REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
August 4, 2026
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
BRADLEY GATES, Director, Workforce Development Department
SUBJECT
Title
Amendment to Lease Agreement with Rancho Tech, LLC for Office Space in Rancho Cucamonga
End
RECOMMENDATION(S)
Recommendation
1. Find that approval of Amendment No. 4 to Lease Agreement No. 02-328 with Rancho Tech, LLC for office space, is an exempt project under the California Environmental Quality Act Guidelines, Section 15301 - Existing Facilities (Class 1).
2. Approve Amendment No. 4 to Lease Agreement No. 02-328 with Rancho Tech, LLC through the Real Estate Services Department’s use of an alternative procedure in lieu of a Formal Request for Proposals, as allowed per County Policy 12-02 - Leasing Privately Owned Real Property for County Use, to:
a. Extend the term of the Lease Agreement by 10 years, for the new lease period of September 1, 2026 through August 31, 2036, by exercising the final two-year option to extend and adding an additional eight years to the term, following a permitted holdover for the period of June 1, 2025 through August 31, 2026.
b. Adjust the rental rate schedule and update standard lease agreement language.
c. Approve turn-key tenant improvements provided by the Landlord.
d. Revise the leased space at 9650 East Ninth Street in Rancho Cucamonga (Assessor’s Parcel Number 0209-021-17-0000), by reducing the space through the removal of Suite B (2,500 square feet), decreasing the total leased area from 24,162 square feet to 21,662 square feet.
e. Increase the total lease amount by $7,062,879, from $13,474,829 to a new total lease amount of $20,537,708.
3. Authorize the Purchasing Agent to issue purchase orders, as necessary, for a total amount not to exceed $50,000, for any minor change orders that may arise in order to complete turnkey tenant improvements set forth in the lease amendment (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). The total cost of Amendment No. 4 (Amendment) to Lease Agreement No. 02-328 (Lease) is $20,537,708, which includes $655,995 for the permitted holdover period. Lease payments will be made from the Real Estate Services Department (RESD) Rents budget (7810001000) and reimbursed from the Workforce Development Department (WDD) budget (5715352260). Other costs associated with this Lease include electric utility costs. Rancho Tech, LLC (RT) is responsible for the electric utility costs up to a monthly cap, any costs in excess of this amount will be paid directly from the WDD budget. It is anticipated that approximately 44% of the Lease costs will be reimbursed to WDD by the State of California Employment Development Department (EDD) that sub-leases a portion of the space from the County. Sufficient appropriation is included in both the RESD and WDD 2026-27 budgets and will be included in future recommended budgets. Annual Lease costs are as follows:
|
Year |
Lease Cost |
|
*June 1, 2025 - August 31, 2026 |
$655,995 |
|
September 1, 2026 - August 31, 2027 |
$558,876 |
|
September 1, 2027 - August 31, 2028 |
$575,640 |
|
September 1, 2028 - August 31, 2029 |
$592,908 |
|
September 1, 2029 - August 31, 2030 |
$610,704 |
|
September 1, 2030 - August 31, 2031 |
$629,016 |
|
September 1, 2031 - August 31, 2032 |
$647,892 |
|
September 1, 2032 - August 31, 2033 |
$667,332 |
|
September 1, 2033 - August 31, 2034 |
$687,348 |
|
September 1, 2034 - August 31, 2035 |
$707,964 |
|
September 1, 2035 - August 31, 2036 |
$729,204 |
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Total Cost |
$7,062,879 |
*Permitted holdover period.
BACKGROUND INFORMATION
On May 7, 2002 (Item No. 42), the Board of Supervisors (Board) approved the Lease with RT, for the term of January 1, 2003 through December 31, 2012, with two five-year options to extend the term, for approximately 24,162 square feet of office space at 9650 East Ninth Street in Rancho Cucamonga, Assessor’s Parcel Number 0209-021-17-0000, (Premises). In the 23 years since the Lease was originally approved, the Board has previously approved three amendments to the Lease. These amendments exercised the first and second extension options, adjusted rental rates, provided for Americans with Disabilities Act (ADA) improvements, tenant improvements, carpet and paint replacement, exterior and parking lot improvements, payment of approved change orders, modifications to improvement schedules, and updates to standard lease language.
