Agenda - Economic Development Authority - 12/08/2022

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Economic Development Authority(EDA) 4.2. Meeting Date: 12/08/2022 By: Sean Sullivan, Community Development III Title, Consider Lease Agreement for 6701 Hwy 10 NW: Case of God's Kingdom Ministry (Portions of the meeting may be closed to the public) Purpose/Background: God's Kingdom Ministry Church has presented an offer to lease the west 4,820 square feet of 6701 Highway 10 NW for 2 years. Staff, along with Premier Commercial Properties (property manager),has been negotiating with the proposed tenant over the past few weeks. God's Kingdom Ministry Church currently leases space in Brooklyn Center and they are current with their rent. The west 4,820 square feet of 6701 Hwy 10 is currently vacant and the city does not have any other offers. The proposed Tenant has been told that his lease situation is temporary, as the Property is RALF owned and will be sold once the Hwy 10 project is completed, or it is known that this parcel will not be needed for the project. The temporary nature of the lease is why it is only for 2 years and includes a 120 day,no questions asked, out for the City. This space was previously occupied by Potter's House Christian Community Church. During the last lease period Potters Church paid a rate of$3,587.00/month. The offer from God's Kingdom Ministry Church is $3,587.00/month for year one with an inflationary increase of 3%for year 2. The offered rate is $8.93/SF with market rate being around $12.00/SF. Staff believes this is a fair offer considering it's a short term,temporary lease. Staff also wants to reiterate that the City does not receive the revenue from RALF leases. The revenue goes to maintain the properties,pay the taxes and the rest goes back to the RALF Program. Notification: N/A Observations/Alternatives: The offer of$3,587/month by God's Kingdom Ministry Church is the offer that is on the table for consideration. There is value to having a tenant in the building and maintaining it. Staff and the Property Manager support accepting the offer with the key terms below. Key Lease Terms Location: 6701 Hwy 10 (West 4,820 SF) Lease Duration: February 1, 2023 -January 31, 2025 Lease Rate(3%inflator): Year 1 (2/1/23 through 1/31/24): $3,587.00 Year 2 (2/1/24 through 1/31/25): $3,695.00 Utilities: Tenant paid Snow Plowing/Sidewalks: Tenant paid(Tenant has agreed to paying "pro-rata" share) Early Termination: The City can terminate the lease at anytime without cause after giving an 120 day notice. Alternatives: 1. Recommend to City Council to approve Lease as presented; subject to City Attorney review. 2. Direct staff to continue negotiations with proposed tenant. 3. Recommend to City Council something else. Funding Source: