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HomeMy WebLinkAbout2017-01-24 - AGENDA REPORTS - ARTS VENUE ON MAIN ST LEASE (2)Agenda Item: 6 CITY OF SANTA CLARITA AGENDA REPORT CONSENT CALENDAR CITY MANAGER APPROVAL: fill DATE: January 24, 2017 SUBJECT: ARTS VENUE ON MAIN STREET LEASE AGREEMENT DEPARTMENT: Recreation, Community Services, Arts, and Open Space PRESENTER: Richard E. Gould RECOMMENDED ACTION City Council: 1. Approve a three-year Lease Agreement with MAGA L.P. for the rental of the property located at 24266 Main Street from February 1, 2017, to December 31, 2019, in an amount not to exceed $166,016. 2. Transfer $23,000 to the Arts Venue expenditure account 15417-5121.001 for the lease and $7,000 to 15417-5131.001 for utilities, from Contingency Account 19300-5401.001, and increase revenue account 100-4561.007 by $12,000. 3. Authorize the City Manager or designee to execute all documents, subject to City Attorney approval. BACKGROUND The City Council adopted the Santa Clarita Arts Master Plan in March 2016. The Arts Master Plan is based on extensive community engagement and is organized according to three overarching themes and 41 recommendations. One of the recommendations in the recently adopted Arts Master Plan speaks to the need to create space for a community arts center. The arts venue, currently called the Repertory East Playhouse, is located in the heart of the City of Santa Clarita's Arts and Entertainment District, and has become available for rent. The current use of the location is as a live theater, but it offers the opportunity for the City of Santa Clarita (City) to address one of the recommendations in the recently adopted Arts Master Plan: RECOMMENDATION 5.3 - Explore future development of a community arts center, oriented to the needs of community -based arts organizations and lifelong learning in the arts. Page 1 Packet Pg. 26 Currently, the City utilizes the property as the venue for the monthly 10 by 10 variety night events and the monthly Note by Note singer/songwriter nights as part of the Thursdays@Newhall series, and to host performances for the annual Cowboy Festival. There is an opportunity for the City to operate and manage the venue as a multi -use art space for the next three years. With the City operating this venue, it will provide the community with several benefits, including having a visible City presence on Main Street, offering a venue for expanded arts and entertainment activities, and the ability to host a welcome center for the Old Town Newhall Arts and Entertainment District. Operating this venue as a multi -arts center will enable the potential for incremental revenue with the goal of fully offsetting operating expenses by the third year of operation. The revenue will be generated by charging rental fees to performers, artists, meeting organizers, class and workshop providers, and arts organizations. The anticipated revenue for the first calendar year of operation is 33 percent of the operating cost, with an increase to 66 percent the second calendar year, and 100 percent by the third calendar year. The term of the lease agreement is three years, from February 1, 2017, to December 31, 2019. The opportunity to take over management of the venue and transition it to an arts center provides the City with many possibilities for ongoing arts and events. Operating this venue provides the opportunity for a more active role and a greater presence for the City in Old Town Newhall, it allows for more arts offerings to occur in the Arts and Entertainment District, and it allows for the continuation of the location as an arts and cultural venue in the area. ALTERNATIVE ACTION Other action as determined by the City Council. FISCAL IMPACT Upon approval of the above recommended action, sufficient funds will be available to cover the current year operation. Funds for future fiscal years are contingent upon appropriation of monies by the City Council during the annual budget process. ATTACHMENTS Arts Venue on Main Street Lease Agreement Page 2 Packet Pg. 27 6.a CON-5 Council Approval Date: Agenda Item: Contract Amount: LEASE AGREEMENT BETWEEN THE CITY OF SANTA CLARITA AND MAGA L.P. FOR THE REPERTORY EAST PLAYHOUSE (24266 Main Street, Santa Clarita, CA 91321) THIS LEASE is made and executed as of February 1, 2017, between THE CITY OF SANTA CLARITA, a municipal corporation and general law city ("CITY"), and MAGA L.P., a California general partnership ("LESSOR"). 1. RECITALS. This Lease is made with reference to the following facts and objectives: A. CITY will lease the Repertory East Playhouse space for three years, from February 1, 2017, to December 31, 2019. 