96-1555 Council File # -\�o����
, Green Sheet # �V��
RESOLUTION
CITY OF SAINT PAUL, MINNESOTA aI
Presented By
,
i
Referred to Committee: Date
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1 WHEREAS, the City is in the process of constructing a Sports Dome and
2 Clubhouse at it's Rice and Arlington Athletic Complex, and;
3
4 WHEREAS, the City is in need of an entity to manage the Sports Dome and
5 Clubhouse, and;
6
7 WHEREAS, Inside sports Incorporated has the experience, ability and desire to
8 fulfill this need, and;
9
10 NOW THEREFORE BE IT RQSOLVED, that the proper City officials are here-by
11 authorized to enter into the attached Management Agreement with Inside Sports
12 Incorporated.
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�� 1� Yeas �( Nays �f Absent �� Reque Division of Parks and
�� Blakey �� � �� �� �� Rec eation
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�� Megard �� /�� �� �� Form Approved by City Att��
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Adopted by Council: Date Q � By:
Director of Fina e nd
Adoption Certified by Council Secretary Management Services
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Approved by Mayor: Date: U -��� `
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DEPARTMENT/OFFICE/COUNCIL p DATE INITIATED GREEN SHEET NO. 40594
Parks and Recreation 12/11/96
CONTACT PERSON AND PHONE INITIALlDATE INITIAUDATE
Vic Wittgenstein 266-6409 �_DEPARTMENT DIRECTOR _y�CITY COUNCIL
ASSIGN
NUMBER FOR �`CITY ATTORNEY CITY CLERK
MUST BE ON COUNCIL AGENDA BY IDATE) ROU7ING
ORDER BUDGET DIRECTOR _y�FIN.&MGT.SERVICES DIR.
December 18, 1996 �MAYOR�OR ASSISTANT) 6 P�rks&Recreation
TOTAL#OF SIGNATURE PAGES�_(CLIP ALL LOCATIONS FOR SI�NATURE)
ACTION REQUESTED:
Signatures of the Superintendent of Parks and Recre�Q Cit Attorney, Director of Finance & Management Services
and passage of the attached City Council Resolution 81fb����enter into an Agreement with Inside Sports
Incorporated for the management of the Rice and Arlington Sports Dome and Clubhouse.
RECOMMENDATIONS: Approve(A)or Reject(R) PEHSONAL SERV�E CONTRACTS MUST ANSWER THE FOLLOWING QUESTIONS:
� PLANNING COMMISSION CIVIL SERVICE COMMISSION �, Has this person/firtn ever worked under a contract for this departmentT
CIB COMMITTEE YES NO
�STAFF 2. Has this person/fitm ever been a city employeeT
DISTRICT COUNCIL YES NO
3. Does this person/firm possess a skill not normally poesessed by any current city employee?
SUPPORTS WHICH COUNCIL 08JECTNET YES NO
Explain all yes answen on separate sheet and ettech to grean sheat.
Recreation
INITIATINC3 PROBLEM,ISSUE,OPPORIUNfTY(Who,What,When,Where,Why):
The City is in the process of constructing a Sports Dome and Clubhouse at its Rice and Arlington Athletic Complex.
The City is in need of an entity to manage and operate the new Facility. Inside Sports Incorporated possesses the
ability and the desire to fill this need.
ADVANTAGES IF APPROVED:
The Sports Dome Facility and Clubhouse will be managed by people who have the ability to do the job. The City will
have termination rights over ISI if they fail to perform.
DISADVANTAGES IF APPROVED: �A����1 ![�����C� ���
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None ���% 1 � 1�96
DISADVANTAGES IF NOT APPROVED:
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The City will have to self-manage the enterprise or find another entity to manage it. At present the City does not have
the staff to do this work and no other entity has expressed an interest in taking on this task.
�
TOTAL AMOUNT OF TRANSACTION S 906.114 over 5 years COST REVENUE BUDGETED(CIHCLE ONE) YES NO
Will be part of 1997-2001 budgets.
FUNDIN(i SOURCE Fund 326 ACTIVITY NUMBER 23130
FINANCIAL INFORMATION: (EXPLAIN)
ISI's base fee covers 75% of their anticipated cost to manage the Facility. The percentage of gross revenues ISI
receives is expected to cover the other 25% of their expenses and their profit.
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MANAGEMENT AGREEMENT
A MANAGEMENT AGREEMENT, dated this day of ,
1996 and effective on January 1, 1997, hereinafter referred to as the Effective Date, by
and between the CITY OF SAINT PAUL, MINNESOTA, a municipal corporation,
hereinafter referred to as the "City", and INSIDE SPORTS INCORPORATED, a
business incorporated under the laws of the State of Minnesota, hereinafter referred to
as "ISI."
