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HomeMy WebLinkAboutR & S Rental LLC-6/16/2014M T IOWA COMMUNITY PLANNING AND DEVELOPMENT 715 Mulberry Street • Waterloo, Iowa 50703-5783 e (319) 291-4366 Fax (319) 291-4262 NOEL C. ANDERSON, Community Planning & Development Director Council Communication Mayor City Council Meeting: June 16, 2014 BUCK Prepared: June 11, 2014 � ,p CLARK Dept. Head Signature: Noel Anderson, Community Planning & Development nt Director # of Attachments: 1 COUNCIL MEMBERS DAVID JONES Ward 1 CAROLYN COLE Ward 2 HAROLD GETTY Ward 3 QUENTIN HART Ward 4 RON WELPER Ward 5 BOB GREENWOOD At -Large STEVE SCHMITT At -Large SUBJECT: Resolution approving: 1. Business Property Lease with R & S Rental Properties, LLC 2. Business Property Lease with R & S Commercial, LLC 3. Exchange Agreement with R & S Commercial, LLC 4. Exchange Agreement with R & S Rental Properties, LLC All as a part of the SJ Construction expansion and relocation project, and authorize the Mayor and City Clerk to sign and fully execute any necessary documents. Submitted by: Noel Anderson, Community Planning & Development Director Recommended City Council Action: Approve resolution for documents Summary Statement: As you may recall, the City of Waterloo is working with R & S Commercial LLC and R & S Rental LLC (SJ Construction) for the relocation and expansion of SJ Construction and the potential relocation of a home on the block at the northwest corner of East 9th and Sycamore. The approved Development Agreement would convey lots to SJ Construction in the Rath area for their new warehouse and office, as well as a potential lot, acquired by 657A, for house relocation. This project would help create new commercial development over $240,000 in new taxable value, as well as work for infill neighborhood development to the area. Expenditure Required: NA Source of Funds: NA Policy Issue: Economic Development within the City of Waterloo. Alternative: NA Background Information: The City is seeing some great new residential investment in this neighborhood, and this project works to help create new lots for new residential development, as well as helping an existing Waterloo business expands in the former Rath area. CITY WEBSITE: www.ci.waterlooda.us WE'RE WORKING FOR YOU! An Equal Opportunity/Affirmative Action Employer Preparer Information Christopher S. Wendland, P.O. Box 596, Waterloo, IA 50704 (319) 2345701 Address tax statement to R & S Rental Properties, LLC, 120 Regal Ridge Drive, Raymond, IA 50667 Retum deed to grantee. SPECIAL WARRANTY DEED For the consideration of One Dollar ($1.00) and other valuable consideration, City of Waterloo, Iowa does hereby convey to R & S Rental Properties, LLC the following described real estate in Black Hawk County, Iowa: Lot 6, Block 23, Original Plat, on the East Side of the Cedar River, City of Waterloo, Black Hawk County, Iowa. Subject to easements of record, general utility and right-of-way easements serving the premises, zoning restrictions, and restrictive covenants, if any. Grantor is an Iowa political subdivision. Exempt from real estate transfer tax, declaration of value, and groundwater hazard statement. The Grantor hereby covenants with grantees, and successors in interest, to warrant and defend the real estate against the lawful claims of all persons claiming by, through, or under it, except as may be stated above. Words and phrases herein, including acknowledgment hereof, shall be construed as in the singular or plural number, and as masculine or feminine gender, according to the context. STATE OF IOWA ) ) ss: BLACK HAWK COUNTY ) Acknowledged before me on June _jam , 2014, by Ernest G. Clark and Suzy Schares, as Mayor and City Clerk, respectively, of the City of Waterloo, Iowa. By: Dated: ,23, 2-6/g CITY 0 TERLOO, I WA t/1 d7,11.14,m4,_ E Notary Public Attest: ®si ®i re c IP 0 n DeAnne Kobliska COMMISSION NO. 763995 MY COMMISSION EXPIRES chares ' Clerk Please return this copy to: City Clerk & Finance Dept. 715 Mulberry St. Waterloo, IA 50703 BLACK HAWK EXCHANGE, INC. June 4, 2014 City of Waterloo, Iowa CIO Christopher Wendland 315 East 5th Street Waterloo, IA 50703 Greeting: You are .hereby notified that, pursuant to a certain Exchange Agreement between R & S Rental Properties, LLC and Black Hawk Exchange Inc., as Qualified Intermediary, the rights under agreement to sell the 1025 Sycamore Street and real estate parcel # 8913-25-137-013 in Waterloo, IA were assigned to Black Hawk Exchange Inc. It is intended that this transaction be treated by the seller as part of a tax deferred exchange of the property rather than an outright sale. Notwithstanding the fact that the contract rights have been assigned to Black Hawk Exchange Inc., as Qualified Intermediary, pursuant to the terms of the Exchange Agreement and applicable regulations, you may expect to receive transfer of, and any applicable bill of sale, directly from R & S Rental Properties, LLC. Enclosed are two originals of the Exhibit B of their Exchange Agreement that I would appreciate if you would sign and retum at your earliest possible convenience. The enclosed Exhibit B —Approval of Assignment is simply a document that acknowledges that you are aware the seller assigned the Development Agreement to Black Hawk Exchange in order to facilitate a 1031 tax deferred exchange. By signing the document it has no impact on your purchase of the property and bears no financial cost to you. Should you have any questions, please give me a call at 319-232-2576 or through email of bmostek a.bh1031x.com Thank you. Sincerely, ZeilhAD Barb Mostek President Enclosures. 221 East 4u' Street • Suite 21 • Waterloo, IA 50703 • (319) 232-2576 APPROVAL OF ASSIGNMENT City of Waterloo, Iowa, ("Purchaser"), hereby acknowledges and approves the transfer and assignment of right, title and interest in and to (1) the Relinquished Property located at 1025 Sycamore Street and Parcel No. 8913-25- 137-013, Waterloo, IA and (ii) the Development Agreement relating to the Relinquished Property from the Exchanger to Black Hawk Exchange, Inc. Purchaser is approving and accepting this Assignment for the sole purpose of fulfilling its obligations under the Development Agreement. Purchaser agrees to accept a deed to the Relinquished Property issued directly to the Purchaser by the Exchanger. Purchaser further agrees that following the date of closing of the Development Agreement ("Transfer Date"), Black Hawk Exchange, Inc. shall have no personal liability to Purchaser for any claims under the Development Agreement, or any other agreements relating to Relinquished Property, and that Purchaser shall enforce any rights it may have under any of said agreements solely against the Exchanger. Purchaser indemnifies Black Hawk Exchange, Inc. against any liability or costs or expenses incurred as a result of Black Hawk Exchange, Inc. acquiring or maintaining beneficial and/or legal ownership of the Relinquished Property, or possession thereof, except for any liability arising from Black Hawk Exchange Inc.'s own acts. CITY Q WATERLOO, IOWA BY: Errte.G • C.tcc.v-l- ITS: VAA.0 s Dated: +A l (p o 2_04 4 ACCEPTANCE OF ASSIGNMENT Black Hawk Exchange, Inc. hereby accepts this Assignment. BLACK HAWK EXCHANGE, INC. By: Barbara J. Mostek, President Dated: 6-3,kil9 Please return this copy to: City Clerk & Finance Dept. 715 Mulberry St. Waterloo, IA 50703 BUSINESS PROPERTY LEASE This Business Property Lease (the "Lease") is made and entered into as of uz /Co, 2014, by and between the City of Waterloo, Iowa, an Iowa municipal corporation ("Landlord"), whose address for the purpose of this Lease is 715 Mulberry Street, Waterloo, Iowa, 50703, and R & S Rental Properties, LLC ( "Tenant"), whose address for the purpose of this Lease is 1027 Sycamore Street, Waterloo, Iowa, 50703. 1. PREMISES AND TERM. The Landlord, in consideration of the rents herein reserved and of the agreements and conditions herein contained, on the part of the Tenant to be kept and performed, leases unto the Tenant and Tenant hereby rents and leases from Landlord, according to the terms and provisions herein, the following described real estate, situated in Black Hawk County, Iowa, to wit: The NW 35 feet of the SE 75 feet of Lot 9, in Block No. 18 in the Original Plat on the East Side of the Cedar River, in the City of Waterloo, Black Hawk County, Iowa, Commonly known as 1025 Sycamore Street, Waterloo, Iowa, with the improvements thereon and all rights, easements, and appurtenances thereto belonging, for a term commencing upon execution of this Lease and continuing until and including December 31, 2014, upon the condition that the Tenant pays rent therefor, and otherwise performs as provided in this Lease. This Lease shall automatically renew for up to five (5) additional terms of one month each unless one party delivers to the other, at least one month before the next scheduled renewal date, a written notice of termination. 2. RENTAL. Tenant agrees to pay to Landlord as rental for said term, as follows: $ 1.00 per year, in advance, due upon signing of this Lease. No additional sums shall be payable in connection with renewal of the Lease as provided in Section 1. 3. POSSESSION. Tenant shall be entitled to possession on the first day of the term of this Lease, and shall yield possession to the Landlord at the time and date of the close of this Lease term, except as herein otherwise expressly provided. 4. USE OF PREMISES; PRIOR USE. Tenant covenants and agrees during the term of this Lease to use and to occupy the leased premises only for activities and purposes consistent with and incidental to the business of renting out residential property. Landlord has not reviewed zoning or other applicable legal requirements or limitations imposed by any local, state, or federal governmental authority that may affect Tenant's use of the premises, and Landlord makes no representation or warranty that the premises is suitable for Tenant's intended use. Tenant shall conduct its own review of applicable law and shall be solely responsible for meeting all legal requirements, including but not limited to building permits, licensure, or governmental approval. The parties acknowledge that Tenant is the former owner of the premises and that this Lease is a lease -back following Landlord's purchase of the premises according to the terms of a development agreement between the parties. 5. QUIET ENJOYMENT. Landlord covenants that its estate in said premises is fee simple and that the Tenant on paying the rent herein reserved and performing all the agreements by the Tenant to be performed as provided in this Lease, shall and may peaceably have, hold and enjoy the demised premises for the term of this Lease free from molestation, eviction or disturbance by the Landlord or any other persons or legal entity whatsoever. (But see paragraph 14, below.) Landlord shall have the right to mortgage all of its right, title, interest in said premises at any time without notice, subject to this Lease. 6. CARE AND MAINTENANCE OF PREMISES. Each party shall perform its responsibilities of repair and maintenance to the end that the premises will be kept in a safe and serviceable condition. Neither party will permit nor allow the premises to be damaged or depreciated in value by any act, omission, or negligence of itself, its agents or employees. (a) Tenant takes said premises in their present condition except for such repairs and alterations as may be expressly herein provided or to which Landlord may hereafter give its prior written consent. Tenant acknowledges that it is the former owner of the premises and that it is fully familiar with the condition of same. 1 (b) LANDLORD'S DUTY OF CARE AND MAINTENANCE. Landlord shall have no duty whatsoever to care for or maintain the premises or any part thereof. (c) TENANT'S DUTY OF CARE AND MAINTENANCE. Tenant shall, after taking possession of said premises and until the termination of this Lease and the actual removal from the premises, at its own expense, care for, maintain, and repair the exterior and interior parts of said premises in a reasonably safe and serviceable condition consistent with its own needs and pursuant to applicable law, ordinance or regulation. Tenant will fumish its own interior and exterior decorating. Tenant's duties under this Section shall include, but not be limited to, the foundation, roof, and other structural parts of the premises, all fixtures and mechanical systems, and any other feature of the premises that is commonly cared for, repaired, or maintained by a landlord. Tenant at its own expense may install floor covering and will maintain such floor covering in good condition. Tenant will be responsible for the plate glass in the windows of the leased premises and for maintaining the sidewalks and parking areas on and abutting the leased premises. Tenant shall make no structural alterations or improvements without the Landlord's prior written approval of the plans and specifications therefor. Tenant shall be responsible for all necessary upkeep of lawns, grounds, and landscaping, if any, to keep the premises well-maintained. Tenant shall be responsible to clear ice and snow from all sidewalks and parking areas on or abutting the premises. (d) Tenant will make no unlawful use of said premises and agrees to comply with all valid regulations of the Board of Health, municipal ordinances, the laws of the State of Iowa and the federal govemment, but this provision shall not be construed as creating any duty by Tenant to members of the general public. Tenant will not allow trash of any kind to accumulate on said premises or the parking area, yards, or sidewalks, and it will remove same from the premises at its own expense. (e) Tenant shall have responsibility for and perform all acts necessary for compliance with the Americans with Disabilities Act. 7. FACILITY SERVICES. (a) UTILITIES AND SERVICES. Tenant, during the term of this Lease, shall pay before delinquency all charges for use of telephone, water, sewer, gas, electricity, power, garbage or trash disposal, and all other utilities or services of whatever kind and nature which may be used in or upon the leased premises. (b) AIR CONDITIONING AND HEATING equipment shall be initially furnished by Landlord, and Tenant shall maintain, repair, and replace same. (c) JANITOR SERVICE shall be furnished at the expense of Tenant. 