UPDATE: City Council To Discuss Library-Condominium Agreement Tonight

The University Place City Council is scheduled tonight to discuss the condominium and operating agreement of the building that houses the community’s library.

The proposal is up for discussion only tonight, but UP City Attorney Steve Victor told Patch that the City Council could vote on the proposed agreement in two weeks.

According to a memo from Victor, the document represents a culmination of eight years worth – and at least six amendments – of negotiations between the city and the Pierce County Library System on the branch's building at Town Center.

The proposed agreement contains general rules and principles of operation, Victor wrote, but won’t dictate daily administrative operations.

"This is simply a legal splitting of the building," he said.

Here are key terms of the proposed agreement from the memo:

- Library Unit - First floor (excluding the city-owned commercial units and including 80 parking stalls in the Lot 9 garage) With respect to the 80 parking stalls, the library has already contracted in a prior agreement to allow those stalls to be used as general public parking. They will not be specially signed or reserved for library patrons. The library is also a half-owner of the Atrium, and will own the library expansion Unit after paying the city in full over ten years. The total final Library percentage of ownership will be 35 percent.

- City Unit - Second and third floors, including the ground level commercial units and all Lot 9 parking with the exception of the 80 library stalls. The city is a half-owner of the Atrium. The city unit also currently includes a unit that is termed the library expansion space. The City has the use of this unit for the ten-year period in which the library is paying for it. The total final City percentage of ownership will be 65 percent.

- Condo Association – A condominium association is necessary under the condominium act however, in the proposed documents the Association and its Board is merely an administrative tool. The association is governed by the three-member board of directors. The directors who will be city and library employees will be appointed by the city manager and library directors as follows. The manager and library director will each appoint one director. The selection of the third will alternate every two years between the manager and library director as the long as the city and library in combination own at least 70 percent of the condominium.

- Insurance – The declaration is set up in such a way that additional insurance separate from the city and library’s existing policies should not be required; however, while the library’s insurer has affirmed that a separate additional policy will not be necessary, we remain in discussion with the city’s insurer who may yet require a separate policy.

Victor also offered the following FAQ's to help residents better understand the proposal. He sent the same one to City Council members today.

CONDO DECLARATION: 

1. When the condominium documents are approved and recorded, will the city receive title to Lot 11, which was pledged as security for the city’s completion of the new library?

Yes, after approval of the documents, I will schedule a closing with the Library where we will execute and record the condominium documents, as well as a re-conveyance of Lot 11 to city title as required by Article 9 of the Second Amended and Restated New Library Development Agreement.

2. How much is the library paying for expansion space?

The library is paying $1.2 million dollars at $120,000 per year over 10 years, commencing on the recording of the condo documents under Article 2 of the Second Amended and Restated New Library Development Agreement.

3. When does the city’s obligation to pay library expenses end?

The city’s obligation to pay any library staff costs associated with the new library end upon final completion of the project. The obligation to pay the Library’s legal expenses ends upon approval and recording of the condo documents under Article 3 of the Second Amended and Restated New Library Development Agreement.

4. What are the exact ownership percentages within the Condo by unit?

City:

- City Unit (second and third floors) - 43.62 percent

- Retail Unit A – 4.23 percent

- Retail Unit B – 3.61 percent

- Police Station Unit (under overhang on Drexler) - 15.49 percent

Library:

- Library Unit – 25.02 percent

- Library Expansion Space (after 10 years) – 8.03 percent

5. Why isn’t the Atrium listed as a unit?

The Atrium, like the halls elevators and stairs is a “common element” of the building in condo terminology. In other words, it is a feature that must be used access units, but is not itself a unit. The Atrium is a “Limited Common Element” of the city and library Units. That means that regardless of whether any other unit is sold of otherwise transferred, the city and library will always jointly own the Atrium as long as they are the owners of the city and library units respectively.

6. Does the way the Board is set up in Sections 6 and 7 essentially require that the city and library agree on all significant condo issues?

Yes. Any irresolvable disputes between the city and library will be subject to the Dispute Resolution clause. However, the Board has very limited authority and its members are city or library staff. The condo will as a practical matter be administered by the Library Director and City Manager or their respective designees.

7. Why shouldn’t the Condo Board be comprised of appointed residents rather than city and library staff?

The Board responsibilities are administrative in nature. To attempt to delegate those persons who are not professional staff of the city and library would be an unlawful delegation. That is not to suggest that the city and library could not choose to contract with a private facility management company, but volunteer resident-Board members would not be permitted.

8. Is language in the Condo Declaration about the Police Station Unit under the overhang still correct in light of the temporary location of the Police on the building’s 2nd Floor?

Yes, the second floor location is an interim use for an indefinite period. The plan remains to complete the police station on Drexler.

9. What is the “City Unit No. 2” referred to on p.9 Section 2.3.4 described as “airspace”?

That unit is a naughty and mischievous relic of a former draft that no longer exists and will be excised from the final before it is brought before you for consideration.

10. What is an example of a reallocation of limited common elements among units referred to 4.1 and 4.2?

A perfect hypothetical example would be that the city or library determines to sell the main city or library units respectively to a third party. In that scenario, it is likely that as a condition of approval of the sale, either might require that the Atrium Limited Common Element be transferred in it’s entirely to the Unit that will remain in public ownership. This feature is one of the protections included in the document that benefits and protects both the city and the library.

11. What happens if one of our leased units fails to make payments?  Is city on the hook? If it goes into foreclosure, do we lose rights to the space?

The answer is that any default by a tenant that is under a lease to the city does not have any impact on our rights or ownership within the condo. Tenants have no ownership and no rights within the condominium. Any city tenant will merely be leasing space within a unit under a typical commercial lease and will have no rights under the Condo or Operating Agreement.

OPERATING AGREEMENT: 

1. If the library is half owner of the atrium, why should the city pay the entire custodial costs during the weekdays along with all restroom maintenance and repair costs, instead of what is described in Paragraph A-4 ?

The weekday/weekend split is an interim administrative measure which resulted in cost savings to the city. As soon as the city’s contractor begins construction of the interim police space on the second floor, the maintenance liability will become 50/50.

2. Paragraphs A-7 (1) and (2) appear to state that events can only occur when the library is closed.

That is correct in that when events are scheduled by the city during hours when the library is not open, no special library consent is required. If during library hours, the library must give advance special consent.