12-11-2012 CC RPT 21 - Laserfiche WebLink

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1lfssforr Sgztare Lease Exterrsforr-4merrdmerrt 'Page 2 requirements. Finally, the Utility needs an Emergency Operations Center that focuses on long term response needs for a disaster or emergency. Staff has developed a "space plan" to meet the existing and future needs of the Utility. Currently, sufficient space is not available to provide space for all budgeted positions, nor is there room to park the required vehicles for current or future field crews. The space plan sets out the most cost effective manner to provide these logistical requirements at the most efficient level. A detailed presentation on the entire space plan will be presented at the December 11, 2012, City Council meeting. The Board of Public Utilities heard the conceptual space plan at their regularly scheduled meeting on December 7, 2012. Mission Square Lease On July 26, 2011, the City Council approved the assignment and assumption of the Lease Agreement for property located at 3750 University Avenue to Riverside Public Utilities (RPU). The office space consists of 70,281 square feet, of which 16,497 square feet is subleased to other tenants. This lease is set to expire on December 31, 2016. As laid out in RPU's long range space plan above, extending the Mission Square lease for an additional 10 years provides the Department sufficient space for future needs, as well as an opportunity to lock in future lease rates now while the market is low which will net a savings of $1.7 million over the next five years of the lease. The key deal points and concessions in the First Amendment to the Lease include the following: • Lease extension of 69 months to provide a total term of 10 years (will expire September 30, 2022). • Option to extend the lease term an additional five years at 95% fair market value. • Reset the base year in operating and maintenance (O&M) expenses from 2006 to 2013 - resulting in a reduction of approximately $738,909 in O&M expenses through 2016. • Rent Credit — RPU will receive $425,000 in rent credit of $18,000 per month starting on November 1, 2014. • Base rent increase will be delayed until October 2013 — resulting in a savings of $44,277. • Tenant improvement allowance of$425,000 to be paid as a rent credit of between $9,000- $27,000/month once RPU improves the space. • HVAC Study/Repairs — Landlord will perform an HVAC study and repairs valued at $100,000. • Base Rent continues at $2.49/square foot per month through September 2013 and shall increase by 2.5% at each anniversary of the commencement date. • Subleases— Nothing shall affect the City's rights to sublease or assign its rights under the lease pursuant to Section 16 of the original lease. FISCAL IMPACT: The First Amendment to the Lease will provide a net savings to Riverside Public Utilities of approximately $1,733,186 over the next five years of the lease. Implementing the long range space plan will provide for current and future need of the Utility at a cost of approximately 1/20th of 1 percent of rate revenues. This means that the space plan implementation will not have an impact on customer rates. 21 -2