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HomeMy WebLinkAboutR-2001-103 PFD Public Facilities DistrictiIJ RESOLUTION NO. R-2001- 'j�, A RESOLUTION appointing five board members to the board of directors of the Yakima Regional Public Facilities District. WHEREAS, Chap. 35.57 RCW (the "Act") authorizes one or more cities located in a county with a population of less than one million to create a public facilities district to acquire, remodel, finance and operate one or more convention, conference or special event centers that serve as "regional centers"; WHEREAS, pursuant to Ordinance No. 2001-28, the City Council of the City of Yakima, Washington (the "City") approved the execution of an interlocal agreement (the "Interlocal Agreement") among the City, the City of Selah and the City of Union Gap creating the Yakima Regional Public Facilities District (the "District") for the purpose of assisting in the financing, expansion and operation of the Yakima Convention Center; WHEREAS, the Act provides that the District "shall be governed by a board of directors consisting of seven members selected as follows: (i) three members appointed by the legislative authorities of the cities and towns; and (ii) four members appointed by the legislative authority based on recommendations from local organizations; WHEREAS, the Act further provides that the members of the board of directors shall be appointed in accordance with the terms of the Interlocal Agreement and shall serve four-year terms, which terms shall initially be staggered; WHEREAS, the Interlocal Agreement and the District's Charter incorporated by reference therein provide that the initial members of the board of directors shall be appointed as follows: five board members shall be appointed by the Yakima City Council (including four based on recommendations from local organizations), one board member by the Selah City Council, and one board member by the Union Gap City Council; WHEREAS, five initial board members have been identified by the selection committee to serve as the City's appointees to the District's board of directors, including four board members recommended by local organizations; WHEREAS, the City Council now desires to appoint such board members to serve on the board of directors of the District in accordance with the Interlocal Agreement and the Charter; now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Council hereby appoints the following persons to serve as board members of the board of directors of the Yakima Regional Public Facilities District. 1. Mr. Richard Ostrander, based on recommendations from local organizations, for a one-year term. Mr. Ostrander shall be designated as a Group I board member for the purposes of Section 6.3 of the Charter; 2. Mr. Brian Johnson, based on applications from community at large and based on Council discretion, for a two-year term. Mr. Johnson shall be designated as a Group II board member for the purposes of Section 6.3 of the Charter; 3. Mr. Don Schussler, based on recommendations from local organizations, for a three-year term. Mr. Schussler shall be designated as a Group III board member for the purposes of Section 6.3 of the Charter; 4. Mrs. Wanda Riel, based on recommendations from local organizations, for a four-year term. Mrs. Riel shall be designated as a Group IV board member for the purposes of Section 6.3 of the Charter; and 5. Mr. Dan Marples, based on recommendations from local organizations, for a four-year term. Mr. Marples shall also be designated as a Group IV board member for the purposes of Section 6.3 of the Charter. ADOPTED BY THE CITY COUNCIL this 10th day of July, 2001. Z �e �' ary Place, Mayor ATTEST: City Clerk KA25739\00049\SC\SC R2000 BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. t U For Meeting Of. June 19, 2001 ITEM TITLE: Public Facilities District (PFD): an ordinance to form a Public Facilities District and a Resolution to adopt Development and Lease Agreements SUBMITTED BY: Dick Zais, City Manager Z' S� Rita Anson, Finance Director;9191L- CONTACT PERSON/TELEPHONE: Rita Anson #575-6050 Tim Je , ccountant, #575-6050 SUMMARY EXPLANATION: In 1999, the Washington State Legislature passed legislation that allowed Cities to establish a Public Facilities District (PFD) for the purpose of owning and operating a Regional Center. Under this legislation, a Public Facility District is allowed to receive revenue from the state in the form of a sales tax credit, if certain criteria are met. This revenue comes from sales taxes already paid by the buyer of goods within the City; this is not a new nor an increased tax. By establishing a PFD, a portion of the sales taxes currently being collected and going to the state can be directed back to our local area (to the PFD). For the past several months, the Cities of Yakima, Union Gap and Selah have researched the possibility of forming a three city PFD for the purpose of re -directing these sales tax revenues to the local area and using the funds to finance an expansion to the Yakima Convention Center. The formation of a PFD requires the parties to pass an ordinance for that purpose; the Interlocal Agreement between the cities is an Attachment to the ordinance and the PFD Charter and Bylaws are included as exhibits to the Interlocal Agreement. These are the documents needed to establish the PFD. With the understanding that the Yakima City Council would consider the formation of a three city PFD at its June 19, 2001 meeting, Union Gap and Selah approved the formation of a joint PFD at their June 11th and 12 Council meetings, respectively. (Note: the, Charter, Bylaws and Interlocal Agreement documents passed by the three cities must be substantially identical. The ordinance needed by Yakima will be somewhat different from that passed by Union Gap and Selah as Yakima has more involvement in the PFD and therefore the Yakima ordinance will cover more elements; however, the ordinances may not be inconsistent.) %-U11111LUCU U1111CXL LRLYC ... ution X Ordinance X Other (Specify) Contract Mail to (name and address): see special instructions in document Phone: Funding Source PFD (sales tax crglit) APPROVED FOR SUBMITTAL: STAFF RECOMMENDATION: Pass Ordinance and Adopt Resolution BOARD/COMMISSION RECOMMENDATION: COUNCIL ACTION: Page 2/5 In addition to the ordinance and related documents (noted above) that must be passed by all three cities in order to form the PFD; Yakima and the Public Facilities District must also enter into two additional agreements to effect the balance of the agreement under which the PFD and the City would function; (1) Lease Agreement; Yakima provides a 25 year lease of the Convention Center to PFD, (2) Design, Development, Construction, Financing and Operating Agreement (aka: Development Agreement): performs multiple functions: (a) Assigns responsibility for the Design, Development and Construction of the expansion of the Convention Center to Yakima and establishes the terms thereof; (b) Establishes a sublease of the Convention Center from the PFD to Yakima; and (c) Assigns responsibility for the operation and maintenance of the convention center to Yakima and establishes the terms thereof Due to the multiple purposes of the Development Agreement, it is a relatively long and complex document. When reading the Development Agreement, it is helpful to keep in mind that the Agreement specifies the authority, responsibilities and restrictions of the PFD and Yakima based on the agreements that Yakima has leased the Convention Center to the PFD and that the PFD has sub -leased the facility back to Yakima. (ie: Yakima and the PFD are each a lessor and a lessee) A Complete Set of the PFD Legal Documents Include: • Yakima Ordinance establishing the PFD; enclosed • Interlocal Agreement (as an Attachment to the Ordinance); distributed next week • Charter (as an Exhibit to the Interlocal Agreement); distributed last week • Bylaws (as an Exhibit to the Interlocal Agreement); distributed last week • Resolution to Adopt the following Contracts:; enclosed • Design, Development, Construction, Financing and Operating Agreement; enclosed • Lease Agreement; enclosed • Updated copy of the Ordinance as approved by the cities of Union Gap and Selah, will be distributed to you, for your records, when received Please Note: • For your convenience, you may wish to insert the above documents into the three-ring binder provided to you last week. • The Yakima Ordinance is enclosed • The Interlocal Agreement had one slight change in wording due to a request by the Selah City Council — it did not change the agreement in any way; however, for consistency with Selah and Union Gap, Council will need to vote on the new version. Union Gap is updating the document and Yakima had not received it prior to going to print; therefore, it is not enclosed. It will be distributed at the Council meeting. Again, the change made by Selah only changed the location of some wording within the document, thus, the copy you received last week is still accurate as to all aspects of the agreement. • The Charter and Bylaws you received in last week's Council package have not changed, therefore, copies of these documents are not enclosed. • The Resolution to approve the Development and Lease Agreements and the Agreements themselves are enclosed Page 3/5 OVERVIEW OF FINAL PFD PROPOSAL: GENERAL: • A three City Public Facility District; Selah, Union Gap and Yakima • *Yakima will indemnify Union Gap & Selah from legal challenges to the formation of PFD • A seven member PFD Board will be appointed as follows: 1 Member - Union Gap City Council Discretion 1 Member - Selah City Council Discretion 1 Member - Yakima City Council Discretion 4 Members - Yakima City Council based on input from community groups Note: The City that appoints the board member may also remove the member • Once PFD Board is appointed, the existing Yakima Valley Visitors & Convention Bureau Advisory Committee previously established by Yakima City Council, will be dissolved • District's powers to impose the Voted Sales Tax is subject to the approval of all three Cities prior to placement on the ballot • Yakima will have approval authority for PFD's annual budget and must approve any admission and parking fees/ taxes, any gambling activities any public display of artwork and the acquisition or transfer of real and personal property valued over $100,000 • Yakima is responsible for design and construction of Convention Center expansion FTNANCTAT.- • Yakima will issue 25 yr. bonds and use net proceeds to fund Convention Center expansion • Yakima will provide a 25 year lease of the Convention Center (Building and Land) to the PFD in satisfaction of the 33 % match requirement • PFD to sub -lease the Convention Center to Yakima to Operate and Maintain • The Convention Center expansion will cost approx. $10 million, including debt service • So long as the bonds are outstanding, only Yakima has the ability to dissolve the PFD • PFD will impose a .033% sales tax (credit) which will re -direct to the PFD revenues that are currently going to the state (sales tax revenues from sales within the three cities) • PFD will transfer to Yakima all revenues received; such revenues will be used to pay debt service on bonds, to pay operating and maintenance expenses of the Convention Center and/or other Regional Center purposes • In the event that the District's sales tax revenues are insufficient to cover the debt service on the bonds, Yakima will have sole responsibility for making up any deficiency; Union Gap and Selah will not be required to contribute. Note: we believe the probability of this occurring to be very low and in the unlikely event of such an occurrence, the amount of any funding requirement from Yakima to be minimal. (For more information, refer to Attachment B - impact of a 5% and a 10% loss in sales tax revenues from all three Cities and Attachment C - five year sales tax revenue history for each of the three cities.) • Yakima will contribute lodging taxes, in an amount, if any, determined annually by the Yakima City Council, to support debt service payments, operation and maintenance of the Convention Center and/or other Regional Center purposes ------------------------------------------ This is a new agreement with the Cities of Union Gap and Selah since the last update to Council. They requested this during the final negotiations prior to their approval of the formation of the PFD Page 4/5 OTHER CONSIDERATIONS: The enclosed plan for the formation of the Public Facilities District, the financing of the expansion of the Convention Center and the on-going operation and maintenance of the Center is based on weeks of analysis and research including numerous discussions with legal counsel, bond counsel, bond underwriters, the department of Revenue, the State Auditors Office, members of the Yakima Visitors and Convention Bureau its Board and Advisory Committee, staff and Council Members from the Cities of Selah, Union Gap and Yakima, owners and employees of local motels/hotels, consultants and appraisers. Many documents and studies have been prepared as part of this research, including Market/Financial Analysis Study of the Convention Center Expansion, Preliminary Architect Evaluation and an Appraisal of the existing Convention Center. This proposal is based on the combined results of all of the above research keeping in mind the City's three primary financing objectives; (1) to minimize the impact on the City's general obligation debt capacity, (2) to maximize the funds available for the expansion of the Convention Center and (3) to provide a marketable bond offering to the public. Yakima is establishing a PFD that is different in some significant respects from other PFDs that have been formed to date and our financing proposal is creative and sensitive to market changes. Therefore, please keep in mind: • No guarantees that the bonds will be marketable • Changes in the Bond Market may require changes to our financing plan, which could have an impact on the expansion plans • No guarantees that the Department of Revenue will approve the use of the lease agreement to satisfy the match requirement (which triggers our ability to attain the sales tax credit) • To make the financing plan work, the Convention Center may have to temporarily reduce operating expenditures and /or non-operating expenditures such as promotional expenses Discussions with rating agencies and investment bankers indicate that the financing plan is both reasonable and achievable; however, nothing is certain until we actually go to market with the bond issue. In spite of the risks noted above, City staff, legal counsel and bond counsel believe this proposal to be a conservative, legal and, in the case of the bonds, a marketable plan. Page 5/5 NEXT STEPS: If the Yakima City Council approves the formation of a Public Facilities District (PFD) the next steps include: • Appointment of Board Members (staff is preparing an outline of a nomination and appointment process for Council's review; this will be distributed in the near future) • Board to Hold Organizational Meeting Within 30 days of Effective Date of PFD Formation. At this meeting the following needs to occur: Approve the Lease Agreement Approve Development Agreement Impose the State Sales Tax (Credit) Other Organizational Activities • Submit Request to Department of Revenue to Commence Transfer of Sales Tax Revenue to the Public Facilities District • Commence Pre -construction Activities for the Convention Center Expansion • Amend existing management agreement for the operation and maintenance of the Convention Center to be consistent with PFD Development and Lease Agreements Note: the construction bonds will not be issued before mid year 2002. This is to allow the sales tax revenues to build up and be sufficient to cover the first debt service payment on the bonds (which will occur approximately six months after the issuance of the bonds) and to provide some reserves for future payments. Attachments: : A: Questions from one Council Member and related Answers B: Worksheet identifying impact of a 5% and a 10% reduction in sales tax revenues of the Cities of Selah, Union Gap and Yakima C Worksheet reflecting the sales tax revenues for each of the three cities for the past five years ATTACHMENT A AGENDA STATEMENT PUBLIC FACILITIES DISTRICT QUESTIONS AND ANSWERS: Following are questions received from a Council Member and the related answers: 1. Under the heading of "Questions and Answers" at the April 18, 2000 Council Study Session, staff indicated that, "if the City no longer owns the Convention Center, it is unclear whether or not the City may receive any amount (hotel/motel tax revenues) over the amount needed to service the existing Convention Center bonds, due to the fact that the City would no longer own a facility, (underscore added for emphasis) which qualifies it to receive the hotel/motel tax revenues. Bond Counsel is reviewing this issue." What was the response of Bond Counsel? (See also Question No. 3 below.) Since the current proposal calls for the City to Lease the Convention Center to the PFD (rather than transferring title), this is no longer applicable; however, bond counsel has indicated transferring the title of the Convention Center to the PFD would not have prevented the City from collecting the hotel/motel taxes 2. "In the event the District's sales tax revenues are insufficient to cover the debt service on the bonds, Yakima will have sole responsibility for making up any deficiency." What would be the City of Yakima's source of funds should there be a deficiency? This is a risk that Yakima is taking; any needed revenues would come from operating revenues of the Convention Center, if available; hotel/motel tax revenue, if available; or the General Fund as a last resort. However, we believe the chances of this occurring are minimal; a 5% reduction in the sales tax revenues of all three cities would not be enough to cause these revenues to be insufficient to cover the debt service. (Refer to the attached worksheet which identifies the impact of a 5% and a 10% reduction in the sales tax revenues of all three cities.) 