8D
Date: September 9, 2025
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 a First Amendment to Ground Lease (RC93-004) for City-owned Property at 1215 El Prado Avenue. 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 First Amendment to Ground Lease (RC93-004) made by and between the City of Torrance, a municipal corporation, and Mar Development Corporation, a California corporation, for City-owned property located at 1215 El Prado Avenue (APN: 7355-027-142).
FUNDING
None required.
BACKGROUND
On June 8, 1993, the former Redevelopment Agency of the City of Torrance entered into a Ground Lease with Gascon Mar Ltd. for the City-owned property located at 1215 El Prado Avenue. A Memorandum of Lease was recorded, establishing a long-term agreement for the development and management of a mixed-use project consisting of affordable housing and commercial space.
On September 10, 1999, Gascon Mar Ltd. was dissolved and its leasehold interest was transferred to its general partner, Mar Development Corporation. Subsequently, on January 28, 2014, the City Council approved a Confirmation of Ground Lease Parties Agreement, formally recognizing Mar Development as the lessee.
The current term of the Ground Lease is set to expire on July 17, 2029. The property includes 26 affordable housing units and approximately 6,680 square feet of commercial space. Suite 1215, a 1,118-square-foot unit within the commercial area, has historically been provided to the City at no cost for use as a Community Room.
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September 9, 2025
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1 DISCUSSION
The First Amendment to Lease extends the lease term by 30 years, resulting in a new expiration date of July 17, 2059. The amendment also returns Suite 1215 to Mar Development’s control and introduces a new rent structure for the commercial in-line spaces. Beginning July 1, 2027, the City will receive 15 percent of all base rental revenue generated from ground level commercial subleases on the property.
This lease structure brings the agreement in line with other City-managed commercial properties that include percentage rent terms and provides the City with a share in potential future revenue growth. The residential rent structure, based on net operating income from the affordable housing units, remains unchanged.
Mar Development has maintained the property in good condition and has invested over $214,000 in capital improvements since 2012. The property also maintains approximately $300,000 in a building capital reserve account to support future repairs and upgrades.
Under the amended lease terms, the City will begin receiving 15-percent of commercial lease revenue starting in Fiscal Year 2027–28. Based on projected commercial income of approximately $196,911 annually, this equates to an estimated $29,536 in annual rent to the City. The City will no longer have access to Suite 1215, which previously served as a no-cost Community Room with an estimated in-kind value of $40,000 per year.
The proposed amendment to the Ground Lease reflects a fair and fiscally responsible update to an aging agreement. It secures long-term revenue for the City, supports continued investment in a key Downtown Torrance asset, and ensures the preservation of affordable housing units.
ENVIRONMENTAL FINDINGS
Pursuant to the California Environmental Quality Act (CEQA), the proposed First Amendment to Lease is categorically exempt under CEQA Guidelines Section 15301 – Existing Facilities. This exemption applies to the operation, repair, maintenance, permitting, leasing, or minor alteration of existing public or private structures, facilities, or mechanical equipment involving negligible or no expansion of existing or former use.
The subject property located at 1215 El Prado Avenue is an existing mixed-use building that includes affordable residential units and commercial space. The proposed lease amendment does not involve any expansion of the building footprint, increase in residential density, or significant alteration of the existing use. Rather, the action pertains solely to the administrative modification of lease terms, including a lease extension, adjustment to rent structure, and transfer of possession of an existing suite within the facility.
CONCLUSION
The City of Torrance has maintained a long-standing and productive partnership with Mar Development Corporation in the stewardship of the mixed-use property at 1215-1227 El Prado Avenue. This collaboration has supported the ongoing availability of affordable housing, contributed to reinvestment in the Downtown area, and preserved the historic character of the building. 2 City Council
September 9, 2025
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1 The proposed First Amendment to Lease reflects a fiscally responsible update to the existing agreement, extending the lease term while introducing a percentage rent structure that aligns with comparable City leases and generates long-term revenue for the City. The amendment also facilitates continued private investment in the property and enables the City to plan for the site's long-term use and capital needs.
Pursuant to the California Environmental Quality Act (CEQA), the proposed First Amendment to Lease is categorically exempt under CEQA Guidelines Section 15301 – Existing Facilities. This exemption applies to the operation, repair, maintenance, permitting, leasing, or minor alteration of existing public or private structures, facilities, or mechanical equipment involving negligible or no expansion of existing or former use. The lease amendment does not result in any physical change to the environment and qualifies as an administrative action affecting an existing facility.
Accordingly, staff recommends that the City Council adopt the Categorical Exemption as part of its action.
For these reasons, staff recommends that the City Council adopt the CEQA exemption and approve the First Amendment to Lease with Mar Development Corporation.
ATTACHMENTS
1. First Amendment to Lease
2. Original Ground Lease (RC93-004) – Limited Distribution 3 4
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