Title
Health and Human Services Agency (HHSA), in conjunction with the Chief Administrative Office, Facilities Division, recommending the Board:
1) Approve and authorize the Purchasing Agent to sign Amendment III to Lease Agreement 576-L1311 (FENIX 997) with Steve’s Christmas Trees, Inc. (Lessor), for office space at 768 Pleasant Valley Road in Diamond Springs, to increase the rentable square footage from 13,770 to 17,405 through May 31, 2034, and the monthly rent amount from $27,209.52 to $34,297.77 through May 31, 2026, with a guaranteed four-percent increase each year thereafter for the remainder of the term, with no change to the existing term, which includes an initial term through May 31, 2034, and includes two five-year renewal options for a term not to exceed May 31, 2044; and
2) Authorize the Purchasing Agent to execute amendments relating to Lease Agreement 576-L1311, contingent upon approval by County Counsel and Risk Management, which do not increase compensation or the term of the Agreement.
FUNDING: 53% Federal/State Medi-Cal, 28% MHSA, 17% Realignment, 2% Federal Substance Use Block Grant.
Body
DISCUSSION / BACKGROUND:
On May 7, 2013, the Board approved the Lease Agreement 576-L1311 (FENIX 997) with Steven and Laura Abel Nevada Family Trust for 13,770 square feet of office space located at 768 Pleasant Valley Road in Diamond Springs (Legistar file 13-0517). The lease of 768 Pleasant Valley Road office space houses mental health outpatient services for HHSA’s Behavioral Health Division (BHD) on the West Slope and represents a centralized location for this region of the County.
On April 30, 2024, the Board authorized the Purchasing Agent to execute Amendment I to Lease Agreement 576-L1311, which extended the term of the Agreement for an additional 10 years through May 31, 2034, with the option to extend for two subsequent five-year term extensions through May 31, 2044. Further, Amendment I increased the lease amount of $3,769,389.37 to a new total of $6,431,511.15 for the initial lease period (20 years and five months), with each subsequent five-year renewal option for an amount equal to the then Fair Market Value or a minimum four percent increase, whichever is greater, for the monthly rent (Legistar file 24-0684).
Amendment II was approved by the Purchasing Agent on August 5, 2024, which transferred and assigned the lease from the Steven and Laura Abel Nevada Family Trust to Steve’s Christmas Trees, Inc. (Lessor), with no changes to the term or maximum obligation of the Agreement.
This Amendment III to Lease Agreement 576-L1311 adds 3,635 square feet of office space, for a total of 17,405 square feet of office space at 768 Pleasant Valley Road in Diamond Springs through May 31, 2034. Additionally, it increases the monthly rent amount from the current rate of $27,209.52 to $34,297.77 through May 31, 2026, with a four-percent rent increase annually thereafter throughout the remainder of the term.
HHSA, in conjunction with (Chief Administrative Office (CAO) Facilities Division, is recommending the Board approve this Amendment III to Lease Agreement 576-L1311 to allow HHSA to lease additional space at 768 Pleasant Valley Road. The lease of the additional space will allow HHSA’s Behavioral Health Division (BHD) to provide the statutorily mandated integration of the Drug Medi-Cal Organized Delivery System/Substance Use Disorder (DMC-ODS/SUDS) services at this location to align with the division’s mental health programming, required by 2027 as a component of California Advancing and Innovating Medi-Cal (CalAIM). Failing to complete this core CalAIM mandate will result in fines, sanctions and penalties by the Department of Health Care Services (DHCS). This additional space will aid in the reducing the number of staff at the aging Spring Street Facility.
ALTERNATIVES:
Should the Board decline to approve this recommendation, the County will not have a lease agreement in place for the lease of additional office space at 768 Pleasant Valley Road.
PRIOR BOARD ACTION:
1) 05/07/13, 13-0517, HHSA/MHD Mental Health Leased Space
2) 04/30/24, 24-0684, HHSA/BHD - Amendment I to Lease Agreement L1311
3) 04/01/25, 25-0591, Facilities/HHSA - Enter into negotiations 768 Pleasant Valley Rd, Upper Level
OTHER DEPARTMENT / AGENCY INVOLVEMENT:
CAO Facilities, CAO Procurement and Contracts, and County Counsel. The Auditor-Controller was notified per Policy B-12.
CAO RECOMMENDATION:
Approve as recommended.
FINANCIAL IMPACT:
There is no Net County Cost associated with this agenda item. Sufficient appropriations were included in the Fiscal Year 2025-26 Budget and will be included in future budgets for the terms of the Agreement.
CLERK OF THE BOARD FOLLOW UP ACTIONS
1) Clerk of the Board to obtain signature of Chair on one original Amendment III to Lease Agreement 576-L1311 (FENIX #997); and
2) Clerk of the Board to return one fully executed Amendment III to Lease Agreement 576-L1311 to CAO Procurement & Contracts at 330 Fair Lane.
STRATEGIC PLAN COMPONENT:
N/A
CONTACT
Olivia Byron-Cooper, MPH, Director, Health and Human Services Agency
Charles Harrell, Facilities Division Manager, Chief Administrative Office