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Labor indices are no longer published, another substitute index generally recognized <br />as authoritative will be used. Flat rate leases may include pre -determined periodic <br />increases to rent instead of consumer price index adjustments. These periodic <br />increases would occur at least every five (5) years. <br />Percentage Leases: <br />Minimum Rent: The minimum rent component for a new percentage lease shall be set <br />at no less than eighty percent (80%) of the fair market rent as defined above. In certain <br />cases, a portion of the minimum rent may be abated for new construction or <br />redevelopment on the leasehold. The minimum rent shall be adjusted upward <br />throughout the duration of the lease at intervals of not more than every five (5) years to <br />reflect no less than eighty percent (80%) of the average annual rent actually paid or <br />accrued during the three (3) years preceding the adjustment. In no event shall the <br />adjusted minimum rent be less than the minimum rent in existence immediately <br />preceding the adjustment. <br />• Percentage Rates: Percentage leases shall provide for adjustment of percentages <br />rates every ten (10) years to current fair market rates. For the purposes of determining <br />fair market rent percentage rates, the City shall adopt and publish a schedule of <br />benchmark percentage rates that will be updated to current market rates on a periodic <br />basis by appraisal. The appraisal will be guided by prevailing market percentage rates <br />for similar operations primarily within the Southern California area. <br />Rent Arbitration: Leases shall provide for binding arbitration when the City and lessee <br />cannot agree on the new rent for a rental period under review. The City and lessee shall each <br />select a professional independent real estate appraiser who in turn will select a third <br />independent real estate appraiser to determine the fair market rent. If the two selected <br />appraisers fail to mutually select a third appraiser, then the third appraiser shall be <br />determined in accordance with the rules of the American Arbitration Association. The City and <br />lessee shall pay the cost of its own selected appraiser and equally share the cost of the third <br />appraiser. <br />Appraisal Assumptions: City leases shall include a definition of the fair market value to be <br />used to set rent and identify the premise for that value. In establishing the fair market value of <br />leased property, any appraisal shall consider the property as a fee simple absolute estate and <br />as vacant and available for lease or sale for the authorized purposes of the lease at the <br />commencement of the rental period under review. Rates established for purposes of periodic <br />percentage rental adjustments shall not consider any abatement as may be appropriate in a <br />"new" development of vacant land. It shall also be assumed that all required regulatory <br />approvals to permit the use authorized in the lease have been obtained. <br />Lease Term: <br />60A-34 <br />