Economic Development Authority - Erik Thorvig, Community Development Director
Title
Title
Consideration of Lease to Blake Drilling for Properties at 10590 Radisson Road, 10600 Radisson Road, and 2150 106th Lane
End
Executive Summary
The EDA is considering entering into a lease for properties at 10590 Radisson Road, 10600 Radisson Road, and 2150 106th Lane to Blake Drilling.
Background
On July 19, 2021, the EDA approved entering into a purchase agreement with Blake Drilling to purchase properties at 10590 Radisson Road, 10600 Radisson Road, and 2150 106th Lane. Blake Drilling is relocating their operation and the properties are located in the 105th Avenue redevelopment area. The purchase price is $1,900,000.
The purchase agreement has been executed by both parties and one of the contingencies of the purchase agreement is entering into a lease agreement allowing Blake Drilling to occupy the property while they construct their new facility. The following are the general terms of the lease agreement.
Rate: Annual gross rate of $1.
Term: Two years, beginning on December 15, 2021 through December 18, 2023, however the company anticipates vacating the premises by April 2023.
Utilities and Maintenance: Tenant is responsible for all utilities and maintenance of the property and buildings.
Subletting: Tenant is not permitted to sublease the property.
Real Estate Taxes: Even though the property is owned by the EDA, because it’s leased the property is taxable. The lease agreement identifies the EDA paying all real estate taxes. The payable taxes in 2021 were $52,176. The EDA would be responsible to pay taxes in 2022 and 2023 of similar amounts. Staff asked the Blake Drilling representative if they would be willing to pay real estate taxes. Blake Drilling maintains the opinion that they are selling the land for about $300,000 less than its real value, however, the value of the lease (paying minimal rent and not paying approximately $50k/year in taxes) evens the value making it acceptable to sell the properties at $1,900,000.
Strategic Plan Relationship
Executing the lease to allow for the purchase of these properties is consistent with the strategic priority of redevelopment of the 105th avenue area.
Board/Commission Review
Not applicable.
Financial Impact
The EDA would be responsible to pay approximately $100,000 in real estate taxes over the two-year lease period. These costs could be funded by the EDA general fund levy and not other funding sources used for redevelopment.
Public Outreach/Input
Not applicable.
Staff Recommendation
Consider the proposed lease agreement and adopt the attached resolution.
Attachment List
Draft Lease Agreement
Body
WHEREAS; the City of Blaine Economic Development Authority and MN Management Partners, LLC (Blake Drilling) have entered into a purchase agreement where the EDA would purchase property at 10590 Radisson Road, 10600 Radisson Road, and 2150 106th Lane; and
WHEREAS, the purchase agreement is contingent upon the buyer and seller entering into a lease agreement.
NOW THEREFORE, BE IT RESOLVED, that the Blaine Economic Development Authority hereby approves entering into a lease agreement and hereby directs the president and executive director to execute necessary documents related to the lease agreement.
PASSED by the Blaine Economic Development Authority this 4th day of October, 2021.