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APPROVE A LEASE AGREEMENT BETWEEN WATERFRONT WAREHOUSE, LLC AND CITY FOR OFFICE SPACE FOR THE DOWNTOWN MARINA
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution to:
1. Approve a Lease Agreement between the City and Waterfront Warehouse, LLC for office space at 445 W. Weber Avenue, Suite 128-B, to operate the Downtown Marina Office and Store.
2. Authorize the City Manager to execute the Lease Agreement.
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
The Stockton Downtown Marina requires the use of office space adjacent to the marina facility for customer services as well as a small store. The office has been located in the Waterfront Warehouse Building located at 445 W. Weber Avenue since the marina’s renovation in 2009. The current lease expired in November of 2018 and is in a month-to-month status. The attached lease is a five-year lease for approximately 1,000 square feet of office/retail space located in the Waterfront Warehouse Building. Annual cost for the leased space will be $13,207 in year one and will escalate by 3% each year to $14,864 by year five.
It is recommended that Council approve the lease agreement with Waterfront Warehouse, LLC for the use of office and retail space for the Downtown Marina Office and Store, attached as Exhibit 1 to the resolution.
DISCUSSION
Background
The Downtown Stockton Marina underwent a major renovation in 2009 and was operated by a third-party contractor, Westrec, Inc. (Westrec), until November 2016. During Westrec’s tenure, a lease agreement for Marina office space was entered between Westrec and ownership of the Waterfront Warehouse Building (Riverrock Properties Waterfront Warehouse, LLC). Following Westrec’s departure, City staff and temporary agency employees operated the Marina and entered a one-year lease (Contract Number 2016-11-08-S001 NP), followed by an additional one-year extension through November 2018 (2016-11-08-S001 NP Addendum), (Attachment A). On March 20, 2017, Council approved an amendment to the SMG event venue Operating Agreement to include the operation of the Downtown Marina starting July 2018.
Present Situation
The current lease agreement between the City and Waterfront Warehouse, LLC expired on November 30, 2018, and is in a month-to-month status. It has been determined that it is in the best interest of the City to continue to be the leaseholder for the Downtown Marina office space, as its proximity to the waterfront and the marina facilities is critical to the ongoing operation. With the warehouse building now under new ownership, the office lease rate will increase by 3% each year beginning with $13,207 in year one and escalating to $14,864 by year five. This pricing is within current market rates for similar properties. Given the indefinite need for office space adjacent to the marina operation, the City will seek a more permanent solution to ensure waterfront access without the long-term need to rely upon lease availability and fluctuations of market rates, prior to the expiration of the proposed lease.
FINANCIAL SUMMARY
The Lease expense will continue to be paid from the Downtown Marina Operating Budget (460-4810-572.20-65) submitted to Council each year through the annual budget cycle. The new lease will cost $13,207 for the first year and will escalate to $14,864 by year five. Upon execution of the new lease, an additional $401 will be due as a security deposit with the property owner. The proposed lease, effective March 2019, will increase the monthly rate to $1,101. Current budget appropriation is available to absorb a small increase of $456 through June 2019.
Attachment A - 2016-11-08-S001 NP