HomeMy WebLinkAboutContract 11085-A1 CITY SECRETARY
CONTRACT NO.
FIRST AMENDMENT TO LEASE AGREEMENT (PARKING GARAGE LEASE)
THIS FIRST AMENDMENT TO LEASE AGREEMENT (PARKING GARAGE
LEASE) ("First Amendment") is entered into on this 1 day of �1��,-c(,�, 2014,
by and between THE CITY OF FORT WORTH, a Texas home-rule municipal corporation
("Lessor"), acting herein by and through its duly authorized City Manager, and NEW FORT
TOWER I HOTEL LIMITED PARTNERSHIP, a Delaware limited partnership ("Lessee").
WITNESSETH:
WHEREAS, Lessor and Hunt Hotel/Fort Worth, Ltd., predecessor-in-interest to Lessee,
entered into that certain Lease Agreement (Parking Garage Lease) (the "Lease") dated effective
as of April 30, 1980 relating to the Leased Property described on Exhibit A attached to the
Lease. Unless otherwise expressly provided in this First Amendment, capitalized terms used in
this First Amendment will have the same meanings as in the Lease.
WHEREAS, Lessee is the Lessee under the Lease pursuant to that certain (i) recorded
Assignment of Leasehold Estate, from Aetna Life Insurance Company to Fort Tower I
Associates Hotel Limited Partnership pursuant to an Assignment of Parking Leasehold Estate
dated June 14, 1994, and (ii) unrecorded Assignment and assumption of Ground Lease by and
between Fort Tower I Associates Limited Partnership and Lessee dated October 26, 2000; and
WHEREAS, Lessor and Lessee desire to extend the term of the Lease and otherwise
amend the Lease pursuant to the terms and conditions herein provided.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars ($10.00) and
other good and valuable consideration paid by each party hereto to the other, the receipt and
sufficiency of which are hereby mutually acknowledged, Lessor and Lessee hereby agree as
follows:
1. Term. Section 1.02 of the Lease is amended and modified so that the term of the
Lease shall be extended by forty (40) years, to expire on April 30, 2070.
2. Termination by Lessee. The Lease is amended and modified by inserting the
following new Section 1.04:
1.04 Early Termination. Lessee shall have the option to
terminate this Lease at any time after April 30, 2030 (the
"Earliest Termination Date"), provided Lessee gives notice
thereof to Lessor not less than six (6) months prior to the
Actual Termination Date (defined below) and provided Lessee
is not in default, beyond any applicable cure period, under the
Lease at the time of the giving of such notice. Such notice
must specify the date (which cannot be prior to the Earliest
Termination Date) on which Lessee desires the termination to
become effective (the "Actual Termination Date").
RECEIVED APR - 1 2014 Additionally, Lessee's right to terminate hereunder is
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TH,TX
conditioned upon the payment in full by Lessee on or before
the Actual Termination Date, of all Rent through and including
the Actual Termination Date (the "Termination Payment").
Upon payment of the Termination Payment, neither party shall
have any rights, liabilities or obligations under this Lease for
the period accruing after the Actual Termination Date, except
those which, by the provisions of this Lease, expressly survive
the termination of this Lease.
3. Percentage Rent. The first sentence of Section 2.02 is hereby deleted and
replaced in its entirety by the following:
"For the period of January 1, 2014 through the Effective Date,
Lessee shall pay to Lessor a percentage rental (the "Percentage
Rent") equal to thirty percent (30%) of the annual net profits
arising from Lessee's operation of the Leased Property if such
Percentage Rent is greater than the Fixed Minimum Rent."
4. Assignment and Subletting. Article 5 of the Lease is deleted in its entirety and
the following is substituted in its place:
ARTICLE V
Assignment and Subletting.
5.01 Lessor's Consent Required. Subject to the
remaining provisions of this Article V, but notwithstanding
anything to the contrary contained elsewhere in this Lease,
Lessee shall not assign any interest in this Lease or sublease or
allow any third party to use any portion of the Leased Property
(collectively or individually, a "Transfer") without the prior
written consent of Lessor, which consent shall not be
unreasonably withheld, delayed or conditioned. Lessor shall
not withhold its consent if the Transfer is to an entity that also
acquires the adjacent hotel and assignee markets the hotel as a
full-service hotel operating under a national chain in at least the
upper upscale segment (i.e., Hilton, Marriott, Sheraton or
Hyatt), or otherwise maintains a three-star/four-diamond rating.
