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HomeMy WebLinkAboutMontana Commercial Lease Agreement with Gallatin County Commission Memorandum REPORT TO: Honorable Mayor and Commission Members FROM: Chuck Winn, Assistant City Manager Anna Rosenberry, City Finance Director Greg Sullivan, City Attorney SUBJECT: Lease of Law & Justice Center Space for Second Municipal Court MEETING DATE: July 13, 2007 RECOMMENDATION: Authorize City Manager to sign agreement with Gallatin County to lease 1710 square feet within the Law & Justice Center for second municipal court, subject to minimal changes for legal review. BACKGROUND: As previously discussed, space constraints at the Law and Justice Center, and increased workload in the City’s municipal court, necessitate the relocation of the current courtroom, court clerk’s office, and the addition of a second municipal courtroom. This is anticipated to be 4-5 year temporary solution until a new municipal police and court facility is built. The FY09 budget contained $200,000 for this purpose. Included in this budget were the costs of lease payments, any necessary leaseholder improvements, and the operational costs of the second court, including the salary of a part-time judge. We entered into negotiations with a local property owner to lease approximately 6000 square feet on Valley Commons Drive. Leasing that space would have required significant remodel expenses to relocate both courts, staff work area, jury deliberation rooms, and court support areas, as well as require an annual lease payment of approximately $100,000. Additionally, the County indicated that they would not let us out of our current lease for the space presently used by the Municipal Court. In September or October of 2009, the 9-1-1 Center anticipates moving to their new location and will vacate their current space after the move. The County has offered to lease the City the 1710 square feet currently used by the 9-1-1 Center for $25,855 annually. Keeping the two municipal courts together in the same building with other courts is a better option than relocating one or both courts off-site and has the support of Judge Seel. FISCAL EFFECTS: The lease of space under this agreement represents a substantial savings from our previous plan at the Valley Commons property. The FY09 court budget included 131 $200,000 for the relocation of the current court, addition of a second court and the salary for a part-time municipal court judge. Because we used the City Commission Room as a temporary location for the second court, we did not expend the money allocated for relocation of the courts. Approximately $8,300 was spent on the part-time judge's salary and $5,500 on additional computer hardware, leaving a balance of $186,200 unspent at the end of FY09. The FY10 City Manager's recommended budget contains $100,000 for court leased space. At the time that budget was developed, this figure represented the anticipated annual lease costs for the Valley Commons property. Locating the second court in the space vacated by 9-1-1 for $25,855/year (including utilities and janitorial services) frees up $74,145 in the FY10 budget. Some interior remodeling needs to be done to make the space suitable for the courts. These costs are unknown at this time, but will be available prior to final budget adoption in mid- September. The lease price increases each July by the most recent December to December increase in the Consumer Price Index - Unadjusted, All Urban Consumers, and expires in June 30, 2012 (~3 years.) It can be extended at our option for an additional 3 years. ALTERNATIVES: As suggested by the City Commission. 132 Montana Commercial Lease Agreement This Commercial Lease Agreement ("Lease") is made and effective 6/15/09, by and between Gallatin County ("Landlord") and City of Bozeman ("Tenant"). Landlord is the owner of land and improvements commonly known and numbered as 615 South 16th Street, Bozeman, Mt 59715 and legally described as follows (the "Building"): Law and Justice Building. Landlord makes available for lease a portion of the Building designated as current space (approximately 1,710 square feet) occupied by 911 Communications Department, Room 101 (the "Leased Premises"). Landlord desires to lease the Leased Premises to Tenant, and Tenant desires to lease the Leased Premises from Landlord for the term, at the rental and upon the covenants, conditions and provisions herein set forth. THEREFORE, in consideration of the mutual promises herein, contained and other good and valuable consideration, it is agreed: 1. Term. A. Landlord hereby leases the Leased Premises to Tenant, and Tenant hereby leases the same from Landlord, for an "Initial Term" beginning October 1, 2009 and ending June 30, 2012. Landlord shall use its best efforts to give Tenant possession as nearly as possible at the beginning of the Lease term. If Landlord is unable to timely provide the Leased Premises, rent shall abate for the period of delay. Tenant shall make no other claim against Landlord for any such delay. B. Tenant may renew the Lease for one extended term of 36 months. Tenant shall exercise such renewal option, by giving written notice to Landlord not less than ninety (90) days prior to the expiration of the Initial Term. The renewal term shall be at the rental set forth below and otherwise upon the same covenants, conditions and provisions as provided in this Lease. 2. Rental. A. Tenant shall pay to Landlord during the first year of the Initial Term a rental of $25,855.00 per year, payable in installments of $6,463.75 per quarter. This rental rate is fixed for the term of the agreement, increased on each July 1 by the amount of the most recent December to December increase in the Consumer Price Index – unadjusted, All Urban Consumers. Each quarterly installment payment for the previous quarter shall be due on or before the following dates: September 21, December 21, March 21, June 21 during the lease term to Landlord at Gallatin County Facilities, 311 W. Main Street, Room 304, Bozeman, Mt, 59715 or at such other place designated by written notice from Landlord or Tenant. The rental payment amount for any partial calendar months included in the lease term shall be prorated on a daily basis. B. The rental for any renewal lease term, if created as permitted under this Lease, shall be a negotiated price agreed to ninety (90) days prior to the expiration of the Initial Term. 133 3. Use Notwithstanding the forgoing, Tenant shall not use the Leased Premises for the purposes of storing, manufacturing or selling any explosives, flammables or other inherently dangerous substance, chemical, thing or device. 4. Sublease and Assignment. Tenant shall not sublease all or any part of the Leased Premises, or assign this Lease in whole or in part without Landlord's consent, such consent not to be unreasonably withheld or delayed. 5. Repairs. During the Lease term, Landlord shall make routine repairs to the Leased Premises. Routine repairs shall include such items lighting repair & replacement, plumbing, and heat and air conditioning. Other parts of the Leased Premises damaged or worn through normal occupancy, except for other major mechanical systems or the roof, subject to the obligations of the parties otherwise set forth in this Lease are the responsibility of the Tenant. 6. Alterations and Improvements. Tenant, at Tenant's expense, shall have the right following Landlord's consent to remodel, redecorate, and make additions, improvements and replacements of and to all or any part of the Leased Premises from time to time as Tenant may deem desirable, provided the same are made in a workmanlike manner and utilizing good quality materials. Any and all alterations to this space must meet all applicable local building codes and any expenses associated with the alterations/improvements shall be the responsibility of the Tenant. These expenses are not limited to the Leased Premises and include any associated building changes required from the alterations and improvements. Tenant shall have the right to place and install personal property, trade fixtures, equipment and other temporary installations in and upon the Leased Premises, and fasten the same to the premises. (Space heaters are not permitted). All personal property, equipment, machinery, trade fixtures and temporary installations, whether acquired by Tenant at the commencement of the Lease term or placed or installed on the Leased Premises by Tenant thereafter, shall remain Tenant's property free and clear of any claim by Landlord. Tenant shall have the right to remove the same at any time during the term of this Lease provided that all damage to the Leased Premises caused by such removal shall be repaired by Tenant at Tenant's expense. 7. Property Taxes. Landlord shall pay, prior to delinquency, all general real estate taxes and installments of special assessments coming due during the Lease term on the Leased Premises, and all personal property taxes with respect to Landlord's personal property, if any, on the Leased Premises. Tenant shall be responsible for paying all personal property taxes with respect to Tenant's personal property at the Leased Premises. 8. Insurance. 134 A. If the Leased Premises or any other part of the Building is damaged by fire or other casualty resulting from any act or negligence of Tenant or any of Tenant's agents, employees or invitees, rent shall not be diminished or abated while such damages are under repair, and Tenant shall be responsible for the costs of repair not covered by insurance. B. Landlord shall maintain fire and extended coverage insurance on the Building and the Leased Premises in such amounts as Landlord shall deem appropriate. Tenant shall be responsible, at its expense, for fire and extended coverage insurance on all of its personal property, including removable trade fixtures, located in the Leased Premises. C. Tenant and Landlord shall, each at its own expense, maintain a policy or policies of comprehensive general liability insurance with respect to the respective activities of each in the Building with the premiums thereon fully paid on or before due date, issued by and binding upon some insurance company approved by Landlord, such insurance to afford minimum protection of not less than $1,500,000 combined single limit coverage of bodily injury, property damage or combination thereof. Tenant shall provide Landlord with current Certificates of Insurance evidencing Tenant's compliance with this Paragraph. Tenant shall obtain the agreement of Tenant's insurers to notify Landlord that a policy is due to expire at least (10) days prior to such expiration. Landlord shall not be required to maintain insurance against thefts within the Leased Premises or the Building. 9. Utilities. Landlord shall pay all charges for water, sewer, gas and electricity used by Tenant on the Leased Premises during the term of this Lease unless otherwise expressly agreed in writing by Landlord. Tenant acknowledges that the Leased Premises are designed to provide standard office use electrical facilities and standard office lighting. Tenant shall not use any equipment or device that utilizes excessive electrical energy or which may, in Landlord's reasonable opinion, overload the wiring or interfere with electrical services to other tenants. 10. Janitorial. Landlord shall pay for and provide nightly janitorial services Monday through Friday each week. 11. Signs. Following Landlord's consent, Tenant shall have the right to place on the Leased Premises, at locations selected by Tenant, any signs which are permitted by applicable zoning ordinances and private restrictions. Landlord may refuse consent to any proposed signage that is in Landlord's opinion too large, deceptive, unattractive or otherwise inconsistent with or inappropriate to the Leased Premises or use of any other tenant. Landlord shall assist and cooperate with Tenant in obtaining any necessary permission from governmental authorities or adjoining owners and occupants for Tenant to place or construct the foregoing signs. Tenant shall repair all damage to the Leased Premises resulting from the removal of signs installed by Tenant. 12. Entry. 135 Landlord shall have the right to enter upon the Leased Premises at reasonable hours to inspect the same or after hours to provide janitorial services, provided Landlord shall not thereby unreasonably interfere with Tenant's business on the Leased Premises. 12. Parking. During the term of this Lease, Tenant shall have the non-exclusive use in common with Landlord, other tenants of the Building, their guests and invitees, of the non-reserved common automobile parking areas, driveways, and footways, subject to rules and regulations for the use thereof as prescribed from time to time by Landlord. Landlord reserves the right to designate parking areas within the Building or in reasonable proximity thereto, for Tenant and Tenant's agents and employees. Landlord to pay for and provide snow removal services from the parking areas and sidewalks. 13. Damage and Destruction. Subject to Section 8 A. above, if the Leased Premises or any part thereof or any appurtenance thereto is so damaged by fire, casualty or structural defects that the same cannot be used for Tenant's purposes, then Tenant shall have the right within ninety (90) days following damage to elect by notice to Landlord to terminate this Lease as of the date of such damage. In the event of minor damage to any part of the Leased Premises, and if such damage does not render the Leased Premises unusable for Tenant's purposes, Landlord shall promptly repair such damage at the cost of the Landlord. In making the repairs called for in this paragraph, Landlord shall not be liable for any delays resulting from strikes, governmental restrictions , inability to obtain necessary materials or labor or other matters which are beyond the reasonable control of Landlord. Tenant shall be relieved from paying rent and other charges during any portion of the Lease term that the Leased Premises are inoperable or unfit for occupancy, or use, in whole or in part, for Tenant's purposes. Rentals and other charges paid in advance for any such periods shall be credited on the next ensuing payments, if any, but if no further payments are to be made, any such advance payments shall be refunded to Tenant. The provisions of this paragraph extend not only to the matters aforesaid, but also to any occurrence which is beyond Tenant's reasonable control and which renders the Leased Premises, or any appurtenance thereto, inoperable or unfit for occupancy or use, in whole or in part, for Tenant's purposes. 15. Default. If default shall at any time be made by Tenant in the payment of rent when due to Landlord as herein provided, and if said default shall continue for fifteen (15) days after written notice thereof shall have been given to Tenant by Landlord, or if default shall be made in any of the other covenants or conditions to be kept, observed and performed by Tenant, and such default shall continue for thirty (30) days after notice thereof in writing to Tenant by Landlord without correction thereof then having been commenced and thereafter diligently prosecuted, Landlord may declare the term of this Lease ended and terminated by giving Tenant written notice of such intention, and if possession of the Leased Premises is not surrendered, Landlord may reenter said premises. Landlord shall have, in addition to the remedy above provided, any other right or remedy available to Landlord on account of any Tenant default, either in law or equity. Landlord shall use reasonable efforts to mitigate its damages. 136 16. Quiet Possession. Landlord covenants and warrants that upon performance by Tenant of its obligations hereunder, Landlord will keep and maintain Tenant in exclusive, quiet, peaceable and undisturbed and uninterrupted possession of the Leased Premises during the term of this Lease. 17. Condemnation. If any legally, constituted authority condemns the Building or such part thereof which shall make the Leased Premises unsuitable for leasing, this Lease shall cease when the public authority takes possession, and Landlord and Tenant shall account for rental as of that date. Such termination shall be without prejudice to the rights of either party to recover compensation from the condemning authority for any loss or damage caused by the condemnation. Neither party shall have any rights in or to any award made to the other by the condemning authority. 18. Subordination. Tenant accepts this Lease subject and subordinate to any mortgage, deed of trust or other lien presently existing or hereafter arising upon the Leased Premises, or upon the Building and to any renewals, refinancing and extensions thereof, but Tenant agrees that any such mortgagee shall have the right at any time to subordinate such mortgage, deed of trust or other lien to this Lease on such terms and subject to such conditions as such mortgagee may deem appropriate in its discretion. Landlord is hereby irrevocably vested with full power and authority to subordinate this Lease to any mortgage, deed of trust or other lien now existing or hereafter placed upon the Leased Premises of the Building, and Tenant agrees upon demand to execute such further instruments subordinating this Lease or attorning to the holder of any such liens as Landlord may request. In the event that Tenant should fail to execute any instrument of subordination herein require d to be executed by Tenant promptly as requested, Tenant hereby irrevocably constitutes Landlord as its attorney-in-fact to execute such instrument in Tenant's name, place and stead, it being agreed that such power is one coupled with an interest. Tenant agrees that it will from time to time upon request by Landlord execute and deliver to such persons as Landlord shall request a statement in recordable form certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as so modified), stating the dates to which rent and other charges payable under this Lease have been paid, stating that Landlord is not in default hereunder (or if Tenant alleges a default stating the nature of such alleged default) and further stating such other matters as Landlord shall reasonably require. 19. Defend, Hold Harmless and Indemnify. The parties shall mutually hold harmless, indemnify and defend the other regarding any and all liability, claims, actions, causes of action, damages, or other losses which may arise by virtue of a party’s respective negligent or intentional acts or omissions occurring on, or with respect to, the Property. This indemnification obligation shall survive the termination of this agreement for the greater of a period of THREE (3) YEARS or the expiration of any applicable statute of limitations. 137 20. Severability; Integration; Amendment; Non-Waiver; Binding Effect. (a) All provisions of this agreement shall be read together to give full effect to the plain meaning and intention of the parties. If any provision is deemed unenforceable, then the remainder shall continue in full force and effect and be binding on the parties hereto, their heirs, personal representatives, and assigns. (b) This agreement supersedes all prior and/or contemporaneous oral or written agreements and understandings of the parties. (c) Any modification or amendments to this agreement must be in writing and fully executed by all parties in order to be effective. (d) No delay, failure to act or election of remedies shall be deemed a waiver of any rights or remedies, legal or equitable, as may be available to a party. (e) This agreement is valid, enforceable and binding on the parties, and the parties’ heirs, representatives, trustees, assigns, successors, insurers, or member managers. (f) Execution of this agreement shall constitute and have the effect of a full general release, hold harmless and indemnification of any claims of any kind or nature whatsoever regarding any prior lease agreements for the same premises or part thereof. 21. Attorney’s Fees, Venue & Choice of Law. The prevailing party in any action to enforce any of the terms or conditions of this agreement shall be entitled to all its costs incurred in such action, including its reasonable attorney’s fees and expert witness fees. Venue for any action shall be in the 18th Judicial District Court, Gallatin County, Montana. Law of the state of Montana shall control. 22. Notice of Claims. Within THIRTY (30) calendar days of the conclusion of each lease-year (twelve month period) of the Term of this Lease, each party shall furnish to the other a statement in writing of any and all claims and/or demands as it believes it may have as against the other party arising out of the other party’s default under this Lease, as to which a formal notice of default has not previously been given. If a party fails to give such notice within such THIRTY (30) day period of any such claims or demand concerning circumstances which are known to the party giving notice, or which would be ordinarily discoverable by means of a party’s visual inspection of the Property, then any such claims and or demands arising out of the preceding twelve month period shall be deemed forever waived and barred, and such party shall be estopped from making such claims or demands relating to such preceding twelve month period at all times in the future, except claims or demands for failure to pay rent or other sums due or owing to the Landlord. 23. Counterparts and Facsimile Execution. This agreement may be executed in counterpart and each separate executed copy taken together, shall constitute one and the same instrument. Signatures of the parties on this 138 instrument, or any counterpart thereof, transmitted by facsimile shall be valid and binding as originals. 24. Notice. Any notice required or permitted under this Lease shall be deemed sufficiently given or served if sent by United States certified mail, return receipt requested, addressed as follows: to Landlord: Gallatin County, 311 W . Main Street, Room 304, Bozeman, MT 59715 Landlord: Tenant: Gallatin County County Commission City of Bozeman ____________________________ ______________________________ Dated & Notarized:__________________ Dated & Notarized:__________________ 139