Agenda - Council Work Session - 10/11/2011

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maintenance and contingencies. An alternate option for the City Council's consideration is to upsize the size of the water main from six inches to eight inches and to follow the proposed route closest to the property line. If the property is sold and goes back on the tax rolls in the future, it may make sense to potentially plan for a development to the east of the old NAU building that could also be served by the same water main. The additional cost would be $4,200 ($2,500 for the larger pipe and $1,700 for the route change). Recommendation: It is recommended that the City Council approve the proposed fire suppression system needed for the city -owned property at 6701 Hwy 10. This investment in a sprinkler system would permit the leasing of the building to Northern Light Church and potentially open up the building to other users. The revised lease provides for a revenue stream that amortizes the approximately $90,000 costs of the fire safety project. It is further recommended that the City Council approve, contingent upon sign -off by the Metropolitan Council, the four -year lease of the office space to Northern Light Church and the use of lease revenues to offset the cost of the site improvements. Funding Source: It is suggested that the City Council consider utilizing approximately $22,500 a year from the lease revenue with Northern Light Church to amortize the cost of installing the fire protection system. This would generate $90,000 to amortize the investment. It is further recommended that the EDA Fund be used to front the costs of the fire safety project, that an interfund loan be established, and that the fund be reimbursed at an interest rate of 2.0% per year with the first year's interest being applied to the remaining three years. Council Action: 1) City Council approval of the proposed fire suppression system needed for the city -owned property at 6701 Hwy 10. This investment in a sprinkler system would permit the leasing of 4,820 sq. ft. of the west office space in the building to Northern Light Church. 2) City Council approval of the four -year lease, contingent upon by sign -off by the Metropolitan Council, to Northern Light that amortizes the approximately $90,000 costs of the fire safety and water main extension project. 3) City Council approval of the use of the EDA Fund to front the costs of the fire suppression system and water main extension, that an interfund loan be established with a 2.0% annual interest rate, and that the EDA Fund be repaid with the proceeds of the lease revenue with the first year's interest being applied to the remaining three years. 6701 Hwy 10 Bldg. 6701 Hwy 10 Water Main Options Northern Light Revised Lease - 4 YR Attachments Form Review Inbox Reviewed By Date Kurt Ulrich Kurt Ulrich 10/06/2011 01:29 PM Form Started By: Aaron Backman Started On: 10/05/2011 03:06 PM Final Approval Date: 10/06/2011