Fort Walton Beach Council agenda — 12-12-06 ‎(regular)‎ — reading text

ABANDONMENT PLAN Consideration of the abandonment plan offered by the Northwest Florida Fair Association. The City Manager reported staff completed the process of analyzing whether or not the property could be declared excess and finds that:the property was purchased, in part, to maintain the recreational use; the purchase was partially financed with tax exempt bonds and there is a safe harbor provision that the financing may only be used for governmental purposes for five years or until the debt is satisfied and if the property were sold to a non- governmental entity, the City would not be permitted to sell at less than Fair Market Value, and it was noted if the property were sold to another governmental agency, the restrictions would not apply; at four different meetings Council directed her to discuss with the County their interest in locating the Judicial Center Annex expansion on a portion of the property, which indicates there is a future need for the property; the City Attorney has given an opinion there is no basis for a determination that the property is unneeded; and the City has solicited bids to develop a master plan to develop the property, which is an underlying assumption there remains a future need for the property. She reported staff finds it cannot be declared excess at this time. The City Manager went over the options available: to accept the abandonment plan, with or without an extension for removal of the buildings; to direct staff to enter into an Interlocal Agreement for the transfer of a portion of the property to the Fair Association, however, staff does not feel it is in the City' s overall best interest; or to direct staff to negotiate a new lease or license agreement with the Fair Association, and provide staff specific direction on the length of term, compensation, termination clause, and whether or not there should be oversight. Mr. Hartwell wished to know if research had been done on the fair market value for a lease of the property. The City Manager replied that a fair market analysis for a lease had not been done and mentioned the Fair Association rents to non- profit and commercial activities and staff would need to evaluate the percentage of use between the profit and non- profit activities. Following the question on whether the City collects ad valorem taxes if the Fair Association is not 100% public service with a combined purpose of commercial and non- profit activities, the City Attorney replied that the City is the property owner and the only taxes collected would be for the permitting and other charges. Special Council 11- 21- 06 ABANDONMENT PLAN cont. The Mayor opened the floor for public input. Charles Rigdon, 232 Mattie' s Way, Destin, explained that the percentage for non- profit and commercial activities will fluctuate each year, and given the opportunity they can increase the rental on the commercial activities to raise the revenue to increase the lease payment to the City. He mentioned the three- part proposed changes to the license agreement: 1) to increase the base rent at $ 2, 000 per for 24, 000 annually; 2) to increase rental override to 20% from 5% for $24, 000 +/- annually; and 3) the Fair to pay 5% of Fair gross income ( admission, booth sales, ride income) for an estimated $ 7, 500 annually. There was no further public input. Mr. Minich moved to direct the City Manager to negotiate a five year lease with the Northwest Florida Fair Association. The lease will be renegotiable or renewable after three years if all parties agree. The rent will consist of the following: Base rent $ 2, 000 per month; 20% of gross receipts except for Fair income; 5% of Fair gross income. Said lease will not include a 180 day no reason termination clause, but should include a clause for termination within 180 days if the Fair Association materially breaches the terms of the lease. Further, direct the City Manager to examine the permitting process in order to facilitate the process for events at the fairgrounds. Mr. Patterson seconded motion. Mr. Minich stated the Fair Association supported the City purchasing the property and Council has seen person after person come in to say the fairgrounds is a great place for public use. He commented over the past year they have gone through a new process, the fairgrounds is a business and the City can collect money from their business, and what Mr. Rigdon suggested is fair. He further commented the 180 day termination clause should not be included and the parties can work together to facilitate the permitting process a little faster. Mr. Patterson expressed it is a fair agreement for both parties and agreed with taking out the 180 day termination clause because the Fair Association would need a good 12 months to vacate the property. Mr.Tucker explained he would not support the motion because he voted to buy the property and he wants the citizens to be repaid the $4 million with a profit. He mentioned his intention was to make a motion that would direct the City Manager and the City Attorney to take the necessary action to allow the fairground property to be sold to the Northwest Florida Fair Association. He voiced his thoughts that the City should sell that property and not keep the burden of the debt on the citizens. Dr. Pullen commented the citizens should not have to subsidize the operation of the fair and the area leased to the Fair Association should return to the City a fair return on the investment. He stated the City should not have their hands in the Fair Associations pocket on how to run their business. He believed a lease should be set up so the citizens do not have to subsidize the operation and there is sufficient return to the City on the investment. He also expressed that the City cannot expect the Fair