HomeMy WebLinkAbout04/17/2018 11 Amendments to the YMCA Aquatic Center Ground Lease, Development Agreement and Operating AgreementBUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
1
Item No. 11.
For Meeting of: April 17, 2018
ITEM TITLE: Resolution authorizing amendments to the YMCA Aquatic Center
Ground Lease, Development Agreement and Operating
Agreement to represent the Parties' negotiated modifications of
terms related to financing and budget
SUBMITTED BY: Jeff Cutter, City Attorney
SUMMARY EXPLANATION:
The City and the YMCA entered Agreements associated with the cooperative development of an
Aquatic Center on City -owned property at Chesterley Park in October of 2015. Since that time
the City and the YMCA have worked to achieve satisfaction of their respective contingent
obligations necessary to the initiation of project construction. As the satisfaction of the
contingencies is now being verified, to better facilitate the partnership and cooperation expressed
in the Agreements between the City of Yakima and the Yakima YMCA for the construction and
operation of the Aquatic Center, the City and the YMCA have agreed to restructure the financial
arrangement between the parties with terms that are more mutually beneficial.
The result of this financial restructuring are several modifications to terms of financing and budget
communication that are represented in the attached Resolution and amendments to the Ground
Lease, the Development Agreement and the Operating Agreement.
The aspects of the financial agreements that have changed are as follows:
1. The City of Yakima's initial capital construction contribution will increase from $4.5 million
dollars to $8 million dollars.
2. The City of Yakima will no longer be responsible for any of the initial start-up operational
costs for the Aquatic Center.
3. For a period of 10 years, rather than being charged for 50% of the annual operating deficit
of the Aquatic Center, the City will not be responsible for funding any operating deficit costs.
Starting in year 11, the City will be responsible for providing 50% of the annual operating
deficit, except that:
a. In year 11, the YMCA will reduce the City's portion by $50,000
b. In year 12, the YMCA will reduce the City's portion by $40,000
c. In year 13, the YMCA will reduce the City's portion by $30,000
d. In year 14, the YMCA will reduce the City's portion by $20,000
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e. In year 15, the YMCA will reduce the City's portion by $10,000
4. For a period of 10 years, rather than being charged for 50% of any capital improvement
costs for the operation of the Aquatic Center, the City will not be responsible for any capital
improvement costs. Starting in year 11, the City will be responsible for funding 50% of
capital improvement costs.
5. For a period of 10 years, rather than being charged $40,000 annually to create a Capital
Reserve Fund for the Aquatic Center, the City will not be responsible for funding any
Capital Reserve Fund costs. Starting in year 11, the City will be responsible for providing
$40,000 per year for the Capital Reserve Fund.
6. The timing of the annual YMCA budget submission to the City will be revised from July 1 to
August 1 of each year (for the following calendar year).
7. The financial reporting schedule will be adjusted as follow:
a. For years 1 — 5 of the agreement, the YMCA will provide to the City semi-annual
financial reports for the Aquatic Center.
b. For years 6 — 8 of the agreement, the YMCA will provide to the City quarterly financial
reports for the Aquatic Center.
c. For years 9 and 10 of the agreement, the YMCA will provide to the City monthly
financial reports for the Aquatic Center.
ITEM BUDGETED:
No
STRATEGIC PRIORITY: Economic Development
APPROVED FOR
SUBMITTAL:
STAFF RECOMMENDATION:
City Council requested final documents to be provided.
BOARD/COMMITTEE RECOMMENDATION:
ATTACHM ENTS:
Description Upload Date
O YMCA -resolution 4!12/2018
D YMCA -First Amendment to Ground Lease 4.%1212018
O YMCA -First Amendment to Development Agreement 4/122018
D YMCA -First Amendment to Operating Agreement 4/1222018
Type
Resolution
tract
tract
tract
A RESOLUTION
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RESOLUTION NO. R -2018 -
authorizing the execution of First Amendments to each of three Agreements
associated with the previously approved City of Yakima/YMCA Aquatic
Center; the amended documents include the Ground Lease, Development
Agreement and Operating Agreement.
