Report Prepared by: Karen Baker, Development Associate, Merced Visitor Services
Title
SUBJECT: Lease Agreement Between the City of Merced and Javier Rodriguez, DBA Viajes California for Office Space in the Merced Transportation Center
REPORT IN BRIEF
Authorize the City to enter into a lease agreement with Javier Rodriguez for 330 square feet of office space and use of the common area facilities located at the Merced Transportation Center, 710 West 16th Street.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving the Lease Agreement between Javier Rodriguez, a sole proprietor, doing business as Viajes California and the City of Merced; and,
B. Authorizing the City Manager or Assistant City Manager to execute the necessary documents.
Body
ALTERNATIVES
1. Approve as recommended by staff; or,
2. Approve, subject to modifications as conditioned by Council; or,
3. Deny the request completely; or,
4. Refer back to staff for reconsideration of specific items as requested by Council; or,
5. Continue item to a future Council meeting (date to be specified in City Council motion).
AUTHORITY
Section 200 of the City of Merced Charter.
CITY COUNCIL PRIORITIES
As provided for in the 2017-18 Adopted Budget.
DISCUSSION
Background
The City has been leasing 330 square feet of office space to Javier Rodriguez, DBA Viajes Express since 2010 in the Merced Transportation Center. The travel related business offers services that include the sale of bus tickets, air travel arrangements and parcel shipping within the United States, Mexico, Central and South America. The proprietor operates seven (7) days a week and employs one (1) full time staff person. Viajes Express regularly pays its full portion of costs for the use of the facility including negotiated rents, a six percent (6%) utility pro-rata share and an eight percent (8%) maintenance pro-rata share as part of the lease. The rent revenues generated are deposited into Facilities Maintenance account 671-1119-352-03-00.
Description
The City of Merced was approached by Javier Rodriguez to update his existing agreement. The name of the business has changed to Viajes California and he would like that reflected on the lease. In addition, he would like to offer additional services through his existing business. Viajes California will not only provide the sale of bus tickets, air travel arrangements and parcel shipping but also will offer Department of Motor Vehicles registration services, Live Scan services, and be a UPS, FedEx and DHL drop off and pickup location. The proprietor intends to continue operating seven (7) days a week and will employ one (1) full time staff person.
Viajes California will continue to pay its full portion of costs for the use of the facility including negotiated rents, an increase to eight percent (8%) utility pro-rata share and an eight percent (8%) maintenance pro-rata share for the Common Area. The rent revenues generated will continue to be deposited into Facilities Maintenance account 671-1119-352-03-00, which is used for ongoing operations and maintenance of the Transportation Center. Negotiations with the proprietor have returned the following terms:
Parties: Lessor: City of Merced
Lessee: Javier Rodriguez
DBA, Viajes California
Premises: The subject site is a portion of 710 West 16th Street, consisting of 330
square feet. Use of common area facilities include the lobby area,
bathroom and concourse for patrons and staff (See Exhibits A and B of Attachment 1.)
Term: Three (3) year lease with two (2) additional one (1) year terms commencing on year four (4) and year five (5) respectively.
Rent: Year 1: $266.11 per month
Year 2: $266.11 per month
Year 3: $294.62 per month
Year 4: $294.62 per month
Year 5: $294.62 per month
Tenant
Improvements: No tenant improvements (TI) is included.
Utilities: Pro-rata share of 8%. Includes cost of water, sewer, garbage, electricity, telephone services, security costs and other public utilities.
Maintenance: Pro-rate share of 8% of incurred costs for maintenance, repairs and
janitorial services for the Common Area (See Exhibit C of Attachment1.)
The tenant will have the option to early termination of the lease. An early termination forfeiture payment in the amount of three (3) months full rent shall apply. This will allow the City to market the space while also receiving rent income if the tenant were to vacate prior to the normal expiration of the lease term.
The current lease with Mr. Rodriguez is in good standing, and the Transportation Center would benefit from the expansion of services offered through the business. Staff recommends approval of the Lease Agreement with Javier Rodriguez, DBA Viajes California and authorize the City Manager or Assistant City Manager to execute the necessary documents
IMPACT ON CITY RESOURCES
The rent revenues generated are deposited into facilities maintenance account
671-1119-352-03-00, which is used for ongoing operations and maintenance.
ATTACHMENTS
1. Viajes California Lease Agreement