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HomeMy WebLinkAboutFirst Amendment to Lease Agreement - Human Rights Commission Lease 319 Niles Ave. City’s Tax Liabiltiy – MedPro Properties, LLC1316 COUNTY -CITY BUILDING 227 W.JEFFERSON BOULEVARD SOUTH BEND, INDIANA 46601-1830 CITY OF SOUTH BEND JAMES MUELLER, MAYOR BOARD OF PUBLIC WORKS August 11, 2020 Mr. Scott Grimm MedPro Properties, LLC 230 E. Day Road, 4100 Mishawaka, IN 46545 RE: First Amendment to Lease Agreement Dear Mr. Grimm: PHONE 574/235-9251 FAx 574/ 235-9171 The Board of Public Works, at its meeting held on August 11, 2020, approved the above referenced amendment for the Human Rights Commission lease of 319 Niles Ave., to reflect the City's tax-exempt status on the property tax liability. Enclosed please find a copy of the amendment for your records. If you have any further questions regarding this matter, please call this office at (574) 235- 9251. Sincerely, s/Linda M. Martin, Clerk Enclosure GARY A. GILOT ELIZABETH A. MARADIK THERESE J. DORAU JORDAN V. GATHERS JOSEPH R. MOLNAR FIRST AMENDMENT TO LEASE AGREEMENT BETWEEN THE SOUTH BEND HUMAN RIGHTS COMMISSION OF THE CITY OF SOUTH BEND AND MEDPRO PROPERTIES LLC MedPro Properties LLC ("Landlord") and the Human Rights Commission City of South Bend ("Tenant"), having entered into a certain Lease Agreement on August 1, 2018 and effective May 1, 2018 ("the Lease"), for the Tenant's use of office space located at 319 Niles Ave, South Bend, St. Joseph County, Indiana, hereby amend Section 5 (A) of the Lease as follows: WHEREAS, when entering the Lease, the parties intended to preserve Tenant's right to use the Premises for Tenant's governmental business exempt from property taxation as required by law under Ind. Code Sections 6-1.1-10-5 and IC 36-1-10-18. WHEREAS, the St. Joseph County Tax Assessor ("the Assessor") contested the issue of Tenant's tax exemption as provided in the Lease resulting in an appeal before the Indiana Board of Tax Review pending as Petition No. 71-026-19-2-8-00886-19 (the Tax Appeal); and WHEREAS, in settlement and resolution of the Tax Appeal, the Assessor has agreed to approve the Tenant's tax exemption retroactive to the effective date of the Lease provided the Landlord and Tenant amend Section 5 (A) of the Lease Agreement to conform to the Assessor's interpretation of IC 6-1.1-10-2 (b); and WHEREAS, Landlord and Tenant understand that the Amendment to Section 5 (A) of the Lease which follows satisfies the Assessor's concerns and will assure that Tenant will occupy the Premises exempt from payment of properly tax and Landlord shall timely file the property tax exemption application (Form 136) with the Assessor's office. SECTION I of AMENDMENT. Text of Amendment to Sections A` of the Lease: Section 5 (A) of the Lease between Landlord and Tenant is amended to read in its entirety as follows: 5. ADDITIONAL RENT. A. In addition to the basic rent, Tenant shall pay as part of the Rental 32.92% of the Operating Costs of the Building which represents that per cent of the Building's total square feet area that is used and occupied by Tenant as its Premises for its work as the Human Rights Commission, a municipal agency. "Operating Costs," as that term is used herein, beginning with the rent payment due January 1, 2019 and thereafter, shall exclude real property taxes applicable to Tenant's Premises within the Building, as to which property tax Tenant shall be solely responsible as of the effective date of this Lease, which sum is $0.00 due to Tenant's non-profit, property tax exempt status pursuant to Indiana Code Section 6-1.1-10-5 and IC 36-1-10-18.Landlord's ability to limit Landlord's property tax liability to the space which is not occupied by Tenant is dependent upon the Landlord's timely filing with the St. Joseph County Assessor of a property tax exemption application (Form 136), which Landlord shall file on or before the due date. The Executive Director of the South Bend Human Rights Commission, on behalf of the Tenant, shall provide to Landlord or Landlord's authorized agent within at least four (4) business weeks before March 1, 2019 and before