CONSENT CALENDAR
City of San Bernardino
Request for Council Action
Date: March 6, 2024
To: Honorable Mayor and City Council Members
From: Charles A. Montoya, City Manager;
Joshua Dramitinos, Deputy Director of Economic Development Department: Community, Housing, & Economic Development
Subject: Amendment No. 4 to the Lease Agreement with Vanir Tower Building Inc. (Ward 1)
Recommendation:
It is recommended that the Mayor and City Council of the City of San Bernardino, California, authorize the City Manager to execute Amendment No. 4 to the Lease Agreement with Vanir Tower Building, Inc., for 290 North D Street, San Bernardino, California; increasing the rental space to include Suite 101B, extending the Lease Agreement through June 30, 2026, and authorizing the Director of Finance and Management Services to amend the FY 2023/24 Operating Budget in the amount of $139,736 to support the costs associated with increasing the rental space with Vanir Tower Building, Inc.
Executive Summary
This action will increase the leased office space at the Vanir Tower Building by 4,956 square feet and extend the existing Vanir Tower Building Lease for an additional two- year period.
Background
On November 21, 2016, the Mayor and City Council approved Resolution No. 2016- 240, directing the City Manager to execute a Lease Agreement for office space with Vanir Tower, Inc., for office space located at 290 North D Street, San Bernardino, California, to house City staff. The Agreement was amended on March 6, 2017, via Resolution No. 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.
On July 1, 2020, the Mayor and City Council approved Amendment No. 2 to the Lease Agreement, eliminating space on the 8 th floor of the Vanir Tower Building, and extended the Lease Agreement term through June 30, 2021. The extension was intended to allow staff time to evaluate the City’s office space needs and present a longer-term option to the Mayor and City Council prior to the expiration of the lease term.
On March 3, 2021, after staff determined that the shared office space on the 3rd floor presented operational challenges, the Mayor and the City Council approved Amendment No. 3 to the Lease Agreement, adding additional office space located on the 8th floor and extended the Lease Agreement through June 30, 2024.
Discussion
Staff has continued to monitor and evaluate the City’s office spacing needs. Staff has determined that the current office space provided under Amendment No. 3 to the Lease Agreement with Vanir Tower Building, Inc. is not sufficient to accommodate the City‘s current staffing levels. Additionally, Amendment No. 3 to the Lease Agreement with Vanir Tower Building, Inc. Is set to expire on June 30, 2024.
Lease Amendment No. 4 will increase the current monthly leased office space with Vanir Tower Building, Inc. from 22,100 square feet to 27,056 square feet and extend the term of the Lease Agreement through June 30, 2026. Amendment No.4 will also include one two-year extension option, extending the lease through June 30, 2028, if needed. Amendment No. 4 is proposed to commence on April 1, 2024.
Effective April 1, 2024, the monthly rent will be increased from Forty-one Thousand, Five Hundred and Forty-Eight dollars ($41,548) to Fifty-Four Thousand, One Hundred and Twelve Dollars ($54,112.00) to reflect the increase in leased space. The monthly rent from July 1, 2024, through June 30, 2025, shall be at the per square foot cost of $2.10 monthly and the City shall pay monthly rent in the amount of Fifty-Six Thousand, Eight Hundred and Seventeen Dollars and Sixty Cents ($56,817.60). Effective July 1, 2025, through June 30, 2026, monthly rent shall be at the per square foot cost of $2.21 monthly and the City shall pay monthly rent in the amount of Fifty-Nine thousand, Seven Hundred and Ninety-Three Dollars and Seventy-Six Cents ($59,793.76).
The costs associated with Amendment No. 4 are as follows:
•FY 2023/24: $29,736 (Suite 101b) + $110,000 (tenant improvement) $139,736 ($29,736 = 4,956 sq ft. X $2.00 per sq ft. X 3 months)
•FY 2024/25 Lease: $681,811.20 (27,056 sq ft. X $2.10 cost per sq. ft.) •FY 2025/26 Lease: $717,525.12 (27,056 sq ft. X $2.21 cost per sq. ft.) The tenant improvement costs are estimated at $110,000 which will include technology infrastructure upgrades, cabling, phones, furniture, carpet, paint, window tinting, and cleaning.
Total Costs: $29,736 + $681,811.20 + $717,525.12 + $110,000 = $1,539,073 2021-2025 Strategic Targets and Goals
Approval of the proposed Amendment No. 4 aligns with Key Target No. 1: Improved Operational & Financial Capacity: and Key Target No. 1f: Create an Asset Management Plan. Extending the lease through June 30, 2026, provides stability related to the Lease Agreement with Vanir Tower Building, Inc. for budgeting purposes through FY 2026.
Fiscal Impact
The General Fund Impact associated with this item for the remainder of FY 2023/24 is $139,736. The FY 2024/25 and FY 2025/26 budgets will be updated to match the new monthly rental rates upon approval. The total fiscal impact for future years has been identified within the discussion section of this report.
Conclusion
It is recommended that the Mayor and City Council of the City of San Bernardino, California, authorize the City Manager to execute Amendment No. 4 to the Lease Agreement with Vanir Tower Building, Inc., for 290 North D Street, San Bernardino, California; increasing the rental space to include Suite 101B, extending the Lease Agreement through June 30, 2026, and authorizing the Director of Finance and Management Services to amend the FY 2023/24 Operating Budget in the amount of $139,736 to support the costs associated with increasing the rental space with Vanir Tower Building, Inc.
Attachments
Attachment 1 – Amendment No. 4 with Vanir Tower Building, Inc.
Attachment 2 – Resolution No. 2021-33 (Amendment No. 3) Ward:
First Ward
Synopsis of Previous Council Actions:
November 21, 2016 - The Mayor and City Council approved Resolution No. 2016- 240, authorizing the City Manager to execute a Lease Agreement with Vanir Tower Building, Inc.
March 6, 2017 - The Mayor and City Council approved Resolution No. 2017-039, authorizing the City Manager to execute Amendment No. 1 to the Lease Agreement with Vanir Tower Building, Inc.
April 3, 2019 - The Mayor and City Council authorized the City Manager to execute two, six-month extensions to the Lease Agreement with Vanir Tower Building, Inc., 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 Lease Agreement with Vanir Tower Building, Inc.
June 17, 2020 - The Mayor and City Council approved Resolution No. 2020-105, directing staff to extend the Lease Agreement with Vanir Tower Building, and reduce the rentable space.
March 3, 2021 - The Mayor and City Council approved Resolution No. 2021-33 authorizing the City Manager to execute Amendment No. 3 to the Lease Agreement with Vanir Tower Building, Inc. extending the Lease through June 30, 2024.