Form revised February 4, 2010

 

FISCAL NOTE FOR NON-CAPITAL PROJECTS

 

Department:

Contact Person/Phone:

DOF Analyst/Phone:

Seattle City Employees’

Retirement System

Cecelia M. Carter/5-1423

Greg Hill / 4-8049

 

Legislation Title:  AN ORDINANCE authorizing the Executive Director of the Seattle City Employees' Retirement System to execute a lease amendment with LHT Corporation for office space in the Pacific Building, 720 Third Avenue in Seattle.

 

 

·         Summary of the Legislation:

 

This legislation authorizes the Executive Director of the Seattle City Employees’ Retirement System (SCERS) to enter into a lease amendment extending the term of the lease for eleven years, and relocating SCERS offices from the 10th floor to the 9th floor, maintaining the size of their current offices.  Tenant improvements, as agreed to by SCERS and detailed in the lease, will be paid for by the Lessor.

 

 

In 2005, Ordinance 121766 authorized the lease of approximately 8,226 square feet of office space in the Pacific Building from LHT Corporation for occupancy by SCERS.  This is an ideal location for SCERS as it is familiar to retirees who make office visits and attend Retirement Board meetings.  Additionally, the detached nature of this location provides privacy for active employees to address retirement questions.  

 

An eleven-year lease extension has been negotiated with the landlord which reduces the initial monthly rent due to and increased period over which the tenant improvements may be amortized by the landlord.  The landlord is responsible for providing the space in “turn-key” condition, including the installation of new energy efficient lights and HVAC. 

 

The negotiated rental rate for the first two years is $10.00 per square foot, increasing gradually over time thereafter to $29.00 per square foot in the eleventh year.  Consistent with typical lease provisions, the rental rates for the two, five-year extension options will be negotiated at fair market rental rates if and when the options are exercised. 

 

This lease provides initial annual savings to SCERS of about $70,000 by reducing the rental rate from $18.50 per square foot to $10.00 per square foot, while at the same time insulating SCERS from potential spikes in rental rates over the next eleven years.

 

SERS is responsible for an estimated $91,000 to move to the new space, including the cost of phone and data cabling. 

 

 

__x__  This legislation has financial implications.  

 

Appropriations: 

 

Fund Name and Number

Department

Budget Control Level*

2010

Appropriation

2011 Anticipated Appropriation

 

 

 

 

 

TOTAL

 

 

 

 

 

Notes:  This legislation makes no new appropriations.  Lease and moving costs will be paid from existing budget authority in the Employees’ Retirement BCL (R1E00).

 

Anticipated Revenue/Reimbursement: Resulting From This Legislation:  N/A

 

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

 

None.

 

Spending/Cash Flow: N/A

 

Notes:

 

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

 

Failure to implement this legislation would cause the existing lease to continue on a month-to-month basis at existing rates which are $8.50 per square foot ($5,826.75 per month) higher.  Further, leasing other office space of a similar size and quality in this neighborhood would likely increase the annual rent paid by SCERS.

 

 

·         Does this legislation affect any departments besides the originating department? 

 

No

 

 

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

 

Leasing a similar space would be the only alternative that could achieve similar objectives.  This would be at a cost higher than that proposed in this lease.

 

·         Is the legislation subject to public hearing requirements: 

 

No

 

·         Other Issues:

 

·         List attachments to the fiscal note below: