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:
TEN
YEAR LEASE
DEPARTMENT OF CHILDREN AND FAMILY
SERVICES
DEPARTMENT OF HEALTH SERVICES
DEPARTMENT OF MENTAL HEALTH
12440 EAST IMPERIAL HIGHWAY, NORWALK
(FOURTH) (3 VOTES)
IT IS RECOMMENDED THAT YOUR BOARD:
1.
Approve and instruct the Mayor to
sign the attached ten year lease with Starwood O.C. Portfolio V, LLC (Lessor),
for 69,480 rentable square feet of office space with 278 parking spaces for the
Departments of Children and Family Services (DCFS), Health Services (DHS), and
Mental Health (DMH) at an initial annual maximum cost of $1,600,853. The lease
payments will be subvened at rates between approximately 88 and 100 percent by
State and Federal funds, or revenue offset depending on the department.
2.
Authorize the Lessor and/or
Director of the Internal Services Department (ISD) at the direction of the
Chief Administrative Office (CAO), to acquire telephone systems for the
Departments involved and a power generator for DMH at a cost not to exceed
$2,040,000. All or part of the telephone, data, low voltage systems and the
generator may be paid in lump sum or financed over a five year term not to
exceed $520,120 per year, in addition to other Tenant Improvement (TI)
allowances provided under the lease.
3.
Find that this lease is exempt from
the California Environmental Quality Act (CEQA) pursuant to Class 1, Section r,
of the Environmental Document Reporting Procedures and Guidelines adopted your
Board on November 17, 1987, and Section 15061(b)(3) of the State CEQA
Guidelines.
4.
Approve the project and authorize
the CAO, DCFS, DHS, DMH and ISD to implement the project. The lease will be
effective upon the completion and acceptance of the TIs.
PURPOSE/JUSTIFICATION OF RECOMMENDED
ACTION
The recommended action will provide a
consolidated housing arrangement for DCFS' Management Information Division,
DHS' Environmental Health and Health Facilities Divisions, and DMH's Access and
Emergency Command Center, comprising a total of 335 employees into one
location. Additionally, the County currently leases 159,705 rentable square
feet at this facility for the Sheriff and Department of Public Social Services.
· DCFS has requested the relocation of its
Management Information Division (130 staff) currently housed at 4060 Watson
Plaza Drive, Lakewood, and Child Care program (15 staff) housed at 425
Shatto Place, Los Angeles to relieve the overcrowding conditions at these
facilities. The vacated space will be absorbed by DCFS to provide a more
productive work environment for its staff.
· DHS has requested the co-location of two
Environmental Health Divisions (40 staff) in the Norwalk area, as well as the
relocation of its Health Facilities Division (32 staff) from an overcrowded
yellow tagged facility at Rancho Los Amigos. One of the Environmental Health
Divisions is currently located at the San Antonio Health Center at 6538 Miles
Avenue, Huntington Park, and the space will be backfilled by the Health Center
staff. The second division is currently located at the Registrar-Recorder
Building at 12400 East Imperial Highway, Norwalk, and the Registrar-Recorder
will absorb this space.
· DMH has requested the relocation of its
Access program (80 staff) and backup Emergency Command Center (18 staff) from
their current location at the Metropolitan State Hospital at 11400 South
Norwalk Boulevard, Norwalk. The lease for the current facility expired on
December 31, 1999, and the County has continued its occupancy on a
month-to-month basis pending the negotiation of a new lease or the relocation
of the program. The State has recently requested the termination of the County
occupancy to accommodate its own program growth.
Implementation of Strategic Plan Goals
The Countywide Strategic Plan directs that
we invest in public infrastructure, in order to strengthen the County's fiscal
capacity. The lease of property supports this strategy by complying with the
Strategic Asset Management Principles (Goal 4, Strategy 2,
Objective 2). The proposed lease will house subvened and grant
funded programs in leased space and consolidate administrative functions as
further outlined in Attachment A.
FISCAL IMPACT/FINANCING
The annual cost of this lease will initially
range from a base rate of $1,125,576 to a maximum of $1,600,853, depending on
the actual cost of TIs.
