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HomeMy WebLinkAboutResolutions 2011-167 N.C.S. 12/19/2011 Resolution No. 2011-167 N.C.S. of the City of Petaluma, California APPROVING FOURTH AMENDMENT TO LEASE AGREEMENT WITH ROOSTER RUN GOLF CLUB, LLC. WHEREAS, the City of Petaluma (City) and Empire Golf, Inc., a California corporation ("Empire"), entered into a Lease Agreement dated January 7, 1991 (the "Lease"), concerning the construction and operation of a golf course on approximately 126 acres located on or near the Petaluma Municipal Airport, Sonoma County, California; and, WHEREAS, in 1994, Empire assigned its interest in the Lease to Cottonwood Golf Club, Inc. ("Cottonwood") and City approved said assignment; and, WHEREAS, City and Cottonwood amended the Lease pursuant to the terms of that certain Amendment to Lease Agreement dated December 8, 1994 (First Amendment); and, WHEREAS, City and Cottonwood amended the Lease pursuant to the terms of that certain Second Amendment to Lease Agreement dated June 5, 1996 (Second Amendment), pursuant to which the Leased Premises were redemised to cover the real property described in the Second Amendment; and, WHEREAS, prior to September 1997, Cottonwood assigned its interest in the Lease to Rooster Run Golf Club, a California Limited Partnership ("Rooster Run LP"), pursuant to the terms of the Lease,the First Amendment and the Second Amendment; and, WHEREAS, Rooster Run LP mortgaged its interest in the Lease to Exchange Bank pursuant to that certain Deed of Trust and Assignment of Rents dated September 17, 1997, and recorded October 10, 1997, as Document No. 97-92917, Sonoma County Records (the "Mortgage"); and, WHEREAS, with the express agreement of Exchange Bank, City and Rooster Run LP amended the Lease pursuant to that Lender's Agreement and Third Amendment to Lease Agreement dated as of December 19, 1997 (the -Third Amendment"); and, WHEREAS, on or about April 24, 1998, Rooster Run LP assigned its interest in the Lease to Rooster Run Golf Club, LLC (`Rooster Run") pursuant to the terms of the Lease, the First Amendment, the Second Amendment and the Third Amendment; and, WHEREAS, Rooster Run is operating the golf course on the terms and conditions set forth in the Lease, the First Amendment, the Second Amendment and the Third Amendment subject to the Mortgage; and, WHEREAS, the economic downturn has affected the ability of Rooster Run to operate the golf course in a manner which is economically sustainable; and, Resolution No.2011-167 N.C.S. Page 1 WHEREAS, Rooster Run has requested, and the City has agreed, to modify certain provisions of the Lease related to percentage rent payable to the City as stated in the Fourth Amendment to Lease Agreement (Fourth Amendment) attached to this Resolution as Exhibit A and incorporated herein by reference; and, WHEREAS, Exchange Bank has agreed to the modifications presented in the Fourth Amendment, including modifications to the terms of the Third Amendment which affect Exchange Bank; and, WHEREAS, the Fourth Amendment removes any present or future claim that Rooster Run is entitled to demand that the City subordinate its interest in the leased premises to any existing or subsequent obligation of Rooster Run, includingbut not limited to existing and/or subsequent financing from Exchange Bank or any other investor or lender; and, WHEREAS, City and Rooster Run wish to amend further the terms of Lease, the First Amendment, the Second Amendment, and the Third Amendment in the manner set forth in - this Fourth Amendment. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Petaluma approves the Fourth Amendment to Lease Agreement with Rooster Run Golf Club, LLC attached hereto as Exhibit A. Under the power and authority conferred upon this Council by the Charter of said City. REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by the Approved as to Council of the City of Petaluma at a Regular meeting on the 19'"day of December, Corm: 2011,by the following vote: City Att e AYES: Albertson, Barrett,Mayor Glass, Vice Mayor Healy, Kearney, Renee NOES: None ABSENT: Harris ABSTAIN: None ATTEST: ft al t . fr/ ��i_ •/.r.