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Amendment No. |
Approval Date |
Item No. |
|
1 |
May 6, 2014 |
51 |
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2 |
July 28, 2015 |
67 |
|
3 |
May 19, 2020 |
79 |
On May 1, 2025, WDD requested that RESD negotiate an amendment to extend the existing Lease term. However, approval of this Amendment was delayed due to extended negotiations regarding much-needed repairs and tenant improvements to the aging Premises and the associated proposed rental rates, including the square foot reduction of approximately 2,500 square feet by the removal of Suite B, no longer in use by the Department. WDD further expressed concerns with increased rental costs for improvements it believed were necessary due to the existing condition of the Premises, requiring additional negotiations with RT to reach mutually acceptable terms. As a result, the Lease entered into a permitted holdover on June 1, 2025, during which WDD has continued to occupy the Premises under the existing Lease terms.
The Amendment will memorialize the mutual agreement of the parties to extend the term for the period of September 1, 2026 through August 31, 2036. The Amendment will also adjust the rental rate schedule, provide for tenant improvements pursuant to RT’s contractual obligations under the recommended Amendment and at its sole cost and expense, document a reduction in the leased premises from 24,162 square feet to 21,662 square feet, 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 ten-year extended term, to be competitive. The site meets the current requirements of WDD which minimizes disruptions to operations and saves moving costs.
WDD has continuously occupied the Premises for more than 20 years. The Premises remains operationally suitable for WDD’s needs, and relocation would result in significant disruption of services and substantial relocation costs. Therefore, RESD determined that use of an Alternative Procedure in lieu of a Formal Request for Proposals (RFP) was appropriate and in the County's best interest.
RT will complete agreed-upon turnkey improvements, including full carpet replacement and interior painting, replacement of damaged ceiling tiles, installation of two Elkay water distribution systems, break room countertop and flooring replacement, cabinetry and millwork repairs, and complete renovation of two restrooms, pursuant to RT’s contractual obligations under the recommended Amendment, at its sole cost and expense. RESD requests, on behalf of WDD, that the Board authorize the Purchasing Agent to issue purchase orders, as necessary, for a total amount not to exceed $50,000 in contingency. The requested contingency is being established solely to address any unforeseen minor change orders that may arise during construction as a result of County-requested modifications or additional work outside RT’s agreed-upon turnkey scope. The contingency will provide the flexibility to address such changes in a timely manner without delaying construction. Any costs charged against this authority will be limited to work requested by the County that is not otherwise included in RT’s obligations under the Amendment. Public Contract Code section 20137 requires four votes by the Board to authorize changes or alterations to a contract where the cost of such change does not exceed 10% of the original contract price but does exceed the amount specified in Public Contract Code sections 20121 ($4,000) and 21031 ($25,000). All change orders will be approved by RESD prior to authorizing any work or payment(s) to RT.
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 Lease 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: |
Rancho Tech, LLC Alexander Moradi, Manager |
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Location: |
9650 East Ninth Street, Rancho Cucamonga |
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Size: |
Approximately 21,662 square feet of office space |
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Third Extended Term: |
10 years, September 1, 2026 through August 31, 2036 |
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Options: |
None |
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Rent: |
Cost per sq. ft. per month: $2.15* full-service gross |
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Monthly: $46,573 |
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Annual: $558,876 |
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*Low to Mid-range for comparable facilities in the Rancho Cucamonga area per the competitive set analysis on file with RESD |
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Annual Increases: |
Approximately 3% |
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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: |
Electric Utility Expense Cap: effective upon execution of the Lease in 2003, County shall pay only electrical costs exceeding the electric utility expense cap, currently $0.36 per square foot per month, increasing 3% 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: |
In the event the County shall hold over and continue to occupy the Premises with the consent of the Landlord, expressed or implied, the tenancy shall be deemed to be a tenancy from month-to-month upon the same terms and conditions, including rent, as existed and prevailed at the time of the expiration of the term of this Lease |
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Right to Terminate: |
The County shall have no rights to terminate the Lease for convenience during the ten-year term |
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Parking: |
Sufficient for County needs |
PROCUREMENT
County Policy 12-02 provides that the Board may approve the use of an alternative procedure in lieu of a Formal RFP process whenever the Board determines that compliance with the Formal RFP requirements would unreasonably interfere with the financial or programmatic needs of the County, or when the use of an alternative procedure would otherwise be in the best interest of the County.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (John Tubbs II, Deputy County Counsel, 387-5455) on July 2, 2026; Workforce Development (Bradley Gates, Director, 387-9856) on July 2, 2026; Purchasing (Jessica Barajas, Supervising Buyer, 387-2065) on July 2, 2026; and County Finance and Administration (Eduardo Mora, 387-4375, Administrative Analysts) on July 20, 2026.
(JF:269-1984)