Approve Second Amendment to the Lease Agreement Between the City of Ramsey and Pro Power Sports
 

PURPOSE
Consider approving the attached second amendment to the lease agreement between the City of Ramsey and Pro Power Sports and Marine INC dated March 1, 2013.

BACKGROUND
Attached to this case is a reference map that outlines nearby City owned property, the existing lease area, and the new proposed lease area.  The new proposed lease area is needed by Pro Power Sports due to the physical constraints of their property.  The distance between Pro Power Sports and 6745 Hwy 10 is very narrow.  Both properties have several large garage doors facing inward to this narrow gap (facing each other).  Facilities on both properties were constructed with the intention of sharing said driveway area ("narrow shared area").  Previously/ originally, one entity constructed, owned, and managed each parcel outlined in the attached reference map.  As a result, sharing the referenced "narrow shared area" was not a problem.

The City purchased 6745 Highway 10 in 2005.  Since then, the relationship between the two properties has remained unchanged.  Both properties have depended on each other for cross access.  Unfortunately, no formal agreement was ever discussed/ pursued.  As a result, no indemnification or liability insurance has been in place for either property owner since 2005; which would protect from accidents occurring from their neighbor's use of their property.  Again, as mentioned, said relationship was not a major issue previously as there was only one property owner/ manager.

In 2014, the City terminated their lease agreement (i.e. evicted the user) for the rear of 6745 Highway 10.  Considering the condition of this facility, and various other complexities, it is highly unlikely this facility will be leased again.  As a result, the City has no foreseeable use of the "narrow shared area" outlined above.  Previously, the City (i.e. the City's tenant) needed access to the "narrow shared area" to operate their business (including use of Pro Power's property).

Lastly, it should be noted, over time, Pro Power Sports has begun using the "narrow shared area" for staging and temporary outside storage of products.

With the above information in mind, a long overdue "house keeping" item is in order.  The City needs to require Pro Power Sports to enter into an agreement related to the "narrow shared area."  Below is staff's proposal.

PROPOSAL (result of approving this case)
Pro Power Sports amends their existing lease agreement with the City of Ramsey to utilize the "narrow shared area" for staging, outside storage, and access to their garages.  This step will provide the City with an indemnification agreement and liability insurance.  With this step, Pro Power Sports, at their cost, will replace their existing "crate wall fence" (which separates the rear of their property from 6745) with a permanent security fence.  Because of this relatively sudden change in past practice (since 2005), and the upfront capital investment required by Pro Power Sports, staff is proposing this lease amendment require no charge for rent.  The existing lease with Pro Power Sports is set to expire in February of 2016.  When the existing lease is ready for renewal, staff will recommend Pro Power Sports begins paying market-rate rent for the new lease area.

NA

NA

No funding required.  Lease negotiation part of normal staff duties.

Approve the attached lease amendment.

Motion to:
Approve the attached second amendment to the lease agreement between the City of Ramsey and Pro Power Sports and Marine INC dated March 1, 2013; subject to review and amendments by the City Attorney.