3. Yakima will transfer a leasehold interest in the Convention Center and the underlying site to the district in satisfaction of the local match. Does this include both the Convention Center building and land? (See also Question No. 1 above.) Yes, the City will lease the Convention Center building and land to the PFD Director/F&B PFD Questions and Answers.doc Page 2 4. Has Bond Counsel reviewed a proposed management contract, or will this be accomplished at a later date? No, the management contract has not yet been drafted; this will need to be done in the near future. (The financing proposal, however, has been reviewed by Bond Counselnil by the Bond Underwriters and, although there are never any guarantees as to the marketability of the bonds until they actually hit the market, they are comfortable that this is a solid proposal and gave their recommendation to its structure and marketability. 5. The Charter at Article IV (page 3) reads in part: "For the purpose only of securing the exemption from federal income taxation for interest on obligations of the District, the District constitutes an authority and instrumentality of Yakima...". What authorizes this without naming Union Gap and Selah? This simply has Yakima "extending" its authority to issue tax exempt bonds to the PFD; authorization from more than one City is not necessary. This is simply an added option and is not likely necessary as the PFD has its own authority to issue tax exempt bonds and due to the fact that Yakima will be issuing the bonds. 6. Article V Powers in the Charter authorizes the District to impose specified charges and taxes (admission, parking) without limitation (underscore added for emphasis). How can these Charter powers of the District "be subject to the approval of the Yakima Council" in an Interlocal Cooperation Agreement? Why wouldn't the Council approval be stated in the Charter of the District? The Charter identifies the powers of the PFD, as authorized by the legislature (which is "without limitation"). However, the PFD may contract with a 3rd party (Yakima, in this case) to give up some of its legal authority for some consideration. The Charter must first provide this authority to the PFD and then the PFD may agree to limit its own authority in "trade" for some other consideration; which it is doing via the Interlocal Agreement. Director/F&B PFD Questions and Answers.doc ATTACHMENT B THREE CITY PUBLIC FACILITY DISTIRCT SAMPLE DEBT SERVICE PAYMENTS WITH REDUCED SALES TAX REVENUES: A. Estimated Annual Debt Service Payment (three cities): $480,000 Based on $3.7 million par value Revenue Bond and a $2.6 million par value LTGO Bond B. Sales Tax Credit (based on year 2000): ! $21,872 ! 4.32%11 Selah $84,358 ! 16.65%1 Union Ga $400,576i 79.04%i Yakima I $506,806 1 100.00% i C. Example - 5% Reduction in Sales Tax Revenue of All Three Cities: $506,806 X.95 ! I $481,466 i Tax Revenue Received $480,000 1 Less Annual Debt Service Payment Required $1,466 Excess Revenue (No Contribution Required) I D. Example - 10% Reduction in Sales Tax Revenue of All Three Cities: $506,806 $0.90 !_______ . I $456,125 ! i $480,000 1 Less Annual Debt Service Payment Required ($23,875) Additional Revenues Required 1st from reserves; then Yakima must contribute to cover balance of any deficiency) 06/14/2001 PFD - Info - Examples City Contributions - Rev Short fall 05-01-01 ATTACHMENT C City of Yakima Public Facilities District Project State Sales Tax Credit Available Based on Sales Tax Collected As Reported by Washington Dept of Revenue Summary: Total sales tax for all three cities combined has hovered around $12.9 million for the past 4 years. However, when comparing 2000 to 1996, sales tax has demonstrated an average annual percentage increase of 2.1 % for that period. A growth assumption of 1 % was used to calculate match requirements, which should be attainable over the extended period of 25 years. The debt issue is planned to maximize project funds, but keep the annual debt service under $480,000. cje 06/14/2001 public facilities district 2000 Credit by Multi -City Tax Credit Calculation 1996 1997 1998 1999 2000 Ci_yt Selah Sales Tax $ 448,440 $ 546,159 $ 539,351 $ 599,638 $ 563,359 $ 21,872 Union Gap Sales Tax 1,683,302 1,962,292 1,993,338 1,976,213 2,172,860 84,358 Yakima Sales Tax 9,920,745 10,373,742 10,464,547 10,274,839 10,317,870 400,576 Total Sales Tax Collected $ 12,052,487 $ 12,882,193 $ 12,997,236 $ 12,850,690 $ 13,054,089 Total Sales (Divide by 0085) $ 1,417,939,647 $ 1,515,552,118 $ 1,529,086,588 $ 1,511,845,882 $ 1,535,775,176 State Credit (Times .00033) $ 467,920 $ 500,132 $ 504,599 $ 498,909 $ 506,806 $ 506,806 Annual Percentage Change 69% 0.9% -1.1% 1.6% Average Annual Percentage Change 2.1% Note: According to the Department of Revenue Local Tax Distribution Report, Local Sales and Use Taxes are distributed as follows: "15% is given to the county for transactions occurring within cities. The remaining 85 % is distributed to the cities as their share of the basic or optional tax. Counties receive the full amount attributable to sales in the unincorporated areas, plus the 15 % share for sales in cities." Summary: Total sales tax for all three cities combined has hovered around $12.9 million for the past 4 years. However, when comparing 2000 to 1996, sales tax has demonstrated an average annual percentage increase of 2.1 % for that period. A growth assumption of 1 % was used to calculate match requirements, which should be attainable over the extended period of 25 years. The debt issue is planned to maximize project funds, but keep the annual debt service under $480,000. cje 06/14/2001 public facilities district CITY OF YAKIMA, WASHINGTON AN ORDINANCE of the City of Yakima, Washington, approving an interlocal agreement with the Cities of Selah and Union Gap to form the Yakima Regional Public Facilities District pursuant to RCW 35.57.020. PASSED ON , 2001 Prepared by: PRESTON GATES & ELLIS LLP 5000 Columbia Center 701 Fifth Avenue Seattle, Washington 98104-7078 TABLE OF CONTENTS Page Section 1. Formation of the District....................................................................................... 2 Section2. Charter.................................................................................................................. 3 Section 3. Board of Directors................................................................................................. 3 Section 4 General Authorization........................................................................................... 3 Section5. Prior Acts.............................................................................................................. 4 Section6. Effective Date....................................................................................................... 4 Appendix A Interlocal Agreement -i- P \SC\SC09L 01/06/14 ORDINANCE NO. 2001 - AN ORDINANCE of the City of Yakima, Washington, approving an interlocal agreement with the Cities of Selah and Union Gap to form the Yakima Public Facilities District pursuant to RCW 35.57.020. WHEREAS, the City of Yakima ("Yakima") currently owns and operates the Yakima Convention Center (the "Convention Center"), providing first-class meeting, ballroom and other event facilities; WHEREAS, the City of Yakima, together with the Cities of Selah and Union Gap, desire to expand the Convention Center to stimulate economic development by creating jobs; realize additional sales tax and lodging tax revenues; attract commercial business and tourism; and provide facilities for convention, special events and community events including public meetings and performing arts events for, among others in the region, the residents of Yakima, at an estimated cost of over $10,000,000 (the "Project"); WHEREAS, Chap. 35.57 RCW (the "Act") authorizes one or more cities located in a county with a population of less than one million to create a public facilities district (a "PFD") to acquire, remodel, finance and operate one or more "regional centers"; WHEREAS, "regional centers" are defined to include, among other things, existing convention centers to be improved at a cost of at least $10,000,000 including debt service; WHEREAS, PFDs have access to several new revenue sources, including a state sales and use tax credit (the "Sales Tax"), which operates to shift 0.033% of the retail sales and use taxes generated within the PFD boundaries to the PFD; WHEREAS, in order to complete the Project and access the Sales Tax, the City wishes to join with the Cities of Selah and Union Gap to create a PFD solely for the purpose of acquiring (by purchase, lease or otherwise), financing, improving and operating regional centers, as defined in the Act (the "District"); WHEREAS, the Act requires a local match in order for the District to impose the Sales Tax and, accordingly, Yakima will transfer a leasehold interest in the Convention Center to the District in satisfaction of this match requirement (the value of the Convention Center and the underlying site is approximately $11,800,000); WHEREAS, the value of the leasehold interest is estimated to be significantly more than 33% of the net present value projected Sales Taxes of the District (approximately $2.4 million), thereby satisfying the match requirement; WHEREAS, Yakima intends to issue bonds and apply net bond proceeds to finance the Project, in consideration for the District's pledge of all Sales Tax receipts to Yakima to pay debt service on the bonds and other regional center costs; WHEREAS, Yakima also intends to contribute lodging taxes to the District, in an amount, if any, determined annually by the Yakima City Council, to the operation of the Convention Center, and will contribute revenues to the District in the event of a Sales Tax shortfall; WHEREAS, the City is authorized and empowered to enter into the Interlocal Agreement pursuant to Chap. 39.34 RCW and to form the District pursuant to Chap. 35.57 RCW; NOW, THEREFORE, BE IT ORDAINED BY the City of Yakima, Washington, as follows: Section 1. Approval of Interlocal Agreement: Formation of the District. Pursuant to RCW 35.57.410(1), the City hereby approves the interlocal agreement attached as Appendix A hereto (the "Interlocal Agreement"), creating a public facilities district in cooperation with the Cities of Selah and Union Gap. As set forth in the Interlocal Agreement, the name of the District shall be the Yakima Regional Public Facilities District. The District shall be a municipal corporation, an independent taxing authority and a taxing district. The District shall be coextensive with the boundaries of Yakima, and the Cities of Selah and Union Gap, as the same may be amended from time to time. The District shall acquire (by purchase, lease or otherwise), construct, own, remodel, maintain, equip, reequip, repair, finance, and/or operate one or more regional centers, as defined in RCW 35.57.020, including the Convention Center, the Project and related parking facilities. Except as limited by State law and the Interlocal Agreement, the District shall have the powers, purposes and form set forth in its charter (the "Charter"). As set forth in the Interlocal and the Charter, in consideration for the mutual promises set forth therein, the District's power to impose sales and use taxes authorized under RCW 82.14.048 is subject to the City's, the City of Selah's and the City of Union Gap's approval of any such levy prior to placement on the ballot. In addition, also in consideration for the mutual promises set forth in Appendix A, the District's annual budget, its power to impose admission charges, parking charges, admissions taxes and -2- PAMSC0K 01/06/14 parking taxes, and any gambling activity or public display of artwork under authority of the District is subject to the approval of the Yakima City Council. Section 2. Charter. The Charter is hereby approved in the form attached as Exhibit A to the Interlocal Agreement. The Charter shall be amended only with the approval of Yakima, and the Cities of Selah and Union Gap. The District shall commence its existence effective upon execution of the Interlocal Agreement by Yakima, and the Cities of Selah and Union Gap. Section 3. Board of Directors. A board consisting of seven directors (the "Board"), as initially identified in the Charter, is hereby approved to govern the affairs of the District. The directors shall be appointed and serve their terms as provided in the Charter. All corporate powers of the District shall be exercised by or under the authority of the Board; and the business, property and affairs of the District shall be managed under the direction of the Board, except as may be otherwise provided for by law or in the Interlocal Agreement or in the Charter. Section 4. Authorization of Documents. The City Manager is hereby authorized to execute the Interlocal Agreement. The City Manager and his designee, and each of the other appropriate officers, agents and representatives of Yakima are each hereby authorized and directed to take such steps, to do such other acts and things, and to execute such letters, certificates, agreements, papers, financing statements, assignments or instruments as in their judgment may be necessary, appropriate or desirable in order to carry out the terms and provisions of, and complete the transactions contemplated by this ordinance. Section 5. Prior Acts. All acts taken pursuant to the authority of this ordinance but prior to its effective date are hereby ratified and confirmed. -3- P:\SC\SC09L 01/06/14 Section -6. Effective Date. This ordinance shall be effective 30 days after its passage, approval and publication as provided by lave. PASSED by the Council of the City of Yakima at a regular meeting thereof, held this 19th day of June, 2001. ATTEST City Clerk APPROVED AS TO FORM: City Attorney First Reading: _ Publication Date: Effective Date: CITY OF YAKIMA, WASHINGTON Mary Place Mayor -4- P-Xsc\sc09L 01/06/14 APPENDIX A INTERLOCAL AGREEMENT A-1 PASC\SC09L 01/06/14 RESOLUTION NO. R -2001- A RESOLUTION of the City of Yakima, Washington, approving the lease of the Yakima Convention Center to the Yakima Regional Public Facilities District; and approving an agreement between the City and the Yakima Regional Public Facilities District for the purpose of financing, expanding, operating and maintaining the Yakima Convention Center. WHEREAS, the City of Yakima ("Yakima") currently owns and operates the Yakima Convention Center (the "Convention Center"), providing first-class meeting, ballroom and other event facilities; WHEREAS, the City of Yakima, together with the Cities of Selah and Union Gap, desire to expand the Convention Center to stimulate economic development by creating jobs; realize additional sales tax and lodging tax revenues; attract commercial business and tourism; and provide facilities for convention, special events and community events including public meetings and performing arts events for, among others in the region, the residents of Yakima (the "Project"); WHEREAS, pursuant to Chap. 35.57 RCW (the "Act") the Cities of Yakima, Selah and Union Gap have approved the creation of the Yakima Regional Public Facilities District (the "District") to assist in completing the Project; WHEREAS, the District has access to several new revenue sources to complete the Project, including a state sales and use tax credit (the "Sales Tax"), which operates to shift 0.033% of the retail sales and use taxes generated within the District boundaries to the District; WHEREAS, the Act requires a 33% local match in order for the District to impose the Sales Tax and, accordingly, Yakima desires to transfer a leasehold interest in the Convention Center to the District in satisfaction of this match requirement (the value of the Convention Center and the underlying site is approximately $11,800,000); WHEREAS, the value of the leasehold interest is estimated to be significantly more than 33% of the net present value of projected Sales Taxes of the District (approximately $2.4 million), thereby satisfying the match requirement; WHEREAS, Yakima intends to issue bonds and apply the net proceeds to finance the Project, in consideration for the District's pledge of all Sales Tax receipts to Yakima to pay debt service on the bonds and other Project costs; WHEREAS, Yakima also intends to contribute lodging taxes to the District, in an amount, if any, determined annually by the Yakima City Council, to the operation of the Convention Center, and will contribute revenues to the District in the event of a Sales Tax shortfall; 1 WHEREAS, Yakima will design and construct the Project, and will operate and maintain the Convention Center, as expanded by the Project; V,UEREAS, Yakima desires to enter into an agreement with the District providing for such finitticing, design, construction, operation and maintenance of the Convention Center, as expande- by the Project; � OW, THEREFORE, BE IT RESOLVED by the Council of the City of Yakima, Washinj:on: Section 1. Approval of Lease Agreement. The City hereby approves the Lease A�rUle;.aaaent —4h tha rlictrirbt in cihetnntially the form nttnrhed aC Annendix A hereto (the 66Lease Agreement"), with such changes consistent with the intent of the attached form as the City Manager shall approve. Section 2. Approval of Development Agreement. The City hereby approves the Design, Development, Construction, Financing and Operating Agreement with the District, in substantially the form attached as Appendix B hereto (the "Development Agreement"), with such i +L +L + ..+ F ai,o 1 £ , r, +11 (:t y 1'. parshall. nnn ve The changes cc.'?slstent with the intent o LII e attached F-- as the fcit AAnnabw YY � Developm - it Agreement also constitutes a sublease of the Convention Center property back to the City. Sec -,:on 3. Authorization of Documents. The City Manager is hereby authorized to execute the Lease Agreement and the Development Agreement. The City Manager and his designee, and each of the other appropriate officers, agents and representatives of Yakima are each hereby authorized and directed to take such steps, to do such other acts and things, and to execute such-: instruments as in their judgment may be necessary, appropriate or desirable in order to carry out , tie terms and provisions of, and complete the transactions contemplated by this resolution. ctic ,14. Effective Date. This Resolution shall be in effect from and after its adoption. 