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CR 05-093 Addendum to Pavilion Mezzanine Lease IDS270 CITY OF m July 19, 2005 HOPKINS Council Report 2005-093 Authorize Execution of Addendum to the Pavilion Mezzanine Lease Agreement between the City of Hopkins and Hopkins School District 270 Proposed Action Staff recommends adoption of the following motion: Move to authorize the Mavor and City Manaaer to sian the Pavilion Mezzanine lease addendum between the Citv of Hopkins and Hopkins School District 270. Overview The Hopkins Alternative Program/Off Campus Pavilion (HAP/OCP) program has been housed in the Hopkins Pavilion Mezzanine since the fall of 2003. The Pavilion Mezzanine interior was finished in a joint development (School DistricUCity) effort to benefit the school district, the City, and the community, and has been very successful in serving this purpose. The school district is now is a position to implement full day classes in the space and in doing so is requesting improvements that will again benefit the school district, City, and the community. The addendum to the Pavilion Mezzanine Lease outlines the improvements the school district is seeking and adjusts the rent terms of the lease to offset the cost of the improvements. Primarv Issues to Consider . Does this lease addendum meet the needs of the community, City, and School District? Supportina Information . Addendum to the Lease Agreement between the Hopkins School District and the City of Hopkins for the Pavilion Mezzanine . Original City of Hopkins & Hopkins School District LEASE AGREEMENT for Pavilion Mezzanine JlJih1!J; J R. Strachota Facilities Director Financial Impact: Not to exceed $70.000: Budgeted: No: Source: Loan not to exceed ;&70.000 from the ERP Related Documents (CIP, ERP, etc.): Notes: Loan pavments will be paid to ERP throuah lease pavments Council Report 2005-092 Page 2 Does this lease addendum meet the needs of the community, City, and School District? The current lease with the school district helped drive the joint development of the Pavilion Mezzanine space in 2003, opening the Pavilion mezzanine to multiple possibilities for community use by organizations and individuals, city use for meetings and training, business use for meetings, and school district use for the Alternative Learning Program. The lease with the school district is flexible to allow for all these usages. The new improvements referenced in the addendum will increase the flexibility of the space with the installation of a folding panel wall that creates more rooms, additional equipment to enhance the space for meeting usage, and additional storage space. The lease payments will continue to finance the leasehold improvements as well as a base rent. The improvements will be the property of the City of Hopkins. The addendum to the lease represents growth in the Pavilion Mezzanine usage, furthers the joint development of the space, and will enhance the ability of the City and Hopkins School District to fulfill the needs of the community. Staff Recommendation Staff recommends the Council authorize the Mayor and City Manager to sign the Pavilion Lease Addendum with the Hopkins School District. Addendum to the Lease Agreement between Hopkins School District and the City of Hopkins for the Pavilion Mezzanine July 2005 With the expansion of the District ALC program housed in the Pavilion Mezzanine in the Fall 2005, up to $70,000 of remodeling costs are approved by the Hopkins School District for the following: . Walls dividing the large room (multi-purpose room) with one sliding door . Creation of a private office within the office area (construction of a wall and door) . Millwork and cabinets for teachers office area . Additional signage . Miscellaneous equipment Revision to #4 Rent: Tenant agrees to pay rent ("Rent") for the Leased Premises, without notice, setoff or demand, a semiannual sum payable on May 1 and November 1 of each year during the term of this lease. COHlIRensing on May 1, 2004, through ana ineIUElin!; November 1, 2006, tile semiaRnual sum shall be Thirty eight Thousand ana 001100 ($38,000) Dollars. Commeneing on May 1, 2007, through ana including November 1, 2013, the semiannual sum shall be Forty fi':e Thousand Fi':e Hunarea ana 00/100 ($45,500) Dollars. Commencing on November 1,2005 through and including November 1, 2006 the semiannual sum shall beforty-two thousandfive hundred and 00/100 ($42,500) dollars. Commencing on May 1, 2007, through and including November 1,2013, the semiannual sum shall befifty thousand and 00/100 ($50,000) dollars. , Hopkins ISD 270 1001 State Highway 7 Hopkins, Minnesota 55305 City of Hopkins 1010 First Street South Hopkins, Minnesota 55343 Mayor Date: By: City Manager Date: City of Hopkins & Hopkins School District LEASE AGREEMENT Lease for Pavilion Mezzanine TIIIS LEASE is executed in multiple originals this 1st day of November. 2003. by and between City of Hopkins. referred to as the "Landlord", and Hookins ISD 270. referred to as the "Tenant". Hopkins School District 270 and the City of Hopkins are jointly developing the Hopkins Pavilion to better serve the dty of Hopkins, Hopkins School District 270, and the community. 1. Leased Premises: Landlord, in consideration of the rents and covenants stated in this Agreement, to be paid and performed by the Tenant, does lease to the Tenant and the Tenant does lease from the Landlord, on a non-exclusive basis as provided in Paragraph 2 of this lease the following described premises (the "Leased Premises") situated at, County of Hennepin, State of Minnesota as follows: Hopkins Pavilion Mezzanine (As depicted in Exhibit A attached hereto & incoIpOl:ated herein) Located at 11000 Excelsior Blvd. Hopkins, MN 55343 2. Use: The Tenant shall use The Leased Premises solely for the following purposes: Adult Basic Education including workforce education and English as a Second Language classes, adult enrichment programs including parenting education, and shared space for off -campus Hopkins Alternative Program (HAP). The Landlord and Tenant shall also use this space for programs that are jointly sponsored such as staff development. The Tenant has exclusive use of the "office" to support the HAP Area Learning Center. In addition, the Tenant has priority use of rooms 201, 202, 203 and the conference room between 7:00 a.m. -2:30 p.m. Monday through Friday. Other use of the space is 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. This meeting and confer process is outlined in the management plan to be developed and attached. The intent of the mariagement plan is to ensure community needs are met while at the same time meeting the educational needs of the Tenant. 3. Term The term of this lease is 120 months, commencing with November 1, 2003 and ending October 31,2013, (hereinafter called the "Term") upon the rentals and subject to the conditions set forth in this Lease Agreement. Except as hereinafter provided, Landlord shall make available the Leased Premise in the condition required to accomplish the goal as stated hereinabove specified for commencement of the Term. 4. Rent: Tenant agrees to pay rent ("Rent") for the Leased Premises, without notice, setoff or demand, the semi-annual sum of thirty eight thousand and 00/100 ($38,000) dollars payable on May 1 and November 1 of each year during the term of this lease, commencing on May 1, 2004, through and including November 1, 2006; and the semi-annual sum of forty-five thousand five hundred and 00/100 ($45,500) dollars on May 1 and November 1 of each year commencing on May 1, 2007 and continuing through December 15, 2013. Landlord and Tenant agree that Tenant may pre-pay rent at the Tenant's discretion, and that Tenant may request of Landlord at any time a statement of account showing the amount and period of such pre-payments. 5. Non-Approval/Appropriation: In the event of non-approval of the "Levy for Lease" from the State of Minnesota, or, non-appropriation of funds from District 270 for the obligations of the Tenant -1- under the Lease, the Tenant shall have the right to terminate the Lease Agreement at the end of the District's Tenant's fiscal year by written notice of termination is given to the LESSOR Landlord. Tenant shall give written notice of termination 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 term of this lease. 6. Improvements: Tenant agrees to make no improvements or alterations in the premises without first obtaining Landlord's written consent, which written consent shall not be unreasonably withheld. 7. Landlord's Covenant: The Landlord hereby covenants and agrees as follows: a. Furnish all necessary utilities for the proper functioning of the building, including heat, electridty, water and sewer and to keep same in good repair. b. To provide custodial, maintenance and repair services for the leased premises/business and common areas, including ice and snow removal in accordance with its normal snow removal schedule. 8. Tenant's Covenants: The Tenant hereby covenants and agrees as follows: a. Not to use or permit any activity upon premises that will increase the rate of insurance thereon or anything that may be dangerous to life or limb, or illegal. b. To provide a certificate of insurance documenting Tenant is maintaining the insurances required by 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 Leased 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. e. 'l'e Landlord may enter the leased premises at all reasonable times and with minimum disruption for the purposes of inspection and to repair and correct all structural and other defects in the premises or the building. 9. Landlord's and Tenant's Scope of Liability: Landlord and Tenant agree that Tenant shallOOtam at all times during the term of this lease maintain a policy of liability insurance insuring against liability resulting from the use of the leased premises by Tenant, its officers, agents, or employees, ana that the cost of such policy of insurance shall be paid for solely by Tenant and that Landlord shall be named as an additional insured on such policy. Such coverage will be in an amount not less than One Million ($1,000,000) Dollars per occurrence. Tenant shall also maintain casualty insurance covering all of Tenants personal property located within the Leased Premises. 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 resulting 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 misconduct of the -2- 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 other 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 180 days from the happening of such injury, then the Landlord may terminate this lease as of the date of such damage or destruction by written notice to Tenant. The Tenant shall then immediately surrender the leased premises and all interest therein to the Landlord. The Tenant shall pay rent only to the time of surrender. In case of any such termination 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 180 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 180days 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 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 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 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 60 days from the date of injury if no notice of repair has been received or from 180 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 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. Unless 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. Inte'1'retation and Amendment: The terms of this Lease shall be interpreted in accordance with the laws of the State of Minnesota. The parties agree that no assent 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 ~aiver of any succeeding breach of such covenant. 14. Assignment and Subletting. Tenant shall not assign, transfer or sublet it's interest in this lease or use of the Leased Premises or any P.art thereof to any third party without in each case obtaining the prior written consent of Landlord, which shall not be unreasonably withheld. 15. Notices. All notices or other communications hereunder shall be in writing and shall be personally served upon the representative of Landlord or Tenant identified below or sent by first class United -3- States Mail, postage prepaid, or by a nationally-recognized overnight delivery service, to the following address: Landlord: The City of Hopkins Attention: 1010 First Street South Hopkins, MN 55343 Hopkins ISO 270 Attention: 1001 State Highway 7 Hopkins, MN 55305 Tenant: This Lease 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 55305 City of Hopkins 1010 First Street South Hopkins, Minnesota 55343 By: Board Chair By: Mayor By Superintendent By: City Manager Date: Date: -4-