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01-614� ' Council File # `� � — � �`1 Resolution # �,n c� Presented By Referred To coaimsccee: yace 1 WHEREAS, the City of Saint Paul Department of Plaiming and Economic Development has worked for the 2 past two yeazs to identify the highest and best use of the Arts & Science Center; and 4 WHEREAS, Music Tech College of Contemporary Music and Recarding Arts has proposed to purchase the 5 Arts & Science Center for $1 and invest $3.7 million to renovate the building for the use of Music Tech and 6 7 9 10 11 12 13 14 15 16 17 18 19 20 21 22 other cultural tenants including the Great American History Theatre; and WHEREAS, Music Tech will bring 260 students and 90 faculty and staff, including 35 fixll-time jobs, to downtown Saint Paul along with a nationally recognized and accredited music program; and WHEREAS, Music Tech has offered the Great American History Theatre a 40-year lease of the Crawford Livingston Theatre and related spaces in the Arts & 5cience Center for the cost of operating expenses and their pro-rata share of capital improvements to the building per Attachment A. NOW, THEREFORE BE IT RESOLVED, that the Saint Paul City Council authorizes Planning and Economic Development staff to proceed with the sale of the Arts & Science Center property to Music Tech in order to close on the properiy on or before August 15, 2001. BE IT FURTHER RESOLVED, that the City Council authorizes the City of Saint Paul Real Estate Division to continue the process of vacating the City's interest in the Arts & Science Center properiy to the Housing and Redevelopment Authority in preparation far this sale. Benanav Coleman Adopted by Council: Date ac�e 5 Adoption Certified by Counci$JSecretary gy: �`� �- _ ,(� �_.. �( 1 Approved by Mayor: Date V V��F' �� �� By: Requested by Department of: -� Plannina & Economi�c Develooment gy: � 2� .N�4�w�✓ Farm Approved by City Attorney / / r i�� � �'/ . L a!/ Approved by May Submissio Co cil sy: o�_��y LETTER OF INTENT DATE: TENANT: LANDLORD: BUII.DING: 3une 13, 2001 Great American History Theatre (the "History Theatre") Music Tech Arts & Science Center PREMISES: The Premises shall consist of a mutually agreed to square footage, including the Crawford Livingston Theatre, offices, dressing rooms and shop space in the Arts & Science Center, as depicted on the attached plans. This constitutes approximately 20,512 usable SF or approxunately 22% of the Arts and Science Center's 92,638 usable SF, square footage to be verified by an architect. The allocation of operating and capitai expenses shall be revised to reflect the actual squaze footage. The measurement of the area to be leased shall be mutuaily agreed upon by the parties prior to execution of a lease. FIR5T RIGHT OF OFF'ER: The History Theatre sha11 have a fust right of offer to lease up to approximately 6,507 squaze feet of additional space highlighted on the attached plan. The terms of said additional space shall be consistent with the terms hereunder. LEASE TERM: NET ItENT: OPERATING EXPENSES: REAL ESTATE The Lease Term for the Premises shall commence upon Music Tech's closing on the Building and shall cont3nue for forty (40) years. Net rent will be $0.00 for the Term. The History Theatre will be responsible to pay its proportionate share of Operating Expenses for the Building during the Term of the Lease. Operating Expenses shall be defined as those costs incurred to operate, maintain and repair the Land and Building including, but not limited to, janitorial expenses, utilities, landscaping, parking lot maintenance, insurance, security, and management fees. Ail costs and fees shall be at commercially competitive rates. Wherever possible any direct expenses allocable directly to the History Theatre (e.g. Cleauiug of the Premises) shall be paid for directly by the History Theatre. Using the City's estimate of $5.25lSF, the History Theatre's operating expenses would total $107,688 annually, or 22% of the building's operating expenses. Tr1�S: Music Tech has received a letter indicating that the building will continue to be exempt from real estate taxes. Music Tech will hold the property as Music Tech and not in a separate LLC. The History Theatre shall pay all taaces if the History Theatre causes real estate tases to be assessed and payable against ihe building through a change in its program, structure or ownership. Similarly, Music Tech shall pay all tates if Music Tech causes real estate taxes to be assessed and payable against the building through a change in its program, structure or ownership. Should City, County, State or Federal levies be placed on the Letter of Intent Page 1 of 5 6/13/200'I D�-��`l SUBOI2DINA'I'ION 1 NON-DISTURBANCE AGREEMENT (SNDA): building due to tas code changes which would require 501(c)3 or similaz organizations to pay such fazes, the History Theatre shall pay its proportionate shaze of such ta�ces. Both parties agee to make all commercially reasonable efforts to maintain the properties' exemption from real estate taaces. Music Tech will request of Music Tech's lender a Subordination Non- Disturbance Agreement (SNDA) on behalf of the Histozy Theatre at the commencement of the Lease. If Music Tech's lender is unwilling to provide an SNDA at the commencement of the lease, Music Tech will use commercially reasonable efforts to attain an SNDA with a term of at Ieast three (3) years at commencement or thereafter. Music Tech shall pay any related transactional costs up to, but not exceeding $1,000. The History Tlieatre shall pay any costs incurted above $1,000. Nothing stated in Music Tech's loan documents or other agreements with lenders will assign a direct cost to securing an SNDA. The History Theatre and Music Tech agree to work collaboratively in exploring alternative formats of SNDA which may be available, including separation of the SNDA for non-monetary items and monetary items. Should Music Tech be unable to initially obtain a SNDA from its lender protecting the History Theatre's lease, Music Tech will make commercially reasonable efforts to secure language in its loan documents specifying the criteria necessary for Music Tech to make such delivery to the History Theatre. CAPITAL EXPENAI'I'[JIiES: Music Tech will complete base building improvements on the electrical systems, mechanical systems, roof and any other areas required (keeping costs to a minimum — after balancing operating vs. capital costs) to the Arts & Science Center. Due to the financing requirements of both Music Tech and the Hisiory Theaue, initial base building improvements wi11 be kept to a minimum. For that reason, Music Tech will noi upgrade the restrooms, access, sprinkler system or any other items unless required by the City of St. Paul LIEP. The following are special conditions that define the manner in which certain Capitalized Expenditures will be charged to the History Theatre: • Any costs triggered by ttae occupancy or requirements of the History Theatre will be bome by tl�e History Theatre. • Any unprovements by the History Theatre that h base building improvements required by the City of St. Paul LIEP or such other govemmental organization having the appropriate jurisdictional authority (ie: asbestos removal, sprinklers or ADA compiiance) will be borne by the History Theatre. • After initial base building improvements (including phasing), any costs triggered by the occupancy or requirements of the Music Tech shall be borne by Music Tech • After 'vutial base building improvements (uacluding phasing), any improvements by Music Tech that trigger base building unprovements requited by the City of St. Paul LIEP or such other govemmental Letter of intent Page 2 of 5 6/13l2001 tS►-�iy organization having the approgriate jurisdictional authority (ie: asbestos removal, sprinklers or ADA compliance) will be bome by Music Tech. INTTIAI< BASE BI7ILDING CAPTTAL REIlVIBiTRSEMEN'T: FUTURE CAPITAL REIMBURSEMENT: The History Theatre will not be required to reimburse Music Tech for tfie History Theatre's proportionate shaze of the Initial Base Building Capital Expenditures for the building. Music Tech and the City will have a separate agreement to reduce the debt to the city to in lieu of the History Theatre reimbursing these costs. Initial base building improvements will include phasing of the replacement of the roof, rebuilding of base building electrical and mechanical systems and any other minimum requirements of the City of St. Paul LIEP (including those that may be phased in over time — but are in the initial agreement with LIEP). A copy of these agreements shall be provided to History Theatre. After the initial base building imgrovements are completed, the History Theatre will be provided a minimum of six (6) month notice of future capital expenditure items and will be required to pay their praportionate share, plus interest at Music Tech's then interest rate calculated from the daCe Music Tech actually makes payment for work completed. Music Tech shall allow up to tweive (12) months to raise funds for these costs plus interest. Unless the timing of the notice from Music Tech shal] miss the allocation schedule of the History Theatre's supporting foundations, in which case, the History'I`heatre shall have up tQ eighteen (18) months to pay its proportionate share of the work completed. Future capital reimbursements will be subject to the amortization of the improvement cost over its reasonable life expectancy compared to the remaining lease term (e.g. an improvement with a 10 year life expectancy and one year remaining on the lease will equal a ten percent reimbursement). RIGHT TO CURE: Music Tech and the History Theatre agree to work collaboratively with the projecYs lenders to request a notice to the History Theatre of an event of default will request that the Aistory Theatre have a notice of default and a right to cure in the event of a default by Music Tech. Letter of {ntent 6!'f 3l2001 Page 3 of 5 bf-�iy LEASEHOLD IMPROVEMENTS: The History Theatre may, at its expense, construct Leasehold Improvements to the Premises subject to Music Tech's approval, which shall not be unreasonably withheld, conditioned or delayed. Ali Leasehold Improvements shall be constructed in a good workmanlike manner in accordance with all applicable codes. Prior to the expiration of the Lease and at the discretion of Music Tech, the History Theatre, at its expense, wIll remove all non-standard improvements constructed after the commencement of the lease in the leased Premises which have been identified by Music Tech at the time of approval of the initial plans. The removal work shall return the Premises to its original condition at the time of lease commencement (normal weaz and tear excepted). ACCEPTANCE OF THE PREMISES: The History Theatre accepts the space "AS IS". Music Tech will complete initial base building work as listed in Capital Expenditures above. The plans will be provided to the History Theatre for review and comments. Music Tech will have the final decision as to the conect method to proceed. Roof replacement (which probably will be phased) and compliance with the minimum requirements of the City of St. Paul LIEP identified initially, whether completed initially or in phases shall be included in the initial base building improvements. BUII.DING SIGNAGE: SECURITY DEPOSTT: '�1►s M_�► Music Tech shall permit the History Theatre to place a sign(s) on the exterior of the Building. The History Theatre shall be allowed up to 20% of the total permitied area for exterior signage on the Building per City and other applicable codes. The History Theatre shall