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HomeMy WebLinkAboutL11-082 - Original - Aquatic Management Group, Inc. - Kent Pool Sub-Lease Agreement - 05/26/2011 CITY CLERK KEN T CITY OF KENT WAS",'GTO" 220 4 Avenue South Kent, WA 98032 Fax: 253-856-6725 PHONE: 253-856-5725 Lease Agreement Cover Sheet This document is to be used in lieu of the Contract Cover Sheet SECTION 1 - CONTRACT PROCESSING AND TENANT SET-UP* Contract Number: L_ (7T,,; 1. Responsible Department/Division: Parks and Recreation Dept Admin 2. Contact Person and Title: Phung Huynh, Accountant Telephone Extension: 5102 3. Tenant (Customer) Name: Aquatic Management Group Inc. 4. Tenant (Customer) Number: 160465 5. General Ledger Account Number: 10006221.56250 6. King County Tax Parcel Number: 202205-9066 7. Address of Parcel: 25316 101s' Ave SE Kent, WA 8. Type of Lease: Sub-Lease (Operating Agreement) 9. Council Authorization Date. 5/11/2011 10. Mayor Signature Date: 5/27/2011 SECTION 2 - LEASE DURATION AND IMPORTANT DATES: 11. Lease Start Date: 5/26/2011 with annual Amendments 12. Tenant Lease Option Renewal Notification Due Date: Annual 13. Lease Termination Date: 5/25/2012 14. Lease Duration: Annual SECTION 3 - RENT DETERMINATION AND DUE DATE: 15. Rent: 1.00/year at Fair Market Value per 5/13/11 Appraisal 16. Rent Due Date: Annual 17. Calculation of Rental Increase(s): N/A Lease Agreement Cover Sheet-Page 1 of 2 SECTION 4 — LEASEHOLD EXCISE TAX: 18. Is this lease subject to leasehold excise taxes? ® YES (go to Question 19) ❑ NO, reason: 19. Are leasehold excise taxes for this tenant centrally assessed, i.e. directly collected from the tenant by the Washington State Department of Revenue? ❑ YES (attach written verification received directly from DOR or indirectly through the tenant, e.g. DOR notification letter) ® NO (go to Question 20) 20. Does Lease Rent include Leasehold Excise Tax? (Leasehold taxes must be broken out on the invoice and coded: Business unit.32500.0303) ❑ YES Calculate the leasehold excise tax (Stated Rent divided by 1.1284) ® NO Calculate the leasehold excise tax (Stated Rent times .1284) SECTION 5 — APPLICABLITY OF UTILITIES: 21. Applicability of Utilities — Check all that utilities that are affected and indicate provider (e.g. City of Kent), Account Number or basis of exclusion. ® Does Not Apply ❑ Water: ❑ Sewer: ❑ Drainage: ❑ Garbage: ❑ Electricity/Natural Gas: SECTION 6 — MONETARY PENALTIES AND LATE INTEREST CHARGES: 22. Monetary Penalties: N/A 23. Late Interest: N/A SECTION 7 — OTHER LEASE CONSIDERATIONS: Special lease considerations, e.g. non-monetary rent, etc ® None (check box if no considerations) Lease Agreement Cover Sheet—Page 2 of 2 KENT POOL SUBLEASE AGREEMENT THIS LEASE AGREEMENT is made by and between the CITY OF KENT, a Washington municipal corporation ("City"), and AQUATIC MANAGEMENT GROUP, INC., a Washington corporation ("Lessee"). SECTION 1. LEASE PREMISES. The City subleases to the Lessee the Kent Pool (the "Pool"), located at 25316 101st Avenue S.E., Kent, Washington. The areas subleased are described in the floor plan, which is depicted in Exhibit "B" attached and incorporated by this reference. The leased areas are herein referred to as the "Premises." In addition to the terms of this Agreement, Lessee agrees to abide by the terms of the Lease in Exhibit "A." SECTION 2. USE OF PREMISES The Lessee shall occupy, manage, and operate the Premises as a public pool in accord with the conditions and restrictions in King County Resolution No. 34571. This leasehold interest includes the right to charge fees for the public pool services rendered by Lessee on the Premises. The City further grants the Lessee the right to operate vending machines and sell aquatic related merchandise on the Premises. The Lessee shall not conduct any other business or social activity at the Pool, or use the Pool for any other purpose without first having obtained the City's prior written consent. SECTION 3. TERM. The term of this Agreement shall be for one year, and shall begin on May 26, 2011, and end at the conclusion of May 25, 2012. At the end of this term, the lease may be extended for additional one year terms subject to the written agreement of terms and conditions by the City and the Lessee, and such additional one year terms need not be approved by the City Council. The City shall have the right, prior to any extension, to review the financial records of the Lessee in order to confirm the Lessee's ability to meet the obligations of this Agreement. The Lessee shall provide the City at least one hundred eighty days prior written notice of its intent to seek an extension of the lease. Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 1 of 17 SECTION 4. LESSEE CONSIDERATION AND PAYMENT The Lessee shall provide to the City the following consideration: A. Public Services. Provide public pool services pursuant to the terms of this Agreement. These public pool services had previously been provided by King County, but in April 2002, King County determined that the Pool would have to be closed unless the City or another entity took over operation and management of the Pool. The Pool was closed in December 2002 when no agreement had been reached between King County and the City regarding the pool. In March 2003, the City received a deed for the Pool from King County and received an assignment of the lease between King County and the Kent School District. B. Annual Rent. Pay to the City One Dollar ($1.00) annually within 30 days of execution of this Agreement, and within 30 days of any extension of this Agreement. C. Leasehold Tax. Pursuant to Chapter 82.29A RCW, Lessee shall pay quarterly to the City, on the 15th day of the month following the end of each quarter, the amount of state leasehold tax owing. The state leasehold tax, currently 12.84% will be based on the fair market value of the rent for the premises. SECTION 5. CITY CONSIDERATION AND PAYMENT — ANNUAL FEE. The City shall have the following obligations under this Agreement. Annual Fee. Payment to Lessee of an amount not to exceed Ninety-Five Thousand Dollars and NO/100 ($95,000.00) for maintenance, operation, and improvements to the Pool, and up to an additional Twenty-Five Thousand Dollars and NO/100 ($25,000) annually for capital repairs and lifecycle improvements to the Pool. The City acknowledges that operating the Pool is not a profitable endeavor as seen by King County's experience with the Pool and during the time the City has subleased the pool, and by the responses received when offers to take over the pool were solicited. On January 315t of each year, Lessee shall submit financial documentation to the City showing the profit or loss incurred the previous year. SECTION 6. LESSEE'S OPERATIONAL OBLIGATIONS. Lessee shall perform the following tasks: A. Public Use. Promote and manage the use of the Pool for use as a public pool. Lessee shall establish for City approval a seasonal schedule of aquatic programs. Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 2 of 17 B. Janitorial Service. Provide janitorial service for the interior and exterior boundaries of the Pool grounds. C. Personnel. Provide competent personnel in numbers to adequately serve the Pool patrons. Train and supervise personnel in their work and provide the City with any training manuals used. All staff must have the necessary aquatic training and certification as required by the State of Washington, and the Red Cross or Ellis & Associates. All training and certification records shall be easily accessible for review by governing agencies and the City. D. Utilities. Pay for all utilities associated with the Premises. E. Maintenance. Maintain the Pool, counter/kiosk area, patios, including garbage containers around buildings and entryways in a clean, well-kept, orderly manner to the satisfaction of the City. Conduct maintenance and repairs to interior facilities and fixtures, including all pool equipment, lights, plumbing, furniture, locks associated with the Premises, Lessee's tools and equipment, and Lessee's leased equipment. F. Hours of Service. Provide hours of service that meet the public demand for use of the Pool. Lessee shall keep the Pool open Monday through Saturday, except Thanksgiving Day and December 25th of each year, except as provided in Section 7 below. Sundays will be reserved for special events. The City's Parks and Recreation director (the "Director") must approve any other days that Lessee proposes to close the Pool prior to any closure. G. Advertising. Provide necessary or appropriate advertising to publicize the Pool; provided, the City shall commit to providing the following as part of that advertising program: 1. Full page in each City Parks & Recreation Program Guide; 2. Printing of two marketing pieces per year to be delivered through the Kent School District; and 3. Promotion support of Pool on Kent Commons reader board. H. Alarm System. Install and maintain a burglar alarm system if it is mutually agreed that a system is needed. I. Fee Schedule. Propose to the City a schedule of fees for use by the Pool. These fees shall include, but not be limited to, lessons and public swim times. The list of fees must be approved by the Director, but the Director may not Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 3 of 17 unreasonable withhold his/her approval. Any subsequent changes to the schedule of fees must be agreed upon by Lessee and the Director. ]. Policies and Procedures. Abide by the following operating policies and procedures: 1. Operate the Pool pursuant to the rules and regulations established by the City and any aquatic facility governing agency. 2. Expel from the Pool unruly persons or those under the influence of intoxicants. 3. Prohibit illegal activity on the Premises. 4. Respond in a timely and reasonable manner to members of the public with complaints regarding the Pool. Lessee shall supervise a public relations program for the Pool. Lessee shall refrain from derogatory comments regarding the City's Pool policies or decisions. Lessee shall explain to Pool staff and Pool users the City's Pool policies or decisions. 5. Prohibit use of the Premises for ancillary, revenue-producing activities, unless expressly authorized by the City prior to any such activities and subject to any conditions imposed by the City. 6. Regulate the conduct of all persons at the Pool including preventing trespassing and other behavior that may cause harm or damage to the Pool. 7. Perform a daily physical inspection of the Pool on all days of operation, and immediately report any unusual or unsafe conditions to the Parks and Recreation Department (the "Department"). Such reports shall be followed by written correspondence to the Department. 8. Communicate with the Director, or his or her designated staff, on a regular basis regarding the Pool's operations and conditions. 9. Obtain prior written City approval for all advertisement for commercial vendors. Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 4 of 17 K. Financial Reports. Provide quarterly financial reports to the Department. L. Documentation of Solvency. Submit to the City by March 315t, either a copy of the previous year's annual report or a Certificate of Solvency by a certified public accountant to demonstrate Lessee's financial solvency and ability to maintain operations under this Agreement. M. New Aquatic Facility. Assist the City in planning, feasibility studies, and promotion of the construction of a new aquatic facility in the City of Kent as directed by the Kent City Council. N. Audits. All revenue and fees collected at the Pool are subject to audit by the State Auditor, the City, or City hired Certified Public Accountants, The Lessee shall permit the City, at any time during business hours, through its designated representative, to inspect and verify such accounts and all other business records concerning operations at the Pool. Detail backing up the subsidiary records is subject to audit and records are to be retained per RCW 40.14, record retention laws. The Contractor shall take immediate corrective action on all prior, current, or future internal accounting weaknesses as directed by the City. SECTION 7. POOL CLOSURE A. Closure due to Catastrophe. The Pool shall remain open unless it is closed as a result of causes beyond the control, fault, or negligence of the parties. Such causes may include, without limitation, acts of God or public enemy, acts of the federal, state, or local governments, fires, floods, earthquakes, epidemics, volcanic eruptions, quarantine restrictions, strikes, freight embargoes, court orders, and unusually severe weather or other conditions that cause all or a portion of the Pool to be closed for extended periods of time. Should either the City or the Lessee fail to perform because of a cause described in this subsection, the City and the Lessee shall make a mutually acceptable revision to Sections 4, 5, and 6 of this Agreement. Additionally, this Agreement may be terminated if the Pool is deemed unusable by the City as a result of major damage or destruction and the City elects not to rebuild the unusable portions. Closure of the Pool under the above conditions shall not be a breach of this Agreement. B. Closure for Maintenance. In the event that Lessee determines that it is necessary to close all or a portion of the Pool due to regular maintenance, repair, capital improvements, inclement weather, or similar conditions that result in a situation where the Pool's condition is unsatisfactory for use, or if damage to the Pool is likely if it remained open, the Lessee shall coordinate such closure with the Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 5 of 17 City prior to the closures. Closure of the Pool under the above conditions shall not be a breach of the Agreement. C. Permanent Closure by the City. Should the City determine that the Pool must be permanently closed for any reason, including but not limited to, structural damage, cost of repair, or expense of operation, Lessee shall comply with the City's decision and close all or part of the Pool, depending on the City's decision, at no cost to the City. Closure of the Pool under such conditions shall not be a breach of the Agreement. SECTION S. SIGNAGE All graphics placed upon or affixed to any part of the Premises shall be subject to the prior written approval of the City or its representative, which approval shall not be unreasonably withheld. The Lessee will follow all City sign codes. The Lessee shall submit detailed plans and secure any needed permits/approvals for all exterior and interior signs. SECTION 9. CAPITAL IMPROVEMENTS/REMODELING A. Generally 1. Lessee shall, prior to commencing any alteration, improvement, or construction, submit to the City in writing, plans for alterations, improvements, and construction along with a breakdown of the cost of such improvements. 2. All plans submitted are subject to the approval of the Director or his/her representative prior to commencement of any alteration, improvement or construction. The City agrees to promptly review the plans, and if the alteration, improvement, and construction is acceptable, to promptly approve the same. The plans as approved shall be attached to an executed copy of this Agreement and be incorporated herein. This approval by the Director is in addition to any plan review or issuance of permits by the City in its capacity as a governing body rather than a landlord. 3. All work performed shall be done to the satisfaction of the City and shall be carried out in a manner that minimizes impact upon the use of the Pool by the public. Lessee shall be responsible for obtaining all governmental permits, for meeting all code requirements, and shall submit copies of the same to the City or Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 6 of 17 its representative prior to commencing any construction on the Premises. 4. The City may conduct inspections of any capital improvement work at any time to assure itself that such work is in accordance with the plans approved by the City. In the event any such work is not performed according to the plans as then approved by the Director, the Director or his/her representative shall send a Notice of Non-Compliance to the Lessee. In the event the Lessee fails to make corrections within twenty (20) days after the Lessee's receipt of such Notice of Non-Compliance, the Department may make whatever corrections are necessary to bring such work into compliance with the plans as approved and shall charge the Lessee for all costs of such corrective work. 5. The City may require Lessee, prior to commencement of any construction work, to provide payment and performance bond(s) in a form(s) approved by the City Attorney, payable to the City in the full and just value of such capital improvements, conditioned that all provisions of this Agreement relating to capital improvements shall be faithfully performed by the Lessee, or the surety, if required. 6. Lessee shall furnish the City with a complete set of reproducible 24"x36" mylar drawings reflecting the final "as-built" condition of all capital improvements within thirty (30) days after completion of the construction. Lessee shall furnish to the City copies of all operating manuals, equipment brochures, paint schedules and material brochures for such improvements. 7. Lessee will use recycled products whenever possible. 8. All alterations, capital improvements, and construction shall be constructed and installed solely at the Lessee's expense, unless the City expressly agrees in writing to contribute toward the costs thereof. All alterations and capital improvements by Lessee shall become and remain the property of the City. All equipment, fixtures, and furnishings installed by Lessee will be maintained and repaired by Lessee. B. Initial Capital Improvements. Lessee shall pay for and construct, subject to this Section 9, the capital improvements to the Pool as mutually agreed to by the parties. Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 7of17 Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 8 of 17 SECTION 10. TAXES/FEES The Lessee shall promptly pay all taxes and fees for its operations to the appropriate collecting agencies. SECTION 11. NON-DISCRIMINATION Lessee shall conduct its business in a manner which assures fair, equal and non-discriminatory treatment at all times in all respects to all persons without regard to race, religion, color, sex, age, sexual orientation, national origin, or the presence of any sensory mental, or physical disability. No person shall be refused service, be given discriminatory treatment or be denied any privilege, use of facilities, or participation in activities on the Premises on account of race, religion, color, sex, age, sexual orientation, national origin, or the presence of any sensory mental, or physical disability. Failure to comply with any of the terms of this provision shall be a material breach of this Agreement. Lessee shall comply with all applicable Federal, state, county, and city laws, ordinance, rules and regulations regarding non-discrimination in employment, and the provision of services to the public in a non-discriminatory manner. The Lessee shall be responsible for complying with the ADA with respect to any improvements installed by the Lessee, the placement of furniture and furnishings, and the Lessee's operations. SECTION 12. INSURANCE During the term of this Agreement and any extension thereof, the City shall maintain an insurance policy on the Premises in the amount of the replacement cost for damage from fire; earthquake, and other perils. Said insurance policy shall also insure the replacement value of the equipment provided by the City pursuant to this Agreement. The Lessee shall be responsible for maintaining its own fire and hazard insurance on Lessee owned personal property and leasehold improvements placed within the Premises by the Lessee. The Lessee shall procure and maintain for the duration of the Agreement, insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work hereunder by the Lessee, its agents, representative, employees or subcontractors. The Lessee shall provide a Certificate of Insurance evidencing: Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 9of17 1. Automobile Liability insurance with limits no less than $1,000,000 combined single limit per accident for bodily injury and property damage, and 2. Commercial General Liability insurance written on an occurrence basis with limits no less than $1,000,000 combined single limit per occurrence and $2,000,000 aggregate for personal injury, bodily injury and property damage. Coverage shall include but not be limited to blanket contractual, products/completed operations; broad form property damage, premise operations, employer's liability; and personal injury. Any payment of deductible or self-insured retention shall be the sole responsibility of the Lessee. The City shall be named as an additional insured on the insurance policy, and a copy of the endorsement naming the City as an additional insured shall be attached to the Certificate of Insurance. The Lessee's insurance shall contain a clause stating that coverage shall apply separately to each insured against whom a claim is made or suit brought, except with respects to the limits of the insurer's liability. The Lessee's insurance shall be the primary insurance with respect to the City, and the City shall be given thirty (30) days prior written notice of any cancellation, suspension or material change in coverage. SECTION 13. INDEMNIFICATION/HOLD HARMLESS The Lessee shall defend, indemnify, and hold the City, its officers, officials, employees, and volunteers harmless from any and all claims, injuries, damages, losses or suits, including attorney fees, arising out of or in connection with the performance of this Agreement, except for injuries and damages caused by the sole negligence of the City. Should a court of competent jurisdiction determine that this Agreement is subject to RCW 4.24.115, then, in the event of liability for damages arising out of bodily injury to persons or damages to property caused by or resulting from the concurrent negligence of the Lessee and the City, its officers, officials, employees, and volunteers, the Lessee's liability hereunder shall be only to the extent of the Lessee's negligence. It is further specifically and expressly understood that the indemnification provided herein constitutes the Lessee's waiver of immunity under Industrial Insurance, Title 51 RCW, solely for the purposes of this indemnification. Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 10 of 17 This waiver has mutually negotiated by the parties. The provisions of this section shall survive the expiration or termination of this Agreement. SECTION 14. MUTUAL RELEASE AND WAIVER. The Lessee and City shall not assign to any insurance company any right or cause of action for damages which the parties now have or may subsequently acquire against the other party during the term of this Agreement and shall waive all rights or subrogation for such damage. SECTION 15. STANDARDS. Lessee recognizes that although it is operating its facilities as an independent operator for profit, the City is organized and exists for the purpose of maintaining park and recreation facilities for the use and enjoyment of the general public. The Lessee, its agents and employees, will devote their efforts toward rendering courteous service to the public with a view of adding to the enjoyment of the patrols of this recreational facility. SECTIONI6. COMPLIANCE WITH LAWS. Lessee shall comply with all applicable Federal or State laws and City ordinances and with applicable Federal, State, City and local rules and regulations. SECTION 17. SURRENDER OF PREMISES AND REMOVAL OF LESSEE'S PROPERTY. A. Surrender. Upon termination or expiration of this Agreement, the Lessee shall surrender the Pool to the City and promptly surrender and deliver to the City all keys that it may have to any and all parts of the pool. B. Condition. The Pool shall be surrendered to the City in as good a condition as at the date of execution of this Agreement, except for the effects of reasonable wear and tear, alterations, and repairs made with the concurrence of the City. C. City PropertX. All City purchased and owned equipment and furnishings, and any such equipment and furnishings situated within the Premises subsequently purchased and owned by the City shall remain City property and be left on the Premises. SECTION 18. LIENS AND ENCUMBRANCES Lessee shall keep the Premises free and clear of any liens and encumbrances arising or growing out of its use and occupancy of the Premises. At the City's Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 11 of 17 request, Lessee shall furnish the City written proof of payment of any item which would or might constitute the basis for such a lien on the Pool if not paid. SECTION 19. ENTRY. The City's representative may enter the Pool during normal operating hours for the purpose of inspecting the Pool, except in the case of emergency when the City may enter at any time, but this right shall impose no obligation upon the City to make inspections to ascertain the condition of the Pool. During operating hours, city employees will check in at the front counter to best coordinate with the Lessee. SECTION 20. BREACH A. Notice of Breach. In the event that either party claims that the other is in a breach of any of the provisions of this Agreement, notice of the breach shall be submitted to the party alleged to be in breach and the party in breach shall have thirty (30) days from receipt of the notice within which to correct any activity or conduct claimed by the other to have constituted a breach of this Agreement. B. Remedies. In the event that the party in breach fails to correct the activity claimed to constitute a breach of this Agreement within thirty (30) days of receipt of the notice of breach, the party claiming breach may: 1. Issue a notice of termination in writing by certified mail (return receipt requested), or by personal delivery setting the reason for termination, and/or 2. Seek a judicial remedy, including specific performance; and/or 3. Pursue any other remedy available at law or equity. C. Fees at Termination. In the event of termination, Lessee shall owe to the City a portion of the annual fee set forth in Section 5 equal to the amount of the fee divided by 12 months and multiplied by the number of months remaining in the Lease. SECTION 21. TERMINATION OTHER THAN BREACH A. Pool Closure. In the event that the City determines in its sole discretion, to close the Pool for reasons in accord with Section 7, the City may terminate this Agreement upon issuance of a Notice of Termination giving the Lessee sixty (60) days from receipt to vacate the Pool per Section 17. A notice of breach is not required under these circumstances. Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 12 of 17 �O �J B. Notice of Termination. Under circumstances other than Section 20.0 above, upon receipt of written notice of termination by the City, Lessee will have sixty (60) days to vacate the Pool, unless Lessee has abandoned the Pool, in which case the City may take immediate possession of the Pool. SECTION 22. ASSIGNMENT. Lessee shall not voluntarily, by operation of law, or by process or proceeding in any court, assign, transfer, mortgage, pledge, hypothecate, or encumber this Agreement, or any interest therein, and shall not subcontract the obligations under this Agreement, or any part thereof, without the prior written consent of the City. Any such assignment, subcontracting or use without compliance with the terms of this paragraph shall be void and shall constitute a default under the terms of this Agreement. If Lessee is a corporation, any transfer of this Agreement from Lessee by merger, consolidation, or liquidation, or any change in the ownership or power to vote in a majority of the outstanding voting stock of Lessee shall constitute an assignment for purposes of this paragraph. Any consent to one assignment, subcontracting, or use by any other person shall not be deemed to be a consent to any subsequent assignment, subcontracting, or use by another person. Consent to any such assignment, subcontracting or use shall in no way relieve Lessee of any liability under this Agreement. Assignment by Lessee to a financial institution holding a security interest in this Agreement shall not be considered a violation of the consent requirements of this Agreement. Consent for any subsequent assignment by said financial institution to another Lessee will not be unreasonably withheld; however, any assignee must have experience and be knowledgeable in public pool management. SECTION 23. MODIFICATION. The parties hereto reserve the right to amend this Agreement from time to time as may be mutually agreed. No amendment hereto shall be effective unless written and signed by authorized representatives of the parties. SECTION 24. PAYMENTS TO VENDORS. The Lessee shall pay timely all suppliers and contractors providing services, materials or equipment for carrying out its obligation under this Agreement. The Lessee shall not take or fail to take any action in a manner that causes the City or the Premises to be subject to any claim or lien of any person without the City's prior written consent. Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 13 of 17 SECTION 25. CONFIDENTIALITY OF RECORDS. The City will, to the extent allowed by law, keep all of Lessee's financial cost information confidential, unless required to disclose the information as a result of the Washington Public Records Disclosure law, Ch. 42.56 RCW or by court order. SECTION 26. SEVERABILITY. In the event any one or more of these sections are held invalid by a court of competent jurisdiction, they shall be severed and this Agreement shall not be voided in its entirety. This Agreement shall then be interpreted as if such invalid agreements and covenants were not contained herein. SECTION 27. WASHINGTON LAWS A. This Agreement shall be construed according to the laws of the state of Washington. B. Any litigation arising under this Agreement shall occur, if in state court, in the King County Superior Court having jurisdiction thereof. SECTION 27. ENTIRE AGREEMENT This Lease, including the exhibits and addenda, if any, contains the entire agreement of the Parties. All prior and contemporaneous agreements, promises, representations, and statements relating to this transaction or to the Premises, if any, are merged into this Lease. SECTION 28 NOTICE. Any notices required or permitted under this Lease may be personally delivered, delivered by facsimile machine, or mailed by certified mail, return receipt requested, to the following addresses or to such other places as the parties may direct in writing from time to time: Parks and Recreation Director City of Kent 220 Fourth Avenue South Kent, Washington 98032 (243) 856-5100 Telephone (253) 856-6050 Facsimile Aquatic Management Group, Inc P.O. Box 129 Kent, WA 98035 (206)824-4722 Telephone Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 14 of 17 IN WITNESS WHEREOF, the parties hereto have executed this Lease CITY By: Print Na Suzette Cooke Its: a r ©ate AQUATIC MMANA EMENT GROUP, INC. By ra Print Name: :�mc,-,, r . Cate: --/ Notary Acknowledgements Appear on Following Page P;\Civil\Files\Open Files\1580-Kent Pool\KENT POOL SUBLEASE AGREEMENT 2011.docx Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 15 of 17 STATE OF WASHINGTON } } ss. COUNTY OF ICING � I certify that I Know or have satisfactory evidence that Suzette Cooke is the person who appeared before me, and said person acknowledged that she signed this instrument, on oath stated that she was authorized to execute the instrument and acknowledged it as the. Mayor of the City of Kent to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated 11 -Notary.Seal Must Appear Within This Box- r; N WHEREOF, I have hereunto set my hand and official seal the day anc ." r Written. ' - ('Sign ure) NOTARY PUBLIC, in and or t e State , �r of Washington, residing at 1�aj OF `V^��'� ` My appointment expires y STATE O ss. COUNTY OF � I certify that I know or have satisfactory evidence that Ken Spencer is the person who appeared before me, and said person acknowledged that (he/she) signed this instrument, on oath stated that (he/she) was authorized to execute the instrument and acknowledged it as the aperatioins Manager of Aquatic Management Group, Inc to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Gated; ._ , % i -Notary Seal , lust Appear Within This Box- " I have hereunto set my hand and official seal the day and year fir— �� + � r ' ,'' m C � ✓' a G Pu � M' .yam '� "� (Signature) NOTARY PUBLI jn and for the to of Washington, residing at C'l ° .w y appointment expires ' ll I Kent Pool Lease Agreement City of Kent and Aquatic Management Croup, Inc Page 16 of 17 0 Kent Pool Lease Agreement City of Kent and Aquatic Management Group, Inc Page 17 of 17 �1 ® CERTIFICATE OF LIABILITY INSURANCE DATY20/ O/Y1 ACORD 5zo/zo1 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER,AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED,the policy(ies)must be endorsed. If SUBROGATION IS WAIVED,subject to the terms and conditions of the policy,certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER CONTACT NAME: Risk Management Services, Inc. PHONE FAX P.O. BOX 32712 (602) 840-3234 AIC No:(602) 274-9138 E-MAIL info®therisk eo le.com ADDRESS:Phoenix AZ 85064-2712 INSURERS AFFORDING COVERAGE NAIC p INSURERA:As en Specialty Insurance Co. 10717 INSURED INSURER B:Nationwide Life Insurance Co. 66869 Aquatic Mgmt Group, Inc INSURER C (Jarycn Amateur Swim Assoc. Corp) INSURERD: PO Box 129 Kent WA 98035 INSURERE: INSURER F: COVERAGES CERTIFICATE NUMBER:Cert ID 7834 REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR TYPE OF INSURANCE POLICY EFF POLICY EXP LIMITS LTR D POLICY NUMBER MMIDD MMIDDIYWY GENERAL LIABILITY EACH OCCURRENCE S 2,000,000 A X COMMERCIAL GENERAL LIABILITY Y Y CRASD9II11 ITS 5/15/2011 5/15/2012 PREMISES Ea occurrence $ 100,000 CLAIMS-MADE ❑X OCCUR MED EXP(Any one person) $ EXCLUDED X Participants Legal PERSONAL BAOVINJURY $ 1,000,000 X Liability Included GENERAL AGGREGATE $ 3,000,000 GENT AGGREGATE LIMIT APPLIES PER: PRODUCTS-COMP/OP AGG $ 3,000,000 POLICY PRa LOC ABUSE/MOLESTATION $ 250,000 AUTOMOBILE LIABILITY accide COMBINEDSINGLEnt LIMIT 1,000,000 Ea A ANY AUTO Y Y CRA5D9U11 ITS 5/15/2011 5/15/2012 BODILY INJURY(Per person) $ ALL OWNED SCHEDULED BODILY INJURY(Per accident) $ AUTOS AUTOS NON-OWNED PROPERTY DAMAGE $ X HIRED AUTOS X AUTOS Per accident $ UMBRELLA LIAB OCCUR EACH OCCURRENCE $ EXCESS LIAB CLAIMS-MADE AGGREGATE $ DIED I I RETENTION$ $ WORKERS COMPENSATION _TORCYSITATLU-- OTH- AND EMPLOYERS'LIABIUTY ANY PROPRIETOR/PARTNERJEXECUTIVE❑ N 1 A E.L.EACH ACCIDENT $ ED?OFFICERIMEMBER EXCLUD (Mandatory in NH) E.L.DISEASE-EA EMPLOYE $ If yes,describe under DESCRIPTION OF OPERATIONS below E.L.DISEASE-POLICY LIMIT $ B AD&D N N 00103637-25 5/15/2011 5/15/2012 Maximum Limit: $ 5,000 XS Medical/Dental Maximum Limit: $ 25,000 DESCRIPTION OF OPERATIONS!LOCATIONS!VEHICLES(Attach ACORD 101'Additional Remarks Schedule,if more space Is required) Verification of General Liability coverage for Swimming Lessons. Excess Medical/Dental coverage provided for the Insured's Participants only. 30 day cancellation per policy provisions. The Certificate Holder is included as Additional Insured on General Liability, but only as respects to the Named Insured's operations. CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. City of Kent AUTHORIZED REPRESENTATIVE 220 Forth Ave SC:� Kent WA 98032 ©1988-2010 ACORD CORPORATION. All rights reserved. ACORD 25(2010/05) The ACORD name and logo are registered marks of ACORD Page 1 of 4 POLICY NUMBER: CRA5D9U11 LTS COMMERCIAL GENERAL LIABILITY THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED - DESIGNATED PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART. SCHEDULE Name of Person or Organization: City of Kent 220 Fourth Ave.S Kent,WA 98032 (If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement) WHO IS AN INSURED(Section II)is amended to include as an insured the person or organization shown in the Schedule as an insured but only with respect to liability arising out of your operations or premises owned by or rented to you. CG 20 26 11 85 Copyright, Insurance Services Office,Inc., 1984 0 DENT POOL SUBLEASE AGREEMENT 1 C10 i THIS LEASE AGREEMENT is made by and between the CITY OF KENT,hereinafter referred to as "City," and AQUATIC MANAGEMENT GROUP, INC,, hereinafter referred to as "Lessee." »SEC"TION 1. LEASE PRE,MISES, "rho City has received an assignment of the lease between ling County and the Kent School District, attached as Exhibit "A", for the Dent fool (the "Pool"), located at 2531E 101s` Avenue SE, lent, "'Washington For and upon the conditions and provisions herein, the City subleases to the Lessee the Pool. The areas subleased are described in the floor plan, which is depicted in Exhibit "l3" attached hereto and incorporated herein by this reference Said leased areas are herein referred to as the "Premises" hi addition to the terms of this Agreement, Lessee agrees to abide by the terms of the Lease in Exhibit"A" I n SECTION 2. USE OF PRE MISE . The Lessee shall o ccupy,in anage and operate Clio Premises as a Public pool in accord with the conditions and restrictions in King County Resolution No 34571 This leasehold interest includes the right to charge fees for the public pool services rendered by Lessee on the Premises The City further grants the Lessee the 'right to operate vending machines and sell aquatic related merchandise on the Preises The Lessee shall not conduct any other business or social activity at the Fool, or use the Pool for any other purpose without first having obtained the City's written consent ° SECTION 3. TE RM. The term of this Agreement shall be for five(5)years commencing oil March k,2003, At the end of that five (5)year period of time,if Lessee has made all payments due to thie City in full, and is not in breach of this lease, then the Lessee shall have the option of extending the term of this lease for an additional five(5)year period of time, subject to the City"s review of financial records in order to confirm Lessee's ability to meet obligations under this Agreement The Lessee shall give the City at least one hundred and eighty (180) days prior written notice of its intention to exercise this option At the end of the third year of the first term of this Agreement either party may terminate this Agreement by giving written notice to the other party within ninety (90) days of the expiration of the third year The effective date of termination of the Agreement tinder this Section shall be sixty (60) days after the required notice is received by the party to whom it is directed. KENT POOL SUBLEASE.AGREEMENT (Aquatic Manaxgeinent Group !nc—Adarclr S,,200) Fags i of 12 i SECTION 4. LESSEE CONSIDERATION AND PAYMENT. The Lessee shall provide to the City the following consideration A Fubli, Services Provide public pool services pursuant to the terms of this Agreement These public pool services had previously been provided by King County, but in April 2002 King County determined that the Pool would have to be closed unless the City or another entity took over operation and management of the Pool The Pool was closed in December 2002 when no agreement had been reached between King County and the City regarding the Pool In March 2003, the City received a deed for the Pool from King County and received an assignment of the lease between King County and the Kent School District. This sublease Agreement will assure that public pool services are again provided to the citizens of the City of Kent I B Annual Rent Pay to the City One Dollars ($100) annually on the anniversary date of this Agreement I� C. Leasehold Tax Pursuant to Chapter 82 29A RCW, Lessee shall pay quarterly to the City, on the 15t' day of the month following the end of each quarter, the amount of state I leasehold tax owing The state leasehold tax,currently 12 84%,will be based on the fair market value of the rent for the premises SECTION S. CITY CONSIDERATION AND PAYMENT. The City shall have the following obligations under this Agreement ' A butial Fee payment to Lessee of an initial sum of Seventy Thousand Dollars and no/100 ($70,000 00) for start up funds to be paid within five (5) days of the execution of this Agreement The City shall receive from Lessee rent relief for use of the Pool at mutually agreed upon terms equal to the initial fee ' B Annual Fee Payment to Lessee once a year of an amount not to exceed Twenty Thousand Dollars and no/100($20,000 00)for maintenance,operation, and unprovements to the Pool The City acknowledges that operating the Pool is not a profitable endeavor as seen by King County's experience with the Pool, and by the responses received when offers to take over the pool were solicited. Payment of the annual fee shall be made under the following terms: Lessee shall make a written request to the City for funds to be released and shall provide documentation demonstrating the need for the amount requested. Within thirty(30) days of the receipt of the request, the City shall determine, in its sole discretion,the amount of funds to be distributed and distribute the same By January 31"of the next fiscal year, Lessee shall submit financial documentation to the City showing