Agenda - Council - 08/25/2015 - Laserfiche WebLink

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ISSUE Due to the significant cost to fix the damaged geothermal system, and the City's plan to demolish/ clean up the former municipal center site next spring, replacing/ fixing the existing geothermal system is not recommended. As a result, heating and air conditioning will not be available in the former Police Department building What does is cost to fix the geothermal system? Unofficially, Staff has received preliminary estimations of $10,000-$20,000. Because Northern Starz Children's Theatre Leases this space, a conflict exists. The City made notification to vacate this space by March 2016. Do to the damaged geothermal system, Staff would now recommend Northern Starz vacate the building by October 1, 2015. Northern Starz has agreed to vacate the space early. This unexpected situation will result in the need for Northern Starz to pay a higher rent payment from October to February 2016 (four months). Northern Starz is a start-up non-profit organization and has very limited funding. Without some sort of assistance, the organization may not be able to make ends meet as a result of this unanticipated situation. Northern Starz has indicated finding a resolution to this situation soon is very important to their continued success; as they have several schedules (kids, volunteers, etc.)/ performances/ events/ funding items/ tenant improvements to their new space they need to resolve. Although this situation is unfortunate, Northern Starz did express their deep appreciate for City support to -date; and sincerely appreciates their consideration to find a resolution for the current issue. PROPOSED RESOLUTION Staff is proposing for the City to cover the "net difference" in costs between what Northern Starz would have paid the City for their existing lease from October 2015 to February 2016 and what they will need to pay now—as a result of this unexpected situation. The current rent rate with the City $510. The new rent rate at the former Allina building is $1,500. The total "net difference" is $3,990 over four months. Additionally, staff is proposing to charge no rent to Northern Starz, at their existing location, for September only. This is a $510 value. What is the proposed funding source? Staff proposes to utilize the City's Facilities Fund. This account has been utilized to -date, for all revenues and expenses related to the redevelopment of the City's former municipal center campus; and staff anticipates using it moving forward. Sufficient funding exists in this account to cover the proposed resolution ($3,990). Notification: NA Observations/Alternatives: NA Funding Source: NA Recommendation: Staff is seeking Council agreement to move forward with the proposed solution.