be responsible for the cost of such exterior Signage. History Theatre shall have exclusive signage rights on the north face of the building and at the entrance on the north east corner of the property at such time as Music Tech has created its entrance on the south side of the building, which is Music Tech's stated goal. No Security Deposit will be required. The History Theatre shall have an option to terminate the Lease with 3b0 days prior written notice during the Lease Term. THEATRE USAGE: The History Theatre will have exclusive control of the Crawford Livingston Theatre and related spaces. The History Theatre agrees to rent the theater to Music Tech at a mutually agreed upon rate to be negotiated. The Theatre will also be subject to the attached Theatre and Auditorium usage agreement. AUDITORIUM USAGE: Music Tech will have control of the Auditorium. Music Tech agees to rent the auditorium to the History Theatre at a mutually agreed upon rate to be negotiated. The Auditorium will also be subject to the Theatre and Auditorium Usage Agreement (mutual agreement by tfie parties would be required; without Letter of Intent Page 4 of 5 6/13/2001 . . 11 - ��'� RIGHT TO SUBLEASE: this agreement it is acknowledged that neither party will enter into this proposed ]ease). T'he History Theatre shall not sublease any or all of the space for more than a one year term without the prior written consent of Music Tech. In the event of a sublease in accordance with the Auditorium Usage Agreement, no written consent shall be required and that Ag�eement will govem. The History Theatre shall have the right to sublet the Theatre to t3urd parties for events and shows without the prior consent of Music Tech. The History Theatre shall not have the right to lease the theatre for a term that exceeds one (1) year to any third-party tenant. COMMISSIONS: The History Theatre and Music Tech represent and warrant that they have deait with no other broker or agent in this transaction other than the History Theatre's representative Zeller Realty Corporafion and Music Tech's repzesentative Northco Real Estate Services, Inc. Each party hereby agrees to compensate its respeetive agent per their sepatate agreements. Each party herehy agees to indemnify the other from any claims made by any other broker or agent claiming commissions. It is also hereby agreed that brokerage commissions or similar fees to either party's representatives shall not be included as reimbursable Capital Expenditures under the terms of this proposed lease. AGREED AND ACCEPTED: LANDLORD: MiTSIC TECH BY: ITS: DATE: TENANT: GREAT A BY: / ITS: � DATE: HISTORY THEATRE � This Letter of fhtent shall serve as an indication of how a proposed deal might be structured. The onty instrument that would bind the parties is a mutually executed lease agreement. �:wm�o.y s�«z�k rewv.a�� or mr�� s� s-oi-.�;uaa� Letter of lntent 6N3l200ti Page 5 of 5 CITY COUNCIL RACT PH25IXJ & PFiONE iT BE �! CWNCILAGENM BY June 13, 2001 (S� ���� June 13, 2001 .-,.r !,e��:a TOTAL � OF SIGNATURE PAGES GREEN SHEET a ti -c� t�( N� i 13751 u��� u��- ❑ anwnort�r ❑ arccisnic ❑ Auwew�aFxxec,oirt ❑ r�.wcu�miw.cao ❑a+rontaewrarr.wn ❑ (CIIP ALL LOCATIONS FOR SIGNATURE� Authorizing the Department of Planning and Economic Development staff to proceed with the sale of the Arts & Science Center property to Music Tech and authorizing the Rea1 Estate Division to continue the process o£ vacating the City's interest. PLANNING COMMISSION CIB COMMITTEE CIVIL SERVICE COMMISSION IF Has N's Pa«��m eMerw+orketl uMer a contrect farthis department? YES NO F� ttiis persorUfrm ever been a city emWcY�T vES NO ocesm� oeisonlfirtn pos6ese a sioa not namauro� br am currem citr emWoveev YES NO Is Vds pHSONfiIm ata�peted vendOYT VES NO Nain atl ves a�wers on seoarate sheet aM attach to areen sheet TRANSACTIO!! S COSTIREVEHUE BUDGETED {ClRCIE ONE7 ACTMITY NUMBER YES NO FlNANaPt ttJFORMnT1oN (DPLaI� � ' Council File # `� � — � �`1 Resolution # �,n c� Presented By Referred To coaimsccee: yace 1 WHEREAS, the City of Saint Paul Department of Plaiming and Economic Development has worked for the 2 past two yeazs to identify the highest and best use of the Arts & Science Center; and 4 WHEREAS, Music Tech College of Contemporary Music and Recarding Arts has proposed to purchase the 5 Arts & Science Center for $1 and invest $3.7 million to renovate the building for the use of Music Tech and 6 7 9 10 11 12 13 14 15 16 17 18 19 20 21 22 other cultural tenants including the Great American History Theatre; and WHEREAS, Music Tech will bring 260 students and 90 faculty and staff, including 35 fixll-time jobs, to downtown Saint Paul along with a nationally recognized and accredited music program; and WHEREAS, Music Tech has offered the Great American History Theatre a 40-year lease of the Crawford Livingston Theatre and related spaces in the Arts & 5cience Center for the cost of operating expenses and their pro-rata share of capital improvements to the building per Attachment A. NOW, THEREFORE BE IT RESOLVED, that the Saint Paul City Council authorizes Planning and Economic Development staff to proceed with the sale of the Arts & Science Center property to Music Tech in order to close on the properiy on or before August 15, 2001. BE IT FURTHER RESOLVED, that the City Council authorizes the City of Saint Paul Real Estate Division to continue the process of vacating the City's interest in the Arts & Science Center properiy to the Housing and Redevelopment Authority in preparation far this sale. Benanav Coleman Adopted by Council: Date ac�e 5 Adoption Certified by Counci$JSecretary gy: �`� �- _ ,(� �_.. �( 1 Approved by Mayor: Date V V��F' �� �� By: Requested by Department of: -� Plannina & Economi�c Develooment gy: � 2� .N�4�w�✓ Farm Approved by City Attorney / / r i�� � �'/ . L a!