Title
Authorization to Enter into Lease and City Building Refurbishment Agreement with Poolhouse Group, LLC for the former Firehouse located at 1130 N. 1st Street (Ordinance S-51053)
Description
Request to authorize the City Manager, or his designee, to enter into a Lease and a City Building Refurbishment agreement, and other agreements as necessary (Agreements), with Poolhouse Group, LLC (Developer) for the operation and installation of public infrastructure and capital improvements for the former firehouse located at 1130 N. 1st St. (Site). Further request to authorize the City Controller to disburse all funds under the terms of the Agreements.
Report
Summary
The Site is approximately 26,500 square feet, including a 4,730 square foot building that was formerly used as a fire station. The building is currently vacant, occasionally utilized for a temporary use or storage, and was last operated as a fire station in the early 1970s. The Site is immediately adjacent to Margaret T. Hance Park (Hance Park) and the lease and redevelopment of the building is an integral component of the ongoing revitalization of the park. The core building infrastructure on the Site is functionally obsolete and needs to be refurbished for the building to be usable. Major systems such as electrical, plumbing and HVAC have largely been removed and need to be replaced, while other elements such as the roof and site layout are in critical need of updating to bring the site up to a grey shell condition attractive to a new use.
The Site is controlled by the Parks and Recreation Department (Parks), which issued a solicitation for the Site in 2015; although three proposals were received, no award was made. In 2022, a new solicitation process for the disposition and redevelopment of the Site was initiated by Parks in partnership with the Community and Economic Development Department (CEDD). The sole proposal received in response to the solicitation, submitted by the Developer, was found responsive and responsible. The Developer proposes to rehabilitate the former firehouse, including refurbishment of the core building infrastructure and operate a restaurant offering high quality dining with affordable options to serve park users, event attendees, and the general public (Project). The lease of the Site was presented to and approved by the Parks and Recreation Board (Parks Board) on May 23, 2024.
Subject to City Council approval, the following major business terms have been negotiated with the Developer and would be implemented through the Agreements:
- Annual lease rate: $128,850 with 3% annual escalator
- Term: 15 years with three five-year extension
- City will reimburse Developer for construction of eligible public infrastructure or capital improvements made to the Site. Eligible improvements are subject to Title 34. Total reimbursement not to exceed $2,405,000 and can be realized through the following funding mechanisms.
1. Reimbursement of the City's share of the General Fund portion of eligible Construction Sales Tax paid during the construction of the Project, not to exceed $20,000.
2. Reimbursement of the City's share of the General Fund portion of eligible Transaction Privilege Tax paid from activities conducted at the Site, not to exceed $667,000.
3. Annual rent credit through the lease. The first year rent for the Site is set at $128,580 with a three percent annual escalator for future years.
Contract Term
Reimbursement for eligible public infrastructure or capital improvements made to the Site and annual rent credit requests may be requested by the Developer during the first 20 years of the lease. The term of the lease will be one 15-year term followed by three five-year extensions.
Financial Impact
Total reimbursement shall not exceed $2,405,000 and will occur only to the extent the Project generates sufficient funds. Financial terms of the Agreements will be provided to the Budget and Research and Finance departments prior to the execution of the Agreements. The Developer will be eligible to request reimbursement of eligible General Fund tax revenue generated from the Site or a rent credit until the total reimbursement amount is reached. CEDD anticipates the total reimbursement will be reached in year 15 of the lease.
Concurrence/Previous Council Action
The item was recommended for approval by the Economic Development and Housing Subcommittee at the June 12, 2024 meeting by a vote 4-0.
Public Outreach
Staff has offered to meet with or provide information to the following community groups:
- Evans Churchill Neighborhood Association
- Roosevelt Action Association
- Downtown Voices Coalition
- Roosevelt Row CDC
- Central City Village Planning Committee
- City’s Historic Preservation Commission
- Hance Park Conservancy
- Parks and Recreation Board
Location
1130 N. 1st St.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager John Chan and the Community and Economic Development and Parks and Recreation departments.