BOARD MEETING DATE: November 7, 2008
AGENDA NO. 9

PROPOSAL:

Execute Lease Agreement for AQMD Headquarters Child Care Center

SYNOPSIS:

The lease agreement for AQMD’s Diamond Bar headquarters child care center will expire February 1, 2009. This action is to execute a ten-year lease, through the school year ending June 30, 2019, with the current operator, Priyalal and Lasanthi Kurera, Incorporated. Lease provisions allow AQMD to terminate the lease at any time with proper notice, should it become necessary, and permit AQMD to require the operators to remove, at their expense, any lessee-owned alterations or improvements.

COMMITTEE:

Administrative, October 10, 2008, Recommended for Approval

RECOMMENDED ACTIONS:

Authorize the Chairman to execute a lease agreement with Priyalal and Lasanthi Kurera, Incorporated for the child care center facility at AQMD Diamond Bar headquarters for the period February 1, 2009 through June 30, 2019 at an annual lease payment of $35,340, plus increases of two percent per year beginning with the second year.
 

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The original lease with Priyalal and Lasanthi Kurera, Incorporated for operation of AQMD’s on-site child care center was for the period February 1, 2004, to February 5, 2007. Under provisions in the lease agreement, and with Administrative Committee approval, the lease was extended to February 2, 2009. At its July 2008 meeting, the Administrative Committee reviewed a report on the center’s enrollment and AQMD parents’ expression of satisfaction with the operation and, at the suggestion of the Executive Officer, agreed to extend the lease an additional year.

The contractors, however, noted that they have dramatically increased enrollment since they took over the operation and stated they are concerned that short-term extensions of the lease do not provide adequate assurance of continuing operation to either parents interested in enrolling their children or the center’s teachers, especially when the lease could end during the middle of the school year. Without a longer-term commitment, the ability to operate a financially viable quality center is, they feel, at risk.

At its September meeting, the Administrative Committee reviewed current contractor concerns and, in consideration for their having established a significantly improved child care center, recommended they be awarded a ten-year lease, with the option of AQMD’s terminating the lease at any time, upon proper notice, should it become necessary. The Committee asked staff to return in October with contract language that would protect AQMD from financial liability should the agency decide to terminate the lease during the ten-year term. This protection has been incorporated into the lease agreement with a provision that permits AQMD to require removal of all alterations and improvements, at the lessee’s expense, whenever the lease is ended.

Resource Impacts

Under the terms of the lease, the child care center operator is responsible for furnishing water, electricity, and gas, plus telephone, janitorial, landscape, waste management, pest control, and security services and for maintaining and replacing appliances and internal furnishings. The monthly lease payment of $2,945 generates $35,340 in revenue annually and, during the term of the current lease, revenue has exceeded AQMD maintenance costs, including replacement of the facility’s roof. Under the new lease, payments will increase by two percent each year beginning with the second year of the lease.

Attachment (DOC, 571k)

Lease Agreement