VII.5. Approve Pavilion Mezzanine Lease Agreement; Stadler (CR2017-071)May 31, 2�17
Council Report 2017-071
Approve Pavilion Mezzanine Lease Agreement
Proposed Action.
Staff recommends adoption of the foliowing motion: Move that City Council
ap�rove a lease aqreement between the City of Hopkins and Hopkins Public
Schools for the leasing of inezzanine spaces at the Hopkins Pavilion.
�verview.
The Hopkins School District is interested in leasing space in the Hopkins Pavilion
mezzanine for its special education programs. City staff has negotiated terms of
a lease �gre�r�ner�t which is �ir�il�r to th�e t�rrr�� �f a 2004-2014 Sch��i Di�cric�
lease for its Alternative Learning Center program. The lease rate took into
account the School District's $1 million contribution to the 2018 Pavilion Upgrade
project. The lease term is 5 years with one automatic 5-year renewal term. The
annual lease payment starts at $51,550 with 3% annual increases. The leased
spaces are shown �s Exhibit A to the attached lease agreemento The Hopkins
School Board approved the lease at a Board meeting in April.
Primary Issues to Consider.
Agreement terms and conditions
The lease term is five (5) years from July 1, 2017 — June 30, 2022, with one
automatic 5-year renewal term July 1, 2022 — June 30, 2027e Either party may
terminate the lease with a 12-month notice. School District must carry liability
insurance coverage for landlord and tenant at $1 M per occurrence. Rent
payments are set at $51,550 per year with 3% annual increases.
Supporting information.
Proposed Lease Agreement
Steven J. Stadler, Public Works Director
City of Hopkins &
Hopkins School District Lease Agreement
Lease for Pavilion Mezzanine
'_=�-�IS LEASE AGREEMENT (the "Lease") is executed in multiple originals this 1st day of ul 2017 by
� zd between Citv of Hopkins, a statutory city and political subdivision of the State of Minnesota, referred
',; herein as the "Landlord", and Independent School District No. 270, a duly organized and existing
���lzool district and political subdivision of the State of Minnesota, referred to herein as the "Tenant."
"' . Leased Premises: Landlord, in consideration of the rents and covenants stated in this Lease, to be
paid and performed by Tenant, does lease to Tenant and Tenant does lease from Landlord, the
following described premises situated at, County of Hennepin, State of Minnesota as follows:
Hopkins Pavilion Mezzanine (the "Mezzanine")
Located at
11000 Excelsior Blvd. Hopkins, MN 55343
Tenant has exclusive use of the "office" and "storage" spaces within the Mezzanine to support the
Hopkins Special Education Program. Tenant will have cledicated use of °'Conference Room B" in the
Mezzanine during the school year. The City of I�opkins will have exclusive use of Conference Room
B at the end of each school year to the start of the following school year. In addition, Tenant has
priority use of rooms 201, 202, 203 and Conference Room A between 7:00 a.m. and 3:00 p.m. Monday
through Friday during the school year and when the Hopkins Special Education Program is in
session. Tenant shall provide the City of Hopkins a schedule of all in session days for the Hopkins
Special Education Program at least 30 days prior to the start of each school year. Tenant's use of the
Mezzanine is outlined on the floor plan labeled "Hopkins Pavilion Mezzanine HSD Leased Space" in
EXHIBIT A attached hereto (the "Leased Premises"). Other use of the Mezzanine will be scheduled
through a meet and confer process, facilitated by the City of Hopkins Facility Director or designee,
involving representatives from both City and School District.
2. Use: Tenant shall have the right to occupy and use the Leased Premises solely for the following
purposes:
Tenant is leasing the Leased Premises to provide space for the following educational program:
Hopkins Special Education Program. Tenant must first obtain Landlord's written consent to use this
space for other programs.
