GRAND FORKS – After the Jobs Development Authority on Monday denied a request by the Grand Forks Herald to leave its lease 11 months early, it appears it could again be considered by the JDA and City Council.
City Administrator Todd Feland said items like the Herald’s lease termination request generally go to the Growth Fund Committee first for recommendation before being presented to the JDA. Feland said the item was placed on the Monday, April 17, JDA agenda rather than going to the Growth Fund Committee first. That’s because he wanted to get feedback to the Herald “sooner rather than later.”
Now, the item is on the agenda for the upcoming meeting of the Growth Fund, on April 24. If it gains that panel's recommendation, it again will move to the JDA. This time, the request will include additional information, as well as possible replacement tenants, Feland said.
Earlier this year, Mayor Brandon Bochenski and Feland spoke with Herald Publisher Korrie Wenzel and concurred that the Herald could end its lease early. The original lease agreement was for five years, to end in May 2024.
A 60 days’ advance notice was requested, and Wenzel provided that notice on March 31.
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When the item was presented during the JDA meeting on April 17, a question was raised by a resident in attendance, wondering how much money the city will lose if the Herald moves out 11 months early. The answer is roughly $60,000 or more. City Council President Dana Sande then made the motion to deny the Herald’s request, which passed 5-1.
Later in the week, Feland said, “what we’ve heard from the Jobs Development Authority is that they’re not against terminating the lease early. However, they wanted more information on the other potential tenants that would like to occupy some or all of the Grand Forks Herald space currently.”
Throughout the week, Feland said the city has reached out to interested tenants who might want to occupy a portion or the entire 4,252 square feet of office space.
“What we've worked on here over this week is to follow up with those interested parties and what their needs were,” Feland said.
During a brief comment period at the start of Monday’s JDA meeting, Wenzel originally said the reason for the Herald wanting to leave is to move to a space that better fits its current number of staff, most of whom work remotely, and due to parking that has become limited with construction downtown.
After the JDA denied the request, Wenzel returned to the meeting to speak during Monday’s public comment portion of the regularly scheduled City Council meeting. Wenzel outlined several points he believes aren’t being upheld in the lease. Those items include heating and cooling issues, limited parking, the city not maintaining the property — shoveling and snow removal, for instance — and issues over the past year with the front door.
Wenzel said the Herald’s lease promises 24 parking spaces, but the Herald has six parking spots after a construction project began in the parking lot nearest the building, which is now known as the HIVE (an acronym for Hybrid Innovation Venture Engine). He contends the city broke the lease when it reduced the spots.
“The city owes the Herald a lot — not in terms of any favors or anything, but only strictly legally speaking. If you’re going to be a landlord, be a landlord,” Wenzel said at the conclusion of his five minutes of time during the meeting’s public-input segment.
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The Herald pays the city $5,666 per month, which includes an 8% increase in 2022. The rent is scheduled to raise roughly 5%, to $5,942, starting in May.
Other tenants within the HIVE include Thread and the Grand Forks Economic Development Corporation. Keith Lund, president and CEO of the EDC, said the organization has been in the building since 2013. At that time the landlord was Forum Communications Co., which owns the Herald and which owned the building until 2019, when the city purchased it for $2.75 million.
Lund said issues inside the building date back to 2013, including the heating and cooling problems.
“There were some issues when we moved into the building,” Lund said. “As a matter of fact when leasing the space the Herald staff warned us of the (heating) challenges and we’ve done a few things to mitigate them and we understand they’ll be greatly improved when some new heating and ventilation units are installed on the roof later this year.”
Lund said overall, he is satisfied with the city as the landlord.
“There are issues in any building. I’ve been a tenant in the Herald, we’ve been a tenant for the city and there are always those types of issues that arise. Whether it’s someone parking in your spot, or maybe the snow not being removed as quickly as you would like,” Lund said. “But all in all I’d say we’ve been very satisfied. The city has been very open to communication if there has been an issue, and discussing solutions and timelines.”
Wenzel this week acknowledged that heating and cooling issues have been persistent even before the city purchased the building. But, he said, everyday problems related to shoveled sidewalks and parking were addressed by the Herald.
“Yes, heating and cooling has been an issue here for years and I acknowledge that,” Wenzel said. “But sidewalks, parking and all those other things – whereas there might have been a quick issue here or there – we did, in my opinion, react and remedy those issues.”
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The Herald reached out to other city tenants, including Thread and LM Wind Power, but didn’t receive a response back.
Whenever a tenant makes a complaint to the city, Feland said it is handled by the Community Development Department.
For building maintenance, Feland said staff in City Hall will start handling day-to-day operations, such as snow removal around the HIVE, since it’s becoming harder to get contractors for the maintenance work.
“The maintenance at the HIVE will likely be done by our City Hall staff just because we’re adjacent to the HIVE,” he said.
Roof and HVAC replacement in the building is set to take place this summer.
Feland said in the last four years there’s been a paradigm shift among the JDA and Growth Fund Committee to reduce its number of buildings that are leased out. He said the goal should be to “grow the economy in Grand Forks, and not just be a building owner and collect rent.”
Past buildings the city owned and leased were Corporate Center I, sold late last year, Corporate Center II, sold in 2021, and the Centre Inc. building located downtown, which sold in 2019. Cirrus Aircraft purchased its building from the city in 2021.
The city also has been selling off land in the business park. As of this month, the city has 49 acres available to sell.
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While Feland said the city hasn’t run into too many problems with tenants in the past, during the pandemic a few retailers struggled with rent. Kittsona, a clothing boutique formerly located in Corporate Center II, fell behind on rent with the Growth Fund Committee authorizing a promissory note to recover a portion of back rent from the retailer in 2021. Kittsona is now in another building, not owned by the city.
At the same time Ann Love, another women’s clothing boutique also formerly located in Corporate Center II, had asked to terminate its lease, with the intention of closing.
“So we had to negotiate with both of those entities on moving forward and that was in and around the time where the city was looking at divesting ourselves of Corporate Center II,” Feland said.
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Grand Forks Herald lease termination still up for discussion - Grand Forks Herald
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