SR-11-F (3)
II-F
C/ED:EDD:EF:rnb
CouncIl MeetIng of 06/12/84
JUtl1 2 1984
Santa MonIca, CalifornIa
TO:
Mayor and CIty Council
FROM:
CIty Staff
SUBJECT: RecommendatIon to AuthorIze the Purchase of 602-620
Colorado Avenue and 1606 Seventh Street for the Future
ExpanSIon of the MunICIpal Bus Lines FaCIlIty
INTRODUCTION
ThIS report recommends that the CIty CouncIl authorIze the pur-
chase of 602-620 Colorado Avenue and 1606 Seventh Street
(RIchard's Surgical) to support the future expansion needs of the
MunICIpal Bus Lines FaCILIty.
The report prOVIdes a background
descr~ptIon of the source of funds currently avaIlable to acqUIre
the site and a dIScussIon descrIbIng the proposed SIte and the
terms of acqUISItion.
BACKGROUND
Beginning In fIscal year 1973-74, the CounCIL acted to set aSIde
TransportatIon Development Act (TDA) funding for the plannIng and
pOSSIble constructIon of a "People Mover" along the Santa Monica
Mall.
The CIty continued to contrIbute TDA fundIng to thIS Peo-
pIe Mover Reserve untIl flscal year 1977-78, when the deciSIon
was made not to further pursue the proJect.
From fIscal year 1979-80 until the present, the reserved funds
were transferred to varIOUS other capItal projects for the
/I-F
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JUN j 2 '984
MunICIpal Bus LInes, IncludIng the new AdmInIstratIon and MaIn-
tenance faCIlIty. By fIscal year 1982-83, $2,841,990 remaIned In
thI s reserve. In May of 1983, the Southern Ca 11 for nIa Associa-
tIon of Governments (SeAG) Informed the Cl ty that the reserved
funds would revert to SeAG unless the funds were reprogrammed to
another MunIcIpal Bus LInes capItal proJect. At the same tIme,
CIty staff was made aware that the RIchard's Surgical property on
Colorado Avenue between SIxth and Seventh Streets was avaIlable
for sale (See LocatIon Map: ExhIbIt 1). As the property is one
of only two parcels ImmedIately adJacent to the Bus LInes faCIlI-
ty, Its purchase now for eventual expanSIon of the bus yards was
an extremely attractIve pOSSIbIlIty.
CIty staff requested the reprogrammIng of the $2,841,900 In re-
served funds for the purchase of the property. As prel iml nary
estImates of the property's cost were greater than thIS amount,
staff also requested that the Los Angeles County TransportatIon
CommISSIon (LACTC) and SCAG program addItIonal funds from fIscal
year 1983-84 TransportatIon Development Act formula fundIng for
thIS proJect. The request was approved by both LACTC and seAG
WIth the understandIng that the land be used for bus yard expan-
SIon and that the purchase be completed In fIscal year 1983-84.
The Cl ty subsequently recei ved the funds from the Los Angeles
County AudItor.
DISCUSSION
The RIchard's Surgical SIte IS approXImately 52,899 square feet
(1.21 acres) in size and IS located ImmedIately adJacent to the
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MunICIpal Bus LInes FaCIlIty. The entIre property IS owned by
the Bradmore Realty Investment Company, a CalIfornIa lImIted
partnership. The property IS currently under a ten (10") year,
trIple net lease to RIchard's SurgIcal - a manufacturer and dIS-
trIbutor of medIcal and surgical products.
The entI re sIte is zoned M2, lIght Industr ial Whl ch allows for
commercial manufacturIng and lIght IndustrIal uses. EXIsting
Improvements consIst of a one-story, brIck IndustrIal bUIldIng
contaIning approxIately 33,564 square feet. There 15 also a
2,070 square foot free standlng stucco (auxlllary) bu i Id Ing to
the rear of the 51 te. Approx ima tely 25 percent of the total
bUIldIng area IS currently In offIce use by the tenant WIth the
remaInIng space dedIcated to manufacturIng and wholesale opera-
tIons. ParkIng IS avaIlable on-SIte with addItional remote park-
Ing prOVIded off-SIte through a long-term lease between the same
owner and lessee. The off-51 te parking IS located one block
north of the SIte at 1546 Seventh Street and IS not avaIlable
for sale at thIS tIme. ExhIbIt 2 prOVIdes a detaIl lay-out of
plant faCIlIties and a descriptIon of existing improvements.
Bradmore Realty has agreed to a sales pr1ce of $3.25 mIllIon WIth
the understandIng that:
1. The $3.25 mIllIon represents the total compensatIon to
be paid by the CIty to the seller,
2. The term of the lease to RIchard's Surgical be modIfIed
by the seller to termInate on March I, 1988, and
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3. The CIty Council approve the purchase.
Based on a staff review of sales for comparable IndustrIal prop-
ertIes It IS staff's assessment that the City should proceed wIth
thIS acquISItIon. Staff also recommends that the Counc1l au-
thorIze the expendIture of an addItIonal $10,000 to provIde for
the CIty's assocIated costs of acqUIsitIon (e.g., escrow fees,
tl tie Insurance, Inspect 10n reports, etc.). Under the terms of
the sale, the CIty would assume the eXIstIng lease wIth RIchard's
SurgIcal WhICh calls for annualized lease payments of $222,660 In
1984 and 1985, IncreaSIng to $240,300 In 1986 and 1987. AssumIng
the CI ty took title to the property on September 1st, I t could
expect to receIve a total lease revenue of approxImately $700,000
for the remaInIng 3.5 year term of the lease.
