Title
Authorization to Amend Lease Agreement 131499 with Carver Mountain Enterprises to Extend Term and Increase Leased Premises (Ordinance S-49809)
Description
Request to authorize the City Manager, or his designee, to amend Lease Agreement 131499 with Carver Mountain Enterprises to extend the term for a five-year period; to provide for three additional one-year options to extend; and to increase the leased premises to 102 acres, net, of farmland. Further request to authorize the City Treasurer to accept all funds related to this item.
Report
Summary
Carver Mountain Enterprises (Tenant) currently leases 97 acres of farmland located between Dobbins Road and South Mountain Avenue, east of 15th Avenue. Tenant currently occupies the property as a holdover tenant and is in good standing.
The lease will be amended to extend the term for a five-year period, beginning July 1, 2023, through June 30, 2028, and to provide for three additional one-year options to extend. Each option period will be exercised upon mutual agreement of the City and Tenant. The lease will also be amended to include an additional five acres, increasing the leased premises to 102 acres of farmland beginning July 1, 2023.
Market rent at the beginning of the five-year extension period is $225 per acre per year, or $22,950 per year, which is within the range of market rents as determined by the Real Estate Division. Base rent will increase three percent annually at the beginning of each one-year option period. As consideration for the extension, the Tenant will receive a rent credit valued in the amount of $180,000 for ground leveling work on 72 acres of the leased premises. Tenant will be assessed market rent, plus applicable taxes, for failure to complete the ground leveling work. Tenant will forfeit any credit related to the work for early termination of the lease or for non-renewal of any option period.
Contract Term
The contract extension is a five-year term, from July 1, 2023, through June 30, 2028, with three additional one-year options to extend.
Financial Impact
There is no net revenue during the five-year extension.
Concurrence/Previous Council Action
Lease Agreement 131499 (Ordinance S-37720) adopted March 16, 2011.
Location
Between Dobbins Road and South Mountain Avenue, east of 15th Avenue.
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer and the Water Services and Finance departments.