Staff Report/Resolution Approving Amendment 1 to the Livingston Senior Citizens Center Lease at 420 Main Street and Authorizing the Interim City Manager to Execute the Amendment.

STAFF REPORT

AGENDA ITEM: Approve Resolution 2011-_, a Resolution Approving Amendment 1 to the Livingston Senior Citizens Center Lease at 420 Main Street and Authorizing the Interim City Manager to Execute the Amendment.

MEETING DATE: July 19, 2011

PREPARED BY: Jasmin Bains, Senior Accountant

REVIEWED BY: Victoria Lewis, Interim City Manager

RECOMMENDATION:

Approve Resolution 201 1-_, a Resolution approving Amendment I to the Livingston Senior Citizens Center lease at 420 Main Street and authorizing the Interim City Manager to execute the Amendment.

BACKGROUND:

On June 30, 2000, the Merced County Community Action Agency Board ("Merced County") entered into a lease agreement with the City of Livingston agreeing to lease the previously known Livingston Recreation Center at 633 Main Street. Merced County used the building for the Cherish Program. In May 2007, the Livingston Recreation Center was transformed into the present City Council Chambers and the Cherish Program was moved to a new Senior Citizens Center at 420 Main Street. In order to provide this building to Merced County, the City of Livingston entered into a lease agreement with the Sapien Family Trust, agreeing to lease the building from the Trust for four (4) years.

The four year lease agreement between the City of Livingston and the Sapien Family Trust in the amount of $1,000 per month was up for renewal June 2011, and a 60-day notice was required if the City wanted to terminate the lease. The City may renew the lease for an additional three (3) years. The lease with the Sapien Family Trust states that if the City decides to exercise the 3 year option the rent will increase by an amount equal to the Consumer Price Index ("CPI") not to increase less than 3% nor greater than 5% at the commencement of each applicable year (Section 3.1) beginning in 2013. During the first year the lease amount could increase from $1,000 per month to a range of $1,030 to $1,050 based on the minimum and maximum percentage increases of 3% and 5%. Based on the correspondences received from Merced County they are unable to augment the County’s contribution towards this service, resulting in the City contributing the amount of the annual increases in addition to its $600 per month portion.

Under the Lease agreement between the City and Merced County, the City receives $400 per month in rent. The lease agreement with Merced County requires the City to provide a 30-days notice prior to the end of the yearly term (July I S’) in order to terminate the agreement.

DISCUSSION:

Pursuant to City Council direction, Staff has been in negotiations with the Sapien Family Trust to amend the lease agreement. As stated above, the current lease would require the City to renew the agreement for 3 years and be responsible for all maintenance to the facility. The attached amendment will change these provisions. 

The attached amendment will I) renew the lease for one year and on a month to month basis thereafter; 2) authorize the City to terminate the lease by providing the Sapien Family Trust 30 days notice; 3) the Sapien Family Trust and the City will now split those costs at 50% each and 4) the Sapien Family Trust will be responsible for fixing the roof of the facility.

ENVIRONMENTAL:

The activity is covered by the general rule that CEQA applies only to projects, which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not covered by CEQA. Renegotiating the terms of a lease is not a project subject to CEQA (CEQA Guidelines 15061 b 3).

FISCAL IMPACT:

On a month to month basis, the City would continue to pay monthly rent of $1,000 to the Sapien Family Trust and receive $400 per month from the Merced County Community Action Agency Board for use of the Senior Citizens Center building for the Cherish Program.

ATTACHMENTS:

1. Resolution 2011- _, a Resolution Approving Amendment 1 to the Livingston Senior Citizens Center Lease at 420 Main Street and Authorizing the Interim City Manager to Sign the Amendment

Exhibit A – Amendment No. 1

2. Agreement between the City of Livingston and the Sapien Family Trust.

3. Agreement between the City of Livingston and the Merced County Community Action Agency

Board.

1675582.1

RESOLUTION NO. 2011-

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LIVINGSTON

APPROVING AMENDMENT 1 TO THE LIVINGSTON SENIOR CITIZENS CENTER
LEASE AND AUTHORIZING THE INTERIM CITY MANAGER TO

EXECUTE THE AMENDMENT

WHEREAS, the City Council authorized the former City Manager to enter into a lease agreement with the Sapien Family Trust ("Sapien Trust") in May 2007 for the Senior Citizens Center located at 420 Main Street; and

WHEREAS, the four year lease agreement between the City of Livingston and the Sapien Trust in the amount of $1,000 per month was up for renewal June 2011 and the City chooses to renew the lease on a month to month basis; and

WHEREAS, the City has been responsible for all maintenance to the facility but the Landlord and City will now split those costs at 50% each and the Landlord will be responsible for fixing the roof of the facility; and

WHEREAS, the attached amendment will 1) renew the lease for one year and on a month to month basis thereafter; 2) authorize the City to terminate the lease by providing the Sapien Family Trust 30 days notice; 3) the Sapien Family Trust and the City will now split those costs at 50% each; and 4) the Sapien Family Trust will be responsible for fixing the roof of the facility; and

WHEREAS, the activity is covered by the general rule that CEQA applies only to projects, which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not covered by CEQA. Renegotiating the terms of a lease is not a project subject to CEQA (CEQA Guidelines 15061 b 3).

NOW, THEREFORE, BE IT RESOLVED, the City Council adopts Resolution 2011-_, a Resolution Approving Amendment 1 to the Livingston Senior Citizens Center Lease at 420 Main Street and Authorizing the Interim City Manager to execute the Amendment in substantially the form attached hereto as Exhibit A.

Passed and adopted this 19th day of July 2011, by the following vote:

AYES:

NOES:

ABSENT:

Rodrigo Espinoza, Mayor
of the City of Livingston

Page 1 of 2

ATTEST:

I, hereby certify that the foregoing resolution was regularly introduced, passed and adopted at a regular meeting of the City Council of the City of Livingston this 19th day of July, 2011.

Antonio Silva, City Clerk

of the City of Livingston

1675584.1

Amendment NO. 1

RELATED TO THE LIVINGSTON SENIOR CITIZENS CENTER LEASE
AGREEMENT FOR 420 MAIN STREET

THIS AMENDMENT, hereinafter referred to as "AMENDMENT NO. 1", is made and entered into this 19th day of July, 2011, by and between the City of Livingston, a municipal corporation, hereinafter referred to as "CITY", and the Sapien Family Trust, hereinafter referred to as "SAPIEN TRUST".

W I T N E S S E T H:

WHEREAS, CITY and SAPIEN TRUST have entered into a Lease Agreement, hereinafter referred to as "AGREEMENT," for the lease of 420 Main Street dated May 15, 2007 wherein SAPIEN TRUST agrees to lease 420 Main Street to CITY for use as a senior citizens center in the City of Livingston, hereinafter referred to as "CENTER,"; and

WHEREAS, CITY and SAPIEN TRUST have agreed to extend the lease on a month to month basis and modify provisions related to the maintenance and upkeep of the CENTER as provided for in this AMENDMENT NO. 1; and

WHEREAS, all of the terms, conditions and covenants of the AGREEMENT shall remain in full force and effect.

NOW, THEREFORE, the CITY and the SAPIEN TRUST agree to amend the AGREEMENT as follows:

Section 1, Term

Section 2, Term, of the AGREEMENT is amended as follows:

The AGREEMENT shall end on July 31, 2012, with an option to extend on a month to month basis. CITY may terminate the AGREEMENT at any time and without cause upon thirty (30) days’ written notice to the SAPIEN TRUST.

Section 2, Rental Terms

Section 3 of the AGREEMENT, Rental terms, is amended as follows:

CITY will pay to SAPIEN TRUST as rent without offsets, deductions, or abatement, the sum of $1,000 per month ("Base Rent") in advance on the first day of each month commencing on August 1, 201 1_, and continue thereafter during the term of the AGREEMENT.

Amendment 1 to Lease Agreement between Page 1 of 2

City and Sapien Family Trust

Section 3, Option Term

Section 3.1, Option Term, is amended as follows:

Provided that CITY is not in default, at the end of the term of the AGREEMENT (July 31,2012), the CITY shall have the right to extend the term of the AGREEMENT on a month to month basis. All terms and conditions of the AGREEMENT and any amendments shall continue into the option period with the exception of rent. The amount of rent shall be increased at the commencement of each applicable year beginning in 2013 by multiplying the Monthly Rent payable during the immediately preceding one-year period by an amount equal to Consumer Price Index ("CPI"); provided that in no event shall the percentage increase be less than Three Percent (3%) per year, nor more than Five Percent (5%) per year.

