DATE: November 20, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Public Works Department
TITLE: AMENDMENT TO LEASE AGREEMENT WITH SR9 1935 AVENIDA DEL ORO, LLC FOR LEASE OF SPACE FOR FIRE STATION NO. 8
RECOMMENDATION
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Staff recommends that the City Council approve Amendment 4 to Lease Agreement with SR9 1935 Avenida Del Oro, LLC to lease of a portion of the building consisting of approximately 4,999 square feet, located at 1935 Avenida Del Oro, extending the term for five-years, for Fire Station No. 8, for a total cost of $280,638; and authorize the City Manager to execute the amendment upon receipt of all supporting documents.
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BACKGROUND AND ANALYSIS
On December 19, 2012, the City of Oceanside (“City”) and SR9 1935 Avenida Del Oro LLC (“Lessor”) entered into a Lease Agreement (“Agreement”) for the City to lease space at 1935 Avenida Del Oro (“Premises”) as a temporary location for Fire Station No. 8. Plans for the construction of a permanent Fire Station No. 8 to be located at the intersection of Old Grove Road and Trestles Street are near completion and that station is anticipated to be constructed once a funding source is identified.
The original lease Agreement was modified by a First Amendment (“Amendment 1”) dated January 9, 2013, by a Second Amendment (“Amendment 2”) dated January 15, 2013, and by a Third Amendment (“Amendment 3”) dated November 20, 2019. The Amendments modified the terms, addressed tenant improvements, modified maintenance terms, increased square footage, and modified base rent throughout the term. The current Agreement will expire on February 28, 2025, and staff recommends continuing to lease the Premises until such time that a permanent Fire Station No. 8 is constructed.
The proposed Fourth Amendment (“Amendment 4”) extends the term of the Agreement an additional five years from March 1, 2025 through February 28, 2030 for the continued use of the Premises by the City as temporary Fire Station No. 8. Lessor has requested to modify the rent schedule whereby the City will continue to pay fair market rent and its share of the Common Area Operating Expenses (“CAOE”). Effective March 1, 2025, monthly rent will increase to $4,056 monthly, and increase annually by approximately 3.5 percent thereafter. In addition, Lessor is increasing the security deposit for the Premises by $1,068 for a total of $4,745. All other terms will remain the same.
FISCAL IMPACT
Total rent to be paid by the City for its use of the Premises over the five-year term is $261,000. Additionally, the City will be required to pay CAOE for an estimated total cost for the term to be $18,570. City will also be required to pay Lessor a security deposit of $1,068, payable on March 1, 2025. Total charges for both rent and CAOE over the five-year term is $280,638. All expenses will be charged to Fire Station 8 Temporary Location account 425429503.5335, which has a current available balance of $69,949; therefore, sufficient funds are available for Year 1 of the contract. Subsequent annual costs will be budgeted during future annual budget processes.
|
Term |
Monthly Rent |
Annual Rent |
Annual CAOE |
Security Deposit |
Total Annual Cost |
Account Fire Station No. 8 Temporary Location |
Available Funds |
|
Year 1 |
$ 4,056 |
$ 48,672 |
$ 3,714 |
$1,068 |
$ 53,454 |
425429503.5335 |
$69,949 |
|
Year 2 |
4,198 |
50,376 |
3,714 |
|
54,090 |
|
Budget in FY25/26 |
|
Year 3 |
4,345 |
52,140 |
3,714 |
|
55,854 |
|
Budget in FY26/27 |
|
Year 4 |
4,497 |
53,964 |
3,714 |
|
57,678 |
|
Budget in FY27/28 |
|
Year 5 |
4,654 |
55,848 |
3,714 |
|
59,562 |
|
Budget in FY28/29 |
|
TOTAL |
$21,750 |
$261,000 |
$18,570 |
|
$280,638 |
|
|
COMMISSION OR COMMITTEE REPORT
Does not apply.
CITY ATTORNEY’S ANALYSIS
The referenced documents have been reviewed by the City Attorney and approved as to form.
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Prepared by: Candice Diaz, Property Agent I
Reviewed by: Hamid Bahadori, Public Works Director
Submitted by: Jonathan Borrego, City Manager
ATTACHMENTS:
1. Staff Report
2. Amendment 4