MEMORANDUM OF UNDERSTANDING CONCERNING
TRANSIT FACILITY AND BUS AQUISITION
THIS MEMORANDUM OF UNDERSTANDING (the “MOU”) is made and entered into by and between the City of Lawrence, Kansas, a city of the first class under the laws of the State of Kansas, (hereinafter referred to as the “City”) and the University of Kansas, an educational institution and agency of the State of Kansas (hereinafter referred to as the “University”), the City and the University from time to time herein collectively referred to as “the parties.”
WHEREAS, both the City and the University desire to improve their respective transportation services, enhance and increase ridership and reduce parking and traffic congestion by continuing to encourage and facilitate use of public transportation; and
WHEREAS, the City and the University have previously determined that it is in the best interests of both the City and the University to facilitate coordination between their respective transit systems; and
WHEREAS, adequate shared transit facilities will better enable the City and University to deliver and improve their respective transportation services, and to facilitate and enhance coordination between their respective services;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises and covenants hereinafter contained, the parties agree as follows:
1. Construction of Transit Facility:
a. The University has issued Request for Proposal number 87147, as amended (the “RFP”), whereby the University intends to enter into an Agreement with a vendor/contractor to purchase a completed transit maintenance and operations facility (the “Transit Facility”). If a final contract is awarded pursuant to the RFP, the Transit Facility (and any real property associated with the Transit Facility), will be purchased, financed, and owned by the University, and the University shall use reasonable best efforts to ensure that construction of the Transit Facility is completed by December 15, 2010. In the event the construction of the Transit Facility is not completed so that occupancy can commence on January 1, 2011, the University and the City agree to cooperate to find suitable facilities for the parties to use until such time as the Transit Facility is completed and ready for occupancy.
b. Construction of the Transit Facility pursuant to the RFP shall be in accordance with the specifications outlined in RFP, as amended and final contract documents. Should the facility’s specifications be amended or revised after the execution of this MOU, the University agrees to provide the City with copies of the amended or revised specifications within a reasonable time.
c. The Lease Agreement between the University and City for the Transit Facility shall provide the City a Right of First Refusal in the event the University determines to sell the Transit Facility during the term of the Lease Agreement. Under the Right of First Refusal, the City shall have the right to meet the terms and conditions of any offer made to the University within a reasonable time agreed to by the University and City.
2. Lease of Transit Facility.
a. The University shall enter into a lease with the City, which Lease shall provide for City’s use of the Transit Facility in the operation of its public transit system, as more fully set forth in the Lease Agreement (the “Lease”).
b. The Lease of the Transit Facility to the City shall commence on January 1, 2011, and extend for a period of ten (10) years (the “Term”). Upon mutual agreement of the parties, the Lease may be extended by the parties for any length up to an additional fifteen (15) years. The University and the City agree that the Lease Agreement shall provide that the terms and conditions for any extension or renewal of the initial ten-year term shall be substantially similar to the terms of the initial lease, provided however, that Base Rent shall increase by the percentage equal to the average annual percentage increases of the Consumer Price Index-All Urban Consumers, All Items, ("CPI-U") for the Kansas City Metropolitan Statistical Area, as published by the United States Department of Labor’s Bureau of Labor Statistics.
c. Base Rent. During the first five (5) years of the Lease term, the City shall pay to the University annual rent (“Base Rent”) of $125,495 in equal monthly installments of ($10,457.92). If any payment of Base Rent is for a period shorter than one full calendar month, Base Rent for that fractional calendar month shall accrue on a daily basis at a rate equal to 1/365th of the annual Base Rent. Rental payment for the first month shall be prorated as described above, if the Transit Facility is not available for occupancy by the commencement date of the Lease.
