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Agenda Item 30.

City Council Meeting

Meeting Date:	06/16/2020
FROM:	Bill Gallardo

Subject:

Consideration of First Amendment to the Communications Facility Lease Agreement with Los Angeles Standard Metropolitan Statistical Area (SMSA) Limited Partnership, dba Verizon Wireless at the Downtown Parking Structure

RECOMMENDATION

Approve the First Amendment to the Communications Facility Lease Agreement with Los Angeles SMSA Limited Partnership, dba Verizon Wireless at the Downtown Parking Structure for two additional five-year extension options.

BACKGROUND/DISCUSSION

On December 17, 2002, the Brea Redevelopment Agency entered into a Communications Facility Lease Agreement with Verizon Wireless to lease space for the placement of wireless telecommunications antennas and supporting equipment. The equipment is located on top of the elevator tower at the Downtown Parking Structure located at 101 S. Brea Blvd. The objective was to increase coverage and provide better cellular service in west Brea and the surrounding area.

Existing Lease Terms
Pursuant to the approved agreement, Verizon Wireless agreed to pay the City a monthly rent of $2,000 a month starting in December 2002 with an additional one-time payment of $15,000 at lease signing. Commencing with the second year of the lease, and continuing every year after that, the monthly rent amount increased by 3%. The lease had a term of 10 years with two five-year extensions and is currently in the third year of the second five-year extension. The current lease rate is at $3,305 a month and is set to increase to $3,404 a month in January 2021 and $3,507 in January 2022.

Proposal
In 2019, Los Angeles SMSA Limited Partnership, dba Verizon Wireless contacted City staff to propose an amendment to the Communications Facility Lease. The First Amendment to this Agreement proposes a start date of December 1, 2022, with rent picking up where it would be at $3,612 a month with the 3% annual escalator remaining. The terms would give Verizon Wireless two five-year extension options and include an additional one-time payment of $7,500. In negotiating the lease, staff reviewed lease rates with 12 other public agencies in the Southern California region and found that city leases ranged from $1,500 a month to $3,700 a month and had an average rate of approximately $2,650 a month with 2 - 4% annual escalators. Total revenue to the City will be $43,344 per year initially (plus a 3% growth rate). At the termination of the lease, Verizon must return the structure to its original condition. Verizon would not be permitted to sublet use of the site without City consent and the right to negotiate an increase in rent accordingly.

COMMISSION/COMMITTEE RECOMMENDATION

The Finance Committee reviewed this item at its meeting of June 9, 2020 and recommended moving to Council action.

FISCAL IMPACT/SUMMARY

The amendment to the lease would generate $43,344 each year at commencement with 3% annual increases.

RESPECTFULLY SUBMITTED:

William Gallardo, City Manager
Prepared by: Linda Sok Tang, Management Analyst I
Concurrence: Tracy Steinkruger, Community Development Director

Attachments
A. Communications Facility Lease
B. First Amendment to Communications Facility Lease
C. Memorandum of First Amendment to Lease