HomeMy WebLinkAboutStaff Report 8 09/19/1994AGENDA ITEMS: SEP 19 1994
KEY WORD: Golf Course Lease
DATE: September 19, 1994
DEPARTMENT:
Parks and Recreation
REQUESTED COUNCIL ACTION:
Adopt resolution amending existing lease agreement with Cottonwood Golf Club, Inc.
RECOMMENDATION:
Staff recommends the City Council approve the proposed amendment.
BACKGROUND:
The City of Petaluma entered into a lease agreement with Empire Golf, Inc., January 7,
1991, in order to build a golf course adjacent to Prince Park and the Petaluma Airport.
All environmental work had been completed and the project was waiting for financing.
Despite numerous efforts, Empire Golf was unable to secure the necessary funding and
assigned the Golf Course development and operations lease to Cottonwood Golf Club,
Inc. The City Council consented to the assignment during their meeting of August 15,
1994.
The original lease authorized the use of 126 acres of City owned property, with the
lessee to contribute an additional 33 acres for a total of 160 acres for the full golf course
facility. Ownership of the lessee's 33 acres was to be transferred to the City upon
expiration of the lease, following the 40 year initial term and 20 year option (60 years
total).
Approval of the proposed amendment would result in the following:
a) The City Attorney would be empowered to meet and confer with the lessee
regarding their financing, in order for the City Attorney to bring the subordination
terms forward to the City Council, to be included in the lease.
jb) Lessee would have until October 30, 1996 to commence substantial
construction of the Golf Course.
�0 c) In consideration for extending the construction date specified in the lease,
lessee will make a one -time rent payment- conveyance of legal title "Free and Clear" to
the 33 acre parcel, no later than the date of opening of public play on the golf course
project.
d) Language specifying termination of the lease in cases where lessee is unable to
conduct golf course operations including loss of title to any portion of the leased
premises through condemnation or by right of eminent domain.
e) City's consent shall not be required for any transfer of stock or assets of lessee;
or any transfer of the lease to a partnership; or any transfer of any undivided interests in
the leased premises; so long as the current partners in Cottonwood Golf Club, Inc., own
either collectively or individually at least fifteen percent (15 %) of the voting stock of
lessee or any partnership or other ownership arrangement for the leased premises.
f) All other terms of the lease shall remain in full force and effect.
ALTERNATIVES:
1) Revise the proposed amendment. This course of action is not recommended. The
amendment allows for extension of the construction date which is crucial to secure
financing. while expediting the conveyance of 33 acres of private property to City
ownership, both factors which are favorable to the City. If at any time during the early
or late stages of golf course operation, a default occurs, City has full control of the
entire 160 acres of developed property.
2) Not approve the amendment.
CONSEQUENCES OF NOT ACTING:
The ability of Cottonwood Golf Club, Inc. to secure required financing would be
severely constrained and the deadline to complete construction could not be met.
ACTION FOLLOWING AUTHORIZATION
Terms of the amendment will be carried out.
JC /ss / #54:zolfleas
THIS AMENDMENT TO LEASE AGREEMENT ( "Amendment "), is
made and entered into as of this day of , 1954
by and between THE CITY of PETALUMA, a public body, corporate and
oolitic of the State of California ( "Lessor "), and COTTONWOOD
GOLF CUTS, INC., a California corporation ( "Lessee ").
2.. Lessor and a certain third party not party hereto,
namely Empire Golf, Inc., a California corporation (WRmpire"),
have entered into that certain Lease Agreement dated January 7,
1991 (the "Lease ") concerning approximately 126 acres Located on
or near the Petaluma Municipal Airport, Sonoma County, California
and therein described as the "Leased Premises ".
B. Empire has assigned its interest in the Lease to
Lessee and Lessor has approved said assignment.
C- Lessor and Lessee wish to amend the terms of the
Lease in the manner herein set forth.
ACCORDIffr=, for good and valuable consideration, the
receipt and stffieiency cyst which is hereby acknowledged, Lc$aoi
and Lessee hereby agree to amend the Lease as follows:-
1. STATUS OF LEA -. The Lease is in full force and
effect and, except for this Amendment, has not been modified or
amended. Upon execution of this Amendment; there is no default
by Empire or Lessee under the Lease and Lessor has no claims,
demands or offsets against Empire or Lessee.
2. LESSOR'S RE0UIREi2 QBLiGA.TJQNS: In order to
implement the landlord's Required obligations to subordinate the
Leased Premises (and the 33 Acre Parcel described in Paragraph 4,
below, when applicable) to alla4r financing of the project by
Lessee in the manner described in Paragraph 6.1(c) of the Lease,
Lessor hereby appoints and empowers the city Manager to meet and
confer with ]Lessee within sixty (60) days of the date of this
Amendment to agree upon reasonable and express terms and
conditions for Lessee's senior financing. At such time as the
city Manager and Lessee agree upon said terms, the Lease shall be
further amended by the City Manager and Lessee to incorporate
formally the express subordination terms into the Lease.
3. CONSTRUCTION: The Required Construction described
in Paragraph 6.5 of the Lease shall be vndertaken by a licensed
California general contractor selected by and under contract with
Lessee.
4. ADDITIONAL RENT: If and when Lessor and Lessee
determine that commencement of construction of the golf course
facility is feasible, Lessee agrees that, as and for
consideration for the extension of the Construction Date
described in Paragraph 7, below, Lessee shall then become
obligated to make a one -tithe rent payment (the "Additional Rent
Payment„) to Lessor in the form of conveyance to Lessor of the 33
Acre Parcel (herein so called and as more particularly described
in Exhibit B to the Lease). For purposes of determining I.esseels
obligation to taake the Additional Rent Payment, Lessor and Lessee
agree that commeneenont of construction of the golf course
facility shall be deemed feasible when Lessee is ready to
commence construction of the golf course =agility in the manner
described in the Lease av evidenced by (i) Lessor4a performance
of lessor's Required Obligations described in Paragraph 6.1 of
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the Lease; (ii) Lessee's acquisition of title to the 33 Acre
Parcel from third parties not party hereto, (iii) xes,sor's
approval of plans for the golf course facility in the manner
described in paragraph 6.4 of the Lease, and (iv) Lessor's
acceptance of Lessee's assurances for completion in the manner
described in Paragraph 6.6 of the Lease. If the commencement of
golf course construction is not feasible, Tenant shall not be
obligated to make the Additional Rent Payment. if the
commencement of golf course construction is feasible, Lessee must
make the Additional Rent Payment no later than the date of
opening of public play on the golf course project (the "Payment
Lute"). Lessee may, but shall not be obligated to, pay the
Additional Rent Payment prior to the Payment Date. If golf
course construction is feasible d Lessee does not Paybthe
ib
Additional Rent Payment by Payment
default hereunder and Lessor may terminate the Lease. The
payment of the Additional Rent Payment shall not reduce or be a
credit against Lessee's other rental obligations described in
Paragraph 7 of the Lease.
if commencement of the golf course facility is
feasible, Lessee shall, convey the 33 Acre Parcel to Lessor an or
prior to the Payment Date in its then existing state and
condition. Lessor shall accept title to the 33 Acre parcel free
and clear of mortgages and/or deeds of trust securing monetary
obligations of Lessee (other than Lessee's rinanaing described in
Paragraph 5.1(0) of the Lease and Paragraph 2, above) but subject
to any and all Other liens and encumbrances that do not have a
material adverse effect on the conduct of golf course operations
or which may otherwise be approved by Lessor.
5. EMIM T 24MAIU, Paragraph 19 of the Tease is
hereby amended to provide that in the event that title to any
portion of the Leased Premises or the 33 Acre Parcel are taken by
condemnation or by right of eminent domain and in the event that
Lessee cannot reasonably conduct golf course operations on the
untaken portion Of the Leased Premises, the Lease shall terminate
effective as of the earlier date title or possession to the taken
/
portion is obtained by the condemning authority.
s. ASSIGNMENT: Lessor agrees that for purposes of
j�
Paragraph 21 of the Lease, Lessor's consent shall not be required
for any transfer of the stock or assets of Lessee; or any
transfer of this Lease to a partnership; or any transfer of an
undivided interest in the Leased Premises; so long as in each
L. Wasem shall
case Richard A. Coombs, Borne H. O'Brien and Larry
ovn, either collectively or individually, at least fifteen
percent (15 %) of the voting stock of Lessee or of any partnership
Any
or other ownership arrangement for the Leased Premises.
transfer described in this Paragraph 6 shall not constitute an
assignment or other transfer of Lessee's interest in the Lease.
7, TENSION OF CONSTRUCTION DATE: In consideration
of the Additional. Rent Payment, Lessor and Lessee hereby agree to
delete Paragraph 22.1(d) of the Lease in its entirety. Lessor
and Lessee agree that in the event Lessee does not commence
substantial construction of the golf course project described in
the Lease by October 30, 1996 (tha "Construction Date "). Lessor,
at its option, may terminate the Lease effective upon delivery of
written notice to Lessee delivered to Lessee at any time after
the construction pate but prior to the time Lessee may actually
commence substantial construction of the golf course. Lessor and
Lessee agree that the Construction Date may be postponed and
extended for Unavoidable Delay. As used herein, the term
"Unavoidable Delay" shall mean delays due to strikes, acts of
God, unusual or unreasonable weather conditions, act or delay to
act on the part of any public or governmental entity (other than
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Lessor) , litigation or similar cause or other causab d beyon the
reasonable control of Y,essee.
a. CAPITALj:ZZ1) TERMS: All capitalized terms and
phrases used in this Amendment shall be given the sane meaning
ascribed to that teem or phrase in the Lease except as otherwise
provided in this Amendment.
9. 110TTCESt_ ADDRESSES: For purposes of paraq -.ap.1 23
of the Lease, notices, demands, reepests or replies to Lessee
shall be delivered to Lessee at the following address:
cottonwood Golf club, Inc.
414 Aviation Boulevard
Santa Rosa, CA OS403 -1069
Attn: Richard A. Coombs
Larry L. Wasem
10. RECD D G: Neither the Lease nor this Amendment
shall be recorded, provided, however, a memorandkim Of the ;tease
and this Amendment in a form reasonably acceptable to the City
manager and Tenant may be recorded by either party in the
Official Records of Sonoma County.
11. CONFLICTS: In the event of any Conflict between
the terms of the lease and the tex-ms of this Amendment, ti;2 terns
of this Amendment shall govern and prevail.
11. M MMTS: This Amendment may be executed in
identical counterparts and each counterpart together shall
constitute a single integrated document.
IN WITNESS WHEREOr, the parties hereto have set their
hand, effective as of the day and year first above written.
LESSOR: I CITY OF PETALTJMA
By:
City Manager
ATTEST:
City Clark
APPROVED AS TO FORM:
City Attorney
Finance OfiicerfAuditor
Risk Manager
LESSEE: COTTONWOOD GOLF CLUB, 2NC., a
California corporation
By:
Naze, Richard A. Coombs
Its-
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EXHIBIT "I" TO AMNb T
TO LEASE AGREEid -`T
TERMS
-To be attached-
-4-
ORDINANCE NO. N.C.S.
Introduced by Seconded by
AN ORDINANCE AUTHORIZING AMENDMENT
TO A LEASE OF REAL PROPERTY LOCATED WITHIN THE
CITY OF PETALUMA
BE IT ORDAINED BY THE Council of the City of Petaluma as follows:
Section 1. The lease for certain real property located in the City of Petaluma,
County of Sonoma, State of California is hereby authorized to be amended under the
terms and conditions set forth in the lease amendment by and between the City of
Petaluma and Cottonwood Golf Club, Inc., which lease amendment is attached hereto as
Exhibit "A" and incorporated herein by reference and the City Manager is hereby
authorized to sign said Amendment which is for the construction of a public golf course.
Section 2. The City Clerk be, and she is hereby directed to post /publish this
ordinance for the period and in the manner as required by the City Charter.
INTRODUCED AND ORDERED published /posted this day of
ADOPTED this
AYES:
NOES:
ABSENT:
ATTEST:
City Clerk
1994.
day of , 1994, by the following vote:
Mayor
APPROVED:
City Attorney