Rainbow MWD authorizes ground lease agreement for 76 contractor

In 2012, the Rainbow Municipal Water District approved a lease which allowed West-Tech Contracting to use the lower yard of the Rainbow district headquarters for the processing of concrete, asphalt and other non-hazardous aggregate needed for West-Tech's work on the district's Pala Mesa Tank project. Because the use of the district space was for a district project, Rainbow agreed to a lease rate of $1 per year.

"They had a very low-cost lease as part of that contract," said Rainbow general manager Tom Kennedy.

That lease expired in February 2015. Rainbow's upcoming projects include sewer and water line relocation as part of the widening of State Route 76, and other work on Highway 76 makes the Rainbow site attractive for storage and processing of materials needed for the highway project.

On May 26, the Rainbow board voted 3-0, with Jack Griffith abstaining and Bob Lucy absent, to authorize Kennedy and acting district engineer Sherry Kirkpatrick to execute a new ground lease agreement at the current market rate.

"It's going to increase the revenue quite a bit," Kennedy said.

Ames Construction is the primary contractor for the widening of State Route 76 between South Mission Road and Interstate 15, although several subcontractors are being used. Kennedy and Kirkpatrick will be negotiating with the specific contractor that will utilize the premises, but the lease amount will be $7,000 monthly or $168,000 total for the two-year lease period beginning June 1, 2015, and ending May 31, 2017. "Sherry and I will be negotiating the final lease," Kennedy said.

A property appraisal which compared similar properties and

uses in the area determined that the market value was $6,100 to $7,100 per month. The interest of multiple subcontractors allowed for a higher lease amount. Kennedy and Kirkpatrick were authorized to execute a lease with the company which will provide the highest benefit to the Rainbow district. "It's a free market," Kennedy said.

The lease arrangement may also be executed with multiple subcontractors.

The board's authorization of Kennedy and Kirkpatrick to negotiate the final details of the lease allowed for the lease period to begin earlier and maximize the benefits both for the Highway 76 construction and for the district's rental income. "The contractor wants to get started right away," Kennedy said.