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HomeMy WebLinkAboutAgenda - 02-20-1996 - IX-A e 1 ORANGE COUNTY BOARD OF COMMISSIONERS Action Agenda Item No. ACTION AGENDA ITEM ABSTRACT Meeting Date: `February 20, 1996 SUBJECT: LEASE APPROVAL;503 WEST FRANKLIN STREET DEPARTMENT: PURCHASING AND Public Hearing:Yes: No: R CENTRAL SERVICES Budget Amendment Reqd?Yes ATTACHMENT(S): INFORMATION CONTACT: PAM JONES, ext.2650 COMPARITIVE DATA or TED ABERNATHY ext.2325 LEASE Telephone Number- Hillsborough 732-8181 Chapel Hill 967-9251 Mebane 227-2031 Durham 688-7331 PURPOSE: To approve a lease for a building at 503 West Franklin Street to be used for a Skill Development Center. BACKGROUND: Following the discussion on January 16, 1996 regarding the Skill Development Center,the Board requested that the following action be taken: 2 County staff was to negotiate the most favorable lease for 503 West Franklin Street and present it for Board approval. 3 Staff was to ensure as part of these negotiations that the following items were addressed: a. HVAC system was in good operational order; b. The restrooms were brought up to a functional standard appropriate for the intended use of the building; c. The roof was sound; d. The electrical service was sufficient for the intended purpose. 4 Staff was to indicate to the Board how this lease was to be funded;current and future years. 5 Additional programming details were to be presented for Board consideration. An item by item comparison of anticipated lease terms and cost estimates vs. actual lease terms and cost estimates is included as attachment#1. A summary of the negotiation outcome is as follows: Lease terms negotiated with Landlord: Amount of square footage included in lease: 13,232 Lease rate: $7.50/s.f. (includes all taxes) Total lease annual lease obligation: $99,240 Term of lease: 5 years;5 year renewals; begins February 22, 1996. Escalation term: CPI Second right of refusal to purchase included in lease(Note: First right of refusal held by Chapel Hill Publishing Company) Utilities;County responsibility Cleaning;County responsibility Maintenance: County provides routine maintenance for walls&ceilings(painting), floor coverings, normal a Y 2 plumbing repairs, minor electrical repairs. Landlord will provide all maintenance to HVAC, roof, exterior of building,sidewalks,parking lot and any other repairs which exceed the ceiling amount established as County responsibility. Upfit: The Landlord has agreed to complete the following work: Construct restrooms;and Replace HVAC equipment. Note: Programming information to establish a floor plan for the facility is to date incomplete. While the equipment will be adequate to heaVcool the entire building,ducting the heattair within the facility will be a County responsibility. When the programming information is conclusive,the County will proceed with the remaining upfit items, which include such things as constructing walls to create offices and classroom spaces, providing electrical outlets for specialized classroom areas, adding lighting as needed. The Landlord has indicated a willingness to provide a rent offset for a portion of the improvements made by the County at such time the County determines the cost estimate. The items of special consideration mentioned in#2 above have been addressed as follows: HVAC as mentioned earlier,is being completely replaced by the Landlord. The lease warranties its sufficiency. The restmoms were inadequate for both the type of usage we propose for the facility and the number of people which we anticipate would be in the building on a regular basis. The Landlord has agreed to construct the restroom facilities to address our needs. The Landlord indicates that the building roof does not teak presently and,aria the lease, assumes responsibility for repairs in the event leaking occurs during the term of the lease. it should further be noted, that the Landlord observed minor conditions in the block walls which could indicate moisture retention in the block and has voluntarily waterproofed the building at a cost of around$16,000. The Landlord indicates that the building is served with sufficient electrical service to address our needs as articulated to him thus far. The building was wired for a business whose electrical needs are likely to far exceed the capacity which we will need. However, it should be noted that in the absence of specific programming plans,the Landlord is unable to wire specific areas according to our needs at this time. He is, as indicated earlier,willing to provide a partial rent offset against our upfit investment,of which this work would be a part. Funds necessary for the balance of the 95-96 fiscal year include: Lease $26,986 Utilities(estimated) $ 3,300 Upfit $40,000 Total $70,286" ("Does not consider