After the fifth year of the Lease term, Base Rent shall increase 4% per year to the following:
Year 6: $130,515
Year 7: $135,736
Year 8: $141,165
Year 9: $146,812
Year 10: $152,684
The Parties acknowledge that the Base Rent amount is based upon City’s procurement of Buses and other contributions as outlined herein. In the event that City is unable to procure and provide the Buses for University use as contemplated herein, the Base Rent amount shall be revised upward by an additional $250,000 per year for ten (10) years, to the following amount:
Year 1: $375,495
Year 2: $375,495
Year 3: $375,495
Year 4: $375,495
Year 5: $375,495
Year 6: $380,515
Year 7: $385,736
Year 8: $391,165
Year 9: $396,812
Year 10: $402,684
d. Cash Basis Law. The parties mutually understand and agree that it is their intent that the terms of any Lease Agreement for the Transit Facility, and any renewals thereof, are lawful under the provisions of the Kansas Cash Basis Law, including K.S.A. 10-1101, et seq., Specifically, the parties understand and agree that the City is obligated only to pay periodic payments or monthly installments under any lease Agreement as may lawfully be made from (a) funds budgeted and appropriated for that purpose during the City’s current budget year or (b) funds made available from any lawfully operated revenue producing source.
e. Rent Abated If Transit Facility Made Unusable by Casualty. The parties agree that should the Transit Facility be damaged or destroyed by fire, tornado, water damage, or other casualty, during the term of the Lease Agreement and any renewals or extensions thereof, and such damage or destruction renders the Transit Facility unusable for the City’s purposes, as determined by the City, the rent payments shall cease until such time as the Facility is reconstructed and made usable to the City’s satisfaction.
f. Termination. Both parties acknowledge that it may not be feasible for both parties to use the Transit Facility as contemplated in this MOU, unless both parties utilize the same transit operator to operate their respective transit systems. While it is the intent of the parties to continue their efforts to coordinate their respective transit systems, and utilize the same transit operator, to the extent that such arrangements continue to be in each party’s best interest, in the event that the either party no longer utilizes the same transit operator as the other party, this MOU and the Lease Agreement shall terminate at the option of either party and the parties shall dispose of the buses in accordance with section 3.g. below.
The parties further agree that the City shall have no further obligations to the University under this MOU or the Lease Agreement if, during the term of the Lease Agreement, the City’s Governing Body takes action to discontinue the Department of Public Transit or the City’s Special Sales Taxes for Transit authorized by Ordinance No. 8347 expire or are repealed.
g. Utilities and Building/Grounds Maintenance
The University shall furnish water, electricity, and gas, to the Transit Facility. University shall also furnish the following additional services: grounds maintenance and landscaping, lawn care including (mowing, snow removal), pest control. The Costs associated with the services outlined in this paragraph are referred to herein as “Transit Facility Costs.” Responsibility for the provision of telephone and internet services will be negotiated by the parties and addressed in the Lease.
In addition to the Base Rent, the City shall pay to the University an allocated share of the Transit Facility Costs (the “City’s Allocated Costs”). The University shall invoice the City for the City’s Allocated Costs on a monthly basis.
The City’s Allocated Costs shall be determined by multiplying the actual Transit Facility Cost by a ratio derived as follows: The parties shall work together to determine each party’s “Administrative Hours” and “Mechanics Hours”. Each party’s Administrative Hours shall be determined by the average monthly revenue hours as provided by the parties’ transit operator(s). Each party’s “Mechanics Hours” shall be determined by monthly mechanics time as provided by the parties’ transit operator(s) and supported by work orders. Each party’s Administrative Hours and Mechanics Hours shall be added together, and that number shall be divided by the total number of Administrative Hours and Mechanics Hours for the City and University combined. For purposes of clarity, an example of this calculation follows:
Each party’s records, books, documents, data, and accounting and operating procedures related to the calculation of the Transit Facility Costs and City’s Allocated costs shall be available to the other party and its representatives for examination and inspection upon request and reasonable notice by the requesting party.
The University shall apply for an exemption for the Transit Facility from ad valorem property taxes. In the event that such exemption is unavailable as a result of City’s or transit operator’s use of the Transit Facility, then the applicable ad valorem property taxes shall be handled as a Transit Facility Cost and allocated between the parties in accordance with this section.
h. The City’s transit operator shall be allowed by the University to utilize the Transit Facility on behalf of the City, and to carry out the City’s transit service operations, provided that City has obtained the Agreement of its transit operator that it will comply with all of the terms and conditions of this MOU and the Lease Agreement.
i. The University will maintain the Transit Facility in good repair, and shall be responsible for meeting all applicable local and State building codes, ordinances, standards and regulations. Provided, however, that repairs of damage caused by the City’s employees or officials or a City transit system operator/contractor shall be paid for by the City.
j. The Lease shall be in a format that is mutually agreeable to the parties, and the agreement of the parties to such Lease shall not be unreasonably withheld. The parties acknowledge that the Lease shall require approval of the State of Kansas Department of Administration.
3. Procurement of Buses.
a. Contingent upon the University entering into a final contract award for construction of the Transit Facility, and FTA and KDOT approval, and contingent upon the City receiving $2,000,000 of ARRA funds for bus replacement, the City agrees to contribute $2,000,000 of the ARRA funds for bus replacement for the purchase of six (6) new 40 foot low floor buses (the “Buses”). The City agrees to make the six buses available to the University for the University’s use, as outlined in more detail below. The University agrees to pay to the City 100% of the “local match” required for the purchase of the six (6) buses. With regard to the payment of the local match by the University, the University will issue a State of Kansas warrant made payable to City at the time of delivery of the buses. The City shall be responsible for full payment of the total cost of the Buses as stated in Exhibit A. Title to the Buses shall be held by the City, subject to the provisions set forth in section 3.g below. FTA’s lien on each of the Buses will last 12 years and 500,000 miles, whichever occurs last.
b. The City shall take the necessary steps to submit the purchase order for the Buses to the manufacturer, after receipt of approval by FTA, the timing of the purchase to be coordinated with and mutually agreed to by the University of Kansas. The Buses to be purchased by the City are six (6) new under 40 foot low floor buses, at an estimated value of $360,000 each. The Buses shall be manufactured in accordance with mutually agreed to specifications to be developed by the parties. Upon completion the agreed to specifications will be signed by both parties and attached to this MOU as Exhibit A.
c. Unless otherwise agreed to between the parties (and permitted by FTA), the Buses shall be used to provide public transit services to the University community. The University shall be responsible for Bus operations, and shall have exclusive control and direction of such Buses, including but not limited to control over fares, routes and schedules. The University shall cause the Buses to be duly registered, licensed, insured and maintained in an operating condition to comply with applicable laws and regulations. The University shall be permitted to subcontract operation and maintenance of the Buses, provided such contractor shall be required to provide such services in accordance with the requirements of this MOU and applicable state and Federal law. Housing for the Buses shall be the responsibility of the University, unless otherwise agreed to by the parties.
d. The University shall, at its own expense, maintain the Buses in good repair, and shall effect all necessary repairs to the Buses until such time as FTA’s lien on the buses is released and title to the buses is transferred to the University. The University assumes all costs and expenses in connection with the operation, use, maintenance and repair of the Buses, including repairs, fuel, oil, fines or penalties for speeding and/or reckless or careless driving or other violation in the use or operation of the Bus, taxes, license plates, wages and all contributions and taxes growing out of the relationship of employer/employee and the insurance hereinafter provided. Any subcontract of/for bus operations may also include provisions addressing responsibility for the foregoing costs and expenses.
e. The University shall cause the Buses to be maintained in accordance with the manufacturer's specifications until such time as FTA’s lien on the buses is released and title to the buses is transferred to the University. All routine and damage repair maintenance shall be documented. The City reserves the right to inspect the maintenance records and maintenance facilities at anytime while the City holds title to the buses. Further, inspection and review of such records and facilities may be performed by authorized representative(s) of the U. S. Department of Transportation.
f. Additional Support. The University agrees to make available appropriate University staff and resources, to provide for compliance with applicable state and federal standards, regulations and statutes, in the performance of work carried out in connection with this MOU. The University understands that ARRA funds require certain reports to be filed from time to time, and other requirements, in addition to FTA requirements, and the University agrees to cooperate with the City to timely comply with all ARRA requirements The parties agree to periodically evaluate such support, so that adjustments can be made where appropriate.
