Agenda

Return

C. 60

To:	Board of Supervisors
From:	Julia R. Bueren, Public Works
Date:	December 4, 2012

Contra

Costa

County

Subject:

APPROVE the Third Amendment to Lease with DVK Realty Ventures, Richmond area.

APPROVE	OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR	RECOMMENDATION OF BOARD COMMITTEE

Action of Board On: 12/04/2012

APPROVED AS RECOMMENDED

OTHER

Clerks Notes:

VOTE OF SUPERVISORS

AYE:

John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Mary N. Piepho, District III Supervisor
Karen Mitchoff, District IV Supervisor
Federal D. Glover, District V Supervisor

Contact:	Dave Silva, 925-313-2132
cc:	J. Carlson, Real Estate Auditor-Controller

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 4, 2012
David Twa,

BY:	, Deputy

RECOMMENDATION(S):

APPROVE a Third Amendment to Lease with DVK Realty Ventures, Inc., to extend the lease term for an eight-year period beginning February 1, 2025 and ending January 31, 2033, to reduce rent and operating expenses, to receive an additional remodeling allowance, and to receive a leasing commission, for the continued occupancy by the Employment and Human Services and Probation Departments, under the terms and conditions set forth in the First Amendment to Lease. (TLP766)


AUTHORIZE the Director of Public Works, or designee, to EXECUTE the Third Amendment to Lease on behalf of the County, and EXERCISE any additional options to the Amendment.

FISCAL IMPACT:

The County currently has a lease for the premises for a term that expires January 31, 2025. The Third Amendment to Lease extends the lease term by eight years from February 1, 2025 through January 31, 2033. The existing lease also provides that the Lessor will pay the County a remodeling allowance of $200,000 on February 1, 2014. The Third Amendment to Lease will, i) reduce the rent and operating expenses paid by the County during the existing lease term by $1,349,950, or approximately 6.2%, ii) obligate the County to pay a total rent of $10,474,560 over the extension period, iii) increase the amount of the remodeling allowance paid to the County by $50,000, iv) require the Lessor to pay the remodeling allowance to the County no later than February 28, 2013, and v) require the Lessor to pay the County a real estate commission of $200,000 no later than February 28, 2013.

EHSD occupies approximately 80% of the premises, and Probation occupies the remaining approximately 20% of the premises. Eighty percent of EHSD’s portion of the rent is reimbursed by state and federal funds. The remaining 20% is paid from the General Fund. The Lease costs were anticipated and budgeted in the Employment and Human Services and Probation Department’s approved FY 2012/2013 budget.

BACKGROUND:

The County’s Employment and Human Services Department (EHSD) has occupied the premises since February 2002. The Probation Department moved into a portion of the premises in May 2009. In early 2012, the Lessor asked the County to consider granting the Lessor an extension of the lease term so the Lessor could secure new financing for the building. EHSD and Probation then approved the extension of the term. In exchange for the extended lease term, the County negotiated a reduction in rent and operating expenses, an increased remodeling allowance, and a real estate commission.

CONSEQUENCE OF NEGATIVE ACTION:

The Third Amendment to Lease will not be executed, the lease term will not be extended as requested by the Lessor, the County will not receive the approximately $1.3 million in rent and operating cost concessions during the existing term, the County will not receive the additional remodeling allowance, and the County will not receive $200,000 in additional leasing commission fees.

CHILDREN'S IMPACT STATEMENT:

Not applicable.