City Council
Report
City Council Meeting: September 30, 2025
Agenda Item: 4.H
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To: Mayor and City Council
From: Jing Yeo, Director, Administration
Subject: Authorization to Enter into Third Amendment to Amended and Restated Lease Agreement with Bank of America for City-Owned Property Located at 1301 Fourth Street
Recommended Action
Staff recommends that the City Council authorize:
1. City Manager to negotiate and execute a Third Amendment to the Amended and Restated Lease Agreement with Bank of America for the City-owned property at 1301 Fourth Street. The Third Amendment would extend term from February 1, 2026 through December 31, 2028; and
2. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) of the California Environmental Quality Act (CEQA) Guidelines Summary
The City’s existing lease agreement with Bank of America (Tenant) is in effect through February 28, 2026. The term was authorized through a Second Amendment in accordance with Section 4.2 of the Lease. Tenant is seeking a Third Amendment for additional term to continue providing services in its current location at 1301 Fourth Street for as long as feasible until the site is redeveloped. The proposed Third Amendment would extend term through December 31, 2028, generating a total of $4,344,122 for the General Fund. In the event the site redevelopment requires more time to implement, the Third Amendment also provides up to three one-year options to extend term through December 31, 2031. If all three options are exercised, the City would receive additional rental revenues of $4,794,807.
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Discussion
The City acquired the buildings at 1301 4th Street (Bank of America) and 1333 4th Street (Chase Bank) in 2010 to form the redevelopment opportunity site commonly referred to as “4
/AZ” (Site) due to its location on the corner of 4th Street and Arizona Avenue. The Site consists of nine contiguous parcels totaling 112,000 square feet (approximately 2.57 acres) bounded by 4th Street, 5th Street, and Arizona Avenue.
The Site is required to comply with the Surplus Land Act (SLA) pursuant to Government Code 54220 which requires any disposition of surplus public land must be offered first for affordable housing.
Council adopted Resolution 11646 declaring several parcels including Assessor Parcel Number 4291-011-909 (1301 Fourth Street) as surplus land at its meeting on February 25, 2025. A Notice of Availability (NOA) for the Site was released on June 30, 2025. The City’s Housing Division is currently in the process of evaluating the interest received from the NOA and will undertake good faith negotiations with proposers in accordance with the SLA.
The timeframe of good faith negotiations including entering into an exclusive negotiation agreement and a disposition and development agreement for the Site will depend on a variety of factors such as complexity of proposed project, financing, and/or entitlements. As such, the term of the lease extension is structured to provide flexibility for the City while allowing Tenant to continue to provide uninterrupted banking services in Downtown Santa Monica for local businesses, employees, residents, and tourists. Moreover, the extension preserves an important revenue stream for the City until redevelopment plans for the 4AZ Site are solidified and construction is ready to commence.
The lease with Tenant is a standard triple net lease. Under a triple net lease, the Tenant pays rent plus all three additional expenses of possessory interest taxes, insurance and maintenance costs. The Third Amendment provides term through 3 of 4
December 31, 2028 with three one-year options to extend at the City’s discretion.
Except for the new extended term and rental rates, the Amended and Restated Lease and subsequent amendments shall continue in full force and effect.
The City will receive $4,344,122 in rental revenues for the term through December 31, 2028. If the City exercises the options to extend beyond December 31, 2028, Tenant will pay rents that are adjusted accordingly by 3% for each option year extended. If all three options to extend are exercised, the City will receive $4,794,807 in additional rental income from this property.
Past Council Actions
Meeting Date Description
5/11/2010 (Attachment A) Acquisition of Property at 1301 – 1333 Fourth Street 2/25/2025 (Attachment B) Adoption of a Resolution of Inventory of City-Owned Properties Subject to the Surplus Lands Act
Financial Impacts and Budget Actions
Lease Revenues are deposited in the General Fund in account 01700014.414000. If approved, the proposed lease extension is expected to generate an additional four months of lease revenues, or $496,911, in FY 2025-26. Additionally, the proposed lease extension will generate additional revenues in future years, as summarized below.
Year
Current Lease
Revenues
Proposed
Change
Lease Revenues under
Lease Extension
FY 2025-26
965,688
496,911
1,462,599
FY 2026-27
1,505,641
1,505,641
FY 2027-28
1,550,810
1,550,810
FY 2028-29*
790,759 790,759
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Budget adjustments will be incorporated in the FY 2024-25 Year-End Budget or FY 2025-26 Midyear Budget, as needed.
Prepared By: Nia Tang, Economic Development Administrator Approved Forwarded to Council
Attachments:
A. Attachment A: Acquisition of Property at 1301–1333 Fourth Street (Web Link) B. Attachment B: Adoption of Resolution and Approval of Release of Request for Proposals for City-Owned Sites Designated Affordable Housing Development in City's 6th Cycle Housing Element (Web Link)
C. Levine - BofA
D. Oaks - BofA
E. Written Comments
Total 965,688
4,344,121 5,309,809
*through December 31, 2028