WHEREAS: The City of Saint Paul desires to upgrade its Rice and
Arlington Sports Complex; and,
WHEREAS: The development and construction of a sports dome,
clubhouse, parking facility, and additional field lighting will
help to serve this purpose; and
WHEREAS: The City wishes to enter into an agreement for the
management of the sports dome and clubhouse; and
WHEREAS: Inside Sports Incorporated has the ability and desire to
provide this service;
NOW THEREFORE: The City of Saint Paul and Inside Sports Incorporated agree
to the following:
I. TERM:
The term of this Agreement shall commence on January 1, 1997 and run for five
consecutive calendar years. Not-with-standing the above, either party may
cancel this agreement without cause and with thirty (30) days written notice after
the first three years of its existence. The City will not cancel this Agreement
within the first three years, without cause, as defined in XIII A.
II. DEFINITIONS:
A. Rice and Arlington Athletic Complex - refers to the existing athletic
complex including any modifications that may occur as a result of the
project. The complex is defined as follows: Blocks 11, 12, 13, 14, Lots 1
through 12 inclusive, Block 15; Lots 1 through 15 inclusive, Block 16;
together with those portions of the adjoining Streets, Avenues, and Alleys
vacated per pocument Numbers 1403879 and 1416664, Merrill's Division
of Rice Street Villas; together with Lot M, Soo Line Plat No. 1 and Lots G
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and H, Soo Line Plat No. 2; all in St. Paul, Ramsey County, Minnesota.
B. Sports Dome - refers to the inflatable dome structure that will be erected
six months per year over an artificial turF field and is attached to the
Clubhouse.
C. Clubhouse - refers to the permanent building which will have offices,
public restrooms, a snack bar, batting cages, and a pro shop.
D. TurF Field - refers to the artificial athletic field which will be installed and
over which the sports dome will be erected six consecutive months in a
one year period.
E. Facilitv - refers to the sports dome, turf field and clubhouse whether the
dome is erected or in storage.
F. Facility Manager- refers to ISI as the day to day manager of the Facility
and the entity responsible for compliance with the terms of this
Agreement.
G. Project - refers to all the work that will be accomplished to upgrade the
Rice and Arlington Complex including the Sports Dome, the Turf Field, the
parking lot, Clubhouse, traffic signal at Rice and Nebraska Streets, new
lighting for existing fields, lighting for the turf field and lighting for the
parking lot.
H. Debt Service - refers to the principal and interest payments on the tax
exempt revenue bonds.
I. Tax Exempt Revenue Bonds - refers to those bonds that are to be sold to
pay for the development and construction of the Project.
J. Operating Period - refers to that period of time for which ISM is paid a
base fee and a percentage of gross receipts.
III. PURPOSE
The City and ISI enter into this agreement for the purpose of the management
of the facility to be located at the City's Rice and Arlington Athletic Complex. It is
agreed that the sports dome will be a seasonal facility while the clubhouse will be
run on a year-round basis.
IV. ISI CONTRIBUTION
A. That ISI agrees to contribute to the Facility the following equipment and
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supplies. All such below listed equipment shall become the property of
the City once the equipment is installed. The repair, maintenance and
replacement of this equipment shall be the responsibility of ISI and shall
be paid for as a part of the annual budget ISI submits to the City as
defined in Section VI. B.
Equipment List
• Four (4)jugs pro-range dual pitch machines
• Netting for batting cages including cables
• Four (4) rubber backstops
• Eight (8) ball hoppers
• Conveyance equipment for ball return system
B. If the City terminates this Agreement with ISI prior to the end of its five
year term, ISM shall have the right to purchase and remove at its cost the
equipment it provided to the project for one-dollar ($1.00) unless the City,
at the City's option, pays ISI as follows:
Termination Period Amount
less than 1 year $35,000
between 1 and 2 years $30,000
befinreen 2 and 3 years $25,000
between 3 and 4 years $15,000
between 4 and 5 years $ 5,000
after 5 years 0
V. CITY CONSTRUCTION
A. The City has entered into a Tax Exempt Revenue Bond sale to obtain the
revenues for the construction of the project.
B. The City shall construct the project with emphasis on the earliest possible
completion day for the dome and clubhouse.
VI. RIGHTS AND RESPONSIBILITIES OF ISI
In connection with ISM's role as Facility Manager it shall have the following
rights and responsibilities:
A. Planning and managing the day-to-day schedule for the Facility,
including staffing, procurement of supplies, and maintenance as needed.
B. Providing an annual budget of projected expenses and revenues for the
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Facility's fiscal year (July 1 - June 30) to the City through its
Superintendent of Parks and Recreation by March 15th of each year of
this agreement, except for the period of January 1 to June 30, 1997 of
this agreement, for which such budget shall be provided within fifteen
days of the signing of this agreement. The Facility's budget, based on its
fiscal year, shall be reconciled to the City's calendar year budget cycle, for
City planning purposes. For this purpose, ISI shall provide an unaudited
calendar year-end balance sheet and income statement for the Facility.