The contInued presence of the lessee for an addItIonal 3.5 years
IS acceptable to CIty staff and wIll meet the seller's expressed
condItIon to have suffiCIent time in which to cons1der the optIon
of building a new facility to relocate the lessee upon the ter-
mInatIon of the lease In March of 1988.
BUDGET/FISCAL IMPACT
ThIS proJect was not Included as a capItal improvement proJect
for the MunICIpal Bus LInes In the adopted fIscal year 1983-84
budget. An Increase In approprIatIon authority of $3,260,000 15
therefore reqUIred to effect thIS purchase. FundIng for the
proJect has been reserved 1n the TransportatIon EnterprIse Fund
restrlcted asset account # 41-980-007-000-000. As funds have not
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been approprIated in the FY 1983-84 transportat~on operatIon bud-
get for thIS purpose 1 t wlll be necessary to author I ze an ap-
proprlatlon of $3.26 mIllIon in account # 41-60'0-656-000-902.
CouncIl approval of the purchase and approprIatIon of the needed
funds would allow the purchase to be encumbered ~n fl seal year
1983-84, meetIng the SCAG and LACTC stIpulatIon on use of the
funding durIng thIS fIscal year.
RECOMMENDATION:
It IS recommended that CIty CouncIl:
1.
author Ize the purchase of the 60'2-620 Colorado
and 1606 Seventh Street 5 I te at a pr Ice not to
$3.25 million dollars,
Avenue
exceed
2. author I ze the CI ty Manager to expend up to $Hl, 000 In
assocIated acquIsItIon fees and to execute all documents
necessary to acquIre the above property, and
3.
Increase approprIatIon authorIty
terprlse Fund account number
$3,260',000'.
in Transportation En-
41-600'-656-0'0'0'-90'2 by
Prepared by: Ernesto R. Flores, Manager
EconomIc Development DIVISIon
Community and EconomIC Development Department
Jack HutchIson, Director
Transportation Department
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EXHIBIT II
(cont'd)
A more detailed description of the improvements is as follows:
612-620 Colorado Avenue
Type of Building:
Brick
stories:
One
Class:
C
Quality:
Good
Building Area:
Office Area:
23,500+ sf
12,313;!: sf
Plant Area:
l1,127!. sf
Foundation:
Concrete slab
Exterior Walls:
Brick
Roof:
Built-up composition roll
Offices:
30 private and/or general offices,
reception area, two lunch areas, 5
restrooms
Floors:
Vinyl asbestos tile flooring and
carpeting
Inter ioe I'la115:
Wood frame, with painted drywall,
wall paper, paneling, and some
moveable partitioning.
Ceiling mounted acoustical tiles
and some painted drywall.
Central package unit
Ceiling:
Heating & Air
Conditioning:
IMPROVEMENTS (Cont'd.)
Manufactu~ing Area
Floors:
vlalls:
Ceiling:
Restrooms:
Loading Access:
Clear Height:
Lighting:
Electric Power:
Type of Building:
Stories:
Class:
Quality:
Building Area:
Foundation:
Exterior Walls:
Interior
Floors:
Walls:
Ceiling:
Lighting:
Heating & Air
Conditioning
;'a.r;king
Exposed concrete
painted brick and drywall
Exposed glu-lam beams
one menls, one women's, with two
fixtures each
10 ft. X 12 ft. aluminum roll-up
truck door with ramp at grade level
12 ft.t
Suspended fluorescent
220 volts/3 phase
1609__ 7th street
stucco with wood trim
One
C
Good
2,070+ sf
Concrete
Painted stucco with decorative wood
built-up composition roll
Exposed concrete; vinyl asbestos
tile
Painted stucco and painted drywall
Acoustical tile and painted plaster
Suspended fluorescent
Building is air conditioned
32 on-si te spaces plus off si te
parking for the entire property.
IMPROVEMENTS (Cont'd.)
M~nufacturing Area
Floors:
Exposed concrete and vinyl asbestos
tile flooring
Walls:
painted brick and painted drywall
Exposed glu-lam beams~ painted
plaster; and acoustical tiles.
Ceiling:
Restrooms:
One men's, one women's with three
fixtures each. Women's restrOOfTl
has a lounge area.
Loading Access:
10 ft. X 12 ft. aluminum roll-up
truck door with ramp at grade level
Clear Height:
12 ft.
Lighting:
Flush and suspended fluorescent
Electric Power:
400-600 afllp
180-480 volt
3 phase
Warehouse Heating:
Space heaters
604 Colorado Bouleva~d
Building Area:
S,082i: sf
Office Area;
535+ sf
Plant Area:
4,547+ sf
Office:
one office; shipping and receiving
Floors:
Vinyl asbestos tile
Interior ~lalls:
Painted brick and panted drywall
ceiling:
ceiling mounted acoustical tile
Heating & Air
Conditioning:
Two ton roof unit for office area