Adopt Resolution #21-092 Approving Lease Agreement of 6745 Hwy 10 NW with RM Golf Carts

PURPOSE:
Approve the attached lease agreement with RM Golf Carts for use of city owned cold storage space located at 6745 Highway 10 NW.

BACKGROUND:
RM Golf Cart's primary location is 7039 Hwy 10 (also a city owned property being leased).  RM Golf Carts has been leasing cold storage space at 6745 Highway 10 NW for 5 years.  Their lease at 6745 is set to expire May 31, 2021.  RM Golf Carts would like to extend their lease at 6745 by two years. 

The City is in the process of evaluating the condition of the building formerly occupied by Independent Auto.  In the event that this building is demolished along with the metal portion currently being leased, the lease allows the City to move the tenants to 6701 Hwy 10 NW. 6701 Hwy 10 NW is anticipated to be vacant in the Fall after the Public Works Campus is complete and equipment can be moved to the new location.

N/a

The attached lease agreement is generally consistent with the city's other lease agreements and policy for leasing city owned property.  The attached lease agreement was drafted by the City Attorney and reviewed by Staff and the City's property management company - Premier Commercial Realty.  Specific notes below:

• Terms/ conditions and language has been updated to be consistent with recent lease agreements.
• Includes rent payments that are market rate. (increase of 3% from previous lease with 3% inflator for year 2)
• Maintenance responsibilities are clearly outlined.
• No political signage allowed.
• Early termination clause included.
• Per the City's agreement with Premier Commercial Properties, a 5% commission payment will be made to Premier for this lease agreement.
• This lease agreement is being brought forward in conjunction with another lease agreement, for Mille Lacs Motor Sports II.  RM Golf Carts and Mille Lacs Motor Sports II (formerly known as Power Lodge) worked together, as a group, with City Staff and Premier Commercial Properties, to come up with this solution.  This Council agenda also contains a lease agreement for Mille Lacs Motor Sports II.

Lease Revenue. The revenue received from the lease is applied to City administrative costs, property maintenance and to reimburse the Right-of-Away Acquisition Loan Fund (RALF) for the cost of parcel acquisition.

Staff recommends that the City Council adopt Resolution #21-092 approving Lease Agreement of 6745 Hwy 10 NW with RM Golf Carts; subject to review by the City Attorney.

Motion to adopt Resolution #21-092 approving Lease Agreement of 6745 Hwy 10 NW with RM Golf Carts; subject to review by the City Attorney.