HomeMy WebLinkAbout06/02/2009 11 Capitol Theatre Ground Lease, Development Agreement, G.O. Line of Credit for Expansion Project BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 1 (
For Meeting Of: June 2, 2009
ITEM TITLE: (A) A Resolution authorizing a Ground Lease and a Development Agreement
with the Yakima Regional Public Facilities District for the purpose of financing,
expanding, operating and maintaining the Capitol Theatre, and (B) A
Resolution authorizing one or more draws on the City's G.O. Line of Credit in
an aggregate amount not to exceed $4.5 million dollars for the purpose of
providing bridge financing for the Capitol Theatre expansion project.
SUBMITTED BY: Finance Department
CONTACT PERSON/TELEPHONE: Rita DeBord, Finance Director 575- 607Q6� , r
Tim Jensen, Treasury Services Officer 576 -6
SUMMARY EXPLANATION:
W Background:
In June 2001 the Cities of Yakima, Selah and Union Gap formed the o ed t e Yakima Regional Public
Facilities District (PFD) to take advantage of a tax credit (out of the State's share of sales tax
already being paid) to fund the expansion of the Yakima Convention Center. In 2007 the State
Continued on next page...
Resolution X (2) Ordinance Other (Specify)
Contract X Mail to (name and address): Yakima Regional Public Facilities District, Brian Johnson
President, 10 N. 8 Street Yakima, WA 98901
Funding Source .025% Sales Tax Credit Revenues from the Yakima PFD
APPROVED FOR SUBMITTAL: _ _
ity Manager
STAFF RECOMMENDATION: Adopt Resolution(s) authorizing Lease and Development
Agreements and Line of Credit Draw
BOARD /COMMISSION RECOMMENDATION: The Lease and Development agreements have
been authorized by the Yakima Regional PFD
•COUNCIL ACTION:
Legislature authorized an additional Sales Tax Credit for the purpose of building, developing,
rehabilitating, operating and maintaining, etc. a performing arts center with fewer than 2,000
seats. This legislation was drafted with the expansion of and improvements to Yakima's Capitol
Theatre in mind. The legal and financing structures necessary for the expansion of the Capitol
Theatre are very similar to those used for the Convention Center project. Resolution A authorizes
the lease and 'development agreements for the Capitol Theatre expansion, enclosed.
Also presented in this packet as Resolution B, is a Resolution to authorize draws on the City's GO
Line of Credit in an aggregate amount not to exceed $4.5 Million for bridge financing; which may
be utilized to cover project costs prior to the issuance of the LTGO bonds. Staff is targeting a
bond sale date in July 2009, and closing date and receipt of bond proceeds in August; at which
time the Line of Credit borrowings, if any, will be paid off. Interest costs on the Line of Credit
borrowing is based on a variable formula, but is not expected to exceed the 2.5% to 3% range.
Project Over ,
The Capitol Theatre Board currently has identified the following elements to be included in Phase
1 of the project; however, these are subject to change until bonds are issued:
• Construction of a Production Center which will allow the Theatre to promote larger, more
elaborate shows;
• Construction of a basement underneath the Production Center to provide storage for the
facility;
• Construction of a 500 seat "black box" theatre for smaller more intimate venues;
• Construction of an outdoor patio with room for 150 diners with food to be provided by
outside caterers
it
Key elements of the legal and financial structure and necessary agreements related to the Capitol
Theatre expansion project are outlined below.
Legal / Financial Structure:
• The PFD is authorized to collect 0.025% Sales Tax Credit from what would otherwise be
sent to the State from the sales taxes already being generated within the PFD (cities of
Yakima, Union Gap and Selah) and to utilize these funds to purchase, construct,
rehabilitate, expand,, improve, operate and maintain. a Regional Center;
• This sales tax credit is available for a maximum of 25 years (the PFD Board imposed this
credit effective January 1, 2008);.
• The City owns the Capitol Theatre and will issue bonds to pay for its expansion; the bon
will be approx 24 yr bonds — to coincide with the remaining time over which the PFD will
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receive the 0.025% sales tax revenues. The City anticipates issuing LTGO bonds this
summer; for a principal amount approximately $7.2 million.
• The City will lease the Capitol Theatre to the PFD for period of time similar to that of the
Y p p
bond issue (approx. 24 years). The lease of the Capitol Theatre to the PFD will satisfy (a)
the requirement that the PFD have an ownership interest in the facility in order to utilize
PFD funds to support its expansion, and (b) the requirement for local matching funds in an
amount not less than 33% of the net present value of revenues received from the sales tax
credit. ($10.3 million = net present value of the estimated Sales Tax Credit Revenues over
25 year period, and $6.4 million = 2009 assessed value of Capitol Theatre);
• The PFD irrevocably pledges to Yakima all sales tax revenues generated from the 0.025%
credit for as long as it flows in consideration of Yakima's agreement to issue bonds to fund
the expansion and upgrades to the Capitol Theatre;
• The total project cost, including debt service, must be at least $10 million to qualify for the
sales tax credit, (City anticipates issuing bonds for approx. $7.2 million; representing a
portion of the total cost of the project);
• Yakima will utilize the sales tax revenues from the PFD to pay debt service on the bonds;
• The PFD will sublease the Capitol Theatre back to the City for the duration of the bonds
being outstanding; and the City agrees to design, develop, construct, and finance the
expansion and to operate and maintain the facility;
• City will pledge the sales tax revenues it receives from the PFD along with Hotel / Motel tax
revenues and the Full Faith and Credit of the City to pay the debt service on the bonds.
(Note: pledging the Hotel / Motel taxes on these bonds will continue the flow of the "double
dip" revenues.);
• The project incurred approximately $500,000 in utility work performed in 2008, these costs
were paid from PFD sales tax revenues received last year;
• It should be noted that the City of Yakima alone is guaranteeing the debt service on the
bonds; thus the City is solely responsible for payment of debt service should the revenues
from the PFD be insufficient to cover the full amount.
Ground Lease Agreement:
• The City will lease the Capitol Theatre to the PFD;
• Lease effective when both parties have executed both the Lease and the Development
Agreements; and terminates simultaneously with termination of Development Agreement;
• Term approx. 24 years (as noted above);
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The Design, Development, Construction, Financing, Operating and Lease Agreement:
• PFD sub-leases Capitol Theatre to City and City accepts responsibility for financing,
constructing and operating and maintaining the Theatre;
• Effective when both parties have executed the Agreement; terminates on the later of the
date the bonds are no longer outstanding or the date on which the sales tax expires;
• Includes the terms and conditions of the design, development and construction of the
expansion and improvements to the Capitol Theatre;
• Identifies the authorized usage of the revenues received from the PFD;
• Defines' terms used in both this Agreement and the Ground Lease Agreement;
• Provides for the authorized utilization of the net Bond proceeds;
• Identifies the scope of the new Regional Center (i.e.: Capitol Theatre expansion project);
• Provides for proper accounting of PFD revenues and debt service on the bonds;
• Establishes the role, responsibilities, commitments and warranties of each party;
• Establishes the City's sole responsibility for debt service on the bonds;
• Establishes Project scope, development criteria and oversight,
Documents for Council Consideration (enclosed): •
• Resolution A
• Ground Lease
• Design, Development, Construction, Financing, Lease and Operating Agreement
• Resolution B (with related legal opinion)
Note: In order to properly account for the revenues and expenditures related to the Capitol
Theater expansion project and the on -going operating and maintenance costs of this facility as a
Regional Cent'' under the jurisdiction of the PFD, the City needs to establish a new fund
specifically designated for this purpose and make an appropriation to the new Fund in the 2009
budget. Therefore, staff has submitted to Council as a separate Agenda Item, two Ordinances for
consideration which would create the new Fund and related 2009 budget appropriation.
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RESOLUTION A
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0 RESOLUTION NO. R - 2009 -
A RESOLUTION OF THE CITY OF YAKIMA, WASHINGTON,
APPROVING THE LEASE OF THE CAPITOL THEATRE 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, REHABILITATING, DEVELOPING,
OPERATING, LEASING AND MAINTAINING THE CAPITOL
THEATRE.
WHEREAS, the City of Yakima, Washington (the "City "), currently owns and operates
the Capitol Theatre, a performing arts and special events center with two thousand or fewer
permanent seats, originally built in 1920; and
WHEREAS, the City desires to expand, rehabilitate and improve the Capitol Theatre,
which may include expanding the Theatre complex to include a multi - purpose pavilion or other
facilities constructed on adjacent property (together, the "Project "); and
WHEREAS, pursuant to chapter 35.57 RCW (the "Act ") and an Interlocal Agreement
40 dated July 25, 2001 (the "Interlocal Agreement"), the City and the Cities of Selah and Union •
Gap, Washington (together, the "Cities "), created the Yakima Regional Public Facilities District
(the "District"); and
WHEREAS, the District is authorized by the Act and the Interlocal Agreement to
acquire, construct, own, remodel, maintain, reequip, repair, finance and operate one or more
"regional centers" as defined in RCW 35.51.020, including, but not limited to, convention,
conference or special event centers, or any combination of such facilities, with associated
parking; and
WHEREAS, the Capitol Theatre, as expanded, rehabilitated and improved by the Project,
will serve as a "regional center" under RCW 35.57.030, benefiting the region including residents
of the Cities, by stimulating economic development, creating jobs, realizing additional sales and
lodging tax revenues, attracting commercial business and tourism, and providing facilities for
special events and community events including artistic, musical, theatrical and other cultural
exhibitions, presentations and performances; and
WHEREAS, construction of the Project commenced on June 30, 2008, in satisfaction of
the requirement of RCW 82.14.485(1) that rehabilitation of an existing regional center be
commenced prior to January 1, 2009; and
WHEREAS, the District, as authorized by RCW 82.14.485, imposed a 0.025% sales and
use tax (the "Sales Tax "), effective January 1, 2008, to assist in financing the design,
0 development, acquisition, construction, operation, rehabilitation, improvement and management
of the Capitol Theatre; and
WHEREAS, the Sales Tax operates to shift 0.025% of the retail sales and use taxes
0
generated within the District boundaries to the District; and
WHEREAS, the Act and RCW 82.14.485(4) require a local match of 33% of the amount
of the Sales Tax collected in order for the District to impose the Sales Tax and, accordingly, the
City desires to transfer a leasehold interest in the Capitol Theatre and the adjacent property, in
the event that it is acquired by the City, to the District in satisfaction of this match requirement
(the 2009 assessed value of the Capitol Theatre and the underlying property is $6,414,100); and
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 $10.3
million), thereby satisfying the match requirement; and
WHEREAS, the City intends to issue bonds and apply bond proceeds to finance the
Project, in consideration of the District's pledge of all Sales Tax receipts to the City to pay debt
service on the bonds and other Project costs; and
WHEREAS, the City also intends to contribute lodging taxes to the District, in an
amount, if any, determined annually by the City Council, to the operation of the Capitol Theatre,
as expanded, improved and rehabilitated by the Project, and will contribute revenues to the
District in the event of a Sales Tax shortfall; and
WHEREAS, the City will design and construct the Project, and will operate and maintain III
the Capitol Theatre, as expanded, improved and rehabilitated by the Project; and
WHEREAS, the City desires to enter into an agreement with the District providing for
such financing, design, construction, rehabilitation, improvement, operation and maintenance of
the Capitol Theatre, as expanded, improved and rehabilitated by the Project;
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
YAKIMA, WASHINGTON, as follows:
Section 1. Approval of Regional Center. Pursuant to Section 7(b) of the Interlocal
Agreement, the City hereby approves the District's expansion, rehabilitation, improvement and
financing of the Capitol Theatre as a "regional center" as defined in RCW 35.51.020.
Section 2. