City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: APRIL 5, 2022 FROM: COMMUNITY & ECONOMIC DEVELOPMENT WARD: 1
DEPARTMENT
SUBJECT: LEASE AGREEMENT BETWEEN THE CITY AND MARKET STREET PROPERTIES I, LLC, FOR THE PERIOD OF MARCH 16, 2022 THROUGH JUNE 30,2022 IN AN AMOUNT NOT TO EXCEED $24,329.55, FOR APPROXIMATELY 86 PARKING SPACES AT 4150 MARKET STREET KNOWN AS PARKING LOT 38, IDENTIFIED AS ASSESSOR’S PARCEL NUMBER 215-252-018 – SUPPLEMENTAL APPROPRIATION ISSUE:
Authorize a supplemental appropriation in an amount not to exceed $24,329.55, for the lease agreement between the City and Market Street Properties I, LLC, for the period of March 16, 2022, through June 30, 2022, on a month-to-month basis, for approximately 86 parking spaces at 4150 Market Street known as Parking Lot 38, identified as Assessor’s Parcel Number 215-252-018.
RECOMMENDATIONS:
That the City Council:
With at least five affirmative votes, authorize a supplemental appropriation for the Fiscal Year 2021/22 Public Parking Fund, Land and Building Rental budget in the amount of $24,329.55, for the lease agreement between the City and Market Street Properties I, LLC, for the period of March 16, 2022, through June 30, 2022, on a month-to-month basis, for approximately 86 parking spaces at 4150 Market Street known as Parking Lot 38, identified as Assessor’s Parcel Number 215-252-018.
BACKGROUND:
On December 20, 1994, the City Council (Council) approved a Memorandum of Agreement with the former City of Riverside Redevelopment Agency (RDA) and the County of Riverside (County) to assist with facilitating the construction of a new County Family Law Court building in downtown Riverside. The former RDA entered into a Ground Lease and Option to Purchase Agreement (Ground Lease) with Market Street Properties I, LLC, the owner of Parking Lot 38 (Property) to provide parking for the County Family Law Court building. The Ground Lease expired on March 15, 2021.
The former RDA also entered into separate agreements with the County and the Riverside County Bar Association (RCBA) to facilitate parking for those parties. Specifically, the former RDA is contractually obligated to provide 36 parking stalls to the County for 30 years from the Certificate of Occupancy for completion of construction (exact date is unknown but estimated to be in late 2025) and 15 parking spaces to the RCBA in perpetuity (indefinitely), including a requirement that the RCBA parking spaces are to be relocated if the Lot 38 lease is not renewed or the RDA does not acquire it. To continue to meet the former RDA’s obligations in the short term, staff negotiated a one-year lease between the City and Market Street Properties I, LLC.
On March 16, 2021, staff presented to Council, in closed session, the Market Street Properties I, LLC five-year lease proposal starting at $6,815 per month with a two percent (2%) annual escalation and three one-year options to extend. Council directed staff to negotiate a one-year lease term with an option to purchase the Property. Market Street Properties I, LLC agreed to a one-year lease, but did not provide the City with an option to acquire the Property.
On April 20, 2021, staff presented to Council, in closed session, a one-year lease proposal with Market Street Properties I, LLC for the Property with a monthly rent of $6,815 retroactive to March 15, 2021, including a month-to-month holdover clause upon expiration of the lease on March 15, 2022. Council consented and directed staff to enter into a new lease agreement under these terms.
On July 20, 2021, Council approved a lease agreement between the City and Market Street Properties I, LLC for a one-year term with a month-to-month holdover clause totaling $81,870 for the initial first year.
DISCUSSION:
The one-year Lease Agreement between the City and Market Street Properties I, LLC (Lease Agreement), approved by Council on July 20, 2021, was retroactively dated March 16, 2021, to allow for the City’s continuous use of approximately 86 parking spaces located at 4150 Market Street (Parking Lot 38), and expired on March 15, 2022. Section 5 of the Lease Agreement states, “In the event the Premises is not vacated, and this Lease is not otherwise extended by written agreement, the tenancy shall continue on a month-to-month basis at the same monthly rental rate as provided in section 4 hereof.” Section 4 provides for a two percent (2%) annual increase to the monthly rental amount.
During discussion with Purchasing staff about this Lease Agreement, it was determined that a supplemental budget appropriation was needed in order to continue meeting the Lease Agreement obligations on a month-to-month basis beyond March 15, 2022, while staff continues to explore potential relocation options from Lot 38 to other available parking sites for the RCBA and the County. It is uncertain how long this process may take to complete, but staff will make every effort to expedite the process. The month-to-month lease approach offers the most flexibility to staff in their efforts to identify alternate parking solutions. Staff is requesting a supplemental appropriation as follows:
Fiscal Year
Month-to-Month Term
Monthly Cost
Total Cost
2021/22
March 16, 2022- June 30, 2022
$6,951.30
$24,329.55
Total
$24,329.55
The Public Works Director concurs with the recommendations in this staff report.
The Purchasing Manager concurs that the recommendation to award is in compliance with Purchasing Resolution 23812.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Plan Priority No. 5 – High Performing Government and Goal 5.4: Achieve and maintain financial health by addressing gaps between revenues and expenditures and aligning resources with strategic priorities to yield the greatest impact.
The item also aligns with each of the five Cross-Cutting Threads as follows:
Community Trust: By approving the additional budget appropriation, in a public forum which provides a space for the public to attend and comment, Riverside demonstrates transparency and a commitment to making decisions based the greater public good.
Equity: By approving the additional budget appropriation, Riverside demonstrates that it is equitable in honoring its parking commitments to the County of Riverside and the Riverside County Bar Association.
Fiscal Responsibility: By approving the additional budget appropriation, Riverside demonstrates that it is fiscally responsible in honoring its parking commitments to the County of Riverside and Riverside County Bar Association.
Innovation: By approving the additional budget appropriation, Riverside demonstrates that establishing collaborative partnerships, with firms such as Market Street Properties I, LLC, are essential to the City in honoring its parking commitments to the County of Riverside and Riverside County Bar Association.
Sustainability and Resiliency: By approving the additional budget appropriation, Riverside demonstrates that it is responsible in meetings its parking obligations to the County of Riverside and the Riverside County Bar Association without compromising itself in the future.
FISCAL IMPACT:
The total fiscal impact of this action is $24,329.55 for FY 2021/22. Upon Council approval an appropriation will be recorded in the Public Parking Fund, Land and Building Rental Account No. 4150000-423200. Appropriations for future fiscal years will be included in the Department’s Budget submissions for those fiscal years to be presented to the City Council for approval.
Prepared by: Chris Christopoulos, Acting Community & Economic Development Director Certified as to
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
Attachment: Lease Agreement with Market Street Properties I, LLC Supplemental Appropriation for Lot 38 Lease AgreementPage 1