County Enters Into Ten-Year Lease For Welfare Building In San Bernardino

The county this week entered into a ten-year $13.4 million lease arrangement for more than 44,000 square feet of office space in the city of San Bernardino for use by the county division which distributes assistance to welfare recipients.
That building, which is located at 1895 Del Rosa Drive in San Bernardino and is yet to be adapted for the county’s intended use, is owned by AOP Development, LLC.
Since 2001 the San Bernardino County Transitional Assistance Department (TAD) has had its San Bernardino area office function out of what was originally 21,442 square feet of office space located at 1585 East Highland Avenue in San Bernardino, initially on a seven-year lease. In the 15 years since the lease was originally approved, the county board of supervisors has approved three amendments to extend the term, increase the square footage to 29,942 square feet of office space and add additional option periods.
On March 17, 2015 the board of supervisors authorized the county’s real estate division to seek bids for the lease of approximately 42,000 square feet of office space for TAD in the San Bernardino/Highland area. The bid request, known as a request for proposal, was disseminated and notifications were sent to prospective proposers on a mailing list the county maintains of building owners. Six proposals were received. A selection committee composed of county human services and transitional services employees as well as real estate division staff was formed to evaluate the proposals, tour the sites and attend proposer presentations.
The 44,190-square foot facility located at 1895 Del Rosa Drive in San Bernardino, proposed by AKS Investments, Inc., contingent on property acquisition, was selected by the committee.
According to a report co-authored by Terry Thompson, the director of the county’s real estate services department. and Nancy Swanson, the director of the county’s transitional assistance department, the Del Rosa Drive location was chosen because “it is an existing building that will be totally rehabbed and improvements made to additional square footage; [it offered a] competitive lease rate with turn-key tenant improvements; [had a] location and services available in the local area; [entailed] the removal of the electrical utility expense cap due to the installation of new energy efficient systems and solar system; and [presented the advantage of] the landlord providing a minimum of 287 parking spaces.”
In August 2015, AOP Development, LLC was formed by AKS Investments, Inc., and Del Rosa Development, LLC, the then-owner of the 1895 Del Rosa Drive property, and ownership of the
property was transferred to AOP Development, LLC in January 2016. The county’s real estate division negotiated a 10-year lease with two five-year options to extend the term, with an initial rental rate of approximately $1.98 per square foot/full service/turn-key, subject to 2% annual increases. AOP Development, LLC at its sole expense agreed to install solar panels on the building.
After the award of the request for proposals and during review of the floor plan, the county’s human services and transitional assistance divisions determined additional improvements were needed to support the number of staff and clients that will be served at the location. Additional breakrooms, restrooms and security features such as perimeter fencing, an enclosed reception area and additional exterior lighting were added. These added items increased the rental rate to $2.25 subject to 2.5 percent annual increases. The county is in for the long haul on the arrangement and does not have the right to terminate for convenience during the initial 10-year term, but if the term is extended, the county will have the right to terminate with 180-days’ notice.
The annual lease cost for February 1, 2017 through January 31, 2018 will be $1,193,136; for February 1, 2018 through January 31, 2019 will be $1,222,956; for February 1, 2019 through January 31, 2020 will be $ 1,253,532; for February 1, 2020 through January 31, 2021 will be $1,284,876
February 1, 2021 through January 31, 2022 will be $ 1,316,988; for February 1, 2022 through January 31, 2023 will be $1,349,916; February 1, 2023 through January 31, 2024 will be $1,383,660; February 1, 2024 through January 31, 2025 will be $1,418,256; for February 1, 2025 through January 31, 2026 will be $1,453,716; and for February 1, 2026 through January 31, 2027 will be $1,490,052
The total cost will be $13,367,088

Leave a Reply