Sausalito is retaining an outside company to oversee the management of its properties and 37 leases.
The City Council voted 3-2 on Tuesday to move forward with a 30-day contract with Kimber Management, which is charging $8,500 a month. The action is necessary to reduce administrative burden and increase revenue, city staff said.
A one-year contract for $102,000 will go back to the council for approval by Dec. 17. Company representatives said they need 30 to 90 days to learn about the leases and the tenants, and to talk with the city about the scope of work.
“This is to get moving, because we have so many properties and they need three months just to get their head around what we have,” Vice Mayor Joan Cox said.
Kimber Management, which is based in Sausalito, was one of three bidders. The other bids came in at $132,000 and $140,124.
The company will oversee maintenance requests, collect rent, resolve conflicts, negotiate and approve leases and find new tenants for the city-owned properties. Sausalito’s leases generated around $2.3 million last fiscal year, said Chad Hess, the city’s financial director.
Renters include the Sausalito Yacht Club, the Sausalito Center for the Arts, Bank of America and the Southern Marin Fire Protection District. The funding for the contract will come out of the city’s Tidelands, MLK, Old City Hall and Bank of America funds.
The city has fluctuated between handling property management with its own staff, outsourcing it or a mix of both. Currently, the city is using a hybrid arrangement that costs $8,130 a month plus staff time, paid out of the general fund, Hess said.
“The current approach is suboptimal,” Hess said. “We do not possess the specialized skill of property management. We do not have the institutional knowledge to manage some of these really old leases that are over 50 years old, and the capacity of our team is certainly limited.”
Councilmember Jill Hoffman asked about broker fees for the management company. Hess said all three bidders had fees of about 6% for finding new tenants. Kimber Management charges between 4% and 5% of the rent, which decreases annually on long-term leases, according to Bruce Huff, a company executive.
Councilmember Janelle Kellman asked if maintenance is included into the contract. Huff said day-to-day maintenance is covered in the management fee, but bigger projects are contracted out and would need to be approved by the City Council.
Kellman voted against the contract because she wanted a formal city leasing policy, a clearer scope of work and more public comment. Hoffman voted against it because she said it was not clear what the council was voting on, considering the edits to the contract that would be made over the next month.
“I think they can actually help us develop our policy, based on their breadth of experience in three states with various properties,” Cox said.
Kimber Management oversees 65,000 square feet of property in Sausalito and a total of 700,000 square feet in three states, according to Huff.
“Sausalito is obviously our home,” said Huff, who has lived in the area for over 20 years.
Resident Babette McDougal said she supported hiring the company, but that the city needs to prioritize passing a formal leasing policy first — something the City Council has mentioned at previous meetings.
“What concerns me most is setting Kimber Management up for failure because we have no guide posts, no benchmarks, we don’t know what is a success measurement or a failure measurement because we haven’t even addressed that yet,” McDougal said.
Resident Peter Van Meter spoke in favor of the contract.
“This is a wonderful opportunity for a win-win-win situation where you have a local firm with a long history in town,” Van Meter said. “They’re local and it can just be nothing but a better opportunity for the city, the public and everybody involved.”
