HomeMy WebLinkAboutAgenda - 05-20-2008-4sORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: May 20, 2008
Action Agenda
Item No. ~{' ~' S
SUBJECT• Valley Forge Road Property Lease Rate for Builder's First Source
DEPARTMENT: Purchasing and Central Srvcs. PUBLIC HEARING: (Y/N) No
ATTACHMENT(S): INFORMATION CONTACT:
Original Lease Pam Jones (919) 245-2652
April 1, 2008 BOCC Meeting Abstract
Aerial Photo Showing Buildings
PURPOSE: To provide supplemental information to the Board regarding the recommended
lease rate for property owned by the County at 401 Valley Forge Road, Hillsborough and leased
to Builders First Source.
BACKGROUND: Staff provided information to the Board on April 1, 2008 recommending a
lease rate of $2.50/square foot for the Builders First Source renewal through September 30,
2012. The following supplemental information is provided in response to a request for additional
information:
Comparables used to calculate renewal rate
Comparables for the lease rate were pulled from several sources, including local realtors, on-
line comparisons of properties in the area and information provided by the County's Economic
Development staff. Considered in the comparisons of the various properties were factors such
as: size of parcel, size of buildings, condition and age of buildings, location and divisiori of
responsibilities for Lessee and Lessor. Lease rates for similar type space that was available in
the Triangle area at the time comparable data was being sought ran from $1.25/square foot to
$3.84/square foot. Although there is no exact match for the facility being leased from the
County, in general, the lower range square footage was for larger facilities, with those
demanding higher per square footage costs being smaller, newer and facilities in which the
Landlord participated at a higher level than does the County in the maintenance of the building.
As a reminder, the Lessee is responsible for all maintenance at the Valley Forge facility. In
addition, the Lessee is responsible for taxes-in-lieu, which equal the total taxes that would be
paid on the property if it were privately owned. The 2007 taxes-in-lieu amount was $47,313.
Acreage as it relates to the lease rate
The lease rate acknowledges the acreage, but does not separately assess a rate for the land.
This is a common practice for valuation of leases.
Structures on the site
In addition to the 100,000 square foot building, the site includes two storage sheds for building
materials (see attached aerial photo). The original lumber storage shed is approximately 8,000
square feet. In 2001, the Lessee requested and received approval to add an 11,000 square foot
metal shed in order to increase the on-site lumber storage capacity. These three sided
structures, which are open to the front to allow large truck access for pick-up and off-loading,
add only nominal value to the leasehold value of the property and are not included in the square
footage calculations against which rent would be assessed. The Lessee was responsible for, the
total cost of the new structure.
A copy of the April 1, .2008 abstract and the original lease are attached for additional
background information.
FINANCIAL IMPACT: The Board may recall that the original lease was set at $1/square foot,
significantly below market rate, to recognize the significant capital investment needed to make
the building suitable for use by Builders First Source. The recommended renewal rate of
$2.50/square foot is based on lease rates for comparable properties in the area. The County
may expect to receive a total of $250,000 in annual rent, an increase of $150,000 in revenue per
year from previous years.
Further, the lease terms require the tenant to pay taxes on the building as if it were privately
owned. The taxes-in-lieu amount paid to Orange County in 2007 was $47,313. Since the
company is outside of the Hillsborough city limits, no city taxes are collected.
RECOMMENDATION(S): The Manager recommends that the Board approve the lease rate for
Builder's First Source at 401 Valley Forge Road, Hillsborough at $2.50/square foot.
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September 11, :19.97
;,
Mr. Greg .Payne.
}range Cauaty E:D.C.
P.4. Box 1 I77
Hillsborough, I3C 2728
Ite: Lease:at 4D 1; Valley Forge Rond
Dear. Gteg,
Asa :fallow-up to our phone conversation earlier this. weep, I' leave enclosed a copy of ttieinvnice
for services xenilexed from Telesis. construction to BSL. These capital improvemients have beery
completed in. order'to.make the building ready for occupancy: In addipn, certain items .were
required tci satis~y`the local Building Inspectors and Fire Marshall. We submit flies invoice as
proof of tine improvements we made in accordance with our lease agzeement (P.axagraph three,.
Paxt b.)
VJe propose to deduct the $ISQ,QQ0.00 of rent.set off in: the first threeyears: Therefore, we
submit to you a proposal-for a new lease payment of $SS;QQQ per annum payable irz monthly
installments f~ $45$4~~the firsttbzeeyears. The rent would increase back.to $1Q5,Q04
annually for the balance of the lease.
You and your staff.liave been a tremendous.resouree.
If you have any questions, .please do not Hesitate to call. '
Thank you,
J ~ ~~.., u
f:-o~ J:`ifJl Y...
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To.xn Vogl ~~~~~~,f _ - . - _ .. - - _•- ...... __
Vice.Presdent
7490 New Technninr+v vu~.• - ~-- • - _._
vw oFFtc~,s
COL:EIviAI*1, CrLEDHILL & ~IA.RGR.AVE
A PROFESSIONAL CORPORATION'
l29 E..'iRYON STREET
P. O. DRAWER L529
HILLSBOROUGH, NORTH CAAOL[NA 27278:
9L9-732-2196
FA}C919-732-7997
June 24, 1997
Mr: Brad Maunz
'Mice President Finance
Builders' Supply & Lumber Company
7490 New Technology Way
Frederick, Maryland 21701.
Dear Mz . Niaunz : '
FROM THE DESK OF
GEOFFREY E. GLEDHILL
Enclosed is a fully executed and recorded copy of the lease
between Orange County and Builders' Supply & Lumber Company., Inc.
With a copy of this letter to Greg Payne, Orange County Economic
Development., we are providing him a copy of thin lease as well.
Beverly Blythe, Clerk to the Board of Commissioners, has
previously been provided with uOrange County's" fully executed
and retarded copy.
very truly yours,
,C.
GEGJIsg
Enclosure
xc : Beverly- A,
Greg Payne:
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EteCurri toy Geo:f~~ ~. Gl.ed[1i;t1, .i?.0:, llca~aer 1529 ..11st~orough, iVC 2:7278
NO.RTH:CAROLTNA
ORANGE COUNTY
THIS LEASE AGREEMENT made and entered Go a of`the 3rd.
day of June , 19 97 by and between the CC}UNTY QF QRANGE,
NOR'Z'H. CAFtOL.II~TA, a ,pol.tica:l subdivision of t;he State o.f Nor.th
Carolina, lia~ring its ,pr.ncipal office'. at 20$ South Cameron.
Street, Hillsborough, North. Carolina, hereinafter sometimes
referred to as "Landlord;" and BL7ILDERS' SUPPLY & LUMBER COMPANY:,
ING., a Michigan corporation: having '.its principal office ri
Fredrick, Maryland, hereinafter referred. to as. "Tenant; " ~ ~'
WHEREAS, on or about C3etober 1, 1.997,: Landlord anticipates
becoming the owner o.f the property,:-including a building and
other structures and facilities located thereon, which is
c3.esc.rbed in Exhi:b.t A attached hereto and made a part hereof
{:which. property is herein sometimes referred to as "the
..
Prem~:ses'"), as provided zn and expla~,ned in the DECLARATION which
is Exhibit B; and
WHEREAS, it is anticipated that the present tenant of the
Premises, Georgia-Pacific Corporation,. will. not exercise t.s
right to renew its lease beyond October 1, 199'7 and'. will vacate
the premises no -later: than Qctober 1, 1997; and
WHEREAS; Tenant has expressed an interest in 1eas.ing the
Premises from Landlord on a long term ba is, and
WHEREAS; on April 1; 1996,., Laridlord~conducte.d a,publ,ic
hearing pursuant to North Carolina General Saatutes §.1:58-7.1,.
follotrring publication of notice of that public hearing at least
ten clays before the hearing was held; for the purpose o:f
-receiving public Gomment.on a. proposed bong term lease between.
