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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 07/21/2009 - RESOLUTION 2009-072 AUTHORIZING THE LEASE OF CITY- t ITEM NUMBER: 18 AGENDA ITEM SUMMARY DATE: July 21, 2009 FORT COLLINS CITY COUNCIL STAFF: Mike Freeman Helen Matson SUBJECT Resolution 2009-072 Authorizing the Lease of City-Owned Property Located at 212 West Mountain Avenue For Up to Two Years as Part of the Rocky Mountain Innovation Initiative 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$26,800. 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 $33,760 in Miscellaneous Revenue - General Fund. EXECUTIVE SUMMARY Since the summer of 2004, the City has leased space to RM12 and its participating companies. Currently, RMI2 leases space in Suites A and C at 200 West Mountain Avenue and 321 Maple Street. This Resolution is a request for authorization to lease the facility at 212 West Mountain Avenue to RMI2. BACKGROUND With support from the City of Fort Collins, Colorado State University, and Fort Collins, Inc., the Rocky Mountain Innovation Initiative("RMI2")was created in 1998. The program provides critical business assistance to the most promising high tech startup companies in the community. To date, RMI2 has assisted 27 companies. In the aggregate,these firms have created 133 full time jobs with an average annual salary of$71,000 and they have raised in excess of$54 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 as entrepreneurial advisory boards, discounted professional service providers,access to a multitude of CSU resources,internal resource sharing, counseling, training and networking. July 21, 2009 -2- Item No. 18 RMI2 has significantly enhanced the level of service to their client companies by offering below market lease space. In this way, RM12 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 could thrive. Key issues of the proposal follow: 1. Offer lease space to qualified candidates on a sliding scale depending on their year in the incubator. For example,companies in their first year in the incubator 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 will only be responsible for their own janitorial services and communication expenses. 2. Conference rooms will be provided at no cost. 3. RM12 is responsible for running 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/recycling services. Some of these expenses are on-going whether or not this space is leased to RM12 and their participants. 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 (4220 SF) $ 9,614 $ 13,834 75% of net building area leased (3165 SF) $ 2,229 $ 5,394 50% of net building area leased (2110 SF) $ -5,156 $ -3,046 25% of net building are leased (1055 SF) $-12,541 $ 41,486 Staff recommends leasing 212 West Mountain Avenue to RM12 and its client companies for a period of two years. Potential 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. ATTACHMENTS 1. Location map ATTACHMENT 1 212 WEST MOUNTAIN LOCATION MAP LAPORTE AVENUE � w w Dz w ow UU �F Ofw wU w U_ :D F— w 7 U co w 5 � w > z U � � d ?W? 0 d 7 � 0 Q Z Z WEST MOUNTAIN AVENUE LARIMER COUNTY COURTHOUSE x 212 WEST rv10UNTAIN AVENUE 1 RESOLUTION 2009-072 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE LEASE OF CITY-OWNED PROPERTY LOCATED AT 212 WEST MOUNTAIN AVENUE FOR UP TO TWO YEARS AS PART OF THE ROCKY MOUNTAIN INNOVATION INITIATIVE PROGRAM WHEREAS, the City is the owner of the property located at 212 West Mountain Avenue, Fort Collins, Larimer County, Colorado (the "Property"); and WHEREAS, this Property was purchased as part of the Block 31 purchases and there is currently not a City need identified for this Property; and WHEREAS, since 1998, the City has supported the efforts of the Rocky Mountain Innovation Initiative ("RM12")program and this program has provided critical business assistance to high tech startup companies in the Fort Collins community; and WHEREAS, the RMI2 program will benefit the City by replacing primary jobs lost by citizens,increasing the economy in the downtown area, and enhancing the sales tax base; and WHEREAS,the City received a proposal from RMI2 in March 2004 to increase the service it provides to high tech startup companies by offering below market lease space to their client companies; and WHEREAS,since 2004,RMI2 and their client companies have leased office space from the City, located at 200 West Mountain Avenue, Suites A and C, and 321 Maple Street; and WHEREAS,the City desires to lease the Property to clients selected by RMI2 for a term of one year,with the option to renew for an 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 of the City Code,the City Council is authorized to lease any and all interests in real property owned in the name of the City,provided that City Council first finds 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 City Council hereby finds that leasing the Property under the terms listed above is in the best interests of the City. Section 2. That the City Manager is hereby authorized to execute such lease agreements for the Property, consistent with the terms of 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. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 21 st day of July A.D. 2009. Mayor ATTEST: City Clerk