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EDA 01/27/03OFFICIAL FILE COPY CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North Monday, January 27, 2003 President W. Peter Enck Commissioner Sharon Cassen Commissioner Don Collier Commissioner Mary Gwin-Lenth Commissioner Steve Sommer 2. 3. 4. Call to order Roll Call Approval of Regular Meeting Minutes of December 9, 2002 Resolution Approving Office Lease for Tenants at 7801 Bass Lake Road (Improvement Project No. 719) Update on Request by the Egan Companies, 7100 Medicine Lake Road, for Financial Assistance to Relocate and Expand Facility in City (Project No. 732) 6. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 Approved EDA Minutes Regular Meeting December 9, 2002 City Hall CALL TO ORDER ROLL CALL APPROVE MINUTES DISCUSSION/ 43OO QUEBEC Item 4 New Hope EDA Page 1 President Enck called the meeting of the Economic Development Authority to order at 8:57 p.m. Present: W. Peter Enck, President Sharon Cassen, Commissioner Don Collier, Commissioner Mary Gwin-Lenth, Commissioner Pat LaVine Norby, Commissioner Motion was made by Commissioner Gwin-Lenth, seconded by Commissioner Cassen, to approve the Regular Meeting Minutes of November 12, 2002. Voting in favor: Enck, Cassen, Collier, Gwin-Lenth; Voting Against: None; Absent: None; Abstained: Norby. Motion carried. President Enck inlxoduced for discussion Item 4, Discussion Regarding Request by Collyard Group/Waldorf-Nevens, Inc. for City Assistance for Potential Redevelopment at Ware Manufacturing Property, 4300 Quebec Avenue North. Mr. Gary Collyard, Collyard Group, LLC, was recognized. He reported of his client's interest in establishing a laundry plant in New Hope. He stated Waldorf- Nevens, Inc. is recognized as one of Minnesota's freest laundry and dry cleaning companies. He stated the business would accommodate the creation of 50 new jobs. Mr. Collyard requested financial assistance for improvements at the 4300 Quebec Avenue North property. Messrs. George Zahhos and John Zahhos were also recognized and shared their expansion plans. It was noted that the present facility in Edina will remain for their dry cleaning operations (retail such as business suits). The New Hope facility would accommodate laundry operations for commercial businesses such as hospitals and hotels. Mr. John Zahhos stated the cost for equipment alone is over $2 million. The equipment is state of the art and reaches 70 decibels at the loudest. Mr. George Zahhos noted this noise level is approximately 1/8 compared to the present equipment used by Ware Manufacturing. The need for financial assistance from the city would be to accommodate the necessary physical changes to the building such as installation of 8-10" water and sewer lines. Commissioner Gwin-Lenth questioned whether the business would occupy the entire building. She also asked if the business uses hazardous chemicals. Mr. John Zahhos stated the building is 94,000 square feet and they would not occupy the entire building immediately. He commented that many institutional and restaurant facilities are lacking inventory space so they may utilize part of the building in that capacity. Mr. Zahhos reported that laundry detergent will be used only. He confn-med that no hazardous chemicals are required for the laundry operations. George and John Zahhos invited the EDA to tour the facility in Edina. December 9, 2002 IMP. PROJECT 707 Item $ EDA RESOLUTION 02-12 Item 5 IMP. PROJECT 707 Item 6 EDA RESOLUTION 02-13 Item 6 ADJOURNMENT President Enck thanked the gentlemen for their presentation to the EDA. Staff was directed to continue discussions to explore the feasibility of financial assistance for renovating the building at 4300 Quebec Avenue North. President Enck introduced for discussion Item 5, Resolution Approving Initial Agreement Between the Minneapolis Public Housing Authority and the New Hope Economic Development Authority for the PPL/Bass Lake Road Apartments Project at 7610 Bass Lake Road (Improvement Project No. 707). " Mr. Ken Doresky, Community Development Specialist, stated Items 5 and 6 involve agreements relating to the 7610 Bass Lake Road property. The agreements are necessary to establish design specifications and funding arrangements. Commissioner Collier introduced the following resolution and moved its adoption "RESOLUTION APPROVING INITIAL AGREEMENT BETWEEN THE MINNEAPOLIS PUBLIC HOUSING AUTHORITY AND THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY FOR THE PPL/BASS LAKE ROAD APARTMENTS PROJECT AT 7610 BASS LAKE ROAD (IMPROVEMENT PROJECT NO. 707),,. The motion for the adoption of the foregoing resolution was seconded by Commissioner Norby, and upon vote being taken thereon, the following voted in favor thereofi Enck, Cassen, Collier, Gwin- Lenth, Norby, and the following voted against the same: None; Abstained: None; Absent: None; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. President Enck introduced for discussion Item 6, Resolution Approving Cooperation Agreement Between the Minneapolis Public Housing Authority, the New Hope Economic Development Authority and the City of New Hope for the PPL/Bass Lake Road Apartments Project at 7610 Bass Lake Road (Improvement Project No. 707). Commissioner Collier introduced the following resolution and moved its adoption "RESOLUTION APPROVING COOPERATION AGREEMENT BETWEEN THE MINNEAPOLIS PUBLIC HOUSING AUTHORITY, THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY AND THE CITY OF NEW HOPE FOR THE PPL/BASS LAKE ROAD APARTMENTS PROJECT AT 7610 BASS LAKE ROAD (IMPROVEMENT PROJECT NO. 707),,. The motion for the adoption of the foregoing resolution was seconded by Commissioner Norby, and upon vote being taken thereon, the following voted in favor thereof: Enck, Cassen, Collier, Gwin-Lenth, Norby, and the following voted against the same: None; Abstained: None; Absent: None; whereupon thc resolution was declared duly passed and adopted, signed by thc president which was attested to by the executive director. Motion was made by Commissioner Collier, seconded by Commissioner Norby, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 9:23 p.m. Respectfully submitted, Valerie Leone City Clerk New Hope EDA Page 2 December 9, 2002 EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development ~~~,~ 1-27-03 EDA Item No. By: Kirk McDonald, Director of CD & Ken Doresky, CD Specialist B~ ,~.,./ 4 RESOLUTION APPROVING OFFICE LEASE FOR TENANTS AT 7801 BASS LAKE ROAD (IMPROVEMENT PROJECT NO. 719) ACTION REQUESTED Staff is requesting EDA 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 Iow quote firm, in the lump sum amount of $300 per month to manage the office building and directed staff to further ~nquire 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. POLICY/PAST PRACTICE 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 operating responsibilities for various properties in 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 located at 7601-41 62nd Avenue North. The City ~urchased these buildings in 1998 for redevelopment purposes, relocated the tenants, cleared the sites and landbanked the properties. BACKGROUND On December 9, the Council approved a resolution awarding a management contract to Quest Real Estate, the Iow quote firm, in the lump sum amount of $300 per month to manacle the office buildin~l and directed staff Request for Action Page 2 1-27-03 to further inquire with the tenants about signing long term leases of twelve (12) to eighteen (18) months. Evergreen Land Services, the City's relocation consultant then surveyed all the tenants. 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. Please see the following information: Evergreen Land Services Long-Term Lease Information: As requested by the Council, Evergreen Land Services, the City's relocation consultant met with the tenants to determine their relocation eligibility and any desire to remain in the building. Please see the following long-term lease interest summary: Unit Business Last Name Monthly Rent Yearly Rent Long Term Lease 101 MN Repping L. Evans/M. Martin $560 $6720 Yes 110 Best Publications Nick Taylor $435 $5220 Yes, but concerns 111 Empty N/A N/A N/A N/A 120 JAK Investments John Koppi $360 $4,320 Yes, but concerns 121 Re-Bound Freight Ed Viehman $445 $5,340 Yes, but concerns 200 Golden Openings Kim Baeth $480 $5,760 Yes 201 Empty N/A N/A N/A N/A 210 Dresser Rand Jim Peterson $222.50 $2,670 No lease, sublets 210 210 On-Track Finance Dale Sprout $222.50 $2,670 Yes 18-24 months, 12 no 211 Buetz Auto Mark Beutz $250 $3,000 Yes 220 Plymouth Agency Sandy Sculthorp $545 $6,540 Yes 231 Empty N/A N/A N/A N/A Total $3,520 $42,240 Estimated Cash Flow Gross Rent $3,520 Operating Expenses (Estimate) $1,895 Management Fee $300 Cash Flow per month $1,325 Evergreen Land Services provided the following information regarding tenant leases: Lori Evans/Margaret Martin - Minnesota Rapping, Suite 101 · Plans on staying the full 12-18 months. · Would be willing to sign a lease. Want to stay until the very end. Nick Taylor - Best Publications, Suite 110 · Plans on staying the full 12-18 months. · Would be willing to sign a lease. Before the building was bought by the city of New Hope, he was on a month-to-month lease. He likes that for the flexibility reasons. Would lose some of that by signing a 12- month lease. Is a bit concerned about that. John Koppi- JAK Investments, Suite 120 · Plans on staying the full 12-18 months, but is concerned about the rent. Does not want it to increase, would like it to go down. · Would be willing to sign a lease. Is interested in the terms of the lease and why the month to month is not an option anymore. Would like to stay as long as possible of course. Request for Action Page 3 1-27-03 Ed Viehman - Re-Bound Freight Brokers, Suite 121 (tenant manager) · Plans on staying the full 12-18 months. · Would be willing to sign a lease. Big question he has is WHY' now does he need to have a lease? Kim Baeth - Golden Openings, Suite 200 · Plans on staying the full 12-18 months. · Would sign a lease with the City. Mark Beutz - Beutz Auto, Suite 211 · Plans on staying the full 12-18 months. · Would be willing to sign a lease. Dale Sprout - On Trac Financial, Suite 210 · Plans on staying the full 12-18 months. · Would be willing to sign an 18-month lease, but a 12-month lease, probably not. He would like to stay there as long as possible. Two years would be a better lease. He is sub-letting to Jim Peterson and would continue to do so. Jim Peterson - Dresser Rand, Suite 210 · Plans on staying the full 12-18 months. · Does not have a lease with the building, is sub-letting from Dale Sprout. Sandy Sculthorp~ Plymouth Agency, Suite 220 · Plans on staying the full 12-18 months. · Would be willing to sign a lease The City Attorney prepared the attached resolution and lease. The City Attorney submitted the following comments regarding the information. "The lease is for a two-year term, however, it can be terminated after 15 months on 90 days written notice. Please refer to paragraph 2 of the lease concerning this term. Paragraph 4 deals with the