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HomeMy WebLinkAbout1993-04-26 93-247 ORDERCOUNCIL ACTION 93-24I Item No. Date Aoril 26, 1993 Item/Subject: Authorizing City Manager to Execute 'Indenture of Lease" with General Electric Corporation for Lease of Land and Buildings at Bangor International Airport Responsible Department: Legal As set out in Ren Gibb's memorandum attached to the Council Order, City staff have been working closely with General Electric Corporation to finalize a revision of GE's current lease with the City of Bangor. A draft Indenture of Lease incorporating the terms set out in Ken's memorandum has been prepared and forwarded to General electric for final review, revision and approval. The attached Order would authorise the City manager to execute the draft Indenture of Lease as currently proposed, or to execute a amended version incorporating final language revisions agreed to by the parties. In either event, the substantive tense of the lease will be those set out in Ren Gibb's memo. (cont'd on next page) Department Head Manager's Consents: 0 41A w City Manager Associated Information: Order, Memo Budget Approval: Finance Director Legal Approval: City Solicitor Introduced For X Passage First Reading Referral Page of 93-267 (cont'd) Please note that the proposed Indenture of Lease would represent an extension of GE's current lease, which would otherwise expire at the latest, in the year 2008. (If not extended by GE, the current lease could expire as soon as 1994). The proposed Lease would be for a fixed term of 20 years ending in the year 2014, and as such would represent a significant new commitment by GE to remain in Bangor as a major private -sector employer. AsAgned to Coundlor Sullivan April 26, 1993 CITY OF BANGOR (MLS) @rber, .....Buthorisingn . City Maager. to execute "Indenture of ..... Lease" with General electric Corporation for Lease of Land and Buildings at Bangor International Airport By We City Carnet! OftA4 Cfty WBanom: ORDERED, THAT the City Manager is hereby authorised in behalf of the City of Bangor, to execute a certain 'Indenture of Lease" with General electric Corporation, for the lease of buildings 487, 408 and 489 and appurtenant land at Bangor International Airport, a copy of said Indenture of Lease being on fila in the City Clerk's office. The City manager is further authorized to execute an amended version of said Indenture of Lease in lieu of the original, upon final agreement of the parties, provided the amended version of said Indenture of Lease shall conform to the "Project Financing" and "General Lease Terms' set out in t memorandum to the Bangor City Council dated April 14, 1993, attached to this Order, and provided that the amended version of said Indenture of Lease as executed by the City Manager shall be in a form reviewed and approved by the City Solicitor. IN CITY COUNCIL April 26, 1993 Passed as � CI CLB 93-24] ORDER Title, Authorizing City Manager to Enecate "Indenture of Lease' with General Electric Corporation for Lease of Land and Buildings at Bangor International Airport Anigned to ...................... Comc.ilsan 93-247 e City interest rate 2 pointe below bank rate, but not lees than 6.58 (estimated to be between 6:58-78) ' a nixed rate for initial 5 years. Rate is adjustable for 5 year terms for the remainder of term. City rate will be adjusted to .reflect 12 point spread with bank financing a City will undertake construction of Polk Street extension to Maine Avenue (see attachedmap)- the coat of the project will be charged to the GE project (paid for by GE) III GENRRAL LEASE TERMS 1. Lease Term - 20 years. 2. GE releases Building 466 to City and takes over Building 487 (when City secures control from Guard). 3. GE continues 'base lease- payment for Buildings 487/488/489. This amount is $9,566.33 per month, which includes amount to amortise City investment in Building 466, which was made in 1987-88. The base lease will be adjusted upwards by 58 in 1999, 2004, 2009, and 2014. 4. GE has right to pay down some or all of the principal on Target and City financing. This would reduce rental payments accordingly. 5. GE has purchase option for Buildings. If this option is exercised, the following guidellnee would be used to determine value: (a) Land will be leased at market rate (108 of value annually). (b) Buildings would be purchased at market value. Buildings would be valued based on original condition (GE' s, leasehold improvements and improvements financed by higher rent payments would not be usedin determining value). (c) GE would reimburse City -Target for all outstanding principal for improvements made since 1969. 6. GE will have first right ofrefusal on land lying between expansion area and Maine Avenue. 7. For the time frame between 1/l/93 to 12/31/94, the following terms shall apply, (a) If Building 487 is occupied by GE, rent will be $1,000 per month. 2 (b) If City occupies Building 466, GB Shall be given a rental credit of $1,000 per month. 8. City will make funds available to GB immediately after the lease is negotiated. Interest will bs charged at 6.58 and accrue until January 1994 when the project will be completed. mw+.l Wmuc.a (.n.in) G { l Ness uubfem to future Vwa r �''t^` between Oenerel EleMric ena trw Cim 13an or ree deignmee 'F4et Rwusw P mel by 6enerel ElecMn I J GENERAL ELECTRIC cv uro•r �, 93-247 HEED To: City Councilor /� Fr®: Hen Gibb 0/ . Be: General Electric Expansion Project Date: April 14, 1993 We are working closely with GE And Target Corporation to complete the financial arrangements related to the proposed 96 Billion Plus expansion of GE facilities. Attached Is an updated summary of the project. Erik Stnapfel has Prepared a lease document which is being reviewed by legal counsel for GE, Target, and Fleet Bank. The draft lease reflects the terms that the Council reviewed during Executive Session in early march. GE has agreed to gradually increase the base rent payments over the 20 year lease tem which will produce higher revenues for the Airport. We are planning to place a Council order on the April 26 Council Agenda. We hope to have a consensus among the various Participants in this project (and their legal counsel) by that time. GE is still hoping to start construction in mid -may; however, DEP has determined that DEP rather than the City will review the DEP Permit modification. This could mean a delay, but we are working with DEP staff to move that process along. Also, enviro:eantal testing has revealed goes 8011 contamination, both on land currently leased by GE and City controlled land which will be developed for the project. While this does not appear to be a serious problem, it may slow down the project schedule. If you have any questions, please contact Erik as I will be cut of tem next week. ERG/JP Ban. cc: Erik Stumpfel �MVED Ed Barrett Bob Farrar Bob Eiegelaar AA9 15 4393 Sohn Quarters= oma+\vornra.® W"Ac) GFMRBA ELECTRIC NEGOTIATIONS (4/14/93 OPOATS) i. BM:RGRORIRf 1. 60,000 sq ft expansion proposed. - 2. Estimated new project cost is $6.5 Billion. 3. Expansion will permit repair and manufacturing of larger turbines which will expand and diversify customer base. 4. No additional jobs are envisioned immediately, but project will help mintain employment levels and provide opportunity for job growth. 5. Site planning and engineering design has begun. Construction to start in the spring, with completion by January 1, 1994. - 6. Local GE plant manager has beenauthorized to take on rent payments of $920,000 per year beginning on January 1, 1994. This number includes current obligations, plus the cost of amortising the coat of the expansion. 7. GR is willing to commit to a 20 year lease. E. Target Corporation is planning to participate in project financing as it hasin the past. Target has selected Fleet Back. 11, PRnrwrT FIw M $6.7 Million - new construction - +/- $950,000 refinancing Of existing loan Total - up to $7,650,000 (dependent on update of construction coat estimates) SOurces of Fmdss $40650,000 Bank Loan via Target 3.000.000 Airport Oept. $7,650,000 Proposed Terms m 20 year 10450 beginning 1/1/94 a 20 year financing by City and Target