/ Approved by May Submissio Co cil sy: o�_��y LETTER OF INTENT DATE: TENANT: LANDLORD: BUII.DING: 3une 13, 2001 Great American History Theatre (the "History Theatre") Music Tech Arts & Science Center PREMISES: The Premises shall consist of a mutually agreed to square footage, including the Crawford Livingston Theatre, offices, dressing rooms and shop space in the Arts & Science Center, as depicted on the attached plans. This constitutes approximately 20,512 usable SF or approxunately 22% of the Arts and Science Center's 92,638 usable SF, square footage to be verified by an architect. The allocation of operating and capitai expenses shall be revised to reflect the actual squaze footage. The measurement of the area to be leased shall be mutuaily agreed upon by the parties prior to execution of a lease. FIR5T RIGHT OF OFF'ER: The History Theatre sha11 have a fust right of offer to lease up to approximately 6,507 squaze feet of additional space highlighted on the attached plan. The terms of said additional space shall be consistent with the terms hereunder. LEASE TERM: NET ItENT: OPERATING EXPENSES: REAL ESTATE The Lease Term for the Premises shall commence upon Music Tech's closing on the Building and shall cont3nue for forty (40) years. Net rent will be $0.00 for the Term. The History Theatre will be responsible to pay its proportionate share of Operating Expenses for the Building during the Term of the Lease. Operating Expenses shall be defined as those costs incurred to operate, maintain and repair the Land and Building including, but not limited to, janitorial expenses, utilities, landscaping, parking lot maintenance, insurance, security, and management fees. Ail costs and fees shall be at commercially competitive rates. Wherever possible any direct expenses allocable directly to the History Theatre (e.g. Cleauiug of the Premises) shall be paid for directly by the History Theatre. Using the City's estimate of $5.25lSF, the History Theatre's operating expenses would total $107,688 annually, or 22% of the building's operating expenses. Tr1�S: Music Tech has received a letter indicating that the building will continue to be exempt from real estate taxes. Music Tech will hold the property as Music Tech and not in a separate LLC. The History Theatre shall pay all taaces if the History Theatre causes real estate tases to be assessed and payable against ihe building through a change in its program, structure or ownership. Similarly, Music Tech shall pay all tates if Music Tech causes real estate taxes to be assessed and payable against the building through a change in its program, structure or ownership. Should City, County, State or Federal levies be placed on the Letter of Intent Page 1 of 5 6/13/200'I D�-��`l SUBOI2DINA'I'ION 1 NON-DISTURBANCE AGREEMENT (SNDA): building due to tas code changes which would require 501(c)3 or similaz organizations to pay such fazes, the History Theatre shall pay its proportionate shaze of such ta�ces. Both parties agee to make all commercially reasonable efforts to maintain the properties' exemption from real estate taaces. Music Tech will request of Music Tech's lender a Subordination Non- Disturbance Agreement (SNDA) on behalf of the Histozy Theatre at the commencement of the Lease. If Music Tech's lender is unwilling to provide an SNDA at the commencement of the lease, Music Tech will use commercially reasonable efforts to attain an SNDA with a term of at Ieast three (3) years at commencement or thereafter. Music Tech shall pay any related transactional costs up to, but not exceeding $1,000. The History Tlieatre shall pay any costs incurted above $1,000. Nothing stated in Music Tech's loan documents or other agreements with lenders will assign a direct cost to securing an SNDA. The History Theatre and Music Tech agree to work collaboratively in exploring alternative formats of SNDA which may be available, including separation of the SNDA for non-monetary items and monetary items. Should Music Tech be unable to initially obtain a SNDA from its lender protecting the History Theatre's lease, Music Tech will make commercially reasonable efforts to secure language in its loan documents specifying the criteria necessary for Music Tech to make such delivery to the History Theatre. CAPITAL EXPENAI'I'[JIiES: Music Tech will complete base building improvements on the electrical systems, mechanical systems, roof and any other areas required (keeping costs to a minimum — after balancing operating vs. capital costs) to the Arts & Science Center. Due to the financing requirements of both Music Tech and the Hisiory Theaue, initial base building improvements wi11 be kept to a minimum. For that reason, Music Tech will noi upgrade the restrooms, access, sprinkler system or any other items unless required by the City of St. Paul LIEP. The following are special conditions that define the manner in which certain Capitalized Expenditures will be charged to the History Theatre: • Any costs triggered by ttae occupancy or requirements of the History Theatre will be bome by tl�e History Theatre. • Any unprovements by the History Theatre that h base building improvements required by the City of St. Paul LIEP or such other govemmental organization having the appropriate jurisdictional authority (ie: asbestos removal, sprinklers or ADA compiiance) will be borne by the History Theatre. • After initial base building improvements (including phasing), any costs triggered by the occupancy or requirements of the Music Tech shall be borne by Music Tech • After 'vutial base building improvements (uacluding phasing), any improvements by Music Tech that trigger base building unprovements requited by the City of St. Paul LIEP or such other govemmental Letter of intent Page 2 of 5 6/13l2001 tS►-�iy organization having the approgriate jurisdictional authority (ie: asbestos removal, sprinklers or ADA compliance) will be bome by Music Tech. INTTIAI< BASE BI7ILDING CAPTTAL REIlVIBiTRSEMEN'T: FUTURE CAPITAL REIMBURSEMENT: The History Theatre will not be required to reimburse Music Tech for tfie History Theatre's proportionate shaze of the Initial Base Building Capital Expenditures for the building. Music Tech and the City will have a separate agreement to reduce the debt to the city to in lieu of the History Theatre reimbursing these costs. Initial base building improvements will include phasing of the replacement of the roof, rebuilding of base building electrical and mechanical systems and any other minimum requirements of the City of St. Paul LIEP (including those that may be phased in over time — but are in the initial agreement with LIEP). A copy of these agreements shall be provided to History Theatre. After the initial base building imgrovements are completed, the History Theatre will be provided a minimum of six (6) month notice of future capital expenditure items and will be required to pay their praportionate share, plus interest at Music Tech's then interest rate calculated from the daCe Music Tech actually makes payment for work completed. Music Tech shall allow up to tweive (12) months to raise funds for these costs plus interest. Unless the timing of the notice from Music Tech shal] miss the allocation schedule of the History Theatre's supporting foundations, in which case, the History'I`heatre shall have up tQ eighteen (18) months to pay its proportionate share of the work completed. Future capital reimbursements will be subject to the amortization of the improvement cost over its reasonable life expectancy compared to the remaining lease term (e.g. an improvement with a 10 year life expectancy and one year remaining on the lease will equal a ten percent reimbursement). RIGHT TO CURE: Music Tech and the History Theatre agree to work collaboratively with the projecYs lenders to request a notice to the History Theatre of an event of default will request that the Aistory Theatre have a notice of default and a right to cure in the event of a default by Music Tech. Letter of {ntent 6!'f 3l2001 Page 3 of 5 bf-�iy LEASEHOLD IMPROVEMENTS: The History Theatre may, at its expense, construct Leasehold Improvements to the Premises subject to Music Tech's approval, which shall not be unreasonably withheld, conditioned or delayed. Ali Leasehold Improvements shall be constructed in a good workmanlike manner in accordance with all applicable codes. Prior to the expiration of the Lease and at the discretion of Music Tech, the History Theatre, at its expense, wIll remove all non-standard improvements constructed after the commencement of the lease in the leased Premises which have been identified by Music Tech at the time of approval of the initial plans. The removal work shall return the Premises to its original condition at the time of lease commencement (normal weaz and tear excepted). ACCEPTANCE OF THE PREMISES: The History Theatre accepts the space "AS IS". Music Tech will complete initial base building work as listed in Capital Expenditures above. The plans will be provided to the History Theatre for review and comments. Music Tech will have the final decision as to the conect method to proceed. Roof replacement (which probably will be phased) and compliance with the minimum requirements of the City of St. Paul LIEP identified initially, whether completed initially or in phases shall be included in the initial base building improvements. BUII.DING SIGNAGE: SECURITY DEPOSTT: '�1►s M_�► Music Tech shall permit the History Theatre to place a sign(s) on the exterior of the Building. The History Theatre shall be allowed up to 20% of the total permitied area for exterior signage on the Building per City and other applicable codes. The History Theatre shall be responsible for the cost of such exterior Signage. History Theatre shall have exclusive signage rights on the north face of the building and at the entrance on the north east corner of the property at such time as Music Tech has created its entrance on the south side of the building, which is Music Tech's stated goal. No Security Deposit will be required. The History Theatre shall have an option to terminate the Lease with 3b0 days prior written notice during the Lease Term. THEATRE USAGE: The History Theatre will have exclusive control of the Crawford Livingston Theatre and related spaces. The History Theatre agrees to rent the theater to Music Tech at a mutually agreed upon rate to be negotiated. The Theatre will also be subject to the attached Theatre and Auditorium usage agreement. AUDITORIUM USAGE: Music Tech will have control of the Auditorium. Music Tech agees to rent the auditorium to the History Theatre at a mutually agreed upon rate to be negotiated. The Auditorium will also be subject to the Theatre and Auditorium Usage Agreement (mutual agreement by tfie parties would be required; without Letter of Intent Page 4 of 5 6/13/2001 . . 11 - ��'� RIGHT TO SUBLEASE: this agreement it is acknowledged that neither party will enter into this proposed ]ease). T'he History Theatre shall not sublease any or all of the space for more than a one year term without the prior written consent of Music Tech. In the event of a sublease in accordance with the Auditorium Usage Agreement, no written consent shall be required and that Ag�eement will govem. The History Theatre shall have the right to sublet the Theatre to t3urd parties for events and shows without the prior consent of Music Tech. The History Theatre shall not have the right to lease the theatre for a term that exceeds one (1) year to any third-party tenant. COMMISSIONS: The History Theatre and Music Tech represent and warrant that they have deait with no other broker or agent in this transaction other than the History Theatre's representative Zeller Realty Corporafion and Music Tech's repzesentative Northco Real Estate Services, Inc. Each party hereby agrees to compensate its respeetive agent per their sepatate agreements. Each party herehy agees to indemnify the other from any claims made by any other broker or agent claiming commissions. It is also hereby agreed that brokerage commissions or similar fees to either party's representatives shall not be included as reimbursable Capital Expenditures under the terms of this proposed lease. AGREED AND ACCEPTED: LANDLORD: MiTSIC TECH BY: ITS: DATE: TENANT: GREAT A BY: / ITS: � DATE: HISTORY THEATRE � This Letter of fhtent shall serve as an indication of how a proposed deal might be structured. The onty instrument that would bind the parties is a mutually executed lease agreement. �:wm�o.y s�«z�k rewv.a�� or mr�� s� s-oi-.�;uaa� Letter of lntent 6N3l200ti Page 5 of 5 CITY COUNCIL RACT PH25IXJ & PFiONE iT BE �! CWNCILAGENM BY June 13, 2001 (S� ���� June 13, 2001 .-,.r !,e��:a TOTAL � OF SIGNATURE PAGES GREEN SHEET a ti -c� t�( N� i 13751 u��� u��- ❑ anwnort�r ❑ arccisnic ❑ Auwew�aFxxec,oirt ❑ r�.wcu�miw.cao ❑a+rontaewrarr.wn ❑ (CIIP ALL LOCATIONS FOR SIGNATURE� Authorizing the Department of Planning and Economic Development staff to proceed with the sale of the Arts & Science Center property to Music Tech and authorizing the Rea1 Estate Division to continue the process o£ vacating the City's interest. PLANNING COMMISSION CIB COMMITTEE CIVIL SERVICE COMMISSION IF Has N's Pa«��m eMerw+orketl uMer a contrect farthis department? YES NO F� ttiis persorUfrm ever been a city emWcY�T vES NO ocesm� oeisonlfirtn pos6ese a sioa not namauro� br am currem citr emWoveev YES NO Is Vds pHSONfiIm ata�peted vendOYT VES NO Nain atl ves a�wers on seoarate sheet aM attach to areen sheet TRANSACTIO!! S COSTIREVEHUE BUDGETED {ClRCIE ONE7 ACTMITY NUMBER YES NO FlNANaPt ttJFORMnT1oN (DPLaI� � ' Council File # `� � — � �`1 Resolution # �,n c� Presented By Referred To coaimsccee: yace 1 WHEREAS, the City of Saint Paul Department of Plaiming and Economic Development has worked for the 2 past two yeazs to identify the highest and best use of the Arts & Science Center; and 4 WHEREAS, Music Tech College of Contemporary Music and Recarding Arts has proposed to purchase the 5 Arts & Science Center for $1 and invest $3.7 million to renovate the building for the use of Music Tech and 6 7 9 10 11 12 13 14 15 16 17 18 19 20 21 22 other cultural tenants including the Great American History Theatre; and WHEREAS, Music Tech will bring 260 students and 90 faculty and staff, including 35 fixll-time jobs, to downtown Saint Paul along with a nationally recognized and accredited music program; and WHEREAS, Music Tech has offered the Great American History Theatre a 40-year lease of the Crawford Livingston Theatre and related spaces in the Arts & 5cience Center for the cost of operating expenses and their pro-rata share of capital improvements to the building per Attachment A. NOW, THEREFORE BE IT RESOLVED, that the Saint Paul City Council authorizes Planning and Economic Development staff to proceed with the sale of the Arts & Science Center property to Music Tech in order to close on the properiy on or before August 15, 2001. BE IT FURTHER RESOLVED, that the City Council authorizes the City of Saint Paul Real Estate Division to continue the process of vacating the City's interest in the Arts & Science Center properiy to the Housing and Redevelopment Authority in preparation far this sale. Benanav Coleman Adopted by Council: Date ac�e 5 Adoption Certified by Counci$JSecretary gy: �`� �- _ ,(� �_.. �( 1 Approved by Mayor: Date V V��F' �� �� By: Requested by Department of: -� Plannina & Economi�c Develooment gy: � 2� .N�4�w�✓ Farm Approved by City Attorney / / r i�� � �'/ . L a!/ Approved by May Submissio Co cil sy: o�_��y LETTER OF INTENT DATE: TENANT: LANDLORD: BUII.DING: 3une 13, 2001 Great American History Theatre (the "History Theatre") Music Tech Arts & Science Center PREMISES: The Premises shall consist of a mutually agreed to square footage, including the Crawford Livingston Theatre, offices, dressing rooms and shop space in the Arts & Science Center, as depicted on the attached plans. This constitutes approximately 20,512 usable SF or approxunately 22% of the Arts and Science Center's 92,638 usable SF, square footage to be verified by an architect. The allocation of operating and capitai expenses shall be revised to reflect the actual squaze footage. The measurement of the area to be leased shall be mutuaily agreed upon by the parties prior to execution of a lease. FIR5T RIGHT OF OFF'ER: The History Theatre sha11 have a fust right of offer to lease up to approximately 6,507 squaze feet of additional space highlighted on the attached plan. The terms of said additional space shall be consistent with the terms hereunder. LEASE TERM: NET ItENT: OPERATING EXPENSES: REAL ESTATE The Lease Term for the Premises shall commence upon Music Tech's closing on the Building and shall cont3nue for forty (40) years. Net rent will be $0.00 for the Term. The History Theatre will be responsible to pay its proportionate share of Operating Expenses for the Building during the Term of the Lease. Operating Expenses shall be defined as those costs incurred to operate, maintain and repair the Land and Building including, but not limited to, janitorial expenses, utilities, landscaping, parking lot maintenance, insurance, security, and management fees. Ail costs and fees shall be at commercially competitive rates. Wherever possible any direct expenses allocable directly to the History Theatre (e.g. Cleauiug of the Premises) shall be paid for directly by the History Theatre. Using the City's estimate of $5.25lSF, the History Theatre's