The City of Sugar Land owns property along Brooks Street, which is developed with two office buildings (addressed as 119 and 123 Brooks Street). Historically, these buildings have been leased to Keep Sugar Land Beautiful (KSLB) and The Arc of Fort Bend County (The Arc).

During Hurricane Harvey, both buildings experienced water intrusion, requiring building repairs and a financial investment contrary to the City’s Facility Master Plan, which indicates that these buildings should remain in use until the maintenance costs become undesirable. As such, the City of Sugar Land provided lease termination letters to these organizations in June 2018.

After receiving the lease termination, The Arc asked if they could lease both buildings and conduct the needed building repairs. At the City Council's direction, Environmental and Neighborhood Services Department staff initiated the lease negotiation process, and a third party firm was contracted to evaluate/assess the repairs needed to bring the buildings up to minimum codes/standards and identify the associated repair costs.

Subsequently, staff negotiated a five (5) year non-renewable lease with The Arc. Through this process, it was important to ensure that the City did not invest any additional money into the repair and maintenance of these buildings. Key terms of the lease agreement are included below:

• The agreement includes both 119 and 123 Brooks Street;

• The Arc accepts the buildings “as-is”;

• The Arc is responsible for making repairs in accordance with the third-party assessment;

• The Arc is solely responsible for all maintenance and operation of the property, including the buildings, parking area and grounds;

• The Arc will contract and pay for all utilities, except for electricity, which will be billed to The Arc as a pass-through from the City;

• The Arc assumes all liability related to the property and waives all claims against the City;

• The Arc is not entitled to recoup from the City any costs expended for the maintenance and repair of the property;

• The Arc acquires no rights in the property based on any increase in property value;

• The City has the right to annually inspect the property; and

• Rent is calculated by deducting the estimated repair costs plus a 20% contingency ($118,836) from the current fair market lease value of the property ($2,000/month); the remaining amount is amortized over the term of the lease and equates to a rental amount of $232.80/year.

Through this negotiation, The Arc will be able to utilize the office space, and the City will not incur any costs associated with the repair and ongoing maintenance of the property throughout the lease term.

The Environmental and Neighborhood Services Department recommends the City Council approve the lease agreement with The Arc for the property at 119 and 123 Brooks Street.