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Agenda Item
ASR
Control 24-000828 |
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MEETING
DATE: |
11/19/24 |
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legal entity taking action: |
Board
of Supervisors |
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board of supervisors district(s): |
3 |
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SUBMITTING Agency/Department: |
County
Executive Office (Approved) |
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Department contact person(s): |
Thomas
A. Miller (714) 834-6019 |
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Brian
Bauer (714) 834-5663 |
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Subject: Third Amendment to Lease Agreement
with Santiago Equestrian Center
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ceo CONCUR |
County Counsel Review |
Clerk of the Board |
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Concur |
Approved
Agreement to Form |
Discussion |
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3
Votes Board Majority |
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Budgeted: Yes |
Current Year
Cost: N/A |
Annual Cost: N/A |
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Staffing Impact: |
No |
# of Positions: |
Sole Source: No |
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Current Fiscal Year Revenue: See Financial
Impact Section
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Prior Board Action: 1/12/2016 #24; 12/9/2008 #16;
3/16/2004 #15 |
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RECOMMENDED
ACTION(S):
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1. |
Find that the
proposed project is categorically exempt from the California Environmental
Quality Act (CEQA), Class 1, pursuant to CEQA Guidelines Section 15301. |
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2. |
Approve
the Consent to Assignment and Transfer of Corporation Stock for the transfer
and assignment of 100% of the corporation stock for the ownership of Southern
Sierra Land & Cattle Company from Sheryl Lynn Edgar to David Charles
Edgar II. |
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3. |
Approve
the Third Amendment to Lease Agreement with Southern Sierra Land & Cattle
Company dba Santiago Equestrian Center, to, among other things, extend the
lease term 15-years to December 7, 2042, modify percentage rent, require
completion of certain capital improvement projects, establish minimum tenant
investment, add additional tenant maintenance obligations, require control of
non-native, invasive plants, and provide one five-year lease extension option
to December 7, 2047, if additional capital improvements are completed. |
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4. |
Authorize
the Chief Real Estate Officer, or designee, to execute the Consent to
Assignment and Transfer of Corporation Stock, Third Amendment to Lease
Agreement, subsequent documents, other lease amendments, and option terms
that make non-monetary and/or monetary changes that do not increase the
County costs by more than $75,000 per fiscal year as approved by County
Counsel and OC Parks Director. |
SUMMARY:
Approval
of the Consent to Assignment and Transfer of Corporation Stock and Third Amendment
to Lease Agreement with Sierra Land & Cattle Company dba Santiago
Equestrian Center will extend the lease term by at least 15 years to allow
Sierra Land & Cattle Company dba Santiago Equestrian Center to complete
various capital improvement projects on the property.
BACKGROUND
INFORMATION:
Southern Sierra Land & Cattle
Company dba Santiago Equestrian Center (SEC) currently operates an equestrian
center located at 18381 Santiago Canyon Road, Silverado, California 92676
(Premises) containing 70 horse stalls and multiple riding arenas on
approximately 6.3 acres of land within Whiting Ranch Wilderness Park (Park).
When the County of Orange (County) acquired the Park in 1997, as part of a
larger land expansion, SEC was already occupying the Premises and operating it
as an equestrian center.
On March 16, 2004, the Board of
Supervisors (Board) authorized County staff to negotiate a Lease Agreement
(Lease) between SEC and the County allowing SEC to continue operating the
Premises for the purposes of horse boarding, training, riding lessons, equestrian-related
community service activities, living quarters for on-site workers and ancillary
uses. SEC provides local residents affordable rates for horse boarding, with a
monthly rental fee that is below other Orange County equestrian centers.
On December 9, 2008, the Board
approved the Lease with SEC for a term of 20 years subject to the completion of
certain improvement benchmarks. SEC did not meet these improvement benchmarks
within the designated time frame and the Lease was reduced to a five-year term,
expiring on December 13, 2013, and was on month-to-month holdover status until
2016.
On January 12, 2016, the Board
approved the First Amendment to the Lease which extended the Lease term to
December 31, 2024, after the improvements were completed. On April 15, 2020,
the Second Amendment to the Lease was executed under delegated authority in
response to the COVID-19 state of emergency to provide a tolling period that
abated rent and extended the Lease expiration date to December 7, 2027.
Third Amendment to
Lease Agreement
The County has prepared a Third
Amendment to the Lease (Third Amendment) which offers SEC a 15-year extension
on its existing lease term, to December 7, 2042, in exchange for completing
approximately $1.3 million worth of capital improvements on the Premises. This
extension would allow SEC to recoup their investment on these projects and
continue to provide the public with an affordable option for horse boarding. A
summary of the Proposed Capital Improvement (PCI) projects proposed are
detailed below.
