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City Center project could begin in two years if economy continues to improve

'It's not a matter of if, it's a matter of when'

Coming in 2014 -- or possibly 2015 -- the start of construction on San Ramon's long-awaited City Center.

That's not actually a guarantee, but it's a best-guess prediction from a KPMG retailer survey that says many retailers are looking at late 2014 or 2015 for a substantial improvement in the economy before moving ahead with expansion plans.

Of course, the future of the City Center is up to Sunset Development and its principal executive, Alex Mehran. But a subcommittee of San Ramon's Economic Development Advisory Committee recently reported to city officials on the status of the project and said it will probably go ahead when the timing is right.

"The simple answer is, 'It's the economy.' It's such a big risk for Sunset to develop it -- $850 million was the last estimate we got. That's for the whole project," said Louis Dagen, who chaired the subcommittee. "It also involves taking down Bishop Ranch 2, which is four office buildings, so it's a loss of rent until those buildings go up."

An executive summary presented to San Ramon City Council describes the project as three separate components:

"The Plaza District, is the signature mixed use component including retail, restaurants, and entertainment uses, new residential units, and a hotel, all planned around a large plaza. The Office District is comprised of three new office buildings, and the City Hall/Transit District includes a new City Hall, Library, and transit center.

"Although the project is called City Center, Sunset Development is the developer of the mixed use Plaza District, and the Office District. The City is responsible for the development of the City Hall/Transit District. Sunset Development needs major financial and development commitments in order for the residential and retail components of the project to fuel the start of the Plaza District portion of the City Center project. The office component will occur when Sunset has lease commitments to warrant the construction of new office space," the summary stated.

However, with 2401 Crow Canyon Road now housing the city's police department and permit center, San Ramon could opt for a smaller project.

City Center has been a part of San Ramon's future for nearly 30 years.

"It's been part of San Ramon's planning since 1983, when we were incorporated," Dagen said. "Everyone is obviously frustrated about the fact that City Center hasn't gotten built."

But Dagen said it's wise to hold off for now, pointing toward a similar $800 million project in Sunnyvale that he said not only never got off the ground, but couldn't even sell at a public auction.

Meanwhile, San Ramon has done a fair amount of work, including getting funding to improve the Iron Horse Trail, which runs along the side of the project, and doing preliminary designs for a pedestrian walkway over Bollinger Canyon Road, which would run to and from City Center.

The city stands to rake in some cash when the project is finished.

Contra Costa County gets property taxes from Bishop Ranch under an arrangement made decades ago. The city has negotiated property tax sharing agreements with the county and the San Ramon Valley Fire District that could generate $1,280,000 in annual revenue from City Center when the project is done.

Beyond that, City Center would be a landmark and would finally give San Ramon something all four other cities in the Tri-Valley already have and take for granted: a downtown.

"I'm optimistic that this will get done. It's not a matter of if, it's a matter of when. Sunset is very committed to getting it done right," Dagen said. "It's a matter of having retail commitment and one or more large office tenants and the ability to get financing."

He said that people want to live in San Ramon because of its people, its parks, its safety and its schools.

"As long as those factors still draw people here and as long as Sunset is committed to building a successful downtown, eventually it will get built," Dagen said.


Posted by Ms. bunny, a resident of San Ramon
on Sep 17, 2012 at 7:56 am

Ah, better "late" than "never"...I think this project in its planning? Might have benefited IF it had been phased...At least it's not scraped! I continue to look forward to it's construction.

Posted by Canyon Park Homeowner, a resident of San Ramon
on Sep 17, 2012 at 1:58 pm

Well, well, well. Discussion of building the City Center arises again. I won't believe it until I see it! However, interesting point in the article, specifically about the San Ramon Police Department's new location. The move of the police department was positioned to nearby residents as "temporary" until the City Center was built. Now it appears it is more permanent. What a surprise! Of the city council members voting at that time, only Abrahm Wilson was opposed to moving the police department even though many nearby residents opposed the new location of the police department - all other city council members supported it. It's a huge building with the planning and police departments only taking a fraction of the overall space. Just waiting for the remainder of the city departments to make the move. More than likely it will come, and as usual, it will be a surprise to the nearby residents.

Posted by Lou Dagen, a resident of San Ramon
on Sep 17, 2012 at 5:23 pm

Hi Ms. Bunny, unfortunately, building the project in phases is not the solution. There needs to be business demand to build the Office District, retail demand to build the Plaza District, etc. That said, it's certainly possible for City Center to be phased in, as demand warrants it, in the future. And don't worry, the project has not been ... um ... "scraped." :-)

--- Lou

Posted by Lou Dagen, a resident of San Ramon
on Sep 17, 2012 at 5:34 pm

Hi Canyon Park Homeowner --

I'm sorry that my presentation wasn't clearer about the future Civic District in City Center. Please note that this district (to comprise City Hall, a Library, and a Transit Center) may or may not include a police station. Please also note that this will not be built until property tax and sales tax revenues from the other parts of City Center pay for the land acquisition, construction, and maintenance costs of the Civic District. Therefore, it's premature to say that the police station (or any other departments) will remain at 2401 Crow Canyon Road for the long-term. I suspect that this is why it was called a "temporary" relocation.

I believe (although this was not part of my purview) that the City obtained the 2401 CCR property for a low price during the (hopefully) worst part of the recession. If this was the case, and since the Police Department needed larger, more secure space than is available at City Hall, then the acquisition made sense. When City Center is built, I'm sure that the Mayor, Council Members, and City Manager will carefully consider moving the Police Department into the Civic District, versus keeping them on Crow Canyon Road.

Hope this helps! --- Lou

Posted by Ms. Bunny, a resident of San Ramon
on Sep 18, 2012 at 8:04 am

Lou...I really don't think you were "listening"...My comment was: It's too bad the City Center WASN'T planned as a phased project. As you admit in echoing what I said? It COULD have been. As you know? Planning for it began LONG before the economy went flat. Phasing building construction is far more successful than WAITING for EVERYTHING to be in COMPLETE sync, since it seldom is.

Posted by Lou Dagen, a resident of San Ramon
on Sep 18, 2012 at 12:19 pm

Hi Ms. Bunny, I understand what you're saying. You think that City Center should have been built in phases over the last few years, rather than building the entire project at once. I apologize if it seemed that I missed your point.

With respect, though, phasing the project wouldn't have made a difference. Please consider the following:

1. The project was approved in December 2007.

2. To build City Center, Sunset Development (the owner of Bishop Ranch) needed to apply for permits (approximately a six month process), demolish Bishop Ranch 2, move utilities, construct the buildings (a twelve to twenty-four month time frame), landscape the area, etc.

3. Sunset also needed to borrow hundreds of millions of dollars to finance the project. As you know, it has been very difficult to get commercial financing during the recession.

So, if you were in charge of Sunset in December 2007, would you:

a. Borrow money to build the Office District over the next two years, even though there was a surplus of available office space, and you didn't have any potential tenants?

b. Borrow money to build the Plaza District over the next two years, even though there was little retail demand, and no retailers would commit to opening on your property after it was built?

c. Hold off on building either district until conditions improve?

As you know, Sunset chose Option "c." This is why I said that phasing the project wouldn't have made a difference. There is no reason to start either district until the demand is there.

However, please see the Committee's presentation (available online at the City's website). We believe that if a large tenant wanted to locate here, there's a good chance the Office District would be started. Alternately, if retail demand picks up in two to three years, we think that makes the Plaza District more feasible.

I hope this helps answer your question, and please let me know if you have any others. --- Lou

Posted by Ms. Bunny, a resident of San Ramon
on Sep 19, 2012 at 8:04 am

I wasn't aware I HAD a question. -Though I didn't realize NO money was in place whatsoever for this project(3)...Ah dreams...Develop a project; Pass it through the city "powers that be" Estimate the projection date and then oops! NO FINANCING! Which now could keep this project sitting on the "table" another decade easily.

Could it be, a dream TOO large to be realistic? Could the essential services not be constructed first, afterall, that was the main objective at one time. The City of Dublin has done it reasonably well.

I will continue to wonder...As many a San Ramon citizen is to this day.

