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CR 05-092 Depot Lease agreement IDS270 CITY OF - July 19, 2005 HOPKINS Council Report 2005-092 Authorize Execution of Depot Lease Agreement between the City of Hopkins and Hopkins School District 270 for School Fiscal Years 2005/2006 through 2007/2008 Proposed Action Staff recommends adoption of the following motion: Move to authorize the Mavor and Citv Manaaer to sian the Depot Lease Aareement between the City of Hopkins and HOPkins School District 270 for School Fiscal Years 2005/2006 throuah 2007/2008. Overview In February of 2003, the City and Hopkins School District 270 entered into a lease, on behalf of the Depot Coffee House, which allowed the school district to use the Depot business as a business lab. That lease has expired. With the support of the Depot Partners, staff from Hopkins School District 270 and the City has drafted a new lease agreement that will carry forth the community-based educational lab program through the 2007/2008 school year. Primarv Issues to Consider · What are the general terms of the lease? · How will the School District use The Depot Coffee House? · How will the lease payments be used by The Depot? · How does this lease differ from the previous lease? Supportina Information · City of Hopkins & Hopkins School District Lease Agreement, Depot Coffee House Business J~ Facilities Director Financial Impact: $ 150.000 to the Deoot budaet over 3 vears Budgeted: Y/N _ Source: Related Documents (CIP, ERP, etc.): Notes: Council Report 2005-092 Page 2 Analvsis of Primary Issues . What are the general terms of the lease? In return for the use of The Depot business and building as an educational setting, the Hopkins School District will make lease payments totaling $150,000 to The Depot Coffee House for a period of three years. The effective term of this contract will be 36 months, commencing with 2005/2006 school year and ending with the 2007/2008 school year. The attached lease agreement spells out provisions for issues such as the lease term, rent, liability and required insurance coverage, as well as other general responsibilities of both tenant and landlord. · How will the School District use The Depot Coffee House? As stated in the lease: Hopkins ISD 270 shall use the Depot Coffee House as a community-based educational laboratory focused on instilling in each learner the knowledge necessary to manage and successfully run a small business and teen center. Students will work with Royal Cuisine management to learn how to manage the coffee shop, Hopkins High School Business Department to learn marketing and advertising skills to promote the Coffee House and Teen Center, Hopkins High School Science Department to learn how alternative energy sources can replace some of the existing energy sources, and to learn about county trail management and development with Three Rivers Park District. These partnerships will be accomplished by working with the Depot Coffee House student board and partner group to design a variety of learning experiences. These experiences may include but not be limited to the above partnerships through; paid and/or unpaid internships, projects incorporated into the classroom or as class assignments, independent study projects, and actual case studies focused on the business and teen center. · How will the lease payments be used by The Depot? The lease payments will help to pay for space and other costs related to Depot Coffee House operations. · How does this lease differ from the previous lease? The only substantive differences between the old lease and new lease is the expanded language for use (the language in the second bullet above), the date changes to reflect the new term, and language more clearly stating when payments of the lease are due (April 1 and October 1). Staff Recommendation Staff recommends the Council authorize the Mayor and City Manager to sign the lease agreement with the School District. ~ City of Hopkins &Hopkins School District LEASE AGREEMENT Depot Coffee House Educational Program 2005-06 through 2007.08 TIllS AGREEMENT is executed in multiple originals this il1 day of July 2005, between City of Ho.pkins, referred to as the "Landlord", and Honkins ISD 270 Hopkins HiVh School Business Department referred to as the "Tenant". I. Leased Premises: Landlord, in consideration of the rents and covenants stated in this Agreement, to be paid and perfonned by the Tenant, does lease to the Tenant and the Tenant does lease from the Landlord, the following described premises situated at, County of He one pin, State of Minnesota as follows: Deoot Coffee House "Business" Located at 9451 Excelsior Blvd. Hookins. MN 55343 2. ~ the Tenant shall use The Leased Business solely for the following purposes: Hopkins ISD 270 shall use the Depot Coffee House as a community based educational laboratory focused on instilling in each learner the knowledge necessary to manage and successfully run a small business and teen center. Students will work with Royal Cuisine management to learn how to manage the coffee shop, Hopkins High School Business Department to learn marketing and advertising skills to promote the Coffee House and Teen Center, Hopkins High School Science Department to learn how alternative energy sources can replace some of the existing energy sources, and learn about county trail management and development with Three Rivers Park District. These partnerships will be accomplished by working with the Depot" Coffee House student board and partner group to design a variety of learning experiences. These experiences may include but not be limited to the above partnerships through; paid and/or unpaid internships, projects incorporated into the classroom or as class assignments, independent study projects, and actual case studles focused on the business and teen center. 3. Tenn: To have and to hold said Leased Business for a tenn of 36 months, commencing with 2005.2006 school year, (hereinafter called the "Tenn") upon the rentals and subject to the conditions set forth in this Lease Agreement. Except as hereinafter provided, Landlord shall make available the Leased PremiseIBusiness in the condition required to accomplish the goal as stated hereinabove specified for commencement of the Tenn. Should the Tenn oflhis Lease commence or end on a date other than the date hereinabove specified, Landlord and Tenant shall execute a ratification agreement which shall set forth the final commencement and tennination dates. 4. Rent: Tenant agrees to pay the Landlord as base rental (hereinafter called "Base Rental") for the Leased Premises, the annual sum of Fifty thousand and 00/100 ($50 000) dollars or One hundred fifty thousand and 00/100 ($150000) dollars for the full 36.month tenn of the lease. Rent will be paid twice each year in $25,000 installments, billed April I and October I of each year. 5. None.A,pprovaVA,pnronriation: In the event of non. approval of the "Levy for Lease" from the State of Minnesota, or, non.appropriation offunds from district 270 for the obligations of the Lessee under the Lease, the LESSEE shall have the right to tenninate the Lease Agreement at the end of the District's fiscal year in which written notice oftennination is given to the LESSOR. LESSEE shall give written notice oftennination not less than thirty (30) days prior to the end of such fiscal year. However, it is the intent of the Hopkins School district 270 to execute the three.year term of this lease. 6. Lease Hold Imorovements: Tenant agrees to make no lease.hold improvements or alterations in the premises without frrst obtaining Landlord's written consent, which written consent shall not be unreasonably withheld. 7. Landlord's Covenant: The Land!ord hereby covenants and agrees as follows: a. Furnish all necessary utilities for the proper functioning of the building, including heat, electricity, including electricity for window air conditioning units, water and sewer and to keep same in good repair. b. To provide custodial, maintenance and repair services for the leased premiseslbusiness and common areas, including ice and snow removal in accordance with its nonnal snow removal schedule. -1- / -. I / c. To enter the leased premises at all reasonable times and with minimum disruption for the plll'Jloses of inspection and to repair and correct all structural and other defects in the premises and equipment, fixtures, or appliances serving same. i -/ " 8. Tenant's Covenants: The Tenant hereby covenants and agrees as follows: / a. N otto use or permit any activity upon said premises that will increase the rate of insurance thereon or , I anything that may be dangerous to life or limb. .1 b. To provide a certificate of insurance covering its exposure to liability as set forth in Paragraph 9 of this agreement. c. Not to deface or injure the leased premises, or the building or surrounding grounds, or to do or permit anything to be done upon said premises, or in the building or surrounding area that will amount to or create a nuisance. d. To quit and deliver up the premises to the 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 Liability: 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, or employees and that the cost of such policy of insurance shall be paid for solely by Tenant. Such coverage will be in an amount not less than Three hundred thousand ($300.000) dollars per occmrence. Landlord further states that it maintains and will continue to maintain during the term of the lease its own policy of public liability insurance providing coverage against liability resulting from the careless, negligent, or unlawful use of the premises by the Landlord, its officers, agents, or employees. The Landlord shall not be responsible or liable to the Tenant for any injury or damage resulting from acts or omissions of third persons occupying property adjoining the leased, or for any injury or damage resuIting to the Tenant or its property from bursting, stoppage or leaking of water, gas, sewer, or steam pipes, except where such loss or damage arises from the willful or negligent misconduct of the Landlord, its agents or employees or from the 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 9ther cause, so as to render the leased premises unfit for occupancy, or to make it impossible to conduct the business of the 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 the Landlord may terminate this lease as of the date of such damage or destruction. The Tenant shall then immediately surrender the leased premises and all interest therein to the Landlord. The Tenant shall pay rent ouly to the time of surrender. In case of any such destruction or injury the Landlord may reenter and repossess the leased premises described in this lease, and may dispossess all parties then in possession thereof. But if the leased premises can be restored within sixty (60) days from the happening of the injury thereto, and the Landlord within fifteen (15) days from the occurrence of such injury elects in writing to so repair or restore said 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 nm or accrue from the date of such injury through the date of completion of such repairs, except that the 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 'o"hich 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 the Landlord shall repair the same with reasonable promptness, and in that case the rent shall not cease or be abated during such repairing period. All improvements or betterment's placed by the Tenant on the leased premises shall, in any event, be repaired and replaced by the Tenant at its own expense and not at the expense of the Landlord. In the event that the Landlord shall fail to make the required repairs or to give the required notice as specified in this provision, the Tenant may, at its option, terminate this lease as of the date of such injury -~- upon furnishing written notice to the Landlord of same. Such right to terminate by the Tenant shall exist from and after thirty (30) days from the date of injury ifno 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. 1 I. Breach of Covenants: In the event of the breach by either party ofamaterial covenant of this Agreement and if said breach is not corrected within thirty (30) days - 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 Agreement upon written notice 12. Termination of Lease: Tenant and Landlord agree to give the other party written notice six (6) months prior to the expiration of this Lease of its intention to vacate the premises or to demand vacation of the premises. Uuless either party gives notice that the premises shall 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 original term, or any extension by option and paid as agreed to during the first term 13. Interoretation and Amendment: The terms of the Lease Agreement shall be interpreted in accordance with the laws of the State of Minnesota. The parties agree that no assent, express or implied, by the Tenant or the 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 Agreement is binding upon the parties hereto and their successors in interest and it contains the complete agreement of the parties. This Agreement can only be amended in writing signed by both parties. The Landlord and Tenant have executed this Lease Agreement on the day and year first written, each party retaining an executed copy for its records. Hopkins ISO 270 1001 State Highway 7 Hopkins,.Minnesota ~530~ City of Hopkins 10 IO First Street South Hopkins, Minnesota 55343 By: Boar<ltq;~ir -- By: . Mayor By By: City Manager Superintendent Date: Date: -:'l-