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HomeMy WebLinkAboutContract 46908 a CffY SECRETARY CONTRACT NO, LEASE AGREEMENT FOR THE ROSE MARINE THEATER This agreement (hereinafter referred to as "Lease") is entered into by and between the City of Fort Worth, acting by and through Susan Alanis, its duly authorized Assistant City Manager, hereinafter called "Lessor", and the Arles De La Rosa, a Texas non-profit corporation, acting by and through Dan Villegas, its duly authorized Board Chair, hereinafter called "Lessee". WHEREAS, in 2000, Lessor utilized Economic Development Initiative (EDI) Grant funds and HUD Community Development Block Grant ("CDBG") funds (M&C G-12118) to purchase and renovate the Roseland Marine Theater d/b/a Rose Marine Theater ("Theater"), located at 1440 North Main Street; WHEREAS, on October 24, 2000, the Lessor's City Council authorized a lease agreement with the Latin Arts Association of Fort Worth ("LAA"), a predecessor of Lessee, for management services of the Theater for $1.00 rent per year for five years (M&C L-12930; City Secretary Contract Number 26440) (the "Original Lease") in exchange for the LAA offering to lease the Theater for art entertainment, education, civic or cultural purposes and operate a theater skills training program targeted to low-income, at-risk youth, WHEREAS, the LAA was awarded further CDBG funds to reimburse the LAA for expenses incurred to operate a program that targets low-income youth with the purpose of training youth in theater production skills; WHEREAS, the Original Lease was amended, effective December 3, 2003 (City Secretary Contract Number 30459) to add certain performance and reporting requirements related to the CDBG funding, WHEREAS, on April 19, 2005 (pursuant to M&C C-20667), Lessor and LAA terminated the Original Lease and entered into a new lease agreement commencing April 27, 2005 that included the Annex Building (City Secretary Contract Number 32235) (the "Second Lease"); WHEREAS, in 2011 LAA changed its name to Arles De La Rosa, who is the current Lessee under holdover status pursuant to the Second Lease; WHEREAS, Lessee is the recipient of funding from Lessor, distributed by the Arts Council of Fort Worth and Tarrant County, Inc., ("Arts Council") pursuant to an agreement between Lessee and Arts Council (City Secretary Contract Number 46127) to provide $50,000 to Lessee for the management of the Theater; and WHEREAS, Lessor and Lessee now desire to enter into a new lease agreement to set forth the terms and conditions of the use of the Premises by Lessee, which primary use is to benefit low and moderate income citizens of Fort Worth. [OFFICIAL RECORD `3� To ;-� Lease Agreement for Rose Marine Theater CITY SECRETARY J� WdR g, Page 1 of 13 FT. WORTH, TX ��CTIS����R� WITNESSETH: 1. PREMISES, TERM, AND RENT Section 1.1 Previous Lease Terminated. The existing lease, identified as City Secretary No. 32235, and any holdover rights Lessee had thereunder, is hereby terminated as of the Effective Date of this Lease and fully substituted by this Lease, and neither party to the Existing Lease shall have any further duties or responsibilities under the Existing Lease following the Effective Date of this Lease. Section 1.2 Premises. In consideration of a $1.00 annual lease fee and under the terms included herein and the commitments made herein by Lessee and Lessor, Lessor leases to Lessee and Lessee takes from Lessor the following property, collectively referred to in this Lease as the "Premises": (a) the buildings known as the Rose Marine Theater, the building known as the "Annex Building" and the real property located at 1440 and 1444 North Main Street, Fort Worth, Texas, and more specifically described in the attached an incorporated Exhibit "A"; and (b) all the equipment, fixtures, furnishings, design, decor, decorations, installations, appurtenances, and personal property that has been placed, installed, and erected in said building by Lessor or Lessee. Section 1.3 Term. The term of this Lease will be effective August 1, 2015 and will end July 31, 2017, unless otherwise renewed or terminated pursuant to the terms hereof. This Lease may be renewed for successive terms of one year each up to a maximum of eight successive one-year terms, subject to the termination provisions of this Lease. Four months prior to any renewal of this Lease, the Lessee shall provide to the Lessor a request for renewal of the Lease term, a report outlining the use of and services provided by the Lessee under the terms of this Lease, and annual financial statements for the prior calendar year including IRS Form 990. Such renewal(s) shall be in Lessor's sole discretion, and shall be in writing, executed by both parties. The terms of this Lease shall continue to govern and control the relationship of the parties during the renewal periods. Section 1.4 Holdover. Unless terminated earlier by either party pursuant to a right hereunder, this Lease will expire without further notice when the Term expires. Any holding over by Lessee after the initial Term or a properly-exercised renewal term expires will not constitute a renewal of the Lease or give Lessee any rights under the Lease in or to the Premises, except as a tenant at will. Section 1.5 Rent. In consideration of the lease, Lessee shall pay to Lessor annual rent in the amount of $1.00 and Lessor shall subsidize the balance of the annual fair market rental at an estimated value of $179,554. Lease Agreement for Rose Marine Theater Page 2 of 13 2. CONDITION OF PREMISES (a) Lessee covenants and agrees to accept the Premises in their present condition, finds them suitable and in good condition for the purposes intended; and further agrees that it is thoroughly familiar with such condition by reason of a personal inspection and does not rely on any representations by Lessor as to the condition of the premises or their suitability for the purposes intended. (b) Upon termination of the Lease, Lessee shall surrender the Premises to Lessor in the good and clean condition as received, normal wear and tear excepted. 3. USE; SIGNS; PARKING Section 3.1 Primary Use. Lessee acknowledges that the primary use of the Premises is to benefit low and moderate income citizens of Fort Worth. Lessee agrees to meet the National Objectives of activities benefiting low and moderate income individuals, and to maintain full documentation supporting fulfillment of the National Objectives in its files. The National Objectives are promulgated by the United States Department of Housing and Urban Development (HUD) when awarding Community Development Block Grants (CDBG). These National Objectives and documentation/record keeping requirements are attached hereto as Exhibits "B" and "C". Lessee understands and agrees that the failure to meet the attached Performance Measures is an event of default and may result in termination if not cured as provided in Section 10. Lessee shall provide to Lessor on a biannual basis, (i) on February 1St and August 1St of every lease year, a list of planned and proposed CDBG-eligible activities to be performed by Lessee in that six month performance period, and (ii) on April 1St and October 1St a report of actual CDBG-eligible activities performed by Lessee. Lessee shall provide any additional reports requested by Lessor regarding the activities of Lessee relating to the National Objectives, Performance Measures, and CDBG-eligible activities as directed by Lessor. Section 3.2 General Use. (a) Lessee will use and occupy the Premises as a recreational and entertainment facility for art entertainment, education, cultural purposes, such purposes including but not limited to the presentation of plays, musicals, operas, operettas, concerts, films, ballet, folkloric ballet, dance, competitions or any other type of performance, the presentation of pictures, speeches and lectures, the conducting of meetings of any group and any similar use for which the building is suitable. Lessee shall not use the Premises for any political activity, gathering or fundraising. (b) In its use of the Premises and the presentation of programs of Lessee, Lessee will not discriminate against any person because of race, religion, color, sex, national origin, age, disability, familial status, gender expression, gender identity, or transgender, and will operate the Premises and the programs thereon in full compliance with all applicable local, state, and federal laws and regulations. Section 3.3 Use of Annex/Gallery and Theatre Facility. (a) The Lessee shall use the Annex/Gallery and theatre facility for instructional performance exhibits and rehearsal Lease Agreement for Rose Marine Theater Page 3 of 13 activities and other arts associated activities that it deems appropriate and that are consistent with the general use allowed under Section 3.2. The Lessee shall have the ability, in full compliance with all applicable local, state, and federal laws and regulations, to determine the programs that will be presented in the Premises. (b) Lessee will provide management services, and may enter into rental agreements with performing arts entities, other organizations and individuals for use of the Premises; provided, however, that any such agreements will be in accordance with and subject to the terms and conditions of the Lease. The Lessee shall furnish sufficient personnel to conduct all its operations. Section 3.4 Signs. Lessee may place on and in the Premises such signs as Lessee deems necessary and proper in the conduct of Lessee's business; provided that all signage shall conform to the sign code of the City of Fort Worth. Section 3.5 Name of Interior after Fort Worth Citizens. Upon written notice to Lessor but without the approval of Lessor, Lessee may name any interior facility after Fort Worth citizens, provided that notice shall be provided to all stakeholders and interested parties that Lessee does not own the building and at the expiration or termination of this Lease, such name shall be removed. However, Lessee shall not change the name of the theater or name the exterior of the Premises. Section 3.6 No Hazardous or Toxic Substances. Under no circumstances during the term of this Lease will Lessee use or cause to be used on the Premises any hazardous or toxic substances or materials, or store or dispose of any such substances or materials on the Premises other than materials normally needed for Premises Uses, such as ordinary paints. 4. MAINTENANCE; IMPROVEMENTS Section 4.1 Maintenance. (a) Except where otherwise expressly provided herein, Lessee covenants and agrees that it will, at its sole expense perform all upkeep, maintenance and repair necessary to keep the Premises, and its operating systems, in good condition and in compliance with all applicable codes and regulations. (b) Except where otherwise expressly provided herein, Lessee will do all work and make all repairs necessary or advisable to keep the Premises from deteriorating in value or condition and to restore and maintain the Premises in as good condition as Lessee found them at the time it took possession under this Lease, normal wear and tear excepted. (c) Lessor will provide Preventative Maintenance to the Premises. For purposes of this Lease, "Preventative Maintenance" shall mean the care and servicing by Lessor for the purpose of maintaining equipment and facilities in satisfactory operating condition by providing for systematic inspection, detection, and correction of incipient failures either before they occur or before they develop into major defects, and includes tests, measurements, adjustments, and parts replacement, performed specifically to prevent faults from occurring. Lessee shall pay to Lessor for the performance of Preventative Maintenance an annual amount of $4,000 Lease Agreement for Rose Marine Theater Page 4 of 13 ("Maintenance Cost"), payable in four equal parts on August 1, November 1, February 1, and May 1. The Maintenance Cost shall be adjusted annually for each renewal term according to the annual average Consumer Price Index for Urban Consumers — Dallas — Fort Worth, Texas Region (C.P.I.