2 ADOPTED at a regular meeting of the Council of the City of Yakima, Washington this 19th day of June, 2001. ATTEST: City Clerk CITY OF Y AKIMA, WASHINGTON UZZ 3 Mayor LEASE AGREEMENT This LEASE AGREEMENT (the "Lease") is made as of , 2001, by and between the CITY OF YAKIMA, WASHINGTON (the "City"), a municipal corporation and first class city of the State of Washington, and the YAKIMA REGIONAL PUBLIC FACILITIES DISTRICT (the "District", and together with the City, the "Parties"), a public facilities district created by the City and the Cities of Selah and Union Gap, to lease certain real property of the City to the District to assist in the design, development, construction, financing and operation of the Yakima Convention Center, as expanded. Reference is made to that certain Design, Development, Construction and Financing Agreement dated 2001, between the undersigned (the "Development Agreement"). 1. Effective Date. This Lease and all of the terms and conditions hereof shall become effective as of the date set forth above; provided that all of the rights, duties and obligations of the City and the District, as lessor and lessee, respectively, under this Lease are not and shall not be effective unless and until the Development Agreement becomes effective. 2. Leased Premises. From and after commencement of the Lease Term (as defined herein), the City hereby leases to the District and the District hereby hires from the City certain improved real property located in the City of Yakima, Washington, legally described in Exhibit A attached hereto and by this reference incorporated (the "Premises") and certain improvements thereon consisting of a convention center, and further improvements to be built on said Premises (the "Improvements"). Such Premises are subject to all easements, reservations, encumbrances and restrictions of record. 3. Term. The Lease Term of this Lease, and all obligation of the parties hereto as lessor and lessee, shall commence on the effective date of the Development Agreement and shall automatically terminate upon expiration or termination of the Development Agreement, unless otherwise terminated or amended as set forth herein. The District shall be entitled to possession of the Premises upon commencement of the Lease Term hereunder. 4. Prepaid Rent. Within 60 days after the commencement of the Lease Term, the District shall pay $50 to the City, which amount represents prepaid rent for the entire Lease Term. The Parties acknowledge that the value of the Premises and Improvements existing as of the date of this Lease is appraised at $11,800,000. The value of the leasehold interest in the Premises hereby transferred is significantly in excess of 33% of the net present value of sales taxes the District projects that it will collect under RCW 82.14.390 (approximately $2.4 million). It is the parties' intent that the City lease the Premises to the District in satisfaction of the local match requirement under RCW 82.14.390. 5. Use of the Premises. The Premises shall be used by the District solely for the operation and maintenance of the Premises and the lease back of the same to the City and for other District purposes consistent with the Development Agreement. At no time during the Lease Term shall the District use the Premises in whole or in part for any unlawful purpose, nor shall the District permit or commit any nuisance or illegal activity on the Premises. 6. Compliance with Laws. The District shall comply with all municipal, county, state and federal 'Laws, rules, regulations or ordinL aces applicable to the Premises and the improvements, and the ownership, use and occupancy thereof. 7. Liens and Encumbrances. Except as expressly provided in this Lease, the District shall keep the Premises and the Improvements thereon free of mechanics' and materialmen's liens and other liens of like nature including tax liens, and will defend and hold the City harmless against such liens or claims and against all attorney's fees and other costs and expenses growing out of or incurred as a result of such liens or claims so long as such liens or claims arise from the actions of the District and not the actions of the City. The City shall defend and hold harmless the District against such liens or claims, fees, costs or expenses growing out of r iriµrre4l rPciilt of flip uvt*nne of t1in(Jihr antnnt e notions of t11A nct-'tPrz�YJAednnno n — gvth however, that the District may in good faith and at the District's own expense contest the validity of any such lien or claim, through litigation if necessary. In the event that the District contests any lien or claim, the District shall prosecute the contest with reasonable diligence, and the District shall at all times effectually stay or prevent any official or judicial sale of the Premises and/or Improvements and the District shall pay or otherwise satisfy any final judgment (unless the District shall appeal same, in which event the judgment from the last appeal shall be the applicable judgment), which may be entered against it and thereafter promptly procure record satisfaction of release of the lien or claim. In the event that the District fails to fully discharge or in good faith contest any such lien or claim that has been perfected, the City may pay the same, or any part thereof, and the City shall be the sole judge of the validity of said lien or claim. All amount so paid by the City shall be recoverable against the District. Q. Maintenance and Repair of Premises and Improvements. The District shall u Improvements. a. a District < adaa maintain the Premises and Improvements in good repair and working order, and shall make such repairs necessary to so maintain the Premises and Improvements. 9. Taxes and Assessments. The District covenants and agrees to pay all real estate taxes and assessments, if any, levied upon the Premises and Improvements that become due and payable during the Lease Term prior to delinquency, together with any leasehold excise tax that may be assessed against the District's leasehold interest hereunder; provided, that if any such taxes or assessments may be paid in installments without penalty, the District shall have the right to pay any such taxes or assessments in installments. '-t District may contest the legal validity or amount of any tax, assessment or other charge for which the District may be responsible under this Lease and may institute such proceedings as the District considers necessary. If the District contests any such tax, assessment or other charge, the District may withdraw or defer payment or pay under protest, provided the District shall protect the City and the Premises and Improvements from any lien by adequate surety bond or other appropriate security. The City appoints the District as the City's attorney-in-fact for the purpose of making all nay.mPvntv to wnv tnv;nR aiihnitionrl fnr thAmnF---t—tin�g, -- t , S6JJ1b.dts or .7 w.sab -..— — cb JUF-- V"Aly 4. other charges, conditioned on the District's preventing any lien from being levied on the Premises or Improvements or upon the City. However, if the District chooses not to contest any tax, assessment or charge, the District shall give the City timely notice thereof so that the City may contest any taxes, assessments or charges levied against the Premises or Improvements if the District fails to do so. 10. Utili , Charges. The District shall be solely responsible for and shall promptly pay all charges for heat, water, light, gas, electricity, sewer and garbage or any other utility now or hereafter used or consumed on the Premises. In no event shall the City be liable for an interruption or failure in the supply of such utilities to the Premises. 11. Alterations. Except as permitted by the Development Agreement, the District shall not alter the Premises or the Improvements without the prior written consent of the City. 12. Insurance. The District shall, at its sole cost and expense, procure and maintain in force during the Lease Term all liability and other insurance required to be procured and maintained by the City under the Development Agreement. 13. Assignment. Except as otherwise provided in Section 22, the District shall not assign or transfer this Lease or any interest therein, nor shall this Lease or any interest therein be assignable or transferable by operation of law or by any process or proceeding of a court, or otherwise, without the prior written consent of the City, which consent shall not be unreasonably withheld. 14. Eminent Domain. A. The following definitions apply in construing provisions of this Lease relating to a taking of or damages to all or a part of the Premises or Improvements or interest therein by eminent domain or inverse condemnation. i. "Taking" means the taking or damaging, including severance damage, by eminent domain or inverse condemnation for any public or quasi -public use under any statute or any purchase or other acquisition under threat of condemnation. The taking shall be considered to take place as of the later of the date actual physical possession is taken by the condemnor, and the date on which the right to compensation and damages accrues under the law applicable to the Premises. ii. "Total taking" means the taking of the fee title to all of the Premises. iii. "Substantial taking" means the taking of so much of the Premises or Improvements or both that one or more of the following conditions result: (i) the conduct of the District's use(s) of the Premises would be substantially prevented or impaired, (ii) the remaining Premises could not be economically and feasibly be made to be so usable by the District, or (iii) the Improvements would be other than reasonably efficient or economic or could not economically and feasibly be made reasonably efficient or economic for the District's use. iv. "Partial taking" means any taking of the fee title that is not either a total taking or a substantial taking. V. "Award" means compensation paid for the taking, whether pursuant to judgment, by agreement or otherwise. B. The party receiving any notice of an intended taking or a willingness to make a negotiated private purchase in lieu of condemnation shall promptly give the other party ­;­en of t11 rnl.a;pt anri contents tharanf. C, The City and the District shall each have the right to represent separately their respective interest in each proceeding or negotiation with respect to the taking or intended taking and to make full proof of their claim. No agreement, settlement, sale or other transfer to or with the condemning authority shall be made without the consent of the City, the District and all leasehold mortgagees. D. Upon a total taking, the City and the District shall be relieved of all obligations hereunder and this Lease shall terminate. Such termination of obligations shall not prejudice the District's right to recover compensation calculated in accordance with the terms hereof for the taking of the District's interest in the Premises and Improvements. The amount of Llamages result -Ing to the City and the 1J1JLliL:l and to the respel lve interests of the C'lty anu LIB, District in the Premises by reason of such taking shall be separately determined and computed by the court having jurisdiction over such eminent domain proceedings. Separate awards and Judgment shall be made with respect to the damage to the City and the District and such awards shall be paid separately to the City and the District. If the City's and the District's damages (and awards therefore) cannot or will not be separately determined and computed by such court, then the award granted shall be divided between the City and the District in a fair and equitable manner, it being understood that the District's portion is to compensate the District for the loss of its leasehold interest hereunder, and the City's portion is to compensate the City for the loss of the right of reversion hereunder and its leasehold interest under the Development Agreement. E. Within 45 days after the District receives notice of an intended substantial taking, the District shall provide written notice of the same to the Yakima City Manager. Upon receipt of such notice the City Manager and the District shall confer as to the level of taking. The City shall have the final determination as to whether the taking should be treated as a total taking or partial taking. F. Upon a partial taking, the Lease shall remain in full force and effect, covering the remaining Premises. The amount of damages resulting to the City and the District and their respective interests in the Premises and the Improvements shall be separately rl®tarminari rarer] nnmr�..torl lie! t19A nnrert i�o�!inn ;i�r;erlintinre n� cr cii,h nminAn4 rinma;n VVLV1d11111V1d an. VVlllil-te d -.y the VVLL16 I Ylddt., JLd ...Ld VAd on. J66Vdd VddadldV116 WVdddNlld proceedings. Separate awards and judgments shall be made with respect to the damage to the City and the District, and such awards shall be paid separately to the City and the District, respectively. G. If the City's and the District's damages (and the awards therefor) cannot or will not be determined or computed by the court, then all sums, including damages and interest, awarded for the fee title or leasehold, or both, shall be deposited promptly with a mutually agreed upon escrow agent and shall be equitably distributed and disbursed for the following purposes: i. To the District for the purpose of compensating the District for the value of its leasehold interest taken and for restoring any- taken Improvements, plus any amount awarded to remove or relocate subtenants, plus any amount specifically awarded to or for the District for detriment to business and severance damages. ii. To the City, a sum equal to the value of the Premises taken. iii. To the City, for the purpose of compensating it for the value of the lost leasehold interest in the Development Agreement. iv. The remainder to the City, to be applied by the City to the repayment of Bonds or Additional Bonds (as defined in the Development Agreement) or to any other lawful use. H. Upon the taking for the temporary use of all or any part of the Premises or Improvements for a period of less than 12 months, the rent under this Lease shall not be affected in any way, and the District shall be entitled to any award for the use or estate taken. I. Nothing in this Lease shall be deemed to limit the City's right of eminent domain. 15. Indemnification. To the extent permitted by law, the District shall defend, indemnify, and hold the City and the Premises harmless from any and all damages or liabilities at any time occasioned by or arising out of (i) any act, activity or omission of the District, or anyone holding themselves out under the District (except the City), or (ii) the occupancy or use of the Premises or any part thereof, by or under the District, excluding the occupancy and use by the City, or (iii) the state or condition of the Premises and the Improvements or any part thereof, except to the extent the City shall itself be grossly negligent in the circumstances. Without limiting in any way the foregoing indemnification, the District agrees that during its use and occupancy of the Premises it shall comply with all laws, regulations, rules and ordinances of the City, the State and the federal government with regard to the use, storage, and disposal of hazardous and toxic substances on the Premises and the Improvements, and the District shall to the fullest extent permitted by law defend, indemnify and hold harmless the City for any and all damages or liabilities with regard to hazardous and toxic substances occasioned by and arising from the District's activities on the Premises and Improvements. 16. Default. Time is of the essence in this Lease, and in the event that (i) the District shall default in the payment of taxes, assessments, utility charges or any other amounts due hereunder, and such default is not caused by the City's failure to meet its obligations i rider file Development Agreeiment, and rf Such deiaiiit Sliaii Coiitlniie for 1© days following written notice and demand; (ii) the District shall default in the performance or observation of any other terms, covenants, conditions or agreements of this Lease for 15 days after written notice and demand, -or in the case of such default that cannot with due diligence and in good faith be cured within 15 days, the District fails to proceed promptly after such notice and with due diligence and in good faith, to begin to cure said default, (iii) there shall be filed against the District in any court or other tribunal pursuant to any statute or other rule of law, either of the United States or of any State or of any other authority now or hereafter exercising jurisdiction, a petition in bankruptcy or insolvency proceedings or for reorganization or for the appointment of a receiver or trustee of all or substantially all of the District's property, or for any other form of debtor- relief, unless, such petition be filed against the District and if in good faith the District promptly thereafter commences and diligently prosecutes any and all proceedings appropriate to secure the dismissal of such petition and shall secure such dismissal within 60 days after the date of filing or the commencement of such proceedings, (iv) if the District vacates or abandons the Premises or Improvements, or (v) the District defaults under the Development Agreement and such default is not cured within the cure periods set forth in the Development Agreement, then and in any such case, at the City's option and in addition to all other rights and remedies, the City may, following the expiration of the cure period, if any, provided herein for such default, immediately declare the District's rights under this Lease terminated and enter the Premises and the Improvements using such force as may be necessary and repossess itself thereof, as of its former estate, and remove all persons and property from the Premises and the Improvements. Qiif-li reent �, shall not constitute a termination of thirz T PaCP and, notwithstanding any -'ll reentry, the liability of the District to pay amounts hereunder (including taxes, assessments and utilities) shall not be extinguished for the balance of the term of this Lease and the District shall make good to the City any deficiency arising from receipt by the City of any lesser amount than that hereinbefore agreed upon. 17. Waiver. Neither the acceptance of rental nor any other actions or omissions by the City at any time after the happening of any event authorizing the cancellation or forfeiture of this Lease shall operate as a waiver of any past or future violation, breach or failure to keep or perform any covenant hereof, to deprive the City of its right to cancel or forfeit this Lease, upon written notice provided for herein, at any time that cause for cancellation or forfeiture may exist, or be construed so as to at any future time estop the City from promptly exercising any other option, right, or remedy, including the right to declare an event of default hereunder that it may have under any term or provision of this Lease. 