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SR-04221986-11A~~' `~~-' APR 2 2 1986 C/ED:PC:ms Council Meeting, April 22, 1986 Santa Monica, California TO: Mayor and City Council Parking Authority FROM: City Staff SUBJECT: Recommendation to Approve Agreement and Adopt Resolutions to Approve an Amendment to Parking Lease with General Telephone Company of California INTRODUCTION This report recommends the City Council approve an Agreement and together with the Parking Authority, adopt resolutions to amend an existing parking lease with'General Telephone Company of California (GTC). The Agreement serves to clarify the exist- ing parking variance for the GTC building at 100 Wilshire, and provides for a one-time payment to the City of $900,000. The Amendment to Parking Lease modifies the existing parking lease between the City Parking Authority and GTC for downtown parking structure spaces. It is also recommended that the $900,000 pay- ment be used for planned improvements to the Third Street Mall. BACKGROUND On April 23, 1968, the City and the Parking Authority entered into a parking lease with the Wilshire West Company (WW) to lease a minimum of 265 parking spaces in a downtown parking structure. That same year the City approved a variance for WW which waived the requirement that all parking be under the same ownership and other parking requirements. This parking lease was subsequently assigned, with the City's approval, to GTC. /'q APR 2 2 196 - 1 - GTC is currently selling the 100 Wilshire property, and has ap- proached the City to clarify the terms of the variance and extend the lease with three additional five year options. The variance, which is valid only as long as the lease is in effect, has been the subject of debate regarding some of its provisions and con- tinued applicability if the building ceases to be used by a sin- gle tenant, as was the case when GTE occupied the building. The Agreement (Attachment "A") clarifies t},ae terms and applicability of the variance. The current parking lease obligates the City to provide for lease to GTC a minimum of 265 spaces through the year 2026, which in- cludes five, five-year options. These spaces are leased at the monthly rate of $15 per space, which is half the current charge for this type of permit parking in the downtown structures. GTC seeks through an Amendment to Parking Lease (Attachment "B") to establish an additional three five-year options. All spaces leased during the extended term, however, would be rented at the permit rate in effect at that time. Agreement The Agreement clarifies the terms and applicability of the variance as follows: 1. The variance will to continue to be effective whether or not the building is occupied by a single or multiple office ten- ant (except medical offices); 2. So long as the variance and Reciprocal Easement Agreement between GTC and WW (which was entered into on March 4, 1985 - 2 - for the use of the joint subterranean parking beneath 100 Wilshire and the adjacent apartment building) remains in effect, that 100 Wilshire shall be in compliance with ap- plicable off-street parking requirements of the City; 3. GTC shall have the right to substitute spaces which conform to the City's off-street requirements for the leased spaces at its option without jeopardizing the validity of the variance (these spaces would revert back to the City); and 4. GTC shall make a one-time payment to the City of $900,000. Amendment to Parking Lease The Amendment to Parking Lease sets forth three additional provi- sions to the original document as follows: 1. GTC may, at its option, extend the lease for three addition- al five-year periods. The rental during these extended terms would be the going market permit rate for the downtown structures; 2. GTC may, at its option, substitute spaces for those parking spaces required to be leased under the Parking Lease. Sub- stituted spaces must conform to the City's parking require- ments concerning location and ownership. GTC would perma- nently relinquish any claim to leased spaces for which sub- stitute spaces were established; and 3. The City will not be required to repair or rebuild the park- ing structures during the additional three five-year periods if they become unsafe to operate or are destroyed through a - 3 - natural disaster or as a consequence of the age of the structure. DISCUSSION GTC has an interest in the clarity and effectiveness of the park- ing variance for the property. The lack of such clarity clouds the sales transaction, as a potential buyer cannot be certain that the existing parking will be considered adequate by the City. Similarly, GTC can sell the building more easily with a 55 year parking lease, the existence of which ensures the continued effectiveness of the variance, than with the present 40 year lease. The City has an interest in realizing additional revenue from the lease with GTC, since the present parking lease does not meet current parking permit rates. Also, the City is currently obli- gated to provide a minimum of 265 lease spaces to GTC through 2026, even if GTC finds substitutes for these spaces elsewhere. A one-time payment by GTC to the City, along with the terms of the Agreement and the Amendment to Parking Lease, were negotiated to remedy the concerns of both parties. The payment substantial- ly improves the City's position regarding the lease terms; also to the benefit of the City, any spaces for which GTC finds suitable substitutes will revert to the City for other uses. Under the Agreement and the Amendment, GTC will receive the as- surances and extension options it desires to effectuate the transfer of the property. - 4 - The payment of $900,000 is particularly well-timed to assist in planned capital improvements for the Third Street Mall. This will reduce the amount the City must finance to implement to im- provements called for in the Mall Specific Plan. BUDGET/FINANCIAL IMPACT The City will receive $900,000 within 10 days of the approval of the attached documents. This sum will be deposited in the General Fund where it will be available for Third Street Mall capital improvements. RECOMMENDATION It is respectfully recommended that the ou it Council: (a} Approve the Agreement (Attachment A) with GTC; (b) Adopt the City Council Resolution (Attachment C) approving the Amendment to Parking Lease; It is respectfully recommended that the Parking Authority adopt the Parking Authority Resolution (Attachment D) approving the Amendment to Parking Lease. Attachments: A. Agreement (with Exhibits) B. Amendment to Parking Lease C. City Council Resolution approving Amendment to Parking Lease D. Parking Authority Resolution approving Amend- ment to Parking Lease Prepared by: John Jalili, City Manager Peggy Curran, Acting Director of Community and Economic Development - 5 - Reference Contract Nos. 4673 (CCS).