01-021-O
ORDINANCE NO. __________

AN ORDINANCE AUTHORIZING SALE OF THE OLD EAST HILLSIDE FIRE HALL BUILDING TO THE HUMAN DEVELOPMENT CENTER IN EXCHANGE FOR A LEASE ON ADJACENT PROPERTY.

BY COUNCILOR ECKENBERG:

        The city of Duluth does ordain:

                Section 1.     That the proper city officials are hereby authorized to enter into an agreement, a copy of which is on file in the office of the city clerk as Public Document No. ______________, with the Human Development Center ("HDC") pursuant to which the city will convey by quit claim deed the below-described property in St. Louis County, Minnesota, to HDC for $12,000, to be deposited in General Fund 0100-700-1418-4640, plus $200,000 as a forgivable loan and to execute all documents necessary with regard to said conveyance:  Lot 1, Block 83, ENDION DIVISION.

                Section 2.     That the authority enter into the agreement referenced in Section 1 above shall be conditioned upon the Human Development Center executing a lease, a copy of which is on file in the office of the city clerk as Public Document No. ______________, leasing to the city at least 270 square feet in the adjacent structure, as described in said lease, plus access to common meeting rooms and facilities, at no rental cost to the city for a term of 20 years, and the proper city officials are authorized to enter into said lease and to execute all documents necessary with regard thereto.

                Section 3.     This ordinance shall take effect 30 days from and after its passage and publication.



STATEMENT OF PURPOSE:  The purpose of this ordinance is to authorize the execution of an agreement to sell by quit claim deed the old East Hillside fire hall, located at 1402 East Second Street, to the Human Development Center ("HDC") in exchange for the sum of $12,000 and a long-term lease on a portion of the adjacent property.

The old fire hall building, which has not been used as a fire hall for many years, is located across Second Alley from HDC's main office and treatment facility at 1401 East First Street. Since 1979, HDC has rented the building from the city, using it to operate their programs which long ago had grown to exceed the capacity of their building. Since leasing the old fire hall building from the city, HDC has spent over $375,000 on making improvements to the property.

The city has now determined that the building, which is valued at in excess of $200,000, is excess to the city's needs and should be sold. The property was put out on bids but the only bid received was that of HDC which was also in the process of acquiring and remodeling the adjacent residential property most recently used as a 9-plex.

After substantial negotiation, it was agreed, subject to council approval, that the city would sell the old fire hall building to HDC in exchange for a 20 year lease on a portion of the remodeled 9-plex. The city would receive $12,000 in cash and, in addition, it would have exclusive use of 270 square feet of space in the 9-plex building plus access to at least 700 square feet of meeting space and to the kitchen, bathrooms facilities and common areas of the building over the 20 year term of the lease. This lease has an approximate present value of about $200,000.

The leased facilities would be used for group meetings and community functions in the East Hillside area of Duluth.