REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
December 3, 2024
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
BEAHTA DAVIS, Director, Regional Parks Department
SUBJECT
Title
Amendment to Revenue Lease Agreement with Sultana Properties, LLC, a California Limited Liability Company, for Land in Chino
End
RECOMMENDATION(S)
Recommendation
1. Find that approval of Amendment No. 1 to revenue Lease Agreement No. 23-70 with Sultana Properties, LLC, a California Limited Liability Company, for land in Chino, is an exempt project under the California Environmental Quality Act Guidelines Section 15301 - Existing Facilities (Class 1).
2. Approve Amendment No. 1 to Lease Agreement No. 23-70 with Sultana Properties, LLC, a California Limited Liability Company, to adjust the rent schedule to commence on August 7, 2024 through February 6, 2033, including back rent, interest and penalties, for approximately 9.21 acres of County-owned land (Assessor’s Parcel Numbers 1057-212-19-0000 [portion] and 1057-212-18-0000) located north of McCarty Road between Chino Corona Road and River Road, along Hellman Avenue in Chino, for live animal livestock selling, grazing, and storage of agricultural related equipment in accordance with the revenue lease agreement, for the Regional Parks Department, for total revenue in the amount of $193,408.
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.
FINANCIAL IMPACT
Approval of this item will not result in the use of Discretionary General Funding (Net County Cost). The total revenue to be received during Amendment No. 1 to revenue Lease Agreement No. 23-70 (Lease) is $193,408, including $38,584 of payments in arrears, which is inclusive of the missed rent of $22,443 and the interest and fees owed by tenant of $16,141. Revenue received from this Lease will be deposited in the Chino Agricultural Preserve Special Revenue Fund (7801142734) for properties acquired under the provisions of the California Wildlife, Coastal and Parkland Conservation Act of 1988 (Proposition 70). Annual revenue during the initial term (based on the August 7, 2024, rent commencement date) is as follows:
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Year |
Annual Base Rent |
Annual Arrears (8.5 years) |
Annual Total |
|
*August 7, 2024 - February 6, 2025 |
$7,678 |
$2,270 |
$9,948 |
|
February 7, 2025 - February 6, 2026 |
$15,969 |
$4,539 |
$20,508 |
|
February 7, 2026 - February 6, 2027 |
$16,608 |
$4,539 |
$21,147 |
|
February 7, 2027 - February 6, 2028 |
$17,273 |
$4,539 |
$21,812 |
|
February 7, 2028 - February 6, 2029 |
$17,964 |
$4,539 |
$22,503 |
|
February 7, 2029 - February 6, 2030 |
$18,682 |
$4,539 |
$23,221 |
|
February 7, 2030 - February 6, 2031 |
$19,429 |
$4,539 |
$23,968 |
|
February 7, 2031 - February 6, 2032 |
$20,206 |
$4,539 |
$24,745 |
|
February 7, 2032 - February 6, 2033 |
$21,015 |
$4,539 |
$25,554 |
|
**Total Revenue |
$154,824 |
$38,584 |
$193,408 |
*Six-month period
**Totals do not add due to rounding.
BACKGROUND INFORMATION
On February 7, 2023 (Item No. 39), the Board of Supervisors (Board) approved the Lease with Sultana Properties, LLC, a California Limited Liability Company (Sultana Properties), for a term of 10 years, which commenced on February 7, 2023, with two options to extend the term for five years each, following the expiration of the initial term, for approximately 9.21 acres of County-owned land (Assessor’s Parcel Numbers [APNs] 1057-212-19-0000 [portion] and 1057-212-18-0000) in Chino (Property).
Due to Sultana Properties’ nonpayment of the rent, the County and Sultana Properties agreed to amend the Lease to adjust the rental rate schedule of the tenant’s additional costs, that include late fees and interest associated with past due rents, in the total amount of $38,584 that will be paid monthly throughout the remaining term of the Lease.
Proposition (Prop) 70, which was approved by California voters in June 1988, provided $776 million of general obligation bonds to fund the “acquisition, development, rehabilitation, protection, or restoration of park, wildlife, coastal and natural lands in California including lands supporting unique or endangered plants or animals.” The County received nearly $20 million of the Prop 70 grant funds for acquisition of land in the cities of Chino and Ontario within the boundaries of the Chino Agricultural Preserve (Ag Preserve).
Senate Bill 1124, an uncodified act of the State Legislature in 2010, authorized the County to sell or exchange some property it acquired with the Prop 70 funds for the acquisition of the Property. As a result, the Property is subject to Prop 70, Senate Bill 1124, and a Land Plan approved by the Board on November 6, 2012 (Item No. 95), as well as a recorded deed restriction limiting its use to agricultural preservation, including community gardens, agricultural heritage projects, agricultural and wildlife education or wildlife habitat, or for open space, conservation and park purposes.
On January 10, 2023 (Item No. 42), the Board adopted Resolution No. 2023-01 declaring the Property as surplus, consistent with County Policy 12-17 - Surplus Real Property, to the Regional Parks Department’s (Parks) own use and made it available for disposition. The Resolution also declared the Property as exempt surplus land under the Surplus Land Act pursuant to Government Code section 54221(f)(1)(G). The California Department of Housing and Community Development has reviewed the adopted Resolution, which was submitted in accordance with Surplus Land Act Guidelines Section 400(e) and concurs with the exempt surplus declaration.
The proposed Lease of the Property was reviewed pursuant to the California Environmental Quality Act (CEQA) and determined to be categorically exempt.
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Summary of Lease Terms |
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Lessee: |
Sultana Properties, LLC, a California Limited Liability Company Frank Lizarraga, Managing Member |
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Location: |
County-owned land commonly known as APNs 1057-212-19-0000 (portion) and 1057-212-18-0000 located North of McCarty Road between Chino Corona Road and River Road along Hellman Avenue in Chino |
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Size: |
Approximately 9.21 acres |
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Term: |
10 years. |
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Options: |
Two options to extend the term of the Lease for five years each following the expiration of the initial term |
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Rent: |
Revenue per month: $1,658* commencing August 7, 2024 |
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Annual Revenue: $19,895 |
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*Low-range for comparable land in the Chino area |
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Annual Increases: |
4% |
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Improvement Costs: |
None; Lessee shall not make any alterations at the Property without prior written consent of the County |
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Maintenance: |
Provided by Lessee |
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Utilities: |
Provided by Lessee |
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Security Deposit: |
$10,000 |
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Insurance: |
The Certificate of Liability Insurance, as required by the lease, is on file with RESD |
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Right to Terminate: |
None except due to default |
PROCUREMENT
N/A
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Suzanne Bryant, and John Tubbs II, Deputies County Counsel, 387-5455) on November 8, 2024; Regional Parks (Beahta Davis, Director, 387-8812) on October 30, 2024; Purchasing (Ariel Gill, Supervising Buyer, 387-2148) on October 31, 2024; Finance (Elias Duenas, 387-4052, and Garrett Baker, 387-3077, Administrative Analysts), on November 13, 2024; and County Finance and Administration (Valerie Clay, Deputy Executive Officer, 387-5423) on November 14, 2024.
(BR: 531-2674)