STATEMENT from the Mobile County Commission regarding the City of Mobile's lease/rent
Posted on: Dec 9th, 2025 | AnnouncementsFeatured NewsPress Releases
The Mobile County Commission values its long-standing partnership with the City of Mobile and our shared use of Government Plaza, a joint venture opened in 1994 to better serve residents. Recent public comments have raised questions about the County’s proposed rate adjustment for City-occupied space. The information below explains how those rates are calculated and why an increase is necessary. We appreciate this decades-long relationship and look forward to continuing our work together.
The lease methodology is straightforward: the County totals the eligible building costs and divides them among the entities that occupy office space in the building, based on their share of that occupied space. Other costs included in the lease rate are basic utilities, maintenance, custodial, electronics, waste disposal, and security, all of which have increased substantially over the last five years. Importantly, the City’s lease is based only on “occupied space,” it does not include restrooms, common areas, or shared meeting spaces such as the Government Plaza Auditorium, Assembly Room, other common areas, or multiple parking spaces in the basement garage. In short, the City is not being billed for space it uses, but does not occupy, a practice atypical of most commercial lease arrangements.
In 2020, the County commissioned an independent cost allocation study using the actual FY2019 expenses for Government Plaza. That study determined that the true cost to operate and maintain the building was $15.11 per square foot. When the current five-year lease with the City took effect for FY2021, the County generously agreed to charge the City only $11.23 per square foot for the first year, an amount well below the calculated cost. By the end of FY2021, actual costs were already two years higher than what the City was paying and the County was subsidizing the City’s occupancy of Government Plaza by over $500,000. Over the life of the five-year lease, this has resulted in the County subsidizing more than $5 million in rental costs for the City to occupy office space within Mobile Government Plaza.
Although the lease agreement allowed for annual increases, the County chose not to raise the City’s rate during the five-year term, even as costs continued to rise substantially, primarily due to increases in building insurance and utilities. Using FY2024 actual expenses, data that is now more than a year old, the updated cost to operate occupied portions of Government Plaza is calculated at $22.34 per square foot.
The City of Mobile currently occupies 28% of the occupied office space in Mobile Government Plaza (south tower: floors 2, 3, 4, 5, 9, and half of 10 + north tower: three courtrooms and judges’ chambers), 127,326 square feet in total.
Space arrangements for other entities in Government Plaza are not directly comparable to the City’s previously agreed-upon cost-sharing method. Under state law, Mobile County has a statutory responsibility to provide space for certain agencies (e.g. state courts, District Attorney, and other such offices). For those agencies, passing on increased building costs is not an option. Likewise, the two restaurants in Government Plaza operate under revenue-based leases, not the cost-allocation method used for the City of Mobile.
Mobile County has been magnanimous but is no longer in a financial position to continue subsidizing the City’s lease at the level it has over the past five years. Since the initial increase notice was conveyed to the City in June, the County has received no formal reply. The County’s goal in the current negotiations is straightforward: the City should pay its fair share of the actual cost to operate and maintain the building we share. We remain committed to a cooperative relationship with the City of Mobile and to a transparent approach based on actual costs.