Okaloosa County BOCC — March 15, 2016 — Approval of Lease Amendment Surfside Ventures — agenda request

BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST DATE: March 15, 2016 TO: Honorable Chairman and Members of the Board FROM: Rick Owen SUBJECT: Approval of Lease Amendment Surfside Ventures DEPARTMENT: County Administrator BCC DISTRICT: All STATEMENT OF ISSUE: Staff requests the approval of the Sixth Amendment to the Public Park Lease between Okaloosa County and Surfside Ventures, Inc. BACKGROUND AND ANALYSIS: In 1992, the County entered into a lease with Paradise Parks, Inc. which was the predecessor of the current Lessee, Surfside Ventures, Inc. The property which is subject to the lease is the Boardwalk on Okaloosa Island. The initial term of the lease was for 25 years with an annual rental amount of $57,612. Over the years, the lease has been amended on five occasions addressing a variety of issues. Through these various amendments and rent adjustments, the current term for the lease would expire on December 31, 2029 and the current rental amount is $71,740.18. Though adjustments to the lease amount have been made over the years, the annual amount is no longer reflective of fair market rental value for similar properties. As a result, discussions between the County and the Lessee have occurred and an adjustment of the lease has been proposed which would increase the annual rental amount to an amount more consistent with the fair market rental value of the property and in exchange for the increase in the rental amount, an extension of the term of the lease would be granted. Under the proposal, the annual rental amount would be increased from $71,740.18 to $250,000 beginning for the annual term of January 1, 2017 to December 31, 2017 and for the four years thereafter. After those five years, the annual rental amount would increase annually by 2% for the next five years, increase annually by 3% for the next five years, and annually increase 3.5% for the remainder of the term of the lease. The term of the lease would also be extended from its current expiration date of December 31, 2029 until December 31, 2039. The approval of the Sixth Amendment to the Public Park Lease between Okaloosa County and Surfside Ventures, Inc. would increase the annual rent to an amount which is more consistent with the fair rental value of the property and would provide a long term dedicated revenue stream that could be utilized for other County purposes. OPTIONS: Approve/Disapprove the Sixth Amendment to Public Park Lease between Okaloosa County and Surfside Ventures, Inc. RECOMMENDATION: Staff recommends the approval of the Sixth Amendment to the Public Park Lease between Okaloosa County and Surfside Ventures, Inc. RECOMMENDED BY: APPROVED BY: John Hofstad, County Administrator