To: Board of Supervisors
Department or Agency Name(s): Sonoma County Public Infrastructure
Staff Name and Phone Number: Johannes J. Hoevertsz, 707-565-2550
Vote Requirement: 4/5th
Supervisorial District(s): Countywide
Title:
Title
Acquisition of 400 Aviation Boulevard, Santa Rosa, CA (APN 059-350-112)
End
Recommended Action:
Recommended action
A) Provide final approval and authorize consummation of the purchase of the property at 400 Aviation Boulevard in Santa Rosa for $49,500,000, from current owner American AgCredit FLCA, pursuant to that certain Purchase and Sale Agreement between the County and owner dated September 15, 2025, contingent on all remaining contingencies and conditions being satisfied as set forth therein.
B) Authorize the Director of Public Infrastructure to prepare and execute all necessary and related transactional documents and to take all necessary actions to facilitate the acquisition and proceed to close escrow on the subject property, including without limitation, executing escrow instructions, tax related forms, bill of sale, assignment of warranties, certificate of acceptance to title for the property, originals of all exhibits to the Purchase and Sale Agreement, and similar instruments and documents, all in a form approved by County Counsel.
C) Adopt a Reimbursement Resolution, pursuant to U.S. Treasury Regulations Section 1.150-2, declaring the County’s intent to preserve the option to reimburse itself for costs associated with the acquisition and improvements of 400 Aviation Boulevard through the future issuance of tax-exempt Certificates of Participation, subject to separate Board approval of any future financing.
end
Executive Summary:
The Director of Public Infrastructure requests Board authorization to post the Notice of Intent to Purchase 400 Aviation Boulevard, Santa Rosa, CA (APN: 059-350-112), pursuant to California Government Code section 25350, and to execute the Purchase and Sale Agreement for $49,500,000. The property consists of a 7.65-acre parcel containing an approximately 132,000 gross square foot, 3-story, steel-frame, fully furnished Class A office building completed in 2016. The County currently leases 73,036 rentable square feet in the building for Sonoma County Public Infrastructure and Regional Parks at an annual rent of approximately $2.05 million. One private tenant occupies 9,266 rentable square feet and approximately 30,207 rentable square feet is currently vacant.
Acquisition of 400 Aviation would convert a major existing County lease into a long-term County-owned facility and provide capacity for additional departments as space becomes available. Staff have identified the property as a location for a modern Emergency Operations Center (EOC), along with relocation of the County’s data center operations, while also supporting future consolidation of other County functions. These uses could reduce the amount of new space required in the County Government Center project and avoid or defer other significant facility investments. The proposed acquisition supports the Board’s Resilient Infrastructure and Climate Action and Resiliency strategic pillar.
Government Code section 25350 requires Board approval and publication of a notice of intent before a county may complete the purchase of real property valued at more than $50,000. Publication occurred pursuant to the Board’s September 15 action authorizing the publication of the notice of intent to purchase the property.
Discussion:
Background
The existing County Administration Center site, designed in the 1950's, has been serving the community for more than 70 years with few improvements over time. The cost of operating the campus buildings has grown as facilities have aged, and deferred maintenance obligations also have increased over time.
The County Administration Center site represents 470,456 square feet of office space, not including the detention facility and the Sheriff’s buildings. The County’s real estate portfolio is diverse, with over two million square feet of owned and leased facilities and over 170 structures. However, because of the inefficiency of the portfolio, departments have leased market-rate commercial offices in order to meet their space needs. The County commissioned reports to study opportunities for more efficient management of the County’s real estate portfolio in 2007 and 2013.
The cost of operating the property portfolio has grown and, as facilities age, so do the deferred maintenance obligations. On May 8, 2018, your Board accepted a “Report on Solutions for Addressing the Growing County Government Center Administrative Building Maintenance Costs.” The report indicated that budget cuts between 2007-2011 resulted in postponement of regular preventative maintenance for several years, increasing the County’s deferred maintenance backlog and causing county buildings and systems to deteriorate. The existing County Government Center campus buildings deferred maintenance backlog was $258 million in FY 2016-17 and costs were projected to grow to over $650 million by FY 2035-36. The report considered various options for constructing and financing new facilities or catching up on deferred maintenance. The report ultimately concluded that new construction would be the most effective way to address the County’s growing backlog of deferred maintenance and provide long-term value to the public as the cost per square foot for refurbishing/replacement was higher than the estimated cost of new construction at the time.