8. END OF TERM. (a)This Lease shall terminate upon expiration of the original term or applicable renewal terms, in accordance with the terms of Section 1. (b) SURRENDER OF PREMISES AT END OF TERM; REMOVAL OF FIXTURES. Tenant agrees that upon the termination of this Lease it will surrender, yield up and deliver the leased premises in good and clean condition, except the effects of ordinary wear and tear and depreciation arising from lapse of time, or damage not covered by insurance. (c) Tenant may, at the expiration of the term of this Lease, or renewal or renewals thereof or at a reasonable time thereafter, if Tenant is not in default hereunder, remove any equipment which said Tenant has installed in the leased premises, providing said Tenant repairs any and all damages caused by removal. Notwithstanding the foregoing, all leasehold improvements made by Tenant and all fixtures installed by Tenant shall remain upon the premises and shall be the sole property of Landlord. (d) HOLDING OVER. Tenant shall not continue to occupy the premises beyond the Lease term without the express prior written consent of Landlord. 9. ASSIGNMENT AND SUBLETTING. Tenant may not assign this Lease without the prior written consent of Landlord, but Tenant may sublet the premises for residential rental purposes, subject to this Lease but not for a term beyond December 31, 2014. In connection with any sublease, Tenant shall terminate same and take all action necessary, at its sole expense, to remove all subtenants so that the premises is vacant by December 31, 2014. 2 Notwithstanding anything to the contrary in this paragraph, Tenant may assign this Lease to the surviving entity in connection with any corporate merger, consolidation or reorganization to which Tenant is a party. 10. PROPERTY TAXES. Tenant shall pay all installments of real estate taxes, and all increases in installments, that would become delinquent if not paid during the term of this Lease. Tenant shall also timely pay all taxes, assessments, or other public charges levied or assessed by lawful authority against its personal property on the premises during the term of this Lease. Tenant shall pay all special assessments that would become delinquent if not paid during the term of this Lease. Each party reserves the right to protest any assessment of taxes. 11. INSURANCE. (a) Tenant agrees that it will at its own expense procure and maintain hazard insurance (i.e., fire and extended coverage) on the Property for the benefit of the parties as their respective interest may appear. Coverage shall be not less than $65,000. From and after delivery of possession, Buyer shall provide no fire and extended coverage insurance on said premises. Certificates or copies of said policies, naming the Landlord as an additional insured, and providing for thirty (30) days' advance notice to the Landlord before cancellation, shall be delivered to the Landlord within no later than the date that Tenant begins to occupy the leased premises. A renewal certificate shall be provided to Landlord prior to expiration of any policy. Tenants share of such insurance proceeds are hereby assigned and made payable to the Landlord to secure rent or other obligations then due and owing by Tenant to Landlord. To the extent permitted by their policies, Landlord and Tenant waive all rights of recovery against each other. (b) Tenant further covenants and agrees that it will at its own expense procure and maintain commercial general liability insurance in the amount of not less than $1,000,000 per occurrence and $3,000,000 annual aggregate. Such insurance shall cover liability arising from premises operations, independent contractors, personal injury, products, and completed operations and liability assumed under an insured contract, including but not limited to the activities of Tenant, its employees and agents. Certificates or copies of said policies, naming the Landlord as an additional insured, and providing for thirty (30) days' advance notice to the Landlord before cancellation, shall be delivered to the Landlord within no later than the date that Tenant begins to occupy the leased premises. A renewal certificate shall be provided to Landlord prior to expiration of any policy. (c) Tenant will not do or omit the doing of any act which would vitiate any insurance, or increase the insurance rates in force upon the real estate improvements on the premises or upon any personal property of the Tenant upon which the Landlord by law or by the terms of this Lease, has or shall have a lien. (d) Tenant further agrees to comply with recommendations of Iowa Insurance Services Office, or its successor office, and to be liable for and to promptly pay, as if current rental, any increase in insurance rates on said premises and on the building of which said premises are a part, due to increased risks or hazards resulting from Tenant's use of the premises otherwise than as herein contemplated and agreed. 12. INDEMNITY. Except as to any negligence of the Landlord or its agents in the performance of any obligation of Landlord under this Lease, and to the extent not covered by insurance maintained by Landlord or Tenant, Tenant will protect, indemnify, and save harmless the Landlord, its officers, officials, employees, and agents, from and against any and all claims, demands, causes of action, loss, costs, expenses, damages and liabilities of any type or nature (including but not limited to attorneys' fees and expenses) occasioned by, or arising out of, any accident or other occurrence causing or inflicting injury and/or damage to any person or property, happening or done, in, upon, or about the leased premises, or due directly or indirectly to the tenancy, use, or occupancy thereof, or any part thereof by the Tenant or any person claiming through or under the Tenant. Prior to occupancy of the leased premises hereunder, Tenant has had the opportunity to test the premises for toxic or hazardous substances, mold, and other environmental matters, and Tenant agrees that the indemnities set forth in this paragraph shall include but not be limited to any claims, demands, losses, or causes of action arising from or relating to such matters. The provisions of this paragraph shall survive the expiration, abandonment, or termination of this Lease. 13. FIRE AND CASUALTY. (a) PARTIAL DESTRUCTION OF PREMISES. In the event of a partial destruction or damage of the leased premises which causes a business interference by preventing the conduct of a normal business operation, and which damage is reasonably repairable within sixty (60) days after its occurrence, this Lease shall not terminate but the rent for the leased premises shall abate during the time of such business interference. In the event of partial destruction, Tenant shall have the option to repair such damages. (b) ZONING. If the zoning ordinance of the municipality in which this property is located makes it impossible for Landlord, using diligent and timely effort, to obtain necessary permits and to repair and/or rebuild so that Tenant is 3 able to conduct its business on these premises, then such partial destruction shall be treated as a total destruction as in the next paragraph provided. (c) TOTAL DESTRUCTION OF BUSINESS USE. In the event of a destruction or damage of the leased premises, including the parking area (if a parking area is a part of the subject matter of this Lease), so that Tenant is not able to conduct its business on the premises, and which damages cannot be repaired within sixty (60) days, this Lease may be terminated at the option of either the Landlord or Tenant. Such termination in such event shall be effected by written notice of one party to the other, within twenty (20) days after such destruction. Tenant shall surrender possession within ten (10) days after such notice issues and, each party shall be released from all future obligations hereunder, Tenant paying rental pro rata only to the date of such destruction. 