Committee forwards five-year lease extension for Sheriff’s Department at 1740 Folsom

The Budget and Finance Committee voted to send forward a resolution authorizing a five-year option to extend the Sheriff’s Department lease at 1740 Folsom Street.

John Updike, Acting Director of Real Estate, told the committee the current 10-year lease expires on June 30, 2012 and the negotiated new starting rate under the option would be $25.18 per square foot, with $1 per-square-foot annual escalators for the remainder of the term. "The current rate paid is $23 per square foot per year," Updike said, adding the new negotiated rate compares favorably with nearby office comparables.

Budget Analyst Rose reviewed the fiscal impact, saying the first-year annual rent at $25.18 per square foot would be $474,009.45, an increase of $41,119 (9.5%) from the current rent of $433,008.26 and that total rent and utilities under the proposed five-year term would be approximately $2,733,386. Rose recommended approval.

Updike described the property’s operational role for the Sheriff’s Department, noting it houses defensive-tactics and policy training, serves as a primary departmental operating center with emergency functions and includes a generator and backup power. He also corrected a typographical error in the legislation, stating the correct property size is 18,862 square feet and that the transposed figure did not affect deal terms.

Supervisor Kim asked whether purchase had been considered instead of leasing; Updike said previous reviews (2006–07) considered purchase and concluded leasing remained more cost-effective once capital-reserve needs and the building’s age were taken into account.

With no substantive opposition during public comment, the committee moved the resolution forward with recommendation.

The item will be considered on the Board of Supervisors agenda per regular scheduling.