Subject
title
Approval of the Twelfth Amendment to the Interim Management Agreement and Authorization of the Acting City Manager to execute the Agreement.
end
Department
City Manager's Office (CMO)
Recommendation
Staff recommends that the Mayor and Council approve and authorize the Acting City Manager to execute the Twelfth Amendment to the Interim Management Agreement.
Discussion
On September 26, 2022, Morguard acquired from Street Retail, the fee simple interest in all the commercial retail properties in the Rockville Town Square (RTS) Mixed-Use Development. As part of the new ownership transition, on January 1, 2023, the Mayor and Council, and Morguard entered into a six-month Tenth Amendment to the initial Interim Management Agreement. The Tenth Amendment terminated on June 30, 2023. On July 1, 2023, the Mayor and Council and Morguard entered into a twelve-month Eleventh Amendment to the initial Interim Management Agreement.
Although a long-term Management Agreement is desired by both the City and Morguard, both parties need time to engage further. As such, staff recommends that the Mayor and Council approve and authorize the Acting City Manager to execute the Twelfth Amendment to the Interim Management Agreement, thus extending the term of the Interim Management Agreement to June 30, 2025. Included in the Agreement is the requirement that Morguard will sponsor as least seventeen (17) concert events or similar promotional events at RTS. The Twelfth Amendment to the Interim Management Agreement is attached for your review.
Background
The Rockville Town Square is a 12.5-acre mixed-use development located in the heart of Rockville City Center, and is encompassed within the area bounded by Beall Avenue to the north, Hungerford Drive to the east, Middle Lane to the south, and North Washington Street to the west, and consists of (i) a City-owned public plaza, which is intended for use by the general public, and includes a pavilion, stage, interactive fountain and storm water management facilities (the “City Plaza”), (ii) a building owned by the Montgomery County government, which houses the Rockville Memorial Library and a commercial space, and (iii) five mixed-use developments, which include residential, commercial, and office spaces, a privately-owned parking garage, and three City-owned public parking garages (the “RTS Mixed-Use Development”).
Cognizant of the need to efficiently and effectively maintain certain common areas within RTS including the Town Square Plaza, the Mayor and Council, and Street Retail, LLC, a Maryland limited liability company and successor by conversion to Street Retail, Inc., a Maryland corporation (“Street Retail”), executed an Interim Management Agreement effective July 1, 2011.
Pursuant to the terms of the Interim Management Agreement, (i) the Mayor and Council agreed to (a) levy a tax against all non-exempt real property within the Town Square Street and Area Lighting District at the rate of zero cents ($0.00) on each $100 of assessable value of said property, and (b) levy a tax against all commercial property within the Town Square Commercial District at the rate of zero cents ($0.00) on each $100 of assessable value of said property, and (ii) Street Retail agreed, among other things, to provide, at its sole cost and expense, (y) certain management and maintenance services for the City Plaza, and (z) certain management and maintenance services for the privately-owned sidewalk areas of the RTS Mixed-Use Development properties.
The initial term of the Interim Management Agreement was to automatically terminate when; (i) a long-term Management Agreement became effective or (ii) on June 30, 2013. Since no long-term Management Agreement was imminent by Spring 2013, the Mayor and Council and Street Retail, Inc., entered into the First Amendment to the initial Interim Management Agreement dated April 22, 2013. Subsequent Amendments to the Interim Agreement have been presented to Mayor and Council for consideration and approval. The table below lists these Amendments.
|
Date |
Description |
|
April 22, 2013 |
First Amendment to Interim Management Agreement |
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April 11, 2014 |
Second Amendment to Interim Management Agreement |
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May 19, 2015 |
Third Amendment to Interim Management Agreement |
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May 9, 2016 |
Fourth Amendment to Interim Management Agreement |
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May 8, 2017 |
Fifth Amendment to Interim Management Agreement |
|
April 10, 2018 |
Sixth Amendment to Interim Management Agreement |
|
May 14, 2020 |
Seventh Amendment to Interim Management Agreement |
|
June 11, 2021 |
Eighth Amendment to Interim Management Agreement |
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July 1, 2022 |
Ninth Amendment to Interim Management Agreement |
|
January 1, 2023 |
Tenth Amendment to Interim Management Agreement with Morguard |
|
July 1, 2023 |
Eleventh Amendment to Interim Management Agreement with Morguard |
Mayor and Council History
The initial Interim Management Agreement was brought before the Mayor and Council for approval on June 20, 2011. Subsequent Amendments, as listed in the table above, have been presented to the Mayor and Council for consideration and approval.
Fiscal Impact
The Interim Management Agreement does not financially obligate the City of Rockville for the services provided, for either the sidewalk areas or the plaza. In addition, the tax rate is set at $0.00 per $100 of assessed value for both the Town Square Commercial District and the Town Square Street and Area Lighting District.
Next Steps
Following Mayor and Council’s approval and authorization for the Acting City Manager to execute the Twelfth Amendment to the Interim Management Agreement, the Acting City Manager will execute the Agreement.