HomeMy WebLinkAbout06.B- Community Development RKY
Staff Report
City of San Bernardino
Request for Council Action
Date: January 23, 2017
To. Honorable Mayor and City Council Members
From: Mark Scott, City Manage4o
By: Mark Persico, AICP, C&iity Development Director
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Subject: Parking Lease Agreement for the Andreson Building located at
320 N. "E" Street (D
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Recommendation S
Adopt a Resolution of the Mayor and City Council of the City of San Bernardino,
California, approving a Parking Lease Agreement for the Andreson Building located at
320 N. "E" Street with 320 N. E Street, LLC. N
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Background
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The Andreson Building was built in 1927 and totals approximately 62,411 square feet of
office space. In 1999, the former RDA entered into a Parking Agreement with the then
owner for use of 133 parking stalls on the third floor of the Carousel Mail parking
structure. That Agreement has since expired and the building currently has no parking E
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available. Under the current code, the building is required to have 125 parking stalls.
The current property owner, Andreson Building LLC, recently entered into escrow to sell
the building to 320 N. E Street, LLC, which is a single entity LLC with Alan Stanly— the
founder of Enterprise Technology Alliance — as the shareholder. Enterprise Technology
Alliance, Inc. (ETA) is a technology company currently based in San Marcos. According
to the Company's website, ETA's focus is on Enterprise Resource Planning (ERP)
software for transportation and logistics companies. The Company has installations
covering all 50 states and over 25 countries internationally. Primary industries served E
include Pharma, big box retail, Hawaiian Island forwarding, heavy equipment hauling, air
and ocean forwarding, expedited, import/export and critical time sensitive freight.
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ETA major customers include 4 of the top 10 logistics companies in the world. The ERP
software platform has over 50,000 users online, moves over 10 billion pounds of freight
and processes over 1 million orders annually.
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6.B.a
Analysis
ETA is the type of company that is much needed within the City. Given the City's strong
performance in the logistics industry and the high pay of technology jobs, having ETA in
the City is a natural fit. Nevertheless, ETA is a relatively young company and is seeking
support from the City. Without redevelopment funding, there are limited options
available that do not involve a direct cost to the general fund. The City does, however,
have excess parking available for use in the City Hall structure. Under certain
circumstances, use of this parking could be granted to companies or industries located
in downtown, at no direct cost to the City. Staff acknowledges that while there is no y
direct cost, there is an opportunity cost of forgone revenue if the parking were leased,
There is also the cost of maintaining the parking structure, which the City currently a
incurs. �.
In 1999, parking was leased for $24 per space per month, which generated a maximum 0
of $38,304 annually ($24 X 12 months X 133 spaces). Lease rates under the new a
Agreement will be set based upon a parking study that the City will commission as part
of the overall downtown revitalization efforts. As a business incentive to this particular
start-up, staff is proposing that up to 125 parking spaces be made available for use by J
ETA or other tenants of the building for five years at no charge.. Payments will start in
the sixth year of the Agreement based upon an agreed upon rate. While there is a
potential opportunity cost to the City— in the form of lost parking revenue for the first five a
years — staff believes the long-term benefit of having a high tech, logistics firm in the 04
City outweighs the opportunity costs.
In meetings with ETA and the owner, Alan Stanly, their vision for the Andreson Building C
is to build a secure, modern, high tech, Class - A office environment catering to legal, 0�
professional services, startups and specifically women and veteran owned
businesses. ETA plans on installing full fiber optic internet service, VQIP phone E
capabilities, on-site technical services, on-site management, conference / meeting ;v
rooms on every floor, with on-site amenities on the first floor and basement. Plans are to a
incentivize complimentary professional services to foster and support the
entrepreneurial incubator environment to encourage startups and youth oriented �
business activities. If fully realized, ETA's vision would be a significant benefit to the =
City. L
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ETA currently has 20 employees with expansion plans of up to 100 additional
employees. They currently have customers in the Inland Empire. They anticipate using
approximately 1/3 of the floor area and leasing the balance of the building to start-up
technology firms and other professional office tenants. a
In order to comply with Government Code Section 53083, which went into effect
January 1, 2014, the City must disclose an economic development subsidy granted for
projects. Staff has quantified the benefits granted to ETA during the first five years of
the Parking Agreement, based upon 1999 lease rates, as a maximum of $38,000
annually. However, the actual opportunity cost is hard to quantify because there are
currently no parking charges in downtown and we cannot determine if a business would
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be willing to pay for parking. Staff believes the benefits of having 20-40 full-time
employees working for a technology company focused on the logistics industry is a
natural fit for the City of San Bernardino. While the City will realize no new tax revenue
from this subsidy, having a technology company in a renovated historic structure in the
City is a benefit that will help start the revitalization of the downtown core. These
benefits override the opportunity cost of potentially renting the parking spaces for the
next five years
There are no fiscal impacts for the initial five-year period. Starting in year six, the
general fund will receive revenue based upon the negotiated lease rates. The marginal
cost to maintain the parking structure for ETA during the initial five years is minimal
because the City is already maintaining the structure for general public use.
Conclusion
ETA is ideally positioned to be a true asset for the City. While there is a measurable
opportunity cost of not charging for leased parking, staff supports the Parking
Agreement. This Agreement is specific to ETA and 320 N. E Street, LLC; if escrow does
not close, the Parking Agreement is null and void.
Attachments
Attachment 1 Resolution
Attachment 2 Parking Agreement
Ward: 1
Synopsis of Previous Council Actions:
Additional Backup
MCC 1/23/17 - item 6.B.a
Packet Page 106 A
6.B.b
1 RESOLUTION NO.
2 RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
3 BERNARDINO APPROVING A PARKING AGREEMENT BETWEEN THE CITY
AND 320 N. E STREET, LLC FOR USE OF 125 UNRESERVED PARKING STALLS
4 IN THE CITY HALL PARKING STRUCTURE c
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6 WHEREAS, Enterprise Technology Alliance, Inc. (ETA) is wishing to relocate to the Q
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7 City of San Bernardino; and E
8 WHEREAS, Alan Stanly is founder and President of ETA and the sole shareholder of Q
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320 N. E Street, LLC, which is currently in escrow to purchase the Andreson Building located
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at 320 N. "E" Street; and
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12 WHEREAS, Through the purchase of the Andreson Building, ETA and 320 N. E N
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13 Street, LLC have plans to refurbish the historic structure and make the building a Class A
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14 professional office building; and 0
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WHEREAS, ETA is a start-up technology firm currently doing business in the Inland
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Empire and is focused on the logistics industry; and w
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18 WHEREAS, ETA is a good fit for the City based upon our strong performance in the
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19 logistics sector and the high wages of technology firms; and
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20 WHEREAS, the City Hall parking structure is underutilized and has excess parking
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21 capacity currently and into the future. c
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23 NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COUNCIL OF
24 THE CITY OF SAN BERNARDINO AS FOLLOWS: E
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SECTION 1. The Mayor and City Council hereby approve the Parking Lease
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27 Agreement with 320 N. E Street, LLC, and authorize and direct the City Manager to take such
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6.B.b
1 steps necessary to execute the Agreement, including but not limited to the making of clerical
2 or non-substantive revisions to the Agreement as may be necessary to effectuate its intent.
3 SECTION 2. In order to comply with Government Code Section 53083, the Mayor
4and City Council finds that ETA located at 320 N. E Street, San Bernardino, California, 92418 0
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will benefit from the five years of free parking that commences on the effective date of the
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Parking Agreement and ending five years thereafter. The subsidy is in the form of free 0
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8 parking representing an opportunity cost to the City, which based upon 1999 lease rates, is a Q
9 maximum of $38,000 annually. However, the actual opportunity cost is hard to quantify
10 because there are no parking charges in downtown and the City cannot determine if a business c
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11 would be willing to pay for parking. The benefits of having 20-40 full-time employees a
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working for a technology company focused on the logistics industry is a natural fit for the
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14 City of San Bernardino. While the City will realize no new tax revenue from this subsidy,
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15 having a technology company in a renovated historic structure in the City is a benefit that will
16 help start the revitalization of the downtown core. These benefits override the opportunity cost v
17 of potentially renting the parking spaces for the next five years.
