Davis Successor Agency Accepts Offer on Sale of Historic City Hall

(From Press Release) – The Successor Agency to the Davis Redevelopment Agency on Tuesday accepted an offer from a highly experienced local commercial real estate owner/developer to buy the Historic City Hall building in downtown Davis for $3.5 million.

The offer, from Engstrom Properties, came as a result of a highly competitive disposition process that began last spring.  Engstrom Properties owns and operates several high-quality commercial properties in Davis, including the Covell Shopping Center and El Macero Center in south Davis.  Both retail properties are anchored by a Nugget Market.  The company also owns, operates and renovated the historic Hotel Woodland in downtown Woodland.

Engstrom Properties was chosen based on its competitive offer price, proven track record of owning and operating high-quality commercial and historic properties, extensive commercial leasing and property management staff, vision for the property, dedication to maintaining the historic integrity of the building, and understanding of Davis community values.

“We feel Engstrom Properties will be an excellent steward for our Historic City Hall building and are confident they will exceed our expectations,” stated Mayor Robb Davis.

Late last year, the State Department of Finance (DOF) notified the Davis Successor Agency that it had to sell the Historic City Hall building.  The sale was required under a 2012 state law that
dissolved all California redevelopment agencies and forced them to dispose of all their assets.  DOF and the Successor Agency’s Oversight Board still need to approve the sale to Engstrom Properties.  City staff anticipate these approvals before the end of the year.

Built in 1938, the Historic City Hall building served as the City’s city hall for many decades and housed all city functions until 1966, when the fire department moved out to new headquarters on Fifth Street.  In 1981, all other city departments (except the police department) moved out to new headquarters on Russell Boulevard.  The police department remained in the building until 2001, when that department moved to new headquarters on Fifth Street.  Shortly after 2001, the property was remodeled into a restaurant and has been leased to a restaurant operator since 2003.

The building is a state historic landmark, which means its exterior historic features are protected.  Any proposed changes to those features require City approval.  In addition, the City will record a deed restriction requiring City approval for any proposed changes to the building’s interior historic features.  The City will retain ownership of the two art pieces on the property.

Turton Commercial Real Estate (“Turton”) was the Successor Agency’s broker for the sale.  Turton marketed the property to potential buyers and helped the Successor Agency evaluate the offers.  The Successor Agency received four offers.  The two most competitive buyers were interviewed by Turton, Successor Agency board members and staff.

Engstrom Properties is owned by Yolo County resident, Mark Engstrom.  The company has a proven track record in the Sacramento region renovating historic properties, owning and operating restaurant and retail properties, and shepherding transactions through DOF.  In addition, Engstrom Properties employs an urban leasing team who works in places like Portland, Austin and Seattle.  This team will be working to activate the area and make the property a family-oriented community gathering place.

The current tenant in the Historic City Hall building, Bistro 33 restaurant, has eight years left on its lease.  The new owners can maintain the lease or negotiate a buy-out of the lease.

The City will receive approximately 21% of the net proceeds from the sale.  The remainder of the proceeds from the sale of former redevelopment agency properties are divided among the public entities that receive property taxes within Yolo County, based on their proportionate share of property taxes.



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19 thoughts on “Davis Successor Agency Accepts Offer on Sale of Historic City Hall”

  1. Ron

    Wondering if the city has any other viable options at this point, other than a forced sale in which they receive 21% of the net proceeds.

    Here’s a link (from Palm Springs) which describes the requirements/process.  The document seems to put a “positive spin” on the process (showing photos of parking lots which were redeveloped, which does not apply, regarding Davis’ old city hall).  In any case, the document also notes that there’s been more than 200 court actions from local governments who “tried to clarify RDA dissolution rules”.  Not sure what became of those.

    http://www.palmsprings-ca.gov/home/showdocument?id=37312

     

     

     

    1. Ron

      Below is an update (as of 2014), regarding some of the court actions (which may not all relate to the forced sale of city property).

      I’m not going to have time to dig deeply into this subject, today. But, I’m hoping that the city actually / thoroughly researched this subject, to see if it had any viable options.

      http://www.gibsondunn.com/publications/pages/Update-on-Recent-Court-Decisions-Relating-to-Dissolution-of-Redevelopment-Agencies-in-California-April2014.aspx

  2. Tia Will

    I am hoping that the new owner’s will continue the Bistro 33 lease at present. Although I eat there rarely, I walk past it daily and love the patio which is already a very family friendly venue on which to enjoy drinks, a snack, or meal. On event days, such as the bicycle races, Picnic Day, the music festival, it provides a lively spot for people watching. Whatever is chosen, I hope this aspect of the property will be maintained.

  3. Ron

    From article:  “The City will receive approximately 21% of the net proceeds from the sale.  The remainder of the proceeds from the sale of former redevelopment agency properties are divided among the public entities that receive property taxes within Yolo County, based on their proportionate share of property taxes.”

    So, for “normal” property taxes, the city only receives 21%?  If so, I think we’ve uncovered a problem.

    Anyone know what percentage the school district receives? Or – the other “entities”?

      1. Ron

        Thanks, Howard.  Skimmed it, didn’t see an answer to the specific question I asked.

        In any case, I’m wondering how any development can “pay for itself”, if the city is only getting 21% of property taxes (which are limited to a 2% increase, per year).

