Loading...
HomeMy WebLinkAboutMINUTES - 02122008 - SD.3 'TG: 'BOARD OF SUPERVISORS = CONTRA FROM, MICHAEL J. LANGO, DIRECTOR OF GENERAL SERVICES V AF. ' s COSTA DATE: FEBRUARY 12, 2008 COUNTY �a•., SUBJECT: LEASE FOR THE PREMISES AT 300, 400, AND 500 ELLINWOOD WAY, PLEASANT HILL FOR THE EMPLOYMENT AND HUMAN SERVICES DEPARTMENT (WLP562) (CP #07-88) SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION 1 . APPROVE a triple net Lease with Ellinwood Office Partners, LLC, for a 20-year period beginning upon the completion of tenant improvements for approximately 137,232 square feet of office space at 300, 400, and 500 Ellinwood Way, Pleasant Hill, at a starting monthly base rent of $236,040, plus operating expenses, for the operation of various services by the Employment and Human Servicers Department, under terms and conditions more particularly set forth in the Lease. 2. DIRECT the Auditor-Controller to establish a Capital Project Fund to account for project expenses and AUTHORIZE the Auditor-Controller to execute an inter-fund loan to the Capital Project Fund from the Land Development Fund to offset project expenses in FY 07-08. 3. AUTHORIZE the Director of General Services, or designee, to EXECUTE the Lease and Memorandum of Lease upon the Lessor's establishment of title and proper execution of the Lease and Memorandum of Lease. 4. DETERMINE that the project is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA guidelines Section 15301 (Class 1). 5. DIRECT the Director of Community Development, or designee, to file a Notice of Exemption with the County Clerk, and the Director of General Services, or designee, to arrange for the payment of the handling fees to the Community Development Department and the County Clerk for the filing of the Notice of Exemption. FINANCIAL IMPACT Approval of the Lease will obligate the County to pay base rent of approximately $65.6 million over the 20-year term of the Lease (an average of $1.99 per square foot per month), capital improvements to the leased premises of approximately $19.5 million, and initial operating expenses of approximately $85,000 per month, or $1.02 million per year. Lease payments for the first year of the Lease will be budgeted in the Employment and Human Services Department's (EHSD) FY 2008/2009 budget. Lease payments in subsequent years have been anticipated by EHSD, and will be budgeted each Fiscal Year thereafter. CONTINUEDONATTACHMENT: X YES SIGNATURE: - //COMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE vAPPROVE OTHER SIGNATURES: ACTION OF BO D N b t APPROVED AS RECOMMENDED ol><�_ OTHER VOTE O SUPERVISORS Q NANIMOUS(ABSENT ) A •ES : NOES: ABSENTS: ABSTAIN: MEDIA CONTACT: MICHAEL J.LANGO(313-7100) Originating Dept.:General Services Department cc. General Services Department I HEREBY CERTIFY THAT THIS ISA TRUE Real Estate Services Division AND CORRECT COPY OF ACTION TAKEN AND ENTERED ON THE MINUTES OF THE BOARD Accounting OF SUPERVISORS,0N T E DATE SHOWN. Auditor-Controller(via RES) Risk Management(via RES) ATTESTED Cb Employment and Human Services Department(via RES) JOHN CULLEN,CLERK OF THE BOARD OF SUPERVISORS Ellinwood Office Partners, LLC(via RES) DMINISTRATOR BYLaDEPLITY I:\LeaseMgt\Board Orders\2008-02-12\EllinwoodLeaseBdOrev.doc DRA:tb Page 1 of 3 M382(10/88) i LEA5E,FOR THE PREMISES AT 300, 400, AND 500 February 12, 2008 •ELLrNIVOOD WAY, PLEASANT HILL FOR THE EMPLOYMENT AND HUMAN SERVICES DEPARTMENT (WLP562) (CP #07-88) Eighty percent (80%) of the funding for this project will come from State and Federal sources. The remaining 20% of funding will be a net County cost paid from the County General Fund. All of these costs will be included in the EHSD fiscal year 2008/2009, and subsequent annual budgets. The total estimated capital improvements to the leased space will equal $25.67 million. Of that amount, the Lessor will be contributing approximately $6.17 million. The County's share of the capital improvements will total approximately $19.5 million, which will be funded through future lease- revenue bonds to be sold in August 2008. As project expenses will be incurred in the current fiscal year, and the bonds will not be sold until next fiscal year, the CAO recommends the Board authorize the Auditor-Controller to execute a short-term loan to the Capital Project Fund established for this project from the Land Development Fund. The loan will offset the project costs for FY 07-08, and will be initiated in June 2008, when such costs are more accurately known. The loan will be in an amount not to exceed $19.5 million, and will be for a term not to exceed 120 days, or when the bond proceeds are received by the County, whichever occurs first. The principal amount of the loan will be repaid in full to the Land Development Fund from bond proceeds, with interest accrued at the rate of interest earned on the County's pooled investments, as determined by the Treasurer-Tax Collector. At an assumed rate of 