• City Clerk i�►for Resolution No.2011-167 N.C.S. Page 2 EXHIBIT A TO RESOLUTION 2011-167 N.C.S. THIS FOURTH AMENDMENT TO LEASE AGREEMENT (the "Fourth Amendment"), is made and entered into as of the first (1st) day of November, 2011 (the "Effective Date"), by and between THE CITY OF PETALUMA, a public body, corporate and politic of the State of California ("Lessor"), and ROOSTER RUN GOLF CLUB, LLC, a California limited liability company ("Lessee"). RECITALS: This Fourth Amendment is made with reference to the following facts: A. Lessor and a certain third party not party hereto, namely Empire Golf, Inc., a California corporation ("Empire"), have entered into that certain Lease Agreement dated January 7, 1991 (the "Lease"), concerning the construction and operation of a golf course on approximately 126 acres.located on or near the Petaluma Municipal Airport, Sonoma County, California. B. In 1994, Empire assigned its interest in the Lease to Cottonwood Golf Club, Inc. ("Cottonwood") and Lessor has approved said assignment. C. Lessor and Cottonwood have amended the Lease pursuant to the terms of that certain Amendment to Lease Agreement dated December 8, 1994, (the "First Amendment"). D. Lessor and Cottonwood have again amended the Lease pursuant to the terms of • that certain Second Amendment to Lease Agreement dated June 5, 1.996, (the "Second Amendment") pursuant to which the Leased Premises were redemised to cover the real property described in the Second Amendment. As used herein, the term "Leased Premises" shall refer to the Leased Premises defined in the Second Amendment. E. Prior to September 1997, Cottonwood has assigned its interest in the Lease to Rooster Run Golf Club, a California Limited Partnership ("Rooster Run LP"), pursuant to the terms of the Lease, the First Amendment and the Second Amendment. F. Rooster Run LP has mortgaged its interest in the Lease to "Exchange Bank" (herein so called) pursuant to that certain Deed of Trust and Assignment of Rents dated September 17, 1997, and recorded October 10, 1997, as Document No. 97-92917, Sonoma County Records (the "Mortgage"). G. Lessor, Rooster Run LP and Exchange Bank have amended the Lease pursuant to that Lender's Agreement and Third Amendment to Lease Agreement dated as of December 19, 1997 (the "Third Amendment"). H. On or about April 24, 1998, Rooster Run LP assigned its interest in the Lease to Lessee pursuant to the terms of the Lease, the First Amendment, the Second Amendment and the Third Amendment. Lessee is the current occupant of the Leased Premises and is operating the golf course on the terms and conditions set forth in the Lease, the First Amendment, the Second Amendment and the Third Amendment subject to the Mortgage. J. Lessee represents that Exchange Bank is willing to amend the terms of the Mortgage and the promissory note secured thereby, including, without limitation, the extension of the maturity date and the promissory note to September 1, 2021, with a further commitment for a ten (10) year extension at a fixed rate of 2.75% over the then current ten (10) year treasury rate, but only if the Lease is amended in the manner described in this Fourth Amendment. Resolution No. 2011-167 N.C.S. Page 3 K. Lessor and Lessee wish to amend further the terms of the Lease, the First Amendment, the Second Amendment, and the Third Amendment in the manner set forth in this Fourth Amendment. ACCORDINGLY, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lessor and Lessee hereby agree to amend the Lease, the First Amendment, the Second Amendment and the Third Amendment as follows: 1. Status of Lease. Lessor and Lessee:agree and acknowledge that the Lease, the First Amendment, the Second Amendment, and the Third Amendment are in full force and effect and, except for this Fourth Amendment, have not been otherwise modified or amended. 2. Rent. As and for rent for the Leased Premises, Tenant shall pay percentage rental for the period beginning November 1, 2011, for the balance of the Lease term in the manner described in this Fourth Amendment. • (a) Paragraphs 7.1 (a) and 7.2(a) of the Lease are deleted in their entirety: (b) For purposes of this Fourth Amendment the term, "Gross Revenue" shall mean only money received by Lessee from green fees, cart rentals and driving range fees and from no other source or activity and shall not include the items set forth in subsections 8(1) through 8(14) of the Lease, inclusive. All other sources of income received by Lessee from the operation of the golf course and ownership of Lessee's interests in the golf course shall be excluded from Gross Revenue. (c) From and after the Effective Date, the term "Lease Year" means a twelve (12) month period commencing each and every July 1 thereafter occurring and terminating on each and every June 30 thereafter occurring. Lease Year 15 shall commence on July 1, 2012. (d) From November 1, 2011 until June 30, 2012, Lessee shall pay rent payments to Lessor in arrears on the 15th day of each calendar month in the amount of three percent (3%) of Gross Revenue. (e) From and after July 1, 2012 (the commencement of Lease Year 15), Lessee shall pay rent payments to Lessor in arrears on the 15th day of each calendar month, in accordance with the following schedule: LEASE 15 16-20 21-23 24-28 29 30 31 32 33-40 41-60* YEARS GREEN 3% 4% 5.0% 7.5% 8% 8.5% 9% 9.5% 10.0% 16.0% FEES CARTS 3% 4% 5.0% 7.5% 8% 8.5% 9% 9.5% 10.0% 10.0% RANGE 3% 4% 5.0% 7.5% 8% 8.5% 9% 9.5% 10.0% 10.0% *If Lessee exercises option to extend described in Paragraph 4.2 of the Lease. (f) The phrase: "On or before the 15th day of each calendar month starting in the second (2nd) month of the eleventh (1 1 th) year of the Lease" shall be deleted from the beginning of Paragraph 7.2(b) of the Lease and replaced with the following: "Commencing on December 15, 2011 and on the fifteenth day of each and every calendar month for the balance of the term of the Lease....." 3. Elimination of Subordination by Lessor. Paragraph 6.1 (C) of the Lease, Paragraph 2 of the First Amendment and the last sentence of the first grammatical paragraph of Paragraph 4 of the Third Amendment are all deleted in their entirety. Lessor shall have no obligation to Resolution No. 2011-167 N.C.S. Page 4 subordinate its fee interest or any interest in the Leased Premises to any existing or future indebtedness or obligation of Lessee or any assigns, transferees or successors to Lessee's interests in the Lease, including Lender and any assigns, transferees or successors of Lender, whether said indebtedness or obligation is to Lender or to other persons or entities. 4. Exchange Bank. This Fourth Amendment is conditioned upon the execution by Exchange Bank in the space provided below by a date no later than December 31, 201 1. 5. Capitalized Terms. All capitalized terms and phrases used in this Fourth Amendment shall be given the same meaning ascribed to that term or phrase in the Lease and First Amendment, the Second Amendment and the Third Amendment, except as otherwise provided in this Fourth Amendment. • 6. Recording. Neither the Lease, the First Amendment, the Second Amendment, • the Third Amendment nor this Fourth Amendment shall be recorded; provided, however, a Memorandum of Lease and the First Amendment, the Second Amendment, the Third Amendment and this Fourth Amendment in a form reasonably acceptable to the City Manager and Lessee may be recorded at any time by either party in the Official Records of Sonoma County. 7. Conflicts. In the event of any conflict between the terms of the Lease, and the First Amendment, the Second Amendment and the Third Amendment on one hand and the terms of this Fourth'Amendment on the other hand, the terms of this Fourth Amendment shall govern and prevail. 8. Counterparts. This Fourth Amendment may be executed in identical counterparts and each counterpart together shall constitute a single integrated document. IN WITNESS WHEREOF, the parties hereto have set their hand, effective as of the Effective Date. LESSOR: CITY OF PETALUMA By: City Manager ATTEST: City Clerk APPROVED AS TO FORM: City Attorney Finance Director Risk Manager Resolution No.2011-167 N.C.S. Page 5 LESSEE: ROOSTER RUN GOLF CLUB, LLC, a California limited liability company By: ROOSTER RUN GENERAL PARTNERS, a California general partnership, Manager By: RICHARD A. COOMBS, General Partner The undersigned hereby accepts and approves the terms of this Fourth Amendment. EXCHANGE BANK By: Name: Its: 1758994.1 Resolution No. 2011-167 N.C.S. Page 6