HomeMy WebLinkAbout2007 09_Temp Lease Agreement with ONEOK_2007.08.07CITY OF OWASSO, OKLAHOMA
RESOLUTION NO. 2007 -09
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF OWASSO,
OKLAHOMA DECLARING THE NECESSITY OF NEGOTIATING AND
EXECUTING A LEASE AGREEMENT BETWEEN THE CITY OF
OWASSO AND ONEOK, INC. TO PROVIDE TEMPORARY OFFICE
SPACE FOR OKLAHOMA NATURAL GAS DURING CONSTRUCTION
OF THE NEW FACILITY IN THE CHEROKEE INDUSTRIAL PARK,
AND AUTHORIZING THE CITY MANAGER TO NEGOTIATE AND
EXECUTE THE LEASE AGREEMENT.
WHEREAS: The City Council has determined that a Lease between the City of Owasso and
OneOk, Inc., providing temporary office space for Oklahoma Natural Gas in the Old Central
facility until such time as the new facility is constructed in the Cherokee Industrial Park, is
conducive to the economic development interests of the City of Owasso, and will promote the
development of a major commercial shopping center pursuant to that certain Development
Agreement executed by the Owasso Public Works Authority, the Owasso Economic
Development Authority, the City of Owasso and SF Shops Investors, L.P. ( "SFSI ") on July 17,
2007;
WHEREAS: The City has determined that the development of a major commercial shopping
center by SFSI will result in increased sales tax revenues, the addition of new jobs and retention
of existing jobs, and will significantly promote collateral economic growth and development
within the City of Owasso; and
WHEREAS: In order to promote economic development within the City of Owasso, the
negotiation, execution and delivery of the Lease is necessary, and is otherwise conducive to the
best interests of the municipality.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
OWASSO, OKLAHOMA, THAT: Officers and agents of the City of Owasso, Oklahoma,
are hereby authorized to negotiate, execute and deliver a lease agreement between the City of
Owasso and OneOk, Inc. (or any of its subsidiaries) to provide temporary office space for the
Oklahoma Natural Gas maintenance facility during the construction of that company's new
facility in the Cherokee Industrial Park;
BE IT FURTHER RESOLVED THAT: Execution of a lease agreement between the City of
Owasso and Oneok, Inc. is necessary to facilitate the purchase by SFSI, L.P. of the current
Oklahoma Natural Gas property, and to additionally facilitate both the related relocation of
Oklahoma Natural Gas to a facility to be newly constructed in the Cherokee Industrial Park, and
the subsequent construction of a commercial retail shopping center by SFSI, L.P. on the current
Oklahoma Natural Gas facility site:
BE IT FURTHER RESOLVED THAT: Execution and delivery of a lease agreement
between the City of Owasso, Oklahoma and OneOk, Inc. is conducive to and promotes
economic development within the City of Owasso, and will result in increased sales tax revenues
and the creation of additional jobs, and will additionally promote collateral economic growth for
the City of Owasso;
BE IT FURTHER RESOLVED THAT: The City of Owasso is hereby authorized to
negotiate and execute a lease with Oneok, Inc. pursuant to the authority granted to municipalities
by virtue of 11 O.S. §22 -101.
APPROVED AND ADOPTED this 7`h day of August, 2007, by the City Council of the City of
Owasso, Oklahoma.
Stephen taudella, Mayor
OFFICIAL
Attest: SEAL
Sherry -Bislo, City Clerk r,aHOMP
Approved As To Form: n '
Z1MiIOU
JUT Trout Lombardi, City Attorney
A
MEMORANDUM
TO: THE HONORABLE MAYOR AND CITY COUNCIL
CITY OF OWASSO
FROM: JULIE TROUT LOMBARDI
CITY ATTORNEY
SUBJECT: RESOLUTION AUTHORIZING THE NEGOTIATION AND EXECUTION
OF A TEMPORARY LEASE AGREEMENT BETWEEN THE CITY OF
OWASSO AND ONEOK, INC.
DATE: August 7, 2007
BACKGROUND:
On October 29, 1996, the Owasso Economic Development Authority ( "OEDA ") executed a
commercial lease agreement with OneOk, Inc. ( "OneOV) for the rental and potential purchase
by OneOk of a building to be used by Oklahoma Natural Gas ( "ONG ") as a maintenance facility.
Hunt Properties ( "Hunt "), by and through SF Shops Investors, L.P. ( "SFSI "), which is a limited
partnership related to Hunt, now seeks to purchase the land located at 96th Street North and 121St
East Avenue upon which the current ONG maintenance facility is located. Subsequent to the
purchase, SFSI intends to demolish the existing ONG facility and develop the property as a retail
shopping center.
To facilitate SFSI's purchase and development of the subject property as a retail shopping center,
the Owasso Public Works Authority ( "OPWA "), the Owasso Economic Development Authority
( "OEDA ") and the City of Owasso ( "City ") entered into a Development Agreement with SFSI
dated July 17, 2007. The Development Agreement is predicated upon a belief by the OPWA,
the OEDA and the City that development of this property as a major commercial retail shopping
center is conducive to and promotes economic development within the City of Owasso through:
1) an increase in sales tax revenue resulting from the construction of an additional retail area
within the City, 2) the creation of new jobs within the City, and, 3) the resultant collateral
economic growth which will emanate from construction of this retail center.
