|
August
31, 2000 Mr.
Dios Marrero Burbank-Glendale-Pasadena
Airport Authority 2627
Hollywood Way Burbank,
California 91505 Re:
Interim Lease of Trust Property Dear
Dios, As you know, Warner Bros. has decided not to pursue a
lease of a portion of the Trust Property for parking purposes.
Although that particular transaction is now moot, I think we should
still try to resolve the issues that arose during that proposed
transaction with the objective of reaching an accommodation that will
allow future leases of portions of the Trust Property. In your e-mail to me of August 10, 2000, you suggest
that the Warner Bros. lease was a “simple transaction,” and you asked
why the City could not do a “simple approval” allowing the Airport
Authority to enter into the lease with Warner Bros.
I must take issue with your characterization of the lease and the
roles of the City, the Authority, and the Trustee in it. The Authority’s use of the Trust Property is
controlled by the 1997 Stipulated Order and the 1999 Title Transfer
Agreements. The purpose of
the 1997 Stipulated Order was to (1) allow the Authority to complete its
environmental cleanup responsibilities for the B-6 Property and (2) allow
the Authority to engage in only those activities and uses that
historically had been authorized by Lockheed when it owned the B-6
Property. Our understanding
of those limited uses, which has been confirmed in discussions with
Lockheed officials, is that Lockheed allowed the Authority to use portions
of the Trust Property for temporary overflow public parking during a few
peak demand periods (e.g., major holidays). As we understand it, neither Lockheed nor the Authority ever leased
the property to a third party for commercial vehicle parking.
That understanding is consistent with the language of the
Stipulation and Title Transfer Agreements. The effect of the Agreements is that the Authority
does not have the right to lease the Trust Property for the use intended
by Warner Bros. There is no
“simple approval” that the City could provide, short of amending the
Agreements, which would authorize the Authority to do so.
While you may take issue with our strict application of the Title
Transfer Agreements, please do not forget that limiting the Authority’s
use of the Trust Property was a key component of the Agreements and one of
the principal reasons the City was willing to approve the Authority’s
acquisition of the Adjacent Property.
We see no compelling reason to alter that deal at this time. Most importantly, I believe that you misconstrued the
City’s intentions regarding the Warner Bros. lease.
We did not act to obstruct the lease but rather to facilitate the
lease consistent with our respective interests in the Trust Property.
We read the Title Transfer Agreements to provide the City and the
Authority with the power to instruct the Trustee to take action with
respect to the Trust Property, including leasing the property to a third
party. However, since we
never intended for the Trustee to act as the landlord for the Trust
Property, we thought it appropriate that the Authority would oversee the
lease. That role is
particularly appropriate because the Authority was to receive the lease
payments. We recognize the value in putting the Trust Property
to productive use, and we would like to establish a protocol in the event
that this situation arises in the future.
As reflected in the prior correspondence on the Warner Bros. lease,
we believe that the protocol should be as follows: -
In
the event that a private third party approaches either the City or the
Authority about a potential lease of the Trust Property, the City and the
Authority will confer on whether the proposed use is authorized under the
title Transfer Agreements. -
If
the use is NOT authorized but nevertheless is deemed appropriate by both
parties, the City and the Authority will issue instructions to the Trustee
to execute a lease (to be negotiated between the third party and the
Authority). -
The
Authority will oversee the lease and receive any lease payments pursuant
to the terms of the lease. The
City will have only limited rights under the lease to ensure that its
interests in the property are protected. Please let me know if you have any questions or
comments about this proposal. I
do not necessarily believe that this approach has to be formal, but we
should at least have a common understanding about how these matters will
be handled in the future so we can act expeditiously to further both our
best interests. Sincerely, Robert R. Ovrom City Manager c:
Peter Kirsch Dennis
Barlow Burbank
City Council Burbank
Airport Authority Commissioners
|