CC 2021-01-26_08g Residential Lease_202 Le Point StreetMEMORANDUM
TO: CITY COUNCIL
FROM: BILL ROBESON, PUBLIC WORKS DIRECTOR
BY: RON SIMPSON, PUBLIC WORKS MANAGER
SUBJECT: CONSIDERATION OF RESIDENTIAL LEASE FOR 202 EAST LE POINT
STREET
DATE: JANUARY 26, 2021
BACKGROUND:
In December 2016, the City finalized the purchase of a parcel of property used as, and
commonly known as, the Le Point Street parking lot. There is currently an
approximately 800 square foot residence on the parcel. The residence was built in 1946
and has two bedrooms, one bathroom, and no garage. The City Council, at last year’s
meeting concerning the annual lease renewal, provided direction supporting the current
lease arrangement that increases the monthly rent by 10% each year until such time
as fair market value is reached. The fair market value information provided by local
property management companies each year, indicates that the subject property is within
the fair market value range.
SUMMARY OF ACTION:
Approval of a Residential Lease between the City of Arroyo Grande as the landlord
and Jena Simmons and Chad Jackson as the tenants for the house located at 202
East Le Point Street.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
The residential lease terms include payment of $1,320 per month, increasing 10
percent to $1,452 per month starting March 1, 2021, with all utilities paid by the tenants.
With this rental fee increase, an additional $1,584 will be generated annually. The
administration of the lease is not anticipated to require significant staff resources.
RECOMMENDATION:
It is recommended the City Council approve and authorize the City Manager to execute
a residential lease between the City of Arroyo Grande as the landlord and Jena
Simmons and Chad Jackson as the tenants for the house located at 202 East Le Point
Street.
Item 8.g. - Page 1
CITY COUNCIL
CONSIDERATION OF A RESIDENTIAL LEASE FOR 202 LE POINT STREET
JANUARY 26, 2021
PAGE 2
ANALYSIS OF ISSUES:
Fair market rental value has been determined each year by consulting with local real-estate
and property management professionals. The market values from 2019 and 2020 were
consistently determined to be within the $1,200 to $1,600 range. For the upcoming 2021
lease renewal, the same process was followed and the subject residence was evaluated
by a local property management company. The setting of the residence and exterior
evaluation did not include an interior assessment. The fair market rental value was
determined to be in a range from $1,500 to $1,600. Other points made in this evaluation
were the uniqueness of the property location, the value in having a long standing and
reliable tenant, and that a comparative analysis is difficult due to the setting. Therefore, the
range provided is somewhat flexible and may lean toward the lower end.
The City purchased the property in anticipation of ultimately expanding parking in the
Village core. At some point in the future, the creation of additional parking on the site
will occur, however, there are no immediate plans for this change in use. In the
meantime, leasing the residence generates revenue for the City until the City is ready
to create additional parking spaces.
The City Council has indicated support for maintaining the lease with the current
tenants, thereby not displacing the residents that have occupied the house for a number
of years, including prior to City ownership. The attached one-year lease agreement
provides for rent of $1,320 per month through February 2021 and $1,452 per month
starting in March 1, 2021. The tenant will continue to be responsible for the payment of
all utilities and other common general provisions for residential leases.
Currently, at $1,320 per month annual revenue generation = $15,840
With 10 percent monthly increase ($1,452 per month), total annual revenue
generation = $17,424
The current tenants are requesting that the rental cost remain unchanged at $1,320
based on multiple reasons stated in an email dated January 12, 2021. The main points
from their email are:
They are responsible, reliable and longtime (12 years) renters.
The rent has been increased each year over the last 3 years (a 32% increase).
- A 4
th year would equal a 45% increase.
The rental increases are a financial hardship.
This is a very unique property and they have maintained it to be a presentable
part of the Village.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Approve and authorize the City Manager to sign the Residential Lease;
Item 8.g. - Page 2
CITY COUNCIL
CONSIDERATION OF A RESIDENTIAL LEASE FOR 202 LE POINT STREET
JANUARY 26, 2021
PAGE 2
2. Do not approve the Residential Lease and direct staff to negotiate different lease
terms with the tenants; or
3. Leave the current rent of $1,320 unchanged for this year and re-evaluate any rental
cost changes in 2022.
4. Provide further direction to staff.
ADVANTAGES:
The proposed lease generates revenue to the City and maintains the current living
arrangement for tenants in the residence. Until such time as the City is ready to create
additional parking, generation of revenue from the property is beneficial for the City.
DISADVANTAGES:
No significant disadvantages have been identified.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall and on the City’s website in accordance with
Government Code Section 54954.2.
Attachments:
1. Aerial Photo of Lot
2. 2021 Residential Lease
ATTACHMENT 1
Item 8.g. - Page 3
RESIDENTIAL LEASE
THIS RESIDENTIAL LEASE ("Lease") dated as of January 26, 2021, is entered into
between the City of Arroyo Grande ("Landlord") and Jena Simmons and Chad Jackson
(collectively "Tenant").
NOW THEREFORE, for good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the parties agree as follows:
Section 1. Lease
Tenant leases from Landlord the premises located at 202 East Le Point Street, Arroyo Grande,
California 93420, and consisting of a single family residence, on the terms and conditions
contained in this Lease (collectively, "Leased Premises").
Section 2. Term
The term of this Lease shall commence on February 1, 2021, and continue for a period of one (1)
year.
Section 3. Rent
Rent shall be One Thousand Two Hundred Dollars ($1,320) for the month of February and
then One Thousand Three Hundred Twenty Dollars ($1,452) per month ("Monthly Rent")
starting in March, payable in advance, on the first day of each calendar month to Landlord
or Landlord's authorized agent, at the following address: Attn: Administrative Services
Director, 300 Branch Street, Arroyo Grande, CA 93420, or at any other place designated by
Landlord from time to time. If Tenant takes possession of the Leased Premises on a date
other than the first day of a calendar month, the first rent payment shall be prorated in
accordance with the then remaining number of days in the month. Tenant agrees to pay a
charge of Twenty- Five Dollars ($25) for each dishonored check.
Section 4. Utilities
Tenant shall be responsible for the payment of all utilities and services to the Leased Premises.
Section 5. Use
The Leased Premises shall be used as a private dwelling.
Section 6. Compliance with Law
Tenant shall comply with all laws, statutes, ordinances, and requirements of all city, county,
state, and federal authorities now or later in force pertaining to the use of the Leased Premises.
Section 7. Maintenance and Alterations
Except as set forth in this Lease, Tenant agrees that as of the delivery of possession the
Leased Premises are in good working order and repair. Tenant shall, at Tenant's own expense
and at all times, maintain the Leased Premises in good working order and repair, including all
equipment, appliances, furniture, fixtures, and furnishings, and shall surrender the Leased
Premises at termination of this Lease in as good condition as received, normal wear and tear
excepted. Tenant shall be responsible for damages caused by Tenant's negligence and that
of Tenant's family, invitees, and guests. Tenant shall not make alterations to the Leased
Premises without the prior written consent of Landlord. Tenant shall not commit or allow any
person to commit any act resulting in the destruction, defacement, damage, impairment, or
removal of any part of the Leased Premises, including wall, ceiling, and floor coverings, and the
furniture, fixtures, and furnishings of the Leased Premises.
ATTACHMENT 2
Item 8.g. - Page 4
Section 8. Entry
Landlord shall have the right to enter the Leased Premises for the purposes of making
necessary or agreed repairs and for showing the Leased Premises to prospective
tenants, provided that, except in the case of an emergency, such entry shall be made
during normal business hours and upon at least twenty-four (24) hours' prior notice. In
the case of an emergency or Tenant's abandonment or surrender of the Leased
Premises, Landlord or Landlord's agent may enter the Leased Premises at any time,
without obtaining Tenant's prior consent. Tenant agrees not to change the locks or add
locks to the entrances of the Leased Premises without the prior consent of Landlord
and without providing Landlord with a key to any locks.
Section 9. Indemnification
Landlord shall not be liable for any damage or injury to Tenant or any other person, or
to any property, occurring on the Leased Premises or any part of the Leased Premises
or in common areas, unless the damage is the proximate result of the gross negligence
or willful misconduct of Landlord, Landlord's agents, or Landlord's employees. Tenant
agrees to indemnify, defend, and hold harmless Landlord for any liability, costs
(including reasonable attorney's fees), or claims for personal injuries or property
damage caused by the negligent, willful, or intentional act or omission to act of Tenant
or Tenant's guests or invitees. Each party waives the right of subrogation against the
other party.
Section 10. Assignment and Subletting
Tenant shall not assign this Lease or any interest under this Lease or sublet the Leased
Premises or any portion of the Leased Premises without Landlord's prior written
consent, which will not be unnecessarily withheld.
Section 11. Abandoned Property
If Tenant abandons or surrenders the Leased Premises, Landlord may consider any
personal property left on the Leased Premises to be abandoned and may dispose of it
in any manner allowed by law. All personal property on the Leased Premises is made
subject to a lien in favor of Landlord for the payment of all sums due under this Lease,
to the maximum extent allowed by law.
Section 12. Default
If Tenant fails to pay rent when due, or to perform any term of this Lease, after not less
than three (3) days' written notice of default given in the manner required by law,
Landlord, at Landlord's option, may terminate all rights of Tenant under this Lease,
unless Tenant, within the time specified, cures the default.
Section 13. Remedies
If Tenant defaults, Landlord may elect to:
(a) continue the lease in effect, and enforce all Landlord's rights and remedies under
this Lease, including the right to recover the rent as it becomes due, or
(b) at any time, terminate all of Tenant's rights under this Lease, and recover from
Tenant all damages Landlord may incur by reason of the breach of the Lease, including
the cost of recovering the Leased Premises and including the worth at the time of the
termination or at the time of an award if suit is instituted to enforce this provision, of the
amount by which the unpaid rent for the balance of the term exceeds the amount of the
rental loss that the tenant proves could be reasonably voided.
In addition to any other rights and remedies allowed by this Lease or by law, Landlord
shall have the remedies as set forth in Civil Code §§1951.2 and 1951.4.
Item 8.g. - Page 5
Section 14. Security Deposit
Tenant will deposit with Landlord the sum of One Thousand Dollars ($1,000) as a
security deposit. Landlord shall not be obligated to pay interest on the Deposit. Landlord
will hold the deposit for the full and timely performance by Tenant of Tenant's obligations
under this Lease, including payment of rent and cleaning, maintaining, and repairing
the Leased Premises after surrender. If all or any portion of Tenant's security deposit is
applied by Landlord during the term of this Lease, Landlord may demand that Tenant
replenish the full amount applied. Tenant's failure to replenish the amount within five (5)
days after written demand will constitute a breach of this Lease. The balance of all
deposits shall be refunded no later than twenty-one (21) calendar days from the date
possession is delivered to Landlord or Landlord's agent, together with a statement
showing any charges made against the deposits by Landlord.
Section 15. Attorney Fees
In any legal action brought by either party to enforce the terms of this Lease or relating
to the Leased Premises, the prevailing party shall be entitled to all costs incurred in
connection with that action, including reasonable attorney's fees.
Section 16 Waiver
No failure of Landlord to enforce any term of this Lease shall be deemed a waiver, nor
shall any acceptance of a partial payment of rent be deemed a waiver of Landlord's right
to the full amount of rent.
Section 17. Notices
Any notice that either party may or is required to give, may be given by mailing the
notice, postage prepaid, to Tenant at the Leased Premises or to Landlord at the address
shown below or at any other place designated by the parties from time to time.
