A last-minute deal to ensure hundreds of staffers have a place to work when a city lease expires at the end of the month could set the stage for a renewed discussion about the city’s real estate and the status of its aging City Hall.
At a Monday press conference, Mayor Bob Filner announced that more than 400 staffers will move across the street a few months after the city’s lease at 600 B St. expires.
Real-estate guru Jason Hughes coaxed the property managers at 525 B St. to agree to a deal that could save the city nearly $16 million over the next five years.
A letter of intent released Monday by the mayor’s office shows an executive with Hines, the firm that owns the building, tentatively agreed to charge the city $1.25 per square foot for about 90,000 square feet the city will use to house water and utility workers.
The city now pays $2.62 a square foot for its slightly larger space at 600 B St.
And officials believe Hines’ tentative agreement to pay up to $10 a square foot for necessary upgrades, technology changes and other needs will also cover the city’s moving costs. The firm also indicated it would pay an additional $15 per square foot if the city requests extra funds.
Filner and Hughes said Monday that the pact frees the city to consider larger questions about its real estate, including the city’s vision for its downtown headquarters.
About three years ago, then-Mayor Jerry Sanders and others pushed for a new City Hall. Those plans mostly crumbled along with a decision to pull a ballot measure for a new $294 million City Hall.
City officials noted three soon-to-be-expiring leases at the time, including the 600 B St. lease that will end May 31. Nearby Civic Center Plaza and Executive Complex are also set to expire by mid-2014.
Late last year, city staffers recommended real-estate firm Cassidy Turley handle related lease negotiations.
Enter Filner. He disregarded that pick and instead took up Hughes’ offer to do the job for free.
Filner also broadened the assignment. He wanted Hughes to help develop a comprehensive strategy for the city’s buildings.
“It’s not just lease negotiation,” the mayor said at a Monday press conference to announce the tentative deal.
The review comes with plenty of considerations. Leases must be configured to conform with the city’s long-term vision, and costs and efficient operations are priorities with any move.
The mayor acknowledged he’s not thrilled with the current City Hall.
“It’s a big box and not very efficient in size, or new as you can see here,” Filner said. “I don’t think it’s a good statement of who we are as a great city in this nation and so we’ll be looking at all the options.”
The mayor has emphasized the need for efficiency in the past.
Immediately before he took office, Filner repeatedly denounced the vacant fourth floor at City Hall.
“It has, I don’t know, 150 cubicles there or something like that,” he said back in December. “Just look inside. It’s completely empty. The whole floor.”
At the time, the city’s former chief operating officer said the city might want to relocate staffers to that open floor to lessen the need for leased spaces.
It’s unclear how consolidation might factor into Filner’s plans but there are already a couple ideas on the table.
Filner suggested Monday it might make sense to look at a smaller City Hall building that’s “more architecturally iconic and interesting” and rely on surrounding real-estate to house most city staffers.
A possible impending move by Sempra Energy could leave its downtown headquarters — another prospective option for the city.
Sandor Shapery, Sempra’s landlord, told U-T San Diego he’d offer the 21-story building to the city if the energy company moved on.
“I think it would make a wonderful city hall,” Shapery told the U-T.
Filner and Hughes said Monday the city won’t dismiss any alternatives.
“Everything is open for review,” Hughes said.
Correction: An earlier version of this post misstated the square footage the city expects to lease at 525 B. St. The city anticipates leasing about 90,000 square feet. It also misstated the amount the real-estate firm will pay the city for tenant improvements. The landlord has tentatively agreed to pay $10 per square foot and an additional $15 per square foot if the city requests more funds.
Lisa Halverstadt is a reporter at Voice of San Diego. Know of something she should check out? You can contact her directly at lisa@voiceofsandiego.org or 619.325.0528.
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