Saturday, September 23, 2017

City of Stockton Buys Waterfront Towers for New City Hall

Just a few years after coming out of bankruptcy, the City of Stockton is paying cash for a pair of waterfront towers to serve as its future city hall.  I was skeptical when I first heard about this plan, mostly concerned about the City spending a large chunk of its reserves when it is projecting some tight budget years in the next decade and has yet to reach its staffing goal for the police force.  After taking a closer look, I believe this could work out well for the City in the long-run.

There is no disputing that the current City Hall is unsuitable, even for a City coming out of bankruptcy.  Staff estimates that the waterfront towers will be $4 million cheaper than following the current plan of moving into leased space on 400 E. Main Street, the building the City originally purchased for a new city hall in 2007, but lost to Assured Guaranty during bankruptcy.  I haven't reviewed those calculations (I wonder if they account for the cost of taking the WaterFront Towers off of the City's property tax roles).  However, I can see some reasons why this move makes sense even if the savings are less than projected.

The 400 E. Main Street is twice as big as the City needs, and a City Hall is an awkward co-tenant in an office building.  Even if the City owned it, this would be a less than ideal structure - the City made a foolish and rushed decision to buy it in 2007.  It doesn't sound like the City is having a good experience with its bankruptcy antagonist Assured Guaranty as a landlord, which is understandable.  It will be interesting to see what Assured Guaranty does with this office building over time after the City moves out.  The space may become more attractive to other tenants after the City moves out.

The Waterfront towers are the right size for the City's needs, and there is a lot of excitement about the big parking lot - even if a big surface parking lot seems like a lousy use of waterfront space.  Interestingly, the City is also actively marketing 3 vacant lots in close proximity to the Waterfront towers, including a large waterfront parcel adjacent to the Towers parking lot, as well as a 3.5 acre lot directly across the street from the future City Hall.  Rather than sell the lot across the street, the City might consider moving their employee parking lot there, and consider selling a large share of the current parking lot with the adjacent waterfront parcel.  It seems to me that would make the waterfront property much more valuable, and would reduce the amount of waterfront space dedicated to surface parking.

I hope the purchase and renovation goes well for the City.  Having been to multiple meetings in both the current and future city halls over the years, I can attest that this will definitely be an upgrade.

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