Loading...
HomeMy WebLinkAbout3223AGENDA BILL CITY OF BREMERTON CITY COUNCIL jZD 5T SUBJECT: Fourth Addendum to the Study Session Date: February 14, 2018 Operating Agreement with the Admiral COUNCIL MEETING Date: February 21, 2018 Theatre Foundation for the Operation of the Department: City Clerk Admiral Theater Presenter: Shannon Corin Phone: (360) 473-5323 SUMMARY: The City has a current Operating Agreement with the Admiral Theatre Foundation to operate City owned Admiral Theater. The agreement expires September 27, 2040, with an annual amount paid to the Foundation from revenues received from the lodging tax in the amount of $90,000 per year. In 2013, the Council approved the Third Addendum to the agreement to increase funding to $150,000 per year through 2017, then it would revert back to $90,000 annually through the expiration of the agreement. The Admiral Theatre Foundation submitted an application to the Lodging Tax Advisory Committee to extend the additional funds. LTAC recommended extension of the additional $60,000 be allocated to the Admiral Theatre Foundation annually through 2022 for a total of $150,000 per year. City Council approved the recommendation at the July 19, 2017 Council Meeting and the $150,000 was included in the 2018 Budget adopted by Ordinance No. 5341 on November 20, 2017. ATTACHMENTS: 1) Fourth Addendum to the Operating Agreement; and 2) Exhibit A — Operating Agreement FISCAL IMPACTS (Include Budgeted Amount): This item has been budgeted for 2018. STUDY SESSION AGENDA: ® Limited Presentation ❑ Full Presentation STUDY SESSION ACTION: ® Consent Agenda ❑ General Business ❑ Public Hearing RECOMMENDED MOTION: Move to approve the Fourth Addendum to the Operating Agreement with Admiral Theatre Foundation extending the annual compensation of $150,000 through 2022, and authorize the Mayor to finalize and execute the agreement with substantially the same terms and conditions as presented. COUNCIL ACTION: [✓Approve Form Updated 01/02/2018 El Deny ❑ Table ❑ Continue ❑ No Action FOURTH ADDENDUM TO OPERATING AGREEMENT (Admiral Theater) This Fourth Addendum to Operating Agreement is entered into on the date fully executed below by and between the CITY OF BREMERTON, hereinafter referred to as the "City," and the ADMIRAL THEATRE FOUNDATION, hereinafter referred to as the "Foundation." WHEREAS, the City and the Foundation entered into an agreement entitled Operating Agreement dated September 28, 1990, with a ten (10) year term expiring on the September 27, 2000, attached hereto as Exhibit A; and WHEREAS, the City and the Foundation entered into a Funding Agreement dated August 22, 1995, for funding of $165,000 and an Addendum to Funding Agreement on January 10, 1996, for additional funding of $25,000; and WHEREAS, the City and the Foundation entered into a one (1) year Professional Services Agreement dated January 1, 1999 (herein referred to as the "Services Agreement"), for the purpose of providing funding for the Admiral Theatre in the amount of $78,450 and further executed the First Addendum to Services Agreement in 2000 extending the term an additional year for funding of $90,000 and a Second Addendum to Services Agreement in 2001 extending the term an additional year for funding of $62,147; and WHEREAS, the City and the Foundation entered into a one (1) year Tourism Promotion Services Agreement dated May 19, 2008 and expiring on December 31, 2008 (herein referred to as the "Tourism Promotion Agreement"), for the purpose of providing funding for tourism promotion services; and WHEREAS, the City and the Foundation entered into a First Addendum to Operating Agreement dated December 12, 2001 (herein referred to as the "First Addendum"), to extend the termination date of the Operating Agreement to September 27, 2040, and to provide continued funding support in the amount of $90,000 for the Admiral Theatre as provided in the Professional Services Agreement which was scheduled to terminate December 31, 2001, as extended by the Services Agreement Extensions, and to further clarify conditions of the Operating Agreement; and WHEREAS, the City and the Foundation entered into a Second Addendum to Operating Agreement on January 25, 2013 (herein referred to as the "Second Addendum"), increasing the annual funding to $150,000 per year for a period of five (5) years, amending language relating to audit reports, and making other related matters; and WHEREAS, in the Second Addendum, the parties acknowledged that the Professional Services Agreement and Services Agreement Extensions have terminated and that the agreements in effect at this time are the Operating Agreement and First Addendum to Operating Agreement; and Admiral Theater — Fourth Addendum to Operating Agreement WHEREAS, the City and the Foundation entered into a Third Addendum to Operating Agreement on July 15, 2015 (herein referred to as the "Third Addendum"), relating to funding, audit reports, and related matters, to replace in its entirety the First Addendum and Second Addendum; and WHEREAS, the parties acknowledge and reaffirm in this agreement that all of the agreements noted above and any related agreements, with the exception of the Operating Agreement and the Third Addendum, have expired, terminated or been repealed and replaced and that the agreements currently in effect at this time are the Operating Agreement and the Third Addendum; and WHEREAS, the City and the Foundation now desire to enter into a Fourth Addendum to Operating Agreement (herein referred to as the "Fourth Addendum") to extend the funding of $150,000 an additional five (5) years through calendar year 2022, axd to replace in its entirety the Third Addendum; NOW, THEREFORE, in consideration of the terms and conditions contained herein, the parties mutually agree that this Fourth Addendum to Operating Agreement hereby amends the Operating Agreement and replaces in its entirety the Third Addendum as follows: 1. Findings. The findings set forth in the recitals above are hereby adopted and incorporated as if fully set forth herein. 2. Addendums Repealed. The Third Addendum to Operating Agreement is hereby repealed and replaced in their entirety by this agreement. 3. Term. The initial term of the Operating Agreement commenced on September 28, 1990 and shall terminate on September 27, 2040. 4. Building Maintenance. The Foundation is solely responsible for maintaining the Admiral Theater facility including all building areas and appurtenances ("Facility") and improvements therein in good condition. The City shall have no responsibility for building maintenance, repairs, or damage to the structure, except to the extent insurance proceeds are available to cover any loss. 5. Financial Contribution. Commencing in 2013, the City shall pay the Foundation a Contribution ("Financial Contribution") of $150,000 annually for a period of ten (10) years subject to the existing terms of the Operating Agreement as amended herein. This Financial Contribution is increased from the previous annual Financial Contributions of $90,000 through calendar year 2012. Commencing in calendar year 2023, the annual Financial Contribution shall automatically revert to the previous annual Financial Contributions of $90,000 unless otherwise extended or adjusted by the parties in writing. Provided, however, the obligation to pay the Financial Contribution is conditioned upon the following: a. The Foundation properly maintaining the Facility; and 2 Admiral Theater — Fourth Addendum to Operating Agreement b. The Foundation continuing to market and provide performing and visual arts at the Theatre on a full-time basis, including education and cultural events; and C. The Foundation provide the City its annual budget and marketing plans within thirty (30) days of adoption by the Foundation Board; and d. The Foundation making available to the City all financial information the City deems appropriate to determine that the Foundation is using its funds in accordance with its non-profit purpose and the purpose of the Operating Agreement and this Fourth Addendum thereto; and e. The Foundation shall provide a review, issued by a Certified Public Accountant, to the City for fiscal year ending August 31, 2016, and for all of the following fiscal years except when an external audit is required pursuant to subsection (f) below. All reviews shall be provided to the City Department of Financial Services by January 31" of the calendar year following the end of the fiscal year being reviewed; and f. The Foundation shall provide an external audit report, issued by a Certified Public Accountant, to the City for fiscal year ending August 31, 2015, and every third year thereafter. All audit reports shall be provided to the City by January 31" of the calendar year following the end of the fiscal year being audited; and g. The City's Hotel/Motel Tax generates at least an amount to cover the Financial Contribution ($150,000 or $90,000 as applicable) each year for each two percent (2%) of tax imposed, otherwise, the City's Financial Contribution shall be reduced accordingly; and h. The City Council, following receipt of the audit review or external audit as set forth in subsections(e) and (f) above, as applicable, renews its commitment to the above -referenced Financial Contribution amount or such other amount as it deems within the best interests of the City and its citizens. The review of commitment shall be included as part of the City's budget process during the year following the end of the fiscal year being reviewed or audited. (As an example, for fiscal year ending on August 31, 2014, the City reviews its renewal of commitment of Financial Contribution as part of the City's budget process in 2015 for funding in budget year 2016). It is anticipated that the Financial Contribution commitment will be renewed each year, so long as the Foundation has used the funds in a manner that the Council deems as promoting the best interests of the City and its citizens and the purposes of the Hotel/Motel Tax enabling, legislation; and i. Commencing in calendar year 2023 the City's annual Financial Contribution shall automatically revert to $90,000 unless otherwise extended or adjusted by the parties in writing following receipt of the external audit; and j. The Foundation shall not apply for or be eligible for additional lodging tax funds provided the City's Financial Contribution is $150,000 annually. 3 Admiral Theater — Fourth Addendum to Operating Agreement 6. Notices. Any notices required to be given by the City to the Foundation or by the Foundation to the City shall be in writing and delivered to the following parties at the following addresses: Mayor E�*�(''�`t(V�' l�(v�C(Lv� City of Bremerton Admiral Theater Foundation 345 61 Street, Suite 100 507 Pacific Avenue Bremerton, WA 98337 Bremerton, WA 98337 7. Confirmation of Agreement Terms. The parties mutually agree that this Fourth Addendum to Operating Agreement hereby amends the Operating Agreement and replaces in its entirety the Third Addendum. Except as modified by this Fourth Addendum to Operating Agreement, the terms and conditions of the Operating Agreement are hereby confirmed in their entirety and incorporated herein as if fully set forth in this Fourth Addendum. The parties hereby enter into this Fourth Addendum to Operating Agreement on the date fully executed below. CITY OF BREMERTON C ADMIRAL THEATRE FOUNDATION By: Jo NSA its: >��C�'L✓Ti�l�?r,GG ./ Date: R:\Legal\Lcgal\Files\Current Active Files\Admiral TheaterWouilk Addendum to Operating Agreement.doc El Admiral Theater — Fourth Addendum to Operating Agreement Contract Number: 3223 Vendor: ADMIRAL THEATRE FOUNDATION Subject: Performing Arts Center Department: Finance File Class: GS50-01-11 Rev. 3 General Begin Date: 9/28/1990 End Date: 9/27/2040 Review Date: 6/30/2017 Vault Date: Comments: 1st Review 2004/2nd Review 2007/3rd Review 2010/ 2nd Addendum 1/1/13-12/31/17; 3rd Addendum 7/15/15 SUBJECT: Third Addendum to Admiral Theatre Operating Agreement AGENDA BILL CITY OF BREMERTON CITY COUNCIL Study Session Date: COUNCIL MEETING Date: Department: Presenter: Phone: 6rn 3zz3 6F January 28, 2015 February 4, 2015 Legal & Finance Roger Lubovich & Cathy Johnson 473-2335 & 473-5296 SUMMARY: The Third Addendum to the Admiral Theatre Operating Agreement amends the Operating Agreement regarding audit reports and related matters, and replaces in its entirety the First Addendum and Second Addendum. ATTACHMENTS: 1) Third Addendum to Operating Agreement (Admiral Theatre) 2) Operating Agreement 3) First Addendum 4) Second Addendum FISCAL IMPACTS (Include Budgeted Amount): No Fiscal Impact STUDY SESSION AGENDA: ❑ No Presentation ® Full Presentation STUDY SESSION ACTION: ® Consent Agenda ❑ General Business ❑ Public Hearing MOTION: Move to approve the Third Addendum to the Admiral Theatre Operating Agreement; and authorize the Mayor to finalize and execute the agreement with substantially the same terms and conditions as presented. COUNCIL ACTION: (Approve Form Updated 01/25/13 ❑ Deny ❑ Table ❑ Continue ❑ No Action THIRD ADDENDUM TO OPERATING AGREEMENT (Admiral Theater) This Third Addendum to Operating Agreement is entered into on the date fully executed below by and between the CITY OF BREMERTON, hereinafter referred to as the "City'', and the ADMIRAL THEATRE FOUNDATION, hereinafter referred to as the "Foundation", and WHEREAS, the City and the Foundation entered into an agreement entitled "Operating Agreement" dated September 28, 1990 with a ten year term expiring on the September 27, 2000, attached hereto as Exhibit A; and WHEREAS, as stated in the Operating Agreement, the agreement's purpose was to provide for the renovation of the Admiral Theatre located at 507 Pacific Avenue, Bremerton, Washington and owned by the City and to provide for the operation of a performing and visual arts center for public entertainment, education and cultural events at the Admiral Theatre; and WHEREAS, the Foundation has successfully renovated the Admiral Theatre and operated it since its renovation as a successful performing and visual arts center for public entertainment, education and cultural events; and WHEREAS, the City and the Foundation entered into a one year Professional Services Agreement dated January 1, 1999 (herein referred to as the "Services Agreement") for the purpose of providing funding for the Admiral Theatre; and WHEREAS, the City and the Foundation entered into an Addendum to Contract to extend the term of the Professional Services Agreement for one additional year expiring on December 31, 2000 and a second Addendum to Contract to extend the term of the Professional Services Agreement for another additional year expiring on December 31, 2001 (herein referred to as the "Services Agreement Extensions"); and WHEREAS, the City and the Foundation entered into a one year Tourism Promotion Services Agreement dated May 19, 2008 expiring on December 31, 2008 (herein referred to as the "Tourism Promotion Agreement") for the purpose of providing funding for tourism promotion services; and WHEREAS, the City and the Foundation entered into a First Addendum to Operating Agreement dated December 12, 2001 (herein referred to as the "First Addendum"), to extend the. termination date of the Operating Agreement to September 27, 2040, to provide continued funding support for the Admiral Theatre as provided in the Professional Services Agreement which was scheduled to terminate December 31, 2001 as extended by the Services Agreement Extensions, and to further clarify conditions of the Operating Agreement, attached hereto as Exhibit B; and WHEREAS, the funding provided in the First Addendum was established in the amount of $90,000 per year; and Admiral Theater - Third Addendum to Operating Agreement WHEREAS, the City and the Foundation entered into a Second Addendum to Operating Agreement on January 25, 2013 (herein referred to as the "Second Addendum"), increasing the annual funding to $150,000 per year for a period of five (5) years, amending language relating to audit reports, and making other related matters, attached hereto as Exhibit C; and WHEREAS, in the Second Addendum, the parties acknowledged that the Professional Services Agreement and Services Agreement Extensions have terminated and that the agreements in effect at this time are the Operating Agreement and First Addendum to Operating Agreement; and WHEREAS, the parties acknowledge and reaffirm in this agreement that the Funding Agreement entered into on August 22, 1995, the Addendum to Funding Agreement entered into on January 10, 1996, the Professional Services Agreement dated January 1, 1999, the Services Agreement Extension (Addendum to Contract) entered into on April 18, 2000 as well as the Tourism Promotion Agreement dated May 19, 2008 and any related agreements have terminated and that the agreements currently in effect at this time are the Operating Agreement, the First Addendum, and the Second Addendum; and WHEREAS, the City and the Foundation now desire to enter into a Third Addendum to Operating Agreement (herein referred to as the "Third Addendum") relating to funding, audit reports, and related matters, to replace in its entirety the First Addendum and Second Addendum; and NOW, THEREFORE, in consideration of the terms and conditions contained herein, the parties mutually agree that this Third Addendum to Operating Agreement hereby amends the Operating Agreement and replaces in its entirety the First Addendum and the Second Addendum as follows: 1. Findinpas. The findings set forth in the recitals above are hereby adopted and incorporated as if fully set forth herein. 2. Addendums Repealed. The First Addendum and Second Addendum to Operating Agreement are hereby repealed and replaced in their entirety by this agreement. 3. Term. The initial term of the Operating Agreement commenced on September 28, 1990 and shall terminate on September 27, 2040. 4. Building Maintenance. The Foundation is solely responsible for maintaining the Theatre property and improvements therein in good condition. The City shall have no responsibility for building maintenance, repairs, or damage to the structure, except to the extent insurance proceeds are available to cover any loss. 5. Financial Contribution. Commencing in 2013, the City shall pay the Foundation a Contribution ("Financial Contribution") of $150,000 annually for a period of five (5) years subject to the existing terms of the Operating Agreement as amended herein. This Financial Contribution is increased from the previous Financial Contributions of $90,000. Commencing in 2 Admiral Theater - Third Addendum to Operating Agreement Calendar year 2018, the annual Financial Contribution shall automatically revert to the previous annual Financial Contributions of $90,000 unless otherwise extended or adjusted by the parties in writing. Provided, however, the obligation to pay the Financial Contribution is conditioned upon the following: a. The Foundation properly maintaining the Theatre and its facilities; and b. The Foundation continuing to market and provide performing and visual arts at the Theatre on a full-time basis, including education and cultural events; and c. The Foundation provide the City its annual budget and marketing plans within thirty (30) days of adoption by the Foundation Board; and d. The Foundation making available to the City all financial information the City deems appropriate to detennine that the Theatre is using its funds in accordance with its non-profit purpose and the purpose of the Agreement and this Third Addendum thereto; and e. The Foundation shall provide a review, issued by a Certified Public Accountant, to the City for fiscal year ending August 31, 2016 and for all of the following fiscal years except when an external audit is required pursuant to subsection (f) below. All reviews shall be provided to the City Department of Financial Services by January 3151 of the calendar year following the end of the fiscal year being reviewed; and f. The Foundation shall provide an external audit report, issued by a Certified Public Accountant, to the City for fiscal year ending August 31, 2015 and every third year thereafter. All audit reports shall be provided to the City by January 31St of the calendar year following the end of the fiscal year being audited; and g. The City's Hotel/Motel Tax generates at least an amount to cover the Financial Contribution ($150,000 or $90,000 as applicable) each year for each 2% of tax imposed, otherwise, the City's Contribution shall be reduced accordingly; and h. The City Council, following receipt of the audit review or external audit as set forth in subsections(e) and (f) above, as applicable, renews its commitment to the above - referenced Financial Contribution amount or such other amount as it deems within the best interests of the City and its citizens. The review of commitment shall be included as part of the City's budget process during the year following the end of the fiscal year being reviewed or audited. (As an example, for fiscal year ending on August 31, 2014, the City reviews its renewal of commitment of Financial Contribution as part of the City's budget process in 2015 for funding in budget year 2016). It is anticipated that the Financial Contribution commitment will be renewed each year, so long as the Foundation has used the funds in a manner that the Council deems as promoting the best interests of the City and its citizens and the purposes of the Hotel/Motel Tax enabling legislation; and i. Commencing in Calendar year 2018 the annual Contribution shall automatically revert to $90,000 unless otherwise extended or adjusted by the parties in writing following receipt of the external audit; and j. The Foundation shall not apply for or be eligible for additional lodging tax funds provided the City's contribution is $150,000 annually. Admiral Theater - Third Addendum to Operating Agreement 6. Notices. Any notices required to be given by the City to the Foundation or by the Foundation to the City shall be in writing and delivered to the following parties at the following addresses: Mayor City of.Bremerton 345 61' Street, Suite 600 Bremerton, WA 98337 Admiral Theater Foundation 507 Pacific Avenue Bremerton, WA 98337 7. Confirmation of Agreement Terms. Except as modified by this Third Addendum to Operating Agreement, the terms and conditions of the Operating Agreement are hereby confirmed in their entirety and incorporated herein as if fully set forthin this Third Addendum. CITY OF BREMERTON By: V Ai Patty Lent, THE ADMIRAL THEATRE. FOUNDATION By: A4 6"21 _ _ Its: ')recd +-: V c Date: Date: R:\LcgaALegal\Files\Current Active Files\Admiral neater\Third Addendum to Operating Agreementl doc 4 Admiral Theater - Third Addendum to Operating Agreement Contract Number: 3223 Vendor: ADMIRAL THEATRE FOUNDATION t Subject. Performing Arts Center Department Finance File Class LEG 12-1 Begin Date 9/28/1990 End Date 9/27/1940 Review Date 6/30/2017 Vault Date Comments: 1st Review 2004/2nd Review 2007/3rd Review 2010/ 2nd Addendum 1/1/13-12/31/17 SECOND ADDENDUM TO OPERATING AGREEMENT (Admiral Theater) This SECOND ADDENDUM TO OPERATING AGREEMENT is entered into the date fully executed below by and between the CITY OF BREMERTON, hereinafter referred to as the "City", and the ADMIRAL THEATRE FOUNDATION, hereinafter referred to as the "Foundation", and WHEREAS, the City and the Foundation entered into an agreement entitled "Operating Agreement" dated September 28, 1990 with a ten year term expiring on the September 27, 2000, attached hereto as Exhibit A, and WHEREAS, as stated in the Operating Agreement, the agreement's purpose was to provide for the renovation of the Admiral Theatre located at 507 Pacific Avenue, Bremerton, Washington and owned by the City and to provide for the operation of a performing and visual arts center for public entertainment, education and cultural events at the Admiral Theatre, and WHEREAS, the City and the Foundation entered into a one year Professional Services Agreement dated January 1, 1999 (herein referred to as the "Services Agreement") for the purpose of providing funding for the Admiral Theatre, and WHEREAS, the City and the Foundation entered into an Addendum to Contract to extend the term of the Professional Services Agreement for one additional year expiring on December 31, 2000 and a second Addendum to Contract to extend the term of the Professional Services Agreement for another additional year expiring on December 31, 2001 (herein referred to as the "Services Agreement Extensions"), and WHEREAS, the City and the Foundation entered into a "First Addendum to Operating Agreement" dated December 12, 2001, to extend the termination date of the Operating Agreement to September 27, 2040, to provide continued funding support for the Admiral Theatre as provided in the Professional Services Agreement which was scheduled to terminate December 31, 2001 as extended by the Services Agreement Extensions, and to further clarify conditions of the Operating Agreement, attached hereto as Exhibit B, and WHEREAS, the parties acknowledge that the Professional Services Agreement and Services Agreement Extensions have terminated and that the agreements in effect at this time are the Operating Agreement and First Addendum to Operating Agreement, and WHEREAS, the City and the Foundation now desire to enter into a "Second Addendum to Operating Agreement" relating to funding, audit reports, and related matters, WHEREAS, the City Council, at its regular City Council meeting of December 21, 2011, approved the terms of this second addendum relating to funding, audit reports and related matters and further authorized the City Attorney to amend the Operating Agreement and First Addendum Admiral Theater - Second Addendum to Operating Agreement to Operating Agreement to incorporate the proposed changes and authorized the Mayor to execute the same NOW, THEREFORE, in consideration of the terms and conditions contained herein, the parties mutually agree that this Second Addendum to Operating Agreement hereby amends the Operating Agreement as amended and modified by the First Addendum to Operating Agreement as follows The findings set forth in the recitals above are hereby incorporated as if fully set forth herein 2 The term of this Second Addendum to Operating Agreement shall commence on January 1, 2013 and shall terminate on December 31, 2017 Upon termination of this Second Addendum to Operating Agreement, the terms and conditions of the Operating Agreement as amended and modified by the First Addendum to Operating Agreement shall be fully applicable as if the Second Addendum to Operating Agreement was never entered into 3 Section 5 of the First Addendum to Operating Agreement entitled "Financial Contribution" is amended to read as follows Financial Contribution Commencing in 2013, the City shall pay the Foundation a Contribution of $150,000 annually for a period of five (5) years subject to the existing terms of the Operating Agreement and First Addendum to Operating Agreement Provided, however, the obligation to pay this amount is conditioned upon the following a The Foundation properly maintaining the Theatre and its facilities, b The Foundation continuing to market and provide performing and visual arts at the Theatre on a full-time basis, including education and cultural events, c The Foundation making available to the City's internal auditor all financial information he deems appropriate to determine that the Theatre is using its funds in accordance with its non-profit purpose and the purpose of the Agreement and this First Addendum thereto, d The Foundation shall provide an internal audit report to the City on a bi-annual basis commencing in calendar year 2014 and due by August 30th for each bi-annual period. The audit shall cover the previous two years of operations and be issued by a Certified Public Accountant e The Foundation shall provide an external audit report to the City on a five-year basis commencing in calendar year 2017 and due by August 30th for each five-year period The audit shall cover the previous two years of operations and be issued by a Certified Public Accountant, f The City's hotel/motel tax generates at least $150,000 each year for each 2% of tax imposed, otherwise, the City's Contribution shall be reduced accordingly, and g The City Council, following receipt of the internal audit report as set forth in subsection (f) above, renews its commitment to the above -referenced funding amount or such other amount as it deems within the best interests of the City and its citizens It is anticipated that the $150,000 commitment will be renewed after each two (2) year review, so long as the City determines, upon review of the internal audit report, that the Foundation has used the funds in a manner that the Council 7 Admiral Theater - Second Addendum to Operating Agreement deems as promoting the best interests of the City and its citizens and the purposes of the'Hotel/Motel Tax enabling legislation, h Commencing in Calendar year 2018 the annual Contribution shall automatically revert to $90,000 unless otherwise extended or adjusted by the parties in writing following after receipt of the external audit, i The Foundation shall not apply for or be eligible for additional lodging tax funds provided the City's contribution is $150,000 annually 4 Confirmation of Agreement Terms Except as modified by this Second Addendum to Operating Agreement, the terms and conditions of the Operating Agreement and the First Addendum to Operating Agreement are hereby confirmed in their entirety and incorporated herein as if fully set forth in this First Addendum THE ADMIRAL THEATRE FOUNDATION Date \ \Z ��� 1 3 By lAi "gri R- Its CITY OF BREMERTON DateA / 25 `3 By Patty Lent, yor R \Lega]\Legal\Files\Current Active Files\Admiral Theater\Second Addendum to Operating Agreement doc 3 Admiral Theater - Second Addendum to Operating Agreement U 11°T NNr L.. OPERATING AGREEMENT Admiral Theater Fad-lity TMS AMW.WNT made and entered into this :. * day of icy, 1990, by and between the City of Bremerton, a First Class City of the State of Washington, (hereinafter referred to as "City") and The Admiral Theater Foundation, a non-profit corporation organized under the laws of the State of Washington (heuieinatter referred to as "Foundation"). WITNESSETH: 1. SCOPE OF SERVICES: The Foundation shall manage the Admiral Theater facility, located at 507 Pacific Avenue, Bremerton, Washington, including all building areas and appurtenances (liereanafter refected to as "Facility") for the purpose of operating a performing and visual arts center for public entertainment, education and cultural events in the auditorium and associated areas matter "Theater") and managing the rental of office and commercial retail spaces. The Foundation's duties are as follows: (a) Complete renovation of the building and have the Facility operational no later than five (5) years from the effective date of this Agreement. Operational shall mean the Facility is immediately available for tenant or public use, including City use under subpart (h) and all other duties of the Foundation under this section shall commence; (b) Building wxrity; (c) Building cleaning, maintenance and repairs, including removal of ice and debris from wallet and common areas; replacement of broken glass, electrical fixtures, plumbing ftwres and seating; and interior and exterior plastering, wall coverings and painting; (d) Advertise for tenants and negotiate and collect rents for all office and retail spaces of the Facility; (e) Promote Theater utilization by every means of advertising designed to attract performing and visual arts events and attendees; (f) Provide for opemon of the Theater and appropriate concessions; and (g) Promulgate rules, policies and regulations for rectal procedures, charges, hours of operation, and uses of the Facility not inconsistent with this Agreement. Rules and regulations shall specifically prohibit the giving of tickets or other free entry to any performance or event to any City or Foundation employee or officer, except m the performance of their duties; and OPERA77NG AGREMW ENT -1- EXHIBIT A Q(h) Provide the Theater for City use upon request for a minimum of twelve (12) days each year at a nominal fee sufficient to cover utilities, security, and janitorial services or other direct expense of use. Scheduling shall not interfere with previously scheduled performances. 2. TEM- The term of this Amt shall begin on the date of execution and continue ten (10) full years thereafter, unless terminated earlier under the provisions of this Agreement. The Foundation shall have the option to extend this Agreement for such additional term, under the same terms and conditions, as may by approved by a vote of the City electorate at the November 1990 general election. Notice to exercise said option shall be given at least ninety (90) days prior to the aspiration of the original term. 3. COMPMATION: The Foundation shall be entitled to retain all revenues collected from rental spaces, concessions and admission charges to the Theater. Admission taxes, as defined by City ordinance, collected from the Admiral Tb oer, shall be paid monthly to the City 1Yasnrer for deposit in the City's Admiral Theater Fund. The City disclaims any interest m any revenues generated through fund raising oactivities of the Foundation. 4. ALTERATIONS: The Foundation shall not mWW any structural alterations, without the expressed written consent of the City Council. Any such alterations consented to by the City Council shall be at the Foundaticm`s expense. The Foundation shall secure any and all governmental peamits required in connection with such work and shall hold the City harmless from any and all liability and any and all liens resulting therefrom. All alterations, additions and improvements, except trade fixtures and appliances and equipment which do not become a part of the building shall immediately become the property of the City without obligation. Upon removal of any trade fixtures, appliances and equipment which did not become part of the Facility, the Foundation shall repair any damage caused by removal. S. UTIIXTIF,S AND TARES: The Foundation shall be responsible for providing the building with all utilities, including light, heat, electriaty, waw, sewer, Jam, lie, and telephone. The Foundation shall pay all utility charges. Q OPERATING AGREEMENT 2- i NNW i 0 The Foundation shall pay all Static leasehold excise taxes, personal property taxes and sales taxes incurred by the Foundation's occupation and operation of the Facility. 6. RELATIONSMP OF PARTIMS: The parties understand and agree that the Foundation is an association sHled in matters pertaining to the scope of work and will Perform independem fundi and responsibilities in the area of its particular field of mqwfise. The Foundation and its personnel shall act as independent contractors and not employees of the City. As such they have no authority to bind the City nor control employees of the City, contractors, or other entities. The Mayor will be the responsible official for fulfilling Continuing responsibilities of the City. I NONDISCRIlVIZriATION: 7be Foundation shall not discriminate in any manner on the basis of sea, race, color, aced, or national origin, age, marital status, physical, mental or sensory handicap unless based on a bona fide occupational qualification. 8. REPORTS AND INFORMATION: The Foundation will maintain accounting records in accordance with generally accepted accounting principals and make the financial rGA records available to the City upon reasonable request of the Mayor. Within sixty (60) days after the end of the fiscal year of the Foundation, the Foundation shall deliver to the City a written financial operating statement. Within ninety (90) days of the end of the Foundation's fiscal year, the Foundation shall provide the City with a written report setting the description and cost of all capital operations performed by the Foundation, improvements, maintenance, and repairs of the Facility during the previous twelve (12) months. Said report shall also contain a projection as to the anticipated alterations, imp:overnents, maintenance and repairs expected during the ensuing twelve (12) month period, The Foundation willpresert to the City a business plan, including actions, milestones, and financial projections (a standard small business plan) within six (6) months of the effective date of this Agreement. 9. CASUALTY/LOSS: Should the Facility coffer structural damage equal to fifty Percent (50%) or more of its appraised value, including complete destruction, the City shall have the option of terminating this Agreement or continuing this Operating Agreement in effect by commencing and completing with due diligence any work necessary to restore or OPERATING ACMES +MNT -3- Orepair the premises. Notice of the City's election shall be given within thirty (30) days of the occurrence causing damage. If the Foundation shall have made improvements or alterations to the Facility and shall not yet have fully amortized its expenditures for such imp, c vements or alterations, the City shall and hereby does assign to the Foundation out of any proceeds payable to the City from insurance coverage, a sum equal to any unamortizod portion of such expendihm- This unamortized portion shall be determined by multiplying such expenditures by a fraction, the numerator which shall be the number of years in the unexpired term of the lease and granted extension options at the time of the casualty occurrence, and the denominator shall be the number of years of the term of the lease and granted extension options remaining at the time of the improvement or alteration. 