Consider Lease Agreement for 6701 Hwy 10 NW: Case of Potter's House Christian Community Church
(Portions of the meeting may be closed to the public)

Potter's House Christian Community Church has presented an offer to lease the west 4,820 square feet of 6701 Highway 10 NW for 5 years.  Staff, along with Premier Commercial Properties (property manager), has been negotiating with the proposed tenant over the past few weeks.   Potter's House Christian Community Church currently leases space in New Hope and their lease expires in December 2020.  The west 4,820 square feet of 6701 is currently vacant and has been used sporadically by Youth First over the past summer. 

This space was previously occupied by Northern Light Church.  During the last lease period from 11/1/18-10/31/19, Northern Light Church paid $2,962 / month. The offer from Potter's House Christian Community Church is $3,500 / month for year one with inflationary increases of approximately 2.5% over the next five years.  The offered rate is $8.71/SF with market rate being around $12.00/SF.

N/A

The offer of $3,500 / month by Potter's House Christian Community Church is the offer that is on the table for consideration.  Staff and the property manager have negotiated a lease that is closer to market rate.  Even though the rate of $3,500 / month ($8.71 / SF) is slightly below market but much higher than what was previously approved for Connections Church ($6.22/SF).  There is value to having a tenant in the building and maintaining it.  Staff and the Property Manager support accepting the offer with the key terms below.

Key Lease Terms
Location: 6701 Hwy 10 (West 4,820 SF)
Lease Duration: December 1, 2020 - November 30, 2025
Lease Rate (2.5% inflator):
                        Year 1 (12/1/20 through 11/30/21): $3,500.00
                        Year 2 (12/1/21 through 11/30/22): $3,587.00
                        Year 3 (12/1/22 through 11/30/23): $3,677.00
                        Year 4 (12/1/23 through 11/30/24): $3,769.00
                        Year 5 (12/1/24 through 11/30/25): $3,863.00
Utilities: Tenant paid
Snow Plowing / Sidewalks: Tenant paid (Tenant has agreed to paying "pro-rata" share)

Alternatives:

1. Recommend to City Council to approve Lease as presented; subject to City Attorney review.
2. Direct staff to continue negotiations with proposed tenant.
3. Recommend to City Council something else.

This item is being handled under normal Staff duties

Staff recommends a recommendation to City Council for approval the Lease as presented; subject to City Attorney review.

Motion to recommend to City Council approval of the Lease as presented; subject to City Attorney review.