Memorandum
City of Lawrence
City Manager’s Office
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TO: |
David L. Corliss, City Manager |
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FROM: |
Diane Stoddard, Assistant City Manager |
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DATE: |
March 23, 2015 |
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CC:
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Casey Toomay, Assistant City Manager Britt Crum-Cano, Economic Development Coordinator |
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RE: |
Consider Request from BTBC regarding lease repayment schedule for the BTBC expansion facility located near Bob Billings Parkway an Wakarusa Drive |
Background:
The City and County are partners, along with other stakeholders, in BTBC (Bioscience and Technology Business Center) business incubator facilities and services. In January 2010, the City of Lawrence and Douglas County, Kansas entered into a lease agreement with the BTBC (formerly Lawrence-Douglas County Bioscience Authority) for the building located at 4950 Bob Billings Parkway. Commonly known as the BTBC-West facility, the City and County agreed to subsidize rent for this facility for the initial years of operations. As per Article V, Section 5.01, the BTBC,
“…agrees to pay as Basic Rent to the City and County on each February 1 and August 1 (each a “Rent Payment Date”) beginning August 1, 2010 through and including August 1, 2014, the sum of $12,500.00. On each Rent Payment Date thereafter, the BTBC shall pay as Basic Rent to the City and the County the principal portion of Basic Rent as shown on Schedule I hereto plus the Interest Portion of Basic Rent.”
The BTBC has been paying the two semi-annual payments of $12,500 each since the lease was executed.
Starting in 2015, BTBC rent payments are to include both an interest and principal portion. Below shows a comparison of rents due in the past and currently under the agreement.
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2015: Estimated BTBC Rent Payments |
Comparison of Annual Rent Due |
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Payment |
Principal |
Interest |
Total Due 2015 |
Total Due 2014 |
Difference between 2014 & 2015 BTBC Rents |
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1-Feb |
$55,000.00 |
$10,561.25 |
$65,561.25 |
$12,500 |
$53,061.25 |
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1-Aug |
$55,000.00 |
$10,366.00 |
$65,366.00 |
$12,500 |
$52,866.00 |
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Total 2015: |
$110,000.00 |
$20,927.25 |
$130,927.25 |
$25,000 |
$105,927.25 |
The BTBC has submitted a request letter dated February 23, 2015, requesting , “…the bond payment structure of the last five years be extended for an additional three years through 2017. Under this proposed extension, the City and County would continue to make the bond payments with semi-annual lease payment provided by BTBC.”
Britt Crum-Cano previously wrote a memo related to the payment due under the current agreement.
The effect of the request would be that the BTBC contribution would remain at $12,500 twice per year for a total of $25,000 annually for 2015, 2016 and 2017. The request would result in a net decrease in principal payments from BTBC of approximately $260,000 over three years. Assuming $21,000 annually in interest each year given the 2015 rate, though the interest rate fluctuates annually depending upon the city’s investment rate of idle funds, the total decrease in payments would be approximately $323,000 over three years, or approximately $161,000 increase to each the City and County over three years. On an annual basis, this would equate to approximately $53,833 per year to each the City and County.
An amendment to the lease agreement along with an updated lease schedule has been prepared to respond to the request.
Douglas County approved the amendment on March 11, 2015.
Requested Action:
Approve amendment to the lease agreement between the City of Lawrence, Douglas County and the Bioscience Technology Business Center (BTBC) to extend the lease repayment schedule for the BTBC expansion facility located near Bob Billings Parkway an Wakarusa Drive for three years through 2017.