HomeMy WebLinkAboutAgenda Report - April 7, 2010 J-04AGENDA ITEM T40%4
A% CITY OF LODI
,. COUNCIL COMMUNICATION
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AGENDA TITLE: Provide Directionto Amend Fee Payment Agreement for 1341 East Kettleman Lane
(Holiday Inn Express)
MEETING DATE: April 7,2010
PREPARED BY: City Manager
RECOMMENDED ACTION: Direct the City Manager to prepare a revised Fee Payment
Agreement for 1341 East Kettleman Lane (Holiday Inn Express).
BACKGROUND INFORMATION: For economic development, businesses purposes and fairness, the
City Council has approved agreements to allow the payment of
impact fees to be spread over time. Typically, the Council has
approved these fee payment agreements for hardship cases or to make select businesses that provide
jobs or tax benefits financially feasible. On March 19, 2008, the City Council approved a fee payment
agreement for a new Holiday Inn Express motel at 1341 East Kettleman Lane developed by KFP GALT,
LLC. The Fee Payment Agreement allowed $420,496.00 in impact fees to be paid in 20 equal semi-
annual installments ($28,004.57) over a 10 -year period. Interest was calculated on the then Local
Agency Investment Fund (LAIF) rate of return plus one percent, which totaled 5.801 percent.
In the two years since the Holiday Inn opened, the economy entered the longest recession in eight
decades (source: Dr. John Mitchell, BofC speech). The principal owners of the Holiday Inn Express have
approached the city manager to request relief from the terms of the payment agreement. They are
presently current with their payments but have stated that they are experiencing a severe financial
hardship. According to financial information provided by the owners, the business is expected to
experience a loss of approximately $120,000 for the eight months ending February 2010.
Staff is requesting that the Council direct the manager to revise the Fee Payment Agreement. It is
proposed that the same interest rate methodology be used (LAIF rate plus 1 percent). The current LAIF
rate is approximately 0.6 percent which would yield a rate of 1.6 percent for this agreement. Additionally,
it is requested that the payments be suspended until January 1, 2011, with the remaining payments
made in 20 semi-annual installments over a 10 -year period (see attached schedule). The restructured
payment schedulewill not materially affect the impactfee program.
This is not a request to waive fees, but a request to restructure payments.
If the Council chooses not to direct the manager to amend the agreement, the business may fail and the
General Fund could experience a loss of approximately $80,000 to $100,000 in annual Transient
Occupancy Tax revenue, the loss of 30 jobs, and the consequences of dealing with a vacant hotel,
including difficulty in collectingthe impactfees from a subsequent operator or bank.
APPROVED:
Blair King, City Ma ager
N:\Adminlstration\CM\Susan\Council Communications\04_07 10 Holiday Inn Express counoom.doc 3/31/2010
Attached is the original Development Impact Mitigation Fee Summary Sheet, a new proposed fee
payment amortization schedule and a draft revised Fee Payment Agreement.
FISCAL IMPACT: $381,684 in impact fees remain unpaid and are subject to the fee payment
schedule. $48,813.09 in principal and $35,200.62 in interest has been paid. The
interest rate charged for the outstanding balance, if Council so directs, would be reduced from 5.801
percent to 1.60 percent. Revising the payment schedule will increase the chance that the Holiday Inn
Express will be a success in this market and continue to provide approximately $80,000 to $100,000 in
Transient Occupancy Tax revenue to the General Fund and increase the likelihood of collection cE the
impactfees. The changes proposed in the timing of the fees is immaterial to the impact fee program.
r--
Blair King
City Mana er
Attachments
cc: Daniel and Beth Kim, Holiday Inn Express
NAAdrninistration\Clul\Susan\Council Communications\04_07 10 Holiday Inn Expresscouncom.doc U3112010
CITY OF LO D I Development Impact Mitigation Fee
PUBLIC WORKS DEPARTMENT Summary Sheet
Subdivision:
Parcel:
1341 E. Kettleman Lane
Address
Permit#
AP #
Developer/Owner:
KFP Management Inc.
Name
Address
Project Description:
Tuscany ComfortSuites
Fee Category
Account # P
RAE Ad.
