| AGENDA ITEM #: 17. DATE: 07/19/2021 AI #:394 |
 |
CITY COUNCIL ACTION REPORT
| SUBJECT: | APPROVAL OF NEW TEN-YEAR LEASE TO FRANKLIN PIERCE UNIVERSITY AND TERMINATION OF THE EXISTING LEASE |
| STAFF PRESENTER(S): | Linda Beals, Real Estate Coordinator |
OTHER PRESENTER(S):
Darah Mann, Economic Development Project Manager
SUMMARY
Approval of a new Ten-year lease to Franklin Pierce University of approximately 18,208 square feet within Building A of the Goodyear Municipal Complex located at 14555 W. Van Buren Street, Goodyear, Arizona and creation of a CIP project to perform agreed upon tenant improvements.
Recommendation
ADOPT RESOLUTION NO. 2021-2174 AUTHORIZING THE CITY MANAGER OR HER DESIGNEE TO EXECUTE A TEN-YEAR LEASE AGREEMENT AND ASSOCIATED DOCUMENTS FOR THE LEASE OF A PORTION OF BUILDING A OF THE GOODYEAR MUNICIPAL COMPLEX TO FRANKLIN PIERCE UNIVERSITY; AUTHORIZING THE CITY MANAGER TO EXECUTE A MUTUAL TERMINATION OF THE EXISTING LEASE AGREEMENT; AUTHORIZING AND DIRECTING THE CITY MANAGER TO APPROVE THE REQUIRED BUDGET TRANSFERS; AND PROVIDING FOR AN EFFECTIVE DATE.
(Linda Beals, Real Estate Coordinator)
(Linda Beals, Real Estate Coordinator)
FISCAL IMPACT
Per the terms of the lease, Franklin Pierce University will be paying monthly rental payments based upon an initial annual rent of $14.00 per square foot per year, plus the amortized Tenant Improvements, Operating Expense Fee and taxes. This rental rate will escalate annually at the rate of $1.00 per square foot. The rental rate is consistent with the local market rentals for similar properties. A new CIP project will be created to construct tenant improvements which will not exceed $400,000. The $400,000 maximum tenant improvement allowance will be amortized and paid back to the City as part of the monthly rental payments. The lease has an early termination clause which allows Franklin Pierce University to terminate the lease after the 5th lease year, if they pay the un-amortized portion of the Tenant Improvements. However, if Franklin Pierce remains in the City of Goodyear the City has agreed to the following: (a) If Franklin Pierce terminates their lease after the 5th year and they lease another property within the City of Goodyear, the City has agreed to forgive 50% of the remaining cost of the tenant improvements, (b) If Franklin Pierce University terminates the lease after the 5th year of the lease and elects to rent another City/Landlord owned property, the City/Landlord will forgive 50% of the remaining tenant improvements and roll the other remaining 50% into the new lease. Tenant Improvements will be funded from available General Fund beginning balance and all rent payments will be general fund revenue.
BACKGROUND AND PREVIOUS ACTIONS
On May 14, 2007, Council authorized the City to enter into a Letter of Intent with Franklin Pierce University (FPU) for 20 acres of the Goodyear 100-Acre Park (former City Center Site). Due to the downturn in our economy, this did not come to fruition. FPU entered into a lease with a private firm in 2009; this allowed them to hold classes for the fall semester of 2009 through 2012.
On July 24, 2012, the City entered into a sub-lease with FPU for GMC Building C through December 2012. The sublease for building C was a temporary space for FPU to hold fall classes in the GMC Complex beginning on August 27, 2012. The City also entered into a 10-year sub-lease with FPU for GMC Building A beginning in January 2013. Tenant improvements were completed on 14,741 SF of Building A, utilizing funds from a Bond Sale approved by Council on August 27, 2012.
In February 2017, FPU approached the City to begin discussions to expand into additional space located in Building A. FPU intended to expand their Doctor of Physical Therapy (DPT) program and was considering offering additional medical education program(s) here which would require additional square footage to accommodate students and faculty classrooms, labs, and offices. Goodyear staff has coordinated numerous site visits with FPU representatives, to tour the additional space available in GMC Building A and FPU has considered various layout options. In the midst of planning the tenant improvements for the expansion, FPU experienced significant leadership changes, including the Provost, Dean, and Goodyear’s campus program director. FPU’s program expansion plans, including a prior CIP Project, were delayed as it was necessary for FPU to fill these positions and get the new team up-to-speed before expansion plans could resume.
FPU’s new leadership team is committed to expanding into additional space in GMC Building A, and have completed the steps necessary to grow their DPT program to 126 students. In the fall of 2020, FPU confirmed plans to bring a Physician Assistant Studies (PA) program to Goodyear with the hiring of a Program Director/Associate Professor to begin the accreditation approval process. Future plans (Phase II) will include adding a nursing program as well, for a total of 250 students in all programs.
To accommodate the expanded DPT and PA programs, FPU plans to expand into 3,467 SF of GMC Building A, as Phase I of their GMC location expansion. They are also considering a future Phase II expansion which may increase their square footage by approximately 2,788 SF (gray-shell space adjacent to Phase I space).
On July 24, 2012, the City entered into a sub-lease with FPU for GMC Building C through December 2012. The sublease for building C was a temporary space for FPU to hold fall classes in the GMC Complex beginning on August 27, 2012. The City also entered into a 10-year sub-lease with FPU for GMC Building A beginning in January 2013. Tenant improvements were completed on 14,741 SF of Building A, utilizing funds from a Bond Sale approved by Council on August 27, 2012.
In February 2017, FPU approached the City to begin discussions to expand into additional space located in Building A. FPU intended to expand their Doctor of Physical Therapy (DPT) program and was considering offering additional medical education program(s) here which would require additional square footage to accommodate students and faculty classrooms, labs, and offices. Goodyear staff has coordinated numerous site visits with FPU representatives, to tour the additional space available in GMC Building A and FPU has considered various layout options. In the midst of planning the tenant improvements for the expansion, FPU experienced significant leadership changes, including the Provost, Dean, and Goodyear’s campus program director. FPU’s program expansion plans, including a prior CIP Project, were delayed as it was necessary for FPU to fill these positions and get the new team up-to-speed before expansion plans could resume.
FPU’s new leadership team is committed to expanding into additional space in GMC Building A, and have completed the steps necessary to grow their DPT program to 126 students. In the fall of 2020, FPU confirmed plans to bring a Physician Assistant Studies (PA) program to Goodyear with the hiring of a Program Director/Associate Professor to begin the accreditation approval process. Future plans (Phase II) will include adding a nursing program as well, for a total of 250 students in all programs.
To accommodate the expanded DPT and PA programs, FPU plans to expand into 3,467 SF of GMC Building A, as Phase I of their GMC location expansion. They are also considering a future Phase II expansion which may increase their square footage by approximately 2,788 SF (gray-shell space adjacent to Phase I space).
STAFF ANALYSIS
Higher Education has been identified as a leading industry sector for high-potential growth in Goodyear. The completion of this project will be a first step in directly and indirectly addressing many of the Economic Development strategic goals, including fostering the development of key industry anchor institutions within Goodyear, ensuring a vibrant and prepared workforce, and creating high paying jobs, which have a multiplier effect on the economy.
City staff has worked with FPU to develop a market rate lease that will meet their needs for the upcoming increase in educational programs for the next several years.
City staff has worked with FPU to develop a market rate lease that will meet their needs for the upcoming increase in educational programs for the next several years.