City Council
Report
City Council Meeting: April 25, 2023
Agenda Item: 5.D
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To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Airport Subject: Approval of Airport Lease with Ruskin Group Theatre Company Recommended Action
Staff recommends that Council:
1. Authorize the City Manager to negotiate and execute a Lease with Ruskin Group Theatre Company (Ruskin) for live theater and educational uses located at 2800 Airport Avenue, reflecting the general terms and conditions below: and
2. Adopt a finding of Categorical Exemption pursuant to Section 15301 (Existing Facilities), of the California Environmental Quality Act (CEQA) Guidelines.
Summary
Ruskin Group Theatre Company (Ruskin) proposes to lease 5,525 square feet of building and portable unit space (“Premises”) for live theater and educational uses at 2800 Airport Avenue, located at the Santa Monica Airport. The 2800 Airport Avenue property has been vacant since April 1, 2023, to allow for extensive building renovations that are expected to be completed in January 2024. The proposed lease with Ruskin would include an initial term of 10.5 years and one renewal option for five years. The initial term includes six months of tenant’s additional construction work.
The term of this lease would extend beyond December 31, 2028, and is thus outside the parameters set forth in the current Airport Leasing and Licensing Policy (Attachment A) and as such requires City Council approval. Securing a tenant for the vacant space at 2800 Airport Avenue helps ensure the Airport Fund’s financial self-sufficiency and aligns with the City’s priorities of economic recovery and expanding community and cultural 2 of 5
offerings. The recommended lease with Ruskin will generate an estimated $1,671,653 over the initial 10.5-year term.
Discussion
Ruskin has operated as a 49-seat performance theater and theater arts education venue at 3000 Airport Avenue since 2002. Ruskin seeks to relocate its operations to 2800 Airport Avenue to expand its operations and ensure the stability of its arts and educational offerings to the community. 2800 Airport Avenue was previously leased to Santa Monica College. However, that lease ended on March 31, 2023.
The City proposes a new lease with Ruskin for 5,525 square feet representing a portion of 2800 Airport Avenue main building and five portable units. The new lease represents a 50% increase in area for Ruskin compared to their previous location. The City and Ruskin would finalize negotiations and execute a lease agreement based on the following proposed terms and conditions.
• The proposed lease is a 10.5-year term that includes a 4% annual escalation provision.
• A security deposit equal to one months’ rent would be due at the execution of the lease agreement.
• The proposed monthly rent of $12,107 reflects fair market value.
The 10.5-year term of the proposed lease is estimated to begin on or about July 1, 2023, and expire on December 31, 2033, with an option to renew for an additional five years. If exercised, the renewal term would expire on or about December 31, 2038, and would be set at the market rate at the beginning of the option period.
The 2800 Airport Avenue property consists of a main building, 12 portable units varying in size and a building with kilns that will continue to be used by Santa Monica College under a lease that is currently being negotiated with the College. Ruskin proposes to lease a portion of the main building and five of the portable units. The main building and 3 of 5
the portable units are currently vacant to allow for the City to complete substantial and necessary facility improvements. The funds to cover the costs of these improvements are included in the current CIP budget. Staff anticipates this work to be completed by January 2024, at which point Ruskin would undertake additional construction for an additional six months. Ruskin’s construction is anticipated to conclude by July 1, 2024.
Ruskin will receive a six-month tenant improvement credit for their improvements to the space subject to their completion of the work.
Ruskin proposes to invest approximately $500,000 to improve the City’s building. The proposed improvements include a live theater for performances, rehearsals, and acting classes. Ruskin will be responsible for all costs associated with the design, engineering, and construction of the capital improvements which include but are not limited to all interior buildouts, electrical, mechanical (HVAC), furniture, fixtures, accessories, and finishes. Any improvements undertaken by Ruskin would revert to the City at the conclusion of the lease term.
The proposed lease would be Triple Net wherein the tenant is required to pay all property taxes and assessments (including possessory interest tax), insurances and utilities. Additionally, Ruskin would be responsible for all services, repairs, replacements, maintenance, improvements, or items related to compliance associated with the premises. Ruskin would be required to comply with all City building code regulations, planning standards, and any applicable FAA regulation, as a condition of the lease.
Ruskin will employ approximately four workers on-site. Therefore, Ruskin will not be subject to the Transportation Demand Management (TDM) requirements of the City to address any transportation and/or parking management issues. 4 of 5
Past Council Actions
Meeting Date Description
08/2018 (attachment A) Santa Monica Airport Leasing and Licensing Policy Environmental Review
The lease is categorically exempt from CEQA pursuant to Section 15301 of CEQA.
Section 15301 exempts Class 1 (Existing Facilities) projects from CEQA, which include the “the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use”. The lease would allow reoccupation of existing airport space and would not result in the expansion of the airport such that a physical impact would occur. Therefore, the lease is categorically exempt pursuant to Section 15301 of CEQA.
Financial Impacts and Budget Actions
The recommended lease with Ruskin would generate an estimated $1,671,653 over the initial 10.5-year term. Revenues generated by the proposed lease would be included in future fiscal year budgets.
There is no immediate financial impact or budget action necessary for the current fiscal year as a result of recommended action. Staff will include revenue budget actions in the Proposed FY 2023-25 Budget.
Prepared By: Kate Schlesinger, Senior Administrative Analyst Approved Forwarded to Council
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Attachments:
A. AIRPORT LEASING AND LICENSING POLICY 2018-08 (1)
B. 20230310 Ruskin Oaks Form