Title
Approval of a Resolution Consenting to DKS Boardwalk LLC’s Assignment of Its Interests and Obligations under Certain Real Estate-Related Agreements with the City
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to approve a Resolution consenting to DKS Boardwalk LLC’s collateral assignment of its interest and obligations in a Right-of-Way Use Agreement and Maintenance Agreement with the City, to Olympia Federal Savings and Loan Association, and approving a “Collateral Assignment of Agreement and Subordination” Agreement.
Report
Issue:
Whether to approve DKS Boardwalk LLC’s collateral assignment, to Olympia Federal Savings and Loan Association, of DKS Boardwalk LLC’s interest and obligations under certain real estate agreements with the City, and subordination of the City’s interests in those agreements to Olympia Federal.
Staff Contact:
Mark Russell, P.E., Director, Public Works Department, 360.753.8762
Laura Keehan, Director of Parks Planning and Maintenance, Parks Arts and Recreation Department, 360.570.5855
Presenter(s):
None - Consent Calendar Item.
Background and Analysis:
DKS Boardwalk LLC and the City have two real estate agreements related to DKS Boardwalk’s ownership and use of a building located at 525 Columbia Street NW; which houses Budd Bay Café. The two agreements are: (1) a Right-of-Way Use Agreement, which allows the 525 Columbia Street building to occupy a portion of the Columbia Street right-of-way, and (2) a Maintenance Agreement, which governs the parties’ cooperation in, and sharing in the costs of, maintaining and repairing certain common elements of the adjacent Percival Landing facility.
DKS Boardwalk LLC wishes to re-finance the loan by which it purchased the 525 Columbia Street building. The lender for this refinance is Olympia Federal Savings and Loan Association. In order to complete the loan, it is necessary for Olympia Federal to acquire, as collateral, a security interest in DKS Boardwalk’s interests in the 525 Columbia Street building, which includes the Right-of-Way Use Agreement and the Maintenance Agreement with the City. The City must consent to this assignment to Olympia Federal of DKS Boardwalk’s interest in the two City agreements.
The City previously approved assignment of DKS Boardwalk LLC’s interests and obligations in the Right-of-Way Use Agreement and the Maintenance Agreement to Washington Business Bank, that provided the financing for DKS Boardwalk’s original purchase of the 525 Columbia Street building in 2021. So, approval of this assignment of DKS’s interest in the two agreements has the practical effect only of changing the entity to which the collateral assignments are made (from Washington Business Bank to Olympia Federal Savings).
Climate Analysis:
This real estate transaction is administrative in nature and has no implications toward the City’s climate goals.
Equity Analysis:
Since this is an administrative real estate transaction, there are no known equity implications.
Neighborhood/Community Interests (if known):
The Right-of-Way Use Agreement provides value back to Olympia community members for use of public right-of-way. The Maintenance Agreement also provides for cooperation and sharing of costs for maintenance of Percival Landing. However, it is not expected that approval of the assignment as requested will have any impact on the City’s receipt of this value. This assignment may aid the continued viability of Budd Buy Café, which is a thriving, locally owned business, a community institution, and an employer of dozens of community members.
Financial Impact:
The City will continue to receive $4,887.06 annually for the use of City right-of-way, with a 4% annual inflation factor. The Maintenance Agreement also provides for some sharing of costs as needed for the maintenance of Percival Landing.
Options:
1. Move to approve a Resolution consenting to DKS Boardwalk LLC’s collateral assignment of its interest and obligations in a Right-of-Way Use Agreement and Maintenance Agreement with the City, to Olympia Federal Savings and Loan Association, and approving a “Collateral Assignment of Agreement and Subordination” Agreement.
2. Direct staff to request modifications to the assignment and subordination agreement to address Council concerns. This may potentially delay the proposed loan refinancing.
3. Do not approve the Resolution consenting to the assignment and subordination agreement. DKS Boardwalk LLC will not be able to re-finance their loan.
Attachments:
Resolution
Agreement