2. LEASE: DESCRIPTION OF PROPERTY. LESSOR leases to City and CITY leases from LESSOR to use, on the terms and conditions of this Lease, portions of real property located at 24266 Main Street, Santa Clarita, CA 91321 consisting of improvements commonly known as the Repertory East Playhouse ("Property"). 3. RENT. CITY agrees to pay to LESSOR as rental for the Property the sum of four thousand, six hundred dollars ($4,600.00), payable in advance on the 1st of each month during the first year of the term. CITY agrees to pay to LESSOR the sum of four thousand, seven hundred, and thirty-eight dollars ($4,738.00), payable in advance on the 1st of each month during the second year of the term. CITY agrees to pay LESSOR the sum of four thousand, eight hundred, and eight dollars ($4,880.00), payable in advance on the 1st of each month during the third year of the term. 4. TERM. The term of this Lease is February 1, 2017 to December 31, 2019. Lessee shall be granted the Option to Renew the term of this lease for an additional three (3) year term by serving LESSOR written notification of its intent to renew the Lease no later than four (4) months and not sooner than six (6) months prior to the expiration of the Lease. Monthly rent for the first year of Option Term shall be based on the then prevailing Market Rental Valuation (MRV) as established using industry standard methodologies for establishing same, through surveying square footage rates of businesses in the Old Town Newhall area and increase annually thereafter by an amount equal to 3% of the prior year's monthly rent (thus, for the avoidance of doubt, if the monthly rent in the first year of the Option Term is $5,000, then monthly rent in the second year of the option term would be $5,150, and in the third year of the Option Term would be $5,304.50). Page 1 of 9 Packet Pg. 28 6.a 5. USE OF PROPERTY. Subject to the limitations listed below, CITY may use the Property for the presentation of performing and visual arts programming for the benefit of the Santa Clarita community. The Property will also be used as office space for CITY staff and as a Welcome Center to distribute information about the Santa Clarita Valley to visitors and residents. 6. UTILITIES. A. CITY is responsible directly to the serving entities for all utilities required for its use of the Property. "Utilities" means electricity, gas, telephone services, trash, water, and cable television. B. CITY agrees to order, obtain, and pay for all utilities and service and installation charges in connection with the CITY'S use and operation of the Property. 7. TRASH AND GARBAGE. CITY will provide and pay all costs for the complete and proper disposal and timely removal of all refuse resulting from its operations. CITY will provide and use appropriate covered receptacles for all refuse at the Property. Piling boxes, cartons, barrels or other similar items in view of a public area will not be permitted. CITY is responsible for the proper disposal of its refuse in such a manner as not to contaminate or restrict sewer lines. 8. MAINTENANCE QUALITY. LESSOR represents and warrants that, on the date the term of this Lease commended, the Property was in good condition and repair and in compliance with all applicable governmental laws and regulations. During the term of this Lease, CITY agrees to maintain the Property in as good a state of condition and repair as the Property was in on the date the term of this Lease commenced, ordinary wear and tear and damage by casualty and the elements excepted; provided, that CITY shall have no obligation to maintain or repair the structural portions of the Property (including, without limitation, foundations, structural floor, load bearing walls and roof and roof covering), unless such maintenance and repair is required due to CITY'S negligence or willful misconduct. LESSOR's designees may, at any reasonable time during normal business hours for the Property, and upon at least 24 hours prior notice, enter the Property to determine if the Property is being maintained as herein required. Entry and inspection by LESSOR'S designees shall be undertaken in a manner so as not to interfere with CITY'S activities on, or use and enjoyment of, the Property. If LESSOR believes that the Property is not being maintained as herein required, LESSOR will provide written notice to CITY which includes the specific nature of the complaint. Should CITY fail to cure the matters complained of in LESSOR'S notice within thirty (30) days of CITY'S receipt of LESSOR's notice, LESSOR may enter upon the Property and perform such maintenance. CITY will promptly reimburse LESSOR for the reasonable and documented cost of maintenance, plus ten percent (10%) of such cost for LESSOR's administrative overhead. 9. HAZARDOUS WASTE. LESSOR warrants that it has not, nor, to LESSOR's knowledge, has any third party used, generated, stored, or disposed of, or permitted the presence, use, generation, storage, or disposal of, any hazardous material (as defined below) on, under, or within the Property in violation of any law or regulation. CITY agrees that it will not use, generate, store, or dispose of any hazardous material (as defined below) on, under, or within the Property in violation of any law or regulation. CITY agrees to defend and indemnify LESSOR, as provided in this Lease, against any and all losses, liabilities, claims, and/or costs arising from Page 2 of 9 Packet Pg. 29 6.a any breach by CITY of any warranty or agreement contained in this section. As used in this section, "hazardous material" means any substance, chemical or waste that is identified as hazardous, toxic or dangerous in any applicable federal, state, or local law or regulation (including petroleum and asbestos). 10. POSSESSORY INTEREST TAXES. CITY is informed by LESSOR pursuant to Revenue and Taxation Code § 107.6 that its property interest in the Property may be subject to property taxation if created and that CITY may be subject to the payment of property taxes levied on its interest. CITY may not deduct such amount from payments to LESSOR. 11. QUIET ENJOYMENT. LESSOR agrees that CITY, upon making payments to be paid by CITY under the terms of this Lease and upon observing and keeping the agreements and each of the covenants of this Lease will lawfully and quietly hold, occupy, and enjoy the Property during the term of this Lease. 12. LESSOR'S LIMITED WARRANTY. LESSOR warrants that it is under no disability, restriction or prohibition, whether contractual or otherwise, with respect to its right to execute and deliver this Lease and perform its terms and conditions and has the legal right, power and authority to grant all of the rights granted herein. 13. TERMINATION. This Lease may be terminated as follows: A. At the expiration of the term; B. Upon mutual written agreement between the parties; C. Upon the Property being condemned; or D. Should CITY materially breach this Lease and fail to cure such breach within thirty (30) days of CITY'S receipt of written notice from LESSOR regarding such breach provided that if the nature of such breach is such that more than thirty (30) days are required for its cure, then CITY shall not be in default and this Lease may not be terminated so long as CITY commences to cure such breach within the thirty (30) day period and thereafter diligently proceeds to cure the breach. 14. CONDITION OF PROPERTY UPON TERMINATION. Upon termination of this Lease for any reason, CITY will vacate the Property and deliver it to LESSOR in the condition in which it is required to be maintained under this Lease, damage by the elements, casualty, and ordinary wear and tear excepted. Page 3 of 9 Packet Pg. 30 6.a 15. SALE OR TRANSFER BY LESSOR. Should LESSOR, at any time during the term of this Lease, sell, lease, transfer, or otherwise convey all or any part of the Property to any transferee other than CITY, then such transfer will be under and subject to this Lease and all of CITY's rights hereunder and CITY agrees that it shall not challenge or dispute LESSOR's right to so sell, lease, transfer, or convey its interest in the Property and that it shall accept the transferee as the owner of the Property for all purposes of this Lease so long as the transferee assumes and agrees in writing for the benefit of CITY to perform the obligations of the LESSOR under this Lease. 16. FORCE MAJEURE. Except for the payment of monetary sums, no parry to this Lease shall be chargeable with, or liable for, or responsible to the other for anything or in any amount due to, and the time for performance hereunder by such party shall be extended for, any delay caused by fire, earthquake, explosion, flood, the elements, acts of terrorism, acts of God, insurrection, rebellion, riots, strikes, lockouts, unforeseeable labor or material shortages, litigation, or any other cause whether similar or dissimilar to the foregoing which is beyond the reasonable control of such party, and any delay due to said causes or any of them shall not be deemed a default under this Lease. 