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HomeMy WebLinkAboutItem 1i - Agreement Parking Lease with VG Property Investments, LLC�� GPyIFORNf9 �� "11iy .w."� o�"�unecy °lam °� DATE: TO: FROM STAFF REPORT Development Services Department November 18, 2014 Honorable Mayor and City Council Jason Kruckeberg, Assistant City Manager /Development Services Director Philip A. Wray, Deputy Director of Development Services /City Engineer SUBJECT: LEASE AGREEMENT WITH VG PROPERTY INVESTMENTS, LLC FOR THE LEASE OF 43 PARKING SPACES IN THE CITY HALL PARKING LOT Recommendation: Approve SUMMARY New medical office buildings and a parking structure are being constructed at 125 West Huntington Drive and 161 Colorado Place. The property currently has one large office building (Parsons) that will remain in use during the construction and additional parking is necessary to meet the tenant's needs during this period. On August 20, 2013, the City Council entered into a lease agreement with VG Property Investments, LLC (VG), the owners of 125 West Huntington Drive, for the exclusive use of 48 parking spaces in the City Hall Parking lot. The lease will expire this month; however, construction is not expected to be completed until May 2015. A modified lease agreement has been negotiated with VG that includes a reduction in spaces to 43, a change to non - exclusive status, a slight increase in the fee, and several other provisions to further protect the City's interests. It is recommended that the City Council authorize and direct the City Manager to enter into an agreement with VG Property Investments, LLC, for the lease of 43 non - exclusive parking spaces in the City Hall parking lot on a month -to -month basis. BACKGROUND On January 8, 2013, and February 5, 2013, respectively, the Planning Commission and City Council approved the development of new medical office buildings and a parking structure at 125 West Huntington Drive and 161 Colorado Place. The existing office building at 125 West Huntington Drive will remain, and the new buildings will be constructed around it. The owner of the property, VG Property Investments LLC (VG), has kept the building occupied during construction. Lease Agreement with VG Property Investments November 18, 2014 Page 2 of 3 In order to meet the terms of the lease with their tenant, VG needed replacement parking spaces to offset the loss of parking during construction. VG investigated all options for replacement parking in the area, including the Santa Anita Inn and the Santa Anita Race Track. They concluded that the City Hall parking lot was the best option because of its ease of access, both vehicular and pedestrian, and its close proximity to their property. The northerly point of the City Hall parking lot is approximately 620 feet from the VG property, and approximately 360 feet further away from the property than the Santa Anita Inn parking lot, which they also currently use. On August 20, 2013, the City Council entered into a lease agreement with VG for the exclusive use of 48 parking spaces in the City Hall parking lot. The construction began in January 2014, and is now just over 50% complete. The original lease was for a 12- month period beginning in September 2013, and terminating in August 2014. The lease has a provision for a three -month extension, which VG exercised, through November 2014. Although VG's tenant has never used the parking spaces, VG has a commitment to make the spaces available to the tenant during the construction period. DISCUSSION VG Property Investments, LLC, has recently approached the City with a request to enter into a new lease agreement for parking spaces to extend until their construction is complete, scheduled for May 2015. Upon review of the current lease agreement, several items were identified that could be improved upon in a new lease. Those items were discussed with VG and modifications were mutually agreed to. A new lease agreement has been prepared based on the following modifications to the current lease: • Reduce the number of spaces from 48 to 43. • Change the designation from exclusive to non - exclusive at all times so that there are no restrictions to the public or VG. • Increase the lease cost per space based on consumer price index increases • Include a stronger clause to require VG to vacate the parking lot on special event days identified by the City (the previous lease was by mutual agreement) • Include a clause to restrict parking in the westerly aisle after 5:00 p.m. to minimize conflicts with soccer field activities (there was nothing in the previous agreement) • The term of the Agreement will be for only six months, until the end of May 2015, so there will be no conflict with summer events. The Agreement is for the lease of 43 non - exclusive parking spaces in the City Hall parking lot, at a rate of $51 per space per month on a month -to -month basis. The rate of $51 is an increase from the previous rate of $50 based on the "Los Angeles, Riverside, Orange County — All Urban Consumers" half -year inflationary price index. If approved, the Agreement would become effective on December 1, 2014, and terminate on May 31, 2015, with no provision for an extension. The lease would also include the Lease Agreement with VG Property Investments November 18, 2014 Page 3 of 3 