Agenda - Council - 06/25/2013 - Laserfiche WebLink

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CC Regular Session 4. 10. Meeting Date: 06/25/2013 By: Diana Lund, Finance Information Title: Approve Temporary Lease Amendment with Independent Auto Care In Regard to Lease Rent Background: The City of Ramsey entered into a Lease Agreement with Independent Auto Service, Inc. for use of the cold storage area at 6745 Highwy 10 in November 2012. The term of the contract is for a period of 29 months and is known as a step lease with an expiration date of April2015. A step lease means that the monthly rent increases over time. Independent Auto is currently under the last step of the lease in regard to monthly rent. The step went from $650.00 to $1,612.00, effective May 1, 2013. Demand for cold storage is low in the summer. Mr Berg, owner of of Independent Auto is currently experiencing the low demand. Thus, the $1,612 is unobtainable for Mr. Berg and he has asked for an extension of the $650.00 rent step for a period of six months (May - October, 2013). Mr. Berg is currently working on negotiating with a car dealership for car storage in the current site and possibly 6701 Highway 10, but the storage would not be needed until November. As the requested extension covers May - October 2013, Mr. Berg is currently delinquent for May and June rent. Notification: Mr. Berg contacted our property manager, Marty Fisher of Premier with the extension request. Observations: The city has the following options in regards to whether to grant the six month rent extension of $650.00 instead of the contracted amount of $1,612.00 1. Don't Grant Extension: The lessee will significantly default and the city will need to weigh legal options - costs involved No rental income - City has already paid the 2013 taxes which rent is to help cover Rental market - Who else and how quickly would someone else be able to rent due to slow economy? 2. Grant Extension: Rental Income continues to come in - pay property taxes Possibility of additional leased space in November Recommendation: City's property manager recommends that the city accept the $650.00 monthly rent for six months with the understanding that the rent will be reviewed in November based on current market conditions and the possibliity of a car storage contract. Funding Source: