Council tables depot lease renewal with Greater Galena Marketing amid tax questions

The Galena City Council on July 14 moved to table consideration of a renewed lease of the depot building with Greater Galena Marketing Inc. so staff can determine whether charging rent would trigger a property tax liability for the city.

Councilmember Katie (staff presenter) explained that the proposed lease reflected an in‑kind rent valuation of $62,172 annually, which the staff translated to $5,181 per month. The proposed renewal in the motion included monthly rent of $5,181 and a $10,000 annual capital expenditure commitment by Greater Galena Marketing Inc., but the council paused action after members raised concerns that renting a city-owned building could remove the property’s tax-exempt status.

Councilmember Sydney Johnson asked whether charging rent would cause the city to be assessed real estate taxes; staff said it could trigger a tax assessment and recommended consulting the local assessor. Council members noted the city had previously paid property taxes when it had rented city-owned buildings, and several said they wanted a clearer estimate of any tax liability before finalizing the lease.

One councilmember suggested exploring sale of the property as an alternative, while others warned that selling would remove the building in case passenger rail service returns in the future. After discussion, a councilmember moved and another seconded to table agenda item 25C-0275 until the next meeting to obtain tax-assessor guidance; the motion to table was seconded and carried.

Staff also rescinded the earlier motion to approve the lease to allow the tabling vote. The council asked staff to get an estimate of any property tax impact and to report back at the next meeting before reconsidering the lease renewal.