SR 06-27-2023 5A
City Council
Report
City Council Meeting: June 27, 2023
Agenda Item: 5.A
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To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Airport
Subject: Award RFP #349 to Corporate Realty Group for Airport Commercial Real
Estate Brokerage and Consulting Services
Recommended Action
Staff recommends that the City Council:
1. Award RFP #349 to Corporate Realty Group (CRG), a California-based
corporation, to provide commercial real estate brokerage services and related
consulting services for non-aviation properties at the Santa Monica Airport.
2. Authorize the City Manager to negotiate and execute an agreement with CRG
in an amount not to exceed $298,608 for three years, with two additional one-
year renewal options of $134,877 for renewal option one and $333,962 for
renewal option two, for a total amount not to exceed $767,447 (including a
10% contingency) over a five-year period, with future year funding contingent
on Council budget approval.
3. Adopt a finding of no possibility of significant effect pursuant to Section
15061(b)(3) (Common Sense Exemption) of the California Environmental
Quality Act (CEQA) Guidelines.
Summary
The City of Santa Monica currently contracts with a professional commercial real estate
brokerage firm to assist staff with commercial real estate broker and consulting services
for City-owned properties at the Santa Monica Airport. Professional commercial real
estate brokerage services ensure that the Airport secures fair market leasing rates as
required by the Santa Monica Leasing Policy and Guidelines adopted in 2018
(Attachment A). Based on the results of a competitive Request for Proposal (RFP)
process, staff recommends that a new professional services agreement be awarded to
Corporate Realty Group (CRG) to continue providing these services to the City for an
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amount not to exceed $767,447 (including a 10% contingency) for a term of up to five
years.
Discussion
The City is the owner and operator of the Santa Monica Airport. The Airport includes
aviation and non-aviation facilities with various uses that include aeronautical services,
commercial office space, creative space, educational classrooms, artist studios, aviation
hangars, tie-downs, and a museum. Approximately 92% of Airport revenues are derived
from leasing these properties. The City’s ability to optimize revenues from the Airport’s
leasable space helps ensure the Airport Fund’s financial self-sufficiency and aligns with
the City’s priority of Economic Recovery.
There are certain facilities at the Airport that due to their size or complexity within the
rental market require the expertise of a commercial real estate broker that can
optimize marketing and negotiations to yield maximum revenues for the City. The
Airport currently contracts with Corporate Realty Group (CRG) for professional
commercial real estate brokerage and consulting for five of the Airport’s non-aviation-
related properties, representing approximately 215,000 square feet of non-aviation
uses and commercial office space.
The City’s contract with CRG will expire on August 31, 2023. To ensure the continuity
of such services, the City issued an RFP for the selection of a vendor to provide non-
aviation commercial real estate brokerage, and consulting services at the Airport.
Staff recommends CRG as the best and most qualified firm to provide these services.
If approved by Council, staff will proceed to negotiate a new professional services
agreement with CRG and have it become effective on September 1, 2023.
Scope of Services
Brokerage services include facilitating, negotiating, and completing new and renewal
lease agreements with the City of Santa Monica for non-aviation properties assigned
including artist studios, commercial offices, event venues, shops, and restaurants.
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CRG will provide consulting services in matters relating to non-aviation real estate
brokerage and lease negotiations.
Pricing
Commissions
CRG ’s brokerage fees will be commission based. CRG would be eligible to earn
commissions for completing any new or renewal lease agreements at the Airport during
the contract period. The new lease commission percentages as well as the renewal rate
are favorable to the City as they are less than other brokers’ comparable rates and are
consistent with CRG's current rates. The yearly budget amount varies based on the
commissions for anticipated new leases and the renewal of expiring leases in each year
of the contract, with the City’s largest tenant renewal scheduled for renewal option year
two. Commissions would be based on the following terms and conditions:
Table 1. CRG Brokerage Commission Fee Schedule
Reimbursements Years Percentage or Flat Fee With Tenant’s Representative/
Outside Broker
New Term
Leases
1-5 3% of aggregate lease
value
An additional 3% of aggregate
lease value
6-10 1.5% of aggregate
lease value
An additional 2% of aggregate
lease value
New Month-to-
Month Leases
Equal to one month’s
rent
An additional 6% or the value of 1
month’s rent, whichever is greater.
Term Lease
Renewals
1-5 2% of aggregate lease
value
Additional 2%-4%
6-10 1% of aggregate lease
value
Additional 1%-2%
Term Lease
Expansions
1-5 2% of aggregate lease
value
An additional 2%-4% of aggregate
lease value.
6-10 1% of aggregate lease
value
An additional 1%-2% of aggregate
lease value.
Consulting Service Fees
CRG will provide five hours of consulting services at no cost for each project (eg.
research reports on competitive market rates and financial analyses). CRG will provide
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the City with a proposal and scope of services for consulting projects which exceed five
hours. CRG consulting fees are based on the following terms:
Table 2. CRG Consulting Fee Schedule
Personnel Hourly Rates Percentage of Scope of Work
Craig Zund/Principal $225.00 Per Hour 90%
Associates $150.00 Per Hour 10%
Project Manager $125.00 Per Hour On Demand
Consultant Selection
Bidder Recommendation
Best Qualified Firm Corporate Realty Group
Evaluation Criteria Experience and technical competence; quality control;
conceptual plan and approach; stability and references, and
cost of services based on fair and cost-effective work pricing.
Municipal Code SMMC 2.24.190
Proposals Received
Clear Blue Commercial Muselli Commercial Realtors
Corporate Realty Group Transwestern Real Estate
RFP Data
Posted On Posted On
Advertised In
(City Charter & SMMC)
Vendors
Downloaded
Date Publicly
Opened
March 10, 2023 City’s Online
Bidding Site
Santa Monica Daily
Press 13 April 14, 2023
Justification to Award
Responses to the RFP were reviewed by a selection panel from the Public Works
Department (Airport Division), Economic Development Division, and Architectural
Services Division. Proposals were evaluated based on the criteria in SMMC 2.24.190,
staff recommends Corporate Realty Group, as the best-qualified firm to provide
commercial real estate brokerage, and related consulting services to the Santa Monica
Airport based on the firm’s documented expertise in commercial real estate and
consulting services, experience with similar projects at the City; conceptual plan and
approach, quality control; positive reports from reference checks, and fair and cost-
effective pricing of services.
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Environmental Review
The award of an agreement for commercial real estate services would have no
possibility of significant effect on the environment, and therefore, is exempt pursuant to
Section 15061(b)(3) (Common Sense Exemption) of the California Environmental
Quality Act (CEQA) Guidelines.
Past Council Actions
Meeting Date Description
8/14/2018 (Attachment A) Santa Monica Airport Leasing and Licensing Policy
Financial Impacts and Budget Actions
Staff seeks authority to approve available funding from the Airport Fund to award an
agreement with Corporate Realty Group to provide commercial real estate brokerage
and related consulting services for the Santa Monica Airport. Funds are included in the
FY 2023-25 Proposed Biennial Budget. Future year funding is contingent on Council
budget approval.
Agreement Request
FY 2023-24
Request Amount Future Years Department # Total Contract Amount
$121,599 $645,847 57500001.552010 $767,447
Prepared By: Ria Valas, Real Estate Project Manager
Approved
Forwarded to Council
Attachments:
A. Airport Leasing and Licensing Policy 2018-08
B. Oaks Initiative Form - Corporate Realty Group (CRG)
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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.A.a
Packet Pg. 27 Attachment: Airport Leasing and Licensing Policy 2018-08 (5539 : Award RFP Airport Commercial Real Estate Brokerage and Consulting
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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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Packet Pg. 28 Attachment: Airport Leasing and Licensing Policy 2018-08 (5539 : Award RFP Airport Commercial Real Estate Brokerage and Consulting
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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. 29 Attachment: Airport Leasing and Licensing Policy 2018-08 (5539 : Award RFP Airport Commercial Real Estate Brokerage and Consulting
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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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Packet Pg. 30 Attachment: Airport Leasing and Licensing Policy 2018-08 (5539 : Award RFP Airport Commercial Real Estate Brokerage and Consulting
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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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Packet Pg. 31 Attachment: Airport Leasing and Licensing Policy 2018-08 (5539 : Award RFP Airport Commercial Real Estate Brokerage and Consulting
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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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Packet Pg. 32 Attachment: Airport Leasing and Licensing Policy 2018-08 (5539 : Award RFP Airport Commercial Real Estate Brokerage and Consulting
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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
5.A.a
Packet Pg. 33 Attachment: Airport Leasing and Licensing Policy 2018-08 (5539 : Award RFP Airport Commercial Real Estate Brokerage and Consulting
CITY OF SANTA MONICA
OAKS INITI ATIVE NOTICE
NOTICE TO APPLICANTS, BIDDERS, PROPOSERS
AND OTHERS SEEKING DISCRETIONARY PERMITS, CONTRACTS,
OR OTHER BENEFITS FROM THE CITY OF SANTA MONICA
Santa Monica’s voters adopted a City Charter amendment commonly known as
the Oaks Initiative. The Oaks Initiative requires the City to provide this notice and
information about the Initiative’s requirements. You may obtain a full copy of the Initiative’s
text from the City Clerk.
