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Yacht Basin Lease AmendmentsMEMORANDUM December 13, 2001 TO: FROM: SUBJECT: The Honorable Mayor and City Council Members Michael C. Van Milligen, City Manager Dubuque Yacht Basin Lease Amendments The Dubuque Yacht Basin, owned by Don Shanley, has requested an extension of their current leases, which expire in 2020 and 2024. The Dubuque Yacht Basin is requesting that the two leases be extended so that they both expire in 2031. Also, the Yacht Basin currently enjoys a discounted lease rate, and in 2020 and 2024, when the previous leases would have expired, the new lease provides that they begin paying market rate leases. Public Works Director Mike Koch recommends approval of the amended lease. I concur with the recommendation and respectfully request Mayor and City Council approval. Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager Michael A. Koch, Public Works Director CITY OF DUBUQUE, IOWA MEMORANDUM December 13, 2001 TO: FROM: SUBJECT: Michael C. Van Milligen, City Manager Michael A. Koch, Public Works Director Dubuque Yacht Basin Lease Extensions INTRODUCTION This is in response to a December 12, 2001 letter from attorney Art Gilloon regarding three lease extensions for the Dubuque Yacht Basin. DISCUSSION Mr. Gilloon is making clarification to ambiguous language contained in my November 27, 2001 letter to the City Council regarding those lease extensions. In my letter, I stated that the Dubuque Yacht Basin, in exchange for the 30-year lease extension, is prepared to make several major physical improvements on the lease property. This statement needs clarification. Mr. Gilloon correctly points out that while the Dubuque Yacht Basin is considering these physical improvements, the lease amendments in no way requires these improvements to be made. RECOMMENDATION The purpose of this memorandum is to clarify and confirm the statements made in Art Gilloon's letter, as referenced in my November 27, 2001 letter. This issue is not referred to in the actual lease extensions; and, therefore, no modifications to the proposal lease amendments are necessary. ACTION TO BE TAKEN The purpose of this memorandum is for clarification purposes; no formal action is needed as a follow-up to the letter. MAK/vjd NORMAN, GILLOON, WRIGHT & HAMEL P.C. Attorneys Wayne A. Norman, Jr.* Arthur F. Gilloon* E. David Wright* Dirk J. Hamel** Christopher R. Paar*** December 12, 2001 Please Reply To: P.O. Box 857 Dubuque, IA 52004-0857 E-Mail: ngwhlaw~i~pcii.net Writer's e-mail address: a~illoon(&dbqlaw.com VIA FACSIMILE 589-4205 AND REGULAR MAIL Michael Koch Public Works Director City Hall 50 West 13th Street Dubuque, IA 52001-4864 RE: Dubuque Yacht Basin Leases and Public Hearing 12/17/01 Dear Mike: This letter will confirm our telephone conference of December 3 and our follow u p conference yesterday, December 11. I mentioned to you on December 3 that when I read your letter to me of November 30, I noticed in the attachments that your November 27, 2001 memo to City Manager Van Milligen stated in the second paragraph of the "Discussion" section that, "In consideration of the 30-year extension, the Yacht Basin is prepared to make several major physical improvements on the leased property." I called on December 3 to refresh your recollection that the Dubuque Yacht Basin originally wanted a 50-year extension, and that we also had discussed the City was well beyond the November 30, 2000 dredging deadline for Schmitt Harbor. In the end, the consideration for the lease extension was Dubuque Yacht Basin's agreement to go with 30 years rather than 50 years, and also to not raise the dredging delay as a default of the February 5, 1974 lease. Making physical improvements is not required. This letter is meant to clarify that it is the understanding of Dubuque Yacht Basin, Incl that the consideration for the lease extensions does not include Dubuque Yacht Basin, Inc. being required to. make any physical improvements on the leased premises. I understand that after our phone conversations of December 3 and yesterday, you are in Security Building / 800 Town Clock Plaza / Dubuque, IA 52001 / (563) 556-6433 / Fax: (563) 556-7706 Also Licensed in Wisconsin / Also Licensed in Illinois / Also Licensed in Minnesota Michael Koch Page Two ' December 12, 2001 agreement that if these lease extensions are approved by the City Council, that Dubuque Yacht Basin, Inc. will not be required to make any physical improvements as a condition of the lease extensions. If your understanding of our agreement is any different from that stated in this letter, please contact me immediately and confirm your understanding by return correspondence. I am sending a copy of this letter to City Attorney Barry Lindahl so that he is also advised as to our agreement on this issue. Thank you for your cooperation in this matter, Mike. Sincerely, ~ Arthur F. Gilloon AFG/jdh Enclosure cc by fax and regular mail: City Attorney Barry Lindahl Don Shanley NORMAN, GILLOON, WRIGHT & HA.MEL P.C. Attorneys Wayne A. Norman, Jr.