AGENDA ITEM #20

November 23, 20lO

Public Hearing

This packet should be retained for use at the Committee and Council meetings next week.

MEMORANDUM
November 19,2010

TO: County Council

FROM: Jeffrey L. zyonl,legiSlative Attorney

~ichael Faden, Senior Legislative Attorney

SUBJECT: Public Hearing - Resolution to approve the sale of Peary High School

On October 18, 20lO the County Executive submitted a draft resolution that seeks Council approval of
the sale of Peary High School to the Berman Hebrew Academy, to which the school is now leased. The
Education and Management and Fiscal Policy Committees are scheduled to have a joint meeting on this
issue on November 29, 2010. The Council is tentatively scheduled to take action on November 30,
2010.

The previous Executive recommended a sale of the property in 2005. The proposed terms for the sale
are different in 4 ways:

1) The price rejects one appraisal. The 2005 proposal called for a payment of $1,500,000;
the 20lO proposal requires a payment of$1,914,860.
2) The repurchase price is tied to the price paid plus the lesser of the fair market value of
improvements made by the tenant or the depreciated actual costs of improvements.
3) The Academy's and its successor's use of the site is limited to school uses.
4) The site may be condemned for public school use at the repurchase price (see # 2 above)
with County possession 5 years after the condemnation action is final and non­
appealable. (This amendment to the deed was submitted to the Council on November 10,
2010.)

Terms and Conditions

The Executive submitted 4 documents to express all of the terms and conditions of sale: 1) the 1996
lease; 2) Amendment No.1 to the 1996 lease (as revised); 3) covenants; and 4) a deed. The terms and
conditions are as follows:
1) Sale price

The price is $1,914,860 if settlement occurs before December 17,2010. 1

2) Public use

The public will have access to the auditorium and the gymnasium when the facilities are not needed by
the Academy. The athletic fields would be open for public use all weekends, Friday after 3:30 PM and
Monday through Thursday after 6:00 PM. The Academy may also schedule events through normal
channels in those periods and can prohibit auditorium and gymnasium use by the public during Jewish
holidays. The Academy would be able to charge fees to cover its operating costs, including personnel
costs for security and compliance with parking regulations. Users must carry insurance to indemnify the
Academy. The Academy and its successors would be prohibited from altering the fields without prior
County approval.

3) County right to repurchase

The Academy and its successors would have the ability to use the site for a private school with
accessory daycare, day camp, worship space, and private religious center. The County would have the
right to repurchase under two conditions controlled by the Academy:

i) the use ceases for more than 180 days (for reasons not due to renovations); or
ii) the site is sold to a non-school user.

The County would have 90 days to tender the price paid by the Academy, adjusted by the consumer
price index, plus the lesser of the Academy's construction costs or the replacement costs of the
Academy's improvements minus depreciation.

If condemned by the Council for use as a public school and the County wins the condemnation action,
the repurchase price is the same as if the Academy had abandoned the use (the price paid by the
Academy, adjusted by the consumer price index, plus the lesser of the Academy's construction costs or
the replacement costs of the Academy's improvements minus depreciation). The County can get
possession 5 years after the last appealable event in the condemnation action. If the Academy chooses
to tender the property to the County before the County prevails, the County must pay the Academy the
repurchase price and the Academy pays the county the rental price in the lease ($60,000 per year,
adjusted by the consumer price index from 1996) for the 5 year period.

Background

In 1984, Peary High School was closed due to a decline in enrollments. The site was turned over to the
County as a surplused school in 1987. The unoccupied building deteriorated over time. Sometime
between 1987 and the adoption of the Aspen Hill Master Plan, the Board of Education recommended
using the school as a holding school while other schools were being renovated. After funds for this
proposal were not authorized, the Board of Education transferred the property to the County by deed in
1994. The Aspen Hill Master Plan (approved April 1994), which included the Peary High School site,
recommended maintaining public ownership of the school site under all circumstances.

1 The sale under the lease was based on the appraised price of land in 1996 adjusted by the consumer price index.
2
On November 29, 1994, after a public hearing, the Council approved Resolution 12-1874 to allow a
lease of the property to a private school and a sale under the following conditions:

Any sale of the property is subject to prior consent of the Council which will consider
appropriate elements of the Aspen Hill Sector Plan at that time. 2

The 1994 resolution gave the Executive the authority to seek a long term tenant or a sale with Council
approvaL In 1995, the Executive solicited private sector proposals for the site. After considering other
options, the Executive signed a lease with the Berman Hebrew Academy in 1996. The lease included an
option to purchase under the following circumstances:

The Lessee shall have the right to purchase the Premises at any time during the lease term or any
extension thereof, subject to the approval of the Montgomery County Council and the
Montgomery County Executive, and subject to any restrictions, conditions or requirements
which the County Executive and County Council may elect to attach to such a purchase. The
Lessee's right to purchase is further subject to the approval of the Board of Public Works, which
may also elect to place restrictions, conditions or requirements on the purchase. The Lessee's
right to purchase and the County's acceptance thereof shall be exercised in accordance with all
applicable State and local statutes and regulations governing the disposition of public
property .... 3

The definition provisions of the lease state the following:

Wherever the phrase "approval of the County" is used it shall, unless otherwise provided, mean
that such approval shall not be unreasonably withheld. 4

In 2001, the Council approved Regulation 4-99 governing the disposition of closed schools. Any lease
which predated the regulation, including the lease for the former Peary High School property, was not
subject to the regulation.

In 2005, the then-County Executive recommended that the Council approve a resolution to sell the
school and site to the Academy. The Management and Fiscal Policy Committee held a worksession on
the proposed resolution on October 17, 2005. Both the Planning Board and the Board of Education
advised against selling the school. The Committee Chair commissioned an independent economic
analysis of the terms of the proposed sale, which concluded that the 2005 sale terms were not in the
County's best interest. 5 The Council took no action after the Committee's worksession.

The Board of Education recommended disapproving the sale currently proposed; the Planning Board
recommended approving it.

2 See © 69; Under Maryland Code §4-115(c), the Council was authorized by the General Assembly to sell or lease any school

site that was no longer needed for school purposes.

3 1996 lease, page 8 on © 31.

4 Ibid., page 5 on © 28; the Council never approved the 1996 lease.

'j See © 73-87.

3
This packet contains © number

Memorandum from the County Executive 1- 2

Amendment No.1 to Lease 3 - 10
Declaration of Covenants 11 - 19
Deed of Reservation of Right of Repurchase (revised Nov. 10) 20 - 23
Lease 3/29/96 24 - 65
Resolution for Council Introduction 66 - 67
Resolution authorizing the lease/sale 11129/94 68 - 70
Board of Education Recommendation 1012512010 71
Aspen Hill Master Plan Extract 72
ZHA, Inc. Technical Memorandum 1116/2006 73 - 87

F:\Zyontz\School Reuse\20 10 Peary Public Hearing Packet.doc

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OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE, MARYLAND 20850
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Isiah Leggett
County Executive 059122

MEMORANDUM

October 18, 2010 X)

TO: Nancy Floreen~ Council President :9

Duchy Trachtenberg, counCilmembe/j L_~t71~--
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FROM: Isiah Leggett, County Executiv~I

RE: Melvin J. Berman in Hebrew Academy Exercise of Contractual Purchase Option

I am writing in response to a request from Councilmember Trachtenberg for an

update on where Executive Staff is on processing a request from the Melvin J. Berman Hebrew
Academy (the "Berman Academy" formerly known as the Hebrew Academy of Greater
Washington) to exercise its contractual purchase option for the former Peary High School site.
I am pleased to respond that negotiations on the request have been concluded and I am now
transmitting to the County Council for its approval documentation reflecting the Berman
Academy's exercise of its purchase option for the Peary High School site.

Under the lease the Berman Academy has the right to purchase the property at any
time during the term. The purchase is subject to the approval ofthe County Executive, the
County Council and the Maryland Board of Public Works and to any restrictions, conditions, or
requirements that may be imposed upon the purchase. However, the lease requires that the
County approvals relating to, among other things, conveyance of the property, not be
unreasonably ¥.-'ithheld.

The methodology of determining the purchase price is set out in the lease.
Consistent with that methodology, a purchase price for theJand has been established at
$1,914,860. Per the lease, the purchase price for the property acknowledges the poor condition
ofthe building at lease execution and places value only in the land. The current good condition
ofthe building is attributable to the significant investment of more than $8 million by the
Berman Academy.

The conveyance is subject to three conditions. Specifically, the property is to be

used as a school pursuant to a restriction that will be recorded with the deed; the County has a
repurchase right if the property is abandoned or used for anything other than a school; and the
Nancy Floreen, Council President
Duchy Trachtenberg, Councilmember
October 18, 2010
Page 2 of2

gymnasium, auditorium, and outdoor athletic fields that are part of the premises must continue to
be available for use by the public when not being used by the school. .

The County's repurchase price is for the same base land value as it is being sold
for plus payment for the building at a price that is the lesser of i) the then current appraised value
of the secular improvements made by the Berman Academy, or ii) the depreciated actual costs of
the improvements.

The terms of this exercise differ in several significant ways from terms that had
been discussed several years ago. First, the price is different and largely reflects the County's
rejection of one of the appraisals that had been used previously. Second, the repurchase right is
tied to the price that is being paid today and the lesser ofthe fair market value ofthe
improvements or the depreciated actual costs of the improvements. Third, the use ofthe site is
limited to school uses.

With this exercise, the public will, through the Community Use of Public
Facilities, continue to have use ofthe fields, the gym and the auditorium during non-school use
times and the County will receive nearly $2 million dollars in purchase money proceeds. With
the three conditions that are imposed on the conveyance, I support the Berman Academy's
exercise of its option and I am asking the County Council to also approve the conveyance in
accordance with the above described terms.

If you have any questions, please feel free to contact me or Diane Schwartz Jones
in my office. I ask that you schedule consideration of this matter at your earliest possible
convenience.

Attachments:

Amendment No.1 to Lease

Declaration of Covenants
Deed and Reservation of Right to Repurchase
Lease dated March 29, 1996
Proposed Resolution
 AMENDMENT NO.1

This Amendment No.1 (this "Amendment") is entered into the day and date below written
by and between MONTGOMERY COUNTY, MARYLAND, a political subdivision of the State of
Maryland, hereinafter called "County" or "Lessor", and MELVIN J. BERl\.1AN HEBREW
ACADEMY, formerly known as HEBREW ACADEMY OF GREATER WASHINGTON,
INC., a non-profit educational organization incorporated in the District of Columbia, with its
principal offices located at 13300 Arctic Avenue, Rockville, Maryland, hereinafter called "Lessee."
Collectively hereinafter referred to as the "Parties."

WITNESSETH

WHEREAS, the County and Lessee entered into a lease dated March 29 th , 1996 (the
"Lease") for the lease of certain property located in Montgomery County, Maryland, known as the
former Peary Senior High School, which consists of 19.52 acres of land, more or less, then
improved with a building comprising approximately 220,000 square feet, together with any and all
then existing site improvements, appurtenant rights and benefits of the parcel, located at 13300
Arctic Avenue, Rockville, Montgomery County, Maryland, known as Parcel P209, on Tax map HR
21, as recorded in Liber 13060 at Folio 122 among the land records of Montgomery County,
Maryland, as shown on Exhibit A attached to the Lease, which land and improvements were
therein and are herein collectively referred to as the "Property" except that as herein used the term
Property also includes all improvements constructed on the land since the date of the Lease or
hereafter constructed on the land by the Lessee (the "Property");

WHEREAS, the Lease in Article III granted to the Lessee the right to purchase the
Property at any time during the 25 year term or during any of the three five year extensions, subject
to the approval of the Montgomery County Executive ("County Executive") and the Montgomery
County Council ("County Council"), and subject to any restrictions, conditions or requirements
which the County Executive and the County Council might elect to attach to the purchase

WHEREAS, the Lessee's right to purchase the Property under the Lease was further
subject to the approval of the State of Maryland Board of Public Works ("Board of Public Works")
which also had the right to elect to place restrictions, conditions or requirements on the purchase

WHEREAS, the Lease further provided that the Lessee's right to purchase and the
County's acceptance thereof was to be exercised in accordance with all applicable State and local
statu,tes and regulations governing the disposition of public property;

WHEREAS, Article III further provided that the "baseline" price of the Property was to be
established by a certain method involving appraisals of the Property all as more specifically set
forth in Article III of the Lease and further provided that the baseline price was to be adjusted
annually pursuant to a CPI index also all as more specifically set forth in Article III of the Lease;

WHEREAS, the Lease further provided in Article XXXVI that certain community uses of
the Property as set forth in Article XXXVI were to be preserved and reserved for use by the public
pursuant to a recorded declaration of covenants preserving and reserving to the public the
community uses as set forth in Article XXXVI of the Lease in the event Lessee purchased the
Property;
 WHEREAS, the County Council Resolution (Resolution No.: 12-1874) adopted November
29, 1994, authorizing the disposition of Peary High School and authorizing an eventual sale of the
Property stated that the Property's preferred reuse was to lease the Property to a private school with
a lease that should not preclude the future reestablishment of a public education facility on the
Property; and

WHEREAS, Lessee has notified the County that it is now exercising its option to purchase
the Property and the County is agreeable to selling the Property upon the terms and conditions
hereinafter set forth.

NOW THEREFORE, in consideration of the above recitals (which are incorporated

herein) and for other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged by the Parties and subject to the terms, conditions and covenants hereinafter
provided for the County does hereby agree to sell and the Lessee does hereby agree to purchase the
Property in accordance with the following terms and conditions.

1. The Parties agree that the unadjusted "baseline" price under the
Lease is One Million Four Hundred Twenty-nine Thousand Dollars ($1,429,000.00), and that
through, December 17,2010, the adjusted purchase price for the Property shall be One Million
Nine Hundred Fourteen Thousand Eight Hundred Sixty Dollars ($1,914,860.00) payable by wire
transfer from the to the County on the Settlement Date (the "Purchase Price"). If the
Settlement Date is after December 17,2010, the Purchase Price shall be equal to the product of
One Million Fout Hundred Twenty-nine Thousand Dollars ($1,429,000.00) multiplied by a
fraction, the numerator of which shall be the most recently preceding published December CPI All
Urban index and the denominator of which shall be the published December 1997 CPI All Urban
1982-1984 index, (the "Adjusted Price"). .

2. Settlement on the Property shall occur within thirty (30) days of

the date that all Approvals (as defmed in Section 3, below) for the sale of the Property have been
obtained and have become final and non-appealable without the rejection by the Lessee of any
conditions to such Approvals as set forth in Section 3 below (the "Settlement Date"). On the
Settlement Date, the County shall execute and deliver to Lessee a special warranty deed in
recordable form conveying fee simple title to the Property, free and clear of any liens and
encumbrances as of the date of the Lease (March 29, 1996).

3. The sale of the Property is subject to (i) the approval of the County
Council and any restrictions, conditions, or requirements imposed on the sale by the County
Council which approval shall be evidenced by the adoption of a resolution by the County Council
authorizing the sale of the Property; and (ii) the approval of (if any may be required) the Board of
Public Works and any restrictions, conditions, or requirements imposed on the sale by the Board of
Public Works which approval shall be evidenced by appropriate action of the Board of Public
Works authorizing the sale (if any may be required); and (iii) compliance with all applicable State
and local statutes and regulations governing the disposition of the Property (the "Approvals").
Lessee cannot reject any conditions that are expressly required by the Lease. Lessee may reject any
other conditions of the Approvals within thirty (30) days of issuance of the respective Approval in
which case the Lease shall remain in effect and Lessee shall have the right to continue its tenancy
pursuant to the as amended hereby. Lessee's rejection of a condition must be exercised in

28)

vvTiting to be valid and if not so exercised within the thirty (30) day period, Lessee shall be deemed
to be exercising the purchase subject to the conditions, if any, of the Approval(s).

4. Covenants. A declaration of covenants shall be recorded on or before the Settlement

Date preserving and reserving to the County for the benefit of the public, use of the Property in
accord with the community uses set forth in Article XXXVI of the Lease, all as more specifically
set forth in the Declaration of Covenants attached hereto as Exhibit A.

5. Additional Covenants. The declaration of covenants referenced in Section 4 above

shall also include covenants containing restrictions and requirements with respect to insurance,
maintenance and use of the Property; and containing a further covenant prohibiting the
abandonment or lack of use of the Property as a school (an "Abandonment") for any consecutive
one hundred and eighty (180) weekday period of time unless such lack of use is attributable to
renovations or restoration of the Property that would preclude use of the Property during such
period oftime and which renovations or restoration are at all times being duly and diligently
pursued, all a? more specifically set forth in the Declaration of Covenants attached hereto as
ExhibitA.

6. Repurchase Right. The County shall have the right to repurchase the Property in the
event of an Abandonment or if at any time Lessee agrees to sell the Property to any purchaser for
any use other than for use as a validly licensed private school or educational institution (a
"Proposed Sale"). In the event of any Proposed Sale to a purchaser as provided in this Section, the
sales agreement shall be made contingent upon the right of the County to repurchase the Property
and Lessee shall provide the County with not less than ninety (90) days notice ofthe Lessee's
execution of the sales agreement and the County shall have the right by written notice to the Lessee
at any time during such ninety (90) day period to give notice to the Lessee of its intent to
repurchase the Property (the "Repurchase Right"). Any exercise of the Repurchase Right by the
County shall be subject to the appropriation of funds by the County Council for such purpose
which appropriation must be obtained by the County within one hundred and eighty (180) days of
the date the County gives written notice to the Lessee of the County's intent to exercise its
Repurchase Right; provided however, that if the one hundred and eighty (180) day period includes
any time period between July 1st and September 30th the time in which to obtain the appropriation
shall be extended day for day by the number of days equal to the number of days of the one
hundred and eighty (180) days falling during any period between July 1st and September 30th ("The
Appropriation Period"). If the County fails to obtain the appropriation within the Appropriation
Period, the County's right to purchase the Property shall lapse and shall be of no further force and
effect; provided, however, that if for any reason the Proposed Sale is cancelled, the County's
Repurchase Right shall not be deemed to have been exercised and the County shall not be obligated
to repurchase the property nor shall the County's Repurchase Right fail or lapse but instead the
County shall have a continuing Repurchase Right with respect to any subsequently occurring
Proposed Sale or Abandonment.

