STAFF REPORT
DATE:
May 26, 2015
TO:
City Council
FROM:
Mike Webb, Assistant City Manager
Tracie Reynolds, Property Management Coordinator
SUBJECT:
Approving the First Amendment to the City’s Ground Lease with Micah McGlocklin
(dba Davis Paintball) for property located at 24998 Poleline Road in Yolo County,
the site of the City’s former landfill
Recommendation
Approve Resolution (Attachment 1) authorizing execution of the First Amendment (Attachment 3)
to the City’s Ground Lease dated July 22, 2004 with Micah McGlocklin (dba Davis Paintball) (the
“Tenant”) for property located at 24998 Poleline Road in Yolo County (the “Ground Lease”), which
would expand the leased premises by 7.7 acres, for a total of 17.3 acres, and make other minor
changes (the “First Amendment”). The Tenant operates paintball playing fields on the Property.
Council Goals
The proposed First Amendment does not directly fulfill any of the City Council’s goals for the
2015-2016 fiscal year. However, the proposed First Amendment does increase City revenues
without increasing City costs, and it allows for an appropriate interim use of City property until a
more permanent use is determined.
Fiscal Impact
There will be a small positive fiscal impact under the proposed First Amendment. Currently, the
Ground Lease generates about $13,000 a year (with 3% annual escalations) for the City. Under the
proposed First Amendment, that amount will increase to about $24,000 a year (with 3% annual
escalations). Of that amount, $800 a month is earmarked for maintenance costs associated with the
site and the balance is earmarked for general property management expenses. The City spends a
minimal amount to maintain the property (i.e., annual water quality testing, maintenance of cover
material, annual environmental health inspections). The First Amendment is not expected to
increase property management costs associated with the site.
Background and Analysis
On July 22, 2004, the City entered into the Ground Lease with the Tenant to allow the Tenant to
operate paintball playing fields on about 9.6 acres of City-owned land off of Poleline Road, on the
site of the City’s former landfill, which is outside the City limits. The Ground Lease has an initial
term of three years, with automatic three-year extensions, unless terminated by either party with six
months’ notice. The Ground Lease, which terminates on July 31, 2028, is currently in its 11th year.
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The Ground Lease prohibits the construction of any permanent structures on the City’s property; but
the Tenant is allowed to erect inflatable, fully-removable obstacles, and posts and netting. The fill
inside all the paintballs used on the City’s property is non-toxic, water soluble and biodegradable.
The Tenant recently approached the City and asked if the leased premises under the Ground Lease
could be expanded to encompass an additional 7.7 acres, for a total of 17.3 acres. City
representatives from the City Manager’s Office, Public Works, and Community Development and
Sustainability met twice to discuss this proposed expansion and determined that it was an
appropriate interim use of the City’s property. A map of the existing leased premises and the
expanded leased premises is attached to this staff report as Attachment 2.
Proposed First Amendment
In addition to expanding the leased premises, the proposed First Amendment would make the
following other changes and clarifications to the Ground Lease:
x
Rent Provisions. The rent amount per acre (currently at $1,342 per year) would remain the
same and continue to escalate at 3% per year. The First Amendment will now include a rent
schedule as shown in the table below:
Lease Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
8/1/04 8/1/05 8/1/06 8/1/07 8/1/08 8/1/09 8/1/10 8/1/11 8/1/12 8/1/13 8/1/14 8/1/15 8/1/16 8/1/17 8/1/18 8/1/19 8/1/20 8/1/21 8/1/22 8/1/23 8/1/24 8/1/25 8/1/26 8/1/27 -
Dates
7/31/05
7/31/06
7/31/07
7/31/08
7/31/09
7/31/10
7/31/11
7/31/12
7/31/13
7/31/14
7/31/15
7/31/16
7/31/17
7/31/18
7/31/19
7/31/20
7/31/21
7/31/22
7/31/23
7/31/24
7/31/25
7/31/26
7/31/27
7/31/28
Original Property Expansion Property
$9,600
$0
$9,888
$0
$10,185
$0
$10,490
$0
$10,805
$0
$11,129
$0
$11,463
$0
$11,807
$0
$12,161
$0
$12,526
$0
$12,902
$1,801
$13,289
$10,602
$13,687
$10,920
$14,098
$11,248
$14,521
$11,585
$14,956
$11,933
$15,405
$12,291
$15,867
$12,660
$16,343
$13,040
$16,834
$13,431
$17,339
$13,834
$17,859
$14,249
$18,395
$14,676
$18,946
$15,116
Total Rent/Yr
$9,600
$9,888
$10,185
$10,490
$10,805
$11,129
$11,463
$11,807
$12,161
$12,526
$14,703
$23,891
$24,608
$25,346
$26,106
$26,890
$27,696
$28,527
$29,383
$30,264
$31,172
$32,108
$33,071
$34,063
Total Rent/Mo
$800
$824
$849
$874
$900
$927
$955
$984
$1,013
$1,044
See footnote.
