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Citrus Heights council approves relocating city hall to make way for medical office building

A three-story, 68,727-square-foot medical office building for Dignity Health is proposed for construction on Citrus Heights’ current civic center site at Greenback Lane and Fountain Square Drive.
A three-story, 68,727-square-foot medical office building for Dignity Health is proposed for construction on Citrus Heights’ current civic center site at Greenback Lane and Fountain Square Drive. Dignity Health

A $53.2 million project to relocate Citrus Heights’ city hall and construct a medical office building on the current civic center site won unanimous approval from the City Council following a more than three-hour hearing Thursday night.

The project, one of the most divisive since the city incorporated in 1997, continued to draw opposition from various quarters. Norman Hill, a spokesman for the group Preserve Our Civic Center, said following the council vote that the group is prepared to file a lawsuit over the the adequacy of the environmental study for the project.

But council members said the deal, which would provide a source of revenue for a new city hall while bringing a non-retail business to the community, was too good to pass up. Citrus Heights has limited opportunity for growth, so “we have to think outside the box about how to get businesses to want to come to the city,” said Mayor Sue Frost.

Under the plan approved by the council, all buildings except the police department on the current civic center site at Greenback Lane and Fountain Square Drive will be demolished and replaced with a $31.2 million three-story medical office building constructed by Panattoni Development Co. for Dignity Health. Under terms of a ground lease, Dignity Health will pay $6.9 million over 15 years, with the option to purchase the property for $1 at the end of that period.

The lease revenue, city officials say, will go toward constructing a new city hall building on a 10.9-acre parcel at Fountain Square Drive and Stock Ranch Road, down the street from the current civic center. The parcel is owned by Rancho Cordova-based Capital Partners Development Co., which will construct the 35,000-square foot, $22 million city hall building.

Following execution of a ground lease with Capital Partners, the city will make lease payments totaling $7.6 million. Once the building is constructed and occupied, the city will have the option to purchase it from Capital Partners for $14.4 million or make lease payments over a 30-year term.

Brian Ivie, president and CEO of Dignity Health’s Mercy San Juan Medical Center, said construction of the medical office building is expected to begin in September with demolition of the current civic center buildings, and the new building is expected to be completed within 18 months.

City offices will have to be temporarily relocated until the new city hall is built. City staff members said several buildings are available within the city and they expect to be able to house all employees at one site.

Opponents generally agreed that the project approved by the council Thursday was an improvement over two earlier versions. The first had called for both the medical office building and a new city hall to be constructed on the civic center site, while the second would have relocated city hall to a city-owned parcel on Antelope Road in a largely residential area.

Members of Preserve Our Civic Center urged a compromise, recommending that the medical office building be reduced to two stories, its footprint expanded and moved farther back from Greenback Lane to lessen the visual effect on Greenback Lane and nearby residential areas. But Dignity Health officials said a two-story structure would affect functional aspects of the building and would not allow for the required number of parking spaces.

The project received support from business groups, including the Citrus Heights Chamber of Commerce and Sunrise MarketPlace business improvement district, which see it as an opportunity to diversify the city’s economy. The medical offices are expected to provide 170 jobs, increasing the customer base for local retail businesses and possibly drawing medical-related businesses to the community.

Those opposed to the project cited various reasons. Some argued that a new city hall is not needed and that the city should renovate the existing buildings. Others said a new city hall is needed, but they would prefer to see it built on the current civic center site. They also have issues with the increased traffic and noise they believe the medical office building will generate.

Call The Bee’s Cathy Locke, (916) 321-5287.

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