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HomeMy WebLinkAbout1993-073 Intent Letter-Billings LETTER OF INTENT August 18, 1993 Re: Proposed Lease of Billings Property to the City of Ashland For Golf Course Purposes The purpose of this letter is to outline the manner in which the members of the John Billings Family ("Billings Family") propose to lease property which they now own to the City of Ashland ("City") for the construction of a municipal golf course. The parties recognize that this transaction will require further documentation and approvals. Nevertheless, the parties execute this letter to evidence their intention to proceed in mutual good faith to complete the work necessary to negotiate a lease agreement and associated documents consistent with this letter. The proposed obligations of the parties, terms and conditions of lease, and other expected contingencies, include but are not limited to the following: I. Acquisition of Loegel Property. The City will acquire title to the approximately 12 acres immediately adjacent to the Billings property, presently owned by the Loegel Family. During the term of the lease by the Billings Family to the City of Ashland, and during any extension or renewal of such lease, the Billings Family shall have a right to purchase the Loegel property from the City of Ashland for its then fair market value. If the Billings Family elects to exercise this option they shall give written notice to the City of Ashland stating their desire to purchase. The parties shall then negotiate in good faith to determine a fair market value for the property. If the parties cannot agree on the determination of a fair market value within sixty (60) days of the notice from the Billings Family, they shall mutually agree upon the selection of an appraiser practicing in Jackson County, Oregon to appraise the property as of the date of the exercise of the option, and the report of the appraiser shall be final and binding on both parties. Once the valuation is established by agreement or appraisal, the Billings Family shall have ninety (90) days from the establishment of the value within which to pay for the property in cash. If the Billings Family is unable to exercise the option within that period of time, the valuation established by the parties shall no longer be binding and the Billings Family will have to issue new notice and enter into a new determination of value prior to exercising the option. Notice provided by the Billings Family pursuant to this option shall be timely if given during the original term of the lease or any subsequent renewal thereof. Should the Billings Family purchase the property, the City shall have the right to lease the property for the golf course under the same terms and conditions as the lease described in paragraph VIII with base rental to be in proportion to the base rental paid for the Billings property comparing the sizes of the two properties. PAGE i-LETTER OF INTENT Q,:l~rks\billings.ffd) II. Aqreement with Jackson County. A portion of the proposed golf course is presently owned by Jackson County. City will obtain title to the property for recreational uses. The Billings Family will grant a pedestrian and bikepath easement to Jackson County for the Bear Creek Greenway project at the northeast corner of the property to be leased by the City. Both parties agree to proceed in mutual good faith to ensure that the County property will be available for use as a portion of the golf course for so long as the property is occupied and utilized as a public golf course. III. Land Lease. The golf course will consist of the Billings property of approximately 130 acres, the Loegel Property of approximately 12 acres, and that portion of the County property determined to be necessary for development of a championship class golf course consisting of approximately seven to ten acres. The Billings Family will lease its entire acreage to the City of Ashland, and the City will develop the acreage as a municipal golf course and driving range with associated facilities. Excluded from the lease will be the 15 acre parcel owned by the Billings which is located within the Ashland City limits and a parcel of approximately 5 acres surrounding the Billings Family homestead. City shall release from the lease that part of the property fronting on Highway 99 located to the South of Jackson Road determined by the City, through advice from its architect, not to be necessary for development of a championship class golf course. For purposes of this section, City shall draft written instructions to the architect, for approval by the Billings Family, which approval shall not be unreasonably withheld, as to what matters the architect shall consider in utilizing this portion of the property in the design of the course. A. Term. The term of the lease shall be fifty (50) years, commencing upon execution of the lease. The City shall have the option to renew the lease for two additional 25 year terms. The City shall have a right of first refusal to purchase the property in the event that the Billings Family offers it for sale. The Billings Family shall have a right of first refusal to purchase the operating rights in the golf course in the event that the City elects to cease operation of the golf course. City reserves the right to contract out the operation of the golf course to a private firm or enterprise. At the conclusion of the lease term, all greens, tees, irrigation systems, and other permanent improvements to the land or buildings shall remain in place for the benefit of the Billings Family. Golf