HomeMy WebLinkAboutOrdinance 4838 ORDINANCE NO. 4838
AN ORDINANCE TO WAIVE THE REQUIREMENTS OF
§34.27 OF THE FAYETTEVILLE CODE OF ORDINANCES
AND TO AUTHORIZE THE SALE OF THE CONTINUING
EDUCATION CENTER BUILDING TO THE UNIVERSITY OF
ARKANSAS FOR $2079650.00
WHEREAS, after long negotiation, the City of Fayetteville and the University of
Arkansas agree that the intent of the Fayetteville City Board of Directors and University of
Arkansas in 1979 was to sell the Continuing Education Center to the University of Arkansas for
the amount of Fayetteville taxpayer dollars needed for this project and not yet returned to the
City by all revenues (including interest earnings and rent payments); and
WHEREAS, the University of Arkansas and the City of Fayetteville have agreed that the
amount of unreimbursed Fayetteville taxpayer dollars invested into the Continuing Education
Center (including construction, financing, insurance, property tax, and maintenance expenses) is
$207,650.00; and
WHEREAS, it is in the best interests of the citizens and taxpayers of Fayetteville and the
University of Arkansas to resolve this controversy by selling the Continuing Education Center to
the University of Arkansas for $207,650.00; and
WHEREAS, since this sale is in accordance with what was stated in the City Board of
Directors' minutes when the Lease Agreement was authorized and somewhat in accordance with
the option to purchase of the Lease Agreement, the City's normal requirements for the sale of
city owned property including: an appraisal, advertisement, signs, certified mail to adjacent
property owners concerning this sale are inappropriate for this sale.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE
CITY OF FAYETTEVILLE, ARKANSAS:
Section 1 : That the City Council of the City of Fayetteville, Arkansas hereby determines
that, because of the unique history of this successful collaboration between the City and the
University to build and operate the Continuing Education Center and the option to purchase
within the Lease Agreement, the sale of the Continuing Education Center building to the
University of Arkansas should not have to comply with § 34.27 of the Fayetteville Code of
Ordinances entitled Sale of Municipally Owned Read Estate. The City Council therefore
waives § 34.27, authorizes the sale of the Continuing Education Center building to the University
of Arkansas for $207,650.00 and authorizes Mayor Coody to execute a deed and all other
documents necessary to effectuate this sale.
PASSED and APPROVED this 7'h day of March, 2006.
\'G\S Y O;c'rG'P
APPROVED: ATTEST: _�, • ��'
^ ; FAYETTEVILLE ;
By: L4 By: 9QKAN`;Pc'J=a•
DAN COODY, Mayor SO DRA SMITH, City Clerk ��' y; � GTO14
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FLAY e TTE V' LLE ejnjlnunS
THE CITY OF FAYETTEVILLE, ARKANSAS CA wyyG TCO. /
KIT WILLIAM% CITY ATTORNEY
DAVID WHITAKER, ASST. CITY ATTORNEY
DEPARTMENTAL CORRESPONDENCE LEGAL DEPARTMENT
TO: City Council
FROM: Kit Williams, City Attorney
DATE: February 8, 2006 /
RE: Decision needed for response to Chancellor White's letter
On the last page of Chancellor White's letter to Mayor Coody dated January 31 ,
2006, he states (in bold):
"Please consider this letter as a request by the University for the City
to honor its obligations under the Lease and to convey the CEC to the University at
the contracted price of Ten Dollars ($10.00) within the next 30 days."
Therefore, the City Council needs to determine what the City' s position should be
on this issue during its February 21 , 2006 meeting.
I believe the City Council has very wide authority in this case to determine the
terms or conditions of selling the CEC to the University. The Legislature has passed a
specific statute to give cities this power.
"14-43-611 . Sale of city property to college or
university.
"Any city of the first class may sell, under such
terms and conditions as it deems appropriate, city
property to any publicly supported postsecondary
educational institution."
Because the Legislature granted us the power to sell under terms City Council
"deems appropriate," normal conditions of fair market value do not appear to restrict your
judgment in this case. However, assuming the option to purchase provision is valid, the
City Council may not charge more than such option to purchase provision would allow.
I have included several old memos and e-mails about this lease option to purchase
issue and may provide further information before your meeting.
UNIVERSITY-OfARKANSAS
Office of the Chancellor 425 Administration Building
Fayetteville, Arkansas 72701
(479) 575.4146
FAX (479) 575-2361
January 31 , 2006
The Honorable Dan Coody
Mayor
City of Fayetteville
113 West Mountain
Fayetteville, AR 72701
VIA PERSONAL DELIVERY
Dear Mayor Coody:
The University of Arkansas and the City of Fayetteville enjoy a mutually beneficial and historic
relationship dating back to the institution's founding in 1871 , when the citizens of Fayetteville and
Washington County had the foresight to pass the bond issues necessary to secure the University for this
area. In more recent times, the University and the City have continuously cooperated on a wide array
of projects, including construction of the Walton Arts Center, establishment of the research technology
park and the Fayetteville Economic Development Council, various street improvements, and First
Night Fayetteville activities. Our common interests in improving the lives of the citizens of
Fayetteville and the State of Arkansas have served as a catalyst in maintaining strong ties between the
University and the City and have set the stage for the dynamic and cosmopolitan community that we
enjoy today. I know we share a strong interest and common desire to nurture that tradition of
cooperation. In that spirit, I am writing to you and each of the members of the City Council as we
stand at an important crossroads with respect to the Continuing Education Center (CEC).
One tangible expression of the cooperative relationship between the University and the City occurred
when the University agreed to locate the CEC in downtown Fayetteville. As you are aware, that
initiative was undertaken, in large measure, to help secure the economic future of the Square, an area
that is now active and vibrant, but which at the time was truly struggling for survival. As a part of that
initiative, the City of Fayetteville and the Board of Trustees of the University entered into a Lease and
Agreement for the CEC dated October 1 , 1979. As you know, for the past year, the Lease has been the
subject of ongoing discussions between representatives of the University and the City.
The University has forthrightly shared its legal interpretation of the Lease with you and with other City
officials in the attached letter of December 7, 2004. I am also aware that City Attorney Kit Williams
The University of Arkansas is an equal opportunitylaffinnative action institution.
The Honorable Dan Coody
January 31 , 2006
Page 2
has set forth his legal interpretation of the Lease. As I understand it, now that we have reached the end
of the Lease, during which the University has paid rent that was strictly dedicated to the retirement of
the bond proceeds used to construct the CEC, the City claims that the University owes millions of
dollars in order to purchase the CEC under the Lease. In essence, the City disregards the University's
lease payments, seeking to characterize them as general funds of the City, and now seeks to charge its
assessment of the current value of the CEC. The University, however, has a fiduciary responsibility to
the taxpayers of the State of Arkansas, including the citizens of Fayetteville, not to pay for the same
building twice. Although the University believes that the text of the Lease on this issue is clear, we are
fortunate to have the benefit of knowing the intent of the individuals directly involved in the decision
to locate the CEC on the Square and to finance the construction largely through the University's rental
payments.
Many officials and leading citizens who were involved with the Lease and the surrounding events a
quarter of a century ago confirm that it was not the intention for the University to pay for the building
twice. In their view, the University was supposed to obtain the facility at the conclusion of the Lease
for the nominal sum of Ten Dollars ($ 10.00) as provided in the Lease, as long as the City did not have
to reach into City taxpayer funds to retire the bonds issued to finance construction of the CEC. In fact,
I am pleased that the positive scenario anticipated by those involved in this matter actually transpired:
the University's lease payments, state-appropriated tumback funds specifically designated for the.CEC,
and interest on CEC bond funds, were together sufficient to pay for all of the costs of the construction
of the CEC and to retire the bonds without reducing the City's coffers.
The intent of the parties to the Lease is stated clearly in the attached affidavits by several individuals
who were involved in the CEC project on behalf of the University, the City, or in their capacity as
leading citizens seeking to revitalize the downtown Square:
■ David Malone, former Mayor of the City of Fayetteville (who executed the
Lease on behalf of the City);
■ Rick Osborne, City Council member at the time of execution of the Lease;
■ Pat Tobin, former Finance Director and Assistant City Manager for the City of
Fayetteville, who represented the City in Continuing Education Center negotiations;
■ John Lewis, business leader who was instrumental in efforts to locate the
Continuing Education Center on the Square; and
■ Fred Vorsanger, former Vice President for Finance and Administration of
the University of Arkansas (whose signature also appears on the Lease), as well as a
former Mayor of Fayetteville.
