8F
Date: November 19, 2024
To: Honorable Mayor and Members of the City Council
From: Aram Chaparyan, City Manager
By: Carlos Huizar, Management Associate | [email protected] Subject: City Manager - Adopt Categorical Exemption Under California Environmental Quality Act (CEQA) Section 15301 and Approve Fourth Amendment to Lease for Portion of City-Owned Property Located at 1520 Greenwood Avenue within Greenwood Park. Expenditure: None.
RECOMMENDATION
Recommendation of the City Manager that City Council:
1. Adopt a California Environmental Quality Act (CEQA) Categorical Exemption pursuant to Guideline Section 15301 (Existing Facilities); and
2. Approve a fourth amendment to Lease by and between the City of Torrance (City) and KinderCare Education LLC (C2000-101), to utilize a portion of City-owned property to continue operation of a day care facility at 1520 Greenwood Avenue within Greenwood Park.
DISCUSSION
The City originally entered into a lease agreement with Children’s Discovery Centers of America, Inc. on May 9, 2000 to establish a daycare center at Greenwood Park. Over the years, amendments have been made to reflect changing economic conditions, rental adjustments, and lease term extensions, ensuring mutual benefits for both parties while maintaining essential services for the community.
In response to the economic downturn, the first amendment, approved on December 8, 2009, reduced the base rent by 10%. This reduction was offset by requiring KinderCare to assume increased maintenance responsibilities. Additionally, the facility was required to close annually between Christmas and New Year's Day, allowing City contractors to perform maintenance outside of KinderCare's obligations.
On September 16, 2014, City Council approved the second amendment, extending the lease beyond the December 31, 2019 lease end date. This amendment introduced a rent inflator based on the Consumer Price Index (CPI), with annual increases ranging from 3% to 5%. It also required KinderCare to notify the City six months prior to the lease’s expiration (by June 30, 2019) if they City Council
November 19, 2024
intended to extend the lease for an additional five-year term. In 2015, the assignment of lease was changed to KinderCare Education, LLC by a certificate of amendment.
The third amendment, approved on June 25, 2019, granted KinderCare additional time beyond the June 30 deadline to notify the City of its intent to exercise the five-year extension option.
KinderCare subsequently exercised this option on September 15, 2019, extending the lease through December 31, 2024.
In January 2023, KinderCare proposed a fourth amendment to extend the lease. The City has negotiated a mutually agreeable extension of one year, with two optional six-month extensions. If KinderCare wishes to exercise these options, they must notify the City by June 30, 2025 (for the first six-month extension) and by April 1, 2026 (for the second extension). The base rent will be adjusted by 3-5% based on the CPI on January 1, 2025, with a flat 5% increase for each optional extension period.
The proposed lease extension qualifies for a Categorical Exemption under Section 15301 of the CEQA Guidelines, as it pertains to the continued use of existing facilities with no significant expansion or change in operation. As there are no physical changes to the site or alterations to its current use, the project does not have the potential to significantly affect the environment.
The approval of the fourth amendment to the lease agreement will allow KinderCare to continue providing valuable daycare services at Greenwood Park while ensuring the City's interests are safeguarded. The amendment aligns with City policies and ensures that the facility remains financially viable through CPI-based rent adjustments and structured extension options.
ATTACHMENTS
1. Fourth Amendment to Lease (C2000-101)
2. Original Lease and Prior Lease Amendments (C2000-101)