This information is required by City Charter Article XXII—Taxpayer Protection. It
prohibits a public off icial from receiving, and a person or entity from conferring, specified
personal benef its or campaign advantages from a person or entity after the official votes,
or otherwise takes official action, to award a “public benefit” to that person or entity. The
prohibition applies within and outside of the geographical boundaries of Santa Monica.
All persons or entities applying or receiving public benefits from the City of Santa
Monica shall provide the names of trustees, directors, partners, and officers, and names
of persons with more than a 10% equity, participation or revenue interest. An exception
exists f or persons serving in those capacities as volunteers, without compensation, for
organizations exempt from income taxes under Section 501(c)(3), (4), or (6), of the
Internal Revenue Code. However, this exception does not apply if the organization is a
political committee or controls political committees. Examples of a “public benefit” include
public contracts to provide goods or services worth more than $25,000 or a land use
approval worth more than $25,000 over a 12-month period.
In order to facilitate compliance with the requirements of the Oaks Initiative, the City
compiles and maintains certain information. That information includes the name of any
person or persons who is seeking a “public benefit.” If the “public benefit” is sought by an
entity, rather than an individual person, the information includes the name of every person
who is: (a) trustee, (b) director, (c) partner, (d) officer, or has (e) more than a ten percent
interest in the entity. Therefore, if you are seeking a “public benefit” covered by the Oaks
Initiative, you must supply that information on the Oaks Initiative Disclosure Form. This
inf ormation must be updated and supplied every 12 months.
5.A.b
Packet Pg. 34 Attachment: Oaks Initiative Form - Corporate Realty Group (CRG) (5539 : Award RFP Airport Commercial Real Estate Brokerage and Consulting
CITY OF SANTA MONICA
OAKS INITI ATIVE DISCLOSURE FORM
In order to facilitate compliance with the requirements of the Oaks Initiative, the City
compiles and maintains certain information. That information includes the name of any
person or persons who is seeking a “public benefit.” If the “public benefit” is sought by
an entity, rather than an individual person, the information includes the name of every
person who is: (a) trustee, (b) director, (c) partner, (d) officer, or has (e) more than a ten
percent interest in the entity.
Public benef its include:
1. Personal services contracts in excess of $25,000 over any 12-month period;
2. Sale of material, equipment or supplies to the City in excess of $25,000 over a 12-
month period;
3. Purchase, sale or lease of real property to or from the City in excess of $25,000
over a 12- month period;
4. Non-competitive franchise awards with gross revenue of $50,000 or more in any
12-month period;
5. Land use variance, special use permit, or other exception to an established land
use plan, where the decision has a value in excess of $25,000;
6. Tax “abatement, exception, or benefit” of a value in excess of $5,000 in any 12-
month period; or
7. Payment of “cash or specie” of a net value to the recipient of $10,000 in any 12-
month period.
Name(s) of persons or entities receiving public benefit:
Name(s) of trustees, directors, partners, and officers:
Name(s) of persons with more than a 10% equity, participation, or revenue interest:
Prepared by: ____________________________Title: __________________________
Signature: ______________________________________ Date: ________________
Email: ____________________________________ Phone: ____________________
FOR CITY USE ONLY:
Bid/PO/Contract # ____________________________ Permit # ___________________________
Craig Zund Owner / CEO
5/11/23
Craig@Corprg.com (310) 570-5011
Corporate Realty Group, Inc
Craig Zund
Craig Zund
5.A.b
Packet Pg. 35 Attachment: Oaks Initiative Form - Corporate Realty Group (CRG) (5539 : Award RFP Airport Commercial Real Estate Brokerage and Consulting