REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
May 19, 2026
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
JANKI PATEL, Acting Director, Department of Public Health
SUBJECT
Title
Amendment to Lease Agreement with Jack S. Katzman Trust and Bernie and Sheila Barrad Bypass Trust for Office Space in San Bernardino
End
RECOMMENDATION(S)
Recommendation
1. Find that approval of Amendment No. 5 to Lease Agreement No. 09-1087 with Jack S. Katzman Trust and Bernie and Sheila Barrad Bypass Trust 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. 09-1087 through the Real Estate Services Department’s use of an alternative procedure in lieu of a Formal Request for Proposals, as allowed under County Policy 12-02 - Leasing Privately Owned Real Property for County Use to:
a. Reflect a change in property ownership from ABO Enterprises, Inc. to Jack S. Katzman Trust and Bernie and Sheila Barrad Bypass Trust.
b. Extend the term of the lease two years for the period of June 1, 2026 through May 31, 2028, for approximately 4,000 square feet of office space for the Department of Public Health, located at 2035 and 2037 North D Street, in San Bernardino, based on the County’s exercise of an existing two-year option to extend the lease, following a permitted holdover for the period of May 1, 2025 through May 31, 2026.
c. Add one two-year option to extend the lease.
d. Adjust the Rental Rate schedule for the two-year term, resulting in an increase of $327,640 inclusive of $111,424 for the permitted holdover period, increasing the total contract amount from $1,459,663 to $1,787,303.
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.
FINANCIAL IMPACT
Approval of this item will not result in the use of Discretionary General Funding (Net County Cost). The total cost of Amendment No. 5 (Amendment) to Lease Agreement No. 09-1087 (Lease) with Jack S. Katzman Trust and Bernie and Sheila Barrad Bypass Trust (Landlord) is $327,640, inclusive of $111,424 for the permitted holdover period. Lease payments will be made from the Real Estate Services Department (RESD) Rents budget (7810001000) and reimbursed from the Department of Public Health (DPH) Women, Infants and Children program (WIC) Internal Order (9300061000). Other costs associated with this lease include an electricity utility cap, beyond which the landlord’s expenses are reimbursable by DPH, but it is not anticipated that electric utility expenses will exceed the cap. The DPH budget for the WIC program is funded with federal pass-through funds. Sufficient appropriation is included in the 2025-26 budget and will be included in future recommended budgets. Annual lease costs are as follows:
|
Year |
Lease Cost |
|
*May 1, 2025 - May 31, 2026 |
$111,424 |
|
June 1, 2026 - May 31, 2027 |
$107,040 |
|
June 1, 2027 - May 31, 2028 |
$109,176 |
|
Total Lease Cost |
$327,640 |
*Permitted Holdover period
BACKGROUND INFORMATION
On December 1, 2009 (Item No. 43), the Board of Supervisors (Board) approved a five-year Lease with one three-year and one two-year option to extend the term for 4,000 square feet of office space located at 2035 and 2037 North D Street in San Bernardino for the DPH/WIC Program. The original term was February 1, 2010 through January 31, 2015. Since that time, the Board has approved four amendments to the Lease, extending the term through April 30, 2025, modifying the rental rate, adding two-year extension options, and updating standard lease language.
|
Amendment No. |
Approval Date |
Item No. |
|
1 |
October 7, 2014 |
38 |
|
2 |
March 20, 2018 |
41 |
|
3 |
August 25, 2020 |
50 |
|
4 |
April 25, 2023 |
56 |
Due to protracted negotiations with the Landlord regarding market rental rates, the Lease went into a permitted holdover effective May 1, 2025. Following a market survey of comparable properties in the San Bernardino area, RESD determined that the proposed rental rate of $2.23 per square foot per month, with an annual increase of approximately 2%, reflects fair market value and is consistent with current market conditions in San Bernardino and surrounding areas.
The Amendment provides a two-year extension of the Lease term, from June 1, 2026 through May 31, 2028, through the County’s exercise of an existing option to extend, following a permitted holdover from May 1, 2025 through May 31, 2026. The Amendment also adjusts the rental rate schedule, adds one additional option to extend, and updates standard lease agreement provisions.
Additionally, the Amendment reflects a change in property ownership from ABO Enterprises, Inc. to the current ownership entities, Jack S. Katzman Trust and Bernie and Sheila Barrad Bypass Trust, ensuring that all future Lease obligations and payments are made to the correct legal property owners of record. The new ownership Grant Deed was recorded on June 16, 2025, and RESD was notified on October 29, 2025.
The project to approve the Amendment was reviewed pursuant to the California Environmental Quality Act (CEQA) and determined to be categorically exempt under Section 15301 - Class 1 Existing Facilities because the proposed Lease 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: |
Jack S. Katzman Trust and Bernie and Sheila Barrad Bypass Trust |
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Location: |
2035 and 2037 North D Street, San Bernardino |
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Size: |
4,000 square feet of office space |
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Term: |
Two additional years, commencing on June 1, 2026 through May 31, 2028 |
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Options: |
One two-year option |
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Rent: |
Cost: $2.23* per square foot per month, full-service gross |
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Monthly: $8,920 |
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Annual: $107,040 |
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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: |
Approximately 2% |
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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, the County is responsible for electrical costs exceeding $22,476 per lease year (equivalent to $0.47 per square foot per month), subject to 4% annual increases |
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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 term upon the same terms and conditions which existed at the time of expiration |
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Right to Terminate: |
County has the right to terminate with 90-days’ notice |
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Parking: |
Sufficient for County needs |
PROCUREMENT
Policy 12-02 provides that the Board may approve the use of an alternative procedure to the use of a Formal Request for Proposal (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 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 April 24, 2026; Public Health (Janki Patel, Acting Director, 387-9146) on April 27, 2026; Purchasing (Ariel Gill, Supervising Buyer, 387-2070) on April 27, 2026; County Finance and Administration (Iliana Rodriguez, 387-4205, and Eduardo Mora, 387-4376, Administrative Analysts) on May 4, 2026.
(PHL: 665-4890)