REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Eric G. Parra, Interim City Manager
VIA: Chau Vu, Director of Public Works
PREPARED BY: Bill Krill, Real Estate and Project Manager
Subject:
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Approve and execute the Second Amendment with Los Angeles SMSA to the Schedule of Leased Property for Fire Station No. 7
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Statement of Issue:
City Council is requested to approve and authorize the Mayor and City Clerk to execute a Second Amendment with Los Angeles SMSA to the Schedule of Leased Property for Fire Station No. 7 located at 3811 Warner Avenue.
Financial Impact:
If approved, this Second Amendment will increase current monthly rent received from Los Angeles SMSA for the wireless ground lease located at Fire Station No. 7 from $2,064.05 to $2,718.26.
Furthermore, upon the first renewal period of the lease on December 2, 2028, the current rent will be adjusted to the market value at that time, as determined by a third-party appraisal firm that will be secured by the City.
Recommended Action:
recommendation
A) Approve the Second Amendment with Los Angeles SMSA to Schedule of Leased Property for Fire Station No. 7; and,
B) Authorize the Mayor and City Clerk to sign and execute the Second Amendment to Schedule of Leased Property for Fire Station No. 7.
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Alternative Action(s):
Do not approve and authorize the execution of the Second Amendment. This will allow the current Agreement with Los Angeles SMSA to expire on December 1, 2028, as scheduled.
Analysis:
In 1998 the City of Huntington Beach and Los Angeles SMSA (Verizon) entered into a Master Communication Site Lease Agreement, which allowed for the construction, maintenance, and operation of wireless communication towers and antenna facilities on City-owned property. This agreement required that a separate schedule of lease property be drafted and executed for each individual wireless communication facility. Each schedule would operate individually for a term of 5 years, with 5 additional renewal periods of 5 years each.
Specifically, the schedule of leased property for Fire Station No. 7 was executed between the parties in August 1998. Afterwards, the City and Los Angeles SMSA entered into a License Agreement, in which the City was granted a license to use, maintain, and repair a rotating electric-mechanical emergency siren on the lessee’s tower. This license agreement will remain in effect for the lifetime of the lease agreement for Fire Station No. 7.
In 2007, both parties entered into a Use Authorization and Consent Agreement, where the City recognized California Tower Inc. (American Tower Corporation) as a sub-lessee of the tower site. In addition to recognizing the sublease and management of the Master Agreement by California Tower, this agreement secures increased monthly payments to the City by way of percentage shares of rent for the site’s collocation tenants.
In 2014, the parties entered into the First Amendment to Schedule of Lease Property for Fire Station No. 7, allowing for the installation of an onsite generator by the wireless provider.
Currently, the agreement between the City and Los Angele SMSA is in its fourth renewal period. Under the existing terms, there is one more renewal period outstanding. This fifth and final renewal period is set to expire on December 1, 2028.
The proposed Second Amendment to Schedule of Leased Property for Fire Station No. 7 will allow for the extension of the lease period and will modernize the rent payments to the City. The term extension would begin at the conclusion of the final renewal period (12/1/2028) and would extend the agreement based on mutual acceptance for 10 additional 5-year periods. Upon execution of this Amendment, monthly rent for the site will be increased from $2,064.05 to $2,718.26. At the conclusion of the fifth renewal period in 2028, the City will secure a third-party appraisal to determine the Fair Market Rent (FMR) for the site. As per the Amendment, the FMR will then become the updated monthly site rent. Each subsequent renewal period (5 years) will cause the monthly rents to increase by a rate of 15%.
Environmental Status:
This action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.
Strategic Plan Goal:
Goal 2 - Fiscal Stability, Strategy A - Consider new revenue sources and opportunities to support the City's priority initiatives and projects.
Attachment(s):
1. Second Amendment to Schedule of Lease Property for Fire Station No. 7
2. PowerPoint presentation