>>> GOOD AFTERNOON,
EVERYONE.
THANK YOU FOR JOINING US TODAY.
THIS IS THE FINANCE AND
NEIGHBORHOODS COMMITTEE.
IT'S 2:00 P.M.
FRIDAY, MARCH
22ND.
AND WE'RE HAPPY WE'RE MOVING
FORWARD WITH JUST ONE AGENDA
ITEM TODAY.
SO OUR REGULARLY SCHEDULED
COMMITTEE MEETING ON MARCH 27TH
HAS BEEN CANCELED.
HENCE WE'RE HAVING IT TODAY, AND
WE'RE GOING TO HAVE OUR NEXT
MEETING ON APRIL 10TH.
SO THANK YOU AGAIN.
WE HAVE TWO PEOPLE SIGNED UP FOR
PUBLIC COMMENT.
AND THEN I'M GOING TO ASK MY
PARKS FRIENDS TO JOIN ME AT THE
TABLE.
DAVID HANES AND ALEX ZIMMERMAN,
YOU TWO ARE UP.
>> COUNCILMAN BAGSHAW, THE CITY
COUNCIL NEEDS TO REJECT THIS
SHADY DEAL TO HUSTLE TAXPAYER
MONEY PROPPING UP ARTIFICIALLY
INFLATED RENT.
THE PARKS AND RECREATION
DEPARTMENT DOESN'T NEED MORE
EMPLOYEES SITTING DOWN ON THE
JOB DISTRACTED BY RUMBLING, HORN
HONKING TRAINS.
WE DON'T NEED CONSTRUCT DONORS
TIED TO PRESIDENT TRUMP TO ABUSE
TAX DOLLARS.
WHILE THE SAME GOVERNMENT
SQUANDERS TAXES TO BUY MORE
VOTES.
CITY COUNCIL MUST REJECT THIS
DEAL BECAUSE IT FURTHER DRIVES
INFLATED COST OF LIVING.
DONORS LAUGHING AT THEIR
ARTIFICIALLY INFLATED CAPITAL
GAINS RIPPING OFF PARKS AND
RECREATION'S BUDGET.
PERHAPS WE SHOULD INVESTIGATE
CITY COUNCIL LUCRATIVE
RETIREMENT FAVORS FROM THEIR
WORK FINANCING RICH PEOPLE
RIPPING OFF THE CITY EVERY
MONTH.
COLLECTING OF RENT.
WE NEED PARKS AND REC TO STOP
IGNORING THE TRASH.
WE DON'T NEED TO GIVE PARKS ASK
REC A WATERFRONT INTERRUPTED BY
COAL AND GAS TRAIN VIEW WHILE
GIVING CHARITY TO MARTIN SELIG
BECAUSE HE CHOSE A BAD LOCATION
WHERE NO ONE WANTS TO RENT
BECAUSE IT CAUSES PTSD BY TOXIC,
RUMBLING, HORN HONKING TRAINS
THAT ECHO THROUGHOUT THE
BUILDING.
NOISE POLLUTED THROUGHOUT HIS
BUILDINGS CAUSES FRUSTRATION AND
IT DERAILS PRODUCTIVITY.
HE SHOULD NOISE ABATE THE
BUILDING.
AND REMEMBER, ED MURRAY STILL
HAS INFLUENCE ON THE BUDGET
BECAUSE HIS HUSBAND CONTROLS IT.
>> MR. HANES.
MR. ZIMMERMAN.
>> THANK YOU, MA'AM.
HI, MY SWEET SUGAR FUR YOUR.
I'M ALEX ZIMMERMAN.
I WANT TO SPEAK OF THIS AGENDA.
MAKE ME A LITTLE BIT COMPLICATE
WHEN WE HAVE SOMETHING AGREEMENT
WITH PRIVATE CORPORATION.
BECAUSE MY EXPERIENCE FOR 30
PLUS YEARS I LIVE IN SEATTLE A
GOVERNMENT LIKE A BUSINESSMAN
SHOW ME SOMETHING SITUATION
ABOUT THIS WHAT CORRUPTION OF
WORK?
BECAUSE WORK CORRUPTION WE'RE
GOING TO BE TALKING ABOUT ONE
APPLE OR TWO APPLE, WE'RE
TALKING ABOUT CORRUPT ALL THREE.
WE HAVE A CORRUPT GOVERNMENT WHO
STAY IN CONTROL BY CRIMINALS.
EXACTLY WHAT'S HAPPENED.
SO A PRIVATE CORPORATION, ALWAYS
OVERPAYMENT.
WE'RE TALKING ABOUT THE
DOLLARS.
WE DON'T HAVE SOMEBODY WHO CAN
INVESTIGATE IT.
VERY INTERESTING SITUATION.
RIGHT NOW WE HAVE A VERY UNIQUE
SITUATION IN SEATTLE IN COUNCIL
CHAMBER.
MANY COUNCIL ARE PURE CRIMINAL,
YOU KNOW WHAT THIS MEAN.
AND COURT RECOGNIZES.
THIS VERY STRANGE TO ME RIGHT
NOW.
I DON'T UNDERSTAND, FOR EXAMPLE,
WHY IN FIRST PLACE THIS COUNCIL
SIT HERE.
COUNCIL JOHNSON GO TO WORK TO BE
TEN DAY FROM NOW.
BY LAW HE CANNOT DOING THIS
BECAUSE HE HAS PERSONAL
INTERESTS.
BY LAW YOU CANNOT GO IN WORKING
FOR ONE YEAR.
CONTRAST WITH WHAT WE HAVE IN
SEATTLE WITH PRY VAULT
CORPORATION IS A CRIMINAL
CONTRACT.
SO MY PROPOSITION VERY SIMPLE.
WE ESTABLISH OUR OFFICE WHO CAN
DOING THIS.
I COMPLAIN TO SEATTLE, OLYMPIA,
COUNTY MANY TIME.
NOTHING HAPPENED.
NOBODY LISTEN TO ME.
THIS DEGREE OF GOVERNMENT
CORRUPTION, PARDON, GOVERNMENT
CRIMINOLOGY WORKING RIGHT NOW.
SO STAND UP AMERICA RIGHT NOW.
CLEANSE THIS DIRTY CHAMBER.
THANK YOU VERY MUCH.
>> ENLIGHTENING AS ALWAYS.
I'D LIKE TO INVITE OUR PARKS
FRIENDS UP TO TALK ABOUT THE
OFFICE SPACE AND LEASE.
>> THANK YOU.
>> AND ALLISON, IF YOU'D READ IN
COUNCIL BILL 119485.
>> ITEM NUMBER ONE, 119485.
ORDINANCE AUTHORIZING THE
SUPERINTENDENT OF PARKS AND
RECREATION TO EXECUTE A LEASE
AGREEMENT BETWEEN THE CITY OF
SEATTLE AND THE SELIG HOLDING
COMPANY.
>> THANK YOU.
AND WOULD YOU LIKE TO START OFF
WITH INTRODUSHGS, MISS TRACY?
>> YES.
TRACY.
>> MICHELLE FIN BEGAN, PARKS AND
RECREATION.
>> HILLARY HAMILTON, FINANCE AND
ADMINISTRATIVE SERVICES.
>> THANK YOU ALL FOR BEING HERE.
SO TRACY, YOU'RE GOING TO GIVE
AUS LITTLE OVERVIEW OF THIS AND
THEN MICHELLE, MAYBE YOU CAN
TALK ABOUT HOW SEVERAL MONTHS
AGO WE WERE GOING TO BE IN A
DIFFERENT BUILDING AND WHY WE'RE
DOING THIS NOW.
>> VERY BRIEFLY HAPPY TO HAVE
THE LEGISLATION IN FRONT OF US
TO OPERATIONALIZE A NEW LEASE
WHICH SEEMS LIKE IT'S TAKEN MANY
MONTHS TO BRING TO FRUITION.
HAPPY TO HAVE THAT HERE IN FRONT
OF YOU TODAY AND I'LL HAVE THEM
GO THROUGH THE DETAILS OF THAT
LEASE AGREEMENT.
>> OKAY, GOOD.
>> GREAT.
WE'RE HAPPY TO PRESENT THIS
LEASE FOR YOUR CONSIDERATION
TODAY.
I WANT TO THANK OUR COLLEAGUES
AT THE FINANCE AND MRLTTIVE
SERVICES DIVISION OR DEPARTMENT
WHO HAVE HELPED US FIND A NEW
SITE, NEGOTIATE THIS LEASE, AND
DO SOME PRELIMINARY SPACE
PLANNING.
MOST OF OUR ADMINISTRATIVE STAFF
ARE IN THREE LOCATIONS, OUR
DENNY HEADQUARTERS, OUR WEST
BRIDGE FACILITY BY MARGINAL WAY,
AND THEN THIS SUBJECT GROUP
WHICH IS IN THE RDA BUILDING IN
THE INTERNATIONAL DISTRICT AND
CHINATOWN.
