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HomeMy WebLinkAbout5. Levee Drive Congregate Dining #5 CITY OF SHAKOPEE MEMORANDUM To: Mayor and City Council Mark McNeill, City Administrator From: Mark Themig, Parks, Recreation, and Facilities Director Meeting Date: January 23, 2007 c Subject: 200 Levee Drive Lease INTRODUCTION This agenda item is intended to provide background and generate discussion for the future lease of physical property within the 200 Levee Drive building. Joan Lynch from the CAP Agency will be in attendance at the meeting, as will Duane Toenyan (Facility Maintenance) and Brad Eller (Recreation Supervisor - Youth, Teens, andcSenior Programs). BACKGROUND In 1979, the City entered into a lease with "200 Levee Drive Associates, L TD" for use of approximately 2,343 square feet of the 200 Levee Drive Building, which was under construction at the time. The lease was intended to provide meals and activity space for senior citizens and older active adults. The Levee Drive Building was constructed in 1979 with funding from the Minnesota Housing Finance Agency. It contains 66 rental units, and 2-3 are currently vacant. The leased space includes a general meeting/dining space for approximately 60, commercial kitchen, restrooms, small office area, and a separate entrance. The space is open 2417for residents of the building. Some kitchen equipment is part of the building and owned by the Lessor (garbage disposal, air exchangers, etc.), and some kitchen equipment is owned by the CAP Agency (stove, pots and pans, etc.). Lease The lease specified the following: 1. Term: . The lease would become effective upon completion of construction, which we believe was November 10, 1980. . The lease provided five successive five-year renewal periods. . The lease has technically expired, so we are a holdover tenant paying monthly rent until we renegotiate another lease or vacate the property. 2. Rents: a. Initial and Second Terms (11/10/1980 to 11/09/1990): $1/year b. Third, Fourth, and Fifth Terms: (11/10/1990 to 11/09/2005): "...equal to 70% of the Fair Market Rental (das hereinafter defined) determined as of the date five (5) months prior to the commencement date of that renewal term, and shall be payable in sixty (60) equal installments each on the firstday of each month during the rental term" "Fair Market Rental" was the amount for which another willing lessor would pay for the space. It appears that the property owner set this amount. The lease allowed for the City to object to the lease amount, but I do not believe that the City has ever objected. c. The current rent is $1, 785/month ($0.76/sq ft), or $21,420 per year. 3. Permitted Uses: . Meeting center, arts and crafts center, dining facility and other uses (exclusively for senior citizens?) . Meal prog~amfor.senior citizens . 6:00a.m.-10:00 p.m. . Tenants of the building can use the space if not being used by the City or partner organizations . Advisory Council to oversee use (not in existence) 4. Utilities: . Owner provides heat, water, and sanitary sewer, but City is charged 4.62% of the owner's total cost for these utilities . City pays for electric and natural gas for stoves, which are metered separately . Total annual City utility costs are approximately $2,600 5. Maintenance and Repair: . City is responsible for ongoing trash removal, extermination services, maintenance, repair and replacement of equipment, restrooms, heating and ventilation equipment, light fixtures, light bulbs . City is responsible for general upkeep, including repainting, floor and carpet replacement, etc . Owner is responsible for the "structure" . Total annual City maintenance costs are approximately $8,000-$11,000 6. Insurance: . City is to provide liability and property insurance for the contents of the space . Total.annual City insurance costs are approximately $500 In total, it cost the City $37,826 in 2005 to lease, maintain, and operate this space. T Use of Space The current primary use of the space under the City's lease is the CAP Agency senior dining program. CAP provided 5,959 meals in 2006, primarily to tenants of the 200 Levee Drive Building. According to the CAP Agency, approximately 13 residents of the Northridge Court building attend for meals, and another 12 meals are picked up and deliveredto residents in the Northridge Court building. Meals are provided over the lunch hour five days/week. In the past, Scott County staffed a senior services position in the office area that coordinated senior activities, and there was an active senior club. The Scott County/Scott County HRA HUBS program (Housing Utilization Bridging Services) currently uses the office area for some services, although it's not entirely clear how active HUBS is in this facility (see attached handout). DISCUSSION We metwith the CAP Agency to discuss the space and the terms of the current lease. I believe there is consensus that the terms of the lease are very favorable to the owner, and very unfavorable to the City. We don't know of many leases where the tenant pays rent, utilities, and is also responsible for maintenance and repair of the mechanical systems and the space. One of the strengths of this space is that it has a commercial kitchen, which is required for the CAP meal program. In addition, it has a separate entrance for community use, and is "self contained" with restroom facilities. One of the downsides of this space is that there is a perception in the community that this building is for low-income seniors, and therefore, its ability to generate interest and/or other uses may be limited. For example, we have discussed the possibility of moving our current senior club that meets at the Youth Building to the 200 Levee Drive Building, but there was no interest from the club members in doing this. Future Options/Opportunities There appear to be three options as we move forward: 1. Continue Use of the Space and Renegotiate a Lease Continuing use of the space would ensure that the meal service continues uninterrupted. Since the current lease has expired, wewould need to renegotiate a lease. However, we don't know if we would be successful in getting better terms than our current lease. If the City were to continue this service, there are several upgrades that are needed. Under the current lease, these would be City costs: . Replace air exchanger . Replace carpet . Repaint/replace waU treatments . Replace kitchen floor . Replace kitchen counters Renegotiating a new lease could create new opportunities for use of the space. Some ideas we brainstormed were: . Additional senior programs and services (perception of the building may be a negative) . Meetings and event space (meeting space is in high demand, and a commercial kitchen would be a plus) . Program space for youth and adults (program space is in high demand) . Huber Park tie-in (???) 2. Search for A Different Facility The second option would be to seek out another facility that has a commercial kitchen and apply our rent payments toward this use. Given the amount of money we are paying each year, there may be another facility that would be interested in this opportunity. However, according to the CAP Agency, moving from the Levee Drive building would eliminate meal service for the seniors living in that building as they are less mobile and transportation is not currently available. 3. Terminate the Lease This would eliminate the meals program. Meals-On-Wheels would be available to the residents of this building. REQUESTED ACTION City Council is asked to discuss and provide direction on the future use of the 200 Levee Drive building lease space. For Information, Contact Housing Utilization sri dgi n,g services Ralph Malz HUBS Coordinator Prior Manor rf-=OOo':::::=-o~ ::::::::::oo() ~~~ ===o~ :~~:::=:o~ :::::::::::::-;,~ ==::-e~ ::::-~::=:0GQ =::::'.'::~o~:::::::::::-o~ ::.7':":::0"=1\ I .. 1 6049 Franklin Trail SE ~ 1 ff 16049 Franklin Trail BE ~j Prior Lake MN 55372 ~~ Prior Lake MN 55372 iJ l' II 1\ !! , .. 00 00, Phone: 952-226-6670 ! .f-:-_ oo.,-:.~:::_DlfO :::~=.~~{): _::':_ '-:,,~_o: :'-:-=-::'_~: ~=-=-_!: :::::::::::::::"~: :::::;.::::::::.0: ::;::-:~.~~ 0: ::-:::.::::~ 0: :::.:~-::..::::.~: :::::-n': ~o. :....1 1 Fax: 952-226-6673 A Joint Pilot Project of Emai I: rm al Z@CO. 5 cotto m n . U 5 Scott County Housing and Redevelopment Authority and Scott County Human Services .. ~ 1Iihf HUBS Goal ServicesOffe,Jed To provide convenient access for .;) Public Health Nurse seniors to community based .;) Health Insurance Counseling and assistance services in the six communities of with Insurance Forms Scott County enabling seniors to .J Financial Assistance Worker live in the housing of their choice, postponing the need for nursing .J Veterans Service Officer faci litycare. .J Individual or Group Mental Health Counseling .J Extension Education Programs .J Scott County Library Services .;) Access to Transit Providers Location .;) Housing Chore Services .J Personal Care Attendants Primary office located at Prior .;) Home Health Aide Services Manor in Prior Lake. .J Senior Advocacy Future satellite offices to be located in Belle Plaine, Jordan, New Prague, .J Congregate Dining Savage and Shakopee .;) Home Delivered Meals ~ -/ .J..lJ, J;"; 1.14/~9; . . - LEASE AGREEMENT THIS INDENTURE. made and entered into this 18th day of December. 