3. Term: The term of this Lease sha11 be 60 months, commencing July 1, 2017 and ending June 30, 2022,
(the "Term"), with an additiona160 month renewal term, commencing July 1, 2022 and ending June
30, 2027, subject to the conditions set forth in this Lease. The renewal term shall be an automatic
renewal unless Tenant provides a 90-day written lease termination notice to Landlord. Should the
Term of this Lease commence or end on a date other than the date hereinabove specified, Landlord
and Tenant shall execute a ratification agreement which sha11 set forth the final commencement and
termination dates.
4. Rent: Tenant agrees to pay Landlord as a base rental price for the 2017-2018 school year (hereinafter
called "Base Rental") for the Leased Premises, without notice, setoff or demand, the sum of Fifty-One
Thousa.nd Five Hundred Fifty and 00/100 dollars ($51,550). For each subsequent school year, Tenant
agrees to pay Landlord the Base Rental vvith an annual three percent (3%) increase to the Base Rental
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for the term of the Lease and the renewal term. For the avoidance of doubt, the Rent for the 2018-
2019 school year would be $53,096.50 and the Rent for the 2019-2020 school year should be $54,689.40.
Tenant sha11 pay Rent to Landlord [in twelve monthly installments on the first business day of each
month] [in nine monthly installments during the school year on the first business day of the month]
[in a lump sum on or before September 1 each year] . Rent sha11 be sent to the Landlord's address set
forth in Section 14.
Landlord and Tenant agree that Tenant may pre-pay rent at Tenant's discretion without penalty, and
that Tenant may request of Landlord at any time a statement of account showing the amount and
period of such pre-payments. All pre-payments shall be applied to the time periods specified by
Tenant at Tenant's sole discretion.
5. Non-Approval/Appro�riation: In the event of non-approval of the "Levy for Lease" from the State of
Minnesota, or, non-appropriation of funds by the School Board of Tenant for the obligations of
Tenant under the Lease, Tenant shall have the right to terminate the Lease Agreement at the end of
Tenant's fiscal year in which written notice of termination is given to Landlord. Tenant sha11 give
written notice of termination not less than thirty (30) days prior to the end of such flscal year.
Notwithstanding the foregoing, the School Board of Tenant intends to occupy the Leased Premises
for the fu11 Term of this Lease.
6. Leasehold Improvements: Tenant agrees to make no leasehold improvements or alterations in the
premises without first obtaining Lanc�lord's written consent, which written consent will not be
unreasonably withheld.
�. Landlord's Covenant: Landlord hereby covenants and agrees as follows:
a. Furnish a11 necessary utilities for the proper functioning of the Leased Premises, including
heat, electricity, water, and sewer and to keep the Leased Premises in good repair.
b. To provide custodial, maintenance, and repair services for the Leased Premises, including
the common areas in and around the building, including ice and snovv removal in
accordance with its normal snotiv removal schedule.
c. To enter the Leased Premises at reasonable times and with minimum disruption for the
purposes of inspection and to repair and correct all structural and other defects in the
premises and equipment, fixtures, or appliances serving same. Landlord shall not be
responsible for maintaining, inspecting or repairing equipment, fixtures or appliances
owned by Tenant.
8. Tenant's Covenants: Tenant hereby covenants and agrees as follows:
a. Not to use or permit any activity in the Leased Premises that will increase the rate of
insurance thereon or anything that may be dangerous to life or limb.
b. To provide a certificate of insurance covering its exposure to liability as set forth in Section
9 of this Lease.
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ce 1�T�t to deface or injure the Leased I'remises, or the building or surr�unding grounds, or to
C�O 01C �Ci`1i11� �Tl�7�it111� t0 b� C�OY1� �.1�i0i1 Sa1C� �JJ�`CTYt1S�S, Oi 11'1 �I�l� I�1111CI1I1� f�i' S111CTOUi1Cl1i1�
area that will amount to or create a nuisance. In ihe event any such damage or injury
occurs, Tenant shall be liable for ensuring its correction.
d. To quit and deliver the premises to Landlord peaceably and quietly at the end of the Term
of this Lease or any previous termination for any cause in as good order and condition and
state of repair, reasonable use, and wearing thereof excepted, as the same now are or may
be put into by Landlord or Tenant.
