SR-08-13-2013-3DAgEm
City of City Council
Santa Modica
City Council Meeting: August 18, 2013
Agenda Item: .
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Limited Term Lease Agreement for 12040 -12048 Wilshire Boulevard
Recommended Action
Staff recommends that the City Council authorize the City Manager to:
1) negotiate and execute a lease agreement for the use of the City -owned property
located at 12040 -12048 Wilshire Boulevard with TruGreen LandCare in the
amount of $5,000 per month, plus a consumer price index (CPI) escalator, for a
base term of three years with two one -year options to extend at the City's sole
discretion.
2) authorize the budget changes as outlined in the Financial Impacts and Budget
section of this report.
Executive Summary
On June 20, 2013, staff issued a Request for Proposals (RFP) to solicit proposals to
utilize the City's property at 12040 -12048 Wilshire Boulevard in an "as -is" condition on a
limited -term basis until the City's Water Resources Division solidifies its long -term plans
for the property. TruGreen Landcare (TruGreen) is recommended for the lease as it will
use the site "as is" and pay rent in the amount of $5,000 per month, plus a consumer
price index (CPI) escalator, for a base term of three years with two one -year options to
extend at the City's sole discretion. Annual rent would start at $60,000.
Background
The City's property at 12040 -12048 Wilshire Boulevard (Property) is an existing surface
parking lot of approximately 10,000 square feet, located at the southeast corner of
Wilshire and Bundy, in the City of Los Angeles, adjacent to the City's Arcadia Water
Treatment Plant. The City received the Property as part of a settlement with
Proctor & Gamble in 2009.
Since 2010, the City has issued RFPs for limited -term use of the Property to generate
revenues until long -term plans for the water treatment plant are developed. In response
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to numerous inquiries from Christmas tree lot operators, past RFPs were targeted to
provide Christmas tree lot operators the opportunity to rent the property for a limited
period of up to ninety days (November, December and January) during the Christmas
season. Most recently, on September 11, 2012, Council authorized a short -term license
agreement for 61 days with Chauvet Tree Farms to rent the property in November and
December 2012 for $10,004. The remaining months of the year, the City's Water
Division utilizes the Property for its operations on an as- needed basis. As plans for the
Property are anticipated to take approximately four to five years to complete, the City's
Water Resources Division supports a limited -term, year -round use for the Property
provided no permanent or long term improvements are made by any proposed user.
Discussion
In reviewing the recent history of use, staff identified the Property as an under - utilized
asset that could generate additional revenue on a limited -term basis. Accordingly, staff
advertised the RFP through Planet Bids as well as on the Housing and Economic
Department's website on June 20, 2013 to commence the competitive bid process.
The RFP requested proposals from potential tenants who could meet the requirements
of utilizing the Property in an "as -is" condition, on a limited -term full year basis, for up to
five years or until the City completes its plans and requires the use of the Property.
The City received one proposal in response to the RFP. TruGreen's proposal is
recommended as it satisfied the requirements of the RFP based on their experience
operating similar properties and by committing to using the Property "as is ", paying rent
of $5,000 per month plus utilities and insurance as requested in the RFP.
TruGreen proposes to use the Property for the purpose of vehicle and equipment
storage, between the hours of 6am and 4pm, Sundays through Saturdays. The vehicles
and equipment proposed to be stored on the Property are used to provide services
related to the city's landscape maintenance services contract awarded to TruGreen on
August 12, 2012. TruGreen's contract to provide turf mowing, aeration, fertilization,
weeding, trimming, trash pick -up, plant replacement and irrigation repairs at City parks,
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various City facilities, streetscapes and other City -owned property, is effective for five
years with two one -year extension options.
Staff recommends that the proposed lease agreement be structured as a triple -net
(tenant responsible for utilities, insurance, maintenance and repairs) lease in the
amount of $5,000 per month with an annual CPI escalator of no less than two percent,
for a lease term of three years with two one -year options to extend at the City's sole
discretion. The recommended lease terms are summarized as follows:
Recommended Lease Terms
Termination date
September 1, 2016, with two one -year
options to extend at the City's sole
discretion
Base rental rate
$5,000 per month, triple net
Escalation rate
CPI increase of no less than two percent
annual)
Financial Impacts & Budget Actions
The proposed Lease Agreement with TruGreen LandCare for use of the City -owned
property located at 12040 -12048 Wilshire Boulevard will generate annual revenues of
$60,000 (plus a consumer price index inflation factor) for the base three -year term.
A revenue increase of $60,000 for FY 2013 -14 and $61,500 for FY 2014 -15 is
requested at account 25671.402350 to reflect receipt of the lease revenues.
Prepared by: Nia Tang, Senior Development Analyst
Forwarded to Council:
Andy Agle, Direct Rod Gould
Housing and Eco is Development City Manager
Attachment A: Site Map
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Attachment A — Site Map
12040 -12048 Wilshire Boulevard
Located at the southeast corner of Wilshire and Bundy, in the City of Los Angeles (the Property)
Reference:
Agreement No.9778
(CCS)