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Proposed Lease |
12440 East Imperial Highway, Norwalk |
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Area |
69,480 rentable square feet |
* The rental rate excludes electricity costs
for lighting and for HVAC for the 24-hour operation, estimated at an additional
$1.20 per square foot per year; i.e., $83,376 annually.
** $3,126,600 represents the maximum
amount of additional TI dollars available for the 69,480 square feet leased.
This amount equates to an additional $475,277 annually or $6.84 per square foot
annually, amortized at 9 percent over the ten year term.
· Sufficient funding for the proposed lease
is included in the 2001-02 Rent Expense Budget and will be charged back to the
departments according to their pro rata occupancy and/or benefits (e.g. if a
department uses more TI funds than another).
· Sufficient funding is available in the
three departments' 2001-02 budgets to cover the projected lease costs.
· DCFS rental costs are approximately 88
percent subvened by State and Federal Funds.
· DHS Environmental Health is 100 percent
revenue offset by fees. Health Facilities is 100 percent subvened.
· The DMH programs are grant funded.
· The monthly base rent is subject to an
annual adjustment based on increases in the Consumer Price Index (CPI) capped
at 3 percent.
· The total estimated lease/purchase
financing cost for the telephone system for the three programs is $520,120
annually over a five year term, or $2,040,000 if paid in lump sum payment. ISD
plans to utilize the Telephone Equipment and Service Management Agreement
(TESMA) to secure and relocate these systems. The lease or purchase payment for
the telephone system and/or relocation will begin upon acceptance of that
system. Funds have been budgeted for the lease/purchase and relocation payment
for the telephone systems in the telephone utilities budget and with various
ISD units for necessary ancillary work to be performed.
· As part of the special electric
requirements for the County, DMH has requested a power generator to insure
uninterruptible power supply to its Access Center and its backup Emergency
Command Center. The estimated cost of the generator is $500,000.
· Should it be determined that the Lessor
can provide the telephone system at the same cost or more economically, the
recommendation herein allows for the payment of these costs to the Lessor and,
at the discretion of the CAO, all or part of the telephone data and low voltage
system may be paid in lump sum or financed over the term.
FACTS AND PROVISIONS/LEGAL
REQUIREMENTS
The DMH Access Program is a 24/7 call center
and the "Fixed Point of Entry" to the Los Angeles County mental
health system that handles all emergency calls including law enforcement
referrals. DMH's Emergency Command Center will also be housed in the proposed
space.
The DCFS Management Information Division
administers the computer and telecommunications systems for the department. The
DCFS Child Care program processes reimbursement payments for children placed in
foster homes.
DHS' Environmental Health Divisions are
responsible for the inspection of restaurants and other food facilities,
applications for permits and licenses, and conduct administrative hearings
regarding public health regulations. The Health Facilities Division is
responsible for the inspection and licensing of all the hospitals, convalescent
homes and skilled nursing facilities in the County, with the exception of
County hospitals..
The proposed lease provides 69,480 rentable
square feet of office space with 278 parking spaces. DCFS will have a total of
145 staff assigned to this facility, DHS 72, and DMH 98. Additionally, an area
comprising 4,000 square feet and capable of accommodating 20 additional staff
is being reserved for future expansion. A grand total of the number of staff
that will be housed in the proposed leased area when the space is fully
utilized is 335. The proposed lease contains the following provisions:
· Commencement of the term upon completion
and acceptance of the TIs, and termination ten years thereafter.
· Modified full service basis whereby the
Lessor is responsible for all operating costs associated with County's tenancy,
except electricity for lighting and air conditioning for the 24-hour operation
area. This is the same as in the current leases the County has in the subject
facility.
· A cancellation option at the fifth
anniversary and every anniversary thereafter upon 120 days prior written notice
to the Lessor and the reimbursement of the unamortized balance of the
additional TIs.
· A TI allowance of $15/square foot
included in the base rent for the fifth floor and $30/square foot for the
cafeteria space, thus, the total TI allowance included in the base rental rate
is $1,204,770.