In January 2023, the Board directed staff to conduct further analysis and other planning, feasibility, and development plan efforts, and conduct environmental review on utilizing the existing County Administration Center site as the location for a proposed new County Government Center. Work continues on the development and planning of a proposed new County Government Center.
In July 2024, the Board supported a broader facilities strategy of evaluating existing buildings for acquisition when doing so could reduce future development costs, provide greater certainty in meeting departmental space needs, and reduce the size and complexity of the proposed County Government Center. Staff regularly review available properties against County operational, location, condition, parking, and space criteria. The County became aware of two opportunities, 400 Aviation and 3850/3880 Brickway Blvd to lease and purchase office buildings that could reduce the size cost of the County Government Center. The Board authorized the purchase of the Brickway campus in 2025 for $32 million; the Registrar of Voters moved there in early 2026, and Permit Sonoma, the Auditor, Treasurer Tax Collector, and the Clerk Recorder Assessor are expected to move in during 2026 -2027.
The acquisition of 400 Aviation, when paired with the Brickway Campus and County Government Center Project, would house 1,500 employees and an Emergency Operations Center in new modern facilities. This would significantly decrease the deferred maintenance backlog on existing county facilities around the county campus and save approximately $300,000 in leasing costs by moving departments out of leased facilities and into a County owned building.
400 Aviation
The Board approved a seven-year lease with American AgCredit for 400 Aviation Boulevard in February 2024. The lease covers 73,036 rentable square feet of fully furnished Class A office space and included an option to purchase the property for $56.1 million. The lease commenced in August 2024, and Sonoma County Public Infrastructure and Regional Parks relocated to the building, consolidating operations that had previously been located at the County campus.
The County completed extensive due diligence on 400 Aviation in early 2025. That work included a Facility Condition Assessment prepared by Kitchell, which rated the building “Grade A,” the assessment’s highest condition rating. The building was constructed as a high-quality headquarters facility and includes flexible interior systems, modern building infrastructure, substantial parking, emergency power capability, and technology infrastructure that can support County operations.
The County exercised the original purchase option in October 2024 and entered into a Purchase and Sale Agreement at $56.1 million. After completing due diligence and reviewing valuation and fiscal considerations, the County did not complete that acquisition, and the prior purchase agreement was terminated. The County continued to occupy the property under its lease.
In February 2026, American AgCredit returned with a revised purchase price of $52 million, consisting of a $44 million value for the real property based on an updated appraisal commissioned by the Seller, plus furniture, fixtures, equipment, and technology. In August 2026, following further negotiations, the parties reached a proposed purchase price of $49.5 million for the fully furnished property. The proposed price is $6.6 million below the County’s original $56.1 million purchase option.
The acquisition would provide the County with additional space beyond its current leased premises. One private tenant, Friedemann, Goldberg, Wargo, Hess (FRIGO Law), occupies 9,266 rentable square feet under a lease extending through July 31, 2032, and approximately 30,207 rentable square feet is currently vacant and available for immediate occupancy. The County would receive the existing tenant’s rent and could phase occupancy of the remaining space as departmental needs and tenant availability allow.
Over the last several months, staff has evaluated potential future use of 400 Aviation as part of the County’s broader facilities plan. Using existing County space standards, the building will support approximately 400 full-time employees. Departments that are planned to join Sonoma Public Infrastructure and Regional Parks in this facility are the Department of Emergency Management, Human Resources, Information Systems Department along with other smaller departments currently in leased space. The Department of Emergency Management has identified the building as well suited for departmental offices and a modern Emergency Operations Center. The property’s emergency generator, uninterrupted power capability, on-site well, and modern building systems provide resiliency advantages for continuity of operations. A standalone replacement Emergency Operations Center had previously been estimated at approximately $54 million in 2023. The Information Systems Department has also identified the building’s existing data infrastructure as a potential long-term technology hub offsetting an estimate $20 million cost of constructing a new data center.
Locating additional departments at 400 Aviation would also reduce the amount of new office space required in the proposed County Government Center. Current planning indicates that occupancy in 400 Aviation could reduce the CGC program by approximately 30,000 square feet and reducing estimated CGC construction costs by approximately $35-$40 million. The final CGC plans and cost remain subject to final programming and Board approval. Staff currently estimates that up to approximately $22.9 million may be needed over time at 400 Aviation for all tenant improvements, technology, furniture, equipment, and relocation to fully utilize 400 Aviation. Funding for these tenant improvements will come from current County Modernization Fund Balance and future General Fund allocation to the County Modernization Fund. Funding will be appropriated in future Board Items or Consolidated Budget Adjustments.
