Memo-HCA, Inc agreement
.
Memo
To: Honorable Mayor and Members of the City Council
From: Jay Strachota, Facilities Director
Date: 9/23/2004
Copy: Susan Hanna-Bibus, HCA, Inc.
Re: HCA, Inc Agreement
At the Apri/27, 2004 work session of the Hopkins City Council the non-profit Hopkins Center
for the Arts Inc. presented a revenue sharing proposal to the Council. The Council was
. generally in favor of the proposal and directed city staff to work with HeA, Inc in the
development of an agreement that met the objectives presented in the HCA, Inc. proposal.
Attached to this memo is such an agreement. The agreement was drafted by modifying
sections of the original Cooperative Agreement that HCA, lnc and the City entered into in
September of 2000_ The city attorney drafted the documents. The first draft was reviewed by
staff and HCA, Inc. board and staff, and then redrafted to reach the document that you see
today. HCA, Inc and city staff are comfortable with the language in this draft of the
agreement. Today we are here to present the agreement to the Council, to answer
questions, receive input, with time for changes before the final draft is presented at an
upcoming Council meeting.
Also attached to this memo is a copy of the HCA, Inc proposal from the April 27th work
session for reference.
Key Points of the Agreement
HCA, Inc revenue sharing proposal is has three sections (See attached HCA, Inc proposal)
Proposal #1, Space Usage Fees, is written into. the draft agreement under section
5(c) starting on page 10. This section has shifted the method of revenue sharing for
events from a percentage of event expenses (Cooperative Agreement) to a
percentage of event revenues (New Agreement)
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. Page 1
Proposal # 2, Membership Dues, is written into the draft agreement under section .
5(d) on page 11. The revenue sharing in the Cooperative Agreement did not include
membership dues so this concept is new under the draft agreement. Please note
"memberships" are defined in section 3(a), page 6.
Proposal # 3, Annual Fundraising Event, is written into the draft agreement under
section 5(e) on page 11_
Other notable changes from the Cooperative Agreement:
The City attorney recommended that rather than try to amend the Cooperative Agreement it
would be neater and more clearly understood if the Cooperative Agreement was terminated
and a new agreement was created. In light of this some additional changes occurred.
Section E of Recitals. Terminates the old Cooperative Agreement and puts the new
agreement into affect.
Section 2(b) Page 4. Paragraph that begins "Third, the HCA shalL." This adds
more clarity to where HCA, Inc stands in the room scheduling priority. Due to the
structure of the tenant leases, that where executed prior to the Cooperative
Agreement, HCA, Inc is concerned about their ability to hold onto desirable dates and
hours in spaces for events should the other major tenants or the City exercise the full
rights of the leases/agreements.
Section 4(f) Page 10. Added to this section was language to allow the HCA, Inc .
Board input on the Executive Arts Director's job description and allowing for a
representative on the interview panel should a new Executive Arts Director need to
be hired.
Section 5(f) Page 11, Payment. The Cooperative Agreement required payments 30
days after each event and once annually for shared cooperative revenues_ The new
agreement calls for semi-annual payments. One payment is due on January 15 (for
the previous 6 months). This payment occurs just after the end of the City's fiscal
year. Another payment is due on July 15 (for the previous 6 months)_ This payment
occurs just after the end of HCA, Inc.'s fiscal year. This works well for HCA, Inc_ 's
cash flow during the event season and works well for closing out the fiscal year for
each organization.
Section 50) Page 6. Allows, at the City's option, for HCA, Inc to complete scheduled
events should the agreement be terminated_ The Cooperative Agreement required a/l
event contracts to be turned over to the City_ This new language presents an option
for a smoother tennination transition for events_
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. Page 2
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. Hopkins Center for the Arts, lnc.
Proposal to the City of Hopkins
3/1/04
We have identified three sources of income as those with the- most potential to increase
monies paid to the City in support of the facility. Therefore, we propose the following:
PROPOSAL #1: HCA, lnc. will pay the City of Hopkins SPACE USAGE FEES based on
100/0 adjusted gross ticket income to HCA, lnc. events in the mainstage theater and
50/0 gross ticket income to HCA, lnc. events in the Jaycees Studio and other facilities
(galleries remain exempt from space usage fees).
Note: Adjusted gross ticket income equals the gross ticket income less a 25% rebate due to
community partners on tickets purchased by their members.
PROPOSAL #2: 100/0 MEMBERSHIP DUES paid to HCA, lnc. will be given to the City
for supporting the facility (this includes individual memberships and business
memberships, business memberships defined as contributions of less than $500)
.
