Administrative
Report
H.9., File # 24-1444 Meeting Date: 9/3/2024
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATERFRONT & ECONOMIC DEVELOPMENT
DIRECTOR
TITLE
ADOPT BY TITLE ONLY RESOLUTION NO. CC-2409-071, A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, LEASING CERTAIN PROPERTY TO JARIET TECHNOLOGIES, INC., A DELAWARE CORPORATION
APPROVE AN AMENDMENT TO THE LEASE WITH JARIET TECHNOLOGIES, INC. FOR A MONTHLY MINIMUM RENT OF $25,183 AND THE TERM SEPTEMBER 3, 2024 THROUGH NOVEMBER 2, 2029
EXECUTIVE SUMMARY
In March 2012, the City of Redondo Beach (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 of office and retail uses. The City of Redondo Beach and Jariet Technologies, Inc. (Jariet or Tenant) entered into a lease beginning May 3, 2016 for spaces located at 103 West Torrance Boulevard and 123 West Torrance Boulevard, Suite 100 (Premises). The Premises totals approximately 11,503 square feet.
The proposed amendment to the Lease (First Amendment) reduces the square footage of the leased premises to 9,503 square feet, allows for a 62-month lease term, and includes a tenant improvement allowance. Monthly rental revenue to the City’s Harbor Uplands Fund will be $25,183, with an annual 3% increase on the anniversary date. During COVID, the Tenant accepted the City’s offer of deferring its rent, along with many other waterfront tenants. As part of the proposed lease extension, the Tenant would pay back the entire amount of COVID deferred rent, $386,260, amortized as additional monthly rent payments over the five-year lease term.
BACKGROUND
The Pier Plaza leasehold is comprised of buildings 103 to 131 West Torrance Boulevard (on the top level of the Pier Parking Structure) and totals approximately 75,000 square feet of space. The property generally contains office uses, with the lone exceptions being a restaurant and child care center. Jariet Technologies, Inc. is a high-tech computer electronics firm.
On May 3, 2016, the City entered into a lease with Jariet for spaces located at 103 West Torrance Boulevard, consisting of approximately 7,372 square feet, and 123 West Torrance Boulevard, Suite 100, consisting of approximately 4,131 square feet, for a total of 11,503 rental square feet. The original term of the lease expired on May 2, 2021, and has remained, in effect, on a month-to-month
H.9., File # 24-1444 Meeting Date: 9/3/2024
original term of the lease expired on May 2, 2021, and has remained, in effect, on a month-to-month basis since that time. During COVID, Jariet accepted the City’s offer of deferring its rent and accrued a balance that the tenant intends to pay back.
The proposed amendment reduces the square footage of the leased premises from 11,503 square feet to 9,503 square feet and allows for a 62-month lease term to expire on November 2, 2029. As part of the proposed lease extension, Jariet would pay back the entire amount of COVID deferred rent, $386,260, amortized as additional monthly rent payments over the length of the five-year lease.
Monthly rental revenue to the City’s Harbor Uplands Fund will be $25,183, with an annual 3% increase on the anniversary date. The proposed amendment also includes a one-time tenant improvement allowance of $5.00 per square foot, not to exceed $47,515.
COORDINATION
The Resolution and lease documents were reviewed and approved as to form by the City Attorney’s Office.
FISCAL IMPACT
Lease revenue from the property will accrue to the City’s Harbor Uplands Fund. The proposed amendment will result in monthly rent of $25,183 with an annual total of $302,196. After including the 3% annual increase to the base rent on the anniversary date of the lease, the total revenue to the Uplands Fund over the term of the Agreement is expected to be approximately $1,749,300, inclusive of the amortized deferred rent of $386,260.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Reso - No. CC-2409-071 Leasing Certain Property to Jariet Technologies, Inc. · Exhibit A - Proposed Amendment to the Office Lease between the City of Redondo Beach and Jariet Technologies, Inc.