HomeMy WebLinkAboutA028 - Lease Agreement for Welch Lot T in CampustownITEM #:35
DEPT:PW
April 22, 2025
Staff Report
LEASE AGREEMENT FOR WELCH LOT T IN CAMPUSTOWN
BACKGROUND:
The City leases property at 207 Welch Avenue in Campustown to serve as a municipal parking lot,
known as Welch Lot T. The current lease with the property owner, approved in 2022 (Resolution
No. 22-221), runs through May 31, 2025, with a fixed annual rent of $16,950. Under this
agreement, the City is also responsible for reimbursing the property owner for two-thirds of the
property taxes assessed to the land, estimated at $14,700 based on the 2023 valuation. The lot
includes 28 spaces, with four reserved for Pizza Pit at a reduced rate of $39.18 per space per month
(typically $50 per space per month). (see location map)
It should be noted that the lot has operated at a deficit in all but the first year of the lease
arrangement (FY 1993/94), with a total net loss of approximately $418,000. (see attached financial
history)
If the City of Ames wants to continue leasing Welch Lot T, notification must be given to the lessor,
Green Book LLC, at least 30 days before the lease expiration if it intends to renew; otherwise, the lease
will terminate. With this deadline approaching, staff is seeking direction from the City Council
regarding whether to renegotiate, terminate, or continue the agreement.
SUMMARY OF CURRENT AGREEMENT:
Lease Term: 3 years, starting June 1, 2019, with a 3-year extension option (this option was
exercised on May 10, 2022; see 2019 Lease Document).
Annual Rent: $15,900 (2019-2022), increasing 6.6% during the extension, which is $16,950
(2023-2025).
Expiration Date: May 31, 2025.
Termination Clause: Either party may terminate with 90 days' written notice.
Tax Responsibility: The City reimburses 2/3 of the real estate taxes on the leased land.
To extend the lease under current terms, the City must provide written notice at least 30 days
before expiration.
SUMMARY OF REVENUES AND EXPENSES:
The financial analysis of Welch Lot T over the available full fiscal years shows the following (this does
not include any City operational costs e.g., staff, meters, lot maintenance, etc.):
Total Revenue 1994-2024: $262,061.06
Total Expenses 1994-2024: $679,747.84
Net Cash Flow: ($417,686.78 deficit to the Parking Fund)
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Annual revenues, except for the first year, have never fully covered expenses, resulting in a
significant and ongoing deficit to the Parking Fund. While revenues have increased slightly in
recent years, they remain insufficient to offset rising costs for rent and property tax
reimbursement. (See attached annual data for details.)
FEEDBACK FROM CAMPUSTOWN BUSINESSES:
City staff collaborated with the Ames Alliance to gather input from local businesses regarding the
future of Welch Lot T. A survey was distributed to assess the importance of the lot for business patrons
and explore potential alternatives.
The survey asked businesses:
Whether Welch Lot T is a primary parking area for their customers or if they rely on other
parking options in Campustown (answer options: YES /NO).
The name of the business responding to ensure a representative sample of perspectives (answer
option: blank to type name).
The results of question 1 of the survey (from two responses) was split evenly YES (50%) and NO
(50%).
ISU INTERMODAL FACILITY AND METERED PARKING AVAILABILITY:
Separately, the City evaluated metered parking availability in the ISU Intermodal Facility, which
includes 44 standard metered stalls and 6 medical stalls—a total of 50 metered spaces. Based on 2025
rate of $1.50/hour rate, and assuming 10 hours per day, and 6 days per week, these stalls have a
maximum annual revenue potential of approximately $234,000.
Through March of the current fiscal year, actual revenue totaled $15,901.75, resulting in an estimated
average utilization rate of 9.1%. This suggests that ample metered capacity currently exists within
the Intermodal Facility to absorb some or all of the parking demand if Welch Lot T is removed
from the public inventory. However, demand does spike significantly during evenings, weekends, and
special events, such as ISU football games and Parents Weekend.