1919. by and between 200 LEVEE DRIVE ASSOCIATES. LTD.. a Minnesota limited partnership (hereinafter referred to as "lessor"). and the CITY OF SHAKOPEE.. MINNESOTA. a Minnesota municipal corporation (hereinafter referred to as "Lessee"); . WITNESSETH THAT: WHEREAS. Lessor proposes to construct on certain property located in the City of Shakopee,.County of Scott; State of Minnesota. legally described on Exhibit A. attached hereto and made a part hereof. a housing developnent for.occupancy by elderly persons (the "Development"); and WHEREAS, Lessee desires to Use a portion ~f the Development for a senior citizen center. NOW, THEREFORE, in;consider~tion of the mutual promises and agree- ments herein contained. the parties hereto hereby agree. as follows: l. The Premises. lessor does hereby demise. lease, and let unto Lessee. and Lessee does hereby hire and take from lessor, that portion of the Development consisting of approximately 1,3 Y-J square feet on the ground floor of the Development identified on the Floor Plan attached hereto as Exhibit B and made a part hereof (the "Premises"). . 2. Construction of the Premises. Lessor expects to commence construction of the Development on or about January, 1980, and expects to complete the Development on or about December, 1980. Perfonnance of this lease shall be contingent upon lessor's completion of the Development on or . . before December 1, 1981. At or prior to completion of the Development, Lessor shall cause the Premises to be prepared for occupancy by lessee in accordance with the Specifications therefor attached hereto as Exhibit C and made a part hereof. :&q:QmH1lg,~J:{IDIL~!!~J;i11'1[~d;rn~;~jJmJ;1~t~IWf,[~J;ilIhll~~nmJ~l~,~ ( th e . ....!'M.~~~:!!:r;!i';~n.a;rEfi~;tii!!!'G'pWIpretr8B';Datg!!3f:~fl~jtns:6~f;!S[l1graa'te1)'tMlIFA1i;;$'1j'~;1i]0;'t~'fEi;~f fy that the Development and the Premises have been completed in accordance with the Plans and Specifications on file with MHFA. As soon as ; possible, the Lessee shall work with the Lessor to seek grants to pay for the installation on the Premises of the equip- ment, furnishings and other items identified on Exhibit D attached hereto and made a part hereof. Lessor acknOWledges that Lessee shall not be financially abligated.to pay for such equipment. furnish- ings and other items or installation thereof. Les.sor ,shall attempt to .allow Lessee to enter.on the Premises prior to the.Completion Date for the purpose of instal.ling such equipment and other items; provided. however. that such entI)' by Lessee shall not interfere with the completion of construction in accordance with established timetables. - 3. The Term. ~~~~~~~~~mR~%~~y ~;mi~~iiigt;~~~~}m~~~~~J~~~,~~~~~~~m?l~~~~&if~~i1 ~ t~!l,i~\Ii&i.~~!fJ~~~gE~~l~~i~li~~!U:~!~{~i'.. , :::::~.::,! ;;"".4'.. ' Permi tted . Us~s ~.-,:::Les~ee.~ s~~ k!!_~.~ntitled~. _~ nonexclu- sive ,us~~f the Pr~eS for t~e:pu~o.se~f.:pro17id:ing .a1lle~ting center. . arts and crafts center, ,dining fa~llity and-,~ther ~~s~. Lessee may etter into agreements with any senior citizen organization.or any other organiza- tion providing services or programs., for. senior..c:itizens. for :the use of the Premises .,and may -charge any such organization a .fee, for the use of tbe Premises. Lessee may enter into.agreements_with any organization furn~sh~ . --. i~g,a:mea1;pro&raD1 for,seni~~.citizens tO,serve meal.s.in.the.1'remises. .Any group Or organization us~ng the Premises will be required to be respon- sible for the cleanup of the.Premises after each use and will be responsible f~~ breakage of any equipment used or any~excessive wear and tear, Lessee shall tnake thi~._~'c~O~ditiop. of...~ny pe!'Uitted use of the Premises.. ,No use of the Premises by .any.other organization shall relieve Lessee of its obli- gations .hereunder., ~o activities shall.be carried on within the Premises . .before 6:00 A.M. or after 10:00 P.M. of any day without Lessorts prior written approval. Lessee agrees that its leasing of the Premises is not exclusive and that Lessort s tenants shall have the right to use the Premises. equipment and furnishings in common with Lessee and senior Citizens living outside the Development. In order to assure that both the tenants of the Lessor and the senior citizens living outside the Development are each reserved sufficient time and space to have some activities separate and apart from the other groups using the facility. an Advisory Council will be appointed to adopt rules and regulations for the orderly use and maintenance of the Premises and for the scheduling of activities. The Advisory Council will consist of a represen- tative from the Lessee. a representative of'the Lessorts tenants and the . Resident Manager of the Development. If a dispute arises over the use or maintenance of the Premises, the matter shall be referred to a conference with the Hayor of the City of Shakopee and the Lessor or their respective representatives. Lessee's use shall be further subject to such reasonable rules and regulations as Lessor, or its management agent, may enact for tile general. safety and welfare of the persons who shall use the Development. . 