g. Disposition of Buses. Unless otherwise agreed to by the parties, City and University agree to provide for disposition of the Buses as follows:
i. Release of lien. City agrees to transfer its title to the Buses to the University, upon release by FTA of its lien upon the Buses.
ii. Termination of the MOU prior to release of lien. In the event that this MOU is terminated in accordance with this MOU, prior to release of FTA’s lien on the buses, the City shall reimburse to the University a proportional amount (to be determined on the basis of the ratio of the financial contribution made by the University to the actual cost of the buses) of the greater of: 1) the unamortized value of the remaining service life per unit, based on straight line depreciation (computed per a 12 year service life) of the original purchase price or 2) the fair market value sale price of the six Buses at the time the MOU terminates. To the extent that such termination requires the refund of any state or federal funds used to procure the Buses, the City shall be responsible for repayment of such funds to the appropriate state or federal agency.
h. As between the parties, the University assumes the risk of loss of or damage to, or destruction of the Buses, resulting from accident, collision, theft, fire, lightning, windstorm, earthquake, flood, explosion, hail, riot or civil commotion, aircraft, water damage, vandalism and malicious mischief or from any other cause whatsoever, from the commencement of this MOU until terminated, and the City shall have no liability or responsibility therefore; excepting, however, that if the loss or damage to the Buses shall result from a collision with a bus or other motor vehicle owned or operated by an employee, agent or contractor of the City in the course of conducting City business, the liability therefore shall be determined in accordance with the applicable law.
i. University agrees, at its sole cost and expense, to obtain and keep in force throughout the term of this MOU and until such time as FTA releases its lien on the Buses, insurance coverages and policies applicable to the Buses and their operation as outlined in Exhibit B. The University may however, subcontract this responsibility by requiring its transit operator to obtain and keep in force throughout the term of this MOU the insurance coverages and policies applicable to the Buses and their operation as outlined in Exhibit B. The parties agree Exhibit B may be amended from time to time with the consent of the parties.
j. With regard to the purchase and use of the Buses as contemplated herein, the University and City agree to comply with applicable state and federal standards, regulations and statutes, and the attached provisions in the City's MOU with FTA for the Federal Funds used to purchase the Buses, which provisions are set forth as Exhibit C. If the City or the University is notified by a state or federal regulatory agency that the transit operator performing work on behalf of the University has failed to comply with applicable state and/or federal standards, regulations, and statutes, and/or any applicable provisions of the City's Agreement with FTA for the Funds used to purchase the Buses, the University shall obtain compliance or address the situation to the satisfaction of the regulatory agency within the time frame set forth by said regulatory agency. If compliance is not obtained or the situation is not timely addressed to the satisfaction of the regulatory agency, then, to the extent such violation is a material violation impacting City's public transit operations or results in termination of City's Agreement with FTA for the Funds, the City shall have the right terminate this MOU by providing written notice of termination to the University. Upon termination of this MOU pursuant to this paragraph, if the FTA lien upon the buses has not yet been released, the City shall reimburse to the University a proportional amount of the fair market value sale price of the six Buses at the time the MOU terminates, which shall be determined on the basis of the ratio of the financial contribution made by the University to the actual cost of the Buses. To the extent that such termination requires the refund of any state or federal funds used to procure the Buses, the City shall be responsible for repayment of such funds to the appropriate state or federal agency.
4. Transit Operator. The University and the City shall each require any transit operator performing work in connection with this MOU or pursuant to a contract or agreement to carry out the parties’ respective transit service operations:
a. to agree in writing to adhere to the same conditions that apply to the respective party, to the extent applicable. The respective party shall include within its contract with any transit operator performing work on its behalf, appropriate provisions to address breach or default by the contractor, including failure to perform in compliance with the applicable terms of this MOU;
b. to provide such data/reports which the other party may reasonably require to document compliance;
5. Prior Agreements; Amendments. This Memorandum of Understanding sets forth the entire agreement between the parties with respect to the acquisition of buses by the City for the University’s use and other matters contained herein. The parties agree to cooperate and take such action as is necessary to update and amend this MOU as needed to address the issues outlined herein. The parties further agree that the agreement between the parties with respect to the Transit Facility shall also require the execution of a Lease Agreement approved by both parties.
6. Claims. With respect to claims arising from activities conducted pursuant to the MOU, unless otherwise stated, each party shall be responsible for its own negligence, or that of its employees or agents, but only in the manner and to the extent provided by applicable State laws, and nothing in the MOU shall create any obligation to defend or indemnify the other party. In the event of claims by third parties arising from such activities, the parties will cooperate in defense of such claims.
8. Binding Effect and Assignment. This MOU shall be binding upon and inure to the benefit of the parties hereto and their respective representatives, successors, and assigns.
9. Applicable Law. This MOU shall be governed by the laws of the State of Kansas.
10. Venue. It is agreed by and between the parties that, should any dispute arise, that cannot be resolved through negotiations and by mutual consent, concerning the validity and effect of this MOU, or of any breach of the MOU herein, venue of action concerning such dispute shall be in the District Court of Douglas County.
11. Severability. Each provision of this MOU shall be considered separable and if for any reason a provision which is not essential to the effectuation of the basic purposes of the MOU is determined to be invalid or contrary to any existing or future law, such validity shall not impair the operation of or effect of those provisions of this MOU that are valid.
12. Contractual Provisions Attachment. The Provisions found in Contractual Provisions Attachment (Form DA-146a, Rev. 1-01), which is attached hereto, are hereby incorporated in this contract and made a part thereof."
IN WITNESS WHEREOF, the parties hereto have caused this MOU to be executed in duplicate as of the date and year hereinafter written.
CITY OF LAWRENCE UNIVERSITY OF KANSAS
By: By: Danny Anderson, Interim Provost and Executive Vice Chancellor
______________________________ _______________________________
Date Date
Exhibit A
Bus Specifications
[Intentionally left Blank]
Exhibit B
Insurance
Unless otherwise agreed to by the parties, the University shall require the transit operator performing work in connection with this Agreement, to obtain and keep in force throughout the term of this Agreement, the insurance coverages and policies as outlined below:
a. Comprehensive General Liability: $5,000,000 combined single limit per occurrence for bodily injury, personal injury and property damage. Policy will include:
i. Premises and Operations
ii. Broad Form Conceptual
iii. Personal Injury with employee exclusion deleted
iv. Products/Completed Operations
v. Broad Form Property Damage
vi. Independent Contractors
b. Worker's Compensation and Employer's Liability:
i. Workers' Compensation Statutory (includes all states endorsement).
ii. Employer's Liability $100,000 each occurrence
c. Automobile Liability
i. $5,000,000 combined single limit per occurrence for bodily injury and property damage.
d. Automobile Physical Damage
i. Comprehensive and Collision coverage naming the City of Lawrence and the University as a loss payee.
ii. The City shall be provided a Certificate of Insurance verifying such coverage and identifying the City of Lawrence, Lawrence, Kansas, its officers, commissions, agents and employees as additional insured as pertains to the contract. This inclusion shall not make the City a partner or joint venture with the University or transit operator in its operation hereunder.
The City of Lawrence, Lawrence, Kansas, its officers, commissions, agents and employees shall be named as additional insured as respects: Liability arising out of acts performed by the transit operator; products and completed operations of the operator; premises owned, leased or used by
the operator; or automobiles, leased, hired or borrowed by the operator. With regard to the City, the certificate holder on the Certificate of Insurance shall be as follows:
City of Lawrence, c/o Risk Manager,
6 East Sixth Street
Lawrence, Kansas, 66044
Prior to any material change or cancellation, the University shall cause the City of Lawrence, its officers, commissions, agents and employees to be given thirty (30) days advanced written notice by registered mail to the stated address of the certificate holder, and to be immediately notified of any reduction or possible reduction in aggregate limits of any such policy where such reduction, when added to any previous reductions, would exceed twenty-five percent (25%) of the aggregate limits. In the event of an occurrence, it is further agreed that any insurance maintained by the City of Lawrence, Lawrence, Kansas, its officers, commissions, agents and employees shall apply in excess of and not contribute with insurance provided by the policies named in this contract.
Provisions in City’s MOU with the FTA