SR-800-005 (15)~_ . .
~ ~;tya, C~ty Counc~l Report
Santa Monica
City Council Meeting: May 9, 2006
Agenda Item: ~ L
To: Mayor and City Council
From: Jeff Mathieu, Director Resource Management Department
Subject: Recommendation to Authorize the City Manager to Negotiate and Execute
Lease Agreements with Three Non-Aviation Tenants Located at Santa
Monica Airport who were Displaced by Airport Park
Recommended Action
It is recommended that the City Council authorize the City Manager to negotiate and
execute lease agreements with three existing tenants which were displaced by the
development of Airport Park:
1) KTB, Inc. dba Santa Monica Acura
2) Market Place Productions (dba Santa Monica and Collectibles Market) and;
3) Spitfire Grill.
The leaseholds are located south of Airport Avenue in the designated non-aviation use
portion of the Airport.
Executive Summary
Approval of this recommendation will result in the execution of lease agreements with
Santa Monica Acura which proposes to lease a one acre vehicle storage lot, Santa
Monica Antique and Collectibles Market which proposes to lease 1.2 acres of vehicle
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parking lot space on a bi-weekly basis and the Spitfire Grill which proposes to lease
approximately 3,052 sq ft of interior & 3,000 sq ft of outdoor patio restaurant space.
Discussion
The following is a synopsis of the three non-aviation service providers under
consideration:
KTB, Inc. dba Santa Monica Acura
Santa Monica Acura and Santa Monica Lincoln-Mercury are new car dealerships
located in Santa Monica. Through a mutual agreement between the two parties Santa
Monica Acura will hold the master lease and Santa Monica Lincoln Mercury will be an
authorized sub-lessee. Santa Monica Acura and Santa Monica Lincoln-Mercury have
been leasing space at the Airport to store off-site new car inventory in support of their
business for over ten years. Their previous leasehold was located in the area that is
now part of the Airport Park development. Staff relocated Santa Monica Acura (and
Santa Monica Lincoln-Mercury which participates in the vehicle storage agreement) to a
one acre parking lot located at 3500 Airport Avenue. Santa Monica Acura has been
leasing the space on a month-to-month basis and subleasing approximately 1/z of the
space to Santa Monica Lincoln Mercury. The proposed lease would be for a period of
nine (9) years commencing the date of the execution of the lease agreement and
terminating on June 30, 2015. The lease will generate $72,000 per year in revenues to
the Airport Fund.
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Upon execution of the lease agreement, Santa Monica Acura will conduct extensive
leasehold improvements costing in excess of $100,000. These improvements include
pavement rehabilitation, exterior lighting enhancements, construction of a new 275' long
block wall running along the south property line and installation of new chain-link
fencing around the remaining perimeter of the parcel. The required improvements will
enhance the overall appearance and security of the Airport.
Market Place Productions dba Santa Monica Antique and Collectibles Market
The Santa Monica Antique and Collectibles Market (Antique Mart) has been a
community feature of the Airport since 1993. The open air market had taken place on
the first, fourth and fifth Sundays of the month on the 2.2 acre parking lot formerly
located on the Airport park site. As a result of the new Airport Park, the Antique Mart
was relocated to two south-side parking lots that are approximately 1.2 acres. This
reduced the size of the Antique Mart and eliminated the fifth Sunday. The proposed
lease would be for a period of approximately three years commencing the date of the
execution of the lease agreement and terminating on June 30, 2009. The rental rate
would generate $30,000 per year in revenues to the Airport Fund.
An interim lease for the current arrangement is proposed and could be extended for a
three year period terminating on or about June 30, 2009.
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The Spitfire Grill
The Spitfire Grill has been a restaurant on the Airport for over 15 years (and prior to that
a restaurant named the Kittyhawk operated in the same space for over 20 years). It
features a large outdoor dining patio abutting Airport Avenue. The construction of
Airport Park incorporates significant streetscape improvements that necessitate the
relocation of the outdoor patio area to the west side of the building. Additionally,
enlargement of the restrooms (which serve both the restaurant and tenants of the
building) is needed. The proposed lease would be for a period of nine (9) years
commencing the date of the execution of the lease agreement and terminating on June
30, 2015. The lease will generate $56,500 per year in revenues to the Airport Fund.
Upon execution of the lease agreement, the Spitfire will construct extensive leasehold
improvements estimated to cost approximately $491,000. These improvements include
new restrooms, new outdoor patio dining area, new exterior fa~ade, enhanced lighting,
new landscape treatments and expanded kitchen area. The required improvements will
enhance the overall appearance and functionality of the restaurant.
The proposed lease would address the changes to the restaurant configuration and
appropriate tenant rental credits toward the improvements. The rent for the site is
approximately $6,100 per month, less a rental credit of $1,390 per month for the term of
108 months to off-set the capital improvement costs to the City owned facility.
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BudgedFinancial Impact
Since the leases would be with existing tenants who are currently paying on a month to
month basis, the revenues have been included in the current and proposed budgets.
Prepared by:
Bob Trimborn, Airport Manager
Approved:
Forwarded to Council:
~
Nam "
Jeff at ieu, Director, Resource
Ma a ment
~Fnont Ewell
Manager
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