HomeMy WebLinkAboutPortola Community Center Lease Rate Reduction and Leasing of Office SpaceCITY OF PALM DESERT
SPECIAL PROGRAMS DEPARTMENT
STAFF REPORT
REQUEST: Approve Lease Rate Reduction and Leasing of Office Space to Palm
Desert Historical Society and Palm Desert Sister Cities Foundation and
Provide Direction as to Facility Operation Costs of Portola Community
Center
SUBMITTED BY: Frankie Riddle, Director of Special Programs
DATE: August 23, 2012
CONTENTS: Summary of Rental Survey
The Public Records Article, Volume 36, Edition No. 28
Letter from the Palm Desert Historical Society
Recommendation
By Minute Motion:
1. Approve decreasing lease rate from a $1.50 per square foot per month to $1.00
per square foot per month;
2. Approve leasing an additional office space at the Portola Community Center to the
Palm Desert Historical Society for $1.00 per year;
3. Approve leasing an office space at the Portola Community Center to the Palm
Desert Sister Cities Foundation for $1.00 per year;
4. Approve a 30-day notice to terminate leases at such time as Portola Community
Center office spaces are required for organizations able to pay in full for office
space(s); and
5. Establish a subcommittee to review facility operation and costs of Portola
Community Center as outlined in Issue No. 4.
Discussion
Included in this staff report are four issues for City Council consideration as follows:
Issue No. 1: Lease Rate Reduction
Since Friends of the Desert Mountains relocated their offices in June 2011, there continues to
be five (5) vacant offices at the Portola Community Center. With the economic downturn, office
space lease rates have dropped significantly resulting in office space rates of $.90 to $1.50 per
square foot according to the attached sources of information. Given that the current rate at the
Portola Community Center is significantly higher than that in the open market, staff has not
received any inquiries on the vacant offices, despite advertising the vacant office spaces
through various means. Therefore, staff is requesting that City Council consider reducing the
Portola Community Center's lease rate to be more consistent with the open market.
The Portola Community Center is an older building that lacks certain modern conveniences
such as internet capability in all offices, cable, etc. Additionally, the building's interior/exterior
has not been renovated to provide a more modern aesthetically appealing look and feel that
potential occupants want when relocating to new offices. Just as important is the fact that a
majority of the offices are quite small (e.g., 130 square feet) which limits use. As a result of
STAFF REPORT
PORTOLA COMMUNITY CENTER
AUGUST 23, 2012
PAGE 2
these combined issues, staff recommends that the Portola Community Center's lease rate be
reduced from $1.50 per square foot per month to $1.00 per square foot per month including
Common Area Maintenance (CAM) charges, which is currently included in the $1.50 rate. In
addition, it should be noted that only non-profit 501(c)(3) organizations are authorized to lease
space at the building and such organizations have been hit quite hard with fewer donations,
grants, and other general funding sources. Many of these organizations are struggling to keep
their doors open and are looking for assistance to offset operational expenses.
Issue Nos. 2 and 3: Rental of Office Space as Storage Space
In 2008, the City approved leasing two (2) office spaces to the Palm Desert Historical Society to
be used for storage and office space for $1.00 each per year. Currently, the two offices are
being primarily utilized as storage space. Recently the Palm Desert Historical Society
approached the City to address its need for additional storage space. In addition, the Palm
Desert Sister Cities Foundation has also approached the City to address its need for storage
space. Unfortunately, the City has minimal space to provide to organizations looking for storage
space. The only available space that could be utilized for these purposes is at the Portola
Community Center; however, staff is concerned that allowing additional office spaces to be
utilized for storage will basically turn half of the useable offices into storage space. However, if
City Council approves the organizations requests to utilize the current vacant office space at the
Portola Community Center for storage, the City could stipulate within the agreements that at
such time as the facility is in demand and office space is needed, both agencies will vacate
upon issuance of a 30-day notice.
Issue No. 4: Facility Operation Costs
Staff is also concerned that while current annual operating expenses have remained basically
the same at approximately $60,000 - $70,000 per year, revenues have dropped (and will
continue to drop) as a result of the vacant offices, the two offices leased at $1.00 per year, and
if approved, the reduction in the lease rate and additional offices leased at $1.00 per year. In
light of this, following is a basic outline of the expenses and current operation of facility.
Currently the City pays for all utilities, landscaping, and maintenance for the facility.
Additionally, the City contracts with the Desert Recreation District to provide staffing (one
Facility Coordinator) and minor janitorial services at the Center. Facility operation is Monday
through Friday from 8:30 a.m. to 8:30 p.m.; however, the Facility Coordinator generally leaves at
5:00 p.m. and Senior Recreation Leaders oversee the facility and its users until 8:30 p.m., as
needed. Organizations interested in utilizing the facility before or after the hours noted above,
as well as on Saturdays, are charged a $13.00 per hour fee. As such there is very little after
hours use. However, Toast Masters does utilize the facility once a week from 7:00 a.m. to 8:30
a.m. at $13.00 per hour. It should be noted that the $13.00 per hour fee does not cover the cost
to keep the facility open before or after regular operating hours.
Based on the above, staff recommends that Council form a subcommittee to review facility
operation and costs.
Fiscal Analvsis:
Although reducing lease rates will have a negative fiscal impact, contrarily, it could also have a
positive affect by allowing organizations the opportunity to lease space at a more affordable
rate, thereby filling the vacant office space(s). In addition, leasing of office spaces at $1.00 per
year to the Palm Desert Historical Society and the Palm Desert Sister Cities Foundation would
STAFF REPORT
PORTOLA COMMUNITY CENTER
AUGUST 23, 2012
PAGE 3
have a negative impact as a result of lower rents received; however, if required to vacate when
demand occurs, this should be mitigated.
Submitted By:
Frankie Riddle, Dire Special Programs
RevirJ4
. Paul Gibson, Director of Finance
proval:
Wohlmuth, City Manager
CTTY COUNCIL AC OM
APPROVED DENIED
RECEIVED OTHER
AYES: irT�U1b.i.l�L1�
NOES:
ABSENT:
ABSTAIN:
VERIFIED BY:
Original on File with Ci Jerk's Office
* Approved all recommendations, with 05)
Councilmember Benson, Mayor Spiegel
appointed as the subcommittee. 5-0
SUMMARY OF RENTAL SURVEY
Item
Property Asking Price
Negotiation Range
1
73-733 Fred Waring (Across from Parkview)
$1.75
$1.25—$1.50
(Morning Star Plaza)
2
73-585 Fred Waring (Across from City Hall)
$1.75
$1.25—$1.50
(Oracle Building)
3.
73-321 Fred Waring (Across from COD Driv. Rnge)
$1.50
$1.25—$1.50
4.
73-271 Fred Waring (Across from PD Library)
$1.25
$1.00—$1.25
5.
73-161 Fred Waring Drive (Across from McCallum
$1.25
$1.25
Theatre & COD)
6.
73-061 Fred Waring Drive (Across from McCallum
$1.90
$1.90
Theatre--- (Fox Building)
7.
44-100 Monterey (SEC Monterey & Fred Waring)
$1.25
$1.00—$1.25
(Fred Waring Building)
(Mod Gross)
8.
72-925 Fred Waring (SEC Fred Waring & Acacia)
$1.35
$1.00—$1.25
(Acacia Building)
9.
72-855 Fred Waring (Across Adonis Dr)
$1.15
$1.00—$1.15
(Mesa Building)
The Historical Society of Palm Desert
is very thankful to the city council for allowing us to use the
Portola Community Center in two important ways:
1) As a meeting place for community activities we wish to hold.
Just this past month about 5o members and guests gathered therefor our
fourth annual summer potluck.
During the season, we invite all folks to attend our fourth -Friday of the month'
meetings at 7: oo p.m.
2) As air-conditioned storage space, where we currently occupy two rooms, the
office in the s/w corner and the first office to the right along the hallway.
As space is limited at the firehouse, we have been storing many items of
historical interest in the `Scout house, our term for the small building (not air-
conditioned) in the s/w corner of the parking lot. Wishing to move these contents to
the Portola offices, and having recently acquired some strong metal shelving, I chatted
with Frankie Riddle (Special Programs) about the possibility of switching the larger
fi-ont office for two smaller hall offices. I thought the larger office might rent out more
easily, and though it would involve a move on our part, some additional storage
footage would make the effort worthwhile.
This is where we now stand. John Wohmuth (City Manager) has suggested the
council provide direction in how the Portola facility is to be used, for storage or office
or both. Thank you for your consideration. Don Graybill ( new HS president)
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