While this facility could potentially serve as a partial replacement if Welch Lot T is no longer
leased, it is located outside the core Campustown area and, therefore, probably will not be
perceived as satisfactory alternative to Lot T.
DISCUSSION WITH PROPERTY OWNER:
Staff spoke with the owner of Green Book LLC, who is the property owner where Welch Lot T is
located. The owner expressed a willingness to enter into a short-term, two-year lease extension under
the same terms. This approach would allow the City time to complete a broader evaluation of the City-
wide parking system and rates.
If the City were to pursue this interim extension, the annual deficit from this leased lot would be
approximately $25,000. Therefore, the Council could consider adjusting the rates specifically for
Welch Lot T to better align revenues with expenses. To achieve a break-even point for the lot,
estimated adjustments would be:
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Metered Parking Rate: Increase from $0.50/hour to approximately $1.50/hour
Reserved Stall Rate: Increase from $50/month to approximately $80/month
This strategy would provide time to evaluate the City's overall parking system while also addressing the
immediate financial imbalance at Welch Lot T.
OPTIONS:
OPTION 1: ENTER INTO A TWO-YEAR LEASE AT EXISTING TERMS
The City could pursue a short-term lease extension with Green Book LLC using the same terms as the
current agreement. This would provide time for a broader City-wide parking system and rate analysis.
It should be noted that the owner of Green Book LLC is agreeable to this option, and the City
would continue to be responsible for reimbursing 2/3 of the property taxes on the land.
OPTION 2: ENTER INTO TWO-YEAR LEASE AT EXISTING TERMS WITH INCREASED
RATES
The City could pursue a short-term lease extension with Green Book LLC using the same terms
as the current agreement. This would provide time for a broader City-wide parking system and
rate discussion. To reduce ongoing losses during this interim period, Council could also consider
adjusting rates specifically for Welch Lot T to approximately $1.50/hour for metered stalls and
$80/month for reserved stalls, which would bring the lot closer to a break-even condition.
OPTION 3: ALLOW THE LEASE TO EXPIRE AND PROMOTE THE USE OF THE
INTERMODAL METERED SPACES
The City could allow the Welch Lot T lease to expire and remove the lot from the public parking
inventory. In this case, users would be directed to available metered stalls at the Intermodal Facility,
where the rate is also $1.50/hour, as set by the ISU Parking Division. Current utilization of the
Intermodal metered spaces suggests excess capacity exists to absorb demand during most periods.
However, it should be noted that these parking stalls cost three times the City’s current rate of
$0.50/hour and may be perceived as less convenient than the Welch Lot T location.
This is the only option that would eliminate the City’s obligation to reimburse 2/3 of the property
taxes.
OPTION 4: NEGOTIATE A STATUS QUO NEW LONG-TERM LEASE
The City could negotiate a longer-term lease with Green Book LLC, likely structured as a three-year
agreement with a three-year renewal option, consistent with past practice. As part of this option, the
lease rate would likely be subject to annual adjustment based on the Consumer Price Index for All
Urban Consumers (CPI-U). The most recent three-year average CPI-U increase (2022–2024) is
a pproxima t ely 4.4% per year, reflecting recent inflation trends. Unless the City concurrently
adjusts parking rates to keep pace with rising lease and tax costs, this option would likely
continue the historical financial deficit experienced by the Parking Fund.
As with the current agreement, the City would remain responsible for reimbursing 2/3 of the property
taxes on the land.
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STAFF COMMENTS:
As staff has pointed out over the past few years, system-wide, the current rate structure for overtime and
illegal parking fines as well as parking space rentals barely generate sufficient revenue to cover the
costs associated with operating our parking system, let alone covering any needed improvements to the
deteriorating surface parking lots. In the past the City Council has been hesitant to implement the
necessary increases in rates to improve the long-term financial viability of the Parking Fund.
There continues to be an approximately $25,000 deficit each year when comparing the cost of the
Lot T lease and associated property taxes with the revenue generated on it. With the lease on Lot
T in Campustown ending shortly it is an appropriate time to determine if the City should
continue to extend the lease or not.
