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HomeMy WebLinkAboutItem 2F: Kaufman Center LeaseEUGENE CITY COUNCIL AGENDA ITEM SUMMARY Adoption of Resolution 4846 Authorizing Lease of Kaufman Center to Emerald Empire Council on Aging Meeting Date: July 18, 2005 Agenda Item Number: 2F Department: Facility Management Staff Contact: Glen Svendsen www. eugene-or, gov Contact Telephone Number: 682-5008 ISSUE STATEMENT In August 2003, the City Council adopted Council Resolution 4773 which allowed the private, non- profit Emerald Empire Council on Aging (EECA) to provide senior services at the Kaufman Center for up to two years at $1.00 per year, with future renewal at the discretion of the City Manager for a term of up to five years "at a rate determined to be fair market rental value." The City Manager is prepared to enter into a new lease with EECA for a five-year term, which will require EECA to increase its payment for use of the building over the term of the lease. However, the proposed terms continue to be below fair market value, and the council is requested to adopt a revised resolution which will enable the City Manager to recover less than fair market value for lease of the Kaufman Center. BACKGROUND In August 2003, the City Council adopted Council Resolution 4773 which allowed EECA to provide senior services at the Kaufman Center at $1 per year, with an initial one-year term renewable for a second year based upon a review of the outcomes achieved. The resolution provided for renewal of the lease for a period of up to five years, at the discretion of the City Manager and "at a rate determined to be fair market rental value". Resolution 4773 is included as Attachment A. The 2003 resolution states that the council found the services provided by EECA to be of value to the City, and that the initial lease terms provided a fair return to the City for the use of the center. However, the council also made it clear during the discussion on the resolution that EECA was expected to begin contributing to the major maintenance of the center after the initial two-year establishment period. The EECA is nearing the end of its lease with the City for use of the Kaufman Center. The existing lease was extended until September 1, 2005, to allow the council to consider the proposed new lease terms. EECA wants to continue providing services in the Kaufman Center but is not yet financially able to pay either market rent or the full cost of maintenance. Rather than terminating EECA's use of the Kaufman House at this time, the City Manager is willing to enter into a new lease with EECA which includes a subsidized, but increasing, payment for use of the building over the term of the lease. The new lease is included as Attachment B. L:\CMO\2005 Council Agendas\M050718\S0507182F.doc As a condition of the renewal of EECA's lease, the City Manager is establishing the expectation that EECA will pay rent that, over time, will offset the ongoing costs of building and grounds maintenance, though not recovering the full value of the use of the center. While the initial lease rate will not cover current annual maintenance costs, the lease schedule will enable the City to come closer to recovering the regular maintenance costs by the end of the five-year term. Larger repair projects as listed in the Facility Condition Report would still need to be done from the General Capital Projects Fund. During the term of the lease, EECA will be expected to continue to provide minor maintenance, repairs, and upgrades needed maintain the condition of the premises to at least the current level of quality. 2005 commercial rental space rates in this area of town vary widely, starting at about $.50 per square foot per month and going up to approximately $1.75 square foot per month. The current average is about $1.00. Under the terms of the proposed lease agreement, EECA would initially pay $0.015 (1.5 cents) per square foot, increasing to $0.24 (24 cents) per square foot over the five-year term of the lease. The lease rates proposed for the lease with EECA for the 2005-2010 term are: Monthly Annual Cost /SF/month Year One $125 $1250' $.015 / SF Year Two $250 $3000 $.03 / SF Year Three $500 $6000 $.06 / SF Year Four $1000 $12000 $. 12/SF Year Five $2000 $24000 $.24/SF *Year One will be ten months instead of twelve due to extension of the current lease to September 1, 2005. Due to the level of subsidy the City is providing for EECA's use of the Kaufman Center, lease provisions have been included which require EECA to share revenue obtained from subleasing in order to come closer to meeting the maintenance expenditures. The City recognizes that it will take more time for EECA to establish funding sources that will allow its rent payments to cover full maintenance costs. It is expected that EECA will establish partnerships with other organizations over the next few years to increase services provided at the center, as well as to generate more operating revenue. To meet the objective of recovering maintenance costs, the lease includes a revenue sharing requirement that would take effect once EECA's revenues from subleasing reach a floor of $1,000 per month. The amount of revenue from subleases above $1,000 per month would be split equally between EECA and the City. This floor of $1,000 per month is based on EECA's earlier budget projecting $12,000 in rental revenues. The revenue sharing with the City would occur only ifEECA meets the projected rental income. In any event, the total monthly payment to the City will not exceed $2000.00 for the term of this lease, which provides an incentive for EECA to maximize rental revenue while protecting the public' s interest in improving the return on the private use of a City asset. The City Manager believes that this proposal is a reasonable compromise for the City in partnering with EECA, and that City Council adoption of Resolution 4846 is a reasonable approach to balancing the desire to receive fair market rent for use of the Kaufman Center with continued provision of EECA's services to the public. L:\CMO\2005 Council Agendas\M050718\S0507182F.doc RELATED CITY POLICIES This proposal attempts to balance the City Council policy on EFFECTIVE AND ACCOUNTABLE MUNICIPAL GOVERNMENT to work openly, collaboratively, and fairly with the community to achieve measurable and positive outcomes, and the policy on FAIR, STABLE