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CITY OF GLENDALE, CALIFORNIA
REPORT TO THE SPECIAL CITY COUNCIL
AGENDA ITEM
Report: Exclusive Negotiating Agreement- 1401 North Verdugo Road (Glendale Civic Auditorium)
1. City Council motion authorizing the City Manager to Execute an Exclusive Negotiating Agreement with Events at Eden, a California corporation, for the purpose of negotiating a lease and management agreement for City-owned property located at 1401 North Verdugo Road.
COUNCIL ACTION
Item Type: Action Item
Approved for December 3, 2024 calendar
EXECUTIVE SUMMARY
The City received an unsolicited proposal from Erik Khojoyan (owner of Eden on Brand) to lease, manage and operate the Civic Auditorium. The intent of the proposal is to transform the Civic Auditorium into an event and meeting center, intended on generating more activity and revenue than its current programming. Mr. Khojoyan has requested the City enter into a Exclusive Negotiating Agreement that would grant his corporation exclusive rights to conduct due diligence and to negotiate with the City for a lease and management agreement for the Civic Auditorium with an initial term of six months.
RECOMMENDATION
That the City Council authorize the City Manager to execute an Exclusive Negotiating Agreement with Events at Eden, a California corporation, for the purpose of negotiating a lease and management agreement for 1401 North Verdugo Road (Glendale Civic Auditorium).
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BACKGROUND
The City-owned Civic Auditorium was built in 1937, and at the time it was the largest municipal auditorium on the West Coast. Since then, it has been renovated twice with the first renovation occurring in 1964 and the second in 1997. The roof was replaced in 2013, and a new HVAC system was installed in 2014 and 2015. The auditorium’s total square footage is 54,832, with 30,098 square feet available for rentals between the upper and lower auditorium. The Civic Auditorium is operated by City staff which rents space to residents, promoters, entrepreneurs, private businesses, and event coordinators. The City also at times has hosted City-sponsored events. In the last fiscal year there have been 40 rentals of the auditorium equating to 177 rental days. The City currently has an agreement with Glendale Community College to rent the lower auditorium that is set to expire at the end of 2024.
The City has received an unsolicited proposal from Erik Khojoyan to lease, manage and operate the auditorium for private functions and events. Mr. Khojoyan is the owner and operator of Eden on Brand, which includes a popular restaurant and event space in Downtown Glendale. He possesses over 20 years of experience as an owner and operator of restaurants, as well as an event coordinator. His goal is to improve the facility and increase the profile of the events hosted at the auditorium. His proposal potentially provides an opportunity to turn a City asset into a revenue generating and culturally interesting venue, by bringing in an experienced partner similar to the agreement with the operators of the Alex Theatre.
ANALYSIS
An exclusive negotiating agreement (ENA) establishes a defined period during which a party is granted exclusive rights to conduct due diligence and to negotiate with the City for the disposition (sale, lease, or grant) of a property. An ENA also permits the City a period to review and determine the financial feasibility of the proposal. An ENA does not commit the City to undertake the disposition of the property. The City retains final discretion regarding the approval of any agreement to lease or manage the property that may result from the negotiations undertaken during the ENA time period.
The following is a summary of the key terms of the ENA:
•Initial Term: Six months. City may extend the Initial Term up to an additional six months, any further extensions are subject to the written approval of the City Council.
•Proposer Submissions: Detailed narrative describing the Proposal including any proposed tenant improvements; description of City building improvements; parking plan; grounds/landscaping plan; operation and management plan; financial feasibility analysis with detailed tenant and building improvement costs; estimated project income; pro forma; method of 3{{section.number}}{{item.number}}
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financing and source of equity and debt capital; proposed revenue share; and financial references.
•Termination: Six months if Proposer has not fully performed or if City and Proposer have not completed negotiating the terms and provisions of an acceptable Lease and Management Agreement (provided both parties have performed their obligations).
•Supplemental Reports: Progress reports every 60 days on the Proposer’s progress in meeting the terms and obligations of the ENA. •City Reimbursement of Financial Analysis: Proposer shall reimburse the City for the City’s financial consultant fees and costs for preparing a Financial Report.
•Assignment: The Proposer shall not assign the ENA without prior written City approval; City retains sole and absolute discretion to approve or deny a requested transfer.
•Hazardous Materials Assessment: Proposer at their expense shall be entitled to conduct environmental assessments, audits and/or testing of the Project Site.
STAKEHOLDERS/OUTREACH
Not applicable.
FISCAL IMPACT
There is no fiscal impact associated with approval of the ENA. Depending on the ultimate direction and status of the lease and management agreement pursued at the completion of the ENA period, there may be associated costs and revenues at that time.
ENVIRONMENTAL REVIEW
CEQA does not apply to projects where the lead agency determines "with certainty that there is no possibility that the activity in question may have a significant effect on the environment." CEQA Guidelines (14 Cal. Code Regs.) § 15061(b)(3). Here, the action involves Council authorization to enter into ENA. There is no possibility that the action regarding the ENA may have a significant effect on the environment.
CAMPAIGN DISCLOSURE
The Campaign Disclosure Statement is attached as Exhibit 2.
ALTERNATIVES
Alternative 1: Council may deny authorization to approve the ENA and provide direction on a preferred course of action regarding the Property. 4{{section.number}}{{item.number}}
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Alternative 2: The City Council may consider any other alternative not proposed by staff.
ADMINISTRATIVE ACTION
Submitted by:
Bradley Calvert, Director of Community Development
Prepared by:
Mark Berry, Deputy Director of Community Development/Economic Dev.
Approved by:
Roubik R. Golanian, P.E., City Manager
EXHIBITS / ATTACHMENTS
Exhibit 1 – Exclusive Negotiating Agreement
Exhibit 2 - Campaign Disclosure