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BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 2.
For Meeting of: August 11, 2016
ITEM TITLE: Next Steps for the Downtown Yakima Plaza
SUBMITTED BY: Cliff Moore, City Manager
Cindy Epperson, Director of Finance and Budget
Sean Hawkins, Economic Development Manager
SUMMARY EXPLANATION:
At the July 5, 2016 City Council meeting, Council approved a motion "that we have private funding
of $9 million, public funding of $3 million with the agreement that a committee from the City and
the Downtown Plaza Committee would work together to look at grants to assist in the funding."
The clarification was also made that the City's $3 million includes $1.2 million already spent on
the design of the plaza.
Since that time, the Downtown Plaza Committee has been meeting, and we have received
pledges for over $5 million of the requested $9 million. Many donations are pledged to come in
over time, with a time frame ranging from now through the next 10 years. The largest donations
are requested to be made over 3 -5 years, however, discussions to reduce the number of
payment years are occurring with major donors. A component of this study session is to review
the ramifications of the timing of the donations.
The packet includes the following documents:
• A memo explaining the effects of cash -flow timing on the bonding;
• A PowerPoint to be presented by the City's Bond Counsel, Deanna Gregory, and Bond
Underwriter, Lindsay Sovde;
• A rough time -line (next steps) on the project from an engineering perspective;
• A draft contract for the pledges; and
• A listing of donation pledges received to date with payment terms.
ITEM BUDGETED: NA
STRATEGIC PRIORITY: Economic Development
APPROVED FOR City Manager
SUBMITTAL:
STAFF RECOMMENDATION:
BOARD/COMMITTEE RECOMMENDATION:
ATTACHMENTS:
Description Upload Date Type
D Memo on 1Bondling for the Plaza 8/8/2016 Omer Memo
D powerpolint on Munliclipall IBonding 8/8/2016 Presentation
D estimated tlimelline 8/9/2016 Omer Memo
D Plath agreement linfo 8/9/2016 Omer Memo
D Ust of Pledges 8/9/2016 Backup Materna°
MEMORANDUM
Date: August 8, 2016
To: The Honorable Mayor and Members of Yakima City Council
From: Cliff Moore, City Manager
Cindy Epperson, Director of Finance & Budget
Subject: Effect of Cash -flow Timing on Bonding for the Downtown Plaza
With the recent reductions proposed in the design of the Downtown Plaza, the total
project is reduced from a total of $14.0 million to $12.0 million. This contains the
components of $1.1 million for project design, and $10.9 million to complete the actual
construction.
Assuming community donations of $9.0 million for the project, the City's responsibility for
the total project would be $3.0 million.
The decision points for Council regarding the plaza project are:
• When to construct the project?
• How much do we bond for? (i.e. design reimbursement and unreceived pledges)
• What is the timing of bond repayment?
Because this is the first project to be bonded by our new Council, we have asked our
Bond Counsel, Deanna Gregory from Pacifica Law Group, and our Bond Underwriter,
Lindsay Sovde from Piper Jaffray to make a short presentation on the bonding process.
Timing of Project Construction /Community Donations:
As presented at the July 5, 2016 Council meeting, debt service on $3.0 million is
estimated to range from $206,000 to $240,000 over a 20 -year period assuming a range
of 3.2% to 5.0% depending on interest rates at the time of bond sale. As we have seen
with the community commitments made to date to support the plaza project, donations
will likely be made over time (i.e. mostly in the 2 -4 year category, but some going up to
10 years). Since the City will need to have the money to complete the $10.9 million
project, several options exist as we plan the construction. It should be noted that
because of the "time value of money ", this project will require an additional financial
commitment by the City, either in the form of additional interest on bridge financing for
the pledged (but not received) donations, or a higher project cost because of
construction inflation if the project is postponed until most of the pledges are deposited.
A discussion on these options follows:
1. Postpone the project until all of the donations are physically received.
We would not recommend this option because we would then need to fund
construction inflation, which would likely be a hard cost that could exceed the
additional interest required to be paid out since interest rates are remaining at
historic lows. According to the Turner Building Cost Index, the 2n quarter of
2016 experienced a 4.8% yearly increase over 2015. If we apply the 4.8% to the
$10.9 million project, additional cost could be $523,000 per year postponed. This
choice also compounds the increase, because theoretically we would need to
bond for the additional project cost, which would require additional interest to be
paid over the life of the bond.
