City Council Agenda Item Meeting of April 7, 2015

Transcription

1 City Council Agenda Item Meeting of April 7, 2015 TO: FROM: DATE: The Honorable Mayor and Members of the City Council James R. O'Connor, City Manager )}Uy}4'2:Y '12. Ci 'C~~Ir~ {/ ' March 31, 2015 SUBJECT: Addendum to Commercial lease Agreement between the City of Vero Beach and 43rd avenue Trade Center, Inc. REQUESTED BY: City Manager/Airport Director The following is requested as it relates to the above-referenced agenda item: _2L Request Council review and approval based on the attached documentation. No action required. (Information only)

2 MEMORANDUM TO: VIA: FROM: James R. O'Connor, City Manager Wayne R. Coment, City Attorney Ericson W. Men~ Director DATE: March 30, 2015 / SUBJECT: ADDENDUM TO cesmmercial LEASE AGREEMENT BETWEEN THE CITY OF VERO BEACH AND 43RD AVENUE TRADE CENTER, INC. I Attached are three (3) original copies of a proposed Addendum to an existing commercial lease agreement, along with a Personal Guarantee between the City of Vero Beach and 43rd Avenue Trade Center, Inc., in the Airport West Subdivision. BACKGROUND: 43rd Avenue Trade Center, Inc. is a long term tenant of the City of Vero Beach Airport, whose principal is Mr. Charles A. Sullivan, Sr. The leasehold property is located on 43rd Avenue and currently has both retail and storage unit rental facilities. The leasehold has generally been in good standing since its inception in Recently, due to the high cost of property insurance, Mr. Sullivan has requested a change in the insurance requirement of the lease, requesting to replace it with a personal guarantee for the full replacement cost for existing improvements and any new construction. In essence, Mr. Sullivan would like to provide self-insurance to protect himself and the City in case of catastrophic loss to the improvements on the leasehold, in which the City has a financial interest. The new language was drafted by staff, approved as to legal sufficiency by the City Attorney's Office, and signed by Mr. Sullivan. ANALYSIS: Strengths: This addendum and personal guarantee will benefit both the City and Tenant by a mutual understanding that there is a personal guarantee to cover the cost of full replacement of all improvements on the property during the term of the lease. Weaknesses: If there is catastrophic damage and the guarantor is not able to fulfill his obligations for any reason, the City might suffer financial loss. However, the same would be true for an insurance company that could not meet it obligations. Opportunities: 43rd Avenue trade center is a long term tenant that is well established in the community and which is interested in additional development of airport property. In this case, there is every indication that a personal guarantee is at least as much protection as an insurance policy. Threats: The City may be setting a precedent that other tenants would want to follow. However, it is staff's view that any request for a similar lease amendment would have to meet the same qualifications (a tenant who is a substantial local developer with outstanding financials and is in good standing with their current leasehold). RECOMMENDATION: Staff respectfully requests that this item be placed on the April 7, 2015, City Council Agenda, recommending approval of the attached Addendum and Personal Guarantee. EWM: Ir Attachments cc: Airport Commission Members (via /us mail) City Manager's Office (via ) City Clerk's Office (via ) N:\ADMINISTRATION\Memos 2015\ CC MEMO 43rd Ave Trade 2nd Addendum.docx

3 SECOND ADDENDUM TO LEASE AGREEMENT THIS SECOND ADDENDUM TO LEASE AGREEMENT entered into as of the day of April, 2015 (hereinafter "Second Addendum"), by and between the CITY OF VERO BEACH, a Florida municipal corporation whose mailing address is P.O. Box 1389, Vero Beach, FL (hereinafter "LANDLORD"), and 43RD AVENUE TRADE CENTER, INC., a Florida profit corporation, whose mailing address is 680 Old Dixie Highway, Vero Beach, FL (hereinafter "TENANT"). WHEREAS, on July 19, 2000, LANDLORD and TENANT entered into that certain Commercial Lease Agreement (hereinafter the "2000 Lease") for commercial real property located at the Vero Beach Municipal Airport as more particularly described in the 2000 Lease (hereinafter "Leased Premises"), which 2000 L~ase was subsequently amended by Addendum to Lease Agreement dated November 6, 2002 (hereinafter "2002 Addendum"); and WHEREAS, TENANT has developed the Leased Premises under the terms of the 2000 Lease, as amended, in a series of phases, and desires to satisfy the property insurance requirement for the 2000 Lease, as amended, through a personal guarantee for the full amount of the replacement cost for improvements on the Leased Premises currently existing and as may be constructed, without deduction for depreciation, as an alternative to providing a property insurance policy. NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, LANDLORD and TENANT agree to further amend the 2000 Lease, as amended by the 2002 Addendum, as follows: A. The foregoing "Whereas" clauses are hereby adopted and incorporated herein. Page 1 of5 N:\Client Docs\Airport\Leases\Sullivan.43rd.Ave\ Second.Amendment.to.Lease.Agreement.property insurance.2.msl.docx

4 B. TENANT and LANDLORD acknowledge that the property insurance requirements set forth in Section 6 (b) of Attachment B to the 2000 Lease are amended to additionally allow for a personal guarantee for the full amount ofthe replacement cost for the improvements on the Leased Premises currently existing and as may be constructed, without deduction for depreciation, as an alternative to providing a property insurance policy. Ifsuch personal guarantee is elected by the TENANT, such guarantee shall be in a separate written document executed by all guarantor(s), and acknowledged and agreed to by the TENANT, subject to approval by LANDLORD. Any such personal guarantee shall be fully enforceable by LANDLORD pursuant to its terms. In the event of damage or destruction to any or all of the buildings, improvements, betterments, installations, fixtures, or equipment, the guarantor(s), without request or demand by LANDLORD, will promptly and fully fund repairs and replacements of such damaged or destroyed buildings, improvements, betterments, installations, fixtures, and equipment such that restoration shall commence within thirty (30) days of such damage or destruction and continue in a reasonably expeditious manner to full completion. C. The parties hereto agree that the terms and conditions ofthe 2000 Lease, as amended, remain unchanged, except as expressly amended by the foregoing. IN WITNESS WHEREOF, we the LANDLORD and TENANT, have hereunto affixed our hands and seals on the dates entered below. Page 2 of5 N:\Client Docs\Airport\Leases\Sullivan.43rd.Ave\20 l 4. l2. l3.second.amendment.to.lease.agreement.property insurance.2.msi.docx

5 TENANT- 43rd Avellllue Trade Center, Inc. (This section to be completed by Tenant only) TENANT: Charles A. ullivan, Jr. President [SEAL] Date: " STATE OF FLORIDA COUNTY OF INDIAN RIVER ~ VVJ The, foregoing instrument was acknowledged before me this<0l'_...j_ day of /-Ll.LJ ircj'i, 2015, by Charles A. Sullivan, Jr., as President, and attested by Kathleen R. Sullivan, as Secretary, on behalf of the corporation: They are personally known to ~r produ:n.l i8-t J.-+...;... -~ as identification. SMcx~L ~'Piiblic _ r-~~-s-ta R-LE-n"'"A""'K'""'Nu"""o""'so""N--f Commlssion#FF f Commission No.: My Commission Expires: Expires December 10, 2017 ilondadthrutroyfoinlnauroncellol) ;,;;..:,, Page 3 of5 N:\Client Docs\Airport\Leases\Sullivan.43rd.Ave\ Second.Amendment.to.Lease.Agreement.property insurance.2.msl.docx

6 LANDLORD - CITY OF VERO BEACH (This section to be completed by Landlord only) ATTEST: LANDLORD: TammyK. Vock City Clerk Richard G. Winger Mayor [SEAL] STATE OF FLORIDA COUNTY OF INDIAN RIVER The foregoing instrument was acknowledged before me this day of, 2015, by Richard G. Winger, as Mayor, and attested by Tammy K. Vock, as City Clerk ofthe City of Vero Beach, Florida. They are both known to me and did not take an oath. Notary Public Commission No.: My Commission Expires: Page 4 of5 N:\Client Docs\Airport\Leases\Sullivan.43rd.Ave\ Second.Amendment.to.Lease.Agreement.property insurance.2.msl.docx

7 CITY MANAGEMENT (This section to be completed by City Management Staff only) Approved as to form and legal sufficiency: Approved as conforming to municipal policy: Wayn,~ R. Coment City Atiomey James R. O'Connor City Manager Approved as to technical requirements: Ericson W. Menger Airport Director Page 5 of5 N:\Client Docs\Airport\Leases\Sullivan.43rd.Ave\ Second.Amendment.to.Lease.Agreement.property insurance.2.msi.docx

8 TO: RE: City ofvero Beach Attn: James R. O'Connor City Manager th Place P.O. Box 1389 Vero Beach, FL rd Avenue Trade Center, Inc. Personal Guarantee Dear Mr. O'Connor: WE, Charles A. Sullivan, Sr. and Henrietta Sullivan ("Guarantors"), hereby request and authorize the City of Vero Beach, pursuant to that certain Commercial Lease Agreement of July 19, 2000 between the City of Vero Beach ("Landlord") and 43rd Avenue Trade Center, Inc. ("Tenant"), as amended by the Addendum to Lease Agreement dated November 6, 2002 and the Second Addendum to Lease Agreement dated, (collectively "Lease"), to accept this Personal Guarantee as security for the performance of Tenant's obligations under the Lease regarding repairs, replacements, and restoration of the buildings and other improvements on the Leased Premises whenever necessitated by the occurrence of any casualty and which Personal Guarantee is provided in lieu of the Tenant securing and maintaining property casualty insurance coverage pursuant to the Lease terms. We acknowledge that we are principals of or otherwise have an interest in the Tenant, 43rd Avenue Trade Center, Inc., we warrant that we have sufficient unencumbered assets to honor this Personal Guarantee, and that we will benefit financially from your acceptance ofthis Personal Guarantee as security in lieu of the Tenant providing traditional property casualty insurance on the Leased Premises, in that doing so will save the Tenant substantial cost and expense. We make this Personal Guarantee pursuant to the following conditions: 1. Guarantors hereby personally guarantee unconditionally and promise to assume the duties and obligations of Tenant under the Lease as amended (and as may be amended, modified, or extended from time to time) and pay the full costs of repairs and replacement of any and all buildings, improvements, betterments, installations, fixtures, and equipment on the Leased Premises damaged or destroyed due to any casualty, including such value as it may increase with additional improvements constructed on the Leased Premises over time, without deduction for depreciation. Said Personal Guarantee shall fully cover and be in conformance with all requirements ofthe Lease for any and all casualty losses that would otherwise be covered by all risks property insurance coverage to be provided under the Lease, including but not limited to losses due to fire, windstorm, flood, and any other peril. In the event of damage or destruction to any or all of the buildings, improvements, betterments, installations, fixtures, or equipment, the Guarantors, without request or demand by Landlord, will promptly and fully fund repairs and replacements of such damaged or destroyed buildings, improvements, betterments, installations, Page 1of5 N:\Client Docs\Airport\Leases\Sullivan.43rd.Ave\ Personal.Guarantee-Insurance.docx

9 fixtures, and equipment such that restoration shall commence within thirty (30) days of such damage or destruction and continue in a reasonably expeditious manner to full completion. 2. This Personal Guarantee shall be for the benefit of Landlord and serve as security for restoration of the Leased Premises pursuant to the terms of the Lease and shall continue in full force and effect unless and until released in writing by Landlord after replacement with property insurance coverage meeting the requirements of the Lease acceptable to Landlord or acceptance of possession of the Lease Premises by Landlord, except as otherwise provided herein. This Personal Guarantee is continuing in nature and shall not expire or terminate upon the Guarantors performing their obligations hereunder for a casualty, but it shall remain in full force and effect and cover any subsequent casualties that may arise until it is released as specified. Guarantors are not discharged from liability if any claim remains outstanding subsequent to termination of the Lease or Tenant's surrender or abandonment ofthe Leased Premises. 3. Guarantors hereby waive and agree not to assert or take advantage of (a) any right to require Landlord to proceed against the Tenant or any other person or to proceed against or exhaust any security held by Landlord at anytime or to pursue any other remedy in its power before proceeding against Guarantors; (b) the defense of statute of limitations in any action hereunder or for the collection of any indebtedness or the performance of any obligation hereby guaranteed; ( c) demand, protest, notice of dishonor, notice of the sale of any collateral held for any indebtedness or obligation hereby guaranteed and all notices of any other kind; and ( d) any defense based on election of remedies by the Landlord. Without limiting the generality of the foregoing or any other provision hereof, Guarantors hereby expressly waive any and all benefits which might otherwise be available to Guarantors under applicable law, if any. 4. Guarantors shall have no right to participate in any security now or hereafter held by Landlord. No exercise or non-exercise by Landlord of any right hereby given to Landlord, no dealing by Landlord with the Tenant or any other guarantor, and no change, impairment, or suspension of any right or remedy of Landlord shall in any way affect any of the Guarantors' obligations hereunder or give the Guarantors any recourse against Landlord. 5. The amount of liability of the Guarantors and all rights, powers, and remedies of Landlord hereunder and under the Lease and any other agreement now or at any time hereafter in force between Landlord and the Guarantors or the Tenant shall be cumulative and not alternative and such rights, power, and remedies shall be in addition to all rights, powers, and remedies given to Landlord by law. 6. The obligations of the Guarantors are independent of the obligations of the Tenant and, in the event of any default hereunder, a separate action or actions may be brought and prosecuted against the Guarantors whether or not the Tenant is joined therein or a separate action(s) is brought against the Tenant. Landlord may maintain successive actions for other defaults, and its rights hereunder shall not be exhausted unless and until all indebtedness and obligations hereby guaranteed have been fully paid and performed. Notwithstanding the foregoing or any other provision of this Personal Guarantee, any default by the Guarantors hereunder may also be deemed by Landlord to be a default by Tenant under the Lease, with all of the remedies provided in the Lease available to Landlord. Page 2of5 N:\Client Docs\Airport\Leases\Sullivan.43rd.Ave\ Personal.Guarantee-lnsurance.docx

