OFFICE OF THE CITY AUDITOR
Roland E. Smith
City Auditor

July 9, 2002

TO: President De La Fuente and Members of the City Counci

RESOLUTION AUTHORIZING THE CITY OF OAKLAND TO ENTER INTO A PREPAID LEASE OF NOT LESS THAN TWENTY YEARS IN AN AMOUNT NOT TO EXCEED $2,340,000 FOR BASIC RENT WITH THE FRUITVALE DEVELOPMENT CORPORATION FOR 8,500 SQUARE FEET OF SPACE IN THE FRUITVALE TRANSIT VILLAGE FOR THE FRUITVALE/SAN ANTONIO MULTIPPURPOSE SENIOR CENTER

We have reviewed the accompanying Public Works Agency Council Agenda Report and draft resolution proposing authorization by the Oakland City Council for the City Manager to negotiate, enter into, and execute a prepaid lease agreement with the Fruitvale Development Corporation as referenced above.

BACKGROUND

City Council Resolution No. 73524 dated May 27, 1997 authorized a master agreement between the City of Oakland and the Spanish Speaking Unity Council in an amount not to exceed $2,340,000 in Measure K Series 1997C Bond monies for the design, construction and project management services for the Fruitvale /San Antonio Senior Project. On June 24 ,1999, this agreement was assigned to the Fruitvale Development Corporation. The Fruitvale Development Corporation has requested that the Measure K 1997C funds be used to fund lease payments instead of the design, construction, and project management services.

The lease is a requirement for the corporation to secure financing for the Transit Village Project. It will also guarantee the space for the senior center for a term of not less than twenty years, which is the life of the Measure K bonds. Approval of the resolution also meets the City goal number 6 of vital neighborhood commerce.

Negotiation of the specific lease terms is under way and has not yet been finalized.

CONCLUSION

We support the resolution authorizing the City Manager to enter into the negotiations for the lease without comments. However, we reserve the right to review the terms of the prepaid lease prior to its execution.

Respectfully submitted by:

Elmer L. de Leon, CGFM, CIA
Deputy Auditor

Issued by:

Roland E. Smith, CPA
City Auditor

June 20, 2002