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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 12/04/2007 - FIRST READING OF ORDINANCE NO. 142, 2007, AUTHORIZ ITEM NUMBER: 11 AGENDA ITEM SUMMARY DATE: December4, 2007 FORT COLLINS CITY COUNCIL STAFF: Mike Freeman Helen Matson SUBJECT First Reading of Ordinance No. 142, 2007, Authorizing Leases of City Property at 200 West Mountain Avenue, Suite C,For Up To Five Years As Part of the Fort Collins Technology Incubator Program. RECOMMENDATION Staff recommends the adoption of the Ordinance on First Reading. FINANCIAL IMPACT Rent collected from these leases has and will continue to vary year to year dependent upon how many tenants occupied the space and what year the tenants were in their lease term. Currently, 100%of the building is leased and the tenants are in their third year of their lease term($9/SF). The leases generate approximately$37,008 in Miscellaneous Revenue - General Fund. EXECUTIVE SUMMARY The currently approved lease with FCTI allowed the participants to lease for three years and then they are required to move. The Fort Collins Technology Incubator(FCTI)nurtures high potential innovation-based companies in their formative stages to increase the probability they will survive and make a sustainable contribution to the economic health of the community. One of the services they offer to accomplish this goal is residence in an incubator facility which gives participants access to shared services, synergy with other startup businesses and below market lease rates. The City currently offers two facilities for this purpose at 200 West Mountain Avenue and 321 Maple Street. The currently defined FCTI residence program is a three-year lease with increasing lease rates each year. Due to the fact that not all companies reach the desired self-sustaining status within this three year window, FCTI would like to add the option of offering up to two additional 12-month extensions at the end of the initial three year period. The program would increase each year by$1/SF for any companies staying after the initial three year period, making the fourth year$10/SF and the fifth year$11/SF. Due to the nature of leasing the facility to several 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 services. Some of these expenses are on-going,whether this space is leased to FCTI and their December 4, 2007 -2. Item No. 11 participants or not. (Suites A and B of this facility are currently occupied by the City's Natural Resources Office.) The following chart offers a look at several lease possibilities and the resulting cost or revenue to the City: City Annual Profit and/or Subsidy (deducting on-going City expense) Based on Occupancy and Rent/SF: $7/SF $8/SF $9/SF $10/SF $11/SF 100% of net building area leased $ 9,521 $ 14,036 $ 18,551 $ 23,066 $27,581 4,515 SF 75% of net building area leased $ 1,618 $ 5,004 $ 8,390 $ 11,776 $15,162 3,386 SF 50% of net building area leased $_ 6,278 $- 4,020 $- 1,762 $ 496 $ 2,754 2,258 SF 25% of net building area leased $-14,181 $-13,052 $-11,923 $-10,794 $- 9,935 1,129 SF Staff recommends leasing 200 West Mountain Avenue, Suite C, to the FCTI 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, 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. Fart Collins Technology Incubator 200 W. Mountain Ave . , Ste C Location Map I City Hall 1 !" tldio215 ( N. Mason `v -.-.-----_- LAPORTE AV - --— ---------- CO Lar€mer County N = Justice Center < z z l7 cell 4 � ' 1 Y 41a -_--"----..—.. W MOUNTAIN AVE CO ~: CO' m Z: �u o o ¢i x < N CO 2001N. Mountain Ave., Ste C Location N ORDINANCE NO. 142, 2007 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING LEASES OF CITY PROPERTY AT 200 WEST MOUNTAIN AVENUE, SUITE C, FOR UP TO FIVE YEARS AS PART OF THE FORT COLLINS TECHNOLOGY INCUBATOR PROGRAM WHEREAS, the City of Fort Collins 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, Suite C (the "Property"); and WHEREAS, the City purchased this 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 Fort Collins Technology Incubator(FCTI); and WHEREAS,the FCTI program has provided critical business assistance to high tech startup companies in the Fort Collins community; and WHEREAS, the City received a proposal from FCTI in March 2004 to increase its services by working with the City to offer below market lease space to its client companies; and WHEREAS,on June 1,2004,the Council approved Resolution 2004-069,which authorized the lease of the Property to FCTI and its clients for up to two years; and WHEREAS, on June 6, 2006, the Council passed Ordinance No. 080, 2006, which authorized the lease of the Property to FCTI and its clients for up to five years; and WHEREAS, The terms of Ordinance No. 080, 2006 allow FCTI clients to rent a portion of the Property for only a one year term, with the option to renew for up to two additional years; and WHEREAS, the current FCTI clients are reaching the end of the third year of their leases and are not yet sufficiently self-sustaining to be able to move out of the Incubator; and WHEREAS, the FCTI 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, City staff has recommended that the terms of the FCTI program be amended to allow FCTI clients to rent portions of the Property for an initial term of three years, with the option to renew for two additional years, at a cost of$7/square foot for the first year, $8/square foot for the second year, $9/square foot for the third year, $10/square foot for the fourth year and $11/square foot for the fifth year; and WHEREAS, the FCTI would continue to lease a portion of the Property for its Director for a term of up to five years at no cost to the FCTI; and WHEREAS, under Section 23-111(a) of the Code of the City of Fort Collins, the Council is authorized to sell, convey or otherwise dispose of any and all interests in real property owned by the City,provided that the City Council first finds,by ordinance,that such sale or other disposition is in the best interests of the City. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the Council hereby finds that allowing the Fort Collins Technology Incubator and its clients to lease portions of the Property for up to five years under the terms listed above is in the best interests for the City. Section 2. That the City Manager is hereby authorized to execute lease agreements or lease amendments consistent with this Ordinance,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 Property. Introduced, considered favorably on first reading, and ordered published this 4th day of December, A.D. 2007, and to be presented for final passage on the 18th day of December, A.D. 2007. Mayor ATTEST: City Clerk Passed and adopted on final reading on the 18th day of December, A.D. 2007. Mayor ATTEST: City Clerk