HomeMy WebLinkAboutItem 12- Lease Review- Carter BuildingAGENDA ITEM SUMMARY
Meeting Date:
Meeting Type:
Staff Contact/Dept.:
Staff Phone No:
Estimated Time:
4/17/2023
Regular Meeting
Allie Camp/CMO
541-726-3688
5 Minutes
SPRINGFIELD Council Goals: Encourage Economic
CITY COUNCIL Development and
Revitalization through
Community Partnerships
ITEM TITLE: LEASE REVIEW- CARTER BUILDING
ACTION Direct the City Manager to lease the vacant property at located at 204 5th Street and
REQUESTED: 422-450 A Street (previously known as the Carter Building but has been
demolished and removed) to Blue McKenzie Apartments LLC for use as temporary
office space and construction staging during construction of the Blue McKenzie
site, for nominal rent.
ISSUE The Downtown mixed-use, market -rate housing project, Blue McKenzie, will
STATEMENT: require close access to the site for construction coordination and management.
ATTACHMENTS: 1. Vicinity map
2. Draft lease
DISCUSSION/ The vacant property owned by the City of Springfield located at 204 5th Street and
FINANCIAL 422-450 A Street, previously referred to as the Carter Building, is located two
IMPACT: blocks west on the same street as the Blue McKenzie project site (ATT 1). The
Carter Building footprint is currently vacant and was most recently used as office
space but the building was vacated due to safety concerns with regards to the failing
roof. The building was demolished and removed in 2022. Blue McKenzie
Apartments LLC will need coordination space for contractors and consultants
during construction. Often, construction sites will utilize a job trailer to serve this
function.
The use of the Carter Building footprint during construction is a resource that the
City can provide to support the project's success. The draft lease (ATT 2) indicates
the cost of the lease at $1 for the duration of construction, which is estimated to
stretch from May 2023 -September 2024 at this time. There is always the potential
for time frames to adjust as the project gets underway.
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Attachment 1, Page
GROUND LEASE AGREEMENT
Contract #
Date: April _, 2023
Between: City of Springfield (City) ("Lessor")
225 Fifth Street
Springfield, OR 97477
And: Blue McKenzie Apartments, LLC ("Lessee")
Statement of Purpose
City owns a vacant parcel of property in the City of Springfield located at 204 5th Street and
402-450 A Street, Map Number 17-03-35-31, Tax Lots 2800 and 2900 (the "Premises").
Lessee wishes to place and maintain a parking and laydown area (temporary laydown facility)
on the Premises in connection with its construction work on the Blue McKenzie Apartments
construction project at 740 A Street ('the Project'.
Section 1. Term
1.1 Term. The original term of this lease shall commence on May 1, 2023 and continue until
September 30, 2024, unless sooner terminated as set forth in this Lease Agreement.
1.2 Option to Extend. If Lessee is not in default and the Project is still under construction,
Lessee may extend this Lease for two additional extension terms of one year each. Each
extension term will commence on the day following the expiration of the immediately preceding
term. Notice exercising the extension option must be delivered to City in writing not less than
180 days prior to the expiration of the preceding term. If notice is given, all terms and
conditions of this Lease, except as expressly amended, will apply during the extension term.
Rent for any renewal terms will be determined by mutual agreement of the parties.
1.3 Sublease. Lessee shall ensure that any Sublease term is consistent with the term of this
Lease, including with the Outside Termination Date. Lessee shall, on or prior to the date this
Lease terminates, cause any Sublease to terminate and cause the Sublessee to fully vacate the
Premises in accordance with this Lease and the Sublease.
1.4 Right to Termination. Either Lessor or Lessee may terminate this lease at any time upon at
least thirty (30) days' advance written notice to the other party.
Section 2. Rent
2.1 Rent. Rent for the premises is $1.00 for the original term. Lessee will be responsible for
paying all costs described as Lessee's responsibility in section 7. Lessor acknowledged that
Lessee may contract with any Sublessee for Sublessee to pay any of the costs described herein.
