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HomeMy WebLinkAboutR-1999-108 Yakima Mall Expansion Project (Great Western Building)RESOLUTION NO. R-99. 1 8 8 A RESOLUTION authorizing the City Manager to execute and submit loan application for $4,000,000 to the U.S. Department of Housing and Urban Development (HUD) Section 108 program for the Yakima Mall Expansion Project. WHEREAS, the City of Yakima has been awarded a. $1 million Economic Development Initiative (EDI) grant from the U.S. Department of Housing and Urban Development (HUD); and WHEREAS, the grant award from HUD is conditioned upon submittal of a $4 million application to the HUD Section 108 loan guarantee program; and WHEREAS, the EDI grant was awarded for expansion of the Yakima Mall and the rehabilitation of the Great Western Building; and WHEREAS, the rehabilitation of the Great Western Building has been determined to be not economically feasible; and WHEREAS, the project developer, Joseph R. Morrier, Sr., has requested a project modification to delete the rehabilitation of the Great Western Building and in its place further expand the Yakima Mall; and WHEREAS, the modified project, the Yakima Mall Expansion Project, will meet the same eligibility requirements as the original project; and WHEREAS, economic development is a priority for the City of Yakima, and the City intends to approach economic development on an inclusive, comprehensive basis which involves public, private and community-based efforts to achieve new investment and redevelopment in the City; and WHEREAS, under Section 108 of the Housing and Community Development Act of 1974, federal loans are available for the purposed of fundingproperty rehabilitation for economic development activities that will create new and stable jobs for low and moderate -income residents; and WHEREAS, the Yakima Mall Expansion Project will leverage over $3 million in private investment and create 145 new full time equivalent jobs, at least 51 percent of which shall either be filled or made available to low and moderate income persons as defined in the Community Development Block Grant regulations; and WHEREAS, as consideration for the Section 108 loan, the developer agrees to pay to the City the amount that the City pays or becomes obligated to pay pursuant to the Section 108 loan, now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAK MA: The City Manager is hereby authorized and directed to execute and submit the attached application, including all understandings and assurances contained therein, for financing from HUD's Section 108 loan program, in the amount of $4,000,000, for the Yakima Mall Expansion Project. The City Manager is hereby designated as the official representative of the City to act in connection with that funding application and is authorized to take such additional actions as may be necessary and prudent to complete the application process. ADOPTED BY THE CITY COUNCIL this 17th day of August, 1999. Al'1'EST: g, .a City Clerk John Puccinelli, Mayor COMMONLY ASKED QUESTIONS REGARDING SECTION 108 LOAN APPLICATION FOR THE YAKIMA MALL EXPANSION PROJECT Foliating is a list of questions which haw birn pos d to City staff and in the media by nvnbers of the ccmmunity neganiing the Yakimz Mall Expansion Project Oomerly tlx Girt Weszem Building Redecdopment Pio 9. Staff hzs proud d responses to the questions &zed on knotderige of HUD regulations, con ensations with HUD staff; and infvnnatzon prvt.ided by the developer: 1. What is the purpose of today's City Council Public Hearing? The purpose of this hearing is as follows: • To provide the opportunity for public comment on the City of Yakima's proposed Section 108 loan application to the U.S. Department of Housing and Urban Development (HUD) for the Yakima Mall Expansion Project, and • To discuss the historical significance of the Great Western Building and provide for public comment on its proposed demolition as part the aforementioned application, as required by Section 106 of the National Environmental Policy Act (NEPA). • Council is not being asked to approve the loan application for the project today. Council consideration will be scheduled in August prior to the August 18, 1999 deadline to submit the Section 108 loan application to HUD. 2. What federal funding is being used for this project? Public funding for the project is from the federal Department of Housing and Urban Development (HUD), and is provided to the City in two forms: a $1 million grant, and a $4 million loan to be applied for with City Council approval. The grant is from HUD's Economic Development Initiative (EDI), a nationally competitive grant program that has only been offered once before. The City applied for the grant in August 1998, and was awarded in November 1998. The loan is from HUD's Section 108 loan guarantee program. The Section 108 program is a federally funded loan made directly to Community Development Block Grant (CDBG) entitlement communities and states. Cities and states, in turn, make loans to developers for economic development projects that retain or create new jobs for low and moderate -income individuals. The maximum amount of Section 108 funds a community may loan out at any time is not to exceed five times the community's annual CDBG entidement. In Yakima's case, the current annual CDBG entidement is slightly more than $1 million. Therefore, the City's borrowing capacity under the Section 108 program is limited to $5 million. This project would utilize 80% of that capacity. However, as the loan is repaid, those funds become available for future lending. 3. How does the funding for this program work? The EDI grant may only be used in conjunction with a Sectio n 108 loan. No grantee is eligible to use EDI funds without firstthroughthe application, approval and closing of a Section 108 loan. No goingunds may aPc until proportionate amount of loan funds been drawn.be accessed at least a A significant number of points awarded during the grant application evaluation were tied directly to the amount of Section 108 loan funds the project would leverage. In its EDI application, the City proposed to apply for $4 million in Section 108 funds for a leveraging ratio of 4:1. Therefore, as a condition of the grant award, the City is expected to apply for at least $4 million in Section 108 funds, even through the project has changed. 4. How was this project and the developer selected for the grant and loan application? HUD issued a Notice of Funds Availability (NOFA) in April 1998 for the Economic Development Initiative (EDI). Because EDI is a highly competitive national grant program, staff initiated a public process to gauge the availability of competitive projects in Yakima, and to conduct a fair process for the selection of a project and developer for the application. The process included the p publication of specific publication proposal guidelines in the media, and the provision of a public workshop on the EDI and Section 108 programs held in the chambers of the City Council. The Great Western Building Redevelopment Project, proposed by Joe Morrier, was determined to have the most competitive value for the EDI application, and an application was approved by the City Council in August 1998. The project proposal was successful in garnering one of only 23 grant awards in the nation, and the only project awarded in the Northwest. As described further in this document, the proposed project experienced some setbacks that affected its financial viability, and had to be cancelled. The Council Economic Development Committee (Mayor Pucinelli and Council Members Place and Sims) directed staff to review other available options for the use of the funds, but with the understanding that Mr. Morrier would have first priority to propose an alternate use for the funds. In May 1999, the committee reviewed Mr. Morrier's new proposal, and an alternative proposal submitted by Mr. Gary Lukehart. It was determined by the committee that Mr. Morrier's proposal more closely fit the criteria required by the grant and loan regulations, and they voted unanimously to recommend the project to the City Council for application. The City Council voted to accept the comnnttee's recommendation on June 15, 1999. 5. Who determines the City's eligibility to change the original scope of work? Prior to, or concurrently with the Section 108 loan application, the City will resubmit its EDI grant application with the new project. HUD's application review committee will be reconvened and the revised EDI application will then be reviewed and scored using the same criteria and point allocation method as before. In order to be approved, the new project must score high enough to fall within the point range of the 23 projects awarded in the same competitive process. In order to be funded, the City's revised application may score no lower than the lowest rated project that was approved for funding. The scoring of projects is based on several criteria, including: • Capacity of the applicants (City of Yakima and the developer) • Socio -Economic Distress Factors • Soundness of Approach • Leveraging of resources • Comprehensiveness and Coordination 6. How is the $5 million of federal funding being used for the Yakima Mall Expansion Project? Federal funding will be used to develop the Yakima Mall Plaza area into 64,000 square feet of retail and office space on three floors. Private funds will be used for site preparation, including demolition of the Great Western Building. 7. How much private investment is being leveraged for the project? The Yakima Mall Expansion project will leverage slightly more than the original proposal, approximately $3.3 million in private investment. 8. How will the City's loan be secured or protected? HUD requires that its loan to the City of Yakima be secured with a minimum collateral to loan ratio of 1.2 to 1. This collateral will include a first lien position on the 64,000 square feet of new retail and office space improvements but not the land on which it is built. To further secure repayment of this loan, the City will require 1) Assignment of leases in the new development, and 2) Personal guarantees from the partners of the Limited Liability Corporation (LLC) which will build and own the new development. Finally, HUD also requires the City to pledge a portion of its future CDBG entitlement as an alternate source of repayment in the event of default. 9. What is the benefit to the community? The project will improve, modernize and increase the availability of retail and office space in a key Central Business District facility. The project will create and retain jobs which are important to the surrounding neighborhoods, and which retain and recruit small business opportunities throughout the downtown area. 145 new jobs will be created in a space that currently provides none. The developer estimates that the new space will generate approximately $10 million in annual retail sales and increase property taxes on the plaza by over 5 times the present amount. This calculates to an estimated total financial impact to the City from this project of $135,000 annually. This figure does not include the additional benefit from the multiplier effect of increased retail activity and payroll from jobs created. 10. Why has the original work plan to restore the Great Western Building to an upscale historic hotel been changed? Several issues factored into the developer's decision. They are summarized below: • Hotel design constraints. Due to the requirements for receiving Historic Preservation Tax Credits which were needed to fund the total project cost, the developer was limited in what could be done to the interior and exterior of the building. Several modifications necessary for a hotel such as windows and the removal of damaged roof ornamentation were prohibited due to preservation requirements. These factors eliminated the entire top two floors of guesttrooms, added to the construction costs, and reduced the amount of revenue generated by the hotel. • Mall Plaza design constraints. Also due to the aforementioned requirements, several components of the Mall Plaza construction were adversely affected. The most severe of these restrictions was the elimination of the upper floors of retail development in the plaza. Citing concerns that the view of the building's only exposed wall from ground level would be compromised, the State Historic Preservation Office indicated that the project would likely forfeit its right to the tax credits if the second floor of retail space was constructed as proposed in the grant application. Eliminating the second floor space would negatively impact the financial pro forma of the project and its ability to generate sufficient revenue to repay the Section 108 loan. Without the second floor retail space, 50 new jobs would be eliminated, jeopardizing the project's eligibility and diminishing its economic development impact. In surnmaiy, the retail portion of the project was projected to produce the bulk of the new jobs and revenue needed to repay the loan. The hotel alone could not carry its share of the debt service and job creation requirements, and was the higher risk component of the overall project. 11. Have other uses for the Great Western Building been considered? Yes. Other uses including office space and housing were considered as alternatives. However, the floor plan is cmall (5,000 square feet) and narrow, and difficult to lay out efficiently for these uses. Also, the building would need an additional elevator for office use, which would trigger costly sei¢r„ is code upgrades. With a projected lease of $10 a square foot, office space at full capacity would only generate $460,000 per year in gross revenue. For housing purposes, the building could accommodate a maximum of 21 two-bedroom units, rented for an average of $600.00 per month. This would provide gross annual revenue of approximately $150,000 per year. Either option would generate less than 25% of the revenue projected from a hotel on a square foot basis, which would be insufficient to cover debt service and operational costs. 12. What funds will be used to demolish the Great Western Building? Private funds from the developer will be used to demolish the building. No federal funds will be used for the demolition. Despite the fact that private funds are being used for demolition purposes, the federal government views all components, including demolition, as one project. Therefore, the State Historic Preservation Office and the City must still review the impact of the demolition, and the developer may be required to mitigate some of the impacts through the preservation of artifacts or historic records related to the building. 13. Who reviews the historical impact/significance of the project and makes recommendations for mitigation? Can they prevent the project from being approved? The Washington State Historical Preservation Office will conduct what is referred to as the Section 106 Environmental Review. This review assesses the impact of the proposed project on the community in terms of historical significance. The State Historic Preservation Officer will recommend mitigation measures for preservation or recording and negotiate a Memorandum of Understanding with the developer and the City outlining how the mitigation measures will be carried out. This recommendation is forwarded along with the project environmental review and loan application for federal approval. While SHPO has the duty to review the project and make recommendations for mitigating potential environmental or historical impacts, HUD makes the ultimate decision on approval of the project. 14. How does public comment affect the application? The City is required to provide sufficient opportunity for the public to comment on the proposed project, and must also ensure that the public is made aware that comments are being received for the purpose of Section 106 of NEPA (review of impact on historic preservation). The public hearing must also provide for a discussion on the historical significance of the property to the community. A transcript of the public hearing is forwarded to the State Historic Preservation Office along with the project application for review and recommendations. SHPO will review the record of the hearing to ensure that procedures were followed correctly, and that the public was provided the opportunity to discuss the project and its impacts. SHPO may also use the record to assess the importance of the building and the potential impact of its demolition on the community. Any opposition or support for the project may be noted in SHPO's review, and may factor into its recommendations for mitigation, and in its recommendations to HUD. 15. Who has the final say in the approval or denial of the project? Locally, the City Council must decide if it intends to apply for funding of the project as proposed by the developer. Ultimately, the U.S. Department of Housing and urban Development will approve or deny federal funding for the project. 16. Can the City Council or the City's Historic Preservation Committee prevent the demolition of the Great Western Building? Without public funds, the developer's only responsibility is the compierion of a State Environmental Policy Act (SEPA) review, which may require an Environmental Impact Statement. In this situation the use of the Great Western Building is ultimately the decision of the property and developer. With federal funding, the project will be subject to the National Environmental Policy Act (NEPA) review, which requires mitigation of any historically significant factors, and the developer may be obligated to preserve artifacts and provide a photographic record suitable for archiving and a historic report on the building, or may be denied use of federal funds for any activity associated with the demolition or reuse of the site. The City's Historic Preservation Committee (authorized by YMC 11.60) is limited to evaluating and encouraging the efforts of owners to maintain, rehabilitate and preserve historic properties through special valuation, a property tax incentive provided in Chapter 84.26 ROW. The committee does not have the authority to approve or deny the rehabilitation or demolition of a historic building. 17. What is the developer's responsibility in regard to historical preservation? When federal funds are involved, the developer's approval to proceed with demolition will require an agreement with the State Historical Preservation Office that outlines the measures that will be taken to mitigate the impact on the historical significance of the building to the community. Mitigation measures may include the preservation of removable interior items or artifacts, photographic records, preparation of a historical report on the facility. The developer has begun the process of preserving some of these features. For example, an agreement is being negotiated between the developer and the local Masonic Lodge to remove and preserve the building's most prominent interior feature, the replica of Solomon's Temple, and certain exterior architectural details. Under this proposed agreement, the temple and artifacts will be removed by the Masons for relocation inside the Yakima Masonic Temple, where it may be returned to its traditional ceremonial use. YAKIMA MALL EXPANSION PROTECT DESCRIPTION Project Summary The scope of the project is to construct a three-level building above grade and a partial basement below grade. The new building footprint will be approximately 19.050 square feet for each of the three levels, with a basement of approximately 7,000 square feet. The total building area will be nearly 64,000 square feet. The basement level, level one and level two will be designed for retail use. Level three will be designed for either office or retail use. The concept is to create a new Yakima Mall primary entrance at level one, which would include a pair of escalators vertically connecting level one to both the basement level and level two. Level three will e accessed via a new elevator. The new mall entrance will bring customers from Yakima Avenue into the existing by means of a single level mall concourse. Using conventional mall standards, it is estimated that there is a need for three full-time employees per 750 square feet of retail space. The new leasable retail space will create approximately 124 retail jobs, and the office space on the third level will create approximately 21 jobs. Section 108 funds will be used for construction costs associated with the expansion of the Yakima Mail retail/office area. Private funds will be used for the demolition of the Great Western Building and other predevelopment activities. Please see the attached budget worksheet. Description of the Applicant The JEM Limited Liability Corporation (LLC) will be the loan applicant. The LLC will own the property occupied by the Great Western Building, and will lease the adjacent Mall Plaza area from the Yakima Mall Shopping Center Corporation. The LLC will own the building and improvements to be constructed on those two properties, which will then be leased back to the Yakima Mall Shopping Center Corporation. The City will receive the following as collateral on its loan to the LLC: A first lien position on the building and improvements located on the Great Western Building site and adjacent Mali Plaza area. Personal guarantees from the principals of the LLC (Eliaabeth Monier, Joseph Monier, Jr., and Michael Morrier). As more definitive financial information is still being developed, further details regarding the applicant and collateral will be presented to and discussed with the Council at the time of loan package consideration. 'IF IR ICH A Waypoint Company June 10, 1999 Mr. Joseph R. Morrier CEO JEM Development Company 402 E. Yakima Avenue / Suite 1400 Yakima, Washington 98901 Re: Great Western Building Dear Joe: FRCH Design Worldwide (FRCH) has been investigating the Great Westem Building for possible reuse and renovation since May 1998. We have examined multiple potential uses: retail, office, hotel, retail and office, retail and hotel. We broadened our scope at first, to include a proposed structure at the open-air plaza to the east of the Great Westem Building, and then, ultimately to include not only the plaza development, but also the second level of the three adjacent buildings immediately to the west of the Great Western Building. All of this was done to determine the feasibility of a new development, which would include a new, revitalized Great Westem Building. The goal has been to create a viable development which would retum a positive cash flow in a reasonable time period. During this concept design and fact finding phase, FRCH and our consultants spent four days in Yakima to survey the existing Great Western Building to confirm appropriateness of all building systems and structural integrity. We also examined the building floor plate size, vertical circulation and exiting for existing development standards as they would be applied to today's office, hotel or retail uses. Upon investigating multiple opportunities for redevelopment, it was determined a boutique style hotel had the best potential of taking advantage of the awkward and small floor plates offered by the Great Westem Building. JEM Development Company engaged the Chambers Group, Inc. to provide a market analysis for converting the Great Western Building into a boutique hotel. This study was to determine market potential and estimate its operating levels. FRCH Architecture, Inc. P.0 311 Elm Street Suite 600 Cincinnati OH 45202 513 241 3000 fax 513 241 5015 New York 212 254 1229 Wilmington 302 6S4 6146 Joseph R. Morrier JEM Development Company June 10, 1999 Page 2 Due to the listing of the Great Western Building on the National Historical Register, JEM Development Company retained a consultant from the National Development Council, an architectural firm specializing in historic preservation and restoration, and met with representatives of Washington State's Department of Archeology & Historic Preservation (DAHP). Guidelines, acceptable building standards, and building design elements/modifications acceptable or not acceptable to DAHP were discussed and reviewed. After reviewing our findings, our consultants reports, the Market Analysis fi'orn the Chambers Group, development proformas, and the recommendations from the Office of Archaeology & Historic Preservation for Washington State, we are forced to the conclusion that it is not feasible to develop a property which includes the Great Westem Building on a financially responsible basis, even with the favorable financing packaging available. Please examine the enclosed architectural / engineering findings summary. Once you have read it, please call me, so we can discuss the next steps. Yours very truly, CH Design Worldwide 01: D. B tt J.D. atzer, AIA Senior Vice President Encl. cc: James T. Fitzgerald James Stapleton Thomas Schroeder eadminstrkstudio.ardyakima\rnorrier061 oa.doc Architectural / Engineering Findings Summary 1. Structural Frame: The Great Westem Building was built in approximately 1911 The building is cast -in-place concrete construction with some of the floor beam and column framing in structural steel, which is further encased in the concrete for fireproofing and presumably, composite strength effects. There have been some structural modifications to the building which appear to have had little impact on the structural strength of the building's frame for gravity and lateral loading. The building structure is in very good condition, and no significant deterioration to the frame was observed during visual observations. 