Association to take care of the entire debt service, but they can take care of the area they lease and there are Charter Officers that can work out the details. Mr. Hartwell explained the reasons he might not support the motion. He would have the City Manager negotiate a fair market value; he would not endorse a lease, he would endorse a license because the City would need to maintain fiduciary oversight; and he believed the 180 day termination clause is needed. Mr. Holmes received clarification that the Fair Association would not be required to submit an operations plan but would still have to go through the permitting process. He then expressed reluctance in tying the hands of future Council, thought a fair income needed to be determined, and the City needed to look at what was done last year. Special Council 11- 21- 06 ABANDONMENT PLAN cont. Mr. Campbell explained he could not support the motion with a five year lease, he would like the City Manager to return with a fair market value for a lease, and he would like the 180 day termination clause to remain. He said he did not want to jeopardize future possibilities of the property, and he could not support to sell it either. He expressed preference for a license agreement rather than a lease. Mr. Minich explained with a lease, rather than a license, the oversight is still there as they go through the process to get a permit for each and every event, and the City makes more money when they do more business. Dr. Pullen moved to amend the motion that the lease could be changed if the operation of the fair were to interfere with the building of the judicial center. Motion died for lack of a second. Mr. Hartwell expressed his preference that the City Manager negotiate a fair market value and to keep the 180 day termination clause. The Mayor called for the vote on the motion and it failed by a vote of 3 to 4 with Patterson, Pullen, and Minich in favor, and Holmes, Campbell, Tucker, and Hartwell opposed. Mr. Tucker moved to direct the City Manager and the City Attorney to take the necessary action to allow the fairground property to be sold to the Northwest Florida Fair Association. Motion died for lack of a second. Mr. Hartwell moved to direct the City Manager to negotiate a license using the date of June 30, 2008 as the termination, and using the fair market value for the base rent, 20% of gross receipts except for Fair income, and 5% of Fair gross income, and to include a 180 day no reason termination clause. Mr. Holmes seconded motion. Mr. Hartwell explained he wished to maintain oversight with a license, and thought the 180 day termination clause is needed as something may come up that they have no control over. Mr. Holmes agreed with a three year period and the 180 day termination clause. Mr. Minich moved to amend the motion by deleting June 30, 2008 termination date and substituting " three years from the date signed." Mr. Patterson seconded amendment. Mr. Tucker expressed his hope that future Council will not carry the debt burden on the backs of the citizens. The Mayor called for the vote on the amendment to the motion and it carried unanimously with Holmes, Patterson, Campbell, Tucker, Pullen, Hartwell, and Minich in favor. Dr. Pullen requested the City Attorney to explain the difference between a license and a lease. The City Attorney explained the difference is the ability to terminate their right to use the property, and a lease would give them a guaranteed right. Mr. Holmes agreed the permitting process should go through the City Manager but did not agree that every event that goes on out there needs to be approved by Council, and he would like it changed so Council would not have to approve every event. He noted the motion is to direct the City Manager to come up with a fair market value and they will give the City 20% of the profit and commented the Fair Association has to make money. He thought the City Manager should be given direction that the City will enter into a license and see what they can negotiate because it will have to come back to Council for final approval. Special Council 11- 21- 06 ABANDONMENT PLAN cont. Mr. Campbell agreed that 20% is too high if they use fair market value. He commented if they are going to keep the 180 days termination clause that the Fair Association should be given latitude as he did not think 180 days is enough time. Mr. Minich did not object to asking the Fair Association to pay fair market value but disagreed with adding the 20% of the profits. The City Attorney explained that the fair market value can be determined by the income approach, land lease value, or compensation, and another way to handle the operation plan is to require a quarterly report that is income related rather than activity related. Mr. Minich moved to amend the motion to delete the 20% of the gross income and 5% of Fair gross income. Mr. Tucker seconded motion, and it carried unanimously with Holmes, Patterson, Campbell, Tucker, Pullen, Hartwell, and Minich in favor. The Mayor called for the vote on the motion, as amended, to direct the City Manager to negotiate a license with the Fair Association to terminate three years from the date signed, using the fair market value, and to include a 180 day no reason termination clause and it carried unanimously with Holmes, Patterson, Campbell, Tucker, Pullen, Hartwell, and Minich in favor. FAIR ASSOCIATION 2007 OPERATIONS PLAN Consideration of a request to approve the 2007 Operations Plan for the Northwest Florida Fair Association. Mr. Minich moved to table the 2007 Operations Plan. Mr. Tucker seconded motion and it carried unanimously with Holmes, Patterson, Campbell, Tucker, Pullen, Hartwell, and Minich in favor. It was noted that the events for December can be addressed at the next regular Council meeting. ADJOURNMENT The meeting adjourned at 6: 55 p. m.