Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
APRIL 17, 2019
Subject
SUBJECT: LEASE AGREEMENT WITH BLUM COURTYARD ASSOCIATES FOR THE LA METRO SYSTEM SECURITY AND LAW ENFORCEMENT OFFICE LOCATED AT 1300 W. OPTICAL DRIVE, AZUSA
Action
ACTION: APPROVE RECOMMENDATIONS
Heading
RECOMMENDATION
Title
AUTHORIZE the Chief Executive Officer (CEO) to execute a ten (10)-year lease agreement commencing August 1, 2019 with Blum Courtyard Associates (“Lessor”) for the LA Metro System Security and Law Enforcement office located at 1300 W. Optical Drive in Azusa at a rate of $40,010 per month with escalations of three percent (3%) annually for a total lease value of $5,268,103 over the term.
Issue
ISSUE
The System Security and Law Enforcement (SSLE) Department has indicated a need for an additional presence of law enforcement for the eastern portions of the Gold Line. The proposed lease site will provide an operating base for law enforcement and is intended to meet the current need, as well as provide future capacity for SSLE as the Gold Line expands eastward through Irwindale/Azusa and on to Montclair in the coming years. The proposed site to be leased exceeds $500,000 and five years and therefore requires board approval.
Background
BACKGROUND
SSLE has contracted with the Los Angeles County Sheriff’s Department (LASD) to provide security services at Metro rail stations and along rail lines. To minimize security response times occurring on Metro operating lines, SSLE and LASD have determined that an additional substation is needed along the eastern extent of Gold Line operations. Beginning in May of 2018, the Real Estate department began working with SSLE, LASD, and brokers to secure a space which is fitted to the required specifications for law enforcement operations.
Discussion
DISCUSSION
Security and safety is a priority for Metro riders and staff. Metro Real Estate and SSLE believe this lease will provide a base of operations from which our SSLE resources can ensure Metro’s Customer Code of Conduct is fully enforceable and enhance the customer experience for all riders as the system expands and provides greater transit modality to all LA County residents.
The Real Estate department, working with SSLE and LASD, reviewed six sites, of which two sites became clearly the most practical for law enforcement operational needs and reasonably priced.
This proposed site is ideally situated within eyesight of the Gold Line Irwindale Station. LASD has noted that proximity to the 10 Freeway will further shorten response time to other nearby stations for interception of incidents occurring during operations. It will increase Metro security presence and provide for a foundation to grow Metro’s SSLE services, as needed, alongside the opening of Gold Line stations east of its current terminus. Not establishing this security office will continue to expose Metro customers to longer delays when law enforcement is needed.
Working with brokers and comparable market data, Real Estate is of the opinion that the cost of the lease over the term of the agreement is of fair-market value. Real Estate negotiated a ten-year agreement with two options to extend by five years.
EQUITY PLATFORM
This project aligns to Metro’s equity platform by addressing security issues for all customers of the agency and ensures law enforcement is stationed to respond to more communities.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
Establishment of a Metro presence with law enforcement agencies along active Metro ROW will provide greater protection, safety, and security along the Gold Line operating corridor for Metro riders and operators.
Financial_Impact
FINANCIAL IMPACT
Approval of the lease with Blum Courtyard will cost a total of $5,268,103 over the ten-year term of the agreement. This cost is inclusive of three-percent annual increases to the rent provided for in the terms and conditions of the agreement. The three-percent increase is comparably lower than the CPI 3.3% inflation as provided by the Bureau of Labor Statistics.
Impact to Budget
For the financial obligations related to the lease that will occur prior to July 2019, Real Estate will use funding provided in Project 306006 for eligible Bus and Rail operations expenditures. Real Estate has planned and submitted the cost of this lease as a part of its FY2020 in the Non-Departmental Real Estate Cost Center budget (0651) under the Gold Line Project 300055.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
Increasing the security and safety of ridership and Metro operators will directly impact the agency’s ability to deliver “outstanding trip experiences” for all and is therefore directly tied into Strategic Plan Goal 2.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The alternative is to not place the lease site at this location and select an alternative which would be less costly. However, when the cost-to-benefit analysis was performed, the savings provided by locating the site at an alternative location completely negated the benefit of having a site for SSLE on the Gold Line.
Next_Steps
NEXT STEPS
Upon board authorization, Real Estate will finalize the lease agreement with Blum Courtyard, forward to County Counsel for approval review, and submit for execution by the CEO for a ten-year period. After the first ten-year period, Metro will reevaluate to determine if continuing the lease site is still within Metro’s interest as it relates to operational concerns and financial constraints.
Attachments
ATTACHMENTS
Attachment A - Lease Location and Plans
Attachment B - Deal Points
Prepared_by
Prepared by: John Potts, DEO, Countywide Planning & Development, (213) 928-3397 Holly Rockwell, SEO, Countywide Planning and Development (213) 922-5585
Reviewed_By
Reviewed by: Laurie Lombardi, Interim Chief Planning Officer, (213) 922-7077
Alex Z. Wiggins, Chief System Security and Law Enforcement Officer, (213) 922-4433
