Loading...
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 Page 1 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 Page 2 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 Page 3