The San Jose City Council Tuesday approved a deal for the U.S. Patent and Trademark Office to lease space at City Hall, five months after the federal agency chose San Jose as the site of a permanent satellite office.
Under the 10-year agreement, the USPTO would lease about 35,000 square feet in a vacant city-owned retail area on Fourth Street and parts of City Hall's western wing fronting Fourth Street for what would be known as the Silicon Valley Patent Office.
USPTO would move into the offices in phases from May 2015 to July 2015, after city employees move out of the second floor and part of the third floor of the wing between March and May of that year, according to city officials.
The new federal office would house space for 110 staffers, including 80 patent examiners, 20 U.S. Patent and Appeal Board judges and others in management, administration and information technology, according to Mayor Chuck Reed's spokeswoman Michelle McGurk.
The office will permit the public to meet with patent examiners, search patent information and use teleconference equipment for in-person and virtual meetings early in the application process, McGurk said.
The U.S. Department of Commerce announced on Nov. 19 it had selected San Jose as the new home for its permanent satellite office. It currently operates at a temporary site in Menlo Park.
More patents are generated in the San Jose metropolitan area, the site of many high-technology industry firms, than any other city in the country, according to city officials.
The negotiations on a lease since November became protracted after the USPTO decided against locating inside City Hall's 18-story tower, choosing the space on the Fourth Street side of the City Hall campus instead, according to McGurk.
The USPTO will pay the city market rate rent of $2.23 a square foot during the first five years of the lease, then have the option to pay a 50% discounted rate during the sixth to tenth years.
After the tenth year, the agency would have the right to renew for another 10 years at market rate, which includes 2.9% cost of living increase each year.
If the patent office opts to stay for the entire 20 years, the city would realize net revenues of about $15.6 million, McGurk said.
The USPTO would be responsible for covering the estimated $6 million it will cost to design and construct its planned offices in City Hall.
The city's own costs for relocating its employees -- the City Clerk's Office, IT staff, City Auditor, Human Resources, Office of Employee Relations and Police Gaming Control -- elsewhere at City Hall is estimated at more than $4.6 million.
That expense would be covered by revenue from the first five years of the lease, amounting to $4.9 million, less about $300,000 for maintenance expenses, city officials said.
The City Council unanimously approved the pact at its meeting Tuesday.