Loading...
HomeMy WebLinkAboutItem 6e - Authorization to Extend Sublease Agreement for South Hills Radio Site Item 6e Department: Information Technology Cost Center: 1101 For Agenda of: 3/17/2026 Placement: Consent Estimated Time: N/A FROM: Greg Hermann, Deputy City Manager Prepared By: Rebecca Cox, Business Analyst SUBJECT: AUTHORIZATION TO EXTEND SUBLEASE AGREEMENT FOR SOUTH HILLS RADIO SITE RECOMMENDATION Approve and authorize the City Manager to execute an amendment to sublease agreement for South Hills Radio Site, between the City of San Luis Obispo and Higuera Hill, LLC (Katherine L Foster, Trustee of the Katherine L Foster Family Trust dated October 21, 2024, and Heather A Spangler, Trustee of the Michael R Spangler revocable trust dated May 27, 2016). POLICY CONTEXT The City of San Luis Obispo’s Municipal Code 3.24.080, Purchase Authorization, requires Council approval for contracts in excess of $200,000. The cumulative value of the initial five-year lease extension is forecasted at $222,178.28. DISCUSSION Background The South Hills radio site is a long-standing primary location within the City’s communication network, connecting radio sites at the 919 Palm Parking Structure, Fire Station 3, and KVEC Hill. The City has leased this space over the past 30 years, and most recently in 2019, completed capital improvements to the site, including replacing the shelter, generator, antenna poles, and constructing a new 100’ radio tower. The South Hills radio site is important to the City’s radio network because of its central location and the broad viewshed it provides. From South Hills, the City can meet most of its radio communication needs for Police, Fire, Public Works, Utilities, and Transit operations. Police and Fire rely on the network for dependable communications during daily operations and disaster scenarios. Utilities use the network for both voice communication and telemetry, making it a critical link for water and wastewater services. Transit depends on the network for communication between bus drivers and central dispatch. Without the South Hills site, the City would need to invest signi ficant capital to build additional radio sites to achieve comparable coverage. Page 61 of 219 Item 6e On August 3, 1993, the City Council approved and authorized the Mayor to execute a 10- year lease agreement for the site, with the predecessors-in-interest to Higuera Hill, LLC. The lease agreement included three renewal options, each for an additional ten-year term. A new sublease agreement for the same site was executed on October 2 3, 2003, for five (5) years, commencing on July 1, 2003, to end June 30, 2008, with the ability to extend the sublease additional terms through October 22, 2025. The 2003 sublease included a 4% annual rent escalator beginning July 1, 2004. In 2020 (two yea rs into the third renewal term), City staff negotiated a rent freeze for the period from July 1, 2020, to June 30, 2021, as part of the City’s efforts to stabilize costs during the COVID -19 pandemic. An amendment to this effect was executed on July 1, 2020, but did not extend the sublease or otherwise modify any of its terms. The sublease ended on October 22, 2025, per the 2003 sublease. Lease payments are made in six-month increments; July 2025-December 2025 was paid in July 2025, and January 2026 -June 2026 will be paid upon approval and execution of this amendment. Both the City and the sublessors, Higuera Hill, LLC, wish to extend the 2003 sublease under the same substantive terms. The sublease grants the City the right to operate, maintain, repair, and replace the ground radial system and related support structures, and includes an access easement for site operations and maintenance. The agreement establishes the City’s ownership of the tower and appurtenances, with the right to remove these improvements upon termination. The four additional, five-year renewal terms maintain an annual 4% increase and the option of nonrenewal with a 90-day notice requirement. As neither party seeks to change the terms of the lease beyond the lease period, an amendment was drafted to extend the lease period and maintain the remaining terms. The sublessors have signed the amendment (Attachment A.) Previous Council or Advisory Body Action On August 3, 1993, the City Council approved and authorized the Mayor to execute a 10- year lease agreement for the site, with the predecessors-in-interest to Higuera Hill, LLC: https://opengov.slocity.org/WebLink/DocView.aspx?id=22522&dbid=0&repo=CityClerk . The 2003 authorization to renew the lease was approved via City Manager Report. Documentation supporting the 2003 authorization to renew the lease is not on file. Per the Records Retention Policy and Schedule, City Manager Reports are retained for the current year plus 5 (CY+5); records of the 2003 authorization were likely destroyed in 2008 in compliance with the Records Retention Policy and Schedule. In future practice, supporting authorization should be retained for the life of the lease, plus the retention period required by the records retention schedule: Lease Agreements of Real P roperty (long-term) closed/completed +5 years (GC34090/CCP337). Public Engagement This item will be before Council during the public session on March 17, 2026. The public can provide comments at or before the meeting. ENVIRONMENTAL REVIEW Page 62 of 219 Item 6e The California Environmental Quality Act does not apply to the recommended action in this report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378. FISCAL IMPACT Budgeted: Yes Budget Year: 2025-26 Funding Identified: Yes Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $41,020.32 $41,020.32 $0 $41,020.32 State Federal Fees Other: Total $ $ $ $41,020.32* *Contractual 4% annual increase Fiscal Year Annual Rent (4% Annual Increase) FY 2025-26 $41,020.32 FY 2026-27 $42,661.13 FY 2027-28 $44,367.58 FY 2028-29 $46,142.28 FY 2029-30 $47,987.97 $222,179.28 Staff negotiated a five-year lease extension with a 4% annual increase consistent with the previous terms of agreement. Costs are forecasted and budgeted for in the Network Services budget and approved through the 2025-27 Financial Plan. Future fiscal year impacts will be managed through the annual budget process. ALTERNATIVES Council could decide not to approve the lease agreement and direct staff to negotiate different terms. ATTACHMENTS A - Amendment to Agreement for South Hills Radio Site B - Agreement for South Hills Radio Site Page 63 of 219 Page 64 of 219 Page 65 of 219 Page 66 of 219 Page 67 of 219 Page 68 of 219 Page 69 of 219 Page 70 of 219 Page 71 of 219 Page 72 of 219 Page 73 of 219 Page 74 of 219 Page 75 of 219 Page 76 of 219 Page 77 of 219 Page 78 of 219 Page 79 of 219 Page 80 of 219 Page 81 of 219 Page 82 of 219 Page 83 of 219 Page 84 of 219 Page 85 of 219 Page 86 of 219 Page 87 of 219 Page 88 of 219 Page 89 of 219 Page 90 of 219 Page 91 of 219 Page 92 of 219 Page 93 of 219 Page 94 of 219 Page 95 of 219 Page 96 of 219 Page 97 of 219 Page 98 of 219 Page 99 of 219 Page 100 of 219 Page 101 of 219 Page 102 of 219