TO: Committee of the Whole - Finance, Administration, and Communications
FROM: Mayor Angela Birney
DEPARTMENT DIRECTOR CONTACT(S):
|
Finance |
Kelley Cochran |
425-556-2748 |
DEPARTMENT STAFF:
|
Finance |
David Amble |
Real Property Manager |
TITLE:
title
Approval of Lease Amendment for Northwest Restaurants, Inc.
OVERVIEW STATEMENT:
recommendation
The City owns the parcel at 15802 Bear Creek Parkway and leases the property to Northwest Restaurants, Inc. (NWR), which operates a Kentucky Fried Chicken (KFC) restaurant at the location. The lease is currently operating on a year-to-year basis and will expire on June 30, 2026, if no additional 1-year options are exercised. NWR’s franchise agreement with KFC requires NWR plan and perform capital improvements on the property; however, NWR will forego improvements without a long-term lease. The proposed lease amendment revises the terms to two five-year periods, along with four five-year options. The profit-sharing portion of the original lease is maintained.
body
☒ Additional Background Information/Description of Proposal Attached
REQUESTED ACTION:
☐ Receive Information ☒ Provide Direction ☐ Approve
REQUEST RATIONALE:
• Relevant Plans/Policies:
N/A.
• Required:
N/A
• Council Request:
N/A
• Other Key Facts:
The lease amendment switches from a CPI-U based rate escalator to a fixed rate, providing more predictable revenues and expenses for both parties. Prior lease terms are kept, including the annual 6% profit share after deduction of annual rent expenses.
OUTCOMES:
Upon amending the lease, the property will remain occupied, and the City will continue to receive revenue from the lease and the profit-sharing agreement. NWR will also move forward with capital improvement planning to upgrade the building and property.
COMMUNITY/STAKEHOLDER OUTREACH AND INVOLVEMENT:
• Timeline (previous or planned):
N/A
• Outreach Methods and Results:
N/A
• Feedback Summary:
N/A
BUDGET IMPACT:
Total Cost:
N/A
Approved in current biennial budget: ☐ Yes ☐ No ☒ N/A
Budget Offer Number:
N/A
Budget Priority:
N/A
Other budget impacts or additional costs: ☒ Yes ☐ No ☐ N/A
If yes, explain:
Lease Revenue Forecast, per five-year period:
• Period 1: 2026-2030 $528,000
• Period 2: 2031-2035 $580,000
• Option Period 1: 2036-2040 $639,000
• Option Period 2: 2041-2045 $703,200
• Option Period 3: 2046-2050 $773,400
• Option Period 4: 2051-2055 $850,800
Profit sharing (6%) is based on sales figures after deduction for rent.
Funding source(s):
N/A
Budget/Funding Constraints:
N/A
☐ Additional budget details attached
COUNCIL REVIEW:
Previous Contact(s)
|
Date |
Meeting |
Requested Action |
|
6/20/2023 |
Business Meeting |
Approve |
Proposed Upcoming Contact(s)
|
Date |
Meeting |
Requested Action |
|
11/18/2025 |
Business Meeting |
Approve |
Time Constraints:
The current lease will expire June 30, 2026, unless another 1-year option is exercised. The lease should be amended as soon as possible to ensure long-term revenue for the City and facilitate NWR’s capital planning.
ANTICIPATED RESULT IF NOT APPROVED:
If the lease is not amended, NWR will lose its franchise and vacate the building. The City will not receive any rental income from the property until a new tenant leases the space.
ATTACHMENTS:
Attachment A: Draft Lease Amendment for Northwest Restaurants, Inc.