Loading...
HomeMy WebLinkAbout04 CITY COUNCIL CONSIDERATION AND APPROVAL TO RELEASE A COMPETITIVE OFFERING FOR THE SOUTH HANGARDocusign Envelope ID: 925292DA-3C22-836C-81C8-1E9AE2ED9AFC MEETING DATE TO FROM Agenda Item 4 AGENDA REPORT Reviewed: City Manager Q`�S Finance Director N/A JULY 21, 2026 ALDO E. SCHINDLER, CITY MANAGER BRIAN MONCRIEF, DEPUTY CITY MANAGER — REAL PROPERTY SUBJECT: CITY COUNCIL CONSIDERATION AND APPROVAL TO RELEASE A COMPETITIVE OFFERING FOR THE SOUTH HANGAR SUMMARY: City Council consideration and approval to prepare and release a competitive offering for the South Hangar pursuant to the procedures established by the City Council in Resolution No. 25-10. RECOMMENDATION: It is recommended that the City Council take the following actions: 1. Authorize staff to prepare and release a competitive offering for the South Hangar and portions of the surrounding leased property pursuant Resolution No. 25-10. FISCAL IMPACT: There is no fiscal impact associated with this item. CORRELATION TO THE STRATEGIC PLAN: The consideration and approval to prepare and release a competitive offering for the South Hangar contributes to the fulfillment of the City's Strategic Plan Goal A: Economic and Neighborhood Development. Specifically, this item implements Strategy 1, which is to develop critical phases of Tustin Legacy. BACKGROUND AND DISCUSSION: The South Hangar remains one of the most recognizable and historically significant structures within Tustin Legacy. Constructed in 1942 as part of the Navy's lighter -than -air program during World War II, the structure continues to serve as an iconic symbol of the area's military heritage. The South Hangar structure stands at approximately 180 feet tall by 300 feet wide by 1,000 feet long, and is currently owned by the United States Navy. Pursuant Docusign Envelope ID: 925292DA-3C22-836C-81C8-1E9AE2ED9AFC City Council Agenda Report Tustin Legacy South Hangar Offering Approval July 21, 2026 Page 2 to a long-term lease agreement, the City leases and manages the structure and portions of the surrounding property pending completion of environmental remediation activities. The South Hangar and surrounding property (Site) under lease totals approximately 32 acres and is currently identified as Assessor's Parcel Number430-371-32, as shown on Attachment 1. The Site is generally bounded by: Moffett Drive to the north, Warner Avenue to the south, Armstrong Avenue to the east, and Tustin Ranch Road to the west. Existing Site Conditions The South Hangar is currently utilized on a limited basis for airship storage and maintenance operations. A previous evaluation by Page & Turnbull, a historic architecture and preservation consultant, identified a need for life -safety repairs, including potential hazards such as debris falling from the ceiling, as well as a range of conceptual improvement scenarios for the structure. Those scenarios currently range from approximately $22.6 million for baseline structural stabilization necessary to support continued airship maintenance operations, to approximately $203 million and $271 million for rehabilitation and broader adaptive reuse opportunities, respectively. As a separate initiative to document the iconic structure, the South Hangar has been comprehensively digitally preserved using a variety of advanced documentation methods. Access to these digital assets, including 3D models, virtual access, and other supporting documentation, will be provided through the secure document center made available to prospective proposers during the offering process. Following the November 2023 Navy North Hangar fire, the City implemented significant security and fire prevention measures, including 24-hour security personnel, security perimeter fencing, lighting, surveillance cameras, and improved emergency access intended to reduce risk to the remaining structure and protect the surrounding community. Although these measures have substantially improved site security, the existing structural and life - safety conditions continue to limit the South Hangar's operational capability. The ongoing cost of operations and security measures currently exceeds approximately $1 million annually, and absent significant investment or a viable reuse strategy, opportunities to expand use of the hangar will remain limited while the cost of maintaining the status quo is expected to continue rising. On June 2, 2026, the City Council received the Tustin Legacy Outreach and Engagement Report and, as recommended by staff, the City Council directed staff to initiate a competitive offering process for the South Hangar to solicit prospective users and investment interest while also developing contingency options should no viable reuse proposal ultimately be identified. The competitive offering is intended to provide the development community with information regarding the South Hangar's historic significance, long-term operational costs, current structural and utility limitations, and unique ownership considerations to facilitate an informed evaluation of the Site and gauge market interest. Responses to the offering will assist the City in evaluating opportunities to: Docusign Envelope ID: 925292DA-3C22-836C-81C8-1E9AE2ED9AFC City Council Agenda Report Tustin Legacy South Hangar Offering Approval July 21, 2026 Page 3 • Identify qualified organizations interested in preserving, operating, or adaptively reusing the South Hangar; • Evaluate potential public -private investment opportunities; • Determine the financial and operational feasibility of proposed concepts; • Identify opportunities to reduce long-term public maintenance and operational costs; • Support future historic preservation efforts where feasible; and • Inform future City Council consideration regarding the long-term future of the South Hangar. The Site is located within Neighborhood D (Planning Area 8, 13 & 14) of the Tustin Legacy Specific Plan (TLSP) and is designated as Mixed -Use Urban. Current allowable land uses include but are not limited to: commercial retail, commercial entertainment, residential, hotel, and public recreation. The applicable land use plan is included as Attachment 2. If a proposal for the Site includes land uses not currently permitted under the applicable Specific Plan or zoning designation, it would be subject to future City Council consideration and approval of the necessary land use entitlements, including any applicable Specific Plan amendment. Proposals may be limited to the South Hangar structure only or may also include additional adjacent land to optimize future development, operational access, infrastructure improvements, or other planning considerations. Additionally, under the long-term lease agreement with the Navy, the Surplus Land Act (SLA) does not currently apply to the Site. Pursuant to Government Code section 54221(b)(1) the SLA only applies to land owned in fee simple by the local agency. Here, the City is the lessee of the land and would be looking at a potential sublease relationship. Consequently, the SLA does not apply to this proposed transaction. If, however, in the future the City becomes the fee simple owner of the Site and the City wanted to enter into a new lease, extend the term of an existing lease or sell the Site, the City will need to comply with the SLA at that time. Offering Authorization On February 4, 2025, the City Council adopted Resolution No. 25-10 establishing a policy requiring City Council consideration and approval prior to the release of future competitive offerings involving the disposition of the City's real property. Pursuant to Resolution No. 25- 10, staff is requesting authorization to prepare and release a competitive offering for the South Hangar. Following City Council approval of the offering authorization, key milestones are listed below: • September 2026: return to the City Council with recommendations to select a qualified real estate brokerage firm to market the competitive offering; Docusign Envelope ID: 925292DA-3C22-836C-81C8-1E9AE2ED9AFC City Council Agenda Report Tustin Legacy South Hangar Offering Approval July 21, 2026 Page 4 • November 2026—December 2026: finalize and release the competitive offering; • First Quarter 2027: evaluate submitted proposals; and • Second Quarter 2027: return to the City Council with recommendations regarding potential next steps. Jason Loya Senior Management Analyst Attachments: 1. Parcel Map 430-37 2. Tustin Legacy Specific Plan land use plan 3. Aerial Exhibit (LIFOC) Docusign Envelope ID: 925292DA-3C22-836C-81C8-1E9AE2ED9AFC L v mill- V V THIS MAP WAS PREPARED FOR ORANGE LOT fffff 64 0.670 AC. pOR. LOT FFFFFO 2.345 AC. ? 