Landlord and. Teriani~; and
WHEREAS, at ghat public hearing nforrnatiarr°was'p.rovided by
or on beYialf af. Tenant as follows
1: approximately 6t1 to 70 employees wi11 be: hired by
Tenant an:d' employed at the 'Premises during .the first year of
occupancy by Tenant; approximately 9Q to 200 employees will be
hired, and employed at the Premises-by Tenant within two to three
years following occupancy of the property by Tenant;
2: wage rates. far the employees o.f Tenant: to be employed
at tYie Premises are projected to aaerage $1.80 per'hour for all
employees a:nd $.9.13 per hour excluding salaried, managerial/
supervisor pos .ions;
3, Tenant .will. invest approximately $`8 .5 million in the.
local economy of Landlord within the first. three years of`its
occupancy of the Premises. Specifically, it will. nwe~stC~$2,14
~~ ~~~~ ~~
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million in equipment and improvements to the Premises, $3 million
in inventory .,that will be located at the Premises and $3.5
million in accounts receivable;
4. local (2~} sales tax .revenues of approximately $220,Opp
are projected £or the first year followa.ng occupancy by Tenant in
the Premises. Sales. tax revenues are projected Ga increase to
$34p.,0pp by the conclusion of the second year of occupancy and
$4p0,Op~ at the cone usidn of the third year of occupancy; and
WHEREAS, Landlord, by resolution an November 19, 1996., made
the determrsati:ons that: ti) the value of the lease payments to
be made to Landlord :together with the value of the real property;
equipment and sales taxes to be paid to Landlord as the result of
the proposed long term Tease, will be equal to or greater than
the fair market value of the leasehold interest conveyed, as
determined by a market survey of similar facilities in the area.,
and iii} Landlord. determined that the leasing of this property to
Tenant will stimulate the local economy, promote business, .and
result i.n the creation of a substantial number of jobs in Orange
County at ar.abave the "median average" wage in Orange County. A
copy of the November 29, 1996 resolution is attached hereto as
Exhibit C and made a part hereof; and
WHEREAS, the total lease payments to be-paid to Landlord as
the result of the proposed long term leas e. between it and Tenant
together with. the covenants of Tenant contained herein are
adequate consideration to Landlord for the proposed long term:
leas e. of the Premises..
W Z T'IJ E S S E T H:
In consideration of the rents to be paid to Landlord by
Tenant, as hereinafter provided,: and of the other covenants. and
agreements upon the part of Landlord and Tenant to be kept and
performed, Landlord hereby demised and leases t:o Tenant, and
Tenant leases and takes .from Landlord. the Premises as defined
herein.
1: The Premises means the real estate and other .rights
described in Exhibit A hereto and elsewhere in this Lease and any
lease supglement:ng this Lease, together with all additions
thereto ancx' substitutions therefore less such real estate,
interest im real estate and other rights as may be released
pursuant to Paragraph 8 of this Lease, ar taken by the exercise
of the power of eminent domain as provided in Paragraph ?.b. of
this Lease.
2. Term of Lease- Rirxha of First Refusal:
a. The. Premises is presently owned by the Industrial.
Development Corporation in the County of Or:arige, North Carolina,
a North: Carolina non-profit corporation, whose principal place of
business is located in Orange County, North Carolina, and i
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presently .leased by Georgia--Pacific Corporation, a Georgia
corporation,. whose principal place of business is 133 Peachtree
Street, N.E., Atlanta, Georgia 30303, pursuant to an unrecorded
Lease Assignment and Assumption Agreement, a copjr of whicri is
Exhibit D.
b. The lease between the Industrial Development
Corporation in tYie County of :(]range and Georgia=Pacific
Corporation e3cpires midnight October 1, 1997 or on a date sooner
than. that if bonds issued by the Indust-vial. Development
Corporation in the County of Orange, North Carolina are fu11y
paid and retired, in which event the-lease expires on the date
they are fully paid and retired. Further, the .lease between the
Industrial Development Corporation iri the County of Orange,. North
Carolina and Georgia-Pacific Corporation, upon its expiration, i.s
automatically renewed or extended. for not exceeding five
additional. terms of four years eacYi,unle5s notice is given in
writing by Georgia=Pacific Corporation at .least 3;O days before
the end of the expiration of the original -term or any renewal or
expiration term, thereof, of its intention to terminate the lease
at the end of such term, i:n which event the lease shall. terminate
in accordance with such notice.
c. ~ Tt is anticipated by Lan.dlard and Tenant that
Georgia-Pacific Corporation will provide notice to the Industrial
Development Corporation in the County of Orange of .ts intention
to terminate the ].ease between them at the: end of the original
term. Further; at the expiration of the original term of the
lease between the Industrial Development Corporation in the
Counter of Qrange, North Carolina and Georgia-Pacific Corporation,
and contemporaneously with.ttie bands being fu7:ly:paid and
retired, a. Warranty Deed of the Premises, which warranty deed
names Landlord: as the grantee, wi3.1 be delivered to Landlord as
described in Exhibit H.
d. Provided Georgia-Pacific Corporation effectively
terminates the .lease between it and the Industrial Development
Corporation in the County of Orange effective midnight October 1,
1997, the ariginaT term of this Lease shall commence on midnight,
October 1, 1.997 and shall end at midnight on September 30, 2007,
subject to the. provisions of this Lease including particularly
Paragraph+-12.hereof: This Lease shall, upon the expiration of
the original term; be automatically renewed ar extended for not
exceeding-two additional terms of five years each unless and
until notice be given ire writing by Tenant at least 30 days
.before the end of the original term, or any renewal or extension
term thereof, of its intention to terminate the Lease at the end
of: such term, in which event the Lease shall terminate in
accordance with- such no ice. All-such renewal terms shall be
upon the terms and conditions herein specified or as otherwise
agreed upon by Landlord and. Tenant except that the rental during
any such renewal term shall be in an amount equal to the fair
rental value of the .property as agreed upon by Landlord and
Tenant. When used herein, the original term and the additional
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term or additional terms; it any, are herein sometimes referred
to as the "Term" or the "Lease Term.'`
e. Landlord agrees to deliver to Tenant sole and
exclusive possessgn of the Premises {subje:ct to .the right of
Landlord to enter thereon for inspection purposes and otherwise
as provided herein} at the commencement date of the orgina
term. And Tenant agrees to accept. possession of the property
upon such delivery. Landlord covenants and agrees that it will
riot take any action, other than pursuant to :Paragraph 1.1 of this
Lease, to preven Tenant .from having quiet and peaceable
possession and enjoyment of the-:property during the Term and
will at the request of Tenant, and at the cost of Tenant,
cooperate with Tenant in order that Tenant may have quiet and
peaceable possession and enjoyment of the property:
f, Landlord hereby grants to Tenant a right of .first
refusal to purchase the Premises, which .must be exercised, if at
all,. in the manner hereinafter set forth. In the event that
Landlord receives a bona fide offer to purchase the Premises on
price, terms and conditions which it is willing to accept, it
sha11 give prompt written notice. of such offer to Tenant ("RQFR
Notice"}. The RQFR Notice shall include a copy of .such offer;
provided that~Landlord may delete the .name of the prospective
purchaser.. .Within .fourteen {14} calendar days from the date. such
RQFR Notice is given, Tenant may exercise its right of first
refusal by executing and .delivering to Landlord a written
contract containing tY'e same price, terms and conditions as set
forth. in the RQFR Notice, wzth no material additional terms or
conditions._ Such contract sha11 be signed and accepted by
Landlord and the ,parties sriall. proceed to close in accordance
with the terms thereof_ In the event that Tenant fails to
exercise this option as herein provided, and. Landlord closes the
sale of the Premises substantially in accordance with the terms
of .the: RQFR Notice, Tenant's right of first refusal shall
terminate and shall not be exercisable as to any future sale by
Landlord, its successors or assigns.. In .the event that Tenant.
fails to exercise this option as provided herein., and Landlord
does not close the sale of the Premises substantially in
accordance with: the terms of the ROFR'Notice, Tenant's right of
first 'refusal steal]. remain in effect and Landlord shall not sell.
the Premises without again subri-itting the-terms of the proposed
sale to Tenant for Tenant's acceptance or approval in accordance
with the terms of 'this paragraph.
