Committee of the Whole

City of Oconomowoc Committee-Of-The-Whole Tuesday, September 17, 2024 - 6:50 PM City Hall - Council Chambers 174 E. Wisconsin Ave. Oconomowoc, WI 53066 (or immediately following Public Services) Notice: If a person with a disability requires that the meeting be accessible or that materials at the meeting be in accessible format, call the City Clerk at least 48 hours prior to the meeting to request adequate accommodations. Tel: (262) 569-2186. 1. Call to order and confirmation of appropriate meeting notification 2. Committee Business a. 2025 Budget Overview b. Consider/recommend City Beach Concession/Lifeguard/Restroom Building Lease Agreement Between the City of Oconomowoc and R&S Hospitality, LLC 3. Adjourn ________________________________ Diane Coenen, City Clerk City of Oconomowoc Notice is hereby given that a majority of the Common Council will be present at the above scheduled meeting to gather information about a subject over which they have decision-making responsibility. This constitutes a meeting of the Common Council pursuant to State ex rel. Badke v. Greendale Village Board, 173Wis. 2d 553, 494 N.W. 2d 408 (1993) and must be noticed as such, although the Common Council will not take any formal action at this meeting. 1  MEMORANDUM ADMINISTRATION AND PARKS Date: September 17, 2024 To: Mayor and Common Council From: Mark Frye, City Administrator Eric Boettcher, Director of Parks, Recreation and Forestry Re: Consider/approve the Lease Agreement for a Restroom, Lifeguard Room and Concession Building at City Beach RELATES TO THE STRATEGIC PLAN IV.A. Plan and Implement Quality of Life Assets and Community Amenities BACKGROUND The topic of a building at City Beach that would house restrooms, lifeguard office and concessions was discussed at our June 18 Committee of the Whole. The minutes from this meeting are shown below: “Boettcher gave a PowerPoint presentation detailing two options - Option A would have one building for three uses; restrooms, concessions and staff rooms and Option B would have two buildings; restrooms closer to Wisconsin Ave and concessions/staff rooms closer to the lake. The approx. design/build cost is $250K-$500K. C-O-T-W consensus is Option A. John Suttner, operator of the current concession stand and Allan Francois, his architect, gave a PowerPoint presentation and passed out proposed renderings of a multi-purpose building with patio and seating area at his own cost or entering into a public-private partnership with the City. If he builds and pays for the building he would need a long-term contract as the City Beach concessionaire. As directed, staff will work with Council on Option A and modernize the building with Suttner as a partner with the City. “ Staff developed a Request for Proposal (RFP) to construct the building for the three uses and operate the concessions. The RFP provided a sample floor plan for the building and required the following items:  The concessionaire portion of the RFP matched what we have done in the past.  The successful bidder (“concessionaire”) shall lease the Lifeguard Area and Restrooms to the City for a period of ten (10) years. After the initial term, ownership will be transferred to the City. The City will concurrently execute a ten (10) year operating agreement for management of the Concession Stand, with an option to extend the operating agreement for five (5) years. Include in your proposal the expected amount of the onetime lease payment amount which cannot exceed the construction cost for the Lifeguard Area and Restrooms.  The exterior of the building will be masonry with low maintenance roof, windows, doors, gutters and trim. 1 2   Include in your proposal the expected amount of the onetime lease payment amount which cannot exceed the construction cost for the Lifeguard Area and Restrooms. We are working with the developer regarding the exterior of the building. This project requires review and approval by the Architectural Committee. Information will be provided for this review as part of their October 2 meeting. The approved exterior of the building will be on the October 15 Council agenda for discussion/approval. ADDITIONAL ANALYSIS R&S Hospitality, LLC (Buddy’s Beach Bungalow) submitted the only response to the RFP. Their proposal provided a lease amount of $265,000. The lease payment is agreed to be $265,000 or the actual construction cost for the leased area, whichever is less. FINANCIAL IMPACT Lease payment of $265,000. RECOMMENDATION City Staff recommends approval of the proposed lease agreement with R&S Hospitality, LLC. SUGGESTED MOTION Suggested Common Council Motion: Motion to approve the 10-year Lease Agreement with R&S Hospitality, LLC. Y:\PR\Waterfront\Concessions\RFP's\Request for Proposals for Building Construction and Concessions 2024\Background Memo for City Beach Restroom, Lifeguard and Concession Building Lease Agreement.docx 2 3  LEASE AGREEMENT This Lease Agreement is effective this ___ day of _________, 2024 by and between the City of Oconomowoc, a municipal corporation (City) and the R&S Hospitality, LLC, a Wisconsin Limited Liability Company (R&S). A. R&S, under a Land Lease between the City and R&S, intends to construct, own and operate a portion of a building to be constructed on City owned land, located at 324 W. Wisconsin Avenue (“City Beach”). The building (referred herein as “Buddy’s Bungalow” – depicted on Exhibit A) shall be constructed at the location depicted on Exhibit B. B. The City, pursuant to this Lease Agreement, shall lease the portions of Buddy’s Bungalow, titled “Men’s Restroom, “Women’s Restroom” and “Lifeguard” (the “Leased Premises”). C. Term. The term of this Lease Agreement shall commence upon execution and terminate on September 30, 2035. D. Rent. The rent for the full term of this Lease Agreement shall be the lesser of: 1) Two Hundred Sixty-Five Thousand ($265,000) Dollars to be paid as follows: One Hundred Thirty Two and Five Hundred ($132,500) Dollars upon R&S’s execution of the construction contract (which must be approved, in advance, by the City) and One Hundred Thirty Two and Five Hundred ($132,500) Dollars upon substantial completion of construction; or 2) One Half (1/2) of the actual construction of the Leased Premises portion of Buddy’s Bungalow, payable in the same proportions and times stated above. R&S shall require the contractor to bid the project so as to identify the proportionate costs of all portions on Buddy’s Bungalow. E. Improvements. R&S shall commence construction of Buddy’s Bungalow on or before November 15, 2024 and shall complete construction on or before May 1, 2025. Thereafter, R&S shall be responsible for any capital repairs (HVAC, structural elements, and fixtures) or improvements associated with the portion of the “Concession” portion of Buddy’s Bungalow, and the City shall be responsible for any capital repairs (HVAC, structural elements, and fixtures) for the Leased Premises. F. Continuous Use. R&S shall assure that the City shall have the use of the Leased Premises the term of this Lease Agreement. G. Housekeeping and Maintenance. City shall furnish, at its own expense, such cleaning City Beach Lease Agreement 9-11-24 Draft 1 4  necessary to keep the Leased Premises in a clean and sanitary condition. R&S shall furnish at its own expense: maintenance or repair of the interior and exterior portion of the Concession Area, including the replacement of window and door glass. R&S shall furnish at its own expense: maintenance or repair of the interior and exterior portion of the Concession Area, including the replacement of window and door glass. H. Utilities. City shall extend, at its expense all sewer, water and electric utilities. Following occupancy, annually during the months of May, June, July, August and September, R&S shall be responsible for all electric bills and the City shall be responsible for all sewer and water bills. During the remainder of each year, the City shall be responsible for all electric, sewer and water bills. I. Damage to the Premises. If the Leased Premises, or any portion(s) thereof, during the term of this Agreement are damaged (otherwise than by causes ordinarily covered by fire and extended coverage insurance), by the act, default or negligence of City, or of City's agents, employees or guests, City will pay to R&S upon demand such sum as shall be necessary to restore the Premises to their condition as of the commencement of this Agreement, except for ordinary wear and tear. If the Concession Area, or any portion(s) thereof, during the term of this Agreement are damaged (otherwise than by causes ordinarily covered by fire and extended coverage insurance), by the act, default or negligence of R&S, or of R&S's agents, employees or guests, R&S shall restore Buddy’s Bungalow to the condition as of the commencement of this Agreement, except for ordinary wear and tear. J. Insurance. At all times during the term of this Lease, R&S shall maintain in effect insurance covering the Leased Premises for the full replacement value of Buddy’s Bungalow. At all times during the term of this Lease, the City shall maintain in effect insurance covering the Leased Premises and all contents and equipment. K. Waiver of Subrogation. Notwithstanding anything to the contrary contained in this Agreement, City shall not be responsible or liable to R&S for any event, act or omission to the extent covered by the proceeds of insurance obtained and maintained under this Agreement by R&S in connection with the Leased Premises. R&S shall cause its policy or policies of insurance to contain effective waivers of subrogation for the benefit of City. L. Laws. R&S shall, during the Lease Term, promptly comply with all laws, ordinances, rules and regulations applicable to the Leased Premises now or hereafter in effect. City Beach Lease Agreement 9-11-24 Draft 2 5 M. Liens and Claims. City shall not suffer or permit to be enforced against the Leased Premises or any part thereof, any mechanic's, material supplier's, contractor's or subcontractor's lien arising from any work of construction, repair, restoration, replacement or improvement to the Leased Premises by City. City shall pay any such lien, claim or demand before any action is brought to enforce it against the Leased Premises. City agrees to hold R&S harmless from all liability for all such liens, claims and demands, together with all costs in connection therewith. N. Transfer on End of Term. On October 1, 2035, R&S shall transfer, by Warranty Deed, free and clear of all encumbrances, Buddy’s Bungalow to the City, for One ($1.00). O. Sign(s). The City may place signs on the exterior of the Leased Premises to identify the uses designated for the Leased Premises. All costs related to the placement and maintenance of such identification signs shall be borne by City. P. Tax Liabilities. During the initial 10-year term, R&S is responsible for tax liabilities, if any, for the building. Q. Subleasing. During the initial 10-year term, R&S cannot sublease the concession portion of the building without approval from the City Council. Signature block on following page. City Beach Lease Agreement 9-11-24 Draft 3 6 IN WITNESS WHEREOF the parties hereto have executed this agreement this ________ day of _______________, 2024. CITY OF OCONOMOWOC ____________________________________ Robert P. Magnus, Mayor ATTEST: ____________________________________ Diane Coenen, Clerk R&S HOSPITALITY, LLC ____________________________________ John R. Suttner, President/CEO City Beach Lease Agreement 9-11-24 Draft 4 7  Exhibit A City Beach Lease Agreement 9-11-24 Draft 5 8  Exhibit B City Beach Lease Agreement 9-11-24 Draft 6 9