2. Elevator Addition: The addition of one or more elevators in the "notch" or light well on the west elevation was discussed during our site visit. This will still be a relatively expensive addition, even if an elevator cab can be found which will fit within the confines between the basement wall and the outside of GWB's west facade. The foundations will require underpinning and special strap reinforcement will be required to connect the proposed elevator to the building frame. If this infill were to be expanded to fill the light well completely with elevator and floors at each level, seismic frame reinforcement would probably be required. 3. Shear Walls: Seismic reinforcement, if required, could be gunite (shotcrete) or reinforced masonry shear walls or steel bracing. The difficulty with seismic reinforcement is that without the original design documents or shop drawings, or without a relatively expensive exploration program; the proposed lateral bracing would have to take the entire seismic loading. While the reinforcement would be expensive, the UBC Zone 2B requirements are not as nearly as significant as in Seattle or California. 4. Exterior Envelope: The exterior envelope (roofing and facade) is in poor condition. The roofing, flashing, and coping (actually lack of coping) require replacement. The skylights needs to be rebuilt or replaced. The brick masonry, particularly on the west elevation, requires tuck -pointing. The other three elevations of brick masonry are in relatively good condition, although tuck -pointing is required in some areas. The building facade has been painted, which can have both beneficial and detrimental effects on the walls' durability. This particular coating is failing and if replaced, needs to be done with proper surface preparation and with a coating that is breathable. The parapets, in general, should be rebuilt. The north wall of the light well appears to have a significant crack. This should be further investigated, but for schematic design we should assume that a horizontal steel strap brace would be required on the inside of the wall, at each floor. Great Wester Building Repast April 1999 Page z The box gutters require closer inspection. It is not clear how significant the leakage and spillover is. Are the gutters failing due to insufficient cleaning or due to failures of the gutter itself? Also, supporting structure of the box gutters needs to be investigated directly. We often find that box gutter and cornice structures are deteriorated due to years of insufficient maintenance. This can only be ascertained with direct hands-on inspections. 5. Decorative Facade: The decorative facade is a combination of terra cotta and metal ("tin"). Typically, the elements on the mansard roof facade are made of metal and the remainder of the decorative work on the masonry facade is terra cotta. a. Metal Fenestration: We have found that "tin" fenestration elements will last virtually forever if water is kept out of the insides of the box. However, pinholes are developing and rust stains are present, which indicates that they may need to be replaced or at least reinforced. Each section needs to be inspected and repaired or replaced, as required. b. Terra cotta: The terra cotta elements are absorbing water, particularly at the joints. The glaze is probably still doing a good job of sealing the main units, even though it has crazed; but we often find that the porous skyward joints dhow the water to penetrate into the mortar and then into the terra cotta bisque. Note that the bisque is the inner yeiiow or orange porous material, which forms the body of the terra cotta. Some of the terra cotta is visibly split apart; in fact sections of the more deteriorated units could be falling hazards. The repair of terra cotta is expensive to do properly and requires an excellent, experienced contractor with a well researched, thorough specification. Replacement units of terra cotta would be a very expensive option, and are also too time consuming to use as a viable repair method. Replacement terra cotta units can easily take a year to obtain since each unit is a custom casting and firing. Very few terra cotta facade repair projects have the luxury of a budget, which can afford actual terra cotta replacement. However, with proper materials, including not only the patch materials, but also anchoring and jointing, very successful, long-term repairs can be made. Proper repair materials include specialty patch materials (not mortar or cement grout) which are durable, non -shrink, and smooth, and match the volume change characteristics of terra cotta. Anchoring should be done with stainless steel pins and all skyward joints should be sealed with a compatible sealant. It is critical that all materials be field tested to confirm their compatibility prior to start of construction. Coatings shall be Great Western Building Report April 1999 Page 3 breathable to allow the wall to not trap water vapor and have the further advantage of hiding the color difference between the original terra cotta and the patches. 6. The historic designation for the Great Westem building will have impact on how the building is repaired. We need an idea of the proper interpretation before we can estimate the potential cost of these facade issues. 7. Water -Domestic & Fire Protection: As confirmed by the City Water Works, the street water service is 1-1/2". The water entrance to the building is 1 inch. A new incoming domestic water service of 3 inches with backflow preventers will be required. All new domestic cold & hot water piping will be required throughout the building. Fire Protection: The fire service is 6 inch into the building. The majority of the building is a dry pipe system with wet systems scattered throughout the building. There are 2-1/2 inch hose butts at each floor. At the entrance vestibule there are two 2-1/2 inch Siamese connections for the wet system and three 1-1/2" connections for the dry Siamese. There is a wet motor gong located here also. There is a city fire hydrant in front of the building. The income fire service is adequate. All new sprinkler piping will be required throughout building. A fire pump most likely will be required. 8. Storm Drainage: There is a gutter system on the bottom of the high-pitched mansard roof. There are two roof sumps on the flat roof at the West Side. The gutters are in need of repair due to leakages. In general there are two downspouts in the wall for each face of the building. All downspouts (with the exception of the downspout on the west wall) collect in the basement and are routed to a sump with two pumps in the tunnel area east of the basement. Downspouts from the west wall tie into the sanitary piping in basement. All new downspout piping will be required throughout building due to leakage inside the wall cavity. 9. Sanitary Sewer: The sanitary sewer is collected from the upper floors and collected above the floor along the west wall in the basement. We understand there was a new connection made from the above lines at the northwest comer of the basement. The incoming sanitary sewer service is adequate. All new sewer lines will be required throughout building. Great Western Building Report April 1999 Page 4 10. Gas: There is no gas service in the building. There is gas nearby at the mall lower level. If a separate service were required this would be worked out with the Utility Company. There is no gas in the street in front of the building. The service is nearby on an adjacent cross street. 11. Telephone: Two cables in conduit enter the basement on the East Side at the basement and terminates in a telephone room at the second floor on the West Side. This appears to be adequate. This can be relocated as long as the cable is not increased in length. 12. Electric: The electric service originates at the high voltage vault northeast of the basement floor. There are three fused switches in the tunnel at the basement level northeast end. All services are 208 volt three phase. One service is 1200 amp feeding the main distribution panel located in the basement at the west center area. Distribution panels distribute power to the floors as follow: Second floor. Third floor: Fourth floor: Fifth floor: Sixth floor, Seventh floor. Eighth floor. The elevator and "a retail two panels, plus a feeder to a duct heater two panels two panels two panels one panel one panel one panel for boiler and an additional panel for HVAC tenant" is also fed from this panel. A second 600 -amp service fed through two meters, provides service for two additional retail tenants. A third 400 amp service provides power to the basement. The electric services are in good condition. Copper wire is used and the feed to the floors are in good condition. If the location of the panels can be maintained then probably the breakers and interior of the panels need only be replaced. The wiring to the lodge room is of concem. This highly omate room is located at the sixth and seventh floors. Within the plaster construction of the room are numerous porcelain sockets for incandescent lamps. The wiring (old and inadequate) should be replaced with new. This will be labor intensive. New panels will have to be provided with proper control. IFIRICIH Great Western Building Report April 1999 Page 5 A fire alarm system and emergency generator will be required. Exiting and emergency lighting; low voltage systems consisting of phone, data, security cameras, etc. will have to be provided. 13. HVAC: All new HVAC equipment, fans, ductwork, pumps & piping will be required throughout building. The present closed loop heat pump system consists of a cooler located on the eighth floor assisted with an electric boiler. There are two pumps for the circulation system to the heat pumps on the floors. This system did service the second through the seventh floor heat pumps with the exception of the Lodge Room. The heat pumps were ducted to supply diffusers. Retum air was through the plenum. On most of the floors there was a make-up air fan connected to a shaft that was located just north of the cut out of the building on the west side and just north of this cut out. These make-up air units had an electric heater with no cooling provided. The make up air unit discharged to the plenum. Toilet exhaust was through the wall of the respective room. This present system is inappropriate and inadequate for the proposed use. The Lodge had a converted duct system with uninsulated ductwork in the attic above the Lodge. This supply ductwork fed to supply cowling at points high and at the beams. Returns were abandoned but were originally through the raised floor on the East Side of the lodge, which was later removed. Heating of this room was through electric baseboard heaters. The Lodge room will require new attic insulated ductwork with supply as is now provided, new retums worked into the east side of the room and possible paddle fans down the center of the room for circulation. This will provide minimum interruption to the room. A new fan - chilled water coil with electric heat will be needed in the fan room in the attic. The new system for the proposed hotel will consist of a chiller in the basement and heat rejection at the eighth floor location of the condenser, as located presently. Noise must be carefully considered. Locating the chiller in the basement emphasizes low noise to the important rooms in the upper portion of the hotel. Vertical fan coil units in the rooms with electric resistance heat for quiet room conditions. Corridor make up and smoke control and stairway pressurization should be provided. 14. Building Size: The footprint of the Great Westem Building is approximately 6,500 square feet; the total area of the building, including basement, is approximately 52,830 square feet. The width of the building is approximately 50 feet wide at Level One and the basement. The upper levels are reduced to approximately 40 feet wide due to the light well at the West side of the building. Due to the locations of the elevator and two -sets of stairs, the building can only be partitioned as a single loaded corridor which makes for an inefficient floor plan. Great Western Building Report April 1999 Page 5 15. Windows: Varying floor to floor heights can be resolved on floors basement through five. Level six will not be able to accommodate rooms due to window sills being at the seven foot plus height level. Windows cannot be adjusted down to appropriate sight levels due to existing terra cotta comice at exterior of building. The seventh level has inadequate window sizes. Floors can be raised approximately two feet to accommodate sill heights, but limitations of window area due to discussions with DAHP, will result in sub -par windows for suite -type rooms. The sixth and seventh floors become problematic for either hotel or office use. 16. Maintenance: Since the building's change of owners in both 1965 and 1972, the building has not been maintained properly (if at all). Both the mansard roof and the built-up roof have exceeded the time frame required, allowing water to penetrate into the building. Lack of attention to the box gutters and intemal downspouts have also created areas of water penetration, leaving behind obvious sections of the building damaged by water. Finally, caulking around the windows and building envelope materials have deteriorated and gone unreplaced. This too has allowed water to seep into the building. Damage to the concealed areas can not be determined until work begins, but damage requiring repair is expected. 17. Department of Archaeology & Historic Preservation: Preliminary discussions and recommendations from the DAHP has limited the height of construction to the proposed open-air infil building to one level. In addition, adequate separation must be kept between the Great Westem building and the proposed Plaza building. This will greatly impact development opportunities for the proposed development. It is anticipated, a minimum of two levels (most likely three levels) is required by the proforma. New windows at the seventh level must blend into the mansard roof. The area of these windows will be limited as well. This most likely will have a negative impact to the "suite" rooms proposed for this location which will impact projected room rents. The Masonic Temple room must be kept in place. 18. Roof: The mansard roof, constructed of a steel frame and lightweight concrete, is covered with slate tiles. While the roof structure appears to be in good condition, the slate will need to be replaced. The built-up roofing, including the insulation, decking, etc., is in poor condition and must be replaced as well. The flashing and coping also require replacement. The skylight over the Lodge Room should be replaced, and the skylight over the existing elevator should be removed. 19. Gutters: The box gutters and their connection to the interior downspouts have developed leaks. On the east side of the building this condition was particularly noticeable. Plaster damage was evident in the Lodge Room on the 6th floor. On the 5th floor, water damage from the same drainpipe was present in the wall cavity. The clay tile crumbled and the wood floor structure was damp from continually 44 IFIRIcIN Great Western Building Report April 1999 Page 7 being wet. Further investigations should be made to determine the total extent of the damage from this drainpipe and the others. 20. Windows: The original wood windows on the 2nd through the 5d' floors, and the east side of the 6th floor, have been replaced with aluminum double -hung units. On the 7th floor, the original wood window has been replaced with non -insulated aluminum one, and the small metal casement windows remain in tact. 21. Terra cotta: The terra cotta shows clear signs of cracking and excessive wear, and should either be replaced or repaired. Both methods are costly, but replacing the terra cotta is very time consuming. In some locations, the cracks are deep and require immediate attention. 22. Parking Garage: Where the parking garage attaches to the Great Westem Building, expansion joints were not utilized at some locations. Consequently, as the garage has settled, it has cracked the building structure in two places—at the Northeast comer and at the East facade where it intersects the parapet wall. This needs to be investigated and repaired. 23. Stairs: The Southwest stair is original and runs from the 8th floor to the basement. Its handrail is original, from when the building was constructed in 1911. Although the size should be adequate, by today's code, to accommodate the occupant Toad of the new use of the building, it requires investigation. Additionally, the stair is open from the 2nd floor to the basement. This needs to be evaluated by current code standards. The northwest stair was added after 1965. It runs from the 8th floor to the 2nd floor, where it exits to the parking garage. Access to the parking garage is also available from the stair on floors 3, 4 and 5. This stair serves as a second means of egress for the 2nd floor and above, but does not continue to the basement. Egress will need to be provided for those floors. 24. Elevators: The building currently has one elevator. The cab and mechanisms have been replaced since its original installation, but its location remains the same. It is slow, and requires updating, but its size should adequately serve the new occupant load of the building. The hotel consultant recommends a second elevator to serve as service and as a backup for the existing one. Pr oAadminsu1studio.arc\yakima\yakimarept0610.doc YAKIMA TEMPLE BUILDING ASSOCIATION 31O North Neches Avenue Yakima, Washington 98901 ChviS JG t3; Masonic Center Phone 457-614 June 25, 1999 Mr. Joe Morrier, Sr. JEM Development Company 402 East Yakima Avenue, Suite 1400 Yakima, Wa. 98901 RE: Masonic Artifacts Dear Joe: JUN 2 8 1999 It is with great enthusiasm and pleasure that our Yakima area Masons and, I believe, Masons through the State of Washington, accept your generosity to donate these delicate and virtually impossible to replace artifacts of our former Yakima Masonic Temple to us. Our Washington Masonic Library and Museum Foundation will be the recipient of these artifacts under their 501(c)(3) exemption, but these items will be (to the extent possible) moved to our Yakima Masonic Center for installation, preservation, and display for future generations to enjoy. We look forward to your formal announcement. To that end, our Board has requested Paul Schafer, a member of our Masonic Order, to be our spokesman. He and others will be present for your July public announcement. If you have Peed to reach Paul, his phone number is 453-2606. Again Joe, thank you for your generosity. We, as well as the Yakima community, are indeed fortunate of your consideration. Sincerely, Carl S. Geho, President cc: Paul Schafer John D. Keliher, Secretary to Museum Foundation YAKIMA REGIONAL URRARY 'FARINA HERALD OmCE AND RETAIL WASHINGTON MUTUAL TILE OLIVE GARDEN PUBLIC PARKING NORTH THIRD STREET •A• STREET PUBLIC PAR= RIMALL L J.1 _ !ll i'PARKINGI L4 THE BON MARCHE 110.000 CLL p AGM aa1vA aYa YAKINA AVENUE 5 i I 11 I NALL 1 3 awarat Akkk- 4..LA D THE PLAZA" JC PENNEY 147.030 OLA P/NM AM MIA OFFICE AND RANKING NORDSTROM'S 44,000 CU. P MOM THE BON MARCHE 3 FLOORS 1250 CAR PARKING GARAGE S LEVELS MERVYN'S moo Cu P 110410 nall= 060 Manua race meaTSIAS kr, 4HC mm AAT Da 1474 / NET MALL L—/ FNTIUNCE m •� PAVILLION C"N MERVYN'S PARKING YAKIMA TONER 14 STORY OFFICE BUILDING PUDUC PARKING L. COMMERCIAL/ OFFICE EXPANSION SITE 2 �Ny BOULEVARD BARN SIRIB PYDLIC PARKIN[ IIPANFON TO MESTAY YAKIMA MALL PLAN NORM 0 50 100 150 700 7 JC PENNEY 3 FLOORS /-- ROOFTOP PARKING L N RTI! TIIRD STREET • • MALL MALL SERVICE DOCK E -W SECTIO N YAKIMA REGIONAL MALL THE YAKIMA MALL SHOPPING CENTER CORPORATION JOSEPH R. MORRIER, SR. PRESIDENT / CEO 40.1 L YAKIMA AYL W170 1400 YAIONA, NASIONOTO0 01101 • PROWS (10q 341 4040 / FAX (1003 407.0311 DESIGN, ARCHITECTURE. k ENCINCi31N0 RT '01.301DI CRA)IAU ASSOC. SEATTLE. WASHINGTON (300) 4616000 YAKIMA MALL YAKIMA, WASHINGTON JEM Development Co. I+kH 5119199 u U1B STREET „ v., • ;.