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HomeMy WebLinkAbout10C - Lease Agreement for Old Library Building MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: CITY COUNCIL AGENDA REPORT December 20, 1999 10C Frank Boyles, City Manager CONSIDER APPROVAL OF SHORT-TERM LEASE WITH SCOTT-RICE TELEPHONE OF THE OLD LIBRARY BUILDING LOCATED AT THE NORTHWEST CORNER OF THE INTERSECTION OF MAIN AVENUE AND CSAH 21 IN DOWNTOWN PRIOR LAKE. History The old library building is owned outright by the City of Prior Lake. The building was vacated by the County library staff in November. The building and the property it is located on is part of the Downtown Redevelopment Study. To preserve future options for the use of this property, we have sought to enter into a short-term lease with a local company. Scott-Rice Telephone has previously advised us of their need for more space. The City has an interest in taking reasonable steps to keep Scott -Rice in Prior Lake in hopes that they will work with local developers to lease more permanent facilities within our community. Current Circumstances I have had numerous discussions with Rebecca Janisch of Scott-Rice Telephone. We have reached conceptual agreement on a lease with the following terms: 1. Lease Area - 4300 sq. ft. on the first floor and access to the bathrooms downstairs. City still has the right to use the remaining rooms downstairs if such use does not negatively impact Scott-Rice. 2. Parking - 12 regular stalls, 2 handicapped stalls. 3. Term - 6 months beginning January 1, 2000, then month-to-month thereafter. 4. Termination - 60 days written notice by either party. 5. Building Improvements - The City would be responsible for repairing and painting walls, repairing and painting floors and ceilings, cleaning and mopping floors and ceilings, shampooing carpets, cleaning glass and mirrors, and testing imR oTrTlQld on air quality. These initial preparation measures will not excee /$7,045.) 6. Insurance - Ci . Insure the structure and Scott-Rice will be responsible for insuring the contents, all of which they own. 7. City On-going Responsibilities - Repair and maintenance of building, heating and cooling equipment. 8. Tenant On-going Responsibilities - Sewer, water, gas, electric, telephone, refuse, custodial service and supplies and electrical/telephone modifications to serve offices. 9. Rent - $7.80 per sq. ft. ($33,540 annually or $2,795 monthly) 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 I :\COUNCIL \AGN RPTS\99\ 1220_1 DC. DOC AN EQUAL OPPORTUNITY EMPLOYER ISSUES: ALTERNATIVES: RECOMMENDED MOTION: This short-term lease is beneficial to the City in two ways. First, it serves Scott-Rice Telephone's immediate needs and keeps them located within Prior Lake in hopes that we can use this additional time to find a resolution for their long-term office needs within the City. The lease also keeps the building occupied which reduces the likelihood of vandalism and provides a cash flow to the City which can be used for building repair or to assist in the Downtown Redevelopment project. The key issue, therefore~ is the cost of the lease. My inquiries to a local bank, the Chamber of Commerce, and a realty representative, have indicated that the lease rate for used office space in the Downtown area is between $8 - $10 per square foot on an annual basis withthe tenant responsible for utilities and other expenses. The old library building is structurally sound, but it has some problems. The restrooms are on the lower floor, while the office space is on the upper floor. Consequently, there are potential Americans with Disabilities Act issues. At the least, the location of the restrooms tends to restrict the potential users to those who will have few if any customer visits. The building is not rentable lias is". Basic clean-up and maintenance work on the building have not been done for years. As a precondition to leasing the building, Scott-Rice has insisted that we evaluate mold and mildew which has formed on the lower level walls to assure there are no potential air quality impacts. We have contracted with a specialist to conduct this work and the cost is included in the above listed lease terms. If the cost to cure is unreasonable, I would advise Scott-Rice that they will have to lease a different building after consulting with the City Council. The cost set forth above for cleaning and painting is based upon one bid. A second is being solicited. The company from whom the bid was received has worked for Scott-Rice in the past. If a lesser bid is received, award would be made to that company and City costs would be reduced accordingly. (1) Approve preparation of a short-term lease and authorize the Mayor and City Manager to execute the document if it is approved by the City Attorney and conforms with this report. (2) Direct the staff to take other actions. (3) Take no action and allow the building to remain vacant. Alternative (1). Motion and Second to Authorize the Staff to prepare a short- term lease with the provisions set forth above and if the lease is approved by the City Attorney, authorize the Mayor and City Manager to execute the document on behalf of the City. 1:\COUNCIL\AGNRPTS\99\ 1220_1 OC.DOC