base rent. The rent will remain the same during the 24 month period of the lease. Finally, paragraph 16 deals with tenants holding over after the 24 month period. At that time, the lease will automatically revert to a month-to-month lease, and the rent will increase by 150% of the base rent. The other rental terms are basically boiler plate rental terms." On October 28, 2002, the Council approved a resolution to purchase the subject property for $370,000. The property is a multi-tenant office building, currently occupied by nine tenants. Two office spaces are vacant. At the October 28 meeting, the Council requested that staff research options to maintain the building's current use as offices and potentially lease the open units until redevelopment activities begin. The concept being that the City could generate income from the property and delay relocation of the existing businesses before the site is required for redevelopment. Relocation expenses would be required as a component of this acquisition project. Evergreen Land Services, the City's relocation consultant, has provided the City with a preliminary relocation estimate of $20,000 per tenant. It has been determined that ten (10) tenants are currently located in the building, therefore assuming all the tenants accept the $20,000 in lieu of payment as opposed to actual expenses, relocation expenses are estimated to be $200,000. Relocation activities are currently underway. On July 22, 2002, the Council authorized staff to negotiate the potential purchase of this multi-tenant office building based on its appraised value of $330,000 as determined by the Shenehon Company. Based on a meeting with the property owner on April 15, 2002, the City Manager authorized staff to obtain an appraisal of 7801 Bass Lake Road for potential acquisition purposes. The property is located in the East Request for Action Page 4 1-27-03 Winnetka Livable Communities area and in Planning District 6. This property is included in the east Winnetka area redevelopment concept plans developed by the Livable Communities Task Force. In 1998, the Council passed a resolution approving the City of New Hope Comprehensive Plan Update. In 1999, the Metropolitan Council approved the Comprehensive Plan Update. In the Plan, the City was broken down into several planning districts. Planning District 6 is the district where the Winnetka, Bass Lake Road and Sumter properties that the City has been pursuing over the past few years are located. Planning District 6 is bordered by Winnetka Avenue North to the west, C.P. Rail system to the south and the City of Crystal to the east and north. The Comprehensive Plan targeted several areas in the City for redevelopment. Recommendations for Planning District 6 include the acquisition and redevelopment of sites located along the south side of Bass Lake Road, in the Bass Lake Road extension area and along the east side of Winnetka Avenue North between 5340 Winnetka Avenue and Bass Lake Road. On May 24, 2002, the Council hired the engineering firm Short Elliott Hen~rickson, Inc. to determine whether qualification tests for tax increment eligibility (site coverage, building conditions) can be met in the east Winnetka area. This study is being undertaken to facilitate redevelopment efforts in the area. SEH has determined the subject building to be substandard in the DRAFT report. At a future meeting, staff will request that the Council consider a resolution determining the building to be substandard and included in a Tax Increment Financing District. The resolution would allow the City to clear the site and still include the property in a future Tax Increment Financing District. The property is located at 7801 Bass Lake Road and built in 1969. The property is zoned CB and is used as a multi-tenant office building. The property measures a total of 14,810 sq. ft. or .34 acres. Gross building area of the facility is an estimated 6,000 sq. ft., with a net rentable area of approximately 4,313 sq. ft. Once the building is vacant, the City would request quotes for demolition and site restoration. Staff recommends approval of the attached resolution. FUNDING The subject property is located in an area where TIF funds can be expended. TIF funds were used for property acquisition. The property produces a positive cash flow. Positive cash flow dollars will be used to pay management costs. ATTACHMENTS · Resolution · City Attorney Correspondence (1/20/03) · Location Map · Topographic Map · Evergreen Land Services Memorandum (1-7-03) · Sample Lease DOUGLAS J. DEBNER3 GORZ)ON L. JENSEN~ GLEN A. NORTON STEVEN A. SONDRALL WILLIAM C. STRAIT: STACY A. WOODS OF COUNSEL LORENS Q. BRYNESTAD ' Real Properly Law Specialist Certified By The Minnesola Slate Bar Association :Qualified ADR Neutral ~Admitted in Iowa JENSEN & SONDRALL, P.A. /lttorneys At Law 8525 EDINBROOK CROSSING, STE. 201 BROOKLYN PARK, MINNESOTA 55443-1968 TELEPHONE (763) 424-8811 · TEL£FAX (763) 493-5193 e-mail law~jensen-sondrall.