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HomeMy WebLinkAbout2003-05-20 Workshop Meeting City Commission Meeting Minutes MINUTES • DANIA BEACH CITY COMMISSION WORKSHOP MEETING MAY 20, 2003 6:00 P.M. 1.. CALL TO ORDER Mayor Anton called the meeting to order at 6:00 p.m. 2. ROLL CALL: Present: Mayor: Bob Anton Vice-Mayor: C.K. McElyea Commissioners: Robert Chunn Pat Flury Bob Mikes City Attorney: Tom Ansbro City Manager: Ivan Pato City Clerk: Charlene Johnson 3. DISCUSSION OF HARBOUR TOWNE LEASE. City Manager Pato reported that he negotiated with representatives of Harbour Towne Associates, Inc. and a formula was agreed upon to offer the City a percentage of gross revenues consistent with the appraisal report that has been submitted. It was also agreed that Harbour Towne Associates, Inc. would pay the City $250,000 for modifying the lease, $125,000 upon signing the modification, and another $125,000 a year thereafter. Attorney Jon Chassen, representing Harbour Towne Associates, Inc., presented the following brief history of the lease agreement. The original lease agreement between the City of Dania and Marine Conversions, Inc., run by David Graham, was entered into on May 28, 1980, and originally called for a rent fee based on percentage of gross revenues according to a fee schedule that was attached to the agreement. The first modification to the lease was dated January 1985, which extended the time for the tenant to make improvements to the property. In July of 1986, the lease was assigned to Southeast Bank as Trustee. The second modification to the lease was dated September 1986, which extended the time period for substantial completion of the now existing I. T. Parker Community Center. Vice-Mayor McElyea interjected that Marine Conversions, Inc. was fined $100,000 at that time. The third modification to the lease was dated 1988, which • changed the rent schedule from percentage of gross revenues to a flat fee that MINUTES 1 MAY 20, 2003 WORKSHOP MEETING would increase every 5 years based upon changes in the cost of living index. The current rent paid to the City is approximately $141,000 per year, which is scheduled to increase in September 2005 for the remainder of the existing term. In December 1988, Harbour Towne Associates, Inc. entered into a sub-lease with Southeast Bank as Trustee for the property. In conjunction with the sub- lease with Southeast Bank, Harbour Towne Associates bought the leasehold owned by Marine Conversions, Inc. and they also bought the fee-simple interest to the portion of the marina that is adjacent to the City's land. At that time, David Graham's company promised to lease back a portion of the marina, but he never made good on the promise, and as a result Harbour Towne Associates and Marine Conversions were involved in litigation for three to four years. The rent fee that Harbour Towne Associates agreed to pay the City was based on the amount of revenue generated by the marina according to David Graham, which included his rent payment. As a result, Harbour Towne Associates has been digging out of a hole since December 1988. Harbour Towne Associates has made many improvements to the property and there have been no complaints about the operation of the marina. Three years ago Harbour Towne Associates requested a modification to the lease, however, they were turned down, because Southeast Bank was the tenant, not Harbour Towne Associates. In 2001 Harbour Towne Associates bought out the lease with Southeast Bank for approximately $700,000, and they are now in a position, as tenant, to hold discussions with the City about negotiating an extension to the existing lease. • City Manager Pato explained that Harbour Towne Associates, Inc. is requesting that the existing lease be restructured for the remaining seven years in addition to a 30-year extension of the lease in order to secure funding for capital improvements. Attorney Chassen pointed out that if the lease is not extended, the City would continue to receive the fixed amount of$141,000 until August 2005, with a slight increase, due to the cost of living index, until August 2010. If the lease is not extended, the City would be required to buy the improvements that have been made to the leasehold. According to the January 2003 report, the value of the improvements in the year 2010 would be $6,656,270. Attorney Chassen explained that Harbour Towne Associates, Inc. needs to negotiate an extension, at this time, in order to negotiate extensions with sub-tenants and secure funding for capital improvements, because financing is not available on short-term leases. Harbour Towne Associates, Inc. is willing to convert the fixed rate payment to a percentage of gross revenues, which would result in a lot more income for the City. Harbour Towne Associates, Inc. is also willing to make a payment of$125,000 to the City upon execution of the lease extension, and another$125,000 one year thereafter. With the proposed amendment, the City would receive between $350,000 to $650,000 additional revenue over the remaining seven years of the existing lease. MINUTES 2 MAY 20, 2003 WORKSHOP MEETING • Attorney Jon Chassen presented Harbour Towne's proposed improvements: ® Replace dock piles, decking and dolphin piles at a cost of$475,000 © Level and overlay the parking lots with new asphalt at a cost of$330,000 ® Enlarge the hull out in the shipyard area in order to bring up bigger boats; make improvements to the pad and put in a covered building; and purchase a larger travel lift at a cost of$2,225,000 m Dredge the basin at a cost of$150,000 Mr. Chassen mentioned that there were only two areas on the property where improvements could be made to generate additional revenue; one is the boat ramps, however, nothing could be done until the year 2016. The other is the grassy area to the east of the restaurant where a small building could be constructed, which could possibly be used for offices. Laurence Leeds, Growth Management Director, advised that a parking variance would be required prior to any additional buildings being constructed on the property. Gary Grumwald, Harbour Towne Associates, Inc., advised that one of the boat ramps has been blocked off because it is unsafe, however, because the ramps were constructed with grant monies, improvements could not be made to the ramps until the year 2016. • Vice-Mayor McElyea questioned whether it would be more feasible to reimburse the grant monies in order to make the boat ramps safer and operational. Commissioner Flury mentioned the possibility of additional grant monies from the same agency to improve the boat ramps. City Manager Pato was directed to research the options. Commissioner Flury was not in favor of putting any type of building next to the restaurant. She was against removing any of the boat ramps, but suggested the need to dredge in front of the boat ramps. Commissioner Mikes mentioned the possibility of obtaining grant monies for a perimeter dock all around the community center. Commissioner Mikes suggested that the City should be allowed use of two of the boat slips for events such as fishing tournaments. City Manager Pato stated that the City's objective should be to get to the formula outlined in the appraisal report by the year 2010, which would be somewhere in the 7% area for the balance of the lease through the year 2010 and then increase to 8% of gross revenues at 2010 and beyond. Attorney Chassen explained that Harbour Towne Associates, Inc. was proposing a lease payment of 5.5% of gross revenues through the remainder of the lease, . with an increase on September 1, 2010, to 7% of gross revenues, plus the MINUTES 3 MAY 20, 2003 WORKSHOP MEETING • $250,000 to be paid in two installments of$125,000 each, which would bring the effective rate of the 5.5% up to 6.34%. It was the general consensus of the Commission to change the payment schedule in the current lease from a fixed rate to a percentage of gross revenues and to extend the lease 30 years plus the remaining seven years for a total of 37 years. City Manager Pato and City Attorney Ansbro were directed to proceed with bringing a 37-year lease back to the City Commission. 4. ADJOURNMENT: The meeting adjourned at 7:30 p.m. ST: OB ANION It; MAYOR-COM ISSIONER A LENE JOH S N CITY CLERK Respectfully submitted by Nanci Denny Approved: June 10, 2003 • • MINUTES 4 MAY 20, 2003 WORKSHOP MEETING