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HomeMy WebLinkAboutFS 2016-03-08 Item 2B - Lease Agreement - Old City Hall Lease with Tukwila Historical SocietyTo: From: Date: City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM Finance and Safety Committee Brandon J. Miles, Economic Development March 3, 2016 CC: Mayor Ekberg Subject: New Lease Agreement with Tukwila Historical Society for Tukwila Grade School /Old City Hall Premise ISSUE Should the City enter into a new lease agreement with the Tukwila Historical Society (hereinafter "Society ") for continued use of the Tukwila Grade School /Old City Hall, located at 14475 59th Avenue South? BACKGROUND In 2010 the City entered into a five year lease agreement with the Society to occupy the old Tukwila Grade School /Old City Hall building. City Administration and the Society desire to enter into a new lease agreement, allowing the Society to continue to operate from the property. DISCUSSION The Society's utilization of the building has been mutually beneficial to both the City and the Society. The City has been able to hand over the day to day care of the building to a third party with a vested interest in the upkeep of the building. While the Society's ability to have a permanent physical space has allowed the Society to grow its membership and expand its offerings. The following are the proposed deal terms of the new lease agreement: Consideration: As with the previous lease, the City will not charge the Society a base rent; instead, the Society will agree to perform certain services: Term: Rental of Space: • Work to continue to secure funding for upkeep and repairs to the historic building. All repairs and building work must be approved by the City. • Provide general upkeep of the building and grounds. • Develop programing for children and youth to educate about the history of Tukwila and the Duwamish /Green River Valley. The term of the lease is for five years with a provision that allows the Mayor to execute an amendment to extend the agreement for an additional five years. In order to generate funds to support and sustain the Society, the Society has requested the ability to rent the space to private groups for events. The lease agreement permits renting the space with limitations on the duration of events, time of day of events and insurance requirements. City may terminate the right to rent the space in the event that the rentals create disturbances for adjacent residents or impact the residential neighborhood. 13 INFORMATIONAL MEMO Page 2 The agreement prohibits the Society from renting the space out long term. Insurance: The Society is required to maintain adequate insurance coverage and name the City as an additional insured. City's (Lessor) Responsibilities: The City is responsible for all utilities, routine janitorial, cleaning, and minor repairs. City's responsibilities for repairs shall not exceed $100.00 per month, $1,200 per month. The City is responsible for maintenance and repair of the building. City retains absolute authority and discretion in determine, what if any maintenance or repairs are performed on the building. It is staff's understanding that members of the Society are still reviewing the proposed lease. Furthermore, staff understands that some members of the Society desire a ten year term for the agreement. FINANCIAL IMPACT None. RECOMMENDATION Administration recommends that the City enter into a new lease agreement with the Society. The Committee is being asked to forward the new lease agreement to the March 14th consent agenda. ATTACHMENTS • Draft Lease Agreement 14 DRAFT, March 3, 2016 LEASE AGREEMENT I. PREAMBLE THIS LEASE AGREEMENT, dated this day of 2016, is entered into by and between the City of Tukwila, a political subdivision of the State of Washington (hereinafter, "Lessor "), and the Tukwila Historical Society, a local 501(c)(3) organization (hereinafter, "Lessee "), for the purpose of leasing the building and improvements formerly referred to as the Tukwila Grade School /Tukwila City Hall, located at 14475 59th Ave South, Tukwila, Washington, 98168 (hereinafter, "Heritage Center "). II. RECITALS WHEREAS, the Lessor is the owner of the Premises, which consists of a building on real property located at 14475 59th Avenue South, Tukwila, Washington, 98168, depicted in the map attached hereto as Exhibit A; and WHEREAS, the Lessee has leased the Premises since September of 2010; and WHEREAS, the Premises is a nationally registered historic place and one of the oldest structures in the City of Tukwila; and WHEREAS, since leasing the Premises in 2010 the Lessee has pursued and obtained funding to complete tenant improvements on the historical structure; and WHEREAS, the Lessee performs a vital community service of preserving the history of the City of Tukwila and Duwamish /Green River Valley; and WHEREAS, the Lessee is taking due care in occupying the space and keeping the Lessor informed of any issues that may need owner attention; and WHEREAS, the Lessee and Lessor desire to enter into a new lease agreement for the Premises; and NOW THEREFORE, in consideration of the mutual promises set forth herein, the Lessor and Lessee agree as follows: III. AGREEMENT A. Description of the Premises. Lessor hereby leases to Lessee, upon terms and conditions herein set forth, the Premises consisting of the former Tukwila Grade School /Tukwila City Hall officially named Tukwila Heritage and Cultural Center, situated in the City of Tukwila, King County, Washington, and whose common address is 14475 59th Avenue South, Tukwila, Washington, depicted in Exhibit A hereto. B. Consideration. There is no base rent for the term of this lease, but in exchange for this lease the Lessee shall maintain the City's history and perform the tasks stated herein at Section III.H, at Lessee's sole cost and at no cost to the Lessor. C. Term. The term of this Lease Agreement is five years, commencing on April 1, 2016 and terminating on March 31, 2021. Upon mutual agreement of the Mayor of the City of Tukwila and 1 15 DRAFT, March 3, 2016 the President of the Tukwila Historical Society, this agreement may be extended for an additional five year period to commence on April 1, 2021 and terminating on March 31, 2026. The Mayor is authorized to execute an amendment to facilitate an extension and to include any needed consideration or modifications to this agreement, without the need for City Council approval. D. Ownership. The real property, improvements, all permanent fixtures, and landscaping shall become and remain the property of Lessor. Any personal property stored at the Premises (e.g. furniture, pictures, clothing, etc.) shall remain the property of the party that supplied it. E. Permitted Uses. The Premises shall be used by the Lessee for the primary purpose of enhancing the historical and cultural place Tukwila holds in the region by collecting, preserving, and displaying collections, artifacts and digital information pertaining to Tukwila's past, and to be an educational resource for future generations. To that end, the Lessee may: 1. Improve and renovate the Premises, with the Lessor's oversight, so as to use the Heritage Center as an historic and cultural resource for the citizens of Tukwila; 2. Rent the Premises, in accordance with Section III.F. F. Rental of Space. In order to generate funds to support and to sustain the Tukwila Historical Society, the Lessee is permitted to rent the premise out to an organization and /or individual (hereinafter, "Renter ") for special events, subject to the following: 1. No single rental may have a duration greater than 72 hours. 2. The Lessee shall obtain and maintain all required permits necessary to conduct events on the site. The Lessee is required to fully comply with all building, fire, and other applicable life safety code regulations. 3. The Lessee shall ensure that Renters do not significantly impact the surrounding residential neighborhood. Rental activities may only take place between the hours of 8:00 AM and 10:00 PM. 4. City of Tukwila sponsored events shall not be charged a fee for use of the Premises. Lessor shall work with the Lessee on scheduling City sponsored events. 5. Termination of Right to Rent: i. The Lessor may, at its sole discretion and absolute authority, terminate Lessee's right to rent the premises in the event the Lessee's actions or the Renter's actions pose a threat to health or safety, or to the physical structure of the building. The Lessor shall provide the Lessee notice of termination, and the termination is effective immediately. The Lessor has sole discretion and absolute authority to determine whether the Lessee's actions or the Renter's actions pose a threat to health or safety, or to the physical structure of the building. Lessor shall not be responsible for loss of rental income or reimbursement of rental funds due to Lessor's exercise of this provision. 2 16 DRAFT, March 3, 2016 ii. The Lessor may terminate Lessee's right to rent the premises for any violation of the terms of this agreement as follows: 1. A written warning will be mailed to the Lessee for the first, second and third violations, specifying the non - compliance. 2. If the Lessee receives four violations within a three hundred sixty five day period (365) day period, calculated from the date of the issuance of the first violation, the Lessor may issue a Notice of Termination to the Lessee, indicating the intention of the Lessor to terminate the Lessee's right to rent the premises not less than thirty (30) days after the receipt of the Notice. The Lessor has sole discretion and absolute authority to determine whether a violation has occurred. Lessor shall not responsible for loss of rental income or reimbursement of rental funds due to Lessor's exercise of this provision. iii. The Lessor may terminate Lessee's right to rent the premises for any reason whatsoever, provided the Lessee issues a Notice of Termination to the Lessee, indicating the intention of the Lessor to terminate the Lessee's right to rent the premises not less than one (1) year after the receipt of the Notice. Lessor has sole discretion and absolute authority to determine whether to terminate Lessee's right to rent the premises. Lessor shall not responsible for loss of rental income or reimbursement of rental funds due to Lessor's exercise of this provision. Lessor may, at its sole discretion, terminate Lessee's right to rent the premises in accordance with Sections F.5.i. and F.5.ii of this agreement at any time, even where a Notice of Termination has been issued pursuant to Section F.5.iii. of this agreement. 6. The Lessee shall require all Renters to execute a rental agreement that: i. States that the City of Tukwila is not a party to the rental agreement; ii. States that the Renter shall defend, indemnify, and hold harmless the City of Tukwila, 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 the Renter's use of the Site, except only such injury or damage as shall have been occasioned by the sole negligence of the City of Tukwila. 7. A template of the rental agreement must be provided to the Lessor for review and approval prior to the first rental of the Premises. G. Acceptance of Premises. Lessee has examined the Premises and accepts them in their present condition. H. Lessee's Responsibilities. In exchange for Lessor providing the Lessee use of the premise at no charge, Lessee shall: 3 17 DRAFT, March 3, 2016 1. Use and occupancy of the Premises shall at all times be consistent with applicable building, fire, and sign code requirements. 2. Continue to work to secure funding, available grants, and private contributions to complete any tenant improvements or restoration upgrades to the Premises. Proposed improvements include, but are not limited to, completing additional bathroom upgrades; and restoring the interior lighting to be more historically appropriate for the building. 3. Subject to the provisions of this Agreement, the Lessee shall design and implement improvements to the Premises. All work performed by the Lessee in, on, or about the Premises shall be subject to prior written review and approval of the Lessor. Materials and installation shall be provided by the Lessee except when structure and systems within the building are found to be in deficient condition. The lessor is under no obligation to repair any latent defects in the structure or systems within the building 4. Obtain all permits that may be necessary to perform such work and ensure all work shall be performed in a good and workmanlike manner. 5. Capital improvements must meet the City's Facility Plan and follow applicable guidelines of both state and national covenants related to the Premises' status as a registered historical landmark. 6. Keep the Premises and the immediate surrounding area neat, clean and in a sanitary condition. 7. Develop programing for children and youth to educate about the history of Tukwila and the Duwamish /Green River Valley. 8. Lessee shall maintain appropriate non - profit status and 501(c)(3) status with the Washington State Secretary of State Office and the United States Internal Revenue Service, including filing all required annual reports, registrations, and tax documents. Lessee shall provide documentation of same to Lessor, upon demand. I. Lessor's Responsibilities. 1. Lessor shall provide and pay for all utilities, routine janitorial, cleaning, and minor repairs. Lessor's responsibility for said minor repairs shall not to exceed $100.00 per month on average, or a total of $1,200 per year. 2. Lessor shall maintain and repair the building, including structural, electrical, mechanical and plumbing systems, as well as grounds and landscaping. Lessor retains absolute authority and discretion in determining what, if any maintenance is performed to the building. J. Hazardous Substances. Lessee shall not, without first obtaining Lessor's prior written approval, generate, release, spill, store, deposit, transport or dispose of (collectively "Release ") any hazardous substance, sewage, petroleum products, radioactive substances, medicinal, bacteriological, or disease - producing substances, hazardous materials, toxic substances or any pollutants or substances defined as hazardous or toxic in accordance with applicable federal, state, and /or 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 4 18 DRAFT, March 3, 2016 Substance it proposes to store on site and Lessor must accept the list or the Hazardous Substances cannot be stored on site. In the event, and only in the event, Lessor approvals Release of Hazardous Substances on Premises, Lessee agrees that such Release shall occur safely and in compliance with all applicable federal, state, and local laws and regulations. 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 fee, arising out of or in any way related to the Release by Lessee in, on or about the Premises occurring at any time after the effective date of this Lease Agreement to the full extent of Lessee's liability therefor. K. General Indemnification. Lessee shall defend, indemnify, and hold harmless the Lessor, 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 the Premises, or from the conduct of Lessee's business, or from any activity, work or thing done, permitted, or suffered by the Lessee in or about the Premises, except only such injury or damage as shall have been occasioned by the sole negligence of the Lessor. Lessee shall ensure that similar hold harmless language is included in any rental agreement, as discussed in Section III.F.6.iii. of this Lease Agreement. L. Subletting Space. Subletting the space by Lessee is strictly prohibited. M. Assignment. Neither party shall assign its rights or responsibilities under this Lease Agreement without the written authorization of the other party. Written authorization shall not be unreasonably withheld. N. Termination. 1. Pursuant to the terms and conditions of this Lease Agreement between the parties, this Lease Agreement may be terminated upon written mutual agreement between the parties hereto. 2. In the event Lessee violates any provision of this Lease Agreement, Lessor may terminate Lessee's use of the Premises upon thirty (30) days prior written notice. O. Liability Insurance. 1. Insurance Term. Lessee shall procure and maintain for the duration of the Lease 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 Premises. 2. No Limitation. The Lessee's maintenance of insurance as required by the Lease shall not be construed to limit the liability of the Lessee to the coverage provided by such insurance, or otherwise limit the Lessor's recourse to any remedy available at law or in equity. 3. Minimum Scope of Insurance. Lessee shall obtain insurance of the types described below: i. Commercial General Liability insurance shall be at least as broad as Insurance Services Office (ISO) occurrence form CG 00 01 and shall cover premises and 5 19 DRAFT, March 3, 2016 contractual liability. The Lessor shall be named as additional 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 at least as broad coverage. ii. Lessee shall maintain adequate insurance coverage for Lessee's personal property located at the premise. 4. Minimum Amounts of Insurance. Lessee shall maintain the following insurance limits: i. Commercial General Liability insurance shall be written with limits no less than $1,000,000 each occurrence, $2,000,000 general aggregate. ii. Personal property insurance shall be written covering the full value of Lessee's personal property with no coinsurance provisions. 5. Other Insurance Provisions. i. 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 the Lessor. Any Insurance, self- insurance, or insurance pool coverage maintained by the City of Tukwila shall be excess of the Lessee's insurance and shall not contribute with it. 6. Acceptability of Insurers. i. Insurance is to be placed with insurers with a current A.M. Best rating of not less than A, unless approved otherwise by Lessor in writing. 7. Verification of Coverage. i. Within ten (10) days of execution of the Lease, Lessee shall furnish the Lessor 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. 8. Waiver of Subrogation. i. Lessee and Lessor 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. 9. Lessors Property Insurance. i. Lessor shall purchase and maintain during the term of the lease all -risk property insurance covering the Building for its full replacement value without any coinsurance provisions. 6 20 DRAFT, March 3, 2016 10. Notice of Cancellation. i. Lessee shall provide the Lessor with written notice of any policy cancellation, within two (2) business days of their receipt of such notice. 11. Failure to Maintain Insurance. i. Lessee shall provide proof of liability insurance coverage at any time upon request by the Lessor. ii. Failure on the part of Lessee to maintain the insurance as required shall constitute a material breach of Lease, upon which the Lessor may, after giving five 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 Lessor on demand. 12. Lessor Full Availability of Lessee Limits. i. If Lessee maintains higher insurance limits than the minimums shown above, the Lessor shall be insured for the full available limits of Commercial General and Excess or Umbrella liability maintained by the Lessee, irrespective of whether such limits maintained by the Lessee are greater than those required by this contract or whether any certificate of insurance furnished to the Lessor evidence limits of liability lower than those maintained by the Lessee. P. Anti - Discrimination. In all hiring, employment, or provision of services made possible resulting from this Lease Agreement between the parties, Lessee shall not discriminate against any employee, applicant for employment or any person seeking service of Lessee on the basis of race, religion, creed, color, national origin, age, veteran status, sex, sexual orientation, gender identity, marital status, political affiliation or the presence of any disability. Q. Liens. Lessee shall keep the Premises free from liens arising out of obligations incurred by Lessee. Upon written request from Lessor, Lessee will furnish written proof of payment of any charge which, if not paid, could provide the basis for a lien on the Premises. R. Access for Inspection or Upkeep. Lessor reserves the right to inspect and maintain the Premises, at a reasonable time and upon responsible notice. Lessee may be present during any and all inspections and /or maintenance. Lessor reserves the right to access the Premises in the event of an emergency, without advance notice to Lessee. S. Compliance with All Laws and Regulations. In using the Premises, Lessee shall comply with all applicable laws, ordinances and regulations form any and all authorities have jurisdiction. T. Entire Agreement; Modification. This Agreement, together with attachments or addenda, constitutes the entire and integrated Lease Agreement between the Lessee and the Lessor and supersedes all prior negotiations, representations, or agreements written or oral. No amendment or modification of this Lease Agreement shall be of any force or effect unless it is in writing and signed by the parties. 7 21 DRAFT, March 3, 2016 U. Severability and Survival. If any term, condition or provision of this Lease Agreement 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 Agreement, which by their sense and context are reasonably intended to survive the completion, expiration or cancellation of this Agreement, shall survive termination of this Agreement. V. Police Power. Nothing in this Agreement shall be construed to diminish, restrict or limit the police powers of the City of Tukwila granted by the Washington State Constitution or by general law. W. No Presumption Against Drafter. This Agreement has been reviewed and revised by legal counsel for both Parties and no presumption or rule that ambiguity shall be construed against the party drafting the document shall apply to the interpretation or enforcement of this Agreement. X. Legal Representation. In entering into this Agreement, Lessee represents that it has been advised to seek legal advice and counsel from its attorney concerning the legal consequences of this Lease Agreement; that it has carefully read the foregoing Lease Agreement and knows the contents thereof, and signs the same of its own free act; and that it fully understands and voluntarily accepts the terms and conditions of this Lease Agreement. Y. Notices. Any written notice required or permitted to be given herein shall be made by registered or certified mail, or by delivery in person to the party which is intended recipient of the notice, at the following addresses or to such other respective addresses as either party hereto may from time to time designate in writing: Notices to the Lessor /City of Tukwila shall be sent to the following address: City Clerk, City of Tukwila 6200 Southcenter Blvd. Tukwila, Washington 98188 With a Copy to: Office of the Mayor 6200 Southcenter Blvd. Tukwila, Washington 98188 Notices to the Lessee /Tukwila Historical Society shall be sent to the following address: President, Tukwila Historical Society Tukwila Heritage and Cultural Center 14475 59th Ave South Tukwila, Washington 98168 Z. 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 8 22 DRAFT, March 3, 2016 and agree that venue shall be properly laid in King County, Washington. Each party shall be responsible for its own legal cost incurred in enforcing any provision of this Lease Agreement. DATED this day of , 20_ LESSOR /CITY OF TUKWILA LESSEE /TUKWILA HISTORICAL SOCIETY By: Mayor, Allan Ekberg Printed Name and Title ATTEST /AUTHENTICATED: City Clerk, Christy O'Flaherty APPROVED AS TO FORM: Office of the City Attorney 9 23 24 Exhibit A Old Tukwila City Hall 25