HomeMy WebLinkAbout- - Lease Approval OC Fair and Event Center - 9/7/2010CITY COUNCIL/ORANGE COUNTY
FAIRGROUNDS AUTHORITY
BOARD AGENDA REPORT
MEETING DATE: September 7, 2010 ITEM NUMBER:
SUBJECT: PROPOSED LEASE WITH ORANGE COUNTY FAIR AND EVENT CENTER, L.P.
DATE: SEPTEMBER 3, 2010
FROM: CITY ATTORNEY/AUTHORITY ATTORNEY
PRESENTATION KIMBERLY HALL BARLOW,
BY: CITY ATTORNEY/AUTHORITY ATTORNEY
FOR FURTHER INFORMATION CONTACT: KIMBERLY HALL BARLOW, 714 754-5339
RECOMMENDATION:
Adopt a Resolution approving the draft lease subject to completion of exhibits and minor
revisions approved by the Authority Attorney and Executive Director.
BACKGROUND:
The Authority considered a draft lease with OC Fair and Event Center, L.P. for the
Fairgrounds property at its Special Joint Meeting on August 24th. At that time, a number of
issues remained open and the Authority Board approved the lease subject to changes it
authorized and further negotiation. The lease as it was approved by the Board on August
24th is attached as Attachment 1. The revised draft lease submitted to the Authority Board
for consideration is the result of on-going negotiations concerning the lease terms between
the Authority and OC Fair and Event Center, L.P. as directed by the Board (Attachment 2).
ANALYSIS:
The attached revised Lease has been negotiated in an effort to resolve all outstanding
issues between the JPA and OC Fair and Event Center, L.P. Attachment 2 shows all
changes from the August 24th version considered by the Board, including all exhibits
except Exhibit A3 (list of contracts), Exhibit F (independent collection agent instructions)
and Schedule 1 (excluded property). With respect to the areas on which staff was
directed to negotiate, we believe we have negotiated revised provisions which the Board
will find acceptable. Changes were made primarily in Sections 6.1, 6.2, 15.10, 28.4,
Exhibit H and its attachments. In addition, several exhibits which were previously
incomplete have now been completed, including Exhibits C-1, G, I, and K.
FISCAL REVIEW:
The terms of the Lease and the related documents relating to the proposed purchase of
the Fairgrounds from the State of California have been drafted to ensure that there is no
risk to the City's general fund involved in acquiring and leasing the Fairgrounds. The
financial terms mutually agreed to in the Memorandum of Understanding have been
restated in Article 3 and Exhibit "E" of the lease. Based on an independent financial
analysis of the terms of the lease as prepared by Kaiser Marston Associates, the City will
receive $234,494,570 in rent and sponsorship fees over the term of the 55 year
agreement. A copy of the revenue analysis is included in this report as Attachment 5.
It requires notation that the JPA/City will assume some level of continuing responsibility for
oversight of the lease and operations of the OCFEC. The appropriate level of staffing
and/or consulting assistance will be modest in comparison to the revenue generation but
will still be necessary. A determination as to the desired level of staffing and oversight of
the Tenant should be determined prior to the close of escrow.
CONCLUSION:
Staff recommends that the Authority Board adopt the attached Resolution approving the
revised lease with OC Fair and Event Center, LP, predicated on its compliance with the
MOU and as directed by City Council/Authority Board subject to such changes as are
authorized by the Board, and subject to independent verification of the financial capacity
of the Tenant, its general partner and the guarantors, and authorize the Chair and
Secretary of the Authority to execute same, subject to addition of the remaining exhibits
and such minor changes as are approved by the Authority Attorney and Executive
Director.
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CITY ATTORNEY/AUTHORITY
ATTORNEY
DISTRIBUTION:
ATTACHMENTS 1 Draft Lease (8-24-10
2 Draft Lease (9-3-10)
3 Resolution
CITY MANAGER/EXECUTIVE
DIRECTOR
Joint Powers Authority OCFEC September 3, 2010 11:00 AM
F