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CR 03-012 Depot Lease Agreement ISD 270 " CITY OF ~ . February 4,2003 I-fOPKINS Council Report 2003-012 Authorize Execution of Depot Lease Agreement between the City of Hopkins and Hopkins School District 270 for School Fiscal Years 2002/2003 through 2004/2005 Proposed Action Staff recommends adoption of the following motion: Move to authorize Mayor and City ManaQer to siQn Depot Lease AQreement between the City of Hopkins and Hopkins School District 270 for School Fiscal Years 2002/2003 throuQh 2004/2005 . Overview With the support of the Depot Partners, staff from Hopkins School District 270 and the City have drafted a lease agreement which would allow the school to use The Depot Coffee House business as a "business lab." The City's lease with the Hennepin County Railroad Authority allows the City to sublet The Depot buildIng for educational purposes. Business education instructors are developing a curriculum using The Depot as a real-life case study. The 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. Primary Issues to Consider . · What are the general terms of the lease? · How will the School District use The Depot Coffee House business? · How will the rent payments be used? · How will the lease arrangement change the operations of The Depot? SupportinQ Documentation · City of Hopkins & Hopkins School District Lease Agreement, Depot Coffee House Business Steve S er Assista t to the City Manager Financial Impact: $150,000 to the Depot budQet over 3 years Budgeted: Y/N Source: Related Documents (CIP, ERP, etc.): _ Notes: . . . . 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 by the business education department, the school will make lease payments totaling $150,000 to The Depot Coffee House business for a period of three years (payment schedule to be determined). The effective term of this contract will be 36 months, commencing with 2002-2003 school year and ending with the 2004/2005 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 business? As stated in the lease: Hopkins ISO 270 shall use the Depot Coffee House as a community-based educational laboratory focused on instilling in each learner the knowledge necessary to start, manage and successfully run a small business. This goal will be accomplished by developing a relationship with the Depot Coffee House management to design learning experiences utilizing all aspects of the business to achieve the above stated purpose. These experiences may include but not be limited to; 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 (both current and past). . How will the rent 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 will the lease arrangement change the operations of The Depot? Day-to-day Depot operations would continue to be run by the City, the Depot Partners and the Depot Board, with Kathleen Taber remaining as The Depot Coffee House manager. Options Available to the Council 1. Vote to authorize Mayor and City Manager to sign the lease agreement with the School District; 2. Vote not to authorize Mayor and City Manager to sign the lease agreement with the School District; or 3. Continue the discussion and direct staff to work with School District staff in modifying the provisions of the lease ag reement 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 Business THIS AGREEMENT is executed in multiple originals this m day of month, year, by and between City of Hopkins, referred to as the "Landlord", and Hopkins ISD 270 - Hopkins High School Business Department, referred to as the "Tenant". 1. Leased Premises: Landlord, in consideration ofthe 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, the following described premises situated at, County ofHemlepin, State of Minnesota as follows: Depot Coffee House "Business" Located at 9451 Excelsior Blvd. Hopkins, MN 55343 2. Use: the Tenant shaH 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 start, manage and successfully run a small business. This goal will be accomplished by developing a relationship with the Depot Coffee House management to design learning experiences utilizing all aspects of the business to achieve the above stated purpose. These experiences may include but not be limited to; 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 (both current and past). . 3. Term: To have and to hold said Leased Business for a term of 36 months, commencing with 2002-2003 school year, (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/Business in the condition required to accomplish the goal as stated hereinabove specified for commencement ofthe Term. Should the Term oftbis 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 termination dates. 4. Rent: Tenant agrees to pay the Landlord as base rental (hereinafter called "Base Rental") for the Leased Premises, without notice, setoff or demand, the annual sum of fifty thousand and 00/1 00 ($50,000) dollars or one hundred fifty thousand and 001100 ($150,000) for the full 36 month term of the lease. The actual schedule of lease payments made by the tenant to the landlord shall be agreed upon by the two parties or their respective agents and articulated in a letter of agreement and attached to this lease document. 5. Non-Approval/Appropriation: In the event of non-approval o[the "Levy for Lease" from the State of Minnesota, or, non-appropriation of funds from district 270 [or the obligations of the Lessee under the Lease, the LESSEE shall have the right to terminate the Lease Agreement at the end of the District's fiscal year in which written notice oftermination is given to the LESSOR. LESSEE shall give written notice oftermination 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 Improvements: Tenant agrees to make no lease-hold improvements or alterations in the premises without first obtaining Landlord's written consent, which written consent shall not be umeasonably 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, 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 premises/business and common areas, including ice and snow removal in accordance with its normal snow removal schedule. -1- c. To 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 and equipment, fixtures, or appliances serving same. . 8. Tenant's Covenants: The Tenant hereby covenants and agrees as follows: a. Not to use or permit any activity upon said 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 Paragraph 8 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. 1. To quit and deliver up the premises to the Landlord peaceably and quietly at the end ofthe 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,OOO) Dollars per occurrence. 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 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 fue or the elements, or tluough 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 carmot 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 only 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 (IS) 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 temunate 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 dming 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 -2- . . . 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 ofrepair 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 substantialIy 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. Interpretation and Amendment: The terms of the Lease Agreement shall be interpreted in accordance with the laws of the State of Mi1lllesota. 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 ISD 270 1001 State Highway 7 Hopkins, Mi1lllesota 55305 City of Hopkins 1010 First Street South Hopkins, Minnesota 55343 By: Board Chair By: Mayor By By: Superintendent Date: City Manger Date: -3-