REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
November 18, 2025
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
ANDREW GOLDFRACH, Chief Executive Officer, Arrowhead Regional Medical Center
SUBJECT
Title
Amendment to Lease Agreement with Lugonia Redlands, LLC for Office Space in Redlands
End
RECOMMENDATION(S)
Recommendation
1. Find that approval of Amendment No. 5 to Lease Agreement No. 04-169 with Lugonia Redlands, 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. 5 to Lease Agreement No. 04-169 with Lugonia Redlands, LLC, to:
a. Extend the term of the lease five years by exercising the first of two five-year options to extend, for the period of December 1, 2025, through November 30, 2030, following a permitted 13-month holdover beginning November 1, 2024, through November 30, 2025.
b. Update standard lease agreement language for approximately 5,880 square feet of office space, located at 800 E. Lugonia Avenue, Suite E-2 in Redlands for Arrowhead Regional Medical Center.
c. Increase the total lease amount by $1,216,841, from $3,528,530 to a new total amount of $4,745,371, inclusive of a 13-month permitted holdover in the amount of $197,873.
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 Amendment No. 5 (Amendment) to Lease Agreement No. 04-169 (Lease) will not result in the use of Discretionary General Funding (Net County Cost). The total cost of this five-year Amendment is $1,216,841, which includes a 13-month permitted holdover in the amount of $197,873. Lease payments will be made from the Real Estate Services Department (RESD) Rents budget (7810001000) and reimbursed from the Arrowhead Regional Medical Center (ARMC) budget (9110004200). Sufficient appropriation is included in the 2025-26 RESD Rents and ARMC budgets and will be included in future recommended budgets. Annual lease costs are as follows:
|
Year |
Lease Cost |
|
*November 1, 2024 - November 30, 2025 |
$197,873 |
|
December 1, 2025 - November 30, 2026 |
$191,928 |
|
December 1, 2026 - November 30, 2027 |
$197,688 |
|
December 1, 2027 - November 30, 2028 |
$203,616 |
|
December 1, 2028 - November 30, 2029 |
$209,724 |
|
December 1, 2029 - November 30, 2030 |
$216,012 |
|
Total Cost |
$1,216,841 |
*Holdover period
BACKGROUND INFORMATION
On March 2, 2004 (Item No. 45), the Board of Supervisors (Board) approved the Lease with two five-year options to extend the term for 5,880 square feet of office space, located at 800 East Lugonia Avenue, Suite E-2, in Redlands (Premises). The original term was for the period of July 1, 2004, through June 30, 2014. In the 21 years since the Lease was originally approved, the Board has approved four amendments to amend the commencement date, reflect a change of ownership, extend the term through December 31, 2024, adjust the rental rate schedule, and update standard lease agreement language.
|
Amendment No. |
Approval Date |
Item No. |
|
1 |
July 17, 2007 |
28 |
|
2 |
April 22, 2014 |
45 |
|
3 |
October 31, 2017 |
43 |
|
4 |
October 22, 2019 |
33 |
Due to protracted negotiations with Lugonia Redlands, LLC (Landlord) regarding market rental rates, the Lease went into a permitted holdover effective November 1, 2024. Following a market survey, RESD determined that the proposed rental rate of $2.72 per square foot per month with 3% annual increase is consistent with current market conditions in San Bernardino and surrounding areas.
The recommended action will amend the existing Lease with the Landlord to extend the term, by exercising the first of two five-year options, for a term commencing December 1, 2025, through November 30, 2030, following a 13-month permitted holdover. The Amendment will also adjust the rental rate schedule, retain one five-year option to extend the term, and update standard lease agreement language. The Lease provides 5,880 square feet of office space for ARMC and remains the most suitable facility to meet program needs. Extending this Lease will minimize service disruption and allow ARMC to continue supporting the local community.
The project to approve the Amendment was reviewed pursuant to the California Environmental Quality Act (CEQA) and determined to be categorically exempt under CEQA Guidelines Section 15301 - Existing Facilities (Class 1) because there is no possibility that the leasing of the subject property will have a significant effect on the environment.
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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 E-2, Redlands |
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Size: |
5,880 square feet of office and clinic space |
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Term: |
Five years commencing December 1, 2025 |
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Options: |
One remaining 5-year option |
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Rent: |
Cost per square foot per month: $2.72* (Full Service) |
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Monthly: $15,994 |
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Annual: $191,928 |
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*Mid-range for comparable facilities in the Redlands area per the competitive set analysis on file with RESD |
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Annual Increases: |
Approximately 3% |
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Improvement Costs: |
None |
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Custodial: |
Provided by Lessor |
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Maintenance: |
Provided by Lessor |
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Utilities: |
Provided by Lessor |
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Insurance: |
The Certificate of Liability Insurance, as required by the Lease, is on file with RESD |
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Holdover: |
Upon the end of the term, if permitted by Lessor, the Lease shall continue on a month-to-month with the same terms and conditions, including the rent |
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Right to Terminate: |
County can terminate with 90-days’ notice |
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Parking: |
Sufficient for County needs |
PROCUREMENT
Not applicable.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (John Tubbs II, and Charles Phan, Deputies County Counsel, 387-5455) on October 21, 2025; ARMC (Andrew Goldfrach, Chief Operating Officer, 580-3290) on October 20, 2025; Purchasing (Ariel Gill, Supervising Buyer, 387-2070) on October 16, 2025; and County Finance and Administration (Jenny Yang, 387-4884, and Eduardo Mora, 387-3077, Administrative Analysts) on October 29, 2025.
(DM: 677-8388)