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