To: MAYOR AND CITY COUNCIL
From: ELIZABETH HAUSE, COMMUNITY SERVICES DIRECTOR
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APPROVE AN AMENDMENT TO THE LEASE AGREEMENT WITH THE CHUKA FAMILY TRUST FOR THE COMMUNITY SERVICES AND POLICE DEPARTMENT OFFICES LOCATED AT 1922 ARTESIA BOULEVARD, REDONDO BEACH, CALIFORNIA FOR A TOTAL FIVE-YEAR AMOUNT OF $1,389,326 AND THE TERM JANUARY 1, 2025 THROUGH DECEMBER 31, 2029
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EXECUTIVE SUMMARY
The Community Services and Police Department operations facility at 1922 Artesia Boulevard is secured through a lease agreement approved by the City Council on January 4, 2011 that included an initial term through December of 2019. The lease contained options for two five-year extensions. On September 17, 2019, the City Council approved an amendment exercising the first option to extend the lease through December 31, 2024 and, recently, gave direction to staff to exercise the second option through December 31, 2029. The proposed second amendment would codify the five-year extension. The rent for the 1922 Artesia facility is currently $21,941.76 per month and is escalated annually by 1.8%. The total rent to be paid over the five-year extended term of the lease is $1,389,326.
BACKGROUND
The office building at 1922 Artesia Boulevard is situated in a highly desirable location for the City’s Community Services Department due to its proximity to the North Branch Library, parks, schools, and senior centers. The facility also includes sufficient square footage to accommodate numerous City functions and provide parking for staff and visitors. City operations at the facility include the Community Services Department, which provides public and human services for recreation, transit, senior and family services, housing, and passports. The facility also houses a Police Department substation, establishing a fixed Police presence in North Redondo Beach.
The original facility lease was for nine years, commencing on January 1, 2011, and ending on December 31, 2019. The lease included an option for the City to extend the term for an additional five-years, through December 31, 2024. On September 17, 2019 the City Council approved an amendment to the lease approving the first five-year option and, a few months ago gave direction in closed session to send a notice of the City’s intent to exercise the second five-year option, extending the term through December 31, 2029. The proposed second amendment would codify the extension.
The current rent for the 1922 Artesia facility is $ 21,941.76 per month. The lease includes a rent escalator of 1.8% calculated each calendar year of the initial term and through any extension terms. This annual increase will result in a total rent payment of $1,389,326.29 over the course of the proposed five-year extension.
As a follow-up to the letter of intent, staff recommends approval of the second amendment to extend the term of the facility lease for 1922 Artesia Boulevard for an additional five-year term running from January 1, 2025 through December 31, 2029.
COORDINATION
This report was coordinated by the Community Services Department with assistance from the City Attorney’s Office. The second amendment to the Lease Agreement was prepared by the City Attorney’s Office.
FISCAL IMPACT
The current monthly lease payment for the 1922 Artesia Boulevard property is $21,941.76. There is an annual 1.8% escalator for the term and any extended term of the Lease Agreement. Funding for the lease payments is included in the Community Services Department annual budget.
Over the course of the term of the amendment to the Lease Agreement, the annual lease payments are as follows:
Calendar Year 2025 $268,040.54
Calendar Year 2026 $272,865.27
Calendar Year 2027 $277,776.84
Calendar Year 2028 $282,776.83
Calendar Year 2029 $287,866.81
Total $1,389,326.29
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
• Agmt - Second Amendment to lease 1922 Artesia Blvd.
• Agmts - First Amendment and Lease for 1922 Artesia Blvd.
• Notification Letter of Lease Extension
• Map - 1922 Artesia Blvd. Site Map