The former headquarters of Tesla Motors could soon be filled with San Mateo County employees if supervisors approve a $40 million purchase of the large complex Tuesday.
Supervisors will consider dipping into the county’s reserves to buy two vacant buildings totaling 208,000 square feet at 1 and 2 Circle Star Way.
The approval for the large purchase is scheduled for the same day the officials will begin tackling a projected $82 million deficit in the 2011-12 fiscal year.
Despite the grim budget situation, officials say buying office space will allow the county to save money in the long run on rent by moving employees from leased buildings to the San Carlos campus.
“I think given some of the financial challenges we’re facing, this may be a very good investment,” said Board of Supervisors President Carole Groom.
Employees from the Health System and Human Services Agency would likely be moved from leased offices into the San Carlos complex, which Tesla occupied before moving its headquarters to Palo Alto last year, officials said.
The county expects to use $40 million from its roughly $220 million reserve fund to complete the purchase by March 10.
Eventually, the county plans to issue bonds to reimburse the reserve fund, said Real Property Manager Steve Alms.
Officials believe it will take about seven years for the “break even” point where the cost of financing the San Carlos purchase will equal what the county is paying today in rent for about 143,000 square feet of leased space, Alms said.
The purchase would be one of several big recent real estate moves for the county, which recently bought a $17 million Redwood City site for a new jail that will also cost an estimated $150 million to build.
Still, Alms said the San Carlos purchase is “opportunity-driven,” given that the complex sold five years ago for $63 million. He said a recent consultant’s study of county facilities recommended the county shift from leases to owned property.
“Given that this is a down point in the market, and there are opportunities out there that haven’t existed before and probably won’t again, we’re trying to strike while the iron’s hot,” Alms said.