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HomeMy WebLinkAbout2008/11/04 Item 8 CITY COUNCIL AGENDA STATEMENT ~\ff:. CITY OF '-~CHUlA VISTA 11/4/08, Item~ ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORlZING THE MAYOR TO EXECUTE AN AGREEMENT BETWEEN THE CITY AND INVESTCAL REALTY, INe. TO SURRENDER THE CITY'S LEASED PREMISES LOCATED AT 900 LANE AVENUE SUITE 200 AND AUTHORlZE THE PA YMENT OF THE BUY-OUT FEf~ DIRECTOR OF ENGINEERING ~ INTERlM CITY MANAGER S Y 4/STHS VOTE: YES 0 NO [gJ SUBMITTED BY: REVIEWED BY: SUMMARY The City currently leases 5,843 square feet of office space from Investcal Reality, Inc. This office space, located at 900 Lane A venue has been used by the Building Inspection and Plan Review sections of the Planning and Building Department since 1998. Due to the relocation of all Planning and Building Services to the City Hall campus, this office space is no longer needed. Because the current lease has 13 months left before it expires, stafT is proposing to buyout the remainder of the term at a discounted rate and surrender the lease. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378(b)(5) of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. RECOMMENDATION Council adopt the resolution. BOARDS/COMMISSION RECOMMENDATION Not applicable. DISCUSSION In December 1998, the City entered into a sub-lease with the Eastlake Company for office space at 900 Lane Avenue to accommodate the Building Inspection section of the Planning and Building Department. In December 1999, Council approved an amendment to the sublease adding space for the Plan Review Section of the Planning and Building Department and for a satellite permit processing center. When their lease expired in December 2004, Eastlake declined to renew and the City, by Council Resolution 2004-338 entered into a five-year lease with Investcal Reality, the 8-1 11/4/08, ItemL Page 2 of 2 property owner, for the office space. This lease is current, has 13 months remaining, and obligates the City to pay rent totaling $12,459 per month for the space. Additionally, the City pays approximately $1,200 per month for utilities at the site. Due to the relocation of all Planning and Building Services to the City Hall Campus, this office space is no longer needed. Staff has looked at options for this space and has determined that, due to the short duration of the remaining lease and the current state of the real estate market, the City's options are limited. There is considerable vacant commercial space currently available in the area. This available space would be in direct competition with our space were we to try to sub-lease for ourselves or find a new tenant for Investcal. Both of those options also have financial and legal obligations attached. Based upon this analysis, combined with the City's ongoing expenditure for rent and utilities, staff approached lnvestcal and has negotiated a proposed buy-out that would allow the City to surrender the lease. The terms as proposed are as follows: . The City would pay lnvestcal a sum equal to eleven (II) months rent or $137,049. . The City would forfeit its security deposit, which is $10,780 and has already been paid. . The City would completely vacate the premises no later than November 15, 2008. . Investcal would accept surrender of the City's lease and release the City from any further obligations on this account. DECISION MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found no property holdings within 500 feet of the boundaries of the property, which is the subject of this action. FISCAL lMPACT The City's future obligation under the lease agreement is 13 months, trom November 2008 through December 2009. With $12,459 in monthly lease costs and $1,200 in estimated monthly utility costs, this equates to an estimated future expense of $177,567. Under the proposed Surrender Agreement, the City will incur costs totaling $147,829. Because the security deposit has already been paid, the net payment resulting trom this action would be $137,049. The net savings to the City resulting from the proposed agreement totals $29,738, and is detailed as tallows: Future Expenses Future Lease Obligation Estimated Future Utility Expense Total Estimated Future Expense $ 161,967 $ 15,600 $ 177,567 Surrender Agreement II Months Lease Payment Forfeited Deposit (1 Month Lease) Total Agreement Cost $ (137,049) $ (10,780) $ (147,829) Estimated Agreement Net lmpact $ 29,738 ATTACHMENTS 1. Surrender Agreement Prepared by: Rick Ryals, Real Property iVfanager, Engineering