City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: August 18, 2025
Report #:2507-4980
TITLE
Approval to Extend the Lease Between 285 Hamilton LLC, and the City of Palo Alto for the Premises Located at 285 Hamilton Avenue (Development Center) for 36 months, at a Starting Base Rent of $49,420.45 per Month and Increasing 3 Percent Annually; CEQA Status – Exempt Under CEQA Guidelines Section 15061(b)(3)
RECOMMENDATION
Staff recommends that Council authorize the City Manager or their designee to countersign the letter contained in Attachment A, from 285 Hamilton LLC, to extend the City’s lease for the office space located at 285 Hamilton Avenue, Suite 100. The lease will extend for an additional 36 months commencing on February 1, 2026, through January 31, 2029. The initial base rent will increase by 3% from the current amount, to $49,420.45 per month, and will continue to increase 3% annually.
BACKGROUND
Planning and Development Services operate within the three locations listed below. They will vacate 526 Bryant Street at the end of the current term on January 31, 2026, but desire to continue operations from the other leased location at 285 Hamilton Avenue while maintaining the City Hall 5th floor location.
Table 1: Planning and Development Services Locations
Address Expiration Date Square Footage
285 Hamilton Avenue 1/31/2026 6,361
526 Bryant Street 1/31/2026 3,076
City Hall – 5th Floor N/A 4,388
Total 13,825
5th Floor square footage is only 75% of the total since the floor is shared with Transportation. It also excludes elevator and restroom area.
The current agreement for 285 Hamilton Avenue was approved by the Council on June 21, 20211 and included two options to extend for additional one-year periods.
While the long-term plan is to relocate staff from 285 Hamilton Avenue into the soon-to-be- vacated police wing at City Hall, that space will require repairs and space planning is currently under way. An extension to the existing lease will provide sufficient time for completion of this work .
ANALYSIS
The recommended amendment to the current lease agreement will extend the lease for an additional 36 months, commencing on February 1, 2026 through January 31, 2029. The initial base rent will increase by 3% from the current amount to $49,420.45 per month and will continue to increase 3% annually, consistent with the annual increase in the current lease agreement. All other provisions of the lease remain unaltered and in full force and effect. The terms are similar to the options in the current agreement but extends the term to three total years instead of two. The City will continue to be responsible for a portion of the operating expenses (such as taxes, insurance, maintenance and repair, janitorial, and utilities), currently estimated at $9,098 per month. The extended term is expected to provide sufficient time for evaluating options for the future space of the development center and the Planning and Development Services Department. The Development Center serves as a one-stop shop, offering integrated City services to support the community in constructing safe, healthy, and sustainable buildings in compliance with state and local codes and regulations.
FISCAL/RESOURCE IMPACT
The current base rent to lease 285 Hamilton Avenue, Suite 100, is $47,981.02 per month or $7.54 per square foot. Upon commencement of the extended term, the monthly rent will increase 3% to $49,420.45 or $7.77 per square foot and continue to increase at the same rate annually. Current operating expenses are estimated at $9,098 per month. The current rental costs are included in the FY 2026 Operating Budget. No additional funding is required at this time and the annual appropriation will be included in the budget development process for the remaining term.
STAKEHOLDER ENGAGEMENT
The Real Estate Division of the Administrative Services Department met with Planning and Development Services to confirm the desire to remain at 285 Hamilton Avenue. Real Estate Division staff engaged with the landlord to extend the lease term under terms similar to the current agreement.
1 City Council, June 21, 2021; Agenda Item # 15;
https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2021/id-12334.pdf
ENVIRONMENTAL REVIEW
Approval of to extend the lease is exempt from review under the California Environmental Quality Act (CEQA) because it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment (CEQA Guidelines Section 15061(b)(3)).
ATTACHMENTS
Attachment A: Letter From 285 Hamilton LLC to Extend Lease APPROVED BY:
Lauren Lai, Administrative Services Director