SR-04-24-2012-3LCity of City Council Report
Santa Monica
City Council Meeting: April 24, 2012
Agenda Item: 3— (--
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Parking Agreement with 1299 Ocean LLC for Parking Structure No. 4
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a Parking Agreement with 1299 Ocean LLC, for Parking Structure No. 4,
regarding the removal of reserved parking spaces, the extension of the lease term and
the payment by the City for use of relinquished parking spaces.
Executive Summary
The proposed parking agreement amendment would make up to 204 reserved and
underutilized parking spaces in Parking Structure 4 available to the public. In return for
relinquishing reserved spaces and using only the amount of spaces that are needed by
tenants, the City would pay 1299 Ocean LLC (Lessee) $20 per month for each space
not used. In addition, the City would agree to extend the term of the lease by ten years,
through August 31, 2031. During the extended ten -year period, the Lessee would be
allowed to purchase up to 204 spaces at the then - current monthly rate, at locations to
be determined by the City, with the City making a good -faith effort to locate the spaces
in close proximity to the office building and with no obligation to pay the Lessee for any
unclaimed parking spaces.
Background
In 1979, the City entered into an agreement with Teleklew Productions, Inc., developer
of an 11 -story office building at 1299 Ocean Avenue. Through Conditional Use Permit
No. 266, the Planning Commission granted the developer the right to fulfill a portion of
its parking obligation with off -site parking in Parking Structure No. 4. Through a
sublease of air - rights between the City and the developer, approved in 1979 and
amended in 1980 and 1981, the developer paid for and constructed three and one -half
levels of parking onto existing Parking Structure No. 4. Of the 304 parking spaces
constructed, the developer retained use of 204 parking spaces during the week in a
reserved area and dedicated 100 spaces to the City for public use. The 40 -year
Agreement expires August 31, 2021. During the term of the Agreement, the developer
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agreed to pay for the parking spaces at a rate that started at $18,000 per year ($7.35
per space per month) and has now increased to $41,713.92 per year ($17.04 per space
per month). On May 7, 1998, the City consented to the assignment of the lease to 1299
Ocean LLC, a California limited partnership.
Discussion
The 204 parking spaces for the Lessee's tenants are located on the upper levels of
Parking Structure No. 4, and are marked as reserved during the weekday for tenants of
1299 Ocean Avenue. The Lessee's parking permit holders avoid the reserved parking
area and park on the lower parking levels, leaving the reserved area largely vacant and
unavailable to the public because of the signage designating the parking spaces as
reserved during weekdays.
In the interest of making unused parking spaces available to the public, the Lessee has
agreed to an amendment of the Agreement to provide for the following:
® All reserved signage will be removed.
• Throughout the duration of the original Agreement, which expires on
August 31, 2021:
• Lessee may purchase up to 204 parking permits per month for its tenants
at 1299 Ocean Avenue, at the rate set forth in the original agreement, now
$17.04 per month, which increases annually by the Consumer Price Index.
• For every parking space not purchased by the Lessee, up to 204 parking
spaces per month, the City will reimburse to Lessee $20 per parking
space per month. The City will be able to re -sell these parking spaces to
monthly parkers, or make the spaces available to daily parkers, at the
City's discretion.
• The City will adjust the electronic signage to the Parking Structure to
reflect the available spaces net the parking permits that the Lessee has
purchased that month.
• The City will agree to offer the Lessee a ten -year option, expiring August 31,
2031, during which time the City will be obligated to sell to the Lessee up to 204
parking permits per month, at the then- current rate. The City will use its best
efforts to assign those parking permits to a public parking facility closest to 1299
Ocean Avenue.
• During the original term of the agreement, the Lessee may request a return to
reserved parking. If the Lessee returns to a reserved parking area, the City's
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obligation to reimburse the lessee for the relinquished spaces will terminate and
the option to extend the lease term by ten years will be reduced by the number of
years that reserved parking is reinstated.
The terms of this agreement are similar to the lease modification negotiated between
the City and Douglas Emmett for the return of up to 155 reserved parking spaces for
public use in Parking Structure No. 2. Addressing reserved parking spaces in Parking
Structures No. 2 and No. 4 was recommended by the Walker Parking Study as a cost -
effective means of increasing parking supply in Downtown Santa Monica.
Financial Impacts & Budget Actions
1299 Ocean LLC currently pays the City $41,713.92 per year for parking
($17.04 1space /mo.), a rate that does not cover the City's maintenance expense. Upon
approval of this Agreement, the City will be able to sell additional parking permits,
netting the City (after deducting the costs of maintenance, parking tax and payment of
$20 per month to 1299 Ocean LLC for the relinquished space) from $17.56 per month
for monthly permits to $96.56 per month for daily users for each parking space that the
Lessee relinquishes. Assuming 1299 Ocean LLC relinquishes 100 parking spaces, the
City would net from $21,072 to $115,872 in additional revenue per year.
There will be no immediate budget/financial impact from this Agreement for FY 11 -12.
Once the parking Agreement is implemented, staff will return to Council to request
budget authority for subsequent years.
Prepared by: Miriam Mack, Economic Development Manager
Approved:
Andy Agle, Director
Housing and Econo'my'e Development
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Forwarded to Council:
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Rod Gould
City Manager
Reference Contract No.
9576 (CCS).