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City approves five-year land lease for Phillips Avenue Diner; tenants to pay $2,264.17 monthly
Summary
The council approved a five-year land lease between the City of Sioux Falls and WR Hospitality LLC for the Phillips Avenue Diner; the agreement sets a $2,264.17 monthly rate with a 2% annual escalator beginning 2027.
The City Council voted unanimously to authorize a five-year lease between the City of Sioux Falls and WR Hospitality LLC allowing the Phillips Avenue Diner to remain in its downtown location.
Dustin Powers of Planning and Development Services described the agreement as a land lease for roughly 6,500 square feet. "The monthly rate is $2,264.17," Powers said, and staff noted a 2% annual escalator that starts Jan. 1, 2027. The diner owner continues to own and maintain the building; the lease covers use of the land.
Aaron Gerwong of WR Hospitality addressed the council and thanked officials for their support. Gerwong noted the diner had weathered a fire and the COVID-19 pandemic and said the business has been a "good employer, a good tenant." He also praised the city's downtown ambassador program, saying ambassadors helped elderly customers and assisted with parking and cleanliness.
Councilors expressed support. Councilor Bassey said the lease was an "appropriate use of the property" and encouraged approval; Councilor Thomason said he was comfortable with the land use and praised the diner as a downtown asset.
The motion to approve passed 8-0. The lease term is five years, monthly rent $2,264.17, with a 2% annual increase beginning in 2027; the tenant remains responsible for building maintenance.
