HomeMy WebLinkAboutORDINANCES-1987-087-O-879/l/87
87-0-87
AN ORDINANCE
Authorizing the City Manager to Negotiate a Lease
of Certain Real Estate and a Lease
with Option to.Purchase Air Rights in Certain
Real Estate and Authorizing the Publication of a
j Notice of Intent to Lease Certain Real Estate,
and to Lease with Option to
Purchase Air Rights in Certain Real Estate
WHEREAS, the City of Evanston is desirous of leasing,
as lessor, the real property hereinafter legally described,
bounded.by Clark Street on the north, Chicago Avenue on the
west, Church Street on the south,.and a public alley on the
east, commonly known as City of Evanston Parking Lot 28 and
hereinafter referred to as the "Property";
WHEREAS, the City of Evanston is desirous of leasing,
!i as lessor, with option to lessee to purchase certain air rights
in the Property; and
WHEREAS, said Property is presently vacant and used
as a municipal parking lot for off-street parking; and
•WHEREAS, in the opinion of the corporate authorities
of the City of Evanston, use of said Property and the use or
ownership of said air rights is no longer necessary,
appropriate, required for the use of, profitable, or in the
best interest of said City; and
WHEREAS, the corporate authorities of the City of
Evanston have determined that the.best interest of the City of
Evanston would be served by the lease of said Property and the
lease of, with option to purchase, said air rights in said
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Property to a party who will develop said Property for mixed
residential and commercial use, including a public parking
�I garage and a residential structure containing rental apartment
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units; and
�• WHEREAS, the corporate authorities of the City of
Evanston have deemed that the lease of said Property and the
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I; lease of, with option to purchase, certain air rights in said
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Property is to take place as the result of negotiation,
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF
THE CITY OF EVANSTON, COOK COUNTY, ILLINOIS:
! SECTION 1: That the City Manager be and is hereby
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j authorized and directed to negotiate the
i' lease of the real estate legally described as follows and to
negotiate the lease with option to lessee to purchase certain
air rights in said real estate:
! All that part of Lot l in Plat of Consolidation of the
South 12 feet of Lot 3 and all of Lots 4, 5, 6, 7, 8, 9
and 10 together with all that part of Lot 2 and Lot 3
(except the South 12 feet thereof), all in Block 14, in
Evanston, in the East half of Section 18, Township 41
North, Range 14, East of the Third Principal Meridian, in
Cook County, Illinois,
1� commonly known as City of Evanston Parking Lot 28.
Such negotiations shall include but not be limited to
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(a) the establishment of financial assurances and guaranties of �
the ability of the lessee ("Lessee") to substantially complete
said public garage portion of the development project within
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• (....... ) months of the commencement of
construction of the project, subject to delays caused by Acts
of God,. strikes, civil disorder and unavailability of
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materials, and (b) the establishment of similar financial
assurances and guaranties of the ability of Lessee to
substantially complete the residential portion of the
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j! development project in a timely manner, all as set forth in a
certain letter of intent between the City of Evanston and
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j Lessee dated April 2, 1987 ("Letter of Intent").
Pursuant to Section 1-17-4-2(B), an affirmative vote
of two-thirds (2/3) of the elected aldermen is required to
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accept the recommendation of the City Manager on the
negotiations authorized herein. The City of Evanston reserves
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the right to reject any and all negotiations.
• SECTION 2: The City Manager is hereby authorized
I! and directed to give notices of intent to
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lease the aforementioned real estate and to lease, with option
to purchase, the aforementioned air rights in said real estate.
Such Notice of Lease and Notice of Lease with option to
purchase must be published at least once in a daily or weekly
newspaper in general circulation in the City. the publication
• must not be less than 15 nor more than 30 days before the date
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on which the City Council shall consider the adoption of said
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SECTION 3: That the Notice of Intent to lease the
it Property shall be in substantially the
following form:
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NOTICE OF INTENT TO LEASE
I' Public notice is hereby given that the City of Evanston
I; proposes to lease the real estate legally described as
follows:
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all that part of Lot 1 in Plat of Consolidation of
the South 12 feet of Lot 3 and all of Lots 4, 5, 6,
�! 7, 8, 9 and 10 together with all that part of Lot 2
and Lot 3 (except the South 12 feet thereof), all in
Block 14, in Evanston, in the East half of Section
ii 18, Township 41 North, Range 14, East of the Third
I� Principal Meridian, in Cook County, Illinois,
licommonly known as City of Evanston Parking Lot 28.
