Adopt Resolution #20-267 Approving 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. The EDA reviewed this request at the November 12, 2020 meeting and recommends approval as presented.

Please note - this site was previous the subject of an approved lease with Connections Church. Ultimately, Connections Church chose a different solution for their temporary space needs in Coon Rapids and is no longer pursuining this site. 

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 ($10-12/SF) 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. Approve Resolution #20-267 as presented; subject to City Attorney review.
2. Approve Resolution #20-267 with changes; subject to City Attorney review.
3. Direct staff to continue negotiations with proposed tenant.
4. Something else.

This item is being handled under normal Staff duties

The EDA reviewed the offer by Potter's House Christian Community Church on November 12, 2020 and made a unanimous recommendation to approve as presented. 

Motion to Resolution #20-267 approving Lease Agreement for 6701 Hwy 10 NW: Case of Potter's House Christian Community Church (as presented); subject to City Attorney review.