SR - AGR-6092 - SHORT TERM LEASE 174 SOUTH ORANGE STREETAGENDA ITEM
April 8, 2014
7 - .�t.�..Py
TO: Honorable Chairperson and Directors
of the Successor Agency to
the Orange Redevelopment Agency
THRU: John W. Sibley
Executive Director
FROM: Lisa Kim
Economic ev ent Manager
ReviewedNeri ied By:
City Manager
Finance Direct r
To Be Presented y:
Lisa
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1. SUBJECT
Lease Agreement between the Successor Agency to the Orange Redevelopment Agency and
Architects Orange providing for a short-term lease of a two -story office building located at 174
S. Orange Street.
2. SUMMARY 7771
Approval of a Lease Agreement between the Successor Agency to the Orange Redevelopment
Agency and Architects Orange.
3. RECOMMENDATION
1. Approve the Lease Agreement with Architects Orange;
2. Authorize the Chairperson to execute and the Agency Clerk to attest to the Lease Agreement
with Architects Orange; and,
3. Direct the Executive Director to transmit the Lease Agreement to the Oversight Board of the
Successor Agency to the Orange Redevelopment Agency.
4. FISCAL IMPACT
Future rent revenue would be available to fund Successor Agency property maintenance costs
and these funds would be budgeted through the Recognized Obligation Payment Schedule
process.
5. STRATEGIC PLAN GOAL(S)
2. Be a fiscally healthy community
a. Expend fiscal resources responsibly
b. Analyze future fiscal needs and potential revenue opportunities
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6. GENERAL PLAN IMPLEMENTATION
Economic Development Element Goal 5.0 Improve economic viability of business districts
through aesthetic enhancement, reconstruction, rehabilitation, and elimination of physical
deterioration.
7. DISCUSSION and BACKGROUND
BACKGROUND
In April 1990, the former Orange Redevelopment Agency acquired a two -story office building
located at 174 S. Orange Street totaling 2,977 square feet. The property was subsequently leased
to the City's Fire Department to accommodate the Fire Prevention offices. In 2010, the Fire
Prevention offices relocated to Fire Headquarters. The property has remained vacant since 2009.
With the impact of redevelopment dissolution in February 2012, reuse of former redevelopment
agency assets are limited pending issuance of a Finding of Completion and approval of a Long
Range Property Management Plan by the State Department of Finance (DOF). On an interim
basis, DOF has indicated a willingness to consider a short-term lease arrangement that would
make available future rent revenue to fund future maintenance cost of Successor Agency
properties.
DISCUSSION
With the Orange County marketplace in recovery and construction investment growing, Orange -
based architectural firm Architects Orange (AO) is in need of additional office space to
accommodate their growing operations in Old Towne Orange. To that end, a Lease Agreement
has been negotiated with AO to provide for a short-term lease of the two -story building located at
174 S. Orange Street. While a longer term lease by AO is desired, this arrangement cannot be
considered under Assembly Bill 1484 which restricts long term use of assets until DOF issues a
Finding of Completion and the Long Range Property Management Plan is approved.
The terms of a short-term lease with AO is three years at a monthly lease rate of $5,954 (or
approximately $2.00 per square foot). Based on the subpar conditions of the property, this rate is
consistent market rate for office properties in Orange. The initial term is one year with an option
for a two (1) one -year extensions. A security deposit of $5,954 is required upon execution of the
lease by the Successor Agency. The lease term begins on the approval date by DOF.
It is recommended that the Successor Agency Board of Directors approve the Lease Agreement
with Architects Orange. The Lease Agreement is also subject to approval by the Oversight Board
and DOE
8. ATTACHMENTS
• Lease Agreement with Architects Orange
040814 ARCHITECTS ORANGE LEASE AGREEMENT_SA.DOC
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