ORANGE City Council will borrow up to $600,000 to install a lift and fire sprinkler system in the first floor of Leaheys Arcade to bring the building up to scratch so it can be leased to Phyz X Physiotherapy and Exercise Physiology.
Although the $41,000 in annual rent will go towards loan repayments, council will be left with a yearly $5000 shortfall while it pays off the loan over 25 years at an interest rate of 5.9 per cent.
Phyz X owner Justin Johnson told Tuesday’s council meeting he had asked for a five-year lease on the council-owned arcade’s top floor after running out of space at his current site within Orange Central Fitness.
“We scouted around Orange and Leaheys Arcade had a top floor that’s vacant,” he said.
All councillors supported the request and agreed to give Mr Johnson a three-month rent-free period, forgoing around $10,250, while his business’s extension is established.
Mayor John Davis and Cr Jason Hamling didn’t vote on the proposal citing a declared interest because Mr Johnson had stood for council on their election ticket.
Cr Russell Turner questioned how long the top floor had been vacant and why no one had shown interest in renting it out.
General manager Garry Styles said council had never been able to justify spending the money to bring the top-floor access up to scratch.
“We looked at the costs a few years ago, but this is the first time we’ve found a potential user,” he said.
Cr Ash Brown said the upgrades would leave the top floor ready for future tenants.
“I think this is a great thing for that business,” he said. “It’s not often you get someone who wants to pay your loan off for you.”
Council bought Leaheys Arcade for $440,000 in 1999 and spent around $1 million in 2011 renovating mainly the ground floor, according to a report from corporate and commercial services director Kathy Woolley.
“The property was purchased for a number of reasons including the ability to provide public toilets in the top block after the toilets in the Orange Arcade were closed and to improve drainage options in the area,” she said.
Phyz X will rent out the top floor for five years and has two options to extend the lease.