Proposed Capital
Improvements (PCIs)
1. Erosion-Related Soil Loss/Retaining
Wall
In
April 2023, OC Community Resources/OC Parks (OCCR/OC Parks) was notified
that
the slope behind the main stable area was showing signs of soil loss due to
erosion.
OC Parks collaborated with SEC to explore different methods for stabilizing
the
slope, such as the planting of approved native species of plants to help
minimize
the
effects. To provide a permanent solution and prevent damage to the existing
stables,
SEC is seeking approval to construct a retaining wall behind the main stable
to
address the erosion issue.
2. Arena Shade Structure
SEC is proposing to install a shade
structure over a reconfigured horse arena area
for the safety and comfort of
clients, staff and horses.
3. Additional Horse Breezeways/Stalls
The
2008 Santiago Fire heavily impacted SEC operations, resulting in the loss of 49
of
the original 120 horse stalls. Since then, the number of stalls has fluctuated
as
SEC
has built new stalls to replace those deemed uninhabitable. SEC currently has
70
stalls and proposes to construct two additional breezeways containing an
additional
40 stalls to replace some of the previously lost/demolished stalls, bringing
the
total to 110. The Third Amendment will limit the maximum number of stalls
allowed
on the Premises to 120, allowing SEC to construct additional stalls in the
future
without further amendment to the Lease.
To prepare for the threat of future
wildfires, SEC has a fire evacuation plan for its
horses filed with OC Parks
Operations. This plan is updated frequently to insure
proper evacuation of horses and
owners at SEC during a fire emergency.
The PCIs are anticipated to be
completed by SEC in a four-year timeframe. SEC has indicated to OCCR/OC Parks
that after these PCIs are completed, they will seek to invest additional funds
into items including, but not limited to, replacing aging infrastructure
including replacement of older breezeways, stalls and storage areas. The Third
Amendment also proposes to allow the Chief Real Estate Officer to provide an
additional 5-year lease term extension in exchange for completing these
proposed additional capital improvement projects.
All PCIs must be completed within
the 48-month period, commencing January 1, 2025. If the PCIs are not completed
in that timeframe, then the lease can be terminated or prorated at the
discretion of the Director of OC Parks.
The Third Amendment establishes a minimum investment from SEC of $1.3
million for the completion of the PCIs and adds an additional maintenance
responsibility upon SEC to control non-native, invasive plants within the
Premises. The Third Amendment will also modify the percentage rents paid from
8% of gross revenue to 10% of gross revenue after the 48-month PCI period has
elapsed, commencing on January 1, 2029.
Assignment and
Transfer of Corporation Stock
SEC has requested the County
consent to transfer and assign all the corporation stock from current president
and sole owner of SEC, Sheryl Lynn Edgar, to her son, David Charles Edgar II.
The County has verified with Ms. Edgar that the equestrian center has been a
family operation since the 1980s. Her son, Mr. Edgar, has been involved with
operations for the last several years, gaining hands-on experience in all
aspects of its management, while Ms. Edgar provided strategic oversight. Mr.
Edgar’s day-to-day management includes horse care, staff management and
customer relations. Within the last 18 months, Mr. Edgar has grown revenue from
$300,000 to over $650,000. County staff recommends approval of the Consent to
Assignment and Transfer of Corporation Stock.
Orange
County Parks Commission: This item was brought before the Orange County Parks
Commission at its October 3, 2024, meeting and received a unanimous
recommendation for County staff to pursue a lease extension with Southern
Sierra Land and Cattle Company for continued operations of the Santiago
Equestrian Center.
Compliance
with CEQA:
The proposed project is Categorically Exempt (Class 1) from provisions of CEQA
pursuant to Section 15301 of the CEQA Guidelines because it involves no
expansion of use beyond that existing.
FINANCIAL
IMPACT:
Approval of the Third Amendment to
the Lease will extend the Lease for an additional 15 years, which will extend
the period that the County will receive revenue from this Lease. Revenues paid
to the County for FY 2023-24 was $53,207. Projected future percentage rent will
adjust from 8% to 10% effective January 1, 2029. This item will be absorbed
into OC Parks Fund 405 FY 2024–25 Budget and will be included in the budget for
future fiscal years.
STAFFING
IMPACT:
N/A
REVIEWING
AGENCIES:
OC
Community Resources/OC Parks
ATTACHMENT(S):
Attachment
A – Location Map
Attachment B – Assignment and Transfer of Corporation Stock
Attachment C – Summary of Third Amendment to Lease Agreement
Attachment D – Third Amendment to Lease Agreement