The Honorable Dan Coody
January 31 , 2006
Page 3
1 am hopeful that, upon having an opportunity to hear directly from these respected individuals
(including former City officials) who were actively involved in this project 25 years ago and who
understood the intent and purpose of the Lease, all parties will have a more complete and better
understanding that no one involved in this transaction intended for the University to pay for the CEC
twice.
In the event that any questions exist concerning the University's view of the Lease, please allow me to
explain our reasoning, as supported by the attached affidavits. Under the Lease, once all of the CEC
project bonds have been retired, the Lease grants the University an option to purchase the CEC for the
amount of hotel, motel and restaurant tax funds and general funds required by the City to construct and
finance the CEC (including the payment of debt service on bonds) less any state tumback funds'
received as a result of the Project. On the other hand, if the sum of the state tumback funds received
for the Project equals or exceeds the hotel, motel and restaurant tax funds plus general funds which
were required to construct and finance the CEC, then the purchase price would be Ten Dollars
($ 10.00).
The records provided by the City to the University indicate that all hotel, motel and restaurant (HMR)
tax funds ever paid into the CEC project were refunded to the Advertising and Promotion Commission
because of the amounts of state tumback dollars received by the City; this was further confirmed in a
memorandum from City officials in September, 2004. Furthermore, to date the City has not
documented that any of its general funds were ever required to construct and finance the CEC.
The rental amounts paid by the University to retire bonds and the interest on the bond funds do not
constitute "general funds" of the City. All of these funds were pledged by the City and by project
agreements for the sole purpose of retiring the bonds. As you can appreciate, if any attempt had ever
been made by Fayetteville to use those funds for any purpose other than bond retirement, there would
have been serious legal repercussions for the City. The mere fact that any funds were passed through
the City en route to the bond Trustee did not transform those funds into general funds. Again, if there
were ever any costs of financing and constructing the project paid for by the City which were not.
included in the bonded debt, the City has never provided the University with any documentation of
such costs.
A vital objective in the CEC project agreements was to protect City of Fayetteville taxpayers from
paying for bond debt. If City taxpayers had paid for the bond debt, then the University would be
responsible to pay the City that amount, less State tumback funds received, in order to purchase the
building under the terms of the Lease. Instead, the bond debt was fully paid through the combination
of the University' s rental payments, state tumback funds, and interest on bond funds. Therefore, the
' Tumback funds are state-appropriated funds designed to promote Arkansas tourism
through helping local communities finance facilities like the CEC. Appropriations were
specifically designated to the CEC and helped defray the cost of constructing the facility.
The Honorable Dan Coody
January 31 , 2006
Page 4
University is contractually entitled to purchase the CEC for Ten Dollars ($ 10.00) as expressly stated in
the Lease and as evidenced in the attached affidavits.
The Lease interpretation previously asserted by the City would result in an unfair and unintended
windfall profit for the City and an unacceptable double payment by the University. As stewards of
taxpayer funds, I am certain that you will understand why this outcome is unacceptable to the
University and unsupported by the officials and leading citizens involved in the construction of the
CEC.
As you are aware, this letter is prompted, in part, by the fact that the City has issued invoices for rent
on the CEC to the University. Further, to date, the City has not honored its contractual promise to the
University under the Lease to convey the CEC to the University by Warranty deed for a purchase price
of $ 10.00 as provided for in Section 2014(A) of the Lease. We understand, however, that this issue
has required a careful review by all of the parties. Please consider this letter as a request by the
University for the City to honor its obligations under the Lease and to convey the CEC to the
University at the contracted price of Ten Dollars ($10.00) within the next 30 days.
Although the parties have engaged in amicable discussions to resolve this matter, the City's ongoing
delay in failing to honor the terms of the Lease and the uncertainty surrounding the future of the CEC
have begun to adversely affect the University's ability to attract clients, which is detrimental to both
the University and the City. Accordingly, the parties need to honor the deal struck many years ago.
We do not support the idea of filing a "friendly" lawsuit to settle our differences and believe that any
litigation between the University and the City undermines the history and tradition of good faith
cooperation between the parties which has been the hallmark of our relationship for more than a
century. There is no mystery what the parties intended by the Lease; especially in light of the
affidavits, a lawsuit would be a waste of each party's time and resources.
We remain optimistic that we can resolve this matter amicably and in the best interests of both parties
without further delay. We look forward to the City honoring the terms of the Lease. Please feel free to
contact me if you would like to discuss this matter.
Sincerely,
"a
John A. White
Chancellor
Attachments
RECEIVED
APR 12
UNIVERSITYMMANSAS
CITY OF FAYETTEVITEVILLE
-- MAYOR'S OFFICE
Vice Chancellor for Finance and Administration 406 Administration Building
Fayetteville, Arkansas 72701
(479) 575-5828
(479) 575-5400 (FAX)
April 9, 2004
The Honorable Dan Coody
Mayor of Fayetteville
113 W. Mountain St.
Fayetteville, AR 72701
RE: Continuing Education Center Lease and Agreement
Dear Mayor Coody:
The Lease and Agreement dated October 1, 1979 between the City of Fayetteville, Arkansas
and the Board of Trustees of the University of Arkansas for the Continuing Education Center
(CEC) property is scheduled to, terminate in May 2005. As per Section 2014 of this Agreement,
the City granted the University an option to purchase the property at the termination of the
lease, provided all bonds issued to finance the project have been retired. Since the University
would like to consider this purchase option, we need for the City to send us an updated
summary of the revenues and expenses applicable to the project as stipulated in the lease.
Last year the University received from the City a summary of Trustee Statements which shows
a yearly breakdown from 1978 through May 2003 of revenues and expenses, transfers, etc. for
both the CEC project and the parking facilities. To the best of our knowledge, the parking deck
was not part of the CEC project, so the revenue and expenses associated with construction and
operation of the parking deck (including any of the bond issue used for the parking deck)
should be shown separately on the summary statement.
Thank you for your time and assistance.
Sincerely,
Don Pederson
Vice Chancellor for Finance & Administration
lac
The University of Arkansas is an equal opportunity/affirmative action institution.
A _ w.. _ ice— _ 11_ _ . _ Ito _
e - Summary of Trustee Statements CEC^ Page
From: James Ezell <jezell@uark.edu>
To: <sturberville@ci.fayetteville.ar.us>
Date: 5/11 /04 9:38AM
Subject: Summary of Trustee Statements, CEC
Shelly,
A copy of the summary statement on the CEC bonds which you sent to Don _
Pederson has been given to me for use in determiningthe the cost to the
University, if we exercise our purchase option after the current lease
expires. In order to make this determination, we need to know just the
expenses and income applicable to the Continuing Education Center. We are
not aware of the Parkin Facili beinn cart of our lease with option to, . ..,.
purchase agreement, but it a pears that the expenses and income applicable'
to this facility are somewhat ergs w to Is stiff-M aryl
Can you clarify this for me? If I am correct, can you provide a summary
statement just applicable to CEC?
Thanks, James
CC: Don Pederson <dop@uark.edu>
FAYET I' EVILLE
THE CITY OF FAYETTEVILLE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
TO: Kit Williams, City Attorney
FROM : Stephen Davis, Finance & Internal Services Director.4
DATE: July 27, 2004
SUBJECT: CEC and Settlement with the University of Arkansas
Over the past year numerous communiques have been exchanged between the City and University
concerning the payments made on the bond issue with the University seeking information on what
the transfer price would be for the University to be able to determine if the University desires to
exercise its purchase option on the facility. On May I I Ih, James Ezell, representing the University,
contacted the Accounting Division requesting information concerning the payments, tax collections,
etc associated with determining the transfer price for the CEC. On June 2"d the Accounting Division
forwarded the information requested by Mr. Ezell to your office for distribution to the University.
Mr. Ezell, on June 25th, again contacted the Accounting Division asking the status of his June 2"d
request. The Accounting Division forwarded his request to your office the same day it was received.
Please advise the current status of the negotiations with the University concerning the potential
exercise of their purchase option. If the University does not exercise the purchase option afforded it
in the 1979 lease the City will need to enter negotiations with the University for a new lease for the
CEC.
CC: Dan Coody, Mayor
Hugh Earnest, Chief Administrative Officer
Marsha Farthing, Accounting Manager
Mfvucl-L LILMIJLLrdn •xtr.-�rrawTo Tyh (A� yep Z k/4 7 •uo r . V[
Vii 1
UNIVERSITY OF ARKANSAS
Of re of rlro• Gewral Camnu!
September 27, 2004
The Honorable Kit Williams
City Attorney
City of Fayetteville
113 West Mountain
Fayetteville, AR 72701
VIA FACSIMILE
575-8315
Dear Kit:
As you know, the University is currently conducting its review of the appropriate
purchase price of the Continuing Education Center under the purchase option of the
existing Lease between the City and the University. Friday's Northwest Arkansas
Times reported that you have issued a new memorandum regarding a proposed
purchase price for the CEC. To assist in our analysis, I would appreciate it if you could
provide us with a copy of that memorandum and any underlying data upon which your
calculation is based.
