Council adopts lease policy for town

Priority is for non-profits and to cover more costs

By Mark Reaman

An official town policy on how Crested Butte should lease its property in the future was approved through resolution by the Town Council January 17 with no discussion.

While no major change will come into place immediately, the policy wants organizations renting town spaces to “at a minimum, cover the expenses incurred by the town to operate and perform annual maintenance for each location.”

That will likely mean an increase in rent and expenses for most current town tenants. The policy states that a “ramp up” period should be provided for the first three years for current non-profit organizations leasing from the town. There will be no rent increase in 2017, and modest increases in 2018 and 2019 “until lease rates reach $2 to $6 per square foot per year, depending on the location and whether or not utilities are paid by the town.”

The policy makes it clear the town prefers to lease its space to non-profits at a discount from the market rate. If no non-profit wants a space, the town is willing to sign a three-year lease with for-profit groups, as opposed to five-year leases with non-profits.

The policy indicates that as part of the lease, the tenant will understand the difference between the town’s lease rate and the market rate to make sure both sides are cognizant of the subsidy being provided by the town.

Tenants of municipally owned property “shall not be permitted to sublet the properties.”

Town manager Dara MacDonald described the policy as solidifying “housekeeping” measures.

The town currently has 26 unique tenants in 14 different locations. Of the 26, 16 do not have a current, signed lease in place. That is what started the conversation earlier this winter.

In a memo to the council from town manager MacDonald, it is clear the rents are all over the board. “Lease rates vary as do expectations for responsibility for payment of utilities and repairs and maintenance. Lease rates vary from $0 to $7,200 per year,” the memo states. “The town pays the utilities for most of the properties that are rented out. The town pays an estimated $17,250 annually for utility expenses… for which the town is not reimbursed.”

The town also incurs expenses for things like snow removal and landscaping. The memo states that the town invested $90,200 in its rental properties in 2016 for everything from boilers to paint. The 2017 budget has $74,000 in capital projects for rental spaces. The town collects about $35,600 annually from the tenants.

“The proposed resolution establishes a policy around the leasing of public property to provide staff with direction in negotiating leases now and in the future,” the memo explains. “A lease spells out the obligations of the tenant and landlord including expectations for insurance and maintenance.”

While the council made it clear last month they do not want to “shock” current tenants with sudden rent increases, it is apparent they are ready to make the renting of town property much more formal than it is currently. And that will likely mean an increase in rent.