REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF BOARD GOVERNED COUNTY SERVICE AREAS
AND RECORD OF ACTION
August 4, 2026
FROM
NOEL CASTILLO, Director, Department of Public Works - Special Districts
TERRY W. THOMPSON, Director, Real Estate Services Department
SUBJECT
Title
Revenue Lease Agreement with United States Postal Service for Use of Office Space in Hinkley
End
RECOMMENDATION(S)
Recommendation
Acting as the governing body of Board Governed County Service Area 70W:
1. Find that approval of Revenue Lease Agreement with the United States Postal Service, for exclusive use of 385 square feet of office space and the non-exclusive use of 297 square feet of common area within the County-owned building owned by County Service Area 70W in Hinkley, is an exempt project under the California Environmental Quality Act Guidelines, Section 15301 - Existing Facilities (Class 1).
2. Find that approval of Revenue Lease Agreement with the United States Postal Service, for exclusive use of 385 square feet of office space and the non-exclusive use of 297 square feet of common area within the County-owned building owned by County Service Area 70W in Hinkley, serves a public purpose and is in the best interest of County residents.
3. Approve Revenue Lease Agreement with the United States Postal Service, including non-standard terms, for exclusive use of 385 square feet of office space and the non-exclusive use of 297 square feet of common area within the County-owned building located at 35997 Mountain View Road, Suite 1 (Assessor’s Parcel Number 0488-112-03-0000) in Hinkley, for continued occupancy from June 1, 2026 through May 31, 2031, in the amount of $43,835.
4. 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
Promote and Fulfill the Countywide Vision.
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). Total revenue associated with this Revenue Lease Agreement (Lease) is $43,835 for the five-year term, from June 1, 2026 through May 31, 2031. Revenue will be deposited into the County Service Area 70W (CSA 70W) (3350001792). Expenses associated with administrative, maintenance, and utility costs, including the Notice of Exemption and CEQA processing fees, will be funded by CSA 70W. Adequate appropriation and revenue have been included in CSA 70W’s 2026-27 budget and will be included in future recommended budgets.
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Year |
Annual Fees |
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June 1, 2026 - May 31, 2027 |
$8,767 |
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June 1, 2027 - May 31, 2028 |
$8,767 |
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June 1, 2028 - May 31, 2029 |
$8,767 |
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June 1, 2029 - May 31, 2030 |
$8,767 |
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June 1, 2030 - May 31, 2031 |
$8,767 |
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Totals |
$43,835 |
BACKGROUND INFORMATION
On May 3, 2016 (Item No. 68), the Board of Supervisors (Board) approved a five-year Revenue Lease Agreement No. 16-173 (Lease 16-173), with one five-year option to extend the term of Lease 16-173, with the United States Postal Service (USPS), for the exclusive use of 385 square feet of office space and the non-exclusive use of 297 square feet of common area within the building located at 35997 Mountain View Road, Suite 1 (Assessor’s Parcel Number 0488-112-03-0000) in Hinkley (Property).
The original term of Lease 16-173 was for the period of June 1, 2016 through May 31, 2021. On July 14, 2020 (Item No. 53), the Board approved Amendment No. 1 to Lease 16-173 for USPS’s exercise of its option to extend the term from June 1, 2021 through May 31, 2026.
USPS has continued its occupancy following the expiration of the prior lease term. The proposed Lease formalizes the continued occupancy and establishes a new five-year term commencing June 1, 2026, thereby ensuring uninterrupted postal services to the Hinkley community. The recommended action will formally continue the occupancy and establish the term from June 1, 2026 through May 31, 2031, with an additional option to extend the term through May 31, 2036. Additionally, USPS agreed to an increase in rent to reflect pro-rata share of the utility expenses. This item is being presented at this time because this is the first available Board date following completion of the required operations, fiscal, and legal reviews.
This USPS location is very important to the local community providing mail services in a rural location. This location allows residents to avoid traveling approximately 12 miles to the Barstow Post Office to obtain postal services.