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SECTION 3. Approval of the Parking Lease Agreement is not considered a project
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20 under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines
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21 Section 15378(a).
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22 SECTION 4. If any section, subsection, subdivision, sentence, or clause or phrase in a
23 this Resolution or any part thereof is for any reason held to be unconstitutional, invalid or
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ineffective by any court of competent jurisdiction, such decision shall not affect the validity or M
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26 effectiveness of the remaining portions of this Resolution or any part thereof. The Mayor and
27 Common Council hereby declares that it would have adopted each section irrespective of the
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6.B.b
1 fact that any one or more subsections, subdivisions, sentences, clauses, or phrases be declared
2 unconstitutional, invalid, or ineffective.
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6.B.b.
1 RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN
BERNARDINO APPROVING A PARKING AGREEMENT BETWEEN THE CITY
2 AND 320 N. E STREET, LLC FOR USE OF 125 UNRESERVED PARKING STALLS
IN THE CITY HALL PARKING STRUCTURE
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I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
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6 and City Council of the City of San Bernardino at a a
7 meeting thereof, held on the day of , 2017, by the following vote, E
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8 to wit. Q
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Council Members: AYES NAYS ABSTAIN ABSENT
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11 MARQUEZ L
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12 BARRIOS N
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13 VALDIVIA =
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14 SHORETT c
15 NICKEL
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RICHARD
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18 MULVIHILL
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20 Georgeann Hanna, CMC, City Clerk
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The foregoing Resolution is hereby approved this day of , 2017. S
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24 R. Carey Davis, Mayor
25 City of San Bernardino Q
26 Approved as to form:
Gary D. Saenz, City Attorney
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28 By:
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6.B.c
PARKING LICENSE AGREEMENT
(ANDRESON BUILDING)
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This Parking License Agreement("Agreement") is made on , 201'7
("Effective Date"),by and between the City of San Bernardino ("City") and 32o N. E Street, a
LLC ("Licensee"). The parties to this Agreement are collectively referred to herein as the 0
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"Parties" and individually as a"Party." This Agreement is made with respect to the facts set
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forth in the Recitals below: Q
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— RECITALS — c
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A. The City owns a three-level parking structure located at property in the CityCO
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known as the Carousel Mall ("Mall Structure") and a five-level parking structure located to
the south of City Hall ("City Hall Structure"). d
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B. Licensee owns or is in escrow to acquire a 62,411 square foot commercial
office building located at 32o North"E" Street in the City, referred to as the Andreson Q
Building. The Andreson Building has no or virtually no on-site parking. However, the Y
Andreson Building is adjacent to the Mall Structure and within walking distance of the City a
Hall Structure.
C. Licensee wishes to secure parking for occupants and invitees of the Andreson a
Building within the Mall Structure to the extent available, and to the extent not available,
within the City Hall Structure.
D. The City's Development Code ("Code") requires that new and expanded land
uses in the land use zone and transit overlay district in which the Andreson Building is
located provide one on-site parking space for every 500 square feet of floor area. Code
Section 19.62.030 provides that a nonconforming use which lawfully existed prior to the
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effective date of the Code,but which is no longer permitted in the zone in which it is located,
may continue subject to certain requirements. These requirements include that additional E
development of the property shall require that new uses conform to the Code, and that a o
nonconforming once converted to a conforming use may not be resumed. As a legal Q
nonconforming use,the Andreson Building may continue to operate without providing on-
Packet Pg. 111
site parking as would otherwise be required, subject to the Code requirements for a legal
nonconforming use.
—AGREEMENT— c
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1. License of Parking Spaces. L
Commencing on the Effective Date of this Agreement, Licensee shall be a
licensed on a non-exclusive basis to use the number of undesignated, non-reserved parking
spaces specified in Section 2(c) in the Mall Structure and,to the extent that number of L
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spaces are or may become unavailable at the Mall Structure, a sufficient number of such Q
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spaces at the City Hall Structure to provide Licensee with a total of the number of spaces a
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specified in said Section. The spaces provided may be at one structure, or the other, or =
divided among the two. The terms non-exclusive, undesignated, and non-reserved
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mean that the City will not, while this Agreement is in effect, assign to or reserve for third
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parties, on an exclusive basis, a number of spaces at the two structures that would result in
fewer than the number of spaces specified in Section 2(c) remaining unassigned among the
two structures,but do not mean that the City warrants or guarantees that said number of d
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spaces will remain free of vehicles and available to occupants and business invitees of thetM
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Andreson Building at any given time. Licensee acknowledges and understands that the
undesignated, non-reserved spaces at the Mall Structure and City Hall Structure are a
currently and may continue to be open for use by the general public, and that demand for =
