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Home My WebLink About10- Development Department D EVE L 0 P ME NT D E P A R T ME NT OF THE CITY OF SAN BERNARDINO REQUEST FOR COMMISSION/COUNCIL ACTION From: KENNETH J. HENDERSON Subject: LEASING AND DEVELOPMENT Executive Director OF 201 NORTH "E" STREET Date: March 31, 1993 ------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s)- On March 25, 1993, the Redevelopment Committee forwarded and recommded to the Community Development Commission approval of the motions A, B and C below. ------------------------------------------------------------------------------- Recommended Motion(s): (Community Development Commission) That the Community Development Commission approve the following: MOTION A: Authorize the Executive Director to develop and execute a lease agreement between the Redevelopment Agency and California State Assemblyman Joseph Baca for 2,183 square feet of space located at 201 North "E" Street at a monthly rental rate of $1,528; and (Continued on next page. . .) - "L4% Administrator KENNETH J. hEN#ERSON Executive Director ------------------------------------------------------------------------------- Contact Person(s) : Kenneth Henderson/James Sharp Phone: 5081 Project Area(s): Central City Project Ward(s) : First Supporting Data Attached: Staff Report FUNDING REQUIREMENTS: Amount: $_$298,400 Source: Bond Prcds Budget Authority: Requested ------------------------------------------------------------------------------- Commission/Council Notes: ------------------------------------------------------------------------------- KJH:JWS:dle:6115R COMMISSION MEETING AGENDA Meeting Date: 04/05/1993 Agenda Item Number: DEVELOPMENT DEPARTMENT STAFF REPORT RE: LEASING AND DEVELOPMENT OF 201 NORTH "E" STREET March 31, 1993 Page Number —2— Recommended Motion(s): (Community Development Commission) MOTION B: Authorize the Executive Director to develop and execute a lease agreement between the Redevelopment Agency and the San Bernardino Convention and Visitors Bureau for 2,250 square feet of space located at 201 North "E" Street at a monthly rental rate of $2,250; and MOTION C: Approve the allocation of $298,400 for the development and construction of office improvements in common areas and offices at 201 North "E" Street within the former "Thrifty" space and authorize the Executive Director to enter into and execute all attendant documents. ------------------------------------------------------------------------------- KJH:JWS:dle:6115R COMMISSION MEETING AGENDA Meeting Date: 04/05/1993 Agenda Item Number: DEVELOPMENT DEPARTMENT STAFF REPORT LEASING AND DEVELOPMENT FOR TENANTS AT 201 NORTH "E" STREET Staff, in its continuing effort to lease vacant Agency-owned properties, and/or design adaptive and marketable reuses, has focused its attention on the subject property. Part of the Agency property at 201 North "E" Street is the vacant former "Thrifty" drug store located at the northeast corner of Second and "E" Streets. The property has been vacant for approximately ten years and a portion of it was redeveloped into a restaurant which failed about six (6) years ago and has been vacant ever since. Marketing efforts initially focused on the constructive reuse of the existing improvements consisting of a large retail space and the 8,400 square foot restaurant. In the past one and one-half years, staff has marketed the property to the commercial brokerage community in the Inland Empire. Approximately six months ago, in the fall of 1992, it became apparent that the marketing of the existing improvements would not be a viable pursuit or the highest and best use for this particular property and location. In October, 1992, staff presented to the Community Development Commission an adaptive reuse plan which consisted of the demolition of all improvements within the former restaurant location and the development of office space for specific tenants. Since that time, the demand for the proposed office space has grown from one to four tenants, three of which have committed to specific terms and conditions. The fourth tenant (San Bernardino Area Chamber of Commerce - SBACC) has committed but is temporarily withholding its consummation of lease negotiations. The following is a summary of the proposed leases to date: I) Tenant Name: California State Assemblyman Joseph Baca Occupancy Use: Administrative Office Space Leasable Square Feet Required: 2,183 S.F. Term: Two (2) years, with one (1) two-year option. Rent: $1,528/month. Tenant Allowances: $15/SF towards tenant improvements above landlord's developed base building. ------------------------------------------------------------------------------- KJH:JWS:dle:6115R COMMISSION MEETING AGENDA Meeting Date: 04/05/1993 Agenda Item Number: _ DEVELOPMENT DEPARTMENT STAFF REPORT RE: LEASING AND DEVELOPMENT OF 201 NORTH "E" STREET March 31, 1993 Page Number -2- II) Tenant Name: San Bernardino Convention and Visitors Bureau (SBCVB) Occupancy Use: Administrative Office Space Leasable Square Footage Required: 2,250 S.F. Term: Five (5) years with two (2) two-year options. Rent: $2,250/month. Tenant Allowances: $15/SF towards tenant improvements above landlord's developed base building. III) Tenant Name: Main Street, Inc. Occupancy Use: Administrative Office Space Leasable Square Footage Required: 1,520 S.F. Because Main Street, Inc. is a division of the Agency, no lease and/or occupancy agreement will be required for its tenancy. Main Street, Inc. , however, will occupy 1,150 square feet of developed office space which the Agency intends to build out in turn-key fashion. DEVELOPMENT AND CONSTRUCTION OF COMMON AREAS AND OFFICE IMPROVEMENTS In the last five months, staff has designed the necessary interior improvements to accommodate the four above referenced prospective tenants. The attached Exhibit "A" is the floorplan illustrating approximately 121,600 square feet of improvements (the former "Fuddrucker's restaurant location was approximately 8,400 square feet). This design utilizes approximately two-thirds (2/3) of the entire vacant "Thrifty" building. On January 11, 1993, the Community Development Commission authorized staff to proceed with the demolition of all interior improvements, known as Phase I, within the "Fuddrucker's" restaurant site. The demolition work for the proposed tenants and additional demolition work required by the larger design was completed March 3, 1993. In an effort to determine the approximate costs to develop all the common area and specific office improvements, staff has distributed preliminary construction documents to various subcontractors and trades. ------------------------------------------------------------------------------- KJH:JWS:dle:6115R COMMISSION MEETING AGENDA Meeting Date: 04/05/19933 Agenda Item Number: ��/ DEVELOPMENT DEPARTMENT STAFF REPORT RE: LEASING AND DEVELOPMENT OF 201 NORTH "E" STREET March 31, 1993 Page Number —3- A preliminary budget was developed based upon the cost estimates of all improvements for common areas, restrooms, exterior facade improvement, landscaping and the construction of interior tenant improvements for all four spaces. Since that preliminary estimate was completed, it has been determined that, given the fact that the Chamber of Commerce is reluctant to expedite its lease agreement, it would be prudent to proceed with the modifications of the development of all planned improvements minus the interior improvements in the specific SBACC suite. Therefore, the construction estimate was adjusted as follows: Revised Construction Cost Estimates (March, 1993): Adjusted Gross Cost estimate for completion $256,000 of all improvements Contingency (8%) $ 20,400 Contractor's overhead and profit (8%) $ 22,000 TOTAL $298,400 (Estimated total cost for all interior common areas, tenant improvements, and exterior improvements.) TENANT IMPROVEMENT ALLOWANCE Pursuant to the lease negotiations of all three proposed tenants, each was allowed a $15 per square foot tenant improvement allowance to modify the empty shell of the office building after landlord base building improvements. The total of occupied leasable space between Assemblyman Baca, SBCVB and Main Street, Inc, is as follows: 5,930 SF x $15/Foot $ 88,950 The previously referenced total cost to develop the space ($298,400) includes the $88,950 for allocated tenant improvements. The net of this calculation is as follows: Estimated Gross $298,400 to complete all improvements Allocated Tenant Improvement Allowance $ 88,950 TOTAL IMPROVEMENTS $209,450 Base Building Exterior and Common Areas (Approximately $18/SF) ------------------------------------------------------------------------------- KJH:JWS:dle:6115R COMMISSION MEETING AGENDA Meeting Date: 04/05/1993 Agenda Item Number: �� DEVELOPMENT DEPARTMENT STAFF REPORT RE: LEASING AND DEVELOPMENT OF 201 NORTH "E" STREET March 31, 1993 Page Number —4— It is staff's opinion that the deal points relative to the leasing for this adaptive reuse of historically failed commercial space is a positive move in creating viable commercial real estate for the Agency's portfolio. The following are some of the highlights of the relative benefits. 1. The proposed tenants' relocation into one of the highest pedestrian and vehicle traffic intersections in the downtown area. Relocation to this site provides the proposed tenants with a higher accessibility and visibility than their current locations. 2. All of the proposed tenants would enjoy and benefit from the "extremely high profile exposure" by utilizing the proposed exterior signage designed to visually capture the traffic in all directions of the Second and "E" Street intersection. 3. The relocation of all the proposed governmentally oriented tenants in one location would promote a greater symbiotic interaction and physical proximity between each other and with City Hall and the Agency. 4. The adaptive reuse of the long term vacant Fuddruckers Restaurant and the Thrifty building would prove to be a new and energetic change for a primary corner and intersection which, historically, has been seen as a void in the downtown area. 5. Full lease term occupancy by the two rent paying tenants, without exercising extension options, will enable the Agency to recoup approximately 67% of its advance costs for basic and tenant improvments. Further, it will make available more marketable space in the basic "shell" previously set aside for the Chamber. Based upon the foregoing, staff recommends adoption of form motions "A", "B" and "C". V& t, KENNETH J. HEND RSON, Executive Director Development Department ------------------------------------------------------------------------------- KJH:JWS:dle:6115R COMMISSION MEETING AGENDA Meeting Date: 04/05/1993 Agenda Item Number: M