5. Rental. As and for rental of the Premises, Lessee agrees to pay Lessor at Lessor's offices in Shakopee, Minnesota, or at such other place as ~ssor s~ll direct in writing, a fixed annual rental of One Dollar ($1.00) per year payable in advance on the Commeneement Date of this Lease and on each anniversary of such date. As additional rent, Lessee shall pay utilities, insurance, taxes and other Costs imposed.by this Lease upon Lessee. . 6. Utilities. Lessox shall. furnish heat to the Premises and shall furnish electrical outlets for the Premises. The electricity for the Premises and the natural gas for the stoves in the kitchen shall be separately metered and paid for by the Lessee. If possible, the cost of the gas ana electricity for the Premises will be billed directly to the Lessee by the .utility companies. Lessee shall pay. the cost of any telephone in the Premises. Lessor shall provide water and sanitar)T sewer facilities~ Lessee shall pay to Lessor, within ~enty (20) days-of billing by Lessor, Lessee's share of the cost of heat, sewer, water and other utilities not separately metered to Lessee, but used within the Premises, which share is hereby determined to be 4.627- of the total of such costs. 7. . Relationship of the Parties. It is expressly agreed and understood that. the relationship betw~en the parties hereto is and shall at all times remain that of Lessor and Lessee. Neither party shall be construed to be a partner or associate of the other in the conduct of its affairs, nor shall either party be liable for any debts incurred by the other party in -3- the conduct of its activities. Nothing herein shall be deemed to obli- gate either party to. participate in or assist in the management or .. . operation of either party's programs, .or to compel residents of lessor's facilities to use or participate in lessee's programs. B. Responsibility for Maintenance and Repair of the Premises. 'l>Wdrfl~tli~lle~t~tii~~lmm~~,~g:!?d~~~l1ifJ~Bmll~~t_,~~~;~, PO~~itg!'Jii~~;~1b~~;9,~;j91fif!!Jj;'n~!;i~[rj-])i~!t~~1l~~ lessee shall maintain and - repair the Premises .and keep the same in a neat, clean and orderly condi- ~tion~O and shall b~ responsible for ccimpfiance with .all a.PPlicable ordi nances, rules and regulations of governmental bodies. lessee shall further be responsible and shall pay for all, costs of trash removal. extermination service, maintenance; repair and replacement of .eqUi~nt..restrooms.~t. light fixtures, light.bulbs. florescent fixture. ballasts. ~anClOther items located within the Premises. After the initial installation pursuant to Paragraph 2 hereof. lessee shall attemp~ to secure for the.Premises sufficient kitchen equipment, pots and pans, dishes and furniture as may be neces- sary to operate the same as a senior citizen center, but shall not be financially obligated to supply such equipment. Should Lessee .fail to perform the requirements of this lease, lessor shall have the right to perform such services on behalf of lessee and the amount expended by lessor for such activities shall be additional rent hereunder. - 9. Alterations. Lessee shall not make any alterations, additions or improvements to the Premises, nor permit any person to perform or do any remodelling, reconstruction, new construction, or other improvement to the Premises or the Development without first obtaining the prior written consent of.lessor and MHFA; Any work per- formed by or at the request of Lessee shall be performed free and clear of all claims for mechanics' liens and lessee shall promptly. satisfy any mechanic's lien which may attach to or against the Development or the Premi ses. lessee shall from time to time cause the interior of the Premises to be repainted, cleaned or. refloored in order that the Premises and the Development will be maintained in a comparable fashion. 10. Insurance. Lessor shall. at its cost and expense. maintain fire and extended coverage insurance on the Development and liability insurance in the minimum amounts of $250.000 for injury or death to any . . . one person and $500.000 for injury or death resulting from anyone occur- rence. lessee shall maintain contents insurance on all equipment. furni- ture and furnishings .10cated within the Premises and shall maintain..-q liability insurance in an aggregate amount of $300.000 per' occurrence. " Lessor's and Lessee's policies of liab1ity insurance shall each name the .., other as additional insured and shall each contain waivers of subrogation - - . P " . rights. All insurance policies shall have mortgagee clauses in favor of lessoris niorigagee.'les'see shall maintain workmen's co~p'ensa-ticin insur- ance covering all of. its employees to the extent requir~d by 1a~.: n. Rear'Estate Taxes. Lessor intends to make application for rea1'estate.tax abatement for the Development. as provided bY:Min~esota Statutes ~ 271.13;' Subd. (17). If the use and occupancy of the. Premises by Lessee shall' cause said tax abatement to be denied to Lessor and cause the'Lessor to receive a tax statement which does not recognlze.said tax abatement. then both lessor and lessee reserve the right to-terminate this Lease. provided. however, that Lessee shall have theoptioil in lieu of said termination to.pay 'the increased taxes and contest the denial of said tax statement on behalf of itself and lessor. To the extent that the real estate taxes payable with respect to the Development shall be" increased by reason of the use to be made by lessee of the Premises here- under. lessee shall pay the amount of such increase in real estate taxes to Lessor for each assessment year during which lessee is occupying the Premises hereunder, such payments to be made on or before the 15th of May and 15th of October of each year for which such taxes shall be paid. The amount payable by Lessee with respect to such taxes shall be determined from data supplied by )oca1 taxing authorities. 12. Destruction of Premises. If, during the term of this lease, the Premises shall be damaged or destroyed by fire or the elements, or through any other cause so as to render the Premises unfit for occupancy" -5- . or'make i~ impossible to conduct the regular activities of the lessee therein. or to such an extent that the Prem:1ses cannot be repaired with reasonab1e di1.igence within 120 days of the happening of such damage. - then Lessor 1nc.-Y. by In'itten notice, terminate this Lease and Lessee shall immedi- a~ely Sur=ender the Premises and all interest therein to Lessor, and Lessee shill pay rent only up to the time ofsui::hsurr~der. Should Lessor not eJ.ect to ~enninate this Lease, then this Lease shall not end or terminate on- accoun~ of such damage, but rent shall not. run or accrue after the damage and during the' process of repairs, and up to the tilne. 'when such repairs shall be completed. except only that Lessee shall during such tilDe pay a pro rata portion of such rent applied to.the portion of the.Premises , llhich are :in condition for' OCcupancy or which may be actually occupied dui:ing such repairing. If, however, the Premises shall be so slightly injured by any cause aforesaid as not to be rendered unfit foroccupancy~ then Lessor shall repair the same with reasonable prOIllptness. and in that case the rent shall not cease or be abated during such repairing period. ":' . . .. ,.. ". - LeSsor's obligation to repair the D~velop~ent shall be contingent upon Lessor receiving proceeds of insurance for'suc:hpurpose.- 1.3. Eminent Domain'. If any part of the Premises shall be taken or conde=.ed for a public or quaSi-public use, and.~ part thereof remains. which is susceptible for occupation hereunder. this Lease shall, as to t,he part so taken, terminate as of the date title shall vest in the c~~d~o~, at which time Lessee's obligations hereunder. shall be adjusted proportion- _ ately.' If all of the Premises, or such a great part thereof, be taken or conde~ed so that there does not remain a portion susceptible for occupation hereunder, this Lease shall terminate. All compensation a~arded upon such condeaaatiOn or taking shall belong to Lessor and Lessee shall have no claim thereto ~.,.,..? hereby irrevocably assigns and tra,nsfers to Lessor any right to 'cD:?ensation or damages to which the Lessee would otherwise become e::.t:itled Curing the term hereof by reason of the condemnation of all or a Pa=t of the Premises; providea, however, Lessee may recover from the con- d~ing ~ority damages for taking of its equipment and personal property. 14. Sublettin~ or' Assismin~ of Premises. Lessee shall not assign this Lease or sublet the Premises w:i.thout the prior writte.n consent of Lessor. except to ,the extent.provided for in Paragraph 4 hereof. Any assignment... sale. bankruptcy or insolvency of Lessee may. at the option of Lessor. be considered as an assignment within the meaning of this Lease or as a breach of the covenants hereof.. Assignment or subletting without first - obtaining Lessor's written Consent and endorsement will authorize Lessor, at its, SOleopt1on.-io terminate the.tenancy created hereunder and 'to re-enter and take possesSion'.of the Premises without. such re-entry- constit:u'tiiig an e1ection of remedies, or- a waiver of lIloney'damages. . - .. ~. .. - . --. - 15. SUb-ordination. This Lease. 'shall be subject and subordinate . , to all existing mortgages or anymortgage~ich may now or hereafter affe~t the Premises. including specifically a mortgage to the MHFA.. This Lease shall also be subject and .subordinate .to all'renewals. modifications. consol- id~tions and replacements of any such mortgages. Although no instrument or act on the part of Lessee shall be necessary'.to effectuate such subordination. . - Lessee will. nevertheless, execute and deliver such further .instrumen.ts con- firming such subordination of this Lease as may be desired by the holders of any mo;-tgage-~.including the MHFA. Lessee hereby appoints Lessor attorney- in-fact. irrevocably. .to execute and deliver any such instrument: of Lessee.. 16. Waiver of SubroRation. L~ssor and Lessee; both on their own -behatf' and Qn behalf or" anyon~ c1ai1llingthrough or under either of tliem-,-- ~ereby mutually waive and release all claims. liabilities and'causes'of action' against the other and the agents. servants, employees and invitees of such other, for loss or damage to. or destruction of. the Premises or any portion thereof.or the Development or any portion thereof. as well as the improvements. fixtures, equipment, supplies, merchandise and other property located in, upon or about the Premises or the Development resulting from fire, explosion or other perils included in standard fire and extended coverage insurance. whether caused by the negligence of any of said persons or entities or otherwise. Provided, however. that this mutual release and -7- . waiver shall be applicable and in force and effect .only for so long as the insu.rance required by Paragraph 10 above shall remain in full force and effect and shall speCifically evidence the existence of a waiver of subro:", gation as to each policy. Both Lessor and Lessee shall advise their insur- ance carriers of. said mutual waiver and shall obtain necessary endorsements to their respective insurance policies. 17. Default by Lessee. If Lessee shall fail to pay any. install- ment. of fixed ~ual rental, or additional .rent, within twenty (20) days- ',..:=,- af:ter .the due .date .thereof. or ~;sha11 default in the .perfon::ance .of any other of its ob1igations -pursuant to .this Lease Agreement. and if such defaults not related to rentp!1yments .sha11 continue for . thirty ,(3D) .daysafter written notice thereof by Lessor to Lessee. or if the Lessee shall be adjudicated bankrupt or insolvent according to law. then in any of said cases Lessor may lawfu1ly enter into and .upon .the Premises or any part thereof and repossess the same as the former estate of Lessor and expel Lessee and those claiming under Lessee without being deemed guilty of any manner of . .- trespass and without prejudice to any remedies which might otherwise be used for arrears of rent or breach of covenant.. Such re-entry shall not be deemed to.relieve. Lessee from any covenant or.obligation arising out of ,. this Lease; provided, however, that as to. covenants and obligations her~undei which would require possession of the Premises toperforo. pr Iulfill, Lessor may perform.or fulfill such covenant or obligation and Lessee shall pay Lessor the cost of same upon demand. No re-entry or retaking of possession shall be deemed to constitute a termination of this Lease unless Lessor gives Lessee notice to that effect either prior or subsequent to such re- entry or retaking of possession. In addition to any remedy provided for herein, Lessor shall have any other remedy provided by.law. Every power and remedy given by this Lease Agreement may be exercised from time to time and as often as the occasion may arise. No delay or omission of Lessor to exercise any power, right or remedy shall impair any such power, right or remedy. No waiver of any breach of any covenant, agreement or provision. of this Lease Agreement shall be construed or held to be a waiver of an)" _1::_ . other breach, covenant, agreement or provision. Lessee ~aives any demand for possesnon of said Premises in the event of forfeiture of Lessee's rights heretmder, and waives any demand of payment for rent. hereundery and any notice of intention of Lessor to terminate this Lease Agreement or to re-- enter said Premises. other than the notice of tbe defaults hereinabove provided for. Lessor shall have the right but not the obligation in the case,of any defa~~,~Y.Lessee hereunder of curing such default at Lessee's -~. ,Any amount expended by Lessor ~ the curing of ~y such default .shalJ. be :bamediate1y.due and payable by Lessee to Lessor -as cfurther.