Section 4, Maintenance and Repairs

Section 10, Maintenance and Repairs, is amended as follows:

CITY agrees to take the property "as is" except for alterations to be furnished by the SAPIEN TRUST as outlined in this AGREEMENT. CITY acknowledges that the  premises are in good and safe condition and agrees to maintain the premises in good and safe condition, including but not limited to interior and exterior surfaces or walls, windows, plated glass, doors, plumbing, electrical, ceilings and all fixtures or equipment installed by CITY or existing fixtures or equipment. CITY promises to surrender the premises at termination of this lease in the same condition as received, except for normal wear and tear. Unless authorized by the SAPIEN TRUST in writing, CITY will make no repairs at the expense of SAPIEN TRUST. SAPIEN TRUST shall be solely responsible for roof repairs or replacement. The CITY and SAPIEN TRUST shall share the cost of all other repairs on a 50-50 basis.

000

IN WITNESS WHEREOF, the CITY has caused this AMENDMENT NO.1 to be executed and SAPEIN TRUST has caused this AMENDMENT NO. 1 to be executed, all as of the day and year first above written.

City of Livingston Sapien Family Trust

By: By:

1675577.1

Amendment 1 to Lease Agreement between Page 2 of 2

City and Sapien Family Trust

From:MCCAA ACCOUNTING FAX 209+724+9527 0110612011 14:10 #568 P.0021006

LEASE AGREEMENT

THIS AGREEMENT is executed this 30th day of June, 2000, by and between City of

Livingston, a Municipal Corporation in the State of California, (hereinafter referred to as

"Lessor"), and Merced Community Action Board, a nonprofit corporation, (hereinafter referred to as "Lessee"),

The parties hereby stipulate and agree as follows:

1. PREMISE:

Lessor does hereby lease to Lessee the premises and real property located at, and commonly known as the Livingston Recreation Center, 633 Main Street, Livingston, California,

2. TERM:

The term of this agreement shall be from 9:30 a.m. to 1:30 p.m., Monday through Friday
commencing on the 1st day of July 1, 2000. Both parties agree that this agreement shall be deemed renewed from year to year unless one notifies the other in writing no later than thirty (30) days prior to the end of the yearly term of its intention to terminate the agreement. Notwithstanding the above, Lessor shall have the right after giving Lessee one week’s notice, to occupy the premises between the hours of 9:30 a.m, and 1:30 p.m. for specific City functions. These functions shall not exceed twelve times per Calendar Year, and shall permit Lessee an alternative time in which to carry out its intent on the same date, If Lessee chooses not to accommodate its activities during the same day, Lessee shall be entitled to a proportionate rebate on the rental amount as computed by Lessor.

3. RENT:

Lessee shall pay Lessor rent in the sum of Four Hundred Dollars ($400.00) per month,
payable in advance on the first day of each and every month, commencing July 1, 2000, payable to the City of Livingston.

From:MCCAA ACCOUNTING FAX 209+724+9527 01106/2011 14:11 #568 P.003/008

4. USE OF PREMISES:

The Lessee shall use the premises for the express purpose of providing services to Lessee’s senior citizen project (Project Cherish, Brown Bag, and U.S.D.A. commodities distribution one day per month), and for no other purpose, except upon the written consent of the

Lessor.

The Lessee shall personally occupy said demised premises and shall not let or underlet the whole or any part of the said premises, nor sell or assign this lease, either voluntarily or by operation of law, nor allow any part of thereof, without the written consent of the Lessor which consent shall not unreasonably be withheld.

5. FIXTURES:

Lessee shall not make any alterations or additions to facilities on the demised premises without prior written consent of Lessor. The Lessee further agrees not to use or keep on the premises any article which insurance companies may deem hazardous.

6. MAINTENANCE:

A. Lessee’s Responsibilities:

(1) Supply all appropriate janitorial supplies, equipment, paper, and cleaning products necessary to support the Projects and shall keep the premises in good repair, including all improvements, which may hereafter be added, damage by the elements excepted, and shall not commit or suffer to be permitted to waste upon said premises.

(2) Clean all areas used and to store all of their equipment, supplies, etc., at the end of each day. This will allow the Livingston Recreation Center to be reserved and/or rented in the evenings and weekends.

(3) Obtain additional refuse containers as may be required to dispose of refuse resultant to serving of meals.

