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HomeMy WebLinkAboutFS 2009-01-21 Item 2B - Agreement - Records Center Lease AgreementTO: City of Tukwila INFORMATIONAL MEMORANDUM Mayor Haggerton Finance and Safety Committee FROM: Jim Morrow, Public Works Director DATE: January 12, 2009 SUBJECT: Record Storage Facility Rental Staff Recommendations from a Record Storage Facility lease offer ISSUE Evaluate staffs recommendations for record storage facility rental. BACKGROUND Jim Haggerton, Mayor In November 2007, the City Clerk's Office expressed the need to obtain a larger record storage space than the current facility at 12026 42 Avenue South, Tukwila (a former Fire station). The existing facility provides records storage for all City departments and the Police Department. Currently the records storage facility holds 1,260 boxes of vital City records, under the charge of the Clerk's Office. The City Clerk's Office receives an average of 81 more storage boxes annually than those purged, per the State Records Retention Schedule. In 2008, 211 boxes were archived at the Records Center, and 121 boxes were purged. Continuing with this trend, the City Clerk's Office will not be able to accommodate the records needs of the City in 2009. Instead, storage boxes will need to remain in their respective departmental work areas. As for the Police Department, their staff indicated the current available space should meet their storage needs until 2012. Due to the immediate and long -term need for additional storage space for City -wide records and the Police Department, staff contacted Sabey Corporation for leasing a suitable warehouse space. Sabey's suggested warehouse space is in Intergate East Building 1, located at 3411 South 120 Street in Tukwila. In the last few months, staff toured this storage facility multiple times. One particular feature that appeals to staff is that the Sabey facility has a sprinkler system connected to an automatic fire alarm system. In case of a fire, the fire alarm system will alert the security company, and certainly to the Fire Department. It is critical for records to be protected from fire; and yet, there is no fire protection at the current record storage facility. Terms of the space lease were offered by Sabey Corporation back in July 22, 2008, with Options A and B (see the attachment for the term details). In brief, Option A is a 5 -year lease for $311,268 total rental cost, and a $105,000 worth of up -front tenant improvements. Option B is also the same 5 -year lease, but for $232,785 total rent and a $33,255 tenant improvement allowance. Per Sabey's representatives, this lease offer is still valid today. Page 1 of 3 W :\2009 Info4emos \Info Memo to recommend for Record Storage Facility Rental, 1- 15- 09.doc INFORMATIONAL MEMO Page 2 ANALYSIS Staff evaluated the offered warehouse space for record storage and the associated lease terms, based on the following three analysis angles. Cost and Benefits: Option A would require $311,268 total rent, while providing $105,000 worth of tenant improvement benefits. Thus, the net cost for Option A is $206,268 ($311,268 $105,000). For Option B, rental cost would be $232,785 over 5 years, with tenant improvement allowance of $33,255. Thus, the net cost for Option B is $199,530 ($232,785 $33,255). The net cost difference for both Options is only $6,738 ($206,268 $199,530) in 5 years. As a result, from the cost benefit standpoint, choosing either Option A or B is recommendable. Tenant Improvement Costs From the July 22, 2008 lease proposal, in Option A, the offered tenant improvements include patch and paint the entire premise, ceiling demolition, gas and electrical meter installations, and sidewalk and exterior door reconstruction, among others. Staff believes that Sabey Corporation correctly identified the primary and necessary tenant improvements for our proposed record storage facility. If the City chooses Option B, then the City should provide all the described Option A tenant improvements up- front, within $105,000. However, these improvement items are numerous and quite demanding to be finished by our own maintenance staff. If contracting with an outside contractor to provide these improvements, then the City will need to compensate under more costly prevailing wage labor rates. The eventual tenant improvement cost could then far exceed $105,000, which is currently offered in Option A. Thus, from the tenant improvement cost standpoint, Option A would be a lower -cost option for the City. Project Manaaement Staff Capacity There are currently ten smaller and one major (Tukwila International Boulevard