As part of the lease negotiations, the parties agreed to certain non-standard insurance and indemnification provisions required by USPS as a condition of entering into the Lease. The Lease contains non-standard contract terms that differ from the County's standard contractual requirements and County Policy 11-07 SP, as follows:
Insurance Requirements:
• The County Policy requires contractors to carry appropriate insurance at limits and under conditions determined by the County’s Risk Management Department.
• Potential Impact: USPS does not maintain commercial insurance coverage in the manner typically required by the County. Instead, USPS operates as a federal governmental entity and is self-insured pursuant to applicable federal statutes, including the Federal Tort Claims Act and the Federal Employees' Compensation Act. Accordingly, the Lease replaces the County's standard insurance requirements with USPS's federally authorized self-insurance provisions which may increase the County's potential exposure beyond that contemplated under the County's standard insurance requirements.
Indemnification:
• The County standard contract indemnity provision requires the Contractor to indemnify, defend, and hold the County harmless from third party claims arising out of the acts, errors or omissions of any person.
• Potential Impact: The Lease contains a non-standard indemnification provision under which USPS agrees to indemnify and hold harmless the County only for claims arising from the negligent or wrongful acts or omissions of USPS employees acting within the scope of their employment, to the extent permitted under applicable federal law. The provision does not provide the broad form indemnification typically required under County lease agreements.
County Counsel and Risk Management reviewed and approved the non-standard provisions. Acceptance of these provisions is recommended because USPS is a federal governmental entity and will not enter into lease agreements containing the County's standard insurance and indemnification requirements.
Approval of the Lease will ensure the continued operation of postal services for the Hinkley community.
The project to approve the Lease was reviewed pursuant to California Environmental Quality Act (CEQA) and determined to be categorically exempt under Section 15301 - Class 1 Existing Facilities because the proposed Lease continues an existing use of previously disturbed land with negligible or no expansion of use. Accordingly, no further action is required under CEQA.
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Summary of Lease Terms |
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Lessee: |
United States Postal Service |
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Location: |
35997 Mountain View Road, Suite 1 (Assessor’s Parcel Number 0488-112-03-0000) in Hinkley |
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Size: |
Aggregate of 682 square feet which includes 385 square feet of office space and 297 square feet of common area |
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Initial Term: |
Five years, June 1, 2026 - May 31, 2031 |
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Options: |
One five-year option |
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Rent: |
Monthly: $730.58 |
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Yearly: $8,767 |
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*High-range for comparable facilities in the Hinkley area per the competitive set analysis on file with Real Estate Services (RESD) |
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Annual Increases: |
None |
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Improvement Costs: |
None |
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Custodial: |
Lessee’s responsibility |
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Maintenance: |
Shared responsibility pursuant to the Lease; Landlord is responsible for building systems and structural components; Lessee responsible for routine interior maintenance and operations |
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Utilities: |
Lessor’s responsibility |
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Insurance: |
USPS operates as a federal governmental entity and is self-insured pursuant to applicable federal statutes, including the Federal Tort Claims Act and the Federal Employees' Compensation Act |
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Right to Terminate: |
180 days’ written notice by the Lessee |
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Parking: |
Shared parking |
PROCUREMENT
California Government Code section 26227 authorizes the County to grant the use of real property to other public agencies for programs that serve a public purpose by meeting the public safety, welfare, and public service needs of the County and the general public.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (John Tubbs II, Deputy County Counsel, 387-5455) on June 30, 2026; Special Districts (Henry Mac, Division Manager, 389-8822) on July 7, 2026; Risk Management (Stephanie Pacheco, Staff Analyst II, 386-9039) on July 9, 2026; Purchasing (Jessica Barajas, Supervising Buyer, 387-2065) on July 2, 2026; and County Finance and Administration (Matthew Dalton, 387-5005, and Eduardo Mora, 387-4376, Administrative Analysts) on July 20, 2026.
(CM: 840-266-0977)