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Home My WebLink About02 ADOPT RES 13-02 APPROVING OFFICE LEASEAgenda Item 2 AGENDA REPORT Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency MEETING DATE. SUBJECT /ACTION FEBRUARY 26 2013 ADOPT OVERSIGHT BOARD RESOLUTION 13 -02 APPROVING THE SUCCESSOR AGENCY OFFICE LEASE EXTENSION FOR 275 CENTENNIAL WAY RECOMMENDATION / PROPOSED ACTION It is recommended the Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency adopt Oversight Board Resolution No 13 -02 approving the office lease extension for the Successor Agency at 275 Centennial Way (Note: This Resolution shall be effective after transmittal of this Resolution to the Department of Finance ( "DoE') and the expiration of five (5) business days pending a request for review by the DoF within the time periods set forth in Assembly Bill No 1484 In this regard, if the DoF requests review hereof it will have 40 days from the date of its request to approve this Oversight Board action or return it to the Oversight Board for reconsideration and the action, if subject to review by the DoF will not be effective until approved by the DoF ) BACKGROUND In 2007 the City entered into a lease for Redevelopment Agency office space located across the street from City Hall at 275 Centennial Way The original lease had a three year term with lease extension options The current one (1) year extension expires February 28, 2013 Given the extent of Successor Agency enforceable obligations, additional office space continues to be necessary while the Successor Agency unwinds redevelopment activities and continues to meet or modify its enforceable obligations, based on direction of the Oversight Board. The current owner's representative for the office building at 275 Centennial Way Kimco Realty Corporation, has recently modified its initial offering to extend the lease after negotiation by staff The following is a summary of the major terms: 1 The term of the lease will be for a period of three years and four months (40 months, March 1 2013 through June 30, 2016), with the ability of the City as the Successor Agency to terminate the lease after twelve months with a ninety (90) day notice. Agenda Report February 26 2013 Page 2 2. The Landlord is waiving the first three (3) months of rent for the renewal term. Beginning June 1, 2013 the annual gross rent per month will be $1 75 per square foot, $21 00 SF/YR, payable in advance in equal monthly installments of $3,661 The lease rate of $3 661 per month is the same amount the City is currently paying. Factoring in the three months of waived rent, the effective rate will be $1 62 per square foot, $19 425 SF/YR. There will be no additional common area charges. Landlord is responsible for providing heat and air conditioning services, electricity (within limits of the lease) building janitorial services and building maintenance services. 3. If it becomes necessary to terminate the lease during the first year (March 1, 2013 — February 28, 2014) the City will be responsible for paying the entire year of rent, including the three months of waived rent. If it becomes necessary to terminate the lease during the second year (March 1 2014 — February 28, 2015), the City will reimburse the Landlord for two months of waived rent. If the lease is terminated during the third year (March 1 2015 — February 29 2016), the City will reimburse the Landlord for one month of waived rent. Staff has reviewed current market comparables for Class B and C office space in Tustin. Office comparables have been found in a broad range and not inconsistent with the rent level proposed at the subject property With the close proximity to City Hall and the specific services provided by the owner which would typically result in additional common area charges that can significantly escalate the gross rent expense for a tenant, the rent proposed is reasonable and will not result in the Successor Agency having to incur any additional expenditures for janitorial services or other common area charges. The City has not yet received the final lease extension from the owner's representative but has received a written proposal which is the basis of the anticipated lease extension. On February 19 2013, the Successor Agency approved the lease extension. Attachment: Oversight Board Resolution No. 13 -02 OVERSIGHT BOARD RESOLUTION NO. 13 -02 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY APPROVING THE EXTENSION OF AN OFFICE LEASE FOR THE SUCCESSOR AGENCY The Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency finds, determines and declares as follows: A. The Tustin Community Redevelopment Agency ('Agency ") was established as a community redevelopment agency that was previously organized and existing under the California Community Redevelopment Law Health and Safety Code Sections 33000 et seq. ( "CRL') and previously authorized to transact business and exercise the powers of a redevelopment agency pursuant to action of the City Council ( "City Council ") of the City of Tustin ( "City "). and B AB X1 26 ('AB26 ") added Parts 1 8 and 1.85 to Division 24 of the California Health and Safety Code, which laws cause the dissolution and wind down of all redevelopment agencies ( "Dissolution Act ") and C On December 29 2011 in the petition California Redevelopment Association v Matosantos, Case No S194861 the California Supreme Court upheld the Dissolution Act and thereby all redevelopment agencies in California are subject to the Dissolution Act and were dissolved as of and on February 1 2012; and D The Agency is now a dissolved community redevelopment agency pursuant to the Dissolution Act; and E. By a resolution considered and approved by the City Council at an open public meeting on January 17 2012, the City chose to become and serve as the 'Successor Agency' to the dissolved Agency under the Dissolution Act; and F As of and on and after February 1 2012, the City serves as the 'Successor Agency' and will perform its functions as the Successor Agency under the Dissolution Act to administer the enforceable obligations of the Successor Agency and otherwise unwind the Successor Agency's affairs, all subject to the review and approval by the seven - member Oversight Board formed thereunder and G Pursuant to Section 34179 the Successor Agency's Oversight Board has been formed and the initial meeting has occurred on March 13, 2012; and H. Section 34179(e), as amended by Assembly Bill 1484 ('AB 1484 ") requires all actions taken by the Oversight Board to be adopted by resolution; and I Pursuant to Section 34171 (d)(1)(F), the Oversight Board acknowledges an extension to the lease of office space for the Successor Agency is necessary for the operation of the Successor Agency. and Oversight Board Resolution 13 -02 Page 1 of 3 J The Oversight Board has duly considered all other related matters and has determined that extending the Office Lease for the operation of the Successor Agency is in the best interest of the City and Agency and in the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements. NOW, THEREFORE, BE IT RESOLVED BY A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY Section 1 The foregoing recitals are incorporated into this Resolution by this reference, and constitute a material part of this Resolution. Section 2. The Oversight Board approves the Extension of an Office Lease for the Successor Agency at 275 Centennial Way Tustin. Section 3 The City Manager of the Successor Agency or his authorized designee is directed to post this Resolution on the City /Successor Agency website Section 4 This Resolution shall be effective after transmittal of this Resolution to the DoF and the expiration of five (5) business days pending a request for review by the DoF within the time periods set forth in Assembly Bill No 1484 which amended the Dissolution Act and was approved by the Governor on June 27 2012. In this request, if the DoF requests review hereof it will have 40 days from the date of its request to approve this Oversight Board action or return it to the Oversight Board for reconsideration and the action, if subject to review by the DoF will not be effective until approved by the DoF The Secretary of the Oversight Board shall certify to the adoption of this Resolution. APPROVED AND ADOPTED this 26th day of February 2013. Doug Davert, Chairman Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency ATTEST Charles E. 'Chuck' Puckett, Secretary Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency Oversight Board Resolution 13 -02 Page 2 of 3 STATE OF CALIFORNIA ) COUNTY OF ORANGE )SS CITY OF TUSTIN I CHARLES E. 'CHUCK PUCKETT Secretary of the Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency do hereby certify that the whole number of the members of the Agency Board is seven, that the above and foregoing Resolution No 13 -02 was duly passed and adopted at a regular meeting of the Oversight Board, held on the 26th day of February 2013 by the following vote BOARD MEMBER AYES. BOARD MEMBER NOES. BOARD MEMBERS ABSTAINED BOARD MEMBERS ABSENT Charles E. 'Chuck' Puckett, Secretary Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency Oversight Board Resolution 13 -02 Page 3 of 3