•',. RETAIL,er',L,;•• ! p • ; • p , ! ;1,'..is P MERvYN'S PARKING LOT SCALE T-80" JE Development Co. YAKIMA AVE. tI 1. PLAN YAKIMA MALL, YAKIMA WASHINGTON IC HI 5/24/99 JEM Development Co. PLAN r3 a s E ri E ti r YAKIMA MALL, YAKIMA WASHINGTON a IFIRICINI 5/19/99 2 JEM Development Co. PLAN LEVEL 1 YAKIMA AvENUE YAKIMA MALL, YAKIMA WASHINGTON RICIH 5/24/99 3 PARKING GARAGE SCALE: T•20' JEM Development Co. PLAN LEVEL 2 g HNkIHI YAKIMA MALL, YAKIMA WASHINGTON 5/24/99 4 EXISTING BUILDING ROOF SCALE r-20' JEM Development Co. PLAN LEVEL 3 MERVYN'S ROOF IFIRIcH YAKIMA MALL, YAKIMA WASHINGTON 5/24/99 .5 I IAKI A M\ LLJWLILLI. _ILLII 111 if IIS -OLD-- BL1U1E 4 1 1 1 1 SCALE 1116•-1-0 JEM Development Co. ELEVATION ScurN FACADE YAKIMA MALL, YAKIMA WASHINGTON STATEMENT OF HISTORICAL SIGNIFICANCE OF THE GREAT WESTERN BUILDING The fCcllata:inQ description and stat nt ((historical simitcance fir the Great Wesrem Burldim, Tens taken frim the applicatrart and registrationfort for the National Register ofHisto is Places appmzai in 1996. It is being used to represent the historical sign z ((the bidding paof moiety pros required by Section 106 of the National Environmental Policy Act (NEPA). Description The Great Western Building is an eight -story building with a basement which encompasses a gross building area of 52,828 square feet. It is located on the northwest corner of North 4th Street and Yakima Avenue. It is adjoined on the north to the Yakima Mall and its parking garage. The building's gross dimensions are 50 feet by 130 feet. It was a grand scale project that was announced to be undertaken in North Yakima in 1910. Construction began that fall and was completed in the fall of 1911. The building consisted of a lobby and several floors which would be leased out for office space, with some space housing the Mason's main headquarters. They had a ballroom on the fifth floor. The Lodge Hall, on the sixth floor, is where the Masons had their meetings and ceremonies. Its dimensions are 72 feet by 36 feet and 26 feet in height. These dimensions are the same today. The lodge room was to be a replica of Solomon's Temple. The room has 29 columns along each side and 15 columns at each end, in addition to four still larger columns along each side and two at each end which support the ceiling beams. These were to give the room the appearance of an ancient temple. There is decoration in and behind these columns. These colo ns and decorations are virtnally intact. The roof has two beams extending from end to end and rests on the columns. They support four crossbeams, the ends of which rest on the larger columns at the sides of the rooms. Above these four beams, there are two other tiers of smaller beams which divide the ceiling into panels two feet square. Three large panels, each four feet square, hold the ceiling lights. The large panels were filled with stained glass creations which were said to be symbolical in nature. The Masons vacated the building and sold it around 1965. At this time it was also the home of the Temple Cafe and Reeds Hat Store. The Masons built another building in North Yakima and moved into it in 1966. The building sat empty for four to five years, and during this time it was vandalized. It was owned at this time by Emmet J. McKenna of San Diego, a former resident of Yakima. In 1969, Architect Thomas F. Hargis, Jr. and James O. May purchased the building. They began a restoration project and part of it was done at the same the Yakima Mall was being constructed. The Lodge Hall was an area that suffered damage from vandals. T.F. Hargis attempted a major restoration to the room. Besides what has been described about the columns in the room, there were additional columns that were not pub back in place. They were incorporated into the decorative scheme of some of the sixth floor hall and one office. All of the floors were restored to be contemporary office space and that is what they are currently to be used for. There were significant alterations to the lobby. It was downsized. In addition to the lobby on the main floor, there is a bookstore which opens into the Yakima Mall. There is a jewelry store which opens onto the plaza of the Mall and, until very recently, there was a bank branch on the very north comer of the building. A basement was added by Hargis and May. A back stairwell was added to the building to allow access to the Yakima Mall garage. Doors open out to every level of the garage. The front stairwell and lighting were updated to accommodate heavy traffic and meet fire codes. A new elevator was installed to meet contemporary building codes. The exterior of the building is brick masonry with brick ornamental trim. It has a slate roof. It also consisted of terra cotta which had suffered some damage over time. The exterior of the building was painted in the early 1970's. All of the ornamental trim remains intact, as well as the terra cotta. It was not removed, but has been painted. Restoration included reglazing windows in office areas. The original openings of the windows remain the same in the majority of the windows. Statement of Significance The period of construction, the size, and historic use of the Great Western Building is significant with regards to the development of Yakima as a major agricultural, production, transport, and commerce center of Central Washington. The building's individual character, which resulted from its unique design and construction, made it identifiable as a Yakima landmark, even to this day. Historical Background and Significance Yakima had its beginnings in an adjoining town we call Union Gap today. In 1884, the railroad made the decision to establish its station at its present location on North Front Street. At this time, the town of Yakima also decided to relocate with the aid of the railroad. After the town moved, it was known as North Yakima and Union Gap was referred to as Old Town. The growth and development of the town became centered around North Yakima. It was the commercial center of Central Washington. As significant irrigation projects in the upper and lower Yakima Valley were developing, commercial and social development in North Yakima were also expanding, frequently making the news. Only a few blocks away was the premier residential area of Yakima. People came to North Yakima from up and down the Valley, from around the Northwest, to shop, to attend social functions, or visit friends. Many were passing through and spent the night in a hotel in North Yakima on their way to another destination. When the Great Western Building, then the Masonic Temple, was built, it was the center of North Yakima and all its activity. With its unique design and characteristics, it was indeed a crown jewel in downtown Yakima. On January 29, 1910, it was front page news in the Yakima Daily Republic when the Masons announced their intentions to build the new Masonic Temple. W.W. Steinweg from the Masons Building Committee made the announcement to the community. The size and scope of the project not only got the community's attention, but also prominent Masons all along the West Coast took notice. The ground breaking ceremony on September 13, 1910 induded an honored guest and speaker, James Stuart, who was a pioneer in the Valley from Old Town. They told the story of how, on one occasion, Mr. Stuart had swam the swollen waters of the Yakima River to deliver the Masons' local charter, in earlier days. The ceremony induded many prominent citizens in the community. The architects designing the building were W.W. DeVeaux of North of Yakima and his associate, Frederic Heath of Tacoma. Heath was also reputed to have been a student with archaeologists who had worked at the unearthing and restoration of the famous temple of Solomon. Part of the focus for the Masons was how mankind's origins went dear back to Solomon. The Lodge Hall on the sixth floor was to be a replica of Solomon's Temple and would be the finest representation of the inner Temple of Solomon. The stone which would become the keystone for the arch of the main Pr' rranre of the building was to come from quarries outside of Jerusalem where stones were supposed to have been obtained for the construction of Solomon's Temple. The American Consul at Jerusalem was a Mason himself. He supervised the stones' procurement and started it on its long journey to North Yakima. It was shipped in block form and would be cut to its desired shape and size when it arrived at its destination. It was said to have passed through the hands of famous Masons along the way who affixed their signets, decorations, and emblems upon it. The keystone was to be the first from King Solomon's quarries ever set in a Masonic Temple in the entire United States. There were skeptics as to its authenticity. On April 12, 1911, William Coffin, American Consul at Jerusalem, public attested to its authenticity. The placing of the keystone was to the pageant ever held in the state for the Masons. keystone biggestChapter members came from Spokane, Bellingham, and Dayton to name a few. The event took place on Tacoma Day, September 27, 1911, in conjunction with the Washington State Fair (now the Central Washington State Fair). The Masons coordinated their ceremony with fair authorities and Ferullo's New York band of 52 pieces and 40 singers. They were in costume from the time of Solomon, including two members dressed as King Solomon of Israel and Hiram of Tyre, with robes and breastplates. Thousands of people from all over the state who were here attending the fair also witnessed the Masons grant ceremony, placing the keystone in the arch at the entrance of the building. The building also represents important social significance from an historical perspective. Fraternal organizations such as the Masons played an important role in the development of American culture. Before television, people relied much more heavily on participating in social activities and organizations. Persons from all professions were represented among the Masons. Some of this country's founding fathers were Masons, such as George Washington. Their origins here began in 1874 in Old Town. By 1911, when they erected this building to house their organization and its activities, they had a membership of 250 from all over the state. Their organization promoted ideals such as persons from all professions working together to build strong communities. Such organizations promoted activities which strengthened social ties in a community. The building stands as a reminder of the vision, cooperation, and accomplishment of a social institution from the earlier part of this century. August 18, 1999 Mr. Kenneth C. Williams Deputy Assistant Secretary for Grant Programs U.S. Department of Housing and Urban Development 451 Seventh Street SW, Room 7180 Washington, D.C. 20410 RE: City of Yakima Section 108 Loan Application and Economic Development Initiative Grant Modification Dear Mr. Williams: It is my pleasure to provide for you a copy of the City of Yakima's request for Section 108 loan funding in the amount of $4,000,000. This loan request is part of the City's $1,000,000 Economic Development Initiative grant that was awarded in December 1998. EDI funds were to be used to expand the Yakima Mall and to rehabilitate the Great Western Building as part of that expansion. The City of Yakima is requesting a modification to its EDI award deleting the rehabilitation of the Great Western Building and in its place further expanding the Yakima Mall. This modification was necessitated when the rehabilitation of the Great Western Building was determined not to be economically feasible. The enclosed application formally requests approval of the required Section 108 loan guarantee funds. The City is also requesting your review of the materials to verify that the modified projects still meets the criteria established in the Super NOFA for EDI for eligibility and competitiveness. Thank you for your consideration of this request. If you have any questions, please call Bill Cook, Director of Community and Economic Development, at 509/575-6113. Sincerely, Richard A. Zais City Manager cc: Paul Webster, HUD Office of Community Planning and Development Application for Federal Assistance OMB Approval No. 0348.0043 Previous Edition No t Usable form SF -424 (4/92) 2. Date Submitted 08/18/98 Applicant Identifier 1. Type of Submission: �1Application Preapplication takonstruction ❑Construction ❑ Non -construction ❑Non -construction 3. Date Received by State N/A State Application Identifier _ 4. Date Received by Federal Agency Federal Identifier 5. Application Information . Legal Name City of Yakima Organizational Unit - Community & Economic Development Address (give city, county, State, and zip code): 129 North 2nd Street Yakima, WA 98901 Name, telephone number, and facsimile number of the person to contacted on matters Involving the application (give area codes) Michael Morales 129 North 2nd Street, Yakima, Wa 98901 (509) 575-3533 Fax Number (509) 575-6105 or (509) 576-6646 6. Employer identification Number. (EIN): 1E1 -C. El CI ❑ ❑ CIB. 7. Type of Applicant: (enter appropriate letter In box) A. State I. State Controlled Insntullon of Higher Learning County J. PrivatendUniversity Municipal K.Indian Tribe D. Township L Individual E. Interstate M. Profit Organization F. Intermunicipal N. Non -Profit Organization G. Special District O. Housing Agency H. Independent School Dist. Other (SPectY): 8. Type of Application ❑ New ❑ Continuation ❑ Revision if Revision, enter appropriate letter(s) in box(es) A. Increase Award B. Decrease Award C. Increase D Decrease Duration Other (specify) Duration 9. Name of Federal Agency: U. S. Dept. of Housing and Urban Development 10. Catalog of Federal Domestic Assistance Number. o ©--o a Title: Technology and Telecommunication 11: Descriptive Title of Applicant's Protect Yakima Mall Expansion Project 12. Areas Affected by Project (cities, counties, States, City of Yakima etc.) 13. Proposed Project 14. Congressional Districts of : RICHARD "DOC" HASTINGS Start Date 01/01/00 Ending Date 12/31/00 a. Applicant 4th b. Project 4th - Washington 15. Estimated Funding: 16. IS APPLICATION SUBJECT TO REVIEW BY STATE EXECUTIVE ORDER 12372 PROCESS: a. Federal 4,000,000.00 a. YES THIS PREAPPUCATION/APPUCATION WAS MADE b. Applicant AVAILABLE TO THE STATE EXECUTIVE ORDER 12372 PROCESS FOR REVIEW ON: c. State Date: d. Local b. NO ❑ PROGRAM IS NOT COVERED BY E. 0 12373 e. Other 3,228,000.00 Cl OR PROGRAM HAS NOT BEEN SELECTED BY STATE FOR REVIEW f. Program Income 17. IS THE APPUCANT DEUNQUENT ON ANY FEDERAL DEBT? g. Total 8,228,695.00 ❑ Yes If "Yes," explain below or attach an explanation ❑ No 18. To the best of my knowledge and belief, all data by the governing body of the applicant and the In this application/preappl cation are true and correct, the document has been duly authorized applicant will comply with the attached assurance if the assistance is awarded. a. Typed Name of Authorized Representative Richard A. Zais b. Title City Manager c. Telephone Number (509) 575-6040 d. Signature of Authorized Representative e. Date Signed Previous Edition No t Usable form SF -424 (4/92) APPLICATION TABLE OF CONTENTS TRANSMITTAL LETTER APPLICATION FOR FEDERAL ASSISTANCE APPLICATION MATERIAL TAB 1 TAB 2 TAB 3 Project Description Community Development Objectives Eligibility - Compliance with National Objectives Eligibility - Eligible Activities Guidelines for Evaluating Project Costs and Financial Feasibility Standards for Evaluating Public Benefit Description of CDBG Pledge Guarantee CDBG Requirements Schedule for Repayment of the Loan Exhibit A - Exhibit B - Exhibit C - Exhibit D - Exhibit E - Agreement to Lease TAB 4 Mall Plaza Ground Lease Jem -Plaza LLC Yakima Mall Building Lease Yakima Mall expansion project pretax cash flow analysis Construction cost estimates Development plan floor plates Yakima Mall employment projection ATTACHMENT 1 City of Yakima Certifications ATTACHMENT 2 Operating Pro Forma TAB 5 CITY OF YAKIMA APPLICATION FOR LOAN GUARANTEE T1�T TE -41P A WAY -NT TIM'T CYO t n nnn nnn I t t tt d�d�16 9 4J 1 `9 b O $4,000,0100 FROM U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT TO ASSIST IN THE EXPANSION OF THE YAKIMA MALL AUGUST 18, 1999 The Yakima Mall Expansion Yakima Avenue at Fourth Street Yakima, Washington In December 1998 the City of Yakima was awarded an Economic Development Initiative (EDI) grant in the amount of $1,000,000. The funds were to be used along with the proceeds of a Section 108 loan in the amount of $ 4,000,000 to expand the Yakima Mall and to rehabilitate the Great Western Building as part of that expansion. The EDI was conditioned on the City of Yakima submitting a successful Section 108 loan request. Concurrently with this request for Section 108 funding the City of Yakima is submitting a request to modify its EDI award deleting the rehabilitation of the Great Western Building and in its place further expanding the Yakima Mall. This modification was necessitated when the rehabilitation of the Great Western Building was determined not to be economically feasible. This application formally requests approval of the required Section 108 loan guarantee funds. PROJECT DESCRIPTION The Plaza Expansion The project encompasses the demolition of the Great Western Building and the construction of a new three-level building with partial basement on the site and the adjacent plaza to the east of the Great Western Building site. This new building will have a floor plate of approximately 19,000 square feet for each of three floors and a basement of approximately 7,000 square feet. The total building area will be 64,000 square feet. Six escalators and one new elevator will connect the three levels. The entire building will be leased to the Yakima Mall Shopping Center Corporation (YMSSC). The building will then be subleased to retail tenants by YMSCC. In addition to the expanded retail square footage, the project will create a new primary entrance to the Yakima Mall. It is estimated that the project will create 145 new permanent jobs. This estimate is slightly more conservative than a standard of 1 job for every 400 square feet of gross leaseable area for shopping malls. The project will be built on two parcels of land. The first is owned by JEM-Plaza, L.L.C. a Washington Limited Liability Company. The members of JEM-Plaza, L.L.C. are Joseph R. Morrier, Jr., Michael D. Morrier and Elizabeth A. Morrier McGree and J & E Family Investments, Inc., a Washington corporation. Joseph Morrier, Jr., Michael Morrier, and Elizabeth Morrier McGree own all stock in J & E Family Investments equally. Yakima Mali Shopping Center Corporation owns the second parcel. YMSCC is a Washington corporation owned by Joseph R. and Elizabeth L. Morrier, Joseph Morrier, Jr., Michael Morrier, and The Yakima Mall Expansion Yakima Avenue at Fourth Street Yakima, Washington Elizabeth Morrier McGree. YMSCC will lease this parcel on a 40 -year ground lease to JEM-Plaza, L.L.C. JEM-Plaza L.L.C. will borrow the section 108 loan proceeds and build the project. Upon completion of the improvements the building will be leased to YMSCC on a 40 year lease. Employment Benefit In total the project is anticipated to create 145 new full time equivalent jobs. At lease 51 percent of these jobs shall be either filled by or made available to low and moderate income persons as defined in the Community Development Block Grant regulations. Project Underwriting Project Sources Section 108 loan in a first lien security position $ 4,000,000 Subordinate debt 2,413,695 Economic Development Initiative 1,000,000 Equity 875.000 Project Uses Acquisition Phase Land and Building $ 875,000 Demolition 350.000 Total Acquisition Phase Design Phase Architects & Engineering 593,695 Consultants 40,000 General & Administrative 15,000 Contingency 30.000 Total Design Phase 3 $ 8,288,695 1,225,000 $ 678,695 The Yakima Mall Expansion Yakima Avenue at Fourth Street Yakima, Washington Construction Phase Hazardous Materials General Construction Basement Deepening 276,590 Plaza Removal 48,912 Retail Level - 1 783,328 Retail Level - 2 783,328 Retail Level - 3 783,328 Under Plaza Strengthening 184,673 Safety & Noise Barricades 89,752 South Facade 400,851 Elevator -Escalator 623,825 Storefront 134,505 Entry Structure 33,600 Electrical Switch Gear 210,000 General Conditions 400,000 Overhead & Profit 479,178 Bonds & Permits 26,355 Internal Amenities 261,570 Equipment Usage & Rental 65,205 Contingency 145,000 5,585,000 530,000 Total Construction Phase 6,260,000 Indirect Costs Financing Costs Closing Fees Total indirect Costs 75,000 50,000 125,000 Total Project Costs $8,288,695 Attached as Attachment 2 is an operating pro forma for the building. It shows a debt coverage ratio of 1.1. 4 The Yakima Mall Expansion Yakima Avenue at Fourth Street Yakima, Washington A. Community Development Objectives The Yakima Mall Expansion project is located in census tract #01 in Yakima's central business district. This census tract is characterized by 44.57 percent poverty. The use of Section 108 loan guarantee and EDI grant proceeds to assist the Yakima Mall Expansion project will meet several of the City of Yakima's Community Development �wa����wv Community 11../bYbAV�Il�dA4.AAb Objectives. These objectives are listed in the City's Consolidated Plan. This plan was developed following extensive citizen input. Under Community Development the plan states: "Economic development is a priority in the City of Yakima in an effort to assist all citizens in achieving 'adequate wages'." The plan's implementation strategy specifically refers to the use of the Section 108 program. Within the action plan under Economic Development it states: "The need for sustainable employment opportunities will be emphasized through activities proposed by the City of Yakima, Department of Community and Economic Development. This will be accomplished by the application for funding to address commercial infrastructure needs and revitalization of the downtown core." B. Description of how the Proposal meets one of the Criteria in 24 CFR 570.208 - National Objectives. The loan of Section 108 guaranteed funds along with EDI grant funds to assist in financing the expansion of Yakima Mall will create approximately 145 new jobs. Section 570.200(a)(2) specifies the National Objectives of the Community Development Block Grant program and Section 570.208 defines the criteria by which an activity meets the requirements of Section 570.200(a)(2). Section 570.200(a)(2) requires that all CDBG activities meet one of three national objectives. These objectives are: 1) activities that benefit low and moderate income families; 2) activities that aid in the prevention or elimination of slums or blight; and, 3) activities that the recipient certifies are designed to meet other community 5 The Yakima Mall Expansion Yakima Avenue at Fourth Street Yakima, Washington development needs having a particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community where other financial resources are not available. Section 570.208(a)(4) states that a job generating activity will meet the requirements of 570.200(a)(2) if "an activity designed to create or retain permanent jobs where at least 51 percent of the jobs, computed on a full time equivalent basis, involve the employment of low -and moderate -income persons." Sections 570.208(a)(4)(i) specifies that to qualify under Section 570.208(a)(4) the City must document that at least 51 percent of the jobs will be held by, or will be available to, low- or moderate -income persons. It is estimated that the project will create 145 full time equivalent jobs. While it is estimated that between 60 percent and 70 percent of these jobs will be held by low- or moderate -income persons, the City will rely on the presumption test available under Section 570.208(a)(4)(iv) (as further discussed below) rather than the more cumbersome need to survey each employee as to his or her specific family income prior to accepting the job. The Yakima Mall is located in census tract #01 within the central business district of Yakima. Section 570.208(a)(4)(iv) lists minimum standards for the presumption that jobs will be "held by or made available to low- and moderate -income persons." Section 570.208(a)(4)(v) states that a census tract qualifies for the presumptions permitted under paragraphs (a)(4)(iv)(A)or(B) if it meets three tests. 1. "It has a poverty rate of at least 20 percent as determined by the most recently available decennial census information; 2. It does not include any portion of a central business district, as this term is used in the most recent Census of Retail Trade, unless the tract has a poverty rate of at least 30 percent as determined by the most recently available decennial census information; and 3. It evidences pervasive poverty and general distress by meeting at least one of the following standards: a. All block groups in the census tract have poverty rates of at least 20 percent; b. The specific activity being undertaken is located in a block group that has a poverty rate of at least 20 percent; or c. Upon the written request of the recipient, HUD determines that the census tract exhibits other objectively determinable signs of general distress such as 6 The Yakima Mall Expansion Yakima Avenue at Fourth Street Yakima, Washington high incidence of crime, narcotics use, homelessness, abandoned housing, and deteriorated infrastructure or substantial population decline." The census tract that the Yakima Mall is located in meets the conditions of Section 570.208(a)(4)(v)(A)(B)&(C). Therefore the City of Yakima is justified in using the more straight forward presumption test for family income instead of surveying the income of all families of persons holding jobs in the project. The developer of the project will be required to report to the City of Yakima annually on the number of jobs created by the project until the activity creates the required 145 permanent full time jobs. C. Eligibility under 24 CFR 570.703 The use of Section 108 guaranteed funds to assist in the expansion of the Yakima Mall is eligible under 24 CFR 570.703 OM) - Activities eligible under Section 570.203. Under 24 CFR 570.203 (b) a city can provide "assistance to a private for-profit business, including, but not limited to, grants, loans, loan guarantees, interest supplements, technical assistance, and other forms of support, for any activity where the assistance is appropriate to carry out an economic development project, excluding those described as ineligible in §570.207(a)." In addition to meeting the requirements of Section 570.203, the activity must be consistent with the guidelines provided in Section 570.209 (Guidelines for evaluation and selecting economic development projects). D. Section 570.209 Guidelines Guidelines and Objectives for Evaluating Project Costs and Financial Requirements. Section 570.209 outlines guidelines for ensuring that a proposed project carries out an economic development objective in an appropriate manner. In addition HUD has 7 The Yakima Mall Expansion Yakima Avenue at Fourth Street Yakima, Washington promulgated underwriting standards for Section 108 loans. The City of Yakima has followed the guidelines outlined Section 570.209 in evaluating the use of Section 108 loan guarantee funds to assist the Yakima Mall expansion. 