Meeting_Body
FINANCE, BUDGET & AUDIT COMMITTEE
JANUARY 18, 2023
Subject
SUBJECT: LEASE AGREEMENT OPTION WITH ANDY AZAD 2002 IRREVOCABLE TRUST FOR A LOGISTICS WAREHOUSE LOCATED AT 2950 E. VERNON AVENUE IN VERNON
Action
ACTION: APPROVE RECOMMENDATIONS
Heading
RECOMMENDATION
Title
AUTHORIZE the Chief Executive Officer ("CEO"), or their designee, to execute a five-year option to extend the existing lease agreement with Andy Azad 2002 Irrevocable Trust ("Landlord") for the use of 44,964 rentable square feet ("RSF") of warehouse and office space located at 2950 East Vernon Avenue in Vernon ("Vernon Warehouse"), commencing August 1, 2023, at a monthly rental rate of $46,391.78 with fixed annual increases of approximately three percent (3%) for a total of $2,955,603 over the five-year option term. The annualized rental rate over the initial term, including the option increases the total amount of the lease from $2,189,247 to $5,144,850.
Issue
ISSUE
The Board approved the current lease on January 17, 2019 (File#2018-0748). Metro Supply Chain Management/Logistics and Metro Facilities Maintenance currently lease the Vernon Warehouse under an existing four-year and nine-month lease agreement. The lease will expire on July 31, 2023. Metro has one (1) option to extend the lease for an additional five-year term ("Lease Extension") with at least six months' notice which must be exercised by February 1, 2023. The lease option requires Board approval as the total annual lease expense exceeds the CEO authority of $500,000 annually.
Background
BACKGROUND
The four-year and nine-month lease term commenced on May 1, 2019, will expire on July 31, 2023, for a total amount of $2,189,247. Metro has one (1) option to extend the term for five (5) additional years.
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