SR - AGR-6327 - LEASE 174 SOUTH ORANGE STREETAGENDA ITEM
March 8 2016
TO: Honorable Mayor and Members
of the City Council
THRU: Rick Otto
City Manager
FROM: Lisa Kim
Economic Wevelopment Manager
ReviewedNerified By
City Manager /
Finance Director
To Be Presented By:
Lisa Kim
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1. SUBJECT
Lease Agreement between the City of Orange and Architects Orange providing for a short-term
lease of a two -story office building located at 174 S. Orange Street.
2. SUMMARY
Approval of a Lease Agreement between the City of Orange and Architects Orange.
3. RECOMMENDATION
1. Approve the Lease Agreement with Architects Orange; and,
2. Authorize the Mayor to execute and the City Clerk to attest to the Lease Agreement with
Architects Orange.
4. FISCAL IMPACT
Future rent revenue would be available to fund the property maintenance of the recently
transferred Successor Agency properties to the City.
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
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.
ITEM 3. t � 1 03/08/16
7. DISCUSSION and BACKGROUND 77:1
BACKGROUND
In April 1990, the former Orange Redevelopment Agency acquired a two -story office building
totaling 2,977 square feet located at 174 S. Orange Street. 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 and the property remained vacant through
2014.
In May 2014, the State Department of Finance (DOF) approved a short-term lease between the
Successor Agency to the Orange Redevelopment Agency and Architects Orange. DOF indicated
their willingness to consider a short-term lease as it made available rent revenue to fund property
maintenance cost of Successor Agency properties. The lease with Architects Orange is due to
expire in May 2016.
DISCUSSION
In February 2016, the transfer of the 174 S. Orange Street property from the Successor Agency to
the City was completed. During the interim period while future reuse of this property is
evaluated, staff is requesting the continuation and authorization to lease the property to Architect
Orange on a short-term basis. The lease revenue will provide a funding source to off -set property
maintenance costs of the recently transferred Successor Agency properties to the City.
The term of a short-term lease with Architects Orange is three years. The monthly lease rate is
$6,132.00 (or approximately $2.00 per square foot). The initial term is three years with an option
for a two (1) one -year extensions. The monthly rent will increase by 3% annually during the
term of the Lease. A security deposit of $6,132.00 is required upon execution of the lease by the
Successor Agency. The City reserves the right to terminate this lease upon 30 days written notice
and Architects Orange shall have six months following receipt of the 30 day notice. The lease
term shall be effective upon execution by both parties.
It is recommended that the City Council approve the Lease Agreement with Architects Orange.
8. ATTACHMENTS
• Lease Agreement with Architects Orange
030816 ARCHITECTS ORANGE LEASE AGREEMENT CITY
ITEM 2 03/08/16