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Home My WebLink AboutAPRIL 16, 2002 MINUTESCITY COUNCIL MAYOR MEYERA E. OBERNDORE At-Large VICE MAYOR WILLIAM D. SESSOMS, JR., At-Large LINWOOD O. BRANCH, 111, Beach - District 6 MARGARET L. EURE, Centerville - District 1 WILLIAM W. HARRISON, JR., Lynnhaven - District 5 BARBARA M. HENLEY, Princess Anne - District 7 LOUIS R. JONES, Bayside - District 4 REBA S. McCLANAN, Rose Hall - District 3 ROBERT C. MANDIGO, JR., Kempsville - District 2 NANCY K. PARKER, At-Large ROSEMARY WILSON, At-Large JAMES K. SPORE, City Manager LESLIE I. LILLEY, City Attorney RUTH HODGES-SMITH, MMC, City Clerk "COMMUNITY FOR A LIFETIME" CITY COUNCIL AGENDA CITY HALL BUILDING I 2401 COURTHOUSE DRIVE VIRGINIA BEACH, VIRGINIA 23456-9005 PHONE: (757) 427-4304 FAX: (757) 426-5669 EMAIL: Ctycncl@city. virginia-beach, va. us April 16, 2002 CITY COUNCIL and DEVELOPMENT A UTHORITY SPECIAL JOINT SESSIONS I. INFORMAL SESSION - Conference Room I:00PM A. CALL TO ORDER - Mayor Meyem E. 0bemdorf B. ROLL CALL OF CITY COUNCIL C. RECESS TO CLOSED SESSION II. FORMAL SESSION - Conference Room 2:00 PM A. CALL TO ORDER - Mayor Meyera E. Obemdorf B. CERTIFICATION OF CLOSED SESSION Co PRESENTATION 1. 3 l't STREET PROJECT D. ADJOURNMENT LA'~ MINUTES VIRGINIA BEACH CITY COUNCIL Virginia Beach, Virginia April 16, 2002 Vice Mayor William D. Sessoms, Jr., called to order the SPECIAL JOINT FORMAL AND CLOSED SESSIONS of the VIRGINIA BEACH CITY COUNCIL and DEVELOPMENT A UTHORITY in the City Council Conference Room, City Hall Building, on Tuesday, April 16, 2002, at 1:00 P.M. Council Members Present: Linwood O. Branch, III, William W. Harrison, dr., Louis R. Jones, Reba S. McClanan, Robert C. Mandigo, Jr., and Vice Mayor William D. Sessoms, dr. Council Members Absent: Mayor Meyera E. Oberndorf Margaret L. Eure Barbara M. Henley Nancy K. Parker Rosemary Wilson [Doctor's appointment. Entered: 5.'00 P.M.] [Entered: 1.'48 P.M.] [Entered: 1:12 P.M.] [Entered: 1.'21 P.M.] [Entered: 2:30 P.M.] Development Authority Members Present: Vice Ch'air Kenneth D. Barefoot, Robert E. Fentress, Robert F. Hagans, Jr., Donald V. dellig and Chairman Robert G. Jones Development Authority Members Absent: Teresa Carrington and Elizabeth A. Duke Item II. 2 ITEM # 49522 Vice Mayor Sessoms read the CALL TO SPECIAL FORMAL SESSION: "HONORABLE MEMBERS OF CITY COUNCIL In accordance with the City Charter, Section 3.06, the Virginia Beach City Code, and by the authority vested in me as Mayor of the City of Virginia Beach, I hereby call SPECIAL JOINT FORMAL and CLOSED SESSIONS of the VIRGINIA BEACH CITY COUNCIL and DEVELOPMENTA UTHORITY on Tuesday, April 16, 2002, at 1:00 P.M. in the City Council Conference Room, City Hall Building, 2401 Courthouse Drive (prior to the regularly scheduled Workshop, which is to begin at 3:00 P.M. ) The purpose of the CLOSED SESSION is to consider publicly held property and a legal matter re 31~t Street. The Formal Session will be a public presentation reference the Mst Street project. Sincerely, Meyera E. Oberndorf Mayor" April 16, 2002 -3- Item IlL ITEM # 49523 Vice Mayor Sessoms entertained a motion to permit City Council to conduct its CLOSED SESSION, pursuant to Section 2.1-344(A), Code of Virginia, as amended, for the following purpose: PUBLICLY-HELD PROPERTY: Discussion or consideration of the acquisition of real property for a public purpose, or of the disposition of publicly-held real property, where discussion in an open meeting would adversely affect the bargaining position or negotiating strategy of the public body pursuant to Section 2.1-344(A)(3). Street ProJect LEGAL MA TTERS: Consultation with legal counsel or briefings by staff members, consultants, or attorneys pertaining to actual or probable litigation, or other specific legal matters requesting the provision of legal advice by counsel pursuant to Section 2.1-344(A)(7). Contractual Negotiations 31~' ' - Street ProJect Upon motion by Councilman Jones, seconded by Councilman Branch, City Council voted to proceed into CLOSED SESSION. Voting: 6-0 Council Members Voting Aye: Linwood O. Branch, III, William ~. Harrison, Jr., Louis R. Jones, Reba S. McClanan, Robert C. Mandigo, Jr. and Vice Mayor William D. Sessoms, Jr. Council Members Voting Nay: None Council Members Absent: Margaret L. Eure, Barbara M. Henley, Mayor Meyera E. Oberndorf , Nancy K. Parker and Rosemary Wilson (Time of Closed Session: 1:05 P.M. to 2:28 P.M.) April 16, 2002 -4- ITEM # 49524 Vice Mayor Sessoms RECONVENED the SPECIAL JOINT FORMAL SESSION on Tuesday, April 16, 2002, at 2.'28 P.M. in the City Council Conference Room, City Hall Building, 2401 Courthouse Drive. Council Members Present: Linwood O. Branch, IIL Margaret L. Eure, William W Harrison, Jr., Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C. Mandigo, Jr., Nancy K. Parker and Vice Mayor William D. Sessoms, Jr. Council Members Absent: Mayor Meyera E. Oberndorf and Rosemary Wilson Development Authority Members Present: Vice Chair Kenneth D. Barefoot, Robert E. Fentress, Robert F. Hagans, Jr., Donald V. dellig and Chairman Robert G. dones Development Authority Members Absent: Teresa Carrington and Elizabeth A. Duke April 16, 2002 hem IV -5- CERTIFICATION OF CLOSED SESSION ITEM #49525 Upon motion by Council Lady Eure, seconded by Council Lady Parker, City Council CERTIFIED THE CLOSED SESSION TO BE IN ACCORDANCE WITH THE MOTION TO RECESS. Only public business matters lawfully exempted from Open Meeting requirements by Virginia law were discussed in Closed Session to which this certification resolution applies; AND, Only such public business matters as were identified in the motion convening the Closed Session were heard, discussed or considered by Virginia Beach City Council. Voting: 9-0 Council Members Voting Aye: Linwood O. Branch, HI, Margaret L. Eure, William W Harrison, Jr., Barbara M. Henley, Louis R. Jones, Reba S. McClanan, Robert C. Mandigo, Jr., Nancy K. Parker and Vice Mayor William D. Sessoms, Jr. Council Members Voting Nay: None Council Members Absent: Mayor Meyera E. Oberndorf and Rosemary Wilson April 16, 2002 RESOLUTION CERTIFICATION OF CLOSED SESSION VIRGINIA BEACH CITY COUNCIL WHEREAS: The Virginia Beach City Council convened into CLOSED SESSION, pursuant to thc affirmative vote recorded in ITEM # 49523, page 3, and in accordance with the provisions of The Virginia Freedom of Information Act; and, WHEREAS: Section 2.2-3711(A) of the Code of Virginia requires a certification by the governing body that such Closed Session was conducted in conformity with Virginia law. NOW, THEREFORE, BE IT RESOLVED: That the Virginia Beach City Council hereby certifies that, to the best of each member's knowledge, (a) only public business matters lawfully exempted from Open Meeting requirements by Virginia law were discussed in Closed Session to which this certification resolution applies; and, (b) only such public business matters as were identified in the motion convening this Closed Session were heard, discussed or considered by Virginia Beach City Council. City Clerk Aphl16,2002 ~em IV -6- CER TIFICA TION OF CLOSED SESSION ITEM #49526 Upon motion by Commissioner Fentress, seconded by Commissioner Jellig, the Development Authority CERTIFIED THE CLOSED SESSION TO BE INACCORDANCE WITH THE MOTION TO RECESS. Only public business matters lawfully exempted from Open Meeting requirements by Virginia law were discussed in Closed Session to which this certification resolution applies; AND, Only such public business matters as were identified in the motion convening the Closed Session were heard, discussed or considered by Virginia Beach City Council. Voting: 5-0 Commissioners Voting Aye: Vice Chair Kenneth D. Barefoot, Robert E. Fentress, Robert F. Hagan& Jr., Donald V. Jellig and Chairman Robert G. Jones Commissioners Voting Nay: None Council Members Absent: Teresa Carrington and Elizabeth A. Duke FIVE MINUTE BREAK April 16, 2002 -7- PRESENTATION 31sr STREET PROJECT 2:40 P.M. ITEM # 4952 7 E. Dean Block, Director of Public Works, presented information relative the 31sr Street project. Mr Block addressed the need forpublicparticipation with this and other economic developmentprojects. Thisproject could not be built in this market at this time without a public partner. The vision and broad goal of the City Council has been and is to upgrade the Oceanfront, attracting quality conventions and conferences and to create a year round resort. This type of hotel is essential to this goal. Public Policy Goals Return Authority Land to Tax rolls Implement Comprehensive Plan Increase Public Parking Create Catalyst for Corridor Neighborhood Protection Oceanfront Park; Ocean Vista Upscale Anchor/Quality Hotel New Revenues for Basic Services Supports Convention Center. 