The Rehder Building is posing several financial challenges for the city, including how to handle its lease with Antares restaurant and whether to move forward with planned renovations.

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The Rehder Building is posing several financial challenges for the city, including how to handle its lease with Antares restaurant and whether to move forward with planned renovations.

Rehder Building poses financial issues

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— Financial challenges associated with the city-owned Rehder Building led to two split votes and a philosophical debate at Tuesday's meeting of the Steamboat Springs City Council.

Council members disagree about the rent being charged to two of the building's tenants. The council also is considering returning a $150,000 grant for capital improvements to the State Historical Fund and transferring matching funds for the capital work to the city's general fund. While some say the move is wise because of the current economic climate, it likely would tarnish the city's reputation with granting agencies.

The Rehder Building is home to Vectra Bank, Antares Restaurant and the Steamboat Art Museum, which has aspirations to occupy the entire building at Eighth Street and Lincoln Avenue in downtown Steamboat Springs. Vectra Bank is leaving this month, however, and taking the $3,571 a month it pays the city in rent with it.

At its meeting Tuesday, the City Council failed to negotiate a higher rent from Antares. Restaurant owner Diane Zahradnik is requesting a seven-month extension of her lease, which is set to expire in September.

Antares pays $9.13 a square foot. Last week, Mainstreet Steamboat Springs Program Manager Tracy Barnett said commercial rents downtown typically range from $20 to $40 a square foot, with an average of about $30 a square foot. Interim City Manager Wendy DuBord recommended a $15 a square foot rent, which Zahradnik insisted was too high.

Citing problems such as a leaky roof, Zahradnik argued that the Rehder Building is in too poor of a condition to command a higher rent.

"The buildings downtown which are charging market-price rents have long-term leases and are in market-price shape," Zahradnik wrote in a letter to council.

Facilities Manger Bob Robichaud, however, said the city has spent about $3,500 on repairs including roof leaks since Antares closed for the fall in September.

"There have been a number of improvements," Councilman Jon Quinn told Zahradnik on Tuesday. "With that in mind, is there some middle ground?"

"No," Zahradnik replied. "We are prepared to leave Sept. 30."

Later, Quinn used strong words to express his disappointment with Zahradnik's unwillingness to negotiate.

"I find it discouraging and pretty remarkable that there's not a middle ground," he said. "I kind of see it as blackmail. The city is essentially subsidizing a private business. It just isn't right to me."

With Quinn dissenting, the council ultimately voted, 6-1, to table the lease agreement. City staff members were directed to return with a lease that does not increase the restaurant's rent.

"In this economic climate, I don't think we're going to have people clamoring for that space," Councilwoman Cari Hermacinski said. "I think $9 a square foot is better than $0 a square foot."

Hermacinski's logic was echoed by others on council, but Quinn said Wednesday that he thinks the majority of council caved.

"I understand that some revenue is better than no revenue, but at the end of the day, I feel like we got pushed around a little bit," he said.

In another 6-1 vote, council approved on second and final reading a one-year, $1 lease for the Steamboat Art Museum, which requested the lease and noted the city has a similar deal with the Steamboat Springs Arts Council at the city-owned Depot Art Center. The museum pays $700 a month in rent. Councilwoman Cari Hermacinski voted against the lease.

In a debate later in the meeting, council members were torn on DuBord's recommendation to return most of the more than $500,000 sitting in the Rehder Building's reserve fund back to the city's general fund, where it originally came from.

Most of that money is earmarked for capital improvements to the building and would be aided by a $150,000 grant from the State Historical Fund. If the money were transferred back to the general fund and the work not done, the grant would have to be returned.

DuBord noted that her recommendation did not have the support of the city's Historic Preservation Advisory Commission or Laureen Schaffer, the city's historic preservation specialist. Schaffer noted returning a grant shows poor planning on the city's part and could hurt the city's chances of earning other grants in the future.

"I'll take the heat on this one," DuBord said. "You never like to give money back to a granting agency."

Noting the city's declining revenues, Hermacinski agreed that the money should be returned to the general fund to help cover the core services of government.

"It's disrupting to me when we spend money that we could be saving," she said.

Others, including Councilman Steve Ivancie, said the move would be shortsighted.

"I know it's attractive to see this money and say, 'Ah, hah!' but we're never going to get this opportunity again," he said. "I just think we can't be reactionary at this time. We have to maintain our long-term vision."

After Schaffer told council that the city had been given a one-year extension on the grant this week, council members decided to delay a decision on the issue.

"Hopefully between now and some point in the future, we will know what our options are," Antonucci said.

Comments

Scott Wedel 6 years ago

How in the world is it blackmail for Diane Zahradnik, owner of Antares, to say the business will leave instead of paying the new rent? If the City Council think that is blackmail then aren't they doing the same thing by threatening to kick out the restaurant if they don't pay the City's proposed rent?

It would be blackmail if Diane Zahradnik brought in many supporters and threatened to recall the City Council if they didn't give her a favorable deal.

With an upcoming winter tourism season expected to be down 20% or more and a whole lot of new vacant commercial space downtown, now the City is moving for a 60% rent increase?

Of course, this is the same city that bought the Iron Horse motel at the peak of the real estate market and has lost a ton of money there as well.

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Russell Orms 6 years ago

It's not blackmail it's business. If Zahradnik doesn't want to pay more and the council won't accept a lower rent then the business moves out. That's the way it is. Each side makes up there own mind. No agreement no deal.

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aichempty 6 years ago

This is not the first business in town to move because rents went up. It's a common business practice that smart people employ every day.

I think I'd be more worried about having a public official accuse me of blackmail in a newspaper story. That's what you call your "libel" and "slander."

