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City Council Meeting: July 12, 2011
Agenda Item:
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Modification of Lease at 1212 Fifth Street
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a second amendment to Lease No. 8404 with Wilshire & Fifth I & II, LLC for
continued occupancy by the Water Division at 1212 Fifth Street, Third Floor to:
1. Extend the term of the lease for an additional three years, from January 31,
2012; to January 31, 2015, and provide for two one-year options;
2. Effective February 1, 2012, reduce the monthly base rent from $15,911.32 to
$12,834 and increase the monthly parking rate for 15 spaces from $85 to $121
each; and
3. Effective February 1, 2013, reduce the annual rent escalator from five percent to
conform to the Consumer Price Index, but not less than three percent nor more
than five percent.
Executive Summary
Wilshire & Fifth I & II, LLC, owner of 1212 Fifth Street, has agreed to modify the terms of
its lease with the City for third floor space occupied by the Water Resources Division
administrative offices. The lease is scheduled to expire on January 31, 2012. Staff is
recommending athree-year lease extension with two one-year options. The rent is
proposed to be reduced from $3.84 per sq. ft. per month to $3.10 per sq. ft. per month.
The fee for parking for 15 reserved spaces is proposed to be increased from $85 per
space to $121 per space, and the annual rent escalator is proposed to be reduced from
five percent to the Consumer Price Index, but not less than three percent nor more than
five percent. The Water Division's annual lease payment, which includes parking, will
decrease from $206,236 to $175,788 for a total annual savings of $30,448.
Background
The Water Resources Division has leased administrative offices at 1212 Fifth Street
since 1994. The Division occupies 4,140 sq. ft. on the third floor. The most recent
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lease, authorized by Council on October 26. 2004, and amended on January 8. 2008,
expires on January 31, 2012.
Discussion
Staff anticipates that the Water Division will move to a space at the City Yards upon the
completion of the Yards Master Plan project in three or four years. In the meantime, the
Water Division will remain in its current location on a short-term basis. Rather than
endure a vacancy and have to contribute towards new tenant improvements, the owner
has agreed to modify the terms of the existing lease, as follows:
1. Reduce the base rent from $3.84 per sq. ft. per month to $3.10 per sq. ft. per
month;
2. Increase the parking rate for 15 reserved spaces from $85 per space to $121
per space monthly, which matches the monthly rate charged in the City's parking
structures; and
3. Reduce the annual rent escalator from five percent to the Consumer Price Index,
but not less than three percent nor more than five percent.
Financial Impacts & Budget Actions
Beginning February 1, 2012, rental expenses for the Water Resources Division will be
$175,788, a reduction of $30,448 per year. Lease payments are split 50/50 between
the Water and Wastewater Funds at Account Nos. 25671.522620 and 31661.522620.
Prepared by: Donna Rickman, Senior Development Analyst
Approved:
Andy Agle, C
Housing and
Forwarded to Council:
Rod Gould
City Manager
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Reference Amended
Lease No. 8404 (CCS)