SO WE HAVE A FEW OTHER STAFF AT
COMMUNITY CENTERS ACROSS THE
CITY.
BUT MOST ARE THERE.
AND IN THIS PARTICULAR CASE
WE'VE HAD STAFF IN THE RDA BUILD
SXG THE INTERNATIONAL DISTRICT,
CHINATOWN FOR 20 YEARS.
ABOUT 113 STAFF ARE DOWN THERE.
AND THAT LEASE EXPIRES AT THE
END OF THIS YEAR.
SO WE'VE BEEN ANALYZING WHETHER
TO RENEW THIS LEASE, WHICH IS
WHY IT'S WITHIN TAKING SOME
TIME.
UNDERSTANDING OUR OPTIONS,
VISITING PROPERTIES, COMPARING
RENTAL PRICES, AND OTHER
FACTORS.
IN THE COURSE OF DOING THIS, WE
CONCLUDED THE BEST OPTION WAS TO
MOVE BOTH FROM AN OPERATIONS AND
COST PERSPECTIVE.
SO WE'VE FOUND A LOCATION THAT'S
ACTUALLY VERY CLOSE COMPARED TO
WHERE OUR CURRENT SITE IS BY
DENNY PARK.
AND WE'RE GOING TO BE ABLE TO,
WITH YOUR APPROVAL, WE'LL BE
ABLE TO MOVE THE STAFF DOWN
THERE, AS WELL AS MOVE A GROUP
OF STAFFING OUT OF THE GREEN
LAKE COMMUNITY CENTER WHICH IS A
GOAL OF OURS AS WELL.
SO THIS TEAM OF SPR STAFF, FAS
STAFF, COMMERCIAL REAL E
BROKERS, AND ATTORNEYS
NEGOTIATED THE LEASE THAT WE'RE
PRESENTING TODAY.
WE BELIEVE IT'S A BENEFICIAL
TRANSACTION FOR THETY AND I'D
LIKE TO ASK MAX AND HILLARY TO
GIVE YOU THE DETAILS.
>> I'M JUST GLANCING THROUGH THE
CHARTS.
MAYBE YOU CAN TALK A LITTLE BIT
ABOUT YOUR EFFORTS TO RENEW THE
LEASE DOWN IN NEXT -- IT'S OFF
OF AIRPORT WAY, RIGHT?
WHERE YOU ARE NOW.
AND WHY THAT WAS NOT SUCCESSFUL
AND WHY YOU'RE RECOMMENDING
THIS.
>> HAPPY TO.
THANK YOU SO MUCH, COUNCIL
MEMBERS, FOR HAVING US TODAY.
I WANT TO ECHO THE DEPUTY
SUPERINTENDENT'S THANKS TO FAS,
THE REAL ESTATE TEAM LED BY
HILLARY HAMILTON, AND THE TEAM
LED BY DOUGH ALLBERG.
TO ANSWER YOUR QUESTION, COUNCIL
MEMBER BAGSHAW, WE REACHED OUT
TO OUR LANDLORD AND WE STARTED A
SITE SEARCH FOR THE PURPOSES OF
HAVING A STRONG NEGOTIATING
POSITION AND STRATEGY IN OUR
BACK POCKETS.
I THINK WE WERE ASSUMING WE'D
STAY IN THE RDA BUILDING, QUITE
FRANKLY.
WORKING THROUGH BROKERS WE
REACHED OUT TO THE LANDLORD AND
HEARD NOTHING FOR AN EXTREMELY
LONG TIME.
AS WE WERE LOOKING FOR OTHER
OPTIONS, AND TO UNDERSTAND THE
MARKET AND WHAT WE SHOULD BE
NEGOTIATING FROM, IT BECAME
CLEAR THROUGHOUT THE PROCESS WE
WERE GOING TO NEED TO LOOK
SERIOUSLY AT MOVING.
THE LANDLORD WEIGHED IN LATE IN
THE PROCESS WITH A KIND OF
CASUAL EMAIL ABOUT BEING WILLING
TO ENTERTAIN A RENEWAL.
IT WAS EXTREMELY, EXTREMELY
CONSTRAINED.
FIRST OF ALL, THEY SOLD THE A
PARCEL WHERE PARKING WAS.
SECONDLY, THEY HAD BEEN KIND OF
FLIRTING WITH POSSIBLY SELLING
THE BUILDING AS WELL.
SO THEY SAY THEY WOULD ONLY
RENEW FOR A SHORT PERIOD OF
TIME.
