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ITEM 3.f. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 2/24/2026 Meeting Type: Town Council Work Session (Budget Retreat) AMENDED Submitting Department: Administration / Economic Development & Tourism Prepared by: Amanda Jacobs, Economic Development Director Staff Contact Information: Phone: 480-816-5104 Email: ajacobs@fountainhillsaz.gov Request to Town Council Regular Meeting (Agenda Language) PRESENTATION: River of Time Museum and Exploration Center Lease Agreement Staff Summary (background) Background The Town of Fountain Hills and the Fountain Hills Lower Verde River Valley Museum/River of Time Museum and Exploration Center (Museum) entered into a lease agreement on August 16, 2001 (Attachment 1). The agreement expires on August 15, 2026. Key provisions of the agreement include: • Approximately 5,000 square feet of Town-owned space was leased to the Museum at a nominal rate of $1 per year for 25 years (total rent collected: $25). • The Town contributed $210,000 toward exhibits, displays, lighting, and permanent improvements at the inception of the lease. • Throughout the lease term, the Town has paid for building maintenance and utilities, including water, gas, electricity, sewer, trash removal, and base cable television service (excluding telephone and equipment costs). Over the past 25 years, the Town and Museum have maintained a longstanding partnership focused on preserving and interpreting the community’s history. Current Considerations As the lease approaches expiration, the Town must evaluate potential next steps in a manner consistent with state law and the Town’s fiduciary responsibility to ensure the highest and best use of Town-owned assets. In assessing fair market value for comparable commercial space in Downtown Fountain Hills (Civic District), staff reviewed available market data for similar properties in the Avenue District, including galleries, retail spaces, and other commercial uses. According to CoStar, estimated commercial lease rates for comparable properties range from $15 to $17 per square foot annually. Using the lower end of this range: $15 per square foot × 5,000 square feet = $75,000 annually. This analysis provides a baseline for evaluating future occupancy scenarios. On January 26, Town staff met with the Museum Director and Board President to provide notice that the Town does not intend to renew the lease under its current terms and expressed interest in collaborating on future possibilities for the space. On February 3, staff met again with the Board President, who formally requested a one-year lease extension (Attachment 2). Purpose of Agenda Item The purpose of this agenda item is to review available options and provide direction regarding next steps for the facility following expiration of the current lease. Related Ordinance, Policy or Guiding Principle N/A Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) N/A Suggested Motion N/A - Work Session/Discussion Only FISCAL IMPACT Fiscal Impact: Budget Reference: Funding Source: ATTACHMENTS 1. FH Lower Verde River Valley Museum Historical Society Lease-Management Agreement 8-16-01 (002) 2. Letter from River of Time Board of Directors 2.3.2026 3. River of Time Museum Lease Agreement 2.24.2026