3. Hockaday Museum of Art LeaseCity of Kalispell
Charles A. Harball office of City Attorney
City Attorney 312 First Avenue East
P.O. Box 1997
Kalispell, MT 59903-1997
MEMORANDUM
To: Mayor Pamela B. Kennedy
and Kalispell City Council
FROM: Charles Harball, City Attorney
James H. Patrick, City Manager
Tel 406,758.7708
Fax 406.758.7771
charball@kalispell.com
SUBJECT: Authority to Approve Hockaday Museum of Art Lease
MEETING DATE: Monday, December 4, 2006 — Regular Meeting
BACKGROUND: The current lease that the City has with the Hockaday Museum
of Art was entered into on June 20, 2001. Hockaday has determined that the space
available for their services in this facility is extremely limiting to them and an
opportunity has arisen in which the neighboring property is now available to
purchase. Hockaday is therefore requesting a new lease with an extended term so
that a capital campaign may be successfully initiated to raise the necessary funds to
construct an addition to the existing facility. This issue is essentially identical to
the Chamber of Commerce request on the Depot Park lease.
A draft of the proposed lease is attached.
RECOMMENDATION: That City Council give the City Manager the authority to
enter into the attached lease on behalf of the City.
FISCAL EFFECTS: Although the City does not receive more than a nominal sum
from rent payments, the Hockaday oversees the maintenance of the property and
provides the services to the Kalispell City community of displaying and purveying
fine arts and other cultural amenities.
Respectfully submitted,
Cha - aif, 6ty Attorney
t
qJa es H. Patrick, City Manager
LEASE AGREEMENT
THIS AGREEMENT, made and entered into this day of December, 2006 by and
between the City of Kalispell, a municipal corporation hereinafter called CITY, and the
Hockaday Museum of Art, a non-profit corporation, hereinafter called HOCKADAY;
WITNESSE TH:
WHEREAS, on the Zoth day of June 2001, the parties did enter into an agreement
whereby CITY leased to the HOCKADAY that certain premises known as Hockaday
Museum of Art and owned by the CITY more particularly described as follows:
Lots 1 and 2 of Block 64, of Kalispell, Montana, according to the map or
plat thereof on file and of record in the office of the County Clerk and
Recorder of Flathead County, Montana.
WHEREAS, such lease of said premises has been found to have been to the mutual benefit
of the parties and to the people of the City of Kalispell and Flathead County, and
WHEREAS, it is the intent of the parties that a similar lease arrangement should be
continued;
WHEREAS, it is the desire of the HOCKADAY to invest in further major renovations to
the premises, to purchase the adjacent lot for the CITY, to construct improvements
thereon to create further space and to do so requires the HOCKADAY, for financing
reasons, to have a long-term leasehold interest in the premises.
NOW, THEREFORE, the CITY does demise, lease and let to the HOCKADAY, and
HOCKADAY does agree to lease and rent from the CITY said premises under the
following terms and conditions:
1. Term: The term of this lease agreement shall be for a period of THIRTY (30) years
commencing the day of , Z00 .
Z. Consideration: The HOCKADAY shall pay to the CITY, as rent, the sum of $1.00 per
year in advance; receipt of the rental for the first year of this term of this lease is hereby
acknowledged by the CITY. Rent for subsequent years of the term of this lease is due
and payable on the annual anniversary date hereof.
3. Insurances- Indemni cation: The HOCKADAY shall hold the CITY harmless from
any loss, cost or damage that may arise in connection with this lease or the use of the
demised premises by the HOCKADAY, or its agents, or employees, or any other person
using the premises. The HOCKADAY shall insure said premises against fire damage and
other hazard to the said premises for the full term of this lease in an amount equal to the
full replacement value of said premises as it currently exists or may be later improved
which amount shall be payable on loss to the City. Fire insurance in excess of that sum
City of K.alispelllHockaday Museum Lease Page 1 of 5
6. Use: Said premises is intended for and may be used only for the exhibition and display
of the visual and performing arts, as well as lectures, public and private meetings,
readings, discussion groups, gallery talks and recitals in music, dance, drama and other
related arts and for classes and instruction in the arts and crafts, particularly those
incidental to this area. In addition to the foregoing, the premises may be used for a sales
gallery operated by the HOCKADAY to develop and exhibit local artists and such other
artists as HOCKADAY may wish to include, the proceeds from said gallery to go to the
HOCKADAY.
7.ssinailit�: This lease is not assignable, however, the HOCKADAY may sublets
with City council approval, on a temporary basis portions of said premises for uses
connected and logically associated with the intended cultural use of the premises.
8. Miscellaneous: HOCKADAY shall, on or before May 1, of each year of this lease,
furnish to the CITY a general budget as adopted by HOCKADAY for the ensuing year.
In addition, HOCKADAY shall, upon request of the City Manager, furnish information
covering the operating policies and costs of operation of said premises.
9. Termination: Failure of the HOCKADAY to perform any or all of the covenants
required by this lease shall be a breach hereof. This lease may, upon such a breach, be
terminated by the CITY on sixty days written notice to the HOCKADAY and the
HOCKADAY's failure to perform said covenant during such notice period, i.e., if the
CITY feels there has been a breach of any obligation it will provide the HOCKADAY
with written notice specifying in detail the alleged breach. If within sixty (60) days of the
date of service of said Notice the HOCKADAY corrects said alleged breach then its
rights under this lease shall be fully reinstated and this lease shall continue the same as if
no default had occurred.
The HOCKADAY may terminate this lease and surrender the premises to the CITY at
any time upon sixty days written notice to the City Clerk. Should the premises be more
than 50% destroyed by fire the HOCKADAY may terminate this lease by written notice
thereof to the CITY and the insurance proceeds thereafter received by the CITY under
paragraph 3 above, need not be used to rebuild the building. If less than 50% of the
building is destroyed, the HOCKADAY will rebuild or repair the premises unless agreed
otherwise by the CITY.
In the event that the HOCKADAY holds over and remains in possession of the demised
premises with the consent of the CITY, that holding over shall be deemed to be from
month to month only, and upon all of the same rents, terms, covenants and conditions as
contained here.
It is .agreed that the written notice required under the termination provisions of this
agreement, or any notice required herein, may be served upon the HOCKADAY by either
personal service, or by registered or certified mall directed to the HOCKADAY at the
following address:
City of KalispelVHockaday Museum Lease Page 3 of 5
may be covered by the HOCKADAY on said building and contents to its own benefit as
it sees fit. The City agrees that should said premises be totally or partially destroyed by
hazard during the term of this lease, that any insurance money payable to the CITY as a
result will be utilized to rebuild or repair said building unless the HOCKADAY elects to
terminate the lease after and as a result of such hazard occurrence.
The HOCKADAY will also obtain and maintain during the term of this lease a policy of
all risk public liability insurance on such premises providing minimum coverage of
$750,000.00 for each claim and $1,500,000.00 for each occurrence. Said limits of
coverage will be increased if the statutes of the State of Montana § 2-9-108 MCA should
increase the maximum exposure of a municipality. The CITY shall be an added named
insured party under such policy.
The City Clerk shall be furnished with a certificate reflecting the foregoing hazard and
liability insurance within 30 days of the effective date of this lease, continuing
certificates shall be furnished to reflect the required coverage at all times.
4. Maintenance Repairs and Utilities: The HOCKADAY intends to do extensive
construction and remodeling to the premises on the existing property as well as the
adjacent property it intends to purchase for the CITY. The CITY has not charged more
than nominal rental for the premises in the belief that such purchase construction and
remodeling will be to the ultimate benefit to the CITY in lieu of a higher rental charge.
The HOCKADAY will be responsible for all maintenance, repairs, upkeep and the
security of said building and all utilities used thereon during the entire terra of this lease
and shall further be required to and be responsible for maintenance of lawn and shrubs
and removal of ice and snow.
The HOCKADAY represents that it has inspected and examined the demised premises
and accepts them in their present condition, and agrees that the CITY shall not be
required to make any improvements or repairs upon the premises demised or any part of
them. The HOCKADAY agrees to make all improvements and repairs at the
HOCKADAY's sole cost and expense,
The HOCKADAY will not suffer waste, destruction or damage to occur on the premises
nor will the HOCKADAY allow any lien to be filed against the premises without written
permission of the City Manager. The CITY may require the HOCKADAY to furnish
additional security for any such lien allowed against the premises.
5. Nothing contained in this agreement shall prohibit the CITY from making available, to
the HOCKADAY, through the budgetary process such additional sums as the CITY
deems necessary to assist in the purchase or construction of improvements or to perform
maintenance upon the property leased to the HOCKADAY.
City of Kalispelffloekaday Museum Lease Page 2 of 5
Hockaday Museum of Art
Kalispell, Montana 59901
Service by mail shall be complete, and the notice period for termination of this Lease
Agreement shall commence to run, on the date said notice is deposited in any U. S. Post
Office.
IN WITNESS WHEREOF, both parties have hereunto set their hands and seals this
day of 2006.
CITY OF KALISPELL HOCKADAY MUSEUM OF ART
James H. Patrick, City Manager
Date: Date. -
City of Kalispell/Hockaday Museum Lease Page 4 of 5
STATE OF MONTANA )
ss.
County of Flathead )
On this day of , 2006, before me, a Notary Public for the State
of Montana, personally appeared , in his authorized capacity as
President of the Board of Directors of the HOCKADAY MUSEUM OF ART and proved
to me to be the person whose name is subscribed to the within instrument, and
acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year hereinabove first written.
NOTARY PUBLIC for the State of Montana
SEAL Residing at:
My Commission expires:
STATE OF MONTANA )
ss.
County of Flathead )
On this day of , 2006, before me, a Notary Public for the State
of Montana, personally appeared James H. Patrick, proved to me to be the person whose
name is subscribed to the within instrument, and acknowledged to me that he executed
the same in his authorized capacity as City Manager of the City of Kalispell.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year hereinabove first written.
NOTARY PUBLIC for the State of Montana
SEAL Residing at:
My Commission expires:
City of Kalispell/Hockaday Museum Lease Page 5 of 5