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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 07/17/2001 - ITEMS RELATING TO A NEW YOUTH ACTIVITY CENTER AT 4 AGENDA ITEM SUMMARY ITEM NUMBER: 32 A-D FORT COLLINS CITY COUNCIL DATE: July 17, 2001go STAFF: Michael W. Powers SUBJECT: Items Relating to a New Youth Activity Center at 415 East Monroe. RECOMMENDATION: Staff recommends adoption of the Resolutions and of the Ordinances on First Reading. FINANCIAL IMPACT: Lease payments for the current year under the lease of 415 East Monroe and the equipment lease have been appropriated and are available in the current fiscal year. All obligations for future years' terms of those agreements are contingent upon the appropriation of funds intended to pay obligations. The effect of the proposed equipment lease on the debt position for the purpose of financial rating of the City will be to raise the total City debt and lease-purchase obligations by .027%. The cost to lease the new Youth Activity Center facility on an annual basis is $193,000 more than the lease cost for the current youth activity center. EXECUTIVE SUMMARY: A. First Reading of Ordinance No. 119, 2001, Approving the Terms of the Lease by the City of 415 East Monroe for a Youth Activity Center. B. First Reading of Ordinance No. 120, 2001, Authorizing the Purchasing Agent to Enter into an Agreement for Acquisition of Certain Recreational Equipment Through Lease- Purchase for a Period of up to Ten Years and Approving an Exception to the City's Competitive Purchasing Requirements. C. Resolution 2001-91 Authorizing a Sublease Agreement Between the City and Xermend, Inc. (Med-X Clinic of Northern Colorado) for the Use of Certain Property at the New Youth Activity Center at 415 East Monroe for a Physical Therapy Office for a Period of Eight Months. D. Resolution 2001-92 Authorizing a Sponsorship and Advertising Lease Agreement Between the City and Everwest for the Use of Certain Property at the New Youth Activity Center at 415 East Monroe for Commercial Advertising for a Period of Two Years. DATE: July 17,2001 2 ITEM NUMBER:32 A-D BACKGROUND: Since 1995 the City's Recreation Division has operated a very popular and successful Youth Activity Center (YAC) in the Old Fort Collins High School. The YAC offers hundreds of activities for youth ages 2 through 19, including sports, dance, crafts, games, classes, and trips. Last year the center had over 140,000 youth contact hours. A few years ago, Colorado State University (CSU) purchased the Old Fort Collins High School from Poudre School District. CSU plans to renovate the building into the University's Center for the Arts and hopes to begin construction of the Arts Center in 2002. Consequently, the YAC needs a new home. Council has been aware of this situation and Council's Policy Agenda on Youth Issues includes the goal of finding a new facility for the YAC. Lease of 415 East Monroe: Everwest has offered to lease to the City the facility located at 415 East Monroe Street, east of the Foothills Fashion Mall and formerly occupied by Healthworks Health Club. The facility has over 26,000 square feet and will make an excellent replacement facility for the YAC. The term of the lease is 10 years,which may be extended by later agreement. Although the City Manager has the authority to enter into the building lease, Council approval of the lease is needed to exempt the leased property from taxation. Adoption of Ordinance No. 119, 2001, allows the City to apply for this tax exemption. Lease-purchase of Health and Fitness Equipment: Another element of this transaction concerns the health and fitness equipment from Healthworks. Everwest has purchased this equipment from Healthworks and will lease it to the City pursuant to the terms set forth in Ordinance No. 120, 2001. Adoption of this Ordinance authorizes the equipment lease as a lease-purchase, and also approves the equipment lease as an exception to the City's competitive purchasing requirements. CLRS staff has determined that the equipment has a value at this time of$150,000. Much of the equipment can be used at the YAC and at EPIC, the Senior Center, and Northside Azdan Community Center. The equipment lease agreement also provides that Everwest will set aside all payments received from the City (except for Everwest's financing costs which are included in the monthly lease payments at a rate of 9%) in an interest bearing account, and that the entire balance of that account will be paid to the City upon the termination of the equipment lease. In addition, if the City chooses to identify third parties willing to purchase pieces of the equipment, Everwest has agreed to sell those particular pieces and place the proceeds of that sale into the reserve account established by Everwest pursuant to the agreement. When all lease payments have been made, or if the City chooses to pay the remaining amount due on the equipment, the equipment will become the property of the City. The City's lease-purchase policy provides that: "The City of Fort Collins uses lease purchase for the provision of new and replacement equipment, vehicles and rolling stock in order to ensure the timely replacement of equipment and vehicles. This method may also be used to acquire real property. Members of the management staff have developed an equipment needs schedule for rolling stock which encompasses the demands of operating departments. This schedule is used to project equipment needs for each budget year." DATE: July 17, 2001 3 ITEM NUMBER: 32 A-D It should be noted that the City may terminate the equipment lease on an annual basis, so that future City Councils will have the option to continue or discontinue the lease-purchasing of this equipment. According to the State of Colorado House Bill 90-1164, local governments are required to identify as part of their budgets: (1) the total expenditures during the ensuing fiscal year for all lease-purchase agreements involving real and personal property; and (2) the total maximum payment liability under all lease-purchase agreements over the entire terms of the agreements, including all optional renewal terms. Staff recognizes that the State does not include lease- purchase in the legal definition of debt; however, rating agencies include lease-purchases in calculating the City's debt burden. Sublease to Med-X: The owner of Healthworks has operated another health related business, known as Med-X, in the 415 East Monroe building. As a condition of leasing the building from Everwest, the City will need to sublease approximately 3,500 square feet of the building to Med-X for up to eight months. By adoption of Resolution 2001-91 Council authorizes this sublease. The terms of the sublease are set forth in the Resolution. Sponsorship Agreement/Advertising Lease to Everwest: The final element of the transaction deals with a sponsorship agreement between the City and Everwest. Everwest will pay the City $50,000 at the outset and will make monthly payments lip totaling $50,000 each year, for a period of two years, for the non-exclusive right to display advertising in the YAC for businesses located on property owned by Everwest, including Foothills Fashion Mall and for the right to advertise itself as a sponsor of the YAC. The advertising location and content must be approved by the City. The advertising will be only in designated locations, allowing the sale of other advertising in the facility as appropriate and desired. Adoption of Resolution 2001-92 approves the sponsorship Agreement. ORDINANCE NO. 119, 2001 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROVING THE TERMS OF THE LEASE BY THE CITY OF 415 EAST MONROE FOR A YOUTH ACTIVITY CENTER WHEREAS, the City has entered into the lease approximately 26,000 square feet of space for a Youth Activity Center (the "YAC") at 415 East Monroe in Fort Collins, Colorado (the "Property"),pursuant to a Lease Agreement that has been executed by the City Manager,a copy of which, dated July 13, 2001, is on file in the office of the City Clerk and available for review(the "Lease Agreement"); and WHEREAS,under the Lease Agreement,the monthly rent for the Property is$20,760.67 for each month of the initial term and four subsequent annual terms,subject to annual adjustment after the fifth term to reflect inflation from the time of execution of the Lease Agreement in subsequent renewal terms; and WHEREAS, the total term of the Lease Agreement is up to ten years from the date of execution of the Lease Agreement, subject to appropriation of funds sufficient and intended for annual renewal after the initial term thereof; and WHEREAS, sufficient funds have been budgeted and appropriated by the City for all expenses associated with the initial term of the Lease Agreement; and WHEREAS,the Lease Agreement provides that the City shall be responsible for any taxes attributable to the Property during the term of the Lease; and WHEREAS,in order for the Property to be exempt from taxation,C.R.S.Section 31-15-801 requires that the Lease Agreement and the terms thereof be approved by ordinance by the City Council; and WHEREAS,the City Council wishes to approve the Lease Agreement by ordinance so that the Property may be removed from the tax rolls. NOW,THEREFORE,BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the City Council hereby approves the Lease Agreement,dated July 13,2001, in the form on file and available for public inspection in the Office of the City Clerk, the terms of which include an initial rental period of through January 31,2002,with an option to extend through January 31,2011,contingent upon the annual appropriation of funds sufficient to meet the City's obligations under the Lease Agreement for each additional term. Introduced, considered favorably on first reading, and ordered published this 17th day of July,A.D. 2001,and to be presented for final passage on the 21 st day of August,A.D. 2001. Mayor ATTEST: City Clerk Passed and adopted on final reading this 21 st day of August,A.D. 2001. Mayor ATTEST: City Clerk ORDINANCE NO. 120,2001 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE PURCHASING AGENT TO ENTER INTO AN AGREEMENT FOR ACQUISITION OF CERTAIN RECREATIONAL EQUIPMENT THROUGH LEASE-PURCHASE FOR A PERIOD OF UP TO TEN YEARS AND APPROVING AN EXCEPTION TO THE CITY'S COMPETITIVE PURCHASING REQUIREMENTS WHEREAS, the City is authorized under the provisions of Colorado Constitution Article XX,§6,its home rule