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Agenda Item Review Form
Muskegon City Commission
Commission Meeting Date: 4/25/23 Title: Anchor Insurance Parking Lot
Lease for City Employee Parking
Submitted By: Jake Eckholm Department: Development Services
Brief Summary:
With the construction of Lofts at 1021 Jefferson, the road diet on Terrace, and potential
development at 122 W. Muskegon (McDonald’s Lot) there is no longer adequate parking for
employees at City Hall without impacting citizen parking areas. Staff has identified a lease option
for dedicated employee parking.
Detailed Summary & Background:
Since 2019 it has been anticipated that development and infrastructure changes around City Hall
would necessitate a permanent parking amenity for city staff. The previous parking lot on 1021
Jefferson was never widely used due to the mid-block crossing on Apple Avenue to access the
building. After that was constructed, most staff have parked on the diagonal spaces installed on
Terrace or in the closed down McDonald’s parking lot across the street. These options are no
longer sustainable either, as Terrace parking is being reoriented with the road diet and our team is
actively working on redevelopment options at the McDonald’s site. Additionally, our insurance
company has requested that we procure dedicated employee parking that we have site control
over to reduce liability.
For about 18 months staff worked to negotiate a long-term lease for parking at the St. Mary’s
Catholic Church parking lot on Webster, and unfortunately both the church and the city could not
get the Archdiocese in Grand Rapids to be particularly responsive to the concept. This
arrangement would have been predicated on the city improving the parking lot substantially up
front and then having a nominal lease payment moving forward.
As we experienced difficulty dealing with the Archdiocese, we reached out to the owner of Anchor
Insurance who has relocated into the former Fifth Third bank building at 877 Terrace. Mr. Jim
Mines has already completely rehabbed the parking lot with resurfacing, lighting, striping, and
landscaping so we would have a higher annual lease payment, but no capital project on the front
end. Our annual payment will be $25,000 for the first five years for 52 spaces which equates to
$1.32 per space/day. This is a competitive price for commercial leases for employee parking we
have found in other markets, both for covered and uncovered lots. After the fifth year, annual rent
inflation would be tied to the CPI with a cap of no more than 8% each year.
Goal/Focus Area/Action Item Addressed:
N/A
Amount Requested: Lease value of $25,000 Amount Budgeted: N/A
per year, escalated after year 5
Fund(s) or Account(s): 101, multiple Fund(s) or Account(s): N/A
departments
Recommended Motion: Motion to approve the lease for city parking at 877 Terrace Street and
authorize the mayor and clerk to sign.
Approvals: Guest(s) Invited / Presenting:
Immediate Division Head [fl Information Technology L] Yes
Other Division Heads Hi Communication f] |No CJ
Legal Review |_|
For City Clerk Use Only:
Commission Action:
PARKING LOT LEASE AGREEMENT
This Parking Lot Lease Agreement ("Agreement") is made on this 2s day of
a“pre’ __, 2023, by and between the City of Muskegon, a Michigan municipality
(the "City"), and Jim Mines Real Estate Development, L.L.C., a Michigan limited liability
company ("Mines Development") (collectively referred to as the 'Parties").
WHEREAS, Mines Development owns 877 Terrace Street, Muskegon, Michigan,
which includes a 70-space parking lot.
WHEREAS, Mines Development is willing to lease 52 parking spaces to City for City's
employees exclusive use and retain exclusive use of any remaining parking spaces, as more
particularly shown on the attached Exhibit A (the Premises") under the terms of this Agreement.
NOW THEREFORE, the Parties do hereby agree as follows:
1, City Undertakings. The City hereby agrees to:
a. Lease of 52 parking spaces for City's employee use, as shown on Exhibit A,
and remaining parking spaces will be retained by Mines Development for the
exclusive use of Anchor Insurance, the tenant of a building located on the
Premises.
b. City may, in its sole discretion and at its sole expense, install additional signage
on the Premises that designates the 52 leased parking spaces as being exclusive
in use, in accordance with the terms ofthis Agreement. City may also purchase
and install a kiosk or other operated parking control system capable of limiting
access to the 52 parking spaces leased by the City, in accordance with the terms
ofthis Agreement.
c. City shall plow the entire Premises as needed in the sole discretion of the City.
