Staff Report
PREPARED BY: ARN ANDREWS
Assistant Town Manager
Reviewed by: Town Manager, Director of Finance, and Town Attorney
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 04/16/2019
ITEM NO: 8
ITEM NO: 11
DATE: APRIL 9, 2019
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: AUTHORIZE THE TOWN MANAGER TO NEGOTIATE AND EXECUTE A SUB-
LEASE WITH THE UNITED STATES POSTAL SERVICE FOR PARKING SPACES
LOCATED AT 15 MONTEBELLO WAY
RECOMMENDATION:
Authorize the Town Manager to negotiate and execute a sub-lease with the United States
Postal Service (USPS) for parking spaces located at 15 Montebello Way.
BACKGROUND:
In 2002, the Town entered into a 15-year lease agreement with Frontier California Inc.
(formerly Verizon) for the use of the parking lot at 15 Montebello Way. On March 17, 2003, the
parking lot lease was amended to allow for the sub-leasing of a portion of the lot to the United
States Postal Service. The Frontier agreement was further amended in 2006 and 2009 with a
final amendment occurring in July of this year to exercise a five-year extension option per the
agreement. The five-year option extension maintains the agreement from May 2019 through
April 2024. Since the 2003 amendment, the Town has continued to sub-lease a portion of the
parking spaces to the USPS concurrently with the lease agreement with Frontier California Inc.
DISCUSSION:
The current sublease with the USPS is scheduled to expire on April 30, 2019. With the five-year
extension on the Frontier California Inc. agreement completed in August, staff negotiated a
new five-year sub-lease (Attachment 1) with the USPS. Similar to the prior sub-lease, the
agreement covers approximately 10,800 square feet or 35 parking spaces. The table on the
following page illustrates the terms of the prior agreement and the proposed agreement with
USPS.
PAGE 2 OF 2
SUBJECT: AUTHORIZE THE TOWN MANAGER TO NEGOTIATE AND EXECUTE A SUB-
LEASE WITH THE UNITED STATES POSTAL SERVICE FOR PARKING SPACES
LOCATED AT 15 MONTEBELLO WAY
DATE: APRIL 8, 2019
S:\COUNCIL REPORTS\2019\04-16-19\USPS Agreement\Staff Report FINAL.docx
DISCUSSION (continued):
TERM ANNUAL LEASE MONTHLY LEASE
Prior Lease Years 11 - 15 $28,566.00 $2,380.50
New Lease Years 1 - 5 $32,400.00 $2,700.00
The new lease terms represent a 13.4% increase from the prior agreement to be more
commensurate with the terms of the lease with Frontier California Inc. The five-year base rent
established in the fourth amendment to the lease with Frontier California Inc. is $5,700 per
month or $68,400 annually.
CONCLUSION:
Execution of the negotiated sub-lease with the USPS will continue the long-standing practice of
subsidizing the lease with Frontier California Inc., providing additional parking to the postal
service, and utilizing a fee structure more commensurate with the primary lease terms.
COORDINATION:
This report was coordinated with the Town Manager’s Office, the Town Attorney’s Office, and
the Finance Department.
FISCAL IMPACT:
If executed, the sublease would provide annual revenue generation of $32,400.
Attachment:
1. USPS sub-lease