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HomeMy WebLinkAbout35. 12-539 OCTOBER 23, 2012 12-539 RESOLUTION (CARRIED___7-0_____LOST________LAID OVER________WITHDRAWN________) PURPOSE: APPROVE LEASE AND PARKING AGREEMENT WITH OSHKOSH INVESTORS LLC FOR OPERATION AND MAINTENANCE OF THE PARKING STRUCTURE ADJACENT TO CITY CENTER HOTEL, 1 NORTH MAIN STREET INITIATED BY: CITY ADMINISTRATION WHEREAS, the City of Oshkosh had previously entered into agreements for the operation and maintenance of the parking structure adjacent to the downtown hotel located at 1 North Main Street; and WHEREAS, the downtown hotel has been purchased by Oshkosh Investors, LLC; and WHEREAS, Oshkosh Investors, LLC has worked with the City to address various issues pertaining to the financing of the hotel renovations, operation of the convention center and operation and maintenance of the parking structure. NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of Oshkosh that the attached Agreement with Oshkosh Investors, LLC for operation and maintenance of the parking structure adjacent to City Center Hotel at 1 North Main Street 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. CITY HALL 215 Church Avenue P.O.Box 1130 Oshkosh,WisconsIn 903-1130 City of Oshkosh 4IPD' OfHKOJH TO: Honorable Mayor and Members of the Common Council FROM: Lynn Lorenson, City Attorney DATE: October 11, 2012 RE: Resolution to approve lease and parking agreement with Oshkosh Investors, LLC for Parking Structure Adjacent to City Center Hotel, 1 North Main Street BACKGROUND Beginning in 1983 and 1984, the City, Park Plaza of Oshkosh, Inc. (i.e., the former mall property now owned by City Center) and Oshkosh Centre Hotel Venture (OCHV) entered into a series of agreements for the construction and operation of a parking structure to be located next to the downtown hotel located at 1 North Main Street. The agreements are complicated and have been amended and assigned throughout the history of the operation of the hotel facility. The land beneath the parking structure is owned by City Center Associates, LLC (City Center). The City leases the land from City Center. The original hotel operator, OCHV, constructed and owned the parking structure and the City leased the parking structure back from the various hotel operators. At the end of the lease term, the structure becomes the property of the City, however, per the ground lease, any improvements would then immediately become the property of City Center. Under the lease, the City was to operate the parking structure and pay all expenses associated with the possession and operation of the parking structure. Previous hotel owners paid various fees to cover the costs of the operation of the facility. However, over time it became clear that the costs of maintenance of the facility were not adequately covered by those fees and some repairs and maintenance were deferred. The City recently updated a study of the hotel structure and identified repairs and maintenance that are needed for the structure. In February of this year, Oshkosh Investors, LLC purchased the hotel property. Since that time, Oshkosh Investors, LLC has been working with the City to address the various issues related to the financing of the reconstruction of the hotel, the operation of +.: the convention center and the parking structure. The Council approved entering into a development agreement which included a requirement that Oshkosh Investors, LLC enter into an agreement with the City pursuant to which Oshkosh Investors LLC will make payments to the City for the use of the parking structure. ANALYSIS The proposed parking agreement would terminate all prior agreements related to the operation of the parking structure (except for the ground lease with City Center) and would be a new agreement containing all of the terms and conditions related to the operation and maintenance of the parking structure. The new agreement is based upon the prior agreements but updates language and clarifies responsibilities in addition to updating provisions providing for payment of the City's costs related to maintenance of the facility. Under the agreement the City would be responsible for all maintenance and repairs to the facility, however Oshkosh Investors, LLC would be responsible for routine cleaning and care of the structure, such as sweeping, clearing refuse and washing surfaces. The City will pay all utility expenses and any taxes or special assessments (the facility is not currently taxed). FISCAL IMPACT Based upon current estimates for maintenance, including elevator maintenance, electrical maintenance, utilities, pavement marking, snow removal and repairs and protective measures recommended in the Carl Walker Study, the City would need to receive approximately $70,000 to $75,000 annually for the first ten (10) years to pay for its costs. Based upon the pro forma submitted by Oshkosh Investors, LLC a guest room charge of $2 per night for the first two years of operation and $3 per guest room night for the remainder of the first ten year period will provide sufficient revenue to the City to provide its maintenance responsibilities and to complete the repairs and recommended protective measures in the Carl Walker Study. The agreement includes a provision for review and renegotiation after ten years to allow the parties to make adjustments to this fee schedule as may be appropriate at that time. RECOMMENDATION Staff recommends that the Council approve the Resolution. Respectfully Submitted, Approved: 4. nn A. Lore on Mark A. Rohloff City Attorney City Manager Lease and Parking Agreement Recitals This Agreement is entered into by and between the City of Oshkosh, a municipal corporation, with its principal offices located at 215 Church Avenue, City of Oshkosh, Winnebago County, Wisconsin and Oshkosh Investors, LLC, a Limited Liability Corporation, with its principal offices located at 1 North Main Street, Oshkosh, Wisconsin. The City is a party to a certain Ground Lease dated August 26, 1985 a memorandum of which was recorded in the Office of the Winnebago County Register of Deeds on May 13, 1986 as document number 651593, pursuant to which Park Plaza of Oshkosh, Inc., leased to the City the real property legally described in Exhibit "A" attached hereto (the "Property"). Park Plaza of Oshkosh Inc.'s interest as lessor under said Ground Lease is currently held by City Center Associates, LLC. Oshkosh Investors, LLC is the successor in interest to the original owners of the hotel structure located at One North Main Street in the City of Oshkosh (The "Hotel"). By a series of agreements, the original owner of the hotel structure constructed a Parking Structure adjacent to the Hotel on the Property (the "Parking Structure") and the original hotel owner and subsequent hotel owners entered into parking agreements with the City of Oshkosh related to the operation and maintenance of the Parking Structure. The first of these agreements was dated December 27, 1984 between the City of Oshkosh and the Oshkosh Centre Hotel Venture. This Agreement was subsequently amended and assigned by documents dated August 28, 1995; October 16, 1987; November 19, 1987; and September 1, 1998. It is the intention of the parties that this Agreement terminate all prior agreements and understandings related to the operation and maintenance of the Parking Structure (other than the Ground Lease) and that this Agreement shall contain the entire agreement and understanding of the parties with respect to the operation and maintenance of the Parking Structure. It is hereby agreed by and between the parties to this Agreement as follows: 1. Leased Property. The City shall lease from Oshkosh Investors, LLC the Parking Structure, including the elevator and adjacent stairwells, located on the Property and operate and maintain the Parking Structure pursuant to the terms of this Agreement. The Parking Structure is a 125 foot by 225 foot structure consisting of an on-grade asphalt lot and two (2) supported parking levels providing approximately 192 parking spaces. 2. Public Facility/ Use by Hotel Guests. Pursuant to the Ground Lease for the Property, the Parking Structure shall be operated as a public facility available for the use of guests of the Hotel. In addition to this public use, the parties to this Agreement wish to provide for the use of the Parking Structure by guests of the Hotel and for maintenance and operation of the Parking Structure by the City for the term of this Agreement or until the Agreement is terminated as provided herein, as contemplated in the original Ground Lease and Parking Agreement. 3. Termination of Prior Agreements. This Agreement terminates all prior agreements and understandings (other than the Ground Lease) related to the operation and maintenance of the Parking Structure, whether enumerated herein or not, whether oral or written. 4. Responsibility for Operation and Maintenance of Parking Structure. City Responsibility. City shall be responsible at City's sole expense for all maintenance and repairs of the Parking Structure including the elevator and adjacent stairwells. The responsibility for operation and maintenance shall include, but not be limited to, the payment of all reasonable and necessary expenses for repair and maintenance of the Parking Structure or any fixtures appurtenant thereto; repair and replacement of any lights or other utilities within or attached to the Parking Structure; snow removal; graffiti removal; pavement repair and marking and other necessary repair and maintenance. The City shall maintain the mechanical operation of the elevators. The City shall comply with all local, state and federal ordinances, laws, rules and regulations with regard to the operation and maintenance of the Parking Structure. Oshkosh Investors, LLC Responsibility. Oshkosh Investors, LLC shall be responsible for routine cleaning/care and upkeep of the parking structure, which shall generally include: keeping the Parking Structure, including stairwells, clean and clear of refuse and obstructions, including dirt around drains; window cleaning; cleaning of other interior and exterior surfaces (including utilizing a power-washing method to remove all accumulated dirt, oil, grease and grime, spider treatment); and disposing of all garbage, trash and rubbish as necessary. 5. Signs. The location and design of all signs to be placed on or adjacent to the Parking Structure, with regard to the Parking Structure, shall be subject to prior review by Oshkosh Investors, LLC. All signs shall be repaired and maintained in such a condition as to keep them at all times in a neat and attractive condition, consistent with any signs displayed on or adjacent to the Hotel. 6. Utility Expenses. The City shall pay for all Utility Expenses for the Parking Structure. 7. Taxes and Assessments. City shall be responsible for and pay all real or personal property taxes and special assessments that may be levied upon the Parking Structure. 8. Insurance. City shall, during the entire term hereof, keep in full force and effect a policy of general liability insurance with respect to the Premises. City shall provide evidence of insurance coverage in the form of a certificate of insurance to Oshkosh Investors, LLC prior to the Commencement Date of this Agreement and at such other times as may be reasonably requested. Such insurance may be furnished under any blanket policy or under a separate policy. City agrees to carry, at its expense, insurance against fire, vandalism, malicious mischief, and such other hazards as are from time to time included in a standard extended coverage endorsement, insuring the Premises in an amount equal to the full replacement value of the Premises. 9. Damage or Destruction. If, at any time while this Agreement or any extension or renewal hereof is in effect, the Parking Structure or any part thereof shall be damaged or destroyed by fire or other casualty of any kind or nature, or razed, City, at its sole cost and expense and whether or not the insurance proceeds, if any, shall be sufficient for the purpose, shall proceed with reasonable diligence to repair, alter, restore, replace or rebuild the Parking Structure as nearly as possible to its value, condition, architectural character, and utility immediately prior to such damage or destruction, subject to such changes or alteration as City may elect to make, provided such changes or alterations do not diminish the amount and convenience of parking available hereunder to the Hotel or the architectural character of the Parking Structure. Under no circumstances shall Oshkosh Investors, LLC be required to contribute to the cost of such rebuilding or restoration or alteration. During the time, if any, that the premises may be unusable by the Hotel due to such casualty or restoration, City shall endeavor to provide alternate parking spaces for the use of the Hotel's guests. 10.Fees. Oshkosh Investors, LLC shall on a monthly basis pay to the City $2 per guest room night each month for the period from reopening of the hotel in 2013 through December 31, 2015. For purposes of determining this fee, the fee shall be collected on a per room basis for each night a room or suite is rented. For the period from January 1, 2016 through December 31, 2022, Oshkosh Investors, LLC shall on a monthly basis pay to the City $3 per guest room night each month. Fees shall be paid on the fifteenth day of each month for the preceding month. Fees collected shall be accounted for separately and shall be used only for expenses attributable to maintenance, repair and improvement of the Parking Structure. Prior to December 31, 2022 or the end of any successive time period established hereunder, the City shall undertake a study of the then current parking structure maintenance costs and needs and the parties shall meet to review the fee structure or to provide another means for payment of the City's costs for maintenance of the parking structure. The parties shall then either enter into an amendment to this agreement providing for payment for the anticipated costs related to further maintenance, repair or improvement of the Parking Structure for additional time periods. In the event the parties are unable to reach an agreement Oshkosh Investors, LLC may assume the responsibilities of the City under the Ground Lease or the parties shall agree upon an arbitrator who shall determine the maintenance, repair and improvement responsibilities and anticipated costs and method for payment thereof. Any remaining fees collected but not spent for the purpose of maintenance, repair or improvement of the Parking Structure at the end of the initial or any agreed upon subsequent time period shall be applied to reduce the future anticipated costs for the next subsequent period or transferred to Oshkosh Investors, LLC if they take on the responsibilities of the City under the Ground Lease. Except as provided above, any remaining fees at the termination of this Agreement shall be the property of the City of Oshkosh without restriction of use. 11. Term. The term of this Agreement shall coincide with the term of the original Ground Lease and shall terminate on December 31, 2059. Upon termination the Parking Structure shall become the property of the City of Oshkosh and Oshkosh Investors, LLC shall no longer have any right, title or interest in the Parking Structure. 12.Default / Termination. In the event that either party hereto shall default in the performance of any of the agreements, conditions, covenants, or terms hereof, the other party may, after ten (10) days written notice to such party, cure such default on the account of the other, provided however that if a breach cannot reasonably be cured within a ten (10) day period the party required to cure the breach shall not be in default if the party commences the process for curing the breach within the ten (10) day period and diligently pursues the cure to its conclusion. Any amount paid or any expense or liability incurred by a party in curing the default of another party shall be added to or subtracted from the obligations of the Hotel hereunder as appropriate. In the event that the Hotel performs such obligations. of the City and the performance thereof costs more than the amount due or to become due hereunder in the following month, City shall pay such additional amount to the Hotel upon written demand therefor. In lieu of or in addition to curing such default, and in the event such default shall continue for a period of 30 days after written notice thereof by the other party, the nondefaulting party shall be entitled to bring an action for specific performance hereof or for damages and shall have any and all other rights or relief which the nondefaulting party may be entitled to by law pursuant to this Agreement. Further, if such default shall continue for a period of 30 days after written notice, the nondefaulting party may forthwith terminate this Agreement and all of the terms and conditions hereunder upon written notice to the defaulting party, provided that such default is substantial and material to this Agreement. 13.Assignment. This Agreement may not be assigned or transferred by Oshkosh Investors, LLC other than in connection with a sale of the Hotel. Upon a sale of the Hotel, this Agreement shall be assigned to the successor owner. In such event, the transferee of the interest of Oshkosh Investors, LLC or its assignee shall be required to abide by and perform all of the covenants and obligations of Oshkosh Investors, LLC hereunder and transferor shall thereby be relieved of further liability hereunder. City's interest under this Parking Agreement may be assigned, transferred or conveyed subject to the terms of this Agreement, but in such event the transferee, assignee, or grantee of the City shall be required to enter into an agreement with Oshkosh Investors, LLC or its assignee contracting to be governed by all relevant provisions of this Agreement and to perform all of the covenants and obligations of City hereunder. Assignment of the City's interest shall be subject to consent of the Oshkosh Investors, LLC, which consent shall not be unreasonably withheld. 14.Notices. Any notices required by this Agreement shall be in writing and delivered via certified mail, return receipt requested, as follows. Changes to these addresses shall be in writing. In addition to formal notification, both parties agree to take reasonable measures to keep the other party informed of issues or questions regarding the Property. FOR OSHKOSH INVESTORS, LLC: Oshkosh Investors, LLC do Richard Batley 1 North Main Street Oshkosh, WI 54901 FOR THE CITY: City of Oshkosh do City Manager P.O. Box 1130 Oshkosh, WI 54903-1130 15.Entire Agreement. This writing constitutes the entire agreement between the parties hereto, with regard to the subject matter of this Agreement, and it is intended that this Agreement integrates and incorporates all previous and concurrent negotiations and agreements between the parties, and may not be amended or altered or modified in any manner except in writing signed by both parties. 16.Applicable Law. This Agreement shall be governed by and interpreted under the laws of the State of Wisconsin. 17.Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be unenforceable or void or contrary to public policy or to law, such provisions shall be ineffective only to the extent of such invalidity or unenforceability, without invalidating the remainder of this Agreement or any portion thereof which is not specifically affected by the determination of such court. 18. Waiver. No delay or omission by any party to this Agreement in exercising any right or power arising out of any default under any of the terms or conditions of this Agreement shall be construed as a waiver of the right or power. A waiver by a party of any of the obligations of the other party shall not be construed to be a waiver of any breach of any other terms or conditions of this Agreement. 19.Invalidity. If any term or condition of this Agreement, or the application of this Agreement to any person or circumstance, shall be invalid or unenforceable, the remainder of this Agreement, or the application of the term or condition to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby, and each term and condition shall be valid and enforceable to the fullest extent permitted by law. 20.No Third Party Beneficiary. The terms of this Agreement are for the benefit of the two parties identified, and it is not the intention of either the Grantor or Grantee that other parties shall acquire any rights to enforce or benefit from through this Agreement. 21.Authority. The Grantee affirms that all necessary boards and elected officials have approved the acceptance of this Agreement, and that the undersigned have the authority to sign this Agreement on behalf of the Grantee. Grantor affirms that it has the authority without limitation to enter into this Agreement. The undersigned assert and affirm that they have the authority without limitation to enter into this Agreement on behalf of the Grantor. IN WITNESS WHEREOF, the parties hereto have executed the foregoing Agreement on the day and year first set forth above. CITY OF OSHKOSH, WISCONSIN Date: By: Mark A. Rohloff, City Manager Date: By: Pamela R. Ubrig, City Clerk Approved as to form: Date: Lynn A. Lorenson, City Attorney OSHKOSH INVESTORS, LLC By: UW-OSHKOSH FOUNDATION HOTEL PROJECT, LLC, Manager Date: By: Arthur H. Rathjen OSHKOSH HOTEL VENTURE, LLC, Manager Date: By: John Pfefferle Acknowledgement of City Center Associates, LLC The undersigned acknowledges and agrees that it is the current lessor under the Ground Lease, that all references to the "Parking Agreement" contained in the Ground Lease shall be deemed to refer to the foregoing Lease and Parking Agreement, and that the prior Parking Agreement, as amended, has been terminated and is of no further force or effect. The Ground Lease shall be modified to the extent necessary to be consistent with the foregoing Agreement. Dated this day of 2012. CITY CENTER ASSOCIATES, LLC By: Its: