HomeMy WebLinkAbout14. 20-403 SEPTEMBER 22, 2020 20-403 RESOLUTION
(CARRIED 7-0 LOST LAID OVER WITHDRAWN )
PURPOSE: APPROVE STIPULATION WITH FOX VALLEY PRO
BASKETBALL, INC. REGARDING ASSUMPTION OF TAX
INCREMENTAL DISTRICT NO. 31 DEVELOPMENT
AGREEMENT AND AUTHORIZE CONSENT TO THE
ASSIGNMENT OF FOX VALLEY PRO BASKETBALL INC.'S
RIGHTS UNDER THE DEVELOPMENT AGREEMENT TO SILVER
ANVIL, LLC AS COLLATERAL
INITIATED BY: FOX VALLEY PRO BASKETBALL, INC.
NOW, THEREFORE, BE IT RESOLVED, by the Common Council of the City of
Oshkosh that the attached Stipulation with Fox Valley Pro Basketball, Inc. Regarding
Assumption of Tax Incremental District No. 31 Development Agreement is hereby
approved and the proper City officials are hereby authorized to execute and deliver the
agreement in substantially the same form as attached hereto, any changes in the execution
copy being deemed approved by their respective signatures, and said City officials are
authorized and directed to take those steps necessary to implement the terms and
conditions of the Agreement.
BE IT FURTHER RESOLVED, that the attached Consent to Assignment of Fox
Valley Pro Basketball Inc.'s Rights under the Development Agreement to Silver Anvil,
LLC as collateral for certain lending is hereby approved and the proper City officials are
hereby authorized to execute and deliver the letter of consent in substantially the same
form as attached hereto, any changes in the execution copy being deemed approved by
their respective signatures, and said City officials are authorized and directed to take
those steps necessary to implement the terms and conditions of the Agreement.
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TO: Mayor and Members of the Common Council
FROM: Lynn A. Lorenson, City Attorney
DATE: September 17, 2020
RE: Approve Stipulation with Fox Valley Pro Basketball, Inc. regarding Assumption of
Tax Incremental District No. 31 Development Agreement and Authorize Consent to
the Assignment of Fox Valley Pro Basketball Inc.'s Rights under the Development
Agreement to Silver Anvil, LLC as Collateral
BACKGROUND
On February 28, 2017, the City of Oshkosh approved Tax Incremental Financing District (TIF)
#31 and directed staff to enter into an appropriate Development Agreement with Fox Valley Pro
Basketball, Inc. for construction of a multi -purpose arena and public improvements. At the time
the Development Agreement was entered, the Developer did not anticipate needing financing
for the project. However higher than anticipated project costs, increased costs for site
preparation due to environmental contamination on the property and poor quality soils, and
changes to the original development plan increased the overall cost of the project. The
Developer requested and Council approved three amendments to the Development Agreement
to increase the reimbursement available from TIF increment, permit financing to be favorably
obtained and permit collateral assignment of the Development Agreement for financing
purposes with consent of the Council. The Council approved Amendments to the Development
Agreement to address these issues in October and December, 2017 but the Developer was unable
to complete financing and after failing to make tax payments to the City and other payments to
creditors the Developer filed for reorganization under Chapter 11 of the Bankruptcy Code in
August 2019.
ANALYSIS
The City incurred a total amount of approximately $69,695.00 in legal fees pre- and post -petition
for outside counsel related to the Developer's defaults under the development agreement and
in relation to monitoring and responding to Developer's bankruptcy filings. Under the terms of
the Development Agreement the City is able to recoup attorney fees related to enforcing the
City's rights in relation to events of default under the agreement. The proposed settlement
agreement provides for payment of all of the pre -petition fees in the amount of $24,293.75 to the
City. In relation to post -petition attorney fees, the City incurred a total of $45,401.00 in attorney
City Hall, 215 Church Avenue P.O. Box 1130 Oshkosh, WI 54903-1130 920.236.5000 http://www.ci.oshkosh.wi.us
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fees. Developer has agreed in the settlement to payment of $18,118.50 of the City's post -petition
fees.
Due to the nature and complexity of this case, the City chose to engage outside counsel and to
actively monitor and respond to certain filings in the case. The City, like other creditors in the
bankruptcy, is responsible for its own costs in that regard. Under the settlement the parties are
attributing $27,282.50 to general bankruptcy costs.
The proposed settlement allows the City to recoup a total of $42,412.25 of its $69,695.00 legal
costs relating to the defaults under the Development Agreement.
In addition to the settlement of the issues related to attorney fees, the Developer has requested
the City consent to the assignment of their rights under the Development Agreement to Silver
Anvil, LLC as collateral for exit financing from the bankruptcy and in connection with that
assignment certain representations from the City as to the status of the Development
Agreement. Most of the representations sought simply state facts or restate provisions within
the development agreement, with settlement of the issues related to attorney fees, the final
representation being sought in relation to the financing will also be resolved. The exit financing
will allow the Developer to move forward with its plan of reorganization and continue to
operate the arena.
FISCAL IMPACT
As noted in the analysis section above, in connection with the Developer's defaults and filing of
bankruptcy proceedings in this case, the City incurred approximately $69,695.00 in legal fees.
The proposed settlement allows the City to recoup $42,412.25 (61%) of those legal costs.
RECOMMENDATION
Staff recommends approval of the resolution.
jeectfull. Lorenson
City Attorney
Approved:
Mark A. Rohloff
City Manager
City Hall, 215 Church Avenue P.O. Box 1130 Oshkosh, WI 54903-1130 920.236.5000 http://�.ci.oshkosh.wi.us
STIPULATION REGARDING
ASSUMPTION OF DEVELOPMENT AGREEMENT
This Stipulation Regarding Assumption of Development Agreement (the "Stipulation") is made
between Fox Valley Pro Basketball, Inc., a Wisconsin corporation (the "Developer") and the City of
Oshkosh, Wisconsin and the Redevelopment Authority of the City of Oshkosh, Wisconsin (together with
the City of Oshkosh, Wisconsin, the "City").
RECITALS
A. The City and the Developer (collectively, the "Parties") are parties to that certain
Tax Incremental District No. 31 Development Agreement (Fox Valley Pro Basketball, Inc.
Project) effective as of March 17, 2017, as amended by the following agreements: (i)
Amendment to Tax Incremental District No. 31 Development Agreement with Fox Valley Pro
Basketball, Inc. and Ground Lease Agreement for Property Located at 1118 and 1212 South
Main Street; (ii) Second Amendment to Tax Incremental District No. 31 Development
Agreement with Fox Valley Pro Basketball; and (iii) Third Amendment to Tax Incremental
District No. 31 Development Agreement with Fox Valley Pro Basketball, Inc (collectively, the
"Development Agreement").
B. The Parties are also parties to that certain Ground Lease Agreement, dated March
17, 2017 concerning the lease of real property located at 1118 S. Main Street and 1212 S. Main
Street in Oshkosh, Wisconsin (the "Ground Lease").
C. On May 17, 2019, the City served the Developer with a notice of default under
the Development Agreement and the Ground Lease because of the Developer's breaches of
paragraphs X.A.2 and VII.A.4 of the Development Agreement and paragraphs 19, 20, and 21 of
the Ground Lease.
D. On August 19, 2019, the Developer filed a voluntary Chapter 11 bankruptcy
petition in the Bankruptcy Court, Eastern District of Wisconsin, Case No. 19-28025.
E. On September 6, 2019, the City filed its Motion to Require Debtor to Reject or
Assume Contract and for Adequate Protection ("Assumption Motion") and its Objection to
Debtor -in -Possession Financing ("DIP Financing Motion").
F. On September 27, 2019, the City and the Developer entered into that certain
Stipulation Resolving City of Oshkosh's Motion to Reject or Assume Contract and for Adequate
Protection and Objection to Debtor -in -Possession Financing to resolve the Assumption Motion
and the DIP Financing Motion. The Bankruptcy Court, Eastern District of Wisconsin approved
the Stipulation by an order dated October 2, 2019 filed at docket no. 104 ("Order Approving
Stipulation").
G. Under the Order Approving Stipulation, among other things, the City was
authorized to withhold $24,293.75 from payments due to the Developer under the Development
Agreement to deposit in its attorneys' trust account pending further order of the Bankruptcy
Court. This amount represented the amount of attorneys fees that the City contended were due
under paragraph X.E. of the Development Agreement.
H. On May 1, 2020, the Parties entered into that certain Stipulation Regarding Relief
from the Automatic Stay because the Developer failed to timely pay its obligations under the
Development Agreement. Pursuant to that stipulation, the City served the Developer with a
Notice of Default under the Development Agreement.
1. The Bankruptcy Court confirmed the Debtor's Plan of Reorganization (the
"Plan") on August 26, 2020.
J. The Plan authorizes the City to retain the $24,293.75 on deposit with Godfrey &
Kahn, S.C. as partial payment to cure attorney's fees the City contends are owed under paragraph
X.E. of the Development Agreement.
K. The Plan provides that, in order to assume the Development Agreement under 11
U.S.C. § 365, the Developer "shall pay to the City additional amounts to cure the Development
Agreement" including "reasonable attorneys fees the City incurred after the Petition Date that are
compensable under the Development Agreement (collectively, `Additional City Cure Amount')."
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth, and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
1. Development Agreement in Effect. Except as provided in the Plan, the
Development Agreement remains in effect and unmodified.
2. Additional City Cure Amount. The Additional City Cure Amount, as defined in
the Plan, is $18,118.50.
3. Payment Terms. FVPB shall pay the City $18,118.50 in accordance with the
terms of the Plan.
4. Assumption. Upon payment of the Additional City Cure Amount, the
Development Agreement will be assumed under 11 U.S.C. § 365 and the Plan.
5. Approval of Common Council. This Agreement is contingent on approval by the
City of Oshkosh Common Council ("Common Council").
6. Effective Date. This Agreement is effective when both Parties have executed it
and it has been approved by the Common Council.
7. Merger. This Agreement contains the complete, full, and exclusive understanding
of the City and FVPB as to its subject matter and shall supersedes any prior agreement between
the City and FVPB regarding assumption of the Development Agreement. No amendments or
modifications to this Agreement are effective unless they are in writing and signed by both
Parties.
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8. Execution in Parts. This Agreement may be executed in counterparts, each of
which will be deemed to be an original.
[Signature Page Follows]
FOX VALLEY PRO BASKETBALL, INC. THE CITY OF OSHKOSH
By:
Name
Title
Date
22849456.2
By:
Name
Title
Date
GODFREY
KAH N S.C. 100 WEST LAWRENCE STREET • POST OFFICE BOX 2728
APPLETON, WISCONSIN 54912-2728
TEL•920.830.2800 FAx•920.830.3530
www•GKLAW.COM
September 13, 2020
VIA EMAIL
Attorney Craig Stevenson
DeWitt LLP
2 E. Mifflin St., Ste. 600
Madison, WI 53703
ces@dewittllp.com
Direct: 920-831-6365
nhahnggklaw.com
RE: Tax incremental District No. 31 Development Agreement with Fox Valley Pro
Basketball, Inc. and the City of Oshkosh, Wisconsin, and the Redevelopment
Authority of Oshkosh, Wisconsin, entered into on March 17, 2017, as
subsequently amended (the "TIF Agreement")
Dear Craig:
This letter will confirm for your client, Silver Anvil, LLC, the consent of City of
Oshkosh, Wisconsin to the assignment by Fox Valley Pro Basketball, Inc. ("FVPB") of FVPB's
rights under the above -referenced TIF Agreement to Silver Anvil, LLC ("Lender") as collateral
for certain indebtedness to be incurred by FVPB pursuant to certain loan documents (the "Loan
Documents"). This letter is provided pursuant to, and is intended to comply with, the provisions
of the TIF Agreement, including Article XI., Section D. l (as amended).
The City further confirms, as of the date of this letter, the following:
(a) Except for the terms of the First, Second and Third Amendments to the TIF
Agreement, there have been no further amendments or modifications to the TIF
Agreement.
(b) The City and FVPB have entered into a Stipulation Regarding Assumption of
Development Agreement (the "Stipulation"). Under the Stipulation, FVPB has agreed
to pay to the City $18,118.50 (the "Additional City Cure Amount") in accordance
with the terms of the Plan.
(c) Except for the unpaid Additional City Cure Amount, there are no other defaults under
the Development Agreement.
OFFICES IN MILWAUKEE, MADISON, WAUKESHA, GREEN BAY AND APPLETON, WISCONSIN AND WASHINGTON, D.C.
GODFREY & KAHN, S.C. IS A MEMBER OF TERRALEX® A WORLDWIDE NETWORK OF INDEPENDENT LAW FIRMS.
Attorney Craig Stevenson
September 13, 2020
Page 2
(d) Assuming no other Event of Default, as defined in the TIF Agreement, exists, upon
payment of the Additional City Cure Amount, the TIF Agreement will be assumed
and in full force and effect.
(e) The Agreement states that so long as no Event of Default exists, the City will make
annual payments under the City MRO (as defined in the TIF Agreement) on
November 1 of each calendar year during the Payment Term.
(0 The City has issued a certificate of occupancy for the Project and/or Property.
(g) The City acknowledges that, in the event of a default by FVPB under the Loan
Documents, the Lender is entitled to exercise all of FVPB rights as Developer under
the TIF Agreement, including the right to receive the City MRO payments.
(h) In the event Lender exercises its rights as Developer in and to the TIF Agreement
following an event of default under the Loan Documents, and provided the City
receives notice of the default and exercise of said rights by the Lender, the City
hereby agrees to accept performance by Lender on behalf of FVPB, and will
otherwise honor the TIF Agreement, provided Lender and/or FVPB or an acceptable
successor continue(s) to perform Developer's obligations under the TIF Agreement.
The City further confirms that it will issue to FVPB a deed to the Property (as defined in
the TIF Agreement) on or before December 31, 2020, as long as no Event of Default occurs.
Very truly yours,
GODFREY & KAHN, S.C.
Nicholas Hahn
Attorney for the City of Oshkosh and the
Redevelopment Authority of the City of
Oshkosh
NLH:
22861790.2