| ITEM #: 7. DATE: 09/11/2023 AI #:1625 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: | LEASE AGREEMENT FOR SOLID ROCK TEEN CENTER GOODYEAR LLC |
| STAFF PRESENTER(S): | Roric Massey, City Attorney |
SUMMARY
Lease Agreement for the lease of Suites C101 and C102 of Building C at 14455 W. Van Buren Avenue, Goodyear Arizona to Solid Rock Teen Center Goodyear, LLC.
STRATEGIC PLAN ALIGNMENT
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RECOMMENDATION
ADOPT RESOLUTION NO. 2023-2352 APPROVING THE FORM OF A LEASE FOR THE LEASE OF CITY PROPERTY; CONDITIONALLY AUTHORIZING ITS EXECUTION, PROVIDING DIRECTION AND AUTHORIZATION, PROVIDING FOR THE TERMINATION OF THE APPROVALS AND AUTHORIZATIONS PROVIDED IN THE RESOLUTION; AND PROVIDING AN EFFECTIVE DATE.
FISCAL IMPACT
The proposed lease has no direct fiscal impact to the city as the property is being leased for a dollar a year.
BACKGROUND AND PREVIOUS ACTIONS
The City of Goodyear owns certain real property at 14455 W. Van Buren Avenue, Goodyear, Arizona that formerly housed the city’s library and parks administrative staff. Following the completion of the city hall building and library at 1900 N. Civic Square (“Goodyear Civic Square”), the parks administrative staff and library were relocated to Goodyear Civic Square, and the vacated space was remodeled. The city’s Wellness Clinic was located in a portion of the remodeled space, but suites C101 and C102 remain vacant.
STAFF ANALYSIS
PURPOSE OF THE LEASE
City staff was approached by individuals who operate teen centers, founded by Alice Cooper and that bear his name, about obtaining space from the city to operate a teen center in Goodyear. There are currently two such teen centers, Alice Cooper’s The Rock Teen Center Phoenix and Alice Cooper’s The Rock Teen Center Mesa. A newly formed limited liability company will be operating the teen center in Goodyear.
The teen center would provide after-school programs and summer programs aimed at inspiring teens, ages 12 through 20, to grow through music, dance, and art. The after-school and summer programs could include: (i) vocational training to teens in the performing arts, which includes, by way of example, but not limitation, vocational training in sound and recording, lighting and staging, and video production; (ii) a computer lab, sound studio, stage set, dance studio; (iii) involve other non-commercial uses associated with the operation of a teen center; and (iv) a supervised facility for teens enrolled in such programs to engage with their peers. The potential use was expanded at the tenant’s request to include other “non-commercial uses associated with the operation of a teen center,” but that term is not defined and the use of the Premises could be expanded into unknown areas. In addition, other non-commercial uses associated with the operation of a teen center would be allowed on the Premises and in the Parking Area on a limited basis and subject to prior city approval.
The teen center would provide after-school programs and summer programs aimed at inspiring teens, ages 12 through 20, to grow through music, dance, and art. The after-school and summer programs could include: (i) vocational training to teens in the performing arts, which includes, by way of example, but not limitation, vocational training in sound and recording, lighting and staging, and video production; (ii) a computer lab, sound studio, stage set, dance studio; (iii) involve other non-commercial uses associated with the operation of a teen center; and (iv) a supervised facility for teens enrolled in such programs to engage with their peers. The potential use was expanded at the tenant’s request to include other “non-commercial uses associated with the operation of a teen center,” but that term is not defined and the use of the Premises could be expanded into unknown areas. In addition, other non-commercial uses associated with the operation of a teen center would be allowed on the Premises and in the Parking Area on a limited basis and subject to prior city approval.
LEASE TERMS
Under the proposed lease, the city would lease Suites C101 and C102 of Building C at 14455 W. Van Buren Avenue, Goodyear Arizona to Solid Rock Teen Center Goodyear, LLC, an Arizona limited liability company (“Solid Rock Goodyear”) for one dollar per year to operate a teen center as described above. The lease is for fifteen years with the option of two five-year renewals subject to the agreement of both parties.
In exchange for the lease of the property, all Goodyear residents between the ages of 12 through 20 who apply to participate in any of the after-school programs offered at the teen center would be allowed to participate free of charge. However, staff has been informed that Solid Rock Goodyear would be offering summer programs that would be offered by other groups. Goodyear residents would be expected to pay to participate in those programs. The favorable lease terms are being provided because of the services that are to be provided. Accordingly, under the terms of the lease, the use of the property is limited to the uses described above for the consideration described above, and the lease cannot be assigned.
Solid Rock Goodyear will be responsible for maintaining the space being leased with minimal exceptions. The city will be responsible for maintaining the HVAC system that serves the entire building, the roof of the building and fire life/safety system. In addition, the city will be responsible for painting the exterior of the leased premises when painting the rest of the building, providing landscaping services to the exterior of the building and maintaining the shared parking areas Solid Rock Goodyear is allowed to use. Solid Rock Goodyear is not required to make any contribution towards the cost of the foregoing services.