B. Lessor’s Responsibilities:

(1) Arrange for clean-up after evening and weekend use so that the building will be clean prior to the next day’s use by Project Cherish.

Froa:NCCAA ACCOUNTING FAX 209+724+9527 0110612011 14:11 #568 P.0041008

(2) Responsible’ for replacement of broken glass to windows or doors of said premises resulting from vandalism, acts of God, or by the elements.

(3) Maintenance by Lessor shall include but not necessarily be limited to roof, foundation, exterior walls, mechanical equipment; i.e. air/heating units, electrical equipment; i.e., wiring and lighting, sewer lines, grounds maintenance, restroom fixtures, and parking.

C. At the expiration of said term or the sooner determination thereof, the Lessee shall peacefully quit and surrender possession of said premises in as good condition as reasonable use and wear thereof will permit.

7. OTHER CASTS AND EXPENSES:

Any utility left operating beyond the term of agreement will necessitate an additional charge of $4.00 an hour.

8. COMPLIANCE WITH GOVERNMENTAL REGULATIONS:

Lessor and Lessee in respect to their individual covenants and duties shall comply with the requirements of Municipal, State, and Federal authorities now in force, or which may hereafter be in force, pertaining to the said premises.

9. RIGHT OF ENTRY:

Lessee shall permit Lessor or its agents to enter said premises or any part thereto at all
reasonable hours as set forth in Paragraph 2 above, for the purpose of examining, or exhibiting the same, or making such repairs or alterations as may be necessary for the safety or preservation thereof.

10. LIABILITY:

Lessee agrees to indemnify, defend, and hold Lessor harmless from any and all claims,
actions or suits, proceedings, costs, expenses, damages, and liabilities arising out of, connected with, or resulting from the use of the said premises by Lessee. Lessee understands and agrees that General Liability Insurance coverage is the Lessee’s own responsibility, and is not covered by the Lessor’s liability.

The Lessor and Lessee mutually agree that neither shall be responsible to the other for damage to the premises or contents or the use thereof by fire or by the perils insured against in property insurance policies and riders or endorse-ments attached thereto, and each hereby waives their rights to recovery and the rights of the insurance carrier to recover such damage.

From:MCCAA ACCOUNTING FAX 209+724+9527 01/0612011 14:12 #568 P. 305/008

II. NOTICES:

Any notices herein provided to be given by either party to the other shall be deemed to have been fully given when made in writing and deposited in the United States mail, postage prepaid and addressed as follows:

Lessee: Merced Community Action Board 7

561 West 18th Street

P.O. Box 2085

Merced, CA 95344-0085

Lessor: City of Livingston

Public Works Department

P.O. Box 308

Livingston, CA 95334

The address to which the notices shall be sent may be changed by either party advising the other in writing of such change. Nothing herein shall preclude the giving of any notice by personal service.

12. MODIFICATION OF AGREEMENT:

Notwithstanding any of the provisions of this agreement, this writing contains the entire
agreement between the parties hereto and there are no other agreements of understanding written or oral. This agreement may not be changed or modified except in writing and signed by the parties hereto.

13. WAIVER OF TERMS:

No waiver of any term, condition, or covenant of this agreement by either party shall be deemed as a waiver of any other term, condition, or covenant herein contained, nor of the strict and prompt performance thereof.

14. CAPTIONS:

The captions of each paragraph in this agreement are inserted as a matter of convenience of reference only, and in no way define, limit or describe the scope or intent of the agreement in any way.

15. AIMMEY’S FEES:

In the event that a dispute arises regarding any term of this agreement, or in the event that lessor must seek legal action to evict tenant under the circum-stances set forth in Paragraph 10 above, the party prevailing in said legal action shall be entitled to reasonable attorney’s fees as the court may then award.

From:MCCAA ACCOUNTING FAX 209+724+9527 01/06/2011 14,12 #568 P.006/008

16. SEPARABILITY OF PROVISIONS:

Should any section, clause or provision of this Agreement be declared illegal and unenforceable by a final judgement of a Court of competent jurisdiction, such invalidation of such section, clause or provision shall not invalidate the remaining portions hereof, and such remaining portions shall remain in full force and effect for the duration of this Agreement. In the event of such invalidation, the parties agree to meet and confer at the earliest possible date concerning substitute provisions rendered or declared illegal.