TO: Mayor and Members of City Council
THRU: Karen M. McDonald, City Attorney
FROM: Kecia Parker, NCCP, Real Estate Manager
DATE: June 26, 2023
RE:
Title
Approve Proposal Bid and Lease from DK Enterprise Inc. to Lease Parking Spaces in the Franklin Street Parking Deck and Downtown Area
end
COUNCIL DISTRICT(S):
Council District(s)
2
b
Relationship To Strategic Plan:
Goal 2: Responsive City Government Supporting a Diverse and Viable Economy
Executive Summary:
Council approved moving forward with the NCGS provided process to advertise an offer from DK Enterprise Inc. to lease 20 parking spaces for a 15-year term, with two 15 year options to renew at the April 24, 2023 City Council Meeting. Fifteen of the parking spaces were to be located in the Franklin Street Parking Deck, and five parking spaces would be located within a one block radius of the proposed Kress Lofts private development, to be located at 111 Maxwell Street. The proposed offer was advertised in the Fayetteville Observer on May 8, 2023 with bids being accepted until May 18, 2023. No upset bids were submitted.
Background:
DK Enterprise Inc. is the owner of 111 Maxwell Street and proposes to develop this property as residential lofts/condominiums. Related to this private development, DK Enterprise Inc. submitted a long-term offer to lease 20 parking spaces from the City. Fifteen of the parking spaces would be located in the Franklin Street Parking Deck, and five parking spaces would be located within a one block radius of 111 Maxwell Street. The term of the lease will be 15 years, with two 15 year options to renew. The offer included an “Automatic Extension of Term” clause that would automatically extend the lease for five years at the conclusion of the first three 15 year terms, unless either party notifies, in writing, the other of the party’s intent to terminate no later than 60 days prior to the end of the third 15-year term.
The offer stated that DK Enterprise Inc. would not have the right to sublet or assign the lease in whole or in part without prior written consent by the City.
The City would be responsible for the maintenance and repair of the parking areas and will provide access to the parking spaces 24 hours a day, 365 days a year.
As City-owned property, under NCGS 106A-272, the City can lease or rent parking spaces for such terms and conditions as the Council may determine, as long as the term is 10 years or less. Any lease longer than 10 years must be treated in the same manner as a sale of real property. This means the City was limited to bids, negotiated offer plus upset bids, or public auction. For the Kress Lofts parking lease, the only option available was the negotiated offer with an upset bid process. This process has been followed and the proposed offer was advertised per NCGS 160A-269. On April 24, 2023 City Council agreed to move forward with the process. DK Enterprise Inc. deposited a check in the amount of $30,000.00 with the City of Fayetteville. The proposed bid was advertised as required in the Fayetteville Observer on May 8, 2023 with a ten day upset period. No upset bids were submitted. The Lessee will pay $50.00 per parking space per month as dictated by the fee schedule which will be reevaluated annually. At this stage the City Council can approve or deny moving forward with the lease and the signing of the Resolution.
Issues/Analysis:
No known issues
Budget Impact:
The revenues from the proposed offer would be accounted for in the Parking Fund.
The rent in the lease will be collected at an initial monthly rate per parking space of $50.00 per month beginning 30 days after the certificate of occupancy for the loft project is granted. The rent may be further adjusted annually and shall be based upon, but shall not exceed, the then current rate charged by the City in other City-owned parking lots as dictated by the City’s fee schedule.
Options:
1. Accept the proposed bid and approve the lease agreement allowing the City Manager to execute the necessary documents.
2. Do not accept the proposed bid and decline the proposed lease.
Recommended Action:
Staff recommends that City Council move to accept the proposed bid and approve the lease agreement allowing the City Manager to execute the necessary documents on behalf of the City.
Attachments:
Resolution
Proposed Lease