Said budget shall include a work program describing ISI's proposed
programming for the Facility, including the proposed usage of the Facility
for soccer, softball and golf and the proposed clinics and tournaments to
be held at the Facility. In addition, a policy offering Saint Paul residents
priority use of the Facility shall be established, and opportunities for the
use of the Facility by disadvantaged Saint Paul youth shall be outlined in
the work plan. In addition, a provision for free or minimum cost use of the
Facility for walking and running by area residents shall be included in the
work plan. The City shall have thirty days from the time it receives the
budget and work plan to accept, to reject or (in consultation with ISI) to
amend it. In the case where the City does not respond to ISI within thirty
days of receipt of the budget and work plan, the budget and work plan
shall be considered accepted by the City. Once said budget and work
plan is accepted either document may be subsequently amended through
the mutual agreement of the City and ISI For the period January 1, to
June 30, 1997 the City shall have fifteen days to respond to ISI's
proposed budget and work plan.
C. Providing a marketing plan and marketing budget to be used to promote
the facility. Such plan shall be presented to the City's Superintendent of
Parks and Recreation by March 15th of each year of this agreement,
except for the period January 1, to June 30, 1997 when the plan shall be
due within fifteen days of signing this agreement. The City shall have
thirty days from its receipt of the marketing plan and marketing budget to
accept, to reject or amend (in consultation with ISI said plan and budget,
except for the period January 1, to June 30, 1997 the City shall respond
within fifteen days. Failure of the City to respond within thirty days of
receipt of said plan and budget shall be deemed the same as acceptance
of the plan and budget by the City.
D. Providing a full time on-site manager, who shall be made known to the
City. If the individual in this position should change at any time, the City
shall have the right to approve any proposed new manager.
E. Managing, operating and maintaining the Sports Dome and TurF Field
portion of the Facility for the six months the dome is up each year.
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F. Ensuring that the dome is taken down and stored by April 24th each year
unless specifically extended in writing by the City's Superintendent of
Parks and Recreation. The cost to take down and to store the Dome shall
be part of the budget submitted by ISI as outlined in B. of this Section.
G. Ensuring that the dome is raised and open for business each year on or
about October 24th, unless specifically extended in writing by the City's
Superintendent of Parks and Recreation. The cost of raising the Dome
each year shall be part of the budget submitted by ISI as outlined in B. of
this Section.
H. Organizing leagues and tournaments, including processing registrations,
collecting entry fees, providing necessary supplies and hiring staff and/or
officials.
I. Organizing and conducting athletic clinics and instruction, including
registration, tuition collection, supplies, and hiring and paying instructors.
J. Managing and staffing the pro shop, including ordering items for re-sale,
inventory control, paying vendors, and operating cash registers.
K. Managing and staffing the batting cages, including scheduling their use,
collecting user fees and maintaining the batting cages in good repair.
L. Operating and staffing the snack bar, including ordering resale items,
inventory control, ordering supplies, operating cash registers, maintaining
and replacing fixtures and equipment, and paying vendors for products
and services.
M. Providing ongoing maintenance of the Facility, including on a year round
basis the Clubhouse, public restrooms and walkways leading to the
Facility and any other areas of the Rice and Arlington Athletic Complex
that may from time to time be used by ISI.
N. Collecting trash from the Facility and storing it in dumpsters for pick up.
O. Using an accounting method acceptable to the City and maintaining, in
accordance with generally accepted accounting principles, proper and
adequate books, records and accounts which accurately reflect all
revenue and expenses generated by the Facility. Such books, records
and accounts shall be available for inspection by the City on demand, and
shall be sufficient to permit the determination and verification of the
Facility's revenue and expenses, as described in Q & R of this section.
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P. Establishing a bank account for the Facility in the name of the City
of Saint Paul, separate from all other ISI accounts, which shall be used
for all receipts and expense payments made in connection with the
Facility. ISI shall be responsible for processing all receipts and
disbursements of the Facility using this account as described in Q and R
of this section. Further, ISI shall not commingle any funds of the Facility
and its operation with funds of any other ISI projects or ventures.
Q. Collecting and accounting for all revenue generated by the Facility and
making bank deposits of these revenues on a daily or as frequently as
reasonably possible basis. ISI shall provide the City, through its
Superintendent of Parks and Recreation, a verified copy of all bank
deposits of revenues on a bi-weekly basis. At no time shall the City
receive verification of receipts more than finro weeks (fourteen days) after
the date of deposit.
R. Providing the City with a listing of all disbursements made by ISI in
connection with the Facility operation on a monthly basis. This monthly
listing shall be submitted by ISI to the City no later than one week (seven
days) after the end of each month.
S. Providing the City with a monthly statement of all revenues and expenses
incurred by the Facility for the previous month. Such statement shall
be received by the City's Superintendent of Parks and Recreation by the
fifteenth day of each month reflecting the previous month's transactions.
ISI shall provide a monthly written explanation for significant variations
of actual year to date revenues and expenses as compared to the budget
submitted by ISI as outlined in B of this section. Facility management
must provide necessary information and assistance to the City to assist
the City in closing its books at the end of each calendar year.
T. Providing the City with an annual report of all expenses and revenues
- generated by the Facility by August 15th of each year for the preceding
fiscal year. (It is agreed that the Facility's fiscal year will be from July 1 to
June 30.) Said annual report shall be certified by an independent public
accounting firm as to the accuracy and completeness of revenues and
expenses and compliance with applicable provisions of the agreement.
U. Providing the City with an annual report of all program activities that took
place at the Facility during the preceding year by August 15th each year.
Included in this report shall be a summary of use by Saint Paul residents
and use by disadvantaged Saint Paul youth.
V. Defending, indemnifying and holding harmless the City and all of its
officers, agents, and employees from and against any and all lawsuits,
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damages, fines, penalties or charges imposed for any violation of law or
ordinance that is occasioned by the negligence of ISI, its agents,
employees or subcontractors. In addition thereto, ISI hereby agrees to
defend, indemnify and hold harmless the City, its officers, agents and
employees from and against any and all damages, costs, losses or other
expenses it may be required to pay as a result of suits, claims, actions, or
judgments arising out of any accident or other occurrence connected with
the negligent operation of the Facility by ISI.
W. As additional assurance of said indemnification but not in lieu thereof,
obtaining and paying the premiums upon a general liability insurance
policy (ies) which will name the City as an additional insured. Such policy
(ies) shall cover injury to persons or property arising out of the operation
of ISI with limits of not less than $50,000 with respect to property loss,
$600,000 with respect to injury or death to any one person and $600,000
for any number of claims arising out of a single occurrence. The policy
(ies) of insurance shall be subject to the approval of the Saint Paul City
Attorney and shall be filed with the Division of Parks and Recreation with-
in 15 days of signing of this agreement. Such insurance policy (ies) shall
be kept in force during the entire period that this Agreement or any
renewal thereof, is in effect, and shall contain a provision which will not
permit cancellation without 30 days' prior written notice to the City.
X. Providing a liquor liability insurance policy which names the City as an
additional insured in limits of not less than $50,000 with respect to
property loss, $600,000 with respect to injury or death to any person and
$1,000,000 for any number of claims arising out of a single occurrence in
the event the City and ISI determine to sell beer and/or wine. The
insurance policy shall be subject to the approval of the Saint Paul City
� Attorney and shall be filed with the Division of Parks and Recreation prior
to the serving of beer and/or wine by ISI.
Such insurance policy (ies) shall be kept in force during the entire period
that this agreement, or any renewal thereof, is in effect and shall contain a
provision which will not permit cancellation without 30 days' prior written
notice to the city. The cost of such liquor liability insurance will be
considered an operating expense of the Facility and thus allowable as
a budgeted item under 6 of this section.
Y. Contracting with a vendor to provide video/arcade games and/or similar
games or entertainments to be offered in the clubhouse and to collect and
deposit commissions received by the Facility from these activities.
Z. Cleaning and keeping up the Turf Field during the time it is used by the
City (outdoor softball season).
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AA. Hiring, training and supervising sufficient numbers of personnel including
employees and independent contractors as are necessary for a
successful and economically prudent operation of the Facility. Employees
of ISI shall be paid by ISI from a source other than the bank account set
up for Facility revenue deposits and Facility expenses.
1. Employees of ISI are not employees or agents of the City of Saint
Paul. The City maintains no operational control over the activities
of the employees of ISI, does not direct their hours or work, and
provides no supervision of their activities. The ownership of
premises and equipment by the City shall not operate to affect the
status of said employees, nor shall the minimum oversight
necessary to determine that ISI is in compliance with its
responsibilities under Section VII be construed as direction of work
or supervision of activities. ISI shall be responsible for ensuring
that all workers' compensation and unemployment compensation
insurance payments, social security, FICA, state and federal
income taxes are withheld, as required by law.
2. The City may require any reasonable changes in the number,
qualifications and conduct of employees required for the operation
of the premises.
3. All employees are to be covered by a fidelity bond in a reasonable
amount acceptable to the City.
BB. Complying with all federal, state and local ordinances in relating to fair
employment practices prohibiting discrimination on the basis of age, sex,
race, creed, religion, color, sexual or affectional orientation, national
origin ancestry, familial status, disability, marital status, or with regard to
public assistance.
CC. Paying to the appropriate governmental official all permit and license fees
required under any law or governmental regulation with respect to the
maintenance or operation of all or any portion of the Facility. These fees
will be budgeted for and paid as part of the annual budget ISI submits
under Section VI. B.
DD. Sending a check to the City by the fifth day of each month for one
twelfth (1/12) of the annual debt service payments for the Tax Exempt
Revenue Bonds used to construct the Facility.
VII. RIGHTS AND RESPONSIBILITIES OF THE CITY
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In connection with the Rice and Arlington Facility, the City shall have the
following rights and responsibilities:
A. Providing the site and constructing the Project.
B. Determining the operating hours of the Facility and its various
components in consultation with ISI.
C. Hauling trash from the site, provided trash is placed in dumpsters
provided by the City.
D. Plowing snow from parking lot areas to be used by visitors to the facility
and ISI staff.
E. Maintaining all outdoor areas of the Rice and Arlington Complex unless
specifically listed as an ISI responsibility. This includes field
maintenance of all natural Rice and Arlington Fields during the period of
time the City is using them for its softball and other sports programs.
F. Keeping of all fencing and field lighting, except for that lighting and
fencing used by the Facility.
