City of San Carlos Closes on Acquisition of $13.7m site for Economic Development
On June 20, the City of San Carlos closed on the final parcels in a 4-acre redevelopment project involving the assembly of obsolete industrial buildings adjacent to the Bayshore (101) Freeway for a new upper midscale hotel project. RSG serves as the City’s real estate advisor on the project, which was initiated less than 12 months ago when the City Council directed staff to proceed with efforts to negotiate the purchase from 3 property owners.
The transaction included leveraging of the City’s strategic property acquisition reserve (in line with policies established with RSG and the City Council in July 2013), and a private placement lease-leaseback financing with ABAG and Western Alliance Bank. The City achieved very favorable credit terms on the 5-year, $8.8m financing with assistance from Southwest Securities, the City’s placement agent on the project.
While the City undertakes site remediation, RSG is assisting the City with site development. Following a competitive RFP process which we coordinated and provided advisory services for the City this spring, the City Council entered into an MOU for entitlement, sale and development of a 200+ key hotel with RD Olson Development. The MOU stipulates economic and fiscal goals for the project, as well as dictates the process both parties would follow to enter into the purchase and sale of the site. In addition to assisting the City with development activities, RSG is the City’s relocation consultant, and is working with the 20 tenants.
When completed, the project would meet a critical need for lodging for businesses and travelers in the San Mateo County market area, while generating over $1.0m of net new tax revenues annually for the City.
This project was highlighted as an innovative and forward-thinking approach to economic development at the CALED Annual Conference by Jim Simon, Principal, who serves as the City’s advisor on this and other economic development projects