SUMMARY OF RESOLUTION Authorization to Enter into Agreement of Lease with Shannon Transit Village, L.P. Port Authority of Allegheny County (Authority) is the owner of an approximately 6.3 acre paved and lighted surface lot, commonly referred to as the Castle Shannon Park and Ride Lot, located adjacent to the Castle Station T Station and Light Rail System in the Borough of Castle Shannon, Allegheny County (Site). Site currently serves as a 507-space lot for the Authority park and ride patrons. Several years ago, and in cooperation with the Allegheny County Economic Development Office, the Authority solicited proposals for development of Site. Due to Site serving as an active and highly utilized park and ride lot, one of the conditions of any viable development proposal was demonstrating the ability to maintain and/or enhance existing parking capacity for transit patrons on Site. Pursuant to a Board resolution passed on September 18, 2009, the Authority’s Board authorized the Authority to enter into an exclusive lease negotiation period with the highest rated responsive proposer, Shannon Transit Village, L.P. (STV). STV proposes to construct “Shannon Transit Village,” a mixed-use development that will consist of 152 apartment units in an eight-story building that will also contain approximately 15,000 square feet of ground level retail on Site (Project). In order to maintain critical park and ride capacity, Project will also include an adjacent two-story parking deck structure that will contain 541 spaces for park and ride patrons and 208 additional parking spaces for apartment community residents and retail establishment visitors. Project will provide ready access and connectivity to the Authority’s adjacent Castle Shannon T Station and Light Rail System. Project will include an approximately $42.3 million investment, including approximately $30.2 million in private funds and approximately $12.1 million in public funds. No funds of the Authority will be utilized to complete Project. Over the past several months, while STV has continued to engage in various due diligence activities to advance Project, STV and the Authority representatives have negotiated a proposed agreement of Lease (Lease) for Site, the material terms and conditions of which are summarized on Exhibit A to the resolution. Due to the ongoing federal interest in Site, Lease was reviewed with Federal Transit Administration (FTA) personnel, including submission of a review appraisal report confirming that fair market rental value will be received by the Authority by leasing Site to STV and legislative support letters expressing local support for Project. On July 10, 2015, FTA provided the Authority with written concurrence, subject to final review and approval by the Board, to proceed with Project and enter into Lease. This resolution authorizes Authority to enter into the Lease with STV, as summarized on Exhibit A to this resolution and otherwise in a form approved by counsel.
3/18/16 J. Tague RESOLUTION WHEREAS, Port Authority of Allegheny County (Authority) is the owner of an approximately 6.3 acre paved and lighted surface lot, commonly referred to as the Castle Shannon Park and Ride Lot, located adjacent to the Castle Station T Station and Light Rail System in the Borough of Castle Shannon, Allegheny County (Site); and WHEREAS, several years ago, the Authority solicited proposals for development of Site in cooperation with the Allegheny County Economic Development Office; and WHEREAS, pursuant to a Board resolution passed on September 18, 2009, the Authority’s Board authorized the Authority to enter into an exclusive lease negotiation period with the highest rated responsive proposer, Shannon Transit Village, L.P. (STV); and WHEREAS, STV proposes to construct “Shannon Transit Village,” a mixed-use development that will consist of 152 apartment units in an eight-story building that will also contain approximately 15,000 square feet of ground level retail on Site (Project); and WHEREAS, Project will also include an adjacent two-story parking deck structure that will contain 541 spaces for park and ride patrons in order to maintain critical park and ride capacity on Site; and WHEREAS, while STV has continued to engage in various due diligence activities over the past several months to advance Project, STV and the Authority representatives have negotiated a proposed agreement of Lease (Lease) for Site; and WHEREAS, the material terms and conditions of proposed Lease are set forth on the attached Exhibit A; and WHEREAS, due to the ongoing federal interest in Site, Lease was reviewed with Federal Transit Administration (FTA) personnel, including submission of a review appraisal report confirming fair market rental value that will be received by the Authority by leasing Site to STV and legislative support letters expressing local support for Project. WHEREAS, following its review, FTA provided the Authority with written concurrence, subject to final review and approval by the Board, to proceed with Project and enter into Lease; and WHEREAS, following consultation with Allegheny County Economic Development, staff and legal counsel of the Authority now recommend that the Authority proceed to enter into Lease with STV; and
WHEREAS, after due consideration, the Board agrees with staff’s recommendation to enter into Lease with STV. NOW, THEREFORE, BE IT RESOLVED, that the Authority’s chief executive officer and/or assistant general manager Legal and Corporate Services be, and hereby are, authorized to enter into Lease with STV, containing the material terms and conditions provided on the attached Exhibit A and otherwise in a form approved by counsel, and to take any and all other actions necessary and proper to carry out the completion of Project and purpose and intent of this resolution.
