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HomeMy WebLinkAboutChronology of ClubHouseWHITE, PETERSON, PRUSS, MORROW & GIGRAY, P. A. ATTORNEYS AT LAW JUSTIN P. AYLSWORTH PHILIP A. PETERSON KATHY J. EDWARDS STEPHEN L. PRUSS JULIE KLEIN FISCHEA ERIC S. ROSSMAN WM. F. GIGMY, Ill TODD A. ROSSMAN D. SAMUEL JOHNSON R. STEPHEN RUTHERFORD WILLIAM A. MORROW DAVID M. SWARTLEY WILLIAM F. NICHOLS' TERRENCE R. WHITE" CHRISTOPHER S. NYE 200 EAST CARLTON AVENUE, SUITE 31 POST OFFICE BOX 1 l50 MERIDIAN, IDAHO 83680-1150 TEL (208) 288-2499 FAX (208) 288-2501 NAMPA OFFICE 104 NINTH AVENUE SOUTH POST OFFICE BOX 247 NAMPA, IDAHO 83653.0247 TEL (208) 466.9272 FAX (208) 466-4405 'ALSO ADMITTED IN OR ''ALSO ADMITTED IN WA Email via Intemr3: wfguwppmgcom September 27, 1999 R~cErv~D PLEASE REPLY TO MERIDIAN OFFICE Mayor and Council °' ~ :1 ~ 7 j~+~~ '~~, J :.. V City of Meridian `'°°~° ~~ 33 E. Idaho Ave. ~~~ ©t', ~~~~tr~L~V ~ ~' Meridian ID 83642 Re: Chronology of Cherry Lane Recreation, Inc. Club House Matters Dear Mayor and Council: I have been requested to prepare for the Mayor and City Council members a chronology of events relative to the proposed development of a ne~v clubhouse by Cherry Lane Recreation, Inc. This has been a somewhat confusing affair and I hope this chronology will be helpful to each of you if you are questioned about this matter. Event No. 1 was the determination that Chevy Lane Recreation, Inc. needed to file an application for conditional use permit for the construction of the new clubhouse. This was required due to the fact that they did not have an existing clubhouse on the golf course property and the project involved the construction of a new clubhouse. The subject property is zoned Low Density Residential (R-4) which is defined at Section 11-2-408 (3) municipal code. A golf course is anon-conforming use in that zone. Therefore, the application did, in fact, constitute a conditional use as provided in § § 11-2-406 E 2 and 1 1-2-406 F of the municipal code. Cherry Lance Recreation, Inc. made the application and did not legally contest this procedure. Event No. 2 The City Council adopted "Findings of Fact and Conclusions of Law and Decision and Order Granting Conditional Use Permit Subject to Conditions" on June 22"`~, 1999. This included the condition which was agreed to and generous by one month Mayor and Council September 27, 1999 Page 2 "1.20 The temporary clubhouse shall he used for a period not to exceed seven (7) months from the date of this order. Prior to moving of the temporary clubhouse, a letter of credit or cash shall be received by the City of Meridian as a guarantee for completion of the permanent clubhouse and parking lot in the amount of Five Hundred Thousand and No/100 ($500,000.00) Dollars. " Event No. 3 These conditions were agreed to by Cherry Lane Construction, Inc., at the public hearing. A draft "Irrevocable Letter of Credit" and other documents which included a draft Leasehold Deed of Trust were faxed to the City Attorney's office from Will Berg's office and Will phoned Sharon at our office about the Golf Course documents, with our inter-office note "Will says this not on the agenda, but it is holding up a substantial building ~~ permit. (Note: at this time My mother was critically ill) I directed that Steve Rutherford review and approve the Letter of Credit form which he did on July 30`x. There was no letter of request or instruction or any direct contact from the bank with this office on this matter at this time that I am aware of. Event No. 4 Our office was next informed that Pioneer Title Company had requested as a condition of issuance of title insurance, [required by the Banlc in order to issue the Letter of Credit] that a Memorandum of Lease Agreement providing the legal description for the second nine holes as being included in the lease. Negotiations on the language for this document were undertaken with me and Harold Houston of Pioneer Title Company, which memorandum was prepared by this office on August 11 `'', 1999. This was approved by the Council on August 17`t', 1999. Event No. 5 I received a letter dated August 13 from R John Insinger, as attorney for Recreational Properties, Inc., requesting the City execute an estoppel certificate. Mr. Insinger stated it was required by the lender and insurers for confirmation of the validity of the lease. He also requested more time for his client to construct the clubhouse. Gerry Mattison from the bank called regarding progress on the estoppel certificate. I notified the Mayor Mayor and Council September 27, 1999 Page 3 on August 18 of this request at which time I recommended that the Mayor have all relevant department heads review the lease agreement, and the facts relative to the Cherry Lane Recreation, Inc. lease agreement. I expressed concerns about items 3, 4 and 7 of the estoppel agreement which would have constituted a written. release of any claims under the lease . agreement by the City as of the date it was issued. I notified John Insinger by phone of my concerns and advised that if his client needed more time to construct the clubhouse, they would have to file a new application to modify the conditional use permit and I encouraged him to file the application if he felt they were going to need more time. Event