Richland updates 50-year-old hotel lease

Richland will collect an extra $31,500 per year from a piece of riverfront property under an amendment to a hotel lease approved unanimously by the city council Tuesday.

The amendment modernizes an agreement with the Shilo Inn that originated in 1961 as a lease with Richland Marina.

The 50-year-old lease calls for a maximum rent of $7,500 per year for the 10 acres along the Columbia River where the Shilo now sits, said Gary Ballew, the city's economic development manager.

Shilo Inns took over the lease in 1977, and now with the lease set to expire in 2015, is exercising an option to extend it until 2059, Ballew said.

The city can't deny the extension, but can re-negotiate the base rent, and has been in talks with Shilo Inns for about two years, Ballew said.

The city wants something closer to the current market rate, which Ballew said is in the neighborhood of $150,000 per year. But Shilo Inns has argued that the lease caps rent payments at 1 percent of gross proceeds, or about $30,000 per year.

They reached a compromise for a new base rent of $42,000 starting in 2015, $50,000 in 2016, and increasing $25,000 every five years to a base rent of $150,000 in 2035.

"A $7,500 to $42,000 increase is very attractive," said Councilman Brad Anderson, who was sworn in earlier this month. "After reading the lease, it seems fair."

The city and the hotel have until July 1, 2015, to finalize an agreement or the lease goes to arbitration.

Also Tuesday:

-- The council agreed to extend its moratorium on collective medical marijuana gardens for another six months. The original moratorium passed in July expires on Thursday.

City Attorney Tom Lampson recommended the extension so that the city can see what action the Legislature takes on medical marijuana during the 60-day session that started Jan. 9.

In particular, Lampson noted that a bill was introduced Tuesday addressing medical marijuana, and that lawmakers must consider an initiative to legalize and tax marijuana or the issue goes to the ballot in November.

The council unanimously extended the moratorium as part of its consent agenda, a group of items approved en masse without discussion.

-- Michelle Dupler: 582-1543; mdupler@tricityherald.com

This story was originally published January 18, 2012 at 12:00 AM with the headline "Richland updates 50-year-old hotel lease."