PURPOSE:

The purpose of this report is to request City Council approval of a resolution extending the multi-year lease agreement between the City and Brandall Modular Corporation.

BACKGROUND:

On January 25, 2000, the City Council approved a lease agreement between the City and Brandall Modular Corp., whereby the City agreed to lease a modular building as part of the old Municipal Services Building relocation and Community Services Building (CSB) construction projects. Additional office space was needed to house Public Works Administration and Engineering, and several divisions of the Community Development Department.  The term of the lease was for a period of three years, including an optional last year, which then reverted to a month-to-month rental charge. 

The optional year and month-to-month periods were included in the lease because the construction schedule of the new CSB was not established and it was unknown how long the occupants would need to be in the leased building.  The fixed term portion of the lease began August 1, 2000 and terminated on July 31, 2003.

On August 12, 2003, the City Council approved a lease agreement extension with Brandall Modular Corp. The extension was needed because the construction date of the CSB project was pushed out due to the unplanned retirement of the CSB project manager, an increase in the scope of the project to include the preparation of a civic center master plan, and a hold placed on the project due to the state�s budget crisis and its potential impacts on the project.

Later that year, the decision was made to go forward with the project.  Approximately nine months later, conceptual designs were completed and presented.  The design was not well received, and as a result, a new architectural firm was hired to continue the project and present a modified design, which has since been accepted.  The project has progressed and has received plan check approval.  Final occupancy is expected to take place in April 2008.

Consequently the modular building is required for an additional nineteen months to provide office space until the CSB project is completed.

ANALYSIS:

Staff successfully negotiated with Brandall Modular Corp. for a nineteen month extension of the current lease agreement.  The agreement will also include a month-to-month option if needed.  The term of the lease extension is based on an estimated CSB occupancy date of April 2008.  The total cost of the lease excluding any month-to-month extension, is $156,750.00 plus $12,931.88 in sales tax for a total of $169,681.88.  The pre-payment schedule is:  

8/1/06             $107,167.50 for 12 months

8/1/07             $62,514.38 for 7 months

This project is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15301 (Class 1) of the State CEQA Guidelines regarding existing facilities as the project involves extension of a lease agreement for an existing public facility involving no expansion of use beyond that existing at the time of this determination.

FISCAL IMPACT:

The cost of extending the lease is $156,750.00.  Total tax is $12,931.88 for a total of $169,681.88.  There are sufficient funds for this balance in the CSB project account, 534.PW33A.15022.0000.16763.

RECOMMENDATION:

Staff recommends that the City Council adopt the proposed resolution extending the multi year lease agreement between the City and Brandall Modular Corporation.

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