Successor Agency to the Redevelopment Agency of the City of Riverside TO: HONORABLE MAYOR AND CITY COUNCIL DATE: FEBRUARY 22, 2022 FROM: COMMUNITY & ECONOMIC DEVELOPMENT WARD: 1
DEPARTMENT
SUBJECT: ADOPTION OF A RESOLUTION APPROVING THE FIRST 10-YEAR EXTENSION OF A LEASE AGREEMENT WITH THE HISTORIC MISSION INN CORPORATION AND THE SUCCESSOR AGENCY IN THE AMOUNT OF ONE DOLLAR AND APPROVING A 10-YEAR EXTENSION OF THE SUBLEASE AGREEMENT FROM THE SUCCESSOR AGENCY TO THE MISSION INN FOUNDATION ISSUE:
Adopt a resolution authorizing the City of Riverside as the Successor Agency to the Redevelopment Agency of the City of Riverside (Successor Agency) to enter into the first 10-year extension of a lease agreement with the Historic Mission Inn Corporation for one dollar and to extend the sublease agreement with the Mission Inn Foundation for 10-years for the use of museum, storage, and offices within the Mission Inn Hotel & Spa located at 3649 Mission Inn Avenue.
RECOMMENDATIONS:
That the Successor Agency Board:
Adopt a resolution (Attachment 1) authorizing the Successor Agency to unilaterally exercise the first 10-year extension of a lease agreement with the Historic Mission Inn Corporation for one dollar by sending written notice to the Historic Mission Inn Corporation consistent with the lease to extend through December 21, 2032, and authorizing the Successor Agency to unilaterally exercise a 10-year extension to the term of the Sublease Agreement, by sending written notice to the Mission Inn Foundation consistent with the Sublease Agreement, to extend through December 21, 2032, for the use of museum, storage, and offices within the Mission Inn Hotel & Spa located at 3649 Mission Inn Avenue, to be presented to the Countywide Oversight Board and Department of Finance for final consideration and approval; and Recommend that the Countywide Oversight Board adopt a separate resolution authorizing the Successor Agency to unilaterally exercise the first 10-year extension of a lease agreement with the Historic Mission Inn Corporation for one dollar by sending written notice to the Historic Mission Inn Corporation consistent with the lease to extend through December 21, 2032, and authorizing the Successor Agency to unilaterally exercise a 10-year extension to the term of the Sublease Agreement, by sending written notice to the Mission Inn Foundation consistent with the Sublease Agreement, to extend through December 21, 2032 for the use of museum, storage, and offices within the Mission Inn Hotel & Spa located at 3649 Mission Inn Avenue; and Authorize the Executive Director, or his designee, to send the written notice to the Historic Mission Inn Corporation to extend the lease for an additional ten (10) year period through December 21, 2032, and send the written notice to the Mission Inn Foundation to extend the Sublease for an additional ten (10) year period through December 21, 2032, including making minor and non-substantive modifications, and to take any and all actions to complete the transactions.
BACKGROUND/LEGISLATIVE HISTORY:
On November 3, 1998, following discussion, the former Redevelopment Agency of the City of Riverside (RDA) approved a Memorandum of Understanding (MOU) with the Historic Mission Inn Corporation (HMIC) regarding acquisition/development rights contained in the Disposition and Development Agreement between the RDA and HMIC which was executed on December 23, 1992 between the parties for the Mission Inn Hotel. The DDA included, among other things, a provision to include a museum at the Mission Inn Hotel and provide office space to the Mission Inn Foundation (MIF) in the Mission Inn Hotel to oversee the operations of the museum. The MOU included a provision to finalize a Lease agreement for the museum in the Mission Inn Hotel.
On November 16, 1999, following discussion, the RDA approved Amendment No. 1 to the MOU to extend the timeline for negotiating terms and preparation of a museum lease from June 30, 1999, to December 31, 1999.
On December 22, 2000, the RDA entered into a twenty-two (22) year lease agreement with the HMIC for approximately 6,500 square feet of office and museum space within the Mission Inn Hotel, which expires on December 21, 2022 (Lease – Attachment 2). The RDA prepaid rent in the amount of $1,255,873 to the HMIC for the initial 22-year term. Under the terms of the lease, the RDA was permitted to sublease to the Mission Inn Foundation.
On January 16, 2001, the RDA authorized the Executive Director to execute a sublease agreement with the Mission Inn Foundation for approximately 6,500 square feet of office and museum space within the Mission Inn Hotel. The Sublease agreement was executed on January 29, 2001 by the RDA and MIF with a commencement date of December 23, 2000 (Sublease – Attachment 3). The Sublease agreement expires on December 21, 2022. As such, the MIF is responsible for all obligations and applicable terms of the RDA in the original lease, including but not limited to the payment of utilities, repairs, and maintenance as set forth in the lease agreement.
