Item 9-A (continued from 11/28/00)

Council Meeting:  November 28, 2000                                           Santa Monica,  California

 

 

SUPPLEMENTAL REPORT TO 9-A

 

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

 

 

Introduction

 

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.

 

Background

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.

 

Non-aviation Airport Property

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.

 

City-Owned Property in Bayside District

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.

 

Bergamot Station

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.

 

Discussion

Proposed Non-aviation Property Leasing Guidelines

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.

 

Proposed City-Owned Property in Bayside District Leasing Guidelines

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.

 

Bergamot Station Leasing Guidelines

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.

 

Budget/Financial Impact

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.

 

Recommendation

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.

 

Attachments

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

ATTACHMENT A

 

 

Non-aviation Airport Property Leasing Guidelines

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-AVIATION AIRPORT PROPERTY
LEASING GUIDELINES

 

 

GUIDELINE OBJECTIVES

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.

 

PREFERRED USES

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.

 

GRANDPARENTING

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.

 

RENEWAL OPTIONS

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.

 

RENTABLE AREA

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.

 

EXPANSION OF LEASEHOLDS

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.

 

PERIODIC REVIEW OF RENTAL RATES

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

 

FACILITY CONDITION REVIEW

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.

 

TENANCY RELATIONSHIPS

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.

 

TENANT RECRUITMENT

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.

 

DELEGATION OF AUTHORITY

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.


NON-AVIATION AIRPORT PROPERTY

SUMMARY OF USES

 

 

CURRENT USES                                                      S.F. - % OF SPACE

 

NET RENTABLE AREA – ALL                              123,928 s.f. – 100%

 

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%

 

 

 

PROPOSED USES                                                    S.F. - % OF SPACE

 

Artist Day Studio                                                            47,805 s.f. – 38%

 

General Offices                                                   36,563 s.f. -  30%

 

Technical Offices                                                            35,810 s.f. – 29%

 

Restaurant                                                                        3,750 s.f. -   3%

 
 

 

 

 


 

 

 

 

ATTACHMENT B

 

 

City-Owned Property in Bayside District Leasing Guidelines

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

CITY-OWNED PROPERTY IN BAYSIDE DISTRICT

LEASING GUIDELINES

 

 

GUIDELINE OBJECTIVES

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.

 

PREFERRED USES

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.

 

RENEWAL OPTIONS

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.

 

TERM OF YEARS

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.

 

EXPANSION OF LEASEHOLDS

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.

 

PERIODIC REVIEW OF RENTAL RATES

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.

 

FACILITY CONDITION REVIEW

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.

 

TENANCY RELATIONSHIPS

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.

 

TENANT RECRUITMENT

All City-owned property within the Bayside District appropriate and suitable for leasing or licensing will be subject to a public marketing and solicitation process to identify prospective tenants with financial and experience qualifications for the Preferred Use of the available space.  Vacancies will be the subject of public Requests for Proposals 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 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.

 

DELEGATION OF AUTHORITY

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.

 

 

 

 


 

 

 

ATTACHMENT C

 

 

Bergamot Station Leasing Guidelines

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BERGAMOT STATION

LEASING GUIDELINES

 

 

GUIDELINE OBJECTIVES

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.

 

PREFERRED USES

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.

 

LOCAL PREFERENCE

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.

 

TERM OF YEARS

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.

 

PERIODIC REVIEW OF RENTAL RATES

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.

 

FACILITY CONDITION REVIEW

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.

 

TENANCY RELATIONSHIPS

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.

 

TENANT RECRUITMENT

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.