Item 322/2026
Final
City of Garden Grove
INTER-DEPARTMENT MEMORANDUM
To:
Lisa L. Kim From: Ursula Luna-Reynosa
Dept:
City Manager Dept: Economic Development and
Housing
Date: 8/25/2026
Subject: Approval of a Lease Agreement between the City of Garden Grove and Orange County Association for Mental Health for the office space located at 11277 Garden Grove Boulevard. (Action Item)
OBJECTIVE
For City Council to approve the Lease Agreement between the City of Garden Grove and the Orange County Association for Mental Health (“Tenant”) for office space located at 11277 Garden Grove Boulevard (“Property”).
BACKGROUND
Following City Council approval in July 2022, the City acquired the Property, a two-story office building with 31,139 rentable square feet. At the time of acquisition, there was an existing lease agreement between JK Investment Group LLC (“Previous Owner”) and the Tenant for Suite 101A of the Property. Pursuant to the Commercial Purchase Agreement, the Previous Owner transferred the Tenant's lease and security deposit to the City, and the City assumed the rights and responsibilities of the landlord under the existing lease.
The lease was originally executed for a five-year term commencing January 1, 2022, with an initial monthly rent of $11,780.00 and annual rent increases of three (3) percent. The current monthly rent is $13,258.49 with the lease scheduled to expire on December 31, 2026.
DISCUSSION
In June 2026, the Tenant requested an extension of its lease and proposed a July 1 through June 30 lease term to align with its fiscal year. Because this lease term also corresponds with the City's fiscal year, the City agreed to the revised term and established a new July 1, 2026 rental rate that reflected the scheduled 3% rent increase that would have otherwise taken effect on January 1, 2027.
Below are key terms of the lease negotiated between the City and the Tenant:
Item 322/2026
Premise: 6,906 Rentable Square Feet located at Suite 101A, 11277 Garden Grove Boulevard, Garden Grove, CA 92480.
Lease Term: One (1) year, commencing July 1, 2026, with the option to extend for up to two (2) additional one-year terms, for a maximum term of three (3) years. Base Rent: $1.95 per square foot per month.
Annual Rent Adjustment : The monthly base rent will be determined according to the rent schedule in the lease agreement, with fixed annual rental adjustments of three (3) percent commencing July 1, 2027, and continuing until the lease expires.
FINANCIAL IMPACT
The City will receive monthly lease payments of $13,471.98 starting on the effective date, July 1, 2026. Beginning July 1, 2027, rent will increase by three (3) percent annually until the expiration of the contract term.
RECOMMENDATION
It is recommended that the City Council:
Approve the Lease Agreement between the City of Garden Grove and the Orange County Association for Mental Health for office space (Suite 101A) located at 11277 Garden Grove Boulevard with a lease term of one (1) year, commencing July 1, 2026, with the option to extend for up to two (2) additional one-year terms, for a maximum term of three (3) years.; and Authorize the City Manager , or designee, to execute the Lease Agreement, including minor modifications or amendments as appropriate, and any other pertinent documents necessary to effectuate and/or implement the Lease Agreement, on behalf of the City.
By: Eric Hong, Administrative Analyst
ATTACHMENT(S)
1. Lease Agreement - Orange County Association for Mental Health