Item:
Title
Approve Budget Amendment No. 25BCC071 Appropriating $129,631.87 of General Fund Fund Balance to Fund the Approval of a Lease Agreement Between Durham County and 712 Ellis Durham LLC for the Relocation of Office of Emergency Services and General Services Vehicle Maintenance Facility to 712 Ellis Road, utilizing 35,306 square feet of space at a lease rate of $10.26 (base lease plus additional rent for taxes and insurance) per square foot for a Year 1 lease payment of $362,239.56.
Body
Date of BOCC Meeting: January 27, 2025
Request for Board Action:
Agenda Text
The Board of County Commissioners is requested to approve Budget Amendment No. 25BCC071 appropriating $129,631.87 of General Fund fund balance to fund the approval of the attached Lease Agreement between Durham County and 712 Ellis Road LLC for 35,306 square feet of industrial space located at 712 Ellis Road, Durham NC, to serve as the centralized location for Office of Emergency Services (OES) and County Fleet Vehicle Maintenance. The lease rate is $8.75 per square foot plus $1.51 per square foot for taxes, insurance, and General and Administrative costs, and an upfront security deposit in the amount of $77,232. The annual escalation on the lease rate is 3.75%. The Board of Commissioners is further requested to authorize the County Manager to execute the Lease agreement in its final version, subject to approval by the County Attorney’s Office. County engineering personnel, with the Assistance of the County Attorney’s Office (and - to the extent necessary - outside counsel) are in the process of finalizing the details of the Lease document. Upon approval and execution of the Lease Agreement, the County Engineering’s Project Management Division will begin the work to complete the design and construction of the building upfit to accommodate the County’s needs in a timely manner.
The budget amendment ensures funding for the Security Deposit ($77,231.88) and first month’s rent ($30,186.63) and Additional Rent for February - June ($22,213.36) which will be due in the FY 2024-25. The plan and budget for this whole project, including the future lease obligations ($362,239.56 for FY 2025-26), will be brought forward through the FY 2025-26 budget process for further consideration by Management and Elected Officials.
This is a 7-year NNN (triple net lease) with two 5-year extensions that may be exercised at the County’s option. A triple net lease means that property taxes, building insurance, and maintenance costs are paid by the Tenant. In order to eliminate repair and maintenance fees that are frequently paid to the Landlord in the form of “additional rent” or TICAM (Taxes, Insurance, Common Area Maintenance) fees, and to retain needed control over the property during our lease term, General Services staff and contractors will maintain this property and make repairs as needed. This includes building systems, landscaping, hardscaping, parking lot, fencing, extermination, refuse hauling, as well as all utility costs for this triple net lease. The Landlord maintains responsibility for repair and replacement of all roof and structural systems.
Durham County has leased space for OES Fleet Maintenance since 2016 at 122 Stone Park Court. The property was sold to the North Carolina Railroad in 2023 and is slated for demolition to allow for the realignment of the existing rail line adjacent to the property. Durham County has been notified that we must vacate the building by the end of August 2025. The former Parkwood Fire Station on Seaton Road was evaluated as a potential solution, however, due to zoning and other issues, could not be upfitted for this purpose in a time to fulfill this urgent need.
In addition to the needs of OES, General Services has been relying on outside vehicle service providers to maintain our fleet due to lack of space to perform this critical function in-house. GSD has found this to be an unreliable and untenable approach. Multiple locations for the relocation of OES and General Fleet Maintenance have been explored, and staff have determined that the location at 712 Ellis Road is the most effective option for a temporary facility until a new permanent facility can be funded and construction on the County’s property at Junction Road, and can be functional within the time available.
Alignment with Strategic Plan: The attached Lease Agreement supports Sustainable Infrastructure & Environment by planning for long-term use of County facilities, and equipment.
Resource Persons: Nancy Mitchell, Senior Real Estate Officer; Peri Manns, Deputy Director of E&ES; Jay Gibson, Director of E&ES; Nathan McKinney, Sr. Assistant County Attorney.
County Manager’s Recommendation: The County Manager recommends that the Board approve Budget Amendment No. 25BCC071 appropriating $129,631.87 of General Fund fund balance to fund the approval of the attached Lease Agreement between Durham County and 712 Ellis Road LLC for 35,306 square feet of industrial space located at 712 Ellis Road, Durham NC, to serve as the centralized location for OES and County Fleet Vehicle Maintenance, and to authorize the County Manager to execute the Lease Agreement in its final version, subject to approval by the County Attorney’s Office.
Signature
County Manager: ____________________________