HomeMy WebLinkAboutA001 - Council Action Form dated May 13, 2025ITEM #:21
DATE:05-13-25
DEPT:PW
SUBJECT:APPROVAL OF A NEW TWO-YEAR LEASE AGREEMENT FOR
WELCH LOT T IN CAMPUSTOWN
COUNCIL ACTION FORM
BACKGROUND:
The City of Ames has leased property at 207 Welch Avenue to provide public parking in Campustown,
known as Welch Lot T. The current lease expires on May 31, 2025. Under this lease, the City pays an
annual rent of $16,950 and reimburses two-thirds (2/3rds) of the annual real estate taxes assessed on the
land. The leased lot includes 28 parking spaces, 4 of which are reserved for the owner at a reduced rate.
On April 22, 2025, Staff provided a report regarding the history of Welch Lot T and presented City
Council with options to move forward (see Welch Lot T Lease – Previous CAF ). The City Council
selected Option 2: to pursue a two-year lease extension under the current financial terms, while
also increasing parking rates at Welch Lot T to reduce the annual operating deficit. The revised
rates—$1.50 per hour for metered stalls and $80 per month for reserved stalls—will be
implemented administratively by updating the Official Parking Meter Map per Municipal Code
Section 18.4(1).
Per the Council's direction, Legal staff has drafted a new two-year lease agreement that maintains the
existing rent and tax reimbursement structure. The property owner has signed copies of the lease and
returned them to the City. The lease document New Two Year Lease – Welch Lot T is attached for the
Council's review and approval.
ALTERNATIVES:
1. Approve the two-year lease agreement with Green Book LLC under the current financial terms,
effective June 1, 2025, through May 31, 2027, and direct staff to implement the rate increases for
Welch Lot T only by administratively updating the parking meter map.
2. Do not approve the lease agreement and allow the current lease to expire, removing Welch Lot T
from the public parking inventory.
3. Refer this item back to staff for further negotiation or revision.
CITY MANAGER'S RECOMMENDED ACTION:
Entering into a two-year lease extension for Welch Lot T aligns with the preferences expressed by
Campustown businesses and provides uninterrupted parking access in the area. This short-term
agreement also allows time for the City to evaluate parking rates and develop a long-term
strategy to support the financial health of the Parking Fund. Therefore, it is the recommendation of
the City Manager that the City Council adopt Alternative No. 1, as shown above.
ATTACHMENT(S):
Welch Lot T Lease - Previous CAF.pdf
New Two Year Lease - Welch Lot T
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ITEM #: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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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
THIS LEASE AGREEMENT is made and entered into effective the 1st day of June,
2025, 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:
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,
1. The term of this lease shall be for a period of two (2) years, commencing on June
1, 2025, and terminating on May 31, 2027.
2. The Lessee agrees to pay to the Lessor for the use of said premises herein mentioned
the following: Lessee shall pay to Lessor monthly installments in the amount of $1,412.50 per
month. The first rental payment shall be due on June 1, 2025, and shall continue until this lease is
terminated.
3. Lessee shall be entitled to possession on the first day of the term of this lease.
4. Lessee covenants and agrees to use and to occupy the leased premises only for a
paved municipal parking lot.
5. Lessor covenants that its estate in said premises is fee simple absolute and that the
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.
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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.
6. All real estate taxes levied or assessed by lawful authority (but reasonably
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 land-value portion of the leased premises. The parties agree, for the purposes of this lease,
that the property leased by Lessee is 2/3rd of the square footage of the total parcel and Lessee shall
be responsible for reimbursing to Lessor 2/3 of the property taxes attributable to the land-only
portion of the tax bill during the term of this Lease.
7. Special assessments shall be timely paid in full by the Lessor and Lessee shall have
no obligation to pay any portion of special assessments.
8. Except as to any negligence of the Lessor, and to the extent allowed by Iowa law,
Lessee shall protect, indemnify and save 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.
9. This lease shall terminate upon expiration of the demised 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. Lessee shall be obligated to make monthly rental payments to Lessor
until this lease terminates.
10. Lessee may cause parking meters and/or other forms of parking control apparatus
to be installed. Such parking control apparatus shall be removed by Lessee at Lessee’s expense
upon termination of this lease.
11. Lessee agrees to reserve up to a maximum of four (4) parking spaces on the leased
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 charged by the City at the rate of $36.75
per space per month, and the City shall be entitled to said rental income for the duration of this
lease.
12. Notices shall be given to the respective parties hereto at the respective addresses as
follows:
Green Book, LLC City Clerk
707 5th Street, Ste 201 City of Ames, Iowa
Ames IA 50010 515 Clark Ave.
Ames, IA 50010
unless either party notifies the other, in writing, of a different address.
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13. Each and every covenant and agreement herein contained shall extend to and be
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 int erest shall
be the surviving joint tenant.
IN WITNESS WHEREOF, the parties have hereunto set their hands and signatures the
day and year first above written.
GREEN BOOK, LLC CITY OF AMES, IOWA
By: By:
Douglas G. Pyle, Member/Manager John A. Haila, Mayor
ATTESTED TO:
Renee Hall, City Clerk
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STATE OF IOWA )
)ss:
COUNTY OF STORY )
This instrument was acknowledged before me on ___________________, 2025, by
Douglas G. Pyle as Member/Manager of Green Book, LLC.
Notary Public in and for the State of Iowa
STATE OF IOWA )
)ss:
COUNTY OF STORY )
This instrument was acknowledged before me on ___________________, 2025, by John
A. Haila and Renee Hall, as Mayor and City Clerk, respectively, of the City of Ames, Iowa.
Notary Public in and for the State of Iowa
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