Owasso staff warns of legal risk as council weighs rent hike for food charity

City staff told the Owasso City Council on Feb. 1 that the city must formalize leases for nonprofits occupying municipal property after identifying decades-long lapses, and that correcting long-outdated rents could impose sharp increases on organizations that provide community services.

The discussion focused on Wasatch Community Resources (OCR), which now occupies roughly 4,938 square feet at 109 North Birch with no valid lease covering that footprint since 2010. "When they had the original lease they were leasing about 1,800 square feet; today they're occupying just shy of 5,000 square feet," staff said, noting a straight inflation adjustment to the old rate would have produced an "incredible, incredible number" staff judged unaffordable for the charity.

The city attorney cautioned the council that courts narrowly allow municipal spending on charitable activity. "Eradicating hunger is not a valid municipal purpose," the attorney said, arguing that a large gap between what the city charges and fair market rent can expose the city and individual councilors to taxpayer litigation and treble damages. The attorney recommended keeping lease terms within a defensible range of market value or documenting clear, quantifiable services the charity provides that the city would otherwise have to perform.

Councilors emphasized the urgency for a lease but differed on the near-term dollar amount. One councilor said a market-based appraisal produced numbers in the multiple-thousands per month and called a straight pass-through of that amount "way too much" given recent increases in client need following federal program changes. Several members proposed a phased-in approach. One councilor asked staff to instead "establish a lease at the current rate and just keep it there for about a year and then revisit this next year," citing immediate hardship for the organization.

After extended discussion about utilities, square footage and legal exposure, staff was directed to draft a one-year lease that would create an enforceable landlord-tenant relationship while softening immediate financial impact: the council asked staff to prepare a draft starting at $900 per month and to include a modest utilities contribution and options to renew so the city documents a trajectory toward a more market-based rent. The city manager said staff would return with proposed lease language for council consideration.

What happens next: Staff will prepare a draft lease reflecting the council's direction for consideration at a future meeting. The city attorney said any longer-term decision to subsidize a charity's occupancy would carry legal risk unless tied to clearly quantified municipal services or otherwise justified in a defensible legal framework.