Fremont City Council Meeting: 07/18/23 07:00 PM
3300 Capitol Avenue Div/Dept: Public Works
Fremont, CA 94538 Category: Property Acquisitions & Dispositions
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 4954) DOC ID: 4954
Updated: 7/12/2023 9:54 AM by Alberto Quintanilla Page 1 LEASE AT FAMILY RESOURCE CENTER - Approve a Lease with the California Department of Rehabilitation for Space at the Family Resource Center, and Find the Action is Exempt from CEQA Review.
Contact Persons:
Name: Ian Champeny Hans Larsen
Title: Real Property Agent Public Works Director
Div/Dept: Public Works Public Works
Phone: 510-494-4759 510-494-4722
E-Mail: [email protected] [email protected]
Executive Summary: The purpose of this report is to facilitate a new lease with the State of California Department of Rehabilitation (DOR) at the Fremont Family Resource Center (FRC) for eight years.
BACKGROUND: The Fremont Family Resource Center (FRC) is an innovative community institution comprised of more than 20 non-profit, City, County and State agencies that provide a variety of integrated services including employment, family economic success services (SparkPoint Fremont), housing, childcare, health education and social support. The City owns two buildings located at 39155 Liberty Street that house the FRC, and leases to, among other tenants, the State Department of Rehabilitation (DOR). The DOR administers the largest vocational rehabilitation program in the county and provides consultation, counseling and vocational rehabilitation to Alameda County residents. The DOR currently has a lease agreement for Suite F-630, which expires on July 31,2023. The leased space totals 5,916 square feet, including 4,771 square feet of exclusive office space and 1,145 square feet of shared common area space.
DISCUSSION/ANALYSIS: The State DOR provides essential vocational rehabilitation services to Alameda County residents and their continued tenancy at the FRC is highly desired. The State is proposing a new lease for eight additional years ending June 30, 2031 .
The current lease terms would remain in effect during the new lease. This includes yearly lease rate adjustments based upon changes in the Consumer Price Index (CPI). After the first four-year period of the lease, provisions would allow either party to terminate the lease upon a 30 days’ written notice.
Staff considers the DOR to be an anchor tenant because it is the FRC’s 3rd largest tenant, leasing approximately 12% of the FRC’s total square footage. There have been minimal upgrades and repairs to the DOR leased space over the past eight years. As such, the City and DOR have agreed to cost-share updates to the space, which includes painting, ADA- compliance updates, flooring, etc. The current estimated expense associated with these updates is approximately $220,000. The City will be capped at contributing $95,420. The DOR will be responsible for the remainder of expenditures associated with the updates.
FISCAL IMPACT: Staff estimates the new lease will provide approximately $176,580 in lease revenue over the first year period, or an average of $14,715 per month. Lease rates and annual CPI increases will take effect each fiscal year similar to previous years. Not Council Staff Report (ID # 4954) Meeting of July 18, 2023 Updated: 7/12/2023 9:54 AM by Alberto Quintanilla Page 2 including CPI increases, lease revenue will be a minimum of $706,320 over the first four years, and $1,412,640 over the full eight-year term. The City will be responsible for a maximum of $95,420 in tenant improvement expenditures. Revenues and expenses associated with this lease are incorporated in the FRC’s 30-year model and are consistent with goal of keeping the FRC financially sustainable.
ENVIRONMENTAL REVIEW: The proposed lease agreement continues the use of an existing facility. The project is exempt from review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15301 as the leasing of an existing facility that involves negligible or no expansion of use beyond that presently existing.
ATTACHMENTS: None.
RECOMMENDATION: Authorize the City Manager or designee to execute a new lease with the State Department of Rehabilitation for 5,916 square feet of office and common area space located at the Fremont Family Resource Center for eight years as described in the staff report.