SR-6-H (66)
, , 6H
EPWM:CP:JM:JSH:sm:srmove Santa Monica~ California
council Meeting: October 11, 1994
TO: Mayor and city Council OCT 1 1 1991t
FROM: City Staff
SUBJECT: Recommendation to Authorize the City Manager to Negotiate
and Execute a Five-Year Lease Agreement with Shaul
Kabu/Dekel Construction for Office Space for the
Utilities Division, Environmental and PUblic Works
Management
INTRODUCTION
This report recommends that the City Council authorize the City
Manager to negotiate and execute a five-year lease agreement with
Shaul Kabu/Dekel Construction in the amount of $8, 58D/month for the
administrative, billlng and industrial waste operations of the
Utilities Division of the Environmental and Public Works Management
Department.
BACKGROUND
In April 199D, the administrative and billing functions of the
Utilities Division of the Environmental and Public Works Department
moved from City Hall to private office space at 1334 Third street
Promenade in order to accommodate the space requirements of other
divisions in the department. The lease will expire on March 31,
1995, and a new lease for space must be negotiated.
The proposed new lease will include space for the Industrial Waste
(IW) staff (consisting of four people) which is currently located
at the City's Arcadia Treatment Plant in West Los Angeles. Staff
1 OCT 1 1199't
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believes it would be advantageous to relocate the IW office to the
central business district since most of the IW staff activities
take place on the Third street Promenade, Main street, Ocean Front
Walk and miscellaneous storm drain outlets in the central business
district area. This move would decrease time spent traveling to
regular inspections and emergency requests, reduce city vehicle
use, and improve program management. Additional work space is also
required for the utilities billing staff since two positions have
been added during the last five years and all utility bills are now
printed in the utility Division office.
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 order to begin negotiations on
a new lease. After comparing space expansion options and parking
availability (for both customers and staff) at the 1334 Third
street location with other office sites in the central business
district, it was concluded that office space at l212 5th street
best satisfles the requirements for the utilities Division
functions and has significant advantages to the public. This
office space is fully accessible and in compliance with ADA
requirement. Additionally, there is ample street parking for
citizens at this location. Finally, this location is in close
proximity to public transportation. since the city is a stable
long-term tenant, staff has been able to negotiate an excellent
monthly base rent to include tenant improvements, janitorial,
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moving expense allowance, partially paid parking, and a 2.5 percent
CPI increase beginning at the fourth year. The following chart is
a comparison of the Utility Divisionrs current lease and the
proposed new lease:
Current Lease Proposed Lease
1334 Third street 1212 5th street
Total Square Footage 2,142 4,140
Per square foot rate $2.53 $2.00
(includes common area
maintenance costs)
No. of Parking Spaces 7 11
Annual Rent $65,031 $ 99,360
Annual Parking Cost 4,914 3,600
Annual Janitorial Cost 3,480 incl.
Total Annual Cost $73,425 $102,960
BUDGET/FINANCIAL IMPACT
Funds in the amount of $67,623 are budgeted in Account No.
25-500-671-00000-2262-00000 in the Water Fund for office lease
costs and $8,394 are budgeted in account #25-500-671-00000-4401-
00000 for parklng and janitorial costs. Since the new lease would
not take effect until March I, 1995 (the leases will overlap by one
month for mlnimal disruption in service to customers) , the
budget/financial impact for FY 1994-95 is as follows:
9 mos. @ $6,118.75* = $55,068.75
4 mos. @ $8,580.00* = 34,320.00
Lease amount for FY 94-95 $89,388.75
Budgeted amount FY 94-95 76,017.00
Additional amount required $l3,371.75
*includes monthly rent, parking and janitorial costs
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. .
Anticipated savings in other line items in the Water DivisionIs FY
1994-95 Supplies and Expenses category will adequately cover the
additional amount required for the new lease. Therefore, for FY
1994-95 no budget action is necessary. For FY 1995-96, an analysis
will be performed to determine the reimbursement amount required
from the Wastewater Fund to the Water Fund for the addition of the
Industrial Waste staff (Division 661).
RECOMMENDATION
It is recommended that the City Council authorize the City Manager
to negotiate and execute a five-year lease agreement with Shaul
Kabu/Dekel Construction for the administrative, billing and
industrial waste functions of the utilities Division of the
Environmental and Public Works Management Department.
Prepared by: Craig Perkins, Director of Environmental & Publ ic
Works Management
John Mundy, utilities Manager
Jean Higbee, Senior Administrative Analyst
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