charter and Title 31,Article 15,Part 8,C.R.S.,to acquire necessary equipment and other property for its governmental and proprietary purposes under the provisions of a long-term rental or leasehold agreement with an option to purchase such equipment or property and to provide for the payment of said property from any available municipal income; and WHEREAS, the City has negotiated an Equipment Lease Agreement, a copy of which is dated July 13,2001,and is on file in the office of the City Clerk(the"Equipment Lease"),through which the City will lease from Everwest various pieces of exercise and recreational equipment(the "Equipment"), for use at the new Youth Activity Center at 415 East Monroe, and in other City facilities; and WHEREAS,the City Council has determined that it is in the best interest of the City to lease- purchase the Equipment from Everwest,in the manner described herein and in the Equipment Lease; and WHEREAS, the City has determined that the lease payments in the sum of$1900.14 per month are reasonable and proper and represent the fair rental value of the subject equipment and sufficient funds to make the lease payments for 2001 are appropriated and available in the City's 2001 budget; and WHEREAS, Section 8-186(a) of the City Code requires that any contract for services with a potential total term over five years in length be authorized by Council by ordinance; and WHEREAS, Article IV, Section 8-161(d)(1)b of the Code of the City of Fort Collins authorizes the Purchasing Agent to contract for services without competition if,although there exists more than one (1)responsible source, a competitive process cannot be used or, if used, will result in a substantially higher cost to the city, will otherwise injure the city's financial interests, or will substantially impede the city's administrative functions or the delivery of services to the public;and WHEREAS, as part of the Equipment Lease, Everwest has agreed to hold in a reserve account for the City all payments made toward the value of the Equipment during the course of the Equipment Lease, to be paid to the City upon the termination of the Equipment Lease; and WHEREAS,the terms of the Equipment Lease will result in a substantially lower cost to the City of acquiring the Equipment, due to the reserve account provision, and WHEREAS,the Purchasing Agent has determined that the purchase of the Equipment from Everwest, falls within the scope of this exception, because the use of a competitive process to contract for the Equipment would likely result in a substantial increase in the overall cost of acquiring the Equipment; and WHEREAS, the Purchasing Agent has submitted the requisite justification for said determination to the City Manager for approval;and WHEREAS, the City Manager has reviewed and approved the justification for this acquisition; and WHEREAS, Section 8-161(d)(3) requires approval of this purchasing method by City Council for items costing more than One Hundred Thousand Dollars($100,000)prior to acquisition. NOW,THEREFORE,BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the Purchasing Agent be,and hereby is,authorized to enter into the Equipment Lease,which includes the following provisions: a. The agreement shall be for an original term from the execution date of the agreement through December 31, 2001. The agreement shall provide for renewable one-year terms thereafter through July 31, 2011, subject to the annual appropriation of funds needed for lease payments. The total lease terms,including the original and all renewal terms,will not exceed the useful life of the Equipment. b. The City shall make equal quarterly payments throughout the term of such agreement but subject to the annual appropriation of funds needed for such payments. C. If the City leases the equipment for the original term and all renewal terms, the payment to Everwest will total the sum of the principal, $228,016.39, including interest at a fixed rate equal to 9%per year. d. The City shall have the option to purchase any piece or combination of pieces or all of the equipment on any quarterly payment date of any term. The option to purchase shall be exercised by paying the quarterly payment due on said date and the unpaid principal due after said date. e. If the City renews the agreement for all the renewal terms and makes all payments during said terms,the City shall be deemed to have exercised the option to purchase said equipment. f. This agreement shall constitute only a current expense of the City and shall not be construed to be a debt or pledge of the City's credit or revenues. Introduced, considered favorably on first reading, and ordered published this 17th day of July, A.D. 2001, and to be presented for final passage on the 21st day of August, A.D. 2001. Mayor ATTEST: City Clerk Passed and adopted on final reading this 21 st day of August, A.D. 2001. Mayor ATTEST: City Clerk RESOLUTION 2001-91 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING A SUBLEASE AGREEMENT BETWEEN THE CITY AND XERMEND, INC. (MED-X CLINIC OF NORTHERN COLORADO) FOR THE USE OF CERTAIN PROPERTY AT THE NEW YOUTH ACTIVITY CENTER AT 415 EAST MONROE FOR A PHYSICAL THERAPY OFFICE FOR A PERIOD OF EIGHT MONTHS WHEREAS, the