The ground level of the Park 1 Garage has six tenants that lease retail/office space. This space, located at 2906 3rd Ave North, was previously occupied by New Day Inc. and has been vacant for two and a half years. The Council is being asked to approve a new lease agreement with Big Sky Imaginarium, LLC for five years with one five-year option to renew. The company will use this space as a daycare center.

Staff has analyzed the following alternatives:
(1) approve lease with Big Sky Imaginarium, LLC.;
(2) seek a different tenant; this is one of the larger lease spaces and it has been difficult to find a tenant that is willing to assume the entire area. 
(3) leave space vacant; vacant space detracts from the desireability of the remaining spaces and it has negative income because utility and other basic operating costs must be paid by the owner even when the space is vacant and not producing income. 

The revenues are projected in the FY 2013 budget. The leased space consists of 3,032 square feet. Revenue for the first year will be $24,000 (3,032 square feet x $7.92).  An allowance of $25,000 has been granted to the Tenant to reimburse it for improvements that must be made before occupancy.  Tenant will have proper insurance in place before access to the space is allowed. Revenue for subsequent leased years will increase by 3% of the previous year's annual amount.

Staff recommends that the City Council approve the lease agreement with Big Sky Imaginarium, LLC.