HomeMy WebLinkAbout- - Balearic Community Center Lease Agreem. - 6/19/2012CITY COUNCIL AGENDA REPORT
MEETING DATE: June 19, 2012 ITEM NUMBER:
SUBJECT: BALEARIC COMMUNITY CENTER LEASE AGREEMENT
DATE: JUNE 5, 2012
FROM: OFFICE OF THE CHIEF EXECUTIVE OFFICER
PRESENTATION THOMAS R. HATCH, CEO
BY:
FOR FURTHER INFORMATION CONTACT: Daniel K. Baker, Management Analyst 714-754-5156
RECOMMENDATION:
Staff recommends that the City Council approve the new lease agreement for the
Balearic Community Center (Attachment 1) with the Newport Mesa Unified School
District, and authorize the Mayor and the City Clerk to sign on behalf of the City.
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.
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.
The District and the City agreed to a second amendment of the lease payment for FY
2011-2012. Amendment #2 waived the lease payment in July 2012 and extended the
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Lease Agreement by one (1) year through June 30, 2015. The next lease payment is due
in July 2012 for the FY 2012-2013 lease year.
ANALYSIS:
Rather than negotiate a third amendment, both City and District personnel agreed that a
new contract would better clarify terms and conditions to ensure the BCC remain an
updated and useful facility for all surrounding residents and would allow the City to realize
long term stability regarding the use of the facility.
The new lease agreement language (attachment 1) remains largely unchanged. However,
a number of new provisions have been added to ensure that both the City and District
continue to work together to keep Balearic as updated as possible.
Unlike prior arraignments, the new agreement allows for the City to recognize a Deferred
Maintenance Credit of up to $5,000 (flooring, sewer, paving, concrete) in the overall rent by
performing deferred maintenance to the facility, reducing the annual base rent to $62,145.
Additionally, a new provision will allow the City to reduce the rent even further by
performing major maintenance improvements (electrical, communication, sanitation) with a
not to exceed credit of up to $16,000 annually. This credit will reduce the annual base rent
to $46,145. These provisions will continue for the initial phase of the contract and will
cease upon the first initial option for extension.
The initial phase of the contract is a three year period ending on June 30, 2015. At the end
of the first phase, the rent will revert to the full U.S. Consumer Price Index based upon the
base rent of $67,145. The deferred maintenance credit and the major maintenance
improvement credit will not be part of subsequent extensions. Additional language allows
for three (3) five (5) year extensions and will allow the City to utilize the BCC continually
until 2030. This extended time -frame will eliminate pressure on City staff to find an
alternate location as well as continually asking for council authorization for Lease
Amendments.
ALTERNATIVES CONSIDERED:
The City Council could choose to pay the lease payment for fiscal year 2012-2013, and not
approve the new lease 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 included in the FY 2012-2013 operating budget. If the
City Council decides not to approve the new lease agreement, the City will make the base
rent payments(s) for FY 2012-13 and attempt to negotiate with the District when the lease
expires in 2014-15.
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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 and Amendment #2 to the lease for a payment waiver for FY 2011-2012. To
provide continuity and increased enhancement to the BCC, staff recommends approving
the new lease agreement as presented.
THOMAS R. HATCH
Chief Executive Officer
ATTACHMENTS: 1 Lease Agreement
DANIEL K. BAKER
Management Analyst
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