SR-6G (7)
Contract No. tc114 (ecs)
SE631997
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RMD- HR -GK - [- \resource\share \gretchsh\cassese srp Santa MOlllca, CA Ii ~
CounCIl Meetmg September 23, 1997 ~
TO Mayor and CIty CouncIl
FROM CIty Staff
SUBJECT RecommendatIon for eny CounCIl to authonze the CIty Manager to negotIate
and execute a lease for retaIl space m Parkmg Structure No 5 located m the
BaysIde DIstnct
IntroductIOn
ThIS report recommends that CIty CounCIl authonze the CIty Manager to negotIate and execute a
five-year lease wIth John Cassese The Dance Doctor for 3,078 square feet of retaIl space m Parkmg
Structure No 5 located at 1440 Fourth Street
BacklITound
1440 Fourth Street IS the former Best Hardware SIte FollmV1llg the death of Best Hardware's ORTIer
ill October 1996, the busmess, mcludmg the store's lease and contents, became an asset of the Estate
of James R Cummmgs The Executor kept the store open on a lImned baSIS untIl May 1, 1997
whIle he unsuccessfully attempted to find a buyer for the bUSIness Vanolls legal Issues regardIng
the status of the estate prevented an earher surrender of the prermses to the CIty, and no rent
payments were made smce October 1996
In the meantIme, antIclpatmg the upcommg aVaIlabIlIty of the SIte, CIty Staff attempted to obtaIn
a comparable full-servIce hardware retaIler to replace Best Hardware Several local hardware
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SEP 2 3 1997
retaIlers were contacted and shO\vn the sIte, but declmed to make offers on the space As a result of
marketmg effort, J olm Cassese The Dance Doctor expressed mterest m rentmg the space
DISCUSSIOn
A monthly base rental rate of approxImately SO 95 per square foot 15 proposed as a fmr and
affordable rate for the specIfic locatIOn and condItIons of parkmg structure space Staff has
researched current market rates and determmed that the proposed rental rate IS consIstent WIth
current area rental rates for thIS partIcular 10catlOn The proposed use of the space as a dance stUdlO
IS compahble WIth the surroundmg uses and 15 expected to enhance the ambIance of Fourth Street
and the BaysIde DIstnct m general
The proposed tenant, John Cassese The Dance Doctor. IS a long-tune Santa Moruca busmess owner
and supporter and organIzer of commurnty focused dance actIvItIes As a sole propnetor ,VIth a need
to amortlze the cost ofsubstantlal capIta1Improvements to the space, and a deslfe to be a long-term
tenant, the length ofterm IS Important A term of five years WIth an optIOn for an addltlonal five
years has been tentatIvely agreed upon The terms of the agreement mclude an annual CPI (cost-of-
hvmg) adjustment, not to exceed 5%. Upon exerCIse of the optIOn, the base rental rate wIll be
renegotIated to reflect market condItIons at that tIme In recogl11t1on of the Investment III capItal
Improvements, a two month rent credIt at the begmmng of the lease IS also proposed The CIty
would proVIde baSIC extenor structure and restroom mamtenance and repmr, WIth the tenant
responSIble for all mtenor mamtenance, repmr and Improvements The projected lease
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commencement date IS October 1, 1997 The BaysIde DIstnct CorporatIOn's Board of DIrectors
supports and recommends the use of thIS locatIon by John Cassese The Dance Doctor
Budget/Fmanclal Impact
A secunty deposIt m the amount of S 2.924 10 wIll be paId upon lease executIOn and WIll be held
m secunty depOSIt account #01-000-000-00000-9755-04266 The first month's rent WIll also be
paId at the hme oflease executron Rental Income In FY 1997-98 IS prOjected to be $20,468 70, ,nth
all rental mcome deposIted mto revenue account #01-620-263-00000-0087-10000 These revenues
were antICIpated m the FY 1997-98 budget and no CouncIl actIOn IS reqUIred at thIS time
RecommendatIon
It IS recommended that the CIty CouncIl authonze the CIty Manager to negotIate and execute a lease
wIth lohn Cassese The Dance Doctor for retaIl space III Parkmg Structure No 5 on Founh Street,
effectIve October 1, 1997
Prepared by Howard Robmson, EconomIc Development Manager
Gretchen Kubacky, AdlmmstratIve Analyst - Real Estate/Econoffilc Development
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