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City selects second tenant for parking structure space

by HEIDI DESCH
Daily Inter Lake | January 24, 2017 3:03 PM

The city of Whitefish is negotiating with a second tenant to lease the commercial space inside the under construction parking garage attached to the new City Hall.

City Council Jan. 17 decided to begin negotiations with Mountain Berry Bowls to lease the western half of the space. The city is already in the process of negotiating a lease with Pig & Olive sandwich shop for the eastern portion of the 2,800-square-foot commercial space at the north end of the parking garage at the corner of Baker Avenue and East First Street.

The city’s downtown master plan, adopted in 2015, calls for the space to be retail or commercial to “activate” that edge of the street creating a retail linkage from Central Avenue to the Railway District.

Lindley Lynch owns Mountain Berry Bowls along with her husband Jared. The couple began their business in June 2015 operating during the summer from a food truck in front of the VFW.

“We have experienced extreme success with our unique business,” Lynch told Council in her proposal. “We have drawn the crowds to the corner in front of the VFW.”

Mountain Berry Bowls sells thick smoothie blends in bowls made from acai berries, which grow on acai palm trees. The smoothie is then topped with an assortment of fruit or granola.

Lynch plans to operate Mountain Berry Bowls year round in the commercial space. She said her business will drive foot traffic from Central Avenue into the Railway District.

City Council in November decided to enter into negotiations with Pig & Olive sandwich shop to lease half the space. It selected the sandwich shop over a proposal from Glacier Sotheby’s International Realty. Council at the time said Pig & Olive was the better choice because it was in keeping with the downtown master plan’s goal of activating that edge of the street.

City Council in 2015 approved using three years of lease revenue from the lease space and using $162,000 of tax increment finance funds to put into the cost of the parking structure project. Thus, the city needs at least $54,000 per year or roughly $18 per square foot from the lease revenue to repay the capitalization loan.

Pig & Olive in its initial proposal offered to rent half the space at a rate of $25,416 annually meeting the $18 per square foot minimum asked by the city. Mountain Berry Bowls is proposing a lease amount of $22,592 per year at a rate of $16 per square foot, saying it needs less infrastructure inside the space.

City Council Jan. 17 directed City Manager Chuck Stearns to begin negotiations with Mountain Berry Bowls.

Stearns said it might be possible to begin the lease at $16 per square foot for the first year, then increase to $17 for year two and $18 per square foot beyond that.

Councilor Jen Frandsen said she would like to see the terms of the lease get to the $18 per square foot amount “the sooner the better.”

“We also need set hours of operation,” she said. “We want to make sure we activate that street.”

The city anticipates a possible $100,000 in costs to finish the commercial space. This amount was not part of the original cost amount and designs for the new City Hall and parking structure, which has a combined budget of $16.2 million. There is not enough funds remaining in the construction contingency to cover the cost to finish the space, according to Stearns.

The city estimates the cost to install heating and cooling in the lease space at about $60,000. There could be additional costs if a restaurant leases the space because a kitchen hood is estimated to be a cost of $20,000.

Other costs include installation of electrical and lighting and plumbing.

Stearns has said that once a deal is negotiated with tenants, the city will be able to get better cost estimates for finishing the commercial space.