Hockaday Development Agreement 2007DEVELOPMENT AGREEMENT
THIS AGREEMENT, made and entered into this _ec day of February, 2007 by and
between. the City of Kalispell, a municipal corporation hereinafter cared the CITY, and
the Hockaday Museum of Art, a Montana non-profit §501(c)(3) corporation, hereinafter
called the HOCKADAY;
1 IT71TESSETH:
WHEREAS, on the � day of �r2007, the parties did enter into an agreement
whereby CITY leased to the HQ� I�A,Ii'AY for a term of thirty (30) years that certain
premises known as Hockaday Museum of Art and owned by the CITY more particularly
described as follows:
Lots 1 and 2 of Block 64, of Kalispell, Montana, according to the map or
plat thereof on fide and of record in the office of the County Clerk and
Recorder of Flathead County, Montana.
WHEREAS, such lease of said premises has been found to have been to the mutual benefit
of the parties and to the people of the City of Kalispell and Flathead County, and
WHEREAS, on the 19th day of December 2006, the CITY" paid the sung of $178,000.00
and the HOCI ADAY paid the sum. of $1,003.8 1, for the purchase of real property
adjacent to the above -described property and more particularly described as follows:
Lot 3 of Block 64, of Kalispell, Montana, according to the map or plat
thereof on ale and of record in the office of the County Clerk and
Recorder of Flathead County, Montana.
which real property was recorded in the ownership of HOCKAI?AY; and
WHEREAS, HOC ADA.Y currently has an active capital campaign underway to finance
the major renovation to the premises subject to the above -described lease and to construct
rnaj or improvements upon the newly acquired real property, described above.
HOCK ADAY further anticipates that the capital campaign and the construction of the
improvements will be completed in the year 2010; and
WHEREAS, the parties enter into this Agreement in order to further their cooperation in
the creation of larger capacity fine arts museum to serve the people of the City of
Kalispell and the greater Flathead valley community area. The facility to be created will
hereafter be referred to as the "Project."
City of walienP11114oI-kadav Mrrepum DAVA"nv"Ont A arpor"01"t pnea 1 of R
NOW THEREFORE, THE PANTIES AGREE AS FOLLOWS:
1. City's Contribution. The parties hereby acknowledge that the CITY has contributed
the sure of ONE HUNDRED SEVENTY EIGHT THOUSAND ($178,000.00) dollars for
the purchase of the above -described real property. The parties further acknowledge all
funds used in construction of the Project's building and attached fixtures will be from
private funds.
2. Fundraising. Except as otherwise stated herein, the HOCKADAY shall be solely
responsible for all fundraising and/or borrowing in connection with the construction of
the Project and related improvements.
3. Hoc day 's Completion ofFinal F final Design. The HOCKADAY shall complete a final
design of the Project, and shall submit all final design plans to the City's Planning
Director for approval. All architectural aspects of the Project and related improvements
shall be designed and stamped by an architect licensed in Montana and experienced in the
design and construction of similar buildings. All engineering aspects of the Project and
related improvements shall be designed and stamped by an engineer licensed in Montana
and experienced in the design and construction of similar buildings. The final design
process shall include the preparation of a final cost estimate prior to the I- OCKADAY's
entry into a construction agreement.
4. Sufficient Funds to Build. The HOCKADAY shall not award a construction contract
for the Project until the HOCKADAY has raised., or otherwise secured, funds sufficient
to cover the entire cost of such construction contract, together with a ten percent (10%)
contingency. Before signing a construction contract, the HOCKADAY shall provide to
the City Finance Director evidence that it has raised and has available sufficient funds, as
described above. The HOCKADAY shall be entitled to a credit, toward the construction
costs, for all contributions in kind which individuals or entities have committed, in
writing, to provide to the HOCKADAY.
5. .wilding Permit. Fees. The HOCKADAY ADAY shall apply for and obtain a building
permmt from the CITY, but the CITY shall waive all applicable building permit fees. The
CITY shall also waive all Impact Fees and connection fees. The HOCKADAY shalt pay
to the CITY water and Sewer Departments all monthly utility fees.
6 Construction Contract: Insurance: Indemnification. In any construction contract
entered into between the HOCKADAY and any contractor involved in the construction of
the building and related improvements, the HOCKADAY ADAY shall insert a provision
requiring that such contractor provide a policy of liability insurance in an amount of not
less than 2 million, which policy shall name the CITY and the HOCKADAY as
additional insureds. Such insurance policy shall be primary, and non-contributory, and
shall provide that it may not be canceled without at least sixty (60) days prior written
notice to the CITY and to the HOCKADAY. In addition, any such construction contract
shall provide that the contractor shall indemnify, defend and hold the CITY and the
HOCKADAY', their employees and agents, harmless from any and all causes of action,
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claims, damages and liabilities incurred as a result of the acts or omissions of the
contractor, its employees, agents and subcontractors. Such obligation to defend shall
include the payment by the contractor of reasonable attorneys' fees incurred in the
defense of the CITY or the HOCKADAY.
7. Construction Contract: Workers' Compensation. Warranty. In any construction
contract entered into between the HOCKADAY and any contractor involved in the
construction of the Project and related improvements, the HOCKADAY shall insert a
provision requiring that the contractor maintain workers' compensation insurance as
required by law. In addition, any such construction contract shall provide that the
contractor warrants that all materials and services provided shall be of a goad and
workmanlike quality free and clear of defects of any kind, for a period of one (1) year
after the date of substantial completion.
8.. ward of Contract. After completing all steps described above, the HOCKADAY
shall be entitled to award a contract for construction of the Project, and may do so as a
private construction project. As a private construction project, the Project shall be fully
funded by private donations and other funds privately raised. The CITY shall not
contribute any funds whatsoever toward construction of the Project.
9. Construction of the Project. The HOCKADAY shall be solely responsible for
constructing and equipping the Project and for constructing and installing all related
improvements, including but not limited to parking lots and access driveways, curbs and
gutter, landscaping and irrigation system, lighting, sidewalks and signage. All of such
improvements, together with all furniture, fixtures and equipment, shall hereafter be
referred to as the "Project and related improvements." The HOCKADAY shall construct
the Project and related improvements in full compliance with all City Zoning Jurisdiction
Regulations, Building and Fire Codes, Utility Regulations and similar requirements. The
HOCKADAY shall apply for and obtain approval of the outside appearance of the
Project and related improvements from the City of Kalispell Architectural Review
Committee.
10. Transfer to City. Upon completion of construction of the Project and related
improvements, they shall be transferred by the HOCKADAY to the CITY, without
receipt of any consideration from the CITY, who shall thereafter own them., and the
CITY shall then lease the land, the Project and related improvements to the
HOCKADAY pursuant to a Lease containing the terms set forth in this Agreement, and
such other terms agreed to by the parties. In the event that the capital campaign fails to
raise the necessary capital to fund the Project and the Project cannot be undertaken, the
HOCKADAY shall transfer all title and ownership to the real property to the CITY for its
uses.
11. Assignment of Warranties. Immediately upon final completion of the
HOC ADAY's Project, the HOCKADAY shall assign to the CITY all warranties with
respect to the Project and all of its equipment and components.
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12. Hockaday s Records. All of the HOCKADAY's books, records, documents, and
correspondence shall be made available, upon request, to the CITY.
13. Hockaday Board. The HOCKADAY agrees that it currently has a 15 member Board
of Directors, and shall not increase the number of Directors without the prior written
consent of the Kalispell City Council. Nor shall the HOCKADAY delegate to an
Executive Committee or any other entity or individual substantial decisions -making power
of its Board of Directors without the prier written consent of the Kalispell City Council.
Members of the HOCKADAY Board of Directors shall not be compensated. Meetings of
the Board of Directors shall be open to the public in the same manner that the City's
Council Meetings are open to the public.
14. Non -Profit Qualification. The parties now agree, and the Lease between the parties
shall provide: Throughout the entire period of construction of the Project and related
improvements, and thereafter through the entire term of the lease to the HOCKADAY,
the HOCKADAY shall remain anon -profit corporation, qualified as such under
§501(c)(3) of the Internal Revenue Code. The failure to maintain qualification as a non-
profit corporation under §50 1 (c)(3) of the Internal Revenue Code shall be considered a
material breach of this Agreement.
15. Payment of Rent. The parties now agree, and the Lease between the parties shall
provide: Once the land, the Project and related improvements are leased to the
HOCKADAY by the CITY, or by its transferee, the HOCKADAY shall pay yearly rent
of one dollar ($1.00), in advance.
16. Term of'Lease_ The parties now agree, and the Lease between the parties shall
provide: The lease of the land, the Project and related improvements by the CITY to the
HOCKADAY shall be for a term of thirty (30) years. The term of the Lease shall begin
on the first day of the month in which the Project opens for public use.
17: Hockaday Responsibility. The parties now agree, and the Lease between the parties
shall provide: The HOCKADAY shall be solely responsible for all costs of operating,
maintaining, repairing and replacing the Project and related improvements. For purposes
of this paragraph, "maintenance" shall include but not be limited to maintenance of all
landscaping, irrigation, lighting, driveways and parking lots (including striping and snow
removal), signage and refuse removal. Except as set forth herein with respect to
insurance, the CITY shall have no responsibility whatsoever to contribute towards the
cost of operation, maintenance, repair or replacement, but may, however contract with the
HOCKADAY for these services.
18. Standard of .maintenance, etc.. Reserves. The parties now agree, and the Lease
between the parties shall provide: The HOCKADAY shall at all times operate, maintain,
repair and replace the Project and related improvements in a prudent manner with the
goal of preserving for use by the public an attractive, safe, comfortable and convenient
facility. The HOCKADAY shall identify and maintain sufficient reserve funds (as
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determined by its Board of Directors) to ensure that it will be able to adequately operate,
maintain, repair and replace the Project and related improvements at all tunes.
19. Manner of Operation. The parties now agree, and the Lease between the parties
shall provide: The HOCKADAY shall be solely responsible for operating the Project as a
public facility serving the residents of the greater Kalispell area and residents from other
areas of Flathead County as well as visitors and tourists.
20. City's Fire Insurance. The parties now agree, and the Lease between the parties
shall provide: During construction of the Project and related improvements, and
continually thereafter the City shall pay for and maintain a policy of fire and extended
coverage insurance on the Project and related improvements, in an amount sufficient to
assure the replacement of any such items destroyed or damaged. Such coverage need not
extend to items of personal property brought into the Project by members of the public.
Such policy of insurance shall provide that it shall not be canceled without at least sixty
(60) days prior written notice to the HOCKADAY.
21. (Hockaday 's Liability Insurance. The parties now agree, and the Lease between the
parties shall provide: After construction of the Project and related improvements, the
HOCKADAY,, as the entity responsible for operating, maintaining, repairing and
replacing the Project and related improvements, shall pay for and maintain at all times a
policy of public liability insurance in an amount not less than. $1.5 million which policy
shall name the CITY as an additional insured. Such insurance coverage shall be primary
and noncontributory, and any similar coverage maintained by the CITY shall be
secondary. Such policy shall be written with an insurance company satisfactory to the
CITY and shall provide that it shall not be canceled without at least sixty (60) days prior
written notice to the CITY. The insurance policy limits contained in this paragraph shall
be discussed by the parties every five (5) years during the term of the Lease, and any
extension, with a view toward increasing such limits to beep pace with inflation in
damage awards.
22. Hockaday to Indemnify. The parties now agree, and the Lease between the parties
shall provide: The HOCKADAY, as the entity responsible for operating, maintaining,
repairing and replacing the Project and related improvements, agrees to indemnify,
defend, and hold the City, its employees and agents, harmless from any and all causes of
action, claims, damages and liabilities incurred as a result of the operation, maintenance,
repair and replacement of the Project and related improvements. Such obligation to
defend shall include the payment by the HOCKADAY of reasonable attorneys' fees
incurred in the defense of the CITY.
23. Exclusive Use; Discrimination, Compliance with Laws. The parties now agree, and
the Lease between the parties shall provide: while leasing from the CITY the
HOCKADAY ADAY shall have exclusive use of the land, the Project and related improvements,
and shall be entitled to reasonably limit, control and schedule use of the Project in a
manner that it deems appropriate, subject to the goals and restrictions set forth herein. In
limiting, controlling and scheduling the use of the Project the HOCKADAY shall not
City of WalicnAl/Und►Lad ov Misemi m Y)Pvpinnmpnt Aarppmpnt paap r% Of R
unlawfully discriminate against any individual or group. The HOCKADAY shall be
entitled to use the Project for its own fund raising activities or for other community
fundraising activities, so long as it does so without unlawful discrimination against any
individual or group. The HOCKADAY shall at all times comply with all applicable
federal, state and local laws, ordinances and regulations.
4. No Assignment. The parties now agree, and the Lease between the parties shall
provide: The lease of the land, the Project and related improvements by the CITY to the
HOC ADAY shall not be assigned without the prior written approval of the City
Council.
25. Litter; Landscaping. The parties now agree, and the Lease between the parties shall
provide: Throughout the term of this Agreement, the HOCKADAY shall maintain the
land, building and related improvements free of litter, trash and other debris and shall
promptly clean up any such material that accumulates. During the term of this
Agreement, the HOC ADAY shall maintain any and all landscaping in an attractive
condition, and shall promptly treat or remove any weeds or other undesirable plants.
26 Ownership by City. The parties now agree, and the Lease between the parties shall
provide: Upon termination of the Lease of the land, the Project and related
improvements, all such property shall automatically revert to the City.
27. Notice; Litigation Forum. The parties now agree, and the Lease between the parties
shall provide: If either party believes that the other party has breached any terms of this
Agreement, the party claiming that a breach has occurred shall provide a written notice to
the party alleged to have breached. the Agreement, which notice shall detail the
circumstances of the alleged breach. The party that is alleged to have breached the
Agreement shall have thirty (30) days within which to respond or, if appropriate, make
adequate arrangements to remedy the breach. If adequate arrangements to remedy the
alleged breach have not been made by the conclusion of the 30-day period, then the party
alleging that a breach has occurred shall be entitled to proceed with litigation or
arbitration regarding the alleged breach. Any litigation to enforce or interpret the
provisions of this Agreement or the parties' rights and liabilities arising out of this
Agreement shall be maintained only in the courts in the County of Flathead, Montana.
28. Attorneys " Fees. The parties now agree, and the Lease between the parties shall
provide: In the event of any litigation or arbitration to enforce or interpret the provisions
of this Agreement, or to remedy a breach thereof, the prevailing party shall be entitled to
reasonable attorneys' fees as fixed by the court or arbitration.
29. .orb itratiom The parties now agree, and the Lease between the parties shall provide:
Any party that desires to initiate arbitration may do so in accordance with the provisions
of the Uniform Arbitration Act, beginning at §27-5-111 MCA. Notice of the demand for
arbitration shall be filed in writing with the other party. The parties shall jointly select an
arbitrator, unless they are unable to agree, in which case they shall each appoint an
arbitrator and the two arbitrators shall select a third arbitrator. The arbitrators shall be
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empowered, by majority decision, to decide any issue of fact or law submitted to them.
This agreement to arbitrate shall be specifically enforceable under the prevailing
arbitration law. The parties shall share equally the arbitrators' fees and costs.
30. Entire Agreement. The parties now agree, and the Lease between the parties shall
provide: This Agreement contains the entire agreement of the parties hereto, and
supersedes any prior written or oral agreements between them concerning the subject
matter contained herein. There are no representations, agreements, arrangements, or
understandings, oral or written, between the parties hereto relating to the subject matter
contained in this Agreement, which are not fully expressed herein. The provisions of this
Agreement may be waived, altered, amended or repealed in whole or in part only upon
the written consent of all parties to this Agreement.
3 1. Partial Invalidity. The parties now agree, and the Lease between the parties shall
provide: Each terra, covenant, condition or provision of this Agreement shall be viewed
as separate and distinct, and in the event that any such term, covenant, condition or
provision shall be held by a court of competent jurisdiction to he invalid, the remaining
provisions shall continue in full force and effect.
32. Governing haw. The parties now agree, and the Lease between the parties shall
provide: The construction of this Agreement, and the rights and liabilities of the parties
hereto, shall be governed by the laws of the State of Montana.
33. Successors in Interest. The parties now agree, and the Lease between the parties
shall provide: Subject to the restrictions against assignment as herein contained., this
.Agreement shall inure to the benefit of, and shall be binding upon, the assigns, successors
in interest, personal representatives, estate, heirs, and legatees of each of the parties
hereto.
34. Necessary Acts. The parties now agree, and the Lase between the parties shall
provide: Each party to this Agreement agrees to perform any further acts and execute and
deliver any further documents that may be reasonably necessary to carry out the
provisions of this Agreement.
IN WI77VfS4 WHEREOF, both parties have hereunto set their hands and seals this
da of
y � 2007.
CITY OF KALISPELL HOC ADAY MUSEUM OF ART
JWnes H. Patric , City Manager
Date: R - Date: 00
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STATE OF MONTANA )
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County of Flathead )
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On this day of ~� , 2007, before me, a Notary Public for the State
of Montana, personally appeared/&;D '� ------ , in his authorized capacity as
President of the Board of Directors of the HOC DAY MUSEUM OF ART and proved
to me to be the person whose name is subscribed to the within instrument, and
acknowledged to me that he executed the sane.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and gear hereinabove first written.
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MONI '
STATE OF MONTANA )
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County of Flathead }
NOTARY P I for !the S to of Montana
Residing at: i
My Commission expires: Yld7VAg001
On this dayof 20071,before me a Kota Public for h
� Notary c o the Mate
of Montana, personally appeared Jame H. Patrick, proved to me to be the person whose
name is subscribed to the within instrument and acknowledged to me that he executed
the same in his authorized capacity as City Manager of the City of Kalispell.
1N WANES` WHEREOF, I have hereunto set nay hand and affixed my official
seal the day and year hereinabove first written.
ova NOTARY PUBL C for the Mate of Montana
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