No. 6 I received a letter from John Insinger on September 3 regarding the estoppel certificate, advising that they had modified Nos. 3, 4 and 7 of the certificate which I reviewed. I then prepared the "Lessor's Statement Concerning Agreement of Lease Dated October 30, 1978" for consideration by the Council which was passed on the September 7`t'. The reasons for recommending to the City Council that it not authorize the execution of the Lessor's Estoppel Certificate were: no legal obligation to do so; the proposed certificate could prevent the City from malting a legal claim it might have; it was` not clear at that point that the lease or lender had obtained approval from the City for the use of the lease as security for a loan. The Statement that was issued was designed to provide the assurances that the City could confirm at this time. John Insinger was notified on September 7`~. Event No. 7 On September 10`t', 1999 I was advised by phone by the City Clerk, Will Berg, that Gerry Mattison needed the Mayor's signature on the Statement that was authorized and on a Deed of Trust document. I was puzzled by the reference to the Deed of Trust and had the entire file pulled. It was only after looking though the file that I found attached on the back of the Letter of Credit document a draft Leasehold Deed of Trust. I prepared a letter to the Mayor enclosing the Draft "Leasehold Deed of Trust and Schedule C" which document was designed to secure the performance of a line of credit of $500,000.00 to Cherry Lane Construction. It was proposed that the City execute the Schedule C. Schedule C included onerous provisions that would have allowed for future advances to be Mayor and Council September 27, 1999 Page 4 covered by the agreement. It provided that the City affirm that there were no defaults [same problem faced with the estoppel certificate], and the schedule would have also changed the terms of the lease agreement by extending the default time, and provided that the bank receive notice of default, and provided that the bank could object to any modification of the lease agreement, and provided that any lien the City might obtain would be subordinate to the bank's lien, all of which the City is not obligated legally to agree to. I recommended that the City Council consider this at its next meeting since it had not been authorized. I notified Gerry Mattison of this recommendation. He was quite upset advising that he had told me this was needed on three earlier occasions. I do not recall him ever stating such in any phone call prior to this date, and which cannot be confirmed by any communications with this office in writing from the bank. I demanded he send me everything the bank was requiring by fax. Event No. 8 I received a fax transmission from Gerry Mattison of the bank with an attached final draft of the Leasehold Deed of Trust on September 10`'', 1999. Event No. 9 I prepared a memo to the Mayor and City Council on September 14`'', 1999 attaching the fax from Gerry Mattison and the final copy of the "Leasehold Deed of Trust". Differences from the first draft included security for advances up to $1,800,000.00; all the other onerous provision were still there. This was submitted for the Council's consideration from this office. Event No. 10 John Insinger, Cherry Lane Recreation Inc.'s attorney, on September 14`'', 1999 faxed a letter to me with a copy of Cherry Lane Recreation, Inc.'s Notice of its exercise of the option to renew the term of the lease for a subsequent 30-year term upon the expiration of the initial 25-year term. Event No. 11 The matter of the request to execute Schedule C of the Leasehold Deed of Tn.ist was placed on the agenda on September 21 S`. In order to give the Council an alternative to consider, and after advice and consent for distribution from Charlie Rountree as President of the Council, who was Mayor and Council September 27, 1999 Page 5 conducting the Council meeting that night, I prepared a "Consent to Lessee Assignment with Right or Reassignment by Deed of Trust" in order to assure that the City was meeting its obligation under section 14 of the Lease Agreement regarding assignment by the lessee to its lender. This was authorized. Event No. 12 I have been advised by the Banlc's attorney Mr. Ed Annsen that they will make an additional request that the City agree to give notice of default to the bank and that the bank be given notice of proposals to amend the lease agreement. I expect the bank will request this in an agreement form. This is not legally required of the City and it will be your decision in the management of this agreement whether or not to do so if requested. The biggest problem is that this will place an additional obligation on the City that is not provided for in the Agreement of Lease and will have to be staffed, so in the event either of these circumstances should arise the proper notice is given. All in all the City has in a very timely manner and in the pnldent managment of the public trust responded to all requests made, and has met its obligations under the Agreement of Lease. If you need additional information on this matter please advise. Very truly yours, ~~,~,, ~ WGm.iF. Gi `II ey/Z:\Work\M\Meridian 15360AA\Cherry lane Golf Course CUP\Mayo:CouncilSep27.ltr