THIRD, THEY WERE GOING TO
INCREASE THE RENT DRAMATICALLY
TO MARKET RENT WHICH WOULD HAVE
BEEN COMPETITIVE WITH SOME OF
THE SITES WE'D SEEN THAT WERE
WAY BETTER.
AND FOURTH, THEY WERE NOT GOING
TO BE WILLING TO ENTERTAIN A
RENEWAL.
SO WE KNEW WE WERE GOING TO HAVE
TO MOVE ANYWAY, IN THE FUTURE,
PROBABLY IN A HIGHER RENT
SITUATION.
AND SO JUST PREEFLY LY BRIEFLY,
IN
THE PROCESS OF DOING THAT WE
DEVELOPED OUR REQUIREMENT TO
TELL THE BROKER WHAT IS WE'RE
LOOKING FOR.
WE LOOKED AT NOT ONLY THE NUMBER
OF STAFF IN OUR CURRENT
BUILDING, BUT WE HAD STAFF IN
OTHER FACILITIES THAT WERE
INTENDED TO BE TEMPORARY, AND WE
NEED TO BRING THEM INTO A MORE,
KIND OF, UPDATED OFFICE
ENVIRONMENT.
SO WE HAD A STAFF NEED OF
APPROXIMATELY 130.
IT WAS THE RDA STAFF PLUS A
COUPLE OTHER FOLKS AND A LITTLE
BIT OF STAFF GROWTH.
AND WE USED THAT TO START
LOOKING AT THE MARKET.
WE WANTED TO BE CLOSE TO
DOWNTOWN.
WE WANTED TO BE CLOSE TO CITY
HALL AND SMT, BUT ALSO CLOSE TO
PARK HEADQUARTERS.
WE WERE COGNIZANT OF NOT DRIVING
BACK AND FORTH THROUGH DOWNTOWN
A LOT OF FOLKS TRAVEL FROM THE
INTERNATIONAL DISTRICT TO PARKS
HEADQUARTERS.
IT'S USUALLY A GOOD HALF HOUR
ONE WAY.
EVERY TIME THERE'S A MEETING,
THERE'S ANOTHER HOUR OF TRAVEL
TIME.
WE ALSO WANTED TO HAVE A LOT OF
STAFF INVOLVEMENT IN THIS
PROCESS.
WE'RE VERY DELIBERATE TO MAKE
SURE FOLKS AFFECTED BY A
POTENTIAL MOVE HAD A VOICE IN
WHAT THIS IS GOING TO LOOK LIKE
AND HOW CAN A SPACE BE OPTIMALLY
DESIGNED SO IT COULD BE
INTENTIONAL.
AFTER 20 YEARS IN THE BUILDING
THE SPACE EVOLVED ORGANICALLY.
IT WASN'T NECESSARILY OPTIMAL
NOR THE WAY THE WORK FLOW IS
HAPPENING NOWADAYS.
SO I THINK THAT'S PROBABLY GOOD
FOR THE REQUIREMENT PART.
>> SO I'M INTERESTED WHEN YOU
SAY NEED FLEET PARKING AND GOOD
TRANSIT OPTIONS, I KNOW ABOUT
THE GOOD TRANSIT OPTIONS, D BUS
GOES RIGHT BY THERE.
FOR THE FLEET SPACE, HOW MUCH
SPACE DID YOU NEED AND DOES THIS
BUILDING ACCOMMODATE WHAT YOUR
NEEDS ARE?
>> IT DOES, THANKS, COUNCIL
MEMBER BAGSHAW.
THIS BUILDING WOULD GIVE US UP
TO 28 PARKING STALLS, MORE THAN
WHAT WE NEED.
WE'RE GOING TO BE LOOK AT
REDUCING OUR FLEET POSSIBLY.
AND ALSO A NICE THING ABOUT THIS
BUILDING IS WE'RE GOING TO HAVE
ELECTRIC CHARGING STATIONS
INCLUDED IN PART OF THE
IMPROVEMENT BUILDOUT IN THE
GARAGE.
AND SECURED BICYCLE STORAGE.
SO IT'S KIND OF A LITTLE BIT
MORE MODERATE IN MULTIPLE MODES
OF TRANSPORTATION.
WE'RE GOING TO HAVE SHOWERS FOR
BICYCLE COMMUTERS IN OUR SPACE.
SO IT'S GOING TO BE REALLY
HELPFUL FOR LOTS OF DIFFERENT
MODES, AND THE MONORAIL.
>> AS YOU'RE TALKING ABOUT
ELECTRIC CHARGING STATIONS,
THAT'S GREAT.
