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HomeMy WebLinkAbout31-01 RESOLUTIONRESOLUTION NO. A RESOLUTION AUTHORIZING PAYMENT OF THE LEGAL EXPENSES OF BEKKA DEVELOPMENT CORPORATION RELATED TO THE TOWN CENTER SUIT IN THE AMOUNT OF $8,545.35. BE IT RESOLVED BY THE CITY COUNCIL FOR THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council hereby authorizes payment of the legal expenses of Bekka Development Corporation related to its defense of the Town Center suit in the amount of $8,545.35. A copy of the invoice is attached hereto marked Exhibit "A" and made a part hereof and a copy of the adjusted budget is attached hereto marked as Exhibit "B" and made a part hereof. PASSED AND APPROVED this �.. (r. ,' . Ra ‘74i i /4‘ � C ATTEST: By: Bather Woo ruff, City Cle 1e day of March, 2001. APPROVED: By: jag 6, DAN COODY, Ma • • BEKKA DEVELOPMENT CO. One West Mountain Street Fayetteville, AR 72701 BILL TO City of Fayetteville 113 W Mountain Fayetteville, AR 72701 r Invoice DATE INVOICE NO. 7/27/2000 2561 EXHIBIT A E E It P.O. NO. TERMS MONTH Net on receipt DESCRIPTION AMOUNT Legal Costs-Davis,Cox & Wright 8/99-5/00 8,545.35 m X X CO Total $8,545.35 E E It • • • • Davis, Cox & Wright PLC Customer Balance Detail Type Date Num Bekka Corp. Williams, et al v city of Fayettv & Bekka Invoice Invoice Invoice Invoice Invoice Invoice Invoice Invoice Invoice Invoice 8/31/99 9/30/99 10/26/99 11/29/99 12/30/99 1/31/00 2/29/00 3/30/00 4/27/00 5/31/00 1474 1655 1813 1998 2212 2361 2525 2722 2892 Account Class 2021 -A/R 2021 -A/R 2021 -A/R 2021 -A/R 2021 -A/R 2021 -A/R 2021 -A/R 2021 -A/R 2021 -A/R WJB WJB WJB WJB WJB WJB WJB WJB WJB • Amount 811.50 836.00 1,012.40 480.00 2,670.25 1,220.20 450.00 345.00 585.00 135.00 18.545 3 City of Fayetteville, Arkansas Budget Adjustment Form nexxa rarlung C. 8: Page 5 Budget Year 2001 Department: Division: Program: General Government Town Center Construction Town Center Construction Date Requested March 6, 2001 Adjustment # EXHIBIT B Project or Item Requested: Funding of 511,776 for the settlement with Bekka Devellopment for legal fee reimbursement and for parking space lost revenue. Projector Item Deleted: None. Recognition of Interest income. Justification of this Increase: The request is to fund the claim submitted by Bekka Development., Justification of this Decrease: Sufficient cash and investments exist to fund this request. Account Name Legal.Services Rent Account Name Interest -CHT -ASP Transf Increase Expense (Decrease Revenue) Amount Account Number 8,596 5600 3,230 9600 5314 01 5600 9600 5308 00 Decrease Expense (Increase Revenue) Amount AccountNumber 11,776 5600 0960 6708 98 Project Number Project Number Approval Signatures Requested By pare Z-7-1-01 3udget Dam )epartment Director. tdmin. Services Director playa Date Date Date Type: A Date of Approval Budget Office Use Only C Posted to General Ledger Posted to Project Accounting Entered in Category Log Blue Copy: Budget & Research / Yellow Copy: Requester E C DRA'Wa16£A.INBA_DIflLMrJ 411 F 1. • NAME OF FILE: Resolution No. 31-01 • CROSS REFERENCE: 03/06/01 Resolution No. 31-01 07/27/00 Exhibit "A" (Copy of Bekka Development Co. Invoice No. 2561) 03/06/01 Exhibit "B" (Copy of Budget Adjustment) 03/02/01 Departmental Memo to Dan Coody, Mayor, and Fay. City Council from Kit Williams regarding Bekka Development Corporation's request for legal expenses and lost parking revenue 06/09/01 Departmental Memo to Fred Hanna, Mayor and Fay. City Council from Jerry E. Rose regarding Bekka claims for legal expenses and lost parking 06/27/00 Letter to Mayor Hanna from John Bradberry, Bekka Development Co. 10/22/98 Lease Agreement between Bekka Development Company and City of Fayetteville 03/06/01 Staff Review Form NOTES: FAYETTEVILLE THE CITY OF FAYETTEVILLE, ARKANSAS • DEPARTMENTAL CORRESPONDENCE To: Dan Coody, Mayor Fayetteville City Council From: Kit Williams, City Attorney Date: March 2, 2001 Re: Bekka Development Corporation's request for legal expenses and Lost parking revenue I have reviewed previous correspondence from Brian Swain (August 5, 1999), City Attorney Jerry E Rose (June 9, 2000), and John Bradberry (May 25, 2000) concerning the parking and attorney fee requests. I have also reviewed the contract of October 22, 1998 between the City and Bekka Development Corporation. Initially, I would like to say that I agree with Jerry Rose's analysis of the City's obligations. Indeed, I believe the City was very generous in its interpretation of Section 14A of the contract, concerning parking during construction. However, this was probably the understood intent of the contract as shown in correspondence by Mr Brian Swain and the subsequent contract which secured 27 parking spaces at a lot as close as possible to Bekka's building and for its exclusive use at our cost on August 25, 1999. However, as Jerry stated in his letter: "The lease does not say nor was it intended to say that if Bekka couldn't convince its tenants that they should pay for the use of the alternate parking that the City would compensate Bekka D M • • this claim you're more than welcome to but I can't think of any legal obligation to do so on this one." The City Council then decided to pay the bill submitted by Bekka, and this Council can choose to do so again. The previous City Council turned down Bekka Development Company's request for its $8,411.00 legal bill related to the Town Center Lawsuit. This is apparently a second request for these expenses. Jerry Rose and I are again in agreement that even the broad language of the contract does not legally obligate the City to pay these attorney fees. However I believe you can legally decide to pay some or all of this amount I encourage the City Council to read Jerry Rose's correspondence to Mayor Hanna of June 9, 2000 on this issue. Respectfully, Kit Williams City Attorney FAY FTE/JILL•LJE LEGAL DEPARTMENT CITY ATTORNEY DIVISION LAGAYLE D.MCCARTY, ASST. Cm' ATTORNEY DEPARTMENTAL CORRESPONDENCE • JERRY E. ROSE, Cm ATTORNEY To: Fred Hanna, Mayor Fayetteville City Council From: Jerry E. Rose, City Attomey Lh Date: June 9, 2000 4 Re: Bekka claims for legal expenses and lost parking John Bradberry's letter dated May 25, 2000 asks for the City to pay attorney fees and lost parking revenue under the terms of Bekka's lease dated October 22, 1998 which is attached as part of the agenda packet. I thought these comments may be of some assistance to you in your decision. Attorney fees: Since the filing of what is commonly referred to as the Town Center lawsuit in mid -1999, I have been asked by Bekka on a number of occasions as to what my position was on paying Bekka's attorney fees incurred as a result of their being named a party to the suit. I can recall two conversations with Dianne Boyd and one with Jack Butt. On every occasion I expressed my belief that the City was not legally obligated under the terms of the lease to pay Bekka's attorney fees, but that I thought that the City Council may well feel that in fairness they should pay some or all of those fees and I encouraged them to make a claim. I do not believe that attorney fees for Bekka's defense of the Town Center suit are covered under the lease agreement. Bekka is accused in the suit of entering into an illegal contract with the City and the suit seeks to void Bekkas lease and requests Bekka refund the money paid under the terms of the lease. I don't think that fits under the lease provisions which are cited by Bekka because I don't tclieve the defense of the suit is directly or indirectly associated with the leased premises. Instead I believe it is associated with the money Bekka received for the lease which has no relationship whatever with the leased premises. For what it's worth, I readily concede that reasonable legal minds may differ. I also readily concede that Bekka's defense assisted the City in its position and that Jack Butt's able and highly competent legal skills were welcomed by all who supported the City's position. Accordingly, I would have no objections to the City resolving this matter by paying this claim. I just want you to know want you to know that I don't believe you are legally obligated to. Remember that this case is likely to be appealed and I assume more attorney fees may be incurred by Bekka as a result. • • Jh M • • • • • • Page 2 Mayor/City Council June 9, 2000 2. Lost Parking Revenues: I recall talking to Dianne Boyd and John Bradberry about the City providing alternate parking to Bekka without any additional clause in the lease. I also recall that we were not sure we could find such alternate parking and told Bekka that if they could find alternate parking that the City may compensate them for that cost. I have no memory of nor do I believe there was a discussion of any compensation that was to be made to Bekka under any circumstances for loss of parking revenue. Section 14A of the lease provides that the City pay for relocating and providing parking. We've done that by providing Bekka alternate parking. The lease does not say nor was it intended to say that if Bekka couldn't convince its tenants that they should pay for the use of the alternate parking that the City would compensate Bekka for a loss of revenue. Again, if you wish to settle this claim you're more than welcome to but I can't think of any legal obligation to do so on this