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HomeMy WebLinkAbout09-R-24, Authorizing the City Manager to Execute a Contract for a Lease at 909 Davis Street for Office Space to House City Hall Functions1/22/2024 9-R-24 A RESOLUTION Authorizing the City Manager to Execute a Contract fo a Lease at 909 Davis Street for Office Space to House City Hall Functions WHEREAS,the Lorraine H. Morton Civic Center (“Civic Center”) located at 2100 Ridge Avenue has experienced significant deterioration of multiple building systems, several of which are no longer considered to be reliable for long-term operation; and WHEREAS,although the City of Evanston is committed to the equitable delivery of programs and services, the Civic Center is substantially not in compliance with the requirements of the Illinois Accessibility Code and the federal American with Disabilities Act requirements; and WHEREAS,the Civic Center is substantially not in compliance with modern building codes, including those for fire safety; and WHEREAS,the Civic Center has limited accessibility by bus transportation; and WHEREAS,because of its layout, the Civic Center continues to be a challenge to provide adequate security for; WHEREAS,the layout of public services at the Civic Center provides a poor customer service experience for community members; WHEREAS,the City of Evanston is committed to climate action and resiliency for all City infrastructure, and the current Civic Center building does not align with multiple goals from the City’s adopted Climate Action Resilience Plan (2018), ~1~ Page 1 of 9 Doc ID: 4aa3f9b9b9ae78fac1738d818e8969350ce0398d 9-R-24 ~2~ including goals for net zero greenhouse gas emissions by 2035, 100% LED lighting, and water efficiency; WHEREAS, because the layout is inefficient, the Civic Center includes an estimated 40,000 square feet that would not be needed (or could be repurposed to an alternate use) if the building were laid out more appropriately for office use, and the City is utilizing significant energy to heat and condition the extra space as well as resources to maintain and operate the space; and WHEREAS, the cost to renovate the Civic Center to resolve the above issues is estimated at approximately $63 million and the cost to replace the Civic Center is estimated to be approximately $52 million; and WHEREAS, renovating or replacing the Civic Center will likely take five years to complete once a decision has been made to move forward and funding is allocated; WHEREAS, the community has been discussing this issue since 1998 without a resolution that includes adequate funding for the necessary improvements; and WHEREAS, the Evanston City Council has determined that it is in the best interest of the City of Evanston to provide a safe, accessible, inclusive and productive city hall space for staff and community members as soon as is practicable; and WHEREAS, the Evanston City Council has also determined it is in the best interest of the City to execute a fifteen-year lease, with a potential seven-year opt out clause for office space to operate the City’s civic center while next steps are determined. Page 2 of 9 Doc ID: 4aa3f9b9b9ae78fac1738d818e8969350ce0398d 9-R-24 ~3~ NOW BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EVANSTON, COOK COUNTY, ILLINOIS: SECTION 1. The City Council hereby adopts the foregoing recitals as its findings, as if fully set forth herein. SECTION 2. The City Manager is hereby authorized and directed to sign, and the City Clerk hereby authorized and directed to attest on behalf of the City of Evanston, a lease between the City of Evanston and 909 Davis Street for office rental space. A letter of intent with the lease terms is attached and incorporated by reference as Exhibit A. SECTION 3. The City Manager is hereby authorized and directed to negotiate any additional terms and conditions of the leases as may be determined to be in the best interests of the City and in a form acceptable to the Corporation Counsel. SECTION 4. The resolution shall be in full force and effect from and after the date of its passage and approval in the manner provided by law. _______________________________ Daniel Biss, Mayor Approved as to form: ______________________________ Alexandra B. Ruggie, Interim Corporation Counsel Page 3 of 9 Attest: ______________________________ Stephanie Mendoza, City Clerk Adopted: _____J _a _n _u _a _r _y _2 _2 ____, 2024 Doc ID: 4aa3f9b9b9ae78fac1738d818e8969350ce0398d 1 Letter of Intent January 16, 2024 Matt Hickey Vice President Brett Ratay Senior Leasing Director Lincoln Property Company 120 N LaSalle St, Suite 2900 Chicago, IL 60602 Re: 909 Davis St Evanston, IL 60201 Matt and Brett: On behalf of our client, The City of Evanston, (“Tenant”), we have been authorized to request a written proposal from ownership (“Landlord”) at 909 Davis St, Evanston, IL 60201 (“Building”). The following RFP outlines Tenant’s preliminary requirements. We would prefer that your response be incorporated in the table format of this document - responses answered directly on the right column next to the question; statements herein to which you agree should be confirmed; statements to which you do not agree should be responded to accordingly. Please feel free to include any other information about your building or lease terms that will be helpful to the Tenant in making this important decision. If you should have any questions, please do not hesitate to contact us. This Request for Proposal is intended solely as a preliminary expression of general intentions and is to be used for discussion purposes only. The parties intend that neither shall have any contractual obligations to the other with respect to the matters referred herein unless and until a definitive agreement has been fully executed and delivered by the parties. A copy of your response should be delivered to the undersigned by no later than Monday, November 20th. Should you have any questions or comments, please do not hesitate to contact either of us. Sincerely, Dan McCarthy Chris Cummins Steven Spinell JLL JLL JLL Page 4 of 9 Doc ID: 4aa3f9b9b9ae78fac1738d818e8969350ce0398d 2 Terms Letter of Intent January 16, 2024 1. Tenant City of Evanston 2. Building Evanston Station 909 Davis St, Evanston, IL 60201 Ownership The Building is owned by Red River 909 Davis, LLC, a joint-venture led by Red River Asset Management. The Building was acquired in December 2022. The Building was acquired in an all-cash transaction. Management The Building is managed by Lincoln Property Company. Lincoln Property Company (LPC) is one of the largest and most respected, full-service real estate firms in the U.S. and Europe, and consistently ranks among the Top 10 Property Managers & Top 10 Developers of office, industrial, retail, mixed-use, and specialty properties. www.lpc.com 3. Landlord The Building is owned by Red River 909 Davis, LLC, a joint-venture led by Red River Asset Management. The Building was acquired in December 2022. The Building was acquired in an all-cash transaction. 4. Premises Tenant shall lease approximately 52,955 RSF comprised of the following: - Suite 100 – 1,447 RSF - Suite 210 – 14,363 RSF - Suite 300 – 37,145 RSF All FF&E shall remain in place at Tenant’s sole discretion. If Tenant elects to remove the FF&E, Landlord will be responsible for removal at their sole cost and expense. Tenant shall make its election regarding the furniture within sixty (60) days of full execution of a lease. The final Premises shall be mutually agreed upon by Tenant and Landlord prior to lease execution. The Premises has been measured utilizing BOMA standards. 5. Lease Commencement Date October 1, 2024 Upon lease execution, Tenant will have access to the Premises to allot for furniture, fixtures and equipment move-in, and conducting normal business operations (“Pre- Occupancy Period”). The Pre-Occupancy Period shall not exceed 120 days. No Base Rent, Taxes, or Operating Expenses should be required during the Pre-Occupancy Period. 6. Lease Term The Term shall be Fifteen (15) years from the Commencement Date, subject to the Termination Option as set forth in Section 13 below. Page 5 of 9 Doc ID: 4aa3f9b9b9ae78fac1738d818e8969350ce0398d 3 Terms Letter of Intent January 16, 2024 7. Base Rent $21.25 per RSF Net, escalating 2.5% per annum. 8. Rent Abatement Sixteen (16) months of Gross Rent Abatement beginning on the Commencement Date. 9. Real Estate Taxes and Operating Expenses In addition to the Base Rent, Tenant shall be separately responsible for its proportionate share of Real Estate Taxes and Operating Expenses which are estimated at $9.41 and $9.60 per RSF for 2023 respectively. Operating Expenses shall be grossed up to reflect a 95% occupied Building. 10. Tenant Improvement Allowance Landlord shall provide a Tenant Improvement Allowance (“TIA”) in the amount of $112.50 per RSF of the Premises to design and construct permanently affixed interior improvements beyond the base condition. Tenant shall have the option to apply fifty percent (50%) of the TIA towards the purchase and installation of FF&E and low voltage cabling, moving expenses, AV, and/or as a credit towards additional Base Rent Abatement. The Premises shall be delivered on an “As-is, Where-is” basis. Currently, all of the space under consideration has been previously built out with HVAC distribution and life safety and sprinkler distribution. Landlord shall supervise Tenant’s construction. Tenant will be responsible for a supervisory fee equal to 3% of hard costs, paid out of the Tenant Improvement Allowance. Landlord shall provide Tenant with an allowance of $0.12/rsf for preliminary “test-fit” drawings as well as $0.06/rsf for one revision, to be memorialized in a separate space planning agreement. Tenant shall not be required to reimburse Landlord for this money whether or not these negotiations result in a lease between Landlord and Tenant. Tenant shall have the right to hire the General Contractor of its choice for the tenant improvement work without any obligation to hire or use the Landlord’s contractor, subject to Landlord’s reasonable approval. Tenant shall use union labor for any and all improvements to the Premises. To be further addressed in the Lease document. [Tenant shall not be charged for any parking, hoisting charges, electrical services, water or the use of freight elevators during the construction period.] 11. Electricity/Fiber All of the proposed Premises are separately metered. The cost to separately demise any of the Premises, including mechanical/metering costs, shall be at Tenant’s expense, paid out of the Tenant Improvement Allowance. 12. Extension Option Tenant shall have one (1) option to renew the Lease for seven (7) years by providing no less than twelve (12) months’ prior written notice. Tenant’s renewal option shall be at market rates to be further defined in the Lease. To be further addressed in the Lease document. [The renewal rate will be at 95% of the prevailing market rental. The prevailing market rental rate shall be defined as the rental rate at the time Tenant provides notice for vacant space in buildings of comparable quality and age for tenants of similar size, credit quality and stature. The prevailing market rental rate shall include all comparable lease Page 6 of 9 Doc ID: 4aa3f9b9b9ae78fac1738d818e8969350ce0398d 4 Terms Letter of Intent January 16, 2024 provisions including, without limitation, market provisions for improvement allowances, tenant procurement costs, commissions, free rent, other lease concessions, lease term, base years, lease rate escalation(s), and operating expenses and taxes. Any dispute over the prevailing market rate shall be submitted to arbitration.] 13. Termination Option Tenant shall have the one-time option to terminate the Lease after the eighty-fourth (84th) month of the Term by providing twelve (12) months’ prior written notice to Landlord. Tenant shall deliver payment in the amount of all unamortized costs and concessions of this transaction, including but not limited to Tenant Improvement Allowances, Rent Abatement, and leasing commissions utilizing an eight percent (8%) interest rate over the rent-paying portion of the Term, plus an amount equal to six (6) months of the then- escalated gross rent. 50% shall be due upon the notice date and 50% shall be due upon the effective date. 14. Right of First Offer (ROFO): Provided Tenant has no less than twenty-four (24) months remaining on the initial Lease Term, Tenant shall have an on-going Right of First Offer (“ROFO”) to lease any space that becomes available for leasing on the 1st, 2nd, 3rd 4th or 5th floors of the Building in Landlord’s sole discretion. Landlord will notify Tenant of the terms and conditions upon which it intends to market and lease such space (“Landlord’s First Notice”). Tenant shall have thirty (30) days in which to accept or reject the proposed space and terms and conditions. If Tenant declines to accept such space under the terms and conditions Landlord proposes, Landlord shall have the right for a period of 180 days thereafter to market the space to third party prospects on substantially the same terms and conditions outlined in Landlord’s notice. If Landlord comes to an agreement on terms with a prospective tenant that yield a net effective rate less than 90% of the terms outlined in Landlord’s First Notice, Landlord shall issue a Second Notice to Tenant. Tenant shall have thirty (30) days to accept or reject the proposed space and terms and conditions. If Landlord is unsuccessful in securing a third-party tenant within such 180 day period, Landlord must re-offer the space to Tenant as stated above. With respect to the rent commencement date for the ROFO space, Tenant shall have a period of 90 days following the delivery to Tenant of the vacant space, ready for commencement of Tenant’s interior improvement work, to perform such work without paying base rent or tax and operating expenses. Tenant must accept the ROFO space in its entirety. 15. Sublease & Assignment Tenant reserves the right to substitute any of its subsidiaries, affiliates, or purchasers as occupants of the Premises without the Sublandord or Landlord’s consent, provided that the resulting entity has a creditworthiness no lesser than that of Tenant. Tenant shall also have the right at any time to sublease or assign all or any portion of Tenant’s Premises to any unrelated entities with Landlord’s prior consent, which is not to be unreasonably withheld, conditioned or delayed. To be further addressed in the Lease. 16. Relocation Rights Landlord shall not have the right to relocate Tenant during the term of the lease or any renewal periods. 17. Adjacencies The Third Floor and Suite 100 are currently leased to another tenant, and are subject to Page 7 of 9 Doc ID: 4aa3f9b9b9ae78fac1738d818e8969350ce0398d 5 Terms Letter of Intent January 16, 2024 Landlord’s successful termination of that Lease. The Premises are otherwise unencumbered. 18. Signage Tenant shall be provided signage on the building directory and building standard suite identification signage. Tenant, at its sole cost and expense, shall have the option to install a sign on the monument sign for the Building. Such signage shall be contingent upon tenant leasing and occupying no less than half of a floor. Tenant, at its sole cost and expense, shall have the option to install branding and signage in the elevator lobby and corridors on any floor Tenant occupies. Such signage shall be contingent upon tenant leasing and occupying the full floor. Tenant, at its sole cost and expense, shall have the option to install one (1) façade sign on the Building’s exterior and one (1) exterior monument sign in a mutually agreeable location. The exterior monument sign shall be in a mutually agreeable location, size, design and wording. Such signage is subject to any required municipal approvals, and is contingent upon Tenant leasing and occupying no less than a full floor at the Building 19. Heating, Ventilation & Air Conditioning As part of Operating Costs, Landlord shall furnish to the Premises heating, ventilation and air conditioning during normal business hours, which shall be 6:00 am to 6:00 pm on weekdays, and 8:00 – 1:00 pm on Saturdays. HVAC services provided at any time outside of these hours is designated as “after -hours” HVAC and is subject to additional charges and fees. The current rate for above-standard HVAC are listed below and are subject to a two (2) hour minimum. Tenant shall not incur after-hours charges for HVAC for Suite 210 one (1) day per month. The current fee for after-hours HVAC is: Heating $75/hour, Cooling $125/hour 20. Parking Tenant shall lease its proportionate share of unreserved parking in the Sherman Plaza Parking Garage at a ratio of 2 spaces per 1,000 RSF leased. Tenant shall pay the then- market rate for parking in the Sherman Plaza Parking Garage. The current cost of which is $105.00 per space, per month. Additionally, Tenant shall have the option to lease spaces in the underground garage of the Building throughout the Term, up to a ratio of 1 space per 4,000 RSF of the Premises. The final number of underground parking spaces will be determined prior to lease execution. Landlord shall provide eight (8) underground parking stalls free of charge. Tenant shall pay the then-market rate for underground parking, which is currently $100/month plus taxes. Page 8 of 9 Doc ID: 4aa3f9b9b9ae78fac1738d818e8969350ce0398d 6 Terms Letter of Intent January 16, 2024 22. Building Amenities The Building features a Farmer’s Fridge salad vending machine in the lobby, underground executive parking, on-site security and management, and Metra/CTA stations on-site Ownership is finalizing plans for an upscale Tenant Lounge, which will include a high- tech conferencing facility, a highly functional and elegant lounge area, an Avenue C grab- and-go food facility and a complimentary coffee bar using freshly ground beans. The amenity program is planned for the sixth (6th) floor of the Building. Landlord will reasonably accommodate Tenant’s feedback in regards to the size and design of conferencing facility. Tenant Lounge shall include seating and will remain open to tenant employees during normal business hours. 23. Security Deposit Tenant shall not be required to provide any security deposit, nor pay first month’s rent until due. 24. Brokerage Tenant is represented by Jones Lang LaSalle Midwest, LLC. (“Broker”). Tenant requires Landlord to enter into a separate agreement with Broker, under which Landlord agrees to pay a real estate commission equal to a full market commission. 25. Non-Disturbance Not applicable. The Building is owned debt-free. In the event that a loan is taken out against the Building, Landlord will act in good faith to provide an SNDA. 26. Holding Over The initial three (3) months of holdover following the expiration of the Term will be at 125% of the last month’s gross rental obligation. The following three (3) months of holdover will be at 150% of the last month’s gross rental obligation, and any addit ional holdover will be at 200% of the last month’s gross rental obligation. Tenant will not be liable for consequential damages related to holdover for the initial sixty (60) days of holdover. Page 9 of 9 Doc ID: 4aa3f9b9b9ae78fac1738d818e8969350ce0398d