Agenda - Council - 02/26/2013 - Laserfiche WebLink

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CC Regular Session 7. 2. Meeting Date: 02/26/2013 Submitted For: Patrick Brama By: Jo Thieling, Administrative Services Information Title: Request by TK Entertainment (DBA Ramsey Raceway) to Amend Lease Agreement Background: Staff has received a request by TK Entertainment (dba Ramsey Raceway) to amend their Lease with the City as proposed in the attached document (drafted by TK Entertainment). The Leased premises in the proposed amendment is 14550 Armstrong Boulevard ( the "Subject Property"). TK Entertainment has requested the Lease term coincide with the approved interim use permit (IUP) term which is set to expire May 16, 2016. TK has also requested elimination of the early termination provision that allows the City to terminate the agreement with a six-month notice without penalty. Case History This case was originally brought forward to the Council on December 11, 2012 at which time this item was tabled. Over the past two months Staff has been working with Anoka County to confirm the tax exemption status of the Subject Property. The City received correspondence from the County on February 7, 2013; which prompted this case to be brought back to the Council. Notification: Observations/Alternatives: The City Attorney has reviewed the amendment for any potential issues and/or liabilities for the City. The primary issue for the City is preserving the right for early termination. The City acquired the property for right-of-way for the Hwy 10/Armstrong Interchange. If the City had to terminate a long-term lease (without an early termination clause) the City would potentially be liable for significant lease buy-out and business relocation expenses. Compared to other City owned properties leased by the City on Highway 10, the early termination provision is generally one year. Under almost any circumstance, the City would have a safe window of one year to notify a Lessee that its lease was being terminated for the construction of a road/interchange. However, the 3+ years requested by TK could potentially create unwarranted liability for the City. An early Lease termination notice of one year would be consistent with City practice on other properties. It also would allow the Lessee a full year to make other plans in light of the Lease termination. The current Lease is also attached to this case for reference. To date, the city has collected $8,110 from the track which has been applied to Happy Days. The City is allowed to collect $19,150 for Happy Days before Tax Increment District 4 will need to be reimbursed. Tax Increment was used by the City to purchase the property. Property Tax Discussion The City has been working with Anoka County over the past two months to confirm the tax exemption status of the Subject Property. Previously, the Subject Property was 100% property tax exempt. The City received correspondence from Anoka County on February 7, 2013 indicating the Subject Property