Form revised: December 14, 2010

FISCAL NOTE FOR NON-CAPITAL PROJECTS

Department:	Contact Person/Phone:	CBO Analyst/Phone:
Seattle Center	Robert Nellams, 684-7334 Kerry Smith, 615-0358 Rebecca Keith, Law, 684-8239	Gregory Shiring, 386-4085

Legislation Title:

AN ORDINANCE relating to the Seattle Center Department; authorizing the Seattle Center Director to execute a ten year lease agreement, with additional options to extend, with Friends of KEXP; under which agreement KEXP will renovate and lease space in the Northwest Rooms and a portion of the adjacent courtyard at Seattle Center for use as KEXP’s radio broadcast studios and offices, performance spaces, a café, a shared use outdoor stage, and other uses supporting KEXP’s operations.

Summary of the Legislation: 

This legislation authorizes execution of a lease agreement with Friends of KEXP for space in and near the Northwest Rooms at Seattle Center. Under this agreement, Friends of KEXP will enter into a 10-year lease with the City for the Northwest Rooms site.  KEXP will renovate and use the space for KEXP’s broadcast and production studios, their administrative and business offices, a café, interior and exterior performance spaces and other uses supporting KEXP’s operations.  Contingent on certain conditions being met, the lease will commence on November, 1, 2013.  During the budget year in which the lease commences the City will request appropriation of up to $250,000 for acquisition of a backup generator and technical fiber connections to serve KEXP’s premises.

Background:  

In the spring of 2010, Seattle Center issued a Request for Proposals (RFP) for redevelopment of the South Fun Forest site that was vacated by Fun Forest Amusement, LLC.  Nine proposals were received in response, including a proposal from KEXP. 

In an effort to involve a broad range of the community interested in the review, the department established a citizens RFP review panel (“Review Panel”) that included members of the Century 21 Master Plan Committee, with the Chair of the Seattle Center Advisory Commission acting as chair of the Review Panel.  Between June and September, the Review Panel analyzed the proposals according to a number of principles and criteria set forth in the RFP.  In September 2010, the Review Panel submitted its recommendation to the Seattle Center Director that the proposal submitted for an exhibition space featuring the work of glass artist Dale Chihuly best satisfied the criteria, but the committee agreed that the addition of KEXP as a resident organization would be positive and supported the idea of exploring alternative locations on the campus for KEXP.   The committee also noted that KEXP is likely to draw a younger demographic to Seattle Center and add to the unique mix at the Center.

Through ongoing discussions with KEXP the upper Northwest Rooms site was identified as an alternative location that met KEXP’s needs and provided a potential venue site for outdoor concerts.  In addition, KEXP’s vision for renovation of the upper Northwest Rooms transforms the building with glass walls that give people a clear view of DJs and artists and improves connections to Lower Queen Anne.

The Seattle Center Northwest Rooms, located next to KeyArena, are currently used for meetings, seminars, banquets, small exhibits and more.  The six rooms that KEXP will lease range in size from 925 to 6,000 square feet and can be utilized separately or in combination.  The rooms open onto a landscaped courtyard and are adjacent to the Vera Project and the Seattle International Film Festival.

Lease Terms

Friends of KEXP plans to renovate and use the space for KEXP’s broadcast and production studios and related purposes such as administrative and business offices and interior performance spaces. They will also develop a new stage in the Northwest Rooms Courtyard that will be used by KEXP, festivals and Seattle Center.

Term of Agreement

· The initial lease term is for ten years with four additional five year options for a total lease term of up to 30 years. 

· The lease will commence on November 1, 2013, contingent on1) issuance of a building permit to KEXP for the project, 2) demonstration by KEXP that they have sufficient funds to make the planned improvements and 3) completion of a construction agreement.

· If the conditions for the lease to commence have not been met by November 1, 2013, KEXP may exercise an option to delay the commencement on two occasions for one year on each occasion.  If the extension option is exercised KEXP will pay an option fee of $31,250 per option to delay the lease commencement.  The fee may be paid in cash or in-kind advertising services.

Construction Financing

· Friends of KEXP will be responsible for all capital costs associated with the renovation. 

· At the time of the lease commencement and conditioned on a future appropriation, the City will invest up to $250,000 to connect KEXP via dark fiber to the University of Washington and the City’s power transmitter facility at 18^th and Madison and to acquire and install an emergency generator, transfer switch  and generator fuel tank to support KEXP’s operations.

Rent

· KEXP will pay an annual rent of $290,500 comprised of a combination of cash rent of $62,500 and $228,000 of in-kind rent. 

· Beginning in year 6 of the lease and each year thereafter, the rent will be increased by 2%.  

· KEXP may sublease up to 25% of the 27,960 square foot Premises for terms of 30 days or less for uses that support KEXP’s operation as a nonprofit music and arts organization and that are consistent with Seattle Center’s overall mission. 

· KEXP may sublease portions of the Premises for longer terms for uses that are compatible with Seattle Center’s over-all mission.

· KEXP will pay Seattle Center 15% of gross rents received from any sublease to tenants, excluding rent received by KEXP from nonprofit organizations.

Maintenance and Operations

· KEXP will be responsible for operation and maintenance of the building interior and of all building systems upgraded or modified as part of the project.

· The City will be responsible for maintenance of the roof, exterior windows and exterior walls of the building as well as maintaining utility systems serving the building.  

· Seattle Center will provide up to $5,000/year of staff time to maintain the new emergency generator and up to $3,000/year of staff time for routine repair and maintenance of any mechanical, plumbing, wastewater, electrical, or similar system serving the site.

· If any utility system serving the building requires major repair, the City and KEXP will share the cost equally.  

Public Benefits and Community Partners

· KEXP will fund renovation of the Upper Northwest Rooms.

· KEXP will enable City use of the new stage for festivals and other events.

· KEXP will provide content and links for the Seattle Center homepage.

· KEXP will provide up to ten work spaces for City staff in the event of a power outage and may serve as an emergency command center.

· KEXP will play a curatorial role in offering Seattle Center incidental arts experiences.

· KEXP will works to develop partnerships with organizations and groups to help people discover music.

Other

· At the end of the lease term, all capital improvements made to the premises will become the property of the City.

Please check one of the following:

____ This legislation does not have any financial implications.

   X _   This legislation has financial implications.

Appropriations:

Fund Name and Number	Department	Budget Control Level*	2011 Appropriation	2012 Anticipated Appropriation
TOTAL

*See budget book to obtain the appropriate Budget Control Level for your department.

Appropriations Notes:  Although this legislation does not include an appropriation, it does include a commitment that prior to the lease commencing, which would be November 1, 2013 at the earliest, that the Executive will include in the proposed capital budget or in separate legislation, and subject to valid appropriation, invest up to $250,000 in the premises for specific purposes.  Those purposes include data connection of the KEXP premises via fiber to the City’s transmitter at 18^th and Madison and to the University of Washington, and acquisition and installation of an emergency generator, transfer switch and generator fuel tank at the premises. 

Anticipated Revenue/Reimbursement: Resulting from this Legislation:

Fund Name and Number	Department	Revenue Source	2011 Revenue	2012 Revenue
TOTAL

Total Regular Positions Created, Modified, or Abrogated through this Legislation, Including FTE Impact:

Position Title and Department	Position # for Existing Positions	Fund Name & #	PT/FT	2011 Positions	2011 FTE	2012 Positions*	2012 FTE*
TOTAL

* 2012 positions and FTE are total 2012 position changes resulting from this legislation, not incremental changes.  Therefore, under 2012, please be sure to include any continuing positions from 2011.

Position Notes: There are no positions created, modified or abrogated through this legislation.  When KEXP has met the conditions necessary for commencement of the lease in the Northwest Rooms, Seattle Center expects to move the majority of events currently held there to other facilities at Seattle Center.  While there may be position implications due to this rearrangement of events, at this time it is assumed that current staffing will be relocated resulting in no net reduction or increase in positions.

Do positions sunset in the future? 

Not applicable

Spending/Cash Flow:

Fund Name & #	Department	Budget Control Level*	2011 Expenditures	2012 Anticipated Expenditures
TOTAL

* See budget book to obtain the appropriate Budget Control Level for your department.

Spending/Cash Flow Notes:

Not Applicable

What is the financial cost of not implementing the legislation?

If this agreement is not approved and the KEXP lease is not approved, the City will forego the financial and public benefits outlined above.

Does this legislation affect any departments besides the originating department?

Yes, the Department of Information Technology (DoIT) will be responsible for working with Friends of KEXP, the University of Washington and Seattle Center to implement the necessary dark fiber connections between the UW, KEXP and the City.  The City has agreed to spend, subject to valid appropriation, up to $250,000 to implement the necessary connections.  Mr. Bill Schrier, Chief Technology Officer, and Mr. Stan Wu Major Project Director, are aware of the legislation.

What are the possible alternatives to the legislation that could achieve the same or similar objectives?

As part of the RFP process for the South Fun Forest site, the City considered multiple alternatives for Seattle Center tenants and identified Friends of KEXP as a positive addition to the tenant mix at Seattle Center.

Is the legislation subject to public hearing requirements?

No

Other Issues:

None

List attachments to the fiscal note below:

None