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City begins steps to end intermodal lease

File Photo North Dakota Port Services, shown in 2017, faces lease issues with the City of Minot.

The City of Minot has begun steps to terminate the city’s lease with North Dakota Port Services for unpaid rent and property taxes at the intermodal facility.

The Minot City Council voted unanimously Tuesday, after meeting in executive session, to give 30-day notice of intent to terminate the lease agreement, giving the company until April 30 to take corrective action.

North Dakota Port Services has leased property from the city since 2009, but the city states it has not received lease payments and property tax payments in 2016, 2017 or in the first three months of 2018. Port Services owes the city about $223,000 in unpaid rent and taxes, the city reported.

“The City provided Port Services with notice in June that lease payments and property taxes were long overdue,” City Manager Tom Barry said in a news release. “Unfortunately, the City has not received those payments. Therefore, the City must move forward in terminating the lease agreement.”

The manager for NDPS was unavailable for comment Wednesday.

NDPS has been leasing about 134.8 acres. The city has capitalized more than $1.1 million in rail and other improvements at the port.

The company has built structures and has equipment at the site, but First Western Bank has initiated foreclosure proceedings that the port is fighting. As of late last year, NDPS was still seeking investment to build out infrastructure.

NDPS previously has alleged the city breached its lease as landlord by failing to maintain the property following construction that occurred. It also alleges the city failed to ensure proper drainage when it constructed improvements on or near the leased property, resulting in damages. NDPS states it was not able to properly use and develop the leased property because of the city’s failures.

The city and NDPS are in court over the issue. The council voted to direct its attorneys to pursue summary judgment in its favor.

Court documents show NDPS’s original mortgage was created in March 2013 to secure $10 million in loans. According to First Western, one loan came into default in November 2016 because of the failure to pay the balance of $994,952 plus late fees of $32,053. A second loan was declared in default for failure to make monthly payments for the third quarter of 2016 and January and February of 2017, for a total of $499,480. The remaining principal owing on the second loan had been $7.17 million, with interest and late fees at the time of $203,697.

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