A report from county CEO William T. Fujioka to the supervisors lays out the plan:
September 10, 2013
Approval of the recommended actions will allow Public Library to lease available commercial space, implement tenant improvements for the proposed Stevenson Ranch Library Project and related appropriation adjustment.
SUBJECT
EIGHT-YEAR LEASE AGREEMENT – PUBLIC LIBRARY
25950 THE OLD ROAD, STEVENSON RANCH APPROVE STEVENSON RANCH LIBRARY PROJECT AND APPROPRIATION ADJUSTMENT CAPITAL PROJECT NO. 77602
IT IS RECOMMENDED THAT THE BOARD:
1. Consider and adopt the Negative Declaration together with the fact that no comments were received during the public review process; find that the proposed Stevenson Ranch Library will not have a significant effect on the environment; find that the Negative Declaration reflects the independent judgment of the County of Los Angeles to approve the Negative Declaration; find that the Project will have no adverse effect on wildlife resources; and authorize the Chief Executive Office to complete and file a Certificate of Fee Exemption for the Project.
2. Approve the eight-year lease agreement with Valencia Marketplace II, LLC, rent commencement to be on May 1, 2014 or upon occupancy, whichever occurs earlier, for 12,000 rentable square feet of space at 25950 The Old Road, Stevenson Ranch, for a maximum first year rental amount of $269,289, which includes: an initial annual base rent of $180,000, plus first year payment of operating expense rent estimated to be $89,289 for the Stevenson Ranch Library. The rental cost is entirely funded by Fifth District net County cost.
3. Authorize and instruct the Chief Executive officer, or his designee, to execute the lease agreement upon recordation of the Amendment to the Declaration of Restrictions and Grant of Easements for the shopping center, or Board approval, the latter of the two.
4. Approve the Stevenson Ranch Public Library Project, with a total Project budget of $4,500,000 funded by net County cost.
5. Approve the appropriation adjustment transferring $10,597,000 from Library’s Stevenson Ranch’s Developer Fee Budget (BM1) into Library’s Operating Budget (Services and Supplies) to fund operational expenses of the proposed Stevenson Ranch Library.
6. Authorize Internal Services Department to deliver the tenant improvements using a combination of in-house and Board-approved Job Order Contract program.
PURPOSE/JUSTIFICATION OF RECOMMENDED ACTION
Approval of the recommended actions will allow Public Library to lease available commercial space and implement tenant improvements for the proposed Stevenson Ranch Library (Project).
The current population and future growth projections of the County’s unincorporated area of Stevenson Ranch, and surrounding communities, indicate a need to provide library services to local residents outside the City of Santa Clarita limits. Currently, local residents must rely on bookmobile service or use libraries owned by the City of Santa Clarita, the nearest full-service library in the area. A real estate investigation resulted in available leased facilities, no unavailable land or available buildings to purchase, and no suitable County owned facilities. Public Library recently completed a library needs assessment survey in unincorporated Stevenson Ranch that clearly shows a desperate need for library service in these communities. Based on the needs assessment, Public Library is recommending entering into the proposed lease agreement (Attachment A).
The proposed 12,000 square-foot library will include a large reading area for adults; teen center for middle and high school students; a children’s area with Family Place; an 80-seat community meeting room; group study rooms; express checkout service machines; public access computers; public access WiFi; public restrooms; and an opening day collection of approximately 60,000 books, and other library materials. These interior improvements will be implemented as part of the tenant improvements scope of work.
The establishment of a library in Stevenson Ranch is consistent with the Public Library’s long-range facility planning and will meet the service needs of the local population.
The design services will be completed through Internal Services Department’s (ISD) as-needed architectural-engineering consultant, and the improvements will be implemented through a combination of ISD in-house crafts staff and Job Order Contract (JOC) program. It is anticipated that the library services will be available beginning the first quarter of 2015.
Implementation of Strategic Plan Goals
The estimated proposed Project cost totals $19,500,000: $4,500,000 for tenant improvements, including telephone and data low voltage systems; $1,000,000 for books and library materials; $1,000,000 for furniture, fixtures, and equipment; $3,000,000 for eight-year rent expense and contingency; and $10,000,000 for eight-year operating costs.
FISCAL IMPACT/FINANCING
The estimated proposed Project cost is $4,500,000 and is fully funded by net County cost. Sufficient appropriation is available in the Fiscal Year 2013-14 Capital Project/Refurbishment Budget for Stevenson Ranch Public Library Project (Capital Project No. 77602) to fully fund the tenant improvements. The proposed Project Schedule and Budget Summary are detailed in Attachment C.
Operating Budget Impact
The eight-year rent expense, contingency, and operating costs are estimated $13,000,000; the onetime cost for books and library materials, furniture, fixtures, and equipment are estimated $2,000,000 funded by $10,597,000 with Public Library Developer Fees, and $4,403,000 with Library Operating Budget.
Approval of the attached appropriation adjustment (Attachment B) will transfer $10,597,000 from Public Library’s Developer Fee Budget (BM1) into Public Library’s Operating Budget (Services and Supplies) to fund operational expenses of the Public Library. The three 5-year optional lease extensions and associated operating costs will be funded by property taxes that have been collected in the Fifth District unincorporated areas for County Public Library.
The annual base lease cost for the proposed Project will initially be $269,289, which includes $180,000 in base rent and $24,480 in Additional Rent, which consists of Common Area Expenses passed through based on the County’s occupancy of 1.6 percent of the entire center. Additionally, the Additional Rent provision of the lease requires the County to reimburse the Landlord in a lump sum for its share of property taxes and insurance annually and certain center maintenance costs, i.e. parking lot slurry sealing/striping of the lot approximately every three years and as-needed roof replacement, which expenses are estimated to be $64,809 annually.
The annual rent under the lease will be a $17.04 per square-foot Triple Net lease comprised of an annual Base Rent of $15 per square-foot, which will be adjusted annually at a rate of 2 percent, and Additional Rent for common area expenses at a rate of $0.17 per square-foot, which is adjusted annually at a rate not to exceed 5 percent based on actual costs, plus lump sum reimbursement of property taxes and insurance and certain maintenance costs estimated to be $64,809 annually.
It is anticipated that the new library will begin operation in the first quarter of 2015 and the funding for the annual operating costs will be required at that time. The annual operating budget for the Stevenson Ranch Public Library is estimated $1,250,000 based on the current staffing, support, facility maintenance, and other operating costs that will be required.
FACTS AND PROVISIONS/LEGAL REQUIREMENTS
The proposed lease agreement provides 12,000 rentable square feet of library space and adequate off-street parking spaces. The lease contains the following provisions:
a. The eight-year term of the lease beginning upon payment of rent, May 1, 2014.
b. A monthly base rent of $15,000 or $180,000 annually, and monthly Common Area Expense of $2,040 or $24,480 annually, plus annual lump sum reimbursement of property taxes and insurance and certain maintenance costs estimated to be $64,800 annually.
c. The Landlord will provide parking which is sufficient to meet the parking needs of the department and patrons.
d. The lease is on a Triple Net lease whereby the Landlord will be responsible for all Common Area maintenance, but the County and other tenants reimburse the Landlord for such costs based on their proportionate share of occupancy of the shopping center. The County must pay for its metered electricity consumption, janitorial and building maintenance costs.
e. The County has three 5-year options to renew the lease under the same terms, conditions and rental rate.
CEO Real Estate staff surveyed Stevenson Ranch, and the surrounding area to determine the market rate of comparable sites. The base rental range, including parking for similar property in the area is between $26.00 and $35.00 per square-foot per year modified full-service. Thus, the base annual rent of $15 per square-foot for the base lease cost is at the lower end of the market rate for this area. Attachment E shows County-owned and leased facilities within the search area for these programs and none are available to house these programs.
The Department of Public Works was not required to inspect this facility as it was built in 2003 and meets current standards for the County’s occupancy.
Prior to the execution of this lease, it is necessary for an Amendment to the Declaration of Restrictions and Grant of Easements for the shopping center to be recorded that allows a public library use within the shopping center.
ENVIRONMENTAL DOCUMENTATION
The Chief Executive Office has made an initial study of environmental factors and has concluded that the proposed Project will have no significant impact on the environment and no adverse effect on the wildlife resources. A Negative Declaration (Attachment F) has been prepared and a notice posted at the site as required by the California Environmental Quality Act (CEQA) and the California Administrative Code, Section 15072. Copies of the completed Study, the resulting Negative Declaration, and the Notice of Preparation of Negative Declaration as posted are attached. No comments to the Negative Declaration were received.
IMPACT ON CURRENT SERVICES (OR PROJECTS)
The proposed lease will provide the necessary space to establish a library to serve the unincorporated Stevenson Ranch area of Los Angeles County.
CONCLUSION
It is requested that the Executive Officer, Board of Supervisors return four originals of the executed lease, two certified copies of the Minute Order and the adopted, stamped Board letter to the CEO, Real Estate Division for further processing; one adopted copy of the Board letter to CEO Facilities and Asset Management Division; CEO Real Estate Division; Public Library; and ISD.
WILLIAM T FUJIOKA
Chief Executive Officer
County Plans to Rent Valencia Space for Stevenson Ranch Library