1. Guidelines for Evaluating Project Costs and Financial Feasibility a. Reasonableness of the Proposed Project Costs. The project costs were provided by Lonestar Services, an independent professional cost estimation firm. They have been further reviewed by the project's architect and by the city's consultant. The overall project costs are approximately $130 per square foot. The costs are considered reasonable. b. Commitment of all Sources of Funds. The site is owned free and clear. The parcel to be owned in fee by JEM-Plaza, L.L.C. was acquired for $875,000. It is being contributed to the project as equity. The parcel owned by the YMSCC will be leased to the project on a 40 year lease at minimal rent: $100.00 per year. This lease will be subordinated to the Section 108 financing. The private debt is committed in the form of a subordinate loan from YMSCC. It is evidenced in the Commitment to Lease between JEM-Plaza, L.L.C. and the Yakima Mall Shopping Center Corporation. The terms of this loan are at LIBOR plus 1.5 percent per annum for a 30 year term. c. Substitution of CDBG funds for Private Sources. There has been no substitution of CDBG funds for private sources. The structure of the project and the nature of the market have necessitated the current structure of Section 108 and equity. A loan structure involving private sources of debt would not have been feasible due to the higher interest rates and lower loan to value ratio from other sources. 8 The Yakima Mall Expansion Yakima Avenue at Fourth Street Yakima, Washington The Section 108 funds will be in a senior security position. The private financing will be subordinate and at a below market rate for such subordinate financing. d. Feasibility of the Project. In evaluating the feasibility of the project the City has considered the project's ability to repay, the value of the collateral, the capacity and experience of the management team, and the character of the proposed owner. Each of these areas is further discussed below. Ability to Repay The project, as proposed will have a projected 1.1 debt coverage ratio. It is personally guaranteed by the members of JEM-Plaza, L.L.C. and by the individual stockholders of YMSCC. The project is filly leased to the YMSCC, which will be obligated to make lease payments equal to 110 percent of debt service on a fully triple net basis. YMSCC is an operating retail mall adjacent to the property with established tenants and a strong cash flow. This lease will guarantee the project's operation, as if fully occupied, from the completion of construction though and beyond the term of the Section 108 loan. By leasing the property to the YMSCC the lease -up and lease renewal risks have been removed from the project. A copy of the draft lease is attached as Exhibit A. Collateral The City of Yakima has ordered a project appraisal. The use of Section 108 guaranteed loan funds by the City of Yakima is conditioned on a loan to value ratio of not greater than 80 percent. This value must be supported by an appraisal prior to funding. The City will take a first security interest in the portion of the property owned by JEM-Plaza, L.L.C. and an assignment and subordination of the lease on that portion of the property owned by YMSCC. 9 The Yakima Mall Expansion Yakima Avenue at Fourth Street Yakima, Washington In addition members of JEM-Plaza, L.L.C. and the individual stockholders of YMSCC will personally guarantee the loan. Capacity and Experience of the Management Team The project will be owned by JEM-Plaza, L.L.C. JEM-Plaza's members are experienced owners and managers of real property. Once built, the project will be fully leased on a triple net basis to YMSCC. Yakima Mall Shopping Center Corporation is a long standing successful shopping center located in downtown Yakima adjacent to the property. Yakima Mall Shopping Center Corporation will sublease the space to retail tenants. The Nature and Character of the Owner The ownership entity is a new limited liability company. Its members are all local, experienced and well respected community leaders in Yakima. e. Return on owner's equity JEM - Plaza, L.L.C. will contribute the existing property purchased in May of 1998 for $875,000. Based on the project pro forma, supported by the proposed lease, the project shows a 5 percent cash on cash rate of return, building to an estimated 10 percent in year 10. These returns are modest but reasonable given the fully leased nature of the project. Because the project is leased to a related party, the City had its consultant review the return projected by YMSCC in its subleasing of the project. The subleasing to YMSCC was not designed to transfer cash flow to YMSCC, but instead to provide increased security to the project. The rate on the lease was set to provide maximum cash flow to JEM-Plaza, L.L.C. while allowing the YMSCC to breakeven on subleasing the project over time. The aggregation of returns to JEM-Plaza and YMSCC will require YMSCC to subsidize the project in the initial years of operation. A review of YMSCC financial statements shows that YMSCC has the existing cash flow to provide the necessary early year subsidy. 10 The Yakima Mall Expansion Yakima Avenue at Fourth Street Yakima, Washington This lower than average return is offset by the strength of the lease and of the personal guarantees of the principals. f. To the extent practicable the Section 108 funds should be disbursed on a pro rata basis. pro The Section 108 and EDI funds will not be disbursed more quickly than on a pro rata basis with the project's other debt. 2. Standards for Evaluating Public Benefit The Yakima Mall expansion complies with the public benefit standards of 24 CFR 570.209(b). Section 570.209(b)(1) established the standards for evaluating public benefit in the aggregate, Section 570.209(b)(2) applies those standards and S70.209(b)(3) establish the standards for individual activities. The aggregate standard requires the creation or retention of at least one full-time equivalent permanent job per $35,000 of CDBG funds used. The project will create at least 145 full time equivalent jobs in Yakima. The project is located in census tract #01 , which contains poverty rate of 44.57 percent. Section 570.209(b)(2)(v)(F) excludes projects from meeting the aggregate standard where the assistance is provided "to business(es) that operate(s) within a census tract (or block numbering area) that has at least 20 percent of its residents who are in poverty." The proposed use will meet the individual standard of Section 570.209(b)(3)(i)(A) - the creation or retention of at least one full-time equivalent permanent job for every $50,000 of CDBG assistance. The project will create 1 full-time equivalent job for every $34,483 of CDBG funding(the aggregate of Section 108 and EDI funding). This level of job creation exceeds both the individual and the aggregate requirements of Section 570.209(b)(3)(i)(A). 11 The Yakima Mall Expansion Yakima Avenue at Fourth Street Yakima, Washington E. A Description of the Pledge of CDBG Guarantee. The City of Yakima understands that if both JEM-Plaza., L.L.C. and its guarantors should fail to make a timely payment and the City of Yakima therefore fails to make a required payment on its notes, HUD will deduct that payment from the City of Yakima's CDBG Letter of Credit and in accepting this loan guarantee, the City of Yakima has pledged its CDBG funds and all other applicable grants as security for the guarantee. (Please refer to Attachment 1 - Certifications.) CDBG Requirements: In addition to eligibility requirements, the Yakima Mall Expansion will be required to comply with all applicable CDBG regulations, as well as all applicable State of Washington and City of Yakima requirements. These may include among others: Davis -Bacon Wage Rates, The Uniform Relocation Assistance and Real Property Acquisition Policies Act, and Local Procurement Rules. G. A Schedule for Repayment of the Loan. In requesting approval of a loan guarantee the City of Yakima is requesting a 20 -year commitment of Section 108 loan guarantee assistance with the following schedule of loan repayment. August 1, 2000 $ 0 August 1, 2010 $200,000 August 1, 2001 135,000 August 1, 2011 210,000 August 1, 2002 145,000 August 1, 2012 220,000 August 1, 2003 150,000 August 1, 2013 235,000 August 1, 2004 155,000 August 1, 2014 245,000 August 1, 2005 165,000 August 1, 2015 255,000 August 1, 2006 175,000 August 1, 2016 270,000 August 1, 2007 185,000 August 1, 2017 280,000 August 1, 2008 190,000 August 1, 2018 290,000 August 1, 2009 195,000 August 1, 2019 300,000 12 SEC a 1®n.Yl®T i 08 LOAD® GUARANTEES Certification of Legal Authority to Pledge Grants rub public entity- hereby certifies and aJJLUGJ W-ith respect 4V its application for a loan �_Ualantee pursuant to Section 108 of the Housing and Community Development Act of 1974, as amended, that it possesses the legal authority to make the pledge of grants required under 24 CFR § 570.705 (b)(2). CITY OF YAKIMA BY: Its: City Manager SECTION 108 LOAN GUARANTEES Certification of Efforts to Obtain Other Financing The City of Yakima hereby assures and certifies with respect to its application for a loan guarantee pursuant to Section 108 of the Housing and Community Development Act of 1974, as amended, that it has made efforts to obtain financing for the activities described herein without the use of such guarantee, it will maintain documentation of such efforts for the terms of the loan guarantee, and it can not complete such financing consistent with the timely execution of the project without such guarantee. CITY OF YAKIMA BY: Its: City Manager SECTION 108 LOAN GUARANTEES CERTIFICATION REGARDING DRUG-FREE WORKPLACE REQUIREMENTS Pt, erti fi at e. ,t bel„ material ...a..a.:,. which _l. placed t__ th_ 111c cc11111VaL1OU SC VUL below is a 1l1aI. I1a11G%/1GjGivauuu upon wm.ai 1G11dL11.iV 1J p14 .WU Uy LIK U.S. Department of Housing and Urban Development in awarding the loan guarantee assistance. If it is later determined that the public entity knowingly rendered a false certification, or otherwise violates the requirements of the Drug -Free Workplace Act, the U.S. Department of Housing and Urban Development, in addition to any other remedies available to the Federal Government, may take action authorized under the Drug -Free Workplace Act. CERTIFICATION A. The public entity certifies that it will provide a drug-free workplace by: (a) Publishing a statement notifying employees that the unlawful manufacture, distribution, dispensing, possession or use of a controlled substance is prohibited in the public entity's workplace and specifying the actions that will be taken against employees for violation of such prohibition. (b) Establishing a drug-free awareness program to inform employees about: (1) The dangers of drug abuse in the workplace; (2) The public entity's policy of maintaining a drug-free workplace; (3) Any available drug counseling, rehabilitation, and employee assistance programs; and (4) The penalties that may be imposed upon employees for drug abuse violations occurring in the workplace; (c) Making it a requirement that each employee to be engaged in the performance of the activities undertaken with the loan guarantee assistance be given a copy of the statement required by paragraph (a); (d) Notifying theemployee in t a statement required by paragrap1(a) that, , as a condition of employment under the loan guarantee, the employee will: (1) Abide by the terms of the statement; and (2) Notify the employer of any criminal drug stature conviction for a violation occurring in the workplace no later than five days after such conviction; (e) Notifying the agency in writing, within ten calendar days after receiving notice under paragraph (d)(2) from an employee or otherwise receiving actual notice of such conviction. Employers of convicted employees must provide notice, including position title, to every grant officer or other designee on whose grant activity the convicted employee was working, unless the Federal agency has designated a central point for the receipt of such notices. Notice shall include the identification number(s) of each affected grant; (f) Taking one of the following actions, within 30 calendar days of receiving notice under paragraph (d)(2), with respect to any employee who is so convicted: (g) (1) Taking appropriate personnel action against such an employee, up to and including termination, consistent with the requirements of the Rehabilitation Act of 1973, as amended; or (2) Requiring such employee to participate satisfactorily in a drug abuse assistance or rehabilitation program approved for such purposes by a Federal, State or local health, law enforcement, or other appropriate agency; Making good faith effort to continue to maintain a drug-free workplace through implementation of paragraphs (a), (b), (c), (d), (e) and (f). B. The public entity shall insert in the place provided below the site(s) expected to be used for the performance of work under the assistance covered by the certification: Place of Performance (include street address, city, county, state, and zip code for each site): Street Address 129 North 2nd Street Yakima, Washington 98901 Check X if there are workplaces on file that are not identified here. CITY OF YAKIMA BY: Its: City Manager Certification Regarding Debarment, Suspension, and Other Responsibility Matters — Primary Covered Transactions (1) The prospective primary participant certifies to the best of its knowledge and belief, that it and its principals: (a) Are not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from covered transactions by any Federal department or agency; (b) Have not within a three-year period preceding this proposal been convicted of or had a civil judgment rendered against them for commission or fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public (Federal, State, or local) transaction or contact under a public transaction; violation of Federal or State antitrust statutes or commission or embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, or receiving stolen property; © Are not presently indicated for or otherwise criminally or civilly charged by a governmental entity (Federal, State or local) with commission of any of the offenses enumerated in paragraph (1)(b) of this certification; and (d) Have not within a three year period preceding this application/proposal had one or more public transactions (Federal, State, or local) terminated for cause or default. (2) Where the prospective -rim participant is unable to certify anyof the statements in � � t,--- -p p ---- � p.- p to this certification, such prospective participant shall attach an explanation to this proposal. CITY OF YAI{IMA BY: Its: City Manager Appendix A to Part 87 - Certification Regarding Lobbying Certification for Contracts, Grants, Loans, and Cooperative Agreements. The undersigned certifies, to the best of his or her knowledge and belief, that: (1) No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of an agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement. (2) If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form -LLL, "Disclosure Form to Report Lobbying," in accordance with its instruction. (3) The undersigned shall require that the language of this certification be included in the award documents for all sub -awards at all tiers (including subcontracts, sub -grants, and contracts under grants, loans, and cooperative agreements) and that all sub -recipients shall certify and disclose accordingly. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. Statement for Loan Guarantees and Loan Insurance The undersigned states, to the best of his or her knowledge and belief, that: If any funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this commitment providing for the United States to insure or guarantee a loan, the undersigned shall complete and submit Standard Form -LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions. Submission of this statement is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S. Code. Any person who fails to file the required statement shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. CITY OF YAKIMA BY: Its: City Manager Date SECTION 108 LOAN GUARANTEES ENTITLEMENT PUBLIC ENTITY CERTIFICATIONS In accordance with Section 108 of the Housing and Community Development Act of 1974, as amended, (the "Act") and with 24 CFR § 570.704 (b) the public entity certifies that: (I) It possesses the legal authority to submit the application for assistance under 24 CFR Part 570, Subpart M ("Subpart M") and to use the guaranteed loan funds in accordance with the requirements of Subpart M. (ii) Its governing body has duly adopted or passed as an official act a resolution, motion or similar action: (A) Authorizing the person identified as the official representative of the public entity to submit the application and amendments thereto and all understandings and assurances contained therein, and directing and authorizing the person identified as the official representative of the public entity to act in connection with the application to provide such additional information as may be required. (B) Authorizing such official representative to execute such documents as may be required in order to implement the application and issue debt obligations pursuant thereto (provided that the authorization required by this paragraph (B) may be given by the local governing body after submission of the application bu prior to execution of the contract required by § 570.705 (b); (iii) Before submission of its application to HUD, the public entity has: (A) Furnished citizens with information required by § 570.704 (a)(2)(I); (B) Held at least one public hearing to obtain the views of citizens on community development and housing needs; and © Prepared its application in accordance with 570.704 (a)(1)(iv) and made the application available to the public. (iv) It is following a detailed citizen participation plan which meets the requirements described in § 570.704 (a)(2). (v) The public entity will affirmatively further fair housing, and the guaranteed loan funds will be administered in compliance with: (A) Title VI of the Civil Rights Act of 1964 (Pub. L. 88-352, 42 U.S.C. 2000d et seg.); and (13) The Fair Housing Act (42 U.S.C. 3601-20). (vi) In the aggregate, at least 70 percent of all CDBG funds, as defined at § 470.3(e), to be expended during the one, two, or three consecutive years specified by he + +• r CDBG will � r � + benefit + public entity for its program will be for activities which benefit tow and moderate income persons, as described in criteria at § 570.208(a). (vii) It will comply with the requirements governing displacement, relocation, real property acquisition, and the replacement of low and moderate income housing described in § 570.606. (viii) It will comply with the requirements of § 570.200 (c)(2) with regard to the use of special assessments to recover the capital costs of activities assisted with guaranteed loan funds. (x) It will comply with the other provisions of the Act and with other applicable laws. CITY OF YAA BY: Its: City Manager JUL. 20 ' 99 (TUE) 17:29 JEW DEVELOPMENT ID; THIS AGASI e T by and between! JIM -PLAZA, Liability 509 457 8361 PAGE. 2/4 JUL 20'99 15:44 No.002 P.02 .GRANT TO IAA is made is day of 1999 L.. L. c. , a Washington Limited Company, hereinafter called "the and YAKIMA MALL BHOPPZNG CENTER CORPORATION, u Washington Corporation, hereinafter called "the Mall Corporation". R.BICITAL@ The Mall corporation is the owner of the fee to a 100' x 130/ parcel which presently includes the Plaza to the Mall Corporation's Shopping Center in Yakiata, Washington. The LLC proposes to construct a 3 -story retail addition to the Shopping Center on the Plaza parcel and the adjacent Lots 11 and 12, Bloca 70, Town of North Yakima, now Yakima, owned by the LLC (the "Plaza Addition"). To enable that development, the Rall Corporation has agreed to grant to the LLC a 40 -year Ground Lease on the Plaza parcel, on the terms and aonditionn of Exhibit MAR attached hereto and by this reference incorporated herein (the 'Ground Lease"). The primary consideration for the Mull corporation in entering intc the Exhibit "A" Kase is the agreement of the LLC to construct the Plaza Addition and to lease the same back to the Hall Corporation for a 40 -year term on the terms and conditions of Bxhibit "S" attached hereto and by this rQ .:_ � ace incorporated herein. The purpose of this instant agreement is to memorialise the agreement of the parties as respects the said Plaza Addition. NOW, TMAR1PORB, in consideration of the mutual covenants and agreements herein eat forth, it is hereby agreed by and between the parties hereto, as folloWss JUL. 2%J 99 (TUI.) 17 : 29 JZ.M DEVELOP/LENT. ID: 509 457 6361 PAGE. 3/4 JUL 099 15:45 TNo.002 P.03 +� a arotinG L*a.e Ia*Yd3.Ate1 upon the receipt _ f _ commit ant for of the Plaza Addition by the City of �i n ��,.,,,y�,._ .,,r„ _„ . �__,� - Yakima in the amount of $5,000,000, 81,oD4,000 of which will be in the form of an Ragn mio Developeent initiative (EDI) Grant and the other $4,000,000 of which will be in the form of a Beation 3.08 Loan at the LIBOR rate, payable over twenty (20) years', and secured by First Mortgage on the Plaza Addition, the parties agree to execute and deliver (enah to the other) the Exhibit "A" Ground Lea oe. 2. aesetruatiion bf_ the lase Additions The LLL agrees, upon execution and delivery of the Exhibit "A" Ground Lease, to promptly undertake and d;1 iga�ntly prnseaute to final completion and the undertake ane ww...� �.�.. ^tee, �•- - issuance of a Certifidstto of ocoupanoy, the Plaza Addition oonat,rUcti.on, on the following terms and conditions: T'he Mall Corporation agrees to loan to the LLC the funds reaPonably necessary for it to complete the Plaza development. Tha loan will be without interest until completion of the plaza Addition and execution and delivery of the Exhibit "B" Lease, and then monthly payments shall be required in such amount as shall mortise the entire indebtedness aver a tare of thirty (30) years in egua1 monthly inetallaents, including interest on the declining principal baletnee at the rate of LIBOR plus 1.5t per annum. The said indebtedness will be secured by the personal guaranty of each member ::f the LLC and a pledge of all ehaTee of stock of .7 & E FAMILY INVESTMENTS, INC., a Washington corporation. E. The Plaza Addition will be constructed in aocordence with plans and epeCifications to be prepared for the LLC end approved by the Beneficiary of the First Deed of Trust on the Pi aaa Addition. !s'he LLC agrees to consult with the Mall Corporation as respeote all aspects of the design, plena and opecificatione for the Plaza Addition and to give careful consideration to the Hall corporation's preferences and rondationa as respects said plans, but the final authority as reapeots all aspects of the Plaza development, including its design, plans and epecifieetians shall remain with the LLC. 3. The Rrhibit UB" _Lease: Upon . - .. letion of the Plaza Addition in accordance with the torus and co tions of the Section 108 First Deed of Trust Financing, end. the iassuanoe of e Certificate Of Occupancy for the Addition by the City of Yakima, the parties agree to Promptly execute and deliver, each to the other, the Exhibit "B" Lewis. e.2® JUL. 20 ' 99 (TUE) 17:30 JEW DEVELOPMENT ID: 509 457 8361 PAGE. 4/4 JUL 20'99 15:46 No.002 P.04 4. hasienikept ligsdithita41 This Agreement is personal between the parties hereto and neither party may aaeign or transfer this AgreaMent er any rights hereunder to anyone without the express prior written and duly acknowledged constant by the other party, and any attempted aesi.gn ent or transfer, whether voluntary or involuntary, by operation of law, or otherwise, shall be totally void and of no legal force or affect. 5. : In any suit or action arising out of this; Agreement, the venue shall be in Yakima County, washington and the prevailing party shall be entitled to reasonable attorneys fees in such amount as shall ba fixed by the Court in said action. s. Camels reament: This Agreeleent, the Exhibit NA' and *B• Leases, and the )Call -Plaza Development Meaiox'anduse of Agreement dated Jul , x.999, represent the entire agreement and understanding of the parties and eupereedes all cetera, negotiations and other agreements. Any amendment to this Agreement must be in writing and executed by the parties. 