G. Assisting ISI when possible in its promotion and marketing efforts.
H. Approving all fees to be charged by ISI, including "mark-up" for resale
items such as sports equipment and food and beverages.
I. Making all debt service payments in connection with the Tax Exempt
Revenue Bonds used to construct the Project and all related accounting
and legal services associated with this bond issuance. It is understood
that said debt service payments are to be made from revenues generated
by the Facility, to the extent available.
J. Approving and/or amending the annual budget and work program
submitted by ISI as outlined in VI. B.
K. Using the non-domed fields at any time and managing them for City-
sponsored programs.
L. Using the TurF Field during those periods when the dome is not erected.
M. Having space in the Clubhouse for temporary administrative and
informational purposes. This includes bulletin board space and space
for tournament administration, and small meetings.
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N. Having the first right to book the sports dome for City-sponsored
programs, provided the City pays normal rental rates.
O. Defending, indemnifying and holding ISI and its agents, employees or
sub-contractors harmless from any and all damages it may be required to
pay as a result of suits, claims, actions, or judgments arising out of any
accident or other occurrence in connection with the use of those areas of
the complex exclusively maintained and controlled by the City, and the
Turf Field when used by the City during the months the dome is not
inflated. The foregoing defense and indemnification is limited to negligent
acts or failure to act by the City, its agents or employees, and does not
include events or occurrences which arise out of damages or injuries
caused by lack of security, supervision or control by ISI of patrons using
the Facility or criminal acts or acts of violence by any person or persons.
Nothing in the foregoing agreement to defend, indemnify and hold
harmless ISI shall be construed as a waiver of the City's limits of liability
as set forth in Minn. Statutes, Section 466.04.
VIII. GENERAL PROVISIONS
A. Separate meters will be used to account for utility usage by both parties.
Each shall be responsible for the expenses it incurs, ISI shall be
responsible for utility usage in connection with the Facility and the City will
be responsible for all other utility usage at the Rice and Arlington
Complex.
B. The City at its discretion shall determine whether it will audit ISI's
books or if it will hire an outside auditing firm for this purpose. If an
outside firm is used, the expense of the audit shall be treated as a
budgeted expense of the Facility under VI. B.
C. The City will make available some of its portable fences for use by ISI to
be used to divide the Turf Field area in the dome for soccer and other
purposes. The number of fences to be provided shall be determined
solely by the City.
D. The City and ISI, together, shall determine which party should apply for
the licenses under which beer (3.2) and wine are to be sold, if it is
determined by the parties to sell these products.
E. The City, or ISI with the prior written consent of the City, may from time
to time make any additions, modifications or improvements at the Facility
that it may deem desirable and that do not adversely affect the structural
integrity of the Facility or its operations or its economic viability and do not
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conflict with (a) any easement running to City, or (b) air rights over the
Facility. If ISI makes the modifications, no work thereon shall be
commenced until plans and specifications, contracts, payment and
perFormance bonds and builder's risk insurance therefor have first been
approved by the City in such amounts and coverage as the City shall
determine. Any such additions, modifications or improvements shall be
come a part of the Facility and the property of the City. The cost of these
modifications or improvements may be reflected in the annual budget
submitted by ISI under VI. B.
F. ISI shall not permit mechanics' liens or other liens to be filed or
established or to remain against the Facility for labor, materials or services
furnished in connection with any additions, modifications, improvements,
repairs, renewals or replacements made by it to the Facility; provided that
if ISI shall first notify the City of its intention to contest any lien, it shall
deposit in escrow a sum of money equal to the amount of the claim of the
lien; in such event, the City may permit the items contested to remain
undischarged and unsatisfied during the period of such contest; provided,
further, however that if the Facility or any part thereof will be subject to
loss or forFeiture, the City may at its sole option cause the escrow deposit
to be used to promptly pay all such unpaid items and cause them to be
satisfied and discharged or obtain a release of the lien as provided by
Minnesota Statutes, Section 514.10. Any sums remaining in the escrow
deposit after satisfaction and discharge or release of the lien and after
satisfaction of all other claims or liabilities against which the City has been
indemnified shall be forthwith returned to ISI. Nofinrithstanding anything
herein to the contrary, the City shall not be obligated to discharge any lien
under this section unless the work perFormed or labor furnished in
connection therewith has been undertaken by the City.
G. No equipment, machinery or other property used in the day-to-day
operation of the Facility shall be removed from the Facility except in
accordance with the provisions of this section.
1. In any instance where the City determines that any item of said
equipment in or for the Facility has become unrepairable,
inadequate, obsolete, worn out, unsuitable, undesirable or
unnecessary for the operation of the Facility, the City (or ISI with
the consent of the City) may remove and dispose of such item of
equipment, provided that such removal and substitution, if any,
shall not materially impair the operating unit, capacity or structural
integrity of the Facility nor conflict with any easements running to
the City or owners of air rights over the Facility.
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2. ISI may, with the express written consent of the City, remove and
put in storage any part of the equipment, machinery or other
facilities used in the day-to-day operation of the Facility, and install
in lieu thereof equipment, machinery or other facilities belonging to
ISI. In that case, ISI shall be responsible for and pay all repair
and replacement costs, and shall bear all costs of reinstalling and
making operable the original equipment, machinery and other
facilities and restoring the Facility to its original condition.
