Item 9-A (continued from
11/28/00)
Council
Meeting: November 28, 2000 Santa
Monica, California
SUPPLEMENTAL REPORT – EXHIBIT A
SUPPLEMENTAL REPORT – EXHIBIT B
To: Mayor and City Council
From: City Staff
Subject: Proposed Guidelines for Leasing City-Owned Non-Aviation Properties
at Santa Monica Airport and other Properties in the Bayside District and at
Bergamot Station
This report recommends City Council approval of
guidelines for Leasing City-Owned Non-Aviation Properties at Santa Monica
Airport and other Properties in the Bayside District and at Bergamot Station.
The City of Santa Monica owns various parcels and
sites of commercial real estate not currently needed or in use for municipal
purposes. Several of these sites,
represented by The Victorian Restaurant and Pacific Shore Hotel, are subject to
long-term ground leases with rental income and other financial returns
benefiting the City General Fund. Uses
for other City-owned properties, such as aviation land at Santa Monica Airport,
are constrained in their long-term use by commitments to the Federal Aviation
Administration.
Other City-owned land and buildings not constrained
in use or committed by long-term lease are or may become periodically available
for leasehold occupancy and are currently in use for a variety of commercial
and community-serving purposes. These
properties are clustered in four locations: Bayside District, where City-owned right-of-way is licensed for
outdoor dining, and kiosks on Third Street Promenade and purpose-built space
within two parking structures are leased for retail sales and neighborhood
services; Santa Monica Pier, on
which buildings and buildable deck sites have been leased by the Pier
Restoration Corporation for visitor-serving restaurant, retail, educational,
entertainment and amusement operations; Bergamot
Station, which the City has rented to a master tenant on a month-to-month
basis for development and operation of art galleries, artist studios and
exhibition areas and related facilities; and the non-aviation properties at Santa Monica Airport, where land and
buildings have been rented on a month-to-month basis for an eclectic range of
uses.
Leasing of City property on Santa Monica Pier by the
Pier Restoration Corporation (PRC) has been guided by the General Use and
Development Plan since its adoption by City Council in 1988. This Plan sets forth a multi-step
development program for the commercial revitalization of the Pier through
attraction of a diversity of products and services offering a broad range of
public appeal. Proposed Leasing
Guidelines for Santa Monica Pier will be separately referred to City Council
for consideration as an update of the 1988 General Use and Development Plan in
conjunction with a proposed new Services Agreement with the PRC and the Annual
Plan of Work for Fiscal Year 2000-01.
SMMC Section 2.32.030 assigns to the City Manager the
duty of executing all contracts on behalf of the City, as authorized by City
Council. The Charter and Municipal Code
are generally silent regarding procedures for leasing of City-owned
property. It has been the established
practice for staff to obtain Council approval of all leases except short-term
leases and license agreements, and leases on the Pier.
Adoption of guidelines governing advertising,
marketing, tenant selection and leasing for the City’s real estate assets
promotes fair and equitable treatment of all potential lessees and avoids any
perceived gifts of public funds.
Clearly stated guidelines also assure that leases of public property
optimally benefit the City and its residents, that property is periodically
offered on the marketplace as a means of providing competitive access to its
use, and that property is managed with an objective of meeting the needs of the
Santa Monica community.
The Economic Development Division provides leasing
and property management services to the Airport Division, both divisions of
Resource Management, for administration of non-aviation airport land and
buildings at reasonable rates that are consistent with and reflective of the
interim month-to-month terms.
Draft leasing guidelines for non-aviation property
were presented to the Airport Commission at its July and August 2000 meetings. An overview of Airport Division operational
and capital expenditure projects was presented at the September meeting of the
Airport Commission to provide a comprehensive understanding of Airport revenue
needs and a context for the consideration of proposed lease rates. Also during this period staff sought
additional input from current non-aviation airport tenants regarding the
proposed leasing guidelines and pricing strategies, resulting in individual
meetings with a majority of the tenants.
Various leasehold issues raised during tenant meetings and Airport
Commission meetings are reflected in the attached proposed Non-aviation Airport
Property Leasing Guidelines.
At the August meeting of the Airport Commission, an
ad hoc committee was appointed to meet with members of the Arts Commission’s
Artist Live/Work/Studio Task Force to examine ways in which non-aviation
airport properties could reasonably be used to support the Santa Monica arts
community’s need for affordable day studio space, while balancing the fiscal
requirements of the Airport. The ad hoc
subcommittee met on two occasions with Task Force representatives. The Task Force subcommittee presented its
report to the September 18th meeting of the Artist Live/Work/Studio
Task Force, and the Arts Commission approved recommendations regarding artist
day studio uses at the Airport at its meeting also held September 18th.
The Arts Commission adopted the following
recommendations:
·
Non-aviation airport
property at 3000 and 3026 Airport Avenue be dedicated to use for artist day
studio spaces
·
A sub-committee of the
Artist Live/Work/Studio Task Force be formed to make recommendations on an
artist definition and selection process for use at the Airport
·
Current artist leases
at the Airport be extended for five years with two three-year options for
renewal at current rental rates plus annual CPI adjustment
The Arts Commission also adopted motions urging the
Airport Commission to:
·
Set a reasonable
aggregate rent target for all non-aviation airport properties
·
Seek super-premium
tenants for a portion of the non-aviation properties
·
Set aside on a
permanent basis 42% of gross building square footage at below-market end user
rents for artist studio spaces with a year 2001 rate of approximately $0.65 per
s.f. per month
The Airport Commission at its meeting held October
23, 2000 considered the public input received at the three previous Commission
meetings, heard additional comments from current tenants, and reviewed
additional related information. The
Airport Commission adopted a motion recommending the Leasing Guidelines subject
to the following:
·
3400 Airport Avenue
office buildings be subject to a Request for Proposals process for leasehold
use at premium rental rates
·
3026 Airport Avenue hangar
building be subject to a Request for Proposals process for artist day studio
use at lowest feasible rental rates
·
Current tenants be
offered five-year term leases plus one three-year renewal option
·
Current tenant rental
rate increases not exceed 20% per year over the next four-year period plus
annual CPI adjustment
·
Fiscal requirements of
Santa Monica Airport resulting from rates protecting the arts community be
supported by City General Fund or other funding sources external to the Airport
Fund
Some but not all adopted recommendations of the Arts
Commission and the Airport Commission are reflected in the attached proposed
Non-aviation Airport Property Leasing Guidelines.
Economic Development Division staff has been
delegated to act on behalf of the City to solicit interest in prospective
commercial leasing opportunities for City-owned property in the Bayside
District. Staff has generally utilized
leasing guidelines suggested in 1986 to solicit and manage tenancies in the
parking structures that provide services to residents and visitors that may
otherwise be absent from Bayside District due to high commercial rental
rates. Examples of these leases are
Best Hardware, Pete the Barber, and Willie & Gloria’s.
Draft leasing guidelines for City-owned property
located in the Bayside District were presented to and reviewed with the
Executive Director of Bayside District Corporation in July. The guidelines were referred to the Land and
Asset Committee of the Bayside District Corporation. At its meeting held
November 7, 2000, the Committee recommended the proposed Leasing Guidelines for
referral to City Council.
The City acquired land and buildings at Bergamot
Station in 1989 from Southern Pacific Transportation Company with loan funds
provided by the Los Angeles County Transportation Commission and from the
City’s T.D.A. Rail Reserve Fund. The
site of Bergamot Station had been in use for decades for manufacturing
purposes, and the 70,000 square feet aggregate industrial shell structures on
5.4-acre land parcel were in extremely poor condition. Economic Development Division renegotiated
and administers the tenancy agreement.
Current operation and maintenance of the property commenced in 1994 on a
month-to-month agreement basis for rehabilitation and interim use of Bergamot
Station as a center for art galleries, artist studios, art foundations,
exhibition areas and supporting purposes.
Leasing guidelines are proposed for the continued
interim use of Bergamot Station pending redevelopment of all or a portion of
the property for the intended long-term public transportation purposes. The intent of the guidelines is to preserve
and optimize the interim use of the site as an art center. The proposed guidelines have been discussed
in general terms with the current master tenant, who is in concurrence with the
approach to continuity of operations.
Proposed leasing guidelines for the non-aviation airport
properties are attached. The Airport
currently accommodates 36 artist studios, more than 100,000 square feet of
space for small businesses and other users, and Spitfire Grill restaurant. It is estimated that approximately 100
artist studios exist in the balance of the City. Dedication of the 22,560 square foot vacant structure at 3026
Airport Avenue and dedication of the 18,035 square foot occupied structures at
2900 and 3000 Airport Avenue for Artist Day Studios will more than double the
amount of Airport space, from 15% to more than 38% of total building area,
utilized to support the arts community, and prospectively increase the number
of artists at the Airport to more than 100 studios. This would be by far the highest concentration of artist studios
in the City.
The Airport Commission expressed serious concern for
the preservation of the diverse multi-use community that has been established
on non-aviation airport properties. As
a result, it is proposed that current tenants with three specific exceptions be
offered five-year term leases plus one three-year renewal option for stable
continued use. Consistent with an
objective to periodically make public property available to members of the
public for the preferred uses, succeeding leases would generally be for
five-year terms without renewal options.
Two current tenants that have made or may be required to make
substantial new capital investment in the buildings to achieve the preferred
uses are recommended for ten-year terms.
Pricing of the leases has been extensively reviewed
by the Airport Commission in terms of the fiscal requirements of Santa Monica
Airport to remain self-sufficient and not reliant on the Federal Aviation
Administration, City General Fund or other outside funding sources. The Airport Fund is restricted to purposes
only in support of the Airport and its operations. Staff developed and recommends an economic model for pricing the
non-aviation airport properties in a manner that helps achieve Airport Fund
fiscal self-sufficiency, and provides the requisite maintenance and repair of
the Airport and its noise management programs.
Rents for new office tenants are proposed to be set at prevailing market
rental rates. Under the proposed
guidelines, these rates in turn will help provide supportive rates for Artist
Day Studio rents. Projected total
revenue required from the Airport’s non-aviation properties in FY2002-03 will
be approximately $3,700,000, in contrast to the $2,100,000 currently budgeted
in FY2000-01.
The underlying assumptions of the recommended
lease-pricing model are:
·
Eight structures
available for lease, totaling 123,928 square feet net rentable area
·
Three of eight
structures (2900, 3000 and 3026 Airport Avenue) dedicated to Artist Day Studios
as the Preferred Use (approximately 38% of all space), achieved over time
through attrition as non-artist leases expire
·
Airport Fund is a
restricted enterprise fund for airport operations and improvements
·
Grand-parented tenant
rent increases to be phased in over a three-year period
·
3400 Airport Avenue
will be subject to a Request for Proposals for ten-year term tenancy at highest
feasible rent
·
3026 Airport Avenue
will be subject to a Request for Proposals for ten-year term operation of an
art studio center
·
Grandparented tenancies
at Spitfire Grill and Benchmark will be offered ten-year term occupancies at
fair market rent
·
Rent increases for
non-artist tenancies in buildings other than those dedicated to Artist Day
Studios and existing commercial tenants within art-dedicated structures will be
to 90% of estimated July 1999 fair market rates
·
Artist Day Studio
tenants in art-dedicated structures and existing day studios in non-dedicated
structures will pay lowest feasible rents (currently estimated at $0.95 per
s.f. per month), balanced against Airport fiscal requirements
A rental rate support program for Artist Day Studios
is feasible if the overall fiscal requirements of the Airport Fund to operate
and maintain Santa Monica Airport are met.
This can be achieved through appropriate pricing of non-aviation airport
property for uses other than the arts.
Use of the building at 3400 Airport Avenue and other structures at
market rates to support studio pricing achieves the overall goal. To the extent that General Fund and other
revenue sources external to the Airport Fund are available, studio support
pricing may be further adjusted.
The Arts Commission has proposed creation of a
sub-committee of the Live/Work/Studio Task Force to make recommendations on a
selection process and artist definition to be adopted for leasing of studio
space at the Airport. The Cultural
Affairs Division of the Community and Cultural Services Department will oversee
the necessary process that will provide the Economic Development Division with
a waiting list of candidate artist tenants for lease access to studio
space. Tenant recruitment for uses
other than artist studios would be in accordance with public marketing and
solicitation for prospective qualified tenants suitable for the available
space.
The Airport Commission suggested that the rent
increases for current tenants be phased over a four-year period with a cap of
20% increase in any one year. This
Commission recommendation was a dual concern for potential tenant impact from construction
of Airport Park and the possible business impact of tenants absorbing large
stepped rent increases. Staff
acknowledges the Commission’s concerns.
However, Airport Park construction will have minimal adverse effect on
these noncommercial tenants, and access will not be impeded. Additionally, the proposed rent structure is
being applied to base rents that are substantially below market, and scheduled
increases are proposed to be phased over a three year period to provide an
adjustment period.
Staff also proposes that City Council delegate to the
City Manager the authority to negotiate and execute leases of non-aviation
airport property providing terms of use up to five years on the basis of
written agreements prepared and approved as to form by the City Attorney and in
accordance with these Leasing Guidelines.
Leases for terms of use greater than five years would continue to be
referred to City Council for its approval.
Leasing guidelines for City-owned properties located
within the Bayside District are attached and further described therein. The City owns two kiosk structures located
on Third Street Promenade totaling 1,275 square feet used for visitor-serving
commercial purposes, and seven leased premises in 2nd Street and 4th
Street parking structures totaling 10,627 square feet used for
neighborhood-oriented educational and commercial services. Additionally, 27 outdoor dining licenses
have been issued to restaurants fronting on Third Street Promenade and the
cross streets of Arizona Avenue, Santa Monica Boulevard and Broadway totaling
7,761 square feet.
The current uses of these City-owned properties are
considered to be consistent with guideline objectives, and support continued
services to the residential community and Bayside District visitors that may
otherwise not be offered due to escalating commercial rental rates. In order to maintain this neighborhood
service orientation, it is proposed that leases and licenses of City-owned
properties in Bayside District be subject to a preference for local
independent, non-formula businesses and operations. Accordingly, if a competent and economically viable local
prospective tenant can provide the preferred community or visitor-oriented
commercial services sought for the available leasehold premises, then a leasing
preference would be applied over an applicant representing a business offering
a standardized service, décor or format.
Consistent with an objective to periodically make
public property available to members of the public for the preferred uses, it
is proposed that leases be issued on the basis of non-renewable five-year
terms. Exceptions may arise if a
prospective tenant may be required to make substantial new capital investment
in the City-owned property to achieve the preferred uses, resulting in
recommendation of a five-year term lease with one five-year renewal option.
Rental rates will be established based upon independently
appraised fair market rates or in accordance with responses received to a
public Request for Proposal process.
Lease rates are considered secondary to establishing or retaining a
preferred use, and pricing may be adjusted as necessary to maintain the
preferred local-serving purposes of the leaseholds. Tenant recruitment would be in accordance with public marketing
and solicitation for prospective qualified tenants suitable for the available
space.
Staff also proposes that City Council delegate to the
City Manager the authority to negotiate and execute leases of City-owned
property in Bayside District providing terms of use up to five years on the
basis of written agreements prepared and approved as to form by the City
Attorney and in accordance with the Leasing Guidelines. Leases for terms of use greater than five
years will continue to be referred to City Council for its approval.
Leasing guidelines for continued interim use and
operation of Bergamot Station in support of the Santa Monica arts community are
attached and further described therein.
Bergamot Station currently provides approximately 70,000 square feet of
building space accommodating art galleries, artist studios, art foundations,
art exhibition areas and related purposes on a 5.4-acre land parcel. These activities were implemented in 1994
subject to a month-to-month agreement.
The tenant, Bergamot Station, Ltd., accepted the premises in an “as-is”
condition and made significant structural improvements suitable for the
intended purposes at its expense partially offset by rental credits valued at
$392,000. The tenant has also been
responsible for all maintenance and repair of structures and other improvements
to the property at its expense.
In 1984, the City entered into an agreement with the
Los Angeles County Transportation Commission (LACTC) (now the Metropolitan
Transportation Authority, or MTA) to establish a City Rail Reserve
Account. The account was established
using State Transportation Development Act (TDA) funds. Under the terms of this agreement, there can
be no permanent change in use of property without LACTC approval, and any
eventual permanent use must be rail-related.
Under the terms of a subsequent 1989 agreement between the City and the
LACTC, the City was permitted to use these funds to partially fund acquisition
of the Bergamot Station site. The
Bergamot parcel today remains an asset in the City’s TDA Rail Reserve Fund. The proposed leasing guidelines recommend an
ongoing interim Preferred Use of the property, with a proposed lease agreement
which could be terminated upon 90 days notice by the City that the long-term
Preferred Use is being implemented; this proposal complies with the existing
LACTC restrictions.
In recognition of the service provided by Bergamot
Station to the Santa Monica arts community and the significant capital
investment and facility management burden carried by the operator, it is
proposed that the current tenant be offered a five-year term lease plus five
one-year renewal options for stable continued use. The tenant would be required to provide on-going management,
maintenance and repair of the premises at its expense, and sublease portions of
the space for permitted uses consistent with terms and conditions of the master
lease.
Lease pricing for continued master tenant operation
and management of the Bergamot Station arts center would be negotiated on a
basis consistent with the interim preferred arts-support use for the five-year
term. The agreement would remain
cancelable upon ninety days’ notice if all or significant portions of the
premises were required for development of public transportation systems. If the current master tenant were unwilling
or unable to accept a new lease in accordance with the proposed guidelines,
preservation of the arts center as an interim use would be pursued through the
Tenant Recruitment procedures. Interim
operation of the art center would also be subject to a preference for local
independent master operators capable of performing the lease obligations
necessary to preserve the preferred uses.
No budget or financial impact in Fiscal Year 2000-01 will result from approval of the Leasing Guidelines. By Fiscal Year 2002-03, after the three year phase-in of tenant rent increases, the annual revenue received by the Airport Fund will have increased by approximately $1,600,000 over estimated revenue for Fiscal Year 2000-01 to satisfy requisite operating and capital needs of the Airport.
Staff recommends that City Council approve the
proposed Leasing Guidelines for non-aviation airport property, City-owned
property in Bayside District and Bergamot Station, and that the City Manager be
authorized to implement the Leasing Guidelines as approved.
A). Non-aviation
Airport Property Leasing Guidelines (Attached Below)
B) City-Owned
Property in Bayside District Leasing Guidelines (Attached Below)
C) Bergamot Station Leasing Guidelines
(Attached Below)
Prepared by: Jeff
Mathieu, Director of Resource Management
Mark
Richter, City Real Estate Manager/Economic Development Manager
Robert
Trimborn, Airport Manager
Rod
Merl, Senior Administrative Analyst
Gretchen Kubacky, Senior Administrative Analyst
Maintain
the compatibility of non-aviation airport property use with Santa Monica
Airport operations and the adjacent residential community; assist Santa Monica
Airport in meeting its fiscal obligations in a self-sufficient manner;
establish implementation procedures for the use of non-aviation property;
provide a safe harbor for the local arts community; and assure access to and
use of public properties by the general public for the Preferred Uses through a
leasing program that promotes orderly and periodic changes in tenancy.
Current
uses of the non-aviation airport property are diverse, and range from Technical
Office, Arts Education and Artist Day Studio to Contractor facilities,
Architectural Offices and General Office.
Diversity of use is valued in establishment of a community of property
users. Diversity will be maintained but
limited to those purposes which have an historic connection to the property, an
ability to pay prevailing market rental rates as a means to support Airport
fiscal self-sufficiency and Arts Community access, and to those purposes which
serve broader community interests and needs, including Artist Day Studios.
