TRANSMITTAL LETTER FOR THE BOARD MEETING OF JUNE 20, 2019
COMMITTEE ON REAL ESTATE
Mr. Brian A. Perkovich, Executive Director
Title
Authority to resolve the Notices of Default issued to the City of Evanston arising out of violations of the lease agreement dated October 14, 1966, as amended, between the District and the City of Evanston on approximately 91.9 acres of District real estate located in Evanston along the North Shore Channel. Consideration shall be $77,450.25
Body
Dear Sir:
The City of Evanston (“Evanston”) leases approximately 91.9 acres of District real estate located in Evanston along the North Shore Channel for public recreational purposes and for the operation of a public fee golf course. Evanston subleases the golf course area to the Evanston Wilmette Golf Course Association, an Illinois not-for-profit corporation commonly known as Canal Shores. The lease commenced December 1, 1966 and expires May 31, 2032. Evanston’s annual base rent is $1,300.00. On April 21, 1994, the lease was amended to require Evanston to pay, in addition to the base rent, 25% of the annual net income from the operation of a parking lot and 25% of the annual net income from the operation of a golf course.
Upon review of the financial statements submitted by Evanston for the operation of the golf course over the past several years, the District identified several violations of the lease agreement. First, Canal Shores had entered into agreements with Northwestern University (“Northwestern”) for parking and tailgating during Northwestern football games for the 2016, 2017 and 2018 seasons. The revenue derived from the Northwestern agreements during those years was a total of $243,401.00. Second, in 2018 Canal Shores hosted two concerts, in conjunction with the music venue SPACE in Evanston, on holes 1 and 2 of the golf course. The revenue to Canal Shores derived from these concerts was $16,600.00.
The above-mentioned uses of the premises by the subtenant, Canal Shores, were not authorized under the lease agreement; accordingly, the District issued Notices of Default to Evanston on February 28, 2019 and April 29, 2019 in an attempt to resolve these violations. The District initially demanded 100% of the Northwestern parking revenue based on the District’s policy pertaining to unauthorized subleases. Evanston disputed that such use was unauthorized in light of the provision relating to parking in the lease agreement.
After numerous discussions with representatives of Evanston and Canal Shores, Evanston has agreed to pay 25% of the income derived from Northwestern parking and tailgating on the premises for 2016 through 2018 in accordance with the lease provision relating to parking income, which amounted to $60,850.25. For the 2019 season and beyond, Evanston understands and agrees that Northwestern must obtain a permit for parking and tailgating directly from the District.
In addition, Evanston has agreed to pay 100% of the revenue derived from the unauthorized 2018 Canal Shores concerts, which amounted to $16,600.00. A companion transmittal letter is on this agenda seeking Board approval to amend the lease to allow Evanston to hold festivals and outdoor concerts and to allow the sale and consumption of alcohol on the premises.
On June 10, 2019, Evanston’s City Council adopted a resolution authorizing a lump sum payment to the District to resolve the violations described above.
It is requested that the Executive Director recommend to the Board of Commissioners that it grant authority to resolve the Notices of Default issued to the City of Evanston arising out of violations of the lease agreement dated October 14, 1966, as amended, between the District and the City of Evanston on approximately 91.9 acres of District real estate located in Evanston along the North Shore Channel. Consideration shall be $77,450.25.
Requested, Susan T. Morakalis, General Counsel, STM:JJZ:BJD:vp
Recommended, Brian A. Perkovich, Executive Director
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for June 20, 2019