Ed012703.doc
CITY OF NEW HOPE
4401 XYLON AVENUE NORTH
NEW HOPE, MINNESOTA 55428
EDA Minutes January 27, 2003
Regular Meeting City Hall
CALL TO ORDER
President Enck called the meeting of the Economic Development Authority to order
at 8:48 p.m.
ROLL CALL
Present: W. Peter Enck, President
Sharon Cassen, Commissioner
Don Collier, Commissioner
Mary Gwin-Lenth, Commissioner
Steve Sommer, Commissioner
APPROVE MINUTES
Motion was made by Commissioner Collier, seconded by Commissioner Gwin-
to approve the Regular Meeting Minutes of December 9, 2002
Lenth, . Voting in
favor: Enck, Cassen, Collier, Gwin-Lenth, Sommer. Voting Against: None;
Absent: None; Abstained: None. Motion carried.
7801 BASS LAKE RD President Enck introduced for discussion Item 4, a Resolution Approving Office
OFFICE BUILDING Lease for Tenants at 7801 Bass Lake Road (Improvement Project No. 719).
IMP. PROJECT 719
Item 4 President Enck expressed reluctance of lease requirements. He commented that the
tenants should be allowed to remain in the building as long as there is sufficient
cash flow for operations.
Commissioner Cassen explained that the reason for the leases is to ensure rentals for
at least one year to generate cash flow. She noted after one year the tenants can
terminate the lease with a 90-day notice. She commented that although the tenants
verbally indicated their intent to stay, there was no guarantee.
Mr. Ken Doresky, Community Development Specialist, was recognized. He stated
staff is requesting consideration of a resolution prepared by the City Attorney
approving long-term tenant leases (12 months with automatic 12 month renewal and
a 90 day termination clause after the first year) for tenants currently located in the
city-owned office building located at 7801 Bass Lake Road. On December 9, 2002,
the Council approved a resolution awarding a management contract to Quest Real
Estate, the low quote firm, in the lump sum amount of $300 per month to manage
the office building and directed staff to further inquire with the tenants about
signing long-term leases. The city closed on the property on December 16. On
November 12, the Council discussed property management and rental options for
the building and requested that staff solicit quotes from professional management
firms and determine the status of leases and interest in remaining in the building for
a period of twelve (12) to eighteen (18) months. On October 28, the Council
approved a resolution authorizing acquisition of the property by direct purchase or
eminent domain and directed staff to return to the Council with property
management and rental options for discussion at a later date. City goal #2 is to
pursue the maintenance and redevelopment of commercial and residential properties
within the city. The Council has been addressing this goal through the city’s many
redevelopment activities, including acquiring properties from willing sellers in
designated redevelopment areas. Over the past few years, the city has purchased a
total of fourteen properties located in Planning District 6 (east Winnetka area) as
referenced in the city’s Comprehensive Plan. The city has, at times, assumed
New Hope EDA January 27, 2003
operating responsibilities for various properties between relocating tenants and site
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clearing activities. Most recently, staff assumed operating responsibilities during
this interim period for the residential four-plex apartment buildings previously
nd
located at 7601-41 62 Avenue North. The city purchased these buildings in 1998
for redevelopment purposes, relocated the tenants, cleared the sites and landbanked
the properties. On January 16, staff, the City Manager, City Attorney, and
relocation consultant met to further discuss the leases. Based on that meeting and
referenced in the city’s Comprehensive Plan. The city has, at times, assumed
operating responsibilities for various properties between relocating tenants and site
clearing activities. Most recently, staff assumed operating responsibilities during
this interim period for the residential four-plex apartment buildings previously
nd
located at 7601-41 62 Avenue North. The city purchased these buildings in 1998
for redevelopment purposes, relocated the tenants, cleared the sites and landbanked
the properties. On January 16, staff, the City Manager, City Attorney, and
relocation consultant met to further discuss the leases. Based on that meeting and
information gathered, staff recommends that the city offer one-year leases with an
automatic one-year renewal and a ninety-day termination clause during the second
year.
City Attorney, Steve Sondrall, explained that everything is negotiable. It was
presumed that the city would need the building vacant after two years, thus the 50%
rent increase after the two-year period.
Commissioner Gwin-Lenth asked about unit 210 and whether a lease would be
required since it is subleased. This tenant would not be entitled to full relocation
benefits because of his status in the building. She asked if he is willing to sign the
lease for 15 months. Mr. Sondrall stated that the lease is for 24 months, but either
party can opt out after 15 months.
Commissioner Sommer asked if the city is locked into 15 months. Mr. Sondrall
replied affirmatively. Commissioner Sommer pointed out that this prohibits
immediate redevelopment activity. Mr. Sondrall stated that staff’s opinion is that
nothing would happen for 15 to 24 months. President Enck explained that planning
would continue, but it is unlikely that anything would materialize in less than 15
months. Mr. Donahue stated timing is structured around the building season next
year, and it is unlikely that anything would happen before then.
Commissioner Collier stated that these are long-term tenants who have been in this
building for years on a month-to-month rent basis. Mr. Doresky clarified that a few
had a lease through March; and the rest were month-to-month when the city
purchased the building. The city’s purchase of the building voided the leases.
Commissioner Collier was not receptive to lease requirements since most of the
tenants are presently on a month-to-month rent basis.
City Manager Donahue explained that one of staff’s concerns is cash flow. The
leases protect the city and give tenants assurance of the building’s status for a
minimum of 15 months.
President Enck disclosed that he understands staff’s perspective but the city has
already assured the tenants that they can remain in the building until it is
demolished.
Discussion ensued regarding the city’s recourse if tenants failure to make lease
payments, relocation benefits, and insurance protection.
City Attorney Sondrall stated a lawsuit could be initiated if tenants failed to make
payments. He stated the issue of relocation benefits was kept separate from the lease
agreement. He noted there are no security deposits or advance rent requirements.
Lastly, he stated the building is covered through the city’s insurance policy
(including fire protection).
MOTION Motion was made by Commissioner Cassen, seconded by Commissioner Gwin-
to approve the resolution approving office lease for tenants at 7801 Bass
Item 4 Lenth,
Lake
Road. Voting in favor: Cassen, Gwin-Lenth; Voting against: Sommer, Collier,
Enck. Motion failed.
New Hope EDA January 27, 2003
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Staff was directed to continue renting the property on a month-to-month basis and
to advise the tenants of the city’s intentions to operate the building for one to two
years provided enough tenants remain in the building to generate a positive cash
flow.
UPDATE/EGAN President Enck introduced for discussion Item 5, Update on Request by the Egan
COMPANIES Companies, 7100 Medicine Lake Road, for Financial Assistance to Relocate and
IMP. PROJECT 732 Expand Facility in the City (Improvement Project No. 732).
Item 5
President Enck stated Egan Companies has rescinded their request for financial
assistance to relocate and expand in the city. The staff worked closely with Egan
Companies to relocate to 8801 Science Center Drive. Unfortunately, Egan
Companies has chosen to relocate to Brooklyn Park. President Enck stated Egan
Companies recognized the efforts of Mr. McDonald and the city staff. He stated
their new location will give them the space they need.
The EDA expressed appreciation that Egan Companies explored the feasibility of
remaining in New Hope.
ADJOURNMENT
to
Motion was made by Commissioner Collier, seconded by Commissioner Cassen,
adjourn the meeting
. All present voted in favor. Motion carried. The New Hope
EDA adjourned at 9:16 p.m.
Respectfully submitted,
Eve Lomaistro
Recording Secretary
New Hope EDA January 27, 2003
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