SR-900-002
EPWM:CP:GB:JSH:f:utilsrvr/users/higbee/data:renew Santa Monica, California
October 12, 1999
To: Mayor and City Council
From: City Staff
Subject: Recommendation to Authorize the City Manager to Negotiate and Execute
a Five-year Option to Extend the Lease with 1212 Fifth Street Santa
Monica Limited Partnership for Utilities Division Office Space.
Introduction
This report recommends that the City Council authorize the City Manager to negotiate
and execute a five-year option to extend the lease with 1212 Fifth Street Santa Monica
Limited Partnership for the Utilities Division office space.
Background
On October 11, 1994, the City Council authorized the City Manager to negotiate and
execute a contract with 1212 Fifth Street Santa Monica Limited Partnership (formerly
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Shaul Kuba/Dekel Construction) to lease office space at 1212 5 Street, Third Floor, for
the Utilities Business Office and the Industrial Waste staff of the Environmental and
Public Works Management Department. The lease was negotiated for five years with
an option to renew for five years. The lease will expire on January 31, 2000.
Staff engaged the services of a professional commercial broker, at no cost to the city, to
analyze current market conditions and availability of other lease space in the City in
order to begin negotiations on the five-year option. After comparing rental rates and
parking availability at other sites, staff concluded that it would be least disruptive and
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most cost-effective to the City to exercise the five-year option at 1212 5 Street.
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The original lease was for 4,140 square feet at $2.00 per square foot and increased to
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$2.05 in the 37 month of the contract (February 1998). This amount also includes 5
parking spaces. Ten additional parking spaces are $500 per month. There have been
no other increases. The negotiated increase for the five-year option is an additional
$.45 per square foot ($2.50 per square foot total) which is comparable to other rates in
the area. The base rent rate will increase by three percent per year starting February
2002. Parking will increase to $1,000 per month. The lessor will install additional
electrical outlets, paint and re-carpet, and provide $5,000 for tenant improvements.
Budget/Financial Impact
The current lease is $8,487 for lease space and $500 for parking for a total of $8,987
per month. The proposed rate is $10,350 for lease space and $1,000 for parking for a
total of $11,350 per month. The total increase is $2,363 per month. Since the new rate
will take effect February 1, 2000, there will be five months at the new rate or an increase
of $11,815 for FY 1999-2000. Funds for the lease are budgeted 50% in the Water
Division in account 25671.522620 and 50% in the Wastewater Division in account
31661.522620. Funds for parking spaces are budgeted in the Water Division in account
25671.544010. Savings in other line items can absorb the increase to both divisions.
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Recommendation
This report recommends that the City Council authorize the City Manager to negotiate
and execute a five-year option to extend the lease with 1212 Fifth Street Santa Monica
Limited Partnership for Utilities Division office space.
Prepared by: Craig Perkins, Director of Environmental & Public Works Management
Gil Borboa, Utilities Manager
Jean Higbee, Utilities Business Supervisor
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