The potential risk of not receiving a pledged donation needs to be weighed
against the lost opportunity costs of postponing the creation of a vital economic
development catalyst in our community. Legal is looking at how we can contract
with donors who have indicated they will pay over time to minimize our exposure
to uncollectible pledges.
2. Bond an additional amount to provide bridge financing for the donations not yet
received at the time of bond issuance, with a repayment schedule tied to the
timing of the pledged donation. Keep the City contribution to debt service level
over the 20 year life of the bonds (i.e. $206,000 - $240,000 per year starting in
2018).
If we assume that all donations will be substantially repaid over 4 years, then we
may need to also bond $6,750,000 (3/4 of $9,000,000, because we should get
the first year donations immediately). Annual debt service for 3 additional years
would be $2,352,000 assuming a fixed repayment schedule and an interest rate
of 2.25 %. This would result in additional interest as follows:
Year One $151,875
Year Two 102,372
Year Three 51,753
Total Additional Interest $306,003
Note: This is only an example for illustrative purposes based loosely on pledges
received to date. A few of the pledges received to date have requested that
payments be spread over 10 years, although the large dollar donations are over
3 to 4 years. The amount of additional interest relating to the timing of donation
receipts could only be finalized when we actually bond.
A potential source of repayment of the additional interest cost could be the REET
2 funds used for the design phase that would be replenished if we issued the full
$3 million bond issue.
3. Bond an additional amount, to provide bridge financing for the donations not yet
received at the time of bond issuance, with a repayment schedule tied to the
timing of the pledged donation. Use only the community donations for debt
service in the early years, and start the City contribution to debt service in the 4th
year (i.e. 2021).
This would give the Plaza time to start generating revenue before the City is
required to repay the bonds from its own "pocket ", but could slightly increase the
annual debt service, because we could be paying our total commitment over a
shorter time frame (i.e. 17 years instead of 20). Debt service for the City's
portion of $3.0 million paid over 17 years could be between $230,000 and
$266,000 per year starting in 2021.
Reimburse Design:
The $1.1 million for project design came from REET 2 funds, and that source was
selected because there was enough to support a 50% community match, which was the
assumption when this was chosen. Today, because community donations have not yet
been deposited, both the REET 2 fund and the Central Business District Capital fund are
in negative cash positions, and at a minimum, we would recommend replenishing 50%
of the design phase or about $550,000. The only other option to make both of these
funds "whole" again is a contribution from General Fund to replenish these funds, and
we cannot support that at this time since the reserve balance in General Fund is already
below recommended minimums. Reimbursing half of the design phase would lower the
City's bonding requirement to about $2.4 million, which would have an annual debt
service requirement range of $165,000 to $192,000 for 20 years.
In the examples given above, $3.0 million for the City's portion of the bond was used
($1.9 million construction plus $1.1 million design reimbursement) , because this would
completely replenish the REET 2 moneys so we can reuse it for additional interest
described above, and /or project cost overruns.
Conclusion:
We do want to reiterate that we believe the additional interest noted above because of
the timing of community donations is a conservative assumption. However, this is based
on just over $5 million pledged to date. This will be different based on the actual timing
of receipts. There are some tools that we could use to keep the additional interest down.
For example, we could explore establishing a line of credit against the pledged
contributions, which we could then repay as soon as we receive the pledges, potentially
lowering the interest cost in comparison to a fixed annual payment. As in any bond
issue, the debt service amounts are "best guesses" until we have the underlying project
costed and actually go to market to sell the bonds, which is when the actual interest
rates and payment streams are set.
The decision points include:
When to construct the project —start next steps now for mid -2017 construction or
delay until more of the donations are "in the bank ". This weighs the "cost of money" risk
of construction inflation against both additional interest required for bonding for pledges
and potential increases in interest rates. This decision point also considers the "what if"
risks of failed pledges versus the lost opportunity cost of a vital economic engine in our
Downtown.
Another component of this decision point is whether we wait to bid the project until all of
the community pledges totaling at least $9.0 million have been made. To date we have
commitments for a little over $5 million. In discussions with our Engineering staff, if they
are directed to go forward with the project it will likely go to bid next spring. Ideally, we
would have all of the pledges identified when we bid the project, so we can structure the
debt service accordingly. This would require pledges to be submitted by the end of
February 2017.
How much to bond for the City's contribution —in addition to the $1.9 million needed
for construction, how much of the design costs to reimburse. We would recommend a
minimum of $550,000 to erase the negative cash balances. The full $1.1 million would
restore REET 2 so it could be used either for additional interest costs, project cost
overruns, and /or other Council priority capital projects.
When to start the City's portion of debt service —this question may be partially
answered with the decision of when to start construction. If Council chooses to provide
some sort of bridge financing for the pledges, the City could commit to annual debt
service in the first year after bonding (i.e. 2018), or use pledges to pay down debt
service in the early years, and postpone the City's debt service allocation for potentially
3 years.
As we answer these questions, the bonding details will come into better focus.
a r
Bonds 101:
An Overview of City Financing
Presentation to the City of Yakima
August 11, 2016
Deanna Gregory, Partner, Pacifica Law Group LLP
(206) 245 -1700, Deanna .Gregory @pacificalawgroup.com
Lindsay Sovde, Managing Director, Public Finance
(206) 628 -2875, Lindsay.A.Sovde @pjc.com
0 PACIFICA PiperJaffray
LAW GROUP
Disclosure
Piper Jaffray is providing the information contained herein for discussion purposes only in anticipation of being
engaged to serve as underwriter or placement agent on a future transaction and not as a financial advisor or municipal
advisor. In providing the information contained herein, Piper Jaffray is not recommending an action to you and the
information provided herein is not intended to be and should not be construed as a "recommendation" or "advice"
within the meaning of Section 15B of the Securities Exchange Act of 1934. Piper Jaffray is not acting as an advisor to
you and does not owe a fiduciary duty pursuant to Section 15B of the Exchange Act or under any state law to you with
respect to the information and material contained in this communication. As an underwriter or placement agent, Piper
Jaffray's primary role is to purchase or arrange for the placement of securities with a view to distribution in an arm's -
length commercial transaction, is acting for its own interests and has financial and other interests that differ from your
interests. You should discuss any information and material contained in this communication with any and all internal or
external advisors and experts that you deem appropriate before acting on this information or material.
The information contained herein may include hypothetical interest rates or interest rate savings for a potential
refunding. Interest rates used herein take into consideration conditions in today's market and other factual information
such as credit rating, geographic location and market sector. Interest rates described herein should not be viewed as
rates that Piper Jaffray expects to achieve for you should we be selected to act as your underwriter or placement agent.
Information about interest rates and terms for SLGs is based on current publically available information and treasury or
agency rates for open- market escrows are based on current market interest rates for these types of credits and should
not be seen as costs or rates that Piper Jaffrey could achieve for you should we be selected to act as your underwriter
or placement agent. More particularized information and analysis may be provided after you have engaged Piper Jaffray
as an underwriter or placement agent or under certain other exceptions as describe in the Section 15B of the Exchange
Act.
Agenda
— Overview of Bonds
— Security for the Bonds
— Different Ways to Borrow Money
— Types of Bond Sales
— Bond Ratings
— Snapshot of Bond Market
— Questions
PACIFICA LAW GROJD
Pip erjaffray
What i a Bond?
— A Bond is a loan in the form of a security
• Structured to allow sale /placement with a wide array of investors
— Public sale to ultimate investors on open market
— Private placement with a bank (bank loan)
— Secured by a pledge of tax collections or revenues
— City is obligated to repay principal of the bond, plus interest, on certain
payment dates
— Benefit — receive project funding up front
— Authorized by State law
— May be issued as tax - exempt
• interest paid to investor holding City bonds is excludable from federal
income taxation
• subject to federal tax law requirements
— Bonds are securities
• subject to federal securities laws
PACIFICA
LAW GROJD
Ke y Considerations
— What is the State law authority?
— What is the credit? What is pledged to pay the debt?
• Excess property taxes, regular property taxes, utility revenues, other
— What are the terms?
• Interest rate, term, what are the needs of the City?
— What approval is necessary?
• Council approval, voted /nonvoter approved, other requirements
— Who is the bond(s) being sold to?
• Public sale to ultimate investors on open market
• Private placement with a bank (bank loan)
— What is the federal tax treatment?
• City bonds can be tax - exempt or taxable
• Depends on use of asset financed /goals of the City
PACIFICA
LAW GROJD
Security for the Bonds —
UTGOs: Key Features
.Unlimited, Voter Approved
— Consumes UTGO debt capacity for general purposes
• UTGO debt capacity is greater than for non -voted general obligation
bonds
• 2.5% of assessed value
— Only for capital purposes, other than replacement of equipment
— 60% voter approval
— Validation requirement 2.5% Assessed Valuation
— Paid from excess property tax levy
• Outside of statutory or constitutional
limits on regular property taxes
— Levy set at rate required to pay debt service
Q PACIFICA Up to 1.5% can be issued without voter approval
LAW GROUP
UTGOs: Process
City Council must pass an election ordinance
— Contents:
• Proposes the form of the ballot measure requesting voter approval for the
issuance of UTGO bonds and excess levies to pay debt service on the bonds. The
ballot language consists of:
— An identification of the enacting legislative body (the City Council);
— A statement of the subject matter;
— A concise description of the measure (no more than 75 words long, prepared
or approved by the city attorney); and
— A question (essentially, whether or not the proposition should be approved).
— Describes the capital project to be funded and outlines the circumstances, if any, under
which the project may be changed
— Sets certain parameters for the bonds, including the maximum principal amount and
term
— The approved election ordinance must be filed with the county
Ballot may be submitted to voters no more frequently than twice a year
Election Calendar
PACIFICA
LAW GROJD
UTGOs: Benefits and Challenges
— Benefits
• Dedicated excess property tax stream of revenue for debt service
payments over the life of the bonds
• Community support
— Challenges
• Requires 60% supermajority voter approval and validation
PACIFICA
LAW GROJD
Security for the Bonds —
LTGOs: Ke y Features
•Limited (councilmanic) non -voter approved
— Consumes LTGO debt capacity
• Within the 2.5% of assessed value for general purposes, the City may,
without a vote of the electors, incur general obligation indebtedness
in an amount not to exceed 1.5% of assessed value
— Any municipal purpose
— Pledge to levy regular (nonvoted) taxes as necessary to pay debt service
within legal limits:
• Statutory rate per thousand (e.g. $3.60/$1,000 AV)
• Aggregate rate limit ($5.90/$1,000)
• 101% limit on increases in dollar amount of levy (Eyman limit)
— Paid from general fund or other legally available revenues
PACIFICA
LAW GROJD
LTGOs: Benefits and Challenges
• Benefits
— non -voted general obligation bonds (councilmanic) may be combined with
other financing options to fund project costs
— does not require voter approval
— payable from and secured by general fund; all or a portion of the debt
service could be paid from other sources
• Pledges, sales taxes, hotel /motel taxes
• Levy lid lift, not to exceed 9 years
— May provide additional flexibility when combined with other sources of
funding
• Challenges
— Non -voted debt capacity constraints
PACIFICA
LAW GROJD
Security for the Bonds —
Revenue Obligations: Key Features
•Enterprise fund obligations
— Water
— Sewer /wastewater
— Stormwater
— Other revenue - producing assets
•Pledge of net income of the enterprise
•Bond owners have a statutory lien on net revenues
•Parity lien protected through:
— Rate covenant (1.2x or 1.25x or...)
— Additional bonds test
— Other covenants
PACIFICA
LAW 6R W P
Security for the Bonds —
Revenue Obligations: Benefits and
Challenges
•Benefits
— does not require voter approval
— does not count against voted or nonvoted debt capacity
— payable from dedicated stream of revenues pledged to special fund
• Challenges
— Can only be used for projects related to the applicable utility system
— Payable solely from rates received from customers
— Additional covenants (additional bonds test, rate coverage requirements)
PACIFICA
LAW 6R W P
Ways to Borrow Money — Types of
Bond Sales
• Public sale
— Bonds are sold to institutional and retail investors from
around the US
— Process takes 6 -8 weeks
— Official Statement
— Credit rating
— Interest rates are locked on pricing date — can be fixed (for
up to 30 years) or variable
— Typically, non - callable for 10 years if fixed interest rate
Pip erJaffray
Ways to Borrow Money — Types of
Bond Sales
• Private placement /bank loan
— "Sophisticated investor" or bank lends money directly to
City
— Offering document is a term sheet
— No credit rating
— Fixed or variable interest rates (term loan or line of credit)
— Set maturity or line of credit
— Shorter maturity for fixed interest rates (10 -12 years)
— Process takes 4 -6 weeks
— Interest rates are locked when City receives term sheet
Pip erJaffray
Bond Ratings
Investment Grade
Rating Categories
• Ratings are essential to most bond sales
Moody's S&P Fitch
• Three primary rating agencies
— Moody's Aa1 AA+ AA+
— Standard and Poor's Aa2 AA AA
— Fitch Aa3 AA- AA-
"Err A+
• Meetings with analysts _
A 2
- — In- person visit
Phone call Baal BBB+ BBB+
• City Ratings: Baa2 BBB BBB
— General Obligation: Standard and Poor's: AA- Baa3 BBB- BBB-
- Revenue (water and sewer): Standard and Poor's: AA-
• Analysts are your advocates
PiperJaffray
Historic Interest Rates
Bond Buyer Index
General Obligation Bond Interest Rate Trends
11.50% 4.50%
10.50% 4.00%
9.50% 3.50%
cu
cc 3.00%
7.50% 2.50%
Jul -15 Nov -15 Mar -16 Jul -16
°. 6.50%
c
— 5.50%
4.50%
3.50%
2.50%
Jul -96 Jul -01 Jul -06 Jul -11 Jul -16
PiperJaffray
Questions?
0 PACIFICA PiperJaffray
L AW GROUP
Yakima Central Plaza Projected Construction Timeline
Bid and Award Date
Revised and Approved Plans and Specification 12/5/2016
Bid (6 week advertisement) 12/8/2016
Bid Opening 1/19/2017
Bid Awarded and Executed 2/16/2017
Construction Begin 3/20/2017
Project Substantial Completion 10/31/2018
Environmental Documentation and Permits Date
Begin SEPA 9/1/2016
Obtain SEPA Mitigated Determination of Non - Significance 12/1/2016
Apply for General Stormwater Construction Permit 1/16/2017
Receive General Stormwater Construction Permit 3/1/2017
Private Utitlity Relocation Date
Begin Plan Design 8/15/2016
Complete Plan Design 12/15/2016
Begin Utility Relocation 2/1/2017
Complete Utlility Relocation 5/1/2017
RESOLUTION NO. R- 2015 -053
A RESOLUTION authorizing the City Manager to execute a Funding
Agreement between the Plath Family and the City of Yakima for the
design and development of the Yakima Downtown Plaza.
WHEREAS, the City of Yakima has identified the Yakima Downtown Plaza as a
key project in the City's Downtown Master Plan; and
WHEREAS, the Yakima City Council has identified the need to create a public
private partnership to design and build the Yakima Downtown Plaza; and
WHEREAS, the Plath Family have been longtime leaders in the Yakima Business
Community and contributors to many projects throughout the City of Yakima; and
WHEREAS, the Plath Family is committed to the success of the Plaza
development and is willing to generously contribute to the design and construction of the
Project on the terms represented in the Funding Agreement attached hereto and
incorporated herein by this reference; and
WHEREAS, the City Council finds it to be in the best interest of the community to
accept the benevolent contribution of the Plath family toward the development of the
Yakima Downtown Plaza, Now Therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The City Manager is hereby authorized and directed to execute the attached and
incorporated Funding Agreement between the Plath Family and the City of Yakima for a
$2,000,000 contribution toward the design and development of the Yakima Downtown
Plaza.
ADOPTED BY THE CITY COUNCIL this 7 day of April, 2015.
/ {
ATTEST: Micah Cawl'zy, Mayor
ry ''
Cit y Clerk a .�� � ��.� .
FUNDING AGREEMENT
BETWEEN THE CITY OF YAKIMA
AND THE PLATH FAMILY
YAKIMA DOWNTOWN PLAZA
T4
T 's AGREEMENT ( "Agreement ") is entered into effective the g day of
7 d rr , 2015 (the "Effective Date ") by and between the City of Yakima, a
Washington municipal corporation ( "City "), and the Plath Family ( "Plath "). The City and the
Plath Family are referred to collectively as the "Parties ".
PURPOSE: The purpose of this Agreement is to establish the terms and conditions by
which the Plath Family agrees to provide funds to the City to be used exclusively for the
architectural design and construction of the Yakima Downtown Plaza and the improvements to
the adjacent City streets that are associated with and a part of the overall design of the Plaza
(collectively identified as "the Project "), the location of which is generally described as that
property presently designated as City of Yakima Parking Lot Number 2, located between South
3rd Street on the east, South 2nd Street on the west, the public alley on the north side of the
parking lot and east Chestnut Street on the south.
DONOR: The donor of the funds provided to the City as a contribution toward the
design and construction of the Project is the Plath Family.
NAMING RIGHTS OPTION: In appreciation of the donation as contemplated by this
Agreement, City shall assign the Plath Family the option for naming rights to the Market Hall
Building that will be part of the completed Plaza Project. Prior to the completion of the Project,
the Plath Family shall exercise its option for the naming rights. If the Plath Family does not
exercise the naming rights option, then the right shall be considered as waived. The form of the
display of the name chosen by the Plath Family on the building structure will be cooperatively
arranged with the architectural designer, the Plath Family and the City in order to present the
building name in an attractive fashion consistent with the Plaza design.
TERMS FOR DONATION PAYMENTS: The Plath Family agrees to provide the City
with a total of Two Million Dollars ($2,000,000) toward the design and construction of the
Project. The funds will be provided to the City in four equal annual installments of Five
Hundred Thousand Dollars ($500,000) each year for four years, the first payment being paid to
the City on June 1, 2015 and three additional payments of Five Hundred Thousand Dollars each
being provided to the City on June 1, of each subsequent year, final payment being paid to the
City on June 1, 2018. The date of the first payment shall be subject to and conditioned upon the
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City having entered into a contract with the architectural landscape design firm for the design of
the Plaza prior to the payment being provided to the City.
PLATH FAMILY CONDITIONS: The specific conditions by which the Plath Family
agrees to provide the funds subject to this Agreement are as follows:
1) The City must be contractually committed to the Plaza architectural design firm prior
to the first payment being paid to the City.
2) Funding is provided so long as the Project, including both the Plaza and the
improvements to the adjacent City Streets, are included in the initial construction and not subject
to separate phasing stages.
3) All funds provided by the Plath Family shall be applied solely to the design,
engineering and construction by third parties of the Plaza Project, and for no other purpose. No
part of the grant funds may be used to pay City overhead expenses for the Project or for salaries
or wages of City Employees.
4) The Project shall be completed in substantial compliance with the approved design
specifications that will be provided by the architectural designer and approved by the City
Council prior to beginning construction.
5) The entire Project must be completed by December 31, 2017.
RIGHT OF REFUND: In the event any one or more of the five conditions of payment
set forth herein are not met the Plath Family reserves the right to demand the City's refund of
part or all of the funds provided to the City by the Plath Family to accomplish the Plaza Project
construction, the refund amount being in the full discretion of the Plath Family. In the event a
full or partial refund is demanded, and it is established that the City failed to meet the specific
conditions of funding set forth herein, the City shall remit the demanded refund to the Plath
Family within a commercially reasonable period of time. Interest shall accrue on the total
amount requested for refund at three percent (3 %) per annum starting from the date the refund
request is made and continuing on any unpaid balance until said balance has been fully refunded,
including accrued interest.
GENERAL CONDITIONS:
ASSIGNMENT: This Agreement is binding on the heirs, successors and assigns of the
Parties hereto. This Agreement may not be assigned by the City or the PLATH FAMILY
without prior written consent of the other, which consent will not be unreasonably withheld. It is
expressly intended and agreed that no third party beneficiaries are created by this Agreement, and
that the rights and remedies provided herein shall inure only to the benefit of the Parties to this
Agreement.
2
INTEGRATION: This Agreement represents the entire understanding of the City and the
Plath Family as to those matters contained herein. No prior oral or written understanding shall
be of any force or effect with respect to those matters covered herein. This Agreement may not
be modified or altered except in writing signed by both parties.
JURISDICTION AND VENUE: This Agreement shall be administered and interpreted
under the laws of the State of Washington. Jurisdiction of litigation arising from this Agreement
shall be in Washington State. If any part of this Agreement is found to conflict with applicable
laws, such part shall be inoperative, null, and void insofar as it conflicts with said laws, but the
remainder of this Agreement shall be in full force and effect. Venue for all disputes arising
under this Agreement shall be in a court of competent jurisdiction in Yakima County, State of
Washington.
DISPUTE RESOLUTION: In the event that any dispute shall arise as to the
interpretation of this Agreement and if the Parties hereto cannot mutually settle such differences,
then the Parties shall first pursue mediation as a means to resolve the dispute. If the afore
mentioned method is unsuccessful then the dispute will be resolved through litigation. If both
parties consent in writing, other available means of dispute resolution may be implemented.
NOTICE: Any notice required to be given under the terms of this Agreement shall be
directed to the Party at the address set forth below. Notice shall be considered issued and
effective upon receipt thereof by the addressee -party, or seventy -two (72) hours after mailing by
certified mail to the address set forth below, return receipt requested, whichever is earlier. Either
Party may change the address for notice to said Party by providing the new address, in writing, to
the other Party.
CITY: City of Yakima
Tony O'Rourke, City Manager
129 North 2 Street
Yakima, WA 98901
PLATH FAMILY: Cliff Plath
P.O. Box 1588
Yakima, WA 98907
FORCE MAJEURE: Neither Party hereto shall have any liability for delay or non-
fulfillment of any terms of this Agreement caused by any cause not within such Party's
reasonable control (but excluding financial inability) such as an act of God, war, riots or civil
disturbance, strikes, accident, fire, transportation conditions, labor and /or material shortages,
governmental controls, regulations and permits and /or embargoes.
3
IN WITNESS WHEREOF, the Parties hereto have caused this agreement to be executed
by their respective authorized officers or representatives as of the effective date set forth above.
CITY OF YAKIMA PLATH FAMILY
/ D
( i 4 f,,:--
i n
Tony 0' Roark ` Cliff Plath, authorized representative of Family
Printed Name: 1 X 1 LI P 1 A- 1 Printed Name:
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Title: City Manager Title: e i q "
Date " Date; , -7 •'
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Attest CA e , , ,
City Clerk .
CITY CONTRAC1NO: " L " ( 4 " r��"
RESOLUTION N0 " "
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BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 15.
For Meeting of: April 7, 2015
ITEM TITLE: Resolution authorizing a funding agreement between the Plath
Family and the City of Yakima for the Yakima Downtown Plaza
SUBMITTED BY: Sean Hawkins, Economic Development Manager 575 -6274
SUMMARY EXPLANATION:
The Plath Family has been longtime supporters of the Yakima community. After attending a public
hearing for the Yakima Plaza Project conducted by Kathryn Gustafson, the Plath Family approached the
City of Yakima offering a financial contribution towards the project. This funding agreement contributes a
total of $2,000,000 towards the design, engineering, and construction of the plaza. The funds will be
provided to the City in four equal installments of Five Hundred Thousand Dollars ($500,000) each year
for four years, the first payment being paid to the City on June 1, 2015. In return for the financial
participation of the Plath Family in the Project, the City will assign the Plath Family the naming rights to
the Market Hall Building that will be part of the completed Plaza Project.
Resolution: X Ordinance:
Other (Specify):
Contract: Contract Term:
Start Date: End Date:
Item Budgeted: Amount: $2,000,000
$2,000,000 contribution from the Plath Family. The funds will be
Funding Source/Fiscal Impact• provided to the City in four equal annual installments of Five
Hundred Thousand Dollars ($500,000), the first payment being paid
to the City on June 1, 2015.
Strategic Priority: Economic Development
Insurance Required? No
Mail to:
Phone:
APPROVED FOR •
SUBMITTAL: City Manager
MEMORANDUM
To: Honorable Mayor and Members of the Yakima City Council
From: Tony O'Rourke, City Manager
Date: April 1, 2015
RE: Plath Agreement
The purpose of this Agreement is to establish the terms and conditions by which the Plath
Family agrees to provide $2 million to the City for the design, engineering, and construction
of the proposed Yakima Downtown Plaza and adjacent City street restorations.
In consideration of a $2 million donation, the Plath Family shall be granted the naming rights
of the proposed Market Hall Building that is part of the plaza design.
The Plath Family agrees to provide the City the $2 million in four equal installments of
$500,000 each year for the next four (4) years, starting June 1, 2015 and June 1 of each
subsequent year.
The proposed annual payments of $500,000 shall be subject to the following conditions.
1. The first payment of $500,000 shall be subject to the City contractually committing
with a design firm for the design and engineering of the plaza.
2. The City must be committed to the plaza design including both the plaza and
improvements to the adjacent City streets in the initial construction and are not
subject to separate phasing stages.
3. All funds by the Plath Family shall be applied solely for the design, engineering, and
construction of the plaza project, and for no other purpose.
4. The plaza project shall be completed in substantial compliance with the approved
design specifications provided by the architectural designer and approved by the
City Council prior to beginning construction.
5. The entire project must be completed by December 31, 2017.
In the event any one or more of these five conditions of payment are not met, the Plath
Family reserves the right to demand the City refund all, or part, of the $2 million provided to
the City by the Plath Family. Any refund amount is at the sole discretion of the Plath Family
and shall be refunded to the Plath Family within a reasonable period of time. Interest shall
accrue on the total amount requested for refund at 3% per annum until the refund has been
fully refunded, including accrued interest.
Pledge Amount Time frame 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$ 1,000 paid 1,000
1,000 1 Year 1,000
50,000 1 year 50,000
40,000 1 year 40,000
5,000 1 year 5,000
80,000 1 year 80,000
5,000 1 year 5,000
1,000 1 years 1,000
1,000,000 3 years 334,000 333,000 333,000
2,250 3 years 750 750 750
15,000 3 years 5,000 5,000 5,000
1,000 4 years 250 250 250 250
2,000,000 4 years 500,000 500,000 500,000 500,000
250,000 5 years 50,000 50,000 50,000 50,000 50,000
25,000 5 years 5,000 5,000 5,000 5,000 5,000
5,000 5 years 1,000 1,000 1,000 1,000 1,000
50,000 5 years 10,000 10,000 10,000 10,000 10,000
2,500 5 years 500 500 500 500 500
50,000 5 years 10,000 10,000 10,000 10,000 10,000
10,000 5 years 2,000 2,000 2,000 2,000 2,000
5,000 5 years 1,000 1,000 1,000 1,000 1,000
50,000 5 years 10,000 10,000 10,000 10,000 10,000
250,000 5 years 50,000 50,000 50,000 50,000 50,000
10,000 10 years 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
50,000 10 years 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
500,000 10 years 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
25,000 10 years 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500
50,000 10 years 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
50,000 10 years 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
100,000 12 years 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
50,000 need pledge sheet
10,000 need pledge sheet
250,000 need pledge sheet
10,000 need pledge sheet
100 need pledge sheet
10,000 need pledge sheet
1,000 need pledge sheet
3,000 need pledge sheet
5,000 need pledge sheet
100 paid 100
100 paid 100
$ 5,023,050 $ 1,241,200 $ 1,057,000 $ 1,057,000 $ 718,250 $218,000 $ 78,500 $ 78,500 $ 78,500 $ 78,500 $ 78,500
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