REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
January 9, 2024
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
BEAHTA DAVIS, Director, Regional Parks Department
SUBJECT
Title
Amendment to Revenue Lease Agreement with SJS Enterprises, Inc. dba SC Village for Land in Chino
End
RECOMMENDATION(S)
Recommendation
1. Find that the approval of Amendment No. 1 to Revenue Lease Agreement No. 23-254 with SJS Enterprises, Inc. dba SC Village, is exempt under the California Environmental Quality Act Guidelines, Section 15301 - Existing Facilities (Class 1).
2. Approve Amendment No. 1 to Revenue Lease Agreement No. 23-254 with SJS Enterprises, Inc. dba SC Village to extend the term of the lease for an additional 10-year period from April 1, 2033 through March 31, 2043, and update the rent schedule and termination language for a total of approximately 54 acres of San Bernardino County-owned land, comprised of approximately 50 acres for use as a recreational paintball/airsoft facility [Assessor’s Parcel Numbers 1057-221-18 (portion), 1057-221-19 (portion), and 1057-221-21 (portion)], and approximately four acres for use as an unimproved parking area [Assessor’s Parcel Number 1057-221-19 (portion)], located along Hellman Avenue between Rincon Road and McCarty Road in Chino, for the Regional Parks Department, for total revenue in the minimum amount of $1,399,580 (Four votes required).
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 revenue to be received during the 10-year extension to Lease Agreement No. 23-254 (Lease) with SJS Enterprises, Inc. dba SC Village (SJS Enterprises) is a minimum of $1,399,580. Revenue received from the Lease will be deposited into the Chino Agricultural Preserve Special Revenue Fund (7801142734) for properties acquired under the provisions of Proposition 70, the California Wildlife, Coastal and Parkland Conservation Act of 1988 (Prop 70). For every month during the extension and continuing for the remainder of the term of the Lease, SJS Enterprises shall pay San Bernardino County (County) the monthly rent in the amount that is the greater of the minimum monthly revenue schedule or 6% of SJS Enterprises’ monthly gross revenues (excluding taxes) for said month. The minimum annual revenue during the extended term of the Lease is as follows:
|
Year |
Minimum Annual Revenue |
|
April 1, 2033 - March 31, 2034 |
$116,572 |
|
April 1, 2034 - March 31, 2035 |
$121,235 |
|
April 1, 2035 - March 31, 2036 |
$126,085 |
|
April 1, 2036 - March 31, 2037 |
$131,128 |
|
April 1, 2037 - March 31, 2038 |
$136,373 |
|
April 1, 2038 - March 31, 2039 |
$141,828 |
|
April 1, 2039 - March 31, 2040 |
$147,501 |
|
April 1, 2040 - March 31, 2041 |
$153,401 |
|
April 1, 2041 - March 31, 2042 |
$159,537 |
|
April 1, 2042 - March 31, 2043 |
$165,920 |
|
Total Minimum Revenue |
$1,399,580 |
BACKGROUND INFORMATION
Amendment No. 1 to the Lease (Amendment) will extend the term of the Lease for 10 years for the additional period of April 1, 2033 through March 31, 2043, and update the termination language. The total period of the Lease will be for the period of April 1, 2023 through March 31, 2043, for approximately 54 acres of County-owned land, comprising approximately 50 acres, for use as a recreational paintball/airsoft facility [(Assessor’s Parcel Numbers (APN) 1057-221-18 (portion), 1057-221-19 (portion), and 1057-221-21 (portion)] and approximately four acres for use as an unimproved parking area [APN 1057-221-19 (portion)], located along Hellman Avenue between Rincon Road and McCarty Road in Chino (Property).
Prop 70, which was approved by California voters in June 1988, provided $776,000,000 of general obligation bonds to fund the “acquisition, development, rehabilitation, protection, or restoration of park, wildlife, coastal and natural lands in California including lands supporting unique or endangered plants or animals”. The County received nearly $20,000,000 of the Prop 70 grant funds for acquisition of land in the cities of Chino and Ontario, within the boundaries of the Chino Agricultural Preserve (Ag Preserve). Senate Bill 1124, an uncodified act of the State Legislature in 2010, authorized the County to sell or exchange some property it acquired with Prop 70 funds for the acquisition of the Property. As a result, the Property is subject to Prop 70, Senate Bill 1124, and a Land Plan approved by the Board of Supervisors (Board) on November 6, 2012 (Item No. 95).