¢om January 20, 2003 VIA FACSIMILE TO: (763) 531-5136 AND BY REGULAR U.S. MAIL Ken Doresky Community Development Specialist City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Re: Office Lease/7801 Bass Lake Road Our File No.: 99.11275 Dear Ken: This letter will confirm our discussions at the January 16, 2003 meeting on written leases for the tenants at the 7801 Bass Lake Road office building. Please find enclosed a Lease which can be used for all tenants at the property. Also enclosed is a proposed Resolution approving the lease. As we discussed, the Lease is for a two-year term, however, it can be terminated after 15 months on 90 days' written notice. Please refer to paragraph 2 of the Lease concerning this term. Also, paragraph 4 deals with the base rent. You can do the mathematics on each tenant and incorporate into that paragraph their annual rent and their monthly installment. As we also discussed, the rent will remain the same during the 24 month period of the Lease. In paragraph 3, a description of purpose should be written in each lease. An example would be the operation of a "dental clinic" or "insurance agency". Finally, paragraph 16 deals with Tenants holding over after the 24 month period. At that time, the Lease will automatically revert to a month-to-month lease, and the rent will increase by 150% of the base rent. The other rental terms are basically boiler plate rental terms. January 20, 2003 Page 2 Please contact me if you have any questions or comments regarding this Lease. Very truly yours, Steven A. Sondrall, City Attorney, City of New Hope JENSEN & SONDRALL, P.A. sas@jensen-sondrall.com After Hours Extension #147 Enclosures CC.' Valerie Leone (w/enc.) p:\Auomey~S AS\Letter~\CNH99.11275-001-Ken Ltr.ck~c CITY OF NEW HOPE EDA RESOLUTION NO. 03- RESOLUTION APPROVING OFFICE LEASE FOR TENANTS AT 7801 BASS LAKE ROAD BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope as follows: WHEREAS, the New Hope Economic Development Authority (EDA) has purchased the office building at 7801 Bass Lake Road; and WHEREAS, it is in the best interest of the EDA and the tenants located at the office building that written leases be executed between the parties outlining the terms of the lease arrangement; and WHEREAS, a proposed office lease for the Nelson Building - 7801 Bass Lake Road (attached hereto as Exhibit A) has been prepared and has been recommended for use as the lease between the EDA and the tenants. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope that the office lease for Nelson Building - 7801 Bass Lake Road attached hereto as Exhibit A is hereby approved, and the Executive Director is hereby directed to take all necessary steps to enter into written leases with the tenants at 7801 Bass Lake and is further directed and authorized to execute leases on behalf of the New Hope EDA. Adopted by the Economic Development Authority of the City of New Hope, Hennepin County, Minnesota this 27* day of January, 2003. Attest: Daniel J. Donahue, Executive Director W. Peter Enck, President P:\Attomey\Cnh Resolutions\CNH99.11275-002-EDA Reso Approv Lease(7801 Bass lake Road).doc OFFICE LEASE FOR NELSON BUILDING 7801 BASS LAKE ROAD the THIS LEASE, is made and emered into this 1st day of February, 2003, by and between New Hope EDA, hereinafter referred to as "LANDLORD", and , hereinafter referred to as "TENANT". In consideration of the mutual covenants hereafter set forth, the parties do hereby agree as follows: 1. DESCRIPTION OF THE PREMISES. LANDLORD does hereby lease and TENANT does hereby take from LANDLORD the following office located within the Nelson Office Building at 7801 Bass Lake Road, New Hope, Minnesota: Office No. ; (the "Leased Premises"). This Lease shall be for a term of 24 months, commencing on the 1st day of February, 2003 and terminating the 31s' day of January, 2005, without notice or demand, subject to early termination as follows: either party may terminate this Lease for any reason on or after April 30, 2003, provided the party terminating the Lease gives a 90 day written notice to the other party indicating the terminating party's intent to terminate the Lease. If a party hereto exercises this termination option, the Lease will terminate 90 days following the last day of the month in which the notice was given. 3. USE OF PREMISES. It is agreed that the Leased Premises shall be used by the TENANT for: operation of a and for no other purpose, subject to all local, state and federal laws and regulations regarding use of the premises. 4. BASE RENT. TENANT shall pay to LANDLORD in advance, the annual rent in monthly installments on or before the tn:st day of each month beginning February 1, 2003, as shown below: Annual Rent Monthly Installments Payment Period $ $ 2/1/2003 through 1/31/2005 LANDLORD shall have the right to assess and collect from TENANT a late charge of three percent (3 %) on rental payments received after the tenth of the month. 5. INSURANCE. TENANT shall maintain in full force and effect during the lease term, a policy of public liability insurance under which LANDLORD and TENANT are named insured; that the minimum limits of liability of such insurance shall be $1,000,000.00 combined single limit for bodily injury and property damage. TENANT agrees to deliver an ACCORD 25 certificate of insurance evidencing such coverage, to LANDLORD. Such policy shall contain a provision requiring thirty (30) days' written notice to LANDLORD before cancellation of the policy can be effected. LANDLORD shall carry and cause to be in full force and effect a fire and extended coverage insurance policy on the building, but not contents owned, leased to or otherwise in possession of TENANT. LANDLORD and TENANT each hereby waive any claim based upon liability which may arise against the other so far as the claim related to loss or damage to the premises or contents which is covered by insurance. 6. MAINTENANCE. TENANT agrees to keep the Leased Premises in a clean, orderly and sanitary condition and will neither do nor permit to be done therein anything which is in violation of insurance policies or that is contrary to law. 7. ASSIGNMENT. TENANT will not assign, mortgage or encumber this Lease, and will not sublet any part of said premises. 