4.10.
CC Regular Session
- Meeting Date:
- 03/12/2013
- Submitted For:
- Patrick Brama
- By:
- Patrick Brama, Administrative Services
Information
Title:
Adopt Policy for Leasing City Owned Property
Background:
The City of Ramsey owns an inventory of real property. A number of City owned properties hold economic value and provide the City with the opportunity of leasing properties to the private sector.
The Community benefits by leasing City owned properties to the private sector as they become taxable. Increasing the overall tax capacity of a community by leasing City owned properties lowers the tax burden for individual tax payers.
The purpose of the proposed policy is to guide the process of developing and negotiating leases for the use of City owned properties. Specifically, this policy outlines standards City Staff shall follow as they negotiate with prospective lessors.
The desired outcome of this policy is to develop a clear, consistent, transparent, and fair process the City Council, prospects, lessees and Staff can rely on as leasing negotiations transpire.
The Community benefits by leasing City owned properties to the private sector as they become taxable. Increasing the overall tax capacity of a community by leasing City owned properties lowers the tax burden for individual tax payers.
The purpose of the proposed policy is to guide the process of developing and negotiating leases for the use of City owned properties. Specifically, this policy outlines standards City Staff shall follow as they negotiate with prospective lessors.
The desired outcome of this policy is to develop a clear, consistent, transparent, and fair process the City Council, prospects, lessees and Staff can rely on as leasing negotiations transpire.
Notification:
NA
Observations:
Due in large part to a number of transportation projects throughout the community, the City has acquired a number of parcels for future right-of-way (ROW). As a result, the City has negotiated a number of leases with private organizations on various City owned properties.
Internally, the responsibility of negotiating leases has shifted over the past five years. At one time, the City contracted said function with Premier Commercial Realty (outside vendor). Over the past few years, with turnover in City staff, this function has changed hands multiple times internally.
Looking back, it is Staff's observation the City has maintained an inconsistent and unclear policy on how lease agreements are negotiated. This issue has the following real or perceived consequences:
*Favoritism or politics
Taxes
City or tenant responsibility?
Paid monthly to the City or by tenant independently; should the City have an escrow?
Insurance
Certificate of Insurance, due before closing or not?
Base rent
What is it and what does it not include?
How do we define and how do we arrive at this number?
Does the City have a price floor?
Stormwater Utility Fee
City or tenant responsibility?
Deposit
How much, due when?
Late Fee
How much, due when?
Utilities
Who is responsible for what specifically?
Political Signage
Is it allowed?
Staff believes the attached policy addresses the real or perceived issues outlined above. By adopting said policy, the City will be in position to develop consistent and fair leases and provide Staff formal support and a baseline in which leases are negotiated. Additionally, this policy will empower Staff to make decisions at the time of negotiation, based on whether or not proposals meet the minimum adopted criteria. For example, if a lessee makes a rent offer for less than 80% of the market rate--Staff would not bring said proposal back to the Council for consideration (less unique circumstances).
ALTERNATIVES:
Internally, the responsibility of negotiating leases has shifted over the past five years. At one time, the City contracted said function with Premier Commercial Realty (outside vendor). Over the past few years, with turnover in City staff, this function has changed hands multiple times internally.
Looking back, it is Staff's observation the City has maintained an inconsistent and unclear policy on how lease agreements are negotiated. This issue has the following real or perceived consequences:
*Favoritism or politics
*City being "NOT" business friendly
*Staff "CONFLICT OF INTEREST"
*The City "SHOULD" lease City owned land, even at a discount, to keep it on the tax roles
*Frustration and disagreements regarding the following specific inconsistencies:
*Staff "CONFLICT OF INTEREST"
*The City "SHOULD" lease City owned land, even at a discount, to keep it on the tax roles
*Frustration and disagreements regarding the following specific inconsistencies:
Taxes
City or tenant responsibility?
Paid monthly to the City or by tenant independently; should the City have an escrow?
Insurance
Certificate of Insurance, due before closing or not?
Base rent
What is it and what does it not include?
How do we define and how do we arrive at this number?
Does the City have a price floor?
Stormwater Utility Fee
City or tenant responsibility?
Deposit
How much, due when?
Late Fee
How much, due when?
Utilities
Who is responsible for what specifically?
Political Signage
Is it allowed?
ALTERNATIVES:
A.) Adopt the proposed Policy for Leasing City Owned Property
B.) Do not adopt the proposed Policy for Leasing City Owned Property
C.) Direct Staff to pursue an alternative direction or amend the proposed policy
B.) Do not adopt the proposed Policy for Leasing City Owned Property
C.) Direct Staff to pursue an alternative direction or amend the proposed policy
Recommendation:
Adopt the proposed Policy for Leasing City Owned Property
Staff believes the attached policy addresses the real or perceived issues outlined in this case. By adopting said policy, the City will be in position to develop consistent and fair leases and provide Staff formal support and a baseline in which leases are negotiated. Additionally, this policy will empower Staff to make decisions at the time of negotiation, based on whether or not proposals meet the minimum adopted criteria. For example, if a lessee makes a rent offer for less than 80% of the market rate--Staff would not bring said proposal back to the Council for consideration (less unique circumstances).
Staff believes the attached policy addresses the real or perceived issues outlined in this case. By adopting said policy, the City will be in position to develop consistent and fair leases and provide Staff formal support and a baseline in which leases are negotiated. Additionally, this policy will empower Staff to make decisions at the time of negotiation, based on whether or not proposals meet the minimum adopted criteria. For example, if a lessee makes a rent offer for less than 80% of the market rate--Staff would not bring said proposal back to the Council for consideration (less unique circumstances).
Funding Source:
NA
Council Action:
Adopt the proposed Policy for Leasing City Owned Property
Attachments
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Diana Lund | Diana Lund | 02/28/2013 10:02 AM |
| Diana Lund | Diana Lund | 02/28/2013 10:31 AM |
| Kurt Ulrich | Kathy Schmitz | 03/05/2013 08:44 AM |
| Kurt Ulrich | Kurt Ulrich | 03/06/2013 03:30 PM |
- Form Started By:
- Patrick Brama
- Started On:
- 02/28/2013 09:08 AM
- Final Approval Date:
- 03/06/2013