1tniN1ee WEIRE07, this agreement is executed by the parties, effective the day and year first above written. JEM^PLANA, L.L.C. YAKIMh MALL SHOPPING CENTER CORPORATION By BY Joseph R. Harrier, Jr. Joseph R. Morrier, Sr. Its Manager ftd President STATE OF WASHINGTON ) se. COUNTY OF YAKIMA ) I certify that I know or have satisfactory evidence that JOSEPH R. NORRXER, an. signed this instrument, on oath stated that he was authorised to execute the instrument and acknowledged it as the Manager of JEM-PLASM!, L.L.G. to be the free and voluntary not of such party for the use and purposes mentioned in the instrument. DATED: ' Notary Public in and for thea: as waebington, reaidtng at: My appointment expires: --3-. JEM-PLAZA, L.L.C. - YAKIMA MALL LEASE OF MALL -PLAZA BUILDING YAKIMA, WASHINGTON THIS AGREEMENT is made and entered into by and between JEM- PLAZA, L.L.C., a Washington Limited Liability Company, as Landlord" and YAKIMA MALL SHOPPING CENTER CORPORATION, a Washington corporation, as "Tenant". IT IS HEREBY AGREED by and between the parties hereto as follows: The Landlord does hereby lease, let and demise to Tenant, and Tenant does hereby lease from Landlord, the hereinafter described premises on all of the following terms and conditions: 1.1 LANDLORD: 1.2 TENANT: ARTICLE 1 BASIC LEASE PROVISIONS JEM-PLAZA, L.L.C. 402 East Yakima Ave., Suite 1400 Yakima, WA 98901 YAKIMA MALL SHOPPING CENTER CORPORATION 402 East Yakima Ave., Suite 1400 Yakima, WA 98901 1.3 PREMISES: Situated in the City of Yakima, County of Yakima, State of Washington, to wit: Parcel A Beginning at the southwest corner of Lot 1, Block 90, Town of North Yakima, now Yakima, according to the plat thereof recorded in Volume A of Plats, page 1, re-recorded in Volume E of Plats, page 10, Records of Yakima County, Washington; thence north along the east line of North Fourth Street a distance of 130 feet; thence west 50 feet; thence south 130 feet; thence east to the point of beginning (being the portion of the east half of North Fourth Street). Parcel B Beginning at the northeasterly corner of Lot 12, Block 70, Town of North Yakima, now Yakima, (7/19/99) -1- according to the plat thereof recorded in Volume A (If U--1 a-cr pa-7s- 1-, .r.nv -r�nvrvnvrrran-rwi 411 VnVil »YlmeV Y va plat-, page 10, records of Yakima County, Washington; thence easterly parallel to the north line of East Yakima Avenue a distance of 50 feet to the center line of vacated North Fourth Street; thence southerly along the center line of vacated North Fourth Street a distance of 130 feet to the north line of East Yakima Avenue; thence westerly along said north line a distance of 50 feet to the southeast corner of Lot 12 of said Block 70; thence northerly along the Pact line of said Lot 1 2 a distance of 130 feet to the northeast corner thereof which is the point of beginning. EXCLUDING THEREFROM the below ground level improve- ments on both Parcels A and B presently leased to Mervyn, Inc., and all right to use and occupancy of the below ground level portions of the property. 1.4 LEASE TERM: Forty (40) Years 1.4.1 COMMENCEMENT DATE: 1.4.2 DATE LEASE TERM EXYltit'ib: 1.5 MINIMUM MONTHLY RENT: 1 ** 2 per month 1.6 PERCENTAGE RENTS PAYABLE ANNUALLY: Four percent (4%) of annual Gross Receipts over $15,000,000, payable annually. 1 (*) If the Lease Commencement Date is before the twentieth (20th) of the month, the last day of the Lease Year will be the last day of the month preceding the Lease Commencement Date. If the Lease Commencement Date is after the nineteenth (19th) day of the month, the last day of the first Lease Year will be the last day of the same month in the next succeeding year and annually thereafter. 2 (**) will be whatever amount is necessary to meet 110% of the monthly payments on the $4,000,000 first Mortgage, plus whatever amount is necessary to amortize Landlord's funds borrowed in excess of $4,000,000 to complete the Plaza Development over 360 months (30 years) in equal monthly installments, including interest at the rate of LIBOR plus .015 as of the Commencement Date. (7/19/99) -2- 1.7 LEASE YEAR: Initial period ending * 3 and thereafter the 12 -month period ending of each successive year of the term. ARTICLE 2 DEFINITIONS As used in this Lease, the following terms shall have the meaning specifically defined in this Article 2. 2.1 "PREMISES": The term "Premises" shall mean the real estate described in section 1.3 above and the commercial building on said property. 2.2 "RENT": The term "rent" shall mean the sum of the minimum monthly rent plus percentage rent, plus all other charges and amounts payable by Tenant to Landlord hereunder. 2.3 "MINIMUM MONTHLY RENT": The term "minimum monthly rent" shall mean the rents set forth in section 1.5 of the Basic Lease Provision (Article 1): 2.4 "PERCENTAGE RENT": The term "percentage rent" shall mean a sum equal to the amount, if any, by which four percent (4%) of the gross receipts (as hereinafter defined) from all business done on or from the premises, in any given Lease Year, exceeds $15,000,000. 2.5 "GROSS RECEIPTS": The term "gross receipts" used herein shall mean the actual sales price of all merchandise sold and the actual charges for all services performed on or from the premises by Tenant or by any subtenant, licensee or concessionaire, whether for cash, or otherwise (without deduction for inability or failure to collect) including, but not limited to, such sales and services, (a) where the order therefor originated on or from the premises, whether delivery or performance is made from the premises or from some other place, (b) made pursuant to order mailed or telephoned, or otherwise received at, or filled from, the premises, (c) by means of mechanical or other vending devices in the premises and 3 (*) If the Lease Commencement Date is before the twentieth (20th) of the month, the last day of the Lease Year will be the last day of the month preceding the Lease Commencement Date. If the Lease Commencement Date is after the nineteenth (19th) day of the month, the last day of the first Lease Year will be the last day of the same month in the next succeeding year and annually thereafter. (7/19/99) -3- (d) as a result of transactions originating on or from the nrcmiccc crcnifirnlly 2.5.1 Exclusions from Gross Receipts: The following shall be excluded from gross receipts, namely: (a) any_ exchange of merchandise between stores of the Tenant or a subtenant where such exchange is made solely for the convenient operation of Tenant's or Subtenant's business and not for the purpose of consummating a sale made on or from the premises; (b) returns to shippers or manufacturers; (c) cash or credit refunds to customers on transactions otherwise includable in gross recP i pts ; ( A) sa l ac of f i v*„rnc after the use thereof in the conduct of Tenant's or Subtenant's business in the premises; (e) the amount of_sales tax or other tax imposed by any duly constituted governmental authority directly on sales and collected by Tenant from customers and paid by Tenant or Subtenant to such governmental authority; (f) rent and lease charges paid by Subtenants to Tenant; (g) other exclusions from gross receipts which are included in any sublease of the premises, but only as the same pertains to the Gross Receipts of that particular Subtenant. 2.6 TARES, ASSESSMENTS AND INSURANCE: The term "taxes, assessments and insurance" shall mean and include all real property and ad valorem taxes, all premiums paid or incurred by Landlord for fire and extended coverage insurance upon buildings on the premises, all assessments and other governmental charges, general and special, including assessments for public improvements or benefits, and including interest charged by the governmental body in respect to assessments or other charges paid by Landlord in installments, which shall during the lease term become due and payable, which may be levied or assessed against the Premises, except for the following: 2.6.1 Franchise, estate, inheritance, succession, capital levy, transfer, income and excess profits taxes imposed upon Landlord shall be excluded. 2.6.2 If at any time during the lease term a tax or excise on rents or other tax, except income tax, however described, is levied or assessed against Landlord on account of the rent expressly reserved hereunder, such tax or excise on rents or other tax shall be included within the definition "taxes and assessments", but only to the extent of the amount thereof which is lawfully assumed or imposed as a direct result of Landlord's ownership of this Lease or of the rents accruing under this Lease. 2.6.3 With respect to any assessment which may be levied against or upon the premises and which under the laws then in (7/19/99) -4- force may be paid in annual installments, there shall be included within the definition of "taxes and assessments" with respect to any tax year only the amount currently payable during such tax year, or the current annual installment for such tax year. 2.7 "LEASE YEAR": The term "lease year" shall mean the periods set forth in section 1.7 of the Basic Lease Provisions (Article 1 hereof). 2.8 "LAWS, RULES AND REGULATIONS": The term "laws, rules and regulations" shall mean all laws of the United States and of the State of Washington, all ordinances of municipal governments, all regulations, rules, orders and other directives issued by any governmental agencies having jurisdiction over the Premises and all rules, orders, regulations or requirements of the Board of Fire Underwriters or of any similarly constituted body having competent authority applicable to the Premises or the Shopping Center. 2.9 "LEASE TERM": The lease term shall be the period fixed by section 1.4 of the Basic Lease Provisions (Article 1 hereof). ARTICLE 3 CONDITION OF PREMISES AND ALTERATIONS, REPAIRS, MAINTENANCE AND USE 3.1 CONDITION OF PREMISES: The Tenant has inspected the premises and accepts the same in the condition they are presently in. Landlord hereby assigns and sets over to Tenant all Landlord's rights to reimbursement for defects in workmanship, materials or equipment under warranty claims or otherwise pertaining to the premises, and agrees to cooperate fully with Tenant in the collection of any such claims. 3.1.1 Latent Defects: Tenant shall be solely responsible, at Tenant's sole expense, to maintain and keep the premises in a good state of repair throughout the term of this Lease, and shall be responsible to remedy any latent defects in the building on the premises, at Tenant's sole expense. 3.2 ALTERATIONS: Tenant shall have the right and privilege at all times during the continuance of this Lease to make, at its own expense, such alterations, changes, improvements and additions to the Premises as Tenant may desire provided such work when completed will not impair the structural integrity or soundness of any building and provided further that if any of Tenant's proposed work would substantially change the exterior appearance of any building Tenant shall, before undertaking such work, obtain (7/19/99) -5- Landlord's written consent to the performance thereof, it being underctnnri that T.anril nra will not unreasonably wi thhol ri �.,c consent. Any alterations, changes, improvements and additions made by Tenant shall immediately become the property of Landlord and shall be considered as a part of the Premises. Landlord hereby constitutes and appoints Tenant Landlord's true and lawful attorney in fact in Landlord's name to apply for and secure from any governmental authority having jurisdiction thereover such building and other permits and licenses as may be necessary in connection with any work which Tenant is authorized to perform under the provisions of this article, and Landlord agrees upon request by Tenant to execute or join in the execut i nn of any appl i r.a4 i nn fnr such permits and licenses. 3.3 MECHANIC'S LIEN: Tenant shall pay or cause to be paid all costs for work done by it or caused to be done by it on the premises. Tenant shall keep the premises free and clear of all .mechanic's liens and other liens on account of work done for Tenant or persons claiming under it. Tenant shall indemnify and save Landlord free and harmless against liability, loss, damage, costs, attorneys' fees and all other expenses on account of claims of lien of laborers or materialmen or others for work performed or materials or supplies furnished for Tenant or persons claiming under it. Should any claims of lien be filed against the premises or any action affecting title to such property be commenced, the parties receiving notice of such lien or action shall forthwith give the other party written notice thereof. 3.4 REPAIRS AND MAINTENANCE: Tenant shall maintain the outside walls, roof and foundation of the premises. Tenant shall be responsible for the maintenance and repair of all interior portions of the premises, including heating, cooling, air-conditioning, plumbing and electrical systems, at Tenant's sole expense, and Tenant agrees that at the expiration of this Lease, Tenant will quit and surrender the said premises without notice, in as good a state and condition as at the commencement of this Lease or as improved thereafter, reasonable depreciation and wear and tear excepted, and will deliver up all keys belonging to the premises to the Landlord. Tenant shall keep the premises clean and in a sanitary condition to the satisfaction of the City of Yakima Health and Fire Departments, and will comply with the laws of the State of Washington and the ordinances of the City of Yakima now in force or hereafter enacted, and will maintain and keep all entryways to said premises in a safe condition for ingress and egress. 3.5 FIXTURES AND ADDITIONS: All floor coverings (except rugs), permanent partitions, electrical outlets and plumbing (7/19/99) -6- installed on the premises by Tenant, or any sublessee of Tenant, shall be deemed to be permanently affixed to the building and shall not be removable as trade fixtures, or otherwise, during the term of, or at the expiration of this Lease. 3.6 USE: Tenant may use and occupy the premises for commercial retail purposes and related shopping center purposes, and for in other purposes without the prior consent of Landlord. Landlord agrees not to unreasonably withhold such consent. Tenant acknowledges that the rental terms of this Lease are agreed upon on the understanding that the premises will be used for retailing and that the Landlord's consent to non -retailing uses may be conditioned on the Tenant agreeing to appropriate modification of the rent clauses to reflect the loss of actual or potential percentage rents on the areas committed to retailing to other uses. Tenant shall not use, occupy, suffer or permit the premises or any part thereof to be used or occupied for any purpose contrary to laws, rules and regulations. ARTICLE 4 RENT 4.1 MINIMUM RENT TO BE PAID: Tenant agrees to pay to Landlord, in advance, on or before the first day of each and every month during the term hereof, at the offices of Landlord in Yakima, Washington (see section 12.6 for mailing address) or at such other place as Landlord may from time to time designate (by written notice to Tenant) the minimum monthly rent (2.3 above). 4.2 PERCENTAGE RENT: Tenant agrees to pay on or before the sixtieth (60th) day of each Lease Year the percentage rent (2.4 above) for the preceding Lease Year. ARTICLE 5 TAXES AND UTILITIES 5.1 TAXES: Tenant shall pay on or before the last day in which payment may be made without penalty or interest, all taxes and assessments against the premises that shall or may, during the lease term be imposed on the premises or arise in connection with the use of the premises or any part thereof. 5.2 UTILITIES: Tenant shall pay all charges for all utilities used on said premises, including, but not limited to, light, heat, gas, telephone, water and power and garbage removal, and shall not allow any charge or charges therefor to become delinquent or to become a lien upon the premises or any part thereof. (7/19/99) -7- 5.3 AIR CONDITIONING AND HEATING: Tenant shall pay all costs of operating and maintaining (including repairs and replacements) the heating and air conditioning equipment on or servicing the premises. Heating and ventilating and air conditioning shall be thermostatically controlled in the premises, and Tenant agrees to operate the same and so to control air pressure within the premises that the temperature and air pressure within the premises will be reasonably identical to that within the adjacent air conditioned Mall. ARTICLE 6 TENANT'S REPORTS 6.1 TENANT'S REPORTS: Within thirty (30) days after the expiration of each lease year, Tenant shall submit to Landlord a written statement certified as correct by a responsible officer or owner of Tenant showing the gross receipts from the premises during the preceding lease year. Such statements shall contain such details as Landlord may reasonably require. 6.2 MAINTENANCE OF RECORDS: Tenant shall maintain at Tenant's home office or at such other place as may be agreed upon by the parties, a permanent, accurate record of all gross receipts of Tenant owned businesses conducted from the premises, and all deductions and exclusions therefrom, together with all reports of gross receipts received by Tenant from subtenants of the premises, which said records shall be open to inspection and audit by Landlord or its agents during ordinary business hours. Tenant agrees to retain and preserve said records for at least three years after the expiration of each lease year, and to make the same available to Landlord or Landlord's auditors not more frequently than once each lease year, upon Landlord's request. ARTICLE ''s INSURANCE 7.1 INSURANCE: During the term of this Lease, and for any further time that Tenant shall hold the Premises, Tenant shall obtain and maintain at its expense the following types and amounts of insurance: 1. Fire Insurance: Tenant shall keep all buildings, improvements and equipment on the Premises, including all alterations, additions and improvements, insured against any loss or damage by fire, with all standard extended coverage. The insurance shall be in the amount sufficient to prevent Landlord and/or Tenant from becoming co-insurers under the provisions of applicable policies of insurance, but in any (7/19/99) -8- event, in an amount not less than 90% of the full insurable value of the premises, including the cost of excavation and of foundations. 2. Liability Insurance: Tenant shall procure and maintain in force at its expense during the term of this Lease and any extension thereof, public liability insurance with insurers approved by Landlord. Such coverage shall be adequate to protect against liability for damage claims through public use of or arising out of accidents occurring in, on or around the leased premises in a minimum amount of $1,000,000 for each person injured; $1,000,000 for any one accident, and $500,000 for property damage. The insurance policy shall provide coverage for contingent liability of Landlord on any claims or losses. All insurance provided by Tenant as required by this section shall name Landlord and any mortgagee or beneficiary of a Deed of Trust covering the premises as additional insureds, as their respective interests appear. If the insurance policies are not kept in force during the entire term of this Lease or any extension thereof, Landlord may procure the necessary insurance and pay the premium therefor, and the premium shall be repaid to Landlord as an additional rent installment for the month following the date of which the premium was paid by the Landlord. All policies shall require not less than thirty (30) days notice to all named insureds of any cancellation or change. 7.2 WAIVER OF SUBROGATION: Notwithstanding any other provision of this Lease, Landlord and Tenant shall release and relieve the other and waive their entire right of recovery against the other for loss or damage arising out of/or incident to the perils of fire, explosion or any other perils described in the "extended coverage" insurance endorsement provided for use in Washington which occurs in, on or about the premises whether due to the negligence of either party, their agents, employees or otherwise. ARTICLE 8 ASSIGNMENT AND SUBLETTING 8.1 ASSIGNMENT AND SUBLETTING: Tenant shall not assign this Lease without Landlord's prior written consent. Tenant expressly reserves the right to sublet the whole or any portion of the premises on such terms and conditions as Tenant shall determine to be acceptable. (7/19/99) -9- No assignment or sublease or transfer by the Tenant, whether with or without the cnnepnt of the Tanci ord _ shall operate to relieve Tenant of the obligation to make payments of rental as they accrue hereunder, or to keep and perform any other covenant or condition of the Tenant under the terms of this Lease. ARTICLE 9 CASUALTY DAMAGE - CONDEMNATION 9.1 CASUALTY DAMAGE: If the premises shall be damaged or destroyed by fire or other casualty or any cause whatsoever, either in whole or in part, Tenant shall forthwith remove any resulting debris and repair and/or rebuild the damaged or destroyed structures and other improvements, including any improvements or betterments made by Landlord or Tenant where such improvements or betterments have become part of the premises as provided in section 3.2 of this Lease, in accordance with the plan pursuant to which such property was constructed. It shall be Tenant's responsibility to maintain business interruption insurance and there shall be no abatement of rents during the period of restoration following a casualty loss. It is expressly provided, however, that if Tenant, for any reason whatsoever, fails to commence such restoration work within 180 days from the date when such damage or destruction occurred or fails thereafter to proceed diligently to complete such repair work and/or rebuilding, Landlord, in addition to such other rights and remedies as may be accorded Landlord by law, shall have the right and option to terminate the term of this Lease by giving Tenant written notice of Landlord's election so to do at any time prior to the completion of such repairs or rebuilding provided Tenant shall not then be actively undertaking such restoration work, and upon such notice being given the term of this Lease shall automatically terminate and end. Anything herein to the contrary notwithstanding, it is understood and agreed that (i) if the Premises should be damaged or destroyed by fire or other cause to such an extent that the cost of restoration would exceed 50% of the amount it would have cost to replace the Premises in their entirety at the time such damage or destruction took place, and (ii) if at the time of such damage or destruction the term of this Lease is scheduled to expire within a period of five years, either Landlord or Tenant shall have the right and option to terminate the term of this Lease by giving the other party to this Lease notice of such election within 30 days after such damage or destruction shall have taken place, and if such notice is given the term of this Lease shall terminate as of the date Tenant vacates the Premises, which date shall be no later than 60 days after the giving of such notice. 9.2 CONDEMNATION: If the whole of the Premises shall be taken by any public authority under the power of eminent domain, (7/19/99) -10- then the term of this Lease shall cease as of the day possession is taken by such public authority and the rent shall be paid up to that date. If only a part of the premises shall be taken under eminent domain and the remainder of the premises not so taken can be made tenantable for the purposes for which Tenant has been using the premises, then this Lease shall continue in full force and effect as to the remainder of said premises and all of the terms herein provided shall continue in effect, except that the minimum rent shall be reduced in proportion to the amount of the premises taken, and Landlord, at its own cost and expense, shall make all necessary repairs and alterations to the premises required by such taking; provided, however, that if more than 50% of the first floor area of the building in which the premises are located shall be taken under power of eminent domain, then either Landlord or Tenant may, by written notice to the other delivered on or before the date of surrendering possession to the public authority, terminate this Lease. In any proceeding whereby all or part of the Premises is taken, whether or not Tenant elects to terminate the term of this Lease, each party shall be free to make claim against the condemning authority for the amount of the actual provable damage done to each of them by such proceeding. If the condemning authority shall refuse to permit separate claims to be made, then and in that event, the parties shall jointly prosecute the claims of both Landlord and Tenant, and the proceeds of the award shall be divided between Landlord and Tenant in such manner as seems fair and equitable. 