Background-

 On or about December 18, 2006, the City, as Landlord, entered into a retail ground lease (the “Lease”) for certain premises known as the Ocean Mall (the “Premises”) with OMRD, LLC, as Tenant (“OMRD”).  The City, OMRD, and the Riviera Beach Community Redevelopment Agency also entered into a Disposition and Development Agreement dated December 18, 2006 (“DDA”) setting out the responsibilities for the development of the Premises in two phases (Phase I and Phase II) and certain surrounding City owned property.  On or about April 24, 2013, GSF Florida Retail LLC became the Tenant under the Lease by virtue of being the winning bidder at the foreclosure sale held in the foreclosure action on the lien of the leasehold mortgage originally held by Branch Banking and Trust Company, and was subsequently assigned to GSF Trust 2011-1.  Right after the foreclosure sale on the leasehold mortgage, the Tenant paid the City $300,000 to extend the construction completion date of Phase I under the DDA on the Premises to May 31, 2013.  It was on or about May 15, 2013 that the parties entered into the First Amendment to Ground Lease – Retail (the “First Amendment”) to facilitate further extension to complete the Phase I construction required of the Tenant by the DDA to May 31, 2014.  The First Amendment provided that in the event that Phase I was not completed by May 31, 2014, the Lease would automatically terminate and the Premises would be surrendered to the City, except in the instance that failure to complete Phase I was based upon “Unavoidable Delay” as defined in Section 35(o) of the Lease. The Tenant paid the City $250,000 for the extension. 

Thereafter on January 15, 2014, a Second Amendment was entered into between the parties which: (a) extended the Phase I Completion Date from May 31, 2014 to March 28, 2015, and provided the Tenant with up to an additional 12 monthly extensions beyond March 28, 2015 to effectuate the Phase I completion; (b) amended Section 25(d) and Section 36 of the Lease (which was added in the First Amendment) to provide the Leasehold Mortgagee the right to enter into a new lease with the City upon the termination of the Lease with Tenant, pursuant to Section 36 or other Event of Default, as defined in Article 14 of the Lease;  (c) provided the Leasehold Mortgagee with eighteen (18) months after the Leasehold Mortgagee or its designee becomes the “Tenant” to complete construction of the Phase I Development; and (d) revised the legal description of the Leased Premises to exclude the North Ocean Boulevard Strip. 

Two months later, the parties entered into a Third Amendment on March 19, 2014, which (a) amended Section 4(d) of the Lease by granting to the City all rights to parking revenue; (b)  in Article 36, extended the Initial Phase I Completion Date to June 30, 2015, with the final extension being June 30, 2016, after payment of $41,666.66 per month for the twelve (12) month delay; and (c) granted, in a new Article 37, a six (6) year parking easement which allowed Tenant to be in compliance with the parking requirements of the Lease.

Summary-

Fourth Amendment

Although the final building will be complete by no later than March 2016, the parking component will not be complete.  In addition, Tenant has advised that it needs a more permanent parking solution than that agreed to in the Third Amendment and is requesting to use the “hotel parcel” as permanent parking for the duration of the Lease.  In exchange, the Tenant has agreed to install, at its cost, a parking system for the city.  All revenue will go to the City.  The City has determined that a kiosk system would be best and will be working in the next two months with Tenant to select an appropriate type. 

Moreover, the Fourth Amendment gives the City a set $63,000 per year as rent as opposed to the revenue system currently in place.  It was determined that for planning purposes it is best for the City to receive a set amount that will not fluctuate year to year.  Since the lease’s inception, the City has received less than $30,000 per year for rent on the Ocean Mall.

Finally, the Amendment gives the city more control over who Tenant can assign the lease too, and specifically allows the City to refuse an assignment to anyone (person or entity) who litigates against the City.

Staff recommends approval of the Fourth Amendment.