8. BREACH BY TENANT. In the event TENANT shall vacate or abandon the Leased Premises or shall default in any of its covenants herein, and such default shall not be cured within ten (10) days after written notice from LANDLORD, LANDLORD is hereby authorized, at its option, to exercise one or more the following rights and remedies: (i) to re-enter the Leased Premises to eject TENANT and take full possession of the Leased Premises; (ii) to terminate this Lease at its option; (iii) to remove from the Leased Premises all personal property of TENANT and to store the same to the account and at the expense of TENANT and to sell such property or any party thereof, and out of the proceeds to pay all expenses of so removing, storing and selling the same, and all sums which shall then be in arrears or past due for rent. No such act or acts of LANDLORD shall be construed as cancellation of this Lease or waiver of its term, except exercise by LANDLORD of its option to terminate this Lease. In case LANDLORD shall determine that an action or proceeding at law or otherwise is necessary to enforce the terms and conditions of this Lease, TENANT agrees to pay to LANDLORD the necessary costs and reasonable attorney's fees and disbursements thereof. 9. ALTERATIONS. TENANT shall not make any alterations to the Leased Premises. 10. ENTRY. LANDLORD, its agents and its employees shall have the right to enter the premises at all reasonable times to inspect them, to make repairs and to maintain the building of which the Leased Premises are a part. LANDLORD shall also have the right of entry as provided in Paragraph 8. 11. NOTICES. All legal notices, consents, demands and requests, with the exception of normal periodic billing statement, which may be or are required to be given by either party of the other, shall be in writing and delivered in person or sent by United States registered or certified mail, return receipt requested, addressed to TENANT at the street address set forth in Paragraph 1 and to the LANDLORD in care of: Quest Real Estate, Inc. 10700 Old County Road 15, Suite 150 Plymouth, MN 55441 with a copy to: Steven A. Sondrall New Hope City Attorney Jensen & Sondrall, P.A. 8525 Edinbrook Crossing, Suite 201 Brooklyn Park, MN 55443 or to such other address as LANDLORD may direct in writing in the future. The date which said registered or certified mail is mailed by LANDLORD shall be conclusively deemed to be the date on which a notice, consent, demand or request is given or made. The above address of a party may be changed at any time or from time to time by notice given by said party to the other party in the manner herein above provided. 3 12. CLAIMS. TENANT will make no claim against LANDLORD for any loss of or damage to property caused by theft, burglary, water, gas, electricity or other means, unless LANDLORD has been willfully and grossly negligent in not taking precaution to prevent such loss or damage. 13. IMPAIRMENT OF USE. If the premises shall become untenantable or unfit for occupancy, in whole or in part, by the total or partial destruction of the building by fire or other casualty, this Agreement may, at the option of LANDLORD, cease and terminate and TENANT shall have no claim against LANDLORD for the value of any unexpired term of said Agreement. If LANDLORD shall elect to restore the premises, rent shall be abated for each period of restoration in accordance with the ratio of the portion of the premises deemed untenantable to the entire premises. 14. QUIET ENJOYMENT. TENANT, upon payment of the rent herein reserved and upon performance of all of the terms, covenants and conditions of the Lease by it to be kept and performed, shall at all times during the term hereof or during any extension or renewal hereof, peaceably and quietly enjoy the Leased Premises without any disturbance from LANDLORD or from any other person claiming through LANDLORD. 15. DEPOSIT. TENANT acknowledges and agrees no prepaid rent or security deposit has been made to LANDLORD. 16. HOLDING OVER. If TENANT shall hold over the Leased Premises after the expiration of the term hereof, such holding over shall be construed only to be a tenancy from month-to-month subject to all covenants, conditions and obligations hereof except that the rent shall be 150% of the amount shown in Paragraph 4. Nothing herein shall be construed to give TENANT any rights to hold over and to continue in possession of the Leased Premises after the expiration of the term hereof. 17. OTHER PROVISIONS. The invalidity or unenforceability of any provision of this Lease shall not affect or impair the validity or any other provision. During the term of this Lease Agreement, in the event TENANT should pay to LANDLORD an amount which is less than the amount due at that time, and LANDLORD receives and deposits such payment, such receipt and deposit shall not be assumed to be payment in full, but rather partial payment toward the TENANT's account. This Lease shall be governed by, construed and enforced in accordance with the laws of the State of Minnesota. ' One or more waivers of any covenant, term or condition of this Lease by either party shall not be construed by the other party as a waiver or subsequent breach of the same covenant, term or condition. The failure or delay on the part of the other party to enforce or exercise at any time any of the provisions, rights or remedies of this Lease shall in no way be construed to be a waiver thereof nor any way effect the validity of the Lease or any part thereof or the right of the party to thereafter enforce each and every such provision, right or remedy. IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed the day and year first-above written. LANDLORD: TENANT: NEW HOPE EDA By: Daniel J. 