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HomeMy WebLinkAbout6D (3)(.a -�) (�) Staff Report to Redevelopment Commission Estoppels for New Hotel at Current Marriott Site Prepared 7/7/11 The Redevelopment Commission is being asked to certify it has reviewed the two Estoppel and Release Agreements attached to this report and to the best of its knowledge, the statements contained therein are true, correct and complete in all material respects. The Commission is also being asked to release Host from its obligations upon closing of the sale of the Hotel and the ground lessee's interest in the land underlying the Hotel by Buyer, and upon Buyer's assumption in writing of all of Host's rights, duties, and obligations related to the Walkway Agreement. The Estoppels essentially indicate that Host and FBCLP (First Bank Center Limited Partnership) are in compliance with the Walkway Agreement (Construction, Easement, Restriction and Operating Agreement), the Common Facilities Management Agreement and the Operation, Maintenance and Easement Agreement, except for "Common Facilities Items Not in Good Condition or Repair" which is attached to the Estoppels as an Exhibit. The Estopples also indicate there is no default in any of these Agreements and no amendments other than identified. In order to make a recommendation to the Redevelopment Commission regarding these Estoppel's, staff has had the City Attorney's office review the estoppels and attached exhibits. Staff has also sought input from the City's Department of Public Works Director and City Engineer to see if they were aware of any additional repairs or maintenance needed for the facilities covered by these documents, and there were none. Staff also checked with a representative of Scott Herczeg, Director of Operations & Building Engineer for Century Center. Scott was not aware of any maintenance or repairs required of Host of FBCLP under the documents. A representative of 1 St Source Bank is also being contacted, but was not available at the writing of this report. Based on the review performed by staff it is recommended the Commission sign the Certification and Release. THG revisions: 7/1/2011 OPERATION, MAINTENANCE AND EASEMENT AGREEMENT [SOUTH BEND MARRIOTT] ESTOPPEL AND RELEASE Date: July , 2011 Reference is made to that certain Operation, Maintenance and Easement Agreement dated as of October 22, 1979, and recorded with the St. Joseph County, Indiana Recorder ( "Recorder ") as Instrument No. 8013310 on August 10, 1980, as amended by that certain First Amendment to Operation, Maintenance and Easement Agreement dated as of January 19, 1982, and recorded with the Recorder as Instrument No. 8213384 on September 2, 1982, as further amended by that certain Second Amendment to Operation, Maintenance and Easement Agreement dated as of May 1, 1987, and recorded with the Recorder as Instrument No. 9021586 on August 10, 1990, and as further amended by that certain Third Amendment to Operation, Maintenance and Easement Agreement dated as of December 28, 2010, and recorded with the Recorder as Instrument No. 1036707 on December 30, 2011 (collectively, the "Easement "). All terms and words of art used herein, as indicated by the initial capitalization thereof, shall have the same respective meanings designated for such terms and words of art in the Easement. At the request of Jenna Hotel Investments, LLC, a Delaware limited liability company ( "Buyer "), in connection with its proposed acquisition of the Marriott Hotel located at 123 North St. Joseph Street in South Bend, Indiana ( "Hotel "), First Bank Center Limited Partnership, a Minnesota limited partnership ( "FBCLP "), as owner of the Office Building, hereby certifies to (a) Host Hotels & Resorts, L.P., a Delaware limited partnership, the current operator of the Hotel ( "Host") and (b) Buyer, as follows: A. As of the date of this Estoppel and to FBCLP's best knowledge, FBCLP has fully complied with any and all installation, construction, maintenance, operation, repair, and replacement obligations contained in the Easement with respect to the Office Building Maintenance Area. B. As of the date of this Estoppel and to the actual knowledge of FBCLP, (a) based solely on day to day observations of the Common Facilities and (b) without further investigation, inspection or inquiry of any nature whatsoever and (c) in complete reliance upon the appointment of a manager pursuant to the Management Agreement described in Section C of this Estoppel, Host and FBCLP have fully complied with any and all installation, construction, maintenance, operation, repair, and replacement obligations contained in the Easement with respect to the Common Facilities, except for certain items described in the document entitled "Common Facilities Items Not in Good Condition or Repair," a copy of which is attached hereto as Exhibit A. In accordance with Section 3(d) of the Easement, FBCLP shall pay thirty percent (30 %) of costs and expenses incurred by the Manager pursuant to the Easement and the Management Agreement described in Section C of this Estoppel to operate, maintain and repair the Common Facilities. To the extent the cost to correct the items listed in Exhibit A is payable -1- {01645838.DOC;7 } Error! Unknown document property name. pursuant to the Easement and the Management Agreement, FBCLP shall pay thirty percent (30 %) of the same. The statement set forth in this Section B specifically does not include any certification or representation as to the obligations contained in the Easement as to the Hotel, of which and for which FBCLP has no knowledge whatsoever. C. The Common Facilities Management Agreement dated as of November 1, 1981, as amended by that certain First Amendment to Common Facilities Management Agreement dated as of November 30, 1982, as further amended by that certain Second Amendment of Common Facilities Management Agreement dated as of October 30, 1986, as further amended by that certain Third Amendment of Common Facilities Management Agreement dated as of May 1, 1987, a copy of which is attached hereto as Exhibit B constitutes the "Management Agreement" contemplated by the Easement, is in full force and effect, and satisfies all requirements of the "Management Agreement" set forth in the Easement. D. As of the date of this Estoppel and to FBCLP's best knowledge, the use and operation of the Office Building by FBCLP is in full compliance with the requirements of the Easement. E. As