18. Force Majeure. Any prevention, delay, nonperformance or stoppage due to a "Force Majeure" shall excuse nonperformance for the period of such prevention, delay, nonperformance or stoppage, except for obligations imposed by this Lease for the payment of taxes or insurance. "Force Majeure" means any causes or conditions beyond a party's reasonable control (including, but not limited to fire, explosion, presence of a hazardous substance. earthouake. storm. flood. wind. drought or act of God or one or more of the elements: court order, legislation, delay or failure to act by civil, military or other governmental authority other than a party; strike, lockout, or other labor dispute; riot, insurrection, sabotage or war; breakdown or destruction of, or damage or casualty to, any equipment, facility or other property; any delay or failure by any third party to provide a necessary service, supply, part, equipment, personnel or other item; or interruption, suspension, curtailment or other disruption of a utility). 19. Access by the City. At any time during the Lease Term, the City and the City's agents shall have the right to enter the Premises and the Improvements on reasonable notice to examine the same. Nothing contained herein shall be construed to impose upon the City a duty to repair the Premises or Improvements. 20. Surrender of Premises. At the expiration or sooner termination of this Lease, the District shall immediately return to the City the Premises and Improvement in its condition following completion of the Project defined in the Development Agreement, except reasonable wear and tear and damage by fire or other casualty. Upon termination of the Lease for any reason the District shall be liable for all costs and expense of restoring the Premises and Improvements to the condition at the time of completion of the Project, but only if such removal and restoration is requested by the City. The District's obligation to perform the covenants of this Section shall survive the expiration or termination of this Lease. 21. Quiet Enjoyment. The District, upon fully complying with and promptly performing all of the terms, conditions, and covenants of this Lease on its part to be performed, shall have and quietly enjoy the Premises for the Lease Term. 22. Leasehold Mortgages. During the term of this Lease, the District shall not encumber its leasehold interest in the Premises or Improvements without the prior written consent of the City. Notwithstanding the foregoing, the District is authorized to assign its rights and interests in this Lease to any financial institution, municipal bond trustee, municipal bond insurer or other entity as may be necessary to accomplish the financing or refinancing of the Project, provided that the District must obtain the prior written consent of the Yakima City Manager. 23. Consent to Lease Back. The parties hereby acknowledge and agree that they would not execute this Lease but for the agreement by the City to operate and maintain the Improvements, finance, construct and operate the Project and lease back the Premises to the City pursuant to the Development Agreement. The obligations of the District under this Section 23 are integral to this Lease and may not be severed herefrom without invalidating the entire Lease. 24. Termination. This Lease may be terminated after notice and opportunity to cure of any event of default in accordance with Section 16. This Lease shall also automatically terminate upon termination of the Development Agreement. 25. Amendment. This Lease may not be amended except by written instrument approved by resolution duly adopted by the District and approved by City ordinance or resolution. No course of dealing between the parties or delay in exercising any rights hereunder shall operate as a waiver of any rights of any party. 26. Entire Aereement. This Lease and any collateral instruments referenced herein contain the entire agreement between the parties hereto and shall not be modified or amended in any manner except by an insti"tilileilt in writing executed by the parties hereto. Previous drafts of this Lease or any portions thereof shall not be utilized in any manner by either party should any dispute arise as to the intent of this Lease. 27. Notices. All notices which may be or are requested to be given pursuant to this Lease shall be deemed given when hand delivered, or when deposited in the U.S. Mail, postage prepaid, and market: registered or certified mail, return receipt requested, and addressed to the parties at the following addresses unless otherwise provided for herein: To the City: Richard A. Zais, Jr. Ctv TVianaai-r City of Yakima 129 N. 2nd Street Yakima, WA 98901 With a copy to: Raymond L. Paolella, Esq. City Attorney City of Yakima 200 South Third Street Yakima, WA 98901 To the District: -C., ,a,: o Tl;won4nr l xec uti V e ,J 11 e V Lv- Yakima Regional_ Public Facilities District Yakima, WA 98901 28. Severability. If any term or provision of this Lease or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable (with the exception of Section 23), the remainder of this Lease or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby and shall continue in full force and effect. 29. No Merger. In no event shall (a) the leasehold interest, estate or rights of the District hereunder, (b) the rights of any leasehold mortgagee upon the District's leasehold interest, estate or rights hereunder, or (c) the leasehold interest, estate or rights of the District as sublessor under the Development Agreement, merge with any interest, estate or rights of the City as fee owner of the Premises and Improvements and lessor under this Lease or as sublessee under the Development Agreement, it being understood that such leasehold interest, estate and rights of the District hereunder and such rights of any leasehold mortgagee shall be dee-,ed to be separate and distinct from the City's interest, estate or rights as fee owner of the vises and Improvements, and as sublessee under the Development Agreement .at, ,,+..... ,7:«... +1,.,+ �, — ;n4nractc PCtntP nr rights chall at any time he held or vested in the 1L11s Lant-LI 1s Lllal ally aud,1 1-„v, vow, v.,�uw v - --b--.., .._.— — .___✓ ______ _ _ _____ _ _ ae, person, corporation or other entity. 30. Limited Obligation of the District. The District is organized pursuant to Chapter 35.57 RCW as a municipal corporation, separate and distinct from the City. All liabilities incurred by the District shall be satisfied exclusively from the assets, credit, and properties of the District, and no creditor or other person shall have any right of action against or recourse to the City or the Cities of Selah or Union Gap, their assets, credit, or services, on account of any debts, obligations, liabilities or acts or omissions of the District. 31. Attorneys' Fees. In the event of litigation between the City and the District or their successors or assigns to enforce a right or rights provided by or arising under this Lease, the non -prevailing party shall pay to the prevailing party reasonable attorneys' fees and other costs and expenses of litigation, including appeals. The amount of costs and attorneys' fees shall be included in any judgment or award for the prevailing party and the court or arbitrator in any such litigation shall determine which is the prevailing party. 32. Recording. The District shall not record this Lease without the written consent of the City; however, upon the request of either party hereto the other party shall join in the execution of a memorandum of this Lease for recording purposes. The memorandum of Lease shall describe the parties, the Premises and Improvements, and the Lease and shall incorporate this Lease and the Development Agreement by reference. 33. Governing Law; Time. This Lease and the rights of the parties hereto shall be governed and construed in accordance with the laws of the State of Washington. Time is of the essence in this Lease. IN WITNESS WHEREOF, the parties hereto have executed this document as of the day and year first above written. DATED this day of T_, 2001. CITY OF YAKIMA YAKIMA REGIONAL PUBLIC FACILITIES DISTRICT 1-3 Richard A. Zais, Jr. City Manager Attest: City Clerk Approved as to forth: City Attorney Chair Board of Directors STATE OF WASHINGTON) ) ss. COUNTY OF YAKIMA ) I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that he/she signed this instrument, on oath stated that he/she was authorized to execute the instrument and acknowledged it as the of to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: , 2001. Notary Public Print/Type Name My commission expires (Use this space for notarial stamp seal) STATE OF WASHINGTON ) ) ss. COUNTY OF YAKIMA ) I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that he/she signed this instrument, on oath stated that he/she was authorized to execute the instrument and acknowledged it as the of to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: , 2001. Notary Public Print/Type Name My commission expires (Use this space for notarial stamp/seal) [ATTACH EXHIBIT A - L.EGAL, DESCRIPTION OF THE PREMISES] KA25739\00049\SC\SC A20UB APPENDIX B DEVELOPMENT AGREEMENT M25739\00049\SC\SC_N20UC DESIGN, DEVELOPMENT, CONSTRUCTION, FINANCING AND OPERATING AGREEMENT BY AND BETWEEN CITY OF YAKIMA, WASHINGTON and YAKIMA REGIONAL PUBLIC FACILITIES DISTRICT 2001 Public Facilities District Design, Development, Construction, Financing nnrd OnPrntinu AurPPmPnt I age I. DEFINITIONS...................................................................................................................2 II. INTENT AND RELATIONS........................................................................................ ... 7 A. Intent............................................................................................................................ .....7 B. Description.....................................................................................--......................... .....8 C. Yakima's Regulatory Role Reserved........................................................................... .....8 D. Governing Law and Venue................................................................................................8 111. SCOPE OF COMMITMENTS.......................................................................................... 8 A. Commitments by the District..................................................................................... ......8 .. Repayment Obligation .....8 2. District Funds........................................................................................... ......9 B. Commitments by Yakima.......................................................................................... .....11 t. itlabiiiy............................................................................................. 1 Ste Avai 1 . 2. Issuance of the Bonds......................................................... ...... ..................11 3. Application of Net Proceeds..........................................................................11 4. Design, Development and Construction Responsibility...............................11 5. Operation and Maintenance Responsibility ........................................... ......11 6. Operation and Maintenance Costs......................................................... ......13 C. Commitment by Yakima to Replenish Sales Tax Shortfall.............................................14 1. Funding Commitment...................................................................................14 IV. PROJECT COMPONENTS AND OPERATION CRITERIA ........................................ 14 A. Project Components.........................................................................................................14 B. Project Purpose..................................................................................................................14 1. Public Access................................................................................................15 2. Yakima Approval..........................................................................................15 C. Project Contracting and Management..............................................................................15 V. DEVELOPMENT CRITERIA AND OVERSIGHT........................................................ 16 A. Generally..........................................................................................................................16 B. Standards of Performance ................................................................................. ...........16 C. Development Schedule and Substantial Completion Date ................................................ 16 VI. PROJECT COSTS............................................................................................................ 17 -1- P:%SC\SC09H 01106/14 VII. INSURANCE.................................................................................................................... 17 A. Insurance Requirements....................................................................................................17 B. Insurance Policies..............................................................................................................17 C. Adjustments.......................................................................................................................18 VIII. AS IS ............................................................................................................................... 18 A. Due Diligence....................................................................................................................18 B. Acceptance........................................................................................................................18 IX. LIABILITY .......................................................................................................................19 A. Indemnification of Yakima...............................................................................................19 X. DESTRUCTION OR CONDEMNATION....................................................................... 20 A. Total or Partial Destruction...............................................................................................20 B. Condemnation...................................................................................................................20 XI. RIGHT TO ASSIGN OR OTHERWISE TRANSFER .................................................... 21 A. Right to Transfer Agreement.............................................................................................21 XII. DEFAULT ........................................................................................................................ 21 A. Event of Default of the District.........................................................................................21 B. Force Majeure...................................................................................................................22 XIII. REMEDIES.......................................................................................................................22 A. Remedies Upon Default....................................................................................................22 B. No Waiver by Yakima......................................................................................................23 C. Termination.......................................................................................................................23 D. Reversion of the Property to Yakima................................................................................23 E. Certain Provisions Survive Termination...........................................................................24 XIV. REPRESENTATIONS AND WARRANTIES................................................................. 24 A. Yakima's Representations.................................................................................................24 B. The District's Representations and Warranties.................................................................24 C. Tax Covenant....................................................................................................................24 XV. LEASE BACK.................................................................................................................. 25 A. Sublease.............................................................................................................................25 B. Rent...................................................................................................................................25 C. Lease Obligations Assumed..............................................................................................25 XVI. MISCELLANEOUS......................................................................................................... 25 A. Captions.............................................................................................................................25 B. Construction......................................................................................................................25 -ii- P\SMSC09H 01/06/14 C. Entire Agreement..............................................................................................................25 D. Successors and Assigns.....................................................................................................25 E. Notices...............................................................................................................................26 F. Incorporation by Reference...............................................................................................26 G. Execution in Counterparts.................................................................................................26 H. Waiver...............................................................................................................................26 I. Exculpation.......................................................................................................................27 J. Severability.......................................................................................................................27 K. Term..................................................................................................................................27 TAma., llmante -- _.____. ___________________________ 27 EXHIBIT A — LEGAL DESCRIPTION OF THE PROPERTY EXHIBIT B — DEBT SERVICE SCHEDULE APPENDIX 1 — PROJECT DOCUMENTS -ill- P•\SC\SC09H 01/06/14 DESIGN, DEVELOPMENT, CONSTRUCTION, FINANCING AND OPERATING AGREEMENT This DESIGN, DEVELOPMENT, CONSTRUCTION, FINANCING AND OPERATING AGREEMENT (the "Agreement") is made as of , 2001, by and between the CITY OF YAKIMA, WASHINGTON ("Yakima"), a municipal corporation and first class city of the State of Washington, and the YAKIMA REGIONAL PUBLIC FACILITIES DISTRICT (the "District", and together with Yakima, the "Parties"), a public facilities district created by Yakima and the Cities of Selah and Union Gap, to provide for the design, development, construction, financing and operation of the Yakima Convention Center, as expanded. WHEREAS, Yakima currently owns and operates the Yakima Convention Center (the "Convention Center"), providing first-class meeting, ballroom and other event facilities; WHEREAS, Yakima desires to expand the Convention Center (the "Project"); WHEREAS, the Convention Center, as expanded by the Project, will serve as a Regional Center under RCW 35.57.030, benefiting the region including residents of Yakima, the City of Selah and the City of Union Gap (the "Cities") by stimulating economic development, creating jobs, realizing additional sales and lodging tax revenues, attracting commercial business and tourism, and providing facilities for convention, special events and community events including public meetings and performing arts event; WHEREAS, pursuant to Chap. 35.57 RCW (the "Act"), the Cities have entered into an Interlocal Agreement to form the District for the purpose of acquiring (by purchase, lease or otherwise), and assisting with the financing, development and operation of, the Convention Center as expanded by the Project; WHEREAS, under the Act, the District has access to several new revenue sources, including a state sales and use tax credit (the "Sales Tax"), which operates to shift 0.033% of the retail sales and use taxes generated within the District boundaries to the District; WHEREAS, the Act requires a local match of 33% of the net present value of the Sales Tax in order for the District to impose the Sales Tax; WHEREAS, Yakima has entered into a Lease Agreement transferring a leasehold interest in the Convention Center property described in Exhibit A hereto (the "Property") (the value of the Convention Center property is approximately $11,800,000) to the District in satisfaction of this match requirement (approximately $2.4 million); WHEREAS, the District will lease back the Property to Yakima pursuant to this Agreement; WHEREAS, subject to certain limitations set forth herein, Yakima will issue bonds to finance the Proiect, in consideration for the District's pledge of Sales Tax receipts to pay debt service on the bonds and other Regional Center costs; WHEREAS, Yakima will apply the net proceeds of the bonds to design, develop and construct the Project, under the terms set forth herein; WHEREAS, to provide for stable financing and operation of the Project in light of the cyclical nature of Sales Taxes, Yakima wishes to provide additional funding in the event of a Sales Tax shortfall; and WHEREAS, Yakima will operate the Convention Center, as expanded by the Project, and ;tl apply nnrt ;„ i i+< t—.-tn +n t;„ .<+ ;7r n ,tn+o „e on --11- by the e%Y AAS a.p�,Ay `... SQA LLAAAA `�, ALJ" M%16i11g LA.Axx.s �11A eA1A ilA]AA}l.AAAL, am U1Ay, 3A4+b'-.iA All3Ade,rss S.e.xlaaLnuAa J` vJ" _axY vnaj Council) to pay a portion of the costs of operation and maintenance; WHEREAS, the Parties desire that Yakima finance, design, develop and operate the Convention Center as expanded by the Project on the terms set forth herein, and the District and Yakima assist in financing the Project, also on the terms set forth herein; NOW, THEREFORE, in consideration of the mutual undertaking and promises contained herein, and the benefits to be realized by each Party including the benefits to the general public in the region by the completion and operation of the Project, the Parties agree as follows: I DEFINITIONS For t,'LLLroses of this Agreement, acid any agreMeits supplemental hereto, the terms defined in this Article shall have the following meanings, except as herein otherwise expressly provided: Additional Bonds means Completion Bonds or Refunding Bonds issued by Yakima. Additional Revenue means all revenue received by the District (or by Yakima on behalf of the District), including gifts, grants, donations, Admission Charges, Admission Taxes, Parking Charges, Parking Taxes, Voted Sales Tax, and any other revenue derived from the ownership or operation of the facilities of the District, including investment income-, but excluding Sales Tax Revenue and amounts received from Yakima pursuant to Section I1I(C) (including investment earnings thereon). Administrative Costs means the costs of the District incurred in administering the District and this Agreement. Administrative Costs shall be specified in the District's annua3 budget submitted to Yakima for approval and to the Cities of Selah and Union Gap for review and comment. Admission Charge means any charge imposed by the Dist-ct (or by Yakima on behalf of +t,- n-+r;n+l -r r nit,,,i-io,, to ;+A. F ilit;AA. .1,,.7;., . .,t,nr— f^r n ticLots o „bs-r, Lio-a. L114 i IOL11L,LJ 1VL UL11111JJ1V11 LV ILO IUL. 111LLL.J, i116ILA6 1116 1i11U1 �,6+J 1V3 .)4UJV11 L ANS LJ or JU V0L/11:J L1V11J, cover charges, or charges for use of seats and tables, and other similar accommodations; charges -?- PASMscoeu 01;06„4 for food and refreshment if free entertainment, recreation, or amusement is provided; charges for rental or use of equipment or facilities for purposes of recreation or amusement; and automobile parking charges if the amount of the charge is determined according to the number of passengers in the automobile. Admission Tax means any tax imposed by the District pursuant to RCW 35.57.100 to be paid by any person who pays an Admission Charge. Agreement means this Design, Development, Construction, Financing and Operating Agreement. Beneficial Occupancy shall mean when the Project is granted a temporary or permanent Certificate of Occupancy for the Convention Center as expanded by the Project from Yakima's building official. Bond Counsel means a firm of lawyers nationally recognized and accepted as bond counsel and so employed by Yakima. Bond Ordinance means the ordinance(s) of the Yakima Council authorizing the issuance of the Bonds and any amendments. Bonds means the bonds, notes or other evidences of indebtedness issued by Yakima pursuant to and under authority of the Bond Ordinance to finance or refinance the Project. Yakima reserves the right not to issue the Bonds if, at the time the Bonds are to be sold, the total interest cost on the Bonds exceeds 5.55%, or if the financing is determined to no longer be economical. Board means the governing body vested with the management of the affairs of the District. Charter means the Charter of the District, issued pursuant to the Interlocal Agreement, as amended from time to time. Code means the Internal Revenue Code of 1986, as amended, and all applicable regulations and rulings thereunder. Completion Bonds means additional bonds of Yakima issued to pay Costs of the Project. Costs of the Project means all capital costs that are paid or incurred by Yakima in connection with the design, development and construction of the Project, including, but not limited to all or a portion of the interest on Bonds during the period of construction of such improvements, and for a period of time thereafter; amounts required to meet any reserve requirement for the Bonds; the cost of paying or reimbursing Yakima or any fund thereof for expenses, including planning, permitting and design expenses, incident and properly allocable to the Project; and all other items of expense incident and properly allocable to designing, -3- P-1SC\SC09H 01/06/14 developing and constructing the Project, financing the Project and placing the Project in operation. Debt Service means the amount to be paid on the next succeeding Payment Date to pay the principal of, premium, if any, and interest on Bonds and any Additional Bonds coming due on such Payment Date. A schedule setting forth Debt Service to be paid on the Bonds and any Additional Bonds shall be attached as Exhibit B at such time as the Bonds or any Additional Bonds are issued. Debt Service Fund means the special fund's) or account's) established by Yakima under the Bond Ordinance or a Supplemental Bond Ordinance for the purpose of paying the principal of, interest on and redemption price, if any, of Bonds and/or any Additional Bonds. Debt Service Reserve Fund means the Debt Service Reserve Fund (or Account), if any, established by Yakima under the Bond Ordinance or Supplemental Bond Ordinance, which secures the Bonds andJor any Additional Bonds. Debt Service Reserve Fund Requirement means the amount required to be deposited to the Debt Service Reserve Fund, as established in the Bond Ordinance. District means the public facilities district created pursuant to the Interlocal Agreement. Event(s) of Default shall be as defined in Article IV herein. V- .1 uvoraute Opinion of ilPond vv::%:Uel means a written legal nrnininn of Bond Counsel addressed to Yakima, to the effect that such action is permitted under the laws of the State and under applicable ordinances of the Yakima Council, including the Bond Ordinance and any Supplemental Bond Ordinance, and will not impair the exclusion of interest on a Bond or any other bonds of Yakima from gross income for federal income tax purposes under the Code (subject to the inclusion of any exceptions contained in the opinion delivered upon original issuance of such bond). Force Majeure means any causes or conditions beyond a Party's reasonable control (inc;,-Iding, but not limited to fire, explosion, presence of a hazardous substance, earthquake, storm, flood, wind, drought or act of God or one or more of the elements; court order, legislation, delay or failure to act by civil, military or other governmental authority other than a party; strike, I ockout, or other labor dispute; riot, insurrection, sabotage or war; breakdown or destruction of, or damage or casualt to, any equipment, facility or other property; any delay or failure by any third party to provide a necessary service, supply, part, equipment, personnel or other item; or interruption, suspension, curtailment or other disruption of a utility). Governmental Authority shall mean any board, bureau, commission, department. or body of any municipal, county, state, or federal governmental or quasi -governmental ur; or any subdivision thereof, having, asserting, or acquiring jurisdiction over the Prope•- or the management om rntinn rice nr improvement thereof -4- P \SMSC09H 01/06/14 Improvements shall mean all buildings, structures, fixtures, improvements and equipment constructed or located on the Property, including, but not limited to, the structure of the Convention Center and the parking facilities, elevator(s), lighting, seating, carpeting, HVAC, plumbing, electrical and mechanical systems. Insurance Proceeds mean the greater of (i) the proceeds from the insurance policies actually maintained by Yakima with respect to the Convention Center or Project; or (ii) the proceeds that would have been available had Yakima maintained the insurance policies required to be maintained by Yakima under this Agreement. Interlocal Agreement means the Interlocal Financing Agreement between the Cities creating the District. Law(s) and Ordinance(s) shall mean all present and future applicable laws, ordinances, rules, regulations, resolutions, permits, authorizations, orders and requirements of all federal, state, county and municipal governments, the departments, bureaus or commissions thereof, authorities, boards or officers, any national or local board of fire underwriters, or any other body or bodies exercising similar functions having or acquiring jurisdiction over all or any part of the Property, including Yakima acting in its governmental capacity. Lodging Taxes means lodging taxes received by Yakima pursuant to Chap. 67 RCW. Net Proceeds, when used with reference to the Bonds, means the principal amount of such Bonds, plus original issue premium, if any, and less original issue discount, if any, and less the proceeds of the Bonds used to pay costs of issuance or deposited in the Debt Service Reserve Fund and/or the PFD Revenue Reserve Fund. Operating Manual means the Operating Standards Manual for the expanded Convention Center. Operation and Maintenance Costs means all necessary costs to Yakima of operating and maintaining the Convention Center as expanded by the Project, including but not limited to administrative and general expenses, costs of insurance (including reasonable contributions for self-insurance reserves, if any), consulting technical services and repairs and replacements (to the extent not properly classifiable as capital costs), real estate taxes, if any, but excluding depreciation (or reserves therefor), amortization of intangibles or other bookkeeping entries of a similar nature and debt service on the Bonds and any Additional Bonds. Outstanding, when used as of any particular time with reference to Bonds or Additional Bonds, means all Bonds or Additional Bonds authenticated and delivered by Yakima under the Bond Ordinance or any Supplemental Bond Ordinance except (1) Bonds or Additional Bonds theretofore cancelled by Yakima or surrendered to Yakima for cancellation; (2) Bonds or Additional Bonds with respect to which all liability of Yakima shall have been discharged in accordance with the Bond Ordinance or Supplemental Bond Ordinance, as applicable, and (3) Bonds or Additional Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds or Additional Bonds shall have been authenticated and delivered by Yakima pursuant to the Bond Ordinance or Supplemental Bond Ordinance, as applicable. -5- P-\SC\SC09H 01/06114 Parking Charge means "vehicle parking charges" as defined in RCW 35.57.110. Parking Tax means a tax on any Parking Charge imposed at any parking facility that is owned or leased by the District pursuant to RCW 35.57.110. Payment Bate means the dates specified in the Bond Ordinance, or any Supplemental Bond Ordinance, as dates for the payment of interest on, principal of or premium, if any, with respect to the Bonds or any Additional Bonds. Permitted .investments means investments permitted by State law for investment of Yakima and District funds, consistent with the terms of the Bonds and any Additional Bonds. PFD Revenue Reserve Fund means the PFD Revenue Reserve Fund (or Account), if any, established by Yakima under the Bond Ordinance or Supplemental Bond Ordinance. The amount of revenue consisting of the District's Sales Tax Revenue received by Yakima that shall be maintained in the PFD Revenue Reserve Fund shall be established in the Bond Ordinance. Predevelopment Casts means the cost of all planning, legal, architectural, engineering and other services incurred by Yakima in connection with the Project until the date of issuance of the Bonds. Project means the design, construction, and operation of the additions to the Convention Center, as described in the Project Documents. Project Documents means all design documents (including drawings describing the structural, mechanical, acoustical, lighting, and electrical systems of the Project, detailed site plans, preliminary specifications, and schematic design documents), construction documents (including all drawings and specifications necessary to completely describe the Project in detail to a contractor for the purposes of bidding and construction, schedules, plans and specifications, and the construction contract) and Project budgets (setting forth the construction contract cost, taxes, all contingencies, fees and allowances). Property shall mean the real property described in Exhibit A attached hereto or as hereafter amended. Refunding Ponds means bonds, notes or other evidence of indebtedness the proceeds of which will be used to refund Bonds. Sales Tax means the nonvoted sales and use tax to be imposed by the District in accordance with RCW 82.14.390 at a rate not to exceed 0.033% of the selling price in the case of a sales tax or value of the article used in the case of a use tax, which tax shall be deducted from the amount of tax otherwise required to be collected or paid over to the State's Department of Revenue and shall expire when the Bonds and any Additional Bondi retired, or, ur any event, t more tha„ 76 —,A vo oftar tlhA Qa1Pc Tax is firct rnllPrted S1Vl lllor6+ Lll(Alt L✓ j'v— a.sa svw �...