Consider Outsourcing of Property Management Services

The City of Ramsey has acquired several parcels (15) through the Right-of-Way Acquisition Loan Fund (RALF) program on Highway 10.  Several of these buildings located on these parcels have been demolished.  On occasion, Council has decided to retain those buildings that were in good structural shape and with the possibility of having them remain on the tax roles through leasing.  Today, the city has six leases that pay a monthly rent - Northern Lights Church, RM Golf Carts, Independent Auto Care (2 leases), Pro Sporting Goods and Todd Bialon; One site that pays $0 and requires maintenance (Youth First) and one site that is currently vacant (6701 Highway 10 - Cold Storage area).

In the past, up to January 2011, the City had contracted with Premier Commercial Properties to oversee the property management of the city's leased/lease-able sites.  The prior agreement called for $200/month per site for property management.

Current staff have been undertaking the property management role since the contract with Premier ended in 2011.  Finance has been overseeing the management of the current leases, administration has been overseeing the leasing of vacant sites and maintenance overseeing any maintenance issues at Youth First.  On average, Finance spends approximately seven hours per month with administrative tasks related to contacting businesses regarding delinquencies, reconciliations etc.  In developing new leases, administration can spend up to 20 hours negotiating a new lease, developing profiles, etc. (this does not include professional legal charges), and maintenance spends approximately three hours per month on maintenance at Youth First.  Our public works, maintenance and IT departments spent numerous hours at 6701 Highway 10 when the water-main break occurred in the building.  Staff has also spent several hours related to hiring painters, roofers, plumbers and HVAC.   

A cost estimate of staff time spent on RALF properties is approximately (not including hiring contractors & legal services):
              Finance - 7 hours month  $350
              Administration - 20 hours per lease   $650
              Maintenance  - 3 hours month  $100

With the reduction in staffing levels, the time spent on property management could be well used in other areas.  In addition, the staff costs related to property management is not eligible for reimbursement through the RALF program.  Payments to outside consultants are eligible, and thus the city would be reimbursed.

The City sent out a request for property management services to three vendors.  Only one submitted a proposal by the closing date of Friday, April 3, 2013.  That proposal from Premier Properties is attached.  Premier is proposing the same $200 monthly fee per site as per their previous contract with the city.

The proposal from Premier Properties is attached.

The Council can approve, postpone, or reject this proposal.  Staff recommends approval of this proposal at the $200 per month per site rate.  Postponing or rejecting this proposal would result in the continuation of the current process which has a negative impact on City operations.  If the proposal was postponed, it would have the advantage of demonstrating competition for the work if staff was directed to further solicit other proposals.   

Staff supports moving forward with the proposed property maintenance contract at $200 per month per site.

 Current rental collections.

Discussion of outsourcing property management services.