City rejects lower lease rate proposed for shopping center

Assembly committee determines rate requested by would-be renters is not fair market value

Posted: Tuesday, November 15, 2005

A Belgian couple hoping to get a cheaper rate on a city land lease for a South Franklin Street tourist shop may be disappointed.

In a special meeting Monday night, the Juneau Assembly approved an ordinance that gives the port director authority to negotiate a lease with the couple for about $30,000 annually over the next five years. That amount is more than twice what the tenants proposed.

Boudewijn Roeland and Hendrika Flamee are working with a local contractor to build a retail store, referred to as Miner's Hall, on a parcel on South Franklin Street near the city cruise ship dock.

The couple wanted the city to approve a rate of $2 per square foot. But the Assembly determined that amount was not in line with the fair market value.

The lease is good for 35 years with a review and adjustment every fifth year. The lessee also will help finance a portion of a seawalk planned along the downtown coastline.

The applicants suggested a low rent rate because of the sales tax the store would generate for the city. It would also be similar to an appraisal done in 2002.

Assembly member John Anderson said he did not want to give any businesses special treatment and that all tenants should pay a fair market rate.

The applicants and the city Docks and Harbors Board recommended setting the annual lease rate at 3.71 percent of the appraised market vale, amounting to $13,861 per year for the 2,989-square-foot tideland lease.

Board vice-chairman Greg Fisk chose that percentage based on a five-year treasury bond on Jan. 6.

Sitka uses a rate of 10 percent and Haines uses rates of 8 percent of market value.

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