All
existing non-aviation airport tenants who are current in rent payments and not
otherwise in default of their current agreements will be offered the
opportunity to retain use and occupancy of their current lease premises for a
non-renewable five-year term plus one three-year option. Exceptions are current tenancies at Spitfire
Grill and Benchmark that, in recognition of their significant investment in
facilities, will be offered ten-year term leases, and the current tenant at
3400 Airport Avenue. Existing tenants
may request shorter duration leases, at their option.
Lease
renewals will not be automatically offered to existing or new tenants. As vacancies arise either by lease
expiration or earlier termination, recruitment for occupancy will be conducted
in accordance with the Leasing Guidelines.
Grandparented
tenant lease premises will not include assessment of rent for lofts constructed
by the tenants. Single occupancy and/or
master tenanted buildings will be leased on the basis of gross building area. New leases for multi-user buildings will be
on the basis of net interior rentable area excluding building common
areas.
TERM OF YEARS
As
vacancies arise either by lease expiration or earlier termination, available
space will be leased for Preferred Uses for a non-renewable five-year
term. Prospective tenants for leasing
of vacant space will be selected from applications received by City staff
pursuant to Tenant Recruitment procedures for each Preferred Use. Prospective tenants will be screened for confirmation
of use and credit-worthiness.
When
a tenant has made or is required to make substantial new capital investment in
the non-aviation airport property to establish their Preferred Use consistent
with intended purposes and uses of the premises (e.g. remodeling/renovation of
3026 and 3400 Airport Avenue), a ten-year term lease will be offered.
In
order to provide access to and use of the non-aviation airport properties to as
many prospective tenants as possible, physical expansion of existing and new
leasehold occupancies will not be accommodated.
Fair
market rents for individual buildings on non-aviation airport properties were
appraised in as-condition in July of 1999.
Rental rates for use of non-aviation airport properties will be set as
follows effective January 1, 2001:
·
3026 Airport Avenue
will be subject to a Request for Proposals for ten-year term operation of an
art studio center at lowest feasible rent, currently estimated at $0.85 per
s.f. per month.
·
3400 Airport Avenue will
be subject to a Request for Proposals for ten-year term single users or master
lease operation at highest feasible marketplace rent, and compatible with
airport operations and adjacent residential neighborhood.
·
Grandparented tenancies
at Spitfire Grill and Benchmark will be offered ten-year term occupancies at
fair market rent.
·
2900 Airport Avenue and
3000 Airport Avenue will be dedicated to artist day studios as the Preferred
Use at lowest feasible rent, currently estimated at $0.95 per s.f. per month for
art studio use.
·
Grandparented artists
in buildings other than those dedicated to artist day studios will be offered
preferred rental rates consistent with 2900 and 3000 Airport Avenue for art
studio use.
·
Grandparented tenancies
in buildings other than those dedicated to artist day studios will be offered
stepped-up rental to 90% of estimated July 1999 fair market rates over a
three-year period.
·
Grandparented and new
leases will be subject to annual CPI adjustment on each January 1.
·
Non-aviation airport properties
will be appraised for fair market rental rates at five year intervals (next
appraisal – 7/2004).
·
If then-current rents
for uses other than artist day studios are determined to be less than 90% of
estimated market rent, step-ups to prevailing market rates followed by annual
CPI adjustment will be made for the term of any new property lease.
·
If then current rents
for Technical Offices, General Offices and Restaurant are determined to be
within 10% of estimated market rates, annual CPI adjustment will be made for
the term of the property lease.
·
Artist Day Studio
tenancies in 2900, 3000 and 3026 Airport Avenue will be granted a continuing
preferential rent structure to an extent consistent with offsetting rents
obtained from non-studio leaseholds and consistent with maintaining the fiscal
self-sufficiency of Santa Monica Airport.
·
New (non-grandparented)
Artist Day Studio tenancies in buildings other than 2900, 3000 and 3026 Airport
Avenue will pay prevailing market rates for the space used.
·
New (non-grandparented)
rents for uses other than artist day studios will be at prevailing market rates
3026
Airport Avenue and 3400 Airport Avenue will be leased in an as-is
condition. The tenant of each would be
responsible for any and all improvements, including roofs and exteriors of the
facilities, necessary to support the Preferred Uses. If tenants make improvements to the buildings for compliance with
basic decent, safe and sanitary standards as a mutually agreed condition of a
lease, the City must first review and approve the proposed work. Appropriate rental credits for the approved
work performed would be negotiated as part of the lease.
All
other non-aviation airport buildings will be inspected prior to new leasehold
occupancy and brought by the City or tenant to a decent, safe and sanitary
condition appropriate for the Preferred Use.
If tenants must make improvements to the buildings to implement the
Preferred Uses as a mutually agreed condition of a lease, the City must first
review and approve the proposed scope of work and improvement design. All necessary building permits must be
obtained, and the work inspected for compliance with applicable code. Appropriate rental credits for the approved
work performed would be negotiated as part of the lease.
