REPORT TO SHASTA COUNTY BOARD OF SUPERVISORS

BOARD MEETING DATE:  April  24, 2018
CATEGORY:  Consent - Law and Justice-6.

SUBJECT:

Building Lease for Department of Child Support Services.

Supervisorial District No. :  All

DEPARTMENT CONTACT:  Terri Morelock, Director, (530) 229-8762

STAFF REPORT APPROVED BY:  Terri Morelock, Director

RECOMMENDATION

Approve and authorize the Chairman to sign a renewal lease agreement with The June Girard Fund Limited Liability Company in the amount of $48,000 per month ($1.14 per square foot) for 41,973 square feet of office space located at 2600 Park Marina Drive, Redding, California, for the period July 29, 2018, through June 30, 2028, with three optional three-year extensions with annual adjustments not to exceed +2% or -2%, based on the Consumer Price Index.

SUMMARY

The Department of Child Support Services (DCSS) is currently housed at 2600 Park Marina Drive, Redding.  The initial lease was signed May 7, 2002, for 41,973 square feet, at $1.39 per square foot, with a rent increase of 3.5% on each anniversary date.  The rent commencement date was July 29, 2003.  With the 3.5% yearly increase, current rent is now at $2.25 per square foot; FY 17/18 cost of $1,130,379.12.

DCSS desires to remain at the same location.  The new lease negotiated with the Lessor now has rent at $1.14 per square foot, with an annual cost of $576,000, with rent adjustments each year on July 1st, not to exceed +2% or -2%, based on the percentage change from April of prior year to April of current year in the U.S. Bureau of Labor Statistics Consumer Price Index for All Urban Consumers for San Francisco-Oakland-San Jose.

DISCUSSION

A rental market analysis was conducted for DCSS in July 2017 by Shasta County Department of Public Works.

The Public Works Department found there was no other available facility meeting the needs of DCSS. DCSS also considered that even if an adequate facility was available, potential building modifications, and move costs to a new location, the prospective lease terms at 2600 Park Marina Drive, Redding, appear substantially less costly with a 10-year-term lease savings of more than $2,000,000 when compared to leasing another facility. DCSS also considered the additional costs of public works administration and building costs for construction of a new facility. Finally, a new/renewal lease of the current facility would avoid the disruption to customers and DCSS’s staff involved with a construction project and/or costly move. Therefore, DCSS recommends a renewal lease, with new lease terms, for the existing facility.

As noted above, the current lease for Fiscal Year (FY) 17/18 is $2.25 per square foot; FY 17/18 cost of $1,130,379.12   The proposed lease is $1.14 per square foot, an annual cost $576,000 for FY 18/19, with an annual adjustment of +2% or -2%, based on the Consumer Price Index, as opposed to the current annual increase of 3.5%. This constitutes a potential cost savings in the amount of $554,379 in FY 18/19.

During DCSS’s 15 years of occupancy, the Lessor has been accessible and quick to respond to building concerns.  He is amenable and flexible when coordinating building repairs, mindful of the work done by the department, and the need to remain open to the public.  The Lessor has been amenable to minor building modifications necessary to improve business practices and enhance the service DCSS provides to customers.

ALTERNATIVES

The Board may choose not to renew the lease or modify the terms. If the Board chooses to not renew the lease, staff would need to be directed to begin the Request for Proposal (RFP) process to secure office space for DCSS as of July 28, 2018; a very tight timeline. This is not recommended as no other available facilities meet the needs of DCSS. The lease renewal is the most cost-effective option, and the lease renewal would support continuity to customers and staff.  

OTHER AGENCY INVOLVEMENT

County Counsel has approved the lease as to form.  Risk Management has reviewed and approved the lease.  The lease and recommendation have been reviewed by the County Administrative Office.

FINANCING

There is no General Fund impact.  DCSS is funded 100% by State and Federal funds. Appropriations for the renewal lease were included in the DCSS’s FY 18/19 Requested Budget.