operating expenses would total $107,688 annually, or 22% of the building's operating expenses. Tr1�S: Music Tech has received a letter indicating that the building will continue to be exempt from real estate taxes. Music Tech will hold the property as Music Tech and not in a separate LLC. The History Theatre shall pay all taaces if the History Theatre causes real estate tases to be assessed and payable against ihe building through a change in its program, structure or ownership. Similarly, Music Tech shall pay all tates if Music Tech causes real estate taxes to be assessed and payable against the building through a change in its program, structure or ownership. Should City, County, State or Federal levies be placed on the Letter of Intent Page 1 of 5 6/13/200'I D�-��`l SUBOI2DINA'I'ION 1 NON-DISTURBANCE AGREEMENT (SNDA): building due to tas code changes which would require 501(c)3 or similaz organizations to pay such fazes, the History Theatre shall pay its proportionate shaze of such ta�ces. Both parties agee to make all commercially reasonable efforts to maintain the properties' exemption from real estate taaces. Music Tech will request of Music Tech's lender a Subordination Non- Disturbance Agreement (SNDA) on behalf of the Histozy Theatre at the commencement of the Lease. If Music Tech's lender is unwilling to provide an SNDA at the commencement of the lease, Music Tech will use commercially reasonable efforts to attain an SNDA with a term of at Ieast three (3) years at commencement or thereafter. Music Tech shall pay any related transactional costs up to, but not exceeding $1,000. The History Tlieatre shall pay any costs incurted above $1,000. Nothing stated in Music Tech's loan documents or other agreements with lenders will assign a direct cost to securing an SNDA. The History Theatre and Music Tech agree to work collaboratively in exploring alternative formats of SNDA which may be available, including separation of the SNDA for non-monetary items and monetary items. Should Music Tech be unable to initially obtain a SNDA from its lender protecting the History Theatre's lease, Music Tech will make commercially reasonable efforts to secure language in its loan documents specifying the criteria necessary for Music Tech to make such delivery to the History Theatre. CAPITAL EXPENAI'I'[JIiES: Music Tech will complete base building improvements on the electrical systems, mechanical systems, roof and any other areas required (keeping costs to a minimum — after balancing operating vs. capital costs) to the Arts & Science Center. Due to the financing requirements of both Music Tech and the Hisiory Theaue, initial base building improvements wi11 be kept to a minimum. For that reason, Music Tech will noi upgrade the restrooms, access, sprinkler system or any other items unless required by the City of St. Paul LIEP. The following are special conditions that define the manner in which certain Capitalized Expenditures will be charged to the History Theatre: • Any costs triggered by ttae occupancy or requirements of the History Theatre will be bome by tl�e History Theatre. • Any unprovements by the History Theatre that h base building improvements required by the City of St. Paul LIEP or such other govemmental organization having the appropriate jurisdictional authority (ie: asbestos removal, sprinklers or ADA compiiance) will be borne by the History Theatre. • After initial base building improvements (including phasing), any costs triggered by the occupancy or requirements of the Music Tech shall be borne by Music Tech • After 'vutial base building improvements (uacluding phasing), any improvements by Music Tech that trigger base building unprovements requited by the City of St. Paul LIEP or such other govemmental Letter of intent Page 2 of 5 6/13l2001 tS►-�iy organization having the approgriate jurisdictional authority (ie: asbestos removal, sprinklers or ADA compliance) will be bome by Music Tech. INTTIAI< BASE BI7ILDING CAPTTAL REIlVIBiTRSEMEN'T: FUTURE CAPITAL REIMBURSEMENT: The History Theatre will not be required to reimburse Music Tech for tfie History Theatre's proportionate shaze of the Initial Base Building Capital Expenditures for the building. Music Tech and the City will have a separate agreement to reduce the debt to the city to in lieu of the History Theatre reimbursing these costs. Initial base building improvements will include phasing of the replacement of the roof, rebuilding of base building electrical and mechanical systems and any other minimum requirements of the City of St. Paul LIEP (including those that may be phased in over time — but are in the initial agreement with LIEP). A copy of these agreements shall be provided to History Theatre. After the initial base building imgrovements are completed, the History Theatre will be provided a minimum of six (6) month notice of future capital expenditure items and will be required to pay their praportionate share, plus interest at Music Tech's then interest rate calculated from the daCe Music Tech actually makes payment for work completed. Music Tech shall allow up to tweive (12) months to raise funds for these costs plus interest. Unless the timing of the notice from Music Tech shal] miss the allocation schedule of the History Theatre's supporting foundations, in which case, the History'I`heatre shall have up tQ eighteen (18) months to pay its proportionate share of the work completed. Future capital reimbursements will be subject to the amortization of the improvement cost over its reasonable life expectancy compared to the remaining lease term (e.g. an improvement with a 10 year life expectancy and one year remaining on the lease will equal a ten percent reimbursement). RIGHT TO CURE: Music Tech and the History Theatre agree to work collaboratively with the projecYs