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ORANGE COUNTY <br />BOARD OF COMMISSIONERS <br />ACTION AGENDA ITEM ABSTRACT <br />Meeting Date: April 1, 2008 <br />Action Agenda <br />Item No. ~- - ~ <br />SUBJECT: Valley Forge Road Property Lease Rate for Builder's First Source <br />DEPARTMENT: Purchasing and Central Srvcs. PUBLIC HEARING: (Y/N) No <br />ATTACHMENT(S): <br />Original Lease <br />INFORMATION CONTACT: <br />Pam Jones, (919) 245-2652 <br />Willie Best, (919) 245-2308 <br />PURPOSE: To consider approving the lease rate for property owned by the County at <br />401 Valley Forge Road, Hillsborough and leased to Builders First Source; and to receive <br />information regarding compliance with the original economic development conditions <br />established in the 1997 lease. <br />BACKGROUND: In 1-997, the County acquired property at 401 Valley Forge Road, <br />Hillsborough as a result of the retirement of revenue bonds owned by the Industrial <br />Development Corporation. The Orange County Economic Development office successfully <br />negotiated a lease with Builder's Supply & Lumber, Incorporated, whose name was changed <br />and the lease assigned to Builders First Source effective December 31, 2000. The lease terms <br />set the initial term for ten years, with two automatic five year renewals. The lease automatically <br />renewed on October 1, 2007. However, a renewal lease amount was only recently finalized. <br />The Board is asked to approve the lease rate at $2.50/square foot for the renewal October 1, <br />2007 through September 30, 2012. No other terms of the lease are affected. A copy of the <br />original lease is provided as information. <br />The original lease also included several conditions that were to be met regarding numbers of <br />jobs created and their associated wages. Builders First Source reports that as of 2002 the <br />company employed 90 people as required by the lease. As of 2008, the company has 70 <br />people employed due to the downturn of the economy. Investments by the company in <br />equipment and improvements to the premises totaled $3.3 million with total sales presently at <br />$25 million, and at its peak, sales totaled $40 million. The original lease. stipulated an average <br />wage for all employees at $12.80 per hour and $9.13 per hour excluding salaried, <br />managerial/supervisor positions. The average wage currently for all employees is $15.40 per <br />hour for all employees and $13.54 per hour for non-managerial and non-supervisory positions. <br />FINANCIAL IMPACT: The Board may recall that the original lease was set at $1/square foot, <br />significantly below market rate, to recognize the significant capital .investment needed to make <br />