REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
August 18, 2026
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
JOSHUA DUGAS, Acting Director, Department of Behavioral Health
SUBJECT
Title
Amendment to Lease Agreement with San Bernardino Community College District to Authorize a One-Time Lump Sum Payment for Additional Tenant Improvement Costs for Office Space in San Bernardino
End
RECOMMENDATION(S)
Recommendation
1. Find that approval of Amendment No. 1 to Lease Agreement No. 24-655 with San Bernardino Community College District for office space, 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. 24-655 with San Bernardino Community College District to:
a. Approve County requested tenant improvement change orders and authorize a one-time lump sum payment of $237,301 to the San Bernardino Community College District, for additional tenant improvement costs, including the previous Board of Supervisors approved contingency allowance of $100,000, and an additional $137,301 for County-requested change orders, increasing the total amount by $237,301, from $11,631,456 to a new total amount of $11,868,757 (Four votes required).
b. Update standard lease agreement language to reflect the revised commencement date of August 6, 2025, and the approved project contingency increase.
c. Continue leasing approximately 29,969 square feet of office space, located at 550 Hospitality Lane, Suites 100, 150, and 325 (Assessor’s Parcel Number 0281-372-20-0000) in San Bernardino, for the Department of Behavioral Health.
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 Discretionary General Funding (Net County Cost). The total cost associated with the change order allowance and Amendment No. 1 (Amendment) to Lease Agreement 24-655 (Lease) is $237,301. The County will make a one-time lump sum payment of $237,301 to reimburse San Bernardino Community College District (SBCCD) for approved tenant improvement change orders. This payment includes the $100,000 contingency allowance previously authorized by the Board of Supervisors (Board) and an additional $137,301 required to complete County-requested improvements. The cost will be paid from the Real Estate Services Department (RESD) Rents budget (7810001000) and reimbursed from the Department of Behavioral Health (DBH) budget (9201011000). DBH lease costs are funded by Medi-Cal, Medi-Care, existing ongoing 1991 Realignment, and existing ongoing 2011 Realignment. Sufficient appropriation has been included in the 2026-27 budget.
BACKGROUND INFORMATION
On July 23, 2024 (Item No. 56), the Board of Supervisors (Board) approved the Lease with the SBCCD for a 10-year term in the amount of $11,631,456 plus $100,000 for unforeseen contingencies and/or County-proposed change orders, with one five-year option to extend, for approximately 29,969 square feet of office space located at 550 Hospitality Lane, Suites 100, 150, and 325 (Assessor’s Parcel Number 0281-372-20-0000) in San Bernardino (Premises). The Lease was structured as a turn-key project with the SBCCD responsible for completing tenant improvements necessary to meet the operational needs of DBH prior to occupancy. The following DBH programs are located in the office space: Director’s Office, Compliance, Public Relations and Outreach, Payroll, and Human Resources.
Construction of the tenant improvements was completed, and DBH took possession of the Premises on August 6, 2025. The Lease originally anticipated a projected commencement date of May 1, 2025. Following substantial completion of the tenant improvements, the parties executed a Commencement Date Certificate establishing the actual Commencement Date as August 6, 2025.
During construction, DBH identified additional operational, technology, electrical, safety, and occupancy-related improvements necessary to support final occupancy and program operations. These modifications included enhancements to telecommunications infrastructure, electrical systems, reception-area improvements, and other field-directed refinements necessary to support final occupancy and program operations. The County requested change orders throughout the duration of the tenant improvement project as additional operational needs and site conditions were identified during construction. As the project progressed, the cumulative cost of the change orders exceeded the previously Board-approved contingency allowance of $100,000 by $137,301, resulting in a total contingency requirement of $237,301.
Because the project extended longer than originally anticipated and additional work continued to be identified, the Landlord was required to complete a comprehensive cost-engineering reconciliation with its contractors and subcontractors to determine the final project costs. The County did not receive the final reconciled cost information until the end of April 2026. Following receipt of the final cost reconciliation, the Department completed its review, and RESD subsequently prepared this amendment for Board consideration to authorize the additional contingency funding. Pursuant to Public Contract Code section 20137, four votes are required to approve change orders for this type of project.
Following substantial completion of the tenant improvements and occupancy of the facility, the County, SBCCD, and the project team completed a comprehensive review and reconciliation of the final construction, engineering, and change-order costs. Upon completion of that reconciliation, the final costs were validated, approved by DBH, and incorporated into this proposed Amendment in accordance with Exhibit B, Improvement Work Letter, of the Lease, which requires Board approval for County-requested change orders that cumulatively exceed $100,000.
The additional improvements were necessary to ensure the facility met DBH’s operational requirements, supported technology and service delivery needs, complied with applicable California building, accessibility, and other regulatory requirements, and provided a safe, secure, and functional environment for staff and clients.
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: |
SBCCD Steven J. Sutorus, Business Manager |
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Location: |
550 E. Hospitality Lane, First Floor, Suite 100, Suite 150, and Third Floor, Suite 325 in San Bernardino |
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Size: |
29,969 square feet of office space |
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Term: |
10-year term, which commenced on August 6, 2025, and expires August 5, 2035 |
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Options: |
One five-year option to extend the term of the Lease |
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Rent: |
Cost per square foot per month: $2.89* full-service gross |
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Monthly: $86,470 |
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Annual: $1,037,640 |
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*Mid-range for comparable facilities in the San Bernardino area per the competitive set analysis on file with RESD; Base rent at $2.40 per square foot per month plus tenant improvements at $0.49 per square foot per month |
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Annual Increases: |
Approximately 3% |
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Improvement Costs: |
Lessor contributed a total Tenant Improvement allowance in the amount of $1,826,558 |
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Custodial: |
Provided by Lessor |
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Maintenance: |
Provided by Lessor |
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Utilities: |
Provided by Lessor, except for County reimbursement for After-Hours Heating, Ventilation, and Air Conditioning use |
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Insurance: |
The Certificate of Liability Insurance, as required by the Lease, is on file with RESD. |
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Right to Terminate: |
No right to terminate for convenience during the initial 10-year term; County can terminate with 90-days’ notice during the extended terms, if any |
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Parking: |
Sufficient for 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 July 27, 2026; Behavioral Health (Lydia Bell, Administrative Manager, 386-9732) on July 27, 2026; Purchasing (Ariel Gill, Supervising Buyer, 387-2070) on July 24, 2026; and County Finance and Administration (Iliana Rodriguez, 387-8392, and Eduardo Mora, 387-4376, Administrative Analysts) on August 3, 2026.
(JF: 269-1984)