HomeMy WebLinkAboutI-7 Staff Report - Authorize the Lease of Two Water System Owned HousesUB CONSENT ITEM
I-7
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: MANNY ROBLEDO, DIRECTOR OF UTILITIES
DATE: JULY 20, 2020
SUBJECT: AUTHORIZE THE LEASE OF TWO WATER SYSTEM OWNED HOUSES
LOCATED AT 720 GLADSTONE STREET AND 1700 BARRANCA AVENUE
BACKGROUND:
The Water division of the Azusa Light & Water Department owns two houses situated on land
that is co-occupied with a water storage tank and distribution services yard. These houses were
historically occupied by distribution employees responsible for water system operations. The
houses were vacated several years ago because on-site employee presence is no longer required
for operations. The houses are single family residences located at 720 Gladstone Street in Azusa
and 1700 Barranca Avenue in Glendora. To realize the value of these assets to offset other water
system expenses Staff recommends leasing the houses at market rates.
RECOMMENDATION:
Staff recommends the Utility Board take the following action:
1) Authorize the leasing of water system owned houses located at 1700 Barranca
Avenue and 720 Gladstone Street at market rates to responsible and credit worthy
lessees for terms not to exceed one (1) year at a time; and
2)Authorize the City Manager to execute lease agreements, in a form acceptable to
the City Attorney, for the lease of said houses.
ANALYSIS:
The subject houses are not needed for water system operations, but to date they have been
difficult to rent for market rates because they were integrated on the properties with other water
system facilities. Staff recognized that the leasing of the houses could yield approximately
APPROVED
UTILITY BOARD
7/20/2020
Water System Lease Authorizations
July 20, 2020
Page 2
$52,800 per year, so an investment in fencing and a driveway approach to separate the property
from water system operations, plus the cost of paint and flooring, would both be fully recovered
in less than a year from lease rents collected. Subsequently, the net rental income going forward
would be budgeted and used to offset the cost of water system capital outlays.
Staff has researched comparable rents in the area of the houses and has determined that the size
and location of the houses would yield approximately $2,200 per month per house. Staff plans on
engaging the services of a professional property manager to secure qualified lessees and
administer the day-to-day operations of the leases. The property manager would be engaged
pursuant to a purchase order issued by the Finance Department under normal purchasing
procedures, and the cost of the property management is expected to be about 6% of rents
collected.
FISCAL IMPACT:
The lease rents from the two houses is expected to yield $52,800 per year, which would be
applied to Water Division revenue fund account #32-40-721-000-4499.
Prepared by: Reviewed and Approved:
Danny Smith Manny Robledo
Administration and Finance Manager Director of Utilities
Reviewed and Approved:
Sergio Gonzalez
City Manager