1985 1988 1989 1990 1994 1996 1997 1997 98/99 98/99 5/00 8/22/00 Project History Urban Land Institute (UL0 identified site as best opportunity for major development Virginia Beach Development Authority acquired Oceanfront property for $3.5-MILLION. Feasibility study by ZHA, Inc. Hotel Market Study by B.B.P Associates Convention Center Hotel Study (KPMG Peat Marwick) and Oceanfront Resort Area Concept Plan approved by City Council. Price Waterhouse study on convention market Hunter and Associates general hotel market study RFP issued for private/public development of hotel/park. Three proposals evaluated with decision made to pursue negotiations with Professional Hospitality Resources Evolution to 300-room hotel Council and VBDA approved term sheet, acquired Sandler property, developed a lease agreement for the property and authorized City Manager to begin negotiations to purchase landJbr a parking deck and retail center on Atlantic Avenue at 3]~t Street - includes public actions of' 9/15/98, 10/31/98, 3/9/99, 7/13/99 Non-binding referendum on project held as part of local elections Council reaffirmed support for project April 16, 2002 -8- PRESENTATION 31sr STREET PROJECT ITEM # 4952 7 (Continued) 12/00 12/00 4/01 7/01 7/01 to date 4/16/02 City secured last parcel of parking garage block; all land assembled Appropriation to acquire property. Last parcel secured. Revised Term Sheet Revised documents approved Discussion to complete terms Presentation of agreement signed by Developer Assistant City Attorney Carol Hahn provided information relative existing August 1999 Agreement re 31st Street development. In August 1999, the City and the Development Authority entered into a Development Agreement with the developer for the construction of a 300-room 4- Star Oceanfront hotel and adjacent public park. Ms. Hahn displayed a depiction of the project elements. The Authority is obligated to lease the land to the developer for 65 years on which to construct the hotel, pursuant to an unsubordinated ground lease. The developer is to construct a public park for an approximate cost of SI-MILLION and to maintain that park day-to-day. The City is obligated to provide capital maintenance. The developer is also obligated to provide entertainment at the public park. The original Agreement also contemplated the construction of public restrooms at the developer's cost. The developer also has the right to construct a fast food "stand alone" restaurant, as well as seventeen (17) parking spaces. An elevated walkway is to be constructed to connect the hotel to the parking garage, owned and constructed by the City and Development Authority (on the west side of Atlantic Avenue at 31st StreeO. The parking garage will contain 800 spaces, 380 of which would be leased to the developer for use in connection with the hotel. There are two provisions of the existing Development Agreement relating to the garage: (1) under the existing Agreement, the developer is obligated to pay the City ~ of the City's acquisition costs for this area of the land over $2-MILLION, which is estimated to be $683,000; (2) upon satisfaction of certain occupancy conditions in the parking garage. The City and Development Authority are obligated to construct an additional floor on the garage to provide additional public parking. Developm en t In cen tives Developer receives rent credit of $260,000 per year for 25 years if Developer submits bid for retail of at least $15 square feet on the 26, 000 square feet of retail space to be constructed as part of the parking garage and owned by the City and Development Authority. No greater incentive to 4-star hotel for five years from August 1999. Virginia Beach Development Authority (VBDA) to provide utilities at site boundary and to pay ~ of the tap fees for restrooms. Under the existing Development Agreement, basically the hotel is to be operational in either 2005 or 2006. In January 2001, the developer and the City began negotiations for a restructured Development Agreement. In April 2001, the developer and City entered into a Term Sheet, approved by City Council and the Development Authority, which established the basic terms of an amended transaction. In duly 2001, City Council approved the documents implementing the modified terms. The developer has not signed these documents. April 16, 2002 -9- PRESENTATION 31sr STREET PROJECT ITEM # 4952 7 Key Provisions Changed or Added by April 24, 2001 Terms Letter and/or April 2002 proposed Documents Key Provisions Changed or Added from 8/5/99 Development 4/24/01 Proposed Documents' Agreement Terms Letter 31st Street Property Sale: Sale of 31st Street Property from er Same ,4 uthority to Developer for $3.5-MILLION Reverter: Authority right to repurchase the 31st Street er Same Property from Developer if Developer fails to commence construction of hotel within 6 months of purchase~lease BQI Purchase.. Authority 's/City's right to purchase the Price of $2.2-MILLION Price increazsed to $2.5-MILLION if no closing Beach Quarters Inn at Rudee Loop on 3 pt Street property BQl Lease Back: Authority obligated to lease BQI property er Rent increased to $142,000 if no closing