WHEREAS, in October, 2015 the City Council approved the terms and conditions for the
cooperative development of an Aquatic Center through a public-private partnership with the
YMCA of Yakima; and
WHEREAS, the terms and conditions for the cooperative development and operation of a
publicly accessible aquatic facility are represented in four separate Agreements that include the
Master Aquatic Center Agreement, the Ground Lease, the Development Agreement and the
Operating Agreement; and
WHEREAS, over the course of the past several years the City and the YMCA have been
diligently pursuing completion of their respective obligations to achieve RCO approval of a
property exchange that will allow construction of the Aquatic Center on City -owned park property
and to secure necessary funding resources that will conform with the terms of the several
Agreements; and
WHEREAS, the Parties have determined that to better facilitate the partnership and
cooperation expressed in the underlying Agreements between the City of Yakima and the Yakima
YMCA for the construction and operation of the Aquatic Center, the City and the YMCA will amend
the necessary Agreements they previously entered in order to restructure the financial and
reporting arrangements between the parties with terms that are more mutually beneficial; and
WHEREAS, to carry out the financial and reporting restructuring the Parties have reached
agreement on amendments to the Ground Lease, the Development Agreement and the Operating
Agreement, identified herein as Amendment One to each of said Agreements, attached hereto
and incorporated herein by this reference; and
WHEREAS, the City Council has determined that entering into the attached First
Amendment to the Ground Lease, First amendment to the Development Agreement and First
Amendment to the Operating Agreement is mutually beneficial to the Parties in the construction
and operation of the Aquatic Center; Now, Therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The City Manager of the City of Yakima is hereby authorized and directed to execute the
attached and incorporated First Amendment to Ground Lease, First Amendment to Development
Agreement and First Amendment to Operating Agreement, attached hereto and incorporated
herein by this reference, to restructure the financial and reporting arrangements between the
parties with terms that are more mutually beneficial.
ADOPTED BY THE CITY COUNCIL this 17th day of April, 2018.
ATTEST: Kathy Coffey, Mayor
Sonya Claar-Tee
PARTIES:
FIRST AMENDMENT TO GROUND LEASE
EFFECTIVE DATE: April 18, 2018
CITY OF YAKIMA,
a Washington municipal corporation
129 North 2nd Street
Yakima, Washington 98901
(referred to in this Amendment as "Landlord")
YOUNG MEN'S CHRISTIAN ASSOCIATION OF YAKIMA
(dlbla YAKIMA FAMILY YMCA),
a Washington nonprofit corporation
5 North Naches Avenue
Yakima, Washington 98901
(referred to in this Amendment as "Tenant")
4
GROUND LEASE. The term "Ground Lease," when used in this Amendment, means and refers to the
Ground Lease dated October 27, 2015, by and among Landlord and Tenant pertaining to Tenant's lease
from Landlord of a portion of Chesterley Park in Yakima, Washington.
BACKGROUND. To better facilitate the arrangements between the City of Yakima (i.e., Landlord) and
the Yakima Family YMCA (i.e., the Tenant) for the construction and operation of the Aquatic Center, the
undersigned parties have mutually agreed to amend the timing and financing of Landlord's financial
obligations under the Operating Agreement through the first ten years of the Aquatic Center's operations
and the manner and timing in which the City's Financial Contribution under the Development Agreement
and certain other financial obligations under the Operating Agreement are met. In general terms, Landlord
has requested to eliminate Landlord's obligation to reimburse Tenant for Pre -Opening Expenses, Operating
Deficits, and Capital Improvement Expenditures under the Operating Agreement until the tenth anniversary
of the Opening Date in exchange for Landlord's agreement to increase the City's Financial Contribution
under the Development Agreement from $4,500,000.00 to $8,000,000.00. Subject to and in accordance
with the terms of this Amendment and the below -described Related Amendments, Tenant has agreed to
accommodate said requests by Landlord. This Amendment and the below -described Related Amendments
are now executed for the purpose of memorializing the amendments made to the Development Agreement,
Operating Agreement, and Ground Lease in connection with said agreement. Moreover, the Development
Agreement, Operating Agreement, and Ground Lease are also executed for the purpose of confirming the
satisfaction of the Due Diligence, RCO, and Funding Contingencies and to memorialize the Possession
Date and commencement of the Initial Term. Finally, the Ground Lease is amended to expressly
acknowledge that Tenant, in connection with financing a portion of the construction of the Aquatic Center
and Other Facility through New Markets Tax Credits, may seek Landlord's consent to the assignment of
certain rights under the Ground Lease to a newly formed nonprofit corporation, the purpose of which is to
qualify as a "supporting organization" within the meaning of Internal Revenue Code Section 509(a)(3) for
the support and benefit of Tenant and to serve as a "qualified active low-income community business" or
"QALICB" as defined in Section 45D of the Internal Revenue Code.
AMENDMENT. FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY
ACKNOWLEDGED, THE UNDERSIGNED PARTIES AGREE AND AMEND THE GROUND LEASE AS FOLLOWS:
1. Effect of Amendment. This Amendment amends, supplements, and is made part of the Ground
Lease. In the event of a conflict between the provisions of this Amendment and the Ground Lease,
Amendment to Ground Lease (2018) 1
5
the provisions of this Amendment will control. Nevertheless, except as expressly amended or
supplemented by this Amendment, the provisions of the Ground Lease remain in full force and
effect.
2. Capitalized Terms. Except when the context clearly requires another meaning and for capitalized
terms defined in this Amendment, all capitalized terms used in this Amendment have the same
meaning given to said terms in the Ground Lease.