Of the four options listed above, the most conservative approach would be to proceed with a
short-term (two year) lease extension under the current terms as highlighted in Option 1. This
approach would: 1) avoid any immediate disruption to public parking in Campustown, 2)
maintain continuity of service for businesses and visitors in the area, and 3) provide sufficient
time for the City to reassess its long-term needs and financial strategies related to the parking
system (This reassessment will not be popular, but should be done to assure the solvency of the
Parking Fund).
ATTACHMENT(S):
Welch_Lot_T_-_Financial_History.pdf
Welch_Lot_T_Lease_-_Location_Map.pdf
Res_No._22-221_Approving_3_year_Lease_for_Welch_Parking_Lot_T.pdf
Land_Lease_for_Welch_Avenue_Parking_Lot_dated_June_1__2019.pdf
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Fiscal Year Expense Revenue Cashflow
1994 $5,439.47 $5,555.17 $115.70
1995 $16,744.00 $4,387.25 -$12,356.75
1996 $15,749.15 $5,825.79 -$9,923.36
1997 $15,939.42 $6,329.47 -$9,609.95
1998 $15,939.42 $6,571.26 -$9,368.16
1999 $16,765.84 $6,703.80 -$10,062.04
2000 $16,870.00 $7,125.18 -$9,744.82
2001 $17,182.00 $7,108.61 -$10,073.39
2002 $17,706.78 $7,100.80 -$10,605.98
2003 $23,608.48 $7,512.05 -$16,096.43
2004 $23,388.59 $7,874.29 -$15,514.30
2005 $23,467.62 $7,490.64 -$15,976.98
2006 $23,644.53 $8,370.58 -$15,273.95
2007 $23,637.34 $8,649.10 -$14,988.24
2008 $23,587.94 $8,551.56 -$15,036.38
2009 $23,908.54 $8,544.66 -$15,363.88
2010 $23,905.84 $8,385.08 -$15,520.76
2011 $25,430.34 $8,624.22 -$16,806.12
2012 $24,221.50 $9,681.35 -$14,540.15
2013 $24,729.88 $9,439.23 -$15,290.65
2014 $24,743.34 $9,417.11 -$15,326.23
2015 $25,065.88 $10,143.03 -$14,922.85
2016 $23,956.84 $10,038.57 -$13,918.27
2017 $23,444.10 $10,044.61 -$13,399.49
2018 $23,436.90 $9,450.46 -$13,986.44
2019 $23,509.94 $13,370.71 -$10,139.23
2020 $23,851.16 $9,476.61 -$14,374.55
2021 $22,991.00 $8,271.63 -$14,719.37
2022 $24,208.00 $9,999.90 -$14,208.10
2023 $31,104.00 $9,887.45 -$21,216.55
2024 $31,570.00 $12,130.89 -$19,439.11
Totals $679,747.84 $262,061.06 -$417,686.78
-$25,000
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WELCH LOT T
Expense Revenue Cashflow
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Welch Lot T Lease
Location Map
75 ft
Overview
Legend
Parcels
Road Centerlines
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RESOLUTION NO. 22-221
RESOLUTION APPROVING A THREE-YEAR LEASE AGREEMENT FOR
THE WELCH PARKING LOT T
FOR THE CITY OF AMES, IOWA
WHEREAS, on May 28, 2019, City Council approved a three-year extension to the Lease of the lot
located at 207 Welch Avenue (known as the Campustown Welch Avenue Parking Lot T), which is owned
by Green Book LLC (Pizza Pit); and,
WHEREAS, Welch Lot T contains 29 spaces, i ncluding ten rented and 19 metered spaces; and,
WHEREAS, the City receives revenue from this lot through the leasing of the rental spaces and from
the revenue from the meters; and,
WHEREAS, the Lease Agreement includes a provision for an additional three-year extension, at the
City’s option; and,
WHEREAS, if the City chooses to enter into this extension, the current rate of $15,900 per year will
increase by 6.6% to $16,950 f or each year of the additional three years; and,
WHEREAS, the lease rate that the Pizza Pit pays for its four reserved stalls will also increase by
6.6% from $36.75/space/month to $39.18, or $1,880 annual ly; and,
WHEREAS, the City will pay 63% of the taxes on the value of the land only, based on the most
current tax information, which equates to approximately 61.7% of the total annual property taxes that are
estimated to be $12,069 i n the first year of the Lease; and,
WHEREAS, the expense for the City’s portion of the taxes and annual lease rate is budgeted from
the Parking Fund; and,
WHEREAS, the Agreement allows either party to cancel this agreement with 90-day notice.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ames, Iowa, that the
three-year Lease Agreement for the Welch Parking Lot T at the rate of $16,950 per year, for three years, and
paying 63% of the annual property taxes, is hereby approved.