14. CONDEMNATION. (a) DISPOSITION OF AWARDS. Should the whole or any part of the demised premises be condemned or taken by a competent authority for any public or quasi -public use or purpose, each party shall be entitled to retain, as its own property, any award payable to it. Or in the event that a single entire award is made on account of the condemnation, each party will then be entitled to take such proportion of said award as may be fair and reasonable. (b) DATE OF LEASE TERMINATION. If the whole of the demised premises shall be so condemned or taken, the Landlord shall not be liable to the Tenant except and as its rights are preserved as in paragraph 14(a) above. 15. TERMINATION OF LEASE AND DEFAULTS OF TENANT. (a) TERMINATION UPON EXPIRATION OR UPON NOTICE OF DEFAULTS. This Lease shall terminate upon expiration of the demised term. Upon default by Tenant in accordance with the terms and provisions of this Lease, or upon Tenant's abandonment of the premises by failure to engage in its usual and customary business activities on the premises for more than fifteen (15) consecutive business days, this Lease may at the option of the Landlord be canceled and forfeited, provided, however, before any such cancellation and forfeiture except as provided in 15(b) below, Landlord shall give Tenant a written notice specifying the default, or defaults, and stating that this Lease will be canceled and forfeited ten (10) days after the giving of such notice, unless such default, or defaults, are remedied within such grace period. As an additional optional procedure or as an altemative to the foregoing (and neither being exclusive of the other), Landlord may proceed as provided in paragraph 22 below. (b) BANKRUPTCY OR INSOLVENCY OF TENANT. In the event Tenant is adjudicated a bankrupt or in the event of a judicial sale or other transfer of Tenant's leasehold interest by reason of any bankruptcy or insolvency proceedings or by other operation of law, but not by death, and such bankruptcy, judicial sale, or transfer has not been vacated or set aside within ten (10) days from the giving of notice thereof by Landlord to Tenant, then and in any such events Landlord may, at its option, immediately terminate this Lease and, upon giving of ten (10) days' written notice by Landlord to Tenant, re-enter said premises, all to the extent permitted by applicable law. default. (c) In (a) and (b) above, waiver as to any default shall not constitute a waiver of any other or subsequent (d) Acceptance of keys, advertising, and re -renting by the Landlord upon the Tenant's default shall be construed only as an effort to mitigate damages by the Landlord, and not as an agreement to terminate this Lease. 16. RIGHT OF EITHER PARTY TO MAKE GOOD ANY DEFAULT OF THE OTHER. If default shall be made by either party in the performance of, or compliance with, any of the terms, covenants, or conditions of this Lease, and such default shall have continued for thirty (30) days after written notice thereof from one party to the other, the person aggrieved, in addition to all other remedies now or hereafter provided by law, may, but need not, perform such term, covenant, or condition, or make good such default, and any amount advanced shall be repaid forthwith on demand, together with interest at the rate of 10% per annum from the date of advance. 17. SIGNS. (a) Tenant shall have the right and privilege of attaching, affixing, painting, or exhibiting signs on the leased premises, provided only (1) that any and all signs shall comply with the ordinances of the municipality in which the property is located and with the laws of the State of Iowa; (2) such signs shall not change the structure of the building; (3) such signs if and when taken down shall not damage the building; and (4) such signs shall be subject to the prior written approval of the Landlord, which approval shall not be unreasonably withheld. 4 (b) Landlord during the last ninety (90) days of this Lease, or extension, shall have the right to maintain in the windows or on the building or on the premises either or both a "For Rent" or "For Sale" sign and Tenant will permit, at such time, prospective tenants or buyers to enter and examine the premises. 18. MECHANIC'S LIENS. Neither the Tenant nor anyone claiming by, through, or under the Tenant, shall have the right to file or place any mechanic's lien or other lien of any kind or character whatsoever upon said premises or upon any building or improvement thereon, or upon the leasehold interest of the Tenant therein, and notice is hereby given that no contractor, subcontractor, or anyone else who may furnish any material, service, or labor for any building, improvements, alteration, repairs or any part thereof, shall at any time be or become entitled to any lien thereon, and for the further security of the Landlord, the Tenant covenants and agrees to give actual notice thereof in advance to any and all contractors and subcontractors who may furnish or agree to furnish any such material, service, or labor. 19. LANDLORD'S LIEN AND SECURITY INTEREST. Landlord shall have, in addition to the lien given by law, a security interest as provided by the Uniform Commercial Code as codified in the State of Iowa upon all personal property, and all substitutions, replacements, accessories, and accessions thereto and thereof, kept and used on the leased premises by Tenant. Landlord may proceed at law or in equity with any remedy provided by law or by this Lease for the recovery of rent or for termination of this Lease because of Tenant's default in its performance. 20. SUBSTITUTION OF EQUIPMENT, MERCHANDISE. ETC. Tenant shall have the right, from time to time during the term of this Lease, to sell or otherwise dispose of any personal property of the Tenant situated on the leased premises, when in the judgment of the Tenant it shall have become obsolete, outworn, or unnecessary in connection with the operation of Tenant's business on the leased premises; provided, however, that the Tenant shall, in such instance and at its own expense, substitute for such items of personal property so sold or otherwise disposed of, a new or other item in substitution thereof, in like or greater value and adopted to the affixed operation of the business upon the leased premises (unless no substituted article or item is necessary). 21. OTHER PROVISIONS. (a) Before the end of the Lease term, Tenant may exercise salvage rights with respect to any portion of the premises, including but not limited to removal of the house to other property, provided that Tenant shall at all times keep structures on the premises secure against entry by third parties and, after removal of the house from its foundation, shall erect safety fencing for protection of the public against injury. All actions required of Tenant under this paragraph shall be performed at the sole expense of Tenant. 22. RIGHTS CUMULATIVE. The various rights, powers, options, elections, and remedies of either party as provided in this Lease shall be construed as cumulative and no one of them as exclusive of the others or exclusive of any rights, remedies, or priorities allowed either party by law, and shall in no way affect or impair the right of either party to pursue any other equitable or legal remedy to which either party may be entitled as long as any default remains in any way unremedied, unsatisfied, or undischarged. 23. NOTICES AND DEMANDS. Notices as provided for in this Lease shall be given to the respective parties hereto at the respective addresses designated on page one of this Lease unless either party notifies the other, in writing, of a different address. Without prejudice to any other method of notifying a party in writing or making a demand or other communication, such message shall be considered given under the terms of this Lease when sent, addressed as above designated, postage prepaid, by registered or certified mail, return receipt requested, by the United States mail and so deposited in a United States mail box. 24. BINDING EFFECT. Each and every covenant and agreement herein contained shall extend to and be binding upon the respective heirs, personal representatives, successors, and assigns of the parties hereto; except that if any part of this Lease is held in joint tenancy, the successor in interest shall be the surviving joint tenant. 25. CHANGES TO BE IN WRITING. None of the covenants, provisions, terms, or conditions of this Lease to be kept or performed by Landlord or Tenant shall be in any manner modified, waived, or abandoned, except by a written instrument duly signed by the parties and delivered to the Landlord and Tenant. This Lease contains the entire agreement of the parties and supersedes any and all discussions, negotiations, understandings, or agreements pertaining to the subject matter hereof. 26. CONSTRUCTION. Words and phrases herein, including acknowledgment hereof, shall be construed as in the singular or plural number, and as masculine, feminine, or neuter, according to the context. 5 IN WITNESS WHEREOF, the parties hereto have duly executed this Business Property Lease as of the date first written above. LANDLORD TENANT City of Wat; oo, Iowa R & S Rental Pr • pertt LC 4111., By.// By: E Attest. Suzy Schare , City Clerk 6 teven J. Santomauro, Manager Please return this copy to: City Clerk & Finance Dept. 715 Mulberry St. Waterloo, IA 50703 BUSINESS PROPERTY i LEASE This Business Property Lease (the "Lease") is made and entered into as of J, 2014, by and between the City of Waterloo, Iowa, an Iowa municipal corporation ("Landlord"), whose address for the purpose of this Lease is 715 Mulberry Street, Waterloo, Iowa, 50703, and R & S Commercial, LLC ( "Tenant"), whose address for the purpose of this Lease is 1027 Sycamore Street, Waterloo, Iowa, 50703. 1. PREMISES AND TERM. The Landlord, in consideration of the rents herein reserved and of the agreements and conditions herein contained, on the part of the Tenant to be kept and performed, leases unto the Tenant and Tenant hereby rents and leases from Landlord, according to the terms and provisions herein, the following described real estate, situated in Black Hawk County, Iowa, to wit: The SE 40 feet of Lot 9, and the SE one-half of Lot 8, in Block No. 18 in the Original Plat on the East Side of the Cedar River, in the City of Waterloo, Black Hawk County, Iowa, Commonly known as 1027 Sycamore Street, Waterloo, Iowa, with the improvements thereon and all rights, easements, and appurtenances thereto belonging, for a term commencing upon execution of this Lease and continuing until and including December 31, 2014, upon the condition that the Tenant pays rent therefor, and otherwise performs as provided in this Lease. This Lease shall automatically renew for up to five (5) additional terms of one month each unless one party delivers to the other, at least one month before the next scheduled renewal date, a written notice of termination. 2. RENTAL. Tenant agrees to pay to Landlord as rental for said term, as follows: $ 1.00 per year, in advance, due upon signing of this Lease. No additional sums shall be payable in connection with renewal of the Lease as provided in Section 1. 3. POSSESSION. Tenant shall be entitled to possession on the first day of the term of this Lease, and shall yield possession to the Landlord at the time and date of the close of this Lease term, except as herein otherwise expressly provided. 4. USE OF PREMISES; PRIOR USE. Tenant covenants and agrees during the term of this Lease to use and to occupy the leased premises only for activities and purposes consistent with and incidental to general commercial purposes. Landlord has not reviewed zoning or other applicable legal requirements or limitations imposed by any local, state, or federal govemmental authority that may affect Tenant's use of the premises, and Landlord makes no representation or warranty that the premises is suitable for Tenant's intended use. Tenant shall conduct its own review of applicable law and shall be solely responsible for meeting all legal requirements, including but not limited to building permits, licensure, or governmental approval. The parties acknowledge that Tenant is the former owner of the premises and that this Lease is a lease -back following Landlord's purchase of the premises according to the terms of a development agreement between the parties. 5. QUIET ENJOYMENT. Landlord covenants that its estate in said premises is fee simple and that the Tenant on paying the rent herein reserved and performing all the agreements by the Tenant to be performed as provided in this Lease, shall and may peaceably have, hold and enjoy the demised premises for the term of this Lease free from molestation, eviction or disturbance by the Landlord or any other persons or legal entity whatsoever. (But see paragraph 14, below.) Landlord shall have the right to mortgage all of its right, title, interest in said premises at any time without notice, subject to this Lease. 6. CARE AND MAINTENANCE OF PREMISES. Each party shall perform its responsibilities of repair and maintenance to the end that the premises will be kept in a safe and serviceable condition. Neither party will permit nor allow the premises to be damaged or depreciated in value by any act, omission, or negligence of itself, its agents or employees. (a) Tenant takes said premises in their present condition except for such repairs and alterations as may be expressly herein provided or to which Landlord may hereafter give its prior written consent. Tenant acknowledges that it is the former owner of the premises and that it is fully familiar with the condition of same. 1 (b) ° ANDLORD'S DUTY OF CARE AND MAINTENANCE. Landlord shall have no duty whatsoever to care for or maintain the premises or any part thereof. (c) TENANT'S DUTY OF CARE AND MAINTENANCE. Tenant shall, after taking possession of said premises and until the termination of this Lease and the actual removal from the premises, at its own expense, care for, maintain, and repair the exterior and interior parts of said premises in a reasonably safe and serviceable condition consistent with its own needs and pursuant to applicable law, ordinance or regulation. Tenant will fumish its own interior and exterior decorating. Tenant's duties under this Section shall include, but not be limited to, the foundation, roof, and