AND ADEQUATE FINANCIAL RESOURCES by implementing lease terms that achieve a fair and equitable system of revenues adequate to maintain and deliver municipal services COUNCIL OPTIONS The council has three options. Option 1 is to adopt the proposed resolution enabling the City Manager to continue leasing of the Kaufman Center to EECA at less than fair market value, under the terms outlined in this AlS and attachments. Option 2 is to recommend modifications to the resolution and/or terms of the new lease to clarify the council' s expectations on the return desired from EECA for its use of a publicly owned building. Option 3 is to not adopt or amend this resolution, effectively retaining the council's original direction that further leasing of the Kaufman Center by EECA be at a rate determined by the City Manager to be at fair market value. At this time, EECA would not be able to meet this financial requirement, and would have to cease its use of the Kaufman Center. If this were to occur, the City Manager would return to the council with a proposal on initiating a public process to request proposals from other organizations to provide services at the Kaufman Center, or on other disposal of the property. CITY MANAGER'S RECOMMENDATION The City Manager recommends that the council adopt Resolution 4846, enabling the City Manager to enter into the lease extension with EECA under the terms set out in Attachment B, to be effective September 1, 2005, with an end date of June 30, 2010. SUGGESTED MOTION Move to adopt Resolution 4846 authorizing the City Manager to lease the Kaufman Center to the Emerald Empire Council on Aging. ATTACHMENTS A. Resolution 4773, adopted August 2003 B. Proposed lease agreement C. Proposed Resolution 4846 FOR MORE INFORMATION Staff Contact: Glen Svendsen Telephone: 682-5008 Staff E-Mail: glen. 1. svendsen~ci, eugene, or. us L:\CMO\2005 Council Agendas\M050718\S0507182F.doc RESOLUTION NO. 4773 A RESOLUTION AUTHORIZING EXECUTION OF LEASE WITH EMERALD EMPIRE COUNCIL ON AGING. The City Council of the City of Eugene finds that: A. Emerald Empire Council on Aging is a nonprofit entity formed in 2003 for the purpose of continuing and expanding service programs for seniors that were formerly sponsored by Lane Community College at the City-owned building known as the Kaufman Senior Center. B. As a newly formed organization, Emerald Empire Council on Aging is reliant upon gifts, grants and donations for its support and is working to expand its service programs and become self-sufficient. C. The use of the Kaufman Senior Center by Emerald Empire Council on Aging benefits the City by providing needed accessible senior services, recreation and a seniors' community center within the Jefferson Westside neighborhood. D. On May 21, 2003, the City's Budget Committee approved the use of $20,237 for fiscal year 2004 from the Kaufman Trust Fund to provide maj or maintenance costs at the Kaufman Senior Center to facilitate a proposal by Emerald Empire Council on Aging to continue to provide a volunteer and community oriented senior center out of the Kaufman Senior Center and annex. E. The City Manager has determined that leasing of the Kaufman Senior Center annex is impractical because of the extensive number of repairs and renovation that would be required to make the property suitable for use by the public. F. The City Manager proposes to lease the Kaufman Senior Center to Emerald Empire Council on Aging for an initial one-year lease at $1.00, with the option to renew for a second year at $1.00 depending upon outcomes achieved. After the first two years the lease may be renewed at the discretion of the City Manager for a term of up to five (5) years at a rate determined to be the fair market rental value. During all lease terms the City' s obligation to provide maintenance and repair shall be limited to the availability of sums budgeted from the Kaufman Trust for such purpose, and the City will have no obligation to make capital improvements to the property. G. The Kaufman Senior Center has not been declared surplus property and it not subject to a development plan. H. Under Section 2.872 of the Eugene Code, 1971 the City Manager has authority to present a proposal for the disposition of real property that is not within a development plan, that has Resolution- 1 not been declared surplus property and for which no other procedure is specified in the Code or a Council-approved intergovernmental agreement to the City Council for its action. The City Manager has requested that the Council authorize him to enter into a lease as described in Recital F with Emerald Empire Council on Aging. I. The City Council specifically finds that the use of the Kaufman Senior Center by Emerald Empire Council on Aging as a center for support services, recreation, and as a community center for seniors will result in a benefit to the City comparable to the fair market rent of the property to be leased. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a Municipal Corporation of the State of Oregon, as follows: Section 1. Based on the above findings, which are hereby adopted, and pursuant to Section 2.872 of the Eugene Code, 1971, the City Manager is authorized to execute on behalf of the City a Lease Agreement with the Emerald Economic Council on Aging for the Kaufman Senior Center. The Lease shall be for an initial term of one-year at $1.00, with the option to renew for a second year at $1.00 depending upon outcomes achieved. After the first two years the lease may be renewed at the discretion of the City Manager for a term of up to five (5) years at a rate determined to be the fair market rental value. During all lease terms the City will have no obligation to make capital improvements to the property, and the City's obligation to repair and maintain the premises shall be subject to the availability of budgeted funds derived from the Kaufman Trust. The lease shall contain such other terms and conditions as are agreed to by the City Manager and are consistent with this Resolution. Section 2. The City Recorder is requested to forward a copy of this Resolution to the Emerald Empire Council on Aging. The foregoing Resolution adopted the 13th the day of August, 2003. /s/ Mary H. Feldman City Recorder Resolution - 2 ATTACHMENT B LEASE Emerald Empire Council on Aging (Lessee) CONTRACT #: 2006-03803 BEGIN DATE: September 1, 2005 TERMINATION DATE: June 30, 2010 REVIEW DATE: March 1, 2006 MANAGER: Emmy Jenson ADMINISTRATOR: Mary Hamilton DEPT/DIV.: CS/Facility Management *CEORDR AUTH. NAME: ACCT. CODE: 618-2615-44919 AMOUNT: Year One $125/mo $1250 for ten months Year Two $250/mo $3000 Year Three $500/mo $6000 Year Four $1000/mo $12000 Year Five $2000/mo $24000 TOTAL: $ $46,250 over five years NOTES: Lease of Kaufman Senior Center to Emerald Empire Council on Aging (EECA) Option to extend lease for up to five years as per terms of original lease 2004-3908 and Eugene City Council Resolution 4773. Original lease was from July 1, 2003 - August 31, 2005. LEASE Kaufman Senior Center BETWEEN: The City of Eugene, an Oregon municipal corporation ("City") AND: Emerald Empire Council on Aging (EECA), an Oregon nonprofit corporation ("Lessee") CONTRACT NO.: 2006-03803 EFFECTIVE DATE: September 1, 2005 RECITALS A. City is the owner of real property described herein as the "Premises" which is commonly known as Kaufman Senior Center and formally known as the Gertrude and Ludwig Kaufman House as approved for City Historic Landmark Designation in December 2003. B. Lessee is a public benefit corporation with members formed for the purpose of providing services to senior citizens. C. On July 1, 2003, City and EECA entered into a temporary permit under which EECA was authorized to use the Premises on a month-to-month basis. D. On August 13, 2003, the City council adopted Resolution No. 4773 ("Resolution No. 4773") authorizing the City Manager to let the Premises to EECA for up to two one-year terms for an annual rental fee of $1.00. E. Beginning duly 1, 2004, the City leased the Premises to EECA, as Lessee, for the second-S1.00 term authorized under Resolution No. 4773. F. This agreement (this Agreement") describes the terms and conditions under which the City will lease the Premises to EECA, as Lessee, for up to an additional five years as authorized under Resolution No. 4773. AGREEMENT 1. Lease of Property. City, in consideration of the rent to be paid by Lessee, and in consideration of the covenants, terms and conditions to be performed by the parties, does hereby lease to Lessee the Premises described below. 1.1 Premises. The Premises include that real property more particularly described in Exhibit A, including a building of approximately $530 gross square feet (the "Building") having the postal address of 996 Jefferson Street, Eugene, Oregon 97402, together with all other fixtures and improvements thereto existing now or at any time in the future, except for fixtures that Lessee installs 2006-03803 Kaufman Senior Center Lease Page 1 at its own expense and which it removes in accordance with section 5 of this agreement. 1.2 Right of Enjoyment; Purpose. Upon compliance by Lessee with its various obligations hereunder and except as provided herein, Lessee shall have the right of possession and quiet enjoyment of the Premises, provided that Lessee's use of the premises shall be restricted to the primary purpose of providing recreation and other community services to seniors and other incidental uses that are consistent with zoning, safety and other applicable laws and with EECA's 501(c)(3) status. 1.3 Condition of Lease. The making of the lease described in this Agreement and the execution hereof, are made in reliance upon Lessee's promise and covenant that Lessee will deliver to City, not later than March 1 of each year, Lessee's Annual Report described in Subsection 14.3, based on EECA's operation in the Kaufman Center for the previous calendar year. The first report, due March 1, 2006, must include a copy of Lessee's letter of determination of tax-exempt 501(c)(3) status from the Internal Revenue Service. 2. Rental. 2.1 Basic Rent. For occupancy of the Premises from July 1 (September 1 for 2005) through June 30 of each year, Lessee shall pay to City basic monthly rent in the amount shown in the following rent schedule. Rent shall be paid on or before the first of the month to City of Eugene contact as per Section 19. As an alternative, EECA may choose to make an annual payment in advance without penalty. 2.2 Rent Schedule. Monthly Annual Cost/SF/month Year One 2005-2006 $125 $1250 $.015 / SF Year Two 2006-2007 $250 $3000 $.03 / SF Year Three 2007-2008 $500 $6000 $.06 / SF Year Four 2008-2009 $1000 $12000 $.12/SF Year Five 2009-2010 $2000 $24000 $.24/SF 2.3 Additional Rent. As additional rent, Lessee shall pay the following: A. Cost of all insurance which Lessee is required to have; B. All amounts Lessee is required to expend for maintenance and repair of the Premises. C. All costs for utility services and security which Lessee is required to pay hereunder. D. Any taxes due on or with respect to the uses made of the Premises. E. If EECA subleases any portion of their leasehold interest to other parties, and such subleases totalmore than $1,000 per month, EECA will pay the City one-half of the total monthly rent received from the sublessees greater than $1000.00. The total monthly payment to the City will not exceed $2000.00. This additional rent to the City will be established at the time EECA creates a sublease with another party and gains the City approval for the sublease as per Section 16. Fees charged for temporary use of the building are not considered to be rent. 2006-03803 Kaufman Senior Center Lease Page 2 3. Term. 3.1 Term. The term of this lease shall be for up to five years, commencing September 1, 2005 and ending no later than June 30, 2010. 3.2 Renewal Term. After five years, the City Manager may, at his or her discretion, renew this lease for a term to be specified at that time, provided that the basic rent shall be established at the fair market value rental for the Premises. 4. Taxes. Lessee shall pay any real property taxes levied upon the Premises. Lessee is responsible to apply for a Lane County tax exemption for the Premises if it wishes to be exempt from taxation as a qualifying non-profit. Lessee is responsible to advise any sub-lessees that they will either need to pay taxes or will need to apply for a Lane County tax exemption if they wish to be exempt from taxation as a qualifying non-profit. Lessee will pay any taxes payable as a result of a sub-lessee's failure to either pay taxes or to apply for an exemption. 5. Ownership of Improvements and Fixtures. Any improvements upon the Premises are the property of City. Upon termination or expiration of this lease, all right, title and interest of Lessee in and to the improvements shall, without further formality, automatically become vested in City, free and clear of all claims of Lessee or anyone claiming under Lessee and Lessee shall indemnify and defend City against all liability and loss arising from such claims. Fixtures installed by Lessee may not be removed without the prior written consent of City, which consent will not be unreasonably withheld if the fixture can be removed without causing damage to the Premises other than non-structural damage that will be repaired by Lessee. In connection with the removal of any fixture that will cause repairable damage, City may require Lessee to post a bond, cashier's check or other form of financial guarantee that the repairs will be made. Any fixture which cannot be so removed, or which is not removed by Lessee within the time period provided for removal of property upon termination or expiration of this lease shall be conclusively deemed abandoned by Lessee and shall be the property of City. 6. Alterations and Improvements. Premises are designated as a City Historic Landmark and any alterations or improvements shall recognize this fact. Lessee shall not make, or permit to be made, any alteration or improvement to the Premises, including without limitation, the installation of fixtures or finishes, without the prior written consent of City, which may be granted or withheld within City's discretion, based on all factors considered relevant by City, including, but not limited to, plans for future development and use of the Premises and surrounding properties, and esthetic considerations. All alterations to the Premises will be made in accordance with all applicable zoning, licensing and building laws and requirements and City may require a performance bond or other reasonable assurance that improvements will be completed in a timely and professional manner. 7. Maintenance. 7.1 City's Obligations. A. Major Building Maintenance. City shall provide all major maintenance (as defined by City) on the interior and exterior portions of the Building, including, but not limited to, plumbing, heating, ventilation and air conditioning (HVAC), electrical, painting (exterior only), carpentry, roof and gutters, pest control, accessible lift and services to all major Building systems. City shall also repair and 2006-03803 Kaufman Senior Center Lease Page 3 maintain the sidewalks, driveway, and curbs. B. Major Yard Maintenance. City will provide annual maintenance and pruning of shrubs, application of fresh mulch, winterization assistance with the irrigation system and assistance with repair of mainline breaks or other major repairs of irrigation features. City will also repair and maintain all constructed landscape features, including the walking surfaces on site, but excluding fencing. C. Limit of City's Obligation. Notwithstanding the foregoing, City's obligation to provide maintenance and repair services is limited, in the aggregate, to the amount of funding approved yearly by the City's budget committee for maintenance of the Kaufman Center, and City shall have the right to terminate this Lease on April 1 of any year, to be effective June 30 of the same year, if such funds are not available unless Lessee is able to assume responsibility for maintenance. City makes no guarantee that present budgeted amounts will be sufficient to pay for all maintenance costs. Routine maintenance will be scheduled by City, and all requests for City repairs or non-routine service are to be directed the City's Facility Management Division. 7.2 Lessee's Obligations. Except as otherwise provided in Subsection 7.1, Lessee shall be responsible for maintenance of the Premises, including the following: A. General Care. Lessee shall keep and maintain the Premises in good and clean condition and take reasonable care to preserve and protect the Premises against damage, vandalism and excessive wear. Lessee shall have a duty to report any damage, decay, failure or vandalism, including graffiti, to the City's Facility Management Division as soon as such condition is discovered. B. Routine Repairs and Maintenance. Lessee shall be responsible for maintenance and repair of all parts of the building not provided by City, including, without limitation, interior surfaces, finishes, equipment and fixtures. General maintenance tasks such as, but not limited to, replacement of light bulbs, minor repairs to fixtures, doors and windows, limited painting, minor plumbing, mechanical and carpentry repairs on the interior and exterior portions of the Premises including ceilings, walls, floors and all special items and equipment installed by or at the expense of the Lessee. C. Custodial Services. Lessee shall be responsible for providing custodial services and supplies. Supplies are to be environmentally friendly and Lessee shall be responsible to keep an inventory of hazardous materials and MSDS sheets. Lessee shall be responsible for both interior and exterior window washing. D. Routine Yard Maintenance. Lessee shall be responsible for repair, maintenance and upkeep of all exterior grounds except for those items described in Sub-subsection 7.1.B. Walks and steps within this area shall be kept free of debris. The lawn area shall be mowed at a height of 2 1/2" each week (April through October) and as needed (November through March). Shrub and flowering plant beds around building shall be maintained by the Lessee. Grassy areas are to be kept alive. Lessee shall keep the exterior of the facility free from trash, debris and general clutter. E. Repairs Caused by Negligence. Lessee shall be responsible for any repairs necessitated by the negligence of Lessee, its agents, employees, invitees and licensees. 8. Utilities, Waste Disposal, and Security. 2006-03803 Kaufman Senior Center Lease Page 4 8.1 Lessee shall provide and pay for all utilities in connection with the Premises including telephone, water, electricity, and natural gas. 8.2 Lessee shall provide and pay for waste disposal for the Premises. 8.3 Lessee shall be responsible for the security of the Premises. The existing electronic security system at the Premises (the "Sonitrol" system) will be maintained by Lessee and the Premises will be continuously monitored for security purposes. Lessee shall provide Sonitrol with a call out list that includes appropriate City staff. 8.4 City will provide all locks, keys and door hardware and will re-key the exterior doors and designated interior doors periodically as it deems necessary. Re-keying was last done in Fall 2004. 9. Rules and Regulations. Lessee shall comply with all rules and regulations governing use of property which have or hereinafter may be promulgated and adopted by City. Further, although the parties intend that the failure to comply with the rules and regulations shall, after notice and opportunity to cure as provided in paragraph 24, be an event of default, nothing herein shall limit the enforcement mechanisms of City. 10. Inspection and Entry. City shall have the right, after giving Lessee reasonable notice, to inspect the Premises for purposes of determining Lessee's compliance with Lessee's obligations under this agreement or for maintenance purposes. City shall give 24-hour notice prior to an inspection or maintenance that requires entry to the building or for any yard maintenance activity by contacting the EECA Executive Director for the Center at 342-1881. City shall also have the right to enter the Premises at any time in the event of an emergency or to check for code compliance. Nothing herein shall affect any inspection or access right City has pursuant to any regulation, code or statute. 11. Indemnification. 11.1 Lessee's Indemnification. Lessee shall indemnify and hold City, its officers, agents and employees, harmless from and against any and all claims, actions, liabilities and costs, including attorney fees and other costs of defense, arising out of or in any way related to Lessee's use of the Premises. In the event any such action or claim is brought against City as a result thereof, Lessee shall, if City so elects and upon tender by City, defend the same (with counsel approved by City) at Lessee's sole cost and expense, promptly satisfy any judgment or settlement adverse to City, or to City and Lessee jointly, and reimburse City for any loss, cost, damage or expense (including legal fees) suffered or incurred by City. This indemnification shall survive the termination or expiration of this agreement. 11.2 City's Indemnification. Subject to the limitations of the Oregon Tort Claims Act, City shall indemnify and hold Lessee, its officers, agents and employees, harmless from and against any and all claims, actions, liabilities and costs, including attorney fees and other costs of defense, caused solely by the wrongful act of City, its employees or agents and for which City is liable at law. In the event any such action or claim is brought against Lessee as a result thereof, City shall, if Lessee so elects and upon tender by Lessee, defend the same at City's sole cost and expense, promptly satisfy any judgment or settlement adverse to Lessee, and reimburse Lessee for any loss, cost, damage or expense (including legal fees) suffered or incurred by Lessee. This 2006-03803 Kaufman Senior Center Lease Page 5 indemnification shall survive the termination or cancellation of this agreement. 12. Damage and Restoration. 12.1 Except as provided in subsection 12.2, if the Premises are damaged by fire or other cause that would be covered by a standard fire insurance policy with an endorsement for extended coverage, City shall promptly repair the damage and restore the improvement. Repair shall be accomplished with all reasonable dispatch, subject to interruptions and delays from labor disputes and other causes beyond City's reasonable control. 12.2 If the Premises are damaged such that the cost of restoration is reasonably estimated by City to equal or exceed 50% of the value of the Premises prior to the occurrence of the damages, then the parties agree to proceed as follows: A. City may elect to terminate this lease by written notice to Lessee, given not more than 30 days following the date of damage. B. Absent such an election, City shall proceed to restore the improvements. The completed repair, restoration or replacement shall be equal in value, quality and use to the condition of the improvement immediately before the damage. Repair shall be accomplished with all reasonable dispatch, subject to interruptions and delays from labor disputes and other causes beyond City's reasonable control. C. Lessee shall not be entitled to any abatement of rent on account of any damage or destruction of improvements on the property, nor shall any other obligations of Lessee under this lease be altered or terminated except as specifically provided to the contrary. 13. Insurance. Lessee shall obtain and maintain continuously in effect at all times during the term of this lease, at its sole expense, the following insurance: 13.1 Comprehensive General Liability Insurance. Lessee shall maintain a comprehensive general liability insurance policy, including premises liability, auto and personal injury, with a combined single limit coverage of not less than $1,000,000 If available, such policy shall contain a contractual liability endorsement to cover Lessee's indemnification obligations under this lease. The liability policy shall contain a "tenant's legal liability" endorsement. 13.2 Property Insurance. Lessee may insure all of its personal property located on the Premises. City shall not be liable for any loss of or damage to personal property of Lessee or Lessee's employees, officers, invitees or licensees. 13.3 Policy Requirements. The insurance policies specified in this section 13 shall be approved as to form and surety by City and shall bear endorsement entitling City to at least 30 days' prior written notice of any material change, non-renewal or cancellation. A copy of all such policies, or certificates thereof, reasonably satisfactory to City, shall be delivered to City within 30 days of signing this agreement. All policies required by these provisions shall be written as primary policies, not contributing with or in excess of any coverage City may have, and shall have loss payable clauses in favor of and reasonably satisfactory to City. 2006-03803 Kaufman Senior Center Lease Page 6 14. Service and Reporting Requirements_. Lessee agrees to the following service and reporting requirements: 14.1 Maintain standing as an organization described in section "501(c)(3)" of the Internal Revenue Code of 1986, as amended. 14.2 Maintain a safe and secure facility during hours of operation by: Correct operation of the building mechanical, electrical and plumbing systems; staff trained in first aid/CPR, risk management and emergency procedures; maintain adequately stocked first aid kits. 14.3 Create written agreements with all sub-lessees that also include the provisions of this lease. Provide copies of all current agreements to the City's Property Manager. 14.4 Provide the City, by March 1 of each of the five years, three copies of a written Annual Report for the previous EECA tax year (Jan 1 - Dec 31) that includes the following: - Annual budget summary of revenue, expenses and reserves for Center operation - Detailed listing of services provided - Current organizational chart and structure - List of partnerships and organizations sharing space in the Facility - Summary of space use and financial contributions of partners and sub-lessees - Hours of Operation - Total number of participants (unduplicated number) - Total attendance at all events - Proposed service changes for the coming year - Current safety plan (see 14.2 above) - Copy of the annual EECA financial report - Copy of federal tax return of 501(c)(3) organization for the reported year or affidavit of Lessee's chief executive officer of continued 501 (c)(3) status. Provide written safety and security plan for including current proof of all insurance required by Section 13. 15. Hazardous Materials. 15.1 Definition of Hazardous Materials. As used herein, the term "hazardous materials" shall mean any materials that, because of their quantity, concentration or physical, chemical or infectious characteristics may cause or pose a present or potential hazard to human health or the environment when improperly used, stored, disposed of, transported, or otherwise handled. This term includes, but is not limited to, petroleum, crude oil, or any hazardous or toxic substance regulated under the Resource Conservation and Recovery Act, the Comprehensive Environment Response Compensation and Liability Act, or any other state, federal or local laws relating to the protection of human health or the environment. 15.2 Use of Hazardous Materials. Lessee shall not cause or permit any hazardous materials to be brought upon, kept, or used in or about the Premises by Lessee, its agents, employees, contractors or invitees without prior written consent of City. City does hereby consent to Lessee's bringing onto the Premises copiers, copier supplies and other office supplies. In the event separate storage facilities are required to store hazardous materials, the cost of construction of such hazardous storage facilities will be borne by Lessee. Notwithstanding any provision to the contrary in this lease, under no circumstances will hazardous materials be disposed of on the Premises. 15.3 Indemnification for Hazardous Materials. Lessee shall indemnify, defend and hold City 2006-03803 Kaufman Senior Center Lease Page 7 harmless from any and all claims, judgments, damages, penalties, fines, costs, liabilities, or losses (including without limitation, diminution in value of the Premises, damages for the loss or restriction on use of rentable or usable space or any amenity of the Premises, damages arising from any adverse impact on marketing of the Premises, and sums paid in settlement of claims, attorney fees, consultant fees and expert fees) which arise during or after the lease term because of the contamination by hazardous materials as a result of the use or activities of Lessee, Lessee's agents, contractors and invitees. This indemnification includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision because of the presence of hazardous materials in the soil or ground water on or coming from the Premises, Without limiting the foregoing, if the presence of any hazardous material on the Premises caused or permitted by Lessee, or Lessee's agents, contractors or invitees, results in contamination of the Premises, Lessee shall promptly take all actions at its sole expense as are necessary to return the Premises to the condition existing prior to the release of any such hazardous material. Nevertheless, City shall have the right to order Lessee to cease any cleanup or mitigation activity if such actions would potentially have any material adverse long-term or short-term effect on the Premise. The foregoing indemnity shall survive the expiration or termination of this lease. 16. Assignment and Subleasing. Lessee's interest in this lease shall not be assigned or sub-let, without City's prior written consent. Lessee acknowledges that the restriction on assignment and subleasing are intended to give City sole discretion concerning what persons or organizations occupy and use the Premises. Notwithstanding any provisions of law or otherwise, Lessee agrees that in the event of an assignment or sublease, Lessee remains fully liable under this agreement. 17. Holding Over - Tenancy at Sufferance. If, after expiration or earlier termination of this lease, Lessee shall remain in possession of the Premises and improvements, with or without the express written consent of City, then Lessee shall be a tenant at sufferance only, at a rental rate equal to the fair market rental value of the Premises at the date of termination or expiration. 18. Condition at End of Term. Upon expiration of the lease term or earlier termination, Lessee shall deliver all keys to City and surrender the Premises and improvements thereto in clean and undamaged condition, except for wear and tear, and broom clean. 19. Notices. Any notice required or permitted under this lease may be delivered and served personally, or alternatively, may be deposited in the United States mail, postage prepaid, registered or certified, return receipt requested, addressed to the parties as shown below: CITY: LESSEE: Emmy Jenson Elaine Barrett Real Property and Lease Manager President, Board of Directors CS / FAC Emerald Empire Council on Aging 210 Cheshire Avenue 996 Jefferson Street Eugene, Oregon 97401 Eugene, Oregon 97402 541-682-5190 541-342-1881 Such notice, if mailed within the State of Oregon, shall be deemed delivered upon the second day following the date postmarked. If mailed outside the State of Oregon, notice shall be deemed delivered upon the fifth day following the date postmarked. 