REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
December 19, 2023
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
JACQUELYN GREENE, Director, Preschool Services Department
SUBJECT
Title
Amendment to Lease Agreement for Classroom and Office Space in Apple Valley
End
RECOMMENDATION(S)
Recommendation
1. Find that approval of Amendment No. 8 to Lease Agreement No. 98-691 with Ashok Talwar and Kay Talwar, Co-Trustees of the Talwar Trust dated June 29, 1989, for classroom and office space is an exempt project under the California Environmental Quality Act Guidelines Section 15301- Existing Facilities (Class 1).
2. Approve Amendment No. 8 to Lease Agreement No. 98-691 with Ashok Talwar and Kay Talwar, Co-Trustees of the Talwar Trust dated June 29, 1989, to extend the term of the lease five years, for the period of January 1, 2024 through December 31, 2028, following a permitted holdover period of April 15, 2023 through December 31, 2023, for approximately 11,026 square feet of classroom and office space located at 13589 Navajo Road in Apple Valley for the Preschool Services Department in the amount of $1,337,036, which includes a holdover period cost of $153,740
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
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 cost of this five-year amendment is $1,337,036 which includes a holdover period cost in the amount of $153,740. Lease payments will be made from the Real Estate Services Department (RESD) Rents budget (7810001000) and reimbursed by the Preschool Services Department (PSD) budget (5911402220) that is 86% federally funded and 14% state funded. Other costs associated with the lease include certain maintenance, utilities, and custodial costs, which will be paid from the PSD budget. Sufficient appropriation is included in the 2023-24 PSD and RESD Rents budgets and will be included in future recommended budgets. Annual lease costs are as follows:
|
Period |
Annual Total |
|
April 15, 2023 - December 31, 2023 |
*$153,740 |
|
January 1, 2024 - December 31, 2024 |
$223,320 |
|
January 1, 2025 - December 31, 2025 |
$229,800 |
|
January 1, 2026 - December 31, 2026 |
$236,460 |
|
January 1, 2027 - December 31, 2027 |
$243,324 |
|
January 1, 2028 - December 31, 2028 |
$250,392 |
|
Total |
$1,337,036 |
*Holdover period
BACKGROUND INFORMATION
The recommended action will approve a five-year lease extension with Ashok Talwar and Kay Talwar, Co-Trustees of the Talwar Trust dated June 29, 1989, (Landlord) for the use of approximately 11,026 square feet of classroom and office space for the continuing need to provide PSD services in the Apple Valley area.
PSD notified RESD of its intention to exercise its five-year extension option. Amendment No. 8 extends the term of the preschool lease agreement by the County exercising the final five-year option for the period of January 1, 2024 to December 31, 2028, adjusts the rent schedule and related provisions, and updates standard lease agreement language. All other terms and conditions of Lease Agreement No. 98-691 (Lease) remain unchanged. The original term of the lease was for the period of April 15, 1998 through April 14, 2001. In the 25 years since the lease was originally approved, the Board has approved seven amendments, which extended the term of the lease through April 14, 2023, adjusted the monthly rental rate schedule, adjusted the commencement and expiration dates of the lease, and updated standard lease agreement language.
|
Amendment No. |
Approval Date |
Item No. |
|
1 |
November 6, 2001 |
49 |
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2 |
April 30, 2002 |
45 |
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3 |
September 24, 2002 |
45 |
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4 |
November 6. 2007 |
46 |
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5 |
February 14, 2012 |
35 |
|
6 |
October 4, 2016 |
31 |
|
7 |
June 8, 2021 |
72 |
With a continuing need for PSD services at this location, PSD requested RESD prepare an amendment to extend the term of the Lease by five years. The Lease went into a permitted holdover period due to longer than anticipated negotiations with the landlord. PSD 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. 8 to the lease with the landlord was reviewed pursuant to the California Environmental Quality Act (CEQA) and RESD has determined that it is an exempt project under CEQA Guidelines Section 15301- Existing Facilities (Class 1). Class 1 consists of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use. The proposed lease agreement is to secure property to operate within the existing structure with negligible or no expansion of existing use.
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Summary of Lease Terms |
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Lessor: |
Ashok Talwar and Kay Talwar, Co-Trustees of the Talwar Trust dated June 29, 1989 |
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Location: |
13589 Navajo Road, Apple Valley, CA |
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Size: |
Approximately 11,026 square feet of classroom and office space |
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Term: |
Five years commencing January 1, 2024 |
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Options: |
None. |
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Rent: |
Cost per square foot per month: $1.69* |
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Monthly: $18,610 |
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Annual: $223,320 |
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*Mid-range for comparable facilities in the Apple Valley area per the competitive set analysis on file with RESD |
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Annual Increases: |
3% |
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Holdover: |
With the consent of the Landlord with the same terms and conditions, including rent |
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Improvement Costs: |
None |
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Custodial: |
To be provided by County |
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Maintenance: |
To be provided by Lessor; except County shall provide maintenance within the interior of the Premises, monitoring of the fire alarm system, maintenance of filters, freon, and thermostat for the heating and ventilation system, maintenance of the playground area, and clearing sewer line clogs to the extent caused by County |
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Utilities: |
To be provided by County for those utilities separately metered |
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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: |
County has the right to terminate with 90-days’ notice provided federal or state funding to the program has been reduced or eliminated |
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Parking: |
Sufficient for County needs |
PROCUREMENT
RESD initially procured the Lease by issuing a Solicitation of Proposals, as required by County Policy No. 12-02 - Leasing Privately Owned Real Property for County Use (Policy), due to the aggregated total length of the lease exceeding 20 years. Pursuant to Exceptions to Policy - Amendments of Existing Leases, Policy 12-02 the County Administrative Office has the authority and responsibility to periodically review all leases and the space needs of the County and Districts.
RESD completed a competitive analysis of the market and found the current rental rate to be competitive, and determined this facility best meets the requirements of PSD. County Policy 12-02 allows the use of an alternative procedure when a formal RFP 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.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (John Tubbs II, and Adam Ebright, Deputies County Counsel, 387-5455) on November 8, 2023; Preschool Services (Debra Billings-Merlos, Deputy Director, 383-2043) on November 15, 2023; Purchasing (Ariel Gill, Supervising Buyer, 387-2070) on November 13, 2023; Finance (Paul Garcia, Administrative Analyst, 386-8392, and Garrett Baker, Administrative Analyst, 387-3077) on November 29, 2023; and County Finance and Administration (Valerie Clay, Deputy Executive Officer, 387-5423) on November 30, 2023.
(KLB: 453-9865)