TRANSMITTAL LETTER FOR BOARD MEETING OF OCTOBER 20, 2016
COMMITTEE ON REAL ESTATE
Mr. David St. Pierre, Executive Director
Title
Authority to issue a one (1) year permit to The Peoples Gas Light and Coke Company on approximately 31.84 acres of District real estate located west of Pulaski Road and north of the Main Channel in Chicago, Illinois, and known as Main Channel Parcels 40.02, 40.04 and 40.07 for continued operation and maintenance of its natural gas pipeline and to perform environmental and remediation testing. Consideration shall be $624,000.00 (As Revised)
Body
Dear Sir:
On November 1, 1916, the District leased to Peoples Gas Light and Coke Company (“Peoples Gas”) 27.38 acres located west of Pulaski Road and north of the Main Channel in Chicago and known as Main Channel Parcels 40.04 and 40.07. The lease commenced in 1916, and expired on January 31, 2015. During the first half of the lease-term Peoples Gas used the site for certain ancillary operations to its adjacent Manufactured Gas Plant (“MGP”). Thereafter, Peoples Gas operated a natural gas pipeline and appurtenances related thereto on Parcel 40.07. On January 31, 1979, the lease was amended whereby Parcel 40.04 comprising 17.67 acres was released from the leasehold thereby reducing the size to 9.71 acres. The annual rent on the 9.71 acres at the time the lease expired was $41,873.00. Upon expiration of the lease, a permit was issued to Peoples Gas on Parcels 40.04 and 40.07 for continued use and occupancy of 40.07 and for environmental testing and remediation on 40.04 and 40.07. The permit, as extended, expires October 31, 2016. The annual permit fee is $190,335.00.
Peoples Gas also leases approximately 4.46 acres of District real estate located east of Cicero Avenue and north of the Main Channel and known as Main Channel Parcel 40.02 (“Parcel 40.02”) under a lease which commenced November 1, 1917, and expires October 31, 2016, to operate a natural gas line and appurtenances related thereto. The annual rent is $1,059.26. Peoples Gas subleases Parcel 40.02 to ExxonMobil Corporation, who uses the barge dock located thereon in conjunction with its adjacent bulk oil distribution center. A companion letter is on today’s agenda seeking authority to issue a permit to ExxonMobil to allow its continued use and occupancy during this interim period and to allow it to pursue a lease thereon with the District.
Accordingly, a one (1) year permit is recommended to allow Peoples Gas to continue to operate its gas main on Parcels 40.02 and 40.07 and to continue environmental testing and remediation on Parcels 40.02, 40.04 and 40.07. It is contemplated that once the testing is completed, a long-term occupancy agreement can be entered into with a comprehensive environmental remediation plan.
The technical departments have no objections to Peoples Gas’ request for a permit. A permit fee of $624,000.00 is recommended as such represents 10% of the appraised fair market value of the site.
It is requested that the Executive Director recommend to the Board of Commissioners that it authorize and approve the issuance of a one (1) year permit to The Peoples Gas Light and Coke Company on approximately 31.84 acres of District real estate located west of Pulaski Road and north of the Main Channel in Chicago, Illinois, and known as Main Channel Parcels 40.02, 40.04 and 40.07 for continued operation and maintenance of its natural gas pipeline and to perform environmental and remediation testing. Consideration shall be $624,000.00.
It is further requested that the Executive Director recommend to the Board of Commissioners that the Chairman of the Committee on Finance and the Clerk execute said permit after same is approved by the General Counsel as to form and legality.
Requested, Ronald M. Hill, General Counsel, RMH:STM:MLD:vp
Recommended, David St. Pierre, Executive Director
Respectfully Submitted, Mariyana T. Spyropoulos, Chairman Committee on Real Estate Development
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for October 20, 2016
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