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14 <br /> • MEMORANDUM <br /> DATE: May 1, 1996 <br /> TO: Mayor and Councilmembers <br /> FROM: Michael Mornson, City Manager <br /> ITEM: CLOSING APACHE WELLS AND ENTERING INTO A <br /> NEW LEASE FOR SAV II <br /> As you are aware, the City has been negotiating with First Bank over the past <br /> several months on terminating the Apache Wells lease. Current annual cost of <br /> Apache Wells' lease is $51,264 for 4,023 square feet. The lease term is <br /> through July 31, 1999 (approximately 3 years, 2 months). <br /> The City has also been talking to First Bank about a new lease for SAV H by <br /> the Tires Plus building. The current cost for SAV H is about $73,330 for 8,500 <br /> • square feet. Our position with First Bank has been that the City will not sign a <br /> new lease on SAV II unless they terminate the Apache Wells lease. <br /> The following is a comparison of the current SAV II cost vs entering into a new <br /> lease at the Tires Plus building. In addition, I have included an estimated cost <br /> of new construction, based on research Don Perry has done. <br /> Current SAV II Proposed Lease <br /> $73,000 9,000 square feet at $9.00 a foot <br /> $81,000 plus $19,000 in taxes, <br /> maintenance, insurance, etc. <br /> $100,000 or $27,000 more a year than the <br /> current lease <br /> New Construction <br /> 9,000 at 75 = $675,000 <br /> Land cost = $500,000 <br /> $1,175,000 <br /> 10 year annual bond cost $190,000 <br /> Maximum annual amount we can afford, <br /> • based on previous profits $125,000 <br /> Annual lease cost of Tires Plus $100,000 <br />