- November 18, 2024
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The city of Palm Coast is running short on time to determine what its home address will be after its lease in City Marketplace ends in October.
The complex’s landlord is demanding a rent increase which would leave the city paying about 57% more than it pays now, and the city’s planned City Hall is only about 60% into the design phase and won’t be open until fall 2015.
“You’re talking about a $140,000 increase in rent in one year for us,” City Manager Jim Landon said during a City Council workshop May 27. “You can’t do that without having an increase in your millage rate. … That is a very large hit for the general fund.”
The city’s annual rent at City Marketplace is about $20,000 per month, or $240,000 per year. The owner’s proposal — $17 per square foot — would bring the city’s rent to about $378,000 per year.
“I’m not very comfortable with $17 a foot,” Palm Coast Mayor Jon Netts said. “I’m not comfortable with that number at all. That’s first-class, premier space.”
At this point, Administration Coordinator Beau Falgout said, the city can either remain in City Marketplace, perhaps using less space there to reduce cost, or it can move elsewhere.
The city’s City Marketplace home is 22,221 square feet at about $10.80 per square foot, Falgout said.
City staff already approached John Clark Bills — owner of John C. Bills Properties, the company that owns City Marketplace — and asked for a six-month term at its current rate and the option to go month-to-month afterward. Bills came back with the $17 per square foot offer.
The city returned to Bills on May 19 with an offer to pay 10% more than its current lease for a one year term at $22,000 per month, and Bills responded May 22 by offering the city five options, only the first two of which would be remotely feasible.
The first option offered was one year at $13.50 per square foot, plus all interior, heating and air conditioning costs. City officials cited regular maintenance issues and problems with bathroom plumbing, elevators and air conditioning as a reason to avoid that one.
The second option was a one-year lease at $17 per square foot.
The remaining three options were: five years at $12 per square foot with 4% annual increases; 20 years starting at $15 per square foot with 4% annual increases, and city ownership at the end of the 20-year term; or a 20-year lease on a new space in City Marketplace that would start at $18 per square foot with 4% annual increases and also result in city ownership of the property after 20 years.
Landon said the lease purchase deals would violate the city charter.
But the city has other options, Falgout said.
The city could vacate the third floor at City Marketplace and lease just 11,334 square feet at the $17 rate, then look for another 3,000 feet of space elsewhere in the Palm Coast Parkway corridor, where there are multiple options. The city could also use space in other city facilities, like Water Treatment Plant No. 3 and the city’s main fire station, he said.
That option would cost about $233,266 per year, including the cost of the additional space.
Or, he said, the city could vacate City Marketplace and move into the former Daytona Beach News-Journal building on State Road 100, where the owner has offered to lease out the 9,800 square-foot space on a short-term lease for $9 per square foot.
The city would also need to rent up to 4,800 feet of space in three units at the Winn-Dixie Plaza on State Road 100 — where space has been offered at $16.87 per square foot — and use other city facilities to make that option work, Falgout said.
That option, including rent in all facilities, would cost a total of $188,300 if the city takes an early move-in option and moves before August 1. Otherwise, it would cost $233,036.
“If City Council decides to look at those two options,” Netts said, “The question is: Which is easier, which is more efficient, which is more user-friendly?”
Staff recommended that the city finalize a one-year lease with Bills for the bottom floor of City Marketplace for $17 per square foot or less, and opt for an agreement to use the old News-Journal building if it can’t work something out with Bills.
Staff will come back to the City Council with a lease for consideration by the June 10 City Council Workshop, Falgout said.
