Fiscal Note
The proposed lease contains three rental payment components, each with unique fiscal implications. The fist component is the base rental payment. Public Health would pay $17.25 per gross square foot for the 11,317 square foot space, thereby paying $195,218 annually for rent with a 3% annual escalator. This rental payment includes a tenant improvement allowance to cover CDA build-out costs of up to $40.00 per square foot. Funding is available in the 2011 Public Health Operating Budget for this expenditure.
The second rental provision allows Public Health to elect to utilize the CDA’s property management company for janitorial services, and pay for the services based upon the management company's actual cost (estimated at $1.30 per square foot). Total contracted janitorial expenses are therefore estimated at $14,712 annually. Public Health - Madison and Dane County has indicated its intention to use this contracted service, instead of the janitorial service provided by the Engineering Division's Facilities Management Service. Funding for the contracted amount is available in the Public Health Operating Budget. The Engineering Division plans to eliminate one custodial position to offset lost interagency revenues of $56,822 from Public Health.
The third component of the rent is related to additional build-out costs. Any costs greater than the $40.00 per square foot noted above would be amortized at 4.50% over a ten year lease. Currently, CDA estimates the total cost of build-out work at $75.00 per square foot. The additional $35.00 per square foot represents added capital costs of approximately $396,095. Based on the amortization, the extra $35.00 per square foot in build-out costs would add $4.35 per square foot ($49,229 annually) to the annual rent noted above. The Public Health Operating Budget does not include funding for the $49,229 of related annual lease costs. Rather, the Public Health Agency proposes to apply grant, trust, and reser...
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