        Recently, David posted an “analysis” for Sterling, which essentially showed “revenues” vs. “expenses”.  I questioned the source of the analysis, as well as details regarding the costs.  Neither was explained.

        Now, I’m wondering if I also should have questioned the “revenues”. For example, did that chart show the gross taxes paid, or did it show the taxes that were actually received by the city?

         

        1. Howard P

          You are correct on the specific %-ages… I did not have that info… apologize for that…

          I offered the cite as pertinent background (for whatever folk think it is worth)… will leave to others the &-ages.  Note that ERAF has had 3 phases, so far.  %-ages have varied.  Not a SME in those… just on the concepts…

          ‘Revenues’ are not just PropTax.  Some are one time, others are ongoing… utilities,  sales taxes, parcel taxes, TOT, and other revenues.  State ripped off Counties, Cities, and Special Districts big time, so they could dodge the financial bullet on education.

          Which chart?  M Coleman’s were gross receipts and gross disbursements by government class.  Statewide basis.  Results for specific Counties and/or Cities may vary.

        2. Howard P

          Thank you, Don…

          67.8% (based on the chart) of all general property taxes in Davis [unclear if the chart was Davis specific or Yolo County, but given context, I assume that is for Davis, and/or DJUSD included properties within the County] goes to education. [not all DJUSD]

          In Davis, that doesn’t include what folk pay for DJUSD M-R school improvement assessments, existing or contemplated DJUSD parcel taxes, and the DJUSD share of the ERAF that goes to the State, but comes back to DJUSD.

          Oh, and some of your income tax may well go to education… and some may trickle back to DJUSD.

          So… look at your tax bill… add up 36.5% of that, your DJUSD M-R(s), DJUSD parcel taxes, and except for ERAF, and a bit of income tax, that’s what you are paying for DJUSD support.

          No judgement, just facts.

          Second chart , Don… is that City only?

          1. Don Shor

            Second chart , Don… is that City only?

            Yes, that’s from the city Financial Forecast and Proposed 17-18-Budget.

        3. Ron

          Thanks, Don and Howard.

          So, only 18.5% of regular property tax is actually received by the city of Davis.  Wow.

          Again, I wonder about the financial analysis chart that David posted specifically regarding Sterling, recently.  The “revenues” and “expenses” were not explained, nor was the source.

        4. Howard P

          Ron, I reiterate…

          ‘Revenues’ are not just PropTax.  Some are one time, others are ongoing… utilities,  sales taxes, parcel taxes, TOT, and other revenues.

        5. Ron

          Thanks, Howard.  I saw that the first time.

          One-time fees are supposed to cover one-time expenses.  There is no TOT associated with Sterling, nor are there any direct sales taxes.  Not sure how all parcel taxes are allocated, but we know that school district parcel taxes are exactly the same for a single-family home, vs. an entire apartment complex.

          The question is really for David, since he posted the Sterling analysis. (And, it’s really a question regarding all of the megadorm proposals.)

          Since the city is only getting 18.5% of regular property taxes, it’s probably going to be difficult for any development to pay for itself.

          At this point, I’m wondering what kind of analysis the city is performing, regarding these proposals.

          1. Don Shor

            Since the city is only getting 18.5% of regular property taxes, it’s probably going to be difficult for any development to pay for itself.

            I’m not sure why you find the percentage startling or relevant. Property taxes go in all sorts of different directions, as you can see. What matters is the total assessed valuation of properties. Reselling, redeveloping, or rezoning properties all increase the assessed valuation. In some cases it’s a considerable increase in value, in other cases like Nishi it’s entirely new revenue due to annexation.

        6. Mark West

          “Reselling, redeveloping, or rezoning properties all increase the assessed valuation.”

          This comment suggests how the City could do a better job of educating the public on the value of redevelopment by specifying the change in revenues expected after the new development. When a parcel changes ownership there is a reassessment of the value of the land, and then with redevelopment, the added value of the new buildings (and equipment inside). Even though the City only receives 18.6% of the increased property taxes, the absolute increase in the City’s revenues from the parcel is often quite significant.

           

        7. Ron

          Don:  “I’m not sure why you find the percentage startling or relevant.”

          I’m not sure why you don’t.  Schools, for example, don’t provide police or fire services, pensions or medical costs for city workers, road, facilities, park, or bike path maintenance, as well as a host of other city services.  18.5% is (already) not covering the costs associated with running the city.

          Don:  “What matters is the total assessed valuation of properties.”

          Both the assessed value, and the percentage that’s received by the city “matter”.  As does an accurate comparison with costs.

          1. Don Shor

            I don’t find the allocations surprising because traditionally the property tax was the sole source of funding for the schools as well as those smaller agencies listed. Some of those agencies provide vital, life-and-death services (mosquito abatement is a matter of public health, flood control agencies protect property and lives).
            Since we’re talking percentages, it’s a pie: any increase in the city’s portion comes at the expense of the other entities. The city has other ways to raise revenues. So my focus is on the dollars, not the percentages.

  4. Ron

    Don:  “Even though the City only receives 18.6% of the increased property taxes, the absolute increase in the City’s revenues from the parcel is often quite significant.”

    And completely meaningless, without accurately comparing the increased costs, properly allocated.

    Now, about that Sterling analysis – still waiting for a detailed explanation regarding the source, revenues, and properly allocated costs. (I realize that David has probably signed off, for the night.)

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