PROPOSAL #3: revenue from an ANNUAL FUNDRAISING EVENT spearheaded by
HCA, Jne. will be shared with the City on a sliding scale of net income as follows -
Shared percentage Amount raised
50% first $0-20,000 raised ($5,000 min. to the City)
then, 25% $20,001-50,000
then, 10% $50,001-100,000
finally, 5% over $1001000 (we can dream!)
ex.: $751000 net income (gross income less total expenses)
$101000 on first $201000
7,500 on next $30,000
2.500 on next $251000
$201000 is given to the City of Hopkins
Summary;
Based on the past few year's experience and on feedback by marketing consultants, the
areas with the most potential for income growth are mainstage ticket sales and
memberships. Therefore, we feel these two incomes should form the basis for revenue
sharing with the City. The third area which can only grow is revenue from a fundraiser.
See attachments for past experience and future projections.
. 1
. Drafted 9/8/04
AGREEMENT
THIS AGREEMENT is made and entered into effective as of the 1st day ofJanuary, 2004,
by and between the City of Hopkins, a municipal corporation under the laws of Minnesota ("City")
and Hopkins Center for the Arts, [nc., a non-profit corporation under the laws of Mirmesota
("HCA").
RECITALS:
A. The City is the owner of an arts and recreational facility located at 1111 Mainstreet,
Hopkins, Minnesota, known as the Hopkins Center for the Arts (the "Facility"). The City is
authorized to own and operate the Facility and to enter into this Agreement by Minn. Stat. 471.16-
471.191.
B. RCA is a non-profit corporation organized and existing under Minnesota law and
. qualified as a tax exempt organization under Section 501(c)(3) of the Internal Revenue Code. The
purpose and mission of HCA is to foster community appreciation for and involvement in the arts.
e. The City and HCA share the common objective offostering community appreciation for
and involvement in the arts by promoting the successful use and operation of the Facility, with
priority being given to arts-related uses, and are entering into this Agreement for the purpose of
accomplishing that common objective.
D. On October 26, 2000, the City and HCA entered into a Cooperative Agreement
("Cooperative Agreement") stating the terms and conditions under which the parties cooperated in
the programming and fundraising functions for the Facility and HCA performed certain
programming and fundraising functions described in the Cooperative Agreement.
E. The City and HCA have a!:,'Teed to terminate the Cooperative Agreement, effective
.
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. December 31,2003, and to enter into this Agreement setting forth the telms and conditions under
which the parties have agreed HCA will continue to perform programming and fundraising functions
for the Facility as described in this Agreement. By executing this Agreement, the City and HCA
agree the Cooperative Agreement is tenninated, effective December 31,2003, and is replaced by this
Agreement, effective January 1,2004.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated and
made a part ofthis Agreement, and ofthe terms, covenants and conditions stated in this Agreement,
the City and HCA agree as foIIows:
1. Retention and Terll!. The City and HCA hereby enter into tllis Agreement, and the City
retains HCA to perform, and HCA accepts, the duties and responsibilities stated in this Agreement
and agrees to perform the same for a term commencing on the date of this Agreement and
. continuing indefinitely until telminated by either party, as provided in this Paragraph. This
AhTfeement may be terminated as follows: i) either party may terminate this Agreement in the event
the other party defaults in the performance of its obligations under this Agreement, and such default
is not cured within thirty (30) days of written notice to the defaulting party, which notice shall
specify the nature of the default; or ii) either party may terminate this Agreement at any time,
without cause, upon ninety (90) days prior written notice to the other pmiy.
Upon tennination of this Agreement, for whatever reason, each party shall promptly remit to
the other, as soon as the same is determinable after the date of termination and within the time
periods specified herein, all amounts due such other party under the tenns of this Agreement.
Further, upon termination, for whatever cause, HCA shall, not later than ten business days after the
effective date of tenllination, deliver to the City, copies of all books, records, contracts, accounts,
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statements, financial records and other documents in the possession or control ofHCA pertaining to .
the Facility and its operation and the pertormance of HCA's duties and responsibilities under this
Ab'Teement or the Cooperative Agreement that have not previously been delivered to the City, and
any and all other records or documents, whether or not described herein, which are neccssary or
desirable tor the ownership and operation of the Facility or the continued pertormance of the duties
and responsibilities tonnerIy pertonned hy HC A. HC A shall also, as soon as reasonably possible,
provide tinal accountings to thc City as required by Paragraphs 2.h. and 3.f. of this Agreement,
complete through the date of tennination. Any and all documents and materials related to the
perfonnance of contracts for HCA Events shall also be delivered to the City. All personal property
of the City shall be delivered intact to the City or its representatives. HCA agrees to do all things
reasonably necessary to cause an orderly transfer of its duties and responsibilities under this
A!:,'Teement without detriment to the interests of the City. .
After termination of this Agreement, the revenues and expenses incident to the rerfurmance
of HeA's duties under this Agreement shaH be aCCl1unted for and distributed as rrovided in Sectiun 5
of this Agreement, which may be subsequent to the date of termination.
2. Programing Duties ofHCA. DUling the term of this Agreement and subject to its terms
and conditions, HCA shall be responsible for scheduling, conducting and administering certaln
concerts, perfonnances. receptions, visual arts display. community arts pro,gramming and other
c\'ents (collectively "HCA Events") in tht: Facility during those times and using those spaces within
the Facility that are available for such use by the City. The following tenns and conditions shall
apply to the performance ofHC A's duties with respect to programing HCA Events:
a. HCA acknowledges it is familiar with the terms and conditions of the Leases ("Leases")
between the City. Stages Theater Company ("Stages") and lndependent School District No.
.
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u____________ ____ . -- .-------
. 270 ("District 270"), which Leases specifY a process for al10cating the use of dates and
spaces within the Facility between the City, Stages and District 270. HCA acknowledges
that the availability to the City of dates and spaces within the Facility is limited by the Leases
and that HCA Events may only be scheduled during the times and dates and using the spaces
available to the City under those Leases. Further, HCA agrees that it shall participate with
and assist the City in the meet and confer process required by the Leases with Stages and
District 270 to the end that the City will obtain the most advantageous dates and spaces
available to the City, consistent with the terms of the Leases, for scheduling HCA Events
within the Facility. The dates and spaces that become available to the City annually as a
result of the meet and confer process are herein referred to as the "Usage Dates".
b. The City and HCA agree that only certain of the Usage Dates shall be available for
scheduling HCA Events, and that the remaining Usage Dates shall be reserved to the City
and shall not be subject to this Agreement. In addition, it is agreed that the City reserves the
right to schedule and conduct concerts, performances, receptions, community arts
programming and other arts-related events (collectively "City Events") in the Facility that do
not require sponsorship, participation, incentives or promotion by HCA. The City and HCA
agree that the following priorities shall apply to the use and scheduling ofthe Usage Dates:
First, certain Usage Dates shall be reserved to the City for recurring annual arts-
related events and that the Usage Dates reserved for such events shall not be
available for programming of HCA Events by HCA. In addition, events and
. functions for which the City has commitments on the date of this Agreement shall
have priority to the extent of those commitments as they exist on the date of this
Agreement.
Second, the Usage Dates shall be available for programming and scheduling ofHCA
Events by HCA to the end that the maximum revenue shall be derived from
scheduling and programming HCA Events consistent with the mission ofHCA and
the provisions of this Agreement.
Third, the HCA shall have priority in scheduling of Usage Dates to City Events,
Usage Dates to be reserved by the City for "occasional user" functions and non arts-
related functions, discounted fee use by users using the Facility under the City's
"community use" policy, and activities including receptions, annual leases to civic
clubs and other service organizations, civic functions, business meetings, educational
activities, fundraising events and other recurring annual events.
The City and HCA shall work cooperatively with one another to allocate the Usage
Dates in a manner consistent with the priorities and the terms and conditions stated in
this Paragraph. [n conjunction with the meet and confer process described in the
Leases, and/or immediately following completion of such meet and confer process,
the City and HCA shall engage in a similar process for the purpose of allocating and
designating the Usage Dates to be reserved by or made available to the City and the
. Usage Dates to be made available for programming HCA Events under this
Agreement. In the event the City and HCA are unable to agree as to allocation of
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any particular date, the priorities stated in this paragraph shall control and the City .
shall make the final determination as to the availability of any particular Usage Dates
tor programming HCA Events under this At,'Teement.
c. The terms and cunditions oLdl contracts and agreements related to HC A Events arranged
and booked by HCA unuer this Agreement shall be negotiated and detennined by HC A, and
HCA is given the authority to enter into such contracts and agreements. HCA agrecs that it
shall, however, incorporate such reasonable tenns and conditions in contracts and agreements
for HC A Events as the City shall request by prior written notice to RCA. HCA shall deliver
copies of all contracts and agreements for H CA Events to the City within seven (7) business
days of execution thereof.
d. HCA shall be responsible fur the administration and perronnance of all contracts and
agreements related to HCA Events arranged and scheduled by RCA undcr this Agreement.
These responsibilities include, but are not limited to, adveriising, promotion, negotiating and
drafting contracts for HCA Ewnts, administration of contracts and at,'Teements for RCA
Events, and arranging for all services and staffing (including ticket sales and collection) to be
provided during HCA Events.
e. HCA shall be solely responsible for the enforcement of all contracts and agreements for
RCA Events and collection of amounts due under such contracts and agreements.
f. HCA shall be entitled to use the services of City employees and staff to pertorm the duties e
assumed by it under this Section 2, upon the tem1S and conditions stated in Section 4 of this
Agreement.