7. Repurchase Price. The repurchase price by the County pursuant to Section 6 shall
be at an amount equal to the sum of (a) the Purchase Price (as set forth in Section 1, above)
increased annually starting on the first anniversary date of this Amendment and on each
anniversary thereafter until the Repurchase Settlement Date (as defmed in Section 8, below) by a
fraction the numerator of which shall be the most currently published value of the index now
known as the "U.S. Department oflabor, Bureau of Labor Statistics, Consumer Price Index for all
Urban Consumers, All Items, (1984 100)", and the denominator of which shall be the value for
said index published for the month and year of the Settlement Date (as defined in Section 2,
above), plus (b) the lesser of (i) the sum of the construction cost of improvements made to the
Property since the date of the Lease which amount is Eight Million Two Hundred Forty-Five
Thousand Two Hundred Ninety-Nine Dollars ($8,245,299) (which amount Lessee represents and
warrants accurately reflects the actual cost thereof and which representation and warranty Lessee
acknowledges the County is relying upon in agreeing to such amount) plus the cost of any
Qualified Elective Capital (non religious) Improvements (as that term is defined in the Lease) made
after the date of this Amendment the cost of which shall be submitted by Lessee to the County and
subject to the County's verification thereof (such sum shall be referred to hereafter as the.
"Aggregate Lessee Improvements"), or (ii) the Appraised Improvements Value (as defined in
Section 9, below). (The "Repurchase Price").

8. Repurchase Settlement Date. Ifthe County exercises its Repurchase Right,

settlement shall occur not sooner than ninety (90) days and not later than one hundred and eighty
(180) days from the date that the County Council appropriates the funds necessary to pay the
Repurchase Price.

9. Appraised Improvements Value. The Appraised Improvement Value shall be the

replacement cost of all Aggregate Lessee Improvements existing on the Property at the time the
County gives notice of its intent to exercise its Repurchase Right less appropriate depreciation
normally used by an appraiser taking into account the conditions of the Aggregate Lessee
Improvements at the time of the appraisal which appraisal valuation date shall be as of the date the
County gives notice to Lessee of its intent to exercise its Repurchase Right.

10. Determination of Appraised Improvements Value. The Appraised Improvements

Value shall be determined using one of the following methods as agreed to by the Parties: (i) a
single appraiser agreed to by the Parties whose appraisal shall be final and non-appealable; or (ii)
each party shall select an appraiser and, if the appraisals are within ten percent (10%) of each other,
the average of the two (2) appraisals shall constitute the agreed final and non-appealable Appraised
Improvements Value; or (iii) if the Parties choose method (ii) and the two (2) appraisals differ by
more than ten percent 10%), then the two appraisers shall select a third appraiser, provided that, if
the two appraisers are unable to agree upon a third appraiser, then either party may request that the
Washington D.C. Metro Area Chapter of the Appraisal Institute select a third appraiser (the "Third
Party Appraiser") and such Third Party Appraiser shall, based on a review of the two appraisals
and based on the Third Party Appraiser's own independent appraisal of the Appraised
Improvements Value determine the Appraised Improvements Value which shall constitute the
agreed and non-appealable Appraised Improvements Value. The term appraiser as used in this
section shall mean a licensed real estate appraiser having experience in the valuation of improved
real estate in the Washington, D.C. metropolitan area, and who is a member of the Appraisal
Institute (Each certified as an "MAl appraiser").

11. Release of Covenants. In the event the Lessee sells the Property to any purchaser,
pursuant to any Proposed Sale, and the County fails to exercise its Repurchase Right, as provided
in Section 6 above, then in such event the County agrees (at no cost to the County) that it will
execute such instrument(s) as may reasonably be requested of it by the Lessee or purchaser
releasing the declaration of covenants excepting the covenant regarding community use set forth in
the Declaration of Covenants attached hereto as Exhibit A which covenant shall remain in full
force and effect and continue to run with the Property.

12. Authority to Bind. The undersigned, by their signatures, individually represent and
warrant that this Amendment and its execution has been duly authorized by all necessary actions
whatsoever on the part of each party to this Amendment, and that they are duly authorized and
empowered to execute this Amendment and that this Amendment is binding on the respective party
on whose behalf they are signing this Amendment.

13.' Authorship and Interpretation. Each party acknowledges that this Amendment is
entirely the product of the collective joint drafting efforts of the Parties and their respective legal
counsel, and should there be any cbim of ambiguity, it shall not be construed more strictly against
(or more favorably for) either party solely as a result ofthat party's particular contribution to this
effort.

14. Successors and Assigns. The terms of this Amendment shall be binding upon and
fully enforceable against the successors, successors-in-title, and assigns of the Parties to this
Amendment.

15. Severability. If any provision of this Amendment proves to be illegal, invalid or

unenforceable, the remainder of this Amendment shall not be affected by such finding, and in lieu
of each provision of this Amendment that is illegal, invalid or unenforceable, a provision will be
added as a part of this Amendment as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.

16. Entire Agreement. This Amendment sets forth the entirety of the undertakings and
obligations of the Parties hereto with respect to the matters addressed herein and supersedes all
prior understandings and agreements, and the Parties acknowledge that they have not relied upon
any representations by the other party as to the matters set forth herein apart from those set forth in
this Amendment.

17. Modifications. Any modifications of this Amendment must be in writing and signed
by both of the Parties to this Amendment.

18. Governing Law. This Amendment shall be governed by and interpreted in

accordance Vvith the laws ofthe State of Maryland.

19. Venue. The Parties agree that the venue for any suit or dispute arising out of or
relating in any way to this Amendment shall be the Circuit Court for Montgomery County
Maryland and the Parties hereby waive any right to bring any suit in any other court or to raise any
claim that venue in the Circuit Court for Montgomery County Maryland is for any reason
inconvenient or improper.

20. Counterparts. This Amendment may be signed in counterparts, each constituting an

original. Photocopies or facsimile transmissions of signatures shall be deemed original signatures
and shall be fully binding upon the Parties to the same extent as original signatures.

21. No Assignment of Rights and no Delegation of Duties. The Parties acknowledge

that the rights and obligations of each under this Amendment are personal and may not be assigned
or delegated by either party without the prior written consent of the other party, which consent may
be granted, withheld or conditioned as the party in its sole discretion shall determine, provided
however, that either party may act through a properly authorized agent having authority to act on
behalf of the party. Either party shall provide to the other party upon request written evidence of
the authority of any such agent to act on behalf of the party.

22. Recording. Lessee and County shall each have the right to record this Amendment,
or to execute a Memorandum of this Amendment and have it properly acknowledged for the
purpose of recording. Such Memorandum shall have included therein such of the provisions hereof
as may be requested by either of the Parties. The cost of recording such a Memorandum or the
Amendment (including all stamps, conveyance, recordation and other taxes incident thereto) shall
be borne by the party so requesting.

23.. Full Force and Effect. Except as expressly provided in this Amendment the Lease
shall remain otherwise in full force and effect until the Settlement Date upon which date the Lease
shall expire and be of no further force or effect.

24. Waiver of Jurv TriaL THE PARTIES HEREBY WAIVE THE RlGHT TO TRlAL
BY JURY ON ANY DISPUTE OR MATTER ARISING FROM THE LEASE OR THIS
AMENDMENT.

25. Effective Date. The Effective Date ofthis Amendment is the date upon which all
the signature pages hereto are fully executed and delivered to each of the Parties (either as originals
or as facsimile copies, or both).

SIGNATURE PAGE FOLLOWS

 IN \\1TNESS WHEREOF, the Parties have affixed their signatures to this Amendment on
the day and date below written.

WITNESS OR ATTEST: MONTGOMERY COUNTY, MARYLAND

By: _ _ _ _ _ _ _ _ _(SEAL)
Diane Schwartz Jones
Assistant Chief Administrative Officer

Date:
---------------------

MELVIN J. BERMAN HEBREW ACADEMY

By: _____________________,
Daphna Raskas
President

Date:
----------------------

RECOMMENDED:

DEPARTMENT OF GENERAL SERVICES

David E. Dise, Director

Department of General Services

APPROVED AS TO FORM AND LEGALITY

OFFICE OF THE COUNTY ATTORNEY

By: _________________________
John J. Fisher
Associate County Attorney

Date:-----------------------

STATE OF MARYLAND, COUNTY OF MONTGOMERY, to wit:

7(j)

 ON THIS day of , 20 10, before me, the undersigned officer,

personally appeared Isaiah Leggett, County Executive for Montgomery County, Maryland, known
to me to be the person whose name is subscribed to the foregoing, who did fully acknowledge that
he executed the same as his voluntary act and deed for the purposes therein contained.

WITNESS my hand and official seal the same day and year first above written.

Notary Public

My Commission Expires: _ _ _ _ _ _ __

STATE OF MARYLAND, COUNTY OF MONTGOMERY, to wit:

ON THIS day of ,2010, before me, the undersigned officer,

personally appeared Daphna Raskas, President of the Melvin 1. Berman Hebrew Academy known
to me to be the person whose name is subscribed to the foregoing, who did fully acknowledge that
~e executed the saine as his voluntary act and deed for the purposes therein contained.

WITNESS my hand and official seal the same day and year first above written.

Notary Public

My Commission Expires: _ _ _ _ _ _ __
 DECLARATION OF COVENANTS

This DECLARATION OF COVENAL~TS (this "Declaration") is made the day of and date
below'WTitten, by MONTGOMERY COUNTY, MARYLAND, a body corporate and politic, it's.
successors and assigns (hereinafter referred to as "County"), and MEL VIN 1. BERMAN HEBREW
ACADEMY, a non-profit educational organization incorporated in the District of Columbia, with
its principal offices located at 13300 Arctic Avenue, Rockville, Maryland, it's successors and
assigns (hereinafter referred to as the "Academy").

WHEREAS, the County is the owner of certain property located in Montgomery County,
Maryland, known as the former Peary Senior High School consisting of all that piece or parcel of
land described in the deed between the Board of Education of Montgomery County, Maryland and
Montgomery County, Maryland dated October 17, 1994, and recorded among the Land Records of
Montgomery County, Maryland in Liber 13060, folio 122, et seq., more particularly described as

All that parcel ofland conveyed to the Board of Education of Montgomery County,
Maryland by Edith E. Matthews, by deed dated April 28, 1958, and recorded among
the Land Records of Montgomery County, Maryland, at Liber 2457, Folio 339
consisting of a total of 19.52 acres, more or less, being known as the former Peary
Senior High School.

together with all improvements, rights, privileges and appurtenances to the same belonging (the
"Property") ; and

WHEREAS, the County intends to convey the Property to the Academy; and,

WHEREAS, as part of the consideration for the transfer of the Property to the Academy, the
Academy agrees to subject the Property to certain covenants for the benefit of Montgomery County,
Maryland, in its capacity as a government; and,

'VVITNESSETH: .

The Academy, with full authority to execute deeds, mortgages, other covenants, and other
rights, titles, and interest in real property owned by the Academy, does hereby covenant to the
benefit of Montgomery County, Maryland, as follows:
 COVENANTS:

1. COMlvillNITY USE:
A. The Academy shall make certain facilities on and within the Property available for
continuing use by the community on an "as available" basis. These facilities are the
(currently existing or any single replacement, but not future additional) Gymnasium
and Auditorium within the building, as well as the outdoor athletic·fields that are part
of the Property. These facilities will be made available for use by the public on the
terms set forth in this Declaration and as will be further set out in a memorandum of
understanding to be negotiated and mutually agreed between the Academy and the
Montgomery County Office of Community Use of Public Facilities ("CUPF"). The
parties contemplate that such memorandum will conform in general concept vvith the
guidelines and regulations for community use of public schools, published by the
Montgomery County Community Use of Schools Program, as established by the
Montgomery County Code 1994, as amended, Chapter 44, Article I, School Facilities
Utilization Act and may be updated annually or otherwise as the parties mutually
may agree. The parties also understand that such arrangement shall include (but not
be limited to) the following provisions:

(i) The Gymnasium and the Auditorium will be made available only on a
scheduled basis,and at times when such community use will not interfere with the
Academy's use.

(ii) The Academy shall be identified in any facility use license or similar
agreement as an indemnitee, and the CUPF either shall require all users not covered
under the County's self-insurance fund ("SIF") to maintain insurance to cover such
use that identifies the Academy and the County as additional named insureds, or
shall stipulate that as to those covered under SIF that the County's self-insurance
(including its coverage, notice, and other limitations and requirements including,
without limitation, the Maryland Tort Claims Act) will cover those uses by the
County or County agencies. Provided further that nothing contained herein shall be

Paae~lO
o,@
 construed as a waiver of the County's sovereign immunity nor create any rights in
any third parties.

(iii) Users of the facility will be responsible for the Academy's costs not already
being incurred by the Academy for building operation and personnel incurred in
connection with such use and for compliance with parking regulations. Although the
CUPF use program may contemplate the potential rental of additional equipment
associated with use of the Gymnasium and the Auditorium and establish a rental
schedule for such equipment, the parties understand that such rentals are not required
under this Declaration and are to be at the Academy's sole discretion and at such
rates as may be established by the Academy, provided, however, that equipment
normally maintained and used with respect to, and located on the premises of, the
outdoor recreational areas by the Academy shall be provided and maintained by the
Academy for CUPF users at no cost.

(iv) In addition, the County recognizes the safety and security concerns associated
\'lith public access to the interior of the building, and accordingly, the Academy may
require such security measures (or reimbursement for reasonable security
expenditures required specifically and solely due to the permitted use) as it
reasonably deems necessary for such purpose.

(v) The parties understand the religious character of the Academy and thus agree
that no community use pursuant to this Declaration shall be permitted for the
Gymnasium or Auditorium during the Jewish Sabbath and Jewish holidays.

B. The Academy shall have the exclusive use of the outdoor recreational areas and
athletic fields until 6:00 p.m. Monday through Thursday and until 3:30 p.m. on
Friday. After those hours during the week and all day Saturday and Sunday, these
outdoor areas will remain available, on a continuing basis, for use by the community
subject to paragraph I.A hereof. In the event the Academy requires the use of these
areas during the times normally reserved for community use, the Academy will
schedule such use with the CUPF.

Page~~
@
 C. The Academy may not materially alter the dimensions or character of the athletic
fields, as generally depicted on Exhibit A attached hereto and incorporated as if
fully set forth in this Declaration of Covenants, without notifying and obtaining the
written approval of the County. Notice of any change must be communicated in
writing and accompanied by accurate drawings and plans of the proposed change.
The County may grant, deny, or condition any requested change in the County's
discretion; however, consent shall not be unreasonably withheld. Provided further
however that the Academy may relocate the athletic fields to other locations on the
property without the consent of the County provided that the relocated athletic fields
retain substantially the same dimensions and characteristics of the athletic fields as
generally depicted on Exhibit A; and can be used at least for the same purposes and
in the same manner as existed at the time of the execution of these Covenants.

2. MAINTENANCE OF PROPERTY: The Academy shall, at its sole cost and expense, keep
the Property in good repair at all times and shall maintain the property in a condition at least
equal to similar private schools operated throughout the County. The Academy, except in
the case of required repairs (the duration of which the Academy shall seek to minimize to
the extent commercially practicable) shall maintain those facilities available for community
use in such a condition as shall make them at all times available for, and not interfere with,
~

the use of them by the public as provided for in the preceding Section 1.

3. INSURANCE: The Academy must obtain at its own cost and expense and keep in full force
and effect at all times the following insurance coverages with an insurance company(ies)
licensed to do business in the State of Maryland. The Academy must provide evidence of
coverage by submitting a certificate of insUrance and/or certified copies of the insurance
policies to the County as reasonably requested by the County. The Academy's insurance
shall be primary.

A. General Liability: Minimum One Million Dollars ($1,000,000.00) combined single

limit for bodily injury and property damage coverage per occurrence, including the
following coverages: Contractual Liability; Premises and Operations; Independent
Contractors; and Personal Injury Coverage.

Pag~f10
t0J
 B. Property Insurance: The Academy shall also provide all risk property damage
insurance for 100% of the value of the secular (non-religious) buildings and contents
on the Property against all risks of direct physical loss or damage, including
expenses of removal of debris of such property damage by an insured peril. The
Property policy shall contain a 100% replacement cost endorsement, and shall cover
demolition and clearing costs. The Academy shall make a claim for all covered
damage to the Property or make such repairs with its 0'WIl funds \vithin the time
prescribed in the Property insurance policy for the making of claims. All insurance
proceeds received by the Academy as a result of any covered casualty must be used
by the Academy solely for the purposes of repair and/or replacement of the property
damaged by the covered casualty, unless otherwise agreed to in writing by the
County. In the event that the Academy does not intend to use the Property policy
proceeds to replace the claimed loss, then no claim on the Property policy shall be
settled without the written approval of the County.

C Additional Insured: Montgomery County Government must be named as an

additional named insured on all liability policies.

D. Policy Cancellation: Forty-five (45) days written notice to the County of

cancellation or material change of any of the policies is required.

Certificate Holder: Montgomery County Government, Department of General

Services, 101 Monroe Street, 9th Floor, Rockville, Maryland 20850.

4. USE OF PROPERTY: The Property may be used only for private educational use, and as
incidental uses related and accessory to use for private educational purposes, use for daycare
and worship services, private educational day camp and private religious education center.
The Academy must not change the use of the Property, or sell, or transfer (with or without
consideration) the Property to any person or entity for any use other than such operation of a
private educational facility and such related and accessory uses unless and until the
Academy has first offered to sell the Property to the County for the Repurchase Price as that
term is defined in Amendment No.1 (the "Amendment") to that certain lease ofthe Property

Page~

\.!::/
 by and between the County and the Academy dated March 29, 1996 (the "Lease"); and in
accord with the terms and conditions of the Amendment regarding exercise of the County's
Repurchase Right (as defined in the Amendment). The Academy agrees that it will be
solely responsible for any and all governmental use or occupancy permits or any other
permits or approvals necessary to establish and:continue this use of the Property.

5. ABANDONMENT: If the Academy shall fail to use the Property as a school (an
"Abandonment") for any consecutive one hundred and eighty (180) weekday period of time,
unless such lack of use is attributable to renovations or restoration of the Property that would
preclude use of the Property during such period of time and which renovations or restoration
are at all times being duly and diligently pursued, the same shall be deemed an abandonment
of the Property and shall entitle the County to proceed with any and all of its enforcement
rights as provided in Section 9 of this Declaration and shall entitle the County, at the
County's election (but the County shall not be required to do so), to reacquire the Property
by exercising its Repurchase Right for the Repurchase Price (as those terms are defined in
the Amendment).

ENFORCEMEl'i'T:

6. The covenants herein contained shall run with the Property and shall bind the Academy, its
heirs, executors, administrators, successors, and assigns.

7. The Academy or its successors and/or assigns shall be permitted to modify, amend or restate
this Declaration, provided the Academy has first obtained the prior written consent of the
County to such modification, amendment or restatement, which consent may be granted,
denied, or conditioned, in the County's sole discretion.

8. The rights and interests granted by this Declaration shall be of no force and effect unless and
until the Academy fust acquires fee simple ownership of the Property. This Declaration shall
terminate and be of no further force and effect if the Academy does not acquire the Property
from the County.

rl0

PageVoflO
9. A violation of any of the provisions herein contained shall give to the County the right to
bring proceedings in court against the party or parties violating or attempting to violate any
of said covenants, conditions, restrictions, and reservations, to enjoin them from so doing, to
cause any such violation to be remedied, and/or to recover damages resulting from such
violation. Further, every act, omission to act, or condition which violates the provisions of
this Declaration shall constitute a nuisance and every remedy available in law or in equity
for the abatement of public or private nuisances shall be available for the abatement thereof,
excepting any self-help remedies. Such remedies shall be cumulative and not exclusive of
any' and all other rights and remedies that the County may have at law or in equity for any
violation of this Declaration, excepting only any self-help remedies.

10. The Academy, shall record, or shall cause this DeclaratIon to be recorded, among the land
records of Montgomery County simultaneously with the recordation of any deed conveying
the Property to the Academy. All costs of recordation shall be paid by the Academy; and
the Academy shall provide the County with a copy of the recorded Declaration as soon as
the same is available from the Clerk of the Court.

SIGNATURE PAGE FOLLOWS

Page~lO

 IN TESTIMO~ry WHEREOF the parties have hereunto set their hands and seals the day
and date below written.

WITNESS OR ATTEST: MONTGOMERYCOUNTY,MARYL~ND

By:
---------------------,­
Isaiah Leggett
County Executive

Date:
--------------------­

MELVIN J. BERMAN HEBREW ACADEMY

By: _____________________
Daphna Raskas
President

RECOMMENDED:

DEPARTMENT OF GENERAL SERVICES

David E. Dise, Director

Department of General Services

Date:_______________________

APPROVED AS TO FORM AND LEGALITY

OFFICE OF THE COUNTY ATTORNEY

By: _________________________
John J. Fisher
Associate County Attorney

Date:-------------------------

Page 8 of10
STATE OF MARYLAND, COUNTY OF MONTGOMERY, to wit:

ON THIS day 2010, before me, the undersigned officer, personally

appeared Isaiah Leggett, County Executive for Montgomery County, Maryland, kno\vn to me to be
the person whose name is subscribed to the foregoing, who did fully acknowledge that he executed
the same as his voluntary act and deed for the purposes therein contained.

WITNESS my hand and official seal the same day and year first above written.

Notary Public

My Commission Expires: _ _ _ _ _ _ __

STATE OF MARYLAND, COUNTY OF MONTGOMERY, to wit:

ON THIS day 2010, before me, the undersigned officer, personally

appeared Daphna Raskas, President of the Melvin J. Berman Hebrew Academy, known to me to be
the person whose name is subscribed to the foregoing, who did fully acknowledge that he executed
the same as his voluntary act and deed for the purposes therein contained.

WITl'ffiSS my hand and official seal the same day and year first above written.

Notary Public

My Commission Expires: _ _ _ _ _ _ __

(jj)

Page 9 of 10
 PARCEL ID NO. 13-502-954274

DEED AND RESERVATION OF RIGHT TO REPURCHASE

THIS DEED AND RESERVATION OF RIGHT TO REPURCHASE (the "Deed"), is

made this _ day of 2010, by and between MONTGOMERY COUNTY,
MARYLAND, a body corporate and politic and a political subdivision of the State of Maryland
(the "GRANTOR") and the MELVIN J. BERMAN HEBREW ACADEMY, a District of
Columbia nonstock corporation organized under the laws of the District of Columbia and
qualified to do business in the State of Maryland and having a detennination tetter from the
Internal Revenue Service as to its status as a qualified organization under §501 (c) (3) of the
Internal Revenue Code of 1986, as amended and the successors, heirs and assigns of the
MELVIN J. BERMAN HEBREW ACADEMY ( the "GRANTEE"), (the GRANTOR and
GRANTEE together the "Parties").

IN CONSIDERATION of the payment of One Million Nine Hundred Fourteen Thousand

Eight Hundred Sixty Dollars ($1,914,860.00) by GRANTEE TO GRANTOR, and of
GRANTEE's past expenditures to rehabilitate the Property, and in reliance upon GRANTEE's
acceptance of tile covenants and conditions contained in the declaration of covenants attached
hereto as Exhibit A (the "Declaration of Covenants"), and GRANTOR's right to repurchase
recited below, the GRANTOR does hereby grant to GRANTEE as sole owner in fee simple
absolute, subject to the limitations set forth in the Declaration of Covenants and GRANTOR's
rights to reacquire the Property as covenanted below, certain property located in Montgomery
County, Maryland, known as the former Peary Senior High School, consisting of all that piece or
parcel of land described in the deed between the Board of Education of Montgomery County,
Maryland and Montgomery County, Maryland dated October 17, 1994, and recorded among the
Land Records of Montgomery County, Maryland in Liber 13060, folio 122, et seq., more
particularly described as

All that parcel of land conveyed to the Board of Education of Montgomery

County, Maryland by Edith E. Matthews, by deed dated April 28, 1958, and
recorded among the Land Records ofMontgomery County, Maryland, at Liber
2457, Folio 339 consisting of a total of 19.52 acres, more or less, being known as
the former Peary Senior High School.

together with aU improvements, rights, privileges and appurtenances to the same belonging,
subject to the conditions and covenants stated below (the "Property")

TO HAVE AND TO HOLD the Property, and all improvements thereon, to the use and
benefit ofthe GRANTEE as sole owner~

SUBJECT, HOWEVER, to all easements, covenants and restrictions of record, including,

without limitation, the Declaration of Covenants and to the foHowing right of GRA.J.~OR to
reacquire the Property:
 RIGHT TO REPURCHASE

GRANTOR-hereby grants the Property to GRANTEE and GRANTEE accepts the

Property subject to the limitation that tbe Property may be used only for private educational use,
and as incidental uses related and accessory to use for private educational purposes, use for
daycare and worship services, private educational day camp and private religious education
center. GRANTEE must not change the use of the Property, or sell, or transfer (with or without
consideration) the Property to any person or entity for any use other than such operation of a
private educational facility and such related and accessory uses unless and until GRANTEE has
first offered to sell the Property (including any secular (non-religious) improvements hereafter
constructed thereon) to GRANTOR for the Repurchase Price as that teml is defined in
Amendment No. 1 (the "Amendment") to that certain lease of the Property by and between
GRANTOR and GRANTEE dated March 29, 1996 (the "Lease"); and in accord with the terms
and conditions of the Lease Amendment regarding exercise of the County's Repurchase Right
(as defined in the Amendment).

REAQUISITION BY MODIFIED CONDEMNATION

In addition to the Grantor's Repurchase Right provided for above, nothing herein is
intended to be in limitation of the Grantor's right of eminent domain. If a condemnation action
is brought based on need by the Montgomery County Public School System (MCPS) for a
school, Grantor shall have the right to reacquire the Property by condemnation, provided
however. that in any such condemnation action the Grantor and Grantee agree that (i) the fair
market value ofthe Property otherwise required to be paid by the Grantor to the Grantee in any
such condemnation action is waived. by Grantee and the G-rantor and Grantee instead agree that
the fair market value ofthe Prope11y payable by the County in any such condemnation action for
an MCPS school shall be an amount equal to the Repurch~e Price as provided in Section 7 of
the Lease, (ii) in the event the Grantor prevails in the condemnation action, notwithstanding any
provision to the contrary regarding the timing oftransfer of title and possession of the Property
provided by law. the Grantor waives any such rights and the Grantor and Grantee agree that the
time in which the Grantor shall be entitled to the transfer oftitle to the Grantor and repossession
of the Property by the Grantor after the condemnation action becomes fmal and non-appealable,
shall be not less than five (5) years from tlle date that such condemnation becomes final and non­
appealable, (iii) Grantee, except with respect to the fair market value compensation for the
Property which shall be instead controlled by subsection (i) of this provision, shall be entitled to
any and an other compensation to which Grantee might otherwise be entitled in any
condemnation action, including without limitation any relocation expenses; and (iv)
notwithstanding the provisions of subsection (ii) if the Grantee tenders title to the Property to the
Grantor at any time before or after the conqemnation action becomes final and. non-appealable,
then upon the occurrence ofsuch event, Grantor shall pay to Grantee the Repurchase Price at that
time and Grantee during the five (5) year period provide for in subsection Oi) shall be entitled to
continue to occupy the Property under the same tenns and conditions as provided in the Lease .
and upon the conclusion of such five (5) year period Grantee shall thereupon vacate the Property
leaving it in the condition as provided in tlle Lease and the Grantee shall have no further right to
possession or occupancy ofthe Property.

-2­

 IN WINESS WHEREOF, the Parties have executed this Deed under seal on the date first
written above, it being the specific intention of the Parties to create a specialty.

WITNESS ORAITEST: MONTGOMERY COUNTY, MARYLAND

By: _ _ _ _ _ _ _ _ _(SEAL)
Isaiah Leggett
County Executive

Date:
--------~-----------

MELVIN J. BERMA,.~ HEBREW ACADEMY

By:
---------------------,-
Daphna Raskas
President

Date:
---------------------

RECOMMENDED:

DEPARTMENT OF GENERAL SERVICES

David Dise, Director

Department of General Services

Date:---'.__________________

APPROVED AS TO FORM AND LEGALITY

OFFICE OF THE COUNTY ATTORNEY

By: _______________________
John J. Fisher
Associate County Attorney

C@

-3­
STATE OF MARYLAND, COUNTY OF MONTGOMERY, to wit:

ON THIS day 2010, before me, the undersigned officer,

personally appeared Isaiah Leggett, County Executive for Montgomery County, Maryland,
known to me to be the person whose name is subscribed to the foregoing, who did fully
acknowledge that he executed the same as his voluntary act and deed for the purposes therein
contained.

WITNESS my hand and official seal the same day and year first above \vritten.

Notary Public

My Commission Expires: _ _ _ _ _ _ __

STATE OF MARYLAND, COUNTY OF MONTGOMERY, to wit:

ON TillS day 2010, before me, the undersigned officer,

personally appeared Daphna Raskas, President of the Melvin J. Berman Hebrew Academy,
known to me to be the person whose name is subscribed to the foregoing, who did fully
acknowledge that he executed the same as his voluntary act and deed for the purposes therein
contained.

WITNESS my hand and official seal the same day and year first above written.

Notary Public

My Commission Expires: _ _ _ _ _ _ __

CERTIFICATION: This Deed has been prepared by the undersigned, an attorney du1y admitted
to practice before the Court of Appeals of Maryland.

John J. Fisher
Associate County Attorney

@)

-4
 LEASE AGREEMENT

BETWEEN

. MONTGOMERY COUNTY, MARYLAl.'ID

A.ND

TIffi HEBREW ACADEMY OF GREATER WAS1:IWGTON

DATED: 31'J-"Ilq~
DEFINTIIONS .... : ............' ........... : ............................... :. -5­

ARTICLE I - LEASED PREWSES ............................................... -7:­

ARTICLE II - RENOVATIONPERlOD, LEASE TERM, AND EXPIRATION ......... , -7­

ARTICLE III - RIGHT TO PURCHASE .......................................... -8­

ARTICLEIV-RENT ................................................... ~ ... -11­

ARTICLE V -LESSEE'SINSlJR.AJ."'TCE ........................................ -13­

"ARTICLE VI - LESSEE'S nIDE1vfNIFICATION ....'.... '.' ......".............. "... -14­

.ARTICLE VIl- LIENS, CLAWS OR £NCU1vl:BRANCES ...... '................... -15­

ARTICLE VIIl- REPAIR, RENOVATION AND IMPROVEi\1ENTS ..... , .......... -16-"

ARTIGLE IX - CONSTRAINTS ................................................. -20­

ARTICLE X - CONSTRUCTION, ALTERATIONS, CONDITION OF PREWSES ...... -21­

.ARTICLE Xr- GENERAL lVLAJNTEN.ANCE .................................... -21-

ARTICLE:xII - :MAINTENANCE OF PROPERIT ............................... -22­

ARTICLE XIII - SIGNS OR MONUMENTS .............. ~ ..................... -23­

ARTICLE XIV - PARKING AREAS AND LOADING ZONES ............... ; ..... ~ -23­

ARTICLE XV - TENfPORARY STRUCTURES ........ ". . . . . . . .. .. .. . .. .. .. .. . ... -24­

ARTICLE XVI - TERM At'ID ENFORCE1v.!ENT

. . .................................
. . . -24­

ARTICLE XVII - EXPIRATION ..................................... .-.......... -26­

 , . "~""--'-~---., ~-~~,='''''-'', . - -'--'-"- -' ," . _..... -,_ .. ",
..... " ...

10.:" ARTICLEXVDI - TENANT HOLDmG OVER ............•... : ................. -27­

ARTICLE XIX - MORTGAGE OF LESSEE!S LEASEHOLD INTEREST ll'r THE DEMISED

PREWSES ......... '. .... : ........................" ............... '.. -27­

ARTICLE XX-ASSIGNMENT AND SUBLEASll'rG ............................. -27­

ARTICLE XXI - SUCCESSORS A}-i'D ASSiGNS ........... '. . . . . . . . . . . . . ., . . .. . . .. -29­

,

ARTICLE XXII - QUIET ENJOYMENT, TITLE TO LAND AND Th1PRO'lEMENTS " .. -29­

ARTICLE XXIII - SURRENDER, WAIVER.AND AtvfENDMENT .................. -30­

ARTICLE XXIV - NON-DISCR.:fMmATION IN E1v1PLOYMENT AND SERVICES .. .. -31­

ARTICLE:XXV - DISPlJ1'ES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. -32­

ARTICLE XXVI - CONTRACT SOLICITATION ................................ -32­

ARTICLE XXVII - PUBLIC E1vfPLOTh1ENT ... _............. .- . . .. . . .. .. . . . . . .. -33­

ARTICLE XXVIII - GOVERNlNG LAW .........................,.............. -33­

ARTICLE XXIX - RnCORDING ... ~ .... : ..'......... '. . . . . . . . . . . . . . . . . . . . . . . . .. -34­

ARTICLE XXX - ENTIRE AGREEMENl .............................. .'....... -35­

ARTICLE XXXI - EX1IIBITS ....... ........ ...... ....... .. '" ............................

~ ~ ~ ' " .. .. -35­

ARTICLE xx:x:rr - NOTICES -35­

ARTICLE JCXXJII - NON..:MERGER ..................... _.................... ~ -36­

ARTICLE XXXIV - CAPTIONS, PRONOUNS .................................. -37­

ARTICLE XXXV - USE OF THE PROPERTY .................. , ................ _ -37-.

ARTICLE:x:x:x:VI - CON:!1YIIJNITYUSE ....................................... -38­

, 'I ••. " •

.."
.
, r';..

:~. 41

LEASE

TIllS LEA~E ,made this _.__ day of_ _ _ _ _ _---->', 19---, by and between

MONTGOMERY COUNTY, MARxLAND a political subdivision of the State ofMaryland,

hereinafter:called "County" or "Lessor''. and TIlE HEBREW ACADE1vfY OF GREATER

WASHll'fGTON, mc" a non-profit educational organization incorporated in the District of

. .
Coluoibia, with its principal offices located at 2010 Linden Lane, Silver Spring, Maryland

20910, hereinafter called "Lessee."

WITNESETH

"WF:IEREAS, the County is the ovro.er of certain real property located in Montgomery

County, Maryland, lmovro. as the former Peary Senior High School, which consists of 19.52 acres

of land, more or less, improved with a building c·omprising approximately:220,000 square feet,

together with any and all site improvements, appurtenant rights and benefits ofthe parcel, located
. .
at 13300 Arctic Avenue, Rockville, Montgomery County, Maryland, knO'i'1n as Parcel P209, on
"
Tax Map HR21, as recorded in Liber 13060 at Folio 122 among the land records of Montgomery

County, Maryland., as shovro. on Exh,ibit A attached hereto and made a part hereof, which land

and improvements are hereinafter collectively referred' to as the IIPremises"; and

WHE~AS, pursuant to Article ~5A of the Annotated Cod~ ofMaryland., the County has

authority to dispose of any real or leasehold property belonging to the County, provided the

property is no longer needed for public use~ and

 'WBEREAS, the County, under authority of Section 4-114 ofthe.Maryl~d Education

Code Ann., has authority to dispose of school property that has been declared surplus to public

needs; ap.d

WHEREAS, as a surplus school, the Premises 'were approved for disposition by the

Montgomery County Council, by Resolution No. 12-1874, adopted on November 29,1994,

pursuant to the requirements of Section 4-114 of the Ma..-yland Education Code .A.Iin., the

Council having approved a lease with a..'1option to pm-chase if supported by the Aspen Hill

Master Plan; and .

\VHEREAS, pursuant.to Montgomery County Council Resolution 12-1874, the

Montgomery County Government solicited proposals for the reuse and/or disp9sitionof the

Premises in 1995; and

WHEREAS, Lessee submitted to the ~ounty a proposal for the reuse of the Premises, as a

private educational institution, which proposal the County has accepted; and

WHEREAS, Lessee desires to lease the Premises with an option to purchase, in

accordance with the terms and conditions of this Agreement, and the County has agreed to lease

the Premises and grant an option to purchase to Less"ee in accordance "With these provisions; and
, . "

WHEREAS, this lease is subject to completion ofthe public notice procesS of the terms

and conditions ofthls iease, in accordance with ~e provisions of Article 25A, Section 5(B) ofthe

Annotated Code of Maryland;

NOW, 'tHEREFORE, in consideration of the financial conditions hereinafter reserved,

other good and valuable consideration, and the covenants hereinafter contained, the County does

hereby lease and demise the Premises unto the Lessee, and the Lessee does hereby rent the'

Premises from the County, in ac~ordance with the following terms and conditions:
f'

DEFINITIONS

.The following definitions are e~blished with regard to this Lease:

. L· ~e term "Building" shall refer to the Peary Senior High School building

currently located on the Premises, to be repaired and renovated by Lessee, and such other and

further construction a,s may be allowed on the Premises consistent with applicable: laws and

regulations, subject to the COlIDty'S approvaL

2. The te:rrn "County" shall refer to .Montgomery Cotmty, Maryland, as the owner,

and grantor of use rights. Statements which indicate the "CO~tyl' approval have reference only

to rights, consent and agreement as related to the ownership, development and conveyance of ibis

property, and not to other required Cotmty re~atbry approvals. The COtmty as land owner shall

cooperate with the Lessee in filing any. appli~ation for zoning or land use per:mts and
. .
pemiissions to proceed with its work on the Premises in a timely marmer at the earliest possible

date.

3. Wherever the phrase "approval oithe Countyll is used it shall, mliess othenvise

provided, mean that such approval shall not be UnIe:asonably withheld..

4. Unless otherwise provided, the term "days" shallrefer to business days wherever

reference is made herein to less than s~ven (7) days. Otherwise the term "days" shall refer ~o

calendar days.

5. The term "Improvements" shall ~efer t? any structtrre, fixture or other

improvements including fixed or attached equipment now located or hereinafter erected upon the

Premises, including, but in no way limited to the Peary building and appurtenant facilities,
,.

together with other buildings or accessory structtires, parking lots, landscaping, etc. now forrrring

part of the Premises .

The term "Lessee shall refer to The H~brew Academy of Greater Washington,
ll
.6.

Inc., a non-profit educational organization, its successors and permitted assigns.

7. The term "Occupant" shall indude any person or persons who, by reason of

employment or other S""t.2.ui.s, occupy space on or 'Nitbin the Premises and Improvep1ents.

8. The term "Lease Year" shall refer to the one year period following the

commencement of the full term of this Lease, and to each .successive one year period thereafter.

9. The term "Renovation Period" shall refer to the two~year period following

commencement of this Lease, during which Lessee shall underia..lce the repair and renovation of

the PrerOises as set forth herein. During the renovation period, the Lessee shall be fully

responsible for the Premises, and shall observe all ofthe terms and conditions ofthis lease. The

two year renovation period, however, shall not be counted as part of the full twenty-five year

term of this Lease.

10. The term '<Elective Capital Improvements" shall refer to capital improvements or

additions made by Lessee to the Premises in order to meet Lessee's specific program

requirements; but which are not otherwise required for the preservation of the building structure

or systems, and are not mandated by County, State or Federal code or regulation.

11. The term "Non-Elective Capital Improvements" shall refer to improvements

required to protect and preserve the building, including items such as roof replacement, boiler

replacement, HVAC system replacement, replacement of failing structural components, .

replacement of electrical or plumbing systems, conversion from oil fired to gas heating systems,

< ! '" \"'1: :,' r'. I" ,.

 " ; '0
..
'.
r~moval ofbazardous or toxie substances, window replacement, and other similar work

mandated by.C01mty, State or Federal code or regulation.

12. . The term "Qualified Elective Capital Improvements" shall refer to elective capital
. .
.improvements or additions to the building that have been reviewed and approved in writing by .

the County anellor the Montgomery County Public School System, as having potential value to

the County if it receives the building in the :future for a schooL

ARTICLE T

LEASED PREMISES

The County hereby leases the Premises Unto the Lessee in consideration of the terms and

conditions oftbis Lease, as more fully set forth below.

ARTICLE II

RENOVATION PERlOD, LEASE TERM. AND EXPlRAnON

1. Lessee shall accept possession of the leased Premises and full responsibility

therefor on the 15th day of April,

. .
1996. Said acceptance of the.Premises
' .
by Lessee shall ~

commence a two-year renovation period, during which Lessee shall undertake repairs.an\f

renovations to the Premises as set forth herein. During this renovation period, Lessee shall abide

by and be held to all of the terms and conditions of this Lease. Upon the expiration of the two-

year renovation period, the lease shall continue for a period of twenty-five (25) years,

commencing on the day following expiration of the tvlo-year Renovation Period. The Lessee.
. .
shall have the option to extend the:full term ofthis Lease for three (3) additional and consecutive

five (5) year periods, under the same terms and conditions herein contained,.subject to the

-7­
<B

c.ounty's right to terminate, as, s~t forth ~Article II, Section (2) herein.. The Lessee shall
. '

provide twelve (12) months' advance written notice to the County of its election to exercise each

option to extend.

2. In the event the leased Premises are needed by the County for public education

purposes, the Cou:rrtymay terminate this Leas~, by providing to Lessee five (5) years' advance

written notice o.fits election to ter.minate, at any time after the conclusion of the ttventy-five year

lease term. This Lease shall automatically terminate upon the expiration of the Lease teIm and

any extension thereof, "'iVithout notice or demand from the County.

ARTICLEll

RlGHT TO PURCHASE

The Lessee shall have the right to pur,chase the Premises at any time during the lease ter;m

or any extension thereof, subject to the approval of the Montgomery County Council and the
, ,

Montgomery County Executive, and subject to any restrictions, conditions or requirements which .

the County Executive and the' County Council may elect t6 attach to such a purchase. Tile

Lessee's right to purchase is f.i.:rr"~er subject to the approval of the State ofMaryland Board of

Public Works, which may also elect to place restrictions, conditions or requirements on the

purchase. The Lessee's right to purchase and the County's acceptance thereof shall be exercised

in accordance with all applicable State and local statutes and regulations governing the

disposition of public property. The County and Lessee reco gnize that the purchase price for the

Premises should fully reflect the Premises' condition on the commencement date of this Lease,

.and should accordingly be established.priorto the Lessee's planned repair and renovation of the

Premises. In accordance Vlith Montgomery County Coul::icil Resolution No. 12-1874, the parties
 , ..
-.
acknowledge that the condition of the building on the Premises is very poor, and that the

altemative reuse of this property, in the event that it is not leased for private educational

purpos~s, is demolition of the building and reuse ofthe land only. In recognition ofthe

building's condition, the parties expect, subject to confirmation by independent appraisers, that_

the value of the property will lie exclusively in the land. The parties expect that the building will

neither contribute to or detract from the value of the property. The price to be pai4 by Lessee for

the leased Premises shall therefore be established by appraisals, to be performed within one

hundred twenty (120) days following the commencement date of the Renovation Period, but

prior to the begirming of the Lessee's repair and renovation work. The County and Lessee also

reco&cize that such a "baseline" price will not be:fully reflective of the value ofthe Premises as

time passes. The pa..'1ies therefore agree that the initial "baseline" price to be paid for the

Premises shall be adjusted on an annual b~ -as. set forth here~. The initial "baseline" price for

the Premises shall be established in the followjng manner:

The 90unty and the Lessee s~all each select a licensed real estate appraiser having

experience in the valuation of improved real estate in the Washington, D.C. metropolitan

area, and who is a member of the American Institute of Real Estate Appraisers (each
. ­
certified as an 'MAl appraiser"). The two NLAI appraisers so selected shall choose a

third 1Y1AI appraiser within fifteen (15) days of thcir selecti on, and notify the County and
_

Lessee of their choice. Each party shall bear the cost of its :M.A1 appiaiser, and shall share-

equally the cost of the third :M.AI appraiser. If the. two MAl appraisers selected by the
. ~- ­
parties cannot agree on the choice of a third MAl appraiser and notify the parties as to

their choice within said fifteen (15) day period, then the paities shall request that the

President of the Montgomery County Board of Realtors deSignate a ·third 11,:\1 appraiser
 - "-'-" ---'--" --_._--­ _____ ~_~.......,....,.-~"""~...i __ _=__... ,_ -_ .......... .,... _ _ _ .~~_"'-. ~~ ••• ,-_.~.

witbin fifteen (15) days of the parties' request to do so. The <'baseline" price for the

Premises shall be the average ofthe fair market values as submitted by each ofthe three

.appraisers. Prior to the coIIimissioning of the three appraisals, the County and Lessee

shall agree on a set ofwritten instructions to be delivered to each ofthe three appraisers,

which instructions will be followed by the appraisers in the performance of their work.

Once established, this '<baseline" price shall be the effective price of the Premises. for the twelve

(12) month period following completion of the appraisals. In the event that Lessee does not

exercise its option to purchase the Premises within the first twelve months following completion

of the appraisals, the initial "baseline" price for the Premises shall be adjusted as follows:

. On the first anniversary of the establishment of me "baseline" price, and on each

anniversary thereafter for the remainder of the lease term or extension thereof, the

"baseline'~ price shall be multiplied by a fraction, the numerator of which shall be the

most currently published value of the index now mO"WTI as the "'U.S. Department of

Labor, Bureau of Labor Statistics, Consumer Price Index for all Urban Consumers, All

Items, (1984 = 100)", and denominator ofwmch shall be the value for said index

. published for the month and year during which the "baseline" price was' initially .
. '"

established. The resulti..D.g number shall be the effective sales price under which the

Lessee may exercise its option to purchase the Premises.

The Lessee may not sell, transfer or assign its option to. purchase the Premises to any third party

withOlit the County's prior written approval.

''''':-"r '" !,!..'l

 '6'"
".~ .~.

, , .. ~~ ..~ l

ARTICLE IV

RENT

.1. Lessee shall pay no rent during the two-year Renovation Period. Lessee shall pay

the sum ofTEN Dollars ($10.00) as annual rent to the C01mry during the first four (4) years of

the lease terrIL The' entire annual rent for the first four years of the lease term shall be Ciue and

payable upon execution of this Lease. Beginning with the first month ofthe fifth lease year,

Lessee shall pay annual rent in the amount of SIXTY THOUSJ...:ND Dollars ($60,000.00),

payable in equal monthly mstaJJments of FIVE TIIOUSM'TI Dollars ($5,000.00). An payments

shall be due and payable on or before the :first day of each month, without set-off, d(:!duction or

demand therefor from the County, payable to the order of Montgomery County, Maryland, and

deliv:ered to the offices ofthe Montgomery County Division of Revenue, 1.01 Monroe Street, 5th

Floor, Rockville, Maryland. Any rental payment not received by the County more than 10 days

from the date it becomes due and payable shall be 'assessed interest at the rate of15% per annum

until paid. Should any payment remain unpaid for more than 30 days after it, is due, the County
,

shall have the right to terminate this Lease, recover possession ofthe Premises, and pursue any

other legal remedies available to the County under the laws o(the State of Maryland. It js '

agreed behveen the parties that the annual rent payable by Lessee shall be adjusted for the sixth

lease year, and every lease year thereafter, as determined by application of the rollowing formula:

To the annual rent payable by Lessee du..,-jng the previous lease year shall be

added that sum representing one hundred percent (100%) of the resulting amount,

a..f'ter (1) multiplying said arinual rent payable during the previous lease year by a

fraction, the numerator ofwhich shall be the index now known as the "U.S.
 Department of Lab.or, Bureau ofLabor Statistics, Revised CPI-U. AIl Items, U.S.

City Average, 1984=100" for the last month of the previous lease year, and

denominator of which shall be said index for the month prior to the :first month of

the previous lease year, and (2) subtracting from such product the annual rent

payable during :the previous lease year. In no event will the newly adjusted rent

exceed the rent payable during the previous lease year by more thap five percent

(5%).

In the event the said index i~ discontinued, ceases to incorporate a significant number ofthe

items now incorporated therein, or· if a substantial change is made in such index, the parties

hereto shall .attempt to agree on an alternative formula in accordance with such

. statistics as may
. .
.
be recommended by a department or agency ?fthe United States Government for such purpose,

or absent such a recommendation, in such manner as may reasonably be determined by

agreement of Lessee and the Coimty.

2. (a) As additional rent hereunder, upon the effective date ofthis Lease, Lessee shall.
"

pay and discharge as they become due, promptly and before delinquency, ail taxes, assessments,

rates, charges, license fees, mumcipalliens, levies, excises, or imposts, whether general or

special, or ordinary or extraordinary, of every name, nature and kind whatsoever, including all

governmental charges of whatsoever name, nature, or kind, which maybe levied, assessed,

charged or imposed, or which may become a lien or charge on or aga.iillt the leasehold ofLessee

herein, any building or buildings, or any improvements now or hereafter thereon, or on or against
 ,,' _ _ ... '..: _ _ _ _ _ _ _ _ _ _ ~ ______ -~_M/MJ"'!~'~ •• "".~-"-"'-"'''' -'.'. "~._"'_4'," .....- ••....

-,

L~ssee's eS"lZte hereby created which may be a subject oftaxation,. or on or against the County by

reason of its ownership ofthe fee underlyi.ng this J;.ease, during the entire term hereof.

(b) Specifically, and without in any way limiting the gen~raIity of the foregoing, '

Lessee shall pay all special assessments and levies or charges made by any State, municipal or

politicaJ. subdivision for local improvements, and ,shall pay the same ill cash as they shall fall due

and before they shall become delinquent and as required by the act and proceedillgs under which

any assessments or levies or charges are made by any State, municipal or political subdivision. If

the right is given to pay either in one sum or in installments'and if the installment(s) shall be

pay~ble after the termination ofthis Lease or any extended term thereof, such unpaid

installment(s} shall be prorated as of the date of termination. and amounts payable after such date

shall be paid by the County. .A.ll ofthe taxes and charges under this Section shall be prorated at

the commencement of the term ofthis Lease and exprration ~fthe term and any extension or

renewal hereof.

(c) , All rebates on account of any such taxes, rates, levies, charges, or assessments

required to be paid and paid by ~essee under the provisions hereof shall belong to Lessee.

ARTICLE V

LESSEE'S INSURANCE

1. On or before the commencement ofthls Lease, the Lessee must obtain at

its own cost and expense and keep in force and effect during the1ease term the following

insurance coverages with an insurance company(ies) licensed to do business in the State of

Maryland. Lessee must provide evidence of coverage by submitting a certificate of insurance

andJor certified copies of the insurance policies. Lessee's insurance shall be primary.
· ,

(a) General Liability: :Minimum One :Million Dollars ($1,000,000.00)

combined single limit for bodily inj1l:lJ and property damage coverage per occurrence including

the folloYVing coverages: Contractual Liability; Premises and Operations; Independent

Contractors; Fire Legal Liability; Personal Injury Coverage "

(b) Property Insurance: Lessee shall also provide an risks property

damage insurance for 100% value of the leased buildings and contents against all,risks of direct

physical loss or damage inc1udin:g eXpense of removal of debris of such property damage by an

insured peril. Property policy shall provide 100% replacement cost endorsement, demolition and

clearing clause. No claim on this policy shall be settled without written approval of the

County.

(c) Workmen's compensation insurance as required by Maryland law.

(d) Additional Insl:lI'ed: Montgomery County Government must be,

named as an additional insured on all liability policies.

(e) Policy Cancellation: Forty-five (45) days written notice to the

County of cancellation or material chru:ige of any ofthe policies is required~

(f) Certi£cate Holder: Montgomery County Government, Department

of Facilities & Services, 110 North Washington Street, Rockville, Maryland 20850.

ARTICLEVl

LESSEE'S INDE.MNIFICATION

Lessee, ~ a material part ofthe consideration for the County's execution oftbis Lease,

covenants '?vith County that the County shall not be liable except as ot.1.erwise provided in this

Lease for "any loss, damage, claim. of damage, liability or expense, of any kind or for any damage
or injury to persons or property duting the term ofthis Lease from any cause whatsoever,

whether negligent, intentional, or otherwise by reason ofthe use, occupation, or enjoyment ofthe
- .
Premises or Improvements ther.eon by Lessee, its employees, agents, visitors, tenants, licensees .
. ­
or concessionaires. Lessee shall indemnify and defend the County in any action or suit brought

against the County, and hold harmless the County from all loss, damage, claim of damage,

liability or expense whatsoever on account of any such damage or injury; provided, however, that ­

the foregoing indemnity for loss,. damage, claim of damage, liability or expense of inj~ to

persons or property, shall not apply if due to any willful or negligent act or omission ofthe

County, its employees or agents. In no event shall the limits of any insurance policy provided

for herein be deemed to limit Lessee'sliability to. the County as herein set forth.

ARTICLEVTI

LIENS, CLAIMS OR ENCUMBRANCES

L Lessee shall at all-times keep the Premises free and clear ofmechanics',

materialmen's and other liens, and of all cha;rges, claims and encumbrances caused or created by

Lessee or anyone claiming through or under Lessee, other than such deeds of trust or mortgages

as may be necessary from 1ime to time to effectuate the financing of the Lessee's renovation and

repair work on the Premises, provided, however, that such deeds of trust or mortgages are

subordinate to this Lease.

2. If any mechanic's or other lien shall at any time be filed against tl:ie Premises for

work perf9rmed by or for Lessee, Lessee shall either cause the same to be discharged of record

within thirty (30) days after the date of filing of the same, or, if Lessee shall desire to contest any _

such lien, Lessee shall furnish to the County security in the amount ofthe claim, plus costs and
. interest, or shall procure a bond m said amount from a reputable bondlng company. The:final

judgment of any court of competent jurisdiction determining the validit"j and!or amount of any

such lien shall be conclusive.

3. If Lessee shall fail to discharge any lien not ·permitted by this Lease or to provide

County with security therefor as heremab~:rve provided, then County may at its option, payor·

discharge any such lien, and Lessee shall pay County all amounts spent by County, including

costs, expenses and reasonable attorneys' fees, mcurred by County together with mterest at the

rate provided1n Section 11-107(a) of the Courts and Judici3.l Proceedings Article, Armotated .

Code ofMarjland, as amended, or m the event that this Section is repealed and not re-enacted,

then interest shall be the prime rate set by Citibank ofNew York, plus one percent (1%), which

payment shall constitute additional rent due hereUnder and shall be paid upon deID.4I1d by the

County.

ARTICLEYTll

REPAIR. RENOVATION AND OOROVEMENTS

. 1. The Lessee shall, within the two year Renovation Period, with exercise of due

diligence, and at Lessee's sole cost and expense, repair, renovate and rehabilitate the buildings

and outdoor areas comprising the Premises, in order to improve and preserve the Premises, and

bring the Premises into a useable condition, in compliance with all applicable use and occupancy;

fire safety, and building codes, and in accordance wit.h all applicable statutes or regulations, .

whether issued by the Federal, State or local government, t.1.e Montgomery County Department

ofEnvironmental Protection or the Fire Marshal's Office. Lessee's work Y'Yithin the Premises is

subject to the following conditions. 1qo building, exterior improvement or addition, or

'.

l3?dscaping shall be erected, placed or altered, nor shall any work beyond routine rep~s be

performed until plans for any such woik have b~en approved by the County. 'Plans"YVill be
, .
reviewed promptly when submitted, will be approved or disapproved within forty-five (45) days

of submission, and approval ;will not be unreasonably withheld, delayed, denied or conditioned.

In the event emergency repairs or emergency woik is required, the Lessee shall notify the County

as to me existence and nature of the emergency, and the County shall accelerate i~ review and

approval process accordingly. The Lessee shall provide the following information to the County

for its review and approval prior to (or, where appropriate, with County approval, during)

construction:

(a) Floor plans, including outline specifications designating materials and

mechanical, electrical and structural "Systems, utility requirements and finishing materials

samples and colors.

(b) A site plan for any work planned to be performed by Lessee on the

exterior ofthe Premises, showing location and design of any construction, driveways, loading

areas, maneuvering areas, lighting, and sidew3.ncs, and improvemeilts to the parking areas.

(c) Dra"-tings
. .
of all exterior signs to be erected, including details of signs,

materials, locations, design, size, color and lighting.

Cd) Any other reasonable information as may be required by the County to .

insure compliance \Vith requirements contained herein.

2.. This review and approval by the County does not alter, replace, or in any way

substitute for or constitute approval in lieu thereof of other permits, approvals or aL-.fuorizations

that may be required in the normal renovation or construction process, which are the separate and

additional responsibility of Lessee.

,.
(

3. Neither the County nor any employee or agent thereof shall be liable for monetary

damages to 'lllY occupant or lessee or to anyone submitting plans or requests for approval, or to

~y oth~r party by reason of mistake in jud.~ent, negligence, or nonfeasance: arising out of or in

connection with the approv-ru,disapproYal or failure to approve any such plans or requests or for

. any other action in connection with its or their duties here1ID.der. Likewise, anyone submitting

plans to the County for approval,.by submitting suchplan.s or requests, and any person when he

becomes an occupant or lessee, agrees that he or it will not bring any action or suit to recover any

monetary damages 'against the County or any employee or agent of said County for such

approval or disapproval.

4. In the event that the County terminates this Lease prior to its normal expiration

date or applicable extension thereof, in accordance with the C01ID.ty's right to terminate as set

forth in Article II, Section (2) hereinabove, the County shall reimburse the Lessee for a

percentage of the cost ofNon-Elective and Qualified Elective capita,l improvements completed

by the Lessee Vlitbin the Premises. The C01ID.ty's reimbursement vrill be pro-rated to reflect the

remaining life of the improvements beyond the date of termination. The life ofthe capital

improvements will be determined in accordance with the Internal Revenue Semce's lifespan

schedule. Lessee Vvill assign any and all remaining warranties covering reimbursable .

improvements to the County.

5. Lessee must obtairi. prior written consent from the County for a determination of

which planned improvements are reimbursable. Submission of plans and speciEcatioDS as set

forth hereinabove shall be considered satisfactory for the purpose of reimbursement approval, if

also accomp9-llied by a specific request that the planned improvements be so certified. In the

event the planned improvements are Elective Capital Improvements, a submission must be made
·.

by Lessee to Montgomery County Public Schools" in order to allow for their review ofthe

potential ~e value ofthe improvements. Work. completed by Lessee 1-Vithout the CoUnty's

approv:;tl will not be considered for reimbursement.

6. The County shall have the right to audit all coilstruction or any other capital

improvement costs for which Lessee seeks reimbursement.

7. In the event any work performed by Lessee vrithin the Premises is not in

compliance with the plans and specifications submitted for approval by Lessee, Lessee shall

immediately undertake, at Lessee's expense, any corrections required to bring the work into

compliance with approved plans and specifications. Corrective measures takeliby Lessee shall

not be eligible for reimbursement.. In the event Lessee fails to take necessary corrective action,

Lessee will forfeit its right to reilnbursement.

8. Limitations on Reimbursement

(i) The initial total cost of all capital improvements will be borne solely by

Lessee. Lessee vrill be responsible for obtaining all construction permits

and licenses from all applicable County, State, Federal or municipal

authorities. Lessee will not be entitled to reimbursement for finance

charges, fees, administrative costs, bonds, permit fees, insu..~ce,

:maintenance, operating or repair expenses, or any other cost not directly

.attributable to the actual construction or installation of capital

improvements.

(ii) Reimbursement Vlill be subj ect to appropriation of funds ~ an adopted

operating budget of the Montgomery County Government or the Board of

 Education ofMontgomery County. In the event funds are not

appropriated for reimbursement, the County vr.ill delay termination until

such reimbursement funds are available. :rD. no event 'will Lessee be

entitled to reimbursement from both the County and the Montgomery

COlmty Board of Education for the same item. In order to avoid such

.. potential duplication, the County Will be the only .recipient,of requests for

reimbursement, and will administer and coordinate the reimbursement

process.

(iii) Lessee will not be entitled to' reimbursement for elective capital

improvements unless such improvements have been determined to be

q,ualified for reimbursement, as set ~orth herein, at the msqetion of the

County and/or the Montgomery County Board ofEducation.

ARTICLE IX

CONSTRAINTS

Once Lessee receives a use and occupancy pennit for the Building, Lessee's use shall be .

constrained by the following permitted uses and performance standards:

1. No noxious, unhealthy or offensive trades, services or activities shall be

conducted within the Premises nor shall anything be done thereon which may be or become any

annoyance or nuisance t,o the County, general public, or any lessee by reason of unsightliness or

the excessive emission of fumes, odors, glare, vibration, gasses, dust, waste, smoke or noise.
, .
2. To the fullest extent provided by law the Lessee shall indemnify and hold the

COUIlty harmless with regard to any loss, expense, damage or cause of action related to a breach

" f.,' " ~":r.-: "

of its obligations conce:rning toxic and hazardous materials, and controlled substances, inciuding

but riot limited to, reasonable counsel fees, court costs, litigation related expenses, clean up .

expens,es, enforcement expenses, and consequential damages to the Premises.

ARTICLE X

CONSTRUCTION, ALTERATIONS, CONDITION OF PREMJSES

1. Construction, renovation or alteration of any bui~ding within the Premises shall be

in conformance with the then existing applicablestindards, codes and ordinances.

2.' During construction, building and site shall be kept clean on a daily basis and all

trash, ru.bbish and d~bris removed therefrom after any construction work is done thereon.

3. The Lessee has leased the Premises and building thereon as herein provided, in

lias is" c~ndition, after an,examination thereQf ::vithout any representation as to its condition on

the part of the Cour:.ty.

ARTICLE XI

GENERAL MAINTENA.,1\fCE

1, Lessee shall maintain all existing landscape, including la\Vn mowing, hedge

trimming, watering, and removal of weeds from planted areas, all as needed, and the Premises

, shall be generally maintained in a neat and clean appearance.

2. The existing landscaping may not be ,altered without submission of a plan and

obtaining the written approval ofthe County.

4. Except du..-riog repair and renovation work, no materials, supplies, equipment,

vehicles (except in designated areas), finished products or semi-fro.ished products, :fi.J:rniture,

( ·1 -: j II -"'. .1"" I' I

~hings, raw materials, or other articl~s of any natJ.:Iie shall be stored or permitted to remain

on the exterior of the Premises without appropriate screeningto be approved by the Coun1y.

5. Except during construction, pr as approved by the County, permanent storage

facilitie~ for fuel oil, or other bulk fue~s, must be provided below grade. Ifbelow grade storage

is technically infeasible, Lessee may use above grade storage, provided such storage is:first

approved by the Coun1y, and suitable screening is furnished by Lessee.

6. Lessee shall, at Lessee's expense, keep the Premises, including buildings,

landscaping, improvements, and appurtenances in a safe, ~lean, neat, wholesome condition, and

shall comply in all respects with all government health and policy r.equirements. Lessee shall

remove at its own expense any rub,bish, garbage or trash of any character which may accmnulate

from or on the PI;emises.

7. ' Vacant or uncompleted porti0:::U> ofthe building, or parts thereof: sha!J. be

adequately secured against vandalism and intrusion by trespassers.

ARTICLE XII

NlAfrDENANCEOFPROPERTY

1. Lessee shall IDamtain and repair the Premises according to plans, and amendments

thereto, as submitted by Lessee and approved by the County including, but not limited to all

buildings, landscaping, fences, dri~es, parking lots, and ail other structures and property

components located thereon in good and sufficient condition at Lessee's expense.

2. In the event of the violation of any of the restrictions set forth herein, the County

shall promptly so notify Lessee in writing, giving specifics as to the nature of the alleged

violation and any recommended remedial action. In the event Lessee has not taken steps to

'1 ""1" rrfl

r~medy the violation in a manner reasonably acceptable to the County wi+Jlln ten (10) business

days ofLessee's rec.eipt of such notice, the County, shall have the right to go upon the property to

put the ,same in good order, condition and repair and the cost of any such work shall be charged

against the Lessee and shall be enforceable in the manner provided by law, consistent with'the

provisions of this Lease.

ARTICLE XIII

SIGNS OR MONUMENtS

1. 'F or the purpose of this paragraph a sign or monument is the display of any words,

numerals, figures, devices, designs or trademarks by which anything is made known and visible

to the general public.

2. All plans and specifications fO.r signs or monuments to be erected on the exterior

ofthe building or grounds and visible to the 'gep.eral public shall be subject to the prior written

approval ofthe County. The submitted info:rmation shall include details of design, materials,

location, color and lighting, ifany.

.~ ARTICLE XIV

PARKING AREAS AND LOADING ZONES

1. Lessee shall provide adequate paved off-street parking facilities for visitors,

tenants, customers, and employees as reqUired by appropriate zoning reguiations unless

otherwise legally waived by the proper authority. No parking shall be perrni:tted on any access

road; nearby street or driveway, either public or private, or any place other than a paved parking

space provided for within the area of the Premises and so designated. Lessee shall be resporisible

-. • !~'ll ~- . 1 'I ~ I . I
f9r compliance with parking regulations by its employees; tenants and visitors. Lessee shaU not

be responsible for compliance with parking regulations during community use ofthe property, 1:0.

accordance withArtic1e 36 here~

2. Load:i.:Ilg andunloadIDg areas.shall be designed"Witb. adequate maneuvering space

.
so as to permit pickups and deliveries. The space for maneuvering of vehicles shall avoid
. .
interference with. other traffic flow. Suitable screening shall b,e provided so thesepperations are

not readily visible from public thoroughfares.

3. Loading and receivj.ng areas shall not be located on that side of the building which

also contains its mam entrance.

ARTICLE XV

TEN~ORARYSTRDCTURES

No structure, covering, garage, barn, or other outbuilding of a temporary nature shall be situated,

erected or maintained on the 'Premises except with prior vvntten approval of the County. This

Article shall not apply to construction buildings andlor storage facilities used du.ring the course

of renovation or repair work on any permanent building which is now on or is to be located on

the Premises.

ARTICLE XVI

TERM AND ENFORCE1v1ENT

'1. The provisions of this Lease shall run for the term ofthe Lease, including the
.
, Renovation P e:1od., and any extensions or renewals hereof, and be binding upon and
, . inure to the

'1 • t ""1'1 l' i~ ,,. :;.

- I j"

b~nefit ofthe Lessee. These provisions shall,be enforced, as provided hereinafter, by the County

or by Lessee for its benefit or protection.'

2. A violation of any provisions herem contained shall give to the County or Lessee

the right to bring proceedIDgs in.court against the party or parties violating or attempting to

violate any of said covf;nants, conditions, restrictions and reservations, to enjoin them from so

, doing, to cause any such violation to be remedied, or to recover damages resulting from such

violation. In addition, violation of any such covenants, conditions, restrictions, and reservatioru
, '

shall give to the COlmty the right to enter upon the Premises to remove at the expense of the

Lessee, any structtrre, thing or condition that may be or exist thereon contrary to the provisions

hereof. Every act, omission to act, or condition which violates the provisions of this Lease shall

constitute a nuisance and every remedy available in law for the abatement ofpublic or private

nuisances shall be available for the abateme~t thereof. In any legal proceeding to enforce the

, provisions hereof or to enjoin their violation, the party orparties against whom judginent is,

entered sJ:.lall pay the reasonable attorneys' ofthe party or parties for whom judgment is

entered in such amount as may ~e fixed by the court in such proceedings. Such remedies shall be

cumulative and not exclusive.

3. The violation by Lessee, of any of the provisions set forth herein shall, at the

County's option, be deemed to create, a default under this Lease and to give rise to any right of

termination or eviction provided that said violation has not been cured within thirty (30)'days

after written noti~e has been given to Lessee, provided that Lessee has not taken steps t9 remedy

said violation a nianner reasonably acceptable tci the County Vlitbin said thirty (30) days after

the written notice, and provided that any mortgagee of Lessee shall have been given notice of

such default and oppo:rtu:ruty to cure~ Further, notice of all claimed violations and of all othei

·~~;"':'lj, I'~'\
·.

enforcement"actions shall be given promptly to Lessee's construction andlor permanent lender

and/or bond·trustee and each ofthe~ is hereby granted an absolute right topalticipate as a party

ill. such pr?ceedings and to ctrre claimed default "'Nitl:iln the applicable cure period, provided

that Lessee has previously notified the County as to their identity.

.4. N onvithstandingany other provision herein, the parties hereto agree that this

Lease and the interest real property conveyed hereunder are not to be subordinated to the terins

of any financing or to any financing entitY or to any other instrument, individual or entity.

ARTICLE XVII

EXPIRA. TION

1. In the event Lessee has not exercised its right to purchase the Premises' as herein
,
set forth, at the expiration or earlier termination. ofthis Lease and extensions thereof, all

buildings. alterations. additions or improvements upon the Premises made by Lessee. shall

become the property of the" County and remain upon and be surrendered "'Nith said Premises as a

part thereof at the end ofthe Lease term.

At the expiration ofthis Lease, all trade fixtures, furnishIDgs and equipment,

whether or not they are or may be deemed to conStitute part of the Improvements, may be

removed by the Lessee, at its sole option. Tne Lessee, at its expense, shall immediately repair

any damage tc? the Premises by reason ofremoval of any such trade fi:x±ure, furnishings and

equipment. If the County elects to enter thereon and take possession at the teIIIlination of the

Lease, all repairs not previously made may at the option of the County he corrected at the
expense of the Lessee.
 ARTIcLE xvrn .
TENANT HOLDING OVER

In the event that the Lessee shall continue to occupy said leased premises or any part thereof after

the conclusion ofthe term ofthls Lease, or any extension thereof, the tenancy thus created shall

be deemed to be upon a month-to-month basis, and may be terrn.inated by either party giving the

other not less than thirty (30) days' written notice, to expire on the day ofthe mon~ from which

the tenancy commenced to run, but in no event will any month-to-month tenancy be terminated

by the Lessor prior to the conclusion of the then-cu:qent school year ofthe Lessee. During any

. month-to-month. tenancy, both parties shall continue to observe all agreements and covenants
\

. contained m this Lease. Lessee shall continue to pay monthly rental under rates to be negotiated

a minimum of thirty (30) days prior to the expiration of the initial term., which month-to-month

rentpl rates shallm noevem be less than me rental rates m enecr a1 me time 'or eXPIration;

·however, continued occupancy ofthe demised premises by the Lessee after the expiration of said

term shall not operate to renew said Lease for said term or any part thereof or render Lessee

liable for double rent.

ARTICLExrx

MORTGAGE OF LESSEE'S LEASEHOLD INTEREST IN THE DEWSED PREMISES

Lessee shall not mortgage this Lease and shall not assign or hypothecate Lessee1s mterest in this

Lease andlor m the Improvements without the 'Written approval ofthe County.

ARTICLE XX

ASSIGNlvfENT AND SlJBLEASING

, ­

L.essee shall not assign or sublease the Premises or any part thereofwithout the County's

advance exp:r:ess written approval thereto, which approval shall not be unreasonably ..,;vithheld,
. ,

delayed,. conditioned or denied.. Lessee shall obtain the C01ID.ty's approval by submission to,the
'

County of copies of the proposed sublease, a description of the activities ofthe proposed

sublessee, and any other information pertinent to the proposed sublessee's use and occupancy.

The County shill respond in writing not later than 45 days after receipt of me Les~ee's

submission. Subleasing by Lessee will bepemritted only under the following conditions:

(1) Lessee shall not sublease more than fifty percent (50%) of the net 'useable square

foot area oftb.e Building. All sublessees must'conform to existing zoning laws and their

proposed use must conform to the Montgomery County Council's reuse resolution for the

Building.

(2) Subleasing of any portion of the Building shall have as its primary goal the

recovery of reasonable operating and leasing expenses incmred by L~ssee in its own operation,

maintenance and administration of the Premises. Any rent charged to sublessee shall be limited

to the sublessee's pro-rated share of actual operating, maintenance, rent, administrative, expenses

and capital expenses inclllTed by Lessee.

(3) The County will not approve any assignment, sublease or t:ransfer of Lessee' s

interest in the Premises or any portion thereof if such an assignment, sublease or transfer results

in any profit or financial gain to Lessee in excess of the permitted costs and expenses. The

County may require 'tVritten evidence and documentation ofLessee;s compliance hereunder. If

Lessee is found to be receiving rent from sublessee in excess of me permitted costs and expenses,

such exc--- -~;lt shall be immediately due and payable by the Lessee to the County upon YVIitten

demand, as additional rent hereunder.

 ........ - -.------------------------.... ...
~~ ... ~ ,~--~,-.~--.-.'"

_~ 4 •

.
'.

(4)' In the event of an approved sublease, the Lessee shall remain responsible to the

County for payment of all rents and other amounts due hereunder, and compliance with all ofthe .

terms and provisions of this Lease.

ARTICLE XXI

SUCCESSORS AND ASSIGNS

The parties hereto that all of the terms, covenants and conditions, agreement, ri~ts,

privileges, obligations and duties contained in this Lease shall be construed to be covenants

ru.nning with the land, and all rights and liabilities herein given to, or imposed upon, the

respective parties hereto shall extend to and bind the respective heirs, personal representatives,

successors and assigns of said parties; and if there ~ha1l be more than one Lessee, they shall all
. .
be bound jointly and severally by the terms, 90venants and agreements herein. No rights,

however, shall inure to the benefit of any assignee ofLessee unless the assi!2T1ment to such

assignee has been approved by the CountY in writing.

ARTICLE x:Xrr

QUIET ENJOYMENT, TITLE TO LAND AND IM:PROVEMENTS

'.-. ,~n payment by the Lessee of the rents herein provided and upon the

observance and performance of all covenants, terms and conditions on Lessee's part to be

observed and performed., Lessee shall peaceably ~d quietly hold and enjoy the Premises for the

term hereby demised without hindrance or interruption by the CoUnty or any other person or

persons la-vvTully or equitably clairD.ing by, through or under the County, subject, nevertheless, to
" . ..

the terms and conditions of this Lease.

 ---"--- ... --.---:.--------:----------~~

(.

2. The County represents that it OYVDS the Premises in fee simple, and that there is no

encumbrance upon the Premises that is superior to this Lease. The County covenants that it shall

not at a,ny time hereafter (except for a sale of the fee simple interest to the Lessee as referred to

herein) convey, sell, encmnber or otherwise dispose of any interest of the Couno/ in the Premises

unles$ such conveyance, sale, encumbrance' or other disposition is made subject to this Lease, ­

arid any leasehold mortgage made by Lessee as herein provided. The County further represents

that it has the right to make this Lease and cC?venants that it will execute or procure any further

necessary assurances of title that may be reasonably required for the protection of the Lessee.

Lessee shall have a right to receive from the County an estoppelceitificate on forty..,five (45)

days 'mitten notice..The County and Lessee each represent to the other that it has the full right,

power, and authority to enter into this Lease for the term herein granted and that the leased

property may be used by the Lessee during tl;l.e :ntire term and extensions thereof for the

purposes herein set forth provided Lessee conforms to the provisions oftbis Lease and all

applicable laws and regulations.

3_ The covenants, agreements, ternis, provisions and limitations set forth in this

Lease shall apply to any buildings and jmprovements now or hereafter exi~g upon the "

Premises and to all additions, improvements, alterations, restorations, repairs and replacements

thereof as if the same were upon the Premises at the time of execution of this Lease.

ARTICLEXXllI

SURRENDER. W AlVER AND AMENDMENT

No agreement to amend or to accept a S1llTender ofthis Lease or a waiver of eithe:r party'~

obligations hereunder shall be valid unless in writing signed by the County· ai::ld Lessee_ The.

'I 'I ',III T ~- r- c 1

"

delivery ofkeys to any employee of the County or its agent shall not operate as a temrinatioD. of

the Lease or, a surrender of Premises. T.ne failure of any party to seek redress for violation of, or
.
to insist upon the strict performance of any covenant or c~:mdition ofthis Lease, shall' not prevent

a subsequent act, wbich would have originally constituted a violation from having all the force ";

and effect of an original violation. The receipt and acceptance by the County of rent with

knowledge of the breach of any condition or covenant of this Lease shall not be deemed a waiver

, of such breach. The right to enforce any such condition or covenant is in the sole jurisdiction of

the County. The failure by either party to enforce any of the conditfons or cov'enants set forth

herein or hereinafter adopted, against the other, shall not be deemed a waiver of any such

condi,tions or covenants: '

ARTICLE XXIV

NON~DISCRTh1I]\f ATION IN EMPL oYME'NT A."ND SERVICES

Lessee agrees to comply with the non-discrimination 'in employment policies in County contracts

as required by Section IlB-33 and Section 27-19 Of the Montgomery County Code 1994, as
amended, as well as all other applicable State and federal laws regarding emp1o~ent

discrimination. The Lessee assures the County that in accordance with applicable law. it does

not, and agrees that it will not discriminate 1n any manner on the basis of age, color, creed,

national origin, race, religious belief, sexual preference or handicap.

I .I I TIt --r:' '\ I • 1

..

ARTICLEMv

DISPUTES

Except ?-s oth~rnise provided in this Lease, recognizing specifically that the Lessee shall have

management control and responsibility for establishing andDi2in.taining Lessee policy, any

dispute concerning a question of fact arising out of interpretation of this Lease which.is not

disposed ofby agreement shall be decided by the County's Chief Administrative Offic;:er or his

design~e. The Lessee shall be afforded an opportu:ri..ity to be heard and offer evidence in support

of its claim. The decision of said Chief Administrative Officer or.his designee shall be governed

. by the Laws ofthe State ofMa..ryland. The Lessee shall be notified in miring of the Chief

AcL.'TIinistrative Officer's decision. Notwithstanding the foregoing, the pames may, by murual

agreement, agree to have their dispute decided under the roles of the American Arbitration

Association; however nothing hereunder s~ ~e interpreted to preclude the parties from seeking

any and all remedies available to them at law.

ARPCLEXXVI

CONJRA.CT SOLICITATION

Lessee represents that Lessee has not retained anyone to solicit or secure this Lease from

Montgomery County, Maryland, upon an agreement" or understanding for a commission, .

percentage, brokerage or contingent fee, excepting for bona fide employees or bona fide

established commercial, selling or leasing agencies maintained by Lessee for the purpose of

securing business or an attorney rendering professional legal services consistent with applicable

canons of e-L1ics.

,I "
 ARTICLE XXVII

PUBLIC EMPLOYMENT

, '

Lessee '!IDderstands that unless authorized under S ection lIB-52 and Chapter 19A ofthe

Montgomery County Code 1994, it is unlawful for any person transacting business mth

Montgomery County, MarYland, tbemploy a public employee for employment contemporaneous

with his cir her public employment

ARTICLE XXVIII

GOVERNING LAW

1. This Lease shall be construed and governed by the laws ofthe State of Maryland

wherein the Premises are located. ,Should any provisions of this Lease and/or of its conditions be

deemed illegal or not enforceable under the laws ofthe said jurisdiction, it or they shall be

considered severable,
, . and the balance of this Lease and its conditions shall remain. in force and
be binding upon the parties as though the said provisipns had never been included.

2. The purpose of this Lease is not primarily residential and shall not be redeemable

as provided in Section 8-110 ofthe Real Prpperty .Article, .A.nnotated Code ofMaryland. ;

3. Ifthe PreIJ?ises or such portion thereof as will make them unsuitable for the

purposes herein leased are condemned for any public use or purpose by a public authority other .

than the C01mty, the Lease shall cease, and rent shall be apportioned as of the date of surrender,
. .
of. possession. In the event of a partial taking, a pro rata reduction in the rent shall be provi~ed in

,the proportion which the property so taken or condemned bears to the entire property. Further, in

the event of any taking 'or condemnation both the County and the Lessee shall be entitled to

+1 ,1"I:r ·-.;~,;'l';; '~I !.,~:::- ,',.

c!aii:n., prove and receive in tqe condemnation proceeding such awards as may be allowed for

their respect:i:ve interests in the Prenrises.

4. It is understood, agreed and covenanted by and between the partie~ hereto that

County and Lessee, as their mterest may appear ,and at their respective expense, shan promptly
comply with., observe and perform all ofllie requjrements of all the statutes, ordinances,. rules,

orders and regulations now.in effect or hereinafter promulgated whether required by the F~detal

Government, State of Maryland, Montgomery COUIlty Government o~ Montgomery County Fire

Marshal's Office.

5. Tne responsibilities and' obligations ofthe County as set forth iJithis Lease shaJ

not constitute a waiver by the County of any provision of the Local Qovemment Tort Claims

Act, Courts and Judicial Proceedi::i:::tgs Article SecTIon 5-401, et ~., Annotated Code of

Maryland.

6. Tne County's liability to Lessee, its employees, agents, visitors, tenants, licensees

or concessionaires for recovery of any loss, expense or judgment under this Lease shall be

limited as set forth herein and as set forth in the Local Government Tort Claims Act, Courts and

Judicial Proceedings Article, Section 5-401. ~ seq., Annotated Code of Maryland.

ARTICLE XXIX

RECORDING

Lessee and Comity shall have the right to record this Lease, or to execute a Memorandum

of Lease and have it properly aclmowledged for the purpose of recording. Such Memorandum of

Lease shall have included therein such of the provisions hereof as may be requested by either of

the parties. The cost of recording such a Memorandum of Lease (mcluding aU stamps,
cQnveyance;Tecordation and other taxes incident thereto) shall be borne ·by the party so

requesting. .

ARTICLE XXX

ENTIRE AGREENfENT

Tills Lease and the Exhibit(s) attached hereto and fomring apart hereof, sets forth. all the

covenants, promises~ agreements, conditions and understandings between the County and Lessee

concerning the Premises and there are no covenants, promis·es, agreements, conditions or

understandings, either oral or written, bet\¥een them other than as herein set forth. Except as

herein othervvise provided, no subsequent. alteration, amendment, change or addition to this

Lease shall be binding upon the County or Lessee unless reduced to writing ·and signed by the

parties.

ARTICLE XXXI

EXHIBITS

This Lease includes and ~corporates all attached Exhibits, and Addenda, consisting of

the following:

1. Exhibit A, a site plan of the leased Premises.

ARTICLE XXXII

NOTICES

An notices required or permitted hereunder shall be deemed to have been given if mailed

in any-United States Post Office by certi:5ed mail, postage prepaid., addressed to County or

T ; -,Irlr : .. ~ -roT .. r ".+'-- ~

~ ... ,~= -1" r I l
.­ -'
.­
,

~essee, respectively, at the following addresses or to such .other addresses as the parties may

designate in.writing from time to time.

COUNTY: LESSEE:

Montgomery County, Maiylaild Attention: Principal

Dept. of Facilities &Semces , The Hebrew Academy of Greater 'Washington, Inc.
Office of Real Estate Management 2010 Linden Lane
110 No~ Washington Street Silver Spring, Maryland 2.0910
Rockville, Maryland 20850

With A Copy To: Following date of occupancy:

County Attorney The Hebrew Academy of Greater Washington, Inc.
Montgomery County 13300 Arctic Avenue
101 Momoe Street, Third Floor 'Rockville, Maryland 20850
Rockville, Maryland 20850

AKr~CLE XXXIII

NON-MERGER

The fee title of the County and the leasehold estate of the Lessee shall, at all times during

the period of this Lease, be separate and apart and shall in no event be merged, notwithStanding

the fact that this Lease or the leasehold estate created hereby, or any interest in either thereof,

may be held directly or incfuectly by or for the account of any person who shall ovro the fee

estate in ~e Premises or any portion thereof; and no such merger of estates shall occur by

operation of law or otherwise. Unless otherni.se provided, all terms and provisions corrtained m: .
this Lease shall survive the execution ofthe Deed but shall not be merged by operation oflaw

upon the execution of any Deed conveying the fee simple title to any entity owning the leasehold

estate. ,

,ll·.,..··~of't', .',"1 I ' I

 •
"

,
." •

ARTICLE XXXIV

CAPTIONS. PRONOuNS

captions, article numbers, paragraph numbers, and index appearing in this Lease are

inserted only as a matter

.
of convenience and in no way define: limit, construe, or describe the ,

scop~ or intent of such articles or paragraphs of this Lease nor in any way affect this Lease. '

The use ofthe n~uter singular prono1.m. to refer to the C01.m.ty or Lessee shall be deemed a

proper reference even though C01.m.ty or Lessee may be an individual, a partnership, ajoint

venture, a corporation, or a group oftwo or more indiv:iduals, partnerships, joint ventures or

corporations. The necessary grammatical changes required to make the provisions ofthis Lease

apply in the plural sense where there is more than one Lessor or Lessee and to either

corporations, associations, partnerships, or individuals, males or females, shall in all instances be

assumed as'though in each case fully express~d.

ARTICLE XXXV

USE OF THE PROPERTY

, Lessee intends to use the Premises as a school, and for uses incidental to the Less~e' s

educational curriculum, including school-sponsored events, commemorations and cere:rp.orues for

students of the schooL Lessee agrees that it mil be solely responsible for any and all

govemmental use or occupancy pe:rririts or any other permits or approvals necessary to establish

intended use ofthe Pre'mises .. Lessee shall complete and all required applications, and

shall diligently pursue any and all requisite approvals for the intended use of the Premises

., .,
'(!!)'
"to
 -----------------=---~~ .......
~,'-~-~-.--;---~,

..

ARTICLE XXXVI

CON!MlJNITYUSE,

(I) Lessee shall make certaID facilities within the Premises available fo~ continuing

use by the commUnity on an "as available" basis. These facilities include the Gymnasium and
.
Auditorium within the building, as well as the outdoor athletic fieldsi:hat are part of the

Premises. These facilities will be made available for use by the public in acco~dap.ce with the

guidelines and regulationS for community use of schools, published by the Montgomery County

, C ommunity Use of SCh90ls Program, as established by the Montgomery County Code 1994, as

amended, Chapter 44, Article I, School Facilities Utilization Act. School facilities will be made

available ,only on a scheduled basis, and at times when such community use will not iriterfere

with the Lessee's regular educational program. Users of the facility under the provisions ofthe

Community Use of Schools program will be ~esponsible for compliance with paiking regulations

during commLmity use ofthe property .

(2) In the event the Lessee exercises its option to purchase the Premises, as set,forth

this lease, the parties will pr7pare and record a declaration of covenants at closing, or, in the

alternate, ,a copdition in the deed,which ~ run with the land and:will smvive closing, requiring

Lessee to continue to make these facilities available for community use as hereinabove

described.

(3) Lessee shall have the exclusive use of me outdoor recreational areas and athletic

fields until 5:00 P.M. Monday tbrough Friday. After 5:00 P.M. during the week and all day

Saturday and Sunday these outdoor areas 'will remain ayailable, on a continum.g basis", for use by

. the community. In the event Lessee requires the use of these areas during the times normally

reserYed for community use, Lessee will schedule such use with the Maryland-National Capital

! r ·>llr : j • •:' (1'1'­

·.
". .

p.a:rk andP~g Corn:mission, the Community Use ofSch001s Program, or the Montgomery

County Department of'Recreation, as appropriate.

[SIGNATURES ON NF-,XT PAGE]

<. _ J ). .'
.,-

IN "'YVIThTESS WHEREO;F, the parties hereto do hereby execute this Lease as of the &y and year

. first above written.'

WITNESS ORATIEST: MONTGOMERYCOuNTY,Nl~YLAND

By: ~ I<"~,",==-=(SEAL)
Douglas . Duncan .
County Executive

HEBREW ACADEMY OF GREATER

W ASIDNGTON, INC.

u BY:~k.
T~lank
(SEAL)

President·

. Dale: !~
RECO:M:ME.NDED:

OFFICE OF REAL ESTATE MA.1\TAGEl\1ENT

By: . \Ui.LlLCWLL&l-- .

ReyJo:nque&:Acting Chief

3 J "1 " +1
Date:----~l~~--------------

.APPROVED AS TO FORM AND LEGALITY.

OFFICE OF THE COUNTY ATTORNEY

By:cf(~'{kil. 0-L~ ~

Date: . 1I0-~dt if; t '19 rv.

 ---'----------.---------~~~~-~."'""'"' ..... ~

,..!
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.J

STATE OF MARYLAND, ~~·222~tOwit:

ON THIS c2tf/1! day of ~ , 1996, before me, the
undersigned officer" personally appeared Douglas M"'Dunc~ County Executive for
Montgoplery County, Maryland, known to me to be the person whose name is subscribed to the
foregoing, who' did fully acknowledge that he executed the same as his voluntary act and deed for
the purposes therein contained..

\VITNESS my hand and official. seal the same day and year first above mitten..

.£kz ~ 7?t7J1?/
_ No~ublic .

My Ccmmizsion~ires:g~ j. /9'7t

STATEOFMARYIAND, G ...... 4) ~~ Kc~W:=Er). ' to wit:

ONTIllS \L..<."""'- dayof' ~Jc, ,.1996, before me, the
undersigned officer. personally appeared Jonathan Blank, President ofthe Hebrew Academy of
Greater Washlngton, Inc. mO-WTI to me to be the person whose name is subscribed to the
foregoing, who did fully acknowledge that he executed the same as his voluntary act and deed for
the purposes therein c o n t a i n e d . ' .

'NITNESS my hand and official'seal the same day .and year first above mitten.

CL~~-~-
. Notary Public ~YUl\..~ -=6. ~~

M)' Cc!mnission Expires: N~v. \. ',qq B

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@ ~rTT' . I ­
 Resolution No:
Introduced:
Adopted:

COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND

By: County Council

Subject: Sale of Peary Senior High School

Background

1. Pursuant to Article 25A ofthe Annotated Code of Maryland, the County has authority to
dispose of any real of leasehold property belonging to the County, provided the property is
no longer needed for public use.

2. The County, under authority of Section 4-114 of the Maryland Education Code Annotated,
has authority to dispose of school property that has been declared surplus to public needs.

3. As a surplus school, Peary Senior High School (the "Property") was approved for
disposition by the Montgomery-County Council, by Resolution No. 12-1874, adopted on
November 29, 1994, pursuant to the requirements of Section 4-114 of the Maryland
Education Code Annotated, the Council having approved a lease with an option to
purchase.

4. Pursuant to Montgomery County Council Resolution 12-1874, the Montgomery County

Government solicited proposal for the reuse andlor disposition ofthe Property in 1995.

5. The Hebrew Academy of Greater Washington, Inc., now known as the Melvin J. Berman
Hebrew Academy (the "Academy"), submitted and the County accepted, a proposal for the
reuse of the Property as a private educational facility.

6. The County and Academy entered into a lease dated March 29, 1996, which included an
option to purchase the Property. The Academy has notified the County that it now intends
to exercise its option to purchase the Property. The County Executive and the Academy
have negotiated mutually acceptable terms for the sale ofthe Property.

Objectives .

1. The Property may be used only for private educational use, and for incidental uses related
and accessory to use for private educational purposes, use for daycare and worship
services, private educational day camp and private religious education center.

2. The County will retain a right to reacquire the Property should the Academy propose to sell
or transfer the Property to any person or entity for any purpose other than as a private
educational institution.

3. The gymnasium, auditorium, and outdoor athletic fields will be made available to
the public at certain times through the Montgomery County Community Use ofPublic
Facilities ("C1JPF").

Action

The County Council for Montgomery County, Maryland approves the following
resolution:

1. The Council approves the sale of Peary Senior High School to Melvin J. Berman Hebrew
Academy for use as a private educational institution and with restrictions as described in
Objectives 1, 2 and 3.

This is a correct copy of Council action.

Linda M. Lauer
Clerk of the Council

RPPROVED RS TO FORM RND LEGALl1V

OFFICE OF ATTORNEY
~~:~~~~----------
 Resolution No.: 12-1874
Introduced: November 29, 1994
Adopted: November 29, 1994

COUNTY COUNCIL FOR MONTGOMERY COUNTY, MARYLAND

By: County Council

Subject: Disposition of Peary High School

Background

1. Maryland Education Article Section 4-114(c), provides that "If, with the
approval of the State Superintendent, a County Board finds that any land,
school site or building no longer is needed for school purposes, it shall
be transferred by the County Board to the County Commissioner or County
Council, and may be used, sold, leased, or otherwise disposed of, except
by gift, by the County Commissioners or County Council." Therefore,
pursuant to State law it is the County Council that determines the
disposition of closed school property.

2. Under County Attorney opinion 90.009, the procedures for disposition of

improved closed school sites are as follows: a) the School Board must
find that the property or school is no longer needed for school purposes
and the State Superintendent must approve this finding, MD EDUC. CODE
ANN., Section 4-l14(c); b) if the improved school site was supported by
state funding, approval by the Board of Public Works is necessary prior to
transfer of the school property from the Board of Education to the County,
65 Ope Att'y. Gen. 118; c) the transfer of the property must occur from
the School Board to the County, MD. EDUC. CODE Ann., Section 4-ll4(c); d)
the proposed disposition must be advertised giving opportunity for
objections, MD. ANN. CODE, art. 25A, Section 5(B); e) thereafter, the
Council acts upon the proposed resolution and disposes of the property.

3. Robert E. Peary High School is situated on a 19.52 acre site located on

the western side of Arctic Avenue in Aspen Hill. The site is zoned for
single-family detached houses on 9,000 square foot lots (R-90).

4. Robert E. Peary High School has not been used for public education
purposes since 1984 and has been unoccupied since 1988. On November 11.
1994, Peary High School was transferred by deed from the Board of
Education to the Montgomery County Government.

5. The 1994 Approved and Adopted Aspen Hill Master Plan recommends that the
school remain in public ownership. Acceptable reuses identified in the
plan include a public or private school, a specialized indoor recreation
facility, theater productions, and other community uses. The existing
outdoor recreation facilities are recommended to be retained and made
available for public use.
 "
"

6. The FY95 Capital Improvement Program (CIP) appropriated funds for a needs ~~
assessment of Peary High School to explore the full range of alternative )
uses and related operating budgets impacts. The CIP indicates that
following the needs assessment, the Executive will propose and the Council
will review a recommended course of action.

7. On October 28, 1994, the Executive transmitted a report on the reuse

alternatives for Peary High School and a recommended course of action.
The Executive recommends private education as the preferred reuse and a
local park/recreation facility as the secondary reuse.

8. On November 1, 1994, Executive staff briefed the Council on the reuse

alternatives-and on the reuse recommendations of the County Executive.

On November 29, 1994 the Council held a public hearing for the purpose of
giving the public an opportunity to comment on reuse alternatives for
Peary High School consisting of, but not limited to: 1) retaining the
building for private education institution use with appropriate sharing of
recreation and other facilities; or 2) demolishing the building and
utilizing the site as a local park with provisions for shared use of
outdoor courts and fields. Testimony was also taken on the County's
option to dispose of the site by sale or by lease.

Action

The County Council for Montgomery County, Maryland, approves the following
resolution:

The following reuse alternatives are approved for the Robert E. Peary High
School:

1. The preferred reuse is to lease the property to a private school with

appropriate sharing with the community of the outdoor recreation
facilities, gymnasium, and auditorium. Future re-estab1ishment of a
public education facility at Peary High School should not be
precluded under any lease agreement. The lease should include
restrictions as necessary to address traffic and parking impacts of a
private school with shared community use. Any sale of the property
is subject to prior consent by the County Council which will consider
the appropriate elements of the Aspen Hill Master Plan at that time.

2. The secondary reuse, in the event the preferred reuse cannot be

arranged within a reasonable period of time, not to exceed eight
months from the adoption date of this resolution, is a local
park/recreation facility. This reuse involves demolition of all or
portions of Peary High School and conveyance of the site to M-NCPPC.
Conveyance of the site to M-NCPPC is subject to the following
restrictions:

-2­
 Resolution 12-1874

a. The property must not be used for any purpose other than a public
park without the County's prior written consent.

b~ The property must be conveyed back to the County i f it is ever

needed by the Board of Education for public school purposes.

c. Transfer by lease or sale of any interest in the property by

M-NCPPC to any third party is subject to the County's prior
consent and any proceeds received from the sale of the property
must be paid to the County.

3. Any reuse must seek to accommodate the roller blade youth hockey
facility constructed on the Peary High School site.

4. The Executive is requested to provide periodic reports to the Council

on the status of this resolution.

This is a correct copy of Council action.

w~~
Kathleen A. Freedman, CMC

Secretary of the Council

.i
J
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@J

 MONTGOMERY COUNTY BOARD OF EDUCATION

850 Hungerford Drive + Rockville, Maryland 20850

October 25,2010

The Honorable Nancy Floreen, President

Montgomery County Council
Stella B. Werner Council Office Building
100 Maryland Avenue, 6th Floor
059206
Rockville, Maryland 20850

Dear Ms. Floreen:

This letter is regarding the proposed sale of the former Robert Peary High School, which is on the
agenda for the County Council meeting on Tuesday, October 26, 2010. The former Robert Peary
High School is located at 13300 Arctic Avenue, Rockville, Maryland. This site is within the Rock
Creek Valley Elementary School service area and the Rockville Cluster of schools.

In October 2005, in response to a request from the County Council's Management and Fiscal Policy
Committee to provide the Board's position on the proposed sale of the fonner Robert Peary High
School, the Board of Education passed a resolution opposing the sale on the basis that the facility
may be needed for educational purposes in the future. Since that time, enrollment in Montgomery
County Public Schools (MCPS) has continued to increase substantially. Preliminary enrollment this
year is 144,458 students, which is 5,071 more students than in 2005. Another 10,000 students are
projected to be enrolled by the 2016-2017 school year.

It is important to note that enrollment is increasing throughout the county, including the Rockville
Cluster. In order to address enrollment increases in the past, MCPS has found it necessary to rebuild
and reopen a number of schools that were closed. Since 1985, three elementary schools, six middle
schools, and one high school have been reopened or built at the sites of fonnerly closed schools. It is
important in this era of enrollment increases to maintain all possible facilities and school sites to
address enrollment growth.

While it is not possible to project our exact facility needs for the future, we know future sites will be
needed given the burgeoning enrollments we have seen at all school levels. For these reasons, we
continue to oppose the sale of the fonner Robert E. Peary High School.

Thank you for your consideration of these remarks.

Sincerely,

;"J-~' .. ,~-
,- "

Patricia B. O'Neill
President
...
PBO:jlc
Copy to:
Members of the Board of Education
Dr. Weast
®

Phone 301-279-3617 + Fax 301-279-3860 + boe@mcpsmd.org + www.montgomeryschoolsmd.org

 ATTACHMENT 3

Facility right-of-way. the entire area should be

acquired and managed as a park.
plused by the Board of Education, it should be
kept in public ownership. If a determination
r
~.
T.· "'..
is made that it is not needed as a public school. y ~.

PARCELS OR AREAS WITH COM­

any use of the site that would not preclude its
eventual reuse as a public school would be
{J J

MENTS
desirable. Such uses include, but are not limi.t­
ed to, a private school, a specialized indoor
.po 1

14 Robert E. Peary High School recreational facility and the use of the audito­
~.
L.__
~-<

rium for theater productions and other com­

The 19.52-acre site is located on the western
munity use. It is conceivable that only a por­
side of Arctic Avenue {Figure 24~ The site is
tion of the structure would find qualified ten­
zoned for single-family detached houses on
ants acceptable to the public owner. To the
9.OOO-square-foot lots. The property is bor­
extent that the building is not renovated and
dered by single-family detached houses to the
not used. it should be considered for demoli­

north and ease. A church and the Frost Center

tion.
school site are to the south. The Rock Creek
Stream Vaney Park borders the site to the west.
Consideration should also be given to adding r .
the site into the Rock Creek Stream Yaney
After years of neglect. the Peary High School
Park to provide additional playing fields.
building in its present condition is no longer
Regardless of who controls the site. the exist­
an asset to the Aspen Hill community. Peary
ing outdoor recreation facilities should be
High School graduated its last class in 1984. In
repaired and made available for public use.
1987. after the Board of Education turned the
site over (.0 the. County as surplus property..
the County Executive proposed thatthe audi­
15 Rock Creek Village Shopping Center
torium and gymnasium wings of the buiJding
The 939-acre neighborhood center is located
be renovated. the remainder of the building be
in the southwest corner of the Norbeck Road
demolished, anew connecting piece be con­
and Bauer Drive intersections (Figure 25). The
structed between the auditorium and gymna­
center has approximately 89,000 square feet of
sium wlngs and that the facility be used as a
gross retail space. It is bordered to the south
combination regional recreation center, chil­
by townhouses and condominiums: To the
dren and youth services center and fine arts
northwest. there is a small strip of unim­
. center. Before that recommendation could be
proved land that is a residual from the
fully acted upon, the Board of Education
Norbeck and Baltimore Roads improvements.
requested that the site be transferred back to
the~ so that the facility could once again be
There is a perception that the rear parking lot
I used for public educa~ion. Funding to reno­
is inaccessible and unsafe. The shopping cen­
vate the building to serve as a holding school
ter previously had two points of ac::cess from
was not available at the time it was requested.
the rear lot [0 the front parking lot. One of
In 1994. the Board of Education is.once again
those entrances was dosed to create additional
considering giving the site to the County as
retail space. leaving one access point to serve
surplus property. The building has been
the entire parking Joe. Efforts should be made
unoccupied since 1988. Positive action is now
to correct this ·situation and improve access to
required to restore the building and site for
this parking lot.
the benefit of the County and the neighbor­
ing community.
The existing two-way light at the shopping
center's entrance on Bauer Drive near the
The reuse of Peary High School as a public
supermarket only stOps traffic on Bauer Drive.
school, if such a need is found by the Board of
It is activated by pedestrians crOSSing Bauer
Education. would be the most desirable future
Drive. This light is near the crest in the road-
for the site. In any event. if the site is sur­

" S P £ N H III
- -
ZHAlnc.

144 Duke of Gloucester Street

Annapolis, MD 21401
410-267-7070
info@zha-inc.com
www;,zha-inc.com

TECHNICAL MEMORANDUM.
'.

TO: Councilmember Marilyn Praisner

Chair, Management and Fiscal Policy Committee
, Montgomery County Council

FROM: Jacob Sesker

ZHA, Inc.

RE: Old Peary H.S./MJBHA

DATE: November 6, 2006

INTRODUCTION

The Administration recommended that the County Council approve a pro­

posed deed, thereby conveying the old Peary High School property to the Berman
Hebrew Academy. The Administration recommended that the County Council
approve the sale, even though the sale and repurchase would be more expensive
than continuing the Lease until the earliest pOint at which the County could termi­
nate the Lease.

County Council requested an objective review of the assumptions and

methodology used in the Administration's calculations. The Council essentially
wanted to know whether the Administration's assumptions were reasonable and in
accordance with industry standards, and whether the Administration took into
account the value of the lease and the underlying property.

Based upon the information available, the answer to the above questions
would be "No." The Lease document was not interpreted consistently throughout
the Analysis, nor was the interpretation in the Analysis consistent with a reasonable
reading of the terms of that document. The comparisons made in the Analysis were
not apples-to-apples comparisons, and therefore were inaccurate representations of
the relative quantitative merits of the Lease and Proposed Deed. The Analysis
failed to convey the qualitative merits of the Lease and the Proposed Deed, and
furthermore failed to take into account the "value" of maintaining ownership and
control over the property during the coming decades.
 -2­
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_wa~ _______________________________________________________
TECH MEMO-Ms. Praisner November 6, 2006

In a fair and equitable sale, the value of the land would accurately reflect its
current market value. If the County, recognizing the scarcity of large available
sites for new school construction, would like to be able to re-purchase the property
at some later date for use as a public school, then it would only be fair to discount
the sale price. However, it would not be reasonable for the County to discount the
sale price without adequately protecting its ability to repurchase the premises at
some later date. As explained in this memorandum, it appears that the proposed
deed offers the Academy a low price and offers little or no protection to the
County's interests. As such, the information available would indicate that this is not
a good business deal for the County.

A review of the Lease, the Proposed Deed, and the analysis prepared by the
Administration (hereafter, Analysis), as well as other supporting materials illus­
trated the following:

• The Analysis was not an "apples-to-apples" comparison.

• The Analysis was not consistent with the often confusing language of the'
Lease and the Proposed Deed.
• Given that the County's interests here are more than just financial and given
that the timeframes contemplated are fairly lengthy, a private-sector analysis
of this proposed transaction would be more qualitative than quantitative in
nature.
• Under the Proposed Deed, it may not be possible for the County to repur­
chase the school for use as a public school at less than fair market value.
• The Analysis performed by the Administration did not clearly convey to the
Council that the proposed transaction was a sale of a rare asset probably weI!
below market value with no guarantee that said asset would be available for
repurchase should the County need to re-use it as a public school.
• A sale under the proposed terms does not represent the best deal available
to the County.

Finally, it must be noted that any analysis of the Lease and Proposed Deed
necessarily involves interpretation of legal documents. However, nothing herein
stated should be construed as legal advice. The County Council is ably represented
by legal counsel and as appropriate should seek their interpretations of the Lease
and Proposed Deed. .

BACKGROUND ON THE LEASE

The Lease was executed on April 15, 1996. The Lease provided for a two­

year renovation period following execution. The renovation period was not to be

 -3­
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..aWL'___________________________________________________________
TECH MEMO-Ms. Praisner November 6, 2006

counted as part of the 25-year term of the Lease. Therefore, the term of the lease
would expire on April 15,2023. 1

Assumptions Timeline

1998 to 2023: The 2S-Year Lease Term

The Lease may only be terminated prior to 4/15/2023 for violation

constitutin default under Article XVI.
Five-years notice may be given of intent to terminate the lease if the
premises are needed for use as a public school, so long as that
termination is effective after 4/15/2023.
2023 to 2038: Three Five-Year Extensions
MJBHA can exercise each five-year extension by providing 12-mont
notice.
During this time, Lease may be terminated either (1) for violation
constituting default under Article XVI, or (2) with five-years notice if
the premises are needed for a public school.
term n, nty m to use r any purpose,
though such use may be subject to claims of bad faith, breach of
contra

f: 60020/Peary Memo Numbers.xls/Timeline

The Lease also sets forth the conditions upon which the Academy may pur­
chase the Premises from the County during the term of the Lease and 'any applica­
ble extensions. The Lease also establishes a methodology for setting a baseline
price and adjusting that baseline for inflation.

IDENTIFICATION OF POTENTIAL OUTCOMES

In analyzing these transactions, three potential outcomes merit evaluation:

1 The lease is to end April 15, 2023, which is the day after the end of "Lease Year 2022."
The calculations prepared by the Administration for the Council assumed that the lease
could not be terminated until 2028. This requires the conclusion that the 25-year lease is
actually a 30-year lease. Furthermore, that interpretation is not consistent with the
response memo (dated September 20, 2006), in which John Fisher, Associate County
Attorney, stated: "The County may terminate the lease upon five-years notice to the lessee,
but the termination would not become effective until after the initial 25-year lease term
expires."
...
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_.

--
_~.L- _______________________________________________________ -4­

TECH MEMO-Ms. Praisner November 6, 2006

1) Sale/Buyback: The County sells the property to the Academy, buying it

back at the earliest possible date under the Proposed Deed (March 1,
2031).

2) Lease Termination: Council rejects this and other proposed sales, contin­
ues the Lease, and then terminates the Lease at the earliest possible date
(April.15, 2023).

3) Lease Continuation: Council rejects this and other proposed sales, contin­
ues the Lease, and allows the Lease and all extensions to expire (not later
than April 15, 2038).

A more detailed explanation of each of those outcomes, as well as the rele­

vant language in the Lease, Proposed Deed, and supporting documentation is pro­
vided below.

OUTCOME #1: SALE/BUYBACK

The Academy's non-assignable right to purchase the property from the

County is established in Article III of the Lease. Under Article III, the Academy
may purchase the property at any time during the original 25-year term and any
subsequent extension. That purchase would be subject to the approval of the
Council and the Executive and subject to "any restrictions, conditions or require­
ments which the County Executive and the County Council may elect to attach to
such a purchase. If

According to the Lease, the parties expected that the price would reflect the
value of the land at the time the Lease was executed, and would not include any
value for the improvements. The method in the Lease for establishing the purchase
price reflects that expectation; the purchase price is to be established by appraisals
of the land performed shortly after execution of the Lease as adjusted periodically·
for infiation. 2

Under the proposed "Deed and Reservation of Rights to Re-purchasei" cer­

tain restrictions will apply to the Academy's use of the property after the purchase.

2 Adjustment for inflation may, over the long term, prove to be fair to all parties. Over the
short term, that method produces results that can be disproportionately beneficial to one
party. Such a method of adjustment fails to take into account various relevant economic
trends. For example, since the execution of this Lease land values have risen much more
quickly than overall inflation. Additionally, the portion of property values that is attributable
to the value of the underlying land is increasing. In light of such trends, adjusting the
baseline price for inflation is likely to significantly understate the value of the land.
 -5­

... -~-~------------------------------------------------------
TECH MEMO-Ms. Praisner November 6, 2006

• The Academy must continue to permit Community Use of the facilities, as set
forth in the deed.
• The Academy may not materially alter the dimensions or character of the
athletic fields without prior written approval.
• Beginning on March 1, 2026, the County shall have the right to send written
notice to the Academy of the County's intention to repurchase the property
for use as a public school not earlier than five years after the date that such
notice is sent. This right by the County will continue for 99 years. The repur­
chase price would be the fair market value of the property if used as a pri­
vate school.

Furthermore, the deed purports to restrict the use of the property to use as a
private educational facility, and "incidental uses related and accessory to use for
private educational purposes." 3 However, this restriction on use is less than iron­
clad-in fact the restriction on use may be largely illusory.

Should the Academy wish to change the use of the property, all that the
Academy must do is first offer to sell the property to the County for the fair market
va!ue of the property at that time. If the County were to decide not to repurchase
the property for fair market value, then the Academy would be re!eased from the
covenant and wou!d be free to proceed with the change in use. 4

OUTCOME #2: "TERMINATION" OF LEASE

The earliest possible date that termination can occur (absent conduct consti­
tuting default) is April 15, 2023. The County may elect to terminate the Lease by
providing the Academy five-years advance written notice-thus in order to termi­
nate the Lease atthe earliest possible date, written notice must be provided by
April 15, 2018 (see Article II, §2). This right of termination is subject to a signifi­
cant limitation-it may only be exercised "in the event the leased premises are
needed by the County for public education purposes."

Financial obligations will arise under Article VIII of the Lease should the
County elect to terminate. Under Article VIII, §4 et seq., the County must reim­
burse the Academy for a portion of approved Non-Elective and Qualified E!ective
capita! improvements completed by the Academy. Upon termination, reimburse­
ment for capital improvements is to be pro-rated for the remaining useful life of the
improvements. The cost of reimbursement under Article VIII is likely to be signifi­
cant; however, reimbursement will be less expensive than building a new school.

3 See paragraph "6" of the "Deed and Reservation of Rights to Repurchase."

4 To illustrate, this could lead to the following absurd result: the County sells the property
today to the Academy for $1.6 million, the Academy offers it back tomorrow for $16 million
(hypothetical FMV), the County rejects the offer, the Academy is released from the
covenants in the deed and sells the property to a residential developer.
 -6­
-iiiii
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ii''',...L-___________________________
TECH MEMO-Ms. Praisner November 6, 2006

county staff has indicated that there are no other restrictions on the use of
this property, so presumably the County would be able to use the property for any
politically feasible purpose. 5 However, the Lease indicates that the requirement for
this type of termination is that the facilities are needed for use as a public school.
Whether termination under this section would operate as a de facto limitation on
the Countyls use of the propertYI and for how long l are legal questions.