carts, golf course equipment and furnishings shall not revert to the Billings Family at the end of the lease B. Rental. Upon execution of a contract for the construction of the golf course and subsequent commencement of construction, the City will begin payment of a monthly base rental of $1,000.00 per month. This base rental shall PAGE 2-LETTER OF INTENT (l~:l~:,,k,~\billi,~g,~.ml) increase to $3,000.00 per month when course play begins. This base rental shall be adjusted annually to equal changes in the Consumer Price Index (All Urban Consumers (CPI-U), for Portland, Oregon). In addition, once course play begins, the City shall pay additional rent to the Billings Family equal to one percent (1%) of the annual gross receipts received by the City from all revenue producing activities on the property in the following manner: When course play begins, the city shall estimate the total gross receipts until the following September and divide the estimate by the number of months until such September. The quotient shall be the amount added to all other monthly payments paid to the Billings Family. When such September arrives, the actual gross receipts for the preceding months shall be calculated. If this calculation is more than the actual amount paid by the City then the difference shall be paid by the City to the Billings Family at time of next monthly payment. If the calculation is less than the actual amount paid, then the difference shall be credited to City on next monthly payment or payments. For each succeeding year, beginning in September, the gross receipts shall be estimated and the percentage monthly payment and September adjustments made as provided above. If, after the second year of operation, the base rental plus the one percent of gross receipts plus the amount paid for water as described in paragraph VI do not equal $6,000.00 per month, the City shall make an additional monthly payment to the Billings Family so that the amount received shall be a minimum of $6,000.00 per month. The lease will terminate and all property shall revert to the exclusive control of the Billings Family in the event that the City of Ashland ceases to operate a municipal golf course on the site for a period of more than six (6) months or notifies the Billings Family of its intention to discontinue the operation of the golf course. Nothing in this paragraph, however, shall be construed to restrict the City's right to contract out the operation of the golf course to a private firm or enterprise. Nor shall this paragraph apply to a termination of the operation of the golf course of less than 18 months if such termination is caused by an act of God. In such case, rent shall be abated during the period of inoperation. If City is able to continue operation on nine holes of the course, then all rents shall apply, except that only one-half of the base rent shall be due. C. Government Approvals. The lease shall require the City at its expense to obtain all necessary governmental permits and zone changes, or other legal authorizations required for the operation of the golf course. D. Course Standards. The City agrees to construct and maintain a championship class golf course, together with a driving range, pro shop, and clubhouse and restaurant. For PAGE 3-LETTER OF INTENT those portions of the golf course within the immediate vicinity of the 15 acre parcel owned by the Billings Family in the Ashland City limits, the parcel of approximately 5 acres surrounding the Billings Family homestead and any of the frontage property determined by the architect not to be necessary for the course as provided in paragraph III above, the Billings Family shall have the right to approve the design of the course as it relates to aesthetic and hazardous conditions for these parcels. Such approval by the Billings Family, however, shall not be unreasonably withheld. As to the remainder of the course, the Billings Family shall have the right to be consulted regarding the design and plans for the course. The golf course master plan shall provide necessary access for the delivery of irrigation, power, and sewer to the property retained by the Billings Family and shall provide for burying the power line which crosses the Billings property located within the City limits within ten years of the date of the lease or when construction of the subdivision described in paragraph VII.D is begun, whichever is sooner. E. Additional Buildinqs and Improvements. The City shall not construct any public buildings or facilities other than golf course and related improvements on the leased premises without first obtaining the permission of the Billings Family, which shall not be unreasonably withheld, and shall be required to establish a reasonable rental payable to the Billings for facilities consented to. Any additional facilities shall be incorporated into the base lease by an addendum and shall be subject to the terms and conditions of the base lease. F. Taxes, Maintenance, and Insurance. The lease agreement shall provide for the City to pay any and all maintenance costs, taxes, liens, or other fees chargeable against the property by reason of the operation of the golf course, and the City shall hold the Billings Family harmless from any such liability during the operation of the golf course, except for the negligence of the Billings Family. The City shall qualify the Billings and Loegel properties for special property tax assessment under ORS 321.795 or otherwise avoid the imposition of back taxes on the Billings Family when the property is removed from exclusive farm use zoning. The City shall maintain liability insurance coverage covering the City and the Billings Family with limits to be mutually agreed upon between the parties. G. Reservation of Riqhts. The lease shall provide that the Billings Family will reserve for itself the following property rights as a part of the lease. 