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HomeMy WebLinkAboutItem 19 Update and Request Direction to the City Manager and City Attorney regarding City Consultants’ Investigation, City’s Right of First Refusal and Forest Lake’s Request for Approval of Assignment City of Ocoee ▪ 1 N. Bluford Avenue ▪ Ocoee, Florida 34761 Phone: (407) 905-3100 ▪ www.ocoee.org STAFF REPORT Meeting Date: December 3, 2024 Item #: 19 Contact Name: Craig Shadrix Department Director: Contact Number: Ext. 6434 City Manager: Craig Shadrix Subject: Update and Request Direction to the City Manager and City Attorney regarding City Consultants’ Investigation, City’s Right of First Refusal (“ROFR”) and Forest Lake’s Request for Approval of Assignment Related to City-owned Property Located at 10521 Clarcona, Ocoee Road (Forest Lake Golf Course and Facilities). (City Attorney Ardaman) Background Summary: On August 20, 2024, the Ocoee City Commission voted 5-0 to deny the request to assign the Ground Lease Agreement from Forest Lake LLP to J.A. Hospitality dated June 26, 2024, without prejudice, due to multiple reasons, including but not limited to Forest Lake LLP’s failure to provide complete financial and other information requested on multiple occasions by the City in order to make a determination. Since the August 20, 2024, Commission meeting, Forest Lake and J.A. Hospitality sent a request for approval of assignment for an Amended and Restated Purchase and Sale Agreement dated September 16, 2024. After the request was received by the City, the City’s consultants received additional information from Forest Lake and conducted numerous inspections that will be provided at the City Commission meeting. The City met with the owners of Forest Lake and their attorneys on November 7, 2024, to discuss all matters related to the requested assignment and notice of default. The parties agreed in writing to extend the ROFR deadline to December 5, 2024. The City sent Forest Lake a 2nd Notice of Default on November 15, 2024, based on the inspections conducted by the City's consultants. Additionally, City Staff and attorneys from Fishback Dominick met with J.A. Hospitality on Tuesday, November 19th, 2024, to obtain information about J.A. Hospitality. J.A. Hospitality was represented by Peter Watzka and other team members and its attorney. Issue: Should the Honorable Mayor and City Commissioners exercise the City’s Right of First Refusal and approve or deny Forest Lake’s Request for Approval of Assignment? Recommendations: The City Attorneys, Consultants and City Staff will provide information for consideration and potential action by the City Commission in lieu of a recommendation at this time. Attachments: 1. Forest Lake Golf Timeline City of Ocoee ▪ 1 N. Bluford Avenue ▪ Ocoee, Florida 34761 Phone: (407) 905-3100 ▪ www.ocoee.org Financial Impacts: None Type of Item: Regular November 27, 2024 Forest Lake Golf Club Timeline Mid-2018: Ocoee City Commission directed staff to investigate the possibility of the City acquiring the Forest Lake Golf Club ground lease. At this time, both the City and Lessee commissioned separate valuation studies performed by consultants. March 2020: Ocoee Commission held a public workshop to discuss the findings of the consultants (GAI for the City; CRM for Lessee) as well as feedback from the City Utilities team related to the wastewater permit. The consultants presented the following “as is” valuation estimates:  GAI $3.7M  CRM $5M In the Lessee’s consultant’s presentation, they presented three other options, which involved reconfiguration of some holes on the golf course and activation of potential development opportunities that would increase the value of the asset/ground lease, etc. All of these options were highly speculative and hypothetical, and required the unlikely assumption that DEP would approve any, some or all of the concepts. The City had no interest in these options and made it clear that their valuation perspective would not take any into account. Based on the workshop discussions, the gap between valuations and the onset of the Covid pandemic, the City put these discussions on hold as they were not a high priority, based on global events. In the fourth quarter of 2020, discussions between Forest Lake LLLP and City officials commenced again about the possibility of a lease transfer. A sales price was discussed but an agreed upon price was not reached. Mid-2023: City staff began discussions internally about the need to establish a structured and disciplined process to develop a full understanding of the ground lease and wastewater permit obligations and requirements between the City and Forest Lake LLLP. The goal was to put the City in position to respond to future potential requests for a potential lease assignment from a fully informed, responsible perspective. November 7, 2023: The Commission approved a proposal by ZHA, Inc. to perform an analysis of the ground lease and wastewater permit and produce a report for the City to have available as a resource when considering potential future requests for assignment of the lease. The approved ZHA proposal included the following scope of work:  Review the ground lease (entirety) and all documents modifying the lease. (the ground lease covers requirements related to all golf operations and compliance with the wastewater permit)  Review the wastewater permit and all documents modifying the permit.  Review maintenance records related to permit compliance (golf course maintenance is tied to permit compliance)  Review operations procedures manuals (golf course operations procedures are tied to the wastewater permit)  Analyze and prepare draft report addressing potential operational efficiencies (tied to overall golf operations) Early December, 2023: ZHA (Robert Utsey) reached out to Ken Ezell and George Clifton to meet and discuss goals and objectives for the analysis and to begin to develop a relationship. December 13, 2023: ZHA sent Ken Ezell a detailed request for information requesting documents needed to effectively perform the analysis. Key areas of focus for this request were based on the following items:  The ground lease requirements – all encompassing  Maintenance records related to the ground lease requirements, which includes golf course operations and wastewater permit.  Operations procedures related to the ground lease, which includes the golf course and wastewater permit.  Overall operational efficiencies related to the entirety of the ground lease, which includes compliance with the wastewater permit. January 18, 2024: ZHA has an on a site tour of the property accompanied by Lessee and was provided limited documentation relative to the request for information. ZHA was told that remaining documents would be forthcoming. Subsequent correspondence between Forest Lake and ZHA centered on the Lessee’s need for an NDA to be in place to protect documents from the public domain. ZHA did not enter into an NDA at the direction of the City due to the City’s position that the City (and ZHA as a contracted representative of the City) was fully entitled to receive any and all documents requested. During the time between these NDA discussions and June, ZHA advised the City that we would likely need the City attorney involved to compel the Lessee to provide all of the documents requested. In the meantime, ZHA analyzed the documents provided, performed various informal observations of golf course operations and worked with City staff to evaluate compliance with the wastewater permit. June 26, 2024: City received a Notice of Ground Lease Assignment and a fully executed Purchase and Sale Agreement from Forest Lake LLLP to JA Hospitality. July 30, 2024: ZHA provided City with status update relative to the proposed Assignment regarding the Ground Lease and wastewater permit. August 6, 2024: Commission authorizes City Attorney to take all actions necessary to support consultant (ZHA) in obtaining all of the documents requested to complete the analysis of the Ground Lease and wastewater permit. Commission also authorizes City Manager, City Attorney, and ZHA to evaluate and respond to Notice of Assignment and Purchase and Sale Agreement. August 20, 2024: Commission votes in 5-0 decision to deny the Assignment of the Ground Lease from Forest Lake LLLP to JA Hospitality. Commission members commented on the importance of protecting the City’s interests and need for Lessee to provide financial data requested to properly evaluate requirements within the ground lease. September 16, 2024: Lessee, through attorney Lowndes, sends letter to City disputing Right of First Refusal (ROFR) expiration timing; Lessee issues amended and restated Purchase and Sale Agreement between Forest Lake LLLP and JA hospitality, extending the deadline for City to act on ROFR to November 15, 2024. September 20, 2024: City issues First Notice of Default to Lessee. September 27, 2024: Lessee’s attorney files a public records request. October 16, 2024: City issues Public Records Request to Lessee. Lessee’s attorney responds to First Notice of Default. October 16, 2024: City receives box of documents from Lessee. Documents received are a small portion of what was requested in the ROI issued to Lessee in December 2023. Lessee’s attorney provides response to first Notice of Default. October 18, 2024: Lessee’s attorney responds to City’s Public Records request. October 24, 2024: Lessee’s attorney sends letter to City regarding inspections at the Forest Lake property. October 25, 2024: City attorney sends letter to Lessee advising of the expiration of the Notice of Default cure period. October 30, 2024: City attorney sends letter to Lessee’s attorney regarding Public Records request dispute. November 7, 2024: The City staff and attorneys met with the owners of Forest Lake and their attorneys to discuss all matters related to the requested assignment and notice of default. The parties agreed in writing to extend the ROFR deadline to December 5, 2024. November 15, 2024: The City sent Forest Lake a Second Notice of Default based on the inspections conducted by the City's consultants. November 19, 2024: City Staff and attorneys met with JA Hospitality (team and attorney) to obtain financial information and relevant experience. November 22, 2024: Lessee’s attorney responds to the City’s outstanding document production list, providing additional context for the missing documents and submitting further materials.