In addition, James Ezell had previously requested Shelley Turberville to provide a copy
of the memorandum you issued to the City Council on March 8, 2004 regarding this
matter. We would also appreciate a copy of that memorandum. Ms. Turberville
provided certain other information to Mr. Ezell last week, which we appreciate.
After we have had an opportunity to review the necessary information, University
officials look forward to visiting with representatives of the City regarding our
assessment of the appropriate purchase price.
421 Administration Ettllding / Fayerrevillq Arkatuas 72701 / 479-575 .5401 / Faa 479-575-5046
Unirarury of Arkansas, Fayetteville / lin w-nity ufArkansas ar Iiule Ruck / Univerairy of Arkansas at Pine Rlldr
University of Asko).0 fw Medical Aeienca / Uma miry of Arkansas at Monticello / Divikon of Agriculture / Criminal Justice lmrignc
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Kit Williams September 27, 2004 -- Page 2
Thanks in advance for your assistance in this matter.
Sincerely,
OL� n �
William R. Kincaid
Assoclate General Counsel
cc: Donald O. Pederson
James Ezell
FAYETTEVI LLE
THE CITY OF FAYETTEVILLE. ARKANSAS
KIT WILLIAMS, CITY ATTORNEY
DAVID WHITAKER, ASST. CITY ATTORNEY
LEGAL DEPARTMENT
DEPARTMENTAL CORRESPONDENCE
TO: Dan Coody, Mayor
Hugh Earnest, Chief Administrative Officer
Steve Davis, Finance & Internal Services Director
FROM: Kit Williams, City Attorney
DATE: September 23, 2004
RE: Purchase price of CEC per lease with U of A
In reviewing the law concerning interpretation of contracts, I believe
my memo of March 8, 2004 (attached) correctly interprets the Lease and
Agreement Between City of Fayetteville, Arkansas and The Board of Trustees of
The University of Arkansas dated October 1, 1979. The crucial option to
purchase language found in §2014 is quoted below:
"It is agreed that should Lessee (University of Arkansas)
desire to exercise said option that the purchase price shall
equal the amount of hotel, motel and restaurant tax funds
and general funds required by Lessor (City of Fayetteville)
to construct and finance said Project (including the
payment of debt service on bonds) less any amounts
received as a result of this Project by Lessor under the
provisions of Act 763 of 1977 as amended by Act 212
of 1979, or as hereafter further amended."
RULES OF INTERPRETATION OF CONTRACT
There have been countless cases through the years where two
parties to a contract argue about how the language in the contract should
be construed or interpreted. The most fundamental of all rules of
interpretation is that "the words of a contract are to be taken and
understood in their plain and ordinary meaning." Phi Kappa Tau
Housing Corp. v. Wengert, 350 Ark. 335, 86 S.W. 3rd 856, 859 (2002)
(emphasis added).
When a contract is clear and unambiguous, "the clear meaning of
the contract must be enforced." Stilley v. James, 345 Ark. 362, 48 S.W. 3rd
521, 528 (2001).
"A contract is unambiguous and its construction
and legal effect are questions of law when its terms
are not susceptible to more than one equally
reasonable construction."
"When contracting parties express their intention in
a written instrument in clear and unambiguous
language, it is the court's duty to construe the
writing in accordance with the plain meaning of the
language employed." Turnbough v. Mammoth Spring
School, 74 Ark. App. 107, 45 S.W. 3rd 430, 434
(2001) (citations omitted). (emphasis added).
To determine what the option to purchase price is, we must
determine two numbers. The first is "the amount of hotel, motel and
restaurant tax funds and general funds required by (the City) to construct
and finance said Project (including the payment of debt service on
bonds)."
I believe it is beyond dispute that the Continuing Education Center's
construction was wholly financed by local government funds (primarily
HMR taxes) with the sole exception of state turnback funds credited to this
building and its construction and financing costs. The state turnback
funds (amounting to over 5 million dollars) shall be deducted from the
2
overall financing and construction cost to determine the option to
purchase price as required in the lease provision.
The amount of HMR taxes and general funds required by the City of
Fayetteville to construct and finance the CEC includes:
(1) The principal payment: $4,175,000.00
This
constitutes
what
it actually cost to build the Continuing
Education
Center in the
early
80's.
(2) Interest payment: $5,712,928.44
This is the debt service on the bonds, but this figure does NOT
constitute the whole cost to finance the project. Trustee Fees, Bond
Underwriter Discount, and Cost of Bond Issuance all are standard
components of financing costs for issuance of municipal or tax bonds.
(3) Trustee Fees: $ 41,694.03
(4) Bond Underwriter Discount. $205,589.50
(5) Cost of Bond Issuance: $101,152.03
TOTAL COST OF CONSTRUCTION AND FINANCING: $10,236,364.00
Thus the total "amount of hotel, motel and restaurant tax funds and
general funds required by (the City) to construct and finance (the CEC)" is
$10,236,364.00. In order for the City not to profit from the proceeds
derived not from its own taxpayers' resources, the lease calls for the
reduction of this cost of construction and financing for any state turnback
funds received. Through excellent management by the U of A, the
Continuing Education Center generated $5,050,252.03 in state turnback
funds paid to the A & P Commission to help pay the financing costs of the
CEC bonds. The turnback funds paid over 83% of the total financing costs.
Deducting the state turnback funds ($5,050,252.03) from the total
cost of construction and financing ($10,236,364.00) yields an option to
purchase price of $5,186,111.97.
This option to purchase price reflects the intention of the parties that
the U of A would be afforded the right to purchase the Continuing
3
Education Center for the amount of the City's construction and finance
costs less any state turnback. Although the City has kept excellent records
of other costs (insurance, property taxes, operating and maintenance) and
other revenues (lease payments, interest on investments), none of these
should be relevant to the option to purchase figure.
INSURANCE COSTS AND PROPERTY TAXES
I could not find any support for the inclusion of this Seven Hundred
Eighty Thousand Dollar figure in the option to purchase price. The Lease
could have specified that this $779,077.10 expense paid by the City be
added to the option to purchase price. The silence of the contract on this
issue controls. If it is not mentioned, it cannot be added.
LEASE REVENUE
These funds are clearly inapplicable to a determination of the option
to purchase price. Lease revenue (even if pledged to a bond) would be
considered "general funds" so that even if it is argued that lease revenue
was used to pay interest or finance charges, the City would get standard
credit for all such payments just as if the payments had been made by
HMR tax revenue. Thus, lease revenue cannot reduce the option to
purchase price.
INTEREST REVENUE
During the quarter century this Lease Agreement has endured, the
City not only had to pay $5,712,928.44 in interest expenses, it also earned
$2,727,613.51 in interest income from the investment of tax revenues and
bond proceeds. This investment income (although probably pledged or
secured to pay off the CEC bonds) would probably be termed "general
funds". If so, its use to pay off the principal or interest would be credited
to the City just like HMR tax revenue. The only listed revenue that is not
"general funds" is the CEC state turnback funds.
The University may argue that this lease provision is ambiguous in
some way. That would be a question for a Court to decide.
4
"If an ambiguity exists, we are permitted to look
outside of the agreement to determine the actual
intent and conduct of the parties.
"Further, in determining the true intentions of
the parties, different clauses of a contract must
be read together and construed so that all of
its parts harmonize if that is possible." Harris
v. Harris, 107 S.W. 3rd 897, 901-902 (Ark. App.
2003)
The most harmonizing manner to read this section is that the option
to purchase price shall be the cost of construction and financing minus
revenues received from the state as turnback funds. That yields the
$5,186,111.97 figure previously stated. I should note that the County
Assessor has appraised the Continuing Education Center for $6,190,100.00
(over a million more than the option to purchase price).
We should invite the University's analysis of this contract language
to ensure both governments agree upon its proper interpretation and agree
on the option to purchase price. I will be happy to consider any analysis
by the University that could arrive at a different figure although our figure
seems like the simple, straight forward, and fair interpretation of the
agreement entered into 25 years ago.
The possible sale of the CEC to the University is not controlled by
our current ordinance for sale of city property. The University has a pre-
existing right to purchase and therefore would not have to pay an
appraised value (6.1 million dollars), but only the option to purchase price
found in the lease.