3. Agreed Possession Date. For the purpose of facilitating an orderly transition of the possession of
the Leased Premises from Landlord to Tenant under the Ground Lease, Section 3.1 of the Ground
Lease is amended such that the Possession Date (i.e., the commencement date for the Initial Term
and the date on which Tenant will take physical possession of the Leased Premises) will be April
18, 2018.
4. Completion of Landlord's Title Obligation Under Section 6.1. Landlord will, on or before April
18, 2018, satisfy Landlord's obligation under Section 6.1 of the Ground Lease to cause the
instrument recorded on or about August 12, 1976, under Yakima County Auditor's File No.
2431304 to be released from the Leased Premises so that it no longer encumbers the Leased
Premises.
5. NMTC. Tenant intends to finance a portion of the construction costs for the Aquatic Center and
Other Facility using New Markets Tax Credits ("NMTC") in accordance with Section 45D of the
Internal Revenue Code of 1986 (as amended) (the "Code"). In connection with obtaining NMTC
financing it may be necessary or appropriate, in order to maximize the amount of subsidy available
in connection with the construction of the Aquatic Center and Other Facility, for Tenant to assign
some or all of its rights and obligations under the Ground Lease to a newly formed nonprofit
corporation, the purpose of which is to qualify as a "supporting organization", within the meaning
of Section 509(a)(3) of the Code for the support and benefit of Tenant and to serve as a "qualified
active low-income community business" or "QALICB" as defined in Section 45D of the Code. In
light of said circumstances, Landlord expressly acknowledges and understands that Tenant may
request Landlord's consent under Section 10 of the Ground Lease to sublease all or a portion of the
Leased Premises to the QALICB formed in connection with the NMTC financing sought by Tenant.
6. Acknowledgment of the Satisfaction of the Contingencies. The undersigned parties hereby
expressly acknowledge the Due Diligence, RCO, and Funding Contingencies are satisfied.
7. Related Amendments. The provisions of this Amendment are interwoven with and dependent
upon the provisions set forth and agreed to in the First Amendment to Development Agreement
and First Amendment to Operating Agreement with "Effective Dates" even with the Effective Date
of this Amendment (collectively the "Related Amendments"). Accordingly, the provisions of this
Amendment will become binding and enforceable only upon the full execution of this Amendment
and the Related Amendments by both Landlord and Tenant.
8. Counterparts and Copies. This Amendment may be executed in any number of identical
counterparts, with each counterpart having the same effect as if all parties to this Amendment had
signed the same document. All executed counterparts of this Amendment will be construed as and
constitute one and the same instrument. A facsimile or electronic copy (e.g., a PDF copy) of an
executed counterpart of this Amendment will have the same effect as an original executed
counterpart of this Amendment.
Amendment to Ground Lease (2018) 2
6
9. Authority. The execution, delivery, and performance by each party of this Amendment has been
duly authorized by their respective governing bodies (i.e., the YMCA's Board of Directors and the
City Council for the City of Yakima) in accordance with their respective governing documents and
applicable law, and no further action is necessary on the part of either party to this Amendment or
their respective governing bodies to make the execution, delivery, and performance of this
Amendment by the undersigned persons valid and binding upon the parties to this Amendment.
[Signatures on Following Page]
Amendment to Ground Lease (2018) 3
7
EFFECTIVE as of the Effective Date first written above.
YOUNG MEN'S CHRISTIAN CITY OF YAKIMA
ASSOCIATION OF YAKIMA
By: By:
Bob Romero, CEO
STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA )
Cliff Moore, City Manager
I certify that I know or have satisfactory evidence that BOB ROMERO 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 CEO for the YOUNG MEN'S
CHRISTIAN ASSOCIATION OF YAKIMA to be the free and voluntary act of such party for the uses
and purposes mentioned in the instrument.
DATED: , 2018.
[PRINT NAME]
NOTARY PUBLIC for the State of Washington,
residing at
My appointment expires:
STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA
I certify that I know or have satisfactory evidence that CLIFF MOORE 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 CITY MANAGER for the CITY OF
YAKIMA to be the free and voluntary act of such party for the uses and purposes mentioned in the
instrument.
DATED: , 2018.
[PRINT NAME]
NOTARY PUBLIC for the State of Washington,
residing at
My appointment expires:
Amendment to Ground Lease (2018) 4
FIRST AMENDMENT TO DEVELOPMENT AGREEMENT
PARTIES:
EFFECTIVE DATE: April 18, 2018
CITY OF YAKIMA,
a Washington municipal corporation
129 North 2nd Street
Yakima, Washington 98901
(referred to in this Amendment as the "City")
YOUNG MEN'S CHRISTIAN ASSOCIATION OF YAKIMA
(d/b/a YAKIMA FAMILY YMCA),
a Washington nonprofit corporation
5 North Naches Avenue
Yakima, Washington 98901
(referred to in this Amendment as the "YMCA")
8
DEVELOPMENT AGREEMENT. The term "Development Agreement," when used in this Amendment,
means and refers to the Development Agreement dated October 27, 2015, by and among the City and the
YMCA pertaining to the development and construction of a new YMCA facility and aquatic center at
Chesterley Park in Yakima, Washington.
BACKGROUND. To better facilitate the arrangements between the City and the YMCA for the
construction and operation of the Aquatic Center, the undersigned parties have mutually agreed to amend
the timing and financing of the City's financial obligations under the Operating Agreement through the first
ten years of the Aquatic Center's operations and the manner and timing in which the City's Financial
Contribution under the Development Agreement and certain other financial obligations under the Operating
Agreement are met. In general terms, the City has requested to eliminate the City's obligation to reimburse
the YMCA for Pre -Opening Expenses, Operating Deficits, and Capital Improvement Expenditures under
the Operating Agreement until the tenth anniversary of the Opening Date in exchange for the City's
agreement to increase the City's Financial Contribution under the Development Agreement from
$4,500,000.00 to $8,000,000.00. Subject to and in accordance with the terms of this Amendment and the
below -described Related Amendments, the YMCA has agreed to accommodate said requests by the City.
This Amendment and the below -described Related Amendments are now executed for the purpose of
memorializing the amendments made to the Development Agreement, Operating Agreement, and Ground
Lease in connection with said agreement. Moreover, the Development Agreement, Operating Agreement,
and Ground Lease are also executed for the purpose of confirming the satisfaction of the Due Diligence,
RCO, and Funding Contingencies and to memorialize the Possession Date and commencement of the Initial
Term.
AMENDMENT. FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY
ACKNOWLEDGED, THE UNDERSIGNED PARTIES AGREE AND AMEND THE DEVELOPMENT AGREEMENT AS
FOLLOWS :
1. Effect of Amendment. This Amendment amends, supplements, and is made part of the
Development Agreement. In the event of a conflict between the provisions of this Amendment and
the Development Agreement, the provisions of this Amendment will control. Nevertheless, except
as expressly amended or supplemented by this Amendment, the provisions of the Development
Agreement remain in full force and effect.
Amendment to Development Agreement (2018) 1
9
2. Capitalized Terms. Except when the context clearly requires another meaning and for capitalized
terms defined in this Amendment, all capitalized terms used in this Amendment have the same
meaning given to said terms in the Development Agreement.
3. Amending the City's Financial Contribution. Section 3 of the Development Agreement is
amended to increase the City's Financial Contribution from Four Million Five Hundred Thousand
and No/100 U.S. Dollars ($4,500,000.00) to Eight Million and No/100 U.S. Dollars
($8,000,000.00). Accordingly, all references in the Development Agreement, Ground Lease,
Operating Agreement, and Master Agreement to the "City's Financial Contribution" now refer to
the City's $8,000,000.00 obligation under this paragraph, rather than the $4,500,000.00 originally
set forth in Section 3 of the Development Agreement.
4. Correcting Exhibit Reference. The second paragraph of Section 2 of the Development
Agreement incorrectly references "Exhibit B" of the Development Agreement (which does not
exist) when referring to the location of the Required Specifications in the Development Agreement.
The Required Specifications are actually listed in Exhibit A of the Development Agreement. For
the purpose of correcting this inadvertent scrivener's error, the "Exhibit B" reference in the second
paragraph of Section 2 of the Development Agreement is hereby amended to now refer to "Exhibit
A" of the Development Agreement.
5. Acknowledgment of the Satisfaction of the Contingencies. The undersigned parties hereby
expressly acknowledge the Due Diligence, RCO, and Funding Contingencies are satisfied.
6. Related Amendments. The provisions of this Amendment are interwoven with and dependent
upon the provisions set forth and agreed to in the First Amendment to Ground Lease and First
Amendment to Operating Agreement with "Effective Dates" even with the Effective Date of this
Amendment (collectively the "Related Amendments"). Accordingly, the provisions of this
Amendment will become binding and enforceable only upon the full execution of this Amendment
and the Related Amendments by both the City and the YMCA.
7. Counterparts and Copies. This Amendment may be executed in any number of identical
counterparts, with each counterpart having the same effect as if all parties to this Amendment had
signed the same document. All executed counterparts of this Amendment will be construed as and
constitute one and the same instrument. A facsimile or electronic copy (e.g., a PDF copy) of an
executed counterpart of this Amendment will have the same effect as an original executed
counterpart of this Amendment.
8. Authority. The execution, delivery, and performance by each party of this Amendment has been
duly authorized by their respective governing bodies (i.e., the YMCA's Board of Directors and the
City Council for the City of Yakima) in accordance with their respective governing documents and
applicable law, and no further action is necessary on the part of either party to this Amendment or
their respective governing bodies to make the execution, delivery, and performance of this
Amendment by the undersigned persons valid and binding upon the parties to this Amendment.
[Signatures on Following Page]
Amendment to Development Agreement (2018) 2
10
EFFECTIVE as of the Effective Date first written above.
YOUNG MEN'S CHRISTIAN CITY OF YAKIMA
ASSOCIATION OF YAKIMA
By: By:
Bob Romero, CEO
STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA )
Cliff Moore, City Manager
I certify that I know or have satisfactory evidence that BOB ROMERO 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 CEO for the YOUNG MEN'S
CHRISTIAN ASSOCIATION OF YAKIMA to be the free and voluntary act of such party for the uses
and purposes mentioned in the instrument.
DATED: , 2018.
[PRINT NAME]
NOTARY PUBLIC for the State of Washington,
residing at
My appointment expires:
STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA
I certify that I know or have satisfactory evidence that CLIFF MOORE 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 CITY MANAGER for the CITY OF
YAKIMA to be the free and voluntary act of such party for the uses and purposes mentioned in the
instrument.
DATED: , 2018.
[PRINT NAME]
NOTARY PUBLIC for the State of Washington,
residing at
My appointment expires:
Amendment to Development Agreement (2018) 3
FIRST AMENDMENT TO OPERATING AGREEMENT
PARTIES:
EFFECTIVE DATE: April 18, 2018
CITY OF YAKIMA,
a Washington municipal corporation
129 North 2nd Street
Yakima, Washington 98901
(referred to in this Amendment as the "City")
YOUNG MEN'S CHRISTIAN ASSOCIATION OF YAKIMA
(d/b/a YAKIMA FAMILY YMCA),
a Washington nonprofit corporation
5 North Naches Avenue
Yakima, Washington 98901
(referred to in this Amendment as the "YMCA")
11
OPERATING AGREEMENT. The term "Operating Agreement," when used in this Amendment, means
and refers to the Operating Agreement dated October 27, 2015, by and among the City and the YMCA
pertaining to the operation of a new aquatic center to be developed, constructed, and operated at Chesterley
Park in Yakima, Washington.
BACKGROUND. To better facilitate the arrangements between the City and the YMCA for the
construction and operation of the Aquatic Center, the undersigned parties have mutually agreed to amend
the timing and financing of the City's financial obligations under the Operating Agreement through the first
ten years of the Aquatic Center's operations and the manner and timing in which the City's Financial
Contribution under the Development Agreement and certain other financial obligations under the Operating
Agreement are met. In general terms, the City has requested to eliminate the City's obligation to reimburse
the YMCA for Pre -Opening Expenses, Operating Deficits, and Capital Improvement Expenditures under
the Operating Agreement until the tenth anniversary of the Opening Date in exchange for the City's
agreement to increase the City's Financial Contribution under the Development Agreement from
$4,500,000.00 to $8,000,000.00. Subject to and in accordance with the terms of this Amendment and the
below -described Related Amendments, the YMCA has agreed to accommodate said requests by the City.
This Amendment and the below -described Related Amendments are now executed for the purpose of
memorializing the amendments made to the Development Agreement, Operating Agreement, and Ground
Lease in connection with said agreement. Moreover, the Development Agreement, Operating Agreement,
and Ground Lease are also executed for the purpose of confirming the satisfaction of the Due Diligence,
RCO, and Funding Contingencies and to memorialize the Possession Date and commencement of the Initial
Term.
AMENDMENT. FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY
ACKNOWLEDGED, THE UNDERSIGNED PARTIES AGREE AND AMEND THE OPERATING AGREEMENT AS
FOLLOWS:
1. Effect of Amendment. This Amendment amends, supplements, and is made part of the Operating
Agreement. In the event of a conflict between the provisions of this Amendment and the Operating
Agreement, the provisions of this Amendment will control. Nevertheless, except as expressly
amended or supplemented by this Amendment, the provisions of the Operating Agreement remain
in full force and effect.
Amendment to Operating Agreement (2018) 1
12
2. Capitalized Terms. Except when the context clearly requires another meaning and for capitalized
terms defined in this Amendment, all capitalized terms used in this Amendment have the same
meaning given to said terms in the Operating Agreement.
3. Relief from Pre -Opening Expenses. Section 7.1(a) of the Operating Agreement is amended to
eliminate the City's obligation to reimburse the YMCA for the City's fifty percent (50%) share of
the Pre -Opening Expenses.