9. Landlord's and Tenant's Scope of Liabilitv: Landlord and Tenant agree that Tenant shall obtain a
policy of insurance providing Landlord and Tenant with coverage against liability resulting from the
careless, negligent, or unlawful use of the leased premises by Tenant, its officers, agents, employees,
students, or guests and that the cost of such policy of insurance shall be paid by Tenant. Such
coverage wi11 be in an amount not less than One Million Dollars ($1,000,000) per occurrence.
Landlord further states that it maintains and will continue to maintain during the term of the Lease
its own policy of liability insurance providing coverage against liability resulting from the careless,
negligent, or unlawful use of the premises by Landlord, its officers, agents, or employees.
Landlord shall not be responsible or liable to Tenant or Tenant's agents, employees, assigns, students,
or guests for any injury or damage resulting from acts or omissions of third persons occupying
property adjoining the leased, or for any injury or damage resulting to Tenant, or Tenant's agents,
employees, assigns, or guests, or its property from bursting, stoppage or leaking of water, gas, sewer,
or steam pipes, except where such loss or damage arises from the wi11fu1 or negligent misconduct of
Landlord, its agents, or employees or from Landlord's failure to make the repairs which it is
obligated to make hereunder.
10. Partial Destruction of Premises: Landlord and Tenant agree that if during the term of this Lease the
Leased Premises or the improvements thereon shall be injured or destroyed by fire or the elements,
or through any other cause, so as to render the Leased Premises unfit for occupancy, or to make it
impossible to conduct the business of Tenant thereon, or to such an extent that the premises cannot be
repaired with reasonable diligence within (30) days from the happening of such injury, then Landlord
may terminate this Lease as of the date of such damage or destruction. Tenant sha11 then
immediately surrender the Leased Premises and all interest therein to Landlord. Tenant shall pay
rent only to the time of surrender. In case of any such destruction or injury Landlord may reenter
and repossess the Leased Premises described in this Lease, and may dispossess all parties then in
possesslon thereof. But if the Leased Premises can be restored within sixty (60) days from the
happening of the injury thereto, and Landlord within fifteen (15) days from the occurrence of such
injury elects in wrlting to so repair or restore saicl Leased Premises within sixty (60) days from the
happening of the injury thereto, then this Lease shall not end or terminate on account of such injury
by fire or otherwise. In such event the rent shall not run or accrue from the date of such injury
through the date of completion of such repairs, except that Tenant shall during such time pay a pro
rata portion of such rent apportioned to the portion of the Leased Premises which are in condition for
occupancy or which may be actually occupied during such repairing period. If, however, the Leased
Premises shall be so slightly injured by any cause aforesaid, as not to be rendered unfit for
occupancy, then Landlord shall repair the same with reasonable promptness, and in that case the rent
shall not cease or be abated during such repairing period. Notwithstanding Tenant's ability to make
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leasehold improvements with a portion of Rent paid under Section 4, all improvements or
betterments placed by Tenant on the Leased Premises sha11, in any event, be repaired and replaced by
Tenant at its own expense and not at the expense of Landlord. In the event that Landlord shall fail to
make the required repairs or to give the required notice as specified in this provision, Tenant may, at
its option, terminate this Lease as of the date of such injury upon furnishing written notice to
Landlord of same. Such right to terminate by Tenant sha11 exist from and after thirty (30) days from
the date of injury if no notice of repair has been received or from sixty (60) days of date of injury
should notice have been received; in either event, the repairs must not have been substantially
completed.
11. Breach of Covenants: In the event of the breach by either party of a material covenant of this Lease
and if said breach is not corrected within thirty (30) days or not corrected within ten (10) days for
nonpayment of Rent — after written notification to the other party of said breach, the non-breaching
party may, at its election, terminate this Lease upon written notice to the other party.
