HomeMy WebLinkAboutReg 2012-05-21 Item 5C - Agreement - 15-Year Lease with Clear Channel Outdoor for Digital BillboardCOUNCIL AGENDA SYNOPSIS
Initials ITEM NO.
Meeting Date Prepared by Mayor's review Council review
05/21/12 BM 5.C.
ITEM INFORMATION
ISTAFF SPONSOR: BRANDON MILES I ORIGINAL AGENDA DATE: 5/21/12
AGENDA ITEM TITLE Authorizing the Mayor to enter into a lease agreement (in substantial form) with
Clear Channel Outdoors (CCO) for the construction of a digital billboard on City
owned property.
CATEGORY Discussion Motionl Consent Resolution Ordinance Bid Award Public Hearing Other
Mt g Date Mtg Date 5/21/12 Mtg Date Mtg Date Mtg Date Mtg Date Mt Date
SPONSOR Council Mayor HR DCD Finance Fire IT P&R Police PW
SPONSOR'S Last year the City Council authorized a lease agreement, which has since expired, for Clear
SUMMARY Channel Outdoor to lease a City owned property at the NE corner of West Valley Highway
and S. 180 street. Clear Channel Outdoor has requested that the City renew the lease
agreement and will pay the City $25,000 per year in rent. The rent amount will increase
every five years.
REVIEWED BY COW Mtg. CA &P Cmte F &S Cmte Transportation Cmte
Utilities Cmte Arts Comm. Parks Comm. Planning Comm.
DATE: 5/14/12 COMMITTEE CHAIR: HOUGARDY
RECOMMENDATIONS:
SPONSOR /ADMIN. Department of Community Development
COMMITTEE Unanimous Approval; Forward to Consent Agenda
COST IMPACT/ FUND SOURCE
EXPENDITURE REQUIRED
$0
AMOUNT BUDGETED
$0
APPROPRIATION REQUIRED
$0
Fund Source:
Comments: The proposed agreement will provide the City over $400,000 in revenue over 15 years
MTG. DATE I RECORD OF COUNCIL ACTION
5/21/12
MTG. DATE I ATTACHMENTS
05/21/12 Informational Memorandum dated 5/8/12
Draft Lease Agreement
Aerial Map of Site
Informational Memornadum dated 3/1/11
Memorandum of Understanding with CCO for use of the billboard structure
Minutes from the Community Affairs and Parks Committee meeting of 5/14/12
39
.s
City of Tukwila
Jim Haggerfon, Mayor
INFORMATIONAL MEMORANDUM
TO: Mayor Haggerton
Community Affairs and Parks Committee
FROM: Jack Pace, DCD Director
BY: Brandon J. Miles, Senior Planner
DATE: May 8, 2012
SUBJECT: Leasing of City Property to Clear Channel
ISSUE
Should the City renew a lease agreement (See attachment) with Clear Channel Outdoor (CCO)
for the construction and operation of a digital billboard on City owned property along West
Valley Highway?
BACKGROUND
On April 4, 2011, the City Council approved a lease agreement with CCO to install and operate
a diq�ital billboard on a parcel owned by the City at the NE corner of West Valley Highway and S.
180 Street (See attached map). That agreement required that CCO construct the billboard
within one year of mutual execution. This has not occurred and thus the agreement approved
by the City Council in April of 2011 is void. CCO has requested that the City enter into a new
lease agreement. Attached with this memo is a draft lease agreement for consideration by the
City Council. The basic terms of the draft lease agreement are similar to the agreement
approved by the City Council last April.
1. CCO will pay the City an annual 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, commencing on July 1, 2012. After the
initial term, the City and CCO can enter into a new agreement if the parties choose;
3. If necessary, the City will credit $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 leases the property.
4. CCO is required to obtain all other governmental approvals for the construction and
operation of the billboard structure.
The new lease agreement replaces the requirement that the structure be built within one year
and instead states that it must be built by January 1, 2013.
The only question being asked of the City 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 Title 19 of the Tukwila Municipal Code (TMC) 19.38. In this chapter of the sign code, the
City specifically 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.
►E
INFORMATIONAL MEMO
Page 2
CCO has obtained a sign permit application to install a one sided billboard structure on the City
property. As part of the permit process, CCO identified the following billboards to be removed in
the City:
Clear Channel Outdoor Panel Number(s) I King County Parcel Number
#17204 and #17205 I #032304 -9046
#22041 I #735960 -0876
#22166 and #22167 I #004100 -0130
Two of the billboards listed above have already been removed. The billboard located on parcel
number #735960 -0876 is located on the old Newporter site, which is owned by the City.
The removal sites are not included in the Lease Agreement because the requirement is
specified by adopted City Code. CCO would still be required to remove billboard structures if
the proposed digital billboard was located elsewhere in the billboard receiving zone.
As required by the TMC, CCO has also made the billboard structure available for City use (See
attached agreement). The City is allowed 28 -days of message area for City events (i.e. Family
Forth at the Fort and the Backyard Wildlife Fair, etc) and the City is granted unlimited use of the
digital billboard for emergency alerts (i.e. Amber Alerts or Evacuation Orders). The digital
billboard is also available to be used by other regional public safety agencies, such as the King
County Sherriff's Office or Washington State Department of Emergency Management.
ANALYSIS
The subject property has an assessed value of $115,500 The proposed Lease Agreement will
generate over $400,000 in revenue for the city over the 15 -year term, while at the same time
allowing the City to retain the property for 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.
FINANCIAL IMPACT
The City's general fund will receive over $400,000 in lease income from the lease agreement
with CCO.
RECOMMENDATION
The Council is being asked to authorize the Mayor to enter into a Lease Agreement (in
substantial form) with CCO. Staff is requesting that the Committee allow the agreement to be
placed on the May 21, 2012 consent agenda.
ATTACHMENTS
Draft Lease Agreement;
Aerial Map of Site;
Informational Memo dated March 1, 2011; and
Memorandum of Understanding between CCO and the City of Tukwila for use of the
billboard structure.
I Source: http: /gismaps. kingcounty .gov /parcelviewer2 /checkd online on May 8, 2012.
42 ZADCD n Clerk's \Brandon \Clear Channel\CAP, 2012.05.08 \InfoMemo.doc
oA5T�
CLEAR CHANNEL OUTDOOR LEASE AGREEMENT
Lease
1. This Lease Agreement "Lease is dated effective as of July 1, 2012, 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 situated in the City of Tukwila, County of
King in the State of Washington, whose permanent property tax number and legal description are attached hereto and
incorporated herein by reference as Exhibit A (the "Property"). The Property is leased for the purpose of erecting,
maintaining, operating, improving, supplementing, posting (whether physically, digitally or via other remotely changeable
technology), illuminating, repairing, repositioning and /or removing outdoor advertising structure, including, without
limitation, fixture connections, electrical and broadband supply and connections, panels, signs whether digital, static or
similar technologies), copy and any other equipment and accessories as Tenant may place thereon (collectively, the
"Structure This Lease includes all necessary rights of ingress and egress. Tenant may license the 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 (15) years, commencing on July 1, 2012. If for any
reason Tenant is unable to either complete construction of the Structure and /or fails to obtain the necessary
governmental authorizations to operate the Structure, Tenant may terminate this Lease immediately upon notice to
Landlord. If structure is not built by January 1, 2013 this lease agreement shall terminate. This Lease Agreement
shall not be construed as a building land use and /or public works permit. Tenant is responsible for obtaining
necessary city permits prior to constructing the structure. CLEAR CHANNEL shall have the right to terminate this
Lease at the end of any monthly period during the initial term or any subsequent term upon notice to Landlord served
not less than thirty (30) days prior to the end of any monthly period.
3. Tenant shall pay Landlord rent in the amount of Twenty Five Thousand Dollars ($25,000.00) per year payable in
full upon commencement of the term and each anniversary date thereafter for the period of time commencing on July 1,
2012. Annual rent shall increase by seven and one half percent (7.5 on the fifth (5 and tenth (10 anniversaries of
the Lease commencement. Tenant is responsible for payment of all applicable taxes.
4. This Lease shall continue in full force and effect for its initial term from July 1, 2012. During any term of this Lease
and for a period of ninety (90) days following the expiration or earlier termination of this Lease, Landlord hereby grants to
Tenant a right of first refusal, acceptance of which is exercisable at Tenant's sole discretion, to match the material terms
of any offer acceptable to Landlord for the use or purchase of all or any portion of the Property and /or to match the
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
investigation as are set forth in the Offer A copy of all relevant document(s) containing the Offer received by Landlord
shall be delivered to Tenant (the "Offer Documents Tenant shall then have twenty (20) days from its receipt of the Offer
Documents in which to match the material terms of the Offer by giving notice of acceptance to Landlord. If Tenant rejects
the Offer and the Property transfers pursuant to the terms of the Offer, Landlord shall promptly notify Tenant of such
transfer and provide Tenant with any relevant contact information and rental payment submission addresses of such new
owner of the Property. Prior to transferring ownership of the Property, Landlord shall furnish the new owner with a copy of
this Lease.
5. Tenant is and shall remain 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
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.
43
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 opinion: (a) the view of the Structure's advertising copy becomes entirely or partially obstructed, (b)
electrical service is unavailable; (c) the Property cannot safely be used for the 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 or past the Property; (f) the Structure's value for advertising
purposes is diminished; (g) Tenant is unable to obtain or maintain any necessary permit for the erection, use and /or
maintenance of the Structure; or (h) the Structure's use is prevented or restricted by law, then Tenant may immediately:
(i) contact the Landlord to negotiate a reduction in rent based on the direct proportionate loss suffered; or (ii) cancel this
Lease pursuant to paragraph 2 and receive all pre -paid rent for any unexpired term of this Lease. In addition, if Tenant is
prevented from illuminating its signs by law, or other cause beyond Tenant's control, the rent shall be reduced by one -third
for such period of non illumination. In the event that a request for rent reduction is made and a mutually agreeable
solution can not be reached in 30 days then Landlord may terminate the Lease 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 right -of -way from which the Structure is visible
is relocated; (c) if there is a diversion, reduction or change in directional flow of traffic from the street or streets currently
adjacent to or leading to or past the Property; (d) if visibility to the Structure is impaired; (e) if the value or utilization of the
Structure is reduced; (f) or the Structure's use is prevented or otherwise restricted, then Tenant shall have the right to
relocate the Structure on Landlord's remaining property or to terminate this Lease upon not less than thirty (30) days'
notice and to receive all pre -paid rent for any unexpired term of this Lease. Tenant shall be entitled to all compensation
and other remedies provided by law, including, without limitation, 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. Landlord shall assert no rights in such interests. If condemnation proceedings are initiated,
Landlord shall use its best efforts to include Tenant as a party thereto. No right of termination set forth anywhere in this
Lease may be exercised prior to the 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. Landlord represents that it is the owner (or owner's authorized agent) of the Property and has the authority to
enter into this Lease. Landlord makes no assurances, representations or guarantees that the necessary utilities and
infrastructure are available on the site for use by Tenant to operate a digital or static billboard. It is the tenant's
responsibility to secure all necessary utilities for its operation. 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 a neighboring property or Landlord will grant permission for Tenant to gain access over the
curb and sidewalk on the south end of the Property. In the event that a ramp needs to be constructed for safe truck
access to the Property Tenant shall construct such a 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
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's employees, agents, licenses and contractors and for all claims, demands, lawsuits for damages arising out of
Tenant's use of the Property.. 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.
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) by certified or registered mail, return receipt
requested, to such address; provided, that in either case notices shall be delivered to such other address as shall have
been specified in writing by such party to all parties hereto prior to the notice being delivered.
15. This Lease shall be governed exclusively by the provisions hereof and by the laws of the state in 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 right arising out of, this Lease may be brought against
any of the parties only in the courts within the county in which the Property 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 objection to venue laid therein. If suit is brought or an attorney is retained
by any party to this Lease because the other party breached this Lease, the prevailing party shall be entitled to
reimbursement for reasonable attorneys' fees and all related costs and expenses.
16. Neither Landlord nor Tenant shall be bound by any terms, conditions 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 previous agreement. 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:
CLEAR CHANNEL OUTDOOR, INC.
By:
Its:
DATE:
Branch Address:
i el No.
ATTEST /AUTHENTICATED
Christy O'Flaherty, CMC, City Clerk
Date approved by City Council
LANDLORD:
CITY OF TUKWILA
By:
Jim Haggerton, Mayor
DATE:
Printed Name of Landlord:
Address:
Tel No.
Tax ID No.
APPROVED AS TO FORM
City Attorney
ER
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
EN
Clear Channel Outdoor digital billboard lease aerial map
47
Fl.]
C it y o f T u kwila
Conxnunity Affairs and Parks C mrrittee
COMMUNITY AFFAIRS AND PARKS COMMITTEE Meeting Minutes
May 14, 2012 S: 00 p.m.
PRESENT
Councilmembers: Kathy Hougardy, Chair; Joe Duffle and Allan Ekberg
Staff. Jack Pace, Brandon Miles, Rick Still, Dave Johnson, Kirsten May and Kimberly Matej
CALL TO ORDER: Committee Chair Hougardy called the meeting to order at 5:01 p.m.
I. PRESENTATIONS
No presentations.
II. BUSINESS AGENDA
A. Leasing of City Pronertv for Digital Billboard Original Agreement Expired
Staff is seeking Council approval to enter into another 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. An
original lease agreement was approved by the City Council April 2011 (also see Community Affairs Parks
Committee minutes dated March 14, 2011).
Per the original agreement, CCO was required to construct the billboard within one year. The billboard has not
been built, the original agreement is now invalid, and CCO has request the City enter into a new agreement.
Essentially, the new lease agreement terms with Clear Channel Outdoor remain similar to the original lease:
Fifteen (15) year lease, termination clause and mutually renewable
Lease rate of $25,000 annually with a 7.5% increase every five years
CCO will provide property access, currently there is none
Structure must be built by January 1, 2013
Will remove a total of five billboard faces for every billboard constructed
Additionally, this agreement clarifies minor risk management issues that were not addressed in the original
contract. Staff anticipates the City will receive over $400,000 in revenue over the next 15 years as a result of this
agreement. UNANIMOUS APPROVAL. FORWARD TO MAY 21 CONSENT AGENDA.
B. Child and Adult Care Food Program
As information only, Parks and Recreation staff briefed the Committee on the federally funded Child and Adult
Care Food Program (CACFP), which reimburses qualifying programs for snacks and/or meals provided to
children. Tukwila will receive a reimbursement of $0.76 per snack provided in its programs. This will allow the
City flexibility to strengthen and better serve children through enhancing programs and providing even healthier,
well balanced snacks in City programs. INFORMATION ONLY.
C. Raikes Foundation Continuation Grant
As information only, staff provided details on the continuation of the Youth Program Quality Initiative (YPQI)
grant from the Raikes Foundation. Over the last three years, the Parks and Recreation Department has received a
total of $25,000 from the YPQI grant. The funding has been utilized to improve the Teen Program. Staff
anticipates receiving an additional $5,000 from this program which will be used to support the teen hip hop
dance program and new arts and crafts club. INFORMATION ONLY.
III. MISCELLANEOUS Meeting adjourned at 5:22 p.m.
Next meeting: Tuesday, May 29, 2012 5:00 p.m. Conference Room #3
q _Committee Chair Approval
Minute thy KAk'
i