those spaces may exceed the number of spaces available at any given time. a
2. Term of Agreement and Number of Spaces.
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}) (a) The initial term of this Agreement shall be five years following the
.� Effective Date of this Agreement ("Initial Term"). Q
(b) After the Initial Term, Licensee may, with the consent of the City, opt
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to extend the term of this Agreement for up to four additional five-year periods, for a total -'
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maximum term of 25 years counting the Initial Term and all optional extensions. Licensee L
shall notify the City in writing of Licensee's exercise of each option to extend not later than a
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18o days before the expiration of the then current term of this Agreement.
(c) At the time of the exercise by Licensee of the first of its options to
extend under Section 2 (b), Licensee shall specify the number of spaces it wishes to be Q
licensed to use for the twelve (12) months beginning with the first day of the extended term,
up to a maximum of 125. Licensee shall follow the same procedure at the end of said twelve
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6.B.c
(12) months period, and at the end of each ensuing twelve (12) months for the term of this
Agreement. At the time Licensee makes such specification of the number of spaces
requested,the Parties shall agree upon the amount to be paid by Licensee for the use of the
spaces, as set forth in Section 3(b). IF
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(d) The City's consent to extension and its agreement to license to L
Licensee the number of spaces requested by Licensee shall not be unreasonably withheld, Q
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but may be withheld if the City determines the number of spaces requested will not be 4)
available during the period for which the spaces are requested. L
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3. Payment. a
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(a) For the Initial Term, Licensee shall be licensed to use 125 spaces, on
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the terms set forth in Section 1, at no cost. The City's agreement to this provision is in =
consideration of the current occupancy level of the Andreson Building, Licensee's intent to
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relocate the business operations of itself and/or its affiliate(s)to downtown San Bernardino,
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and the anticipated economic benefit to the City and its residents of such relocation. CO
Licensee therefore agrees that the City shall have no obligation to extend the no-cost C
parking provision of this Section 3(a)to any transferee of the Andreson Building, and that
any such transferee who wishes to be licensed to use parking spaces in the Mall Structure or a
City Hall Structure will be required to comply with Section 3(b) of this Agreement,
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beginning immediately upon the transfer of title. Licensee further agrees to advise any such a
transferee of the provisions of this Section 3(a) in advance of such transfer.
(b) Following the Initial Term, Licensee shall pay the City a monthly fee Q
for the use of the number of parking spaces which it is licensed to use under this Agreement.
The monthly fee shall be agreed upon by the Parties at the time of the exercise by Licensee
of the first of its options to extend under Section 2 (b) and every twelve (12) months
thereafter for the term of this Agreement. The fee shall be negotiated in good faith so as to
be substantially equivalent to the prevailing market rate,based upon a parking study
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performed by the City. At the end of the initial 12 months following the Initial Term, and L
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every 12 months thereafter,the monthly fee shall be adjusted by the percentage increase or a
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decrease in the Consumer Price Index for Los Angeles-Riverside-Orange Counties, CA
during the preceding 12 months, as published by the U. S. Department of Labor, Bureau of
Labor Statistics. a
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6.B.c
(c) Payment shall be remitted on the first business day of each month to
the City at the address set forth later in this Agreement or at such other address as may later
be designated by the City.
(d) Where payment is required under this Agreement, Licensee shall pay c
for the number of spaces it is licensed to use each year,whether or not Licensee actually L
needs or uses that number of spaces. a
4. Licensee's Right of Assignment. Licensee may assign to occupants of the
Andreson Building and their business invitees the right to use any of the parking spaces L
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licensed to Licensee under this Agreement. With the consent of the City, which shall not be d
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unreasonably withheld, Licensee may assign any or all of its rights under this Agreement to a
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a purchaser of the Andreson Building, except the right to be licensed to use spaces at no cost
during the Initial Term, as stated in Section 3(a). All persons using parking spaces licensed M
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to Licensee under this agreement must agree in writing to comply with all terms of this
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Agreement and with all applicable rules, regulations, City of San Bernardino Municipal
Code provisions, and other provisions of law governing the use of the spaces.
5. Limitation on Duration of Parking. Licensee shall not allow any parking 0
space licensed to Licensee under this agreement to be used by the same vehicle for more a
than 72 consecutive hours. _
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6. Nonexclusive Right. Licensee's right to use parking spaces in the Mall a
Structure and City Hall Structure shall be on a non-exclusive basis. Nothing in this
Agreement precludes the City from licensing such spaces to third parties, so long as at least a
the number of spaces licensed to Licensee remain unassigned among the two structures, or
from designating any such spaces for use by the public.
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7. Closure of Facilities. The City shall have the right, on 3o days' notice,to Q
close the Mall Structure or City Hall Structure, or both,temporarily to make necessary
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repairs or modifications or for such other purposes as may be reasonably required. Closure
may be on less notice in the event of emergency or other non-foreseeable need for repair. In L
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addition, Licensee acknowledges and understands that the City is in the process of a
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redevelopment of the Carousel Mall and that such redevelopment may cause the permanent
closure of the Mall Structure. Permanent closure of both the Mall Structure and the City
Hall Structure for any reason shall terminate this Agreement. Q
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6.B.c
8. Eminent Domain. If any part of the Mall Structure or the City Hall
Structure is taken by eminent domain,the compensation for such taking shall belong to the
City, except for relocation expenses paid or awarded to Licensee.
9. Loss or Destruction. Loss or destruction of any of the parking spaces o
licensed to Licensee under this Agreement shall terminate this Agreement as to those
spaces,without liability on the part of either of the Parties. a
io. Possessory Interest Tax. The property interest created by this Agreement
may be subject to property taxation, and Licensee may be subject to the payment of property a
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taxes levied on the interest. Licensee agrees to pay when due any possessory interest tax Q
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that is levied on Licensee's right to the use of parking spaces under this Agreement.
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ii. Indemnity. Licensee agrees to defend, indemnify and hold harmless the
City against all claims and any loss,liability, or damage of whatever nature arising out of or
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in any way relating to Licensee's use or occupancy of parking spaces pursuant to this
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Agreement. 00
12. Insurance. Licensee shall maintain the following policies of insurance
throughout the term of this Agreement:
(a) Commercial general liability coverage, including coverage for assumed a
contractual liability under this Agreement, of at least $2 million aggregate per occurrence. _
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The City and its elected officials, officers, employees, and agents must be named as a
additional insureds. Coverage must protect against claims for bodily injury, personal injuryN
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j and property loss or damage based upon, involving or arising out of the use or occupancy of w
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any of the parking spaces licensed to Licensee under this Agreement. Coverage shall be on
an occurrence basis. The policy shall not contain any intrainsured exclusions as between
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insured persons and organizations, and the insurer shall waive subrogation as against the Q
j' City. Coverage shall be primary to and not contributory to any insurance carried by the City.
? Any and all City insurance shall be considered excess insurance only. Coverage shall not be
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subject to cancellation or modification except on at least 3o days' notice to the City. Y
(b) If and to the extent required by law, Licensee shall maintain workers' a
compensation or similar insurance in the form and amounts required by law. E
Insurers providing coverage shall be qualified to do business in California and shall
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maintain during the term of the policy an A.M. Best Financial Strength Rating of at least A Q
and a Financial Size Category designation of at least V. Satisfactory evidence of coverage
must be provided to the City before this Agreement will become effective.
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13. Default and Cure. Failure to perform, or material delay in performing, any
material term of this Agreement shall constitute a default. The defaulting Party shall have
thirty(3o) days after notice of default to cure the default and pay any consequential
damages to the Party damaged by the default. If the default is not timely cured, the non- o
defaulting Party may, at its option,terminate the Agreement and seek all available legal L
remedies. a
14. No Waiver. Delay by a Party in asserting or failure to assert any right or
remedy under this Agreement or provided by law shall not constitute a waiver of said right L
or remedy. a
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15. Entire Agreement. This Agreement is the entire agreement of the Parties a
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concerning the matters addressed herein and supersedes all prior and contemporaneous =
expressions, discussions, negotiations, or agreements with respect to those matters. CO
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16. Approvals. This Agreement shall not be signed on behalf of the City, and
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shall not be effective, until the City Council of the City, also referred to as the CommonCO
Council("Council") has approved the Agreement on behalf of the City.
17. Modification, This Agreement can only be modified in a writing signed by
all Parties. Any modifications must be approved in writing by the Council. a
18. Choice of Law;Venue. This Agreement and its interpretation shall be c
governed by the law of the State of California including, as applicable,the City of San a
Bernardino Municipal Code. Venue for any legal action arising out of this Agreement shall
be in the Superior Court of the State of California for the County of San Bernardino. a
19. Interpretation. Neither of the Parties shall be considered to have drafted
this Agreement, for purposes of the rule that ambiguity in an agreement shall be construed
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against the drafting party. Q
20. Severability. If any provision of this Agreement is declared by a court or
other entity of competent jurisdiction to be invalid or otherwise unenforceable, all
remaining provisions not affected by said declaration of invalidity or unenforceability shall L
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be fully enforceable. a
21. Additional Documents. The Parties agree to execute such additional
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documents as may be required to effectuate the provisions of this Agreement. U
22. Authorization. Each of the Parties certifies that the individual executing a
this Agreement on its behalf has the authority to do so.
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23. Notices. Notices or other communications under this Agreement shall be in
writing and shall be deemed to have been properly given on the day delivered in person, or
seven (7) days after deposit in the United States Mail, postage prepaid, certified with return
receipt requested. Notices shall be given at the following addresses: c
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City:
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City of San Bernardino a
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Office of the City Manager a
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30o North`D' Street, Sixth Floor
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San Bernardino, CA 92418
Attn: City Manager
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Licensee:
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32o N. E Street, LLC
Dillon Gerardi Hershberger Miller&Ahuja, LLP Q
5872 Owens Avenue, Suite 200
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Carlsbad, California 92008 a
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Either Parry may change its address for purposes of notice under the Agreement by giving Q
notice to the other Parry in accordance with this Section 23.
24. Counterparts. This Agreement may be executed in counterparts, each of 0
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which shall be deemed to be an original. Q
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CITY OF SAN BERNARDINO a,
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By: Date: , 2017 °-
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Title:
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6.B.c
32o N. E STREET, LLC
By: Date: 12017
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APPROVED AS TO FORM: E
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Gary D. Saenz, City Attorney
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By: J
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01/23/2017
MAYOR AND COMMON COUNCIL
January 23, 2017
Item: 613
Resolution Approving
Parking Lease Agreement—Andreson Building
320 N. E Street
fi Community Development Department
San Bernar ino
Project Overview:
1. Historic 1927 Andreson Building with 62,400 square feet of space
2. 1999 former RDA lease agreement at$24 per stall(Expired)
3. Under current code 125 spaces required
4. Building for sale at least three years
5. Enterprise Technology Alliance(ETA)wishes to relocate to San Bernardino
6. Five years of free parking
7. City to conduct Downtown Parking Study/Parking Management Plan
8. Four,five year options paid at then current rent
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01/23/2017
Company Overview:
1. Enterprise Technology Alliance,Inc.(ETA)
2. San Diego based technology company focused on logistics
3. Currently 20 employees growing to 100 employees
4. Working with Inland Empire logistics firms
5. Covering all 50 states and 25 countries
6. Working with 4 of top 10 logistics firms
Economic Development Subsidy:
1. Compliance with Government Code Section 53083
2. Benefits exceed opportunity cost of potential lost revenue
3. Creating high paying technology jobs in City
4. Company natural fit for San Bernardino
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01/23/2017
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01/23/2017
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Staff Recommendation:
1. Determine Lease Agreement is exempt from CEQA
2. Approve Parking Lease Agreement with 320 N. E Street, LLC
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