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16-156 Resolution No. 16-156 RESOLUTION AUTHORIZING EXECUTION OF A COMMERCIAL PROPERTY LEASE AGREEMENT WITH 164 DIVISION, LLC FOR THE ELGIN ART SHOWCASE (164 Division Street) BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that David J. Kaptain, Mayor, and Kimberly A. Dewis, City Clerk, be and are hereby respectively authorized and directed to execute a Commercial Property Lease Agreement with 164 Division, LLC for the Elgin Art Showcase for the premises commonly known as 164 Division Street, Suite 801-803, Elgin, Illinois, a copy of which is attached hereto and made a part hereof by reference. s/David J. Kaptain David J. Kaptain, Mayor Presented: December 21, 2016 Adopted: December 21, 2016 Vote: Yeas: 8 Nays: 1 Attest: s/Kimberly Dewis Kimberly Dewis, City Clerk COMMERCIAL PROPERTY LEASE AGREEMENT THIS LEASE is made and entered into as of the 21st day of December, 2016, by and between 164 Division LLC, of 164 Division Street, Suite 705, Elgin, Illinois 60120, (hereinafter referred to as "Lessor"), and the City of Elgin, an Illinois municipal corporation (hereinafter referred to as the "Lessee") 1. Lessor hereby leases to Lessee and Lessee hereby leases from Lessor the space presently known as 164 Division Street, Suite 801-803, hereinafter referred to as the "Premises", in the building located at 164 Division Street, Elgin, Illinois 60120, hereinafter referred to as the "Building". 2. The Premises is leased for a term of 36 months, to commence on January 1, 2017, and to continue until December 31, 2019. 3. The monthly rent for the first year of the lease term shall be $3,818.98, the monthly rent for the second year of the lease term shall be $3,895.36, and the monthly rent for the third year of the lease term shall be $3,973.27. The Lessee is hereby granted an option to extend this Lease for an additional three year term. The rent under such an additional three year term will go up at a rate of three percent (3%) from the previous years rent amount. To exercise the option to so extend this Lease the Lessee shall provide the Lessor written notice to exercise such option prior to October 1, 2019. 4. Lessee shall pay rent, and any additional rental as provided below to Lessor at Lessor's above-stated address, or at such other place as Lessor may designate in writing, without demand, and without counterclaim, deduction or setoff. Lessee shall pay the monthly rent in two annual installments for each year of the lease term. Lessor shall provide Lessee an invoice each January during the term of the Lease for the monthly rent of January through June and each July during the term of the Lease for the monthly rent for July through December. Lessee shall pay such invoices for such rent to the Lessor within thirty(30) days of the receipt of such an invoice. 5. Lessee shall use and occupy the Premises as an art studio and live theater and for no other purpose. Lessor represents that the Premises may be lawfully used for such purpose. It is understood and agreed that Lessee's use of the Premises as an art studio and live theatre may include, but not be limited to, as accessory uses, the service of food and beverages including alcoholic beverages as authorized by the Liquor Commission of the City of Elgin. 6. Lessee shall commit no act of waste and shall take good care of the Premises and the fixture and appurtenances therein, and shall, in the use and occupancy of the Premises, conform to all laws, orders and regulations of the federal, state, and municipal government of any of their departments. All improvements made by Lessee to the Premises which are so attached to the Premises that they cannot be removed without material injury to the Premises, shall become the property of Lessor upon installation. 7. Not later than the last day of the term Lessee shall at Lessee's expense, remove all of the Lessee's personal property and those improvements made by Lessee which have not become the property of the Lessor, including trade fixtures, cabinet work, movable paneling, partitions and the like; repair all injury done by or in connection with the installation or removal of the property and improvements; surrender the Premises in as good condition as they were at the beginning of the term, reasonable wear and damage by fire, the elements, casualty, or other cause not due to the misuse or neglect by Lessee or Lessee's agents, servants, visitors, servants or licensees, excepted. All property of the Lessee remaining on the Premises after the last day of the term of this Lease shall be conclusively deemed abandoned and may be removed by Lessor, and Lessee shall reimburse Lessor for the cost of such removal. Lessor may have any such property stored at Lessee's risk and expense. 8. Lessee may make interior revisions to the Premises to accommodate Lessee's intended art studio and live theater, subject to all applicable code regulations and with the prior written approval of the Lessor, which approval shall not be unreasonably withheld. Prior to commencing any such work approved by Lessor, Lessee shall procure certificates of insurance from all contractors and subcontractors showing general liability and worker's compensation coverage and naming Lessor as an additional insured. 9. Lessee shall not do or suffer anything to be done on the Premises which will cause an increase in the rate of fire insurance on the Building. 10. Lessee shall not permit the accumulation of waste or refuse matter on the Premises or anywhere in or near the Building. 11. Lessee shall not, without first obtaining the written consent of the Lessor, abandon the Premises, or allow the Premises to become vacant or deserted. 12. Lessee shall not, without obtaining the written consent of the Lessor, assign, mortgage,pledge, or encumber this Lease, in whole or in part. Notwithstanding the foregoing, or anything to the contrary in this Lease, it is agreed and understood that Lessee may enter into agreements with third party organizations or individuals to use the Premises for the intended art studio and live theater purposes. 13. Lessee shall observe and comply with such reasonable rules and regulations as may be established from time to time by Lessor, provided that such rules and regulations do not unreasonably interfere with Lessee's intended art studio and live theatre use of the Premises. 14. If the Building is damaged by fire or any other cause to such extent that the cost of restoration, as reasonably estimated by Lessor, will equal or exceed 60% of the replacement value of the Building,just prior to the occurrence of the damage, then Lessor may, no later than the seventh day following the damage, give Lessee a notice of election to terminate the Lease. In the event of such election this Lease shall be deemed to terminate as of the date of the damage or destruction, and Lessee shall surrender the Premises within a reasonable time thereafter, and any pre-paid rent shall be refunded proportionally. 2 15. If the Premises or any part of the Premises, or any part of the Building materially affecting Lessee's use of the Premises,be taken by eminent domain, this Lease shall terminate on the date when title vests pursuant to such taking. The rent shall be apportioned as of the termination date and any rent paid for any period beyond such date shall be repaid to Lessee. 16. This Lease shall be subject and subordinate to all underlying leases and to mortgages which may now or hereafter affect such leases or the real property of which the Premises form a part, and also all renewals, modifications, consolidations, and replacements of the underlying leases and mortgages. Lessee agrees to execute such estoppel letters or other documents required to confirm the same. 17. Lessor may enter the Premises at any reasonable time, upon adequate notice to Lessee (except that no notice need be given in case of an emergency) for the purpose of inspection of the making of such repairs, replacements, or additions in, to, on and about the Premises or the Building, as Lessor deems necessary or desirable. 18. Lessor at its cost shall within thirty (30) days of the entry into and execution of this Lease provide for the repair of leaks causing water damage to the ceiling and walls of the Premises. The Lessor shall thereafter monitor the roof for leaks and make repairs at Lessor's cost as needed. Lessor shall also at its cost maintain the Premises and the Building in compliance with all codes, ordinances and other requirements of law. In the event a repair has been made necessary by the misuse or neglect by the Lessee or the Lessee's agents, servants, visitors or licensees, Lessor shall give the Lessee written notice thereof and the cost of such a repair shall be born by the Lessee. 19. Lessor agrees to and shall furnish at its cost all utilities for the Premises and the Building including electricity, water and any utilities required for the heat of the Premises and the Building. Lessee shall not use any electrical equipment which in Lessor's reasonable opinion will overload the wiring installations or interfere with the reasonable use of such installations by Lessor or other tenants in the Building. 20. Nothing in this Lease is intended or shall be deemed or construed as creating the relationship of principal and agent,partnership or joint venture between the parties hereto. 21. Lessor shall, at Lessor's own cost and expense, bear, pay and discharge prior to delinquency, all real estate taxes, special assessments, leasehold taxes or any other taxes which are or may be levied, charged, and/or assessed upon the Premises, the Building and/or the leasehold of the Premises during the term of this Lease. 22. The Lessee shall at all times maintain public liability insurance with a minimum $300,000 bodily injury liability. Lessee shall provide proof of this coverage to the Lessor. 23. Notwithstanding anything to the contrary in this Lease, the parties understand and agree that the fiscal year of the Lessee is a twelve (12) month period ending December 31 of each year. The obligations of the Lessee under any contract for any fiscal year are subject to and contingent upon the appropriation of funds sufficient to discharge the obligations which accrue 3 in that fiscal year and authorization to spend such funds for the purposes of the contract. If, for any fiscal year during the term of this Lease, sufficient funds for the discharge of the Lessee's obligations under this Lease are not appropriated and authorized, then the Lease shall terminate as of the last day of the preceding year, or when such appropriated and authorized funds are exhausted, whichever is later, without liability to the Lessee for damages, penalties or other charges or any other relief whatsoever on account of such termination. 24. This document represents the entire agreement of the parties and there are no representations not stated herein, and this agreement may only be modified by a writing executed by both parties hereto. LESSEE: LESSOR: CITY OF ELGIN, 164 DIVISION, LLC an Illinois municipal corporation r if / By/.1 i14t�_4.��� By: li Mayor *Ill . VI l Its: t� .M VI� Attest: Lit'f! 6;ele/CA City Clerk F:\Legal Dept\Agreement\Lease-164Division-Ste 801-803-ElginArtsCenter-clean-12-2-16.docx 4