HomeMy WebLinkAboutHeritage Agreement A-25-417 Amendment IV.pdf Agreement No. 25-417
1 AM ENDM ENT NO .4 TO LEASE AG REEM ENT
2 This Am endm ent No. 4 to Lease Agreem ent ("Am endm ent No. 4") is dated
3 August 19, 2025 and is between Heritage Centre, LLC, a California lim ted liability
4 com pony ("Lessor"), and the County of Fresno, a political subdivision of the State of California
5 ("Lessee"). Capitalized term s used but not defined in this Am endm ent No. 4 shall have the
6 m eanings ascribed to such term sin the Lease, or other am endm efts to the Lease referenced
7 herein.
8 Recitals
9 A. On February 22, 2022, Lessor and Lessee entered into a Lease Agreem Ent, which is
10 County Agreem Ent Num ber 22-059, for a lease of the Prem ices with Lessee having a purchase
11 option for the Heritage Centre ("Lease"), as set forth in the Lease. The Parties agreed under the
12 Lease that the total cost of all Tenant Im p'ovem eats in the aggregate shall not exceed the sum
13 of$10,000,000 (the "TI Budget").
14 B. On August 8, 2023, Lessor and Lessee signed Amendment No. 1 to Lease Agreement
15 ("Am endm ent No. 1") to m odify the scope of the Tenant Im provem ents and increase the TI
16 Budget from the aggregate sum of$10,000,000 to $13,200,000 to accom m date the m o✓e of
17 several 24-hour m ental health facilities onto the site for the Departm Ent of Behavioral Health.
18 Amendment No. 1 also modified the Tenant Improvement Tasks and Payment Schedule to
19 reflect the elim nation of M cnthly Tenant Im p-ovem ent Paym ents for Years 1 and 2 and to
20 reference a m axim um $10,000,000 threshold for each com pleted Tenant Im p-ovem ent "Task"
21 up to such m axim urn relative to such schedule.
22 C. On Septem ber 24, 2024, Lessor and Lessee signed Amendment No. 2 to Lease
23 Agreement ("Am Endm ent No. 2") to again m odify the scope of the Tenant Im p-ovem eats and
24 increase the TI Budget to accom m date additional large-scale operational im p-ovem eats,
25 identified and needed by the Department of Behavioral Health, including new HVAC equipment,
26 the modification of the kitchen from a warm ng kitchen to a full-service kitchen, and several
27 other m nor cam pus im p'ovem eats. In addition to those additions and changes to the Tenant
28 Improvements, the Department of Social Services also identified modifications to the Tenant
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1 Improvements needed to rehouse the Transitional Shelter Care Facility operations located at
2 M odular Building C on the University M edical Center Cam pas. To m odify the scope of the
3 Tenant Im provem ents, the parties agreed under Am endm ent No. 2 to increase the TI Budget
4 from the aggregate sum of $13,200,000 to $17,700,000. Under such TI Budget, $3,000,000 of
5 such increase is attributable to Tenant Im provem ants for the Departm Ent of Behavioral Health
6 (for a m a(im urn of$16,200,000), and $1,500,000 of such increase is attributable to Tenant
7 Im provem Ents for the Departm ent of Social Services. In addition, the m axim urn $10,000,000
8 threshold for each com pleted Tenant Im p-ovem Ent "Task" up to such m aim urn was applied to
9 the m axim urn of$16,200,000 that is attributable to Tenant Im provem ents for the Department of
10 Behavioral Health.
11 D. On Novem bar 5, 2024, Lessor and Lessee signed Am endm ent No. 3 to Lease
12 Agreement ("Amendment No. 3"), to execute the negotiated Purchase and Sale Agreement in
13 order to better qualify for com petitive grant funding to m ake additional upgrades to the site to
14 add additional 24/7 treatment facilities beyond those that have previously been under
15 construction. Am endm Ent 3 also decreased the m axim um tenant im provem ents threshold from
16 $10,000,000 to $6,525,578.38 (as defined in Am endm Ent 3 as the "TI Rent Threshold"), to
17 reflect Lessee's prior paym Ent, which was without prepaym ent penalty, to Lessor totaling
18 $3,474,421.62 toward a portion of the rent that is attributable to Tenant Im provem ents for the
19 Department of Behavioral Health.
20 E . Lessee, on behalf of the Department of Behavioral Health, in consultation with Lessor,
21 has now identified additional large scale im provem ents necessary for the Departm Ent of
22 Behavioral Health's facilities to operate, including the design, specifications, dem dition and
23 installation of structural im p-ovem Ents to support the installation of new HVAC air handlers, and
24 im provem ents to the Crisis Stabilization Units (CSUs) for the Prem ses to com ply with City of
25 Fresno and State of California Departm Ent of Health Care Services (DHCS) regulations for
26 Psychiatric Health Facilities (PHFs); these improvements include the addition and relocation of
27 a seclusion room ,requiring fire-rated walls, safety padding, and restraint capabilities. Lessee,
28 on behalf of the Department of Behavioral Health, in consultation with Lessor, has also
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1 determ ned that the following im provem ents are needed for the Prem i§es to m eet the regulatory
2 requirem ents: the installation of sm cke partitions and dam pers necessary to divide the CSUs
3 into separate fire/sm cke zones; floor leveling, based on a com Alex issue due to m Utiple building
4 additions over tim e, to m eet Am e'icans with Disabilities Act (ADA) requirem efts; and the aging
5 m an sliding entrance doors will be replaced with storefront style doors. Lessor has informed
6 Lessee that these changes, needed for such regulatory requirem ents, have im pacted the
7 fram ng, plum king, HVAC, electrical and fire/life safety system s, resulting in the foregoing
8 additional needed Tenant Im provem ents.
9 F. Based on Lessee and Lessor consulting, as state above, the parties now desire to
10 am end the Lease to revise the scope of the Tenant Im provem ents and increase the portion of
11 the TI Budget attributable to the Department of Behavioral Health for these Tenant
12 Im provem ents as follows. Consistent with Am endm ent No. 1, Am endm ent No. 2, and
13 Am eidment No. 3, and as provided in this Am endm ent No. 4, the Lesse's paym ent for each
14 com pleted Tenant Im provem ent "Task" above the m axim urn threshold of$6,525,578.38 for all
15 Tenant Im provem ents for the Departm ent of Behavioral Health, is without penalty, and enables
16 Lessee to avoid paying the 8% per annum am crtization charge referenced in Exhibit C.
17 The parties therefore agree as follows:
18 1. Subsection 10(a) of the Lease, located at page 12, lines 7 through 12 of the Lease
19 (as am ended by Section 2 of Am endm ent No. 1 and as further am ended by Section
20 2 of Amendment No. 2) is deleted in its entirety and replaced with the following:
21 "Lessor shall use com m ecially reasonable efforts to ensure that those certain tenant
22 im provem ents ("Tenant Im provem ents") for which a Notice to Proceed is tim dy issued
23 under this Lease, including, Amendment 1 to Lease Agreement, Amendment 2 to Lease
24 Agreem ent, and Am endm Ent 4 to Lease Agreem ent, respectively, are com pieted, as and
25 to the extent provided in, and in accordance with and subject to the term sand conditions
26 of, the provisions of this Section 10; provided, however, that the total cost of all such
27 Tenant Improvements in the aggregate shall not exceed the sum of $21,531,645.00 (the
28 "TI Budget")."
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1 2. Subsection 10(g) of the Lease located at page 14, lines 6 through 13 of the Lease
2 (as am ended by Section 2 of Am endm ent No. 1 and as further am ended by Section
3 2 of Amendment No. 2) is deleted in its entirety and replaced with the following:
4 "Cost of Work: Lessor and Lessee shall use com m ecially reasonable efforts to
5 prom ptly finalize and jointly approve such TI Costs and any revisions to the
6 Working Drawings necessary to achieve a m utually acceptable TI Costs budget.
7 Notwithstanding the foregoing or anything to the contrary contained in this
8 Section 10, in no event shall the aggregate TI Costs for all phases of Tenant
9 Improvements hereunder exceed the total TI Budget of$21,531,645.00, unless
10 the Parties m utually agree in writing, through an amendment to this Lease, in
11 their respective sole and absolute discretion, to increase the allowable TI
12 spending lim its or otherwise to provide for the paym ent of the excess TI Costs."
13 3. The portion of Subsection 10(k) of the Lease beginning on page 15, line 20 and
14 ending on page 16, line 2 of the Lease (as amended by Section 3 of Amendment No.
15 1, as further am ended by Section 3 of Am endm Ent No. 2, and as further am ended by
16 Section 3 of Amendment No. 3) is deleted and replaced with the following:
17 "TI CO Sr REIM BURSEM ENT. In consideration of the TI Costs incurred by Lessor in
18 connection with this Section 10, Lessee shall pay Additional Rent to Lessor, which
19 shall be calculated by Lessor and paid by Lessee in accordance with the following
20 provisions ("TI Rent"):
21 ,a. (i) The am cunt of the cost for each com pleted separate Tenant Im provem ent
22 "Task" up to a m axim urn of $6,525,578.38 (the "TI Rent Threshold"), as listed
23 on the schedule in Exhibit C (whether a Tenant Im provem ent has been
24 com pleted shall be determ ned in accordance with Section 10.j above) shall be
25 increased at the rate of 8% per annum from the date expended through the first
26 day of the calendar m cnth following Task com pletion (as so increased,
27 collectively, the "Task TI Cost").
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1 (ii) Lessor will, by the 2011 of each m cnth, invoice Lessee for actual expenses
2 incurred in the previous m cnth for TI Costs as listed on Exhibit C (whether a TI
3 has been com Peted shall be determ hed in accordance with Section 10.j above)
4 for TI Costs incurred over and above the TI Rent Threshold. These separately
5 invoiced costs shall not exceed the difference between $20,031,645 and the TI
6 Rent Threshold. Invoices shall be accompanied by documentation in support of
7 the expense. Lessee agrees to reim purse Lessor within 45 days of receipt and
8 approval of the invoice. Lessor shall subm I invoices referencing the provided
9 agreem ent num ber to Departm ent of Behavioral Health — Invoices, 3151 N.
10 M ilbrook Ave, Fresno, CA 93703 (dbh-invoices(a�-fresnocountyca.go ). Exhibit C
11 to this Lease (as am ended by Am endm ent No. 1 to Lease Agreem Ent,
12 Am endm ent No. 2 to Lease Agreem ent, and Am Endm ent No. 3 to Lease
13 Agreem ent), is revised pursuant to this Am endm ant No. 4 and is attached and
14 incorporated by this reference."
15 4. S ection 45 ENTIRE LEASE of the Lease located on page 45 lines 1-7 (as amended
16 by Section 6 of Amendment No. 1 and as further amended by Section 6 of
17 Am endm ent No. 2) is deleted and replaced with the following:
18 "This Lease Agreem ent constitutes the entire Lease Agreem ant between the
19 Lessor and the Lessee with respect to the subject m etter hereof and supersedes
20 all previous Lease Agreem ent negotiations, proposals, com mtim Ents, writings,
21 advertisements, publications, and understandings of any nature whatsoever
22 unless expressly included in this Lease Agreem ant. In the event of any
23 inconsistency in interpreting the documents which constitute this Lease
24 Agreement, the inconsistency shall be resolved by giving precedence in the
25 following order of priority: (1) the text of this Am endm ent No. 4 including Exhibit
26 C; (2) the text of Am endm Ent No. 3 including Exhibit G ;(3) the text of
27 Am Endm Ent No. 2 including Exhibits C and K; (4) the text of Am endm Ent No. 1
28 including Exhibit C; and (5) the Lease including all its exhibits."
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1 5. Wh en both parties have signed this Am endm ent No. 4, the Lease, Am endm ent No.
2 1, Am endm ent No. 2, Am endm ent No. 3 and this Am endm ent No. 4 together
3 constitute the Lease.
4 6. Lessor represents and warrants to Lessee that:
5 a. Lessor is duly authorized and empowered to sign and perform its obligations
6 under this Am endm ent No. 4.
7 b. The individual signing this Am endm Ent No. 4 on behalf of Lessor is duly
8 authorized to do so and his or her signature on this Amendment No. 4 legally
9 binds Lessor to the term s of this Am endm ent No. 4.
10 7. The parties agree that this Amendment No. 4 maybe executed by electronic
11 signature as provided in this section.
12 a. An "electronic signature" m eans any sym bol or process intended by an
13 individual signing this Amendment No. 4 to represent their signature, including
14 but not lim ted to (1) a digital signature; (2) a faxed version of an original
15 handwritten signature; or (3) an electronically scanned and transm itted (for
16 exam Pe by PDF docum Ent) version of an original handwritten signature.
17 b. Each electronic signature affixed or attached to this Am endm ent No. 4 is
18 deem ed equivalent to a valid original handwritten signature of the person
19 signing this Am endm ent No. 4 for all purposes, including but not lim ited to
20 evidentiary proof in any adm nistrative or judicial proceeding, and (2) has the
21 sam eforce and effect as the valid original handwritten signature of that person.
22 c. The provisions of this section satisfy the requirements of Civil Code section
23 1633.5, subdivision (b), in the Uniform Electronic Transaction Act (Civil Code,
24 Division 3, Part 2, Title 2.5, beginning with section 1633.1).
25 d. Each party using a digital signature represents that it has undertaken and
26 satisfied the requirem ents of G o✓ernm ent Code section 16.5, subdivision (a),
27 paragraphs (1) through (5), and agrees that each other party m ay rely upon that
28 representation.
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1 e. This Am endm ent No. 4 is not conditioned upon the parties conducting the
2 transactions under it by electronic m eans and either party m ay sign this
3 Amendment No. 4 with an original handwritten signature.
4 8. This Am endm Ent No. 4 may be signed in counterparts, each of which is an original,
5 and all of which together constitute this Am endm Ent No. 4.
6 9. The Lease as amended by this Amendment No. 4 is ratified and continued. All
7 provisions of the Lease and not am Ended by this Am Endm ent No. 4 rem an in full
8 force and effect.
9 [SIG NATURE PA EFO LLO W
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1 The parties are signing this Amendment No. 4 on the date stated in the introductory
2 clause.
3
HERITAGE CE T , L COUNTY OF FRESNO
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6 J.R. Orton, II . M ager Ernest Buddy Mend ,' Chairman of the
Board of Supervisors of the County of Fresno
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Attest:
8 Bernice E. Seidel
Clerk of the Board of Supervisors
9 County of Fresno, State of California
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By:
11Deputy'
12 For accounting use only:
13 Department of Behavioral Health
Org No.: 5630
14 Account No.: 7340
Fund No.: 0001
15 Subclass No.: 10000
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Exhibit C
DBH - Tenant Improvement Tasks and Payment Schedule
M onthly Base Rent M onthly Tenant Im govern ent
Payments*
Year 1 $ 220,000.00 Y ear 1 $ -
Year 2 $ 220,000.00 Y ear 2 $Year 3 $ 220,000.00 Y ear 3 $ 114,414.53
Year 4 $ 220,000.00 Y ear 4 $ 114,414.53
Year 5 $ 220,000.00 Y ear 5 $ 114,414.53
Year 6 $ 230,000.00 Y ear 6 $ 114,414.53
Year 7 $ 230,000.00 Y ear 7 $ 114,414.53
Year 8 $ 230,000.00 Y ear 8 $ 114,414.53
Year 9 $ 230,000.00 Y ear 9 $ 114,414.53
Year 10 $ 230,000.00 Y ear 10 $ 114,414.53
* Exam pie: Tenant Im p-ovem ent costs of$6,525,578 for com ideted im p-ovem ents before Year 2 are
am crtized over 8-years (in Years 3 — 10) at 8% per annum .
Tenant Improvement Tasks
The Scope of Work (including all labor, m aterials and equipm ent required to com Mete the work as outlined
below shall be performed by Lessor and Lessor's contractor.
The Scope of Work includes the following:
Dem dition/Abatem Ent
- D em dish and rem cve interior walls, acoustical ceiling system and wires
- H VAC ductwork as needed per plans
- R em cve abandoned electrical
- D ispose of plum ling fixtures, restroom fixtures and partitions per plans
- D em dish and rem cve doors and fram es per plans
- D em dish CSU plum Ling piping
Concrete
- P our and place concrete to patch trenches for new plum ling per plans
Rough Carpentry
- S uppiy all lum bar and hardware per plans
Casework
- F abricate and install upper/lower cabinets and hardware per plans and Tenant Specifications
- I nstall Countertops per plans and Tenant specifications
Insulation
- F urnish and install all wall and ceiling insulation per plans
Door Fram es/Hardware
- F urnish and install all doors and hardware per plans
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Exhibit C
DBH - Tenant Improvement Tasks and Payment Schedule
- F urnish and install new storefront doors at CSU entrances
Studs/Drywall
- F urnish and install all studs and drywall per plans
- F urnish and install additional studs and drywall throughout CSU
- F urnish and install additional studs and drywall for seclusion room
- F urnish and install drywall and paneling in basem Ent of facility
Flooring/Base
- F urnish and install all carpet, VCT or LVT per plans
- L evel flooring throughout CSUs to meet Americans with Disabilities Act (ADA) requirements
Painting
- P aint interior surfaces per plans and Tenant specifications
- E xterior painting not included
Acoustical Ceiling
- F urnish and install all acoustical ceiling per plans
- F urnish and install ceiling for additional room s
Code Signage
- P rovide and install code signage per plans
Restroom Accessories
- F urnish and install all restroom accessories per plans
Fire Extinguishers/Cabinets
- F urnish and install all fire extinguishers and cabinets per plans
- S ervice PHF and basem Ent fire extinguishers
Fire Sprinklers
- M dify existing fire sprinklers per plans as necessary
Plum ling
- P rovide and install all plum ling per plans, including Central Kitchen
- F urnish and install plum ling fixtures for all restroom sand break room s
- F urnish and install anti-ligature plum ling fixtures in CSU
- F urnish and install of replacement piping in CSU
HVAC
- F urnish and install all ducting to accom m adate new offices, room s, and Restroom s
- F urnish and install new registers/grilles per plans
- D esign, spec, and install structural air handler platform
- F urnish and install new air handler units
Electrical
- P rovide and install all electrical per plans
- F urnish and install new light fixtures and controls per plans
- F urnish and install new anti-ligature light fixtures and controls in additional room s
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Exhibit C
DBH - Tenant Improvement Tasks and Payment Schedule
Fire Alarm
- M dify existing fire alarm system per plans
G anerator
- D esign, spec and install backup generator(s) for 24-hour facilities
Chiller/ Cooling Towers and Variable Frequency Drives (VFD)
- D esign, spec and install
O Ltdoor Recreation Yard Fencing
- D esign, spec and install
Appliances for Central Kitchen
- D esign, spec and install
Fire Protection
- I nstallation of sm cke dam pers and sm cke barriers per plans
Safety M eterials
- F urnish and install seclusion room padding
Exclusions
- D ata (servers, patch panel, cable, punch-down etc.)
- P hone systems(cables and equipment)
- S ecurity cam era and intrusion system s
- N oise m Ligation system s
- F urniture (Cubicles/m odular furniture, chairs etc and fixtures)
- A ppliances (Exception — Central Kitchen Equipm rent)
- P layground equipm ent
- N ew roof
- E Ievator m odernization
- L EED Certification
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