Memorandum

City Attorney’s Office

City of Lawrence

 

TO:

David L. Corliss, City Manager

FROM:

Toni R. Wheeler, City Attorney

 

C:

Diane Stoddard, Cynthia Wagner, Assistant City Managers

Date:

December 13, 2012

RE:

Request to transfer lease to Barb Wire Building to Barb Wire Building, L.L.C.

 

 

 

 

 

Doug Compton and Mike Logan desire to assume the lease the City has with Mike Elwell for the use and occupancy of the Barb Wire Building.  They have requested the City Commission place their request on the December 18, 2012, agenda for discussion.  They further request the Commission authorize the preparation of the necessary documents to provide for the City’s consent of the transfer of the lease, as required by the City’s lease with Mr. Elwell. 

 

Background

The City owns the Barb Wire Building, having acquired it in a land transfer associated with the construction of the current City Hall.  In 1999, the City Commission entered into an agreement leasing the real estate, building and appurtenances to Mike Elwell.  In 2009, Mr. Elwell exercised his option to renew the lease for an additional period that expires on April 4, 2017.  By the terms of the original lease, Mr. Elwell has seven (7) additional ten-year renewal periods available to him.  If the lessee exercise all lease renewal options, the lease will terminate in 2077.   

 

Summary of Lease Terms

Mr. Elwell pays the City $4,800.00 per year for use by his customers and patrons of a portion of the City’s parking garage.  By the terms of the lease, the City does not guarantee parking for the building, other than the right to use the available parking as to all citizens and guests of the parking lot.  The lease requires Mr. Elwell to pay all personal property taxes, real estate taxes, and special assessments, if any, levied against the Barb Wire Building, as well as the utilities.

 

Land Use and Sale or Consumption of Alcohol

With a couple of significant exceptions, the building can be used for purposes consistent with its zoning (CD – Commercial District).  It may not, however, be used for gambling purposes, for the operation of a sexually oriented business, or for the showing of sexually explicit scenes or activities.  Alcohol may be served, with appropriate state and city licenses, however, the City, as landlord, exercises greater control over the sale or consumption of alcohol on the premises.  The City Commission has the authority to stop the sale or consumption of alcohol at a time earlier than allowed other licensed establishments in Lawrence.  If alcohol is served, the lease provides the tenant will have in effect a valid liquor liability insurance policy naming the City as an additional insured.  The lease requires the tenant to procure and maintain other standard insurance coverage.

 

Maintenance

The tenant must maintain the premises and building, including the overhead access to the south of the building.  The maintenance responsibilities include the interior and exterior condition of the building (cosmetic and structural), the grounds, roof, roof structure, walls, flooring, windows, elevators, mechanical, water, electrical heating and air conditioning, plumbing and all other portions of the premises, whether or not specifically identified in the lease. 

 

The City is aware that there is deferred maintenance of the building.  The maintenance responsibilities, along with all other obligations of the lease will transfer to the new tenant(s).  The use and occupancy must also comply with all applicable laws.

 

The building is listed on the State Register of Historic Places.

 

Transfer / Assignment of Lease

Mr. Elwell has the right to sell, assign or transfer the lease with the prior consent of the City (City Commission), “so long as the assignee shall be fully bound by the terms, conditions, covenants, restrictions, duties and obligations” of the original lease, and any lease addendums. If the City consents to the sale or assignment, the parties must execute an Assumption Agreement that will be recorded. 

 

Action Requested:  Receive request and direct staff to prepare and execute the necessary transfer documents, if appropriate.