Approve Temporary Lease Amendment with Independent Auto Care In Regard to Lease Rent - Moved from Consent Agenda 4.10 to Regular Case 7.7

The City of Ramsey entered into a Lease Agreement with Independent Auto Service, Inc. for use of the cold storage area at 6745 Highwy 10 in November 2012.  The term of the contract is for a period of 29 months and is known as a step lease with an expiration date of April 2015.  A step lease means that the monthly rent increases over time.  

Independent Auto is currently under the last step of the lease in regard to monthly rent.  The step went from $650.00 to $1,612.00, effective May 1, 2013.  

Demand for cold storage is low in the summer.  Mr Berg, owner of of Independent Auto is currently experiencing the low demand.  Thus, the $1,612 is unobtainable for Mr. Berg and he has asked for an extension of the $650.00 rent step for a period of six months (May - October, 2013).  Mr. Berg is currently working on negotiating with a car dealership for car storage in the current site and possibly 6701 Highway 10, but the storage would not be needed until November.

As the requested extension covers May - October 2013, Mr. Berg is currently delinquent for May and June rent. 

Mr. Berg contacted our property manager, Marty Fisher of Premier with the extension request. 

The city has the following options in regards to whether to grant the six month rent extension of $650.00 instead of the contracted amount of $1,612.00

1. Don't Grant Extension:
          The lessee will significantly default and the city will need to weigh legal options - costs involved
          No rental income - City has already paid the 2013 taxes which rent is to help cover
          Rental market - Who else and how quickly would someone else be able to rent due to slow economy?

2.  Grant Extension:
          Rental Income continues to come in - pay property taxes
          Possibility of additional leased space in November
          

City's property manager recommends that the city accept the $650.00 monthly rent for six months with the understanding that the rent will be reviewed in November based on current market conditions and the possibliity of a car storage contract.

This is a Right-of-way Loan Acquisition Fund (RALF)acquired project area.  Rents used for authorized RALF expenditures.

Motion to approve the recommendation of the City's property manager to accept the sixth month rental extension for period of May 2013 to October 2013 in the amount of $650.00.