5.02 No Consent Required. Lessee may assign its entire
interest under this Lease to its Affiliate (defined below), a
Mortgagee, or to a successor to Lessee by purchase, merger,
consolidation or reorganization without the consent of Lessor,
provided that all of the following conditions are satisfied in
Lessor's reasonable discretion (a "Permitted Transfer"): (1)
no uncured event of default exists under this Lease; (2)
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Lessee's successor shall own all or substantially all of the
assets of Lessee; and (3) Lessee shall give Lessor written
notice at least ten (10) days prior to the effective date of the
proposed Transfer. The term "Affiliate" means any person or
entity controlling, controlled by or under common control with
Lessee or a publicly traded entity advised by Ashford
Hospitality Advisors, LLC. If requested by Lessor, Lessee's
Affiliate or successor shall sign a commercially reasonable
form of assumption agreement.
5. Maintenance and Replacements. The third sentence of Section 9.01 of the
Lease is is hereby deleted and replaced in its entirety with the following sentence:
"Lessee, at its sole expense, shall maintain, or cause to be
maintained, the foundation, exterior walls, roof and all other
structural improvements of the Leased Property described by
the Plans in good repair and shall make or cause to be made all
such structural repairs and replacements necessary to maintain
the Leased Property, ordinary wear and tear excepted."
6. Surrender of Leased Property. The Lease is amended and modified by
inserting the following new Section 9.04:
9.04 Surrender of Leased Property. At the expiration or
earlier termination of this Lease or Lessee's right of
possession,Lessee shall quit and surrender the Leased Property
to Lessor, broom clean, and no worse than its current
condition, ordinary wear and tear excepted. Lessee shall, at
Lessee's expense, engage the services of an engineering firm to
perform a property condition report to assess the current
condition of the Leased Property. Such engineering firm shall
coordinate its inspection of the Leased Property with
Landlord's representatives.
7. Lessee's Notice Address. Lessee's addresses for notices in lieu of the notice
addresses for Lessee set forth in the Lease are as follows:
Lessee: With a copy to:
New Fort Tower I Hotel Limited Susan A. Halsey
Partnership Jackson Walker L. L.P.
c/o Bobby Nandipati 777 Main Street, Suite 2100
Ashford Hospitality Trust Fort Worth, Texas 76102
14185 Dallas Parkway, Suite 1100
Dallas, Texas 75254
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8. Hotel and Garage Improvements. Lessee agrees to invest not less than
$3,500,000 on or in the Leased Property or the adjacent Hilton Ft. Worth Hotel ("Lessee
Investment") by December 31, 2017 ("Investment Deadline"). Lessee's Investment may
include, without limitation, expenses necessary for demolition, repairs, alterations,
improvements, renewals, replacements to the structure, fagade, mechanical, electrical, heating,
ventilation, air conditioning, plumbing or vertical transportations elements soft (design,
construction management, project management and other professional fees) and hard costs for
capital improvements, as well as costs associated with the renovation and furnishing of guest
rooms and corridors (including the 2014 renovation project), ballrooms, meeting space, public
areas and the like, or any other expenditures classified as "capital expenditures" under generally-
accepted accounting principles or pursuant to Lessee's or Lessee's managers policies
implemented across its portfolio. Upon written request from Lessor, Lessee shall provide
reasonable documentation evidencing Lessee's Investment. In the event that Lessee fails to
make Lessee's Investment by the Investment Deadline, upon written notice from Lessor to
Lessee (which notice must be provided prior to March 31, 2018), Lessor's sole and exclusive
remedy shall be to increase Rent by the difference between Lessee's actual investment and
Lessee's Investment required pursuant to this paragraph which amount shall be amortized over
the remaining term of the Lease. By way of example, if Lessee only invests $3,400,000 by the
Investment Deadline, Rent will increase by$1923.08 per year($100,000 amortized over 52 years
(2070-2018)).
9. Miscellaneous. This First Amendment will become effective only upon its full
execution and delivery by Lessor and Lessee. This First Amendment contains the parties' entire
agreement regarding the subject matter covered by it and supersedes all prior correspondence,
negotiations, and agreements, if any, whether oral or written, between the parties concerning
such subject matter. There are no contemporaneous oral agreements, and there are no
representations or warranties between the parties not contained in the Lease, as modified by this
First Amendment, and neither party is relying upon any warranty, statement or representation not
contained in the Lease, as modified by this First Amendment. Except as modified by this First
Amendment, the terms and provisions of the Lease will remain in full force and effect, and the
Lease , as modified by this First Amendment, will be binding upon and will inure to the benefit
of Lessor and Lessee,their successors and permitted assigns.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
executed on the day and year first written above.
LESSOR:
A. �0 THE CITY OF FORT WORTH, a Texas home-rule
09 870 municipal corporation, acting herein by and through its
*% i duly authorized City Manager
AS
C^ By:,
Name:
. K , 1tY Title:_-A�ss;.s4&,A 0—\c4
Date: 311z7//4
LESSEE:
NEW FORT TOWER I HOTEL LIMITED
PARTNERSHIP, a Delaware limited partnership
By: New Fort Tower I GP, LLC, a Delaware limited
liability company, its general partner
By::_
Name: David A. Brooks
Vice President
Title:
Date. `3111 11,y
L-1so( � c�
CoatraCt Authorization
EOFFICIA:L RECORD
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Official
CITY COUNCIL AGENDA FOATTII
COUNCIL ACTION: Approved on 3/4/2014
DATE: 3/4/2014 REFERENCE NO.: **L-15666 LOG NAME: 17UDAG LEASE
CODE: L TYPE: CONSENT PUBLIC HEARING: NO
SUBJECT: Authorize Execution of a Lease Amendment with New Fort Tower I Hotel Limited
Partnership for the Parking Garage Located Under General Worth Square at 916 Main
Street to Extend the Lease Term and Adjust the Rental Rate (COUNCIL DISTRICT 9)
RECOMMENDATION:
It is recommended that the City Council authorize the execution of an Amendment to the lease with
New Fort Tower I Hotel Limited Partnership to extend the term of the lease for the parking garage
under General Worth Square at 916 Main Street until April 30, 2070 and to reduce the rental rate to
thirty percent of the annual net profits in exchange for the Lessee assuming all maintenance
responsibility for the parking garage structure, foundation, walls and roof.
DISCUSSION:
In 1979, the City was awarded an Urban Development Action Grant (UDAG) of$6,002,000.00 from
the U.S. Department of Housing and Urban Development. The funds were used by the City to acquire
and construct a plaza and an underground parking garage. As a condition of the grant, the City was
required to lease the parking garage to the historic Hotel Texas (now known as the Hilton Hotel),
which was planned to be renovated. The City used the federal funds to construct a parking garage
and entered into a lease with the hotel for the parking garage (Lease).
The current terms of the parking garage lease with New Fort Tower I Hotel Limited Partnership
(Lessee) are as follows:
50 year term- expires April 30, 2030
City responsible for any repairs to the parking structure, foundation, walls and roof
Rental rate is the greater of $60,000.00 per year, increased every five years by the greater of
$5,000.00 or 1/2 of the Consumer Price Index increase for the Dallas/Fort Worth Standard
Metropolitan Statistical Area or 80 percent of the annual net profits for operating the garage
Rent collected by the City under the Lease is considered federal program income under the original
federal grant. Because maintenance of the garage is not an eligible expense under the original grant
guidelines, program income cannot be used to maintain the parking garage. This condition has led to
a lack of funding to maintain the garage's major structures adequately.
Lessee has requested certain amendments to the Lease in order to refinance the hotel, which will be
used to upgrade the accommodations and the current conditions of the garage. After reviewing the
current condition of the garage and planned investment improvements of a minimum of$3,500,000 to
the hotel and garage, Staff recommends the following amendments to the Lease:
Extend the term until April 30, 2070 (required to refinance)
Allow the Lessee to terminate the Lease after April 30, 2030 at any time with six months notice
and
Reduce the rent to 30 percent of the annual net profits in exchange for Lessee taking responsibility
for the structure, foundation, walls and roof of the garage.
Staff recommends amending the Lease as outlined above.
Page 1 of 2
The parking garage is located in COUNCIL DISTRICT 9, Mapsco 77A.
FISCAL INFORMATION/CERTIFICATION:
The Financial Management Services Director certifies that Housing and Economic Development
Department is responsible for the collection and deposit of funds due to the City.
TO Fund/Account/Centers FROM Fund/Account/Centers
Submitted for City Manager's Office by: Fernando Costa (6122)
Originating Department Head: Jay Chapa (5104)
Additional Information Contact: Cynthia Garcia (8187)
ATTACHMENTS
916 Main Street Map.pdf
Pate 2 of 2
Mills, Stephanie
From: Odle, Sarah
Sent: Wednesday, April 02, 2014 11:57 AM
To: Mills, Stephanie
Subject: RE: amendment number
The original M&C was C4779 &the contract number is CSC#11085. We need to mail this out today if at all possible so
please let me know when it is ready. Thanks so much for your help!
From: Mills, Stephanie
Sent: Wednesday,April 02, 2014 8:01 AM
To: Odle, Sarah
Subject: RE: amendment number
Awesome,thanks!
From: Odle, Sarah
Sent: Tuesday, April 01, 2014 4:56 PM
To: Mills, Stephanie
Subject: RE: amendment number
Okay, I'll get it for you.
From: Mills, Stephanie
Sent: Tuesday, April 01, 2014 4:50 PM
To: Odle, Sarah
Subject: amendment number
Hello!
I received an amendment for processing, but it does not state the original contract number that is being amended.
It is this contract: Lease Amendment with New Fort Tower I Hotel Limited Partnership for the Parking Garage Located
Under General Worth Square at 916 Main Street to Extend the Lease Term and Adjust the Rental Rate (L-15666)
Please provide the original contract number.
Thanks! O
Stephanie Mills
Administrative Technician/Contracts
City Secretary's Offico
(817)392-6090
JUST KEEP LIVIN