The URL can be used to link to this page

Home My WebLink About2015 Resolution No. 085RESOLUTION NO. f'5°' SERIES OF 2015 A RESOLUTION SUPPORTING THE ENGLEWOOD MCLELLAN RESERVOIR FOUNDATIONTOPURSUELEASENEGOTIATIONSwrnISHEAPROPERTIESFORPA 81 APPROXIMATELY 37.9 ACRES. WHEREAS, the Englewood McLellan Reservoir Foundation was formed to oversee the development of the McLellan Reservoir property; and WHEREAS, the Englewood City Council authorized the creation of the Englewood McLellan Reservoir Foundation, a non-profit corporation charged with furthering the development of the McLell an Reservoir property and transferred the property to Englewood McLellan Reservoir Foundation by the passage of Ordinance No. 41, Series of 1999; and WHEREAS, the imposition of covenants or use restrictions on all lands within the development area ensure a consistent high level of development; and WHEREAS, leasing for no less than 20 years prior to the sale of the property will provide even greater protection to the McLellan Reservoir's water quality when compared to development without the restriction; and WHEREAS, Englewood McLellan Reservoir Foundation received an offer from Shea Properties to lease PA 81, approximately 12.8 acres, with a future option to purchase as outlined: • A lease term of 20 years, with extensions up to 65 years. • An initial net annual rental rate based on a $6/sq. ft. value with a capitalimtion rate of 4.5%, or appro ximately $435,000/year. • An annual inflation rate increase of 2% for years 2 -10, with an adj ustment for years 11 -20 based on inflationary factors. • A purchase option at the expiration of the lease term, based on a fair market appraisal of the land in an unimproved, vacant condition. • Agreement by Englewood McLellan Reservoir Foundation and the City of Englewood to include a ballot question for the November 2015 City election to authorize approval of the proposed future purchase option. • In the event the ballot question authorizing the lease option is not approved, Shea may elect to execute the lease without the purchase option, or to not execute the lease without further obligation. • The lease, if executed, would take down the property in a time frame to be determined. • The exchange agreement between Shea and Englewood Mclellan Reservoir Foundation would take place either following or simultaneously with the closing the lease, if executed. WHEREAS, the passage of this Resolution will also support Englewood McLellan Reservoir Foundation to entry into formal lease negotiations with the objective of completing a lease agreem ent; and 1 WHEREAS, if the negotiations are successful Englewood McLellan Reservoir Foundation will submit the agreement to the Englewood City Council, prior to formal approval by the Englewood McLellan Reservoir Foundation Board of Directors. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ENGLEWOOD, COLORADO, AS FOLLOWS: Section 1. The City Council of the City of Englewood, Colorado, hereby supports the Englewood McClellan Reservoir Foundation to pursue lease negotiations for PA 81 approximately 37.9 acres with Shea Properties. ADOPTED AND APPROVED this 6th day of July, 2015. I, Loucrishia A Ellis, City Clerk for _!Q.~ity of Englewood, Colorado, hereby certify the above is a true copy of Resolution No .~ Series of201 . 2 COUNCIL COMMUNICATION Date Agenda Item Subject July 6, 2015 Resolution of support for the Englewood 11 Ci Mclellan Reservoir Foundation to enter into negotiations for a ground lease with Shea properties INITIATED BY STAFF SOURCE Englewood Mclellan Reservoir Foundation Michael Flaherty, EMRF Board COUNCIL GOAL AND PREVIOUS COUNCIL ACTION In 1999, City Council authorized the creation of the Englewood Mclellan Reservoir Foundation (EMRF) for the purpose of facilitating the development of property adjacent to the City's Mclellan Reservoir. On December 17, 2007, Council supported EMRF in the sale of approximately 11 acres of PA85 to RTD for $3.2 million. On December 1, 2008, City Council supported EMRF in leasing approximately 12.8 acres of PA84 to TT Denver. On December 6, 2010, Council approved a resolution of support for a lease agreement with Benjamin Franklin Charter School. At its October 1 7, 2011 meeting, Council adopted a resolution of support for a lease agreement with Miller Family Real Estate, llC. On March 4, 2013, Council adopted a resolution of support for lease negotiations with MKS, llC for lease of property in PA85. City Council discussed the current proposal during an Executive Session on June 15, 2015 and requested that EMRF bring a resolution of support forward for consideration. RECOMMENDED ACTION EMRF recommends City Council approval of a Resolution supporting the EMRF to enter into negotiations with the Shea Properties, d.b.a. Central Park at Highlands Ranch, for lease of approximately 37.9 acres designated as Highlands Ranch Planning Area 81(PA 81) owned by EMRF. BACKGROUND In 1999, City Council authorized, through Ordinance 41, the creation of the Englewood Mclellan Reservoir Foundation, a non-profit corporation charged with furthering the development of the Mclellan Reservoir property and transferred the property to EMRF. During the Executive Se ssion of June 15, EMRF presented City Council with an offer to to lease PA 81, with a future option to purchase, and the basic deal points of the offer. Council directed the EMRF to proceed with formal lease negotiations. The details of the draft lease agreement, as proposed by Shea, which remain open to further negotiations, were discussed with Council and are outlined below. 1. A lease term of 20 years, with extensions up to 65 years. 2. An initial net annual rental rate based on a $6/sq. ft. value with a capitalization rate of 4.5%, or approximately $435,000/year. 3. An annual inflation rate increase of 2% for years 2-10, with an adjustment for years 11-20 base d on inflationary factors. 4 . A purchase option at the expiration of the lease term, based on the fair market appraisal of the land in an unimproved, vacant condition. 5. Agreement by EMRF and the City of Englewood to include a ballot question for the November 2015 City election to authorize approval of the proposed future purchase option. 6. In the event the ballot question authorizing the lease option is not approved, Shea may elect to execute the lease without the purchase option, or to not execute the lease without furthe r obligation. 7. The lease, if executed, would take down the property in a time frame to be det ermined. 8. The exchange agreement between Shea and EMRF would take place either following or simultaneously with the closing of the lease, if executed. Approval of this resolution will allow EMRF to enter into formal lease negotiations with the objective of completing a lease agreement, and if successful, EMRF will submit to City Council prior to formal approval by the Board of Directors. FI NANCIAL IMPACT Subject to successful negotiations, the lease of PA 81 will result in a minimum of $435,000 in annual lease payments, escalated by 2%/year for the first 10 years of the agr eement and adjusted for inflation in years 11-20. The sale of the property at the end of the initial lease term would be completed at fair market value at that time, subject to voter approval of the 201 S ballot question. LIST OF ATTACHMENTS Site map of subject property Proposed Resolution , .. , PA 84 ..... PAIS LOT AREAS <•<n•J HR 153 HR 155 HR154 NOl'"th '°""' lot 1A Lot 18 lotl lot 3 Tract A Tract& Tr11cl C Lot 1 lot l Tract A Tr•ct 8 Tr•c.tC Tr11ct o lrKtf Tr•ct f loll lot.I lot 5 , ... Lot 5 '" 7.)3 12 79 ... 3.33 l .43 1 34 "' , .. 2.27 7.06 J.M .... 0.01 a" lD 14 9.19 10.17