City of Gonzales
CITY MANAGER DEPARTMENT
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: October 7, 2024
FROM: Carmen Gil, City Manager
THROUGH: Carmen Gil, City Manager
SUBJECT: Lease Agreement with the Mexican American Opportunity Foundation (MAOF)
RECOMMENDATION
It is recommended that the City Council renew a three-year Lease Agreement Between the City of Gonzales and the Mexican American Opportunity Foundation (MAOF) for the property located at 225 Elko Street with an option to extend the lease at a new monthly rate for an additional two-year term, following expiration of the initial term (October 31, 2027).
BACKGROUND
MAOF has been a long-time tenant of the stated location. They have been great tenants and have done a tremendous job keeping the facility in exceptional condition. They provide a great service to the community and offer affordable daycare to the families of Gonzales. Their prior Lease Agreement has lapsed and thus have been operating on a month-to-month basis. Additionally, the Market Rate study conducted earlier this year, reflected that their monthly rent was well below the market; therefore, we have negotiated a new contract with an adjusted rental rate over a three-year period to help bring them up to a more comparable rate, as instructed by City Council.
Consequently, staff recommends that a new Lease Agreement is put in place with MAOF reflecting the new lease terms and the new rental rate. The new rental rate per month will be $1,575.69 in year 1, which also includes a 3% increase to address inflation. A total of $2,227.73 (with inflation) in year two, and $2,899.33 in year three.
REVIEW AND ANALYSIS
As stated above, MAOF is a great asset to the community. They have been providing an essential service for residents of Gonzales for many years and bring tremendous value to the community. At the new rate, AGENDA
ITEM
8 they will still be able to offer quality service to local families, but this new rate will help cover City expenses. The new rate is a substantial increase from the previous rental rate and brings them a bit more in line with what others are paying for a similar size building. Over the life of the three-year Lease Agreement, the City will collect $80,433 for the rental of the property. If the City Council does not renew the Lease Agreement, it will be a loss for the community as the service they provide is an essential service available to residents of Gonzales.
Explain Recommendation and How it Supports the Vision
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small-town charm.
Explain: Leasing out available public facilities for an essential service such as a daycare supports the City Council’s Mission and Vision while generating some much-needed revenue for the City.
Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment, and resources necessary to provide excellent services that enhance the quality of life of our diverse community.
Explain: MAOF has an established facility that provides a valuable service to vulnerable residents in the community. Ensuring this service continues to be offered locally is important to the City Council’s Vision of supporting a healthy and thriving community.
City services will be delivered in a cost-effective, respectful, and friendly manner to ensure the safety and well-being of the residents and the promotion of business, recreational, housing and employment opportunities in an environmentally sustainable manner.
Explain: Staff believes this Lease Agreement continues to ensure that the community has access to much needed services like childcare while generating some revenue for the City.
Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety Yes No X N/A
• Housing Yes No X N/A
• Recreation X Yes No N/A
• Environment Yes No X N/A
• Education X Yes No N/A
Explain: Staff believes that extending this lease creates a win-win situation for both the tenant and the City as continuing to support them provides residents with an essential service.
ALTERNATIVES
Alternative 1 – The City Council could direct staff to modify the Lease Agreement.
Alternative 2 – The City Council could determine this Lease Agreement is no longer needed. However, staff believes this Lease Agreement allows us to provide local families with a quality childcare option and brings in much needed revenue.
BUDGET IMPACT
If the Lease Agreement is approved, it will generate $1,575.69 a month in year 1; $2,227.73 in year two; and $2,899.33 in year three. For a total of $80,433 over the three years.
CONCLUSION
It is recommended that the City Council renew a three-year Lease Agreement Between the City of Gonzales and the Mexican American Opportunity Foundation (MAOF) for the property located at 225 Elko Street with an option to extend the lease at a new monthly rate for an additional two-year term, following expiration of the initial term (October 31, 2027).
Attachments:
1. Lease with MAOF