(Feb. 7, 2010, updated Feb. 8) -- On Tuesday Feb. 9, LB city management will ask the City Council to approve a second amendment to a lease with a Tom Dean-related LLC for WLB property ("5.61 acres of excess Terminal Island freeway right of way") for up to half a century (thirty years + two ten year options to extend) at an initial rent of $13,391 per month (with annual CPI increases)...and an entitlement to rent credits for the costs of permanent improvements to the property made by the lessee.
LBReport.com photo at Willow St. shows portion of property which extends southward beyond photo
Management's memo text indicates that the tenant "shall be responsible for constructing all improvements on the Premises. All improvements and development costs shall be subject to the approval by Landlord in its sole and absolute discretion. In consideration of permanent improvements made to City-owned property, the Tenant shall be
entitled to receive rent credits for the costs of said improvements."
[Feb. 8 update: Community Development Dir. Dennis Thys tells LBReport.com that a rent credit provision was already part of the prior lease. [This wasn't indicated in prior city staff reports.] Mr. Thys says the requested amendment stems from a survey that recalculates the property's square footage, found to be slightly smaller, meaning an adjustment downward to the base rent.]
Management's memo doesn't specify who/when/how the "rent credit" will be calculated or what happens if here's disagreement on the matter. A "rent credit" provision became a major point of contention in the lease that a former City Hall entered into with a now former (bankrupted) entity that previously operated the Queen Mary.
City management's agendizing memo indicates that regarding Heavy Equipment Sales, the Dean LLC (Wilmington-Lomita Blvd., LLC) or its affiliated entities "shall locate the point of sale for Bob Hill and Carde crane sales companies on the Premises, or otherwise within the city limits of Long Beach, for as long as Tenant or its affiliated entities operate such businesses."
As previously reported by LBReport.com, a revised proposed Mitigated Negative Declaration for removal of several tanks on the SE LB Studebaker/Loynes parcel didn't indicate what another Dean related entity (Studebaker LB, LLC) plans to do with the land after the tanks are removed. There are multiple uses consistent with the SE LB property's current IG zoning.
It has been LB City Hall's practice (through several City Managers) not to attach copies of proposed contracts and leases where Councilmembers and the public can ses them before a voted action. Instead, management asks for Council authority to execute an agreement on terms it says are consistent with an agendizing memo. Some (but not all) cities routinely disclose large proposed contracts/leases so Councilmembers and taxpayers can view what's actually proposed before a decisional vote.
Management's agendizing memo is signed by Community Development Director Dennis Thuys. (Memos on previous leases/amendments were signed by Public Works Director Mike Conway). Community Development Director Thys writes in pertinent part:
On September 23, 2008, City Council authorized the execution of Lease No. 30946 with
Wimington-Lomita Blvd., LLC (WLB), for approximately 2.79 net acres of excess Terminal Island Freeway right-of-way, for a term of 30 years, at an initial monthly rental rate of $6,900.
Subsequently, on February 3, 2009, City Council authorized the First Amendment to Lease No. 30946, which increased the leased area from 2.79 net acres to 5.77 net acres, and the corresponding monthly rent from $6,900 to $14,260. [image below from City of LB staff report accompanying Feb. 09 agenda item]
A final survey of the leased premises has determined the total area is comprised of 5.61 net acres (Premises), which equates to an adjusted initial monthly rental rate of $13,931.
Improvements to the Premises shall further the City's goal of removing blight in the area. In accordance with the California Environmental Quality Act, Categorical Exemption No. CE-78-10 has been issued for this project.
After considerable negotiation between the City and WLB, staff proposes a Second Amendment to Lease No. 30946 containing the following major terms and provisions.
Landlord: City of Long Beach.
Tenant: Wilmington-Lomita Blvd., LLC, a California limited liability company.
Lenqth of Term: The term of the lease shall be for 30 years with two options to
extend for periods of 10 years each.
Premises: The Premises shall consist of approximately 5.61 acres of excess
Terminal Island Freeway right-of-way.
Rent: The initial monthly base rent for the Premises shall be $13,931 and shall be adjusted annually based upon any increase in the Consumer Price Index.
Improvements: Tenant shall be responsible for constructing all improvements on
the Premises. All improvements and development costs shall be subject to the
approval by Landlord in its sole and absolute discretion. In consideration of
permanent improvements made to City-owned property, the Tenant shall be
entitled to receive rent credits for the costs of said improvements.
Heavy Equipment Sales: Tenant or its affiliated entities shall locate the point of
sale for Bob Hill and Carde crane sales companies on the Premises, or otherwise
within the city limits of Long Beach, for as long as Tenant or its affiliated entities
operate such businesses.
All remaining terms and provisions of Lease No. 30946 shall remain in full force and
effect...
TIMING CONSIDERATIONS
City Council action on this matter is requested on February 9, 2010 in order to proceed
with the site improvements immediately.
FISCAL IMPACT
Monthly rent in the amount of $13,931 including annual adjustments shall accrue to the General Fund (GP) in the Department of Community Development (CD) subject to the agreed upon rent credits...
s/ Dennis Thuys
Director, Dept. of Community Development
[approved] s/ Pat West [initial by another person]
City Manager
In August 2009, a story by TheDistrictWeekly.com Senior Editor Dave Wielenga said an ad by a commercial real estate broker that was then-offering to sublease the property (described as a "Heavyweight Container Yard...5-to-11.83-acre container-permitted") for considerably more rent than City Hall was receiving from Dean's LLC.
