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Home My WebLink About03.h. Consider 3-month lease extension with County QuarryCentral Contra Costa Sanitary District BOARD OF DIRECTORS 3. h • POSITION PAPER Board Meeting Date: June 20, 2013 Subject: ADOPT A RESOLUTION AUTHORIZING STAFF TO EXECUTE THE FIFTH AMENDMENT TO LEASE AGREEMENT EXTENDING IT UNTIL SEPTEMBER 30, 2013 WITH COUNTY QUARRY PRODUCTS LLC (5501 IMHOFF DRIVE, MARTINEZ - APN 159 - 140 -052) Submitted By: Initiating Dept. /Div.: Danea Gemmell Engineering/ Environmental Services Division Manager Environmental Services Division REVIEWED AND RECOMMENDED FOR BOARD ACTION: 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 September 30, 2013. FINANCIAL IMPACTS: The District will receive $18,411 per month until September 30, 2013. 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; • authorized the extension of the current lease for six months to June 30, 2013 (the Fourth Amendment); C:\ Users\ danderson \AppData \Local\Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \PP CQ 6 -20 -2013 Final.doc Page 1 of 2 POSITION PAPER Board Meeting Date: June 20, 2013 Subject: ADOPT A RESOLUTION AUTHORIZING STAFF TO EXECUTE THE FIFTH AMENDMENT TO LEASE AGREEMENT EXTENDING IT UNTIL SEPTEMBER 30, 2013 WITH COUNTY QUARRY PRODUCTS LLC (5501 IMHOFF DRIVE, MARTINEZ - APN 159 - 140 -052) • 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 presented a 2 -year Lease Amendment to the full Board at the April 18, 2013 meeting with a new provision that adds financial penalties for failure to comply with mutually agreed upon housekeeping and safety issues. The Board provided direction to allow a 7 -1/2 year extension conditional upon County Quarry's satisfactory performance in the initial 2 -year term. County Quarry has agreed to the new conditions outlined by staff. District Counsel recommends that a new Lease Agreement be drafted to update the terms, rather than execute a comprehensive revision. The proposed Lease Agreement is still being negotiated. Staff requests a ninety -day extension to the previous Lease to complete the revisions of the new 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 for a ninety day extension through September 30, 2013. Attached Supportinq Documents: 1. Draft Fifth Amendment to Lease Agreement with County Quarry Products, LLC 2. Resolution 2012 -102 C:\ Users \danderson\HppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \PP CQ 6 -20 -2013 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 06/27/13, 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 28, 2012, the Parties entered into a Fourth Amendment, which extended the term of the Lease monthly for six months until June 30, 2013 to give the parties an opportunity to negotiate a new or extended term lease. F. The Parties have now agreed to extend the Lease for two additional years with an option to extend seven and a half more years, contingent upon maintaining the premises as set forth by the District and receiving fewer than four penalties for failure to meet maintenance standards in the initial two year period. G. The Parties have agreed to enter into a new Lease Agreement rather then extending the original Agreement. An additional 90 days is needed to finalize the terms of the Agreement. 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 Lease term that began January 1, 2001, and was extended four times, is extended an additional ninety days to September 30, 2013. If by that time, the Parties have not reached agreement on terms for a new Lease Agreement, 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 September 30, 2013. Rent is paid in advance, and is due on the first day of each calendar month. Section 4 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, Third and Fourth 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 5 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 6 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-M 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. 2013- 012. A RESOLUTION OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT AUTHORIZING STAFF TO EXECUTE THE FIFTH AMENDMENT TO THE LEASE AGREEMENT EXTENDING IT UNTIL SEPTEMBER 30, 2013 WITH COUNTY QUARRY PRODUCTS LLC (5501 IMHOFF DRIVE, MARTINEZ — APN 159- 140 -052) BE IT RESOLVED by the Board of Directors of the Central Contra Costa Sanitary District (District) as follows: THAT the District hereby consents to the execution the fifth amendment to the lease agreement extending it until September 30, 2013 with County Quarry Products LLC (5501 Imhoff Drive, Martinez — APN 159- 140 -052); and THAT the President of the Board of Directors and the Secretary of the District are hereby authorized to execute said deed for and on behalf of the District; and THAT staff is authorized to record said deed in the office of the Recorder of Contra Costa County. PASSED AND ADOPTED this 20th day of June 2013, by the Board of Directors of the District by the following vote: AYES: Members: NOES: Members: ABSENT: Members: James A. Nejedly President of the Board of Directors Central Contra Costa Sanitary District County of Contra Costa, State of California COUNTERSIGNED: Elaine R. Boehme, CMC Secretary of the District Central Contra Costa Sanitary District County of Contra Costa, State of California Approved as to form: Kenton L. Alm, Esq. Counsel for the District