0- All costs and expenses inculTed in the performance of HCA' s duties under this Section :2 and
O'
the revenues derived from the scheduling of HCA Events shall be paid, accounted tor,
deposited and distributed as stated in Paragraph h. of this Section:2 and in Sections 5 and 6
of this Agreement.
h. HCA shall provide the City, upon request, copies of all statements, invoices, billings and
other documents evidencing revenues and expenses for all HC A Events. No later than sixty
(00) days after the end of each Activity Year as detlned in Paraf:,'Taph 5.a.) during the term of
this Agreement, HCA shall deliver to the City a detailed, itemized accounting for all HCA
Events arranged and/or administered by the HCA under this Agreement for the preceding
Activity Year, detailing all revenues and expenses in a fonnat approved by the City. In the
event this Agreement is tenninated before the end of an Activity Year. HCA shall provide
the accounting required by this paragraph h. no later than sixty (60) days after the date of
tennination of this At,'Tcement.
l. The authority and responsibility ofHCA shall be limited to that explicitly described in this
Agreement. The City retains all rights, responsibilities and authority related to the ownership
and operation of the Facility that are not explicitly delegated to HC A by this Agreement.
The rights, responsibilities and authority retained by the City shall specitlcally include all e
right, title and interest of the City in and to the Leases with Stages and District 270 and
C:Hopcivil\Agrcemenlllopkin5JICA- 5 -
. responsibility for the repair, maintenance and physical operation of the Facility.
J. Upon tennination of this Agreement, the City shall have the right and option to require HCA
to assign all of its right, title and interest in all contracts and agreements for HCA Events to
the City, upon written notice to HCA given within thirty (30) days of service of Notice of
Termination under Section I of this Agreement. HCA agrees that it shall assign all such
contracts and af,'Teements to the City, provided the City assumes all liabilities under such
contracts and agreements from and after the date of assignment. If the City does not exercise
its right and option to require HCA to assign its right, title and interest in any contract or
agreement for an HCA Event to the City at the time oftermination of this Agreement, HCA
shall have the continuing right to perform any such contract or agreement in effect at the time
of termination of this Agreement and all of the tenns, covenants and conditions of this
Agreement applicable to the performance of any such contract or agreement shall remain in
effect until such contract or agreement has been fully performed.
3. Fundraising Functions Of HCA. During the teffi1 of this Agreement, HCA shall work
cooperatively with the City and assume primary responsibility for certain fundraising activities for
the benefit of the Facility in accordance with the provisions ofthis Agreement and, in that capacity,
shall solicit, and obtain membership enrollments and contributions for the uses and purposes stated
below. However, the parties acknowledge that. in consideration of the City's agreement to allow
HCA to use the Facility, and to provide the use of City employees and maintenance ofthe Facility as
provided in this Agreement, the City is entitled to receive a portion ofthe Fundraising-Membership
. Revenues as provided in Section 5 of this Agreement. HCA shall perform these fundraising activities
subject to the following terms and conditions:
a. The membership dues, and other gifts, contributions and payments obtained by HCA, as a
result of fundraising events conducted by HCA in accordance with the provisions of this
Agreement are hereinafter referred to as the "Fundraising and Membership Revenues."
Fundraising and Membership Revenues shall not include any grants obtained by HCA from
any grant making agency or institution, business membership dues of over $500.00 per year
or any other bequest, gift or payment received by HCA that is not specifically included in the
definition of "Fundraising and Membership Revenues" stated in the first sentence of this
subparagraph a..
b. HCA shall diligently pursue and actively solicit Fundraising and Membership Revenues to
the end that the maximum possible revenues shall be obtained from such fundraising
activities. The fundraising duties assumed by HCA under this Agreement shall include
conducting fundraising events at the Facility, advertising, correspondence, promotion of the
arts related activities of the Facility, conducting fundraising activities and soliciting
membership enrollment and dues and all other activities that are reasonably necessary to
achieve the fundraising objectives in this Agreement.
c. HCA may use the assumed name "Hopkins Center for the Arts" in connection with the
fundraising activities conducted by it under this Agreement. Such use shall be on a non-
. exclusive basis, and the City shall continue to use such name in connection with all activities
of the City related to the Facility consistent with the provisions of this Agreement. Upon
C:Hopcivil\AgreementHopkinsHCA- 6 -
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tennination of this Agreement, HC A shall discontinue use of the name "Hopkins Center for .
the Arts".
d. All Fundraising and Membership Revenues obtained by HCA under this Agreement shall be
payable to "Hopkins Center for the Arts."
e. All Fundraising and Membership Revenues obtained by HCA under this Agreement shall be
deposited and accounted tor as provided in Section 6 of this Agreement. HCA shall retain
copies of all statements, invoices and billings for costs and expenses related to fundraising
acti vities conducted pursuant to the tenns of this Agreement, and the City shall have the light
to inspect all such records upon request to the HCA. It shall be the responsibility ofHCA to
pay such statements, invoices and billings. HC A shall cooperate with the City in compiling
financial and other information as necessary for the City to complete any bookkeeping and
accounting work necessary to account for rcvcnues from fundraising and expenses related
thereto. HC A shall also provide the City, upon request, with originals and/or copies of all
documents related to fundraising activities. In no event shall the City assume responsibility
for any record keeping, bookkeeping or accounting related to the business or atIairs ofHC A
or its status as a tax exempt organization under Section 501 (c )(3) of the Internal Revenue
Code.
r No later than sixty (60) days after the end of each Activity Year during the tenn of this
Af,'Tecment, HCA shall deliver to the City a detalled, itemized accounting of all Fundraising
and Membership Revenues for the preceding Activity Year, detailing all revenues from .
fundraising activities under this Ab'Teement and expenses related thereto in a format
approved by the City. In the event this Agreement is terminated bcfore the end of an
Activity Year, HCA shall provide the accounting required by this para!,'Taph t~ no later than
sixty (60) days after the date of termination of this Agreement.
g. HCA shall maintain and submit all required reports, returns, disclosures and financial
statements and records to thc Intcmal Revcnue Service, Minnesota Department of Revenue,
Minnesota Attomey Gencral Charities Division and any other state or federal agency or
authority to which reports or financial disclosures are required to be made in connection with
the fundraising activities to be conducted under this Agreement. Copies of all such reports,
returns, disclosures and records shall be promptly delivered to the City_
h. HC A shall maintain its status as an organization described in Section 501 (c )(3) of the
Intemal Revenue Code at all times during the tenn of this Agreement.
l. HCA shall be entitled to use the services of City employees and statTto pertonn the duties
assumed by it under this Section 3, upon the tenns and conditions stated in Section 4- of this
Agreement.
J. HCA shall pay all expenses that it incurs in performing its fundraising activities under this
Agreem en t.
k. The authOlity and responsibility of HCA in its fundraising capacity shall be limited to that .
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. delegated and described in this Agreement. The City retains all rights, responsibilities and
authority related to the ownership and operation of the Facility that are not explicitly
delegated to HCA by this Agreement, including the right to conduct other fundraising
activities in its own behalfor to employ third parties to conduct fundraising activities during
the term of this Agreement, provided the City shall do so in good faith and shall not
materially interfere with the fundraising activities to be performed by HCA under this
Agreement.
4. Use of City Employees. The City and HCA agree that HCA shall, subject to the tenns
and conditions described in this Section 4, be entitled to use the services of the Facilities Director,
Executive Arts Director and Scheduling Coordinator employed by the City, or other City personnel
designated by the City, for the purpose of performing the duties and responsibilities assumed by
. HCA under Sections 2 and 3 tIus Agreement.
The employees listed above, and any other City employee assisting the HCA, are and shall at
all times remain City employees and shall not in any way be deemed an employee or agent of the
HCA.
The City retains all employment authority over the employees, including but not limited to
the right to establish work schedules and compensation rates, the right to supervise the employee's
performance of his /her job duties, including those performed under this Agreement. and the right to
make all decisions regarding promotion, demotion or discipline of the employee. Further, the City
retains all obligations for the employees' compensation, including payment of wages, withholding
and payment of employment taxes, payment of contributions for benefits, including but not limited
to insurance and retirement beneilts and inclusion of the employee under the City's Worker's
. Compensation coverage, Reemployment Insurance coverage, liability insurance coverage and any
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and all other similar coverages. .
The Executive Arts Dircctor shall be available to the HCA for a total of no morc than forty
(40) hours per week. If the HCA demonstrates to the Facilities Director that the usc of City
employees for more than forty (40) bours per \veek is necessary for the HCA to perform its duties
and responsibilities under this Agreement and the Facilities Director determines additional use of
City employees will serve the best interests of the HCA and the City. the City will provide such
additional use of City employees to the HCA as is detcrmined to be reasonably necessary in the
discretion of the Facilities Director. The use of City employees by the HCA shall be upon and
subject to the following additional tenns and conditions:
a. The Facilities Director or other City employee designated by the City shall detennine
which City employee or employees shall be made available to HCA, the dates and
times of such availability, and the Facilities Director's determination in this regard
shall be tlnal.
b. There shall be no charge to H C A for its use of City employees as described in this .
