For weeks, the city council had been expected to discuss a fee-for-service contract with the Saratoga Chamber of Commerce, as well as a rental agreement for the city-owned McWilliams House, which the Chamber currently occupies. But the issue was removed from the Oct. 16 agenda the week prior to the meeting at the request of Mayor Nick Streit because, he said, the two agencies did not yet have a consensus on what the council would be considering.

"We do not have agreement on either contract yet," Streit said. "There was just nothing to vote on."

Streit said the Chamber and city are still working out the legal language of their proposed fee-for-service agreement. And, while Chamber executive director Kristin Davis said earlier this month that the city-proposed $1.64-per-square-foot rental rate for the 480-square-foot house would be acceptable, the Chamber has since received information that suggests the building is worth far less than the city said. Now, Davis said, the Chamber's executive committee—which has the authority to negotiate with the city on the Chamber's behalf—is asking for a $1-per-square-foot rental rate.

"We have a difference of opinion for what is a fair market rate for the house," she said. "They want to meet before it goes on the agenda."

Davis said the city's rent request of $1.64 per square foot was based on an average of rents charged for a variety of office locations in the Village area, Argonaut Center and Park Saratoga. That averaged amount was then discounted by $1 due to the condition of the McWilliams House, restrictions on what a renter could do in the building and its limited parking space.

However, the Chamber asked two professional property appraisers to determine an appropriate rental value for the building on Saratoga­Los Gatos Road, Davis said. The first appraisal, done in September, surprised both the city and Chamber when it came in at between 45 and 85 cents a square foot, she said, far below what the city was asking.

To verify that appraisal, the Chamber got another appraisal, and on Oct. 3 was told that the building could be valued at between 80 cents and $1 a square foot, Davis said.

She said the Chamber also wants to make sure that the rental agreement includes a provision that the city will make necessary repairs to the old building. She said a plumber has been in to fix leaks but repairs needed on the front steps and porch have not yet been made.

Streit said those repairs are in the works. But, he said, the city has to consider the Chamber's $1-per-square-foot proposal, particularly because the council doesn't think its own proposal was unfair.

"We felt, based on our analysis, the $1.64 was a reasonable amount," he said. "It's an interesting dilemma. I just don't see any place anywhere in Saratoga going for $1 a foot. If the market was to bear, it would certainly be more than a buck a foot."

Streit said the city is unlikely to employ an independent appraiser of its own, as the council believes that, to be a fair market rate, the amount should be based on other, comparable buildings. He said the city will likely respond to the Chamber's request in writing by either holding firm to the $1.64 or offering another rate. Streit says that he wants to avoid a "bidding war."

He added that this month-to-month agreement is intended to provide the Chamber with enough time to find an alternate location, as the relationship between the city and Chamber would be improved if they were further separated.

An ad hoc group of representatives from the city and the Chamber, including Streit and Davis, has been meeting since early summer in an attempt to work out a new fee-for-service agreement to replace an expired one that allowed the Chamber to occupy the McWilliams House for $1 a year. The city, which had originally expressed no interest in continuing to rent to the Chamber unless it opened its meetings and put council members on its board, has since said it will rent the house at market rate without those provisions.

Davis and Streit said they expect the item to be heard by the council at its next meeting, on Nov. 6. Meanwhile, the Chamber is still considering other relocation options.

"If we can't get an agreement, we want to make sure we have options," Davis said.