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HomeMy WebLinkAboutMemo - Mail Packet - 1/19/2021 - Memorandum From Keith Hanson Re: Policy On Rental Of City Facilitiesv.com THRU: ______________________________________________________________________________ up responses to o 5, 2021 h (RES) g , –, –Di , Di –. 23 114 unless certain criteria are met that determine a . bon o , , n on 28, 2019 .two non – – p b on 23 113 o , g , ,y , n 1.. 2.. 3.. 4.nn CPI Index , . 5.b ,,working , d on 317 . 6. by . . o , ’ d by d n 3 o u 30 or 60 REAL ESTATE SERVICES LEASE PORTFOIO ADDRESS Tenant SQ. FT. RENT / SF / MO. ANNUAL ESCALATION LEASE START LEASE END VACANT COMMERCIAL 117 N. Mason (Old Utility Bldg.) VACANT 4,200 200 W. Mountain Ste A VACANT 1,681 200 W. Mountain Ste B VACANT (Council members) 1,681 NON-PROFITS 1801 W Mountain (Trolley Barn) Fort Collins Municipal Railway Society 5,500 * $0.00 N/A 12/31/2015 Month-to-Month 212 W Mountain The Center for Family Outreach 3,825 $1.00 N/A 1/15/2018 1/14/2021 200 Mathews Street Fort Collins Public Media (FC-PAN) 1,106 $0.23 N/A 2/1/2020 1/31/2021 200 W. Mountain Ste C Global Village Museum 6,530 ** $0.31 N/A 7/1/2020 6/30/2021 321 Maple The Center for Fine Art Photography 901 ** $0.65 3% 5/1/2020 4/30/2022 225 Maple Street FoCo Café 2,023 $0.91 CPI < 3% 8/1/2018 7/31/2023 317 / 321 Sherwood St Faith Family Hospitality of Fort Collins, Inc.9,278 * $0.00 0% 9/14/2018 9/13/2023 400 Wood Street Foothills Gateway 2,500 * $0.00 0% 10/1/2014 9/30/2024 2005 N. Overland Trail (Old Water Works) Poudre Landmark Foundation Unknown $0.00 0% 6/1/2011 6/1/2026 425 10th Street (Romero House) Museo de La Tres Colinas 1,248 $0.00 0% 8/1/2012 7/31/2027 211 Byran St - aka Scout House Fort Collins Baseball Club 2,400 $0.00 0% 3/1/2018 4/30/2028 328 W. Mountain (Avery House) - 108 N. Meldrum Avery House & Carriage House 4,176 * $0.00 0% 9/3/2013 9/2/2028 424 Pine St United Way/Teaching Tree 11,855 * $0.00 0% 1/1/2019 12/31/2039 Old Power Plant - 430 N College (Old Power Plant) CSU 38,509 * $0.00 0% 2/29/2012 2/28/2052 1715 W. Mountain Avenue Housing Catalyst - aka Housing Authority Ground Lease * $0.00 0% 8/1/2012 7/31/2052 FOR-PROFIT 314 N. Howes Street Eco-Thrift 6,909 $0.48 3% 7/1/2018 Month-to-Month 226 W. Mountain Mountain Café 1,370 $0.73 N/A 4/1/2016 3/31/2021 212 W. Laporte Avenue The Butterfly Café 900 $0.80 3%2/3/2019 2/2/2022 RESIDENTIAL 3620 Kechter Road Carlson, David and Marci 2,139 $0.70 N/A 9/1/2018 Month-to-Month 812 N. Shields Holly, Thomas ("Fritz") 1,568 $0.64 N/A 3/21/2019 3/20/2021 Katelyn Hood, Erin Hood, Jade Jones 1,647 $0.91 N/A 6/25/2020 6/30/2021 Menchaca, Joe & Sandy 1,876 $0.67 N/A 9/1/2020 8/31/2021 945 E. Prospect Tyler Knauf & Danielle Lesh 1,160 $0.86 N/A 9/2/2020 9/1/2021 5830 Timberline Road Larry and Susan Schwartz 2,116 $0.80 N/A 10/1/2019 9/30/2021 5630 Tilden John and Kim Sullivan 2,812 $0.89 N/A 11/1/2019 11/1/2021 *Reduced rent in exchange for City not having any mainentance/repair responsibility or capital investment by tenant ** Reduced rent applied as a result of new tenant application and rubric evaluation Red cells indicate leases that will expire within six months. 149 Grandview $1,250.00 $0.00 RENT / MO. $0.00 1341 E. Horsetooth Road (Collindale G.C. House)$1,500.00 $2.08 $250.00 $0.00 $3,825.00 $1,835.35 $1,005.90 $0.42 $2,500.00 $3,324.19 $2,040.63 $2.08 $721.14 $1,500.00 $2.08 $50.00 $0.42 $2.08 $1,000.00 $1,000.00 $0.00 $1,700.00 $25.00 $585.65 $2.08 Attachment A City of Fort Collins Natural Areas Leases 2021 Actual Revenue TOTAL Type Property Lease Area Acreage/Square footage Lessee(s)Current Term Start Final Expiration Purpose Rental Rate Lease Soapstone (Green) 21900 acres Folsom Grazing Assn. 1/1/2021 12/31/2030 Cattle Grazing Based on AUM Total paid in 2020 = $8,046 Lease Soapstone (Green) Folsom (Altenburg Winter Lease) Cattle Grazing Based on AUM Total paid in 2020 = $2,586 Lease Soapstone (Green) 276 acres Bernard Land & Cattle 1/1/2021 12/31/2025 EvansGrazing BasedonAUM Total paid in 2020 = $600 Lease Soapstone Antenna (Green) 1 acre Townsquare Media 7/1/2020 12/31/2021 Radio Antenna Building and Tower Use Annual payment = $8400 Lease Hageman (Blue) 14.8 acre Hageman Earthcycle, Inc Roger Hageman roger@hecinc.net 7/1/2018 6/30/2038 Hageman Earthcycle Operations Monthly payment = $1,822 Lease Kestrel Fields (Green) 35 acre Poudre Valley Community Farms 11/1/2020 10/31/2025 Conservation Ag. $9,200.00 Lease Flores del Sol (Green) 150 acre Poudre Valley Community Farms 11/1/2020 10/31/2035 Conservation Ag. $5,000.00 Staff Leases Employee Housing Bobcat Ridge Employee Tenancy (Blue) 1,008 s.f. Karl Manderbach 6/1/2020 5/31/2025 Attendant Residence Monthly rate = $800 Employee Housing Gateway Ranger Residence (Blue) 0 VACANT Attendant Residence Employee Housing Crossline Canyons (Green) 1,686 s.f. Anastasia Patterson 6/1/2020 5/31/2025 Attendant Residence Monthly rate = $800 Employee Housing Reservoir Ridge Primrose Residence (Blue) 1,100 s.f. Dave Myers 10/1/2020 9/30/2025 Attendant Residence Monthly rate = $700 Sec. 23-114. - Disposition of property interests for less than fair market value. Any sale, lease or other conveyance of property interests approved under Subsection 