ITEM TITLE:
Consider approving a “Purchase and Sale Agreement and Settlement Agreement” between School House Slough, Inc. and the Lawton Water Authority in the amount of $2,875,000.00 for the purchase by the Authority on behalf of the City of Lawton of improvements made by School House Slough Inc., as well as: (a) personal property, (b) appurtenances and other rights associated with the improvements or personal property, (c) School House Slough Inc.’s interest in any leases or occupancy agreements with third-party tenants currently within the property, (d) a copy of any existing plans and specifications for the improvements and any surveys, environmental studies, engineering reports and other technical information owned by School House Slough Inc., and (e) all January 1, 2023 electricity meter readings relating to or taken from any location at the property, or the last meter readings in the custody, control, or possession of School House Slough Inc. prior to the termination of School House Slough’s lease that relate to or were taken from any location on the property; said agreement also addressing other issues relating to the transaction, providing a release from School House Slough Inc. of claims it may have against the Lawton Water Authority and the City of Lawton, providing a release by the Lawton Water Authority of claims it may have against School House Slough Inc.; and if the agreement is approved, authorize the execution of the agreement and any other action necessary to effectuate payment to School House Slough Inc.
INITIATOR: Timothy Wilson - Acting City Attorney
STAFF INFORMATION SOURCE: Timothy Wilson - Acting City Attorney; John Ratliff - City Manager; Joe Dunham - Finance Director
BACKGROUND: The City of Lawton [“City”] owns Lake Lawtonka. The City has leased its water system to the Lawton Water Authority [“Authority”]. The Authority, with the City’s consent, leased the land commonly known as Schoolhouse Slough to School House Slough, Inc. [“SHS Inc.”] during the period of May 1997 through December 31, 2022 under a Ground Lease and Non-Exclusive Concession Operation Agreement dated May 28, 1997, as amended by that certain Amendment 1 dated November 25, 1997, that certain Amendment 2 dated June 13, 2000, that certain Amendment 3 dated December 10, 2002, and that certain Amendment 4 dated December 27, 2012, pursuant to which SHS Inc. was permitted to develop and construct buildings, improvements and other structures. During the term of SHS Inc.’s lease, SHS Inc. built buildings, improvements and structures on the land and operated the improvements with certain machinery, equipment, fixtures and other tangible personal property. After the SHS Inc. lease terminated a dispute arose regarding the disposition of the improvements as a result of the lease’s termination. Section 2.9 of the SHS Inc. lease states that a new or succeeding lessee will be required to purchase all the buildings and improvements with the structural value being determined by three independent appraisers. However, since the SHS Inc.’s lease terminated over a year ago, a new lessee has yet to be identified. Rather, the City is administering the camping and boathouse leases associated with the Schoolhouse Slough recreational area while future operational plans for the area yet to be determined. In the interim, the three appraisals have been completed. The first appraisal by David B. Means appraised at $3,100,000. The second appraisal by Isaacs & Associates appraised at $2,700,000. The third appraisal by Roberson & Company Realty Advisors, LLC appraised at $2,830,000.
The proposed “Purchase and Sale Agreement and Settlement Agreement” resolves the dispute with SHS Inc. Under the proposed agreement the Authority will purchase from SHS Inc. on behalf of the City the improvements made by SHS Inc., as well as: (a) personal property, (b) appurtenances and other rights associated with the improvements or personal property, (c) SHS Inc.’s interest in any leases or occupancy agreements with third-party tenants currently within the property, (d) a copy of any existing plans and specifications for the improvements and any surveys, environmental studies, engineering reports and other technical information owned by SHS Inc., and (e) all January 1, 2023 electricity meter readings relating to or taken from any location at the property, or the last meter readings in the custody, control, or possession of SHS Inc. prior to the termination of SHS’s lease that relate to or were taken from any location on the property, and authorize the execution of the agreement and any other action necessary to effectuate payment to SHS Inc. As part of this agreement, SHS Inc. will release claims it may have against the Authority and City. The Authority will release claims it may have against SHS Inc. relating to any occurrences with the SHS Inc. lease, the land, the improvements, the personal property or the dispute. The purchase will be funded by the Authority’s Utility System Revenue Note, Series 2023, which was issued in December 2023 in the principal amount of $2,940,000.
EXHIBIT: Proposed “Purchase and Sale Agreement and Settlement Agreement” with exhibits.
KEY ISSUES: N/A
FUNDING SOURCE: The Authority’s Utility System Revenue Note, Series 2023, which was issued in December 2023 in the principal amount of $2,940,000.
STAFF RECOMMENDED COUNCIL ACTION: Approve the agreement and authorize the execution of the agreement and any other action necessary to effectuate payment to School House Slough Inc.