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Home My WebLink AboutC5. Lease Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Carolyn Poissant – TOP Design and Development Manager Mitch Overton – Director of Parks and Recreation SUBJECT: Renewal of Lease Agreement with Montana Rail Link, Inc. for Story Mill Spur Trail MEETING DATE: October 19, 2015 AGENDA ITEM TYPE: Consent RECOMMENDATION: Approve the Renewal of Lease Agreement with Montana Rail Link, Inc. for the Story Mill Spur Trail (Attachment A) and authorize the City Manager to sign the Agreement RECOMMENDED MOTION: I hereby move to approve the Renewal of Lease Agreement with Montana Rail Link, Inc. for the Story Mill Spur Trail (Attachment A) and authorize the City Manager to sign the Agreement BACKGROUND: The Story Mill Spur Trail is an important trail corridor linking downtown and northeast Bozeman to the new Story Mill Community Park and trail networks in the north park of town. It will ultimately connect to Forest Service trails in the Bridger foothills via the Trail to the M and Drinking Horse Mountain TOP project. A Master Lease Agreement for the Story Mill Spur Trail was originally executed on July 21, 1987, which included a renewal term from April 1, 2008 through March 31, 2013. The Master Lease also includes and Option to Renew for the period of April 1, 2013 through March 31, 2018. In 2013 – 2014, City legal staff had been in the process of negotiating with Montana Rail Link for a longer term lease arrangement, which was not able to be finalized. A one-year lease extension was executed for the period of November 27, 2013 – November 26, 2014 (Attachment B). Montana Rail Link recently suggested that the Option to Renew for the term of April 1, 2013 through March 31, 2018 be exercised at this time in order to allow for additional negotiations to take place. Staff feels this is the appropriate action to take at this time. UNRESOLVED ISSUES: Further negotiations for a longer-term lease will continue. ALTERNATIVES: As Directed by Commission. FISCAL EFFECTS: The lease requires no financial contribution from the City to for the use of the trail. On-going maintenance is currently included in the Parks Department operations budget. 35 The Gallatin Valley Land Trust assists in maintaining the trail and the foot bridge over the East Gallatin River. ATTACHMENTS: Attachment A – Renewal of Lease Agreement with Montana Rail Link, Inc. For the period of April 1, 2013 – March 31, 2018 Attachment B – Previous Temporary Lease Agreement Report compiled on: September 23, 2015 36 Exercise of Option to Renew MRL Form 414 March 2014 Page 1 of 2 EXERCISE OF OPTION TO RENEW LEASE NO. 500,539 02BOZEMAN THIS EXERCISE OF OPTION TO RENEW ("Renewal Agreement") is dated as of the 24TH day of August, 2015 (the "Effective Date") between MONTANA RAIL LINK, INC., a Montana corporation ("Lessor"), whose mailing address is PO Box 16624, Missoula, MT 59808-6624 and physical address is 101 International Way, Missoula, MT 59808 and City of Bozeman, ("Lessee"), whose address is PO Box 1230, Bozeman, MT 59771 RECITALS A. Lessor is in the railroad transportation business and leases a system of rail tracks ("Lessor's Track(s)") and various real properties associated therewith from BNSF Railway Company, a Delaware corporation ("BNSF"), pursuant to that certain Agreement between Lessor and BNSF dated July 21, 1987 ("Master Lease"), including the Premises described below which Lessee desires to further lease from Lessor. B. Lessee and Lessor entered into a Definite Term Lease Agreement for Land ("Lease") on April 1, 1998. C. By the terms and provisions of the Lease, Lessor leases to Lessee and Lessee leases from Lessor that certain property located at City of Bozeman, County of Gallatin, State of Montana, Mile Post 0+3678, Survey Station 36+78, as more particularly described in the Lease ("Premises"). D. The current Term of the Lease for the Premises commenced on April 1, 2008 and expired on March 31, 2013. E. The Lease contains an option to renew ("Option") pursuant to the Addendum For Renewal Option attached to the Lease. The renewal period shall commence as of April 1, 2013 and expire on March 31, 2018. F. Lessee desires to exercise the Option and Lessor and Lessee desire to extend the Term of the Lease pursuant to the terms set forth below in this Renewal Agreement. AGREEMENTS NOW, THEREFORE, in consideration of the mutual covenants, premises, and agreements contained in this Renewal Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Lessee hereby exercises the Option, and Lessor and Lessee hereby extend the Term of the Lease for a period of five (5) years (the "Extended Term") under the same terms and conditions set forth in the Lease except as otherwise provided herein. 2. The Extended Term will commence as of April 1, 2013 and shall expire on March 31, 2018. 3. During the Extended Term, Rent shall be at an annual rate of zero ($0.00). 4. Rent for the Extended Term shall be adjusted as provided in the Lease. 5. This Renewal Agreement and the Lease are subject and subordinate to the Master Lease. BNSF by its signature below acknowledges Lessee’s rights under the Lease, if, prior to the termination of the Lease, or to the expiration of the term of the Lease, the term of the Master Lease expires, the Master Lease is terminated or BNSF reenters and repossesses the Premises after a default by Lessor under the Master Lease. If BNSF succeeds to the rights of Lessor as the "Lessor" under the Lease, Lessee agrees that (i) BNSF shall not be liable or responsible for any breach of or default under the Lease arising prior to the date that BNSF succeeds to the rights of Lessee as the "Lessor" under the Lease; (ii) BNSF shall not be required to cure or correct any breach or default under the Lease arising prior to the date that BNSF succeeds to the rights of Lessor as the "Lessor" under the Lease; and (iii) no breach of or default under the Lease arising prior to the date that BNSF succeeds to the rights of Lessor as the "Lessor" under the Lease shall excuse, delay, release or relieve Lessee from the payment and performance of all of Lessee’s duties and obligations under the Lease. The preceding sentence is not intended and shall not be construed to affect any rights or remedies of Lessee against Lessor arising or resulting from a breach of or default under the Lease by Lessor prior to the date that BNSF succeeds to the rights of Lessor as the "Lessor" under this Lease. If BNSF succeeds to the rights of Lessor as the "Lessor" under this Lease, Lessee agrees to recognize BNSF as the "Lessor" under the Lease and timely tender payment 37 Exercise of Option to Renew MRL Form 414 March 2014 Page 2 of 2 and performance of Lessee’s duties and obligations under the Lease to BNSF as if BNSF were named as "Lessor" in the Lease. 6. Lessee agrees that Lessor has complied fully and completely with all of Lessor's obligations under the Lease with the result that Lessee is fully obligated to pay, and will pay, the rent and other charges due thereunder in accordance with the terms and provisions set forth in the Lease, and Lessee is fully obligated to perform, and is performing, all of the other obligations of Lessee under the Lease, without the right of counterclaim, offset, or defense. 7. Unless otherwise provided herein, all capitalized and/or defined terms herein shall have the same meaning given to such capitalized and/or defined terms in the Lease. 8. Except as amended hereby, or by other previous amendments signed by the parties, all of the terms and provisions of the Lease are hereby reaffirmed and remain in full force and effect. In the event there is a conflict between the terms and provisions of the Lease and the terms and provisions of this Renewal Agreement, the terms and provisions of this Renewal Agreement shall control. 9. This Renewal Agreement may be executed in multiple counterparts, each of which shall, for all purposes, be deemed an original but which together shall constitute one and the same instrument, and the signature pages from any counterpart may be appended to any other counterpart to assemble fully executed documents, and counterparts of this Renewal Agreement may also be exchanged via electronic facsimile machines and any electronic facsimile of any party's signature shall be deemed to be an original signature for all purposes. Executed by the parties to be effective as of the Effective Date set forth above. LESSOR Montana Rail Link, Inc., a Montana corporation By: Dave Koerner, Vice President and Chief Financial Officer LESSEE City of Bozeman By: Printed Name: Title: BNSF's execution in the space provided below evidences BNSF's consent to this Renewal Agreement. This Renewal Agreement is not valid and shall have no force and effect without BNSF's signature. BNSF BNSF Railway Company Jones Lang LaSalle Brokerage, Inc. It’s Attorney in Fact 4300 Amon Carter Blvd, Ste. 100 Ft. Worth, TX 76155 By: Ed Darter, Senior Vice President – National Accounts 38 39 40 41