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LEASE -AGREEMENT
THIS IS A LEASE, dated APR 0 9 ,2002, between MCMAHAN-KA YS, LLC.,
11776 Pico Blvd., West Los Angeles, CA 90064 (hereinafter called the "LESSOR", whether
one or more), and the COUNTY OF FRESNO, a political subdivision of the State of California,
2220 Tulare Street, 16th Floor, Fresno, CA 93721, (hereinafter called the "LESSEE").
WHEREAS, the COUNTY is in need of leased premises sufficient to accommodate
services to be provided by the Human Services System and all ancillary services associated
therewith; and,
WHEREAS, LESSOR represents it currently owns property located at 311 Coalinga Plaza,
Coalinga, California; and,
WHEREAS, LESSOR will make all necessary tenant improvements to the subject property
to accommodate the Human Services System and all ancillary services associated therewith, prior
to the commencement of the lease term hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
1. LEASED PREMISES -LESSOR leases to LESSEE apprOXimately 24,000 square
feet of office space and adjacent parking lot (apprOXimately 40 stalls) located at 311 Coalinga
Plaza, Coalinga, CA, hereinafter referred to as the "Premises."
2. IMPROVEMENTS TO PREMISES -Upon execution of this Lease by all parties,
LESSOR shall prepare final drawings, plans and specifications for tenant improvements to the
Premises necessary for its use for the Human Services System and ancillary services
associated therewith. The drawings, plans and specifications shall be approved in writing by
the Director of the Human Services System, or his authorized appointee, prior to the
commencement of construction of tenant improvements by LESSOR. Any modifications to the
drawings, plans and specifications must be approved in writing by both LESSOR and the
Director of the Human Services System, or his authorized appointee.
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COUNTY OF FRESNO
F....no. California 1
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LESSOR shall make and pay for the tenant improvement_s according to the drawings,
plans and specifications approved by the LESSEE. LESSOR shall provide all labor, material
and equipment for the completion of the above-mentioned work in strict accordance with the
approved plans and specifications.
In the construction of the tenant improvements, LESSOR shall comply with, and shall
insure compliance by all contractors and subcontractors with, all applicable laws and
regulations, including the payment of prevailing wages pursuant to Section 1770 et.seq. of the
Labor Code. With regard to the improvements constructed by LESSOR to the Premises which
are separate from the tenant improvements referenced above, the contract for said
improvements shall be entered into prior to the effective date of this Lease Agreement and are
not subject to such prevailing wage regulations.
LESSEE shall pay LESSOR a remodeling rent in consideration of LESSOR
constructing the above-described tenant improvements. In lieu of paying the remodeling rent
in accordance with Paragraph 4 of this Lease, LESSEE shall have the option to prepay to
LESSOR the amount of LESSOR'S unamortized cost of the tenant improvements computed in
accordance with Paragraph 11 hereinbelow.
3. TERM -The lease term shall commence on September 1, 2002, or two (2) weeks
after the City of Coalinga issues an occupancy permit after the completion of the improvements
mentioned in Paragraph 2 in accordance with the approved drawings, plans and specifications,
whichever is later, and end ten (10) years thereafter. Should LESSEE retain possession after
terminating said Lease Agreement as provided in Clause Nos. 8, 11, 15 and 16, LESSEE shall
become a tenant on a month to month basis on the same terms and conditions as herein
provided and leasehold may be terminated by giving at least thirty (30) days prior written
notice.
4. RENT -LESSEE shall pay on or about the 1 st of each month a monthly base rent
(the "Base Rent") in the amount of $11,500.00 for the office space and $500.00 for the parking
lot for months 1 through 30 of the primary term and increase 5% for months 31 through 60 of
the primary term and each additional 30 months of the primary term and occupancy after the
COUNTY OF FRESNO
Frnno. California 2
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primary term . In addition to the Base Rent , if LESSEE does not pay the cost of its tenant
improvements within thirty (30) days of occupancy of the premises as provided in Paragraph 2
above, LESSEE shall pay on or about the 1 st of each month a remodeling rent (the
"Remodeling Rent") to compensate LESSOR for any cost to LESSOR of constructing the
tenant improvements described hereinabove. The Remodeling Rent shall be computed as the
monthly amount required to fully amortize the actual cost of tenant improvements (which shall
not exceed $850,000 after a $50,000 tenant improvement allowance) referenced in Paragraph
2 over the ten (10) year primary term at the actual interest rate paid for any construction loan,
not to exceed 9% per annum, or the current rate available for said loan at the execution of this
lease if no loan is taken. The actual amount of said cost will be determined after final drawings
are prepared and project put out to bid. The final cost for tenant improvements shall be
mutually agreed on by LESSOR and LESSEE after bids are received.
