HomeMy WebLinkAboutCAO-09-037 - 3 Year Leases - Kit Market Upper Level Vendors
REPORT
REPORT TO:
Finance and Corporate Services
DATE OF MEETING:
June 22, 2009
SUBMITTED BY:
Kathy Weiss, Director
PREPARED BY:
Kathy Weiss, Director
Sian Williams, Assistant City Solicitor
WARD(S) INVOLVED:
Ward 6
DATE OF REPORT: June 15, 2009
REPORT NO.: CAO 09-037
SUBJECT:
Three Year Leases - Kitchener Market Upper Level Vendors
RECOMMENDATION:
That the Mayor and Clerk be authorized to execute a three year lease with the upper level
market vendors at the Kitchener Market located at 300 King St. E., Kitchener, Ontario,
subject to the satisfaction of the City Solicitor, and;
That included in each lease is the rental fee of $9.00 sq. ft for year one, with an annual
rental increase totalling $13.00 sq. ft. for year two and $17.00 sq. ft. for year three.
BACKGROUND:
The Kitchener Market opened its doors to the new site on King Street in the spring of 2004. The
original concept was to offer a space for not only Saturday vendors to sell produce, meat and cheese
(as it traditionally had) but also to include additional services on the upper level such as an
International Cuisine Eatery and full time grocery vendors.
On June 23, 2003, Council approved and authorized the use of a lease agreement as a pre-
approved contract to be used with full-time Market Shop Vendors at Your Kitchener Market; and
that subject to the satisfaction of the City Solicitor, the Market Supervisor and the Director,
Enterprise Division be authorized to negotiate terms of the lease on behalf of the Corporation of
the City of Kitchener; and, that subject to the satisfaction of the City Solicitor, the Market
Supervisor and the Director, Enterprise Division be authorized to sign a lease agreement on
behalf of the Corporation of the City of Kitchener, with full-time vendors in Your Kitchener
Market.
The lease rates approved at that time were based on the following:
Type of Tenant Lease Rate CAM cost
Food Rental $10 per sq. ft. $30 per sq. ft.
On Premises Food $12 per sq. ft. $36 per sq. ft.
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Unfortunately, the upper level of the Market did not meet the expectations of the original vision which
was to have a full complement of retail food vendors along with an International Cuisine Eatery that
operated six days a week. By June 2005 all of the retail vendors closed their businesses due to lack
of business, leaving the eight International Cuisine vendors. In December 2005, Kitchener Council
approved the waiver of all rental fees for part of 2005 and all of 2006 and 2007 in order to retain
these remaining vendors while staff determined a new strategy to revive the upper level of the
Market. Consequently, although offer to lease agreements had been signed by various upper level
market vendors, no formal lease agreements between the City as Landlord and the upper level
market vendors as Tenants were ever executed.
In 2007, Council approved an incremental rent increase to be effective January 2008 with the
intent of charging fair market value by 2011. These fees are as follow:
2008 $ 6 sq. ft.
2009 $ 9 sq. ft.
2010 $13 sq. ft.
2011 $17 sq. ft
In June 2008, Council approved the concept of “Small Independent Vendors” to maximize the
use of the upper level of the Market. This concept was based on the ‘Original Vision’ that was
introduced to the Market in the fall of 2004 with the intent of utilizing the space to accommodate
a weekday clientele.
REPORT:
Although the International Food vendors continue to operate under the goodwill of the original
offer to lease agreements which are no longer legally valid, it is necessary to formalize the
landlord-tenant relationship by executing new leases setting out all appropriate terms. The
former offer to lease agreements no longer comply with current fees, hours of operation and
other proportionate share of costs. New leases will allow for the City to enforce required policies
and procedures, ensuring that the facility is operating efficiently and effectively, and that the
Market remains fiscally accountable.
The lease document is a standard commercial lease for a multi-tenant building. The lease is net
to the Landlord (City) in that the tenants pay base rent (as per fees noted above). The tenant
will lease their space for the term, subject to any rights to renew, and may only use their space
for the permitted business as set out in the lease. The business must be operated by
themselves and/or their employees. The tenant is not permitted to sublet their space or assign
their lease without the Landlord’s consent. The lease contains a schedule of rules and
regulations specific to the operation of the market. Finally, the important standard provisions in
regard to indemnification, insurance, default and termination are also included.
Other highlights include:
*Beginning in year two, a proportionate share of costs (if applicable) for the cleaning of grease
traps equal to $55/month per year and a $35/year maintenance fee for the use of the City
owned walk-in cooler to help offset annual maintenance costs, currently solely being paid for the
by the City.
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*Effective August 1, 2009, hours of operation will be 9am to 6pm, Tuesday to Friday and 7am to
4pm Saturday. One of the primary issues that have negatively impacted the success of
Kitchener Market is the inconsistent hours of operation. Unfortunately, some vendors would
prefer to operate only during peak times (11am to 1pm) while others continue to abide by the
hours as set out by management. Enforcing a standard set of hours of operation will allow
management to continue to improve operations of the market and move the strategic plan
forward.
FINANCIAL IMPLICATIONS:
As a result of the new leases, additional revenues to be collected from the upper vendors at the
Kitchener Market from 2009-2001 will be as follows:
2009
Rent $10,500
(50% increase - additional rental income from 2008 @ $6sq ft to $9 sq ft)
Total $10,500
2010
Rent $15,750
(50% increase - additional rental income from 2009 @ $9sq ft to $13 sq ft)
Grease trap cleaning $ 550
Cooler maintenance $ 140
Total $16,440
2011
Rent $14,175 (
30% increase - additional rental income from 2010 @ $13sq ft to $17 sq ft)
Grease trap cleaning $ 550
Cooler maintenance $ 140
Total $14,865
COMMUNICATIONS:
N/A
ACKNOWLEDGED BY:
Rod Regier, Executive Director, Economic Development
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