DISCUSSION:
The lease provides the Successor Agency with the unilateral right for two additional 10-year extensions for the sum of one dollar for each 10-year extension. The RDA must notify the HMIC by providing written notice with not less than 180-days or more than 360-days prior to the expiration of the lease. Under the terms of the lease, the deadline to provide notice is June 21, 2022. If no notice is given, then the lease terminates.
On August 30, 2021, the MIF sent an email to staff to discuss their interest in renewing the first 10-year lease extension. After receiving this email, staff worked with the City Attorney’s Office for clarification and direction on the next steps for the appropriate course of action since the Redevelopment Agency has been dissolved.
Since the lease was never provided to the State Department of Finance (DOF) for consideration as an existing enforceable obligation, the first step is to include the lease on the Successor Agency’s Fiscal Year 2022/2023 Recognized Obligation Payment Schedule (ROPS). The total financial obligation of two dollars for the two 10-year extensions was added to the ROPS, which was approved by the Successor Agency Board on January 11, 2022, and the Countywide Oversight Board on January 20, 2022. This line item on the ROPS must be approved by the DOF before it can be considered as an existing enforceable obligation and eligible for payment. Staff anticipates receiving approval from the DOF in late April or early May 2022.
Provided that the DOF approves the lease as an existing enforceable obligation, the next step is to determine if the Lease should be extended for an additional 10-year term. The MIF preserves, interprets, and promotes the cultural heritage of the Mission Inn Hotel & Spa, Riverside, and the surrounding southern California communities through its museum services, educational programs, and outreach activities. It also serves to provide docent tours of the Mission Inn Hotel & Spa.
Staff notified both parties by written letter dated December 20, 2021, acknowledging that the initial term of the lease ends on December 21, 2022. In January 2022, staff met with representatives from both the HMIC and MIF to discuss their interest in extending the initial term for two periods of ten (10) years each. After discussions/meetings with both parties, staff recommends entering into the first extension term of ten (10) years with the HMIC (Attachment 3) and subleasing it to the MIF for ten (10) years through December 21, 2032 (Attachment 4).
STRATEGIC PLAN ALIGNMENT
This decision supports Strategic Priority 1 – Arts, Culture and Recreation; Goal 1.1 - strengthen Riverside’s portfolio of arts, culture, recreation, senior, and lifelong learning programs and amenities through expanded community partnerships, shared use opportunities, and fund development; and Goal 1.2 - enhance equitable access to arts, culture, entertainment and recreational service offerings and facilities.
This item aligns with each of the Cross-cutting Threads as follows:
Community Trust: The first 10-year extension of the lease follows through on the original intention of the initial Lease agreement by the Redevelopment Agency of the City of Riverside and the Historic Mission Inn Corporation to allow for a maximum term of 42-years.
Equity: The Mission Inn Foundation provides diverse programming and services for youth, seniors, visitors, and residents of our community.
Fiscal Responsibility: The initial investment and lease amount was prepaid in 1999 by the Redevelopment Agency of the City of Riverside. The rental amount to extend for the first 10-year lease extension is $1.00.
Innovation: The sale of The Mission Inn Hotel & Spa from public to private ownership to allow for its renovation and the inclusion of the Mission Inn Foundation to operate a museum for the Mission Inn Hotel as part of those initial agreements was creative and innovative.
Sustainability & Resiliency: The Mission Inn Hotel & Spa and the Mission Inn Foundation Lease/Sublease agreements are a great example of public-private partnerships and collaborations. These agreements will also allow for continued dialogue between the two organizations for future collaborations and opportunities that will be of benefit to visitors and residents Citywide.
FISCAL IMPACT:
The fiscal impact of this action is $1. The Lease agreement is an obligation of the former Redevelopment Agency and is listed on line 206 of the 2022-2023 Recognized Obligation Payment Schedule. If the Department of Finance approves the line item, the payment will be remitted in Fiscal Year 2022/23.
Prepared by: David Welch, Community & Economic Development Director Certified as to the
availability of funds: Edward Enriquez, Chief Financial Officer/City Treasurer Approved by: Rafael Guzman, Assistant City Manager
Approved as to form: Phaedra A. Norton, City Attorney
Attachments:
Resolution
Original Lease Agreement with Historic Mission Inn Corporation Original Sublease Agreement with Mission Inn Foundation Mission Inn Hotel & Foundation Lease Extensions Page 4