5
Ii Kit Williams - ceclegal.xls Page 1]
CEC Bonds
Expense Description
Principal Payment
Interest Payment
Trustee Fees
Bond Underwriter Discount
Cost of Issuance
CEC Insurance & Property Taxes
Accounting Records
Expenses -Revenues
4,175,000.00
5,712,928.44
41,694.03
205,589.50
101,152.03
779,077.10
Lease Formula
Expenses -Revenues
4,175,000.00
5,712,928.44
41,694.03
205,589.50
101,152.03
Total 11,015,441.10 10,236 364.00
Revenue Description
CEC Turnback
5,050,252.03
5,050,252.03
Lease Revenue
2,806,000.00
Interest - Bond Fund
292,276.43
Interest - Debt Service
1,206,028.58
Interest - Cost of Issuance
152.56
Interest - Rev Fund .
770,587.09
Interest - Construction Fund
458,568.85
Total
10,583,865.54
5,050 252.03
Net 431.575.56 5.186.111.97
my document:ceclegal 9/22/04
FAYETTEVI LLE
THE CITY OF FAYETTEVILLE, ARKANSAS
KIT WILLIAMS, CITY ATTORNEY
DAVID WHITAKER, ASST. CITY ATTORNEY
LEGAL DEPARTMENT
DEPARTMENTAL CORRESPONDENCE
TO: Dan Coody, Mayor
Hugh Earnest, Chief Administrative Officer
Steve Davis, Finance & Internal Services Director
FROM: Kit Williams, City Attorney �C
DATE: March 8, 2004
RE: Analysis of Lease and Agreement between the City of Fayetteville
and the Board of Trustees of the University of Arkansas
Now that we are nearing the time when the bonds issued to finance the
construction of the Continuing Education Center shall be retired, we should
examine that agreement to determine what our legal obligations are. On
October 1, 1979, the Lease and Agreement was entered into. In Section 2014
of the Lease, the City Board of Directors apparently gave the University "an
option to purchase the Leased Premises described in Section 301 hereof at the
termination of the lease term as set forth in Section 302 .... provided all bonds
issued to finance the Project have been retired."
"Section 302 The terms of this Lease Agreement
shall commence upon substantial completion of
the Project in accordance with the plans and
specifications attached as Exhibit B hereto and
shall run for a period of twenty-three years."
This 23 year lease period is from "substantial completion of the Project".
I am not sure when the Continuing Education Center was completed, but I
believe it is approaching 23 years (if we have not already reached the 23 year
anniversary). The second part of the requirement, prior to the option to
purchase is when the bonds financing "the Project have been retired." I believe
this will occur in a few months. When the bonds are retired, the University
shall have an option to purchase the Continuing Education Center. The price
for purchase is set forth next in Section 2014.
"It is agreed that should Lessee desire to exercise said
option that the purchase price shall equal the amount
of hotel, motel and restaurant tax funds and general
funds required by Lessor to construct and finance said
Project (including the payment of debt service on bonds)
less any amounts received as a result of this Project by
Lessor under the provisions of Act 763 of 1977 as
amended by Act 212 of 1979, or as hereafter further
amended."
The purchase price shall equal:
(1) Fayetteville Taxpayer Investment
The amount of HMR taxes and general funds required to construct
and finance the Continuing Education Center (which would be the full
construction, plus interest charges);
(2) State Turnback Funds
Less the amounts received by the City pursuant to Act 763 of
1977, Act 212 of 1979, and later amendments.
Thus
the
City taxpayer should get credit for the whole cost
of
construction
and
financing the Continuing Education
Center (CEC), but
the
amount of state
turnback funds received as a result
of the operation of
the
Continuing
Education Center should be subtracted
from the total cost
of
construction
and
finance.
I do not believe that other items (such as rent payments, parking revenue,
etc.) should be deducted from the city taxpayers' payments for the construction
and interest costs of this project. Although I do not have the drawings and
specifications alluded to in Exhibit B, I believe the parking deck across the
alley from the hotel is not a part of the "Project" as defined in the lease. If the
parking deck was financed out of the same bonds that financed the CEC, an
argument could be made that the portion of taxpayers' funds used to build the
parking deck should be reduced from the total taxpayer funding for the whole
project when determining what the city taxpayer investment in the CEC was.
After determining the Fayetteville taxpayer investment in the "Project",
the option to purchase price only allows deduction from this amount for
state turnback receipts (Act 763 of 1977 and Act 212 of 1979). Since these
are delayed payments, the final price should be reduced by the amount of future
assured payments.
When determining the amount of Fayetteville taxpayer investment, any
lease or rent payments paid on the bonds should be credited in our taxpayers'
interest because rent from facilities should be considered "general funds" of the
City, even if pledged to pay bonds.
Looking at the attached memo entitled "CEC BONDS", I compute the
Principal Payments and Interest Expense and fees through 2002 to be
$9,119,411.00. The state turnback totals $4,482,710.00 through 2002. This
would yield a purchase option price of $4,636,701.00. There was still about
one million dollars owing in capital and interest costs at that time. But there
will also have been additional state turnback payments to reduce that
investment.
One final issue is the "interest revenue". Although it could be argued
that this should reduce the option to purchase price, it was not included in
Section 2014 as a deduction. This $2,730, 274.00 total through 2002 is a
substantial figure that could lead to controversy if the University claims it
should reduce the option price. The vast majority of interest earned by the City
is credited to the general fund. Thus, I see no reason not to include this interest
as "general funds required by Lessor (City of Fayetteville) to construct and
finance said Project ...."
The bottom line is that the Continuing Education Center is a well built,
well maintained, structurally solid and functionally efficient, large five story
building on the Square in Fayetteville. The CEC was built for around 3.2
million in the early 80's. With substantially increased building costs and land
valuation (which I believe would have been in addition to the 3.2 million
construction cost) at this prime location, the University would be getting a very
good deal at 4.6 million.
I hope our Accounting Department can update their figures through 2003
and maybe project this to the time for the option to purchase to be offered
(including future, pending state turnback funds). The City on behalf of its
taxpayers could then make a formal offer to the University to purchase the
Continuing Education Building at a fair figure.
CEC BONDS
Interest Exp.
Year Lease Revenue and fees (1) (2) Interest Rev (2) Turnback
1980
383,576
343,620
1981
20,333
153,907
268,374
1982
122,000
376,183
186,615
1983
122,000
370,984
168,202
65,865
1984
122,000
368,284
224,006
240,390
35,000
1985
122,000
338,669
144,597
148,638
65,000
1986
122,000
334,904
124,506
166,490
90,000
1987
122,000
343,278
160,386
151,697
110,000
1988
122,000
333,535
121,015
205,887
120,000
1989
122,000
323,467
180,552
218,642
125,000
1990
122,000
313,746
127,037
228,023
135,000
1991
122,000
303,365
113,079
238,583
145,000
1992
122,000
292,087
93,916
340,114
150,000
1993
122,000
280,825
76,269
276,373
160,000
1994
122,000
267,884
83,034
222,284
175,000
1995
122,000
312,792
80,201
358,885
1996
122,000
137,107
26,386
180,768
245,000
1997
122,000
126,161
27,034
270,884
255,000
1998
122,000
114,856
28,055
230,960
265,000
1999
122,000
101,735
25,920
199,328
280,000
2000
122,000
87,758
31,779
188,703
295,000
2001
122,000
72,743
24,566
269,407
310,000
2002
122,000
56,701
8,851
280,789
325,000
Total
2,582,333
5,834,411
2,730,274
4,482,710
3,285,000
(1) Interest Exp. And Fees includes interest expense on bonds, trustee fees, and
amortization of bond discount and bond issue cost.
Unamortized 12/31/02
Bond Discount - 1979 bonds 179,000
Bond Issue Cost - 1979 bonds 36,945
Bond Discount - 1995 bonds 26,590 5,123
Bond Issue Cost - 1995 bonds 33,070 6,371
(2)
Interest expense and
interest
revenue amounts are estimated
- CAFR for years ended
1982 - 1985 included
Parking
Facility Bonds.
(3) Bonds outstanding 12/31/02 $700,000
Interest expense $388,316 - $235,495 Capitalized as building cost.
THE CITY OF FATETTEVILLE. ARKANSAS
KIT WILLIAMS, CITY ATTORNEY -��/
DAVID WHITAKER, ASST. CITY ATTORNEY
DEPARTMENTAL CORRESPONDENCE LEGAL DEPARTMENT
TO: Dan Coody, Mayor
FROM: Kit Williams, City Attorney --2(_
DATE: January 31, 2005
RE: Continuing Education Center Offer To Purchase
Our Accounting Department has now provided me a finalized
accounting for the terms of the lease's option to purchase. I have attached it
to this memo. This accounting shows that the principal amount borrowed
and paid back is $4,175,000.00. The interest payments total $5,712,928.44.
A part of our cost of financing were the Trustee's fees of $41,694.03.
Thus the total cost of construction and financing is $9,929,622.47.
Subtracted from this should be the total amount of state turnback
revenue of $5,199,345.53. This results in an option to purchase price of
$4,730,279.94.
This is less than my earlier memo since Accounting had not figured in
the total amount of turnback funds. The CEC is correctly appraised at over
$6 million for property tax purposes.
City of Fayetteville
Continuing Education
Center Bonds
Debt Service and State Tumback
Principal
Interest
Trustee Sub -Total
CEC
Total
Payment
Payment
Fees
Tumback
1979 Bonds:
1978-81
637,813.84
403.00
638.216.84
638,216.84
1982
341,686.00
4.768.75
346,454.75
346,454.75
1983
341,686.00
3,268.75
344,954.75
32,295.87
312.658.88
1984
35,000.00
341,686.00
1,777.62
378,463.82
220,017.86
158,445.96
1985
65,000.00
339,323.87
1.799.83
406,123.70
107,950.20
298.173.50
1986
90,000.00
334,903.75
1,769.89
426,673.64
203.123.09
223,550.55
1987
110.000.00
328,693.88
1,618.67
440.312.55
193,970.54
246,342.01
1988
120,000.00
320,994.00
3,307.81
444,301.81
56,342.54
387,959.27
1989
125,000.00
312,474.00
1,804.85
439,278.85
372,150.69
67,128.16
1990
135,000.00
303,473.75
1,804.30
440,278.05
97,664.92
342,613.13
1991
145,000.00
293,686.25
1,786.75
440,473.00
357,542.93
82.930.07
1992
150,000.00
283,300.24
1,609.20
434,909.44
190,619.57
244,289.87
1993
160,000.00
272,001.25
1,864.80
433,866.05
382,813.77
51,052.28
1994
175,000.00
260,081.25
1,785.05
436,866.30
215,985.76
220,880.54
1995:
1979 Bonds(95)
123,478.13
193.25
123,671.38
198,999.71
(75.328.33)
Refunding
190,000.00
153,228.13
2,987.50
346,215.63
346,215.63
Refunding-acc. Interest
(9.905.44)
(9,905.44)
(9.905.44)
1995 Bonds
1996
245,000.00
143,078.54
535.00
388,613.54
385,376.61
3,236.93
1997
255,000.00
121,660.00
1,605.00
378,265.00
241,698.98
136,566.02
1998
265,000.00
110,185.00
750.00
375,935.00
274,963.28
100,971.72
1999
280,000.00
97,507.50
1,250.00
378,847.50
165,938.80
212,908.70
2000
295,000.00
83,877.50
1,000.00
379,877.50
200,932.90
178,944.60
2001
310,000.00
69,127.50
1.000.00
380,127.50
303,881.01
76,246.49
2002
325,000.00
53,317.50
1,000.00
379,317.50
280,789.00
98,528.50
2003
340.000.00
36,580.00
1.003.81
377,583.81
283,597.00
93,986.81
2004
360,000.00
18,900.00
1,000.00
379,900.00
287,571.50
92,328.50
2005 (pending)
145,119.00
(145,119.00)
__ 4,175,000.00
: 5,712,926.44
- + 41.694.03 •'
9.929.622.47.,:
-.-,5..99,315.53
.,:.4:730276.94.
Note: The City has accrued but not received rent payments
for the months of
November and December, 2004 and for
January 2005 at the amount of $10,167 for each month.
Washington County Assessor
And Board of Equalization
Washington County Courthouse
280 North College Ave, Suite 250
Fayetteville, AR 72701
CITY OF FAYETTEVILLE, ARKANSAS
113 W Mountain St
Fayetteville
AR
72701-6069
llnluhlluIlllunnli1llulluulhuhlomllulhinhl
7/15/2004
August 16,2004, is the last day to appeal to the
Board of Equalization. Should you have questions
call the appraisers between 8:30am & 4:00pm
(until 5:30pm on Thursday). Refer to the back of
this notice for "How to Schedule a Hearing".
THIS IS NOT A TAX BILL
WASHINGTON COUNTY, ARKANSAS
ASSESSOR and BOARD OF EQUALIZATION
Parcel: 765-01821-000 RPID: 36077 Acres: 0
School:011 FAYETTEVILLE SCH, FAY
FAYETTEVILLE ORIGINAL Block: Lot:
LOT 6-7 BLOCK 15
ALSO 1/2 VACATED ALLEY N SIDE
LOT 6
Previous Previous
Appraised Value Assessed Value
TOTAL 4939050 987810
Limitations on Assessment Increases Provided by Amendment 79
Assessments on properties SERVING as the principal place of residence for any taxpayer who is disabled or who is 65 years of
age or older on 01/01/04, shall be assessed at a level no greater than the Previous Assessed Value plus any modifications made
that were not previously assessed.
OR
Assessments on properties SERVING as the principal place of residence for all other taxpayers shall be limited to a 5% increase
over the Previous Assessed Value plus any modifications that were not previously assessed. The 5% increase will occur yearly
until the Full Assessed Value is reached.
OR
Assessments on ALL OTHER properties shall be limited to a 10% annual increase over the Previous Assessed Value plus any
modifications made that were not previously assessed. The 10% increase will occur yearly until the Full Assessed Value is
reached.
AND
A $300.00 Property Tax Credit
Amendment 79 also provides that any homeowner can receive UP TO a $300.00 tax credit on the property serving as their
principal place of residence. If this property is your principal place of residence and you have not previously confirmed this
information with the county assessor you should do so immediately.
G. p.,.rEI t t�RA IF g.
To receive your Property Tax Credit and/or to certify that you are 65 years of age or older, or have a disability, contact the
Washington County Assessor's Office, 280 N College Suite 250, Fayetteville, AR 72701.
THE CRT Of EAYETTEVHEE. ARKANSAS
- KIT Wn.UAMS, CITY ATroRNRY
- DAVID WHITAKER, ASST. CnY ATTORNEY
::. DEPARTMENTAL CORRESPONDE
• TO: Dan Coody, Mayor
Steve Davis, Finance & Internal Services Director -
FROM: Kit Williams, City Attorney ( ,V
DATE`. June 21, 2005
• RE: CEC Delegate days and value to city
I have reviewed .the last four quarterly reports from the University of
Arkansas concerning the number of "delegate days" (participants times number
of days of convention/meeting/training) within the Continuing Education
Center. The following is a total for each of last four quarters: .
DATES DELEGATE DAYS
April 1,2004 —June 30, 2004 1,680
July 1; 2004 September 30; 2004 610
October 1, 2004- December 31, 2004. 1,302
,.-January.) 2005.= March 31; 2005 637'
Annual total " 4,229
The quarterly average is about 1,057 or about 352 per month.
I; believe it would-be legal to give the U of A some offset in its purchase
pace, monthly (mortgage?) payments, or monthlyrent based upon the worth to
the City of Fayetteville (and A- & P Commission?) of these delegates:. I : .
im' gine -Steve has access to studies regarding tax revenue generation of
tourists/delegates which we could use to.translate delegate days to tax receipts
estimates.. If Steve can get me those numbers, maybe we can work out a
proposal for the U of A that will be a win/win for both the City and the
University.
Ll
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FAYETTEVILLE
THE CITY OF FAYETTEVILLE, ARKANSAS
KIT WILLIAMS, CITY ATTORNEY
DAVID WHITAKER, ASST. CITY ATTORNEY
DEPARTMENTAL CORRESPONDENCE LEGAL DEPARTMENT
TO: Dan Coody, Mayor
Steve Davis, Finance & Internal Services Director
Marsha Farthing, Accounting Manager
FROM: Kit Williams, City Attorney/
DATE: July 18, 2005
RE: CEC option to purchase
The annual rent established for the CEC in October of 1979 was
$122,000.00 to be paid every six months ($61,000.00).
I was surprised to learn that the Continuing Education Center totaled
only 4,229 "delegate days" from April 2004 through March 31, 2005. Thus,
the CEC averaged only 352 "delegate days" per month or 16-17 per
weekday. Obviously, much of the building must be being used for non -
delegate purposes.
An analyzed by Steve Davis, this could result in about $347,000.00
annually for meals, lodging, and incidentals spent locally. However, this
figure might actually be inflated because numerous "delegates" might
actually be local or come to town only for a day long seminar (or for other
reasons, such as U of A football games). Even assuming that $347,000.00 is
what is spent by attendees at the CEC annually, the tax revenue to the City
of Fayetteville would only be $10,810.00 (or $14,277 if you consider the A
& P Commissions 1% tax). This is only around 10% of the 1979 rent for
this building.
Thus, a long term contract giving the U of A credit for delegates
brought into Fayetteville would have little impact upon what the actual rent
should be. Nor would it be a significant financial factor to reduce the
purchase price of the Continuing Education Center.
The University is obviousl
for more than trying to bring
education. This building is worth
derived from the lease's wording.
a compromise price, we will be
decide.
y using the Continuing Education Center
in seminars and groups for continuing
far more than the option to purchase price
If the University will not fairly negotiate
left with little option but to let a Court
Of course, the U of A could vacate this building if that is its decision.
We could then have possession as well as ownership of a building appraised
at 6.1 million dollars. With the completion of the Terminella building and
the Nock/Alexander hotel, condominium, parking deck complex less than a
block away, the CEC's value would certainly increase dramatically.
One way or another, this needs to be brought to a conclusion as the U
of A has not paid rent as far back as last year. The last thing I want is
litigation with the U of A, but my duty to the taxpayers of Fayetteville might
require it.
UNIVERSITY'ARKANSAS
Vice Chancellor for Finance and Administration
Mr. Dan Coody
Mayor
City of Fayetteville
113 W. Mountain
Fayetteville, AR 72701
Dear Mr. Coody:
406 Administration Building
Fayetteville, Arkansas 72701
(479) 575-5828
(479) 575-5400 (FAX)
August 11, 2005
In response to your request, the staff of the Continuing Education Center reviewed all of
the participant programs for FY2005. The staff identified the number of attendees and
participant -days in programs for different categories that might have different economic
value in assessing the importance of the location of the Continuing Education Center to
the City of Fayetteville. Naturally, visitors from the most distant locations would be
expected to spend the most money in Fayetteville but in -state and even in -town
participants have contributed to the sustained vitality of the downtown square and the
City as a whole.
A complete listing of events during FY2004-05 with participant -days is provided in an
attachment. Entries marked in yellow indicate either the program consisted
predominantly of residents of Fayetteville, including those from the University of
Arkansas, or the program took place at a location other than the Continuing Education
Center, including some which were out of town. Programs specifically conducted for the
City of Fayetteville are listed separately below but are included on the white lines in the
attachment so that they may be noted for their specific benefit to the City in evaluating
the value of the location of the Continuing Education Center.
I am providing the following summary of the full set of data from the Continuing
Education Center. This summary and the full set of data includes the number of delegate -
days (3,112) for out-of-state participants previously reported to the city. The summary
also includes a breakdown of all the attendees which highlights the value of the location
of the Continuing Education Center to the downtown square and City of Fayetteville.
The economic impact on the City clearly includes the combined total of visitors from out-
of-state and out-of-town. The value of the Continuing Education Center's location for
city meetings and for all other community programs should be including in calculating
the economic value of the location.
The University of Arkansas is an equal opportunity/affirmative action institution.
FY05 Attendees Participant -days
Out of state 1,593 3,112
Out of town 10,425 23,605
City Programs 93 93
Other in town 7.900 17,983
Total 20,011 44,793
Using the same ratio between the out-of-town and out-of-state attendees as is found for
FY05 for other fiscal years suggests that the number of attendees since 1984 is over I
million and the number of participant -days for those from out-of-town including out-of-
state is over 2.5 million. Precise records on the number of out-of-town participants are
not available (as opposed to out-of-state participants which are available) for the
operating period from FYI 984 but the Continuing Education Center has annually
reported the out-of-state delegate -days in qualifying the City for state tumback funds and
total participant -days including those from Fayetteville itself in previous Annual Reports.
We look forward to resolving the status of the Continuing Education Center as soon as
possible. We believe the information in this letter and its attachments illustrates the
important economic impact of the Continuing Education Center to the downtown square
and the City of Fayetteville. The data also demonstrates the importance of retaining the
Continuing Education Center in its current location over the next decade.
Sincerely yours,
Donald O. Pederson
Attachment
Xc: Kit Williams, City Attorney
Bill Kincaid
Scott Varady
UfA
UNIVERSITY OF ARKANSAS
Office of the General Counsel
November 23, 2005
The Honorable Kit Williams
City Attorney
City of Fayetteville
113 West Mountain
Fayetteville, AR 72701
VIA FACSIMILE 575-8315
Dear Kit:
The University is in receipt of the attached letter, invoice and statement for the
Continuing Education Center. As I am sure you will understand, University officials
were surprised to receive this letter, given the fact that discussions remain underway to
reach an amicable resolution regarding the future of the Continuing Education Center.
Furthermore, to the best of our knowledge, the University was not notified that the City
intended to bill the University for rent for this period.
The University respectfully denies any liability for any rental payments to the City. Dr.
Pederson has arranged a meeting with Mayor Coody this coming Monday. November
28. In the meantime, I would appreciate it if you would notify Accounting Division
personnel of the continuing efforts to resolve this matter.
This letter and its contents are presented in an effort to resolve a disputed claim and
are, therefore, protected under Rule 408 of the Federal Rules of Evidence and Rule
408 of the Arkansas Rules of Evidence. The University fully reserves all of its legal
rights with respect to this matter.
Sincerely,
William R. Kincaid
Associate General Counsel
cc: Donald O. Pederson
Donnie Dutton
James Ezell
421 Administration Building / Fayetteville, Arkansas 72701 / 479-575-5401 / Fax 479-575-5046
University of Arkansas, Fayetteville / University of Arkansas at Little Rock / University of Arkansas at Pine Bluff
University of Arkansas for Medical Sciences / University of Arkansas at Monticello / Division of Agriculture / Criminal Justice Institute
Arkansas Archeological Survey / Phillips Community College of the University of Arkansas
University of Arkansas Community College at Hope / University of Arkansas Community College at Batesville
Cossatot Community College of the University of Arkansas / University of Arkansas Community College at Morrilton
Arkansas School for Mathematics, Sciences, and the Arts / University of Arkansas Clinton School of Public Service
University of Arkansas at Fort Smith
The University of Arkansas is an equal opportunity/affirmative action institution.
;479 575 7237
2/
FAYETTEVILJLE
NOV 232005
� i-`13.ii i i•T3 � 1 a� i a�i Inl �_�:1:F� 2 F'7_F9
Donnie Dutton, Dean
Division of Continuing Education
2 East Center
Fayetteville, AR 72701
Dr. Dutton,
Enclosed is an invoice to the University for rent on the Continuing Education Center from the
City of Fayetteville. The semi-annual lease amount of $61,000 was due in full on May 1, 2005
and November 1, 2005.
Please remit the payment to:
City of Fayetteville
Accounting Division
113 West Mountain
Fayetteville, AR 72701
Thanks for your attention to this matter and please call me at 575-8288 if you have any
Iquens Farthing
Accounting Manager
City of Fayetteville
113 WEST MOUNTAIN 72701 479421-7700
FAX 4793754257
11-23-O5; 1:26PM; ;479 575 7237 4 3/
CITY OF FAYETTEVILLE INVOICE
TayeVt�ACCOUNTINGDIVISION
RANtAs . 113 WEST MOUNTAIN STREET
FAYETTEVILLE, AR 72701
479-575-8281
UNIV OF AR - DIV CONTINUING ED
2 E CENTER ST
FAYETTEVILLE AR 72701
Please Make Check Payable to City of Fayetteville
CUSTOMER # INVOICE # INVOICE DATE DUE DATE AMOUNT DUE
4044 50003114 11/03/05. 11/30/05 $122000.00
For questions regarding this invoice, please .
call (479) 575-8275
Description U/M Quantity ,Amt/UnitTota
ANNUAL LEASE OF CONTINUING EA 1.0000 122,000.0000 122..000.C
EDUCATION BUILDING
Total Due..........: •$122000.0
____________
REMITTANCE COPY
11-23-O5; 1:26PM.
;479 575 7237
r
CITY OF FAYETTEVILLE
aye le ACCOUNTING DIVISION
N
STATEMENT
ev1 E . STREET
FAYETTEVILLE, AR 72701
479-575-8281
UNIV OF AR - DIV CONTINUING ED
2 E CENTER ST
FAYETTEVILLE AR 72701
CUSTOMER #
STATEMENT DATE
LAST STATEMENT DATE
PREVIOUS BALANCE
BALANCE DUE
4044
11/09/2005
$ .00
$ 122,000.00
TRAM. DATE TRAM. TYPE INVOICE # INV. TYPE
TRAN. AMT.'
11/03/2005 Billing 50003114 Misc-Gen
122,000.00
STATEMENT PERIOD TRANSACTION BALANCE:
122,000.00
BALANCE . . . . .
122,000.00
.OUTSTANDING INVOICES
INVOICE # INV. TYPE INV. DATE DUE DATE
BALANCE AMOUNT
50003114 Misc-Gen 11/03/2'005 11/30/2005 .
122,000.00
OUTSTANDING INVOICE BALANCE
122,000:00
Please contact (479)575-8275 if you have, questions
regarding
this statement. Thank You!
