Administrative
Report
H.7., File # 22-5290 Meeting Date: 1/17/2023
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATERFRONT & ECONOMIC DEVELOPMENT DIRECTOR TITLE
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2301-003, A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY TO JP SECURITY PRODUCTS, INC.
APPROVE A LEASE WITH JP SECURITY PRODUCTS, INC. FOR THE PREMISES AT 134 INTERNATIONAL BOARDWALK FOR A MONTHLY AMOUNT OF $450 WITH AN ANNUAL 3% BASE RENT INCREASE FOR THE TERM JANUARY 17, 2023 THROUGH JANUARY 16, 2028
EXECUTIVE SUMMARY
In July 2012, the City purchased the International Boardwalk leasehold and began the process of direct leasing to various tenants. The International Boardwalk is comprised of a narrow linear development of approximately 17,200 square feet that is fronted by a public walkway. The City has negotiated a new lease with JP Security Products, Inc. (Tenant) for the space at 134 International Boardwalk for approximately 200 rentable square feet. The Tenant has occupied the space since 2015. The current space measures 500 square feet but will be reduced in size to 200 square feet to accommodate the expansion of a neighboring tenant space occupied by Project Barley.
The proposed lease will reflect the new size of the tenant space and eliminate the existing month-tomonth term in favor of a sixty (60) month term with the City retaining the option to terminate the lease with a twelve (12) month prior written notice. Rental to the City’s Harbor Uplands Fund is the greater of the minimum monthly rent of $450, or 10% of gross sales.
BACKGROUND
JP Security, Inc. which specializes in security hardware, software, and application, has occupied the space at 134 International Boardwalk since 2015 and has been operating on a month-to-month term since 2020. The current space measures 500 square feet and will be downsized to 200 square feet to accommodate the expansion of Project Barley in the neighboring space, unit 136. Under the lease, the Tenant accepts the property “as is”.
The proposed lease carries a sixty month term with a minimum monthly rent of $450, or approximately $2.25 per square foot, which is consistent with other similar retail leases in the waterfront. The monthly rent paid to the City will be the greater of the minimum monthly rent, or 10% of gross sales. The minimum monthly rent increases by 3% on the anniversary date for each year the lease remains in effect.
The lease is personally guaranteed by the owner Jean Pierre de Melo and a security deposit of $450
H.7., File # 22-5290 Meeting Date: 1/17/2023
The lease is personally guaranteed by the owner Jean Pierre de Melo and a security deposit of $450 will be kept on file. The City retains the right to terminate the lease with a twelve-month written notice.
COORDINATION
The Waterfront and Economic Development Department collaborated with the City Attorney’s Office on the preparation of the lease. The City Attorney’s Office has approved the document 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 minimum monthly rent of $450 for the first lease year with an annual increase of 3% to the base rent. Over the five-year term of the lease, revenue to the Uplands Fund will be a minimum of $28,667.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Reso - No. CC-2301-003, Lease Certain Property to JP Security Products, Inc. · Proposed Lease Between the City of Redondo Beach and JP Security Products, Inc. · Existing Lease Between the City of Redondo Beach and BRD Security Products, Inc., July 22, 2015