12. Termination of Lease: Except for the termination c�f the Lease due to the non-appropriation of funds
as described in Section 5, Tenant and Landlord agree to give the other party written notice twelve
(12) months prior to the expiration of this Lease of its intention to vacate the premises or to demand
vacation of the Leased Premises. Unless either party gives notice that the Leased Premises sha11 be
vacated at the end of the Lease term, or any extension by option thereof, the Lease shall be extended
for successive one-month periods commencing as of the date of the end of the Lease, or any extension
by option thereof, and continuing until terminated upon a one-month written notice delivered to the �
other party. Rent payable during such period shall be at the same rate as that paid during the most
recent school year, or any extension by option and paid as agreed to during the most recent school
year.
13. Interpretation and Amendment: The terms of the Lease shall be interpreted in accordance with the
laws of the State of Minnesota. The parties agree that no assent, express or implied, by Tenant or
Landlord to any breach of any of the covenants or agreements contained therein shall be deemed or
taken to be a waiver of any succeeding breach of such covenant.
This Lease is binding upon the parties hereto and their successors in interest and it contains the
complete agreement of the parties. This Lease can only be amended in writing signed by both
partles.
14. Notices: Any and all notices and demands by or to the parties hereto shall be in wri.ting and sha11 be validly
given or made if served either personally or if deposited in the United States mail (certified or registered,
postage prepaid, retur�l receipt requested). If such notice be served personally, service shall be conclusively
deemed made at the time of such personal service. If such notice or dernand be served by registered or
certified mail in the manner provided herein, servrce shall be conclusively deemed made forty-eight (48)
hours after the deposit thereof in the United States mail, addressed to the party to whom such notice is to be
given. Landlord and Tenant may, by written notice given by one to the other, designate any address to which
notices and demands shall be sent when required under this Lease. Notices sha11 be addressed as follows;
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To Tenant: Independent School Dlstrict �o. 270
To Landlord: City of Hopkins
10101St Street South
Hopkins, MN 55343
ATTN:
15. Bond-Financed Improvements to Hockev Pavilion. Tenant acknowledges and understands that
Landlord intends to issue tax-exempt general obligation bonds to finance certain improvements to
the Hockey Pavilion building, which includes the Leased Premises in the near future. Tenant
understands that, as a political subdivision of the State of Minnesota, it may use bond-financed
property of the Landlord. However, Landlord may require that Tenant agree to additional covenants
related to this Lease and the use of the Leased Premises in conjunction with the issuance of its general
obligation bonds in order to ensure the tax-exempt nature of the bonds. The Tenant agrees to
cooperate with Landlord in the event additional covenants are necessary.
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Landlord and Tenant have executed this Lease on the day and year first written, each party retaining
an executed copy for its records.
Independent School District 270
1001 State Highway �
Hopkins, Minnesota 55305
By:
Board Chair
By:
Superintendent
Date:
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City of Hopkins
1010 First Street South
Hopkins, Minnesota 55343
By:
Mayor
By:
City Manager
Date:
Facility
Storage
Facil�ty
�t�rage
EXHIBIT A
HOPKINS PAVILION MEZZANINE LEASED SPACE
Hapkins Pavilion Mezz�nine
HSD Leased Space
; �..�
' Room 2oZ
Room 2038 Room 203A } — Mech�nical Room 20Z
(816 square f�et) (320 square �ee#j Room (572 square feet) i�72 squar� feet�
�+
-- . ^, i
�
�
Muti-Rurpose 203AB
�_....... ....,
•-' - Offic�
t C''"'r`1 � �v SF)
�
� Program Use 7am-3pm, tn session
program days only during schoo! year
� Dedicated Use During School Year
� Dedicated Use Ye�r Round
_ _. . _ -- w.. - -..�--._-.,.. -
497858v3 AMB HP145-4
�a '�`:�rer�c_� ?�om E �`
t:.�� sF�i G�P����n�_e Room a
( ��o s�}
.–� .,
'� Storag�
� 1ani�or �"
Elev. Uose�
Wornens .
Restroom Mens
Restroam