Adopt Resolution #23-097 Approving Lease with Mille Lacs Motor Sports II, Inc. for Rear 18,200 Square Feet of Building at 6701 Hwy 10 NW
 

Mille Lacs Motor Sports II, Inc. has presented an offer to lease the rear 18,200 square feet of 6701 Highway 10 NW from June 1, 2024 - May 31, 2025.  Staff, along with Premier Commercial Properties (property manager), has been negotiating with the proposed tenant over the past few months.   The proposed lease is considered "market rate" according to Premier Commercial Properties. It should be noted that Lease Period 1 was an exercised option period for the Tenant and the rate was locked in.  For the Second Lease Period the rent has been raised to $4.25/SF to adjust for current market conditions.  Mille Lacs Motor Sports II, Inc. currently leases space in 6781 Hwy 10 NW, 6745 Hwy 10 NW and 6701 Hwy 10 NW and has proven to be a reliable tenant.  Staff supports this lease to help a growing Ramsey business.
 

N/A

The duration of the lease works well with Hwy 10 construction as it terminates no later than May 31, 2025.  This timing would allow for the property to be put for sale on the open market after the improvements to Hwy 10 are completed.  The City Attorney has reviewed the lease and approves it to form.  The proposed lease rates include a base rent of $3.18 per square foot with a market adjustment to $4.25 per square foot for Lease Period 2 year as defined below in the key lease terms:

Key Lease Terms
Location: 6701 Hwy 10 NW - Cold Storage (Rear 18,200 SF)
Lease Duration: June 1, 2023 - May 31, 2025
Lease Rate :
                        Year 1 (6/1/23 through 5/31/24): $4,827.10 / month (Exercised Option)
                        Year 2 (6/1/24 through 5/31/25): $6,445.83 / month (Market Adjustment)
                                        
Utilities: Tenant paid
Snow Plowing / Sidewalks: Tenant paid (Tenant has agreed to paying "pro-rata" share)
Maintenance responsibilities are clearly outlined.
No political signage allowed.
Early termination clause included. Per the City's agreement with Premier Commercial Properties, a 5% commission payment will be made to Premier for this lease agreement.

Alternatives:

1. Approve Resolution #23-097 as presented; subject to City Attorney review.
2. Approve Resolution #23-097 with changes; subject to City Attorney review.
3. Direct staff to continue negotiations with proposed tenant.
4. Something else.

Staff recommendation is to approve Resolution #23-097 as presented.

Motion to adopt Resolution #23-097 Approving Lease with Mille Lacs Motor Sports II, Inc. for Rear 18,200 Square Feet of 6701 Hwy 10 NW (as presented); subject to City Attorney review.