MOORLACH UPDATE — SSA Building — December 15, 2014

Although it has been on the Board of Supervisors agenda numerous times for the last six months, the Voice of OC piece below is the first article that I can recall on the topic. It will be on tomorrow’s agenda, as it has been in the past, as a Discussion Calendar item and a Closed Session item. Here is the Discussion Calendar Agenda Staff Report (ASR) heading:

39. Approve 15-year lease agreement CEO/ALS/SSA-13-047 with IX CW 500 Orange Tower, LP or relocation of SSA Administration Headquarters, Orange; and authorize the Chief Real Estate Officer to agree to minor non-monetary revisions and amendments to the lease terms as necessary to effectuate the action set out in this ASR and the build-out of the premises for the County; and make California Environmental Quality Act findings – District 3 (Continued from 7/15/14, Item 30; 8/5/14, Item 21; 8/12/14, Item 17; 8/19/14, Item 38; 9/9/14, Item 31; 9/16/14, Item 44; 9/30/14, Item 36; Previously heard on 10/21/14, Item 17 and continued on 11/25/14, heard on 11/18/14. Item 7)

As this has only been discussed in Closed Session, I was not able to make any comments. However, the piece does lay out the many concerns accompanying this matter. Tomorrow we will have a new Fifth District Supervisor and the First District Supervisorial seat, where the current building is located, is vacant. But, it would be nice to cast a vote. If number 39 is not continued, then expect me to be favorable to relocating to this facility.

County Social Services Workers Stuck in Deteriorating Building

By THY VO Voice of OC

Mold proliferates in the air vents.

Staff get stuck in elevators weekly.

The roof leaks when it rains, and a corroded plumbing system regularly releases sewage gases that float up the elevator shafts.

For years, employees at the Orange County Social Services Agency at 888 N. Main Street in Santa Ana have complained about the condition of the 10-story building, which was first constructed in the 1960s and has yet to be retrofitted with modern mechanical, electrical and plumbing systems.

"If this were a County facility, it would be a difficult choice to decide whether to invest the capital in the facility or to relocate the agency," wrote OC Public Works Deputy Director Tom Corbett in a July 28 memo describing the building’s condition.

"Since this is not a County facility and we do not have the burden of ownership it would be unreasonable to subject the staff and agency to this environment," Corbett said, adding that relocation "could be accomplished within weeks."

Yet since a proposal to relocate the agency and lease a property in Orange on State College Boulevard first came before the county Board of Supervisors on July 15, negotiations have dragged on in closed session and the item has been delayed week after week.

With a Dec. 31 expiration date set for the Main Street property’s lease approaching, county supervisors will again consider on Tuesday whether to renew the lease or relocate the agency.

Asked why the situation has gone on so long, County Supervisor John Moorlach said, "you’ve asked an incredible question," adding that he could not discuss closed session negotiations.

"[The State College lessor] has been patiently waiting for this Board to make a decision," Moorlach said.

Orange County Employees Association spokeswoman Jennifer Muir said the union has received many complaints from members about the building in the past several months, as well as members who are concerned about the new building being too far from the Civic Center in downtown Santa Ana.

"We’ve communicated those concerns to the Board…and now it’s time for them to make a decision about what’s best for the county," Muir said.

The Social Services Agency has occupied the building since 1996, when the county signed a 15-year, fixed rent lease with Eastcom Corp., a company owned by local developer Michael F. Harrah.

Harrah, who is one of the largest property owners in downtown Santa Ana, also owns the building and property that houses the District Attorney’s Office, according to the county’s press office.

Harrah is now offering a long-term lease extension that would include major repairs, including renovation of elevators and replacement of the air conditioning system.

At an Oct. 21 board of supervisors’ meeting, Harrah told supervisors that he would make all repairs necessary to make sure "the building will be in perfect condition" for the county.

"We are ready, willing and able to do any modernization. We’re looking for a long-term commitment. Not only for 15 years, but for many years to come," Harrah said.

SSA officials and the county real estate office say that remaining in the Main Street building would be impractical and disruptive, as staff would need to be relocated temporarily during building upgrades.

Staff has proposed a 15-year lease at a new building on State College Blvd. in Orange, further from the Civic Center but closer to other SSA facilities, according to a staff report.

