HomeMy WebLinkAbout9/6/2000 - STAFF REPORTS (29) DATE: September 6, 2000
TO: City Council
FROM: Director of Aviation
AIRPORT PARK PLAZA- CONSENT TO ASSIGN
RECOMMENDATION:
That the City Council modify its August 2, 2000 approval of term extensions for three
ground leases comprising the Airport Park Plaza and the Consents to Assignment to AP-
Palm Springs Airport LLC to reflect the rental rate adjustment every five (5) years based
upon the Consumer Price Index(CPI)with the cost of living adjustment not-to-exceed 25%
in a five-year period; and extend the current lease obligation of Agreement No. 2636 to
build additional square footage commencing prior to November 2013, conditional upon
assignee obtaining all necessary use permits.
BACKGROUND:
August 02,2000,the Palm Springs City Council approved Minute Order No.6692 approving
Consent to Assign from John Apostle and Helen Apostle, trustees of the Apostles Family
Trust to AP-Palm Springs Airport LLC, and Minute Order No. 6693 for lease extensions for
a total of 18 years for property located at 255, 265 and 275 N. El Cielo Road, Airport Park
Plaza.A2528, 2529 and 2636. As indicated in the August 2, 2000 staff report, staff and the
City Attorney were to finalize the contract form and deal points within the lease agreement.
Subsequently, the City Council received a letterfrom Mr. Donald G.Abbey, Chairman/CEO
of the Abbey Company dated August 11, 2000, requesting that the City Council reconsider
certain lease terms that were presented to and approved by the Council on August 2,
2000. They are as follows:
1.) Rental Rate Adjustments. That the 3% minimum annual guarantee or 15%
minimum over five (5) years, or CPI adjustment, whichever is the greater,
with a 25% cap rate for a five (5) year period (CPI adjustments are made
every five (5) years) be changed to the original lease provision calling for
rate adjustments every five(5)years based upon the Consumer Price Index
(CPI), and shall not exceed 25% for any five-year period.
2.) Improvements (Agreement No. 2636). That the lease provision that
obligates the Lessor to build additional square footage, commencing prior
to November 2003 be amended to provide that the improvements be started
by November 2013. Mr. Abbey remains interested in development,
however, would like this amendment to reflect a deferment until favorable
economic conditions prevail, which is unknown.
Currently,the two(2)adjacent developed parcels containing office buildings
are approximately 98% occupied, but at rental rates that do not cover the
minimum annual ground rental for the three (3) parcels.
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September 6, 2000
Airport Park Plaza - Consent To Assign
Page 2
Staff and the City Attorney's office have negotiated in good faith with The Abbey Company
acquisition team. The $275K exchange offer remains unchanged; the landscaping
improvements between the south parcel and the dog park remain unchanged;the assignee
understands and acknowledges the current parking concerns and will recalculate the
parking ratio accordingly; the term extensions totaling 18 years for the three parcels
remains unchanged;and the assignee is still very interested in the prospects of having long
term ground leases in the designated Foreign Trade Zone (FTZ). These items were
previously discussed with the Council and have not changed.
In summary, staff feels that this remains a good business deal even with these
modifications because of the past rent history on the property and because of the market
experience that The Abbey Group brings to the community with a portfolio of 42 retail,office
and industrial developments including properties in the City of Palm Springs. Staff
recommends approval of the term extensions and lease assignments, with these two (2)
modifications, subject to the assignee receiving all necessary use permits and City
Atttoorrney's /approval as to form.
APPROVED
JEFV L. RIDDLE City Man
Director of Aviation
Attachment: 1. Minute Order
REVIEWED BY DEPT.OF FINANCE
MINUTE ORDER NO.
MODIFYING CITY COUNCIL'S AUGUST 2, 2000
APPROVAL OF TERM EXTENSIONS FOR THREE (3)
GROUND LEASES COMPRISING THE AIRPORT PARK
PLAZA AND THE CONSENTS TO ASSIGNMENT TO AP-
PALM SPRINGS AIRPORT LLC, TO REFLECT THE
RENTAL RATE ADJUSTMENT EVERY FIVE (5) YEARS
BASED UPON THE CONSUMER PRICE INDEX(CPI)WITH
THE COST OF LIVING ADJUSTMENT NOT-TO-EXCEED
25% IN A FIVE-YEAR PERIOD; AND EXTEND THE
CURRENT LEASE OBLIGATION OF AGREEMENT NO.
2636 TO BUILD ADDITIONAL SQUARE FOOTAGE
COMMENCING PRIOR TO NOVEMBER 2013,
CONDITIONAL UPON ASSIGNEE OBTAINING ALL
NECESSARY USE PERMITS, SUBJECT TO CITY
ATTORNEY'SAPPROVAL OF THE ASSIGNMENTS AS TO
FORM.
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I HEREBY CERTIFY that this Minute Order modifying City Council's August
2, 2000 approval of term extensions for three (3) ground leases comprising
the Airport Park Plaza and the consents to assignment to AP-Palm Springs
Airport LLC to reflect the rental rate adjustment every five (5) years based
upon the Consumer Price Index(CPI)with the cost of living adjustment not-
to-exceed 25%in a five-year period; and extend the current lease obligation
of Agreement No.2636 to build additional square footage commencing prior
to November 2013, conditional upon assignee obtaining all necessary use
permits and subject to City Attorney's approval of the assignments as to
form, was adopted by City Council of the City of Palm Springs, California in
a meeting thereof held on the 6th day of September, 2000.
PATRICIA A. SANDERS
City Clerk