other structural parts of the premises, all fixtures and mechanical systems, and any other feature of the premises that is commonly cared for, repaired, or maintained by a landlord. Tenant at its own expense may install floor covering and will maintain such floor covering in good condition. Tenant will be responsible for the plate glass in the windows of the leased premises and for maintaining the sidewalks and parking areas on and abutting the leased premises. Tenant shall make no structural alterations or improvements without the Landlord's prior written approval of the plans and specifications therefor. Tenant shall be responsible for all necessary upkeep of lawns, grounds, and landscaping, if any, to keep the premises well-maintained. Tenant shall be responsible to clear ice and snow from all sidewalks and parking areas on or abutting the premises. (d) Tenant will make no unlawful use of said premises and agrees to comply with all valid regulations of the Board of Health, municipal ordinances, the laws of the State of Iowa and the federal government, but this provision shall not be construed as creating any duty by Tenant to members of the general public. Tenant will not allow trash of any kind to accumulate on said premises or the parking area, yards, or sidewalks, and it will remove same from the premises at its own expense. (e) Tenant shall have responsibility for and perform all acts necessary for compliance with the Americans with Disabilities Act. 7. FACILITY SERVICES. (a) UTILITIES AND SERVICES. Tenant, during the term of this Lease, shall pay before delinquency all charges for use of telephone, water, sewer, gas, electricity, power, garbage or trash disposal, and all other utilities or services of whatever kind and nature which may be used in or upon the leased premises. (b) AIR CONDITIONING AND HEATING equipment shall be initially furnished by Landlord, and Tenant shall maintain, repair, and replace same. (c) JANITOR SERVICE shall be furnished at the expense of Tenant. 8. END OF TERM. (a)This Lease shall terminate upon expiration of the original term or applicable renewal terms, in accordance with the terms of Section 1. (b) SURRENDER OF PREMISES AT END OF TERM; REMOVAL OF FIXTURES. Tenant agrees that upon the termination of this Lease it will surrender, yield up and deliver the leased premises in good and clean condition, except the effects of ordinary wear and tear and depreciation arising from lapse of time, or damage not covered by insurance. (c) Tenant may, at the expiration of the term of this Lease, or renewal or renewals thereof or at a reasonable time thereafter, if Tenant is not in default hereunder, remove any equipment which said Tenant has installed in the leased premises, providing said Tenant repairs any and all damages caused by removal. Notwithstanding the foregoing, all leasehold improvements made by Tenant and all fixtures installed by Tenant shall remain upon the premises and shall be the sole property of Landlord. (d) HOLDING OVER. Tenant shall not continue to occupy the premises beyond the Lease term without the express prior written consent of Landlord. 9. ASSIGNMENT AND SUBLETTING. Tenant may not assign this Lease or sublet the premises or any part thereof without the prior written consent of Landlord. Notwithstanding anything to the contrary in this paragraph, Tenant may assign this Lease to the surviving entity in connection with any corporate merger, consolidation or reorganization to which Tenant is a party. 2 10. PROPERTY TAXES. Tenant shall pay all installments of real estate taxes, and all increases in installments, that would become delinquent if not paid during the term of this Lease. Tenant shall also timely pay all taxes, assessments, or other public charges levied or assessed by lawful authority against its personal property on the premises during the term of this Lease. Tenant shall pay all special assessments that would become delinquent if not paid during the term of this Lease. Each party reserves the right to protest any assessment of taxes. 11. INSURANCE. (a) Tenant agrees that it will at its own expense procure and maintain hazard insurance (i.e., fire and extended coverage) on the Property for the benefit of the parties as their respective interest may appear. Coverage shall be not less than $25,000. From and after delivery of possession, Buyer shall provide no fire and extended coverage insurance on said premises. Certificates or copies of said policies, naming the Landlord as an additional insured, and providing for thirty (30) days' advance notice to the Landlord before cancellation, shall be delivered to the Landlord within no later than the date that Tenant begins to occupy the leased premises. A renewal certificate shall be provided to Landlord prior to expiration of any policy. Tenant's share of such insurance proceeds are hereby assigned and made payable to the Landlord to secure rent or other obligations then due and owing by Tenant to Landlord. To the extent permitted by their policies, Landlord and Tenant waive all rights of recovery against each other. (b) Tenant further covenants and agrees that it will at its own expense procure and maintain commercial general liability insurance in the amount of not less than $1,000,000 per occurrence and $3,000,000 annual aggregate. Such insurance shall cover liability arising from premises operations, independent contractors, personal injury, products, and completed operations and liability assumed under an insured contract, including but not limited to the activities of Tenant, its employees and agents. Certificates or copies of said policies, naming the Landlord as an additional insured, and providing for thirty (30) days' advance notice to the Landlord before cancellation, shall be delivered to the Landlord within no later than the date that Tenant begins to occupy the leased premises. A renewal certificate shall be provided to Landlord prior to expiration of any policy. (c) Tenant will not do or omit the doing of any act which would vitiate any insurance, or increase the insurance rates in force upon the real estate improvements on the premises or upon any personal property of the Tenant upon which the Landlord by law or by the terms of this Lease, has or shall have a lien. (d) Tenant further agrees to comply with recommendations of Iowa Insurance Services Office, or its successor office, and to be liable for and to promptly pay, as if current rental, any increase in insurance rates on said premises and on the building of which said premises are a part, due to increased risks or hazards resulting from Tenant's use of the premises otherwise than as herein contemplated and agreed. 