Report Prepared by: Francisco Mendoza-Gonzalez, Economic Development Administrator, Economic Development Department
Title
SUBJECT: Authority to Negotiate a Purchase and Sale Agreement Regarding City-Owned Real Property at 626 W. Main Street (APN 031-134-025)
REPORT IN BRIEF
Staff is requesting authority from the City Council to negotiate a Purchase and Sale Agreement with Hopeton Properties, LLC, regarding the City-owned property at 626 W Main Street (APN 031-134-025) pursuant to a Request for Proposal bid.
RECOMMENDATION
City Council - Adopt a motion authorizing Staff to negotiate a Purchase and Sale Agreement with Hopeton Properties, LLC, for the City-owned property located at 626 W. Main Street; and directing staff to return the Purchase and Sale Agreement to the City Council for consideration at a future meeting.
Body
ALTERNATIVES
1. Select an alternative bid; or
2. Refer to staff for further consideration of specific items (specific items to be addressed in motion); or.
3. Continue to a future meeting (date and time to be specified in motion); or,
4. Deny
AUTHORITY
Merced City Charter, Section 200.
CITY COUNCIL PRIORITES
City of Merced FY 2026-2027 Budget, Section 7, Economic Development, Goals, “Coordinate real estate and infrastructure development that will assist in expanding and attracting new business investment and jobs.”
DISCUSSION
Background
The property at 626 West Main Street (APN 031-134-025) is an approximately 2,500-square-foot parcel located within downtown. This strip of land was intended to be used as a pedestrian access from the City-owned parking lot located on the north side of 16th St., between M St. and N St. The parcel was formerly held by the Successor Agency to the Redevelopment Agency of the City of Merced, a legacy entity established following the statewide dissolution of redevelopment agencies on February 1, 2012, under AB 1x 26.
On January 5, 2026, the Successor Agency-acting through the City Council-approved the transfer of the parcel to the City of Merced for a future development project (see Administrative Report #26-039 at Attachment 6). During the same meeting, the City Council voted 6-0 to initiate the disposition of the property for future development.
The parcel is designated Regional Community Commercial (RC) in the General Plan and is zoned Central Commercial (C-C). It was appraised at $55,000 and includes approximately 35 feet of street frontage with a depth of 70 feet, totaling approximately 2,500 square feet.
Pursuant to California Government Code § 54221(f)(1)(B), the subject site is exempt from the requirements of the Surplus Land Act. California Government Code Section 54221(f)(1)(B) defines exempt surplus land to include land that is less than one-half acre in area and is not contiguous to land owned by a state or local agency that is used for open-space or low-and moderate-income housing purposes. The subject meets these requirements and has an area of 0.057 acres. Per Government Code Section 54222, staff provided a 30-Day Notice of Exemption from the Surplus Land Act to CalHFA certified housing sponsors, impacted tax agencies, and other local agencies. By providing said notice, a Resolution of Exempt Surplus Land will not be required from the City Council, per Government Code Section 54221(b)(4).
Request for Proposal for 626 W. Main Street
Following the transfer of the property, staff issued a Request for Proposals (RFP) on June 3, 2026, soliciting development concepts for 626 West Main Street. The RFP established a submission deadline of June 30, 2026, disclosed the parcel’s appraised value of $55,000, and required respondents to provide at least three references as well as disclosure of any litigation involving public agencies within the past ten years (see Attachment 2 - Published RFP).
The RFP also required that construction begin within 18 months of the close of escrow and that a Purchase and Sale Agreement be executed within 90 days of proposer selection.
Request for Proposal Submissions
The City received three proposals in response to the Request for Proposals (RFP), summarized below:
1. Hopeton Properties, LLC (Caleb Medefind) - “The Porch on Main” (see Attachment 3)
Hopeton Properties submitted a purchase offer of $25,000 and proposed the development of an outdoor community gathering space. The concept envisions a combined development area of approximately 17,500 square feet by integrating the City’s 2,500-square-foot parcel with approximately 15,000 square feet of adjacent property to the west controlled by Hopeton Properties, LLC, at 628 and 636 W. Main Street. The proposer also noted the potential inclusion of the undeveloped parcel to the east at 620 W. Main Street, which would expand the total development area to approximately 22,500 square feet.
The proposed plan includes:
• Eight to ten micro-retail or vendor pads (80-200 sq. ft. each)
• A beverage and hospitality anchor (300-1,000 sq. ft.)
• Seating for 50-150 public-facing guests
• A 1,000-1,500 sq. ft. event and performance area
• A 1,000 sq. ft. service and operations area
The preliminary development budget is estimated between $450,000 and $550,000. Hopeton Properties provided three references and highlighted relevant team experience, including an 18-story convention-center hotel overhaul in Arlington, Texas, and a $300 million, 1.1-million-square-foot convention-center hotel project in Phoenix, Arizona.
