HomeMy WebLinkAbout10E - City Perks Lease
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
ISSUES:
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
CITY COUNCIL AGENDA REPORT
February 6, 2006
10E
Kelly Meyer, Assistant to the City Manager
CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE MAYOR
AND CITY MANAGER TO ENTER INTO AN ADDENDUM TO LEASE
AGREEMENT WITH CITY PERKS FOR THE COFFEE SHOP SPACE
LOCATED WITHIN THE LIBRARY RESOURCE CENTER AT 16210 EAGLE
CREEK AVENUE SE.
History: The 480 square foot coffee shop space located within the Library
Resource Center is currently occupied by Dean Reeve and Kelly Biese d/b/a/
City Perks. Mr. Reeve and Ms. Biese purchased the business in February
2002, and entered into a lease agreement with the City. In February 2005, the
City re-negotiated the lease terms as requested by Mr. Reeve and Ms. Biese,
and entered into a lease that provided a one-year term, with an option to enter
into an additional 4 year term, and reduced the lease payments for the new
renewal period. The rationale for this renegotiation was the reduction in the
hours the Library was operating, as well as a concern about the increased
competition from the bakery. The initial one-year term of the lease expired
January 31,2006.
Current Circumstances: At this time, Mr. Reeve and Ms. Biese have elected to
renew their existing lease for the additional 4-year term, but have realized
several circumstances that may impact their business. These concerns include
increased competition in the area, and the fact that Premiere Dance intends to
leave its Library Resource Center space as early as September 2006. As a
result, Mr. Reeve and Ms. Biese have asked for the addition of language which
would provide for an early termination of the lease.
Conclusion: The City is sensitive to the concerns Mr. Reeve and Ms. Biese
have regarding not knowing how the relocation of Premiere Dance will impact
their business. For that reason, the staff agreed, subject to City Council
approval, to language that would provide for the early termination of the lease
agreement by either party with 90 days notice. The City does have similar
language in another lease.
The City wants to be pro-active in assisting new and established members of
the Downtown business community when appropriate. At the same time, the
City is also responsible for protecting the public interest in the Library
Resource facility, and the revenue that the space can generate. The proposed
early termination language in effect means that the City can not rely on long-
term revenues provided for under this lease agreement.
The lessee has indicated that they intend to continue operation of the City
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Perks coffee shop for years to come. But given the unknowns when Premiere
Dance vacates the studio space, the early termination language would allow
them to renew the lease at this time without being locked in to a 4 year term in
the event their business is significantly impacted. City Perks would have the
opportunity to more fully understand how the relocation of Premiere Dance
may affect the business, and will also have an opportunity to realize how the
vacated space might be used in the future.
Staff believes the amendment is appropriate. The Council may want to provide
staff direction regarding how it wishes to address future requests with regard
to this lease. For instance, competition in the area will likely increase with the
construction of the Premiere Dance and Rock Creek buildings. Since 2002, the
City has made reasonable accommodations within the lease agreement in
order to provide a facility which allows the business to be viable. But ultimately,
the City is responsible to the taxpayer and not whether the business is a
success or failure.
FINANCIAL
IMPACT:
Year 1 of the renewal term of the lease provides for a lease payment of $1000
per month. This is a 0% increase from last year's lease rate. The effect of
adopting the early termination language proposed by the Addendum, is that
the tenant or the City may terminate the lease agreement with 90 days notice.
This means that one month of the 4-year renewal term could be fulfilled, or 4
years of the renewal term could be fulfilled.
ALTERNATIVES:
1. Adopt the attached Resolution authorizing the Mayor and City Manager to
enter into the Lease Addendum.
2. Take no action and provide staff with additional direction.
RECOMMENDED
MOTION:
Alternative 1. Motion and Second for approval.
Reviewed by:
WHEREAS,
WHEREAS,
WHEREAS,
WHEREAS,
WHEREAS,
WHEREAS,
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
RESOLUTION 06-xx
A RESOLUTION AUTHORIZING THE MAYOR AND CITY MANAGER
TO ENTER INTO AN ADDENDUM TO LEASE AGREEMENT
WITH CITY PERKS FOR THE COFFEE SHOP SPACE
LOCATED WITHIN THE LIBRARY RESOURCE CENTER AT
16210 EAGLE CREEK AVENUE SE.
Motion By:
Second By:
in February 2002, Dean Reeve and Kelly Biese ("Owners") purchased the City Perks coffee shop and
entered into a three-year lease for 480 square feet of space within the Library Resource Center; and
in February 2005, the City re-negotiated the renewal term of the lease reducing the lease payments and
providing for a one-year lease term expiring January 31,2006, with the option of a 4-year renewal term;
and
the Owners have requested to re-negotiate the lease renewal terms on the basis that Premiere Dance
Academy will be vacating the adjacent space in the Library Resource Center thereby reducing the amount
of foot traffic in the facility; and
the City is sensitive to the concerns of the Owners and desires to retain City Perks as a viable Downtown
Prior Lake business; and
the Owners and City staff have agreed to proposed language which would provide for the early termination
of the lease agreement by either party with 3 months written notice; and
the Owners and City staff believe the proposed early termination language addresses the concerns of the
Owners because they will have time to evaluate any impacts the relocation of Premiere Dance may have
on the business, and have an option to terminate the lease if appropriate.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. The Mayor and City Manager are hereby authorized to enter into the Lease Addendum which provides an option for early
termination of the Lease Agreement by either party with 3 months written notice.
PASSED AND ADOPTED THIS 6TH DAY OF FEBRUARY, 2006.
YES
NO
Haugen Haugen
Dornbush Dornbush
Erickson Erickson
LeMair LeMair
Millar Millar
Frank Boyles, City Manager
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Phone 952.447.4230 / Fax 952.447.4245