ilogli rei ' Los Angeles World Airports REPORT TO THE : OARD F AIRPORT COMMISSIONERS kj 1 JI - ApprWiTar' Dúi.n Vi Tvg i I 1./. A' d ys Development Meetin Date: g 6/16/2014!tern Nur ber he Reviewed by: A 4(.4 A, JAI AL JS Debbie Bowers, Depir y Executive Director 1111 Attorney, CAO Review: G "P (1t(- Reviewed for Date A_ / / -' / if Al).- G. a Marie Lindsey - Executive Director Capital Budget Operating Budget CEQA Procurement 5/1/2014 ID A E] 5/20/2014 5116/2014 5/12/2014 Completed Pending N/A Approval Status EN 0 N 0 NA KiYD N ONA NY CI N NY ONE Cond By OS RW MV MT SUBJE ti llease and Rental Rates with Valley Sod Farms, Inc. at Van Nuys Airport Approve a ten-year Lease and land rental rates with Valley Sod Farms, Inc. located at 16405 Chase Street at Van Nuys Airport that will generate approximately $102,332 in revenue the first year and approximately $1,023,318 in revenue over the ten-year term. RECOMMENDATIONS: Management RECOMMENDS that the Board of Airport Commissioners: 1. ADOPT the Staff Report 2. DETERMINE that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article Ill, Class 1 (18)(c) of the Los Angeles City CEQA Guidelines. 3. APPROVE land rental rates at 16405 Chase Street as referenced in this report. 4. APPROVE a Lease between the City of Los Angeles and Valley Sod Farms, Inc. 5. AUTHORIZE the Executive Director to execute the Lease between the City of Los Angeles and Valley Sod Farms, Inc. upon approval as to form by the City Attorney. Page 1
DISCUSSION: 1. Purpose To lease 57-acres of land in the north approach zone at Van Nuys Airport (VNY) that can only be used for sod farming or similar use. 2. Prior Related Actions October 15, 2012 - Resolution 24931 (Certain Properties) The Board of Airport Commissioners (Board) approved Land and Building Rental Rates for certain properties (including 16405 Chase Street) at Van Nuys Airport. 3. Current Action Valley Sod Farms Inc., (Valley Sod) currently occupies 36.6 acres of land on a month-tomonth basis on the eastern portion of the 57-acre site. Valley Sod has a well-developed sod farming business at two locations in Southern California. Procurement Process On April 12, 2013, LAWA released a competitive process for the premises located at 16405 Chase Street at VNY by advertising and soliciting Expressions of Interest (E0I) on the City's Business Assistance Virtual Network (BAVN). Responses were received from the following companies: Valley Sod Farms, Inc. R&R Properties I,LLC / Superior Sod On September 16, 2013 LAWA released a Request for Lease Offer (RLO) opportunity to the aforementioned E01 respondents. On October 15, 2013, LAWA received RLO submittals from Valley Sod and Superior Sod. An evaluation committee reviewed the RLOs and conducted the evaluation process in accordance with LAWA policies and procedures. The three member evaluation committee consisted of the following: Deputy Executive Director, Commercial Development Group Property Manager II Financial Analyst Specific evaluation criteria listed below assisted in evaluating the RLO submittals, which passed the administrative requirements review. Page 2
Category: Points Financial Lease Offer 50 Qualifications - References 30 Community Benefit 20 Total Available Points 100 Valley Sod achieved the highest rank based upon the previously referenced evaluation criteria. Staff completed lease negotiations with Valley Sod, which included agreement to all standard LAWA lease terms and provisions. The table below provides a summary of the proposed Lease terms: TERM: Commencement Expiration Cancellation Provision LEASE SUMMARY Upon execution 10 Years from Commencement Upon 30 day notice by either party DEMISED PREMISES: Initial Land 40.8 acres Expansion Premises 9.6 acres (when the current tenant vacates this site, LAWA has the option to add these premises to the Lease) RENT: Land Agricultural Use $2,506 Per Acre Per Year (PAPY) Rent Credit - ($138,004, For Expansion Premises Rent Escalations Contingent upon addition of Expansion Premises: Paid over remaining Lease term after LAWA approval of completed site clearance work Annual CPI adjustments no less than 2% and no greater than 7%; 5-year Periodic Adjustments 1st Year RENT: $102,332.76 Action Requested Staff requests the Board approve a ten-year Lease and land rental rates with Valley Sod at VNY and authorize the Executive Director to execute the proposed Lease after approval as to form by the City Attorney. Page 3
Fiscal Impact Approval of this Lease will result in gross revenue of approximately $102,332 to LAWA for the first year and approximately $1,023,318 in revenue over the 10-year term. 4. Alternatives Considered Take No Action Taking no action is not recommended. Approval of the proposed Lease would update rental rates to reflect the most recent market land rate. Additionally, not leasing the premises would be an option if LAWA needed to use this facility for its own purposes. At this time LAWA does not have a need for the premises. APPROPRIATIONS: Approval of this action will have no impact on LAWA's Capital Budget. STANDARD PROVISIONS: 1. The issuance of permits, leases, agreements, gate and space assignments, and renewals, amendments or extensions thereof, or other entitlements granting use of existing airport facilities or its operations is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article Ill, Class 1 (18)(c) of the Los Angeles City CEQA Guidelines. 2. This item is subject to approval as to form by the City Attorney. 3. Actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section 606. 4. Valley Sod Farms will comply with the provisions of the Living Wage Ordinance. 5. The Small Business Enterprise Program does not apply to leases. 6. Valley Sod Farms will comply with the provisions of the Affirmative Action Program. 7. Valley Sod Farms has been assigned Business Tax Registration Certificate number 0000053708-0001-6. 8. Valley Sod Farms will comply with the provisions of the Child Support Obligations Ordinance. 9. Valley Sod Farms will have approved insurance documents, in the terms and amounts required, on file with Los Angeles World Airports prior to execution of the Lease Agreement. 10. This action is not subject to the provisions of City Charter Section 1022 (Use of Independent Contractors). Page 4 Valley Sad Fangs Lease.docx
11. Valley Sod Farms has submitted the Contractor Responsibility Program Pledge of Compliance and comply with the provisions of the Contractor Responsibility Program prior to execution of the Lease Agreement. 12. Valley Sod Farms must be determined by Public Works, Office of Contract Compliance, to be in compliance with the provisions of the Equal Benefits Ordinance prior to execution of the Lease Agreement. 13. This action is not subject to the provisions of the First Source Hiring Program. 14. Valley Sod Farms has submitted the Bidder Contributions CEC Form 55 and will comply with its provisions. Page 5
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