-U unadjusted) as issued by the Bureau of Labor Statistics, United States Department of Labor (if this index ceases to be published, then a comparable index shall be used). If the C.P.I. - U unadjusted for Dallas- Fort Worth decreases, the Maintenance Cost shall remain the same as the previous period. (d) Lessor shall be responsible for performance of all items of "Major Maintenance", to be defined as follows: upkeep of and repairs to the roof (including replacement), structural systems and foundation, exterior walls and windows, the heating, ventilation, and air conditioning systems and other major systems, gutters and water spouts, internal plumbing, truck loading facilities, structural components, electrical systems, utility services extending to the service connections within the Premises. Lessor shall perform such Major Maintenance as it determines necessary, prudent, and expedient considering all factors relative to the Premises and the cost of maintenance. (e) Lessor shall not be responsible for maintenance, repair or replacement of any theatrical equipment, including but not limited to theater lighting, marquees, curtains, and sound systems. (f) If Lessor determines not to perform any Major Maintenance, Lessee may request to perform the repairs itself. Lessee shall obtain Lessor's written authorization to proceed prior to the performance of any Major Maintenance, and shall promptly perform any Major Maintenance authorized by Lessor. (g) Lessee shall perform, at its sole cost, such routine operational housekeeping as is necessary to carry on Lessee's business, including but not limited to janitorial service light bulb replacement, and trash and waste disposal. (h) Lessor will provide general grass mowing services on the premises, on a schedule it deems appropriate to the season, in the manner such mowing is performed at other of Lessor's facilities. Lessee may perform additional landscaping and grounds keeping activities it deems necessary. Lessor shall also be responsible for maintaining the irrigation system and the external plumbing extending from the structure to the service main. In addition, Lessor shall maintain air filters. Section 4.2 Improvements. (a) Lessee covenants and agrees that it will not make or suffer any waste of the Premises, nor shall Lessee make any structural alterations nor Major Maintenance in excess of $5,000 to the Premises, except such alterations or Major Maintenance as may be first approved in writing by Lessor. Any such requested alterations or Major Maintenance, if permitted by Lessor, shall be made at Lessee's sole expense and shall be done in a good and workmanlike fashion approved by and acceptable to the Assistant City Manager of the City of Fort Worth, and shall be in full compliance with all local, state and federal requirements. However, the approval of Lessor of any plans or specifications shall not constitute approval of the architectural or engineering design, and Lessor, by approving the Lease Agreement for Rose Marine Theater Page 5 of 13 plans and specifications, assumes no liability or responsibility for the architectural or engineering design or for any defect in any building or improvement constructed from the plans or specifications. (b) In no event shall any person participating in any such alterations or Major Maintenance on the Premises be considered an officer, agent, servant, employee, contractor or subcontractor of the Lessor. Any such alteration or Major Maintenance which is of a permanent nature and which cannot be removed without structural damage shall become and be the property of Lessor and shall be surrendered as a part of the Premises upon the expiration or termination of this Lease. It is understood, however, that minor alterations and adjustments for which a City building permit is not required may be made to the Premises by the Lessee without the prior written approval of the Lessor. Such minor alterations and adjustments shall be of the nature of, but not necessarily limited to, interior painting, carpeting, lighting fixtures, and replacement of theater seating and lighting. (c) Any alterations or improvements that are funded in whole or in part with City funds shall be performed in compliance with all state competitive bid requirements and City purchasing regulations, including without limitation, the Minority and Women Business Enterprise ordinance. Nothing herein shall be construed as a commitment or appropriation of City funds for any alterations or improvements. Section 4.3 Liens. Lessee shall have no power to create any liens against the Premises and shall indemnify Lessor against any and all liens imposed or attempted to be imposed against the Premises as a result of Lessee's actions. If any lien is created or filed against the Premises, Lessee, at Lessee's sole cost and expense, shall have the lien discharged within 10 days after the filing thereof, and Lessee's failure to discharge the lien shall constitute a breach of the Lease. Section 4.4 Americans with Disabilities Act Compliance. Lessee shall make all improvements necessary to make the Premises comply with all applicable requirements of the Americans with Disabilities Act of 1990 ("ADA") and SHALL FULLY INDEMNIFY AND HOLD LESSOR HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES, SUITS, AND LIABILITY OF EVERY KIND, INCLUDING ALL EXPENSES OF LITIGATION, ARISING OUT OF OR IN CONNECTION WITH THE PREMISES' COMPLIANCE, OR LACK OF COMPLIANCE, WITH ADA. SECTION 4.5 Reserve Funds for the Operation and Maintenance of the Premises. Deleted by agreement of the parties. Section 4.6 Ordinances; Inspection. Lessee covenants and agrees that neither it, nor its officers, agents, employees, licensees, invitees or patrons shall make or suffer any unlawful, improper or offensive use of the Premises or any part thereof. Lessee further agrees to maintain and police the area in order to keep the Premises in a clean safe and sanitary condition at all times and shall comply with all ordinances of the City of Fort Worth. The City's agents, servants or employees shall be permitted by Lessee to make inspection of the Lease Agreement for Rose Marine Theater Page 6 of 13 Premises, after two (2) business days' notice to Lessee, to ascertain compliance with the terms and provisions of this Lease. 5. CONCESSIONS; ASSIGNMENT; SUBLETTING Section 5.1 Concessions and Licenses. Lessee shall have the right, without Lessor's consent, to grant concessions or licenses for sale of any or all of the merchandise, products, food, beverages, and items within the Premises deemed necessary by Lessee for its operations, provided the grant of license or concessions comply with applicable laws. Lessee shall obtain a liquor license if Lessee or Lessee's sublessees or contractors serve or sell alcohol on the Premises. Section 5.2. Assignment of Lease. With Lessor's consent, Lessee shall have the right to assign this Lease. If this Lease is assigned, such assignment shall be upon and subject to all of the terms, covenants, and conditions contained in this Lease, and Lessee shall continue to remain liable thereunder. Upon any subsequent assignment, each subsequent assignee shall continue to be and remain liable hereunder. Within thirty (30) days after the execution and delivery of any such assignment Lessee shall furnish to Lessor a duplicate original of the assignment which shall contain an assumption by the assignee of all of the obligations of Lessee under this Lease. Any assignment without the Lessor's consent shall be void. Section 5.3. Subletting. Lessee may sublet portions of the Premises without Lessor's consent provided such uses are consistent with this Lease and Lessee submits a copy of the sublease to Lessor within thirty (30) days of execution. 6. BASIC UTILITY SERVICES Lessor warrants that the Premises are served by electricity, water, gas, and sanitary sewer utilities. All charges for utility services provided to the Premises shall be paid for by Lessee. 7. INDEMNITY AND INSURANCE; INDEPENDENT CONTRACTOR Section 7.1 Indemnification. LESSEE COVENANTS AND AGREES TO INDEMNIFY, HOLD HARMLESS AND DEFEND THE LESSOR, ITS OFFICERS, AGENTS, SERVANTS AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR PROPERTY DAMAGE OR LOSS AND/OR PERSONAL INJURY, INCLUDING DEATH, OF WHATSOEVER KIND OR CHARACTER; ARISING OUT OF OR ALLEGED TO ARISE OUT OF OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THE LEASING, OCCUPANCY, USE, CONDITION AND/OR MAINTENANCE OF THE PREMISES AND ANY AND ALL ACTIVITIES CONDUCTED THEREON, OR IN CONNECTION WITH THE ACTS OR OMISSIONS OF LESSEE, ITS OFFICERS, AGENTS, EMPLOYEES, CONTRACTORS, SUBCONTRACTORS, SUBLESSEES, PATRONS, GUESTS, LICENSEES, INVITEES OR TRESPASSERS OR IN CONNECTION WITH THE SALE AND/OR CONSUMPTION OF ANY FOOD, BEVERAGE, OR OTHER ITEM HEREUNDER; AND SHALL INDEMNIFY AND HOLD Lease Agreement for Rose Marine Theater Page 7 of 13 HARMLESS LESSOR FROM AND AGAINST ANY AND ALL INJURY OR DAMAGE TO SAID PREMISES OR ANY OTHER PROPERTY OF LESSOR, ARISING OUT OF OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THE LEASING, OCCUPANCY, USE, CONDITION AND/OR MAINTENANCE OF THE PREMISES. Section 7.2. Liability Insurance. Lessee shall at all times during the term hereof, maintain a Commercial General Liability Policy of insurance with limits not less than $1,000,000 per occurrence, combined single limit for bodily injury or death and property damage, $2,000,000 aggregate. Said policy shall include the Lessor as an additional insured, as its interests may appear (ATIMA). Lessee shall furnish to Lessor a certificate of insurance verifying such coverage with a confirmation that such policy shall not be subject to cancellation except upon thirty (30) days' prior written notice to Lessor. Lessor may, at its option, also require Lessee to submit a copy of the policy or policies in effect as well as proof of payment of premiums. Insurance must be carried with firms licensed to do business in the State of Texas, and that have financial capability acceptable to Lessor. Section 7.3. Insurance for Contents of Buildings. Lessee shall be responsible for maintaining any policy of insurance that will insure against loss of property owned by Lessee that is located on the Premises. Said insurance shall waive any right of subrogation in favor of Lessor. Section 7.4. Fire and Extended Coverage: Boiler and Machinery Coverage. Lessor shall maintain a policy of fire and extended coverage insurance to cover the structures and mechanical systems included in the Premises and those structures immediately adjacent thereto. Such insurance policies shall be for full replacement value. Said insurance shall waive any right of subrogation in favor of Lessee. Section 7.5. Liquor Liability and Host Liability, If Lessee sells, gives, serves or allows alcoholic beverages to be sold, given or served, Lessee shall at all times during the term hereof maintain Liquor Liability coverage and Host Liability coverage with limits not less than $1,000,000 per occurrence, combined single limit for bodily injury or death and property damage, $2,000,000 aggregate. Section 7.6. Hazardous Use. Lessee will not permit the Premises to be used for any purpose which would render the insurance thereon void or the insurance risk more hazardous and will use its best efforts to use the Premises and to store its property in such a manner as to minimize risk of loss by casualty, it being acknowledged that the use of the Premises in the proper and ordinary conduct of Lessee's business for the purposes set forth herein shall not be considered in violation of this Section. Section 7.7 Independent Contractor. It is expressly understood and agreed that Lessee shall perform its obligations and responsibilities hereunder as an independent contractor and not as an officer, agent, representative or employee of the Lessor; that Lessee shall have exclusive control of and the exclusive right to control the details of its obligations and responsibilities and all persons performing same; that Lessee shall be solely responsible for the acts or omissions of its officers, agents, employees or other persons under its Lease Agreement for Rose Marine Theater Page 8 of 13 supervision, management and control; that the doctrine of respondeat superior shall not apply as between Lessor and Lessee and that nothing herein shall be construed as creating a partnership or joint enterprise between Lessor and Lessee. 