HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/20/2018 - FIRST READING OF ORDINANCE NO. 142, 2018, AUTHORIAgenda Item 12
Item # 12 Page 1
AGENDA ITEM SUMMARY November 20, 2018
City Council
STAFF
Ashley Macdonald, Real Estate Specialist I
Adam Molzer, Grant & Community Partnership Coordinator
Helen Matson, Real Estate Services Manager
Ken Mannon, Operations Services Director
Ryan Malarky, Legal
SUBJECT
First Reading of Ordinance No. 142, 2018, Authorizing the Lease of City-Owned Property at 424 Pine Street
for Up to 40 Years.
EXECUTIVE SUMMARY
The purpose of this item is to obtain authorization from City Council to lease City-owned property to a nonprofit
corporation, United Daycare Center dba Teaching Tree Early Childhood Learning Center, at a less-than-
market lease rate of $600 per year for a period of up to 40 years. The initial term is for 20 years, followed by
the option for 4 additional 5-year terms at the City’s discretion.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
The Social Sustainability Department collaborates with a local Colorado nonprofit corporation known as United
Day Care Center that does business as Teaching Tree Early Childhood Learning Center. Teaching Tree
provides affordable childcare programs to residents in the City. Teaching Tree currently occupies a portion of
424 Pine Street through a sublease with the United Way of Larimer County, Inc.
Teaching Tree desires to execute a lease with the City as the primary lessee to continue providing reduced
cost childcare and early childhood education opportunities to residents. Teaching Tree and United Way are
working together in collaboration with City staff on a potential sublease between Teaching Tree and United
Way for United Way’s continued use of a portion of 424 Pine Street. Concurrent with Teaching Tree’s
execution of the proposed lease, United Way will convey the existing building and related fixtures to the City,
as required by United Way’s current lease.
Teaching Tree has also expressed its intent to invest significant capital (over $1 million) of its own funds into
facility renovations and upgrades to double the number of children served.
Teaching Tree currently serves 101 children (infant through age 5), and their capacity would increase to 215
total childcare spots upon completion of the proposed renovation.
The expansion of quality, affordable childcare, especially for low-income families, is a focus for the Social
Sustainability Department. The lease agreement requires that Teaching Tree will provide low-income families
with reduced tuition, tuition reimbursements, scholarship opportunities or similar programs to no less than 20%
of their enrollment for the duration of the lease.
Agenda Item 12
Item # 12 Page 2
The execution of the lease aligns with City Strategic Objective NLSH 1.2 by delivering a collaborative
partnership between the City and Teaching Tree to address a high priority human service need.
BFO Budget Enhancement 27.19 (Childcare Services, 2017-2018) aligns with the proposed use of the facility.
Funding has been expended and committed from Budget Enhancement 27.19 to support Teaching Tree’s
preliminary project scoping and design efforts prior to lease execution.
Goals and objectives of the Fort Collins Social Sustainability Strategic Plan that may benefit from the execution
of the lease with Teaching Tree include:
(a) Goal C2, as it is a collaborative effort of continuing support of childcare and early childhood education.
(b) Goal C3, as it supports the objective to which promotes programs and initiatives providing residents with
affordable, quality caregiving services
CITY FINANCIAL IMPACTS
Annual rent collected from this lease will result in at least $600 per year in commercial rent revenue for a total
of $12,000 over the course of the initial term of twenty (20) years. Rent for this space is based on the lease
rate determined by staff for a bona fide nonprofit organization. Teaching Tree will be responsible for expenses
of all utilities, maintenance, communication services, trash services, janitorial services, and taxes. In addition,
Teaching Tree will be responsible for any tenant finish costs. The City and Teaching Tree will share equally the
costs of parking maintenance.
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ORDINANCE NO. 142, 2018
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING THE LEASE OF CITY-OWNED PROPERTY
AT 424 PINE STREET FOR UP TO FORTY YEARS
WHEREAS, the City of Fort Collins is the owner of the property located at 424 Pine
Street, Fort Collins, Larimer County, Colorado (the “Leased Premises”); and
WHEREAS, in 1983 the City Council approved Resolution 83-218 authorizing the lease
of the Leased Premises to Larimer Community Services Corporation (“LCSC”) for the purpose
of building a human services facility on the Leased Premises; and
WHEREAS, in April 1985, the City and LCSC entered into a Lease Agreement (the
“1985 Lease”) that permitted construction of a building on the Leased Premises, but stipulated
that upon termination of the Lease Agreement, the building would become the property of the
City; and
WHEREAS, in 1994, with the City’s consent, United Way of Larimer County, Inc.