17. NO FIXTURES. Improvements and facilities that currently exist shall be considered part and parcel to the Premises and not subject to removal or modification without the prior written approval of LESSOR, which shall not be unreasonably or untimely withheld. Any additional improvements or fixtures that may be constructed during the term of the Lease shall be subject to written review and approval from LESSOR which shall not be unreasonably or untimely withheld. In connection with such review and approval, LESSOR shall inform CITY whether it will require removal of such improvements and fixtures at the end of the Lease term or earlier termination. If LESSOR informs CITY that it will require removal, and CITY proceeds with the installation of such improvements and fixtures, then CITY shall remove such improvements and fixtures at the end of the Lease term or earlier termination; otherwise, such improvements and fixtures shall be surrendered and become the property of LESSOR at the end of the Lease term or earlier termination. Notwithstanding anything to the contrary contained in this Lease, all articles of personal property owned by CITY or installed by CITY in the Property (including, without limitation, business and trade fixtures, furniture and equipment) shall be, and remain, the removable personal property of CITY, and may be removed and/or replaced at any time and shall be removed by CITY on or before the expiration or sooner termination of this Lease. 18. ALTERATIONS, MECHANICS' LIENS. Except as provided by this Lease, CITY will not make, or cause to be made, any alterations to the property, or any part thereof, without LESSOR's prior written consent, which shall not be unreasonably or untimely withheld. CITY will keep the property free from (or prevent the foreclosure by bonding of) any liens arising out of any work performed, material furnished, or obligations incurred by CITY. 19. ASSIGNMENT AND SUBLETTING. This Lease may not be assigned, transferred, or sublet by CITY, court order, or through any other means. Any such purported transfer will be null and void. Page 4 of 9 Packet Pg. 31 6.a 20. HOLDOVER. If CITY holds possession of the Property after the initial term, or any option term, expires, with LESSOR's prior written consent, CITY will become a tenant from month -to -month at the then prevailing Market Rental Valuation (MRV) rate per month, per paragraph 3 TERM. Such tenancy will be subject to all of the terms and conditions of this Lease and either party shall reserve the right to terminate said month -to -month tenancy with a prior thirty (30) day written notification served on the 1st day of the month prior to the intended termination date for month -to -month tenancy. 21. INDEMNIFICATION. A. CITY indemnifies and holds LESSOR harmless from and against any claim, action, damages, costs (including, without limitation, attorney's fees), injuries, or liability (collectively, "Claims"), arising out of CITY'S default under this Lease, except for Claims arising out of LESSOR's negligence or willful misconduct, or That of its partners, officers, agents, employees or representatives. Should LESSOR be named in any suit, or should any claim be against it, by suit or otherwise, whether the same be groundless or not, for which LESSOR is entitled to indemnity under this Lease, CITY will defend LESSOR (with counsel satisfactory to LESSOR) and will indemnify it for any judgment rendered against it or any sums paid out in settlement or otherwise. B. For purposes of this section "LESSOR" includes employees, agents, and representatives. C. CITY expressly agrees that this hold harmless and indemnification provision is intended to be as broad and inclusive as is permitted by the law of the State of California and that if any portion is held invalid, it is agreed that the balance will, notwithstanding, continue in full legal force and effect. D. It is expressly understood and agreed that the foregoing provisions will survive termination of this Lease. E. The requirements as to the types and limits of insurance coverage to be maintained by CITY as required by Section 22 below, and any approval of such insurance by LESSOR, are not intended to and will not in any manner limit or qualify the liabilities and obligations otherwise assumed by CITY pursuant to this Lease, including but not limited to the provisions concerning indemnification. 