23-111(a) or (b) or § 23-113 above must be for an amount equal to or greater than the fair market value of such interest unless the City Council or City Manager, as applicable, determines that such sale or lease serves a bona fide public purpose because: (1) The use to which the property will be put promotes health, safety or general welfare and benefits a significant segment of the citizens of Fort Collins; (2) The use to which the property will be put supports one (1) or more of the City Council's goals, adopted policies, projects or plans; (3) The financial support provided by the City through the below-market disposition of the property will be leveraged with other funding or assistance; (4) The sale or 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 (5) Selling or leasing the property for less than fair market rent will not interfere with current City projects or work programs, hinder workload schedules or divert resources needed for primary City functions or responsibilities. (Ord. No. 085, 2014 , § 5, 7-1-14) Attachment B COUNCIL FINANCE COMMITTEE AGENDA ITEM SUMMARY Staff: Ashley Macdonald – Real Estate Services Coordinator Joe Wimmer – Graduate Management Assistant Date: January 28, 2019 SUBJECT FOR DISCUSSION Real Estate Services’ new approach for determining less than fair market value rental rates for nonprofit organizations renting City facilities. EXECUTIVE SUMMARY Real Estate Services developed a new administrative policy for determining rental rates for nonprofit organizations. Historically, reduced rental rates for nonprofits were individually considered. As requests for reduced rates arise more frequently, Real Estate Services needs a consistent framework for determining appropriate rates. The City’s current seventeen leases with nonprofits are highly variable in regard to rent amount and rent discount based on fair market value. The intent of the new administrative policy is to make rates more predictable and equitable and allow for consistent negotiations. This new administrative policy may alter rental rates for current tenants after their present lease expires and is up for renewal beyond the extension period. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED Real Estate Services is seeking feedback on the proposed administrative policy for determining reduced rental rates for nonprofit organizations. BACKGROUND/DISCUSSION The City currently has seventeen leases with nonprofit organizations. Annual rent ranges from less than 1% of fair market value to 95% of fair market value. Nine nonprofits are paying less than 1% of the fair market value with a $25-$600/year lease. In 2014, Ordinance No. 085 was approved to amend City Code, Sec 23-114 Disposition of property interests for less than fair market value, to provide guidelines for leasing or selling City owned property for less than market value and/or for a term exceeding 5 years in length. Recently, a few tenants currently leasing City owned buildings have requested additional reductions to their existing lease rate (e.g. Global Village Museum and The Center for Fine Art Photography). Historically, rental rates for nonprofit organizations were determined on a case-by-case basis after nonprofits contacted the City seeking an available facility. The limited structure for determining an appropriate rental amount resulted in inequitable rates among the organizations and a lack of transparency regarding the evaluation criteria. The new framework will determine rental amounts based on the nonprofit’s services to the community. Prospective nonprofit organizations will be evaluated using consistent criteria and procedure. The evaluation process and rubric are attached. Attachment C Real Estate Services determines fair market value through comparative market analysis, a method used by real estate appraisers and other real estate professionals. These values are analyzed quarterly or as needed to ensure the City is abreast of real estate market changes and fluctuations. It is important to note that each lease negotiation is unique based on the level of services available and amenities provided or needed in the space. Due to the disparate characteristics of City owned properties, the policy for determining rates will not be applicable to all leases with nonprofit organization. Properties/organizations that may be exempt from the process include historical properties, CSURF, and organizations with lease- purchase agreements. The new framework is estimated to impact four current tenants if they were to renew their leases. Reduced nonprofit lease agreements and/or long-term lease agreements would still need approval by the City Manager or Council per the guidelines outlined in the City code. ATTACHMENTS 1) Spreadsheet of existing City leases with nonprofit organizations 2) Guiding Principles for Leases with Nonprofit Organizations (includes Rental Rate Reduction Rubric and Process) Address Tenant Date of Term Origination Date Recommended Fair Market Value (per sq. ft.) Recommended Fair Market Value (annual) Current Rent (per sq. ft) Current Rent (annual) Nonprofit Lease 400 Wood St Foothills Gateway 10/01/14 09/30/2024 11/2/2004 $10.50 $102,900 $0.0514 $25.00 424 Pine Teaching