Minutes - Council Work Session - 07/12/2011

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Finance Officer Lund responded the City is responsible for structural improvements and painting. Snow and lawn care is the tenant's responsibility. Utilities in the building are up to the City. Mayor Ramsey asked if any funds were set aside for the demolition of these properties when they were purchased with RALF funds. He stated he is not interested in keeping the buildings if it starts costing the citizens money. He pointed out if they are not rented, the City does not have to pay taxes. He also noted whether the buildings are rented or not, they still need to be painted. He questioned what that cost would be. He suggested discussing the cost of demolition and whether that is a viable option. Finance Officer Lund responded she was not sure if funds were set aside for demolition. She agreed the City would not have to pay taxes if the buildings were not rented, if they are made exempt. She indicated the bids for demolition were approximately $3,400. Councilmember Elvig inquired how many square feet were involved. Finance Officer Lund replied the net rent for Mr. Sharp's area covers 21,840 square feet Mr. Sharp stated he was interested to know if the City could accept his proposal for rent. He said he understood if the City cannot lease the buildings for less than the payment amount. Discussion took place regarding the possibility of requiring a higher rent on one property, and lower on the other. The amounts together would then satisfy the total amount owed. Finance Officer Lund explained the rent for one of the sites must stay at the amount it is currently in order to cover expenses. She stated she cannot combine the rental payments into one large payment for recordkeeping due to the requirements of RALF funding. City Administrator Ulrich explained the lease requires the rent to be paid through 2012. The rent must be paid for one year's time from the time of termination. There will be time to line up another tenant. If a tenant gave notice August 1, the termination would be effective one year later. Councilmember McGlone suggested the lease be terminated, and the property put on the market. Councilmember Tossey advised if the taxes cannot be covered, the building should be vacated. The City would be taking a risk if there was a termination and there is no guarantee that there will be a new tenant. Councilmember Elvig suggested the City maintain the current lease rate and take a risk. Councilmember Wise gave his opinion that he would like to see activity continue on that site. He pointed out Sharp & Associates has been a benefit to the City. City Council Work Session / July 12, 2011 Page 2 of 4