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Home My WebLink AboutMINUTES - 04262005 - SD5 r 500� TO: BOARD OF SUPERVISORS ,�, s ' L .,o� -------.- Contra FROM: BARTON J. GILBERT DIRECTOR OFCosta •'I -� - '� GENERAL SERVICES oa DATE: April 26, 2005n=- . cou , SUBJECT: APPROVE A 20-YEAR LEASE AND PURCHASE OPTION WITH J&L PROPERTIES,LLC(JAMES J.BUSBY AND LYNETTE L.BUSBY)FOR DEVELOPMENT OF A NEW 35,640 SQUARE FOOT OFFICE BUILDING AT 555 ESCOBAR STREET,MARTINEZ TO CONSOLIDATE THE COUNTY CLERK-RECORDER AND ELECTIONS FACILITIES SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: APPROVE a 20-year lease agreement and purchase option with J & L Properties, LLC (James J. Busby and Lynette L. Busby) for a new 35,640 square foot office building at 555 Escobar Street, Martinez for the County Clerk-Recorder, under the terms and conditions more particularly set forth in the lease, and AUTHORIZE the Director of General Services, or designee, to execute the lease, subject to final approval by the Director of General Services and County Administrator and approval as to form by County Counsel. FINANCIAL IMPACT: Approval of the lease will obligate the Clerk-Recorder to pay approximately $83,398 per month in initial year lease payments for 35,640 square feet of new built-to-suit office space. Under the terms of the lease, the County will have the option to purchase the building for $10,993,524 during the first two years of the lease. The purchase option will enable the County to convert the monthly lease payment to a debt service payment of approximately $50,340 per month. The total estimated project cost is $11,763,000, which includes telephone, data communications and contingencies. The Clerk-Recorder's office has accumulated approximately $2 million in fund balance over several years to pay for a portion of the building costs. In addition, there are approximately $2 million in Micrographic Modernization funds earmarked for this project, leaving a balance of $7,813,000 in lease revenue bonds that will need to be issued to purchase the building. However, given that the County will enter into a lease with an option to purchase, it is not necessary to issue the bonds until the County exercises its purchase option, which is anticipated to occur in FY 2006-2007. The proposed financing plan assumes the issuance of 25-year bonds at an all-in cost of 6%, which is a conservative assumption based on current interest rates. The new building will provide approximately 10,000 square feet more office space than the current leased space that the Clerk-Recorder/Elections occupies at six locations in downtown Martinez. The funding plan for the project is summarized in the following table: r CONTINUED ON ATTACHMENT: X YES SIGNATURE: i COMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDAr(5F BOARD COMMI E APPROVE OTHER SIGNATURE(S): ^%ACTION OF BOA D ON APPROVE AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AN ORRECT COPY OF AN ACT N TAKEN ZN,kJNANIMOUS(ABSENT } AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE AYES: NOES: SHOWN. ABSENT: ABSTAIN: ATTESTED t Q MEDIA CONTACT: BARTON J.GILBERT(313-7100) JOHN OWEETEN, CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR Originating Dept.:General Services Department cc: General Services Department Administration Accounting County Administrator's Office County Counsel Auditor- ntroller(via GSD) B - ,DEPUTY April 26,2005 APPROVE A 20-YEAR LEASE AND PURCHASE OPTION WITH J&L PROPERTIES,LLC(JAMES J.BUSBY AND i YNETTE L.BUSBY)FOR DEVELOPMENT OF A NEW 35,640 SQUARE FOOT OFFICE BUILDING AT 555 ESCOBAR STREET,MARTINEZ TO CONSOLIDATE THE COUNTY CLERK-RECORDER AND ELECTIONS CLERWRECORDER/ELECTIONS BUILDING PROJECT FUNDING PLAN Estimated Project Expenses Fiscal Year 2002- 2003- 2004- 2005- 2006- 03 04 05 06 07 Planning/Negotiations/Project Mgmt 781106 66,216 30,000 25,000 Telephone Data 280,000 Communications/Alarms Project Contingency 219,000 Signage 701000 Purchase of Building Upon Completion 10,994,000 Total Costs $78,106 $66,216 $309000 $594,000 $119763,000 SF of Building 35,640 Project Cost/SF $330 Funding Resources General Fund Contributions thru 6/30/04 $1,950,000 Micrographic Modernization Fund $2,000,000 Lease Revenue Bond Proceeds (Sold in FY 06-07) $72813,000 Total Resources $11,763,000 Current Leased Facilities/New Building Project Annual Cost Comparison FY 2005-2006 Budgeted Leased Facilities Occupancy Cost $7289652 Estimated Leased Facilities Occupancy Cost in FY 06-07 $7659085 New Building Occupancy Cost Estimated Annual Debt Service $604,071 Estimated Maintenance/Utilities Cost $225,000 Total New Building Occupancy Cost $8292071 DIFFERENCE (Annual Increase in Net County Cost)' $63,986' Current Leased Facilities/New Building Monthly/SF Cost Comparison Projected Occupancy Cost/Current Leased Buildings(FY 06-07) $2.49 ($765,085/yr) New Building Lease/Estimated Occupancy Cost(FY 06-07) $2.80 ($1,197,504/yr) New Building Purchase/Estimated Occupancy Cost(FY 06-07) $1.94 ($829,071/yr) 'Pays for 9,984 square feet of additional office space at a full service occupancy cost of.53 cents per square foot. Rent for the new 35,640 square feet of office space will be $2.34 per square foot or $83,398 per month for the first year of the lease, which includes building maintenance services, taxes, and insurance. In addition to rent, the Clerk-Recorder will pay for janitorial services and utilities, bringing the total occupancy cost to $2.80 per square foot or $99,792 per month. If the County exercises its purchase option in 2006 as anticipated, total building occupancy cost will drop to $69,089 per month ($1.94 per square foot), as occupancy costs and debt service on the $7,813,000 to be financed will be significantly lower than the corresponding rent payments. BACKGROUND Existing Clerk-Recorder/Elections Facilities The County