TO:
Honorable Mayor and Members of the City Council
THROUGH:
Talyn Mirzakhanian, City Manager
FROM:
Patricia Matson, Senior Management Analyst
SUBJECT:Title
Consideration of a Resolution Approving the Proposed Fiscal Year 2025-2026 Chamber of Commerce Work Plan Agreement; Future Lease Payments for a New Lease Associated with the Office Space Utilized by the Chamber of Commerce; and Receipt of the Fiscal Year 2024-2025 Work Plan Report (Potential Budget Impact) (City Manager Mirzakhanian)
(Estimated Time: 1 Hr.)
A) ADOPT RESOLUTION NO. 25-0131
B) AUTHORIZE THE CITY MANAGER TO FINALIZE THE TERMS AND EXECUTE THE AGREEMENT AND A NEW LEASE
C) DISCUSS & PROVIDE DIRECTION REGARDING FUTURE LEASE PAYMENTS
D) RECEIVE AND FILE FY 2024-2025 WORK PLAN REPORT
Body
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RECOMMENDATION:
Staff recommends that the City Council:
a) Provide direction to staff regarding the funding level commitment;
b) Adopt Resolution No. 25-0131 approving the proposed Fiscal Year (FY) 2025-2026 Chamber of Commerce Work Plan agreement;
c) Authorize the City Manager to finalize the remaining terms and execute the agreement as amended by City Council;
d) Discuss and provide direction regarding lease payments for the purpose of entering into a new lease associated with the office space currently utilized by the Chamber of Commerce and authorize the City Manager to execute the lease accordingly; and
e) Receive and file the Chamber of Commerce’s FY 2024-2025 Work Plan Report.
FISCAL IMPLICATIONS:
The draft agreement allows the Chamber of Commerce (Chamber) to invoice the City of Manhattan Beach for three investment installments for expenses related to the provision of economic, business development, visitor attraction, and community enhancement services in a final amount to be determined by the City Council.
The Chamber of Commerce is requesting an agreement for an amount not to exceed $85,000. In the FY 2025-2026 budget, funds in the amount of $40,000 are currently budgeted within the General Fund under the Management Services Department for this agreement. If City Council chooses to exceed the $40,000 currently budgeted, staff would need to return with an additional appropriation to cover the remaining costs during the mid-year budget update report.
BACKGROUND:
The Manhattan Beach Chamber of Commerce serves to support businesses and the community through advocacy, leadership, education, and marketing efforts that promote economic vitality and enhance quality of life. Historically, the City has partially funded the Chamber’s activities and events through an annual Work Plan Agreement, and the Chamber submits regular reports to demonstrate progress on these initiatives. Additionally, since 2012, the Chamber has operated in a City-owned building via a lease agreement with the City.
Work Plan Agreement
Prior Funding
In years past, the City has provided varying amounts of funding to the Chamber of Commerce to assist in promoting commerce and economic development in Manhattan Beach.
|
Fiscal Year |
Work Plan Funding |
|
2013-2014 |
$100,000 |
|
2014-2015 |
$100,000 |
|
2015-2016 |
Sponsorship of select events only |
|
2016-2017 |
Sponsorship of select events only |
|
2017-2018 |
$57,250 |
|
2018-2019 |
$49,500 |
|
2019-2020 |
COVID - Sponsorship of select events only |
|
2020-2021 |
COVID - Sponsorship of select events only |
|
2021-2022 |
COVID - Sponsorship of select events only |
|
2022-2023 |
$47,585 |
|
2023-2024 |
$36,585 |
|
2024-2025 |
$29,585 |
|
2025-2026 |
Budgeted Amount: $40,000 |
The City reimburses the Chamber based upon work completed.