I,eo for period o
City of Fayetteville x 113 West Mountain * Fayetteville, Arkansas 72701
Clarice Pearman - Ord. 4838 Page 1
From: Clarice Pearman
To: Williams, Kit
Date: 3.10.06 5:21 PM
Subject: Ord. 4838
Attached is a copy of the ordinance regarding the sale of the CEC building to the University of Arkansas,
passed by City Council, March 7, 2006.
Thanks.
Clarice
CC: Bell, Peggy; Deaton, Vicki
AFFIDAVIT OF PUBLICATION
I, Erin Emis, do solemnly swear that I am the Legal Clerk of the Arkansas
Democrat-Gazette/Northwest Arkansas Times newspaper, printed and
published in Lowell, Arkansas, and that from my own personal knowledge
and reference to the files of said publication, that advertisement of:
46' was inserted in the regular editions on
cI
PO#
** Publication Charge: $
Subscribed and sworn to before me this
day of
Notary Public
Sharlene D. Williams
ub
My Commission Expir% teary kpfrlc
My Commission Expires
October 18, 2014
** Please do not pay from Affidavit.
An invoice will be sent.
RECEIVED
MAR 2 2 20001
CITY OF FAYETTEVILLC
CITY CLERK'S OFFICE
212 NORTH EAST AVENUE
2006.
„...au.e AV. CU S
OF ORDINANCE TO WAIVE THE CED OF ONTS
OF §34.27 OF THE AUTHORIZE
THO EVIL( -E CODE OF ORDI- 7' 1
NANCES AND TO CATION CE THE SALE OF THE , Y
CONTINUING EDTY OF A$ON CENTER $207.60 TO
THE UNIVERSITY OF ARKANSAS FOR $207,650.00
ARKANSAS
WHEREAS, after long negotiation, the CIty of
Diryectorsll6 and the and Unversltyof Arkansaity of s In 1979ansas gwa ee thto at the eta �uingof the FEdetteville City ucation Center Co the
University of Arkansas for the amount of Feyedevllle taxpayer dollars needed for MIS project and not
yet returned to the City by all revenues (Including interest earnings and rent Payments); and
WHEREAS, the University of Arkansas and the City of Fayetteville have agreed Mal the amount of
unreimbursed Fayetteville taxpayer dollars Invested into the Continuing Education Center (Including
construction, financing, insurance, property tax, and maintenance expenses) is
$207,650.00: and
WHEREAS, It is In the best interests of the citizens and taxpayers of Fayettevllle and the University
of Arkansas to }eeove this controversy by selling the Continuing Education Center to the University
of Arkansas for 5207,650.0 : and
WHEREAS, since this sale is in accordance with what was stated In the City Board of Directors'
minutes when the Leese Agreement was authorized and somewhat In accordance with Me option to
purchase of the Lease Agreement, the City normal requirements for the sale of city owned proper.
ty Including: an appraisal. advertisement, signs, certified mail to adjacent properly comers con-
cerning this sale we inappropriate for MIS sale,
NOW, THEREFORE, BE IT ORDAINED SY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE. ARKANSAS.
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby determines that,
because of the unique history of this successful collaboration between Me City and We University to
build and operate Me Continuing Education Center and the option to purchase withIn Me Lease
Agreement, the sale of the Continuing Education Center building to the University of Arkansas
should not have to comply with § 34.27 of the Fayetteville Code of Ordinances entitled Sale of
Municipally Owned Read Estate. The City Council therefore waives §.34.27, authorizes the sale of
the Continuing Education Center building to the University of Arkansas for $207,650.00 and author-
izes Mayor Candy to execute a deed end all other documentsmecessary to effectuate this sale.
PARSED SR• APPROVED this 7th day of March, 2006.
APPROVED: ATTEST.
By: By;
DAN COODY, Mayo. SONORA SNVM CIry Ck k
• P.O. BOX 1607 • FAYETTEVILLE,-ARKANSAS 72702 • (501) 4�
Pt-
(p�z2�0�
6i4inu'1j £dt4c4 Oi
Cju t r a Cc
1A f)/prd, c,tg38
A U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
SETTLEMENT STATEMENT
I.[J �� FHA 2. 1 FHMA 3. ' CONV. I NINS.
4. 1 1 VA 5. mNV INS
C. NOTE: Theform is funristied to give )Ora sweanmt ofactal ualeova coed. Amounts paid to and by the mountains aaam are shown. tram
mated (p.o.c.)' were mid outside the closing; they are shown has for infamut10 1 purpose and an not included in the taals
D. NAME & ADDRESS Board of Trustees of the University of Arkansas
OF BORROWER: 3038 Administration Building, Fayeteville„ AR 72701
E NAME & ADDRESS The Cityof Fayetteville, Arkkanssas
OF SELLER: 113 West Mountain St.. Fayetteville, AR 72701
F. NAME & ADDRESS
I. SETTLEMENT DATE: 6/22t2006 DISBURSEMENT DATE: 6/22/2006
J. Summa of Borrower's Transactions K. S• of Seller's Tnwctfn
100.
Crass Amount Due From Borrower:
400.
Gros Assistant Dae To Seller.
101.
Contract ales a
207450.0€
401.
Cowan ala
207 650.00
102.
Personal
402.
Personal
103.
Samtlamam c to bonoww One 1400)
248.5
403.
104.
404.
105.
405.
d 1 In
• For Items Paid Advance:
106.
C' /lawn mates to
406.
C' Mown axes to
107.
County axes to
407.
axes a
106.
aea
Asmans l0
408.
Asnamema to
109.
409.
110.
410.
Ill.
411.
112.
412.
113.
413.
114.
414.
115.
415.
116.
416.
120.
Gran Amount Due From Borrower:
207,898.5
420. Gros Amount Due To Seller:
207,650.00
20).
earnest or ewsr
501.
Excs pee immctiom
202.
Prircamomw of new s
'
502.
Smlmrntc tost (line 1400)
63362.60
203.
Exist s taken 'ecta
303.
Eieti a taken sub' to
204.
504.
P. led M la.
205.
505.
P 2d M In.
206.
506.
207.
507.
208.
508.
209.
509.
Adjustments For Items Unpaid By Seller:
C' Mown axes to
510.
Adjustments For Items Unpaid By Seller:210.
Ci Mown tats 10
211.
axes 0Uui/06 a62 02/06
29437.4
511.
taxer 0I/0106 m 06/27/16
29437.49
212.
Assessments to
512.
Aa®rnsa to
213.
513.
214.
514,
215.
515.
216.
516.
217.
517.
218.
S18.
219.
519.
220.
Total Paid By/For
Borrower;
29,437.4
520. Total Reduc
In Amoaut Due Seller,
92,800.09
301.
Gross m from emoum dore borrower Nm 120
207 896.5
601.
Oraamount due a alter line 420
n
207 650.00
302.
303.
Iamountid /fa Sn borrower220
an
Co►(iXIFROM) �1_}f0) Borrower:
29437.4
602.
Lessnilueriom in amountduescllw Iire520
92800.09
178,461.01
603. Cash QX}TO) d FROM) Seller:
114,849.91
co A fcaafWVLI
Prevsoa Edition Is Clientele
Fam No. 1581
326
Page I of 3
HUD-) (3-86)
$IIii RESPA, HB 4305.2
SELLER'S AND/OR BORROWER'S STATEMENT Escrow: 17203-06
I have carefully reviewed the HUD -I Settlement Statement and to the best of my knowledge and belief, it is a we and amnte cerement of all receipts and
disbursements made on my account or by me in this transaction. I further certify that I have received a copy of the HUD -t Settlement Statement.
Bonowers/Purchaxrs Sellers
Board of Trustees of the University of The Cityyf Fayetteville, Arkansas
Arkansas __ B
--� ,,1�,%&1J JDX16
��ys�ii
I
The HUD I Satlemart Statement which 1 have prtpred is a true and accurate account of this eansectiar. I have used or will cause the funds to be
disbursed in accordance with this t.
Settlement Agent:.. .._. - _- — —.—. __. ... __ 4
Becky Osbum, Bronson Abstract Co., Inc.
WARNING: It is a aime to knowingly make false statements to the United States on this or any other similar font Penalties upon conviction can include a
fine or imprisonment. For details see: Title IS U.S. Code Section 1001 and Section 1010.
