Laserfiche WebLink
<br />CASE #--':> <br /> <br />Consider RentIncreases for Properties Located at 6701 and 6745 Highway 10 <br />By: William K.Goodrich, City Attorney & <br />Sean M. Sullivan, Economic Development Coordinator <br /> <br />Background: <br /> <br />As Council is aware, the City has purchased the properties located at 6701 and 6745 Bighway 10 <br />through the RALF Funds Program and has leased them back to viable businesses. The rear <br />portions of both buildings. are currently being leased by K & K Sharp and are being used for a <br />R V !boat storage business. The initial lease terms did not require payment of property taxes by the <br />tenant. Each lease.term provides that the annual rent during any option term. be negotiated during <br />the months of June and July. If a new negotiated rental amount is not agreed upon before August 1, <br />either party may terminate the lease upon written notice tothe otherfor termination of the lease on <br />July 31 of the subsequent year. Staff recommends that the annual rent for each lease be increased <br />by the amount of the annual property taxes assessed against the Leased Property. <br /> <br />With regard to the RV!boat storage for 6701Hwy 10, including the rent increase proposal, the <br />primary lease terms are as follows: <br /> <br />1. Leased space: 18,360 square feet <br />2. Term: five one-year options <br />3. Rent: 1.25 per square foot per year or $1,912.50 per month (1.25 per sq. ft. X 18,360 sq. ft. <br />+ 12 = $1,912.50 per month) <br />4. Property Taxes: Tenant shall pay its pro-rata share of property taxes. Total Property <br />Taxes on the tax assessed portion of the building are $16,249.03. The tenant occupies <br />approximately 100% of the tax assessed value of the building and therefore shall pay <br />$16,249.03 of the current annual taxes (100% x $16,249.03). <br /> <br />With regard to the RV!boat storage for 6745 Hwy 10, including the rent increase proposal, the <br />primary lease terms are as follows: <br /> <br />1. Leased space: 11,200 square feet <br />2. Term: One year with 5 one year renewal options <br />3. Rent: 1.25 per square foot per year or $1,166.66 per month (1.25 per sq. ft. X 11,200 sq. ft. <br />+ 12 = $1,166.66 per month) <br />4. Property taxes: Tenantshall pay its pro-rata share of property taxes. Total Property <br />Taxes on the entire building are $21,619.44. This tenant will occupy approximately <br />40% ofthe tax assessed valueofthe building and therefore pay $8647.78 ofthecurrent <br />annual taxes (40% x $21,619.44). The balance, or $12,971.66 of taxes, will be paid by <br />Midwest Car Care. <br /> <br />Council needs to keep in mind that (1) all net rent proceeds are remitted to the Met Council, and (2) <br />Council has previously agreed that to the extent possible, the lease amounts need to be "market <br />rate" . <br /> <br />-255- <br />