4. Implementation of the Operating Deficit Reimbursements and Additional Credits. Sections
7.3(a) and 7.3(b) of the Operating Agreement are amended to:
(a) Eliminate the City's obligation under Sections 7.3(a) and 7.3(b) of the Operating
Agreement to reimburse the YMCA for the City's fifty percent (50%) share of the annual
Operating Deficits until the first day of the first calendar month immediately following the
ten- (10-) year anniversary after the Opening Date (the "Reimbursement Obligation
Commencement Date"); and
(b) Grant the City the following annual credits against the City's Operating Deficit
reimbursement obligations under Sections 7.3(a) and 7.3(b) of the Operating Agreement
during the eleventh (11th), twelfth (12th), thirteenth (13th), fourteenth (14111), and
fifteenth (15th) years following the Opening Date:
Year Following
the Opening Date
Operating Deficit
Reimbursement Credit Against
the First Funds Owed For the
Corresponding Year
Year 11
$50,000.00
Year 12
$40,000.00
Year 13
$30,000.00
Year 14
$20,000.00
Year 15
$10,000.00
For example and illustration purposes only, if the Opening Date is October 20, 2019, the City will
be relieved of the City's obligation under Sections 7.3(a) and 7.3(b) of the Operating Agreement to
reimburse the YMCA for the City's 50% share of Operating Deficits from October 20, 2019,
through October 31, 2029, and the City's obligation to commence reimbursing the YMCA under
Sections 7.3(a) and 7.3(b) of the Operating Agreement for the City's 50% share of the Operating
Deficits would commence on November 1, 2029, which date would be the Reimbursement
Obligation Commencement Date; provided, however, the City would receive a credit against and
not have to reimburse the YMCA for (1) the first $50, 000.00 of the City's Operating Deficit
reimbursement obligation under Sections 7.3(a) and 7. 3(b) of the Operating Agreement for the
period running from November 1, 2029, through October 31, 2030; (2) the first $40,000.00 of the
City's Operating Deficit reimbursement obligation under Sections 7.3(a) and 7.3(b) of the
Operating Agreement for the period running from November 1, 2030, through October 31, 2031;
(3) the first $30,000.00 of the City's Operating Deficit reimbursement obligation under Sections
7.3(a) and 7. 3(b) of the Operating Agreement for the period running from November 1, 2031,
through October 31, 2032; (4) the first $20,000.00 of the City's Operating Deficit reimbursement
obligation under Sections 7.3(a) and 7.3(b) of the Operating Agreement for the period running
from November 1, 2032, through October 31, 2033; and (5) the first $10,000.00 of the City's
Amendment to Operating Agreement (2018) 2
13
Operating Deficit reimbursement obligation under Sections 7.3(a) and 7.3(b) of the Operating
Agreement for the period running from November 1, 2033, through October 31, 2034.
5. Implementation of the Capital Improvement Expenditure Reimbursements and Reserve
Fund Contributions. Sections 7.4(a), 7.4(b), and 7.4(d) of the Operating Agreement are amended
to:
(a) Eliminate the City's obligation under Sections 7.4(a) and 7.4(b) of the Operating
Agreement to reimburse the YMCA for the City's fifty percent (50%) share of the annual
Capital Improvement Expenditures until the Reimbursement Obligation Commencement
Date (Le., first day of the first calendar month immediately following the ten- (10-) year
anniversary after the Opening Date); and
(b) Eliminate the City's obligation under Section 7.4(d) of the Operating Agreement to make
annual $40,000.00 contributions into the City's Capital Improvement Reserve Fund
account until the Reimbursement Obligation Commencement Date (i. e. , first day of the
first calendar month immediately following the ten- (10-) year anniversary after the
Opening Date).
For example and illustration purposes only, if the Opening Date is October 20, 2019, the City will
be relieved of the City's obligation under Sections 7.4(a), 7.4(b), and 7.4(d) of the Operating
Agreement to (1) reimburse the YMCA for the City's 50% share of Capital Improvement
Expenditures from October 20, 2019, through October 31, 2029, and the City's obligation to
commence reimbursing the YMCA under Sections 7.4(a) and 7.4(b) of the Operating Agreement
for the City's 50% share of the Capital Improvement Expenditures would commence on November
1, 2029, which date would be the Reimbursement Obligation Commencement Date; and (2) make
annual $40, 000.00 contributions into the City's Capital Improvement Reserve Fund account until
November 1, 2029.
6. Budgeting and Reports. As a result of the Pre -Opening Expense, Operating Deficit, and Capital
Improvement Expenditure relief provided to the City under Sections 3, 4, and 5 above, the
Operating Agreement is amended to:
(a) Eliminate (i) the YMCA's obligation under Section 7.1(b) of the Operating Agreement to
prepare and submit a proposed Initial Budget to the City and (ii) the process by which the
City and the YMCA will meet to discuss and review the proposed Initial Budget and agree
on the final Initial Budget. Instead, the Initial Budget will be prepared and approved solely
by the YMCA; provided, however, once the Initial Budget is prepared and approved by the
YMCA, the YMCA will submit a copy of the Initial Budget to the City, with said
submission occurring no later than the Opening Date;
(b) Amend Section 7.2(a) of the Operating Agreement to extend the date on which annual
Proposed Budgets are to be prepared and submitted by the YMCA to the City from July
1st of each year to August 1st of each year.
