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Item No: 4 Meeting Date: December 7, 2009 Type of Business: Work Session Administrator Review: ____ City of Mounds View Staff Report To: Honorable Mayor and City Council From: James Ericson, Clerk - Administrator Item Title/Subject: Review Lease Agreement with the Twin City North Chamber of Commerce Introduction: The lease agreement with the Twin Cities North Chamber of Commerce is due for renewal; it expires on December 31, 2009. The existing lease agreement plus the amendment approved in 2008 are attached for your reference. The last attachment is a draft renewal lease agreement which has been shared with the Chamber for their review. Discussion: The Twin Cities North Chamber of Commerce has been a tenant at the Community Center since 2004. Presently, the Chamber leases 1,225 square feet of space and their 2009 lease payment is $1012.37. This represents a current lease rate of $9.92 per square foot. Office vacancies in the Twin Cities metro area are at their highest since 1992 with a vacancy rate of more than 18%. As a result, lease rates for office space similar to what the Chamber occupies at the Community Center have been stagnant and in some cases are decreasing. I have had conversations with the Chamber’s President, Tim Roche, who in turn has met with the Chamber’s executive board. A draft renewal agreement has been prepared, however it does not yet reflect a rate increase. I will be asking the Council for some direction in this regard. While the Chamber is content with their space at the Mounds View Community Center and would like to remain as tenants, they are researching lease rates elsewhere for comparable space. The other issue which will need to be discussed relates to the property taxes. The Chamber is not the type of non-profit organization that would be exempt from property taxes. The Chamber was signed as a tenant during the time that the Mermaid held the management rights to the Event Center. The original lease agreement stipulated that any property taxes assessed as a result of the tenant’s lease of the space would be the responsibility of the agent—the Mermaid. When the Mermaid terminated its agreement with the City to manage the event center, the taxes became the City’s responsibility. The original intent was that the City not bear this burden, however shifting the tax burden to the tenant would result in an increase of $81 per month, from $1,012.37 to $1,093.37, which equates to an 8% increase. (As an aside, the City also pays property taxes for the space leased by the day care facility. The owners have been put on notice that when the lease expires, the City will want to reconsider that arrangement.) If it is the Council’s intent that