Okaloosa County BOCC — September 20, 2016 — Assignment of Lease on Okaloosa Island — agenda request — reading text

BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST DATE: September 20, 2016 TO: Honorable Chairman and Members of the Board FROM: Jason Autrey SUBJECT: Assignment of Lease on Okaloosa Island DEPARTMENT: Public Works BCC DISTRICT: 2 STATEMENT OF ISSUE: Counsel representing DB Entertainment Productions, LLC (DB) has submitted a request to assign the lease currently held by Gulf Coast Marine Life Center, Inc. (GCMLC) with Okaloosa County for 4.4 acres +/- on Okaloosa Island. The assignment request presented calls for assignment of the lease from GCMLC to DB, an extension to the current construction timeline, and an alteration to the lease fee structure. This request was previously heard on August 8, 2016 and was tabled to the September 20th meeting to allow for additional input from residents during a meeting held in the south end of the County. An extension to the existing operational facility requirement of the lease was also provided by the Board of County Commissioners to September 20, 2017. BACKGROUND: On August 21, 2012 the lease between GCMLC and Okaloosa County for approximately 4.4 acres of land on Okaloosa Island became effective. As approved the lease was for ten (10) years plus two (2) additional ten (10) year terms (for a total of 30 years), has a base fee of $75,000 with an annual CPI adjustment, a construction commencement within two (2) years, and a completion of an operational facility within four (4) years. Additionally, any assignment of the lease requires Board of County Commissioners’ approval. A development order was issued to GCMLC and construction consistent with that order has been performed. However, a completed project will not be operational by the end of the four (4) year - August 21, 2016 deadline. Due to various circumstances surrounding the permitting aspect of the originally proposed project by GCMLC, they are seeking options for assignment of the lease; specifically with DB. DB is an extension of the entity responsible for the lease that operates as Wild Willy’s Adventure Zone. The assignment requested by the leaseholder includes the following modifications to the lease: 1) Assignment and assumption of the lease from GCMLC to DB (Section 2 of the provided document). Such assignment requires approval by the Board of County Commissioners per the existing lease and would effectively alter the entity responsible for the terms of the lease with the County. Staff has no objection to this request. To date GCMLC has complied with the terms of the contract (provided rent payments, received a development order and performed a portion of the construction) with the exception of the completion of an operational facility. Assignment of the lease to DB, an entity affiliated with an adjacent leaseholder that is also compliant with the terms of their lease, does not cause concern among staff. 2) Alteration of the lease fee (rent) structure (Section 5A): The current lease rent fee is  based on a base fee of $75,000 in year one, adjusted annually based on specified Consumer Price Index (CPI) factor. To date the adjustment factor has averaged around 1.6% for the first three years of the lease. The new rent structure proposed is to be the greater of either a) the current rate structure; a base rate of $75,000 with annual CPI adjustments or b) 3% of the gross receipts for the improvements on the 4.4 acre parcel. Staff has no objection to this request. Staff’s ability to determine revenue projections are limited. Without a known site plan or a comparable product it is not possible to develop high confidence revenue projections with respect to a 3% portion of gross receipts. However, the alternative rate structure is identical to what is currently in place on the parcel. Therefore, the expectation would be that the current anticipated revenue stream would serve as a minimum. 3) Allow for the expansion of Wild Willy’s Adventure Zone on to the lease parcel by restating the allowable use of the premises (Section 5B). The proposed expansion would occur in two phases. Staff would require additional information regarding this request. It is recommended that the proposed uses on the parcel provide adequate buffering/screening from the adjacent Veterans Park. Areas identified as buffers should specifically exclude surface stormwater features and appropriate plantings should be prescribed. As an expansion to the existing Wild Willy’s Adventure Zone the proposed use would be compatible with that parcel. Some adverse impacts to the Veterans Park area are possible and the proposed use of an amusement park is not consistent with the covenants governing the lease parcel. 4) Extend the construction completion date for an additional two (2) years. Proposed improvements to the parcel are to occur in two (2) phases with the improvements occurring from east to west on the lease parcel. Staff has no objection to this request. Because of past efforts to develop the parcel by GCMLC (acquisition of a development order and the performance of various levels of sitework/construction) staff has no objection to the extension of the construction timeline. The request to have the project operational within two years does not appear to be unreasonable considering the requested allowable use. Any and all improvements proposed on site would be required to go through development review and approval in accordance with County codes and ordinances. Subsequent to the presentation and discussion on August 8th, several members of the public have expressed concerns to the Board of County Commissioners during the public comment section of regularly scheduled meetings. In general those comments have expressed a desire for the lease areas (both the one currently held by GCMLC and one held by the Emerald Coast Wildlife Refuge) to remain "as is" and incorporated as part of the adjacent Veterans Park. Understanding those concerns representatives for Wild Willy's have proposed the inclusion of a buffer along the boundary of the lease tract where amusement/facility improvements can not be located and to provide a vegetative area within that buffer. Concerns regarding the proposed lease assignment have also been expressed by a representative of US Fish & Wildlife Services (USFWS). Comments regarding the potential impact to the adjacent heron rookery were shared with the parties and they have verbally expressed that they are amenable to proposing development that is consistent with measures to conserve the habitat. Specific measures have not been identified because there is not a definitive development plan for the parcel, however USFWS has expressed a desire to assist. OPTIONS: Approve/deny assignment and amendment of the lease from Gulf Coast Marine Life Center, Inc. to DB Entertainment Productions, Inc. for 4.4 acres +/- on Okaloosa Island. RECOMMENDATIONS: Staff has no objection to the requested assignment of the lease, proposed rate structure or construction timeline extension. However, if the assignment is approved staff recommends requiring the lease holder to provide the Board of County Commissioners with information related to covenant compliance (amendments or variances if/as necessary), consistency with recommendations from US Fish & Wildlife Services, details regarding the buffer and vegetative areas, and development plans prior to authorizing the change of allowable uses within the lease. RECOMMENDED BY: APPROVED BY: John Hofstad, County Administrator