AGENDA #4d
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Proposed Lease of a Building on Homestead Road to Carolina Sport Art
DATE: January 13, 2003
This memorandum discusses management options for a 6,000 square foot building at 2200 Homestead Road that was transferred to the Town on December 23, 2002.
The attached Resolution A would authorize the Manager to execute a two-year lease agreement with Carolina Sport Art, Inc. that would allow the existing gymnastics school to continue to operate in the building until the end of 2004.
Alternatively, the attached Resolution B would direct the Manager to execute a 1-year lease agreement with Carolina Sport Art and to assume use of the building for Parks and Recreation purposes at the end of the lease period.
The Homestead Road building was constructed as a private gymnasium in 1974. Carolina Sport Art has operated in the building for approximately 22 years.
On June 25, 2001, the Council approved a Special Use Permit application for the Vineyard Square development that included a requirement that the developer deed a 14.91 acre recreation area to the Town. The recreation area includes the 6,000 square foot building currently being used by Carolina Sport Art. Ownership of the land and building was transferred to the Town on December 23, 2002. We have allowed the gymnastics school to operate for the past three weeks under the rental terms the school had with the previous owners. In addition, we required that their insurance policies be modified on the date the building was transferred to name the Town as an additional insured.
OPTIONS FOR USE OF THE PROPERTY
We believe that there are two primary options for use of the building available to the Council.
Option 1: Lease of Property to Carolina Sport Art: North Carolina General Statute 160A-272 states that public property may be rented or leased by a municipality pursuant to a resolution of the Council authorizing the execution of the lease, adopted at a regular meeting, and upon 10 days’ public notice. We published such notice in the Chapel Hill News on January 1, 2003.
The proposed lease agreement would contain the following main points:
8. Non-Discrimination: In matters of employment, provision of services and contracting, Carolina Sport Art agrees to act without regard to race, color, sex, religion, age, national origin, affectional preference, or handicapped status.
Potential Benefits of Leasing the Property to Carolina Sport Art:
· Chapel Hill's only gymnastic school would continue to operate. The school has a full program including classes for all ages, summer camps, and a team. The school currently operates classes, one week summer camps, kindersport programs, and a travel team. The school also serves as a home base for the Chapel Hill High School gymnastics club. In total the school serves about 850 people per year. The owner of the school has told us that the school would likely have to close or relocate to another community if the lease is not extended.
· Needed capital repairs and renovations to the building could be financed by lease payments.
Potential Costs of Leasing the Property to Carolina Sport Art:
· The building would not be available for Town-sponsored programs.
· The Town would be responsible for making minor repairs not covered by the proposed capital repair fund.
Option 2: Use the Property for Town Parks and Recreation Programs: Under this option the Town would lease the building to Carolina Sport Art for one year in order to allow the school time to relocate. The Town could then use the building for its own programs.
The building could be suitable for Town operated gymnastics programs, dance, exercise, summer camps, and large meetings. With modifications the building could be used for other programs such as art classes.
Potential Benefits of Using the Building for Town Programs:
· The Town’s Parks and Recreation Master Plan identifies the need for multi-purpose space as one of the greatest needs of the Parks and Recreation Department. Please see the attached pages SF-2, 3-13, 4-8 and 4-9 of the Parks and Recreation Master Plan. In addition, the space could be used as a camp site without the need to rent from the schools or some other provider.
Potential Costs of Using the Building for Town Programs:
· The Town would likely lose a successful gymnastics program that is not duplicated anywhere in the area. Local gymnastics students would have to drive to Durham or other communities.
· The Town would lose at least $13,800 per year in lease payments and would have to identify another revenue source for capital and minor repairs.
· The Town would have to pay the costs of operating programs and outfitting the building for programs.
Budget Issues: If the Council agrees to lease the building to Carolina Sport Art, we would recommend placing the lease payments in a restricted account that would be used for capital maintenance and repair. Revenues should amount to about $28,000 at the end of the 2-year lease period.
We believe that the building and surrounding grounds require an immediate expenditure of about $18,000-20,000 to pay for an overhaul of the building that would include painting, replacement and extension of drainage improvements including some grading, stormwater improvements, replacement of doors and windows, increased ventilation, roof repair, replacement of some wood, and septic upgrades. In the future we anticipate the need to replace the siding, additional grounds improvements, and the addition of air conditioning. We would come back to the Council in the spring or early summer with recommendations for a preliminary renovation project and funding.
