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Mason City and Gatehouse have development agreement ready for 95-room hotel; City council to consider at next meeting

Video image of this morning’s announcement via social media

MASON CITY – Mayor Bill Schickel and City Administrator Aaron Burnett announced this morning that Mason City and Gatehouse have a development agreement ready for a proposed 95-room hotel as part of the downtown Renaissance project and the City council will consider the “long legal document” at its next meeting Tuesday evening.

Watch the following video posted Friday, June 14, 2019

The Mason City council will consider a resolution Tuesday night:

RESOLUTION NO. 19 – 148

RESOLUTION (1) APPROVING THE MINIMUM DEVELOPMENT REQUIREMENTS, COMPETITIVE CRITERIA, AND PROCEDURES FOR DISPOSITION OF CERTAIN PROPERTY LOCATED WITHIN THE URBAN RENEWAL AREA; (2) DETERMINING THAT THE PROPOSAL SUBMITTED BY GATEHOUSE MASON CITY, L.L.C. SATISFIES THE OFFERING REQUIREMENTS AND DECLARING THE INTENT OF THE CITY TO ENTER INTO A PURCHASE, SALE, AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE CITY OF MASON CITY, IOWA AND GATEHOUSE MASON CITY, L.L.C. IN THE EVENT THAT NO COMPETING PROPOSALS ARE SUBMITTED; AND (3) SOLICITING COMPETING PROPOSALS.

WHEREAS, by Resolution No. 15-238, adopted October 20, 2015, this Council found and determined that certain areas located within the City are eligible and should be designated as an urban renewal area under Iowa law, and approved and adopted the Mason City Downtown Reinvestment Urban Renewal Plan (the “Plan” or “Urban Renewal Plan”) for the Downtown Reinvestment Urban Renewal Area (the “Area” or “Urban Renewal Area”) described therein, which Plan is on file in the office of the Recorder of Cerro Gordo County; and

WHEREAS, the Plan has been amended by Amendment No. 1 as approved by Resolution No. 17-88 on May 11, 2017, by Amendment No. 2 as approved by Resolution No. 19-98 on April 16, 2019, and as proposed to be amended by Amendment No. 3 on July 2, 2019; and

WHEREAS, Gatehouse Mason City, L.L.C. (“Gatehouse”), wishes to purchase from the City certain property located within the Urban Renewal Area (the “Hotel Property”), as defined in a proposed Purchase, Sale, and Development Agreement between the City and Gatehouse (the “Agreement”); and

WHEREAS, the City intends to sell the Hotel Property to Gatehouse in exchange for $1.00 and other consideration under the Agreement, pursuant to the terms of the Agreement; and

WHEREAS, pursuant to the Agreement, Gatehouse would be obligated to, among other things, construct and operate certain Minimum Improvements including the construction of Convention Center Improvements on the Music Man Square Property (as those terms are defined in the Agreement) and a 95 guest room hotel and convention center on the Hotel Property, and in exchange the City would (i) sell the Hotel Property to Gatehouse; (ii) complete the Skywalk Improvements on the Skywalk Property (as those terms are defined in the Agreement); (iii) provide a Grant to Gatehouse in an amount not to exceed $8,700,000, under the terms and following satisfaction of the conditions set forth in the Agreement; and (iv) provide 80 consecutive quarterly Local Hotel Tax Rebates to Gatehouse equal in amount to 50% of the Local Hotel Tax generated by operations on the Hotel Property, under the terms and following satisfaction of the conditions set forth in the Agreement; and

WHEREAS, in order to comply with Iowa Code Section 403.8, the City is establishing reasonably competitive bidding procedures for the disposition of the Hotel Property and all developers interested in submitting a proposal to compete for the sale and redevelopment of the Hotel Property must submit a proposal meeting the requirements set forth herein; and

WHEREAS, to both recognize the firm proposal (in the form of the Agreement) from Gatehouse for the disposition and redevelopment of the Hotel Property already received by the City, and to give full and fair opportunity for other developers interested in submitting a proposal for the sale and redevelopment of the Hotel Property, this Council should by this Resolution:

1. Set the fair market value of the Hotel Property for uses in accordance with the Plan.

2. Approve the minimum requirements for the sale of and redevelopment of the Hotel Property.

3. Approve Gatehouse’s general terms as to form of the Agreement, subject to modifications and revisions as determined appropriate by the Council.

4. Set a date for receipt of competing proposals and the opening thereof; and provide for review of such proposals with recommendations to this Council in accordance with established procedures.

5. Declare that the Agreement submitted by Gatehouse satisfies the requirements of the offering, and that in the event no other qualified proposal is timely submitted that the City intends to accept Gatehouse’s proposal and enter into the Agreement.

6. Declare that any competing proposals must include the redevelopment of the Hotel Property with construction similar to or exceeding the standard proposed in the Agreement.

7. Approve and direct publication of a notice to advise any would-be competitors of the opportunity to compete for the sale of the Hotel Property on the terms and conditions set forth herein.

8. Declare that in the event another qualified proposal is timely submitted, another and future notice will be published of the intent of the City to enter into the resulting contract, as required by law.

WHEREAS, this Council believes it is in the best interest of the City and the Plan to act as expeditiously as possible to offer the Hotel Property for redevelopment as set out herein.

NOW, THEREFORE, BE IT RESOLVED, BY THE CITY COUNCIL OF MASON CITY, IOWA:

The Hotel Property offered for sale and redevelopment in accordance with the terms and conditions contained in this Resolution and the Plan is legally described as follows:

THE EAST-WEST ALLEY LYING NORTH OF AND ADJACENT TO LOT FOUR (4), AND THE SOUTH ONE HUNDRED AND EIGHTY-FOUR FEET (184’) OF LOT THREE (3) AND ALL OF LOTS FOUR (4), FIVE (5), AND SIX (6) OF AUDITOR’S PLAT OF LOTS TEN (10) AND ELEVEN (11) IN AUDITOR’S PLAT OF THE SOUTH ONE-HALF (1/2) OF THE SOUTHWEST ONE-QUARTER (1/4) OF THE NORTHWEST ONE-QUARTER (1/4) AND THE NORTH ONE-HALF (1/2) OF THE NORTHWEST ONE QUARTER (1/4) OF THE SOUTHWEST ONE QUARTER (1/4) IN SECTION 10-96-20, EXCEPTING THEREFROM ALL PORTIONS OF SAID EAST-WEST ALLEY AND SAID LOTS LYING EASTERLY OR SOUTHEASTERLY OF THE WESTERLY RIGHT-OF-WAY LINE OF US HIGHWAY 65; AND

LOTS ONE (1) THROUGH FOURTEEN (14) IN STANBERRY ADDITION TO MASON CITY, IOWA, AND THAT PORTION OF THE NORTH-SOUTH ALLEY LYING EAST OF AND ADJACENT TO SAID LOTS, EXCEPTING THEREFORM THOSE PORTIONS OF SAID NORTH-SOUTH ALLEY AND OF LOTS THIRTEEN (13) AND FOURTEEN (14) LYING SOUTHEASTERLY OF THE WESTERLY RIGHT-OF-WAY LINE OF US HIGHWAY 65; AND

THE SOUTH THIRTY-FIVE (35) FEET OF THE AUDITORS PLAT OF LOTS ONE (1) THROUGH FOURTEEN (14) OF THE SOUTH ONE HALF (1/2) OF THE SOUTHWEST ONE QUARTER (1/4) OF THE NORTHWEST ONE-QUARTER (1/4) AND THE NORTH ONE-HALF (1/2) OF THE NORTHWEST ONE QUARTER (1/4) OF THE SOUTHWEST ONE-QUARTER (1/4) IN SECTION 10-96-20, MASON CITY, IOWA.

2. It is hereby determined that in order to qualify for consideration for selection, each developer must submit a proposal which contains terms no less favorable to the City than those set forth in the Agreement submitted by Gatehouse and which must include and provide for the developer’s purchase of the Hotel Property at not less than the fair value for use in accordance with the Plan.

3. It is hereby determined, based on investigation by the City, that the proposed sale price of the Hotel Property of $1.00, as provided in the Agreement, is equal to or greater than fair value when considering all of the obligations set forth in the Agreement, and is hereby approved. The proposed sale price and the terms of payment as described in the Agreement are hereby approved.

4. It is hereby determined that the Agreement submitted by Gatehouse satisfies the requirements of this offering and is approved as to form, subject to modifications as determined appropriate by the City Council, and in the event that no other qualified proposals are timely submitted, the City intends to enter into the Agreement and sell the Hotel Property to Gatehouse on the terms proposed.

5. It is hereby determined that Gatehouse possesses the qualifications, financial resources and legal ability necessary to purchase and redevelop the Hotel Property in the manner proposed by this offering and in accordance with the Plan.

6. This action of the Council shall be considered to be and does hereby constitute notice to all concerned of the intention of this Council, in the event that no other qualified proposals are timely submitted, to accept the Agreement with Gatehouse for the sale and redevelopment of the Hotel Property, which Agreement is on file for public inspection at the office of the City Clerk, City Hall, 10 First Street NW, Mason City, Iowa 50401.

7. The City Clerk is authorized and directed to secure immediate publication of this Resolution in the Globe Gazette, a newspaper having general circulation in the community, by publication of the text of this Resolution.

8. Written proposals for the purchase of the Hotel Property must be received by the City Clerk at or before 12:00 P.M. (Noon) on July 19, 2019. Said proposals must be received in the City Clerk’s Office, located at City Hall, 10 First Street NW, Mason City, Iowa 50401. Each proposal will then be publicly opened by the Clerk or the Clerk’s designee at the hour of 1:00 P.M. in the City Clerk’s Office, City Hall, 10 First Street NW, Mason City, Iowa 50401, on that same date. The City Clerk, or the Clerk’s designee, is hereby authorized and directed to make a preliminary analysis of each such proposal for compliance with the minimum requirements established by this Council hereinabove and to advise the Council with respect thereto. Said proposals will then be presented to the City Council at 7:00 P.M. on July 23, 2019, at a public hearing to be held in the Council Chambers, City Hall, 10 First Street NW, Mason City, Iowa. The Council shall judge the strength of the proposals meeting the foregoing minimum requirements by the criteria set forth above and shall make the final evaluation and selection of a proposal.

9. The method for transfer of the Hotel Property as set forth herein is in substantial conformance with the provisions of Section 403.8(1) and (2), Code of Iowa, requiring “fair value” and “reasonable competitive bidding procedures.”

10. In the event another qualified proposal is timely submitted, another and further notice shall be published of the intent of the City of Mason City, Iowa to enter into the resulting contract, as required by law.

PASSED AND APPROVED this 18th day of June, 2019.

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