REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF THE COUNTY OF SAN BERNARDINO
AND RECORD OF ACTION
May 19, 2020
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
JOHN McMAHON, Sheriff/Coroner/Public Administrator
SUBJECT
Title
Amendment No. 5 to Existing Lease Agreement and New Lease Agreement with Seitel Investments, LLC for Office and Garage Storage Space for the Sheriff/Coroner/Public Administrator in San Bernardino
End
RECOMMENDATION(S)
Recommendation
1. Approve Amendment No. 5 to Lease Agreement No. 00-223 with Seitel Investments, LLC to reflect a permitted holdover period for the period of January 1, 2020 through May 31, 2020 and to terminate Lease Agreement No 00-223 by mutual agreement, effective May 31, 2020 for approximately 17,726 square feet of office space and 3,720 square feet of garage storage space located at 808 East Mill Street in San Bernardino for the Sheriff/Coroner/Public Administrator in the amount of $140,525.
2. Approve the Real Estate Services Department’s use of an alternative procedure in lieu of a Formal Request for Proposals as allowed per County Policy 12-02 - Leasing Privately Owned Real Property for County Use, to procure a new five year lease agreement for the period of June 1, 2020 through May 31, 2025, with two five-year options to extend the term of the lease, with Seitel Investments, LLC for approximately 17,726 square feet of office space and 3,720 square feet of garage storage space in San Bernardino for the Sheriff/Coroner/Public Administrator.
3. Approve a five-year lease agreement with Seitel Investments, LLC, for the period of June 1, 2020 through May 31, 2025, with two five-year options to extend the term of the lease, for approximately 17,726 square feet of office space and 3,720 square feet of garage storage space located at 808 East Mill Street in San Bernardino for the Sheriff/Coroner/Public Administrator in the amount of $2,091,288.
(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 additional Discretionary General Funding (Net County Cost). The total cost of the amendment to Lease Agreement No. 00-223 to reflect the permitted holdover and the termination date is $140,525. The total cost of the five-year replacement lease agreement is $2,091,288. Lease payments under both agreements will be made from the Rents budget (7810001000) and reimbursed from the Sheriff/Coroner (Sheriff) budget (4430002392). There are no other costs associated with the amendment or the replacement lease. Sufficient appropriation is included in the 2019-20 Rents and Sheriff’s budget and will be included in future recommended budgets. Annual lease costs for each agreement are as follows:
|
Period |
Lease Cost for Amendment |
|
January 1, 2020 - May 31, 2020 |
$140,525 |
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Period |
Annual Lease Cost For New Lease |
|
June 1, 2020 - May 31, 2021 |
$394,776 |
|
June 1, 2021 - May 31, 2022 |
$406,296 |
|
June 1, 2022 - May 31, 2023 |
$417,840 |
|
June 1, 2023 - May 31, 2024 |
$429,360 |
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June 1, 2024 - May 31, 2025 |
$443,016 |
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Total Cost |
$2,091,288 |
BACKGROUND INFORMATION
The recommended action will amend Lease Agreement No. 00-223 (Existing Lease) to reflect a holdover for the period January 1, 2020 through May 31, 2020 and, with the consent of Seitel Investments, LLC (SI), and a mutually agreed termination of the Existing Lease, effective May 31, 2020, for approximately 17,726 square feet of office space and 3,720 square feet of garage storage space located at 808 East Mill Street in San Bernardino. The recommended action will also provide for the approval of a new five-year lease agreement (New Lease) with SI for the period of June 1, 2020 through May 31, 2025 with two five-year options to extend the term of the lease for approximately 17,726 square feet of office space and 3,720 square feet of garage storage space located at 808 East Mill Street in San Bernardino because of the continuing need to provide Sheriff’s services in the San Bernardino area.