* Arthur F. Gilloon* E. David Wright* Dirk J. Hamel** Christopher R. Paar*** Please Reply To: P.O. Box 857 Dubuque, IA 52004-0857 E-Mail: ngwhlaw~pcil.net December 12, 2001 VIA FACSIMILE 583-1040 AND REGULAR MAIL Barry A. Lindahl Corporation Counsel City of Dubuque 700 Locust Street, Suite 196 Dubuque, IA 52001 RE: Dubuque Yacht Basin, inc. Lease Extensions Dear Barry: After I received copies of Mike Koch's memos, information and recommendation to the City Manager (and ultimately the City Council) regarding the lease extensions, I talked with Mike to clarify the status of proposed physical improvements that Don Shanley and Dubuque Yacht Basin, Inc. had discussed with Mike Koch and Ken TeKippe at various meetings. The result of those discussions was that Dubuque Yacht Basin, Inc. would not get a 50-year lease, but instead a 30 year lease, and the dredging at Schmitt Harbor required to be done by November 30, 2000, could be done in the spring of 2002. In return, any requirement that Dubuque Yacht Basin, Inc. make physical improvements over the next 30 years was dropped. To the extent Mike's communications to the City Manager or City Council indicated otherwise, I wanted to dear that up. Let me know if you have any question about this, as I wanted to make our position known prior to the public hearing on December 17. Thank yo, u~ery much. Sincerely, / / / Arthur F. Gilloon AFG/jdh Enclosure cc: Don Shanley Mike Koch Security Building / 800 Town Clock Plaza / Dubuque, IA 52001 / (563) 556-6433 / Fax: (563) 556-7706 *Also Licensed in Wisconsin / **Also Licensed in Illinois / ***Also Licensed in Minnesota MEMORANDUM November 28, 2001 TO: FROM: SUBJECT: The Honorable Mayor and City Council Members Michael C. Van Milligen, City Manager Dubuque Yacht Basin Lease Amendments The Dubuque Yacht Basin, owned by Don Shanley, has requested an extension of their current leases, which expire in 2020 and 2024. The Dubuque Yacht Basin is requesting that the two leases be extended so that they both expire in 2031. Also, the Yacht Basin currently enjoys a discounted lease rate, and in 2020 and 2024, when the previous leases would have expired, the new lease provides that they begin paying market rate leases. Public Works Director Mike Koch recommends setting a Public Hearing for December 17, 2001 on these lease amendments. I concur with the recommendation and respectfully request Mayor and City Council approval. IV~chael C. Van Milligen -- < MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager Michael A. Koch, Public Works Director _© CITY OF DUBUQUE, IOWA MEMORANDUM November 27, 2001 TO: FROM: SUBJECT: Michael C. Van Milligen, City Manager Michael A. Koch, Public Works Director Dubuque Yacht Basin Lease Amendments INTRODUCTION The following is a response to a request from the Dubuque Yacht Basin, owned by Mr. Don Shanley, and represented by attorney Arthur F. Gilloon, to extend the termination dates of their existing leases with the City of Dubuque. DISCUSSION Currently the Dubuque Yacht Basin holds three leases with the City of Dubuque. The first Lease Agreement is dated April 8, 1970, as amended by a First Amendment dated November 3, 1970, a Second Amendment dated February 12, 1975, and a Third Amendment dated May 4, 2000. The second Lease Agreement is dated February 5, 1974, and as amended by a First Amendment dated May 4, 2000. The third Lease Agreement is dated November 23, 1987, as amended by a First Amendment dated December 21, 1987, a Second Amendment dated January 19, 1998, and a Third Amendment dated May 4, 2000. The current leases are scheduled to expire in 2020 and 2024. The Dubuque Yacht Basin is requesting that the leases be extended for a period of 30 years, with termination date of March 31, 2031, In consideration of the 30-year extension, the Yacht Basin is prepared to make several major physical improvements on the leased property. When the current leases expire in 2020 and 2024, a new lease rate would be set by negotiation or appraisal in the Year 2020. However, the lease payment on the 2024 lease would not increase until its current expiration date. The new lease rates would be based upon the then current fair market rates as agreed by the parties or as determined by the following process: If the parties cannot agree to a fair market rental rate at least ninety (90) days prior to March 31, 2020, they shall jointly appoint an MIA real estate appraiser to determine the fair market rent. If the parties cannot agree on an appraisal, each party shall appoint its own MIA real estate appraiser, and the two appointed parties shall select a third. The average of the fair market rents, as determined by the three appraisers, shall determine the annual rate for the period commencing in the years 2020 and 2024, and ending on March 31, 2031. RECOMMENDATION I would recommend approval of the requested lease extensions through March 31, 2031, and recommend that a public hearing be held on December 17, 2001. ACTION TO BE TAKEN The attached resolutions authorizing the City Clerk to advertise for a public hearing on the lease extensions should be approved. MAK/vjd Prepared by: Michael A. Koch, Public Works Director Address: 50 W. 13zh Street, Dubuque, IA 52001-4864 RESOLUTION NO. 543-01 RESOLUTION APPROVING FOURTH AMENDMENT TO LEASE AGREEMENT BETWEEN DUBUQUE YACHT BASIN, INC. AND THE CITY OF DUBUQUE WHEREAS, Dubuque Yacht Basin, Inc., entered into a Lease Agreement with the City of Dubuque dated April 8, 1970, as amended by a First Amendment dated November 3, 1970, a Second Amendment dated February 12, 1975, and a Third Amendment dated May 4, 2000 (referred to collectively as the Lease Agreement); AND WHEREAS, Dubuque Yacht Basin, Inc. and the City desire to extend the term of the Lease Agreement from March 31, 2020, to March 31, 2031. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. The Fourth Amendment to Lease Agreement attached hereto is hereby approved and the Mayor be authorized and directed to execute the Fourth Amendment to Lease Agreement attached hereto. Section 2. That the City Clerk is hereby authorized and directed to record a certified copy of this resolution and Fourth Amendment to Lease Agreement in the office of the Dubuque County Recorder. Passed, approved and adopted this 17th 2001. Attest: day of December Jeanne F. Schneider, City Clerk Terrance M. Duggan, Mayor FOURTH AMENDMENT TO LEASE AGREEMENT BETWEEN DUBUQUE YACHT BASIN, INC. AND THE CITY OF DUBUQUE This Fourth Amendment to Lease Agreement is made and executed this 20th day of.December, 2001, A.D., between DUBUQUE YACHT BASIN, INC., a corporation organized and existing under the laws of the State of Iowa, with its principal place of business in Dubuque, Iowa, (YACHT BASIN) and the CITY OF DUBUQUE, IOWA, a municipal corporation organized and existing under the laws of the State of Iowa, through its duly authorized City Council (CITY): WHEREAS, YACHT BASIN and CITY have heretofore entered into a Lease Agreement dated April 8, 1970, as amended by a First Amendment dated November 3, 1970, a Second Amendment dated February 12, 1975, and a Third Amendment dated May 4, 2000, referred to collectively as the Lease Agreement; and WHEREAS, CITY and YACHT BASIN now desire to further amend the Lease Agreement to extend the termination date from March 31, 2020, to March 31, 2031. NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Lease Agreement is hereby amended as follows: 1. Article (1) of the Lease Agreement is deleted and the following substituted in lieu thereof: The term of the lease IS HEREBY EXTENDED FROM March 31, 2020, to March 31, 2031. For the period through March 31, 2020, the annual rates shall be as provided for in the April 8, 1970 Lease Agreement. For the period commencing April 1, 2020, and ending on March 31, 2031, the annual rent for the leased premises shall be the fair market rental as agreed by the parties. If the parties cannot agree to the fair market rental at least ninety (90) days prior to March 31, 2020, they shall jo. intly appoint an MAI real estate appraiser to determine the market rate. If the parties cannot agree on an appraiser, each shall appoint its own MAI appraiser and the two appointed