STAFF REPORT
DATE: July 30, 2024
TO: Justin Hess, City Manager
FROM: Patrick Prescott, Community Development Director BY: David Kriske, Assistant Community Development Director
SUBJECT: Approval of a Second Amendment to a Parking Lease Agreement with Creative International Investment, Inc. for Parking Spaces at the Courthouse Parking Structure Located at 301 East Angeleno Avenue
RECOMMENDATION
Approve a Second Amendment to a Parking Lease Agreement (Attachment 1) with Creative International Investment, Inc. (Creative) for lease of parking spaces at the Courthouse Parking Structure (Parking Structure) located at 301 East Angeleno Avenue to provide parking for the office building at 250 East Olive Avenue, and authorize the Community Development Director, as the City Manager’s Designee, to execute the Second Amendment.
BACKGROUND
The City of Burbank owns and operates the Parking Structure which provides parking for the Burbank Courthouse as well as general public parking. In 2003, the City authorized the former Redevelopment Agency to lease 190 spaces in the Parking Structure to the owner of the adjacent Burbank Civic Plaza office building at 250 East Olive Avenue, to help satisfy that development’s required parking (Attachment 2). Lease revenues flow to the City to fund operations and maintenance costs of the leased parking spaces and other Downtown facilities, and the City maintains administrative authority over the Lease. The Lease grants Creative, as the current owner of the Burbank Civic Plaza, 1 exclusive use
of these 190 parking spaces during weekday business hours. Outside of these exclusive hours, the spaces are made available as public parking.
Creative is required to pay 90% of the fair rental value of each parking space, as determined every five years through a survey of market parking rental rates. Rent for the current five-year period is $81 per space and was last adjusted in 2019. Since March 2019, Creative’s monthly rent for the 190 spaces is $15,390.
1 The former owner of the Burbank Civic Plaza (and original party to the Lease) was Burbank Civic Plaza, L.L.C.
COMMUNITY
DEVELOPMENT
2 In September 2023, Council approved a First Amendment to the Lease (Attachment 3) that: (1) provided a one- time rent abatement due to Creative’s financial hardships resulting from the Covid- 19 Pandemic and related office closures, and (2) temporarily converted Creative’s leased parking spaces from exclusive use (rented at $81 per space) to n on-exclusive use (leased at $52 per space) until the 2024 rental reassessment required under the Lease.
DISCUSSION
In February 2024, staff approached Creative to initiate the required five -year rental reassessment. In response, Creative requested to amend the Lease by: (1) reducing the total number of rented parking spaces, (2) adjusting rent to match the City’s monthly parking permit fee, and (3) allowing Creative’s tenants to park non-exclusively in any City- owned parking facility rather than renting exclusive, dedicated parking spaces within the Parking Structure. These requests were made in part due to existing tenant occupancy at Burbank Civic Plaza and related demand for tenant parking.
In response, staff evaluated the requests against the City’s interests to ensure that : (1) Creative’s property has adequate parking, (2) the City can receive recurring monthly parking revenue to help maintain its parking facilities, and (3) overall public parking in Downtown Burbank is effectively managed to ensure parking is available for the multiple mixes of land uses that rely on it. Proposed amendments to the Lease ( with terms that are favorable to both parties ) were discussed with Creative to develop a draft Second Amendment to the Parking Lease Agreement. The proposed amendments include the following:
1. Creative will lease a minimum of 95 parking spaces at the Courthouse Parking Structure ( half of the existing 190 spaces currently leased). If office tenant occupancy and parking demand increases at Burbank Civic Plaza, Creative will have the right to lease up to 190 spaces under the Lease. T enant parking usage will be reviewed on a yearly basis and the required spaces will be adjusted if necessary to reflect tenant parking usage relative to the maximum 190 spaces; a minimum lease of 95 spaces is required.
2. Rent will be adjusted to the same per-space amount established for monthly public parking permits in Downtown Burbank or the Parking Structure (whichever is applicable) in the City’s annual Fee Schedule (currently $67 per space as of July 1, 2024). Rent will be automatically adjusted commensurate with any adjustments to the City’s applicable monthly parking permit fee.
3. The parking spaces will be non- exclusive spaces, and Creative’s tenants may park in any public parking space within the Courthouse Parking Structure that allows for overtime parking with a permit. The parking spaces that are currently being rented exclusively to Creative would become available for other members of the public to park in, including those who park within the parking time limits as well as those who purchase monthly parking permits to exceed the time limits.
Creative’s tenants will not be allowed to park in other City -owned parking structures.
The proposed amendments mutually beneficial because they ensure Creative continues to provide parking for its office building tenants in relation to the office space actually occupied by businesses, in a location that can accommodate this parking demand without 3 overburdening general public parking demand in Downtown Burbank. Creative hopes that by adjusting their parking space fee to match the City’s monthly parking permit, more tenants will purchase space rentals from Creative rather than seeking a lower rate directly with the City. This will benefit the City by shifting more parking to the Courthouse Parking Structure, which currently has lower occupancy during weekday business hours, and by making more spaces available in higher -occupancy Downtown Burbank parki ng structures. Further, by preserving the Lease, the City will continue to receive yearly revenue of at least $76,380 to assist in funding operations and maintenance costs of the Parking Structure.
ENVIRONMENTAL REVIEW
Approving the proposed Second Amendment with Creative will have no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment since all infrastructure will remain the same as it exists today. As such, this action is not a “project” subject to the requirements of the California Environmental Quality Act (CEQA) pursuant to 14 Cal.
Code Regs. §15378.
FISCAL IMPACT
By approving the proposed Amendment, the City’s Parking Authority Fund recurring revenue will decrease from $184,680 under the current Parking Lease to $76,380, which will reduce the revenues available to maintain the City’s public lots and structures.
However, revenues may increase if the City raises overall monthly parking permit prices in the future, or if Creative’s occupancy increases. Alternatively, should the Second Amendment not be approved , the parties would continue negotiations on the rent reassessment as required by the Lease, and it is unclear at this time what the final fiscal impact would be to the City.
CONCLUSION
The City currently leases 190 spaces in the Courthouse Parking Structure to Creative to provide parking for the office building at 250 E ast Olive Avenue, but has received a request to reduce the number of spaces leased and the lease price of each space based on a non-exclusive use of the spaces. The proposed Second Amendment to the Parking Lease would reduce Creative’s lease to 95 non-exclusive spaces. The number of leased spaces would then be adjusted annually based on Creative’s office occupancy and parking demand, and the price of each space would be tied to any changes in the price of the City’s monthly public parking spaces applicable to the Courthouse Parking Structure, which is considered each year as part of the Citywide budget fee schedule.
While this Amendment would provide lower revenues to the City versus what is currently paid by Creative, it still provides a guaranteed minimum level of revenue for parking structure maintenance with the opportunity for increase based on parking demand, ensures that Creative’s building has adequate parking, and maintains flexibility in how the City manages its public parking.
ATTACHMENT
Attachment 1 – Proposed Second Amendment to Parking Lease Attachment 2 – Original Parking Lease
Attachment 3 – First Amendment to Parking Lease