Lake Elmo considers demolishing or leasing vacant Old City Hall as costs, parking and school-site plans loom

Staff opened the workshop by summarizing the city's options for the vacant Old City Hall, a roughly 3,000-square-foot building on a 1.5-acre site built in 1986. "There’s a lot of repairs," the staff presenter said, noting a space-needs study and an estimated more-than-$800,000 of deferred repairs. Staff described three narrowed options: demolish and expand parking, keep and add a front parking lot while retaining the building for lease, or hold the parcel while monitoring a nearby school-site and pursue a coordinated master plan.

Staff presented a schematic that would yield about 40 parking spaces and gave a demolition estimate of about $35,000 and a total figure of roughly $291,000 to demo the site and install a parking lot. "We'd prefer to see option 1, demolish the building," the staff presenter told council while asking for guidance and input.

The council then heard a broker price opinion from Scott Cragness of Metro East, who said small-office or light-commercial tenants remain in demand. "For that value, you'd find a lot of folks very interested," Cragness said, and he outlined how tenant improvements and a triple-net lease could shift maintenance responsibility to occupants. Staff also walked through a lease pro forma showing first-year gross rent in the mid‑$40,000s and modest net operating income after debt service, together with scenarios that projected positive cash flow only after many years under a conservative amortization.

Council members raised practical concerns about code upgrades, lease-ability and public-safety access. One councilor asked whether the building could be leased without bringing bathrooms and certain areas up to current accessibility codes; staff said some office uses may be grandfathered but that changes of use or significant renovations would trigger permit and code-review requirements. Several councilors pushed for preserving flexibility in case the adjacent school-site and community proposals coalesce. That school site — described in the workshop as still under a purchase agreement but not closed — could enable a coordinated master plan involving both properties.

Council discussion repeatedly returned to a middle-ground approach: several members said they would not invest heavily in renovations now but were open to short-term leases (one to three years) or to demolishing the building and installing a temporary gravel parking surface until the master-plan picture clears. Staff said it will convene stakeholders and bring the topic back at a September workshop; the city will also meet with school-district representatives and other partners to clarify options and timing.

Next steps: staff will schedule a follow-up workshop in September to refine options and report results of outreach with the school district and other stakeholders.