City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: DECEMBER 12, 2023 FROM: COMMUNITY & ECONOMIC DEVELOPMENT WARD: 2
DEPARTMENT
SUBJECT: THIRD AMENDMENT TO LEASE AGREEMENT WITH NEWMAN BROS. OF CALIFORNIA DOING BUSINESS AS A-1 GRIT TO EXTEND THE LEASE AN ADDITIONAL THIRTY-FIVE YEARS FOR USE OF A PORTION OF THE PROPERTY LOCATED 1901 MASSACHUSETTS AVENUE ISSUE:
Approve the Third Amendment to Lease Agreement with Newman Bros. of California doing business as A-1 Grit to extend the lease an additional thirty-five years for use of a portion of the property located at 1901 Massachusetts Avenue.
RECOMMENDATIONS:
That the City Council:
Approve the Third Amendment (Attachment 1 – Agreement) with A-1 Grit to extend the current lease an additional thirty-five (35) years; and Authorize the City Manager, or his designee, to execute the Agreement including making minor and non-substantive changes, and to sign all documents and instruments necessary to complete the transaction.
BACKGROUND
On September 20, 2006, The City of Riverside (City) entered into a 10-year Lease Agreement with Gaylor W. Singletary and A-1 Grit for the use of a portion of 1901 Massachusetts Avenue with one option to renew for an additional five years.
On February 21, 2007, Gaylor W. Singletary assigned the Lease to the City.
On May 19, 2011, the City Council (Council) approved a First Amendment to the Lease Agreement to include an additional five-year term.
On December 8, 2016, the Council approved a Second Amendment to the Lease Agreement to include three additional renewal terms of five-years each and to modify the monthly rental amount. Per the agreement, the annual rent increase is determined by the Consumer Price Index and is calculated at the current rate for that year.
DISCUSSION:
On April 17, 2022, staff was contacted by Louis Medina, Vice-president, and General Manager of A-1 Grit Company, with a proposal to either acquire the property or extend the current lease at the end of the second renewal term that is due to expire on October 31, 2026. As the lease is a revenue stream for the Riverside Access Center, selling the property was not an option. Staff was able to negotiate adding seven 5-year options totaling thirty-five (35) years to renew at the end of the second renewal term. Additionally, the annual Consumer Price Index increase will be modified to a standard 2% increase each year beginning November 1, 2026.
The Housing and Human Services Director concurs with the recommendations in this report.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Plan Priority No. 5 – High Performing Government, specifically 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 – The City is transparent and makes decisions based on sound policy, inclusive community engagement, involvement of City Boards & Commissions, and timely and reliable information. By approving the Agreement, the City demonstrates that Riverside is committed to serve the public interest, benefitting the City’s diverse populations that results in greater public good.
Equity – The City supports racial, ethnic, religious, sexual orientation, identity, geographic, and other attributes of diversity and is committed to advancing the fairness of treatment, recognition of rights, and equitable distribution of services. Approving the Agreement ensures every member of the community has equal access to share the benefits of community progress.
Fiscal Responsibility – The City is a prudent steward of public funds and approving the Agreement ensures responsible management of the City’s financial resources while providing quality public services to all.
Innovation – The City is inventive and timely in meeting the community’s changing needs. By approving the Agreement, the City demonstrates how it prepares for the future through this collaborative partnership with A-1 Grit.
Sustainability & Resiliency – The City is committed to meeting the needs of the present without compromising the needs of the future. Approving the Agreement ensures the City’s capacity to persevere, adapt and grow during good and difficult times alike.
FISCAL IMPACT:
The total monthly fiscal impact is $8,857.62. The City receives rental revenue from the Lease agreement which provides critical support to the Riverside Access Center’s operations. The current monthly lease rate through October 31, 2024, is $8,857.62 which generates annual revenue in the amount of $106,291.44. Rental revenues are deposited into the Grants & Restricted Programs Fund, Hulen Place Access Center, Land & Building Rental revenue account number 2545200-373100.
Prepared by: Sheryn Smay, Real Property Agent
Approved by: Jennifer A. Lilley, Community & Economic Development Director Certified as to
availability of funds: Kristie Thomas, Finance Director/ Assistant Chief Financial Officer Approved by: Rafael Guzman, Assistant City Manager
Approved as to form: Phaedra A. Norton, City Attorney
Attachments:
Third Amendment to Lease Agreement
Presentation
Third Amendment – A-1 Grit ● Page 2