SR 04-25-2023 5D
City Council
Report
City Council Meeting: April 25, 2023
Agenda Item: 5.D
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To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Airport
Subject: Approval of Airport Lease with Ruskin Group Theatre Company
Recommended Action
Staff recommends that Council:
1. Authorize the City Manager to negotiate and execute a Lease with Ruskin Group
Theatre Company (Ruskin) for live theater and educational use s located at 2800
Airport Avenue, reflecting the general terms and conditions below: and
2. Adopt a finding of Categorical Exemption pursuant to Section 15301 (Existing
Facilities), of the California Environmental Quality Act (CEQA) Guidelines .
Summary
Ruskin Group Theatre Company (Ruskin) proposes to lease 5,525 square feet of
building and portable unit space (“Premises”) for live theater and educational use s at
2800 Airport Avenue, located at the Santa Monica Airport. The 2800 Airport Avenue
property has been vacant since April 1, 2023, to allow for extensive building renovations
that are expected to be completed in January 2024. The proposed lease with Ruskin
would include an initial term of 10.5 years and one renewal option for five years. The
initial term includes six months of tenant’s additional construction work.
The term of this lease would extend beyond December 31, 2028, and is thus outside the
parameters set forth in the current Airport Leasing and Licensing Policy (Attachment A)
and as such requires City Council approval. Securing a tenant for the vacant space at
2800 Airport Avenue helps ensure the Airport Fund’s financial self -sufficiency and aligns
with the City’s priorities of economic recovery and expanding community and cultural
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offerings. The recommended lease with Ruskin will generate an estimated $1,671,653
over the initial 10.5-year term.
Discussion
Ruskin has operated as a 49-seat performance theater and theater arts education
venue at 3000 Airport Avenue since 2002. Ruskin seeks to relocate its operations to
2800 Airport Avenue to expand its operations and ensure the stability of its arts and
educational offerings to the community. 2800 Airport Avenue was previously leased to
Santa Monica College. However, that lease ended on March 31, 2023.
The City proposes a new lease with Ruskin for 5,525 square feet representing a portion
of 2800 Airport Avenue main building and five portable units. The new lease represents
a 50% increase in area for Ruskin compared to their previous location. The City and
Ruskin would finalize negotiations and execute a lease agreement based on the
following proposed terms and conditions.
• The proposed lease is a 10.5-year term that includes a 4% annual escalation
provision.
• A security deposit equal to one months’ rent would be due at the execution of the
lease agreement.
• The proposed monthly rent of $12,107 reflects fair market value.
The 10.5-year term of the proposed lease is estimated to begin on or about July 1,
2023, and expire on December 31, 2033, with an option to renew for an additional five
years. If exercised, the renewal term would expire on or about December 31, 2038, and
would be set at the market rate at the beginning of the option period.
The 2800 Airport Avenue property consists of a main building , 12 portable units varying
in size and a building with kilns that will continue to be used by Santa Monica College
under a lease that is currently being negotiated with the College. Ruskin proposes to
lease a portion of the main building and five of the portable units. The main building and
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the portable units are currently vacant to allow for the City to complete substantial and
necessary facility improvements. The funds to cover the costs of these improvements
are included in the current CIP budget. Staff anticipates this work to be completed by
January 2024, at which point Ruskin would undertake additional construction for an
additional six months. Ruskin’s construction is anticipated to conclude by July 1, 2024.
Ruskin will receive a six-month tenant improvement credit for their improvements to the
space subject to their completion of the work.
Ruskin proposes to invest approximately $500,000 to improve the City’s building. The
proposed improvements include a live theater for performances, rehearsals, and acting
classes. Ruskin will be responsible for all costs associated with the design, engineering,
and construction of the capital improvements which include but are not limited to all
interior buildouts, electrical, mechanical (HVAC), furniture, fixtures, accessories, and
finishes. Any improvements undertaken by Ruskin would revert to the City at the
conclusion of the lease term.
The proposed lease would be Triple Net wherein the tenant is required to pay all
property taxes and assessments (including possessory interest tax), insurances and
utilities. Additionally, Ruskin would be responsible for all services, repairs,
replacements, maintenance, improvements, or items related to compliance associated
with the premises. Ruskin would be required to comply with all City building code
regulations, planning standards, and any applicable FAA regulation, as a condition of
the lease.
Ruskin will employ approximately four workers on-site. Therefore, Ruskin will not be
subject to the Transportation Demand Management (TDM) requirements of the City to
address any transportation and/or parking management issues.
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Past Council Actions
Meeting Date Description
08/2018 (attachment A) Santa Monica Airport Leasing and Licensing Policy
Environmental Review
The lease is categorically exempt from CEQA pursuant to Section 15301 of CEQA.
Section 15301 exempts Class 1 (Existing Facilities) projects from CEQA, which include
the “the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration
of existing public or private structures, facilities, mechanical equipment, or topographical
features, involving negligible or no expansion of existing or former use”. The lease
would allow reoccupation of existing airport space and would not result in the expansion
of the airport such that a physical impact would occur. Therefore, the lease is
categorically exempt pursuant to Section 15301 of CEQA.
Financial Impacts and Budget Actions
The recommended lease with Ruskin would generate an estimated $1,671,653 over the
initial 10.5-year term. Revenues generated by the proposed lease would be included in
future fiscal year budgets.
There is no immediate financial impact or budget action necessary for the current fiscal
year as a result of recommended action. Staff will include revenue budget actions in the
Proposed FY 2023-25 Budget.
Prepared By: Kate Schlesinger, Senior Administrative Analyst
Approved
Forwarded to Council
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Attachments:
A. AIRPORT LEASING AND LICENSING POLICY 2018-08 (1)
B. 20230310 Ruskin Oaks Form
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1
SANTA MONICA CITY COUNCIL AIRPORT LEASING AND LICENSING POLICY
Purpose. The purpose of this Airport Leasing and Licensing policy is to
establish and declare City policy on matters related to airport leasing. This
Leasing Policy shall be used by the City Manager to analyze leasing and
licensing issues, to present leasing and licensing recommendations to the City
Council, and to render leasing and licensing decisions under the authority
granted by the City Council.
By adopting the Airport Lease Policy, the City Council seeks, to the extent
consistent with the Consent Decree signed by the City of Santa Monica
and the U.S. Justice Department on behalf of the Federal Aviation
Administration, to have an airport tenant mix that:
• Is harmonious with the nearby built environment by protecting the
health and safety of Airport neighbors.
• Maintains a sustainable Airport Fund that is independent from the
General Fund and other subsidies.
• Comports with any applicable legal requirements and protects the
City’s rights that relate to leases at the Airport.
• Continues to provide opportunities for arts, education, and culture,
including, but not limited to, the Artist Space Program administered
in conjunction with Cultural Affairs Division.
• Establishes practices and procedures for evaluating potential
leasehold interests, and for lease management and administration.
• Fosters uses and practices that are sensitive to the environment and
protect the health of Airport neighbors and users and protect the City
from future environmental damage exposure.
General Provisions. The majority of the Airport revenue is derived from
leases. To help support the Airport’s fiscal self‐sufficiency, all rents, fees,
and charges must reflect fair market value. To achieve the goals of the
Leasing Policy, the policy shall be managed in a manner consistent with
the following standards:
5.D.a
Packet Pg. 104 Attachment: AIRPORT LEASING AND LICENSING POLICY 2018-08 (1) (5602 : Airport Lease Ruskin Group Theatre)
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SECTION A: USES
1. Authorized Uses: Authorized uses include: (a) uses required by the
Consent Decree; and (b) low intensity uses that are compatible with
surrounding uses, serve the adjacent community, and are consistent with
the City's environmental goals and policies. Examples of uses in category
(b) include, but are not limited to: parks and open space, arts/cultural,
creative space, professional theaters, museums, artist studios, art
galleries, photograph studios, uses customary or incidental to the
production or distribution of motion pictures, educational facilities,
professional and general offices, public or private schools existing prior to
September of 1984, warehouses, self‐storage/public mini‐warehouses,
and restaurants with 500 square feet of floor area or less.
2. Conditionally permitted uses: Parking and automobile storage lots
and structures. Restaurants with over 500 square feet of floor area.
Theaters. New public or private schools or educational institutions.
3. Prohibited Uses: Prohibited uses include: any use involving the
manufacture, processing, storage, or treatment of products, which by
nature of the operation is likely to be obnoxious or offensive to the
surrounding environment; construction of new general office buildings;
any use not specifically authorized as a permitted or conditionally
permitted use; and high intensity uses that are incompatible with the
surrounding residential uses.
