Fiscal Note
Services performed under this management agreement are expected to cost approximately $140,000 during the next 18 months, offset by rental revenues collected until individual apartment units are vacated. The net costs associated with this contract will be accounted for in the TID #29 fund and financed with general obligation debt to be repaid with future TIF district revenues.
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AMENDED - Authorizing the execution of a Property Management Agreement with Meyer Realty and Management, Inc. for a City-owned 129-unit apartment complex located on Allied Drive.
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WHEREAS, on May 16, 2006 the City of Madison acquired a 129-unit apartment complex located at 2317-2333, 2345-2355 and 2409-2437 Allied Drive ("Property"); and
WHEREAS, on April 18, 2006 the Common Council adopted a resolution (Enactment No: RES-06-00366)) which authorized City staff, contingent upon City acquisition of the Property, to negotiate an agreement for the ongoing management and maintenance of the Property and that the proposed agreement be brought before the Common Council for further action; and
WHEREAS, previous to the acquisition by the City the Property had been managed by Meyer Realty and Management, Inc. ("Manager"); and
WHEREAS, City staff wishes to have the Manager retained as managing agent for the Property and the Manager wishes to be so retained; and
WHEREAS, the terms and conditions of a property management agreement for the Property have been negotiated between City staff and the Manager.
NOW, THEREFORE, BE IT RESOLVED that the Mayor and City Clerk are authorized to execute a Property Management Agreement ("Agreement") with Meyer Realty and Management, Inc. ("Manager") for the management of a City-owned 129-unit apartment complex located at 2317-2333, 2345-2355 and 2409-2437 Allied Drive ("Property"), as shown on the attached Exhibit A, on the following terms and conditions:
1. TERM OF AGREEMENT. Subject to the termination rights set forth in Paragraph 4 herein, the term of this Agreement shall be month to month, commencing on June 21, 2006.
2. DUTIES OF MANAGER. The Manager shall on behalf of the City perform all services required in connection with the operation of the Property subject at all times to the City's general supervision and control. It shall be the duty and responsibility of the Manager:
a. Operation. To thoroughly familiarize itself with the Property, including its character, location(s), construction, layout, plan, operation, and electrical, heating, plumbing, air conditioning, ventilating and all other mechanical systems.
b. Vacation of Units. To ensure that all tenants vacate their units on the expiration of their current lease or after one hundred eighty (180) days of written notice from the City of the termination of their tenancy, whichever occurs later. In no event shall the Manager enter into any new lease, renew any current lease or permit any holding over by tenants following expiration or termination of their current lease without the prior written approval of the City.
c. Tenant Assistance. The Manager shall provide assistance to Property tenants to relocate them to other housing units off of the Property and shall use its best efforts to relocate said tenants to other properties in the Allied Drive area. Such assistance shall include, but not be limited to, assisting in completion of rental applications, processing credit, housing and employment verifications and reference checks that would effect their leasing of new housing units and scheduling and, if necessary, providing transportation to inspect prospective housing units. The City acknowledges that the Manager cannot guarantee the successful relocation of every Property tenant.
d. Securing of Vacated Units. The Manager shall be responsible to empty and secure all units being vacated.
e. Collections and Operating Account. To timely collect all rents, charges and other income on behalf of the City as they become payable, and to deposit all monies collected on behalf of the City in an operating account or accounts held at M&I Bank or such other financial institution as approved by the City in writing. Such account or accounts shall be identified as "City of Madison-Allied Drive". The funds of the City shall at all times be maintained separate and apart from the Manager's own funds and from the funds of any other entities or persons. The Manager's designees shall be the only parties authorized to draw upon such accounts. The Manager shall not be held liable in the event of bankruptcy or failure of such financial institution. Such operating account shall not be required to bear interest.
f. Lease Enforcement. When necessary, to institute, in the City's name, legal actions or proceedings for collection of delinquent rents and other income and for the dispossession of tenants and other persons therefrom, and to engage attorneys in connection with such actions or proceedings. The Manager is authorized to sign and serve such notices as the Manager deems necessary for lease enforcement, including the collection of rent or other income. Attorneys' fees, filing fees, court costs, and other necessary expenses incurred in connection with such actions and not recovered from tenants shall be paid out of the operating (and/or) reserve account(s) or reimbursed directly to the Manager by the City. The Manager may select the attorney of its choice to handle such litigation.
g. Tenant Relations. To use its best reasonable efforts to establish and maintain amicable relationships with tenants.
h. Repairs and Maintenance. At the expense of the City, to make or cause to be made all necessary or prudent repairs, to purchase all necessary supplies and materials to facilitate the repair, operation, or management of the Property including the emptying and securing of vacated units, and to do all other things reasonably necessary to maintain the Property in a clean, safe, and orderly condition and to ensure compliance with all federal, state, and local statues, ordinances, rules, regulations, and policies, and the City's policies, applicable to the management and operation of the Property. The Manager shall promptly investigate all service requests from tenants, take such action thereon as may be justified, and keep written records of such requests. The Manager shall respond to emergency requests as promptly as possible but in no event shall the response to an emergency request occur longer than twenty-four (24) hours after the emergency request has been received. The Manager shall report service requests of a serious nature to the City within three (3) days of the investigation of each service request.
i. Purchase of Services. To use its best efforts to make all repairs and to obtain all materials, supplies, and services at the best economic price available, and to obtain a minimum of three estimates where expenditures exceed One Thousand Five Hundred Dollars ($1,500) and written documentation of the foregoing as may be required by the City. This does not apply in emergency situations where time is of the essence and acquiring three estimates is not feasible.
j. Contract for Services. To contract in the City's name for electricity, gas, water, sewer, oil, telephone, window cleaning, pest control, trash collection, lawn and landscaping maintenance, snow removal and such other utilities and services as shall be necessary and advisable for the proper operation of the Property. All such contracts shall include a provision allowing the City to terminate on a minimum of thirty (30) days notice. The Manager shall not contract for any services with a termination clause greater than thirty (30) days minimum notice without the City's prior written consent thereto. The Manager shall use its best efforts to contract with minority, emerging business enterprises and/or Allied Drive area contractors for these services.
k. Management Unit. At the direction of the City, to maintain a suitably equipped management office (the "Management Office") on the Property. The Management Office shall be provided to the Manager at no cost to the Manager. The City shall pay for all utilities, repairs and maintenance to the Management Office with the exception of the partial reimbursement of the cost of telephone service to the Management Office as provided in Paragraph 3.c.
l. Management Presence and Employees. The Manager shall have sufficient personnel available on the Property or on call for the full and efficient performance of its duties under this Agreement, including physical presence of responsible persons during the hours of 9:00 a.m. to 12:00 p.m. and 1:00 p.m. to 5:00 p.m. Monday through Friday and at other such times as reasonably may be requested by the City. If the City, in its sole discretion, notifies the Manager of specific staffing or scheduling requirements, the Manager shall conform to the requirements within ten (10) days after written notice by the City. It is agreed that the Manager is an independent contractor and that any employees who the Manager uses to provide services under this Agreement are employees of the Manager and not employees of the City.
m. Payment of Bills. To review all bills, invoices, and statements received for services, supplies, materials and other expenditures incurred in connection with the maintenance, operation and ownership of the Property, and, on behalf of the City, to pay or cause to be paid in a timely fashion all appropriate and reasonable expenses from the reserve or operating accounts. Any amounts owed by City to the Manager shall also be paid from the operating account at any time without prior notice to the City.
n. Records. To establish and maintain complete and orderly files containing correspondence, rent records, payroll records, and leases, receipts, unpaid bills, tenant maintenance requests, and all other documents and papers pertaining to the management and operation thereof or otherwise required by the City to be maintained, all of which shall be and remain the property of the City and shall be available to the City and any of its authorized representatives for inspection upon reasonable notice at any reasonable time during regular business hours.
o. Books of Account. To establish and maintain in accordance with generally accepted accounting principles, consistently applied, accurate, and complete books of account with proper entries of all receipts, income, and disbursements pertaining to the Property, which books of account shall be and remain the property of the City and shall be available to the City and any of its authorized representatives for inspection upon reasonable notice at any reasonable time during regular business hours.
p. Financial Reports. To prepare and furnish to the City monthly income and expense statements and any other financial reports and statements of the Property as requested by the City. All such statements and reports shall be prepared in accordance with generally accepted accounting principles.
q. Compliance With Applicable Laws. The Manager shall become familiar with, and shall at all times comply with and observe all federal, state and local laws, ordinances and regulations which in any manner affect the services, duties or conduct of the Manager and its agents and employees.
r. Other Services. To perform all other services reasonably necessary or convenient for the care, protection, maintenance and operation of the Property and the prevention of waste, damage or injury thereto. If the parties determine that certain other services are reasonable under this Agreement, the Manager shall be reimbursed for its actual costs upon the prior written approval of the City as scheduled in Paragraph 3.g. It is understood that the Manager is a member of the City's Transition Team for the Property and that attendance at Transition Team meetings is considered part of the Manager's duties as described above and are not reimbursable under this paragraph.
3. COMPENSATION. The Manager will be compensated out of the operating account for its services performed under this Agreement as follows:
a. Management Fee. The City shall pay to the Manager a monthly management fee (the "Management Fee") of Five Thousand Dollars ($5,000.00), payable in arrears on the last day of each calendar month for the duration of this Agreement. Said Management Fee shall be prorated for partial months.
b. Tenant Assistance Fee. The City shall pay the Manager a Tenant Assistance Fee of Two Hundred Dollars ($200.00) for the relocation of the tenant(s) of each apartment on the Property that the Manager assists in relocating to other housing units off of the Property. Said fee shall be limited to Two Hundred Dollars ($200.00) per apartment unless the tenant relocates to one of the Manager's owned or managed properties. The amount the manager is paid is to be negotiated by staff. No Tenant Assistance Fee shall be paid in those cases that tenants either do not request assistance or are evicted from the Property To receive a Tenant Assistance Fee the Manager shall provide the City with a copy of a fully executed lease documenting that a tenant relocated to a housing unit off of the Property. In addition to the Tenant Assistance Fee, the City shall reimburse the Manager for the cost of each credit report it orders to assist in the prequalification of tenants relocating to other housing units off of the Property.
c. Telephone Fee. The City shall pay to the Manager a monthly fee of One Hundred Dollars ($100.00) as partial reimbursement for the cost of telephone service to the Management Office on the Property. The Telephone Fee shall be payable in arrears along with the Management Fee.
d. Eviction Fee. The City shall pay to the Manager a fee of Seventy-Five Dollars ($75.00) for each eviction action in small claims court that the Manager files or attorney's fees, but not both. If an attorney is used, the fee should be capped at an hourly rate to be negotiated by staff. Any Eviction Fees shall be paid in arrears along with the Management Fee.
e. Insurance Premium Reimbursement. In the event the Manager purchases Tenant Discrimination Liability Insurance, the City shall reimburse the Manager annually for the cost of such insurance in an amount not to exceed Two Thousand Six Hundred Seventy Five Dollars ($2,675.00) per year.
f. Bonding Cost Reimbursement. The City shall reimburse the Manager for the cost of bonding its employees, as required under Paragraph 7.
g. Miscellaneous Fee. The City shall pay the Manager Seventy-Five Dollars ($75.00) per hour for participation in or attendance at any activities over and above those stated in this Agreement (e.g., attending neighborhood meetings, Common Council meetings). The Manager shall obtain approval from the City prior to any participation and/or attendance at these activities.
h. Other Services. The Manager shall be reimbursed for its employees that will be used to complete work orders requested by the tenants and to empty and secure units being vacated based on the following schedule of charges:
Type of Service Rate
Maintenance Technician (regular hours) $30.00-36.00/hr (based on skill level)
Maintenance Technician (Emergency After Hours) $35.00/service call + 1.5 regular time per hour rate and
double time on holidays (i.e.,Memorial Day, Fourth of
July,Labor Day, Thanksgiving, Christmas Day, New
Year's Day, and Easter)
Cleaning Staff $25.00-30.00/hr
Semi-skilled Labor $18.00-20.00/hr
4. TERMINATION.
a. With Cause. The City may terminate this Agreement if cause for such termination exists thirty (30) days after the Manager receives written notice of such cause. As used herein, "cause" shall include, but not be limited to, any of the following:
i. The Manager's failure to promptly and competently perform any of its duties hereunder;
ii. The Manager's material mismanagement of the Property.
b. Without Cause. The City may terminate this Agreement at any time without cause upon sixty (60) days written notice to the Manager.
c. Upon Mutual Agreement. This Agreement may be terminated at any time by written, mutual agreement of the parties, provided all applicable laws and regulations are complied with.
d. Transition. In the event this Agreement is terminated, whether with or without cause, the Manager shall promptly turn over to the City all keys, resident files and records and similar items so as to facilitate a smooth transition of property management.
5. INDEMNIFICATION AND INSURANCE.
a. The Manager shall be liable to and hereby agrees to indemnify, defend and hold harmless the City, and its officers, officials, agents, and employees against all loss or expense (including liability costs and attorney's fees) by reason of any claim or suit, or of liability imposed by law upon the City or its agents or employees for damages because of bodily injury, including death at any time resulting therefrom, sustained by any person or persons or on account of damages to property, including loss of use thereof, arising from, in connection with, caused by or resulting from the Manager's or its subcontractors' acts or omissions in the performance of this Agreement.
b. The Manager will insure, and will require each of its subcontractors to insure, as indicated, against the following risks to the extent stated:
i. Commercial General Liability
Covering as insured the Manager and naming the City as an additional insured, with no less than the following limits of liability: Bodily injury, death and property damage of $1,000,000 in the aggregate. This policy shall also be endorsed for contractual liability in the same amount. All of the Manager's subcontractors shall maintain a similar policy covering as insured each subcontractor.
ii. Automobile Liability
If the Manager owns any vehicles, covering as insured the Manager and naming the City as an additional insured with no less than the following limits of liability: $1,000,000 combined single limits for bodily injury, and property damage. The Manager's subcontractors shall maintain a similar policy covering as insured each subcontractor.
iii. Worker's Compensation
Such insurance or other coverage that is required by Wisconsin Worker's Compensation Law.
iv. Authorized Insurers
All insurance shall be carried with companies that are financially responsible and authorized to do business in the State of Wisconsin. As evidence of the above listed coverages, prior to the beginning of work under this Agreement, the Manager shall forward a Certificate of Insurance, a copy of the policy showing the relevant endorsement(s), and a cover letter identifying this Agreement to: City Comptroller, Attention: Risk Manager, 210 Martin Luther King Jr. Blvd, Room 406, Madison, WI 53703-3345.
6. INITIAL DEPOSIT, CONTINGENCY RESERVE AND SECURITY DEPOSIT ACCOUNT. Immediately on commencement of this Agreement, the City shall remit to the Manager the sum of Five Thousand Dollars ($5,000.00) to be deposited in the operating account(s) established for the City pursuant to Paragraph 2.e., such amount representing the estimated disbursements to be made in the first month, plus an additional sum of Three Thousand Dollars ($3,000.00) as a contingency reserve. The City agrees to maintain this contingency reserve amount at all times and shall agree in writing to a new contingency reserve when such is required. The contingency reserve thus established is to enable the Manager to pay obligations of the City as they become due. The Manager shall maintain a separate interest-bearing account for tenant security deposits. Such account shall be maintained in accordance with applicable state and local laws.
7. BONDING OF EMPLOYEES. All employees of the Manager who handle or are responsible for the safekeeping of any monies of the City shall be covered by a bond protecting the City. Such bond shall be in an amount of One Hundred Fifty Thousand Dollars ($150,000.00) and with a company authorized to do business in Wisconsin, and may be a blanket or umbrella bond. The cost of such bonding shall be paid by the City, as provided in Paragraph 3.f.
BE IT FURTHER RESOLVED that the Mayor and City Clerk are authorized to sign any and all other documents that may be required to accomplish the purpose of this resolution.