STAFF REPORT
Meeting Date:
March 24, 2026
CONSENT
11 SUBJECT: LEASE AGREEMENT WITH ANNELIESE PRESCHOOL, INC. FOR PORTION OF THE PROPERTY IDENTIFIED AS ASSESSOR PARCEL NUMBER 988-01-95 CONSISTING SPECIFICALLY OF THE BUILDING LOCATED AT 21542
WESLEY DRIVE AND THE SMALL MULTIPURPOSE ROOM AND COMMON AREAS LOCATED AT 21540 WESLEY DRIVE CONSISTING OF RESTROOMS,
PLAYGROUND, AND PARKING SPACES
RECOMMENDATION: It is recommended that the City Council:
1. Authorize the City Manager to execute a lease agreement with Anneliese Preschool, Inc., in a form approved by the City Attorney, for an initial two-year term with an option for three, one-year extensions, at the rate of $10,635 per month with an annual consumer price index increase; and
2. Find the action is not a project within the meaning of the California Environmental Quality Act under Public Resources Code Section 21065.
SUMMARY OF THE MATTER
This report recommends that the City Council authorize the City Manager to execute a lease agreement with Anneliese Preschool, Inc. for the continued use of a portion of the Lang Park Community Center property located at 21542 Wesley Drive for an initial two-year term with three one-year extension options.
The City owns property identified as assessor parcel number 988-01-95, which is more commonly known as the Lang Park Community Center. Since 1990, Anneliese Preschool, Inc. (“Anneliese”) has leased a portion of the property to operate a year-round preschool and childcare program.
The current lease with Annaliese was executed in 2021 and is scheduled to expire on June 30, 2026.
Anneliese has requested a new lease agreement to allow the preschool program to continue operating at this location.
City staff has prepared a 2026 lease agreement that largely maintains the operational structure of the existing lease, while clarifying the leased areas and addressing parking limitations at the facility. The proposed agreement has an initial two-year term beginning July 1, 2026, with three optional one-year extensions that could extend the agreement to June 30, 2031.
The proposed rent is $10,635 for fiscal year 2026-2027, with annual adjustments based on the Consumer Price Index (CPI) each July 1.
DISCUSSION
Background
The City owns property located at 21540–21542 Wesley Drive, commonly known as the Lang Park Community Center. Since 1990, Anneliese has leased a portion of the property to operate a preschool and LEASE AGREEMENT WITH ANNELIESE PRESCHOOL INC. FOR PROPERTY LOCATED AT 21542 WESLEY DRIVE
March 24, 2026
childcare program. The preschool provides year-round early childhood education and childcare services for families in the Laguna Beach Community.
The current lease agreement between the City and Anneliese was executed in 2021 (and is based on an appraisal done in 2019, with CPI adjustments). The 2021 lease expires on June 30, 2026 (Attachment 1).
In advance of the expiration, Anneliese has approached the City seeking a new lease agreement (Attachment 2).
Existing Lease Terms
Below are some of the terms from the 2021 lease:
• The monthly rent is $10,325, adjusted annually based on CPI. • Responsibility for all interior maintenance, repairs, and utility expenses. • Requirement to maintain $3 million in comprehensive liability insurance. • Use a small conference room within the Lang Park Community Center for kindergarten or specialty classes, as well as a neighboring building and outdoor play yard for preschool programs and activities.
Proposed 2026 Lease Agreement
City staff has prepared a proposed 2026 lease agreement that maintains the existing lease terms while providing additional clarity regarding the leased areas and addressing parking management at the site. The proposed lease includes an initial two-year term, with three one-year extension options through June 30, 2031. Monthly rent will be $10,635 for Fiscal Year 2026–2027 and will be adjusted annually based on the Consumer Price Index (CPI) each July 1 throughout the term of the agreement (Attachment 3).
Key provisions of the proposed lease include:
Lease Element Proposed Terms
Initial Lease Term Two years (July 1, 2026 – June 30, 2028) Extension Options Three one-year extensions
Maximum Lease Term Through June 30, 2031
Monthly Rent $10,635 for FY 2026-2027
Rent Adjustments Annual CPI adjustment each July 1
Premises Description:
The proposed lease clarifies the areas used by the preschool program. These areas included:
• The building (“Building”) located at 21542 Wesley Drive • The small multipurpose room (“Small Multipurpose Room”) located at 21542 Wesley Drive • The common areas with non-exclusive rights located at 21540 Wesley Drive:
o the common area restrooms (restroom janitor restroom); o the playground; and
o parking spaces, as further restricted in the lease (the “Common Areas”).
LEASE AGREEMENT WITH ANNELIESE PRESCHOOL INC. FOR PROPERTY LOCATED AT 21542 WESLEY DRIVE
March 24, 2026
Collectively, hereinafter referred to as the “Premises.” The Premises are depicted below:
Parking Management
Finally, the 2026 lease addresses parking limitations at and around the property and specifies that the City will provide a limited number of ten-minute parking passes for use by parents and guardians during dropoff and pick-up times, to be agreed upon annually by the Lessor and Lessee. Lessee shall be responsible for distributing the passes to parents and guardians and shall enforce the ten-minute parking limit against them.
All other terms of the new 2026 lease agreement are the same as the 2021 lease agreement.
FINANCIAL ANALYSIS
Monthly rent on July 1, 2026, will equal $10,635 for an annual sum of $127,620 for FY 2026-2027, which will increase annually based on the Consumer Price Index (CPI) as specified in the lease agreement.
Under the terms of the lease, Anneliese Preschool is responsible for interior maintenance, repairs, utilities, and operational costs associated with the leased premises. As a result, the lease does not create additional operational costs for the City.
ENVIRONMENTAL ANALYSIS
LEASE AGREEMENT WITH ANNELIESE PRESCHOOL INC. FOR PROPERTY LOCATED AT 21542 WESLEY DRIVE
March 24, 2026
The recommended action consists of organizational or administrative activities of the City that will not result in a direct or indirect physical change in the environment and therefore does not constitute a “project” within the meaning of the California Environmental Quality Act. (Public Resources Code Section 21065; 14 CCR Section 15378(b)(5).) Here, the recommended action consists of continuing to lease a City-owned property to Anneliese Preschool, Inc. on the same terms that currently exist and have existed for the last five years. Therefore, there will be no direct or indirect physical change in the environment.
ATTACHMENTS
1. Executed 2021 Lease (Pgs. 3-19)
2. Letter request from Anneliese School to renew lease at Lang Park. (Pg. 20)
3. Proposed 2026 Lease (Pgs. 21-37)
Submitted By: Alexis Braun Approved: .David A Kiff
Alexis Braun, Acting Director of
Transit and Community Services
Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Andrea Tirnauer, Senior Recreation
Coordinator
Jane Abzug, Assistant City Attorney