EXHIBIT A Material Terms and Conditions for Real Property Lease Agreement Parties – Port Authority of Allegheny County (Authority) and Shannon Transit Village, L.P. (STV) Transit-Oriented Joint Development – Both Authority and STV agree that the Project to be designed and construction on the Site shall constitute a “Transit-Oriented Joint Development” in accordance with the requirements of Federal Transit Administration (FTA) Circular 7050.1. Federal Interest – Both Authority and STV understand and acknowledge that the Federal Government, through the FTA, retains a continuing Federal interest in the Site because the prior acquisition and development of the Site was financed, in part, with Federal assistance. Closing Period – Upon the effective date of the Lease, STV will be provided up to 60 days to complete any remaining due diligence or related activities necessary to begin Project construction, including obtaining any remaining approvals required from the Borough of Castle Shannon or other governmental entities. STV will pay Authority a non-refundable fee of $5,000 upon the commencement of the closing period. Lot Closure Notice Period – Upon the closing conditions being met and the Closing Period terminating, STV shall then coordinate with Authority to post signage and otherwise communicate with the public concerning temporary closure of the Site for construction purposes for a period of 60 days. Project Construction Period – Upon conclusion of the Lot Closure Notice Period, STV shall be provided up to 24 months to complete construction of the overall Project, though the parking deck portion of the Project shall be completed and reopened to the public within 12 months. During the Project Construction Period, STV will pay Authority $40,000, payable in equal installments of $10,000 every six months. Term – The primary term of the Lease shall begin upon completion of the Project Construction Period and extend for a period of fifty-two years. At the expiration of the primary fifty-two year term, STV shall have the option to extend the Lease via five 10-year options subject to rental increases as summarized below. The renewal options, if exercised, shall be subject to a reappraisal process to confirm fair market rental value for the Site. Rent – Upon completion of the Project Construction Period, STV will pay rent to Authority in the amount of $95,665 per year for first five years of the primary term of the Lease. Rent shall then escalate every five years at a rate of 7% or the cumulative increase of the Consumer Price Index in the Pittsburgh metropolitan area in the then preceding five year period, whichever is lower. Use of Site – STV shall maintain a minimum of 541 spaces in the parking deck structure for park and ride patron parking during the term of the Lease. STV intends to charge a rate of $3.00 per day upon opening the deck facility, but STV will not be able to increase rates further without Port Authority’s prior review and approval, which shall not be unreasonably withheld if STV can provide written justification for any proposed rate increases.
Other Terms and Conditions – The Lease also contains various other terms and conditions, in a form approved by Authority counsel, including the provision for easements to ensure Authority maintain access to and through the Site for maintenance of its adjacent light rail system and equipment; provisions related to assignment and subleases; provision relating to compliance with all laws and regulations; various provisions recognizing STV’s interest is limited to the leasehold in the Site and recognizing that Authority’s fee interest in the Site and transit operations cannot be interfered with; various provisions related to lender protections and assurances, including the lender having the opportunity to cure a Lease default by STV; a condemnation and reversionary interest for transit purposes that Authority could exercise if the Site would be needed in the future for its transit operations; a dispute resolution provision; and force majeure provision. Exhibits to Lease – Exhibits to the Lease will include the following: Exhibit A - Leased Area Drawing and Legal Description; Exhibit A-1 – Project Easement Drawings and Legal Description; Exhibit B – Project Sponsor Certificate of Compliance; Exhibit C – Port Authority Board Resolution Authorizing Lease Negotiations and Entering into Lease; Exhibit D – Site Plan; and Exhibit E – Project Construction Period and Remainder of Lease Term Insurance Requirements.