REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF THE COUNTY OF SAN BERNARDINO
AND RECORD OF ACTION
June 23, 2026
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
JAMES LOCURTO, Director, Transitional Assistance Department
SUBJECT
Title
Amendment to Lease Agreement with Whitacre Investment Company for Office Space in Hesperia
End
RECOMMENDATION(S)
Recommendation
1. Find that approval of Amendment No. 10 to Lease Agreement No. 94-828 with Whitacre Investment Company for office space, is an exempt project under the California Environmental Quality Act Guidelines, Section 15301 - Existing Facilities (Class 1).
2. Approve Amendment No. 10 to Lease Agreement No. 94-828 with Whitacre Investment Company, for office space located at 9655 9th Avenue in Hesperia to:
a. Extend the term of the Lease by five years, for the period of July 1, 2026 through June 30, 2031, by exercising the remaining five-year option to extend the term.
b. Adjust the rental rate schedule.
c. Continue leasing approximately 33,600 square feet of office space at 9655 9th Avenue in Hesperia for the Transitional Assistance Department.
d. Increase the total lease amount by $4,940,052, from $22,271,145 to a new total amount of $27,211,197.
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.
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 additional Discretionary General Funding (Net County Cost). The Human Services (HS) Administrative Claim for the Transitional Assistance Department (TAD) budget is funded by 96% federal and state, and 4% local share (Net County Cost). The total cost of Amendment No. 10 (Amendment) to Lease Agreement No. 94-828 (Lease) is $4,940,052. Lease payments will be made from the Real Estate Services Department (RESD) Rents budget (7810001000) and reimbursed from the Human Services (HS) Administrative Claim budget (3000464). Sufficient appropriation is included in both the RESD Rents and HS 2026-27 budgets and will be included in future recommended budgets. Pursuant to the Lease, the County is responsible for electrical costs that exceed the contractual utility expense cap. Any such costs, if incurred, will be funded within existing departmental appropriations. Annual lease costs are as follows:
|
Year |
Lease Cost |
|
July 1, 2026 - June 30, 2027 |
$921,228 |
|
July 1, 2027 - June 30, 2028 |
$953,472 |
|
July 1, 2028 - June 30, 2029 |
$986,844 |
|
July 1, 2029 - June 30, 2030 |
$1,021,380 |
|
July 1, 2030 - June 30, 2031 |
$1,057,128 |
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Total Cost |
$4,940,052 |
BACKGROUND INFORMATION
On August 2, 1994 (Item No. 41), the Board of Supervisors (Board) approved the 10-year Lease with two five-year options to extend the term for 33,000 square feet of build-to-suit office space at 9655 9th Avenue in Hesperia (site). The original term of the Lease was for the period of June 1, 1995 through May 31, 2005. Since the Lease was originally approved, the Board has approved nine amendments to approve Subordination, Non-Disturbance and Attornment Agreements between the County, Landlord, and Landlord’s lender; reflect changes in property ownership; exercise options to extend the Lease term through June 30, 2026; provide for tenant improvements to be amortized during the Lease term; correct the building size from 33,000 square feet to 33,600 square feet; approve modifications to tenant improvements; reduce tenant improvement costs from $197,047 to $148,455; adjust rental rate schedules; and update standard lease agreement language.
|
Amendment No. |
Approval Date |
Item No. |
|
1 |
July 18, 1995 |
30 |
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2 |
June 22, 1999 |
11 |
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3 |
June 22, 1999 |
11 |
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4 |
April 19, 2005 |
42 |
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5 |
July 14, 2005 |
63 |
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6 |
April 13, 2010 |
84 |
|
7 |
March 22, 2016 |
67 |
|
8 |
April 30, 2019 |
56 |
|
9 |
June 22, 2021 |
77 |
The Transitional Assistance Department (TAD) requested that RESD negotiate an Amendment to extend the existing Lease term, which is set to expire on June 30, 2026. The Amendment will exercise the final five-year extension option, extending the term from July 1, 2026 through June 30, 2031. The Amendment will also adjust the rental rate schedule and update standard lease agreement language. All other Lease terms will remain unchanged.
RESD, acting in its approved capacity as the County Administrative Office designee to review proposed real property leases under Policy 12-02, completed a market analysis of comparable properties and found the current rental rate, including annual increases during the five-year extended term, to be competitive. The site meets the current requirements of TAD, and if the Amendment is approved by the Board, it would minimize disruption to TAD operations and save moving costs.
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.
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Summary of Lease Terms |
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Lessor: |
Whitacre Investment Company, a California General Partnership Donald W. Whitacre and Roger W. Whitacre, General Partners |
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Location: |
9655 9th Avenue, Hesperia |
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Size: |
33,600 square feet of office space |
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Term: |
Five years; July 1, 2026 through June 30, 2031 |
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Options: |
No remaining options |
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Rent: |
$2.28* per square foot per month, full-service gross |
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Monthly: $76,769 |
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Annual: $921,228 |
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*Low to Mid-range for comparable facilities in the Hesperia area per the competitive set analysis on file with RESD |
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Annual Increases: |
Approximately 3.5% |
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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; County to pay electrical costs in excess of $249,375 per lease year or $0.62 per square foot, per month (electric utility expense cap), which cap is increased 4% annually |
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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 termination of the current term of the Lease, County’s tenancy shall be on a month-to-month term on the same terms and conditions of the Lease, but not limited to, the monthly rent for the Premises in effect as of the expiration or earlier termination of the then current term of the Lease but excluding any amounts paid by County to Landlord for amortized improvements. |
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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
The Board approved the Lease which was procured according to County Policy 12-02 - Leasing Privately Owned Real Property for County Use using a formal Request for Proposals 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 (John Tubbs II, Deputy County Counsel, 387-5455) on May 21, 2026; Transitional Assistance (James Locurto, Director, 388-0245) on May 26, 2026; Purchasing (Ariel Gill, Supervising Buyer, 387-2070) on May 19, 2026; and County Finance and Administration (John Hallen, 388-0208, and Eduardo Mora, 387-4376, Administrative Analysts) on June 4, 2026.
(JF: 909-269-1984)