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Home My WebLink About08.b. Consider two-year lease renewal with County Quarry for concrete and asphalt recycling operationBoard Meeting Date: April 18, 2013 Subject: ADOPT A RESOLUTION AUTHORIZING STAFF TO EXECUTE THE FIFTH AMENDMENT TO LEASE AGREEMENT EXTENDING IT UNTIL JUNE 30, 2015 WITH COUNTY QUARRY PRODUCTS LLC (5501 IMHOFF DRIVE, MARTINEZ - APN 159 - 140 -052) Submitted By: Initiating Dept. /Div.: Kathleen West Engineering/ Senior Right -of -Way Agent Environmental Services Division REVIEWED AND RECOMMENDED FOR BOARD ACTION: T. Brightbill — Senior Engineer -- U D. Gemmell — Environmental Services Manager ' K. Alm C. Swanson Counsel for the District Provisional General Manager ISSUE: Board authorization is required for execution of lease agreements. RECOMMENDATION: Authorize staff to execute the Fifth Amendment to the Lease with County Quarry beginning July 1, 2013 to June 30, 2015. FINANCIAL IMPACTS: The District will receive $18,411 per month until July 1, 2014. From July 1, 2014 through June 30, 2015 the rent will increase by the San Francisco - Oakland -San Jose CPI -U. ALTERNATIVES /CONSIDERATIONS: The Board of Directors may decline to authorize a lease extension. BACKGROUND: The District has leased the 7.58 acre parcel at 5501 Imhoff Drive to County Quarry for the past 27 years. County Quarry operates a concrete and asphalt recycling operation on the property which recycles concrete and asphalt materials and sells the recycled materials as well as new aggregate, concrete and asphalt on the site. A ten -year Lease Agreement was executed with County Quarry in December 2000; which was extended for one year in 2010 and for a second one -year term in 2011. The one -year terms allowed the District to monitor concerns about pile height, dust, traffic, and general housekeeping at the site. Staff monitored performance during this period and believed that County Quarry achieved substantial compliance with the agreed -upon performance standards. In the Fall of 2012, County Quarry approached the District with a request for a longer - term lease extension. On December 20, 2012, a public hearing was held after which the Board approved Resolution 2012 -102. In summary, this resolution: • declared the property "currently un- needed" for a period not to exceed 10 years; C: \Users \danderson\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content .Outlook \DVCG8C5G \PP CQ 4 -18 -13 Final.doc Page 1 of 2 POSITION PAPER Board Meeting Date: April 18, 2013 subject: ADOPT A RESOLUTION AUTHORIZING STAFF TO EXECUTE THE FIFTH AMENDMENT TO LEASE AGREEMENT EXTENDING IT UNTIL JUNE 30, 2015 WITH COUNTY QUARRY PRODUCTS LLC (5501 IMHOFF DRIVE, MARTINEZ - APN 159 - 140 -052) • authorized the extension of the current lease for six months to June 30, 2013 (the Fourth Amendment); • authorized the General Manager to negotiate a lease agreement with County Quarry for a period not to exceed 10 years; and • required presentation of the proposed lease to the Board of Directors for full consideration, review, and approval prior to execution. The Enterprise Committee (formerly the Real Estate Committee) requested a 2 -year lease period at the February 11, 2013 meeting in order to continue to monitor County Quarry's performance. Staff has negotiated a Fifth Amendment which would extend the Lease Agreement for an additional 2 years from July 1, 2013 to June 30, 2015. The proposed amendment adds financial penalties for failure to comply with mutually agreed upon housekeeping and safety issues. The draft Fifth Amendment to the Lease Agreement was presented to the Enterprise Committee on April 8, 2013. The two committee members were split on whether to recommend execution of the lease agreement. Based on the previous public hearing on December 20, 2012 and consultation with District Counsel, Staff believes an additional public hearing is not required for execution of the Fifth Amendment to the Lease Agreement. Staff has concluded that the proposed Fifth Amendment to the Lease Agreement and continuation of the concrete and asphalt materials recycling operation are exempt from the requirements of the California Environmental Quality Act (CEQA) under District CEQA Guidelines Section 15301, since it involves extension for existing facilities. Approval of this lease extension will establish the Board of Directors' independent finding that this approval is exempt from CEQA. RECOMMENDED BOARD ACTION: Authorize staff to execute the Fifth Amendment to the Lease with