Memorandum
City of Lawrence
Legal Services Department
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TO: |
David L. Corliss, City Manager
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FROM: |
Toni Wheeler, Director of Legal Services
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Date: |
June 9, 2010 |
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RE: |
Agreements With Riverfront, L.C. For PDS Office Lease and Parking Agreement |
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We have been in negotiations with representatives of Riverfront, L.L.C. (“Riverfront”) regarding the City’s lease of approximately 6500 square feet for the Planning and Development Services (PDS) offices in One Riverfront Plaza, as well as Riverfront’s Agreement with the City for parking in the City’s parking garage adjacent to City Hall.
The City’s lease for the PDS office space expires on August 31, 2011. The proposed First Amendment to the Commercial Lease Agreement for the PDS office space extends the lease agreement for three additional years, through August 31, 2014, with a two year option after the expiration of the extended term. The annual rent for the office space in the first two years of the extended term will remain flat. The City currently pays base rent of $67,778.70 in monthly installments of $5,648.22, plus additional rent for taxes, common area maintenance and insurance. The City will continue to pay the same base rent ($67,778.79) in 2012 and 2013. In the third year of the extended term, and in the option periods, the annual base rent will be adjusted for inflation, based on an agreed upon index.
The City and Riverfront, L.L.C. entered into an Amended and Restated Ground Lease in 2000 which included provisions related to the Parking Garage. Under the Amended and Restated Ground Lease Riverfront agreed to purchase from the City 235 annual, non-exclusive parking permits for parking in the lower level of the City’s garage and to pay a common area parking fee. [1] Riverfront’s tenants could then park on the lower level of the garage. Under the existing parking agreement, Riverfront is obligated to pay the City $45,120.00 in 2010 for parking in the garage. Under the proposed First Amendment to the Amended and Restated Ground Lease, Riverfront will owe the City $15,000 in 2010. Thereafter, the payments decline each year until 2013 when the annual payment is $5000 to assist the City with ongoing maintenance of the garage. After 2013, the annual payments will remain at $5,000 through 2025, the end of the term of the agreement. Under the proposal, the City will have no obligation to provide parking to Riverfront or its tenants beginning January 1, 2011. Riverfront’s tenants and their employees may still purchase parking passes from the City at the rate at which the City offers passes to the public. Currently, there are 42 spaces in the garage marked “reserved” for the City’s use. The City agrees not to increase the number of reserved city spaces during the term of the Agreement unless it proportionally reduces the Riverfront’s annual maintenance fee and the maximum number of reserved City spaces will not exceed 50 during the term of the First Amendment.
The bonds the City issued to construct the parking garage were paid off in 1999.
Staff recommends approval of the two documents. The lease agreement for the PDS office provides the City with office space that serves our current needs through at least 2014, and there is no increase in base office rent until September 1, 2013. The proposed amendment to the ground lease relating to the parking facility better reflects the market conditions for Riverfront tenants.
Action: Authorize the City Manager to execute the First Amendment to Commercial Lease Agreement and authorize the Mayor to execute the First Amendment to the Amended and Restated Ground Lease with Riverfront, L.L.C., if appropriate.
[1] By separate agreement, there are 138 spaces on the upper level for use by the Marriott Spring Hills Suites.