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'. ..,.%, .., · ~.....,..,, '.,.... - ~,~.f : .?~ %" .... .... ~-..,......... I ST. $STH AVENUE RAPHAEL / 120.4 O ~ Q Q Q O J evergreen '-~LA ND SERVICES COMPANY 4131 Old Sibtey Memorial Highway Suite 201 Eagan, MN 55122 Tel: (651) 882-0200 Fax: (651) 882-6564 January 7, 2003 Ken Doresky Community Development Specialist City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Re: 7801 Bass Lake Road tenants signing a 12-18 month lease with the City of New Hope. Dear Mr. Doresky: Attached is a breakdown of the tenants that are currently in the 7801 Bass Lake Road building. I had a chance to speak with each one of them regarding the possibility of signing a 12-18 month lease with the City of New Hope. They all said they would be willing to sign a lease depending on the terms of the lease. Some questions did come up as to why they needed to sign a lease or why it was not going to month-to-month, as they have had in the past. I addressed those questions to the best of my knowledge. Just stating that the City would be drawing up the lease and I was not aware of the terms. I stated that all questions regarding the lease should be addressed to the City, as they are the building owner and manager now. If you need any more information, please give me a call at (651) 882-0200. Sincerely, Kari Klassen Relocation Specialist Relocation status of tenants at 7801 Bass Lake Road - New Hope. MN Mark Beutz - Beutz Auto, Suite 211 · Plans on staying the full 12-18 months. · Would be willing to sign a lease. .lira Peterson - Dresser Rand, Suite 210 · Plans on staying the full 12-18 months. · Does not have a lease with the building, is sub-letting from Dale Sprout. Kim Baeth - Golden Openings, Suite 200 · Plans on staying the full 12-18 months. · Would sign a lease with the city Ed Viehman - Re-Bound Freight Brokers, Suite 121 · Plans on staying the full 12-18 months. · Would be willing to sign a lease. Big question he has is WHY now does he need to have a lease? John Koppi - .1AK Investments, Suite 120 · Plans on staying the full 12-18 months, but is concerned about the rent. Does not want it to increase, would like it to go down. · Would be willing to sign a lease. Is interested in to the terms of the lease and why the month to month is not an option anymore. Would like to stay as long as possible of course. Nick Taylor - Best Publications, Suite 110 · Plans on staying the full 12-18 months. · Would be willing to sign a lease. Before the building was bought by the city of New Hope, he was on a month-to-month lease. He likes that for the flexibility reasons. Would lose some of that by signing a 12-month lease. Is a bit concerned about that. Dale Sprout - On Trac Financial, Suite 210 · Plans on staying the full 12-18 months. · Would be willing to sign an 18-month lease, but a 12-month lease, probably not. He would like to stay there as long as possible. Two years would be a better lease. He is sub-letting to .lim Peterson and would continue to do so. Lori Evans/Margaret Martin - Minnesota Rapping, Suite 101 · Plans on staying the full 12-18 months. · Would be willing to sign a lease. Want to stay until the very end. Sandy Sculthorp- Plymouth Agency, Suite 220 · Plans on staying the full 12-18 months. · Would be willing to sign a lease Susan Aseby- Bass Lake Insurance Agency, Suite 220 · Plans to vacate and move into new location by 1/1/03. · Vacated .loe Sprout/Russ Hoyt- Frontier Interiors, Suite 201 · Plans to vacate and relocate business and set up a home office. · Vacated EDA j REQUI ST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development -~ 1-27-03 EDA Item No. By: Kirk McDonald By: . 5 UPDATE ON REQUEST BY THE EGAN COMPANIES, 7100 MEDICINE LAKE ROAD, FOR FINANCIAL ASSISTANCE TO RELOCATE AND EXPAND FACILITY IN CITY (?RO.TgCT NO. 732) ,REQUESTED ACTION Staff requests to update the EDA on the status of the Egan Companies project. POLICY/PAST PRACTICF When city staff receives requests for financial assistance from local companies, they are submitted to the EDA for consideration. In the past, the City has assisted a number of businesses with expansion projects using a variety of financing tools. Staff routinely updates the EDA on the status of specific requests. ,BACKGROUND At the August 26, 2002, EDA meeting, the EDA considered a request by Egan Companies for financial assistance to relocate and expand its facility in New Hope. Staff and the financial consultant met with company officials on several occasions and preliminary cost estimates/financing projections were prepared regarding an expansion at 8801 Science Center Drive. Staff was also aware that Egan was considering the purchase of another property in Brooklyn Park to relocate its business. The company recently submitted the attached correspondence confirming that it will be moving the operations to Brooklyn Park. Staff wanted to share this information with the EDA and is sorry to see Egan Companies relocate out of the City and wants to work with the company to bring another business to the existing site and buildings on Medicine Lake Road in the future. A'I-I'ACHMENTS · 1/17/03 Egan Correspondence · News Article · Previous RFAAttachments