7.1.
CC Regular Session
- Meeting Date:
- 02/26/2013
- By:
- Patrick Brama, Administrative Services
Information
Title:
Consider Lease Agreement with Pro Power Sports & Marine, Inc
Background:
Staff has been working with Todd Amar, owner and manager of Pro Power Sports & Marine, Inc, over the past two months to negotiate a lease agreement for a portion of City owned property located directly west of and adjacent to 6781 Highway 10 (the "Subject Property").
The purpose of this case is to consider a lease agreement with Pro Power Sports & Marine, Inc.
The purpose of this case is to consider a lease agreement with Pro Power Sports & Marine, Inc.
Notification:
Observations/Alternatives:
SUMMARY OF LEASE:
Premises: 22,000 square feet, paved/fenced in area only
Term: two year term, beginning March 1, 2013
Termination: one year termination clause for City
Insurance: $1,000,000 public liability insurance
Rent: $650 monthly, $7,800 annual
Property Taxes: City responsible (similar to other RALF properties, covered in base rent)The 2012 taxes on the entire parcel were $12,268.00.
Permitted Use: the subject Property will be used and occupied by tenant solely for the purpose of outside storage, display and sales of boats, snowmobiles and similar recreation equipment and accessories as an accessory use of the Tenant’s primary business operation located at 6781 West Highway 10.
CONSIDERATIONS:
Pro Power Sport did move a number of empty snowmobile crates onto the Subject Property in mid December. Staff contacted Mr. Amar and requested removal of all crates. Mr. Amar requested to remove the crates after Christmas. Staff indicated removing crates after Christmas would be acceptable. After the New Year, said crates had not been removed as agreed. Staff was unable to contact Mr. Amar until mid January to express the need to remove said crates from the Subject Property. In late January, Staff notified Mr. Amar he must vacate the Subject Property immediately. At that time, Mr. Amar indicated said crates were frozen to the pavement and could not be removed;. Then, Mr. Amar began negotiating a lease agreement for the Subject Property with staff. The case before the Council is a result of the negotiation process that transpired over the last month.
Premises: 22,000 square feet, paved/fenced in area only
Term: two year term, beginning March 1, 2013
Termination: one year termination clause for City
Insurance: $1,000,000 public liability insurance
Rent: $650 monthly, $7,800 annual
Property Taxes: City responsible (similar to other RALF properties, covered in base rent)The 2012 taxes on the entire parcel were $12,268.00.
Permitted Use: the subject Property will be used and occupied by tenant solely for the purpose of outside storage, display and sales of boats, snowmobiles and similar recreation equipment and accessories as an accessory use of the Tenant’s primary business operation located at 6781 West Highway 10.
CONSIDERATIONS:
- Due to City code, the only available users for the Subject Property is Pro Power Sports and Ramsey Bicycle (outside storage is an accessory use).
- Council has indicated a desire develop lease rates as close to market as possible.
- Based on previous lease for the Subject Property, rent for the same area was about $800 per month.
- Previous lessee indicated a reason for their departure was a too expensive lease rate ($800 per month).
- Based on input from Premier Commercial Realty, Staff's recommendation is reasonable given the circumstance even though is sightly below market rental rate.
- Staff's recommendation covers all City fixed costs and more. Considering how the negotiation process has transpired, Staff feels $650 per month is a reasonable rate for both parties. Attached is a rent analysis for Council's ingormation.
- Pro Power,s asking rental rate is .27 per square foot, the City,s proposal is .355 per square foot and low end of the market rental rate is .40 per square foot.
Pro Power Sport did move a number of empty snowmobile crates onto the Subject Property in mid December. Staff contacted Mr. Amar and requested removal of all crates. Mr. Amar requested to remove the crates after Christmas. Staff indicated removing crates after Christmas would be acceptable. After the New Year, said crates had not been removed as agreed. Staff was unable to contact Mr. Amar until mid January to express the need to remove said crates from the Subject Property. In late January, Staff notified Mr. Amar he must vacate the Subject Property immediately. At that time, Mr. Amar indicated said crates were frozen to the pavement and could not be removed;. Then, Mr. Amar began negotiating a lease agreement for the Subject Property with staff. The case before the Council is a result of the negotiation process that transpired over the last month.
ALTERNATIVES:
1. Approve the proposed lease with Pro Power Sports, INC. as proposed. [Staff Recommendation]
Staff believes the proposed lease is reasonable for both parties, and meets two Council objectives: retaining flexibility to terminate lease within one year and to set lease rates as close to market rates as possible.
2. Amend and approve the proposed lease with Pro Power Sports, INC. as proposed.
As mentioned, Pro Power Sports INC. did partially use the Subject Property for about two months free of charge. If the Council desires to recapture lost rent, Staff could include a charge in this agreement.
3. Deny the proposed lease with Pro Power Sports, INC. and or direct different terms.
Recommendation:
Approve the proposed lease with Pro Power Sports, INC. as proposed.
Funding Source:
NA
Council Action:
Approve the proposed lease with Pro Power Sports, INC. as proposed.
Attachments
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Diana Lund | Diana Lund | 02/20/2013 02:57 PM |
| Kurt Ulrich | Kurt Ulrich | 02/21/2013 12:51 PM |
- Form Started By:
- Patrick Brama
- Started On:
- 02/20/2013 09:11 AM
- Final Approval Date:
- 02/21/2013