3026
Airport Avenue and 3400 Airport Avenue are appropriate and suitable for leasing
by the City to a single user/operator or a master tenancy basis in accordance
with agreements prepared by the City.
The master tenant would be responsible for any structural improvements
or modifications necessary to support the Preferred Uses, and would be
responsible for all interior and exterior facility maintenance, repairs and
utilities associated with operation of the property. Master tenant activities at 3026 and 3400 Airport Avenue must be
compatible with airport operations and the adjacent residential
neighborhood. Subletting of interior
space by the master tenants for the Preferred Uses would be explicitly permitted.
All
other non-aviation airport buildings appropriate and suitable for leasing by
the City to individual occupants for the Preferred Uses will also be in
accordance with agreements prepared by the City. Each tenant would be responsible for interior maintenance and
repair and utility consumption pro ration, and the City would retain
responsibility for maintenance and repair of roofs, building exteriors,
landscaping and common user parking.
Subletting of interior space by the individual tenants would be
explicitly prohibited. However, artists
may cooperatively share individual Artist Day Studio spaces provided that rents
charged do not exceed lease rates.
The
Cultural Affairs Division of Community and Cultural Services Department will
define eligible visual artists, and will provide to Economic Development
Division a waiting list of qualified artist-candidates for leasing of
individual Artist Day Studios. Candidate
tenants for available Artist Day Studio space in 2900 and 3000 Airport Avenue
will file Lease Applications for screening purposes, and qualifying artists
will be selected only from the screened waiting list.
3026
Airport Avenue and 3400 Airport Avenue will be the subjects of public Requests
for Proposals intended to optimize leasehold occupancy of the properties for
the Preferred Uses. Requests for
Proposals will be publicized utilizing some or all of the following, as
appropriate:
·
Media advertising,
including general circulation newspapers and local/limited circulation
publications.
·
Advertising in
specialized trade publications
·
Posting notice on the
California Real Estate Journal Internet web site.
·
Direct mail to waiting
list and/or other targeted individuals having expressed previous interest in
master lease operation of the properties for the Preferred Use.
·
Direct contact or
outreach to prospective master tenants and/or referrals from other City
departments.
·
Posting notice on the
City’s and Resource Management’s Internet web site.
·
Dissemination by fax,
e-mail or telephone to local commercial real estate brokers.
All
occupancies of non-aviation airport buildings other than Artist Day Studios,
3026 and 3400 Airport Avenue will be subject to a public marketing and
solicitation process to identify appropriate and qualified tenants for the
Preferred Use of the available space.
Vacancies will be publicized utilizing some or all of the following, as
appropriate:
·
Media advertising,
including general circulation newspapers or local/limited circulation
publications, as appropriate.
·
Direct mail to waiting
list and/or other targeted individuals having expressed previous interest in
leasehold occupancy for the Preferred Use.
·
Direct contact or
outreach to prospective tenants
·
Posting notice on the
City’s and Resource Management’s internet web site
·
Dissemination by fax,
e-mail or telephone to local commercial real estate brokers
All
prospective tenants will file a Resource Management Department Lease Application. Upon confirmation that the proposed tenancy
is a Preferred Use consistent with Guideline Objectives, verification of
references and credit history, and mutual preliminary concurrence in proposed
lease terms and conditions, a lease agreement will be prepared by the City
Attorney for review and execution by the prospective tenant and referral to
City Manager for approval. Leases for
terms greater than five years will require Council approval.
The
City will neither pay nor receive commissions for leasing of City-owned
property. Staff will cooperate with
commercial real estate brokers who are authorized to negotiate leases on behalf
of prospective tenants.
The
City Manager will negotiate and execute leases of City-owned property providing
terms of occupancy up to five years for the Preferred Uses in accordance with
these Leasing Guidelines on the basis of written agreements prepared and
approved as to form by the City Attorney.
Leases for terms of occupancy greater than five years will be referred
to City Council for its approval.
Technical Offices 36,895 s.f. - 30%
Vacant 22,560 s.f. – 18%
Media/Entertainment Offices 22,444 s.f. – 18%
Artist Day Studios 18,816 s.f. – 15%
Contractors 9,588 s.f. - 8%
Architectural Offices 4,440 s.f. - 4%
Restaurant 3,750 s.f. - 3%
General Offices 3,490 s.f. - 2%
Storage 1,190 s.f. - 1%
Commercial 755 s.f. - 1%
General Offices 36,563 s.f. - 30%
Technical Offices 35,810 s.f. – 29%
Restaurant 3,750 s.f. - 3%
CITY-OWNED PROPERTY IN BAYSIDE DISTRICT
LEASING GUIDELINES
Maintain the compatibility of use of City-owned
property located within the Bayside District for purposes which contribute to
pedestrian orientation and neighborhood residential services; establish and
implement procedures for managing and preserving the Preferred Uses of
City-owned property; and assure access to and use of these public properties by
the general public for the Preferred Uses through a leasing program that
promotes orderly and periodic changes in tenancy.