MOTION BY SECOND BY l:rfa\improvement projects\Q-ip732 Egan The Egan Companies Building Integrated Solutions'" Craig T. Sulentlc Chief Executive Officer and President 7100 Medicine Lake Road New Hope, MN 55427-3671 763.544.4131 Main 763.595.4380 Fax ww~'.eganco.com January 17, 2003 Mr. Peter Enck, Mayor City of New Hope 4401 Xylon Ave N New Hope, MN 55428 RE: Egan Companies Dear Peter: Thank yoa for assisting Egan Companies to relocate to a larger facility in th6 City of New Hope ("City"). You and others at the City, especially Kirk McDonald, have been very cooperative in exploring ways for the City to provide Tax Increment Financing ("TIF"), tax rebates and other financial assistance to Egan Companies to try and redevelop 8801 Science Center Drive. As you know from our, previous discussions, Egan Companies has proudly called the City of New Hope its headquarters since 1964 and strongly preferred to stay in New Hope. Since, we must act immediately to secure a new facility, it is likely Egan Companies will be consolidating its operations within a renovated facility in the City of Brooklyn Park. The only facility currently available in the City of New Hope, that may meet our needs, is 8801 Science Center Drive. Since CSM, has the property under contract to purchase it appears unlikely we can purchase and renovate the building in budget and on time to suit our needs. We appreciate the fact the City appears willing to provide tax increment financing ("TB:V'). The TIF projections provided by the City indicated a $500,000 shortfall, approximately, from the amount required, to offset the cost of the improvements required to make 8801 Science Center Drive usable to Egan Companies, and keep the project within budget. Peter, this decision was not made lightly, and much effort was put in to finding an affordable and timely way to purchase a suitable facility in the City of New Hope. I have a profound respect for you and others at the City of New Hope, and I sincerely appreciate all of your efforts to make the 8801 Science .Center Drive facility work for Egan Companies. Si_ncerelT~x /r~ Crai~lentic Chief Executive Officer CC: Daniel J. Donahue, City Manager Kirk McDonald, Director of Community Development Mark Houge, CRESA Partners THE EGAN COMPANIES Egan M~ehanical Contractors, Inc. * Egan-McKay Elecffical Contractors, Inc. £ & S Insulation Co. · Egan Automation, Inc. ,, Int~rClad, Inc. · Egan Service An AJ~'mati~e Action/Eqmd Opport~nlty Employer Real _F~._~-~te.~ Journal De-::_~x, be,- 9, 2002 Egan will consolidate COMPANY TO BUY 103,000 SQUARE FOOT OFFICE, WAREHOUSE by Danielle Anderson Tlhe Egan Cos. plans to close on a 03,000 square foot office and ware- house facility in Brooklyn Park by years end. The New Hope-based construction company expects to consolidate at least five of its six existing Twin Cities locations at that new facility, according to Don Kohlenberger, Egan's vice president of mechanical conslruction. Kohlenberger would not release specifics, such as the building's location or purchase price, because the deal has yet to close. However, he did confirm that Egan has signed a purchase agreement on the property. He adds the Egan's goal is to begin talc- ing occupancy of the building next Octo- ber: The company plans to spruce the place up m the meantime. "Once we finalize the due diligence on the piece of real estate and we close on the facility, we can start refining our space to meet our require- and.mo r mponant our p uction yom an.aiysis, Koldenberger says. "That process is going to take about three months. We would plan on demolitions of existing structures in the building taking place at the end of March, and then con- struction taking place approximately six months beyond that time." Egan currently occupies 126,300 square feet in its six locations, including a 34,000 square foot headquarters at 7100 Medicine Lake Road in New Hope, an 18,000 square foot warehouse facility at 7155 Medicine Lake Road in Golden Valley, a 32,300 square foot duct fabrication facility at 2335 Nevada Ave. in Golden Valley, Egan Ser- vices facility at 2901 Louisiana Ave in New Hope, an 11,000 square foot Egan Automation facility at 6765 Wedgwood Road in Maple Grove and the 26,500 square foot lnterclad Curtainwall Systems facility at 14105 13th Ave. in Plymouth. Th ' ' ' P~OTO COUaTESY O~ T~E ECaa COS. e cgan ~.os. [~lans to sell its headquarters building m 7100 Medicine Lake in New Hope as I~rt ot an upcoming consolidation. Thc company has definite plans to dis- pose of all of the existing facilities except for the curtainwaU building in Plymouth. "That's the only group that may not be part of the phase one implementation," Kohlenberger says. "They have a lease that will continue on for a number of years yet so it is purely a financial-driven issue." Egan owns three of the remaining propertiesmthe headquarters building in New Hope, the warehouse facility in Golden Valley and the duct fabrication building in New Hope~and Kohlcnberg- cr says those properties will be listing in the next six months. Egan's upcoming move is about 18 months in the making. During that time, the firm has been working with a real estate services team from CRESA Part- hers. Egan execs gave the move a green light a year ago after considering the financial and cultural advantages of operatin~ under a single roof. "Part of our goal wi~ the new facility is to keep our operating expenses as low as possible;' Kohlen- bcrger says. "But then we also want to invest in the facility to a certain degree to be able to