5. UTILITIES -LESSEE is responsible for all utilities, including telephone.
6. USE -LESSEE shall use the leased Premises for the purpose of general office
use. LESSEE agrees to comply with all applicable laws, ordinances and regulations in
connection with its use of the Premises. LESSOR covenants that said Premises are suitable .
for the intended use of LESSEE and are in compliance with all applicable laws, ordinances and I
iregulations for said use.
7. MAINTENANCE -All exterior and interior maintenance, and repair of air
conditioning, heating units and roof is to be the responsibility of the LESSOR, excluding
janitOrial services and supplies . Landscaping and parking lot maintenance shall be the
obligation of the LESSOR. The LESSOR is also responsible for the structural condition of the
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building and agrees that the building will always be maintained in a condition acceptable for the
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LESSEE'S intended use of the Premises. This will include interior painting and new carpeting
every five (5) years and exterior painting as needed .
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COUNTY OF FRESNO
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COUNTY OF FRESNO
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8. MAINTENANCE, NON-PERFORMANCE -In the ev~nt LESSOR neglects, fails or
refuses to maintain said Premises as aforesaid, within fifteen (15) days after written notice has
been given by LESSEE, LESSEE may, notwithstanding any other termination provisions
contained herein:
A. Terminate this Lease; or
B. At LESSEE'S sole option, cure any such default by performance of any act, .
including payment of money, and subtract the cost thereof plus reasonable
administrative costs from the rent.
9. LIABILITY -This Lease is made upon the expressed condition that the LESSEE is
to be free of all liability and damages or injury arising from structural failures or from external ..
cause to walls, glass, doors, roof and floor. This Lease acknowledges that as ~etween
LESSOR and LESSEE, LESSEE is responsible for the negligence of its employees.
LESSEE shall indemnify, defend and hold harmless LESSOR from and against any
and all claims arising from the conduct of LESSEE'S business or from any activity, work or
things done, permitted or suffered by LESSEE in or about the Premises and shall further _
indemnify, defend and hold harmless LESSOR from and against any and all claims arising
from any breach or default in the performance of any obligation on LESSEE'S part to be
performed under the terms of this Lease and from and against all costs, attorney's fees,
expenses and liabilities incurred in the defense of any such claim or any action or proceeding
brought thereon. In case any action or proceeding is brought against LESSOR by reas on 6{:::':'
any such claim, LESSEE upon notice from LESSOR shall defend the same at LESSEE'S
expense.
LESSOR shall indemnify, defend and hold harmless LESSEE from a'nd against
any and all claims, damages, or injury arising from the condition of the Premises' and from
breach or default in the performance of any obligation on LESSOR'S part to be performed
under the terms of this Lease and from and against all costs, attorney's fees, expenses and
liabilities incurred in the defense of any such claim or any action or proceeding brought
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thereon. In case any action or proceeding is brought against LESSEE by reason of any such
claim, LESSOR upon notice from LESSEE shall defend the same at LESSOR'S expense.
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COUNTY OF FRESNO
F....no. california
10. INSURANCE. LESSOR shall maintain during the term of this Lease the following
policies of insurance:
a. Commercial General liability insurance with limits of not less than $1
million per occurrence.
b. All-Risk or fire insurance and extended coverage on the Premises, and
shall add the LESSEE as an additional loss payee thereon as its interests may appear.
Such coverage shall not be materially altered, cancelled or non-renewed unless
LESSEE has received not less than thirty (30) days advance written notice.
LESSEE shall maintain during the term of this Lease the following policies of insurance:
a. Commercial General Liability insurance with limits of not less than $1
million per occurrence.
b. All-Risk property insurance covering the personal property of LESSEE.
It is understood that LESSEE may elect to provide all or a portion of such insurance
coverage through one or more programs of self-insurance.
11. NON-FUNDING, TERMINATION -The term of this lease is contingent on the
approval of funds by the appropriating governmental agency. Should funds not be allocated,
this Lease may be terminated by LESSEE by delivering not less than one hundred twenty
(120) days written notice of termination. Should LESSEE exercise its option to terminate under
this Paragraph within the primary ten (10) year lease term, LESSEE shall pay to LESSOR,
within thirty (30) days after the lease termination date an amount equal to the unamortized
principal balance of the cost of the tenant improvements made under Paragraph 2 and 4
assuming an original cost of $850,000 Dollars amortized at the actual interest rate paid for any
construction loan, not to exceed 9% per annum, or the rate available for said loan at the
execution of this lease if no loan is taken for ten (10) years of monthly payments.
12. SURRENDER OF POSSESSION -It is mutually understood that upon any
termination of this Lease, LESSEE will surrender Premises to LESSOR in original condition
less reasonable wear and tear and will not be responsible for any damage or destruction which
LESSEE was not obligated hereunder to repair or replace.
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COUNTY OF FRESNO
FrMnO. Callfoml.