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! The property proposed to be leased is at the present time
utilized as a municipal parking lot for off-street
II parking.
The City of Evanston intends to lease said property upon
the following terms and conditions:
1. The site is to be improved by Lessee by the
I. construction of:
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(a) A mixed -use complex consisting of (i)
multi -story public parking garage ("Public Garage")
containing 621 parking spaces for automobiles, and
(ii) 190 rental dwelling units contained in two
9-story residential apartment structures and 199
additional parking spaces for automobiles for the use
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and benefit of the residents of the residential
structures ("Residential Structures").
(b) The complex will contain such driveways,
ramps, entrances, exits, landscaping and other
appurtenances as shall be required and shall comply
with applicable zoning ordinances.
2. Prior to commencement of construction, the City
• ! of Evanston (the "City"), as lessor, and the Lessee shall
execute a Ground Lease of the property containing
substantially the following terms and conditions:
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(a) A term of 25 years beginning prior to
commencement of construction of the Public Garage.
Construction will commence on or before
.............. 1987 and shall be substantially
completed on or before ............. 1988.
(b) Annual rent at the rate of $120.00 shall be
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payable from the commencement of the term until the
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earlier to occur of (i) the first day of the calendar
month immediately,following the issuance by the City
of a Certificate of Occupancy for the completed
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Public Garage, or (ii) the first day of the 27th
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calendar month following commencement of
construction.
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(c) From and after the expiration of the period
provided in the preceding paragraph (b) until the
expiration of the term, Lessee shall pay minimum rent
at the annual rate of $68,000 (representing a 10%
return on $680,000, the current appraised value of
the vacant land encumbered by the Air Rights Lease to
be executed with the same Lessee in accordance with
the Letter of Intent to enable the construction of
the residential Structures on air rights extending
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upward from a given datum above the site).
(d) Minimum rent provided in the preceding
paragraph (c) shall be subject to annual adjustments
for increases with respect to the 6th lease year and
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respect to each lease year thereafter during the
balance of the term. Such adjustment shall be keyed
to 75% of the increase of the Consumer Price Index
published by the United States Department of Labor
("CPI"), provided that in no event shall the first
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such adjustment produce a minimum rent
J P greater than
120% of the minimum rent specified in paragraph (b)
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and in no event shall the minimum rent ever be
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decreased by reason of a CPI. adjustment.
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(e) In addition to the CPI adjustment,
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effective as of the first day of the 12th lease year,
the first day of the 17th lease year and the first
day of the 22nd lease year, the minimum rent shall be
subject to adjustment for increases in the fair
market value of the land. Each such adjustment shall
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be determined as follows: (i) The base value of the
land shall be deemed to be $680,000, and .(ii) upon
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the commencement of each such appraisal year, the
City and Lessee shall cause a new appraisal to be
made of the fair market value of the land -(subject to
the Air Rights Lease) determined as of the first day
of such year. From and after such date, the minimum
rent shall be increased by adding thereto an amount
which shall be the greater of (A) the amount by which
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10% of the newly appraised fair market value of the
land exceeds the base value or (B) the CPI adjustment
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as determined in accordance with the provisions of
paragraph (d) above for the lease year which
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corresponds for such appraisal year. In no event
shall such adjustment produce a minimum rent which is
less than the minimum rent for any preceding lease
year.
• I� (f) In addition to the minimum rent, Lessee
I, shall pay to the City a sum equal to .......% of all
parking revenues realized by Lessee during such lease
;i year in excess of a base amount of $...............
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(g) Neither the rent nor the City's interest in
the real estate shall be subordinated in any way to
Lessee, to Lessee's mortgagee, or any other claimant.
Lessee may place a single construction Mortgage on
its leasehold estate under the Ground Lease and its
leasehold estate under the Air Rights Lease, provided
Lessee shall deliver or cause to be delivered to the
City a guaranty of performance and payment executed
by the beneficial owners of such leasehold estates
and secured by an irrevocable bank letter of credit
in an amount equal to the greater of (i) 4 1/20 of
the total cost of the complex, or (ii) $1,000,000.
