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HomeMy WebLinkAbout11163RESOLUTION NO. 11163 A RESOLUTION APPROVING LEASE AMENDMENT NO. 2 BETWEEN PEDCO FOUNDATION AND DOSS AVIATION, INC. BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: The Lease Amendment No. 2 between PEDCO Foundation and Doss Aviation, Inc. amending the July 24, 2006 Lease for the Doss Aviation, Inc. facilities at Pueblo Memorial Airport Industrial Park, a copy of which is attached hereto, is hereby approved. INTRODUCED December 10, 2007 BY Randy Thurston Councilperson APPROVED: d1occindwr %J City Council ATTESTED BY: CITY CLERK Res. I M493 Background Paper for Proposed RESOLUTION AGENDA ITEM # DATE: December 10, 2007 DEPARTMENT: Law Department TITLE A RESOLUTION APPROVING LEASE AMENDMENT NO. 2 BETWEEN PEDCO FOUNDATION AND DOSS AVIATION, INC. ISSUE Should City Council approve the Lease Amendment No. 2? RECOMMENDATION Approve the Lease Amendment No. 2. BACKGROUND Doss Aviation, Inc. ( "Doss ") has submitted documents showing it has expended $2,528,453 of its funds to construct and modify its facilities at Pueblo Memorial Airport Industrial Park ("Facilities"). Lease Addendum No. 2 modifies the computation of the purchase price to be paid by Doss if it purchases the Facilities under its May 22, 2006 lease with PEDCO Foundation ( "Lease "). The purchase price shall not be less than $14,020,000 less credits of 85% of rents paid ( "Minimum Purchase Price "), which will result in City and PEDCO Foundation receiving full payment of the funds they invested in the Facilities plus 15% of rents paid by Doss.' As modified, the maximum purchase price is fixed at $16,548,453 (based on appraisal) plus $100,000 a year during the first five years of the Lease starting January 1, 2007 ( "Maximum Purchase Price "). In addition to credit of 85% of rent paid, Doss will get a credit against the purchase price of $2,528,453 but in no event will the purchase price be less than the Minimum Purchase Price. Assuming the Facility was purchased by Doss in the year 2008 for the Maximum Purchase Price of $16,748,453, City and PEDCO Foundation would receive an additional $200,000 divided as follows: 80% to the City and 20% to PEDCO Foundation. Under the July 24, 2006 Agreement between the City and PEDCO Foundation, City reserved the right to approve amendments to the Lease. The Resolution approves Lease Amendment No. 2. "City's total contribution to the Doss project was $13,090,000 of which $2,420,000 represents City funds advanced to Doss in consideration of its employment commitment of 121 full -time employees with an average annual salary of not less than $44,000 per year plus benefits. If Doss purchases the Facilities, its employment commitment and repayment obligations are to be secured by a first deed of trust on the Facilities. The $2,420,000 is not included in computation of the Minimum Purchase Price. FINANCIAL IMPACT See Background. LEASE AMENDMENT NO.2 THIS LEASE AMENDMENT NO. 2 ( "Amendment ") entered into as of November 15 , 2007 by and between PEDCO Foundation, a Colorado corporation ( "Lessor ") and Doss Aviation, Inc., a Texas corporation (the "Lessee "), WITNESSETH: WHEREAS, Lessor and Lessee entered into a Lease dated as of May 22, 2006 and Lease Amendment No. 1 dated as of July 24, 2006 (herein collectively the "Lease "), and WHEREAS, Lessor and Lessee are desirous of further amending the Lease. NOW, THEREFORE, in consideration of the foregoing and mutual covenants contained herein, Lessor and Lessee agree as follows: 1. Articles 17.04 and 17.05 of the Lease as previously amended are further amended to read as follows: 17.04 The purchase price shall be the greater of (a) an amount equal to the appraised value of the Leased Premises on or not more than ninety (90) days prior to the Designated Purchase Date as determined by an independent appraiser qualified in appraising commercial real property who is a Colorado certified general appraiser and Member Appraisal Institute (MAI), selected by mutual agreement of Lessor, Lessee and City of Pueblo (but not more than a maximum appraised value of $16,548,453.00 plus $100,000.00 per year during the first five (5) years of the Term of this Lease commencing January 1, 2007 and on the I' day of January of each year thereafter to and including January 1, 2011 ( "Maximum Appraisal Value "), or (b) $14,020,000.00. If Lessor, Lessee, and City of Pueblo are unable to mutually agree as to such appraiser within twenty (20) days after delivery of Lessee's notice of exercise of option, Lessee may, at its cost and expense (including attorney fees), petition the District Court, County of Pueblo, State of Colorado, to select after notice and hearing an appraiser from a list of three (3) appraisers consisting of the appraisers designated by Lessor, Lessee and City of Pueblo. All fees and costs of the appraiser selected by mutual agreement or by the Court shall be paid by Lessee. After receipt of the appraisal made by the selected appraiser, Lessee may decline to purchase the Leased Premises upon written notice given to Lessor and City of Pueblo prior to the Designated Purchase Date. Such declination shall not prevent Lessee from purchasing the Leased Premises in accordance with the provisions of this Article 17 and Article 18 on any subsequent anniversary of the Overall Commencement Date. 17.05 Subject to the limitations set forth in this Article 17.05, Lessee shall be granted a credit against the purchase price as follows: (a) an amount equal to eighty-five percent (85 %) of the rental payments made by Lessee pursuant to Article 4.01 hereof during the term of this Lease up to the Designated Purchase Date ( "Rent Credits "), and (b) an amount equal to $2,528,453.00; provided, however, that in no event shall the purchase price be less than $14,020,000.00 minus Rent Credits. 2. All other terms, covenants and provisions of the Lease are by reference incorporated herein as if set forth herein in full. The Lease as modified by this Amendment No. 2 shall remain in full force and effect inuring to the benefit of and binding upon Lessor and Lessee and their respective successors and approved assigns. Executed as of the day and year first written above. LESSEE DOSS AVIATION, INC. Frank G. Hunter President/CEO LESSOR PEDCO FOU Davi 'haw Title: Chairman STATE OF COLORADO ) ) ss. COUNTY OF PUEBLO ) The foregoing instrurWnt was acknowledged before me this AIL tl1 day of N , 2007 by Dahaw as Chairman of PEDCO Foundation, Inc., a Colorado nonprofit corporation. Witness my hand and official seal. My commission expires: q- -2,nie . [SEAL] ( IV,'rGot10 s,< o _n Notary Public STATE OF COLORADO ) ) ss. COUNTY OF EL PASO ) The foregoing instrument was acknowledged before me this IS day of hlUtA ,CabA r , 2007 by Frank G. Hunter as President/CEO of Doss Aviation, Inc., a Texas Corporation. Witness my hand and official seal. SEA No" PUM Sk" of Coloraoo EZI r w