1. Any trees and buildings removed during or after construction shall be the property of the Billings Family. PAGE 4-LETTER OF INTENT 2. Prior to commencement of construction, the Billings Family shall have adequate time to liquidate their cow herd, and Lessee shall take all necessary steps to protect the herd during construction. 3. The Billings Family reserves all mineral, oil, gas, and geothermal rights, so long as the removal does not adversely affect the operation, facilities and play of the golf course. 4. Sums received as a result of condemnation proceedings shall all be the property of the Billings Family except for any value attributed to special improvements of the property for a golf course provided for in any award. 5. The Billings Family reserves the rights to all potential electricity which may be generated by use of the water discharged from the dam or dams on the property. The Billings Family will use the water for electrical generation only when it does not affect the irrigation of the golf course or the use of the water by the City as replacement water. The Billings Family agrees to sell to the City such electricity as desired and generated at the same cost as is then paid by the City to Bonneville Power Administration. To the extent practicable, the City shall leave all existing trees on the property, and shall bury any future City power lines crossing the property. To the extent practicable, future power lines accessing the property shall also be buried. IV. Land use approvals. Within 12 months of the date the lease is finalized, the City agrees to initiate the process to include the entire golf course and property retained by the Billings Family for inclusion in its urban growth boundary. Prior to December, 1998, the City agrees to initiate the process to annex the course and property to the City. Both parties acknowledge, however, that the City cannot guarantee the result of these processes nor contractually obligate itself to a predetermination of the issues involved. The Billings Family agrees to cooperate in obtaining the necessary land use approvals, whether from Jackson County or the City of Ashland and, if necessary, to execute all necessary applications and other documentation as record owner of the property. Following approval of Lessee's plans and specifications by the Commission and the building officials, Lessee shall expeditiously apply for all necessary permits and make continued and substantial progress towards permit issuance. Lessee shall commence construction in accordance with plans and specifications approved by the Commission within 60 days following approval by City or County of Lessee's plans and specifications. If required permits are not issued by the appropriate authority within 90 days of approval of plans and specifications by the Commission, City may, upon 30 PAGE 5-LETTER OF INTENT (p:,~,rks\~illin~s.lftl) days written notice to Lessor, terminate this Lease and Lessor shall have no further liability to City under this lease. V. Development Costs. All costs associated with the processing of the land use actions or appeals required to obtain approval for this project, shall be borne by the City, including all master planning, engineering and survey costs, if any. VI. Irrigation. The City proposes to use the existing water rights on the property to irrigate the golf course or to maintain streamflow The City shall pay the Billings Family $12,000.00 per year beginning six months after commencement of construction of the golf course or upon irrigation of grass for the course, whichever occurs sooner, for the use of the Billings Family water rights. Water rights payments under this section shall be adjusted annually to equal changes in the consumer price index (All Urban Consumers) (CPI-U) for Portland Oregon. In the event the city uses treated effluent from its sewer plant, The City shall be obligated to save and indemnify the Billings Family free and harmless from any and all claims of environmental damage resulting from the use of such effluent on the property. VII. Contingencies. This transaction is subject to the fulfillment of the following contingencies: A. Purchase by the City of the Loegel property. B. A written agreement in a form mutually satisfactory to Jackson County, City, and the Billings Family with respect to the use and development of the County's property adjacent to Bear Creek. C. Execution of a written lease agreement in a form mutually satisfactory to the City and the Billings Family, with basic terms as set forth in this letter of intent. D. Consultation with the Billings Family's on the schematic plans for the design of the golf course and location of the driving range, club house and restaurant and other amenities associated with the course. For those portions of the golf course within the immediate vicinity of the 15 acre parcel owned by the Billings Family in the Ashland City limits, the parcel of approximately 5 acres surrounding the Billings Family homestead, and any of the frontage property determined by the architect not to be necessary for the course as provided in paragraph III above the Billings Family shall have the right to approve the design of the course as it relates to aesthetics and hazardous conditions for these parcels. Such approval