(h) Upon completion of the Public Garage, the
City shall acquire and Lessee shall convey to the
City fee simple title to the Public Garage for a cash
price equal to the aggregate costs incurred and paid
by Lessee for the construction of such facility,
which costs shall be determined by agreement between
the City and Lessee prior to commencement of
construction. Funds required for such acquisition by
the City shall be obtained by the sale of the City's
General Obligation Bonds. Pending construction of
the Public Garage, the proceeds of such sale of Bonds
shall be escrowed in a special account*of the City.
(i) If Lessee defaults in its obligation to
complete the Public Garage, its construction lender
shall have the right to assume Lessee's obligations
to complete the facility and thereafter operate such
facility as the Lessee under the terms of the Ground
Lease above described. In such event, the City shall
'nevertheless have the option to purchase the Public
Garage from the construction lender at a cash price
equal to the greater of (i) the stipulated contract
price referred to in paragraph (h) above, or (ii) the
actual cost of construction of the Public Garage.
Upon the City's acquisition of the Public Garage,
whether from Lessee or its construction lender, the
Ground Lease shall be terminated.
(j) Neither the Lessee nor its construction
lender shall have the option to purchase the land.
(k) All rent shall be absolutely net to the
City, with Lessee paying all real estate taxes and
other expenses.
;! 3. In the event that timely construction of the
`complex is not commenced by reason of Lessee's inability
i' to obtain the necessary construction and permanent
t financing for the complex, Lessee shall be obligated to
reimburse the City for its actual out-of-pocket
i disbursements and fees for architects, attorneys and other
consultants. In the event that construction is not so
I commenced by reason of the City's failure to approve
plans, the cost budget or required zoning variations,
either the City or Lessee shall have the right to
terminate all agreements with each other without further
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liability.
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• i 4. Prior to commencement of construction, the City
and Lessee shall enter into a Reciprocal Easement
Agreement for the purpose of determining the portions of
the complex to be owned and used by the City and the
i Lessee, respectively, the allocation of certain costs of
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maintenance and for the efficient and harmonious operation
of the complex as a mixed -use facility in accordance with
applicable laws and ordinances.
5. The subject property shall remain vacant and
available for municipal use without cost to the. City as a
public parking lot until construction commences.
SECTION 4: That the Notice of Intent to lease,
with option to purchase, air rights in
the Property shall be in substantially the following form:
NOTICE OF INTENT TO LEASE
WITH OPTION TO PURCHASE AIR RIGHTS
Public notice is hereby given that the City of Evanston,
as lessor, intends to lease, with option by Lessee to
purchase, air rights in the real estate legally described
as follows:
All that part of Lot 1 in Plat of Consolidation of
the South 12 feet of Lot 3 and all of Lots 4, 5, 6,
7, 8, 9 and 10 together with -all that part of Lot 2
and Lot 3 (except the South 12 feet thereof ), all in
Block 14, in Evanston, in the East half of Section
18, Township 41 North, Range 14, East of the Third
Principal Meridian, in Cook County, Illinois,
commonly known as City of.Evanston Parking Lot 28.
The property in which air rights are to be leased as
aforesaid is at the present time utilized as a
municipal parking lot for off-street parking.
The City of Evanston intends to lease, with option to
purchase, air rights in said property upon the
following terms and conditions:
1. The site is to be improved by Lessee by the
construction of:
(a) A mixed -use complex consisting of (i) a
multi -story public parking garage ("Public Garage")
containing 621 parking spaces for automobiles, and
(ii) 190 rental dwelling units contained in two
9-story residential apartment 8tructures.and 199
additional parking spaces for automobiles for the use
and benefit of the residents of the residential
structures ("Residential Structures").
(b) The complex will contain such driveways,
ramps, entrances, exits, landscaping and other
appurtenances as shall be required and shall comply
with applicable zoning ordinances.
.2. Prior to commencement of construction, the.City
of Evanston (the "City"), as Lessor, and Lessee shall
execute an Air Rights Lease of the property containing
substantially the following terms and conditions:
(a) An initial term of 25 years beginning
immediately prior to commencement of construction of
the Residential Structures. Construction of the
Residential Structures by Lessee shall commence on or
before ............. 1988 and shall be substantially
well
completed on or before 1989, all in
accordance with the provisions of the Letter of
j Intent.
(b) Lessee shall have the right to extend the
initial term by two consecutive additional terms of
25 years each, upon serving due notice on the City.
As used hereafter, "term" shall include such
• extensions.
