Following months of discussions in executive session with several interested industrial prospects, the Grenada City Council approved a lease agreement last week with a company to take over the city-owned building currently occupied by a division of Modine in the Industrial Park.
The decision, however, wasn’t made without controversy.
For more than a year, Greater Grenada Partnership Executive Director Matthew Harrison met with the City Council during official monthly meetings as well as one-on-one to discuss the industrial development organization and how it could assist in recruiting manufacturing prospects to fill city-owned buildings. One such building is the 180,000-square-foot facility located at 823 Air Industrial Park Rd., the location of the building leased last Thursday.
After months of back-and-forth and tabled discussions, the Council finally agreed to work with Pillar, LLC., operated by Don Tate, which will use the building for warehouse space. The company will rent out space in the facility to manufacturers and other businesses for storage. Pillar was also chosen over locally owned MS Freight Co., owned by Will White, who also approached the Council about leasing the building in August.
Nevertheless, the small company was chosen over a Fortune 500 corporation interested in investing $1.5 million into the property over the next three years and employing more than 50 people in five years with average wages of $19 per hour as part of its first phase. In the proposed second phase, the company planned to increase its investment to $25 million and employment to 300. Representatives with the company were in attendance during the June and July Council meetings to discuss the company’s intentions to expand its footprint in Grenada County utilizing and expanding the city-owned building. Their proposal fell on deaf ears.
Lease Approved
During last Thursday’s special-called meeting of the Board of the Mayor and Council prior to the last FYE2023 budget work session, City Attorney Mary Brown discussed details of Pillar, LLC.’s lease.
“The first thing that we need to decide is – they want a five-year lease with two five-year extensions, which is really 15 years,” she said after Mayor Billy F. Collins called the meeting to order. “We’ve never done that, we normally do just 10.”
According to Brown, Pillar, LLC., agreed to pay $5,500 per month for the first five years, then $6,000 per month for years six through 10 and $7,000 for the last five years if they were granted three five-year terms.
“So the best way to go would be five, five, five,” Ward 7 Councilman Ronald J. Merriman asked.
Brown went on to say that 15-year leases are uncommon.
“If you all want to do 15 years; normally we do 10,” Brown responded. “There’s nothing that says you can’t do 15 years, we just always do 10 with everybody else.”
“We would realize more money is what I’m saying,” Merriman added.
“You’re guaranteed $7,000 if he stays there, right,” Brown responded.
“You’re also locking out a manufacturer every five years too,” Ward 6 Councilman Larry Vance interjected.
Collins then asked about Pillar, LLC.’s sub-leasing capabilities.
“He can rent,” Brown answered. “It’s a warehouse, so he’s renting spaces inside. I’m calling that renting; he’s still liable for the rent.”
Brown then reminded the Council that officials with Pillar, LLC., did mention that the company may have a small manufacturer lease space in the building when they met with them.
Collins and Ward 4 Councilman Michael D. Smith went on to ask about stipulations for the company being put on a 90-day notice.
“When you say 90-day notice, it’s for cause; he isn’t doing something,” Brown said. “It isn’t just because we changed our minds.”
Brown mentioned that lessees not paying the rent or keeping the building up according to the lease agreement would be grounds for the agreement to be terminated. She also reported that Pillar, LLC., had already started working to repair roof leaks and had also agreed to repair damaged ceiling insulation in addition to the costs for necessary improvements to accommodate its storage needs.
“He’s accepting that building as is, he’s going to make those repairs and it’s not part of his rent,” Brown said. “So what he’s saying is that building is good enough for me to be in there. He agreed to do certain things, but that’s not part of his rent, that’s extra.”
It was also discussed that Modine will rent the building from Pillar, LLC., while they finish vacating the premises.
Ward 3 Councilman Lewis Johnson then made a motion to enter into a five-year lease agreement with a five-year option to renew. Councilman Smith seconded the motion, however, more concerns were expressed before the motion was put to a vote.
“At the end of five years, if we don’t want to renew his lease, can we walk away,” Cox asked.
“It says the lessee has the option to renew, it doesn’t say that he gets to renew,” Brown concluded.
“He may say that he doesn’t want to renew,” Ward 5 Councilman Eric Harris added.
The motion was approved by a 6-1 vote with Cox voting against the lease agreement, which Brown said would go into effect immediately.
