05-13-2019 BPU RPT 07 - Laserfiche WebLink

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WATER I ENERGY ' J I F F RIVERSIDE PUBLIC UTILITIES W& PUBLIC U T I L I T I F 5 BOARD OF PUBLIC UTILITIES Board Memorandum DATE: MAY 13, 2019 ITEM NO: 7 SUBJECT: PROPOSED FIVE-YEAR GROUND LEASE AGREEMENT WITH DRIVETIME CAR SALES COMPANY, LLC FOR USE OF PROPERTY LOCATED AT 1388 SOUTH E. STREET, SAN BERNARDINO, CALIFORNIA, FOR A TOTAL REVENUE OF $832,128 DURING INITIAL FIVE-YEAR TERM ISSUE: Recommend that the City Council approve the proposed five-year Ground Lease Agreement with DriveTime Car Sales Company, LLC, of Phoenix, Arizona, for the use of the property located at 1388 South E. Street, San Bernardino, California for a total revenue of approximately $832,128 during the initial five- yearterm. RECOMMENDATIONS: That the Board of Public Utilities recommend that the City Council: Approve the five-year ground lease agreement with DriveTime Car Sales Company, LLC, of Phoenix, Arizona, for the use of the property located at 1388 South E. Street, San Bernardino, California for a total revenue of approximately $832,128 during the initial five-year term with the option of four (4) additional five-year extensions; and 2. Authorize the City Manager, or designee to execute all necessary documents, including making minor non -substantive changes, and the ability to execute the four (4) optional five-year extensions, if necessary. BACKGROUND: Riverside Public Utilities (RPU) owns a 4.2 -acre parcel of vacant land at 1388 South E Street, San Bernardino, located adjacent to the 215 Freeway south of Orange Show Road (Property). The site is shown in the aerial site map on the next page. For approximately 37 years, the Property was leased from RPU as an auto dealership, first to Holiday Oldsmobile and subsequently to Center Chevrolet, which was terminated in 2008 under its own terms. Upon Center Chevrolet's vacancy, the buildings, which were in need of repair, became a magnet for graffiti, vagrancy, and vandalism. In an effort to mitigate the various issues, RPU had the structures demolished in 2010 and the Property has remained vacant. On February 19, 2016, the Board of Public Utilities reviewed and recommended the approval of a lease with DriveTime Car Sales Company, LLC, (DriveTime) which was subsequently approved by City Council on March 22, 2016. The lease provided a 150 -day period for due diligence and permitting with the option for commencement after the City of San Bernardino issued the required construction permits. DriveTime