HomeMy WebLinkAbout05 OFFICE LEASE EXTENSION FOR 275 CENTENNIAL WAY, SUITE 104 5
Agenda Item
Reviewed:
AGENDA REPORT City Manager
Finance Director
MEETING DATE: JUNE 7, 2016
TO: JEFFREY C. PARKER, CITY MANAGER
FROM: ECONOMIC DEVELOPMENT DIVISION
SUBJECT: OFFICE LEASE EXTENSION FOR 275 CENTENNIAL WAY, SUITE 104
SUMMARY
Authorization is requested to execute a five year lease extension through June 30,
2021, for the suite at 275 Centennial Way to provide office space for the Economic
Development Division employees and certain operational functions.
RECOMMENDATION
It is recommended the City Council authorize the City Manager to execute the attached
lease extension for Suite 104 at 275 Centennial Way, consistent with the general terms
identified in this Agenda Report.
FISCAL IMPACT
Rent during the extension term of the lease will be increased by five percent from
$3,661 per month under the current lease to $3,844.05 per month, with total annual rent
being $46,128.60. The monthly rent will remain fixed at $3,844.05 per month during the
five year lease term. The lease extension provides the City with a tenant termination
right after three years. In the event it becomes necessary to terminate the lease, the
City will pay the unamortized portion of the carpet replacement costs.
CORRELATION TO THE STRATEGIC PLAN:
The office lease extension supports the Economic Development Division's efforts to
implement and execute Goal A — Economic and Neighborhood Development strategies.
BACKGROUND
In 2007, the City leased office space across the street from City Hall at 275 Centennial
Way for the former Redevelopment Agency. The lease has been amended three times
and the current three year extension expires June 30, 2016.
Agenda Report— Lease Extension
June 7, 2016
Page 2
Given the extent of the Economic Development Division's responsibilities, adequate
office space for staff and operational functions continues to be necessary. The current
owner's representative for the office building at 275 Centennial Way, Kimco Realty
Corporation, has 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 five years with the ability of the City to
terminate the lease after three years with a ninety (90) day notice.
2. Beginning July 1, 2016, the annual gross rent per month will be $1.8375 per square
foot, $22.05 SFNR, payable in advance in equal monthly installments of $3,844.05.
The lease rate of $3,844.05 month will be in effect for the term of the agreement and
is in an increase of five percent from the current rent. There are 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. The Landlord is providing the City with a Tenant Improvement Allowance of
approximately $10,000 to install new carpet.
4. If it becomes necessary to terminate the lease on or after June 30, 2019, the City will
be responsible for paying the prorated amount of the carpet replacement costs. The
costs are distributed equally across the five year or sixty month term and the City
would pay the prorated amount for the remaining months at the point of termination.
Staff has reviewed current market comparables for Class B and C office space in
Tustin. 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 City having to incur any additional expenditures for
janitorial services or other common area charges. Staff is available to respond to any
questions the City Council may have.
Jerry Craig
Economic Development & Housing Manager
Attachment: Fourth Amendment to Lease (275 Centennial Way)
LEASING
LEGAL
CONST.
FOURTH AMENDMENT TO LEASE
Project ID: SCAT1420/ Lease ID: LCITYTU00 Tenant ID: TCITYTU00
THIS FOURTH AMENDMENT TO LEASE 20th day of May,
2016, by and between PK II LARWIN SQUARE SC LP(hereinafter referred to as "Landlord") and CITY
OF TUSTIN (hereinafter referred to as "Tenant") with reference to the following:
WITNESSETH:
WHEREAS, Landlord and Tenant are the parties to that certain Lease Agreement dated
December 11, 2006 , as amended by that certain First Amendment to Lease dated
as of February 16, 2007, as amended by that certain Second Amendment to Lease dated as of February
29, 2012, as amended by that certain Third Amendment to Lease dated as of February 12, 2013
(hereinafter collectively re
LARWIN SQUARE
SHOPPING CENTER located in Tustin, California, as more particularly described in the Lease
Agreement;
WHEREAS, Landlord and Tenant desire to amend the Lease in the manner hereinafter set
forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, it is mutually agreed as follows:
1. Extended Term. The term of the Lease is hereby extended for an additional period of five
(5) years commencing as of July 1, 2016 so that the term of the Lease shall now
expire on June 30, 2021 (the "Expiration Date"). Tenant agrees and acknowledges that there are no
options to extend the term of the Lease beyond the Expiration Date.
2. During the Extended Term, the Annual Gross Rent shall be as follows:
LEASE ANNUAL GROSS RENT MONTHLY GROSS RENT
YEAR
7/1/2016-6/30/2017 $46,128.60 $3,844.05
7/1/2017-6/30/2018 $46,128.60 $3,844.05
7/1/2018-6/30/2019 $46,128.60 $3,844.05
7/1/2019-6/30/2020 $46,128.60 $3,844.05
7/1/2020-6/30/2021 $46,128.60 $3,844.05
3. Paragraph 5 of the Third Amendment to Lease is hereby deleted in its entirety and
replaced with the following in lieu thereof:
Termination Right. Provided Tenant is not in default under any of the terms or conditions of the Lease,
Tenant shall have the right to terminate the Lease at any time, on or after June 30, 2019, on not less than
ninety (90) days prior written notice to Landlord upon the following terms and conditions: (i) Tenant
terminate this Lease; (ii) at the time Landlord receives the Termination Notice the Lease is in full force and
effect and Tenant is not in default thereunder and no act has occurred or is continuing which, after notice
or lapse of time, or both, would constitute a default hereunder; (iii) the Termination Notice is clear and
unequivocally states that Tenant is exercising its right to terminate and specifies a date not less than
ninety (90) days from the date that Landlord receives the Termination Notice upon which the Lease shall
t
certified check payable to Landlord in an amount equal to the unamortized portion of the amount paid by
Landlord for the carpet replacement costs, as outlined on A attached hereto, for the Leased
Premises, as special consideration to Landlord for the early termination of the Lease. In the event that
Tenant elects to terminate this Lease in accordance with the provisions of this Article, then and in such
event the Lease shall terminate on the Lease Termination Date as if such date was the date originally set
forth for the expiration of this Lease. The right to terminate contained in this Article is a limited one time
right to terminate this Lease. A failure to strictly comply with the terms and conditions of this Article, TIME
BEING THE ESSENCE OF THE RIGHTS GRANTED HEREUNDER, shall constitute a waiver of the rights
granted to Tenant in this Article. Tenant will remain liable to Landlord for all payment obligations
(including, without limitation, rent, additional rent, and tax, if any) and all other obligations under the Lease
Termination Date.
