11. Central School Lease - Approval of Purchase AgreementAgenda -April 28, 1997
AGENDA ITEM 11 - CENTRAL SCHOOL LEASE -APPROVAL OF PURCHASE
AGREEMENT
BACKGROUND/CONSIDERATION: I have enclosed a proposed option to
lease and lease agreement that the staff composed for your
consideration and the Historical Society's consideration. It was
our intent to assure the City that the Historical Society would be
able to operate and perform the maintenance requirements of a new
building. The entire operations and maintenance of the building,
after reconstruction, will be the responsibility of the Society.
The Society must have raised $250,000 in cash prior to the lease
agreement consideration. (I would suggest we may want to change
n option to lease, paragraph 1-d should require that the $250,000
cash shall be placed in an escrow account for the City to insure
that the funds are available.)
RECOMMENDATION: Based upon your direction to proceed, we have
attempted to protect the City by assuring the prior performance and
potential cost coverages be addressed by the lease. I am not
certain that there is any way that we can protect the City from a
future failure to perform. A reversion to the City, if the worst
happens, will place an unenviable decision and possible burden on
the City. What will we do with the building? Will we be forced to
operate it as a museum? Will we need to "rehab" the building to
make it useful as an office complex for the City? To continue the
process to complete the museum, I recommend approval of the lease
Agenda -April 28, 1997
form presented (with the possible escrow account conditions).
ACTION REQUIRED: A MOTION to approve the lease format is needed.
OPTION TO LEASE AGREEMENT
This Option to Lease Agreement, made and entered into on , 1997, by
and between the City of Kalispell, a municipal corporation of the State of Montana, hereinafter
referred to as CITY and the Northwest Montana Historical Society, a ,
organized and existing under the laws of the State of Montana, hereinafter SOCIETY,
WITNESSETH:
WHEREAS,
The CITY for and in consideration of the sum of One Dollar and other valuable consideration
($1.00 and ovc) paid by the SOCIETY, the receipt and sufficiency of which is hereby acknowledged,
does grant to the SOCIETY the exclusive option to lease.the within described premises owned by
the CITY and commonly known as the Central School, more particularly described as follows:
The East one-half (E %Z), Block 45, Kalispell Original Townsite, together with the
building located thereon, for the purpose of operating a museum, together with
exclusive concession right and privilege to charge admission, and to sell novelties,
gifts, memorabilia, food products, and refreshments, and all other activities incidental
to the primary purpose of operating a museum.
NOW THEREFORE, the parties hereto agree as follows.
The option to lease granted herein is subject to the following terms and conditions:
1. The option to lease the premises hereby granted to the SOCIETY shall
become effective upon the date of execution of this Agreement, and shall be
subject to the following terms and conditions:
a. This shall terminate one (1) year after execution hereof, unless sooner
exercised by SOCIETY in the manner hereinafter set forth;
b. Any extensions hereof shall be effective only if made in writing by
mutual agreement of the SOCIETY and the CITY;
C. The CITY must agree to invest the sum, not to exceed, Two Million
Five. Hundred Thousand Dollars ($2,500,000) for the purpose of
designing and reconstructing said premises for use as a museum, and;
d. CITY will not expend funds for other than architectural fees, unless
and until SOCIETY, complies with ¶ e, and
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e. The SOCIETY, prior to exercising this Option, can demonstrate to
the CITY that it has the requisite financial capability of operating said
premises as a museum for a period of two years. For purposes of this
Option, SOCIETY shall be considered to have met the financial
viability requirements of this paragraph if the SOCIETY raises, and
places in escrow, the sum of Two Hundred and Fifty Thousand
Dollars ($250,000) cash, and has said sum available and earmarked
only for the purpose of maintenance and operation of the museum.
2. If the SOCIETY fails to exercise the option to lease within the time
prescribed, this Option shall lapse and the CITY may retain the stated
consideration.
3. SOCIETY may not sell, transfer, assign or otherwise part with any or all of
its rights under this Option Agreement.
4. The Option herein granted shall be exercised in the following manner:
a. On or before the termination date above, the SOCIETY shall execute
the Lease Agreement, attached hereto as Exhibit "A", and in the event
of such exercise the payment shall be applied to the consideration due
from the SOCIETY under this Option Agreement.
5. It is further understood and agreed that time is of the essence in this Option
Agreement, and that the Option must be exercised on or before the
termination date, and if not so exercised, all rights of the SOCIETY granted
by this Option shall cease, and the CITY may retain the consideration given
by SOCIETY for this Option.
IN WITNESS WHEREOF, the SOCIETY and the CITY have caused this Option Agreement
to be executed on the day first above written.
CITY OF KALISPELL
Douglas D. Rauthe - Mayor
NORTHWEST MONTANA HISTORICAL
SOCIETY
By:
Its:
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EXHIBIT "A"
LEASE AGREEMENT
This Lease made and entered into , 199_ is by and between the CITY OF
KALISPELL, a municipal corporation, hereinafter CITY, and the NORTHWEST MONTANA
HISTORICAL SOCIETY, a - organized and
existing under the laws of the State of Montana, hereinafter SOCIETY:
WHEREAS,
The CITY is the owner of certain real property and the improvements situated thereon located
in the City of Kalispell, more commonly referred to as the Central School; and
WHEREAS,
The SOCIETY is an organization created by citizens for the purpose of establishing and
operating a historical museum within the City limits of Kalispell; and
WHEREAS,
The SOCIETY desires to lease from CITY the Central School premises in furtherance of its
goal of establishing and operating a museum within the City of Kalispell.
NOW, THEREFORE in consideration of the mutual agreements and covenants contained
herein the parties hereto agree as follows:
The CITY hereby leases to the SOCIETY and the SOCIETY hereby leases from the
CITY that certain real property situated in the City of Kalispell, Flathead County,
Montana, more particularly described as follows, to -wit: East'/2 , Block 45, Kalispell
Original Townsite, excluding the parking lot on the North end of said '/2 block,
together with the building situated thereon, commonly known as the Central School.
2. The term of this Lease shall be for a term of years commencing ,
1997 and ending ,
3. SOCIETY shall use the demised Premises only for purposes connected to and
consistent with the operation of a public historical museum and related services and
programs, including the exclusive concession, right and privilege to charge
admission, and sell novelties, gift, memorabilia, food products and refreshments,
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provided however, that the SOCIETY may use the Premises for any other lawful
purpose with the CITY'S advanced written consent, which consent shall not be
unreasonably withheld.
4. CITY and SOCIETY acknowledge that the premises have received major structural
improvements necessary for occupancy by the SOCIETY as a museum and
SOCIETY acknowledges that said improvements have been accomplished.
5. The rent or rents to be paid to the CITY by the SOCIETY are in the amounts and on
the basis and terms as follows:
a. SOCIETY shall pay to the CITY as rent for the Premises the sum of ten
dollars ($10.00) per year for each year during the term of this Lease. The
rent shall be payable on or before , in each year.
b. The SOCIETY shall be solely responsible for the costs of any and all special
facilities, including City special assessments, equipment and materials, and
services required by the SOCIETY, which by virtue of the SOCIETY'S
occupancy of the premises, SOCIETY deems necessary for operation and
maintenance of the premises as a museum. This however, does not grant to
SOCIETY the right to make any structural alterations to the building or to the
demised premises in general without the express prior written consent of the
CITY, which consent shall not be unreasonably withheld.
C. SOCIETY shall be solely responsible for all labor and services and materials
necessary for SOCIETY'S use of premises, exterior building maintenance,
grounds maintenance, and all interior building maintenance including, but not
limited to, heating systems, ductwork, electrical systems, conduit, plumbing,
sewer, and HVAC.
d. SOCIETY shall keep an accurate account of all monies received through its
operation upon the premises, and the CITY shall at all times have the right
to audit such accounts and any records pertaining to the right to the accounts.
6. Except as otherwise permitted by this Lease Agreement, the SOCIETY covenants not
to do or suffer any demolition, waste or damage, disfigurement or injury to the
demised premises or the building or any part of it, or permit or suffer any overloading
of its structural members or floors.
SOCIETY shall permit the authorized representatives of CITY to enter the demised
premises or any part of it at all times during usual business hours after reasonable
notice under the circumstances prevailing for the purpose of making reasonable
inspections.
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7. All portions of the sidewalks and passageways, and all ways of access to public
utilities of the premises shall be kept unobstructed by the SOCIETY and shall not be
used for any purpose other than ingress and egress to and from the premises. The
doors, stairways or openings into any place in the structure, including hallways,
corridors and passageways shall in no way be obstructed by the SOCIETY.
8. SOCIETY shall indemnify and save harmless the CITY from all losses, costs and
expenses (including attorneys' fees) arising out of any liability, claim of liability, for
injuries to persons or property sustained or claimed to have been sustained by
anyone, by reason of the use or occupancy of the premises, whether such use is
authorized or not, or by any act or omission of the SOCIETY or any of its officers,
agents, employees, patrons, guests or invitees, and SOCIETY shall pay for any
damage to the property of CITY, or loss or theft of property, done or caused by such
persons.
9. SOCIETY shall provide the CITY at the time of the execution of this Lease
Agreement a comprehensive liability insurance policy, including liability and
property damage, written by a company approved by the CITY, covering premises,
operation and productions in amounts as stipulated below:
For any one person:-------- $750,000.00
For any one accident:------ $1,500,000.00
Property Damage:---------- $ 50,000.00
a. In the event the CITY is not named as an additional named insured on
SOCIETY'S insurance policies, the policies shall contain a provision
waiving all subrogation rights against the CITY.
b. Certified copies of above policy or a certificate evidencing its existence or a
binder shall be delivered to the CITY upon execution of this Lease
Agreement. In the event a binder is delivered, it shall be replaced with 30
days by a certified copy of the policy. Each copy or certificate shall contain
a valid provision or endorsement that the policy may not be canceled,
terminated, or modified without giving 30 days' written notice to the CITY.
C. A renewal insurance policy shall be delivered to the CITY not less than 30
days prior to a policy's expiration date except for any policy expiring on or
after the termination date of this Lease Agreement.
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10. In the event any portion of the Central School Museum leased to the SOCIETY is not
vacated at the end of the term of this Lease Agreement, the CITY is authorized to
remove from the premises, at the expense of the tenant, all the property of any kind
which may be occupying a portion of the museum on which the term of this Lease
Agreement has expired, and the CITY shall not be liable for any damages to or loss
of such property sustained either during its removal or storage and the CITY, its
agents, employees, and officials, are released from all claims for such loss or damage.
Upon termination of this Lease Agreement, the SOCIETY will deliver to the CITY
the premises in as good condition as they shall be found at the beginning of the term
of this Lease Agreement, except for normal wear and tear.
11. It is agreed that all receipts and funds received by the SOCIETY in operation of the
museum are the property of the SOCIETY.
12. The CITY assumes no responsibility for any property placed in the premises, and the
CITY is released and discharged from any and all liabilities for any loss, injury or
damages to person or property that may be sustained by reason of the occupancy of
the premises under this Lease Agreement; and all guards or other protective services
desired are the responsibility of the SOCIETY. Further, it shall be the sole
responsibility of SOCIETY to procure insurance against losses to any museum
contents, including but not limited to, furnishings and fixtures, equipment, museum
display items and artifacts, and any and all other property placed in the demised
premises by the SOCIETY, its agents, employees, and representatives..
13. CITY shall have the power and authority to terminate this lease for any of the
following reasons:
a. Recission by mutual consent of the parties;
b. For violations of any of the terms and conditions of this lease;
C. For using the demised premises for any purpose other than those authorized
by this lease or for any other misuse of the premises.
14. If there is default or violation of any of the covenants or conditions in this Lease
Agreement involving the failure of the SOCIETY to keep the demised premises in
good condition and repair in accordance with the provision of this Lease Agreement,
or to take any action required by the terms of the Lease Agreement, then the CITY
shall have the right to, but shall not be required, to make good any default of the
SOCIETY. Nothing in this Lease Agreement shall imply any duty upon the part of
the CITY to do any work which, under any provisions of this Lease Agreement, the
SOCIETY is required to perform, and the performance of it by the CITY shall not
constitute a waiver of SOCIETY'S default in failing to perform it. The CITY may,
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during the progress of any work elected to be performed by it on the demised
t _ premises or the building, enter with contractors, agents, and employees and keep and
store upon the demised premises and in the building or any part of it all necessary
materials, tools and equipment. The CITY shall not in any event be liable for any
inconvenience, annoyance, disturbance, loss of business or other damage of or to the
SOCIETY by reason of bring materials, supplies and equipment into or through the
building during the course of work, and the obligations of the SOCIETY under this
Lease Agreement shall not be affected in any manner whatsoever, provided that the
CITY uses reasonable care under the circumstances prevailing to avoid unnecessary
inconvenience, annoyance, disturbance, loss of business or other damages of or to the
SOCIETY.
15. To the extent not prohibited by law, all expenses, including reasonable attorney fees
and court costs, incurred by the CITY by reason of any default by the SOCIETY
(whether or not any proceeding is instituted) or in connection with any action or
proceeding affecting this Lease Agreement or demised premises, shall be paid to the
CITY by the SOCIETY on demand. Conversely, the SOCIETY shall be entitled to
similar expenses incurred because of the CITY'S default, without default on the
SOCIETY'S part.
16. All sums advanced by the CITY pursuant to § § 14 and 15 and all necessary incidental
expenses, and attorney's fees in connection with the performance of any acts shall be
deemed additional rent and shall be promptly payable by the SOCIETY, in the
respective amounts so advanced by the CITY. This reimbursement shall be made on
demand. Conversely, the SOCIETY shall be entitled to receive from the CITY
prompt payment or reimbursement on any sum due and owing from the CITY to the
SOCIETY.
17. Any notice which the CITY may desire to give the SOCIETY shall be deemed
sufficiently given if the notice is in writing and sent by certified mail addressed to the
SOCIETY, at , or at the latest substituted by the
SOCIETY in writing to the CITY, or left at such address or delivered to the
SOCIETY'S representative at the premises; and the time of giving of the notice shall
be the time when the notice is mailed, left or delivered as proved herein. Any notice
from the SOCIETY to the CITY shall be validly given if sent by certified mail
addressed to CITY MANAGER, P.O. Box 1997, Kalispell, MT 59903-1997, or at
such other address and the CITY shall designate by notice to the SOCIETY.
18. Time is of the essence in this Lease Agreement.
19. Upon termination of this lease, SOCIETY shall peaceably yield up and surrender the
possession of the demised premises to CITY or its agents, or to subsequent lessees
or grantees.
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20. SOCIETY waives all claims for compensation for any loss or damage sustained by
reason of any defect, failure, or impairment of the water or sewer system, electrical
system leading to or on the premises. In the event the premises or any part thereof
is damaged by fire or if for any other reason, including strikes, failure of utilities or
any act of God which, in the judgement of the CITY, renders fulfillment of this Lease
Agreement by the CITY impossible, the SOCIETY releases the CITY and its agents
from all demands, claims, and causes of actions arising from any of these causes.
21. Traffic control and parking on or near the demised premises under this Lease
Agreement shall be subject to approval of the CITY'S Public Works Department and
the Kalispell Parking Commission.
22. This Lease Agreement shall and its terms and conditions shall be binding upon and
inure to the benefit of the respective parties their heirs, successors and assigns.
IN WITNESS WHEREOF, the CITY and the SOCIETY have caused this Lease Agreement
to be executed the day and year first above written.
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