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Home My WebLink AboutAgenda 10-03-23; 8-g - Five-Year Lease Extension for Hillsborough Commons 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: October 3, 2023 Action Agenda Item No. 8-g SUBJECT: Five-Year Lease Extension for Hillsborough Commons DEPARTMENT: Asset Management Services; Social Services ATTACHMENT(S): INFORMATION CONTACT: 1) Five-Year Lease Extension Alan Dorman, Assistant Director of Asset Management Services, 919-245-2627 Steven Arndt, Director of Asset Management Services, 919-245-2628 PURPOSE: To approve a five-year extension of the lease of Hillsborough Commons, a 66,444 square foot building that houses the Department of Social Services. BACKGROUND: The County began leasing Hillsborough Commons in 2008 for the Department of Social Services (DSS). The original lease allowed for several options to extend the lease, with the first option approved in September 2019 and expiring on January 21, 2024. The current base lease rate is $71,705 per month, or $860,000 per year. If the second option period is approved, the lease will extend through January 21, 2029, with a base rate of$77,740 per month or$932,880 per year. FINANCIAL IMPACT: Funds for extending the lease for the balance of FY 2023-24 were already approved as part of the FY 2023-24 budget, so no additional funding would be necessary. Currently, DSS can receive at least 50% administrative reimbursement on rental costs and other related operating costs such as utilities. SOCIAL JUSTICE IMPACT: There are no Orange County Social Justice Goals associated with this item. ENVIRONMENTAL IMPACT: There are no Orange County Environmental Responsibility Goal impacts associated with this item. RECOMMENDATION(S): The Manager recommends that the Board approve the five-year lease extension for Hillsborough Commons (Attachment 1) and authorize the Chair to sign upon final review by the County Attorney. Attachment 1 2 LEASE MODIFICATION THIS MODIFICATION OF LEASE (this "Amendment") is entered into as of the _ day of _, 202_ (the "Effective Date") by and between HILLSBOROUGH NC I SGF, LLC, a Delaware limited liability company ("Landlord"), and ORANGE COUNTY, NORTH CAROLINA ("Tenant"). WITNESSETH: WHEREAS, Landlord, as successor in interest to Hillsborough Commons, LLLP, and Tenant entered into that certain Lease Agreement dated July 25, 2008, as amended by that certain Lease Modification dated January 12, 2015, and that certain Lease Modification dated November 12, 2015, and that certain Lease Modification dated September 20, 2018 (collectively, the "Lease"), pursuant to which Landlord leases to Tenant certain premises consisting of 66,444 rentable square feet, identified as Unit Nos. 01 and 03 (the"Premises"), in the shopping center(the "Shopping Center") known as Hillsborough Commons, situated in Hillsborough,North Carolina, City of Richmond, Virginia(the "Property"), as more fully described and depicted in the Lease. WHEREAS,Tenant has exercised its first option to extend the Lease Term for the renewal period commencing on January 22, 2019 and expiring on January 21, 2024. WHEREAS, Landlord and Tenant desire to memorialize Tenant's exercise of Tenant's second option to extend the Lease Term for the renewal period commencing on January 22, 2024 and expiring on January 21, 2029, subject to the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the aforesaid premises and the other agreements and covenants hereafter set forth and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties do hereby agree as follows: 1. Incorporation of Recitals. The above recitals are hereby incorporated into this Amendment as if fully set forth herein. As used herein the term "Lease" shall mean the Lease as amended by this Amendment. 2. Definitions.All capitalized terms used in this Amendment shall have the meanings assigned to them in the Lease unless otherwise specified herein. 3. Exercise of Renewal Option. This Amendment shall serve as Tenant's exercise of its second option to extend the Lease Term for the renewal period commencing on January 22, 2024 and expiring on January 21, 2029. Base Rent for the Premises during such period shall be $932,880.00 per year($77,740.00 per month). Landlord and Tenant acknowledge that Tenant has two (2) additional renewal options of five (5)years each remaining. 4. No Default. Each of Landlord and Tenant hereby affirm to each other that to best of its knowledge without inquiry as of the Effective Date, no breach, default, event of default, or other act, error, or omission which, with the giving of notice or passage of time or both would constitute a breach, default, or event of default by such party has occurred and is continuing under the Lease beyond any applicable notice or cure period. 5996614.1 Attachment 1 3 5. No Third-Party Beneficiaries. Notwithstanding any other provision of thisAmendment or the Lease, Tenant and Landlord hereby agree that (i) no individual or entity shall be considered, deemed or otherwise recognized to be a third-party beneficiary of this Amendment or the Lease, as amended; (ii) the provisions of the Lease, as amended, are not intended to be for the benefit of any individual or entity other than Tenant and Landlord; (iii) no individual or entity shall obtain any right to make any claim against Tenant and Landlord under the provisions of the Lease, as amended; and (iv)no provision of the Lease, as amended, shall be construed or interpreted to confer third-party beneficiary status on any individual or entity. For purposes of this paragraph, the phrase "individual or entity" means any individual or entity, including, but not limited to, individuals, contractors, subcontractors, vendors, subvendors, assignees, licensors and sublicensors, regardless of whether such individual or entity is named in this Amendment or the Lease, as amended. 6. Affirmation of Lease Terms. Except as modified by this Amendment,Landlord and Tenant each hereby ratify the Lease and agree that the Lease shall remain unchanged and shall continue in full force and effect. In the event there is any conflict between the terms of the Lease and the terms set forth in this Amendment, the terms specifically set out in this Amendment shall control. From and after the Effective Date, any and all references to"the Lease"or"this Lease"in the Lease shall mean the Lease as modified by this Amendment. 7. Mutual Authorization Representation. Each of Landlord and Tenant hereby represent and warrant to each other that: (a)this Amendment(and each term and provision hereof) has been duly and appropriately authorized and executed by such parry through proper written corporate or limited liability company action and approval; and (b) no additional consent, agreement, or approval is required with respect hereto. 9. Miscellaneous. The submission of an unsigned copy of this Amendment to Tenant shall not constitute an offer. Landlord and Tenant each agree that this Amendment (i) shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs, legal representatives and assigns, (ii) shall be governed by and construed in accordance with the laws of the State of Virginia, (iii) shall constitute the entire agreement between the parties relating to the subject matter hereof, all prior negotiations, agreements, and understandings, and (iv) shall become effective and binding upon execution and delivery by both Landlord and Tenant. 10. Signature and Counterparts. Landlord and Tenant each agree: (a) no further approvals or consents are required and that it has full right and authority to execute this Amendment; (b) that the individual executing this Amendment on its behalf has the authority to bind it; (c) execution and delivery of this Amendment via electronic transmission or other electronic means shall be binding; (d) photocopies, facsimile transmissions, electronic images or copies (such as docusign or pdf), shall be valid, binding, effective and enforceable the same as originals for all purposes, and may be so admitted in any judicial proceeding, regulatory proceeding or arbitration, and in making proof of this Amendment; it shall be unnecessary to produce the original hereof or any or all original signature pages, and(e)this Amendment may be executed in two (2) or more counterparts, all of which together shall constitute but one and the same agreement. [Remainder of Page Intentionally Blank; Signature Page Follows] 2 5996614.1 Attachment 1 4 IN WITNESS WHEREOF, Landlord and Tenant have caused this Amendment to be executed as of the dates respectively listed below. LANDLORD: HILLSBOROUGH NC I SGF, LLC, a Delaware limited liability company By: Name: Title: TENANT: ORANGE COUNTY,NORTH CAROLINA By: Name: Title: 5996614.1