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HomeMy WebLinkAboutCOM 0478.003 2004-2006 Mtv orM~ Lincoln S.T. Ashida Har Kim ~ti Corporation Counsel ry Mayor Gerald Takase ;J,i Assistant Corporation • o: Counsel COUNTY OF HAWAII OFFICE OF THE CORPORATION COUNSEL 101 Aupuni Street, Suite 325 Hilo, Hawaii 96720-4262 (808) 961-8251 Fax (808) 961-8622 October 19, 2005 Honorable Stacy K. Higa Chair, Hawaii County Council County of Hawaii 25 Aupuni St. Hilo, HI 96720 Dear Chairman Higa: RE: Resolution 188-05 Proposed Lease of Real Property for the Office of County Council-Clerk At the Hawaii County Council meeting on October 18, 2005, the Council approved the funding of a multi-year lease for the leasing of real property belonging to BF Hilo Partners (hereinafter "BF"). We note that the resolution as agendized on the Council's calendar provided for discussion and decision on the question of multi-year financing. No discussion was had nor decision made on the contents of the proposed lease document. As you know, our office prepared the attached draft lease, after review of BF's proposed draft. I have been working with BF's attorney, Alan Okamoto, to arrive at mutually agreeable terms. As presently written (attached), BF is in accord with the terms of the contract, save the length of the lease and base yearly rental amount, to be mutually decided upon. Four items which require further discussion and decision, however, are found in sections 18.2, 18.3, 19.1, and 19.2. As expressed in my communication to you dated October 17, 2005, it was my desire to discuss this with the Council at its meeting on October 18`h. However, given the gravity of other matters on the agenda, no such discussion was had. Nonetheless, since the resolution was for the specific purpose of authorizing multi-year funding, appropriate action was taken thereon. We are of the opinion that the Council Chair may properly act as representative of the Council in finalizing and authorizing specific terms of the contract. The Mayor is then required to execute the contract as signatory on behalf of the County of Hawaii. ~ f 8',3 Comm. t'~^ _ Hawaii County is an Equal Opportunity Employer and Provider °~sf. To: . t ~ n T Honorable Stacy K. Higa October 19, 2005 Page 2 Section 18.2 As presently written, this provision provides as follows: Liquidated Damages. If Tenant shall, at the expiration or other termination of this Lease, fail to yield up possession to Landlord, Landlord shall have the option to require Tenant to pay and Tenant shall pay as liquidated damages for each day possession is withheld, an amount equal to three times the amount of the daily Minimum Rent computed on a thirty-day- month basis. Liquidated damages are essentially damages which are computed and agreed upon in advance, in the event of a future occurrence. In this case, BF seeks to charge the County three times the daily rent for each day the County continues to occupy the premises after expiration and/or termination of the Lease. As I understand it, the Council intends on executing aone-year lease with BF. If it is contemplated that the County will move out in advance of the expiration of the one-year period, or that a subsequent lease will be entered into under terms acceptable to the County, the above liquidated damages clause is of nominal concern. Section 18.3 As presently written, this provision provides as follows: Holding Over. Any holding over after the expiration of the said term, with the consent of Landlord, shall be construed to be a tenancy from month to month at twice the monthly rentals herein specified, so far as applicable. We would prefer the addition of the following language at the end of the above provision: unless Landlord and Tenant mutually agree upon and enter into an addendum to the present Lease, or mutually agree upon and enter into a new lease agreement for said premises." Such language would allow the County to negotiate terms with BF less than "twice the monthly rentals." Section 19.1 As presently written, this provision provides as follows: Tenant's Liabilitv. In case Landlord shall, without fault on its part, be made a party to any litigation commenced by or against Tenant arising out of Tenant's occupancy of the Demised Premises or any act of Tenant concerning the Demised Premises or this Lease, or in case suit shall be brought for recovery of possession of the said Demised Premises, for the recovery of rent or any other amount due under the provisions of this Lease, or because of the breach of any other covenant herein contained, Honorable Stacy K. Higa October 19, 2005 Page 3 on the part of Tenant to be kept or performed, and a breach shall be established, Tenant shall pay to Landlord all expenses incurred in connection therewith, including reasonable attorney's fee. We recommend this blanket fee and cost indemnification provision be deleted. As presently written, if the County were to initiate an action against BF for any reason, the County would agree to pay for BF's costs and attorney fees. Further, the County cannot control the actions of third parties, who may sue BF. Assume for example a member of the public, while en route to the Council offices, slips and falls in a common area. Under the terms of the above provision, if BF is sued, the County has agreed to pay for BF's court costs and attorney fees. Section 19.2 As presently written, this provision provides as follows: Landlord's Liability. In case suit shall be brought by Tenant against Landlord for breach of any of Landlord's covenants herein contained and a breach shall be established, Landlord shall pay to Tenant all expenses incurred therefore, including reasonable attorney's fee. Although advantageous to the County, we recommend in good faith that this provision be deleted, if BF agrees to a deletion of Section 19.1 above. Please consider our recommendations and let me know how you would like us to proceed. Upon hearing your input, I will consult with BF's attorney in an attempt to reach an agreement on this lease. Thank you. Very truly yours, ~Y/ UI ~ LINCOLN S. T. ASHIDA Corporation Counsel Encl. c: Honorable Constance Kiriu, County Clerk (w/ encl.) Rodney Oshiro, Legislative Research Branch (w/ encl.) 5: Departments/Council/LSA Misc. Corresp./letter to Chairman re BF lease 10-19-05/LSAmr