(c) Lessee shall pay rent at the annual rate of
$130,000 (representing a 10% return on $1,300,000,
the current appraised value of the air rights to be
i leased under the Air Rights Lease). Such rent shall
be absolutely net to the City, with Lessee paying all
Ijreal estate taxes and other expenses.
li (d) The rent provided in the preceding
paragraph (c) shall be subject to annual adjustments
for increases with respect to the 6th lease year and
�i with respect to each lease year thereafter during the
balance of the term. Such adjustment shall be -keyed
to 750 of the increase of the Consumer Price Index
published by the United States Department of Labor
("CPI"), provided that in no event shall the first'
such adjustment produce a rent greater than 1200 of
the rent specified in paragraph (c) and in no event
shall the minimum rent ever be decreased by reason of
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a CPI adjustment.
(e) In addition to the CPI adjustment,
i� effective as of the first day of the 12th lease year,
and the first day of every fifth lease year
thereafter during the term (i.e., the 17th, 22nd,
27th, etc., lease years), the rent shall be subject
to adjustment for increases in the fair market value
of the air rights. Each such adjustment shall be
• determined as follows: (i) The base value of the air
rights shall be deemed to be $1,350,000, and (ii)
i; upon the commencement of each such appraisal year,
the City and Lessee shall cause a new appraisal to be
made of the fair market value of the air rights'
determined as of the first day of such year. From
and after such date, the rent shall be increased by
adding thereto an amount which shall be the greater
of (A) the amount by which 100 of -the newly appraised
fair market value of the air rights exceeds the base
�i value or (B) the CPI adjustment as determined in
accordance with the provisions of paragraph (d) above
for the lease year -which corresponds for such
appraisal year. In no event shall such adjustment
produce a rent which is less than the rent for any
I preceding lease year.
(f) Neither the rent nor the City's interest in
the air rights shall be subordinated in any way to
Lessee, to Lessee's mortgagee, or any other claimant.
Lessee may place a single construction mortgage on
I its leasehold estate under the Air Rights Lease and
f� its leasehold estate under the Ground Lease (which is
to be executed by the same Lessee in accordance with
the Letter of Intent to enable the construction of
i the Public Garage), provided Lessee shall deliver or
• cause to be delivered to the City a guaranty of
performance and payment executed by the beneficial
Ii owners of such leasehold estates and secured by an
irrevocable bank letter of credit in an amount equal
�j to the greater of (i) 4 1/20 of the total cost of the
complex, or (ii) $1,000,000.
(g) If Lessee defaults in its obligation to
complete the Residential Structures, its construction
lender shall have the right to assume Lessee's
�i obligations to complete such structures and
thereafter operate such structures as the Lessee
• j� under the terms of the Air Rights Lease above
described.
(h) Lessee shall.have the option to purchase
the leased air rights on the loth anniversary of the
i� commencement of the term and on each subsequent
anniversary of such commencement. Such option may be
exercised by appropriate notice and shall be for a
cash price based upon the fair market value of such
rights determined as of the date the option is
i exercised. Such value shall be determined by
lJ appraisal in the manner to be provided in the Air
Rights Lease. The price shall be payable in full
ii upon closing.
3. In the event that timely construction of the
it complex including the Public Garage) is not commenced by
reason of Lessee's inability to obtain the necessary
construction and permanent financing for the complex,
Lessee shall be obligated to reimburse the City for its
actual out-of-pocket disbursements and fees for
i architects, attorneys and other consultants. In the event
that construction is not so commenced by reason of the
City's failure to approve plans, the cost budget or
i required zoning variations, either the City or Lessee
shall have the right to terminate all agreements with each
other without further liability.
• 4. Prior to commencement of construction, the City
and Lessee shall enter into a Reciprocal Easement
Agreement.for the purpose of determining the portions of
the complex to be owned and used by the owners of the
Public Garage and the Residential Structures,
i; respectively, the allocation of certain costs of
�i maintenance and for the efficient and harmonious operation
of the complex as a mixed -use facility in accordance with
applicable laws and ordinances.
5. The subject property shall remain vacant and
I� available for municipal use without cost to the City as a
public parking lot until construction commences.
SECTION 5: All ordinances or parts of ordinances
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in conflict herewith are hereby repealed.
jSECTION 6: This ordinance shall be in full force
and effect from and. after its passage,
approval, and publication in the manner provided by law.
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Introduced: T, 1987.
Adopted: 1987.
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ATTEST:
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City Clerk,
Api?roved a co form:
A�Corporation Counsel
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: 1987.
Approod
Y: Mayor