Loading...
HomeMy WebLinkAboutStaff Report 234-06City of Palo Alto C ty Manager’s Report TO: FROM: HONORABLE CITY COUNCIL CITY MANAGER 10 DEPARTMENT: ADMINISTRATIVE¯SERVICES DATE:JUNE 5, 2006 CMR: 234:06 SUBJECT:AMENDMENT TO EXTEND THE LEASE AT 1003 ELWELL COURT TO COINCIDE WITH THE LEASE TERM AT 1007 ELWELL COURT RECOMMENDATION Staff recommends that Council authorize the City Manager to execute the attached Amendment No. 4 to the lease for 1003 Elwell Court. The amendment will extend the term of the 1003 Elwell Court lease for one additional year to coincide with the term of the lease for 1007 Elwell Court. BACKGROUND On July 13, 1998, staff provided to Council information on the space needs in the Civic Center complex (CMR: 307:98). A survey indicated that the "space deficit" in the Civic Center was approximately 21,000 square feet. At that time, Council was informed that the Utilities Engineering staff was desperately in need of additional workspace due to overcrowded conditions (CMR: 204:98). At its July 13, 1998 meeting, Council approved leasing 9,202 square feet of space for the Utilities Engineering Division at 1007 Elwell Court near East Bayshore Road. In 2003, the Council approved amending the lease at 1007 Elwell Court to provide a location for the dark fiber engineers, water, gas and wastewater inspectors, and the utility library by leasing an additional 5,600 square feet at 1003 Elwell Court (CMR: 165:03). The lease for the 1007 Elwell Court space will expire on August 31, 2008 and the lease for 1003 Elwell Court on September 30, 2006. DISCUSSION The lease term for 1003 Elwell Court was limited to two years to coincide with the decision on whether to proceed with the Fiber-to-the Home project and was due to expire on March 31, 2005. Although the FTTH project has been discontinued, the telecommunications staff remains at the same leve! due to increased dark fiber business activity. In March of 2005, the lease was amended for a second time to provide for a six month extension, to September 30, 2005, and then was amended for a third time to provide for an additional year extension to September 30, 2006. This Fourth Amendment will now provide for an extension of the lease term to coincide with the expiration of the lease for the larger area at 1007 Elwell Court which is due to expire on August 31, 2008. All other terms and conditions of the original lease shall remain unchanged. CMR:234:06 Page 1 of 2 Staff is currently exploring the possibility of using Utilities Enterprise Funds to purchase property that would house all of the Utilities Engineering staff as well as most of the remaining Utilities staff currently located at the Civic Center. Utilities Operations staff will return to Council with a recommendation to either: 1) extend the leases for the 1007 and 1003 Elwell Court locations upon their expiration in August 2008 and explore the possibility of negotiating a more favorable rental rate; 2) or take advantage of the current economic situation to explore the option of purchasing a building for the Utilities Department. RESOURCE IMPACT The monthly rent ($7,328) and common area charges ($2,142) will remain at their current level of $9,420 per month for an annual cost of $113,640. The cost will be paid from the Electric, Gas, Water and Waste Water Fund budget. POLICY IMPLICATIONS The recommendation is consistent with existing City policies and supports the Utilities Strategic Plan. ENVIRONMENTAL REVIEW Leasing of existing office space involving no expansion of use is exempt from California Environmental Quality Act review pursuant to CEQA Guideline Section 15301. PREPARED BY: MARTHA E. MILLER Senior Financial Analyst DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL: Director, A~Services EMIE’~HARRISON - Assistant City Manager ATTACHMENTS Attachment A: Fourth Amendment to Standard Industrial Lease CMR:234:06 Page 2 of 2 ATTACHMENT A THIS FOURTH AMENDMENT TO STANDARD INDUSTRIAL LEASE (hereinafter "Fourth Amendment") is made this __ day of 2006 (the "Effective Date"), by and between McCANDLESS LIMITED, a California limited parmership (Landlord") and THE CITY OF PALO ALTO, a California municipal corporation ("Tenant"). RECITALS This Fourth Amendment is made with reference to the following facts: A. Tenant currently leases from Land!ord approximately nine thousand two hundred two (9,202) square feet of space located at 1007 Elwell Court, Palo Alto, California (the "1007 Premises") and approximately five thousand six hundred ninety two (5,692) square feet located at 1003 Elwell Court, Palo Alto, California (the "1003 Premises") pursuant to that certain lease dated as of July 31, 1998, that certain Amendment to Standard Industrial Lease dated as of April 1, 2003 and that certain Second Amendment to Standard Industrial Lease dated as of March 16, 2005 and that certain Third Amendment to Standard Industrial Lease dated as of September 20, 2005 (the "Lease"). The 1007 Premises and the 1003 Premises are located in a building commonly known as 1001-1007 Elwell Court, Palo Alto, California (the "Project"). The term of the Lease respecting the 1007 Premises expires August 31, 2008 and the term of the Lease respecting the 1003 Premises expires September 30, 2006. B. Tenant wishes to lease the 1003 Premises for one (1) additional year and eleven (11) additional months from October 1, 2006 until August 31, 2008 (the "Third Extended Term of the Lease for the 1003 Premises"). C. Landlord is willing to so amend the Lease subject to the terms and conditions set forth in this Third Amendment. ACCORDINGLY, in consideration of the above Recitals and the mutual covenants and agreements contained herein and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows: 1.Conditions Precedent. This Fourth Amendment is subject to the satisfaction of the condition precedent set forth in this Para~aph 1 by no later than August 31, 2006, which condition precedent shall be deemed to be for the benefit of both Landlord and Tenant and which may be amended or waived only by a subsequent written agreement executed by both Landlord and Tenant. In the event the following condition precedent is not satisfied in a timely manner, this Fourth Amendment shall be nul! and void and of no force and effect without notice or further documentation. 1.1 This Fourth Amendment must be approved by the Palo Alto City Council at no cost to Landlord. MCJEX.30288k512180.2 - 1 - 2.Term. The Extended Term of the Lease for the 1003 Premises shall commence as of October 1, 2006, and shall extend to August 31, 2008. The term of the Lease for the 1007 Premises shall continue to August 31, 2008. 3.Basic Rent and Common Area Charges. Commencing on October 1, 2006, Tenant shall continue to pay the same monthly basic rent as such monthly basic rent is described in Paragraphs 4 (a) and 5 of the Lease for the 1003 Premises in the amount of Seven Thousand Three Hundred Twenty-Eight and 45/100 Dollars ($7,328.45) per month. Pursuant to Paragraph 32 of the Lease, basic rent shall not be adjusted for any measurement of the 1003 Premises. Tenant shall continue to pay basic rent for the 1007 Premises in the manner described in the Lease. In addition, Tenant shall continue to pay common area charges in the manner described in paragraph 16 the Lease, as amended. Tenant’s percentage share of common area charges shall continue to be 28.44 % respecting the 1007 Premises and 17.58% respecting the 1003 Premises. 4.Security Deposit. Landlord currently holds a cash security deposit provided by Tenant attributable to the 1003 Premises in the amount of Seven Thousand One Hundred Fifteen Dollars ($7,115.00) and no further deposit shall be required. 5.No Tenant Improvement Allowance. Tenant shall not be entitled to a tenant improvement allowance for the 1003 Premises. Landlord has made no promise and is not obligated to modify, alter or renovate the 1003 Premises. Tenant has determined that the 1003 Premises are suitable for Tenant’s use. Tenant accepts the 1003 Premises and the FF&E in its present "as-is" state and condition and acknowledges that the 1003 Premises are in good and tenantable condition and are fit for Tenant’s business purposes. 5.1 Acknowledgement of Limitation of Agent’s Authority: No person acting on behalf of Landlord is authorized to make, and by execution hereof Tenant acknowledges that no such person has made, any representation, warranty, guaranty or promise except as may be expressly set forth herein; and no agreement, statement, representation, guaranty or promise made by any such person which is not expressly contained herein shall be valid or binding on Landlord and Landlord’s agents, heirs, successors or assigns. The only representations or warranties outstanding with respect to the 1003 Premises, or Landlord, either express or implied by law, are expressly set forth herein. 5.2 Documentary Information: Tenant acknowledges that any and all documentary information, soil reports, environmental audits, site assessments, analyses or reports, insurance policies or other information of whatever type which Tenant has received or may receive from Landlord or Landlord’s agents is furnished on the express condition that Tenant shall make Tenant’s own independent verification of the accuracy and completeness of such information. Tenant agrees that Tenant shall not attempt to assert any liability upon Landlord or Landlord’s agents for furnishing such information and Tenant does hereby release Land!ord and Landlord’s agents, heirs, successors and assigns from, and does hereby a~ee to indemnify, protect, defend and hold Landlord and Landlord’s agents, heirs, successors and assigns free and harmless from and against, any and all such claims or liability. MCJEk302882512180.2 -2- 6.Use of Premises: Tenant shall use the 1003 Premises for general office, research and development purposes and for no other purpose without the express written consent of Landlord, which consent shall not be unreasonably withheld. 7.Warranty of Authority: Each signatory to this Fourth Amendment represents that he or she possesses full authority to exercise this Fourth Amendment and to bind the entity on whose behalf such signatory is signing. 8.Brokers. Each party represents that it has not had any dealings with any real estate broker, finder or other person with respect to this Fourth Amendment, and that there are no leasing commissions to be paid by Landlord or Tenant in connection with this transaction. Each party hereto shall hold harmless the other party from all damages, loss or liability resulting from any claims that may be asserted against the other party by any broker, finder or other person with whom such party has dealt, or purportedly has dealt, in connection with this transaction. 9.Restatement of Other Lease Terms. Except as specifically modified herein, all other terms, covenants and conditions of the Lease, including Tenant’s obligation to pay common area charges for both the 1003 Premises and the 1007 Premises, shall remain in full force and effect. 10. ~apitalized Terms. Except as expressly provided in this Fourth Amendment, all capitalized terms used in this Fourth Amendment shall possess the same meaning ascribed to that term in the Lease. 11. Conflicts. In the event of any conflict between the Lease on the one hand and this Fourth Amendment on the other, the terms of this Fourth Amendment shall govern and control. 12. counterparts. Counterparts. This Fourth Amendment may be executed in identical MCJEk30288~ 12180.2 -3 - IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment as of the Effective Date. LANDLORD:TENANT: McCANDLESS LIMITED, a California limited parmership By:The Jean A. McCandless Trust U/T/A 1/25/77, General Parmer By: Sandra M. Simons, Trustee THE CITY OF PALO ALTO, a California municipal corporation By: City Manager Approved as to form: By: By: Sr. Asstistant City Attorney Director of Utilities By: Director of Administrative Services MCJEB0288k512180.2 -4- EXHIBIT "A" DESCRIPTION OF FF&E IN 1003 PREMISES 16 Free-standing Cubicles with built-in self contained desks & shelves 46 chairs within the cubicles 1-4’ round conference table with 5 chairs 4 - 12’ Long Desks with 6 chairs 10 Offices - which contain the following 23 Haworth Desks 19 Shelves for books 9 Chairs 1- small metal 2-drawer file cabinet 1- metal file cabinet 10’ tall Wooden file cabinet MCJE230288~512180.2 -5-