Tuesday night Tom Daly, attorney for the Wal-Mart Landlord read this letter to the City Commission:
Dear Members of the City Council:
I am unable to appear before you in person because of a previously scheduled event which could not be rescheduled. I do not want my absence to indicate in any way that this issue is not of the utmost importance to me. I have asked Tom Daly, our company attorney, as well as Steve Struebing, our local counsel, to represent me at this hearing.
I realize there are many development issues that the council will be considering.
The one that has the most severe impact on us is the extension of Bluemont Avenue east from Tuttle Creek to Hayes Drive.
Wal-Mart contacted me last October to advise me that they wanted to buy approximately 20,000 square feet of our parking lot to be used for City right-of-way.
I advised Wal-Mart that I would consider conveying the property to the City without cost to the City or Wal-Mart if I could maintain the present income stream from the Wal-Mart lease for the remaining twelve years of the lease.
Under its present lease, Wal-Mart is obligated to pay $4.33 per sq. ft. annually for 115,000 sq. ft., plus annual percentage rent of $115,000.00. If Wal-Mart does not operate its store on the premises, it is, under the terms of the lease, relieved of paying percentage rent. If it subleases the store to another tenant for more than $4.33 per sq. ft., it is entitled to retain the difference. Wal-Mart advised me that it had a tenant (Hobby Lobby) for 55,000 of the 115,000 sq. ft. at a $5.00 per sq. ft. rent. Therefore, if Wal-Mart subleased all of the 115,000 sq. ft. for not less than $5.00 per sq. ft., which I think they can do, and paid that rent to me, I could retain the present income stream, without any cost to Wal-Mart.
Wal-mart responded by saying that Wal-mart did not renegotiate its leases.
This offer, at Wal-Martís request, was later reduced to writing. The offer was again rejected with a counteroffer to pay 115% of the appraised value of the approximate 20,000 sq. ft. I spoke to the Wal-Mart representative, and advised him that Wal-Martís offer does not take into account the long term impact to the shopping center. He simply reiterated Wal-Martís response that they do not renegotiates leases as a matter of policy.
In reflecting upon my offers, and after receiving the advice of an appraiser, it appears that I have short changed myself, and that my offer to Wal-Mart only protects the property for the next 12 years. After the Wal-Mart lease expires, I will no longer be able to find what is referred to as a "Big Box" tenant because my parking ratio will be less than 5 to 1, and in fact, will be closer to 4 to I.. This will severely limit the future income of this property.
Also as part of Wal-Martís proposal, they have requested that I agree to the closing of the exit that runs along the north side of Staples. The combination of these two requests will reduce access to the center by 50%.
It has now come to my attention that Wal-Mart plans to ask the City to condemn the approximate 20,000 sq. ft. I present this letter to the Commission so that you will know that I have attempted to negotiate with Wal-Mart in good faith. Wal-Mart has the ability to negotiate for the property by agreeing to pay the same rent it is now paying, with no additional cost to them. They have declined to do so.
Thank you for your time.
Very truly yours,
Sam M. Devinki