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Council directs staff to build a consolidated lease policy emphasizing market rates and periodic review
Summary
Councilmembers instructed staff to consolidate scattered lease guidance into a citywide policy that generally charges market rates, limits long-term below-market deals, and includes exceptions and monitoring for nonprofits and caretaker units; staff will draft policy language for future council action.
City staff told the council on Feb. 25 that more time is required to develop a consolidated citywide lease policy and asked for direction on key principles. Council members provided several.
Councilman Moore and others said the city should be 'good stewards' of taxpayer assets by charging market rates and avoiding preferential treatment for private businesses. Several council members recommended routine contract reviews (suggested every five years) and contract escalators to keep pace with market changes.
At the same time, members asked for carve-outs and clear standards for nonprofit tenants that provide community services. Councilmember Roosing cited Meals on Wheels and the Rolly P. Simmons community center as examples of nonprofit tenants historically authorized to pay nominal rent; she asked staff to preserve support for such operations while formalizing eligibility criteria. Council members suggested documenting the community benefit nonprofits deliver and considering grant or subsidy mechanisms rather than indefinite below-market leases.
Councilmembers also discussed caretaker and employee housing on city property and recommended explicit selection criteria, contract terms and auditability for those arrangements. Councilman Montoya recommended quantifying the public benefit when nonprofits are given below-market leases and suggested an application or grant path that tracks outcomes and provides accountability.
Staff said the city charter gives the city manager authority to negotiate leases while disposals and sales require public solicitation; councilmembers referenced a past lease'purchase situation (the Hilton Garden Inn matter) as a rationale for more transparent and uniform policy.
The city manager said staff will consolidate existing guidance, benchmark other Arizona jurisdictions, and return with a draft citywide lease policy for council approval that includes market-rate defaults, documented nonprofit exceptions, review cycles and escalator clauses.
