RECOMMENDATION: Approve and authorize a Sublease Agreement between Midcoast Operating, L.P. formerly known as Enbridge Midcoast Energy, L.P. (Sublandlord) and City of Houston (Subtenant) for the sublease of office space for certain City of Houston employees at 1100 Louisiana Street, Houston, Texas.
SPECIFIC EXPLANATION: On August 26, 2017, Hurricane Harvey inundated the basement of City Hall with approximately 3-4 feet of rising water, displacing employees of the Strategic Procurement Division (SPD) of the Finance Department. Consequently, the City entered a sublease with Shell Oil Company (Shell) for approximately 74,723 rentable square feet on three floors for temporary office space for these displaced City employees, at no cost to the City. Thereafter, on December 15, 2017, the sprinkler system on the 9th floor of 611 Walker activated, resulting in water damages to the 8th and 9th floor of the building. Approximately 110 Houston Information Technology Services Department (HITS) employees were displaced and relocated to One Shell Plaza.
The initial sublease term at One Shell commenced September 7, 2017 and expired March 6, 2018. The City and Shell subsequently extended the sublease, but only for two floors, consisting of approximately 49,786 rentable square feet, both at no cost, until May 31, 2018. The City and Shell subsequently extended the sublease for two floors for an additional month, until June 30, 2018, at the monthly rental of $70,073.80.
The City now proposes to sublease office space for SPD and HITS at 1100 Louisiana Street from Midcoast Operating, L.P., formerly known as Enbridge Midcoast Energy, L.P. The proposed Sublease Agreement will commence on July 1, 2018, and expire on December 31, 2019, at the monthly rental of $93,380.63, $175 per month per parking space, and $100 per hour for HVAC overtime. The proposed subleased premises consist of all of the 34th, 37th, and 38th floors, containing 68,958 square feet, and four unreserved parking spaces. HVAC overtime is estimated at ten hours per month. At the expiration of the sublease term, SPD and HITS will move to the City-owned facility at 611 Walker.
Therefore, the General Services Department recommends approval of the Sublease Agreement for the sublease of three floors of office space at 1100 Louisiana for SPD and HITS.
DISASTER RECOVERY NOTE: Part of this item is related to the impact of Hurricane Harvey DR4332 and it is the City’s intent to seek reimbursement from the Federal Emergency Management Agency (“FEMA”) and other eligible sources for such expenditures.
OPERATING BUDGET FISCAL NOTE: Funding for this item is included in the FY 2019 Adopted Budget. Therefore, no Fiscal Note is required as stated in the Financial Policy Ordinance No. 2014-1078.
DIRECTOR’S SIGNATURE/DATE:
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C. J. Messiah, Jr.
General Services Department
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Tantri Emo
Finance Department
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Lisa Kent
Houston Information Technology Services Department