lenders to request a notice to the History Theatre of an event of default will request that the Aistory Theatre have a notice of default and a right to cure in the event of a default by Music Tech. Letter of {ntent 6!'f 3l2001 Page 3 of 5 bf-�iy LEASEHOLD IMPROVEMENTS: The History Theatre may, at its expense, construct Leasehold Improvements to the Premises subject to Music Tech's approval, which shall not be unreasonably withheld, conditioned or delayed. Ali Leasehold Improvements shall be constructed in a good workmanlike manner in accordance with all applicable codes. Prior to the expiration of the Lease and at the discretion of Music Tech, the History Theatre, at its expense, wIll remove all non-standard improvements constructed after the commencement of the lease in the leased Premises which have been identified by Music Tech at the time of approval of the initial plans. The removal work shall return the Premises to its original condition at the time of lease commencement (normal weaz and tear excepted). ACCEPTANCE OF THE PREMISES: The History Theatre accepts the space "AS IS". Music Tech will complete initial base building work as listed in Capital Expenditures above. The plans will be provided to the History Theatre for review and comments. Music Tech will have the final decision as to the conect method to proceed. Roof replacement (which probably will be phased) and compliance with the minimum requirements of the City of St. Paul LIEP identified initially, whether completed initially or in phases shall be included in the initial base building improvements. BUII.DING SIGNAGE: SECURITY DEPOSTT: '�1►s M_�► Music Tech shall permit the History Theatre to place a sign(s) on the exterior of the Building. The History Theatre shall be allowed up to 20% of the total permitied area for exterior signage on the Building per City and other applicable codes. The History Theatre shall be responsible for the cost of such exterior Signage. History Theatre shall have exclusive signage rights on the north face of the building and at the entrance on the north east corner of the property at such time as Music Tech has created its entrance on the south side of the building, which is Music Tech's stated goal. No Security Deposit will be required. The History Theatre shall have an option to terminate the Lease with 3b0 days prior written notice during the Lease Term. THEATRE USAGE: The History Theatre will have exclusive control of the Crawford Livingston Theatre and related spaces. The History Theatre agrees to rent the theater to Music Tech at a mutually agreed upon rate to be negotiated. The Theatre will also be subject to the attached Theatre and Auditorium usage agreement. AUDITORIUM USAGE: Music Tech will have control of the Auditorium. Music Tech agees to rent the auditorium to the History Theatre at a mutually agreed upon rate to be negotiated. The Auditorium will also be subject to the Theatre and Auditorium Usage Agreement (mutual agreement by tfie parties would be required; without Letter of Intent Page 4 of 5 6/13/2001 . . 11 - ��'� RIGHT TO SUBLEASE: this agreement it is acknowledged that neither party will enter into this proposed ]ease). T'he History Theatre shall not sublease any or all of the space for more than a one year term without the prior written consent of Music Tech. In the event of a sublease in accordance with the Auditorium Usage Agreement, no written consent shall be required and that Ag�eement will govem. The History Theatre shall have the right to sublet the Theatre to t3urd parties for events and shows without the prior consent of Music Tech. The History Theatre shall not have the right to lease the theatre for a term that exceeds one (1) year to any third-party tenant. COMMISSIONS: The History Theatre and Music Tech represent and warrant that they have deait with no other broker or agent in this transaction other than the History Theatre's representative Zeller Realty Corporafion and Music Tech's repzesentative Northco Real Estate Services, Inc. Each party hereby agrees to compensate its respeetive agent per their sepatate agreements. Each party herehy agees to indemnify the other from any claims made by any other broker or agent claiming commissions. It is also hereby agreed that brokerage commissions or similar fees to either party's representatives shall not be included as reimbursable Capital Expenditures under the terms of this proposed lease. AGREED AND ACCEPTED: LANDLORD: MiTSIC TECH BY: ITS: DATE: TENANT: GREAT A BY: / ITS: � DATE: HISTORY THEATRE � This Letter of fhtent shall serve as an indication of how a proposed deal might be structured. The onty instrument that would bind the parties is a mutually executed lease agreement. �:wm�o.y s�«z�k rewv.a�� or mr�� s� s-oi-.�;uaa� Letter of lntent 6N3l200ti Page 5 of 5 CITY COUNCIL RACT PH25IXJ & PFiONE iT BE �! CWNCILAGENM BY June 13, 2001 (S� ���� June 13, 2001 .-,.r !,e��:a TOTAL � OF SIGNATURE PAGES GREEN SHEET a ti -c� t�( N� i 13751 u��� u��- ❑ anwnort�r ❑ arccisnic ❑ Auwew�aFxxec,oirt ❑ r�.wcu�miw.cao ❑a+rontaewrarr.wn ❑ (CIIP ALL LOCATIONS FOR SIGNATURE� Authorizing the Department of Planning and Economic Development staff to proceed with the sale of the Arts & Science Center property to Music Tech and authorizing the Rea1 Estate Division to continue the process o£ vacating the City's interest. PLANNING COMMISSION CIB COMMITTEE CIVIL SERVICE COMMISSION IF Has N's Pa«��m eMerw+orketl uMer a contrect farthis department? YES NO F� ttiis persorUfrm ever been a city emWcY�T vES NO ocesm� oeisonlfirtn pos6ese a sioa not namauro� br am currem citr emWoveev YES NO Is Vds pHSONfiIm ata�peted vendOYT VES NO Nain atl ves a�wers on seoarate sheet aM attach to areen sheet TRANSACTIO!! S COSTIREVEHUE BUDGETED {ClRCIE ONE7 ACTMITY NUMBER YES NO FlNANaPt ttJFORMnT1oN (DPLaI