SECTION B: TERMS AND CONDITIONS
1. Term for Hangars. All hangars shall be leased on a month‐to‐month basis.
2. Term for Tie‐Downs. All tie‐downs shall be leased on a month‐
to‐ month basis.
3. Term for Aeronautical Service Providers. Consistent with the terms of
the Consent Decree, aeronautical service providers may be offered up
to three‐year lease terms that comport with this Leasing Policy and the
Minimum Standards for Commercial Aeronautical Services at Santa
Monica Municipal Airport (the “Minimum Standards”), so long as the
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expiration date of the lease does not extend beyond December 31,
2028.
4. Term for Non‐Aviation Tenants. Lease terms may be month‐to‐month
or longer. However, no lease shall have a term that goes beyond
December 31, 2028.
5. Environmental Responsibility. New requests to lease and existing
leases shall be reviewed to assess potential negative effects on the
environment. The City may require environmental studies or testing
as appropriate and necessary, and any needed remediation shall be
performed prior to establishment of new uses. All lessees shall be
responsible for any environmental contamination, resulting from
their prior use, as a condition to a renewed or extended lease.
Environmental clean‐up will be required as a condition of any renewal
or extension. At the time of the application, an assessment of the
proposed use will be conducted, and appropriate insurance and/or
remediation requirements will be incorporated into the lease based
on proposed usage.
6. Rates. All new and renewed leases will be leased at prevailing
market rates and rates will be adjusted to stay current with market
conditions and as new/renewed leases arise.
7. Percentage Rent Provision. In addition to a base rent, the City may
elect to require that certain leases include a percentage rent provision,
which can be differentiated by categories of sales. The City shall have
the right to audit tenant's financial records to ascertain that the gross
sales figures reported by the tenant are accurate.
8. Existing Tenants. All existing airport tenants will be given the
opportunity to submit a lease application to the City. The City is under
no obligation to offer lease agreements. Submitting an application to
the City does not obligate the City to enter into lease negotiations,
offer a lease agreement, or execute a lease agreement. The decision to
execute a lease agreement will be made solely within the City’s
discretion as landlord and property owner.
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Packet Pg. 106 Attachment: AIRPORT LEASING AND LICENSING POLICY 2018-08 (1) (5602 : Airport Lease Ruskin Group Theatre)
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9. Whole Building Leases. Whole building leases may, at the City’s
discretion, be subject to public Requests for Proposals intended to
optimize leasehold occupancy and the self‐sustainability of the airport.
Tenants under a whole building lease shall be responsible for
maintenance and repair of said buildings.
10. Transfer of Interest. Space sharing is prohibited without the written
consent of the City and granting or withholding consent will be
conditioned on express standards and conditions set forth in the lease.
11. Lease and License Areas. Operation and improvements to lease and
license areas are subject to the City’s standard regulatory rules,
review and approval process.
12. Triple Net Leases. The City may require tenants to pay all property
taxes and assessments (including Possessory Interest Tax), insurance,
and utilities.
13. Commercial Operations Permit (COP). Prospective tenants proposing
to use the Santa Monica Airport to engage in an activity that requires
a business license from the City are required to acquire a commercial
operations permit issued by the City Manager. All COPs will be
presented to the Airport Commission for their recommendation and
comment prior to City Manager’s approval.
14. Master Tenants. Master tenant agreements are to be phased out in
an orderly transition.
15. Sub‐Leasing. New sub‐leasing shall be prohibited. Existing sub‐
tenancies shall be subject to an orderly phase‐out at the sole
discretion of the City.
16. Insurance. Airport lease agreements shall minimize the City’s
financial and economic risk, by incorporating reasonable
indemnification and insurance provisions.
17. Daily and Transient Users. Daily and transient uses shall be permitted.
SECTION C: PERFORMANCE STANDARDS
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1. Compatible and Harmonious. All lessees shall use the airport and any
airport property in a manner that is compatible with City policies and with
the adjacent residential uses; to encourage activities that complement
adjacent residential and commercial uses; to establish practices that are
sensitive to the environment and protect the City from future
environmental exposure; and for aeronautical service providers, comply
with the Minimum Standards.
