Successor Agency to the Redevelopment Agency of the City of Riverside TO: HONORABLE MAYOR AND CITY COUNCIL DATE: JANUARY 16, 2024 FROM: COMMUNITY & ECONOMIC DEVELOPMENT WARD: 1
DEPARTMENT
SUBJECT: THIRD AMENDMENT BETWEEN THE SUCCESSOR AGENCY AND ANTONIOUS PIZZA, FOR SUITE 105 OF THE CALIFORNIA TOWER BUILDING, LOCATED AT 3737 MAIN STREET, TO AMEND THE LEASE TERMINATION DATE AND AMORTIZE UNPAID RENT ISSUE:
Authorize the City of Riverside, as the Successor Agency to the Redevelopment Agency of the City of Riverside, to enter into a Third Amendment (Third Amendment) to the Standard Commercial Multi-Tenant Lease – Modified Net (Lease) with Wadie M. Andrawis and Teresa A. Andrawis, dba Antonious Pizza Café (Antonious Pizza), on the ground floor of the California Tower building, located at 3737 Main Street (Cal Tower), Suite 105, to amend the Lease expiration date to September 30, 2024 and amortize unpaid rent in the amount of $7,876.03.
RECOMMENDATIONS:
That the Successor Agency:
Authorize the execution of the attached Third Amendment (Attachment 1) with Antonious Pizza to amend the termination date of the Suite 105 lease at Cal Tower to September 30, 2024 and amortize the unpaid rent in the amount of $7,876.03; and Authorize the Executive Director, or designee, to take all actions neccessary, including making minor and non-substantive modifications, to execute the Third Amendment with Antonious Pizza.
LEGISLATIVE HISTORY:
State Legislations
In 2011, the State of California passed Assembly Bill X1 26 (State Dissolution Act), which eliminated redevelopment agencies throughout the state and required a successor in interest to manage the dissolution of each redevelopment agency. In 2012, pursuant to the State Dissolution Act, the City Council adopted a resolution for the City of Riverside (City) to become the Successor Agency (Successor Agency) to the former Redevelopment Agency of the City of Riverside (RDA). As the Successor Agency, the City is responsible for winding down the affairs of the RDA and overseeing the disposition of its assets and properties.
In 2013, the State of California passed Assembly Bill 1484 (AB 1484), which directed all successor agencies to prepare a long-range property management plan to address the use and disposition of the RDA’s assets and properties. In accordance with AB 1484, the Successor Agency submitted a plan to the Department of Finance (DOF). In 2014, the DOF approved the Successor Agency’s Long-Range Property Management Plan with a total of 33 properties for disposition and development (State Approved LRPMP). Since the State Approved LRPMP, the Successor Agency has sold a total of 19 properties. The Successor Agency currently has 10 surplus land sites, an occupied building (known as Cal Tower), and an electronic pylon sign remaining for disposition.
The State Approved LRPMP lists Cal Tower as Site 4, and it is to be disposed through an existing enforceable obligation with the California Department of General Services (DGS). DGS currently leases Cal Tower from the Successor Agency, and the lease expires on October 1, 2024.
BACKGROUND:
On April 26, 1994, the RDA entered into a Lease Agreement leasing to DGS the entire 160,000-square-foot office tower with approximately 22,400 square feet of ground floor retail and office space for a term of 30 years (State Lease). Concurrently, both parties entered into a Leaseback Agreement in which the RDA leases back the ground floor retail and office space (Ground Floor) from DGS for the same term of 30 years (Leaseback Agreement). Pursuant to Section 25 of the State Lease, DGS may assume ownership of Cal Tower at the conclusion of the lease, on October 1, 2024, for $1. Additionally, DGS may purchase Cal Tower prior to 2024, but the State would be required to repay the bonds that were issued in 1994 to fund the purchase and improvement of the building. Furthermore, pursuant to the Leaseback Agreement, the RDA has an option to extend the Leaseback Agreement for an additional ten years, which would extend the Leaseback Agreement until October 1, 2034.
The existing enforceable obligation with DGS allows the Successor Agency to maintain and lease vacant spaces in the Ground Floor of Cal Tower to retail, restaurant, and office tenants.
DISCUSSION:
On June 29, 1998, the RDA entered into the Lease with Antonious Pizza to lease Suite 105 of the Ground Floor at Cal Tower.
On February 15, 2006, the RDA and Antonious Pizza entered into a First Amendment to the Lease, and the Lease was amended to: 1) make Lease co-terminus with Suite 102, 2) include a “Taco Bar”, 3) authorize a Tenant Improvement Allowance, 4) establish a rent abatement period, 5) establish the Lease Commencement Date of February 7, 2006 and Termination Date as February 6, 2016, with a ten-year option to extend, and 6) establish the rent schedule, with the Rent Commencement Date of June 6, 2006.
On August 7, 2012, the Second Amendment to the Lease was approved and executed to modify the base rent, maintenance schedule, and option periods.
On November 1, 2015, Antonious Pizza exercised its option to extend, which continued the term of the Lease to February 6, 2026.
Because the master lease with DGS expires on October 1, 2024, the proposed Third Amendment is to correct the Lease termination date from February 6, 2026, to September 30, 2024, and to amortize the unpaid rent in the amount of $7,876.03 to be paid in full by September 30, 2024.
In compliance with the existing State Lease with DGS, staff negotiated with Antonious Pizza the following proposed amendment terms:
Current Terms
Proposed Amendments
Termination Date: February 6, 2026
Termination Date: September 30, 2024
Unpaid Rent: $7,876.03
Lessee to pay approximately $875.11 per month; and
Unpaid Rent must be paid in full by September 30, 2024.
Staff recommends that the Successor Agency approve the Third Amendment with Antonious Pizza, in accordance with the above terms, which is consistent with the State Approved LRPMP and existing enforceable obligation with DGS.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 3 – Economic Opportunity and Goal 3.3 – Cultivate a business climate that welcomes innovation, entrepreneurship, and investment.
This item aligns with each of the five Cross-Cutting Threads as follows:
Community Trust – The Third Amendment aligns with the State Approved LRPMP and the existing enforceable obligation with DGS.
Equity – Moving forward with the Third Amendment ensures that Cal Tower is fully occupied while generating additional revenue to fund expenditures for the building and providing equitable economic benefits to a small local business.
Fiscal Responsibility – The Third Amendment produces ancillary revenue for the City, Successor Agency, and Taxing Entities.
Innovation – Developing and maintaining supportive relationships with local small businesses demonstrates that Riverside is inventive and timely in meeting their needs and the needs of all Riverside residents.
Sustainability & Resiliency – Developing solutions for business continuity demonstrates that Riverside is committed to sustainability and resilience.
FISCAL IMPACT:
There is no fiscal impact to the City with the proposed amendment. Revenue generated by the Third Amendment to the Lease with Antonious Pizza will fund expenditures associated with Cal Tower.
Prepared by: Kaitlyn Nguyen, Senior Project Manager
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
Attachment: Third Amendment to the Lease with Antonious Pizza Antonious Pizza 3rd Lease Amendment ● Page 2