OUTCOME #3: CONTINUATION OF LEASE

The Lease automatically expires at the end of the 25-year term and any
extension, without notice or demand from the County (see Article II, §2). The latest
date upon which the Lease would expire is April 151 2038. Expiration is thereafter
governed by Article XVII of the Lease.

Upon expiration the County has no obligation to reimburse the Academy for
Non-Elective and Qualified Elective capital improvements-those obligations only
arise if the County terminates the lease prior to the expiration of the Lease and any
exercised extensions. All buildings, alterations, additions or improvements on the
premises then become property of the County (see Article XVII). It seems that the
County could then use the Premises for any use whatsoever.

EVALUATION OF POTENTIAL OUTCOMES

Each of the three outcomes described above can be evaluated on the basis of
various criteria. The following are among the criteria that might be used in an
analysis of these potential outcomes:

• Time: What is the earliest possible date the facility is available for re-use as
a public school?
• Financial Benefit: What revenue accrues to the County?
• Financial Cost: What is the cost to the County?
• Opportunity Cost: What opportunities are missed and at what cost?

The extent to which those or any other evaluation criteria should be consid­
ered depends upon the policy objective. If the County Council's objective is to have
the flexibility to use the Premises for a public school when such a need arises in the
coming decades l then the calculation and weighting of the evaluation criteria must
reflect that objective.

5 Re-use by the County for a purpose other than public education may give rise to causes of
action for bad faith or claims on the contract-County Council might seek legal clarification
of the effect of any possible restrictions on the re-use of the property.
 -7­
...
-- - _~_L- _______________________________________________________________
TECH MEMO-Ms. Praisner November 6, 2006

OUTCOME #1: SALE/BUYBACK

Under the sale/buyback scenario, it is unlikely that the County would be able
to use the property as a public school prior to March 1, 2031. Furthermore, it is
quite possible that the school will never be available for the County's re-use as a
public educational facility.6

A current sale would result in a current influx of capital. Using the methodol­
ogy established in the Lease, the 2007 sale price would be between $1.6 million
and $1.7 million. Based upon the language of the Lease, it appears that the County
could ask for a higher price than that obtained through the methodology set forth in
the Lease.

Sale Price Under Lease

D t CPI for All Urban Appraisal
a e Consumers (Adjusted)
Dec 97 161.3 $1,335,000
Dec-OS 196.8

f:/60020/Peary Memo Numbers.xls/Sale Price Under Lease'

The price in the table above assumes that the baseline price was established
in December of 1997, and that the sale is consummated in 2006. Should the sale
occur in 2007, that price would be slightly higher.

The proposed deed, which is dated in 2005, cites a sale price of exactly
$1,500,000. The Administration's Analysis (from 2006) cites a figure of
$1,650,000/ It is not clear why the methodology established in the Lease was not
followed in either instance. 8 In any event, it is worth noting a few things regarding
the method established in the Lease and the sale price that the method produced:

6 See Paragraph B of Proposed Deed. The proposed deed does not truly restrict the use of
the property. The Academy could, at any point in time, force the County to decide between
(a) paying the Academy fair market value for the property and (b) allowing the Academy to
use the property for other purposes and/or sell the property to a developer who would
develop other uses on the property.
7 The only explanatory reference to the $1.65 million number is a footnote in the figures
that the Executive staff provided to the Council, which reads in its entirety: "This is the
actual amount, as per the agreement between the County and Berman Hebrew Academy."
8 A reasonable reading of the Lease indicates that the County may ask for a price that is a
higher price than that established under the methodology set forth in the Lease. Whether
the County could accept a price that is lower than the price established under the
methodology set forth in the Lease is a legal question. In any event, the $1.5 million figure
may have been below the value that would have been established using the methodology
-
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..
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... -~.~---------------------------------------------------------
TECH MEMO-Ms. Praisner November 6, 2006

• Since 1997, land values have increased much faster than inflation.
• The portion of property value attributable to the land itself has increased
rapidly in recent years.
• The proposed sale price is low for 19.5 acres of residential land in

Montgomery County.

• This price is well below the current replacement cost, i.e., Montgomery
County could not buy the land, parking and athletic fields for this amount of
money.

Once the Academy has purchased the Premises, it gains control over the
COI.lnty's cost of repurchasing the Premises for use as a school. The cost to the
County of repurchasing the Premises for use as a school will be either (1) fair
market value of the property (all land and improvements) at a time chosen by the
Academy, or (2) fair. market value· of the property used as a private school (all land
and improvements) not earlier t,han March 1, 2031.

In the first case, the "sky is the limit." In the second case, the value would
be limited by its use as a school. The value for use as a school will include the
value of the land and the value of the improvements.

The Analysis cites a present value cost of repurchasing the property in 2032
of nearly $3.8 million. However, the earliest possible date that the property would
be available for repurchase under the proposed deed is March 1, 2031. Applying
the methodology used in the Executive's Analysis correctly, one arrives at a present
value cost of approximately $4.8 million, which is significantly higher than the $3.8
million figure cited by the Administration, and yet still probably quite low. 9

established in the Lease, whereas the $1.65 million appears to be slightly above the price
established under the Lease.
9 This figure ($4.8 million) assumes a 5 percent discount rate, a 2007 value of $8.6 million,
and an inflation rate of 2.5 percent. The Administration used a 2 percent inflation rate
when calculating this figure, but used a 2.5 percent inflation rate when escalating the rent.
This was changed to allow for an "apples-to-apples" comparison. The Administration
established a repurchase price for 2032, even though the Proposed Deed establishes a right
to repurchase in 2031. Furthermore, the Administration depreCiated the 2032 repurchase
price as though it were occurring in 2034.
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TECH MEMO-Ms. Praisner
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November 6, 2006

Estimated Appraised Value of Land &. Improvements Using

Framework of Executive's Methodology

L y Value as Present Value PV as School

ease ear School ($) Factor ($)
2007 8,600,000 1.00 8,600,000
2008 8,815,000 0.95 8,395,238
2009 9,035,375 0.91 8,195,351
2010 9,261,259 0.86 8,000,224
2011 9,492,791 0.82 7,809,743
2012 9,730,111 0.78 7,623,796
2013 9,973,363 0.75 7,442,277
2014 10,222,697 0.71 7,265,080
2015 10,478,265 0.68 7,092,102
2016 10,740,222 0.64 6,923,243
2017 11,008,727 0.61 6,758,403
2018 11,283,945 0.58 6,597,489
2019 11,566,044 0.56 6,440,406
2020 11,855,195 0.53 6,287,063
2021 12,151,575 0.51 6,137,371
2022 12,455,364 0.48 5,991,243
2023 12,766,748 0.46 5,848,595
2024 13,085,917 0.44 5,709,342
2025 13,413,065 0.42 5,573,406
2026 13,748,392 0.40 5,440,705
2027 14,092,101 0.38 5,311,165
2028 14,444,404 0.36 5,184,708
2029 14,805,514 0.34 5,061,263
2030 15,175,652 0.33 4,940,757
2031 15,555,043 , 0.31 4,823,120
f:60020/Peary Memo Numbers-.xls/Repurchase Values_2.5%

The Administration's methodology does not accurately reflect the true cost of
the Premises. By using the estimated cost of replacement for systems and adding
the estimated appraised value of the land in 2031 one would arrive at a figure in
the $6.6-million to $7.9-million range. That range is more accurate, but still very
conservative. Given the possibility that land values might be considerably higher at
that time, it is possible that those numbers could be low by an order of magnitude.

A problem with establishing value in 2031 based upon the market value (as
established by appraisals) of the Premises in 1997 is that housing appraisals have
increased at a rate many times the rate of inflation in recent years. 10 In fact, a
2006 study by the Federal Reserve opined that even if land appreciation returns to
the slower pace seen before the recent housing boom, prices might rise more

10 e.g., see Washington Post, January 5, 2006: "Housing Appraisals in Md. Rise 67%."
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TECH MEMO-Ms. Praisner November 6, 2006

quickly on average than they did before the boom. 11 Thus, the rate-of-inflation
assumption may yield results that are less and less accurate as time progresses.

Beyond cost, additional factors must be considered in weighing the

sale/buyback:

• The County may forever lose the ability to use the property as a public

school.

• There are few other sites in the County appropriate for a new public school.
• The County may be forced to allow the Premises to be used for something
other than a private school. .
• The County may lose the opportunity to participate in the redevelopment of
this site, or to see to it that that redevelopment of the site achieves other
public purposes (e.g., affordable housing).
• If the Academy purchases the property at this low price, is released from the
covenant and promptly sells the property for a significant profit, there will
likely be a public perception that the County gave away a substantial
resource and opportunity.

OUTCOME #2: LEASE TERMINATION

The Lease may not be terminated (other than for default) prior to April 15,
2023. The Lease may only be terminated with five-years written notice, and only in
the event that the Premises are needed for use as a public school. Among the
three potential outcomes, this is the earliest date on which the County could use
the site for public education.

The net present value of rents received from April 15, 2007 until April 15,

2023 would be approximately $912,175. 12

11 See The Wall Street Journal Online, June 22, 2006: "Land Prices Increasingly Drive
Housing Markets, Fed Study Says."
12 Assuming 2.5 percent inflation and assuming· that current rent payments are as
represented in the Administration's Analysis. This figure is different from the
Administration's figure. In the Administration's Analysis, the rent seems to have included
the years 1998 to 2006 and 2023 to 2027, and seems to have been calculated in 1998
dollars.

(fj)
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TECH MEMO-Ms. Praisner November 6[ 2006

Lease Income Through April 15, 2023

PVof PVof
Annual Rent
Lease Year ($) PV Factor Annual Rent Cumulative
($) Rent ($)
2007 67884 1 67884 67884
2008 69582 0.95 66269 134153
2009 71322 0.91 64691 198843
2010 73105 0.86 63150 261994
2011 74932 0.82 61647 323641
2012 76806 0.78 60179· 383820
2013 78726 0.75 58746 442566
2014 80694 0.71 57348 499914
2015 82711 0.68 55982 555896
2016 84779 0.64 54649 610545
2017 86898 0.61 53348 663893
2018 89071 0.58 52078 715971
2019 91298 0.56 50838 766809
2020 93580 0.53 49628 816436
2021 95920 0.51 48446 864882
2022 98318 0.48 47292 912175
f:/60020/Peary Memo Numbers.xls/Lease Income table

Under this Lease[ the established rents are very low. For example[ assuming
that the facility is 210,000 square feet[ the 2007 rent is approximately 32.3¢ per
square foot. As such, even when aggregated over 16 years, the total rent received
is nominal. 13

In contrast to the relatively small rent payments, termination of the Lease

triggers significant financial obligations on the part of the County. If the County
terminates the Lease, the County must repay the Academy for the amortized value
of systems replacement.

However, the cost of reimbursement is essentially the cost of the school, and
that cost will be less than the cost of buying land and building a new school. Thus,
if the County is terminating the Lease in order to use the Premises for a public
school, then the County is just buying the improvements (the County already owns
the land) that it needs in order to operate the school.

In order for any capital improvement made by the Academy to be eligible for
repayment by the County, that improvement must have qualified under the terms
set forth in the Lease and the Academy must have obtained prior approval from the
County. As such, it was assumed that all improvements took place in 2017, which

13That fact reflects the condition of the school at the time that the Academy entered into
the Lease, and presumably also reflects the County's stated desire to re-use the facility as a
school in the future.
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TECH MEMO-Ms. Praisner November 6, 2006

will be nearly the end of the useful life of all improvements made in the Renovation
Period; and more than five years before the end of the Lease. 14 The present value
. cost of repayment for systems replacement is approximately $6 million. is

Reimbursement for Systems Replacement At 2.5 %

Repayment PVof
Total
Years Until Replacement for Present value amortized
Lease Year
Termination Cost ($) Replacement factor repayment

2007 15 10,195,761 2,548,940 1.00 2,548,940

2008 14 10,450,655 3,135,197 0.95 2,843,716
2009 13 10,711,921 3,749,172 0.91 3,238,676
2010 12 10,979,719 4,391,888 0.86 3,613,217
2011 11 11,254,212 5,064,396 0.82 3,968,086
2012 10 11,535,568 5,767,784 0.78 4,519,210
2013 9 11,823,957 6,503,176 0.75 4,852,770
2014 8 12,119,556 7,271,734 0.71 5,167,885
2015 7 12,422,545 8,074,654 0.68 5,465,244
2016 6 12,733,108 8913,176 0.64 5,745,513
2017 5 13,051,436 9,788,577 0.61 6,009,337
2018 4 13,377,722 10,702,178 0.58 6,257,342
2019 3 13,712,165 11,655,340 0.56 6,490,130
2020 2 14,054,969 12,649,472 0.53 6,708,285
2021 1 14,406,343 13,686,026 0.51 6,912,373
2022 0 14,766,502 14,766,502 0.48 7,102,940
f:/60020/Peary Memo Numbers.xls/repay for replace

Termination of the Lease may only occur if the Premises are needed for a
public school. Realistically, the need would have to be acute in order for this option
to be politically palatable. Though it is possible that other land uses will seem more
attractive than educational uses in 2023, political and legal considerations may pre­
clude any use other than education for some time following the termination of the
Lease.

OUTCOME #3: LEASE CONTINUATION

Of course t the County may choose to reject this and all other attempts by the
Academy to exercise the option to purchase the property. Assuming that the
Academy would exercise all three of the five-year options under the Lease the
latest date that the County could use the property as a school would be April 15,

14 This method is different from the unnecessarily complicated method used in the Analysis.
15 This figure assumes that the very high estimated replacement costs are accurate. The
Analysis by the Administration assumes that the current cost of replacement would be
nearly $47 per square foot (in contrast to the 32 cents per square foot that the Academy
pays in rent), and that those costs inflate at 5.69 percent for five years t and thereafter
inflated at 3 percent. For purposes of this table, a 2.5 percent inflation rate was assumed,
rather than the higher rates assumed by the Executive.
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TECH MEMO-Ms. Praisner November 6, 2006

2038. 16 It should be noted that under this scenario, the County could use the prop­
erty for anything, e.g., affordable housing or the development of a town center.

Assuming that inflation adjustments occur at an annual rate of 2.5 percent,

the net present value of the cumulative rent received until April 15, 2038 would be
approximately $1,500,355.

The income received must be weighed against any financial costs directly
related to the expiration of the Lease. There is no financial cost to the County asso­
ciated with allowing the Lease and all extensions to expire, i.e., the County has no
obligation under the Lease to reimburse the Academy for improvements. 17 The
County would have the property "free and clear."

Lease continuation would allow the County to maintain a civic use on the
Premises until the existing Lease and all extensions expire, while also preserving
the County's ownership of this land until a time when it can be developed to its
highest and best use and put back on the County's tax roll. On the other hand,
Lease continuation would not allow the County to use the facility to meet a need for
a public school facility, unless and until the Academy chose to end its tenancy.
Thus, it is possible that the County would be unable to meet the need for a new
school in 2026.

CONCLUSION

To engage in a pOint-by-point evaluation of the methods and assumptions

included in the Administration's Analysis would be to miss the larger issues relevant
to the Council with respect to this proposed sale.

The Proposed Deed raises questions as to whether that price (less than
$85,000 per acre) is a reasonable price in today's economy and whether the terms
of the Proposed Deed accurately reflect the County's desire to re-use the Premises
for a public school if a need for a public school arises. If the County would like to
have the flexibility to re-use the property as a public school in the future{ this Pro­
posed Deed does not provide that protection. If the price in the Proposed Deed is
this low in consideration of the purported use restriction and the potential for later
re-use by the County, perhaps the price should be adjusted upward.

16It is possible that the Academy would choose not to exercise their options, making the
property available in April of 2023, 2028 or 2033. The 2038 date is the latest date on
which the Lease will expire, though the County cannot assume that it will expire prior to
that point, because the expiration is entirely dependent upon the actions of the Academy.
17 It is, of course, possible that the County might agree to share costs of replacement with
the Academy during the later years of the Lease, in order to encourage the Academy to
continue to operate the school in a condition of good repair through April 15, 2038.
 -14­
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TECH MEMO-Ms. Praisner November 6, 2006

Second, the transaction that has been proposed is to sell 19.5 acres with a
school and athletic fields in a County that is growing rapidly and which has experi­
enced skyrocketing land values in recent years. The cost of replacing that much
land at some unknown point in the future is likely to be very high and replacement
of the land may be impossible after tiNo more decades of growth.

In shortr no matter how much weight is given to the financial aspects of

these possible transactions, the differences between them can be summed up in
entirely qualitative terms.

In the Sale/Buyback scenario:

• The County will be selling the land for well below its value.
• The County may forever lose the opportunity to repurchase the
Premises for use as a school.
• The County may be given the opportunity to buy the land and
improvements back from the Academy at Fair Market Value at a time
not of the County's choosing. .
• The County may be able to buy the land and improvements at fair
market value as a school in 2031.
• There is a great deal of uncertainty as to both the price and timing of
any future repurchase by the County.

In t he Lease Termination scenario:

• The County will be spending a significant amount of money to

terminate the Lease r but will be buying a school for much less than
the cost of a new school.
• The County will be able to buy a school without having to buy the
land on the open market at an uncertain price.
• The County will retain control over a larger contiguous parcel of
land. .
• The timing of the Lease termination is more certain and/or within
the control of the County.

In the Lease Continuation scenario:

• Even if the County does reimburse the Academy for improvements r

the County will still be buying a school for less than the cost of a
new school.
• The' County will be able to buy a school without having to buy the
land on the open market at an uncertain price.
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TECH MEMO-Ms. Praisner November 6, 2006

• The County will retain control over a large, contiguous parcel of

land, and wi" be able to re-develop that parcel in the future in a
way that achieves multiple County objectives.

A sale of the school would be fair if the land value used to determine the sale
price accurately reflected its current value, and if the sale price reflected the value
to the County of maintaining control over the property. If the deed actually pro­
vided the County with adequate protection of its interests, it might be fair for the
County to discount the sale price to reflect any restrictions on use or alienation.
However, here the sale price has been discounted and adequate protection of the
County's interests has not been written into the proposed deed. The County is
being asked to sell this property below its market value, and may need to buy it
back at market value at some undetermined point in the future.

Given these qualitative concerns, the sale and repurchase option does not
compare favorably to other alternatives under the Lease. Unless more favorable
terms are offered, the County's various objectives will more likely be met by main­
taining ownership and control over the site.

F:\60020- Mont Co - Old Peary School\MEMO-Peary-Final.doc