3. Rent and Other Consideration.
a. Tenant shall pay to Landlord the sum of One
Hundred Five Thousand Dollars ($.105,000) per-annum during the
original term, payable in monthly installments of Eight Thousand,
Seven Hundred. Fifty Dollars {$8,750} each due on the first day of
each month, in advance, during the original term of this Lease
except that payment for the first such monthly installment shall
be made by Tenant contemporaneously with notice to Tenant from
Landlord of Landlord's receipt of notice .from Georgia-Pacific
Corporation of Georgia:-Pacific Corporation's intent not to renew
its lease of the Premises... In the event Tenant shall fail to
make any of the lease .payments required, the payment so in
elefault shall continue a.s:an obligation of Tenant until the.
amount in default shall have been fully paid, and Tenant agrees.
to pay the same with interest thereon at Nat:onsBank.'s prime rate
plus l~ per annum until paid., Rent payments shall be made to
Landlord and shall.be received on the due: date at the Office of.
Purchasing and Central Services of Landlord ar received
electronically on the due date in an account or accounts
designated by Landlord.
b. Tenant has indicated its interest in making
certain capital mprovements.to the Premises upon -ts occupancy
of 'the Premises., which capital improvements, when completed,, wild
be permanently affixed to the Premises or to structures that. are
on the Premises and will thereafaer become a part of the.
Premises, For example but not by way of limitation, the roof to
trie building may need t.o be replaced, do-ors to the building may
need to be replaced and the gravel parking areas may better serve
Tenant's needs. if .same o.r all of them are paved, and it :may be
necessary or appropriate to remodel the offices. and bathrooms;
rna}c`e-railroad spur improvements and connect the: sanitary sewer
faC11.1.t1eS to the public service provided by the Town of
H.llsboroiigh. I,andlorel agrees to a rent set-off. for any such.
capital improvements undertaken and completed by Tenant, and upon
Tenant`s submitting proof of their cost. ta:.Landlord, within the
f:,rst five years of the original term. up to a maximum of
$15a,ooo, with.na more. than :$50,000 set off in any one year;
proy.ided,..if Tenant expends :more than $50,000 in one year, the
excess may be carried aver and, set off against rent in the
following yeasts) in all cases subject to the limitation. that riot
more than $5O,Q00 will be setoff on any single year nor more.
than $150,Q00 in the aggregate and no set offs will be taken
after the initial five years of the term.
c. The obligations of Tenant to make rent payments
required shall be absolute and unconditional and shall not be
subject to diminution. by set-off, counterclaim, abat.errient, or
otherwise during the Team except as expressly provided:zn this
Lease.. Nath.ng contained in this subparagraph.-shall be construed.
to release_Landiord from the performance of any of the agreements
on its part contained in this Lease; and in the event Landlord
shall fail to perform any such agreement on its part,,`T`enant.-may
institute such action against Landlord as Tenant may deem-
necessary to compel performance or recover its damages for non-
performance provided that. no such action shall violate the
agreement an the part of Tenant to unconditionally make the rent
payments or diminish the amount of the rent payments.
d. Tenant makes the following representations, as an
inducement to acid the basis for its unde.r.takings and Landlord's
agreement to lease the Premises. to Tenant. These representations
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are. covenants and the failure of Tenant to compl an:d remain in
c;bmpli'anee with them constitutes an event of default under this
Lease:
() Tenarit is a corporation duly i,ncorpora.ted
under the laws of aril is in ;good. standing i:n Che state of:
Michigan, is authorized tci do business and is in good standing in
the State of North Carolina, Yias powear'to enter into this Lease.
'and by proper cc~rpor--ate action has: been duly authorized to
execute and deliver this Lease.
(ii) :Neither the execution and:. delivery of this.
Lease, the consummation of 'the:transactzoris contemplated hereby;
nor the. f.tilfillinent or compliance of the tennis and conditions of
this Lease, conflict wzth or result .n a breach of ariy of the
terms, ccind.it;cans or provisions of any corporate restriction or
any agreement or instrument to which Tenant is now a parCy or by
which;i.t is bound, or constitute a default under any of the
foregoing, or result in the creation or imposition of any lien,.
charge or encumbrance of any nature vrhatsoever upon any of the
property or assets o;f Tenant under the terms of any instrument or
agreement.. .
(iii Tenant intends to operate the Premises or to
cause the Premises to be operated to 'the expiration or sooner
termination of the Term as provided. herein for the manufacture of
.such products~as Tenant may deem appropriate:.
(iv) Tennant will hire and employ on the- Premises
approximately 60 to 70 einplayees during the first year of its
occu:p.ancy of the Premises. Tenant will use its best efforts to
achieve a level of~busness which enables Tenant to hire and.
employ an the Premises approximately 90 to 100 employees within
two to three years of its occupancy of the premises.
(v? Tenant projects paying an average wage for
all employees that it employs. on the Premises to be $:12.80. an
hour artd $9.13 per hour excluding salaried, managerial./supervisor
positions.
(vi? Tenant will invest $.2`.14 million in equipment
and improvements to the Premises., and will use its best efforts
to achievea level of business which enables Tenant to invest in
and to maintain approximately $3 million in inventory on the
Premises and expects to Have invested approximately $3.5 million
in accounts receivable as the aresult of its operations on the
Premises.
(vi_) It is antcipa'Ged that local (l~j sales tax
revenue. of approximately $220,000 will be paid by Tenant by the
conclusion of the first yeax of its occupancy of the Premises and
that the e sales tax revenues paid are projected to increase to
$340,Op0 by Che ctiriclusion of the second Year of its occupancy of
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the Premises and $400,000 by the conclusion of its third year o.f
ciccupancy of the Premises.
4. Maintenance and Modifications.
a. Tenant agrees that during the Term it will, at .its
own expense, except as 'to rent set-offs expressly provided for in
this Lease., (i} keep.the Premises in reasonably safe condition
and { i. i. ) keep the building and all other improvements forzriii-ig a
part of the Premises in good repair and. in. good 'operating
condition, making from time to tune all necessary .repairs. thereto
{:including external and structural repairs) aril renewals and.
replacements t2er-eof. Tenant may, also at its own expense, make.
from tune to time any additions, znodifcati.ons or improvements to.
the Premises it may deem desirable for its business purposes that
dq not adversely affect the structural integrity of any buildings.
or structures Tocated on .the Premises. or substantially reduce the
value of the Premises.; provided that al such additions,
modifications and improvements to the Premises shall be located
wholly within the: boundary lines of the premises, All such
addit.a.ois:, modifications, and improvements so made. by Tenant :shall.
become a part of the Premises,: provided that any i em of personal
property, :machinery, equipment, furniture o:r fixture. installed by
Tenant for its business purposes without expense to Landlord.
which does not. constitute a part of t;he Premises; may be reinaved
by Tenant.. at any time and from dine to time while Tenant is not
in default under this Lease; and provided further, that ang
damage t.o the Premises occasioned by sucYi removal shall be
repairea.by Tenant at its own. expense. Tenant will not permit
any :mechanics' lien, security interest or other; encumbrance to'
remain against the Premises for labor or materials furnished -in
connection with any additions, modifications, improvements,
repairs, renewals or replacements so made by it; provided., tYiat
it Tenant shall first notify Landlord of its intention so to do,
Tenant may in gooel faith contest any mechanic's` or other liens
filed or establi hed against the Premises, and iri uch event may
permit the item so contested to remain undischarged and
unsatisfied during the period of such contest and any appeal
therefrom unless Landlord sh'a11 notify Tenant that, i:n the
o'p'inion of independent counsel, by nonpayment of any such items,
Landlord's::titl.e to the Premises will be materially endangered or
the Prem es or any part thereof will be subject to loss or
forfeiture,. in which egent Tenant shall promptly pay and cause to
be satisfied and discharge all such unpaid items. Landlord will,
at the expense Qf Tenant, cooperate fully with Tenant in any such
lien contest.