the profit or loss incurred the previous year Lessee ` shall reimburse the City for any profit it made, up to the amount of annual fee paid by the City i the previous year I I KENT POOL SUBLEASE AGREEMENT (Aquatic Management Group, Inc—March 5,2003) Page 2 of 12 i C Capital Fee Payment to Lessee of a portion of the capital improvement funds the i City receives from Ding County in 2003 and 2004 under the terms of the Intergovernmental Agreement conveying the Pool from King County to the City The amounts will be mutually agreed upon for capital improvements to the Pool The City may retain some of the funds for unanticipated capital repairs. D Computer System Provide to Lessee the computers that were transferred with the Pool by King County Lessee shall be responsible for.the set up and maintenance of the i computer system SECTION 6. LESSEE'S OPERATIONAL OBLIGATIONS. Lessee shall perform the following tasks. A Public Use Promote and manage the use of the Pool for use as a pubhc pool Lessee shall establish for City approval a quarterly schedule of aquatic programs B. J'anitonal Service. Provide ,janitorial service for the interior and exterior I I boundaries of the Pool grounds C Personnel Provide competent personnel in numbers to adequately serve the Pool patrons, Train -and supervise personnel in their work and provide the City with any training manuals used All staff must have the necessary aquatic training and certification as required by the State of Washington, and the Red Cross or Ellis &Asociates All training and certification i records shall be easily accessible for review by governing agencies and the City D Utt lies Pay for all utilities associated with the Premises. E Maintenance Maintain the Pool, counter/kiosk area, patios, including garbage j containers around buildings and entryways in a clean, well kept, orderly manner to the I` satisfaction of the City Conduct maintenance and repairs to interior facilities and fixtures, including all pool equipment, lights, plumbing, furniture, locks associated with the Premises, i Lessee's tools and equipment,and Lessee's leased equipment , F Hours of Service Provide hours of service that meet the public demand for use of the Pool. Lessee shall keep the Pool open Monday through Saturday, except Thanksgiving Day and December 25'" of each year, except as provided in Section 7 below Sundays will be reserved for special events. The City's Director of Parks,Recreation, and Community Services (the"Director)must approve any other days that Lessee proposes to close the Pool prior to any closure , ' f RENT POOL SUBLEASE AGREEMENT (Aquattc Management Group,Inc—March 5,2003) Page 3 of 12 1 G Advertismg Provide necessary advertising to publicize the Pool. Lessees hall establish an advertising program and obtain the approval of the Director for the program. The Director shall not unreasonably withhold his approval. H Alarm stem Install and mamtam a burglar alarm system if it is mutually agreed that a system is needed I. Fee Schedule Propose to the City a schedule of fees for use by the Pool These fees shall include,but not be limited to, lessons and public swum tunes The list of fees must be approved by the Director, but the Director may not unreasonably w nthhold h is approval.Any subsequent changes to the schedule of fees must be agreed upon by Lessee and the Director. J. Policies and Procedures Abide by the following operating policies and procedures I i Operate the Pool pursuant to the rules and regulations established by the City and any aquatic facility governing agency i 11 Expel from the Pool unruly persons or those under the influence of intoxicants Ill Prohibit illegal activity on the Premises IV Respond in a timely and reasonable manner to members of the public with complaints regarding the Pool Lessee shall supervise a public relations program for the Pool Lessee shall refram from derogatory comments regarding the City's Pool policies or decisions Lessee shall explain to Pool staff and Pool users the Cnty's Pool policies or decisions. v Prohibit use of the premises for ancillary, revenue-producing activities, unless expressly authorized by the City prior to any such activities and subject to any conditions imposed by the City vn Regulate the conduct of all persons at the Pool, including preventing trespassing and other behavior that may cause harm or damage to the Pool vni Perform a daily physical inspection of the Pool on all days of operation, and immediately report any unusual or unsafe conditions to the Department of Parks, Recreations, and Community Services (the "Department's Such reports shall be followed by written correspondence to the Department vin Communicate with the Director,or his or her designated staff,on a regular basis regarding the Pool's operations and conditions KENT POOL SUBLEASE AGREEMENT (Aquanc Alanage=t Group. Inc—March 3.2003) Page4of12 1 i ix Obtain prior written City approval for all advertisement for commercial vendors I K Financial Reports Provide monthly financial reports to the Department L Documentation o Solvency Submit to the City by March 31"of each year after 2003, either a copy of the previous year's annual report or a Certificate of Solvency by a certified public accountant to demonstrate Lessee's financial solvency and abihty to mai itain operations under this Agreement M New Aquatic Facility Assist the City in planning, feasibility studies, and promotion of the construction of a new aquatic facility in the City of Kent as directed by the Kent City Council i N Audits All revenue and fees collected at the Pool are subject to audit by the State Auditor, City Internal Auditor, or City lured Certified Public Accountants The Lessee shall permit the City, at any time during business hours, through its designated representatives, to inspect and verify such accounts and all other business records concerning operations at the Pool Detail backing up the subsidiary records is subject to audit and records are to be retained per RCW 4014 record retention laws. The Contractor shall take immediate corrective action on all prior,current, or future internal contract weaknesses as directed by the City SECT(ON 7 POOL CLOSURE. A. Closure due to Catastrophe The Pool shall remain open unless it is closed as a result of causes beyond the control,fault,or negligence of the parties Such causes may include, without limitation, act of God or public enemy, acts of the federal, state, or local governments, fires, floods, earthquakes, epidemics, volcanic eruptions, quarantine restrictions, strikes; freight embargoes, c ourt o rders, and unusually s evere w eather o r o ther c ondition t hat c auses all or a portion of the Pool to be closed for extended penods of time. S hould either the City or the Lessee fail to perform because of a cause described in this subsection, the City and the Lessee shall make a mutually acceptable revision to Sections 4, 5 and 6 of this Agreement ' Additionally,this Agreement may be terminated if the Pool is deemed unusable by the City as a result of major damage or destruction and the City elects not to rebuild the unusable portions Closure of the Pool under the above conditions shall not be a breach of this Agreement. B, Closure for Maintenance In the event that Lessee determines that it is necessary to close all or a portion of the Pool due to regular maintenance, repair, capital improvements, inclement weather, or similar conditions that result in a situation where the Pool's condition is unsatisfactory for use, or if damage to the Pool is likely if it remained open, the Lessee shall coordinate such closure with the City prior to the closure Closure of the Pool under the above conditions shall not be a breach of the Agreement KENT POOL SUBLEASE AGREEMENT (AquattcManagment Group, Inc—Mack 5,2003) Page 5 of 12 C Permanent Closure by Caty Should the City determine that the Pool must be , permanently closed for any reason, including but not limited to, structural damage, cost of repair, or expense of operation,Lessee shall comply with the City's decision and close all or part of the f Pool, depending on the City's decision, at no cost to the City Closure of the Pool under the conditions shall not be a breach of the Agreement SECTION& SIGNAGE. All graphics placed upon or affixed to any part of the Premises shall be subject to the prior written approval of the City or its representative, which approval shall not be unreasonably withheld The Lessee will follow all City sign codes The Lessee shall submit detailed plans and secure any needed permits/approvals for all exterior and interior signs SECTION 9. CAPITAL IMPROVEMENTS/REMODELING. A Generally 1 Lessee shall, prior to commencing any alteration, improvement, or construction, submit to the City in writing,plans for alterations,improvements,and construction along with a breakdown of the cost of such improvements, 2. All plans submitted are subject to the approval of the Director or his ; representative prior to commencement of any alteration, improvement or construction The City agrees to promptly review said plans, and if the alteration, improvement, and construction is acceptable, to promptly approve the same The plans as approved shall be attached to an executed copy of this Agreement and be incorporated herein This approval by the Director is in addition to any plan review or issuance of permits by the City in its capacity as a governing body rather than a landlord ! 3. All work performed shall be done to the satisfaction of the Department and shall be carried out in a manner that muninizes impact upon the use of the Pool by the public I Lessee shall be responsible for obtaining all governmental permits, for meeting all code requirements,and shall submit copies of the same to the Department or its representative prior to commencing any construction on the Premises 4 The Department may conduct inspections of any capital improvement work at any time to assure itself that such work is in accordance with the plans approved by the Department. In the event any such work is not performed according to plans as then approved by the D irector,t he D irector o r h is r epresentative s hall s end a Notice of Non-Comphance to the Lessee. In the event the Lessee fails to make corrections within twenty (20) days after the Lessee's receipt of such Notice of Non-Comphance, the Department may make whatever corrections are n ecessary t o b ring s uch work into compliance with the plans as approved and shall charge the Lessee for all costs of such corrective work KENT POOL SUBLEASE AGREEMENT (AquahcManagement Group, Inc—Marc*S,2003) Page 6of12 I 5 The City may require Lessee,prior to commencement of any construction work, to provide payment and performance bond(s)in a form(s) approved by the City Attorney, payable to the City in the full and Just value of such capital improvements, conditioned that all provisions of this Agreement relating to capital improvements shall be faithfully performed by the Lessee,or the surety,if required 6 Lessee shall furnish the City with a complete set of reproducible"24 x 36" mylar drawings reflecting the final "as-built' condition of all capital improvements within thirty (30) days after completion of the construction Lessee shall furnish t o t he C ity c opies o f all operating manuals, equipment brochures, paint schedules and material brochures for such improvements 7 Lessee will use recycled products whenever possible. 8 All alterations, capital improvements, and construction shall be constructed and installed solely at the Lessee's expense, unless the City expressly agrees in writing to contribute toward the costs thereof,All alterations and capital improvements by Lessee shall become and remain the property of the City All equipment, fixtures, and furnishings installed by Lessee will be maintained and repaired by Lessee. B Initial Cauital Improvements Lessee shall pay for and construct, subject to this Section 9,the capital improvements to the Pool as mutually agreed to by the parties. SECTION 10. TAXES/FEES. The Lessee shall promptly pay all taxes and fees for its operations to the appropriate collecting agencies i SECTION11. NON-DISCRMNATION. Lessee shall conduct its business in a manner which assures fair, equal and non-discriminatory treatment at all times in all respects to all persons without regard to race, color, religion, sex, age or national origin No person shall be refused service, be given discriminatory treatment or be denied any privilege,use of facilities, or participation in activities on the Freinises on account of race,color,religion,sex,age or national origin. Failure to comply with any of the terms of this provision shall be a material breach of this Agreement Lessee shall comply with all applicable Federal,State,County,and City laws,ordinances, rules and regulations regarding non-discrimination in employment, the provision of services to the public in a non-discriminatory manner The Lessee shall be responsible for complying with the ADA with respect to any Improvements mstalled by the Lessee, the placement of furniture and furnishmgs, and the Lessee's operations. 