The space being leased shares a wall with the Wellness Clinic and is close to other buildings on the property occupied by city staff and Franklin Pierce University. Accordingly, the lease includes terms intended to minimize the impact of the operation of the teen center on the Wellness Clinic and occupants of the other buildings on the property by prohibiting the use of sound amplification systems before 3:30 p.m. on weekdays or after 11:00 p.m. on any day of the week without the prior permission of the city manager. This restriction applies only to amplification systems in the dance studio. Sound amplification systems can be used in the Premises and in outside areas at all times as long as it is not in the dance studio.
The lease includes a provision that would allow the city, at the city’s sole cost, to install sound proofing or sound dampening measures if needed to minimize the disruption to the occupants in the adjacent suite (the Wellness Clinic) or the occupants in any other Building in the Goodyear Municipal Complex. If the use of the sound amplification systems inside and outside the Premises for purposes other than the dance studio is disruptive to the adjacent suite (the Wellness Clinic) or the occupancy in the other buildings, including Franklin Pierce, the City’s sole recourse would be to incur the cost of installing sound proofing or sound dampening measures.
Because the lease involves the lease of government property, the GPLET provisions apply. Solid Rock Goodyear will be responsible for paying any government property lease excise taxes owed. Solid Rock Goodyear has been informed of this requirement, and potential exemptions that might apply. Specifically, Solid Rock Goodyear was informed that premised used by organizations that are exempt from taxation under section 501(c)(3) of the Internal Revenue Code are exempt from these taxes as is “property used primarily for athletic, recreational, entertainment, artistic, cultural or convention activities if the interest is used for those activities or activities directly related and incidental to these uses including concession stands.” Solid Rock Goodyear is not identified as a non-profit corporation on the Arizona corporation commissions website, but its articles of organization suggest that it is to be a 501(c)(3) entity and its sole member is a 501(c)(3). If it is not qualified as a 501(c)(3) Solid Rock Goodyear will be responsible for paying the government property lease excise tax unless its operations meets the exemption for recreational, entertainment, artistic, or cultural activities. Staff informed Solid Rock Goodyear that the Arizona Department of Revenue makes the determination if a use is exempt.
The space being leased shares a wall with the Wellness Clinic and is close to other buildings on the property occupied by city staff and Franklin Pierce University. Accordingly, the lease includes terms intended to minimize the impact of the operation of the teen center on the Wellness Clinic and occupants of the other buildings on the property by prohibiting the use of sound amplification systems before 3:30 p.m. on weekdays or after 11:00 p.m. on any day of the week without the prior permission of the city manager. This restriction applies only to amplification systems in the dance studio. Sound amplification systems can be used in the Premises and in outside areas at all times as long as it is not in the dance studio.
The lease includes a provision that would allow the city, at the city’s sole cost, to install sound proofing or sound dampening measures if needed to minimize the disruption to the occupants in the adjacent suite (the Wellness Clinic) or the occupants in any other Building in the Goodyear Municipal Complex. If the use of the sound amplification systems inside and outside the Premises for purposes other than the dance studio is disruptive to the adjacent suite (the Wellness Clinic) or the occupancy in the other buildings, including Franklin Pierce, the City’s sole recourse would be to incur the cost of installing sound proofing or sound dampening measures.
Because the lease involves the lease of government property, the GPLET provisions apply. Solid Rock Goodyear will be responsible for paying any government property lease excise taxes owed. Solid Rock Goodyear has been informed of this requirement, and potential exemptions that might apply. Specifically, Solid Rock Goodyear was informed that premised used by organizations that are exempt from taxation under section 501(c)(3) of the Internal Revenue Code are exempt from these taxes as is “property used primarily for athletic, recreational, entertainment, artistic, cultural or convention activities if the interest is used for those activities or activities directly related and incidental to these uses including concession stands.” Solid Rock Goodyear is not identified as a non-profit corporation on the Arizona corporation commissions website, but its articles of organization suggest that it is to be a 501(c)(3) entity and its sole member is a 501(c)(3). If it is not qualified as a 501(c)(3) Solid Rock Goodyear will be responsible for paying the government property lease excise tax unless its operations meets the exemption for recreational, entertainment, artistic, or cultural activities. Staff informed Solid Rock Goodyear that the Arizona Department of Revenue makes the determination if a use is exempt.
RECOMMENDATION
Staff is recommending the adoption of Resolution 2023-2352 and the approval of the Lease Agreement (Solid Rock Teen Center) by and between Solid Rock Teen Center Goodyear, LLC, an Arizona limited liability company and the City of Goodyear, as it furthers the Council’s goals of enhancing the quality of life and promoting a sense of community in Goodyear by providing an additional and alternative recreational outlet for Goodyear teens.