Department 8-2 THE ATTACHED AGREENlENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALL Y SIGNED UPON APPROVAL BY THE CITY COUNCIL ~ tL0c(/~.fr"-- Bart C. Miesfeld Interim City Attorney Dated: i 0 r ,)-1 ( () ? Lease Surrender Agreement between the City ofChula Vista and Investcal Realty Incorporated re: Leased Premises Located at 900 Lane Avenue, Suite 200 8-3 LEASE SURRENDER AGREEMENT THIS LEASE SURRENDER AGREEMENT ("Agreement") is entered into this .:itl~day of O("TO\"'~<< 2008, by and between THE CITY OF CHULA VISTA, a municipal corporation and charter City organized under the laws of the State of California ("City"), and INVESTCAL REALTY, INCORPORATED, a California Corporation ("lnvestcaJ"), (eollectively, the Parties). This Agreement shall be effeetive as of the date last signed by the Parties to the Agreement (the "Effective Date") and is entered into with respect to the following recited facts: WHEREAS, in December 2004, City, pursuant to Council Resolution 2004-338, entered into a lease with Investcal Reality, Inc., for 5,843 squarc feet of office space at 900 Lane A venue to aecommodate the Building Inspection section of the Planning and Building Department (the "Lease"); and WHEREAS, the Lease obligates the City to pay rent at the rate of $12,459 per month, for a total of 60 months, and City paid a security deposit for the Lease premises in the amount of$1O,780; and WHEREAS, the City eurrently pays approximately $1,200 per month for utilities at the Lease site; and WHEREAS, due to the relocation of City's Planning and Building Services to the City Hall campus, the office space is no longer needed by City; and WHEREAS, the Lease does not expire until December 3],2009, leaving a total of $161,967 to be paid under the terms of the Lease, and approximately $]5,600 in estimated future utility costs for the Lease premises; and WHEREAS, City and Investcal have reached an aecord, by which City will surrender the Lease to Investcal and Investcal will aeeept City's surrender subjeet to the terms and eonditions set forth in this Agreement. NOW THEREFORE, the Parties agree as follows I. City shall pay Investcal $137,049 as payment in full for all remamll1g rent obligated under the Lease. Said payment shall be made no later than November 30, 2008. 2. City forfeits the security deposit it previously paid Investcal, in the amount of $1O}80, to Investcal. -1- 3. City shall vacate the Lease premIses no later than 5:00 pm on Saturday, November 15,2008. 4. In consideration of City's performance under this Agreement, as described in paragraphs ]., 2. and 3., above, Investcal, on behalf of itself, its successors and assigns, hereby releases and discharges the City, its elected officials, officers, directors, employees and agents from any and all debts, claims, demands, liabilities, obligations, causes of action and rights, including attorney's fees and court costs, whether known or unknown, that Investcal now owns or holds, or at any time on or before the effective date owned or held, by reason of any act. malter, cause or thing relating to the Lease. . 5. As of the date City vacates the Lease premises, but not later than November 15. 2008, City surrenders and Investcal accepts City's surrender of the Lease. The Lease shall have no further force and affect. 6. It is further understood and agreed that all rights under Section 1542 of the Civil Code of California and any similar law of any state or teITitory of the United States or other jurisdiction are hereby expressly waived. Said section reads as follows: 1542. General Release - Claims Extinguished. A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor 7. City represents and warrants that it has made no transfer of the Lease, any interest in the Lease, or any demand, ohligation, liability, or cause of action arising out of the Lease. Investeal represents and warrants that Investcal has made no transfer of the Lease, any interest in the Lease, or any demand, obligation, liability, or cause of action arising out of the Lease. . 8. The Parties have herein set forth the whole of their agreement. The performance of this Agreement constitutes the entire consideration for surrender of the Lease and shall relieve City and Investcal of all further obligations or claims under the Lease. 9. Time is of the essence of each and every term, condition, obligation and provision of this Agreement. 