Consider Renovation and Lease of Old Town Hall

The purpose of this case is two fold.

1. Structural Renovation of structure. 
2. Leasing of space to private business.

The City has been approached by a private business, Small Town Boutique, interested in leasing this building. In order to lease the space, several repairs to the building need to be completed. The building is listed on the National Historic Registry, so any repairs need to be consistent with this protection. The estimated cost of repairs is between $40,000 and $50,000 (planning-level estimates only, not based on actual contractor quotes). 

N/A

Renovation
The City worked with the U of M and Resilient Communities Project (RCP) to put together a 1) Historical Report of the Old Town Hall (17A) and 2) the Future of Ramsey Town Hall (17B).  The Historical Report has been provided for reference but the focus of the discussion centers around the renovation and future use of this historical building in Report 17B.  The report evaluated the pros and cons of keeping the building at is current location or moving it to the COR. The report concluded that leaving it ats current location would allow it to remain on the National Register and not risk damaging the building by moving it.  The report than looked at what would be needed to renovate the building so it could be restored appropriately and be able to be occupied and used.  Any renovation would need to comply with the Secretary of the Interior's Standards for Rehabilitation as outlined in the RCP report

In order to maintain its place on the National Register, special care must be taken to restore the building as close to the original conditions as possible.  The report outlines the 2 major steps necessary to get to this point: 1) Climatization and 2) Pre-Occupancy Upgrade. In 2018, the cost to bring this building into operation was estimated to be $44,940. in 2019, the City re-roofed the building and repaired the eaves.  There is still some minor work to do in this area but the cost should be minimal (under $1,000).  Staff has put together a document outlining the estimated costs to renovate and lease the Old Town Hall.  Staff is supportive of completing the renovation of this historic building.

Future Use

The 17b RCP report discussed potential future use of the Old Town Hall.   Uses contemplated ranged from a public space, museum, school, arts, business and incubator.   Staff has received multiple requests about the availability of the building for lease for various types of businesses.  Schools and retail uses have approached the City but due to the condition and renovation needed to the building the users go elsewhere. These users are excited at the possibility of using this unique building and think its allure will benefit their businesses. The current interested party has been very patient with the city and the use of a boutique with limited hours seems like a great fit for this building.  Parking is also difficult to solve for and any agreement with a future tenant would likely need some sort of cross parking easement with the adjacent properties. 
Staff believes there is an opportunity to preserve a historic building and to add a unique building to the lease market.  The City has been presented a fair offer to lease the Old Town Hall from the Small Town Boutique.  In order to move to the next step the EDA and City Council must consider taking the initiative to renovate Old Town Hall and to put the building back into service.  If the EDA is comfortable recommending moving forward with the renovation staff would ask the EDA to make a formal recommendation to obtain quotes to complete the Climatization and Pre-Occupancy Upgrade outlined in the RCP 17B report.

The Old Town Hall has an estimated 778 SF of leasable space.  It includes a bathroom, main hall and cloak room.  Staff has consulted with a local real estate agent and market rate rent for this building would be in the 12-18 / SF range with the tenant responsible for the utilities / snowplowing and the City responsible for the property taxes. The offer by Small Town Boutique is market rate as outlined below:

Year 1 - $10,200 (13.11 / SF)
Year 2 - $15,000 ($19.28 / SF)
Year 3 - $15,000 ($19.28 / SF)

This business has an online presence and moving to a brick and mortar store certainly has risk.  Staff has put together a projected lease summary (see attached) and identified the break-even point if renovation expenses are accurate. This preliminary analysis shows a breakeven point, from a new City investment perspective, of five years.  Getting quotes from contractors can confirm the renovation numbers and verify the analysis.

Next Steps
The EDA will need to review the information presented and ultimately come to a recommendation on how to proceed in relation to the Renovation and / or lease of the Old Town Hall.

Alternatives:

Renovation

1. EDA recommend to City Council to obtain quotes to complete the full renovation and to utilize EDA / HRA funds to complete the renovation.
2. EDA recommend to the City Council to complete the Climatization work to preserve the Old Town Hall and improve its appearance.
3. Something Else

Lease

1. EDA recommend to the City Council the Staff enter into exclusive negotiations with Small Town Boutique.
2. EDA recommend to the City Council that the City complete the renovation and to put on market after renovation is complete
3. Something else.

Funding for the renovation could be provided by the City EDA Fund Balance or potentially the Anoka County HRA Fund.

Renovation
Staff recommends that the EDA recommend to City Council to obtain quotes to complete the full renovation and to utilize EDA / HRA funds to complete the renovation.
 

Motion to recommend to City Council to obtain quotes to complete the full renovation and to utilize EDA / HRA funds to complete the renovation.

and

Motion to recommend to the City Council the Staff enter into negotiations with Small Town Boutique.