HomeMy WebLinkAbout20070716 - VIII-C-1VIII-C-1
MEMORANDUM
TO: Honorable Mayor and City Councilmembers
FROM: Dave Osberg, City Administrator
DATE: July 12, 2007
SUBJECT: Electronic Message Board Lease Agreement
RECOMMENDED CITY COUNCIL ACTION
It is recommended that the City Council take action approving the attached Electronic Display
Sign Lease Agreement with School District #200.
BACKGROUND
Throughout the last several weeks, Staff has been working with the School District on the final
plans and agreement for the installation of the Electronic Display Sign, to be located at the
intersection of Highway #61 and Highway #55. The City Council approved at its meeting on July
2, 2007 the policies and procedures that will be utilized for the operation of the electronic display
sign. Recently, Community Education Don Kramlinger, City Attorney Dan Fluegel, Parks and
Recreation Director Barry Bernstein and I conducted a meeting to review the contents of a lease
agreement between the City of Hastings and School District #200. Staff recommends the City
Council approve the attached lease agreement, which includes the following major elements for
consideration:
1.) The School District will own the sign, and the City will lease its portion of the sign,
which will be the side facing Highway #61.
2.) Initial installation costs will be split equally, with the City's share of the payment due
and payable on February 1, 2008.
3.) Each year thereafter, the annual maintenance and operation costs will be split equally
by both parties. This will be the case regardless of the exact maintenance or repair
cost that may be incurred on either sign; both parties will share equally.
4.) While the City's sign will be the Highway #61 side, and the School's sign will be the
Highway #55 side, should emergency messages, major events or maintenance on the
sign be needed, both parties agree to allow the other to operate both sides of the sign
at certain times.
5.) School District will provide insurance
6.) Should the lease be terminated with the first five years of the agreement, the City will
be reimbursed a portion of the initial capital cost, based upon a five year amortization
scheduled, as outlined in the agreement.
7.) After the initial five years, there shall be no reimbursement
8.) No commercial advertisement shall be allowed on the signs.
9.) Either party may cancel, by providing six months advanced notice.
David M. Osberg
City Administrator
LEASE OF ELECTRICAL DISPLAYSIGN
This lease is made on the _ day of , 2007, between Independent School
District No. 200 (hereinafter referred to as "Lessor"), and the City of Hastings, a Minnesota
Municipal Corporation (hereinafter referred to as "Lessee").
Recitals.
A. Lessor desires to construct, operate and maintain an electrical display sign on real property
owned by Lessor lying generally adjacent to the Northwest of the Junction of U.S. Highway
61 and Minnesota State Highway 55 in the City of Hastings.
B. Lessor and Lessee wish to enter into an agreement whereby Lessee will be granted certain
rights to operate a portion of the electrical display sign in exchange for Lessee sharing
equally in the costs of constructing, operating and maintaining the sign and subj ect to certain
conditions and requirements of both parties.
IN CONSIDERATION of the matters described above and of the mutual benefits and
obligations set forth in this agreement, the parties agree as follows:
Section 1. Construction of Sign.
Lessor shall construct and install at the location above-described an electrical display sign
conforming to the specifications and conditions set forth in the plans and specifications attached to
this lease and marked as Exhibit A.
Section 2. Lease of Sign.
Lessor leases that portion of the above-described sign identified in Section 5 to Lessee, and Lessee
leases the sign from Lessor for a term of five years, commencing on the first day of the month
immediately following the installation of the sign, which shall be no later than September 1, 2007.
Section 3. Rent.
Lessee shall pay to Lessor, as rent for the sign, an amount equal to one-half of all actual costs
incurred and paid by Lessor for the construction, operation and maintenance of the sign. Lessor shall
provide reasonable documentation to Lessee of all costs and expenses for which Lessor seeks
payment by Lessee. The initial rent payment shall be due and payable no later than February 1, 2008
for all cost incurred prior to that date. For costs and expenses incurred after that date, rent shall be
due on the first day of February of each successive year during the term of the lease. As provided
below, upon termination of this lease by either party, Lessee shall be entitled to refund of rent paid
under certain circumstances.
Section 4. Inspection By Lessee.
Lessee shall inspect the sign within ten days after its installation. Unless Lessee within this period of
time gives written notice to Lessor specifying any defect in or other proper objection to the sign, it
shall be conclusively presumed, as between Lessor and Lessee, that Lessee has fully inspected and
acknowledged that the sign is in good condition and constructed in accordance with the plans and
specifications attached to this lease and marked as Exhibit A, and that Lessee is satisfied with and
has accepted the sign within this condition.
Section 5. Sign Area Operation.
The sign specifications set forth as Exhibit A provide that the sign shall be constructed to allow
separate electrical displays on each of two sides of the sign with one side facing generally traffic on
U.S. Highway 61 and one side facing generally traffic on Minnesota State Highway 55. The content
of each of the two visual displays will be controlled separately via electronic communications.
Except as provided below, Lessor shall retain all rights to operate the visual display facing Highway
55 and Lessee shall generally be granted the right and lease to operate the visual display facing
Highway 61. Lessor and Lessee agree, however, to cooperate and allow the opposite party to operate
both sides of the sign at certain times and for reasonable durations. It is anticipated that such times
when either Lessor or Lessee, as the case maybe, would be allowed to operate both visual displays
on the sign would be for reasonably short durations, would be roughly equal between the parties, and
would be allowed for the purpose of displaying content that is either urgent or emergency in nature,
or which advertises a major event of one of the parties. Neither party shall display commercial
advertising content on the sign.
