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Staff Recommendation To accommodate the License Center's increasing space needs, it is recommended that the City negotiate with representatives of the Lexington Shopping Center to acquire an additional 1,000 square feet of space. Among the options identified above, it will allow the License Center to address its space needs in relatively quick fashion. The additional 1,000 square feet will address the License Center's space needs for the next 3-5 years. It is also recommended that City Staff conduct a feasibility study to consider bringing the License Center back onto the City Hall campus or other city-owned property, for purposes of addressing the License Center's long-term space needs. Expansion Costs Within the 2006 License Center Budget, $20,000 was set aside to accommodate the renovation and equipping of the additional $1,000 square feet. An additional $15,000 was also set aside for added rent and utility charges. The costs for expansion will be more than offset by anticipated increase in revenues, including healthy increases in passport and vehicle dealership licensing fees. For 2006, the net from License Center operations available to support other City programs and services is expected to be $180,000 inclusive of the costs of expansion and related costs. This is an increase of $10,000 or 6% from the previous year. It is anticipated that at least $180,000 in surplus funds will be available each year for the next 3 years - the duration of the proposed new lease. The License Center has available reserves to finance the expansion costs in 2005. Anticipated revenue increases in 2006 would replenish any reserves that were expended. Final Comments One option that was not discussed above is the "Do Nothing" option. Certainly the License Center could continue to work within the existing lease space. The likely impacts would be added crowding in employee workspace and customer waiting areas, and increased customer wait times. Over time, this would prohibit us from expanding our customer base and eventually would restrict future surplus monies. With added customer wait times, it may also encourage our customers to seek out other Deputy Registrar offices. Over the past few months, we have been in discussions with representatives of the Lexington Shopping Center. They are prepared to lease the License Center an additional 1,000 square feet almost immediately, subject to further negotiations. If this option proves to be the most desirable, it would be in the City's best interest to secure this lease space sooner rather than later to prevent any other tenants from taking the space. The new lease and expansion plan would require Council approval. We're prepared to present this information to the Council at the next available meeting. 3