SR-05131986-6PMA1113 1986
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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.
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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
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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
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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
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stones
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Reference Contract
No. 4680 (CCS).