10 7. No provision of this Personal Guarantee or right of Landlord hereunder can be waived nor can the Guarantors be released from any obligation hereunder except by a writing duly executed by an authorized representative oflandlord. 8. This Personal Guarantee shall be governed by and construed in accordance with Florida law and the venue for resolution of any dispute or for enforcement of any obligation hereunder shall be in Indian River County, Florida. Should any one or more provisions of this Personal Guarantee be determined by a court of competent jurisdiction to be illegal or unenforceable, all other provisions hereof shall nevertheless remain effective. Guarantors agree to pay to Landlord its attorneys' fees and all costs and other expenses incurred in collecting or compromising any indebtedness hereby guaranteed or in enforcing this guarantee against the undersigned Guarantors, whether or not suit is filed 9. No alteration, amendment, change, deletion, or addition to this Personal Guarantee shall be effective unless in writing and approved by Landlord in writing. 10. The obligations of the Guarantors under this Personal Guarantee shall be joint and several. This Personal Guarantee is binding on the respective Guarantors and each of their successors, estates, heirs, contractors, representatives, agents, and permitted assigns. However, neither Guarantor may assign its obligations hereunder without the prior written consent of Landlord. r() (1 / EXECUTED this do day of 1-r\O;\c-y \ ~ ~~QS~~ Ch;les A. Sullivan, Sr. Personally as Guarantor ~nrietta Sullivan Personally as Guarantor STATE OF FLORIDA COUNTY OF INDIAN RIVER \l The, foregoing Personal Guarantee was acknowledged before me this 234iay of ~(l.\{ LV\ 2015, by Charles A. Sullivan, Sr., and Henrietta Sullivan, as Guarantors. They are personally known to me or produced as identification. Notary Public Commission No.: " BROOKE SULLIVAN ~ Commission# My Commission Expires: Expires April 28, 2016 Bonded Thnl Troy Fain lnsur.in<e f! Page 3of5 N :\Client Docs\Airport\Leases\S ullivan.43 rd.ave\ Personal.Guarantee-Insurance.docx

11 Acknowledgment and Agreement by Tenant Tenant, 43rd Avenue Trade Center, Inc., hereby acknowledges and agrees that the foregoing Personal Guarantee is submitted as security for the performance of Tenant's obligations under the Lease regarding repairs, replacements, and restoration of the buildings and other improvements on the Leased Premises whenever necessitated by the occurrence of any casualty. Tenant requests that Landlord accept this Personal Guarantee in lieu oftenant securing and maintaining property casualty insurance coverage pursuant to the Lease terms. Tenant acknowledges and agrees that Landlord's acceptance ofthis Personal Guarantee in lieu of Tenant maintaining property casualty insurance coverage on the Leased Premises does not relieve Tenant of any other obligation under the Lease and such acceptance by Landlord is not otherwise a waiver ofany of the terms ofthe Lease. ATTEST: Secretary C arles A. Sullivan, Jr. President [SEAL] STATE OF FLORIDA COUNTY OF INDIAN RIVER The foregoing Personal Guarantee was acknowledged before me this 2i1ay of \\l (J \(CV\ 2015, by Charles A. Sullivan, Jr., as President, and Kathleen R. Sullivill, as Secretary, of 43rd Avenue Trade Center, Inc. They are personally known to me or produced as identification. Notary Public Commission No.: My Commission Expires: Page4of5 N:\Client Docs\Airport\Leases\Sullivan.43rd.Ave\ Personal.Guarantee-lnsurance.docx

12 Acceptance by Landfo:rd In reliance on the promises given by the Guarantors in the foregoing Personal Guarantee, said Personal Guarantee is hereby accepted by the City of Vero Beach as security in lieu of property casualty insurance for the performance of 43rd Avenue Trade Center, Inc.'s (Tenant) obligations under the Lease regarding repairs, replacements, and restoration of the buildings and other improvements on the Leased Premises whenever necessitated by any casualty. ATTEST: CITY OF VERO BEACH Tammy K. Vock City Clerk Richard G. Winger Mayor Approved as to form and legal sufficiency: Approved as conforming to municipal policy: James R. O'Connor City Manager Approved as to technical requirements: Ericson W. Menger Airport Director Page 5of5 N :\Client Docs\Airport\Leases\SulIivan.43rd.Ave\ Personal.Guarantee-lnsurance.docx