5: Taxes Assessments and Utilities. Tenant will promptly
pay', as the same become due, all taxes and other-government
charge's of any kind whatsoever that may at any time be lawfully
assessed or levied against or with respect.ta the Premises or any
interest tfieren or any machinery; equipment or other property
installed or located on the Premises; including all ad valorem
taxes lawfully assessed. Tenant will prgmpGly :pay., as the same
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become due, all utility and other charges incurreel i:n the.
operation, maintenance, use, occupancy and upkeep of the Premises.
and all assessments and charges lawfully made by any governmental
body for public improvements that may be secured by lien on the
Premises; provided that with respect to special assessments or
other governmental charges that may be lawfully paid in
installments over a period of years, Tenant shall be obligated to
pay only such installments as are required to be paid during 'tYie
Term.
At the commencement of this Lease the Premises will be owned
by Landlord and will thereafter, on January 1, 1998, be exempt
from ad valorem .property taxes as provided in Article V, Section
2{.3) of the North Carolina Constitution and North Carolina
General. Statutes § Ifl5-278..1.. During the Term, Tenant agrees~ta
make payments to Landlord and to any municipality in which the
Premises is .located, in lieu of taxes, in amounts equivalent to
the amount of property tax. that wov.7~d be lawfully assessed if the
Premises-were. taxable by Landlord and any municipality in which
tYie Premises is located. TYiis agreement to make payments in lieu
of taxes in amounts equivalent to the amount of property tax that
would a.therwise lie ]:awfully. .assessed is to eliminate the
competitive advantage accruing to Tenant, a profit-making
enterprise, from the use for profit of Landlord"s tax exempt
property. Payments in lieu of: ad valorem taxes as provided
herein shall be made to Landlord and to any municipality in which
the Premises is located on or before December 31,:1998 and
December 31 of each year thereafter during the Term. Tenant
agrees that the valuation of the Premises shall be made by
Landlord's Tax Assessor according to the Schedule of Values
adopted by..Landlord fxom time to time and that the determination
of the true value in money of the Premises. shall be made by
Landlord's Tax Assessor..
Tenant rttay, at .its expense, in good faith, contest any such:
taxes, assessments and other similar charges or the valuation on
which the same are based, and, in the event of .any such contest,
may pay the taxes., assessments or other charges .under protest
during the period of such contest and any appeal therefrom. In
the event it .is determined by Tenant and Landlord or by the
tribunal which ordinarily has~jur:sdiction that such tribunal
does not have jurisdiction or is otherwise riot ,permitted to act
as a foruzii;n consequence of the fact that Tenant's liability for.
the tax is contractual rather than imposed by law, then either
party may submit a challenge to a tax, assessment or other
similar charge or valuation to arbitration by an arbitration
panel made up of MAI qualifedlcertfied appraisers. Landlord
shall select .one appraiser; Tenant shall select one appraiser;
the appraiser selected by Landlord and Tenant shall select. a
third appraiser and the decision of -the arbitration panel shall.
be binding on both parties. Ta the extent. that enforcement of
the payment of any such taxes, assessments and other charges in
the event of any contest are legally stayed during the period of.
such contest, such taxes, assessments and other charges may
!3
remain unpaid during the period. of such contest and any appeal
therefrom.
6. Insurance Required. During the Term, Tenant shall keep
the Premises continuously insured against such risks as are'
customarily insured against by businesses of like size and type,
paying as the same become-.due all premiums in respect thereto,
including but not necessarily limited 'to {i) insurance to the
extent of the full insurable value, determined on October 1 of
each year of the .Lease Term, of any improvements located an the:
Premises against loss thereto from or damaged by vandalism, fire.
and flood, with the deductible arnaunt not exceeding $25,000, with
uniform standard extended coverage endorsement limited only as
may .be provided in the standard form of extended coverage
endorsement at the time in use in North Carolina, and (ii)
insurance against liability far injuries to or death of any
person ar damage to or loss of property arising out of or in any
way relating to the condition of the Premises ar any portion
thereof, in the minimum. :amount of a combined single limit of $1
million far .death of or personal injury to any one person and for
all personal injuries and deaths resulting from any one accident
and for property damage, in any one: accident. Landlord, its
officers and employees, shall be named as additional .insureds in
the insurance contracts providing for liability insurance.,..
In the event of a loss, the net proceeds of. the extended
coverage .insurance shall be received by Tenant and shall be paid
and. applied as prQVided in Paragraph 7, re acing to damage,
destruction and :condemnation. All insurance required in this
Lease shall be taken out and maintained in generally recognized,
responsible insurance companies qualified to do bu mess in the
State of North Carolina s.elect.ed,by Tenant: ..All policies
evidencing such insurance shall provide for payment to Tenant and
Landlord as their respective interests may appear. A certificate.
ar cer.tificates of the insurers that such insurance is in force
and effect shall be delivered to Landlord. Prior to the,
expiration of any such policy; Tenant shall furnish Landlord with
evidence satisfactory to Landlord that the policy has been
renewed or replaced.. The insurance herein required may be
contained in blanket policies now or hereafter: maintained by
Tenant. In the event Tenant shall ;fail to maintain the full
insurancercoverage required by this _Lease or shall fail to keep
the Premises in as reasonably safe condition as its operating
condition will permit, ar shall fail to keep. the structures
located on the Premises in good repair and good operating
condition, Landlord may, but shall be under no obligation to,
takeout the required policies of insurance and pay the premiums
or make the required repairs; renewals> and replacements. A11
amounts a advanced therefore by Landlord s-hall became additional
rent, which amounts, together with interest thereon at
NationsBank's prime rate plus 1% per annum from the date thereof,
shall be paid by Tenant. upon demand by Landlord.
q
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7. Damaae Destruction and Condemnation..
a_ If any .structure located an the Premises is
destroyed (in whole or in part.} or is damaged by fire or other
casualty to such extent that the claim for loss, under the
insurance policies required to be carried by this Lease,
resulting from such. destruction or damage is not greater than
$10q,00q, Tenant {i} will promptly repair, rebuild or restore the
property damaged or destroyed to substantially the-same condition
as it existed prior to the event causing such damage. or
destruction, with. such changes, alterations and modifications
{including the substitution and addition of other property) as
maybe desired },y Tenant and as will not impair operating unity
or productive capacity or the character of the Premises as a
manufacturing plant.,. and {i:i) will apply for such purpose so much
as may be necessary of any Net Proceeds of insurance resulting
from such claims for lasses, as well as any additional moneys of
Tenant necessary therefor. All Net Proceeds c£ insurance
resulting from such claims for losses not in excess~of $lOq,OgO
shall be paid to Tenant,
If. the Premises is destroyed (in whole or in part.) or is
damaged by fire or other casualty to such extent that the claim
for lass under the insurance policies required to be carried by
this Lease hereof resulting from such destruction or damage is in
excess of $~.oq,gg0, Tenant shall promptly give written notice
thereof to Landlord. All Net Proceeds of insurance resulting.
from such claims for losses in, excess of $100,Og0 shall be
received by Tenant., in trust, and applied by Tenant promptly to
repair, rebuild or restore the portion of the Premises damaged or
destrayed.ta substantially the same condition as it existed prior
to the event causing such damage or destruction, with such
changes, ahteratons and modifications {including the
substitution and addition of other property) as may be desired by
Tenant and as will not: impair operating unity or productive
capacity or the character cif the Premises as a manufacturing.
plant. In the event said.. Net Proceeds are not sufficient to pay
in full the costs of such: repair., rebuilding or,restoratian,
Tenant will nonetheless complete the work thereof and will pay
that. portion of the costs thereof in excess of .the amount of said
Net Proceeds.. Any balance of such Net Proceeds remaining after
payment of all the casts. of such repair,, rebuilding or
restoration-, upon concurrence of Landlord, that repair,
rebuilding or restoration complies with the requirements of Ghis
paragraph, are released from the trust created here. and shall be
.paid to Tenant, except rent loss insurance proceeds which. shall
be payable to Landlord.'
