The IRS has been a tenant in the Rucker Building since 2002, occupying 9,882 square feet of office and related space. Their current lease (Exhibit A), managed by General Services Administration (GSA), began December 1, 2012, and continues through November 30, 2022. On January 5, 2018, Health District staff received notice (Exhibit B) that the IRS intended to partially reduce space effective April 19, 2019, by 7,302 rentable square feet, leaving 2,478 occupied.
Beginning May 31, 2018, the IRS began moving staff out of the Rucker Building while continuing to occupy all 9,882 square feet. On March 28, 2019, SHD staff was contacted by GSA requesting a space reconfiguration (Exhibits C and D), which would accomplish the planned reduction in the occupied space. GSA would like to accomplish this through the current lease via a lease amendment.
If SHD takes responsibility for the project, SHD would secure bids for the work and submit them to GSA for acceptance. Once the work is completed and accepted by GSA and the IRS, SHD would be reimbursed in accordance with the lease agreement. If SHD declines to do the project, the government would need to be given permission to do the work to reconfigure their occupied space.
Staff consulted with Weed, Graafstra & Associates, Inc., to determine legal considerations of SHD doing the project or allowing the government permission. Legal counsel noted that if the government controlled the process of getting bids and cost estimates, they have no basis to question or disagree with process SHD used to secure bids. It was also noted that if costs were to be shared, then SHD will need to be involved in the review of the bids and work to be done. It was also noted that cost overruns, contract disputes, or project acceptance could all lead to SHD being caught between contractor and lessee. Lastly, counsel suggested several addendums to the existing contract to clarify SHD’s role in contracting for tenant improvements, add protections for SHD oversight and control over what is done to the space and the building, and minimize inconvenience and disruption to SHD employees and operations.
At their April 24 meetings, both the Executive Committee and the Administration Committee recommended SHD decline the project and allow GSA to contract the project directly with the IRS.