HomeMy WebLinkAbout303 - Marketing/Leasing Policy for the Redding Airport Business Park CITY OF REDDING, CALIFORNIA
Council Policy
• S( KT Resolution Policy Effective
K TING/LEASING POLICY FOR Number Number Date Page
THE REDDING AIRPORT BUSINESS
PARK (RABP) 95-146 303 06-06-95 1
PURPOSE:
The purpose of this Policy is threefold:
1 . To formally establish the City's intent to compensate a real estate broker, if that
broker is determined to be the procuring cause of a lease within RABP;
2. To set forth a realistic rate of return upon which rental amounts will be based
within the RABP; and
3. To provide a means, through either an "Option Agreement" or a "First Right of
Refusal Agreement" whereby a potential lessee might reserve a particular parcel
of land within the RASP for a short period of time in order to facilitate completion
of a specific site evaluation.
POLICY:
I. BROKER PARTICIPATION
• A. The City will allow a licensed real estate broker to participate in the leasing of
RABP land and shall pay a commission to such broker if:
1) The broker is certified by lessee to be the procuring cause of the lease;
2) The broker certifies that he/she is not the lessee, an employee of the lessee,
or does not own or have substantial control over or in the lessee's business;
and
3) The broker certifies that he/she has represented the City's interest in the
lease transaction.
B. The City has the sole right to accept or reject any offers to lease and no commis-
sions will be paid on a transaction which the City has rejected.
C. No rental rates will be lowered solely due to the absence of broker involvement.
D. The monetary commission payable shall be established at the equivalent to the
first year rent on the subject lease, subject to receipt of rental payments by
lessee.
E. Commission payments deemed by the City to be incurred and payable shall be
paid only after scheduled lease payments have been received by the City and in
accordance with a formula which provides that twelve and one-half (121) percent
of the total commission due is payable at the end of each three (3) months period
. during the first twenty-four (24) months of the lease term.
F.0091 -793
CITY OF REDDING, CALIFORNIA
Council Policy
• SUBJECT Resolution Policy Effective
MARKETING/LEASING POLICY FOR Number Number Date Page
THE REDDING AIRPORT BUSINESS
PARK (RABP) 95-146 303 06-06-95 2
F. The City will pay commissions for transactions involving present lessees acquir-
ing additional sites provided the real estate broker meets the requirements out-
lined in Paragraph A.
G. The City shall not pay commissions on any break-out (divided) leases or
subleases. Also, the City shall not pay commissions on any "First Right of
Refusal" or "Option to Lease" transactions.
H. Leasing commissions shall be established at lease onset and no adjustments shall
be made in the established commission due to changes in the lease rental rates.
I. In the event more than one broker is involved in any one lease transaction, the
City will only pay a single commission, which will be determined from the cer-
tification of the lessee establishing the procuring broker.
II. LEASE TERM & RATES
A. A lease agreement for land within the RABP may have a fixed term of 30, 35, or
• 40 years, depending upon the rental rate initially established. Specifically, a
lease term of 30 years shall be based upon an initial rate of return equal to 7.0
percent of the Market Value, a lease term of 35 years shall be based upon 7.5
percent, and a lease term of 40 years shall be based upon 8.0 percent.
B . Rental rates shall be established/adjusted every 5 years in accordance with the
following:
YEARS METHOD
1 - 5 (7.0, 7.5, or 8.0%) OF APPRAISED VALUE
6 - 10 1/2 OF CPI INCREASE
11 - 15 (7.5, 8.0, or 8.5%) OF APPRAISED/ESTIMATED VALUE 1
6 - 20 1/2 OF CPI INCREASE
21 - 25 (8.0, 8.5, or 9.0%) OF APPRAISED/ESTIMATED VALUE
26 - 30 1/2 OF CPI INCREASE
31 - 35 (8.5, 9.0, or 9.5%) OF APPRAISED/ESTIMATED VALUE
36 - 40 1/2 OF CPI INCREASE
OPTIONS (7.0, 7.5, or 8.0%) OF APPRAISED/ESTIMATED VALUE
Note: Each of the above percentages are related to the applicable lease term, i.e. , 30,
35, or 40 years. Also, each 5 year adjustment shall not be greater than 10% of
• the previous, but never less.
F-0091 -7/93
CITY OF REDDING, CALIFORNIA
Council Policy
• S 1B J�ECT Resolution Policy Effective
KETING/LEASING POLICY FOR Number Number Date Page
THE REDDING AIRPORT BUSINESS
PARK (RASP) 95-196 303 06-06-95 3
C. An "Option to Extend" a lease agreement may be negotiated in conjunction
with the initial establishment of such lease agreement, but in no event shall
the amounts of the fixed term and the options combined exceed 50 years.
D. A "First Right of Refusal" with a fifteen day call-period may be offered for
a rate that is one half the calculated regular monthly rental rate.
E. An "Option to Lease" for a period of sixty days may be offered for a rate
equal to the calculated regular monthly rental rate.
F. Gross leasing of land within RABP consisting of five or more acres may have
a rental which is phased in over a three year period, i.e. , 33 1/3% for the
first eighteen months and 66 2/3% for the second eighteen months.
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F-0091 •7/93