SR-6-D (76)
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RMD:JPM:JM:ement Santa Monica. California ",.:,~
Council Meeting: November 22. 1994
NOV 2 2 _ -
To: Mayor and City Counc1l
From: City Staff
Subject: Recommendation to Authorize the City Manager to Negotlate and Execute a
Lease with Emeritus College for the Commercial Space m Parking Structure No.6
Introjluction
This report recommends that City Councll authonze the City Manager to negou.ate and execute a
five year lease with Ementus College for 4,836 square feet of commercial space in Parle-mg
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Structure No. 6 located at 1431 Second Street
Backaround
In January, 1985 the Citr Council adopted terms and procedures for leasing ground floor J
commercial space 111 the downtown parking structures. Lease agreements were subsequently
approved for tenant spaces m Parking Structures No. 5 and No.6. In accordance with the Service
Agreement with the Bayside District Corporation (BOC) and within the scope of the Council
established policy. the BOC is responsible for marketing, negotiatmg. and recommending lease
opportunities for the City-owned tenant spaces. The BOC's pnncipal critena is to idenufy credit
worthy businesses which offer interesting, pedestrian oriented uses with particular consideranon to
neighborhood or unique services andlor products which may be priced out of the competitive
downtown real estate market.
In May. 1989, the City Council approved a ten year lease with A Change of Hobbit for
approximately 5,000 square feet of commercial space in Parking Structure No.6. The popular
science ficuon bookstore suffered economlc losses as a result of the recession and was forced to
cease operation in February, 1991. The space has remained vacant for the past three and a half
years. NOV 2 2 199It
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The BDC has worked hard to market the space but efforts have not been succes~ful for a number
of reasons. A Change of HobbIt had leased the space ill an "as IS.' condItIon and certam functIonal
unprovements, such as accessIbIhty and HV AC reqUIrements have not been made There IS
vanatIon ill the floor levels and ceIhng heIghts WhICh makes the space dIfficult for retall uses. The
elevatIon llTegulanoes also make the space dIfficult to subdiVIde to accommodate several uses and
It has been dIfficult to attract a smgle user requmng such a large space.
Discussion
Emeritus College has been located at 1431 ThIrd Street Promenade smce 1990. In June of thIS
year, Ementus College receIved notIce to vacate the premIses and have smce been operatmg ill
temporary locatIons at Santa MOllica College and other CIty park facuIoes Upon learnillg of the
potential loss of the Ementus College to the BaysIde DIstnct, the BOC IllitIated dISCUSSIOns WIth
Ementus College regardtng possIble locatlons_ The vacant tenant space ill Parking Structure No 6
appears to be a vIable solutIon that satIsfies both the space requirements of Ementus College and
fulfills the objectIVes of the BaysIde DistrIct Corporaoon to reach out to semors ill the commumty
and proVIde a gathering place and educal10nal opportunItIes.
The proposed lease term IS five years wIth one five year optIon The rent has been set at $100 per
square foot for the fITst year WhICh IS conSIstent WIth current market rents on Second Street whIch
range from $0.95 to $1 10 The rent Increases to $1.05 duong the second year WIth CPI Increases
thereafter. As mentIoned above, the 4,836 sf premIses IS essentially a shell and requITes
substanttalImprovements and alterations to bnng the premIses Into functional use_ Erneotus
College WIll be responsIble for all the costs asSOCIated WIth the functIonal use nnprovements and
WIll receIve a rent credIt, not to exceed two years rent ($118,953), as an offset for these costs. The
functIOnal use Improvements are hmIted to utIhty and acceSSIbility modificatIons reqUIred by State
and local law Emeoms College WIll be responslble for all tenant Improvements necessary for
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classrooms and offIces
The use IS permItted ill the C-3C, Downtown Overlay Zone The use is conSIstent WIth the
eXlsung Thud Street SpecIfic Plan as well as the proposed BaysIde DIstnct SpecIfic Plan and will
encourage pedestnan acuVIty on Second Street. Based on the analYSIS that the prevlOus use was
retaIl. and the proposed use is educatIOnal, the new use w1l1 not result 1ll an expansion or
mtenslficatlOn from the preVIOUS use In fact, the trip generauon for educational facllItles IS
slgmficantly less than the rate for retaiL Therefore, the lease of the space to Emenms College has
been found to be Categoncally Exempt (Class 1(14)) under CEQA.
Budl!etIFinancial ImDact
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Lease revenue from the commerCIal spaces III the downtown parkmg structures IS depOSIted m
Account 01-620-263-00000-0087-10000, Parlang Structure Leases. Under the terms of the
proposed lease, the rent credIt offset WIll apply to the frrst and pOSSIbly the second year of rent, so
that there may be no revenues for thIS space to the above account untll the tlurd year of the lease
Dunng the thIrd year, the annual rent w1l1 be $60,927 adjusted for cpr
Recommendation
Staff respectfully recommends that the CIty Council authonze the CIty Manager to negotIate and
execute a lease with Ementus College for commerCIal space m Parkmg Structure No 6.
Prepared by: Jeff MathIeu, Dll-ector
Resource Management Department
JudIth MeIster, Asset Manager
Resource Management Department