1� f KENT POOL SUBLEASE AGREEMENT (Aquatic Management Group, Inc—March S,Z003) Page 7 of 12 i L SECTION 12. INSURANCE. During the term of this Agreement and any extension thereof, the City shall maintain an insurance policy on the Premises in the amount of the replacement cost for damage from fire; earthquake, and other perils Said insurance policy shall also insure the replacement value of the equipment provided by the City pursuant to this Agreement The Lessee shall be responsible for maintaining its own fire and hazard insurance on Lessee owned personal property and leasehold improvements placed within the Premises by the Lessee. The Lessee shall procure and maintain for the duration of the Agreement, insurance against claims for injuries to persons or damage to property which may anse from or in connection with the performance of the work hereunder by the Lessee,its agents,representatives, employees or subcontractors The Lessee shall provide a Certificate of Insurance evidencing 1 Automobile Liability insurance with limits no less than $1,000,000 combined single limit per accident for bodily mnjury and property damage, and 2 Commercial General Liability insurance written on an occurrence basis vnth limits no less than $1,000,000 combined single limit per occurrence and $2,000,000 aggregate for personal umjury,bodily mjury and property damage Coverage shall include but not be limited to blanket contractual, products/completed operations;broad form property damage, premise operations,employer's liability; and personal injury. Any payment of deductible or self-insured retention shall be the sole responsibility of the Lessee The City shall be named as an additional insured on the insurance policy,with respect to work performed by, or on behalf of, the Lessee, and a copy of the endorsement naming the City as additional insured shall be attached to the Certificate of Insurance The Lessee's insurance shall contain a clause stating that coverage shall apply separately to each insured against whom claim is made or suit brought, except with respects to time limits of the insurer's liability The Lessee's insurance shall be the primary insurance with respect to the City, and the City shall be given thirty (30) days prior written notice of any cancellation, suspension or material change in coverage I 4 I KENT POOL SUBLEASE AGREEMENT (AqualicManagemenr Group, Inc—March S,2003) Page 8 of 12 i I SECTION 13. INDEMNMCATION/HOLD HARMLESS. The Lessee-shall defend, indemnify, and hold the City, its officers, officials, employees, and volunteers harmless from any and all claims, injuries, damages, losses or suits, including attorney fees, ansing out of or in connection with the performance of this Agreement,except for injuries and damages caused by the sole negligence of the City I I Should a court of competent jurisdiction determine that this Agreement is subject to RCW 4.24 115, then,in the event of liability for damages arismg out of bodily injury to persons or damages to property caused by or resulting from the concurrent negligence of the Lessee and the City, its officers, officials, employees, and volunteers, the Lessee's liability hereunder shall be only to the extent of the Lessee's negligence It is further specifically and expressly understood that the indemnification provided herein constitutes the Lessee's waiver of unmumty under Industrial Insurance, Title 51 .RCW, solely for the purposes of thus indemnification This waiver has been mutually negotiated by the parties The provisions of this section shall survive the expiration or termination of this Agreement SECTION 14. MUTUAL RELEASE AND WAIVER { The Lessee and City shall not assign to any insurance company any right or cause of action for damages which the parties now have or may subsequently acquire against the other party during the term of this Agreement and shall waive all rights or subrogation for such damage f SECTION 15. STANDARDS. I Lessee recognizes that although it is operating its facilities as an independent operator for profit,the City is organized and exists for the purpose of maintaining park and recreation facilities for the use and enjoyment of the general public. The Lessee, its agents and employees, will devote their efforts toward rendering courteous service to the public with a view of adding to the enjoyment of the patrons of this recreational facility SECTION 16. COMPLIANCE WITH LAWS. I Lessee shall comply with all applicable Federal or State laws and City ordinances and with applicable Federal,State,City and local directions,rules and regulations I SECTION 17. SURRENDER OF PREMISES AND REMOVAL. OF LESSEE'S PROPERTY. { A Surrender Upon termination or expiration of this Agreement, the Lessee shall surrender the Pool to the City and promptly surrender and deliver to the City all keys that it may have to any and all parts of the Pool ! { I KENT POOL SUBLEASE AGREEMENT (Aquatic Management Group Inc—March S,2003) Page 9 of 12 i l i i I B Condition The Pool shall be surrendered to the City in as good a condition as at the date of execution of this Agreement, except for the effects of reasonable wear and tear, alterations,and repairs made with concurrence of the City C Removal by Lessee Prior to the expiration of the term of this Agreement,Lessee shall remove from the Pool, at its sole expense, all equipment, furmsbmgs, and other personal property owned and placed in or on the Pool by the Lessee. D. City Pronerj All City purchased and owned equipment and furnishings,and any such equipment and furnishings situated within the Premises subsequently purchased and owned by the City shall remain City property and be left on the Premises SECTION 1& LIENS AND ENCUMBRANCES. Lessee shall keep the Premises free and clear of any liens and encumbrances arismg or growing out of its use and occupancy of the Premises At the City's request,Lessee shall f msh the City written proof of payment of any item which would or might constitute the basis for such a lien on the Pool if not paid SECTION 19. ENTRY. The City's representative may enter the Pool during normal operating hours for the purpose of inspecting the Pool, except in the case of emergency when the City may enter at any time,but this right shall impose no obligation upon the City to make inspections to ascertain the condition of the Pool. SECTION20 BREACH A. Notice o Breach In the event that either party claims that the other is in a breach, of any of the provisions of this Agreement,notice of the breach shall be submitted to the party alleged to be in breach and the party in breach shall have thirty (30) days from receipt of the notice within which to correct any activity or conduct claimed by the other to have constituted a breach of this Agreement B. Remedies In the event that the party in breach shall fail to correct the activity claimed to constitute a breach of this Agreement within thirty(30)days ofreceipt of the notice of breach, the party claiming breach may: 1 Issue a notice of termination in writing by certified mail (return receipt requested), or by personal delivery setting the reason for termination,and/or 2. Seek judicial remedy,including specific performance;and/or l 3 Pursue an other remedy available at law ore equity Y Y q t3' ` KENT POOL SUBLEASE AGREEMENT (AquaticManagemeng Group, Inc—March J.2003) I I Page 10 of 12 I i i Ii C. Poa1-Closure_ In the event that the City detemunes in Its sole discretion,to close the Pool for reasons in accord with Section 7, the City may terminate this Agreement upon Issuance of a Notice of Termination giving the Lessee sixty(60)days from receipt to vacate the Pool per Section 17, A notice of breach is not required under these circumstances D. Notice of Term�o�I Under circumstances other than Section 20.0 above, Upon receipt of written notice of termination by the City, Lessee will have twenty(20) days to vacate the Pool, unless Lessee has abandoned the Pool, in which case the City may take immediate possession of the Pool SECTION21. ASSIGNMENT, Lessee shall not voluntarily, by operation of law, or by process or proceeding in an court, assign, transfer, mortgage, pledge, hypothecate, or encumber this Agreement, or any interest therein, and shall not subcontract the obligations under this Agreement, or any part thereof, without the prior written consent of the City Any such assignment, subcontracting or ! use without compliance with the terms of this paragraph shall be void and shall constitute a default under the terms of this Agreement If Lessee is a corporation, any transfer of this Agreement from Lessee by merger, consolidation, or liquidation, or any change in the ownership or power to vote in a maJonty of the outstanding voting stock of Lessee shall constitute an assignment for purposes of this paragraph Any consent to one assignment, or use by any other person shall not be deemed to be a consent to a y ssubse subcontracting, assicting, t subcontracting,or use by another person Consent to an such assi y q gnment, shall in no way relieve Lessee of any liability under this Agreemen�e Assignment or use financial institution holding a security interest in thus Agreement shall not bebconsiderred a violation of the consent requirements of this Agreement Consent for any subsequent assignment by said financial institution to another Lessee will not be unreasonably withheld; however, any assignee must have experience and be knowledgeable in public pool management SECTION22. MODIFICATION. The parties hereto reserve the right to amend this Agreement from time to time as maybe mutually agreed. No amendment hereto shall be effective unless written and signed by authorized representatives of the parties SECTION23. PAYMENTS TO VENDORS. The Lessee shall pay timely all suppliers and contractors providing services, materials or equipment for carrying out its obligations under this Agreement, The Lessee shall not take or fail to take any action in a manner that causes the City or any matenals that the Lessee hereunder to be subject to any claim or lien of any person without the City's prior written consent ! I KENT POOL SUBLEASE AGREEMENT ! Page 11 of 12 (4quatic Management Group, he —March S,2003) I i i SECTION24. CONFIDENTIALITY OF RECORDS. The City will,to the extent allowed by law,keep all of Lessee's financial cost information confidential, unless required to disclose the information as a result o f the W aslungton P ublic Records Disclosure law,Ch 42.17 RCW or by court order SECTION25. SEVERABILITY. In the event any one or more of these sections are held invalid by a court of competent jurisdiction, they shall be severed and this Agreement shall not be voided m its entirety. This Agreement shall then be interpreted as if such invalid agreements and covenants were not contained herein i SECTION 26. WASHINGTON LAWS. A This Agreement shall be construed according to the laws of the state of Washington. B. Any litigation ansing under this Agreement shall o ccur,i fin s tate c ourt in the King County court having jurisdiction thereof, and if in federal courts, in the United States District Court for the Western District of Washington SECTION27. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement between parties IN WITNESS WBEREOF, the City aused this Agreement to be executed by its proper officers duly authorized this day of ,2003,and the Lessee has hereunto set its hand LESSEE: CITY: AQUATIC MANAGEMENT,INC. CITY OF KENT By: C By: Name 5fa,� C (4 VTC if 1SyrJ N W G L•t s Title CC Title. A3Date_3IS-ll am s G Date i KENT POOL SUBLEASE AGREEMENT (Aquatic Managemwu Group Inc—March S 2003) Page 12 of 12 i - i i f 0 y IN �" 1 ✓/ a� ,ter czr z 3 Ail I� v �. .. L...»J �� ti✓ ,y!t r_ ✓✓ i p�'��� �*� � �'., f 9 V z .. � � c 4 10 wC �� do C 65g a y✓e- {�J '_` Y, t ^ I �>up OK , tj - &via 3 ayw,9 znc Air a". Bn Wu wt �u :3"C:✓^T,I ni,A^l}TVk. r33 r rAY3r{ • I g� � Ur h1E M, \\\ I ° \ / Rm 0 ca'a '44 cam 0 FL L-rL I �,. REQUEST FOR MAYOR'�IGIVATURE KENT Please Fill in All Applicable Boxes Routing Information (ALL REQUESTS MUST FIRST BE ROUTED THROUGH THE LAW DEPARTMENT) Reviewed by City Attorney: Reviewed by Director: Originator: Jeff Watling/Teri Petrole Phone (Originator): 5101/5007 Date Sent: 5/19/2011 Date Required: I Return Signed Document to: Teri Petrole CONTRACT TERMINATION DATE: n/a VENDOR NAME: Aquatic M mnt Group DATE OF COUNCIL APPROVAL: 5/3/2011 Brief Explanation of Document: Since King County's transfer of the Kent Pool to the City in 2003, the Aquatics Management Group (AMG) has been the contracted operator of that facility. The current lease agreement with is scheduled to expire on May 25, 2011, coinciding with the expiration of the current land lease with the Kent School District. I I l All Contracts Must Be Routed Through The Law Department (This area to be completed by the Law Department) I o, Received: Approval of Law Dept.. ; , Law Dept. Comments: P _ Date Forwarded to Mayor. f ( p Shaded Areas To Be Completed By Administration Staff Received: i i II Recommendations and Comments: ii Disposition: �ZI, �� ; y i Date Returned: Appraisal of Kent Meridian Pool 316 1 O1 st Avenue Southeast Kent, Washington AL�w , or �r7.rtn ,mot " m r t s RaInbiuctl (d twMN ssRd% 'u�aa"r,r Wand d 1 EdVO�vtA1 "xg r `ar,.r,,7 S E3rIl4�w41� z 5rtirrurrr,.Nnri�„tu CA 6wvapptl+wa7 ,n ,w o�t�rerva ��- ', r ao C`� °� G Vdiorad ffrawEd�,uC+a ay, 44 feflr+kwlrr ... y 4 ""'Jhu F CdMJ�iY'MY' (41 �,ry mww. wi.00 drs&rmw i k" P Cnrt FVreaatr,er aaa iRrrncr roy IHgihrmm, Etr,r%rarr �^,Nm, �'IybhmrlRlq ""�"�°r•+YUL:+NmtWmpr� Mivnnruman0. °ewA uxrw Nc".mw oar a`.A A `d,. i .,"M M .l lcftr 2 DP,E'4YwIP ps M"oo,VIA) N-0 ww�nxir4wrawr parr roNerr�winY3t�var 'ww.r F,�,wnx s�_. McK } u f E SCHALKA- REAL.ESTATE APPRAISAL SERVICES&CONSULTANTS,INC. Seattle, Washington APPRAISAL of Market Rent Kent Meridian Pool 25316 101St Avenue Southeast Kent, Washington Aso : May 13, 2011 Atithorized bw Hope Gibson Park Planning & Development Manager City of Kent PrWared by: Kenneth A. Barnes, MAI, CRE Arthur Jones, Appraiser McKEE & SCHAU<,A L SERVICES&CONSUL:tANTS.INC. 1210016th Avenue,Suite 1805,Seattle,Wnshingtnn 98101 TO 206,343,80M�www.msocal.com I Fak MS 386,5777 Reference No. 302181 McKEE & SC_HALK�A, Real Estate Appraisal Services&Consultants, Inc. May 20, 2011 Ms, Hope Gibson, RLA Park Planning& Development Manager City of Kent-Parks, Recreation& Community Services 220 Fourth Avenue South Kent,WA 98032 Project. Estimate of Market Rent Property Name Kent Meridian Pool Description. Public swimming pool Location: 25316 101stAvenue Southeast Municipality: Kent, Washing-ton Real Property Description: A