Agenda

Return

C.30

To:	Board of Supervisors
From:	Michael J. Lango, General Services Director
Date:	December 8, 2009

Contra

Costa

County

Subject:

Second Lease Amendment for 1275A Hall Avenue, Richmond

APPROVE	OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR	RECOMMENDATION OF BOARD COMMITTEE

Action of Board On: 12/08/2009

APPROVED AS RECOMMENDED

OTHER

Clerks Notes:

VOTE OF SUPERVISORS

AYE:

John Gioia, District I Supervisor
Gayle B. Uilkema, District II Supervisor
Mary N. Piepho, District III Supervisor
Susan A. Bonilla, District IV Supervisor
Federal D. Glover, District V Supervisor

Contact:	Mike Lango, 313-7100 and Dave Silva, 313-7266
cc:	GSD Administration GSD Accounting GSD RES Division Manager GSD RES Agent GSD RES Clerical Auditor's Office County Counsel's Office County Administrator's Office County Administrator's Office Risk Manager Probation Employment and Human Services

I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown.
ATTESTED: December 8, 2009
David Twa,

BY:	, Deputy

RECOMMENDATION(S):

1. APPROVE a Second Lease Amendment with DVK Realty Ventures, Inc., to extend the term for thirteen (13) years beginning February 1, 2012, and ending January 31, 2025, and to realize rent reductions for approximately 60,000 square feet of office space at 1275A Hall Avenue, Richmond, for the continued occupancy by the Employment and Human Services and Probation departments, under the terms and conditions set forth in the Amendment.

RECOMMENDATION(S): (CONT'D)

2. AUTHORIZE the Director of General Services, or designee, to EXECUTE the Amendment on behalf of the County, and to EXERCISE any additional options to the Amendment.

3. DETERMINE that the project is a Class 1(a) Section 15301 Categorical Exemption under the California Environmental Quality Act (CEQA).

4. DIRECT the Department of Conservation and Development Director, or designee, to file a Notice of Exemption with the County Clerk, and DIRECT the Director of General Services, or designee, to arrange for the payment of the handling fees to the Department of Conservation and Development and County Clerk for filing of the Notice of Exemption.

FISCAL IMPACT:

The original lease term was due to expire on January 31, 2012. With this Second Lease Amendment, the lease term will be extended to January 31, 2025, and will obligate the County to pay a total rent of $11,021,520 over the thirteen (13) year extended lease term. However, the Second Lease Amendment represents a decrease in rent of $1,015,200 for the period beginning with the execution of this Second Lease Amendment through January 31, 2012, including a reduction of $410,400 in FY 2009/10, $482,400 in FY 20010/11, and $122,400 in FY 2011/12. In addition, beginning February 1, 2012, rent will be reduced by approximately 31% from $122,400 to $84,000 per month, which also represents a reduction in rent of approximately 6.7% compared to rent at the inception of the lease in 2002.

The Amendment also requires the Lessor to pay the County a remodeling allowance of $250,000 in 2012 and $200,000 in 2014, and a real estate commission of $250,000 upon the execution of the Second Lease Amendment. The Amendment also provides that the Lessor will perform all maintenance in the building, with the County to reimburse the Lessor for all such work. The maintenance expenses are anticipated to be approximately $387,275 in FY 2009/2010. Rent and maintenance expenses were anticipated and budgeted in the Employment and Human Services and Probation department’s approved FY 2009/2010 budgets, but the rent decreases were not included in either department’s FY 2009/10 budgets.

BACKGROUND:

The County has occupied the Hall Avenue premises since February 2002. The Employment and Human Services Department (EHSD) and the Probation Department currently share the occupancy of the building. The two departments asked the Real Estate Services Division to exercise the option to extend the lease, and to negotiate a rent decrease, if possible. The lease Amendment provides for the County’s occupancy of the building through January 31, 2025, at a substantially reduced rent, and contains two additional 10-year options to extend the term of the lease beyond 2025.

CONSEQUENCE OF NEGATIVE ACTION:

The lease for the premises will not be extended, the rent reductions for the remaining term of the lease will not be realized, and the Employment and Human Services and Probation departments will have to look for new space.