HomeMy WebLinkAboutCOW 2011-03-28 Item 4B - Lease Agreement - City Property for Digital Billboard with Clear Channel Outdoors for $25,000 Per Year COUNCIL A GENDA SYNOPSIS
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ITEM INFORMATION
CAS NUMBER: 11-039 STAFF SPONSOR: BRANDON MILES ORIGINAL AGENDA DATE: 3/28/11
AGENDA ITEM TITER Authorizing the Mayor to enter into a lease agreement with Clear Channel Outdoors
for the construction of a digital billboard on City owned property.
CATEGORY Discussion Motion Resolution Ordinance Bid Award Public Hearing Other
Mtg Date 03/28/11 Mtg Date 4/4/11 Mtg Date Mtg Date Mtg Date Mtg Date Mtg Date
SF( )NSOR 1 1 Council 1 !Mayor n Adm Svcs DCD Finance Fire Legal P&R Police PIV
Si( NSOR's The City owns a 9,400 square foot parcel located at the NE corner of West Valley Hwy and
SUMMARY South 180th Street. Clear Channel Outdoors (CCO) has approached the City about the
possibility of leasing the property for the construction and operation of a digital billboard.
CCO would pay the City a starting lease rate of $25,000 per year. As required by City
Code, prior to installation, CCO would remove ten billboard faces elsewhere in the City.
RI {\'I1 WED BY (l COW Mtg. CA &P Cmte F &S Cmte Transportation Cmte
n Utilities Cmte Arts Comm. Parks Comm. (l Planning Comm.
DATE: 3/14/11 COMMITTEE CHAIR: COUNCILMEMBER SEAL
RECOMMENDATIONS:
SPONSOR /ADMIN. Department of Community Development
CoMMIrrEE Unanimous Approval; Forward to Committee of the Whole
COST IMPACT FUND SOURCE
ERP1 REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
$N /A $N /A $N /A
Fund Source: N/A
Comments: The proposed agreement will provide the City over $400,000 in revenue over 15 years
MTG. DATE RECORD OF COUNCIL ACTION
03/28/11
MTG. DATE ATTACHMENTS
03/28/11 Informational Memo dated 3/1/11
Lease Agreement in Final Form
Aerial Photo of Site
Minutes from the Community Affairs and Parks Committee Meeting of 3/14/11
04/04/11
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ILA h
(ay City of Tukwila
o
Jim Haggerton, Mayor
I9oa INFORMATIONAL MEMORANDUM
TO: Mayor Haggerton
Community Affairs and Parks
FROM: Brandon J. Miles, Senior Planner
DATE: March 1, 2011
SUBJECT: Leasing of City Property for Construction of a Digital Billboard
ISSUE
Should the City enter into a lease agreement (Attachment A) with Clear Channel Outdoors
(CCO) for the construction and operation of a digital billboard on City owned property along
West Valley Highway?
BACKGROUND
The City currently owns a 9,400 square foot parcel located at the NE corner of West Valley
Highway and South 180` Street (See Attachment B: Aerial Photo) CCO has approached the
City about the possibility of leasing the property for the construction and operation of a digital
billboard.
In 1995, the City granted written permission for NC Power Systems to use the City property.
This agreement provides no direct income to the City. City staff has informed NC Power of the
proposed lease agreement with CCO. The agreement would allow a future tenant to use the
property provided their use does not interfere with the CCO billboard structure.
City staff has offered NC Power Systems the continued use of the City property, provided rent is
paid to the City; NC Power Systems has stated that they do not need the property and thus,
were unwilling to enter into an agreement that required the payment of rent. On March 4, 2011,
Steve Lancaster, City Administrator and Brandon Miles, Senior Planner met with Joe Huley of
NC Power to discuss the future of the City owned property. The meeting was cordial and each
party understood that the future use of the property would likely not include NC Power. City staff
committed to keeping NC Power informed on the progression of the construction of the
billboard. While the City's written permission to NC Power only requires that we grant them ten
days notice to vacate the property, staff will provide as much notice as possible to NC to
minimize any impacts to their business operations. If an agreement can be reached with NC
Power in the future, staff thinks they would be a good tenant on the property.
The basic terms of the Lease Agreement with CCO would be as follows:
1. CCO will pay the City an annual lease rate of $25,000 per year. The lease amount will
increase 7.5% every five years.
2. The term of the agreement will be 15 years. After the initial term, the City and CCO can
enter into a new agreement if parties choose.
3. The City will credit CCO $5,000 of the first year's rent for the construction of an access
point to the property. This access point will be for the exclusive use of the City and
CCO. The access point will remain even after CCO leaves the property.
