The Boys and Girls Club of Fullerton (BGC) entered into a lease agreement with the City in 2012, agreeing to make monthly rent payments and a $700,000 capital contribution over 25 years to support the construction of the Fullerton Community Center. As of June 2024, the outstanding balance amounts to $352,555. However, the proposed amendment would allow BGC to settle the remaining $295,000 balance as a lump sum.

The Fullerton City Council approved and authorized City Manager Eric Levitt, or his designee, to execute and administer the Second Amendment to Lease Agreement with the Boys and Girls Club of Fullerton, in a form approved by the City Attorney.

The fiscal impact of this amendment is significant, as it entails an immediate lump sum payment of $295,000 to the City from BGC, as opposed to receiving $352,555 over the next 14 years. The City stands to benefit from the upfront payment by being able to use or invest the funds immediately, giving the City Council a sense of financial control. Additionally, opting for the lump sum payment mitigates the risk of potential defaults on quarterly payments.

BGC entered into a Lease Agreement with the City on November 18, 1966 and a replacement Lease Agreement on September 1, 1976 for the BGC of Fullerton facility previous located in Amerige Park at 348 W Commonwealth Ave, for the purpose of promoting the physical, mental and moral welfare of boys and girls in the City of Fullerton.

The 1976 Lease Agreement between the Parties terminated on August 31, 2006 and Tenant’ s lease continued on a month-to-month basis until the Boys and Girls Club facility was torn down in October 2010 in preparation for the construction of the Fullerton Community Center (FCC) located in Amerige Park at the site of the former Fullerton Senior Center.

The City agreed to lease to BGC a portion of the space in the FCC to operate the Boys and Girls Club of Fullerton in exchange for a contribution towards the construction of the community center and BGC accepted City’ s offer and committed to paying monthly rent along with a substantial capital contribution of $700,000. As of now, they have made payments totaling $347,445, leaving an outstanding balance of $352,555 for the capital contribution.

BGC has proposed an alternative payment approach, suggesting a lump sum of $295,000 in lieu of the scheduled payments. The Second Amendment to the Lease Agreement outlines that this lump sum would effectively fulfill BGC’s capital contribution obligation. Additionally, the proposed 2.8% discount rate emphasizes the present value savings for the City by facilitating early payment.

The proposed plan carries potential advantages for both parties involved. The City stands to gain from an immediate cash injection which it needs and reduced future payment risk. Meanwhile, BGC benefits from a decreased total payment amount and the fulfillment of its commitment ahead of schedule.

According to the original lease agreement, the tenant (BGC) shall pay the City the annual sum of $ 36,000 in 12 monthly installments of $ 3,000 per month for the first 12 months of this Agreement. The monthly payments shall increase to 4,000 per month on the 1st-anniversary date of this Agreement and $ 5,377 per month on the second-anniversary date of this Agreement. Rent will be increased by three percent 3%) every two ( 2) years beginning on the 3rd anniversary date of this Agreement. Monthly rent includes the City’s costs to provide maintenance, custodial, capital replacement flooring, roof, HVAC, exterior and interior painting, automatic doors, security systems, and windows) utilities,( including Wi-Fi service, water, electricity and gas) property taxes and property insurance.

The City will also provide building maintenance, facility capital repair, and custodial services. Building maintenance includes general maintenance of the buildings and fixtures and does not include maintenance of equipment, data, telephone lines, or personal property. Facility capital repair includes scheduled replacement of the roof, flooring, exterior and interior painting, and the HVAC system. Custodial services include daily cleaning, trash removal, vacuuming, and mopping of all rooms and offices, as well as weekly/ monthly cleaning of walls and windows, carpet shampooing, floor waxing, and other services deemed necessary by the City.