Ground Lease Negotiations & Real Estate Consulting

San Carlos

RSG prepared a technical analysis of a long-term ground lease between the City of San Carlos and a hotel operator, who was seeking to extend the term by up to 20 years to strengthen their portfolio. The existing ground lease was comprised of base rent plus a participation in the profits of the project, which were providing above-market returns to the City General Fund. After completing our review of the advantages and disadvantages of an extension from the City’s vantage point, RSG was involved in negotiations which resulted in a successful amendment with a one-time $750,000 extension payment back to the City.

RSG’s role in the City of San Carlos has also entailed serving as their primary economic development advisor on several infill redevelopment projects, leading to several projects proceeding despite the loss of redevelopment tools. Our extensive range of services include project feasibility, developer negotiations, market analysis, relocation, acquisition, project financing and project management.

When RSG was retained in 2006, the proposed Wheeler Plaza TOD project was stalled. The project, located in the center of the City’s downtown, would redevelop a City-owned surface parking lot and six other retail and residential buildings. With RSG’s assistance over many years, the site now includes 108 condominiums, a subterranean public/private parking garage, 9,855 square feet of retail space and a public plaza. Both Wheeler Plaza and another RSG-assisted mixed-use project (San Carlos Transit Village) have received recognition by APA and the Silicon Valley Leadership Group for their success.

RSG was also intricately involved in the creation of investment policies around the City’s award-winning Public/Private Partnership (P3) investment platform: The Strategic Property Acquisition Reserve, recognized by CALED in 2015. RSG designed a lease-leaseback debt financing to assemble, cleanup, consolidate and redevelop a gateway site into a 200-room Residence Inn project with RD Olson, which broke ground in 2015. The City’s net cost for the project was less than $200,000 after sale of the property to the developer, required no additional subsidy, and yields over $1 million annually to the General Fund, as well as meeting prevailing wage construction benefits mandated by the City Council.