County Manager's Office
December 3, 2003
BOARD MEETING DATE:
December 16, 2003
Honorable Board of Supervisors
Paul T. Scannell, Assistant County Manager
Lease of office space at 310 Harbor Boulevard, Belmont for the use of Human Services Agency as a Health Insurance Telecenter, and a corresponding Fourth Amendment to Lease No. 1185 at 264 Harbor Boulevard.
On April 16, 2002, the Board adopted Resolution No. 65195 authorizing the First Lease Amendment to the County's lease of Building A. The First Amendment extended the term of the lease through April 30, 2012, and modified the premises to include all of Building A. On July 30, 2002, the Board adopted Resolution No. 65461 authorizing the Second Lease Amendment. The Second Amendment provided for the County's temporary use of a portion of Building E by the Probation Department during completion of the seismic retrofit of the Hall of Justice. On September 9, 2003 the Board adopted Resolution No. 66238 authorizing the Third Lease Amendment. The Third Amendment extended the Probation Department's occupancy through September 30, 2003. The Second and Third Amendments no longer affect the terms of the lease.
HSA recently developed a new insurance case management system to consolidate handling of all health insurance matters by telephone from a centralized location instead of requiring clients to appear personally at locations throughout the County. After evaluating the feasibility of reconfiguring space currently leased by the County in the Harbor Park, HSA determined that it would be more cost effective to lease the portion of the building at 310 Harbor Boulevard (Building E) that was previously occupied by the Probation Department during the seismic retrofit of the Hall of Justice. Because Building E is furnished with work stations and connected to the HSA telephone and data system, HSA is able to implement the new program quickly and in a cost-effective manner. In order to limit the fiscal impact of leasing the additional space at Building E, Real Property Services negotiated a further amendment of the County's current lease of Building A.
In connection with negotiation of the lease of a portion of Building E, the landlord has agreed to amend the County's lease of Building A. This Fourth Lease Amendment gives the County the right, on thirty days written notice from the County Manager, to reduce the area of the Building A premises by 7,985 square feet, with a corresponding rent reduction of $14,373 per month (approximately $1.80 per square foot per month).
The portion of Building A that HSA intends to vacate is temporarily occupied by HSA staff displaced by a construction project from the HSA facility at 550 Quarry Road. HSA expects to vacate the 7,985 square foot portion of Building A upon completion of the Quarry Road construction, which is currently projected for April 2004. As a net result, the initial impact of the proposed lease and amendment at the Harbor Park will be an increase of 4,015 square feet (12,000 sq. ft. added in Building E, less the reduction of 7,985 sq. ft. in Building A) at an increased monthly cost of $2,907 ($17,280 - $14,373).
In addition, the structure of the new lease provides the County the flexibility, with the written authorization of the County Manager, to use up to 8,160 square feet of additional space in Building E, either on a long or short-term basis, at the convenience of the County. The initial base rent, and the rental rate per square foot for any additional space taken by the County, will remain fixed for the first five-years of the term. Effective November 1, 2008, there will be a one-time adjustment of the rental rate, which will be proportionate to the increase in the Consumer Price Index. The landlord is responsible for the cost of taxes, insurance, utilities, janitorial and maintenance costs for the premises. The County will pay its proportionate share of increases in such operating costs over those of the base year of the term.
Under the terms of the new lease, the County will have the right, without additional charge, to use the furniture, fixtures and equipment that are currently in place at the premises. The landlord has also agreed to make, at its cost, improvements to the premises that are necessary to make them suitable for the County's use.
The Director of the Human Services Agency concurs in this recommendation.
Cc: w/enc: D. Penny Bennett, Deputy County Counsel
cc:Maureen Borland, Director, HSA
John Joy, HSA
Patty Lockman, HSA
Phil Naylor, HSA
Steve Alms, Real Property