by the parties shall select a third. The average of the fair market rent determined by the three appraisers shall be the annual rent for the period commencing April 1, 2020 and ending on March 31, 2031. The appraisal reports shall be completed in accordance with the current "Uniform Standards of Professional Appraisal Practice" as promulgated by the Appraisal Standards Board of the Appraisal Foundation. The annual rent shall be paid in four (4) equal installments by not later than the first day of April, August, and December. full force and effect. All other terms and conditions of the Lease Agreement shall remain in full force and effect. /s/ Terrance M. Duggan, City of Dubuque Attest by: Jeanne F. Schneider, City Clerk DUBUQUE YACHT BASIN /s/ by Donald P. Shanley President Prepared by: Michael A. Koch, Public Works Director Address: 50 W. 13~h Street, Dubuque, IA 52001-4864 RESOLUTION NO. 544-O1 RESOLUTION APPROVING SECOND AMENDMENT TO LEASE AGREEMENT BETWEEN DUBUQUE YACHT BASIN, INC. AND THE CITY OF DUBUQUE WHEREAS, Dubuque Yacht Basin, Inc., entered into a Lease Agreement with the City of Dubuque dated February 5, 1974, and as amended by a First Amendment dated May 4, 2000 referred to collectively as the Lease Agreement; AND WHEREAS, Dubuque Yacht Basin, Inc. and the City desire to extend the term of the Lease Agreement from March 31, 2024, to March 31, 2031. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. The Second Amendment to Lease Agreement is hereby approved and the Mayor is authorized and directed to execute the Second Amendment to Lease Agreement attached hereto. Section 2. The City Clerk is hereby authorized and directed to record a certified copy of this resolution and the Second Amendment to Lease Agreement in the offices of the Dubuque County Recorder. Passed, approved and adopted this 17th 2001. Terrance M. Duggan, Mayor Attest: day of December Jeanne F. Schneider, City Clerk SECOND AMENDMENT TO LEASE AGREEMENT BETWEEN DUBUQUE YACHT BASIN INC. AND THE CITY OF DUBUQUE This Second,~ ~Amendmen~ to Lease Agreement is made and executed this 20th day of December, 2001, A.D., between DUBUQUE YACHT BASIN, INC., a corporation organized and existing under the laws of the State of Iowa, with its principal place of business in Dubuque, Iowa (YACHT BASIN) and the CITY OF DUBUQUE, IOWA, a municipal corporation organized and existing under the laws of the State of Iowa, through its duly authorized City Council (CITY). WHEREAS, YACHT BASIN and CITY have heretofore entered into a one Lease Agreement dated February 5,1974, as amended by a First Amendment dated May 4, 2000, referred to collectively as the Lease Agreement; and WHEREAS, CITY and YACHT BASIN now desire to further amend the Lease Agreement by extending the termination date of March 31, 2024, to March 31, 2031. NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Lease Agreement is hereby amended as follows: 1. Article 5 of the Lease Agreement is deleted and the following substituted in lieu thereof: The term of the lease is hereby extended from March 31, 2020, to March 31, 2031. For the period through March 31, 2020, the annual rates shall be as provided for in the February 5, 1974 Lease Agreement. For the period commencing April 1, 2020, and ending on March 31, 2031, the annual rent for the leased premises shall be the fair market rental as agreed by the parties. If the parties cannot agree to the fair market rental rate at least ninety (90) days prior to March 31, 2020, they shall jointly appoint an MAI real estate appraiser to determine the market rate. If the parties cannot agree on an appraiser, each shall appoint its own MAI appraiser and the two appointed by the parties shall select a third. The average of the fair market rent determined by the three appraisers shall be the annual rent for the period commencing April 1, 2020 and ending on March 31, 2031. The appraisal reports (including definitions used) shall be completed in accordance with the current "Uniform Standards of Professional Appraisal Practice" as promulgated by the Appraisal Standards Board of the Appraisal Foundation. The annual rent shall be paid in four (4) equal installments by not later than the first day of April, August, and December. All other terms and conditions of the Lease Agreement shall remain in full force and effect. Terrance M. Duggan, Mayor Attest by: Jeanne F. Schneider, City Clerk DUBUQUE YACHT BASIN /s/ Donald P. Shanley President Prepared by: Michael A. Koch, Public Works Director Address: 50 W. 13th Street, Dubuque, IA 52001-4864 RESOLUTION NO. 545-O1 RESOLUTION APPROVING FOURTH AMENDMENT TO LEASE AGREEMENT BETWEEN DUBUQUE YACHT BASIN, INC. AND THE CITY OF DUBUQUE WHEREAS, Dubuque Yacht Basin, Inc., entered into a Lease Agreement with the City of Dubuque dated November 23, 1987, as amended by a First Amendment dated December 21, 1987, a Second Amendment dated January 19, 1988, and, a Third Amendment dated May 4, 2000, referred to collectively as the Lease Agreement; and WHEREAS, Dubuque Yacht Basin, Inc. and the City desire to extend the term of the Lease Agreement from February 5, 2024, to March 31, 2031. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. The Fourth Amendment to Lease Agreement is hereby approved and the Mayor is authorized and directed to execute the Fourth Amendment to Lease Agreement attached hereto. Section 2. The City Clerk is hereby authorized and directed to record a certified copy of this resolution and the Fourth Amendment to Lease Agreement, in the offices of the Dubuque County Recorder. Passed, approved and adopted this 17th 2001. Attest: /s/ Jeanne F. Schneider, City Clerk day of December, 2001. /s/ Terrance M. Duggan, Mayor FOURTH AMENDMENT TO LEASE AGREEMENT BETWEEN DUBUQUE YACHT BASIN INC. AND THE CITY OF DUBUQUE This Fourth_Amendmentito Lease Agreement is made and executed this 20th day of Decmeber, 2001, A.D., between DUBUQUE YACHT BASIN, INC., a corporation organized and existing under the laws of the State of Iowa, with its principal place of business in Dubuque, Iowa, hereinafter referred as "YACHT BASIN", and the CITY OF DUBUQUE, IOWA, a municipal corporation organized and existing under the laws of the State of Iowa, through its duly authorized City Council, hereinafter referred to as "CITY"; WITNESSTH: Whereas, YACHT BASIN and CITY have heretofore entered into one certain lease agreement dated November 23, 1987, as amended by a First Amendment dated December 21, 1987, a Second Amendment dated January 18, 1988, and a Third Amendment dated May 4, 2000, whereby CITY leased to YACHT BASIN certain real estate described in the aforesaid Lease Agreement dated November 23, 1987; and WHEREAS, CITY and YACHT BASIN now desire to further amend the Lease Agreement from a termination date of February 5, 2024, to March 31, 2031. NOW, THEREFORE, in consideration of One Dollar (~)1.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the aforesaid Lease Agreement between YACHT BASIN and CITY dated November 23, 1987, and as amended by a First Amendment dated December 21, 1987, a Second Amendment dated January 19, 1988, and a Third Amendment dated May 4, 2000; is hereby amended as follows: 1. Article 1 of the Lease Agreement is deleted and the following substituted in lieu thereof: The term of the lease is hereby extended from February 5, 2024 to March 31, 2031. For the period through February 5, 2024, t'he annual rates shall be as provided for in the November 23, 1987 Lease Agreement. For the period commencing February 6, 2024, and ending on March 31, 2031, the annual rent for the leased premises shall be at the then current fair market rates as agreed by the parties or as determined by the following process. If the parties cannot agree to the fair market rental rate at least ninety (90) days prior to February 5, 2024, they shall jointly appoint an MAI real estate appraiser to determine the market rate. If the parties cannot agree on an appraiser, each shall appoint his own MAI appraiser and the two appointed by the parties shall select a third. The average of the fair market rent determined by the three appraisers shall be the annual rent for the period commencing February 6, 2024 and ending on March 31, 2031. This appraisal report (including definitions used) shall be completed in accordance with the current "Uniform Standards of Professional Appraisal Practice" as promulgated by the Appraisal Standards Board of the Appraisal Foundation. The annual rent shall be paid in four (4) equal installments by not later than the first day of April, and the first day of each quarter thereafter. All the terms and conditions of the lease agreement dated November 23, 1987, as amended, shall remain in full force and effect. /s/ Terrance M. Duggan, Mayor Attest by: Jeanne F. Schneider, City Clerk DUBUQUE YACHT BASIN /s/ Donald P. Shanley