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HomeMy WebLinkAboutCAP 2011-03-14 Item 2A - Lease Agreement - Digital Billboard with Clear Channel Outdoors (West Valley Highway and South 180th Street) AN CLA- MS Cit of Tukwila o a 6 Jim Haggerton, Mayor *t90 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. 1 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 2 W:\2011 Info Memos\Billboard Lease.doc 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 TUKW ILA "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 situatedwinthe City of Tukwila, County of King in the State of Washington, whose permanent property tax number and legaI are attached hereto and incorporated herein by reference as Exhibit A (the "Property The Property -isa leased for the purpose of erecting, maintaining, operating, improving, supplementing, posting (whether physically, gitalIy:or via other remotely changeable technology), illuminating, repairing, repositioning and /or removing outdoorF advertiis ng including, without limitation, fixture connections, electrical and broadband supply and connections, panels;xsiiggns (whether digital, static or similar technologies), copy and any other equipment and accessories: Tenant may place thereon (collectively, the "Structure This Lease includes all necessary rights of ingress and,egress:yTenant may IicerlSethe 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 (1s5Lyears, cohrhencing on the datewconstruction permits are approved by the City of Tukwila. If for any reason TerighlEis unaal to complete construction of the Structure and /or fails to obtain the necessary governmental authorizatio'ns::to operate the Structure, Tenant may terminate this Lease immediately upon notice to Landlord. If the structurei's "a.not built within 1 year of mutual execution of this tease agreement then the lease shall terminate. This Lease Agreeme.n €.;shall not be construed as a building or land use permit. Tenant is responsible for obtainin n city permits prior:,to constructing the structure. CLEAR CHANNEL shall have the right to terminate this Lease arthesen ofrany monthly periOdAiring the initial term or any subsequent term upon notice to Landlord served not less than thirty (30), days:proar to the end of anymon fly period. 3. Tenant shall pay Landlord rent in the amount offvventy Five Th;iEsand Dollars ($25,000.00) per year payable in full upon commencement of the terra and each anniversarydate7 hereafterfor -the period of time commencing when tenant has approval from governmental.entiti for the construction of the structure° Annual rent shall increase by seven and one half percent (7.5 on the fifth ""(5 antra (10 annive of the Lease commencement. 4. This Lease shalrcontinue in full fora and effect for its n itiitial,lerm from the date construction permits are approved by the City of Tukwila. During aRy term of this-Lease and for a period of ninety (90) days following the expiration or earlier termination of this Lease, Landlord hereby grant$ to Tenant_aright of first refusal, acceptance of which is exercisable at Tenant's sole discretion ztomatch the"rr%aterial terms =of a iyoffer acceptable to Landlord for the use or purchase of all or any portion of the'P rope ?tv and /or to match the material terms of any offer acceptable to Landlord for the use of purchase of any parceI or collection of parcels that rrieWes the Property (the "Offer"), which includes, without limitation, similar time periods for}performance and investigation as= are:ser:orth in the Offer A copy of all relevant document(s) containing the Offer received by Landlord shall 6 e Felivered to4Tehant (the "Offer Documents Tenant shall then have twenty (20) days from its receptof.the Offer Documents in whiclto match the material terms of the Offer by giving notice of acceptance to Landlord. If Teran't.rejects the Offer and the Property transfers pursuant to the terms of the Offer, Landlord shall promptly notify Tenant of s uch transfer and provide Tenant with any relevant contact information and rental payment submission addresses of such r ew owner of the P. roperty. Prior to transferring ownership of the Property, Landlord shall furnish the new owner with a copy =ef his Leap 5. Tenant is and shall the owner of the Structure until Tenant no longer has any rights to use or possess the Property whether (1) under.th'iis 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 3 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 Landlorda 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-pre advertising. 7. If in Tenant's sole opinion: (a) the view of the Structure's advertis co becomes entirely or partially obstructed, (b) electrical service is unavailable; (c) the Property cannot safely_be used fo:rtFe erection or maintenance of the Structure for any reason; (d) the Property becomes unsightly; (e) there..is a diversion, reduction or change in directional flow of traffic from the street or streets currently adjacent to or leading` =to of'past the PropertyA:the Structure' value for advertising purposes is diminished; (g) Tenant is unable to obtain.oRnaintain any necessary pert] for the erection, use and /or maintenance of the Structure; or (h) the Structure's use is prevented or restricted by law, Ter ant is required by any governmental entity to reduce the number of billboards op.erated it in the city, county or state in File:h the Structure are located; then Tenant may immediately at its option either: (i) reduce rent in direct proportion to the Ioss suffered; or (ii) cancel this Lease pursuant to paragraph 2 and receive all pre -paid rentfor any:unexpired term of this Lease. In addition, if Tenant is prevented from illuminating its signs by law, or other cause beyondfTenant's control, the rent shall be reduced by one -third for such period of non illumination. In the event that rent is reducedaas outlined in this paragraph landlord and tenant shall first use best efforts to resolve the issu "'e =which has caused the reift;.reduction. In the event that a mutually agreeable solution can not be reached in 30 days th 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 :condemned by,proper authorities or taken without the exercise of eminent domain, whether permanently or temporarily; (b) if any Fig19r of -way from which the Structure is visible is relocated; (c) if there is a diversion;:Rreduction or changeinrdirectional floWbf traffic from the street or streets currently adjacent to or leading to or past4the Propedy; (d) if visibility to:the Structure impaired; (e) if the value or utilization of the Structure is reduced; (f) oriFe Structure s i e is prevented or. otherwise restricted, then Tenant shall have the right to relocate the Structure on `Larrd.lIord's remaining property or to terminate this Lease upon not less than thirty (30) days' notice and to receive all pre -paid =rent for argy unexpired term offhis Lease. Tenant shall be entitled to all compensation and other remedies provided by IaTuinclirdlrrgA without JimitatiOi just compensation for the taking of the Structure and Tenant's leasehold interest in this Lease,, limitation on:the use or maintenance of the Structure, loss of goodwill, and /or relocation assistance =r Landlord shaFas "sert no rights ?i such interests. If condemnation proceedings are initiated, Landlord shall use its besthefforts to include 4Tenant as a party thereto. No right of termination set forth anywhere in this Lease maybe exercised prior- toithe sale to.any,entity with the power of eminent domain or by or for the benefit of any entity with the power of eminent domain. 9. Landlordj- epresents that it°s the owner (or owner's authorized agent) of the Property and has the authority to enter into this L 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 shop property di Landlord will grant permission for Tenant to gain access over the curb and sidewalk on the south end of the yperty `i the event that a ramp needs to be constructed for safe truck access to the Property Tenant shall construct sucha =ramp 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 4 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.::F w- -H;. 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 aperson "at =the address specified within this Lease, or (b) the date which is three (3) days after mailing (postage prepaid) by certified"or ce.gistered mail, return receipt requested, to such address; provided, that in either case notices shall be.deliv_ered to sail:ti h,er address as shall have been specified in writing by such party to all parties hereto prior to the being delivered,, 15. This Lease shall be governed exclusively by the provis7.ons hereof and by the laws of'thestate which the Property is located, as the same may from time to time exist.witfidEl wregard to of laws provisto`ns Any action or proceeding seeking to enforce any provision of, or based on anynght-arising .o.uEof, this Lease may fie brought against any of the parties only in the courts within the county in which the:;P_topeT:ty is located, or, if it has or can acquire jurisdiction, in the United States District Court for the applicable district located in the applicable county where the Property is situated, and each of the parties consents to the jurisdiction of such courts;(and of the appropriate appellate courts) in any such action or proceeding and waives any objec"fion to venue laid therein'..l „suit is brought or an attorney is retained by any party to this Lease because the other part' breached this Lease,'the;prevailing party shall be entitled to reimbursement for reasonable attorneys' fees and alf; relatedEeosts and expenses 16. Neither Landlord nor Tenant shall be bound by any terms; :con:ditiops. or oral representations that are not set forth in this Lease. This Lease represents the entire agreement of Tenant and='L-andford with respect to the Structure and the Property and supercedes any previotasr agreement. Land:Ior-d hereby grai7f°s Tenant all rights necessary to record a memorandum of this Lease without Landaord's signature, including a Iimite °d power of attorney for such purpose. TENANT: LANDLORD: CLEAR CHANNELO INCA., 4TY OF TUKWILA B By: Its: Jim Haggerton, Mayor Branch Address: Printed Name of Landlord: Address: Tel No. Tel No. Tax ID No. ATTEST /AUTLIENtICAI =EIS APPROVED AS TO FORM Christy O'Flaherty, CMC, City Clerk City Attorney Date approved by City Council 5 city owned property attachment b aerial map of digital billboard site 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 2.7 7Z,n, -7Z-7 6