(“United Way”) assumed LCSC’s rights under the 1985 Lease and became owner of the
building; and
WHEREAS, in 2008 the City entered into a new lease with United Way, leasing the
Leased Premises for human services purposes to benefit the community at large with an initial
term of twenty years (the “2008 Lease”); and
WHEREAS, United Way currently subleases a portion of the Leased Premises to the
United Day Care Center, doing business as Teaching Tree Early Childhood Learning Center
(“Teaching Tree”), which provides affordable early childhood and education programs for the
community at large; and
WHEREAS, United Way and Teaching Tree desire that Teaching Tree would become the
primary lessee and occupant of the Leased Premises, and the parties intend that United Way will
occupy a portion of the Leased Premises under a sublease with Teaching Tree; and
WHEREAS, concurrent with execution of a proposed new lease agreement between the
City and Teaching Tree, United Way would terminate the 2008 Lease, convey the existing
building and all other related fixtures to the City, and Teaching Tree and United Way would
execute a sublease in a form acceptable to the City; and
WHEREAS, the proposed lease terms include an initial twenty-year lease term in
exchange for a nominal rent in the amount of $600.00 per year and compliance with certain
terms and conditions including restrictions on the use of the Leased Premises and an obligation
to maintain the Leased Premises; and
WHEREAS, the proposed lease agreement may be extended at the City’s discretion for
four additional five-year terms for a maximum tenancy of forty years; and
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WHEREAS, under Section 23-113(b) of the Code of the City of Fort Collins, the City
Council is authorized to lease any and all interests in real Leased Premises owned in the name of
the City, provided that the City Council first finds that the lease is in the best interests of the
City;
WHEREAS, if the proposed term of the lease exceeds twenty years, the lease must be
approved by the City Council by ordinance; and
WHEREAS, under Section 23-114 of the City Code, any sale or lease of City property
interests must be for an amount equal to or greater than the fair market value of such interest
unless the City Council determines that such sale or lease serves a bona fide public purpose,
based on the five factors listed in Section 23-114; and
WHEREAS, staff believes that leasing the Leased Premises to Teaching Tree for less
than fair market value serves a bona fide public purpose because:
(1) The use to which the Leased Premises will be put promotes the health, safety, or
general welfare and benefits a significant segment of the citizens of Fort Collins
by providing affordable early childhood and education programs for the
community at large;
(2) The proposed lease supports Goal C.2 of the Fort Collins Social Sustainability
Strategic Plan, which promotes the continuing support of childcare and early
childhood education; and
(3) The use to which the Leased Premises will be put supports Goal C.3 of the Fort
Collins Social Sustainability Strategic Plan, which promotes programs and
initiatives providing residents with affordable, quality caregiving services;
(4) The financial support provided by the City through the below-market lease of the
Leased Premises will be leveraged with other funding or assistance;
(5) The lease will not result in any direct financial benefit to any private person or
entity, except to the extent such benefit is only an incidental consequence and is
not substantial relative to the public purpose being served; and
(6) Leasing the Leased Premises for less than fair market value will not interfere with
current City projects or work programs, hinder workload schedules or divert
resources needed for primary City functions or responsibilities.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby makes and adopts the determinations and
findings contained in the recitals set forth above.
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Section 2. That the City Council hereby finds that leasing the Leased Premises at 424
Pine Street under the terms listed above is in the best interests of the City.
Section 3. That the City Council further finds that such lease for less than fair market
value serves a bona fide public purpose for the reasons stated in the recitals above.
Section 4. That the City Manager is hereby authorized to execute a negotiated lease
agreement consistent with the terms of this Ordinance, together with such additional terms and
conditions consistent with the terms of this Ordinance, 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 Leased Premises, as long as such
changes do not materially increase the size or change the character of the Leased Premises.
Introduced, considered favorably on first reading, and ordered published this 20th day of
November, A.D. 2018, and to be presented for final passage on the 4th day of December, A.D.
2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 4th day of December, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk