CITY OF SIMI VALLEY MEMORANDUM AGENDA ITEM NO. 7A June 10, 2013 TO: FROM: SUBJECT: City Council Office of the City Manager CONSIDERATION OF LETTER OF INTENT TO ENTER INTO A LEASE OF THE DEVELOPMENT SERVICES BUILDING WITH THE SIMI VALLEY COMMUNITY FOUNDATION FOR THE UNDER ONE ROOF FACILITY STAFF RECOMMENDATION It is recommended the City Council approve, and authorize the Mayor to sign, a Letter of Intent (Attachment A, page 4) to enter into a Lease Agreement of the Development Services Building with the Simi Valley Community Foundation for the Under One Roof facility. CITY MANAGER S RECOMMENDATION The City Manager recommends approval. BACKGROUND AND OVERVIEW The Simi Valley Community Foundation (Foundation) has been working with the City of Simi Valley on the establishment of an Under One Roof facility. The Under One Roof project will locate health and human service non-profit agencies in one location to better serve their clients and the community. On August 30, 2010, the City Council and then Board of Directors of the former Simi Valley Community Development Agency (Agency) approved moving forward on a plan to expand City Hall to relocate City services currently located in the Development Services Building (DSB). Upon that relocation, the City/Agency would lease a portion of the DSB to the Foundation to house the Under One Roof facility. Staff and the Foundation have been working on developing a lease agreement. However, in order to facilitate the Foundation s fund raising efforts, it is recommended the City Council approve a Letter of Intent to enter into a Lease Agreement with the Foundation for the lease of the DSB. FINDINGS AND ALTERNATIVES The City Council/Agency Board has taken several actions over the past several years to support the Foundation s Under One Roof project. In February 2009, the City Council directed staff to prepare a report addressing modifications to the Civic Center Master Plan to accommodate the Under One Roof facility. On April 6, 2009, the City Council approved
2 locating the Under One Roof facility to the Civic Center site without regard to a specific location. On March 8, 2010, the Agency Board approved the Agency s 2010 2014 Simi Valley Community Development Agency Implementation Plan. The Implementation Plan identified as a priority the establishment and development of a citywide social services center. With the dissolution of redevelopment by the State of California in 2012, the Agency is no longer a partner or participant in the Under One Roof project. Finally, on August 30, 2010, the City Council approved moving forward with the expansion of City Hall. This expansion will allow for the relocation of the Department of Environmental Services (Planning and Building & Safety Divisions) to City Hall (scheduled to occur in July 2013), thereby locating all development related staff in one location and creating a one-stop permitting public counter. The expansion will also allow for the relocation of the Department of Community Services (Code Enforcement and Citizen Services Divisions) to City Hall (scheduled to occur in December 2013). At approximately 18,500 square feet, approximately 15,550 square feet of DSB will be available for the Foundation s Under One Roof program. The City intends to retain a portion of the DSB, approximately 2,950 square feet, for storage of City equipment and files. This storage will replace several cargo containers located at the Public Services Center that house documents and records of the Departments of Environmental Services and Community Services. Additionally, records of the Department of Public Works are currently stored in City Hall, utilizing vital storage space within the building. A demising wall will be constructed at City expense to segregate the City s storage area from the Under One Roof area. On August 30, 2010, the City Council authorized the City Manager (then Executive Director of the Agency) to initiate negotiations for a Lease Agreement with the Simi Valley Community Foundation to establish the Under One Roof program at the DSB. City staff and representatives of the Foundation have met on several occasions to negotiate a Lease Agreement and have a solid framework that will lead to a final document. However, the City is not yet ready to release the DSB building to the Foundation, the Foundation is not in a position to take possession of the DSB, and the City still needs to review the financial capabilities of the Foundation, as well as an Under One Roof Business Plan, prior to entering into a Lease Agreement. The Foundation has recently launched their fund raising effort to fund construction of tenant improvements to accommodate the Under One Roof facility, as well as create working capital for the organization. In order to facilitate their fund raising efforts, it is critical for the Foundation to show a commitment from the City to enter into a Lease Agreement for the Under One Roof facility. As neither the City, nor the Foundation, are ready to enter into a Lease Agreement, staff recommends the City enter into a Letter of Intent (LOI) with the Foundation. The City and the Foundation have drafted a LOI for the City Council s consideration (Attachment A, page 4). This LOI will show intent on the City s and Foundation s part to enter into a Lease Agreement. General in nature, the LOI is non-binding upon the parties and provides a very broad outline of the key business points to be addressed in the Lease Agreement. The LOI
3 does require a minimum of $1 million in actual or pledged donations for the operations of the Under One Roof facility prior to initiating construction, and the Foundation must be able to post a $1 million performance/construction bond prior to initiating construction of the tenant improvements. Staff recommends the City Council approve the LOI and authorize the Mayor to sign the Letter of Intent. The following alternatives are available to the City Council: 1. Approve, and authorize the Mayor to sign, a Letter of Intent (page 4) to enter into a Lease Agreement of the Development Services Building with the Simi Valley Community Foundation for the Under One Roof facility; 2. Modify, approve, and authorize the Mayor to sign a Letter of Intent to enter into a Lease Agreement of the Development Services Building with the Simi Valley Community Foundation for the Under One Roof facility; 3. Elect not to approve a Letter of Intent; 4. Provide staff with further direction. Staff recommends Alternative No. 1. SUMMARY The Simi Valley Community Foundation (Foundation) has been working with the City on the establishment of an Under One Roof facility. The Under One Roof project will locate health and human service non-profit agencies in one location to better serve their clients and the community. On August 30, 2010, the City Council authorized the City Manager to initiate negotiations for a Lease Agreement with the Simi Valley Community Foundation to establish the Under One Roof program at the DSB. City staff and representatives of the Foundation have met on several occasions to negotiate a Lease Agreement and have a solid framework that will lead to a final document. As the City, nor the Foundation, are ready to enter into a Lease Agreement, staff recommends the City enter into a Letter of Intent (LOI) with the Foundation. Staff recommends the City Council approve the LOI (page 4) and authorize the Mayor to sign the Letter of Intent. Brian P. Gabler, Director of Economic Development/Assistant City Manager
4 ATTACHMENT A June 10, 2013 CITY OF SIMI VALLEY Home of The Ronald Reagan Presidential Library Simi Valley Community Foundation Attn: Board of Directors P.O. Box 1164 Simi Valley, CA 93062 RE; LETTER OF INTENT - LEASE AGREEMENT BETWEEN THE CITY OF SIMI VALLEY AND SIMI VALLEY COMMUNITY FOUNDATION Dear Board of Directors: The purpose of this letter is to set forth a non-binding Letter of Intent between the City of Simi Valley ("City") and the Simi Valley Community Foundation (the "Foundation") for the Foundation's lease of the City'S real property and improvements described below, on the following principal terms: 1. t. Purpose. The Foundation is a non-profit corporation organized under Section 501(c)(3) of the Internal Revenue Code, dedicated to providing on-going charitable support to the Simi Valley community. The Foundation serves as an umbrella for local charities and other non-profit organizations who seek to maximize their resources through the Foundation. The Foundation seeks to provide families and individuals access to human services provided by the charities and other non-profit organizations in one central location through a Program known as "Under One Roof' (the "Program") on premises leased from the City. 2. Premises. The Premises to be leased ("Premises") consists of real property totaling approximately 2.5 acres and includes approximately 18,500 square feet of space in the building, of which the City will retain control of approximately 2,950 square feet, commonly known as the Development Services Building with the street address of 3855-A Alamo Street, Simi Valley, California located within the western portion of the Premises, and includes approximately 121 parking spaces, driveways, lawn area, parking lot lights, and patio covers. 3. Permitted Uses. The City has determined that the Foundation's use of the Premises to operate the Program will be in the public interest so long as the operations of the Program do not disrupt, disturb or interfere with the surrounding government facilities and the City's use of the portion of the Premises which it will retain, as will be more specifically identified in a future exhibit. Bob Huber, Mayor Mike Judge, Mayor Pro Tem Glen T. Becerra, Council Member Steven T. Sojka, Council Member Keith L. Mashburn, Council Member 2929 Tapa Canyon Road, Simi Valley, CA 93063-2799 805.583.6700 www.simivalley.org
4. Lease Term. The term of the Lease shall be fifty (50) years from the date of the execution of the Lease Agreement. 5. Rent. The annual rent, due and payable to City by the Foundation on June 1st of every year shall be one-dollar ($1.00). 6. Title. Title to the Premises shall remain with the City. 7. Tenant Improvements. The Foundation, at its sole cost and expense, shall be allowed to carry out the design, construction and operation of Tenant Improvements in conformance with all applicable laws provided that the improvements and work done thereon conform to the public works requirements applicable to the City including prevailing wage requirements. 8. Fees and Maintenance. The Foundation shall be responsible for its share of any taxes or assessments of any nature whatsoever. The Foundation shall be responsible for the cost and expense to maintain, preserve, repair and keep the Building in good working order and condition along with paying for all maintenance and custodial service costs. The Foundation will also be responsible for the maintenance of that portion of the Premises being leased which will be more specifically defined in the Lease Agreement. 9. Insurance and Indemnity. The Foundation shall maintain adequate insurance to protect against any loss or damage to the Premises and for any claims made against the City or its personnel. The Foundation shall agree to indemnify and hold the City harmless from any and all claims arising out of the lease of the Premises to. Contingencies. The Foundation's ability and right to lease the Premises shall be contingent upon the following: (a) (b) Condition of Premises. The Foundation shall be able to review and approve the physical condition of the Premises, including, but not limited to, ensuring it is compliant with all laws, physical inspections and conduct soils tests, at its own cost. The City shall provide the Foundation with reasonable access to the Property and the Foundation shall indemnify the City for any loss, damage or injury resulting from the Foundation's access to the Property. Financing. Prior to entering into a fifty (50) year lease agreement, the City needs assurance of the Foundation's ability to finance the construction of tenant improvements and operation of the Premises. The acquisition of a performance/construction bond in the amount of $1,000,000.00 shall suffice for allowing the construction of tenant improvements and a showing of $1,000,000.00 in actual or pledged donations for operations of the Program shall be sufficient.
6 This Letter of Intent represents the principal provisions which are being discussed between the parties however, it is non-binding and neither party is bound to the provisions contained herein. Notwithstanding either party's execution hereof, nothing in this letter shall create a legally enforceable contract and neither party shall be bound to anything unless and until a definitive Lease Agreement has been fully negotiated, drafted and executed by both parties. Attest: City of Simi Valley, A Municipal Corporation Ky Spangler, Assistant City Clerk Approved as to Form: By: Simi Robert o. Huber, Mayor of the City of Simi Valley, California Valley Community Foundation Marjorie Baxter, City Attorney By: Barbara Frova, Chair of the Simi Valley Community Foundation Board of Directors Approved as to Content: Eric J. Levitt, City Manager By: Barbara Frova, Chair of the Simi Valley Community Foundation Board of Directors