March 1 of each lease year thereafter all information known to and concerning Tenant as required on the St. Joseph County real property tax exemption application (Form 136), such as a description of its operations, its personnel and similar 2 matters, so that Landlord may file such form with the appropriate office of St. Joseph County on or before the filing deadline. Tenant's assistance may include completion of that portion of the Tax Waiver Application concerning Tenant's leasehold and operations, and return of the form to Landlord or agent within the time stated above. Landlord's failure to timely file the application form for tax exemption (Form 136) shall not alter the exclusion of real property tax from Tenant's share of the Operating Costs provided Tenant timely submits the application information to Landlord as described hereinabove, nor shall Tenant be responsible to pay or reimburse Landlord for the exempt portion of tax should Landlord fail to timely file the application after receiving Tenant information as previously described. Landlord shall promptly and within ten (10) days of receiving notice from the County, communicate to Tenant whether the tax exemption application has been approved or denied. If Landlord claims that its belated filing of the tax exemption application form (No.136) was due to untimeliness of Tenant's information as previously described, the parties shall immediately attempt to mediate a resolution including whether Tenant should reimburse Landlord for the loss of exemption. Such mediation may be informal between the parties or through a professional mediator under Indiana's Alternative Dispute Rules (ADR). Should such mediation fail, Landlord shall be entitled to pursue any remedy at law. In the event that a tax exemption application is timely filed but denied by officials of St. Joseph County, Landlord shall cooperate in good faith to take prompt, necessary action to re -submit, alter, amend, otherwise cure, or timely and properly appeal a rejected exemption filing. If such curative action is not successful, Landlord shall promptly notify Tenant, and the parties shall immediately attempt to mediate a resolution. Such mediation may be informal between the parties or through a professional mediator under Indiana's Alternative Dispute Rules (ADR). Should mediation fail, either parry may terminate this lease upon written Notice to the other party within forty-five (45) days from the date Tenant received receipt of notice of exemption denial from Landlord, and the lease termination shall be effective sixty (60) days after the date of such party's notice to the other party of lease termination, during which sixty (60) day period following notice of termination, Landlord may show the premises to other potential tenants during business hours upon 24 hours' notice to Tenant, notwithstanding any other term in this Agreement. For the full lease term "Operating Costs" shall also exclude replacement costs of structural or major components of the Building including but not limited to roof, parking lot re -pavement, heating systems, air conditioning units, windows, doors, walls, water pipes due to defect or age deterioration, sinks, toilets, and electrical components Furthermore, "Operating Costs" do not include specific costs uniquely incurred by specific tenants which are separately billed to and reimbursed by such specific tenants, but shall consist of all other regular and routine operating costs of the Building, which shall be computed on the accrual basis in accordance with generally accepted accounting principles consistently applied. These include but are not limited to the following: 1. All reasonably necessary supplies and materials used in the operation, cleaning and maintenance of the Building, parking lot, and all of its machinery and equipment. 