At the October meeting, Harrah requested a 30-day continuance on the item so that he could determine what repairs were necessary on the building before supervisors moved forward on the lease.

He said county staff had not provided him with a list of specific renovations for the building. Because negotiations over the relocation and current property are ongoing, assessments of the building are being kept confidential.

"It’s difficult for me to figure out what they want…if they hire someone to figure out what the building needs but they can’t give it to me," Harrah said.

Chief Real Estate Officer Scott Mayer, the county’s lead negotiator, said conducting a survey of the building to create a list for Harrah would require significant county resources.

"I pointed out that we are a tenant of the building and would think it was not our obligation to conduct destructive testing of his building to determine each and every instance where there might be an issue with plumbing," Mayer said.

A Deteriorating Building

Memos and county-commissioned reports obtained by Voice of OC show unpleasant and even dangerous conditions for the more than 300 county employees who work at 888 N. Main Street.

A 10-page list of tenant improvements requested by the county shows the building would require extensive renovations and major replacement of mechanical, electrical and plumbing systems that do not comply with existing codes and have not been upgraded since the 1960s.

Corbett’s July memo notes that the building is "in great decay, potentially exposing SSA staff and patrons to serious air quality concerns."

Air circulation units are operational but "badly deteriorated," with rusted interiors that are harbors for mold, Corbett writes. The steel duct on the roof has rusted through, opening the system to rain and dirt.

The building’s sewage and water piping are also showing significant signs of rust and corrosion, leading to leaking water that has exposed asbestos insulation to open air.

A lack of efficient water and air circulation means some rooms are too hot, while on cold days, employees on the first three floors rely on space heaters, according to Corbett’s memo.

Another report on the building’s electrical system by IBI, a firm hired by the county, noted it would cost at least $5.8 million to reconstruct and repair the building’s "obsolete" electrical system, not including the cost of relocating employees temporarily during the construction.

The building also lacks a number of basic safety features.

Throughout the building, electrical panels are missing doors or and dead fronts on breaker slots. Only the first floor has automatic fire sprinklers. The building does not have a standby emergency electric generator system, which would regulate elevators, smoke evacuation and lighting in the event of an emergency.

A 2011 assessment also concluded that the facility is a "high seismic risk," according to Corbett’s memo.

A Good Deal for the County?

Since the original lease for the Main Street property was signed in 1996, the county has paid a fixed rent of $1.27 per square foot, per month, or $137,453.37 monthly.

Under the proposed 15-year lease with IX CW 500 Orange Tower LP, the company that owns the building at 500 N. State College, the county would pay $1.05 per square foot per month in the first year, with increases each year after, or an effective rental rate of $2.38 per square foot per month.

The company would also pay the county a $619,555 commission for the lease and $1.2 million in moving expenses.

Over the life of the lease for the State College property, the county would pay $59.5 million in rent, more than twice the amount the county has paid to Harrah in rent since 1996.

But the county has clashed with Harrah in the past over his obligations to the Main Street building.

According to the original contract, when the lease expired Jan. 31, 2012 the county had the option of purchasing the property for $100.

In September 2011, the county signed an agreement with Harrah to purchase the property. But that December, the county filed a lawsuit against Harrah, alleging that he did not complete repairs to the building’s parking lot and failed to provide all the free parking spots promised in the original contract.

Harrah disputed the county’s interpretation of the contract and claimed the county never properly executed the purchase agreement. He also claimed the county did unauthorized construction on the parking lot itself, withholding $75,155 in other payments to recoup losses from the construction, according to court documents.

The case was ultimately dismissed. The county dropped its plans to purchase the property and signed another 2-year extension of the lease.

Board Chairman Shawn Nelson declined to comment on the negotiations and whether the county is considering extending the lease on the Main Street facility, citing confidentiality of ongoing negotiations.

Asked about safety concerns and whether the county should extend the lease, Nelson hung up on a reporter.

Supervisors Todd Spitzer and Lisa Bartlett, the latter who was sworn in this month and has yet to participate in any closed sessions on the item, did not respond to requests for comment.

Contact the writer at thyanhvo or follow her on Twitter, @thyanhvo.

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