Staff recommends that City Council approve the addendum to the lease agreement with Yellowstone County for space in the New City Hall Building, extending the lease on a month-to-month basis for up to 12 months with a 3% increase in the lease rate, effective May 23, 2025.

Yellowstone County has leased approximately 17,395 square feet of office space on the third floor of the Stillwater Building (New City Hall) since May 23, 2018, under an agreement originally signed with WC Commercial, LLC. The lease was later assigned to the City of Billings when the City acquired the Stillwater Building on October 15, 2021.

The original lease was for a seven-year term, expiring on May 22, 2025, with an option for the County to extend for an additional three years under the same terms. On November 19, 2024, the County formally declined the extension option but requested a short-term lease extension to accommodate its ongoing space needs while it completes renovations to the County Administration Building.

Under the proposed lease addendum, Yellowstone County will continue to occupy the space on a month-to-month basis for up to 12 months, ending no later than May 22, 2026. The County has agreed to provide the City with at least 90 days’ notice before vacating the premises. In consideration of this extension, the County will pay an additional 3% to the monthly lease rate as of May 23, 2025.

City of Billings: Owner of the New City Hall Building and lessor of the leased space.
Yellowstone County: Lessee of the space, responsible for lease payments and space usage.
Billings City Council: Decision-making body responsible for approving the lease extension.
County Administration: Overseeing Yellowstone County’s facility needs and transition planning.
City Facilities Management: Responsible for maintaining and managing the leased property.
Legal Counsel: Reviewing terms and compliance with contractual obligations.
Public and Taxpayers: Indirect stakeholders impacted by financial and space management decisions.

City Council may:
Approve the lease addendum as presented, allowing the County to remain in the space for up to one year on a month-to-month basis.

Deny the lease addendum, requiring the County to vacate the space at the end of the current lease term on May 22, 2025.

Propose modifications to the terms of the lease extension before approval.

As of January 2025, Yellowstone County has been paying $35,501.85 per month, inclusive of common area maintenance (CAM) charges. Under the proposed lease addendum, this amount will increase by 3% on May 23, 2025, bringing the new monthly payment to approximately $36,566.91. Over the course of a full 12-month extension, this would generate an additional $12,780 in lease revenue for the City.

The City will remain responsible for building operations and common area maintenance as outlined in the original lease terms.