8. CASUALTY EVENT Section 8.1. Substantial Casualty. (a) As used herein, the term "substantial casualty" shall mean (1) a fire, explosion, flood, tornado or other casualty of like character, or (2) a structural defect in any part of the Premises, or (3) any other act, condition or event, in any case not due to the negligence or breach of this Lease by Lessee and resulting in needed repairs, replacement or other expenditure to the Premises that would require more than sixty (60) days for completion. (b) If the Premises are the subject of a substantial casualty, Lessee shall give immediate notice to the Lessor and to Lessee's casualty insurance provider. Lessee shall follow all required procedures to file a claim(s) for the damage caused by the casualty event, and shall assign any and all proceeds for damage to or replacement costs for the building on the Premises to Lessor received as a result of the casualty event. Lessee will have the option, exercisable by written notice given to Lessor within ninety (90) days after the occurrence of such substantial casualty, to terminate this Lease upon the date specified in said notice, said date not to exceed one (1) year from the date of the substantial casualty. In such event, the Lease shall expire as of such date in the same manner as if the date specified in said notice were the date herein originally specified for the expiration of the Lease term and Lessee shall have no obligation to make any expenditure in connection with such substantial casualty or the results thereof, unless Lessee's continued occupancy requires such expenditure. (c) If Lessee does not give notice as specified in Subsection (b) or waives its right to terminate, Lessor at its sole discretion may proceed to repair, restore, and rebuild the Premises to its former condition within one hundred eighty (180) days from the date of such damage; provided, however, that Lessor will be under no obligation to expend any amount on rebuilding or repairing the Premises in excess of the amount of insurance proceeds actually received by Lessor. (d) If Lessor chooses not to rebuild or restore the Premises, the Lease will terminate. Such choice shall be made by written notice to Lessee within ninety (90) days after the occurrence of such substantial casualty. Section 8.2. Minor Casualty. The term "minor casualty" shall be defined in like manner as "substantial casualty" in Section 8.1 except that the length of time for repairs, replacements or other expenditures (the "needed repairs") to the Premises is less than sixty (60) days. If the Premises are the subject of a minor casualty, Lessee shall give immediate notice to the Lessor and to Lessee's casualty insurance provider. Lessee shall follow all required procedures to file a claim(s) for the damage caused by the casualty event, and shall assign any and all proceeds for damage to or replacement costs for the building on the Premises to Lessor received as a result of the casualty event. If there are insurance proceeds available to the Lessor in Lease Agreement for Rose Marine Theater Page 9 of 13 amounts sufficient to cover the needed repairs, Lessor will proceed with reasonable diligence to repair such damage. In the event that insurance proceeds are not available or not sufficient to cover the needed repairs, Lessor shall have no obligation to make such repairs until either (1) it receives sufficient funds from Lessee to cover the uninsured needed repairs or (2) Lessee agrees to make the needed repairs at its own expense. In any case, if such repairs are not completed within ninety (90) days after the casualty, Lessee or Lessor may terminate this Lease. 9. RECORDS — FEES —FUNDING Section 9.1. Records; Right to Audit. Lessee agrees to keep and maintain adequate books and records showing its receipts and disbursements, and all information relating to its obligations under Section 3.1. In addition, Lessee agrees that Lessor has the right to perform or have performed an audit and report of such books and records by a qualified auditor who is independent of the Lessee, certified as to truth and accuracy by the auditor making same. Lessor and Lessee agree that until three (3) years after the termination of this Lease Agreement, Lessor, the United States Department of Housing and Urban Development, or the United States Office of Inspector General, shall have access to and the right to examine relevant books, documents, papers, subleases, agreements and records of the Lessee involving transactions relating to this Contract. Section 9.2. Fees. Lessee may make or authorize the making of reasonable admission, attendance or tuition charges for attendance at and/or participation in programs, events and functions conducted by or under the authorization of the Lessee in the Premises, and Lessee may make reasonable charges to individuals, groups of individuals or organizations for their use of the Premises. The Lessee may further make or authorize the making of reasonable charges for food and/or drink sold in or on, the demised premises in connection with activities herein set forth; however, a schedule of all such charges under this section shall be subject to review by Lessor. Such funds as may be realized by the Lessee from charges made in accordance with this paragraph shall be used by the Lessee only for the benefit of the general public and the operation and management of the Premises. Upon notice of termination being sent to Lessor as provided under this Lease, all funds collected under the authority of this section shall not be spent by Lessee outside the purview of operating and maintenance costs of the Rose Marine Theater, pursuant to 24 CFR 570.504. 10. DEFAULT - REMEDIES If Lessee defaults in the performance of any of the terms, covenants, or conditions of this Lease, Lessor must give to Lessee written notice of such default, and if Lessee does not cure such default within forty-five (45) days, after the giving of such notice (or, if such default is of a nature that it cannot be completely cured within such forty-five (45) days, if Lessee does not commence such curing within forty-five (45) days and thereafter proceed with reasonable diligence and in good faith to cure such default), then Lessor may terminate this Lease on not less than thirty (30) days written notice to Lessee, and on the date specified in said notice the term of this Lease shall terminate, and Lessee shall then quit and surrender the Premises to Lease Agreement for Rose Marine Theater Page 10 of 13 Lessor. If this Lease shall have been so terminated by Lessor, Lessor may at any time thereafter resume possession of the Premises by any lawful means and remove Lessee and other occupants and their effects. 11. BUSINESS DIVERSITY ENTERPRISE COMMITMENT Lessee shall comply with the City of Fort Worth's competitive bidding procedures and the City's Ordinance No. 20020-12-2011, as amended ("Ordinance"), concerning business diversity enterprises in all of Lessee's contracts. 12. NOTICES Any notice, demand, request, or other communication hereunder given or made by either party to the other shall be in writing and shall be deemed to be duly given if hand-delivered or if mailed by registered or certified mail in a postpaid envelope addressed as follows: (a) If to Lessee: Artes De La Rosa Secretary 1440 North Main Street Fort Worth, TX 76106 (b) If to Lessor: City Manager City of Fort Worth 1000 Throckmorton Street Fort Worth, Texas 76102 With a copy to: City Attorney City of Fort Worth 1000 Throckmorton Street Fort Worth, Texas 76102 or at such other addresses as Lessee or Lessor, respectively, may designate in writing by notice pursuant to this Section 12. 13. QUIET ENJOYMENT Section 13.1. Quiet Enjoyment. Lessor covenants that if and so long as Lessee performs the terms, covenants, and conditions required on Lessee's part by this Lease Agreement, Lessee shall peaceably and quietly have, hold and enjoy the Premises for the term of this Lease, subject to the provisions of this Lease. Section 13.2. Title Warranty. Lessor warrants and represents that Lessor has good and marketable title to the real property of which the Premises form a part, free and clear of all liens and encumbrances. Lease Agreement for Rose Marine Theater Page 11 of 13 14. RIGHT TO TERMINATE In addition to any other provisions of this Lease Agreement governing rights of termination, Lessor or Lessee shall have the right at any time during the term of this Lease Agreement, by giving written notice detailing the reason for termination, no less than six (6) months' notice, by written notice to the other party. The notice to terminate shall include a copy of Lessee's financial statement for the Premises. 15. MISCELLANEOUS PROVISIONS Section 15.1. No Waiver. The failure of either party to insist on strict performance of any term; covenant, or condition hereof, or to exercise any option herein contained, shall not be construed as a waiver of such term, covenant, condition, or option in any other instance. Section 15.2. Written Modification. This Lease cannot be changed or terminated orally, but only by an instrument in writing signed by both parties. Section 15.3. Access to Premises. Upon 48 hours' notice, Lessor may enter the Premises at any reasonable time for the purpose of inspection and to repair the Premises as required herein. Section 15.4. Captions. The captions in this Lease are included for convenience only and shall not be taken into consideration in any construction or interpretation of this Lease or any of its provisions. Section 15.5. Partial Invalidity. If any provision of this Lease, or the application thereof to any person or circumstances, shall to any extent be held invalid or unenforceable, the remainder of this Lease, or the application of such affected provision to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be valid and shall be enforced to the fullest extent permitted by law. It is further the intention of Lessor and Lessee that if any provision of this Lease is capable of two constructions, one of which would render the provision void and other of which would render the provision valid, then the provision shall have the meaning which renders it valid. Section 15.6. Waiver of Immunity. If Lessee is a charitable association, corporation, entity, or individual enterprise, has or claims an immunity or exemption (statutory or otherwise) from and against liability for damage or injury to persons or property, Lessee hereby expressly waives its rights to plead defensively such immunity or exemption as against Lessor. Lessor expressly waives immunity or exemption for its breach, if any of this Lease, including any intentional acts. Section 15.7. Removal of Personal Property. Upon termination of this Lease for any reason, Lessee shall have the right to remove from the Premises all art works and other personal property of Lessee, but may not remove improvements, alterations, or fixtures which may not be removed without structural damage to the Premises. Lease Agreement for Rose Marine Theater Page 12 of 13 Section 15.8. Venue. Venue of any action brought under this Lease shall be in state courts located in Tarrant County, Texas or the United States District Court for the Northern District of Texas, Fort Worth Division. Section 15.9. Entire Agreement. This Lease constitutes the entire agreement of the Lessor and Lessee and it supersedes any prior oral or written agreements concerning the Premises. This Lease is executed by the parties to be effective as of. ("Effective Date"). LESSOR: LESSEE CITY OF FORT WORTH ARTES DE LA ROSA, a Texas non- profit corporation d,,Sus n Alanis By: ® XName: ► Assistant City Manager 0� �.. - y. ( %0 Title: _ �S0Cr A I`r )jj Ain L' ATTEST I.0 o� s� $°%000 °e ity r t °°° e 4A APPROVED AS TO FOR ' ` D LE ALITY Assistant City Attorne C a774(oo Contract Authoriaa,tioi Date OFFICIAL RECORD CITY SECRETARY Lease Agreement for Rose Marine Theater FT,WORTH, TX Page 13 of 13 Exhibit "A" Property Description Lease Agreement for Rose Marine Theater fk 04• r • .