25B - AGMT - CDA WORK CENTER OFFICE SPACE LEASE

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Agreement to Lease Office Space Community Development Agency — WORK Center October 3, 2017 Page 2 The WIOA requires the WORK Center to undergo a certification review. One of the certification criteria requires the WORK Center to be fully ADA compliant. SARTC is not ADA compliant, and the cost to retrofit the building to achieve compliance is estimated at $1.2 million. There has been internal review of keeping the WORK Center at SARTC, but given the ADA retrofit cost and with the OC Streetcar light rail line scheduled to break ground next year, there is an opportunity to re -envision the use of the site and building and enhance overall economic development opportunities in the neighborhood. As an alternative, staff worked with a commercial real estate broker and explored alternative sites tha focused on finding a building that meets ADA and seismic standards, allows for operations to be located on one floor, and provides adequate parking and access to public transportation. Staff is recommending the city execute a five year master lease agreement with CF Santa Ana, LLC, for approximately 19,321 square feet of office space located on the second floor of 801 W. Civic Center Drive (Exhibit 1). Initial term base rent will be $2.20 per rentable square feet, per month, on a full service gross basis. The first year's year monthly rent will be $42,506.20 per month. The base monthly rental rate will increase annually by three percent in year two to five. The lease provides a tenant improvement allowance of $772,840 with the right to apply the allowance toward both tenant improvement build out and soft costs such as cabling, wiring, and procurement and installation of furniture. The City will be the master lease holder and enter into sub -lease agreements with its co -located one-stop partners. Each sub tenant partner will reimburse the City for the partner's portion of the space occupied in the WORK Center and also share proportionally in the cost of the common space (i.e. training rooms, employment resource area, break room, IT and storage rooms) which will reduce the net cost of the master lease to the City. The sequence of the lease agreement execution is to sign the master agreement first. After execution of master lease agreement, the landlord will finalize an Accessibility Survey and perform all work required to correct any conditions identified in the survey. Following completion of this work, the landlord will provide a signed Verified Report Form G. (This form is required by our primary partner, the Employment Development Department (EDD), prior to executing a sub lease). Letters of intent to enter into a sub -lease with the city from both EDD and OC Social Services Agency (SSA) are in hand (Exhibit 2 and 3). 25B-2