McMinnville officials are preparing to walk away from a contract with Three Star Mall to rent five spaces during the shutdown of the Civic Center.
“I’m going to go ahead and start looking elsewhere,” said Mayor Ben Newman on Tuesday night.
That statement came after city attorney Tim Pirtle announced his review of the contract didn’t go as well as the city’s Parks and Recreation Committee had hoped when it approved the contract, contingent on legal review.
Pirtle said his inspection found a significant point of contention that might be a “deal breaker.” The lease from Ershig Properties holds the city responsible for replacing any heating and air units associated with the spaces it rents.
McMinnville Parks and Recreation director Scott McCord had the units inspected and the report was gloomy.
“Of the eight units inspected, seven are inoperable, needed work, or need to be replaced,” said McCord. “We would need six replaced.”
An estimate set the cost at approximately $50,000.
“The way the lease is worded, as proposed by the mall’s management company, the city would be responsible for those HVAC units,” said Pirtle. “If that means replacing those HVAC units, it would be our responsibility to do that.”
Pirtle said he spoke with Ershig representatives about the units and was given two options to correct the situation – financial assistance by the owners of the mall toward the units, or higher rent for the city.
“I was told they would contribute $25,000 to the replacement, repair or whatever was required to make the HVAC units operable for our purposes or, in the alternative, the per square foot cost of the lease space would be increased from $5.50 a square foot to $7.50 a foot,” said Pirtle.
Square footage of the five spaces is 10,311. Committee members approved pursuing a two-year lease agreement to cover the timeframe of construction and the city’s relocation in and out of the mall. At $2 more a square foot, rent would increase from $113,421 to $154,665 – a difference of $41,244.
“So, if we pay for these air conditioning units, do we get to take them with us when we leave?” asked Vice Mayor Ryle Chastain. “There’s no reason why the city of McMinnville should have to buy the mall new air conditioning units just to rent spaces for 18 months.”
Newman said the mall management group should consider increased foot traffic as a benefit.
“Moving the operations there for 18 months, in my opinion, does a great service to the mall and the other businesses at the mall,” Newman said. “Let’s say we have 500 people a day out at the mall to use our services. They will likely go and use other services. We have other options. I’m in the process of obtaining contact information on another building that would be large enough for us to get in. We have other options out there. We might need to keep those open until we hear back from the mall.”
Alderman Everett Brock stated, “If we’ve got other alternatives, let’s look at them.”
Pirtle was instructed to return to Ershig representatives with an offer of $5.50 per square foot in rent and routine upkeep of the HVAC units, such as changing filters, but that the city would not repair or replacement the units.