City's typical insurance provisions, including hold harmless and indemnification language protecting the City from any claims filed as a result of the lease. VG is in agreement with the proposed changes and wishes to proceed with a new lease agreement. FISCAL IMPACT There is no cost to the City other than processing the Agreement. The revenue to the City will be $2,193 per month, or $13,158 for the six -month term. RECOMMENDATION It is recommended that the City Council authorize and direct the City Manager to execute a Lease Agreement with VG Property Investments, LLC, for the lease of 43 parking spaces in the City Hall Parking Lot. Dominic Laa City Manager Attachment: City Hall Parking Lot Lease Agreement Exhibit "A" to Lease Agreement - Location Map PARKING LEASE This Lease ( "Lease ") is entered into as of this day of , 2014 between the City of Arcadia, a California municipal corporation ( "Landlord "), and VG Property Investments, LLC, a California Limited Liability Company ( "Tenant "). Recitals A. Landlord is the owner of real property located at 240 W. Huntington Drive, in the City of Arcadia, Los Angeles County, California, APN No. 5775- 024 -910 (the "Property "), including the portion of such Property which is currently utilized by Landlord as a parking lot for employees and visitors to City Hall (the "Parking Area "). B. Tenant desires to lease from Landlord and Landlord desires to lease to Tenant forty-three (43) parking spaces within the Parking Area on the Property as shown on the plan of the Property attached as Exhibit "A" ( "Leased Premises "). Agreement Therefore, for good and valuable consideration the receipt and adequacy of which are acknowledged, the parties agree as follows: Section 1. Lease of Premises. Landlord leases to Tenant and Tenant leases from Landlord the Leased Premises on the terms and conditions set forth in this Lease. Section 2. Use. Tenant agrees to use the Leased Premises for the purpose of employee and visitor parking for its business office located at 125 West Huntington Drive, Arcadia, California. Section 3. Term. The term of this Lease shall be for a period of six (6) months, commencing on December 1, 2014, and unless terminated sooner in accordance with this Lease, ending on May 31, 2015 ( "Term "). Should the Term commence on a date other than the first day of a calendar month, the Term shall be extended by this fractional month. There shall be no extensions to this lease. Section 4. Rent. Tenant shall pay to Landlord during the Term of this Lease as monthly rental for the Leased Premises the sum of Fifty -one Dollars ($51.00) per parking space per month for a total of Two Thousand One Hundred Ninety -three Dollars ($2,193.00) per month, which shall be paid in advance on the first day of each calendar month ( "Monthly Rent "). Should the Term commence on a date other than the first day of a calendar month, Tenant shall pay Monthly Rent for the fractional month on a per diem basis (calculated on the basis of a thirty (30) day month) until the first day of the month, and thereafter the Monthly Rent shall be paid in equal monthly installments on the first day of each month in advance. All rental to be paid by Tenant to Landlord shall be in lawful money of the United States of America and shall be paid without deduction or offset, prior notice or demand at the address designated in Section 21. If Tenant does not make any payment of Rent to Landlord within ten (10) days following receipt by Tenant of written notice from Landlord of a delinquency, Tenant agrees to 1 pay to Landlord a late charge in an amount equal to five percent (5 %) of the delinquent rent amount. Section 5. Parking Rights. Tenant, its employees, agents, customers and licensees, shall have the non - exclusive right to park forty -three (43) passenger vehicles on the Leased Premises. Tenant understands and agrees that Tenant shall have the non - exclusive right, together with Landlord and other present and future owners, tenants, and their agents, employees, customers, licensees, and subtenants, to park vehicles on the Leased Premises. Tenant, its employees, agents, customers and licensees, shall have the nonexclusive right in common with Landlord, and other present and future owners, tenants, and their agents, employees, customers, licensees, and subtenants, during the entire Term of this Lease, , for vehicular and pedestrian ingress and egress over and across the Parking Area and the Walkway. Tenant agrees to a modified schedule for non - exclusive rights whereby after 5:00 P. M., no Tenant parking will be allowed in the westerly two parking aisles Tenant understands and agrees that notwithstanding any other provisions of this Lease, Tenant shall have reduced or no parking rights, as determined by the Landlord in its sole and sbsolute discretion, on certain days deemed by the Landlord in its sole and absolute discretion, as special event days. Landlord shall notify Tenant at least forty -eight (48) hours in advance of a special event day in which the Tenant will have reduced or no parking rights. Section 6. Rules and Regulations. Tenant agrees to comply with and enforce amongst its employees, agents, customers and licensees, all traffic, parking, and penal codes, as well as any reasonable rules and regulations Landlord may adopt from time to time for the orderly and proper operation of the Parking Area which are made known to Tenant. Such rules and regulations include, without limitations, the following: (a) The speed limit in the Parking Area shall be fifteen (15) miles per hour. (b) Neither Tenant, nor any of its employees, agents, customers or licensees, shall use the Parking Area for washing, waxing, cleaning, servicing or storing any vehicle. (c) Neither Tenant, nor any of its employees, agents, customers or licensees, shall engage in illegal or improper conduct in the Parking Area, including but not limited to, the use of drugs or alcohol, aggressive or sexual misconduct, lodging or sleeping, or the sale or solicitation of any products or services. (d) Neither Tenant, nor any of its employees, agents, customers or licensees, shall commit, or suffer to be committed, any waste upon the Parking Area, or any nuisance or other act or thing that may disturb the quiet enjoyment of any surrounding property owners or Landlord's employees, agents, customers or licensees. 2 Section 7. Maintenance. Landlord shall keep or cause to be kept the Parking Area, including the Leased Premises, in neat, clean, and orderly condition and repair. Section 8. Landlord's Limitation of Liability. Landlord makes no representations or warranties as to the security of vehicles parked in the Parking Area, and is under no obligation to provide security for persons or property on the Parking Area. Landlord is not responsible to Tenant, its employees, agents, customers or licensees for any fire, theft or damage to vehicles parked in the Parking Area, and is not responsible for personal property left in the vehicles. Tenant shall indemnify, defend and hold harmless Landlord and its officials, officers, employees and agents from and against any and all claims for injury or death to persons or damage to property, related to Tenant's and Tenant's employees, agents, customers or licensees, use of the Leased Premises. Section 9. Lease Subject to Existing Rights of Others. This Lease is subject to all existing easements, servitudes, licenses, and rights of way for canals, ditches, levees, roads, highways, and telephone, telegraph, and electric power lines, and other purposes, whether or not of record. Section 10. Tenant's Insurance. During the entire Term of this Lease, Tenant shall, at Tenant's sole cost, maintain general public liability insurance against claims for personal injury, death, or property damage occurring in or about the Leased Premises and on any sidewalks directly adjacent to the Leased Premises. The limitation of liability of this insurance shall be not less than One Million Dollars ($1,000,000.00) per incident, including but not limited to, injury, casualty, death, or damage to persons or property, and not less than Two Million Dollars ($2,000,000.00) in the aggregate. All policies of insurance shall be issued in the name of Tenant, with Landlord and its officials, officers, employees, and agents, listed as an additional insured with respect to the obligations undertaken in this Lease, and certificates of this insurance shall be delivered to Landlord within ten (10) days of this date. Thirty (30) days prior written notice of any cancellation of such policies shall be given to Landlord by Tenant before the effective date of cancellation. Section 11. Taxes. Tenant understands that this Lease may create a possessory interest subject to property taxation, and that Tenant may be subject to the payment of property taxes levied on such interest. Any such imposition of a possessory interest tax shall be a tax liability of Tenant solely, and shall be paid by the Tenant. Section 12. Signs. Tenant may place signs upon the Leased Premises so long as such signs comply with any sign policy adopted by Landlord and are approved in advance by Landlord. Section 13. Default. Each of the following shall constitute an event of default ( "Event of Default ") under this Lease: (a) if Tenant fails to make any payment required by the provisions of this Lease, when due; (b) if Tenant fails within thirty (30) days after written notice to correct any breach or default of the other covenants, terms, or conditions of this Lease; 3 (c) if Tenant abandons the Leased Premises before the end of the Term; or (d) if all or substantially all of Tenant's assets shall be placed in the hands of a receiver or trustee and if this receivership or trusteeship continues for a period of thirty (30) days, or should Tenant make an assignment for the benefit of creditors, or be adjudicated bankrupt, or should Tenant institute any proceedings under any state or federal bankruptcy act in which Tenant seeks to be adjudicated bankrupt, or seeks to be discharged of debts, or should any voluntary proceeding be filed against this Tenant under the bankruptcy laws and Tenant consents to it and acquiesces by pleading or default. Section 14. Remedies of Landlord on Default by Tenant. In the event of a default by Tenant under any of the terms of this Lease, Landlord may, at its option, have the right to (a) terminate this Lease upon providing fifteen (15) days' notice to Tenant of Landlord's intention to terminate; or (b) re -enter and repossess the Leased Premises by summary proceedings, ejectment or any other legal action Landlord determines