City of Santa Monica
California

Staff Report
3685

Approval of Modification to Lease Agreements at Airport Properties with SNAP, Inc.

Information

Department:Public Works, Airport DivisionSponsors:
Category:03. Consent Calendar

Recommended Action

Recommended Action

Staff recommends that the City Council authorize the City Manager to negotiate and execute a third modification to month-to-month rental agreement for 3000 31st Street Suite A-E and a first modification to lease agreement #10302 for 2772 and 2800 Donald Douglas Loop North with Snap, Inc. (formerly known as Snapchat Inc.), a Delaware-based company, to include, subject to strict approval requirements, industrial laboratory and research and development uses among the permitted uses for the premises. There is no immediate financial impact or budget action necessary as a result of the recommended action.

Staff Report Body

Summary

Snap, Inc. (“Snap”) currently operates its research and development laboratory, which primarily houses the tools and equipment necessary in prototyping and testing various pieces of hardware, in Venice, California. Snap wishes to move some of its laboratory operations from Venice into the space it leases from the City either at 2772 and 2800 Donald Douglas Loop North or 3000 31st Street Suite A E (Leased Space) at the Santa Monica Airport.  Use of either space for Snap’s laboratory operations would fall outside the current permitted uses under either lease and outside the uses currently authorized under the Santa Monica Airport Leasing and Licensing Guidelines. Staff recommends modifications of the leases to permit Snap to consolidate some of its laboratory operations into its Santa Monica Airport Leased Space. Such modifications require Council approval.

 

Discussion

In September 2016, the City entered into lease agreement #10302CCS for City-owned properties at 2772 and 2800 Donald Douglas Loop North and eight small abutting hangars.  The lease term is 67 months, expiring on April 30, 2022, with an option to extend the lease for a period of five years. The current permitted uses of the premises are “general commercial office and administrative uses consistent with uses related to a technology company.”

 

In April 2017, the City entered into a month-to-month rental agreement with Snap for Suites A-E and ground floor hangar space within the City-owned property located at 3000 31st Street. This rental agreement has been the subject of two prior modifications and remains in place subject to termination by either party on 30 days written notice. The current permitted uses of the premises are aircraft storage (in the hangar space) and “general office and administrative use consistent with a use expected for a commercial business operation in the City of Santa Monica.”

 

Snap has approached the City seeking the ability to consolidate some of its research and development laboratory operations from their current location in Venice, California into the Leased Space. All costs to construct the research and development laboratory will be the responsibility of Snap.  In order to ensure that this construction does not hinder the City’s ability to market the space in the future, Snap would be responsible for bearing the costs of returning the premises to its original condition if Snap decides to vacate the premises.  Snap has described its research and development laboratory operations as follows:

·         The R&D lab primarily houses the tools and equipment necessary in prototyping and testing various pieces of hardware and other projects, for example, Snap’s Spectacles. The lab is used daily by a small team of engineers certified to operate the equipment.

·         The prototyping lab is common to the electronics industry and similar in nature to the prior use of the space as a design center by Audi/VW. The lab operations will be a low intensity use that is compatible with surrounding uses and will not be obnoxious or offensive to the surrounding environment. 

·         To support the operations, the team, as part of its normal business operations, uses, stores and maintains small quantities of hazardous substances (e.g., paint and solvents) and generates small quantities of hazardous waste (e.g., e-waste) that is sent to a 3rd party for treatment and disposal. All such substances/products shall be stored, used, kept and maintained by Snap in accordance with all applicable laws, regulations or rules.

The Airport’s Leasing and Licensing Guidelines (Guidelines) define authorized uses as “low intensity uses that are compatible with surrounding uses, serve the adjacent community, and are consistent with the City’s environmental goals and policies.” The Guidelines list “professional and general offices” as an example of authorized uses but not “laboratory or research and development uses. The Guidelines identify as prohibited uses “any use involving the manufacture, processing, storage, or treatment of products, which by nature of the operation is likely to be obnoxious or offensive to the surrounding environment.” The Guidelines state that leases outside the parameters established by this Policy, will require City Council approval.” 

 

Snap has provided the City with both a list of the chemicals it will be using in its electronics prototyping lab and the procedures it follows for handling and disposing of those chemicals and waste. Snap’s submission has been reviewed by the City’s Water Resources Division, which has determined that its chemical and waste handling procedures are appropriate and that Snap’s use of the chemicals pursuant to those handling procedures will not negatively impact the surrounding environment.  Additionally, Snap would be required to obtain an industrial wastewater permit under Santa Monica Municipal Code Section 5.20.170 and be subject to routine inspections.  The proposed modifications would require similar review and approval for any additional research and development use of the Leased Space that Snap may propose in the future.

 

The proposed modifications would allow the tenant to consolidate its operations from other locations to their facilities at the Santa Monica Airport and would further foster a beneficial long-term tenant relationship between the City and Snap.

 

Accordingly, staff recommends that the City Council approve the modifications to the agreements for the Leased Space to permit industrial laboratory and research and development uses, including the operation of an electronics prototyping lab, and any lawful ancillary uses related thereto (e.g., the lawful disposal of any waste generated by the prototyping lab).

 

Past Council Actions

08/14/2018 (Attachment A)

Approved the Minimum Standards for Commercial Aeronautical Services

05/10/2016 (Attachment B)

Approved a Lease with Snapchat, Inc. for Office Space at 2772 and 2800 Donald Douglas Loop North

 

Financial Impacts and Budget Actions

There is no immediate financial impact or budget action necessary as a result of the recommended action.

Meeting History

Aug 27, 2019 5:30 PM  City Council Regular Meeting
draft Draft