Consideration and Approval of Amendment Two, Lease Agreement: Between the City of Flagstaff and Theatrikos, Inc. (Lease of City building for theater)

Amendment Two will replace Amendment One with the following changes. 
Section 3
3. Term and Option to Renew.
Lease extended to October 30, 2026 with the option to extend for an additional 5 years at the end of the lease term. The current lease expires October 21, 2021 with the option for the City to extend for an additional 10 years. 
3.1 Cancellation for Convenience. Each party reserves the right to terminate this Lease upon at least 18 months' written notice.  (This was increased from 30 days to give Theatrikos ample time and notification in the event of termination to find a replacement building).
3.2 Termination due to Repair Costs. (This is an addition to the lease and is referenced in Section 8.4.)

Section 4:
4. Rent. (Rental increase due to annual adjustment.)
Monthly rent of $1,065.54 from July 1, 2017 until October 2017.  Rent of $1,140.11 from November 1st, 2017 through the remainder of the Lease term, along with adjustment as provided for herein.
4.2 Annual Adjustment. Changed annual adjustment of 7% to 2% on November 1st of each year. (This change is to be consistent with other City leases.)
4.3 Repair Adjustments. Lessee to continue paying $217.49 per month until October 30, 2021 for prior roof repairs totaling $28,491.00.  In the event of early termination Lessee to pay the balance still owing within 30 days.
4.4 Reporting. Lessee shall submit a detailed annual report and profit and loss statement to the Lessor by April 15th annually.
(Added a date for reporting.)

Section 6 
6. Acceptance of Premises. Lessee accepts premises in existing condition. (No change.) Lessor may but is not obligated to make any repairs or to maintain the building or improvements. (This is a clarification of existing practice.) Lessor shall not be held responsible for damages to Lessee's property.

Section 8.
8. Repairs, Maintenance and Alterations.
-  Lessee, at its cost and expense, shall keep and maintain the exterior and interior of the Premises, the building and improvements. (No change.)
- Lessee shall obtain written consent of Lessor prior to making any alterations or improvements to the facility. (No change.)
- Lessee shall obtain all necessary permits and retain licensed contractors to perform work and all approved alterations shall be in compliance will all applicable laws. (This is clarification.)
- All alterations, additions or improvements shall become the property of Lessor and shall remain with the Premises. (No change.)
- Lessee shall indemnify and hold Lessor harmless and keep property free of mechanic's or any other liens. (No change.)
8.1 Any damage caused by Lessee shall be repaired by Lessee.  Lessor may repair any damages but shall be reimbursed by Lessee. (This is clarification).
8.2 Lessor will maintain the landscaping and provide snow removal of the parking lots. (Conforms with City practice.)
-  Lessee responsible for snow removal on sidewalks. (Conforms with sidewalk ordinance.)
8.3 If Lessor elects to make repairs, Lessor's repairs shall not be construed to create an obligation to continue to make repairs. Lessor will not make repairs covered by insurance. (This is clarification.)
8.4 Lessee shall notify Lessor of any building safety concerns.  Lessor may pay for repair costs for building and safety issues that exceed $5,000, or may elect to terminate this Agreement if the facility is deemed unsafe for habitation and repair costs are deemed by a party to be cost prohibitive; in this event either party may elect to terminate the Lease and Lessee shall have 30 days to vacate the Premises. (New.)

Section 10.
10.Parking. Lessor reserves the right to exclusive use and management of the parking area on the Premises, Lessee not entitled to any reduction in rent or compensation in the event Lessor modifies the parking arrangements. (No change.)
10.1 Upper parking lot. Parking meters will be installed in the upper parking lot and available for public parking on a pay-to-park basis during certain hours as posted. (New.)
10.2 Lower parking lot.  Signs are being installed in the lower parking lot. Vehicles parking in the lower lot must have an "F" permit during hours posted. Lessee shall receive six (6) F permits for the lower parking lot for the exclusive use of Lessee, its employees, customers and invitees. (New.)

City Manager shall have authority on behalf of City to approve any additional amendments to the Lease, Section 10, as needed for management of the parking areas. (New.)

Maintenance and Repairs: The Lessee is responsible for repairs of the facility. However, if the City is notified of building safety concerns, City may be asked to correct repairs in excess of $5,000.  City may pay for all or a portion of the repair costs, or may elect to terminate this Agreement if the facility is deemed unsafe for habitation and repair costs are deemed by a party to be cost prohibitive.  City has a catastrophic fund for unforeseen maintenance, and or repairs that deemed necessary for City leased facilities.

Landscaping and snow removal are costs to the City.

Revenue:
Annual lease revenue for FY 2018, $15,992.90
Annual lease revenue for FY 2019, $16,473.67

ECONOMIC DEVELOPMENT
Grow and strengthen a more equitable and resilient economy.

 No

1. Approve Amendment Two as drafted
2. Suggest changes to Amendment Two
3. Do not approve Amendment Two

11 West Cherry Avenue was constructed in 1923 and was the original Babbitt homestead. Over the years this property was the home to the Flagstaff Elks lodge, The Workers Union Meeting Locale and the Flagstaff Public Library.  
 
In 1972, a group of Flagstaff citizens met in the basement of the Weatherford Hotel to form a non-profit community theater now known as the Theatrikos Theatre Co. For sixteen years Theatrikos performed at various locations around the city until they entered into a lease for the use of the City building located at 11 West Cherry Avenue. Theatrikos has operated that space as a community arts hub, drawing thousands of patrons downtown each year since 1988. Today the building is known as the Doris Harper-White Community Playhouse.  In 2006 a new Lease between the City and Theatrikos was approved by council, and in 2010 Amendment One to the lease was approved by council. 

 This Amendment Two addresses
1. Rental increase
2. Annual rental adjustment change from 7% to 2%
3. Repairs and maintenance responsibilities
4. Reporting
5. Parking

The proposed changes to the Lease provide benefits to the City and Theatrikos and further clarify responsibilities under the lease.

Theatrikos Theatre Co. is an award-winning community theater organization, serving the Northern Arizona region since 1972, offering high-quality live theatrical productions and developmental opportunities, utilizing a diverse base of writing and production talent that reflects the community at large. The programs are inclusive, family-oriented, and responsive to the community's needs and interests. Each year, these programs include:

• Six MainStage productions throughout the year, running for three weeks each. Each of these shows is attended by 700 to 1,200 patrons, many of whom attend the local restaurants downtown before and after the show. This is potentially a draw of 4,200 to 7,200 people to downtown Flagstaff annually.

• Five TheatriKids plays, plus at least five week-long workshops for kids ages 4 to 18, bringing close to 300 children on-stage each year. No child is ever turned away due to inability to pay, as $3,000 in need-based scholarships is awarded annually.

• A free youth theater program, Stage Buddies, which brings together individuals with disabilities alongside previous TheatriKIDS participants to put on a show.

•  Numerous on-site and off-site free or heavily discounted productions and workshops for school groups. In the past three years, this has included Sechrist Elementary, Marshall Magnet School, Haven Montessori, Mountain School, the Flagstaff Arts and Leadership Academy, Northland Preparatory Academy, BASIS, Flagstaff Junior Academy, as well as several Home school groups.

•  One to two Studio Series productions, which present more challenging and topical works to the community and invite experts from the community for panel discussions.

•  Eight annual special preview performances for local social service groups and senior centers.

•  Fundraising efforts for local organizations, such as collecting warm clothes, food, and money for groups like Hope Cottage, Flagstaff Family Food Center, and Coconino Humane Association.

•  The opportunity for local visual arts to display their work in a setting that does not charge any gallery fees.
 

 None