The thing this really proves is that public entities should not be renting retail store space to private businesses. Either sell the place, or put it to a bona-fide public use.

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untamedShrewd 6 years ago

so let's see with Vectra Bank out the city loses $42,852 a year. And say Antares is about 1100 sq ft (this is a guess of size), and they leave then the city loses another $118,800 a year. Then we have the Steamboat Art Museum with "...aspirations to occupy the entire building", requesting a one-year $1 lease (similar to the Steamboat Springs Arts Council at the city-owned Depot Art Center). The city will be making an astronomic amount of One Dollar a year for the Rehder Building. What a Deal! And the tax payers get shisted. Don't return the grant too soon, you'll need it.

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ybul 6 years ago

Fix the building and sell it with an easement to maintain its historic look. Use the funds to pay off debt, as if times get tough, then debt service comes first and foremost.

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bubba 6 years ago

Nobody is paying 120k per year in rent, commercial leases are priced per square foot per year, and untamed shrew calculated it as a monthly rent. 9 bucks a foot is per year, not per month.

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aichempty 6 years ago

Okay, now stop a second. Who in their right mind is going to pay $120k per year in freakin' rent for this place? That's $10,000 a month in rent, more or less. Do you realize that means the tenant is expected to pay something around $330 PER DAY in rent? You gotta have 30 people a day walking in and spending over $100 each just to pay the rent? Or, how about 300 people spending over $10 each every day. And then there's mud season, and the shoulder season.

Wow.

I think I'd get me a drug dog in there sniffing for cocaine, because somebody has been selling a lot of high-priced stuff at a fearsome rate in those spaces in order to stay in business.

Or maybe that's the point. Maybe the city should be happy with some money instead of no money.

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untamedShrewd 6 years ago

sorry if my calculation is off. But if Antares pays only $9.13 a year per square foot then that calculates to only $10,043 for a 1100 sf or $837 per month (and that's only guessing the size of their space). Even if we double the size to 2200 sf at $9.13 a year than it amounts to $20,086 or $1674 monthly (or triple to 3300 sf is $30,129 a year at $2,511 montly). Certainly Antares is larger than Vectra Bank and the bank was paying $3571 monthly amounting to $42,852 a year. My guess is the bank was no more than 500 sf.

Any way it's calculated...anything beats the $1 a year the museum proposes. Currently the museum pays $700 monthly or $8,400 a year: $34,452 less than Vectra Bank. And their space is at least equal to that of the bank.

Keeping only the museum in the building for $1 to $8,400 a year with no other renters is a major financial drain on the city. Not to mention the loss of sales taxes Antares brings to the city in addition to rent. The museum doesn't bring in as much revenue in sales tax as Antares. Plus, Antares serves great food!

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Brandon Gee 6 years ago

All,

I apologize for the confusion regarding Antares' rent. I should have made it more clear in the story. Antares current rent is $2,737.92 a month for about 3,600 square feet of space. That comes to about $9.13 a square foot per year or $32,855.04 in annual rent.

Brandon Gee, reporter (970) 871-4210 bgee@steamboatpilot.com

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untamedShrewd 6 years ago

thanks for solving the guessing game Brandon

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aichempty 6 years ago

Well, given these corrections, I say: Sell the place and let somebody in the commercial real estate business handle it.

No matter what the city does, this is a perfect place to avoid the appearance of impropriety. You can't give a friend a break on the rent if you don't own the place.

By the way, if memory serves me, Antares is getting a real break. I'm pretty sure the rates at Central Park Plaza were about double the quoted rates as far back as 15 years ago.

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mtroach 6 years ago

Why does the city of steamboat need to support both a Art Depot, and Museum with free rent?

As the city sees drops in tax revenue, we must start to look for places to cut back. Art is not a service the city needs to provide. Private citizens should be supporting the arts outside of government, so that we do not need to use public tax dollars. Choices are gonna need to be made, we cannot continue to support every whim of the citizens with our deminishing sales tax dollars.

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Scott Wedel 6 years ago

First and foremost, the City needs to have a plan for this building. If it is going to be a museum then the museum needs to be funded. And if it is to be funded by the City then there needs to be enough of a plan to justify why the City wants to spend money on three museums (Tread of Pioneers, Art Depot and Rehder).

And the City Council's handling of Antares rent shows exactly why the City should not be in the real estate business. The City wants a 60% rent hike for a seven month extension when tourism is expected to drop 20% or more and then complains about the business owner blackmailing them when the City's offer is rejected.

Maybe $15 a sq ft is fair, but a landlord has no right to complain about an otherwise good tenant declining to pay a 60% rent hike for a 7 month extension and instead choosing to leave when the lease expires.

No sane business person would want these bozos as their landlord.

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Scott Wedel 6 years ago

The trouble with the lease offered by the City is that it is for 7 months. No one is going to move a new business in there for 7 months.

If Antares is bluffing and would pay $15 if that was their only option then the City should call their bluff and openly advertise the spot being available for $15 a month for those 7 months.

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canudigit 6 years ago

Sounds to me like there are multiple problems... The City is under restrictions from the Rehder estate. This property is supposed to be operated as a museum. BUT the building needs improvements.

The money is there right now but, the city council wants to put it back in the general fund and give back the 150,000 in grants they have already received. I know times are tough but, if the building has major issues and they are left alone- it might cost a lot more money down the road to fix it. Then, the taxpayers are footing an even larger bill. Everyone knows that if you ignore that little leak, eventually it becomes a flood. It would be nice to know what improvements were supposed to be made with this money...

I don't see how the city can ever make any money if they operate this as a museum at $1.00 per year. They should give it back to the estate- the restrictions are too tough. We can't afford it.

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