CB council to revisit rental policy for local nonprofits

HCCA pushes back on tripling rent over three years

By Mark Reaman

How much rent to charge nonprofit organizations that use space owned by the town of Crested Butte will be reexamined by the town council later this year. The decision comes after hearing concerns from representatives of High Country Conservation Advocates (HCCA) which was faced with an increase in rent this year under a 2022 council policy that starts the process of collecting rents closer to the market rate.

The council last year agreed to begin charging higher rents to those groups renting town property for offices and opening up the spaces to all nonprofits in a lottery if needed. Many of the tenants did not have active leases at the time and many rents were substantially discounted. HCCA, for instance, has had offices in the Depot for almost 25 years and has been paying less than $1 a square foot per month, or about $6,000 annually, with a 1% rate yearly increase through 2028. The town sent HCCA a notice on March 1, 2023 informing the nonprofit that the lease was being terminated at the end of year five of the 10-year lease and if other organizations showed interest in the space, there would be a lottery to see which organization could use it. According to the notice, the lease terms would also include a substantial increase in rent; in the case of HCCA, the rent would more than triple over three years, going from about $6,000 to more than $21,000 annually. New leases would be for five years. 

HCCA is one of about 20 renters of town property, and while there are special carve-outs with lease terms for some groups (e.g., the Nordic Center and Center for the Arts), other organizations are experiencing the same situation as HCCA. There are 26 town-owned rental spaces and 19 tenants. Town manager Dara MacDonald said of the six groups currently looking at new leases, three—the CB Land Trust, RMBL and the Crested Butte Fire Protection District—have signed the new five-year leases. HCCA, the Wildflower Festival and Snowsports Foundation have not yet done so.

“We are looking at a tripling of our rent in three years and that’s quite a bit to absorb over three years,” HCCA executive director Chad Reich told the council at the May 1 meeting. “I would ask that if the rent is going to rise that much, it do so over a 10-year period instead of three years. Give us a longer time to absorb the jump.”

Longtime HCCA board member Sue Navy said she was shocked by the new rental terms and how it was conveyed to the group that had partnered with the town for decades. “We have been in that office about 25 years and seeing a ‘termination of lease’ notice was a shock,” she explained. “Then hearing we might have to go into a lottery and might lose the space was extremely stressful. Ultimately, we were the only ones who applied for the space so that was lucky.”

Navy pointed out that earlier in the council meeting during a work session over the Facilities Use Plan, council had talked about the importance of the many nonprofits in town and praised their value to the community. “I would suggest you revisit the resolution that deals with this new policy. Like it says in the Community Compass, don’t be afraid to try new things, but if it doesn’t work, learn from it and adjust. Take another look and help the nonprofits that provide incredible service to the town,” she suggested. She also proposed that a nonprofit organization in a town space that has been a good tenant and is up to date with rent not be given a termination notice or be left to secure their space via a lottery every few years.

In answer to Mayor Ian Billick’s question about HCCA’s budget, Reich explained that their overall budget is about $300,000, so the rent increase would be about 5% of the budget. Billick suggested that council move ahead with the proposed lease with the rent increase, but engage in a “rich” conversation about adjusting the policy after the Facilities Use Plan is completed later this summer.

“We originally changed the policy to try and address the maintenance gap,” explained councilmember Chris Haver. “We were having to take care of the buildings and it was getting expensive, so we made the decision to try to close the gap of what was being paid and what we were putting in to maintain the spaces. The costs of maintaining the spaces continue to grow so the idea is that the money from the rent increase goes back to those needs.”

MacDonald reminded the council that they had instructed staff to increase rental rates to reflect the market but try to keep them below what was available on the open market for nonprofits. She said that free market rents are about $5 per square foot per month and the new increase would get to about $3 per square foot per month in the three years. She said the council had talked about increasing the funds in the town grant process so that if a nonprofit was having a hard time with rent, it could request a subsidy.

“Can nonprofits survive if they have to pay rents closer to the market rate?” asked councilmember Mallika Magner.

“It’s tough. We made a tough decision, but we needed to do it given the increased maintenance costs,” said councilmember Jason MacMillan.

“As everything in Crested Butte gets more expensive, what is the impact in the vitality of town if nonprofits can’t afford to be here,” Magner asked.

“I would be happy to discuss the full implications,” said councilmember Gabi Prochaska. “It is a big increase for a nonprofit. The HCCA increase is about 250%. I’m proud the town supports nonprofits.”

“It’s an interesting question. Do we increase the grant program to help address the issue?” asked Haver.

“It is fair to say the town supports a lot of nonprofits,” said Billick. “We can relook at how we support them after the Facilities Use Master Plan approval this summer so we should revisit this in 2023. It is a rich conversation.”

The council will look at approving the specific HCCA lease at the May 15 meeting with the idea it will revisit the overall policy sometime later this year.

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