Agenda - Council - 07/28/2009 - Laserfiche WebLink

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CASE # CONSIDER LEASE FOR PROPERTYPURCHASED FROM PSG, LLC AT 6811 HIGHWAY 10 NW By: William K. Goodrich, City Attorney Sean Sullivan, Economic Development Coordinator Background: On June 23, 2009 Council approved the purchase of an unimproved 1.65 acre of land located at 6811 Highway 10 NW (the "Subject Parcel") by use of RALF Funds. The seller is PSG, LLC. PSG is also the owner of the adjacent parcel from which the Pro Sporting Goods business is operated. PSG would like to lease back from the City the Subject Parcel. The lease back is essential to Pro Sporting Goods' operation as it contains a substantial amount of that business's customer/employee parking and a chain linked fenced -in area for outside storage of boats and equipment. Pro Sporting Goods leases the entire site from PSG, LLC. That lease will be amended to accommodate the Subject Parcel sale to the City. The proposal then is for the City to lease the Subject Parcel back to PSG, LLC so as to permit Pro Sporting Goods to continue its use. The lease back's term for the Subject Parcel would coincide with the Pro Sporting Goods' lease with PSG, LLC which lease runs through September 20, 2010. Three options are listed below that City Council should consider: Option A Term: July 29, 2009 — September 20, 2010 Rent: $2,987/mo. This amount is based on .50/square feet/yr. Staff has been advised by a real estate professional that this is a rental amount consistent with the low-end of the market for this type of property. Taxes: Tenant pay levied property taxes for Subject Parcel Uses: Any lawful commercial use which shall be interpreted as permitting the existing outside storage. No storage of junk or debris permitted. Insurance: Tenant maintain public liability insurance on Subject Parcel Utilities: Tenant responsible for any utilities it may use at Subject Parcel Subletting: Tenant may not sublet during lease term Improvements: Tenant required to stripe parking spaces in order to delineate parking stalls Other standard lease terms as recommended by City Attorney Comments: Lease would be renegotiated to a market rate for next renewal period. Option B Term: July 29, 2009 — September 20, 2010 Rent: $1,600/mo. This amount is based on a prorated value calculation provided by PSG that uses the current base rent of $8,500 for the entire land and building of Pro Power Sports. Staff has been advised that this is significantly below market rate. Taxes: Tenant pay levied property taxes for Subject Parcel