LEGISLATIVE ACTION ITEM
SPONSOR: Grover C. Robinson, IV, Mayor
SUBJECT:
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PORT - SIDDIQI INVESTMENTS LLC 750 COMMENDENCIA LEASE AGREEMENT
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RECOMMENDATION:
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That City Council authorize the Mayor to finalize and execute the Lease Agreement with Siddiqi Investments, LLC for a portion of the Port’s parking lots located at 750 Commendencia (surface lots bordered by Cedar Street to the north, Jefferson Street to the west and Commendencia Street to the east) and take all actions necessary to administer the Lease Agreement.
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HEARING REQUIRED: No Hearing Required
SUMMARY:
Siddiqi Investments, LLC contacted the Port of Pensacola seeking a long-term lease of approximately 84,506.40 usable, buildable square feet of land at 750 Commendencia, parcel number 00-0S-00-9100-001-011, account number 154318000, in order to develop a hospitality venue and related uses (i.e., guest parking, pool, food and beverage, other amenities, back of house operations, meeting flex space, convention and special event venue). The parcel is currently leased from the Port and accommodates existing surface parking for the Siddiqi Investments, LLC (Holiday Inn Express) and Sine Qua Non-Holdings (Aylstock, Witkin, Kreis, and Overholtz law firm).
This proposed Lease Agreement is for an initial term of thirty (30) years with up to four (4) renewals of ten (10) years each for a total potential lease duration of 70 years.
The lease includes both Base Rent and Percentage Rent. Base Rent starts at approximately $147,440 (exact amount to be determined based on the exact square footage of the “as-built” project post-construction) and increases 7% every five years. During the last year of the primary term, the City has the opportunity to review fair market value and adjust base rent up to a maximum increase of 15%.
Percentage rents are 5% of all room night revenue over $3.5 million not to exceed $250,000 and 2% of all non-room revenue (including but not limited to restaurant sales, room service sales, bar sales, banquet sales, convention sales, retail sales, valet/ parking charges, etc.) whether operated by the tenant, sub-lessee or assignee and will be paid to the Port annually.
All existing agreements for parking at the Lease Premises must be honored at all times, including during construction. Additionally, the Tenant’s new development must include sufficient parking to accommodate the existing adjacent hotel (currently a Holiday Inn Express), this new development, and either retain or replace all parking spaces displaced by this development. The Tenant is also obligated to honor the existing parking leases previously referenced.
All provisions of the City Council Policy on Port Leases have been fulfilled, and all required notifications have been made.
PRIOR ACTION:
October 19, 2020 - City Council briefed on the project during Workshop Session. Council and Public input received. No formal action was taken.
FUNDING:
N/A
FINANCIAL IMPACT:
The Lease Agreement will generate an average of approximately $147,440.00 in annual revenue to the Port from base rent payments in years 1-5. Base rent increases 7% every five years throughout the 30-year Primary Term. The base rent amount was determined by broker’s opinion of market value and taking into consideration the project’s fit with the publicly approved Port Vision Plan. Additional revenue from Room Revenue Percentage Rent and Non-Room Revenue Percentage Rent is unknown at this time but is estimated to be as much as an additional $100,000 per year in revenue to the Port.
CITY ATTORNEY REVIEW: Yes
10/28/2020
STAFF CONTACT:
Keith Wilkins, City Administrator
Dick Barker, Jr., Deputy City Administrator - Enterprise and Administration
Amy Miller, Port Director
Rebecca Ferguson, Waterfront Development Projects Coordinator
ATTACHMENTS:
1) Proposed Project Terrace Property Lease
PRESENTATION: No end