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DATE :
TO :
VIA :
FROM :
SUBJECT :Garden Street Terraces Term Sheet
June 1, 201 0
City Counci l
Katie Lichtig, City Manage r
Christine Dietrick, City Attorney O
RED FIL E
-MEETING AGEND A
DATE,‘'N a ,ITEM #,
Based on an oversight in the review of the proposed Term Sheet for Parking Lot 2 - Garde n
Street Terraces, the developer has requested a minor adjustment to the CPI increase for the bas e
rent as reflected in the attached legislative draft of the proposed Term Sheet .
Staff has no objection to the attached modification .
Attachment s
Page 2, clause 3 .5, Parking Lot 2 — Garden Street Terraces Proposed Term Shee t
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3 .2 .TERM .Ninety-nine (99) years . At the end of the lease term Developer shall have n o
further right to occupy or improve Parking Lot 2 and all rights and title to any and al l
improvements on or to the Property shall become the sole property of the City, unless a
successor lease is negotiated prior to the expiration of the term .
3 .3 .COMPENSATION TO THE CITY FOR REPLACEMENT OF ON-SITE PUBLIC PARKING REMOVED .
The parties acknowledge that City Lot 2 currently contains sixty-two (62) spaces an d
the final EIR recommends elimination of public parking on the project site, the effect o f
which will be to remove from public use 62 on-site parking spaces that currently ar e
available to the public generally at City Lot 2 .
In recognition of that elimination of public parking, the Developer shall pay the City,
upon issuance by the City of building permits for the Project, a one-time fee of Thirt y
Thousand Dollars ($30,000) for each of the sixty-two (62) public spaces that are to b e
eliminated on-site in connection with the Project (i.e., 62 parking spaces x
$30,000/parking space = $1,860,000 total parking replacement fee). The partie s
further acknowledge that the amount of such $1,860,000 replacement parking fee i s
greater than the currently prevailing rate for in-lieu parking fees because the amoun t
thereof is intended to contribute to the costs of constructing replacement spaces .
3 .4 .In-lieu Parking Fees .Given the conceptual description above, the project mor e
than meets the zoning requirements for parking on site . If, however, the ultimatel y
proposed project fails to provide all required parking on site, the Developer will b e
required to pay the generally applicable in-lieu parking fee at the time building permit s
are issued . Such payments will be in addition to those set forth above for th e
replacement of public parking .
3 .5 .BASE RENT .Developer will pay to the City base rent that is equal to an agreed upo n
fair market percentage of the re-use value of the real property, to be determined by a
qualified appraiser agreeable to Developer and City . In no event shall the base rent b e
less than the amount of the City's annual net revenue from the operation of Parking Lo t
2 as of the date of execution of the lease agreement (currently $167,800 per year).
Annual base rent shall be increased on the first day of every third fiscal year by th e
amount of increase in the Consumer Price Index,if any,for each ofthe 3 years
immediately preceding, but in no event shall the increase be less than two percent (2%)
three percent (3%)nor more than four percent 1(2/o).per year,for a cumulative tota l
increase of not less than six percent (6%) and not more than twelve percent (12%) i n
any three year period .
3 .6 .Time of Rent Payment.Base rent payments shall begin upon the date o f
possession and shall be due on the first day of each fiscal year every year of the leas e
thereafter .
3 .7 .PERCENTAGE RENT.Beginning in year 15 of the lease Term, the Developer shall pay a n
amount equal to one and one-half percent (1 .5%) of the amount by which gros s
individual room revenues for the hotel that is included in the Project, exceed th e
stipulated room revenue threshold of $71,500 per room .
4.CITY PARKING ASSISTANCE FINANCING .The City, via the Parking Enterprise Fund, wil l
provide a loan to the developer in an amount not to exceed $2 .4 million, which may be
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