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HomeMy WebLinkAboutFS 2013-12-03 Item 2B - Lease Agreement - 2014-2016 6300 Building Lease with Engineering SolutionsCity of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM TO: Mayor Haggerton Finance and Safety Committee FROM: Bob Giberson, Public Works Director BY: Pat Brodin, Operations Manager DATE: November 26, 2013 SUBJECT: Updated New Lease for Engineering Solutions Suite 209, 6300 Building ISSUE Approve the updated lease with Engineering Solutions on a year to year basis with no agreement to extend the term beyond December 31, 2016. BACKGROUND Engineering Solutions has been a tenant in the 6300 Building since 2005. They currently occupy 1,982 square feet of general office space on the second floor. They also have two reserved parking spaces in the garage below the building. Their current lease expires on December 31, 2013. The rental is for $19.50 per square foot for 2014 and increases by $0.25 each year thereafter if extended. Engineering Solutions has been an excellent tenant for the City over the years. Their track record is stellar with our Finance Department wherein they have consistently paid the necessary rent on a timely basis. Throughout the period since 2005, maintenance and repairs to the space (Suite 209) have been minimal and Engineering Solutions continues to abide under Section 7a of the lease to "peaceably and quietly enjoy the premises." RECOMMENDATION It is being recommended that Council authorize the Mayor to sign a new lease with Engineering Solutions for a term of one year that may extend until December 31, 2016. The Committee is being asked to forward this item to the December 9, 2013 Committee of the Whole and Special Meeting to follow that night. ATTACHMENTS Lease Agreement W: \2013 Info Memos-Council \LeaseEngr Solutions.docx 3 4 LEASE AGREEMENT This Lease Agreement (the "Lease ") is entered into on this day of , 2013, between the City of Tukwila, a Washington municipal corporation, (the "City") and Engineering Solutions, Inc. (the "Lessee "). The City and Lessee agree as follows: 1. PREMISES: The City leases to Lessee the commercial property currently situated at 6300 Southcenter Boulevard, Suite 209, Tukwila, Washington (the "Premises "). The "Premises" is that portion of the building containing approximately 1,982 square feet of rentable area, shown by diagonal lines on Exhibit "A," located on the 2nd floor of the Building. Tenant shall be permitted to park two (2) cars on a reserved basis in the area(s) designated by the City for parking. Tenant shall abide by any and all parking regulations and rules established from time to time by the City. 2. TERM: The term of this Lease shall commence on January 1, 2014, and shall end on December 31, 2014, unless sooner terminated pursuant to Section 24 below. This Lease may be extended for an additional one year term without further City Council approval if such an extension is agreed to by the Parties. Upon termination of this Lease, Lessee shall surrender all keys to the City at the place then fixed for notice. 3. POSSESSION: Lessee shall be deemed to have accepted possession of the Premises in an "as -is" condition. The City makes no representations to Lessee regarding the Premises including the structural condition of the Premises and the condition of all mechanical, electrical, and other systems. Lessee shall not engage in any improvements or alterations to the Premises without the express written consent of the City. 4. RENT: Monthly rent shall be set at $21.50 per square foot per year and shall be paid in 12 equal monthly installments due on the fifth (5th) day of each month. If any sums payable by Lessee to the City are not received by the tenth (10th) day of each month, Lessee shall be responsible for paying a late payment for the cost of collecting and handling the late payment. The amount of the late payment shall be five (5) percent of the delinquent amount and shall be in addition to the delinquent amount due. In addition, all delinquent sums not paid within thirty (30) days of the date due shall bear interest at the rate of twelve (12) percent per annum or the highest rate of interest allowable by law, whichever is less. Interest on all delinquent amounts shall be calculated from the original due date to the date of payment. The City's acceptance of less than the full amount of any payment due from Lessee shall not be deemed an accordance and satisfaction or compromise of such payment. 5. SECURITY DEPOSIT: City will transfer security deposit in the amount of $2,642.67 from the expiring lease. If Lessee breaches any covenant or condition of this Lease including but not limited to the payment of Rent, the City may apply all or any part of the security deposit to the payment of any sum in default or any damages suffered by Landlord as a result of Lessee's breach. Any payment to the City from the security deposit shall not be construed as a payment of liquidated damages for any default. If Lessee complies with all of the covenants and conditions of this Lease throughout the Lease term, the security deposit shall be repaid to Lessee without interest within thirty (30) days after the vacation of the Premises by Lessee. LEASE AGREEMENT Page 1 of 8 5 6. USE: Lessee shall use the Premises for the following purposes: General Office. The Premises shall be used only for the uses specified herein and for no other business or purpose without the prior written consent of the City. No act shall be done on or around the Premises that is unlawful or that will increase the existing rate of insurance on the Premises or cause the cancellation of any insurance on the Premises. Lessee shall not commit or allow to be committed any waste upon the Premises or any public or private nuisance. Lessee shall not do or permit anything to be done on the Premises which will obstruct or interfere with the rights of other tenants, or occupants of the Premises or their customers, clients, and visitors or to injure or annoy such persons. 7. LESSEE MAINTENANCE AND REPAIR RESPONSILIBITY: Lessor shall, when and if needed, at Lessor's sole expense, make repairs to the Premises and every part thereof; and Lessee shall maintain the Premises in a neat, clean, sanitary condition. Lessee shall surrender the Premises to the City in good condition upon the termination of this Lease, reasonable wear and tear excepted. 7a QUIET ENJOYMENT: Tenant, upon paying the rent and performing all of its obligations under this Lease, shall peaceably and quietly enjoy the Premises, subject to the terms of this Lease and to any mortgage, lease, or other agreement to which this Lease may be subordinate. 8. SIGNAGE: Lessee shall obtain the City's written consent before installing any signs up on the Premises. Lessee shall install any approved signage at Lessee's sole expense and in compliance with all applicable laws. Lessee shall not damage or deface the Premises when installing or removing signage and shall repair any injury or damage to the Premises caused by such installation or removal. 9. UTILITIES: Lessor shall pay prior to delinquency for all heat, light, water, and all other utility services supplied to the Premises. 10. DESTRUCTION OF PREMISES: If the Premises are completely or partially destroyed by fire or other casualty, or if they are damaged by an uninsured casualty, or by an insured casualty to such an extent that the damage cannot be repaired within sixty (60) days of the occurrence, Lessor shall have the option to restore the Premises or to terminate this Agreement on thirty (30) days written notice, and Lessee shall have the option to terminate this Agreement on thirty (30) days written notice, effective as of any date not more than sixty (60) days after the occurrence. If this Section becomes applicable, Lessor shall advise Lessee within thirty (30) days after such casualty whether Lessor elects to restore the Premises or to terminate this Agreement. If Lessor elects to restore the Premises, it shall commence and prosecute the restoration work with diligence. For the period from the date of the casualty until completion of the repairs (or the date of termination of this Agreement, if Lessor elects not to restore the Premises), the monthly minimum rent shall be abated in the same proportion that the untenantable portion of the Premises bears to the whole thereof, unless the casualty results from Lessee's negligence or its breach of its obligations under this Agreement. 11. HAZARDOUS SUBSTANCES: Lessee shall not generate, release, spill, store, deposit, transport, or dispose of (collectively "Release ") any hazardous substances, sewage, petroleum products, radioactive substances, medicinal, bacteriological, or disease - producing substances, hazardous materials, toxic substances or any pollutants or substances defined as hazardous or LEASE AGREEMENT Page 2 of 8 6 toxic in accordance with applicable federal, state and local laws and regulations in any reportable quantities (collectively "Hazardous Substances ") in, on or about the Premises. Lessee shall attach a separate list of Hazardous Substances they propose to store on site and Lessor must accept the list in writing or the Hazardous Substances cannot be stored on site. Lessee shall indemnify, hold harmless, and defend Lessor from any and all claims, liabilities, losses, damages, clean -up costs, response costs and expenses, including reasonable attorney's fees, arising out of or in any way related to the Release by Lessee, or any of its agents, representatives or employees, or to the presence of such Hazardous Substances in, on or about the Premises occurring at any time after the effective date of this Agreement to the full extent of Lessee's liability. 12. ALTERATIONS AND ADDITIONS BY LESSEE: After obtaining the prior written consent of the City, Lessee may make, at its sole expense, such additional improvements or alterations to the Premises, which it may deem necessary or desirable. Any repairs or new construction by Lessee shall be done in conformity with plans and specifications approved by the City. All work performed shall be done in a workmanlike manner and shall become the property of the City. 13. LIENS: Lessee shall keep the Premises free from any liens arising out of any work performed, materials furnished, or obligations incurred by Lessee, including those utilities which Lessee is responsible for. 14. INSURANCE: The Lessee shall procure and maintain for the duration of the Agreement, insurance against claims for injuries to persons or damage to property which may arise from or in connection with the Lessee's operation and use of the leased Premises. Lessee's maintenance of insurance as required by the agreement shall not be construed to limit the liability of the Lessee to the coverage provided by such insurance, or otherwise limit the City's recourse to any remedy available at law or in equity. A. Minimum Scope of Insurance. Lessee shall obtain insurance of the types described below: 1. Commercial General Liability insurance shall be written on Insurance Services Office (ISO) occurrence form CG 00 01 and shall cover premises and contractual liability. The City shall be named as an insured on Lessee's Commercial General Liability insurance policy using ISO Additional Insured - Managers or Lessors of Premises Form CG 20 11 or a substitute endorsement providing equivalent coverage. 2. Property insurance shall be written on an all risk basis. B. Minimum Amounts of Insurance. Lessee shall maintain the following insurance limits: 1. Commercial General Liability insurance shall be written with limits no less than $1,000,000 each occurrence, $1,000,000 general aggregate. LEASE AGREEMENT Page 3 of 8 7 2. Property insurance shall be written covering the full value of Lessee's property and improvements with no coinsurance provisions. C. Other Insurance Provisions. The Lessee's Commercial General Liability insurance policy or policies are to contain, or be endorsed to contain that they shall be primary insurance as respect to the City. Any insurance, self - insurance, or insurance pool coverage maintained by the City shall be in excess of the Lessee's' insurance and shall not contribute with it. D. Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best rating of not less than A: VII. E. Verification of Coverage. Lessee shall furnish the City with original certificates and a copy of the amendatory endorsements, including but not necessarily limited to the additional insured endorsement, evidencing the insurance requirements of the Lessee. F. Waiver of Subrogation. Lessee and the City hereby release and discharge each other from all claims, losses and liabilities arising from or caused by any hazard covered by property insurance on or in connection with the premises or said building. This release shall apply only to the extent that such claim, loss or liability is covered by insurance. G. City's Property Insurance. The City shall purchase and maintain during the term of the lease all -risk property insurance covering the Building for their full replacement value without any coinsurance provisions. H. Notice of Cancellation. The Lessee shall provide the City with written notice of any policy cancellation, within two (2) business days of their receipt of such notice. I. Failure to Maintain Insurance. Failure on the part of the Lessee to maintain the insurance as required shall constitute a material breach of Lease, upon which the City may, after giving five (5) business days notice to the Lessee to correct the breach, terminate the Lease or, at its discretion, procure or renew such insurance and pay any and all premiums in connection therewith, with any sums so expended to be repaid to the City on demand. 15. INDEMNIFICATION: Lessee shall defend, indemnify, and hold harmless the City, its officers, officials, employees and volunteers from and against any and all claims, suits, actions, or liabilities for injury or death of any person, or for loss or damage to property, which arises out of Lessee's use of Premises, or from the conduct of Lessee's business, or from any activity, work or thing done, permitted, or suffered by Lessee in or about the LEASE AGREEMENT Page 4 of 8 8 Premises including any injuries or damages caused by any dogs allowed under Section 30, except only such injury or damage as shall have been occasioned by the sole negligence of the City. 16. ASSIGNMENT AND SUBLETTING: Lessee shall not assign this lease or any part thereof, either by operation of law or otherwise, without first obtaining the prior written consent of the City. 17. HOLDING OVER: If after expiration of the Lease term, Tenant remains in possession of the "Premises" with the City's permission, Tenant shall become a tenant from month to month only, upon all the provisions of this Lease, but the monthly rent payable by the Tenant shall be increased to one hundred fifty percent (150 %) of the base monthly rent payable by the Tenant at the expiration of the Lease term. If either the City or the Tenant desires to terminate such month to month tenancy, it shall give the other party not less than thirty (30) days advance written notice of the date of termination. 18. DEFAULT: Failure by Lessee to observe or perform any of the covenants, conditions, or provisions of this Lease, where such failure shall continue for a period of thirty (30) days after written notice from the City to cure the default, shall constitute a default and breach of the Lease by the City. Lessee shall notify the City promptly of any default not by its nature necessarily known to the City. 19. ACCESS: After reasonable notice from the City (except in cases of emergency where no notice is required), Lessee shall permit the City and its agents, employees, and contractors to enter the Premises at all reasonable times to make repairs, alterations, improvements, or inspections. This Section shall not impose any repair or other obligation upon the City not expressly state elsewhere in this Lease. 20. COMPLIANCE WITH LAWS, RULES AND REGULATIONS: Lessee shall, at its sole cost and expense, promptly comply with all laws, statutes, ordinances, and governmental rules, regulations or requirements now in force or which may hereafter be in force relating to or affecting the conditions, use, or occupancy of the leased premises. Lessee shall faithfully observe and comply with the rules and regulations that the City shall from time to time promulgate, including, without limitation, those regulations affecting signage on the Property. 21. PERMITS: Lessee shall, at its sole cost and expense, be responsible for obtaining any permits or licenses that are necessary to perform the work and covenants of this Lease. 22. PROPERTY TAXES: The City shall be responsible paying all property taxes on the premises. 23. NOTICE: All notices under this lease shall be in writing and shall be effective when mailed by certified mail or delivered to the City at the address below stated, or to Lessee at the address below stated or to such other address as either party may designate from time to time: LEASE AGREEMENT Page 5 of 8 9 CITY OF TUKWILA: LESSEE: CITY OF TUKWILA ATTN: Mayor's Office 6200 Southcenter Boulevard Tukwila, Washington 98188 ENGINEERING SOLUTIONS INC. 6300 Southcenter Boulevard Tukwila, Washington, 98188 24. TERMINATION: Either party has the right to terminate this Agreement if the other party is in default of any material obligation or representation of this Lease which default is incapable of cure, or which being capable of cure, is not cured within fifteen (15) days after receipt of written notice of such default. 25. APPLICABLE LAW; VENUE; ATTORNEY'S FEES: This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. In the event any suit, arbitration, or other proceeding is instituted to enforce any term of this Agreement, the parties specifically understand and agree that venue shall be properly laid in King County, Washington. The prevailing party in any such action shall be entitled to its attorney's fees and costs of suit. 26. AUTHORITY OF LESSEE: Lessee, and each individual executing this Lease on behalf of Lessee, represent and warrant that s /he is duly authorized to execute and deliver this Lease, and that this Lease is binding upon Lessee in accordance with its terms. 27. WAIVER AND FORBEARANCE: No waiver by the City of any breach or default by Lessee of any of its obligations or agreement or covenants herein, shall be deemed to be a waiver of any subsequent breach or default of the same or any other covenant, agreement or obligation, nor shall forbearance by the City to seek remedy for any breach or default of Lessee be deemed a waiver by the City or its rights and remedies with respect to such breach or default. 28. ENTIRE AGREEMENT; MODIFICATION: This Lease, together with any attachments or addenda, represents the entire and integrated Lease Agreement between the City and the Lessee and supersedes all prior negotiations, representations, or agreements written or oral. No amendment or modification of this Lease shall be of any force or effect unless it is in writing and signed by the parties. 29. SEVERABILITY AND SURVIVAL: If any term, condition or provision of this Lease is declared void or unenforceable or limited in its application or effect, such event shall not affect any other provisions hereof and all other provisions shall remain fully enforceable. The provisions of this Lease, which by their sense and context are reasonably intended to survive the completion, expiration or cancellation of this Lease, shall survive termination of this Lease. 30. DOG OCCUPANCY: Landlord grants permission for Tenant to have his dog in the subject space. This permission is conditioned upon no difficulties with the dog such as barking, "house broken," attacking occupants or visitors of the building. Upon lease expiration, Tenant shall pay $400.00 for professionally deodorizing the subject space. LEASE AGREEMENT Page 6 of 8 10 31. TENANT IMPROVEMENTS: City at its sole cost and expense will - Repaint the subject space - Recarpet the subject space Tenant is granted permission to install static -free tile in two (2) of the offices. Such work shall be done in a professional and workman -like manner. IN WITNESS THEREOF, the parties hereto have executed this Lease the date and year above written. CITY OF TUKWILA: LESSEE: By: By: Its: Its: Date: Date: APPROVED AS TO FORM: Office of the City Attorney STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) I certify that I know or have satisfactory evidence that Mayor, is the person who appeared before me, and said person acknowledged that they signed this instrument, and on oath stated that they were authorized to execute the instrument on behalf of the City of Tukwila and acknowledged it to be his /her free and voluntary act for the purposes mentioned in the instrument. DATED: (Signature of Notary) (Legibly Print or Stamp Name of Notary) Notary Public in and for the State of Washington My appointment expires: [Stamp or Seal] LEASE AGREEMENT Page 7 of 8 11 STATE OF COUNTY OF ) ss. I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that said person signed this instrument, and on oath stated that said person was authorized to execute the instrument and acknowledged it to be his /her free and voluntary act for the purposes mentioned in the instrument. DATED: [Stamp or Seal] LEASE AGREEMENT 12 (Signature of Notary) (Legibly Print or Stamp Name of Notary) Notary Public in and for the State of My appointment expires: Page 8 of 8