08-13-1980 Council Agenda - Laserfiche WebLink

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Teague of minnesota cities August 4, 1980 TO: Mayors, Managers and Clerks FROM: Donald A. Slater, Executive Director RE: rc, os.: Buil it Proj.:ct for L"('iC This is the most important letter which I have sent to you, that is, considering the League of Minnesota Cities as an institution, its future, and your own city's financial participation in the League. Let me encourage you as much as I can to review my letter, the attached materials, and give the matter serious consideration. The subject is a building for the League. When I arrived in Minnesota over two years ago, one of my fellow staff members handed me the real estate file and explained that the League almost bought a building two years before I came to Minnesota, but finally decided not to do it. Your Board of Directors, subsequently, reopened the question of permanent space for the League when the League renegotiated its lease and found a considerable jump in the rental price. A Board committee worked on this issue for two years. The committee reviewed a complete set of options, including, other rental space, lease purchase, purchase of an existing building, and new construction. After careful consideration of the options, the committee concluded that, considering the St. Paul real estate market and the future of the League, new construction is the best course of action. Mayor Harvey Lange of Robbinsdale put it this way, "If you think that the League is going to be around for twenty years, then it's foolish not to own the League's office space." That was the controlling view on the Board of Directors. For the long -term, there is no doubt of the wisdom of this view. If the League continues to rent space, it will, ultimately, pay more per year than the cost of owning a building and have nothing to show for the payments. Currently, the League spends roughly $60,000 a year for its space. This figure is going up sharply. Our landlord not only wants to increase rental for our space but also passes through excess real estate taxes, increased utility costs (over a base year), increased maintenance costs (over a base year), and wants to add a charge for parking space -- all of which would be subject to further future increases. Building a building -- which would give the League much more adequate space to serve the members' convenience -- would cost $1.2 million. Financed for twenty years, an annual debt amount is $130,000. The question is: Are the cities prepared to commit themselves to this course of action? There is no doubt that a building will cost more in the short run than continuing the present rental arrangement. After five years, however, the League will be saving money: every year. building, 4(i saint paul, minnesota 55101 C612] 222 -2861