v . 0 0 5 P a g e | 1
April 1, 2025
ITEM TITLE
Lease Agreement: Second Amendment to Lease Agreement with SBCS for City -Owned Property at 430 F Street
Report Number: 25-0066
Location: 430 F Street
Department: City Manager
G.C. § 84308 Regulations Apply: Yes
Environmental Notice : The Project qualifies for a Categorical Exemption pursuant to California Environmental Quality Act State Guidelines Section 15301 Class 1 (Existing Facilities).
Recommended Action
Adopt a resolution approving a second amendment to the lease agreement between the City of Chula Vista and SBCS for City-owned property at 430 F Street.
SUMMARY
In June 2012, the City entered into a five -year lease with SBCS Corporation (SBCS) , formerly South Bay Community Services, for a City-owned real property consisting of an office building and parking lot located at 430 F Street (Ken Lee Building). In 2017, the City Council approved a first amendment to the lease agreement extending the original term through June 2023 and providing for two additional 15-year options to extend giving the lease the ability to run until 2053.
This item is a second amendment to the lease agreement with SBCS amending the term of the agreement. If approved, the lease agreement would terminate 45 days after SBCS receives their final Certificate of Occupancy for their building currently under construction at 318 Fourth Avenue or June 30, 2026, whichever is earlier.
ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project qualifies for a Categorical Exemption pursuant to State CEQA Guidelines Section 15301 Class 1 (Existing Facilities), because the proposed project P a g e | 2
would not result in a significant effect on the environment, create a cumulative impact, damage a scenic highway, or cause a substantial adverse change in the significance of a historical resource. Thus, no further environmental review is required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
DISCUSSION
In 2012, after having experienced a significant reduction in the need for office space required to conduct day- to-day operations, the City identified the K en Lee Building, located at 430 F Street, as a site not needed for City operations in the near future. In order to offset the maintenance and utilities costs while still keeping open the option of re-occupying the space at a later date, City Council authorized the retention of a real estate broker to market the site. The City Council approved a Standard Industrial/Commercial Single-Tenant Lease (Lease Agreement) effective July 1, 2012 via Resolution 2012-108 for SBCS, formerly South Bay Community Services, to occupy the Ken Lee Building for an initial lease term of five -years, with two additional, three - year extensions. The lease contemplated utilization of 5,400 square feet at $4,860 per month. The Lease Agreement also included an annual Consumer Price Index (CPI) increase, capped at two percent per year.
SBCS exercised its option for an additional five years in June 2017 and, at the time, expressed a desire to design and construct a modular building facility upon the premises. Due to the large capital expe nditure involved, SBCS requested the term of their lease be extended beyond the Lease Agreement. In September 2019, the City Council approved an amendment to the Lease Agreement (Attachment 2) that amended the initial term of the lease to be 11 years, 2012 -2023, and allowed for two additional 15 -year extensions, through 2053.
Future City Needs
More than 10 years after the City entered into this Lease Agreement, the City’s population has grown significantly, and the complexity of resident needs has as well. Similarly, the City’s workforce has increased, which has led City staff to adapt their current office spaces to accommodate the growing needs. The City is now in need of moving operations into leased spaces like the Ken Lee Building, owned by the City.
For this reason, City staff recommends amending the Lease Agreement with SBCS to modify their lease term.
The Lease Agreement would terminate 45 days upon SBCS receiving their final Certificate of Occupancy (COO) for their building under construction at 318 Fourth Avenue or June 30, 2026, whichever is earlier .
Additionally, and in accordance with the terms o f the Lease Agreement, this amendment also clarifies rent due to the City with implementation of the appropriate CPI increases owed to the City over the term of the lease.
Additionally, the proposed amendment also permits the City to utilize the parking facilities for public and/or City events outside of normal business hours and weekends as needed.
Pending SBCS Agreement
P a g e | 3
Staff is considering a new agreement with SBCS for u se of the southern portion of the property at 430 F Street. SBCS currently operates several trailers, which were donated to the City d uring the COVID-19 pandemic, to temporarily house program clients.
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council members and has found no property holdings within 1,000 feet of the boundaries of the property which is the subject of this action. Consequently, this item does not present a disqualifying real p roperty-related financial conflict of interest under California Code of Regulations Title 2, section 18702.2(a)(7) or (8), for purposes of the Political Reform Act (Cal. Gov’t Code §87100, et seq.).
Staff is not independently aware, and has not been infor med by any City Council member, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
Approval of this item would increase lease rent to $5,990, generating an additional $890 a month, in lease rent for the General Fund beginning April 1, 2025.
ONGOING FISCAL IMPACT
Lease revenue will be incorporated into the City budget as part of the annual budget process.
ATTACHMENTS
1. SBCS Lease Agreement (Original)
2. First Amendment to SBCS Lease Agreement
3. Second Amendment to SBCS Lease Agreement
Staff Contact: Adrianna Relph, Special Projects & Legislative Manager, City Manager’s Office