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HomeMy WebLinkAboutAgenda - 06-03-2008-4tORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 3, 2008 Action Agenda Item No. q- --~' SUBJECT: Lease Approval: Hillsborough Commons DEPARTMENT: Purchasing, Budget, County PUBLIC HEARING: (Y/N) No Attorney ATTACHMENT(S): INFORMATION CONTACT: Pam Jones, 919-245-2652 Donna Coffey, 919-245-2151 Geof Gledhill/Brian Ferrell, 732-2196 PURPOSE: To consider approving a lease for 56,328 square feet of space at Hillsborough Commons Shopping Center for use by the Department of Social Services (DSS). BACKGROUND: On March 6, 2008, the County Commissioners approved a motion that directed staff and the County Attorney to negotiate and present the most favorable lease/purchase arrangement possible for the Hillsborough Commons Shopping Center, along with an appropriate funding plan and approvals by the Local Government Commission as may be needed. The terms of this lease are as follows: ® Lease Term: 10 years and three months, with options to renew up to 30 years. • Minimum Rent: ^ Months 1-3 are rent free ^ *Months 4-63: $59,363 ($712,356) (2012 option to purchase occurs in this lease term) ^ Months 64-123: $63,858 ($766,296) ^ **Months 124-183: $60,787 ($729,444) (reduction reflects amortization of landlord's contribution to upfit) ^ Months 184-243: $65,904 ($790,848) ^ Months 244-303: $71,537 ($858,444) ^ Months 304-363: $77,733 ($932,796) ® The County's proportionate share of the center is 52.26% and is the basis of Common Area Maintenance/Taxes and Insurance calculations. Costs of such are included in the base rent up to a total of $221,751, above which the County would be billed annually around March 1. • The County will provide interior maintenance, including maintenance of systems such as the HVAC, lighting and plumbing. • The County will be responsible for all utility costs, except those associated with exterior lighting, including parking lot lighting, which will be included in the Common Area Maintenance assessment. • The owner will be responsible for exterior maintenance of the building, including roofing and site maintenance. • The base lease includes $600,000 contribution by the Landlord toward upfit costs by the County. i411 other costs of upfit will be the responsibility of the County. ® The owner will allow the construction of the sustainable design elements proposed by the County, such as parking lot improvements and the addition of natural daylighting to the building as part of the upfit initiative. These amounts, however, would be reported separately to the Board at such time plans are developed since they lie entirely outside of the lease and interior upfit costs. • The County shall have the option, but not the obligation to purchase the entire shopping center by February, 2012 at a cost of $15,489,000, minus $15,000 for each month rent has been paid during the lease term. DSS has submitted a list of desired amenities for the space. Upon. approval of the lease by the Board, a contract with an architect will be prepared based on previous Board authorization and programming commenced. It is anticipated departmental programming and architectural analysis of sustainable design options can be accomplished within approximately 120 days, including regulatory approvals. During the same time period, staff will pursue a Construction Manager at Risk (CMAR) contract for consideration by the Board in August 2008. Bringing the CMAR under contract early in the process will allow the upfit and sustainable elements to be accurately priced early in the work so the Board may make well-informed decisions about the magnitude of investment at the site. FINANCIAL IMPACT: Costs for the lease in the amount of $712,356 will be met through General Fund appropriations in the DSS budget. The County'will be reimbursed of 50% of the lease and operating costs, such as utilities. Upfit costs beyond those included in the lease are included in the 2008-2018 Capital Investment Plan, pursuant to earlier Board discussions. Upfit costs are also reimbursed at 50%, based on a 10-year depreciation schedule. RECOMMENDATION(S): The Manager recommends that the Board .direct the County Attorney to collaborate with staff and the owner to prepare a lease for approximately 56,328 square feet of space at the Hillsborough Commons Shopping Center that incorporates the material terms cited above; and authorize the Chair to sign on behalf of the Board.