10. INS LANCE AND DiDE WNUY: The City shall carry at full replacement cost fire and extended coverage insurance and such other insurance as it may desire to carry on the Facility. The Foundation shall not be liable for any loss or damage to the premises resulting from fire or other peals insurable under the standard form of fire and extended coverage insurance policy due to any cause whatsoever, except intentional damage by the Foundation or its agents or employees. The City shall not be liable for any loss or damage to the property of the Foundation, except intentional damage by the City or its agents. Prior to and during the performance of the work covered by this Agreement, the Foundation shall provide the Risk Manager for the City of Bremerton with evidence that It has obtained and maintains in full force and effect during the term of this Agreement a policy of public liability insurance, providing coverage of at least $1,000,000.00single limit, naming the City as additional insured. The City's Risk Manager shall be provided thirty (30) days' written notice of any cancellation of said liability insurance. The Foundation agrees to defend, indemnify and save harmless the City, its appointed and elected officers and employees, from and against any and all liability loss, costs, damage and expense, including costs and attorney fees in defense thereof because of actions, claims or lawsuits for damages resulting from personal or bodily injury, including death at any time resulting therefrom, sustained or alleged to have been sustained by any N OPERAMNO AGREEMENT -4- ✓ L person or persons and on account of damage to property, arising or alleged to have arisen directly or indirectly out of or in consequence of the Foundation's performance of this Agreement, whether such injuries to persons or damage to p mperty is due to the negligence of the Foundation, its s -I - - -actors, agents, successors or assigns. This provision shall be inapplicstble to the extent the City is judicially found sole negligent for such damage or injury. The City agrees to defend, indemnify and save harmless the Foundation, its appointed and elected officers and employees, from and against any and all liability, loss, costs, damage and expense, including costs and attorney fees in defense thereof because of actions, claims or lawsuits for damages resulting from personal or bodily injury, including death at any time resulting therefrom, sustained or alleged to have been sustained by any Person or persons and on account of damage to property, arising or alleged to have arisen directly or indirectly out of or in consequence of the City'speaformance of this Amt, wbedw such injuries to persons or damage to property is die to the negligence of the City, its subcontractors, agents, successors or assigns. This provision shall be inapplicable to the extent the Foundation is judicially found solely negligent for such damage or injury. 11. GENERAL CONDITIONS: a. Assignability - The Foundation shall not assign any interest in this Agreement and shall not transfer any interest in same (whether by assignment or novation), without the prior written consent of the City thereto; hvwded, howwr, that claims for payment under this Agreement may be assigned. b. Entire Agreement - This Agreement constitutes the entire agreement between the parties and both parties admowledge that there are no other agreements, written or oral, that have not been fully set forth in the text of this Agreement. c. Amendments -The parties hereby further agree that this Agreement cannot be amended or modified without the written concunance of both parties. d. Notices - Any notices required to be given by the City to Foundation or by the Foundation to the City shall be in writing and delivered to the following parties at the following addresses: OPERATING AGREEMENT -5- Mayor, City of Bremerton 239 Fourth Sum Bremerton, WA. 98310 Admiral Theater Foundation 507 Pacific Bremerton, WA 98310 e. Waiver - Failure to insist upon strict compliance with any terms, covenants or conditions of this Agreement shall not be deemed a waiver of such, nor shall any waiver or :+elinqurshmerrt of such right or power at any time be talon to be a waiver of any other breach. f. Compliance with State, Local and Federal Laws - The Foundadon agrees to comply with all applicable local, state and federal laws in perfor wce of all services under this Agreemeat. g. Applicable Law; Venue - This Agreement shall be construed and interpreted in accordance with the laws of the State of Wasbington and, in the event of dispute, the venue of any action brought hereunder shall be in Kitsap County Superior Court. h. Attorney Fees - The substantially prevailing party in any litigation arising hereunder shall be entitled to its reasonable attorney's fees and court costs, including appeals, if any. 12. TF.RI MATION: Should the electorate fail toe approv Agreement for an additional term of forty (40) years, under the same teams and conditions, through a proposition on the September 18, 1990, ballot, the Foundation may terminate this Agreement upon ninety (90) days written notice. In the event of breach or default of any material provision of this Agreement, either party may terminate this Agreement upon written notice to the other effective in thirty (30) days if cor echw action has not been commenced and them completed in a timely manner. 1\ 1\ \1 OPERATING AGREEMENT -6- U V oIN WnXMS WHEREOF the parties hereto have umded this Agreement the date and year indicated. THEAD 72zTER FOUNDATION Date: � 2., BY: OF BRP.iV1HRTON 74" Aa,,�t Date: a1 50 LOUIS MENTOR, Mayor ATTEST: , vL •i «1• m TO FORM: IAN R. VERS, City Attorney Q OPERATING AGREMIENT 7- FIRST ADDENDUM TO OPERATING AGREEMENT 1. jDand P les. This document, for reference purposes only, is dated the, day ,�`, 2001 and is entered into by and between the City of Bremerton, hfter referred to as the "City", and the Admiral Theatre Foundation, hereinafter referred to as the "Foundation". 2. General Recitals. a. The City and the Foundation entered into an agreement entitled "Operating Agreement' (herein referred to as the "Agreement") dated the 28th day of September 1990. b. As stated in the Agreement the Agreement's purpose was to provide for the renovation of the Admiral Theatre located at 507 Pacific Avenue, Bremerton, Washington and owned by the City and to provide for the operation of a performing and visual arts center for public entertainment, education and cultural events at the Theatre. C. The Foundation has successfully renovated the Admiral Theatre and operated it since its renovation as a successful performing and visual arts center for public entertainment, education and cultural events. d. The purpose of this First Addendum is to clarify the term of the Operating Agreement, to provide funding support for the Admiral Theatre and further clarify conditions of the Agreement. 3. Rrm. The initial temp of this Agreement commenced on September 28, 1990 and shalt terminate on September 27, 2040. 4. Buildina Maintenance. The Foundation is solely responsible for maintaining the Theatre property and improvements therein in good condition. The City shall have no responsibility for building maintenance, repairs or damage to the structure, except to the extent insurance proceeds are available to cover any loss. 5. Financial Contribution. Commencing in calendar year 2002 the City shall pay to the Foundation Ninety Thousand Dollars ($90,000 00) and a like amount each and every year thereafter. Provided, however, the obligation to pay this amount is conditioned upon the following: a. the Foundation properly maintaining the Theatre and its facilities; b. the Foundation continuing to market and provide performing and visual arts at the Theatre on a full-time basis, including education and cultural events; First Addendum to Operating Agreement Paste 1 of 3 EXHIBIT B i C. the Foundation making available to the City's internal auditor all financial information he deems appropriate to determine that the Theatre Is using its funds in accordance with its non-profit purpose and the purpose of the Agreement and this First Addendum thereto, d. the Foundation providing to the City an external audit on a bi- annual basis, commencing in 2003, and the results of that audit showing no significant irregularity, e. the City's hotel/motel tax generates at least $90,000 each year for each 2% of tax imposed; and f. the City Council, in 2004, and every three (3) years thereafter, renews Its commitment to the above-referenoed funding amount or such other amount as it deems within the best interests of the City and its citizens. It is anticipated that the $90,000.00 commitment will be renewed after each three (3) year review, so long as the Foundation has used the funds in a manner that the Council deems as promoting the best interests of the City and its citizens and the purposes of the Hotel/Motel Tax enabling legislation. 6. Confirmation of Agreement Terms. Except as modified by this First Addendum, the terms and conditions of the Agreement are hereby confirmed in their entirety and incorporated herein as If fully set forth in this First Addendum. Date: 1 aZ • 21io - 01 Date:. D/ ATTEST: Kathleen McCluskey, Cleric First Addendum to Operating Agreement Pone 2of3 THE ADMIRAL THEATRE FOUNDATION By. C.. Its: t CITY OF BREMERTON By: Q� �, /, 4Z' -Z- L n Horton, Mayor APPROVED AS TO Lorent. Combs, City Attorney b%22497bontre adM.clot First Addendum to Operating Agreement Paae 3 of 3 Contract Number: 3223 Vendor: ADMIRAL THEATRE FOUNDATION Subject: Performing Arts Center Department: Finance File Class: LEG 12-1 Begin Date: 09/28/1990 End Date: 09/27/2040 Review Date: 06/01/2010 Vault Date: Comments: Renew after 3 year review per 1St Addendum of 12/01 1St Review 2004/2 Id Review 2007/3 Id Review 2010 Memorandum To: City Council Members Mayor Cary Bozeman From: Laura Lyon, Director of Financial Services Re: Admiral Theatre Agreement — 3 Year Contract Review Date: August 29, 2007 In December of 2001 the City of Bremerton entered into the "First Addendum to Operating Agreement with the Admiral Theatre Foundation" for the purposes of providing ongoing funding for the operations of the Admiral Theatre and to clarify the conditions under which the continuation of funding support would be p"rovided. The summarized terms of the agreement are as follows: Term - Expires on September 27, 2040 Building Maintenance — The Foundation is solely responsible for maintaining - the theatre property and improvements therein in good condition. The City shall have no responsibility for building maintenance, repairs, or damage to the structure, except to the extent insurance proceeds are available to cover any loss. Financial Contribution - Commencing in calendar year 2002 the City shall pay to the Foundation Ninety Thousand Dollars ($90,000.00) and a like amount each and every year thereafter. Provided, however, the obligation to pay this amount is conditioned upon the following: a) The Foundation properly maintaining the Theatre and its facilities; b) The Foundation continuing to market and provide performing and visual arts at the Theatre on a full-time basis, including education and cultural events; c) The Foundation making available to the City all financial information deemed appropriate to determine that the Theatre is using its funds in accordance with its non-profit purpose and the purpose of the City's existing agreements with the Foundation; d) The Foundation providing to the City an external audit on a bi- annual basis, commencing in 2003, and the results of that audit showing no significant irregularity; e) The City's hotel/motel tax generates at least $90,000, each year for each 2% of tax imposed; and f) The City Council, in 2004, and every three (3) years thereafter, renews its commitment to the above referenced funding amount or such other amount as it deems within the best interest of the City and its citizens. It is anticipated that the $90,000 commitment will be renewed after each three (3) year review, so long as the Foundation has used the funds in a manner that the Council deems as promoting the best interests of the City and its citizens and the purposes of the Hotel/Motel tax enabling legislation. The first three year review in 2004 was not conducted by the City as anticipated by the terms of the agreement. It was noted in December of 2005 (while updating the final payment schedule for the interagency loan between the City and the Foundation) that this review was needed and the City Council directed the Director of Financial Services to ensure that the required next three year review (due in 2007) was completed. Accordingly, I have undertaken the review performing the following steps in that process: 1. Reviewed the terms of the contract — noting conditions for continued funding 2. Requested and received internally generated financial reports from the Foundation for the previous 3 year period and the most recent audited financials (year ended August 31, 2006) 3. Conducted an onsite interview and facilities walk through with Ruth Enderle (Executive Director) and Brian Johnson (General Manager) on June 27, 2007. 4. Requested and received on July 6th a recap report from the Foundation outlining actions taken to comply with the agreed upon conditions, including a recap of events conducted in the facilities over the past three year period (report attached) 5. Reviewed current Admiral Theatre Foundation website — noting freshness of information and general program/event marketing contained therein. After reviewing the information collected, I have concluded the following: a) Maintenance of the facilities appears to be adequate. Some repairs and maintenance needs were noted, however, the most pressing items are scheduled to be attended to before the end of 2007. Items to be completed in 2007 include roof repairs, HVAC repair/upgrades; and sound system upgrades. Noted but not immediately scheduled for attention is the need to waterproof the exterior of the building. b) Marketing and provision of performing visual arts (including education and cultural events) have been increasing over the past three year period — with the 2006-2007 season being the largest in offered events to date. However, the theatre expects that the number of events each year will likely remain at or near this current level — as each event requires set up and tear down time and adding more events beyond the current level would not allow adequate time for these activities. The theatre provides a main stage season each year, as well as two film series, and a school day 2 series. A significant number of community events, private events, and commercial events are also hosted each year. Complete listings of the events offered and hosted were provided and reviewed in the conduct of this contract review. The following is a recap of events offered and marketed in the current three year period: 2004-05 2005-06 2006-07 Presented Events 62 62 75 Client Events 35 38 - 49 TOTAL 97 100 124 c) Financial information has been made available to the City as requested and as deemed appropriate to determine that the Theatre is using funds in accordance to Agreement expectations. d) The Foundation provided to the City external audit reports when requested. The audit report was prepared by Clarke Whitney, P.S. Certified Public Accountants for the year ended August 31, 2006 and included an unqualified opinion with no significant irregularities noted. The terms of the Agreement require that the Foundation provide these audited financials on a biannual basis. In practice, the reports were readily provided upon request but have not routinely been submitted to the City. In order to properly comply with the expectations of the Agreement, the Foundation will be requested to place the City on an automatic distribution list for audit reports and City staff will place a tickler in the City's contract file to ensure receipt of such occurs. e) The City's hotel/motel tax generated more than $90,000 each year for each 2% of tax imposed. The following is the hotel/motel tax receipts for the period 2002 through 2006: City of Bremerton Lodging Tax Receipts Year Amount 2002 $ 255,395 2003 $ 203,140 2004 $ 256,068 2005 $ 317,825 2006 $ 333,577 2007 Budget $ 300,000 Based upon the results of this review and given that the Agreement expressly anticipates that the $90,000 commitment will be renewed after each three (3) year review, so long as the Foundation has used the funds in a manner that the Council deems as promoting the best interests of the City and its citizens and the purposes of the Hotel/Motel tax enabling legislation — it is my recommendation that the City Council renew its commitment to the current funding amount of $90,000/year with staff to conduct the next three year review in 2010. Attachment — July 6, 2007 Summary Report Submitted by Admiral Theatre Foundation CC: Ruth Enderle, Executive Director of the Admiral Theatre 3 F, A1)V I2 5 . 'I FOLT�TT)AT10 NT BOARD OF DIRECTORS Joanne Haselwood, Chairman Jerry Reid, President Donna Gay Boyle, Vice President Lori Johnson, Vice President Judith Rammel, Vice President Earle Smith, Secretary Greg Meyer, Treasurer Ruth Enderle, Executive Director Bryant Arnold Brian Buskirk Louise Cramer Kyle Cruver Michael Huey, DMD Kyle Kincaid Leslie Krueger Abraham Laners Vickie Levi Patricia J. Lund Marilyn Mantzke Paul McCullough, MD Norman McLoughlin John Mitchell Rodney B. Near Sean Olmsted Kimberly Ruona, DDS Tim Ryan Gussie Schaeffer Helen Langer Smith Ed Wolfe July 6, 2007 Laura Lyon, Director of Financial Services City of Bremerton 345 Sixth Street, Suite 600 Bremerton, Washington 98337 Dear Ms. Lyon: Thank you for taking the time to meet with me regarding the agreement between the Admiral Theatre Foundation and the City of Bremerton. On behalf of the Admiral Theatre Foundation Board of Directors, the following report is submitted for your review. As our fiscal year ends on August 31, the information presented covers the period beginning September 1, 2004 through today's date, with projections through August 31, 2007. FACILITY — IN MEMORIAM, FOUNDING CHAIR The Foundation has kept the Admiral Theatre building in excellent condition. As A. H. "Ike' Parker we begin our tenth season, the theatre is requiring work in several major areas including: roof repair; HVAC repair/upgrades; sound system upgrades and HONORARY FUNDRAISING CHAIR exterior waterproofing. It is expected that roof repair, HVAC repair and sound Congressman Norm Dicks system upgrades will be completed by September 2007. THE ADMIRAL THEATRE RECEIVES GENEROUS In 2005, the Foundation purchased the building adjacent to the theatre on the SUPPORT FROM THE CITY NTY. BREMERTOlJ AND KITSAP COUUNwest side and invested more than $2 million to connect the two buildings and create a backstage and loading area, production work spaces, artist dressing CITY OF Cary Boze rooms and a multi-purpose community room. Mayor Cary Bozeman CITY COUNCIL Will Maupin, President (Dist 8) Brad Gehring, Vice President (Dist 1) Cecil McConnell (Dist 2) Adam C. Brockus (Dist 3) Wendy Priest (Dist 4) Mike Shepherd (Dist 5) Dianne Robinson (Dist 6) Carol Arends (Dist 7) Nick Wofford (Dist 9) KITSAP COUNTY BOARD OF COMMISSIONERS Chris Endresen, Chair Jan Angel Josh Brown FINANCE — The Foundation budget has grown only slightly in the past three years, due to the Board's policy of responsible fiscal management. The current year budget is $1.3 million. As compared with other theatres in the region, the Admiral Theatre is in extremely good financial condition and operates efficiently. It receives less than 10% of its budget from public sources — a notable exception among Washington State theatres. Staff is often asked to lead seminars and workshops on funding and budget issues and the Admiral Theatre is well known 515 Pacific Avenue • Bremerton, Washington 98337 • (360) 373-6810 • FAX (360) 405-0673 www.admiraitheatre.org A F, Laura Lyon, Director of Financial Services City of Bremerton July 6, 2007 Page 2 and respected throughout the region for its ability to offer quality and affordability to the community. One measure of theatre quality is the fees paid to professional artists each season. The Admiral Theatre spends more than $300,000 each season to bring professional performances to Bremerton. This risk is completely underwritten by sponsors. BOARD OF DIRECTORS — The Admiral Theatre Foundation is fortunate to have some of the most influential businiess and civic leaders as its Board members. They are responsible for setting policy, financial oversight and raising more than $600,000 annually to support the theatre's program. The Board of Directors includes two CPAs, two attorneys, 15 business owners, 5 banking/ investment professionals, one marketing professional, 29 committed community supporters, and Congressman Norm Dicks as Honorary Fundraising Chairman. Each and every Board member honors the Foundation's Vision and Mission Statement which are: VISION STATEMENT The Admiral Theatre is a symbol of the pride we hold in our West Sound community. MISSION STATEMENT The Admiral Theatre Foundation pledges that the Admiral Theatre shall be the primary link in the encouragement and development of the cultural, civic and entertainment horizons of the entire West Puget Sound. The principles upon which we shall make all our decisions are based in the following core values: A well-equipped and well-maintained performing arts facility for community use Presentation of a selection of arts performances to meet the needs of the community Responsiveness to the needs and interests of local arts and community groups Operation that is fiscally responsible L r I Laura Lyon, Director of Financial Services City of Bremerton July 6, 2007 Page 3 OPERATIONS — The theatre presents a mainstage season each year, as well as two film series, and a schoolday series. It also hosts a large number of community events, private events and commercial events each year. Following is the event history for the period: 2004-05 2005-06 2006-07 Presented Events 62 62 75 Client Events 35 38 49 TOTAL 97 100 124 As each event requires set up and tear down time, it is likely the number of events each year will remain at or near the current level. The Admiral Theatre Foundation is grateful for the support of the City of Bremerton and pledges to continue to provide service to the community which represents an excellent return on investment and which adds irreplaceable value to the lifestyle of our citizens. Respec submitted, Ruth Enderle Executive Director cc: Mayor Cary Bozeman, City of Bremerton Gary Sexton, City of Bremerton Economic Development Congressman Norm Dicks Enclosures: Board of Directors Roster Independent Auditor's Report and Financial Statements, August 31, 2006 Income and Expense Statements for Fiscal Years 2004-05, 2005-06 and 2006-07 Event Lists for 2004-05, 2005-06 and 2006-07 +--------------------------------------------------------------------------+ +Enter Search Criteria, Press Esc Key to Transmit T1 +Press Del Key to Terminate Delete Mode T1 T CHANGE Contract Transactions T Contract Number 3223 endor Name ADMIRAL THEATER FOUNDATION ubject PERFORMING ARTS CENTER epartment ADMIN SVCS tatus Code PRO Amount Begin Date 09/28/1990 Insurance End Date 09/27/2040 Type Amount Review Date 09/01/2007 GL $2000000.00 AL $1000000.00 Insurance Total $3000000.00 Insurance Review Date 09/01/2006 Comments RENEW AFTER 3 YEAR REVIEW PER 1ST ADDENDUM OF 12/12/01 1ST REVIEW 2004/2ND REVIEW 2007 +---------------------------------------------------------------------------r FIRST ADDENDUM TO OPERATING AGREEMENT 1. Date and Parties. This document, for reference purposes only, is dated the,4k,(,day of4&&,,,&,4 2001 and is entered into by and between the City of Bremerton, hereihafter referred to as the "City", and the Admiral Theatre Foundation, hereinafter referred to as the "Foundation". 2. General Recitals. a. The City and the Foundation entered into an agreement entitled "Operating Agreement" (herein referred to as the "Agreement") dated the 28th day of September 1990. b. As stated in the Agreement the Agreement's purpose was to provide for the renovation of the Admiral Theatre located at 507 Pack Avenue, Bremerton, Washington and owned by the City and to provide for the operation of a performing and visual arts center for public entertainment, education and cultural events at the Theatre. C. The Foundation has successfully renovated the Admiral Theatre and operated it since its renovation as a successful performing and visual arts center for public entertainment, education and cultural events. d. The purpose of this First Addendum is to clarify the term of the Operating Agreement, to provide funding support for the Admiral Theatre and further clarify conditions of the Agreement. 