4. Parking. Article 9 of the Original Lease is hereby amended to provide Tenant with four
(4) parking spaces located in the office building parking area designated by Landlord for the exclusive use
employees. Provided it is in accordance with local governmental codes and
location of and signage for the parking spaces, Tenant shall be permitted to add two (2) additional parking
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spaces located in the office building parking area designated by Landlord for the exclusive use and
employees. As such, Tenant will have a total of six (6) designated parking
spaces located in the office building parking area. Te
these spaces to ensure compliance, nor is Tenant permitted to take any action against any other tenant,
or their employees or customers, for a violation thereof. Landlord shall have the right, at any time, to
remove any such designation from up to two (2) parking spaces for future tenant use.
5. Miscellaneous.
(A) Addresses for notice purposes are:
To Tenant:
City of Tustin
300 Centennial Way
Tustin, CA 92780
Attn: Jerry Craig
Telephone No. (714) 573-3121
jcraig@tustinca.org
jcraig@tustinca.org
To Landlord:
c/o Kimco Realty Corporation
Attn: Legal Department
1621-B South Melrose Drive
Vista, CA 92081
with a copy to:
c/o Kimco Realty Corporation
Attn: Legal Department
3333 New Hyde Park Road
Suite 100, P.O. Box 5020
New Hyde Park, NY 11042-0020
(B) It is mutually understood and agreed that the Lease shall be and remain in full force
and effect, as modified and amended hereby, and Landlord and Tenant hereby ratify and confirm the
Lease as amended hereby. Without limitation of the foregoing, Landlord hereby confirms its granting of
the Leased Premises to Tenant, and Tenant hereby confirms its acceptance of the Leased Premises on
all of the terms and conditions of the Lease as hereby amended.
(C) If Tenant is not an individual, the person signing this document on behalf of Tenant
represents (by such signature) that he or she has been duly authorized by Tenant to execute this
document and that such signature creates a binding obligation of Tenant.
(D) Tenant acknowledges that, no default exists on the part of Landlord under the Lease
as of the date hereof.
(E) In the event of a discrepancy between the Lease and this Amendment, this
Amendment shall prevail. If not defined herein, all capitalized terms used in this document shall have the
meaning ascribed to them in the Lease unless the context otherwise requires. This Amendment contains
all of the agreements of the parties hereto with respect to the matters contained herein, and no prior
agreement (other than the Lease), arrangement or understanding pertaining to any of such matters shall
be effective for any purpose.
(F) No Broker. Tenant represents and warrants to Landlord that it has not dealt with any
broker in connection with this Amendment and Tenant does hereby agree to defend, indemnify and hold
Landlord harmless of and from any claim of or liability to any broker, finder, or like agent with whom
Tenant may have dealt in connection with this transaction.
(G) OFAC. Tenant represents and warrants to Landlord that neither Tenant nor any
affiliate or representative of Tenant (i) is listed on the Specially Designated Nationals and Blocked
Persons List maintained by the Office of Foreign Asset Control, Department of the Treasury ("OFAC")
pursuant to Executive Order number 13224, 66 Federal Register 49079 (September 25, 2001) (the
"Order"); (ii) is listed on any other list of terrorists or terrorist organizations maintained pursuant to the
Order, the rules and regulations of the OFAC or any other applicable requirements contained in any
enabling legislation or other executive orders in respect of the Order (the Order and such other rules,
regulations, legislation or orders are collectively called the "Orders"); (iii) is engaged in activities prohibited
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in the Orders; or (iv) has been convicted, pleaded nolo contendere, indicted, arraigned or detained on
charges involving money laundering or predicate crimes to money laundering.
IN WITNESS WHEREOF, the Landlord and Tenant have executed this instrument as of the
day and year first above written.
WITNESSES: LANDLORD: PK II LARWIN SQUARE SC LP
By: PK II Larwin Square GP LLC, its general partner
By: PK II Holdco LLC, its member
By: PRK Holdings II LLC, its managing member
By: Kimco PK, LLC, its managing member
By: Kimco PK Inc., its managing member
By:
Name:
Title:
Date:
WITNESSES: TENANT: CITY OF TUSTIN
By:
Name:
Title:
Date:
A notary public or other officer completing this certificate verifies only the identity of the individual who
signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of
that document.
ACKNOWLEDGMENT FOR TENANT
STATE OF )
) SS:
COUNTY OF )
On ________________________, before me, ________________________________, a
Notary Public in and for said State, personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
___________________________________
Signature of Notary (SEAL)
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EXHIBIT A
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