Development Responsibility and Process

Details on the development responsibilities and process for State Commercial Opportunities

DEVELOPER’S RESPONSIBILITY TO EXECUTE

While the state is selecting a development partner, the responsibility to redevelop the property shall be the selected developer’s. In accordance with this, the selected developer must:

  • Accept the property in its current “as-is” condition, without warranties from the State.
  • Enter into a long-term ground lease or purchase agreement with the State.
  • Secure all necessary financing, conduct all due diligence, and obtain all necessary permits, entitlements and utility approvals from relevant authorities.
  • Cover all on-site and off-site development costs, including security, maintenance, remediation, construction, management, and operations.
  • Pay prevailing wages to the extent required by state law.
  • Comply with CEQA, including exploring streamlining or exemption options and preparing required environmental documents for submission to DGS as Lead Agency.
  • Pay any applicable development fees, including but not limited to fees for permitting, applicable impact fees, etc.
  • Meet all contractual milestones established in the final agreement.

LEASE OPTION AGREEMENTS

After selection, the State and the Selected developer will first negotiate a Lease Option Agreement (or, in rare cases, an exclusive negotiating agreement). The Lease Option Agreement shall also contain the process by which the selected developer may access the property for surveys, investigation, testing, etc. (this will be in lieu of individual rights-of-entry agreements). Once the Lease Option Agreement is fully executed by all parties, the selected developer (Lessee) will apply to DGS for environmental review.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)

Unless otherwise exempted from CEQA, all Lease Option Agreements will not only condition entering into a ground lease upon completion and approval of the environmental review, but the Agreement will also preserve the State’s right as Lead Agency to reject the proposed project altogether on environmental grounds. This preserves the validity of the “No Project Alternative” requirement under CEQA, ensuring that the State’s environmental reviews are compliant with applicable law.  While the developer is responsible for preparing all required CEQA documentation, the State retains final decision-making authority.

LEASE AGREEMENTS

Upon satisfaction of the conditions in the Lease Option Agreement, and unless the Lead Agency selects the “No Project Alternative” as may be applicable, the State and developer will then enter into a Ground Lease. At no point shall a Ground Lease be executed until all applicable financing is secured. 

SALE OF STATE PROPERTY

The sale of state property generally requires property-specific authorization by the Legislature. For some of the properties available under this program, that authorization may have already been obtained. Properties that already have such authorization shall show “(Surplus)” in the map under the search criteria tabs on the left side drop down table next to the map.

As a general rule, the State prefers to lease excess properties to retain long-term control and revenue potential. However, where a sale would result in better outcomes, proposals to purchase may be considered—particularly for properties already authorized for sale”).