Title
Authorization to Amend Lease Agreement 123630 with Horseheads Industrial Capital II, LLC (Ordinance S-52439) - District 8
Description
Request to authorize the City Manager, or his designee, to amend Lease Agreement 123630 with Horseheads Industrial Capital II, LLC to extend the term for seven years commencing on April 1, 2026, and provide for two additional five-year options to extend. Further request to authorize the City Controller to disburse all funds related to this item.
Report
Summary
The Police Department currently leases 23,565 square feet of industrial warehouse space for the Public Records and Services Bureau under Lease Agreement 123630 through March 31, 2026. The Police Department does not require continued occupancy beyond the end of the term as these operations will be relocated to 100 W. Washington Street. The Fire Department wishes to assume occupancy April 1, 2026, for administration and operational needs and requests authorization to extend the term for continued tenancy.
Base rent beginning April 1, 2026, will be $16 per square foot per year, plus applicable taxes, which is within the range of market rents as determined by the Real Estate Division. Base rent will increase two percent annually during the extended term. The Fire Department will also be responsible to pay common area operating expenses for its pro rata share of all operating and maintenance expenses related to the site and improvements; including utilities, janitorial service, common area insurance, taxes, HVAC equipment maintenance, and building maintenance costs.
Contract Term
Upon approval, the extended term of the lease agreement will be seven years commencing April 1, 2026, with two five-year options to extend.
Financial Impact
Rent during the first year of the extension, beginning April 1, 2026, will be $31,420 per month, or $377,040 for the year, plus applicable taxes. Base rent will increase two percent annually thereafter. Common area operating expenses, janitorial services and utilities are estimated to be $15,219.06 per month, plus applicable taxes, and may be adjusted annually depending on need. Funds are available in the Fire Department's operating budget.
Concurrence/Previous Council Action
Contract 123630 was authorized by Ordinance S-34929 on March 8, 2008.
Contract 123630-001 was authorized by Ordinance S-44648 on June 6, 2018.
Location
1717 E. Grant Street, Suite 100
Council District: 8
Department
Responsible Department
This item is submitted by Assistant City Manager Lori Bays and the Fire and Finance departments.