HomeMy WebLinkAboutItem No. 04 - Lease Extension Agreement Options - Vanir Tower Building, Inc.
Staff Report
City of San Bernardino
Request for Council Action
Date: June 17, 2020
To: Honorable Mayor and City Council Members
From: Teri Ledoux, City Manager
By:Kris Jensen, Director of Public Works
Subject: Lease Extension Agreement Options - Vanir Tower Building,
Inc.
Recommendation
It is recommended that the Mayor and City Council of the City of San Bernardino,
California, consider Vanir Tower lease options and provide direction to staff.
Background
On November 21, 2016, the Mayor and City Council approved Resolution 2016-240
directing the City Manager to execute a Lease Agreement for office space at Vanir
Tower, Inc. (290 North D Street, San Bernardino, California - APN 0134-311-42-0000)
to house City staff. The agreement was amended on March 6, 2017 by Resolution
2017-039, resetting the lease period to commence on April 15, 2017 for a two year
period with the option of two six-month extension periods. On April 3, 2019, the Mayor
and City Council authorized the City Manager to exercise both of the six-month
extension options, extending the Lease Agreement term through April 15, 2020. The
original Lease Agreement and Amendment No. 1 to the Lease Agreement are included
as attachments to this report.
ement, including all term extensions, expired on April 15,
2020. On May 20, 2020, staff proposed that the Mayor and City Council consider a
lease amendment to extend the term of the Lease Agreement through June 30, 2021.
Following Mayor and City Council discussion of the item, staff was directed to explore
options for reducing the rentable office space square footage, reducing lease term
periods, and to continue to negotiate per square foot pricing.
Staff has since met with Vanir Tower Building, Inc. Multiple options for moving forward
with a lease extension are provided below for Mayor and City Council review and
discussion.
Discussion
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The office space leased by the City at the Vanir Tower on the 3 and 8 Floors are
currently occupied by the Offices of the Mayor, City Council, City Attorney, City
Manager, City Treasurer, Finance and Human Resource Departments. The ground level
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SB Direct Call Center staff. The current square footage occupied of 24,538 breaks down
as follows:
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1 Floor 2,668 Sq. Ft.
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3 Floor 14,004 Sq. Ft.
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8 Floor 7,865 Sq. Ft.
On May 20, 2020, staff originally proposed a lease agreement extension that would
extend the term of the lease through June 30, 2021, incorporate minor adjustments to
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price per square foot price from the current $1.91/Sq. Ft. to $1.88/Sq. Ft. All other
terms of the original agreement were to remain in effect per the proposed lease
extension agreement.
Following discussion of the proposed lease extension, the Mayor and City Council gave
direction to staff to return to negotiations with the Vanir Tower representative to discuss
alternate terms and office area reductions. Based on that direction staff has negotiated
the following options with Vanir Tower Building, Inc:
1. One-year Lease retaining all current office areas (previously proposed)
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2. One-year Lease removing all office space from the 8 floor
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3. Six-month lease removing all office space from the 8 floor
4. Six-month lease removing Suite 803 (Council Offices)
5. Six-month lease removing Suite 808 (Mayor's Office)
A cost analysis for each of these options is included as Attachment 1 to this report. Staff
will also provide a presentation on these options.
Options above that reduce overall square footage usage result in an increase in price
per square foot, however this pricing remains at the lower end of lease rates discussed
with Vanir Tower Building, Inc. It is important to note, that in the event a six-month term
is chosen, budgets will still be required for leasing office space in this or another facility
through the end of FY 2020/21.
Pending direction on this item, the City will have the opportunity to continue occupying
the existing office space until through the term of the lease extension. In the event
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direction is given to reduce all or partial office space on the 8 floor, staff will require a
minimum of 30 days to relocate employees and vacate the space and may incur
additional costs associated with relocating City personnel to other areas.
As the City continues to work towards reestablishing a permanent City Hall location,
staff will continue to evaluate the City's office space needs and present the Mayor and
City Council with a longer term option prior to the expiration of any extended lease term.
Staff is scheduling a review of the City Hall Building Facility Assessment to be brought
before the Mayor and City Council in July 2020.
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2020-2025 Key Strategic Targets and Goals
The provision of multiple lease options for consideration supports Key Target No. 1.c:
Create a framework for spending decisions by allowing the Mayor and City Council to
evaluate the fiscal and operational impacts of each option prior to providing extending
the lease through June 30, 2021, provides cost stability related to the lease for
budgeting purposes through FY 2020/21.
Fiscal Impact
No additional fiscal impact to the City in FY 2019/20 as the City is currently in a month
to month hold over lease at the current rate of $1.91 per sq. ft. per month. Budget
impacts for FY2020/21 will be determined and planned for pending staff direction from
Mayor and City Council on this item.
Conclusion
It is recommended that the Mayor and City Council of the City of San Bernardino
consider Vanir Tower lease options and provide direction to staff.
Attachments
Attachment 1 Vanir Tower Lease Option Cost Analysis
Ward: 1
Synopsis of Previous Council Actions:
November 21, 2016 Resolution 2016-240 of the Mayor and Common Council of the City
of San Bernardino was adopted, authorizing the City Manager to
execute a Lease Agreement between the City of San Bernardino
and Vanir Tower Building Incorporated for the Lease of Office
Space (#4737).
March 6, 2017 Resolution No. 2017-039 of the Mayor and City Council of the City
of San Bernardino was adopted, directing the City Manager to
execute the Amendment Number One to the Lease with Vanir
Tower Inc.
April 3, 2019 The Mayor and City Council authorized the City Manager to
execute two, six month lease extensions to the lease agreement
between Vanir Tower Building, Inc., and the City of San Bernardino
extending the Lease agreement through April 15, 2020.
May 20, 2020 The Mayor and City Council directed staff to explore additional
lease options for extending the Vanir Tower lease.
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