Title
Extend Lease with Arizona Department of Transportation - No. 134482 (Ordinance S-43626)
Description
Request to authorize the City Manager, or his designee, to amend Lease No. 134482 (Lease) with the Arizona Department of Transportation (ADOT) to extend the term.
Report
Summary
In 2001, the City purchased the real property located at 2739 E. Washington St., which included an 81,815-square-foot, two-story office building. ADOT has continuously leased the building, either in whole or in part, since 2001. ADOT currently leases 53,966 square feet of the 81,815 square foot building, including adjacent parking space. ADOT uses the building for various State of Arizona departments and for employee parking. In 2010, the current Lease was entered into and its term will expire on June 30, 2017. ADOT pays total gross rent of $12.71 per square foot per year under the Lease. ADOT asked the City to extend the term of the Lease.
Contract Term
Subject to City Council approval, the amendment to extend the term of the Lease will contain the following terms and conditions:
* The term will be one year, beginning July 1, 2017, with four one-year options to extend the term, which may be exercised at the sole discretion of the Aviation Director.
* The annual gross rental rate effective on July 1, 2017, will be $13.87 per square foot per year. The base rent will be $12.14 per square foot per year, which is consistent with current market rates, and $1.73 per square foot per year for actual utility costs.
* The base rent will be adjusted annually according to the Consumer Price Index.
* ADOT will remain responsible to perform all maintenance on the building, subject to the provisions in the Lease for structural and foundation repairs.
* The Lease may contain other terms and conditions as deemed necessary or appropriate by the Aviation Director.
Financial Impact
The estimated rent and utility fees that will be paid to the City for the first year of the term of the Lease is $748,510. The estimated rent and utility fees that will be paid to the City throughout the term and option period is $3.8 million.
Location
The leased premises is located at 2739 E. Washington St.
Department
Responsible Department
This item is submitted by Deputy City Manager Paul Blue and the Aviation Department.