10. The Recitals of fact preceding this Agreement are true and correct and are incorporated into this Agreement, in their entirety, by this reference. -2- 11. No elected official, officer, director, employee or agent of thc City shall be personally liable to lnvestcal, or any successor-in-interest of Investcal, in the event of any default or breach by the City under this Agreement or for any amount that may be or become due to Investcal, or any of its successors-in- interest, on any obligations under the terms or conditions of this Agreement. 12. No inference in favor of or against any Party shall be drawn from the fact that such Party has drafted any part of this Agreement. The Parties have all participated substantially in the negotiation, drafting, and revision of tlus Agreement, with advice from legal and other counsel and advisers of their own selection. 13. The laws of the State of California shall govern the interpretation and enforcement of this Agreement, without application of conflicts of laws principles. The Parties acknowledge and agree that this Agreement is entered into, is to be fully performed in and relates to real property located in the City of Chula Vista, County of San Diego, State of California. All legal actions arising from trus Agreement shall be filed in the Superior Court of the State in and for the County or in the United States District Court withjurisdietion in the County. 14. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective legal representatives, successors and assigns. 15. Except as expressly set forth in this Agreement, no Party makes any representation or warranty material to trus Agreement to any other Party. 16. Each signatory and Party to this Agreement warrants and represents to the other Party that it has legal authority and capacity and direction from its principal to enter into this Agreement, and that all resolutions or other actions have been taken so as to enable it to enter into this Agreement. 17. This Agreement may be executed in multiple counterpart originals, each of which shall be deemed to be an original, but all of wruch together shall constitute one and the same document. [Signatures blocks appear on the next page] -3- SIGNATURE PAGE TO LEASE SURRENDER AGREEMENT The Parties have signed this Agreement by and through the signatures of their authorized representatives, as set forth below: CITY OF CHULA VISTA, a California INVESTCAL municipal corporation and charter city CORPORA nON, corporation a REALTY California By: Cheryl Cox, Mayor Dated: By: W . \L.-/~ Kenneth Shafie /"'7 Its: /// . Dated: /&/.30/b>)7 ATTEST: Donna Norris, City Clerk APPROVED AS TO FORM: Bart Miesfeld, Interim City Attorney -4- RESOLUTION 2008- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT BETWEEN THE CITY AND INVESTCAL REALTY, INC. TO SURRENDER THE CITY'S LEASED PREMISES LOCATED AT 900 LANE A VENUE SUITE 200 AND AUTHORIZE THE PAYMENT OF THE BUY-OUT FEE WHEREAS, the City of Chula Vista currently leases 5,843 square feet of office space from InvestcaI Reality, Incorporated (Investcal), located at 900 Lane Avenue, which has been used by the Building Inspection and Plan Review sections of the Planning and Building Department since 1998; and WHEREAS, due to the relocation of all Planning and Building Services to the City Hall campus, this office space is no longer needed; and WHEREAS, this lease currently has 13 months remaining and obligates the City to pay rent totaling $12,459 per month for the space plus the cost of utilities and custodial service; and WHEREAS, staff has looked at options for this space and has determined that, due to the short duration of the remaining lease and the current state of the real estate market, the City's options are limited; and WHEREAS, staff has negotiated a buy-out with Investcal, that would allow the City to surrender the lease; and WHEREAS, the City's future obligation under the lease agreement is 13 months, from November 2008 through December 2009; and WHEREAS, with $12,459 in monthly lease costs and $1,200 in estimated monthly utility costs, this equates to an estimated future expense of$I77,567; and WHEREAS, under this Surrender Agreement, the City will incur costs totaling $147,829. The net savings to the City resulting from this agreement totals $29,738. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula V ista hereby authorizes the Mayor to execute an agreemeqt between the City and lnvestcal Realty, Inc. to surrender the City's leased premises located at 900 Lane A venue Suite 200 and authorizes the payment of the buy-out fee. Presented by Approved as to form by Richard A. Hopkins Director of Engineering 8-8