60A - PROPERTY DISPOSITION POLICY

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Percentage Leases: • Minimum Rent: The minimum rent component for a new percentage lease shall be set at no less than eighty percent (80%) of the fair market rent as defined above. In certain cases, a portion of the minimum rent may be abated for new construction or redevelopment on the leasehold. The minimum rent shall be adjusted upward throughout the duration of the lease at intervals of not more than everyfive (5) years to reflect no less than eighty percent (80%) of the average annual rent actually paid or accrued during the three (3) years preceding the adjustment. In no event shall the adjusted minimum rent be less than the minimum rent in existence immediately preceding the adjustment. • Percentage Rates: Percentage leases shall provide for adjustment of percentages rates every ten (10) years to current fair market rates. For the purposes of determining fair market rent percentage rates, the City shall adopt and publish a schedule of benchmark percentage rates that will be updated to current market rates on a periodic basis by appraisal. The appraisal will be guided by prevailing market percentage rates for similar operations primarily within the Southern California area. `•. ` Rent Arbitration: Leases shall provide for bindingarbitration when the City and lessee cannot agree on the new rent for a rental period under review. The City and lessee shall each select a professional independent real estate appraiser who 'in-turn will selecta third independent real_estate appraiser to determine the fair market rent. If the two elected appraisers'fail to mutually select a third appraiser, then the third appraiser shall be determined in accordance with�the rules of the American Arbitration Association. The City and lessee shall pay the,cost of its own selected appraiser and equally share the cost of the third appraiser.,''-,, Appraisal Assumptions':.,City leases shall include a definition of the fair market value to be used to set rent and identify the premise for that value. In establishing the fair market value of leased property, any appraisal shall consider tthe property as'a.fee simple absolute estate and as vacant and available for lease or sale-forthe authorised purposes of the lease at the commencement of the rental period under review. Rates established for purposes of.periodic percentage rental adjustments shall not consider any abatement as may be appropriate in a "new' development of vacant land. It shall also be assumed thaf'al�required regulatoryappy vials to permit the use authorized in the lease have been obtained. \ Lease Term: • Short-Term Lease:'The"City'Manager shall have the authority, without advertising, notice, or competitive bidding, and'upon such terms as he or she may deem proper, to lease any City property for a term of up to three (3) years (short-term lease). The City Council will be notified of a short-term lease not later than fifteen (15) days following its execution. A short-term lease may not be renewed without approval of the City Council. The City Manager may also execute rental agreements covering month-to-month tenant occupancy of City-owned residential housing. • Long-Term Lease:_A lease in excess of three (3) years requires a resolution passed by a majority vote of all members of the City Council. The length of lease term shall be based on the level of capital improvements to be made by the lessee and the economic life expectancy of the development. These factors can be determined utilizing cost estimating and economic life A� 8 60A-12