AGENDA DATE: 6/7/2017
TITLE:
Title
Virginia Department of Health (VDH) Lease Amendment
BODY
SUBJECT/PROPOSAL/REQUEST: Resolution to approve a proposed amendment to the Health Department Lease
ITEM TYPE: Consent Action Item
STAFF CONTACT(S): Walker, Letteri, Kamptner, Herrick, Henry, Allshouse
PRESENTER (S): Andy Herrick
LEGAL REVIEW: Yes
REVIEWED BY: Douglas C. Walker
BACKGROUND: The County and the City of Charlottesville jointly own the Health Department building and property on Rose Hill Drive and have leased it to the Virginia Department of Health, originally under a 1995 Deed of Lease (Attachment D), subsequently amended in 2009 (Attachment C). Though the current lease term is set to expire on June 30, 2017, the parties are interested in extending the VDH’s use of the property. The current resolution proposes a second amendment to the parties Deed of Lease.
STRATEGIC PLAN: Infrastructure Investment. Prioritize, plan, and invest in critical infrastructure that responds to past and future changes and improves the capacity to serve community needs.
DISCUSSION: As the new fiscal agent for the Health Department facility, the City of Charlottesville has taken the lead in negotiating the proposed lease extension. The proposed second amendment to the lease Includes the following amendments:
* Term -- Section 1 would extend the lease for an additional five (5) years, through June 30, 2022.
* Rent -- Section 2 would increase the VDH’s rent from $55,000 per year to $251,655 per year.
* Purpose and Use of Premises -- Section 3 would acknowledge (a) the Charlottesville Free Clinic’s occupancy of a portion of the property, under a License Agreement approved in 2009 and (b) a state-mandated Firearms Rider.
* Improvements by County/City -- Section 5 would require the County and City to make certain improvements outlined in a 2015 Property Condition Assessment Report.
* Utilities and Routine Maintenance -- Section 6 would make the VDH responsible for utilities and janitorial services, and would make the County and City responsible for elevator maintenance and inspections, snow and ice removal, and exterior landscaping
* Improvements and Alterations -- Section 8 would allow the VDH to make improvements and alterations to the property, with the consent of the County and City.
BUDGET IMPACT: As noted above, the proposed lease would increase the Health Department’s rent from $55,000 per year to $251,655 per year. Though Section 5 of the proposed lease amendment would require the County and the City to make a City-estimated $512,186 in improvements and provide an estimated $711,336 in services (many of them new) over the proposed five-year extended term, these additional expenses would be more than offset by $1,258,275 in state-authorized rent over that same period. With increased income expected to more than offset increased expenses, the proposed lease amendment is not expected to have a negative budget impact.
RECOMMENDATION:
Recommendation
Staff recommends that the Board adopt the attached Resolution (Attachment B) to authorize the execution of the proposed Second Amendment to the Deed of Lease between the City of Charlottesville, the County of Albemarle and the Commonwealth of Virginia, Department of Health.
ATTACHMENTS: A - Resolution
B - Proposed Second Amendment to Deed of Lease
C -- 2009 First Amendment to Deed of Lease
D - Original 1995 Deed of Lease