If the structures on the Premises shall have been damaged or
destroyed {i) to such extent that., in the opinion of an
Lndependent Engineer expres ed. in a certificate filed with
Landlord, it cannot be reasonably restored within a period of six
consecutive months to the condition thereof immediately preceding
such damage or destruction, ar iii} to such extent that, in the-
1q
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opinion of an Independent Engineer expressed in a cer ifica e
f:.iled with Landlord, the Tenant is thereby .prevented from.
ca:rryi.ng on its normal: operations for a period of six co.ns.e.cutiv.e
months, or .(iii} to such extent that he cost. o.f restoration.
thereof would exceed by $10.0, 00(? the Net. Proceeds of ;insurance
carried thereon pursuant to the requirements of this Lease, this.
Lease: shall 'terminate, at Tenant's election by written notice from
Tenant given within ninety {90') days after the date of the
casualty, and if Tenant so terminates, then the proceeds of such
insurance shall be. paid. to Landlord,;. provided; any insurance
proceeds' payable i:n respect of: business interruption cir for
damage to the equpmeirxt, trade fixtures or inventory of Tenant
shall be payable to Tenant.
'b. In the event that title to, or the temporary use
cif, the Premises or the leasehold estate of Tenant in the
Premises created by this Lease or any part of either 'thereof
shall be ta}cen under. the exercise of the power-of eminent domain
ley any governmental body yr by any person., firm or corporation
act..ng under governmental authority, Tenant shall be obligated to
continue to make the rental and. all other payments required by
this Lease. Landlord and Tenant will cause the Net Proceeds
received by them or either of them from :any award. made in. such
eminent domain proceedings,, to be paid to Landlord to be held by
Landlorcl..in trust to b.e applied in one or more of the .following
ways as shall be directed in writing by Tenant:
(i) The rest.orat:on of the improvements located
on the Freznises tg substantially the wine condition. as they
existed.pror to the exercise of the said power of eminent
domain. .
(ii) The acquisition; by'eonstruction or
otherwise, by Landlord of obher improvements suitable for
Tenant's operations on or adjacent to the improvements taken by
eminent domain, which other improvements shall be .deemed a part
of the. Premises acid availakile f.or use :and occupancy by Tenant
without the payment of any rent other than as herein provided to
the same extent as if such other improvements. were specf'ieally
described herein and demised hereby,
{iii} Held in ,trust in the event that Tenant shall
furnish to Landlord a certificate of an Tndependezt Engineer
acceptable to Landlord stating ti) that the property farming a
part of ':the Premises that was taken by such condemnation
proceedings is not essential to Tenant's use or occupancy of the
Premises, or tii'} that the Premises has been restored to a
condition substantially equivalent to :ts condition prior to .the
taking by such condemnatoni'proceedngs or {iii} that
improvements have been acquired which are suitable for Tenant's
operatioins at the Premises as contemplated herein: within ninety
days from the date of entry of a f:ina,l order in any eminent
domain :proceedings granting condemnation, Tenant shall direct
.Landlord in writing as to. which of the ways specified herein,
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Tenant elects to have the condemnation award applied: Any
ba-lance of the Net Proceeds of the award in such eminent domain
proceedings shall be paid to Landlord and Tenant, as their
interests may appear.
If title to, or the temporary use of, alT or substantially
-all the Premises shall have been taken under the exercise of the
power of eminent damari ley any governinenbal authority,. or person,
firm or corporation acting under governmental authority,
including. such a taking or takings as results, in the opinion of
an Independent Engineer expressed in a certi:fi:cate filed with
Landlord, .in Tenant being thereby prevented from carrying on its
normal operations therein for a period of four consecutive
months, this Lease shall .terminate at Tenant's election and in
the. :event of termination the Net Proceeds •of such condemnation.
proceedings shall lie paid to Landlord and. Tenant as their
interests shall appear.
Landlord shall cooperate fully with Tenant. in the handling
and conduct of any prospective or pending condemnation
proceedings with respect to the Premises or any part thereof and
wi11, to the extent it may lawfully do so., permit Tenant to
litigate in any such proceeding in the. name and behalf~of
Land=Lord. In no event will Landlord voluntarsly settle, ar
consent to the settlement af, any prospective or pending
condemnation proceeding wzth respect to the Fremises or any part
thereof without the written consent of Tenant.
Tenant shall be enGit ed to the Net Proceeds of any
condemnation award or portion thereof made for damages to or
takings of its own property not included in the Premises,
provided that any Net Proceeds. resulting from damages to, or
taking of a1:1. ox- a portion of the leasehold estate of Tenant in
the Premises created by th~.s Lease shaT1 be .paid. and applied in
the manner provided: herein.
$. Granting o'f Easements. If no event of default shall
have happened and be continuing, Tenant may at any dime or times
grant. easements, licenses, rights of way (.including the
dedication of public highways.) and other: rights or privileges i.n
the nature of easements with respect to the Premises, or Tenant
may release existing easements,, licenses, rights of way .and, other
rights or .privileges. with or without consideration, and Landlord
agrees that. it shall execute and: deliver any instrument necessary
ar appropriate to confirm and grant or release any such easement,
license-,.right of way or other right. or privilege upon receipt.
of: {) a copy of the instrument of grant or release; iii) a
written application signed by a vice president of Tenant
regii.esting such instrument; and (i:ii_) a certificate. executed by a.
vice president of Tenant stating {;1) that such: .grant or release
is not. detrimental to the 'proper conduct of the business of
Tenant, and C2) that. such grant or release will not impair the
effective use or interfere with the operation of, or adversely
affect the title o~ Landlord to, the Premises.
12
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9. Release and Indemnification Covenants. Tenant releases
Landlord from and covenants and agrees that Landlord shall not be
liable for, and to indemnify and hold Landlord. harmless against,
any loss or damage to property or any injury to ar de_ath of any
person occurring on or about or resulting from .any defect in the
-Premises or improvements located on the .Premises,. provided, that.
'the indemnity provided in this sentence shall be effective only
to t'he extent of any loss that may be sustained by Landlord in
excess of the Net Proceeds received from any insurance required
in this Lease with respect to the loss sustained, and provided
further, that the indemnity shall not be effective for damages
that result from negligence or intentional. acts an the part of
Landlord. Ta this end, Tenant will provide.-far and insure, in
the public liability policies required i'n this Lease., not only
its own liability in respect of the matters there mentioned but
alsa.the liability herein assumed.
Whenever under .the provisions of this Lease the approval of
Tenant is required or Landlord is required to take same action at
the request of 'Tenant-such approval or such request shall be made
by the Authorized Tenant Representative whose name is Kevin P.
Bruce, President, unless otherwise specified in this Lease and
Landlord: shall be authorized to act on any such approval or
request and Tenant shall have no complaint against Landlord as a
result of any such action taken.
10. Assignment. Subleasing, Moxtgaaina and Selling.
~a. This Lease :may be assigned in whole ar in part,
and the Premises may be subleased as a whale or in par by
Tenant without the necessity of obtaining the consent of
Landlord, subject, however, to each of the following conditions:
(i) no assignment shall relieve Tenant from primary liability for
any of its obligations :hereunder, and in the event of any such
assignment Tenant shall continue to .remain primarily liable for
payment of the rents specified herein and for performance and
observance of the other covenants, warranties, representations.
and agreements on its part herein provided to be performed and
observed by it to the same extent as though no assignment had
been made-- (ii) the assignee ar subtenant shall assume the
obligations of Tenant hereunder to the extent of the interest
assigned or subleased; (.iii) Tenant shall, within thirty days
after the delivery thereof, furnish ar cause to be furnished to
Landlord a true and complete copy of each.such assignment,
assumption of obligations and sublease., as the case .may be.
b. Landlord :may mortgage the Premises and may assign its
interest in thus Lease and any moneys receivable under this Lease
as security fo:r payment of the principal of and. interest on any
installment debt ar other debt of Landlord, subject, however, to
the rights of Tenant under this Lease.
