Agenda - Council Work Session - 03/29/2011

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CC Work Session Date: 03/29/2011 By: Brian Olson Engineering/Public Works Information Title: Consider demolition and /or lease agreement for 7157 Highway 10 NW Item #: 2. 4. Background: As Council is aware, the City has purchased the property located at 7157 Highway 10 NW, the former Holiday gas station and convenience store, through the Right -of -Way Allocation and Loan Fund (RALF) Program. On July 20, 2010, City Council directed Staff to grant the adjacent property owner access pursuant to an agreement for parking and maintenance (see attached case and minutes). The proposed lease (also attached) itself has been reviewed by the City Attorney as to proper form. The lease, should City Council direct Staff to proceed forward, includes a specified term of 3 years, specific upgrades to the property (parking lot improvements, irrigation and electrical service to the COR signage), maintenance and insurance responsibilities. Total taxes paid in 2010 are $27,447.75 which the lease does not recoup. In checking with the County, if there is any rent that is collected for this property, the property will not qualify as tax exempt as it is today and therefore will require payment of the property taxes. On March 8th, the City Council discussed the issues revolving around Trunk Highway 10 and its ultimate disposition. There were comments made that contradicted the direction that was received in July 2010 and Staff is looking for direction on the terms of the lease and whether or not to demolish the building. Another issue that Staff has been made aware is the selling of surplus inventory that are within the building to be demolished. Staff has met with an organization (Bid -2 -buy) that sells this type of equipment online with no upfront costs. In coversations with the owner of this company, he feels that there is minimal value associated with these pieces of equipment, however, he would be willing to sell them on a commission of 25 %. Staff will attempt to have a copy of an agreement that would follow these terms at the meeting on Tuesday night. This would apply to the canopy, internal refrigration units and potentially some minor equipment in the Oasis building including the HVAC system etc. Staff feels that it would be prudent to enter into this type of arrangement due to the fact that we are unsure if there is any value in these pieces of equipment and the upfront work will not cost the City of Ramsey anything This would be a new way to deal with the internal contents left behind by the previous owner and eliminate any confusion during the demolition process as to the value of those items. Also attached to the case is a cross easement agreement that was prepared years ago when Holiday owned the property. This issue is resolved by the lease as the entire property is being leased by the adjacent property owner. In discussions with Bill Goodrich, this particular agreement was not signed by the property owner (Holiday) and does not encumber the land that is currently owned by the City of Ramsey. Observations: There are a number of options available to the City Council on this topic that Staff will be looking for direction. If the City Council wants to move forward with the lease agreement, Staff will work with the property owner to finalize the attached lease agreement based on tonight's discussion and once signed, will organize the demolition quotes and online bidding for the equipment in the building during the advertisement phase of the demolition process.