�f - •• LO U • • "4A CM LU Chb ICi n I K i }yk � r •• LO 116 CM f ro � h ca ► • • s r cc f �+ r1 v _ t Exhibit"B" CDBG National Objectives Lease Agreement for Rose Marine Theater 4 CHAPTER 3: NATIONAL OBJECTIVES CHAPTER PURPOSE & CONTENTS This chapter provides a summary of the three national objectives of the program, the category for meeting the three national objectives as well as selecting and documenting the appropriate national objective for activities funded by grantees. SECTION TOPIC PAGE 3.1 Introduction to National Objectives 3-1 3.2 Benefit to LMI Persons 3-2 3.3 Elimination of Slums and Blight 3-12 3.4 Urgent Need 3-14 3.5 LMI Benefit Expenditures 3-15 3.6 Choosing the Right National Objective 3-17 3.7 Documenting National Objectives 3-18 3.1 Introduction to National Objectives ✓ This section provides general background on the national objectives and an overview of the possible approaches. Key Topics in This Section ✓ Overview of the three national objectives Regulatory/Statutory Citations Section 101(c),Section 104(b)(3), 105(c) §570.209- Other 570.208Other Reference Materials on This Topic ✓ CDBG Guide to National Objectives and Eligible Activities for Entitlement Communities - Chapter 3:Meeting a National Objective ✓ The authorizing statute of the CDBG program requires that each activity funded, except for program administration and planning activities, must meet one of three national objectives. The three national objectives are: - Benefit to low-and moderate- income (LMI) persons; - Aid in the prevention or elimination of slums or blight; and - Meet a need having a particular urgency(referred to as urgent need). ✓ An activity that does not meet a national objective is not compliant with CDBG requirements and may be subject to remedial actions. C ✓ The following exhibit depicts the different categories associated with each of the national objectives. Basically CDBG (July 2012) 3-1 HUD, Office of Block Grant Assistance �n Chapter 3: National Objectives •-: • . NATIONAL OBJECTIVES LOWIMOD SLUM/BLIGHT URGENT NEED Area Limited Area Spot Benefit Clientele Basis �d Basis Housing Jobs Urban Renewal ✓ Each national objective and the categories are discussed in further detail in the following sections of this chapter. ✓ This chapter will also explore the strategic decisions grantees can make when qualifying an eligible activity under a national objective. It is possible for an activity to qualify under more than one national objective, although only one national objective may be selected for an activity. Additionally, activities can qualify under more than one category. This chapter will discuss considerations for making a decision regarding which category works best for an eligible activity. ✓ HUD has developed a matrix of the national objectives, eligible activities and IDIS matrix codes. Grantees may wish to refer to this matrix when selecting national objectives. A copy is attached to the IDIS chapter of this manual. 3.2 Benefit to Low and Moderate Income Persons or Households ✓ This section describes each of the possible LMI national objectives. Key Topics in This Section ✓ Overview of the primary objective and associated expenditure cap ✓ Area benefit activities(LMA) ✓ Limited Clientele Activities(LMC) ✓ Housing Activities(LMH) ✓ Job Creation and Retention Activities(LMJ) Regulatory/Statutory Citations Section 101(c), Section 104(b) Basically CDBG(July 2012) 3-2 HUD, Office of Block Grant Assistance tS t Chapter 3: National Objectives l §570.1, §570.200(x)(3),§570.208(a) Other Reference Materials on This Topic ✓ Guide to National Objectives and Eligible Activities for Entitlement Communities - Chapter 3:Meeting a National Objective - Chapter 4:Overall Expenditure Level-Benefit to LMI Persons - Appendix D:Determining Service Areas ✓ CPD Notice 05-06:US HUD Suggested Survey Methodology to Determine the Percentage of LMI Persons in the Service Area of a Community Development Block Grant-Funded Activity ✓ The LMI national objective is often referred to as the "primary" national objective because the statute requires that recipients expend 70 percent of their CDBG funds to benefit LMI persons. ✓ Additional information on how to meet the 70 percent test and certification to HUD is located later in this chapter. ✓ In addition to meeting the 70 percent test, applicants must ensure that the activities proposed, when taken as a whole, will not benefit moderate-income persons to the exclusion of low-income persons. This does not mean that each activity has to include both low- and moderate income beneficiaries, but it further ensures that the CDBG program will primarily C benefit low-income persons. ✓ This section covers the four categories that can be used to meet the LMI national objective: - Area benefit activities; - Limited clientele activities; - Housing activities; or - Job creation or retention activities 3.2.1 Low Mod Area Benefit (LMA) ✓ The area benefit category is the most commonly used national objective for activities that benefit a residential neighborhood. An area benefit activity is one that benefits all residents in a particular area, where at least 51 percent of the residents are LMI persons. ✓ Examples of area benefit activities may include the following when they are located in a predominately LMI neighborhood: - Acquisition of land to be used as a neighborhood park; - Construction of a health clinic; - Improvements to public infrastructure like the installation of gutters and sidewalks; and - Development of a community center. ✓ The activities listed above benefit all LMI residents in a service area and thus are the type of activities that may qualify under the LMI area benefit category for the purposes of meeting a Cnational objective. Basically CDBG (July 2012) 3-3 HUD, Office of Block Grant Assistance a Chapter 3: National Objectives r ✓ Grantees are responsible for determining the service area of an activity. HUD will generally accept a grantee's determination as long as it complies with CDBG regulations. The factors that should be considered in making a determination regarding the service area include: • The nature of the activity: In general the size and the equipment associated with the activity should be taken into consideration. A small park with a limited number of slides and benches would not be expected to a large neighborhood. In the same way, a larger park that can accommodate a considerable number of people would not be expected to serve just the immediately adjacent properties. The same applies to improvements or assistance to an alleyway versus a small two-lane street versus an arterial four-lane street within the same neighborhood. The service area for each of these infrastructure projects will be different in size and population. • The location of the activity: In general, the immediate area surrounding a facility or improvement is expected to be included in the service area. Additionally, when a facility is located near the boundary of a particular neighborhood, its service area could likely include portions of the adjacent neighborhood as well as the one in which it is located. Accessibility issues: Geographic barriers can separate and preclude persons residing in a nearby area from taking advantage of a facility or improvement. Other limits to accessibility can include access fees, language barriers, time or duration that an activity is available, access to transportation and parking, etc. The availability of comparable activities: Comparable activities within the service area should be taken into account so that the service area does not overlap with the service area of another comparable activity. 13 Boundaries for facilities and public services: The service area for some public facilities and services are determined based on specified and established boundaries or districts. Examples of such services and facilities are police precincts, fire stations, and schools. If the service area has not already been identified for an activity, the grantee has to determine the service area before CDBG assistance can be provided under the LMI Area Benefit category. ✓ An area is considered to meet the test of being LMI if there is a sufficiently large percentage (51 percent)of LMI persons residing in the service area as determined by: — The most recently available decennial Census/American Community Survey information, together with the Section 8 income limits that would have applied at the time the income information was collected by the Census Bureau; or — A current survey of the residents of the service area. ✓ With respect to using Census/American Community Survey information to document that the service area qualifies, grantees can obtain the following data: Basically CDBG(July 2012) 3-4 HUD, Office of Block Grant Assistance Chapter 3: National Objectives •`� - A listing of all census tracts and block groups in the community's jurisdiction; - The number of persons that resided in each such tract/block group at the time of the last census; and - The percentage of such persons who were LMI (based on the CDBG definition) at that time. ✓ The above data (low/mod income summary data (LMISD))is available directly from HUD online at: http://www.hud.gov/offices/cpd/systems/census/statemap.cfm - IDIS calculates this information for grantees. ✓ If the proposed activity's service area is generally the same as a census tract or block group, then the Census data may be used to justify the income characteristics of the area served. ✓ Additionally, grantees can compute the percentage of LMI persons in multiple census tracts and block groups because the data includes both the total number of persons as well as the number of LMI persons within a tract and block group. ✓ HUD permits an exception to the LMI area benefit requirement that an area contain 51 percent LMI residents. This exception applies to entitlement communities that have few, if any, areas within their jurisdiction that have 51 percent or more LMI residents. These communities are allowed to use a percentage less than 51 percent to qualify activities under the LMI Benefit category. / - This exception is referred to as the "exception criteria" or the "upper quartile". - A grantee qualifies for this exception when fewer than one quarter of the populated block groups in its jurisdictions contain 51 percent or more LMI persons. - In such communities, activities must serve an area which contains a percentage of LMI residents that is within the upper quartile of all Census block groups within its jurisdiction in terms of the degree of concentration of LMI residents. - HUD assesses each grantee's census block groups to determine whether a grantee qualifies to use this exception and identifies the alternative percentage the grantee may use instead of 51 percent for the purpose of qualifying activities under the LMI area benefit category. - HUD determines the lowest proportion a grantee may use to qualify an area for this purpose and advises the grantee accordingly. ✓ HUD uses the following steps in computing the upper quartile for a given community: - Identifies the total number of block groups in the grantee's jurisdiction; - Subtracts the block groups with zero persons to determine the net number of block groups in the jurisdiction; - Arranges the remaining block groups in descending order, based on LMI residents in the block group; - Computes the last block group in the upper quartile by multiplying the net number of block groups by 25 percent; and - Applies the "exception criteria" if the percentage of LMI persons in the last census block group in the top quartile is less than 51 percent. Basically CDBG(July 2012) 3-5 HUD, Office of Block Grant Assistance G3 . Chapter 3: National Objectives •' ✓ Grantees which qualify for the