REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF THE COUNTY OF SAN BERNARDINO
AND RECORD OF ACTION
March 10, 2020
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
VERONICA KELLY, Director, Department of Behavioral Health
SUBJECT
Title
Amendment No. 4 to Lease Agreement with Southern California Schools Facilities Corporation for office space for the Department of Behavioral Health in San Bernardino
End
RECOMMENDATION(S)
Recommendation
Approve Amendment No. 4 to Lease Agreement No. 09-438 with Southern California Schools Facilities Corporation to extend the term of the lease three years by exercising an extension option for the period of April 1, 2020 through March 31, 2023, following a permitted six-month holdover for the period of October 1, 2019 through March 31, 2020, adjusting the rental rate schedule, and updating standard lease agreement language for 13,891 square feet of office space for the Department of Behavioral Health at 1950 Sunwest Lane, Suite 200, in San Bernardino in the amount of $1,052,730.
(Presenter: Terry W. Thompson, Director, 387-5252)
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 amendment, including the permitted holdover, is $1,052,730. Lease payments will be made from the Rents budget (7810001000) and reimbursed from the Department of Behavioral Health (DBH) budget (9200001000). DBH lease costs are funded 30% Federal, 28% State and 42% State Mental Health Realignment funds. Sufficient appropriation is included in the 2019-20 DBH budget and will be included in future recommended budgets. Annual lease costs are as follows:
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Year |
Annual Lease Cost |
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October 1, 2019 - March 31, 2020 |
$155,022 |
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April 1, 2020 - March 31, 2021 |
$ 291,300 |
|
April 1, 2021 - March 31, 2022 |
$ 299,160 |
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April 1, 2022 - March 31, 2023 |
$ 307,248 |
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Total Cost |
$ 1,052,730 |
BACKGROUND INFORMATION
The recommended action will amend the lease by exercising an existing extension option for the period of April 1, 2020 through March 31, 2023, following a permitted six-month holdover for the period of October 1, 2019 through March 31, 2020, adjusting the rental rate schedule, and updating standard lease agreement language for 13,891 square feet of office space in San Bernardino for the DBH. Amendment No. 4 to the lease provides for a three-year extension of the lease due to the County’s exercise of its second three-year extension option with rent to be adjusted to market rates. The Real Estate Services Department (RESD) negotiated a rental rate of $1.75 per square foot per month ($291,300 annually) for the first year of the extended term, which is an decrease of $0.11 per square foot per month from the prior rental rate of $1.86 per square foot per month ($310,044 annually), with 2.7% annual rent escalations thereafter. The amendment also reflects a 6-month permitted holdover, adjusts the rent rate schedule, and updates standard lease agreement language.
On June 2, 2009 (Item No. 31), the Board of Supervisors (Board) approved a seven-year lease agreement, No. 09-438, with three three-year options to extend for 13,891 square feet of office space at 1950 Sunwest Lane, Suite 200, in San Bernardino. The original term of the lease was for the period of October 1, 2009 through September 30, 2016. In the ten years since the lease was originally approved, the Board has approved three amendments to reflect a change of ownership, exercise an option to extend the term through September 30, 2019, perform tenant improvements, and update standard lease agreement language.
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Amendment No. |
Approval Date |
Item No. |
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1 |
June 22, 2010 |
95 |
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2 |
July 26, 2016 |
38 |
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3 |
March 28, 2017 |
41 |
DBH requested RESD exercise the second three-year option to extend the term of the lease to allow the Workforce Education and Training (WET) program to continue providing services to residents in the San Bernardino area. Due to protracted negotiations with the landlord regarding market rental rates, the lease went into a permitted holdover on October 1, 2019. Amendment No. 4 to the lease extends the term of the lease three years for the period of April 1, 2020 through March 31, 2023, following a permitted six-month holdover for the period of October 1, 2019 through March 31, 2020, adjusts the rental rate schedule, and updates standard lease agreement language. All other provisions and terms of the lease remain unchanged.
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 Lease Terms |
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Lessor: |
Southern California Schools Facilities Corporation (Karla M. Rhay, E.D., Chief Administrator Officer) |
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Location: |
1950 Sunwest Lane, Suite 200, San Bernardino |
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Size: |
13,891 square feet of office space |
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Term: |
Three years commencing April 1, 2020 |
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Options: |
One three-year option remains |
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Rent: |
Cost per sq. ft. per month: $1.75 |
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Monthly: $24,275 |
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Annual: $291,300 |
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*Mid-range for comparable facilities in the San Bernardino area per supporting lease comparables on file |
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Annual Increases: |
2.7% |
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Summary of Lease Terms |
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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 the Real Estate Services Department. |
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Right to Terminate: |
The County has the right to terminate with 90-days’ notice |
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Parking: |
Sufficient for County needs |
PROCUREMENT
On June 2, 2009 (Item No. 31), the Board of Supervisors (Board) approved a seven-year lease agreement, No. 09-438, which was procured according to County Policy 12-02 - Leasing Privately Owned Real Property for County Use (Policy), using a Solicitation of Proposals (SOP) process. The procurement process required by the Policy does not apply to amendments of existing leases, provided the amendment does not exceed the maximum term (including options) of the lease.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Agnes Cheng, Deputy County Counsel and Dawn Martin, Deputy County Counsel, 387-5455) on January 21, 2020; DBH (Michael Knight, Assistant Director, Behavioral Health, 388-0808 and Emily Petrus, Administrative Supervisor, Behavioral Health, 388-0949) on January 7, 2020 ; Purchasing (Michelle Churchill, Buyer III, 387-2070) on January 9, 2020; Finance (Monique Amis, Administrative Analyst, 387-4883 and Chris Lange, Administrative Analyst, 386-8393) on February 18, 2020; and County Finance and Administration (Matthew Erickson, County Chief Financial Officer, 387-5423) on February 24, 2020.
(JAG: 677-8210)