The Development Agreement requires that the land upon which the current ONG maintenance
facility is located be sold by the OEDA to SFSI. As a prerequisite for the sale and conveyance of
this property to occur, ONG must vacate the facility. A new facility for ONG will be constructed
at the Cherokee Industrial Park by SFSI concurrent with construction of the new retail shopping
center. However, construction of the shopping center and the new ONG facility will not begin
until the subject property is conveyed to SFSI and the premises are vacated. Therefore, it will be
necessary for ONG to obtain temporary office space within or near Owasso during construction
of the substitute facility in the Cherokee Industrial Park.
Temporary office space sufficient to house ONG's maintenance facility personnel is available in
the rear portion of the Old Central building on the second floor. The Old Central facility is
typically utilized by the City of Owasso Business Incubator as office space for businesses
participating in the Incubator program. While ONG is not a part of the Incubator program, the
portion of the Old Central building it proposes to lease may be used for that purpose following
the termination of the Oneok lease agreement. Formerly, the subject rental space within Old
Central has not been usable because substantial and costly repairs and improvements were
needed. However, to facilitate the rental of this space to ONG, SFSI has expended significant
funds in making repairs and improvements to the space so that it might be suitable for use by
ONG while the new facility is under construction. Subsequent to ONG's occupation of its new
facility and the lease's consequent termination, the City will possess usable, improved space
within Old Central suitable for use in the Business Incubator Program or otherwise as rental
office space.
The proposed lease between the City and OneOk will provide that ONG shall maintain the rental
space within Old Central in good working order, obtain its own janitorial services and be
responsible for payment of its pro rata share of Old Central's utility bills, as determined based on
square footage. In addition, OneOk will maintain a comprehensive policy of general liability
insurance in the amount of One Million Dollars ($1,000,000.) or provide evidence of funds
which have been segregated by ONG for that purpose. The City will assume no responsibility or
obligation for ONG's property which will be kept in the leased premises, and OneOk is
additionally required to indemnify and hold the City harmless for any liability which may result
from any act, omission or negligence of OneOk or any of its employees or agents. The
commencement, termination and length of the lease term is not determined by date or time
period but by event and occurrence. Specifically, the lease will commence when ONG vacates its
current facility, and will terminate when a Certificate of Occupancy is issued to OneOk which
allows ONG access and possession of the new building. The lease does not require payment of
rent by ONG for two reasons: 1) the significant repairs and improvements made to the rental
space by SFSI inure permanently to the City's ongoing benefit, and, 2) execution of a lease with
OneOk to provide temporary office space for ONG is fundamental to SFSI's construction of a
retail shopping center on the subject site, and thus is conducive to the economic development of
the City as well as ancillary economic growth.
In the absence of certain circumstances, a municipality is generally prohibited from providing no
or low cost rental space to a private company or entity. An exception has been created by the
Legislature, however, through the enactment of Il O.S. §22 -101. This statute allows a
municipality to enter into agreements regarding real property which are conducive to the best
interests of the municipality. Negotiation and execution of a lease agreement making temporary
office space available to ONG necessarily promotes economic development within the City
because the lease is intrinsic to the purchase and development of the proposed retail site by SFSI.
The proposed lease agreement is "conducive to the best interests of the municipality," and is
thereby a permissible act under the cited statute.
Municipalities are given significant authority and latitude for promotion of economic
development. While Section 14 of the Oklahoma Constitution restricts the use of public funds to
expenditures which are made in furtherance of a "public purpose," economic development has
been recognized by the courts in Oklahoma as a legitimate public purpose, and a city may
expend funds for the promotion of economic development. To qualify as an economic
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development project, a plan or proposed course of action must be intended and anticipated to
increase sales tax revenues and/or provide additional job opportunities within the municipality.
Execution of a lease agreement between the City and OneOk to provide temporary office space
for ONG is an integral and necessary element of the proposed construction of a retail shopping
center by SFSI, and, as such, is a legitimate public purpose for the promotion of economic
development within the City.
To authorize development of a lease agreement between the City and OneOk, it is necessary for
the Council to adopt a Resolution affirming its intention to execute a Development Agreement
with SFSI. The Resolution must also state that the Development Agreement facilitates
construction of a retail shopping center and thereby advances economic development through an
anticipated increase in sales tax revenues and the creation of additional employment
opportunities within the City. Finally, the Resolution must establish that the City's execution of
a lease agreement with OneOk which provides temporary office space to ONG is a fundamental
and necessary prerequisite to the SFSI's purchase and development of the subject property. The
Resolution prepared and attached for the Council's consideration incorporates these necessary
elements.
RECOMMENDATION:
The staff recommends approval of Resolution 2007 -09 and additional authorization of the City
Manager to negotiate and execute a lease agreement with OneOk to provide temporary office
space for ONG in the Old Central facility.
ATTACHMENTS:
Resolution 2007 -09
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