City of Alexandria, Virginia
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MEMORANDUM
DATE: JUNE 2, 2021
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: MARK B. JINKS, CITY MANAGER /s/
DOCKET TITLE:
TITLE
Consideration of an Amendment to the Lease Between the City and WG Tavern Square Venture, LLC for office space at the Tavern Square Office Building Complex located at 421 King Street.
BODY
ISSUE: Extend the term of the lease for office space at the Tavern Square office building complex located at 421 King Street in order to lock in a favorable rental rate.
RECOMMENDATION: That City Council:
(1) Receive this report and set the Fourth Amendment to the office space lease for the public hearing on June 12, 2021 and after the public hearing approve this proposed seven-year lease amendment; and
(2) Authorize the City Manager to execute the proposed Fourth Amendment to the lease with WG Tavern Square Venture, LLC.
BACKGROUND: In order to address part of the project budget gap in the context of the FY 2022 budget development process, staff identified the City's lease obligations and agreements, particularly at Tavern Square as a means to reduce future operating expenses.
In 2016, the City entered into a new 10-year agreement to lease 56,223 square feet in the Tavern Square office complex across from City Hall to consolidate leased space for nine City departments from multiple floors to one floor in the complex resulting in a reduction of 6,000 square feet in leased space. The lease, which expires in 2026, had a projected total annual cost of $1.8 million in FY 2022. As part of the City's evaluation of possible cost savings in FY 2022 and beyond, staff engaged Tavern Square management to discuss the possibility and options for savings by extending the current lease. At the City's request, the owner's agent submitted a proposal with options for 5, 7 and 10-year lease extensions. Based on those initial discussions and estimates, a reduction of $592,575 was reflected in the F...
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