5.5% over a 20-year term, the annual debt service for the bonds will be approximately $1,632,000. Annual base rent will be $2,832,480 for the first year of the Lease term, and will remain flat for the first 10 years; thereafter rent will increase by approximately 23% in the 11th year of the Lease, and by approximately 15% in the 16th year of the Lease. Annual operating expenses are estimated at $1.02 million in the first year of the Lease, subject to annual change, for a total annual occupancy cost of approximately $5,485,000. The total net annual cost increase will be approximately $3,870,000, subject to the 80/20 cost reimbursement described above, resulting in an annual County cost increase for EHSD of approximately $774,000. The County's future financial obligation for leased space vacated by EHSD to occupy the Ellinwood site is $548,778. This amount could be mitigated by other departments reoccupying these spaces or by negotiating lease buy-outs with the property owners. In addition, this transaction will provide a real estate commission to the County in the amount of $699,859 in accordance with the County's real estate commission policy. That commission will be used to offset the County's financial obligations above. BACKGROUND The Employment and Human Services Department (EHSD) currently occupies the County-owned buildings located at 30 and 40 Muir Road in Martinez and 2425 Bisso Lane in Concord, and four leased spaces in the cities of Concord and Martinez. EHSD provides CalWorks, Medi-Cal Intake, Children's Services, Food Stamps, and General Assistance services to its central-county clients from those locations. In addition, the occupancies of all but one of EHSD's central-county leased facilities are at greater than 90% of capacity. Current County-owned and leased facilities will not support EHSD's anticipated long-term space requirements for the central-county region. In 2006, EHSD completed an internal needs assessment to both identify its future space needs, and to consider consolidation) of various divisions into one location. The new facility was intended to solve the various EHSD space problems and to provide for the anticipated future growth of the department. The resulting plan includes relocating the EHSD Community Services Bureau's Director and administrative staff from 2425 Bisso Lane in Concord to 40 Douglas Drive in Martinez to consolidate all of the EHSD Bureau's Directors and central staff at one location. The plan also includes a self- supporting fee-for-service childcare facility at the Ellinwood location. On June 7, 2006, the Capital Facilities Committee of the Board of Supervisors (the Committee) authorized the General Services Department to issue a Request for Proposals (RFP) to identify locations in central Contra Costa County suitable for a new EHSD facility. The RFP was issued in January 2007. Upon the issuance of the RFP, County staff conducted outreach with the cities of Concord, Martinez, Pleasant Hill, and Walnut Creek to build support for the project and to identify possible properties of interest. The RFP resulted in three responses: the Ellinwood Corporate Center site located at 300, 400, and 500 Ellinwood Way in Pleasant Hill, the construction of a new office tower at the Metroplex II office site at 1401 Willow Pass Road in Concord, and the construction of the new Willow Pass Business Park in a somewhat remote area of Concord north of Highway 4. Of those, the Ellinwood G:\LeaseMgt\Board Orders\2008-02-12\EllinwoodLeaseBdOrev2.doc Page 2 of 3 M382(10/88) LEASE-FOR THE PREMISES AT 300, 400, AND 500 February 12, 2008 ELLINWOOD WAY, PLEASANT HILL FOR THE EMPLOYMENT AND HUMAN SERVICES DEPARTMENT (WLP562) (CP #07-88) site was selected as the most suitable to the County's needs. The Ellinwood site consists of three 3- story adjacent buildings totaling approximately 137,232 square feet of general office space. The site is located adjacent to 1-680, and is between the JFK University building and Chevy's restaurant in Pleasant Hill. If approved, EHSD will be vacating 109,327 square feet in 7 buildings, for a net increase of 27,905 square feet at the Ellinwood. Status reports of the project were given to the Committee on _August 2nd, and October 30th, 2007. On August 2, 2007, the Committee received a report regarding the outcome of the RFP process and directed staff to pursue negotiations concerning the Ellinwood property. On October 30, 2007, the Committee received an update on the status of negotiations and the projected costs for the Project. At that time, the Committee directed staff to complete negotiations and to prepare a final Lease for consideration by the Board of Supervisors. Lease provisions. Rent for the first 10 years of the Lease term will be $1.72 per square foot per year, and will average $1.99 per square foot (exclusive of the cost of tenant improvements) over the 20- year term of the Lease. County operating expenses are anticipated to be approximately $.62 per square foot per month, for a total of $85,000 per month, and approximately $1.02 million per year. The term of the Lease will be 20 years, and includes two 10-year options to extend the term at County's discretion. The County will have the right to reduce the size of the leased premises by no more than approximately one-third in the 10th, 201 , and 30th year of the Lease term, if extended. The County will have the right to terminate the Lease in certain cases of damage or destruction. The County can only terminate the Lease upon Lessor's default if the default materially interferes with the County's use or access to the premises, and only after the Lessor has failed to cure the default after 6 months, and the Lessor's lender has failed to cure the default after an additional 6 months. The Lessor will be responsible for all maintenance of the buildings, with the County to reimburse the Lessor for those expenses. The County will have a right to receive Lessor's first offer to sell the premises, but will not have the right to match any unsolicited third-party offers. The County will have the right to a minimum of 472 parking spaces at the Ellinwood location, and EHSD has indicated that that number of spaces will be adequate to meet its future needs. G:\LeaseMgt\Board Orders\2008-02-12\EllinwoodLeaseBdOrev2.doc Page 3 of 3 M382(10/88) j ADDENDUM to SD.3 February 12, 2008 On this day, the Board of Supervisors considered authorizing the General Services Director, or designee, to execute a lease with Ellinwood Office Partners, LLC, for a 20- year period beginning upon the completion of tenant improvements for approximately 137,232 square feet of office space at 300, 400, and 500 Ellinwood Way, Pleasant Hill at a starting monthly base rent of$236,040, as requested by the Employment and Human Services Department; and adopted related California Environmental Quality Act findings. Director of General Services, Michael Lango, Employment and Human Services Director Jo Valentine and Deputy County Administrator Jason Crapo provided the Board information on lease for 300, 400 and 500 Ellinwood Way, Pleasant Hill, and requested the Board for their approval in going forward with the approval. Mr. Crapo modified Recommendation No. 2 to read "DIRECTED the County Administrator to prepare a Resolution authorizing an inter fund loan to the Capital Project Fund from the Land Development Fund, to offset project expenses in FY 07-08, for consideration by the Board of Supervisors Recommendation." He said this was necessary as this is an action by law that needs to take place by a Resolution of the Board. Supervisor Uilkema voiced her concern of how this proposal could possibly affect the Other Peoples Employee Benefits (OPEB). She requested during the upcoming retreat to make sure the Board discuss items over a certain threshold. She questioned Mr. Lango regarding the status of the two buildings on Muir Road to be vacated. Mr. Lango responded said no definite decisions have been made as yet but other Departments have shown interest. Supervisor Uilkema asked how the Board would be informed when he concludes his recommendations. Mr. Lango said this matter would be discussed at the Capital Facilities Committee meeting and brought before the Board for determination. Supervisor Bonilla said she has discussed with the Mayor of Pleasant Hill the importance of this project, and conceded they look forward to the 350 County' employees coming in there and shopping. Supervisor Piepho noted the Capital Facilities Committee have worked on this and agreed this is a Board Order about cost savings, efficiency and safety not for staff but also for those the County serves. She highlighted all Board Committee meetings are public and information requested by the public would be available with the Clerk of the Board at 925-335-1900. 1 By an unanimous vote,with all Supervisors present, the Board took the following action: ■ AMENDED recommendations to APPROVE a triple net Lease with Ellinwood Office Partners, for 20 years, for roughly 137,232 square feet office space at 300, 400 and 500 Ellinwood Way, Pleasant Hill, at a monthly base rent of$236,040; ■ DIRECTED the County Administrator to prepare a Resolution allowing an interfund loan to the Capital Project Fund from the Land Development Fund, to offset project expenses in FY 07-08, for consideration by the Board of Supervisors; ■ AUTHORIZED the General Services Director, or designee, to execute a lease and Memorandum of Lease with Ellinwood Office Partners, LLC, for a 20-year period beginning upon the completion of tenant improvements for approximately 137,232 square feet of office space at 300, 400, and 500 Ellinwood Way, Pleasant Hill at a starting monthly base rent of$236,040; ■ ADOPTED related California Environmental Quality Act findings, and ■ DIRECTED the Auditor-Controller to establish a Capital Project Fund to account for project expenses.