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Mayor Gamec expressed concem with the City being required to pay taxes on the property and <br />with the operating costs that could be incurred by the City. <br /> <br />City Attorney Goodrich explained the City acquired this property with $1,800,000 in RALF <br />funds, and also received an additional $11,000 from RALF to cover administrative expenses in <br />acquiring the property. The Council is the trustee of the public funds, and needs to be mindful of <br />that. Also, the City has acquired about five properties that will be leased back. The leases need <br />to be as uniform as possible, with no one being favored. The City needs to be market conscious, <br />as well as being conscious that the properties are not tax-exempt once they are leased. Marty <br />Fischer of Premier Commercial Properties, Inc. has been hired to assist the City in managing the <br />former NAU building and advising the City on the expenses. Mr. Goodrich provided an <br />overview of estimated revenues and expenses. <br /> <br />Councilmember Elvig questioned if the recreational vehicles, boats, etc. require individual <br />leases. He questioned ifa triple net lease would work with the building. <br /> <br />Mr. Fischer replied there could possibly be 60 individual contracts. He explained this storage <br />situation is unique. It is cold storage with market driven rates, and they would not have any <br />customers with a triple net rent. However, the front end is set up for a triple net basis, which <br />means the tenant would pay the base rent and be responsible for their share of property taxes and <br />maintenance on the building, as well as utilities. <br /> <br />Councilmember Cook inquired if there are certain properties that would not facilitate a triple net <br />lease. <br /> <br />Mr. Fischer replied that on the north side of Highway 10, the Anchors Away building and the <br />NAU building are rather unique. The office and/or retail in the front of the buildings should be <br />done at triple net, but the buildings are unique in the back because of the cold storage. Standard <br />tenant type buildings such as the B & B building should be completely triple net. <br /> <br />City Attorney Goodrich indicated at the last Council meeting the Council agreed to pay the <br />property taxes on the rear portion of the building. He reviewed the estimated expenses, <br />including property taxes for the building, and explained the full taxes will not be required if the <br />entire building is not rented. He advised net revenues would go to the Metropolitan Council <br />RALF fund. <br /> <br />Mayor Gamec stressed the need for the City to be reimbursed for any administration expenses <br />incurred. <br /> <br />Councilmember Elvig stressed the importance for the compensation in the Property Management <br />Agreement to provide enough incentive, due to the importance of leasing out the property. <br /> <br />City Attorney Goodrich indicated staff has proposed a lease to Denny Sharp. A letter was <br />received today from Mr. Sharp's attorney expressing agreement with most of the lease. They do <br />not want to pay a damage deposit, but every tenant pays that. He believes there is a <br />misinterpretation regarding maintenance expenses, and he will discuss this with the attorney. <br /> <br />City Council Work Session / January 24, 2006 <br /> Page 2 of 4 <br /> <br /> <br />