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HomeMy WebLinkAboutHostmark Hospitality Group, Ramada Inn Hotel LeaseLEROY H. REDFERN DAVID R. MASON ROBERT J. DIETER JOHN C. LARSEN STEVEN D. MOORE DONALD B. REDFERN MARK W. FRANSDAL MARK S. ROLINGER BRUCE L. GETTMAN, JR. MICHAEL J. MILLER CHET A. MELLEMA cirraite, q -e27 -°y 1240-120.aooV-C73 REDFERN, MASON, DIETER, LARSEN & MOORE, P.L.C. ATTORNEYS AT LAW 415 CLAY STREET P.O. BOX 627 CEDAR FALLS, IOWA 50613 Mayor and Council Members City of Waterloo, Iowa City Hall 715 Mulberry Street Waterloo, IA 50703 TELEPHONE (319) 277-6830 FACSIMILE (319)277-3531 September 17, 2004 RE: Agreements Relating to the Five Sullivan Brothers Convention Center Dear Mayor and City Council: JAMES B. NEWMAN 1870-1958 WM W. McKINLEY 1926.1981 GEORGE F. NEWMAN 1908-1988 Our office is legal counsel for Hostmark Hospitality Group of Schaumburg, Illinois. Our client has entered into a Purchase and Sale Agreement to acquire the Ramada Inn hotel property in downtown Waterloo. The actual purchaser of the property will be Hostmark's affiliate, Watermark Hotel Equities, LLC, an Iowa limited liability company, which is a single -purpose entity in order to satisfy the requirements of the selected lender. In order to proceed with the purchase as well as the significant investment that will be necessary to upgrade the hotel facilities to the standards of our client, it is necessary to reach an agreement with the City on issues related to the Five Sullivan Brothers Convention Center, i.e., assignment/extension of the lease and parking agreements; improvement of electrical and mechanical systems; allocation of meeting room revenue; and clarification of certain areas of responsibility. The purpose of this letter is to outline our client's understandings with respect to the above-mentioned issues and to secure the City's agreement on those issues so that our client may proceed with the acquisition of the hotel property. Accordingly, our client proposes the following: 1. Assignment of Lease and Parking Agreements. The City of Waterloo ("City") will assign to Hostmark or its affiliate designee ("Hostmark") the existing convention center lease and parking agreement effective on the date Hostmark acquires the hotel property. 2. Extension of Lease and Parking Agreement. The City and Hostmark will work together toward reaching an agreement on an extension of the convention center lease and parking agreement to a date acceptable to both parties. Such an agreement will be negotiated in good faith and entered into as soon as practicable. 3. Improvement of Electrical and Mechanical Systems. Hostmark and the City will enter into an agreement relating to an improvement of the electrical and certain mechanicals for the convention center. The City will pay for the cost of the improvements. The agreement will establish a mechanism for the City to recover the cost of the improvements from the savings realized from lower utility usage resulting from the upgrades. The City will pay the actual utility September 17, 2004 Page 2 bills generated on the center. After the improvements have been installed, Hostmark each month will pay the City for utilities in an amount equal to up to one hundred percent (100°/x) of the four-year historical average of energy units used for the calendar month of the current bill times the then current rate per unit. The actual percentage will be negotiated in good faith by the parties. The difference between the actual monthly utility bills paid by the City and the monthly utility payments made by Hostmark to the City shall be retained by the City as reimbursement for the improvements. Any rebates received from energy/utility companies for improvements to the convention center shall be paid over to the City as reimbursement for the improvements. As soon as the cost savings and rebates have reimbursed the City for such improvements the allocation of future cost savings will be determined by the written agreement entered into between Hostmark and the City. Other than participating in the cost recovery program described in this paragraph 3, Hostmark shall have no responsibility to pay for the electrical/mechanical systems. An agreement implementing this policy will be negotiated in good faith and entered into as soon as practicable. 4. Meeting Room Revenue. In the few instances when Hostmark provides groups with meeting room space at a reduced rate or at no charge as part of an incentive to increase hotel room occupancy, then Hostmark will show on its books a reasonable meeting room charge by allocating to such charge a portion of the revenue generated from each hotel room occupied by the benefiting group or organization. The City will have access to the books and records of Hostmark in order to verify that such allocations have been made. An agreement implementing this policy will be negotiated in good faith and entered into as soon as practicable. 5. Areas of Responsibility. With respect to mechanical, plumbing and other equipment systems in the convention center, all cleaning and general maintenance items shall be the responsibility of Hostmark and all replacements and repairs shall be the responsibility of the City. An agreement implementing this policy will be negotiated in good faith and entered into as soon as practicable. We would appreciate the City indicating its acceptance of the terms of this letter of intent by countersigning this letter of intent and returning one signed original to the undersigned. Upon receipt of the countersigned letter of intent, our client will move ahead as swiftly as possible in order to enter into agreements necessary or convenient to carry out the terms specified herein as well as to deal with other issues that may arise in the process. Thank you for your consideration. Very truly yours, REDFERN, MASON, DIETER, LARSEN & MOORE, P.L.C. By David R. Mason DRM/mjd c: L. W. Hawkey, Jr. September 17, 2004 Page 3 �-h Accepted on this �7 day of September, 2004. CITY OF WATERLOO, IOWA By:/a Timoth77.11:1 , Mayor By: NancyEckert it Clerk Y Mayor TIMOTHY J. IURLEY CITY OF WATERLOO, IOWA CITY CLERK AND FINANCE DEPARTMENT 715 Mulberry St. • Waterloo, IA 50703 • (319) 291-4323 Fax (319) 291-4571 NANCY ECKERT • City Clerk MICHELLE WEIDNER, CPA • Chief Financial Officer September 29, 2004 COUNCIL. Mr. David Mason MEMBERS Redfern, Mason, Dieter, Larsen & Moore P.O. Box 627 REG]NALD A. Cedar Falls, IA 50613 SCIIMI T w°rt I Dear Mr. Mason: CAROLYN COLE Warn 2 BUCK CLARK Wart 3 JOHN A. KINCAID War/ 4 RON WELPER Was/ 5 13013 GREENWOOD At- La iNe ERIC GUNDERSON it t-LmNe Enclosed please find one signed original agreement with Watermark Hotel Equities, LLC for assignment of the lease of the Five Sullivan Brothers Convention Center. The Waterloo City Council approved said agreement on Monday, September 27, 2004. If you have questions or need additional information, please feel free to contact my office. Enclosure Sincerely,( Nancy Eckert City Clerk WE'RE WORKING FOR YOU! An Equal Opportunity/Affirmative Action Employer