9.3 RIGHT OF MORTGAGEE OR DEED OF TRUST BENEFICIARY: All provisions herein as respects the application of the proceeds of insurance or condemnation proceedings between Landlord and Tenant shall be subject to and subordinated to the rights of the mortgagee under any Mortgage or beneficiary under any Deed of Trust encumbering the property at the commencement of this Lease. ARTICLE 10 INDEMNIFICATION AND WAIVER 10.1 LANDLORD NOT LIABLE: Landlord shall not be liable for any loss or injury to persons from any cause whatsoever, which at any time may be sustained by Tenant, Tenant's subtenants, or by any person whosoever at any time may be using, occupying or visiting the Premises. 10.2 TENANT SHALL INDEMNIFY: Tenant agrees to indemnify and save Landlord harmless from any and all claims, costs and expenses whatsoever arising out of any injury or damage to persons, however occurring in the premises, and for such injury or damage to persons in or about the Tenant's adjacent Shopping Center, which injury or (7/19/99) -11- damage is the result of the negligence of Tenant, its employees, contractors, QjCnts or representatives. This indemnit..y sa--1�— l include without limitation, reasonable attorneys fees and costs incurred by Landlord in defending itself against such claims or in establishing its rights to indemnity under this section. 10.3 WAIVERS INDEPENDENT: One or more waivers of any provision of this Lease by Landlord shall not be construed as a waiver of a breach of any other provision hereof nor of a subsequent breach of the same provision, and the consent or approval by Landlord to or of any act by Tenant requiring consent or approves l Shall n^ he deemed t o waive or render 11nn.Pccary ew.7,. 5air�d6. e.+v c.a ..,. .a as...,a.., .+,. ...r .. .+�. uv.r.......... ..... .. ....... � .... � ..........-. �.... � Landlord's consent or approval to or of any subsequent similar act by Tenant. 10.4 ACCEPTANCE OF RENT NOT A WAIVER: The subsequent acceptance of rent shall not be deemed a waiver of any preceding breach, nor may any provision of this Lease be waived either by Landlord or Tenant except by appropriate written instrument. ARTICLE 11 DEFAULT OF TENANT AND REMEDIES 11.1 DEFAULT OF TENANT AND REMEDIES: If any rental or other sums payable to Landlord by Tenant are not paid when due and payable and remain unpaid for more than ten (10) days after written notice is given by Landlord to Tenant that the same are past due, or if Tenant shall violate or default in the performance of any of the other covenants, agreements, stipulations or conditions herein, and such violation or default shall continue for a period of thirty (30) days after written notice by Landlord to Tenant of such violation or default, then without prejudice to any other remedies which Landlord might have, Landlord may, at its election, declare this Lease forfeited and the said term ended, and reenter the premises, with or without process of law, and to remove all persons or chattels therefrom. Landlord shall not be liable for damages by reason of such reentry, but notwithstanding such reentry by Landlord, the liability of Tenant for the rent and other charges provided herein shall not be extinguished for the balance of the term of this Lease, and Tenant agrees to make good to Landlord any deficiency arising from a reentry and reletting of the premises at lesser rentals and other charges than herein reserved and Tenant shall pay such deficiencies each month as the amount thereof is ascertained by Landlord. In case of such reentry, Landlord may relet the premises upon such terms as it may seem fit and for a term which may expire either before or after the expiration date of this Lease. It is further understood that tenant will pay, in addition to the rentals and other sums agreed to be paid hereunder, (7/19/99) -12- such additional sums as the court may adjudge reasonable as attorneys fees in any suit or action instituted by Landlord to enforce the provisions of this Lease, or the collection of the rentals due Landlord hereunder. For the purposes of this section, the rentals for the period after any such default shall, at the option of the Landlord, be deemed to be at a rate equal to the total of the minimum rentals and the percentage rentals payable by Tenant for the last preceding full lease year, but, if such event shall occur during the first year of this Lease, then at a rate equal to the minimum and percentage rentals payable for such part year. Upon reletting, Tenant shall be immediately liable to pay to Landlord the cost and expense of reletting and of such alterations and repairs as may be reasonably incurred by Landlord in readying the premises for reletting. 11.2 TENANT'S PAYABLES AS RENT: All amounts payable by Tenant to Landlord hereunder, including amounts paid by Landlord on behalf of Tenant and reimbursable to Landlord, and whether specifically called rent or not, shall be deemed to be rent and in respect therein, Landlord shall have and enjoy all remedies provided under the laws of the State of Washington and under Section 11.1 hereof with respect to the collection of rent. All such amounts shall bear interest at the rate of twelve (12%) percent per annum from the date of any delinquency in payment thereof to the date paid. ARTICLE 12 MISCELLANEOUS 12.1 LEASE MAY TERMINATE IN EVENT OF TENANT'S INSOLVENCY: Anything herein contained to the contrary notwithstanding, neither this Lease nor any interest herein nor any estate hereby created shall pass to any trustee in bankruptcy, or to any receiver, or assignee for the benefit of creditors, by operation of law. Without limiting the generality of the provisions of the preceding sentence, if any proceedings under the Bankruptcy Code or any amendment thereto be commenced by or against Tenant, and, if against Tenant, said proceedings shall not be dismissed before either an adjudication in bankruptcy or the confirmation of a composition, arrangement or plan of reorganization, or in the event Tenant be adjudged insolvent or make an assignment for the benefit of its creditors, or if a writ of attachment or execution be levied on the leasehold estate hereby created and not released or satisfied within fifteen (15) days thereafter, or if a receiver be appointed in any proceeding or action to which Tenant is a party, with authority to take possession or control of the premises or the business conducted thereon by Tenant, and such receiver be not discharged within a period of fifteen (15) days after his (7/19/99) -13- appointment, then any such event shall constitute a breach of this Lease by Tenant and, at the option of Landlord and without notice or entry by Landlord, shall terminate this Lease and all rights of Tenant under this Lease should any portion of this section 18.1 be unenforceable by reason of the operation of any provisions of the Bankruptcy Code, or any amendment thereto, such unenforceability shall not affect the remaining portion thereof. 12.2 SUBORDINATION OF LEASE: Tenant will, upon demand by Landlord, execute such instruments as may be required at any time, and from time to time, to subordinate the rights and interests of the Tenant under this Lease to the lien of any mortgage or deed of trust at any time placed upon the real estate or which the premises are a part; PROVIDED, HOWEVER, that such subordination shall not affect Tenant's right to possession, use, and occupancy of the premises so long as Tenant is not in default under any of the terms and conditions of this lease. 12.3 HOLDING OVER: In the event that Tenant remains in possession of the premises after the expiration of this Lease and without execution of a new lease, it shall be deemed to be occupying the premises as a Tenant from month to month, subject to all of the conditions, provisions and obligations of this Lease insofar as the same are applicable to a month-to-month tenancy. 12.4 SURRENDER OF LEASE: The surrender of this T.caca by Tenant or a mutual termination thereof, shall not work a merger and may, at the option of Landlord, terminate any or all existing sub -leases or concessions, or may operate as an assignment to it of any or all such subleases or concessions. 12.5 SUCCESSORS AND ASSIGNS: Subject to the provisions of Article 15 hereof, all of the provisions of this Lease shall be binding and inure to the benefit of and shall apply to the respective assigns and legal representatives of Landlord and Tenant, respectively. 12.6 NOTICES: All notices in this Lease provided to be given by either party hereto to the other shall be deemed to have been given, when made in writing and when first delivered or refused by the intended recipient, and addressed as follows: TO LANDLORD: JOSEPH R. MORRIER, JR., MANAGER JEM-PLAZA, L.L.C. THE TOWER 402 E YAKIMA AVE STE 1400 YAKIMA WA 98901 (7/19/99) -14 - TO TENANT: JOSEPH R. MORRIER, SR. YAKIMA MALL SHOPPING CENTER CORPORATION 402 E YAKIMA AVE STE 1400 YAKIMA WA 98901 Such notice may be sent by postal service or a nationally recognized overnight courier service, at the election of the sender. The address to which any notice, demand or other writing may be given, made or sent to either party may be changed by written notice given by such party as above provided. 12.7 TIME OF ESSENCE: Time is of the essence of this Lease and every provision thereof. 12.8 CONSTRUCTION: Nothing contained herein shall create the relationship of principal and agent or of partnership or of joint venture between the parties hereto and neither the method of computation of rent, nor any other provisions contained herein shall be deemed to create any relationship between the parties hereto other than the relationship of Landlord and Tenant. Whenever herein the singular number is used, the same shall include the plural, and the neuter gender shall include the feminine and masculine genders. 12.9 GOVERNING LAW; ATTORNEY'S FEES; VENUE: This Lease Agreement shall be construed in accordance with the laws of the State of Washington. In the event of any action arising hereunder, the prevailing party shall be granted its attorney's fees and court costs. Venue for any such action shall be in the County of Yakima. 12.10 RECORDING: Neither party shall record this Lease without the prior written consent of the other. However, upon the request of either party, both parties shall execute a memorandum or "short form" of this Lease for the purposes of recordation in a form customarily used for such purposes. Said memorandum or short form of this Lease shall describe the parties, the leased premises and the lease term, and shall incorporate this Lease by reference. IN WITNESS WHEREOF, the Landlord and Tenant have signed their names and affixed their seals the day and year first above written. JEM-PLAZA, L.L.C. YAKIMA MALL SHOPPING CENTER CORPORATION By Its Manager By By Its Manager Its President LANDLORD TENANT (7/19/99) -15- STATE OF WASHINGTON ) ss. LANDLORD'S COUNTY OF YAKIMA ) ACKNOWLEDGMENT I certify that I know or have satisfactory evidence that JOSEPH R. MORRIER, JR. and MICHAEL D. MORRIER signed this instrument, on oath each stated that they were authorized to execute the instrument, and acknowledged it as the Managers of JEM- PLAZA, L.L.C., to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. DATED: (Seal) STATE OF WASHINGTON COUNTY OF YAKIMA Notary Public in and for the State of of Washington, residing at My appointment expires: ss. TENANT'S ACKNOWLEDGMENT I certify that I know or have satisfactory evidence that JOSEPH R. MORRIER, SR. signed this instrument, on oath stated that he was authorized to execute the instrument, and acknowledged it as the President of YAKIMA MALL SHOPPING CENTER CORPORATION, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. DATED: (Seal) Notary Public in and for the State of of Washington, residing at My appointment expires: (7/19/99) -16- MALL -PLAZA GROUND LEASE THIS INDENTURE OF LEASE 1999, by and between YAKIMA Washington corporation, as Washington Limited Liability "Lessee". is made this day of MALL SHOPPING CENTER CORPORATION, a ' "Lessor", and JEM-PLAZA, L.L.C., a Company, hereinafter referred to as W ITNESSET H: That the Lessor for and in consideration of the faithful performance by the Lessee of the covenants and agreements hereinafter contained by said Lessee to be kept and performed, does hereby lease and demise unto the Lessee, and said Lessee does hereby take from said Lessor, the following described premises situated in the City of Yakima, County of Yakima, State of Washington, to -wit: (7/19/99) Parcel A Beginning at the southwest corner of Lot 1, Block 90, Town of North Yakima, now Yakima, according to the plat thereof recorded in Volume A of Plats, page 1, re-recorded in Volume E of Plats, page 10, Records of Yakima County, Washington; thence north along the east line of North Fourth Street a distance of 130 feet; thence west 50 feet; thence south 130 feet; thence east to the point of beginning (being the portion of the east half of North Fourth Street). Parcel B Beginning at the northeasterly corner of Lot 12, Block 70, Town of North Yakima, now Yakima, according to the plat thereof recorded in Volume A of Plats, page 1, re-recorded in Volume E of Plats, page 10, records of Yakima County, Washington; thence easterly parallel to the north line of East Yakima Avenue a distance of 50 feet to the center line of vacated North Fourth Street; thence southerly along the center line of vacated North Fourth Street a distance of 130 feet to the north line of East Yakima Avenue; thence westerly along said north line a distance of 50 feet to the southeast corner of Lot 12 of said Block 70; thence northerly along the east line of -1- said Lot 12 a distance of 130 feet to the northeast corner thereof which is the point of beginning. EXCLUDING THEREFROM the below ground level improvements of said property presently leased to Mervyn, Inc., and all right to use and occupancy of the below ground level portions of the property. 1. TERM: To have and to hold the above described premises, together with the privileges and appurtenances thereunto belonging, subject, however, to the foregoing restrictions and conditions, and to the terms, conditions and covenants hereinafter expressed and declared, unto the said Lessee, its successors and assigns, for the following terms: (a) Interim Term: The Interim Term shall commence on the date that the Lessee commences demolition of any of the improvements upon the leasehold premises, or the adjacent Lots 11 and 12, Block 70, or begins construction of the buildings proposed to be erected on the leased premises, and shall end on the date that YAKIMA MALL SHOPPING CENTER CORPORATION, or its assignee, accepts occupancy of the building Lessee will construct for it and begins payment of its minimum rent. (b) Principal Term: The Principal Term shall commence upon the date that YAKIMA MALL SHOPPING CENTER CORPORATION accepts occupancy of the building and begins its payment of rent and shall continue for a period of forty (40) years, unless the same shall be sooner terminated, as hereinafter provided. 2. RENTALS: The Lessee covenants that during the Interim Term of this Lease, the Lessee shall pay to the Lessor the sum of SEVEN THOUSAND AND NO; 100 DOLLARS ($7,000.00) per annum, payable in arrears on September 30 of each calendar year. Rent for a period of less than twelve months will be prorated based on a 365 day year. Rent for a period of less than 12 months shall be prorated at the rate of $16.75 per day. Recognizing that upon commencement of the Principal Term of this Lease, the Lessor herein will be leasing back as Tenant (from the Lessee herein as Landlord) the improvements to be built on the herein leased premises and the adjacent Lots 11 and 12, Block 70, under a long term net lease wherein any ground rent paid by the Lessee herein would be added to the rent payable by the Lessor herein, it is agreed that during the Principal Term of this Lease, the Lessee shall pay to the Lessor at such place in the City of (7/19/99) -2- Yakima, or such other city or town or place as the Lessor may from time to time in writing designate, by way of rent for said premises, the sum of ONE HUNDRED AND NO/100 DOLLARS ($100.00) per annum, payable annually on or before September 30 of each calendar year. Any installments of rent which shall not be paid when due, shall bear interest at the rate of ten percent (10%) from the date when the same were due and payable by the terms of this Lease until paid by the Lessee. All of said installments shall be paid in lawful money of the United States of America. 3. USE OF PREMISES: Lessee agrees to use and occupy said premises in a lawful and proper manner for the purpose of maintaining and operating or permitting to be maintained and operated thereon only lawful businesses. Lessee agrees not to permit said premises to be used for any illegal purpose nor to commit or permit waste to be committed thereon. 4. COMPLIANCE WITH ORDINANCES: The Lessee will observe and comply with all lawful requirements, rules, regulations, laws and ordinances of all legally constituted authorities in any way affecting the use of the above described premises, the buildings and improvements now or hereafter thereon, or the use of the same existing at any time during the continuance of this Lease. The Lessee will further save and keep harmless the Lessor, the above described premises and the buildings or improvements now or hereafter situate thereon at all times during the continuance of this Lease from all damages, claims, fines, penalties, costs or other expenses whatsoever, including reasonable attorneys fees that may result to the Lessor or be incurred by the Lessor imposed on said premises or any buildings or improvements of any kind situate thereon from any default or failure of the Lessee in the performance of the foregoing covenants and agreements with respect to the use of the said premises. 5. ACCEPTANCE OF THE PROPERTY: The Lessee has inspected and accepts said premises in their present condition and quality and agrees to keep the same and all improvements which may hereafter be placed on said premises at all times in good condition, order and repair at Lessee's sole cost and expense during the term of this Lease, reasonable wear and tear and damage by the elements excepted. 6. TAXES: The parties have agreed upon the rent hereinabove provided, taking into consideration the taxes on the herein leased premises which will continue to be paid by Lessor. The Lessor shall pay promptly as the same shall become due and indemnify and (7/19/99) -3- save harmless the Lessee from all taxes, assessments, license fees, wA ..1.�«.,..... .L....� +.r.... may hereafter be levied, G%►V 1.�7 G� Q11K Vit Gll yG.7 L.11Q 1. giG now, or may £ A_GGiJ_ {..G.k be assessed, charged or imposed upon the leased premises. 7. INDEMNITY: Lessee agrees to indemnify and hold harmless_.. the Lessor from any and all claims or demands of whatsoever nature arising out of loss, damage or injury to persons or property, whether due to the erection of improvements, disrepair of the demised premises or otherwise, arising out of or in connection with the Lessee's use of the improvement, maintenance or occupancy of said premises including construction of any and all types and ah.e... .F...he....ri c11a.rh lose, A... ae.mae.ge.... r..+r injury is cnffercAaa1v the Lessor, its agents, employees, representatives, assigns or others. Further, the Lessee agrees to insure with a reputable casualty insurance company itself, with the Lessor being named as additional insured, against any loss arising out of the operation, maintenance or construction upon said premises by the public or any agents, employees, representatives of the Lessor with limits of $1,000,000.00 / $2,000,000.00 for public liability, loss, claim or damage and with reasonable limits for property damage. B. BUILDING: It is understood and agreed that the Lessee will construct a building to be leased to Lessor (the Plaza Building). The building is to be constructed upon the premises herein leased and adjacent premises owned by Lessee. Since the entire purpose of the parties entering into this ground lease is for the construction of the said Plaza Building, it is, therefore, specifically agreed that in the event the Lessee does not commence construction of the Plaza Building by October 1, 2002, then and in that event this Lease shall become null and void and be of no further effect. 9. PROTECTION AGAINST LIENS AND CLAIMS: Lessee agrees to save the Lessor safe and harmless and to indemnify the Lessor from any claims arising out of liens, claims of contractors, subcontractors, mechanics, laborers and materialmen; Lessee further agrees that it shall pursue the construction and completion of the building within a reasonable time after the commencement thereof and shall promptly pay all claims of every kind and nature arising out of the construction as said claims become due. Lessee further agrees to indemnify the Lessor against and save the Lessor harmless from any loss, costs, damage or expense, including reasonable attorneys fees or liability in any manner arising out of, or connected with the construction and completion of said building or the excavation and preparation for said building. 10. MAINTENANCE: The Lessee will at all times and at its own expense keep all buildings and improvements situate on said premises at any time during the term of this Lease in good order, (7/19/99) -4- condition and repair, and shall at all times save and keep the Lessor free and harmless from any and all damage and liability occasioned by any act or neglect of the Lessee or any agent or employee of the Lessee or any tenant of said premises holding under said Lessee. 11. RESTORATION: If the buildings and improvements which the Lessee may erect on said premises shall be damaged or destroyed from any cause whatsoever, whether or not protection by insurance shall have been obtained against such damage and/or destruction, the Lessee covenants that within three (3) months from the date of such damage or destruction it will commence the work of repair, reconstruction or replacement and prosecute the same with all reasonable dispatch and in any event within eight (8) months from the date of commencement of repairs or reconstruction such buildings and improvements will have been repaired or reconstructed or replaced with another building or buildings and improvements equal in value to the value of the buildings and improvements so damaged or destroyed, provided, however, that Lessor shall extend the time for repair or reconstruction for delays due to strikes, war, riots, or other delays beyond the control of the Lessee. Notwithstanding anything contained in this paragraph to the contrary, however, the Lessee is given the option in the event any building shall have been destroyed or damaged to the extent that in the opinion of the Lessee it shall not be practical to replace or repair the same, to cause to be removed from said premises herein demised all debris and restore the said premises to the condition in which they existed at the time of the inception of this Lease, and the Lease shall thereupon be terminated. Provided, however, that if the Lessee elects not to rebuild the damaged buildings, then in that event, it shall pay to the Lessor the reversional value of said buildings at the time of their destruction, said reversional value being herein defined as the reasonable market value of said buildings immediately prior to the time of the destruction. Upon such payment of the reversionary value, the remaining leasehold term shall then be terminated. In the event the parties cannot agree upon the reversionary value, the amount of such value shall then be litigated. In the event the Lessee shall elect to reconstruct any improvement or building in accordance with the terms of this paragraph, the Lessee shall comply with all the terms and conditions of this Lease with reference to securing the Lessor from any claim arising out of any said repairs or reconstruction, as more specifically set forth hereinbefore in this Lease. 