Posted by SR Resident, a resident of San Ramon
on Sep 19, 2012 at 9:33 am

Lou, thank you for a clear summary of the circumstances. I wish everyone (especially Ms. Bunny) would recognize Sunset and the City are doing their best to get this project built. As in many instances, demand drives these types of decisions. It's easy to say otherwise when it's not your money or head on the the line.

Posted by Lou Dagen, a resident of San Ramon
on Sep 19, 2012 at 9:46 am

Hi Ms. Bunny --

Thanks, as always, for your good feedback.

Regarding financing: it's somewhat analogous to buying a home. The first hurdle is saving, say, 20% for a down payment. However, once you've saved that money, you might delay purchasing a home until the economy improves, real estate prices stop falling, etc. We on the Committee felt this was Sunset's situation: they may (or may not) have the down payment, but they didn't think it was the right time to move forward. We imagine that the increased difficulty of getting financing over the last five years only made their decision to postpone the project easier.

May I ask a follow-up question of you? What are you referring to when you discuss "essential services?" --- Lou

Posted by Lou Dagen, a resident of San Ramon
on Sep 19, 2012 at 9:51 am

Hi SR Resident --

Thank you for your kind words. They were a team effort from our Committee, all San Ramon residents and volunteers, who do no business with the City or Sunset Development. The City's staff members were also incredibly helpful in gathering reams of data for our research.

We on the Committee are working on public outreach, to share this information with the community. Would you (or anyone else reading this) like one of us to speak to a local group or organization? If so, please reply here, and we'll schedule a briefing. Thanks again! --- Lou

Posted by Ms. bunny, a resident of San Ramon
on Sep 20, 2012 at 8:16 am

Mr. Dagen, "essential" services to me, as I would imagine most citizens, primarily means our City Hall if not Transit Center (Library can wait...). (not sure why "SR" resident above has issues with my stating opinions on this matter...last time I checked? This freedom of speech was "alive and well" in this country!)

Posted by Bob P, a resident of another community
on Sep 20, 2012 at 4:07 pm

Ms Bunnie,

To me, having a city hall built would be an 'essential service' if San Ramon did not have one already. City Hall exists, albeit in a mostly jigsaw puzzle arrangement. Essential city services are provided now and will continue to be. I agree that a library at this point might be a 'nice to have' and transit center may straddle the line between 'needed and nice to have'.

Lou and everyone else,

The City Center planning process has been on-going and evolving for decades. To be at the point where the financials are being looked at for a realistic potential 'start' is a wonderful thing, especially for someone like me who basically had given up on seeing anything built.

Posted by Canyon Parks Homeowner, a resident of San Ramon
on Sep 20, 2012 at 4:25 pm

At this point in time, why do the remaining city functions need to be located in what will someday be the "City Center"? The city has already purchased 2401 Crow Canyon Rd building and it is more than 1/2 empty - if not more. I can understand the city council chambers to be at a central location, like within Bishop Ranch, but the other functions may be more movable and do not necessitate a centralized, prime real estate location. Would this make it easier for Sunset Development to begin the building process of the City Center if the actual city buildings were not co-located and instead the entire Bishop Ranch space is dedicated to commercial use?

To Lou - many times, we (Canyon Park homeowners) were told that the police and planning departments move to 2401 Crow Canyon Road was "temporary" and those offices would move to the new City Center. It was estimated that would be in about 5 years. You may want to check City Council minutes on this one or notes of the meetings held with the surrounding neighbors and the police department prior to the decision being made to purchase the building.

Posted by Ms. bunny, a resident of San Ramon
on Sep 21, 2012 at 7:53 am

I really believe the city services exist BEST and most EFFECTIVELY when housed together Bob. Just my experience in dealing with numerous ones in construction and architecture in the mass buildout of the eastbay over the last 30 years...For example, I personally do not like the current arrangement of the SR building dept. separate here on Camino Ramon and Public Works "up the road". It is, disjointed as you say, as other services are. I believe they work far more cohesively all housed together. Again (for the sake of our SR "resident" ??? Just my opinion, though based on many years in the industry and my own use of these services when remodeling my home)

Posted by Harry S. , a resident of San Ramon
on Sep 21, 2012 at 10:29 am

I would like to interject a couple of thoughts here. Glad to see there is a healthy discussion of the City Hall aspect to this plan.

First, the City is a partner to this plan and it has not been determined who will actually build the City Hall- Library complex. This was projected to be a 110,000 square foot building that was, at the time of approval, going to be "state of the art." When Sunset Development came to the City for a development agreement extension in 2008, I, along with the other 4 planning commissioners, voted to extend the agreement. One issue I raised at the time was having the City Hall Library complex be part of Phase 1. With Construction costs at historic lows, the city and Sunset could have built this part of the project first and developed a footprint for the retail and office phases to follow. This was not accepted at the time, primarily for financing reasons.

When the 2401 Crow Canyon Property was purchased the planning commission provided an advisory vote. Phil O'Loane at the time questioned the city getting into the real estate business. I questioned whether this would deter from the new City Hall being built. The Crow Canyon building WAS to be a temporary fix to an overcrowding of the police office complex which was the focus of a state report.

If anyone has looked at the latest city budget, you will note that this city is steadily increasing its debt load and revenues lag expenditures by approximately $5 billion. The long established "reserves" that were highly touted in the early 2000's are essentially spent. I could not discern from the budget document what those reserves are today.

I bring this up because the only way a new City hall will be built would be a) the city takes out a bond, b) Sunset builds the building complex and leases it back to the city or c) it doesn't get built.

Speaking for myself, when I voted to approve this as a planning commissioner in 2007 it was the City Hall Library complex that was at the top of my list of reasons. Our residents have been promised since 1983 that "one day" we would have a city hall.

I feel it is vital that The City Hall Library complex not be "negotiated away" when it comes time for the City and Sunset Development to negotiate the financial and revenue sharing agreements. Let's remember that the City is transferring valuable land parcels and in 2011 had to issue debt for its financing portion of the Crow Canyon Offramp expansion which is part of this project.

Yes Sunset Development will be coordinating a substantial financial committment to this project. A new City Hall and Library was part of the plan and no one should think otherwise. The extended development agreements call for the City Hall Library district to be built.

Posted by Dave Hudson, a resident of San Ramon
on Sep 25, 2012 at 12:27 pm

For the record I do get a vote and I am committed to having our police at city hall at city center. The transit facility is a major component in this planning. (see ABAG One Bay Area program) This position has not changed over time and neither has the importance of the City Center project. The only thing that has changed is the optimum time to proceed with a maximum chance for success and minimum risk.

Posted by Canyon Park Homeowner, a resident of San Ramon
on Sep 25, 2012 at 9:54 pm

Mr. Hudson, as I recall, you were one of the city council members that voted FOR the move of the police station and planning offices to 2401 Crow Canyon Rd. As long as there is no movement forward to building the City Center, then, to say the least, the police station and planning offices stay put at 2401 Crow Canyon Rd. Only Abrahm Wilson stated publicly that the city did not want to go into the real estate business. Not speaking on behalf of all the Canyon Park Homeowners, overall, the move of the police and planning offices have resulted in a positive effect on the neighborhood. Fences were put up, plants have matured, and traffic is really a minimum, considering. The city did go into the real estate business if the Crow Canyon site is temporary.

Mr. Hudson, as a city council member, when do you foresee the city center to be built - really? I have been a resident of San Ramon for over 29 years and the whole concept of the City Center is becoming a big joke since it has been postponed so many times. The empty lot on Bollinger Canyon Rd. and Camino Ramon is sitting idle - just a good place for the geese to graze and a parking lot during the Wind Festival. Why can't the City Center project be done in phases so something starts to happen?

Posted by Ms. Bunny, a resident of San Ramon
on Sep 26, 2012 at 8:49 am

I think I heard an "echo" on phasing...though that really needed to occur long ago in the planning...

Posted by Beth, a resident of San Ramon
on Sep 30, 2012 at 6:51 am

Here is a thought...maybe it should not be built at all. I have lived here since 1993 and do not feel my property value, quality of life or enjoyment of the area would increase if it did exist. If anything, I think frustration with traffic and new fees/taxes would be a real negative. Look at the discussion of cutting down trees on Bollinger to make it wider now. It is OK to change your minds. Say that under further review it is not a good idea and the City is moving on.

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