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VII.2. Ovation Apartments (Former Hopkins Cinema 6) Parking Agreement; KrzosSeptember 6, 2022 Council Report 2022-082 PARKING AGREEMENT – OVATION APARTMENTS Proposed Action: Staff recommends the City Council approve the following motion: Move to approve the Parking Agreement between the City of Hopkins and Ovation Apartments. With this motion the Mayor and City Manager will be authorized to execute the agreement. Overview The developer, Enclave Companies, has proposed a redevelopment of the former Cinema 6 property into a retail and apartment development, Ovation Apartments. In order to meet the additional parking demand that cannot be met on site due to cost and design factors, the developer has requested to use the municipal parking ramp for overnight residential parking. Under the proposed agreement, the management company for the apartments would be able to purchase 40 parking permits annually at a cost of $55.56 per month or $26,668.80 per year for the first year and a 3% increase each year thereafter. They would also pay a pro rata share of property taxes as well as any damage done to the ramp by Ovation residents. Ovation will be responsible for managing the permits with their residents. The term of the agreement would be five years, with three five-year renewals. Actual usage of the ramp will be monitored and the number of spaces may decrease if mutually agreeable. Primary Issues to Consider The parking agreement mirrors an existing parking agreement between the City of Hopkins and Gallery Flats with the exception of the commitment of the term of the agreement and extensions. Supporting Documents • Parking Agreement _______________________ Kersten Elverum Director of Planning & Development Financial Impact: $ N/A Budgeted: Y/N ____ Source: _____________ Related Documents (CIP, ERP, etc.): _________________________________________ Notes: 1 DOCSOPEN\HP145\88\816571.v4-8/31/22 PARKING AGREEMENT THIS AGREEMENT (“Agreement) is by and between the City of Hopkins, Minnesota, a Minnesota municipal corporation (“City”), and Ovation Apartments, LLC, a Minnesota limited liability company (“Ovation”) (collectively, the “Parties”). WITNESSETH: WHEREAS, Ovation recently secured an agreement to purchase the property located along Mainstreet between 11th Avenue South and 12th Avenue South (PID No. 24-117-22-34-0249) and plans to development a residential mix of 67 alcove, 22 studio, 47 one-bedroom, and 14 two- bedroom market rate apartments, and 5,382 square feet of commercial space on the ground floor accessed from Mainstreet at the Property known as Ovation Apartments (the “Apartment”); and WHEREAS, City and Ovation desire to enter into an agreement entitled “Parking Agreement” (“Lease”), in which Ovation agrees to lease forty (40) overnight parking spaces of the City parking ramp located at 26 10th Ave S. Hopkins, MN, mainly for use by residents of the Apartment. NOW THEREFORE, in consideration of the mutual promises and agreements herein contained, the Parties hereto stipulate and agree as follows: 1. Recitals. The Recitals hereinabove are hereby incorporated as terms of this Agreement. 2. Term of Agreement. Notwithstanding the effective date of this Agreement, the term of this Agreement shall commence on April 1, 2023 (“Commencement Date”), and shall terminate on March 31, 2028 (“Initial Term”), unless earlier terminated as provided under this Agreement. The Initial Term of this Agreement may be extended for three 5-year extensions (each an “Extension Term”) at the option of Ovation (each an “Extension Term”) as Ovation has indicated that a long-term commitment is necessary for project financing. The Initial Term and each 5-year Extension Term shall be collectively referred to as the “Term”. The Term of this Agreement shall automatically extend for the three 5-year term, unless Ovation or the City terminates this Agreement in writing pursuant to the terms of this Agreement prior to the end of the Initial Term or any of the Extension Terms. Ovation has acknowledged that all of the 40 spaces may not be needed and has agreed to provide City staff a report of actual use in order to conduct an annual review of need, and the reduction of spaces pursuant to this Agreement accordingly. 3. Grant of Right to Use and Assignment of Such Rights. Subject to the limitations, terms and conditions hereinafter provided, City agrees to grant to Ovation, for the use of the occupants or guests of the Apartment, the nonexclusive right to use forty (40) parking spaces in the Ramp, twenty-four (24) hours a day on every day during the Term, for the sole purpose of providing parking of non-commercial passenger vehicles. Ovation shall be entitled to assign without the City’s consent, individual, nonexclusive parking spaces in the Ramp solely to occupants of the 2 DOCSOPEN\HP145\88\816571.v4-8/31/22 Apartment. Ovation is not permitted to assign any parking space or spaces to persons or entities who are not then-current occupants of the Apartment. 4. Annual fee. Ovation agrees to pay to City $55.56 per permit per month (Twenty-Six Thousand Six Hundred Sixty-Eight and 00/100 Dollars for the first year ($26,668.80)). The rate would increase 3% per year thereafter starting in year two of the Term. The annual total amount would be paid in twelve (12) equal monthly payments, the first installment to be paid in advance on or before the Commencement Date of this Agreement, and each subsequent monthly installment to be paid on or before the first day of each succeeding month, said payments to be made each and every month during the term of the Agreement without demand therefor. Ovation’s annual aggregate charges for all of the Ramp parking spaces paid for by the Apartment occupants, as measured beginning on the Commencement Date for the following 12-month period and for each succeeding 12-month period, may not exceed the annual total payment and other expenses and charges paid by the Ovation to City or otherwise incurred or paid by Ovation for use of the Ramp under this Agreement. Each payment due under this Agreement made more than three (3) days late shall result in an automatic late fee penalty of One Hundred and 00/100 Dollars ($100). Late payments more than 45 (forty-five) days late shall accrue monthly interest from the due date at 1.5% per annum. The late fee and interest, if any, shall be paid with the subsequently monthly payment or, in the event that it arises from the late payment of the Term, within ten (10) days of a written demand from the City. 5. Taxes and special assessments. Ovation shall pay a pro rata share of property taxes and special assessments (certified to property taxes) for the Ramp, calculated as a ratio of forty (40) authorized parking permits to the three hundred and eighty (380) total parking spaces in the Ramp- 40:380. Ovation shall pay the City its share of the property taxes within thirty (30) days of receipt of evidence of the property taxes. If the term of this Agreement concludes on a partial calendar year, the real estate taxes and installments of special assessment payable by Ovation shall be prorated on a daily basis so that Ovation pays only the real estate taxes and installments of special assessments for those days during the Term. 6. Maintenance and Repair. City shall be responsible, at its sole cost, for the maintenance and repair of the Ramp and other areas used for parking and any access points to public streets, and shall be likewise responsible for the removal of ice or snow accumulations on such areas, but only in connection with its customary practices of maintaining, repairing and servicing such areas. If any damage is caused to the Ramp by Ovation or Ovation’s employees, customers, agents or sublessees, City may, but shall not be required to, repair such damage. Ovation shall reimburse City for all reasonable costs and expenses incurred in completing such repairs. City shall have no duty or obligation to provide security for the Ramp. Ovation shall permit City to enter the Ramp at all times for the purposes of performing maintenance and repair work, and there shall be no abatement of the payments due hereunder by reason of such entry by City and City’s agents and employees, provided that the fees paid by Ovation shall abate ratably if such entry materially interferes with the use of the Ramp. No alteration of the Ramp shall be made by Ovation without the prior consent of City in writing. 3 DOCSOPEN\HP145\88\816571.v4-8/31/22 7. Termination. Ovation may terminate the Agreement by providing advance written notice of termination to City no less than one hundred twenty (120) days prior to the effective date of the Agreement termination. City may, upon mutual agreement with Ovation, terminate the Agreement with notice to Ovation not less than one hundred twenty (120) days prior to the effective date of the Agreement termination. Ovation’s parking rights under this Agreement shall terminate upon expiration of the Term. The parties shall execute and record such instruments as reasonably necessary for any such termination of rights. 8. Destruction of Premises. If the Ramp or a portion of the Ramp shall be damaged or destroyed by any cause so as to render it unfit for the parking uses granted to Ovation under this Agreement, without the fault or neglect of the City or any person for whose conduct the City may be liable, the City shall undertake to repair such damage or destruction at the City’s own expense. However, this Agreement shall remain in full force and effect following such damage or destruction, and the fees payable under paragraph 6 of this Agreement shall not be abated so long as the City is conducting such repairs, barring evidence of a lack of due diligence, and, provided further, that the fees paid by Ovation shall abate ratably if such damage or destruction materially interferes with the use of the Ramp. If the destruction or damage was caused by the gross negligence or intentional conduct of Ovation or Ovation’s agents, assignees, or employees, Ovation shall be responsible for repairing such damage at its sole expense and this Agreement shall remain in full force and effect during the course of such repairs following such damage or destruction, and the fees payable under paragraph 6 of this Agreement shall not be abated. Notwithstanding the forgoing, if the City determines in its sole discretion that repair of such damage or destruction affecting the Ramp or a portion of the Ramp shall not be undertaken, there shall be no need to replace the Ovation parking spaces either in part or in full. If such a determination is made, the City agrees to endeavor to work with Ovation on a parking plan. Further, the parties acknowledge that in the event of redevelopment of the Ramp, there is no need to replace the parking spaces either in part or in full; however, the City agrees to endeavor to work with Ovation on a parking plan. 9. Liability and Indemnity. This Agreement is made on the express condition that, except for injury or damage caused by City’s negligence or willful misconduct, City shall be free from all liabilities, claims, obligations and damages for or by reason of any injury or injuries to any person, persons or property of any kind of nature whatsoever resulting from the use of the Ramp by Ovation or Ovation’s agents, assignees, or employees for any cause whatsoever during the term of this Agreement. Except for injury or damage caused by the City’s negligence or willful misconduct, Ovation further agrees and covenants to indemnify, save, hold harmless and defend City from all liabilities, claims, obligations, damages, charges, expenses and costs, including reasonable attorney’s fees, arising out of or resulting from the use of the Ramp by Ovation or Ovation’s assignees or employees. Nothing in this Agreement shall constitute a waiver or limitation of any immunity or limitation on liability to which the City is entitled under Minnesota Statutes, Chapter 466 or otherwise. This paragraph survives the termination of the Agreement. Ovation is responsible for any damage done to the ramp by their tenants. In addition, Ovation agrees to hold the City harmless from any liabilities arising from the use of the Ramp by residents. 10. Insurance. Ovation shall, during the term of the Agreement and any extension thereto, maintain comprehensive general public liability insurance insuring against death, personal injury and property damage occurring as a result of or in connection with Ovation’s use of the 4 DOCSOPEN\HP145\88\816571.v4-8/31/22 Ramp in a single limit amount of not less than $500,000 for personal injury or death, and not less than $500,000 for property damage or any other claim, and not less than $1,500,000 for any number of claims arising from a single occurrence. Such insurance policy shall name City as an additional insured, and Ovation shall provide City, prior to using or subleasing any of the parking spaces provided herein, and upon written request any time thereafter, with certificates evidencing Ovation is maintaining such insurance. Such insurance shall also require the insurer to give City at least 60 days prior written notice of the cancellation or termination of said policy. 11. Default. A. Any one of the following events shall constitute and Event of Default: i. Ovation fails to pay any installment of rent or payment for real estate taxes or special assessments as provided in paragraphs 4 and 5 of this Agreement when said payment is due, and such default shall continue for ten (10) business days after notice from the City; ii. Ovation violates or fails to perform any of the other terms, covenants or conditions of this Lease and such default shall continue for ten (10) days after notice from the City, unless such default cannot be cured in the exercise of reasonable diligence within said ten (10) day period, in which event Ovation shall be allowed such additional time as is needed to cure such default with all due diligence. B. If any Event of Default occurs and continues without a timely cure as provided above, the City may at its sole option by written notice to Ovation terminate the Agreement effectively immediately. The foregoing notwithstanding, the City shall not have a right to terminate this Agreement until the City delivers written notice of termination to Ovation, which includes a termination date no earlier than ten (10) days from the date of delivery. Neither the passage of time after the occurrence of the Event of Default nor exercise by the City of any other remedy with regard to such Event of Default shall limit the City’s rights under this paragraph. C. If an Event of Default occurs and the City retains an attorney to prosecute the enforcement of all or any of the terms, covenants, agreements or conditions of this Agreement, the collection of any fees or taxes due or to become due, or other rights under this Agreement, Ovation agrees to reimburse the City, for the City’s reasonable attorney’s fees, together with the actual cost of maintaining any action commenced in law or equity by said attorneys for the service of the attorneys, whether suit is filed or not. Such reimbursement shall be payable within thirty (30) days of demand thereof. 5 DOCSOPEN\HP145\88\816571.v4-8/31/22 D. Upon termination of this Agreement, Ovation shall vacate the Ramp, and remove all personal property belonging to Ovation, its agents, assignees, or employees. 12. Permit Administration and Parking Enforcement. The City shall annually issue up to forty (40) parking permits, or such other number of parking spaces as determined pursuant to paragraph 2 of this Agreement, in the form of numbered cards, color-coded to reflect the year of issuance, to Ovation. Ovation shall then be responsible for all other administrative tasks related to the issuance of permits to and use of permits by the occupants of the Apartment (“Permit Holders”). No contracts between Ovation and the Permit Holders shall extend beyond the Term of this Agreement. Permit Holders may park in any area of the Ramp designated for permit parking, except for the upper uncovered deck within forty-eight (48) hours of a snow fall. Ovation shall provide written notice to all Permit Holders of all terms, conditions and limitations of their parking permit under this Agreement. Contemporaneous with the execution of any contract with a Permit Holder, Ovation shall provide a written notice to the Permit Holder that her/his permit is subject to the covenants, terms and conditions of this Agreement, including without limitation the City’s right to revoke the permits if this Agreement is terminated as set forth in this Agreement. Ovation shall obtain a written acknowledge from the Permit Holder of the receipt of this notice and provide a copy of such acknowledgement to the City. Although Ovation need not provide a copy of this Agreement to each Permit Holder, it shall make the agreement available to the Permit Holder for review upon request. Throughout the term of this Agreement, Ovation shall maintain a list of all Permit Holders, along with each Permit Holder’s mailing address and e-mail address, if any. Ovation shall provide the City with a copy of such list within thirty (30) days of the Commencement Date and shall provide an updated copy of the list at the end of each successive six month period. Upon the provision of a notice of termination of this Agreement, including default by Ovation, Ovation shall be responsible for notifying all Permit Holders that the permits shall no longer be valid upon the termination of the Agreement. Notwithstanding this requirement, the City may also, at any date subsequent to the provision of the notice of termination to either party to this Agreement, inform the Permit Holders in writing that the permits shall no longer be valid upon the Agreement’s termination. The City shall be responsible for general parking enforcement in the Ramp, but Ovation shall be responsible for enforcing the terms of its contracts with the Permit Holders. 13. Notices. Any n otice required or permitted pursuant to the Agreement shall be in writing and deemed properly given: (a) on the date of personal delivery, or attempted personal delivery if refused; (b) on the date the notice is delivered, or attempted to be delivered if refused, by a reputable overnight delivery service with proof of delivery or refusal; or (c) on the date of actual receipt if by certified mail. All notices shall be sent to the address provided below or to such other address designated by proper notice. Refusal to accept delivery of a notice or the inability to deliver a notice because of an address that was not properly given shall not defeat or delay the giving of notice. 6 DOCSOPEN\HP145\88\816571.v4-8/31/22 A. City address for notice purposes: City of Hopkins 1010 – 1st Street South Hopkins, MN 55343 Attn: City Manager B. Ovation address for notice purposes: Ovation Apartments, LLC 300 23rd Avenue East, Suite 300 West Fargo, ND 58078-5807 Attn: Austin J. Morris 14. Laws Governing. The Agreement shall be governed by the laws of the State of Minnesota. 15. Assignment. The City may assign its rights and obligations under this agreement without the consent of Ovation. The City shall give Ovation reasonable written notice of such assignment and that the assignee has agreed to be bound by and perform all of the terms, covenants and conditions of this Agreement. assumed this Agreement. Ovation shall be allowed to assign its rights under this Agreement (e.g., the right to assign the individual permits to occupants of the Apartment), without City’s consent, to any entity that controls, is controlled by, or is under common control with Ovation. As a condition to any permitted assignment of Ovation’s interest in this Agreement, Ovation shall provide City with a written assignment of Ovation’s interest in this Agreement whereby the assignee agrees to be bound by and perform all of the terms, covenants and conditions of this Agreement. No assignment of Ovation’s interest shall relieve Ovation of Ovation’s obligations under this Agreement, all of which shall survive any such assignment. 16. Waiver. The failure of City to enforce any term, covenant, condition or breach of the Agreement shall not be deemed a waiver of the right to do so thereafter. The acceptance by City of partial payment shall not be deemed a waiver of any term, covenant, condition or breach of the Agreement. No waiver of any term, covenant, condition or breach shall be effective unless in writing. A written waiver of any term, covenant, condition or breach of the Agreement shall not be deemed a waiver of any subsequent term, covenant, condition or breach, whether such subsequent term, covenant, condition or breach is the same or different, except as specified in writing in the waiver. No waiver by City shall constitute a waiver of sovereign immunity or any other immunity from liability provided for by statute. This paragraph survives the termination of the Agreement. 17. Severability. If any term, covenant, or condition of the Agreement or the application thereof to any person or circumstance is, to any extent, invalid or unenforceable, or in conflict with the law of the jurisdiction, the remainder of the Agreement or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected and each term, covenant or condition of the Agreement shall be valid and be enforced to the fullest extent permitted by law. 18. Binding Effect. This Agreement is intended to be binding on the parties hereto and their respective assigns. 7 DOCSOPEN\HP145\88\816571.v4-8/31/22 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. [Signature page to follow] 8 DOCSOPEN\HP145\88\816571.v4-8/31/22 CITY OF HOPKINS, MINNESOTA DATE: __________________, 2022. By: Patrick Hanlon, Mayor And DATE: __________________, 2022. By: Mike Mornson, City Manager OVATION APARTMENTS, LLC DATE: __________________, 2022. By: Its: Managing Member