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Item 5.1 - Poway Sheriff Substation Site Review Dr TRIBUTED AGENDA REPORT ADDITIONAL INFORMATION TO: Honorable Mayor and Members of the City Council FROM: James L. Bowersox, City Ma~~')~ INITIATED BY: John D. Fitch, Assistant City Manage~' DATE: February 14, 1995 SUBJECT: Poway Sheriff Substation Site Review ABSTRACT At their January 10, 1995 meeting, the City Council reviewed a list of 18 potential sites for the Poway Sheriff Station. At that meeting, it was the consensus of the majority of the City Council to consider locating the proposed Poway Sheriff Station on the east end of the Huber Property which is located at the northeast corner of Bowron Road and Civic Center Drive, and to move a portion of the affordable housing project that has been planned for that site to the Western Lumber property. However, the City Council requested that the matter be referred to the Redevelopment and Housing Advisory Committee and that staff prepare a drawing that would show the relative amount of area that would be assigned to each use on the Huber and Western Lumber properties and how many units would be developed on each location. A report was prepared regarding this issue for the February 7, 1995 City Council meeting; however, due to the absence of two of the City Council members, this item was continued to the February 14, 1995 meeting. At the February 7, 1995 meeting City Councilmember Rexford requested that additional information be provided regarding the financial implications of the City building the Poway Sheriff Station. This report has been prepared to address City Councilmember Rexford's request for additional information. BACKGROUND In May of ]994, the City proposed to the County that the new sheriff station be located on the Western Lumber site adjacent to the library. The proposal, which the County agreed to in concept, included the City acquiring 2 acres of the Western Lumber site from the Redevelopment Agency, the City selling revenue bonds to cover the cost of land acquisition, design, site preparation, and construction and the City entering into a long-term lease with the County to rent the FEB 1995 ITEM 5. I ' lof7 Agenda Report - Additional Information - Poway Sheriff Station February 14, 1995 Page 2 facility. Even though the City Council decided not to locate the sheriff station adjacent to the library on the Western Lumber site, the County indicated a desire to continue to work with the City in locating and developing a new sheriff station. FINDINGS There are several benefits regarding the City building the Poway Sheriff Station including the following: 1. The Sheriff Department will be housed in a new facility rather than in leased space not designed to be a sheriff station. The County of San Diego, at this time, does not have the financial ability to build a new station. As a result, if there are no other alternatives available to the County, it would be their intention to lease existing commercial space and convert it to be used as a sheriff station. Sites that have been identified include: Builder's Emporium; the Mega Foods Building; the Mega Foods (K-Mart) Center; the Von's Store at Pomerado and Poway Road; and the Von's Center. As indicated in the January 10, 1995 report regarding potential sheriff station sites, none of these sites have been identified as good sites for a sheriff station. 2. The City, thus the public, would own the building and would be gaining equity in the building as a result of the County lease instead of a ~rivate building owner gaining equity in a leased building. After 32 years the debt would be paid on the building and the building would be owned in full by the public. 3. The City would have a Police Department facility in the event the City ever decided to discontinue the contract for law enforcement services with the County of San Diego. Whether or not the City continues to contract with the County of San Diego for law enforcement services there will always be a need for a law enforcement facility in Poway. In the case of severe economic problems, the City could be forced to discontinue the subsidies to the Performing Arts Center or the municipal swimming pool; however, it is not forseeable that the City would eliminate, or sharply curtail, law enforcement services. 4. Because of the way the law enforcement contract with the County is structured, the additional lease cost would be paid by the contact law enforcement cities of San Diego County of which Poway is one of nine members and represents only 14.4 percent of the total contract cost for patrol and traffic units, which is used as the basis for calculating Poway's share of the total facilities lease cost. As a result, the cost of 2 of 7 FEB 1 4 1995 ITEM Agenda Report - Additional Information - Poway Sheriff Station February 14, 1995 Page 3 the new Poway Sheriff Station would be averaged with the cost of leasing the other facilities used by the contract law enforcement cities. In addition, under the current contract, the County of San Diego would pay 45 percent of the total lease based upon the total number of sheriff deputies who are assigned to the unincorporated areas of the County that are assigned to the stations serving contract law enforcement agencies including the Poway Sheriff Station. 