DISCLAIMER

06-0786R


RESOLUTION APPROVING AMENDMENT TO LEASE BETWEEN SMRAA AND MOUNTAIN VILLAS OWNERS’ ASSOCIATION EXTENDING THE TERM THEREOF.

BY COUNCILOR STAUBER:

     RESOLVED, that pursuant to the provisions of Laws of Minnesota, 1973, Chapter 327, Section 5(f), the first amendment to Mountain Villas Lease, a copy of which is on file in the office of the city clerk as Public Document No. ____________, between the Spirit Mountain recreation area authority and the Mountain Villas Owners’ Association is hereby approved.


STATEMENT OF PURPOSE:  The purpose of this resolution is to approve an amendment of the existing lease between the Spirit Mountain recreation area authority and the Mountain Villas Owners’ Association, extending the term thereof through 2056.


In 1974, the authority, with the city’s approval, leased property to a private developer to construct the 15 “Mountain Villas” (mushroom) structures, each of which contained two rental units, at the ski hill for the purpose of providing rental housing on the hill for patrons of the facility. Subsequently, in 1979, the units were sold to the Mountain Villas Owners’ Association, an association of owners of the individual units, who have owned and managed them since. The ownership of individual units has changed from time to time as the individual units were bought and sold, and along with it, the membership of the association but the control and operation has remained with the association.


The ability to market the individual units is the key to making this ownership structure viable and therefore to their continued operation as high quality rental units which adequately serve the needs of the area’s patrons. When originally organized, the association had a 50 year lease which made the units marketable but with the passage of time, the duration of the remaining term of the lease has been reduced to 23 years and the association members are finding it difficult to find a market for their units and lenders willing to lend for their acquisition on the reduced time frame.


Therefore, the association requested that the authority agree to extend the term of their existing lease, returning it to a term equal to the original term of 50 years. In view of the mutually beneficial and symbiotic relationship between the association and the villas and the authority and the area, the authority approved the extension.


Pursuant to the legislation cited in the text of the resolution, the city council’s approval is required; this resolution provides that approval. The approval of the planning commission and the parks and recreation commission, also referenced in the statute is not required because this is merely the extension of an existing lease.