ADOPTED THIS 10th day of May, 2022.
____________________________________________________________________
Diane R. Voss, City Clerk John A. Haila, Mayor
Introduced by:Betcher
Seconded by:Corrieri
Voting aye:Beatty-Hansen, Betcher, Corrieri, Gartin, Junck, Rollins
Voting nay:None Absent:None
Resolution declared adopted and signed by the Mayor this 10th day of May, 2022.
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Instrument H: 2019-05749
Total Pages: 407/08/2019 09:09:16 AM
00 OTHER
8.
■Ill MAF WMi MIIIII
as shown on the attached plat.
The term of this lease shall be for a period of three (3) years, commencing on1.
June 1, 2019, and terminating on May 31, 2022.
The Lessee agrees to pay to the Lessor for the use of said premises herein mentioned2.
Lessee shall be entitled to possession on the first day of the term of this lease.3.
Lessee covenants and agrees to use and to occupy the leased premises only for a4.
paved municipal parking lot.
Lessor covenants that its estate in said premises is fee simple absolute and that the5.
the following: $15,900.00 per year, payable in monthly installments of $1,325.00 per month, the
first rent payment becoming due on the 1st day of June, 2019.
Recording Fee:
Stacie Herridge,
Lessee, on paying the rent herein provided and performing all agreements by the Lessee to be
performed as provided in this lease, shall and may peaceably have, hold and enjoy the premises
for the term of this lease free from molestation, eviction or disturbance by the Lessor or any other
person or legal entity whatsoever.
The south 60 feet of Lot 24, Block 3 of Auditor’s Plat of Blocks 3, 4, and 5
Beardshear’s Addition and Walter’s Subdivision to Ames, Iowa,
; 22.00
Recorder, Story County Iowa
THIS LEASE AGREEMENT is made and entered into effective the 1st day of June,
2019, by and between Green Book, LLC, hereinafter referred to as Lessor, and the City of Ames,
Iowa, a municipal corporation, hereinafter referred to as Lessee.
In consideration of the rents and agreements herein contained, Lessor does hereby lease to
Lessee and Lessee does lease from Lessor the following described real estate situated in Ames,
Story County, Iowa, to wit:
DO NOT WRITE IN THE SPACE ABOVE THIS LINE; RESERVED FOR RECORDER
Prepared by: Mark O. Lambert, City of Ames Legal Department, 515 Clark Ave., Ames, IA, 50010; 515-239-5146
Return document to: Ames City Clerk, 515 Clark Ave., Ames, IA, 50010
LAND LEASE
WELCH AVENUE PARKING LOT
8
Lessee may, at its option, cause this lease to be extended for an additional term of6.
All real estate taxes levied or assessed by lawful authority (but reasonably7.
8.Special assessments shall be timely paid in full by the Lessor.
9.Except as to any negligence of the Lessor, Lessee shall protect, indemnify and save
10.This lease shall terminate upon expiration of the demised term; or if the option
11.Lessee may cause parking meters and/or other forms of parking control apparatus
12.Lessee agrees to reserve up to a maximum of four (4) parking spaces on the leased
three (3) years at a rental amount six and six tenths percent (6.6%) greater than stated in paragraph
2 above, all other agreements, terms and conditions to remain the same, except as noted in
paragraph 12, below. The Lessee’s option to extend the lease as aforesaid shall be exercised by
enactment of a resolution of its city council to that effect and purpose. Written notice shall be
given to Lessor upon enactment of a resolution not less than thirty (30) days prior to expiration.
premises for the exclusive use of the business which occupies the building on the other portion of
this lot. The reservation of these parking spaces shall be at the rate of $36.75 per space per month,
with Lessee’s option to increase the rate by the same percentage as in paragraph 6 above, beginning
with approval of a three-year extension.
provided in paragraph 6 is exercised by Lessee, then this lease will terminate at the expiration of
the option term. Additionally, either party shall have the right to cause this lease to terminate at
any time upon ninety (90) days written notice to the other party.
to be installed. Such parking control apparatus shall be removed by Lessee at Lessee’s expense
upon termination of this lease.
harmless the Lessor from and against any and all loss, costs, damage and expenses occasioned by,
or arising out of, any accident or other occurrence causing or inflicting injury and/or damage to
any person or property, happening or done in, upon or about the leased premises, or due directly
or indirectly to the tenancy, use or occupancy thereof, or any part thereof by Lessee or any person
claiming through or under the Lessee.
Lessor shall have the right to mortgage all of its right, title and interest in said land at any
time without notice, subject to this lease.
preserving Lessor’s rights of appeal) against said real property shall be timely paid in full by
Lessor. Beginning with the taxes first due and payable after the effective date of this lease, Lessee
shall reimburse Lessor, upon being billed by Lessor, for the portion of the taxes attributable to the
assessed value of the land only which is leased to Lessee. The property leased by Lessee is 2/3rd
of the square footage of the total parcel.
9
Notices shall be given to the respective parties hereto at the respective addresses as
unless either party notifies the other, in writing, of a different address.
Each and every covenant and agreement herein contained shall extend to and be14.
GREEN BOOK, LLC CITY OF AMES, IOWA
f tr (
—
■■t
2 2A#
ATTESTED TO:
1 -
R .( (AAIO/O
Diane R. Voss, City Clerk
Approved as to Form:
By:
Mark O. Lambert, City Attorney
Attachment: Plat of Leased Area
Green Book, LLC
707 5th St., Suite 201
Ames, IA 50010
binding upon the respective successors, heirs, administrators, executors and assigns of the parties
hereto; except that if any part of this lease is held in joint tenancy, the successor in interest shall
be the surviving joint tenant.
. ] /
City Clerk
City of Ames, Iowa
515 Clark Ave.
Ames, IA 50010
ger
""' ■ Ye"
By:_____ I —________
John A. Haila, Mayor
13.
follows:
IN WITNESS WHEREOF, the parties have hereunto set their hands and signatures the
day and year first above written.
By:Douglas G. Pyle, Member/Manager ad5M •
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STATE OF IOWA
COUNTY OF STORY
Notary Public in and for the State of Iowa
STATE OF IOWA
COUNTY OF STORY
JJL, 2019, and that John A. Haila and Diane R. Voss
acknowledged the execution of the instrument to be their voluntary act and deed and the voluntary
act and deed of the corporation, by it volunt;executed.
(llu LCweA,A‘ <6 - My Sommjssion ExpiresOwblic in and for the State of IowaNotary
On this A0 day of June, 2019, before me, a Notary Public in and for the State of Iowa,
personally appeared John A. Haila and Diane R. Voss, to me personally known, and who, being
by me duly sworn, did say that they are the Mayor and City Clerk, respectively, of the City of
Ames, Iowa; that the seal affixed to the foregoing instrument is the corporate seal of the
corporation, and that the instrument was signed and sealed on behalf of the corporation, by
)
)ss:
)
)
)ss:
)
. RACHEL KNUTSEN
7 Commission Number 813260
This instrument was acknowledged before me on this 2% day of June, 2019, by Douglas
G. Pyle as Member/Manager of Green Book, LLC.
• AMY L. COLWELL
7 Commission Number 812138
authority of its City Council, as contained in Resolution No. I -303 adopted by the City
Council on the 251 day of
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