Agenda Item AGENDA STAFF REPORT ASR Control 25-000380
MEETING DATE:	05/20/25
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	2
SUBMITTING Agency/Department:	County Executive Office (Approved)
Department contact person(s):	Thomas A. Miller (714) 834-6019
	Brian Bauer (714) 834-5663

Subject: Adoption of Resolutions and Release of Request for Proposals for 17th Street

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Resolution to Form

Public Hearing

3 Votes Board Majority

Budgeted: N/A

Current Year Cost: N/A

Annual Cost: N/A

Staffing Impact:

# of Positions:

Sole Source: N/A

Current Fiscal Year Revenue: N/A

Funding Source: N/A	County Audit in last 3 years: No
Levine Act Review Completed: N/A

Prior Board Action: 8/9/2022 #26

RECOMMENDED ACTION(S):

Adopt a Resolution, finding that the County of Orange-owned property located at 1725 West 17th Street, Santa Ana, is exempt surplus land, pursuant to Government Code Sections 54221, et seq., and the California Department of Housing and Community Development guidelines.

Adopt a Resolution authorizing the release of a Request for Proposals for a public-private partnership to develop a mixed-use development with a mandatory residential component, including affordable residential units, and making findings pursuant to Government Code Section 25515, et seq., for development of County of Orange-owned property located at 1725 West 17th Street, Santa Ana.

Direct the Chief Real Estate Officer, or designee to return to the Board on September 23, 2025, or as soon thereafter as practicable, for receipt of proposals received in response to the Request for Proposals, as set forth in the Resolution.

SUMMARY:

Adoption of the Resolutions, making Surplus Land Act findings, and authorizing the release of the Request for Proposals for development of County of Orange-owned property located at 1725 West 17th Street, Santa Ana will maximize the property’s value and stimulate economic growth through job creation, infrastructure improvements, community-serving retail, and facilitate the development of affordable housing.

BACKGROUND INFORMATION:

The Orange County Health Care Agency (HCA) operates one of largest health care facilities on a 9.3-acre site owned by the County of Orange (County) located at 1725 West 17th Street, Santa Ana (Property). Known as the 17th Street Clinic, the facility provides core public health services and programs to Orange County residents (HCA Clinic). The Property is bounded by 17th Street on the south, College Avenue and Kindred Hospital Santa Ana on the east, an existing single-family development on the north and most of its westerly border, and a small commercial development at its southwesterly border. The 17th Street Clinic includes the following buildings:

- Public Health Services (PHS) building: 90,000 square feet (SF)

- Four single-story modular (SSM) buildings: 16,600 SF

- Public Health Laboratory (PHL): approximately 18,000 SF

- Surface Level Parking: 447 standard stalls and 12 handicap accessible stalls

Conditional Assessment of the 17th Street Clinic

In early 2018, the County completed a comprehensive conditional assessment of the facility. The assessment determined that critical systems, including the roof, windows, mechanical, electrical, and plumbing infrastructure had reached the end of their useful functional and economic life. The estimated rehabilitation cost of the existing facility far exceeded the estimated cost to construct a new building. Consequently, replacing the PHS building and the SSM buildings became a strategic financial priority necessary to ensure the continued health and safety of patients receiving care at the 17th Street Clinic and the County employees working there.

Previous Request for Proposals

On September 9, 2021, the County Executive Office Real Estate (CEO Real Estate) released a Request for Proposals (RFP) seeking qualified development teams interested in partnering with the County on a public-private partnership (P3) to develop a new HCA Clinic on the Property or an alternate location, as well as revenue generating uses (Project) on the Property. On November 16, 2021, three proposals were received in response to the RFP. Those proposals were presented to the Board of Supervisors on August 9, 2022, where 17th Street Partners, LLC (comprised of Inception Property Group and Bridgecreek International Corp.) was selected as the primary proposer. However, in January 2023, the Inception Property Group and Bridgecreek International Corp. notified the County of their decision to withdraw from the Project, prompting the County to reassess the development approach for the Project.

Re-Evaluation of Development Strategy

As part of this re-evaluation effort, the County engaged Gensler to conduct a programming study to determine HCA’s space and programming needs. The study involved collaborating with HCA’s seven departments to assess both current and future space requirements. The study included developing a functional program questionnaire, conducting Property site visits and holding numerous focused meetings with each department. These meetings involved extensive discussions to understand the services provided, the patients served, and the gaps in resources and needs. As a result, CEO Real Estate gained a comprehensive understanding of the departments’ requirements and challenges. CEO Real Estate will continue to work with HCA to ensure that the new HCA Clinic aligns with their evolving needs, as well as budgeting, funding, and programmatic changes.

Additionally, the County, with the assistance from Jones Lang LaSalle, conducted a redevelopment analysis to compare the costs and potential revenue generation in retaining the HCA Clinic at its current location versus relocating it to a new site. The analysis determined that constructing a new HCA Clinic on the existing Property would cost an estimated $405 million, while relocating to a new site would cost approximately $224 million, resulting in a cost savings of $181 million over a 30-year period. The analysis also compared the potential revenue generation for both options. If the new HCA Clinic were built on the Property with the remaining space used for revenue-generation, it would generate approximately $27.4 million in ground lease revenue. In contrast, relocating the HCA Clinic and using the entire Property for revenue generation would yield an estimated $38.5 million in revenue, an increase of $11.1 million over the same period. In summary, the redevelopment analysis concluded that relocating the HCA Clinic would result in significant cost savings and higher revenue generation, with a $181 million savings over 30 years and an additional $11.1 million in revenue compared to retaining the HCA Clinic at its current location.

Relocating the HCA Clinic to an offsite location offers several key advantages. First, it ensures continuity of care by allowing patients to receive uninterrupted healthcare services. Additionally, it eliminates the need for temporary facilities, which would be necessary if the new HCA Clinic were constructed on the same site as the proposed mixed-use development. This option serves to reduce both disruptions and costs associated with temporarily relocating staff and equipment. Moreover, separating the existing HCA Clinic from construction activities prioritizes patient and staff safety and allows construction to proceed without operational constraints. Ultimately, this streamlined process enhances efficiency, accelerates the timeline, minimizes delays, and ensures a safer, more cost-effective development.

HCA has toured and selected a potential new clinic site in Santa Ana, which is currently leased by another County department, which within its existing lease allows for the option to expand to accommodate the additional square footage required by HCA for its new clinic. Upon approval of the RFP release and the designation of the property as exempt surplus land, CEO Real Estate can proceed with negotiations to exercise the lease option for the expanded space. The lease for this expansion will be presented to the Board as a separate action.

Compliance with Surplus Land Act and Government Code Section 25515

After conducting a thorough evaluation, the County has determined that relocation of the HCA Clinic to an alternate location in Santa Ana and development of the Property with revenue-generating uses is the most viable approach. The County intends to move forward with this development in compliance with the Surplus Land Act (SLA) and Government Code Sections 25515, et seq., which allows public-private partnerships for residential and commercial purposes.

Surplus Land Act

The County plans to utilize an exemption under the SLA, specifically Government Code Section 54221(f)(1)(G), which applies to properties larger than 1 acre but smaller than 10 acres. The Property, at 9.3 acres, qualifies for this exemption. The SLA exemption is subject to approval by the California Department of Housing and Community Development (HCD) and will require certain affordable housing requirements for residential development of the Property. The County has worked closely with HCD to ensure compliance with all relevant requirements and to obtain the necessary approvals before proceeding with the disposal of the Property. Consequently, CEO Real Estate is requesting the Board to adopt a resolution (Resolution) declaring the Property to be “exempt surplus land” pursuant to Government Code Section 54221(f)(1)(G).