portion of King County APN-202205-9066 McKee &Schalka Reference No.: 31218 Dear Ms. Gibson: We have prepared this summary appraisal report for the subject property. The subject is a public swimming located on the campus of Kent Meridian High School in Kent, Washington. The pool was constructed in 1971 by King County, The fee simple interest in the subject is owned by the Kent School District. They lease the improvements to the City of Kent, who then sublease the pool to a licensed pool operator. The intended use of this appraisal is for determination of an appropriate market rent to be charged by the City of Kent to the pool operator (sublessee). We have made the special assumption that the pool improvements must remain on site and be open to the public. The accompanying appraisal has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) and with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute, It is subject to the Assumptions, Certification & Limiting Conditions contained in this report. As a result of our investigation and analysis,our conclusions are: Effective Value Description Valuation Date Conclusion Market Rent May 13,2011 No Rent* *Assunies a lease term of three to five years,zoith lessee responsible for all expenses including utilities typical repairs and maintenance, and taxes, and lessor responsible far capital repairs, Respectfully submitted, Kennet Barnes, "CRE pra-itu r J�ie Appraiser ppl WA State-Certified General Real Estate Appraiser(1100578) WA State-Registered Apprais r rai4ee(1000956) 1200 6th Munw,Suite 1605,Seattle,Washington 98101 Tei:206343.8909 1 www rnsrojl com I Fax:2(X)386 5777 Kent Meddian Pool,May 20, 2011 Certification, Disclosure and Use Restriction I certify that, to the best of my knowledge and belief • The statements of fact contained in this report are true and correct. • The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses,opinions, and conclusions. • I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved, • I have no bias with respect to the property that is the subject of this report or to the parties invoived with this assignment. • My engagement in this assignment was not contingent upon developing or reporting predetermined results. • My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. • My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the,Uniform Standards of Professional Appraisal Practice. • Mr. Kenneth A. Barnes, MAI, CRE and Mr. Arthur Jones have made a personal inspection of the property that is the subject of this report. No one provided significant professional assistance to the person(s)signing this report,with the exception of other associates of McKee&Schalka, Inc. • The reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice, • The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. • As of the date of this report, Mr. Kenneth A. Barnes, MAI, CRE, has completed the requirements of the continuing education program of the Appraisal Institute, RESTRICTION UPON DISCLOSURE&USE: This appraisal is intended for use only by the client and intended users specifically identified in the report, and may not be transmitted or communicated to any other party without the specific written permission of McKee & Schalka, Inc. Disclosure of the contents of this appraisal report is governed by the By-Laws & Regulations of the Appraisal Institute. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser or the firm with which (s)he is connected, or any reference to the Appraisal Institute or to the MAI designation) shall be disseminated to the public through advertising media, public relations media, news media, sales media or any other public means of communication without the prior written consent and approval of the undersigned. No part of this report or any of the conclusions may be included in any offering statement, memorandum, prospectus or registration without the prior written consent of the appraiser. Kenneth A. Barnes, MAI, CRE Arthu Jo es, Appraiser WA State-Certified General Real Estate Appraiser(11010,578) WA State-Registered Apprais r ainee(1000956) McKee &Schalka Real Estate Appraisal Services&COYISLIltants,Inc. Kent Meridian Pool,May 20,2011 General Assumptions and Limitinsa Conditions The attached report may only be used or reviewed in its entirety. No individual pages, portions, analyses or conclusions may be separated from the complete report or verbally disseminated without transmittal of the entire report. The report is intended solely for the review and use by the client identified in the Transmittal Letter, and may not be transferred to any other party without the specific written permission of McKee&Schalka, Inc. Certain aspects of the report (including analysis methodology, spreadsheets, textual formatting and content) are considered the exclusive intellectual property of McKee&Schalka, Inc. All rights are reserved. The following General Assumptions and Limiting Conditions are supplemented by additional specific assumptions and limiting conditions identified in the attached report. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, structures, or environment (including asbestos, formaldehyde, radon, soil contamination, structural conditions, legal compliance including zoning and Americans With Disabilities Act compliance, title or legal conditions, mineral or other valuable conditions or rights, or unknown soils, hydrological, or environmental factors)that render it more or less valuable. We have no expertise in any of these areas, and we specifically counsel the client to perform additional investigation by qualified experts. No responsibility is assumed for such conditions or for arranging the studies that may be required to discover them. The liability of McKee&Schalka, Inc. and its employees is limited to the client only. The value conclusions are the result of integration of the entire appraisal process, including multiple methodologies, approaches and analyses. Any specific errors or omissions may or may not change the value conclusions. The appraiser is not required to give further consultation, testimony or attendance in court by reason of this appraisal unless arrangements have been previously made. The information furnished by others is believed to be reliable,but no warranty is given for its accuracy. The forecasts, projections and estimates contained in this report are based on current market conditions, anticipated short-term supply and demand factors, and a stable economy. These forecasts are, therefore, subject to changes with future conditions. The analyses and conclusions are valid only as of the date of transmittal of the report. The appraiser has made no survey of the property and assumes no responsibility in connection with such matters. Any sketch or identified survey of the property included in this report is only for the purpose of assisting the reader to visualize the property. No responsibility is assumed for the legal description or for matters including legal or title considerations. The property is appraised free and clear of any or all liens or encumbrances, unless otherwise stated. Title to the property is assumed to be good and marketable. Responsible ownership and competent management are assumed. The allocation of total value to land, buildings, or any fractional part or interest as shown in this report, is invalidated if used separately or in conjunction with any other appraisal. ii McKee&Schalka Real Estate Appraisal Services&Consultants,Inc. Kent Meridian Pool,May 20,2011 TABLE OF CONTENTS AND INDEX Certification, Disclosure,and Use Restriction......................................................................i General Assumptions and Limiting Conditions ..................................................................ii Assignment Scope of Work,Information, &Definitions.....................................................1 Identityof Property.....................................................................................................1 LegalDescription.........................................................................................................1 Title Report,Easements,&Other Restrictions.........................................................1 Purpose of the Appraisal............................................................................................1 Client and Intended User of Appraisal.....................................................................1 Intended Use of Appraisal..........................................................................................1 PropertyRights Appraised.........................................................................................1 Scopeof the Appraisal.................................................................................................1 Unavailability of Information.....................................................................................2 ADACompliance.........................................................................................................2 Ownershipof Property................................................................................................2 History and Current Status of Property ...................................................................2 Assumptions, Hypothetical Conditions, Limiting Conditions, & Jurisdictional Exceptions........................................................................................................... ...2 Effective Date of Value Estimate................................................................................3 Date of Report Preparation.........................................................................................3 PropertyData............................................................................................................................4 Neighborhood Description.........................................................................................4 Kent...................................................................................................................4 Downtown Development..............................................................................4 East Hill Neighborhood.................................................................................5 Subject Property Description......................................................................................5 Highest& Best Use...................................................................................................................7 Highest and Best Use As If Vacant and Unimproved............................................7 Highest and Best Use As Currently Improved........................................................7 MarketRent Estimate...............................................................................................................8 RentComparisons........................................................................................................8 Additional Indications...................................................................................9 MarketRent Conclusion.............................................................................................10 ADDENDA.........................................................................................:......................................11 Aerial Photograph Subject Photographs Neighborhood Map Agreement Comparison Map Appraisers' Experience &Qualifications iii McKee&Schalka Real Fstate Appraisal Services&Consultants,Inc. Kent Meridian Pool,May 20,2011 Assignment Scope of Work, Information,&Definitions ♦ 1 Assignment Scope of Work, Information, & Definitions Identity of Property The subject is located at 25316101st Avenue Southeast in Kent,King County,Washington. Legal Description The property can be described as a portion of King County Assessor's Parcel #202205-9066. Title Report,Easements,&Other Restrictions We have not been provided with a title report for the subject. We specifically assume that there are no title issues that would unduly impact the utility of the property. Purpose of the Appraisal The purpose of this appraisal is to estimate the Market Rent for the subject improvements. The following definition of Market Rent is found in The Dictionary of Real Estate Appraisal, 5th ed. (2010),Pages 121-122: "Market Rent means the most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the lease agreement including permitted uses, use restrictions, expense obligations, term, concessions, renewal and purchase options, and tenant improvements Ms)." Client and Intended User of Appraisal The client and intended user of this report is the City of Kent. Intended Use of Appraisal The intended use of this appraisal is to assist in lease negotiations. Property Rights Appraised We are estimating the market rent for the fee simple interest in the property, under the special assumption that the pool improvements must remain on site and be open to the public. Scope of the Appraisal This is a summary appraisal report with the reasoning supporting the appraisals included. Our scope of work included inspection of the subject property and a review of the existing lease for McKee&Schalka Real Estate Appraisal Services&Consultants,Inc. Kent Meddlan Pool,May 20,2011 Assignment Scope of Work,Information,&Definitions ♦ 2 the subject property. Our research also included the gathering of information from the market, including a search for recent comparable leases. We then estimated the market rent based on an analysis of the comparisons. Unavailability of Information We have not been provided with a structural inspection report, a hydrologic or soils report, or an environmental site assessment. We are not expert in these areas, and generally rely on the technical reports of qualified personnel. We specifically assume that there are no unapparent conditions which affect the value or utility