REPORT TO THE CITY COUNCIL FROM: BRIAN BARR, Director General Services Department BY: SZARINA LOZANO, Management Analyst II General Services Department SUBJECT ..Title Approve the second amendment to the lease agreement between the City of Fresno and Tutelian Holdings I, LLC, for office space at 2440 Tulare Street, Civic Center Square, extending the lease term through August 31, 2025, in the amount of $137,434 for rent plus the proportionate CAM (Common Area Maintenance) charges estimated through end of the term at $81,602 for the Planning and Development Department, Housing and Community Development Division ..Body RECOMMENDATION Staff recommends Council approve the second amendment to the lease agreement between the City of Fresno and Tutelian Holdings I, LLC, a California limited liability company for office space at 2440 Tulare Street, Civic Center Square through August 31, 2025, in the amount of $137,434 for rent plus the proportionate CAM charges estimated through the end of the term at $81,602. EXECUTIVE SUMMARY In Fiscal Year 2023, the Planning and Development Department created two new Divisions and added 12 new staff members to handle numerous transactions related to the acquisition and rehabilitation of emergency homeless shelters, the development of tiny home projects, and expedited construction of permanent affordable housing units. Due to this increase, the Housing Production, Finance, and Community Development Divisions outgrew their space at City Hall and temporarily relocated to 2440 Tulare Street under a one-year lease agreement. These Housing Divisions plan to move to city owned property located at 1255 Van Ness Avenue, upon completion of tenant improvements in the summer of 2025. The current lease agreement expires February 28, 2024, and therefore needs to be extended 18 months to allow for the completion of tenant improvements. The proposed rent for the extension is $1.60 per square foot ($7,635.20 per month) through the end of the term. In addition to the monthly rent due, the City shall also pay $0.95 per square foot of CAM charges, estimated through the end of the term at $81,602. BACKGROUND As part of the Fiscal Year 2023 budget adopted by the City Council, the Planning and Development Department created two new Divisions and added 12 new staff members to handle numerous transactions related to the acquisition and rehabilitation of emergency homeless shelters, the development of tiny home projects, and expedited construction of permanent affordable housing units. As a result, the Housing Production, Finance, and Community Development Divisions outgrew the available space at City Hall and temporality relocated to office space at 2440 Tulare Street. The City entered into a one-year lease agreement for 4,772 square feet of office space with Tutelian Holdings I, LLC, in the amount of $5,971.25 plus the proportionate share of monthly CAM charges. The proposed rent for the extension is $1.60 per square foot ($7,635.20 per month) through the end of the term. In addition to the monthly rent due, the City shall also pay its proportionate share of CAM charges estimated at $0.95 per square foot. The total CAM estimate through the end of term is $81,602. CAM is defined as operating expenses incurred by the Landlord in maintaining, repairing, and operating the building. This can include utilities, maintenance, janitorial, landscaping, repairs, and similar. The City's proportionate share of CAM is based upon the square feet leased proportioned to the total rentable square feet of the building. Therefore, the City is responsible for 5.48% of the annual CAM charges during the term. CAM charges are estimated by the Landlord each year based upon prior year actual CAM expenses. These can increase or decrease each year. The City Attorney has approved this Amendment as to form. ENVIRONMENTAL FINDINGS This agreement falls within the Class 1 Categorical Exemption for Existing Facilities set forth in the CEQA Guidelines, Section 15301 for existing facilities, as a lease of an existing structure involving no expansion of use and will not result in any significant negative effects relating to traffic, noise, air quality or water quality. Furthermore, none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, Section 15300.2, apply to this project. LOCAL PREFERENCE Local Preference does not apply because this agreement is not a bid or award of a construction or services contract. FISCAL IMPACT The lease payments have been included in the adopted FY2024 General Fund under the Planning and Development Departments office. Attachments: Executed Lease Agreement Executed First Amendment Proposed Second Amendment