Clerk-Recorder/Elections offices are currently located in six leased buildings totaling 25,656 square feet in downtown Martinez. The leased buildings were not designed for the Clerk- Recorder operations and have been marginally adapted over the years to accommodate significant changes in Clerk-Recorder/Elections operations, including increased staff and workload demands, and technology driven system modifications and requirements. The leased facilities are functionally obsolescent, difficult to locate and access by the public, lack sufficient parking, and are not suitable for housing an increasingly complex and modernized Clerk- Recorder/Elections operation. The current Clerk-Recorder/Elections leased building locations and annual occupancy costs are described in the following table: Page 2 of 4 April 26,2005 APPROVE A 20-YEAR LEASE AND PURCHASE OPTION WITH J&L PROPERTIES,LLC(JAMES J.BUSBY AND LYNETTE L.BUSBY)FOR DEVELOPMENT OF A NEW 35,640 SQUARE FOOT OFFICE BUILDING AT 555 ESCOBAR STREET,MARTINEZ TO CONSOLIDATE THE COUNTY CLERK-RECORDER AND ELECTIONS CURRENT CLERK RECORDER/ELECTIONS LEASED FACILITIES FY 05-06 FY 05-06 FY 05-06 SF Budgeted Budgeted Total Rent Utilit /Maint Clerk Recorder 730 Las Juntas 60500 $140,100 $91,979 $2329079 816 Main St 575 56,865 13,341 709206 822 Main St 22580 37,230 32,353 699583 826 Main St 351 51058 61926 119984 835 Castro St 11800 199200 27,653 469853 516 Ward St(Parking) N/A 31840 21300 6,140 Subtotal—Clerk Recorder 119806 $262,293 $174,552 $4369845 Elections 524 Main St 13Y850 189,060 96,467 285,52 7 535 Ward St(Parking) NIA 41980 11300 69280 Subtotal—Elections 139850 194,040 97,767 2912807 Total 25,656 $456,333 $272,319 $7289652 Monthly Occupancy Costs/SF $1.48 $0.89 $2.37 Process to Identify Replacement Facilities In June 2000, the Board directed the County Administrator's Office to identify replacement facilities for the Clerk-Recorder/Elections operations in the Concord/Martinez/Pleasant Hill area near Highways 4 or 680 with downtown Martinez being the preferred location. The General Services Department issued Request for Proposals. Consistent with Board policy that the County should have an equity interest in facilities in which the County would have long-term occupancy, the RFP requested proposals to include a provision for a lease with a purchase option by the County. After review and evaluation of the proposals submitted, in February 2001 the Board directed staff to further evaluate two alternatives. Upon completion of this evaluation, a recommended replacement site and build-to-suit development opportunity was identified as the best alternative. The selected site is approximately 40,000 square feet of land bordered by Marina Vista, Alhambra, Escobar, and Castro streets. In September 2001, the Board approved the selected site and the proposed replacement of the Clerk-Recorder/Elections leased buildings with a consolidated facility in which the County would have an equity interest. Concurrently, the Board directed staff to initiate the negotiation process to develop a lease with option to purchase agreement for the project. In September 2003, the Board approved entering into the proposed lease subject to final terms and conditions being approved by the County Administrator. The Board's conditional approval was based upon a total estimated project cost of$9.6 million. Since the Board's conditional approval in September 2003, the project costs have been refined to incorporate all fixed tenant improvements, state-of-the-art climate control, mechanical, electrical, fire alarm and security systems. An independent cost estimator retained by the County has verified the current construction cost estimate and a value engineering assessment has been performed. The current estimated project cost is $11,763,000, which results in an annual increase in Net County Cost of $63,986 and a new building lease/occupancy cost and purchase/occupancy cost of $2.80 per square foot and $1.94 per square foot respectively compared to the estimated FY2006-2007 Clerk-Recorder leased facilities cost of $2.49 per square foot. The additional $63,986 in Net County Cost will pay for 9,984 square feet of new built-to-suit office space at a full service occupancy cost of .53 cents per square foot. Occupancy costs include rent or debt service payments, maintenance, utilities, janitorial, and insurance expenses. Page 3 of 4 April 26,2005 APPROVE A 20-YEAR LEASE AND PURCHASE OPTION WITH J&L PROPERTIES,LLC(JAMES J.BUSBY AND LYNETTE L.BUSBY)FOR DEVELOPMENT OF A NEW 35,640 SQUARE FOOT OFFICE BUILDING AT 555 ESCOBAR STREET,MARTINEZ TO CONSOLIDATE THE COUNTY CLERK-RECORDER AND ELECTIONS New Clerk-Recorder/Elections Replacement and Modernized Facilitx The proposed Clerk-Recorder/Elections replacement facility will be located on approximately 40,000 square feet of land bordered by Marina Vista, Alhambra, Escobar, and Castro streets. The building will be a three-story office building comprised of 35,640 square feet with 67 on-site parking spaces. The building has been designed in accordance with County design standards and guidelines and the interior improvements have been designed to meet the requirements of the Clerk-Recorder/Elections operation. The new building will provide electrical and computer capacity consistent with the modern needs, systems, and legal requirements of Clerk- Recorder/Elections operations, including emergency generator and security systems. The City of Martinez has approved the proposed development plan. Estimated Project Schedule and Completion The lease with purchase option will be executed in May 2005 and construction will begin in June or July 2005. The developer for the project has indicated that construction will be completed in approximately 12 months with estimated occupancy by the Clerk-Recorder in Summer 2006. Page 4 of 4