January 12, 1999
The Honorable Board of Supervisors
County of Los Angeles
383 Kenneth Hahn Hall of Administration
500 West Temple Street
Los Angeles, CA 90012
Dear Supervisors:
TWENTY- FIVE YEAR LEASE
FOR DEPARTMENT OF PUBLIC SOCIAL SERVICES (DPSS)
4680 SAN FERNANDO ROAD, GLENDALE
(FIFTH) (3 VOTES)
IT IS RECOMMENDED THAT YOUR BOARD:
1. Approve a lease agreement with Chase Glendale Services, LLC, for 80,000 rentable square feet of office space and a parking structure to accommodate 400 to 420 cars at 4680 San Fernando Road, Glendale for a term of 25 years at an annual cost of $2,083,200 ($2.17 per square foot per month) on a full-service basis and capital replacement reserve included.
2. Authorize the Interim Director of the Internal Services Department (ISD) to acquire a telephone system for the project with a vendor to be selected in accordance with established purchasing agreements.
3. Consider the Negative Declaration together with the fact that no comments were received during the public review process and find that the project will not have a significant effect on the environment, and find that the Negative Declaration reflects the independent judgement of the County and approve the Negative Declaration; and find that the project will have no adverse effect on the wildlife resources and authorize the Chief Administrative Office (CAO) to complete and file a Certificate of Fee Exemption for the project.
4. Approve the project and authorize the CAO to implement the project.
PURPOSE OF RECOMMENDED ACTION
DPSS is currently serving the Glendale, Burbank and La Canada-Flintridge geographic area from an office located at 225 East Broadway, Glendale. The current facility was originally built as a financial institution which was later modified to accommodate the needs of DPSS. The facility is located in the heart of the redevelopment area and the City of Glendale is very desirous that the County relocate outside the redevelopment area.
Additionally, it was determined that the costs associated with remodeling the facility to accommodate the new computer requirements of DPSS will be prohibitive. This office circulated a Request For Proposals (RFP); subsequently a request for authority to negotiate was approved by your Board on November 17, 1998. The proposed action herein is consistent with the Strategic Asset Management Principles approved by your Board on November 17, 1998.
JUSTIFICATION
On November 17, 1998, the Board directed the CAO to finalize negotiations for a 25-year lease with Charles Dunn Company [Chase Glendale Services, LLC (CGS) is a subsidiary of Charles Dunn Company] for approximately 80,000 rentable square feet of office space and appurtenant parking at 4680 San Fernando Road, Glendale, at a full-service fixed rental rate not to exceed $2.18 per square foot.
DPSS projects a long term operational need for space in the area. Over the last several years, this office has been working with the City of Glendale to achieve the mutually desired goal of relocating this program outside the redevelopment area. Although final agreement has not been reached with the City of Glendale, it is the City's intention to acquire the current location.
A survey of the immediate area was conducted to determine the availability of comparable and more economical sites. Staff was unable to identify any sites in the surveyed area that could accommodate this requirement more economically, nor are there any County-owned or leased facilities available for this program.
FISCAL IMPACT
CGS has offered to build a new 80,000 rentable square feet Class A building for DPSS to lease at a fixed rental rate of $2.088 per rentable square foot per month, on a full-service basis, including the tenant improvement allowance, as outlined in their proposal dated September 22, 1998. The County opted to request an upgrade of their proposal to include a 20-year bondable roof and a granite type facade for an additional cost of $.082 per square foot.
Most of the rental costs associated with this program will be subvened by the State and Federal Governments via the established claiming process. To the extent that these costs are claimed to CalWORKs and Food Stamps, there is no additional net County cost (NCC) since the CalWORKs maintenance of effort (MOE) requirement has already been met by the County. There is a minimal NCC that results from costs associated with the General Relief and FSET (Food Stamp Education and Training) program. The estimated additional NCC of $252,058 will be included in the FY 1999-2000 budget.
FINANCING
Sufficient funds are available for this project in DPSS' 1998-99 Rent Expense Budget, although the scheduled occupancy and rental payments for the new facility will not begin until the 1999-2000 fiscal year.
It is also expected that when negotiations are completed with the City of Glendale for its acquisition of the current facility, all or a portion of the net proceeds from the sale may be applied to partially offset the cost of the new facility.
FACTS AND PROVISIONS/LEGAL REQUIREMENTS
The proposed lease is for approximately 80,000 rentable square feet of office space and a parking structure to accommodate 400 to 420 cars. The rental rate under the proposed lease is $2.17 per square foot ($173,600 monthly, or $2,083,200 annually). The rental rate comprises a base rent fixed for the entire term of the lease, an operating expense rent with a passthrough capped at five percent (5%) annually and a reserve for capital replacement. The base for calculating the passthrough of the operating expenses is subject to adjustment every five years. CGS has proposed a lease term of 25 years with TIs provided on a turnkey basis for $55 per square foot as specified by the County. Preliminary plans have been prepared by CGS's architect and are subject to review and approval by the County.
The lease allows the County to cancel at or anytime after the fifteenth year upon one year prior written notice and contains two options to renew for five year each. The lease also contains an option that allows the County to purchase the facility for $12,520,000 at the end of the original term, or for $6,412,000 or $3,307,000 at the end of the first and second option periods, respectively.
The proposed lease has been presented to your Board appointed Real Estate Management Commission (REMC). After careful review, it was the Commission's recommendation to approve the lease.
CONTRACTING PROCESS
The development team was chosen through a Request For Proposal process. On November 17, 1998, your Board authorized this office to negotiate with the successful proposer.
IMPACT ON CURRENT SERVICES (OR PROJECTS)
Your Board's approval of this lease will provide the necessary space for the consolidation, modernization, and implementation of the CalWORKs program without disrupting current service delivery. In accordance with your Board's policy on the housing of any County offices or activities, DPSS concurs in this lease recommendation.
NEGATIVE DECLARATION/ENVIRONMENTAL IMPACT REPORT
The CAO has made an initial study of environmental factors and has concluded that this lease will have no significant impact on the environment and no adverse effect on wildlife resources. Accordingly, a Negative Declaration has been prepared and a notice posted as required the California Environmental quality Act (CEQA) and the California Administrative Code, Section 15072. Copies of the completed Initial Study, the resulting Negative Declaration, and the Notice of Preparation of Negative Declaration as posted are attached.
No comments were received on the Negative Declaration. A fee must be paid to the State Department of Fish and Game when certain notices are filed with the Registrar-Recorder/
County Clerk. The County is exempt from paying this fee when your Board finds that a project will have no impact on wildlife resources.
CONCLUSION
It is requested that the Executive Officer, Board of Supervisors return the executed lease in duplicate and the adopted, stamped Board letter to the CAO, Leasing and Space Management at 550 South Vermont Avenue, Tenth Floor, Los Angeles, CA 90020, for further processing.
Respectfully submitted,
DAVID E. JANSSEN
Chief Administrative Officer
DEJ:SNY:CWW
CCF:ms
Attachments (4)
c: County Counsel
Auditor-Controller
Department of Public Social Services
Internal Services Department
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