FISCAL NOTE FOR NON-CAPITAL PROJECTS

Department:	Contact Person/Phone:	DOF Analyst/Phone:
FFD	Kyle Joyce / 4-7154	Kathryn Ewing  / 3-9580

Legislation Title:

An ordinance authorizing the Fleets and Facilities Department to execute a Lease Amendment with LBA Realty Fund II-Company IV, LLC, on behalf of the Human Services Department’s Aging & Disability Services Division.

· Summary of the Legislation:

This legislation authorizes the Fleets and Facilities Department (FFD) to amend a lease agreement with LBA Realty Fund II-Company IV, LLC, to increase office space provided at 600 SW 39^th Street in Renton, Washington on behalf of the Human Services Department (HSD) Aging & Disability Services Case Management Unit by an additional 2,698 square feet.  The amendment requires legislation, because the total amount of office space exceeds FFD statutory authority for leasing under Seattle Municipal Code 3.18.240.

· Background:

In 2004, Ordinance 121686 authorized FFD to lease approximately 10,934 square feet of office space to relocate HSD’s Aging and Disability Services Case Management Unit from overcrowded offices in the Kent Commons.  The current lease expires August 31, 2010; however, a new five year lease term has been negotiated to expand the current premises by approximately 2,698 rentable square feet.

HSD’s Aging & Disability Services Case Management Unit is the federally designated Area Agency on Aging for the Seattle-King County Planning and Service Area, serving clients across King County.   Services are co-sponsored by the City of Seattle, King County, and the United Way, with the City of Seattle as the lead administrative agency.  With the aging population, the Case Management Unit’s workload and corresponding revenue has continued to grow.    

FFD has negotiated an expansion with the current landlord on behalf of HSD, to allow for the group’s continued growth.  The lease rate under the new lease term is approximately $14.64 per square foot, net of taxes, insurance, and operating expenses.  Operating expenses for the first year of the lease are estimated at $4.48 per square foot.  Under the terms of the lease amendment, the landlord will complete improvements necessary for HSD’s occupancy of the expansion space, as well as renovations to HSD’s current space, as detailed in Attachment 1:  Second Amendment to Lease, section Exhibit B (Work Letter – Landlord Turnkey Construction).  Any and all improvement costs exceeding the total planned amount are the landlord’s responsibility, unless those additional costs are due to change requests by HSD.

_X_ This legislation has financial implications.  (Please complete all relevant sections that follow.)

Appropriations: 

Fund Name and Number	Department	Budget Control Level	2009 Appropriation	2010 Appropriation
NA	NA	NA	NA	NA
TOTAL

Notes:  HSD included the total new lease rental cost, detailed below, is fully funded by grant revenue and is included in the HSD 2009 Adopted / 2010 Endorsed Budgets.  The increased rental cost is not included in the FFD 2009 Adopted Budget, and FFD may submit a budget supplement request for pass-through budget authority sufficient to permit lease payments to the landlord.

Calculation of Lease Costs (Rent+Overhead (OH)+Operating Expenses) for HSD office space at 600 SW 39^th Street in Renton, WA.

	2009				2010
	Existing Lease Expense	Amended Lease Expense	Lease Annual Inflation		Lease Annual Inflation
Cost	Jan - May	June – Aug	Sept - Dec	Jan - Aug	Sept - Dec
Rent/month	$13,257.83	$16,630.33	$16,774.15**	$16,774.15	$17,277.37
Rent/year	$66,289.15	$49,890.99	$67,096.60	$134,193.20	$69,109.48
Annual Op Exp	*$20,410.13	* $15,267.84	*$20,357.12	* $41,935.67	*  $20,967.83
FFD OH  3%	$2,600.98	$1,954.76	$2,623.61	$5,283.87	$2,702.32
Total	$89,300.26	$67,113.59	$90,077.33	$181,412.74	$92,779.63
		2009 Total	$246,491.18	2010 Total	$274,192.37
				Total 2009+2010	$520,683.55

*    Annual operating expense is based on landlord’s estimate for the first year plus an estimated 3.0% increase in operating expense for the second year of the lease.

**  Inflates only the newly rented square footage, not the square footage under the old lease.

Anticipated Revenue/Reimbursement: Resulting From This Legislation:

Fund Name and Number	Department	Revenue Source	2009 Revenue	2010 Revenue
NA	NA	NA	NA	NA
TOTAL

Total Regular Positions Created, Modified, Or Abrogated Through This Legislation, Including FTE Impact: 

None.

Spending/Cash Flow:

Fund Name & #	Department	Budget Control Level*	2009 Expenditures	2010 Anticipated Expenditures
NA	NA	NA	NA	NA
TOTAL	NA	NA	NA	NA

Notes:

· What is the financial cost of not implementing the legislation?

Failure to implement this legislation would prevent HSD’s Aging and Disability Case Management Unit from obtaining the space necessary to adequately serve its clients.

· What are the possible alternatives to the legislation that could achieve the same or similar objectives?

Obtaining additional space for HSD’s Aging and Disability Case Management Unit in a location other than the space adjacent to the current location would result in a split group and increased administrative costs.

· Is the legislation subject to public hearing requirements: 

No

· Other Issues (including long-term implications of the legislation):

None.

Please list attachments to the fiscal note below:

Attachment 1.  Map showing the location of the space to be leased.

Attachment 1