City of Arroyo Grande
300 East Branch Street
Arroyo Grande, CA 93420
Section 18. Successors and Assigns
This Lease is binding upon and inures to the benefit of the heirs, assigns, successors,
executors, and administrators of Landlord and Tenant.
Section 19. Time
Time is of the essence in this Lease.
Section 20. Holding Over
Any holding over after expiration of the Lease, with the consent of Landlord, shall be
construed as a month-to-month tenancy in accordance with the terms of this Lease, as
applicable. Rent during any hold over period shall be One Hundred Fifty Percent (150%)
of the rent payable prior to the expiration of the Lease term.
Section 21. Late Charges and Default Interest
If Tenant fails to pay the Monthly Rent within five (5) days after the due date, Tenant
agrees that it would be impracticable or extremely difficult to fix the actual damage to
Landlord caused by that failure and therefore agrees to pay a late charge of Twenty-Five
Dollars ($25) plus interest at Ten Percent (10%) per annum commencing on the date on
which the delinquent amount was due. The amounts due under this Section are in
addition to and not in lieu of any other remedies of Landlord.
Item 8.g. - Page 6
Section 22. Construction
Headings at the beginning of each section are solely for the convenience of the parties
and are not a part of and shall not be used to interpret this Lease. The singular form
shall include plural, and vice versa. This Lease shall not be construed as if it had been
prepared by one of the parties, but rather as if both parties have prepared it. Unless
otherwise indicated, all references to sections are to this Lease.
Section 23. Further Assurances
Whenever requested to do so by the other party, each party shall execute, acknowledge,
and deliver any further conveyances, agreements, confirmations, satisfactions,
releases, powers of attorney, instruments of further assurance, approvals, consents,
and any further instruments and documents as may be necessary, expedient, or proper
to complete any conveyances, transfers, sales, and agreements contemplated by this
Lease. Each party also agrees to do any other acts and to execute, acknowledge, and
deliver any documents requested to carry out the intent and purpose of this Lease.
Section 24. Third-Party Rights
Nothing in this Lease, express or implied, is intended to confer upon any person, other
than the parties and their respective successors and assigns, any rights or remedies
under or by reason of this Lease.
Section 25. Integration
This Lease contains the entire agreement between the parties regarding the subject
matter of the Lease, and this Lease expressly supersedes all previous or
contemporaneous agreements, understandings, representations, or statements
between the parties regarding those matters.
Section 26. Counterparts
This Lease may be executed in one or more counterparts, each of which shall be
deemed an original and all of which taken together shall constitute one and the same
instrument.
Section 27. Amendment
This Lease may not be amended or altered except by an instrument in writing executed
by Landlord and Tenant.
Section 28. Partial Invalidity
Any provision of this Lease that is unenforceable or invalid or the inclusion of which
would adversely affect the validity, legality, or enforcement of this Lease shall have no
effect, but all the remaining provisions of this Lease shall remain in full force.
Section 29. Joint and Several Liability
If Tenant is more than one person, each person shall be jointly and severally liable for
the performance of Tenant's obligations under this Lease.
Section 30. Conduct of Tenant
Tenant shall not create a nuisance on the Leased Premises or otherwise disturb other
tenants of the property.
Item 8.g. - Page 7
Section 31. Governing Law
The validity, meaning, and effect of this Lease shall be determined in accordance with
California law.
IN WITNESS WHEREOF, Tenant has executed this Lease as of the date first above
written.
TENANT:
Jena Simmons
Date:
Chad Jackson
Date:
Landlord accepts and agrees to this Lease.
LANDLORD:
Whitney McDonald, City Manager
Date:
ATTEST:
Annamarie Porter, Interim City Clerk
Date:
APPROVED AS TO FORM:
Timothy J. Carmel, City Attorney
Date:
Item 8.g. - Page 8