on 31st back to Developer for $125,000/year, Authority can Street property terminate upon developer default or A uthority's decision to put BQI to another use Subordinated Ground Lease of 31'~ Street Property: Lease Not Addressed Price increase, by CP1 annually after year six from Authority to Developer for 65 years by subordinated Ground Lease with option to purchase at cost increased by CPI Performance Schedule: Milestone dates adjusted to make er Timing Adjusted performance more certain Retail RFP/CREDIT: Developer entitled to cash or credit if Allows developer to er City receives bid of at least $15 SF on retail space terminate Development (No requirement for Developer to bid; cash or Agreement if Developer not credit to Developer if$15 sf bid received from selected Retail Provider. any party). Developer required to bid at least $15 sf Rent Rent modified to address Rent modified to include ground lease for 31s' only parking spaces given Street property if lease option purchased that 31st Street property to be sold and not ground leased to developer Deletion of Restaurant Site: DQ-type restaurant (and 17 er Same parking spaces) deleted and park enlarged by 1 O, 200 sf Construction/Maintenance of Restrooms: City/A uthority to er Same construct public restrooms on the Park Site, at its cost and maintain the same, at its cost Park Improvements.. Park Site enlarged. City/Authority to er Same construct park improvements for $1. O-MILLION Park Maintenance.. Developer to perform day-to-day er Same cleaning and mowing of Park at its cost. City/Authority to perform capital maintenance at its cost A )d-a-Deck Provision: Authority's obligation to construct er Same an additional floor on the Parking Garage based on occupancy deleted so long as the final design for the Parking Garage contains at least 800 parking spaces and includes a third access point on Pacific Avenue without changing the contemplated circulation or access points as orovided in the Master Plan Entertainment Venue.. Developer to program and provide er Same entertainment at the Park Site. City/Authority to reimburse Developer for the first $100, 000 in entertainment costs annually based on invoice Water and Sewer: City/Authority to bring water and sewer er Same taps and meters to the 31st Street property, at its expense not to exceed $300,000 April 16, 2002 - 10- PRESENTATION 31sr STREET PROJECT ITEM # 49527 (Continued) Key Provisions Changed or Added by April 24, 2001 Terms Letter and/or ~4pri12002 proposed Documents Key Provisions Changed or ~4dded from 8/5/99 4/24/01 Proposed Documents Development Agreement Terms Letter ,4 & E City/Authority to share up to $300, O00 for er Same coordination of design of public and private facilities (includes $50, O00 for Master Plan design) Barracuda Bob's.. ,4 uthority to lease back Barracuda Bob's er Same to operate for nominal rental payment until site necessary for Paring Garage construction Rudee Loop.. No promotion of hotel at Rudee loop until Not Addressed er 12/31/03 Under the proposed Agreement, the City is to provide the base parking garage signage for both hotel identification, as well as traffic circulation. In addition, the proposed ,4greement provides for the waiver of the developer's share (contribution toward the purchase price of the north parking garage site - calculated to be $683,000). In the existing Agreement, the City is obligated not to provide a greater incentive to a 4-star Oceanfront hotel than that being provided to the developer for a period of five years' (expiring in 2004). Under the proposed Agreement, this time period has been extended. Ms. Hahn displayed a depiction of the project elements Ms. Hahn displayed a conceptional depiction of the project elements of the proposed Agreement dated April 2002. This does not depict actual sizes. What's Next Distribute Agreement documents to all libraries, post on the City's }Feb site and have available in City Attorney's and Clerk's offices. Schedule Public Hearing for the City Council Session of April 23, 2002. 3Pt Street Project Agreement and Term Sheet shall be scheduled for the City Council Session of May 14, 2002. April 16, 2002 Item V. AD JO URNMENT -11 - ITEM #49528 City Council CONVENED into the City Council Workshop, after which to adjourn. Vice Mayor Sessoms DECLARED the SPECIAL JOINT FORMAL AND CLOSED SESSIONS of the VIRGINIA BEACH CITY COUNCIL and DEVELOPMENT AUTHORITY ADJOURNED at 3:25 P.M. Beverly O. Hooks, CMC Chief Deputy City Clerk William D. Sessoms, Jr. Vice Mayor City Clerk Meyera E. Oberndorf Mayor City of Virginia Beach Virginia The City Council Workshop Adjourned 6.'11 P.M. April 16, 2002