Phases II Ill) capital improvement projects being managed by the Public Works Project Management office. As stated, the up -front tenant improvements for record storage are quite demanding to be managed. Thus, Option A is definitely a more preferable choice from a Project Management staffing standpoint. Also, when constructing these tenant improvement items in the storage facility, the City's staff or contractor may end up damaging some of Sabey's other current building facilities, including the current piping systems on the ceiling. Option A would simply be an easier option to implement than Option B. Therefore, staff recommends Option A over Option B based on the above analysis. Awareness of other Costs: Please be aware that in addition to the rental cost offered by Sabey Corporation, there are other costs associated with establishing this record storage facility. One of the costs is to dismantle the existing record storage shelving, and re- assemble them at the Sabey's proposed facility. Per the enclosed estimate provided by Easyup Storage Systems in March 2008, such record relocation and re- establishment work could be $41,783.00 or more. This cost will also need to come from the General Improvements 303 Fund. Page 2 of 3 1:12009 InfoMemoslInfo Memo to recommend for Record Storage Facility Rental, i- 15- 09.doc INFORMATIONAL MEMO Page 3 Other Observations: During this storage facility evaluation, staff also discovered two other concerns that merit further discussion. Flooding Concern: Based on staff's past storm event memories, the lntergate East Building 1 is susceptible for flooding in a major storm event. The proposed storage facility is located within a single -level warehouse; and the warehouse plaza is partially surrounded by a creek. At some locations surrounding the plaza, the creek is two to three feet above the warehouse ground level, but is being retained by a four -foot concrete wall. Public Works staff recalls seeing flooding occurred during past major storm events. Although there are catch basins outside of the warehouse building, these few catch basins may not prevent the creek from flooding into the building in a significant rainstorm. The City needs to determine if this proposed facility is actually suitable for the City's record storage, due to the flooding concern. Room for further lease negotiation: If the Committee deems this proposed warehouse facility as suitable for the City's record storage, then staff would recommend the City to negotiate for a more economical lease. Sabey Corporation's lease offer was written back in July 2008; and the proposal is still valid today for the same storage facility. When staff toured the storage space, Sabey's representatives did not state that there is a long list of potential tenants ready to rent the facility. Indeed, it is the right time for the City to bargain for lower rent. RECOMMENDATION Staff recommends the Finance and Safety Committee to determine if Sabey's proposed facility is suitable for the City's record storage. If deemed suitable, the City should choose Option A, but with a reduced lease cost. Depending on the Finance and Safety Committee's recommendation, the Council could be asked to consider and approve the proposal at the January 26, 2009 Committee of the Whole meeting, and subsequent February 2, 2009 Regular Meeting. ATTACHMENTS A lease offer from Sabey Corporation back in July 22, 2008, for the potential record storage facility. A March 2008 estimate from Easyup Storage Systems, for record relocation from the City Hall, and re- establishment at the Sabey's proposed facility. Page 3 of 3 W:12009 Infolvtemosllnfo Memo to recommend for Record Storage Facility Rental, 1- 15 -09.doc July 22, 2008 Sent Via Email U.S. Mail Mr. Jim Morrow, P.E. imorrow(aici.tukwila.wa.us City of Tukwila Public Works Director 6300 Southcenter Blvd. Tukwila, WA 98188 -2544 Dear Jim: Re: Lease of Warehouse space at Intergate.East SABEY CORPORATION appreciates the opportunity to present to The City of Tukwila "Tenant our proposal for leasing warehouse space at Intergate.East Building 1( "IGE 1 The following are the key business tennis, which if acceptable to Tenant, shall be the basis for a new lease agreement. L- BUILDING PARAMETERS Owner Profile: Landlord: Premises: Additional Space: Use of Space: Access: Building Security: SABEY CORPORATION, a Washington State company with over 35 years of experience and over 4 million square feet under ownership, will own and manage the property. A Limited Liability Company wholly owned by Sabey Corporation will be the direct owner of the property. International Gateway East LLC c/o Sabey Corporation. Landlord shall provide up to approximately 6,651 square feet in IGE's Building #1 pursuant to BOMA standards, as outlined on the attached floor plan. In the event the Tenant needs additional space, Landlord is willing to discuss additional alternatives to accommodate Tenant's space needs. General record storage space or other uses incident thereto. Tenant will have access 365 days a year, 24 hours a day, subject to Landlord's security protocols for the property and building. Landlord has a contract with a security provider to monitor the building and site after hours. Tenant shall have the right to install a cardkey and camera security system on Tenants space, at Tenant's cost, subject to Landlord's building protocols. Landlord is willing to discuss any additional security requirements Tenant might have. Parking: Landlord shall provide Tenant up to one (1) unassigned parking stall per 1,000 rented square foot leased. IL- ECONOMIC TERMS Term: Commencement: Option A: Rental Rate: Tenant Improvements to Space: Option B: Rental Rate: Tenant Improvements to Space: In the event that a five (5) year lease is fully- executed, Landlord will provide for a Tenant Improvement Allowance of up to $5.00 per rented square foot (or $33,255.00) to be used towards improvements, alterations and repairs, including any space planning or design costs, subject to Landlord's review and approval of the Working Drawings. Tenant shall incur the cost of any additional alterations, improvements, and repairs including all wiring cabling for data and communications. Security Deposit: Five (5) years. October 1, 2008 or sooner or upon substantial completion of Tenant Improvements. Year 1: Year 2: Year 3: Years 4 -5: Year 1: Year 2: Year 3: Year 4: Year 5: 8.30 per square foot, per year, NNN. 9.00 per square foot, per year, NNN. 9.50 per square foot, per year, NNN. 10.00 per square foot, per year, NNN. In the event that a five (5) year lease is fully- executed Landlord will patch paint the entire premises, provide door locks, heat premises (no cooling), demo ceiling, provide lighting, install gas electrical meters, add new exterior lighting, sidewalk and exterior door, provide a small amount of electrical, and clean up flooring, per the attached space plan. The total estimated cost for completing all the work requested by Tenant is a total of 105,000. Tenant shall incur the cost of any additional alterations, improvements, and repairs including all wiring cabling for data and communications. 6.60 per square foot, per year, NNN. 6.80 per square foot, per year, NNN. S 7.00 per square foot, per year, NNN. 7.20 per square foot, per year, NI\TN. 7.40 per square foot, per year, NNN. A cash deposit equal to last month's rent will be required. Amount of additional security required, if any, to be determined upon Landlord's review of Tenant's current financial statements. Operating Costs: IIL OTHER PROVISIONS: Confidentiality: Broker's Fee: This Proposal does not create any legal rights or obligations to either party, but rather summarizes the key business terms of our offer. All of the legal rights and obligations of the parties will be set forth in the lease agreement. Please confuin that this Letter of Intent accurately sets forth your understanding of the key business terms by signing the enclosed copy of this Letter and returning it to me before July 31, 2008 Sincerely, SABEY CORPORATION, as agent for International Gateway East LLC Marcy A. Purdy Associate Vice President of Leasing Operating costs shall be passed through on a pro -rata basis and are currently estimated at 52.75 per rentable square foot, per year (which electricity will be separately metered). NI Operating costs include the following services for a typical user: a. Real Estate Taxes b. Property Insurance c. Site, Building and Parking Lot Maintenance e. Standard Water Usage f. Standard Sewer Usage g. Building Site Security and Fire Monitoring i. Exterior Landscaping k. Property Management Each party hereto agrees to retain in confidence all infoi ivation that is disclosed by the other party and is marked or otherwise identified as confidential at or near the time of discussion, including without limitation, the terms and conditions of this Letter of Intent. In addition, unless otherwise required by law, neither party shall make any press release or public announcement with respect to this Letter of Intent or the transactions completed hereby without prior consent of the other, which consent shall not be unreasonably withheld or delayed. The financial structure of this proposal is based on Landlord's and Tenant's