HomeMy WebLinkAboutItem 1a: Lease with Rusnak for 21 Morlan Place with Adoption of CEQA ExemptionApril 6, 2010
TO: Chairman and Members of the Agency Board
FROM: Jason Kruckeberg, Assistant City Manager /Development Services Director 7
By: Jerry Schwartz, Economic Development Managerj$
SUBJECT: Authorize the Executive Director to execute a lease with Rusnak /Arcadia
for the property at 21 Morlan Place and adopt a categorical exemption
from CEQA regarding the lease
Recommendation: Approve
SUMMARY
The Redevelopment Agency Board has been working with Rusnak /Arcadia to facilitate
the expansion of its Mercedes -Benz dealership onto neighboring properties. The
dealership already leases a portion of the property at 21 Morlan Place from the Agency
for vehicle storage. Now that the building has been demolished and the lot is
completely paved, the dealership desires to utilize the entire 44,000 sq. ft. site to grow
its business. The property at 21 Morlan Place (the prior Church in Arcadia site), was
purchased by the Agency for the Rusnak/Arcadia expansion. A new lease for this site
has been prepared and reviewed by both parties.
BACKGROUND
In 2004, the Agency entered into a Land Assembly and Development Agreement
( "LADA ") with the Rusnak /Arcadia Mercedes -Benz Automobile Dealership to assemble
five parcels nearby the dealership site located at 55 West Huntington Drive. The
Agency acquired the site at 21 Morlan Place (Church in Arcadia) in 2008 as part of its
efforts to facilitate the expansion of the dealership.
DISCUSSION
STAFF REPORT
Arcadia Redevelopment Agency
In December 2008, the Agency approved short term leases with Rusnak /Arcadia for two
floors of the Arcadia Self Storage building for parts storage and the parking lot at 21
Morlan Place for auto storage and parking. In 2009 the Agency demolished the building
at 21 Morlan Place, and has graded and paved the entire property. It is now a vacant
44,000 sq. ft site that Rusnak /Arcadia can use for vehicle parking. It was understood at
the time of the short term lease, that once the building was demolished, a new longer
term lease would be negotiated.
A new deal point letter was prepared that provides for a five year lease for the entire
site. The new lease would supersede the existing lease that covers only a portion of the
site. The lease rate remains at $1,000 per month for the five year term. This rental rate
reflects the cooperative relationship between Rusnak and the City of Arcadia, and the
revenue received in the General Fund from the sales generated by the dealership. If
Rusnak Mercedes Benz leaves Arcadia before the end of the five year term, it would
immediately owe the Agency a payment of $30,000. This represents the difference
between the proposed rent and a rate of $1,500 per month, which is closer to the
market rent for the entire five year lease period. One provision of the lease involves the
Agency paying the cost to stripe the parking lot, which has been requested by the
General Manager of Rusnak /Arcadia. The lease is in keeping with our efforts to work
with Rusnak to expand their business in Arcadia.
The use proposed by Rusnak /Arcadia for this site was previously approved by the
Planning Commission which granted a Conditional Use Permit to allow vehicle storage
at 21 Morlan Place on September 23, 2009.
This item must be considered pursuant to a public hearing under Section 33431 of the
Health and Safety Code, which provides that any lease made by the Agency to another
party without public bidding can only be approved following a public hearing, with notice
provided once per week for two weeks. For the purpose of this hearing, notice was
published in the Arcadia Weekly on March 25 and April 1, 2010.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)
This project is categorically exempt from CEQA under Section 15301(a) (Class 1) of the
Guidelines, leasing or minor alteration of public structures or facilities. The Agency
should find that the project is categorically exempt and that a Notice of Exemption
should be filed with the Los Angeles County Recorder's Office.
FISCAL IMPACT
The impact to the Redevelopment Agency will be lease revenue of $12,000 per year for
the next five years, or $60,000. There is also the potential that the Agency will receive
an additional $30,000 if the dealership leaves Arcadia during the five year lease term.
Rusnak/Arcadia may also pay possessory interest taxes on the leased area, a portion of
which would accrue to the Agency.
RECOMMENDATION
That the Redevelopment Agency Board authorizes the Executive Director to execute a
lease with Rusnak/Arcadia for the property at 21 Morlan Place and adopt a categorical
exemption from CEQA regarding the lease.
Approved: .
Donald Penman, City Manager /Executive Director
Staff Report
March 2, 2010
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