If the Council chooses to take over operation of the building we would prepare recommendations for its use and associated cost estimates as part of the FY 2003-04 budget process.
CONCLUSION
One of the greatest needs of the Town’s Parks and Recreation Department is for additional multi-purpose space. These needs have been identified in the Town’s Parks and Recreation Master Plan. The building is suitable for a number of parks and recreation uses.
However, one of the programs that would likely be scheduled in this building and for which there is a demonstrated demand, is a gymnastics program. As with soccer, there is a privately provided gymnastic program. We do not believe that there would be sufficient advantage to justify substituting this established program with one which the Town Parks and Recreation Department would need to develop and operate itself. In addition, we are concerned with the projected cost of providing needed repairs to this 28-year-old building. The potential lease revenue from the gymnastics school could help fund the necessary repairs to the building. Finally, the proposed two-year lease would allow a reconsideration of this question and the opportunity to take another course at the end of the lease period.
Manager’s Recommendation: That the Council adopt the attached Resolution A authorizing the Manager to execute a lease with Carolina Sport Art, Inc. for operation of a gymnastics school at 2200 Homestead Road from January 14, 2003 until December 31, 2004.
Resolution B would authorize the Manager to enter into a one-year lease with the school and then take over operation of the building at the end of the lease period. Budgeting for repair and programming of the building would be incorporated into the FY 2003-04 budget process. This agenda item would have to be removed from the consent agenda and considered as a regular agenda item if the Council desires to adopt Resolution B.
ATTACHMENTS
1. Sketch showing location of the building (p. 7).
2. Pages SF-2, 3-13, 4-8 and 4-9 of the Parks and Recreation Master Plan (p. 8).
RESOLUTION A
A RESOLUTION AUTHORIZING THE MANAGER TO EXECUTE A LEASE AGREEMENT FOR THE APPROXIMATELY 6,000 SQUARE FOOT BUILDING LOCATED AT 2200 HOMESTEAD ROAD FROM JANUARY 14, 2003 UNTIL DECEMBER 31, 2004 (2003-01-13/R-3a)
WHEREAS, Carolina Sport Art, Inc. currently operates a gymnastics school in a building owned by the Town of Chapel Hill; and
WHEREAS, the Town desires that the services of the gymnastic school continue to be offered to the citizens of Chapel Hill; and
WHEREAS, the Town has published a public notice of the Council’s intent to enter into a lease agreement with Carolina Sport Art, Inc.; and
WHEREAS, no other party has requested to lease said premises;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council authorizes the Manager to execute a lease agreement on behalf of the Town with Carolina Sport Art, Inc., or its successors in interest, for an approximately 6,000 square foot building at 2200 Homestead Road for the operation of a gymnastics school, said lease containing conditions substantially in the form presented by the Manager with his report on this matter on January 13, 2003, a copy of which shall be kept with the records of this meeting.
This the 13th day of January, 2003.
RESOLUTION B
A RESOLUTION AUTHORIZING THE MANAGER TO EXECUTE A ONE YEAR LEASE AGREEMENT FOR THE APPROXIMATELY 6,000 SQUARE FOOT BUILDING LOCATED AT 2200 HOMESTEAD ROAD AND PLAN FOR TOWN OPERATION OF THE FACILITY AFTER THE CONCLUSION OF THE LEASE PERIOD (2003-01-13/R-3b)
WHEREAS, Carolina Sport Art, Inc. currently operates a gymnastics school in a building owned by the Town of Chapel Hill; and
WHEREAS, the Town desires that the services of the gymnastic school continue to be offered to the citizens of Chapel Hill for the period of one year; and
WHEREAS, the Town has published a public notice of the Council’s intent to enter into a lease agreement with Carolina Sport Art, Inc.; and
WHEREAS, no other party has requested to lease said premises; and
WHEREAS, the Council desires that the Town use the building for Town programs after the one year lease period;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council authorizes the Manager to execute a lease agreement on behalf of the Town with Carolina Sport Art, Inc., or its successors in interest, for an approximately 6,000 square foot building at 2200 Homestead Road for the operation of a gymnastics school, said lease containing conditions substantially in the form presented by the Manager with his report on this matter on January 13, 2003, but for the period of only one year, a copy of which shall be kept with the records of this meeting.
BE IT FURTHER RESOLVED by the Council that the Manager is authorized to plan for Town use of the building after the conclusion of the one year lease period and to plan for the building’s use during the FY 2003-04 budget process.
This the 13th day of January, 2003.