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The Lot generates about $198,000 in parking revenue annually. As the $1 a year ATM lease transitions to <br />a roughly $1,500 a month lease, the new ATM lease will generate an additional $18,000 annually. The Lot <br />costs the City about $7,500 a year to maintain. <br />The not - for - profit nautical and marine educational program called ExplorOcean ( "EO ") operates a one - <br />story 26,219- square foot building nearby, and has plans for a significant new facility in the future. The new <br />facility's construction and operation is subject to funding, permitting (including by the California Coastal <br />Commission), and community and environmental review and approval. According to EO, the new facility is <br />to be an "ocean literacy educational center" (for more information, see www.explorocean.org). A key <br />aspect of EO's success is access to significant amounts of parking. Today, EO has an on -site <br />subterranean parking area with about 55 parking spaces. <br />To accommodate growth for the new facility, EO has asked the City to consider offering an option to lease <br />the Lot to EO to help ensure that the new facility has the parking it needs. EO is interested in constructing <br />a parking structure on the Lot, and the attached Option to Lease and Ground Lease are written to <br />accommodate the parking structure, following appropriate community and environmental review. The City <br />itself is not bound by either the Option to Lease or the Ground Lease to approve EO's new facility or the <br />proposed parking structure. <br />Proposed Terms of the Option to Lease the Lot <br />Following discussions with City Council members, <br />proposed for an Option to Lease (for the full Option <br />Lot should the City Council see appropriate to do so: <br />City staff, and EO officials, the following terms are <br />to Ground Lease Agreement, see Attachment B) the <br />• Grant of Option /Term of Option: The City would grant EO the right to enter into the attached Ground <br />Lease with the City for the Lot from the execution date through December 31, 2021. <br />• Options on the Option: EO would have three one -year options to extend the term of the Option to Lease <br />(taking it through December 31, 2024), with a $2,500 fee per option extension. <br />• Compensation: The option price is $2,500, paid whether or not the Option is exercised. This amount is <br />creditable against rent should the Option be exercised. <br />• CEQA: EO is responsible for all CEQA work and approvals. An Environmental Impact Report (EIR) is <br />required. The City has the absolute discretion to approve or deny or modify any EO project, including the <br />expansion and any parking structure. <br />• Establishment of Fair Market Rental Value: At the time of the Ground Lease, the Fair Rental Value shall <br />be the amount that the City would otherwise derive from the Lot if available on the open market for use as <br />a surface parking lot (generally — see Section 4). <br />• The City will continue to operate the surface lot and receive all revenues associated therewith until <br />such time as the option is exercised. <br />Conditions to be Met before Option can be Exercised <br />• Final EIR is approved <br />• All governmental approvals and permits are in hand, including City and Coastal Commission <br />• EO demonstrates its financial capacity to proceed with its projects <br />Proposed Terms of the Ground Lease of the Lot <br />If the Option is exercised, the following is a summary of the Ground Lease associated with the Option to <br />Lease (see Exhibit 1 of Attachment B for the full Ground Lease): <br />• Term of the Ground Lease: 50 years <br />• Premises: The Palm Street Parking Lot. <br />• Improvements to be Constructed: A parking structure and ancillary structures, if permits, funding, and <br />approvals are obtained. <br />• Utility Removal: The City must relocate any utilities running through or under the Lot (at brief review, we <br />believe that there is an 8" sewer line and a 6" water line running through the lot where the alleyway used to <br />be). EO would reimburse the City for any re- location costs within 60 days. <br />• Establishment of Rent: See term under Option to Lease (Section 5.1) <br />• ATM Revenue: EO would receive any ATM revenue generated on the Lot. 23 -2 <br />