one. • /cbp If I can provide anything further, Just let me know. • BDC • REM - JUL 2 8 2000 BEKKA DEVELOPMENT COIF°os`cr_�c`_-= EXECUTIVE SQUARE, ONE WEST MOUNTAIN, FAYETTEVILLE, AR 72701 (501) 442-7672 FAX (501) 442-4580 June 27, 2000 City of Fayetteville Attn: Hon. Fred Hanna, Mayor 113 W. Mountain Fayetteville, AR 72701 Dear Mayor Hanna: In accordance with our lease agreement and further to my letter of May 25, 2000, we are submitting an updated invoice for legal fees related to the leased premises. As you may have heard, Judge Gunn denied our motion for the plaintiff in the Town Center Lawsuit to pay defendant legal fees. Please remit promptly to: Bekka Development Company One West Mountain Fayetteville, AR 72701 Thank you for your attention to this matter. John Bradberry Vice President-Bekka Development Co. cc: Mr. E.G. Bradberry, President Bekka Development Co. Mrs. Dianne Boyd, Secretary Bekka Development Co. L Jc e • • LEASE AGREEMENT Agreement made this ZL day of A , 1998, by and between BEKKA • Development Company, an Arkansas Corporation, with offices at One West Mountain Street, Fayetteville, Arkansas 72701, (hereinafter called "Lessor"), and the City of Fayetteville, Arkansas, a municipal corporation, with offices at 113 West Mountain Street, Fayetteville, Arkansas 72701, (hereinafter called "Lessee"). WHEREAS, the City of Fayetteville desires to revitalize its Downtown by building a Town Center with a Plaza connected to the Fayetteville Square; and, WHEREAS, BEKKA Development Company is also interested in revitalizing Downtown Fayetteville; and, WHEREAS, BEKKA Development Company recognizes that its property is much more A valuable than indicated by the terms of this Lease Agreement; nevertheless, is willing to lease the (E hereinafter described property, under the terms and conditions specified herein; and, WHEREAS, the plans contemplate the conversion of an entire tract of Lessor's property to use as an entrance plaza to the Town Center, which may materially and adversely impact Lessor's adjacent developed lots to the east and west of the intended plaza, and will preclude integrated development of Lessor's combined tracts fronting the Fayetteville Square; and, WHEREAS, while the City could exercise its power of eminent domain to acquire Lessor's property, both parties wish to avoid the uncertainties and potential expense of condemnation proceedings, as well as the threat such proceedings could hold for either the project itself or the value to Lessor of this and its adjacent Lots. NOW, THEREFORE, IN CONSIDERATION of the rents, promises, recitals and mutual covenants contained herein, the Lessor and Lessee hereby agree as follows: 1. LEASED PREMISES. Lessor hereby lets, leases and demises unto Lessee, without representations as to physical condition or suitability, subject to the terms and conditions contained herein, the following described property situated in Washington County, Arkansas: Lots Two (2) and Three (3) in Block Thirty (30) in the Original Plat of the Town (now City) of Fayetteville, Arkansas, and part of Lot 4 West of Lot 3 to the existing walkway edge, a distance of approximately 15'. To have and hold said premises unto the said Lessee for and during the term herein stated, subject to the covenants, terms and conditions contained herein. 2. TERM. This lease shall commence upon the effective date hereof and shall extend for a term of twenty-five (25) years. Lessee shall have the option to extend said lease in five (5) year increments, on an Evergreen basis, rent to continue as set forth in paragraph 7, if Lessee is not in default. It is the specific intent of the parties that this lease be one of perpetual renewal at the option of the Lessee so long as Lessee is not in default. Mir • • • • • • • • 3. DESIGN. Lessor agrees to allow Lessee to construct a Town Plaza in substantially the same design as shown in the architectural drawing attached hereto as Exhibit "A". Before and after initial construction, any substantial changes to the design as shown in Exhibit "A", must be approved by the Lessor in writing pnor to construction. Lessor shall not unreasonably withhold such approval. 4 ASSIGNMENT. Lessee shall not assign this lease or sublet the leased premises or any part thereof without prior written consent of the Lessor. 5. POSSESSION. Lessee may take possession of the leased premises when Lessor has given•final approval of Lessee's plans for the improvements to be made to the Leased Premises as set forth in paragraph 3 above and, when a construction contract for the Town Center Project, which will be located south of the Leased Premises, has been entered into. 6. COSTS, UTILITIES AND LIABILITY. All costs, utilities, and liability of and for the plaza and connecting areas, steps, and tie ins shall be bome by the Lessee. 