Agenda - Council Work Session - 05/24/2016

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CC Work Session Meeting Date: 05/24/2016 Submitted For: Patrick Brama, Administrative Services By: Patrick Brama, Administrative Services 2. 2. Information Title Policy for Leasing City Owned Land Purpose/Background: PURPOSE Consider providing staff direction to amend the attached "Policy for Leasing City Owned Land." The need to address the leasing policy is a result of two attached pending requests (see attached). BACKGROUND The city adopted the attached lease policy in 2013. As the policy stands today, it does not provide clear direction for the attached two pending requests. The two primary issues are: 1) providing for the re -negotiation of rent in periods of economic hardship, and 2) a policy for land which is slated for acquisition as identified in MNDOT's U.S. Highway 10 Access Planning Study. Notification: NA Observations/Alternatives: Below is an outline of the general policy direction staff is seeking: (1) Would the Council consider an amendment to our lease policy to allow/ address, economic hardship requests? In other words, should staff include language in our policy that sets minimums/ maximums for the discounted amount and the term in which we are willing to consider rent reduction requests? Consideration of policy for leasing City owned property to provide parameters for economic hardship requests. For example: Maximum economic hardship term, 10 total months 5 months with a max discount of 50% 5 months with a max discount of 25% Past practice of the City has provided breaks in lease rates to other tenants in the past for various case -by -case reasons (Independent Auto, Crystal Pierce Marine, Northern Lights Children's Theater, etc.). One example is, we provided a step-up lease for Independent Auto: $100, $350, $650, $1612 over the course of six months. The City's Real Estate manager, Premier Commercial Realty, indicated it is common for landlords to work with tenants on these types of requests (especially during the great recession). However, as the economy improves, concessions have become less prevalent. Staff is also seeking input from other cities to see if other public agencies have such rent reduction policies. The attached pending request from Northern Lights Church prompted this policy reconsideration. Some unique factors of the pending request is that it is from a non-profit tenant (so, it is tax exempt) and it's a City property purchased via the RALF program (so, rent proceeds must go to directly maintenance or back to the RALF program).