SR-800-005 (10)
RMD:EDD:GK:F:\RESOURCE\SHARE\GRETCHSH\Staff Reports\SMFAS 3026 AA lease.doc
Council Meeting: March 27, 2001 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Recommendation to Authorize the City Manager to Negotiate and Execute a
Ten-Year Lease with Santa Monica Fine Art Studios for Industrial Shell
Building at 3026 Airport Avenue for Artist Day Studio and Artist Service
Center Use.
INTRODUCTION
This report recommends that the City Council authorize the City Manager to negotiate and
execute a ten-year lease with Santa Monica Fine Art Studios for the industrial shell
building at 3026 Airport Avenue for artist day studio and artist service center use.
BACKGROUND
On December 5, 2000, the City Council approved leasing guidelines for use of non-
aviation properties at Santa Monica Airport. These guidelines specified that the
approximately 22,560 square feet of space available at 3026 Airport Avenue be utilized for
artist day studio space, in furtherance of the goal of providing a safe harbor for the local
arts community. Subleasing is specifically permitted at this location for the intended use
as an art studio center. Because a substantial private capital investment is necessary to
convert the structure for this purpose, a ten-year term was approved to allow sufficient time
for amortization of the cost of tenant improvements. Additionally, appropriate rent credits
could be negotiated as part of the lease. The guidelines were modified regarding 3026
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Airport Avenue to stipulate a lease rate of $0.65/square foot/month, and staff received
direction to select a tenant within three months utilizing the Request for Proposals (RFP)
process specified in the guidelines.
In order to most broadly expose the leasing opportunity to the public, the guidelines
included recommendations for a public marketing and solicitation process to identify
appropriate and qualified tenants for the preferred use of the available space. The RFP
was advertised in the Los Angeles Times Westside Weekly section, surfsantamonica.com,
various locations within the Citys own internet website (Hot Topics and Economic
=A@
Development), and via direct contact with Santa Monica arts organizations and other
parties who had previously inquired about the property.
Santa Monica Fine Art Studios (SMFAS) submitted a proposal which was reviewed by staff
and found to meet all necessary criteria, including compatibility with the surrounding area,
financial strength, appropriate scope and preliminary design for improvements, artistic
service programming, operations, scheduling, and other issues.
Affordability to subtenants will be assured with rates that are currently anticipated to be
about 20% lower than those currently paid by SMFAS tenants at its existing location within
Santa Monica. That rate will be determined after actual build-out costs for the space have
been confirmed. Additional pass-through costs which will be factored in to determine the
end rate include utilities, facility maintenance, and programs and services to artists.
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Spaces of various sizes and configurations will be available, at a range of costs starting at
about $150/month, going up to about $750/month, with the average space being about
$350/month, thus further assuring affordability for artists in a variety of economic
circumstances.
Subtenants will be screened for professionalism, educational background, and
compatibility with existing tenants. Existing SMFAS subtenants, of which there are
approximately 35, will be given first priority for all available spaces, with further tenant
recruitment by word-of-mouth and public advertising, as needed. Waiting lists developed
by City staff with input from the Santa Monica Arts Commission and its Artist
Live/Work/Studio Committee will be utilized at the discretion of SMFAS. Staff will also
refer prospective studio tenants to SMFAS.
SMFAS will provide a significant public benefit to the community through its programming,
as well as well as its core function, the provision of affordable day studios. This includes,
but is not limited to: art classes for both sub-tenants and members of the public; evening
and weekend technical instruction workshops; an annual exhibit which is open to the
public; school field trips and tours for the Santa Monica/Malibu Unified School District
students; and visiting artist programs held in conjunction with UCLA, CSUN, and other
local colleges.
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DISCUSSION
The proposed lease terms are as follows:
Ten (10) years, in accordance with the recently approved Non-aviation Airport
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Leasing Guidelines.
April 1, 2001 commencement date.
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January 1, 2002 rent start date, with rent abatement period to be extended at Citys
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discretion, for a maximum of six months (through June 30, 2002), should additional
time be necessary to complete the improvements.
All improvements to the premises are to be made at tenants sole expense.
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Leasehold shall remain free of liens.
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$0.65/square foot/month rental rate, consistent with the Leasing Guidelines.
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Annual CPI increases capped at 2% minimum/5% maximum per year.
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No additional rental charges for loft space if it is eventually built-out by tenant.
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No additional charge for parking as-needed, up to 68 spaces.
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Lessee may provide exterior landscaping.
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Exterior signage requires Architectural Review Board approval.
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Operating hours limited to 7:00 a.m. - 11:00 p.m., consistent with other Airport
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leases.
Exterior and roof are responsibility of Lessor to repair, Lessee to maintain.
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BUDGET/FINANCIAL IMPACT
There will be no budget impact in FY 00/01. In FY 01/02, assuming a January 1, 2002 rent
commencement date at the rate of $14,664 per month, it is expected that this lease will
generate $87,984, which will be credited to Airport revenue account number
33631.402110. In future years, the annual revenue will be $175,968, as adjusted by CPI,
and will be budgeted at the same account number.
RECOMMENDATION
It is recommended that the City Council authorize the City Manager to negotiate and
execute a ten-year lease with Santa Monica Fine Art Studios for industrial shell building at
3026 Airport Avenue for artist day studio and artist service center use.
Prepared By: Jeff Mathieu, Director of Resource Management
Mark Richter, Economic Development Manager
Gretchen Kubacky, Senior Real Estate Analyst
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