HomeMy WebLinkAbout2015-0106 Document Submitted at the Mtg
Dave Kanner O V_ Fauwh&~
From: David Lohman [lohmand@ashland.or_us}
Sent: Friday, November 07, 24141:44 PM
To: 'Carol Voisin'
Cc: 'John Stromberg'; 'Pam Marsh; 'Michael Morris; 'Dennis Slattery; 'Rich Rosenthal'; 'Greg
Lemhouse'; 'Dave Kanner; 'Kris Bechtold'
Subject: RE: OSF Lease - Response to Your Request for Interpretation
Carol
J.. Section 3 of the 2000 Lease grants to OSF "sole and exclusive possession and use of the Property and
all improvements, facilities and equipment thereon during the term of this Lease."
a. Interpretation: Unless some other Lease provision applies (see #3 below), OSF has the right to
require the owner the fountain to remove it.
b. Clarification: "Exclusive possession.., during the term of this Lease" is not the same as
ownership. This is a right to prevent anyone else, including the Lessor; owner, from taking
possession of the fountain during the term of the Lease, but this right also inherently includes the
right to return possession to the Lessor/owner at any time, As Section 6 makes clear, the City
retains ownership (although not possession) of improvements during the Lease. The City
automatically gets both possession and ownership of the fountain only upon termination of the
lease, unless DSF relinquishes its right to possession of the fountain before then,
c. Note: For purposes of this email, the fountain is deemed to be an improvement. This is to
avoid arcane discussion about which legal tern best characterizes the fountain. The Lease
references multiple types of additions to property: improvement, structure, facility, appurtenance,
fixture, or addition. Since "improvement"' is the terry, with the broadest possible applicability and is
used in each of the sections of the lease that are pertinent to your questions, presuming the
fountain to be an "improvement" affords the least possible leeway to OSF, holding in abeyance - at
least for purposes of this analysis the possible argument that the fountain is a non-permanent,
readily-removable feature.
2. Section 6 of the tease says the City shall have ownership of structures and improvements on the
property, except for readily-removable additions to the property by OSF.
a. truer 2retation,. OSF does not own the fountain, the City does.
3. Section 7 grants to OSF the right to make any alterations it deems necessary to the leasehold
property, except that the City's written consent is needed to alter ("tear down or materially demolish")
any improvements on the property in a :wfaY; which, when completed, would substantially diminish the
value or utility of the property.
a. Interpretation: Consent of the City is not required for removal of the fountain. Rationale: This
deteriorating, costly-to-repair fountain almost certainly lowers the commercial value of the parcel
it is on and is a sizeable obstacle to better use of the property for public purposes, Removing the
fountain would make the property worth more than it is currently and enable= enhancement of the
property as a public gathering place and portal to the OSF campus.
b. Comment: Conceivably, restoration of the fountain to working order and regular maintenance
thereafter potentially could transform it into an addition to the value of the leasehold, instead of a
drag on value. The obvious questions about restoration are "How much would restoration and
maintenance cost and who would pay that cost?" It seems unlikely that OSF would voluntarily
f
undertake to pay for expensive restoration if removal is an option and removal would make the
space more usable for the public and OSs .
4. Section 8 transfers to OSF responsibility for maintenance, repair (including structural repairs),
replacement and renewal of improvements to the property,
a. Interpretation: In the absence of an as-yet undiscovered oral or written agreement to the
contrary, OSF has had responsibility for repairing, replacing, or renewing the fountain since the
date of its installation.
b. Comment. Section 18 says the City has the right to terminate the Cease if OSF falls to comply
with any provision of the lease within six months after the City has given notice of the non-
compliance. The pity has no record of having ever given such notice. If the City were to demand
that OSF repair the fountain, OSF could avoid that obligation {arid avoid breaching the Lease) by
removing, the fountain itself or telling the City to do so, justifying the removal as a Section 7
alteration that does not require City consent.
5. Section; 8 also says OSF shall defend and indemnify the City against all costs and expenses "because of
OSF's failure to comply with the foregoing, and OSF shall not call upon, the City for any disbursernent or
outlay whatsoever in connection therewith, and hereby expressly releases and discharges the City of and
from all liability therefore."
a. Interpretation: This provisiori of Section 8 does not apply to the cost of removing a fountain
which the City owns and which OSF has the right to require the City to remove from the leasehold.
Analogy by way of explanation: If the City placed a City-owned concrete Jersey barrier (usually
used for separating lanes o i l traffic) on the Black Swan Plaza, Section 8 of the Lease would not
excuse the City from paying for its removal upon demand by OSF. This would be true even if the
harrier had been initially placed on the leasehold with OSF's acquiescence.
--Dave Lohman
From: Carol Voisin [mailto:carol@council.ashiand.or.usl
Sent: Monday, November 03, 2014 9:46 PM
To: David Lohman; Dave Kanner
Cc: John Strornberg
Subject: OSF Lease
All,
I've attached what I found in the 2000 lease that states clearly that OSF must have (7_(a.)) the written consent of
the city if OSF tears down or materially demolishes any of the improvements on the property . It seems OSF
is required to come to the council. for a formal vote on the fountain and the planters along the sidewalk. How do
you interpret this?
In this same section 7.(a.) it states that OSF may at OSF's expense snake such alterations... I hope that the
city is not paying for these changes. However, in conversations with Mr. Kanner and Cynthia Rider, it was
clearly stated to me that the city will pay for all the improvements related to the planters and the fountain.
The fountain hasn't been working for seven years. According to 8. Repair and Maintenance, ...OSF, at its sole
expense shall keep the Property as now or hereafter constituted with all improvements_..in good condition and
shall make all repairs, replacements... It seems OSF is responsible for repairing the fountain at least before we
make any decision to move it. How do you interpret these sections and issues?
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There are additional questions related to sections 7. and 8. in the 2000 lease. Please see the attached document.
Before I ask any additional questions, however, I would like to know your official opinion on the questions
noted above.
I couldn't get to Mr. Lohman today about my questions because I found this information late Sunday night and I
work all day Monday. For that I do apologize. I like to give staff advance notice of any questions that I have.
I look forward to hearing from you.
Please share your answers with the council.
Carol
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