HomeMy WebLinkAboutAGENDA REPORT 2006 0517 CC REG ITEM 10H TTEM X0. 14.
MOORPARK CITY COUNCIL
AGENDA REPORT
TO: The Honorable City Council
FROM: Hugh R. Riley, Assistant City Mana p
DATE: May 8, 2006 (CC Meeting of May 17, 2006)
SUBJECT: Consider Allocation of California Highway Patrol Lease Revenue-
Police Services Center
DISCUSSION
The City is leasing 4,497 square feet of the total 25,822 square feet in the new Police
Services Center to the California Highway Patrol for their East Ventura County Station.
The lease also includes the CHP's use of additional space included in the common area
lobby and the public restrooms.
RENT REVENUE
The City receives base rent from this lease at a rate of $1.3342/square foot
($6,000/mo.) increasing on the annual anniversary date beginning November 1, 2006 at
a fixed rate of 2.5% and each year thereafter for the full term of the lease. In addition,
the City receives a monthly payment representing an amortized cost for CHP required
Change Orders during the building construction that totaled $68,839.58. The
amortization adds $658 (rounded up from $657.86) to the monthly base rent through
June 30, 2020. The total base rent revenue plus the amortized change order payment
for the 15-year term of the lease is $1,363,824.
FACILITY COST
The estimated construction cost per square foot for the CHP lease space including
design, construction management, and tenant improvements not reimbursed by the
State is $270 per square foot or $1,214,190. With the proposed rent, excluding
operating costs for the space, the City would fully recover its cash investment during the
15-year rent period considering the 2.5% rent escalator schedule proposed and
excluding probable interest earnings.
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Honorable City Council
May 17, 2006
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OPERATING COSTS- CHP SPACE
Based on the first-year operating cost estimates for the building which include insurance
expense, it costs the City's General Fund $3.44 per square foot per year or $78,741 to
provide utilities and maintain the space for the Sheriffs Department and the California
Highway Patrol. The only recurring costs associated with the CHP portion of the building
are property insurance, water, and periodic required maintenance. In order to determine
the costs for water and property insurance for the CHP, the total amount for each was
reduced to per square foot cost and multiplied by the total square footage of the CHP
area. The maintenance costs are a best guess estimate. Based on these numbers the
space leased to the CHP has an annual operating cost of $13,366 or $2.97 per square
foot.
ALLOCATION OF RENT REVENUE
Staff recommends that the City Council consider allocating the CHP lease revenue to
reimburse the City General Fund for the operating cost for the CHP leased space (4,497
sq. ft.). The remaining revenue including the $658 payments to amortize change order
costs can then be allocated to repay the Endowment Fund which was used to construct
the facility. For the first year, this translates into a payment of $66,529.49 to the
Endowment Fund, with an increase each year as the amount of revenue generated from
the lease increases. Attachment A to this report provides the lease revenue over the 15
year period of the lease, less annual operating costs for the CHP space with an
estimated yearly increase of 2%, and the funds to be repaid annually to the Endowment
Fund totaling $ 1,132,671. If the operating costs increase at a rate exceeding 2%, the
reimbursements to the General Fund would be adjusted accordingly.
This allocation of rent revenue provides for the recovery of the $ $1,214,190 capital
investment with an additional year (11 months) of the lease at the same terms and
considering the rent payments reduced by the $658 change order amortization amount.
STAFF RECOMMENDATION
Approve the use of the CHP lease revenue to reimburse the General Fund for actual
operating cost for the CHP leased space and allocate remaining revenue to the
Endowment Fund.
Attachment A: 15-Year Revenue/Repayment Projection
Police Services Center- CHP Space
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Attachment "A"
15-Year Revenue/Repayment Projection
Police Services Center
• Yearly CHP Rent Revenue CHP Operating Costs* Funds Repaid
05/06 $ 79,896.00 $ 13,366.51 $ 66,529.49
06/07 $ 81,336.00 $ 13,633.84 $ 67,702.16
07/08 $ 82,800.00 $ 13,906.52 $ . 68,893.48
08/09 $ 84,300.00 $ 14,184.65 $ 70,115.35
09/10 $ 85,836.00 $ 14,468.34 $ 71,367.66
10/11 $ 87,396.00 $ 14,757.71 $ 72,638.29
11/12 $ 88,980.00 $ 15,052.86 $ 73,927.14
' 12/13 $ 90,600.00 $ 15,353.92 $ 75,246.08
13/14 $ 92,256.00 $ • 15,661.00 $ 76,595.00
14/15 $ 93,948.00 $ 15,974.22 $ 77,973.78
15/16 $ 95,904.00 $ 16,293.70 $ 79,610.30
16/17 $ 97,416.00 $ 16,619 58 $ 80,796.42
17/18 $ 99,216.00 $ 16,951.97 $ 82,264.03
18/19 $ 101,040.00 $ 17,291.01 $ 83,748.99
19/20 $ 102,900.00 $ 17,636.83 $ 85,263.17
Total: $ 1,363,824.00 $ 231,152.63 $ 1,132,671.37
*assumes 2%annual increase in costs
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