08-19-2014 CCM - Laserfiche WebLink

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LAKE ELMO CITY COUNCIL MINUTES AUGUST 19, 2014 Page 6 of 8 They were able to come up with a 5 year lease for the space at the price of $12/sq ft for the first two years. The lease comes with electric, water, garbage, parking, bathrooms, and use of a common area. The only utilities the City is responsible for would be telephone and data lines going into the building. The space comes as is with fixtures, it has some working stations that would meet the City’s needs. The terms of the lease are $12/sq ft for the first two years, $13/sq ft for years three and four and $13.50/sq ft for the fifth year with a 90 day opt out clause. City Attorney Snyder reviewed the lease earlier today. Mr. Zuleger stated that they have also priced other office space in the area and there is not a lot that can accommodate the City’s needs, especially being so close to the current. Mr. Zuleger went over who would be officed out of which building. He also stated that time is of the essence on this issue because Mr. Zignego has offered to give the City a free month of rent for September so we could move in and get situated. Mr. Zuleger also stated that the City would be given first right of refusal to purchase the building. Mr. Zuleger spoke about running the lease by John Thompson, who is a premiere leasing agent, and he described it as a good deal. He thanked the Mayor, Council Member Nelson, and John Thompson for doing a lot of the work on this issue. Council Member Smith asked if this is more of a want or a need. She understands that down the road we will be adding more staff, but right now it seems like a lot of money to spend. Ms. Smith also asked if it would be more logical to move planning to the other building to be next to engineering and leave administration staff in the current building. Mayor Pearson responded that we need more space. He also spoke about the risk of waiting being that someone else may take the space. He and Council Member Nelson have looked at other spaces and they are more expensive and do not provide the convenience of this space. Mayor Pearson also spoke about being able to get rid of the Annex if we accept this lease. He thinks this lease is a good deal and it is a good time to move. Finance Director Bendel reminded Council that the net book value of the Annex at the end of 2014 is about $42,000. If it is demolished that amount will need to be expensed. The City has written off about $10,000 a year for it, so we planned on having the Annex for about four more years. The City paid close to $100,000 for the Annex. Council Member Smith spoke about when the Annex was first purchased. She asked if when sewer and water are put in, will the owners be able to raise the City’s rent in that building, or are we locked into this rent number. City Attorney Snyder responded that paragraph 1b of the lease responds to that. There was also some additional language that Counsel wants to suggest to the property owner. He asked Council if it is their direction to staff that the cost associated with assessments should not be borne by the City. Council responded yes. Mayor Pearson spoke about negotiating utility expenses if they go up dramatically from year to year. He believes that is fair. City Attorney Snyder stated that other than a few refining points, the lease is all there. Council Member Nelson asked a question regarding the top of page two of the lease. City Attorney Snyder responded that that is a part that needs clarification, as our percentage of the prorated share is not defined and the years are in need of adjustment. He also stated that one common way of dealing with unintended increases in CAM (Community Area Maintenance) costs is to put a cap on it, that they won’t increase year over year by “x percent” without consent of the tenant. City Attorney Snyder also noted that there are often other CAM costs in a lease that are paid by the tenant so this least is fairly tenant favorable.