SR-913-000 (7)
F:\ResourceManageShare\Redevelopment\RAND.OPAAmendment.05.10.05.Final doc
Council Meeting: May 10, 2005 Santa Monica, CA
TO: Chairperson and Redevelopment Agency
FROM: City and Redevelopment Staff
SUBJECT: Lease Agreement Extension between Agency and RAND; and
Amendment to the Owner Participation Agreement between
Agency and RAND
INTRODUCTION
This staff report requests that the Redevelopment Agency take the following
actions: 1) authorize an extension to the Lease Agreement (Lease) with RAND to
provide RAND additional time to complete demolition and remediation work; and
2) authorize an amendment to the Owner Participation Agreement (?OPA?)
between RAND and Agency with regard to the payment of the $2.3 million due to
RAND.
BACKGROUND
In 1999, the Redevelopment Agency authorized the negotiation and execution of
an Owner Participation Agreement with the RAND Corporation for the purchase
of 11.3 acres of land located west of Main Street, east of Ocean Avenue, and
north of Pico Boulevard. Acquisition of this property advanced the goals and
objectives of the Civic Center Specific Plan and the Earthquake Recovery
Redevelopment Plan.
Under the terms of the OPA, RAND must demolish its former buildings and
perform abatement and remediation work before releasing the property to the
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Agency. As part of the OPA, the Agency approved a Lease Agreement providing
RAND use of the buildings from April 2000 through September 2005 including
lease extensions as well as access to perform the demolition and remediation
work.
DISCUSSION
RAND seeks a lease extension beyond the date included in the Lease
Agreement because additional time is necessary to complete demolition and
remediation work. To date, RAND has performed soils testing, abatement work,
submitted its demolition permit application, and is preparing its bid package for
the demolition work. RAND anticipates commencing demolition and remediation
work by July 2005. This demolition and remediation work is estimated to take
approximately 14 months to complete.
The current lease with RAND expires on September 4, 2005. The proposed
lease extension requires Agency approval. In conjunction with the extension, the
Agency is requesting RAND deliver possession of two areas known as the North
Lot and Pit Lot, prior to completion of the demolition work. These areas will be
excluded from the proposed lease extension, as RAND will not need these areas
to carry out its demolition work.
Additionally, staff requests that the Agency approve an amendment to Section
307 of the OPA to reclassify a $2.3 million obligation of the Agency to RAND.
The agreement currently requires the Agency to pay RAND $2.3 million for
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demolition and remediation costs. The proposed amendment would entail
restructuring the payment provision stipulated in Section 307, to become a
payment attributed to acquisition costs rather than as a contribution toward
demolition and remediation costs. This is consistent with the balance of the
OPA, which make RAND solely responsible for demolition and remediation
activities, and clarifies the fact that the Agency has no legal or procedural
liabilities in connection with this work. This change will not increase the amount
of money to be expended by the Agency under the OPA.
BUDGET/FINANCIAL IMPACT
There is no budget or financial impact associated with the proposed actions.
RECOMMENDATION
Staff recommends that the Agency:
1. Authorize the Executive Director to negotiate and execute an extension to
the Lease Agreement with RAND, setting the expiration date as
September 4, 2006; and
2. Authorize the Executive Director to execute an amendment to the OPA,
Section 307, reclassifying payment of the $2.3 million the Agency owes to
RAND.
Prepared by: Jeff Mathieu, Director Resource Management Department
Lyn Cacciatore, Deputy City Attorney
Tina Rodriguez, Redevelopment Administrator
Nia Tang, Senior Administrative Analyst
Reference Contract No. 7641 (CCS) (lease)
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Reference Contract No. 7639 (CCS) (OPA).
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