20. Default. The following shall constitute "Events of Default:" 2006-03803 Kaufman Senior Center Lease Page 8 20.1 Default in Rent. Failure by Lessee to cure a delinquency in the payment of rent within thirty (30) days of the date of written notice from City that the rent is delinquent; 20.2 Improper Use. Immediately, upon use of the Premises for a purpose other than that specified in Subsection 1.2; 20.3 Default in Insurance. Immediately upon failure of Lessee to prevent the expiration, lapse or cancellation of any insurance required by this agreement; 20.4 Default in Other Covenants. Failure of either party to comply with any other terms or conditions or fulfill any other obligation of this lease within 30 days after written notice by the other party specifying the nature of the default with reasonable particularity; or 20.5 Insolvency. Assignment by Lessee for the benefit of creditors, the filing by Lessee of a voluntary petition in bankruptcy, and adjudication that Lessee is bankrupt, or the appointment of a receiver of the property of Lessee, the filing of an involuntary petition of bankruptcy and failure of Lessee to secure dismissal of the petition within 60 days after filing, attachment or levying of execution on the leasehold interest and failure of Lessee to secure discharge of the attachment or release of the levy of execution within 30 days. 20.6 Recurring Default. If Lessee cures a default in the manner described in subsection 20.4 above, in the event of Lessee's subsequent failure to comply with the same obligation within any 12 consecutive months or Lessee's violation of the same provision within any 12 consecutive months, no notice of the obligation or violation will need to be given prior to declaring an Event of Default. 21. Waiver of Default. Any waiver by City of strict compliance within the terms of this lease shall not be a waiver of any subsequent violation or default. 22. Remedies on Default if a Default Occurs. 22.1 Termination. Upon the occurrence of an Event of Default, this lease may be terminated at the option of City with five (5) days' prior written notice from City, provided that this lease shall terminate automatically upon the cancellation or lapse of any insurance required to be maintained by Lessee. 22.2 Damages without Termination. If this lease is not terminated by election of City or otherwise, City shall be entitled to recover damages from Lessee for the default. 23. Termination by City. In addition to termination upon an Event of Default or following the destruction of the Premises, this lease may be terminated by City on April 1 of any year, to be effective June 30 of the same year, upon a determination by the City manager that sufficient funding is not available for the continued maintenance and support of the Premises. The Lessee's interest in the Premises will cease unless Lessee is able to assume responsibility for maintenance. A termination of this Agreement for any reason shall not prejudice any other remedy for breach of contract, damages, non-payment or otherwise which City has under this Agreement or under law. 24 Annual Option to Renew. On or before April 1 of each year, EECA will inform the City in writing of its intention to continue to lease the premises for the following fiscal year under the terms and conditions described herein, or will inform the city of its intention to terminate the lease. EECA may opt out of the lease 2006-03803 Kaufman Senior Center Lease Page 9 for the remainder of the term at this time, which will terminate their leasehold interest as of midnight June 30 of the same year. 25. Action upon Termination or Expiration. If this lease expires or is terminated for any reason, Lessee's liability to City for damages shall survive such expiration or termination, and the rights and obligations of the parties shall be as follows: 25.1 At any time more than 24 hours after the expiration or the termination of this Lease for any reason, City may re-enter and assume complete control of the Premises, including the right of ingress and egress, and, subject to the provisions in subsection 25.2 remove any persons or property by legal action or self-help with the use of reasonable force and without liability for damages. 25.2 Lessee shall vacate the property within 30 days of the expiration or termination date, remove any property of Lessee, including fixtures which Lessee is permitted to move at the end of the lease term, perform any cleanup, alterations or other work required to leave the property in the condition required at the end of the term, and deliver all keys to City. During this period, City agrees to permit Lessee access to the Premises to remove Lessee's property and perform the required cleanup, alterations, etc., upon notification to City least 24 hours in advance of the time access to the Premises is necessary. 25.3 Following re-entry after termination upon an Event of Default, City may re-let the Premises and in that connection may: A. Make any suitable alterations or re-furnish the Premises or improvements, or both, to change the character or use of the Premises or improvements, but City shall not be required to re-let for any use or purposes (other than that specified in this lease) which City may reasonably consider injurious to the Premises or improvements or to any Lessee which City may reasonably consider objectionable; B. Re-let all or part of the Premises or improvements, alone or in conjunction with other properties, for a term longer or shorter than the term of this lease, upon such terms as City may in good faith deem proper. C. Subject to City's duty to mitigate damages, in the event of termination on default, City shall be entitled to recover damages immediately, without waiting until the due date for any future rent or until the date fixed for expiration of the lease term 26. Attorney Fees. In the event any legal proceeding is commenced for the purpose of interpreting or enforcing any provision of this lease, rescinding the lease, or to collect any indebtedness hereunder, the prevailing party in such proceeding shall be entitled to recover reasonable attorney fees in the proceeding, or any appeal or review thereof, to be set by the court without the necessity of hearing testimony or receiving evidence, in addition to the costs and disbursements allowed by law. In addition, in the event of default by either party in performance of this lease, the defaulting party agrees to pay all reasonable attorney fees and legal expenses incurred by the non-defaulting party in collecting any sums due hereunder, even though no litigation is filed. 