HomeMy WebLinkAboutItem 06.n
Date: Item No.
KENRICK LIQUOR STORE
LEASE AGREEMENT AMENDMENT
Proposed Action
Staff recommends adoption of the following motion: Move to approve an amendment to the
Kenrick Liquor Store lease located at 16179 Kenrick Avenue, Lakeville, Minnesota.
Overview
The City is in the process of updating the HVAC control systems in several of our facilities this
year. The HVAC controls at the Kenrick Liquor Store are on this list for replacement, however the
new lease, approved by the City Council in February, does not include permission for the City to
complete the upgrade or to maintain and manage the system. An amendment to the lease is needed
to outline the landlord and tenant responsibilities regarding the existing and new HVAC control
system as well as ongoing maintenance. The amendment clarifies the City will manage the HVAC
system and perform regular maintenance and upkeep, but any overall major system replacement,
such as the replacement of rooftop units, will be the responsibility of the landlord with the costs
prorated back to the City for the life of the lease.
Primary Issues to Consider
Is it cost effective for the City to maintain and manage the HVAC system?
• The proposed revision to the lease will allow the City to control their costs associated with any
maintenance and upkeep of the system for the liquor store. It is also more cost effective for the
City to inspect and maintain the system ourselves, avoiding additional administrative fees from
the management company.
Supporting Information
• Amended Lease Agreement
Financial Impact: $ Budgeted: Y☐ N☐ Source:
Related Documents: (CIP, ERP, etc.):
Envision Lakeville Community Values: Good Value for Public Services
Report Completed by: (Allyn G. Kuennen, Assistant City Administrator)
May 21, 2018
N/A n/a
237246
197747v1
FIRST AMENDMENT TO LEASE AGREEMENT
THIS FIRST AMENDMENT TO LEASE (the “Agreement”) is made and entered into
dated May ____, 2018, by and between LAKE 46 I, LLC, a Minnesota limited liability
company, and LAKE 46 II, LLC, a Minnesota limited liability company (collectively,
“Landlord”) and CITY OF LAKEVILLE, a Minnesota municipal corporation (“Tenant”).
WHEREAS, Landlord and Tenant entered into that certain Lease dated April 10, 2018
(erroneously dated 2017), for a portion (once construction expanding said building is completed)
of 16179 Kenrick Avenue, Lakeville (hereinafter called the “Demised Premises”); and
WHEREAS, Landlord and Tenant desire to amend the Lease as set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements made hereinafter, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The date of the Lease is April 10, 2018, not April 10, 2017.
2. The clause in Article 7.B of the Lease which reads “the HVAC system (except to
the extent of negligence by Tenant or its employees or contractors; and replacement costs for
Tenant’s HVAC system shall be paid by Tenant only, in monthly installments amortized over the
useful life of the replaced equipment)” is deleted in its entirety.
3. The word “HVAC” is deleted from Article 7.F of the Lease.
4. Article 7.G of the Lease is amended and restated in its entirety as follows:
Tenant acknowledges that the Demised Premises shall be served by an HVAC system
dedicated exclusively to the Demised Premises. Tenant shall maintain and administer an
HVAC preventative maintenance contract during the term of this Lease and any renewals
or extensions thereof, which contract will require inspection twice annually, and
incorporate the requirements of Exhibit “H” attached hereto and incorporated herein by
this reference. In the event Tenant fails to comply with the foregoing requirements, after
fifteen (15) days written notice of such failure, Landlord may take over administration of
the preventative maintenance contract, and Tenant shall pay to Landlord on a monthly
basis and together with Tenant’s proportionate share of Maintenance Costs the estimated
monthly costs incurred by Landlord in connection with such HVAC preventative
maintenance contract and in connection with enforcing any HVAC warrantees on
Tenant’s behalf. Tenant shall make any repairs to the HVAC system not covered by the
preventative maintenance contract. Landlord shall replace the HVAC system as
reasonably necessary. Tenant shall pay for costs of repairs not covered by the
preventative maintenance contract (or if performed by Landlord as described above pay
to Landlord such costs incurred within thirty (30) days of receipt of invoice). Tenant
shall pay to Landlord costs of replacement in monthly installments amortized over the
useful life of the replaced equipment. Landlord and Tenant agree that Tenant’s
computer-based climate control system and the cooling system for tenant’s refrigerated
storage cabinets (beer coolers) are not part of the HVAC system for purposes of this
237246
197747v1 2
Article 7.G and that Tenant is solely responsible for maintenance, repair and replacement
of such systems.
5. Landlord and Tenant agree that (i) neither is in default under the Lease, (ii) there
are no defenses to performance by either party to performance under the Lease, and (iii) the
Lease remains in full force and effect and unmodified (other than as expressly set forth herein).
IN WITNESS WHEREOF, Landlord and Tenant have signed this Lease as of the date set
forth above.
LAKE 46 I, LLC CITY OF LAKEVILLE
By By
Vincent J. Driessen, Vice President Douglas P. Anderson, its Mayor
LAKE 46 II, LLC
And By:
Charlene Friedges, Its City Clerk
By:
Paul A. Stearns, Vice President
237246
197747v1 3
EXHIBIT “H”
HVAC MAINTENANCE STANDARDS