by the Billings Family, however, shall not be unreasonably withheld. The schematic plan shall provide for the continued delivery of irrigation, electrical power, sewer, and water facilities to those portions of the Billings property retained by the Billings Family. Nothing in this paragraph shall require City to PAGE 6-LETTER OF INTENT provide delivery of irrigation, power, sewer or water not now provided to the Billings property nor require irrigation to be provided to that portion of the Billings property within the City after such property receives subdivision plat approval and construction of the subdivision begins. Any irrigation continued to be provided shall be proportionate to the size of the property it serves compared to the size of the property leased by City. E. Issuance of all necessary land use permits for construc- tion of the golf course. The City may initially process this application as a conditional use permit under existing county zoning, but the City shall commit itself, as provided in paragraph IV, to file and process an urban growth boundary amendment and annexation for the entire property as well. F. Written confirmation from affected state agencies with jurisdiction that the proposed use of the water rights for the Billings property will not result in loss or abandonment of those water rights to the Billings Family. City shall take such steps as are necessary to ensure that the easements for delivery of the water from such water rights shall not be lost or abandoned. G. Confirmation, prior to use of effluent, from all affected agencies with jurisdiction that effluent may be used for irrigation. H. Environmental assessment of the property including wetlands inventory and other environmental, historical or archeological constraints. If such assessment indicates that a material portion of the property would not be available for course development, then City shall have no further obligation for development. I. Approval by Oregon Department of Transportation for adequate access from the state highway to the proposed development. J. Securing by the City of the necessary financing commitments for construction of the golf course. viii. construction Schedule. The parties have agreed to pursue the following schedule for completion of this project: A. Execution of letter of intent. August 18, 1993. B. Completion of a mutually agreed upon definitive lease agreement. September 17, 1993. C. Completion of all other conditions necessary before start of construction within 18 months of the completion of the lease agreement. PAGE 7-LETTER OF INTENT (lXl',~,,-ks\hi]li,'~g.s.lTd) D. Completion of golf course, driving range, clubhouse, restaurant and related amenities within 2½ years of commencement of construction. If not completed within such period of time, City shall commence paying the base rental as if the project were completed. The parties recognize that the above time schedule is subject to change and it represents only an approximate prediction of the timing with which the necessary tasks remaining for completion of this project will be performed. If the City shall have exercised due diligence to obtain the necessary governmental permits, authorizations and financing and such permits, authorizations and financing are not obtained within 48 months of the completion of the lease agreement then either party may terminate their efforts to secure completion of the project upon providing the other party with written notice. Until such termination, the Billings Family agrees not to offer its property or assets to third parties or entertain offers from them, negotiate for the sale or lease of their property to third parties, or make information about the property available to third parties for purposes of sale or lease. Neither party shall issue any press release, advertisement, or public relations information regarding this project prior to the execution of a definitive lease agreement as provided for by this letter of intent. Nothing in this paragraph, however, shall prohibit the City from giving public notice and holding public hearings regarding this letter of intent and the proposed terms of a lease agreement. This letter sets forth the intent of the parties only, and is not binding on the parties, and may not be relied on as the basis for a contract of estoppel or the basis of a claim based on detrimental reliance or any other theory. The parties understand that no party shall be bound until the definitive lease agreement has been negotiated, executed, delivered and approved by the City Council of the City of Ashland and the Billings Family. It is the intent of the parties that this lease will be negotiated and entered into during the month of September, 1993. Any contingencies listed in Section VII which have not been satisfied or waived within this period of time shall be incorporated into th~ l~ase. This agreement is personal to the parties and may not be assigned by any of parties without the express written consent of all other parties. By signing below, the parties indicate their agreement with the basic understandings set forth in this letter of intent and PAGE 8-LETTER OF INTENT signify their intent to proceed in good faith substantially in the manner outlined in this letter. Dated this /~ day of ~_~~ , 1993. "BILLINGS FAMILY" ~ :.' ,~ J~.'~ii~i~s /- Gladys ~. Billings (J~hn S. Billings. ~r. ~.. ~ry~. ~mes [~' ~imothy L. ~ngs, ~/ Virgq~ M.--Lewi~T:.'.- "CITY" At test: ./"~ F~" ....- .. ~ ~ ~~4~~~' . - - Cathy Golden, Mayor Nan Franklin City Recorder PAGE 9-LETTER OF INTENT (p:p:,rks\billings.ffd)