REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
January 23, 2024
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
CHERYL ADAMS, Deputy Executive Officer, Human Services
SUBJECT
Title
Amendment to Lease Agreement with Bear Valley Medical Business Center, LLC for Office Space in Victorville
End
RECOMMENDATION(S)
Recommendation
1. Find that approval of Amendment No. 4 to Lease Agreement 02-301 with Bear Valley Medical Business Center, LLC, for office space is an exempt project under the California Environmental Quality Act Guidelines Section 15301 - Existing Facilities (Class 1).
2. Approve Amendment No. 4 to Lease Agreement No. 02-301 with Bear Valley Medical Business Center, LLC to extend the term of Lease Agreement 02-301 five years by exercising an option, for the period of February 1, 2024 through January 31, 2029, following a permitted three-month holdover for the period of November 1, 2023 through January 31, 2024, adjust the rental rate, and update the standard lease agreement language for approximately 5,040 square feet of office space at 17270 Bear Valley Road, Suite 107, in Victorville for the Human Services, Performance, Education and Resource Centers in the amount of $644,323.
3. Direct the Real Estate Services Department to file the Notice of Exemption in accordance with the California Environmental Quality Act.
(Presenter: Terry W. Thompson, Director, 387-5000)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Operate in a Fiscally-Responsible and Business-Like Manner.
Provide for the Safety, Health and Social Service Needs of County Residents.
FINANCIAL IMPACT
Approval of this item will not result in the use of Discretionary General Funding (Net County Cost). The total cost of this five-year amendment is $644,323. Lease payments will be made from the Real Estate Services Department (RESD) Rents budget (7810001000) and reimbursed from the Human Services (HS) Administrative Claim budget (5015011000). Sufficient appropriation is included in both the 2023-24 Rents and HS budgets and will be included in future recommended budgets. Annual lease costs are as follows:
|
Year |
Annual Lease Cost |
|
February 1, 2024 - January 31, 2025 |
$124,195* |
|
February 1, 2025 - January 31, 2026 |
$127,008 |
|
February 1, 2026 - January 31, 2027 |
$130,032 |
|
February 1, 2027 - January 31, 2028 |
$130,032 |
|
February 1, 2028 - January 31, 2029 |
$133,056 |
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Total Cost |
$644,323 |
* First month’s payment for February 2024 reflects a $2,813 credit from Lessor due to over-payment, otherwise, the annual lease cost in year one of the amended term is $127,008.
BACKGROUND INFORMATION
The recommended action will amend an existing lease with Bear Valley Medical Business Center, LLC, a California Limited Liability Company (Bear Valley), by the County’s exercise of an existing option to extend the term of the lease for the period of February 1, 2024 through January 31, 2029, following a permitted three-month holdover for the period of November 1, 2023 through January 31, 2024, adjust the rental rate, and update the standard lease agreement language because of the continuing need for the HS Performance, Education and Resource Centers (PERC) to provide services for its clients in the Victorville area.
On April 23, 2002 (Item No. 40), the Board of Supervisors (Board) approved 10-year Lease Agreement, No. 02-301 (Lease), with two five-year options to extend the term for approximately 5,040 square feet of office space located at 17270 Bear Valley Road, Suite 107, in Victorville for HS PERC. The original term of the Lease was for the period of May 1, 2002 through April 30, 2012. In the 22 years since the Lease was originally approved, the Board has approved three amendments to extend the term through October 31, 2023, reflect a change of ownership, adjust the rental rate schedule, and modify the monthly rental payment and certain other provisions of the Lease.
|
Amendment No. |
Approval Date |
Item No. |
|
1 |
September 25, 2012 |
54 |
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2 |
April 5, 2016 |
47 |
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3 |
October 16, 2018 |
40 |
PERC requested that RESD negotiate Amendment No. 4 to the Lease to extend the term for the period of February 1, 2024 through January 31, 2029, by exercising the existing five-year option to extend the term of the Lease. Due to continued negotiations regarding the rental rate at renewal, the renewal process was delayed and on November 1, 2023 the Lease went into a permitted three-month holdover. PERC has continued to occupy the leased premises and abide by the terms of the Lease. The amendment to the lease extends the term of the Lease for five years, adjusts the rental rate schedule, and updates standard lease agreement language. All other terms and conditions of the Lease remain unchanged.
The project to approve Amendment No. 4 to the Lease was reviewed pursuant to the California Environmental Quality Act (CEQA) and determined to be categorically exempt under Guidelines Section 15301 - Existing Facilities (Class 1) because the proposed lease agreement is to secure property to operate within the existing structure with negligible or no expansion of existing use.
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Summary of Lease Terms |
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Lessor: |
Bear Valley Medical Business Center, LLC (Elizabeth A. Brown, Managing Member) |
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Location: |
17270 Bear Valley Road, Suite 107, Victorville |
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Size: |
Approximately 5,040 square feet of office space |
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Term: |
Five years commencing February 1, 2024 through January 31, 2029, following a permitted three-month holdover period for the period of November 1, 2023 through January 31, 2024 |
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Options: |
None |
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Rent: |
Cost per square foot per month: $2.10 |
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Monthly: $10,584* *First month’s payment for February 2024 reflects a $2,813 credit from Lessor due to over-payment. |
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Annual: $127,008 |
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Annual Increases: |
Approximately 2.4% every two years |
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Improvement Costs: |
N/A |
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Custodial: |
Provided by Lessor |
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Maintenance: |
Provided by Lessor |
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Utilities: |
Provided by Lessor except that the County pays electric and gas costs that exceed the monthly electric cap of $1,857.63 ($0.38 per square foot) and monthly gas cap of $591.06 ($0.12 per square foot) subject to 3.5% increases |
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Insurance: |
Certificate of Liability Insurance, as required by the lease is on file with RESD |
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Holdover: |
Month-to-month basis upon the same provisions of the Lease |
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Right to Terminate: |
County has the right to terminate with 90 days’ notice |
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Parking: |
Sufficient for County needs |
PROCUREMENT
On April 23, 2002 (Item No. 40), the Board approved the Lease, which was procured according to County Policy 12-02 - Leasing Privately Owned Real Property for County Use (Policy) via a Formal Request for Proposal process. The procurement process required by the Policy does not apply to amendments of existing leases (including an amendment to exercise an option to extend the term of a lease), provided the amendment does not exceed the maximum term of the lease.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (John Tubbs II, and Kaleigh Ragon, Deputies County Counsel, 387-5455) on January 4, 2023; Performance, Education and Resource Centers (Kristen DeLongchamp, Interim Chief Learning Officer, 420-6404) on December 21, 2023; Purchasing (Ariel Gill, Supervising Buyer, 387-2070) on December 15, 2023; Finance (John Hallen, 388-0208, and Garrett Baker, Administrative Analysts, 387-3077) on January 4, 2023; and County Finance and Administration (Valerie Clay, Deputy Executive Officer, 387-5423) on January 4, 2023.
(YG: 665-0268)