59,27' COUNTY ASSESSOR DEPT. PURPOSES ONLY. 33.40' 462.86 310.7T' 63 432.06 B.,� LOT 0 b THE ASSESSOR MAKES NO GUARANTEE AS TO i 75.36' 35.33 222 ITS ACCURACY NOR ASSUMES ANY LIABILITY TRACT LOT 57 62 "^" /l FOR OTHERIGHR USES. NOT TO BE REPRODUCED. s f.847 AC. LOT 52 LOT 53 24 es °- ©COPYRIGHT ORANGE COUNTY ASSESSOR 2018 O e 18 23 - 4.710AC. B 6 / _----��� po 55,. RO 5.240 AC. 3.848 AC. e LOT 56 z ' 9' ;e'6• / / / 66 LOT DDDDD 412't 25 / 38 / 5 0.349 AC. / 97.45' 220.22 LOT CCCCC LOT 54 22 31.94' 1.933 AC. ` / a '43637 65 0.527 AC. 316.66' 0.013 AC. 55'36 310.68' 123.4 ryj�b9 +S6° / S95j L `9�6 160. 64 267.33 1B2.3B 175.57'35.36' 67 1 311- 310.68 21.48' 0.83'6 LOT D V� LOT 26' 180.45' LOT BBBBB zza. 28 68 0. 121 AC. 67 21•g2 21 LOT 49 LOT 55 61 m Vp 27 0. 150 AC 19 LOT 51 26 5.966 AC. 26.392 AC. . �� 0.220 AC. 7.387 AC. �1.859 AC. .° 63, q5. LOT 50 ti ' ss 0, -70.38' fD.8f7 AC. 37.73' 292.96 5+31B LOT 25 76.66' 35.99' 4 33.40' /B' van. �14.33' `362' q4t. _ " n '•z 38 93' 60 88.57 29 PDR. LOT 27 0.311 AC. ,36.66 0� b`1' b 56 3.209 AC. 3z 50'mO,o,s POR. �e., 3992' S'h'�, SO 28.65' Q 44.90'e- 37 'a'P.M. +. LOT 28 B 37.49, NER 2. 184 AC. LOT 40 Q 40.z3' 378-1 i 106.1 14 . �pR 1.668 AC. 30 J-3s.23' J ;5,20.077 AC. POR. LOT 27 LOT B O B 31 0.030 AC. 206.35 57 4 9g+•bj P. M. 378 - 1 � .a 69.29 " 59 6• 3. 011 AC. / '�_.�. b q` '' 32 60 LOT 3A 2.466 AC. do `b of 3B6. A6' 9•BS 0.019 AC. zy4`. 0.655 AC. ` 9ed f LOT 39 ' 4.624 AC. LOT 48 w POR. 40•�, P 355.96 9.85' V \ /� ° POR. LOTzz. N Q M 40 LOT C o5 XXXX LOT E = V \ 79 /� LOT 28 6, 23 6 Pb' '9B `� 55 0. '60 AC. N 2.530 AC. " 77 �' f 31.50' v 11. 126\AC. /p 33 LOT 47 z1.2r LOT 4f 12.66' \ /� 3 0.351 58 46 7.248 AC. T ' LOT 38 \ / LOT 29 AC. 7. 135 AC. z1.z1' eti �+3> 47 ' 3.715 AC. , B- oti 9 a>5 LOT AC 54 -21 qti 5a y-� B /�0 3� 8.941 AC. pz8 a LOT 45 42 ',. ,�: siB 946 `�• ^q�?�^•� LO s '4" �j'/ F. 179 AC. LOT 42 AC. as b��5 53 RR Q P. M. 378 - 1 �p\` m 41 LOT 46 ti 45 '�8.� ° °�2a� 78 3B° Z 5a• O POR. e- LOT ti G �13,v .323 AC 2.930 AC. LOT RRRR 76 09 c. °30 4 3 '2B ; 1.935 AC. AC. s 3 74 0. 73 J 6 rya. 'o. �GF 9e 3y L 0 T ZZZZ �� LOT 43 LOT 37 0.949 AC. 48 JN P LOT 31 ' G�\� LOT N qq z1.zr 6.695 AC. Q " 50 33 .11 v 3.018 AC. 1. B6 1.505 A5.2� LOT M 52 / c9•�6 v > ba L 5132 5 16-iiP 0.046 AC. 964\�o9�p�O9k \ Q� 4.515 AC. / \ Q a, �0• NOTE - ASSESSOR'S BLOCK & PARCEL NUMBERS .17404 SHOWN IN CIRCLES 73 �399 C VV 0J� TRACT NO. 17404 M.M. 907-6 to 42 incl. ASSESSOR'S MAP BOOK 430 PAGE 37 COUNTY OF ORANGE m 430-3 7 7 = JUL/ 4Yq qF..-9 * PRIVATE STREET Docusign Envelope ID: 925292DA-3C22-836C-81C8-1E9AE2ED9AFC Section 2 Figure 2-:L Land Use Plan rusriw LEGACY SPECIFIC PLAN EGEND Tustin City Limit -- — Specific Plan Boundary Mixed -Use Transit Mixed -Use Urban Commercial Commercial j Business Residential Park Tustin Legacy Park Overlay TransitionaljEmergency Housing Education Village Existing R.O.W. ® Proposed R.O.W. Planning Area South Hangar Site k 1°-1.600' 800' 1.600' 2-4 City of Tustin Docusign Envelope ID: 925292DA-3C22-836C-81 C8-11 E9AE2ED9AFC 'w"I A L51 )AS A011 I .11 J-1111111; 'I. jL JH1 P` ik , PIK - - - - - - - - - - - - ......... EDINGERA r ------- — — — — — — — — — — — — — — — ir — — — r VALENCIA AVENUE SPA MOFFETT DRIVE S 0 r WARNER AVENUE ♦ 4 rye, I WARNERAVENUE ' 0, 0 J 0 ccl 01 co L,J L — — V — — — — — — —-777rr————————— L-— — — — OA BARACA PARKWAY W AN&J4F LEGEND LIFOC CARVE OUTS �,P 161s TUSTIN LEGACY CONTEXT I WE TUSTIN , CALIFORN + P A R T N E R S 1 .9.2025