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HomeMy WebLinkAboutResolutions - 2024.05.22 - 41242 AGENDA ITEM: Lease with Novi Investment Partners, LLC at 48150 Grand River Avenue, Novi, Michigan for the 52-1 District Court DEPARTMENT: Facilities Management MEETING: Board of Commissioners DATE: Friday, June 7, 2024 8:55 PM - Click to View Agenda ITEM SUMMARY SHEET COMMITTEE REPORT TO BOARD Resolution #2024-4127 _ 24-40 Motion to adopt the attached suggested resolution. ITEM CATEGORY SPONSORED BY Lease Yolanda Smith Charles INTRODUCTION AND BACKGROUND The current lease for the 52-1 Novi District Court expires March 31, 2026, and has a seven-year option to extend. The landlord has proposed a new 10- year lease term with two 5-year options ensuring long term value to the County for operating the court at that location. As part of the negotiations, the County will receive a $150,000 tenant improvement allowance giving Court Administrators the ability to spend as needed over five years. POLICY ANALYSIS This item authorizes a 10-year lease with Novi Investment Partners LLC, who is the landlord for the building located at 48150 Grand River Avenue, Novi, Michigan that provides courthouse facilities for the 52-1 District Court. The lease is for the entire building consisting of approximately 25,833 square feet and the parking lot. The new lease agreement provides the Court to continue occupying the courthouse for a 10-year term with the option to extend the lease for 2 successive periods of 5 years each. The initial term of the new lease would commence on June 1, 2024 and expire on May 31, 2034. The current lease has an expiration of March 31, 2026 but the County has renegotiated the lease early. As a result, the County has received $150,000 in tenant improvements (Exhibit D). Rent will begin at $420,328.86 annually with a 2% increase each year and shall continue with the same 2% annual increase during the renewal option term of the lease. The previous lease also included a 2% annual increase that began in year 4 of the lease. The increase from the current lease to the new lease is consistent with the 2% increase. Regarding the Termination Clause, the County only has the option to terminate “In the event that the State of Michigan, by action of its legislature, takes over and assumes responsibility for the 52/1 District Court or assigns the responsibility for the District Court to another governmental entity during the Term...”. The Department advises that there are no plans to build a new courthouse or move the existing courthouse and therefore it is low-risk to enter into this 10-year lease with a restrictive option to terminate. Under the current lease, the new landlord was to address the historical issues with property maintenance from the previous landlord. The Department advises that these issues have resolved under the current landlord and their hiring of a property manager. Any maintenance that is the responsibility of the County is handled by County staff, Facilities Management, or contractors as necessary. Other maintenance services such as property insurance, roof repairs, building structure repairs, etc. as noted in lease/Exhibit C will be provided by Novi Investment Partners LLC. NOTE: This request was previously before the Economic Development and Infrastructure Committee on January 31, 2024 and the motion to approve the lease failed unanimously with a request to renegotiate for more favorable terms and/or explore the feasibility of purchasing the property. As a result of those discussions, the recommendation is to proceed with the original lease as presented in January and the reasons are laid out in the attached Memorandum from April M. Lynch, Deputy County Executive. BUDGET AMENDMENT REQUIRED: No Committee members can contact Michael Andrews, Policy and Fiscal Analysis Supervisor at 248.425.5572 or andrewsmb@oakgov.com or the department contact persons listed for additional information. CONTACT Paul Zachos, Property Management Specialist ITEM REVIEW TRACKING Aaron Snover, Board of Commissioners Created/Initiated - 5/22/2024 David Woodward, Board of Commissioners Approved - 5/22/2024 Hilarie Chambers, Executive's Office Approved - 6/3/2024 Lisa Brown, Clerk/Register of Deeds Final Approval - 6/5/2024 AGENDA DEADLINE: 06/07/2024 6:00 PM ATTACHMENTS 1. EDI Memo Regarding District Court 52-1 Final 2. LEASE - 52nd District Court First Div - County of Oakland (final 5.21.24) COMMITTEE TRACKING 2024-05-15 Economic Development & Infrastructure - Recommend to Board 2024-05-22 Full Board - Adopted Motioned by: Commissioner Yolanda Smith Charles Seconded by: Commissioner Ajay Raman Yes: David Woodward, Penny Luebs, Christine Long, Robert Hoffman, Philip Weipert, Gwen Markham, Angela Powell, Marcia Gershenson, William Miller III, Yolanda Smith Charles, Charles Cavell, Brendan Johnson, Ajay Raman, Ann Erickson Gault, Linnie Taylor (15) No: Michael Spisz (1) Abstain: None (0) Absent: Karen Joliat, Michael Gingell (2) Passed June 7, 2024 RESOLUTION #2024-4127 _ 24-40 Sponsored By: Yolanda Smith Charles Facilities Management - Lease with Novi Investment Partners, LLC at 48150 Grand River Avenue, Novi, Michigan for the 52-1 District Court Chair and Members of the Board: WHEREAS as approved by Miscellaneous Resolution Number 16035 the County of Oakland (“the County”) currently leases a building from Novi Investment Partners, LLC at 48150 Grand River Avenue, Novi, Michigan, to house the 52-1 District Courthouse, which lease expires on March 31, 2026; and WHEREAS to extend the lease term, the County and Novi Investment Partners negotiated a new 10- year lease with two 5-year options commencing on June 1, 2024, which new lease is attached hereto; and WHEREAS the terms of the new lease are substantially the same as the current lease; and WHEREAS the landlord is contributing $150,000 allowance for improvements specified by the Court Administrators over the first five years; and WHEREAS the 52-1 District Court Administrators of the 52-1 District Court have reviewed and approved the terms of the attached new lease; and WHEREAS the Departments of Facilities Management and Corporation Counsel have reviewed the attached new lease; and WHEREAS the 52-1 District Court and the Department of Facilities Management recommend that the Oakland County Board