Title
Authorization to Enter into a Lease Agreement with International Flora Technologies, Ltd. at 28633 W. Patterson Road, Buckeye, Ariz. (Ordinance S-48091)
Description
Request to authorize the City Manager, or his designee, to enter into a 10-year lease agreement with International Flora Technologies, Ltd. (Floratech) for continued occupancy of approximately 10.95 acres of land improved with a 25,837 square foot industrial building at 28633 W. Patterson Road. Further request to authorize the City Treasurer to accept all funds related to this item.
Report
Summary
Floratech has operated at this location since Aug. 15, 2008, and currently leases approximately 10.95 acres of land improved with a 25,837 square foot industrial building for the purpose of administrative offices, manufacturing and distribution of cosmetic products, related uses, and processing and storage. A new lease agreement will be executed and will supersede lease agreement 124291 which expires on Aug. 14, 2023. Floratech is a long-term tenant in good standing.
The lease will be for a 10-year term plus two, 5-year options to extend. Each option period will be exercised upon mutual agreement of the City and Floratech.
Monthly base rent for the first year will be $9,125, plus applicable taxes, which is within the range of market rents as determined by the Finance Real Estate Division. Base rent will be adjusted annually thereafter at a rate of three percent, and to market rent at the beginning of each option period, if exercised. Base rent will be abated in an amount not to exceed $3,541.67 per month over the initial 10-year term to offset Floratech's costs for installation of a 300,000-gallon water storage tank and pump for the purpose of fire suppression. The City will retain ownership of the fire suppression system (i.e. the water storage tank and pump) upon termination of the lease.
Floratech is responsible for all costs associated with operation and maintenance of the property and all fees, repairs and maintenance related to the fire suppression system. Floratech will provide insurance and indemnification acceptable to the City's Risk Management Division and the Law Department. The lease may be canceled pursuant to A.R.S. section 38-511. The lease may contain such other terms and conditions deemed necessary or appropriate by the City.
Contract Term
The lease agreement will be for a 10-year term, with two 5-year options.
Financial Impact
Net revenue, inclusive of abatement, during the 10-year term will be $830,295, plus applicable taxes.
Concurrence/Previous Council Action
The City Council approved:
- Agreement 124291 (Ordinance S-35018) on May 7, 2008.
- Amendment 1 and Amendment 2 to Agreement (Ordinance S-40610) on Aug. 15, 2013.
Location
28633 W. Patterson Road, Buckeye, Ariz. - identified by Maricopa County Assessor parcel number 401-66-026C.
Council District: Out of City
Department
Responsible Department
This item is submitted by Deputy City Manager Karen Peters and the Public Works and Finance departments.