Tree 7/1/2008 6/30/2028 TBD $10.50 $896,028 $0.1024 $600.00 211 Bryan St FTC Baseball Club 3/1/2018 4/30/2028 1983 $10.50 $12,957 $0.0162 $25.00 225 Maple St FoCo Café 8/11/2018 8/10/2023 8/8/2014 $16.50 $136,851 $7.7855 $21,386.88 200 Mountain Ste C Global Village Museum 11/01/2016 4/30/2019 2/16/2011 $10.50 $68,565 $4.00 $26,120.04 321 Maple Center for Fine Art Photography 1/15/2018 1/14/2019 1/12/2018 $10.50 $9,461 $8.00 $7,208.04 212 W Mountain Center for Family Outreach 1/15/2018 1/14/2021 1/1/2018 $10.50 $38,966 $10.00 $37,110.00 Nonprofit Ground Lease 1715 W Mountain Housing Authority 08/1/2012 7/31/2052 1/4/1977 $10.50 $176,043 $0.0038 $25.00 1801 Mountain Trolley Car Association TBD 4/24/1990 $3.25 $3,640 $0.5357 $600.00 Nonprofit Lease Historic, Exempt 450 N College CSU/CSURF 2/29/2012 2/28/2052 2/15/1994 $23.00 $942,172 $0.0003 $25.00 200 Mathews St FC Media 01/15/2018 01/14/2019 7/1/2012 $16.50 $18,249 $2.7125 $3,000.00 425 10th St Museo de La Tres Colinas 8/1/2012 7/31/2027 7/18/2002 N/A N/A $0.0040 $5.00 2005 N Overland Trail Poudre Landmark Foundation (Waterworks) 6/1/2011 6/1/2026 6/5/1996 N/A N/A sq ft not available $5.00 328 W. Mountain 108 N. Meldrum Poudre Landmark Foundation (Avery House, Carriage House)10/1/2013 9/30/2028 1988 N/A N/A $0.0106 $25.00 317 321 Sherwood Faith Family Hospitality Lease Purchase 10/1/2018 $10.50 $99,099 $0.0305 $300.00 408 Mason Ct Discovery Center N/A $0.00 200 Matthews Carneige Building N/A $0.00 Vacant 906 E Stuart Vacant TBD Vacant $10.50 $21,746 TBD TBD 200 Mountain Stes A Vacant TBD Vacant $16.50 $37,868 TBD TBD 200 Mountain Stes B Vacant TBD Vacant $16.50 $37,868 TBD TBD 6916 S College Vacant Land TBD Vacant TBD TBD Guiding Principles for Leases with Nonprofit Organizations Background This framework of guiding principles was developed to make the lease negotiation process with nonprofit organizations more consistent, and lease rates more equitable among nonprofit organizations leasing real estate from the City. Principles 1. The City of Fort Collins Real Estate division intends to lease all city-owned real estate at equal to the fair market value. A reduced lease rate is possible if the lease meets the standards of City Code Sec. 23-114. Per City Code Sec. 23-114, any sale, lease or other conveyance of property interests must be for an amount equal to or greater than the fair market value of such interest unless the City Council or City Manager determines that such sale or lease serves a bona fide public purpose because: (1) The use to which the property will be put promotes health, safety or general welfare and benefits a significant segment of the citizens of Fort Collins; (2) The use to which the property will be put supports one (1) or more of the City Council's goals, adopted policies, projects or plans; (3) The financial support provided by the City through the below-market disposition of the property will be leveraged with other funding or assistance; (4) The sale or 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 (5) Selling or leasing the property for less than fair market rent will not interfere with current City projects or work programs, hinder workload schedules or divert resources needed for primary City functions or responsibilities. 2. The leased facility must be managed collaboratively. Roles and Responsibilities of Collaborative Management The City and the nonprofit have the joint responsibility of operating, maintaining and rehabilitating the facility through collaborative stewardship and place management, as well as the responsibility of managing specific public and private assets. For long-term leases to work well, the roles and responsibilities of the city and nonprofit must be clearly defined and agreed upon. The City of Fort Collins has multiple roles, including o Ownership of the facility and serving in this role as the landlord. o Manager of the public infrastructure, assets and some lands outside of the leasehold. o The City will typically be responsible for the following maintenance items: Roof, Structure, Plumbing (outside), Rooter services, Electrical (inside the building), Electrical (outside building), Heating Ventilation and Air Conditioning (HVAC), Parking Lot Maintenance The nonprofit tenant has multiple roles, including o Operating, maintaining, managing and programming certain public assets in a manner consistent with the its mission and these guiding principles. o The tenant will typically be responsible for the following maintenance items: Mowing and weed control, Snow removal, Plumbing (inside), Plate glass/glass, Fixtures, Appliances, Security Services, Locks, Janitorial Services, Internet Services, Utilities (Gas, Electric, Water, Sewer), Personal Property Taxes, Parking Lot Maintenance, Furniture o The tenant will be responsible for any facility maintenance that is needed due to neglect of the facility or an issue that was not reported and resulted in damage to the facility. o The tenant is not responsible for items that are deemed normal wear and tear. 3. The amount of rental rate reduction will be determined by the Rental Rate Reduction Process. An evaluation committee of City staff will assess the nonprofit’s application to determine the lease rental rate appropriate for the nonprofit organization. The evaluation committee will be comprised of 5-7 City staff from multiple stakeholder departments such as Real Estate Services, Economic Health, and the department sponsoring the nonprofit organization’s proposal, e.g., Social Sustainability, Cultural Services. The lease rate amount resulting from the Rental Rate Reduction Process will be used as a baseline rate for negotiations and is not fixed or unalterable. Leases negotiated before the implementation of this rate reduction process will not be altered with new rates, but will be renegotiated with the new rate reduction upon expiration and renewal of the lease. Due to the disparate characteristics of City owned properties, the Rental Rate Reduction Process is not applicable to all leases with nonprofit organizations.Properties/organizations that may be exempt from the Rental Rate Reduction Process include: Historical properties with restricted uses and not market competitive. Organizations with lease-purchase agreements with the City. CSU/CSURF Rental Rate Reduction Process 1. Prospective nonprofit organizations will submit a Reduced Rent Application to Real Estate Services. This application provides an explanation of how their services meet the City’s strategic objectives or needs in the community, etc. 2. The nonprofit’s application will be evaluated by an evaluation committee comprised of 5-7 City staff from the nonprofit’s supporting department, Real Estate Services, and Economic Health Department. Committee members will individually evaluate the nonprofit using the Rental Rate Reduction Rubric and return the rubric to Real Estate Services. City strategic planning documents such as the biannual Strategic Plan and Social Sustainability Strategic Plan will guide evaluators during their evaluation. 3. The scores of each individual rubric will be averaged by Real Estate Services to determine the appropriate rental rate reduction amount. 4. The rate reduction amount will be used during negotiations with the nonprofit organization. Nonprofit Lease Agreement Process Map Public inquiry or direction from CMO/Council regarding property rental Determine fair market value of property Determine needs of identified leasee Verify references and application Determine appropriate rate amount though Rental Rate Reduction Process Facility-owning department approval to proceed Present final terms. Final negotiation Present final terms. Final negotiation Draft lease City Manager approval Council approval Execute and distribute lease Short term leases (Under 5 years) (Fair market or reduced rate) Long term leases (Over 5, under 20 years) (Fair market) Long Term Leases (Over 5 years) (Reduced rate) Long term leases (Over 20 years) (Fair market or reduced rate) Rental Rate Reduction Rubric Applicant Organization: Property/Facility: Market Rate (year): Date: Evaluator Name: Evaluation Criteria –please read explanation on next page Criteria Weighting Factor Rating Score The applicant's services promote the health, safety, and general welfare of the community by supporting one or more: 1) City Strategic Objectives 2) Supporting Department Strategic Plan Goals 10 = strongly supports 0 = does not support 10 Service offered by the applicant responds to a community priority/need 10 = significant 0 = none 10 Impact of this service relative to community need 10 = significant 0 = none 10 Impact of City’s funding assistance 10 = significant 0 = none 10 Real Estate Services: Investment into property by applicant 10 = significant 0 = none 1 X 0 Total 0 Score Rental Reduction Range (% of Fair Market Value) 0­10 0 – 20% 11­20 21 – 40% 21­30 41 – 60% 31­40 61 – 80% 41­50 81 – 99% Recommended rental rate reduction amount (range)______________ Comments for the evaluation group How to Score 1. Carefully read the applicants proposal and the Selection Criteria. The selection criteria are listed below with specific descriptive standards for each. 2. Use the abridged strategic plan documents attached as guides to help score the first criterion. Respective strategic plan documents not attached will be provided by Real Estate Services. 3. Assess and score each criterion using your individual judgement. The evaluation is not a discussion and consensus process. If more information is needed from a specific department (e.g. Real Estate to assess the investment into the property), write your questions in the comments/question box on the rubric. 4. Send your completed rubric to Real Estate Services. Keep results confidential. Criteria Explanation Criteria Standard The applicant's services supports one or more: 1) City Strategic Objectives 2) Department Strategic Plan Goals 10 = strongly supports 0 = does not support Do the services support specific objectives or goals in these documents? Are they closely or tangentially related to the objectives? Do they enhance the overall community strategy for their objective and collaborate with similar services? Service offered by the applicant responds to a community priority/need 10 = significant 0 = none How urgent and vital are the nonprofit’s services to the community? Are there other organizations offering the same services or is there a void in the community for this service? Impact of this service relative to community need 10 = significant 0 = none How much of the community population will benefit from the services provided? Will the services have a significant impact in the community? To what extent will the services help achieve the objectives and goals of the community? Impact of City’s funding assistance 10 = significant 0 = none What will the organization accomplish as a result of being provided rental assistance from the City? Will the reduced rate make a significant impact on the organization’s services and financial sustainability? Is the nonprofit leveraging other funding assistance? Investment into property by applicant 10 = significant 0 = none Is the organization investing money into the facility? For example: tenant finish, improvements and upgrades paid by the tenant. Please consider investments from the City to subsidize the nonprofit’s operations as a counter to this score. CITY OF FORT COLLINS STRATEGIC PLAN (2018) (Abridged) NEIGHBORHOOD LIVABILITY & SOCIAL HEALTH 1.1 Improve access to quality housing that is affordable to a broad range of income levels 1.2 Collaborate with other agencies to address poverty issues and other identified high­priority human service needs, and to make homelessness rare, shortlived and non­recurring 1.3 Improve accessibility to City and community programs and services to low­ and moderate­income populations 1.4 Co­create a more inclusive and equitable community that promotes unity and honors diversity 1.5 Foster positive and respectful neighbor relationships and open communication 1.6 Protect and preserve the quality of life in neighborhoods 1.7 Guide development through community planning, historic preservation, and efficient and effective development review CULTURE & RECREATION 2.1 Develop recreational and cultural programs with pricing and marketing strategies that drive value, attendance and cost recovery 2.2 Plan, design, implement and maintain the City’s parks and trails systems 2.3 Provide enhanced opportunities for arts and culture throughout the City 2.4 Protect the health and longevity of the tree canopy ENVIRONMENTAL HEALTH 4.1 Achieve Climate Action Plan (CAP) 2020 goals and continue progress toward the 2030 goals 4.2 Improve indoor and outdoor air quality 4.3 Achieve 2020 Energy Policy goals and work towards Climate Action goals for carbon neutrality 4.4 Achieve the 2020 Road to Zero Waste goals and work toward the 2030 zero waste goals 4.5 Develop strategies to improve the community’s climate resiliency 4.8 Protect and enhance natural resources on City­owned properties and throughout the community 4.9 Sustain and improve the health of the Cache la Poudre River and its watershed 4.10 Expand the Natural Areas land portfolio while simultaneously maintaining existing lands and access to nature SAFE COMMUNITY 5.1 Improve community involvement, education and regional partnerships to increase the level of public trust and keep the community safe 5.6 Optimize the use of data and technology to improve service, protect mission­critical infrastructure and enhance cybersecurity effectiveness 5.7 Reduce incidents of, and impacts from, disruptive behavior of the transient population TRANSPORTATION 6.1 Improve safety for all modes of travel 6.2 Manage traffic congestion and improve high­priority intersections 6.3 Improve transit availability and grow ridership 6.4 Support, enhance and accelerate I­25 improvements according to the multi­modal environmental impact statement 6.6 Maintain Level of Service ‘B’ for City streets and the current level of service for medians and associated infrastructure 6.7 Address parking needs Downtown, along the MAX corridor and in residential neighborhoods SOCIAL SUSTAINABILITY STRATEGIC PLAN (2018) (Abridged) COMMUNITY WELLNESS A.1 Increase overall levels of physical health 1. Increase availability, access, and desire to indoor and outdoor physical activity 2. Encourage networks for the full spectrum of healthcare A.2 Increase access to healthy food 1. Strengthen local food systems A.3 Support initiatives and programs promoting good mental and behavioral health and assisting persons with mental and behavioral illness 1. Foster increased availability and access to mental and behavioral healthcare 2. Encourage networks for emotional, spiritual, and intellectual well­being EQUITY & INCLUSION B.1 Promote and maintain a welcoming, inclusive community where people feel connected 1. Increase opportunities for awareness and acceptance of all community members 2. Promote and develop culturally and income diverse neighborhoods B.2 Encourage transportation options that are inclusive to all populations 1. Support increased transit service as well as bike trails and sidewalks by supporting Transfort’s strategic plan B.3 Expand the City’s diversity, inclusion and equity goals, with an emphasis on internal and external communications, education and outreach. 1. Help create internal policies and goals that promote, enhance, and maintain diversity 2. Develop education and outreach strategies on a broad range of diversity issues B.4 Support programs that enable all residents to have equal access and opportunities to meet their basic needs 1. Support programs that ensure access and opportunity for all residents to employment, food, housing, clothing, education, recreational opportunities, a safe and healthy environment, and social services COMMUNITY PROSPERITY C.1 Close skills gap and increase career pathways in the community 1. Create alignment between employers, workforce assistance and development entities, and educational institutions regarding workforce needs. C.2 Support early and secondary educations to improve opportunities for life success 1. Continuing support of childcare and early childhood education. 2. Support supplemental educational programs for children and youth. C.3 Support programs and initiatives providing residents with affordable, quality caregiving services. 1. Support programs providing caregiving services (people with disabilities, eldercare, dependents, etc., who need specialized care) C.4 Support area financial literacy initiatives 1. Support efforts in various sectors to provide financial literacy tools in order to increase personal and household financial stability and self­sufficiency HOUSING D.1 Increase housing opportunity 1. Increase the supply of affordable rental housing 2. Increase opportunities to obtain affordable homeownership 3. Advocate for affordable housing options for special populations D.2 Support housing stability 1. Provide support to prevent housing displacement 2. Provide support to maintain or improve the health of the housing syst Nonprofit Reduced Rate Application Date of Application: Name of Organization: Requested Term (Min 5 years – Max 20 years): Email: Phone Number: Current Address: Requested use of City Facility: In a separate document please answer the questions below. Attach a copy of this application to the front of your responses. It is encouraged to attach any additional information about your organization that you think would be of importance for your application. 1. Please describe how your organization supports the City of Fort Collins Strategic Objectives and/or specific City department Strategic Plan Objectives. Also, please describe how your services integrate and align with other complementary community services to benefit our community. 2. Please describe and quantify the community need for your organization’s services. Is there a void in the community for your service? 3. How much of the community is impacted by the services provided by your organization and do your services impact a certain demographic of our community? Please describe the measurable benefit of your services to the community. 4. Please describe how a reduced rental rate will affect your services and the financials of your organization. What will your organization accomplish as a result of being provided rental assistance from the City? Is your organization leveraging additional funding from other entities? (*Attach a board approved financial statement or FASB117) 5. What kind of tenant finishes, utility services, improvements or upgrades will your organization need in order to operate in this facility? Is your organization willing or able to invest in into the facility? In addition to this application, the following supporting documents will also need to be provided. o Board approved financial statement or FASB117 o Letter of support from the City Department in which you support the Strategic Plan Goals for o Certificate of Good Standing from the Secretary of State o Letter of Authorization from your Board or Registered Agent that allows you to be a signor and apply for the reduced rate application To be completed by RES Services Date Received: Received By: Anticipated Date to Submit to Council: Confirm required documentation: o Completed Application o Responses to Application o Board approved financial statement or FASB117 o Letter of support from the City Department in which you support the Strategic Plan Goals for o Certificate of Good Standing from the Secretary of State o Letter of Authorization from your Board or Registered Agent that allows you to be a signor and apply for the reduced rate application Rubric Reviewers: 1. Economic Health Office: 2. Supporting Department: 3. Supporting Department: 4. RES Services: 5. Operation Services: 6. (Optional): 7. (Optional): Fair Market Value Per Sq Ft: $_______ sq. ft. Total Rubric Average: ________ is the average score of the rubric review. This applicant qualifies for a ___________% reduction of the fair market value. Suggested Reduction: $ ________per square foot for a term of ___________ years with ___­ ___ year extensions. Additional Application Notes: I have reviewed the attached the above application and support / do not support the recommended rate reduction for the applicant. ________________________________________ __________________ City Manager Date January 28, 2019 Real Estate Leases with Nonprofits Ashley Macdonald, Joe Wimmer Purpose • Provide Council Finance Committee with an overview of the City’s current leases with nonprofit organizations. • Seek feedback on the new proposed administrative policy for determining lease rental rates for nonprofit organizations. 2 Nonprofit Leases Overview • 17 current leases • Inequity concerns among rates • Rent range • <1% to 95% fair market value • Up to 99.99% rent discount • Rates determined from case-by-case negotiations 3 Tenant % of Fair Market Foothills Gateway 0.02% Teaching Tree 0.07% FTC Baseball Club 0.19% FoCo Café 15.63% Global Village Museum 38.10% Center for Fine Art Photography 76.19% Center for Family Outreach 95.24% Current Leases Tenant Recommended Fair Market (per sq. ft.) Recommended Fair Market Value (annual) Current Rent (annual)Rent Discount ($)Rent Discount (%) Foothills Gateway $10.50 $102,900 $25.00 $102,875.00 99.98% Teaching Tree $10.50 $896,028 $600.00 $895,428.00 99.93% FTC Baseball Club $10.50 $12,957 $25.00 $12,932.00 99.81% FoCo Café $16.50 $136,851 $21,386.88 $115,464.12 84.37% Global Village Museum $10.50 $68,565 $26,120.04 $42,444.96 61.90% Center for Fine Art Photography $10.50 $9,461 $7,208.04 $2,252.46 23.81% Center for Family Outreach $10.50 $38,966 $37,110.00 $1,855.50 4.76% 4 New Approach Nonprofit Rental Rate Reduction Process • Formal application • Standard evaluation criteria: 1) Support City Objectives 2) Community Need 3) Service Impact 4) Earning Potential 5) Investment from the City • 5-7 person staff evaluation committee • Process determines eligible discount range 5 Policy Impact 6 Tenant Current Rent Discount (%) Proposed Discount (%) if Policy Implemented Yearly Rent Impact Foothills Gateway 99.98% 81 - 100% $19,551 - $0 Teaching Tree 99.93% 81 - 100% $170,245 - $(575) FTC Baseball Club 99.81% 61 - 80% $5,028 - $2,566 FoCo Café 84.37% 41 - 60% $4,615 - $33,353 Global Village Museum 61.90% 21 - 40% $28,046 - $15,019 Center for Fine Art Photography 23.81% 21 - 40% $266 - $(1,532) Center for Family Outreach 4.76% 81 - 100% $(29,707) - $(37,075) • 4 tenants potentially impacted • 3 higher rent • 1 lower rent • New policy would take effect with expiration of current leases Questions/Feedback Does Council Finance Committee support the new approach for determining rental rates for nonprofit organizations? If yes, what feedback does Council Finance Committee have on the proposed administrative policy? 7 1of 2|Page City Manager’s Office PO Box 580 300 LaPorte Ave. Fort Collins, CO 80522 970.221.6505 970.224.6107 - fax fcgov.com Date: March 18, 2019 To: Mayor and Councilmembers From: Joe Wimmer, Graduate Management Assistant Ken Mannon, Operation Services Director Thru: Darin Atteberry, City Manager Kelly DiMartino, Senior Assistant City Manager Re: Nonprofit Leases – Council Finance Committee Follow Up Background Real Estate Services is piloting a new approach for determining less than fair market value rental rates for nonprofit organizations renting City facilities. The proposed administrative policy was presented to Council Finance Committee on January 28th, 2019. The intent of the policy is to have a consistent process for Real Estate Services to negotiate rates and make rate discounts equitable among the City’s nonprofit tenants. Bottom Line Based on feedback received from the Council Finance Committee, staff revised the Rental Rate Reduction Policy to make the rubric evaluation process more quantitative and objective. Real Estate Services will pilot the new administrative policy with current nonprofit tenants with leases expiring in 2019, as well as with prospective nonprofits seeking to rent from the City. Current tenants will be contacted and consulted regarding the new approach and potential rate impacts. Council Finance Committee Questions/Discussion Lease Approval: Lease rates are ultimately approved by Council or the City Manager dependent on the term of the lease as stated by City Code Sec 23-114. The lease rate amount resulting from the new Rental Rate Reduction Policy will be used as a baseline rate for negotiations and is not fixed or unalterable, leaving flexibility for Council priorities. Quantitative Evaluation: To address the qualitative and subjective nature of determining rental rates, the following elements are included in the process: Prospective nonprofits must submit a formal application asking the nonprofit to quantify the impacts of their services to the community, financial leveraging, and financial documentation. The evaluation committee is comprised of 5-7 staff, whom evaluate a consistent numeric rubric, reducing subjectivity and bias. Evaluation Committee:The evaluation committee includes Real Estate staff, members from departments in the relevant outcome area, as well as staff who are detached from the nonprofit to 2of 2|Page serve as impartial evaluators. Public participation in the evaluation and determination of lease rates was explored and is not recommended by staff to be included in the pilot of the new administrative policy. Common Services Framework:Applicants are asked to describe how their services integrate with other complementary community services to benefit our community. Nonprofits collaborating with similar organizations through a systems-level approach to enhance our community strategy will be scored to receive a higher rent discount. Implementation Plan:The rental rate reduction process will be piloted by Real Estate Services for new prospective nonprofits seeking to rent a City facility in addition to current tenants with leases expiring in 2019. Current nonprofit tenants will be individually contacted and provided with information regarding the new process. The first organization to pilot the new process is the Global Village Museum. Real Estate Services will solicit feedback from them and other tenants during the pilot to make policy adjustments and mitigate severe rate impacts. Tenants with leases set to expire this year will be contacted as soon as possible to prepare them for the application process and potential rate changes. Prospective nonprofits will be provided with information on how to apply and expectations from the City as a lessor and from the applicant as lessee. If tenants wish to apply for a reduced rate using the new process prior to the expiration of their lease, they will be allowed to apply for a new rate and re-negotiate their lease. Leadership Planning Team Questions Does the rental income go into General Fund or into an account to fund related maintenance? The rental income goes into an account for the department that owns the property minus a small management fee paid to Real Estate Services. Each department budgets for and funds the maintenance of the properties that they own with recommendations from Real Estate Services. Is operations and maintenance factored in to the rent amounts charged? Yes, operations and maintenance are accounted for during negotiations with tenants. However, with the current standard low-rate ($25) leases, it is difficult to account for maintenance funding, leaving the City responsible for these costs. The new process will allow Real Estate Services to formally account for maintenance and facility investments in the rubric evaluation of the nonprofit. The new process will also provide the benefit of having historical documentation of the maintenance commitments and how the rate reduction was determined. What determines the differences in what tenants pay? Fair market value is calculated through the Comparative Market Analysis Method. Current rates are considered based on tenant need, facility maintenance, tenant finish, operations and any other special considerations needed by the tenant. Currently the rent reduction is a judgment by the Director of Operations and or the Real Estate Manager through negotiation with the tenant. Sec. 23 113.Leases. (a) Interests in real property owned in the name of the City that are part of theCity'swaterorelectric utility system may be leased only in the manner provided in §23 111 above. (b) Interests in other real property owned in the name of the City may be leased subject to the following provisions: (1) The City Council may lease any and all interests in real property owned in the name of the City if the City Council first finds that the lease is in the best interests of the City. Such leases may be approved by the City Council by resolution unless the proposed term of the lease exceeds twenty (20) years, in which event the lease must be approved by the City Council by ordinance. (2) The City Manager may lease, for a definite term of five (5) years or less, any interests in real property owned in the name of the City. This five year limitation shall not apply to the lease of real property located at the Northern Colorado Regional Airport. (3) The Northern Colorado Regional Airport Commission may, on behalf of andinthenameof the City and the City of Loveland, as co owners and operators of the Northern Colorado Regional Airport, lease an interest in real property located at the Airport subject to the following requirements: a. All leases of Airport property shall be in a form generally approved by the City Manager and the City Attorney; b. The use to which the real property is to be put under the lease is an aeronautical or general aviation use or a use which directly augments an aeronautical or general aviation use; c. The use to which the real property is to be put is permitted by any land use or zoning codes or regulations applicable to the real property; d.Theleaseandtheusetowhichtherealpropertyistobeputareincompliance with all Federal Aviation Administration and state laws, regulations and agreements applicable to the property to be leased; e. The total term of the lease, including all options to extend, shall not exceed fifty (50) years; and f. Any direct monetary obligations created by the lease are within the approved Airport budget and appropriations. (4) The City Manager shall promptly notify the City Council of the executionofanylease agreement entered into by the City pursuant to Paragraph (2) above. (5) The Northern Colorado Regional Airport Commission shall notify the City Council of the execution of any lease agreement entered into by the Commission on behalf oftheCities pursuant to Subsection (3) above. Attachment D (c) A lease approved by the City Council pursuant to this Section or §23 111 is presumed to include the right of the tenant to sublease all or a portion of theleased property for a definite term of five (5) years or less with the written consent, and in the sole discretion, of the City Manager or the City Manager's designee, unlessthetermsof such lease further restrict, condition or prohibit subleasing. (Ord. No.085, 2014 ,§4,7 1 14; Ord. No.068, 2016 ,§4,6 7 16; Ord. No.012, 2020 ,§2,1 21 20)