Nws file photo of the back of the Alpena County Fairgrounds grandstands.

ALPENA — Alpena County has approved its lease contract with Blackwaters NE for the Blackwater on the Water entertainment complex, which states that no taxpayer money will be used for its construction. Blackwaters NE leadership says they can’t wait much longer for an agreement to be met with the Alpena County Fair Society.

The county contract allows for one “initial term” lease period for nine years after the “partial first lease year” which starts when all parties approve the effective date, ending on Sept. 30 of that same calendar year.

The subsequent lease years include a twelve month period commencing on Oct. 1 and ending on Sept. 30.

The lease will automatically renew for three additional, ten year lease, renewal terms.

Mike Romanowski, CEO Blackwater NE, told The News that if Blackwaters NE fails, the county gains ownership of all improvements without having to foot the bill.

“If we fail, and we cannot hold up our end of the deal, the county gets that, everything we’ve put into it, free of charge,” he said.

He explained that if the county backs out of the lease, it may be subject to buy back provisions outlined in the approved contract.

The county’s contract also includes a provision which requires Blackwaters NE to maintain a relationship with the fair society, allowing them to host an annual fair.

Though the county has approved its side of the agreement, the proposed deal hinges on the fair society’s approval of its contract with Blackwater NE.

The fair society will hold a public meeting at 6 p.m. on May 5 at the Ramada Inn in Alpena, according to an Alpena County Fair Board press release on Sunday. This meeting is in regards to the proposed Blackwater on the Water proposal.

Courtney Tauriainen, Alpena County Fair Board president, said that the fair society will not vote on the contract at that meeting.

“The purpose of this meeting is to review the most recent agreement between Blackwater and the fair society,” she said. “Following this review, eligible voting members will provide direction to the board of directors regarding how to proceed.”

County Administrator Jesse Osmer said that under the advice of the parties’ respective legal team, the “cleanest” way to move forward with negotiations was to separate the county and the fair society’s contracts.

Osmer said that the “more time that passes,” the more the project looms under uncertainty.

“The fair board was included on day one and yet we haven’t been able to get them to come up with a clean agreement,” he said.

Osmer added that it is still the intent for the county to continue in good faith negotiations with the fair society, to reach an agreement.

“We are still attempting to continue to work with the fair board and 4-H,” he said.

Jason Atwell, Blackwater NE head of production and events, and Romanowski told The News that Blackwaters NE is financially ready to start construction. They said that the deadline for the project was April 1 and they are concerned that their contracts for construction will back out if the project continues past the deadline.

“We can’t wait until the fifth,” Atwell said. “We can’t wait that long.”

Romanowski explained that the $3 million in projected investments will go towards remedying safety violations, begin improvements on preventative maintenance that has been neglected, and to start upgrades to the main stage and grandstands.

He added that construction will not occur during fair week, this year.

Tauriainen said that the fair board is not concerned about the project not going forward at the moment, but rather is concerned about ensuring the fair society supporters are acknowledged for their concerns.

Key points of the county contract affirm Blackwaters NE’s obligation to cover the costs of construction and renovations while paying the county $100,000 a year for base rent. The contract also outlines avenues the county can take in the case it has to buy back portions of the project, subject to provisions.

In Article Two of the contract, on page one, Blackwaters NE accepts the lease of the property “as is,” understanding that the company must foot the bill to remedy safety violations and ailing infrastructure.

“Blackwaters accepts the Premises in its present condition … without representation or warranty by the County except as expressly set forth herein,” the contract states.

The fair society’s proposed contract with Blackwaters NE stipulates that their agreement is subject to the county’s agreement, which includes renewal terms. This agreement proposes a twenty-two day period, annually, for the fair board to reserve use of the fairgrounds, apart from Blackwaters NE’s improvements, for the fair.

ALPENA COUNTY AND BLACKWATERS NE CONTRACT

FINANCIAL OBLIGATIONS

The contract affirms financial responsibility to be assigned to Blackwaters NE multiple times throughout the contract, though improvements are subject to buy back provisions if the county chooses to end the lease.

The county contract states on page two that in “consideration of the public benefits anticipated from the development and operation” of the complex, the county will require Blackwaters NE to pay base rent of $100,000, annually. Each lease year, the base rent will be subject to a reduction per “Entertainment Services Fees” which will be paid to the county.

Romanowski said that the partial first-year lease is subject to a significant reduction due to the cost of improvements needed to bring the fairgrounds up to acceptable safety standards.

Payments for base rent are as follows, per lease year, as detailed in the county’s contract:

– Partial first year lease: $1

– Second year lease: $25,000

– Third year lease: $75,000

– Fourth year lease: $100,000

The contract states that if Blackwaters paid $86,000 to the county in entertainment service fees for the fourth lease year, for example, the base rent for that lease year would be $14,000.

Entertainment service fees will be taken from ticket sales.

In the first year of the initial lease term, the county will receive $1 per ticket sold. In year two through year ten of the initial lease term, $2 per ticket sold will be paid to the county.

Multi-day ticket fees will be multiplied by the number of days of access permitted.

Blackwaters NE will also pay the county $5 per night, per camping party.

On page four under Article Six, the county explicitly states Blackwaters NE is responsible for the “sole cost” to “…design, construct, and install improvements upon the Premises.”

Premises refers to the Alpena County Fairgrounds.

“All construction activities shall be at the expense of Blackwaters,” the article adds.

Under Article Seven, on page five, the contract states that the county will assist Blackwaters NE in rezoning the fairgrounds, with sole cost and expense on Blackwater NE.

MAINTENANCE RESPONSIBILITIES

Cost of maintenance will also fall on Blackwater NE throughout the lease terms, dictated in Article Nine on page six.

Maintenance will include, but is not limited to, all “…structural, nonstructural, interior, and exterior portions thereof in good, sanitary and neat order, condition and repair.”

Under this provision, if Blackwater NE “refuses or neglects to commence and to complete repairs required by it” the county may enter the premises and complete the necessary repairs, cost subjected to Blackwaters NE “upon demand.”

Per the contract, the county is not required to make those repairs that are required by Blackwaters NE.

BUYBACK PROVISIONS

Addressing the risk of a public-private partnership for the county’s lease with Blackwater NE, the county’s contract outlines provisions in the case that either Blackwater NE defaults under the lease or the county decides to forego renewal.

Article 10, on page six and page seven, explicitly states that if the county decides to not renew the lease at any renewal phase, they are subject to buy back provisions. Those stipulations are as follows:

– If the lease is terminated after the initial term (nine years) the county will purchase the Blackwaters improvements at 50% of the lesser of fair market value or actual cost.

– If the lease is not renewed following the expiration of the first renewal term, the county will purchase the Blackwaters NE improvements at 40% of the fair market value or actual cost.

– If the lease is not renewed following the expiration of the second renewal term, the county will be required to purchase the Blackwaters improvements at 30% of the lesser of the fair market value or actual cost.

– Following the third renewal term, a buyback will not be required.

Per the contract, the county may finance such purchases through municipal bonds or other lawful public financing mechanisms.

If Blackwaters defaults under the agreement, the county will not be required to purchase any Blackwaters improvements.

ALPENA COUNTY FAIR SOCIETY

The county contract is separate from the fair society’s contract with Blackwaters NE. The fair society’s contract is subject to change upon further negotiations.

However, the county contract stipulates in Article 27, on page 15, that Blackwaters NE will honor the fair society, a Michigan nonprofit, which holds “…certain rights to exclusive use of the Premises for one week each year…”

ALPENA COUNTY FAIR SOCIETY AND BLACKWATERS NE CONTRACT

The fair society’s proposed contract asserts its right to charge an admission fee to the public for entry to the fairgrounds during the allocated fair dates, on page one. These funds become “the sole property of the Fair Board,” according to the proposal.

The society also asserts its right to have access to barns and agricultural facilities during the agreed upon fair dates. At the completion of the fair, the fair society is expected to leave the fairgrounds “restored” to its condition prior to the fair.

The proposed contract places responsibility for upkeep and maintenance for the fair office on the fair society. The contract also requests an initial exterior painting of the fair office building at the expense of Blackwaters NE.

The fair society will be required, per the proposed contract, to keep all grounds within 20 feet of the fair office “neat and tidy at all times.”

The fair society affirms its responsibility to provide additional portable restroom facilities as it deems necessary during the allotted fair dates.

RENTAL CONSIDERATION

The fair society proposes a $1 rental agreement to be paid to Blackwarters NE annually, on page three of the proposed agreement. The fair board assumes rights to bear full financial responsibility for all operational costs, including, but not limited to:

– Utilities the fair society uses year round and during fair time.

– Repairs for any damage to the fairgrounds as a result of the fair society’s use, though “reasonable wear and tear” is expected.

– The fair society will be required to pay for all cleanup and sanitation of the property, except for Blackwater’s improvements, during and after fair time.

– Security will be provided by the fair society when applicable.

– The fair society will pay all premiums for insurance policies required per the agreement.

BLACKWATERS NE CONTROL

The fair society’s proposed contract recognizes Blackwater’s right to retain “exclusive control” of improvements the company adds to the property at all times, including during fair time, described on page three and four.

The contract stipulates that if Blackwaters and the fair society agree on fair society’s use of Blackwater’s improvements on a “case-by-case” basis, the fair society will be allowed use of equipment free of charge.

The fair society can be charged for “any actual cost incurred for the Fair Board’s use of materials, physical expendables, and Blackwater personnel associated with the Fair Board’s use.”

Kayla Wikaryasz can be reached at 989-358-5688 or kwikaryasz@TheAlpenaNews.com.