7. RENT. As partial consideration, in addition to the terms, conditions and covenants hereof, Lessee agrees to pay Lessor the sum of one hundred twenty thousand dollars ($120,000.00) upon possession and one dollar ($1.00) per year during the term or any extended terns, hereof. 8. TAXES. Lessee shall pay any and all ad valorem taxes, fees and assessments levied against said premises during the term of this lease; including, but not limited to, real estate taxes, personal property taxes, sales taxes and off-street parking district taxes. 9. PARKING. Lessee shall at no cost to the Lessor provide and maintain a paved area adjacent to the Executive Square Office Building, underneath the Town Plaza, sufficient to accommodate 32 parking spaces. Said area shall be for the exclusive use of the Lessor and/or Lessor's Tenants and guests; however, when not in use by Lessor, said spaces may be utilized by the Lessee for public purposes. Lessee shall provide and maintain reasonable access which is satisfactory to the Lessor from the parking area provided to Lessor hereunder, to the premises to the east and west of the Leased Premises; and shall provide and maintain lighting, ventilation and upkeep of said parking area in a manner which is satisfactory to Lessor. 10. USE. Lessee shall use the Leased Premises for the purpose of building and operating a Town Plaza, which shall be the entrance from the south side of the Fayetteville Square to the Town Center, and for no other purpose or purposes without the written consent of Lessor. 11. DEFAULT. Lessor may declare a default by Lessee upon the following: A. Lessee failing to pay any installment of rent and the failure continues for a period of 60 days after written notice to the Lessee. B. Failure to comply with any other terms of this Lease Agreement, and not curing such failure within 60 days after written notice to the Lessee. 12. REMEDIES. Upon the occurrence of any default by the Lessee, which is not timely cured after written notice, Lessor may terminate this Lease Agreement and immediately enter upon 4 • • . • and take possession of the leased premises. Pursuit of said remedy shall not preclude pursuit of any other remedies herein provided, or provided by law. No waiver by Lessor or any violation or breach of any portion hereof shall be deemed or construed to constitute a waiver of any other violation or breach of the same or otherwise. Lessee shall pay any and all costs and expenses resulting from an event of default hereunder or incurred in the collection of any past due balances hereunder, including reasonable attorney fees, whether said attorney is in-house or not, and whether or not suit is brought. 13. CONTINUING OBLIGATIONS. Lessee shall bear all cost and expenses, directly or indirectly associated with the Leased Premises, including, but not limited to, any and all improvements, maintenance, up -keep, lighting, utilities, insurance, accidents, taxes, fees, assessments, cleaning, snow removal and trash removal, and shall defend, indemnify and hold Lessor harmless therefore. Lessee shall maintain the Leased Premises in a clean, attractive, healthful condition, and in accordance with all laws and ordinances. Lessee's obligations under this agreement shall continue and shall survive the expiration or termination hereof, until all obligations of the Lessee incurred hereunder have been met. Nothing herein is to be interpreted or intended as a waiver of the tort immunity granted Lessee under the law of the State of Arkansas. 14. MISCELLANEOUS PROVISIONS. A. Lessee shall pay any and all costs and expenses associated with, directly or indirectly, the removing, relocating, replacing, providing, etc., any and all utilities, electrical service, heating and air-conditioning, water, sewer, steps, entrances, driveways, parking, etc., to or for the Leased Premises. Said removal, relocations, etc., shall be subject to Lessor's prior approval and shall be done with minimum disruption of services. B. Lessee shall provide and maintain reasonable access from the Leased Premises (plaza and parking) to the premises east and west of the Leased Premises, to Lessor's satisfaction, including at least three (3) walkways from the plaza to the premises located to the west of the Leased Premises. C. The rent provided in this lease shall not be used directly or indirectly in determining fair market value in any subsequent condemnation action regarding this property. D. All nsk and loss to the Leased Premises during the tern or any extended teens hereof shall be borne by Lessee. E. Upon termination of the lease, Lessee shall continue to provide Lessor reasonable ingress and egress to and from the Leased Premises across Lessee's property lying south of the Leased Premises. Said access is currently being afforded by a driveway/alley along the south edge of the Leased Premises from both East and Block Streets. F. Lessee shall provide, at no cost to Lessor, during the term and any extended term hereof, reasonable space for trash/garbage disposal and pickup for use by Lessor and the occupants of the premises lying east and west of the Leased Premises. 