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AMENDED RECOMMENDATION Item No: 10L Meeting Date: 11/25/04 Type of Business: CB City of Mounds View Staff Report To: Honorable Mayor and City Council From: Kurt Ulrich, City Administrator Item Title/Subject: Consider Mermaid Request for Reimbursement of Leasehold Improvements Background: Action on this item was postponed at the October 11, 2004 Council meeting until the City received lien waivers from the Mermaid for the completed work. In January 2004, the Mermaid entered into a 60-month sublease with the Twin Cities North Chamber of Commerce for space they leased from the City in the Mounds View Community Center. The City was a party to that lease in recognition of the fact that the Mermaid only had an interim lease with the City to the end of 2004. The interim lease was not renewed with the Mermaid and the Mermaid is leaving the facility on November 1, 2004. In conjunction with the lease to the Chamber, the Mermaid made leasehold improvements to the space (e.g., carpet, electrical, office panels, etc) in the amount of $10,387.22. That cost was included in the rent over the life of the lease in the amount of $173.12 per month. The Mermaid has made a request for reimbursement of these costs in the amount of $8,656, as outlined in the attached letter (Mermaid – September 23, 2004). Discussion: Under the terms of the sublease it, along with all the rental income from the Twin Cities North Chamber of Commerce, transfers to the City. There is no provision for the reimbursement of leasehold improvements. Apparently, the Mermaid made the improvements with some expectation of remaining in the facility for a longer period of time. The City will receive the total lease payments from the Chamber for the remaining 50 months of the lease in the amount of $1,163 per month. The leasehold improvements have added value to the building space and will remain with the building. It is a reasonable request for the Mermaid to seek reimbursement for the balance of the cost of these improvements. During the interim term of the Mermaid, the City has experience damage to the building which has cost the City approximately $417.30 to repair. Additionally, sufficient documentation has not been received to demonstrate payment of $1,560 for painting contracting. It is recommended that this amount also be withheld pending receipt of such documentation (e.g., cancelled checks, sign affidavit).