+ ............. i ».. ... �...... .. ., --��'�—' -6- PASMSC09H 01/06/14 Sales Tax Revenue means all Sales Taxes received by the District. State means the State of Washington. Substantial Completion shall mean when the Beneficial Occupancy of the Convention Center as expanded by the Project is achieved. Supplemental Bond Ordinance means any ordinance adopted by the Yakima Council amending or supplementing the Bond Ordinance, including any ordinance adopted by the Yakima Council in connection with the issuance of Additional Bonds. Voted Sales Tax means any sales and use tax imposed by the District pursuant to RCW 82.14.048 and approved by the voters. Yakima means the City of Yakima, Washington, a municipal corporation of the State, as now or hereafter constituted. Yakima Council means the City Council of Yakima, or any successor thereto as provided by law. IL INTENT AND RELATIONS A. Intent. 1. Financing. It is the intent of this Agreement that the District lease the Property to Yakima and that Yakima finance the Project. In consideration for Yakima's agreement to finance the Project, it is the intent of the Parties that the District transfer all Sales Tax Revenue to Yakima to pay Predevelopment Costs (to the extent not paid from Net Proceeds), Debt Service and other Regional Center costs including but not limited to funding and/or replenishing the Debt Service Reserve Fund and PFD Revenue Reserve Fund and reimbursing Yakima for deposits made to the Debt Service Fund pursuant to Section III(C). It is the intent of the Parties that, in the event that Yakima provides notice that amounts on deposit in the Debt Service Fund and the PFD Revenue Reserve Fund are projected to be insufficient (not taking into account amounts in the Debt Service Reserve Fund) for Yakima to pay Debt Service when due, Yakima will deposit sufficient funds to the Debt Service Fund to remedy such deficiency as set forth in Section III(C). 2. Development. It is the intent of this Agreement that Yakima design, develop and construct the Project in accordance with the Project Documents and the standards of performance set forth in Article V. This Agreement is intended by the Parties to establish the design, development and construction standards and other performance criteria for the Project. 3. Operation. It is the intent of the Parties that Yakima operate and maintain the Convention Center and the Project, and that Yakima retain all rents, receipts, profits and other revenues of the Convention Center as expanded by the Project. In consideration for Yakima's agreement to operate and maintain the Convention Center and the Project, it is the intent of the Parties that the District pay Additional Revenue, if any, to Yakima, and that Yakima -7- - PASMSC09H 01/06/14 pay the District's Administrative Costs. In addition, the Parties intend that Yakima apply certain Lodging Taxes to pay a portion of Operation and Maintenance Costs, in an amount, if any, determined on an annual basis by Yakima. B. Description. The Property is located at 10 North Eighth Street , Yakima, Washington 98901-2515, as legally described on the attached Exhibit A. The Convention Center, as improved by the Project, will occupy approximately 47,000 square feet. C. Yakima's Regulatory Role Reserved. Any Yakima design review and approvals provided for herein are independent of, in addition to and do not in any way obligate Yakima with respect to usual and customary Yakima permitting, code compliance and other regulatory reviews. The outcome of any such regulatory review is independent of and is in no way biased, .. ,7..,..7nr..f k;; A rrrat nt i�ntb;nrr in this A OTPPTY1 P.ttt 1C �.pr Coj iidicc(l. of pr+v6l.5+ZLi aaaa lac.. ,x iia an., ita., v.y essau i sus vsnx�n_c, s.........5 ... ...... .��_______ _.. intended or shall be construed to require that Yakima exercise its discretionary authority under its regulatory ordinances to further the Project nor bind Yakima to do so. Yakima will process applications for permits and approvals associated therewith as if such a~plications were made without any Yakima participation in such projects. D. Governing Law and Venue. This Agreement and the rights and obligations of the Parties shall be governed by, and construed and interpreted in accordance with, the laws of the State. Any suit filed between the Parties concerning this Agreement shall be commenced in the Superior Court in Yakima County. III. SCOPE OF COMMITMENTS A. Commitments by the District Payment Obligation. (a) Payment of Debt Service and Predevelopment Costs. In consideration for Yakima's agreement to issue the Bonds and design, develop and construct the Project, the District shall pay all Sales Tax Revenue to Yakima to pay Yakima's Debt Service and Predevelopment Costs (to the extent not paid from Net Proceeds), and other Regional Center costs including but not limited to funding and/or replenishing the Debt Service Reserve Fund and PFD Revenue Reserve Fund and reimbursing Yakima for deposits made to the Debt Service Fund pursuant to Section III(C). (b) Pledge of Sales Tax Revenue, additional Revenue and other Receipts of the District. The District hereby pledges Sales Tax Revenue and other amounts to be paid by the District to Yakima for payment of Debt Service, Predevelopment Costs (to the extent not paid from Net Proceeds), and other Regional Center costs including but not limited to funding and/or replenishing the Debt Service Reserve Fund and PFD Revenue Reserve Fund and reimbursing Yakima for deposits made to the Debt Service Fund pursuant to Section III(C). The obligation of the District to pay Sales Tax Revenue and other amounts due under the Agreement anA t....a, FS. .�.,rl nhrar.ra tha Mbar nhl;Trot;nnc nn ;tc mart rnnta;Hart harP;n chnll hP nhcnhitP uaau w Y�.a a.vaia cnuu vvuva ry ..., -- vv.susavaau v.. .w ru.. ..v...»..- .......... ....».. .... »...,...»... and unconditional, and shall not be subject to diminution by setoff, counterclaim, abatement or -8- P1SMSC09H 01/06/14 otherwise. The District's obligations under this Agreement shall continue in effect and shall survive the satisfaction of Yakima's obligations under the Bonds, the Bond Ordinance, any Additional Bonds, and any Supplemental Bond Ordinance until such time as all Predevelopment Costs and Debt Service have been paid, together with any other amounts owed to Yakima hereunder. The Parties acknowledge and agree that Yakima will pledge this Agreement, as well as the District's Sales Tax Revenue and other amounts to be paid by the District to Yakima, to the payment of the Bonds and any Additional Bonds. Such pledge will be material to the offer and sale of the Bonds, and will be disclosed to potential purchasers and purchasers of the Bonds. Bondholders will rely on this pledge in purchasing the Bonds. So long as the Bonds or any Additional Bonds are Outstanding, the District shall not issue bonds, or incur any other obligation, secured by Sales Tax Revenue or by Additional Revenue. (c) Revenue and Payment Reports. The District shall file annual financial statements and annual reports with the Cities, as required under Sections 8.5 and 8.6 of the Charter Each such report shall bear a current date, be signed by an appropriate and duly authorized District officer and be supported by reasonable documentation sufficient to sustain the accuracy of the report. (d) Termination for Failure To Timely Pay. This Agreement is specifically conditioned upon the District's timely payment of amounts due hereunder. In the event that the District fails to transfer amounts as and when required to Yakima, Yakima may terminate this Agreement pursuant to the provisions contained in Article XIII. 2. District Funds. The District shall establish the following Funds and accounts: Sales Tax Revenue Fund (or Account), Additional Revenue Fund (or Account), and the Administrative Fund (or Account). The District may, in its discretion, establish such additional accounts and subaccounts as the District deems necessary or useful, but the establishment of any such account or subaccount shall not alter or modify any of the requirements of this Agreement with respect to a deposit or use of money in the funds. (a) Sales Tax Revenue Fund. The District shall establish a Sales Tax Revenue Fund and shall deposit in the Sales Tax Revenue Fund all Sales Tax Revenue and all net earnings on investments of money in the Sales Tax Revenue Fund. Amounts in the Sales Tax Revenue Fund may be invested in Permitted Investments. The District shall maintain records sufficient to permit calculation of the income on investments and interest earned on deposit of amounts held in the Sales Tax Revenue Fund, and such income and interest shall become part of the Sales Tax Revenue Fund unless otherwise applied in accordance with this Section. The money and investments in the Sales Tax Revenue Fund are irrevocably pledged and shall be used and transferred by the District as follows: Within three working days after receipt, all amounts on deposit in the Sales Tax Revenue Fund to Yakima to pay Debt Service, Predevelopment Costs and other Regional Center costs, including but not limited to funding and/or replenishing the Debt Service Reserve Fund and PFD Revenue Reserve Fund and reimbursing Yakima for deposits made to the Debt Service Fund pursuant to Section III(C). -9- P \SMSC09H 01/06/14 (b) Additional Revenue Fund. The District shall dept: sit in the Additional Revenue Fund all Additional Revenue received by the District and all net : arnings on investments of money in the Additional Revenue Fund. Amounts received from Ya,,;ma to pay Administrative Costs shall be deposited to the Additional Revenue Fund. Amounts in the Additional Revenue Fund may be invested in Permitted Investments. The District sh,4d maintain records sufficient to permit calculation of the income on investments and interest earned on deposit of amounts held in the Additional Revenue Fund, and such income and interest shall become part of the Additional Revenue Fund unless otherwise applied in accordance with this Section. The money and investments in the Additional Revenue Fund are irrevocably pledged and shall be used and transferred by the District at least monthly as follows and in the following order of priority: (;l Tn tha O.minictrativa Fnnrl to nav A� ...... t"AttVP. Cv(1CtS and (ll) The remainder, to Yakima to pay Operation and Maintenance Costs. To the extent that Additional Revenues are received by Yakima on behalf c the District, Yakima shall apply such Additional Revenues to pay (i) Administrative Coss and/or (ii) Operation and Maintenance Costs. (c) Administrative Fund. The District shall establish an Administrative Fund. Amounts transferred from the Additional Revenue Fund to pay Administrative Costs pursuant to subsection (b) shall be deposited to the Ad���ir, aLrative Fund. shall be used to pay Administrative Costs. Amounts in the Administrative Fund may be invested in Permitted In-estments. The District shall maintain records sufficient to permit calculation of the income on investments and interest earned on deposit of amounts held in the Administrative Fund, and si�ch income and interest shall become part of the Administrative Fund unless otherwise applies in accordance with this Section. (d) Liens. Except as permitted under this Agreement, the District shall not create any lien upon funds created hereunder other than the lien hereby created. -10- P %SC\SC09H 01/06114 B. Commitments by Yakima 1. Site Availability. Pursuant to the terms of the Lease Agreement between Yakima and District, dated 2001, Yakima will lease to the District the Property described in Exhibit A. The Parties agree that the leasehold interest in the Property is donated (for nominal consideration in the form of $50 in rent) by Yakima to the District to be used for the construction of a Regional Center, as defined in RCW 35.57.030. Moreover, the Parties agree that the value of the Property is $11,800,000. The value of the leasehold interest in this Property transferred by the Lease Agreement significantly exceeds 33% of the net present value of the total Sales Taxes projected to be received by the District (approximately $2.4 million). 2. Issuance of the Bonds. Yakima agrees to issue the Bonds and Completion Bonds, if necessary. Yakima reserves the right not to issue the Bonds if, at the time the Bonds are to be sold, the total interest cost on the Bonds exceeds 5.55%, or if the financing is determined to no longer be economical. The Bonds shall be in an aggregate principal amount to be determined by Yakima, at least equal to the projected Costs of the Project, Predevelopment Costs, amounts to pay costs of issuance and amounts to be deposited to the Debt Service Reserve Fund, if any. 3. Application of Net Proceeds. Yakima agrees to apply Net Proceeds to pay Predevelopment Costs and Costs of the Project as follows. (a) Predevelopment Costs. Yakima has incurred and will continue to incur Predevelopment Costs for the benefit of the District. Yakima will pay these Predevelopment Costs from the District's Sales Tax Revenue received by Yakima to the extent that Predevelopment Costs are not paid from Net Proceeds (at Yakima's election). (b) Costs of the Project. In addition, Yakima will apply Net Proceeds to pay Costs of the Project. , 4. Design, Development and Construction Responsibility. Yakima shall design or contract for the design of the Project and construct or contract for the construction of the Project, in accordance with the Project Documents and with the standards of performance set forth in Article V and elsewhere in this Agreement. 5. Operation and Maintenance Responsibility. (a) Operations and Maintenance—Generally. Yakima agrees to operate and maintain the Improvements including the Convention Center, related parking and, upon Substantial Completion, the Project, on the terms and in accordance with the standards set forth herein. Yakima shall operate and maintain the Improvements including the Convention Center, related parking and the Project as a first class convention center facility, to be kept at all times in a safe and clean condition. Yakima shall provide (directly or by contract) all management, supervision, personnel, materials, equipment, services and supplies necessary to operate, maintain and repair of the - I I - P:\SC\SC09H 01/06/14 Improvements and shall take all reasonable precautions to prevent damage, injury or loss by reason of or related to the operations and maintenance of the Improvements to any person or property. Yakima shall hire an appropriate number of qualified employees to operate and maintain the Improvements consistent with the best management practices. Yakima shall properly supervise and direct its employees and other parties implementing the performance of its duties, obligations and functions under this Agreement. Yakima shall be fully responsible for the performance of such employees and other parties. Yakima shall comply with all applicable Laws and Ordinances relating to the safety of persons or property or their protection from damage, injury or loss. Yakima shall obtain all statements, certificates, permits, licenses, rights, and approvals, whether public, private, local, state or federal, that are necessary or appropriate to the continued operation of the Improvements r___...1...... ,....t;on ..n +. V�lrima ci,all ttnliPYf IiCP ail modifications to the Improvements ci3 it iii3i SriG33 i3>avv.+3Lb+,:la .»��.. required --r- required to comply with state, federal and local laws, rules, regulations, judgments, orders and decrees. Prior to Substantial Completion of the Project, Yakima shall provide pre -opening services, including start-up of the Project, mobilization of staff and services, and performance of marketing and booking plans. (b) Compliance with the Operating Manual. Yakima shall maintain the Improvements in substantial compliance with the terms of the Operating Manual during the term of this Agreement. The Operating Manual shall not be amended except with the written approval of the Yakima City Manager or his or her designee. The Operating Manual shall not be will UIC '+.. F t f the Bonds nr any Additional revised 1n a manner that viii irripair �iic securi�y irl uic owners V^� lllV i3V11uJ .,1 al. Bonds. Article V11. (c) Insurance. Yakima shall maintain insurance as set forth in -12- PASC1SC09H 01/06/14 6. Operation and Maintenance Costs. (a) Obligation To Pay Operation and Maintenance Costs and Administrative Costs; Right to Receive all Rents and Operating Revenues. Yakima shall pay Operation and Maintenance Costs from revenues derived from operation of the Convention Center and the Project, Additional Revenues received from the District, from Lodging Taxes, or other Yakima funds, as set forth below. Within a reasonable period after receipt of an invoice therefor, Yakima shall pay to the District its Administrative Costs as set forth in the District's budget approved by Yakima. All rents, receipts, profits and other revenue derived from the operation of the Convention Center and the Project shall be retained by, and shall be the property of, Yakima, and shall be applied to pay Operation and Maintenance Costs or any other lawful purposes of Yakima. (b) Lodging Taxes. To the extent not paid from revenues derived from operation of the Convention Center and the Project, Additional Revenues received from the District, or other Yakima funds, Yakima will apply Lodging Taxes to pay Operation and Maintenance Costs. The amount of Lodging Taxes to be applied to this purpose in any year shall be determined by the Yakima Council in its sole discretion as part of its annual budget process. The amount of Lodging Taxes to be applied to pay Operation and Maintenance Costs may vary from year to year and may equal zero in some years. In any event, the amount of Lodging Taxes to be applied shall not exceed the amount available after payment of debt service on Yakima's outstanding bonds (including all or a portion of the Bonds) to which these taxes are pledged. Yakima's obligation hereunder is limited only to the amounts designated for this purpose by the Yakima Council. Yakima does not hereby guarantee any obligations or liability of the District. It is expressly understood and agreed that any obligation or liability arising out of and/or incurred by the District by reason of this Agreement, or the carrying out of any activity in connection therewith, shall be satisfied exclusively from the assets and credit of the District, and no creditor or any other person or entity shall have any recourse to any of the assets, credit, or services of Yakima on account of any debts, obligations, or liabilities of the District (c) Amounts Remitted to Yakima. Amounts remitted to Yakima pursuant to Section III(A)(2)(a) and (2)(b)(ii) shall be used by Yakima for the following purposes. Receipts that are Sales Tax Revenue shall be used to pay Predevelopment Costs (to the extent not paid from Net Proceeds), Debt Service, and for the purposes set forth in RCW 35.57.020, as the same may be amended (acquiring, constructing, owning, remodeling, maintaining, equipping, reequipping, repairing, financing, and operating one or more Regional Centers). Receipts that are Additional Revenues shall be applied to pay Operation and Maintenance Costs. Yakima's obligation hereunder is limited only to the amounts received from the District. Yakima does not hereby guaranty any debt obligations or liability of the District. -13- PASMSC09H 01/06114 All amounts remitted to Yakima pursuant to Section III(A)(2)(a) and 2(b)(ii), together with all rents, receipts, profits and other revenues derived by Yakima from its operation of the Convention Center, shall be retained by and be the property of Yakima to be applied to pay Oneration and Maintenance Costs (directly or by contract) or for other lawful purposes of Yakima . It is the Parties intent that all such amounts shall be Yakima funds, accounted for in Yakima's books and accounts. (d) Additional Support. To the extent, as from time to time authorized by the Yakima City Manager, Yakima will utilize its employees to provide oversight and administrative assistance in working with District to achieve the mutual goals and objectives of the Cities and District under this Agreement. Unless otherwise specified in this Agreement or applicable law, actions to be taken or decisions to be made by Yakima will be the responsibility _c .L_ v 11. fl—, A 1 « 1,;� .,, i,Pr .IPC1f7n PP Valllma hPrPhv arantc ti extent iii iii, d Si Bilins %-,!Ly IV-kan 1,�,e o pals vs nws: A. wcrww•_.