of Commissioners approve and execute the attached new lease. NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commissioners approves the attached new lease for the 52-1 District Courthouse (Novi) located at 48150 Grand River Avenue, Novi, Michigan with Novi Investment Partners, LLC and directs its Chair to execute the attached new lease and all other documents related to and needed to effectuate the new lease. Chair, the following Commissioners are sponsoring the foregoing Resolution: Yolanda Smith Charles. Date: May 22, 2024 David Woodward, Commissioner Date: June 03, 2024 Hilarie Chambers, Deputy County Executive II Date: June 05, 2024 Lisa Brown, County Clerk / Register of Deeds COMMITTEE TRACKING 2024-05-15 Economic Development & Infrastructure - Recommend to Board 2024-05-22 Full Board - Adopted Motioned by Commissioner Yolanda Smith Charles seconded by Commissioner Ajay Raman to adopt the attached Lease: Lease with Novi Investment Partners, LLC at 48150 Grand River Avenue, Novi, Michigan for the 52-1 District Court. Yes: David Woodward, Penny Luebs, Christine Long, Robert Hoffman, Philip Weipert, Gwen Markham, Angela Powell, Marcia Gershenson, William Miller III, Yolanda Smith Charles, Charles Cavell, Brendan Johnson, Ajay Raman, Ann Erickson Gault, Linnie Taylor (15) No: Michael Spisz (1) Abstain: None (0) Absent: Karen Joliat, Michael Gingell (2) Passed ATTACHMENTS 1. EDI Memo Regarding District Court 52-1 Final 2. LEASE - 52nd District Court First Div - County of Oakland (final 5.21.24) STATE OF MICHIGAN) COUNTY OF OAKLAND) I, Lisa Brown, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and accurate copy of a resolution adopted by the Oakland County Board of Commissioners on June 7, 2024, with the original record thereof now remaining in my office. In Testimony Whereof, I have hereunto set my hand and affixed the seal of the Circuit Court at Pontiac, Michigan on Friday, June 7, 2024. Lisa Brown, Oakland County Clerk / Register of Deeds 2100 Pontiac Lake Road | Building 41W | Waterford, MI 48328 | OakGov.com April McGrath Lynch, Deputy County Executive Memorandum To: Commissioner Yolanda Smith Charles, Chair, ED&I From: April M. Lynch, Deputy County Executive Date: May 01, 2024 Re: 52-1 District Court Lease At the January 31, 2024, ED&I Meeting, the Department of Facilities Management presented a request and recommendation to extend the lease for the 52-1 District Court located at 48150 Grand River Avenue, Novi, Michigan. As you are aware the District Court has been in this location for approximately 30 years. Facilities Management’s request was for a new lease with a 10-year term, two, five-year options and a $150,000 tenant improvement allowance (“TIA”). After a discussion at the Meeting, the Committee requested that the County further negotiate with the Landlord and ask for an increased TIA of $250,000 and/or an option to buy the courthouse. Facilities Management and Corporation Counsel acted upon this request. Accordingly, in an attempt to negotiate a purchase price for the courthouse and an increased TIA, the County’s Property Manager contacted Mr. Ken Lewis and Corporation Counsel contacted the attorney for Novi Investment Partners, LLC, Mr. Joseph Siciliano. As part of negotiations and in response to the Meeting, Mr. Ken Lewis sent a letter to the Committee, dated March 4, 2024, setting forth three options for the lease. Mr. Lewis expressed to the County Property Manager and his attorney expressed to Corporation Counsel that no other negotiations or offers would be entertained that were not included in the March 4, 2024, letter. As it relates to other options, the Landlord made an alternative offer to increase the TIA to $200,000 ($50,000 over the original proposal) in exchange for a 3% rent escalator versus a 2% escalator that was offered in the first agreement. In working with our CFO and finance team, it was determined that the immediate receipt of the increased TIA ($200,000) was offset and even surpassed by the increase of the rent escalator from 2% to 3%. In other words, over the life of the lease the County would be paying back the extra $50,000 TIA and then some. Below is the analysis: OAKLAND COUNTY EXECUTIVE DAVID COULTER 2100 Pontiac Lake Road | Building 41W | Waterford, MI 48328 | OakGov.com Novi Court Rent Escalation Difference Year 2% adj 3% adj 1 $418,932.00 $418,932.00 2 $427,310.64 $431,499.96 3 $435,856.85 $444,444.96 4 $444,573.99 $457,778.31 5 $453,465.47 $471,511.66 6 $462,534.78 $485,657.01 7 $471,785.47 $500,226.72 8 $481,221.18 $515,233.52 9 $490,845.61 $530,690.52 10 $500,662.52 $546,611.24 $4,587,188.52 $4,802,585.89 2% Minus 3% $ (215,397.37) With this calculation, it doesn’t make fiscal sense for the County to agree to pay an extra percentage point for the extra $50,000. If there are other improvements the court needs, I have encouraged them to work with Facilities Management to get in the rotation. Thus, the original offer stands as the best offer for the County. While we understand the Committee’s interest in purchasing the building, our previous Chief Financial Officer, Kyle Jen, and our current Chief Financial Officer, Brian Lefler, do not believe purchasing the building is advantageous to the County given the rate of return and recommend maintaining a lease at the current location. The purchase price given was $7,500,000; the rate of return just on this basis is 20 years. Then to include the price of maintenance of roofs, HVAC systems, parking lots, etc. adds more years to the rate of return. This does not include if we were to bond for the payments. In conclusion, this Courthouse works well for the District Court and County Executive Administration is formally recommending that we move forward with the offer presented to ED&I at this time. In addition, it was brought to my attention that the discussion during the Meeting may have included some inaccuracies. Moreover, I became aware that the Landlord sent a letter to the Committee, dated March 4, 2024, regarding the inaccuracies as well. I would like to discuss and resolve these inaccuracies. Courthouse Initial Purchase Price The most recent sale price of the courthouse was discussed at the Meeting. On June 11, 2015, the actual sale price was $4,470,000; not less than three million dollars as discussed. 