H. If, during the term of this agreement, there is any damage to the Facility or
injury sustained or alleged to have been sustained to person or property
while at the Facility, ISI shall give written notice thereof to the City within
two (2) business days, after notification or discovery of occurrence or
allegation. Any and all proceeds of insurance (hereinafter, "Net
Proceeds") resulting from damage to the Facility shall be paid to and
belong to the City. Unless this agreement is terminated, the City (to the
extent there are Net Proceeds or other funds which the City determines
are available therefor), or ISI with the consent of the City, may proceed to
repair, rebuild and restore the property damaged or otherwise lost to
substantially the same condition as existed before such occurrence, or to
any other condition, which, with such alterations and modifications
(including the substitution and addition of other property) as may be
desired by the City, will not materially impair the operating efficiency,
productive capacity or value of the Facility as a public athletic facility and
Clubhouse. Before any work is undertaken by ISI, it shall cause plans
and specifications, payment and perFormance bonds, "builder's risk"
insurance and contracts therefore to be approved by the City or its duly
designated agent. The City shall apply so much as may be necessary of
the Net Proceeds or Insurance Proceeds to payment of the costs of
repair, rebuilding or restoration of the Facility, upon such terms and
conditions as the City reasonably determines to be appropriate. The City
shall insure the Facility under its Commercial Property Insurance Contract
in the amount of the replacement cost of the facility. ISI, through its
facility operating budget, shall be responsible to pay the insurance
premiums, including the Risk Retention Fund amount. The Insurance
proceeds in the event of a claim shall be the City's and be used to restore
the affected loss area.
I. Except as provided in Section VIII.G.2., any additional property acquired
and installed in the Facility shall be available for use by ISI and shall be
and become a part of the Facility. ISI shall, at the request of the City,
cause title to any such property to be formally placed in the name of the
City by bill of sale or warranty deed, as the case may be. ISI shall have
no equity in the Facility or any rights or interests therein, except for those
rights to occupy or use such areas as governed entirely by the terms of
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this Agreement.
J. This Agreement between the City and ISI for the management of the
Facility shall not be adversely affected by any other present, past or future
ISI third party business arrangements.
K. The City owns the real property upon which the Facility will be constructed
under the Project, and the City will own the Facility after construction.
ISI will solely be a manager of the Facility, and will have no ownership
or real property rights to the Facility; and this Management Agreement
may not be construed as a lease of real property.
IX. COMPENSATION
A. As consideration for it's services, ISI shall receive a management fee and
a percentage of gross receipts, minus state sales tax, generated by the
Facility. This management fee is shown for the periods indicated below.
Operating Base Plus 13 % of the Plus 20% of the
Period Gross Revenue Revenue Over
between:
1/1/97 to $86,416.12 $275,000 - $500,479 $500,479
6/30/97
7/1/97 to $170,998.88 $475,000 - $918,170 $918,170
6/30/98
7/1/98 to $177,537.25 $500,000 - $955,144 $958,170
6/30/99
7/1/99 to $184,165.88 $525,000 - $1,000,083 $1,000,083
6/30/00
7/1/00 to $191,187.12 $540,000 - $1,032,300 $1,032,300
6/30/01
7/1/01 to $95,808.75 $225,000 - $471,574 $471,974
12/31/01
B. The compensation which ISI receives as a percentage of gross shall at
no time exceed the base fee received by ISI for a given period.
C. If this Agreement befinreen ISI and the City is suspended, terminated or
cancelled by either party ISI shall receive a pro rated share of its base
fee for the period. ISI shall also receive a pro-rated share of gross
revenues generated for the period, in which the termination occurs based
on an audited report of revenues which will occur at the end of said
period. ISI shall not receive this payment until its normal due date.
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X. DISBURSEMENT OF RECEIPTS
Receipts generated by the Facility shall be distributed by ISI in priority order as
follows:
A. First to the City: the City shall receive from ISI, by the fifth day of each
month (beginning February 5, 1997), a check for one-twelfth of the annual
debt service, needed by the City to repay the Tax Exempt Revenue Bonds
that were issued to pay for the Project and any other debt due as a part of
the construction of the Project. These payments shall be budgeted for in
the budget ISI submits to the City as outlined in Section VI. B.
B. Secondly, all operational expenses of the Facility shall be paid to vendors
so that late charges are avoided.
C. Thirdly, ISI, using the bank account used for paying all Facility expenses
described in VI. P., shall pay to itself one-finrelfth (1/12) of the base
management fee on the fifth day of each month as ISI's compensation
for the preceding month. It being understood that for compensation for
the periods January 1, 1997 to June 30, 1997 and July 1, 2001 to
December 31, 2001, ISI shall pay itself one-sixth (1/6) of the base fee
each month for those operating periods. Further for cash flow purposes
ISI may pay itself, one half of the compensation due on February 5,
1997, on January 15, 1997.