Prior Agreement Structure
Over the last few years, the Chamber’s agreement was vastly event-based and each deliverable had its own cost. The FY 2024-2025 agreement was valued at $29,585 and focused on the following:
I. Local Marketing
Location Analytics and Marketing Analysis Reports: ($7,500)
II. Business Education and Engagement
Business Safety/Education/Homelessness Seminars (two seminars) ($2,000)
Young Entrepreneurs Academy (YEA!) - Investor Panel ($2,500)
III. City Sponsored Legacy Events
Mayor's Lunch ($5,000)
Signature Fall Event - i.e. Best of Manhattan, Bite at the Beach ($5,000)
State of the City ($5,000)
III. Membership
Annual Membership Dues ($2,585)
Leadership Transition
The Chamber’s previous CEO departed in January 2025 and the appointment of their new President and CEO, Jill Lamkin, was announced in June 2025. Due to the transition of leadership, development of the FY 25-26 agreement was delayed. The Chamber has now provided a proposed scope of services for the current fiscal year to be discussed in the following “Discussion” section.
Lease
Since 2012, the City has been supporting the Chamber by charging $1 per year to rent their office space in the City-owned Post Office building at 425 15th Street. This lease is currently under a month-to-month agreement structure. Staff is recommending that the City Council consider entering a new long-term lease. Options for City Council’s consideration are included in the “Discussion” section below.
DISCUSSION:
As mentioned above, the Chamber has provided a proposed work plan and scope of services for the current fiscal year. The attached draft agreement (Attachment) aims to meet the City’s needs across three categories 1) Economic Development, Business Promotion & Education Program, 2) Visitor Attraction & Experience + Community Welcome Program, and 3) Community Enhancement.
Staff appropriated $40,000 for the FY 2025-2026 agreement, however, the Chamber is proposing a scope of services valued at $85,000. With the understanding that the City budgeted $40,000, staff requested that the Chamber list their proposed events and activity funding by priority (Attachment) for Council’s discussion. Further information regarding the proposed events and activities can be found in the attached draft agreement under Exhibit A - Scope of Services.
The attached spreadsheet lays out the following funding priorities:
Priority Funding Level 1
The first priority level adds up to the appropriated amount of $40,000. These events and activities include:
• Business License Tax Forum - sponsorship ($4,000)
• State of the City - sponsorship ($6,000)
• Economic Forum: Major Sporting Events - sponsorship ($5,000)
• A portion of the requested amount for Economic Development Services ($8,000)
• Visitor Analytics (half the subscription cost of Placer.ai) ($8,000)
• Destination Guide ($5,000)
• Young Entrepreneurs Academy (YEA!) Investor Panel ($4,000)
Priority Funding Level 2
The second priority level includes additional activities as well as the items listed under the first priority. This level amounts to $75,000. These additional events and activities include:
• Business Recognition ($2,000)
• Business Ribbon Cuttings & Anniversaries ($1,500)
• New Business Welcome ($1,500)
• An additional portion of the requested amount for Economic Development Services ($12,000)
• New Resident Welcome Package ($2,000)
• Manhattan Beach Logo Merchandise Inventory ($3,000)
• Relocation Guide ($2,000)
• Social Media Marketing ($8,000)
• Community Fairs and Expos ($3,000)
Priority Funding Level 3
The third level includes all of the remaining activities as well as the items listed under the first and second priority levels. This third level amounts to the full amount of $85,000 being requested by the Chamber. These additional events and activities include:
• The remaining portion of the requested amount for Economic Development Services ($4,000)
• Visitor Map ($3,000)
• Internships & Summer Job Preparation Program ($3,000)
The proposed investment schedule, attached as Exhibit B to the draft agreement, provides that payment is contingent upon the satisfaction of the City Manager that the Chamber is meeting its ongoing obligations and includes a requirement for semi-annual reporting.
Staff recommends that City Council approve Priority Funding Level 1, consistent with the current budget appropriation. Alternatively, the City Council may choose to approve Priority Funding Levels 2 or 3; however, the alternative options would require a future budget appropriation. City Council may also direct staff to include additional funding for the Chamber as part of the City’s FY 2026-27 budget discussions. Staff also recommends that the City Council authorize the City Manager to finalize and execute the draft agreement, as amended based on City Council’s direction.
Lease
As mentioned above, since 2012, the City has leased office space to the Chamber, on City-owned property located at 425 15th Street, for $1.00 per year. Additionally, based on an agreement between the City and the Chamber dated 1989, the City has provided office space to the chamber at little to no cost since 1989.
The current annual payment is significantly below market rate; however, the below-market rent serves a public purpose for several reasons, including but not limited to the Chamber’s significant public service efforts to attract, promote and market local businesses, which strengthens the local economy and produces tax revenue for the City. Thus, the market value of the lease could be considered in-kind support that adds to the value of the City’s agreement with the Chamber.
Staff is proposing that City Council consider entering a new long-term lease with the Chamber, but requests City Council’s direction on the appropriate amount for future lease payments.
For reference, a representative at CBRE: Global Commercial Real Estate Services, provided the City with current market rate data for office spaces in or near downtown Manhattan Beach:
• Morningside Drive - $8.60/sq ft/month (triple net)*
• Second floor office space on Manhattan Beach Blvd. east of Highland Ave - $11.60/sq ft/month (triple net)
• Sepulveda Blvd./Rosecrans Ave. area - $4.00-$4.50/sq ft/month
• 800-900 block of Manhattan Beach Blvd. - $4.00-$4.50/sq ft/month
o More comparable with older buildings and distance to downtown
*A triple net lease is a commercial lease where the tenant is responsible for paying the base rent, plus three additional items: property taxes, building insurance, and maintenance costs.
The CBRE representative estimated that the market rate for the property at 425 15th Street could be approximately $4.00-$4.50/ft/month (triple net) considering its distance from the center of downtown and that it is an older building.
For purposes of comparison, the current Post Office Lease in the same building is $58,300 per year for 1,900 square feet, which amounts to approximately $2.55/sq ft/month. With the Chamber of Commerce office space at approximately 750 square feet, the market value of the Chamber lease space is estimated between $2.55-$4.50/sq ft/month or $22,950-$40,500 annually.
In addition, the Chamber has four dedicated parking stalls in the lot to the north of the facility. Current rates for outdoor parking leases in the area are estimated at $150-$250/stall/month, resulting in an estimated value of roughly $7,200 to $12,000 annually.
Another factor to consider is that the City currently pays the associated costs for the following maintenance at the entire facility shared with City offices and the Post Office:
• Landscaping (approx. $450/month - covers both the Joslyn Center and 425 15th Street)
• HVAC (approx. $280/month)
• Janitorial services (approx. $1,200/month - for servicing the bathrooms, common areas in and around the facility, and the Dial-a-Ride office)
• Property insurance ($1,425 for FY 25-26)
With the Chamber’s office space occupying roughly 16% of the building, annual maintenance and insurance costs are estimated at $3,706 and $228, respectively.
Including the office space, four parking stalls, facility maintenance and insurance, the total approximate value of in-kind services are estimated between $34,084 and $56,434 annually at the highest market rent. Based on City Council direction provided, staff is requesting authorization for the City Manager to execute the new lease.
FY 24-25 Work Plan Report
Per the FY 24-25 work plan agreement, the Chamber is required to submit an annual report detailing overall project management and achievement of the goals outlined in the agreement. The Chamber completed all their objectives except for one of the two planned business education seminars. The Chamber’s final report has been included as an attachment (Attachment) and is recommended to be received and filed by City Council.
CONCLUSION:
Staff recommends that the City Council:
a) Provide direction to staff regarding the funding level commitment;
b) Adopt Resolution No. 25-0131 approving the proposed FY 2025-2026 Chamber of Commerce Work Plan agreement;
c) Authorize the City Manager to finalize the remaining terms and execute the agreement as amended by City Council;
d) Discuss and provide direction regarding lease payments for the purpose of entering into a new lease associated with the office space currently utilized by the Chamber of Commerce and authorize the City Manager to execute the new lease; and
e) Receive and file the Chamber of Commerce’s FY 2024-2025 Work Plan Report.
PUBLIC OUTREACH:
After analysis, staff determined that public outreach was not required for this issue.
ENVIRONMENTAL REVIEW:
The City has reviewed the discussion item for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the discussion item is not subject to CEQA. Thus, no environmental review is necessary.
LEGAL REVIEW:
The City Attorney has approved the draft agreement as to legal form.
ATTACHMENTS:
1. Resolution No. 25-0131
2. Draft Agreement - Chamber of Commerce Fiscal Year 2025-2026
3. Chamber of Commerce - Proposed Funding by Priority
4. Fiscal Year 2024-2025 Final Work Plan Report
5. PowerPoint Presentation