2100 Pontiac Lake Road | Building 41W | Waterford, MI 48328 | OakGov.com Lease Negotiation Participation As general practice, the client (department or office) is always involved in the lease negotiation process. While they may not participate in each meeting or each phone call, the client generally has final approval of all lease terms and conditions (subject to Board of Commissioners approval). In the case of the District Court, the Court Administrator was the Client Representative and had a direct line of communication to the Landlord/Owner and Facilities Management. In November of 2023, the Director of Facilities Management reached out to the District Court Administrator to begin the process of reviewing the current lease. During the first week of January 2024, a conference with the Court Administrator, Deputy Court Administrator, the County Property Manager and Corporation Counsel was held to discuss lease details. Prior to the lease being presented to the Committee at the Meeting, the Court Administrator and Deputy Court Administrator, acting as the Client Representative, approved the lease via e-mail. Responsible Party for Renovations The current lease is, or at least is a modified, triple net lease, which was negotiated in 2015/2016. With a triple net lease, the tenant, in addition to rent, generally pays the taxes, insurance, maintenance, and operating expenses. The general idea is that the tenant pays for these items in exchange for a lower rent. In the case of the District Court, the parties, including the Court Administrator, back in 2015/2016, negotiated a modified triple net lease—with the County paying rent, taxes, and delineated operations and maintenance expenses and the Landlord/Owner paying insurance and delineated operations and maintenance expenses. Currently, the annual rent is $418,932.42, which is $14.59 per square foot (based on a 28,718.7 square foot building). The maintenance and operating expenses are set forth in Exhibit C of the lease. Under Exhibit C of the negotiated lease, the County is responsible for, among other things, remodeling/improvement/alternations at its request (additional office), carpet, tile, bathroom upgrades, countertops, and paint. Condition of Building Upon Return to Landlord Section 14 of the existing lease addresses the issue of the condition of the building at the end of the lease. The last sentence of Section 14 permits the Landlord to require the Tenant, as a condition of approval for an improvement, to restore the property at the expiration of the lease. By way of example, when security improvements were made at the District Court, the Landlord’s approval letter required the Tenant to restore/remove the security improvements at the end of the lease. A letter was signed by the Landlord and Tenant codifying this requirement. (See insert below.) 14. Alterations or Improvements. Except as set forth in this Lease and Exhibits, neither the LANDLORD nor the TENANT shall make any alterations or improvements on, about, or to the Premises without the prior written consent of the other Party. Such consent shall include approval of designs for alterations or improvements; approval of contractors to perform the alterations or improvements; and any request for proposals for the alterations or improvements. Any alterations or improvements made to or upon the Premises shall become an integral part of the Premises and shall become the sole property 2100 Pontiac Lake Road | Building 41W | Waterford, MI 48328 | OakGov.com of the LANDLORD immediately upon the completion, unless agreed to in writing by the Parties. The LANDLORD, in its sole discretion, may require as a condition of approval that the TENANT restore the Premises, at the expiration of this Lease, to its condition prior to improvements made by the TENANT. The LANDLORD shall fund a Tenant Improvement Allowance of one hundred and fifty thousand dollars ($150,000.00)(“TIA”) for improvements to the Premises subject to the provisions set forth in Exhibit D, which is attached and incorporated by reference into this Lease. Thank you for your kind attention to this matter and I look forward to meeting with ED&I Committee to discuss this request. 1 Final Version LEASE FOR 52ND DISTRICT COURT, FIRST DIVISION This Lease(“Lease”) is made and entered into on the ___ day of ____, 2024, but effective as of June 1, 2024 (the “Commencement Date”) between NOVI INVESTMENT PARTNERS LLC, a Massachusetts limited liability company 232 Summit Avenue, Suite103, Brookline, MA 02446 ("LANDLORD"), and the COUNTY OF OAKLAND, a Michigan Constitutional Corporation, 1200 North Telegraph Road, Pontiac, Michigan 48341 ("TENANT"). INTRODUCTION A. The TENANT currently leases the building and parking lot from the LANDLORD located at 48150 Grand River Avenue, Novi, Michigan (as further defined herein the “Premises”) for use as the 52nd District Court, First Division, pursuant to a certain lease made and entered on April 1, 2016 by and between the TENANT and the LANDLORD (“Current Lease”); and B. The Parties desire to terminate the Current Lease and to enter into this new Lease, which will replace and supersede the terms and provisions of the Current Lease as of the Commencement Date, all in accordance with and pursuant to, the terms and conditions set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and agreed, and of the mutual covenants and agreements set forth herein, LANDLORD and TENANT hereby covenant and agree as follows: 1. Leased Premises of Lease. In consideration of the Rent to be paid and the covenants to be performed by the TENANT, the LANDLORD leases to the TENANT and the TENANT leases from the LANDLORD the entire building consisting of approximately 25,833 square feet and the parking lot for this building, located at 48150 Grand River Avenue, Novi, Michigan (the “Premises”). The Premises are depicted in Exhibit A, which is attached and incorporated by reference into this Lease. 2. Term. The term of this Lease shall begin on the Commencement Date and shall end on May 31, 2034, unless extended as provided herein (the “Term”). 3. Renewal Options. Provided the TENANT is not in default of any terms and provisions herein contained, the TENANT shall have the option to extend the Lease Term for two (2) successive periods of five (5) years each (the first such period shall be referred to herein as the “First Renewal Term”; and the second such period shall be referred to herein as the “Second Renewal Term”, all of which shall be collectively referred to as the “Renewal Terms” and are herein also referred to as the “Term”) , provided the TENANT gives to the LANDLORD written notice of the exercise of such option not less than three hundred sixty five (365) calendar days prior to the expiration of the then current Term. The terms and provisions of this Lease shall govern each Renewal Term except for the Rent (as defined in Paragraph 4 of this Lease). The Rent for each Lease Year of the First Renewal Term and for each Lease Year of the Second 2 Final Version Renewal Term shall be as set forth in Exhibit B to this Lease, which is attached and incorporated by reference into this Lease. TENANT’S option to extend the Lease for the Renewal Terms shall be exercised by TENANT’s Director of Facilities Management or their successor. 4. Rent for Lease. The rent due and owing to the LANDLORD from the TENANT under this Lease for the Term is set forth in the rent schedule in Exhibit B (“Rent”). Exhibit B is attached and incorporated by reference into this Lease. 5. Place and Date of Payment. All payments due to the LANDLORD under this Lease shall be paid at the address of the LANDLORD set forth above or at such other place as the LANDLORD may designate in writing. All payments due to the LANDLORD under this Lease shall be paid on a monthly basis on the first calendar day of each month or another date agreed to by both Parties, in writing. 6. Partial Month Payment Proration. Should the Commencement Date be other than the first calendar day of a month, then all payments under this Lease for such month shall be prorated upon a daily basis based upon a thirty (30) day calendar month. Should this Lease terminate or expire other than the first calendar day of the month, then all payments under this Lease for such month shall be prorated upon a daily basis for a thirty (30) day calendar month. 7. Failure to Perform. In the event the LANDLORD fails to perform or comply with any obligation or requirement of this Lease, the TENANT shall give the LANDLORD five (5) business days written notice of such failure. If the LANDLORD does not perform or comply with the obligation or requirement within the five (5) business day period (or, for such items that take longer than the five (5) business days to cure, if the LANDLORD does not reasonably commence to perform or comply with the obligation or requirement within said five (5) business day period, and then fails to diligently proceed to cure thereafter), then the TENANT may perform or cause the compliance with the obligation or requirement. TENANT may deduct any reasonable costs associated with performing or complying with the obligation or requirement of the Lease from the Rent. In an emergency situation, the TENANT may perform or cause compliance with the obligations or requirements of the Lease without prior written notice to the LANDLORD and still may deduct reasonable costs from the Rent. Upon request, the TENANT shall provide the LANDLORD with an itemized invoice or statement for the costs associated with performing or complying with the obligations or requirements in the Lease. 8. Hold Over. In the event the TENANT holds over after the expiration of the Term or Renewal Term of this Lease, as the case may be, without a written agreement between the LANDLORD and the TENANT, the hold over shall be construed to be a tenancy from month-to-month on the same terms and conditions contained in this Lease, and the Rent shall be one hundred and fifty (150%) of the then current Rent for the period of such holdover. 9. Use and Occupancy. The Premises shall be used as a Courthouse. The Premises shall not be used in violation of any law, municipal ordinance, or regulation. Upon expiration or 3 Final Version termination of this Lease, the TENANT shall surrender the Premises in the same condition when taken, normal wear and tear excepted, and shall remove its personal property. 10. Equipment and Furnishings. The TENANT shall provide, at its own expense, all computer and telephone systems, furniture, and equipment it deems necessary. The TENANT, at its own expense, shall be solely responsible for the maintenance and repair of all computer and telephone systems, furniture, and equipment. 11. Taxes. From and after the Commencement Date of this Lease, the TENANT agrees to pay all real estate taxes assessed or imposed on the Premises directly to the taxing authority prior to the date on which any penalty for nonpayment of such taxes attaches. The taxes for the year in which the Lease ends or is terminated shall be prorated and adjusted between the LANDLORD and the TENANT on the due-date basis. 12. Utilities. The TENANT shall be solely responsible for and promptly pay all charges for water, gas, heat, electricity, telephone, sewer, and any other utility used upon or furnished to the TENANT during the Term. The LANDLORD shall provide utility service lines into the Premises and separate meters for utilities used upon or furnished to the Premises. 13. Maintenance, Repairs and Services. The division of responsibilities between the LANDLORD and the TENANT as they relate to maintenance, repairs, and services on, about, or to the Premises are set forth in Exhibit C, which is attached and incorporated by reference into this Lease. 13.1. Costs. Each Party shall be solely responsible for their own costs associated with providing maintenance, repairs, and services on, about or to the Premises as set forth in Exhibit C. 13.2. Third-Party Contractors. Either Party may hire a third-party to perform the maintenance, repairs, and services on, about, or to the Premises, for which they are obligated to perform as required by this Lease. The responsibilities contained in this Lease shall not be diminished in any manner if a Party hires a third-party to perform the responsibilities. 14. Alterations or Improvements. Except as set forth in this Lease and Exhibits, neither the LANDLORD nor the TENANT shall make any alterations or improvements on, about, or to the Premises without the prior written consent of the other Party. Such consent shall include approval of designs for alterations or improvements; approval of contractors to perform the alterations or improvements; and any request for proposals for the alterations or improvements. Any alterations or improvements made to or upon the Premises shall become an integral part of the Premises and shall become the sole property of the LANDLORD immediately upon the completion, unless agreed to in writing by the Parties. The LANDLORD, in its sole discretion, may require as a condition of approval that the TENANT restore the Premises, at the expiration of this Lease, to its condition prior to improvements made by the TENANT. The LANDLORD shall fund a Tenant Improvement Allowance of one hundred and fifty thousand dollars 4 Final Version ($150,000.00)(“TIA”) for improvements to the Premises subject to the provisions set forth in Exhibit D, which is attached and incorporated by reference into this Lease. 15. Indemnification/Liability. 15.1. The LANDLORD shall save, defend, indemnify and hold the TENANT harmless from and against any and all loss, cost, liability, damage, expense (including, without limitation, reasonable attorneys' fees, litigation expenses, or court costs), penalties, fines and claims whatsoever in connection with loss of life, personal injury and/or damage to property arising from acts or omissions of the LANDLORD or its agents or employees. 15.2. The TENANT shall be responsible for property damage to the Premises, including the structure thereon or fixtures attached to the structure, up to $10,000.00 per occurrence, which is caused by the acts of the TENANT, the TENANT’S employees or officers, or third-parties on the Premises for Court purposes. Normal wear and tear to the Premises is excluded from this Section. 16. Landlord Insurance. The LANDLORD agrees to provide the following insurance or similar insurance: 16.1. At Landlord’s option, either (i) Commercial General Liability Insurance in the minimum amount of five million dollars ($5,000,000) Combined Single Limit per occurrence, including Contractual Liability coverage recognizing this contract, or (ii) Commercial General Liability Insurance in the minimum amount of one million dollars ($1,000,000) Combined Single Limit per occurrence, including Contractual Liability coverage recognizing this contract, and an umbrella or excess policy in the amount of four million dollars($4,000,000). The TENANT shall be an additional named insured on such policy or policies. 16.2. The LANDLORD shall cause the Premises, including the structure and improvements located thereon, to be insured against loss or damage under a policy or policies of fire and extended coverage insurance, including “additional perils.” 16.3. All Insurance Certificates are to provide 30 day’s notice of material change or cancellation. Certificates of Insurance and insurance binders must be provided no less than ten (10) working days before commencement of this Lease. 16.4. The LANDLORD and the LANDLORD’S insurance carrier agree to waive all rights of subrogation against the TENANT for any loss or damage to the Premises and/or structure thereon exceeding $ 10,000.00. 17. Tenant Insurance. The TENANT is self-insured as to liability claims. Any personal property kept on the Premises by the TENANT shall be insured at the TENANT’S sole risk and at its discretion. The TENANT and the TENANT’s insurance carrier agree to waive all rights of subrogation against the LANDLORD and the LANDLORD’S insurance carrier, and to release 5 Final Version the LANDLORD and the LANDLORD’s insurance company, for any loss or damage to the TENANT’S personal property kept on or at the Premises. 18. Destruction of Premises. In the event, the Premises are partially or totally damaged or destroyed by fire or other casualty that is not attributed to the acts of the TENANT’s employees, contractors, or visitors, the damage to the Premises shall be promptly repaired or rebuilt by the LANDLORD. Notwithstanding any other provision in this Lease, if the Premises cannot be repaired or rebuilt within one hundred eighty (180) days after such damage, destruction, or casualty, then the TENANT shall have the right to terminate this Lease and vacate the Premises upon written notice to the LANDLORD, after the expiration of such one hundred eighty (180) day period. In any event, the Rent owed by the TENANT shall be reduced in proportion to the fraction of the Premises rendered unusable (in the discretion of the TENANT) until the Premises are repaired or rebuilt. If more than fifty percent (50%) of the Premises are damaged or destroyed by a casualty, then the LANDLORD may elect to either repair or rebuild the Premises or to terminate this Lease by giving written notice to the TENANT within thirty (30) days after the occurrence of such damage or destruction. 19. Compliance with Laws. The LANDLORD agrees, at its own expense, to promptly comply with all applicable federal, state, and municipal laws and regulations affecting the Premises, including any barrier-free requirements. Notwithstanding any provision of this Lease, if the LANDLORD fails to comply with such laws and regulations, then the TENANT may give the LANDLORD written notice of its intent to terminate the Lease one hundred fifty (150) days after the LANDLORD'S receipt of the written notice (or as to any matter that cannot reasonably be cured within such one hundred fifty (150) day period, then the LANDLORD shall not be in violation of this Section, if the LANDLORD commences such cure within the one hundred fifty (150) day period and thereafter diligently prosecutes such cure until completion). If the LANDLORD complies with the laws and regulations within the one hundred fifty (150) day period, or such applicable longer period as provided herein, the TENANT shall not have the right to terminate the Lease. 20. Security. 20.1. The TENANT is solely responsible for interior and exterior security measures, equipment, and devices for the Premises. 20.2. All persons working inside or outside the Premises will be subject to and must pass a background check conducted by the TENANT’s Building Safety Division. Because the Premises are used as a Courthouse and have Law Enforcement Information Network (“LEIN”) terminals (providing access to LEIN information) located thereon, if a person will be working inside the Premises, then the person will be subject to and must pass an additional background check conducted by the 52-1 District Court. The TENANT shall be responsible to perform the background checks and shall be responsible for all costs associated with the background checks. Notwithstanding the foregoing, the parties acknowledge that in certain circumstances (i.e., emergencies, insufficient response time) TENANT may not be able to have performed a background check, and on such occasions, 6 Final Version such persons working inside or outside the Premises must be first accompanied by an employee or person designated by TENANT for that purpose (unless waived by TENANT). 21. Access. The TENANT shall allow the LANDLORD access to the Premises during regular business hours or at other times mutually agreed to by the Parties for the purposes of inspecting, repairing and/or maintaining the Premises as may be required under this Lease. The LANDLORD shall use its best efforts not to disrupt the usual operations of the TENANT at the Premises. The TENANT shall also allow the LANDLORD access to the Premises at any time in case of an emergency. Given the TENANT’S use of the Premises as a courthouse, an employee of the TENANT may have to escort the LANDLORD or the LANDLORD’S agents or contractors while on the Premises. Notwithstanding anything to the contrary contained herein, the LANDLORD shall have access to the Premises during the last nine (9) months of the term of this Lease to show the Premises to prospective tenants, purchasers or lenders; provided, however, that in such showings that would include portions of the Premises to which the public does not have unfettered access, LANDLORD shall not make such showing without being accompanied by an appointed person of TENANT. LANDLORD shall give advance notice to TENANT of the scheduled showing and TENANT shall reasonably cooperate with LANDLORD in the scheduling of such showing and the appointment of a person to accompany LANDLORD. 22. Signs. The TENANT may attach, install, or erect signs on the interior walls of the Premises as necessary for the TENANT'S use of the Premises. The TENANT may not install or erect a sign on the exterior walls of or the area surrounding the Premises without the prior written approval of the LANDLORD to the form, content, material, lighting and structure thereof, and the City of Novi pursuant to local ordinance and state law. 23. Assignment. The TENANT shall not assign, sublet or in any manner transfer this Lease or any estate or interest herein without the prior written consent of the LANDLORD. Notwithstanding the foregoing, in the event of the State of Michigan, by action of its legislature, takes over and assumes responsibility for the 52/1 District Court or assigns the responsibility for the District Court to another governmental entity, the TENANT may assign its interest in this Lease to the State of Michigan or other governmental entity, which shall in writing assume all of the liabilities and obligations of the TENANT under this Lease. Upon any such transfer of the TENANT’S interest in the Lease, the TENANT shall have no further obligation under the Lease or to the LANDLORD, except to the extent any obligation accrued and remain unsatisfied prior to the date of such transfer. The interest of the LANDLORD in the Lease may be sold, conveyed, assigned, or otherwise transferred without the consent of the TENANT, but any such sale, conveyance, assignment, or transfer shall be subject to this Lease and the documents accomplishing such sale, conveyance, assignment, or other transfer shall expressly require compliance with all terms and conditions of this Lease. Upon any such transfer of the LANDLORD’s interest in the Lease, the LANDLORD shall have no further obligation under the Lease or to the TENANT, except to the extent any obligation accrued and remain unsatisfied prior to the date of such transfer. 7 Final Version 24. Option to Terminate. In the event that the State of Michigan, by action of its legislature, takes over and assumes responsibility for the 52/1 District Court or assigns the responsibility for the District Court to another governmental entity during the Term , then in such event, the TENANT may terminate this Lease, without any penalty, on that date which is not less than three hundred and sixty-five (365) days from the delivery of written notice, together with evidence of such take over or assignment of such responsibility (the “Termination Notice”) to the LANDLORD (the “Termination Date”). If said Termination Notice is delivered to the LANDLORD in accordance with this Lease, then this Lease shall remain in full force and effect until the Termination Date, and then shall terminate and be of no further force and effect upon, the end of the day on the Termination Date. During the period between the date of the Termination Notice and the Termination Date, the LANDLORD shall have the right upon reasonable notice to the TENANT to show the Premises to prospective tenants, purchasers and lenders provided, however, that in such showings that would include portions of the Premises to which the public does not have unfettered access, LANDLORD shall not make such showing without being accompanied by an appointed person of TENANT. LANDLORD shall give advance notice to TENANT of the scheduled showing and TENANT shall reasonably cooperate with LANDLORD in the scheduling of such showing and the appointment of a person to accompany LANDLORD. 25. Parking. The LANDLORD agrees to provide sufficient parking at the Premises for the TENANT’S use of the Premises, provided, however, that a minimum of 227 parking spaces shall be provided for the TENANT’S exclusive use. The TENANT may use additional parking spaces, if available. The TENANT agrees that the existing parking available to the TENANT as of the date of this Lease complies with this paragraph. 26. Eminent Domain. If the whole Premises are taken by any public authority under the power of eminent domain, then this Lease shall be terminated on the day the public authority takes possession of the whole Premises. If less than the whole, but more than thirty-five percent (35%) of the Premises are taken by any public authority under the power of eminent domain, then either Party may terminate this Lease upon thirty (30) days written notice to the other Party. In the event neither Party elects to terminate this Lease, the Lease shall terminate on the date the public authority takes possession of the Premises. Neither Party shall have any future liability or obligation under the Lease if it is terminated under this Paragraph. 27. Quiet Enjoyment. Upon performance of its obligations under this Lease, the TENANT shall peacefully and quietly hold and enjoy the Premises without hindrance or interruption by the LANDLORD, its agents or employees, subject to the terms of this Lease. 28. Modifications. This Lease may be modified or amended only by written agreement of the LANDLORD and the TENANT. 29. Governing Law. This Lease shall be interpreted under and governed by the laws of the State of Michigan. 8 Final Version 30.Severability. If a term, condition, or provision of this Lease is found, by a court of competent jurisdiction, to be invalid, unenforceable, or to violate or contravene federal or state law, then the term, condition, or provision shall be deemed severed from this Lease; all other terms, conditions and provisions shall remain in full force and effect. 31.Right to Mortgage. The LANDLORD reserves the right to subordinate this Lease to the lien of any mortgage now or hereafter upon the LANDLORD’S interest in the Premises and on the land and buildings of which the Premises are part or upon any buildings hereafter placed upon the land of which the Premises form a part. The TENANT agrees to execute and deliver upon demand an instrument or instruments subordinating this Lease to the lien of any such mortgage or mortgages. The TENANT agrees, within ten (10) business days after the LANDLORD’S request, to execute an estoppel certificate in a form reasonably acceptable to the LANDLORD or any third party relying on said estoppel certificate. 32.Waiver. No waiver of any term, provision, or condition of this Lease, whether by conduct or otherwise, in one or more instances, shall be deemed or construed as a further continuing waiver of a term, provision or condition of this Lease. No remedy available to a Party for the other Party's breach of this Lease is intended to be an exclusive remedy. A Party's exercise of any remedy for breach of this Lease shall not be deemed or construed to be a waiver of its right to pursue another remedy. 33.Entire Agreement. This Lease constitutes the entire agreement of the Parties with respect to the Premises and all prior negotiations, agreements and understandings, either oral or written, are merged herein. The Current Lease is terminated and is null and void as of the Commencement Date of this Lease. This Lease is being executed to govern the terms and provisions covering the period on and after the Commencement Date. LANDLORD and TENANT acknowledge and agree that the terms and provisions of the Current Lease shall remain in full force and effect through May 31, 2024. If any provisions of this Lease conflict with any of those of the Current Lease on and after the Commencement Date, then the provisions of this Lease shall govern. 34.Binding Effect. The terms and conditions of this Lease shall be binding and shall inure to the benefit of the Parties and their respective heirs, representatives, successors and assigns. 35.Use of Words. The pronouns and relative words used in this Lease shall be read interchangeably in masculine, feminine or neuter, singular or plural, as the context requires. 36.Notice. Any notice or other communication required or desired to be given shall be deemed to have been sufficiently given for all purposes if delivered personally to the Party to whom the same is directed, or if sent by registered or certified mail, postage and charges prepaid, addressed to the address of such Party as set forth above. Any notice which is served personally shall be deemed to be given on the date on which the same is actually served, and any notice which is sent by mail shall be deemed given two (2) days after the same is deposited in a regularly maintained receptacle for the deposit of United States mail, addressed as provided in 9 Final Version the immediately preceding sentence. Any Party may change its address for purposes of this Lease by giving the other Party written notice of the address change. 37. Reservation of Rights. This Lease does not and is not intended to impair, divest, delegate, or contravene any constitutional, statutory, and/or other legal right, privilege, power, obligation, duty, capacity, or immunity of the TENANT. 38. Default. 38.1. Upon written notice, a Party may terminate this Lease for default by the other Party pursuant to the following procedure: (a) the non-defaulting Party gives the defaulting Party written notice specifically identifying the default(s) and (b) the defaulting Party does not cure the default within thirty (30) calendar days of receiving the written notice of default or the defaulting party does not commence to cure the default within thirty (30) calendar days of receiving written notice of the default and does not diligently pursue the cure to completion, if the default is of such a nature that it cannot be cured within the thirty (30) day period. 38.2. If either Party defaults in any of its obligations under this Lease (after expiration of the notice and cure periods in Section 38.1), the other Party shall have all remedies available to it under the law, in addition to the rights and remedies set forth herein. [SIGNATURES ON FOLLOWING PAGE] 10 Final Version IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year above written. LANDLORD: NOVI INVESTMENT PARTNERS LLC By: Corey Hill Partners, LLC, Manager _______________________________ By: ___________________________________ WITNESS Kenneth G. Lewis, Its: Managing Member The foregoing instrument was acknowledged before me this ____ day of__________, 2024 by Kenneth G. Lewis, Managing Member of Corey Hill Partners, LLC, Manager of Novi Investment Partners LLC. ___________________________________ Notary Public, Commonwealth of Massachusetts My Commission Expires: ________________ TENANT: COUNTY OF OAKLAND, a Michigan Constitutional Corporation ______________________________ By: ____________________________________ WITNESS David T. Woodward Chairperson, Oakland County Board of Commissioners The foregoing instrument was acknowledged before me this ____ day of ___________, 2024 by David T. Woodward of the Board of Commissioners