REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
June 23, 2026
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
JOSHUA DUGAS, Acting Director, Department of Behavioral Health
SUBJECT
Title
Consolidated Lease Agreement with Rich Property, Inc. for Clinic, Office, and Clubhouse Space in Victorville
End
RECOMMENDATION(S)
Recommendation
1. Find that approval of Lease Agreement with Rich Property, Inc., for clinic, office, and clubhouse space is an exempt project under the California Environmental Quality Act Guidelines, Section 15301 - Existing Facilities (Class 1).
2. Approve 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.
3. Approve a new Consolidated Lease Agreement with Rich Property, Inc., including a non-standard term, for approximately 17,395 square feet of clinic, office, and clubhouse space, including 106 parking spaces, located at 12625 Hesperia Road in Victorville, for use by the Department of Behavioral Health, for a five-year term commencing July 1, 2026 through June 30, 2031, with one five-year option to extend, at a total lease cost of $3,978,500, inclusive of historical holdover occupancy costs incurred from December 1, 2023 through June 30, 2026 under prior lease agreements.
4. Approve the termination of Lease Agreement Contract No. 98-51 and Lease Agreement Contract No. 02-1013, effective June 30, 2026 and upon execution of the new consolidated lease agreement.
5. 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 Health and Social Services 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 the new Consolidated Lease Agreement (Lease) is $3,978,500. The total amount below includes historical holdover occupancy costs under prior lease agreements and prospective lease obligations under the new Lease. Lease payments will be made from the Real Estate Services Department (RESD) Rents budget (7810001000) and reimbursed from the Department of Behavioral Health (DBH) budget (72% from 9206101000 and 28% from 9206242200). DBH lease costs are funded 30% federal Medicaid administrative reimbursement, 28% Behavioral Health Services Act (BHSA), and 42% existing ongoing 1991 Realignment funds. Sufficient appropriation is included in the 2025-26 RESD Rents and DBH budgets and will be included in future recommended budgets. Annual lease costs are as follows:
|
Period |
*Annual Total |
|
*December 1, 2023 - June 30, 2026 |
*$984,188 |
|
July 1, 2026 - June 30, 2027 |
$520,752 |
|
July 1, 2027 - June 30, 2028 |
$591,252 |
|
July 1, 2028 - June 30, 2029 |
$608,988 |
|
July 1, 2029 - June 30, 2030 |
$627,252 |
|
July 1, 2030 - June 30, 2031 |
$646,068 |
|
Total |
$3,978,500 |
*Permitted holdover period
*The rental amounts for the period of December 1, 2023 through June 30, 2026, reflect the County’s permitted month-to-month holdover occupancy under the prior lease agreements, Contract Nos. 98-51 and 02-1013, and are memorialized in the new Lease for historical and audit purposes only.
BACKGROUND INFORMATION
The recommended action will approve a new Lease with Rich Property, Inc. (Rich Property or Landlord) for approximately 17,395 square feet of existing clinic, office, and clubhouse space located at 12625 Hesperia Road in Victorville (Property), for continued use by the DBH.
The County’s occupancy of the Property has historically been governed by two separate lease agreements with Rich Property. On January 27, 1998 (Item No. 18), the Board of Supervisors (Board) approved Lease Agreement No. 98-51 for approximately 14,515 square feet of clinic and office space. The original term commenced August 1, 1998 and expired July 31, 2008, with multiple extension options. Over the course of its duration, the Board approved various actions related to Lease Agreement No. 98-51 to address evolving operational and administrative needs, including adjustments to lease term provisions, rental rate schedules, space configuration, ownership changes, and updates to standard County lease language.
Contract: 98-51
|
Amendment No. |
Approval Date |
Item No. |
|
Initial |
January 27, 1998 |
18 |
|
1 |
March 7, 2000 |
35 |
|
2 |
March 17, 2009 |
43 |
|
3 |
September 25,2012 |
55 |
|
4 (Option Exercise Notice) |
November 17, 2020 |
74 |
On October 1, 2002 (Item No. 37), the Board approved Lease Agreement No. 02-1013 for approximately 2,880 square feet of clubhouse space at the same location, to support client recreation and education activities for DBH. The original term commenced December 1, 2002 and expired November 30, 2012, with multiple extension options. Similar to Lease Agreement No. 98-51, the Board approved several actions over time related to Lease Agreement No. 02-1013 to address ownership changes, lease term extensions, rental rate adjustments, modifications to extension options, and updates to standard County lease provisions.
Contract: 02-1013
|
Amendment No. |
Approval Date |
Item No. |
|
Initial |
October 1, 2022 |
37 |
|
1 |
April 9, 2013 |
34 |
|
2 |
October 6, 2015 |
51 |
Following the expiration of Lease Agreement No. 98-51 and Lease Agreement No. 02-1013 on November 30, 2023, the County continued occupancy under a permitted month-to-month holdover arrangement while negotiating a long-term replacement lease. Negotiations addressed consolidation of the two legacy agreements into a single lease, clarification of maintenance and operational responsibilities, a rent credit for reimbursement of uninterrupted Day Porter Services, and resolution of outdated provisions carried forward from prior agreements. Throughout this period, the County maintained uninterrupted DBH operations at the facility while working in good faith toward a comprehensive long-term lease solution. The proposed Lease is the result of those negotiations and supersedes both prior agreements with a single updated governing document.
As part of the lease negotiations, the parties agreed to certain non-standard insurance provisions, which the Landlord required to Lease the property. The Lease contains a non-standard County contract term that differ from the standard terms in 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: The Lease does not include County standard insurance requirements for Workers’ Compensation/Employers Liability, Automobile Liability, and Umbrella Liability. This means that the County has no assurance that Landlord will be financially responsible for claims that may arise from the Landlord’s employment of workers or its commercial use of automobiles on the Property, which could result in expenses to the County that exceed the County’s insurance obligations.
Acceptance of these provisions is recommended because the County will occupy an existing facility that has been continuously leased and occupied by the DBH for more than 25 years. Additionally, the lease requires the Landlord to maintain liability insurance for risks arising from the Landlord's ownership, operation, maintenance, and management of the property, while the County remains self-insured for its own operations. The lease also includes Landlord indemnification obligations, maintenance and repair responsibilities, property insurance requirements, and additional insured protections that collectively provide reasonable risk mitigation for the County. Approval of the non-standard insurance provisions avoids the significant operational disruption, relocation costs, tenant improvement expenses, and interruption of critical behavioral health services that would result from relocating the programs to an alternative facility.
The project to approve the Lease with Rich Property was reviewed pursuant to the California Environmental Quality Act (CEQA) and is an exempt project under the CEQA Guidelines Section 15301 - Existing Facilities (Class 1). Class 1 consists of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use. The proposed Lease is to secure property to operate within the existing structure with negligible or no expansion of existing use.
Use of an alternative procedure avoids operational disruption, relocation expenses, tenant improvement costs, and interruption of critical DBH services. RESD completed a competitive analysis of the local market and determined that the proposed rental rate is competitive for comparable facilities in the Victorville area. The facility continues to meet the operational requirements of DBH, minimizes disruption to ongoing program activities, avoids relocation and build-out costs, and allows DBH to maintain continuity of services for residents in the Victorville and High Desert area.
|
Summary of Lease Terms |
|
|
Lessor: |
Rich Property, Inc. Chiman Yoo, CEO |
|
|
|
|
Location: |
12625 Hesperia Road in Victorville |
|
|
|
|
Size: |
Approximately 14,515 square feet of clinic and office space and approximately 2,880 square feet of clubhouse space, for total of approximately 17,395 square feet |
|
|
|
|
Term: |
Five years; July 1, 2026 through June 30, 2031 |
|
|
|
|
Options: |
One five-year option |
|
|
|
|
Rent: |
Cost per square foot per month: $2.75* |
|
|
Monthly: $43,396.04 |
|
|
Annual: $520,752 |
|
|
*Mid-range for comparable facilities in the Victorville area per the competitive set analysis on file with RESD |
|
|
|
|
Annual Increases: |
Approximately 3% |
|
|
|
|
Holdover: |
Any holdover occupancy shall be subject to Landlord’s consent, on a month-to-month basis, and governed by the terms and conditions set forth in the Lease |
|
|
|
|
Improvement Costs: |
None |
|
|
|
|
Custodial: |
Provided by Lessee |
|
|
|
|
Maintenance: |
Provided by Lessor |
|
|
|
|
Utilities: |
Provided by Lessee |
|
|
|
|
Insurance: |
The Certificate of Liability Insurance, as required by the Lease, is on file with RESD |
|
|
|
|
Right to Terminate: |
County may terminate the Lease for convenience upon 90 days’ prior written notice to Lessor, as provided in the Lease |
|
|
|
|
Parking: |
106 reserved parking spaces |
PROCUREMENT
Policy 12-02 provides that the Board may approve the use of an alternative procedure in lieu of a Formal Request for Proposal (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 June 17, 2026; Behavioral Health (Lydia Bell, Administrative Manager, 386-9732) on June 15, 2026; Purchasing (Ariel Gill, Supervising Buyer, 387-2070) on May 27, 2026; Risk Management (Arissia Beaven, Staff Analyst II, 386-9030) on June 17 2026; and County Finance and Administration (Iliana Rodriguez, 387-8392, and Eduardo Mora, 387-4376, Administrative Analysts) on June 16, 2026.
(JAG: 677-8210)