REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
November 15, 2022
FROM
TERRY W. THOMPSON, Director, Real Estate Services Department
JACQUELYN GREENE, Director, Preschool Services Department
SUBJECT
Title
Amendment to Lease Agreement with Mettl Investments, LLC for Classroom and Office Space and Playground Area in Chino
End
RECOMMENDATION(S)
Recommendation
Approve Amendment No. 2 to Lease Agreement No. 12-327 with Mettl Investments, LLC, by exercising an existing extension option to extend the term of the lease for two years for the period of December 1, 2022 through November 30, 2024, following a permitted month-to-month holdover from July 1, 2022 through November 30, 2022 and adjusting the rental rate schedule for 6,554 square feet of classroom and office space, and approximately 8,250 square feet of playground area at 5585 Riverside Drive in Chino for the Preschool Services Department in the amount of $415,103.
(Presenter: Terry W. Thompson, Director, 387-5000)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Provide for the Safety, Health and Social Service Needs of County Residents.
Operate in a Fiscally-Responsible and Business-Like Manner.
FINANCIAL IMPACT
Approval of this item will not result in the use of additional Discretionary General Funding (Net County Cost). Preschool Services Department (PSD) lease costs are 86% federally funded and 14% state funded. The total cost of this two-year amendment is $415,103. Lease payments will be made from the Real Estate Services Department (RESD) Rents budget (7810001000) and reimbursed from the PSD budget (5911422220). Other costs associated with this lease include custodial costs, utility costs, and parking lot and landscape maintenance, which will be paid from the PSD budget. Sufficient appropriations are included in the 2022-23 recommended Rents and PSD budgets and will be included in the future recommended budgets. Annual lease costs are as follows:
|
Year |
Annual Lease Cost |
Estimate of Other Costs Associated With This Lease |
|
July 1, 2022 - November 30, 2022* |
$ 66,850 |
$ 23,086 |
|
December 1, 2022 - November 30, 2023 |
$ 169,880 |
$ 57,069 |
|
December 1, 2023 - November 30, 2024 |
$ 178,373 |
$ 58,781 |
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Total Cost |
$415,103** |
$138,936 |
*Permitted holdover period
**Total included annual lease cost for permitted holdover period
BACKGROUND INFORMATION
The recommended action will amend an existing lease agreement with Mettl Investments, LLC (Mettl) by exercising an existing extension option, that will extend the term of the lease for two years, for the period of December 1, 2022 through November 30, 2024, following a permitted month-to-month holdover for the period of July 1, 2022 through November 30, 2022 and adjust the rental rate schedule for the use of 6,554 square feet of classroom and office space, and approximately 8,250 square feet of playground area at 5585 Riverside Drive in Chino, because of the continuing need to provide PSD services in the Chino area.
PSD has occupied the preschool facility located at 5585 Riverside Drive in Chino since 1993 under the provisions of leases with two previous owners. On June 5, 2012 (Item No. 67), the Board of Supervisors (Board) approved a five-year lease Agreement, No. 12-327, with one two-year option to extend the term of the lease with MettI for approximately 6,554 square feet of classroom and office space and approximately 8,250 square feet of exterior playground area. The original term of the lease was for the period of May 1, 2012 through April 30, 2017. In the 10 years since the lease was originally approved, the Board has approved Amendment No. 1 (Item No. 78) dated June 13, 2017, to extend the term of the lease through June 30, 2022, adjust the rental rate schedule, and update standard lease agreement language.
PSD requested that RESD process an amendment to the lease to exercise the existing two-year option to extend the term of the lease for the period of December 1, 2022 through November 30, 2024, following a permitted month-to-month holdover for the period of July 1, 2022 through November 30, 2022, and adjust the rental rate schedule. RESD conducted a market survey of comparable properties in the Chino area and determined that the rate currently charged for this lease was within an acceptable market rate for specialized use properties of this type. During negotiations regarding the rental rate adjustment for the extension, the lease went into holdover status on July 1, 2022.
Staff has reviewed the recommended action pursuant to the California Environmental Quality Act (CEQA) and has determined that it does not constitute a project. Accordingly, no further action is required under CEQA.
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Summary of Lease Terms |
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Lessor: |
Mettl Investments, LLC (Ruby H. Lai, Managing Member) |
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Location: |
5585 Riverside Drive, Chino |
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Size: |
Approximately 6,554 square feet of classroom and office space, and approximately 8,250 square feet of the playground area |
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Term: |
Two years commencing December 1, 2022 |
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Options: |
None |
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Rent: |
Cost per square feet. per month: $2.16 modified gross for office space* *Mid-range for comparable facilities in the Chino area per supporting lease comparables on file. |
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Monthly: $14,156.64 |
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Annual: $169,880 |
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Annual Increases: |
5% |
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Improvement Costs: |
None |
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Custodial: |
Provided by County |
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Maintenance: |
Provided by Lessor, except provided by County for parking lot and landscape |
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Utilities: |
Provided by County |
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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: |
The County has the right to terminate with 90-days’ notice |
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Parking: |
Sufficient for County needs |
PROCUREMENT
On June 5, 2012 (Item No. 67), the Board approved Lease Agreement No. 12-327, for a term of five years with one two-year extension option, which was procured in accordance with County Policy 12-02 - Procuring Privately Owned Real Property for County Use (Policy 12-02), using an alternative procedure. The procurement process required by Policy 12-02 does not apply to amendments of existing agreements, 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 (Agnes Cheng, Deputy County Counsel, and Adam Ebright, Deputy County Counsel, 387-5455) on September 23, 2022; Preschool Services (Jacquelyn Greene, Director, 387-2005) on September 19, 2022; Purchasing (Bruce Cole, Supervising Buyer, 387-2148) on September 22, 2022; Finance (Paul Garcia, Administrative Analyst, 386-8392, and Penelope Chang, Administrative Analyst, 387-4886) on October 25, 2022; and County Finance and Administration (Diana Atkeson, Deputy Executive Officer, 387-4376) on October 25, 2022.
(LD: 453-5349)