Administrative
Report
H.5., File # 22-4888 Meeting Date: 11/15/2022
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATEFRONT & ECONOMIC DEVELOPMENT DIRECTOR TITLE
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2211-095, A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY TO SAVOIR FAIRE IMMERSION PRESCHOOL, INC.
APPROVE THE LEASE WITH SAVOIR FAIRE IMMERSION PRESCHOOL, INC. FOR A MONTHLY MINIMUM RENT OF $12,050 WITH AN ANNUAL 3% BASE RENT INCREASE FOR THE TERM DECEMBER 1, 2022 THROUGH FEBRUARY 28, 2028
EXECUTIVE SUMMARY
In March 2012, the City purchased the Pier Plaza leasehold and began the process of direct leasing to various tenants. Pier Plaza is comprised of several buildings totaling approximately 75,000 square feet. The property is comprised mainly of office and retail uses with the exception of one restaurant and the existing Savoir Faire child care center for children ages 3-7.
The proposed lease is for a second Pier Plaza location for the Savoir Faire Immersion Preschool, Inc. (Tenant) at 109 W. Torrance Boulevard, Suite 100. The lease area totals approximately 4,580 square feet of indoor space and 1,200 square feet of outdoor patio space. The proposed lease is for an immersive language pre-school for children ages 0-3.
The proposed lease between the Tenant and City is for 63 months. The initial three months of rent are waived to allow the Tenant to complete improvements to the interior space. The City will retain the option to terminate the lease with a twelve (12) month prior written notice. Total monthly rental revenue to the City’s Harbor Uplands Fund will be $12,050 which is comprised of $11,450 for the indoor space and $600 for the outdoor patio. The proposed lease also includes a 3% minimum rent increase on the anniversary date each year thereafter.
BACKGROUND
Savoir Faire is a European-style immersion Preschool, Pre-K and Kindergarten, that offers a complete multi-lingual program. The school was founded on the belief that children are most receptive to speaking a new language when they start early. The school teaches Spanish, French, and Mandarin to children by laughing, playing, drawing and eventually conversing. Savoir Faire has been a Pier Plaza tenant since 2013 in their current location of 117 W. Torrance Blvd. and is in good lease standing. On September 7, 2021 Council approved a new five-year lease for the existing location.
H.5., File # 22-4888 Meeting Date: 11/15/2022
Proposed Second Location of 109 W. Torrance Boulevard, Suite 100 At the existing Savoir Faire location of 117 W. Torrance Boulevard, there is currently an estimated 58 pre-school students starting at the age of three. Over the last few years Savoir Faire has received weekly inquiries from parents about infant care programs. Based on this demand, the Tenant is looking to expand its business by leasing 109 W. Torrance Blvd., Suite 100 from the City to provide services for the following age groups: 1 month to 12 months, 12 months to 24 months and 24 months to 36 months. The school will offer various schedule options that include half day (9:00 a.m. to 12 p.m.) and full day (9:00 a.m. to 3:30 p.m.) programs from two to five days a week. The children will be taught Spanish and will have the opportunity to transition to the Savoir Faire pre-school at the appropriate age. Savoir Faire anticipates they will have 20 full-time clients enrolled within the first month of opening, starting with 12 families that have already committed to enrolling their children in the new facility.
Public Hearing: Exemption Declaration, Conditional Use Permit and Coastal Development Permit
Pursuant to the municipal code, a Conditional Use Permit (CUP) was required for the addition of the child care center at 109 W. Torrance Boulevard, Suite 100. The public hearing to consider the CUP and associated Coastal Development Permit (CDP) for the proposed Savoir Faire location was held at the October 10, 2022 Harbor Commission meeting. The discussion was led by Sean Scully, Planning Manager, and covered the primary concerns associated with child care facilities that include noise (outside play areas), parking, and traffic/pedestrian safety concerns attributable to drop-off/pick -up activities.
After careful deliberation and review of appropriate traffic and parking studies, the Harbor Commission did not find any concerns with the proposed use and voted unanimously to approve the Savoir Faire CUP and CDP at 109 W. Torrance Boulevard, Suite 100. The Harbor Commission added one condition of approval to the CUP resolution to prohibit amplified sound in the outdoor play area. The applicant was not proposing any amplified sound but the Harbor Commission wanted to ensure such amplified sound was never an issue with the surrounding office businesses. The applicant agreed to the sound restriction. There were no appeals received during the 10-day appeal period and the Conditional Use Permit is considered finalized.
The Coastal Commission appeal period for the approved Coastal Development Permit will end on November 17, 2022. Given that the appeal period ends after the date in which the City Council considers this lease agreement, staff has adjusted the Commencement Date of the lease to December 1, 2022. The delayed commencement date will allow City staff the ability to delay commencement further if the Coastal Commission receives an appeal by the November 17, 2022 deadline. After navigating local government review processes, Savoir Faire will still need to work with the appropriate state agency to obtain the proper licenses and permits. With the additional three months of anticipated construction work calculated into the project timeline, the applicant’s target opening for the Savoir Faire preschool is Spring 2023.
The proposed lease carries a sixty (63) month term of $12,050, or approximately $2.50 per square foot, which is consistent with other similar office leases in the waterfront and the broader market. The lease contains a provision that escalates the rent at 3% per year for the remaining term of the lease.
The City retains the right to terminate the lease with a twelve-month written notice. The lease is
H.5., File # 22-4888 Meeting Date: 11/15/2022
The City retains the right to terminate the lease with a twelve-month written notice. The lease is personally guaranteed by Zoila Norwood, owner of Savoir Faire, and requires a security deposit of $12,050 that will be kept on file.
The premises will need extensive construction in order to transition from an office space to a child care facility. Improvements will include the relocation of several interior walls and doors, re-routing of sprinklers, construction of an additional restroom, and the installation of a new fire alarm system pursuant to review by the Fire Department. The Landlord construction allowance is $5.00 per square foot with a not-to-exceed amount of $21,500.
COORDINATION
The Waterfront and Economic Development Department collaborated with the City Attorney’s Office on this report. The City Attorney’s Office has approved the lease and resolution documents as to form.
FISCAL IMPACT
Lease revenue from the property will accrue to the City’s Harbor Uplands Fund. The proposed lease will result in a monthly rent of $12,050 with an annual total of $144,600. Annual rent increases of 3% over the five-year term will result in total lease revenue to the Uplands Fund of approximately $767,700.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Reso - No. CC-2211-095, Lease Certain Property to Savoir Faire Immersion Preschool, Inc. · Proposed lease between the City of Redondo Beach and Savoir Faire for 109 W. Torrance Blvd, Suite 100 (Children ages 0-3 years)
· Existing lease between the City of Redondo Beach and Savoir Faire for 117 W. Torrance Blvd.
Children ages 3-7 years, executed September 7, 2021
· Reso - #2022-10-HCR-02 Harbor Commission Resolution, October 10, 2022 · Admin Report - Harbor Commission CUP Evaluation, October 10, 2022 · Minutes - Harbor Commission Meeting, October 10, 2022