D. ISI, using the bank account used for paying all Facility expenses, shall
pay to itself any percentage of gross receipts it may have earned, due to
reaching revenue thresholds on the following dates, provided that all
payments to the City for Debt Service and all operating expenses of the
previous period have been paid.
Operating Period Payment Date
1 August 30, 1997
2 August 30, 1998
� 3 August 30, 1999
4 August 30, 2000
5 August 30, 2001
6 February 28, 2002
(Payment to ISI for the above may be made earlier if the necessary
auditing of revenues and expenses of the period is accepted and
approved by the City.)
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E. On or before the 10th day of each month, commencing on the 10th
day of January 1997, after deducting an amount equal to three twelfths
(3/12ths) of the City's annual Debt Service payment, three twelfths
(3/12ths) of ISI's annual management fee and all expenses budgeted for
the next three months, ISI shall remit any gross receipts remaining to a
separate bank account established in the name of the City in order to
build up a reserve account for the Facility. This reserve is to be drawn on
in any period where Facility expenses exceed Facility revenues and to
fund the replacement of the various physical assets of the Facility.
Transfers to and from this reserve account shall be accounted for as
receipts and disbursements as described in VI. Q. and R.
F. In the event that, at any time during an Annual Period, the actual monthly
gross receipts of the Facility are not sufficient to pay one finrelfth (1/12th)
of the ISI Management Fee, one finrelfth (1/12) of the City's annual Debt
Service fee and the actual monthly expenses of the Facility, ISI shall
notify the City, and the City shall apply any funds in the reserve account it
has received to cure such deficiency. In the event that the City does not
have any funds in the reserve account and at any time during an Annual
Period the actual monthly gross receipts collected during such Annual
Period are insufficient to pay one finrelfth (1/12th) of ISI's Annual Fee,
one finrelfth (1/12th) of the Debt Service and the monthly expenses, the
payment of ISI's Management Fee shall be reduced by such shortfall.
Any future Excess Gross Receipts received during any Annual Period
shall be used to make up, without interest, for any past reductions in the
payment of the Management Fee.
G. In the event that the reserve account contains more than 45 days'
average operating expenses, the City has the right to draw all or part of
this excess for its own use. The City has a duty to make equal amounts
available, later if necessary under X. F. of this Section.
XI TEMPORARY CLUBHOUSE
A. Beginning on January 1, 1997 and running through such time as the
Clubhouse at the Rice and Arlington Complex is ready for operation, the
activities planned for the Clubhouse shall be run out of ISI's existing
business location at 1550 Rice Street, Saint Paul, Minnesota 55117. In
this way ISI's existing site shall serve as the Temporary Clubhouse.
B. All revenues derived from the operation of batting cages, clinics, lessons,
pro-shop sales, vending, video and or other arcade games at 1550 Rice
Street for the period described in A. of this section shall be revenues of
the Facility and therefore be deposited into the checking account set up to
receive revenues of the Facility. These revenues shall be projected for as
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a part of the budget submitted by ISI as outlined in VI. B.
C. All expenses incurred in connection with the operation described above
shall be considered operating expenses of the Facility and therefore, shall
be budgeted for in accordance with VI. B.
D. The management fee paid to ISM as outlined in IX. A. shall include ISI's
fee for managing the activities taking place at 1550 Rice Street during the
period outlined in A. of this section.
XII. COMPLIANCE
ISI agrees to comply with all applicable governmental laws, regulations,
requirements and rules and prohibitions of public or private nuisances with
respect to the use, maintenance, operation of the Facility, and each item of
equipment used or installed on the Facility, subject, however, to the right of the
City to require ISI to continue any such use or operation (consistent with the
other provisions of this agreement) during the continuance of any lawsuit or other
legal proceedings in which the legality of such use or operation is in dispute and
is defended by the City. In case any equipment or appliance shall be required to
be changed or replaced or in case any additional or other equipment or
appliance is required to be installed in order to comply with such laws,
regulations, and rules, ISI shall promptly notify the City of such requirement,
and, if such requirement is not duly contested as provided above, the City may
make such changes, additions and replacements by amending the Facility's
operating budget to allow for such necessary purchases.
XIII. HOLDOVER; REMEDIES; DEFAULTS; THIRD PARTIES
A. In the event that either party fails to perform any of the material provisions
of this Agreement or is in material breach of any condition, this shall
constitute default, and either party may cancel the Agreement in its
entirety, if the defaults are not remedied within thirty days after receipt of
written notice of any such failure to perform or breach.
B. In the event ISI shall default under any of the provisions of this
agreement and the City should incur expenses for the collection of net
income or charges for the enforcement of performance of any obligation
or agreement on the part of ISI, or the protection of its interest in the
Facility, ISI will, on demand, pay to the City the reasonable expenses so
incurred.
C. In the event any provision contained in this agreement should be
breached by either party and said breach thereafter waived by the other
party, such waiver shall be limited to the particular breach so waived and
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shall not be deemed to waive any other breach hereunder.
D. No remedy herein conferred upon or reserved to the City under this
Agreement is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Agreement or now
or hereafter existing at law or in equity or by statute. No delay or omission
to exercise any right or power accruing upon any default shall impair any
right or power or shall be construed to be a waiver thereof, but any such
right and power may be exercised from time to time and as often as may
be deemed expedient.
E. In the event that ISI shall remain on the property after the expiration of
this Agreement with the express consent of the City, in the absence of
written Agreement on the subject, this Agreement shall be deemed to
continue on a month-to-month basis terminable on 30 days notice by the
City, such deemed continuation of this Agreement may be terminated by
either party by providing the other party with thirty (30) days written notice
of the desire to terminate the same.
XIV. NOTICES; INUREMENT; ETC.
A. All notices, certificates or other communications hereunder shall be
sufficiently given and shall be deemed given when mailed by first class
mail, postage prepaid, with property address as indicated below unless
otherwise provided by the respective parties:
To: ISI: Jerry Freeman
1550 Rice Street
Saint Paul, MN 55117
To: City: Superintendent of Parks and Recreation
300 City Hall Annex
25 W. 4th Street
Saint Paul, MN 55102
B. In case of disputes between the City and ISI that do not fall under the
terms of this Agreement, and which cannot be resolved through informal
processes within 60 days of notice of said disputes, ISI and the City
mutually agree to enter into a two-phase dispute resolution process as
defined in Minnesota General Rules of Practice for District Courts 114,
Alternative Dispute Resolution. All mediators or arbitrators shall be
selected mutually from the list of certified persons maintained by the
Minnesota Supreme Court. All decisions of an arbitrator will be final and
binding. In the event that either party refuses to enter into mediation or
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either party does not accept the ruling of the arbitrator, this agreement will
be declared null and void.
1. Mediation
The Parties shall enter into mediation and agree to a mediator
within 30 days of notice of intent to enter into mediation. Each
party will pay one half the cost of inediation. In the event that
mediation does not resolve the dispute within 60 days, then the
parties mutually agree to enter into binding arbitration.
2. Binding Arbitration
a. The City and ISI understand that they have a constitutional
right to a trial by jury but waive that right in favor of binding
arbitration.
b. As soon as possible, the arbitrator shall disclose to both
parties any facts or relationships that could be construed as
a possible conflict of interest for the arbitrator. After such
disclosure, either party may request the arbitrator to remove
himself or herself, and a new arbitrator will be selected by
agreement of the parties. After appointment, there shall be
no ex parte communication, verbal or written, with the
arbitrator.
c. The arbitrator shall be the sole judge of all issues of law and
fact. There can be no appeal from any decision made by
the arbitrator except a claim of fraud or that the arbitrator
violated one of the provisions of this agreement.
d. All discovery allowed by the Minnesota Rules of Civil
Procedure apply to this proceeding. Either party may serve
interrogatories or make inspections, take depositions and
schedule medical examinations. It is the intent of the parties
to move this matter to hearing as quickly and as
economically as possible. Any discovery dispute shall be
decided by the arbitrator.
e. The arbitrator shall have all the powers provided for in Minn.
Statutes, Section 572. In addition, the arbitrator shall make
all appropriate deductions or set offs from the award that
would have been mandated by Minnesota law had this
matter been tried by a jury.
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f. Each party will provide the arbitrator with a copy of all
exhibits it intends to introduce, at least one week prior to the
scheduled hearing date. Exhibits shall be exchanged
befinreen the parties prior to their submission to the
arbitrator. Any exhibit objected to by either party shall not
be submitted to the arbitrator prior to the hearing. That
exhibit may be offered at the hearing, and a ruling on its
admissibility will be made by the arbitrator at that time. The
parties agree that all relevant records and reports may be
admitted without regard to the hearsay rule.
g. The cost of the arbitrator shall be borne equally by the
parties. The arbitrator has the sole discretion to deny or
award costs or pre judgment interest to either party.
h. The terms of this Dispute Resolution Agreement and any
resulting Award shall be confidential and will not be
disclosed to any person or entity.
Nofinrithstanding the foregoing, either party may, at its
option, commence a court proceeding and secure a judicial
determination of the dispute without participating in the
arbitration process.
C. This agreement shall inure to the benefit of, and shall be binding upon
the City, ISI and their respective successors and assigns.
D. In the event any provision of this agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding shall
not invalidate or render unenforceable any other provision hereof, unless
such holding makes it practically impossible for the Facility to be operated
as a public facility.
E. Except as otherwise herein provided, this agreement may be amended,
changed, modified, altered or terminated with the mutual written consent
of the parties.
F. This agreement shall be construed in accordance with the laws of
Minnesota; provided, however, that the parties shall be entitled to all rights
conferred by any applicable federal statute, rule or regulation.
G. All consents and approvals required in this agreement to be obtained from
the City or ISI shall be in writing.
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IN WITNESS WHEREOF, the City of Saint Paul, Minnesota and Inside Sports
Incorporated have caused this agreement to be executed and attested by their duly
authorized officers, all as of the date first above written.
INSIDE SPORTS INCORPORATED: FOR CITY:
Its
Superintendent of Parks and Recreation
City Attorney
Mayor
Budget Director
Director of Finance & Management
Services
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