{00028553:2} GROUND LEASE AGREEMENT (City) — Page 1 of 8
Attachment 2, Page 1 of 7
Section 3. Use of the Premises
3.1 Leased Purposes. Lessee and any Sublessee may use the Premises as a temporary staging
or laydown area in connection with construction of the Project, and for no other purpose
without the prior written consent of Lessor (the "Leased Purposes"). Lessee's and any
Sublessee's use must also comply with all of the following requirements:
(a) Conform to all applicable laws and regulations of any public authority affecting the
Premises and the use, and correct at Lessee's own expense any failure of compliance created
through Lessee's fault (as Lessee and not as prior owner), Sublessee's fault or by reason of
Lessee's or Sublessee's use, but Lessee shall not be required to make any structural changes to
effect such compliance unless such changes are required because of Lessee's or Sublessee's
specific use.
(b) Refrain from any activity that would make it impossible to insure the Premises
against casualty.
(c) Refrain from any use that would be reasonably offensive to users of neighboring
premises or that would tend to create a nuisance or damage the reputation of the Premises,
provided however that normal construction activities will not be deemed an unreasonably
offensive use.
(d) Lessee shall not cause or permit any Hazardous Substance to be stored, spilled,
leaked, disposed of, or otherwise released on or under the Premises. Lessee shall comply with
all Environmental Laws. The term Environmental Law shall mean any federal, state, or local
statute, regulation, or ordinance or any judicial or other governmental order pertaining to the
protection of health, safety or the environment. The term Hazardous Substance shall mean any
hazardous, toxic, infectious or radioactive substance, waste, and material as defined or listed by
any Environmental Law and shall include, without limitation, petroleum oil and its fractions.
Section 4. Reserved
Section S. Alterations
5.1 Alterations. Lessee is responsible for all development costs associated with installation of
the temporary laydown facility and for bringing all utilities and required services for use on the
Premises. During the Lease term, Lessee may make any improvements to the Premises as
needed, including site lighting, fencing and gates, in order to operate a temporary laydown
facility, consistent with any applicable requirements of city codes. Lessor is not responsible for
any cost to develop or improve the Premises or Lessee's temporary laydown facility. Lessee
may not place any foundation or other permanent structure or fixture on the Premises without
approval by Lessor.
5.2 Ownership and Removal of Alterations. All improvements and alterations performed on the
Premises by either Lessor or Lessee shall be the property of Lessor when installed, unless
removed by Lessee prior to termination of the Lease.
Section 6. Insurance
{00028553:2} GROUND LEASE AGREEMENT (City) — Page 2 of 8
Attachment 2, Page 2 of 7
6.1 Insurance. Lessee will carry, and shall bear the expense of, any insurance for the personal
property of Lessee and Lessee improvements on the Premises.
6.2 Waiver of Subrogation. Neither the Lessor nor the Lessee shall be liable to the other for
loss arising out of damage to or destruction of the Premises, or the building or improvements of
which the Premises are a part or with which they are connected, or the contents of any thereof,
when such loss is caused by any of the perils which are or could be included within or insured
against by a standard all risk property insurance policy. All such claims for any and all loss,
however caused, hereby are waived. Such absence of liability shall exist whether or not the
damage or destruction is caused by the negligence of either Lessor or Lessee or by any of their
respective agents, servants, officials, or employees. It is the intention and agreement that the
Lessor and the Lessee shall provide their own property insurance and that both parties shall
look to their respective insurance carriers for reimbursement for any such loss, and further, that
the insurance carriers involved shall not be entitled to subrogation under any circumstances
against any party to this lease. Neither the Lessor nor the Lessee shall have any interest or
claim in the other's insurance policy or policies, or the proceeds thereof, unless specifically
covered therein as a joint insured.
Section 7. Taxes; Utilities
7.1 Property Taxes. Lessee shall pay as due all taxes on its personal property located on the
Premises. Lessor shall pay all real property taxes and special assessments levied against the
Premises.
7.2 Contest of Taxes. Lessee shall be permitted to contest the amount of any tax or
assessment as long as such contest is conducted in a manner that does not cause any risk that
Lessor's interest in the Premises will be foreclosed for nonpayment.
7.3 New Charges or Fees. If a new charge or fee relating to Lessee's use of the Premises is
assessed or imposed, then, to the extent permitted by law, Lessee shall pay such charge or fee.
Lessee, however, shall have no obligation to pay any income, profits, or franchise tax levied on
the net income derived by Lessor from this lease.
7.4 Payment of Utilities Charges. Lessee shall pay when due all charges for services and
utilities incurred in connection with the use and operation of the Premises to the extent utilities
are necessary to Lessee.
Section 8. Reserved
Section 9. Liability and Indemnity
9.1 Liens. Lessee and Sublessee shall keep the Premises free from any liens. If Lessee fails to
discharge any lien, upon written notice from Lessor, Lessor may do so and collect the cost as
rent. Any amount so added shall bear interest at the rate of 12% per annum from the date
expended by Lessor and shall be payable on demand. Such action by Lessor shall not constitute
a waiver of any right or remedy which Lessor may have on account of Lessee's default.
{00028553:2} GROUND LEASE AGREEMENT (City) — Page 3 of 8
Attachment 2, Page 3 of 7
9.2 Indemnification. Subject to the limits of the Oregon Tort Claims Act and the Oregon
Constitution, Lessee shall defend, indemnify and hold harmless Lessor from any claim, loss, or
liability arising out of or related to any activity of Lessee or Sublessee on the Premises. Lessor
shall have no liability to Lessee or Sublessee for any injury, loss, or damage caused by third
parties, or by any condition of the Premises except to the extent caused by Lessor's failure to
perform Lessor's obligations under this lease.
9.3 Liability Insurance. Lessee must procure and thereafter during the term of this Lease, or
require a Sublessee to procure and maintain, at its own cost: Commercial General Liability
Insurance (occurrence version) with limits of not less than $2,000,000 per single claimant per
occurrence and $3,000,000 in the aggregate. Such insurance shall cover all risks arising directly
or indirectly out of Lessee's activities on the Premises, and shall name Lessor as an additional
insured. A Certificate evidencing such insurance and bearing endorsement requiring 30 days
written notice to Lessor prior to any material change or cancellation shall be furnished to Lessor
prior to Lessee's or Sublessee's occupancy of the Premises. Lessor's liability insurance shall be
excess of and not contributing with Lessee's or Sublessee's liability coverage.
Section 10. Assignment and Subletting
10.1 Assignment/Sublease. Lessor consents to Lessee's sublease of the Premises to any
Sublessee who is a construction contractor or subcontractor on the Project, consistent with the
terms of this Lease upon approval by Lessor of the Sublease as described in section 3.1. Except
as specifically provided in this Lease, no part of the Premises may be assigned, mortgaged,
encumbered, subleased nor may a right of use of any portion of the Premises be conferred on
any third person by any other means, without the prior written consent of Lessor. This provision
shall apply to all transfers by operation of law. No consent in one instance shall prevent the
provision from applying to a subsequent instance.
Section 11. Default
The following shall be events of default:
11.1 Default in Other Covenants. Failure of Lessee to comply with any term or condition or
fulfill any obligation of the lease within 20 days after written notice by Lessor specifying the
nature of the default with reasonable particularity. If the default is of such a nature that it
cannot be completely remedied within the 20 -day period, this provision shall be complied with if
Lessee begins correction of the default within the 20 -day period and thereafter proceeds with
reasonable diligence and in good faith to effect the remedy as soon as practicable.
Section 12. Remedies on Default
12.1 Termination. In the event of a default the lease may be terminated at the option of Lessor
by written notice to Lessee. Whether or not the lease is terminated by the election of Lessor or
otherwise, Lessor shall be entitled to recover damages from Lessee for the default, if any, and
Lessor may reenter, take possession of the Premises, and remove any persons or property by
legal action or by self-help with the use of reasonable force and without liability for damages
and without having accepted a surrender.
12.2 Right to Sue More than Once. Lessor may sue periodically to recover damages during the
{00028553:2} GROUND LEASE AGREEMENT (City) — Page 4 of 8
Attachment 2, Page 4 of 7
period corresponding to the remainder of the lease term, and no action for damages shall bar a
later action for damages subsequently accruing.
12.3 Lessor's Right to Cure Defaults. If Lessee fails to perform any obligation under this lease,
Lessor shall have the option to do so after 30 days' written notice to Lessee. For clarification,
the 30 days' written notice is in addition to any notice provided pursuant to Section 11.1. All of
Lessor's expenditures to correct the default shall be reimbursed by Lessee on demand with
interest at the rate of twelve percent (12%) per annum from the date of expenditure by Lessor.
Such action by Lessor shall not waive any other remedies available to Lessor because of the
default.
12.4 Remedies Cumulative. The foregoing remedies shall be in addition to and shall not
exclude any other remedy available to Lessor under applicable law.