F
A
T
1) Water Facilities
1821.6122 $ 5,046.00
0.64
$ 3,230.00
2.00
$
6,460.00
2) Sewer Facilities- See Below
$ 0.00
2.00
$
0.00
3) Storm Drainage Facilities
3261.6122$ 18,454.00
1.33
$ 24,540.00
2.00
$
49,080.00
4) Street Improvements
3321.6122 $ 14,355.00
2.08
$ 29,860.00
2.00
$
59,720.00
5) Police Protection Facilities
12151.6122 $ 1,983.00
4.12
$ 8,170.00
2.00
$
16,340.00
6) Fire Protection Facilities
12161.6122 $ 1,938.00
2.69
$ 5,210.00
2.00
$
10,420.00
7) Parks & Recreation Facilities
12171.6122 $ 27,868.00
0.32
$ 8,920.00
2.00
$
17,840.00
8) General City Fac. & Proq. Admin.
12181.61221 $ 8,012.00
0.89
$ 7,130.00
2.00
$
14,260.00
P =Program Fee per Residential Acre Equivalent (RAE) per Resolution 2001-242 and 2004-238 as
adjusted in conformance with LMC 15.64.050.
RAE = ResidentialAcre Equivalent per LMC §15.64,070, unless adjusted.
Adj. = Checked if RAE is adjusted, see Notes below.
F = Fee per acre (rounded to nearest$10.00) = P x RAE.
A= Gross acreage per LMC§15.64.020A& 15.64.060 (rounded to nearest 0.01 acre).
T = Total Fee for service category = A x F.
Notes:
1. Wastewater Capacity Impact Fee is based on a 138 -bed hotel and 3 bedskewer service unit (SSU) and represents46 SSU. Each SSU is $5,356.00.
2. The fees are based on the January 2008 Development Impact Mitigation Fee Schedule.
By:
Approved:
Date Billed:
Record*:
Date Paid: (Fee category 1 thru 8)
03/31/2010 Impact Fees
Total Fees:
Interest Rate:
Term:
Payment No.
1
2
3
Terms Re-nego
10
11
1e
12
14
1E
1E
17
18
19
FEE PAYMENTAMORTIZATION SCHEDULE
Holiday Inn Express
1341 E. Kettleman Lane
(Portion of APN #049-250-87)
$420,496.00
5.801% (4.801%LAI F rate plus 1%) 1.60% (0.60%LAIF rate plus 1%)
10 vears
Unpaid Balance I semi-annual Payment Principal
$420,496.00
$404,687.92
$388,421.33
ad February2010; Into
$371,682.92
$354,471.79
$337,122.98
$319,635.38
$302,007.87
$284,239.35
$266,328.68
$248,274.72
$230,076.33
$211,732.35
$193,241.62
$174,602.97
$155,815.21
$136,877.14
$117,787.57
$98,545.29
$79,149.06
$59,597.67
$39,889.86
$20,024.39
* includes interest for 2010
$28,004.57
$28,004.57
$28,004.57
st rate re -set and next
$26,131.51
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$15,808.08
$16,266.60
$16,738.41
'ment deferred until Ja
$17,211.12
$17,348.81
$17,487.60
$17,627.50
$17,768,52
$17,910.67
$18,053.96
$18,198.39
$18,343.98
$18,490.73
$18,638.65
$18,787.76
$18,938.07
$19,089.57
$19,242.29
$19,396.22
$19,551.39
$19,707.81
$19,865.47
$20,024.39
$420,496.00
Interest
$12,196.49
$11,737.97
$11,266.16
iary 2011
$8,920.39
$2,835.77
$2,696.98
$2,557.08
$2,416.06
$2,273.91
$2,130.63
$1,986.20
$1,840.61
$1,693.86
$1,545.93
$1,396.82
$1,246.52
$1,095.02
$942.30
$788.36
$633.19
$476.78
$319.12
$160.20
$72,200.28
Check Totals
$28,004.57
$28,004.57
$28,004.57
$26,131.51
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$20,184.59
$492,696.28
WHEN RECORDED, RETURN TO:
City Clerk
City of Lodi
221 West Pine Street
Lodi, CA 95240
REVISED FEE PAYMENTAGREEMENT
1341 E. Kettleman Lane
THIS AGREEMENT is made and entered into by and between the CITY OF LODI, hereinafter referred to
as "City" and KFP GALT LLC, hereinafter referred to as "Owner".
