The City Council plans to vote on a new rent agreement for the Old Spaghetti Factory, a restaurant housed in the historic Union Pacific train depot, during its meeting on Tuesday, August 18. Under the proposed lease, the restaurant will pay $260,000 annually, with gradual increases to $275,000 per year by May 2031. City officials clarify that this raise is attributable to a long history of below-market rent, not a targeting of the restaurant or an attempt to address a budget shortfall.

The Old Spaghetti Factory has occupied its current location since 1983. The new payment structure reflects a significant increase of 54% in its first year and a total increase of 119% by 2041, according to city staff. Community and Economic Development Director Sunayana Thomas emphasized that despite the seemingly steep increase, it is part of a transition from a historically low rent to fair market value, defined as the current rental price for similar spaces.

Thomas explained that the new rate of approximately $2.03 per square foot is at the lower-mid range for the market. Factors influencing this rate include the building’s size, its historic preservation status, and the restaurant’s plans for tenant investment. She also pointed out that few other tenants could take over the space if the restaurant chose to leave.

City officials noted that the lease terms were mutually agreed upon, indicating that the restaurant accepted the new figures before the council’s vote. Clarifying confusion around previous rental amounts, Thomas explained that while the original contract in 1983 set the rent at $15,000 per year, this figure has evolved over time, with the city collecting about $225,000 from the restaurant in 2024 and a slightly higher amount in 2025.

The Observer article compared the Old Spaghetti Factory’s new lease to a much lower $0.29 per square foot rate paid by a neighboring tenant. However, Thomas said that figure stems from a 1992 agreement and should not be used for current comparisons. Furthermore, the two agreements have different histories, property conditions, tenant obligations and investment requirements, so the rent figures are not directly comparable. In recent negotiations for a new restaurant space at the depot, the city set a rate of $2.00 per square foot, aligning closely with the Old Spaghetti Factory’s new agreement.

Emphasizing the city’s balanced approach, Thomas remarked that while the city aims to earn a reasonable return on properties, it also considers the public benefit. The aim is to revitalize buildings and support local businesses, with long-term community value being a primary focus. Thomas reinforced that comparing city properties based on price per square foot isn’t effective, as each lease has unique histories and conditions.

The new rate was not directly linked to the city’s budget but resulted from a fair market review, as stipulated in the 2010 lease agreement.