REMEMBER ELECTRICITY FOR THOSE
OF US RIDING E-BIKES.
IT'S NICE TO HAVE ACCESS THERE.
>> IN TERMS OF THE SUMMARY AND
FISCAL NOTE, THE TENANT
IMPROVEMENTS YOU JUST DESCRIBED,
IS THAT INCLUDED IN THE SUMMARY
AND FISCAL NOTE.
>> YES, IT IS.
>> CAN YOU POINT ME TO IT SO I
CAN GET TO IT QUICKLY?
>> AND ACTUALLY, COUNCIL MEMBER
GONZALEZ, THE TENANT
IMPROVEMENTS ARE PAID FOR BY THE
LANDLORD.
THERE'S NOT A DOLLAR FIGURE IN
THE NOTE.
WHAT'S IN THE NOTE IS THE BUDGET
FOR BIEG FURNITURE, EQUIPMENT,
THE I T CONNECTIONS.
THE LANDLORD'S COST, THE DESIGN
CONSTRUCTION OF THE SPACE, IS
GOING TO BE BORNE BY THE
LANDLORD.
>> I APPRECIATE THAT.
SOMETIMES I MISS THINGS, SO WHEN
I HEARD YOU TALK ABOUT TENANT
IMPROVEMENTS, I THOUGHT MAYBE I
DIDN'T SEE IT IN THE SUMMARY AND
FISCAL NOTE AND WANTED TO GIVE
YOU THE OPPORTUNITY TO POINT IT
OUT.
I APPRECIATE THE ADDITION
INFORMATION THAT THAT IS A COST
THAT'S GOING TO BE PICKED UP BY
THE LANDLORD WHICH IS A SAVINGS
TO THE CITY.
>> EXACTLY.
APPRECIATE IT.
>> OKAY.
PARKS REACHED OUT TO FINANCE
ADMINISTRATIVE SERVICES TO
PROVIDE ASSISTANCE FIRST OF ALL
WITH SEARCHING FOR A SITE AS WE
DO WITH TYPICALLY LARGER SPACES.
THIS WAS ABOUT 28,000 SQUARE
FEET AS MAX INDICATED.
WE DID BRING ON A BROKERAGE FIRM
THAT WORKS SPECIFICALLY ON
TENANT REPRESENTATION.
THEIR GOAL IS TO REPRESENT THE
TENANT AND GET THE BEST DEAL FOR
THE TENANT.
THEY STARTED OUT BY SEARCHING
PRETTY MUCH EVERYTHING FROM
FREMONT TO GEORGETOWN, AND
LOOKING VERY BROADLY AT CLASS A
AND CLASS B OFFICE SPACE SO THAT
WE DIDN'T MISS ANYTHING.
WHEN YOU GET INTO CLASS A, THE
CLOSER YOU GET TO DOWNTOWN IT'S
GETTING ALMOST IMPOSSIBLE TO
FIND A FLOOR THAT'S AVAILABLE IN
A BUILDING.
LUCKILY WITH PARKS, THEIR GOAL
WASN'T REALLY TO WITH DOWNTOWN
BUT, AS MAX SAID, TO BE CLOSE TO
HEAD QUARTERS, AND GOOD ACCESS
TO TRANSPORTATION.
A LOT OF FOLKS ARE TRAVELING
AROUND THE CITY ALL DAY EVERYDAY
TO PARKS AND SO ON.
THE CHART IN THE PRESENTATION
SHOWS SOME OF THE FINAL
CONTENDERS THAT WE LOOKED AT
WITH PARKS.
A TOUR WAS DONE.
THEY GO MOSTLY NORTH AND SOUTH
DIRECTLY OF DOWNTOWN.
THERE WAS ONE BUILDING IN
SOUTHEAST SEATTLE.
WE TOOK A HARD LOOK AT THAT.
UNFORTUNATELY THE SPACE
AVAILABLE WAS PREDOMINANTLY IN
THE BASEMENT AND WASN'T VERY
GOOD WORK SPACE.
SO AFTER SOME TRIALS AND
TRIBULATIONS, LANDING ON THE
ELLIOT BAY OFFICE PARK WAS A
GOOD SOLUTION.
IT IS COMPARABLE IN PRICE AND
ALL OF THE OTHER NEEDS, THE
CRITERIA.
$33 A SQUARE FOOT IS THE RENTAL
RATE.
MAX WILL TALK NEXT A LITTLE BIT
ABOUT HOW THAT ESCALATES OVER
TIME.
BUT I THINK IT'S VERY
COMPETITIVE.
>> GOOD.