$1,991
$2,051
$2,112
$2,176
$2,241
$2,308
$2,377
$2,449
$2,522
$2,598
$2,676
$2,756
$2,839
Note : Lease Year 11 includes 12 months of rent on the Original Property (at $1,075.13/month) and three
months of rent (May (prorated), June and July) on the Expansion Property (at $857.80/month).
Based on discussions with several local land brokers, the rent the City is receiving per acre
is highly competitive, given the property’s location and condition.
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x
Lease Termination Provisions – Currently, the Ground Lease allows either party to
terminate the Ground Lease for any reason by giving the other party six months’ notice.
That notice period will be reduced to three months under the proposed First Amendment.
x
Other Minor Changes – The proposed First Amendment also makes other minor “clean-up”
changes, such as clarifying the Ground Lease commencement date and other matters, and
updating insurance provisions.
No other terms of the Ground Lease will be changed. For more information, the full text of the
proposed First Amendment is attached to this staff report as Attachment 3.
Staff believes the Tenant is providing an appropriate interim use for the property, and generating
income for the City that it would not likely otherwise receive. In addition, should the City decide it
wants to use the property for something else, the City would be able to do so by giving the Tenant
three months’ notice to vacate the property.
Staff consulted with Yolo County planning officials and they had no concerns about the proposed
expansion of the paintball operation.
Next steps
Upon approval, staff will execute the First Amendment and the Tenant will begin using the
additional 7.7 acres for its paintball operations as of the start of business on Wednesday, May 27.
The Tenant will also begin paying rent on the additional acreage on that date, based on a prorated
amount for the month of May.
Attachments:
Attachment 1:
Attachment 2:
Attachment 3:
05-26-15 City Council Meeting
Resolution
Map of Existing Leased Premises and Proposed Expanded Premises
Proposed First Amendment (without attachments)
05G - 3
Attachment 1
RESOLUTION 15 , SERIES 2015
RESOLUTION APPROVING THE FIRST AMENDMENT TO THE CITY’S GROUND
LEASE WITH MICAH MCGLOCKLIN (DBA DAVIS PAINTBALL) FOR PROPERTY
LOCATED AT 24998 POLELINE ROAD IN YOLO COUNTY, THE SITE OF THE CITY’S
FORMER LANDFILL
WHEREAS, on July 22, 2004, the City of Davis (the “City”) entered into a ground lease with
Micah McGlocklin (dba Davis Paintball) (the “Tenant”) to allow the Tenant to operate paintball
playing fields on about 9.6 acres of City-owned land at 24998 Poleline Road in Yolo County, the
site of the City’s former landfill (the “Ground Lease”); and
WHEREAS, the Tenant recently approached the City and asked if the leased premises under the
Ground Lease could be expanded to encompass an additional 7.7 acres, for a total of 17.3 acres.
City representatives from the City Manager’s Office, Public Works, and Community Development
and Sustainability collectively determined that the proposed expansion was an appropriate interim
use of the City’s property; and
WHEREAS, the proposed First Amendment to the Ground Lease would (1) expand the leased
premises by 7.7 acres, for a total of 17.3 acres, (2) include a chart clarifying the rent amount to be
paid by Tenant on the 9.6 acres and the 7.7 acres, (3) reduce the notice period for termination to
three months, and (4) make other minor clarifying changes.
NOW, THEREFORE, BE IT RESOLVED, that the Davis City Council authorizes the City
Manager, or his designee, to execute the First Amendment to the City’s Ground Lease with Micah
McGlocklin (dba Davis Paintball) for property located at 24998 Poleline Road in Yolo County, the
site of the City’s former landfill, in the form approved by the City Attorney; and to make minor
modifications to the document if necessary after consultation with the City Attorney.
PASSED AND ADOPTED by the City Council of the City of Davis on this 26th day of May, 2015,
by the following vote:
AYES:
NOES:
ABSENT:
Daniel M. Wolk
Mayor
ATTEST:
Zoe Mirabelle, CMC
City Clerk
Attachment 1
Proposed Resolution
Page 1 of 1
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05G - 4
Attachment 2
Map of Existing Leased Premises and Proposed Expanded Premises
Attachment 2
Map of Existing Leased Premises and Proposed Expanded Premises
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05-26-15 City Council Meeting
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Attachment 3
Proposed First Amendment
FIRST AMENDMENT TO LEASE
This First Amendment to Lease (the “First Amendment”) is entered into as of May 26, 2015, by
and between the City of Davis, a California Municipal Corporation (the “Landlord”), and Micah
McGlocklin, an individual (the “Tenant”).
RECITALS
WHEREAS, Landlord and Tenant entered into a ground lease agreement on July 22, 2004
covering the lease of approximately 9.6 acres of Landlord’s property at 24998 Poleline Road in
Yolo County, California (the “Original Property”), for the development and operation of paintball
playing fields (the “Lease”); and
WHEREAS, Tenant desires to expand its paintball playing field operation onto 7.7 acres of
adjacent property also owned by Landlord (the “Expansion Property”); and
WHEREAS, Landlord and Tenant desire to amend the Lease to incorporate the terms and
conditions whereby Tenant may expand its operations onto the Expansion Property.
AGREEMENT
NOW, THEREFORE, the Lease shall be amended as follows:
1. Section 1.01, The Property, is hereby amended to include additional acreage (approximately
7.7 acres) in the definition of the Property (the “Expansion Property”). The Property will
now total about 17.3 acres (9.6 acres plus 7.7 acres). The Expansion Property is more
particularly described in Exhibit A-1 (Description of Expansion Property) and Exhibit B-1
(Map of Expansion Property) attached to the First Amendment to Lease and incorporated
herein by reference.
2. Subsection A of Section 2.01, Term, is hereby amended to reduce the time period required
to give advance notice of non-renewal from six (6) months to three (3) months.
3. Subsection C of Section 2.01, Term, is hereby amended to reduce the time period required to
give advance notice of lease termination from six (6) months to three (3) months.
4. Section 2.02, Commencement, is hereby amended to establish the Commencement Date as
August 1, 2004.
