Title
Old Sacramento Waterfront State Lands Commission General Lease-Public Agency Use
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FileID
File ID: 2026-00759
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Location
Location: Old Sacramento Waterfront, District 4
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Recommendation
Recommendation: Adopt a Resolution authorizing the City Manager or designee to: 1) execute a lease agreement with the California State Lands Commission for City's lease of tide and submerged land in the Sacramento River between J Street and Capitol Mall for a 35-year term; and 2) terminate City Agreement 86013 between the City of Sacramento and California State Lands Commission.
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Contact
Contact: Ellen Sullivan, Senior Development Project Manager, (916) 808-5758, eesullivan@cityofsacramento.org, Economic Development Department; Dustin Hollingsworth, Assistant Director, (916) 808-5538, djhollingsworth@cityofsacramento.org, Department of Convention and Cultural Services
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Presenter
Presenter: None
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Attachments
Attachments:
1-Description/Analysis
2-Waterfront Reinvestment Program Overall Project Site Plan
3-Resolution
4-Exhibit A General Lease-Public Agency Use
5-Quitclaim Termination of Master Lease
6-State Lands Commission Staff Report June 23, 2026
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Description/Analysis
IssueDetail
Issue Detail: On July 1, 1986, the City Council approved City Agreement 86013, a General Lease Public Agency Use (Master Lease) between the City of Sacramento (City) and State Lands Commission (SLC) for an area covering a portion of the Sacramento River in Old Sacramento between the I Street Bridge and Tower Bridge. The Master Lease has a 49-year term and expires on June 30, 2035. The lease has been amended three times to adjust the rent, the due date of annual reports, the expiration date of the Lease, and the language on assigning or subletting.
The City has subleases with several businesses that manage and operate tourist related services within the Master Lease area. The sublessees operate businesses that include waterfront dining, tour boats, and the permanently moored Delta King hotel and restaurant.
On November 19, 2024, City Council approved a Resolution #2024-0339 directing staff to proceed with implementation of the Waterfront Reinvestment Program. Phase 1 identified six key tourism improvements as essential capital investments for Old Sacramento: the Public Market Buildings, the Waterfront Site Redevelopment Opportunity, Boardwalk Replacement, K Street Barge Hull Repair, River Docks and Native American-Themed Children’s Play Area (Attachment 2). Phase 2 of the Waterfront Reinvestment Program involved continued redevelopment of City property on Front Street, including the full buildout of the Public Market Buildings. The approximate cost of the Phase 1 projects was $25 million to be paid by the issuance of bonds, secured by future Transient Occupancy Tax (TOT) revenues. Phase 2, was estimated to be an additional $15 million, paid by a second issuance of TOT bonds. After receiving Council direction, staff began working on the projects but encountered some significant challenges.
The Waterfront Site Redevelopment Opportunity, K Street Barge Hull Repair, and River Docks projects all fall within the boundary of the SLC leased area. The current Master Lease between the City and SLC expires June 30, 2035. With fewer than 10 years remaining in the lease term and a standard life for municipal bonds of 30-years there was not sufficient time left on the lease to cover the bonds. Staff was advised that bonding for waterside projects could not occur until a new lease with longer terms was secured. In August of 2025, the City submitted a request to terminate the existing lease and to simultaneously reissue a new lease.
On December 2, 2025, City Council approved a reimbursement resolution (R2025-0330) to allow reimbursement of Waterfront Project expenses from the future TOT bond issuance and directed staff to rephase the Waterfront Reinvestment Program with a focus on landside projects (Public Markets, Boardwalks, Children’s Play Area) while the lease with SLC was being reissued
City staff worked closely with SLC on developing a new lease based on the City’s planned investment and rehabilitation of the waterfront and were able to come to agreement in June. On June 23, 2026, the State Lands Commission approved the issuance of a new General Lease - Public Agency Use (General Lease) with a 35-year term. The new General Lease will allow the City to secure TOT bond funding for both land and waterside projects as directed by Council, permit the existing businesses to continue to operate, and will provide the City greater flexibility in securing new tenants.
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PolicyConsiderations
Policy Considerations: City Code Chapter 3.56 provides that City Council approval is required to enter into agreements over $250,000. The General Lease term of base rent is $867,755 over the 35-year term and the lease estimates $24,320 in reimbursement costs to SLC totaling $892,075, therefore, City Council approval is required.
Approval of the General Lease will further the visions, goals, and objectives of the 2035 General Plan, the 2003 Sacramento Riverfront Master Plan as approved by the cities of Sacramento and West Sacramento, and the Sacramento riverfront priorities set out by the Mayor and City Council. Further, the General Lease will ensure the long-term vibrancy and control of the City’s riverfront, a supporting asset that will aid the economic development efforts of the City, other civic organizations, and the private sector.
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EconomicImpacts
Economic Impacts: A vibrant Sacramento waterfront destination can have a significant, beneficial impact on Sacramento’s ability to 1) capture increased sales and transient occupancy tax revenues from new waterfront business, 2) encourage visitors’ choice of Sacramento as a leisure and convention destination, 3) market the region to new business relocations, and workforce attraction and retention, and 4) allow the City to continue public serving riverfront operations.
Further, the economic benefits of the General Lease will accrue to the entire Sacramento economy, but a concentrated benefit will also occur in the Old Sacramento Waterfront. An active and dynamic riverfront will increase visitor spending and demand, expand business revenue, and create new jobs, allowing for investment building infrastructure, new and improved businesses, amenities for residents, and serving as a catalyst for additional private infill development within an Opportunity Zone. The project will also support the underserved populations that have businesses within Old Sacramento by increasing visitation and activity in the area. The diverse businesses in Old Sacramento support businesses in other areas of the City by serving as the gateway and encouraging visitors to explore the larger City and its offerings.
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EnvironmentalConsiderations
Environmental Considerations: Pursuant to the California Environmental Quality Act (CEQA) the termination of the Master Lease and issuance of a General Lease for the Old Sacramento Waterfront with State Land Commission is exempt from CEQA pursuant to CEQA Guidelines Sections 15301 (Existing Facilities). The action consists of the operation, repair, maintenance, permitting, leasing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use.
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Sustainability
Sustainability: Not Applicable.
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Commission/Committee Action
Commission/Committee Action: Not Applicable.
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RationaleforRecommendation
Rationale for Recommendation: As one of seven National Historic Landmark Districts in California, the Old Sacramento Waterfront is the most historically significant attraction in Sacramento. It attracts over 4 million visitors a year and contributes to the almost 1 million annual overnight hotel stays within the City. However, it has not reached its potential as a tourism visitor attraction or marketing asset. The approval of the General Lease will ensure the City is able to secure TOT bond funding. Additionally, the General Lease allows the City to maintain control over the historic riverfront, which acts as a destination for locals, business and leisure visitors and will continue to provide a unique asset for marketing and Sacramento region.
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FinancialConsiderations
Financial Considerations: The current Master Lease requires the City pay SLC 20% of all income from subleases and license agreements in the leased area annually. In Fiscal Year 2025, the City paid SLC $109,647 and over the previous five-year period (between FY21 and FY25), the City received over $3,200,000 in rental income and made over $650,000 in payments to SLC, resulting in approximately $2,550,000 of income for the City. The new General Lease proposes a flat rate annual rent of $24,793 with an annual CPI adjustment and allows the State to modify the rental structure at ten-year intervals during the term of the lease. At the new annual rate, the City would be required to pay SLC $123,965 over five years, which could result in a significant increase in revenue for the City.
The new General Lease requires the City to retain an engineer who must create an inspection workplan for the facilities within the lease area within one year of the execution of the lease. The workplan will provide a timeline of inspections which must be completed within three years of the execution of the lease. The inspections may identify deficiencies or repairs that SLC may require the City to rectify at the City’s expense. Sufficient funding exists in the Old Sacramento Revitalization and Improvement Project (C15002100) for the engineer and associated workplan. A funding source has not been identified for the future repairs.
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LocalBusinessEnterprise
Local Business Enterprise (LBE): Not applicable.
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