of the property. ADA Compliance We have not been provided with any documented information regarding the compliance of the building improvements with the Americans with Disabilities Act(ADA). We are not an expert in ADA compliance issues and specifically assume that there are no unapparent conditions with regard to ADA compliance which affect the value or utility of the property. Ownership of Property The owner of the fee simple interest in the subject property is the Kent School District. History and Current Status of Property The subject was constructed in 1971 by King County as a result of one of the Forward Thrust ballot initiatives. The $118 million ballot initiative passed in 1968 in support of the Department of Parks and Recreation was, at the time, the largest parks and recreation bond issue ever passed in the United States. The Kent Meridian Pool was constructed on land owned by the Kent School District. When the pool failed to be a profitable venture, the county assigned their lease to the City of Kent. After a year of closure the city subleased the pool to a pool operator. The most recent agreement was between the City and Aquatics Management Group. This agreement commenced in March of 2003, with a five year initial term and a five year option term. The pool is not currently listed for sale and we are not aware of any other agreements,offers,or other direct indications of value for the subject. Assumptions,Hypothetical Conditions,Limiting Conditions, &jurisdictional Exceptions This appraisal is subject to the General Assumptions and Limiting Conditions found at the beginning of this report, as well as the assumptions in the previous paragraphs. In specific, we have made the special assumption that the pool improvements must remain on site and be open to the public. McKee&Schalka Real Estate Appraisal Services&Consultants,Inc. Kent Meridian Pool,May 20,2011 Assignment Scope of Work,Information,&Definitions ♦ 3 Effective Date of Value Estimate May 13,2011 Date of Report Preparation May 20,2011 McKee&Schalka Real Estate Appraisal Services&Consultants,Inc. Kent Meridian Pool,May 20,2011 Property Data ♦ 4 Property Data Neighborhood Description Kent The subject neighborhood is within the East Hill neighborhood of the incorporated City of Kent, Washington. The cities of Tukwila and Renton are located to the north, and the city of Auburn is to the south. Large portions of Tukwila, Renton, Kent and Auburn occupy the relatively wide, level valley floor of the Green River valley, often referred to as the Kent Valley. The City of Kent had a population of 88,760 according to the Washington State Office of Financial Management's April 2010 population estimate. As of July 1, 2010, the City of Kent completed the annexation of the adjacent Panther Lake area of King County to the north. This added roughly 24,000 people to the incorporated area. This recent annexation pushes the population to around 113,000, making Kent the sixth largest city in Washington. The city has an average household income of$62,475 per the city of Kent web site. Interstate-5 (1-5) runs north/south along the ridge just west of the valley. I-5 connects to the north with downtown Seattle, and connects in the south with Tacoma. The Port of Seattle is adjacent to downtown Seattle and the Port of Tacoma is adjacent to downtown Tacoma. These are the two largest ports in the state,and are among the most active container ports on the West Coast. Freight consolidation for outgoing container traffic is done in warehouses in the Kent Valley, and much of the storage and distribution of products coming into the port is accomplished in warehouses in this industrial neighborhood,most of which is north of the Kent CBD. Boeing has its major space center facility in Kent, and has one of its major commercial airplane manufacturing plants in Renton. The valley has many multi-tenant business and industrial parks of varying sizes. Downtown Development Also of note are the ongoing developments in downtown Kent. Kent Station is an 18.2 acre mixed use development that will eventually consist of 470,000 sf of retail, education, entertainment and residential space. Phase I of the project opened in November 2005 while Phase II opened in October 2006. These two phases consisted mostly of the retail space,a 30,000 sf civic plaza, a 14-screen AMC Theater and a two-story branch campus for Green River Community College. Subsequent phases have included additional grade-Ievel retail and three stories of office that are partially occupied by Green River Community College, with the most recent$22 million expansion completed in July of 2009. The project is located adjacent to Sound Transit's Sounder Commuter rail station and parking garage. Other major developments include the Kent ShoWare Events Center, which is the home to the Seattle Thunderbirds professional hockey team, and Town Square Plaza, a city development with a farmers market, water features,and seating. McKee&Schalka Real Estate Appraisal Services&Consultants,Inc. Kent Meridian Pool,May 20,2011 Property Data ♦ 5 East Hill Neighborhood The subject property is located in the East Hill area of Kent. Kent is essentially divided into three distinct areas. The western portion of Kent consists of a residential neighborhood and commercial districts along Interstate-5 and Highway-99 (Pacific Highway South). The central portion of Kent is a valley with an extensive warehouse and manufacturing district, downtown retail area and city center. The eastern portion of Kent is located on a plateau above the valley and consists of the East Hill neighborhood. Access to the East Hill neighborhood is via a series of major arterials and highways. East/west access is made possible via SE 276th Street, SE 208th Street, SE 240th Street, and the Kent- Kangley Road (SR-516). North/south access through the East Hill neighborhood is primarily via Highway 515 which is the main north/south arterial connecting Kent to Renton. Highway 515 is 108th Ave SE which turns into 104th Avenue SE to the south. It is also known as the Benson Highway. The 272nd/277th east/west corridor was completed about seven years ago and links the Valley Freeway (SR-167) to Kent East Hill. This arterial is a two-way, two-Iane roadway with a center turn lane. Significant population growth over the last few decades has increased demand for commercial properties to provide services to the surrounding residential neighborhoods. Shopping centers and other retail properties have been developed along the major arterials to serve the needs of surrounding residential neighborhoods. Much of this recent commercial development has occurred on the Kent East Hill along the Benson Highway(104th Avenue SE). Recent developments in East Hill are centered around two major intersections. The first area is the intersection of SE 256th St and 104th Ave SE, just south of the subject within the Kent- Kangley corridor. Major anchor tenants in this vicinity include Home Depot,Target,Top Food & Drug, TJ Maxx and WaIgreens. Single family residential developments surround the shopping centers, especially to the east of 104th Avenue SE where numerous subdivisions are located. The second major intersection consists of 104th Avenue SE and 240th Street, about a mile north of the subject. Major anchor tenants in this area include Big 5 Sporting Goods, Fred Meyer,and Safeway. Subject Property Description The following brief description of the subject site and improvements is based on the records of the King County Assessor, and our inspection of the subject property. Please refer to the Subject Photographs included in the addenda of this report for further visualization of the subject site and improvements. The subject is part of the larger Kent Meridian High School Campus. The entire parcel on which the subject is located is 1,684,900 sf (38.68 acres). Using King County's iMap Property Information tool, we have estimated that the portion of the site dedicated to the subject is approximately 46,000 sf (1.06 acres). The street address of the subject is 25316 101st Avenue Southeast, in Kent. The portion of the larger parcel that we have allocated to the subject is generally rectangular, level, and at grade with the surrounding campus. The subject has no McKee&Schalka Real Estate Appraisal Services&Consultants,Inc. Kent Meridian Pool,May 20,2011 Property Data. ♦ 6 visibility from the surrounding streets and is accessed via the entrances to the larger high school campus. This entrance is the signalized intersection of SE 256th Street and 101st Avenue SE. We have not been provided with a soils report or an environmental site assessment and assume that the soils are free from contamination and adequate to support the improvements. The subject is served by typical public utilities including water, sewer, natural gas, electricity, and telephone service. The site is located on FEMA map panel number 53033C-1252F, which has an effective date of May 16, 1995. According to this map the subject is located in Zone X, which are areas outside the 500-year floodplain. The subject is zoned Medium Density Multifamily Residential (MR-M) in the jurisdiction of the City of Kent. Most residential uses are allowed, including attached single-family houses, duplexes, multifamily, and mobile home parks. No commercial uses are permitted. Public facilities (firehouses, police stations, libraries, and administrative offices of governmental agencies, primary and secondary schools,vocational schools,and colleges) and public parks are conditional uses. We note that the recreation use "Public Assembly (indoor)," which includes sports facilities, is not a permitted use in the subject's zone. Parking requirements for swimming pools are not listed in the Kent Municipal Code. In such cases, the amount of parking required shall be determined by the planning department, based on staff experience and parking required for similar uses. The subject has 30 parking stalls attributed to its use. The 2011 assessment of the larger parcel on which the subject is located is as follows: 2011 2011 Total 2011 2011 King Co. Parcel# Land Value Structure Value Assessed Value$ Taxes$ 202205-9066 $10,109,400 $6,205,000 $16,314,400 $17.95 *The property is tax exempt. Tax charges include a$10.00 conservation fee and a $7.25 noxious weed fee. The subject improvements consist of a 13,055 sf, concrete block and concrete tilt-up panel, community pool according to the King County Assessor. They are primarily single story and construction was completed in 1971. The entrance is located at the northwest corner of the improvements. Inside the entrance is a counter for collecting admission. Locker rooms are located to the left and right of the entrance. Also located near the entrance is a small office, staff locker rooms, and restrooms. The pool itself is 35 yards long and six lanes wide. At the west end of the pool it is three feet deep,it gets gradually deeper with a diving well at the east end of the pool that has a depth of twelve feet. There is a storage room located at the west end of the pool. The mechanical systems are located on the north side of the building. There are two small areas of seating on the north and south sides of the pool—each with three rows of stadium style bench seating. Please refer to the subject photographs included in the Addenda of this report for further visualization of the subject improvements. McKee&Schalka Real Estate Appraisal Services&Consultants,Inc. Kent Meridian Pool,May 20,2011 Highest&Best Use ♦ 7 Highest & Best Use Highest and Best Use As If Vacant and Unimproved The site is level and easily accessed from surrounding streets. If vacant and unimproved, the zoning would limit the site to residential and multifamily uses,or public facility uses. Since the school surrounds the subject, and given that the school is using modular buildings on site, it seems evident the school has increasing demand for site area. We conclude that the highest and best use of the site if vacant and unimproved would be for school use. Highest and Best Use As Currently Improved As improved, the site is improved with a municipal swimming pool. We are not aware of any legal document that requires the site to be improved with this pool, or that requires the pool to be operated. However, when the County initially transferred the pool to the City to avoid the financial burden the City closed the pool. Residents put political pressure on the City and the pool was re-opened after a year. Now the City subsidizes the pool operation. There is a defacto municipal requirement that the pool exists and be open to the public. Although the land value would exceed the capitalized value of the pool net income, this legal restriction makes the highest and best use to be continuing use of the pool. McKee&Schalka Real Estate Appraisal Services&Consultants,Inc. Kent Meridian Pool,May 20,2011 Market Rent Estimate ♦ 6 Market Rent Estimate Rent Comparisons Our search for comparisons was extensive. We focused on municipalities and school districts in the Seattle Metropolitan Area. In addition, we researched news articles concerning public pools in the area. From this group of potential comparisons, we selected comparisons that are functionally similar to the subject (primarily in terms of amenities provided) and are run by an independent pool operator. Rent Comparison No. 1 is the agreement to run the Evergreen Pool, in South Seattle. The pool was a Forward Thrust pool that was constructed by King County on land owned by the Highline School District. King County closed the pool on August 31, 2009. At this time the county also terminated their lease with the school district. Whitewater Aquatics came forward with a proposal to manage the pool in order to get it reopened. In 2010 the district entered into a four year agreement with Whitewater to manage