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REPORT: <br />Under the terms of the existing lease, the owner has the right to transfer the lease to a new <br />tenant, subject to City Council approval. The proposed new tenant is Maeck Weddings <br />(2609699 Ontario Inc.), owned and operated by a local wedding planning and officiating <br />team that have been coordinating and officiating weddings in Waterloo Region since 2012. <br />They intend to utilize the space in the same way that it has been used for the past 25 years <br />but intend to renovate and revitalize the space to make it more current and attractive.Staff <br />have determined that the potential purchasers are currently well regarded within the <br />communityand recommend support for the proposed transfer of the lease. <br />Lease Extension <br />When a lease is set to expire, the City’s practice is torenegotiate a new lease with the <br />existing tenant. Only if the existing tenant does not wish to continue operations would the <br />space be made available to other potential tenants.As such, should Council accept the <br />transfer, the City would normally renegotiate the leasewith the purchaserin August. <br />However, in order to achieve financing, the purchaser is requesting that the current lease <br />be extended to 2026 (a full 5-year term), with an option to extend the lease for an additional <br />5 years. Staff recommend approval of the lease extension subject to the lease rate <br />considerations below, as no other terms of the lease would change. <br />Lease Rate <br />In 2018, the City received a lease valuation to determine fair market value. The valuation <br />confirmed that a lease rate of approximately $13.75 - $14.00 per square foot represents fair <br />market value. Staff believe the 2018 valuation is still relevant. <br />Based on the foregoing, andgiven thecurrent economic climate, staff believe the current <br />rate of $13.75 + Common Area Maintenance feesis appropriate. The current lease does <br />not contemplate annual increases; however, the purchaser has agreed to anannual <br />increase of 2%per yearfor years 3, 4 and 5 should Council approve the transfer.The <br />purchaser has requested a clause in the lease that would allow the lease rates to be <br />renegotiated should, in they future,they wish to consider a major capital improvement to the <br />space that would benefit the City for the life of the facility (ex: a new washroom). Such <br />negotiations would be subject to Council approval at a future date. <br />STRATEGIC PLAN ALIGNMENT: <br />This report supports the delivery of core services. <br />FINANCIAL IMPLICATIONS: <br />Capital Budget – The recommendation has no impact on the Capital Budget. <br />Operating Budget – The recommendation has no impact on the Operating Budget. Approval <br />of the transfer and extension ensures no disruption to the revenue generated by this space. <br />5 - 2 <br />