Cost Avoidance
If the County did not acquire Aviation and continued to lease space at Aviation or another facility for approximately the same cost with a 3% annual inflator, then it would cost $32 million for the next 10 years. Constructing a new Emergency Operation Center and data center would cost an estimated $74 million if constructed today. The cost of the proposed County Government Center would also be reduced by $35-$40 million. Combined, the acquisition of 400 Aviation for $49.5 million and tenant improvements of $22.9 million results in a net savings of $68.6.5-73.6.5 million, eliminates the need to construct a new EOC and Data Center, and reduces both the footprint and cost of the proposed CGC.
Purchase and Sale Agreement (PSA)
The proposed PSA contains the following key provisions:
1. Property: 7.65-acre parcel with an approximately 132,000 gross square foot office building and 396 on-site parking spaces.
2. Purchase Price: $49,500,000; no financing contingency.
3. Earnest Money Deposit: $5,000,000, fully refundable prior to final Board approval of the purchase.
Project Costs and Construction Schedule:
Category Budget Notes
Purchase Price $49,500,000
Initial Deposit (Refundable) $5,000,000 Deposit
Closing Expenses $45,000
Within 10 business days of execution of the Purchase and Sale Agreement, the County would place a $5,000,000 refundable earnest money deposit into escrow. Because the County previously completed due diligence on the property, staff anticipates returning to the Board within approximately 30 days for consideration of final acquisition approval. Close of escrow would occur only after final Board approval.
Funding
The requested $5,000,000 refundable earnest money deposit will be funded from the County Center Modernization Fund. The Fund currently has an estimated available fund balance of approximately $72.9 million.
Staff recommends purchasing 400 Aviation with County Center Modernization Fund cash while preserving the County’s ability to reimburse the County Center Modernization Fund through a future issuance of tax-exempt Certificates of Participation (COPs). To preserve this financing option, Staff recommends that the Board adopt a reimbursement resolution prior to closing the transaction.
Under U.S. Treasury Regulations Section 1.150-2, an issuer that may later use tax-exempt financing proceeds to reimburse itself for project expenditures must formally declare that intent. The reimbursement resolution satisfies this requirement by generally describing the project and stating the maximum amount expected to be financed. Adoption of the resolution does not authorize the issuance of COPs or otherwise commit or obligate the County to issue debt. Any future COP issuance would require separate Board approval.
If the County elects to pursue COP financing, the COP issuance and reimbursement of the County Center Modernization Fund generally must be completed no later than 18 months after the later of (a) the date the asset is purchased or (b) the date the asset is placed in service, and in no event later than three years after the date of purchase.
COPs are a form of tax-exempt lease financing commonly used to finance public infrastructure. If COP financing is approved at a later date, a County-owned facility would be identified and pledged as the leased asset supporting the financing. 400 Aviation itself could serve as the pledged asset. COPs may also provide for substitution of the pledged asset and, depending on the financing terms, early redemption after 10 years. Any future issuance would be coordinated with the County’s municipal advisor and would be issued through a public sale.
At its September 25, 2025, meeting, the County’s Debt Advisory Committee recommended COP financing as the appropriate financing mechanism for the acquisition of 400 Aviation. Purchasing the property with cash and adopting the reimbursement resolution allows the County to complete the acquisition without committing to long-term financing now, while preserving the option to subsequently reimburse the County Center Modernization Fund with tax-exempt COP proceeds within the applicable federal time limits.
Based on current estimates, a future COP issuance to reimburse the County Center Modernization Fund for $49.5 million of acquisition costs, assuming a 20-year term and a true interest cost of 3.86% consistent with current “AA” rated market spreads, would result in average annual debt service of approximately $3.4 million and total payments of approximately $68.3 million over the 20-year term. Actual debt service would depend on market conditions at the time the COPs are issued.
Appraisals
The appraisal history for the 400 Aviation Boulevard property began on November 1, 2024, when the County retained Ward Levy to prepare an appraisal of the building. Ward Levy delivered its appraisal on December 6, 2024, concluding values of $88.5 million under the Cost Approach, $37.7 million under the Sales Comparison Approach, and $33.8 million under the Income Capitalization Approach. On December 17, 2024, JLL was retained to conduct a peer review of the Ward Levy appraisal to evaluate how reasonable its approach to both analysis and support of the conclusion. On December 27, 2024, JLL delivered its peer review of the Ward Levy appraisal determining that there were an adequate analysis and relevant data to support the appraised value. Subsequently, on February 26, 2026, the seller provided the County with an appraisal prepared by Forrest Bailey, dated November 11, 2025, which concluded values of $90.0 million under the Cost Approach, $46.3 million under the Sales Comparison Approach, and $41.5 million under the Income Capitalization Approach.