THAT WAS A QUESTION I WAS GOING
TO ASK YOU.
AND THANK YOU FOR BRINGING THAT
UP, THE $33 A SQUARE FOOT.
IT'S SOMEWHAT BREATHTAKING IN
THIS MARKET, BUT IF THAT'S
COMPETITIVE, THAT'S WHAT WE
NEEDED TO KNOW.
>> AS YOU CAN SEE, THE BUILDINGS
THAT MOSTLY MET THE NEEDS HERE
RANGED IN THE $32 TO $38 RANGE.
IF YOU WERE DOWNTOWN WE'RE
PUSHING $50 NOW IN THE $40s AND
$50 PER SQUARE FOOT.
>> YEAH.
THANK YOU, HILLARY.
ALL RIGHT, MAX, WHAT ELSE DO YOU
HAVE FOR US?
>> THE NEXT SLIDE IS SHOWING THE
LOCATION OF 300 ELLIOT.
IT'S REALLY CLOSE TO PARKS
HEADQUARTERS.
IT'S FAIRLY CONVENIENTLY LOCATED
TO DOWNTOWN A LITTLE BIT OF A
DIFFERENT LOCATION.
BUT IT HELPS FOLKS NOT HAVE TO
CROSS UP AND DOWN THROUGH
DOWNTOWN GOING TO THE
HEADQUARTERS BUILDING.
SO THAT'S ACTUALLY A REALLY BIG
PLUS.
>> WHAT IS IT?
ABOUT A HALF MILE?
>> I THINK IT'S A LITTLE MORE
THAN A HALF MILE, BUT IT'S RIGHT
AROUND JUST UNDER A MILE.
AND THEN THE KEY TERMS OF THE
LEASE, REALLY QUICKLY, IT'S
28,000 SQUARE FEET.
A TINY BIT BIGGER THAN OUR
CURRENT SPACE, BUT THIS IS A
DELIBERATE ATTEMPT TO CREATE AN
OFFICE SPACE THAT'S REALLY GOING
TO WORK FOR THE DEPARTMENT.
IT GIVES US A LITTLE BIT MORE
FLEXIBILITY.
IT'S GOING TO ACCOMMODATE ALL OF
OUR OFFICE NEEDS AND ALSO WITH A
KIND OF A STRATEGIC EYE TO
FUTURE NEEDS.
WE HAVE ONE FEATURE OF THIS
LEASE WHICH WAS THE RESULT OF A
LOT OF NEGOTIATION WAS THERE'S
GOING TO BE ADDITIONAL GROWTH
SPACE.
WITHIN SIX YEARS OF BEGINNING
THE LEASE WE WILL ADD 4,000
ADDITIONAL SQUARE FEET, SO
MAKING A TOTAL OF 32,000.
THE RENTAL RATE, AS HILLARY
SAID, IS $33 A SQUARE FOOT TO
START.
IT'S VERY MUCH WHAT ALL THE
OTHER PROPERTIES WERE ASKING
FOR.
IT'S WITH A $1 A YEAR RENTAL
INCREASE.
AND THAT'S PRETTY TYPICAL AS
WELL.
>> PER FOOT?
>> PER SQUARE FOOT, RIGHT.
THE RENT GOES UP EVERY YEAR
WHICH IS STANDARD.
THE OPERATING EXPENSES, THIS
LEASE AND PRETTY MUCH EVERY
OTHER LEASE WE LOOKED AT IS
WHAT'S CALLED FULLY SERVICE
WHICH MEANS THE OPERATING
EXPENSES ARE INCLUDED IN THE
FIRST YEAR'S RENT.
THEN THE TENANT PAYS DELTA.
SO FOR EXAMPLE, IN THE FIRST
YEAR WHICH IS 2020, THERE WILL
BE ZERO DOLLARS FOR OPERATING
EXPENSES.
THE SECOND YEAR WE'LL PAY WHAT
THE INCREMENTAL --
>> WHAT ARE THE OPERATING
EXPENSES YOU'RE GOING TO PAY?
>> UTILITIES, CLEANING
MAINTENANCE, EVERYTHING THAT HAS
TO BE DONE TO KEEP A BUILDING
WORKING.
TAXES, INSURANCE.
SO PRETTY MUCH EVERYTHING.
SOME THINGS ARE EXCLUDED LIKE
MAJOR CAPITAL COSTS TO THE
EXTERIOR OF THE BUILD RG NOT
CONSIDERED OPERATING COSTS, BUT
THE COST TO KEEP A BUILDING
FUNCTONING, THERE'S ABOUT 15
ITEMS THAT ARE TRADITIONAL
OPERATING COSTS INCLUDING THOSE
I MENTIONED.
>> WILL YOU DESCRIBE HOW THAT
COMPARES TO TRIPLE NET.
>> YEAH, ABSOLUTELY.
I MEAN, TRIPLE NET'S KIND OF A
REALLY SIMPLE LEASE STRUCTURE
BECAUSE YOU PAY A FIXED RENT
PLUS ALL YOUR OPERATING COSTS,
WHATEVER THEY MAY BE.
SO THE PROBLEM WITH THAT IS YOU
DON'T KNOW FROM ONE YEAR TO THE
NEXT WHAT THE TOTAL COST IS
GOING TO BE.
BUT THE RENTAL RATE IS ALWAYS,
IT'S WHATEVER THE LEASE SAYS.
AND USUALLY IT GOES UP JUST LIKE
THIS CASE.
THE DIFFERENCE REALLY WITH THE
BASE YEAR MODEL IS THAT THE BULK
OF THE OPERATING COSTS ARE BUILT
INTO THE RENT.
IT'S, I MEAN, AT THE END OF THE
DAY IT'S VERY VERY SIMILAR.
EITHER WAY YOU HAVE TO LOOK AT
THE OPERATING COSTS, FIGURE OUT
WHAT THE COSTS WERE, FIGURE OUT
WHAT PORTION IS YOURS.
THE ONLY DIFFERENCE IS THEN YOU
HAVE TO BACK OUT THE BASE YEAR
PORTION.
FRANKLY, IF YOU'RE A LANDLORD
IT'S HARDER.
TRIPLE NET IS EASY BECAUSE YOU
PASS THE COSTS TO THE TENANT.
THAT SEEMS TO BE THE TREND IN
THE OFFICE MARKET.
>> JUST SO I AM CLEAR, THE
MARKET RENTAL RATE IF WE GO FOR
THE FULL 25 YEARS, THAT'S 15
PLUS THE TWO FIVE-YEAR OPTIONS
T RENEW, TAKES US UP TO $58 A
SQUARE FOOT.
>> THAT'S -- I DIDN'T, I DON'T
KNOW THE MATH, BUT THAT'S
PROBABLY RIGHT.
A DOLLAR A YEAR.
>> A BUCK A YEAR, THAT'S 25
YEARS.
>> YEP, YOU'RE RIGHT.
>> ADD 25 TO THREE.
HIGHER MATH.
>> THAT'S EXACTLY RIGHT.
>> WHAT'S THE PROJECTION 25
YEARS OUT?
DO YOU THINK THIS IS REASONABLE?
>> WE DO, ABSOLUTELY.
AND I MEAN, REAL ESTATE IS
DIFFICULT BECAUSE NOBODY KNOWS
WHAT'S GOING TO HAPPEN IN THE
MARKET.
BUT ONE THING WE CAN SAY,
TRENDING DECADE AFTER DECADE AS
REAL ESTATE PRICES GO UP.
SO WE ARE VERY VERY CONFIDENT
THAT THIS IS A GOOD RATE NOW AND
IT'S GOING TO TREND AT AN
ACCEPTABLE RATE.
IT'S PROBABLY MUCH BETTER THAN
SEEKING TO FIND A NEW LEASE FROM
SCRATCH FIVE OR TEN YEARS FROM
NOW WHEN RENTS COULD BE MUCH
HIGHER.
>> THAT'S A GOOD ANSWER.
>> ONE THING ABOUT A REGULAR
ESCALATOR, LIKE A DOLLAR A YEAR,
IS THAT WHEN YOU GET A RENEWAL,
YOU'RE ALREADY CLOSER TO THE
MARKET.
IF YOU WERE FLAT FOR FIVE YEARS,
YOU'RE GOING HAVE A JOLT WHEN IT
COMES TIME TO LOOK AT RENEWING.
AND IT MAY WELL BE, I DON'T HAVE
THE LEASE WITH ME, BUT IT'S NOT
UNUSUAL THAT A LEASE WILL RESET
TO MARKET DURING A RENEWAL.
>> AND THAT'S HERE.
>> YOU'RE MUCH CLOSER TO THAT
BECAUSE YOU'VE HAD THE ANNUAL
ESCALATORS.
>> OKAY.
AT THE FIRST COMMITTEE HEARING
ON THIS, YOU DESCRIBED THE
BUILDING.
I KNOW WHERE IT IS.
AND YOU'RE TAKING THE FIRST
FLOOR, IS THAT RIGHT?
