HomeMy WebLinkAboutPlanning _ Development Committee - 14 Apr 2025 - Agenda - Pdf
CITY OF RENTON
AGENDA - Planning & Development Committee
Meeting
4:45 PM - Monday, April 14, 2025
7th Floor Council Conference Room/Videoconference
1. COMMERCIAL LEASE PROGRAM EVALUATION
a) Commercial Lease Control Memo
2. EMERGING ISSUES IN CED
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Department of Community &
Economic Development
Memorandum
DATE: April 9, 2025
TO: Ed Prince, Committee Chair
Members of Planning and Development Committee
FROM: Gina Estep, CED Administrator
STAFF CONTACT: Gina Estep, CED Administrator
Amanda Free, Economic Development Acting Director
SUBJECT: Seattle Commercial Lease Control Review
Summary:
On June 10, 2024, the City Council requested a review and evaluation of Seattle’s
Ordinance No. 126982/Seattle Municipal Code Chapter 6.104 pertaining to
Commercial Leases and Rental Agreements between tenants and commercial real
estate lessors. This memo summarizes Renton CED staff’s initial evaluation of said
Ordinance.
Ordinance 126982 was passed by the Seattle City Council in December 2023. The
stated goal of the Ordinance is to support creation of and continuing success for
small businesses by making the deposit, personal guaranty, and letters of credit
requirements of commercial space leases less onerous for small businesspeople
to bear. Another overarching rationale cited in the Ordinance was to foster public
safety and community health by supporting small businesses, which are central to
any thriving community.
Seattle Municipal Code Chapter 6.104 applies to all lessors of commercial property
located within city limits and is an exercise of the City’s police power to regulate
commercial contracts.
The Ordinance established limits on both the maximum personal guaranty that may
be included in or as a condition of commercial leases and the value of the
commercial lease’s required security deposit and/or letters of credit. The
AGENDA ITEM #1. a)
Page 2 of 3
April 9, 2025
Ordinance applies to all lessors of commercial property located within Seattle city
limits (excluding U.S., state, municipal or Tribal government lessors) and applies to
all new lease agreements executed after January 27,2024. Lease extensions are
excluded.
Requirements within the code:
1. Lease agreements must comply with the following provisions:
• The total combined value of any required security deposit
and/or letters of credit shall not exceed the total value of the
first month and last month of base rent (SMC 6.140.030.A)
• The maximum personal guaranty that may be included in, or
required as a condition of, the commercial lease is the sum of
(SMC 6.140.030.B):
ο The first two years of base rent payments and
ο The total cost of tenant improvements made to the
leased space, including any tenant improvement
allowance but excluding any tenant improvement costs
borne by the tenant.
2. A copy of a City of Seattle published summary must be provided by the
lessor to the tenant or prospective tenant when a new commercial lease
is offered.
3. Violations, penalties, private right of action and city staff responsibilities
for monitoring and enforcing are outlined within the code.
Highlights from and impacts of the Ordinance:
1. Stated intent to support small businesses
• Small businesses are less likely to own properties.
• Small businesses are less likely to have financial resources
when entering into a commercial lease.
• Ordinance and code are applicable to all commercial leases
and not just the new leases that identify with small
businesses.
• Excepts the compliance with lease extensions with any
business.
2. City responsibilities
• Review all new commercial leases for compliance.
• City designee authorized to investigate potential violations.
AGENDA ITEM #1. a)
Page 3 of 3
April 9, 2025
• City designee required to enforce the penalties and involved in
the private right of action.
• Program supported by multiple offices of City of Seattle; Office
of Economic Development, Finance and Police departments
were listed in the code.
3. Review of the program results
• Ordinance refers to a report to be prepared by the Executive
December 31, 2024. Unable to find this report available online.
• An annual report will be prepared to include the evaluation,
feedback, and recommendations of the program
• Program to be reevaluated in 2026.
City of Renton analysis:
The City would be required to review every new commercial lease prior to the
execution with the lessor. These requirements would be significant and require the
City to develop a specific program staffed by numerous individuals including legal,
financial, outreach and enforcement personnel.
• Additional staffing and resources needed to ensure timely review
and not cause harm or add time to the lease execution.
• In previous interactions with businesses, we’ve seen privately-
owned companies that do not wish to share their lease due to
proprietary conditions; these parties may actively resist new
requirements.
• Staff training required to support commercial lease review and
financial acuity to address the requirements are met with
personal and business financial statements.
• Citywide outreach would be required to inform commercial
property owners of the new lease requirements and process.
• Staffing and resources to implement compliance and
correction of violations likely would require not just additional
headcount and training but also would include coordination
between multiple departments to fully support the program.
• While the intent of Seattle’s code change was specifically to
support small business owners, the code as written applies to
all commercial leases and not only to small businesses
leases.
AGENDA ITEM #1. a)