25G - AGMT - AUTOZONE LEASE - Laserfiche WebLink

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REQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: MAY 5, 2015 TITLE: LEASE AGREEMENT WITH AUTOZONE FOR PROPERTY AT 1101 S. BRISTOL STREET {STRATEGIC PLAN NO. 3} !�Q-= Z,4 CI Y MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: :5.00 97 ❑ As Recommended ❑ As Amended ❑ Ordinance on 1st Reading ❑ Ordinance on 2nd Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Authorize the City Manager and Clerk of the Council to execute a lease agreement with AutoZone West LLC, for a site located at 1101 S. Bristol Street, Santa Ana, CA, subject to non - substantive changes approved by the City Manager and City Attorney, for a five year period, starting May 1, 2015 with provisions for three five -year periods, for a total of 20 years, exercisable by the City Manager and City Attorney. This lease will generate $132,000 annually for the first lease term and each subsequent lease option increases five percent respectively. DISCUSSION The City of Santa Ana acquired the property at 1101 S. Bristol Street as part of the Bristol Street Improvement and Widening project in 1994. At that time the property had an existing tenant, Chief Auto Parts, which was subsequently acquired by AutoZone. The City has been collecting rent from the tenant since acquisition for their use of the real property. The original lease agreement terms between the prior landowner (Jerome Esterkin) and Chief Auto Parts, have been in effect since the City acquired the property. The current lease term is set to expire in September 2015. AutoZone has expressed an interest in remaining at the site and requested an extension of the lease. While evaluating their request, staff reviewed the original terms of the lease to protect the City's interest moving forward. In order to provide a staff recommended lease amendment, it would have required numerous changes to the original lease executed in 1992. Rather than developing a complicated amendment or series of amendments, AutoZone and staff agreed that a new lease would be in the best interest of both parties. The following represents the terms of the agreement: • 5 years starting May 1, 2015: $11,000.00 per month ($132,000 annualized) • First 5 year extension period: $12,100.00 per month ($145,200 annualized) 0 Second 5 year extension period: $13,310.00 per month ($159,720 annualized) 0 Third 5 year extension period: $14,641.00 per month ($175,692 annualized) 25G -1