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4.03: Consider Lease Agreement for 6701 Highway 10 NW: Case of Connections Church <br />(Portions of the meeting may be closed to the public) <br />Economic Development Manager Sullivan presented the staff report. <br />Chairperson Steffen asked if there has been any interest in the space within the past year that it has <br />been vacant. <br />Economic Development Manager Sullivan replied that there was interest from a thrift store, but <br />they declined to even submit a proposal of lease. He stated that there was some lukewarm interest <br />from a fitness use, but the building air filtration and parking would not support that use. <br />Member Kuzma asked if parking would be an issue for the church. <br />Economic Development Manager Sullivan replied that parking could potentially be problematic <br />but there is no competition from adjacent uses on Sundays, so there is potential for shared parking. <br />He stated that if parking issues arise, the City can handle that through the noiiiial processes. He <br />commented that the potential tenant believes this space will work and is aware of the available <br />parking. <br />Member Riley stated that he would like to see the space rented out but would be concerned with <br />the perception of fairness because the previous church tenant paid a higher rate. <br />Chairperson Steffen asked if there is a policy that states that the City cannot lease space for under <br />market rate. <br />Economic Development Manager Sullivan replied that there is not such a policy. He stated that <br />the current market for office space of this type is depressed and therefore it not unreasonable to <br />accept a lower rate. He acknowledged that this would be below market rate and the group should <br />acknowledge that, noting that his staff report included a list of reasons this could be considered. <br />Member Cords agreed that the concept of market rate is arbitrary, and property is only worth what <br />someone is willing to pay. He stated that he would rather see a tenant paying something rather <br />than continuing to look for someone that may pay slightly more. He asked how the year period of <br />the lease aligns with the construction plans of the church. <br />Economic Development Manager Sullivan replied that there is nothing within the lease that ties to <br />the construction of the church. <br />Craig Norenberg, Connections Church, stated that they should be closing on their land in October <br />2020 and will then begin a building campaign to raise funds for the construction of the building, <br />which he estimated could happen in two or three years. He was uncertain the plans of the church <br />after the year lease expires. He stated that they plan to begin construction within three to five <br />years. <br />Chairperson Steffen stated that it is certain that the new building will not be completed in one year. <br />He asked if there is language included for the rate for a potential lease extension. <br />Economic Development Authority/ October 8, 2020 <br />Page 3 of 7 <br />