That the City Council:
A.  Authorize staff to negotiate a long-term lease agreement with iTennis with the goal of providing the City with an improved level of community benefits and lease revenue and bring that lease agreement back to City Council for review and approval at a future date; and,

B.  If a new long-term lease agreement with iTennis cannot be successfully negotiated, authorize staff to issue a Request for Proposals for the use of the City-owned La Habra Tennis Center facility.

Under the current lease, the City remains responsible for the maintenance of driveways, parking and landscaped areas. The lease set a rental rate for the facility at $3,000 per month for August 2017 and then $3,500 each subsequent month through July 2019.

The City-owned Tennis Center facility is located at the City’s 10-acre Portola Park site on Euclid Street. The park site includes a number of distinct public facilities and uses, including:

Portola Park is, by far, one of the City’s most heavily utilized facilities and serves as the current location of the City’s summer concerts and movies in the park, the annual Tamale Festival, the Police Department’s National Night Out event, the back-to-school summer backpack giveaway, multiple Children’s Museum special events, and most recently, the La Habra Host Lions Club Corn Festival, in addition to the La Habra City Little League’s games and practices and the City’s Child Development’s daily programs for preschool and school-age children. Portola Park also serves as overflow parking for Brio Park across the street, which is heavily utilized during the summer months when the City’s splash pad is in operation. Portola Park has hundreds of visitors using various facilities each day, all of whom share the common 138-space parking lot, which is often fully utilized, making it difficult for each distinct function at the park to concurrently operate at full capacity.

As the expiration date of the iTennis lease approached in 2019, staff was contacted by other parties interested in leasing the City’s facility, so staff recommended to City Council at the time to extend the lease with iTennis on a month-to-month basis until additional information about other potential uses for the facility could be evaluated or if a Request for Information (RFI) should be released to gather additional options and ideas for the development of the City’s Tennis Center into other potential recreational activities, such as soccer.

Then, in early 2020, the global COVID pandemic resulted in the City shutting down virtually all public facilities and activities for the better part of a year. Staff was unsure when the pandemic would subside, but continued with the RFI process and received five proposals and four suggestions for the future use of the City’s Tennis Center facility. Staff reported the results of the RFI to the Community Services Commission on December 9, 2020, and recommended that the Commission review the suggested uses and development of the Tennis Center and to approve staff’s recommendation to release a full Request for Proposals (RFP) for the development of a multi-use sports and arts complex that could include the re-imagining of the entire Portola Park site. The Commission agreed with staff’s recommendation to release a full RFP; however, the process was significantly disrupted by the continuing impacts of the pandemic, resulting in the suspension of the RFP process for the Tennis Center/Portola Park site development concept.

As the impacts of the pandemic faded, staff in the Community Services Department focused all of its efforts on restarting Citywide programs, services, activities and events that had been suspended and kept the Tennis Center lease with iTennis on a month-to-month contract at the same monthly rate established in 2017. The leaseholder, iTennis, has requested a long-term lease that would allow them to continue to operate the facility and to provide them with some degree of financial certainty in order for them to invest capital for significant facility upgrades.

Community Services Department staff have met with the owners of iTennis to better understand their lease request and capital improvement plans, and to communicate the City’s desire to provide the best partnership possible for the benefit of the La Habra community.  iTennis has created a growing Pickleball presence at the facility, along with a sustained tennis program, has consistently paid their monthly lease on time, and has made attempts to increase the number of La Habra residents using the facility. Staff has indicated an expectation that any leaseholder of this facility should be more community friendly in providing options for La Habra residents, such as resident discounts, cooperative play agreements with the Recreation Division for La Habra senior citizens, allowances for community organizations and local school programs to use the facility, and improved coordination with the City regarding the joint uses that regularly occur at Portola Park. iTennis management staff has acknowledged staff’s focus and concerns and has indicated a willingness to consider adding provisions such as these to an extended contract. iTennis is aware of staff concerns regarding the limited parking at Portola Park and has indicated a willingness to incorporate certain “closed days” as a part of a new lease agreement.

If a new mutually beneficial lease agreement cannot be reached with iTennis, it is feasible for City staff to take over operation of the City-owned Tennis Center facility and continue providing tennis and pickleball recreational services to the community. This will require additional staffing and training; however, staff will be able to have full control over the management of the facility and the use of the parking lot, especially when other activities are being held at Portola Park.
 
At this time, there are three main options available to the City for the use of the La Habra Tennis Center.

1.  Negotiate a new long-term lease with iTennis - RECOMMENDED
Pros:      A new long-term lease with iTennis could allow them to commit to a significant capital investment for much-needed facility improvements, provide Community Services to program access to the facility at low or no cost for La Habra senior citizens and other groups, establish discounted memberships/rates specifically for La Habra residents, increase the monthly lease payments to the City, among other terms and conditions.

Cons:     Parking will likely remain very limited at Portola Park and multi-event same day activities at the park will continue to be challenging, current Tennis Center users are predominantly non-La Habra residents, the Center will continue as a members-only venue, with some negotiated exceptions.

Fiscal:    Lease payments to the City would likely increase to an amount higher than the current $3,500 per month level, subject to negotiation.

2. Have the Community Services Department take over operation of the Tennis Center
Pros:      The City would have complete control over the operation and use of the facility, the City could close the facility whenever necessary due to other large-scale events at the park, and the City could establish use fees designed to encourage participation by La Habra residents and other local groups.

Cons:     The City would be directly responsible for all ongoing facility repairs, court restorations, lighting improvements, contract instructor coordination, tournament coordination, facility and liability insurance, facility staffing and more.

Fiscal:    The City would need to invest an unknown, but likely significant, amount of resources to provide needed renovations, lighting upgrades, and more. While the City operated Tennis Center could be structured as an Enterprise Fund where user fees could be established to pay for classes, facility use and operations, if the City desired to provide incentives for local residents to use the facility, it is unclear if sufficient user fees could be generated to fully offset operating and capital costs, resulting in the potential need to subsidize the Tennis Center with General Fund resources. As it appears that the current for-profit Tennis Center operation is being successfully managed by iTennis, it is feasible that the City could similarly operate the facility in a manner that could lower prices for residents, while maintaining program self-sufficiency.

3. Issue a Request for Proposal to evaluate the level of interest and what other options might be available to structure a new long-term lease for existing or other types of recreational amenities at the City’s Tennis Center facility
Pros:      A Request for Proposals would allow the City to evaluate all potential recreational use options available for the use of the Tennis Center facility, including the continued use of the facility by iTennis if they choose to submit a proposal.

Cons:     A Request for Proposal process will take some time to develop, advertise and evaluate. While iTennis would likely continue to lease the facility during this time, they would not likely invest in any capital improvements until the results of the RFP process are known.

Fiscal:    Unknown until the results of the RFP are assessed and presented to City Council.

Staff evaluated these three options and recommends that the City Council authorize staff to attempt to negotiate a long-term lease with iTennis that meets or exceeds all of the City’s operational, capital improvement, community benefit and fiscal requirements. If terms cannot be reached with iTennis for a new long-term lease, subject to City Council approval, staff will proceed with the issuance of an RFP to determine what, if any, other options might be available to the City for the future use of the City’s Tennis Center, including the option for City staff to directly operate the facility.

There is no fiscal impact to negotiating a long-term lease for the La Habra Tennis Center. If an agreement with iTennis is reached, staff will present the terms, conditions and fiscal impact of that new agreement to the City Council at a future date for review and approval.