REPORT TO THE CITY COUNCIL
FROM: BRIAN BARR, Director
General Services Department
BY: DESIREE NARANJO, Property Specialist II
General Services Department
SUBJECT
Title
Actions pertaining to a Lease Agreement between the City of Fresno and Bericon Partners, LLC for office space located at 5051-5059 East McKinley Avenue (Council District 4):
1. Adopt a finding of Categorical Exemption pursuant to Section 15301/Class 1 of the California
Environmental Quality Act (CEQA) Guidelines
2. Approve a lease agreement between the City of Fresno and Bericon Partners, LLC, a California limited liability company, to lease office space for one year with an option to extend for two additional one-year terms, starting at $58,059 a year with a 1.5% annual increase, totaling $176,802 over three years in rent plus the City’s proportionate share of utility costs
Body
RECOMMENDATION
Staff recommends Council approve actions pertaining to a Lease Agreement between the City of Fresno and Bericon Partners, LLC for office space located at 5051-5059 East McKinley Avenue:
1. Adopt a finding of Categorical Exemption pursuant to Section 15301/Class 1 of the California Environmental Quality Act (CEQA) Guidelines
2. Approve a lease agreement between the City of Fresno and Bericon Partners, LLC, a California limited liability company, to lease office space for one year with an option to extend for two additional one-year terms, starting at $58,059 a year with a 1.5% annual increase, totaling $176,802 over three years in rent plus the City’s proportionate share of utility costs
EXECUTIVE SUMMARY
Since 1977, the City has leased office space located at 5051-5059 East McKinley Avenue. The City is seeking to renew its lease agreement for 5,498 square feet of office space with an effective term of July 1, 2025, for one year with an option to extend for two additional one-year terms. The term of the proposed lease shall be one year ending June 30, 2026, with an option to extend for two additional one-year terms. The proposed negotiated lease rate is $0.88 per square foot ($4,838.24 per month) for rent with a 1.5% annual increase through the end of the term. In addition to the monthly rent due, the City shall also pay its proportionate share of utilities costs.
After the first full year of occupancy, the lease may be terminated by the City, without cause at any time, with a 180-day prior written notice. The lease agreement also includes a non-appropriations termination clause which allows the City to terminate the lease with a 90-day prior written notice, should funding not be approved in the annual adopted budget.
BACKGROUND
Since 1977, the City has leased office space located at 5051-5059 East McKinley Avenue. The City is seeking to renew its lease agreement for 5,498 square feet of office space with an effective term of July 1, 2025, for one year with an option to extend for two additional one-year terms.
The proposed negotiated lease rate is $0.88 per square foot ($4,838.24 per month) for rent with a 1.5% annual increase through the end of the term. The lease rate increased $0.08 per square foot from the prior lease agreement term of $0.80 per square foot. The area leased will also be reduced from the existing 7,246 square feet to 5,498 square feet which reflects the minimum required space moving forward.
In addition to the monthly rent due, the City shall also pay its proportionate share of utilities costs for electricity, natural gas, water, garbage, and sewer services. The City’s share of utility costs is proportionate to the square footage of the leased office space to the total rentable square footage of the property.
After the first full year of occupancy, the lease may be terminated by the City, without cause at any time, with a 180-day prior written notice. The lease agreement also includes a non-appropriations termination clause which allows the City to terminate the lease with a 90-day prior written notice, should funding not be approved in the annual adopted budget.
The lease agreement has been approved by the City Attorney’s Office as to form.
ENVIRONMENTAL FINDING
Staff has performed preliminary environmental assessments of this project and has determined this project is exempt under Section 15301/Class 1 (Existing Facilities) of CEQA Guidelines as it involves no alteration of existing facilities, with no expansion of use. Furthermore, none of the exceptions to Categorical Exemptions set forth in CEQA Guidelines, Section 15300.2, apply to this project.
LOCAL PREFERENCE
Local preference was not considered because this item does not include a bid or award of a construction or service contract.
FISCAL IMPACT
The lease payments have been included in the adopted FY2026 General Fund budget. Funding for future years will be included in the appropriate fiscal year’s budget subject to Council approval.
Attachments:
Lease Agreement
Levine Act Form