13 . . FIXTURES -It is further mutually understood and aqreed that any equipment,
fixtures or apparatus installed in or on said Premises by the LESSEE, with the permission of
LESSOR, shall continue to be the property of the LESSEE and shall be removed by the
LESSEE without recourse at the expiration of tenancy. LESSEE to repair damage caused by
the removal of fixtures. Any fixtures not removed become the property of LESSOR.
14. RIGHT OF ENTRY -LESSOR, or his representatives, shall have the right to enter
said Premises during business hours at any time during the term of this Lease to make any
alteration, repair or improvement to said building, or the Premises, which he or she deems
convenient for the maintenance or preservation thereof provided always that the normal
business of LESSEE or its invitees shall not be unnecessarily inconvenienced.
15. OPTION TO RENEW -It is further understood and agreed that LESSOR gives to
LESSEE two five (5) year options to renew this Lease and continue on the Premises under the
same terms and conditions after the primary term. Said option will be automatically exercised
each year unless either LESSOR or LESSEE advises the other to the contrary by giving at
least a thirty (30) day written notice before the last day of the then current Lease term.
16. DESTRUCTION OR DAMAGE
(a) If the Premises or the portion of the Building necessary for LESSEE'S
occupancy, or if any other portion of the Building or property of LESSOR necessary to the
operation of the LESSEE'S business, is damaged by fire, earthquake, act of God, the elements
o~ other casualty, LESSOR shall, subject to the provisions of this Paragraph 16, promptly
repair the damage, if such repairs can, in LESSOR'S opinion, be completed within one
hundred and twenty (120) days. If LESSOR determines that repairs can be completed within
one hundred and twenty (120) days, this Lease shall remain in full force and effect, except that
the Base Rent shall be abated to the extent LESSEE'S use of the Premises is impaired,
commencing with the date of damage and continuing until completion of the repairs required of
LESSOR under Paragraph 16(d) below.
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.(b) If in LESSOR'S opinion, such repairs to the Pre.£T1ises or portion of the
Building necessary for LESSEE'S occupancy cannot be completed within one hundred and
twenty (120) days, at the option of the LESSEE, the Lease may be declared null and void as of
the date of the fire or other casualty. If LESSOR elects to repair such damage, LESSOR may,
upon notice to LESSEE given within thirty (30) days after the date of such fire or other
casualty, request LESSEE to maintain the Lease in full force and effect. If LESSEE agrees to
the continuation of the Lease, the Base Rent shall be wholly or partially abated as provided in
Paragraph 16(a) above.
(c) If LESSOR does not elect to make such repairs, this Lease shall terminate as
of the date of such fire or other casualty.
(d) If the Premises are to be repaired under this Paragraph 16, LESSOR
shall repair at its cost any injury or damage to the Building and Building Standard Work in the
Premises, including any alterations or fixtures instal/ed (or attached to the Premises) by
LESSEE. LESSEE shall be responsible at its sole cost and expense for replacement of
LESSEE'S personal property. LESSOR shall not be liable to LESSEE for compensation for
any loss of business, inconvenience or annoyance arising from any repair or restoration of any
portion of the Premises or Building as a result of any damage from fire or other casualty.
17. VENUE -Venue for any action arising out of or relating to this Lease shall only be
in Fresno County, California. The rights and obligations of the parties and all interpretation and
performance of this Lease shall be governed in all respects by the laws of the State of
California.
18. NOTICES -Any notice required or intended to be given to either party under the
terms of this Lease shall be in writing and shall be deemed to be duly given if delivered
personally or deposited into the United States mail, with postage prepaid, addressed to the
respective address as previously stated herein.
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COUNTY OF FRESNO
F_caJlfomla 7 @# -_..
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19. ENTIRETY -SUCCESSION -This Lease merges an£1 supersedes all prior
negotiations, representations, and contracts, and constitutes the entire agreement concerning
LESSOR'S leasing of the Premises to LESSEE and the consideration therefore .
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This agreement shall be binding on and inure to the benefit of LESSOR'S heirs,
successor and assigns.
EXECUTED as of the date first herein written.
APPROVED AS TO LEGAL FORM:
PHILLIP S. CRONIN, COUNTY COUNSEL
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APPROVED AS TO ACCOUNTING FORM:
GARY W. PETERSON
AUDITOR-CONTROLLERfTREASURER
TAX COLLECTOR
By ~&-46u ; O<Ynun4A.
ATTEST: P1n rt f$ohn "CLERK
BOARD OFSUPERVISORS
~Am£~
Org No. 56107081
Acct. No. 7340
Tax 10 # 95-4879988
2079A
LESSOR
MCMAHAN-KAYS, LLC
By ~IJ3 .~. . __ .
Douglas B. Kays I ManagTr1gember
. LESSEE
COUNTY OF FRESNO
RECOMMENDED FOR APPROVAL:
By r£l.. ~p~
David Dent, Director
Human Services System
COUNTY OF FRESNOF_.CalIfOmI. -------8 -~-.--~----.-------:-