HomeMy WebLinkAbout07 DELEGATION OF LEASE AUTHORITY TO THE CITY MANAGER DocuSign Envelope ID: 1C9A57ED-E503-4BE9-A039-5CA5DED3CAE3
AGENDA REPORT Agenda Item
Reviewed:
City Manager D5W
Finance Director N/A
MEETING DATE: July 7, 2020
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: MATTHEW S. WEST, CITY MANAGER
SUBJECT: AUTHORIZATION OF CITY MANAGER TO NEGOTIATE, APPROVE AND EXECUTE
LEASE AMENDMENTS WITH TENANTS OF CITY-OWNED PROPERTY DURING THE
LOCAL EMERGENCY RELATING TO COVID-19.
SUMMARY:
Consider delegating authority to the City Manager to negotiate, approve and execute lease
amendments with tenants of City-owned non-residential property during the local emergency
relating to COVID-19.
RECOMMENDATION:
That the City Council authorize the City Manager, for the duration of the COVID-19 local emergency,
to negotiate, approve and execute lease amendments with non-residential tenants of City-owned
property, including but not limited to authorization to increase, reduce and/or defer rented space
and/or past due or future rent amounts with individual tenants, provided the City Manager determines
that each lease amendment is the most reasonable economic mitigation alternative then available to
the City.
FISCAL IMPACT:
The fiscal impact will depend on the nature of future lease amendments, which may change rental
income and/or rented space in City-owned facilities. By providing flexibility to the City Manager to
approve lease amendments with individual tenants that are struggling due to COVID-19 related
financial impacts the City Manager will endeavor to stabilize the City's longer-term lease revenues by
offering individualized lease amendments to the City's tenants depending on their specific economic
circumstances related to business needs to mitigate COVID-related impacts.
BACKGROUND AND DISCUSSION:
On March 20, 2020, the City Manager, acting in his capacity as Director of Emergency Services,
proclaimed the existence of a local emergency relating to Covid-19, in accordance with Government
Code Section 8630 and Tustin Municipal Code Sections 5204 and 5205(a)(1). The proclamation of
local emergency was subsequently ratified by the City Council.
On April 7, 2020, to promote stability among commercial tenancies financially impacted by
the COVID-19 pandemic, the City Council adopted Resolution 20-21, which encouraged non-
residential landlords and utilities to refrain from evictions, foreclosures, rent increases, or
service or utility
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DocuSign Envelope ID: 1C9A57ED-E503-4BE9-A039-5CA5DED3CAE3
DELEGATION OF AUTHORITY TO NEGOTIATE LEASE AMENDMENTS DURING COVID-19 EMERGENCY
July 7, 2020
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disconnections for the duration of the COVID-19 emergency, and encouraged non-residential
landlords to offer rent-deferral programs to tenants.
Concurrently with its consideration of Resolution 20-21, it was noted that the City also owns
property that is leased or licensed to non-residential businesses. Consistent with the City
encouraging its commercial landlord community to defer rent for struggling tenants, and to
demonstrate leadership in implementing the objectives of Resolution 20-21, the City
Council authorized City staff to negotiate rent deferral and recovery options to non-residential
tenants on City-owned property for those tenants that are experiencing a significant reduction
in business income related to the COVID-19 pandemic.
To further promote stability among its non-residential tenancies and to demonstrate
continued leadership in working with the City's business community to address the financial
challenges posed by COVID-19, it is recommended that the City Council authorize the City
Manager to negotiate, approve and execute lease amendments with non-residential tenants
of City-owned property, including but not limited to authorization to increase, reduce and/or defer
rented space and/or past due or future rent amounts with individual tenants, provided the City
Manager determines that each lease amendment is the most reasonable economic mitigation
alternative then available to the City. If approved, this delegation of authority would remain in place
until the City rescinds its proclamation of local emergency regarding COVID-19.
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