-addi- . _ . tional rent. -. ,. _.. .... " ..- il Lessor. shall default in the performance of any of .it:.s covenants I and agreements hereunder. and such default shall continu.e. (or thir.ty_,(30) days after written notice thereof by Lessee to Lessor .Le.s~ee may .terminate .this Lease and quit the .Premises without further liability for rent hereunder. Provided. however. that if such Lessor default cannot be .c,u~e4.by. the.. payment of ~ey. the initiation of good faith efforts to cure said ,default ~tbin . - said thirty (30) day period and diligent efforts by Lessor .t.o complete the same thereafter shall be deemed to constitute a cure of said default. , 18. Quiet Possession and En;o\~ent. Lessor agree~ that Lessee. Upon paying the specified rental and performing the covenants. herein agreed-- by it to be performed, shall and may peaceably and qUietly: have:. hold and enjoy the said Premises for the term specified. Lessor shall have the right at all reasonable times during the term of this Lease Agreement. to enter. the Premises ~orthe purpose of' examining or inspecting the s~e_andfor the further purpose of making such repairs and replacements therein. as Lessor shall deem necessary; provided, hoyever. that Lessor shall use all reason- able efforts not to disturb Lessee's use and occupancy.. 19. Condition of Premises Upon Surrender. At the expiration of the term hereof. Lessee shall quit and surrender the Premises hereby de~sed in as good a state and condition as when received, reasonable wear and tear excepted. Lessee shall have the right to remove any equipment. fixtures and -9- ". . personal property installed by it. provided it sha~l'-repair any damage to the Development caused by su~h removal. Any such equipment. .fixtures and. personal property not so removed at the expiration or. earlier termination of this Lease shall be deemed abandoned and. .shall be .theproperty of Lessor. 20. Arbitration. . Any disagreement betweencthe.parties ~th respect to the interpretation or application of.tbeprovisions of this Lease or t~e obligations oftbe parties::hereunder .shall be determined by.--arbitra-. tian.- Such arbitration sha11 be conducted.tipon''1:'equest of~1.essor or .Lessee. bef~re three. arbitrators (unless"the parties"liIutual1y'ag~ee to~submit.,. the matter to one arbitrator) designated by the American'Arbitration Association audin accordance with the rul-es of such ASsociat1<<;'il. '. The arbitrators desig- nated and acting hereunder shall.make their award "in 'strict conformity'wi th such rules and shall have no power to .depart 'from or change-'any:of . the pro~ ViSions thereof. 'The expenses of arbitration proceedings conducted bereUnder, sha1l be borne equally by the parties~ but-each party shaU:pay the fees of,." legal counsel and witnesses selected b:rit in connection \dth .sueh..arbitra-: . . tion proceedings. Ail arbitration proceedings hereunder shall be conducted in::1:he City of Shakopee. Minnesota. . . - - . 2l. Notice~. . Whenever ,any notice, demand.'approval, consent, request or election 'is given or made pursuant to this Lease Agreement, it sha1l be in writing. Communications and payments to Lessor shall be addressed: -.' - JO/1N . ~. 13 Q.~ ff sf. AJ . ~ a/ '-~ ;;~'''5 ~ ::;,;-t ~ R.. ,Unl) ('1M,,> . 3 . M .'s--s<lo ~ , . or such other address as may have been specified by prior notice to Lessee, and comm~cations and payments to Lessee shall be addressed: C I f.~ /-1,.,/1 I ";29 ~. I.st f-Ju e. Shr~'r" h <-, 4JJ1. SS.3';JY Attn: (' i1~' Ifd WI 1">>1 <;t- eA-t 0 ( or such other address as may have been specified by prior notice to Lessor. Any cacmwnications so addressed shall be duly served if mailed by registered or certified mail. return receipt requested. -In- 22. Options to Renew.. Lessee shall have the right and option to renew this Lease for five (5) successive renewal terms. each such renewal terms to be five (5) years in length and to commence on the expiration date of the then current term and continue for five (5) years thereafter. For the first two renewal terms under this paragraph. said Lease shall be deemed to have been renewed unless Lessee gives Lessor notice of intent IDt to renew said !ease at least 120 days prior to the , ."- . ..- expiration of the then current term"~~~~~~nJjg1901ijt~p~n~~~~J~' .~~M~Jf~~i~l~l~~1J~~~~~flrj[l;fdc~'f~:W~~g~"g!!~l~~~~~~~~FgfJI~it~ _ on ~~".e:5ii;''''prol{ided. however, that should Lessee neglect or fail for anyre~~on to give ~~id notice as provided in this sentence,~~~~~~ - .... Le~.1.~lwl[B~~~~~I~~~!1.m~'E~~~ci&~1~~~12~~$f~~~~[~,~~&P- '~~~~!l~~~~~~~~~~ny such exercise by Lessee shall and effect if. .as of the date of exercise of such option. this Lease shall be in default. If this Lease shall be renewed as set forth above, then the renewal term shall 'be subject to the same terms, and conditions " as set forth in this Agreement, except that the monetary rent payable pursuant to Paragraph 5 hereof shall be as follows: (a) During the first and second renewal terms. the monetary rent pay- able shall be $1.00 per year, payable in advance on the first day of each year during such renewal term. (b) During the third, fourth and fifth renewal terms, the monetary rent payable pursuant to Paragraph 5 hereof shall be equal to 70% of the Fair Market Rental (as hereinafter defined) determined as of the date five (5) months prior to the commencement date of that renewal term, and shall be payable in sixty (60) equal installments each on. the first day of each month during the renewal term. For purposes hereof, the term "Fair Market Rental" shall mean the amount expressed in dOllars for which a lessor willing, but not obligated to lease, would lease to a tenant, I'rilling, but not obligated to lease. the Premises in accordance with the terms set forth in this Lease. In the .. ~...~ . . event Lessor and Lessee shall be unable to agree to the amount of the Fair Market Rental within fifteen (15) days of .the date of exercise of any option to renew hereunder by lessee, such dispute'shall be submitted to arbitration by one or more arbitrators. a~.herein set,forth. The first such arbitrator shall be appointed by written notice given by Lessor or lessee at any ti~ after the. expiration of the fifteen (15) days after :the noti ce by lessee to exerci se the optio~~o renew. ,The second su~h arbitrator shall be appointed by the other party within five (5) days af~er~~~e appointment of the first arbitrator. If, the second.arbitrator.. . . . . is not selected within such time.period. .t~~ initia] ~rbitra~or_appointed shall decide the~~atter. Within t,en (10) days. of the date both arbitra- ~ors ar'e appoi.nted, such arbitrators shall appoint a third arbitrator. Should said arbitrators fail to appoint a third arb'itrator within said ~en (10) day~, either arbitrator may apply.to the senior judge.of the First Judicial District for the appointment of su~h arbitrator and any appointment by saidjudge shall be final and binding on both parties. The arbitrators thus appointed shall convene. within ten (10) d~ys of the ~ate.of .appointmentof the lastar.bitrator.and shall hear such testimony '. . " . .. . : ".' . - ". and evidence as either party. to this leaseshall choos~ to submit.. The. decision of .a majority of the arbitrators shall be made within ten (10) days of the conclusion of any such hearing and shall be expressed in ~~iting to the parties and shall be binding upon the parties. If lessee shall detennin~ that the Fair Market Rental. .as detennined .by -arbitration (and as a result thereof the' rent payable pursuant to Subparagraph (b) above). shall be too highy then Lessee shall have the option to withdraw its exercise to extend the term of this lease; provided. however. such withdrawal shall be i.n writing and shall be given to lessor within ten (10) days of the written decision of the arbitrators and not less than four (4) months prior to the expiration of the then current term. All arbitrators selected hereunder shall be disinterested and shall be per- Sons knowledgeable in real estate values and leasing in the City of Shakopee. Minnesota. The cost of any such arbitration shall be divided equally between the parties, provided each party shall pay all their own, attorneys and witness fees. -12- -,~-"---- I .. . 23. Paragraph Titles. The paragraph titles hereinht've been inserted for convenience only and shall not be construed to modify, limit or amplify the meaning of the terms and provisions hereof. IN WITNESS WHEREOF. The Lessor and lessee have caused this lease Agreement to be executed by duly authorized officers, all as of the day and year first above written. By: CITY OF SHAKOPEE. MINNESOTA By: ~~/%'A:' ~ .#' .--:t::.,~. _,c(>.,- . f;,' Its Mayor .------ And -~~ ' ~ . "lt~- Ci'~ ~;'-;;to~ ; ! - 13 - i I ---"---'-"- II" '