Agenda - Council Work Session - 05/24/2016

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NORTHERN LIGHT CHURCH REQUEST EXISTING LEASE The City of Ramsey began leasing 4,820 of space to Northern Light Church in 2011 (original lease agreement), located at 6701 U.S. Highway 10. The City entered into a second lease agreement with Northern Light Church in August of 2015. The current lease agreement is set to expire on October 31, 2017. REQUEST Reduction in lease payment rates. Below is a summary. Generally, they are asking for a step-up lease rate (going from 50% rate, to 75%, then back to 100%). Current Terms Year 1: $2,711 per month (11/1/15 to 10/31/16) Year 2: $2,792.33 per month (11/1/16 to 10/31/17) Requested Terms Year 1: remaining portion (5 months), $1,355.50 Year 2: $2,033.25 through March 2017 (5 months), and full price to finish out the lease ***Discounted term would be 10 months total (5 months at 50% and 5 months at 75%). NORTHERN LIGHT CHURCH Northern Light Church is a startup Christian Church (link). Please see background page for details. Northern been a strong community partner (support various community events and initiatives) and generally has a positive relationship with the City of Ramsey, and the larger community. STAFF NOTES • The city is not paying property taxes on this parcel, as Northern Light Church (and Youth First/ PACT Charter) are all non-profit users. As a result, the City's holding costs on this property are low (other than some basic annual/ comprehensive maintenance). In other words, financially, the proposed reduction in rent won't put the City in a position of high risk/ liability/ negative cash flow. Northern Light Church is responsible for their own utilities, basic maintenance, and snow plowing. • Northern Light has taken good care of their space, and has made various tenant improvements (interior remodeling and reconfiguring, carpet, painting, finishes, etc.). • The proposed request appears to be financially justified, based on input from Premier Commercial Realty (see next section). • Although the request can be financially justified, staff believes the question of equitability remains on the table (what if this wasn't city owned property, what if this was a different user, etc.)? If this was a privately owned property, this request may not be granted, in it's entirety.