of the date of this Estoppel and to the actual knowledge of FBCLP, based solely on day to day observations of the Common Facilities and without further investigation, inspection or inquiry of any nature whatsoever, and in complete reliance upon the appointment of a manager pursuant to the Management Agreement, the use and operation of the Common Facilities by Host, FBCLP and Marriott Hotel Services, Inc., as successor to Marriott Corporation, as Manager, are in full compliance with the requirements of the Easement. F. As of the date of this Estoppel and to FBCLP's best knowledge, FBCLP has no right to claim or establish a Default Lien against any portion of the Hotel Parcel, the Office Building Parcel or Common Facilities pursuant to the terms of the Easement. G. As of the date of this Estoppel, FBCLP has no actual notice of (without inquiry or investigation of any nature whatsoever), any reason why Host has a right to claim or establish a Default Lien against any portion of the Hotel Parcel, the Office Building Parcel or Common Facilities pursuant to the terns of the Easement. H. As of the date of this Estoppel and to FBCLP's best knowledge, FBCLP is not in breach or default under the Easement and no event has occurred which, given notice, the passage of time or both, would constitute a breach or default by FBCLP under the Easement. I. As of the date of this Estoppel, FBCLP has no actual notice of (without inquiry or investigation of any nature whatsoever), (a) Host's breach or default under the Easement, or (b) any event which may have occurred which, given notice, the passage of time or both, would constitute a breach or default by Host under the Easement. J. The individual executing this certificate on behalf of the undersigned entity is the authorized signatory of such entity, and as such has full power and authority to bind such entity. -2- f 016458XD0C;7 ) Error! Unknown document property name. Upon (a) the closing of the sale of (i) the Hotel and (ii) the ground lessee's interest in the land underlying the Hotel by Buyer, (b) execution by all appropriate parties of that certain Fourth Amendment to the Easement regarding the release of future parties transferring their interest in the Easement, and (c) the assignment to and unqualified assumption by Buyer of (i) the Easement and (ii) hotel ground lease (dated October 16, 1979), FBCLP shall release Host from any and all liability and obligation related to or arising out of the Easement. This certificate may be relied upon and shall inure to the benefit of Host and Buyer and their respective successors, assigns, title companies and lenders, and shall be binding upon the undersigned and its successors and assigns. [Signature Page Follows] -3- {01645838.DDC;7 i Error! Unknown document property name. IN WITNESS WHEREOF, the FBCLP has duly executed this certificate as of the year and date first above written. FIRST BANK CENTER LIMITED PARTNERSHIP By: HUNTER, KEITH INDUSTRIES, INC., Its Gweneral y. _ Name: Rob rt Vl . Horstman Title: Vice President — Finance -4- {o164ss3S.DOC;s } CERTIFICATION AND RELEASE (Operation, Maintenance and Easement Agreement Estoppel and Release) At the request of Jenna Hotel Investments, LLC, a Delaware limited liability company ( "Buyer "), in connection with its proposed acquisition of the Marriott South Bend Hotel located at 123 North St. Joseph Street in South Bend, Indiana, the South Bend Redevelopment Commission hereby certifies to Host and Buyer and their respective successors, assigns, title companies and lenders, that (i) it has reviewed the foregoing Operation, Maintenance and Easement Agreement Estoppel Certificate and Release by First Bank Center Limited Partnership, and (ii) to the best of its knowledge, the statements contained therein are true, correct and complete in all material respects. Upon the closing of the sale of the Hotel and the ground lessee's interest in the land underlying the Hotel by Buyer, and assignment and written assumption of the Easement and hotel ground lease (dated October 16, 1979) to Buyer, Host shall be released from any and all liability and obligation related to or arising out of the Easement (as defined in the Estoppel Certificate). SOUTH BEND REDEVELOPMENT COMMISSION, as to itself and on behalf of the City of South Bend Department of Redevelopment By: Name: Title: Date: (01645838.noc;7 } -5- Error! Unknown document property name. EXHIBIT A COMMON FACILITIES ITEMS NOT IN GOOD CONDITION OR REPAIR Exterior: 1. Numerous dead shrubs are located along the walkways and should be replaced. 2. At least three trees appear to have died over the winter and one is missing completely — all of which should be replaced. 3. A tree continues to flourish (not intentionally planted) on the grass terrace outside the restaurant and should be removed. 4. Various handrails are corroded and require repainting. 5. A very large dirt filled planter is sitting on a suspended walkway, which is a dangerous condition likely to result in damage or harm. Garage: 6. An open drain pipe in the parking garage is not assisting in draining the clogged drain shown in the upper right of that photograph. A close -up of that clogged drain is shown in the accompanying photograph that also shows water still dripping from the concrete above and the start of what will surely be spalling of the concrete in that area. One should not dismiss the significance of this photograph, as it is of a pipe coming from the drain pan beneath the sidewalk pavers. As you can see in the previous photograph (oversized planter), vegetation is growing out of the drain pan. 7. Water leaking from the maintenance room was recently observed. 8. There are numerous pictures of drains on the parking deck that show damage to the membrane and /or concrete from standing water. Unfortunately, even though the Bank has repeatedly reported the problem of clogged drains and the damage that can result, you see from the photos that most continue to remain clogged. 9. Last Thursday or Friday, a bank employee tripped over one of the sidewalk pavers and broke her wrist. Atrium: 10. The roof in the atrium continues to leak, as evidenced during last week's (and prior) storms. 11. The atrium HVAC system may require repair due to historical problems. As of the date of this Estoppel, the HVAC system appears to be operating, but sufficient time has not occurred to confirm that condition. -6- (01645838.DOC;7 } Error! Unknown document property name.