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HomeMy WebLinkAbout10 - CC-11 - Approval of Measure Q- Warehouse Lease - 6/15/2021 CITY COUNCIL AGENDA REPORT MEETING DATE: JUNE 15, 2021 ITEM NUMBER: CC-11 SUBJECT: APPROVAL OF MEASURE Q – WAREHOUSE LEASE AGREEMENT DATE: MAY 27, 2021 FROM: POLICE DEPARTMENT PRESENTATION BY: JOYCE LAPOINTE, CAPTAIN FOR FURTHER INFORMATION CONTACT: JOYCE LAPOINTE (714) 754-5663 RECOMMENDATION: Staff recommends City Council: 1. Approve the lease agreement with Norwood Management, LLC for a 8,554 square foot warehouse space in Costa Mesa for additional evidence storage in connection with illegal dispensary operations (Attachment 1) for an initial twelve (12) month term from July 1, 2021 to June 30, 2022, with four (4) one-year renewal options. Rent will be $12,500 per month during the initial term and will increase by 3% during each renewal period. 2. Authorize the City Manager and City Clerk to execute the lease agreement and future authorized changes and amendments to this Agreement. BACKGROUND: On November 3, 2020, city voters approved the “City of Costa Mesa Retail Cannabis Tax and Regulation Measure” (Measure Q). The passage of Measure Q does not allow the retail sale of cannabis products, rather it allows the Costa Mesa City Council to adopt regulations permitting cannabis retail and delivery uses within the City subject to specific requirements outlined in the ordinance. At the February 24, 2021 City Council meeting, the City Council approved the proposed staffing plan from the Finance Department for the successful implementation of the Retail Cannabis Tax and Regulation Measure (Measure Q) allowing for cannabis retail storefront (dispensaries) and retail non-storefront (delivery) uses in specified areas of the City subject to limitations. 2 These positions will perform various functions including: process permit and business license applications, perform inspections, ensure tenant improvements are compliant with requirements, review onsite safety plans and measures, and provide enforcement against illegal cannabis dispensaries in Costa Mesa posing as legitimately licensed businesses. As a result, an Illegal Dispensary Enforcement Task Force was created to assist in the enforcement of illegal dispensaries that are operating within City limits. Staff identified various enforcement tools, including delinquent citations by Code Enforcement, Police or Fire personnel that can be imposed on property tax, litigation or other means to actively enforce illegal cannabis dispensaries. ANALYSIS: As of March 23, 2021, SIU Detectives identified 18 marijuana dispensaries operating illegally within the City of Costa Mesa. In an effort to close these illegal dispensaries the Cannabis Task Force has served 10 search warrants resulting in the closure of 8 illegal dispensaries. SIU detectives made 46 arrests, Code Enforcement Officers issued 20 citations, and Fire Personnel issued 13 fire code violations. Due to the frequency and amount of evidence confiscated during these operations, the Police Department’s Property and Evidence Storage areas have been completely filled. An alternate City site was identified and also filled necessitating the request to lease the above-mentioned warehouse. The warehouse will allow for the additional evidence storage needed to allow enforcement operations to continue closing illegal dispensary operations. The proposed lease provides for an initial term of July 1, 2021-June 30, 2022, with four (4) additional one-year renewal options. Rent during the first year will be $12,500 per month. Thereafter, rent will increase by three percent (3%) each year that the City elects to exercise a renewal option. ALTERNATIVES CONSIDERED: City Council could decide not to authorize the lease agreement; however, this alternative is not recommended because it would require enforcement operations to be stopped until a new storage area could be identified and leased. FISCAL REVIEW: Funding for the lease with Norwood Management, LLC is included in the FY2021/2022 adopted budget (535400-101-15400-10136). LEGAL REVIEW: The City Attorney’s Office has reviewed this report and the lease agreement, and approved them as to form. 3 CITY COUNCIL GOALS & PRIORITES: This item supports City Council goals: achieve long-term fiscal sustainability, and strengthen public safety and keep the community safe. CONCLUSION: Staff recommends City Council: 1. Approve the lease agreement with Norwood Management, LLC for a 8,554 square foot warehouse space in Costa Mesa for additional evidence storage in connection with illegal dispensary operations (Attachment 1) for an initial twelve (12) month term from July 1, 2021 to June 30, 2022, with four (4) one-year renewal options. Rent will be $12,500 per month during the initial term and will increase by 3% during each renewal period. 2. Authorize the City Manager and City Clerk to execute the lease agreement and future authorized changes and amendments to this Agreement. JOYCE LAPOINTE BRYAN F. GLASS Police Captain Chief of Police CAROL MOLINA KIMBERLY HALL BARLOW Finance Director City Attorney ATTACHMENTS: 1 Lease Agreement with Norwood Management, LLC