5. Section 3.01, Base Rent, is hereby deleted and replaced in its entirety with the following:
“The rent for the Original Property and the Expansion Property (the “Rent’) shall be the
yearly and monthly amounts shown in the table below, which includes escalations of 3.0%
every year on the anniversary of the Commencement Date and each year thereafter:
Attachment 3
Proposed First Amendment
Page 1 of 4
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05G - 6
Lease Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Dates
8/1/04 - 7/31/05
8/1/05 - 7/31/06
8/1/06 - 7/31/07
8/1/07 - 7/31/08
8/1/08 - 7/31/09
8/1/09 - 7/31/10
8/1/10 - 7/31/11
8/1/11 - 7/31/12
8/1/12 - 7/31/13
8/1/13 - 7/31/14
8/1/14 - 7/31/15
8/1/15 - 7/31/16
8/1/16 - 7/31/17
8/1/17 - 7/31/18
8/1/18 - 7/31/19
8/1/19 - 7/31/20
8/1/20 - 7/31/21
8/1/21 - 7/31/22
8/1/22 - 7/31/23
8/1/23 - 7/31/24
8/1/24 - 7/31/25
8/1/25 - 7/31/26
8/1/26 - 7/31/27
8/1/27 - 7/31/28
Original Property Expansion Property
$9,600
$0
$9,888
$0
$10,185
$0
$10,490
$0
$10,805
$0
$11,129
$0
$11,463
$0
$11,807
$0
$12,161
$0
$12,526
$0
$12,902
$1,801
$13,289
$10,602
$13,687
$10,920
$14,098
$11,248
$14,521
$11,585
$14,956
$11,933
$15,405
$12,291
$15,867
$12,660
$16,343
$13,040
$16,834
$13,431
$17,339
$13,834
$17,859
$14,249
$18,395
$14,676
$18,946
$15,116
Total Rent/Yr Total Rent/Mo
$9,600
$800
$9,888
$824
$10,185
$849
$10,490
$874
$10,805
$900
$11,129
$927
$11,463
$955
$11,807
$984
$12,161
$1,013
$12,526
$1,044
$14,703
See footnote.
$23,891
$1,991
$24,608
$2,051
$25,346
$2,112
$26,106
$2,176
$26,890
$2,241
$27,696
$2,308
$28,527
$2,377
$29,383
$2,449
$30,264
$2,522
$31,172
$2,598
$32,108
$2,676
$33,071
$2,756
$34,063
$2,839
Note: Lease Year 11 includes 12 months of rent on the Original Property (at $1,075.13/month) and three
months of rent (May (prorated), June and July) on the Expansion Property (at $857.80/month).
6. A new Section 3.03, Late Charges, is hereby added as follows:
“3.03. Late Charges. The Rent is due by the first of every month during the Lease Term
and is late by the 10th of the month. Rent not paid when due shall bear interest from the date
due until paid at the rate of ten percent (10%) per annum or the maximum lawful rate that
Landlord may charge to Tenant under applicable laws, whichever is less. Acceptance of any
late charge shall not constitute a waiver of Tenant's default with respect to the overdue
amount, nor prevent Landlord from exercising any of the other rights and remedies available
to Landlord.”
7. The following sentence is added after the first sentence in Subsection 4.01. A., Permitted
Uses:
“All paintballs used on the Premises must be made of non-toxic, water soluble and
biodegradable materials, and Tenant will display sign(s) on the Premises notifying the public
of this fact.”
8. A new Subsection K is added to Section 4.03, Use Prohibitions, as follows:
Attachment 3
Proposed First Amendment
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“K.
Use any Hazardous Materials, as that term is defined in Section 8.05 C (3) of the
Lease, on the Premises.”
9. The following sentence is added to the end of the first paragraph in Section 8.04, Proof of
Coverage:
“The additional insured coverage under the Tenant’s policy shall be endorsed to indicate that
it is primary and non-contributory and will not seek contribution from the Landlord’s
insurance or self-insurance.”
10. Ratification; Miscellaneous. Except as modified by this Amendment, in all other respects
the Lease is hereby ratified and affirmed and remains in full force and effect. This
Amendment may be executed in one or more counterparts.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
Attachment 3
Proposed First Amendment
Page 3 of 4
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05G - 8
IN WITNESS WHEREOF, the Landlord and Tenant have hereto executed this First
Amendment to Lease on May 26, 2015.
CITY OF DAVIS, a California Municipal
Corporation
By:
Title: _________________________
"LANDLORD"
APPROVED AS TO FORM:
City Attorney
MICAH MCGLOCKLIN, an individual
By:
Title:
By:
Title:
"TENANT"
Attachment 3
Proposed First Amendment
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05-26-15 City Council Meeting
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