Adopt Resolution #25-097 Approving Lease Agreement of 6745 Hwy 10 NW (front) with Mille Lacs Motor Sports II

PURPOSE:
To consider a lease for the front portion of 6745 Hwy 10 NW. 

BACKGROUND:
Mille Lacs Motor Sports II's primary location in Ramsey is at 6781 Hwy 10.  They also currently lease a portion of 6701 Hwy NW and the rear portion of 6745 Hwy 10 NW.  This company is growing and needs additional space to operate efficiently.  The City filled in the "old Pit Area" in 2021 and worked with the tenant to conduct needed maintenance and the building is in condition to rent as verified by the building official and Fire.  The leases premises would be used to conduct repairs on boats and ATV vehicles and the fenced in area would be used for outside storage of product for its business (ATV's, boats, etc.). Originally the City did not include an option to extend the lease past May 31, 2025 and recommended that the building be demolished after the lease was over.  However, this arrangement has gone well and City Staff supports leasing it out until the Highway 10 Construction is completed in late 2025. In addition, discussions with Met Council have determined that the City Cannot use Lease Revenue to demolish the building and that that building must remain in place for ultimate sale.  Power Lodge is also trying to figure out a permanent solution here in Ramsey and this extension allows them the time needed to crunch some numbers.   The City has negotiated directly with the Tenant and have agreed to the lease under consideration. The City Attorney has approved this lease as to form.  Staff supports the request to assist a growing Ramsey business that would possibly expand in Ramsey.   Staff believes that this building should be demolished for any future development on this site.

N/A

The timing of the proposed lease (7 month extension) works well with Hwy 10 construction as it terminates January 31, 2026.    The lease under consideration includes a 3% increase from the previous lease period.

Key Lease Terms
Location: 6745 Hwy 10 (Front 4,864 SF)
Lease Duration: June 1, 2025 - January 31, 2026
Lease Rate :
                        Lease Period - (6/1/25 through 1/31/26): $5,009.92 / month                                                               
Utilities: Tenant paid
Snow Plowing / Sidewalks: Tenant paid 
Maintenance responsibilities are clearly outlined.
No political signage allowed.
Early termination clause with 90 days written notice included. 

Other Special items of consideration include:

• The front portion of the building (Old Siding) has been repaired and repainted by the Tenant at the cost of the Tenant.
• The Pylon Sign has been removed by Tenant at the cost of the Tenant.
• All required items have been completed that were identified in the Building Memo and the Building Official has granted occupancy for the Leased Premises. 

Alternatives:

1) Adopt Resolution #25-097 Approving Lease Agreement of 6745 Hwy 10 NW (front) with Mille Lacs Motor Sports II (as presented); subject to City Attorney review. 
2) Adopt Resolution #25-097 Approving Lease Agreement of 6745 Hwy 10 NW (front) with Mille Lacs Motor Sports II (with changes); subject to City Attorney review.
3) Something Else.

Lease Revenue, RALF.

Staff recommendation is to approve Resolution #25-097 Approving Lease Agreement of 6745 Hwy 10 NW (front) with Mille Lacs Motor Sports II (as presented); subject to review by the City Attorney.

 

Motion to:
Adopt Resolution #25-097 Approving Lease Agreement of 6745 Hwy 10 NW (front) with Mille Lacs Motor Sports II (as presented); subject to review by the City Attorney.