Consideration and Approval of Two (2) Year Lease Amendments: United States Geological Survey (U.S.G.S.) for Buildings 3, 4 and 5 (Amendment of U.S.G.S. Leases) (Approve Two (2) Year Amendments to Building Leases with U.S.G.S.) 

The GSA wishes to amend their leases with the City of Flagstaff for an additional two (2) year period with the same terms and conditions.  The terms and conditions include rent escalation clauses so the rents do continue to increase and generate additional revenue during that period.  The GSA has indicated their intention to release a future solicitation that would, should the City respond and be successful, lead to the potential renovation and expansion of the U.S.G.S. campus.  These lease amendments will provide the time necessary to have the GSA release their solicitation and for the City to respond. 

The amendment of the leases will allow the continuation of lease revenues and associated escalations.  The lease revenue from Building 3 is over $330,000.  The lease revenue from Buildings 4-5 is over $550,000 annually.  In addition to the direct lease revenue generated, the amendment of the leases will allow for a maintained relationship with U.S.G.S. that will preserve over 200 jobs which have an annual payroll value of over $13,000,000.   Failure to amend the leases could impact future U.S.G.S. use or expansion of the facilities and will result in significant lost revenue.

COUNCIL GOALS:
5. Retain, expand, and diversify economic base
11. Effective governance
 

 

There has been a long relationship between the City of Flagstaff and the U.S.G.S..  Numerous Council actions and a bond question have defined the specific and unique nature of the lease and the relationship.  Two examples include the approval of Resolution 2011-16 in March of 2011 which authorizes the City to submit a bid response to the GSA to continue providing leased space and to potentially renovate and construct additional space specific to the U.S.G.S.; and Question Number 101 from the General Election in 2004 in which the voters authorized the construction and renovation of the facilities for USGS.   

1) Approve the amendment of the leases for two (2) years.  This will continue the leases under the current terms and conditions until a new Federal process has been completed and longer term leases can be executed with potential for expansion and redevelopment.
2) Not approve the amendment of the leases which will result in non-payment by the GSA.

The City of Flagstaff has leased buildings to the U.S.G.S. since the 1960s.  These buildings both generate revenue for the City of Flagstaff and the location of the U.S.G.S. in Flagstaff provides skilled employment opportunities.  Over the decades there have been numerous lease extensions, amendments, master plans, and renovations.  This requested amendment of the leases will allow the GSA to complete a new procurement process that will lead, according to our correspondence, to new long term leases for the campus.

The two (2) year lease amendments allow the time necessary for the process required for the GSA to release a new procurement solicitation. The City could then respond to the solicitation in order to maintain and enhance the existing unique relationship with the U.S.G.S.

The leases expire December 31st so the amendment is time sensitive.  Should the leases expire they will enter a holdover situation which will not allow for continued lease payment and could damage the current and future relationship.

Having the leases in place is both a revenue generator and a source of jobs.

The amendment of the leases provides jobs and revenue and maintains the relationship between the City and U.S.G.S. which has an economic and employment benefit long term.  There is also a value to the synergy between the U.S.G.S., NAU and other science based institutions which provide a strong scientific component to assist in diversifying the economy.

Inform