REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
November 17, 2026
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
ARLENE MOLINA, Director, Preschool Services Department
SUBJECT
Title
Amendment to Lease Agreement with Potomac Plaza, LLC for Classroom, Office Space and Playground Area in San Bernardino
End
RECOMMENDATION(S)
Recommendation
1. Find that approval of Amendment No. 1 to Lease Agreement 24-896 with Potomac Plaza, LLC for classroom, office space, and playground area, is an exempt project under the California Environmental Quality Act Guidelines, Section 15301 - Existing Facilities (Class 1).
2. Approve Amendment No. 1 to Lease Agreement No. 24-896 with Potomac Plaza, LLC, to authorize a one-time lump-sum payment of $55,400, for increased tenant improvement costs resulting from County-related project delays, consisting of the previously Board-approved $45,000 contingency allowance and an additional $10,400, increasing the total tenant improvement costs from $507,600 to $563,000, without changing the monthly rental rate, for the Preschool Services Department facility located at 2382 Del Rosa Avenue (Assessor’s Parcel Number 0272-201-55-0000) in San Bernardino (Four votes required).
3. Authorize the Auditor-Controller/Treasurer/Tax Collector to post necessary budget adjustments to the 2026-27 budget as detailed in the Financial Impact Section (Four votes required).
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
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). Amendment No. 1 (Amendment) to Lease Agreement No. 24-896 (Lease) authorizes a one-time lump-sum payment of $55,400 to Potomac Plaza, LLC (Potomac) for additional tenant improvement costs. This amount includes the $45,000 contingency allowance previously approved by the County Board of Supervisors (Board) and an additional $10,400 for County-requested improvements, increasing the total tenant improvement costs from $507,600 to $563,000. The payment will be made from the Real Estate Services Department (RESD) Rents budget (7810001000) and reimbursed by the Preschool Services Department (PSD) budget (5910002220).
|
Fund Center |
Commitment/GL Account |
Description |
Action |
Amount |
|
|
7810001000 |
52002905 |
Rents & Leases - Structures, Improvements & Grounds |
Increase |
$ 563,000 |
|
7810001000 |
55415013 |
Services & Supplies Transfers In |
Increase |
$ 563,000 |
|
5911592220 |
55405012 |
Services & Supplies Transfers Out |
Increase |
$ 563,000 |
|
5910002220 |
40509030 |
Federal Aid for Day Care |
Increase |
$ 563,000 |
BACKGROUND INFORMATION
On March 14, 2017, the County Administrative Office approved Capital Improvement Program Project No. 17-282 to expand PSD's facilities. On November 14, 2017 (Item No. 33), the Board approved Lease Agreement No. 17-862 (Prior Agreement) for approximately 8,292 square feet of classroom and office space and 6,375 square feet of playground area at 2382 Del Rosa Avenue in San Bernardino. The Prior Agreement had an initial five-year term, from December 1, 2017, through November 30, 2022, with two five-year extension options. On September 24, 2024 (Item No. 68), the Board approved Lease Agreement No. 24-896 with Potomac, replacing the Prior Agreement and providing for a new 15-year lease term. The Lease included $507,600 in tenant improvement costs to accommodate five additional classrooms. The improvements were structured as a turnkey project, with Potomac responsible for completing the work necessary to meet PSD's operational requirements.
Construction of the tenant improvements was delayed by nearly one year due to County related project delays associated with PSD’s budgetary and grant constraints relating to how the tenant improvements would be managed and funded due to the federal grant requirements, leasing and contracting procedures, and responsibilities between PSD and RESD. As a result of the extended project timeline, construction costs increased, requiring the landlord to obtain updated proposals to complete the improvements. These delays resulted in increased project costs totaling $55,400, increasing the total tenant improvement costs from $507,600 to $563,000. The improvements have since been substantially completed and accepted by the County, and PSD has reviewed and validated the final costs. Of the additional $55,400, $45,000 is covered by the contingency allowance previously approved by the Board, leaving an additional $10,400 requiring Board approval.
The proposed Amendment authorizes a one-time lump-sum payment of $55,400 in accordance with Exhibit B, Improvement Work Letter, of the Lease, without modifying the existing Lease commencement date, term, or rental rate. Pursuant to Public Contract Code section 20137, four votes are required.
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 Amendment is to secure property to operate within the existing structure with negligible or no expansion of existing use. Approval of the one-time lump sum payment is an administrative action related to an existing lease and will not result in any direct or reasonably foreseeable indirect physical changes to the environment.
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Summary of Lease Terms |
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Lessor: |
Potomac Plaza, LLC, Joon Choi, Managing Member |
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Location: |
2382 Del Rosa Avenue in San Bernardino |
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Size: |
8,292 square feet of classroom and office space, and 6,375 square feet of playground area, and parking space |
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Term: |
15-year term, which commenced October 1, 2024 |
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Options: |
Two five-year options to extend the term of the Lease |
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Rent: |
Cost per square foot per month: $1.96* full-service gross |
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Monthly: $17,247 |
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Annual: $206,969 |
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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 3% |
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Improvement Costs: |
County pays a lump sum of $563,000 for total improvement costs upon substantial completion and Certificate of Occupancy |
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Custodial: |
Provided by County |
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Maintenance: |
Provided by Lessor, except for repairs and maintenance of the playground area which will be provided by the County |
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Utilities: |
County pays all utility costs (gas, electricity, sewer, water, and trash), including telephone line, and any additional dumpster costs as needed |
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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 |
County may continue occupancy on a month-to-month basis following expiration or early termination of the Lease, under the same terms and conditions, at the monthly rental rate in effect immediately preceding expiration or termination. |
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Right to Terminate: |
County can terminate with 180 days’ notice |
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Parking: |
Provided by Lessor, and must be sufficient to meet County needs |
PROCUREMENT
Not applicable.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (John Tubbs II, Deputy County Counsel, 387-5455) on October 20, 2026; Auditor-Controller/Treasurer/Tax Collector (Charlene Huang, Auditor-Controller Manager, 382-7022) on October 22, 2026; Preschool Services (Arlene Molina, 383-2028, Director) on November 9, 2026; Purchasing (Dylan Newton, 665-4793, Buyer III) on October 20, 2026; and County Finance and Administration (Allegra Pajot, 387-4351, and Eduardo Mora, 387-4376, Administrative Analysts) on October 30, 2026.
(JF: 269-1984)