2. All City‐owned buildings appropriate and suitable for leasing may be
subject to a public procurement and solicitation process to identify
prospective tenants and licensees whose financial and professional
experience, and products and/or services are consistent with the Leasing
Standards set forth herein.
3. All prospective tenants must submit a Lease or License Application to the
City. Information contained in the Lease Application shall describe the
proposed use for the available space; provide information about the
respondent; provide references; describe in detail the financial capability
of the respondent to perform; and set forth preliminary terms and
conditions.
4. Hangars
a. Hangars that have a land lease agreement with the City will be
on a month‐to‐month tenancy under a City approved lease
agreement which will be updated as deemed necessary by the
City.
5. Recruitment for artist day studios will adhere to the criteria set forth by
the Cultural Affairs Division of Community and Cultural Services
Department. Candidate tenants for available Artist Day Studio space are
required to file Program applications for screening purposes, and
qualifying artists are selected only from the screened waiting list.
SECTION D: MAINTENANCE AND TENANT IMPROVEMENTS
1. All leaseholders shall be responsible for maintaining their facilities in
attractive and safe condition, in compliance with applicable building and
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life safety codes and all applicable environmental laws, ordinances,
regulations and other city standards.
2. Facilities will be inspected prior to new or extended leasehold occupancy
and refurbished, by the City or tenant (at the City’s election), to a decent,
safe and sanitary condition appropriate for use. If tenant makes
improvements to the facility as a mutually agreed upon condition of a
lease, the City must first review and approve the proposed design and
scope of work. All necessary building permits must be obtained, and the
work must be inspected for compliance with applicable code(s).
Appropriate rental credits for the approved work performed may be
negotiated as part of the lease. Any Tenant Improvement Credit that
exceeds two months’ worth of tenant monthly rent must be approved by
the Airport Director.
3. Each tenant or licensee will be responsible for interior maintenance and
repair at its sole expense, and the City generally will retain responsibility
for maintenance and repair of roofs, building exteriors, landscaping and
common use parking for all Airport‐managed leaseholds unless otherwise
specified in the lease or license. Tenants who lease whole buildings from
the City will be responsible for any and all maintenance, repair and
improvements including roofs, building equipment and exteriors of the
facilities as well as interior maintenance and repairs.
4. Tenants shall respond to the City’s written inquiries regarding any
complaints or issues. Tenant will provide an action plan for improvement
if so requested by the City.
5. As applicable, the above requirements may be incorporated in leases,
licenses and other agreements. In addition, the City may add to any Lease
or License further or different or additional operational and performance
standards as the City concludes are appropriate to the particular Tenant’s
operation.
6. Upon confirmation that the proposed tenancy is consistent with this
Leasing Policy, a lease agreement will be prepared for review by the City
Attorney and execution by the prospective tenant before being referred
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to the City Manager for approval. Leases for terms greater than terms
specified in these guidelines require City Council approval.
SECTION E: LEASE APPROVALS AND DELEGATION OF AUTHORITY
1. The City Manager has the authority to negotiate and execute month‐to‐
month leases, leases with aeronautical service providers, and leases that
expire prior to or on December 31, 2028, provided the City Manager finds
the proposed use is consistent with this Leasing Policy, the Minimum
Standards, and the Consent Decree. To be valid, such leases must be on
the basis of written agreements prepared and approved as to form by the
City Attorney. Leases for terms of occupancy of more than five years or
with an expiration date beyond December 31, 2028, or otherwise outside
the parameters established by this Policy, will require City Council
approval.
2. The City may cooperate with commercial real estate brokers who
are authorized to negotiate leases on behalf of prospective
tenants.
SECTION F: GENERAL PROVISIONS
This Leasing Policy may be altered by the City at any time, in its sole discretion,
and shall not create any right or reliance interest for any person.
Updated August 2018
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Packet Pg. 110 Attachment: AIRPORT LEASING AND LICENSING POLICY 2018-08 (1) (5602 : Airport Lease Ruskin Group Theatre)
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Packet Pg. 111 Attachment: 20230310 Ruskin Oaks Form (5602 : Airport Lease Ruskin Group Theatre)
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Packet Pg. 112 Attachment: 20230310 Ruskin Oaks Form (5602 : Airport Lease Ruskin Group Theatre)