�.. .... imp ....r.....J v _- .-, - extent permitted by law such person or persons the power, authority, and right to carry . such responsibilities. C. Commitment by Yakima to Replenish Sales Tax Shortfall 1. Funding Commitment. Yakima shall provide notice to the District in the event that amounts in the Debt Service Fund and the PFD Revenue Reserve Fund (not taking into account amounts in the Debt Service Reserve Fund) are projected to be insufficient to pay Debt Service on any Payment Date. In such event, Yakima will deposit sufficient funds to the Debt Service Fund to remedy such deficiency. Yakima's obligation hereiiaider is limited only to the amount to be paid to replenish any projected deficiency in the Debt Service Fund. Yakima does not hereby guarantee any debt obligations or liability of the District. It is expressly understood and agreed that any obligation or liability arising out of and/or incurred by the District by reason of this Agreement, or the carrying out of any activity in connection therewith, shall be satisfied exclusively _from the assets and credit of the District, and no creditor or any other person or entity shall have any recourse to any of the assets, credit, or services of Yakima on account of any debts, obligations, or liabilities of District. Ids PROJECT COMPONENTS AND OPERATION CRITERIA A. Project Components. Yakima shall finance, design and construct the Project in accordance with the Project Documents, and in accordance with the performance specifications set forth herein. B. Project Purpose. The Project is being constructed to serve the needs of the region, including the residents of Yakima, the City of Selah and the City of Union Gap. Following Project completion, Yakima shall be s. iy responsible tr - management, operation and maintenance of the Convention Center, as expanded by the Projec" :onsistent with the terms ,.CtL... A .� «t «.7 +I,- 01 L1116 L'1b'r GG111Gl11 allu lll\+ %- F`Gltlll6 t•iuisuuw. -14- P•1SC\SC09H 01/06114 1. Public Access. Yakima shall provide regular hours during which the Convention Center will be open to the public (subject to reasonable Admission Charges); provide public programs; and make available for reasonable public use any ballroom, auditorium, meeting rooms or other public spaces in the Convention Center (subject to reasonable security measures). 2. Yakima Approval. In consideration of Yakima's obligations hereunder, the District agrees that the following shall be subject to the approval of the Yakima Council: (a) Approval of the Yakima Council: (i) The District shall not impose Admission Charges or Parking Charges without the prior approval of the Yakima Council, as set forth in the Interlocal Agreement and the Charter. (ii) The District shall not impose Admission Taxes or Parking Taxes without the prior approval of the Yakima Council. (iii) The District's annual budget, including Administrative Costs, shall be subject to the approval of the Yakima Council and to review and comment by the Cities of Selah and Union Gap. (iv) The District shall not authorize or engage in gambling activities or authorize or publicly display any artwork without the prior approval of the Yakima Council. (v) Any acquisition or transfer of real and personal property with a value over $100,000 by lease, sublease, purchase, or sale by the District shall be subject to approval by the Yakima Council. C. Project Contracting and Management 1. Yakima shall construct the Project according to the Project Documents. 2. Yakima will select the contractor(s) for the Project through a competitive bidding process under the Laws of the State, pursuant to procedures designed to provide maximum practical competition by and from qualified contractors. 3. Yakima shall take reasonable precautions to prevent unnecessary damage, injury or loss to property, structures, and vegetation in the Project area and shall at its own expense repair any damage thereto caused by its, or its contractors', actions. Yakima shall require its contractors to take any and all precautions that may be necessary to render all portions of the Project and any adjacent areas affected by the Project secure in every respect, and to decrease the likelihood of accidents from any cause, and to avoid contingencies that are liable to delay the Project. Yakima shall require its contractors to exercise utmost care when using explosives or other hazardous materials or equipment, and when utilizing unusual methods. -15- PASMSC09H 01/06/14 These requirements shall in no way relieve Yakima of its responsibility for safety on the Project. The District shall not be responsible for any unsafe conditions. V. DEVELOPi ENT CRITERIA AA'D OVERSIGHT A. Generally. Except as otherwise provided in this Section, the Parties hereby agree that Yakima shall have sole responsibility for construction of the Project and shall be responsible for obtaining all necessary land use, building and mechanical permits, and all other required permits or approvals for construction of the Project. Yakima shall promptly comply with all applicable Laws and Ordinances as they relate to the Property and Improvements. Yakima's responsibility to finance such construction is limited to the extent of Net Proceeds. R .Gandardc nf Pprfarmance. Yakima shall perform the terms of this Agreement according to the following standards: Performance in a good and workmanlike manner and in compliance with all applicable laws and ordinances, rules, and regulations. 2. Use of materials that are of first class quality and workmanship. 3. Maintenance and warranty of all portions of the Project consistent with the Project Documents. C. Development Schedule and Substantial Completion Date. 1. RCW 82.14.390 currently requires that construction of the Project commence before January 1, 2003. Accordingly, Yakima shall commence construction of the Project before January 1, 2003, or such later start date set forth in any amendment to RCW 82.14.390 (the "Date of Commencement"). 2. Yakima shall pursue the design and construction of the Project to achieve Substantial Completion within 24 months after the Date of Commencement, excluding time periods when the design, construction or development of the Project is unavoidably delayed by reasons of Force Majeure; provided, however, that said date may be extended by the Yakima City Manager. VI. PROJECT COSTS. Yakima shall finance, design, construct, and assume the risk of loss of the Project from Net Proceeds and from other amounts paid by the District to Yakima pursuant to the Agreement. -16- PASMSc09H 01/06/14 VIL INSURANCE A. Insurance Requirements. Yakima shall maintain and keep in force insurance covering all aspects of the construction activity on the Property, including but not limited to the following requirements: 1. Builder's All Risk Comprehensive Coverage. Yakima shall keep, or shall require the construction contractor to keep, all Project components, including but not limited to the Convention Center and parking facilities, insured for Builders All Risk Comprehensive Coverage including earthquake and flood in any event in an amount not less than one hundred percent (100%) of the then full "Replacement Cost," being the cost of replacing the Project components, and all fixtures, equipment, improvements and betterments thereto. 2. Commercial General Liability. Yakima shall carry, and shall require its construction contractor to carry, Commercial General Liability insurance providing coverage against claims for bodily injury, death or property damage on the Property with broad form liability and property damage endorsement, such insurance to afford minimum protection, during the term of the construction phase, and written for combined single limits of liability of no less than Ten Million Dollars ($10,000,000), per occurrence, said amount to be adjusted from time to time with coverage deemed customary under like conditions. 3. Property Damage Insurance. Yakima shall carry property insurance covering the Property including all Improvements, including earthquake, flood, boiler and machinery insurance, in an amount equal to at least one hundred percent (100%) of the replacement cost of all Improvements. Such insurance shall contain coverage against loss or damage by perils no less broad than the current edition of the ISO Special Form, 1985 Edition. Yakima shall be responsible for payment of any deductibles under said insurance policies and any costs of restoration resulting from any uninsured or underinsured losses. B. Insurance Policies. Insurance policies required herein: 1. Shall be issued by companies authorized to do business in the State with the following qualifications: a. The companies must be rated no less than "A," as to general policy holders rating and no less than "X" as to financial category in accordance with the latest edition of Best's Key Rating Guide, published by A.M. Best Company, Incorporated. b. The policies shall be issued as primary policies. 2. Each such policy or certificate of insurance mentioned and required in this Section VII shall have attached thereto (1) an endorsement that such policy shall not be canceled or materially changed without at least 30 days' prior written notice to the District and Yakima; (2) an endorsement to the effect that the insurance as to any one insured shall not be invalidated by any act or neglect of any other insured; (3) an endorsement pursuant to which the insurance -17- P9SMSC09H 01/06114 carrier waives all rights of subrogation against the Parties hereto; and (4) an endorsement pursuant to which this insurance is primary and noncontributory. 3. The certificates of insurance and insurance policies shall be furnished to the District and Yakima prior to commencing any construction under this Agreement. The certificate(s) shall clearly indicate the insurance and the type, amount and classification, as required for strict compliance with this Section VII. 4. Cancellation of any insurance or non-payment by Yakima of any premium for any insurance policies required by this Agreement shall constitute an Event of Default under Section XII of this Agreement. 7 L 0 AX-ofs ,a"fo Tha tAmPc of nn1;C;,-C ricL-c 1nciirPri mvi-rPaP amnnntc derhirtihIeS and endorsements may be adjusted from time to time as the District and Yakima may mutually determine. VIII. AS IS A. Due Diligence. The District acknowledges that it has diligently investigated to its full satisfaction the physical condition of the Property and all other matters that in the District's judgment affect the District's use of the Property and the District's willingness to enter into this Agreement. The District acknowledges that except as expressly provided for in this Agreement, neither Yakima nor any employee, officer, agent or representative of Yakima has made an} representations or warranties whatsoever regarding the Property or this transaction or any facts 1_�. L___a... 1.. ,]:... 'ah...,,a 1..,.a.,tr. _ 4n t. (.wo +; nnn� p ;nR t e relating' thereto, including, without 111111tatu1l, ally repreJei11u L1VUJ or vvaliauu�.0 vV l� riillab physical condition of the Property, access, zoning laws, environmental matters, suitability, feasibility, utilities, or any other matter affecting the Property or the use thereof. B. Acceptance. Except as expressly provided for in this Agreement, Yakima shall accept the Property "as is" and "where is" with all faults, of any nature or kind, without any representations or warranties, express or implied or statutory of any kind whatsoever by the District or any employee, officer, agent or representative of the District. Upon acceptance by Yakima of the Property under this Agreement, then Yakima shall be deemed to have accepted the Property and to have waived and released its right to recover from the District any and all damages, losses liabilities, costs, or expenses whatsoever (including attorneys' fees and costs) and claims therefor, whether direct or indirect, known or unknown, foreseen or unforeseen, which may arise on account of or in any way arising out of or connected with the physical condition of the Property or any Law or Ordinance. C. Environmental Contamination. Yakima agrees to indemnify and hold harmless the District for any environment4 =tamination existing as of the date of this Agreement. Yakima agrees to design and develo- the Project in such a manner as to minimize, to the extent financially practicable, the excavation of native soils. In the event Yakima encounters contaminated soils, Yakima shall be responsible for all costs of remediating the contaminated .;1 ., 1 F r oI rnnnvarar Frnm rPcr�nncii�ia nartiPc JV 11, ClllU 1V1 .�7eVdldllg 1NdV Yvl la Vial awJiJvaeJa viv rui �avu. -1 PASMSC09H 01/06/14 The Parties agree that in the event contaminated soils are encountered and any Party incurs remediation costs, the Parties shall fully cooperate in pursuing claims against those entities that may be liable. LY LIABILITY A. Indemnification of Yakima. During the term of this Agreement, to the maximum extent not prohibited by law, the District agrees to and shall indemnify and hold Yakima harmless from and against all liability, loss, damage, cost, or expenses (including reasonable attorneys' fees and court costs, amounts paid in settlements and judgment) arising from or as a result of the death of any person or of any accident, injury, loss or damage whatsoever to any person or to the property of any person that occurs on or adjacent to the Property and that is directly or indirectly caused by the acts, errors, or omissions of the District or its officers, agents, servants, employees, officers, contractors or subcontractors. The District shall not be responsible for (and such indemnity shall not apply to) the gross negligence or willful misconduct of Yakima, or their respective officials, servants, employees or officers. X. DESTRUCTION OR CONDEMNATION A. Total or Partial Destruction. 1. If the Convention Center or Project is totally or partially destroyed at any time after execution of this Agreement, and the Insurance Proceeds are or would have been sufficient to pay the cost of reconstruction or restoration, or if the uninsured cost of reconstruction or restoration is less than Two Hundred Fifty Thousand Dollars ($250,000), and the damage or destruction is such that as a result thereof Yakima cannot meet its obligations under this Agreement, Yakima shall reconstruct or restore the damage consistent with terms of this Agreement within two years of the destruction; provided that, if the damage or destruction is such that Yakima may notwithstanding such damage or destruction continue to fulfill its obligations under this Agreement, Yakima shall have the discretion to use the Insurance Proceeds to restore and repair the Property to the extent necessary and appropriate for its purposes. If the Insurance Proceeds are insufficient and the uninsured cost is more than Two Hundred Fifty Thousand Dollars ($250,000), Yakima may elect to reconstruct or restore the damage or to terminate this Agreement by delivery of written notice to the District within 30 days after the destruction. 2. If Yakima elects not to reconstruct or restore the damage, this Agreement shall terminate and the Property shall revert to Yakima pursuant to Section XIII. The District shall transfer the Property in its then condition to Yakima, along with any Insurance Proceeds attributable to the damage or destruction of the Project. B. Condemnation. If the whole or any substantial part of the Property is taken or condemned in the exercise of eminent domain powers (or by conveyance in lieu thereof), such -19- PASMSC09H 01/06/14 that Yakima can no longer meet its obligations under this Agreement, this Agreement shall terminate upon the date when possession of the Property so taken shall be acquired by the condemning authority. As use- herein, "substantial" shall be defined as reasonably preventing the conduct of Yakima's actio,.- -s. Yakima shall have the right to claim and recover from the condemning authority such cc -:.pensation as may be separately awarded or recoverable by Yakima in Yakima's own right on account of any and all damage to Yakima's activities by reason of the condemnation and on account of any cost or loss Yakima might sustain; provided that, the District shall pay to Yakima that portion of its condemnation proceeds equal to the amount of Debt Service on the Outstanding Bonds and Additional Bonds, if any. XT RIGHT TO ASSIGNOR OTHERWISE TRANSFER AWant to Trnsicfor Aaroamont ... �..�...... s . »...fig.,. . _�..,.,.._.,._.. 1. During the term of this Agreement and at such time as the Bonds or Additional Bonds are no longer Outstanding, the District shall have the right to assign or otherwise transfer the Agreement, to such other persons, firms, corporations, partnerships, joint ventures, and federal, state or municipal government or agency thereof, as the District shall select (the "Transferee"), provided, however, that: a. The District must obtain the prior written consent of Yakima; b. Such assignment or transfer shall be made expressly subject to the terms, covenants and conditions of this Agreement; C. The District shall deliver to Yakima a duly executed and rPeorded copy of the document evidencing such transfer, including a suitable estoppel agreement(s); and d. Such transfer shall not be effective v, bind Yakima until the Transferee has assumed all obligations of the District under this Agrec,.ient and notice thereof is given to Yakima, and such notice shall designate the name and address of the Transferee. 2. Said Transferee (and all succeeding and successor Transferees) shall succeed to all rights and obligations of the District under this Agreement, subject, however, to all duties and obligations of the District in and pertaining to the then unperformed provisions of this Agreement. Upon such transfer by the District, or by a successor in accordance with the requirements of this Section, the District (and/or its successor(s)) as Transferor in such a transfer shall not be released and discharged from all of its duties and obligations hereunder which pertain to the then unperformed provisions of this Agreement without the written consent and release of Yakima. XII. DEFA ULT A. Event of Default of the District. This section shall apply if the District fails to kPPn nhcPmiP nr narfnrm nnv of itc �intiPc nr nhlicrntinnc nncipr thic AarPPmPnt (nn L6FvPnt of ..,...I,, .,.,.,...I-, . t.. .......... ....J , . . ......b.....,..., ....., ..b............. 1'.... �,...... .,. -20- PASMSC09H 01/06/14 Default"). Notwithstanding the generality of this paragraph, an "Event of Default" shall be deemed to occur for any of the following specific events: 1. The failure of the District to pay amounts due to Yakima hereunder when due. 2. Conversion by the District of any portion of the Property to any use other than the uses permitted under the Charter and this Agreement. 3. The making by the District of an assignment for the benefit of creditors contrary to the terms of this Agreement, or filing a petition in bankruptcy or of reorganization under any bankruptcy or insolvency law or filing a petition to effect a composition or extension of time to pay its debts. 4. The appointment of a receiver or trustee of the property of the District, which appointment is not vacated or stayed within ninety days. 5. The filing of a petition in bankruptcy against the District or for its reorganization under any bankruptcy or insolvency law that shall not be dismissed or stayed by the court within ninety days after such filing. B. Force Majeure. The District shall not be considered to be in breach of or default under this Agreement on account of any delay or failure to perform as required by this Agreement as a result of a Force Majeure event. XIII. REMEDIES A. Remedies Upon Default. If an Event of Default on the part of the District shall occur, then Yakima at any time after periods set forth for the exercise of rights herein shall have the following cumulative rights and remedies: 1. Provide Notice and Time to Cure. If Yakima desires to take action for an Event of Default, Yakima shall provide written notice to the District specifying such Event of Default or Events of Default and stating that Yakima at its option may terminate this Agreement on the date specified in such notice, which shall be at least 30 days, but no more than 90 days, after the giving of such notice, unless the District cures such Event of Default. 2. Injunction. Yakima shall be entitled to restrain, by injunction, the commission of or attempt or threatened commission of an Event of Default and to obtain a judgment or order specifically prohibiting a violation or breach of any such term or provision of this Agreement without, in either case, being required to prove or establish that Yakima does not have an adequate remedy at law. The District hereby waives the requirement of any such proof and acknowledges that Yakima would not have an adequate remedy at law for the District's commission of an Event of Default hereunder. -21- PASOSC09H 01/06/14 3. Terminate for Default. a. Yakima shall be entitled to immediately terminate this Agreement if any Event of Default continues for a period of 30 days after written notice thereof from Yakima to the District, or in the case of such Event of Default which cannot with due diligence and in good faith be cured within 30 days, the District fails to proceed promptly after such notice and with due diligence and in good faith, to begin to cure said Event of Default; provided that, in such event proper time to cure may be extended only by written permission of Yakima. b. In the event that this Agreement terminates for reasons of an Event of Default, Yakima, in its sole discretion, shall have the option of exercising one or both of the following choices: (i) Receive payment from the District in an amount required to pay Predevelopment Costs (to the extent not paid from Net Proceeds), Debt Service on the Outstanding Bonds and any Additional Bonds when due, and the amount necessary to reimburse Yakima for any amounts paid pursuant to Section III(C). (ii) Immediately terminate the Lease Agreement. 4. Recover Damages, Costs and Expenses. Yakima shall be entitled to proceed against the District for all direct damages, costs and expenses arising from the District's committing an Event of Default hereunder and to recover all such direct damages, costs and expenses, including reasonable attorneys' fees. B. lYa 3d'air2r by Yakima. No failure by Yakima to insist upon the performance of any of the terms of this Agreement or to exercise any right or remedy consequent upon a breach thereof, shall constitute a waiver of any such breach or of any of the terms of this Agreement. None of the terms of this Agreement to be kept, observed or performed by the District, and no breach thereof, shall be waived, altered or modified except by a written instrument executed by Yakima. No waiver of any breach shall affect or alter this Agreement, but each of the terms of this Agreement shall continue in full force and effect with respect to any other then existing or subsequent breach thereof. No waiver of any default of the District hereunder shall be implied from any omission by Yakima to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and then only for the time and to the extent therein stated. One or more waivers by Yakima shall not be construed as a waiver of a subsequent breach of the same covenant, term or conditions. -72- c SM-SC09H 01[06/14 C. Termination Notwithstanding anything to the contrary contained in this Agreement: 1. Termination by Mutual Agreement Prior to Beneficial Occu aanncY. This Agreement shall terminate under circumstances where all Parties mutually agree in writing that it is impossible or impractical to design, develop or construct the Project. In the event that one Party determines that it is impossible or impractical to design, develop or construct the Project, the Parties agree to meet and enter into good faith negotiations regarding whether the Project has become impossible or impractical. D. Reversion of the Leasehold Interest to Yakima. In the event that this Agreement terminates prior to Beneficial Occupancy, Yakima may immediately terminate the Lease Agreement and reenter and retake the Property, and the District shall promptly: 1. Remove all of its personal property from the Property: 2. Remove all rubble, debris and unusable improvements from the Property as required by Yakima in its sole discretion; 3. Remove all waste materials and rubbish from and about the Property and adjacent property; and 4. Satisfy or bond all liens upon the Project (or claims which with notice or passage of time or both would mature into a lien). Yakima shall be entitled to retain title to the Property and all Improvements, including the Convention Center and Project, free and clear of any leasehold interest or other claim of the District and anyone claiming by, through or under the District. E. Certain Provisions Survive Termination. The following provisions of this Agreement shall survive notwithstanding any termination of this Agreement and reversion of the leasehold interest in the Property and Improvements to Yakima: 1. As Is (Section VIII); 2. Liability (Section IX); and 3. Destruction or Condemnation (Section X). -23- P:\SMSC09H 01106/14 XIV. REPRESENTATIONS AND WARRANTIES A Yakima's Representations. Yakima hereby represents and warrants to the District th.,'. it has full statutory right, power and authority to enter into this Agreement and perform in accordance with its terms and provisions; that the person signing this Agreement on behalf of Yakima has the authority to bind Yakima and to enter into this transaction; and that Yakima has taken all requisite action and steps to legally authorize the execution, delivery, and performance of this Agreement. B. The District's Representations and Warranties. The District hereby represents and warrants to Yakima that it has full power and authority to enter into this Agreement and perform in accordance with its terms and provisions; that the parties signing this Agreement on I-�,r F�� o n;�*^-* 1-�Ao" All 1—� the a,.:thnni-v to hind the District and to enter into this transaction; and U-11that the District has taken all requisite action and steps to legally authorize the execution, delivery, and performance of this Agreement. C. Tax Covenant. The District acknowledges that the Bonds are to be issued as tax- exempt obligations. The District covenants that it will not take any action to cause interest on the Bonds or any Additional Bonds to be taxable. Xi. LEASEBACK A. Sublease. The District hereby leases to the City and the City hereby hires from the District certain improved real property located in the City of Yakima, Washington, legally described in L MUIL A atta\iiled liereio ailu by ihls reference 1n-nrnnratPrd (the "Premises") an r nrntPd (the Certain improvements thereon consisting of a convention center, and the Proiect to be built on the Premises (the "Improvements"). Such Premises are subject to all ea..r::lents, reservations, encumbrances and restrictions of record, including in particular that certain Lease Agreement between the City, as lessor, and the District, as lessee, dated B. Rent. Within 60 days of the date of this Agreement, the City shall pay to the District $50, which represents prepaid rent for the entire term of this Agreement. C. Lease Obligations Assumed. Except as other wise provided herein, the District hereby assigns and the City agrees to assume all duties and obligations of the District under the Lease Agreement. XVI. MISCELLANEOUS A. Captions. The headings and captions of this Agreement and the Table of Contents preceding the body of this Agreement are for convenience and reference only and in no way define, limit or describe the scope or intent of this Agreement nor in any way affect this Agreement, ,rnHOtN7//f1Ai9 All nrnnrninc anrd any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the Party or Parties may _24_ P \SC\SC09H 01/06/14 require. The Parties hereby acknowledge and agree that each was properly represented by counsel and this Agreement was negotiated and drafted at arms' length so that the judicial rule of construction to the effect that a legal document shall be construed against the draftsman shall be inapplicable to this Agreement. C. Entire Agreement. This Agreement and any collateral instruments referenced herein contain the entire agreement between the Parties hereto and shall not be modified or amended in any manner except by an instrument in writing executed by the Parties hereto. Previous drafts of this Agreement or any portions thereof shall not be utilized in any manner by either Party should any dispute arise as to the intent of this Agreement. D. Successors and Assigns. The terms herein contained shall bind and inure to the benefit of Yakima, its successors and assigns, and the District, its successors and assigns, except as may be otherwise provided herein. E. Notices. All notices which may be or are requested to be given pursuant to this Agreement shall be deemed given when hand delivered, or when deposited in the United States Mail, postage prepaid, and marked registered or certified mail, return receipt requested, and addressed to the Parties at the following addresses unless otherwise provided for herein: To Yakima: Richard A. Zais, Jr. City Manager City of Yakima 129 N. 2nd Street Yakima, WA 98901 With a copy to: Raymond L. Paolella, Esq. City Attorney City of Yakima 200 South Third Street Yakima, WA 98901 To the District: Executive Director Yakima Regional Public Facilities District Yakima, WA 98901 F. Incorporation by Reference. All exhibits and appendices annexed hereto are hereby incorporated by reference herein. -25- P-\SC\SC09H 01/06/14 G. Execution in Counterparts. I . This Agreement may be executed in any number of counterparts and by different Parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same Agreement. 2. This Agreement becomes effective when the representatives of the Parties have executed it. H. Waiver. The waiver by either the District or Yakima of the performance of any covenant, condition, or promise shall not invalidate this Agreement nor shall it be considered a i >, n ., rho, nnc�enunt condition nr nrnrnke hereunder_ The waiver by S'iG.i'J er by 3uLlt A b>i� '-%_ <sny QU-1 n , -� either the District or Yakima of the time for performing any act shall not constitute a waiver of the time for performing any other act or an identical act required to be performed at a later time. The exercise of any remedy provided by law or the provisions of this Agreement shall not exclude other consistent remedies unless they are expressly excluded. I. Exculpation. Notwithstanding anything contained to the contrary in any provision of this Agreement, it is specifically agreed and understood that there shall be absolutely no personal liability on the part of any individual officers or directors of Yakima or the District with respect to any of the obligations, terms, covenants, and conditions of this Agreement. J. Severability. 1term, 1`any teor provision of tiiiS A reelllent .^,r the aranliratinn thereof g 1,1..11..... nn to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Aereement or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby and shall continue in full force and effect. K. Term. This Agreement shall terminate on the later of the date that the Bonds and any Additional Bonds are no longer Outstanding and the date on which the Sales Tax expires. L. Amendments. This Agreement may be amended, only with the written consent of the Parties. -26- P \SC\SC09H 01/06/14 IN WITNESS WHEREOF, the Parties hereto have executed this document as of the day and year first above written. DATED this day of 12001. CITY OF YAKIMA iz- Richard A. Zais, Jr. City Manager Attest: City Clerk Approved as to form: City Attorney YAKIMA REGIONAL PUBLIC FACILITIES DISTRICT Chair Board of Directors -27- PASMSC09H 01/06/14 STATE OF WASHINGTON ) ss. COUNTY OF YAKIMA ) I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that he/she signed this instrument, on oath stated that he/she was authorized to execute the instrument and acknowledged it as the of _ to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: (Use this space for notarial stamp/seal ) 2001. Notary Public Print/Type Name My commission expires STATE OF WASHINGTON ) 1 cc COUNTY OF Y14KIMA ) I certify that I know or have satisfactory evidence that is the Person who appeared before me, and said person acknowledged that he/she signL..i this instrument, on oath stated that he/she was authorized to execute the instrument and acknowledged it as of to be the free and untary act of s2 party for the uses and purposes mentioned in the instrument. Dated: (t Ise this snace for notarial stamp/seal) 2001. Notary Public Print/Type Name My commission expires -28- P\SC\SC09H 01/06/14 EXHIBIT A LEGAL DESCRIPTION OF PROPERTY Real property located at 10 No. 8th Street, Yakima, Washington, including accompanying parking lots: Lot 1 and the E 60 feet of Lots 15 & 16, Block 149, together with vacated alley; and Lots 1-8 & the E 60 feet of Lots 9-16, Block 150; together with vacated alley, and the E 220 feet of vacated "A" Street, and Lots 1-4, 6-8 and 9-14, Block 170, together with vacated alley; and Lots 1-3 and 14-16, Block 169; All in Husons Addition to North Yakima as recorded in Vol. "A" of Plats, pg. 11, records of Yakima County, Washington. A-1 M :i iiia S DEBT SERVICE SCHEDULE (To be attached and incorporated into the Agreement at the time that the Bonds and any Additional Bonds are issued) B_1 P1SMSC09H 01/06/14 APPENDIX 1— PROJECT DOCUMENTS [To Be Attached upon City Approval of Project Documents] P:\SC\SC09H 01/06/14