12. INDEMNITY. Except as to any negligence of the Landlord or its agents in the performance of any obligation of Landlord under this Lease, and to the extent not covered by insurance maintained by Landlord or Tenant, Tenant will protect, indemnify, and save harmless the Landlord, its officers, officials, employees, and agents, from and against any and all claims, demands, causes of action, loss, costs, expenses, damages and liabilities of any type or nature (including but not limited to attorneys' fees and expenses) occasioned by, or arising out of, any accident or other occurrence causing or inflicting injury and/or damage to any person or property, happening or done, in, upon, or about the leased premises, or due directly or indirectly to the tenancy, use, or occupancy thereof, or any part thereof by the Tenant or any person claiming through or under the Tenant. Prior to occupancy of the leased premises hereunder, Tenant has had the opportunity to test the premises for toxic or hazardous substances, mold, and other environmental matters, and Tenant agrees that the indemnities set forth in this paragraph shall include but not be limited to any claims, demands, losses, or causes of action arising from or relating to such matters. The provisions of this paragraph shall survive the expiration, abandonment, or termination of this Lease. 13. FIRE AND CASUALTY. (a) PARTIAL DESTRUCTION OF PREMISES. In the event of a partial destruction or damage of the leased premises which causes a business interference by preventing the conduct of a normal business operation, and which damage is reasonably repairable within sixty (60) days after its occurrence, this Lease shall not terminate but the rent for the leased premises shall abate during the time of such business interference. In the event of partial destruction, Tenant shall have the option to repair such damages. (b) ZONING. If the zoning ordinance of the municipality in which this property is located makes it impossible for Landlord, using diligent and timely effort, to obtain necessary permits and to repair and/or rebuild so that Tenant is able to conduct its business on these premises, then such partial destruction shall be treated as a total destruction as in the next paragraph provided. 3 (c) TOTAL DESTRUCTION OF BUSINESS USE. In the event of a destruction or damage of the leased premises, including the parking area (if a parking area is a part of the subject matter of this Lease), so that Tenant is not able to conduct its business on the premises, and which damages cannot be repaired within sixty (60) days, this Lease may be terminated at the option of either the Landlord or Tenant. Such termination in such event shall be effected by written notice of one party to the other, within twenty (20) days after such destruction. Tenant shall surrender possession within ten (10) days after such notice issues and, each party shall be released from all future obligations hereunder, Tenant paying rental pro rata only to the date of such destruction. 14. CONDEMNATION. (a) DISPOSITION OF AWARDS. Should the whole or any part of the demised premises be condemned or taken by a competent authority for any public or quasi -public use or purpose, each party shall be entitled to retain, as its own property, any award payable to it. Or in the event that a single entire award is made on account of the condemnation, each party will then be entitled to take such proportion of said award as may be fair and reasonable. (b) DATE OF LEASE TERMINATION. If the whole of the demised premises shall be so condemned or taken, the Landlord shall not be liable to the Tenant except and as its rights are preserved as in paragraph 14(a) above. 15. TERMINATION OF LEASE AND DEFAULTS OF TENANT. (a) TERMINATION UPON EXPIRATION OR UPON NOTICE OF DEFAULTS. This Lease shall terminate upon expiration of the demised term. Upon default by Tenant in accordance with the terms and provisions of this Lease, or upon Tenant's abandonment of the premises by failure to engage in its usual and customary business activities on the premises for more than fifteen (15) consecutive business days, this Lease may at the option of the Landlord be canceled and forfeited, provided, however, before any such cancellation and forfeiture except as provided in 15(b) below, Landlord shall give Tenant a written notice specifying the default, or defaults, and stating that this Lease will be canceled and forfeited ten (10) days after the giving of such notice, unless such default, or defaults, are remedied within such grace period. As an additional optional procedure or as an alternative to the foregoing (and neither being exclusive of the other), Landlord may proceed as provided in paragraph 22 below. (b) BANKRUPTCY OR INSOLVENCY OF TENANT. In the event Tenant is adjudicated a bankrupt or in the event of a judicial sale or other transfer of Tenant's leasehold interest by reason of any bankruptcy or insolvency proceedings or by other operation of law, but not by death, and such bankruptcy, judicial sale, or transfer has not been vacated or set aside within ten (10) days from the giving of notice thereof by Landlord to Tenant, then and in any such events Landlord may, at its option, immediately terminate this lease and, upon giving of ten (10) days' written notice by Landlord to Tenant, re-enter said premises, ail to the extent permitted by applicable law. (c) In (a) and (b) above, waiver as to any default shall not constitute a waiver of any other or subsequent default. (d) Acceptance of keys, advertising, and re -renting by the Landlord upon the Tenant's default shall be construed only as an effort to mitigate damages by the Landlord, and not as an agreement to terminate this Lease. 16. RIGHT OF EITHER PARTY TO MAKE GOOD ANY DEFAULT OF THE OTHER. If default shall be made by either party in the performance of, or compliance with, any of the terms, covenants, or conditions of this Lease, and such default shall have continued for thirty (30) days after written notice thereof from one party to the other, the person aggrieved, in addition to all other remedies now or hereafter provided by law, may, but need not, perform such term, covenant, or condition, or make good such default, and any amount advanced shall be repaid forthwith on demand, together with interest at the rate of 10% per annum from the date of advance. 17. SIGNS. (a) Tenant shall have the right and privilege of attaching, affixing, painting, or exhibiting signs on the leased premises, provided only (1) that any and all signs shall comply with the ordinances of the municipality in which the property is located and with the laws of the State of Iowa; (2) such signs shall not change the structure of the building; (3) such signs if and when taken down shall not damage the building; and (4) such signs shall be subject to the prior written approval of the Landlord, which approval shall not be unreasonably withheld. (b) Landlord during the last ninety (90) days of this Lease, or extension, shall have the right to maintain in the windows or on the building or on the premises either or both a "For Rent" or "For Sale" sign and Tenant will permit, at such time, prospective tenants or buyers to enter and examine the premises. 4 18. MECHANIC'S LIENS. Neither the Tenant nor anyone claiming by, through, or under the Tenant, shall have the right to file or place any mechanic's lien or other lien of any kind or character whatsoever upon said premises or upon any building or improvement thereon, or upon the leasehold interest of the Tenant therein, and notice is hereby given that no contractor, subcontractor, or anyone else who may furnish any material, service, or labor for any building, improvements, alteration, repairs or any part thereof, shall at any time be or become entitled to any lien thereon, and for the further security of the Landlord, the Tenant covenants and agrees to give actual notice thereof in advance to any and all contractors and subcontractors who may furnish or agree to fumish any such material, service, or labor. 19. LANDLORD'S LIEN AND SECURITY INTEREST. Landlord shall have, in addition to the lien given by law, a security interest as provided by the Uniform Commercial Code as codified in the State of Iowa upon all personal property, and all substitutions, replacements, accessories, and accessions thereto and thereof, kept and used on the leased premises by Tenant. Landlord may proceed at law or in equity with any remedy provided by law or by this Lease for the recovery of rent or for termination of this Lease because of Tenant's default in its performance. 20. SUBSTITUTION OF EQUIPMENT, MERCHANDISE. ETC. Tenant shall have the right, from time to time during the term of this Lease, to sell or otherwise dispose of any personal property of the Tenant situated on the leased premises, when in the judgment of the Tenant it shall have become obsolete, outworn, or unnecessary in connection with the operation of Tenant's business on the leased premises; provided, however, that the Tenant shall, in such instance and at its own expense, substitute for such items of personal property so sold or otherwise disposed of, a new or other item in substitution thereof, in like or greater value and adopted to the affixed operation of the business upon the leased premises (unless no substituted article or item is necessary). 21. OTHER PROVISIONS. (a) Before the end of the Lease term, Tenant may exercise salvage rights with respect to any portion of the premises, provided that Tenant shall at all times keep structures on the premises secure against entry by third parties. 22. RIGHTS CUMULATIVE. The various rights, powers, options, elections, and remedies of either party as provided in this Lease shall be construed as cumulative and no one of them as exclusive of the others or exclusive of any rights, remedies, or priorities allowed either party by law, and shall in no way affect or impair the right of either party to pursue any other equitable or legal remedy to which either party may be entitled as long as any default remains in any way unremedied, unsatisfied, or undischarged. 23. NOTICES AND DEMANDS. Notices as provided for in this Lease shall be given to the respective parties hereto at the respective addresses designated on page one of this Lease unless either party notifies the other, in writing, of a different address. Without prejudice to any other method of notifying a party in writing or making a demand or other communication, such message shall be considered given under the terms of this Lease when sent, addressed as above designated, postage prepaid, by registered or certified mail, return receipt requested, by the United States mail and so deposited in a United States mail box. 24. BINDING EFFECT. Each and every covenant and agreement herein contained shall extend to and be binding upon the respective heirs, personal representatives, successors, and assigns of the parties hereto; except that if any part of this Lease is held in joint tenancy, the successor in interest shall be the surviving joint tenant. 25. CHANGES TO BE IN WRITING. None of the covenants, provisions, terms, or conditions of this Lease to be kept or performed by Landlord or Tenant shall be in any manner modified, waived, or abandoned, except by a written instrument duly signed by the parties and delivered to the Landlord and Tenant. This Lease contains the entire agreement of the parties and supersedes any and all discussions, negotiations, understandings, or agreements pertaining to the subject matter hereof. 26. CONSTRUCTION. Words and phrases herein, including acknowledgment hereof, shall be construed as in the singular or plural number, and as masculine, feminine, or neuter, according to the context. IN WITNESS WHEREOF, the parties hereto have duly executed this Business Property Lease as of the date first written above. 5 LANDLORD City of Waterloo, Iowa By: Attest: ayor AJ Suzy Sc res, ity Ierk 6 TENANT R & S Commer By: teven J. Santomauro, Manager Please return this copy to: City Clerk & Finance Dept. 715 Mulberry St. Waterloo, IA 50703 BLACK HAWK EXCHANGE, INC. June 4, 2014 City of Waterloo, Iowa C/O Christopher Wendland 315 East 5th Street Waterloo, IA 50703 Greeting: You are hereby notified that, pursuant to a certain Exchange Agreement between R & S Commercial, LLC and Black Hawk Exchange Inc., as Qualified Intermediary, the rights under agreement to sell the 1027 Sycamore Street and real estate parcel # 8913-25-137-010 in Waterloo, IA were assigned to Black Hawk Exchange Inc. ffis intended that this transaction be treated by the seller as part of a tax deferred exchange of the property rather than an outright sale. Notwithstanding the fact that the contract rights have been assigned to Black Hawk Exchange Inc., as Qualified Intermediary, pursuant to the terms of the Exchange Agreement and applicable regulations, you may expect to receive transfer of, and any applicable bill of sale, directly from R & S Commercial, LLC. Enclosed .are two originals of the Exhibit B of their Exchange Agreement that I would appreciate if you would sign and return at your earliest possible convenience. The enclosed Exhibit B Approval of Assignment is simply a document that acknowledges that you are aware the seller assigned the Development Agreement to Black Hawk Exchange in order to facilitate a 1031 tax deferred exchange. By signing the document it has no impact on your purchase of the property and bears no financial cost to you. Should you have any questions, please give me a call at 319-232-2576 or through email of bmostekAbh1031x.com Thank you. Sincerely, A/49 Barb Mostek. President Enclosures 221 East 4th Street • Suite 21 • Waterloo, IA 50703 • (319) 232-2576 APPROVAL OF ASSIGNMENT City of Waterloo, Iowa, ("Purchaser"), hereby acknowledges and approves the transfer and assignment of right, title and interest in and to (i) the Relinquished Property located at 1027 Sycamore Street and Parcel No. 8913-25- 137-010, Waterloo, IA and (ii) the Development Agreement relating to the Relinquished Property from the Exchanger to Black Hawk Exchange, Inc. Purchaser is approving and accepting this Assignment for the sole purpose of fulfilling its obligations under the Development Agreement. Purchaser agrees to accept a deed to the Relinquished Property issued directly to the Purchaser by the Exchanger. Purchaser further agrees that following the date of closing of the Development Agreement ("Transfer Date"), Black Hawk Exchange, Inc. _ shall have no personal liability to Purchaser for any claims under the Development Agreement, or any other agreements relating to Relinquished Property, and that Purchaser shall enforce any rights it may have under any of said agreements solely against the Exchanger. Purchaser indemnifies Black Hawk Exchange, Inc. against any liability or costs or expenses incurred as a result of Black Hawk Exchange, Inc. acquiring or maintaining beneficial and/or legal ownership of the Relinquished Property, or possession thereof, except for any liability arising from Black Hawk Exchange inc.'s own acts. CITY, WATERLOO, IOWA yi BY: CJk-y1 c ITS: vvv.A.Apn Dated: J u✓vU 1 lea 2&C ACCEPTANCE OF ASSIGNMENT Black Hawk Exchange, Inc. hereby accepts this Assignment. BLACK HAWK EXCHANGE, INC. By:1/,-4//-1-OJ 4/9244) Barbara J. Mostek, President Dated: a r_,