Fiscal Note
No additional City appropriation required. The current rent schedule for the property began in 2012 starting at $4,500 with a two percent (2%) increase in each year thereafter. The first amendment to the ground lease rent schedule authorized in file 69489 and subsequently amended by file 74045 was not executed between the City and the Lessee due to construction delays for property improvements. According to the attached revised rent schedule, the ground lease amount will be $6,403 in 2025 based on currently-planned property improvements, and it will increase by two percent (2%) each year starting in 2026, resulting in an annual increase of approximately $466 in the first year.
Title
Amending Resolution 22-00745 Authorizing the First Amendment to Ground Lease for the residential structure located at 704 East Gorham Street, within James Madison Park, and authorizing an access easement over a portion of the City’s property at 728 East Gorham Street. (District 6)
Body
WHEREAS, on April 4, 2012, the City of Madison Common Council approved Resolution RES-12-00247 (Legistar #25054), accepting a proposal from Bob Klebba and David Waugh (collectively, the “Lessees”) for the purchase of the residential structure located 704 East Gorham Street, commonly known as the Collins House (the “Property”) and authorized staff to negotiate the final terms for the sale of residential structure and a lease of the land beneath it (the “Ground Lease”); and,
WHEREAS, on September 14, 2012, by Bill of Sale (Doc. #4913197) and Ground Lease (Doc. #4913196) the City sold the improvements and leased the land to the Lessees, the Ground Lease being attached hereto and incorporated herein; and,
WHEREAS, the Lessees wish to make certain improvements (“Improvements”) to the Property, including a reconfiguration of the access to the Property from N. Blount Street across an existing right-of-way (the “Lincoln School Access Drive”) over the City’s property located at 728 E. Gorham Street. The City granted the existing right-of-way over its property to the lessee of the property located at 720 E. Gorham St. (“Lincoln School Lessees”) in 1985 (Doc. #1872438), which Right-of-Way Agreement includes a condition reserving the right of the City to grant to the Lessees a right to use the portion of the Lincoln School Access Drive abutting the Property, subject to the Lessees entering into a Joint Driveway Agreement with Lincoln School Lessees; and,
WHEREAS, the Council has previously approved amendments to the Ground Lease in RES-22-00139 (Legistar #69489) and RES-22-00745 (Legistar #74045), and Lessees have received approvals to make improvements to the Property including the receipt of a Conditional Use Permit and Certificate of Appropriateness as required by Madison General Ordinances; and,
WHEREAS, Lessees have experienced construction delays that will not allow them to commence construction of the Improvements until late 2024. In addition, Lessees’ have reduced the overall size and impact of the Improvements upon the Property from what was initially authorized in the previously approved amendments to the Ground Lease for the Property; and,
WHEREAS, these delays will not allow Lessees realize increased revenue from these Improvements to the Property until 2026; and,
WHEREAS, the Lessees have previously agreed to a commensurate increase in the Ground Lease Rent Schedule (the “Revised Rent Schedule”), shown as Exhibit C in the attached Ground Lease; and,
WHEREAS, the Lessees have requested that the commensurate increase in the Revised Rent Schedule be delayed for one year so they can complete the Improvements and begin to realize income from said improvements; and,
WHEREAS, Lessees and City have not executed an amendment to memorialize the Revised Rent Schedule, therefore, this will remain the First Amendment to Ground Lease; and,
WHEREAS, the Improvements contemplated by the Lessees include new parking spaces that will be accessed off of the Lincoln School Access Drive. Consistent with the terms of the existing Right-of-Way Agreement, and subject to the new Joint Driveway Agreement executed between the Lincoln School Lessees and the Lessees on August 17, 2024, it is appropriate for the City to grant Lessees an access easement over a portion of the City’s property at 728 E. Gorham St.
NOW, THEREFORE, BE IT RESOLVED that the Mayor and City Clerk are authorized to execute a First Amendment to Ground Lease with Lessees, or their successors and assignees, substantially, though not exclusively, on the terms and conditions attached hereto;
BE IT FURTHER RESOLVED that the Ground Lease rent schedule shall be increased to the amounts shown in the attached Revised Rent Schedule;
BE IT FURTHER RESOLVED that, consistent with the terms of the existing right-of-way, and pursuant to the executed Joint Driveway Agreement , the City hereby grants an Access Easement (the “Access Easement”) to the Lessees, or their successors and assignees, as shown on the attached documentation;
BE IT FURTHER RESOLVED that the City’s Common Council hereby authorizes the Mayor and City Clerk to execute, deliver and record the First Amendment to Ground Lease and Access Easement and take any further action required to accomplish the purpose of this resolution in a form approved by the City Attorney.