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HAMMITT Bob <br /> From: ROYER Russ C <br /> To: HAMMITT Bob <br /> Subject: 4J bus barn lease <br /> Date: Thursday, December 07, 1995 2:17PM <br /> Bob, I have talked with both Jon Lauch and Pat at 4J regarding the proposed lease agreement. In your <br /> memo of November 2, 1995 you had addressed a few concerns you had with the lease provided by 4J. <br /> I also called and talked with Cathy Joseph about the insurance provisions - both liability and structural. <br /> Cathy explained there was no problem providing the certificate verifying the $1 million liability. I had <br /> discussed using 4J's property insurance and then reimbursing them. Cathy said because we have so many <br /> million dollars worth of structure coverage the City has very low rates, approx. 4 cents per 100 dollars. <br /> Therefore, the insurance would be minimal. If the structure were valued at $50,000 the insurance <br /> premium would be about $20 per year. She said she can provide the insurance certificate with about a <br /> 2 -3 day lead time. <br /> As to the $920 lease amount, I called and discussed the amount with John Brown, the appraiser who 4J <br /> had referred to. He had approached it both through a capitalization approach, which estimates the value <br /> of the property and then applies a rate of return, which assigned a value to the bare land and a depreciated <br /> value to the improvements. He also approached it through the market comparison approach as either RV <br /> parking (both covered and outside), and as vehicle parking for nearby offices. Both approaches seemed to <br /> adequately support the $920 per month rent. When talking to Pat at 4J today she said they had another <br /> governmental agency recently offer them $1,350. Apparently they are going to work something out with <br /> the other agency in another area. They have agreed to honor the $920 rate. We are tentatively working <br /> towards a January 1, 1995 date to begin the 2 year lease. <br /> I discussed the electricity originally with Jon and again with Pat today. Pat said 4J was going to be <br /> providing the power to the site and it would be separately metered. <br /> I have also requested a more specific description of the lease area with an approximate lot size and building <br /> size. She said they would add that to the agreement. I requested they delete the last portion of the first <br /> sentence of item 5 pertaining to all structural repairs. I said the City would be responsible for ongoing <br /> maintenance repairs but wanted to clarify it is not our intent to replace structural members that have <br /> deteriorated over the life of the building. She understood and said she would see if that could be deleted in <br /> the final agreement. <br /> I will forward a copy of the modified agreement on to you for your review and approval when I receive it. <br /> Please let me if there is anything else you feel we need to address. Russ <br /> Page 1 <br />