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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 05/06/2008 - RESOLUTION 2008-040 AUTHORIZING THE LEASE OF A POR ITEM NUMBER: 14 AGENDA ITEM SUMMARY DATE: May 6, 2006 FORT COLLINS CITY COUNCIL STAFF: Helen Matson SUBJECT Resolution 2008-040 Authorizing the Lease of a Portion of City-Owned Property Located at 200 West Mountain Avenue, Suites A and B, for Up to Two Years As Part of the Rocky Mountain Innovation Initiative ("RMIZ") Program. RECOMMENDATION Staff recommends the adoption of the Resolution. FINANCIAL IMPACT Rent collected from this lease will vary year to year dependent upon how many tenants occupy the space and what year the tenants are in their lease term. For projection purposes, with a low occupancy of only 25%of the building leased and with these tenants being in their first year of the lease term ($7/SF), it is estimated that the City will be paying building costs of$7,768. However, if 100%of the building is leased and the tenants are in their second year of their lease term($8/SF), the lease will generate approximately $2,766 in Miscellaneous Revenue - General Fund. EXECUTIVE SUMMARY Since Summer 2004, the City has leased space to Rocky Mountain Innovation Initiative ("RMIZ") Program and its participating companies. Currently,RMI2leases space at 200 West Mountain,Suite C and 321 Maple Street. With the City's Natural Resources Office move to 215 Mason Street, Suites A and B are now vacant. This Ordinance authorizes the lease of the vacated Suites A and B to RMI1. BACKGROUND With support from the City of Fort Collins, Colorado State University, and the Northern Colorado Economic Development Corp,RMIZ,formerly known as"Fort Collins Technology Incubator",was created in 1998. The program provides critical business assistance to the most promising high tech startup companies in the community. To date, RMI1 has assisted 20 companies. In the aggregate these firms have created 109 full time jobs with an average annual salary of$65,570 and have raised in excess of$40 million in equity capital. The"bottom line"of this program is the creation of good paying jobs from within the community. The program achieves its success through services such May 6, 2008 -2- Item No. 14 as entrepreneurial advisory boards, access to a multitude of CSU resources, internal resource sharing, counseling, training and networking. RMI2 has significantly enhanced the level of service to its client companies by offering below market lease space. In this way, RMI2 not only helps to mitigate the very tight cash flow situation encountered by most startups,but it also provides a synergistic,collaborative environment in which the talented young companies can thrive. Key operational aspects of the program are as follows: • Provides lease space to qualified candidates on a sliding scale depending on their year in the incubator. Companies in their first year in the program will pay$7/SF with a$1/SF increase in the second year of their lease. The rent charged will be a gross lease meaning that all expenses are included in the lease payment. Tenants are only responsible for their own janitorial services and communication expenses. • RMI2 is responsible for the incubation program including selection, business assistance, annual review, graduation, etc. The City's Real Estate Services staff provides property management duties,including lease execution,rent collection,and addressing any concerns with the facility. Due to the nature of leasing the facility to many different tenants at different lease rates,it is difficult to accurately project City revenue or City expenses on a yearly basis. The costs to be paid by the City include: taxes;janitorial for common areas; utilities; maintenance; snow removal; and trash and recycling services. Some of these expenses are on-going whether this space is leased to RMI2 and their participants or not. Suite C of this facility is currently occupied by three startup companies in the RMI2 Program. The following chart offers a look at several lease possibilities and the resulting cost or revenue to the City: City's Annual Profit and/or Subsidy (deducting on-going City expense) Based on Occupancy and Rent/SF: $ 7/SF $ 8/SF 100% of net building area leased 1,686 SF $ 1,080 $ 2,766 75%of net building area leased 1,265 SF $ -1,867 $ - 602 50%of net building area leased 843 SF $ -4,821 $ -3,978 25% of net building area leased 422 SF $ -7 768 $ -7 346 Staff recommends leasing a portion of 200 West Mountain Avenue, Suites A and B, to RMI= and its client companies. Benefits to the City include: replacement of primary jobs lost over the past several years, increased economic robustness, especially in the downtown area, better retention of the City's highly talented professional workforce, and an enhanced sales tax base. In addition,the Program is consistent with and in support of strategic recommendations released by the Economic Vitality and Sustainability Action Group. ATTACHMENTS 1. Location map. ATTACHMENT 1 200 W. Mountain Ave-Stes A & B Rocky Mountain Innovation Initiative Location Map LaPorte Avenue Y lC 0- 0 o City of Ft Cal ling m = Operation �c Z SenriaealRES Z W Mountain Avenue Larimer County Courthouse ® Suites A and B Location N s Suite C Location RESOLUTION 2008-040 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE LEASE OF A PORTION OF CITY-OWNED PROPERTY LOCATED AT 200 WEST MOUNTAIN AVENUE, SUITES A AND B, FOR UP TO TWO YEARS AS PART OF THE ROCKY MOUNTAIN INNOVATION INITIATIVE ("RMI'") PROGRAM WHEREAS, the City is the owner of the property legally described as a portion of Lot 2, Replat Lots 1-49,Block 31,Fort Collins,Colorado and also known as 200 West Mountain Avenue, Suites A and B (the "Property"); and WHEREAS, the City purchased the Property for the Civic Center Master Plan and has not yet finalized specific plans for the Property; and WHEREAS, since 1998,the City has supported the efforts of the RMI1 Program, formerly known as Fort Collins Technology Incubator, and this program has provided critical business assistance to high tech startup companies in the Fort Collins community; and WHEREAS, the RMI2 wishes to increase its service by offering below-market lease space to its client companies; and WHEREAS, the RMI1 Program will benefit the City by replacing primary jobs lost by citizens,thereby increasing the economy in the downtown area and enhancing the sales tax base;and WHEREAS, the City desires to lease portions of the Property to RMI2 clients for a term of one year with the option to renew for one additional year,at a cost for the first year of$7/square foot and for the second year at a cost of$8/square foot; and WHEREAS, under Section 23-114(a) of the Code of the City of Fort Collins, the Council is authorized to lease, for a definite term of two years or less, any and all interests in real property owned in the name of the City, provided that the Council first finds, by resolution,that the lease is in the best interests of the City. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the Council hereby finds that leasing the Property under the terms listed above is in the best interests for the City of Fort Collins. Section 2. That the City Manager is hereby authorized to execute such lease agreements for the Property on terms and conditions consistent with this Resolution,together with such additional terms and conditions as the City Manager, in consultation with the City Attorney,determines to be necessary and appropriate to protect the interests of the City,including any necessary changes to the legal description of the Property, as long as such changes do not materially increase the size or change the character of the leased premises. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 6th day of May A.D. 2008. Mayor ATTEST: City Clerk