13
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Landlord agrees that, except as set forth in this Paragraph
10 of this Lease.,, it will not sell., convey, mort;gage,: encumber or
ot.herwis,e.dispose.of any part cif the Premise during the: Leas e.
Term as provided in Paragraph 2 of this Lease.
c. Tenant, may from time to time; in its sole di-scretlori'
and at its own expense, inst-all machinery and equipment in t.he:
structures or otherwise on the Premises. All machinery and
equipment so instal.-led by Tenant shall remain the sole property
of Tenana. Tt may be modified or removed at any time while
Tenant is not in default hereunder ,and shall not be subject to
lien :but all such machinery and equipment shall be subject to any
landlord:'s lien allowed by law. Provided, however, Tenant shall
promptly make; at its sol..e expense, .any and all repairs to the
Premises or to tYie structures on the Premises necessitated by the
removal by Tenant of 'any such machinery and equipment; The nee<3
for. repairs shall,be those reasonably determined to be necessary
by Landlord, Tenant shall notify Landlord upon the removal of "
any such~machriery :arid equipment to enable Landlord to inspect,
the Premises to imake a determination of the repairs; if any, to
be made to the .Premises:. Nothing conta.n'.ed in this Paragraph
shall prevent Tenant from purchasing machinery and. equzpirient on
candit`a:onal sa~:e contract or lease sale contract; or subject to
vendor's lien or purchase money mortgage; as security for the
unpaid portion of the purchase price thereof, and each such
conditional sale contract, lease sale con r.act, vendor's lien and
purchase mpney mgrtgage made by Tenant with respect to machinery
and equipment purchased kiy it under. the provisions. of this
Paragraph shall, if appropriate financing statements are duly
filed for record in the manner :and places required by the North
Caraln.a Uniform Commercial Code simultaneously with or prior to
the.installatiori at the. Premises o€ the machinery and equipment
covered thereby; be prior and superior to any landlord`s lien.,
Tenant. agrees to pay as due the purchase price of .and all. costs
and expenses with respect to the acquisition and installation of
any machinery and equipment installed by it pursuant to this
Paragraph,
11. Events of Default and Remedies.
` a. The .following shall be "events of default." under
this Lease and the terms "-event of defaul-t" or "default" shall
mean, whenever they are used. in this Lease, any one or more of
the following events:.
(i) Failure by Tenant to pay the. rents required
to be paid at the times specified and (l) continuation of said
failure for a perioel of five days after notice b}r mail given to
it by Landlord that the rent referred to iri such notice has .not
been received or (2) continuation of said failure for a period of
fifteen. days. .
tii) Failure by Tenant to observe anal perform any
covenant, condition or agreement on its: part to be observed or
performed, other: than as referred to in subsection l) of tl-iis
19
i~
Paragraph,, for a period of thirty days after written notice,.
specifying such failure and requesting that it be remedied, given
tq Tena.nt by Landlord.; unless Landlord shall agree i.n.iaritng to
ari extension of such time prior to i.ts expiration, or if t:he
default be of a nature that it is no reasonably susceptib'1e to
being ctizred within thirty (30) days., the time to cure ,may be,
extended by Landlord so long as Tenant is diligently a.t-tempting
to :cure sucYi default. Landlord shall not unreasonably withhold.
__
agreement to extend, the time period to cure.
tiii:) The dissolution or liquidation of Tenant or
the filing by Tenant of a voluntary petition in bankruptcy, or
failure by Tenant prompt y to li.f~ any execution; garnishment or
attachment of such consequence: as will impair its ability to
carrlr on its operations at the Premises, or the commission by
Tenant oaf any act of bankruptcy, or adjudication of Tenant as a
bankrupt, or assignment by Tenant for the benefit of~its
credit:ars, or the entry by Tenant into an agreement of
composition with its creditors, or the approval by a court of
competent jurisdiction of a petiaion applicable to Tenant i.n any
proceeding for its reorgani2ation instituted under the ,provisions
of the Bankruptcy Act, as amended, or under any simi ar act which
may hereafter be enacted. The term "dissolution or liquidation
of Tenant," as used n`ths:subsection, :shall not be construed to
include the cessation of the corporate existence of Tenant.
resulting either from a merger or consolida ion of Tenant into or
wi h another corporation or a dissolution or liquidation of
Tenant fol owing a transfer of all or substantially all of its
assets aS an entirety.
The foregoing provisions o:f tYii:s Paragraph. are sub.~eet to
the following limitations: If by reason of force maj'eure Tenant
is unable in whole or in part to carry out its agreement on its
part herein contained, other than the obligations on the part bf
Tenant contained in Paragraphs 3.a., b., and c:, 5, b and.9
hereof, Tenant shall not.be. deemed in default during the
continuance of such inability: The team."force majeure" as used
Yierein shall .mean, without limitat-ion,. the following: Acts of
God, strikes, lockouts or other industrial. clistti~bances, acts of
public enemies; orders of any kind of the government of the
t3nited States or of North Carolina or any of their departments,
agencies, or o€ficals, or .any civil or military authority;
insurrections; riots; .epidemics; landslides; lightning;
earthquake; fire; hurricanes; 's arms; floods; washouts; drought
arrests; restraint of government and people; civil disturbances;
e~cplosons; breakage or accident to machinery; transmission pipes
or canals; partial or entire failure of utilities; or;any ocher
cause or event Writ reasonably within the control of Tenant.
Tenant agrees; however, to remedy with all reasonable dispatch.
the cause or causes preventing Tenant from carrying out it,s
agreements; provided, that the settlement of strikes, lockouts
and other industrial disturbances shawl be entirely within the
discretion of Tenant, and Tenant shall not be required to make
settlement of strikes,. lockout and other industrial disturbances
1S
ao
by acceding to the demands of the opp.os.inq party or parties when
such course is in the judgment of Tenant unfavorable to Tenant.,-
b. Whenever ariy event of de~aizlt referred to in this
Lease shall have happened and be subsisting, Landlord may take
any one. or mare of the following remedial tees:
(i) Landlard may, at its option, declare'a,11
insta]:lments of rent payable for the remainder of the Leas:e Term
to be immediately due and payable, whereupon the same shall
become immediately due and payable.
(ii) Landlord :may
the Premises without terminating
Premises f'or the account of Tema
difference in the rent ani3 other
subtenant in. such subleasing and
payable by Tenant hereunder.
re-enter and take possession of
this Lease,.-and sublease the
?t, holding Tenant liable far the
amounts payable by such
the rents and other amounts
(iii) Landlord may terminate the Lease Term,
exe'.l,ude Tenant from possession of the Premises and use its best
efforts to lease-the Premises to another for t2ie account of
Tenant, holdi:x~g Tenant liable for all rent and other payments due
up to the effective date of such leasing.
(iv) Landlord .may take whatever action .at law or
in equity may appear necessary or desirable to collect the rent
'and any other amounts payable by Tenant hereunder, then due and
thereafter, to become due; or to enforce perfarmanee and.
observance>of any obligation, agreement or covenant of. Tenant
under this Lease.
