Agenda Item AGENDA STAFF REPORT ASR Control 23-000808
MEETING DATE:	04/23/24
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	5
SUBMITTING Agency/Department:	County Executive Office (Approved)
Department contact person(s):	Thomas A. Miller (714) 834-6019
	Todd Spitzer (714) 347-8401

Subject: Approve retroactive District Attorney First Amendment to Lease at 5000 Birch St.

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Agreement to Form

Discussion

3 Votes Board Majority

Budgeted: Yes

Current Year Cost: $32,987

Annual Cost: See Financial Impact Section

Staffing Impact:

# of Positions:

Sole Source: N/A

Current Fiscal Year Revenue: N/A

Funding Source: GF: 41%, State 59% (Prop 172)	County Audit in last 3 years: No
Levine Act Review Completed: Yes

Prior Board Action: 09/10/2013 #9, 05/06/2008 #25

RECOMMENDED ACTION(S):

Find the project is categorically exempt from the California Environmental Quality Act (CEQA), Class 1 (Existing Facilities) pursuant to CEQA Guidelines, Section 15301.

Retroactively approve the First Amendment to lease with John Hancock Life Insurance Company (U.S.A.) for 1,683 rentable square feet of office space at 5000 Birch Street in Newport Beach, for District Attorney's use, for a total term of 251 months, commencing on September 10, 2013 through August 31, 2034.

Authorize the Chief Real Estate Officer or designee to execute subsequent documents, exercise option terms and amendments that make non-monetary and/or monetary changes that do not increase County costs by more than $75,000 per year, as approved by County Counsel.

SUMMARY:

Approval of the First Amendment to Lease with John Hancock Life Insurance Company (U.S.A.) will allow the District Attorney to continue its current lease and use of 1,683 rentable square feet of office space on the fourth (4th) floor at 5000 Birch Street, Newport Beach.

BACKGROUND INFORMATION:

On May 6, 2008, the Board of Supervisors (Board) approved a lease wherein the District Attorney leased from Cornerstone Partners IV, LLC (Original Lessor) approximately 4,042 rentable square feet (RSF) of office space on the fourth floor of 5000 Birch Street in Newport Beach (Premises) for District Attorney’s need to house staff assigned to the Harbor Justice Center – Newport Beach Facility (Lease). The original five-year Lease commenced on July 1, 2008, and expired on June 30, 2013. On September 10, 2013, the Board approved a subsequent ten-year Lease with the Original Lessor for reduced square footage of approximately 1,626 RSF that commenced November 1, 2013, and expired October 31, 2023. On or about November 4, 2015, the Original Lessor assigned its rights and interests to John Hancock Life Insurance Company (U.S.A) (Lessor) and Lessor accepted and assumed all rights and obligations thereto. Now, the District Attorney and Lessor (Parties) desire to enter into this first amendment to remeasure the Premises accurately from 1,626 RSF to 1,683 RSF, extend the term from July 1, 2008 to July 31, 2034, adjust the current monthly rent from $4,146.00 to $4,712.40 and refurbish the Premises. District Attorney has been in month-to month tenancy since the Lease term expired on October 31, 2023, because of Lessor’s delay in lease negotiations.

To ensure continuity of service for District Attorney’s staff assigned to the Harbor Justice Center, CEO Real Estate and the District Attorney are recommending the proposed First Amendment to Lease (Proposed First Amendment) for the continued use of 1,683 RSF of office space, commencing retroactively on November 1, 2023, for one hundred-thirty (130) months (Term). Under the terms of the Proposed First Amendment, the monthly rental rate will be $4,712.40 or a rate of $2.80 per RSF, full-service gross and will adjust by three percent (3%) annually over the term. The proposed rental rate is within current market expectations for facilities with similar uses in this area. The Lessor is abating County's rent over the initial ten (10) months of the Term and County has one (1) optional term extension for five (5) years. Lessor, at Lessor's sole cost and expense, is providing new paint and carpet, as well as upgrading the existing light fixtures within the Premises. To minimize County’s disruption, said refurbishment work will be completed after business hours.

Under the Proposed First Amendment, the County has an on-going Right of First Offer (ROFO) (ROFO) to lease space on the fourth (4th) floor of the building that is contiguous to the Premises. Lessor is required to provide County written notice that the space has become available. Within seven (7) business days after County’s receipt of Lessor’s notice, County is required to deliver written notice to Lessor of its intent to lease the additional space at a rate consistent with fair market value, which will subsequently be memorialized in an amendment to the Lease.

Compliance with CEQA: The proposed project is Categorically Exempt from CEQA pursuant to Section 15301 (Class 1) of the CEQA Guidelines, because it involves the leasing of existing private facilities for continuity of service for District Attorney’s staff assigned to the Harbor Justice Center involving negligible or no expansion of use beyond that currently existing.

FINANCIAL IMPACT:

Appropriations for this Proposed First Amendment are included in the District Attorney’s budget for FY 2023-24 and will be included in District Attorney’s requested budgets for subsequent years through the term of the Lease agreement.

Fiscal Year	Rentable Area	Monthly Rent	Total Rent
2023 – 2024*	1,683	$4,712.40	$32,986.80
2024 – 2025*	1,683	$4,847.04	$57,625.92
2025 – 2026	1,683	$4,998.51	$59,376.24
2026 – 2027	1,683	$5,149.98	$61,193.88
2027 – 2028	1,683	$5,301.45	$63,011.52
2028 – 2029	1,683	$5,469.75	$64,963.80
2029 – 2030	1,683	$5,621.22	$66,848.76
2030 – 2031	1,683	$5,789.52	$68,801.04
2031 – 2032	1,683	$5,974.65	$70,955.28
2032 – 2033	1,683	$6,142.95	$73,042.20
2033 – 2034	1,683	$6,328.08	$75,196.44
2034 – 2035	1,683	$6,328.08	$18,984.24

* Monthly Rent is abated during the initial 10 months of the Extended Term.

STAFFING IMPACT:

N/A

REVIEWING AGENCIES:

District Attorney

ATTACHMENT(S):

Attachment A - First Amendment to Lease
Attachment B - Summary of First Amendment to Lease
Attachment C - Conveyance Questionnaire