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

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CC Regular Session Meeting Date: 06/25/2013 By: Jo Thieling, Administrative Services Information Title: Consider terms for Bury & Carlson's (B&C) request to terminate Lease Agreement. 7. 6. Background: The City acquired this 20 acre site for a future public works campus and leased it back to the current tenant. The tenant now wishes to terminate the lease. This issue was considered by the City Council at its February 5, 2013 work session. The direction of the City Council at that time was to direct staff to negotiate with B&C for terms of an early termination and possible use of B&C resources. Since February 5, staff has met with B&C on several occassions and an agreement has been agreed upon. Tentative terms of the Agreement include the following: 1. Termination of lease effective as of July 1, 2013. A June 30, 11:59 termination of the lease allows notification to the County that lease expired prior to July 1, 2013 allowing the entire property to be tax exempt effective January 1, 2014. 2. The City will retain at no cost to it the bunker blocks along the north and west sides of the property. 3. The City will retain at no cost to it the bottom two rows of bunker blocks along the east side of the property and will purchase 125 bunker blocks on the east side at $30/block in order to have a more effective barrier/fence on that side of the property totaling $3,750. 4. City will purchase from B&C 80 bunker blocks at $30/block in order to level off the North wall totaling $2,400. 5. City will purchase up to 20,000 ton (estimated current inventory) of con -bit (class V) for its road construction purposes at $4.75/ton. Totaling $95,000 to be paid prior to termination date. 6. Per the original purchase agreement, the small scale and the tan scale shack building will remain on the site. The large scale on the site will be removed by B&C. The City will be responsible for removal of the large scale foundation etc. at an approximate $4,000 city cost. 7. Taxes on the property have been fully paid in advance for 2013 and the City has agreed to a partial refund of $6,734.47. Notification: Observations/Alternatives: As part of this lease termination agreement, Bury and Carlson has offered to sell the city 20, 000 tons of Con Bit (recycled concrete/bituminous), which the city could use on future construction projects. The material could be used for base material under roads, trails, parking lots, etc.... Bury and Carlson would leave the material on site for a cost of $4.75/ton ($95,000.00). Staff received quotes from area aggregate suppliers for similar material. The prices quoted ranged from $6.75/ton ($135,000.00) for material located in Ramsey to $13.55/ton ($271,000.00) for material trucked in from a supplier located in Elk River. Material would have to meet MnDot specifications for salvaged/recycled aggregate material listed under Division II section 3138.2 of the MnDot Standard Specifications for Construction. If the City does not terminate the lease, it would remain in place through August of 2014, and the City would be responsible for taxes for four months of 2014 and 12 months in 2015. B&C has submitted notice to terminate the contract at that time as allowed by the current lease. This option does not allow the property to be declared tax exempt until payable 2016.