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Home My WebLink AboutFS 2009-02-03 Item 2B - Agreement - Records Center Lease Agreement with Sabey Corporation (Intergate East) City of Tukwila Jim Haggerton Mayor INFORMATIONAL MEMORANDUM TO: Mayor Haggerton Finance and Safety Committee FROM: Jim Morrow, Public Works Directo~ January 26, 2009 DATE: SUBJECT: Record Storaqe Facility Lease ISSUE Authorize staff to negotiate a lease for a new record storage facility space from the Sabey Corporation. BACKGROUND In November 2007, the City Clerk's Office expressed the need for additional space for the City's record storage center. The current facility at 12026 42nd Avenue South (a former Fire station) is old, undersized (records are currently spread all over the City), and lacks adequate fire protection. 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. At this rate, the City will run out of space this year and be unable to continue offsite storage of critical records. Due to the immediate and long-term need for additional storage space, a search was conducted to identify approximately 6,000 sq. feet that would be suitable for both City records and Police Department records. The Sabey Corporation has identified warehouse space. Staff toured the proposed facility multiple times. With tenant improvements, the proposed facility will meet all of the City and Police Department needs well into the future. ANAL YSIS The Sabey Corporation submitted a lease proposal with two options: . Option A: 5-year lease for $311,268 total rental cost and $105,000 worth of up-front tenant improvements. Sabey will perform the up-front tenant improvements. The improvements include patch and paint the entire space; ceiling demolition; gas and electrical meter installations; and sidewalk and exterior door reconstruction. . Option B: 5-year lease for $232,785 total rent and $33,255 tenant improvement allowance. Tenant improvements are not as extensive. INFORMATIONAL MEMO Page 2 The net costs of Option A and B are relatively close - $206,268 ($311,268 - $105,000) versus $199,530 ($232,785 - $33,255); a difference of $6,738. If Option B were chosen, the City would be required to perform the additional tenant improvements needed for the space. If the City were to undertake the improvements, the staff costs and time to award a contract and oversee the contract would cost more than the $6,738 in difference. As part of the project, the City must dismantle the existil)g shelves, re-assemble them, purchase additional shelving, and erect a floor-to-ceiling fence to separate the Police records from City records. The City has received an estimate of $41,783 from Easyup Storage Systems for the shelving work (same supplier of the existing shelving) and an estimate of approximately $30,000 for the fence and gates for a total of approximately $72,000. Public Works and Finance have discussed the funding options. It is proposed that the 303 Fund be used for both the annual rent and the shelving/fence costs. RECOMMENDATION Staff recommends pursuing Option A with Sabey and consideration of this item at the February 9, 2009 Committee of the Whole Meeting and subsequent February 17, 2009 Regular Meeting. ATTACHMENT Sabey Corporation lease offer dated July 22, 2008. P:\Jim\Revised - Record Storage Memo - 1-26,{)9 - changes accepted.doc 2 July 22, 2008 Sent Via Email & U.S. Mail Mr. Jim Morrow, P.E. imorrow@cLtukwila.wa.us City ofTukwila Public Works Director 6300 Southcenter Blvd. Tukwila, W A 98188-2544 Re: Lease of Warehouse space at Intergate.East Dear Jim: SABEY CORPORATION appreciates the opportunity to present to The City ofTukwila ("Tenant") our proposal for leasing warehouse space at Intergate.East Building 1 ("IGE 1 "). The following are the key business terms, which if acceptable to Tenant, shall be the basis for a new lease agreement. L- BUILDING PARAMETERS Owner Prome: 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. Landlord: International Gateway East LLC c/o Sabey Corporation. Premises: 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. Additional Space: In the event the Tenant needs additional space, Landlord is willing to discuss additional alternatives to accommodate Tenant's space needs. Use of Space: General record storage space or other uses incident thereto. Access: Tenant will have access 365 days a year, 24 hours a day, subject to Landlord's security protocols for the property and building. Building Security: 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. S~BEY CORPORATION IL- ECONOMIC TERilfS Term: Five (5) years. Commencement: October 1,2008 or sooner or upon substantial completion of Ten ant Improvements. Ootion A: Rental Rate: Year 1: Year 2: Year 3: Years 4-5: Tenant Improvements to Space: $ 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. Ootion B: Rental Rate: Year 1: Year 2: Year 3: Year 4: Year 5: $ 6.60 per square foot, per year, NNN. $ 6.80 per square foot, per year, NNN. $ 7.00 per square foot, per year, NNN. $ 7.20 per square foot, per year, NNN. $ 7.40 per square foot, per year, NNN. 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: 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. S:t~BEY CORPORATION Operating Costs: Operating costs shall be passed through on a pro-rata basis and are currently estimated at $2.75 per rentable square foot, per year (which electricity will be separately metered). NNN 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 1. Exterior Landscaping k. Property Management IIL- OTHER PROVISIONS: Confidentiality: Each party hereto agrees to retain in confidence all information 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 othenvise 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. Broker's Fee: The fmancial 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. 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 confirm 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 /fdP'if /I Ihd;j' Marcy A. Purdy Associate Vice President of Leasing SA BE v L~~\ , 1 CORPORATION ACCEPTED AND APPROVED: CITY OF TuKWILA By: ItsrritIe: Date: cc: Mikel Hansen Ken Stickley SABEY CORPORATION, as agent for International Gateway East LLC By: ItsrritIe: Date: