Memorandum

City of Lawrence

Parks and Recreation Department

TO:	Diane Stoddard – Interim City Manager Casey Toomay – Assistant City Manager Brandon McGuire – Assistant to the City Manager
FROM:	Ernie Shaw – Interim Director of Parks and Recreation
CC:	Mark Hecker – Assistant Director, Parks and Recreation Tim Laurent – Recreation Operations Manager, Parks and Recreation
DATE:	August 18, 2015
RE:	Authorize the Interim City Manager to execute agreements with Lawrence Memorial Hospital for sponsor area and lease space of Sports Pavilion Lawrence

Background: Sponsorship

In April 2014, the City contracted with Premier Sports Management to solicit and secure sponsors for Sports Pavilion Lawrence (SPL). Premier Sports approached LMH for an Entitlement sponsorship of $100,000 per year that would have included naming rights of the SPL facility. Through negotiations Lawrence Memorial Hospital (LMH) expressed a desire to secure a “Presenting Sponsorship” ($50,000 per year) of SPL designated signature area and lease space ($50,000 per year) for their “Sports Performance Training and other health and wellness” activities.

The presenting sponsorship include a signage package for the LMH “Signature Area,” LMH would also receive 2 banners (4’ x 10’) at each of the City’s other 3 recreation centers (Holcom Park Recreation Center, East Lawrence Center and the Community Building). All cost related to the design, printing and installation of the signage package would be the responsibility of LMH.

LMH would also receive ad space in the Departments Activity Guides, LPRD website, emails to database members, social media and in-venue digital signage at SPL. See attached agreement for details.

The proposed sponsorship agreement would be for a term of 5 years at $50,000 per year.

Background: Lease

As part of the construction of Sports Pavilion Lawrence, approximately 6,000 sq. ft., area was left unfinished. This space had initially been earmarked as a wellness facility to be operated by Lawrence Memorial Hospital. After extensive research and study, LMH concluded that the space was not large enough to accommodate the activities they had planned but now request to lease space for “Sports Performance Training and other health/wellness related” activities.

LMH wishes to lease approximately 4,007 sq. ft. of dedicated space at SPL for ten (10) years, at $50,000.00 per year with a 3 percent escalation clause after year three, years six, and year nine of the agreement (see attached agreement). This breaks down to approximately $12.48 per sq. ft. According to Colliers International – Lawrence Market Snapshot 2015, the average cost to lease this type space in Lawrence ranges between $10.00 - $20.00 per sq. ft. Doug Brown, Senior Commercial Partner with McGrew Real-estate confirmed that this space would be in the range of $12 - $15 per sq. ft. Leasing to a non-profit will also not affect the tax exempt states of the facility.

LMH would be responsible for all tenant build-out design and construction costs in the leased space including, but not limited to, water/sewer installation, wall finishes on the LMH side of the shared divider wall (city supplied), outside entrance and walk into LMH leased space, as per city building code and agreement.

Lawrence Parks and Recreation proposes to use the approximately 1,959 sq. feet of remaining space to provide a wide variety of classes and programs, as well as meeting and hospitality space for the general public and tournaments. (see attached)

Action Requested

Staff recommends that the LMH Sponsorship and Lease agreements be approved and allow the Interim City Manager to finalize agreements with Lawrence Memorial Hospital as a “Presenting Sponsor” and “Lessee” at Sports Pavilion Lawrence and as a Health and Wellness Partner with the City of Lawrence.