3. Term. The initial term of this Agreement commenced on September 28, 1990 and shall terminate on September 27, 2040. 4. Building Maintenance. The Foundation is solely responsible for maintaining the Theatre property and improvements therein in good condition. The City shall have no responsibility for building maintenance, repairs or damage to the structure, except to the extent insurance proceeds are available to cover any loss. 5. Financial Contribution. Commencing in calendar year 2002 the City shall pay to the Foundation Ninety Thousand Dollars ($90,000.00) and a like amount each and every year thereafter. Provided, however, the obligation to pay this amount is conditioned upon the following: a. the Foundation properly maintaining the Theatre and its facilities; b. the Foundation continuing to market and provide performing and visual arts at the Theatre on a full-time basis, including education and cultural events; First Addendum to Operating Agreement Page 1 of 3 C. the Foundation making available to the City's internal auditor all financial information he deems appropriate to determine that the Theatre is using its funds in accordance with its non-profit purpose and the purpose of the Agreement and this First Addendum thereto; d. the Foundation providing to the City an external audit on a bi- annual basis, commencing in 2003, and the results of that audit showing no significant irregularity; e. the City's hotel/motel tax generates at least $90,000 each year for each 2% of tax imposed; and f. the City Council, in 2004, and every three (3) years thereafter, renews its commitment to the above -referenced funding amount or such other amount as it deems within the best interests of the City and its citizens. It is anticipated that the $90,000.00 commitment will be renewed after each three (3) year review, so long as the Foundation has used the funds in a manner that the Council deems as promoting the best interests of the City and its citizens and the purposes of the Hotel/Motel Tax enabling legislation. 6. Confirmation of Agreement Terms. Except as modified by this First Addendum, the terms and conditions of the Agreement are hereby confirmed in their entirety and incorporated herein as if fully set forth in this First Addendum. Date: % oZ • 2_(o-0 / Date: .1,?- / 9- D/ ATTEST: Kathleen McCluskey, Clerk First Addendum to Operating Agreement Paoe 2 of 3 THE ADMIRAL THEATRE FOUNDATION By: fzx_,_� Its: CITY OF BREMERTON By: 'j. a, Z L nn Horton, Mayor APPROVED AS TO Loren b. Combs, City Attorney b\22497\contrad\admiradd#7.doc First Addendum to Operating Agreement Paae 3 of 3 ASSIGNMENT OF FUNDS THIS ASSIGNMENT is to ensure repayment of funds advanced to the ADMIRAL THEATER FOUNDATION ("Foundation") from the CITY OF BREMERTON ("City") for capital improvement to the Admiral Theater, 507 Pacific Avenue, Bremerton, Washington. WHEREAS, the City has entered into a long term operating agreement for its theater complex located at 507 Pacific Ave., Bremerton commonly known as the Admiral Theater; and WHEREAS, the Foundation has received a Section 108 loan guarantee from the Dept of Housing and Urban Development, and the City has agreed to advance funds for the project approved for HUD assistance on an interim basis until the HUD assistance is received; now, therefore, IT IS MUTUALLY AGREED between the parties hereto as follows: 1. The Foundation hereby assign to the City of Bremerton all right, title and interest in funds received through the HUD Section 108 assistance under HUD application B -95 -UC -53-0005 deposited with Kitsap County, or any bank named by Kitsap County as a depository for such funds, up to the amount of all funds advanced to the Foundation by the City, together with all interest, fees or other expenses paid by the City to Kitsap County on behalf of the Foundation. The City is hereby authorized to draw upon the funds upon deposit with Kitsap County. 2. The Foundation agrees to promptly process any agreements or other documents required for release of their Section 108 assistance. 3. The Foundation agrees that funds advanced by the City against the Section 108 grant shall only be expended on projects fully qualified for Section 108 assistance under the terms of the Foundation's application B -95 -UC -53-0005, Loan Approval and Grant Agreement. ADMIRAL THEATER FOUNDATION By: Date: l0la3%g!o Admirel.AOF - IRS 4 - 10/23/96 ADDENDUM TO FUNDING AGREEMENT WHEREAS, the CITY OF BREMERTON, a municipal corporation, and ADMIRAL THEATER FOUNDATION, a duly organized corporation, hereto entered into a Funding Agreement dated August 22, 1995. WHEREAS, the parties desire to amend the Funding Agreement to include the 1996 appropriation of $25,000 from Fund 109 Real Estate Excise Tax. NOW, THEREFORE, in consideration for the mutual covenants set forth below, the parties agree as follows: Section 1. Deposit of Funds shall be amended to read as follows: The City shall place on deposit with the National Bank of Bremerton funds in the amount of $165,000 designated for use for real property improvements to the Admiral Theater. Not later than February 15, 1996 an additional $25,000 shall be placed on deposit with the National Bank of Bremerton designated for use for real property improvements to the Admiral Theater. The City of Bremerton and Admiral Theater Foundation agree that all provisions of the original agreement which are not in conflict with this Addendum to Contract shall remain in full force and effect. CITY OF BREMERTON By: 'J- LYNN S. HORTON, Mayor Date: 1— `l -9:6 ATTEST: KATHLEEN MCCLUSKEY, City Clerk ADMIRAL THEATER FOUNDATION Date: 1-14-94 FUNDING AGREEMENT Admiral Theater Improvements This agreement made and entered into this Zk*. day of , 1995, by and between the City of Bremerton, a First Class City of the State of Washington, (hereinafter referred to as "City") and the Admiral Theater Foundation, a non-profit corporation organized under the laws of the State of Washington, (hereinafter referred to as "Foundation"), WHEREAS, the City is the owner of the Admiral Theater Facility at 507 Pacific Avenue, Bremerton, Washington; the Admiral Theater, and WHEREAS, the City wishes to fund improvements to its property in addition to those funded by the Foundation, W I T N E S S E T H: For and in consideration of the mutual covenants and promises contained in the Operating Agreement, and other valuable consideration, the parties hereto agree as follows: 1. DEPOSIT OF FUNDS: The City shall place on deposit with the National Bank of Bremerton funds in the amount of $165,000 designated for use for real property improvements to the Admiral Theater. 2. WITHDRAWAL OF FUNDS: FUNDING AGREEMENT -1- ADM-FUND.AGT - Dentonio Disk 1 - 7/12/95 Funds may be withdrawn for use by WHEREAS, an Operating Agreement, attached as Appendix "A" and incorporated h re' by this reference, was entered into the 28th of September etween the City and the Foundation for the operation of the Admiral Theater, and WHEREAS, the City wishes to fund improvements to its property in addition to those funded by the Foundation, W I T N E S S E T H: For and in consideration of the mutual covenants and promises contained in the Operating Agreement, and other valuable consideration, the parties hereto agree as follows: 1. DEPOSIT OF FUNDS: The City shall place on deposit with the National Bank of Bremerton funds in the amount of $165,000 designated for use for real property improvements to the Admiral Theater. 2. WITHDRAWAL OF FUNDS: FUNDING AGREEMENT -1- ADM-FUND.AGT - Dentonio Disk 1 - 7/12/95 Funds may be withdrawn for use by the Foundation for improvements authorized under paragraph four (4) of the Operating Agreement upon the signatures of the City Mayor, the City Treasurer and a duly designated representative from the Foundation. The City shall provide or authorize a balance statement for the assigned account to the Foundation. 3. INTEREST: Interest accrued on the funds on deposit will accrue for improvements as outlined in paragraph two (2) of this agreement. 4. TERMINATION: This agreement shall terminate upon termination of the Operating Agreement for any reason by either party; or exhaustion of the Funds on deposit in the assigned account. 5. GENERAL PROVISIONS: a. Assignability - The Foundation shall not assign any interest in this Agreement and shall not transfer any interest in same (whether by assignment or novation) without the prior written consent of the City thereto. b. Entire Agreement - This Agreement constitutes the entire agreement between the parties and both parties acknowledge that there are no other agreements, written or oral, that have not been fully set forth in the text of this Agreement. There is attached hereto and incorporated by reference as part of this Agreement Attachment "A". C. Amendments - The parties hereby further agree that this Agreement cannot be amended or modified without the written concurrence of both parties. FUNDING AGREEMENT -2- ADM-FUND.AGT - Dantonio Disk 1 - 7/12/95 d. Notices - Any notices required to be given by the City to the Foundation or by the Foundation to the City shall be in writing and delivered to the parties at the following addresses: City Clerk Admiral Theater Foundation 239 Fourth St. 507 Pacific Bremerton, WA 98337 Bremerton, WA 98310 e. Waiver - Failure to insist upon strict compliance with any terms, covenants or conditions of this Agreement shall not be deemed a waiver of such, nor shall any waiver or relinquishment of such right or power at any time be taken to be a waiver of any other breach. f. Compliance with State, Local and Federal Laws - the Foundation agrees to comply with all applicable local, state and federal laws in performance of all services under this Agreement. g. Applicable Law; Venue - This Agreement shall be construed and interpreted in accordance with the laws of the State of Washington and, in the event of dispute, the venue of any action brought hereunder shall be in Kitsap County Superior Court. h. Attorney Fees - The substantially prevailing party in any litigation arising hereunder shall be entitled to its reasonable attorney's fees and court costs, including appeals, if any. IN WITNESS WHEREOF the parties hereto have executed this Agreement the date and year indicated. THE ADMIRAL THEATER FOUNDATION Date�� if qS BY: FUNDING AGREEMENT -3- ADM-FUND.AGT - Dantonio Disk 1 - 7/12/95 Date: (�, 2-S 1S ATTEST: !' \�� KATHLEEN MCCLUSKEY, Jerk A OVE O FORM: IAN R. EVERS, City Attorney FUNDING AGREEMENT -4- ... CITY OF BREMERTON sz,14L LYfrN HORTON, Mayor OPERATING AGREEMENT Admiral Theater Facility THIS AGREEMENT made and entered into this A day of day, 1990, by and between the City of Bremerton, a First Class City of the State of Washington, (hereinafter rAerred to as "City") and The Admiral Theater Foundation, a non-profit corporation organized under the laws of the State of Washington (hereinafter referred to as "Foundation"). WITNESSETH: 1. SCOPE OF SERVICES: The Foundation shall manage the Admiral Theater facility, located at 507 Pacific Avenue, Bremerton, Washington, including all building areas and appurtenances (hereinafter referred to as "Facility") for the purpose of operating a performing and visual arts center for public entertainment, education and cultural events in the auditorium and associated areas (hereinafter "Theater") and managing the rental of office and commercial retail spaces. The Foundation's duties are as follows: (a) Complete renovation of the building and have the Facility operational no later than five (5) years from the effective date of this Agreement. Operational shall mean the Facility is immediately available for tenant or public use, including City use under subpart (h) and all other duties of the Foundation under this section shall commence; (b) Building security; (c) Building cleaning, maintenance and repairs, including removal of ice and debris from walks and common areas; replacement of broken glass, electrical fixtures, plumbing fixtures and seating; and interior and exterior plastering, wall coverings and painting; (d) Advertise for tenants and negotiate and collect rents for all office and retail spaces of the Facility; (e) Promote Theater utilization by every means of advertising designed to attract performing and visual arts events and attendees; (f) Provide for operation of the Theater and appropriate concessions; and (g) Promulgate rules, policies and regulations for rental procedures, charges, hours of operation, and uses of the Facility not inconsistent with this Agreement. Rules and regulations shall specifically prohibit the giving of tickets or other free entry to any performance or event to any City or Foundation employee or officer, except in the performance of their duties; and OPERATING AGREEMENT -1- (h) Provide the Theater for City use upon request for a minimum of twelve (12) days each year at a nominal fee sufficient to cover utilities, security, and janitorial services or other direct expense of use. Scheduling shall not interfere with previously scheduled performances. 2. TERM: The term of this Agreement shall begin on the date of execution and continue ten (10) full years thereafter, unless terminated earlier under the provisions of this Agreement. The Foundation shall have the option to extend this Agreement for such additional term, under the same terms and conditions, as may by approved by a vote of the City electorate at the November 1990 general election. Notice to exercise said option shall be given at least ninety (90) days prior to the expiration of the original term. 3. COMPENSATION: The Foundation shall be entitled to retain all revenues collected from rental spaces, concessions and admission charges to the Theater. Admission taxes, as defined by City ordinance, collected from the Admiral Theater, shall be paid monthly to the City Treasurer for deposit in the City's Admiral Theater Fund. The City disclaims any interest in any revenues generated through fund raising activities of the Foundation. 4. ALTERATIONS: The Foundation shall not make any structural alterations, without the expressed written consent of the City Council. Any such alterations consented to by the City Council shall be at the Foundation's expense. The Foundation shall secure any and all governmental permits required in connection with such work and shall hold the City harmless from any and all liability and any and all liens resulting therefrom. All alterations, additions and improvements, except trade fixtures and appliances and equipment which do not become a part of the building shall immediately become the property of the City without obligation. Upon removal of any trade fixtures, appliances and equipment which did not become part of the Facility, the Foundation shall repair any damage caused by removal. 5. UTILITIES AND TAXES: The Foundation shall be responsible for providing the building with all utilities, including light, heat, electricity, water, sewer, gas, garbage, and telephone. The Foundation shall pay all utility charges. OPERATING AGREEMENT -2- The Foundation shall pay all State leasehold excise taxes, personal property taxes and sales taxes incurred by the Foundation's occupation and operation of the Facility. 6. RELATIONSHIP OF PARTIES: The parties understand and agree that the Foundation is an association skilled in matters pertaining to the scope of work and will perform independent functions and responsibilities in the area of its particular field of expertise. The Foundation and its personnel shall act as independent contractors and not employees of the City. As such they have no authority to bind the City nor control employees of the City, contractors, or other entities. The Mayor will be the responsible official for fulfilling continuing responsibilities of the City. 7. NONDLSCREVENATION: The Foundation shall not discriminate in any manner on the basis of sex, race, color, creed, or national origin, age, marital status, physical, mental or sensory handicap unless based on a bona fide occupational qualification. 8. REPORTS AND INFORMATION: The Foundation will maintain accounting records in accordance with generally accepted accounting principals and make the financial records available to the City upon reasonable request of the Mayor. Within sixty (60) days after the end of the fiscal year of the Foundation, the Foundation shall deliver to the City a written financial operating statement. Within ninety (90) days of the end of the Foundation's fiscal year, the Foundation shall provide the City with a written report setting the description and cost of all capital operations performed by the Foundation, improvements, maintenance, and repairs of the Facility during the previous twelve (12) months. Said report shall also contain a projection as to the anticipated alterations, improvements, maintenance and repairs expected during the ensuing twelve (12) month period. The Foundation will present to the City a business plan, including actions, milestones, and financial projections (a standard small business plan) within six (6) months of the effective date of this Agreement. 9. CASUALTY/LOSS: Should the Facility suffer structural damage equal to fifty percent (50%) or more of its appraised value, including complete destruction, the City shall have the option of terminating this Agreement or continuing this Operating Agreement in effect by commencing and completing with due diligence any work necessary to restore or OPERATING AGREEMENT -3- ... repair the premises. Notice of the City's election shall be given within thirty (30) days of the occurrence causing damage. If the Foundation shall have made improvements or alterations to the Facility and shall not yet have fully amortized its expenditures for such improvements or alterations, the City shall and hereby does assign to the Foundation out of any proceeds payable to the City from insurance coverage, a sum equal to any unamortized portion of such expenditures. This unamortized portion shall be determined by multiplying such expenditures by a fraction, the numerator which shall be the number of years in the unexpired term of the lease and granted extension options at the time of the casualty occurrence, and the denominator shall be the number of years of the term of the lease and granted extension options remaining at the time of the improvement or alteration. 10. INSURANCE AND I14DFM'4IW: The City shall carry at full replacement cost fire and extended coverage insurance and such other insurance as it may desire to carry on the Facility. The Foundation shall not be liable for any loss or damage to the premises resulting from fire or other perils insurable under the standard form of fire and extended coverage insurance policy due to any cause whatsoever, except intentional damage by the Foundation or its agents or employees. The City shall not be liable for any loss or damage to the property of the Foundation, except intentional damage by the City or its agents. Prior to and during the performance of the work covered by this Agreement, the Foundation shall provide the Risk Manager for the City of Bremerton with evidence that it has obtained and maintains in full force and effect during the term of this Agreement a policy of public liability insurance, providing coverage of at least $1,000,000.00,single limit, naming the City as additional insured. The City's Risk Manager shall be provided thirty (30) days' written notice of any cancellation of said liability insurance. The Foundation agrees to defend, indemnify and save harmless the City, its appointed and elected officers and employees, from and against any and all liability loss, costs, damage and expense, including costs and attorney fees in defense thereof because of actions, claims or lawsuits for damages resulting from personal or bodily injury, including death at any time resulting therefrom, sustained or alleged to have been sustained by any OPERATING AGREEMENT -4- person or persons and on account of damage to property, arising or alleged to have arisen directly or indirectly out of or in consequence of the Foundation's performance of this Agreement, whether such injuries to persons or damage to property is due to the negligence of the Foundation, its subcontractors, agents, successors or assigns. This provision shall be inapplicable to the extent the City is judicially found sole negligent for such damage or injury. The City agrees to defend, indemnify and save harmless the Foundation, its appointed and elected officers and employees, from and against any and all liability, loss, costs, damage and expense, including costs and attorney fees in defense thereof because of actions, claims or lawsuits for damages resulting from personal or bodily injury, including death at any time resulting therefrom, sustained or alleged to have been sustained by any person or persons and on account of damage to property, arising or alleged to have arisen directly or indirectly out of or in consequence of the City's performance of this Agreement, whether such injuries to persons or damage to property is due to the negligence of the City, its subcontractors, agents, successors or assigns. This provision shall be inapplicable to the extent the Foundation is judicially found solely negligent for such damage or injury. 11. GENERAL CONDITIONS: a. Assignability - The Foundation shall not assign any interest in this Agreement and shall not transfer any interest in same (whether by assignment or novation), without the prior written consent of the City thereto; Provided, however, that claims for payment under this Agreement may be assigned. b. Entire Agreement - This Agreement constitutes the entire agreement between the parties and both parties acknowledge that there are no other agreements, written or oral, that have not been fully set forth in the text of this Agreement. c. Amendments - The parties hereby further agree that this Agreement cannot be amended or modified without the written concurrence of both parties. d. Notices - Any notices required to be given by the City to Foundation or by the Foundation to the City shall be in writing and delivered to the following parties at the following addresses: OPERATING AGREEMENT -5- Mayor, City of Bremerton 239 Fourth Street Bremerton, WA. 98310 Admiral Theater Foundation 507 Pacific Bremerton, WA 98310 e. Waiver - Failure to insist upon strict compliance with any terms, covenants or conditions of this Agreement shall not be deemed a waiver of such, nor shall any waiver or relinquishment of such right or power at any time be taken to be a waiver of any other breach. f. Compliance with State, Local and Federal Laws - The Foundation agrees to comply with all applicable local, state and federal laws in performance of all services under this Agreement. g. Applicable Law; Venue - This Agreement shall be construed and interpreted in accordance with the laws of the State of Washington and, in the event of dispute, the venue of any action brought hereunder shall be in Kitsap County Superior Court. h. Attorney Fees - The substantially prevailing party in any litigation arising hereunder shall be entitled to its reasonable attorney's fees and court costs, including appeals, if any. 12. TERMINATION: Should the electorate fail to approve Agreement for an additional term of forty (40) years, under the same terms and conditions, through a proposition on the September 18, 1990, ballot, the Foundation may terminate this Agreement upon ninety (90) days written notice. In the event of breach or default of any material provision of this Agreement, either party may terminate this Agreement upon written notice to the other effective in thirty (30) days if corrective action has not been commenced and thereafter completed in a timely manner. OPERATING AGREEMENT -6- IN WITNESS WHEREOF the parties hereto have executed this Agreement the date and year indicated. O/ THEAD TER FOUNDATION 7 Date: ! 2,2 BY: Date: CikD%t to ATTEST: CrrA OF BREMERTON ^ U,WL LOUIS MENTOR, Mayor KATHLEEN McCLUSKEY, berk PR D S TO FORM: IAN R. S VERS, City Attorney OPERATING AGREEMENT -7- OPE UMNG AGREEl1dE1VT A*"Mxwkrftcft TM AGRP MNT made and entered into this day of lady, 1990, by and between the City of Bremerton, a First Class City of the State of Washington, (mer referred to as "City') and The Admiral Theater Foundation, a non-profit corporation organized under the laws of the State of Washington (hereinafter rderred to as .Foundaf;w). WITNESSETH: 1. SCOPE OF SERVICES: The Foundation shall manage the Admiral Theater facility, located at 507 Pacific Avenue, Bremerton, Washington, including all building areas and appuutenances {hereinafter referred to as "Facility") for the purpose of operating a performing and visual arts center for public entertainment, education and cultural events in the auditorium and associated areas (hereinafter 'Theater') and managing the rental of office and commercial retail spaces. The Foundation's duties are as follows: (a) Complete renovation of the building and have the Facility operational no later than five (5) years from the effective date of this Agreement. Operational shall mean the Facility is immediately available for tenant or public use, including City use under subpart (h) and all other duties of the Foundation under this section shall commence; (b) ►; (c) Building cleaning, maintenance and repairs, including removal of ice and debris from walks and common areas; replacement of broken glass, ciecond fixtures, plumbing fixtures and seating; and interior and exterior plastering, wall coverings and painting; (d) Advertise for tenants and negotiate and collect rents for all office and retail spaces of the Facility; (e) Promote Theater utilization by every mems of advertising designed to attract performing and visual arts events and attendees, M Provide for operation of the Theater and appropriate cwcesdons; and (g) Promulgate riles, policies and regulations for rental procedures, charges, hours of operation, and uses of the Facility not mconustent with this AgneenmL Rules and regulations shall speifically prohibit the giving of tickets or other *free entry to any perfarmance or event to any City or Foundation employee or offices, crept in the perfarmanc a of their duties; and OPERATING A -1- (h) Provide the Theater for City use upon request for a minimum of twelve (12) days each year at a nominal fee sufficient to cover utilities, security, and janitorial savices or other direct expense, of use. Scheduling shall not interfere with previously scheduled performances. 2. TERAft The tern of ibis Agreement shall begin on the date of execution and continue ten (10) full yea=s thereafter, unless terminated earlier under the provisions of this Agreement. The Foundation shall have the option to extend this Agreement for such additional term, urMder the same tams and editions, as may by approved by a vote of the City elactorate at the November 1990 general election. Notice to exercise said option shall be given at least ninety (90) days prior to the a0ration of the original term. 3. COAMOiSATION: The Foundation shall be entitled to retain all revenues collected from rental spaces, concessions and admission charges to the Theater. Admission taxes, as defined by City ordinance, collected from the Admiral Theater, shall be paid monthly to the (Sty Tbeasurear for deposit in the City's Admiral Theater Food. The City disclaims any interest in any revenues generated through fund raising activities of the Foundation. 4. ALTERATIONS: The Foundation Shan not malar any structural alterations, without the expressed written consent of the City Council. Any such alterations consented to by the City Council shall be at the Foundation's expense. The Foundation shall secure any and all governmental permits required in connection with such work and shall hold the City harmless from any and all liability and any and all liens resulting th ezefrom. All alterations, additions and impmvemee ls, except trade fixtures and appliances and equipment which do not become a part of the building shall immediately become the property of the City without obligation. Upon removal of any trade fixtures, appliances and equipment which did not become part of the Facility, the Foundation shall repair any damage caused by removal. S. UTII.i1W AND TAXES: The Foundation shall be responsible for providing the building with all utilities, including light, heat, electricity, water, sewer, gas, garbage, and telephone. The Foundation Shan pay all utility charges, OPERATINGA -2- The Foundation shall pay all Static leasehold excise taxes, personal property taxes and Sao taxes incurred by the Fou mdation's occupation and operation of the Facility. 6. RELATIONSHIP OF PARTJS: The parfm understand and agree that the Foundation is an association skilled in matters pertaining to the SCOW of work and will perform independent fwxdons and responsibilities in the area of its particular field of expertise- The Foundation and its personnel shall act as independent contractors and not employees of the City. As such they have no authonty to bind the City nor control employees of the City, contractors, or other entities. The Mayor will be the responsible official for fulfilling ooatinning reapons-bilities of the City. 7. NONDISCRIlVMATION: The Foundation shalt not discriminate in any manner on the basis of sea, race, color, creed, or national origin, age, marital status, physical, mental or sensory handicap unless based on a bona fide occupational gaalific�tion. S. REPORTS AND INFORMATION: The Foundation will maintain ac=mtine records in accordance with generally accepted accounting principals and make the financial records available to the City upon reasonable request of the Mayor. Within sixty (60) days atter the end of the fiscal year of the Foundation, the Foundation shall deliver to the City a written financial operating statement. Within ninety (90) days of the end of tine Fm's fiscal year, the Foundation shall provide the City with a written repot setting the dampaon and cast of all capital operations performed by the Foundation, improvements, maintenance, and repairs of the Facility during the previous twelve (12) months. Said report shall also contain a projection as to the antic 4x tod alterations, its, maintenance and repairs expected during the ensuing twelve (12) month period. The Foundation willpresent to the City a business plan, including actions, milestones, and financial projections (a standard small business plan) within six (6) months of the effective date of this Agreement. 9. CASUALTY/IASS: Should the Facility sufkr structural damage equal to fifty percent (50%) of mare of its appraised value, inducting complete destruction, the City shall have the option of terminating this Agreement or continuing this Operating Agreement in effect by commencing and complcting with due diligence any work noir to restore or OPERATING A -3- NOW %%001 fir the premises. Notice of die City's dec tion shall be gim within thirty (30) days of the occurrence causing damage. If the Foundation shall have made impmvemeab or altecafms to the Facility and shall not yet have fully amortized its aspeadhu es for such imltt+ovements or shmations, the City shall and bcmby does assign to the Foundation out of any proceeds payable to, the City from insurance coverage, a sum equal to any unamortiaed portion of such expenditures. This un mmdzed portion shall be determined by multiplying such expenditures by a fraction, the numerator which shall be the number of years in the unexpired term of the base and granted extension options at the time of the casualty occurrence, and the dRomirmator shall be the number of years of the teem of the lease and granted extension options remaining at the time of the imp, --- or alteration. 10. WSORANCE AND MEMMTY: The City shall carry at full replacement cost fire and extended coverage insurance and such other insurance as it may desire W carry on the Facility. The Foundation shall not be liable for any loss or damage to the premises resulting from fire or other perms insurable under the standard form of fire and extended canrmp inscrrance policy due to any CZU3V wbatsoever, except intentional damage by the Foundation or its agents or employees. The City shall not be liable for any loss or damage to the property of the Foundation, except intentional damage by the City or its agents. Prior to and during the performance of the worn covered by this Agr went, the Foundation shall provide the Risk 1lfanW for the City of Brzmerton with evidence that it has obtained and maintains in full force and effect during the term of this Agreement a Policy of public liability insurance, providing coverage of at least $1,000,000.00 ggle limit, naming the City as additional insur+od. The City's Risk Manager shall be provided thirty (30) days' written notice of any cancellation of said liability insurance. The Foundation agrees to defend, indemnify and save harmless the City, its appointed and elected officers and employees, from and against any and all liability loss, costs, damage and expense, including tests and aftomey foes in defense thereof because of actions, claims or lawsuits for damages resulting from pmmd or bodily nVury, including death at ally time resulting therehom, sustained or afted to have been sustained by any OPERATING AGREEMENT -4- person or persons and on account of damage to Property, arising or alleged to have arisen directly or indirectly out of or in consequence of the Foundation's performance of this Agreement, whether such injuries to persons or damage to property is due too the negligence of the Foundation, its suboontiractors, agents, successors or assigns, This provision shall be inapplicable to the extant the City is judicially found sole negligent for such damage or injury. The City agrees to defend, indemnify and save harmless the Foundation, its appointed and elected officers and employees, from and against any and all liability, loss, coists, dam -me and otpense, incduding costs and attorney fees in defense thereof because of actions, Chahar or lawsuits for damages resulting ficin personal or bodily injury, m dudmg death at any time resulting therefrom, sustained or alleged W have been sustained by any person or persons and on account of damage to property, arising or alleged to have arisen directly or indirectly out of or in consequence of the City'sperlarmanee of this Agreement, whether such injuries to persons or damage to property is due to the negligence of the City, its subcontractors, agents, yrs or assigns. This provision shall be inapplicable to the extent the Foundmion is judicially found soaely negligent for rwh damage or injury, 11. GENERAL CONDITIONS: a. Assignability - The Foundation shall not assign any interest in this Agr=ment and shall not transfer any interest in same (whetter by asses or novation), without the prior written consent of the City thereto; Provided, however, that claims for payment under this Agreement may be assigned. b. Fntire Agreement - This Agreement constitutes the entire agreement between the parties and both parties acknowledge that there are no other agreements, written or oral, that have not been fully set forth in the text of this Agreement. c. Amendments -The parties herby further agree that this Amt cannot be amended or modified without the written conci raeaoe of both parties. d. Notices - Any notices required to be given by the City to Foundation or by the Foundation to the City shall be in wfiting and delivered m the following parties at the following addresses: OPMATMG AGREHUMT -5- Mayor, City of Bremerton 239 Fourth Street Bremerton, WA. 98310 Nwe Admiral Theater Foundation rn7 Pacific Bremerton, WA 98,310 e. Waiver - Failure to insist upon strict compliance with any terms, covenants or conditions of this Agreement shall not be deemed a waiver of such, nor shall any waiver or relinquishment of such right or power at any time be bdmn to be a waiver of any other breach. f. Compliance with State, Local and Federal Laws - The Foundation agrees to comply with all applicable local, state and federal laws in puf mum of all services under this Agreement. g. Applicable Law; Venue - This Agreement shall be cid and interpreted in accordance with the laws of the State of Washington and, in the event of dispute, the venue of any action brought hereunder shall be in Kitsap County Superior Court. h. Attorney Fees - The substantially pmvaftg party in any litigation arising hereunder shall be entitled to its zeasonable attorney's fees and court costs, inrcluding appeals, if any. 12. TERMMATION: Should die elec Carate fail to approve Agreement for an additional term of forty (40) years, under the same terms and conditions, through a proposition on the September 18, 1990, ballot, the Foundation may terminate this Agreement upon ninety (90) days written notice. In the event of breach or default of any material provision of this Agreement, either Party may teinate this Agreement upon written notice to the other effective in thirty (30) days if corrective action has not been commenced and thereafter completed in a timely manner. \1 OPERATING A -& 1 :1: : • ' 11 1'I 1 .+ I � .tl I 1 a .Y I.1 I V -.� I �1 1',' 1 f' I C OF BRBMERTON Dom `t 1 ao.110. LOIIIS MENTOR, Mayor _ 1 V: i :ia Z MUM,M OPERATING AGREBMENT -7-