Loading...
SR-05131986-6PMA1113 1986 1" f;~, 1 ~ ~ C/ED:EDD:EF:mb Council Meeting: May 13, 1986 Santa Monica, California T0: The Mayor and City Council FROM: City Staff SUBJECT: Recommendation to Authorize City Manager to Negotiate and Execute a Lease for the Remaining 950 Square Feet of Retail Space in Downtown Parking Structure No. 2 INTRODUCTION This report recommends that the City Council authorize the City Manager to negotiate and execute a lease for the remaining 950 square feet of retail space available in Downtown Parking Struc- ture No. 2 pursuant to the terms outlined in this report. BACKGROUND 'rhe City Council has adopted terms and procedures for the leasing of approximately ti,500 square feet of retail space in Downtown Parking Structure No. 2. Under the adopted lease terms, all im- provements are to be made by the lessees and become the property of the City upon the expiration of the lease terms. To date, all but 950 square feet of retail space has been leased. City staff has periodically advertised the availability of the retail space with local commercial brokers, with paid advertise- ments published in the Evening Outlook, and through the procure- ment of commercial broker services through Ed Flores Realty. ~~ Mar ~ ~ i9a6 - 1 - All persons inquiring about the space have been directed to in- spect the site and have been informed of the City's requirement that all tenant improvements be paid by the Lessee. Interested parties have been requested to submit a formal proposal for leas- ing of the space specifying proposed lease terms, tenant improve- ments and local credit references. DISCUSSION Based on the above process, it is recommended that i1'lr. Young Sung Lo and Mr. Conway Leung, doing business as Bruna Ferrari, Inc., be granted a commercial lease subject to the terms proposed be- low. The specific lease terms are the product of negotiations based on the City's stated terms and the applicant's proposal. The recommended financial terms take into consideration the amount of capital improvements required, the term of the City's lease, the condition of the lease premise, and the estimated schedule for completion of all tenant improvements. A summary description of the proposed lessee and lease terms is provided below. BRUNA FERRARI, INC. is an established semi-precious stone retail store jointly owned by Mr. Young Sung Lo and Mr. Conway Leung. At this time, ~Ir. Lo and Mr. Leung's main store is located at the California Jewelry Mart in Downtown Los Angeles. They are seeking to add a retail outlet, preferably in the Santa Monica or West Los Angeles area. Under the terms of the proposed lease, Mr . Lo and Mr . Leung will make all tenant improvements which include the installation of an - 2 - acoustical ceiling, floor coverings, an upgraded electrical sys- tem, air conditioning and various other improvements associated with the furnishing of a retail store. The following terms are proposed for granting a lease to Mr. Lo and Mr. Leung: o monthly rent - $1045 subject to an annual C.P.I. adjust- ment with no cap; o amount of lease space - 950 square feet; o term of lease - 5 years; o a deposit - equal to 3 months rent ($3135), payable upon execution of the lease by the City; and o a "grace period" - a sixty (60) day grace period is recommended, effective upon the execution of the lease by the City, against the payment of monthly rent to ac- commodate the necessary construction schedule for tenant improvements. Under the terms of the City's agreement with Ed Flores Realty, the firm is to receive a base broker's commission of $2780. Fifty percent of the fee is to be paid upon execution of the lease by both parties, with the remainder to be paid upon the occupancy of the lease space by the lessee. These terms are con- sistent with the current and prevailing industry standards for broker commissions on the G~Vestside. BUDGET/FISCAL IMPACT Given the recommended lease terms, it is anticipated that the project will continue to be under construction through the remainder of FY85-86. During FY 1986-87, however, the City - 3 - General Fund Account Number 01-904-077-000-000 is expected to receive an additional total lease revenue of $12,015, plus the benefit of annual C.P.I. adjustments recommended as part of the lease terms. Funds are currently available in General Fund ac- count number O1-200-266-000-506 to pay the required broker fee of $2780. RECOMMENDATION It is recommended that the City Council authorize the City Man- alter to negotiate and execute a commercial lease with the above referenced lessee consistent with the terms outlined in this report. Prepared by: Ernesto R. Flores, Manager Economic Development Division Community & Economic Development Department ERF:mb stones - 4 - Reference Contract No. 4680 (CCS).