Consider Lease Concept with Northern Starz Children's Theatre Company: Old Municipal Center

Background:
Staff was recently approached by Northern Starz Children's Theatre Company with a request to lease space located in a City owned building.  Proposed lease terms are included in the 'Terms' section below.

The purpose of this case is to consider a lease CONCEPT.  If the Council is comfortable with the proposed concept, Staff will draft a lease agreement, gather all required supplemental information/research and bring a full case back on May 27 for formal consideration.

Policy Discussion:
Northern Starz is requesting a below market lease rate.  The proposed lease rate provides no revenue for the City.  However, it does cover ALL known/anticipated costs associated with the proposed lease.  Allowing Northern Starz to lease City owned property below market rate is inconsistent with the City's "Policy for Leasing City Owned Property" (attached).

Although the proposed lease does not meet the City' lease policy, Staff does recommend the City Council consider the uniqueness of this particular situation:

• Northern Starz is a non-profit children's organization
• The City is not served by any other Ramsey based children's theater
• The proposed lease would be short term in nature (not a permanent commitment)
• The proposed lease would provide Northern Starz with time to build up resources, become established, and find a permanent home in Ramsey
• The proposed lease structure is identical to the existing lease between Youth First and the City (except Northern Starz has agreed to pay for all regular maintenance costs)

Old Municipal Center Development:
The proposed lease is located in the "Old Police Building" on the "Old Municipal Center" site.  As the Council knows, the City is in the process of rezoning and redeveloping the Old Municipal Center site today.  It is anticipated, buildings located on the Old Municipal Center site will be demolished for redevelopment sometime in the next 12-24 months.  Both Northern Starz and Staff are aware of this situation.  The proposed lease does include a 90 day termination provision.

Terms:

1. USE: Practice facility for children's theater.  No official/paid performances allowed.  20-40 children 4-5 times per week.  Hours of operation between 8am-10pm.  Besides parking, not outside use of property allowed.
2. SPACE: 15153 Nowthen Boulevard, building B (Old Police Building), about 1/3 of upstairs.
3. TERM: Month-to-month, 3 month termination clause.
4. RENT RATE: Only cover City costs, no revenue ($500).
5. RENT COVERAGE: Natural gas ($200), electricity ($200), water ($25), admin ($25), finance ($25), maintenance inspections ($25).  Change of rent provision included: with 2 month notice, City can increase rent if costs are not being covered.
6. TENANT RESPONSIBLE: All regular maintenance.  Tenant agrees to complete a specified list of work before occupying the building, will be condition of lease.
7. REMOVAL OF WALL: Tenant is proposing removal of wall to create a larger space.  Will require written City approval and appropriate permits/inspections.  This was reviewed by Building Official and Fire Marshal.
8. DEPOSIT: 2X rent ($1,000)
9. INSURANCE: General public liability and content.
10. TAXES: No taxes will assessed.  Property is tax exempt, user is tax exempt, proposed use fits within zoning.  This was confirmed with Anoka County.
     

This discussion will take 10-25 minutes.  With direction, this case will be brought back to the City Council for formal approval on May 27.

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Pat Brama - Administration

• General discussion/direction regarding the proposed lease concept.
• If the Council is comfortable with the proposed concept, Staff will draft a lease agreement, gather all required supplemental information/research and bring a full case back on May 27 for formal consideration.