SR-900-002 (19)~_ . .
City Council Report
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Santa Monica
City Council Meeting: September 26, 2006
Agenda Item: ~~
To: Mayor and City Council
From: Craig Perkins, Director - Environmental and Public Works Management
Subject: Authorization to Negotiate and Execute a Lease of 1433 Fourth Street, 4tn
Floor, with Metropolitan Pacific Capital, LLC
Recommended Action
It is recommended that City Council authorize the City Manager to negotiate and
execute a lease of 1433 Fourth Street, 4th floor, from Metropolitan Pacific Capital, LLC,
for use as ofFice space for the Civil Engineering and Architecture Division of the City's
Environmental and Public Works Management Department.
Executive Summary
Since 2002, the Civil Engineering and Architecture Division has occupied leased office
space at 1918 Main Street. The current lease for this space expires on January 1,
2007. As a result, staff has evaluated the availability of comparable office space in the
downtown area as close to City Hall as is feasible. An available location with
approximately the same size space as the current offices, but in a much better physical
condition, has been identified for a total annual rent of $380,000, which includes the
annual costs for eight parking spaces at the site, subject to an annual inflation
adjustment. The additional employee parking is available in the Main Library
subterranean parking structure. The cost for lease space at the current location is
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approximately $340,200 per year. There are sufficient funds in the FY 2006-07 adopted
budget to cover the proposed lease.
Discussion
The Civil Engineering and Architecture (CE&A) Division's staff of thirty is currently
housed in leased space at 1918 Main Street, Suite 300. Conditions at the present site
have become unacceptable with ongoing disrepair of the HVAC system, elevator
failures, garage access difficulties, and general lack of cleanliness throughout the
facility. No space is available within City Hall or City-owned facilities for CE&A staff at
this time.
After analyzing current market conditions and the availability of lease space in Santa
Monica (including alternate City sites), as well as the cost of moving and the need for
space to be located within close proximity to City Hall, staff concfuded that the 8,350
square foot space located on the 4th floor of 1433 Fourth Street best fits the needs of
the Division for the next five years.
Discussions with the property owner have resulted in agreement on tentative terms and
conditions. Subject to Council approval, staff proposes that the lease term be five
years, with one five-year extension. This agreement would be effective January 1, 2007
and expire December 31, 2011. The initial rent will be $3.65 per square foot per month,
with an annual CPI escalator set at 5% per year. This rental rate is reasonable and
competitive, based upon current rental market comparisons. A generous allowance of
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$35.00 per square foot is provided in the lease by the building owner for tenant
improvements.
Budqet/Financial Impact
Sufficient funds for this lease are included in the FY2006-07 Adopted Budget and no
additional funding is required for this fiscal year.
Prepared by: Ruth M. Firestone, Engineering Support Services Supervisor
Approved:
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Craig Perkin
Director, ironmental and Public
Works Management Department
Forwarded to Council:
.
mont Ew
ity Manager
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