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ORANGE COUNTY <br />BOARD OF COMMISSIONERS <br />ACTION AGENDA ITEM ABSTRACT <br />Meeting Date: January 24, 2012 <br />Action Agenda <br />Item No. ~--'Yl <br />SUBJECT: Expiration of Option to Purchase Hillsborough Commons <br />DEPARTMENT: Asset Management Services PUBLIC HEARING: (Y/N) No <br />ATTACHMENT(S): <br />Lease <br />INFORMATION CONTACT: <br />Pam Jones, (919) 245-2652 <br />PURPOSE: To acknowledge the February 2012 expiration of an Option to Purchase <br />Hillsborough Commons as provided in the lease executed in 2008, and officially decline its <br />execution. <br />BACKGROUND: In 2008, the Board of Commissioners authorized a lease for 56,238 square <br />feet of space at the Hillsborough Commons Shopping Center in Hillsborough for use by the <br />Department of Social Services. The lease contained a provision that allows the County to <br />purchase the entire shopping center for $15,489,000 minus $15,000 per month of rent paid. <br />The quoted cost is not favorable to the County, particularly given the drop in real estate prices <br />since 2008. At various times over the past three years, the Board has indicated its intention to <br />not execute the Option. <br />The Option to Purchase would have enabled the County to develop the entire 108,000 square <br />feet at the shopping center to house the human services agencies in Central Orange on a single <br />campus. Renovations at the Whiffed Building in 2011 will allow efficient operation of Health and <br />Dental Clinics for an estimated ten to fifteen years. The leased premises for DSS offices will <br />continue under contract per the provisions contained in the attached lease, although the owner <br />has expressed potential interest in negotiating with the County should the find it prudent, to <br />purchase the leased premises under some type of condominium agreement. <br />FINANCIAL IMPACT: There is no financial impact related to the expiration of the Option to <br />Purchase. Lease payments will continue to be made pursuant to the attached lease and paid <br />through the Department of Social Services budget. <br />RECOMMENDATION(S): The Manager recommends that the Board officially decline to <br />exercise the Option to Purchase the Hillsborough Commons Shopping Center on Mayo Street, <br />Hillsborough as presented in the 2008 lease. <br />