Title
Enter Into Lease for PPE and Emergency Resource Materials Warehouse (Ordinance S-47769)
Description
Request to authorize the City Manager, or his designee, to enter into a lease with 801 South 16th Industrial, LLC ("Landlord") for approximately 41,296 square feet of industrial warehouse and office space to store personal protective equipment (PPE), emergency resource materials and other critical inventory. Further request authorization for the City Controller to disburse funds related to this item. Rent will be abated for the first five months of the lease, making the total base rent for the first year approximately $373,384.67, plus applicable taxes. Funds are available through the Federal American Rescue Plan Act and General Funds.
Report
Summary
The Finance Department is currently utilizing a hall at the Phoenix Convention Center to store sanitizer, masks, gloves and other PPE needed by City departments to protect staff and the public from COVID-19. However, due to a return of event activity to the convention center, the PPE must be moved to another location. In addition to PPE, the warehouse will be used to store water, cots, and other materials necessary for heat mitigation, homelessness assistance and other emergencies.
Base rent for the first year of the lease is $15.50 per square foot per year which is a negotiated modified-gross lease, including tenant improvements. During the initial term, base rent will escalate annually by 2.5 percent starting on the first anniversary of the rent commencement date. At the start of each extended term, the base rent will reset to 95 percent of market value and increase annually by 2.5 percent.
The City will be responsible for janitorial expenses, refuse removal and utilities. The Landlord will be responsible for maintenance and repairs of common areas and the building, including roof, HVAC, plumbing and electrical systems. Landlord, at Landlord's sole cost and expense, will provide a turn-key build-out based on requested tenant improvements required for use by the City.
The lease may contain other terms and conditions deemed necessary by the City.
Contract Term
The initial term, beginning on or around July 1, 2021, will be five years and five months with two, five-year options to extend the term at the City's discretion.
Financial Impact
Rent will be abated for the first five months of the lease, making the total base rent for the first year approximately $373,384.67, plus applicable taxes. Total base rent for the initial term is approximately $3,365,624.00, plus applicable taxes. Funds are available through the Federal American Rescue Plan Act and General Funds.
Location
801 S. 16th St.
Council District: 8
Department
Responsible Department
This item is submitted by City Manager Ed Zuercher and the Finance Department.