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.
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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
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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
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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.
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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
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Reference Contract
Nos. 4673 (CCS).