DEPARTMENT: Center City Development and Operations Department
DEPARTMENT HEAD: John Jacks
COUNCIL DISTRICTS IMPACTED: 1
SUBJECT:
Amending the River Walk Lease Agreements with Macrode Holdings, LLC. d/b/a Tiendas Del Rio, MeGusta Fine Cigar Co. d/b/a Spirit of San Antonio, and Silversmith Inc.
SUMMARY:
This ordinance authorizes amending the lease agreements between the City of San Antonio and Macrode Holdings, LLC. d/b/a Tiendas Del Rio, MeGusta Fine Cigar Co. d/b/a Spirit of San Antonio, and Silversmith Inc. to extend lease terms through December 31, 2021.
BACKGROUND INFORMATION:
Ordinances 2006-11-30-1353 and 2006-12-14-1435 authorized lease agreements for indoor retail space under the Commerce Street Bridge with Pakal Jewelry LLC (business subsequently changed name to Macrode Holdings, LLC.) d/b/a Tiendas Del Rio (Tiendas), MeGusta Fine Cigar Co. d/b/a Spirit of San Antonio (Spirit of SA), and Silversmith Inc. (Silversmith). These lease agreements were for five-years and included one five-year renewal, which will expire on December 31, 2016.
ISSUE:
This ordinance will authorize amending the lease agreements to extend the terms through December 31, 2021. The amendments will also authorize a 1.5% rate increase in Year 1 of the extension period, a market rate adjustment in Year 2, and 2.5% annual rate increases in Years 3-5. In addition, the amendments establish minimum operating hours and a $50.00 late payment fee. Approval of this ordinance is consistent with the City’s policy of leasing City-owned property in support of downtown economic development.
ALTERNATIVES:
The City may elect not to amend and extend the agreements, which would result in the lessees’ occupancy becoming at will or terminating.
FISCAL IMPACT:
The amendments authorize a 1.5% rate increase in Year 1 of the extension period, followed by a market rate adjustment in Year 2. In Years 3-5 rates will increase 2.5% annually. The total amount to be received in Year 1 is shown below:
|
Lessee |
Lease Year 1 |
Monthly Total Due |
Annual Total Due |
|
Tiendas |
01/01/17 - 12/31/17 |
$7,131.06 |
$85,572.72 |
|
Spirit of SA |
01/01/17 - 12/31/17 |
4,625.36 |
55,504.32 |
|
Silversmith |
01/01/17 - 12/31/17 |
2,481.27 |
29,775.24 |
|
Total |
$14,237.69 |
$170,852.28 |
All revenue received will be deposited into CDBG Funds.
RECOMMENDATION:
Staff recommends approval of amending the River Walk Lease Agreements between the City of San Antonio and Macrode Holdings, LLC. d/b/a Tiendas Del Rio, MeGusta Fine Cigar Co. d/b/a Spirit of San Antonio, and Silversmith Inc. to extend lease terms through December 31, 2021.