· A reimbursable additional TI allowance of
up to $3,126,600 or $45/square foot, which may be paid in lump sum or amortized
over the ten year term at an interest rate of 9 percent.
· The Lessor will provide 278 parking spaces
included in the rental rate, which is sufficient to meet the parking needs of
the 335 staff that will eventually be housed in this area of the building. The
parking spaces will be allocated between the departments in proportion to their
respective occupancy levels.
· An option to lease additional space in
the building at the same terms, conditions and rental rate as prevailing under
the lease.
· All TI expenditures shall be approved in
writing by the CAO. All construction shall be in compliance with Paragraph 26,
"Tenant Improvements" and the Tenant Improvement Work Letter attached
as Exhibit G and referenced in Paragraph 26, Section A of the proposed lease.
· No County Project Manager or employee,
including the CAO, is authorized to approve any expenditure not expressly
pre-approved by the Board of Supervisors. The Board of Supervisors will not
approve retroactive expenditures. Any unapproved expenditures by the Lessor,
even if it benefits the County, shall not be recovered by Lessor who shall
solely bear the risk of loss for incurring such liabilities as stated in
Paragraph 30 of the lease.
CAO Real Estate staff conducted a survey of
the Norwalk area to determine the availability of comparable and more economical
sites. Staff was unable to identify any sites in the surveyed area that could
accommodate these requirements more economically. Attachment B shows all County
owned and leased facilities within the search area for these programs. There
are no County owned or leased facilities available for these programs.
Based upon a survey of similar properties in
Norwalk, staff has determined that the base rental range, including parking, is
between $15.60 to $18.60 per square foot, excluding electricity. Thus, the base
annual rental rate of $16.20 per square foot for the proposed lease represents
the middle range of the market rates.
The proposed lease was submitted for review
to your Board's appointed Real Estate Management Commission on June 6, 2001.
After careful review, it was the Commission's decision to approve the proposed
lease.
The Department of Public Works has
previously considered this facility and found it suitable for County's
occupancy.
The CAO is studying the need for a child
care center in the Norwalk area. Should a demand exist, the CAO will request
funding and Board approval for the construction of a child care center on the
adjacent County owned Registrar-Recorder site.
NEGATIVE DECLARATION/ENVIRONMENTAL
IMPACT REPORT
The CAO has made an initial study of
environmental factors and has concluded that this lease is exempt from CEQA
pursuant to Class 1, Section r, of the Environmental Document Reporting
Procedures and Guidelines adopted by your Board on November 17, 1987, and
Section 15061 (b) (3) of the State CEQA Guidelines.
IMPACT ON CURRENT SERVICES (OR
PROJECTS)
It is the finding of the CAO that the
proposed lease is in the best interest of the County and is the most effective
means of providing the necessary space for these requirements. In accordance
with your Board's policy on the housing of any County offices or activities,
DCFS, DHS and DMH concur in this recommendation.
CONCLUSION
It is requested that the Executive Officer,
Board of Supervisors return two originals of the adopted, stamped Board letter
with the executed lease agreements, and two certified copies of the Minute
Order to the to the Chief Administrative Office, Real Estate Division at 222
South Hill Street, Fourth Floor, Los Angeles, CA 90012 for further processing.