Anjr a"mounts collected pursuant to action. taken -under this:
subparagraph shall be applied to the account of Tenant.
c: No remedy herein. conferred upon or~reserved to
Landlord is intended to be exclusive of any other available
remedy ar remedi:es, but each and every such remedy shall be
cumu~.ative and sha11 be in addition to,every other remedy given
under this Lease or now or hereafter existing at.law or izi equity
or by 'statute. No delay ;or omission to exercise any right or
power accruing upon any default shall impair any such right ar
power or shall be construed to be a waiver thereof, but any such
right and power may be exercised frarn time to time and as often
as may be deemed expedient. Tn order to entitle Landlord to
exercise any remedy reserved to it, it shall not be necessary to
give any notice, other than such notice as zinay be herein
expressly required.
d. In the event Tenant should default under .any of
the provisions of this Lease and Landlord.shou d employ attorneys
or incur other expenses for the collection of rent or the
enforcement of performance or observance of arid;obligation or
agreeineri on the part of Tenant herein contained, Tenant agrees
16
{ ~~
that .it will: on demand therefor pay to Landlord the reasonab.J.e
Eee of such-attorneys and such other expenses so incurred by
Landlord.
e. l:n the. event any agreement contained in this Lease
should bE breached by either party and thereafter vaaived by the.
other party, such waiver sha1.2 be l~:mited to the particular
breach so waiued and shall. not be deemed to waive any other
breach hereunder..
12. Notic-es. .All. notices, certificates or other
communications hereunder. shall be sufficiently gzven and sha17. be
deemed given when mailed by registered mail, postage prepaid,
addressed as follows s If to Landlord., at 4raixge County, North.
Carolina, Office of Puzehasi.ng and Central Services, Past Off ice
B+~x 81.87., Hillsborough, North Carolina. 27278, Attentican of
Purchasing Di.re~tor; if to Tenant, at 7490 New Technology Way,
Fredrick, Maryland 21..701, Attention of President. Landl.ard and
Tenant may by notice ga;ven hereunder; designate any .further or
different address to which subsequent notices, certificates ar
otb.er communications shall be sent,
13. Binding Ef£.ect. This Lease sha.l.l. inure to the benefit.
of and. shall be binding upon Landlord, Tenant and.thea..r
respective sv.ccessvrs and assigns, sub]ect, however, to the
limitations contained herein.
l~. Sev~erablit~r. In the event any provision of this Lease
shall be held invalzd or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof.
l5 , Amendments , Clanger aiid Modi f icat ions . Except as
otherwise provided in this Lease, it may not be effectively
.amended, changed, modified:, altered or terminated without the
written consent of Landlord and Tenant
16, Execution Counte arts. This Lease may be executed .in
several counterparts, .each o~ which shall be an original and all
of which shall constitczte btz~ one and the same instrument.
17. Ne~„Leasc~, This I;ease shall be decrned and construed. to
be a "net-lease;" and Tenant shall pay absolutely n:et during the
Lease Term the rent and all other payments requa,red hereunder,
free of any deductions, without abatement or set.-off other than
those herein expressly provided.
ItQ WITNESS WHERECJF, Landlord grid Tenant have caused this
Lease to be executed in their respective Corporate names. and
their respective corporate seals to be hereunto affzxed and
attested by their duly authorized of~,icers, all as of the date
first above written.
1'l
~3~~r~ OF ORANGE, NORTH CAROLINA
By . ~ J ,~~~~c~+~auwt L : Ll ti~UU~
inllliam L. Crowther, Chair
.Board of,Coinmissioners
ATTEST'
[SEAL ]
evenly A Blythe, C1 k to
the Board of Commissioners
BUILDERS' SUPPLY & LUMBER COMPANY, INC.
President
ATTEST:.
~~ Z ~~~ ""'--- ~ SEAL ]
qtr' Secretary
NORTH. CAROLINA
GRANGE COUNTY
I, a notary public of the County and State aforesaid,
certify that Beverly A. Blythe personally came before me this day
and acknowledged that she is Clerk to the Board of Cornmissioriers
for Orange, County and that by authority duly given and as the act
of said County, the:faregoing instrument. was signed in its name
by the Chairman of said Board of Commissioners and attested by
her as Clerk to said Baard of Commissioners,
Witness my hand and official stamp or seal, this the ~_
day of 1~~~.R 1g~-
Notary Public
MY commission expires':
f~ ~~ ~
it
STATE. OF ~,
COUNTY QF
I, a notary p~ li.c i a fa,~ said county and state do
certify that ~illli''~ t~ f~„~!/y,-.d-~r personally came
as
18
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.,
before me; this day and.:acknowTedged that _he a:s the
secretary of BUILDERS' SUPPLY'& LUMBER COMPANYt INC., and that by
a~zrliority duly given and as the ac.t o€ the corpara~ion, the
foregoing instrument was signed .n its name by its
Presi en. sealed with .its Corp ra e. seal; .and attested lay
as its _/~i1./~ Secretary..
Witness ha d and notarial seal this the ~~day of
> ~9.~' t`
otary Pubh:c
My commission expi:res.: (VA.'VCYH.GA'N'f(;{~gP
~lotary PcLiic, C::~.iard Coe::y, PY3i
~Y Camnssion expires Dct 9, :1899
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RES~LUT.ION APPROVING A LEASE AGREEMENT BETWEEN T.HE
COUNTY. OF ORANGE:, .NORTH G:i3.ROLINA AND E~IILDERS'
SUPPLY & LUMBER.CQMPANY, I:NG., FoR THE .BULLDLNG
AND PROPERTY AT 4Q1 VALLEY FORGE RC3AD, HILLSBOROUGH
WHERERS, pursuant to and .i.n satisfaction of the requirements
of'Section 158-7.i of the. General Statutes o= North Carolina, the
Bciaxd of Gamms:sioners, following a public. hearing., has
determined that if it Leases the building and property located. at
4~1 valley Forge. Road. to Builders' Supply & Lumber Company, Inc.
:per the Z;ease that is an exhibit to this Resolution, the'
consideration to.Qrange County wi1:I be equal to or greater than
the vaJ.ue of the lease2iold intezest to be conveyed by Orange
County, and more specifically that: the value of the-lease,
payments made: to Orange County, togethez faith the value o£ tYie
real. property, equ%pment, and. sales taxes paid to orange County
as the 'result of the Lease, will be equal to or greater than the
fair; market value of the interest conveyed., as determined by a
market survey of similar: facilities in th.i:s area; and
WFIEREAS., pursuant to and in .further sat.i s.fact.on of Secti:oii
158=7.1 of. the General Statutes., the Board o€ Commissioners
hereby determines. that the leasing of this property to Builders%
Supply & Lumber Company, Inc. will;_stmulate the local economy.,
promote business, and resuilt in the .:reation of a ~uhstantial:.
number of jobs in the County at. or above the "median average"
wage iq orange County. The .median average wage projected to be.
paid by Bulders'.Supply at this, facility exceeds the median
avei~a5e wage paid by all insured private a.ndustzi~s in orange
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County, according, to .the latest available data of the: Employment
Security Commission off: North ;Carolina,
NOW,: THEREFORE, BE IT RESOLVED by the B;Oard:Of CommiSSionerS
for the County of orange, North Ca.ralina: ~"
1. ghat ;it hereby approves the Lease Agreement in
substantially the form as the.EXhibit to this resolution;
2. O£fi.cers and employees of the county are au hor:zed and
directed {without limitation except as may be expressly set forth
hexein) to make such changes to the Lease Agreement,-to.take such. .
other actions and to execute and deliver such ether documents,
certificates, undertakings, agreements or other instruments as
they, with. the advice of counsel, may deem necessary or
appropriate to effectuate the lease transaction contemplated by
the Lease, Agreement. .
