COMMUNITY CENTER LEASE RATES

 

Recommendation

The Parks, Recreation and Community Resources Commission and staff recommend that Council:

1. Add Community Center lease rates to the City’s Master Fee Resolution to be adjusted annually based on the Consumer Price Index.
2. Review all new prospective tenants and initial lease agreements.
3. Allow routine lease renewals to be handled administratively.

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:

• July 1, 1997 through June 30, 1998: $ .93 sq. ft.
• July 1, 1998 through June 30, 1999: $ .98 sq. ft.
• July 1, 1999 through June 30, 2000: $1.03 sq. ft.
• July 1, 2000 through June 30, 2001: $1.08 sq. ft.
• July 1, 2001 through June 30, 2002: $1.13 sq. ft.

At their September 4 ^th , 2001 meeting, the Commission reviewed an agenda item that recommended a $.05 increase for FY 02-03 and another $.05 increase for the following Fiscal Year. At that time, the Commission approved an alternate staff recommendation that would instead, tie the lease rates to the CPI on an annual basis along with City fees listed in the Master Fee Resolution

Analysis

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 substantially to account for the non-profit status. In evaluating these rates, the value of the tenancy of the social service agencies in the Community Center has always been an intangible benefit we have factored in. 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.

Understanding the uniqueness of the Community Center tenancy and the importance of locale and building condition in determining lease rates, it has been difficult to find comparable rates in our area. In short, there are few comparable lease spaces in the vicinity of Hermosa Beach. Staff has found one comparison with property leased by the City of Redondo Beach to a private school at a rate of $1.25 per square foot. Even at that, the condition of the spaces are not exactly comparable.

This has placed staff in a difficult position of evaluating lease rates every few years with very little data to work with. The use of the CPI will eliminate this exercise.

The Commission felt that the existing lease rates were equitable as a baseline for annual CPI adjustments. Unless the building is substantially renovated, staff concurs with this. Furthermore, annual adjustments and routine lease renewals have needlessly clogged both Commission and Council agendas. Once approved by Council, leases can be renewed administratively saving considerable space on agendas.

Attached you will find a list of the non-profit organizations who currently lease space in the Community Center.

• Fiscal Impact: Estimated annual revenues for FY 2001-02: $63,270.96
• Total square footage available for lease: 7,363 square feet

(Total excludes The Historical Society and The Hermosa Beach Community Center Foundation whose leases are subsidized by the City).

Attachment: List of Community Center Tenants

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List of Community Center Tenants and Vacancies

Projected Rent for 2001-02

• Rooms 1, 2, & 15 – ARC – 2,660 sq. ft. $36,069.60

• Room 6A – Youth Project – 166 sq. ft. $2,250.96

• Room 14 – Easter Seals – 920 sq. ft. $12,475.20

• Room 17 – Project Touch – 920 sq. ft. $12,475.20

• Room 5 – vacant – 792 sq. ft. -0-

• Room 6B – vacant – 165 sq. ft. -0-

• Room 9 – So. Bay Center for Counseling – 420 sq. ft. -0-

• Room 11 – vacant – 400 sq. ft. -0-

• Room 16 vacant – 920 sq. ft. -0-

                                                                                                           $63,270.96

List of Community Center Tenants and Vacancies

Projected Rent for 2002-03

• Rooms 1, 2, & 15 – ARC – 2,660 sq. ft. $37,665.60

• Room 6A – Youth Project – 166 sq. ft. $2,350.56

• Room 9 – So. Bay Center for Counseling – 420 sq. ft. $5,947.20

• Room 14 – Easter Seals – 920 sq. ft. $13,027.20

• Room 17 – Project Touch – 920 sq. ft. $13,027.20

• Room 5 – vacant – 792 sq. ft. -0-

• Room 6B – vacant – 165 sq. ft. -0-

• Room 11 – vacant – 400 sq. ft. -0-

• Room 16 – vacant – 920 sq. ft. -0-

$72,044.96

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