TRANSMITTAL LETTER FOR BOARD MEETING OF OCTOBER 15, 2009
COMMITTEE ON REAL ESTATE
Mr. Richard Lanyon, Executive Director
Title
Consent to Noramco-Chicago, Inc.’s assignment to Illinois Marine Towing, Inc. of two leases totaling approximately 54 acres of District land located along the south bank of the Main Channel in and adjacent to the Village of Lemont c/k/a Main Channel Atlas Parcel Nos. 21.09, 21.11, and 22.01. Consideration shall be a document preparation fee of $2,000.00
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Dear Sir:
At its meeting of March 18, 2004, the Board of Commissioners consented to Slater-Lemont Corporation’s assignment of two leases to Noramco Chicago, Inc. Slater had occupied, under two separate lease agreements, two parcels of District land totaling approximately 54 acres located along the south bank of the Main Channel in and adjacent to the Village of Lemont c/k/a Main Channel Atlas Parcels No. 21.09, 21.11, and 22.01. Since the inception of the leases in 1951, the subject parcels, under a series of assignments, have been occupied at various times by several different entities including but not limited Robertson-Ceco (a steel mill), Thomas Steel, Auburn Steel, Slater-Lemont (a steel mill), and most recently Noramco Chicago, Inc., which uses the large former steel mill building for warehousing and storing materials. With the exception of Noramco, each of the former tenants subsequently filed bankruptcy and thereafter assigned the leases. The last few tenants claimed they were the victims of the declining steel industry in the United States. The subject leases expire in 2051 and the current total annual rental is $109,484.00.
The current tenant, Noramco, now reports that it is experiencing severe financial distress due to the economy and it must assign or default on the two leases if it is to survive. In addition to the subject two leases, Noramco also leases another adjacent parcel of District land that it uses for warehousing c/k/a Main Channel Parcel 21.02. Noramco does not request to assign that lease as it reports that if it reduces the size of its operation and expenses by assigning the subject two leases it can survive - otherwise, it claims it cannot.
The proposed assignee, Illinois Marine Towing, is a current District tenant. It leases Main Channel Atlas Parcel No. 22.06, which contains a barge slip, and it operates a fleet and barge mooring operation from the site. It pays an annual rental of $288,000.00 and the lease which commenced in 2006 is set to expire in 2045. Illinois Marine is in good standing with respect to its lease and proposes to use the two new leases for warehousing and storage and additional barge and fleeting space. Based upon its financial statements, it appears that Illinois Marine Towing is in superior financial condition to Noramco, and if the assignment is approved will be assuming substantial debt of Noramco.
The consent will be conditioned upon both Illinois Marine Towing assumption and compliance with all obligations and liabilities of Noramco under the subject leases, and no discharged or release of Noramco from any such liabilities or obligations.
It is respectfully requested that the Executive Director recommend to the Board of Commissioners that it consent to Noramco-Chicago Inc.’s assignment to Illinois Marine Towing, Inc. of two leases totaling approximately 54 acres of District land located along the south bank of the Main Channel in and adjacent to the Village of Lemont, c/k/a Main Channel Atlas Parcel Nos. 21.09, 21.11, and 22.01. Consideration shall be a document preparation fee of $2,000.00.
It is further requested that the Executive Director recommend to the Board of Commissioners that it authorize and direct the Chairman of the Committee on Finance and the Clerk to execute said consent to assignment of leases on behalf of the District after it has been approved by the General Counsel at to form and legality.
Requested, Frederick M. Feldman, General Counsel, FMF:CL:rg
Recommended, Richard Lanyon, Executive Director
Respectfully Submitted, Terrence J. O’Brien, 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 15, 2009