desire to complete this transaction without the involvement of a third party Brokerage representation for either party. ACCEPTED AND APPROVED: CITY OF TUKWILA By: Its/Title: Date: cc: Mikel Hansen Ken Stick ley SABEY CORPORATION, as agent for International Gateway East LLC By: Its/Title: Date: AS f LIP S TORAE S YSTEMS 9883 40 Ave South Tel: (206) 394 -3330 Seattle, WA 9818 Fax (206) 575.61829 Contractor License: ENGINPC931CO Federal ID# 22- 3949676 UBI 602 -684 -203 Employment Security: 357076 00 6 L &l 586,0 -04 Oregon Contractors License: 174426 Quotation: To: Ms. Stacie Norris Date; March 25, 2008 City of Tukwilla 6300 Southcenter Blvd Tukwilla, WA 98188 RE: Archive shelving Page 1 of 2 We propose to furnish the equipment and or services described below based on acceptance of our General Terms and Conditions contained on the bottom of this quote. Easy Up Storage Systems will provide the following services as shown be low. 1. We will dismantle the existing Easy Up shelving for the City Clerks (City) archive boxes, and the existing Police Depaibrtent (Police) file storage that are now in the former fire station, package for shipment, and transport same to your new location at 3411 South 120 Place. The City file area currently has 35 shelving sections, the new plan calls for an additional 59 units. (see attached drawing) All units will be 8' tali, either 15" or 24" or 30" deep, and either 39" or 52" long, with 7 adjustable particle board shelf levels including the dust cover. (except transfer case units which will only have 6 levels) Prices include the trade in value of your existing T non seismic posts. All other existing material will be re -used. 2. We will re- assemble the existing City material as well as the additional units shown on the attached drawing. For the Police section, we will replace the existing 7' posts with 8' posts with seismic footplates to comply with current seismic requirements and re- assemble the units with 7 Levels with the proper beams to support the loads. 13 sections will be provided for the Police transfer case files. The Police area now contains 14 sections, the new plan adds 53 additional units. (see attached drawing) Units will be 8' tall, either 15" or 30" deep, either 39" or 52" long, with 7 adjustable particle board shelves, including the dust cover. All existing material will be re -used. All units will be anchored to the floor, and either have overhead earthquake bracing or will be secured in some way, per engineering direction. 3. Prior to the move and assembly, Easy Up will secure the necessary building permits for the construction of these shelving units. Our permit will attest to the structural integrity and installation of the system. Fire protection,'ADA, special inspections, or any other issues that may arise as a result of this installation will the responsibility of the City of Tukwila. Storage and Material Handling Specialists CONFIDENTIAL AND PROPRIETARY 1. Normal terms are cash or net 15 days with approved crecrrt. 2. Materials are quoted FOt3 EasyUp, Tukwila, excluding any applicable taxes, unless otherwise specified. 3. Minimum order, $50.00, 4. A 25% Restocking fee is assessed for canceled orders that have been pulled and return of normally stocked materials. 5. Special orderproducx is non returnable. 5, Quote is vaf„i for 30 days, 7. Pricing for used material is based upon stock on hand at the time of quotation and is subject to change without nice. Easy Up Storage Systems is a division of Engineered Products, a Paps Company e Page 2 March 25, 2008 The drawings and subsequent layouts are best estimated from building information provided to date, and are subject to field inspection. Proposed layouts and structural engineering are subject to review and correction by the City of Tukwila, Pricing will be adjusted accordingly, of course. Your pre -tax price for the goods and services described above: City file area: Take -down, move, re- install old and new units $21,823.00 Police area: Take -down, move, re- install old and new units $18,460.00 Combined engineering and permit processing: 1.500.00 (Actual City of Tukwila charges not included) TOTAL: $41,783.00 Thank you for the opportunity to be of assistance on this project. Respectfully, Roger H_ Stuessi, Sales Manager Easy Up Storage Systems Accepted by: (206) 394 -3331 Direct (206) 368 -0437 Fax Direct Title: Date: (206) 915 -9455 Cell roger©easyupusa.com FRO Roger@EasvUpStorage5ystems FAX NO. 206 -368 -0437 Mar. 25 2088 07:22AN P4 7 [a CQ O C7 co I V ro w �T M S' a CL1 �ft I N �J n N' v rn_ try W co ice I.a':`l:.�;�# _a;::l a o! v U f H �1 Q I ca if N s u if