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& AJ 6) Sours e`�o Community & Economic Development 1200 County -City Building, 227 West Jefferson, South Bend, Indiana 46601 -1830 Phone 574/235 -9371 Fax 574/235 -9021 To: Redevelopment Commission From: Tamara Nicholl- Smith, Director, Downtown Business Recruitment Subject: Lease Proposal for Imagine That! (Holiday Pop -Up Program Participant) Date: May 5, 2011 Staff in the Community and Economic Development Department has reviewed the lease situation for 117 S. Michigan Street and is recommending the following: Background: • 117 S. Michigan is a 1,100 SFT storefront that has not been rented since the yoga place moved out. • The asking price for storefronts in the Michigan Street Shops building is $11.50 PSF, plus CAM of $4.5 PSF for a total PSF price of $16 plus utilities, however the most recent lease for 131 S. Michigan was signed at a reduced rate of $4.49 PSF for rent plus $4.92 in CAM for a total of $9.41 PSF. • The building currently has 3 unrented spaces 123, 121, and 117 S. Michigan. • Regardless of whether or not 117 S. Michigan is occupied, the city has a fixed cost equal to the CAM $4.50 PSF x 1,100 = $4,950 per year or $412.50 per month). The current proposal below promises to, at the very least, cover the fixed expenses of the building and works towards doing more than this by the end of the lease term. Assumptions: • The building owner will need to pay the fixed costs regardless of whether or not the space is occupied • The goal of the building owner, is not only to make money on the building, but also to help enliven the downtown by bringing the types of businesses that are in line with the retail plan for downtown • The downtown is better off with Imagine That! in the space than without them in the space • Even at paying utilities and 10 %, Imagine That! will need to reach a certain sales threshold to make this venture a profitable one for their business. In this way, the interests of the property owner and the business owner are tied together. What We Do Today Makes A Difference!