22. INSURANCE. CITY must procure and maintain insurance of the type, for the period, with the coverages and limits, and in accordance with the terms, conditions, and requirements that follow: A. CITY will provide Commercial General Liability, Broad Form General Liability, and Business Automobile Liability insurance that meet or exceed the requirement of ISO Forms GL0002, GL0404 and CA0001, Code 1, respectively, in the most current State of California approved forms, in connection with CITY's performance in the amount of not less than $1,000,000 combined single limit per occurrence for bodily injury, personal injury, and property damage for each policy coverage, naming the LESSOR, Frank B. Maga as General Partner and property manager, if any, as additional insureds. Page 5 of 9 Packet Pg. 32 6.a B. Commercial General Liability, Broad Form General Liability and Business Automobile Liability policies required in this Lease will be endorsed to name LESSOR, its employees, agents, and representatives as "additional insureds" under said insurance coverage, to state that such insurance will be deemed "primary" such that any other insurance that may be carried by LESSOR will be excess thereto, and to state that the policy(ies) will not be cancelable or subject to reduction except upon thirty (30) days prior written notice to LESSOR. C. CITY will furnish to LESSOR a certificate of insurance, in the standard form required by LESSOR, duly authenticated, evidencing maintenance of the insurance required under this Lease and such other evidence of insurance or copies of policies as may be reasonably required by LESSOR from time to time. Insurance must be placed with insurers with a current A.M. Best Company Rating equivalent to at least a Rating of "A:VII." 23. COMPLIANCE WITH LAW. CITY will, at its sole cost and expense, comply with all of the requirements of all federal, state, and local authorities now in force, or which may hereafter be in force, pertaining to CITY'S particular use of the Property as permitted by this Lease and will faithfully observe in such use of the Property all applicable laws. The judgment of any court of competent jurisdiction that CITY has violated any such ordinance or statute in the use of the Property will be conclusive of that fact as between LESSOR and CITY. 24. WAIVER OF BREACH. Any express or implied waiver of a breach of any term of this Lease will not constitute a waiver of any further breach of the same or other term of this Lease. 25. INSOLVENCY; RECEIVER. Either the appointment of a receiver to take possession of all or substantially all of the assets of CITY, or a general assignment by CITY for the benefit of creditors, or any action taken or offered by CITY under any insolvency or bankruptcy action, will constitute a breach of this Lease by CITY, and in such event this Lease will automatically cease and terminate. 26. NOTICES. Except as otherwise expressly provided by law, all notices or other communications required or permitted by this Lease or by law to be served on or given to either party to this Lease by the other party will be in writing and will be deemed served or given when personally delivered (including by same day or next business day commercial courier or delivery service) to the party to whom they are directed, or in lieu of the personal service, five (5) business days following deposit in the United States mail, certified or registered mail, return receipt requested, postage prepaid, addressed to: CITY at: City of Santa Clarita Attn: Kenneth W. Striplin, City Manager 23920 Valencia Blvd. Santa Clarita, CA 91355 With a copy to: Page 6 of 9 Packet Pg. 33 6.a City of Santa Clarita Attn: City Clerk 23920 Valencia Blvd. Santa Clarita, CA 91355 LESSOR at: MAGA L.P. Attn: Frank Maga 8022 Cuddy Valley Road Frazier Park, CA 93225 Either party may change its address for the purpose of this Section by giving written notice of the change to the other party in the manner specified in this section. 27. ACCEPTANCE OF FACSIMILE SIGNATURES. The Parties agree that agreements ancillary to this Lease and related documents to be entered into in connection with this Lease will be considered signed when the signature of a party is delivered by facsimile transmission. Such facsimile signature will be treated in all respects as having the same effect as an original signature in accordance with California Government Code section 16.5 and Civil Code section 1633.7. 28. GOVERNING LAW. This Lease has been made in and will be construed in accordance with the laws of the State of California and exclusive venue for any action involving this Lease will be in Los Angeles County. 29. PARTIAL INVALIDITY. Should any provision of this Lease be held by a court of competent jurisdiction to be either invalid or unenforceable, the remaining provisions of this Lease will remain in effect, unimpaired by the holding. 30. INTEGRATION. This instrument and its attachments, if any, constitute the sole agreement between CITY and LESSOR respecting the Property, the use of the Property by CITY, and the specified term, and correctly sets forth the obligations of CITY and LESSOR. Any Lease or representations respecting the Property or its licensing by LESSOR to CITY not expressly set forth in this instrument are void. 31. CONSTRUCTION. The language of each part of this Lease will be construed simply and according to its fair meaning, and this Lease will never be construed either for or against either party. 32. AUTHORITY/MODIFICATION. The Parties represent and warrant that all necessary action has been taken by the Parties to authorize the undersigned to execute this Lease and to engage in the actions described herein. This Lease may only be modified by written amendment signed by each of the parties. CITY's City Manager, or designee, may execute any such amendment on behalf of CITY. Page 7 of 9 Packet Pg. 34 6.a 33. COUNTERPARTS. This Lease may be executed in any number or counterparts, each of which will be an original, but all of which together will constitute one instrument executed on the same date. 34. ELECTRONIC TRANSMISSION OF CONTRACT AND SIGNATURES. The Parties agree that this Lease may be transmitted and signed by electronic mail by either/any or both/all Parties, and that such signatures shall have the same force and effect as original signatures, in accordance with California Government Code section 16.5 and Civil Code section 1633.7. 35. EQUIPMENT. This Lease shall include and CITY shall be permitted the use of equipment, fixtures, theatre seats, intercoms, lights, power switches, light dimmers, sound equipment and all items within the building and outside of the building which contribute to its function, herein defined as "LESSOR'S equipment." All LESSOR'S equipment belongs to LESSOR and all such equipment shall remain the property of LESSOR. A. CITY shall maintain equipment in good working order and repair at CITY's expense. Replacements for existing equipment, if any, shall remain property of LESSOR, unless otherwise determined upon mutual consent of the parties prior to acquisition and installation of such equipment. If CITY acquires upgraded equipment or equipment of a different type or manufacture or equipment to replace equipment which is worn out or has failed due to reasons other than CITY' S negligence or willful misconduct (collectively, "New Replacement Equipment") to operate the venue, and documents the New Replacement Equipment as detailed below, such New Replacement Equipment will, at the CITY'S option, remain the property of CITY, as long as CITY reinstalls the equipment that was in the venue at the beginning of the lease term upon the expiration or sooner termination of the term of this Lease. Upon providing LESSOR with sales receipt and photograph, the New Replacement Equipment CITY has paid for, which is not a replacement for existing equipment, shall become property of CITY and any such equipment not documented as such is property of LESSOR. B. CITY and LESSOR will jointly inventory equipment in the venue at the beginning of the lease term. Such inventory will be conclusive as to the equipment in the venue at the beginning of the Lease term. Except as provided in paragraph A immediately above respecting replacements, the equipment in the inventory will remain in the venue and will remain the property of LESSOR. 36. ROOF. CITY shall not trespass upon, cut, patch, place anything upon or mount anything on the roof of the building without permission from LESSOR. In addition to permission from LESSOR to place or mount anything on the roof, CITY must have the roofer specified by LESSOR supervise the work and if the roofer deems necessary, modify the installation. CITY is solely responsible for the time and materials cost of said roofer and will pay roofer directly and within thirty (30) days of billing. Failure to pay roofer in the allotted time will be considered a breach of this Lease. [SIGNATURES ON NEXT PAGE] Page 8 of 9 Packet Pg. 35 6.a IN WITNESS WHEREOF, the parties hereto have executed this contract on this date of FOR LESSOR: IF CORPORATION: By: Draft Document By: Print Name & Title Date: FOR CITY OF SANTA CLARITA: KENNETH W. STRIPLIN, CITY MANAGER City Manager Date: APPROVED AS TO FORM: JOSEPH M. MONTES, CITY ATTORNEY City Attorney Date: Print Name & Title Date: Page 9 of 9 Packet Pg. 36