Fiscal Note
The proposed resolution authorizes a 25-month extension of the lease term beginning December 1, 2026, and includes the current adjacent Expanded Leased Premises space used by the Clerk’s office for storage purposes. The lease is a modified gross lease with the Lessor paying for all utilities, common area maintenance, real estate taxes, and maintenance and repairs needed in the Leased Premises and Building. The City is paying for the following operating costs: janitorial, internet, and fire alarm and security monitoring. These City operating costs are estimated to be $4,004 for December 2026 rent, $48,048 for calendar year 2027, and $49,488 for calendar year 2028. Total lease costs are estimated to be $101,540 from December 2026 to December 2028.
Under the terms of the Third Amendment to the Lease, the current monthly Rent will increase by ten (10) percent to $4,003.88 per month for thirteen (13) months and then increase by three (3) percent to $4,124 per month for the remaining twelve (12) months of the Extended Lease Term. Rent will then increase by three (3) percent per annum for each of the Extended Renewal Option Terms, if exercised by the City.
The 2026 Adopted Budget for the Clerk's Office includes funding for this lease for December 2026. Funding for 2027 and 2028 lease costs will be included in the Clerk's operating budget requests. At this time, no additional appropriation is required.
Title
Authorizing the execution of a Third Amendment to a Lease with MESC, LLC for property located at 2713 East Washington Avenue for the continued operation of storage space. (District 12).
Body
WHEREAS, MESC, LLC (“Lessor”), is the owner of the commercial building located at 2713 East Washington Avenue (“Building”); and
WHEREAS, the Lessor and the City of Madison (“City”) are parties to that certain Lease dated December 1, 2016 and recorded on December 21, 2016 with the Dane County Register of Deeds as Document No. 5293840; as well as the “First Amendment” to the Lease dated September 30, 2020 and recorded on October 5, 2020 with the Dane County Register of Deeds as Document No. 5644553; as well as the “Second Amendment” to the Lease dated November 17, 2022 and recorded on November 18, 2022 with the Dane County Register of Deeds as Document No. 5874393 (collectively the “Lease”); and
WHEREAS, the Initial Term of the Lease for the “Leased Premises” of roughly 3,200 square feet expires on November 30, 2026. The City has two (2) options to renew the Lease for an additional five (5) years each (“Renewal Terms”) for the Leased Premises; and
WHEREAS, per the First Amendment to the Lease, the City leased an additional 1,664 square feet of the Building which is adjacent to Leased Premises space (“Expanded Leased Premises”) for storage until December 31, 2021 (“Expansion Term”) that had four (4) options of three (3) months each to renew the Expansion Term. The City exercised all Expansion Renewal Terms and the Expansion Term was extended to December 31, 2022; and
WHEREAS, per the Second Amendment to the Lease, the City intended to continue its use of the Expanded Leased Premises until December 31, 2023 and said agreement provided for three (3) new Expansion Renewal Terms through November 30, 2026; and
WHEREAS, the City exercised all three of its Expansion Renewal Terms until November 30, 2026; and
WHEREAS, the City Clerk intends to continue its use of the Leased Premises and Expanded Leased Premises per the terms described in this resolution; and
WHEREAS, the Renewal Terms for the Leased Premises do not include the Expanded Leased Premises in them and the City intends to add the Expanded Leased Premises to the definition of the Leased Premises for a total of 4,864 square feet in a Third Amendment to the Lease; and
WHEREAS, the City would like to shorten the Renewal Term lengths from five (5) years each to twenty-five (25) months, and add four (4) one (1) year Renewal Option Terms in a Third Amendment to the Lease; and
WHEREAS, the City and the Lessor have agreed to the lease terms and conditions of a Third Amendment to the Lease as outlined in this resolution.
NOW, THEREFORE, BE IT RESOLVED that the Mayor and City Clerk are authorized to execute on behalf of the City a Third Amendment to the Lease agreement with MESC, LLC on substantially, though not exclusively, the terms and conditions attached to this resolution as Exhibit I - Third Amendment to Lease.
BE IT FINALLY RESOLVED that the City’s Common Council hereby authorizes the Mayor and City Clerk to execute, deliver and record a Third Amendment to the Lease and take any further action required to accomplish the purpose of this resolution in a form approved by the City Attorney.