AGREEMENT WITH PRODESSE PROPERTY GROUP
FOR PROFESSIONAL CONSULTANT SERVICES
FOR
Commercial Property Management
This Agreement, made and entered into this day of ____________________, by and between the CITY OF SAN MATEO, a municipal corporation existing under the laws of the State of California (“CITY”), and Prodesse Property Group, a California Corporation, (“CONSULTANT”), whose address is 655 Mariners Island Boulevard, Suite 301, San Mateo, CA 94404.
RECITALS:
A. CITY desires certain Commercial Property Management services hereinafter described.
B. CITY desires to engage CONSULTANT to provide these Commercial Property Management services by reason of its qualifications and experience for performing such services and CONSULTANT has offered to provide the required services on the terms and in the manner set forth herein.
NOW, THEREFORE, IT IS AGREED as follows:
SECTION 1 - SCOPE OF SERVICES
The scope of services to be performed by CONSULTANT under this Agreement is as described in Exhibit A to this Agreement, attached and incorporated by reference.
SECTION 2 - DUTIES OF CONSULTANT
CONSULTANT shall be responsible for the professional quality, technical accuracy and coordination of all work furnished by CONSULTANT under this Agreement. CONSULTANT shall, without additional compensation, correct or revise any errors or deficiencies in its work.
CONSULTANT represents that it is qualified to furnish the services described under this Agreement.
CONSULTANT shall be responsible for employing or engaging all persons necessary to perform the services of CONSULTANT.
CONSULTANT agrees to comply with the City’s minimum wage ordinance as codified in Municipal Code Chapter 5.92, which differs from the state minimum wage and includes a Consumer Price Index escalator.
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CITY shall provide pertinent information regarding its requirements for the project.
CITY shall examine documents submitted by CONSULTANT and shall render decisions pertaining thereto promptly, to avoid unreasonable delay in the progress of CONSULTANT's work.
SECTION 4 - TERM
The services to be performed under this Agreement shall commence on March 1, 2026 and be completed on February 28, 2029. The CITY reserves the option to extend CONSULTANT’S services for an additional two years after the initial period is completed.
SECTION 5 - PAYMENT
Payment shall be made by CITY only for services rendered and upon submission of a payment request upon completion and CITY approval of the work performed. In consideration for the full performance of the services set forth in Exhibit A, CITY agrees to pay CONSULTANT a fee in an amount pursuant to rates stated in Exhibit B to this Agreement, attached and incorporated by reference. The total compensation paid to CONSULTANT under this Agreement will not exceed $125,000 over the term of the Agreement without prior written amendment approved by the CITY.
SECTION 6 - TERMINATION
Without limitation to such rights or remedies as CITY or CONTRACTOR shall otherwise have by law, CITY shall have the right to terminate this Agreement or suspend work on the Project for any reason, upon thirty (30) days' written notice to the other party. CONSULTANT agrees to cease all work under this Agreement upon receipt of said written notice.
Upon termination and upon CITY's payment of the amount required to be paid, documents become the property of CITY, and CONSULTANT shall transfer them to CITY upon request without additional compensation.
SECTION 7 - OWNERSHIP OF DOCUMENTS, AUDIT AND TRUST RECORDS All documents prepared by CONSULTANT in the performance of this Agreement, although instruments of professional service, are and shall be the property of CITY, whether the project for which they are made is executed or not.
CITY shall have the right to audit CONSULTANT’s books and records as they pertain to the performance of CONSULTANT’s duties during normal business hours. In the event CITY elects to perform such audit, payment for any such audit shall be the responsibility of CITY.
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5 All documents and records prepared, maintained and stored by CONSULTANT on behalf of CITY in the performance of CONSULTANT’s duties hereunder, such as receipts, cancelled checks, and other records shall be stored in electronic digital format. CONSULTANT’s obligation to store such electronic digital records shall end upon termination of this Agreement.
SECTION 8 - CONFIDENTIALITY
All reports and documents prepared by CONSULTANT in connection with the performance of this Agreement are confidential until released by CITY to the public. CONSULTANT shall not make any such documents or information available to any individual or organization not employed by CONSULTANT or CITY without the written consent of CITY before any such release.
SECTION 9 - INTEREST OF CONSULTANT
CONSULTANT covenants that it presently has no interest, and shall not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of the services under this Agreement.
SECTION 10 - CONSULTANT'S STATUS
It is expressly agreed that in the performance of the professional services required under this Agreement, CONSULTANT shall at all times be considered an independent contractor as defined in Labor Code Section 3353, under control of the CITY as to the result of the work but not the means by which the result is accomplished. Nothing herein shall be construed to make CONSULTANT an agent or employee of CITY while providing services under this Agreement.
SECTION 11 - INDEMNITY
CONSULTANT agrees to hold harmless and indemnify CITY, its elected and appointed officials, employees, and agents from and against any and all claims, loss, liability, damage, and expense arising out of CONSULTANT’s performance of this Agreement, except those claims arising out of CITY’s sole negligence or willful misconduct. CONSULTANT agrees to defend City, its elected and appointed officials, employees, and agents against any such claims.
CITY agrees to hold harmless and indemnify CONSULTANT from and against any claims, loss, liability, damage, and expense arising out of the condition of the property being managed or acts of God(“Covered Claims”) ; except to the extent any such claims result from a breach of CONSULTANT’S duties hereunder or negligence or willful misconduct of CONSULTANT or its vendors, agents or employees, in which case CONSULTANT shall indemnify, hold harmless, and defend CITY. CITY agrees to defend CONSULTANT against any Covered Claims.
The provisions of the indemnification provision in Section 11 shall survive any cancellation, termination or expiration of this Agreement and shall remain in full force and effect until the
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SECTION 12 - INSURANCE
CONSULTANT shall procure and maintain for the duration of the contract and three years thereafter (five years for building or major improvements) the insurance specified in Exhibit C to this Agreement.
With regard to Covered Claims described above in Section 11, the CITY’s insurance will be primary for CONTRACTOR and CONTRACTOR will be listed as an additional insured.
SECTION 13 - NON-ASSIGNABILITY
Both parties hereto recognize that this Agreement is for the personal services of CONSULTANT and cannot be transferred, assigned, or subcontracted by CONSULTANT without the prior written consent of CITY.
SECTION 14 - RELIANCE UPON PROFESSIONAL SKILL OF CONSULTANT It is mutually understood and agreed by and between the parties hereto that CONSULTANT is skilled in the professional calling necessary to perform the work agreed to be done under this Agreement and that CITY relies upon the skill of CONSULTANT to do and perform the work in the most skillful manner, and CONSULTANT agrees to thus perform the work. The acceptance of CONSULTANT's work by CITY does not operate as a release of CONSULTANT from said obligation.
SECTION 15 - WAIVERS
The waiver by either party of any breach or violation of any term, covenant, or condition of this Agreement or of any provisions of any ordinance or law shall not be deemed to be a waiver of such term, covenant, condition, ordinance or law or of any subsequent breach or violation of the same or of any other term, condition, ordinance, or law. The subsequent acceptance by either party of any fee or other money which may become due hereunder shall not be deemed to be a waiver of any preceding breach or violation by the other party of any term, covenant, or condition of this Agreement or of any applicable law or ordinance.
SECTION 16 - SEVERABILITY
If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect.
SECTION 17 - COSTS AND ATTORNEY FEES
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SECTION 18 - NON-DISCRIMINATION
CONSULTANT warrants that it is an Equal Opportunity Employer and shall comply with applicable regulations governing equal employment opportunity. Neither CONSULTANT nor any of its subcontractors shall discriminate in the employment of any person because of race, color, national origin, ancestry, physical handicap, medical condition, marital status, sex, or age, unless based upon a bona fide occupational qualification pursuant to the California Fair Employment and Housing Act.
SECTION 19 - MEDIATION
Should any dispute arise out of this Agreement, any party may request that it be submitted to mediation. The parties shall meet in mediation within 30 days of a request. The mediator shall be agreed to by the mediating parties; in the absence of an agreement, the parties shall each submit one name from mediators listed by either the American Arbitration Association, the State Mediation and Conciliation Service, or other agreed-upon service. The mediator shall be selected by a blind draw.
The cost of mediation shall be borne equally by the parties. Neither party shall be deemed the prevailing party. No party shall be permitted to file a legal action without first meeting in mediation and making a good faith attempt to reach a mediated settlement. The mediation process, once commenced by a meeting with the mediator, shall last until agreement is reached by the parties but not more than 60 days, unless the maximum time is extended by the parties.
SECTION 20 - LITIGATION
CONSULTANT shall testify at CITY'S request if litigation is brought against CITY in connection with CONSULTANT's services under this Agreement. Unless the action is brought by CONSULTANT, or is based upon CONSULTANT's wrongdoing, CITY shall compensate CONSULTANT for preparation for testimony, testimony, and travel at CONSULTANT's standard hourly rates at the time of actual testimony.
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All notices hereunder shall be given in writing and mailed, postage prepaid, addressed as follows:
To CITY: Jennifer Chen
City of San Mateo
330 W. 20th Avenue
San Mateo, CA 94403
To CONSULTANT: Prodesse Property Group
Attn: Michael Pierce
655 Mariners Island Boulevard, Suite 301
San Mateo, CA 94404
SECTION 22 -AGREEMENT CONTAINS ALL UNDERSTANDINGS; AMENDMENT This document represents the entire and integrated agreement between CITY and CONSULTANT and supersedes all prior negotiations, representations, and agreements, either written or oral.
This document may be amended only by written instrument, signed by both CITY and CONSULTANT.
SECTION 23 - CONFLICTS
In the event of any conflict between the provisions of this Agreement and any other referenced exhibit or document attached to this Agreement, the language and terms of this Agreement shall control.
SECTION 24 - AUTHORITY TO ENTER INTO AGREEMENT
CONSULTANT has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement. Each party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and to bind each respective party.
SECTION 25 - GOVERNING LAW AND VENUE
This Agreement shall be governed by the laws of the State of California and, in the event of litigation, venue will be in the County of San Mateo.
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5 SECTION 26 – ADDITIONAL PROVISIONS: REPAIRS, SIGNS AND BANKING CONSULTANT shall have the right to make repairs, emergency or otherwise, at the CITY’s request, for the benefit of the CITY’s properties. All such repairs shall be performed at the CITY’s expense.
CONSULTANT shall have the right to place leasing signs on the properties CONSULTANT is managing for the CITY, to advertise vacant space(s) and to place other required signage as Federal, State and local ordinances require.
CONSULTANT shall have the right to establish a bank account for the CITY’s properties at a Federal Deposit Insurance Corporation (FDIC) insured bank selected by CONSULTANT (the Operating Account), to deposit income from the CITY’s properties and to pay property expenses. To ensure the orderly payment of bills, CONSULTANT shall maintain a cash reserve in the Operating Account equal to Five Thousand dollars ($5,000). After meeting the cash reserve, on or before the 15th day of each calendar month, CONSULTANT shall transmit to CITY all other funds remaining in the Operating Account as of the end of the prior calendar month. If the Operating Account has insufficient funds to pay the properties financial obligations, then such obligations will be paid in this order: insurance premiums; payroll and payroll taxes, Management Fee and reimbursements, mortgage payment; property taxes; utilities; operating expenses; reserves.
Signature page follows
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5 IN WITNESS WHEREOF, CITY OF SAN MATEO and Prodesse Property Group have executed this Agreement the day and year first above written.
CITY OF SAN MATEO CONSULTANT
Prodesse Property Group
Alex Khojikian Date Michael Pierce Date
City Manager Its Authorized Agent
President
APPROVED AS TO FORM
Mazarin Vakharia Date
Assistant City Attorney
Attachments:
Exhibit A: Scope of Services
Exhibit B: Fee Rates
Exhibit C: Insurance Requirements
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5 EXHIBIT A
SCOPE OF SERVICES
Prodesse shall provide the day-to-day commercial property management for the City’s currently owned ground floor commercial spaces within the Main Street Garage and the Transit Center in downtown San Mateo, which includes the current occupied and vacant properties at 2 N. B Street, 360 First Avenue, 380 First Avenue, 385 First Avenue, 385 First Avenue, 390 First Avenue, 365 Second avenue, 275 Second Avenue and 385 Second Avenue, plus additional City owned sites that the City may elect to place under management in the future. These management functions would include, but not be limited to the following:
Tenant Management
Facilitate the execution of lease extensions, amendments, renewals and terminations with the prior approval of the City.
Maintain a relationship with each tenant to better know their needs and concerns, and to ensure tenant compliance with lease terms and conditions. Provide 24- hour response to any emergency situations, reporting such events to the City by the next business day at the latest. Address any tenant issues with leases and/or occupied spaces.
Serve delinquency notices and assist the City with tenant eviction processes, whether for nonpayment of rent or violation of lease provision(s) Advise the City on needed repairs to preserve long-term property value and make recommendations as to potential improvements that could enhance the value of the properties.
Walk the interior and exterior of the properties periodically after lease-required notices to the tenants, to ensure the maintenance of the properties, making sure they are safe and sanitary, and notifying the City of any identified leaks, damage or necessary repairs either within the premises or in the common areas of the Garage and Transit Center within one business day.
Represent the City in all matters relating to each tenant, under their lease agreement.
Record the water meter readings for the Transit Center, Main Street Garage and other managed properties on a monthly basis and report the same to City staff. Walk any vacated properties and coordinate any necessary repairs so that the property shows well.
Collect monthly lease payments from tenants and remit to the City on a monthly basis net of property related expenses.
Oversee any maintenance work approved by the City, including ensuring all contractors have City-approved licenses and insurance coverage, and pay prevailing wages if required.
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Advertise vacancies on the properties and on commercial property listing sites and prepare all necessary marketing and advertising collateral materials. Oversee minor repairs to prepare spaces for leasing.
Screen applicants for compatibility of use and check credit and references and make recommendations to City with regard to tenant selection. Provide guidance to the City on fair market rent and tenant selection. Final tenant selection and approval to be at the discretion and approval of the City Council. Represent the City’s interest in lease negotiations as its broker and advisor for vacant spaces, including reviewing lease documents for conformity to those negotiations.
Ensure lease documents reflect negotiated terms and conditions and make recommendations on updating the City’s lease forms to align with industry standards.
Management Services, Reporting & Administration
Attend meetings with City staff, including those held outside of regular business hours, as requested.
Establish, manage and maintain a separate FDIC insured bank account for the deposit of rents and payment of operating expenses for the City’s leased properties, with a $5,000.00 reserve.
Provide monthly bank statements and reconciliations.
Provide itemized monthly reports and statements on property receipts, expenses and charges, including reports on rent collections, late fees, delinquencies, delinquency aging, and a rent roll including upcoming rent increases. Reports to be delivered to the City by the 10th of each succeeding month. Review annual possessory interest audit as requested by the City’s Finance Department for accuracy and completeness.
Prodesse uses the same Yardi Voyager software that much larger property management firms use, which generate the reports detailed below. Provide other property management service support to the City, as needed.
As is detailed above, each month, consultant team would collect all rents from the tenants that are leasing space at the City’s properties in and around the train station and parking garage. Consultant would serve as the primary contact for all tenants, helping to relieve that burden from City staff. All rents collected would be deposited into a Trust account which consultant would establish and maintain for the City. All tenant concerns regarding the property would be directed to consultant team and handled.
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5 Each month, consultant accounting team will prepare a monthly financial statement package that will include an income statement, balance sheet, general ledger, rent roll and 12-month rolling income statement, which will be forwarded electronically to the appropriate City staff members for review. The net cash flow from the properties, following payment of all expenses and withholding the pre-determined $5,000.00 reserve amount will be deposited into the City’s designated bank account each month.
Prodesse will continue to provide the City with general property analysis and risk assessment based upon consultant observations from visits to the City’s properties, and ongoing review of the existing leases, utility bills and rent roll.
PROJECT SCHEDULE & TIMELINE
Prodesse will continue providing services under this Agreement, with no interruption in services to the City.
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FEE RATES
1. A management fee of 6.0% of the collected monthly gross income (base rent and CAM) from all properties and spaces managed, with a floor of $1,000.00 per month.
2. A leasing fee for leases obtained for new tenants of 6.0% of the total base rent for lease years 1 and 2; 4.0% of the total base rent for lease years 3, 4 and 5; and
3.0% of the total base rent for lease years 6 through 10. These fees would be shared on a 50/50 basis with any procuring brokers. For current tenants, a lease renewal fee of $1,000.00 for each lease that is renegotiated and/or renewed.
3. A Percentage Rent fee of 4%, calculated annually, will apply for Rise Wood-Fired Pizza on any Gross Sales exceeding $2,000,000.00; this structure shall also apply to any other tenant whose lease includes a percentage rent clause.
4. A data access fee of $5.25 per unit, per month to offset Prodesse’s software licensing and support costs. Management may adjust the per unit per month fee from time to time in recognition of increased costs for the purchase, licensing, training and operation of property management software as well as the costs of data processing and data storage.
5. A construction management fee of 5.0% of the total costs for any projects that exceed $25,000 to cover the additional staffing time and costs we would bear to manage large repairs and renovation projects at the properties.
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5 EXHIBIT C
INSURANCE REQUIREMENTS
MINIMUM SCOPE OF INSURANCE
Coverage shall be at least as broad as:
1. Commercial General Liability (CGL): Insurance Services Office (ISO) Form CG 00 01 12 07 covering CGL on an “occurrence” basis, including products-completed operations, personal & advertising injury, with limits no less than $1,000,000 per occurrence with a $2,000,000 general aggregate.
2. Automobile Liability: ISO Form Number CA 00 01 covering any auto (Code 1), or if CONSULTANT has no owned autos, hired, (Code 8) and non-owned autos (Code 9), with limit no less than $1,000,000 per accident for bodily injury and property damage.
3. Workers’ Compensation: as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease.
4. Professional Liability (Errors and Omissions): Insurance appropriate to the CONSULTANT’s profession, with limit no less than $1,000,000 per occurrence or claim, $2,000,000 aggregate.
If the CONSULTANT maintains higher limits than the minimums shown above, the City requires and shall be entitled to coverage for the higher limits maintained by the CONSULTANT.
Other Insurance Provisions
The insurance policies are to contain, or be endorsed to contain, the following provisions:
Additional Insured Status
The City, its elected and appointed officials, employees, and agents are to be covered as insureds on the auto policy for liability arising out of automobiles owned, leased, hired or borrowed by or on behalf of the CONSULTANT; and on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the CONSULTANT including materials, parts or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the CONSULTANT’s insurance (at least as broad as ISO Form CG 20 10, 11 85 or both CG 20 10 and CG 20 37 forms if later revisions used).
Primary Coverage
For any claims related to this contract, the CONSULTANT’s insurance coverage shall be primary insurance as respects the City, its elected and appointed officials, employees, and agents. Any
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Notice of Cancellation
Each insurance policy required above shall provide that coverage shall not be canceled, except after thirty (30) days’ prior written notice (10 days for non-payment) has been given to the City.
Waiver of Subrogation
CONSULTANT hereby grants to City a waiver of any right to subrogation which any insurer of said CONSULTANT may acquire against the City by virtue of the payment of any loss under such insurance. CONSULTANT agrees to obtain any endorsement that may be necessary to effect this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer.
Deductibles and Self-Insured Retentions
Any deductibles or self-insured retentions must be declared to and approved by the City. The City may require the CONSULTANT to purchase coverage with a lower deductible or retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention.
Acceptability of Insurers
Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to the City.
Verification of Coverage
CONSULTANT shall furnish the City with original certificates and amendatory endorsements or copies of the applicable policy language effecting coverage required by this clause. All certificates and endorsements are to be received and approved by the City before work commences. However, failure to obtain the required documents prior to the work beginning shall not waive the CONSULTANT’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.