For example and illustration purposes only, if the Opening Date is October 20, 2019, the
YMCA, not later than September 1, 2020, will provide Proposed Budgets to the City for the
first (1st) complete Fiscal Year after the Opening Date (Le., September 1, 2020 - August
31, 2021), and the budgeting process for said Fiscal Year will continue in the manner set
forth in Section 7.2(a) of the Operating Agreement, with said process to repeat on an
annual basis for each subsequent Fiscal Year;
Amendment to Operating Agreement (2018) 3
14
(c) Eliminate the YMCA's obligation under Section 7.3(b) of the Operating Agreement to
submit Monthly Financial Statements and invoices to the City until the expiration of the
first eight (8) complete Fiscal Years after the Opening Date;
(d) Eliminate the YMCA's obligation under Section 7.4(b) of the Operating Agreement to
submit Monthly CAPEX reports and invoices to the City until the expiration of the first
eight (8) complete Fiscal Years after the Opening Date;
(e)
Eliminate the YMCA's obligation under Section 7.5 of the Operating Agreement to meet
and provide quarterly reports to the City Manager until the first quarter of the sixth (6th)
complete Fiscal Year after the Opening Date; provided, however, during the first five (5)
complete Fiscal Years after the Opening Date, the YMCA, on a semiannual basis (i.e.,
twice -a -year), will meet with the City Manager, on dates and at times mutually convenient
for the YMCA and the City Manager, and provide written report summaries and in-person
updates on the status of the Aquatic Center's financial performance, usage, and programs;
and
(f) Eliminate the YMCA's obligation under Section 7.7 of the Operating Agreement to prepare
and submit to the City the annual financial statements required thereunder until the ninth
(9th) complete Fiscal Year after the Opening Date, with the financial statement for said
ninth (9th) Fiscal Year to be provided no later than one hundred eighty (180) days
following the close of the ninth (9th) complete Fiscal Year after the Opening Date.
7. Acknowledgment of the Satisfaction of the Contingencies. The undersigned parties hereby
expressly acknowledge the Due Diligence, RCO, and Funding Contingencies are satisfied.
8. Related Amendments. The provisions of this Amendment are interwoven with and dependent
upon the provisions set forth and agreed to in the First Amendment to Development Agreement
and First Amendment to Ground Lease with "Effective Dates" even with the Effective Date of this
Amendment (collectively the "Related Amendments"). Accordingly, the provisions of this
Amendment will become binding and enforceable only upon the full execution of this Amendment
and the Related Amendments by both the City and the YMCA.
9. Counterparts and Copies. This Amendment may be executed in any number of identical
counterparts, with each counterpart having the same effect as if all parties to this Amendment had
signed the same document. All executed counterparts of this Amendment will be construed as and
constitute one and the same instrument. A facsimile or electronic copy (e.g., a PDF copy) of an
executed counterpart of this Amendment will have the same effect as an original executed
counterpart of this Amendment.
10. Authority. The execution, delivery, and performance by each party of this Amendment has been
duly authorized by their respective governing bodies (i.e., the YMCA's Board of Directors and the
City Council for the City of Yakima) in accordance with their respective governing documents and
applicable law, and no further action is necessary on the part of either party to this Amendment or
their respective governing bodies to make the execution, delivery, and performance of this
Amendment by the undersigned persons valid and binding upon the parties to this Amendment.
[Signatures on Following Page]
Amendment to Operating Agreement (2018) 4
15
EFFECTIVE as of the Effective Date first written above.
YOUNG MEN'S CHRISTIAN CITY OF YAKIMA
ASSOCIATION OF YAKIMA
By: By:
Bob Romero, CEO
STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA )
Cliff Moore, City Manager
I certify that I know or have satisfactory evidence that BOB ROMERO 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 CEO for the YOUNG MEN'S
CHRISTIAN ASSOCIATION OF YAKIMA to be the free and voluntary act of such party for the uses
and purposes mentioned in the instrument.
DATED: , 2018.
[PRINT NAME]
NOTARY PUBLIC for the State of Washington,
residing at
My appointment expires:
STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA
I certify that I know or have satisfactory evidence that CLIFF MOORE 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 CITY MANAGER for the CITY OF
YAKIMA to be the free and voluntary act of such party for the uses and purposes mentioned in the
instrument.
DATED: , 2018.
[PRINT NAME]
NOTARY PUBLIC for the State of Washington,
residing at
My appointment expires:
Amendment to Operating Agreement (2018) 5
Distributed at th
Meeting -17-1
CITY OF YAKIMA
Report for Agreed -Upon Procedures on
Capital Funding for Yakima Family YMCA
For the Year Ended December 31, 2017
Clark NuberPS
Independent Accountant's Report on Applying Agreed -Upon Procedures
To the Yakima City Council
City of Yakima
Yakima, Washington
We have performed the procedures enumerated below, which were agreed to by the City of
Yakima (the City), solely to assist the City with gaining comfort that the Yakima Family YMCA
(YMCA) has been able to secure at least 80% of the funding needed to construct the Aquatic
Center. The sufficiency of these procedures is solely the responsibility of the parties specified in
this report. Consequently, we make no representation regarding the sufficiency of the
procedures enumerated below either for the purpose for which this report has been requested
or for any other purpose.