the pool. We note that the district representative reported that although the term is specified, the condition of the building systems is somewhat tenuous and that there are termination clauses if continued operation becomes financially unfeasible for either party. Under the agreement, Whitewater is responsible for all the costs associated with operation of the pool and does not share any revenue with the district. In addition, the school district agreed to repair the roof, which was damaged in a fire, and King County agreed to give $50,000 towards operational costs and an additional $50,000 towards capital improvements. In order to receive any of the money allocated from King County, Whitewater has to apply to the district for those funds. The Highline School District entered the agreement with no intention of seeing any financial gain, but rather to reopen the pool with no negative impact on their budget. The school district bears no responsibility or costs associated with the pool outside of managing the lease and the one time funds from King County. Rent Comparison No. 2 is the agreement to run the Mt. Rainier Pool, in Des Moines. This pool is also owned by the Highline School District. It was previously run through an agreement with three municipalities—Des Moines, SeaTac, and Normandy Park. When one of the municipalities decided that they no longer wanted to participate the pool faced closure. A citizen vote resulted in the creation of a Metropolitan Pool District, which has the ability to generate their own tax revenue. The pool district entered into an agreement with the Highline School District in which they pay the district$1/year to lease the facility. The pool district then entered into an agreement with Aquatics Management Group (AMG) to operate the pool. In this agreement the pools district is responsible for capital expenditures and the operator is responsible for ordinary repairs and maintenance and utilities. There is no payment from AMG to the pool district for the right to be the pool operator. It was reported by AMG that in 2010 this resulted in a profit of$3,000. Rent Comparison No. 3 is the agreement to operate the Juanita Pool, in Kirkland. The Juanita Pool is owned by the Lake Washington School District and was self-operated for most of its McKee&Schalka Real Estate Appraisal Services&Consultants,Inc. Kent Meridian Pool,May 20,2011 Market Rent Estimate ♦ 9 history. Historically, the pool was losing about $150,000/year and, due to recent budget constraints, it was decided that unless the annual loss could be eliminated (or greatly reduced) the pool would have to be closed. The district sent out an RFP to pool operators,which resulted in three interested parties. The pool is now operated by WAVE Aquatics. They are responsible for ordinary maintenance and repairs, utilities, and other operational costs, while the district is responsible for capital costs. WAVE does not share revenue, nor do they make an annual payment to the district. Rent Comparison No.4 is the agreement to run the Redmond Pool, in Redmond. The pool was previously managed by Northwest Center who reported requiring an $80,000/year subsidy from the City in order to cover operating losses. In 2009 it was discovered that there were a number deferred maintenance items that needed attention and the pool was closed. At this time the agreement with Northwest Center was terminated. After repairs were completed by the City the current agreement between the City of Redmond and WAVE Aquatics was negotiated. Under this agreement WAVE operates the pool at their own expense, including operation, ordinary maintenance and repair, staffing, and utilities. WAVE also received a one time payment of$32,000 from the City for startup costs. Under the agreement WAVE pays to the City of Redmond 50% of net revenues from the pool (however, the $32,000 could be deducted from the net revenue for the first year of the agreement). The City of Redmond is responsible for capital improvements. The agreement started in January of 2010 and has a two year initial term, with the right to extend the term for two 2-year periods. We anticipate the capital improvement costs will exceed the net revenue share, leaving the City with no positive income,but a lower subsidy than previously required. Additional Indications Indication No. 1 is the most recent agreement for operation of the subject. This agreement is between the City of Kent and Aquatic Management Group (AMG). The initial term started in 2003 and was five years with a five year extension option. Under the agreement AMG operates the pool, pays the City $1/year, and pays the leasehold tax (which is based on fair market rent for the premises). AMG is responsible for janitorial service, personnel, utilities, maintenance, advertising, the alarm, and costs associated with insurance and being a licensed pool operator. The City of Kent is responsible for capital improvements and also agreed to an annual payment of up to $20,000 to cover operational losses. It was reported that the pool lost about$2,000 in 2010. Indication No. 2 consists of a couple of agreements between the City of Tacoma and the Tacoma Metropolitan Parks District (TMPD). In general, parks and recreational facilities in the City of Tacoma are owned and operated by the TMPD. However, not all of the facilities have been transferred and there are operational agreements for these facilities. Two of these agreements are for the Eastside Pool and the People's Pool. Under these agreements TMPD operates the pool and covers ordinary repairs and maintenance, utilities, and all other operational costs and receives 100% of the revenue from operations. The City of Tacoma is only responsible for capital improvements. The operation of these two pools is scheduled to continue in this manner until Tacoma and TMPD can negotiate the transfer of ownership,which is expected to be sometime in the next five years. Additional, the TMPD is currently preparing an RFP for the Titlow Pool. The TMPD has a new pool coming online and Titlow was McKee&Schalka [Zeal Estate Appraisal Services&Consultants,Inc. Kent Meridian Pool,May 20,2011 Market Rent Estimate ♦ 10 scheduled for demolition; however, they do not currently have the money to demolish it, so they are seeking an operator to keep the pool open until they can afford to tear it down. The RFP has not yet been issued, but the general tenor of the agreement is that it will keep the pool open at zero(or very Iittle) cost to the TMPD. Market Rent Conclusion In the course of researching our comparisons, we had a discussion with several individuals involved in the local market of pools and pool operators. In general, the consensus is that operating a pool that does not have a number of other amenities(such as waterslides,lazy river, etc.) is not a profitable venture. This is supported by our comparisons,and is further supported by anecdotal evidence, such as the City of Renton (who operates their own pool) Iosing $50,000/year and reports that the Sumner School District is very close to closing their pool due to negative annual cash flows. Overall, the comparisons show a very strong trend. The market standard for operator agreements is that the operator is responsible for ordinary maintenance and repairs, utilities (including water, electricity, gas), insurance, taxes, and other operational costs (such as personnel, advertising, security, janitorial service, and maintaining proper licensing). The operator pays no rent to the lessor. The responsibility of the lessor is typically limited to capital improvements. The agreements typically have terms of 2-5 years, but frequently have no- penalty termination options due to things such as catastrophic equipment failure. In conclusion, we have concluded that market rent for the subject pool operator is No Rent. This is accompanied by the special assumption that the pool improvements must remain on site and be open to the public. McKee&Schalka Real Estate Appraisal Services&Consultants,Inc. Kent Meridian Pool,May 20,2011 ADDENDA ♦ 11 ADDENDA Aerial Photograph Subject Photographs Neighborhood Map Agreement Comparison Map Appraisers' Experience & Qualifications McKee&Schalka Real Estate Appraisal Services&Consultants,Inc. AERIAL PHOTOGRAPH Aerial Photograph reffectiae"ofp�rceltaaun�'aryfirr8s. at ��,, �� �C�J���1// �i�i i„�r�tiarrs shows� rx�xrr�r�1�srl�e�r�a !Isis n 1 ��� J � '��✓ram � '�o' r r x tU 1Ject J i i P 11 r � o � SUBJECT PHOTOGRAPHS Kent Meridian Pool, Kent, WA,May 20, 2011 Subject Photographs Subject Photographs Exterior view of the subject building facing generally south and slightly east. View facing south of the access to a, the subject through the larger bent Meridian High school campus. 1 View of the subject improvements and parking facing generally south. and slightly west. W McKEE $ SCHALKA REAL ESTATEAPPRAtSAL SERVICE'S B CONSULTANTS,INC. Seattle, Washington Kent Medd'ian Peal,Kent, WA,May 20, 2011 Subject Photographs i 'View entrance and admissions counter. "'View of the men`s staff locker room. Oil 1 i u mu View of the men s locker room. McKEE & SCHALKA REAL ESTATE APPRAISAL SERVICES&CONSULTANTS,INC„ Seattle,Washington Kent Meridian Pool, Kent, WA,May 20, 2011 Subject Photographs Jf 111d17i1 V'�I u iliMilliVuuu View of the pool from the shallow end near the entrance. x View of the starting blocks and diving board. View of the pool from the deep end. i rrt j„ AMAcKEE & w7CHALK A REAL ESTATE APPRAISAL SERVICES&CONSULTANTS,INC. Seattle, Washington Kent Meridian Pool,,Kent, WA,May 20,2011 Subject Photographs View of the pool office, IIIIII J View of the mechanical room.. 1 View of a storage roam. McKEE & SCHALKA REAL ESTATE APPRAISAL SERVICES a&CONSULTANTS,INC. Seattle, Washington Y, t - Y ' f f NEIGHBORHOOD MAP 4A 't h`. SI 11 ., yh • 'it: "J �l,t-:%;i hborh + d Map S 22,2rad St S 222,n SE 2:22rd St St 224U'v Sl o SE 220tv St CA S 2281"h St S 225tta St 00 SE Tumko' uj NmNtSE 2 rwSt � � 0 ,c"�. SPaa� 2s IJt ut� N trot Mz LU SE 2 a6M FBI Memor4aarmt tons < ' ar!k 2.37th ICI W J:irr ra Ss. ., 2 Jl woes St _ ..._ ... . 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'" Cca Y4i9I � - a7 Wsh Print Cub5ur�1. / WackDiaraond �na� Fwdondaa6e RuMon Fedtrla day di t� # � , a� •. a rr �y r�r P FoxSsWd People's Pool r �rr�ana �4eL � �Fvx Wand9 r,era ``, Tacnmx i ;�'a a e�,�i .. 0r�rnaauorsrn TCa9� # + Fife dl atd �e a,,�, w 'tly aa440051a. Wptix,4^ „r x Una versrty place r apol fahw d la N P a4^tsa M PxY:+ua9 Nafth t"v,uy tVTup .. ,� "rMaCaer i�";,,$urnzr�r �auuYru�l n^an ., astsi:d 41t`I &auyalaao � ^Lake ,. 01 Laka� ad y �,,.�POJ rsax S,trClrPa„G „,. "C3wcu. b,�AJY APPRAISERS' EXPERIENCE & QUALIFICATIONS McKee & SCHALKA REAL ESTATE APPRAISAL SERVICES&CONSULTANTS, INC. 1200 Sixth Avenue,Suite 1805,Seattle,Washington 98101 Telephone (206)34M%9 Faz (206)386-57P EXPERIENCE &QUALIFICATIONS KENNETH A. BARNES,MAI,CRE Mr. Barnes graduated from the University of Missouri -Columbia with a BS in Biochemistry in 1982. In 1988 Mr. Barnes received an MBA with a Finance concentration from the University of Chicago. Mr. Barnes received the MAI (Member Appraisal Institute) designation in 1989. He also holds the CRE designation awarded by the Counselors of Real Estate. Mr. Barnes entered the real estate business in 1981,first as a principal acquiring and renovating small rental properties,and then as an appraiser in 1983 with Moore & Shryock in Columbia, Missouri. In 1984 Mr. Barnes moved to Chicago to join Real Estate Research Corporation. He joined Cushman & Wakefield in 1989 as a Senior Appraiser in Seattle. In 1990, Mr. Barnes was elected an officer of the company as a Director and Manager of the Seattle practice. In 1998 he left the company to travel and returned to CB Richard Ellis. After 18 months of corporate advisory work he joined first one, and then a second, startup in executive roles. Mr. Barnes returned to Cushman & Wakefield in 2001 as Director. Mr. Barnes joined McKee&Schalka in 2006. Mr. Barnes has authored a number of articles in the Appraisal Journal and other real estate publications, and has been a guest speaker or panelist for real estate organizations including NAIOP, IREM and the Appraisal Institute. Mr. Barnes is a Certified General Real Estate Appraiser (Washington State Certificate No. 1100578), and has completed the requirements of the continuing education program of the Appraisal Institute. In his appraisal experience, Mr. Barnes has appraised and analyzed a wide variety of commercial property types, and provided critical appraisal, consultation and litigation services to a diversified range of clients. McKEE & SCHALKA REAL ESTATE APPRAISAL SERVICES&CONSULTANTS,INC. 1200 Sixth Avenue,Suite 1805,Seattle,Washington 98101 Telephone (206)343.8%9 Fax (206)38&57n EXPERIENCE&QUALIFICATIONS ARTHUR JONES Mr.Jones graduated from Whitman College with a Bachelor of Arts. He majored in Economics and minored in Mathematics. He previously attended Franklin College, in Lugano, Switzerland. Mr. Jones has appraised a variety of property types, including vacant commercial and residential land, retail, industrial, office, special purpose,as well as open space and timberland. Valuation has encompassed fee simple, leased fee and leasehold estates. His appraisal practice has focused on Western Washington. Mr. Jones also has experience with full and partial acquisition appraisals for public agency acquisition. Mr. Jones is a State-Registered Real Estate Appraiser Trainee, No. 1000956. Appraisal coursework includes Real Estate Appraisal, USPAP, General Income Approach Part I, General Income Approach Part II, Market Analysis & Highest and Best Use, and Advanced Income Capitalization. Before joining McKee & Schalka, Mr. Jones co-founded Meydenbauer Entertainment, a full service video production company. He has lived in Washington State his entire life.