to be necessary or desirable and the right to remove all persons and property therefrom. This provision is not a limitation of other legal or equitable remedies available to Landlord. Section 15. Expenses of Enforcement. Should any suit be brought by either Party against the other for the enforcement of any rights of with party against the other pursuant to the provisions of this Lease, or by reason of any alleged breach of any of the provisions of this Lease or arising from this Lease, then and in such event the successful party in such action shall be entitled to receive from the unsuccessful party at all costs incurred in connection with such suit, including a reasonable allowance for attorneys' fees incurred by the successful Party. Section 16. Abandonment. If during or at the end of the Term of this Lease or any extension thereof, Tenant shall abandon, vacate, or surrender the Leased Premises or be dispossessed by process of law, or otherwise, any personal property belonging to Tenant and left on the Leased Premises shall, at the option of Landlord, be deemed abandoned. For purposes of this Lease, the non -use of the Leased Premises by Tenant for any period of time shall not be deemed abandonment. Section 17. No Assignment. Neither this Lease nor any interest herein shall be assigned, voluntarily or involuntarily, or by operation of law or otherwise, nor shall the Leased Premises, or any part thereof, be sublet by Tenant without the prior written consent of Landlord. Any such assignment or subletting without such prior written consent of the Landlord shall be void. Section 18. Indemnification of Landlord. Tenant shall at all times during the term of this Lease indemnify, save and hold Landlord harmless from all damages, injuries or claims arising in or about the Leased Premises in connection with the conduct by Tenant, its successors or assigns, officers, employees, agents, licensees, invitees or subtenants of any activities thereon. Section 19. Holding Over. Any holding over after the expiration of the Term, with the consent of Landlord, shall be construed to be a tenancy from month -to- month, cancelable upon thirty (30) days' written notice, and a rental and upon terms and conditions as existing during the last year of the Term. Any holding over after the expiration of the Term, without the fl consent of Landlord, shall be construed to be a tenancy -at -will at a Monthly Rent of one hundred twenty -five percent (125 %) of the Monthly Rent as existing during the last year of the Term, but otherwise on the terms and conditions in this Lease. Section 20. Notices. Wherever in this Lease it shall be required or permitted that notice and demand be given or served by either party to the other, this notice or demand shall be given or served and shall not be deemed to have been given or served unless in writing and forwarded by certified mail, addressed as follows: If to Landlord: City of Arcadia 240 W. Huntington Drive P.O. Box 60021 Arcadia, CA 91066 Attention: Philip A. Wray, Deputy Director of Development Services /City Engineer Telephone: (626) 547 -5488 Facsimile: (626) 447 -7866 If to Tenant: VG Property Investments, LLC, a California Limited Liability Company 25 E. Huntington Drive Arcadia, CA 91006 Attention: Mike Soo, Vice President Telephone: (626) 821 -8777 Either party may change this address by written notice by certified mail to the other. Section 21. Successors in Interest. The covenants in this Lease shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators, and assigns of all the parties to this Lease. Section 22. Partial Invalidity. If any term, covenant, condition, or provision of this Lease is held by a court of competent jurisdiction to be void or unenforceable, the remainder of the provisions of this Lease shall remain in full force and shall in no way be affected, impaired, or invalidated. Section 23. Captions. The various headings and numbers in this Lease and the grouping of the provisions of this Lease into separate sections and paragraphs are for the purpose of convenience only and shall not be considered a part of this Lease. Section 24. No Oral Agreements. This Lease includes in full each agreement of every kind between the parties concerning the Leased Premises, and all preliminary negotiations and agreements of any kind or nature are merged in this Lease, and there are no oral agreements or implied covenants made in connection with this Lease. 5 Section 25. Governing Law. This lease shall be governed by and construed in accordance with the laws of the State of California. The parties have executed this Lease as of the day and year first above written. LANDLORD: TENANT: The City of Arcadia, a California municipal VG Property Investments, LLC, a California corporation Limited Liability Company By: By: Dominic Lazzaretto, City Manager ATTEST: Its: By: City Clerk APPROVED AS TO FORM: Its: Stephen P. Deitsch City Attorney D CITY OF ARCADIA U y a DEVELOPMENT SERVICES DEPT. ENGINEERING DIVISION CITY HALL PARKING- LOCATION MAP EXHIBIT A DATE: 11/07/14 BY: KLM CHK'D BY: 11 NO TH SCALE: DRAWING NO. 1 " =50' 1 0 Ao j AL k an Al \ ., CITY OF ARCADIA U y a DEVELOPMENT SERVICES DEPT. ENGINEERING DIVISION CITY HALL PARKING- LOCATION MAP EXHIBIT A DATE: 11/07/14 BY: KLM CHK'D BY: 11 NO TH SCALE: DRAWING NO. 1 " =50' 1