TO:
VIA:
FROM:
DATE:
Placentia City Council
AGENDA REPORT
CITY COUNCIL
CITY ADMINISTRATOR
DEPUTY CITY ADMINISTRATOR / PUBLIC SERVICES & INFRASTRUCTURE MARCH 21, 2023
SUBJECT: EXTENSION OF LEASE AGREEMENT WITH KAPPE TERRACINA, LLC FOR 166 E. LA JOLLA AVENUE
FISCAL
IMPACT: EXPENSE: $39,479 MONTHLY BASE RENT LEASE EXTENSION BUDGET: FY 2023-24 OPERATING BUDGET (103043-6160)
SUMMARY:
The City currently leases an industrial commercial building at 166 E. La Jolla Avenue as supplemental office space and to house the Police Department's vehicle storage and impound lot and other operations. The existing lease expires on December 31, 2023, and the building was sold in October 2022. The new owners have agreed to extend the lease an additional three (3) months at market rate to provide the City additional time to finish construction of the new property and evidence warehouse and provide sufficient time to move into and occupy the new facility.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Approve a three-month term extension with Kappe Terracina, LLC, for 166 E. La Jolla Avenue, Placentia for a monthly base rent of $39,479; and
2. Authorize the City Administrator to execute the term extension in a form approved by the City Attorney.
STRATEGIC PLAN STATEMENT:
This item is consistent with the City Council approved 5 -Year Strategic Goal 5, Implement Public Infrastructure to Meet Community Needs, and Objective 5.4, Construct the Placentia Public Safety Center.
1.g.
March 21, 2023
City Council Agenda
March 21, 2023
DISCUSSION:
On January 1, 2021, the City Council entered into a lease agreement with the Karagines Family Trust and the Dennis and Deborah Sigalos Family Trust for the property they owned at 166 E. La Jolla Avenue, Placentia (Attachment 1). The property includes an approximately 21,000 square foot light industrial commercial building that the Placentia Police Department has been utilizing for a number of years as supplemental office space and to house the Police Department's vehicle storage and impound lot and other operations. The term of the agreement is for three (3) years and expires on December 31, 2023. In October 2022, Kappe Terracina, LLC, purchased the building. The City is currently constructing the Placentia Public Safety Center which will include warehouse space for the Police Department to transfer the operations currently housed in the leased building. The Placentia Public Safety Center is scheduled to be completed by the end of December 2023.
The project team has phased the Public Safety Center Project in two (2) main project phases to focus on delivering the new warehouse first, given the time constraints the expiring lease agreement presents to the City. City Staff has held numerous discussions with the building's new owners in the hopes of securing a short-term extension to hedge against any unforeseen delays in completing the new warehouse, and to provide sufficient time for the Police Department to physically transfer all operations currently housed in the leased building into the new Placentia Public Safety Center. The new owners have agreed to extend the existing lease an additional three (3) months at market rate lease terms (Attachment 2) from December 31, 2023, through March 31, 2024. Staff recommends that the City Council approve this proposed lease agreement to ensure there is sufficient time for a smooth transition into the facility. The proposed agreement includes an early termination provision of $13,042.69 should the City elect to forgo the lease extension within four (4) months of the lease expiration date.
FISCAL IMPACT:
The proposed lease extension includes a monthly base rent of $39,479 for three (3) months (or $118,437 total) through March 31, 2024. The City has budgeted funds in the Operating Budget each year to cover the cost of leasing this facility and Staff will ensure that sufficient funds are budgeted in the FY 2023-24 Operating Budget to cover the monthly payments through the lease extension expiration date.
Prepared( by:
Luis Estevez
Deputy City Administrator
Reviewed and approve
rad Butts
Chief of Police
City Council Agenda
March 21, 2023.
Reviewed and approved: Reviewed and approved:
;44•141* 1.04,11201142•1.
Jennifer Lampman
Director of Finance
Attachments:
1. Existing Lease Agreement
2. First Amendment to Lease Agreement
Damien R. Arrula
City Administrator