Anoka County License Center Lease Amendment

Staff has been reviewing a request by Anoka County to amend the License Center Lease terms.  City Council discussed the proposed amendment by Anoka County at their May 14, 2024 Work Session.  Following discussion, the City Council agreed to the following amendments:

• Amend future terms as requested to three year terms with a mutually agreed option of four additional terms.
• Adjust the annual rent escalator to 25 cents per year instead of a 2% increase.
• Leave the CAM charges as it is to include the License Center area and common shared space.

Following this direction, staff continued to work with the County to implement the amendment.  Part of this discussion further included adjusting the annual term from July 1 – June 30 to follow a calendar year.  This would benefit both parties from a budgeting standpoint as both entities are following a calendar year budget cycle.  The County provided the attached letter notifying the City of their desire to extend the lease, subject to the lease amendment.  They did counteroffer and request the reduction of space the CAM charges are applied to.  Their reason being, their staff do not utilize the employee breakroom.  Below is a summary of the counteroffer:

• Convert the lease term from July 1 – June 30 to January 1 – December 31.  This adjustment would be completed by having an 18-month first term running from July 1, 2024 – December 31, 2025.
• Beginning January 1, 2026 lease term will be set at a three-year term subject to mutual agreement to extend the optional terms.
• Beginning January 1, 2026, annual base rent increases by 25 cents (2,220 sq. ft. for License Center space).
• Beginning January 1, 2026, CAM rent charges will be based on the 2,200 sq. ft. for License Center space.
• All other terms of the initial agreement will remain intact.

Considering the service the License Center brings to Ramsey residents and this area of the county, staff supports the above identified terms.  Currently, the City receives approximately $57,000 annually for the lease.  Approval on adjusting the CAM charges would reduce the annual amount by approximately $4,600 beginning in 2026.

Brian Hagen, City Administrator

Provide consensus direction on the attached letter and whether staff should proceed forward with formalizing the amendment and extension of the lease, or to provide notice to the Council that Ramsey does not agree to the amendment.  If supported, staff will bring back a formal lease amendment to a future meeting on consent.