Minutes - Council - 06/01/2010 - Special

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Motion by Mayor Ramsey, seconded by Councilmember Jeffrey to accept Mr. Sharp's proposal with the lower amount being paid for lease beginning August 1, 2010. Further discussion: Councilmember Dehen stated he did not want any perspective tenants to have to pay more than what the market rate is, but in this case, there might have been some azguments that taxes are too high. He stated he had not heard anything from any assessor and he did not really know what it is worth. Finance Officer Lund stated that she spoke to Mr. Fisher and he said it's about a 30% decrease for commercial property and she felt he was talking about for storage use. Councilmember Dehen inquired if we are passing this on Mr. Fisher's word. Mayor Ramsey stated there is a difference between rental rates and property values. Just because rental rates go down doesn't mean property values go down too. Mr. Ulrich stated we do not actually collect rent - it goes back to the RALF. Councilmember McGlone expressed concern about some of the City's other RALF properties and the values figured out. Councilmember Wise commented this is property under RALF -you will not get the same -it's owned by the government. He added he is all for any taxes we can collect on this property. Mr. Sharp stated his proposal was to leave the lease as it is. It says he pays "x" amount of money every month. He was told what expenses this had so he came up with an amount for expenses. The lease says he does not pay taxes -the City does so the amount he pays should have that figured in. He stated now he is paying the taxes. He stated he will pay $4,800 to make it 95 cents a square foot per year for that property. The amount can be split out with the cost of each building and what the City does with that money doesn't matter. It can take the money to pay the taxes. He didn't feel that was fair. Councilmember Elvig suggested the City should be monitoring the property it owns more closely. Councilmember Dehen asked Mr. Sharp if the "beep' he has is that he pays the taxes and they aze going up and if the lease includes the taxes, Mr. Sharp cannot control what he is paying. Mr. Sharp replied the rent is going up -whatever taxes are doesn't make any difference - he pays a yeaz ahead of time. He added that he has already given everyone notice so he needs a decision from Council. Finance Officer Lund stated that $4,800 does cover property taxes from both sides and will offset expenses in the NAU building. Councilmember Dehen commented on renting to just cover property taxes versus market value. Mayor Ramsey stated that we are still generating money above taxes. Ms. Lund stated it will look like he is paying more than the market value. He doesn't want to see fluctuating dollars from taxes - he wants the rate to be consistent. City Attorney Goodrich stated it is not along-term lease - it is good for one yeaz. Consensus was to accept Mr. Sharp's proposal as follows: 1) To become current on all delinquent rent by paying in full the present rent of $3,266/mo for 6701 and $1,886/mo for 6745 through July 31, 2010. 2) Commencing August 1, 2010 -pay $2,983.50/mo for 6701 and $1,820/mo. For 6745. 3) The City would be responsible for the property taxes on each pazcel. 4) This would be a one-year lease and require the City to propose any rent increases one year prior to the effective date. This would give Mr. Sharp lead-time to react accordingly with his RV/boat storage customers. The City would then be free to allocate the total monthly payment to taxes or base rent as it chooses. 4.01. Discuss Acquisition of 7751 Highway #10 -Todd Bialon Property Special City Council -June 1, 2010 Page 3 of 5