Tuesday, January 26, 1999
Promenade Spirit Store expected to open March 15
ASUCLA: University took over lease negotiations, delayed shop’s
opening
By Neal Narahara
Daily Bruin Contributor
Delays and unexpected costs have plagued the Associated Students
of UCLA (ASUCLA) Spirit Store on the Third Street Promenade in
Santa Monica, largely due to unexpected interest and participation
by the university.
"There were points where I was worried it might not happen,"
said Patricia Eastman, executive director of ASUCLA.
The Spirit Store, which will feature UCLA-related merchandise,
was originally scheduled to open in late November. It is now
expected to open on March 15.
In the past, ASUCLA had managed lease negotiations
independently, but more recently, it has had to go through the
university, according to ASUCLA and university officials.
In the case of the Third Street Promenade store, ASUCLA had
already had preliminary talks with the landlords of the space
before the university stepped in.
"We didn’t understand that we needed to work through the
university," Eastman said.
Although ASUCLA’s governing documents identify the association
as a part of the university and therefore "subject to all
applicable regents and university policies," the university has not
exerted its power over students’ association leases until
recently.
According to university and association officials, the UC
Regents must be the signees on ASUCLA leases.
"Theoretically, it would have been a shorter process without the
university," said Bradley Erickson, director of real estate for
UCLA.
This is a moot point, however, because ASUCLA does not
technically have the authority to negotiate a lease independent of
the university.
"They were always supposed to be involved," said Terence Hsiao,
business development director for ASUCLA.
In addition to the late university intervention in the lease
negotiation, a strong real estate market made it harder for the
university to secure a satisfactory lease.
"It’s a bit of a landlord’s market," Erickson said.
When the university first took over lease negotiations, it found
that ASUCLA was willing to negotiate on points that were not in
line with university policies or interests.
"There were some unfavorable provisions in the (preliminary
lease agreement)," Erickson said.
"The document was unacceptable for many reasons."
According to Hsiao, one of the provisions unacceptable to the
university was the length of the commitment.
Under ASUCLA’s preliminary understanding, the association would
have committed to stay at the property for 10 years.
The university negotiated a clause which would allow ASUCLA to
get out of the lease in five years, if the store was unsuccessful.
ASUCLA had not actively sought such a clause in its original talks
with the landlord.
"The university is concerned with mitigating risk," Hsiao said.
"Their negotiation gave us an out if our financial results were
poor."
University policies include the requirement that workers be paid
a prevailing (union) wage, and other requirements related to
construction.
"University policies are stringent, but not unreasonably so,"
Erickson said.
The policies, however, proved costly for the students’
association. In December, ASUCLA’s board of directors passed a
proposal to increase the budget for the Spirit Store by $100,000 in
order to meet costs in the university-brokered deal.
This increased the budget for the store nearly 30 percent, up
from the original $325,000 to $425,000.
According to Erickson and Hsiao, the university has more closely
scrutinized ASUCLA’s ventures since its bailout of the
near-bankrupt students’ association in 1995.
In the early 1990s, ASUCLA independently negotiated the lease
for another off-campus Spirit Store at the Universal Citywalk.
"At the time ASUCLA entered the lease at Citywalk, the
administration had an understanding that ASUCLA was a separate
entity," Erickson said.
"Since then, ASUCLA has become subject to all the regents’
policies."
Under the current understanding of the university’s role in
ASUCLA leases, this lease may have to be re-negotiated by the
university when it comes up for renewal.
"We’re looking at Citywalk and reviewing for appropriate
protection in the lease," Erickson said.
If the university found the current lease to be unsatisfactory,
it would "try to work out a mutually agreeable contract (for
ASUCLA)," Erickson added.
Despite delays and increased costs, the Promenade project is
still worthwhile, according to Eastman.
ASUCLA expects the store to pay back its costs plus 12 percent
over its first five years of being open.
Comments, feedback, problems?
© 1998 ASUCLA Communications Board[Home]