exception criteria may use CDBG funds for area benefit activities in any service area, whether or not located in a block group in the highest quartile, if the percentage of LMI persons in the service area is equal to or exceeds the upper quartile percentage. ✓ If the grantee will use the exception criteria, the percentage of LMI persons in the service area must be determined by use of the Census data provided by HUD. - This is because the "upper quartile"was determined using Census data collected at the point in time of the use of CDBG funds. ✓ Income surveys are often used to determine LMI area in one of two instances: - If HUD data does not indicate the service area contains at least 51 percent LMI persons or if a grantee decides it would be more appropriate to use a methodologically sound survey. This could be based on a change in either population or income of the area since the Decennial Census. - Also, when the service area is not generally the same as a census tract or block group, then the grantee should conduct household surveys to determine the LMI percentage for the service area. ✓ The survey instrument and methodology must be approved by HUD for the purpose of establishing the percentage of LMI persons in a service area. - A survey must meet standards of statistical reliability that are comparable to that of the Decennial Census/American Community Survey data for areas of similar size. - Additional guidance is available in CPD-Notice 05=06. ✓ Finally, the service area of the activity must be primarily residential and the activity must meet the identified needs of LMI persons. - An activity with a service area that is not primarily residential may not qualify under the LMI area benefit category even if the activity provides benefits to all residents in the service area and 51 percent of the residents are LMI persons. - This requirement does not apply to the location of the activity itself but rather the service area of the activity. As such it does not mean that activities located in commercial districts cannot be qualified under the LMI area benefit category on the virtue of their geography. The primarily residential test is applied to the service area of the activity. 13 For example, activities that support the infrastructure of a commercial district composed of institutions and firms that serve a national and international clientele will not qualify under LMI area benefit. 13 In contrast, if the commercial district is composed of stores and businesses that serve local customers such that the service area boundaries of the commercial district is around a primarily residential area with the requisite percentage of LMI residents, the activity qualifies under the LMI area benefit category. ✓ Activities under Public Facilities and Improvements and some Public Service activities (e.g. police or fire services)tend to provide benefits to all residents in the service area. Additionally, public schools can be qualified under LMI area benefit because of the affect a school may have on the value of the residential property in the area. Public schools are _-______ Basically CDBG(July 2012) 3,6 HUD, Office of Black Grant Assistance Chapter 3: National Objectives considered to benefit all the residents of the service area and may qualify under this category. ✓ There are activities and facilities that are located in a service area but are designed to meet special needs. These activities cannot be qualified under this category. For example, a senior center would qualify under the LMI limited clientele category and not the LMI area benefit category. ✓ With respect to exceptions and special situations, the statute allows two kinds of area benefit activities to meet the national objective of benefit to LMI persons even when the general requirements of the area benefit category cannot be met. The two kinds of area benefit activities are described below: 911 Systems (§ 570.208(a)(1)(iii)) With prior HUD approval, a grantee may develop, establish and operate for up to two years after the establishment, a uniform emergency telephone number system serving an area having less than the percentage of LMI persons otherwise required. Special Assessments (§ 570.208(a)(1)(iv)) The use of CDBG funds to pay special assessments levied against residential properties that are owned and occupied by LMI persons will qualify under the LMI area benefit category provided that this is the only use of CDBG funds in the financing of a public improvement. The activity will qualify even if the public improvement provides a benefit to all the residents of an area. ✓ Finally, there are two special situations that can meet the national objective of benefiting LMI persons under either the area benefit category or the job creation or retention category, at the option of the grantee. 1. Activities undertaken pursuant to a HUD approved Neighborhood Revitalization Strategy Area (NRSA)for the purpose of creating or retaining jobs, and 2. Activities carried out for the purpose of creating or retaining jobs by a Community Development Financial Institution (CDFI)whose charter limits its investment area to a primarily residential area consisting of at least 51 percent LMI persons. 3.2.2 Low Mod Limited Clientele (LMC) ✓ The limited clientele category is a second way to qualify specific activities under the LMI benefit national objective. Under this category, 51 percent of the beneficiaries of an activity have to be LMI persons. ✓ In contrast to the area benefit category, it is not the LMI concentration of the service area of the activity that determines whether the activity will qualify or not, but rather the actual number of LMI persons that benefit from the activity. ✓ Activities in this category provide benefits to a specific group of persons rather than everyone in an area. It may benefit particular persons without regard to their residence, or it may be an activity that provides a benefit to only particular persons within a specific area. ✓ Examples of activities that qualify under the limited clientele category include: Acquisition of a building to be converted into a shelter for the homeless; Basically CDBG(July 2012) 3-7 HUD, Office of Block Grant Assistance 'a Chapter 3: National Objectives •` ti rn Rehabilitation of a center for training severely disabled persons to enable them to live independently; - Clearance of a structure from the future site of an neighborhood center that will exclusively serve the elderly; and Public service activities like the provision of health services. ✓ The listed examples qualify under the limited clientele category because the beneficiaries can be identified as LMI residents. ✓ With respect to determining the beneficiaries of activities as LMI and qualifying under the limited clientele category, activities must meet one of the following tests: Benefit a clientele that is generally presumed to be principally LMI. This presumption covers abused children, battered spouses, elderly persons, severely disabled adults (see the box below), homeless persons, illiterate adults, persons living with AIDS and migrant farm workers; or Require documentation on family size and income in order to show that at least 51 percent of the clientele are LMI; or Have income eligibility requirements limiting the activity to LMI persons only; or Be of such a nature and in such a location that it can be concluded that clients are primarily LMI. An example is a day care center that is designed to serve residents of a public housing complex. ✓ In addition, the following activities may qualify under the limited clientele national objective: - Removal of architectural barriers to the mobility of elderly persons or the severely disabled will be presumed to qualify under this category if it is restricted, to the extent practicable, to the removal of such barriers by assisting 13 The reconstruction of a public facility or improvement or portion thereof, that does not qualify under the area benefit category; 13 The rehabilitation of a privately owned nonresidential building or improvement that does not qualify under area benefit or job creation or retention category: or The rehabilitation of common areas in a residential structure that contains more than one dwelling unit and that does not qualify under the LMI housing category for meeting national objectives. - Microenterprise activities carried out in accordance with the HUD regulations when the person owning or developing the microenterprise is LMI; or - Activities that provide training and other employment support services when the percentage of persons assisted is less than 51 percent LMI may qualify if: the proportion of total cost borne by CDBG is no greater than the proportion of LMI persons assisted; and when the service assists businesses, CDBG is only used in the project to pay for the job training and/or supportive services. ✓ There are two sets of activities that are precluded from qualifying under this category based on statutory limitations: Basically CDBG (July 2012) 3-s HUD, Office of Block Grant Assistance Chapter 3: National Objectives •'i ' � Acquisition, construction, or rehabilitation of property for housing, including homeownership assistance must qualify under the housing national objective which will be discussed below in further detail. Creation or retention of jobs generally qualify under the jobs or the area benefit category of the LMI benefit national objective. Definition of Severely Disabled Persons are considered severely disabled if they: • Use a wheelchair or another special aid for 6 months or longer; • Are unable to perform one or more functional activities(seeing,hearing, having one's speech understood,lifting and carrying,walking up a flight of stairs and walking); • Need assistance with activities of daily living(getting around inside the home,getting in or out of bed or a chair, bathing,dressing,eating and toileting)or instrumental activities of daily living(going outside the home,keeping track of money or bills, preparing meals,doing light housework and using the telephone); • Are prevented from working at a job or doing housework; • Have a selected condition including autism,cerebral palsy,Alzheimer's disease,senility or dementia or mental retardation;or • Are under 65 years of age and are covered by Medicare or receive Supplemental Security Income(SSI). C 3.2.3 Low Mod Housing Activities (LMH) ✓ The housing category of LMI benefit national objective qualifies activities that are undertaken for the purpose of providing or improving permanent residential structures which, upon completion, will be occupied by LMI households. ✓ Examples of eligible activities include, but are not limited to: — Acquisition of an apartment house to provide dwelling units to LMI households at affordable rents, where at least 51 percent of the units will be occupied by LMI households; — Site improvements on publicly-owned land to serve a new apartment structure to be rented to LMI households at affordable rents; — Housing rehabilitation for single family units; — Conversion of an abandoned warehouse to be reconfigured into new apartments, where at least 51 percent of the units will be occupied by LMI households at affordable rents. ✓ In order to meet the housing LMI national objective, structures with one unit must be occupied by a ILMI household. If the structure contains two units, at least one unit must be LMI occupied. Structures with three or more units must have at least 51 percent occupied by LMI households. Rental buildings under common ownership and management that are located on the same or contiguous properties may be considered as a single structure. For rental housing, occupancy by LMI households must be at affordable rents, consistent with standards adopted and publicized by the grantee. Basically CD-BG(July 2012) 3-9 HUD, Office of Block Grant Assistance Chapter 3: National Objectives ✓ Under the following limited circumstances, structures with less than 51 percent LMI occupants may be assisted: - Assistance is for an eligible activity that reduces the development cost of new construction of non-elderly, multi-family rental housing; and - At least 20 percent of the units will be occupied by LMI households at an affordable rent; and - The proportion of cost borne by CDBG funds is no greater than the proportion to be occupied by LMI households. ✓ When housing activities are conducted by a Community Development f=inancial Institution(CDFI) or as part of an approved NRSA, multiple units(e.g. scattered site housing)may be aggregated for the purposes of meeting the ILMI housing national objective. - NOTE: This flexibility does not apply to activities under the Direct Homeownership Assistance eligibility category (570.201(n)). - Please refer to the chapter on Revitalization Areas for more information. ✓ There are a number of activities that generally do not qualify under the LMI Housing national objective. These include code enforcement, interim assistance, microenterprise assistance, public services, and special economic development activities. 3.2.4 Low Mod Job Creation or Retention Activities (LMJ) ✓ The job creation and retention LMI benefit national objective addresses activities designed to create or retain permanent jobs, at least 51 percent of which (computed on a full-time equivalent basis) will be made available to or held by LMI persons. ✓ Some examples of activities that qualify when at least 51 percent of jobs created/retained will be for LMI persons include: - Clearance activities on a site slated for a new business; - Rehabilitation activity that will correct code violations and enable a business to survive and retain jobs; - Financial assistance to a manufacturer for the expansion of its facilities that is expected to create permanent jobs; and - Assistance to expand a small house cleaning service with four employees that agrees to hire three additional LMI employees. ✓ The following requirements must be met for jobs to be considered created or retained. - If grantees fund activities that create jobs, there must be documentation indicating that at least 51 percent of the jobs will be held by, or made available to, ILMI persons. - For funded activities that retain jobs, there must be sufficient information documenting that the jobs would have been lost without the CDBG assistance and that one or both of the following applies to at least 51 percent of the jobs: 13 The job is held by a LMI person; or Basically CDBG(July 2012) 3-10 HUD, Office of Block Grant Assistance Chapter 3: National Objectives ♦ ' The job can reasonably be expected to turn over within the following two years and steps will be taken to ensure that the job will be filled by, or made available to, a LMI person. ✓ The following requirements apply for jobs to be considered available to or held by LMI persons. - Created or retained jobs are only considered to be available to LMI persons when: 13 Special skills that can only be acquired with substantial training or work experience or education beyond high school are not a prerequisite to fill such jobs, or the business agrees to hire unqualified persons and provide training; and The grantee and the assisted business take actions to ensure that LMI persons receive first consideration for filling such jobs. - Created or retained jobs are only considered to be held by LMI persons when the job is actually held by a LMI person. ✓ For the purpose of determining if the preceding requirements are met, a person may be presumed to be LMI if: - He/she resides in a Census tract/block numbering area that has a 20 percent poverty rate (30 percent poverty rate if the area includes the central business district); and the area evidences pervasive poverty and general distress; or - He/she lives in an area that is part of a Federally-designated Empowerment Zone (EZ) or Enterprise Community (EC); or - He/she resides in a Census tract/block numbering area where at least 70 percent of the residents are LMI. ✓ Jobs created or retained by assisted businesses may also be presumed to be LMI if the job and business are located in an area that: - Has a 20 percent poverty rate (30 percent poverty rate if the area includes the central business district) and the area evidences pervasive poverty and general distress; or - Is part of a Federally-designated EZ or EC. ✓ To determine if an area evidences pervasive poverty and general distress, the following standards are applicable - All block groups in the census tract have poverty rates of at least 20 percent; - The specific activity being undertaken is located in a block group that has a poverty rate of at least 20 percent; or - Upon the written request of the grantee, HUD determines that the census tract exhibits other objectively determinable signs of general distress such as high incidence of crime, narcotics use, homelessness, abandoned housing, and deteriorated infrastructure or substantial population decline. ✓ As a general rule, each assisted business shall be considered to be a separate activity for purposes of determining whether the activity qualifies under the job creation and retention category for meeting a national objective. Basically CDBG(July 2012) 3-11 HUD, Office of Block Grant Assistance -uU Chapter 3: National Objectives •' ✓ However, in certain cases, such as where CDBG funds are used to acquire, develop or improve a real property (e.g., a business incubator or an industrial park), the requirement may be met by measuring jobs in the aggregate for all the businesses that locate on the property, provided such businesses are not otherwise assisted by CDBG funds. ✓ Additionally,where CDBG funds are used to pay for the staff and overhead costs of an entity making loans to businesses from non-CDBG funds, this requirement may be met by aggregating the jobs created by all of the businesses receiving loans during the program year. ✓ As mentioned under the area benefit category, certain job creation or retention activities carried out by a CDFI or under a Neighborhood Revitalization Strategy can meet the national objective of benefiting LMI persons under either category. In these instances, the grantee will decide which category it will use to qualify the activity and record the decision in program files so that HUD will know which category is being applied. 3.3 Elimination of Slums and Blight ✓ This section highlights the national objectives related to the elimination of slums and blight. Key Topics in This Section ✓ Overview of elimination of slums and blight - Area basis(SBA) - Spot basis(SBS) - Urban renewal (SBR) Regulatory/Statutory Citations Section 101(c),Section 104(b)(3), Section 105(c) §570.208(b) Other Reference Materials on This Topic ✓ Guide to National Objectives and Eligible Activities for Entitlement Communities Chapter 3:Meeting a National Objective ✓ The focus of activities under this national objective is a change in the physical environment of a deteriorating area. This contrasts with the LMI benefit national objective where the goal is to ensure that funded activities benefit LMI persons. ✓ This difference in focus has an impact on the information that is required to asses the qualifications of an activity. Under the LMI benefit national objective, determining the number of LMI persons that actually or could potentially benefit from an activity is central to qualifying the activity. Under the elimination of slums and blight national objective, determining the extent of and physical conditions that contribute to blight is central to qualifying an activity. Basically CDBG (July 2012) 3-12 HUD, Office of Block Grant Assistance f ■ ^l: Chapter 3: National Objectives l ✓ There are three categories that can be used to qualify activities under this national objective: - Prevent or eliminate slums and blight on an area basis; - Prevent or eliminate slum and blight on a spot basis; or - Be in an urban renewal area. 3.3.1 Slum Blight Area Basis (SBA) ✓ This category covers activities that aid in the prevention or elimination of slums or blight in a designated area. Examples of activities that qualify when they are located within the slum or blighted area include - Rehabilitation of substandard housing located in a designated blighted area when the housing is brought to standard condition; - Infrastructure improvements in a deteriorated area; and - Economic development assistance in the form of a low-interest loan to a business as an inducement to locate a branch store in a redeveloping blighted area. ✓ To qualify under this category, the area in which the activity occurs must be designated as slum or blighted. The following tests apply: - The designated area in which the activity occurs must meet the definition of a slum, blighted, deteriorated or deteriorating area under state or local law; - Additionally, the area must meet either one of the two conditions specified below: Public improvements throughout the area are in a general state of deterioration; or 13 At least 25 percent of the properties throughout the area exhibit one or more of the following: • Physical deterioration of buildings/improvements; • Abandonment of properties; • Chronic high occupancy turnover rates or chronic high vacancy rates in commercial or industrial buildings; • Significant declines in property values or abnormally low property values relative to other areas in the community; or • Known or suspected environmental contamination. - Documentation must be maintained by the grantee on the boundaries of the area and the conditions that qualified the area at the time of its designation. The designation of an area as slum or blighted must be re-determined every 10 years for continued qualifications. ✓ Finally, eligible activities must address one or more of the identified conditions that contributed to the deterioration of the area. ✓ NOTE: When undertaking residential rehab in a slum/blight area, the building must be considered substandard under local definition and all deficiencies making the building substandard must be eliminated before less critical work is undertaken. Basically CDBG(July 2012) 3-13 HUD, Office of Block Grant Assistance �u Chapter 3: National Objectives •' r�� " 3.3.2 Slum Blight Spot Basis (SBS) ✓ These are activities that eliminate specific conditions of blight or physical decay on a spot basis and are not located in a slum or blighted area. Examples include: — Acquisition and demolition of a dilapidated property; — Rehabilitation of a decayed community center that eliminates code violations that are detrimental to the health and safety of potential occupants like faulty wiring, falling plaster, or other similar conditions; — Preservation of a deteriorated building of historic significance; and — Financial assistance to a business to demolish a decayed structure ✓ Activities under this category are limited to acquisition, clearance, relocation, historic preservation, remediation of environmentally contaminated properties, and building rehabilitation activities. ✓ Furthermore, rehabilitation is limited to the extent necessary to eliminate a specific condition detrimental to public health and safety. 3.3.3 Slum Blight Urban Renewal Area (SBR) ✓ These are activities located within an Urban Renewal project area or Neighborhood Development Program (NDP)action area that are necessary to complete an Urban Renewal Plan. ✓ A copy of the Urban Renewal Plan in effect at the time the CDBG activity is carried out, including maps and supporting documentation, must be maintained for record keeping purposes. ✓ This national objective category is rarely used as there are only a handful of communities with open Urban Renewal Plans. 3.4 Urgent Need (URG) ✓ This section describes the urgent need national objective. Key Topics in This Section ✓ Overview of urgent need Regulatory/Statutory Citations Section 101(c), 104(b)(3), 105(c) §570.208(c) Other Reference Materials on This Topic ✓ Guide to National Objectives and Eligible Activities for Entitlement Communities -Chapter 3:Meeting a National Objective ✓ Use of the urgent need national objective category is rare. It is designed only for activities that alleviate emergency conditions. Examples include: Acquisition of property located in a flood plain that was severely damaged by a recent flood; Basically CDBG(July 2012) 3-14 HUD, Office of Block Grant Assistance Chapter 3: National Objectives •' t - Public facility improvements like the reconstruction of a publicly-owned hospital that was severely damaged by a tornado; - Demolition of structures that are severely damaged by a major earthquake; - Public services like additional police protection to prevent looting in an area damaged by a recent hurricane; - Interim assistance such as emergency treatment of health problems caused by a flood; and - Special economic development assistance to a grocery store that was damaged by an earthquake. ✓ Urgent need qualified activities must meet the following criteria: - The existing conditions must pose a serious and immediate threat to the health or welfare of the community; - The existing conditions are of recent origin or recently became urgent(generally, within the past 18 months); - The grantee is unable to finance the activity on its own; and - Other sources of funding are not available. 3.5 LMI Benefit Expenditures ✓ Grantees are required to expend a substantial portion of their funds in order to benefit LMI persons. This section describes the calculation of LMI benefit. Key Topics in This Section ✓ Expenditure requirement ✓ Meeting the requirement - Excluded expenditures - Activities that meet the requirement ✓ Examples: - Excluded housing activity expenditures - LMI calculation Regulatory/Statutory Citations Section 101(c),Section 104(b), 105(c) §570.200(a)(3) Other Reference Materials on This Topic ✓ Guide to National Objectives and Eligible Activities for Entitlement Communities Chapter 4:Overall Expenditures Level-Benefit to UM Income Persons ✓ The primary national objective of the CDBG Program is the development of viable urban communities principally for LMI persons. ✓ To meet the primary national objective, the CDBG regulations require that grantees expend not less than 70 percent of CDBG funds for activities that benefit LMI persons. Basically CDBG(July 2012) 3-15 HUD, Office of Block Grant Assistance Chapter 3: National Ohiertives — Planning and administrative costs are excluded from the LMI benefit calculation. — Activities meeting this requirement are those which qualify under one of the four LMI benefit national objective category: 13 Area basis; Limited clientele; 13 Housing activities; or Job creation or retention, — The percentage calculation is based on aggregate CDBG expenditures over a period specified by the grantee (up to three years) in a certification to HUD. The certification must be included in grantee's annual Consolidated Plan action plan submission. LMI Calculation Example Total entitlement grant amount $1,000,000 Less actual planning and admin(up to 20 percent) (200,000) Equals amount subject to LMI calculation $800,000 Multiplied by 70 percent x 0.70 Equals minimum to benefit LMI $560,000 Amount subject to LMI calculation $800,000 Less LMI minimum (560,000) Equals maximum allowable for slum/blight and urgent needs activities $240,000 ' NOTE:This example is for illustrative purposes only. It does not demonstrate the calculation for grantees on a multi-year certification cycle,and does not take into account program income. ✓ Due to the 70 percent LMI benefit standard, grantees must limit expenditures under the Slum/Blight and Urgent Need national objectives in order to meet the LMI expenditure requirement. ✓ Under housing activities, the expended funds that count towards the 70 percent requirement may be limited depending on number of LMI units in the housing structure and the amount of the CDBG funds expended on the structure. — To determine the amount expended under housing activities that counts towards the 70 percent requirement, grantees should take the following steps: 13 Divide the number of units in an assisted structure that is occupied by LMI households by the total number of units to determine the percentage of units that are or must be occupied by LMI households; Multiply the total costs of the assisted activity (including those paid for with CDBG and non-CDBG funds) by the percentage of units that are occupied by LMI households; and Basically CDBG (July 2012) _ T — 3-16 HUD, Office of Block Grant Assistance tJ . Chapter 3: National Objectives •'i ° ` P Exclude the amount of CDBG funds expended for the assisted structure that is in excess of the amount calculated in the above step. Excluded Housing Activity Expenditures Example Number of units occupied by LMI households 4 Total number of units in assisted structure 6 Divide number of units occupied by LMI households by total number of (416)* 100 units in assisted structure and multiple by 100 Equals percent of LMI units in structure 67% Total cost of the housing activity(all sources of funds) $300,000 Multiplied by percent of LMI units in structure $200,000 (i.e.proportion of housing costs attributed to LMI units) CDBG assistance to the structure $250,000 Excess CDBG funds that have to be excluded from LM expenditures $50,000 *NOTE:This example is for illustrative purposes only. 3.6 Choosing the Right National Objective ✓ Grantees may have options regarding which national objective is used for a particular activity. This section provides tips on selecting the right national objective. Key Topics in This Section ✓ Activities that meet more than one national objective ✓ Selecting the most appropriate national objective Regulatory/Statutory Citations §570.200(a)(3),§570.208 Other Reference Materials on This Topic ✓ Guide to National Objectives and Eligible Activities for Entitlement Communities — Chapter 3:National Objectives ✓ Activities may qualify for more than one national objective category. If an activity meets the LMI benefit national objective, then the best decision for most grantees will be to use the LMI benefit national objective because of the 70 percent requirement associated with that national objective. ✓ For the activities that meet more than one national objective, grantees may find it useful to document compliance with all the applicable national objectives, especially if there is some uncertainly regarding the ability of an activity to meet the chosen national objective upon completion. ✓ For example, grantees may have concern that an activity qualifying on the basis of creating jobs may not meet the test that at least 51 percent of the jobs created will benefit LMI persons. If the activity could also qualify under the slum/blight area category, the grantee may be best served by documenting compliance with both national objectives. This way, if Basically CDBG(July 2012) 3-17 HUD, Office of Block Grant Assistance -�u Chapter 3:�National Objectives the activity does not meet the LMI job creation criteria the grantee can switch the activity to the slum/blight area national objective rather than have the activity in non-compliance with CDBG rules. Note that switching the activity from LMI benefit to slum/blight area may affect the grantees certification that 70 percent of expenditures are associated with the LMI benefit national objective, so grantees should proceed with precaution. 3.7 Documenting National Objectives ✓ It is critical that grantees document the results of their activities and the related national objective. This section highlights required national objective documentation. Key Topics in This Section ✓ Timing of documentation activities ✓ Documenting LMI Benefit national objective ✓ Documenting Prevention/Elimination of Slums or Blight ✓ Documenting Urgent Need Regulatory/Statutory Citations §570.208,§570.506(b) Other Reference Materials on This Topic ✓ Guide to National Objectives and Eligible Activities for Entitlement Communities -Chapter 3:National Objectives ✓ Grantees must maintain records that funded activities meet one of the national objectives. The records depend on the national objective category. ✓ The Performance Measurement, Reporting, Record Keeping and Monitoring chapter in this manual, Chapter 13, has more details regarding records that must be maintained to document compliance with CDBG regulations, including records on meeting national objectives. ✓ The timing of documentation for activities is an important consideration. Compliance with national objectives can be documented upfront for a number of the categories. For example, compliance documentation for the following national objectives can be established upfront: — Under the national objective of benefit to LMI persons, the LMI area benefit; — Under the national objective of elimination of slums or blight, all three categories (area basis, spot basis, and urban renewal); and — The urgent need national objective. ✓ Some national objectives have to be documented over time. For example, it is likely that the future occupants of a rental rehabilitation activity cannot be identified up-front. Compliance with the LMI Housing requirement that 51 percent of the occupants have to be LMI households, will require collecting documentation demonstrating compliance during the lease-up period and until the national objective is met. ✓ In the same way, future hires of created jobs cannot be identified and documentation of compliance cannot be obtained upfront. Rather, hires by the assisted business have to be monitored over a period of time. Basically CDBG(July 2012) 3-18 HUD,Office of Block Grant Assistance . r Chapter 3: National Objectives •'i ""° 3.7.1 Benefit to LMI Persons LMI Area Benefit ✓ The following records will demonstrate compliance under this national objective category: - Boundaries of service area; - Percentage of LMI persons that reside in the service area; and - The data used for determining percentage of LMI persons. LMI Limited Clientele ✓ One of the following five types of records must be kept: 1. Documentation showing that the activity is designed for exclusive use by a segment of the population presumed by HUD to be LMI persons; or 2. Documentation describing how the nature and the location of the activity establishes that it will be used predominantly by LMI persons; or 3. Data showing the family size and annual income of each person receiving the benefit; or 4. Data showing that barriers to mobility or accessibility have been removed and how the barrier removal was restricted to the extent feasible to one of the particular cases authorized under this category; or 5. Documentation showing that the activity qualifies under the special conditions regarding job services where less than 51 percent of the persons benefiting are LMI persons. LMI Housing ✓ The following records must be maintained: - A written agreement with each landlord or developer receiving CDBG assistance. The agreement must specify o The total number of dwelling units in each multi-unit structure, and 13 The number of those units which will be occupied by LMI households after assistance. - Total cost of the activity, including both CDBG and non CDBG funds - The household size and income eligibility for each of the LMI households occupying assisted units - For rental housing 13 The rent charged (or to be charged)after assistance for each dwelling unit in each assisted structure; and 13 Documentation of compliance with the locally established standards for housing that is "affordable to LMI households". - When assisting structures with less than 51 percent LMI occupants, documentation of qualification under the special conditions: 13 Number of units to be occupied by LMI households at an affordable rent; Basically CDBG(July 2012) 3-19 HUD,Office of Block Grant Assistance a f. Chapter 3: National Objectives Total development cost of new construction; and Amount of CDBG funds expended for activity. - When aggregating scattered sites, documentation of the basis for aggregating scattered sites and considering them as a single structure. - When assisting with the delivery costs of HOME assisted projects and assistance, evidence that housing projects and/or tenant based rental assistance achieves HOME income targeting requirements. ✓ While compliance with