What you need to know about the YMCA Lease
On Monday March 11th, the Pensacola City Council will be presented with a lease that has been defined as a “work in progress” by City Attorney Jim Messer. The lease is a proposed agreement between the current leaseholder for the Maritime Park, the Community Maritime Park Associates, Inc. (CMPA), and proposed subleasee, the Young Men’s Christian Association (YMCA) of Northwest Florida, Inc. The lease includes signature lines for CMPA chairman Collier Merrill, Mayor Ashton Hayward, Council President P.C. Wu. and YMCA Chief Executive Officer Michael Bodenhausen. However, the CMPA has been bypassed in their role as the lease holder. As a result, we have been presented with a flawed lease that is not backed up by any details of the proposed use of the land. In addition, the presentation is procedurally improper and ill-timed.
Lease Holder Gets No Say in Sublease?
The lease has not been approved or even discussed by this body. In fact, it is unclear how the chairman of the organization would be empowered to sign the lease without a vote of the CMPA board. According to our City Attorney, the CMPA never expressed an interest in discussing or being involved in the process. I have spoken to several CMPA board members who are very interested in discussing this lease and many of them spoke during the last CMPA meeting. Unfortunately, this organization has been bypassed in favor of bringing the item directly to council. The master lease and subsequent omnibus amendment to the master lease is clear in that the CMPA is the leasee for the park. In the business world, how can a lease holder not have a say in the sublease?
Not Utilizing Our Agent
According to the language in the governing omnibus amendment, the “CMPA shall have no interest in the Private Improvements on the Leased Property and, except as contemplated in the Site Improvement Project, shall not be responsible for any costs of development, construction, operation or maintenance, including taxes and insurance, with respect to the Private Improvements. It shall, instead, act as agent of the City in making such portions available to developers of the Private Improvements on terms subject to approval of the city. All amounts paid by such developers or sublesses for use of the Private Improvements or the land on which they are situate shall be paid to the city.” In other words, the CMPA receives none of the funding from private improvements, but they are responsible for making these parcels available and acting as the city’s agent. In the current instance, not only were they not employed as our agent, they weren’t even asked about the lease until after it was drafted. So the council will consider the lease without any recommendation from its agent.
The staff member assigned to the CMPA, Ed Spears did not even receive a copy of the lease until March 6th. After reviewing, he made several corrections and suggestions. In a string of emails, several of his corrections are noted as legitimate, but in the words of Stephanie Tillery, “Ed’s comments 5, 8, 10, and 11 are correct. There are other such mistakes identified by Mandy and John Daniel in the sublease to be corrected also. However, until the COW, we are keeping one draft (the one in the agenda).” So we aren’t even being provided with a reviewed and corrected copy.
No Points for Presentation
The manner in which the lease is being provided to us is also questionable. We have a new item on our agenda called “Attorney Communications and Actions.” This places responsibility for this item in the hands of our attorney who has already informed us that he will not advise us on procedural matters. I have spoken with Mr. Messer directly, and I am still not sure what desired action is being proposed. We have no formal recommendation from the mayor at this time. This item should not be on our agenda and the council president ultimately should have represented the council and not allowed it to be included.
No Details or Due Diligence
Along with the procedural problems, we also have a tremendous due diligence problem. At this point, we have no backup information on the proposal by the YMCA. Instead, the lease proposes that we provide the YMCA with an alleged $1.8 to $1.9 million (appraisal conducted but not provided to the council members) valued property for $1.96 per square foot per year for the next 40 years. In return, the YMCA must spend at least $10,000,000 and construct a building that is at least 40,000 square feet. We have no plans or even proposed plans for the facility. We have no idea how many jobs this will create or what possible economic impact it will have. The issue of parking is vague in the lease and no plan is provided. With any private development, we would ask such questions. We would require such projections in return for any incentives. The YMCA already receives the incentive that it does not pay any property or sales tax. We have been provided with nothing formal on the proposed new YMCA.
Marketing the Maritime Park: Coldwell Banker Richard Ellis
This week, the council received news that the Mayor is working with an international firm, Coldwell Banker Richard Ellis (CBRE), that will be helping the city to market and dispose of city owned property. In my meeting with the Mayor this week, he told me a top priority for CBRE will be the marketing of the Maritime Park properties. This is long overdue. The firm will be here next week to meet with staff and council members to discuss expectations and collect information. I look forward to meeting with them as we take the right steps to truly market these properties. This process should help to clarify the appropriate uses for each property. Any decision on the current lease proposed with the YMCA should be delayed until after this group provides us with recommendations. I applaud the Mayor for engaging this group for our city.
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