REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF THE COUNTY OF SAN BERNARDINO
AND RECORD OF ACTION
December 17, 2019
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
TRUDY RAYMUNDO, Director, Department of Public Health
SUBJECT
Title
Amendment No. 4 to Lease Agreement with Lugonia Redlands, LLC for Office Space for the Department of Public Health, Women, Infants And Children Program In Redlands
End
RECOMMENDATION(S)
Recommendation
Approve Amendment No. 4 to Lease Agreement No. 11-11 with Lugonia Redlands, LLC to extend the term of the lease two years by exercising an extension option for the period of January 1, 2020 through December 31, 2021, following a permitted four-month holdover for the period of September 1, 2019 through December 31, 2019, adjust the rental rate schedule, and update standard lease agreement language for 3,000 square feet of office and clinic space for the Department of Public Health, Women, Infants and Children Program at 800 East Lugonia Avenue, Suite K, in Redlands in the amount of $119,556.
(Presenter: Terry W. Thompson, Director, 387-5252)
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 additional Discretionary General Funding (Net County Cost). The total cost of this two-year amendment, including the permitted holdover at the current lease rate of $4,110 per month for four months, as adjusted by an annual 3% increase per the terms of the lease, is $119,556. Other costs associated with this lease include custodial and utility expenses, which will be paid from the DPH budget. Lease payments will be made from the Rents budget (7810001000) and reimbursed from the Department of Public Health (DPH) budget (9300061000). The DPH budget for the program is 100% federal and state funded. Sufficient appropriation is included in the 2019-20 budget and will be included in future recommended budgets. Annual lease costs are as follows:
|
Period |
Lease Cost |
Estimate of Other Costs Associated With This Lease |
|
September 1, 2019 - December 31, 2019 |
$ 16,440 |
$ 5,424 |
|
January 1, 2020 - December 31, 2020 |
$ 50,796 |
$ 16,763 |
|
January 1, 2021 - December 31, 2021 |
$ 52,320 |
$ 17,265 |
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Total Cost or Total Revenue |
$ 119,556 |
$ 39,452 |
BACKGROUND INFORMATION
The recommended action will amend the existing lease by exercising an extension option for the period of January 1, 2020 through December 31, 2021, following a permitted four-month holdover for the period of September 1, 2019 through December 31, 2019, adjust the rental rate schedule, and update standard lease agreement language for 3,000 square feet of office and clinic space for the Department of Public Health, Women, Infants and Children Program. The Real Estate Services Department (RESD) negotiated a rental rate of $1.41 per square foot per month ($50,796 annually), which is an increase of $0.04 per square foot per month from the prior rental rate of $1.37 per square foot per square foot per month ($49,320 annually), for the period of January 1, 2020 through December 31,2021. The amendment also reflects a 4-month permitted holdover, adjusts the rent rate schedule and updates standard lease agreement language.
On January 11, 2011 (Item No. 43), the Board of Supervisors (Board) approved a five-year lease
agreement, No. 11-11, for 3,000 square feet of clinic space at 800 East Lugonia Avenue, Suite K, in Redlands. The original term of the lease was for the period of May 1, 2011 through April 30, 2016. In the eight years since the lease was originally approved, the Board has approved three
amendments to amend the commencement date, reflect a change of ownership, extend the term through August 31, 2019, adjust the rental rate schedule, and update standard lease agreement language.
|
Amendment No. |
Approval Date |
Item No. |
|
1 |
September 1, 2011 |
35 |
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2 |
April 19, 2016 |
55 |
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3 |
October 31, 2017 |
42 |
DPH requested the Real Estate Services Department (RESD) exercise the final two-year option to extend the term of the lease to allow the Women, Infants And Children (WIC) program to continue providing services to residents in the Redlands area. Due to protracted negotiations with the landlord regarding market rental rates, the lease went into a permitted holdover on September 1, 2019. Amendment No. 4 to lease agreement 11-11 extends the term of the lease two years for the period of January 1, 2020 through December 31, 2021, following a permitted four-month holdover for the period of September 1, 2019 through December 31, 2019, and adjusts the rental rate schedule. All other provisions and terms of the lease remain unchanged.
Staff has reviewed the recommended action pursuant to the California Environmental Quality Act (CEQA) and has determined that it does not constitute a project. Accordingly, no further action is required under CEQA
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Summary of Lease Terms |
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Lessor: |
Lugonia Redlands, LLC (Yoon Ja Han, Managing Member) |
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Location: |
800 East Lugonia Avenue, Suite K, Redlands |
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Size: |
3,000 square feet of office and clinic space |
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Term: |
Two years commencing January 1, 2020 |
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Options: |
None |
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Rent: |
Cost per sq. ft. per month: $1.41 |
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Monthly: $4,233 |
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Annual: $50,796 |
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*Mid-range for comparable facilities in the Redlands area per supporting lease comparables on file |
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Annual Increases: |
3% |
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Improvement Costs: |
None |
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Custodial: |
Provided by County |
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Maintenance: |
Provided by Lessor |
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Utilities: |
Electricity and gas provided by County |
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Insurance: |
The Certificate of Liability Insurance, as required by the Lease, is on file with the Real Estate Services Department. |
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Right to Terminate: |
The County has the right to terminate with 90-days’ notice |
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Parking: |
Sufficient for County needs |
PROCUREMENT
On January 11, 2011 (Item No. 43), the Board of Supervisors (Board) approved Lease Agreement No. No. 11-11, which was procured according to County Policy 12-02 - Leasing Privately Owned Real Property for County Use (Policy), using a Solicitation of Proposals (SOP) process. The procurement process required by the Policy does not apply to amendments of existing leases, provided the amendment does not exceed the maximum term (including options) of the lease.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Agnes Cheng, Deputy County Counsel and Adam Ebright, Deputy County Counsel, 387-5455) on November 12, 2019; Department of Public Health (Corwin Porter, Assistant Director, 387-9146) on October 31, 2019; Purchasing Department (Michelle Churchill, Supervising Buyer, 387-2070) on November 7, 2019; Finance (Paul Garcia, Administrative Analyst, 387-8392 and Monique Amis, Administrative Analyst, 387-4883) on November 26, 2019; and County Finance and Administration (Matthew Erickson, County Chief Financial Officer, 387-5423) on November 27, 2019.
(JAG: 677-8210)