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RESOLUTION NO. 2015-221 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A LICENSE AGREEMENT WITH ACTIONS IN MOTION FOR CITY OWNED PROPERTY LOCATED AT 610 BAY BOULEVARD AMENDING THE FISCAL YEAR 2015-2016 BUDGET FOR PAYMENT OF MINOR CONSTRUCTION COSTS (4/5 VOTE REQUIRED)
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RECOMMENDED ACTION
Recommended Action
Council adopt the resolution
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SUMMARY
The City of Chula Vista currently owns the former bank building located at 610 Bay Boulevard. This property was acquired by the City for the potential future use as a fire station site in February 2013 and is currently vacant. The City has been approached by an auto auction company, Auctions in Motion (AIM), about leasing this site to them on an interim basis. Council is being asked to consider this license.
ENVIRONMENTAL REVIEW
The Development Services Director has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project qualifies for a Class 1 categorical exemption pursuant to Section 15301 (Existing Facilities) of the State CEQA Guidelines because the action is approval of a lease of City property for a new permitted use (auto auction). Thus, no further environmental review is necessary.
BOARD/COMMISSION RECOMMENDATION
Not Applicable
DISCUSSION
The City purchased the bank building located at 610 Bay Boulevard in 2013 as a potential site for a new fire station that is needed prior to the occupancy of the Resort and Conference Center (RCC) on the Bayfront. Since that time staff has had several short term tenants occupy the building, primarily in support of the Port’s construction activities along the Bayfront. This minimal use has allowed the City to offset maintenance costs for the site and deter vandalism and transient activity. Staff does not anticipate needing this site for the Bayfront for at least two years.
Staff has been approached by Auctions in Motion (AIM) to license the entire site for a period of one year with the option for an additional two years. They are a member of the nation-wide XLerate Group which sold 130,000 cars in 2014 generating almost $500 million in gross revenue. AIM currently has three sites in Southern California and has identified the San Diego Region for their next location. They propose to pay the City $10,000 per month for the first year with three percent increases in each of the two subsequent years. They have agreed to pay for all utilities and maintenance on site and will provide the City with a $10,000 security deposit. In order to make the site suitable for this type of tenant some minor work will need to be done. This work consists of fencing and gate modifications, locksmithing, HVAC servicing and general site cleanup. Staff anticipates that the cost of this work will be about $10,,000 and asks that Council appropriate these funds as a part of this action.
This agreement proposes no foreseeable problems for the City, provides a sufficient income stream to carry the cost of owning the asset and alleviates the City’s obligation to maintain the building and land.
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. Staff is not independently aware, and has not been informed by any Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. By entering into this license the City is utilizing un-used office space to create a revenue stream for the City. At the same time the City is relieved of the burden of utility cost and maintenance for space we cannot use. This furthers the City’s goal of maintaining Operational Excellence.
CURRENT YEAR FISCAL IMPACT
In the current fiscal year, (2015-2016) the City will receive $90,000 of license revenue with no anticipated expenses beyond those normally incurred for this site (exterior building maintenance). The City will incur a cost of $10,000 to fund the items detailed above. Staff is requesting an appropriation of $10,000 to the Supplies Services expenditure category of the Non-Departmental budget. This appropriation will be offset by deposit revenue received from the License Agreement resulting in no net fiscal impact.
ONGOING FISCAL IMPACT
In the next fiscal year, 2016-2017, the City will receive $120,000 of lease rental revenue with no anticipated expenses beyond those normally incurred for this site (exterior building maintenance). In the remaining fiscal years, the City will receive $123,600 of license revenue should the agreement be extended.
ATTACHMENTS
License Agreement
Staff Contact: Rick Ryals, Real Property Manager