on behalf of the County of Oakland. ___________________________________ Notary Public, State of Michigan, Oakland County, My Commission Expires: ________________ Acting in the County of Oakland 11 Final Version EXHIBIT A Premises 48150 Grand River Avenue, Novi, Michigan EXHIBIT B RENT SCHEDULE OAKLAND COUNTY DISTRICT COURT 52-1 NOVI, MI Annual Rent Schedule Lease Year Lease Fiscal Year Annual Rent (1) 1 6/1/24 - 5/31/25 $420,328.86 2 6/1/25 - 5/31/26 $428,735.44 3 6/1/26 - 5/31/27 $437,310.15 4 6/1/27 - 5/31/28 $446,056.35 5 6/1/28 - 5/31/29 $454,977.48 6 6/1/29 - 5/31/30 $464,077.03 7 6/1/30 - 5/31/31 $473,358.57 8 6/1/31 - 5/31/32 $482,825.74 9 6/1/32 - 5/31/33 $492,482.25 10 6/1/33 - 5/31/34 $502,331.90 First Option Period Lease Fiscal Year Annual Rent (1) 11 6/1/34 - 5/31/35 $512,378.54 12 6/1/35 - 5/31/36 $522,626.11 13 6/1/36 - 5/31/37 $533,078.63 14 6/1/37 - 5/31/38 $543,740.20 15 6/1/38 - 5/31/39 $554,615.01 Second Option Period Lease Fiscal Year Annual Rent (1) 16 6/1/39 - 5/31/40 $565,707.31 17 6/1/40 - 5/31/41 $577,021.45 18 6/1/41 - 5/31/42 $588,561.88 19 6/1/42 - 5/31/43 $600,333.12 20 6/1/43 - 5/31/44 $612,339.78 Final Version 12 13 Final Version EXHIBIT C The LANDLORD and the TENANT shall perform and/or provide or cause a third party to perform and/or provide the following maintenance, repairs, and services on, about, or to the Premises as set forth below. A. DIRECT BY TENANT:The following property related services and expenses shall be procured, administered, and paid directly by the TENANT: 1. Real estate taxes 2. Utilities (electric, water, sewer, gas, cable, etc.) 3. Security services and equipment 4. Equipment and furnishings 5. Signage 6. In-suite janitorial 7. Interior & exterior window cleaning 8. Landscape and grounds maintenance 9. Parking lot cleaning and sweeping 10. Snow and ice removal 11. Trash removal 12. Pest control 13. HVAC preventive maintenance. See Exhibit C-1 attached and incorporated herein. 14. Fire extinguisher maintenance & inspection fees 15.Replacement, repairs & maintenance (including painting) of all interior walls, doors, ceilings, floors, lighting, built-in cabinets & counter tops, restroom fixtures, and specialty items. 16. Replacement of light bulbs and ballast for all light fixtures including upgrade of bulbs to LED 17. Property management & administrative fees 18. Alterations to Premises requested by the TENANT B. DIRECT BY LANDLORD (non-reimbursed expenses): The following property related services and expenses shall be procured, administered and paid directly by the LANDLORD: 1. Insurance 2. Repairs, maintenance, and replacement of the following property components: (a) Roof; (b) Building structure including the foundation, exterior masonry walls, and windows; (c) Exterior areas including the parking lot, driveways, 14 Final Version sidewalks, retention pond, and dumpster (excluding landscaping and sweeping the parking lot); (d) Exterior lighting excluding replacement of light bulbs and ballast; (e) Base building mechanical, electrical & plumbing systems (except electrical outlets, light switches, and electric panel for enhanced security system); (f) HVAC system (except HVAC Preventive Maintenance); (g) Life safety system including sprinklers, fire alarm, and emergency lighting (excluding fire extinguishers) 15 Final Version EXHIBIT C-1 PREVENTIVE MAINTENANCE FOR HVAC SYSTEM The following is included and required as part of HVAC system preventative maintenance: • Inspect electrical controls and compressor, hook gauges to compressor, check for proper gas levels and working pressures; • Inspect the heat exchanger; • Inspect and clean burners; • Check for proper pressure and manifold and gas pressure; • Remove and replace filters; • Check interior coils and filter box for debris and vacuum, if necessary; • Clean exterior coils; • Lube hinges on filter box door; • Grease bearings; • Oil and grease motor; • Check all damper linkages for wear and tear and lube as necessary; and • Check all belts for wear and cracks and adjust and/or replace belts as necessary All preventative maintenance listed above shall be performed according to manufacturer's specifications or according to best industry practices (if the manufacturer specifications are silent regarding a particular preventative maintenance task). 16 Final Version EXHIBIT D TENANT IMPROVEMENT ALLOWANCE Oakland County District Court 52-1 Novi, MI LANDLORD shall fund a Tenant Improvement Allowance(“TIA”), subject to the following provisions: 1. Amount: The total amount of the TIA shall be One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00). 2. Maximum Funding Per Lease Year: The amount of the TIA funded in any single Lease Year shall not exceed Fifty Thousand and 00/100 Dollars ($50,000.00), unless otherwise approved in writing by LANDLORD. 3. Scope of Work: The scope of work shall be determined by the TENANT subject to the following provision: LANDLORD shall approve any proposed improvements that impact portions of the Premises that are the maintenance responsibility of the LANDLORD under Exhibit C (including the base building mechanical, electrical & plumbing systems, the building envelope (e.g., roof, walls, windows), or exterior areas (e.g., parking lot, driveways, sidewalks, retention pond, and dumpster), which approval shall not be unreasonably withheld, conditioned, or delayed. 4. Timetable: All improvements under the TIA shall be completed by the end of the fifth (5th) Lease Year unless otherwise approved in writing by LANDLORD. 5. Procedure: TENANT shall notify LANDLORD and its property manager in writing to request improvements under the TIA. TENANT shall provide specifications in sufficient detail to enable LANDLORD or its property manager to secure proposals from a third- party contractor(s) to install the proposed improvements. TENANT shall review the contractor’s proposal(s) and provide in writing a notice to proceed for all proposed improvements. TENANT shall facilitate access to the Premises for the selected contractor(s) to perform the work including administration of any required security clearances. LANDLORD is not required to secure a minimum number of competitive proposals for the proposed improvements. All communication related to the proposed improvements shall be in writing (including electronic mail).