5. Although, due to the current economic conditions, the County could secure a short-term lease of one of the existing buildings at a rate which would be less than the debt service on a bond issue to build a new facility. The cost of converting the building to office use would probably be over $500,000. Therefore, it would cost the taxpayers more to lease a privately owned commercial building. As an example, a short-term lease for one of the existing buildings could be negotiated for the next couple of years at approximately $0.80 per square foot; however, once the economic conditions improve the, lease would be increased to represent the then market rates. In addition, the County would have to finance over $500,000 in tenant improvements or the rent would have to would have to be increased to include the cost of the improvements made to convert the existing buildings so that it could be used as a sheriff station. As indicated in the attached financial information that was prepared at the City's request by Paine Webber in October, 1994, the building would have to be leased to the County for approximately $1.31 per square foot to cover the debt service on a 30 year bond issue if the construction costs including land acquisition totaled $2,500,000. Since it would take approximately two years to complete the construction of the facility and thus no lease payments would be paid, the first two years following the issuance of the debt, the debt service would be paid from a capitalized interest fund. Based upon the above, the total amount of debt service that would be paid over the 32-year term of the bonds would be $8,017,218. If, on the other hand, the County of San Diego was to enter into a lease at $1.00 per square foot, which would reflect a very low cost lease, the rent that would be paid over the same 32-year period if a 3 percent annual increase was assumed would be approximately $9,450,498, for a difference of $1,433,270. Although the initial rent would be $1.00 per square foot, the rent at the end of the 32-year period would be approximately $2.50 per square foot and would average approximately $1.64 per square foot over the 32-year term. Since interest rates have increased following the preparation of the above information, and the actual costs of construction and land acquisition, depending on the site that the City Council selects, may be closer to $3,000,000, the above information may no longer be accurate. However, if the City Council decides to pursue this option further, the actual costs will be provided to the City Council 3 of 7 FEB 1 4 1995 ITEM 5. I ' ' ' Agenda Report - Additional Information - Poway Sheriff Station February 14, 1995 Page 4 prior to their being committed to any specific action. SUMMARY City Build/Own County Build/Own County Lease Cost over 32 years based upon the above assumptions $8,0]7,280 $8,0]7,280 $9,450,498 Average Rent, per square foot over 32 years $1.40 $1.40 $1.64 Equity City of Poway County of San Diego Property Owner In addition to the above costs for the County lease, the County would have to finance the $500,000 in tenant improvements or the rent would have to be increased by approximately $0.30 a square foot to offset these costs. ENVIRONMENTAL REVIEW The subject matter of this report is exempt from environmental review. FISCAL IMPACT This report asks the City Council to provide staff guidance in siting a new Sheriff Substation in Poway. As such, there is no immediate fiscal impact. Additional action will be required by the City Council and the fiscal impact of any recommended action will be reported at that time. PUBLIC NOTIFICATION AND CORRESPONDENCE In addition to the normal distribution, a copy of this report was sent to Jerry Hargarten, Chairman of the Budget Review Committee; Jim Marmack, Captain Poway Sheriff's Station; John Cross, of the Real Property Division for the County of San Diego; Tom Tremble, Chairman of the Redevelopment and Housing Advisory Committee; Joye Davisson, Chairperson of the Library Advisory Committee; Jerry Long, Chairman of the Poway Road Specific Plan Committee; and Kathy Shawl, President of the Friends of the Poway Library. RECOMMENDATION It is recommended that the City Council: ]. select a site for the proposed Poway Sheriff Station, and 2. indicate whether the City Council would be interested in pursuing an 4 of ? FEB 14 1995 rrEM 5,)- ~ Agenda Report - Additional Information - Poway Sheriff Station February 14, 1995 Page 5 agreement with the County of San Diego that would provide for the City acquiring property, designing and constructing a sheriff station tha-Fwould be leased to the County at an amount sufficient to cover the City's cost. JLB/JDF Attachments: 1. Letter dated October 10, 1994 from PaineWebber regarding Sheriff Station Financing. A:\SHERiO1.JDF 5 of 7 FEB 14 1995 ITEM 5.1- ' ' INC. 213 9?2 159& TO 1974~1~55 ~'.~-~2/d3 M~ John D. Fitch A,~si:a~at Cit?y t~,- ~er .. C~' of Po~ay 15325 Cw~c C. gm~ Drive Poway, CA 92064 Re: Sheriff gubst~ion Fin~Cmg ~ John 30y~~,~a~ur~~r~h ~; ~y ~ ditek ~ ~ s~ of ~g. Assumptions ~ ~ ~ 2, 1995 · ~v~ ~ F~ 2, 1 F~ ~ Pa)~ ~tc A~t 2. 1995 F~ ~ Pa~ ~ Feb--. 2, 1997 Conclusions ~ you ~ ~, ~ ~w~ t~ paJmmt s~a6o m ~ur~, for 30 j~ ~wc~, a ~ ~ ~ ~y ~ do ~)' a~ of ~nos. i~ boRom I~t is ~t the Ci~'s ~ w~ ~ ~w~ ~n ~35,~ ~d 5285,~ annually. 6 of 7 ~'[B 1 4 1995 ITEM 5. I "' Attachment 1 Mr. John D. Filch October 10, 1994 Parc tv, o ld"yoa ha,..e an5., qUgS'm:ms, please call mc at (213) 972-1714. SinCerely, '*rice President 7of7 ~ ~'EB ! 4 1995 ITEM 5,/ ~ ~