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CR 2003-158 City of Hopkins & Hopkins School District Lease Agreement For the Pavilion Mezzaninei 10/15/03 Proposed Action Primary Issues to Consider Supporting Information Y 0 City of Hopkins & Hopkins School District Lease Agreement for the Pavilion Mezzanine Staff recommends adoption of the following motion: Move to approve the lease agreement between Hopkins School District 270 and the City of Hopkins for the leasing of the Hopkins Pavilion Mezzanine area. Overview The Hopkins School District began looking for space last spring to house the "Off Campus" portion of an expanding Hopkins Alternative Program (HAP). During this search school district officials toured the unfinished Pavilion Mezzanine area and from that point discussions began on a potential joint School District/City development of the Pavilion to meet school district and community needs. In May of 2003, the Hopkins School Board and Hopkins City Council approved this joint development of the mezzanine and staff was directed to move forward with the Mezzanine, elevator and restroom build out, and enter into lease negotiations with the school district. The Pavilion Mezzanine construction is scheduled for completion by November 1, 2003. Attached you will find a copy of the City School District lease for Council approval. • Does this lease meet the needs of the community? • Does this lease meet the needs of the Pavilion /City? • Does the lease meet the needs of the School District? • City of Hopkins & Hopkins School District Lease Agreement for Pavilion Mezzanine ig /ture Title 72- a,n A g,e'2_ Council Report 2003 -158 Financial Impact: $ Budgeted: Y/N Source: Related Documents (CIP, ERP, etc.): Notes: Council Report 2003 -158 Page 2 • Does this lease meet the needs of the community? The Pavilion Mezzanine has been an unfinished space since the facility opened in 1990 and assembly in the space was prohibited due to lack of handicap accessibility. The desire and need to finish the space has been around since the Pavilion was opened. The City and the community have been unable to develop the resources needed to finish the space. Through this joint development the resources are now available. This joint development of the Pavilion Mezzanine space opens the mezzanine to multiple possibilities for community use by organizations and individuals, city use for meetings and training, and business use for meetings, seminars, etc. The lease with the school district is flexible enough to allow for these usages. The lease calls for the School District to have priority usage of the mezzanine from 7:00 a. m. - 2:30 p. m. Monday through Friday. This is to accommodate the HAP program. The balance of the space and time will be allocated through a meet and confer process that will be developed as a part of a management plan. The intent of the management plan is to ensure community needs are met while at the same time meeting the educational needs of the school district. Does this lease meet the needs of the Pavilion /City? The lease provides the Pavilion with a stable mezzanine tenant who is a proven partner • with the city and community, who also has ties to the Pavilion in athletics. The lease will cover the leasehold improvements as well as a base rent. The lease provides the flexibility needed to further develop relationships with community groups, individuals, and business to utilize the facility in a way that showcases the Pavilion as a community focal point while sustaining the financial integrity of the facility. • Does the lease meet the needs of the School District? School District staff believes the lease will meet their needs and will be bringing the lease to the October 23, 2003 meeting of the Hopkins School Board for the Board's approval. City of Hopkins & Hopkins School District LEASE AGREEMENT Lease for Pavilion Mezzanine THIS AGREEMENT is executed in multiple originals this 1st day of November, 2003, by and between City of Hopkins, referred to as the "Landlord ", and Hopkins ISD, referred to as the "Tenant ". 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, the following described premises situated at, County of Hennepin, State of Minnesota as follows: Hopkins School District 270 and the City of Hopkins are jointly developing the Hopkins Pavilion to better serve the city of Hopkins, Hopkins School District 270, and the community. Through this city/school district partnership, the Hopkins Pavilion will provide space for a number of purposes and community groups including, but not limited to, the Hopkins Hockey Boosters club and Youth Hockey Association. Hopkins School is leasing the following area within the Pavilion: Hopkins Pavilion Mezzanine (hereinafter called the "Mezzanine ")" Located at 11000 Excelsior Blvd. Hopkins, MN 55343 2. Use: The Tenant shall use The Leased Premises solely for the following purposes: Hopkins School District 270 is leasing the "Mezzanine" to provide space for the following educational programs: 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). This space shall also be used for programs that are jointly sponsored by the partners 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 management plan is to ensure community needs are met while at the same time meeting the educational needs of the Tenant. 3. Term: To have and to hold said Leased Mezzanine for a term of 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. Should the Term of this Lease commence or end on a date other than the date hereinabove specified, Landlord and Tenant shall execute a ratification agreement which 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 bi- annual sum of thirty eight thousand and 00/100 ($38,000) dollars for years one through three (2004 -2006) and the bi- annual sum of forty-five thousand five hundred and 00/100 ($45,500) dollars for years four through ten (2007- 20013). Included in this rental are the Mezzanine lease hold improvements. 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 -1- pre - payments. All pre - payments shall be applied to the time periods specified by Tenant at Tenant's sole discretion. 5. None - 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 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 of termination is given to the LESSOR LESSEE 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. 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 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, electricity, 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. 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 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. 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 One Million ($1,000,000) 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 -2- 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 other cause, so as to render the leased premises unfit for occupancy, or to make it impossible to conduct the bush 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 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 (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 run or accrue from the date of such injury through the date of completion of such repairs, except that the Tenant shall during such tirne 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 thirty (30) days from the date of injury if no notice of repair has been received or from sixty (60) days of date of injury should notice have been received; in either event, the repairs must not have been substantially completed. 11. Breach of Covenants: In the event of the breach by either party of a material covenant of this 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 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. -3- Hopkins ISD 270 1001 State Highway 7 Hopkins, Minnesota 55305 By: By: Board Chair Mayor By By: Superintendent City Manager Date: Date: -4- City of Hopkins 1010 First Street South Hopkins, Minnesota 55343