City opts not to renew lease with The Interchange at end of year

Published 4:54 pm Wednesday, June 16, 2021

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The owner of The Interchange Wine & Coffee Bistro in Albert Lea is questioning the notice she received from the city not to renew her lease of the lower level of the Jacobson building at the end of the year. 

Lisa Hanson said during the public forum of the Albert Lea City Council meeting on Monday she received a notice May 26 signed by Albert Lea’s city attorney.

“After 7 1/2 years of being an exemplary downtown business, well loved by the community, I was surprised the city was terminating my lease,” she said. 

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Hanson said in 2020, she worked with city management to negotiate rent after she had experienced a hardship when scaffolding went up outside of the building as a safety precaution because of exterior damage to the building. The building has cracks developing on mortar joints and terra cotta blocks that are cracking. A few blocks have even fallen off the structure, leading to the decision to put up the scaffolding as a precaution. 

She said the scaffolding gave the appearance of construction or that the business was closed. After what she described as several months of negotiations because of the changes in city managers at the time, she was able to come to terms on an agreement when current manager Ian Rigg was hired. At that time, she said the city gave her the impression it would renew at the end of the lease.

After receiving the notice, she said she reached out to City Manager Kelly Martinez and Rigg about why the lease would not be renewed and learned from Rigg that he had made the decision. She questioned whether he had the authority to do so and whether he needed to consult with the City Council. 

“It’s a very dangerous thing when those in positions of leadership usurp their authorities and act unilaterally,” she said. 

She said she plans to win the civil and criminal cases against her that stem from reopening her business in December and January in defiance of state executive orders and has plans to reopen The Interchange. If the city decides to permanently terminate her lease, she said it would leave her with no opportunity to recoup her investment of “blood, sweat and tears and a great deal of finances.” 

“It would seem the city or certain actors in city government would prefer to destroy me and my business,” she said, asking that the city renew the lease. 

Rigg on Tuesday said Hanson had stopped paying her rent in late 2019 after she blamed the city for why her business was failing and went more than a year without making monthly rent payments. 

Her rent was ultimately reduced to $600 a month when they worked out a deal, and she ultimately got caught up on the back payments. 

In the end, he said, it was a numbers decision for him when he made the decision, and he said he felt it was more of a disadvantage for the city financially to continue to provide what he described as “subsidized space” for the business while the city is trying to get the building restored. 

Construction is slated to take place in 2022, and costs have increased from the original $300,000 estimate to $600,000. The city plans to pay for half of the cost through a grant. 

The high price is because of the terracotta facade, which is made up of blocks that are glazed and finished and that are baked similar to pottery. Each block has a piece of metal baked in, and each is tied into the building structure with a wire hook. Over the years if the building joints are not maintained, cracks develop on the mortar joints as the building freezes and thaws.

He asked how a business could survive a year of having trucks and cranes and full construction scaffolding, in addition to the noise that will likely happen. 

He said the city also hopes to look at reuses for the building so the city can recoup the $300,000 that will be spent on the building, whether that is marketing it for housing or other things. 

“There’s no possibilities until that facade gets done,” he said, noting that the city owns several buildings that have fallen into disrepair. 

He said he has not received disagreement from the council about the decision and thinks it was a logical decision for economic development and the community as a whole. 

“Everything seemed to line up with what I know to date the council is expressing,” Rigg said, stating if at any point the council feels like he needs to be directed differently they can tell him and he will accommodate their wishes. 

“Excluding the huge liability implication, the costs to work around a tenant, contractor flexibility, storage of materials and more to the loss of revenue from the tenant for approximately one year are not equal,” Rigg said in an email to Hanson on June 2. “In addition to the construction project that closes off the leasing potential of the space for approximately all of 2022, we have to consider other factors such as payment history and other lease adherence matters.”

Rigg said in an email on June 2 to Hanson that the City Charter allows the city manager to approve contracts and bids that are below $100,000, as per the city’s policy. 

Hanson in a return email to Rigg on June 11 said she thought the section of the City Charter that Rigg referenced that granted him unilateral authority to not renew her lease was “misplaced if not outright fraud.” 

“It is clear from this section that your power to make contracts is in the nature of your function as the chief purchasing agent for the city,” she wrote. “It is clear from this section that your power to make contracts is in the nature of your function as the chief purchasing agent for the city. There is no delegated authority for you to act as you have with respect to terminating my lease as a ‘contract’ in your function as a purchasing agent.”