Agreement.
c. HCA shall be entitled to use City employees solely tor the purpose of pcrforrning the
duties and responsibilities assumed by HCA under this Agreement.
d. HCA shall be entitled to use space within the Facility designated by the City for the
purpose of performing its duties :lnd obligations under the Agreement.
c. The City employees may use office equipment, telephones, computer systems and
other property of the City while pertonning services tor HCA without charge to
HeA.
r The City ah'TCCS that HCA shall be entitled to require that the City employees to be
made available for use by tbe HCA shall be qualified to perform the services to be
provided by HCA under this Agreement and otherwise competent to fu1tlll the
objectives of this Ah'Tcement. To that end; HCA may periodically prepare and
deliver to the City a statement of goals and objectives. including criteria to be
incorporated in the job description of the Executive Arts Director, to be
accomplished by the City employees to be made available to the HCA under this
Agreement in furtherance of HCA' s responsibilities hereunder. Such periodic
statements may include an evaluation of prior perfonnance and accomplishment of .
C:I-IopciviL\!,,'TeementIlopkinsHCA- 9 -
. the goals and objectives identified by the HCA. A representative of the HCA may
also participate in interviews of candidates for the position of Executive Arts
Director, provided aU decisions regarding the employment of the Executive Arts
Director shall be made solely by the City.
5. Expenses and Division of Revenues. Payment of expenses, consideration for the
services performed by HCA under this Agreement and payments to the City for the use and
maintenance of the Facility and use of City employees shall be made and distributed as follows:
a. Definitions: In addition to the words and phrases defined elsewhere in this Agreement,
which definitions are incorporated in this Section 5, the following words and phrases, when
used in this Agreement, shall have the meaning stated below:
"'Activity Year" shall mean and refer to each successive twelve (] 2) month period beginning
on July 1 and ending on June 30.
"'Event Revenues" shall mean and refer to all revenues, ticket receipts, concessions, rents,
and advertising payments and other income derived from HCA Events scheduled and
administered by RCA under Section 2 of this Agreement_Any revenues or other payments I
received by HeA for the use of the art gallery room(s) shall not be included in Event
Revenues and may be retained by HCA.
. "Fundraising and Membership Revenues" shall mean and refer to the "Fundraising and
Membership Revenues" defined and identified in Paragraph a. of Section 3 of this
Agreement.
"Fundraising Revenues" shall mean and refer to the net amount of aU of the Fundraising and
Membership Revenues except for the Membership Revenues, after deduction of all fees,
costs and expenses related thereto.
"Membership Revenues" shall mean and refer to the net amount of all dues, contributions
and payments made to He A and included in the definition of Fundraising and Membership
Revenues stated in Paragraph 3 3. of this Agreement, after deduction of all fees, costs and
expenses related thereto.
h. Payment of Expenses. He A shall pay all fees, costs and expenses of whatever kind or nature
that it incurs or which result from the activities perfonned by HCA under this Agreement,
including, but not limited to, the progranuning activities described in Section 2 of this
Agreement and the fundraising activities described in Section 3 of this Agreement.
c. Division of Event Revenues. HCA shall pay the City ten percent (10%) of all Event
Revenues for each Activity Year for events booked or conducted in the main theatre located
within the Facility, without deduction of any expenses related thereto. However, any rebateo: I
due to community partners on tickets purchased by community partners members shall be
subtracted from the Event Revenues for events in the main theatre before calculating the ten
. percent (10%) payment due to the City. HCA shall also pay the City five percent (5%) of
Event Revenues for ertch Activity Year for all events conducted or booked in the Facility with
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the exception L)f those events cUI1Lluded or booked in the main theatre, without deduction of .
any expenses related thereto.
d_ Membership Revenues. HCA shall pay the City ten percent (10%) all Membership Revenues,
for each Activi ty Y car during the term uf this Agreement.
e. Fundraising Revenues_ HCA shall ~':lY the City a percentage of all Fundraising Revenues for
each Activity Year during the term of this Agreement as follows;
i) The City shall receive fifty percent (50%) of the first $20,000.00 of Fundraising
Revenues fur each Activity Year during the term of this Agreement.
ii) The City shall receive h\.enty-five percent (2 SSl;()) of Fundraising Revenues for each
Activity Year during the term II this Agreement that exceed $20,000.00 up to a
ma..'{imum of $50,000.00.
iii) The City shall receive ten percent (1 O~'o) ofFundraising Revenues for each Activity
Year during the tcrm oftbis Agreement that exceed $50,000.00 up to a maximum of
$100,000.00.
iv) The City shall receive five percent (5~'O) of Fundraising Revenues tor each Activity
Year during the term of this Agreement that exceed $100,000.00. .
If the payments to the City tor its percentage of FunJraising Revenues during any Acti vity
Year are less than $5,000.00, HC A shall pay the City for such Activity Year a payment equal
to the difference between the amount received by the City as its percentage of Fund raising
Revenues and $5,000.00 so that the City always receives a minimum payment 01'$5,000.00
from the Fundraising Revenues.
f. Payment. The payments due to the City as provided in Paragraphs c, d and e of this Section
5 shall be payable semiannually, on January 15 and July 15 of each year. The payment due
January 15 shall be for the first six months of the preceding Acti vity Year and the payment
due July 15 shall be for the second six months of the preceding Activity Year. Upon
termination of this Agreement, all paymcnts due to the City under Paragraphs c, d and e of
this Section 5 shall be paid no later than thirty (30) days after the effective date of
tennination. HC A shall be entitled to retain all net Event Revenues and Fundraising and
Membership Revenues atter paymcnt of the amounts due to the City under this Section 5,
and He A shall pay all expenses related thereto.
6. Bank Accounts and Financial Reports. All sums received by HCA in connection with
its probJTamming and fundraising duties under Sections 2 and 3 of this Agreement shall be deposited
into a bank account maintained by HCA. HCA agrees that it shall maintain an accounting system for .
C:lIopciviP_^,gre'-'lllentHopkinsHCA- II -
. the bank account into which the sums received by it in cormection with its progranuning and
fundraising duties are deposited that complies with so-called "non-profit" or "fund accounting"
accounting requirements and procedures, including itemizing by fund designation different
categories of receipts and expenses. The City shall at all times by entitled to receive copies of aU
banks statements, books and records related to the bank account so established by RCA and HCA
shall deliver such copies to the City upon request.
No later than ninety (90) days after the end of each Activity Year during the term of this
Agreement, HCA shall cause its certified public accountant to prepare, in accordance with generally
accepted accounting principles, and deliver to the City a compiled annual financial report of the
programming activities and fundraising activities performed by HCA under this Agreement. Within
ninety (90) days following the termination of this Agreement, HCA shall also deliver to the City a
. compiled financial report for the year of termination complete through the date oftennination. HCA
agrees that the City shall have the right to inspect, audit and receive copies of all books, records,
bank statements and other documents related to or evidencing HCA's programming and fundraising
activities and duties under this Agreement, and ReA agrees to give the City or its representatives
access to RCA's records for that purpose.
7. Insurance and Indemnification.
a. Insurance. The City shall maintain casualty insurance coverage for the Facility, with
coverage limits, terms and conditions as determined by the City in its sole discretion. ReA
shall not be named as an additional insured in the City's casualty insurance policies. HCA
shall maintain fire and extended coverage casualty insurance insuring an personal property of
HCA that is located within the Facility and personal property of third parties that is
consigned or entrusted to HCA for display purposes within the Facility. Such tire and
extended coverage casualty insurance to be maintained by HC A at its sole expense and shall
name the City as an additional insured. The City and HCA shall each maintain
comprehensive general liability insurance providing coverage for claims arising from the
operation of the Facility and (in the case of HCA) the pertonnance of HCA's duties and
. responsibilities under this Agreement. The coverages and liability limits for the
comprehensive general liability insurance to be maintained by the City shall be as
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C:Hopcivil\A.grecrnentHopkinsHC A - 12 -
determined by the City in its sole discretion. The comprehensive general liability insurance .
to be maintained by HCA shall provide tar limits of coverage of not less than $1.000,000.00
combined single limit coverage. The City shall be named as an additional insured on the
comprehensive general liability insurance policy to be maintained by HC A. The City and
HCA agree that they shall provide one another with certificates evidencing the insurance
coverages that they are required to maintain by this Agreement, which certificates will
provide for thirty (30) days' prior written notice to any party named as an additional insured
prior to cancellation of the applicahle policy_ HCA acknowledges that it has been advised
the City does not maintain liability insurance in excess of the statutorily imposed liability
limit of$l ,000,000_00, and that HCA is solely responsible for insuring itseIfagainst all risks
associated with the perfonmmce of its duties under this Agreement. As provided in Section 4
of this Agreement. the City shall provide all Worker's Compensation insurance and other
insurance to be provided on behalf of the City employees and staff whose services are to be
used by HCA pursuant to Section 4.
b. Indemnification. Except to the extent such claims, damages and liabilities are covered by
insurance maintained by the City. RCA agrees that it shall indemnify and hold the City
harmless from and against any and all claims, damages and liabilities arising out of:
i) Any failure of He A to perfanll any of its obligations under this Agreement;
ii) Any acts of HCA or its agents or representatives beyond the scope ofthe agency and
authority specifically granted to He A under this Agreement; and .
ii i) The negligence or intentional misconduct ofHCA, its agents orrepresentatives other
than the City employees to be provided to HC A under Section 4 of this Agreement.
Except to the extent such claims, damages and liabilities are covercd by the insurance HC A
is required to maintain under Paragraph a., above, the City shall indemnify and hold HCA
hannless from and against any and all claims, damages and liabilities arising out of the
operation, ownership, leasing and maintenance of the Facility. Other than those arising out
of the matters described in Subpara~:"Tnphs i), ii) and iii) of this Paragraph 6.b.
8. l\1iscellaneous provisions.
a. The captions and headings used in this Agreement arc uscd tor convenience only and shall
not be Llsed in construing or interpreting the provisions of this Agreement.
b. Any notice, demand or other communication required or permitted to be given hereunder
shall be deemed delivered and effectively given. when delivered personally to the
representatives of the City and HCA identitied below or one (1) business day after being
mailed by registered or certified mail. retum receipt requested, addressed as tallows:
To City: City of Hopkins
Attention: City Manager .
] 010 First Street South
C:1I0lX"ivil\Agreementl-I'-'p~insHCA- 13 -
.
. Hopkins, MN 55343
To HCA: Hopkins Center for the Arts, Inc.
Attention:
Either party may change its address or the identity of its designated representative named
above by written notice to the other party in the manner stated in this paragraph.
c. HCA is an independent contractor of City, and shall act only pursuant to and in accordance
with the terms of this At,'Teement. No provision of this Agreement, nor any acts of the
parties hereto, shall be deemed to create a partnership or joint venture between the Oty and
HCA.
d. There are no third party beneficiaries ofthis Agreement, intended or otherwise.
e. This Agreement represents the entire Agreement between the City and HCA with respect to
its subject matter, and supersedes all prior agreements between the parties related to the
subject matter of this Agreement, including the Cooperative Agreement. Any amendment to
this Agreement must be in writing and signed by both parties.
. f. HCA may not assign its rights or responsibilities under this Agreement without the prior
written consent of the City, which consent may be withheld in the City's sole discretion.
Subject to such limitation concerning assignment, this Agreement shall be binding upon and
inure to the benefit of the City, HCA and their respective representatives, successors and
aSSIgns.
g. HCA agrees that it shall comply with all state and federal codes, statutes, rules, regulations
and ordinances applicable to the perfonnance of its duties and responsibilities under this
Agreement
h. In the event any claim, action or proceeding is filed or initiated to enforce the provisions of
this Agreement, the prevailing party in such claim, action or proceeding shall be entitled to
recover such parties' reasonablc attorney's fees as determined by a court or arbitrator.
1. This Agreement shall be govemed by, construed and enforced in accordance with the laws of
the State of Minncsota.
J. Each and every provision of this Agreement is intended to be severable. If any term or
provision hereof is determined to be illegal or unenforceable for any reason whatsoever, such
term or provision shall be severed from this Agreement, and shall not affect the validity of
enforceability of the remaining terms and provisions of this Agreement.
. k. HCA acknowledges and agrees that it is familiar with the provisions of the Leases with
Stages and District 270 and, in addition, with the provisions ofthat certain Grant Agreement
C:Hopcivil\Agn:ementHopkinsHC A- 14 -
End Grant dated April 1 , 1997, between the City and the State of Minnesota Department of .
Administration (the "Grant Agreement"). HCA agrees, in the pertonnanceofits duties under
this Ab'Teement, that it shall not violate any Agreement, term, covenant, condition or
requirement of such Leases or the Grant Ab'Teement. Without limitation of the foregoing
provisions ofthis Paragraph k., HCA shall comply with the provisions of Section 3.03 of the
Grant Agreement, including Paragraph L thereof, which requires HCA. for one (I) year fi'om
the date of this Agreement to list any vacant or new positions HCA may have with job
services of the Commissioner of Economic Security of the State of Minnesota, or the local
service units, as required by Minn. Stat. 268.66, Subd. 1, as the same may be subsequently
amended, modified or replaced.
1. Any and all documents, records and data created, collected, received, stored, used,
maintained or dissemimted by HCA in performing the duties and functions assumed by it
under this Agreement are subject to the requirements of the Govenunent Data Practices Act,
Minn. Stat. Chapter 13, and H C A acknowledges and agrees that, by entering into this
Agreement, it shall comply with the requirements of Mim1. Stat. Chapter 13 as if it were a
governmental entity subject to such requirements.
lTI. During the tenn of this Agreement, He A a~'Tees that its Bylaws shall provide that at least
one-third of its board members shall be Hopkins residents. No provision of this Agreement
shall, however, be construed as granting the City control over the governance, existence or
operation of H C A which, at all times, shall remain fully independent of the City.
IN WITNESS WHEREOF, the City and HCA have executed and entered into this Agreement .
etfective as of the date first above written.
CITY OF HOPKINS, MINNESOTA HOPKINS CENTER FOR THE ARTS, INe.
By By
Its Its
By By
Its Its
.
C:Hupci\'il"A",'TccmcntHllplinsI-lCA- 15 -