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2. KidsportsCity of Kalispell Post Office Box 1997 - Kalispell, Montana 59903 Telephone: (406) 758-7701 Fax: (406) 758-7758 MEMORANDUM To: Mayor Johnson and City Counc'1 From: Doug Russell, City Manager Re: MOU with Kidsports Meeting Date: July 14, 2014 BACKGROUND: In December of 2012, the City Council authorized the acquisition of a permanent easement for the Kidsports property from the State of Montana. Part of the discussion leading up to that decision was the understanding that the City of Kalispell and Kidsports would enter into a new Memorandum of Understanding for the use and maintenance of the facility. Kidsports and city staff have been meeting since that time to develop the attached draft MOU, though the parties have been operating in good faith according to the terms identified within the draft agreement, despite it being yet to be ratified by either party. At the work session, staff will review the draft agreement with Council. Should parties feel that this MOU is satisfactory, it will come back before Council at a future meeting for approval. COMMENDATION: It is recommended that the City Council review and discuss the attached draft MOU. Memorandum of Understanding between CITY OF KALISPELL A Montana Municipal Corporation and KIDSPORTS A Montana Charitable Corporation wi 1. Purpose and Scope The purpose of this Memorandum of Understanding [M01 relationship between the City of Kalispell [the City] apd,K acquiring a permanent easement from the State of Montan Resources and Conservation [DNRC] for a major portion, the City and developed by Kidsports as a youth sports con future development of facilities at the Complex, including transportation and other accessory uses and amenities' 3) responsibilities of the parties with respect to the develom Complex; and 4) r City and Kidsport 2. Recital of Facts ` A. The City enter 3053189 on M 138 acres loca by Four Mile 1 purpose of the B. The Citv and 1 positive, constructive ] is 1) to describe the Isports subsequent to the City Department of Natural the real property leased by 4ex [Complex]; 2) address ports fields, parking, [dress financial nt and maintenance of the g relationship between the into a special lease of state lands under MT State Agreement No. 9, 1997 for the term of 40 years. The lease included approximately in the City of Kalispell in the SE1/4 of Section 36; an area bounded vre (south); Highway 93 (east), and Reserve Loop (north). The sole ise was to develop a youth athletic complex on the property. shorts entered into an Agreement on December 19, 1997 for the same term as the above described lease that defined "the public -private partnership between Kalispell and Kidsports regarding the planning, development, financing, operation and maintenance" of the above -described property. C. The City and Kidsports successfully negotiated with DNRC for the City to exchange a portion of the leasehold interest in the above -described property for a permanent easement that preserves existence of the Complex in perpetuity. The City and DNRC will execute a Second Supplemental Lease Agreement addressing that portion of the leased premises not converted to a permanent easement. The Grant of Easement No. D-14505, dated March 18, 2013, was received by the City and is attached hereto as Page 1 of 9 3. 4. Exhibit "A." Among other things, it delineates the revised footprint for the Complex. The Second Supplemental Lease Agreement, when signed, will be attached to this MOU as Exhibit `B." MOU Term The Initial Term of this MOU is 20 years commencing upon the execution by both parties. The parties agree to meet and discuss additions, corrections and modifications to this MOU at the request of either party. In addition, on each fifth anniversary date from the effective date of the MOU, Section 10 shall be reviewed and the parties may agree to change the contribution paid by Kidsports to the City to the Complex. This agreement may be extended for additional perio terms as the parties agree. Should either party desire notice shall be provided to the other party not fewer 1 (120) days prior to expiration of this MOU; detailing to extend the agreement. The other party shall have 1 parties agree to engage in good faith discussions regE renewing party and agreeing on a successor agreem Should the City elect not to extend this agree: as the result of action or inaction by the City, member of the User Group the appraised vah made to the Complex,; so long as the User Gr improvements due to action by the City. The each hire, at,their own expense, an appraiser improvements. If the two (2') appraisals do n market value of the with maintenance costs at f five years eac to extend the a ONE HUNDR reasons behind pportunity to rn upon such cement written ision not and the g the concerns of the non - or the permanent easement extinguish ,ity shall pay Kidsports and each )ermanent improvements it or they iup(s) no longer has access to these City and Kidsports or the User Group shall o determine the fair market value of the rt differ by more than three (3%), the fair existing usage shall be the average of the two (2) appraisals. If there is a difference of more than three percent (3%) between the twei (2) appraisals, the first two. (2) appraisers shall select a third appraiser, who shall appraise the fair market value ofthe improvements at the then existing usage. The parties shall equally share the expense of the third appraiser. The average of the three (3) appraisals shall determine the fair market value of the improvements at the then existing usage. The City shall pay the fair market value of the improvements at the then existing usage to Kidsports or the User Group within sixty (60) days of the date of determination of the fair market value as set forth above. The City may deduct from the appraised value of any improvement it is reimbursing Kidsports for the amount of money it paid or contributed directly toward construction or installation of the improvement (i.e. does not include money spent by the City maintaining the improvement). Master Plan of Complex Page 2 of 9 5. The parties agree that master plans of the Complex have evolved since 1997, and they will continue to evolve. The parties agree that the current master plan will be amended to reflect the revised footprint of the Complex, and that it will be further amended as additional phases are planned and developed. After development at the Complex is completed, a final master plan will be prepared that will include all athletic fields and associated infrastructure (e.g. fencing, irrigation, storm water conveyance, sanitary sewer, electric, telephone and gas utilities, concession and storage facilities, restrooms and seating, etc.), roadways, both inside the Complex and in the immediate vicinity and leading to the Complex, and parking. Representatives of the parties shall meet periodically to discuss and agree upon future modifications to the roaster plan, which shall be subject to the review and approval by the governing bodies of the parties. The parties acknowledge that past master plans have been prepared by a third party and they further agree that a third party planner approved by both parties nay be used to assist with future master planning. City's Responsibilities The City shall be responsible for the following:: a) Maintaining and repairing: i. All athletic fields, including turf ii. All landscaping iii. All access roads, internal roads and parking areas iv. Sewer, potable and irrigation water distribution systems v, All non -turf ground cover vi. All permanent fencing ii. Trash_ collection viii. Winterizing all water systems ix. Game preparation of all fields b) The parties agree that the improvements at the Complex are presently in optimal condition, and it is the intent of the parties that the present quality of the'Complex be maintained and not deteriorate as the result of misuse, or the lack of attention, maintenance or repair. Both parties agree that the responsibilities outlined in this agreement are intended to, revent the deterioration of the facility through normal wear and to maintain the facility and its improvements as a top-quality complex that provides recreational opportunities for the community's youth and also serves as an attraction and destination for regional and state competitions. In performing its responsibilities as described above, the City has and will continue in the future to: (1) mow grass areas as needed, usually 1 or 2 times per week during the grass growing seasons; (2) string trim grass areas that are not mowed on the same schedule as mowing: (3) fertilize grass as needed, usually 2 or 3 times annually: (4) aerate grass Page 3 of 9 areas as needed, usually 1 or 2 times annually; (5) thatch grass areas as needed, usually once a year; (6) apply pesticides to grass areas as needed, usually once every three years; (7) maintain (e.g. water, feed, mulch, prune, etc.) tress and perennial plantings; (8) maintain and repair access and internal roads, and parking areas; (9) garbage pick- up; (10) summarize and winterize the irrigation systems and pumps, concession stands and bathrooms; and (11) paint field boundary lines on grass playing surfaces. c) The City shall comply with the terms of the permanent easement appended hereto as Exhibit A, and Second Supplemental Lease appended as Exhibit B. 6. Kidsports' Responsibilities Kidsports shall be responsible for the a) Kidsports shall be the developer of the Complex and shall be responsible for the placement and construction of the improvements in accordance with the master Dlan. b) Kidsports will maintain liability insurance coverage during construction activities, which shall name the City as an additional insured party. c) Kidsp is shall advise each User Group that the City requires that they maintain liability insurance for their athletic activities which also names the City as an additional named insured. d) Coverage amounts for the liability insurance policies obtained by Kidsports and each User, pursuant to this paragraph 6 will not be less than 750,000 peroccurrence or less than $1.5 million aggregate and shall be written on a "'primary noncontributory basis." Subject to availability, each coverage shall be obtained from an insurance company that is duly licensed and authorized to transact insurance business and write insurance within the state of Montana, with a minimum of "A.M. Best Rating" of A- , VI. The purpose of this coverage is to protect the City, its officers, employees, agents, and representatives from claims for bodily injury and/or property damage which may arise from construction activities or conduct of program activities by the Users. Proof of insurance coverage shall be submitted annually to the City's Parks and Recreation Director. e) Kidsports shall have primary responsibility for: i. Development of improvements at Complex consistent with master plan, as amended, ii. Purchase of all playground equipment Page 4 of 9 7. iii. Cost of delivering all electric and telephone utilities inside Complex iv. Maintaining all concession stands and restrooms (not including winterizing or summarizing) V. All metered water charges (not including irrigation) for concession stands/restrooms vi. All temporary fencing vii. Maintaining clean ground viii. Replace netting (e.g backstops, goals, etc,), benches and grandstands f) It is the intent of the parties that the improvements not deteriorate through misuse, or lack of attention, maintenance, or repair- The parties agree that the improvements at the Complex are, presently in optimal condition, and it is the intent of the parties that the present quality of the Complex be maintained and not deteriorate as the result of misuse, or the lack of attention, maintenance or repair. Both parties agree that the responsibilities outlined in this agreement, are, intended to prevent the deterioration of the facility and its improvements through normal wear and to maintain the facility as a top-quality complex that provides recreational opportunities for the community's youth and also serves as an attraction and destination for regional and. state competitions. g) Kidsports may assign or contract one of more of the above responsibilities in subparagraph 6(e) above to third parties (e.g. User Group, etc.). comply with the terms of the permanent easement as Exhibit A, and Second Supplemental Lease The City paid to acquire the permanent easement described in paragraph 2 above. Following execution ofthis MOU, Kidsports agrees to undertake capital campaigns to raise an amount of money that will be equal to or greater than the amount paid by the City to DNRC for the permanent easement. Funds received by Kidsports in consideration for releasing acreage from the lease, described in paragraph 2(c), shall be used for improvements to the Complex consistent with the master plan, as amended, and will be applied towards its capital campaign requirements as described in the preceding paragraph. It is further agreed that Kidsports will undertake additional fund-raising activities for the purpose of developing the Complex consistent with future master plans. Page 5 of 9 8. 9. User Fees. Kidsports has agreements with providers of youth athletic programs at the Complex. Those providers are referred to throughout this MOU as User Group and User(s). When User Groups begin using the complex more than three times in a one month period, additional agreements will be generated between the providers and Kidsports. The agreements between Kidsports and the User Group define their relationship and, among other things, describe fees to be paid to Kidsports by the User Group, Kidsports and/or the User Group may charge fees to visitors to the Complex (e.g. admission fees to events, etc.), advertisers (sponsors, fence ads, etc.), and others using or frequenting the Complex (e.g. associations, tournament participants, individuals etc.). Funds raised by Kidsports and/or the User Group may be used to further their purposes. The parties recognize that Kidsports and the User Group engage in fund raising activities (e.g. those just mentioned, plus registration fees, concession stand sales, tournament entry fees, etc.) to conduct their activities, and neither the fund,raisng activities of Kidsports or the User Group, nor the subsequent use of those funds, are subject to this MOU. The City may charge fees to Groups. The City will only charge fees tt the User Group if mutually agreed to in ai anticipated that fees charged by the City A improvements at the Complex, and will n other facilities under the jurisdiction of th Department. If;a riser or prospective user Kidsports, representatives of the City and annronriate fee. not charged fees by Kidsports or the User ins or groups charged fees by Kidsports or e by the City and Kidsports. It is utilized for maintenance or 'be eligible for recreation programs or any City, including its Parks and Recreation isagrees with fees established by the City or will confer and agree upon an payment of user fee that is assessed consistent with this paragraph may be grounds lenying use of the Complex. Kidsports and. the User Group have priority for scheduling activities at the Complex. The City may schedule activities at the Complex that do not conflict with activities scheduled by Kidsports or the User Group, and the City shall ensure that no conflict exists before scheduling activities at the Complex. No party shall schedule activities that threaten to damage or compromise the Complex. Kidsports and the User Group shall solely be responsible for establishing and maintaining rules and regulations concerning the activities they conduct at the Complex, provided those activities shall comply with applicable park rules and regulations, laws and ordinances. (1997 Agreement, Section 11(a)). Page 6 of 9 10. Maintenance Fees Kidsports shall submit an annual amount, as identified in Exhibit C of this agreement to the City of Kalispell by June 301h each year to offset a portion of the maintenance costs identified in Section 5. Kidsports and the City agree to meet during the annual buc assess maintenance activities for the upcoming year and to that may require attention. During the term of this agreement, Kidsports shall Groups without receiving the prior written consem during this term, increase the rates charged to Uses the City. If, pursuant to section 3 above, the City elects n increase rates charged to user groups more than the user groups. 11. Lease Payment of the City to ial activities charged to User ity. Kidsports may, however, without receiving consent of l this MOU, it shall not y unless by agreement with Kidsports shall reimburse the City in the event the City, becomes obligated to pay any lease payment for property not currently hart of the permanent easement, but is part of the property under use of Kidsports. 12. Independent The parties agree and acknowledge that the City and Kidsports are independent entities. In the performance of this I OU and the completion of its development responsibilities hereunder, Kidsports shall render services as an independent contractor and not as the agent, representative, subcontractor, or employee of the City. The parties further agree that all individuals and companies retained by Kidsports will not be the agents, representatives, subcontractors, or employees of the City. In turn, the City shall solely be responsible for meeting legal obligations with respect to its employees, contractors, agents and representatives. 13. Third -Party The parties acknowledge that Kidsports, in addition to primarily being responsible for development of the Complex, may conduct limited athletic activities (e.g. Miracle League, etc.). The youth sports programs presently occurring at the Complex are conducted by Kalispell Pee Wee Baseball League, Inc., Kalispell Babe Ruth League, Inc., Kalispell Youth Softball Association, Flathead Soccer Club, Flathead Little Guy Football, and Kalispell School District 5, or their successors (individually and Page 7 of 9 14. 15. collectively called the "User(s)" and "User Group"). Kidsports also functions as a liaison between the User Group and City. Kidsports will give written notification to the City of changes or additions to the User Group. The parties agree that the Users are third -party beneficiaries of this MOU, and they may rely upon and enforce this MOU. Modification and Termination a) In the event either party fails to perform its obligations under this MOU, the non -defaulting party may give written notificatii of the default to the other party. The parties shall meet and confer with the"intent of resolving the default, but in the event the default is not cured, or reasonable efforts are not underway to correct the default (in the opine of either party), the dispute shall be submitted to mediation. In the event the parties are not able to agree upon a mediator, a mediator shall be appointed pursuant to the, rules of the American Arbitration Association, The expenses of the mediator shall be shared equally by the parties. b) Any and all amendments must be made in writing and must be agreed to and executed by the parties before becoming effective. c) This MOU may be terminated in writing by the parties at any time. Effective Date This MOU shall be effective 'upon the signat officials, and shall remain in effect until tern Kidsports indicate agreement with this MOL Doug Russell, City Manager Date re of the City and Kidsports authorized ,hated as provided herein. The City and by their signatures. Authorized Signature of Kidsports Date Page 8 of 9 EXHIBIT "C" Formula for Calculating Annual Maintenance Payments due June 30 of each year. 1. In determining Kidsports annual contribution to maintaining the Complex, the base amount shall be considered to be 50% of gross receipts that Kidsports receives from user fees during each calendar year. This remittance, however, will be reduced based upon the capital investment of Kidsports and Users into the Complex during the prior calendar year: Amount of Capital Investment by Kidsports Maintenance fee remittance for the following year $0 to $99,999 50°% of gross receipts from user fees $100,000 to $299,999 3 5 % of gross receipts from user fees $300 000 and above 20% of gross receipts from user fees The annual maintenance fee paym( any lease payment paid by Kidspor to the State of Montana by the City. above will be reduced by the amount of as reimbursement for payments made Page 9 of 9