4.2. SR 11-17-1997~ay of
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MEMORANDUM
Item #4.2.
TO:
FROM:
DATE:
SUBJECT:
Mayor & City Council
Pat Klaers, City Administrator
November 17, 1997
Old Municipal Liquor Store
Councilmember Holmgren has requested that a discussion on the old
municipal liquor store be put on this agenda. As I understand the situation,
Councilmember Holmgren has a number of concerns regarding the status of
the old store. Of all the concerns presented to me, I believe that the biggest
issue relates to city liability if we lease out our property and a "catastrophe"
of some type happens while the city owns the property and is leasing it to
another party.
In addition to the liability concern, I understand that Roger would also like to
discuss with the Council whether or not the city should be in the leasing
business versus whether or not the city should try to market and sell the
property. Associated with this selling versus leasing issue is the cost for
necessary building improvements in order to bring the facility up to code.
Another issue, and I don't know if this is the final issue or not, relates to
whether or not this location is the best spot for a teen oriented "caf~ club"
along with whether or not the city should be involved with this type of
business.
I certainly cannot answer all of Roger's questions and some of the concerns
require a City Council decision. However, to help clarify some of the
situations at the old municipal liquor store, I have asked Building Official
Cliff Skogstad to be in attendance at this meeting to talk about the
upgrading of the facility to meet building codes. Also, attached is a comment
from Assistant City Administrator Lori Johnson regarding lease liability
concerns at the old liquor store. Furthermore, it should be noted that Ron
Dargis has not contacted me regarding his interest in our property.
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425
A final comment that I have on the old liquor store relates to selling versus
leasing the property. I believe that it is premature to sell the property at this
time until we know what the future is for the property across the street. This
redevelopment of the trailer court area may impact our two way access on
Main Street and, subsequently, the overall value of our property.
Additionally, I believe that we should not sell this city asset and that we
should only consider long term lease arrangements. I believe that under the
right conditions we can get as much for the property under a 20 or 30 year
lease agreement as we could by selling the site, and by entering into a lease
agreement we will own the property when the lease expires. No one has a
crystal ball, but this property could be a very valuable city asset in 20-30
years and who knows what this site may be worth or what the area may look
like in 50 or 60 years. I don't believe we should be selling this city asset.
This could become a very important piece of property for the city in the
future. For example, this site could be a satellite fire station, police station,
public works station, or be put to any number of municipal uses in addition to
it potentially being sold in the future. I believe that the property will go up
in value in the long term.
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MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
PAT KLAERS ~&
LORI JOHNSON
NOVEMBER 12, 1997
OLD LIQUOR STORE - LEASE LIABILITY
In response to your request for information regarding the City's potential exposure arising from leasing
the former Northbound liquor store, I have contacted City insurance agent, Dan Greene. Dan confirmed
the information I provided to you earlier on this issue.
There are no real insurance or liability concerns regarding leasing the store. The lessee will be required to
carry the primary liability insurance coverage. The City will carry excess liability coverage - we are on
second base as far as liability claims are concerned. There will be no additional cost to the City for
adequate coverage if the building is leased to the Watz's or any other business. The City will continue to
caro2 property coverage which could become part of the lease payment.
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (6t2) 441-7425