the housing national objective is based on the initial occupancy of the housing following completion of the CDBG-assisted activity,grantees are urged to establish their own requirements for replacing such households with other LMI households whenever the assisted unit becomes vacant within a period of time following completion that is commensurate with the amount of CDBG financial assistance that was provided to the developer. ✓ Another consideration when documenting compliance is that occupancy of the unit may not be for some time after the completion of the activity. For example, there may be a time lag between the acquisition or land clearing activity subsidized by CDBG funds and the development of the housing units. It is not sufficient to document the intention to comply. The grantee is responsible for documenting that the housing units are constructed and that the appropriate number of units are initially occupied by LMI households. LMI Job Creation and Retention ✓ Record keeping requirements in this category relate to both the status of the business, the jobs created or retained, and the LMI persons benefiting from the activity. The following is an outline of the documents that have to maintained by grantees: - Written agreement with the business in which the following is specified: 13 A commitment from the assisted business to hire or retain LMI persons; A list by job title of jobs to be created and/or retained and which will be full- or part-time; and O The actions that the business will take to ensure that at least 51 percent of the hires or retainees will be LMI persons, including providing training for any jobs requiring special skills or education - Compliance with the written agreement must be documented as follows: • A list of jobs that were actually created and/or retained; • Whether each such job was held by or made available to a LMI person, and • The full-time equivalency status of the jobs. - For created jobs that will be held by LMI persons, the records must demonstrate: 13 Listing by job title of the jobs created and which were initially held by LMI persons; Listing by job title of the jobs filled; The family size and income of the person who filled each position;and 13 The full-time equivalency status of the jobs. Basically CDBG (July 2012) 3-20 HUD, Office of Block Grant Assistance Chapter 3 National Objectives - For created jobs that will be made available to LMI persons but are not taken by LMI persons: 13 The title and description of the jobs made available; a The full-time equivalency status of the jobs; 13 The prerequisites for the job; special skills or education required for the job, if any; and the business' commitment to provide needed training for such jobs; and How first consideration was given to LMI persons. This can include: • The name(s) of person(s) interviewed for the job and the date of the interview(s), and • The family size and income of the person(s) interviewed. - For retained jobs that would otherwise be lost: Specific evidence that the jobs would be lost without the CDBG assistance. If the retained job is held by a LMI person: • A listing by job title of permanent jobs retained; • The jobs that are known to be held by LMI persons at the time of assistance; • The full time equivalency status of each job; and • Family size and annual income of each LMI person. - For retained jobs that are projected to turnover to LMI persons: A listing of the retained jobs that are projected to become available within two years of assistance; El The basis of the determination that the job is likely to turnover within two years of assistance; 13 The actual turnover date; The name and income status of the person who filled the vacancy; 13 If the person who took the job was not a LMI person, records to demonstrate that the job was made available to LMI persons: • The name(s)of person(s) interviewed for the job and the date of the interview(s) and • The income status of the person(s) interviewed 13 Information on the family size and annual income of each LMI person hired. ✓ There are five options for documenting the LMI status of an applicant or employee: 1. Referrals from an agency that has agreed to refer individuals who are determined to be LMI based on HUD's category. These agencies must maintain records, which must be available to the grantee or federal inspection, showing the basis upon which they determined that the person was LMI; or C 2. A written self certification by the employee or applicant of his/her family size and total income that is signed and dated. Certification can either include actual size and income Basically CDBG(July 2012) 3-21 HUD, Office of Block Grant Assistance Chapter 3: National Objectives •'♦ �•'° of family or can contain a statement that the annual family income is below the Section 8 low-income limit for the applicable family size; or 3. Qualification of employee or application for assistance under another program with income qualification that are as restrictive as those used by the CDBG program. Examples include referrals from Public Housing, Welfare Agency, or the Workforce Investment Area (WIA), with the exception of the WIA Title III program for dislocated workers; or 4. Evidence that the individual is homeless; or 5. Evidence that the individual may be presumed to be LMI by way of residence address and poverty rates of applicable census tract or documentation of area designation as EZ or EC. ✓ The grantee can use any combination of documenting income status for the persons benefiting from a job creation or retention activity. ✓ When documenting income, the income status of an individual is made at the time the CDBG assistance is provided. This may have an affect on the retention of high-paying unskilled jobs counting as eligible except for turnover purposes. This is because a person who occupies a high-paying but low-skilled job may not qualify as a LMI person. Whereas a LMI person may fill the job at a lower pay rate if it were created or if it became available through turnover. 3.7.2 Prevention;Elimination of Slums or Blight ✓ Under the categories of Area Basis and Spot Blight, the presence of blight has to be evidenced in record keeping. In documenting the presence of blight, the use of pictures is encouraged. Area Basis ✓ Records to be maintained include: — Area designated (i.e., boundaries)and date of designation — Documentation and description of blighted conditions that meet the criteria identified at 570.208(b)(1)(ii)(A)or(B) (e.g., photographs, structural surveys, or development plans) — For residential rehabilitation: • Local definition of substandard, • Pre-rehabilitation inspection report qualifying the building as substandard and work plan describing deficiencies, 13 Scope of work performed, by structure, with documentation that substandard elements were addressed first; and 13 Evidence that the activities undertaken address one or more of the conditions that contributed to the deterioration of the area. Spot Blight ✓ Grantee files should include the following: Basically CDBG(July 2012) 3_22 HUD, Office of Block Grant Assistance r �J . asp Chapter 3: National Objectives - Description of condition addressed by activity, - Documentation of eligibility of activity under this category, and - For rehabilitation, a description, by structure, of specific conditions detrimental to public health and safety identified and those addressed by the rehabilitation." Urban Renewal Area ✓ Records must contain: - A copy of the Urban Renewal Plan, and - Documentation that activity was required to meet the goals outlined in the renewal plan. 3.7.3 Urgent Need ✓ Files should include: - Documentation of urgency of need and timing and that the activity was designed to address the urgent need; - Evidence the recipient certified that the CDBG activity was designed to address the urgent need; and - Evidence confirming that other financial resources were unavailable and CDBG had to be used. Basically CDBG (July 2012) 3-23 HUD, Office of Block Grant Assistance Exhibit"C" CDBG Client Data Reporting Form Lease Agreement for Rose Marine Theater !� « ^ �0 ! 2� ! |� HH IN 1H hN I HH -� �| - !| !| . � !! ■ � || !�• ! !! . ! |||| . .■ � H M, )k !| | §) #■ �! ! �! |!! ■|| � ,.. ! its �${ mail! + !!| || |f �|! | �,!!!!,|. . ill NO �= � .�.����.�e�„=,,,,��;a,;..nn�,;,,,,,A„e:,;■■,,, City of Fort Worth, Texas Mayor and Council Communication COUNCIL ACTION: Approved on 7/28/2015 DATE: Tuesday, July 28, 2015 REFERENCE NO.: C-27400 LOG NAME: 25ARTESDELAROSA2015 SUBJECT: Authorize Execution of a Lease Agreement with the Artes De La Rosa for the Rose Marine Theater and Annex Building Located at 1440 and 1444 North Main Street, Fort Worth (COUNCIL DISTRICT 2) RECOMMENDATION: It is recommended that the City Council authorize the City Manager to execute a Lease Agreement with Artes De La Rosa for two years with eight one-year options to renew for the Rose Marine Theater and the Annex Building located at 1440 and 1444 North Main. DISCUSSION: In 1998, the City received a Section 108 loan from the U.S. Department of Housing and Urban Development for development of the Mercado de Fort Worth project in the 1400 Block of North Main Street. Part of the project was to renovate Roseland Theater, now called the Rose Marine Theater (Theater), to be used as a cultural and community gathering place. On October 24, 2000, (M&C L-12930) once the renovation of the theater was completed, the City entered into a five-year Lease Agreement with the Latin Arts Association of Fort Worth (City Secretary Contract No. 26440) for management services of the Theater. On April 19, 2005, (M&C C-20667) the lease was terminated and a new lease was executed to include the Annex Building (City Secretary Contract No. 32235) in the management services for a period of three years with two one-year options. The lease expired in 2010 and has been held over under the same terms and conditions. In 2011, the Latin Arts Association of Fort Worth (LAA) changed its name to Arles De La Rosa (ADLR). ADLR is a non-profit organization established to promote Latin arts and culture in the City and to encourage the youth of the community to pursue a life in the arts. ADLR has requested a new lease. The proposed Lease Agreement with the ADLR will be for a period of two years with eight one-year options to renew. ADLR will manage the Theater and the Annex Building and oversee its operation and maintenance. The lease provides that the primary use of the building is to benefit low and moderate- income citizens of Fort Worth. ADLR will pay rental of$1.00 per year to the City and the City will subsidize the balance of the fair market rental at an estimated value of$179,554.00. The Lease Agreement also provides that the City will be responsible for preventive maintenance and major maintenance of the facility. ADLR will reimburse the City for the estimated cost of the preventive maintenance on the basis of$4,000.00 annually, paid in four equal parts on August 1, November 1, February 1 and May 1. This amount will increase annually with the August payment based on prior year Consumer Price Index increases. The City will be responsible for major maintenance including the building envelope and mechanical systems. The City will explicitly not be responsible for theatrical Logname: 25ARTESDELAROSA2015 Page 1 of 2 lighting, curtains, sound, etc. In addition to the Lease Agreement, the ADLR receives a grant of$50,000.00 per year through the Arts Council for management of the facility. This proposed project is located in COUNCIL DISTRICT 2. FISCAL INFORMATION / CERTIFICATION: The Financial Management Services Director certifies that Public Events will be responsible for the collection and deposit of the yearly rent. FUND CENTERS: TO Fund/Account/Centers FROM Fund/Account/Centers GG01 442001 0214020 1.00 CERTIFICATIONS: Submitted for City Manager's Office by: Susan Alanis (8180) Originating Department Head: Kirk Slaughter (2501) Additional Information Contact: Betty Tanner (2502) ATTACHMENTS No attachments found. Logname: 25ARTESDELAROSA2015 Page 2 of 2