sr-032409-1lc'7®
City of
Santa MonicaW
City Council Report
City Council Meeting: March 24, 2009
Agenda Item: ~-'~--
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Office Space Lease at 1717 4tn Street
Recommended Action
Staff recommends that the Council authorize the City Manager to negotiate and execute
a Lease with PCA I, LP for City offices at 1717 4th Street.
Executive Summary
The City currently leases and subleases 20,703 sq. ft. of office space and 420 sq. ft. of
storage space at 1717 4th Street. The City leases 6,434 sq. ft. from the building owner o
house the Finance Department and subleases an additional 14,269 sq. ft. from the Los
Angeles Times. The leases and subleases expire January 31, 2010. The Tribune
Company, parent company of the Los Angeles Times, has filed for Bankruptcy .and
seeks to terminate certain unexpired. leases including its lease at 1717 4th Street. The
owner of the building is willing to consolidate the City's lease for a term of ten years,
with two five year options.
Discussion
Currently, the City leases 6,434 sq. ft. in 1717 4th Street from PCA I, LP and subleases
an additional 14,269 sq. ft. from the Los Angeles TimeslTribune Company. The lease
and sublease expire January 31, 2010. On March 9; 2009, the. City was notified that the
Tribune Company has filed a motion with the Bankruptcy Court to reject several leases,
including its lease at 1717 Ott' Street.
Prior to notification by the Tribune Company of the bankruptcy action the City. had
begun discussions with the building owner about extending its lease and the building
owner was amenable to leasing the. space directly to the City for a term that would have
begun February 1, 2010. In light of the bankruptcy action, the owner is willing to
1
negotiate a lease for all the space the City currently occupies. Staff is still negotiating
some of the deal points, but the minimum acceptable terms are described below.
Commencement As soon as final lease documents are executed.
Date:-
Term Ends; February 1, 2020
Options Two five-year options
Base Rental Rate Until January 31, 2010, no more than the amount City currently
pays; beginning February 1, 2010, $2.80 per sq. ft adjusted by
escalation rate.
Storage Rental $560 per month with escalations defined below
Rate
Escalations CPI, no less than 2% and not to exceed 3% per year
Right of First Owner shall provide Lessee Right of First Refusal to lease
Refusal to Lease or additional space or to acquire the property should Owner sell the
Acquire Property office building separately from the hotel
Tenant An allowance of $360,000
Improvement
Allowance
Parking Eight parking spaces to be provided free plus ten complimentary
validations per month
Financial Impacts & Budget Actions
Lease payments will be charged to account 01221.522620, .59229.522620 and
01207.522620. Sufficient funds in the department's budget will cover this expenditure
for the remainder of the year, and on-going costs will be reflected in next year's budget.
2
Prepared by:
Elana Buegoff, Sr. Development Analyst
Andy Agle, Director
Housing and Econo
Forwarded to Council:
3
Reference Contract No.
9047 (CCS).