any offsets against rent for upfits made by County.) The Skill Development Center has been allocated $25,000 through the current year CIP. The Budget Staff indicates that the approximately$45,000 additional funds are available through the capital reserve account in the Capital Improvement Plan. 1996-97 fiscal year obligations are estimated as follows: Lease $99,240 Utilities $13,200 Total $112,440 Although we would continue to diligently pursue alternative funding sources,such as subleases with tenants or other program reimbursement opportunities, it must be presumed at this point that the funds would come directly through the County's budget or CIP. 3 The Board may recall that the Owner has expressed an interest in selling the facility, although they have indicated a strong preference to selling the whole building, rather than just the 503 portion. At the Board's direction, more specific information can be obtained regarding this option. The County staff is continuing to work with several organizations to finalize a plan for comprehensive delivery of employment and training services. The Department of Social Services, Durham Tech, JOCCA(JTPA), Employment Security Commission and Literacy Council are all expected to provide on site programming. RECOMMENDATION: The Manager recommends that the Board approve the lease substantially as presented;and authorize the Chair to sign on behalf of the Board. t 4 Attachment#1 Comparison of terms suggested on 1/16/96 vs.those agreed to by the Owner: LEASE TERMS SUGGESTED ON 1/16186 LEASE TERMS AGREED TO BY OWNER Amount of space to be leased 12,700+/= Amount of space to be leased 13,232. The Landlord had the square footage measurements verified and they are in fact more than what he originally indicated to us. Three year lease term Five year lease term Lease rate between 6.50-8.00"(included no taxes) $7.50/includes all taxes Tax liability is approximately$9,000 annually for this property. Utilities;paid by County Utilities paid by County;except water,which is paid by Landlord. Cleaning;County provides Cleaning;County provides Maintenance; County provides routine Maintenance; County provides routine maintenance and up to$2,000 annually for HVAC, maintenance for walls&ceilings(painting),floor electrical, plumbing systems repairs. Landlord coverings, normal plumbing repairs, minor provides all major repairs,including sidewalk and electrical repairs. Landlord will provide all parking lot;all exterior repairs. maintenance to HVAC, roof,exterior of building, sidewalks, parking lot and any other repairs which exceed the ceiling amount established as County responsibility. Insurance;County insures general liability and Insurance; As suggested on 1/16/96. contents to the extent of our interest in the building. Landlord provides hazard insurance for the structure. Escalation to be according to CPI. CPl Right of refusal to buy included in lease. Right of second refusal is included in lease; Chapel Hill Publishing Company has right of first refusal. F 5 COST INFORMATION: Cost Estimate provided on 1/1196 Outcome of negotiations Annual Lease: $82,550—$101,600("Included $99,240. no taxes) Utilities: Estimate$13,000 annually Estimate$13,000(to be included in Public Works operation budget.) Upfit costs: $30,000—$40,000 Upft costs: Still estimating at$30,000-$40,000 until programming information is provided in greater detail. Landlord has assumed responsibility for the following: Rework the restrooms to bring them into code compliance; Change out completely the HVAC system. Note: The Landlord will install new equipment, however,since the programming information is unavailable,we are unable to establish a specific floor plan and subsequent ducting which might be needed. Note: The Landlord is also willing to give us a partial offset against rent for upfit items for which the County may assume responsibility. 6 STATE OF NORTH CAROLINA COUNTY OF ORANGE LEASE AGREEMENT THIS LEASE AGREEMENT, made and entered into as of the 20th day of February, 1996, by and between DEVISEES OF ORVILLE B. CAMPBELL, hereinafter referred to as "Landlord", and County of Orange, North Carolina , hereinafter referred to as"County". WITNESSETH: THAT FOR and in consideration of the mutual covenants and conditions hereinafter set forth, the parties hereto do hereby agree as follows: 1. Premises. Landlord does hereby lease and let unto County and County does hereby accept as County those certain premises designated as 503 West Franklin Street, Chapel Hill, Orange County, North Carolina, as more particularly shown on EXHIBIT A-1 and A-2 appended hereto ("Premises'). The floor plan dimensions of the Premises equals 13,232 square feet. It is understood and agreed that parking which is adjacent to the building and also described in Exhibit shall be for the exclusive use of the County. 