10.M.
City Council Meeting - FINAL
- Meeting Date:
- 07/15/2014
- Co-Submitter:
- Amy Hagin, Senior Procurement Specialist
- From:
- David McIntire, Asst. to City Manager - Real Estate
Information
TITLE:
Consideration of bid and Approval of the Lease Agreement: City-Owned Property: Located at 6628 S. Piper Lane (Lease of property located near the Airport - formerly the FAA facility)
RECOMMENDED ACTION:
Accept the bid and approve the Lease Agreement with Northern Arizona Healthcare dba Guardian Air for lease payments of $833.50 per month ($10,002 annually). The facility will receive intended improvements by lessee at an estimated value of $200,000. Authorize the City Manager or his designees to execute all necessary documents.
Policy Decision or Reason for Action:
Acceptance of the bid and approval of the Lease Agreement will re-purpose a vacant City-owned facility in need of significant repairs and currently a liability to the City. The Lessee will make the necessary repairs and additional tenant improvements along with paying an initial rent of $833.50 per month for a term of ten (10) years. Subsidiary Decisions Points: None
Financial Impact:
The structure is currently a liability and generating zero income for the City. With this Lease Agreement the facility will be turned into an asset. Once the capital improvements are complete, the facility's value will have significantly appreciated. The Lessee will have a reduced lease payment to partially offset the cost of the required tenant improvements. The lease payments will generate $100,020 over the 10 year period to assist in funding the airport.
Connection to Council Goal:
1. Repair Replace maintain infrastructure 11. Effective governance
Has There Been Previous Council Decision on This:
None.
Options and Alternatives:
1) Accept bid and approve the Lease Agreement as presented. 2) Reject bid and provide staff guidance regarding desired terms and conditions for the Lease Agreement. 3) Reject bid and lease Agreement which will leave the facility in its current condition.
Background/History:
The facility was previously leased by the Federal Aviation Administration (FAA). The FAA relocated to a nearby location that met their needs, in part, due to the needed repairs to the facility. A facilities report identified a number of issues that would need to be addressed prior to leasing the building to a new party. The current Airport budget was not able fund the repair costs so staff structured an Invitation for Bid (IFB). The IFB terms and conditions included the lease of the facility but also allowed for tenant improvement costs in exchange for lease consideration. The proximity to the Airport Runway and Public Facilities zoning of this facility limits the number of potential uses/users.
Key Considerations:
The building is currently vacant and an unfunded liability. The IFB had one (1) bidder with the proposed lease being the highest responsible and responsive bid. The proposer will provide $200,000 in capital improvements which will address the identified issues and add value to the building. Initial rent will be $833.50. The Airport is an enterprise fund. The use is compatible with zoning and runway proximity.
Community Involvement:
Inform
Expanded Options and Alternatives:
1) Approve the Lease Agreement as presented 2) Not approve the Lease Agreement as presented and provide staff guidance regarding desired terms and conditions 3) Not approve the Lease Agreement and leave the facility in its current condition.