TO: Board of Supervisors
FROM: Steve Lederer, Director of Public Works
REPORT BY: Leigh Sharp, Deputy Director of Public Works
SUBJECT: 555 Gateway Lease Amendment
RECOMMENDATION
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Approve and authorize Amendment No. 1 to Lease Agreement No. 260113B with Gateway Partners 1, LLC increasing the contract amount by $375,156 for tenant improvements with no change to the monthly lease amount and a Budget Amendment. (Fiscal Impact: $375,156 Expense; 2011 Realignment Local Community Corrections Non-Operating Special Revenue Fund; Not Budgeted; Discretionary)
[4/5 vote required]
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BACKGROUND
On June 3, 2025, the Board received an update on the Facilities Master Plan, made the strategic decision to indefinitely pause implementation of the plan, and directed instead to move forward with short-term improvements to address critical facility and department space needs. Among these short-term actions was an item to lease office space for the Probation Department and Child Support Services.
Staff evaluated several properties and identified approximately 40,000 square feet of space in a single building located at 555 Gateway Drive as the most cost-effective available property to meet the space needs. On December 31, 2025 the Board approved and authorized Agreement No. 260113B with Gateway Partners 1, LLC (Landlord) to lease 40,000 square feet for a 10-year period with the option to extend the term for two consecutive five-year periods with an initial base rent of $86,000 per month and an escalation of 3% per year for use by the Probation Department and Child Support Services for office space. Under the Lease, the Landlord is required to make certain tenant improvements (Phase I) prior to the County’s occupancy of the building. On January 27, 2026, the Board approved Phase II which includes the installation of systems furniture and all other furniture to complete the facility for Probation and Child Support Services to begin operations.
The Probation Department has identified a need for a secured exterior fenced area. This scope was not included in the tenant improvements scope (Phase 1) covered under the approved lease. The secured fencing will provide safe and designated parking for County fleet vehicles, specialized transport vehicles, the Mobile Supervision community outreach van, and staff. The establishment of secured parking will protect staff and clients by ensuring a safe environment for probation services; safeguard County assets and vehicles used in service delivery; maintain public safety by reducing opportunities for incidents that could put staff, clients, or community members at risk; and support compliance with operations and legal standards required of probation departments.
Amendment No. 1 adds additional tenant improvements for secured fencing prior to Gateway Partners 1, LLC delivering the building to the County. The security fence cost is $285,156. The Community Corrections Partnership Committee (CCP) approved to fund $275,000 for the security fence at its September 17, 2025 meeting from the Local Community Corrections Realigned Fund - 1020081 as a Revenue Offset. The remaining funds will be from the Phase II Capital Improvement Project (Program 26002) contingencies.
The Landlord recently received their building permit and have started work on the Phase 1 tenant improvements. The Landlord has advised the County of certain changes to Phase 1 required as a result of the building permit process. Under the terms of the Lease, the County is obligated to pay for additional work. County staff and the Landlord are negotiating the final details regarding the additional work required as a result of the building permits and is recommending the Board delegate authority to the Public Works Director to finalize any further change orders necessary to complete the project for an amount not to exceed $90,000 with the funding to come out of Phase II (Program 26002) contingencies.
Requested Action:
1. Approve and authorize Amendment No. 1 to Lease Agreement No. 260113B with Gateway Partners 1, LLC to include secured exterior fencing and authorize the Public Works Director to approve any further necessary changes to Phase 1 not to exceed $90,000 at 555 Gateway Boulevard; and
2. Approval of a Budget Amendment for the following (4/5 vote is required):
a. Increase appropriations for Project 26002 - Probation Tenant Improvements in the Capital Projects Fund (Fund 3000, Sub-Division 3000550) in account 52490-Other Professional Services by $275,000, offset by an increase of $275,000 in revenue account 48200-Transfers-in from the 2011 Realignment Local Community Corrections Non-Operating Special Revenue Fund; and
b. Increase appropriations in the 2011 Realignment Local Community Corrections Non-Operating Special Revenue Fund (Fund 2500, Sub-Division 1020081) in account 56100 - Transfers out by $275,000, offset by use of its available fund balance.
FISCAL IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
No |
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Where is it budgeted? |
$100,156 is currently budgeted in project 26002, the remaining $275,000 will come from the 2011 Realignment Local Community Corrections Non-Operating SRF |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
Approval of this amendment improves safety and ensures continuation of the improvements needed. |
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Is the general fund affected? |
No |
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Future fiscal impact: |
Any future cost will be budgeted accordingly in future fiscal years. |
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Consequences if not approved: |
Leased facility will not meet Departmental needs. |
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Additional Information |
Strategic Initiative: Elevate County Service and Workforce Excellence, Build Healthy, Connected Communities |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: General Rule. It can be seen with certainty that there is no possibility the proposed action may have a significant effect on the environment and therefore CEQA is not applicable. [See Guidelines for the Implementation of the California Environmental Quality Act, 14, CCR 15061(b)(3)]