>> THAT'S RIGHT.
>> THE ENTIRE FIRST FLOOR?
>> THE ENTIRE FIRST FLOOR.
THERE IS A SHARED CONFERENCE
ROOM USED BY OTHER TENANTS,
INCLUDING THE CITY.
WE DON'T HAVE TO PAY FOR IT.
IT'S A REALLY GREAT SITUATION
BECAUSE WE CAN HAVE PUBLIC
MEETINGS THERE.
WE CAN RESERVE IT 30 DAYS OR
MORE IN ADVANCE.
WE DON'T PAY FOR IT BUT WE GET
TO USE IT PRETTY MUCH WHENEVER
WE WANT.
OTHER TENANTS WILL ALSO USE
THAT.
>> WHO ELSE IS IN THE BUILDING
NOW?
>> I DON'T KNOW YET.
BUT THEY'RE NEGOTIATING LEASES
WITH OTHER PARTIES.
>> WE TALKED ABOUT IT BEING
CLOSE TO PUBLIC TRANSIT.
BIKE STORAGE, CONFERENCE SPACE,
MARKET REPRESENT TERM.
WHAT ELSE DO WE NEED TO KNOW?
>> I DON'T THINK WE NEED TO KNOW
ANYTHING ELSE.
WE FEEL GOOD ABOUT THIS LEASE.
IT'S A GOOD OPPORTUNITY.
>> YOU'RE ALL SMILING, THAT'S
NICE.
ANY REASONS WHY WE SHOULDN'T DO
IT?
>> FRANKLY AND CONFIDENTLY, NO.
I THINK IT'S A GOOD DECISION FOR
THE CITY.
>> DO YOU HAVE ANY QUESTIONS?
>> I DON'T.
>> OKAY.
IF WE DON'T HAVE FURTHER
QUESTIONS, I KNOW YOU'D LIKE US
TO VOTE ON THIS TODAY.
AND I'M GOING TO RECOMMEND THAT
WE DO.
SO I WOULD MOVE TO PASS COUNCIL
BILL 119485 WHICH WILL HAVE OUR
SUPERINTENDENT AUTHORIZE THE
LEASE AGREEMENT.
>> I SECOND.
>> TRACY, DID YOU HAVE SOMETHING
TO ADD?
>> WE WERE PLANNING TO BRING IT
TO FULL COUNCIL ON MONDAY OR
WAIT THE WEEK SINCE WE'VE MISSED
THE CUTOFF.
>> WE MISSED THE CUTOFF, THAT'S
FINE.
>> WE COULD MOVE -- LET'S VOTE.
>> AND WE WILL ADDRESS WHETHER
OR NOT THE RULES SHOULD BE
SUSPENDED.
>> THANK YOU VERY MUCH.
ALL THOSE IN FAVOR SAY AYE.
THERE'S NOBODY HERE TO OPPOSE OR
ABSTAIN.
WHAT IS YOUR TIMELINE?
>> WE WOULD LOVE TO HAVE THIS
APPROVED AS SOON AS POSSIBLE.
WE ARE ACTIVELY WORKING WITH THE
LANDLORD ON DESIGN RIGHT NOW AND
HAVE A SHORT TIMELINE TO DESIGN
AND BUILD THE SPACE.
>> COUNCIL MEMBER BAGSHAW, I
HAVE NO OBJECTION TO SUSPEND THE
RULES TO HAVE THIS CONSIDERED
THIS MONDAY IF YOU ARE SO
INCLUDED TO MAKE THAT MOTION.
>> THANK YOU VERY MUCH.
I APPRECIATE THAT.
AND IF YOU FEEL COMFORTABLE WITH
IT, THEN I WILL MOVE TO SUSPEND
THE RULES.
THAT WOULD ALLOW US TO RECOMMEND
SINCE IT WAS UNANIMOUS ALLOW US
TO RECOMMEND THIS GO FORWARD
THIS MONDAY THE 25TH.
>> SECOND.
>> THOSE IN FAVOR SAY AYE.
>> AYE.
>> THANK YOU, WE WILL DO THAT.
AND I THINK THE ONLY TIME WE
CAN'T SUSPEND THE RULES IS IF
THERE'S A DIVIDED REPORT,
CORRECT?
>> THAT'S MY UNDERSTANDING.
>> VERY GOOD.
IS THERE ANYTHING ELSE FOR THE
GOOD OF THE ORDER.
ALL RIGHT.
THIS MEETING'S ADJOURNED.
THANK YOU ALL.
>> THANK YOU SO MUCH, COUNCIL
MEMBERS.