Project advances for Arroyo Grande Village

The Arroyo Grande City Council decided to move ahead on a project that would add commercial development to the Village, increase city facilities and create an area to recognize the city’s centennial in 2011.

With Councilman Chuck Fellows dissenting, the council voted 4-1 late Tuesday night to proceed on three conditions: that Councilmen Jim Guthrie and Ed Arnold meet with City Manager Steve Adams to recommend whether to sell, lease or maintain the current City Hall building; that the council agree on how to fund the acquisition of the former Farm Credit building at 300 E. Branch St., which would be used for city facilities; and that the city analyze its staff and operational needs at both buildings.

Guthrie expressed concern at the meeting that the existing city facilities are deficient and said he believes the city could fit its current staff into the Farm Credit building.

Guthrie also wants the council to consider other ways to pay for that building rather than using sales tax revenue.

Under the current proposal, the city would pay about $1.2 million for the building at 300 E. Branch St., which Adams said the city proposes to pay for with a low-interest federal loan. The annual cost to the city is expected to be about $78,000 for a 30-year term, of which $58,000 would be funded by local sales tax revenue.

Guthrie said he’d prefer the money came out of the city’s general fund.

However, Adams said, the city faces a projected $600,000 shortfall to its $13.8 million budget in the 2010-11 fiscal year.

The council has scheduled a special meeting at 6 p.m. on March 29 to discuss those conditions.

Under the plan, San Luis Obispo-based NKT Commercial would sell the city the former Farm Credit building at 300 E. Branch St. in exchange for the Conrad House, the 1950s-era city Building Department office and the parking lot between the buildings.

The Conrad House would be restored, and NKT Commercial would construct a 5,700-square-foot commercial building in the area of the current parking lot and 200 E. Branch St.

Short Street would be made one-way and realigned, adding $30,000 to $50,000 to the cost of the project, depending on the design.

That money would come from local sales tax revenue currently budgeted for City Hall improvements, Adams said.

Reach Cynthia Lambert at 781-7929. Stay updated on Twitter by following @SouthCountyBeat.