3. Chamber of Commerce LeaseCity of Kalispell
Charles A. Harball office of City Attorney
City Attorney 312 First Avenue Bast
P.O. Box 1997
Kalispell, MT 59903-1997
MEMORANDUM
To: Mayor Pamela B. Kennedy
and Kalispell City Council
FROM: Charles Harb all, City Attorney
James H. Patrick, City Manager
Tel 406.758.7708
Fax 406.758.7771
charball@kalispell.com
kalispell.com
SUBJECT: City Lease to Kalispell Area Chamber of Commerce at
Depot Park
MEETING DATE: Mondays October 10, 2006 — Regular Meeting
BACKGROUND: The City of Kalispell has leased the "Depot Building' in Depot
Park to the Kalispell Chamber of Commerce since 1981. with the City's approval,
the Chamber has made substantial improvements to the structure and has also
recently approached the City Council about making significant additional
improvements to the structure within the next few years.
The current lease will expire in 2011. The Chamber is proposing to renegotiate the
lease to extend it another 30 years beyond the current expiration date. The purpose
of this is to allow the Chamber to achieve a more favorable status for acquiring gifts
or loans in it capital campaign to raise funds for its project. Council considered the
issues of the lease at its work session on October 9, 2006. The lease presented is in
a form that addresses those issues discussed.
RECOMMENDATION: That Council consider and, by motion, give the City
Manager the authority to enter into the attached lease.
FISCAL IMPACTS: This is a long-term lease for a nominal rental consideration.
This is offset by the fact that the Chamber of Commerce is responsible for all
indemnification, insurance, maintenance and upkeep of the premises, as well as by
the fact that the Chamber may invest further into the improvements, adding value
to the City owned property.
Chamber Lease Memo
October 11, 2006
Page - 2
Respectfully submitted,
Charles Harball, City Attorney
Jam .Patrick, City Manager
Office of City Attorney
City of Kalispell
LEASE AGREEMENT
This Agreement made and entered into this day of October, 2006, by and between
the City of Kalispell, a municipal corporation of the State of Montana, P.O. Box 1997, Kalispell,
MT 59901, hereinafter called "City" as Lessor, and the Kalispell Area Chamber of Commerce, a
corporation, 15 Depot Park, Kalispell, Mt., 59901, hereinafter called "Chamber" as Lessee,
WITIITESSS`ET .
WHEREAS, the City owns certain property in the City of Kalispell formerly owned by the
Great Northern Railway (now known as the Burlington Northern Santa Fe) and utilized as the
Railway Depot serving the City of Kalispell; said premises is centrally located and is part of a
popular Kalispell City Park known as "Depot Park"; and
WHEREAS, the City has, since 1981, leased the premises to the Kalispell Area Chamber
of Commerce which thereafter made significant renovations to the said Depot Building and has
been carrying on its operations therein since that time; and
WHEREAS, the City does not contemplate using said Depot Building for City
administrative purposes and the uses of the Chamber would be to the benefit of the citizens of
the entire Kalispell area; and
WHEREAS, it is the desire of the Chamber to invest in further major renovations to the
Depot Building, creating further space and to do so requires the Chamber, for financing reasons
to have a long-term leasehold interest in the premises.
NOW,, THEREFORE, in consideration of the rent and covenants hereinafter mentioned to
be paid and performed by the Chamber, the City does demise, lease and let to the Chamber and
the Chamber does lease and rent from. the City the following described premises on the terms and
conditions as hereinafter set out:
I. PREMISES:
That portion of "Depot Park" bounded on the north by the Burlington Northern Right of Way, on
the west by the east side of Main Street, on the east by the west side of First Avenue East and on
the south by sidewalks and parking lot, as shown in Exhibit "A" attached hereto and incorporated
herein fully by this reference. Said area is included within but does not include all the area more
particularly described in the Deed of Gift and Conveyance recorded July 10, 1961, in the
Records of the Flathead County Clerk and Recorder, Kalispell, MT at Book 463, Page 700.
II. TERM:
This lease shall be for a term of thirty-five (35) years, commencing November 1, 2006.
DEPOT PARK/CHAMBER OF COMMERCE LEASE Page - 1 of 5
III. CONSIDERATION:
The Chamber shall pay to the City, as rent, the sum of One Dollar ($1.00) per year in advance.
Receipt of the rental for the term of this lease is hereby acknowledged by the City.
IV. OPTION TO LEASE ADDITIONAL PREMISES
In the event that BNSF abandons its easement on the northern boundary of the subject -leased
premises, the City agrees that the leased premises included in this agreement may include the
property within the abandoned easement area as well as the City owned adjacent property to the
north as shown on Exhibit "A", SUBJECT To the right of the City to construct and for the
public use of a bicycle/walking path within the confines of the existing BNSF easement.
V. LIABILITY AND INSURANCE:
The Chamber 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 Chamber, or its agents, or
employees, or any other person using the premises. The Chamber shall insure said premises
against fire damage and other hazard to the said Depot Building 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 may be covered by the Chamber on said building and contents to its own benefit as it
sees fit. The City agrees that should said Depot Building 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 Chamber elects to terminate the lease after
and as a result of such hazard occurrence.
The Chamber 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.
VI. USE:
The Chamber may use said premises only for activities, which are generally associated with
"non profit" entities and/or commonly accepted "Chamber of Commerce" functions such as
economic, community, and workforce development activities and small business incubator
activities. It is intended that the premises are not to be used for any major sales activity
(wholesale or retail), manufacturing, distribution or assembly of business not normally or
customarily associated with Chambers of Commerce. It is understood that the Chamber may, to
DEPOT PARK/CHAMBER OF COMMERCE LEASE Page - 2 of 5
the extent provided by City Zoning, sell souvenirs such as T-shirts, hats, maps, buttons, film,
postcards, etc.
VII. ASSIGNABILITY:
No portion of the premises may be sublet, assigned, hypothecated or mortgaged during the full
term of this lease without written permission of the City Manager, which permission will not be
unreasonably withheld. At the termination of this lease, the Chamber will quietly yield and
surrender the entire premises covered by this lease to the City.
VIII. MAINTENANCE AND REPAIR:
The Chamber intends to do extensive renovating and remodeling of the interior and exterior of
the Depot Building. The City has not charged more than nominal. rental for the premises in the
belief that such renovation and remodeling will be to the ultimate benefit to the City in lieu of a
higher rental charge.
The Chamber will be responsible for all maintenance, repairs, upkeep and the security of said
building and all utilities used thereon during the entire term of this lease.
The Chamber 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 Chamber agrees to
make all improvements and repairs at the Chamber's sole cost and expense,
The Chamber will not suffer waste, destruction or damage to occur on the premises nor will the
Chamber allow any lien to be filed against the premises without written permission of the City
Manager. The City may require the Chamber to furnish additional security for any such lien
allowed against the premises.
Ix. TERMINATION:
Failure of the Chamber 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 upon sixty days
written notice to the Chamber and the Chamber'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
Chamber with written notice specifying in detail the alleged breach. If within sixty (60) days of
the date of service of said Notice the Chamber 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 Chamber 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 Depot Building be more than 50%
destroyed by fire the Chamber may terminate this lease by written notice thereof to the City and
the insurance proceeds thereafter received by the City under paragraph IV above, need not be
DEPOT PARK/CHAMBER OF COMMERCE LEASE Page - 3 of 5
used to rebuild the building. If less than 50% of the building is destroyed, the Chamber will
rebuild or repair the premises unless agreed otherwise by the City.
In the event that the Chamber 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 sane rents, terms, covenants and conditions as contained here.
X. NOTICE:
It is agreed that the written notice required under the termination provisions of this contract, or
any notice required herein, may be served upon the Chamber by either personal service, or by
registered or certified mall directed to the Chamber at the following address:
Kalispell Area Chamber of Commerce
15 Depot Park
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, addressed
to the Purchaser.
XI. MAINTENANCE IN DEPOT PARK
The Chamber shall be responsible for maintenance and upkeep, including snow removal, of all of
the sidewalks and parking areas included in the property covered by this lease. The City will
continue its maintenance and upkeep of the landscape within the Park, will maintain the
remainder of the sidewalks in Depot Park and will further provide all maintenance and upkeep of
the public restrooms.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as of the day
first above written.
CITY OF KALISPELL KALISPELL AREA
CHAMBER. OF COMMERCE
James H. Patrick, City Manager
Date:
Joe Unterreiner, President and CEO
Date:
DEPOT PARK/CHAMBER OF COMMERCE LEASE Page - 4 of 5
STATE OF MONTANA )
):ss
County of Flathead )
On this day of October, 2006, before me, the undersigned, a Notary Public for the
State of Montana, personally appeared JOE UNTERREINER, in his capacity as President and
CEO of the Kalispell Area Chamber of Commerce, a Montana corporation, that executed the
within instrument, and acknowledged that such President and CEO subscribed, sealed and
delivered said instrument as the free and voluntary act of said corporation, for the uses and
purposes therein set forth, and that he was duly authorized to execute the same on behalf of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the
day and year in this certificate first above written.
Notary Public, State of Montana
Residing at
My Commission Expires
STATE OF MONTANA )
):ss
County of Flathead )
On this day of October, 2006, before me, a Notary Public in and for the State of
Montana, personally appeared JAMES H. PATRICK, known to me to be the City Manager of
the City of Kalispell, a municipality, that executed the within instrument, and acknowledged that
such City Manager subscribed, sealed and delivered said instrument as the free and voluntary act
of said municipality, for the uses and purposes therein set forth, and that he was duly authorized
to execute the same on behalf of said municipality.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal,
the day and year first above written.
Notary Public, State of Montana
Residing at
My Commission Expires
DEPOT PARK/CHAMBER OF COMMERCE LEASE Page - 5 of 5