Current uses of City-owned property in the Bayside
District are diverse, and have been intended to enhance open air casual dining
experience on Third Street Promenade and support those purposes which serve
broader neighborhood community interests and needs. Diversity will be maintained but focused on those purposes which
support continued services to the residential community and Bayside District
visitors, and which have an ability to pay fair market rental rates. Preferred Uses include, but are not limited
to, outdoor dining license agreements associated with adjacent restaurants and
cafes, commercial activities providing services which may otherwise not be
offered to the neighborhood residents in the Bayside District, and educational
and recreational access for otherwise under-served segments of the community.
Existing City-owned properties within Bayside
District available for lease or license, and associated Preferred Uses, consist
of the following:
·
Twenty-seven outdoor
dining licenses located on Third Street Promenade and the cross streets of
Arizona Avenue, Santa Monica Boulevard and Broadway totaling 7,761 square feet.
·
Four kiosk lease premises
located on Third Street Promenade totaling 1,275 square feet (excluding the
SMPD substation) occupied for visitor-serving commercial purposes.
·
Seven parking structure
lease premises totaling 10,627 square feet occupied for neighborhood and
community-oriented educational, recreational and commercial services.
·
One retail cart license
for operation of a vending cart program on Third Street Promenade consisting of
a minimum 15 and a maximum 24 individual cart operators subject to sublicense
agreements and for retail purposes approved by the City.
Other City-owned properties within and adjacent to
Bayside District are also subject to agreements separately administered by
Planning and Community Development and Environmental and Public Works
Management Departments, consisting of licenses for outdoor dining on Ocean
Avenue and Wilshire Boulevard and parking occupancies.
LOCAL
PREFERENCE
The low-density scale of public improvements and a
casual aesthetic ambience are important factors in defining the character and
pedestrian orientation of the Bayside District. Leasing and licensing of City-owned property within Bayside
District will be subject to a preference for local independent, non-formula
businesses and community services that are capable of providing the Preferred
Uses. A formula business is that which
requires by contractual or other arrangement the maintenance of standardized
services, décor, uniforms, facility design and format substantially identical
to another operation.
Lease renewals or options to extend the term of
occupancy will not be offered to existing or new tenants. As vacancies arise either by lease
expiration or earlier termination, recruitment for occupancy will be conducted
in accordance with the Leasing Guidelines.
As vacancies arise either by lease expiration or
earlier termination, available space will be offered for lease for Preferred
Uses for typically a non-renewable five-year term if significant tenant
improvements are not required. Prospective
tenants for leasing of vacant space will be selected from applications received
by City staff pursuant to Tenant Recruitment procedures for each Preferred
Use. Prospective tenants will be
screened for confirmation of use, operating experience and credit-worthiness.
Term of years for new leases and licenses will vary
with the following:
·
If a tenant is required
to make substantial new capital investment in the City-owned property to
establish their Preferred Use consistent with intended purposes of the
premises, a five-year term with one five-year renewal option will be offered.
·
Outdoor dining licenses
will be issued for month-to-month and subject to periodic use review in support
of the adjacent restaurant operation.
If the licensee is current in rent payments and not otherwise in
default, the license will be continued.
·
A Vending Cart license
agreement will be issued for a term of three years and subject to periodic
performance review.
In order to provide access to and diverse use of the
City-owned properties to as many prospective tenants as possible, physical
expansion of existing and new leasehold occupancies will not be accommodated.
Rentals will be established at independently
appraised fair market rates or in accordance with responses received to a
public Request for Proposal process.
City-owned property will be independently appraised for fair market
rental rates at five-year intervals.
Lease rates are considered secondary to establishing or retaining a
preferred use, and pricing may be adjusted as necessary to maintain the
preferred local-serving purposes of the leaseholds. Annual CPI adjustments will be made for the term of any new
property lease or license.
All City-owned structures will be inspected prior to
new leasehold occupancy and brought by the City or new tenant to a decent, safe
and sanitary condition appropriate for the Preferred Use. If tenants must make improvements to the
structure to implement the Preferred Uses as a mutually agreed condition of a
lease, the City must first review and approve the proposed scope of work and
improvement design. All necessary
building permits must be obtained, and the work inspected for compliance with
applicable codes. Appropriate rental
credits for the approved work performed would be negotiated as part of the
lease.
All City-owned property within the Bayside District
appropriate and suitable for leasing or licensing by the City to individual
occupants for the Preferred Uses will be in accordance with agreements prepared
by the City. Each tenant or licensee
would be responsible at its expense for interior maintenance and repair and
utility consumption, and the City would retain responsibility for maintenance
and repair of roofs and building exteriors.
Subletting of space would be explicitly prohibited, with the exception
of vending cart agreements to individual cart operators issued by the licensee.
·
Media advertising,
including general circulation newspapers or local/limited circulation
publications, as appropriate.
·
Direct mail to waiting
list and/or other targeted individuals having expressed previous interest in
leasehold occupancy for the Preferred Use.
·
Direct contact or
outreach to prospective tenants and through Bayside District Corp.
·
Posting notice on the
City’s and Resource Management’s internet web site.
·
Dissemination by fax,
e-mail or telephone to local commercial real estate brokers.
All prospective tenants will file a Resource
Management Department Lease Application.
Upon confirmation that the proposed tenancy is a Preferred Use for the
available space, verification of references and credit history, and mutual
preliminary concurrence in proposed lease terms and conditions, a lease
agreement will be prepared by the City Attorney for review and execution by the
prospective tenant and referral for approval.
The City will neither pay nor receive commissions for
leasing of City-owned property. Staff
will cooperate with commercial real estate brokers who are authorized to
negotiate leases and licenses on behalf of prospective tenants.
The City Manager will negotiate and execute leases
and licenses of City-owned property providing terms of occupancy up to five years
for the Preferred Uses in accordance with these Leasing Guidelines on the basis
of written agreements prepared and approved as to form by the City
Attorney. Leases and licenses for terms
of occupancy greater than five years will be referred to City Council for its
approval. All proposed leases and
licenses shall be reviewed and discussed with the Bayside District Corporation
Board of Directors, and staff will consider the suggestions and/or
recommendations of the board in its preparation of agreements.
BERGAMOT STATION
LEASING GUIDELINES
Maintain and enhance the interim use of City-owned property
at Bergamot Station in service and support of the Santa Monica arts community;
maintain the future use of all or a portion of the property for development of
public transportation systems; and optimize the access to and use of this
public property for the benefit of the community.
Current uses of City-owned property at Bergamot
Station are limited to art galleries, artist studios, art foundations, museums
and exhibition areas, and related purposes.
These uses support an active and vital arts community in Santa Monica,
and are designated as interim Preferred Uses for purposes of these
Guidelines. The Bergamot Station
property was acquired to preserve and protect the long-term future use of the
property for development of public transportation systems and as the
prospective site of an intermodal transportation transfer point. This remains the long-term Preferred Use of
the property.
The low-density, diverse leasehold improvements and
local character of Bergamot Station are important factors in defining the
popularity and acceptance of this arts center by the visual arts
community. Interim operation of
gallery, exhibition space and related purposes will be subject to a preference
for local independent businesses that are capable of providing the Preferred
Uses.
In recognition of the significant capital investment
made in rehabilitation and conversion of structures and facilities at Bergamot
Station by the current master lessee, a five-year term lease plus five one-year
options will be offered in lieu of the existing month-to-month agreement. Both the initial lease term and options will
be conditioned by the ability of either the City or master lessee to terminate
the agreement upon ninety days’ prior written notice to preserve the right to
implement the long-term Preferred Use.
Interim master lease tenancy of the property will be
granted a continuing preferential rent structure consistent with the right to
terminate the leasehold upon short notice, acceptance by the tenant of all
responsibility for maintenance, repair and improvement to the premises, and
consistent with the support provided to the Santa Monica arts community. Initial term rent will be negotiated with
the master tenant on a basis consistent with the interim preferred use, and
subject thereafter to annual CPI adjustment commencing January 1, 2002.
All structures and other improvements on the premises
will be inspected prior to issuance of a new lease agreement and brought by the
master tenant at its sole expense without offset in rent to a decent, safe and
sanitary condition appropriate for the interim Preferred Use. If the master tenant must make improvements
to the premises to implement the interim Preferred Uses as a mutually agreed
condition of a new lease, the City must first review and approve the proposed
scope of work and improvement design.
The master tenant must obtain all necessary building permits, and the
work must be inspected for compliance with applicable code.
Bergamot Station is appropriate and suitable for
leasing by the City to a single user/operator on a master tenancy basis in
accordance with an agreement prepared by the City. The master tenant would be responsible for any structural
improvements or modifications necessary to support the interim Preferred Uses,
and would be responsible at its expense for all interior and exterior facility
maintenance, repairs and utilities including paving and landscaping associated
with operation of the property.
Subletting of interior space by the master tenant for the interim
Preferred Uses would be explicitly permitted.
The current master tenant of Bergamot Station will be
offered the right of first refusal to lease the premises to optimize leasehold
occupancy of the premises for the interim Preferred Uses. If the current master tenant declines to
accept a new master lease in accordance with these Guidelines or defaults or otherwise
terminates its occupancy, a Request for Proposals will be publicized utilizing
some or all of the following, as appropriate:
·
Media advertising,
including general circulation newspapers and local/limited circulation
publications.
·
Advertising in specialized
trade publications.
·
Direct mail to targeted
individuals or prospective master tenants having expressed previous interest in
operation of the properties for the interim Preferred Uses.
·
Direct contact or
outreach to prospective master tenants and/or referral from other sources.
·
Posting notice on the
City’s and Resource Management’s Internet web site.
·
Dissemination by fax,
e-mail or telephone to the Santa Monica arts community and to local commercial
real estate brokers.
The City will neither pay nor receive commissions for
leasing of City-owned property. Staff
will cooperate with commercial real estate brokers or other individuals who are
authorized to negotiate leases on behalf of prospective master tenants.