REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
July 23, 2024
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
GEORGINA YOSHIOKA, Director, Department of Behavioral Health
SUBJECT
Title
Emergency Short-Term Lease Agreement with 1250 Fairfax, LLC and 521 East 11th St, LLC, dba Three Carnegie Plaza for Office Space in San Bernardino
End
RECOMMENDATION(S)
Recommendation
1. Find that approval of an emergency short-term lease with 1250 Fairfax, LLC and 521 East 11th St, LLC dba Three Carnegie Plaza for Office Space is an exempt project under the California Environmental Quality Act Guidelines Section 15301- Existing Facilities (Class 1).
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 lease approximately 19,284 square feet of office space for a period of nine months, expected to commence August 1, 2024 through April 30, 2025, for the Department of Behavioral Health located at 735 East Carnegie Drive, Suites 120, 240, and 270 in San Bernardino.
3. Approve an emergency short-term lease agreement with 1250 Fairfax, LLC and 521 East 11th St, LLC dba Three Carnegie Plaza for nine months, expected to commence August 1, 2024 through April 30, 2025, for approximately 19,284 square feet of office space for the Department of Behavioral Health located at 735 East Carnegie Drive, Suites 120, 240, and 270 in San Bernardino, for a total cost of $524,218, including $407,857 in rent and $116,361 in tenant improvements.
4. Authorize the Director of the Real Estate Services Department to approve and execute any other documents and take any other actions necessary to complete this transaction, to exercise San Bernardino County’s early termination right, or perform lease requirements prior to or throughout the term, subject to County Counsel review.
5. Authorize the Purchasing Agent to issue purchase orders, as necessary, for a total amount not to exceed $50,000, for any unforeseen contingencies and/or change orders that may arise during construction in order to complete the tenant improvements set forth in the lease agreement with 1250 Fairfax, LLC and 521 East 11th St., LLC dba Three Carnegie Plaza (Four votes required).
6. Direct the Real Estate Services Department to file the Notice of Exemption in accordance with the California Environmental Quality Act.
7. Authorize the Auditor-Controller/Treasurer/Tax Collector to post the necessary adjustments to the Real Estate Services Department 2024-25 budget, as detailed in the Financial Impact section (Four votes required).
(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 this item will not result in the use of Discretionary General Funding (Net County Cost). The total cost of this nine-month short-term emergency lease (Lease) is $524,218. Lease payments will be made from the Real Estate Services Department (RESD) Rents budget (7810001000) and reimbursed from the Department of Behavioral Health (DBH) budget (9200001000). DBH Lease costs are funded by Federal, State, and State Mental Health Realignment funds. The total cost for this Lease is $524,218, including $407,857 in rent and $116,361 in tenant improvements amortized over the nine-month term of the Lease period expected to commence August 1, 2024 through April 30, 2025.
RESD requests the Auditor-Controller/Treasurer/Tax Collector to post the following adjustments to the 2024-25 budget:
|
Cost Center |
GL Account |
Description |
Action |
Amount |
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7810001000 |
52002905 |
Rents & Leases-Structures Improvement & Grounds |
Increase |
$524,218 |
|
7810001000 |
55415013 |
Services & Supplies Transfer In |
Increase |
$524,218 |
BACKGROUND INFORMATION
The recommended actions will approve RESD’s use of an alternative procedure in lieu of issuing a formal Request for Proposals (RFP) as allowed under San Bernardino County (County) Policy 12-02 - Leasing Privately Owned Real Property for County Use (Policy). The approval will allow RESD to enter into a Lease with 1250 Fairfax, LLC and 521 East 11th St, LLC, dba Three Carnegie Plaza (Landlord) for the projected period of August 1, 2024 through April 30, 2025, subject to the Landlord’s completion of certain tenant improvements, for approximately 19,284 square feet of office space for DBH, located at 735 East Carnegie Suites 120, 240, and 270 in San Bernardino.
On April 17, 2024, the fire suppression pipeline burst, causing a water intrusion event to occur on the first floor of the current DBH building, and as a result DBH evacuated the property. Since then, floors two through four have been reoccupied. The first floor has been displaced and the staff are working at alternate locations. Approval of this Lease will allow the staffing units who were displaced from the first floor to be united and work at the new leased location out of one building.
The total cost of this Lease is $524,218, including $407,857 in rent and $116,361 in tenant improvements for carpet and paint, amortized over the nine-month term of the lease. The initial base rent is $2.35 per square foot per month, plus $0.67 per square foot per month for certain tenant improvements.
The Lease allows for the RESD Director in administering the lease, to:
• Exercise the County’s early termination right.
• Execute estoppel certificates confirming facts regarding the lease.
• Execute subordination, non-disturbance, and attornment agreements to preserve the County’s lease rights during the Landlord’s financing transactions involving the real property.
County Policy provides that the Board of Supervisors (Board) may approve the use of an alternative procedure to the use of a RFP process whenever the Board determines that compliance with the 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 interest of the County. RESD 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: |
1250 Fairfax, LLC, and 521 East 11th St, LLC, dba Three Carnegie Plaza |
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Location: |
735 Carnegie Drive, Suites 120, 240, and 270, San Bernardino, California, 92408 |
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Size: |
19,284 square feet of office space |
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Term: |
Nine-months projected to commence on August 1, 2024 through April 30, 2025; subject to Landlord’s completion of certain tenant improvements |
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Options: |
One (5) five-year option |
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Rent: |
Cost per square foot per month: $2.35* |
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Monthly: $45,317 |
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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: |
None |
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Improvement Costs: |
$116,361 which shall be amortized over the nine-month term of the Lease |
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Custodial: |
Provided by Lessor |
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Maintenance: |
Provided by Lessor |
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Utilities: |
Provided by Lessor, except for reimbursement of excess electric utility expense cap for the first Lease year (starting as of the Commencement Date) shall be calculated at $0.29 per square foot, per month, per Lease year (adjusted annually by 3%). Heating, Ventilation, and Air Conditioning (HVAC) services provided during Building Hours of Operation of Monday through Friday, 7:00 am to 6:00 pm and Saturday 9:00 am to 12:00 pm excluding County holidays. After-hours HVAC charges, without mark-up shall be $65 per hours of use. |
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Insurance: |
The Certificate of Liability Insurance as required by the Lease will be obtained by RESD prior to occupancy |
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Holdover: |
With the consent of the Landlord with the same terms and conditions, including rent |
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Right to Terminate: |
County can terminate with 30-days’ notice. In the event that County exercises its right to terminate the Lease prior to the end of the Term, the County shall be responsible for 50% of the amortized tenant improvement allowance (originally $116,361), which amount shall be due and payable to the Landlord upon termination. |
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Parking: |
Sufficient for County needs |
PROCUREMENT
N/A
REVIEW BY OTHERS
This item has been reviewed by County Counsel (John Tubbs II, and Dawn Martin, Deputies County Counsel, 387-5455) on July 1, 2024; Auditor-Controller/Treasurer/Tax Collector (Charlene Huang, Auditor-Controller Manager, 382-7022) on July 3, 2024; Behavioral Health (Lydia Bell, Administrative Manager, 386-9732) on July 3, 2024; Purchasing (Ariel Gill, Supervising Buyer, 387-2070) on July 1, 2024; Finance (Chris Lange, 386-8393, and Garrett Baker, 387-3077, Administrative Analysts) on July 5, 2024; and County Finance and Administration (Robert Saldana, Deputy Executive Officer, 387-5423) on July 5, 2024.
(KB: 453-9865)