Respectfully submitted,
DAVID E. JANSSEN
Chief Administrative Officer
c: County
Counsel
Auditor-Controller
Department of Children and Family
Services
Department of Health Services
Department of Mental Health
Internal Services Department
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ATTACHMENT A DEPARTMENTS OF CHILDREN AND FAMILY SERVICES
Asset Management Principles Compliance Form1 |
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1. Occupancy |
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YES |
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NO |
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NA |
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A |
Does lease consolidate administrative functions?2 |
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X |
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B |
Does lease co-locate with other functions to better serve clients?2 |
X |
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C |
Does this lease centralize business support functions?2 |
X |
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D |
Does lease
meet the guideline of 200 sf of space per person?2 207sf/staff
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X |
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2. Capital |
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A |
Should program be in leased space to maximize State/Federal funding? |
X |
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B |
If not, is this a long term County program? |
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X |
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C |
Is it a net County cost (NCC) program? List % NCC |
16.00% for DCFS portion |
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X |
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D |
If yes to 2 B or C; capital lease or operating lease with an option ? |
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X |
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E |
If no, are there any suitable County owned facilities available? |
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X |
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F |
If yes, why is lease being recommended over occupancy in County owned space? |
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X |
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G |
Is Building Description Report attached as Attachment B?2 |
X |
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H |
Was build to suit or capital project considered?1 Build to suit was not considered viable because of economics, time requirement and subvention funding. |
X |
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3. Portfolio Management |
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A |
Did department utilize CAO Space Request Evaluation(SRE)?2 |
X |
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B |
Was the space need justified? |
X |
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C |
If a renewal lease, was co-location with other County departments considered? |
X |
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D |
Why was this program not co-located? |
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1. |
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The program clientele requires a "stand alone" facility. |
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2. |
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No suitable County occupied properties in project area. |
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3. |
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No County owned facilities available for the project |
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4. |
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Could not get City clearance or approval |
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5. |
X |
The Program is being co-located |
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E |
Is lease a
full service lease?2
Net utilities for lighting and 24 hours HVAC |
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X |
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F |
Has growth projection been considered in space request? |
X |
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G |
Has the Dept. of Public Works completed seismic review/approval? |
X |
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1 As approved by the Board of Supervisors 11/17/98 Please BOLD any written responses |
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2 If not, why not? |
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ATTACHMENT B
DEPARTMENT CHILDREN & FAMILY SERVICES
DEPARTMENT OF HEALTH SERVICES
DEPARTMENT OF MENTAL HEALTH
SPACE SEARCH WITHIN THE CITY
NORWALK FOR 12440 E. IMPERIAL HIGHWAY, NORWALK
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SQUARE |
FEET |
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SQUARE FEET |
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LACO |
FACILITY NAME |
ADDRESS |
GROSS |
NET |
OWNERSHIP |
AVAILABLE |
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A161 |
DMH-PATIENT EMERGENCY COORDINATION SERVICES |
11401 BLOOMFIELD AVE METRO STATE HOSPITAL, NORWALK 90650 |
5773 |
5484 |
LEASED |
NONE |
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D210 |
PUBLIC LIBRARY-ALONDRA LIBRARY |
11949 E ALONDRA BLVD, NORWALK 90650 |
6808 |
5061 |
PERMIT |
NONE |
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5368 |
PUBLIC LIBRARY-NORWALK REGIONAL LIBRARY |
12350 E IMPERIAL HWY, NORWALK 90650 |
33749 |
27529 |
OWNED |
NONE |
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X168 |
HARRY HUFFORD REGISTRAR-RECORDER/CO CLERK BLD |
12400 E IMPERIAL HWY, NORWALK 90650 |
262510 |
240600 |
FINANCED |
NONE |
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5685 |
NORWALK COURTHOUSE |
12720 NORWALK BLVD, NORWALK 90650 |
225008 |
111898 |
OWNED |
NONE |
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D221 |
DPSS-NORWALK AP DISTRICT OFFICE |
12727 NORWALK BLVD, NORWALK 90650 |
40500 |
30928 |
LEASED |
NONE |
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A068 |
SHERIFF-THE BECHTEL BUILDING-IMPERIAL CENTRE |
12440 E IMPERIAL HWY, NORWALK 90650 |
159705 |
134699 |
LEASED |
NONE |
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A022 |
ASSESSOR-NORWALK MAJOR PROP/ ALT PUB DEFENDER |
12440 (A) FIRESTONE BLVD, NORWALK 90650 |
4155 |
3913 |
LEASED |
NONE |
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A007 |
ASSESSOR-NORWALK REGIONAL OFFICE |
12440 (B) FIRESTONE BLVD, NORWALK 90650 |
8350 |
8214 |
LEASED |
NONE |
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A358 |
DPSS-COMPUTER SERVICES/ LEADER PROGRAM OFFICE |
14714 CARMENITA RD, NORWALK 90650 |
44250 |
42038 |
LEASED |
NONE |