RECITALS:
Owner is the owner of that certain real properly situated in the City of Lodi, County of San Joaquin, and
described as follows:
Parcel 2, as shown on that certain parcel map filed for record March 14,
2008 in Book 24 of Parcel Maps, Page 176, San Joaquin County Records.
Owner is desirous of complying with existing City ordinances and policies regarding payment of the
Wastewater Capacity Impact Fee and Development Impact Mitigation Fees as set forth in Title 13, Chapter
13.12 and Title 15, Chapter 15.64, respectively, of the Lodi Municipal Code. Owner had previously
entered into a Fee Payment Agreement with the City on March 19,2008 to cover these costs. However,
Owner has requested that this Agreement be revised to reflect the currentLocal Agency Investment Fund
(LAIF) interest rate.
Council of the City will approve the payment of the remaining fees in twenty (20) semi-annual installments
on condition that the owner first enter into and execute this agreement with the Cbi.
NOW THEREFORE, in order to insure satisfactory'performance by Owner of Owner's obligations under
said City Code, the parties agree as follows:
1. Owner has provided the City with three payments of TWENTY EIGHT THOUSAND FOUR AND
57/100 DOLLARS ($28,004.57). The remaining balance due for the Development Impact Mitigation
Fees and Wastewater Capacity Fees is now THREE HUNDRED SEVENTY ONE THOUSAND SIX
HUNDRED EIGHTY TWO AND 92/100 DOLLARS ($371,682.92).
2. Owner agrees to pay the balance of the Development Impact Mitigation Fees and Wastewater Capacity
Impact Fee in twenty (20) semi-annual payments at an interest rate of 1.600 percent as shown on the
attached Development Impact Mitigation Fee Payment Amortization Schedule Sheet (Exhibit A).
3. The firstpayment shall be due no later than January 1,2011. All subsequentpayments are due no later
than January 1 and July 1 of each year.
3. Each payment shall be credited first on interest due and the remainder on principal.
4. Upon sale, transfer or any other conveyance of the property, all fees payable under this agreement shall
become immediately due and payable. This agreement shall have no right of assignment.
CFeePmtAgmt I343BKettleman_Agreement.doo Page 1 of3
5. If Owner fails to meet any specifiedpayment as set forth in Item #2 and Item #3 above within fifteen
(15) days following the due date, the City Manager or the City Council may serve written notice upon
Owner for breach of this agreement and the default of Owner.
6. In the event of any such notice of breach, Owner shall have the duty to pay, in full, the balance of the
required fees. If the Owner, within five days after the servingof notice, does not give the City written
notice of its intention to pay in full the balance of the unpaid development impact mitigation fees and
wastewater capacity impact fee, and does not make such payment within five days after its notice to
City, this agreement shall be considered void. City shall institute legal proceedings to recover the
balance of the unpaid fees and for any excess cost or damage occasioned City thereby.
7. A copy of the Agreement shall be recorded in the office of the San Joaquin County Records, P. O. Box
1968, Stockton, California 95201-1968.
8. All notices herein required shall be in writing, and delivered in person or sent by registered mail,
postage prepaid.
Notices required to be given to City shall be addressed as follows:
F. WaUy Sandelin
Public Works Director
City of Lodi
P. O. Box 3006
Lodi, CA 95240-1910
Notices required to be given to Owner shall be addressed as follows:
KFP Galt, LLC
2552 CottonwoodDr.
Lodi, CA 95242
CFeePmtAgmt_1343EKettieman_Agreement.doc Page 2 of 3
IN WITNESS WHEREOF, the parties hereto have set their hands the day, month and year appearing
opposite their names.
Dated 2008
Dated
Approved as to form:
2008
CITY OF IMI, a Municipal Corporation
By:
Blair King, City Manager
Attest:
Randi 7ohl, City Clerk
KFP GALT LLC
D. Stephen Schwabauerr—
City Attorney
Dated: 2008
CFeePmtAgmt 1343SKettleman_Agreement.doe Page of