REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
August 22, 2023
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
DAVID MYERS, Director, County Museum
SUBJECT
Title
Amendment to Lease Agreement with Wohl/Westport, LLC for Warehouse Space in Loma Linda
End
RECOMMENDATION(S)
Recommendation
1. Find that approval of Amendment No. 2 to Lease Agreement No. 16-510 with Wohl/Westport, LLC, for warehouse space, is an exempt project under the California Environmental Quality Act Guidelines Section 15301 - Existing Facilities (Class 1).
2. Approve Amendment No. 2 to Lease Agreement No. 16-510 with Wohl/Westport, LLC, to extend the term of the lease for five years, for the period of September 1, 2023 through August 31, 2028, following a permitted two-month holdover for the period of July 1, 2023 through August 31, 2023, add two five-year options to extend the term of the lease, and update standard agreement language for the County Museum’s use of 11,518 square feet of warehouse space located at 10482 Enterprise Drive in Loma Linda, in the amount of $1,072,210, which includes the two-month holdover cost.
3. Direct the Clerk of the Board of Supervisors to file and post the Notice of Exemption for the project as required under the California Environmental Quality Act.
(Presenter: Terry W. Thompson, Director, 387-5000)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Promote the Countywide Vision.
Operate in a Fiscally-Responsible and Business-Like Manner.
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 five-year amendment is $1,072,210, which includes the two-month holdover cost. Lease payments will be made from the Real Estate Services Department (RESD) Rents budget (7810001000) and reimbursed from the County Museum (Museum) budget (6510001000). Other costs associated with this lease include electricity, gas, and sewer expenses, which will be paid from the Museum budget. Sufficient appropriation is included in the Museum and Rents 2023-24 budget and will be included in future recommended budgets. Annual lease costs are as follows:
|
Year |
Lease Cost |
Estimate of Annual Costs Associated with this Lease |
|
July 1, 2023 - August 31, 2023* |
$18,659 |
$4,978 |
|
September 1, 2023 - August 31, 2024 |
$159,294 |
$39,824 |
|
September 1, 2024 - August 31, 2025 |
$214,235 |
$53,385 |
|
September 1, 2025 - August 31, 2026 |
$219,763 |
$54,987 |
|
September 1, 2026 - August 31, 2027 |
$226,674 |
$56,637 |
|
September 1, 2027 - August 31, 2028 |
$233,585 |
$58,335 |
|
Total Cost |
$1,072,210 |
$268,146 |
*Holdover rent during the two-month holdover period.
BACKGROUND INFORMATION
Lease Agreement No. 16-510 (Lease) with Wohl/Westport, LLC will be extended for the period of September 1, 2023 through August 31, 2028, following a permitted two-month holdover for the period of July 1, 2023 through August 31, 2023. Amendment No. 2 to the Lease will adjust the rental rate schedule, add two five-year options to extend the term of the Lease, and update standard Lease language for approximately 11,518 square feet of warehouse space for the Museum, located at 10482 Enterprise Drive in Loma Linda (Premises). The storage space is used to store museum collections including minerals, fossils, and cultural artifacts.
On June 28, 2016 (Item No. 64), the Board of Supervisors (Board) approved the seven-year Lease with one three-year option to extend the term of the Lease for the Premises. The original term of the Lease was from July 1, 2016 through June 30, 2023. In the seven years since the Lease was originally approved, the Board has approved an amendment to reflect a change in property ownership from DRC Industrial CBC I, LP to Wohl/Westport, LLC, and update standard Lease language.
With a continuing need for warehouse space, Museum requested that RESD prepare an amendment to extend the term of the Lease for five years for the period of September 1, 2023 through August 31, 2028, add two five-year options to extend the term of the Lease, and update standard agreement language. Negotiations with Wohl/Westport, LLC regarding the rent at renewal and the term of the Lease have delayed the renewal process, and on June 30, 2023, the Lease went into permitted holdover. The County has continued to occupy the leased premises and abide by the terms of the Lease. All other terms and conditions of the Lease remain unchanged.
The project to approve Amendment No. 2 to the Lease was reviewed pursuant to the California Environmental Quality Act (CEQA) and determined to be categorically exempt under 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: |
Wohl/Westport, LLC (Peter Desforges, Manager) |
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Location: |
10482 Enterprise Drive, Loma Linda |
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Size: |
11,518 square feet of warehouse space |
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Term: |
Five years, September 1, 2023 through August 31, 2028 |
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Options: |
Two five-year options to extend |
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Rent: |
Cost per square foot per month: $1.15* |
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Monthly: $13,275 |
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Annual: $159,294 for the first year |
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*Low-range for comparable facilities in the Loma Linda area per the competitive set analysis on file with RESD |
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Annual Increases: |
34% in year one to reach negotiated base market rent and 3% in years two through five |
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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: |
Provided by County |
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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: |
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 a 90-day notice |
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Parking: |
Sufficient for County needs |
PROCUREMENT
On June 28, 2016 (Item No. 64), the Board approved the Lease, which was procured in accordance with County Policy 12-02 - Leasing Privately Owned Real Property for County Use, using a Solicitation of Proposals process for new leases of privately-owned real property that are either equal or less than 15,000 square feet, or have a term, including options, equal to or less than 10 years.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (John Tubbs II, Deputy County Counsel, and Katherine Hardy, Deputy County Counsel, 387-5455) on July 10, 2023; Museum (David Myers, Director, 798-8601) on July 11, 2023; Purchasing (Peter Geriguis, Lead Buyer, 387-2573) on July 11, 2023; Finance (Elias Duenas, Administrative Analyst, 387-4052 and Garrett Baker, Administrative Analyst, 387-4376) on July 28, 2023; and County Finance and Administration (Valerie Clay, Deputy Executive Officer, 387-5423) on July 31, 2023.
(YG: 665-0268)