HomeMy WebLinkAboutR8- Economic Development Agency ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
REQUEST FOR COMMISSION/COUNCIL ACTION
FROM: RONALD E.WINKLER SUBJECT: RADISSON HOTEL-CONSENT
Development Director TO TRANSFER
DATE: March 26, 1996
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Synonsis of Previous Commission/Council/Committee Action(s):
On October 17, 1994,the Community Development Commission and the City Council took action to consent to the
transfer of the Radisson Hotel operating agreement and assignment of the Downtown Convention Center lease to Foster-
Khoury International,Inc.,and to Rabweh International for operation by ARK Services Company. The Community
Development Commission adopted two resolutions,5410 and 5411. The City Council adopted four resolutions;94-333,
94-334,94-335 and 94-336.
On March 7, 1996,the Redevelopment Committee considered this matter and recommended that it be forwarded to the
Commission/Council for consideration.
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Recommended Motion(s):
(Community Development Commission)
MOTION A: RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN
BERNARDINO ON BEHALF OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN
BERNARDINO AUTHORIZING AND DIRECTING THE EXECUTION OF CONSENT TO
FINANCING OF HOTEL PROPERTY,CERTIFICATE OF COMPLIANCE AND ESTOPPEL
CERTIFICATE[FOSTER HOTELS] .
(Motions Continued to Neat Page...)
Admuustrat Vr RONAL .WINKLER
Develop ent Director
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Contact Person(s): Ronald E.Winkler/John Hoeger Phone: 5081
ProjectArea(s): Central City Ward(s): One 1)
Supporting Data Attached: Staff Report;Resolutions
FUNDING REQUIREMENTS: Amount: $ N/A Source: N/A
Budget Authority: N/A
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Commission/Council Notes:
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REW:JBH:lag:03-18-03.cdc COMMISSION MEETING AGENDA
Q j� MEETING DATE: 04/01/1996
t/
Res � Agenda Item Number: ,
REQUEST FOR COMMISSION/COUNCIL ACTION
Radisson Hotel
March 12, 1996
Page Number-2-
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Recommended Motion(s) Continued:
(Mayor and Common Council)
MOTION B: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO, CALIFORNIA, AUTHORIZING AND DIRECTING
THE EXECUTION OF CONSENT TO FINANCING OF HOTEL
PROPERTY, CERTIFICATE OF COMPLIANCE AND ESTOPPEL
CERTIFICATE [FOSTER HOTELS]
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REW:JBH:Iag:03-18-03.cdc COMMISSION MEETING AGENDA
MEETING DATE: 04/01/1996
Agenda Item Number: _
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
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Radisson Hotel- Consent to Transfer
BACKGROUND
The unfinished hotel was purchased from Bank of America by Maruko, Inc. in late 1987. Maruko
completed construction of the improvements and the property was opened for business on April
1, 1988 as the Maruko Hotel. The City and Agency facilitated this purchase and construction by
providing an assistance package to Maruko that totaled more than$3.5 million. Most of this
assistance is through an agreement in which the City pays the Hotel a reimbursement of 64% of
the amount of the Transient Occupancy Tax(TOT) generated by the Hotel. In recent years the
Agency has paid this reimbursement on behalf of the City and a little less than $1.5 million of this
amount remains outstanding. The length of time needed to complete these payments will depend
upon the performance of the Hotel and the rate at which TOT revenues are produced.
Maruko filed for a Chapter 11 Bankruptcy in October of 1991. Three years later on October, 17,
1994, the Community Development Commission and the Common Council adopted resolutions
which consented to a purchase by Foster-Khoury International, Inc. This consent was based, in
part, upon a representation that the Hotel would subsequently be operated by an experienced
management firm, Northwest Lodging. This was important because Foster was a new
corporation with no track record in hotel management and, at that time, without experienced
personnel.
Based in part on the October consent, the Bankruptcy Courts approved the sale from Maruko to
Foster who became the owner in December, 1994 and changed its name to Foster Hotels
International. Foster, however, did not execute the agreements which the Council/Commision
had approved. Further, Northwest did not become the operator of the Hotel as promised.
Northwest and Foster are currently in litigation and attorneys for Northwest have indicated that
they still strongly desire to manage the hotel although they are not in a position to do so at the
present time.
CURRENT STATUS
As mentioned above, Foster, has not signed the consent agreements and the conditions of the
consent have not been satisfied. For this reason, staff has not processed assistance payments
based upon the TOT since December of 1994 (the time of the most recent sale). The current
amount owed to the Hotel is a little more than$148,000. In response, the Hotel has withheld
payment of certain parking fees to the City totaling about $47,000.
Since purchasing the hotel, Foster has hired the staff of the Hotel so that it is self-managed.
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REW:JBH:lag:03-18-03.cdc COMMISSION MEETING AGENDA
MEETING DATE: 04/01/1996
Agenda Item Number: _
ECONOMIC DEVELOPMENT AGENCY STAFF REPORT
Radisson Hotel - Consent to Transfer
March 12, 1996
Page Number-2-
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Foster is now operating the property using the same people who have run the Hotel for a number
of years. A business plan has been developed for the Hotel, a renovation program has been
approved and the initial remodeling work is funded with a $500,000 unsecured loan from Foster's
sole share holder, Mr. Hamad Bin Mohamad Bin Sulman Al Khalifa. All of the renovation work
is expected to be complete by the end of 1996.
Staff has reviewed the business plan, the marketing plan for the next three years and the
experience of the primary staff. Mr. Deskus has been responsible for operational management of
major hotel properties for the last 16 years and, as Corporate Controller, was responsible for the
financial management of three hotels for 7 years before that. The submitted plan appears both
feasible and sound.
PROPOSED RESOLUTION
The attached resolutions and documents contain the following provisions:
1. A Certificate of Compliance will be issued to evidence completion of the requirements of
the OPA(accomplished by Maruko who completed the improvements and opened the
Hotel on April 1, 1988).
2. An Estoppel Certificate will be issued to evidence the current status of the OPA for
financing purposes.
3. Consent is given to financing secured by liens on the property.
4. Foster will execute an assumption agreement undertaking the full responsibility of Maruko
under the existing OPA.
On March 7, 1996, the Redevelopment Committee considered this item and directed that it be
forwarded to the Commission/Council with a recommendation that resolutions be adopted which
would consent to ownership of the Hotel by Foster Hotels International. Since the time of the
Redevelopment Committee meeting there have been clarifications from Foster which simplify the
transaction. The attached resolutions are such that Northwest can still become the operator of the
Hotel if it settles its action against Foster Hotels and the prior agreement is implemented.
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REW:JBH:lag:03-18-03.cdc COMMISSION MEETING AGENDA
MEETING DATE: 04/01/1996�I
Agenda Item Number: (i
ECONOMIC DEVELOPMENT AGENCY STAFF REPORT
Radisson Hotel - Consent to Transfer
March 12, 1996
Page Number -3-
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RECOMMENDATION
If the Commission/Council approve the form motions, staff will process back payments to the
Hotel. Payments based upon transient occupancy tax will be brought to date and kept current,
improving the property's cash flow position. The Hotel will bring its parking fee payments to the
City current.
Based upon the foregoing, staff recommends adoption of the attached Resolutions.
(ZI.AZ� A Ve 1,1411
RONALWE. WINKLER, Director
Development Department
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REW:JI3H:1ag:03-18-03.cdc COMMISSION MEETING AGENDA
MEETING DATE: 04/01/1996
Agenda Item Number: L
1 EXHIBIT "A"
i
2 CERTIFICATE OF COMPLIANCE
i
3
After Recording,
4 Mail To:
5 City Clerk
6 City of San Bernardino
300 North "D" Street
7 San Bernardino, CA 92418
8 CERTIFICATE OF COMPLIANCE
9
10 PROJECT NAME: San Bernardino Hotel/Convention Center
11 LEGAL DESCRIPTION: See Att . 111" and "2"
12
OWNER OF PROPERTY/
13 PARTICIPANT: Foster Hotels International, Inc .
14 ADDRESS: c/o Thomas Roberts, Esq.
15 Baker & Hostetler
600 Wilshire Blvd.
16 Los Angeles, CA 90017-3212
17 PROJECT DESCRIPTION: Completion of Hotel/Convention Center in
18 accordance with the terms of that "Owner Participation and
Development Agreement" between the City of San Bernardino, The
19 Redevelopment Agency of the City of San Bernardino and Maruko,
20 Inc . , dated July 20, 1987 (the "Agreement" ) .
21 NOTICE IS HEREBY GIVEN that the above described project
has been completed in compliance with the terms and conditions of
22 the Agreement .
23 DATED: CITY OF SAN BERNARDINO
24
By:
25
REDEVELOPMENT AGENCY OF THE
26 CITY OF SAN BERNARDINO
27 By.
28
A - 1
I Attachment 1 to Exhibit "A"
2 That portion of Parcel 26 , Parcel Map No. 668 , in the City
3 of San Bernardino, County of San Bernardino, State of
California, as per plat recorded in Parcel Map Book 25 pages 47
4 through 58, records of said County, described as follows :
5 Beginning at the Northwest corner of said Parcel 26 ;
6 thence S890 55 ' 49 11E 206 . 57 feet to the Northeast corner of
said Parcel 26 ; thence along the Southerly and Easterly lines
7 of said Parcel 26 through its various courses of SO° 04 ' 11 11W
8 60 . 01 feet; thence N890 55 ' 49 11W 128 . 55 feet; thence SO° 04 '
11 11W 82 . 77 feet; thence S590 38 ' 54 11W 29 . 01 feet; thence N890
9 55 ' 49 11W 12 . 00 feet; thence SO° 04 ' 11 11W 31 . 50 feet; thence
N890 55 ' 49 11W 46 . 69 feet to the Southwest corner of said Parcel
10 26 ; thence N030 57 ' 39 11E along the West line of said Parcel 26,
11 said line also being the East line of "E" Street as shown on
said Parcel Map No. 688, a distance of 86 . 71 feet; thence
12 continuing along said West line of Parcel 26 NO° 02 ' 37 11W
102 .46 feet to point of beginning.
13
14 Note : This description is based upon a field survey
performed in July, 1987, by C M Engineering Associates and
15 shown on the plat prepared for title insurance purposes for
Maruko.
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A - 2
1 Attachment 2 to Exhibit "A"
2 EXHIBIT HALL
3 That portion of Parcel 25, Parcel Map No. 688, in the City
4 of San Bernardino, County of San Bernardino, State of
California, as per plat recorded in Parcel Map Book 25 pages 47
5 through 58, records of said County described as follows :
6 Beginning at the Southwest corner of Parcel 22 of said
7 Parcel Map No. 688 ; thence S890 55149 11E along the South line of
said Parcel 22 a distance of 39 . 02 feet; thence SO° 04111 11W
8 14 . 67 feet; thence N890 55 ' 49 11W 28 . 63 feet; thence SO° 04111 11W
9 108 . 18 feet; thence S890 55149 11E 0 . 12 feet; thence SO° 04111 11W
27 . 16 feet to the Northeast corner of Parcel 26 of said Parcel
10 Map No. 688 ; thence N890 55149 11W along the North line of said
Parcel 26 a distance of 162 . 95 feet to a point that bears S890
11 55149 11E 43 . 62 feet from the Northwest corner of said Parcel 26 ;
12 thence NO° 04111 11E 15 . 25 feet; thence N450 04111 11E 11 . 55 feet;
thence NO° 04111 11E 25 . 17 feet; thence N450 04111 11E 11 . 79 feet;
13 thence NO° 04111 11E 70 . 84 feet; thence N450 04111 11E 11 . 55 feet;
thence NO° 04 ' 11"E 14 . 03 to a point in the South line of said
14 parcel 21 that bears S890 55149 11E 68 . 64 feet from the Southwest
15 corner of said Parcel 21; thence S890 55149 11E along the South
line of said Parcel 21 a distance of 127 . 77 feet to the point
16 of beginning.
17 Note : This description is based upon a field survey
18 performed in July, 1987, by C M Engineering Associates and
shown on the plat prepared for title insurance purposes for
19 Maruko, Inc . , dated July 16, 1987 .
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A - 3
I EXHIBIT "B"
2 CONSENT TO FINANCING
3 OF HOTEL PROPERTY
4 [Foster Hotels International]
5 This Consent to Financing of Hotel Property is made as
6 of , 1996, by the City of San Bernardino, California
(the "City" ) and by the Redevelopment Agency of the City of San
7 Bernardino (the "Agency" ) , with respect to the following facts :
8 Recitals
9 A. The City and Maruko, Inc. ( "Maruko" ) entered into
10 that certain City of San Bernardino Convention Center Sublease
11 and Operating Agreement (the "Operating Agreement" ) on or about
August 4, 1987, with regard to certain real property located in
12 the City, described in Exhibit "A" to the Operation Agreement,
which property consists of convention center facilities and
13 related improvements and personal property.
14 B . The City, the Agency and Maruko entered into that
15 certain Owner Participation and Development Agreement ( "OPA" ) on
or about July 20, 1987, with regard to certain real property
16 located in the City, described in Exhibit "A" of the OPA, which
17 property is improved with a hotel (the "Property" ) . The
Operating Agreement and the OPA were amended by virtue of that
18 certain Amendment No. 1 to Owner Participation and Development
Agreement and Convention Center Sublease and Operating Agreement
19 ( "Amendment No. 111 ) .
20 C. Maruko filed for protection under the bankruptcy
21 laws of the United States .
22 D. Maruko entered into an agreement for the sale of
23 the Property to Foster-Khoury International, Inc. , a California
corporation ("Foster-Khoury") . The City and the Agency consented
24 to the transfer of title to the Property and the interests of
Maruko under the Operating Agreement and the OPA to Foster-
25 Khoury.
26 E. Foster-Khoury has changed its corporate name to
27 Foster Hotels International, a California corporation ( "FHI") .
The stock of FHI is wholly owned by Hamad Bin Mohamed Bin Sulman
28 Al Khalifa.
B - 1
1
Consent
2
3 1 . The City and the Agency hereby consent, upon the
condition set forth in Section 3 below, to the following:
4
a. FHI may, without further consent of the City
5 or the Agency, enter into a financing whereby a lien is created
6 against the Property and/or FHI' s rights under the Operating
Agreement, provided that the proceeds of such financing are used
7 solely for improvements and rehabilitation of the Property and/or
the Leased Premises, including related personal property, and
8 for offsetting operating deficits of the Property and/or the
9 Leased Premises, and further provided that the terms and
conditions of the financing are reasonable and customary, and in
10 compliance with Section 18 . 1 of the Operating Agreement .
11 2 . No further transfers or assignments of the
12 Property, the rights under the Operating Agreement or the OPA
shall occur without compliance with the applicable provisions of
13 the Operating Agreement and the OPA.
14 3 . This consent is expressly contingent upon
15 execution by FHI of the Assumption Agreement approved by the City
and the Agency, and delivery thereof to the City and the Agency.
16
17 CITY OF SAN BERNARDINO, CALIFORNIA
18
19 By:
20 Tom Minor
Mayor
21 APPROVED AS TO FORM
AND LEGAL CONTENT:
22
23 By
City Attorney
24
REDEVELOPMENT AGENCY OF THE
25 CITY OF SAN BERNARDINO
26
27 By:
Tom Minor
28 Chairman
B - 2
1 APPROVED AS TO FORM
AND LEGAL CONTENT:
2 Sabo & Green
3
By:
4 Agency Special Counsel
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1 EXHIBIT "C"
2 ASSUMPTION AGREEMENT
3 This Assumption Agreement ( "Agreement") is entered into
4 as of 1 1996, by and between the City of San
Bernardino, California (the "City" ) , the Redevelopment Agency of
5 the City of San Bernardino (the "Agency" ) and Foster Hotels
6 International, a California corporation ( "FHI" ) .
7 Recitals
8 A. The City, the Agency and Maruko, Inc . ( "Maruko" )
9 entered into that certain Owner Participation and Development
Agreement ( "OPA" ) on or about July 20, 1987, with regard to
10 certain real property located in the City (described in
Exhibit "A" of the OPA) , which property is improved with a hotel
11 (the "Property" ) .
12 B. The City and Maruko entered into that certain City
13 of San Bernardino Convention Center Sublease and Operating
Agreement (the "Operating Agreement" ) dated as of August 4, 1987,
14 whereby the City, as sublessor, subleased the Leased Premises
15 (described in Exhibit "A" of the Operating Agreement) , generally
consisting of convention center facilities adjacent to the
16 Property, to Maruko as sublessee. The OPA and the Operating
Agreement were amended by virtue of that certain Amendment No. 1
17 to Owner Participation and Development Agreement and Convention
18 Center Sublease and Operating Agreement .
19 C. The City, as owner of the Leased Premises, had
previously leased the same to the San Bernardino Civic Center
20 Authority (the "Authority") as lessee by way of a lease recorded
21 June 4, 1970 . The Authority, in turn, subleased the Leased
Premises back to the City by virtue of a sublease recorded
22 June 4, 1970 . Since the date of the Operating Agreement, the
23 Authority has assigned, transferred or released its interests in
the Leased Premises in favor of the City, which now holds all
24 ownership and lease rights in the Leased Premises, save for the
rights originally held by Maruko under the Operating Agreement .
25
26 D. Maruko sold the Property and transferred, with the
consent of the City and the Agency, Maruko' s rights under the OPA
27 and the Operating Agreement to Foster-Khoury International, Inc. ,
a California corporation ("Foster-Khoury") .
28
C - 1
I E. The shares of Foster-Khoury were previously
transferred, with the consent of the City and the Agency, to
2 Hamad Bin Mohamed Bin Sulman Al Khalifa ( "Shareholder" ) .
3 F. Foster-Khoury has changed its corporate name to
4 FHI .
i 5 G. FHI intends to enter into a financing, secured by
6 a lien against the Property and/or FHI' s rights under the
IOperating Agreement, for the purposes of obtaining funds to make
7 improvements to and rehabilitate the Property and/or the Leased
Premises and related personal property, and for offsetting
8 operating deficits of the Property and/or the Leased Premises
9 (the "Financing" ) . FHI seeks the acquiescence of the City and
the Agency to the Financing.
10
11 NOW, THEREFORE, THE PARTIES HERETO AGREE AS HEREINAFTER
12 PROVIDED.
13 Terms and Conditions
14
15 1 . The Recitals stated above are true and correct and
incorporated herein by reference.
I 16
2 . FHI hereby assumes all of Maruko' s obligations,
17 without exception, and acquires all of Maruko' s rights, under the
18 provisions of the OPA, as amended.
19 3 . FHI hereby assumes all of Maruko' s obligations,
20 without exception, and acquires all of Maruko' s rights, under the
provisions of the Operating Agreement, as amended.
21 4 . By the assumptions set forth in Sections 2 and 3
22 above, FHI agrees to perform each and every obligation of Maruko
23 under the OPA and/or the Operating Agreement, including
obligations, if any, previously due but unperformed.
24
5 . FHI agrees that no further transfer of any right
25 in or title to the Property or of rights under the OPA or the
26 Operating Agreement may occur except in compliance with the
applicable provisions of the OPA and/or the Operating Agreement .
27 No transfer or assignment of any of FHI ' s rights and obligations
under the OPA may be made unless its rights and obligations under
28
C - 2
1 the Operating Agreement are likewise transferred or assigned to
the same transferee, and vice versa.
2
3 7 . The City and the Agency agree that FHI may,
without further action by the City or the Agency, enter into the
4 Financing, including the grant of a lien on the Property and/or
on FHI' s rights under the Operating Agreement as security
5 therefor, provided that the proceeds of the Financing are used
6 solely for the purposes of improvements to and rehabilitation of
the Property and/or the Leased Premises and related personal
7 property, and for offsetting operating deficits of the Property
and/or the Leased Premises .
8
9 8 . This Agreement may be executed in counterparts.
10 IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
11
12 CITY OF SAN BERNARDINO, CALIFORNIA
13
14 By:
15 Tom Minor
Mayor
16 APPROVED AS TO FORM
AND LEGAL CONTENT:
17
18 By:
19 City Attorney
20 REDEVELOPMENT AGENCY OF THE
21 CITY OF SAN BERNARDINO
22
By:
23 Tom Minor
24 Chairman
APPROVED AS TO FORM
25 AND LEGAL CONTENT:
Sabo & Green
26
27 By:
28 Agency Special Counsel
C - 3
j FOSTER HOTELS INTERNATIONAL,
a California corporation
2
3
4 By:
Name :
5 Title
6
APPROVED AS TO FORM:
7 BAKER & HOSTETLER
8 BY
9 Attorneys for Foster Hotels
International
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