Title
Resolution to Approve Fuller Park Parking Lot Land Lease with the University of Michigan (8 Votes Required)
Memorandum
Attached for your review is a resolution to approve a land lease agreement with the University of Michigan to lease the three parking lots at Fuller Park.
The existing lease expires on August 31, 2024. The term of the new lease agreement is proposed to be for five years, with an option to renew the lease administratively for two additional two-year periods. The proposed new lease includes a few changes from the expiring one:
• Due to the University switching Lot A back to yellow permit parking, the City and the University have agreed that the annual lease payment will be reduced by 64% which matches the increase agreed upon in the last agreement.
• The City will reserve more public use for Lot B (3 weeks prior Memorial Day versus 2 weeks in the prior lease) to accommodate opening Fuller pool earlier. The City and University have agreed to increase the rental rate of Lot B by 1.5% to offset that increased public use for the first year.
• The University agrees to a 3% rental increase for Lot C.
• Total annual revenue for the first year is $109,768.00, which will be a reduction from $137,332.00.
The three lots are the existing parking lot south of Fuller Road adjacent to the railroad tracks (Lot A), the paved parking lot north of Fuller Road at Fuller Park (Lot B) and the unpaved parking lot also north of Fuller Road a Fuller Park (Lot C).
Lot A has been leased to the University for parking since 1993. Lots B & C have been leased since 2009. The primary function of the three parking lots is to provide parking for park visitors and the hours that the lots are available for University use is determined with this in mind. For example, Lot B, nearest the pool, will be exclusively public use during the summer and majority public use for the three weeks prior to Memorial Day and the two weeks after Labor Day. As Parks staff have extended the pool schedule beyond traditional summer days, the University has worked with the City to adjust the lease to provide additional public parking during those 5 weeks of “shoulder season.”
Exhibit A of the agreement contains provisions for maintenance, security and signage, and specifies the days and times of use. Lot A will be leased to University for twenty-four hours a day, seven days a week. The City will have the option to use the lot for special events and other park activities up to ten times annually. Lot B (paved lot) will be leased from 5:00 am to 5:00 pm Monday through Friday, from two weeks after Labor Day through the Friday three weeks before Memorial Day, excluding holidays (except the first row of Lot B will always be reserved for park users). For the two-week period following Labor Day and the three weeks prior to Memorial Day, only the two southernmost rows of Lot B (out of 6 total rows) will be leased to the University. Lot C (unpaved lot) will be leased from 5:00 am to 5:00 pm Monday through Friday, excluding holidays.
Budget/Fiscal Impact: The revenue derived from the lease in recognized in the Parks & Recreation Services General Fund revenue budget. Annual revenue per terms of the lease will be $109,768.00 for September 1, 2024 - August 31, 2025. Each additional year of the lease will be subject to a 3% increase on all lots. If the lease is renewed administratively, the lease is subject to annual 3% increases for all three lots unless otherwise negotiated by both parties.
The Park Advisory Commission recommended approval of this lease at its July 16th meeting.
Staff
Prepared by: Josh Landefeld, Parks & Recreation Services Manager
Reviewed by: Derek Delacourt, Community Services Area Administrator
Approved by: Milton Dohoney Jr., City Administrator
Body
Whereas, On September 29, 1993, an agreement was entered into between the City of Ann Arbor and University of Michigan for the establishment and operation of a parking lot on City-owned property at Fuller Park, located south of Fuller Road;
Whereas, The parking lots north of Fuller Road have been leased to the University since 2009;
Whereas, The lease generates significant revenue for the Parks & Recreation General Fund;
Whereas, It is the desire of the City and the University to continue the lease arrangement; and
Whereas, The City Administrator recommends that the City not expend money on an appraisal report prior to execution of this lease, per Chapter 14, Section 1:321 of the Municipal Code, as the University’s parking pass rates are public and form the basis of the lease amounts;
RESOLVED, That an appraisal report is not necessary as the City is receiving a fair rental rate relative to the University parking pass rates for their proportionate use of the parking spots;
RESOLVED, That City Council approves the attached Fuller Park Parking Lot Land Lease with the University of Michigan (“Lease”) for five years with two optional two-year renewals at the City Administrator’s discretion;
RESOLVED, That the Mayor and City Clerk are authorized and directed to execute the Lease after approval as to substance by the City Administrator and approval as to form by the City Attorney; and
RESOLVED, That the City Administrator is authorized to take all appropriate actions to implement this resolution and the Lease, including all determinations delegated to the City under the Lease, including renewal, extension, amendment, or termination.