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AUTHORIZE AMENDMENT TO LEASE OF EXCESS LAND - DELTA WATER SUPPLY PROJECT SITE
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RECOMMENDATION
It is recommended that the City Council adopt a resolution to:
1. Authorize the City Manager to execute the First Amendment to Lease of Excess Land Delta Water Supply Project site;
2. Approve findings that support and justify an exception to the competitive bidding process; and
3. Authorize the City Manager, or his designee, to take all necessary and appropriate actions to carry out the purpose and intent of this resolution.
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Summary
On August 12, 2014, by Resolution No. 2014-08-12-1205 (Attachment A - Resolution No. 2014-08-12-1205) City Council approved a lease with Roy Yates for the purpose of cattle grazing on 67.12 acres of unused excess land located on the Delta Water Supply Project (DWSP) site located at 11373 Lower Sacramento Road, Stockton, California (Attachments B and C - Vicinity and Aerial Maps).
On April 19, 2016, Roy Yates requested the City consider a proposed amendment to the lease (Attachment D - Proposed Amendment Request). A proposed amendment was negotiated between the City and Roy Yates which will extend the term of the lease from two (2) years to five (5) years, retaining the original commencement date of September 1, 2014, but terminating on August 31, 2019. Included in the amendment is an option to renew the lease up to an additional five (5) years, in one (1) five-year increment (Exhibit 1 to the Resolution - Proposed Amendment). An annual adjustment to the lease amount based on the Consumer Price Index (CPI) was also negotiated. All other terms and provisions of the original lease are unchanged, including the lease amount of $2,560 per year since it remains within market range.
Upon review, staff determined the proposed amendment benefits the City since it complies with the environmental use and restrictions associated with the property; and is in the interest of the public as it will allow for the continuation of what has been a successful lease. Consequently, it is recommended that Council approve the proposed resolution.
DISCUSSION
Background
On November 8, 2005, by Resolution No. 05-0493 (Attachment E - Resolution No. 05-0493), the City Council approved the DWSP and associated environmental documents to develop a new supplemental water supply for the Stockton Metropolitan Area by diverting surface water from the Sacramento-San Joaquin Delta. DWSP required the construction of water transmission and water treatment facilities and is located just north of Eight Mile Road on Lower Sacramento Road. DWSP went into operation in May 2012.
The DWSP environmental documents stated that any unused portion of the land, not required for present or future expansion, shall remain available for farming operations. Approximately 67.12 acres of unused excess land was identified on the DWSP site as available for farming operations. In 2014, the Municipal Utilities Department (MUD) requested the Economic Development Department (EDD) attempt to lease the identified unused excess land.
The EDD implemented a leasing plan to solicit proposals and advertise the availability of the property for lease. The plan included the following:
1. Notification of all parties that had shown interest in the property;
2. Advertisement of the property for lease by placing signage on the property and placing a public notice in the newspaper; and
3. Conducting an onsite informational meeting for prospective Lessees.
After thirty (30) days of soliciting and advertising the availability of the property for lease, two (2) lease proposals were submitted to the City. Upon review by MUD and EDD staff members, the proposal submitted by Roy Yates was deemed to be the most appropriate and acceptable, as the proposed use of the water treatment property for cattle grazing caused the least amount of impact to the site thus leaving it in its most natural state.
On August 12, 2014, by Resolution No. 2014-08-12-1205, the City Council approved a lease with Roy Yates for the purpose of cattle grazing on 67.12 acres of unused excess land located on the DWSP site located at 11373 Lower Sacramento Road, Stockton, California. The lease included a term of two (2) years commencing on September 1, 2014, and terminating on August 31, 2016, with an option to renew under the same terms and conditions for an additional period of one (1) year.
The terms of this lease were appropriate at the time as the City was interested in a short term lease in order to monitor the impacts of the lease to the property before considering and entering into a longer arrangement. Roy Yates has exercised care and caution with the cattle grazing operation located at the DWSP site. There have not been any incidents in which the cattle have posed an issue. In addition, the service road to the DWSP Water Treatment Plant has been kept open for access at all times. The impacts of this lease have remained minimal with the site being maintained in a natural state thereby warranting the proposed amendment.
Present Situation
The lease with Roy Yates is scheduled to terminate on August 31, 2016. On April 19, 2016, Roy Yates requested the City consider a proposed amendment to the lease in lieu of exercising the option to renew for an additional one-year period. A proposed amendment was negotiated between the City and Roy Yates. The proposed amendment will extend the term of the lease to five (5) years retaining the original commencement date of September 1, 2014 but extending the termination date to August 31, 2019; and extend the option to renew the lease up to an additional five (5) years, in one (1) five-year increment. An annual adjustment to the lease amount based on the CPI was also negotiated. All other terms and provisions of the original lease are unchanged, including the initial lease amount of $2,560 per year since it remains within market range.
Roy Yates requested the amendment to the Lease to allow sufficient time to establish quality grazing land on the property since substandard grazing conditions have developed as a result of drought. Roy Yates proposes to plant grass seed so that the cattle may graze in grasslands instead of brush and weeds. The estimated time duration for the establishment of a grasslands environment is several years. The creation of grasslands on the property provides for sustainable grazing land and a healthy environment.
Proposals were not solicited at this time since the following findings support and justify an exception:
1. Roy Yates has proven to be a beneficial tenant for the City as he has performed and complied with all the terms and conditions of the lease;
2. The leased area has been maintained in an exceptional manner;
3. The proposed amendment benefits the City since it complies with the environmental use and restrictions associated with the property; and
4. The proposed amendment is in the interest of the public as it will allow for the continuation of a successful, market-rate lease.
MUD staff has reviewed the proposed amendment for compatibility and use. EDD staff has reviewed the proposed amendment and supports extending the lease term, option to renew, and annual adjustment to the lease amount based on CPI. EDD staff has determined that the proposed amendment is fair and reasonable.
This resolution authorizes the City Manager, or his designee, to execute an Amendment to Lease Excess Land located on the DWSP site located at 11373 Lower Sacramento Road, along with authorization to approve the option to renew, and any related documents.
NOTIFICATION
As required, a “Notice of Intent to Grant or Lease Real Property Interest” in accordance with the provisions of Article V, Section 510, of the Charter of the City of Stockton was advertised in the legal notice section of The Record on July 11, 2016.
FINANCIAL SUMMARY
The annual revenue associated with this proposed amendment is expected to remain unchanged. Expected revenue in the amount of $2,560 will continue to be deposited into DWSP account number 421-0000-379.
Attachment A - Resolution No. 2014-08-12-1205
Attachment B - Vicinity Map
Attachment C - Aerial Map
Attachment D - Proposed Amendment Request
Attachment E - Resolution No. 05-0493