As a follow-up from the September 15 Board Meeting, the County contracted with a firm to conduct a new appraisal of 400 Aviation. Once available that appraisal will be shared with the Board and public. The appraisal report will show three different approaches, Sales Comparison, Income Capitalization, and Cost, to determine the value of the building. The three different approaches are described below for a general understanding and interpretation of the appraisal report.
The Sales Comparison Approach estimates value by analyzing recent sales of similar properties and adjusting for differences between the comparable properties and the subject property. The Income Capitalization Approach estimates value based on the property’s ability to generate income, using factors such as net operating income, capitalization rates, and projected cash flows. The Cost Approach estimates value based on the current cost to replace or reproduce the improvements, less applicable depreciation, plus the value of the underlying land.
Given the county’s intent is to purchase this building instead of constructing a new office space, staff believe the cost approach is the most appropriate comparison tool. Given the absence of comparable sales, the sales approach provides limited value. The income capitalization approach is not an appropriate tool given the county’s intended use.
Strategic Plan:
This item directly supports the County’s Five-year Strategic Plan and is aligned with the following pillar, goal, and objective.
Pillar: Resilient Infrastructure
Goal: Goal 1: Invest in County buildings and technology to enhance service delivery and improve employee mobility
Objective: Objective 1: Align the Board of Supervisor’s strategic priorities, policy, and operational goals with funding and resources. Pillar: Climate Action and Resiliency Goal: Goal 3: Make all County facilities carbon free, zero waste and resilient Objective: Objective 1: Design or retrofit County facilities to be carbon neutral, zero waste and incorporate resilient construction techniques and materials. Objective 3: Invest in County owned facilities, establishing carbon eliminating microgrid technology and improving energy grid resilience to reduce the impact of power loss during power shutdowns and natural disasters (floods, fires, earthquakes), prioritizing critical infrastructure such as command and communications facilities.
Pillar: Climate Action and Resiliency
Goal 3: Make all County facilities carbon free, zero waste and resilient
Objective 1: Design or retrofit County facilities to be carbon neutral, zero waste and incorporate resilient construction techniques and materials.
Objective 3: Invest in County owned facilities, establishing carbon eliminating microgrid technology and improving energy grid resilience to reduce the impact of power loss during power shutdowns and natural disasters (floods, fires, earthquakes), prioritizing critical infrastructure such as command and communications facilities.
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
No
Prior Board Actions:
09/15/26 - Authorize execution of Purchase and Sale Agreement and declare intent to purchase property
02/27/24 - Authorize Public Infrastructure Director to execute Lease
01/30/24 - Declare intent to enter into Lease
Fiscal Summary
|
Expenditures |
FY26-27 Adopted |
FY27-28 Projected |
FY28-29 Projected |
|
Budgeted Expenses |
$49,545,000 |
|
|
|
Additional Appropriation Requested |
|
|
|
|
Total Expenditures |
$49,545,000 |
|
|
|
Funding Sources |
|
|
|
|
General Fund/WA GF |
|
|
|
|
State/Federal |
|
|
|
|
Fees/Other |
|
|
|
|
Use of Fund Balance |
$49,545,000 |
|
|
|
General Fund Contingencies |
|
|
|
|
Total Sources |
$49,545,000 |
|
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Narrative Explanation of Fiscal Impacts:
SPI staff requested increasing appropriations by $49,545,000 with the previous Board Item on September 15th by $49,500,000 for the purchase price and an estimated $45,000 in closing costs associated. Fund balance from the County Center Modernization Fund (23027-40803600) is covering the expenses associated with the acquisition, which was originally established to fund tenant improvements and moving expenses associated with the lease/purchase agreement approved by the Board on February 27, 2024. The County Center Modernization Fund currently has an estimated available fund balance of approximately $72.9 million.
Narrative Explanation of Staffing Impacts (If Required):
None.
Attachments:
1 - Resolution
2 - Purchase and Sale Agreement between County of Sonoma as Buyer and AmericanAgCredit FLCA as Seller
3 - Presentation
Related Items “On File” with the Clerk of the Board:
Lease Agreement between County of Sonoma as Tenant and American AgCredit FLCA as Landlord