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HomeMy WebLinkAbout13-033 Transfer of the Golf Course Lease to Gabriel Tonan Golf Shop LLC Resolution 13-033 Transfer of Golf Course Lease Page 1 of 2 RESOLUTION NO. 13-033 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PORT TOWNSEND, WASHINGTON PROVIDING CONDITIONAL APPROVAL TO A TRANSFER OF THE GOLF COURSE LEASE TO GABRIEL TONAN GOLF SHOP, LLC RECITALS: A. Since 1987, the City has leased the golf course to Mike Early Golf Shops, LLC ("Early"). The current Lease Agreement runs from September 20, 2005 to December 31, 2015, with one five-year renewal (the "Lease Agreement"). B. Early requests City approval to transfer the Lease Agreement to Gabriel Tonan Golf Shop, LLC ("Tonan") as part of a purchase and sale of Early's business to Tonan. C. The Lease Agreement provides that an assignment requires City consent, which would be "evidenced by a City Council Resolution and the signature of the City Manager, which consent shall not be unreasonably withheld." The lease provides that on a proposed transfer Early shall provide the City with information on the transferee: Information the City will need to conduct its due diligence and review includes: golf course experience of assignee, transferee, sublessee; ownership of proposed ...transferee ... (including principals); history of suits and acclaims; five years of year-end financial statements prepared and certified by a certified public accountant, including latest balance sheet and income statement. D. Gabriel Tonan has worked with Early since the late 1990s. Early and Tonan represent Tonan has learned the golf business, including how to merchandise, run tournaments independently, use equipment in connection with the golf course, and that he knows the members of the Port Townsend Golf Course and has a good relationship with them. E. The City Manager recommends City approval of the lease transfer, subject to the following: 1. The City would enter into a new lease with Tonan, with no rights in the lease or recourse to Early. Any lease issues (including a potential default in lease terms) would be solely a matter between Tonan and the City, and Early would have no further rights or responsibilities under the lease. In other words, Early would have no right to resume the lease in the event Tonan defaulted on the lease to the City or defaulted on his purchase and sale agreement with Early. (Early would have the right in the event of default by Tonan to take back the equipment—mowers, etc. - that Early owns and is selling to Tonan.) Resolution 13-033 Transfer of Golf Course Lease Page 2 of 2 2. There would be walk-through of the premises with City representatives and Tonan to ascertain conditions and make sure there is a clear understanding of lessor and lessee responsibilities under the Lease Agreement. 3. There would be an independent financial review (`due diligence") of the purchase and sale between Early and Tonan to ascertain if the sale compromises the lessee's obligations under the Lease Agreement to the City F. Since Tonan has been involved with the course for a number of years, and the transfer largely maintains the status quo, the City Council determines it is reasonable to approve the transfer, subject to the conditions set forth above. NOW,THEREFORE, BE IT RESOLVED by the City Council of the City of Port Townsend as follows: 1. The City Council approves the transfer of the Lease Agreement with Mike Early Golf Shops, LLC to Gabriel Tonan Golf Shop, LLC subject to following: a. The City would enter into a new lease with Tonan, with no rights in the lease or recourse to Early. b. There would be walk-through of the premises with City representatives and Tonan to ascertain conditions and make sure there is a clear understanding of lessor and lessee responsibilities under the Lease Agreement. C. There would be an independent financial review(`due diligence") of the purchase and sale between Early and Tonan to ascertain if the sale compromises the lessee's obligations under the Lease Agreement to the City 2. The City Manager is authorized to sign necessary documents to effect the transfer so long as he is satisfied the conditions have been met. ADOPTED by the City Council of the City of Port Townsend at a regular meeting thereof, held this 18th day of November 2013. C Davi King, Mayor Attest: Approved as to}corm: 2 Pamela Kolacy, MMC '± John P. Watts City Clerk '' City Attorney