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PUC seeks property purchases and lease to relocate Central Shops; budget analyst flags appraisal concerns
Summary
SFPUC proposed purchasing two properties and leasing one to relocate Central Shops near the Southeast Water Pollution Control Plant; the committee advanced the item but the budget analyst noted the Real Estate Division did not obtain new appraisals and that one purchase price exceeded recent comparables.
The committee considered a multi‑parcel plan to relocate the city’s Central Shops to sites near the Southeast Water Pollution Control Plant. Michael Carlin, deputy general manager of the SFPUC, said the move is intended to provide laydown and fabrication areas to support major plant upgrades over the next 10–20 years.
The proposal includes a 10‑year lease of 450 Tolland (about 46,000 sf of building) at $735,600 per year, and purchases of two adjacent lots — 555 Selby (72,788 sf; purchase price $6.3 million) and 1975 Galvez (48,338 sf; purchase price $5.0 million) — to be merged for redevelopment and to replace existing Central Shops facilities. Real estate staff said the Tolland lease rate is under market and that the combined acquisition/relocation/construction costs to replace Central Shops are estimated at roughly $73.7 million.
Budget office staff told the committee the Real Estate Division did not obtain new appraisals prior to negotiating purchase prices and noted that 1975 Galvez was negotiated at about $103.44 per square foot, above the range of completed comparable sales provided (approximately $57–$96/sf). Real estate staff responded that market indicators, including a near-complete adjacent transaction at roughly $120/sf, supported the negotiated price.
The committee accepted amendments and agreed to forward the item to the full Board; supervisors expressed a preference for new appraisals in future purchases and requested follow-up materials and revised legislation be provided to the clerk.