The Lease was submitted to the State of California Department of Housing and Community Development (HCD) for review for Surplus Land Act (SLA) compliance. On January 25, 2023, via a letter, HCD concluded that the Lease is not subject to the SLA. HCD determined that, even though the term of the Lease exceeds five years, the improvements, alterations, and preventative maintenance permitted thereunder does not amount to demolition or development as contemplated under Section 102(h)(1) of the SLA Guidelines.
The Real Estate Services Department (RESD) proposed that the Property be disposed by the Lease to provide revenue for the Chino Agricultural Preserve Special Revenue Fund. On March 28, 2023 (Item No. 46), the Board approved the Lease with SJS Enterprises for the period of April 1, 2023 through March 31, 2033. Due to unforeseen circumstances regarding finances, SJS Enterprises entered into negotiations to extend the term of the Lease. SJS Enterprises requested that the County prepare the Amendment to extend the term of the Lease for the period of April 1, 2033 through March 31, 2043. The Amendment updates the termination language to state neither party has the right to terminate the lease early unless either party is in default. The Amendment further updates the default section to include the California Office of Grants and Local Services (OGALS) requirements. The Lease will be considered in default if at any time after the first two years of the term, OGALS notifies the County that SJS Enterprises’ use of the Property violates Prop 70. As explained with the initial Lease approval in March of this year, if OGALS were to notify the County of any violation during the first two years of the term of the Lease, the County could be subject to Prop 70 penalties. RESD and Parks believe that the risk is low given the use has existed on the Property since 2000 and recommended approval of the Lease despite the risk.
The project to approve Amendment No. 1 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) of the CEQA Guidelines because there is no possibility that the leasing of the Property will have a significant effect on the environment.
|
Summary of Lease Terms |
|
|
Lessee: |
SJS Enterprises, Inc. dba SC Village (Dennis J. Bukowski, President) |
|
|
|
|
Location: |
County-owned land, comprising of approximately 50 acres for use as a recreational paintball/airsoft facility [APNs1057-221-18 (portion), 1057-221-19 (portion), and 1057-221-21 (portion)] and approximately four acres for use as an unimproved parking area [APN 1057-221-19 (portion)] located along Hellman Avenue between Rincon Road and McCarty Road in Chino |
|
|
|
|
Size: |
A total of approximately 54 acres, comprising approximately 50 acres of land for use as a recreational paintball/airsoft facility and approximately four acres of land for use as an unimproved parking area |
|
|
|
|
Extended Term: |
10 additional years from April 1, 2033 through March 31, 2043 |
|
|
|
|
Options: |
None |
|
|
|
|
Rent: |
Revenue per month: $9,714* |
|
|
Annual Revenue: $116,572 |
|
|
*Low-range for comparable land in the Chino area |
|
|
|
|
Annual Increases: |
4% |
|
|
|
|
Improvement Costs: |
None; Lessee shall not make any alterations at the Property without prior written consent of the County, OGALS, the HCD, and the United States Corp of Engineers; at the end of the term, Lessee has the right, in its sole discretion, to surrender any fixtures, improvements, or alterations to the County without an obligation to remove and restore |
|
|
|
|
Maintenance: |
Provided by Lessee |
|
|
|
|
Utilities: |
Provided by Lessee |
|
|
|
|
Insurance: |
The Certificate of Liability Insurance, as required by the Lease, is on file with RESD |
|
|
|
|
Holdover: |
With County’s express written consent, the Lessee may remain on the Property with the Lease continuing on a month-to-month basis on the same terms and conditions, except that the minimum monthly rent will increase by 4% of the rent during the month prior to expiration; either party will have the right to terminate the Lease during a permitted holdover period with not less than 30 days prior notice |
|
|
|
|
Right to Terminate: |
Neither party has the right to terminate for convenience. In the event OGALS notifies the County of an unapproved use, the Lease shall terminate upon proper notice |
PROCUREMENT
Government Code Section 25536(a) permits the Board to directly enter into a lease of all or any part of County-owned, leased, or managed property devoted to or held for ultimate use for park, amusement, or recreation purposes without complying with the provisions of Government Code Section 25520 et seq. with a four-fifths vote. This is due to the restrictive nature of the permitted use as the Property, which is subject to Prop 70, Senate Bill 1124.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (John Tubbs II, and Suzanne Bryant, Deputies County Counsel, 387-5455) on November 14, 2023; Regional Parks (Beahta Davis, Director, 387-2886) on November 18, 2023; Purchasing (Ariel Gill, Supervising Buyer, 387-2070) on November 17, 2023; Finance (Elias Duenas, 387-4052, and Garrett Baker, Administrative Analysts, 387-3077) on December 12, 2023; and County Finance and Administration (Valerie Clay, Deputy Executive Officer, 387-5423) on December 14, 2023.
(YG: 665-0268)