Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
NOVEMBER 17, 2021
Subject
SUBJECT: LEASE AGREEMENT WITH THE CITY OF AZUSA FOR THE SYSTEM SECURITY OFFICE LOCATED AT 890 THE PROMENADE IN AZUSA
Action
ACTION: APPROVE RECOMMENDATIONS
Heading
RECOMMENDATION
Title
CONSIDER:
A. AUTHORIZING the Chief Executive Officer (CEO) or their designee to execute a ten (10)-year lease agreement with four (4) five-year options commencing May 1, 2022 with the City of Azusa (“Lessor”), for the System Security and Law Enforcement (SSLE) office for 8,206 rentable square feet located at 890 The Promenade in Azusa at a rate of $20,555 per month with escalations of three percent (3%) annually and approximately $2,865,318 in tenant improvements for a total of $5,443,930 over the initial term with four 5-year options, if needed.
B. AMENDING the FY22 budget to include an additional $1,920,878 for FY2022 and one-time tenant improvements (initial lease costs).
Issue
ISSUE
With the Eastern expansion of the Gold Line System Security and Law Enforcement (SSLE) is requesting a deployment facility to provide infrastructure protection in the Azusa area and eastward as the Gold Line expands. This facility will allow Transit Security Officers to be deployed from the APU/Citrus College Station to protect Metro assets, employees, patrons and help deter unlawful entry into secured areas along the Gold Line. Additionally, as we reimagine our public safety efforts and continue to embrace the expansion of community engagement opportunities with ambassadors, mental health and homeless outreach workers, this space will provide the ability for these teams to deploy from the areas they serve.
Background
BACKGROUND
Metro has need for a SSLE presence to provide infrastructure protection on the eastern portion of the Gold Line and has identified the Azusa Building as an optimal location. The building located at 890 The Promenade in Azusa (Azusa Building) is uniquely situated right next to the APU/Citrus College Station in Azusa allowing for quick walking distance access to the Gold Line. This location will aid in supporting the expansion of the Gold Line and reduce response times to calls for service on the current line.
Discussion
DISCUSSION
A presence is needed along the Eastern portion of the Gold Line to assure timely responses to security issues in the Irwindale/Azusa area and further East as the Gold Line expands toward Pomona. Without this deployment facility System Security will have severely delayed response times to infrastructure protection issues along the eastern portion of the Gold Line.
Of the four locations considered, only the Azusa Building is located within close walking distance of the Gold Line. The other locations are 1.5 to 3 miles away. Driving to the station and parking would add 10 to 20 minutes to SSLE response time and, it would be difficult and more costly to secure Metro assets at the other locations because they are in shared buildings and parking areas. After reviewing the three comparable properties (Attachment “C”), it was determined that the initial rental rate of $1.40 per square foot (PSF) is within the range of fair market, NNN (Triple Net). Consistent with NNN leases, Common Area Maintenance (CAM), insurance and property taxes are paid separate from rent. In addition, costs have been estimated for utilities, interior maintenance and janitorial services for a 24/7 operation. Those costs are estimated to add an additional $1.1048/PSF to the lease cost per month. This amounts to the $20,555 per month total costs shown below. The tenant improvements shown in Exhibit D will be paid as follows:
The total tenant improvements (TI) will cost: $3,111,498
Lessor will contribute $30 per SF toward TI’s: ($246,180)
Metro will pay the net TI costs: $2,865,318
This lease will provide a facility to deploy an initial team of 24 Metro Transit Security Personnel as well as 50 contract security personnel. Additionally, as we reimagine our public safety efforts and continue to embrace the expansion of community engagement opportunities with ambassadors, mental health and homeless outreach workers, this space will provide the ability for these teams to deploy from the areas they serve. Moreover, this facility prepares Metro to better address the needs of patrons and employees as the system continues to grow with the Gold Line expansion.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
The proposed lease will have a direct impact on Metro’s safety standards by increasing System Security’s ability to respond to and address safety issues along the Gold Line as it expands Eastward.
Financial_Impact
FINANCIAL IMPACT
The proposed rent for FY22 is $41,110 ($20,555 monthly), which is currently budgeted in 0651.300055.55.8.01.51201 Rent Property/Facilities. Future lease obligations will be included in annual budget preparation by Real Estate staff.
The one-time lease improvements for FY22 are $2,865,318, which are not currently budgeted in full. If approved, $1,920,878 will be added to FY22 budget 0651.300055.55.8.01.51201 Rent Property/Facilities to cover all remaining unbudgeted expenses.
Impact to Budget
The funding for the proposed lease is the general fund, right-of-way. The funding source is eligible for bus & rail operations and capital projects.
Equity_Platform
EQUITY PLATFORM
This lease will not have any direct equity impacts. This lease will provide enhanced security for Metro infrastructure in the protection of Metro assets and employees, as well improved service and response times for patrons using the system, particularly on the San Gabriel Valley portion of the Gold Line. The lease will allow for a more effective deployment strategy of existing security personnel as it will minimize travel time to and from their work location to their assigned posts. The de-centralized deployment strategy also creates an opportunity for existing security personnel to establish relationships with frequent riders utilizing the system. Security personnel will still have the ability to summon additional services for those in need including homeless outreach teams, mental health counselors, medical aid or other necessary care. Security personnel will be available to remind users of the system of our efforts for a clean and safe ride and to provide masks when needed. This lease is an essential link in Metro’s overall rail security measures to ensure and maintain the security and stability of the Gold Line rail, platform, employees and riders and to keep the Metro system dependable and comfortable for all who rely on Metro for their transit options.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The recommendation supports strategic plan goal #2: “Deliver outstanding trip experiences for all users of the transportation system.”
Alternatives_Considered
ALTERNATIVES CONSIDERED
The alternative is to not select the proposed site and lease another location that would be less convenient with added delays in response times to security issues along the eastern portion of the Gold Line.
Next_Steps
NEXT STEPS
Upon board authorization, Real Estate will finalize the lease agreement with the City of Azusa, forward to County Counsel for approval, and submit for execution by the CEO or their designee for the initial 10-year lease period and, if needed in the future, additional lease options.
Attachments
ATTACHMENTS
Attachment A - Location Map and Plan Draft
Attachment B - Deal Points
Attachment C - Rent Comparison
Attachment D - Tenant Improvements
Prepared_by
Prepared by: John Beck, Principal Real Estate Officer, Countywide Planning & Development, (213) 922-4435
John Potts, Executive Officer, Countywide Planning & Development, (213) 928-3397
Holly Rockwell, SEO - Real Estate, Transit Oriented Communities and Transportation Demand Management, (213) 922-5585
Reviewed_By
Reviewed by: James de la Loza, Chief Planning Officer, (213) 922-2920
Judy Gerhardt, Deputy Chief System Security & Law Enforcement, (213) 922-2771