2. Mines Development Undertakings. Mines Development may, in its sole discretion and
at its sole expense, install additional signage on the Premises that designates the parking
spaces for the exclusive use of Anchor Insurance. Mines Development may also purchase
and install a kiosk or other operated parking control system capable of limiting access to
the parking spaces for Anchor Insurance's exclusive use, in accordance with the terms of
this Agreement.
3. Term. The term of this Agreement shall be for approximately 10 years, commencing as
soon as this Agreement is executed by the Parties and ending on December 31, 2033.
Rent and Property Taxes. City shall pay an annual rent of $25,000 per year, payable on
January 1, 2024 and the first of each calendar year thereafter. Said rent to be paid in
advance. Within 30 days of execution of this agree, City shall pay rent in the amount of
$68.49 per day from the date of execution through December 31, 2023, inclusive in a lump
sum to Mines Development. Mines Development will pay all property taxes on the
Premises, which includes the parking lot and the building leased by Anchor Insurance.
Inflation of Rental Rate. Beginning with the lease payment due on January 1, 2028, City
payment shall increase by the previous year’s rate of inflation according to the U.S, Bureau
of Labor Statistics Consumer Price Index, not to exceed an 8% increase in any given year.
Maintenance, Repair and Alterations. During the Term, Mines Development is
responsible for all decoration, utility, landscaping, maintenance, repair and replacement
costs of the Premises and all improvements.
Insurance. Both Parties shall acquire insurance coverage and name the other as an
additional assured. Each Party shall provide the other with proof of insurance in December
of each year.
Estoppel Certificates. Either party shall, upon request of the other, deliver an estoppel
certificate to lender, bond holder or other identified interested party which acknowledges
the existence or non-existence of any uncured defaults, the number of years which remain
in this Agreement, and the amount of rent or other expenses currently payable.
Notices. Whenever this Agreement requires any notice of any kind, it shall be in writing
and delivered personally or by registered or certified mail, postage prepaid, and addressed
to the Parties at their respective addresses, with notice to the City being delivered or
directed to the City Clerk. Either party may change their address by like notice to the other
party. Notice shall be effective upon receipt, if personally delivered, or one (1) business
day after mailing, if mailed.
10. Interpretation. This Agreement shall bind and benefit the Parties and their respective
successors and assigns. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Michigan. Nothing contained in this Agreement shall be
deemed or construed by the Parties, nor by any third parties, as creating the relationship of
principal and agent or of partnership or of a joint venture between the Parties. Whenever
the Parties are required or authorized in this Agreement to exercise discretion or grant
approval, the City and Mines Development shall do so in a reasonable manner, without
unreasonable delay or condition.
11. Entire Agreement; Amendments. This Agreement contains the entire understanding of
the Parties with respect to the subject matter of this Agreement and supersedes all prior and
contemporaneous understandings of the Parties (both written and oral) with respect to the
subject matter of this Agreement. No amendment of this Agreement shall be effective
unless the same is in writing and signed by the Parties, their successors or assigns.
12. Partial Invalidity. If any term, covenant or condition of this Agreement or its application
to any person or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this agreement, or the application of such term, covenant or condition to
persons or circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected by such invalidity or unenforceability.
13. Assignment, Neither Party may, without written permission from the other Party, assign
or in any manner transfer its obligations under this Agreement, which shall not be
unreasonably conditioned, delayed or withheld.
The Parties have executed this Agreement on the date first identified above.
City of Muskegon, a Michigan municipality Jim Mines Real Estate Development, L.L.C.
By: An Ken Johnson
Its: Mayor
By Qe SO rt
Ann Marie Meisch
Its: Clerk
EXHIBIT A
LEASED PREMISES
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