On April 18, 2000 (Item No. 43), the Board of Supervisors (Board) approved the Existing Lease with East Mill Street, Ltd. for a term of seven years for 17,726 square feet of office space and 1,860 square feet of garage space located at 808 East Mill Street in San Bernardino. The original term of the Existing Lease was for the period of July 1, 2000 through June 30, 2007. In the nearly 20 years since the Existing Lease was originally approved, the Board has approved four amendments, to reflect a change in the ownership of the premises, expand the premises, provide for tenant improvements, adjust the rental schedule, and extend the term of the lease through December 31, 2019.
|
Amendment No. |
Approval Date |
Item No. |
|
1 |
June 12,2007 |
30 |
|
2 |
January 26, 2010 |
50 |
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3 |
February 8, 2010 |
34 |
|
4 |
April 8, 2014 |
42 |
On April 22, 2019, the County Administrative Office approve Capital Improvement Program (CIP) request No. 20-066 to extend the term of the Existing Lease three years for the 808 East Mill Street property. The Sheriff requested the Real Estate Services Department (RESD) prepare an amendment to the Existing Lease extending the term. RESD conducted a market survey to establish market rate and determined that preparation of a new lease agreement should be pursued to upgrade to standard lease agreement language. SI declined to consider a three-year renewal term and instead suggested a five-year initial term with two five-year extension options in order to prepare the property to be marketed. Negotiations regarding the lease rate, the term of the lease and the County’s right to terminate the lease prior to the scheduled termination date delayed the presentation of this item, and on December 31, 2019, the Existing Lease went into holdover status. County has continued to occupy the premises and abide by the provisions of the Existing Lease.
Amendment No. 5 to Existing Lease reflects the permitted holdover from January 1, 2020 through May 31, 2020 and provides for mutual termination of the Existing Lease effective May 31, 2020. Thereafter, the New Lease will go into effect.
The New Lease with SI is for a term of five years for the period of June 1, 2020 through May 31, 2025, with two five-year options to extend the term of the lease, to provide for continued use of approximately 17,726 square feet of office space and 3,720 square feet of garage storage space located at 808 East Mill Street in San Bernardino. The County has the right to terminate the New Lease with 90-days’ written notice.
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 New Lease Terms |
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Lessor: |
Seitel Investments, LLC (Brian Seitel, Member) |
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Location: |
808 East Mill Street, San Bernardino |
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Size: |
Approximately 17,726 square feet of office space and approximately 3,720 square feet of garage storage space. |
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Term: |
Five years commencing June 1, 2020 |
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Options |
Two five-year options |
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Rent (Office Space): |
Cost per sq. ft. per month: $1.73 |
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Monthly: $30,666 |
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Annual: $367,992 |
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Rent (Garage Storage) |
Cost per sq. ft. per month: $0.60 |
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Monthly: $2,232 |
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Annual: $26,784 |
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Combined annual: $394,776 |
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*Mid-range for comparable facilities in the San Bernardino area per the competitive set analysis on file with RESD |
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Annual Increases: |
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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Right to Terminate: |
The County has the right to terminate with 90-days’ written notice |
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Parking: |
Sufficient for County needs |
PROCUREMENT
This new five-year lease agreement was procured according to County Policy No. 12-02 - Leasing Privately Owned Real Property for County Use (Policy) via an alternative procedure. The policy provides that the Board may approve the use of an alternative procedure in lieu of a Formal Request for Proposals (RFP) process whenever the Board determines that compliance with the Formal RFP requirements would unreasonably interfere with the financial or programmatic needs of the County or when the use of an alternative procedure would otherwise be in the best interests of the County.
RESD completed a competitive analysis of the San Bernardino area and found the negotiated rental rate is competitive, this facility best meets the requirements of the department and the department would save moving expenses if it stays in the current location. RESD requests that the Board approve the use of an alternative procedure in lieu of a RFP to procure the New Lease.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Agnes Cheng, Deputy County Counsel and Richard Luzak, Deputy County Counsels, 387-5455) on April 24, 2020; Sheriff (Jose Torres, Administrative Manager, 387-3648) on April 8, 2020; Purchasing (Bruce Cole, Staff Analyst II, 387-2148) on April 9, 2020; Finance (Wen Mai, Principal Administrative Analyst, 387-4020 and Carolina Mendoza, Administrative Analyst, 387-0294) on April 28, 2020 and County Finance and Administration (Matthew Erickson, County Chief Financial Officer, 387-5423) on May 4, 2020.
(KB: 677-7961)