Agenda

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Finance Committee

Meeting Date:	10/12/2021
FROM:	Bill Gallardo

Subject:

Consideration of Lease Agreement for Remote Learning for Brea Olinda Unified School District at the Civic & Cultural Center

RECOMMENDATION

Proceed to City Council for approval of a two-year Lease Agreement between the City of Brea and the Brea Olinda Unified School District, with the option of three one-year extensions.

BACKGROUND/DISCUSSION

The Brea Olinda Unified School District (School District) currently occupies 9,300 square feet of office space on the second floor of Brea's Civic & Cultural Center. With the COVID-19 pandemic shutting down businesses and schools, there has been an increased need for remote learning.

With the recent Space Plan remodel of the third floor of the Civic & Cultural Center, the Communications & Marketing team moved their operations from the second to the third floor. This has opened up additional leasing space on the second floor which is of great interest to the School District to conduct remote learning.

The proposed Office Lease provides for a Base Term of two-years commencing retroactively on August 1, 2021, with three one-year extension options. The City has agreed to a two-year Base Term knowing that the COVID-19 pandemic can end any time, thus eliminating the School District's need for remote learning.

Commencing on August 1, 2021, the School District shall pay $1.86/sf per month for the 1,721 square feet of office space totaling $3,201.06 in monthly rent. Should the School District choose to exercise their option of extending the lease, the monthly rent shall be increased annually, effective August 1 of each year, by an amount equal to the annual percentage increase published as the Consumer Price Index (CPI), with a minimum increase of 2% and a maximum increase of 4% in any given year.

Staff compared the square footage rate to two existing Civic & Cultural Center tenants and approximately 24 commercial lease spaces in Brea. The City of Brea will pay for the maintenance and upkeep of the shared parking, restrooms, elevators, landscaping, and other common amenities while the School District will pay for and maintain the upkeep of the interior of their leased space. Based on the research, the proposed monthly rent is within the market range, at the lower end of the surveyed properties.

The rent of the space will be as follows:

Year	Price per square foot	Price per square foot per year	Monthly Rent	Annual Rent
1	$1.86	$22.32	$3,201.06	$38,412.72
2-5*	TBD	TBD	TBD	TBD

*Rent increased annually by CPI, floored at 2% and capped at 4%

This lease is similar to more recently executed leases (such as the Brea Chamber of Commerce and Ambassador Church), except that no Late Charge clause was included. Because there was no such clause included in the original Brea Olinda Unified School District lease, this has been modified to reflect the same.

SUMMARY/FISCAL IMPACT

The proposed Office Lease with the School District provides for a Base Term of two-years commencing retroactively on August 1, 2021, with three one-year extension options. This Office Lease will provide initial monthly revenue of $3,201.06 to the City of Brea, or $38,412.72 annually, and the rental amount will increase on an annual basis.

RESPECTFULLY SUBMITTED

William Gallardo, City Manager
Prepared by: Marie Dao, Management Analyst
Concurrence: Chris Emeterio, Acting Community Development Director

Attachments
Draft Office Lease