SR 08-23-2011 3GCity Council Meeting: August 23, 2011
Agenda Item: 3 "{~1
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Print Shop and Mail Room Lease at 1630 17th Street
Recommended Action
Staff recommends that the City Council:
1. Authorize the City Manager to negotiate and execute a Lease with STG Three
Properties, LLC for 4,528 sq. ft. at 1630 17th Street for occupancy by the Print
Shop and Mail Room for aten-year term, with one five-year option beginning
September 1, 2011; and
2. Appropriate the budget increases outlined in the Financial Impacts & Budget
Actions section of this report.
Executive Summary
The Print Shop and Mail Room staff has occupied 3,728 sq. ft. of leased office and
warehouse space at 1660 Lincoln Boulevard since 2002. The current owner is
redeveloping the property and will require that the Print Shop and Mail Room vacate no
later than Spring of 2012.
A new facility has been located at 1630 17th Street. The proposed lease with STG
Three Properties, LLC is fora 4,528 sq. ft. space. The proposed term is for 10 years,
with one five-year option, commencing September 1, 2011. The base rental rate is
$1.80 per sq. ft. with an escalation of three percent per year beginning in year three of
the lease. With the Common Area Maintenance (CAM) of $.58 per sq. ft., the effective
rent would be $2.38 per sq. ft. per month. Parking for eight reserved spaces would be
$50 per space, or $400 per month. Tenant improvements in the amount of $361,000
would be required for the space.
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Background
In 2001, the City entered into a lease at 1660 Lincoln Boulevard for 12,000 sq. ft. to be
used for Big Blue Bus warehouse needs. The Print Shop and Mail Room began sharing
3,723 sq. ft. of the leased area in 2002
In 2010, the owners of the building notified the City that they were selling the building
and would not be exercising the option to extend the lease. The Big Blue Bus was able
to relocate from the space prior to July 31, 2011, the end of the lease term. However,
while the property was on the market, the owners were willing to give the City time to
search for a new location for the Print Shop and Mail Room. On November 23, 2010,
the Council approved a lease amendment that reduced the leased area to 3,723 sq. ft.
beginning August 1, 2011, reduced the rental rate to $8,000 per month, and provided for
a three-month notice for the City to terminate.
Discussion
In Fall 2010, staff began looking for a new location for the Print Shop and Maif Room
and visited numerous properties before finding 1630 17th Street. The building is a
single-story multi-tenant building providing good access to many City offices that the.
Print Shop and Mail Room serve. Although the proposed space of 4,528 sq. ft. is 805
sq. ft. larger than their current location, staff's intent is to redesign the space so that
there can be a segregated area that could be used by another City operation in the
future.
The proposed lease terms are
• Monthly rent at $1.80 per sq. ft. per month, or $8,150.40
• Common Area Maintenance fee of $.58 per sq. ft. per month
• Annual rent escalator of 3% beginning in year three of the lease
• Parking at $50 per month for eight reserved spaces
• Ten-year term commencing September 1, 2011
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• One five-year option
• Rental and CAM abatement period ofsix-months
The Architecture Services Division has estimated the one-time cost for tenant
improvements at $361,000. The major line-item costs include design, demolition of
walls, new double doors, electrical wiring and outlets to power print shop and mailroom
equipment, HVAC, lighting in print shop area, casework, information systems expenses,
and relocation and installation of furniture and equipment. Design, bidding and
construction of the tenant improvements are estimated to take nine months.
Financial Impacts & Budget Actions
Appropriations totaling $385,000 are requested for FY2011-12 in the following accounts:
0014061.589000 $361,000 Print Shop Relocation
01214.522620 $ 24,000 Rent
TOTAL $385,000
These amounts include $361,000 in one-time tenant improvement costs and $24,000 in
additional rent expenditures due to increased rent and occupancy costs. Rent
expenditures are currently budgeted at $119,143 in account 01214.522620. Budget
authority for adjustments reflecting a full year of occupancy at the new site will be
included iri each biennial budget cycle for Council approval
Prepared by: Donna Rickman, Senior Administrative Analyst
Approved:
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Andy Agle, Direct
Housing and Economic Development
Forwarded to Council:
Rod Gould
City Manager
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Reference Contract
No. 9450 (CCS)