Consider Lease Agreement of 6701 Hwy 10 NW to Mille Lacs Motor Sports II (Power Lodge)
(Portions of meeting may be closed to the public)

Mille Lacs Motor Sports (Power Lodge) has requested use of an area behind the building at 6701 Hwy 10 NW for temporary storage of boats and inventory for its business for 3 temporary lease periods.  The lease periods are October 15, 2020 - November 15, 2020, April 1, 2021 - May 31, 2021 and October 1, 2021 - November 30, 2021.  The business continues to grow and the use of this area for the time periods requested increases efficiencies for the operation of that business.  The lease rages from $0.59-$0.61 which is considered market rate for outside storage. Staff has worked with the City Attorney, Premier Commercial Properties and Mille Lacs Motor Sports to draft the attached lease agreement.  

N/A

Observations:

City Staff is still working on the exact square footage and area of the property available for the lease.  The final lease calculation will be adjusted (if needed) and the square footage rate will be applied to area.

The Terms of the lease are straight forward. Here are some of the specifics based on 7,182 SF lease area :

1. Lease.  Landlord leases to Tenant the area outlined in Exhibit A along the rear property line of the property located at 6701 Highway 10 NW (PID 34-32-25-12-0009) (the Leased Area).
2. Term.  The Lease consists of three Lease Periods: October 15, 2020-November 15, 2020, April 1, 2021 - May 31, 2021 and October 1, 2021-November 30, 2021.  
3. Use.  The Leased Area may only be used for storage of Tenant’s inventory and/or customer’s boats.  The Leased Area may not be used for employee parking or any other use without Landlord’s written permission.  No signage shall be installed by Tenant in or on the Leased Area. Tenant shall conduct its business and control its agents, employees, invitees and visitors in such a manner as not to create waste, odors, nuisance, or interfere with, annoy or disturb any other tenant of Landlord or Landlord’s employees and agents in its operation of the 6701 Highway 10 property. Tenant acknowledges that the Leased Area is not fenced except along the rear of the property or otherwise secured in any manner and Landlord makes no representations as to the security of the Leased Area.
4. Access.  To the extent reasonably practicable, the Leased Area shall be accessed by Tenant through the gate on the east fence of Outdoor Storage Area D located at the rear of 6745 Highway 10 NW.  A 15-foot-wide through lane between the rear of the building at 6701 Highway 10 NW and the Leased Area must be maintained at all times for emergency vehicle access and for City access to the rear of the 6701 building.
5. Rent.  A lump sum fee of $1,814.00 shall be paid by Tenant to Landlord upon execution of this Lease in full payment of rent for the full term of Lease Periods 1, 2 and 3.  The Leased Area must be clear of all inventory, customers boats and refuse during the time in between Lease Periods.  
6. Maintenance and Improvements.  Tenant is solely responsible for routine maintenance of the Leased Area during the term of the Lease, including trash removal.  Tenant shall not damage the existing parking surface, normal wear and tear excepted.  Any damage to the Leased Area by Tenant, its employees, agents, customers or guests shall be repaired by Tenant at its sole cost.  In the event Tenant does not complete said repairs, Landlord may do so and invoice the cost of such repairs to Tenant plus 15% for overhead incurred by Landlord.  The Leased Area is provided “as is” and Landlord is not obligated to make any improvements to the existing property as part of this Lease.  Tenant shall not make any improvements to the Leased Area without Landlord’s written permission.
7. Assignment or subletting.  Tenant may not assign, transfer, mortgage or encumber this Lease, and may not sublet, rent or permit occupancy or use of the Leased Area, or any part thereof, by any third party.
8. Entry by Landlord.  Landlord, its employees, agents or representatives may enter the Leased Area at all reasonable hours to inspect or make repairs.  Tenant waives any claim for damages or for any injury or inconvenience or for interference with Tenant’s business, and any other loss occasioned thereby.
9. Hold Harmless and Liability Insurance.  Except in the case of the negligence of Landlord, its agents or its employees, Tenant agrees to indemnify, save, hold harmless and defend Landlord against all claims, losses or liabilities for injury or death to any person or for damage to or loss of use of any property arising or resulting from the occupancy or use by Tenant of the Leased Area.  Landlord shall not be liable to Tenant, its agents, employees, representatives, customers or invitees for any personal injury, death or damage to property caused by theft, burglary, fire or for any other cause occurring on or about the Leased Area.  All property kept, stored or maintained within the Leased Area shall be so kept, stored or maintained at the sole risk of the Tenant.  Tenant further agrees to defend and indemnify Landlord from and against any and all claims arising from any breach or default in the performance of any obligation on Tenant’s part to be performed under the terms of this Lease.  Further, in no event shall Landlord be liable for damages caused by Tenant or Tenant’s employees or agents.  The provisions of this Paragraph shall survive the expiration or termination of this Lease with respect to any damage, injury, death, breach or default occurring prior to such expiration or termination.
10. During the Lease Term and any extension thereof, Tenant shall at all times have in full force and effect a policy of general public liability insurance in the amount of the greater of $2,000,000.00 or the maximum liability for tort liability pursuant to Minnesota Statutes Section 466.04 and any amendments thereto, which insurance shall insure Landlord and Tenant against liability for acts of Landlord and Tenant.

Alternatives:

1. Recommend  to Approve lease, as presented. (subject to actual lease area calculation)
2. Recommend to Approve lease, with modifications
3. Not approve the lease

N/A. 

Staff Recommendation is to recommend approval of Lease as presented subject to final lease area calculation and review by the City Attorney.

Motion to recommend approval of Lease of 6701 Hwy 10 NW to Mille Lacs Motor Sports II; subject to final lease area calculation and review by the City Attorney.