By Linda Taaffe

The Los Altos City Council last week started eviction proceedings against a dry-cleaning establishment leasing space on the city-owned property at First and Main streets. The property is slated for a retail development or a hotel.

City Attorney Marc Hynes said Jin Lee, who owns Nielsen’s 1 Hour Martinizing, allegedly has been delinquent with rent and taxes based on a July 2001 lease renewal. Hynes said Lee has continued to make his monthly payments at the former rent rate. He owes the city $70,636, according to a city bill.

Hynes planned to proceed with unlawful detainer proceedings to remove him from the building if he didn’t comply.

Lee said he was shocked when he received last month’s bill since he had never agreed to the new lease rate and was still negotiating with city officials.

He was unaware of any possible legal proceedings to remove him from the building.

“I don’t agree with the new figure,” Lee said. “It is not a reasonable rate. I don’t know how they got it. I think they figured out that amount around the table without any evidence. They can do what they need to do, and I will do what I need to do.”

City Manager Phil Rose said the rate is consistent with other similar downtown commercial spaces and, under lease terms, will remain locked in place for the next five years.

“The bottom line is, he can’t stay if he doesn’t pay the rent. I believe the rent is a fair market value,” Rose said.

Lee’s original lease agreement allowed him the option to renew his lease another five years, until 2006, with a possible rate adjustment based on the property’s fair market value. The city became Lee’s landlord in 1996. Lee and his wife, Kathy, who are Los Altos residents, have operated their business in Los Altos since 1986.

Lee said the city wants to raise his monthly lease from $2.25 per square foot to $3.10 per square foot for his approximately 4,000-square-foot shop.

Commercial real estate broker Ron Labetich said a fair market price is based on a variety of factors, including whatever a tenant is willing to pay.

“Three dollars is not out of the realm of possibility for that location,” he said. “The retail rate on Main (Street) between First and Third is about $3 a square foot. Retail rental rates have stayed the same over the past year. There’s been no big jump one way or the other.”

Lee said he believes the rate jump is an attempt to force him from the property so the city can begin developing the site. The city was in negotiations with Palo Alto developer Roxy Rapp to build a hotel on the site following an intensive selection process last year. Those negotiations are currently on hold while the city looks at alternative developments for the site, including a possible housing-retail complex.

Lee said he would be willing to relocate with the city’s assistance. He had already made some agreements with Rapp.

Hynes said if Lee does not pay the new rent, the city could deem his lease renewal invalid, which could also sever the Home Consignment Center’s lease extension, which is contingent on Nielsen’s renewal. The Home Consignment Center shares the city-owned site with Lee and is linked to Nielsen’s lease. Under the center’s agreement, the business can only renew its lease another five years if Lee exercises his right to renew the Nielsen’s lease.

Home Consignment Center owner Johnnie Crowell said he believes that Lee exercised his option to renew his lease.

“They may not have a (rate) agreement, but I believe Mr. Lee exercised his option to renew the lease, and we are exercising our option.”

Crowell’s lease expired last January. He has not yet negotiated a new rate with the city, he said.