Upon motion duly made and seconded, the foregoing resolution
was passed by the fo~.lowing votes
Ayes: Comm%ss loners Moses Carey, Jr., Stephen H. Halkiotis, William
L. Crowtfier~ Don Wi]',].fiv.t and Alice M. Gordon
Naes : NONE
I, 'Beverly' A. Blythe,. Clerk to the Board of Commissioners
for the County of Qrange, North Carolina, DO H£REBX CERTIFY that
the foregoing has been carefully copied from the recorded. minutes
of the Boatel of Commissioners for said County at a regular
meeting of said Board~helel an November T9 1.9:96, said record
having been made in .the Minute Sook o€ tine minutes o.f saa.d Boazd,
2
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and is a true. copy o'€ so much of said proceedings of said .Board
as relates :~.n any way to the passage of the resolut.on described
:n said p=oceedngs ,
WITNESS my hand the_cozporate seal of aad Co.untgr~-ths
' 19th d'ay of November , 19;9 6 ..
lsg-6'
- build.ess.res -
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~hiS,Yns:t:um~nt Pren;ar~d By:
L. Ph.l.xp McCZendori, ~squ:re
Georgi.tt-~?aca:fic Gorgo,ration.
133 Peacht:=ee Stree~.; N.E.
Atlanta, Georgia 3:0303
:LEASE AS~TSz-N~NT AtI}~Au~~t1~1PTTQN AGREE.t'~SENT
This Lease Ass%gnment and Assumption Agreement made this
4th day o£ January, 1.988, between U.5. Plywopd Corporation; .a
De}_aware corporation ("Assignor"~'and.Geo.rgia-Pacific Corporation,
a Georgia corpora~.ian ("Assignee").
• W Z ''T N E' S :E. T H
WHEREAS, in a lease dated Clctobe;r ~., 1972, reed=ded in
.Book 23:$, Pa:g'e 20:07, Orange .County' Registry ("arigin.al Lease
Agreement"}, The Industrial Development Corporation in the Caun~y
of Orenge,. Ncirth Carolina leased certain land, bua.lrlings,
machinery and equipment to Valley Forge Carpora~zon, a Georgia
cvrporator~ ("VE"~ .
WHEF2EAS, in, an unre.eo'ri3ed Assignment of Lease, dated
October 2d, •.1973:, VP' assigneel all. :ts .righ:~, title and interest in
the C>rigina3. Iieas'e' Ag=esment to Lesc'ington HotriPs , 2nc . { "L:" }
W:-a~RE.AS, the~.{>rig:in,al_ Lease Agreement .kas amended by a:
rirs.t .Supp7:einental ;Lease, Agreeanei~~, reca:r.ded in 3oo3t 255, ?age.
1487, Orange County Registry arzd Second Suop.ler:~e~,t2.1 Lease
Agreement. filiich included an assignment;. of the le°ase,. as amended,
£.xori L.'~ anal YE to ` Champion Internatzonal Corna.ra 4on, reeoY.ded i:n
Book 258, :Page: 1:8:65. Orange County::Regstzy (S+ilich he~eina~terr
the Ora:.ginal .Lease Agreement and al:l amendz~~nts thereto are
col:lec~vely refer`r;ed to as the ',Lease" } ; and.
Wr~R~AS, i:n an .Assgnrnen4 0£ Lease; dated; August 28, 1965
and recorded in Book 53Z`, Page 228,. Qrange CDUrity 2e,gistry,,
Cha~ipion. Internatoxial Carpor'ation ans3 Champion. Warehacise
• Properties, Znc, assigned all its right, title and interest in the.
Lease to ~issignor. _ .
W~iEiZ£A$;., LT. .S'. PLYWOt}D ~QRPOR.r'~:TION, Assignor herein ha s
adoQted• a Plazi of Cvrng7:ete Liquidation, has ~a..led a statement of
i:xi~ent to dissolve with the Secre_tary.of .State of Del-aware, and is
i.n` the pro'cess.. of wi..i~d~:n.g up its busiae:ss and. af~a.i'rs;
WHEREAg, Assignor is ~ wholly-o;aned subsidiary or
G.^C}RGTA-=PACIF`SC• CQi2PflI?AT:IC7N, Assignee.; ani3
W:-FER...AS, T'fie parties •d?sire to ?,iquidate and Fore°ver
c~..sconti.nise Elie e~i:stence oL Assignor as a se:aerat.e en~it~- and to
n1.acP the assets now st'anffing i.n the. nary= aE' tae: P:s's.:g:ct a:nto the
na:r.Q o`_. the Assign.ae.
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21QW; .TEEREFOR&., for gooQ and valuab]:e Gonsiderati'izan, -
r:eceipt off; wh~:ch.'is laerebp acknowledged,. Assignor does hereby
sell, assign, txansfer and set over to Assignee all 0£ Assignor's
:rights, title and interest: untiex and pursuant to the I;ease.
Assignee hereby acceQts the above assignment and
sgecific.aliy assumes, effective as o£ the date hereof, the
obl:i.ga-Boris .off :the Ass~_g'nox uudez the Lease..and ag;ree's to be ba.und.
by the terms and pravisi:ons thereof to the same exteht, as, i£ the
Assignee had been made a pang thereto a:n the p7.ace and sEead of
the Assignor,
IPi WIT2dESS WHEREQF, the: garti:es hereto have entexed into
tb.:s Lease Assignment as: of the date set out .above.
• ASSZGNQR: U.:S. OQDICORP,•C?RATION
George A. MacConnell
Senior Vice President
' ; .ASSIGiiEE. GEQRG~~,,;1'AC~rc ~RP(7RATIOII
• George A. MacConnell
• Seziidx~ Vice P'resden
• Building Products
• • • Manufacturing Da.vision
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ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGEND CT
Meeting Date: April 1, 20fl8
Action Agenda
Item No. _ ~}-
SUBJECT• Valley Forge Road Property Lease Rate for Builder's First Source
DEPARTMENT: Purchasing and Central Srvcs
PUBLIC HEARING: (YIN) No
ATTACHMENT(S):
Original Lease
INFORMATION CONTACT:
Pam Jones, (919) 245-2652
Willie Best, (919) 245-2308
PURPOSE: To consider approving the lease rate for property owned by the County at
401 Valley Forge Road, Hillsborough and leased to Builders First Source; and to receive
information regarding compliance with the original economic development conditions
established in the 1997 lease.
BACKGROUND: In 1-997, the County acquired property at 401 Valley Forge Road,
Hillsborough as a result of the retirement of revenue bonds owned by the Industrial
Development Corporation. The Orange County Economic Development office successfully
negotiated a lease with Builder's Supply & Lumber, Incorporated, whose name was changed
and the lease assigned to Builders First Source effective December 31, 2000. The lease terms
set the initial term for ten years, with two automatic five year renewals. The lease automatically
renewed on October 1, 2007. However, a renewal lease amount was only recently finalized.
The Board is asked to approve the lease rate at $2.50lsquare foot for the renewal October 1,
2007 through September 30, 2012. No other terms of the lease are affected. A copy of the
original lease is provided as information.
The original lease also included several conditions that were to be met regarding numbers of
jobs created and their associated wages. Builders First Source reports that as of 2002 the
company employed 90 people as required by the lease. As of 2008, the company has 70
people employed due to the downturn of the economy. Investments by the company in
equipment and improvements to the premises totaled $3.3 million with total sales presently at
$25 million, and at its peak, sales totaled $40 million. The original lease stipulated an average
wage for all employees at $12.80 per hour .and $9.13 per hour excluding salaried,
managerial/supervisor positions. The average wage currently for all employees is $15.40 per
hour for all employees and $13.54 per hour for non-managerial and. non-supervisory positions.
FINANCIAL IMPACT: The Board may recall that the original lease was set at $1/square foot,
significantly below market rate, to recognize the significant capital .investment needed to make
33
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the building suitable for use by Builders First Source. The recommended, renewal rate of
$2.50/square foot and is based on lease rates for comparable .properties in the area. The
County may expect to receive a total of $250,000 in annual rent, an increase of $150,000 in
revenue per.year from previous years.
Further, the lease terms require the tenant to pay taxes on the building as if it were privately
owned. The taxes-in-lieu amount paid to Orange County in 2007 was $47,313. Since the
company is outside of the Hillsborough city limits, no city taxes are collected.
RECOMMENDATION(S): The Manager recommends that the Board approve the lease rate for
Builder's First Source at 401 Valley Forge Road, Hillsborough at $2.50/square foot.
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