create a building that will showcase thc different types of things that we do mechanically, curtainwalls, glass glazing systems, automation sys- tems and using the types of materials that we work with everyday." To that end, Egan wiU be tackling some of the build-out on its own. The rest of the work will be done by yet-to-be-named contractors. The company also saw a strategic advantage in having most, if not all, of its 750 employees operating from a single location. "We're at a time when the real benefits lie in us integrating our manage- ment and our ability to deliver our prod- nets," Kohlenberger says. "The more closely we are working with one another, shoulder to shoulder, the more we can learn best practices from one each other." .In that sense, the consolidation marks a shift in philosophy for the company, which started more than 50 years agio with a focus on the plumbing business. As opportunities arose, the firm spun off new divisions, such as mechanical con- tracting and electrical subcontracting, that thrived independently, Kohlenberger says. "Early on some isolation of the dif- ferent business units was beneficial. It allowed each group to grow autonomous- ly.'' Now Egan is set to grow synergistical- ly. The company plans to add to the 103,000 square foot facility to support all of its business units, Kohlenberger says. And it's already eyeing the adjacent undeveloped loL ~! N t ~ AVEN IIIIIIMII g III g III g I I '1 ~1'~F,'I~' '~'~'1~ 1T'~ ~' ¢IEWCREST LA 2751 II 710~ 3101 /ST AVE N 7101 2919 2721 2711 3001 2901 2701 7100 ~l I~ 27TH AVE N 5~21 g210 CTR RD WEST 3E CENTER DR ~l ~ VICT moO ~' I -_. 5mo ..-m~o 56TH A~ ~50 E ~ST~;;: NORTH / g101 g401 g101 ~801 PUBLIC WORKS GARAGE 5410 5501 5417 5401 8801 RIDGE APART- MENTS ~ NORTH RIDGE CARE CENTER AVE N g210 5101 5100 9211 5010 5017 51ST AVE N The Egan C0mpanies Building Integrated Solutions" 7100 ,Medwane Lake Road Ne~. Hope. MN 55427.367 763.5.;4 763.595.4380 F~ August 19, 2002 Mr. Kirk McDonald Director of Commumty Development City of New Hope 4401 Xylon Ave N New Hope, MN 55428 RE: Th~ Egan Companies Thank you for taki~ time last week to discuss how the City of New Hope may be able to assist The Egan Compames in expanding their operations in New Hope, Minnesota. The Egan ~es ("EGAN") requests the City of New Hope Council, staff and financial consultant work with EGAN to determine what alternatives the City of New Hope has to provide Tax Increment Financin~ tax rebates or other financial assistance to facilitate EGAN redeveloping 8801 Science Center Drive, or similar facility, in New Hope. EGAN moved its hea&luatters to New Hope in 1964 and prefers to stay in New Hope. EGAN has been in business for 57 years (founded in 1945) providing commercial construction services to the greater meuopo~ Twin Cities area. EGAN is an crnpioyce owned business with over $130 mill/on dollars in annual revenue. EOAN .has over. seven-hundred-6fty (750) employees desi?i%o and constructing Electrical, Mechanical, Building Automation, Insulation, Glass and Curtain-wall systems. Egan also mamtfacatres compments of the ventilation, electrical and ~..i..?.~ systems they install. The staff includes approxin~____--ly 175 full time office personnel, 100 full time manufacturing people and over 475 crafts-people worki%o on job sites. EGAN employs a diverse group of people including highly skilled craflspeoplc from five (5) different trade unions, designers, The F..gan Companies is recoguiz~ as one of Minne~rat's fastest ~ finns and one of thc nation's largest specialty comract~ firms. EGAN's safety conscious "Zero Injury" culture has resulted in EGAN having a safety record in th= top 10% of the safest construction compames to work for in the nation. EGAN ~_oed CRESA Panne~ to assist in a thorough evaluation of our future real estate needs and we have decided to consolidate all thc company's operations into a single facility. EGAN currently occupies six (6) facilities in four (4) different conmumifies in the Northwest suburbs of the Twin Cities. Each of its current locations is too small to accommodate the ~bd~_.,d c~ons of EGAN. This consolidation would result in bringing 50 to 100 new jobs the City. of New Hope. THE EOAN COMPANIES Egan Mechanical Contractors, Inc. · Egan-McKay Electrical Contractors, Inc. E & S Insulation Co. · Egan Automation, Inc. · InterClad, Inc. · Egan Service EGAN is considering the building at 8801 Science Center Drive. The building would need considerable improvements to accommodate EGAN's needs. We have enclosed sketches of proposed improvements to the 8801 Science Center Drive building. We are asking the Civ,, of New Hope to consider providing 5;800,000 to $1,000,000 of assistance to redevelop this location. EGAN has invested considerable time and e~xse in evaluating all its options to consolidate operations into a n~w facility and would like to lock-m on a site to relocate to before thc end of August 2002, for a move-m date in late 2003. We ask the City of New Hope to indicate the approximate level of finnqcial assistance the City may be able to offer EGAN for the redevelopment of the 8801 Science Center Drive or a similar facility located in New Hope, Please call if you have any questions, comments, or to confirm that City staff will request the City Council consider our request for financial assistance during their meeting August 26, 2002. Sincerely, The £gan Companies Craig Chief Executive Officer CC: Mark Houge, CRESA Partners EGAN COMPANIES SCIENCE CENTER DRIVE HEADQUARTERS NEW HOPE, MN C'R.E.S.A ASSOCIATES Al.lB