Fiscal Note
Initial annual rent for year 2008 of $10,925.38 will be deposited into Account No. GN01-78220. Rent for the period though December 31, 2021 shall be adjusted annually based on the change in the Consumer Price Index. Effective January 1, 2022, rent shall be equal to 3% of the market value of the Leased Premises, based on the per square foot land value of the Owner's Property as fixed by the City Assessor as of December 1, 2021. Rent shall increase each 5-year period thereafter by 5%.
Title
Authorizing the Mayor and City Clerk to execute a Subterranean Lease with Pinckney Investment Group, LLC, the owner of property located at 1 South Pinckney Street, to accommodate the existing encroachments of a subterranean parking structure and subterranean office, storage and mechanical spaces into the South Pinckney Street, East Washington Avenue, and South Webster Street public rights-of-way; and authorizing the Mayor and City Clerk to execute a Notice of Termination of Leases pertaining to two existing leases for such subterranean encroachments.
Body
WHEREAS, Pinckney Investment Group, LLC (the "Owner") is the new owner of certain property located at 1 South Pinckney Street, commonly known as U.S. Bank Plaza (the "Owner's Property"); and
WHEREAS, the City and the Owner (as successor-in-interest to First Wisconsin National Bank of Madison) are parties to a certain unrecorded Subterranean Lease Agreement dated September 1, 1972, a memorandum of which was recorded in the office of the Register of Deeds for Dane County, Wisconsin, on January 9, 2008, as Document Number 4387395 (the "1972 Lease"); and
WHEREAS, the 1972 Lease pertains to subterranean premises within the East Washington Avenue, South Pinckney Street and South Webster Street public rights-of-way described below as "Lease Area 1" and depicted on attached Exhibit A; and
WHEREAS, the City and the Owner (as successor-in-interest to First Wisconsin National Bank of Madison) are also parties to a certain Subterranean Lease Agreement dated September 18, 1984, and recorded October 16, 1984 with the Dane County Register of Deeds as Document Number 1854917 (the "1984 Lease"); and
WHEREAS, the 1984 Lease pertains to subterranean premises within the South Webster Street public right-of-way more particularly described below as "Lease Area 2" and depicted on Exhibit A; and
WHEREAS, the 1972 Lease and the 1984 Lease (hereinafter, collectively referred to as the "Prior Leases") are scheduled to expire on August 31, 2021 and August 31, 2034, respectively; and
WHEREAS, in connection with its recent purchase of the Property, the Owner has requested that the City consolidate the Prior Leases into a single lease and grant a new 50-year term; and
WHEREAS, the Owner and the City's Real Estate Section have renegotiated the terms and conditions of the Prior Leases and have agreed to terminate the Prior Leases and to enter into a new lease in accordance with Wisconsin Statutes Section 66.0915(4).
WHEREAS, the City Attorney's office has reviewed and approved the Subterranean Lease as to form.
NOW THEREFORE BE IT RESOLVED that the Mayor and City Clerk are authorized to execute a Subterranean Lease ("Lease") with the Owner, Pinckney Investment Group, LLC, to accommodate the existing encroachments of a subterranean parking structure and subterranean office, storage and mechanical spaces into portions of the South Pinckney Street, East Washington Avenue, and South Webster Street public rights-of-way, subject to the following terms and conditions:
1. The "Leased Premises" shall consist of approximately 9,787 square feet of subterranean space, as described below and depicted on Exhibit A. The Leased Premises are contiguous to or connected with the Owner's Property
2. The term of the Lease shall be for a period of approximately 50 years, commencing as of January 2, 2008 (the "Effective Date") and expiring on December 31, 2057. The Owner shall have the option to renew the Lease for an additional term of 49 years.
3. Rent payable for the period from January 2, 2008 through December 31, 2021 shall be calculated using the formula established under the Prior Leases. Such formula provides that the annual rent is determined by multiplying the prior year's rent by the percentage of change in the Consumer Price Index for All Urban Consumers, All Items, U.S. City Average (1982-84 = 100) published by the Bureau of Labor Statistics of the U.S. Department of Labor, or any successor or substitute index appropriately adjusted ("CPI") during such prior year, using annual averages. Total rent payable for calendar year 2008 has been calculated as $10,925.38.
4. Annual Rent payable for the period from January 1, 2022 through December 31, 2057 shall be equal to three percent (3%) of the market value of the Leased Premises, based on the per square foot land value of the Owner's Property as fixed by the City Assessor as of December 1, 2021.
5. Beginning on January 1, 2027 and on the anniversary of each subsequent five (5) year period throughout the term of this Lease and any renewal term, the rent shall increase by five percent (5%) per five (5) year period.
6. In the event the Owner's Property becomes tax-exempt, rent shall be calculated based on the last annual assessed land value of the Owner's Property prior to it becoming tax-exempt.
7. The Owner shall be permitted to sell, assign, transfer, sublease, mortgage, pledge, encumber, grant and convey its interests in the Lease and the improvements located on the Leased Premises (which actions are collectively referred to herein as "Transfers"), but only if such Transfer is made simultaneously with the Transfer of the Owner's Property to the same purchaser or transferee of the Lease and the improvements located on the Leased Premises.
8. No further construction, modification, improvement, alteration, or remodeling of the Leased Premises shall be undertaken without prior written approval of the City's Real Estate Section, and any plans for any of the same are subject to written approval of the City's Real Estate Section. In all cases, the Owner is responsible for following all applicable ordinances, codes, statutes, and laws, and obtaining all permits required for any construction activity.
9. The City shall have no responsibility or liability for any maintenance of the Leased Premises or improvements in the Leased Premises and the City shall have no responsibility or liability for any damage to the Leased Premises, improvements, facilities or contents, caused by moisture or water in any manner, and the Owner shall hold the City harmless therefrom.
10. Upon the expiration or termination of the Lease, the Owner, at its sole cost, shall remove the improvements from the Leased Premises, including removal of the Vault in accordance with MGO 10.31(4). The City may waive or alter this removal requirement at its sole discretion.
11. The Owner shall be required to carry commercial general liability insurance including contractual liability with no less than the following limits of liability, as may be adjusted, from time to time, by the City's Risk Manager: bodily injury, death and property damage of $5,000,000 per occurrence.
12. The Owner shall be liable to and shall agree to indemnify, defend and hold harmless the City, and its officers, officials, agents, and employees, against all loss or expense (including liability costs and attorney's fees) by reason of any claim or suit, or of liability imposed by law upon the City or its officers, officials, agents, or employees for damages because of bodily injury, including death at any time resulting therefrom, sustained by any person or persons or on account of damages to property, including loss of use thereof, arising from, in connection with, caused by or resulting from the acts or omissions of the Owner or its officials, officers, agents, employees, assigns, guests, invitees, sublessees or subcontractors, in the performance of this Lease, whether caused by or contributed to by the negligence of the City, its officers, officials, agents, or employees.
13. The Owner shall represent and warrant that its use of the Leased Premises will not generate any hazardous substance, and it will not store or dispose on the Leased Premises nor transport to or over the Leased Premises any hazardous substance in violation of any applicable federal, state or local law, regulation or rule. The Owner shall further agree to hold the City harmless from and indemnify the City against any release of such hazardous substance and any damage, loss, or expense or liability resulting from such release including all attorneys' fees, costs and penalties incurred as a result thereof except any release caused by the sole negligence or intentional acts of the City, its employees or agents. "Hazardous substance" shall be interpreted broadly to mean any substance or material defined or designated as hazardous or toxic waste, hazardous or toxic material, hazardous or toxic radioactive substance, or other similar term by any federal, state or local environmental law, regulation or rule presently in effect or promulgated in the future, as such laws, regulations or rules may be amended from time to time; and it shall be interpreted to include, but not be limited to, any substance which after release into the environment will or may reasonably be anticipated to cause sickness, death or disease or damage to or loss of use of real or personal property.
14. The City shall have the right to terminate the Lease upon 30 days written notice in the event of the Owner's default or upon 180 days written notice in the event the Leased Premises are needed for any public use or purpose.
15. The Owner shall have the right, at its sole option, to terminate the Lease upon 180 days written notice.
BE IT FURTHER RESOLVED that the Mayor and City Clerk are authorized to execute a Notice of Termination of Leases with Pinckney Investment Group, LLC, terminating as of midnight on January 1, 2008 that certain unrecorded Subterranean Lease Agreement dated September 1, 1972, a memorandum of which was recorded in the office of the Register of Deeds for Dane County, Wisconsin, on January 9, 2008, as Document Number 4387395, and that certain Subterranean Lease Agreement dated September 18, 1984, and recorded October 16, 1984 with the Dane County Register of Deeds as Document Number 1854917.
Description of the Leased Premises
Lease Area 1 (9,072 sq. ft.):
Part of South Pinckney Street, East Washington Avenue and South Webster Street adjacent to Block 102 of the Original Plat, City of Madison, Dane County, Wisconsin and being more fully described as follows:
Beginning at the most Westerly corner of said Block 102; thence S45º02'30"E, along the Southwest line of said Block 102, 218.1 feet; thence S45º00'W, 13.6 feet; thence N45º02'30"W, 218.1 feet; thence N00º08'37"E, 23.96 feet; thence N45º00'E, 253.1 feet; thence N87º50'06"E, 23.05 feet; thence S45º02'30"E, 218.1 feet; thence S45º00'W, 7.15 feet to the Northeast line of said Block 102; thence N45º02'30"W, along said Northeast line of said Block 102, 218.1 feet to the most Northerly corner thereof; thence S45º00'W, along the Northwest line of said Block 102, 265.0 feet to the point of beginning.
Notes:
1. The top of the above-described encroachment is 1.0 foot below existing sidewalk elevations and the bottom is at elevation 40.75 based on Madison City datum.
2. Lease Area 1 is identified as "Parcel F" on that certain ALTA/ACSC Land Title Survey prepared by Wayne D. Barsness, dated 12/3/07, FN: 07-02-143, attached as Exhibit A.
Lease Area 2 (715 sq. ft):
A parcel of land being part of South Webster Street along the Northeasterly line of Block 102, Original Plat, City of Madison, Dane County, Wisconsin, and being more fully described as follows:
Commencing at the most Easterly corner of said Block 102; thence along the Northeasterly line of said Block 102, N45º04'21"W, 17.92 feet to the point of beginning; thence continuing along said Northeasterly line N45º04'21"W, 95.56 feet; thence N44º55'39"E, 7.48 feet; thence S45º04'21"E, 95.56 feet; thence S44º55'39"W, 7.48 feet to the point of beginning.
Notes:
1. The top of the above-described encroachment is 1.0 foot below existing sidewalk elevations and the bottom is at elevation 35.00 based on Madison City datum.
2. Lease Area 2 is identified as "Parcel E" on that certain ALTA/ACSC Land Title Survey prepared by Wayne D. Barsness, dated 12/3/07, FN: 07-02-143, attached as Exhibit A.