Notice of Terminating Building Lease

							                                LEMON GROVE CITY COUNCIL
                                  AGENDA ITEM SUMMARY

Item No. __4 ___ __
Mtg. Date __January 6, 2009__
Dept.     __City Manager’s Office__

Item Title:   Termination of a Lease Agreement with the San Diego East County Chamber of
              Commerce and Discussion of Alternative Uses of the Lemon Grove
              Depot/Trolley Station

Staff Contact:    Graham Mitchell, City Manager

Recommendation:

  Adopt resolution (Attachment B) terminating the lease agreement for the use of the Lemon
  Grove Depot/Trolley Station.




Item Summary:
The City and the Lemon Grove Chamber of Commerce entered into a lease agreement for the use
of the Lemon Grove Depot/Trolley Station in August 1986. The building has been used as an
office for the Chamber of Commerce.
On October 29, 2008, the Lemon Grove Chamber of Commerce merged with the San Diego East
County Chamber of Commerce. This action resulted in the East County Chamber taking on the
lease agreement.
Because the Lemon Grove Depot/Trolley Station is no longer being used by the East County
Chamber of Commerce and it is staff’s opinion that the building space is not suitable for a chamber
office, staff has prepared a resolution terminating the lease agreement with the East County
Chamber of Commerce for City Council consideration.

Fiscal Impact:
None.



Environmental Review:
   Not subject to review                                Negative Declaration
   Categorical Exemption, Section                       Mitigated Negative Declaration

Public Information:
   None                      Newsletter article         Notice to property owners within 300 ft.
   Notice published in local newspaper                  Neighborhood meeting

Attachments:
A. Staff Report
B. Resolution



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                                                                             Attachment A

                                 LEMON GROVE CITY COUNCIL
                                      STAFF REPORT
Item No.      4 ____

Mtg. Date     January 6, 2009

Item Title:   Termination of a Lease Agreement with the San Diego East County Chamber of
              Commerce and Discussion of Alternative Uses of the Lemon Grove Depot/Trolley
              Station

Staff Contact:     Graham Mitchell, City Manager

Discussion:
On August 4, 1986, the City Council adopted Resolution No. 901 approving a lease agreement
between the City and the ―Chamber of Commerce of Lemon Grove.‖ The lease is for the use of
the City-owned 570 square foot building referred to as the Lemon Grove Depot/Trolley Station
(the ―Depot‖) located at the Broadway and Main Street trolley platform.
Since entering into the lease agreement, the Lemon Grove Chamber of Commerce has used
the Depot as its offices and meeting space. During periods of greater activity, the Chamber
staffed a person at the Depot. However, in recent years, the Depot has primarily been used to
store Chamber supplies, marketing material, and equipment, and has been used as its board
meeting room. In the past year, the Depot has rarely been used by the Chamber—even board
meetings were being held at the community center.
On October 29, 2008, the Lemon Grove Chamber’s membership voted to merge with the San
Diego East County Chamber of Commerce (ECCC). The merging of the two organizations
resulted in the transfer of the lease agreement from the Lemon Grove Chamber of Commerce to
the ECCC.
Staff has met with ECCC’s President/CEO, Mike Cully, to express interest in terminating the
lease and to have an understanding of how this would impact their service to businesses in
Lemon Grove. The ECCC desires to have a storefront in Lemon Grove but does not find the
Depot a satisfactory location for its office. The ECCC is currently exploring several office
locations in the downtown area.
It is staff’s opinion that the Depot is not a suitable location for a chamber of commerce office, as
it lacks visibility and ease of access. It is staff’s recommendation that the Council consider
adopting a resolution (Attachment B) terminating the lease agreement with ECCC. If the lease
agreement is terminated, staff will provide the 90-day written notice required by the lease.
If no longer occupied by a chamber of commerce, the City has an opportunity to utilize the
Depot in a manner that either creates revenue for the City or provides the community with an
amenity it currently does not offer. The report will provide several options for consideration and
further exploration. Staff anticipates that the three ideas identified in this staff report will prompt
other ideas for discussion.
Option 1 – do not use the building for any purpose, except to store supplies needed to maintain
the building. This option results in no cost and no revenue.
Option 2 – lease the building to a commercial vendor. Staff has explored this option in the past.
In fact, on September 7, 2004, the City Council authorized the release of a request for proposals
(RFP) for the use the Depot. On December 7, 2004, the Council reviewed an analysis of four
proposed uses of the Depot. Three of the respondents to the RFP were convenience store-type




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Attachment A
operations; the other respondent was real estate office. The rents offered by the respondents
varied from $525 per month to $1,000 per month. The request for City-initiated tenant
improvements ranged from $2,000 to $12,000.
Staff’s December 2004 analysis also addressed issues related to MTS. Even though the City
owns the Depot, MTS owns the platform on which the building sits. As such, if the City leased
its building, the City would need to negotiate an agreement with MTS. One of the negotiation
points will be an expectation that MTS will receive a portion of the revenue generated from the
lease. Based on conversations staff had with MTS in 2004, the expected share MTS would
require is between 25 and 50 percent of the revenue.
Given City-initiated tenant improvements, on-going City operation costs, and sharing revenue
with MTS, according to the 2004 analysis, the City anticipated netting between $5,000 and
$9,000 annually from a lease.
If the City leased the building, one of the lease terms could be that the restroom located in the
Depot would be open for public use during hours of operation. This benefit to trolley riders may
help with negotiating a lower MTS share of revenue (given that the City is providing MTS riders
a service at its trolley station that is not offered at any of its other stations).
Option 3 – use the Depot for community promotion and for fund raising activities by local
organizations. The City does not have staff that could regularly occupy the Depot. However,
periodically, the City could open the Depot for special promotions of storm water education,
recycling education, redevelopment surveys, etc. One shortfall of this idea is that staff does not
know the percentage of users at the trolley station who are Lemon Grove residents. On most
day in which the Depot is not occupied by the City, the Depot could be used by local non-profit
and community groups to use the facility to promote their services to the community and to
operate fund-raising activities. If the City were to explore this option, very specific guidelines
would need to be established, insurance liability policies would need to be obtained, and short-
term lease agreements would need to be entered into.

Conclusion:
Staff recommends that the City Council adopt the resolution terminating the lease agreement
with the ECCC and discuss other possible uses of the Depot building for further research.




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                                                                      Attachment B
                                  RESOLUTION NO.

    RESOLUTION OF THE LEMON GROVE CITY COUNCIL TERMINATING A LEASE
   AGREEMENT BETWEEN THE CITY OF LEMON GROVE AND THE SAN DIEGO EAST
       COUNTY CHAMBER OF COMMERCE FOR USE OF THE LEMON GROVE
                        DEPOT/TROLLEY STATION



        WHEREAS, on August 4, 1986, the City Council adopted Resolution 901, approving a
lease agreement between the Chamber of Commerce of Lemon Grove and the City for the use
of the Lemon Grove Depot/Trolley Station (the ―Depot‖); and
     WHEREAS, since that time, the Depot has been used by the Lemon Grove Chamber of
Commerce as an office and conference room; and
        WHEREAS, on October 29, 2008, the Lemon Grove Chamber of Commerce merged
with the San Diego East County Chamber of Commerce (ECCC); and
       WHEREAS, the merger of the two organizations resulted in a transfer of the lease from
the Lemon Grove Chamber of Commerce to the ECCC; and
     WHEREAS, the City finds that the Depot is not a preferable site for a chamber of
commerce office; and
        WHEREAS, the City wishes to terminate the lease agreement with the ECCC; and
        WHEREAS, the lease agreement includes a 90-day termination provision; and
       WHEREAS, in that the lease agreement was entered into by authority of a resolution, it
is necessary to terminate the lease agreement by authority of a resolution.
        NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Lemon
Grove, California hereby directs the City Manager to send a notice to the ECCC terminating the
lease agreement between it and the City of Lemon Grove for use of the Depot and take any
further action necessary pursuant to the lease agreement for its termination.
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