HomeMy WebLinkAbout10/29/1992 .~~~dy 13 A K E R $ F I E L D
Ken
Peterson,
Chair
Alan , ager Kevin McDermott
Staff: Jack Hardisty Patricia M. Smith
AGENDA SUMMARY REPORT
URBAN DEVELOPMENT COMMITTEE
Thursday, October 29, 1992
12:00 noon
City Manager's Conference Room
CDDA Members: William (Bill) Paynter
Mel Rubin
1. Convention Center Hotel Update (Jake Wager)
Discussed possible brokerage agreement with Chuck Nester. Staff to
negotiate agreement and present to CDDA for review and recommendation
to City Council..
2. Set Next Meeting
Monday, November 23, 1992
In Attendance: Chair Ken Peterson; Kevin McDermott; Patricia M. Smith; Bill Paynter;
Mel Rubin; Alan Tandy; Jack Hardisty; Larry Lunardini; Jake Wager; and Chuck Nester.
Attachment
cc: Mayor and City Council
MEMORANDUM
October 28, 1992
TO: Urban Development Committee ~/ ~//
FROM: Alan Tandy, City Manager
SUBJECT: Brokerage Agreement with Brown Mo fl Investment Inc. Regarding the
Convention Center Hotel.
As part of our efforts to find a buyer for the Convention Center Hotel staff has contacted Chuck
Nester, who is a principal in the firm of Brown Motel Investments, Inc. (BMI). This hotel/motel
brokerage fkrn was established in 1948. The fu'm also owns and manages several hotel
properties. The fu'm is an active member of the Hotel and Motel Brokers of America whose
members have handled over $250 million in hotel sales, leases, and exchanges. Through its
membership in this brokerage association, BMI enjoys a computer link-up to forty other associate
offices across the country.
It is my opinion that given the complex nature of real estate dealings relating to the sale of hotels
the City and CDDA would do well to secure the services of a broker who specializes in the sale
of such properties. This specializations translates to a s~xong base of knowledge of day-to-day
hotel operations, accounting procedures, changing markets, and financial conditions. BMI's
relationship with previous buyers gives them high credibility, easier access, to likely prospects
and the ability to screen out lesser qualified individuals or entities.
The individual we are proposing to act as our broker is currently serving as the Vice President
of the Hotel and Motel Brokers of America and is the president elect for 1993. In 1990 and
1991 he was recognized as the top performer of the year. Last year Mr. Nester was involved in
the sale of over $40 million in hotel properties. So far this year the firm has produced 23.5
million in sales.
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I have listed the business terms we are proposing for inclusion in any agreement with BMI and
Chuck Nester. They are as follows:
1) The City of Bakersfield enter into an agreement with Brown Motel Investments
to act on the City and CDDA behalf in selling the existing project, as is.
2) The term of the agreement would be for a period of six months beginning on the
effective date (to be determined) following approval by the City Council and the
Centxal District Development Agency (herein after the "Agencies").
3) The agreement would be prepared by the City Attorney's Office,
4) Bi-monthly updates are to be provided to the City Manager detailing level of
marketing activity undertaken and status of prospects.
5) A base commission of $315,000 would be paid upon approval of a Disposition
and Development Agreement (DDA) by a buyer (agreeable to the Agencies). It
is our intent to have the buyer pay the commission.
6) Upon execution of a DDA and conveyance of the sale amount, the Agencies will
deliver to the purchaser 5+ acres in fee simple and no liens on the hotel parcel
and a long term land lease (or simple fee rifle) on the public improvement parcel.
Upon completion of the project and a determination that the property is open for
occupancy, all encumbrances and obligations resting with the purchaser shall be
lifted.
If the committees are receptive to our recommendation, I would bring an agreement to the City
CoUncil for action on November 18, 1992 and to the CDDA on November 30, 1992.
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