2. Acceptance of Premises. County accepts the Premises in its present condition, not withstanding any modifications agreed to by the Landlord and,County as cited in EXHIBIT The Landlord shall be.responsible for insuring that the heating and air conditioning systems are in good operating condition; the exterior walls and roof, the lighting system (excluding such additions as may be required for County's particular business operation) and the parking area and sidewalks are in good repair on the date of commencement of the lease term. Landlord represents and warrants to County that he hold unencumbered fee title to the lease premises. 3. Term. This lease shall commence on March 1, 1996 ("Commencement Date") and shall continue for a term of five years, which shall end on February 28, 2001, unless sooner terminated as herein provided. County shall have an option to renew this lease for one additional term of five (5)years. County shall give Landlord notice of its intent to renew this lease during the last year of the term or any renewal thereof but in no event shall such notice be given later than ninety(90) days from the end of said term. 7 4. Rent. The County agrees to pay to the Landlord at the office of the Landlord or at such other place designated by the Landlord, the guaranteed rental of$8,270 per month payable on or before the first day of each calendar month commencing with the Commencement Date ("Initial Rental Rate"). Effective on the first day of each lease year after the first lease year("Adjustment ,Date'%-the rental rate shall be increased by the amount determined by multiplying the Initial,Rental Rate by that percentage which represents any cost of living increase between the Commencement Date and the Adjustment Date. Such percentage shall be determined by utilizing the applicable indices determined by the United State Bureau of labor Statistic (or its successor organization) through its Consumer Price Index entitled "United States City Average-All Items-All Urban Consumers Index". Such adjustment shall be made effective as of the Adjustment Date, as soon as possible after the index for the applicable month is published,with any deficiency due and payable herein to the contrary notwithstanding, in the event that the adjustment would reduce the monthly rental from the only rental in effect for the preceding lease year, no such adjustment shall be made and the rental then in effect shall continue through the next Adjustment Date. 5. Notices. For the purpose of notice or demand, the respective parties shall be served by certified or registered mail, return receipt requested, address to County or Landlord at their respective office address, as set forth herein: To County: County of Orange Director of Purchasing and Central Services PO Box 8181 Hillsborough, NC 27278 To Landlord: Devisees of Orville B. Campbell c/o Stephen J. Manton, agent ESM Associates PO box 4523 Chapel Hill, NC 27515 8 6. Subordination. County agrees that this lease is and shall remain subject and subordinate to and may be assigned as security for any present and all future ground leases or underlying leases of the Premises or of the real property upon which the Premises is located and to and for all mortgages or deeds of trust which may now or hereafter affect such leases or the Premises or the real property upon which the .Premises is .located and to and for all renewals, modifications, consolidations, replacements and extension thereof. This clause shall be self-operative and no further instrument shall be necessary to effect such subordination. However, County shall execute promptly and deliver to Landlord any such certificate or certificates in writing as Landlord may request evidencing the subordination of this lease to or the assignment of this lease as additional security for such ground lease, underlying lease, mortgage or deed of trust. In the event the Premises or the real property upon which the Premises is located or a leasehold interest in the Premises or the real property upon which the Premises is located is sold pursuant to a court order in any foreclosure proceeding or is sold pursuant to a power of sale contained in any mortgage or deed of trust, County agrees to execute an attomment agreement with such purchaser not in conflict herewith at the request of such purchaser. 7. Assignment and Sublease: County agrees not to encumber or assign this lease or sublease all or any part of the Premises without the written consent of Landlord, which consent shall not be unreasonably withheld. Such assignment shall in no way relieve County from any obligations hereunder for the payment of rents or the performance of the conditions and provisions of this lease. Landlord acknowledges and agrees that County intends to develop a Skill Development Center in the Premises and that said Skill Development Center will involve a number of related agencies other than County. Landlord agrees that any revenue derived by the County from these related agencies to offset operational expenses, including but not limited to, lease payments, shall not be considered a sublease in the context of this lease and shall be permissible. 8. Quiet Enjoyment. Landlord agrees that County upon paying the stipulated rental and keeping and performing the agreement and covenants herein contained, shall hold and enjoy the Premises for the term aforesaid, subject to the terms of this lease. 9. Right of Entry. County agrees that Landlord or his designee shall have the right to enter the Premises during normal business hours or any other time with the consent of County. 9 10. Insurance. Landlord shall provide Fire and Extended coverage insurance to the Premises. Contents will be insured by County or the agency to which contents belong. County shall also insure any improvements and betterments made by it to the Premises to the insurable value thereof. Unless the parties hereto then agree otherwise, the proceeds collected upon all such policies of insurance-shall be-used to repair and/or replace the Premises, improvements or betterments so damaged or destroyed, and such repairs or replacements shall be prosecuted promptly by both landlord and County with such insurance funds; and in the event such funds are not adequate, then the deficiency shall be made up by Landlord as to the premises as leased. In the event of the total destruction of the Premises by fire or other casualty, this lease shall terminate as of the date of such destruction, unless Landlord and County mutually agree to have the premises restored, during which restoration period County shall be excused from the rental payment. In the event of partial destruction of the Premises, rendering them unsuitable for County's business, the parties shall repair and restore the Premises as quickly as practical and during such period of repair and restoration there shall be an abatement to County of the rental amount proportionate to the portion of the floor area of the Premises rendered unsuitable for Countys business. County shall maintain insurance, at it's sole expense, against claims for personal injury or property damage under a policy of general public liability insurance, with limits of no less than $1,000,000 for bodily injury and$100,000 for property damage. Such policies will name the Landlord as additional named insured under the policy and a certificate verifying coverage shall be issued to the Landlord within 10 days of execution of this lease. Certificate shall indicate that the policy will not be canceled without a minimum of 30 days prior written notice to Landlord. 11. Indemnity: County agrees to indemnify and save harmless to the extent permitted by the law and to the extent provided of by policies of insurance maintained by County, Landlord against and from any and all claims by or on behalf of any person, firm or corporation arising by reason of injury to person or damage to property occurring in the Premises occasioned in whole or in part by any act or omission on the part of County or an employee, agent, visitor, assign or undertenant of County or by reason of any unlawful use of the Premises or any breach, violation or nonperformance of any covenant in this lease on the part of Landlord to be observed or performed, and also for any matter or thing growing out of the occupancy or use of the Premises by County. 10 12. Repair and Maintenance. a. County repair and maintenance. County agrees to keep the Premises in good condition and repair, excepting repairs which are the responsibility of Landlord or which are made necessary by reason of fire and other unavoidable casualties covered by Landlord's fire and extended coverage insurance, and excepting reasonable wear and tear. Within such repair responsibilities of County shall be included: the walls and ceiling(including painting thereof); repairs, normal plumbing maintenance (including stoppage but does not include repair to water, drainage or sewer lines outside of building); normal minor electrical maintenance ; maintenance of floor coverings. b. Landlord's Repairs and Maintenance. Landlord agrees to keep, repair and maintain the exterior of the building (including the roof, exterior walls, foundations, gutters and downspouts), sidewalks, parking areas, supply pipes for gas (if any), and water drainage and sewer pipes(excluding stoppage), repairs of air conditioning and heating systems, plumbing and electrical above limits stipulated in County Repair and Maintenance. If any portion of the Premises which is the responsibility of the Landlord shall at any time be in need of repairs, Landlord will promptly repair same upon receipt of written notice from County to do so, except that Landlord shall not be obligated to make or pay for any repairs rendered necessary by the fault, act or negligence of County, or any of its agents, employees or business invitees. 13. Improvements/Alterations. No substantial alteration, addition or improvement to the Premises shall be made by the County without the written consent of the Landlord. Any alteration, addition or improvement made by the County after such consent shall have been given and any fixtures permanently installed as part thereof, shall at the Landlord's option, become the property of the Landlord upon expiration of or other sooner termination of this lease; provided however, that the Landlord shall have the right to require the County to remove such fixtures at the County's cost upon such termination. 14. Utilities. County shall pay charges for gas, electricity, light and power used, rendered or supplied upon or in connection with the leased property. The Landlord shall be responsible for the payment of all charges related to the supply of water to the leased property. 15. Signs. The Landlord will place and maintain in and about the leased property at appropriately designated places, such neat and appropriate signs advertising the County as such. Any special County sign will be at the sole cost of the County but in the same styling, provided, J 11 however, that Landlord shall not unreasonably withhold approval of such signs as County may desire. Upon the termination of this lease the County shall remove all signs and repair any damage to the leased property caused by erection, maintenance or removal of such signs. 16. Parking. It is-understood and agreed that contained within the Premises are approximately 35 parking spaces adjacent to 503 West Franklin Street, Chapel Hill, North Carolina, and that for the life of the lease, County shall maintain exclusive use of these parking spaces. 17. Entire Agreement. This Lease contains the entire agreement between the parties hereto, and no promises, agreements, conditions or stipulations not contained herein shall be binding upon either party hereto. 18. Holdover. If the County shall remain in possession of the leased property after the expiration of the original or renewal period as set out above, such possession shall be as a month-to- month County. During such month-to-month tenancy, rent shall be payable at the same rate as that in effect during the last month of the term immediately preceding, and the provisions of this lease shall be applicable. 19. County's Warranty of Non-Disturbance. County hereby expressly covenants and agrees that the County shall be responsible for controlling the noise level emanating from the Countys use of the premises in such a way that other occupants of the building of which the premises is a part shall not be disturbed. County shall be responsible for the cost of any noise suppressing devises which may be necessary for noise mitigation. 20. Condition of Premises. The County shall, during the term of this lease and any renewal or extension hereof, at its sole expense, cause the leased property to be kept clean and in a manner satisfactory to the Landlord. 21. Surrender of Premises. The County shall vacate the Premises in the good order and repair in which such property now is, ordinary wear and tear and casualties by accidental fire or other natural casualties or ads of God not occurring through the County's negligence alone excepted, and shall remove all its property therefrom so that the Landlord can repossess the leased property no later than Noon on the day upon which this lease ends, whether upon notice or by holdover or otherwise. The Landlord shall have the same rights to enforce this covenant by ejectment and for 12 damages or otherwise as for the breach of any other condition or covenant of this lease. County may at any time prior to or upon the termination of this lease or any renewal or extension thereof remove from the leased property all materials, equipment, and property of every other sort or nature installed by the County thereon, provided that such property is removed without substantial injury to the leased-property. -No injury shall be considered substantial if it si promptly corrected by restoration to the condition prior to the installation of such property, if so requested by the Landlord. Any such property not removed shall become the property of the Landlord. 22. Use of Premises. The County shall use the premises for use as a Skill Development Training Center, general offices or similar governmental function. County shall not use or permit the premises to be used for any other purpose or purposes except with the prior written consent of the Landlord. 23. Waiver of Landlord's Rights Only by Written Instrument. No failure by the Landlord to insist upon the strict performance of any item or condition of this lease or to exercise any right or remedy available on a breach thereof, and no acceptance of full or partial rent during the continuance of any such breach shall constitute a waiver of any breach or of any such term or condition. No term or condition of this lease required to be performed by the County, and no breach thereof, shall be waived, altered or modified, except by a written instrument executed by the Landlord. No waiver of any breach shall affect or alter any term or condition in this lease, and each such term or condition shall continue in full force and effect with respect to any other then existing or subsequent breach thereof. 24. Condemnation. If the whole of the leased property, or such portion thereof as will make the leased property unsuitable for the purposes herein leased, is condemned for any public use or purpose by any legally constituted authority,then in either of such events this lease shall cease from the time when possession is taken by such public authority and rental shall be accounted for between the Landlord and the County as of the date of the surrender of possession. Such termination shall be without prejudice to the rights of either the Landlord or the County to recover compensation from the condemning authority for any loss or damage caused by such condemnation. Neither the Landlord nor the County shall have any rights in or to any award made to the other by the condemning authority. i 13 25. Assignment of Interest in Rents. The Landlord shall have the right, without selling its fee interest in the leased property or assigning its interest in this lease,. to assign from time to time the whole of the net rent at any time payable hereunder to persons, firm, corporation, trusts or other entities designated by the Landlord in a written notice to the County, and in any such case the County shall-pay the net rent, subject to the terms of this lease, to the Landlords' designee at the address mentioned in any such notice for the period covered by such assignment. 26. Right of First Refusal. Landlord hereby grants to County a right of first refusal to purchase the Premises, which must be exercised, if at all, in the manner hereinafter set forth. In the event that the Landlord receives a bona fide offer to purchase the Premises on price, terms and conditions which it is willing to accept, it shall give prompt written notice of such offer to County ('ROFR Notice'). The ROFR Notice shall include a copy of such offer, provided that Landlord may delete the name of the prospective purchaser, unless County agrees that such identity shall be held confidentially to the extent permitted by applicable law. Within fourteen (14) calendar days from the date such ROFR Notice is given, County may exercise its right of first refusal by executing and delivering to the Landlord a written contract containing the same price, terns and conditions as set forth in the ROFR Notice, with no material additional terms or conditions. Such contract shall be signed and accepted by the Landlord and the parties shall proceed to close in accordance with the terms thereof. In the event that the County fails to exercise this option as herein provided, and Landlord closes the sale of the Premises substantially in accordance with the terms of the ROFT Notice, such option shall terminate and shall not be exercisable as to any future sale by Landlord, it successors or assigns. 1 14 IN TESTIMONY WHEREOF,the parties have hereunto set their hands and seals the day and year first above written. LANDLORD: DEVISEES OF ORVILLE B. CAMPBELL BY: (SEAL) Stephen J. Manton, Agent COUNTY: BY: (SEAL) Moses Carey, Jr., Chair to the Board of Commissioners ATTEST: Beverly A. Blythe, Clerk Orange County Board of Commissioners 15 STATE OF NORTH CAROLINA COUNTY OF ORANGE I, , a Notary Public, do hereby certify that Stephen J. Manton, Agent, personally appeared before me this day and acknowledged the due execution of the foregoing Lease Agreement on behalf of the Devisees of Orville B. Campbell. WITNESS my hand and official seal, this the day of NOTARY PUBLIC My commission expires: STATE OF NORTH CAROLINA COUNTY OF ORANGE I, , a Notary Public, do hereby certify that Beverly A. Blythe personally appeared before me this date and acknowledged that she is the Clerk to the Board of Commissioners of Orange County, and that by authority duly given and as the act of orange County, the foregoing instrument was signed in its name by Moses Carey, Jr., Chair, sealed with its official seal, and attested by herself as its Clerk. Witness my hand and official seal, this the day of , 1996. NOTARY PUBLIC My commission expires: