SR - AGR-6107 - LEASE AGREEMENT CHAPMAN AVENUE TUSTIN STREET+nA APB 6� •' S
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AGENDA ITEM
June 10, 2 014
TO: Honorable Mayor and
Members of the City Council
THRU: John W. Sibley
City Manager
FROM: Lisa L Ki /eve�opment Economic Manager
ReviewedNerif ed By:
City Manager
Finance Direc r
To Be Presente . L
Kim
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Plan /Environ
1. SUBJECT
A Lease Agreement with Selman Chevrolet to ground lease the vacant City -owned remnant
parcel located at the southeast corner at Chapman Avenue and Tustin Street.
2. SUMMARY
Lease Agreement between the City of Orange and Selman Chevrolet to ground lease the vacant
City -owned remnant parcel located at the southeast corner of Chapman Avenue and Tustin
Street. The proposed Lease Agreement provides for a term of up to 21 years starting at a
monthly rate of $1,790 or $21,480 annually. Selman Chevrolet proposes to install certain
property improvements and landscape upgrades to extend the existing car display area.
3. RECOMMENDED ACTION
1. Approve Lease Agreement between City of Orange and Selman Chevrolet; and
2. Authorize the Mayor to execute and the City Clerk to attest to the Lease Agreement on behalf
of the City.
4. FISCAL IMPACT
The proposed Lease Agreement provides for monthly rent payments of $1,790 and includes a
provision for six percent increases every three years.
5. STRATEGIC PLAN GOAL(S)
Be a fiscally healthy community
b. Analyze future fiscal needs and potential revenue opportunities.
d. Effectively manage and develop City assets.
ITEM 1 6/10/14
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
DISCUSSION
The City -owned remnant parcel is located at the southeast corner of Chapman Avenue and Tustin
Street. The parcel totals approximately 11,951 square feet and the result of excess property from
the completion of major intersection widening improvements at Chapman Avenue and Tustin
Street. Given the close proximity to the dealership and visibility at a major intersection, staff
outreached to Selman Chevrolet ( "Selman ") who has operated at their dealership since 1960 to
inquire about their interest to lease the parcel. Negotiation began shortly thereafter for a ground
lease.. Selman will invest approximately $200,000 to construct property improvements including
landscaping upgrades to increase the vehicle display area along Tustin Street.
The terms and conditions of the proposed Lease Agreement provides for:
• Monthly Lease payments of $1,790 or $21,480 annually for the initial three years.
• Lease rate is subject to an increase of 6% every three years.
• Lease term will be eleven years with two five -year renewal options that mirrors the
existing Master Lease Agreement by Selman and the adjacent property owner.
The economic development benefits include property improvements to increase visibility and
expansion of an Orange business resulting in increased sales tax revenue for the City. It is
recommended that the City Council approve the Lease Agreement with Selman.
8. ATTACHMENTS
• Lease Agreement between City of Orange and Selman Chevrolet
NASTAFF REPORTS \2014 \061014a Selman Lease.doc
ITEM 2 6/10/14