Page 3 of 3
SELLERIBORROWER'S AFFIDAVIT
STATE OF Arkansas
COUNTY OF Washington
The undersigned, referred to as Seller/Borrower, whether one or more, being first duly sworn on oath that
the seller/borrower is the owner of the following described lands, situated in Washington County, AR, to -
wit:
Part of Lots Six (6) and Seven (7) in Block Fifteen (15) of the original town (now city) of
Fayetteville, Arkansas, and being more particularly described as follows, to -wit: beginning at the
southwest comer of said Block 15 and running thence North 0 degrees 01 minutes 40 seconds
East 105.38 feet to the north line of a vacated alley which is on the center line between the north
brick wall for the University of Arkansas Center for Continuing Education Building and the
south brick wall for the Fayetteville Hilton building; thence East along said center line between
the two brick walls 155.0 feet to the west line of an alley; thence along said alley South 0 degrees
01 minutes 40 seconds West 105.38 feet to the south line of Block 15; thence West 155.0 feet to
the point of beginning. Subject to easements and right-of-ways of record.
Seller/Borrower further states the following facts are true:
I. There is no adverse occupant of the property described above.
2. Seller/Borrower and those, under whom Seller/Borrower claims title, have been in peaceful
possession of said lands for more than 7 years past.
3. There are no unrecorded options to purchase, Sales Contracts or Lease Agreements outstanding,
which affects the property described above.
4. There have been no improvements made on the property described above during the past 130
days for which a Mechanic's and Materialmens' Lien may be filed.
5. No appliances have been installed in the property described above on deferred payments, which
are unpaid for.
6. The property described above is not traversed by any roadways or easements, except those shown
on record.
7. There are no delinquent assessments due on the resident's association on the property described
above, if applicable.
8. That no money whatsoever is owed on subject property to any person, firm or corporation other
than the following , a
9. There are no outstanding judgments against Seller/Borrower as a result of legal action to include,
but not limited to, Tax Liens, Divorce, Bankruptcy or Foreclosure.
10. That the marital status of SellaBorrower has not changed since they acquired above described
property.
Witness the hand and seal of the undersigned this 6/22/2006
CUGUJ
Board of Trustees of the Uni ity Arkansas The City Fayetteville, Arkags
Subscribed and sworn to before me, a Notary Public, on this
OfMJal 8W Notary public
L"CLA A DAVIS
%nae mere Ste 5, Fayetteville, AR 72703
File NuM . 17203-06
INDEMNITY AGREEMENT
DATE: June 22, 2006 RE: 17203-06
PROPERTY ADDRESS: Lots 6 & 7 Block 15
Fayetteville, AR 72701
LEGAL: PARCEL NO.: 765-01821-000
Part of Lots Six (6) and Seven (7) in Block Fifteen (15) of the original town (now city) of Fayetteville,
Arkansas, and being more particularly described as follows, to -wit: beginning at the southwest comer of
said Block 15 and running thence North 0 degrees 01 minutes 40 seconds East 105.38 feet to the north
line of a vacated alley which is on the center line between the north brick wall for the University of
Arkansas Center for Continuing Education Building and the south brick wall for the Fayetteville Hilton
building; thence East along said center line between the two brick walls 155.0 feet to the west line of an
alley; thence along said alley South 0 degrees 01 minutes 40 seconds West 105.38 feet to the south line
of Block 15; thence West 155.0 feet to the point of beginning. Subject to easements and right-of-ways of
record.
WHEREAS, CLOSING AGENT is required to collect the county property taxes for prior years from the Seller, and prorate
funds for the year 2006, in order to satisfy title requirements, and
WHEREAS, CLOSING AGENT'S information regarding said taxes is based on figures obtained from the records of the
Washington COUNTY TAX ASSESSOR'S OFFICE; and said information available at the time of the closing of the
transaction from the said Assessor's office is on some occasions only an estimate of the taxes for the parcel of real property
or said property may currently be or at some time in the future be reassessed.
NOW, THEREFORE, in consideration of CLOSING AGENT closing this transaction for the BORROWER AND/OR
SELLER based on information available to CLOSING AGENT, the BORROWER and/or SELLER agree with CLOSING
AGENT as follows:
1) In the event the funds collected to pay taxes for prior years and prorated taxes for the year 2006 as shown on the
SETTLEMENT STATEMENT for the BORROWER and/or SELLER herein, are not sufficient to pay in full the
actual real property taxes for said calendar years, the BORROWER and/or SET I FR agree to hold the CLOSING
AGENT harmless from any claims and demands from any lending institution, or other entities for payment of said
taxes, and
2) If CLOSING AGENT is required to advance any of its own funds to pay said taxes, the BORROWER and/or
SELLER will indemnify CLOSING AGENT for any such funds so advanced.
3) The SELLER will make an additional prorau payment of said taxes based on the percentage reflected on the
respective SETTLEMENT STATEMENT regarding this transaction when advised by the CLOSING AGENT that
the funds credited to the BUYER at the closing for payment of said taxes were not sufficient to pay same.
® PRIOR YEAR TAXES are based on amount reported by WASHINGTON COUNTY TAX COLLECTOR
PRORATED TAXES are based on amount reported by WASHINGTON COUNTY TAX COLLECTOR
❑ PRORATED TAXES credited to the BUYER are based on an estimate, calculated as follows: PURCHASE PRICE
s 20% s MILEAGE RATE = ESTIMATED TAXES.
❑ WASHINGTON COUNTY TAX COLLECTOR'S books are currently closed Prior years taxes and prorated taxes
may be based on prior year reporting. In the event the property is reassessed or tax figures are adjusted,
BORROWER and lot SELLER will be responsible for any difference between amount collected and the actual
amount reported on the tax billing for the current year.
THIS AGREEMENT shall be binding on the bein, successors and assigns of the parties hereto.
BORROWER:
Board of Trustees of the U ' fly Arkaa s
SELLER:
Social Security NumberlTlN Number
Parcel No. 765-01821-000
WARRANTY DEED
r uunidpal Corporation
BE IT KNOWN BY THESE PRESENTS:
THAT WE, the City of Fayetteville, Arkansas, a municipal
corporation, hereinafter called GRANTORS, for and in consideration of the
sum of Two Hundred Seven Thousand, Six Hundred Fifty Dollars
($207,650.00) and other good and valuable consideration, the receipt of
which is hereby acknowledged, do hereby pant, bargain, sell and convey
unto the Board of Trustee of the University of Arkansas, hereinafter
called GRANTEE, and unto Grantee's successors and assigns, the following
described land situated in the County of Washington, State of Arkansas, to -
wit:
A pad of Lots Six (6) and Seven (7) in Block Fifteen (15) of the original town (now city) of Fayetteville,
Arkansas, and being more particularly described as follows, to -wit: Benning at the Southwest corner of said
Block 15 and running thence East 89 feet 4X inches; thence North 98 feet thence West 11 feet 3.54 inches;
thence North 10 feet; thence West 51 feet inch; thence South 10 feet; thence West 27 feet thence South 98
feet to the point of beginning. ALSO: A part of Lot Six (6) in Block Fifteen (15), in the original survey of the
Town of Fayetteville, Arkansas, being more particularly described as follows, to -wit Beginning at a point on
the West line of said Block 15 that is N 0°01'40 E 105.38 from the SW comer of said Block 15; said point
being on the centerline between the north brick wall for the University of Arkansas Center for Continuing
Education building and the south brick wall for the Fayetteville Hilton building; thence East along said
centerline between the two brick walls 155.0 feet to the west line of an alley, thence S0°01'40°W 1.7 feet
thence West 155.0 feet to the west line of said Block 15; thence NO°01'40'E 1.7 feet to the point of beginning.
Subject to all easements and rights of way of record.
TO HAVE AND TO HOLD the said lands and appurtenances thereunto belonging unto the said Grantee and
Grantee's successors and assigns, forever. And the said Grantors, hereby covenant that they are lawfully seized of said lands
and premises; that the same is unencumbered, and that the Grantors will forever warrant and defend the title to the said lands
against all legal claims whatever.
And we, the Grantors, hereby release and relinquish unto the said Grantee our respective rights In and to said lands.
WITNESS the execution hereof on this day of J rA tS , 2006.
__. i .. . _!!ILA' rr:
• • r
AR VEST BANK
5-1000
BRONSON ABSTRACT NC. YEUE ILLS,
CO.,� FA E EVILLE, AR
ESCROW ACCOUNT 81-87/829
3810 FRONT ST., SUITE 5
FAYETTEVILLE, AR 72703 File No.: 17203-06
PAY TO THE The City of Fayetteville, Arkansas
ORDER OF
ONE HUNDRED FOURTEEN THOUSAND EIGHT HUNDRED FORTY NINE AND 91/100 DOLLARS
MEMO
The City of Fayetteville, Arkansas
113 West Mountain St.
Fayetteville, AR 72701
Ir0 1469 711' 1:08 2c1008? 2D: i 10 7668 311•
014697
14697
6/22/2006
$ 114,849.91
a s
4
D
DOLLARS
O
RCDTORE