Section 13. Surrender at Expiration
13.1 Condition of Premises. Upon expiration of the lease term or earlier termination, Lessee
shall deliver all keys to Lessor and surrender the Premises in first-class condition, free of any
occupants and broom clean.
13.2 Fixtures. Prior to expiration or other termination of the lease Term, Lessee shall remove or
cause any Sublessee to remove all furnishings, furniture and other personal property placed in
the Premises by Lessee or Sublessee or their invitees. If Lessee fails to do so, this shall be an
abandonment of the property, and Lessor may retain the property and all rights of Lessee with
respect to it shall cease or, by notice in writing given to Lessee within 20 days after removal
was required, Lessor may elect to hold Lessee to its obligation of removal. If Lessor elects to
require Lessee to remove, Lessor may effect a removal and place the property in public storage
for Lessee's account. Lessee shall be liable to Lessor for the cost of removal, transportation to
storage, and storage, with interest at the legal rate on all such expenses from the date of
expenditure by Lessor.
13.3 Holdover. If Lessee or Sublessee does not vacate the Premises at the time required,
Lessor may eject Lessee and Sublessee from the Premises and recover damages caused by
wrongful holdover. Failure of Lessee or Sublessee to remove furniture or furnishings that Lessee
or Sublessee are required to remove under this lease shall constitute a failure to vacate to
which this section shall apply if the property not removed will substantially interfere with
occupancy of the Premises by Lessor for any purpose including preparation for a new Lessee.
Section 14. Miscellaneous
14.1 Nonwaiver. Waiver by either party of strict performance of any provision of this lease shall
not be a waiver of or prejudice the party's right to require strict performance of the same
provision in the future or of any other provision.
14.2 Notices. Any notice required or permitted under this lease shall be given when actually
delivered or 48 hours after deposited in United States mail as certified mail addressed as
follows:
{00028553:2} GROUND LEASE AGREEMENT (City) — Page 5 of 8
Attachment 2, Page 5 of 7
To Lessor: City of Springfield
Attn: Allie Camp
225 Fifth Street
Springfield, OR 97477
Phone: 541-726-3700
To Lessee: Blue McKenzie Apartments, LLC
[to be added]
14.3 Succession. Subject to the above stated limitations on transfer of Lessee's interest, this
lease shall be binding on and inure to the benefit of the parties and their respective successors
and assigns.
14.4 Recordation. This lease, or any memorandum thereof, shall not be recorded without the
prior express written consent of Lessor.
14.5 Time of Essence. Time is of the essence of the performance of each of Lessee's
obligations under this lease.
14.6 Oregon Law. This agreement is subject to, and shall be interpreted in accordance with,
the laws of the State of Oregon.
14.7 Soil/Waste. Lessee will not store, treat, deposit, place, or dispose of treated or
contaminated soil, industry by-products, or any other form of waste on the Property or
Premises, without the prior written consent of Lessor.
14.8 Lessor Consent or Action. In the event this Lease is silent on the standard for any
consent, approval, determination, or similar discretionary action, the standard is the sole
discretion of Lessor, rather than any standard of implied good faith or reasonableness. If Lessee
requests Lessor's consent or approval under any provision of the Lease and Lessor fails or
refused to give the consent or approval, Lessee will not be entitled to any damages as a result
of the failure or refusal, whether or not unreasonable. In the event Lessor has expressly
agreed, in writing, not to act unreasonably in withholding its consent or may not unreasonably
withhold its consent as a matter of law, and Lessor has, in fact, acted unreasonably in either of
those instances, Lessee's sole remedy will be an action for specific performance or injunction.
Whenever consent, approval, or direction by Lessor is required under the terms contained
herein, all such consent, approval, or direction must be received, in writing, from the Lessor.
{00028553:2} GROUND LEASE AGREEMENT (City) — Page 6 of 8
Attachment 2, Page 6 of 7
IN WITNESS WHEREOF, the parties have executed this Lease Agreement to be effective the
date first set forth above.
LESSOR:
City of Springfield
By: Nancy Newton
Its: Springfield City Manager
LESSEE:
Blue McKenzie Apartments, LLC
By: JP Veillet
Its: Manager
{00028553:2} GROUND LEASE AGREEMENT (City) — Page 7 of 8
Attachment 2, Page 7 of 7