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 City of Hermosa Beach --- 04-25-00COMMUNITY CENTER LEASE RATES
Recommendation Staff recommends that the Council approve a lease rate increase of $.05 per sq. ft each year for the next two Fiscal Years as follows:
Background Per the deed restrictions on the use of the Community Center property, non-profit agencies are the only groups permitted as tenants in the Center. The Commission is charged with recommending lease rates to the Council and has typically done so with annual lease rate increases established in two or three year increments. The lone exception to this practice occurred from 1995-1998 when in consideration of the recession (and the impact it had on non-profit donations), lease rates were frozen for three consecutive Fiscal Years. In the past five (5) fiscal years, lease rates have been set as follows:
Recommendations for various rates have been calculated in the past by researching what the "going rate" is for commercial buildings (more specifically, older commercial buildings) in the area and by reducing these rates by 25-30% to account for the non-profit status.
Analysis
The Chamber of Commerce reports a range of approximately $1.50-2.00 sq. ft. for older office space in Hermosa Beach. Using the "low end" rate of $1.50 sq. ft. as a baseline, the recommended initial rate of $1.08 sq. ft. represents a discount of 28% from the $1.50 level. Another potential measure for determining rates is the Consumer Price Index figure, which rose by 1.2% in 1998 and 2% in 1999, which would seem to support this modest increase in our rental rates. Understanding the uniqueness of the Community Center tenancy and the importance of locale in determining lease rates, it is difficult to find comparable rates in our area. In short, there are few comparable lease spaces in the vicinity of Hermosa Beach. One notable exception is in the City of Redondo Beach. They lease City owned space to a private school for a rate of $1.22 sq. ft. In evaluating these discounted rates, it is critical to understand how much the City benefits from the tenancy of the social service agencies in the Community Center. They not only provide vital services to those in need (particularly convenient to our residents) but they also provide a way for our residents to participate positively in their community as volunteers for these agencies. Attached you will find a list of the non-profit organizations who lease space in the Community Center. It is noteworthy that Public Works has amended the square footages slightly for a number of our tenants’ rooms from the figures that have been used for the past 20 years. Community Resources staff requested a review of all room measurements upon discovering that (due to a carpeting job) one of them was incorrect. In all cases, the adjustments to lease rates will be minor, and only one of them requires adjusting a lease rate downward. Staff has amended that lease administratively and will adjust the other lease rates upward at annual renewals.
Other Alternatives Available to the Commission Include:
Fiscal Impact: Estimated annual revenues for FY 2000-01: $108,294 Total square footage available for lease: 9,148 SF (Total excludes The Historical Society and The Hermosa Beach Community Center Foundation whose leases are fully subsidized by the City). Total estimated potential revenue: $117,810
COMMUNITY CENTER LEASES FY 2000-01
Lessee Location SF Expires Payment/Mo. @ $1.08 SF
COMMUNITY CENTER LEASES FY 2000-01
Lessee Location SF Expires Payment/Mo. @ $1.08 SF
*Miscellaneous Space – Closets and hallways. Revised: 3/2000
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