Agenda - Council - 07/10/2007 - Laserfiche WebLink

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CASE # 5 Consider Assignment of Lease For Property at 6101 Highway 10 (Ralph's Gun and Pawn) • By: William IC Goodrich, City Attorney Sean M. Sullivan, Economic Development Coordinator Background: As Council is aware, the City has purchased the property at 6101 Highway 10, known as Ralph's Gun and Pawn through the RALF Funds Program. The City executed a lease with C.R. Foods, Inc., a Minnesota Corporation on April 24, 2006. The terms of the existing lease are listed below and a copy of the lease is attached. 1. Leased space: 3 808 square feet 2. Term: five year lease with options to extend 3. Rent: $2,400.00 /month. 4. Property Taxes: The property taxes are included in the $2400.00 /month rent for the initial term (4.24.06 - 4/30/08) but they will be revisited once that term expires and will be adjusted accordingly. 5. Insurance: City (Landlord) will maintain hazard insurance On July 1, 2007, the business of Ralph's Gun and Pawn was transferred to TJWB, LLC. The lease clearly states that any assignments of the lease must be approved by the City. Ralph Nissen has provided the City with a written request to transfer the lease to the new .entity and this is also attached. The City has yet to receive the financial information and the written request to have the • lease assigned to them. Staff has had discussions with the proposed new tenant and it appears as if the new owner is willing to work with the City bringing this property up to code. The tenant has already taken steps to adhere to city performance standards by mowing its outside storage area and removing a significant amount of product off of the unpaved surface. The new tenant intends to add car pawning to its operation and would like to install more pavement and light standards. Council needs to keep in mind in negotiating these leases that (1) all net rent proceeds are remitted to the Met Council, and (2) Council has previously agreed that to the extent possible, these leases need to be "market rate ". Recommendation: Approve the transfer of the lease to TJWB, LLC contingent on: 1) Receipt of adequate financial information and written request from TJWB, LLC. 2) Compliance with City Code (outside storage on paved surfaces within 6 months) Council Action: (1) Motion to approve a transfer of the Lease Agreement dated April 24, 2006 to TJWB, LLC, for 3,808 square feet of the building located at 6745 Highway 10 upon the terms and conditions of the Lease Agreement reviewed and amended by City Council. • Review Checklist: Interim City Administrator CC: 07.10.07