4. CCO is required to obtain all other governmental approvals for the construction and
operation of the billboard structure.
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INFORMATIONAL MEMO
Page 2
The only question being asked of the Council is regarding the leasing of City owned land. The
installation and operation of a digital billboard in this area of the City is specifically permitted
under the new Sign Code at Tukwila Municipal Code (TMC) 19.38. In this section of the new
code, the City established two billboard receiving areas, one along West Valley Highway and
one along Boeing Access Road. The purpose of the billboard receiving areas was to allow the
installation of new billboards in exchange for removing a significant number of existing
billboards in the City.
Before constructing the proposed billboard, CCO will be required to remove ten existing
billboard faces within the City, representing a significant reduction in the total number of
billboards. The removal sites are not included in the Lease Agreement because it's a specific
code requirement that CCO is required to comply with as part of their required construction
permit. The requirement to remove billboards elsewhere in the City would still be required of
CCO if they chose to install a billboard on a non -city owned property.
ANALYSIS
The subject property has an assessed value of $115,000. The proposed Lease Agreement will
generate over $400,000 in revenue to the City over the 15 year term, while at the same time
allowing the City to retain the property for any future needs, such as right of way improvements.
The lease with CCO would not restrict other possible uses of the property, provided those uses
do not constrain the operation of the proposed billboard. City staff has tried to develop a new
agreement with NC Power which would allow them to continue using the property along with
CCO and is open to further conversations.
RECOMMENDATION
The Council is being asked to authorize the Mayor to enter into a Lease Agreement and
consider this item at the March 28, 2011 Committee of the Whole meeting and subsequent
April 4, 2011 Regular Meeting.
ATTACHMENTS
A. Agreement in Final Form
B. Aerial Photo
W:12011 Info Memos\Billboard Lease.doc
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CLEAR CHANNEL OUTDOOR LEASE AGREEMENT
Lease
1. This Lease Agreement "Lease is dated effective as of April 1 2011, and entered into by and between CITY OF
TUKWILA "Landlord and CLEAR CHANNEL OUTDOOR, INC., a Delaware corporation "Tenant Landlord hereby
leases to Tenant the real estate commonly known as 2140 SW 43 Street and situatedein:the City of Tukwila, County of
King in the State of Washington, whose permanent property tax number and legalad are attached hereto and
incorporated herein by reference as Exhibit A (the "Property The Property.t ileased for the purpose of erecting,
maintaining, operating, improving, supplementing, posting (whether physically ^d gitalIy.or via other remotely changeable
technology), illuminating, repairing, repositioning and /or removing outdoor_ advertisin:g structure, including, without
limitation, fixture connections, electrical and broadband supply and connections, panels,= 7signs whether digital, static or
similar technologies), copy and any other equipment and accessories as Tenant may place2 hereon (collectively, the
"Structure This Lease includes all necessary rights of ingress and egress: Tenant may licenseYthe use of the Structure,
or any portion thereof, for any lawful purpose.
2. This Lease shall be in effect for an initial term of fifteen (1;5) corri:mencing on the date construction
permits are approved by the City of Tukwila. If for any reason Tenants unable to=either complete construction of the
Structure and /or fails to obtain the necessary governmental authorizatlonsto`operate the Structure, Tenant may
terminate this Lease immediately upon notice to Landlord. If the structure;i not built within 1 year of mutual execution
of this lease agreement then the lease shall terminate. This Lease Agreemert_ not be construed as a building or
land use permit. Tenant is responsible for obtaining necessary city permits pnor "ito_constructing the structure. CLEAR
CHANNEL shall have the right to terminate this Lease at :the endof any monthly period= during_tte initial term or any subsequent
term upon notice to Landlord served not less than thirty (30) dayspnorLto the end of any monthly period.
3. Tenant shall pay Landlord rent in the amount of Twenty Five Thousand ($25,000.00) per year payable in
full upon commencement of the term and each anniversarydatethereafterfoiEti -ie period of time commencing when tenant
has approval from governmental erttitiesTfor the construction of the structure.°Annual rent shall increase by seven and one
half percent (7.5 on the fiff f(5 and4enth (10 anniversaries of the Lease commencement.
4. This Lease shall full force effect for its initiatterm from the date construction permits are approved
by the City of Tukwila. During any of thi :Lease and for a period of ninety (90) days following the expiration or earlier
termination of this Lease, Landlordpherebygrants to of first refusal, acceptance of which is exercisable at
Tenant's sole discretion: to.match thewir aterial termsrofeny acceptable to Landlord for the use or purchase of all or
any portion of the Propertyand/or to matchgthe material terms of any offer acceptable to Landlord for the use of purchase
of any parcel "or collection of parcels that includes the Property (the "Offer"), which includes, without limitation, similar time
periods;for performance and irvestigation asare set=forth in the Offer A copy of all relevant document(s) containing the
Offer received -by Landlord shall bede►ivered to Tenant (the "Offer Documents Tenant shall then have twenty (20) days
from its recei5t of the Offer Documen't's in which to match the material terms of the Offer by giving notice of acceptance to
Landlord. If Tenant.rejects the Offefland the Property transfers pursuant to the terms of the Offer, Landlord shall promptly
notify Tenant of sucltttransfer and provide Tenant with any relevant contact information and rental payment submission
addresses of such new -owner of theProperty. Prior to transferring ownership of the Property, Landlord shall furnish the
new owner with a copy:ofetb Lease`
5. Tenant is and shall rerrlain the owner of the Structure until Tenant no longer has any rights to use or possess the
Property whether (1) under this Lease, or any extension, renewal, or modification of this Lease; (2) by operation of law; (3)
as a holder -over tenant; or (4) as such right is otherwise held by Tenant, provided, however, that Tenant has the right to
remove the Structure at any time. Tenant must remove the structure within 30 -days of termination of this Lease or
termination of tenant's right to use or possess the property. If tenant fails to remove the structure, the Landlord may
remove the structure and seek reimbursement from the tenant for the removal and disposal of the sign and any
associated legal fees. If for any reason Tenant's Structure is removed, materially damaged or destroyed, all rent
payments shall cease for up to ninety (90) days until the Structure is rebuilt and all necessary governmental authorizations
are obtained to operate the Structure. After 90 days tenant shall pay fifty percent (50 of the scheduled rent until repairs
or replacement is completed or Tenant may terminate the Lease. If the Structure is removed for any reason, only the
above ground portions of the Structure need be removed. Tenant has the sole right to make any necessary applications
with, and obtain permits from, governmental entities for the construction, use and maintenance of the Structure. All such
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permits and other rights to outdoor advertising on the Property shall remain the property of Tenant. Tenant shall have no
obligation to pursue any zoning matter or to continue to maintain any permit. Any such action shall be at Tenant's option.
6. Landlord and Landlord's tenants, agents, employees or other persons acting on Landlord's behalf, shall not place
or maintain any object on the Property or any neighboring real property owned or controlled by Landlord, excluding City of
Tukwila owned right of way or easements, which, in Tenant's sole opinion, would obstruct the view of the advertising copy
or display on the Structure. If Landlord fails to remove the obstruction within fifteen (15) days after notice from Tenant,
Tenant may in its sole discretion: (a) remove the obstruction at Landlord's expense; (b) cancel this Lease, remove any or
all of the Structure, and receive all pre -paid rent for any unexpired term of this Lease; or (c) reduce the rent to One
Hundred Dollars ($100.00) per year while the obstruction continues. Tenant may trim any trees and vegetation currently
on the Property and on any neighboring property owned or controlled by the Landlord `as often as Tenant in its sole
discretion deems appropriate to prevent obstructions. Without limiting the foregoing, Landlord =shall not permit the Property
or any neighboring property owned or controlled by Landlord to be used for off premise advertising.
7. If in Tenant's sole opinion: (a) the view of the Structure's advertising m copy,becomes entirely or partially
obstructed, (b) electrical service is unavailable; (c) the Property cannot safel (be used foUhe erection or maintenance of
the Structure for any reason; (d) the Property becomes unsightly; (e) there..is a d redu or change in directional
flow of traffic from the street or streets currently adjacent to or leading to=orepast the Property (f jv Structure' value for
advertising purposes is diminished; (g) Tenant is unable to obtain .or°maintain any necessary perrnitfor the erection, use
and /or maintenance of the Structure; or (h) the Structure's use jS4revented or restricted by law, orTe'nant is required by
any governmental entity to reduce the number of billboards oper- atedeby it in therocity, county or state inw5 cFi the Structure
are located; then Tenant may immediately at its option either: (i) reduce rent indirect proportion to the,oss suffered; or (ii)
cancel this Lease pursuant to paragraph 2 and receive all pre -paid rentafor anyeunexpired term of this t=ease. In addition, if
Tenant is prevented from illuminating its signs by law, or other cause beyondJenant's control, the rent shall be reduced by
one -third for such period of non illumination. In the event that rent is reducedEas outlined in this paragraph landlord and
tenant shall first use best efforts to resolve the issuewhich has caused the° rentrreduction. In the event that a mutually
agreeable solution can not be reached in 30 days then Landlord may terminate the:L -ease after giving Tenant at least 90
days notice.
8. (a) If the Structure or the Property, or any part thereof, is;. by proper authorities or taken without the
exercise of eminent domain, whether permanently or tem-porar(LST (b) if any i l f`=of -way from which the Structure is visible
is relocated; (c) if there is a diverston,Ieduction or change:indirectional flow'of traffic from the street or streets currently
adjacent to or leading to or past•the Prove:Ely; (d) if visibility to °the Structure °is impaired; (e) if the value or utilization of the
Structure is reduced; (f) orJhe Structures „pse is prevented 'or otherwise restricted, then Tenant shall have the right to
relocate the Structure on1 andj'ord's remaining property or to terminate this Lease upon not less than thirty (30) days'
notice and to receive all pre paid rent for and! unexpired term of this Lease. Tenant shall be entitled to all compensation
and other remedies provided by law= includijig 7without limitation, just compensation for the taking of the Structure and
Tenant's Ieasehoid interest in this ,,limitation-on the use or maintenance of the Structure, loss of goodwill, and /or
relocation assistance Lain -dlord shalh�assert no rights' iF such interests. If condemnation proceedings are initiated,
Landlord shaft use its best °eff_0 rt&to incli deizTenant as a party thereto. No right of termination set forth anywhere in this
Lease may be exercised prior t o=the sale to.anv-- entity with the power of eminent domain or by or for the benefit of any
entity with: the, power of eminent'domain.
9. Landlord` that its'the owner (or owner's authorized agent) of the Property and has the authority to
enter into this Lease Landlord shall .provide a readily accessible access point to the Property for Tenant to enter and exit
the Property for installation and maintenance of the Structure. Access will be granted either from the east through the
neighboring cabinet shopproperty or "Landlord will grant permission for Tenant to gain access over the curb and sidewalk
on the south end of the K,Olerty n the event that a ramp needs to be constructed for safe truck access to the Property
Tenant shall construct su a at its own expense. The cost associated with constructing the ramp shall be
reimbursed by Landlord via =:a rent credit in the amount of the cost of the ramp not to exceed five thousand dollars,
($5,000).
10. If the Property is currently encumbered by a deed of trust or mortgage, ground lease or other similar
encumbrance, Landlord shall deliver to Tenant on or before the commencement date hereof a non disturbance agreement
in a form reasonably acceptable to Tenant.
11. If (a) Tenant has not been informed of the current address of Landlord or its authorized agent, or (b) two or more
of the monthly payments sent by Tenant are not deposited by Landlord within ninety (90) days after the last such payment
is sent by Tenant, then no further rent shall be payable hereunder for the period commencing with the due date of the first
such payment not deposited and continuing until Landlord (i) gives Tenant notice of its business address or that of its
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authorized agent or (ii) deposits all previous payments. In either case, Tenant's rent obligations shall be reinstated
retroactively as if neither event described in (a) or (b) of this section had occurred.
12. Tenant shall indemnify and hold Landlord harmless from all injuries to the Property or third persons caused by
Tenant, Tenant's employees, agents, licensees and contractors. Landlord shall indemnify and hold Tenant harmless from
all injuries to Structure or third persons caused by Landlord, Landlord's employees, agents, licensees and contractors.
13. This Lease is binding upon the heirs, assigns and successors of both Landlord and Tenant. Landlord agrees not
to assign this Lease to any competitor of Tenant without Tenant's prior written permission. Tenant shall have the absolute
right to assign or sublet the structure. Landlord shall have the right to use the property and lease remaining portions of the
property provided those leases do not impact Tenants use of the property or Tenants about to maintain the Structure.
Landlord agrees not to lease any portions of the property to a competitor of Tenant.i r
14. Any notice to any party under this Lease shall be in writing sent by certified or registered mail, and shall be
effective on the earlier of (a) the date when delivered and receipted for by a ;person at =the address specified within this
Lease, or (b) the date which is three (3) days after mailing (postage prepaid) y certified- orregistered mail, return receipt
requested, to such address; provided, that in either case notices shall be.delivered to suchother address as shall have
been specified in writing by such party to all parties hereto prior to thewnotice being delivered
1 5. This Lease shall be governed exclusively by the provisions hereof,and by the laws of °th;e state which the
Property is located, as the same may from time to time exist without_regard to conflicts of laws provisions Any action or
proceeding seeking to enforce any provision of or based on any rigr-t arisingoutwof, this Lease may bebrought against
any of the parties only in the courts within the county in which theProperty is located, or, if it figs or can acquire
jurisdiction, in the United States District Court for the applicable district Ioc "a`t"ed in the applicable county where the Property
is situated, and each of the parties consents to the jurisdiction of such court�s:(and of the appropriate appellate courts) in
any such action or proceeding and waives any objection to venue laid therein afsuit is brought or an attorney is retained
by any party to this Lease because the other party== fi=eached this Lease, "the prevailing party shall be entitled to
reimbursement for reasonable attorneys' fees and all reiate`dbcosts and expenses z- -L
16. Neither Landlord nor Tenant shall be bound by any terms ennaitions. or oral representations that are not set forth
in this Lease. This Lease represents the entire agreement of Tenant and;:Landlord with respect to the Structure and the
Property and supercedes any.previoos;°wagreement. Landlord hereby grants Tenant all rights necessary to record a
memorandum of this Lease without Landlord's signature, including a limited power of attorney for such purpose.
TENANT: LANDLORD:
CLEAR CHANNEL OUTDOOR, INC RJR „CITY OF TUKWILA
By: _m By:
Its: Jim Haggerton, Mayor
Branch-Address: Printed Name of Landlord:
Address:
Tel No. )AM ^1S
Tel No.
Tax ID No.
ATTEST/AUTHENITC-ATID APPROVED AS TO FORM
Christy O'Flaherty, CMC, City Clerk City Attorney
Date approved by City Council
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Exhibit A
Permanent Property Tax Number: 362304-9037
Legal Description: POR OF NW 1/4 BEG 30 FT N 1275.75 FT W FROM NE CORNER OF
HENRY ADAMS DONATION CLAIM TH N 120 FT TH W 98 FT TH S 57 FT TH W 72 FT TO
ELY MGN OF WEST VALLEY HWY TH SLY ALG SAID ELY MGN TAP 30 FT N OF PLW N
LINE OF HENRY ADAMS DONATION CLAIM TH E TO POB LESS POR FOR STATE HWY
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City of Tulzwila
Community Affairs and Parks Committee
x:
COMMUNITY AFFAIRS AND PARKS COMMITTEE
Meeting Minutes
March 14, 2011— 5:00 p.m.; Conference Room #3
PRESENT
Councilmembers: Verna Seal, Chair; Joe Duffle and De' Sean Quinn
Staff: Rick Still, Robert Eaton, Shawn Hunstock, Lynn Miranda, Minnie Dhaliwal, Brandon Miles,
Steve Lancaster and Kimberly Matej
Guests: Michael Mays (Clear Channel), Justin Rose (Pacific Golf and Cart)
CALL TO ORDER: Committee Chair Seal called the meeting to order at 5:00 p.m.
I. PRESENTATIONS
No presentations.
II. BUSINESS AGENDA
A. Leasing of City Property for Digital Billboard
Staff is seeking Council approval to enter into a lease agreement with Clear Channel Outdoor (CCO) for the
City -owned property located at the northeast corner of West Valley Highway and South 180 Street.
CCO will be utilizing the property to locate and operate a digital billboard. Currently, NC Power Systems is
using the property, and may continue using the property provided rent is paid to the City. At this time, it
does not appear as if NC Power has a need for continued use. However, if at a later time, they desire to use
the property, CCO's lease agreement does not restrict other uses, and a new agreement could be discussed.
Highlights of the lease agreement with Clear Channel Outdoor include:
Fifteen (15) year lease, termination clause and mutually renewable
O Lease rate of $25,000 annually with a 7.5% increase every five years
CCO will provide property access, currently there is none
Committee Members expressed appreciation for staff's effort to communicate intentions and processes with
NC Power Systems. In relation to property access above, Committee Member Duffie commented that a
driveway cut should be made in the sidewalk for vehicular access to the property in order to avoid driving
over the sidewalk. Committee Chair Seal stated that it is essential that we make sure that we comply with
our own codes and regulations. UNANIMOUS APPROVAL. FORWARD TO MARCH 28 COW FOR
DISCUSSION.
B. North Highline Annexation
Staff is seeking Committee approval of a resolution that states the City's interest in commencing
negotiations of an interlocal agreement with King County for the annexation of the area known as North
Highline. This area was identified as a potential annexation (PAA) area in the City's Comprehensive Plan in
1995.
The bulleted items below briefly describe the PAA:
A Approximately 135 acres
Twenty -four (24) parcels
$91 million accessed value
Currently zoned industrial
Revenues are projected to be more than the costs of annexation
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