12. SURRENDER AT TERMINATION: Lessee further covenants and agrees that upon a termination of Lessee's rights hereunder, the Lessee will surrender to the Lessor possession of the leased premises, together with all buildings and improvements thereon, (7/19/99) -5- free and clear of any claim of any kind or nature on the part of the Lessee and in good condition and repair, reasonable wear and tear and damage by the elements excepted. 13. QUIET ENJOYMENT: That the Lessee shall have the peaceful and quiet enjoyment of the demised premises without hindrance or disturbance during the term of this Lease so long as Lessee observes and complies with the obligations imposed upon it by the terms hereof; subject only to the rights of the parties hereto which are hereinafter defined in the event said premises are taken under the power of eminent domain. 14. PAYMENTS BY LESSOR: In case of any default on the part of the Lessee in the payment of any taxes, assessments, public charges or any other items herein provided to be paid by the Lessee, the Lessor, subject only to the limitation herein otherwise expressly provided, may make any such payments on behalf of the Lessee but will not be obligated so to do, and Lessee agrees upon demand to reimburse and pay the Lessor any amounts so paid or expended with interest thereon at the rate of 10% per annum from the date of payment so made by the Lessor. 15. ASSIGNMENT AND SUBLETTING: The Lessee shall have the right, should it so desire, to assign this Lease or any portion thereof, provided, first, that there be at the time of the assignment nr transfer nn existing defaults on the part of the Lessee in the performance and observance of the covenants and conditions hereof. And secondly, Lessee shall remain bound as principal and not as surety or guarantor for the performance of all the terms, covenants and conditions of this Lease, irrespective of whether or not the same be assigned in whole or in part, and by signing this Lease, the Lessee agrees to remain so bound in the event of an assignment or subsequent assignment by the Lessee or its assignees, and further agrees that no acceptance by the Lessor of rental or any other performance from any future assignee and/or assignees shall be construed as a novation nor in any way construed to release the Lessee from the performance of all the terms, covenants and conditions of this Lease. Should the Lessee be adjudged bankrupt or become insolvent, the Lessor may at its option terminate this Lease and resume possession of the premises herein demised, together with all improvements situated thereon free and clear of any claim of any kind or nature on the part of said Lessee or anyone claiming under said Lessee, and said improvements shall be taken by Lessor as liquidated damages for the breach of this Lease. 16. CONFLICT WITH LEASE BACK TO YAKIMA MALL SHOPPING CENTER CORPORATION: It is the intent and expectation of the parties that upon completion of the Plaza Building on the herein leased premises (7119/99) -6- and the adjacent property owned by Lessee, the Lessee will lease the entire Plaza Building to the YAKIMA MALL SHOPPING CENTER CORPORATION for a term co -extensive with the term of this Ground Lease. In the event any of the provisions of this Ground Lease conflict with the JEM-PLAZA L.L.C. to YAKIMA MALL SHOPPING CENTER CORPORATION Lease, the provisions of the JEM-PLAZA, L.L.C. to YAKIMA MALL SHOPPING CENTER CORPORATION Lease shall be paramount and superior and shall be substituted in the place and stead of the conflicting provisions of this Lease. 17. REMEDIES OF LESSOR: If any of the rents reserved under and by virtue of the terms of this Lease, or any part hereof, shall be and remain unpaid when the same shall become due, or if the Lessee shall violate or default in any of the covenants and agreements herein contained, then the Lessor may at its option upon giving the notice required by law and by paragraph 23 hereinafter, re-enter said premises and all rights of the Lessee under the terms of this Lease shall be terminated, but notwithstanding such re- entry by the Lessor, the liability of the Lessee for the rent provided for herein shall not be extinguished for the balance of the term of this Lease and the Lessee covenants and agrees to make good to the Lessor any deficiency arising from the re-entry and re- letting of the premises at a lesser rental than herein agreed to. The Lessee shall pay such deficiency each month as the amount therein is ascertained by the Lessor. No damage to or destruction of any building on the premises by fire or any other casualty of whatsoever kind or nature shall entitle Lessee to surrender possession of the demised premises or to terminate this Lease. 18. DEFAULTS: This Lease is granted on the following conditions: (1) That if at any time rents, taxes, assessments, charges, utility charges, liens, mortgage payments, penalties or damages aforesaid, or any part thereof, or any of them, shall become in arrears and shall be unpaid for a period of thirty (30) days after written notice; or (2) If, in the performance or observance of any of the other covenants, agreements or conditions herein set forth to be performed and observed by the Lessee, such defaults shall continue for a period of thirty (30) days after notice in writing thereof shall have been given by the Lessor to the Lessee; then and in such event the Lessor at any time thereafter shall have the full right at its election upon giving ten (10) days written notice of such election to enter in, into and upon the above described premises and take possession of the same, together with (7/19/99) -7- all buildings and improvements thereon and from the time of such Antry the T. cnr may hol A and retain the said d m s and all l j —••� a. ....af aaviv anr1 iv.Y iaa .�. Gi14 �rGllli�Gj Q11 buildings and improvements thereon as of their first and former estate, and Lessor may bring suit for and collect all of the rents, taxes, assessments, charges, utility charges, liens, mortgage payments, penalties and damages, including damages to the Lessor by reason of such breach or default on the part of the Lessee which will have accrued up to the time of such entry, or shall accrue subsequent to the time of such entry, and the Lessor may, if it elects so to do, bring suit for and collect all such rents, taxes, assessments, charges, utility charges, liens, mortgage payments, penalties and damages in filo event of any default ac a fares i A without voiding this Lease; PROVIDED, however, that any sublessee of the Lessee under the provisions of this Lease may avoid the aforesaid re-entry as herein provided by satisfying and curing the default prior to the expiration of the period at the termination of which the right of re-entry may be exercised. Nothing contained in this paragraph, however, shall be construed to release the Lessee in the event of such entry and/or repossession for the liability to the Lessor for the rent provided for herein for the balance of the term of this Lease, and Lessee covenants and agrees to make good to the Lessor any deficiency arising from any re-entry or re -letting of the premises at a lesser rental than herein agreed to. 19. WAIVER: No waiver by the Lessor of any default or breach of any covenant, condition or stipulation herein contained shall be treated as a waiver of any subsequent default or breach of the same or any other covenant, condition or stipulation hereof. 20. CUMULATIVE REMEDIES: The various rights, powers, options, elections, appointments and remedies of the Lessor in favor of the parties hereto contained in this Lease shall be construed as cumulative and no one of them is exclusive of the other or exclusive of any rights or priorities allowed by law. 21. COSTS AND ATTORNEYS FEES: In case it should be necessary for the Lessor or the Lessee to bring action against the other party in any court of law or equity in order to enforce the terms, covenants and conditions of this Lease, the successful party shall have and recover against the unsuccessful party in addition to the costs allowed by law, such sum as the Court may adjudge to be reasonable attorneys fees. 22. NOTICES: All notices which may be proper or necessary for the parties hereto to serve upon each other in the case of the Lessee may be mailed via registered or certified mail to the Lessee, Yakima, Washington, or such other address as may be furnished by the Lessee to the Lessor in writing from time to time; and in case of the Lessor, may be mailed by registered mail to the (7/19/99) -8- Lessor in care of Joseph R. Morrier, Sr., The Tower, 402 East Yakima Avenue, Suite 1400, Yakima, Washington 98901, or at such other address as may be furnished by the Lessor to the Lessee in writing from time to time. The depositing of said notices in accordance with the terms of this paragraph in the United States Mails, properly addressed, as hereinbefore set forth, with postage and registration or certification prepaid, shall be conclusively presumed to be delivery of such notices. 23. SUCCESSORS: The covenants, agreements and conditions herein contained shall extend to and be binding not only upon the parties hereto but also upon their respective successors, heirs, executors, administrators, assigns and/or subtenants and the same shall be construed as covenants running with the land. 24. EXTENT OP PREMISES: The Lessee has examined and knows the condition of the above described premises, together with the extent thereof, and no representations as to the condition or extent thereof have been made by the Lessor nor by any agent of the Lessor. 25. EMINENT DOMAIN: In the event that the aforesaid land and any building hereafter built thereon, or any part of said land or building, be appropriated by some public or private corporation having the power of eminent domain, or if the said property be conveyed by the parties hereto for the purpose of avoiding proceedings in appropriation, the payment or award shall be apportioned and paid as hereinafter provided: (1) If all of the said land and building (or so much thereof as to render the premises unsuitable for any business occupancy) be taken or appropriated by eminent domain proceedings, then and in that event this Lease shall terminate and any award or payment therefor will be deposited in a bank or trust company and apportioned and paid as follows: From the said fund there shall first be paid to the Lessor an amount equal to the then value of the Lessor's reversionary interest in and to the said lands at the time of the condemnation and the balance of said award shall be paid to the Lessee; (2) If only a portion of the said land and buildings be taken or appropriated by eminent domain proceedings, and if the premises are still suitable for any business use after such taking, the proceeds therefrom will be deposited in a bank or trust as to that portion of the land so taken but shall remain in full force and effect as to the remainder of the said land and buildings; providing that the future rentals (7/19/99) -9- to be paid by the Lessee shall be abated in that ratio that the land area taken bears to the whole land area herein demised. From the proceeds'of any award or compensation for such partial appropriation, there shall first be paid to the Lessor an amount equal to the value of the Lessor's reversionary interest in the lands so taken, and to the amount of damage, including but not limited to severance damages, if any, to the Lessor's reversionary interest in the lands so taken. The balance of the fund shall be paid to the Lessee. If the parties hereto are unable to agree on the respective valuations to be placed upon the various interests and property hereinbefore mentioned, such questions shall then be litigated. All of the terms and conditions of the foregoing provisions applying to condemnation shall apply to any successive or later condemnations, if any there be, with equal force and effect. 26. WARRANT OF AUTHORITY BY PARTIES: The parties herewith warrant their authority, both corporate and legal, to enter into this Lease and will affix hereto any necessary corporate resolutions and/or other evidence of legal authority under the laws and regulations not only of the United States of America but also the State of Washington. IN WITNESS WHEREOF the parties hereto have caused this insstruumeent to be v u e 7day a t • first .. ... vv executed the aaaa.s year Alere�.1A .��,r e�6. above written. YAKIMA MALL SHOPPING JEM-PLAZA, L.L.C. CENTER CORPORATION By By Joseph R. Morrier Joseph R. Morrier, Jr. Its President Its Manager LESSOR LESSEE STATE OF WASHINGTON ) ss. COUNTY OF YAKIMA I certify that I know or have satisfactory evidence that JOSEPH R. MORRIER signed this instrument, on oath stated that he (7/19/99) -10- was authorized to execute the instrument and acknowledged it as the President of YAKIMA MALL SHOPPING CENTER CORPORATION to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. DATED: Notary Public in and for the State of Washington, residing at My appointment expires: STATE OF WASHINGTON ) ss. COUNTY OF YAKIMA I certify that I know or have satisfactory evidence that JOSEPH R. MORRIER, JR. signed this instrument, on oath stated that he was authorized to execute the instrument and acknowledged it as the Manager of JEM-PLAZA, L.L.C. to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. DATED: Notary Public in and for the State of Washington, residing at My appointment expires: (7/19/99) -11- JEM Plaza, LLC Yakima Mall Expansion Project Pre Tax Cash Flow Analysis 7!18!99.527 PM i:acct'sec108Mefad\Cash Flow.x1s111O% & 5% ovr (2) YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 YR 8 YR 9 YR 10 Income + Lease Income 558,896 558,896 558,896 558,896 558,896 558,896 558,896 558,896 558,896 558,896 + Percentage Rents - - - - - - - 3,046 20,766 38,682 = Total Income 558,896 558,896 558,896 558,896 558,896 558,896 558,896 561,943 579,663 597,578 Operating Expenses Ground Lease Expense 7,000 100 100 100 100 100 100 100 100 100 - Total Operating Expenses 7,000 100 100 100 100 100 100 100 100 100 = Operating Income 551,896 558,796 558,796 558,796 558,796 558,796 558,796 561,843 579,563 597,478 - Debt Service (Annual P & Int) City 321,571 321,571 321,571 321,571 321,571 321,571 321,571 321,571 321,571 321,571 - Debt Service (Annual P & Int) Private 186,516 186,516 186,516 186,516 186,516 186,516 186,516 186,516 186,516 186,516 = Cash Flow Available for Distribution 43,809 50,709 50,709 50,709 50,709 50,709 50,709 53,755 71,475 89,390 CASH -ON -CASH ROI Cash Flow Available for Dist 5.0% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8% 6.1% 8.2% 10.2% Original Equity Investment Investment = $875,000 7!18!99.527 PM i:acct'sec108Mefad\Cash Flow.x1s111O% & 5% ovr (2) JEM Plaza, LLC Yakima Mall Expansion Project Pre -Tax Cash Flow Analysis 7/16199, 527 PM i acct\sec108\aetainCash Flow .xts\11 O% & 5% ovr (2) YR 11 YR 12 YR 13 YR 14 YR 1.5 YR 16 YR 17 YR 18 YR 19 YR 20 TOTALS Revenues + Lease Income 558,896 558,896 558,896 558,896 558,896 558,896 558,896 558,896 558,896 558,896 11,177,926 + Percentage Rents 32,936 51,592 70,248 89,490 109,317 129,144 150,864 172,584 194,890 217,195 1,280,754 = Effective Gross Rent 591,832 610,488 629,144 648,386 668,213 688,040 709,760 731,480 753,786 776,091 12,458,679 Operating Expenses Ground Lease Expense 100 100 100 100 100 100 100 100 100 100 8,900 - Total Operating Expenses 100 100 100 100 100 100 100 100 100 100 8,900 = Operating Income 591,732 610,388 629,044 648,286 668,113 687,940 709,660 731,380 753,686 775,991 12,449,779 - Debt Service (Annual P & Int) City 321,571 321,571 321,571 321,571 321,571 321,571 321,571 321,571 321,571 321,571 6,431,422 - Debt Service (Annual P & Int) Private 186,516 186,516 186,516 186,516 186,516 186,516 186,516 186,516 186,516 186,516 3,730,329 = Cash Flow Available for Distribution 83,645 102,301 120,957 140,198 160,026 179,853 201,573 223,293 245,598 267,904 2,288,029 CASH -ON -CASH ROI Cash Flow Available for Dist 9.6% 11.7% 13.8% 16.0% 18.3% 20.6% 23.0% 25.5% 28.1% 30.6% 13.1% Original Equity Investment Investment = $875,000 7/16199, 527 PM i acct\sec108\aetainCash Flow .xts\11 O% & 5% ovr (2) JUL. 20 ' 99 (TUE) 12 : 08 JEW DEVELOPMENT 509 457 8361 PAGE. 2 D ' LOPMENT COMPANY MA, WASHINGTON 0: ' 0, i c i 1'1 i.. ?, i 1 1 T11'1 1 ✓. 1T1 ✓ Q0a I»eladad Included Included Included L8 Included LS Included LS Inc/Wed LS Included LS SUBTOTAL ACCUMULATIVE Included LS Included LS General'' -tions 000 0 0.00 0` 0.80 O " SUBTOTAL ACCUMULATIVE TOTAL THIS SHEET 000 527,800 4,077,600 JUL.. 20 • eA 017. 12 09 5 E'Dd 45 7 6361 FAGS. 3 '-Fred Petersen 1 �.�: D OP r COMPANY ■ .JJl,� 2. 19991 RA/5T YAEIMA ArENUE AT FOUR ..•- STREET FRCr}I DESIIA WORLDWIDE A.KIKAtIVASHINGTON 811 ELM STkuaA">', SUITE 600 1! CINCINNATI, STAR SERVI CES, a professional Com pany OHIO 45202 111LOt 1[ • Est mentors schedu ers - Specikrs 424 G Street Covington, 41011 i '- -_-- 1 if 1h i T� .b. 1 11 LABOR WHO; ri TOTAL DESCRIFTIoN Quote/ Un1 Ane ai !-lotus Other kb MATERIAL MAGNITUDE CONSTRUCTION BUDGET ESTIMATE BASELINE BUILDING DEMOLITION rSuperstucturo 1 - by r�ub6.500 5F by t3 Hoott12.00' 624,000 CF 0.00 0.00 0.20 0 0 0' 124,800 124,800, re 1500 SFby 1 F r yb acxi - ; oao cr o.00 0.00 0.25 0 0 39,1566 19,500 Biking North of Plaza 1,200 SF by 1 Floor by 12.00' 14,400 cF coo taco a..• 4 0• 2,890, 2,880 0.21 - AVG AVG AVG 11 = �� ,1 ACCOUNT - 716400 000 0.00 0.21 0 0 0 147,180 147,180 In II M • Mona 41 - axes imfro r" i •.00 0.00 0.00 0 0 0 0 - 11E7 Mrre9ILS 0.00 0.00 0.00 1 0' 0 e .4 • i :71': ns, nsurance. • • s, ... .. l cludcd LS 400 0.00 0.00 0 O 1 II Trade • . tsi0nli"g1}*`I is 0.00 1 0.00 0.00 o O 0 0 MOM 11 •u• nt r.:.: , Included LS 0.00 0.00 0.00 0 IIII 0 0 0 IIIIIm1 II a M, ." fTILF.T7?I.- 1eer4eidcd LS 0.00 0.00 0.00 � 0 I 0 0 O _ ..__ II ._ , :,• I r I Ls too ton o.00 0 I 0 0 0�7 IIIncidentals- i' . 147.180 S 0.00 0.00 5.00% 0 I 0 0 9 7 5 421 AVG AVCMI - DBTOTAL ACCUMULATIVE 716400 F 0.00 0.00 0.22 0 0 1, - • . a 16039 Ir • Su ac�> lvethead & Profit- Wabrial■ )1•51.%171 0.00 too o.00 0 0 1 Luber��. InclededQ 0.00 oho 0.00 0 0 0 Q • 1; r incistatd0 0.00 0.00 000 0 0 0 Cola RUCTION MANAMA R 1 Il c^.-_^ t •" • • • See su,nrn,ry -- 0.00 0 0 0 00 II 1" ' ! . • r. rt See Summary 0.00 0.00 0.00 o II : I I • • • _ • • nt See mary 0.00 0.00 (1.00 0 0 0 0 II 0 ,.- IISUBTOTAL. ACCUMULATIVE W •• 716,400 AVG AVG AVG C 0o 0.00 a22 0 0 0 154,11.39 1541539 Irk •. r• Lt. IL*. /41 Ll 1-1sa 1 KO 14 '. see Summvy Ls 0.00 a o0 0.00 0 1 *min o • r. 1 is 0.00 0.00 0.00 j 0 0 eg ._.: 0.'� ■wpm AVG AVC SUBTOTAL THIS SHEET 716400[ 0.00 0.00 022 0 • A 164,600' - - ilow. II NM= - I{ -■�. �fill - - - - 111 EliII II 111 11111111E2 Mil= IUM_ II Iii ■_ ■■ JUL. 20 ' 99 (TUE), 12:10 JEM DEVELOPMENT 509 457 8961 PAGE. 4 r { --. Petelso L AKI A S A L--- j• �9G1 i JM DEVELOPMENT COMPANY July §..1999 EAST YAIC MA AT :FP 0 •'+ i •' ' = -iDi: FRG" DESIGN WORLDWIDE 'YAKIM , wAS1T6roroN 811 ELM STREET, SUITE 600 CINCINNATI, 0)110 45202 4 LONESTAR SERVICES, a professional company ,. Estimators • Schedulers • rs � - SU -. Co n24 gtonO K icy 41011 ilei Uhl Lkift Tont Avg MATERIAL LABOR r OTHER TOTAL, DESCRIPTION • e'• SMs puan wens Hours other t 3016 p.....-. s ... _. ,...... .,... .. __... ...... MAGNITUDE CONSTRUCTION BUDGET ESTIMATE BASELINE BASEMENT DEEPENING "•' Waits and stab on Grade inlucded will f tihg_Do i n -- _.� 1 :.• n L. alcimef9l ►4 Feet . Yom• . � ._� _ �,- -fi 6,500 $F X 4."5 10 1.37 1,092 CY-31.00 0.10 9.00 109 19 5 O 075 0,228 17.31 Gravel Base 10 0.23 180 111 8.00 0.1.0 55.00 13 19 1,440 irv, 1,620 3,402 Castln Place Concrete Wails 2 at 140.111 x 16.00' 10 1350 190 CY 12500 6.00 25.030 1,030 19 22,500 20,520 4,500 47,620 Wats 2 at 45.00 x 1600' 10 430 60 CY 12540 6.00 25.00 30 i 6 7,500 6,840 1 15 840 Slab On Grace 10 13.00 130 CY 7500 8.00 2500 1,040 19 '9,7____50 19,780 0 82,700 e':, ; + -10 rets :. ' 10 0.75 20 CY 75.00 3.00 2100 60 19 1 1,140 600 81140 ,5, V: ext • anis 10 0.75 20 CY 75,00 3.00 2500 60 19 I,600 1440 500 14(1 Elevated Slab 4 Stlonng 10 4.06 6.500 SF, 2.00 0.05 0.00 325 19 18 600 0,175 0 19,175 Elevalad Stab 10 13.00 130 ACY 7100 8.00 7500 1,040 19 9,750 19,780 8,250 32.780 Underpinrbng i L8 0.00 000 15.000 a o 0 15,000 15,0001 (#?2. AVG AVG AVG 1 : 1AL THIS ACCOU 540 CY 334.07 738 73.98 4,092 19 72,400 77,752 89,948 190,1 INDIRECT ACCOUNTS .....,44 of Yakima Sales Taxes 72.400 $ 7.90% Goo 0.00 0 5,7201 6- 0 6720 Freight72,400 •Insurance, $ 4.00% 0.00 0.00 0 2 0 0 2,896 Payr0Tff31mderrs Tools, Supplies 77.752 $ 2100% 0.00 0.00 0 0 19,438 0 19,439 Trade Su is on induce is o.00 0.06 0.00 o 6" 0 0 0 Included LS 0.00 0,00 0.00 0, 0'- 0 0 - -----6 Incidentals - Material 81,016 $ 5.00% 0.00 0.00 0 4,051 - o 0 ,KIW. 'Incidentals Incidentals - Labor 2 12.79 4,092 AR 0.00 50096 0.00 208 24 0, 4,869 0 4,�� - Other 39.948 $ 0.00 000 5.00% 0 0 0 1,997 1,997 424JD Avo AVG AVG SUBTOTAL ACCUMULATIVE Sao CY 157.53 '7.96 77.68 4,297 24 85,066 102,049 41,946 289,06 ThisSubcontraciors Overhead 8 Profit Material -Tabor 85.066 $ 15.00% 0.00 0.00 6 12,,780 6 0 i 7� moo 15.00'3, 0.o0 non0 0 15,307 0 15 807 Mar 41.945 $ 15.00% 0.00 0.00 j 0 0 0 692 8 9$ CONSTRUCTION MANAGER I•- Oeneral Catdilians see ssmmary 1,s (iia 0.00 0.00 o 0 0 0 0 Overhead & Profit scc Summery LS Goo 0.03 0.00 o 0 0 0---0 J6onds- Perorm n0@- Payment Sc Ss� nrnary LS 0.00 0.00 0.00 0 0 0 0 ......_..0. 457 AVO AVO AVG w SUBTOTAL ACCUMULATIVE 540 CY 181.16 7.96 $9,3 ..:..7. x,297 27 • ., . 9 8..7,826 117,857 ._, 48,237... 2638,420 Altowarta For Unforeseen Condfdons 'Round Sce Summary LS asp o.o0 0.0) 0 0 0 0 0 To rill Dollars1 LS 0.00 0.00 ' 0.00 2 27 43 43 ,37 ------M 487.75 AVO AVO AVG SUBTOTAL THIS SHEET 540 CY 181.11 7.96 89.26 E 4,299 27 87,800 117,400 48,200 288,400 ` 11 JUL..620 • 99 C r U 12 :11 .f L.11 D EITELL7P'A41::N 509 457 0361 PAGE. 5 Petersen ANIMA MAIL red - -r DEVELOPMENT COMP _July 2. 1929 BART YAKIMA AVENUE AT FC i -T- -.--.;,; _ FRC,ii DESIGN WORLD \..._ YAKIMA, WASHINGTON 811 ELM STREET, SUITE 600 CaaNCINNATa, CSD LOPIESTAR SERVICES, a professional company _ Estimators • Schedulers Covington, Konitciv 41011 vie llNi Unit Total ' vg- MATERIAL j ABOR OTHER DESCRIPTION � ti ! • . . {il i�'1TT'' 111'' .. C.'7>i Hew - it i HAONI1uaE CONBTRUCI1ON RUtt?�slET1 BASELINE PLAZA REMOVAL am . tan . . , ► : ,,. •:. 1 S 96.00 2, • 100! 96 19 0 =►'"'• . •fri IM:i P: r • am B ,n 1,000 6 13 LS 0.00 624.00 1C1000 624 19 0 11856 r 1 1 1 21856 'Fri Trash Bin 10 EA 0.00 0.00 350.00 ® I s f , , 1 s • Barricades 6 , • 1 IS 2,500100 96,00 :17000 + I v :! Fri 1r5,7 AVG AVG AVG ..... .. . . ..,.. m.r�mr..n r .rmtc� ar.r..wt wl1 `m.s,�1t)1d99., 1lmia� ,FA��.,e.®@JL 1 lama sF 0.21 .. w... .W1 aw.. Ems!! err 816' aw 19 0CM aAy6"0"," 1C k'14 a.ee,ss.�r-as 1R AM ..a.pa.... QA APIA 11,34.7 .� ,INDIRECT ACCOUNTS city of Ya1dm ams Taxes 2,800 $ 7.90% 0.00 040 0 1 R _ 198 710411 2,S)0 $ 0.00 0.00 0 100 0 r 0 100 urdens, Iace, `, • - LI Payro11BInsurance, 15,504 $ •-4.0�0�% - `1-S.W* 0.00 0.00 ,. 0 6 0 8 87 R Trade S 1011 ind LS 0.00�.�.0 0.00 0 0 0 00 1 Egli ate, �. 1sc1uded ILS 0.00 0^0 00.0000 0.00 I 0 0 0 0 _t\ d Ina s • Mater(al 2,798 $ 5.00% 0.00 0.00 0 140 0 0 X r Incidentals • Labor 2.55 816 IKR 0.00 . 00% 0.00 41 24 0 tag- 0 'lnci&ntats • Other - u 4rxr $ 0.00 0.00 5.00% 0 0 0 820 820 536- AVG AVG AV( SU73't'UTAL ACCUMULATIVE 12,000 Sr 024 0.07 1.44 757 24 2,937 20,349 17,220 40,606 This Subcontractors Overhead & trout i-liRel 2:50.7 $ 14.0095 0.00 0.00 dt 441 0 0 444 rrr Labor 20,349 $ 15.00% 0.00 0.00 0 8,062 0 • 1 • JUL. 20 ' 99 (TUE) t 5 :24 JEM DEVELOPMENT 509 457 8361 PAGE_ 2/7 11 • AICIMA MALL 111111111111 ' _1 ' • , . etereen r Et , iripv *- • hipANy lily 2. 1909 II EAST 1A101111-AVENUE---Arr0up.TH sTREWr FR.CH DESIGN WORLDWIDE YAKIMA WASHINGTON 101 311 ELM STREET, MITE 600 II CINCINNATI, OHIO 46202 1. LONESTAR SERVICES, a Fralessional company ._._ . Estimators - Schedulerstr•ardners 424 Greenup S - - Covington,. Kentucky 41011 III • ilNAIIITOI, 11 1tItht Ont ,TO Zill ,,RIAL . On TOTAL II DR8CRIPTION . .;" ',•• Ouentl MIY7'`n- - I ilium other Haut a] .01,-- 11 ... 1 _ MAGNITUDE CONSTRUCTION BUDGET ESTIMATE ii BASELINE PLAZA REMOVAL __. 11 "717TI . • lc. . .. s.; S OA) 96756 2,400,00 19 0 4 i i 4 ' 4 LS 1 int fraillciffl anj,000 000 ',"" a 13 1 0.00 624:00 10,03D 19 _ 11 868 1 r 2Apar10. 1 .., . , .. 1 10 0.00 (1 3 50.00 0 0 .:2.11 31500 I Badman Ea 2.00 1 2,500 .00 00 9fx00.50 5 500 . , 500 ' 4 a •P 11111 AVCI AVG AVG - II SUBTOTAL THIS ACCOUNT 12000 3F 0.21 0.07 1.37 MI5 19 50O4 16,400 84,404 II INDIRECT ACCOUNTS --/90% NI 11 11' . - n 17:4 T- 2.300 0.00 -0,00- • 1 t 0 199 1fil1 ''-' .. ME 2.500 $ 4.00% 000 0.00 1 i i 0 11 o ell Burdns, rince adsestrai LIM 15:901 Ell 2500% 0 .0Ci 0.00 . 0 3,876 0 TWP inE . 11111 Inc itictialls 0.00 0.00 aoo 0 J :. 1 :r: •: 7:" Whirled 1,3 0.00 0.00 0.00 0 .. 0 0 Il,...0 rix .: M Y - 2.798 $ S00% 0.00 0.00 0 140 0 0 140 lden1:5'tor 2 816 0.00 3.064 0.00 41 0 969 0 'II •Other t (vin5 0.00 ape 500*0 1 11 a . all .. . Arrs AVO AVG . . . I SUBTOTAL ACCUMULATIVE 12,000 NF 0_24 0.07 1.44 2,937 . P.4 , . . .',1 40,606 This qr.. i : . Moorhead & Pr. Material 2737 3 15.00% 0.00 0.00 0 441 0 11 Lator 20349 15.00% 0.00 0.00 0 0 I , 3,069 3 I 1 :f 17,220 tsar* 000 o:tii 0 0 0 . 21W. 1 J __. ..... . 4 /I t II • See Slummy 0.00 0.00 0.00 0 a 6 0 0 • . -um • • See Summary Geo ate 0.00 .... -- 0 0 0 '6 : - - nce ytnent sec iumainiy 000000000 ' n • 0 0 0 0 3 el .. ... ,, , *Siiiiithirs AVG , .. AVG AVG -, AL AccumuLATIvE 12.000 D 0.28 0.07 .. 1.61 . SS7 , MI 3,876 28,401 .. . ..... 19,903 _ .. Allowance For Moreseen ernions sae summary 0.00 ctao 0.00 0 0 0 0 it ..._ . To Even-I:Wars t 606 0.00 0.00 4 -11 -----18 ..._. a .. PIIVAGPMINON On Ava 0-28 AVG 0.07 AVG IIM 011M II , 2400 .. . 10,800 46,600 1 suBroTAL THIS SHEET i_,..„..,.„..- 1111111111M10.1100 I .. .. 1 I II - . 1 .__._ , . . I .. _._. . --r_ _ . M In JUL 20 ' 99 (TUE) 15:25 JE1[ DEVELOPMENT 509 45? 6361 cssvn. -,-, t i YAKIMA MALL { �e iit I Jut, 2. 1999 i ATFOURTH_ a DESIGN WORLDWIDE n AVENUE _T- all ELM sums: too 1 I 1 , citNerNNAT1, 41202 1 L iWST" SERVICES, 8 -�u�od I i n oy OHIO - Estimators • Scheckilors lalifiers 424 Greenup Covington, Kentucky 41011 --- a ..EN _ �_ _ _-__�Unt Unit Unit Total . l t AMONG rtntoCT PIONQ09/1111yUnL __� Other t =.1. - 'lm -b"., :=spa_ • illMAGNITUDE CONSTRUCTION BUDGET ESTIMATE - BASELINE BUILDING CORE & SREL l - __ Bas001011- gift EiltSernant I :.: _ , 1 tit F1012111.9905 . 101E200 ® 7,00 0.10 25.00 ! 187 400 84,50 1 1 01 = :`► ne covo F lamp 7.00 (1°10 -- '• , 12 1 1 3 .580 810,9 O 18.200 f 7.00 0.10 _25.00 25.00 _1111,,,4-.1- 19 127,400 34,: ' 1 • .. 000 816.980 t,sidsr azo NW C00:19119 (;011111111.001111(18 6 16 150 GY 103.00 5.00 3500 750 19 16,000 14,2 684,5001 Now Gavots CcAumns 6 15 90 CY 1500 8.00 23.00 730 19 13 000 13,680 - Floor orUpe� ngs for Food .,. 7 19 45 EA 0.00 24.00 0.00 1,090 19 0 20,6° -21---6-`4260 0 20,520 Ir tlev Stab Openirlgsfior Co 7 39 45 FA o.00 4 ux 0, 00 2.160' 19 0 41,040 0 41040 If ll - and Noise Barricades --Beitiiik 6 17 S(1 HA 300.00 16.00 25.00 ADD 19 X6,000 3 i 900 1,250 31,450 6 and Noise Barricades •141loor 6 17 .10 _ EA 300.00 1600 25.00 800 19 15000 ,` 00 1,250 31,450 J 1 Minimal tntariorAlnenittes - .. 1) . -:) c, H 18,200 SF 0.00 0.02 3.00 3614 19 1 8 ' 16 54, . 6X 513 r - r; Et 18,200 SF 0.00 0.0E 3.00 3499 19 0 6,918 - 600 16 'Moment 11,2(x1 000 0.0 3.00 364 0 6 918 5. 6011 ___111 01,516 . 6,50(1 0,00 0.02 3.00 130 0 2 470 i; 1 1 A970 41.19/w AVG AVG Tr AUBTOTAL THIS ACCOUNT 54•.6110 . 8.m 0.24 12,992 fl 4!0,700 1*i . 8 . 1 . , 8,120 2 068 INDIRECT ACcOUNTSi---- ity0 axes 440,700 u 7.9096 0.00 8,00 4 34,816 0 0 8 BI 091 Thawed LS 0.00 0.00 0.00 j 0.1 0 0 Para B rdoos, Insurance, Taoi<4, oot •246,848 25.0096 0.00- 0.00 0 0 01.71 0 81.1111 TradigUpe m ail -- Yacluded 1.9 0.00 11.00 0.00 1 0 0 1 0 i9 I. . -Lisa. /fliTa los ph 0.51 0.00 ....... :moo i _ 1 0 -guilt I 1 1 ,' =n • •- • -' C� 418,515 2.00% 0.00 0,00 1 9 oio 0 t} 9 10 1nl nla(s •labor 2 12,992 0.00 2.00% 0.00 leo, . 171 0 . 171 ni1d@r i* - Other , - 1,612.120 $ 0.00 (.00 2.00%0 � 0 a': Ts; 38,9 .lvi; AVG AVG SUBTOTAL ACCUMULATIVE 94.600 SF a88 0.24 30.12 13,252 24 486,026 314,751 1,044,962 2 444,11 ' Subcontractors bier 11-1• '7" /� . Irt 481,026 $ 15.00% 0.00 OF _...__ u -.. 7? 754 0 0 D4 :1' 314.731 $ 1.5-00% 0.00 0.00 0 0 47,210 0 1 47111.0 I. , 62 $ 15.00% 0.00 0.00 - 0 0 0 246 6&! 946 Oi4Tt3'1'lEl;llCTION MANAGER -TW1 - _ Ons / SCesul,atlery 0.0o n.xl 0.n0 e/ to : rfiea !1t See Summary 0.00 0.00 0,00 0 0 0 0 0 • • 9 nae 8 rli Sec Sumen:uy 0.00 [!(IU 000 --- SUBTOTAL AC UM ' WE54,600 • SF Ala: 1022 I.YO 0.24 AVG 34 63 13,262. 861,041 1,691,017 2,810.757 ow1>r1C8rix Urioreseen on.. Sec Samna CS 0,00 0.00 0.00 0 0 0 6 0 o n rs - , . 1 Ls 0.00 0.00 0.00 -2 27 21' 4.1 •17 - CI. AVC AVG AVC► _T___TAL THIS SHEET 817 10.22 3463 13,2a0�667,800 361,900 1,891,000 2,810,700 atm JUL. 20 • 99 (TUE) 15:26 JIM DEVELOPHENT 509 457 9361 PAGE. 4/7 TMA .%l.si 'EVELOPMENT • 'r EAST iAAE MA AVENUE AT Foil •• ; = T "l' FRCH DESIGN WORLDWIDE WASHINGTON r 1 1 811 STREET, BUTTE 800 j CINCINNATI, OHIO 45202 MAGNITUDE MATERIAL CONSTRUCTION BUDGET ESTIMATE Included minded LS Jnchzlcd LS Included LS Included 'LS LS LS 0.00 0.00 000 0.00 0.00 0.00 0.00 000 0.00 0370 0.00 003 D.00 0.00 0.00 0.00 0.00 .5T10% AVO 11 umr, 117 II +� Ii CONSTRUCTION MANACwit I I : nararco 'Mats II :' • effformaT108 & Payment 4E1 N SUBTOTAL ACCUMULATIVE II 1. / nrxa�Unff seen r. II.7', 0 . �^ H. II SUIDT OTAL THIS S II II II II 7.904 Included Included Included 0.00 0.00 0.00 0:00 ao0 0.00 1n 1 1 See Summary Sec Nummny See Summary (1.D(t 0.00 0.00 0.00 MOD 0.00 000 0.00 0.00 AVO 000 0.00 0.00 0.00 '0:60 Ara 881,763 581,800 MIL_ 70 • oo (TUE) 1 5 77 _I V` L nEVYt r1Alf4NT 509 457 15 191.7 7s Tt 12 YAKIMA ;tilt i mommingoomm ilom FredPeterson uIy 2. I09 1" r . :a • MOM Co Ni• - _ -- -. - - FRS` `II DEIGN WORLDWIDE IST TAS AVER ,&.m POUI m 311 IGI2•1 STREET, SUITE 600 11 ' A1MA, WASUT iGRO -_ CINCINNATI. 01110 43202 }_ -- CONES i AR Sa i ICES, a professional --. Estimators • Schedulers • Spam424 - �'etCovington. ._ Unit Urtt Untt . _ Total a, ,T. Mate011 Mom Ober Hour %aM "^.ERIAL fl-.w,t� BE IPTON Qusrrb MAGNITUDE CONSTRUCTION BUDGET ESTIMA _ - - BASELINE ELEVATOR. & ESCAJ ATO ' 't ~'r _ ACLtIS ' (100 0.00 90.000 s 0 0 00,000 :'r r Bawd{0r 1 ► 4 0.00 0.00 210,000 i • �( 0 240,000 240,000 scalaGers -� 1 1. 0.04 000 000 0 0 1 ''' r 000 330,000 SUBTOTAL THIS ACCOUNT, INDIRECT ACCOUNTS _ 0.00 0.00 '.0e . 0 0 r 0 pity of Yakima Sales Taxes Indudnd Freight Induded� o.00 0.00 0.00i 0 q p t rrdens,anc0, . . • -, ` e, : Included 0.00 o 00 0.00a 0 0 0 0 1nci, i od Ls 0 00 ' 0.00 0.000 $ 0 -b . ipxtreM i.:-.: 9g�e • T__'__ t , _ LS 0,00 boo (100 , 0 0 Ir dantais- i eie rnrdnded Ips 000 0.00 0.00 0 0 0 Ind - LaborI$1 I S 0.00 0.00 0.00_ 0 0 +, 0 0 lr�tieertsls - Other soon +9.00 0.00.. a,. ' ME ?r i 0.00 0.00 _ �� ... 0 340,600 SUBTOTAL ACCUMUtiaATi[ T�8 jii conbucbra Overbeaad &C Pr0*tt ,,._ _ . _346,500 � inaitled LS 0.00 000 o.00 0a 0 0 0 1 tabor Included LS 0.00 0.00 0.00 0 i t 0 1 • Included L( 0.00 0110 0.00 d 0 0 0 0 CONSTRUCTION MANAGER I)♦ General Conditions Sea Summary LS 0.00 0.00 0.00 1 Overhead & Prot sea summary Es 0.00 4100 0.00 • ' • 1 � h�ayrr•e taarxt nt � see Sum LS O.On 0.0D 0 0 0 348.500.00 10.101111 11111. . SUBTOTAL ACCUMULATIVE t 0.00 moo 0.00 o ... ._ �-...... ,.. r :•. o 348,G00 346,500 Allowance tx lnfaoseen Cotleiitiorls sae sun wnary aoo 0.ao o.00 ` 0 0 0 0 0 Round To Evan Dolars o oo 0.00 arm ii 0 0 0 0 it 346,600: 1- ii --- _. ._. IISUBTOTAL THIS SHEET . " 0.44 0.00 _ 0 3 ` 500 340,6 1 E _..- .. IIR mei...______. 1.1 1, El ._....._ II ill - it - I�� JUL. 20 ' 99 (TUE) 16:52 JEM DEVELOPMENT 509 457 8361 PAGE. 1 Fred Petersen FRCH DESIGN WORLDWIDE 811 ELM STREET, SUITE 600 CINCINNATI, OHIO 45202 MAGNITUDE CONSTRUCTION BUDGET ESTIMATE BASELINE BUILDING STOREFRONT East d Prior" : at :fi EC West of Future Field - ' are) -11. Nord d •r'r"r - = r. = mien.. ;i. • INDIRECT ACCOUNTS ciy of YatamaSaa asI Taxes Freight Payrili tttrdens, insurance, Toss, Su.MO G3"_ Trade Sui : .n �Mlt___ prnsflt I sage "� X111111 nc dentals - Materiel riffenta - bor AL THIS ACCOUNT Included Included O 0 o o' o o 0 0 o o' 0 6 o 0 0 1 '• 6 O 128,100 128,100 0 SUBTOTAL ACCU1KULATIVL Subcontrablori Overhead & Prod =LIME Material MEM►.,eroded 11 11 •b I•at 1CONSTRUCTION MANAGER — _. 1 H err -17; 11:774. -• • ., nce .-ayfiiaf"— II 126,100 Ger>erattcndtions 5cc Sums ury Sec Sunuany See Summary 0.00 0.00 o 0,00 0.00 0 0.00 0.00 000 0.00 0.00 11 SUBTOTAL ACCUMULATIVE 11. ' . '- -For Un oresoen • , 1, ., imiSex Sum • - 0.00 0.00 O 11 '41 o viii bot{aais •.-" MEM t ® aoo aoo 000 0 11 1 ,oO - • WM_ .. . II SUBTOTAL THIS SHEET 11.11.1t o.oa 0.oa ►0.00 o Ii y -4 tiNN111141= -- i II ILI IMMO :-: 11 .1... 1111 ° (1.00 0.06 0 0'— 0 0 o 128,100 0 0 0 128,100 00 128,100 JUL. 20 99 (TUE) 15:29 JEM DEVELOPMENT 509 457 6361 PAGE. 7/7 MALL ' AIUMA MEM - Petersen DEVELOPMENT COMPANY July 2.1061) :in; ' VI ‘ A A' Dr' :7"-Mr-FOTTil o = 'iTIII : FRCEi DESIGN WORLDWIDE 1 --411 w - -.....- -114,- ---iN =ma 311 But sTREET, surrE eoo limi NEN CINCINNATI, e • a IONFSTAR SFRVICES, a protmional nnmpAny OHIO 43202 rn 111 Estimators • Schedulers • Specifiers 424 Greenup Street .. -T- Covington, Kentucky 41011 a4.17 xiiiiiiiiii.12740441=2===9:1=Mal ====.ftedeettneFirriawmagmr LI* tkll Unit -Ttell Avg MATERIAL utoOR 1 mull TOTAL .1212:13LatlralL4P4 if Ceivwurcridruarraw unit material m riaurs Mei i0if,milmorminrimmemerkes -r ia sezlwrimememi Aragmumonnump. t MAGNITUDE CONSTRUCTION BUDGIET ESTIMATE . BASELINE ENTRY STRUCTURE . . livry ShirAte Araware - -1- i - vr1 . 640 SF do° ark 50.00 0 0 0 000 . 32.4:4311.. ......,,.. ..„. . . . ....- ......-..,.,.. .... , SU: AL THIS ACCOUNT .. . . „ . Ls 0.00 0.00 0.00 o 0000 3244* INDIRECT ACCOUNTS trlitv I tif Valdrrea gaIctc T21.011C parliwirat tS 01Y1 fl 0,00 , Inettieed 0.00 000 0.00 0 Pyur3 ' 'ns, nsur a T43id d IUli O 000 0 0 Trade ldN 0.00 (MXI 0.00 u 0 0 0 li 11E1 - ' 4.• en - Included ILU 0.00 000 0.00 0 0 I 0 II ' 7:14atirtal- [winded LS am 0.06.0160 0 0 0 1 or,• -• - - . -- - '' ''' Ineltided LS 0.00 0.00 0.00 ' 0 0 0 - i irvidiga....-F-15ther teduaed coo a on oliik m .... . mono= SUBTOTAL ACCUMULATIVE . 1 0.00 0.00 MOD 0 0 0 82,000 38,000 S Vr. Thl)Wihead& Included 0.00 0_00 0.00 1 0 0 0 0 6 ; 4 lichidrgl 0.00 000 0.00 1 00 4 Other _ ......... _._. ncludod • - LS 0.00 0.00 0.00 i .... - .-. - CONSTRUCTION MANAGER snare! Conditions See Summary LS 0.00 aoo 0.00 i 0 0 . .-. ,-, . See . urrcr"7"--enary . at* o.00 - 0 f 1 ret P C494::kii0j1114inGE4. 4t-Piiyi-i. n . .. SeeSetitlfterry 1.S. OM 0.00 0.00 i 3goon. • • TiUBTOTAL ACCUMULATIVE LS 0.00 0.00 n.00 MC • 0 0 32.,000 . . 32,000 AnowarTh-E-e For Unforeseen I.:Iitions See Summary LS 0.00 0.00 0.00 0 0 0 -----b 'r' 0-EtieriDaare L S 0.00 0.00 0.00 0 0 WW1 4 4 II SUBTOT.AL THIS. SHEET • • .. . . LS 0.00 .. . 0.00 . .. .. 0.0U I • - - . • • • -- --- •-• . _._. _ . I , , .. . . . . _ ___ _-____ ...-. . ......... _ . - - -... .. . . .. JEM-Plaza, LLC Yakima Mall Expansion Project Position/Salary Analysis for 3 Floors of Retail # $/hr Annual Salary Insurance Benefit Schooling Level 1 Manager 3.0 14.53 $ 30,221.81 $ 8,280.00 High School Asst. Manager 3.0 10.53 21,912.51 8,280.00 High School Sales Clerk 45.0 6.54 13,603.20 None Level 2 & 3 General Manager 1.0 14.53 30,221.81 2,760.00 High School Department Heads 8.0 10.53 21,912.51 22,080.00 High School Sales Clerk 85.0 6.54 13,603.20 None TOTAL 7/15/99 145.0 $ 131,475.04 $ 41,400.00 is/acct/sec108robs.xls V4K!MA MALL YAKIMA, WASHINGTON JEM Development Co. WB STREET THE BON MARCS RETAIL FOOD COURT RETAIL EXISTING MALI_ RETAIL RETAIL PROPOSED RETAIL JC PENNY CO. RETAIL SCALE T•60' JEM Development Co. 1 YAKIMA AVE. RETAIL MERVYN'S MERVYN'S PARING LOT IF IR lc IH PLAN YAKIMA MALL, YAKIMA WASHINGTON 5/19/99 EXISTING. . BUILDING NEW BASEMENT/ PROFOSED RETAIL 6,480 5r SERVICE MERVYN'S SCALE T-20' JEM Development Co. IFIR lc {HI PLAN BASEMENT YAKIMA MALL, YAKIMA WASHINGTON 5/19/99 2 RETAIL YAKIMaA MALL PROPOSED RETAIL 11,5'10 5r JEM Development Co. RETAIL MERVYN'S YAKIMA AVENUE PLAN LEVEL YAKIMA MALL, YAKIMA WASHINGTON 11; RICH 5/19/99 3 EXISTING BUILDING SCALE: 120' JEM Development Co. PARKI•i:3 GARAGE OPEN TO BELOW n ri ❑ PROPOSED RETAIL 16,20r, 4 MERVYN'S 1 PLAN LEVEL 2 YAKIMA MALL, YAKIMA WASHINGTON IFIRkH 5/19/99 4 PARKING GARAGE ❑ 0 EXISTING BUILDING ROOF 0 SCALE f-20' JEM Development Co. ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ OPEN TO BELOW ❑ PROPOSED RETAIL !S,480 SF ❑ 0 ❑ ❑ ❑ 0 -B--- MERVYN'S ROOF PLAN LEVEL 3 YAKIMA MALL, YAKIMA WASHINGTON cl14) IFIRICIHI 5/19/99 5 BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. I 0 For Meeting Of: August 17. 1999 ITEM TITLE: Consideration of a resolution authorizing the City Manager to execute and submit a loan application to the U.S. Department of Housing and Urban Development Section 108 Loan Guarantee Pr. • ram for the Yakima Mall Expansion Project. SUBMITTED BY: ook, Director of Community and Economic Development CONTACT: Bill Cook, 575-6113 BACKGROUND: The project before you today for approval began with an advertised competitive process in June 1998, requesting proposals for any eligible project in the City. The project selected for funding was a project to expand the retail area of the Yakima Mall by 26,000 square feet, and rehabilitate the Great Western Building to an upscale hotel. In September 1998, State Senator Deccio, Council Member Sims, the project developer and the Director of Community and Economic Development traveled to Washington, D.C. to lobby our congressional delegation for a $1 million Economic Development Initiative (EDI) grant through a national competition. In November 1998, the City was successful in securing one of only 23 EDI grants in the nation, and was awarded a $1 million grant based upon our community's needs, the strength of the developer and the anticipated creation of 145 new jobs. CONTINUED ON FOLLOWING PAGE Resolution X Ordinance Contract Other: Loan Application Funding Source: U.S. Department of Housing and Urban Development Approval for Submittal:�.�:�‘ City Manager STAFF RECOMMENDATION: Staff recommends approval of the resolution. BOARD RECOMMENDATION: COUNCIL ACTION: 1 If Council approves this application today, the developer will clear the site for the new 64,000 square foot addition to the Yakima Mall using his own funds. HUD will prepare closing documents for Council review and approval later this fall. New construction will begin following closing on the Section 108 loan. If council does not approve this application today, the $1 million EDI grant will be returned to HUD. The developer will proceed with the demolition of the Great Western Building with his own funds, and will consider construction of a single level 19,000 square foot addition in its place. PROJECT DESCRIPTION The project encompasses the demolition of the Great Western Building and the construction of a new three-level building with partial basement on the site and the adjacent plaza to the east of the Great Western Building site. This new building will have a floor plate of approximately 19,000 square feet for each of three floors and a basement of approximately 7,000 square feet. The total building area will be 64,000 square feet. Six escalators and one new elevator will connect the three levels. The entire building will be leased to the Yakima Mall Shopping Center Corporation (YMSSC). The building will then be subleased to retail tenants by YMSCC. In addition to the expanded retail square footage, the project will create a new primary entrance to the Yakima Mall. It is estimated that the project will create 145 new permanent jobs. This estimate is slightly more conservative than a standard of 1 job for every 400 square feet of gross leaseable area for shopping malas. The project will be built on two parcels of land. The first is owned by JEM-Plaza, L.L.C. a Washington Limited Liability Company. The members of JEM-Plaza, L.L.C. are Joseph R. Morrier, Jr., Michael D. Morrier and Elizabeth A. Morrier McGree and J & E Family Investments, Inc., a Washington corporation. Joseph Morrier, Jr., Michael Morrier, and Elizabeth Morrier McGree own all stock in J & E Family investments equally. Yakima Mall Shopping Center Corporation owns the second parcel. YMSCC is a Washington corporation owned by Joseph R. and Elizabeth L. Morrier, Joseph Morrier, Jr., Michael Morrier, and Elizabeth Morrier McGree. YMSCC will lease this parcel on a 40 -year ground lease to JEM-Plaza, L.L.C. JEM-Plaza L.L.C. will borrow the section 108 loan proceeds and build the project. Upon completion of the improvements the building will be leased to YMSCC on a 40 year lease. 2 JEM, _LC. Yakima Mall Expansion Project Project Budget Federal Funds Acquisition Phase Building & Land Design Phase Architects & Engineering 436,303 Consultants 29,396 General & Administrative 11,023 Contingency 22,047 Total Design Phase Construction Phase Demolition of Building Hazardous Material 106,560 Permits & Fees 18,372 General Construction 3,894,942 Contingency 389,494 Total Construction Phase Indirect Costs Financing Costs Closing Fees Total Indirect Costs 55,117 36,745 498,769 $ 4,409,369 91,862 Total Project $ 5,000,000 6130199.3:72 PM Private Funds Total Project $ 1,135,000 $ 1,135,000 157,392 $ 593,695 10,604 40,000 3,977 15,000 7,953 30,000 179,926 I 678,695 $ 350,000 $ 350,000 38,440 145,000 6,628 25,000 1,405,058 5,300,000 140,506 530,000 19,883 13,255 $ 1,940,631 1 6,350,000 $ 75,000 50,000 33,138 125,000 $ 3,288,695 $ 8,288,695 I'‘ l)tri f'f...t t,. .nn n._ DF ELOPMENT COMPANY RECEIVE AUG 0 9 1999 CITY Ur r xiUMA Yakima Mall • The Tower • Monier Ranch Inc. • Yakima Valley IndustITY DEVELOPMENT August 6, 1999 Honorable Mayor Puccinelli City of Yakima 129 North Second Street Yakima, WA 98901 Dear Mayor: I am writing you this letter to explain my plans for the Yakima Mall. As I have explained publicly, I have made a good faith effort to rehabilitate the Great Western Building as a hotel. From the results of my efforts and from everything I have been told by my people, a restored hotel at $125 plus per night, combined with an occupancy rate far in excess of what I now know I could expect, still will not provide sufficient cash flow to operate the building and repay the cost of restoration. While the effective design of the hotel and plaza addition was severely handicapped by the limitations that were placed on the restoration because of the "historic" characterization of the building and exacerbated the problem, the fundamental business decision was based on the economic non -feasibility of the hotel. As I have said, with no economically feasible reuse for the building, a very expensive cost to maintain it in its current empty condition, and the increasing liability to me due to the deteriorated condition of the structure, the building must come down. I will demolish the building with my own funds with or without the City's financial assistance to build additional new retail space in its place. With the available Section 108 loan and grant which we worked so hard to secure for the City, a 60,000 square foot multi-level addition to the Yakima Mall is practical. That will increase our leasable retail area by more than 10% and be a major improvement to the City's central business core. Unlike suburban malls that are constructed with abutting acres of parking on relatively inexpensive land, the expansion possibilities for a mall in the heart of the City are severely limited. The Section 108 loan and grant will make the planned expansion economically feasible. My discussion with potential tenants convinces me that such a development is commercially practical. Without such funding the Mall expansion will still go forward, but certainly not with a 60,000 sq. ft. multi-level design. This is because the space off the mail level is of interest primarily to high volume, low mark-up retailers. Yakima Mall Shopping Center Corporation 402 E. Yakima Avenue • Suite 1400 • Yakima • Washington • 98901 Phone (509) 248-4040 • Fax (509) 457-8361 q SoIIor able 'Mayor P'uccinelli August 6, 1999 Page Two These tenants typically provide the same jobs per square foot as "Gap" and "The Bon Marche", and compete directly with the outlying "big boxes", but do not provide the rental base necessary for main level expansion. Without the Section 108 loan and grant, our expansion plans will necessarily be scaled back to a single level. That would be regrettable at a time the City must increase its efforts to strengthen its downtown, compete with the retailing beyond our City limits, and increase our sales tax revenue. If you will support me in this project, I assure you, here in writing, that 1 will use only my own dollars to clear and prepare the site for our new construction and that I am irrevocably committed to going forward and completing the 60,000 plus addition to the Yakima Mall within the calendar year 2000. I hope you will support me with this important project. Sincerely, Joseph R. Morrier, Sr. President 08-12-1999 02:58PM FROM NDC Seattle August 12, 1999 Bill Cook, Director Community and Economic Development City of Yakima 129 N. 2' Street Yakima, WA 98901 Re: Yakima Mall Expansion Section 108 Dear Bill: TO 15095766646 P.02 THE NATIONAL DEVELOPMENT COUNCIL As you are well aware, the proposed expansion of the Yakima Mall by JEM-Plaza, L.L.C. represents a modification of the Economic Development Initiative and companion Section 108 loan guarantee as proposed in the City of Yakima's original application. This modification excludes the rehabilitation of the Great Western Building for use as a small hotel. The new proposal will result in the demolition of the Great Western Building and the expansion of retail uses on the site of the former Great Western Building. These changes are the result of feasibility analysis on the former proposal undertaken in the development of the Section 108 loan application. In my work on behalf of the City of Yakima, 1 requested that JEM provided a feasibility analysis of the hotel proposal. JEM contracted with The Chambers Group, a well respected hospitality industry consulting firm, to do the feasibility analysis and with FRCH Design Worldwide for architectural and engineering analysis. As a result of these studies it was determined that the building could not be economically redeveloped either as a small hotel or more importantly for any other commercial, retail or housing use. This determination was based on the costs of rehabilitation and the potential for return once the building was rehabilitated. The costs of rehabilitation were especially high because of the buildings long history of deferred maintenance, 1932 F1rnt Avenue, Suite 800 Statile, WA 98101 TEL (206) 448-5244 FAX (206) 448.5216 New York Office 51 East 42nd Street Suite 300 Now York. Now York 10017 TEL(212) 682.1106 FAX (212) 5736118 t. OO®12-1 02:59PM FROM NIX Seattle TO 15095766646 i.03 its unique construction with a very narrow footprint, its inadequate windows, its need for an additional elevator, and the cost of structural work in a cast -in-place building envelope. The income potential for the project was determined by market rents for each of the potential uses. The developer's decision that the building could not be economically rehabilitated was made only after careful evaluation of the results of an independent analysis of the building. It is a decision that greatly disappoints me but one with which I fully concur. The modified application for EDI and Section 108 loan guarantee assistance will result in a project that is economically viable. Under this proposal the site of the Great Western Building will be developed along with the plaza site as a three story 64,000 square foot retail development. The entire building will be leased by JEM-Plaza L.L.C. to the Yakima Mall Shopping Center Corporation. The Section 108 loan will be on a fully leased building, will have a first security interest in the real estate and will be guaranteed by Joseph R. Morrier, Elizabeth L. Morrier, Joseph R. Morrier Jr., Michael D. Morrier and Elizabeth A. Monier McGree. As -such, it is a low risk loan for the City to make. The new proposal will not alter the criteria used by HUD in awarding EDI grants and will result in a stronger proposal for the City of Yakima. This is important in that the City of Yakima is pledging its future Community Development Block Grant funds to guarantee repayment of the Section 108 loan. The new proposal will present less risk to the City's Block Grant program than the original proposal. I hope this information is useful in the City's review of the proposed application. II TRE NATIONAL DEVELOPMENT COUNCIL • TOTAL P.03