County Quarry beginning July 1, 2013 to June 30, 2015. Attached Supporting Documents: 1. Draft Fifth Amendment to Lease Agreement with County Quarry Products, LLC 2. Resolution 2012 -102 C:\ Users \danderson\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \PP CQ 4 -18 -13 Final.doc Page 2 of 2 ATTACHMENT 1 FIFTH AMENDMENT TO LEASE AGREEMENT BETWEEN CENTRAL CONTRA COSTA SANITARY DISTRICT AND COUNTY QUARRY PRODUCTS, LLC This Fifth Amendment to Lease (this "Fifth Amendment ") is effective as of 04/18/13, between CENTRAL CONTRA COSTA SANITARY DISTRICT, a public entity (the "District "), and COUNTY QUARRY PRODUCTS, LLC, a California Limited Liability Company ( "Lessee "). The parties are jointly referred to herein as "the Parties." RECITALS A. The District and County Quarry Products entered into that certain lease dated December 21, 2000 (the "Lease ") which leased certain property to County Quarry Products for use as a concrete crushing recycling site and asphalt plant (the "County Quarry Site "); and B. On August 7, 2009, the Parties executed an amendment to the Lease (the "First Amendment "), in part to reflect that County Quarry Products, LLC, a California limited liability company, succeeded to the interests of County Quarry Products, a California general partnership; and C. In 2010, the Parties executed a Second Amendment to the Lease to extend the term of the Lease, which would have expired December 31, 2010, to December 31, 2011. D. In December 2011, the Parties entered into a Third Amendment, which extended the term of the Lease to December 31, 2012, provided for an increase in rent, and provided for District review and monitoring of the Lessee's performance, among other things. E. On December 20, 2012, the District Board held a public hearing declaring the County Quarry site unneeded for public use, and authorized a further extension of the Lease. F. Effective December 28, 2012, the District and County Quarry Products, LLC entered into a Fourth Amendment, which extended the term of the Lease monthly for up to six months until June 30, 2013 to give the parties an opportunity to negotiate a new or extended term lease. G. The Parties have now agreed to extend the Lease for an additional two years from July 1, 2013 through June 30, 2015, to include a rent increase during the second year of the Lease, and to include a provision imposing penalties for failure to meet maintenance standards. AGREEMENT Section 1 General Provisions. The foregoing Recitals are true and correct and incorporated herein by reference. Section 2 Modification and Extension of Lease Term; Amendment of Section 2.1. Section 2.1 of the Lease is amended to read as follows: The ten (10) year Lease term that began January 1, 2001, and was extended twice, is extended to December 31, 2014. If by that time, the Parties have not reached agreement on terms for another extension, Lessee will have ninety (90) days to vacate the leased premises, unless otherwise agreed to by the Parties. Nothing herein shall be construed to imply that the District waives any right to receive reasonable rent for the 90 -day period and for any period that the Lessee might still occupy the leased premises after the 90 -day period. Lessee shall not be entitled to any damages for diminished revenues, lost opportunity or lost profits upon termination. Section 3 Rent for County Quarry Site; Modification of Section 3.1 Section 3.1 of the Lease is amended to read as follows: Lessee agrees to pay rent of eighteen thousand, four hundred eleven dollars ($18,411) per month through December 31, 2013. For the period beginning January 1, 2014 through December 31, 2014, Lessee hereby agrees to an increase in its rent by the San Francisco - Oakland -San Jose CPI -U (by the percent change in the most recent 12 -month period) for the remainder of the term of the extension. Rent is paid in advance, and is due on the first day of each calendar month. Section 4 Addition of Article 25.0 regarding Penalty For Non - Compliance A new article is added to the Lease as follows: Article 25.0 Penalty For Non - Compliance If at any time, and from time to time during the Lease Term, Lessee fails to maintain the grounds, adjoining street and the operations of the plant facilities located on the property in accordance with previous discussions between the District and Lessee regarding dust control, pile height and similar housekeeping and safety considerations, Lessee shall pay the District a penalty of one day's rent for every day of non - compliance after receipt of written notice thereof from the District if the matter of non - compliance is not cured within 48 business -day hours. Notwithstanding the above, the District does not waive any of its other available remedies or rights in the event of a Lessee default as stated herein. Section 5 Effect of Fifth Amendment. Except as the Lease has been expressly modified by the First, Second, Third, Fourth and Fifth Amendments, the Lease shall continue in full force and effect according to its terms, and the Parties hereby ratify and affirm the respective rights and obligations under the Lease and the First, Second and Third Amendments (the "prior amendments "), including but not limited to Lessee's indemnification obligations and insurance requirements set forth in Articles 9.0 and 11.0 of the Lease. In the event of any conflict between this Fifth Amendment and the Lease or the prior amendments, the provisions of this Fifth Amendment shall govern. Section 6 Severability. If any provision of this Amendment is determined to be illegal or unenforceable, this determination shall not affect any other provision of the Amendments or Lease, and all other provisions shall remain in full force and effect. Section 7 Counterparts This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one agreement. The undersigned agree to all terms and conditions of this Amendment, hereto certify and warrant that they are authorized to sign. CENTRAL CONTRA COSTA SANITARY DISTRICT Lo Curt Swanson Provisional General Manager COUNTY QUARRY PRODUCTS, LLC, a California Limited Liability Company By: Charles S. McDowell Co- Manager By: Doug Foskett Co- Manager 2057353.1 ATTACHMENT 2 RESOLUTION NO. 2012-1CZ WHEREAS, the District owns seven and fifty eight hundredths (7.58) acres of land northeast • the Wastewater Treatment Plant located at 5501 Imhoff Drive, Martinez, as shown in Exhibit A (the "Property'), which is currently leased by County Quarry Products LLC ("County Quarry'); and WHEREAS, the Property has been leased to County Quarry for approximately twenty - seven years, and WHEREAS, before the consideration of the lease renewal or extension, County Quarry was to address the District's concerns regarding pile height, dust, traffic and storage of used equipment at the Property; and WHEREAS, over the past twenty three months, County Quarry has significantly improved their operations in response to the District's concerns; however, the District "4'2M`4Y* 1 1111Rdi11 I LIA It 10 51 RA 4 9 is] 9;14J (kTA k -F?VEREF-0-R--E,l3E-MRES*LTED by the Board of Directors of the Central Contra Costa Sanitary District as follows: after holding a noticed public hearing, the Board of Directors finds that th Property is currently unneeded for the performance of the Districts purposes, function and duties for a period not to exceed ten years. Furthermore, the Board of Directors finds that the proposed lease for the Property is compatible with the District's activitie and functions. I 2. That, after holding a noticed public hearing, the Board of Directors finds that the lease • the Property would provide a public benefit • generating funds for the District's duties and functions. 3. That the General Manager • her designee is authorized to extend the current lease for up • six months on a month-to-month basis to complete negotiations for a longer term lease extension. Resolution No. 2012-102 Page 2 of 2 4. That the General Manager or her designee is authorized to negotiate a lease agreement for the Property for a term not in excess of ten years. Such lease shall be as a concrete and asphalt recycling operation. HaT-M =*. it JC=NUM.5 30HER 6. That the proposed lease and operation of the existing structures and facilities -OU the Property are exempt from the requirements of the California Environmental Quali Act (CEQA) under District CEQA Guidelines Section 15301, since it involves extensi for existing facilities. • 7. That each portion • this resolution is severable. Should any portion of this resolution be adjudged to be invalid and unenforcea le by a ody o competent jurisdiction, then the remaining resolution portions shall be and continue in full force and effect. PASSED AND ADOPTED this 20th day of December, 2012, by the Board of Directors of the Central Contra Costa Sanitary District by the following vote: AYES: Members: Causey, McGill, Pilecki, Williams, Nejedly NOES: Members: None ABSENT: Members: None Jama,s'-A, Nejedly X President of the Board of Directors Central Contra Costa Sanitary District County of Contra Costa, State of California