27. Severability. Invalidation of any term or provision herein by judgment or court order, or otherwise, shall not affect any other provision, which will remain in full force and effect. 28. No Third Party Beneficiaries. City and Lessee intend that that the provisions of this lease shall be 2006-03803 Kaufman Senior Center Lease Page 10 binding on and inure only to the benefit of the signatories and their successors. There are no third-party beneficiaries to this lease. 29. Paragraph Headings. The paragraph headings appearing in this lease are not to be construed as interpretations of the text, but are inserted for convenience and reference of the reader only. 30. Entire Agreement. This lease replaces and supersedes all prior agreements between the parties and embodies the entire agreement of the parties. There are no promises, terms, conditions or obligations other than those contained herein. This lease shall supersede all prior communications, representations or agreements, either verbal or written, between the parties. CITY: LESSEE: Dennis M. Taylor Elaine Barrett City Manager President, Board of Directors City of Eugene Emerald Empire Council on Aging 541-682-5336 541-342-1881 Date: Date: 2006-03803 Kaufman Senior Center Lease Page 11 EXHIBIT A Legal Description Lane County Assessor's Map 17-03-31-24, Tax Lot 9200 Gertrude and Ludwig Kaufman House -known as Kaufman Senior Center Beginning at a point on the North line of 10th Ave. West in Eugene, Lane County Oregon, which is 66 ft. North of the NE corner of Block 3 in the Amended Plat of James Huddleston Addition to Eugene, Oregon, run thence: West along the North line of said 10 Ave. west 198.9 feet thence North 161.2 feet to the South Line of alley if extended, thence East along the South line of the alley, if extended to the West line of Jefferson St., thence South along the West line of Jefferson St. 161.2 feet to the point of beginning in Eugene, Lane County Oregon. ALLEY TAX LOT # 9200 ~ Z o (/) iii El- ii I ,,, 996 JEFFERSON I lOTH AVENUE ~ 2006-03803 o lo 20 4o Kaufman Senior Center Lease Page 12 ATTACHMENT C RESOLUTION NO. 4846 A RESOLUTION AUTHORIZING EXECUTION OF LEASE OF KAUFMAN CENTER TO EMERALD EMPIRE COUNCIL ON AGING. The City Council of the City of Eugene finds that: A. Emerald Empire Council on Aging is a nonprofit entity formed in 2003 for the purpose of continuing and expanding service programs for seniors that were formerly sponsored by Lane Community College at the City-owned building known as the Kaufman Senior Center. B. In August 2003, the City Council adopted Resolution 4773, which authorized the City Manager to lease the Kaufman Center to Emerald Empire Council on Aging for an initial term of one year for $1.00, with an option to renew the lease for a second year for $1.00, depending on outcomes achieved. The City and the Emerald Empire Council on Aging entered into the lease. Resolution 4773 also authorized the City Manager, in his discretion, to renew the lease for up to five more years at a rate determined to be the fair market rental value. C. The use of the Kaufman Senior Center by Emerald Empire Council on Aging benefits the City by providing needed accessible senior services, recreation and a seniors' community center within the Jefferson Westside neighborhood. D. Despite the success of its programs and progress in the operation of the Kaufman Senior Center, Emerald Empire Council on Aging is not yet able to pay fair market rental value for the lease. E. The City Manager has determined that there is a limited market for rental of the building and that determining a precise market value for a lease of the building is not feasible at this time. The City Manager has recommended entering into a new lease with Emerald Empire Council on Aging on terms that will require steady increases in rent. F. The City Manager proposes to lease the Kaufman Senior Center to Emerald Empire Council on Aging at a rental rate that is greater than under the prior lease but is still less than fair market value. The rental rate would increase each year during the term of the lease. G. The Kaufman Senior Center has not been declared surplus property and it not subject to a development plan. H. Under Section 2.872 of the Eugene Code, 1971 the City Manager has authority to Resolution- 1 present a proposal for the disposition of real property that is not within a development plan, that has not been declared surplus property and for which no other procedure is specified in the Code or a Council-approved intergovernmental agreement to the City Council for its action. The City Manager has requested that the Council authorize him to enter into a lease as described in Recital F with Emerald Empire Council on Aging. I. The City Council specifically finds that the use of the Kaufman Senior Center by Emerald Empire Council on Aging as a center for support services, recreation, and as a community center for seniors will result in a substantial benefit to the City that justifies leasing the property at less than fair market value. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a Municipal Corporation of the State of Oregon, as follows: Section 1. Based on the above findings, which are hereby adopted, and pursuant to Section 2.872 of the Eugene Code, 1971, the City Manager is authorized to execute on behalf of the City a Lease Agreement with the Emerald Economic Council on Aging for the Kaufman Senior Center. The rent may be less than fair market value, but it should increase each year during the five-year lease term; contribute substantially toward regular maintenance costs; and include a portion of any revenues exceeding $1000 per month that the lessee receives from subleases. During the lease term the City will have no obligation to make capital improvements to the property, and the City's obligation to repair and maintain the premises shall be subject to the availability of budgeted funds derived from the Kaufman Trust. The lease shall contain such other terms and conditions as are agreed to by the City Manager and are consistent with this Resolution. Section 2. The City Recorder is requested to forward a copy of this Resolution to the Emerald Empire Council on Aging. The foregoing Resolution adopted the __ day of August, 2005. City Recorder Resolution - 2