2. 626 W. Main St., LLC (John Martin) - “The Merced Commons Plaza” (see Attachment 4)
John Martin submitted a purchase offer of $65,000 and proposed a development utilizing the City’s 2,500-square-foot parcel and the adjacent vacant parcel to the east at 620 W. Main Street, for a combined estimated development area of 7,500 square feet.
The proposed concept includes outdoor gathering space for events, small-format music, fitness/wellness events, vender markets, and food/beverage parts.
Development cost, job creation estimates, and construction start date were identified as “to be determined.” The proposer’s relevant experience includes several major projects in Merced:
• El Capitan Hotel (historic renovation and new construction; 114-room boutique hotel)
• Mainzer Theater (historic art deco theater renovation into a food-and-beverage venue with entertainment)
• The Tioga (70-unit mixed-use residential development involving full renovation of a historic hotel)
The proposer reported no litigation involving public agencies within the past ten years and provided three references.
3. ERE Construction (John Larson) - “Main Street Valet Lane & Parking Improvement” (see Attachment 5)
John Larson submitted a purchase offer of $25,000 and proposed converting the parcel into a valet staging lane and parking improvement serving the adjacent El Capitan Hotel. The proposed site plan includes:
• A 900-square-foot valet staging lane (accommodating 4-6 queued vehicles)
• Approximately 1,000 square feet of short-term guest parking (3-4 stalls)
• A 150-square-foot valet key station and attendant post
• A 450-square-foot through-connection to an existing parking lot
The project is expected to generate a combined total of 5-9 part-time and full-time jobs. The proposer estimated an active construction period of 60-90 days, with overall project completion likely within 12 months following the close of escrow.
Staff Evaluation Committee
A four-member review committee-comprised of staff from the City Manager’s Office, Economic Development, and the Planning Division-evaluated all proposals. The committee conducted both a broad, open-ended review and a focused assessment based on the five criteria outlined below.
1) Quality of Project - This criterion evaluates the overall design quality of the proposed development, including architectural features, landscaping, and the general quality of onsite improvements. It measures how effectively the project would enhance the visual appeal and functionality of the site.
2) Community Benefit - Assesses the proposal’s ability to serve the community through job creation, accessibility for residents of all ages, and the flexibility of the space to support various activities and uses.
3) Economic Value - Measures the financial benefits offered to the City, including anticipated property and sales tax revenue (though not yet quantifiable), the proposed purchase price, and the level of investment in onsite improvements.
4) Maximization of Site Potential - Evaluates how well the proposal makes use of the parcel’s full potential, including its scale, versatility of uses, and compatibility with Downtown Merced-particularly its designation as an Arts & Cultural District.
5) Experience and Qualifications - Considers the developer’s experience with similar projects, demonstrated capacity to successfully deliver projects, and overall financial and operational qualifications.
Staff Evaluation Committee Recommendation
Upon evaluation by the Committee, staff recommends the proposal submitted by Hopeton Properties, LLC. Their proposal, The Porch on Main, ranked highest among all submissions for the following reasons:
• Family-Friendly Design:
The proposal creates a welcoming environment for residents of all ages, featuring amenities such as a family game area, bocce court, and a community fire pit.
• Job Creation:
The project is expected to generate 23-55 full-time and part-time jobs-more than any other proposal submitted.
• Capital Investment:
Hopeton Properties anticipates investing $450,000 to $550,000 in onsite improvements, representing the largest capital commitment among all proposers.
• Scale and Scope of Development:
The proposed project has the largest potential footprint. At minimum, the development would cover approximately 17,500 square feet by combining the City’s 2,500-square-foot parcel with about 15,000 square feet of adjacent property to the west owned by the proposer at 630 and 640 W. Main Street.
If Hopeton Properties secures an agreement with the owner of 620 W. Main Street, the project area could expand to roughly 22,500 square feet. This would result in a fully integrated development spanning the entire undeveloped stretch between 614 W. Main Street and 642 W. Main Street on the south side of Main Street, between M Street and N Street.
• Business Incubation Opportunities:
The concept includes flexible micro-retail spaces that give local entrepreneurs opportunities to test concepts and grow into future brick-and-mortar locations.
• Versatility and Site Activation:
The project features social gathering areas and a dedicated stage for live performances, offering the highest level of activation and community use among all proposals.
These combined strengths position The Porch on Main as the proposal that most effectively aligns with goals for community benefit, economic vitality, and further activation of Downtown Merced’s Arts & Cultural District.
Finance and Economic Development Subcommittee
On September 2, 2026, staff presented all three proposals to the Finance and Economic Development Subcommittee. The subcommittee provided general support of staff moving forward to City Council with their recommendation of selecting Hopeton Properties, LLC, for the development of the “Porch on Main” as shown at Attachment 3.
IMPACT ON CITY RESOURCES
No appropriation of funds is needed.
ATTACHMENTS
1. Location Map
2. RFP for 626 W. Main Street
3. Proposal - Hopeton Properties, LLC/Caleb Medefind
4. Proposal - 626 W. Main St., LLC/John Martin
5. Proposal - ERE Construction/John Larson
6. Administrative Report #26-039
7. Presentation