15. SUCCESSION. This lease agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors and permitted assigns. • • • • 16. SEVERABILITY. Each provision of this lease agreement is severable from all other provisions. In the event any court of competent jurisdiction determines that any provision is invalid or unenforceable for any reason, all remaining provisions shall remain in full force and effect and shall be construed to best effectuate the intent of the parties. 17. INTERPRETATION. This Lease Agreement shall be deemed to have been made under and shall be govemed by the laws of the State of Arkansas in all respects, including without limitation, matters of construction, validity, performance and venue Venue of any legal actions shall be in Washington County, Arkansas and the parties specifically waive any and all other. 18. AUTHORIZATION. The persons executing this agreement covenant and represent that they are duly authorized and empowered to do so on behalf of the party they purport to represent. 19. LIABILITY. Lessor shall not be liable to Lessee or any other party, person, or entity for damage, injury or loss of any kind arising from or associated with the Leased Premises, directly or indirectly, and Lessee shall defend, indemnify and hold Lessor and its officers, agents, employees, directors, and shareholders harmless therefrom. The Lessee shall be liable for any and all damages from their construction, development, and use of the Leased Premises. Nothing herein is to be interpreted or intended as a waiver of the tort immunity granted Lessee under the Law of the State of Arkansas. 20. TIME OF ESSENCE. Time shall be of the essence in this Lease Agreement. 21. ALL RIGHTS NOT SPECIFIED. All nghts not specifically granted under this Lease shall remain with the Lessor. 22. ENTIRE AGREEMENT. This Lease Agreement including Exhibit "A" contains the entire agreement of both parties hereto, and no other oral or written agreement shall be binding on the parties hereto. This Lease Agreement supersedes all prior agreements, contracts, and understanding of any kind between the parties relating to the subject matter hereof. I� N �YITNESS Wj3'EREOF, the parties hereto have hereunto set their hands and seals on this day of i%/41111- , 1998. LESSOR: LESSEE: BEKKA D LOPMENT CO. CITY OF FAYETTEVILLE, ARKANSAS A Municipal Corporation An Arka ; i s. poration / f1 d nt A g•EST: Secretary By. Fred Hanna, Mayor ATTEST: ✓i 4 -•74 -sr Heather Woodruff, City Clerk • STAFF REVIEW FORM • X AGENDA REQUEST CONTRACT REVIEW GRANT REVIEW G, ?GO/ For the Fayetteville City Council meeting of , FROM: John Maguire Administration Name Division Department ACTION REQUIRED: Consideration of a claim by Bekka Development for legal expenses in conjunction with the Town Center. A claim for parking rental revenue was approved at the June 20, 2000 meeting of the Fayetteville City Council. If the claim is approved, approval of a budget adjustment to fund the approved claim is also requested. COST TO CITY: $8,545.35 Stir' 22.-: Cost of this Request Category/Project Budget 5600-9600-5314-01 400! Account Number Funds Used To Date Project Number Remaining Balance Services and Charge Category/Project Name Town Center Program Name Fund BUDG T RE W: Budgeted Item LA Budget Coordinator x Budget Adjustment Attached Administrative Services Director CONTRACT/GRANT/LEASE REVIEW: GRANTING AGENCY: Aft. . & Accoffing Man=•er C Attorney i Purchasing Officer ADA Coordinator z 2 3 /o (-61 ate 021 a3 re • "Levi, At Internal Aucf for Date Grant Officer Date a(..)a(O Date Date STAFF RECOMMENDATION: D rtment Dire or Admin. ..v. s Direc Ma Date D (Dile Date Z -/a%/(.42( / %/�( Cross Reference New Item: Yes NO Prev Ord/Res #: Orig Contract Date:_ • s F • 411 STAFF REVIEW FORM 411 Description Meeting Date Comments: Budget Coordinator Reference Comments: Page 2 Accounting Manager Reference Comments: City Attorney Reference Comments: Purchasing Officer Reference Comments: ADA Coordinator Reference Comments: Internal Auditor Reference Comments: Grants Offcier Reference Comments: