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RES 2013-028LM CITY OF SOUTH LAKE TAHOE RESOLUTION NO. 2013 -28 A RESOLUTION OF THE CITY OF SOUTH LAKE TAHOE ADOPTING CITY OF SOUTH LAKE TAHOE POLICY - LEASING OF CITY OWNED REAL PROPERTY RESOLVED, by the City Council of the City of South Lake Tahoe, that- WHEREAS, the City of South Lake Tahoe has authority to lease real property owned by the City of South Lake Tahoe,- WHEREAS, the City of South Lake Tahoe wishes to formalize policies regarding the lease of such City owned property-, NOW, THEREFORE, the City Council of the City of South Lake Tahoe does hereby adopt the policy entitled "City of South Lake Tahoe Policy - Leasing of City Owned Real Property." This Resolution was duly PASSED AND ADOPTED by the City Council of the City of South Lake Tahoe at a regular meeting of the City Council on the 2nd day of April, 2013 by the following vote: AYES: Councilmember(s): NOES: Councilmember(s): ABSENT: Councilmember(s): ABSTAIN: Councilmember(s)- ATTEST' i usan Alessi, City Clerk DAVIS, COLE, CONNEH, LAINE & SWANSON F Ou B u-- Y• Tom Davis, Mayor CITY OF SOUTH LAKE TAHOE POLICY LEASING OF CITY OWNED REAL PROPERTY I. PURPOSE OF POLICY The purpose of this policy is to: 1. Establish guidelines by which City owned real property will be leased and establish the conditions of the lease arrangements; 2. Provide the conditions for the leasing of City property by either bidding or staff level negotiations; stafflevel negotiations shall rely on the criteria set forth in ~~ III and IV(3) herein; 3. Set minimum standards acceptable to the City related to lease terms, conditions, and rates. II. ApPLICATION OF THE POLICY This policy shall apply to all real property owned by the City of South Lake Tahoe. As of the date of the approval of this Policy (April 2, 2013), these properties include those set forth in Attachment A, incorporated herein, with the exception of those properties owned by the South Tahoe Redevelopment Agency (or its Successor Agency). This policy shall not apply to short term facility and parks rentals which require a City Facility Use Permit pursuant to SLTCC ~ 181\-14 or special events which require a Special Event Permit. III. CRITERIA FOR LEASING CITY OWNED REAL PROPERTY City property shall be considered for leasing when one or more of the following criteria apply: 1. The property is not required for current municipal use, but is to be held for possible future use and can be leased as an interim measure. 2. The property can only be leased because of legal restraints. 3. The City requires substantial control over development, use and reuse of the property. 4. The property has the immediate potential of a high return to the City because of its demand and type of use. 5. The property can be efficiently utilized by a provider of services needed within the City. 6. The property can be leased to promote substantial economic development opportunity. 1 IV. LEASING PROCEDURES AND SELECTION OF LESSEE 1. Competitive Offers. Competitive offers for lease of City property shall be solicited from the open market by using the following techniques: a. Requests for Proposals (RFPs) b. Direct advertising c. Use of a Multiple Listing Service (tv1LS) d. Listing with a broker e. Any other appropriate means 2. RFPs should be used when either: a. The City intends or wishes to enter into a lease agreement of six months or more; or b. The anticipated value of the rent to be received will exceed $30,000. 3. RFP Evaluation. Leasehold proposals shall be evaluated in terms of: a. The degree to which the proposed use is in compliance with the City's strategic plan for the property and the City's General Plan Update. b. In terms of the amount of consideration offered in the form of rent. c. In terms of the financial feasibility of the proposal. d. The capability, expertise, and experience of the potential lessee with respect to the proposed leasehold development and operation. e. The capability, expertise, and experience of the potential lessee with respect to the proposed leasehold development and operation. f. If new development is proposed, a development plan that includes a description of the development, and qualifications of the lessee to complete such development. g. Benefits to the public which will be derived from the lease. 4. Consideration of Sole Proposals. In certain limited situations, the City may exclusively consider a single proposal for lease of City property. Potential lessees wishing to exclusively negotiate with the City must submit for City staff review a business case with sufficient justification as to how it is capable of optimizing the use of the property and return to the City thereby negating the need for a competitive process. This information will be included when the lease transaction is presented for City Council approval. V. LEASE TERMS AND RATES 1. Rate of Return The City shall obtain fair market rents for its leases commensurate with the highest and best use of the property. The fair markt~t rent shall be based on: a. An appraisal that is no more than six months old at the time of the lease transaction and is presented to City Council for approval; or 2 b. If the cost of an appraisal is not justified by the anticipated rents, the City may choose an alternative method to establish rent, including a comparable lease analysis based upon data throughout the Lake Tahoe Basin and surrounding areas. 2. Lease Terms a. Rental terms may be negotiated on the basis of: 1. Fixed rates (flat rent leases); or 11. Percentages of the lessee's gross income derived from business conducted on the property with a provision for a minimum rental rate (percentage leases). b. Lease Rates. The City shall obtain a fair market rent on City property and shall negotiate terms and conditions which will continue to sustain a fair rate of return throughout the lease agreement. i. Flat rate leases shall provide for a rental review at a minimum of every 3 years, and shall be adjusted every three years based on the Consumer Price Index for San Francisco. 11. Percentage Leases shall provide for a minimum rent as well as a percentage rent, whichever is higher. There shall be a minimum rent and a percentage rent review at a minimum of every five years. c. Late Payments and Termination. Lease payments which are over tcn days latc shall result in a late charge of ten percent of the overdue lease payment. City staff shall assess this late charge immediately upon every failure of Lessee to tender a timely lease payment. City staff may terminate lease for cause, and the City Council may terminate the lease without cause. VI. LEASE LENGTH Lease terms will be limited to the shortest practical time commensurate with the amount of capital investment (if any) in permanent improvements to be made by the lessee. VII. COUNCIL ApPROVAL 1. The City Council must approve and authorize all leases of City property. 2. RenewaL Renewal options included in the lease may not be exercised automatically by the Lessee. Renewal options require approval of the City Council. 3. Amendments. Amendments to leases require City council authorization. VIII. STANDARD LEASE AGREEMENT The City's Standard Lease Agreement (attached hereto and incorporated herein as Attachment B) shall be the lease agreement utilized by the City for all leases. 3 ATTACHMENTS: Attachment A - List and map of City Owned Real Property Attachment B - City of South Lake Tahoe Standard I,ease Agreement 4