Public-Private Partnership Authority

Government Code Sections 25515, et seq. provides that residential, commercial, industrial, and cultural development of public property owned by counties constitutes a valid public purpose and permits public-private partnerships (P3) for these purposes. Section 25515.1 permits counties to lease any of its real property for these purposes. It also permits counties to participate as a principal party in the development of these uses. A county may contract for management, operation, or leasing of its real property for these same purposes. Counties are required to adopt an ordinance authorizing any sale, lease, development, or contract agreement pursuant to these regulations and to hold a public hearing prior to adopting the ordinance. In accordance with Government Code Section 25515.2(c), the Board may solicit proposals for any lease development or contract agreement for such development. The County has determined that the development of the Property through a P3 will deliver significant public and economic benefits, including the creation of affordable housing, job creation, community integration, and long-term fiscal growth. Therefore, CEO Real Estate is requesting the Board adopt the attached Resolution, making certain findings pursuant to Government Code Sections 25515, et seq., and authorize the Chief Real Estate Officer, or designee, to issue the RFP.

Following the adoption of both Resolutions, the County will release the RFP for development of the Property, with the intention of entering into an Option and Ground Lease (Agreements) with the successful proposer. The Agreements will cover the planning, designing, entitling, financing, construction, and operation of a mixed-use development that includes a mandatory residential component. In compliance with Government Code Section 54221(f)(1)(G), the RFP will require that proposals include a mandatory residential component with a minimum of 300 residential units on the Property, with at least 25% of the residential units designated for low-income households, in accordance with Health and Safety Code Section 50079.5. These units will have to meet affordable rent standards as defined in Health and Safety Code Sections 50052.5 and 50053, with affordability restrictions required for a minimum of 55 years for rental housing. All residential units will be designated for rental purposes only. In addition to the required residential component, the development may include other revenue generating uses fostering a dynamic, sustainable, and inclusive mixed-use community. The County will ensure all relevant entities, including those focused on affordable housing development are notified to facilitate a broad and inclusive solicitation process.

In compliance with Government Code Section 25515.2(g), notice of adoption of the resolution, the resolution, and the time and place of holding the meeting was published once a week, for three weeks in a newspaper of general circulation published in the county in which the property is located. This ensured that the public was adequately informed and has had an opportunity to participate in the process.

In compliance with Government Code Section 25515.2(h), the County will return to the Board within no less than 60 days to receive all proposals submitted in response to the RFP, for the Board’s review and consideration. The Board will have the opportunity to consider all proposals as submitted or as revised by the Board, and to direct the Chief Real Estate Officer, or designee, to incorporate the approved proposal into the Agreements and negotiate Agreements acceptable to the Board.

Summary of Board Requests

The County is requesting the Board adopt the attached Resolution declaring the Property as “exempt surplus land” pursuant to Government Code Section 54221(f)(1)(G), in compliance with the SLA. Additionally, the Board is asked to adopt the attached Resolution making findings pursuant to Government Code Sections 25515, et seq., and authorize the Chief Real Estate Officer, or designee, to issue the RFP for the development of the Property and return to the Board for receipt of the proposals on September 23, 2025, or as soon thereafter as practicable.

CEQA COMPLIANCE:

This action is not a project within the meaning of CEQA Guidelines Section 15378 and is therefore not subject to CEQA, since it does not have the potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. The approval of this agenda item does not commit the County to a definite course of action, in regard to a project, since it includes adoption of a Resolution declaring agency use and exempt surplus land, and issues an RFP for the selection of a Development Team to plan, design, entitle, finance, construct, and operate a mixed-use development with a mandatory residential component. This proposed activity is therefore not subject to CEQA. Any future action connected to this approval that constitutes a project, will be reviewed for compliance with CEQA.

FINANCIAL IMPACT:

N/A

STAFFING IMPACT:

N/A

ATTACHMENT(S):

Attachment A – Property Map
Attachment B – Resolution – Exempt Surplus Property
Attachment C – Resolution – Public-Private Partnership
Attachment D – California Government Code Section 54221
Attachment E – California Government Code Section 25515