Warrenton reassesses leasing strategies

Jan. 9—WARRENTON — The city is looking to reevaluate its approach as a landlord.

In a work session on Friday, the City Commission reviewed several of the city's leased properties. Commissioners have expressed frustration with how some of the leases have played out, with reports of tenants making late payments, letting structures deteriorate and engaging in illegal activity.

"Past administrations have been very lax, if not completely ignorant, of enforcement of properties, which has created a very bad precedent where past practice of the city has been just to let everything and anything go," Mayor Henry Balensifer said. "Those properties and how they're managed reflect on the city and I think that, as any landlord should, if you're going to put it into writing, as a requirement, it should be followed."

City Manager Esther Moberg sought guidance from the City Commission on how strictly to enforce lease guidelines and how to approach lease agreements moving forward.

Long-term agreements

Some disputes over city leases have arisen over the last few years. In 2021, a lease transfer of Sturgeon Paul's — now Big Game Fishing — in Hammond was delayed due to multiple violations at the location. Although it was eventually approved, the City Commission said Friday that several issues remain with the structure.

Last year, several businesses sought to take over Skipanon Marine and RV Supply on E. Harbor Drive, but it came to an unexpected resolution last month as the city inherited ownership of the building.

Many of the city's leases, Moberg said, were put together in the 1990s and were long-term agreements, often extending over several decades with only minor rate increases.

"They've had slight increases over time but they don't seem to match current market rates, market value, commercial value as far as rentals," Moberg said.

Balensifer said the city has a responsibility to taxpayers to maximize the value of the properties.

While the city has looked to identify and tackle nuisance properties in recent years, some buildings on city-owned property have deteriorating structures or conditions that are not up to city code standards.

"We need to make sure that we're setting an example so that we're not out declaring properties nuisances only to find out that properties with (our) tenants are nuisances themselves," Balensifer said.

Commissioners strongly supported increased enforcement of lease guidelines.

Commissioner Tom Dyer and Commissioner Gerald Poe pointed to the need for having periodic inspections, citing safety concerns and illicit activity by tenants.

Commissioners have shared anecdotes of unapproved sublessees, prohibited residences on commercial properties and a variety of other code violations.

"I think there's been a lot of just very loose and unenforced contracts that the city has had and people have either been subsidized by the city because of that — de facto subsidized — or the city has gotten the reputation as an easy place to take a ride for," Balensifer said.

Moving forward, Moberg said she will ensure that contractual obligations are stringent and enforceable, adding that she will make recommendations to favor shorter leases.

"We don't want to micromanage but we want to make sure the property is kept up," Moberg said. "It is viewed as a city property, and so we want that to not be an eyesore or have objectionable things happening. We want it to be seen as something that the city has put forth in good standing."

The city may also look to sell some of its properties. On Friday, Jay Blake, the city planner, reviewed a number of city-owned parcels — on both developable and undevelopable land — that could be sold.

Skipanon Marine and RV Supply

Jan and Richard Kelly, owners of Skipanon Marine and RV Supply, have operated their RV repair shop alongside the Warrenton Marina for three decades. In 1992, the couple signed a 30-year lease to operate on city property.

Last year, the Kellys approached the city with the intent of selling their business. A number of businesses came forward seeking lease reassignment or purchase of the property.

Since the couple owned the building but not the land, they assumed they could either sell the structure to the city or purchase the land with the intent of selling it all off to another business.

But a recent discovery by the city spelled trouble for the Kellys' plans. A clause in the lease states that if the lease expires, the city gains ownership of the building.

Both the Kellys and the city say they were previously unaware of the provision. While city commissioners had previously considered several options, upon discovery of the clause, the City Commission instead favored letting the lease run out.

The lease expired on Dec. 31, and the city gave the couple until Jan. 31 to remove everything from the building.

Jan Kelly is doing what she can to clear the building, which is filled from corner to corner with materials, tools and other items. She plans to hold a large sale of supplies in the coming weeks.

"We have a lot of stuff to liquidate," she said. "Thirty years of accumulation gone in 30 days."

Kelly said they would not have agreed to the lease had they been aware of the provision.

"We would say, 'After 30 years you can buy the building from us, not that we just turn it over after 30 years of my life spent here,'" she said. "Because you lose everything."

But she does not blame the city for its decision.

"Stupidity is stupidity," she said. "I guess we really should have read the lease."

Richard Kelly's opinion differs. He says he feels like the rug was pulled out from under them.

Moberg said the City Commission's desire to reassess the city's leasing strategies played into the decision. Balensifer, who had previously referred to the building as a "borderline nuisance," said the decision to let the lease run out was simple.

"Once we got close to the end, they were in violation — multiple violations," he said. "At that point, it went from working well together to, 'OK, maybe we should just exercise our rights.'"

Balensifer said he is unsure what the city will do with the property. Moberg said the city has received several requests for the property and that leasing it and selling it are both on the table as options.