60A - PROPERTY DISPOSITION POLICY

Home Browse Search

Leasehold Assignments: Requests for assignment of leasehold interest shall be evaluated on the same basis as the criteria used in evaluating a leasehold proposal. The City Manager may authorize assignments which do not require amendment of the master lease. Consent may be contingent on the payment of additional consideration to the City, either as a percentage share of the purchase price of the leasehold interest or an upward adjustment to the rent. Either of which shall be based on commercially reasonable comparables found in the market. If new financing is involved in the sale, the requirements of'Leasehold Financing' shall apply. Lease Extensions & Renewals: Requests from existing lessees for lease extensions or renewals may be considered if such proposals promote capital investment and,.redevelopment of City property. Whenever an existing lessee is seeking renewal of an expiring•I'ong=term lease, the City Manager will bring the issue before the applicable City Council Committee'with an appropriate recommendation. In addition to the criteria used to assess new lease proposals` City`staff•also will review the lessee's history with respect to: maintenance of the property; compliance with•.existing lease terms; prompt rent payments; and a rental return consistent with maximizing the property's full potential. The lessee must propose capital investment that: will increase tFie value or the useful life of the leasehold improvements by an amount more than can be reasonably amortized over the.remaining lease term; is not recurring in nature; and is at least ten percent\(10%)'orjmore of the. Value of the existing improvements. It specifically should, exclude expenditure"s to correct deferred Maintenance and expenditures for repairs to keep theexisting improvements in good condition. The length of any extended lease term shall be calculated'by the same method used for calculating the length of new leases. City's Interest in Leasehold Improvements: City lease agreem nts.provide the City the right to assume ownership of the leasehold,improvements at 6e end`of the lease The value of the City's interest in the leasehold improvements can be appraised usingwidelyaccepted appraisal methods. In the event the City grants.a-lessee a lease extension the City shall be compensated by an amount equal to the change in present value attributable.to the•deferral of its)interest in the leasehold improvements. This amount either can be paid.as`an upfront payment at the beginning of the extended term or amortized over time with appropriate interest applied. The City shall offset from the value of its interest in the leasehold improvements any increased economic benefit derived from an extended lease. The City shall not receive any compensation for its interest in the leasehold improvements on leases extended prior to the last twenty percent (20%) of the existing term. Security Deposits: The stariclar`d security deposit for a new lease agreement shall be equivalent to three (3) month's rent. The security deposit may take the form of cash, an instrument of credit or a faithful performance bond. For a lessee making a substantial investment in improvements, the security deposit will be refunded upon completion of the improvements. Transaction Processing Fees: The City may charge a transaction processing fee in accordance with the schedule of adopted fees. The fee may be waived for transactions that provide benefit to the City. Nothing in this section shall preclude the City from negotiating terms or conditions that may vary from these requirements should that be necessary or required under the particular circumstances of the proposed lease transaction. 10 60A-14