Section 6. Maintenance; Repairs.
Lessor shall maintain and service the sign by inspecting, cleaning, repainting, and making all
necessary repairs to it. If the sign fails to operate for any reason not due to the fault of Lessee or
Lessee's agents, Lessee shall promptly notify Lessor, and Lessor shall repair the sign within a
commercially reasonable time. All expenses of maintenance and repairs to the sign shall be paid
equally by Lessor and Lessee as provided in Section 3 hereof, regardless of which portion or area of
the sign requires maintenance or repairs. It is expressly understood and agreed that both parties shall
share the expenses of maintenance and repairs to areas of the sign operated by either party. All costs
of maintaining the real property upon which the sign is located shall be borne by Lessor.
Section 7. Damage or Destruction.
If the sign is totally destroyed or damaged to such an extent that proper repairs would exceed 25% or
more of the original cost of construction, exclusive of all net insurance proceeds received by Lessor
as a result of such damage, then Lessor shall have the option to either rebuild the sign and extend the
term of this lease for such a period of time as equals the period of time the sign is not in operation
due to such damage or destruction, or to terminate this lease, in which event Lessee shall be entitled
to refund of rent paid according to the termination provisions herein. If Lessor elects to rebuild or
replace the sign and Lessee does not terminate the lease as provided for in Section 10 herein, then the
additional costs incurred by Lessor shall be included as maintenance costs to be included in the
calculation of future rent.
Section 8. Electric Powers
Lessor shall supply electric power to the sign. Lessor and Lessee shall equally share all costs for
electric power as provided in Section 3 above.
Section 9. Insurance.
Lessor shall keep the sign insured for such risks and in such amounts as are commercially reasonable
in the outdoor advertising industry. All insurance shall name both Lessor and Lessee as the insured.
Lessor shall pay all insurance expenses without reimbursement by Lessee.
Section 10. Termination of Lease.
Either party may terminate this lease at any time and for any reason upon six months notice. If either
party terminates the lease within the initial lease period of five years identified in Section 2, Lessor
shall refund to Lessee a portion of the rent paid by Lessee which is attributable to Lessee's share of
costs incurred for the initial construction and placement of the sign and subsequent repairs and
improvements to the sign but Lessee shall not be entitled to reimbursement for that portion of rent
paid by Lessee attributable to operating costs and expenses of the sign. If termination occurs during
the initial lease period of five years, Lessor shall refund to Lessee rent paid and attributable to all
initial construction and placement costs and all subsequent repair and maintenance costs through the
date of termination as follows:
Year of
Lease Percent of Rent
Refundable
1 80%
2 b0%
3 40%
4 20%
5 0%
If this lease is terminated after the initial term of five years, Lessee shall not be entitled to
reimbursement of any amount of the initial capital investment. Upon notice of termination, both
parties shall be obligated to pay its share of operation and maintenance costs through the
effective date of termination but not thereafter. If either party terminates this lease during the
first year of the lease prior to Lessee delivering the initial rent payment on or before February 1,
2008, Lessee shall still be obligated to pay its share of rent for the full initial year according to
the schedule set forth above provided, however, that if the termination occurs as a result of
damage or destruction of the sign through no fault of the terminating party, and Lessee provides
written notice of termination within 30 days of learning of the damage or destruction, Lessee
shall not be required to pay any additional costs or rent resulting from repair or replacement of
the sign.
Section 11. Ownership.
The sign is and shall at all times remain the sole property of Lessor and Lessee shall have no right,
title or interest in the sign, except as set forth in this lease.
Section 12. Assignment.
Lessee shall not, without the prior written consent of Lessor, assign any interest in this lease.
Section 13. Renewal.
If not first terminated, this lease shall automatically renew after the initial lease as period in
subsequent one year terms until either party terminates the lease as provided herein.
The parties have executed this agreement on the day and year first above written.
Dated this _ day of , 2007.
Dated this _ day of , 2007.
INDEPENDENT SCHOOL DISTRICT N0.200
By:_
Its:
By: _
Its:
CITY OF HASTINGS, A MINNESOTA
MUNICIPAL CORPORATION
By:
Paul J. Hicks, Mayor
(SEAL) By:
Melanie Mesko Lee,
Assistant City Administrator/City Clerk
ACKNOWLEDGMENT
STATE OF MINNESOTA )
ss.
COUNTY OF DAKOTA )
by
The foregoing instrument was acknowledged before me this day of , 2007
the and the of
Independent School District No. 200.
NOTARY PUBLIC
ACKNOWLEDGMENT
STATE OF MINNESOTA )
ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this _ day of , 2007 by
Paul J. Hicks and Melanie Mesko Lee the Mayor and Assistant City Administrator/City Clerk of the
City of Hastings, Minnesota.
NOTARY PUBLIC
THIS INSTRUMENT DRAFTED BY:
FLUEGEL LA W FIRM P.A.
1303 South Frontage Road, Suite #5
Hastings, MN 55033
65 i -438-9777
{DAN/ham)
EXHIBIT A-SIGN SPECIFICATIONS
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