The table below describes the areas tested, procedures performed and results of those
procedures:
AREA
a
PROCEDURE PERFORMED
RESU ..;
Debt
Obtain loan
documentation and review
for reasonableness.
We obtained and reviewed the underlying
loan agreement. We reviewed the lender's
website and did a search online for the
lender's president (who signed the
agreement) to verify the existence of the
lender.
City Money
Obtain and review
agreement with the City.
We obtained and reviewed the agreement
with the City rioting $4.5M would be
provided for the construction of the
Aquatic Center.
Cash
Confirm the YMCA Aquatic
Center bank balance as of
December 31, 2017.
We were not able to obtain a bank
confirmation from the bank by the
issuance of this report. As an alternative
procedure, we obtained a copy of the
December 31, 2017 bank statement from
YMCA. We used the bank statement to
reconcile the bank balance to the listing
of contribution receipts from YMCA as of
December 31, 2017. We noted a
difference of $332,907. Per discussion
Bob Romero, Executive Director of the
YMCA, the difference represented
architecture and engineering costs
incurred through December 31, 2017 on
the project, which were funded with the
Aquatic Center Cash account. Therefore,
we reviewed the related invoices totaling
$386,867.42, noting a remaining
difference of $53,960.
Clark NuberPs
.,.x`'
a, .A ....
REA a0
s":3r-
fir &iet
CEDURE PERFOR ED,-
y •_ig rr-, Z4 t vsf ,, ,
..,€,?.;...-
RE UL S
z '� < �. Y �' r e a^'E..
Contributions
We obtained a listing of all
We reviewed pledge forms or check copies
contributions. We sorted
for 67 contributions $12,000 or greater for
the list by size and directly
a total of $7,806,458 of total contributions
tested contributions
tested.
$15,000 and higher to test
at least 80% of the total
We called ten donors and spoke with nine
commitments required as
donors and for each we confirmed the
of December 31, 2017
amounts recorded by the YMCA.
($16,209,484) after testing
debt and City money.
To test each contribution,
we obtained the "A Pledge
to Help Build a Second
YMCA for Yakima" pledge
letter and agreed the
donor name, amount and
donation month/year to
the YMCA contribution
listing. For any
contributions that were
cash and did not have a
related pledge form we
agreed the amount and
donor name to the check
copy.
Additionally, we selected
10 donors to call and
confirm their contribution.
We selected five $150,000
and higher and five below
$150,000.
Summary of
Summarize total dollars
See information below:
Procedures
verified through the above
Performed
procedures and compare to
the funding required by the
City as of December 31,
2017 and the total funding
represented by YMCA at
December 31, 2017.
-2-
Clark Nuber5
Capital Funding Criteria) Calculation Per Agreement:
Total estimated project costs per YMCA $ 20,261,855
Percent required to be committed at December 31, 2017 80%
Required Commitment by December 31, 2017 $ 16,209,484
Total Funding Commitment at December 31, 2017, Per YMCA:
Funding source -
City of Yakima Capital $ 4,500,000
Loan 5,000,000
Contributions and pledges to the YMCA from individuals and businesses 7,440,000
Contributions and pledges made to Yakima Rotary for the Project 1,260,000
Total Funding Commitments at December 31, 2017 $ 18,200,000
Agreed -Upon -Procedures Testing Performed by Clark Nuber:
Funding source -
City of Yakima Capital $ 4,500,000
Loan 5,000,000
Contributions and pledges to the YMCA from individuals and businesses 7,300,772
Contributions and pledges made to Yakima Rotary for the Project 469,476
Total Funding Tested as Part of Agreed -Upon Procedures $ 17,270,248
* We performed procedures over $17,270,248 in funding commitments as the agreed -upon -
procedures did not require testing of all funding commitments reported by YMCA at December 31,
2017. Therefore, we make no representation related to the untested balance of $929,752.
This agreed-upon procedures engagement was conducted in accordance with attestation
standards established by the American Institute of Certified Public Accountants. We were not
engaged to and did not conduct an examination or review, the objective of which would be the
expression of an opinion or conclusion, respectively, on the capital commitments obtained by the
YMCA as of December 31, 2017. Accordingly, we do not express such an opinion or conclusion.
Had we performed additional procedures, other matters might have come to our attention that
would have been reported to the City.
This report is intended solely for the information and use of City management and City Council
and is not intended to be and should not be used by anyone other than this specified party.
aid
Certified Public Accountants
April 17, 2018
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