2. Costs of utilities, including water and power for heating, lighting, air conditioning and ventilating the entire Building (including all common and service areas), fuel adjustment charges, sewer use charges and any utility taxes. Tenant may, at any time and solely at Tenant expense, choose to provide a separate meter for any utility used by Tenant, W such as water, sewer, and/or electricity and shall pay the cost of that utility directly. Such utility shall then be excluded from Tenant's portion of the "Operating Cost" allocation. Landlord shall cooperate as needed with the separation of utilities if desired by Tenant. 3. Costs of all management, including management fees paid to a third parry, maintenance and service agreements for the Building and the equipment therein, including, without limitation, alarm service, trash removal, window cleaning and elevator maintenance. 4. Accounting costs, including the costs of audits by certified public accountants, pertaining solely to the management and operation of the Building. 5. Costs of, fire, casualty, and liability insurance for the Building, along with such Landlord personal property and equipment used solely for operation and maintenance of the building. 6. Costs of ordinary and usual repairs, and general maintenance of the Building excluding repairs and general maintenance paid by proceeds of insurance or by Tenant or by other third parties, and alterations attributable solely to other Tenants of the Building. 7. Snow removal, landscaping and any and all other common area maintenance costs related to public areas, including sidewalks and landscaping on the Building's site. SECTION II of AMENDMENT. Retroactivit . The Amendment as set forth in this Instrument shall be retroactive to the effective date of the Lease, that is, from May 1, 2018 and at all times continuously thereafter. SECTION III of AMENDMENT. Reaffirmation of all other Terms and Conditions of the Lease. All other terms, conditions and provisions of the Lease as previously executed by the parties shall remain in full force and effect. In the event of a conflict between those terms and that portion of the Lease amended by this instrument, the terms of this Amendment shall prevail. LAND] MedPrc By: Title: Attest: Date: 6 -2 2 q 'Z 0 c� TENANT: BOARD OF Pt/BLIC WORKS Gary A. Cnlot, President Elizabeth A. Maadik, Member Joseph R. Molnar, Member Therese J. Doran. Member Jordan V. Gathers, Member ATTEST �:.in�la GZ1�atix Linda M. Martin, Clerk City of South Bend, Indiana, on behalf of the Human Rights Commission as designated by the Board of Public Works in Resolution No. 37-2018 By Title _DI Attest: Date: " ;7- S P - 2-.- 2- 0 V BOARD OF PUBLIC WORKS AGENDA ITEM REVIEW REQUEST FORM Date August 6, 2020 Name Aladean DeRose Department Legal BPW Date August 11, 2020 Phone Extension Ext. Review and Approval Required Prior to Submittal to Board Diversity Compliance ❑ Officer Name and Inclusion Officer BPW Attorney ® Attorney Name Clara McDaniels Dept. Attorney ® Attorney Name Aladean DeRose Purchasing ❑ Check the Appropriate Item Type — Re uired or All Submissions ❑ Professional Services Agreement ❑ Contract ❑ Proposal ❑ Open Market Contract ® Amendment/Addendum ❑ Special Purchase, QPA ❑ Bid Opening ❑ Bid Award ❑ Req. to Advertise ❑ Title Sheet ❑ Quote Opening ❑ Quote Award ❑ Reject Bids/Quotes ❑ Proposal Opening ❑ C/O & PCA No. ❑ PCA ❑ Chg. Order, No. ❑ Traffic Control ❑ Resolution ❑ Other: ❑ Ease./Encroach Required Information Company or Vendor Name MEDPRO Properties ❑ Yes ❑ If Yes, Approved by Purchasing New Vendor ® No MBE Yes MBE/WBE Contractor Completed E-Verify Form Attached ❑ ❑ No Project Name NA Project Number NA Funding Source NA Account No. NA Amount NA Terms of Contract NA Purpose/Description First Amendment to Lease Agreement between the South Bend Human Right; Commission and MEDPRO Properties. Original lease approved in 2018 pursuant to Resolution No. 37-18. Request made by County property tax assessor to explicitly Incl. lang. noting City's $0 property tax liability exemption status. Because City is tax exempt and is not required to file any document to obtain that exemption, the change to the lease does not involve any change of a material term or condition. Board notice versus approval needed. For Change Orders Only Amount of ❑ Increase $ ❑ Decrease ($ ) Previous Amount $ Increase % Current Percent of Change: Decrease ( %) New Amount $ Total Percent of Change: Increase %