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REQUEST FOR COUNCIL ACTION Date: 9/10/12 Item No.: 7.g Department Approval City Manager Approval Item Description: Approve a 4-Year Lease Extension for the Roseville License Center B ACKGROUND 1 Since 1999, the Roseville License Center has been located in the Lexington Shopping Center just north of 2 the City Hall Main Campus. The current lease includes 3,332 square feet and expires on January 31, 2013. 3 4 Over the past few months, City Staff has been in negotiations with the shopping center to extend the lease 5 for an additional term. With these negotiations, it was recognized that although it is in the City’s best long- 6 term interest to have the License Center in a City-owned facility, it is unlikely that such a facility will be 7 available in the next several years. There does not appear to be any community momentum to build new 8 facilities beyond the current construction of a new fire station and planned park improvements. 9 10 Based on transaction volume projections, it is recommended that the License Center retain the same amount 11 of leased space. However, in the event the City loses the ability to issue passports – currently a mild 12 concern, the City would have the opportunity to terminate the leased area for that service. 13 14 Based on the negotiations, the Lexington Shopping Center has agreed to the following lease terms: 15 16 % YearRate / S.F. Increase 2013 $17.523.0 % 2014 18.053.0 % 2015 18.593.0 % 2016 19.143.0 % 17 As shown in the above table, the annual lease rate includes a 3.0% annual escalator. The previous lease had 18 a 3.5% escalator. 19 20 It should be noted that the rates shown above include what is known as common area maintenance (CAM) 21 charges. This is an important distinction when considering comparable lease rates in the marketplace which 22 typically do not include CAM charges. For 2013, the proposed lease rate for the License Center without 23 CAM charges would be about $9 per square foot. 24 25 Page 1 of 2