SR - AGR-6407 - LEASE AGREEMENT FOR USE OF WATER WELL SITE ON WEST KATELLA AVENUE1. SUBJECT
Lease Agreement between the City of Orange and Southern Counties Oil Co. (SC Fuels)
providing the use of a portion of a City water well site for SC Fuels' employee parking.
2. SUMMARY
Approval of a Lease Agreement between the City of Orange and SC Fuels for a portion of the
water well site located at the north side of West Katella Avenue, just east of Struck Avenue.
3. RECOMMENDATION
1. Approve the Lease Agreement with SC Fuels; and,
2. Authorize the Mayor to execute and the City Clerk to attest to the Lease Agreement with SC
Fuels.
4. FISCAL IMPACT
Future rent revenue would be available to offset maintenance costs for the water well site.
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.
7. DISCUSSION and BACKGROUND
BACKGROUND
Due to recent acquisitions and growth, SC Fuels has substantially increased the number of
employees that work at their corporate headquarters located at 1800 W. Katella Avenue. This
growth has presented a challenge to SC Fuels as their property has insufficient parking to
accommodate the additional employees. As a result, SC Fuels approached the City to assist them
in looking for a solution to address the current parking shortage as well as to accommodate future
growth.
DISCUSSION
City Staff identified an underutilized water well site on the north side of Katella Avenue, just
east of Struck Avenue. The .7 acre site is across the street from SC Fuels and currently has a
water well, but approximately 30,000 square feet of the site is not used. This unused portion of
the site could yield approximately 38 parking spaces. Staff is proposing to lease this unused
portion of the site to SC Fuels for use as an employee parking lot. Under the terms of the
proposed lease, SC Fuels would construct the parking lot improvements as well as fund sidewalk
improvements to the frontage along Katella Avenue so that their employees could safely access
the new employee parking lot.
City staff hired Tierra West Advisors, Inc. to perform a rent analysis for the proposed lease. The
analysis compared the site to other comparable sites that are leased for parking and determined
that $1,600 per month would be a reasonable market rate rent for the site. However, a $1,100 per
month rent credit would be provided to SC Fuels to reflect the cost of the improvements they are
responsible for. Below is a summary of the terms of the proposed lease agreement:
• Ten -year term with four, five -year extensions, for a maximum possible term of 30 years.
• Monthly rent of $1,600, which is increased by three percent every five years. The City
would grant a rent credit to SC Fuels for sidewalk improvements along Katella Avenue as
well as parking lot improvements to the property. This rent credit would reduce the
monthly rent paid to the City to $500 per month.
• SC Fuels would make all parking lot improvements to the property and would maintain
the property for the term of the lease.
• SC Fuels would not be able to assign or sublet the parking facility for any purpose
without prior written consent from the City.
It is recommended that the City Council approve the Lease Agreement with SC Fuels.
8. ATTACHMENTS
• Lease Agreement with SC Fuels
ITEM 2 11/09/16
CITY COUNCIL MINUTES NOVEMBER 9, 2016
3. CONSENT CALENDAR (Continued)
AGREEMENTS
3.6 First Amendment to Consultant Services Agreement No. 6331 with Raftelis Financial
Consultants in the amount of $18,705.00 for additional services preparing the Water
Rate Study, and Amendment Number 2 to Consultant Services Agreement No. 6249
with Raftelis in the amount of $9,220.00 for additional services preparing the
Sanitation Rate Study. (A2100.0; AGR- 6249.2)
ACTION: 1) Approved First Amendment to Agreement No. 6331 in the amount of $18,705
and authorized the Mayor and City Clerk to execute the Amendment on behalf of the City;
2) Approved Amendment Number 2 to Agreement No. 6249 in the amount of $9,220 and
authorized the Mayor and City Clerk to execute the Amendment on behalf of the City; and
3) Authorized the City Manager to approve up to twenty percent (20 %) in contingencies
for each contract agreement if additional studies are necessary.
3.7 Lease Agreement between the City of Orange and Southern Counties Oil Co. (SC
Fuels) providing the use of a portion of a City water well site for SC Fuels' employee
parking. (A2100.0; AGR -6407)
NOTE: Councilmember Whitaker recorded an abstention due to a potential conflict with
employment.
ACTION: Approved the Lease Agreement with SC Fuels; and authorized the Mayor to
execute and the City Clerk to attest to the Lease Agreement with SC Fuels.
3.8 Mills Act Contract No. MAC 249.0 -16 (Historic Property Preservation Agreement)
204 West Chapman Avenue. (A2100.0; AGR -6408)
ACTION: Approved a Mills Act Contract (Historic Property Preservation Agreement)
between City of Orange and the property owner for the preservation and rehabilitation of
a qualified historic property.
3.9 Mills Act Contract No. MAC 250.0 -16 (Historic Property Preservation Agreement)
224 South Olive Street. (A2100.0; AGR -6409)
ACTION: Approved a Mills Act Contract (Historic Property Preservation Agreement)
between City of Orange and the property owner for the preservation and rehabilitation of
a qualified historic property.
3.10 Mills Act Contract No. MAC 251.0 -16 (Historic Property Preservation Agreement)
204 South Grand Street. (A2100.0; AGR -6410)
ACTION: Approved a Mills Act Contract (Historic Property Preservation Agreement)
between City of Orange and the property owner for the preservation and rehabilitation of
a qualified historic property.
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