City of Fort Collins has leased from Everwest, a Colorado general partnership,the property at 415 East Monroe in Fort Collins,Colorado,for use as a Youth Activity Center(the"YAC"); and WHEREAS, XERMEND, Inc., doing business as Med-X Clinic of Northern Colorado ("Med-X"),an affiliate of the prior major tenant of 415 East Monroe,Healthworks Health Club,has requested to be allowed to remain in a specified portion of the building approximately 3,500 square feet in size (the"Sublease Area"), for a period of eight months; and WHEREAS,City staff has determined that allowing Med-X to continue in the Sublease Area for eight months will not substantially interfere with the City's use of the building for the YAC;and WHEREAS, staff has negotiated a sublease agreement with Med-X, dated July 13, 2001, setting out the terms and conditions of Med-X's use of the Sublease Area, together with the obligation ofMed-X to indemnify the City for any costs,damages,losses,claims or liability incurred by the City in connection therewith, a copy of which agreement is on file in the office of the City Clerk and available for public inspection(the"Agreement"); and WHEREAS,although the Agreement does not provide for a payment by Med-X of rent for the term of the Agreement,the owner of 415 East Monroe, Everwest,has agreed to pay to the City the amount of$50,000 as an inducement to enter into the Agreement; and WHEREAS, pursuant to Section 23-114(a) of the Code of the City of Fort Collins, the Council is authorized to lease for a term of two years or less any and all interests in real property owned in the name of the City,provided that Council first finds that the lease is in the best interests of the City; and WHEREAS,the Council,having considered the benefits to the City of the proposed sublease arrangement that staff has negotiated with Med-X,finds that Agreement and the sublease to Med-X of the Sublease Area as specified herein and in the Agreement to be in the best interests of the City. NOW,THEREFORE,BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the City Council hereby determines that the sublease and Agreement as described herein, is in the best interests of the City, and hereby authorizes the Mayor to enter into the Agreement consistent with the terms hereof,together with such additional terms and conditions as the City Manager,in consultation with the City Attorney,determines to be necessary and appropriate to protect the interests of the City. Passed and adopted at a regular meeting of the City Council held this 17th day of July,A.D. 2001. Mayor ATTEST: City Clerk RESOLUTION 2001-92 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING A SPONSORSHIP AND ADVERTISING LEASE AGREEMENT BETWEEN THE CITY AND EVERWEST FOR THE USE OF CERTAIN PROPERTY AT THE NEW YOUTH ACTIVITY CENTER AT 415 EAST MONROE FOR COMMERCIAL ADVERTISING FOR A PERIOD OF TWO YEARS WHEREAS, the City of Fort Collins has leased from Everwest, a Colorado general partnership,the property at 415 East Monroe in Fort Collins,Colorado,for use as a Youth Activity Center(the "YAC"); and WHEREAS, City staff has negotiated a Sponsorship Agreement/Advertising Lease agreement with Everwest dated July 13, 2001, a copy of which is on file in the office of the City Clerk and available for public inspection(the "Agreement"); and WHEREAS, pursuant to the Agreement, Everwest would be considered a sponsor of the YAC, and would be entitled to advertise itself as a sponsor of the YAC, and further would be authorized to use certain specified interior areas of the YAC for the placement of advertising for businesses located on property owned by Everwest,including Foothills Fashion Mall,subject to the City's review and approval of the appearance and content of any such advertising; and WHEREAS,the Agreement provides that Everwest shall pay to the City upon execution of the Agreement the sum of$50,000, and then for each of the two years of the Agreement, shall pay an additional $50,000,payable monthly, for a total amount of$150,000; and WHEREAS, pursuant to Section 23-114(a) of the Code of the City of Fort Collins, the Council is authorized to lease for a term of two years or less any and all interests in real property owned in the name of the City,provided that Council first finds that the lease is in the best interests of the City; and WHEREAS, the Council, having considered the benefits to the City of the proposed lease arrangement that staff has negotiated with Everwest,finds that Agreement and the grant to Everwest of the right to use certain portions of the YAC for advertising as specified herein and in the Agreement to be in the best interests of the City. NOW,THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the City Council hereby determines that the Agreement as described herein,is in the best interests of the City,and hereby authorizes the Mayor to enter into such agreement consistent with the terms hereof, together with such additional terms and conditions as the City Manager, in consultation with the City Attorney, determines to be necessary and appropriate to protect the interests of the City. Passed and adopted at a regular meeting of the City Council held this 17th day of July,A.D. 2001. Mayor ATTEST: City Clerk