Minutes - Council Work Session - 12/12/2017

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Mayor Strommen asked for clarification from the tenant that if the current lease is extended, the tenant would be responsible for maintenance and if a more market rate lease is negotiated, the City would be responsible for maintenance. Assistant City Administrator/Economic Development Manager Brama confirmed that if there is a negotiation on a more market rate lease, perhaps the City could make a one-time investment in maintenance but from then on, any maintenance would be the responsibility of the tenant. Councilmember LeTourneau stated that he is curious of the lease rate and asked if there is a current policy on how the rate is viewed, whether the lease could remain at the current rate, or whether the rate should be changed to market. He asked how that would apply to other RALF properties as well. Assistant City Administrator/Economic Development Manager Brama stated that the lowest rate that the City would allow is 90 percent of the market rate. He stated that this lease was negotiated at the lowest point in the economic downfall. He noted that the lease of this building was also an attempt to fill the vacant building and assist a Ramsey business. He stated that this rate is about 60 percent of the market rate and noted that jumping to the market rate would be a substantial difference for the business. Allen Berg, owner of Independent Auto stated that the building was not in 100 percent condition when he began his lease and he is aware that there are not relocation funds available because this is a RALF property and therefore when the road is expanded he will be out of his location with no relocation costs and that is why the lower rate was agreed upon. He noted that he began his building with no assistance and started from nothing. Councilmember Riley stated that it would be helpful to have a memorandum from the City Attorney on this issue. He stated that the most important thing he has heard is that there is a contract in place that should be honored and that should answer the question regarding market value. He stated that with the shape the building is in, perhaps this would be considered market value. He stated that if there are things the tenant would need to do in terms of maintenance under the contract, that should be done. He agreed that the lease language should be clarified to address what will or will not do, but the lease should be renewed. Mayor Strommen agreed that the lease should be extended, and this would be an opportunity to clarify the language in the lease. Councilmember Kuzma asked for additional information on late payments. Assistant City Administrator/Economic Development Manager Brama stated that there is no default language in the contract that would address late payments. He noted that the lease is currently up to date. Mr. Berg replied that there was an issue with late payments when he began leasing the second storage building because of unanticipated problems with summer storage and provided additional City Council Work Session/December 12, 2017 Page 2 of 8