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Home My WebLink About03 - CC-5 - Balearic Community Center Lease Amend. 2 - 7/5/2011CITY COUNCIL AGENDA REPORT MEETING DATE: JULY 5, 2011 ITEM NUMBER: SUBJECT: BALEARIC COMMUNITY CENTER LEASE AMENDMENT #2 DATE: JUNE 23, 2011 FROM: ADMINISTRATIVE SERVICES/RECREATION DIVISION PRESENTATION DONNA THERIAULT, MANAGEMENT ANALYST BY: FOR FURTHER INFORMATION CONTACT: Donna Theriault, Management Analyst 714-754-5636 RECOMMENDATION: Staff recommends that the City Council approve the proposed Amendment #2 to the Balearic Community Center Lease Agreement (Attachment 1) with the Newport Mesa Unified School District which waives the lease agreement payment for Fiscal Year 2011- 2012, and authorize the Mayor and the City Clerk to sign the Amendment. BACKGROUND: The City currently leases the Balearic Community Center (BCC) from the Newport Mesa Unified School District (District), and has utilized the Balearic Community Center for the past 30 years. The BCC facility is owned by the District and was formerly used as an educational facility by the District. The City utilizes the BCC to conduct recreation programs including Day Camp, Summer Recreation on Campus for Kids program, Teen programs, contract classes, and the Early Childhood Program. The City provides all maintenance of the fields and janitorial services for the restrooms which are used by youth groups who utilize the fields for soccer and football games and practices. The City also offers the BCC for rental to community groups, non-profit groups, and to the public for parties and special events in the evenings and on the weekends. On October 7, 2008, City Council approved a new lease Agreement with the District for the continued use of the BCC for an initial term of five (5) years, expiring June 30, 2013, with an option of three (3) additional term extensions of five (5) years each. ANALYSIS: Under the current Lease Agreement, the City pays the District an annual lease payment of $67,145 with an annual increase based on the U.S. Consumer Price Index, All Urban Consumers (CPI -U). Due to a negative CPI, there was no increase to the rent payment for FY 2009-2010, and the City paid the District the lease payment amount of $67,145. The District and the City agreed to waive the lease payment for FY 2010-2011, and at the May 17, 2011 City Council meeting, the Council approved Amendment #1 to the lease for the payment waiver and extension of the lease to June 30, 2014. 1 The District recently approved a waiver of the lease payment for FY 2011-2012 and has provided Amendment #2 for the payment waiver. The proposed Amendment #2 waives lease payment in July 2012 and it extends the Lease Agreement by one (1) year through June 30, 2015. The next lease payment due will be in July 2012 for the FY 2012-2013 lease year. ALTERNATIVES CONSIDERED: The City Council could choose to pay the Lease payment for fiscal year 2011-2012, not approve Amendment #2 and not extend the Agreement. The City Council could also choose to provide the District with the required six-month notice to terminate the Lease Agreement in which case the City may be required to vacate the premises. Staff would then need to seek an alternative location for the recreation programs currently offered at the BCC. FISCAL REVIEW: The lease payment of $67,145 is not included in the FY 2011-2012 operating budget. If the City Council decides not to approve Amendment #2, and to pay the lease payment to the District, a budget adjustment would be required. LEGAL REVIEW: The City Attorney has reviewed the document and approved it as to form. CONCLUSION: The City has been leasing the Balearic Community Center from the Newport Mesa Unified School District for recreation programs and community activities for over 30 years. The City and the District approved Amendment #1 to the lease for a payment waiver for FY 2010-2011. The District has provided Lease Amendment #2 documenting the terms of the lease payment waiver for FY 2011-2012. Staff recommends City Council approve the proposed Lease Agreement Amendment #2. DONNA THERIAULT Management Analyst DISTRIBUTION: Chief Executive Officer City Attorney City Clerk Staff TAMARA S. LETOURNEAU Interim Administrative Services Director ATTACHMENTS: 1 Lease Agreement Amendment #2 E ATTACHMENT I AMENDMENT #2 LEASE AGREEMENT BETWEEN THE NEWPORT -MESA UNIFIED SCHOOL DISTRICT AND THE CITY OF COSTA MESA AT BALEARIC SITE This LEASE, made and entered into between the NEWPORT -MESA UNIFIED SCHOOL DISTRICT, (the "District") and THE CITY OF COSTA MESA AT BALEARIC SITE (the "Tenant") on the 14th Day of June, 2011. 1. Building Lease. a. District owns the school site formerly known as the Balearic Elementary School located at 1975 Balearic Drive in the City of Costa Mesa, County of Orange. The City of Costa Mesa has leased the facility since January 11, 1977 for their Community Service Program. b. Compensation. For the purpose of strengthening the District's partnership with the City of Costa Mesa and thereby ensuring uninterrupted service to the District's students, the District has agreed to waive the rent for one year and extend the lease for one year. The rent waiver is applicable to 2011-12 and is valued at approximately $67,145.00. The $67,145.00 will be adjusted by the March CPIU and due July 30, 2012. The term adjustment extends the lease through June 30, 2015. All other terms of the agreement remain unchanged. IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first written above. District: Newport -Mesa Unified School District BY: —zM Name: Paul H. Reed Title: Acting Superintendent, Chief Business Official Board Approval Date: June 14, 2011 Approved as -t gntent By: Name: cPherson Title:' Recreation Supervisor, City of Costa Mesa City: City of Costa Mesa A municipal corporation By: Name: Gary Monahan Title: Mayor of the City of Costa Mesa Approved as to Form: M Name: Tom Duarte Title: City Attorney Attest: By. Name: Julie Folcik Title: City Clerk and ex -officio Clerk Of the City of Costa Mesa