David DeRose: Finding ‘market fair rent’
March 9, 2011
To the editor:
It's time we reflect on the history of the Moffat County Public Safety Center.
The facility was funded by a .75-percent sales tax that was county sales tax and a portion of the 1.5-percent county sales tax that is collected within the city limits and was tendered to the city before this election.
Moffat County voters and the city elected to make the change to establish this facility. The lease signed by the mayor and county commissioners states lease payments after 10 years will be based on fair market rent and the Craig Police Department has been there rent free for 10 years as the land was city property.
The police department occupies 2,258 square feet of space and there is about 9,000 square feet of common space, or 3,000 feet if you take the city as a 33-percent partner. That totals 5,258 square feet that we can agree is the city's share.
Let's explore fair market rent.
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You will find any commercial property owner in Craig would be happy to find a tenant that was paying $10 per foot per year. And if that was "triple net," where the tenant paid for taxes, insurance and all utilities, most property owners would be ecstatic.
If you raised that to $15 per foot to cover the technical items and connections the safety center offers, you would see an annual rent of $78,870.
With the city paying its pro rata share of utility costs based on square footage they occupy compared to the entire facility, we now have what most would consider fair market rent. This same concept also applies to the Colorado State Patrol.
I'm not saying the city should not contribute to this operation, but realize that without sales and property taxes all city residents pay, there would not be much funding left for the county.
In reality we are all paying for this facility already and the real issue is the transfer of our tax dollars from one fund that appears to be healthy to another that is not as solvent.
I have seen the city make some changes needed to protect funds to the extent of laying off staff that the downturn has deemed necessary. The same thing all business owners would do to secure the future of their business. I thank them for that.
I propose we let the real landlord of this facility, the Moffat County Sheriff's Office, and the tenants, the police department, and even the state patrol, negotiate these leases.
They realize the synergy anticipated by the elected officials who spent many late hours hashing out details of this facility.
I also say that I, as a taxpayer, am comfortable with a lease rate around $15 per foot per year and pro rata share of utility costs.
The city might elect to provide water, sewer and trash totally for their portion, but only if the police department were to reimburse other city departments affected.
It doesn't seem like rocket science to me, and I prefer this to the city having a new police department and the safety center losing revenue from this partnership.
By the way, this should be a 10-year lease with a rent adjustment every two years, which could be up or down. Just like real commercial leases.