3. Golf Course Lease� t
f 01011
Incorporated 1892
Telephone (406) 758-7700
FAX (406) 758-7758
Post Office Box 1997
Kalispell, Montana
Zip 59903-1997
M-"MO
To: Mayor & City Council
From: Al Thelen, Interim City Manager
Date: May 10, 1996
Re.: Proposed New Lease with the Kalispell Golf Association
Regarding Buffalo Hills Golf Course
Included in your packets are three leases regarding this issue.
The 1988 lease, the proposed lease from the K.G.A., and the
proposal developed by City staff. The City Attorney has
prepared a comparison regarding the major differences in the
three leases. Apparently, negotiations for a new lease were
initiated in the later half of 1994, a number of proposals have
been made by the City and the K.G.A. without much progress in
reconciling the major differences. There are a number of
factors that you,need to be aware of in considering this issue:
A. The K.G.A. has done a good job in maintaining and
expanding the golf course for a long period.
B. The current lease expires in 2008.
C. The value of the golf course and property is somewhere
between 5 and 7 million dollars.
Douglas Rauthe
Mayor
AI Thelen
Interim City Manager
City Council
Members:
Gary W. Nystul
Ward I
Cliff Collins
Ward I
Norbert F. Donahue
Ward II
Dale Haarr
Ward II
Jim Atkinson
Ward III
Lauren Granmo
Ward III
Pamela B. Kennedy
Ward IV
M. Duane Larson
Ward IV
Mayor and City Council
Page 2
May 10, 1996
D. The current lease was not processed according to law in
that 2/3 of the Council did not approve it, and the lease was
not submitted to the voters. (See attached opinion of City
Attorney.)
E. In February of 1995, after considerable discussion, the
majority of the Council rejected the idea of a tiered fee
schedule.
F. Approximately Z of the users of the facility live outside
the City of Kalispell.
G. The gross receipt figures for green fees, membership fees,
and driving
range for
the past
five years
were:
1995
1994
.1993
1992
1991
Driving Range
$ 21,151
$ 21,806
$ 27,028
$ 31,168
$ 25,805
Membership Dues
366,600
384,700
394,700
369,800
318,225
Greens Fees
368,480
368,074
421,698
538,743
508,024
Total $756,231 $774,580 $843,426 $939,711 $852,054
The five year average is $833,200, and at 3%, it generates
- � $2-; t99-. Very close to your goal of $25, 000 . Due to seasonal
Al charges, it is my opinion that one has to look at a 3 to 5
year cycle in projecting activity.
H. The current year's costs for property insurance is $1,771.
I. The preliminary FY 1997 budget was prepared on the basis
of the current lease.
In the limited negotiation sessions that I have been a part, the
K.G.A. representatives have consistently talked about the poor
revenue years that they experienced in 1994 and 1995, and the flood
Mayor and City Council
Page 3
May 10, 1996
damage that they have experienced this year. They feel that the
increase from 1% to 3% or higher as the base for the City's lease
payment is too high. They want to talk about the increased dollars
that we might receive during the life of the new contract as
compared to the existing lease and have expressed little
understanding of the present value of money. They feel the current
lease is a good one for the City and we should not be trying to
change it. I have expressed your desire to see that the new lease
is for the benefit of the entire community.
--It:-does appear that a lease will have to be placed on the November
ballot, and we will have to present that ballot issue to the County
Clerk by August 22, so you will have to act on it no later than
August 5, 1996. The staff recommends the new lease that we
prepared and would recommend that we continue with the current
lease, subject to a declaration of invalidity, rather than approve
the lease submitted by the K.G.A.
TO: Bruce Williams, City Manager
FROM: Glen Neier, City Attorney
Re: Kalispell Golf Association Lease
I have researched both statutory and case law relavant to the
questions asked in you memo of August 24, 1995. S 7-8-4201, MCA is
quite specific in its requirments for the sale or lease of City
property:
. . . the city or town council may sell, dispose of, or lease
any property belonging to the city or town.
(2) (a) The lease or transfer must be made by ordinance
or resolution passed by a two -third vote of all members
of the council.
According to your research in the matter the City Council on August
22, 1988, approved the golf course lease, now in effect, by a vote
of 5 to 3. At the time of the approval the Mayor did not have a
vote except to break a tie. The vote did not meet the necessary
2/3 requirement set forth in the statute.
McQuillan, Municipal Corporations 5 29.104.30 the dicusses the
status of a contract entered into in violation of a statute.
". . . no ratification or estoppel can make alwful a municipal
contract which is beyond the scope of the corporate powers, or
which is not executed in compliance with madatory conditions
prescribed in the charter or statutes. . ."
"A contract casnnot be ratified if it violates and express
provision of the . . . statutes ."
"The fact that the other party to the contract has fully
performed its part of the agreement, or has expended money in
reliance of its validity, does not estop the city from
asserting ultra vires, nor is a municipality estopped to aver
its incapacity to make a contract because it receive benefits
under its. . . "
McQuillin in the above language is stating that a contract made by
a city which either is in excess of staututory authority or in
violation of a statutory mandate is illegal. The net effect is
that the contract is invalid and void and cannot be enforced.
The Montana Supreme Court in Prezeau vs. City of Whitefish (1982)
held that the provisions of S 7-8-4201, MCA were to be strickly
construed and required an election would be required to enable the
City of Whitefish to lease certain trust park land to a rifle club.
The Court ruled that the statute meant exactly what it said.
Although, Prezeau deals with trust land, a Court in order to rule
the KGA lease as valid would be forced to alter the statute to mean
something it does not say.
It is the opinion of this office that the lease entered into
between the City of Kalispell and the Kalispell Golf Association is
invalid and the parties should immediately begin negotiations to
write a contract which can be approved requisite number of
councilpersons. In the absence of a new agreement, the City and
the KGA have really no lease to enforce.
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JKd?AXW SUPPUCS
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postagefreigbt
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Telephone
Lab Service
Auditing
Contract Service
Training materials
Consultants
PSC Tu
Repair & Maint.
Equip Maim
BuMing Main.
Radio Maint.
School & Travel
Equip
prop & Limb. Rrs.
eenuld Garage
Admin. Transfer
Data Proc Transfer
Debt service Evergreen
-dual Cast to Evergreen
Fvcrnreetr F1owS
City of Kalispell Flows
calendar year
S 108,843.86
$113,696.73
S222,540.59
.10
S8,431.92
S14,660.02
S 13,176.20
S13,333.45
$26,709.65
$7.095.63
$6,573.73
$13,669.36
S325.84
S7793
$403.77
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SMA
VaI3
SI.667.84
$543.90
S2.211.74
S2.109.13
S1.425M
S3.335.09
S151.18
S101.68
$252.86
3.13
$0.00
52,303.13
S4,$27.75
SI -W
$17,077.14
S1,731.52
Si, ."
S3,426.S0
S1,086.91
$3.428.74
$4,515.65
S4,803.46
$1,092.81
$5,896.27
S188.08
S304.39
$492A7
SZ915.00
$285.00
$3,200.00
S72.00
$210.00
$282.00
S63,370.75
$71,223.46
$134,594.21
S915.70
S1,041.74
S1.957.44
$14.433.64
$9,454.55
$23,888.19
$1,292.07
S1,530.69
S2,822.76
S3,220.27
S2,299.41
S5,519.68
S1,550.00
S0.00
S1,550.00
S45,965.51
S53,741.96
S99,707.47
$273.35
$273.24
$546.59
$760.00
$0.00
$760.00
$0.00
S268.54
S268.54
$0.00
S243.75
S243.75
S22,814.41
S20,928.83
$43,743.24
$1,631.29
$1,014.54
$2,645.83
S71.50
$0.00
S71.50
S%2.74
$1,057.46
$2,020.20
$0.00
S150.94
$130.94
St,sMM
S25,265.57
S26,765.57
S5,000.00
$51000.00
$10,000.00
S33,548.46
S41,298.85
$74,847.31
S5,964, $4,022,g4 S9,987,36
S361,851.45 $403,016.50 S764,867.95
x 16.847242% $128,859.16
S167 SM.0000 $167.500.00 $335,000.00 x 16.947242%
S529,351.45 $570,516.50 SL099.8"
$55,530.00 $56,388.00 $111,918.00
113.303.600 = 0.16847242
672,535,000
Rate per thousand: rate:
'Kalispelrs M&O $764,967.95 $1.14
Replacement Cost $335,000.00 54,54
S1.64
$56,439.26
$185,297.42
$111,918.00
weal S22LWA2
billed S309,899.31
corn My brill $300.00
4 due 9S ($12,683.89)
adj due 94 ($LVA.0)
Lt13a692.531
1998 LEASE
1.
2. Term- July 1, 1988—
Septexuber 30, 200&
3. Gross -driving
range (golf ball rentals);
sale of season passes;
daily green fees.
4. Rent-1% of Gross
receipts, mcrease/decrease
0.1% every 5 years.
S. Termination for failure to
City assumes all
outstanding capital improve-
ment obligations.
6. Alterations or improvements-
City's consent required for
improvements over $25,000;
no notice or accounting for
improvements less than $25,000.
7. Golf Fee- Annual City review
of golf fees.
S. Liability Insurance-
$1,000,000.
T 20 years from 'Perm- 20 yem from
date of approvaL date of approvaL
Gross rece€ iving
Gross receipts —driving
range (golf ball rentals);
range (golf ball rentals);
membership fees (season
membership fees (season
passes); sale of green fee
passes); sale of green fee
punch cards and other
punch cards and other
green fees.
green fees.
Rent- Lesser amount of 3% Rent- 3% of Gross
Gross receipts or $25,000; receipts; increase/decrease
increaseldecrease 0.5 % 0.5% every 5 years.
every 5 years.
Termination for failure to Termination for failure
maintain- City assumes all to maintain- City does
outstanding capital improve- not assume outstanding
ment obligations. capital improvement
obligations.
Alterations or improvements-
Alterations or improve-
City's consent required for
ments- City's consent
improvements over $25,000;
required for improve -
no notice or accounting for
ments over $25,000;
improvements less than $25,000.
KGA to report
annually on improve-
ments of < $25,000.
Golf Fee- Current fee schedule
Golf Fee- Current fee
attached; KGA's discretion to
attached; KGA's
adjust fees 10iDPo yearly w/o
discretion to adjust
City approval.
fees 10% yearly w/o
City approval.
Liability Insurance- Liability Insurance-
$1,500,000. $1,500,000.
a
Five Insurance- City maintains
policy on improvements.
Free Ix City
maintains policy, KGA
pays premium which is
credited to refit payment.
f. Y � •'iY . 1l. A"i
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or 98bhding effed of
C: rty `s Frorso-L
THIS LEASE, made and entered into as of the
, by and between the City of Kalispell, Montana, a
Municipal Corporation, hereinafter referred to as LESSOR, and the
Kalispell Golf Association, a Montana Corporation, hereinafter
referred to as LESSEE,
W I T N E S S E T H:
For and in consideration of the mutual covenants and promises
hereinafter set forth, the parties hereto agree as follows:
1. PROPERTY: LESSOR hereby leases to LESSEE and LESSEE
hereby leases and hires from LESSOR those certain premises and all
appurtenances thereto situated in Kalispell, Flathead County,
Montana, as follows:
All of that property owned by LESSOR and commonly known,
referred to and utilized as the Kalispell City Golf
Course. Attached as Exhibit "A" is a map with the
subject premises outlined. Attached is Exhibit "B" which
identifies the boundary and fenceline between the golf
course and the north portion of the old Lawrence Park.
The total area consists of approximately 240 acres.
2. TERM: TO HAVE AND TO HOLD the above rented premises
during the full term of twenty (20) years, which term shall begin
upon the date of approval of this lease as required by section 7-8-
4201 (2)(b) MCA, and shall terminate upon the expiration of said
1
full twenty year term, unless terminated sooner as hereinafter
provided.
3. GROSS R,E.CEIPTS: For purpose of this Lease "Gross
Receipts" shall be defined as all gross receipts obtained by LESSEE
from the operation of the driving range (golf ball rentals),
membership fees (season passes), the sale of green fee punch cards
and other green fees. All other receipts shall not be defined as
gross receipts under the provisions of this lease and shall be and
remain the sole income of LESSEE. The definition of "Gross
Receipts" as specified herein, shall be subject to renegotiation
under paragraph #18 of this lease.
4. RENT: LESSEE shall pay to LESSOR, as rent, a sum to be
determined annually as herein provided, payable in arrears, on or
before the 30th day of June, commencing with June 30, and
continuing on the 30th day of June throughout the term of this
Lease.
The full term of this Lease shall be divided into four (4)
equal five year segments. The annual rent for the first five year
period shall be the greater Unt either three percent (3.00%)
of the Gross Receipts, as defined above,
. or Twenty Fiv=-
At the end of that first five year period,
and at the end of each subsequent five year period, the Parties
shall review the financial situation of LESSEE for the purpose of
determining the amount of rent to be paid for the next five year
period. It is agreed that in no event shall the amount of rent be
raised or lowered for any subsequent five year period by more than
2
one-half of one percent (0.5%) of said Gross Receipts. Once raised
or lowered, that rent will apply for the next five year period.
Said rent payment shall be mailed or delivered to LESSOR at
the Kalispell City Hall. All prior rents due by LESSEE to LESSOR
under that certain lease dated July 1, 1988 are hereby deemed and
agreed to be paid in full and let it be known and agreed that this
lease dated supersedes any and all Leases
between the Kalispell Golf Association and the City of Kalispell.
5. USE OF LEASED PREMISES: LESSEE shall use the leased
premises for the primary purpose of operating a municipal golf
course; however, LESSEE shall also encourage members of the general
public to utilize said premises for such other purposes as cross-
country skiing, sledding and jogging, subject however, to
reasonable rules and regulations regarding the conduct of such
activities as may be promulgated from time to time by LESSEE.
LESSEE agrees to observe all Federal, State and municipal laws and
regulations including those related to human and equal rights and
in particular Bureau of Outdoor Recreation regulations.
6. MAINTENANCE AND REPAIR OF PREMISES: LESSEE agrees to
maintain the above described premises in as good a condition as the
same are in at this time, or as good as they may be put by LESSOR
during the term hereof in case of a casualty loss causing repair or
reconstruction by LESSOR; and to return said property to LESSOR at
the expiration of said lease in said condition, reasonable wear and
tear and damage by the elements alone excepted. In the event
LESSEE refuses or neglects to keep the above -mentioned premises in
3
such order and condition hereinabove mentioned, LESSOR shall have,
after first giving ninety (90) days written notice to repair, the
right to declare this lease null and void and of no further force
and effect. In this case the annual payments of rent shall
terminate and LESSEE shall not in any way be responsible for any
future rent payments, and fiHS9()R in taking over the premises shaij
H,en existing-;- LESSEE agrees to maintain and keep in
repair all water lines and pumps on said golf course, and to attend
to the shutting off of the water supply and draining of all pipe
lines in the fall, and to turn the water in to said system in the
spring.
7. ALTERAT1ONS AND IMPROVEMENTS: LESSEE shall not make any
alterations or improvements to the premises or the appurtenances
located thereon in excess of Twenty Five Thousand Dollars
($25,000.00) at any one time without having first received approval
from the LESSOR of the intended alteration or improvement. LESSEE
shall report to LESSOR annually on alterations and improvements
costing less than $25,000.00.
B. UTILITIES: During the entire term of this lease LESSEE
shall pay when due for required utilities serving the leased
premises, including but not limited to, electrical, gas, telephone,
water, sewer and garbage services. LESSEE shall also be entitled
to continue use of LESSOR's appropriated water right of the
Stillwater River adjacent to the golf course premises without
charge. LESSEE in using the water from the Stillwater River under
4
said water rights shall operate and maintain the system and pump
for such purposes.
9. PERSONAL PROPERTY AND FIXTURES: All personal property
hereinbefore or hereinafter obtained in connection with the
operation and maintenance of the Kalispell City Golf Course shall
be the property of LESSEE; provided, however, that all fixtures
that have been or may be installed on the premises and attached
thereto have or will become part of the premises and are the
property of LESSOR.
10. COST OF OPERATION: All costs of operation including the
cost or providing supplies, equipment, tools, labor and other such
items and the entire cost of maintaining and operating the golf
course, the club house and other appurtenances shall be the sole
responsibility of LESSEE.
11. USE OF CLUBHOUSE BY LESSOR: Although LESSEE shall have
the exclusive use and supervision of all buildings on said premises
including that structure known as the clubhouse, it is agreed that
LESSOR shall be entitled to use of the clubhouse at any convenient
time to LESSEE upon adequate notice with LESSOR reimbursing LESSEE
for all actual expenses incurred by LESSEE for the reason of any
such use by LESSOR.
12. GOLF COURSE FEES: A schedule of membership fees (season
passes), green fees punch cards and other green fees shall be
presented by LESSEE to LESSOR prior to the first day of April of
each year of this Lease. The schedule for such fees for the 1996
golfing season is attached hereto as Exhibit "C", and by this
5
reference made a part hereof.
LESSEE, at its discretion, may from year to year, during the
term of this Lease, increase or decrease its Schedule of Fees, then
in effect, up to ten percent (10%) without prior approval of such
an increase from LESSOR. LESSOR shall not unreasonably
withhold its approval of any proposed Fee Schedule for which its
approval may be required under this Lease.
13. LESSEE'S FINANCIAL REPORTS: Annually, on or before the
first day of November, in conjunction with the payment of the
annual rent, LESSEE shall present to LESSOR for review a copy of
LESSEE's annual financial report completed in accordance with
generally accepted accounting principles.
14. LESSEE'S LIABILITY INSURANCE: LESSEE shall obtain and
keep in full force and effect during the term of this lease, full
general liability insurance in the amount of One Million, Five
Hundred Thousand Dollars ($1,500,000.00) with a company licensed to
do business in the State of Montana; and said policy of insurance
shall name LESSOR as additional named insured. LESSOR shall be
furnished with a certificate that such insurance is in force and
the same shall provide for reasonable notification to LESSOR prior
to the same being cancelled. LESSEE agrees to hold LESSOR harmless
from any and all liability of any nature, whatsoever, arising from
or out of LESSEE's possession, use, maintenance, improvement or
occupancy of the property herein described; LESSEE further agrees
to defend, at LESSEE's expense, any action brought against LESSOR
arising out of LESSEE's possession, use, maintenance, improvement
6
or occupancy of said property.
15. FIRE INSURANCE: During the full term of this lease,
LESSOR shall maintain its own fire insurance adequate to cover
replacement costs on the improvements on said premises. LESSEE
shall pay the annual premium cast of such insurance which --coat
. Should the premises during the
term of this lease suffer damages which are covered by said fire
insurance policy, LESSOR agrees to utilize all insurance
reimbursements therefore, towards rebuilding or repairing the
damaged premises, or towards providing adequate replacement
facilities. The contents of buildings and fixtures located on the
premises shall be insured by LESSEE and shall be in such amounts as
to assure replacement. The parties mutually agree as to waiver of
subrogation rights each with the other.
16. DEF IILT AND BANKRUPTCY: In the event that:
(a) LESSEE shall default in the payment of any
installment of rent or other sum herein specified and
such default shall continue for thirty (30) days after
written notice thereof; or
(b) LESSEE shall default in the observance or
performance of any other of LESSEE's covenants,
agreements, or obligations hereunder and such default
shall not be corrected within ninety (90) days after
written notice thereof; or
(c) LESSEE shall be declared bankrupt or insolvent
7
according to law, or, if any assignment shall be made of
LESSEE's property for the benefit of creditors;
LESSOR shall have the right thereafter, when such default
continues, to re-enter and take complete possession of the leased
premises, according to law, and to declare the term of this lease
ended, and to remove LESSEE's effects, without prejudice. In doing
so no additional rent payments may be collected from LESSEE;
however, if LESSEE shall default, after reasonable notice thereof,
in observance or performance of any conditions or covenants on
LESSEE's part to be observed or performed by virtue of any of the
provisions in any article of this lease, LESSOR, without being
under any obligation to do so and without thereby waiving such
default, may remedy such default for the account and at the expense
of LESSEE.
17. NOT -ICE: No notice from LESSOR to LESSEE relating to the
leased premises or the occupancy thereof, shall be deemed duly
served unless personally served upon or mailed to LESSEE,
registered or certified mail, return receipt requested, postage
prepaid, and addressed to LESSEE at its address as follows:
Manager, Kalispell City Golf Course
Post Office Box 1116
Kalispell, Montana 59903
Any notice from LESSEE to LESSOR relating to the leased premises or
the occupancy thereof, shall be deemed duly served, if personally
served upon or if mailed to LESSOR by registered or certified mail,
return receipt requested, postage prepaid, and addressed to LESSOR
at the address as follows:
N
Mayor
City of Kalispell
Drawer 1997
Kalispell, Montana 59903-1997
18. FIVE YEAR DISPUTE RESOLUTION: At the end of each five
years of this lease it is hereby agreed that either party may upon
written notice given to the other ninety (90) days prior to
September 30 of the fifth year, tenth year and fifteenth year,
specify in writing that there are matters contained in the lease
(other than the percentage of gross and the length of term) which
because of a sense of urgency and import require discussion and
possible renegotiation.
It is further agreed that any such discussions and
renegotiations shall take place and be concluded within sixty (60)
days from the date of the notice; otherwise they shall be
arbitrated within the last thirty (30) day period of the notice (in
other words thirty days prior to September 30 of the year
involved). Arbitration shall involve three arbitrators with one
being chosen by each of the parties and the two of those
arbitrators selecting a third. Results of the arbitration shall be
binding and have the effect of a District Court judgment as though
rendered by a District Court Judge in Flathead County, Montana.
19. EXISTING LEASE:
belt.ween the partile-S -the existing the eity
Itsvell and the RX&I.ILS on- ted July r ,
binding upon the
the terms of that agreement unless supersed
et" re aln t�ptrrsuernt to its termQ5 4-An
20. TIME OF ESSENCE AND BINDING EFFECT: It is mutually
agreed by and between the parties hereto that the time of payment
shall be an essential part of this lease agreement, and that all of
the covenants and agreements herein contained shall extend to and
be binding upon the parties hereto, and their successors and
assigns.
IN WITNESS WHEREOF, the parties have executed this lease as of
the date first above written.
ATTEST:
Clerk
ATTEST:
CITY OF KALISPELL
Mayor
KALISPELL GOLF ASSOCIATION
Association Secretary President
10
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.. C WATER LEVEL SOi3 �
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WATER LEVEL �v66
ATE 0
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•ALVft9 OFF tKtsntatNLCT �"
PENCE LINE RELOCATItm : KALISPELL MUNICIPAL
GOLF COURSE LAIIRENCE PARK
Low Water Line Of
Point Of Beginning
Of Fence Line Relocation
encing at the NE corner of the Water Dept.
Maintenance guiidiag to Lawrence Park. thence
N 444 E. 56 feet to the NE fence corner of the
Water Dept. Site in Lawrence Park. thence N "I
W, on and along the existing fence line 50 feet
to a point. thence N 10' E on and along the
existing fence line 243 feet to the point of
beginning of the fence line relocation, thence
along the following courses, N 20' R. 290 feet,
N 3' R, 190 feet, N 88' W. 47 feet. N 29' V.
103 feet to a point on the Low Water Line of the
Stillwater River. said point an the Low Water
Line of the Stillwater River tieing the and of
the fence line relocation.
NOTES All bearings were obtained through tee
use of a hand compass. All information hereon
was obtained on November 18. 1987.
This Section Of Fence
To Be Removed
N 68' W N.E. Fence Corner Water
50 iT4 Dept. Site In Lawrence Park
Point On Fence Line N.E. Corner Hater Dept.
Maintenance Building is
Lawrence Park
SCHEDULE OF FEES
1996 Golfing Season
The following schedule of fees shall be applicable for the
1996 golfing season:
Season - Adult Members
Season - Full Time College Student
Season - Junior (through high school)
Daily - Green Fees (Chamionship Eighteen)
Daily - Green Fees (9 moles; Cameron Nine)
Exhibit "Cu
-360. 00
$3►s . 00
$150.00
$100.00
$ 28.00
$ 13.00
PIA KopoSA 1
LEASE
THIS LEASE, made and entered into as of the
I by and between the City of Kalispell,
Montana, a Municipal Corporation, hereinafter referred to as
LESSOR, and the Kalispell Golf Association, a Montana Corporation,
hereinafter referred to as LESSEE,
W I T N E S E T H:
For and in consideration of the mutual covenants and promises
hereinafter set forth, the Parties hereto agree as follows:
1. PROPERTY: LESSOR hereby leases to LESSEE and LESSEE
hereby leases and hires from LESSOR those certain premises and all
appurtenances thereto situated in Kalispell, Flathead County,
Montana, as follows:
All of that property owned by LESSOR and commonly known,
referred to, and utilized as the Kalispell City Golf
Course. Attached as Exhibit "All is a map with the
subject premises outlined. Attached is Exhibit "B" which
identifies the boundary and fence line between the golf
course and the north portion of the old Lawrence Park. yfl-,�t-4 Y—Y
2. TERM: TO HAVE AND TO HOLD the above rented premises
during the full term of twenty (20) years, which term shall begin
upon the date of the approval of this lease as required by section
7-8-4201(2) (b) MCA, and shall terminate upon the expiration of said
full twenty year term, unless terminated sooner as hereinafter
provided.
3. GROSS RECEIPTS: For purpose of this Lease, "Gross
1
Receipts" shall be defined as all gross receipts obtained by LESSEE
from the operation of the driving range (golf ball rentals),
membership fees (season passes), the sale of green fee punch cards
and other green fees. All other receipts shall not be defined as
"Gross Receipts" under the provisions of this Lease and shall
remain the sole income of LESSEE. The definition of "Gross
Receipts", as specified herein, shall be subject to renegotiation
under Paragraph No. 18 of this Lease.
4. RENT: LESSEE shall pay to LESSOR, as rent, a sum to be
determined annually as herein provided, payable in arrears, on or
before the 30th day of June, commencing with June 30, and
continuing on the 30th day of June throughout the term of this
Lease.
The full term of this Lease shall be divided into four (4)
equal five year segments. The annual rent for the first five year
period shall be the lesser amount of either three percent (3.00%)
of the Gross Receipts, as defined above, or Twenty Five Thousand
Dollars ($25,000.00). At the end of that first five year period,
and at the end of each subsequent five year period, the Parties
shall review the financial situation of LESSEE for the purpose of
determining the amount of rent to be paid for the next five year
period. It is agreed that in no event shall the amount of rent be
raised or lowered for any subsequent five year period by more than
one-half of one percent (0.50) of said Gross Receipts. Once raised
or lowered, that rent will apply for the next five year period.
Said rent payment shall be mailed or delivered to LESSOR at
2
the Kalispell City Hall. All prior rents due by LESSEE to LESSOR
under that certain Lease, dated July 1, 1988, are hereby deemed and
agreed to be paid in full, and let it be known and agreed that this
Lease, dated , supersedes any and all Leases
between the Kalispell Golf Association and the City of Kalispell.
5. USE OF LEASED PREMISES: LESSEE shall use the leased
premises for the primary purpose of operating a municipal golf
course; however, LESSEE shall also encourage members of the general
public to utilize said premises for such other purposes as cross-
country skiing, sledding and jogging, subject however, to
reasonable rules and regulations regarding the conduct of such
activities as may be promulgated from time to time by LESSEE.
LESSEE agrees to observe all Federal, State, and municipal laws and
regulations, including those related to human and equal rights, and
in particular Bureau of Outdoor Recreation regulations.
6. NAINTENANCE AND REPAIR OF PREMISES: LESSEE agrees to
maintain the above described premises in as good a condition as the
same are in at this time, or as good as they may be put by LESSOR
during the term hereof in case of a casualty loss causing repair or
reconstruction by LESSOR; and to return said property to LESSOR at
the expiration of said Lease in said condition, reasonable wear and
tear and damage by the elements alone excepted. In the event
LESSEE refuses or neglects to keep the above mentioned premises in
such order and condition hereinabove mentioned, LESSOR shall have,
after first giving ninety (90) days written notice to repair, the
right to declare this Lease null and void and of no further force
3
and effect. In this case the annual payments of rent shall
terminate and LESSEE shall not in any way be responsible for any.V_�
future rent payments; and LESSOR in taking over the premises shall
assume and be responsible for all outstanding capital impr9yement
obligations then exi.sti LESSEE agrees to maintain and keep in
repair all water lines and pumps on said golf course, and to attend
to the shutting off of the water supply and draining of all pipe
lines in the fall, and to turn the water in to said system in the
spring.
. ALTERATIONS AND IMPROVEMENTS: LESSEE shall not make any
alterations or improvements to the premises or the appurtenances
located thereon in excess of Twenty Five Thousand Dollars
($25,000.00) at any one time without having first received approval
from the LESSOR of the intended alteration or improvement; which
said approval shall not be unreasonably withheld by Lessor.,gt�r.
8. UTILITIES: During the entire term of this Lease, LESSEE
shall pay when due for required utilities serving the leased
premises, including but not limited to, electrical, gas, telephone,
water, sewer, and garbage services. LESSEE shall also be entitled
to continue use of LESSOR's appropriated water right of the
Stillwater River adjacent to the golf course premises without
charge. LESSEE, in using the water from the Stillwater River under
said water rights, shall operate and maintain the system and pump
for such purposes.
9. PERSONAL PROPERTY AND FIXTURES: All personal property
hereinbefore or hereinafter obtained in connection with the
4
operation and maintenance of the Kalispell City Golf Course shall
be the property of LESSEE; provided however, that all fixtures that
have been or may be installed on the premises and attached thereto
have or will become part of the premises and are the property of
LESSOR.
10. COST OF OPERATION: All costs of operation, including
the cost of providing supplies, equipment, tools, labor, and other
such items and the entire cost of maintaining and operating the
golf course, the club house and other appurtenances shall be the
sole responsibility of LESSEE.
11. USE OF CLUBHOUSE BY LESSOR: Although LESSEE shall have
the exclusive use and supervision of all buildings of said premises
including that structure known as the club house, it is agreed that
LESSOR shall be entitled to use of the club house at any convenient
time to LESSEE upon adequate notice with LESSOR reimbursing LESSEE
for all actual expenses incurred by LESSEE for the reason of any
such use by LESSOR.
12. GOLF COURSE FEES:
A schedule of membership fees (season passes), green fee
punch cards and other green fees shall be presented by Lessee to
Lessor prior to the first day of April of each year of this Lease.
The schedule of such fees for the 1996 golfing season is attached
hereto as Exhibit "C", and by this reference made a part hereof.
LESSEE, at its discretion, may from year to year, during
the term of this Lease, increase or decrease its Schedule of Fees,
then in effect, up to ten percent (100) without prior approval of
5
such an increase from Lessor. LESSOR shall not unreasonably
withhold its approval of any proposed Fee Schedule for which its
approval may be required under this Lease.
All fees other than those included on Exhibit "C" shall be
established at LESSEE's sole discretion.
13. LESSEE'S FINANCIAL REPORTS: Annually, on or before the
30th day of June, in conjunction with the payment of the annual
rent, LESSEE shall present to LESSOR for review, a copy of LESSEE's
annual financial report completed in accordance with generally
accepted accounting principles.
14. LESSEE'S LIABILITY INSURANCE: LESSEE shall obtain and
keep in full force and effect during the term of this Lease, full
general liability insurance in the amount of One Million, Five
Hundred Thousand Dollars ($1,500,000.00) with a company licensed to
do business in the State of Montana; and said policy of insurance
shall name LESSOR as additional named insured. LESSOR shall be
furnished with a certificate that such insurance is in force and
the same shall provide for reasonable notification to LESSOR prior
to the same being canceled. LESSEE agrees to hold LESSOR harmless
from any and all liability of any nature, whatsoever, arising from
or out of LESSEE's possession, use, maintenance, improvement, or
occupancy of the property herein described; LESSEE further agrees
to defend, at LESSEE'S expense, any action brought against LESSOR
arising out of LESSEE's possession, use, maintenance, improvement,
or occupancy of said property.
15. FIRE INSURANCE: During the full term of this Lease,
LESSOR shall maintain its own fire insurance adequate to cover
replacement costs on the improvements of said premises. LESSEE
shall pay the annual premium cost of such insurance which cost
shall be credited to LESSEE'S annual rental obligation as
determined in Section 4, hereof. Should the premises during the
term of this Lease suffer damages which are covered by said fire
insurance policy, LESSOR agrees to utilize all insurance
reimbursements therefore, towards rebuilding or repairing the
damaged premises, or towards providing adequate replacement
facilities. The contents of buildings and fixtures located on the
premises shall be insured by LESSEE and shall be in such amounts as
to assure replacement. The Parties mutually agree as to waiver of
subrogation rights each with the other.
16. DEFAULT AND BANKRUPTCY: In the event that:
(a) LESSEE shall default in the payment of any
installment of rent or other sum herein specified and
such default shall continue for thirty (30) days after
written notice thereof, or
(b) LESSEE shall default in the observance or
performance of any other of LESSEE's covenants,
agreements, or obligations hereunder and such default
shall not be corrected within ninety (90) days after
written notice thereof; or
(c) LESSEE shall be declared bankrupt or insolvent
according to law, or, if any assignment shall be made of
LESSEE's property for the benefit of creditors;
7
LESSOR shall have the right thereafter, when such default
continues, to re-enter and take complete possession of the leased
premises, according to law, and to declare the term of this Lease
ended, and to remove LESSEE Is effects, without prejudice. In doing
so no additional rent payments may be collected from LESSEE;
however, if LESSEE shall default, after reasonable notice thereof,
in observance or performance of any conditions or covenants on
LESSEE's part to be observed or performed by virtue of any of the
provisions in any article of this Lease, LESSOR, without being
under any obligation to do so and without thereby waiving such
default, may remedy such default for the account and at the expense
of LESSEE.
17. NOTICE: No notice from LESSOR to LESSEE relating to the
leased premises or the occupancy thereof, shall be deemed duly
served unless personally served upon or mailed to LESSEE,
registered or certified mail, return receipt requested, postage
prepaid, and addressed to LESSEE at its address as follows:
Manager, Kalispell City Golf Course
Post Office Box 1116
Kalispell, Montana 59903
Any notice from LESSEE to LESSOR relating to the leased premises or
the occupancy thereof, shall be deemed duly served, if personally
served upon or if mailed to LESSOR by registered or certified mail,
return receipt requested, postage prepaid, and addressed to LESSOR
at the address as follows:
Mayor
E.
City of Kalispell
Drawer 1997
Kalispell, Montana 59903-1997
18. FIVE YEAR DISPUTE RESOLUTION: It is hereby agreed that
either Party may, upon written notice given to the other ninety
(90) days prior to the end of the fifth year, tenth year and
fifteenth year of this Lease specify in writing that there are
matters contained in the Lease (other than the percentage of Gross
Receipts and the length of term provided herein) which because of
a sense of urgency and import require discussion and possible
renegotiation.
It is further agreed that any such discussions and
renegotiations shall take place and be concluded within sixty (60
days from the date of the notice; otherwise they shall be
arbitrated within the last thirty (30) day period of the notice (in
other words, thirty days prior to end of the Lease year involved).
Arbitration shall involve three arbitrators with one being chosen
by each of the Parties and the two of those arbitrators selecting
a third. Results of the arbitration shall be binding and have the
effect of a District Court judgment as though rendered by a
District Court Judge in Flathead County, Montana.
19. EXISTING LEASE: It is mutually understood and agreed
between the parties hereto that the existing Lease between the City
of Kalispell and the Kalispell Golf Association dated July 1, 1988,
shall remain binding upon the parties pursuant to its terms and
provisions and in full force and effect through the remainder of
9
the term of that agreement unless superseded and replaced by this
lease upon approval by the electors of the City of Kalispell as
described herein.
20. TIME OF ESSENCE AND BINDING EFFECT: It is mutually
agreed by and between the Parties hereto that the time of payment
shall be an essential part of this Lease Agreement, and that all of
the covenants and agreements herein contained shall extend to and
be binding upon the Parties hereto, and their successors and
assigns.
IN WITNESS WHEREOF, the Parties have executed this Lease as of
the date first above written.
ATTEST:
Clerk -Treasurer
ATTEST:
CITY OF KALISPELL
Mayor
KALISPELL GOLF ASSOCIATION
Association Secretary President
10
v B s...d I ti 6J
i
4ease-
LEASE
THIS LEASE, made and entered into as of the 1st day of July,
1988, by and between the City of Kalispell, Montana, a Municipal
Corporation, hereinafter referred to as LESSOR, and the Kalispell
Golf Association, a Montana Corporation, hereinafter referred to as
LESSEE,
W I T N E S S E T H:
For;` and in consideration of the mutual covenants and promises
hereinafter set forth, the parties hereto agree as follows:
1. PROPERTY: LESSOR hereby leases to LESSEE and LESSEE hereby
leases and hires from LESSOR those certain premises and all appurtenances
thereto situated in Kalispell, Flathead County, Montana, as follows:
All of that property owned by LESSOR and commonly known,
referred to and utilized as the Kalispell City Golf Course.
Attached as Exhibit "A" is a map with the subject premises
outlined. Attached is Exhibit "B" which identifies the
boundary and fenceline between the golf course and the north
portion of the old Lawrence Park.
2. TERM: TO HAVE AND TO HOLD the above rented premises during
the full term of twenty (20) years and three months, which term shall
begin July 1, 1988, and shall terminate on September 30, 2008, unless
terminated sooner as hereinafter provided.
3. GROSS RECEIPTS: For purpose of this lease "gross receipts"
shall be all gross receipts obtained by LESSEE from the operation of
the driving range, (golf ball rentals) the sale of season passes, and
daily green fees. All other receipts shall not be defined as gross
receipts under the provisions of this lease and shall be and remain
the sole income of LESSEE. The definition of Gross Receipts as
specified herein, shall be subject to renegotiation under paragraph
#18 of this Lease.
-1-
4. RENT: LESSEE shall pay to LESSOR, as rent, a sum to be
determined annually as herein provided, payable in arrears, on or
before the first day of November commencing with November 1, 1988 and
continuing on the first day of November throughout the term of this
lease.
The first rental period shall be deemed to be July 1 through
September 30, 1988. the amount of rent due shall be one percent
(1.0%) of the gross receipts (as defined above) obtained by LESSEE
during that period of time. This period is established to coincide
with LESSEE's fiscal year which terminates on September 30th annually.
The remaining twenty years of this lease shall be divided into
four equal five year segments. The rent for the first five year
period shall be one percent of the gross receipts. At the end of
that first five year period and at the end of each subsequent five
year period the parties shall review the financial situation of LESSEE
for the purpose of determining the amount of rent to be paid for the
next five year period. It is agreed that in no event shall the
amount of rent be raised or lowered for any five year period by more
than ten percent (10.0%) of the one percent (1.0%) base rate. Once
raised or lowered, that rent will apply for the next five year
period.
Said rent payment shall be mailed or delivered to LESSOR at the
Kalispell City Hall. All prior rents due by LESSEE to LESSOR under
that certain lease dated July b, 1983 are hereby deemed and agreed to
be paid in full and let it be known and agreed that this lease dated
July 1, 1988 supersedes any and all leases between the Kalispell Golf
Association and the City of Kalispell.
5. USE OF LEASED PREMISES: LESSEE shall use the leased premises
for the primary purpose of operating a municipal golf course; however,
LESSEE shall also encourage members of the general public to utilize
said premises for such other purposes as cross-country skiing, sledding
and jogging, subject however, to reasonable rules and regulations
regarding the conduct of such activities as may be promulgated from
time to time by LESSEE. LESSEE agrees that to observe all Federal,
State and municipal laws and regulations including those related to
human and equal rights and in particular Bureau of Outdoor Recreation
regulations.
-2-
6. MAINTENANCE AND REPAIR OF PREMISES: LESSEE agrees to maintain
the above described premises in as good a condition as the same are
in at this time, or as good as they may be put by LESSSOR during the
term hereof in case of a casualty loss causing repair or reconstruction
by LESSOR; and to return said property to LESSOR at the expiration of
said lease in said condition, reasonable wear and tear and damage by
the elements alone excepted. In the event LESSEE refuses or neglects
to keep the above -mentioned premises in such order and condition
hereinabove mentioned, LESSOR shall have, after first giving ninety
(90) days written notice to repair, the right to declare this lease
null and void and of no further force and effect. In this case the
annual payments of rent shall terminate and LESSEE shall not in any
way be responsible for any future rent payments; and LESSOR in taking
over the premises shall assume and be responsible for all outstanding
capital improvement obligations then existing. LESSEE agrees 'to
maintain and keep in repair all water lines and pumps on said golf
course, and to attend to the shutting off of the water supply and
draining of all pipe lines in the fall, and to turn the water in to
said system in the spring.
7. ALTERATIONS AND IMPROVEMENTS: LESSEE shall not make any
alterations or improvements to the premises or the appurtenances
located thereon in excess of Twenty Five Thousand Dollars ($25,000.00)
at any one time without having first received approval from the
LESSOR of the intended alteration or improvement.
8. UTILITIES: During the entire term of this lease LESSEE
shall pay when due for required utilities serving the leased premises,
including but not limited to, electrical, gas, telephone, water,
sewer and garbage services. LESSEE shall also be entitled to continue
use of LESSOR's appropriated water right of the Stillwater River
adjacent to the golf course premises without charge. LESSEE in using
the water from the Stillwater River under said water rights shall
operate and maintain the system and pump for such purposes.
9. PERSONAL PROPERTY AND FIXTURES: All personal property herein -
before or hereinafter obtained in connection with the operation and
-3-
maintenance of the Kalispell City Golf Course shall be the property
of LESSEE; provided however, that all fixtures that have been or may
be installed on the premises and attached thereto have or will become
part of the premises and are the property of LESSOR.
10. COST OF OPERATION:
cost of providing supplies,
items and the entire cost
course, the club house and
responsibility of LESSEE.
All costs of operation including the
equipment, tools, labor and other such
of maintaining and operating the golf
other appurtenances shall be the sole
11. USE OF CLUBHOUSE BY LESSOR: Although LESSEE shall have the
exclusive use and supervision of all buildings on said premises including
that structure known as the club house, it is agreed that LESSOR
shall be entitled to use of the club house at any convenient time to
LESSEE upon adequate notice with LESSOR reimbursing LESSEE for all
actual expenses incurred by LESSEE for the reason of any such use by
LESSOR.
12. GOLF COURSE FEES: LESSEE may charge reasonable season and
daily green fees to those persons desiring to use the premises for
golfing purposes; however, LESSOR reserves the right to review and
approve those fees annually. A schedule of proposed fees shall be
presented by LESSEE to LESSOR prior to the first day of April of each
year of this lease. All other fees shall be established at LESSEE's
sole discretion.
LESSOR hereby approves the following schedule of fees for the
1988 golfing season:
Season - First Member (adult - same family) $200.00
Season - Second Member (adult - same family) 175.00
Season - Junior (through high school) 50.00
Daily - Green Fees (Championship Eighteen) 16.00
Daily - Green Fees (9 holes; Cameron Nine) 7.00
13. LESSEE'S FINANCIAL REPORTS: Annually, on or before the
first day of November, in conjunction with the payment of the annual
rent, LESSEE shall present to LESSOR for review a copy of LESSEE's
-4-
annual financial report completed in accordance with generally accepted
accounting principles.
14. LESSEE'S LIABILITY INSURANCE: LESSEE shall obtain and keep
in full force and effect during the term of this lease, full general
liability insurance in the amount of One Million Dollars ($1,000,000.00)
with a company licensed to do business in the State of Montana; and
said policy of insurance shall name LESSOR as additional named insured.
LESSOR shall be furnished with a certificate that such insurance as
is in force and the same shall provide for reasonable notification to
LESSOR prior to the same being cancelled. LESSEE agrees to hold
LESSOR harmless from any and all liability of any nature, whatsoever,
arising from or out of LESSEE's possession, use, maintenance, improvement
or occupancy of the property herein described; LESSEE further agrees
to defend, at LESSEE's expense, any action brought against LESSOR
arising out of LESSEE's possession, use, maintenance, improvement or
occupancy of said property.
15. FIRE INSURANCE: During the full term of this lease, LESSOR
shall maintain its own fire insurance adequate to cover replacement
costs on the improvements on said premises. Should the premises
during the term of this lease suffer damages which are covered by
said fire insurance policy, LESSOR agrees to utilize all insurance
reimbursements therefore, towards rebuilding or repairing the damaged
premises, or towards providing adequate replacement facilities. The
contents of buildings and fixtures located on the premises shall be
insured by LESSEE and shall be in such amounts as to assure replacement.
The parties mutually agree as to waiver of subrogation rights each
with the other.
16. DEFAULT AND BANKRUPTCY: In the event that:
(a) LESSEE shall default in the payment of any installment
of rent or other sum herein specified and such default shall
continue for thirty (30) days after written notice thereof;
or
-5-
(b) LESSEE shall default in the observance or performance
of any other of LESSEE's covenants, agreements, or obligations
hereunder and such default shall not be corrected within
ninety (90) days after written notice thereof; or
(c) LESSEE shall be declared bankrupt or insolvent according
to law, or, if any assignment shall be made of LESSEE's
property for the benefit of creditors;
LESSOR shall have the right thereafter, when such default continues,
to re-enter and take complete possession of the leased premises,
according to law, and -to declare the term of this lease ended, and to
remove LESSEE's effects, without prejudice. In doing so no additional
rent payments may be collected from LESSEE; however, if LESSEE shall
default, after reasonable notice thereof, in observance or performance
of any conditions or covenants on LESSEE's part to be observed or
performed by virtue of any of the provisions in any article of this
lease, LESSOR, without being under any obligation to do so and without
thereby waiving such default, may remedy such default for the account
and at the expense of LESSEE.
17. NOTICE: No notice from LESSOR to LESSEE relating to the
leased premises or the occupancy thereof, shall be deemed duly served
unless personally served upon or mailed to LESSEE, registered or
certified mail, return receipt requested, postage prepaid, and addressed
to LESSEE at its address as follows:
Manager, Kalispell City Golf Course
Post Office Box 1116
Kalispell, Montana' 59903
Any notice from LESSEE to LESSOR relating to the leased premises or
the occupancy thereof, shall be deemed duly served, if personally
served upon or if mailed to LESSOR by registered or certified mail,
return receipt requested, postage prepaid, and addressed to LESSOR at
the address as follows:
Mayor
City of Kalispell
Drawer 1997
Kalispell, Montana 59903-1997
-6-
18. FIVE YEAR DISPUTE RESOLUTION: At the end of each five
years of this lease it is hereby agreed that either party may upon
written notice given to the other ninety (90) days prior to September
30 of the fifth year, tenth year and fifteenth year, specify in
writing that there are matters contained in the lease (other than the
percentage of gross and the length of term) which because of a sense
of urgency and import require discussion and possible renegotiation.
It is further agreed that any such discussions and renegotiations
shall take place and be concluded within sixty (60) days from the
date of the notice; otherwise they shall be arbitrated within the
last thirty (30) day period of the notice (in other words thirty days
prior to September 30 of the year involved). Arbitration shall
involve three arbitrators with one being chosen by each of the parties
and the two of those arbitrators selecting a third. Results of the
arbitration shall be binding and have the effect of a District Court
judgment as though rendered by a District Court Judge in Flathead
County, Montana.
19. TIME OF ESSENCE AND BINDING EFFECT: It is mutually agreed
by and between the parties hereto that the time of.payment shall be
an essential part of this lease agreement, and that all of the
covenants and agreements herein contained shall extend to and be
binding upon the parties hereto, and their successors and assigns.
IN WITNESS WHEREOF, the parties have executed this lease as of
the date first above written.
ATTEST:
f �
er-T-reasurer
ATT
CITY OF KALISPELL
ayor
KALISPELL GOLF ASSOCIATION
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FBNCE LINE RELOCATruat KALISPELL MICIPAL
GOLF COURSE LAWREM PARK
Comencing at the IS comer of the Water Sept.
Maintenance Buildlog is Loursmas Parke thence
M 44' i, 56 feet to the NR fence corner eY the
Water Dept. Sit* is Lawrence !`ark, thence N 64'
W. on and along the existing fence line SO test
to a points thence x 10' R 06 oad along the
existing fence line 243 fast is do point of
begiasing of the feace Use valocat"Of tbeame
along the feltowift Mass, a W 14 ne fosts
N30V, 1"feet•M60'Me41 twoanoWo
103 feet to a point so the Low Water Lim of the
lttllueter Rivers said robe on do Low Water
Line of the stiumster aver Ube do end of
the fonts lira r* sot.
Low Water Lis* Of
r l stage VM# All bearings +teems oWtalmod tkvuo de
4 use of a hand compass. All Information
vas obtained on November 18, 1917.
y .
i
Point Of Beginning' ,,.•►
Of Fence Line Relocation
`"'`'�••.,_?hto Section Of Fence
�!o Be Removed
N 68
• u...—_.._.. N.E. Fence Corner stater
Dept. Site Is Lawrence Park
Point On Fence Line / M.E. Career Witter Dept.
Maintenance Building In
Lawrence Park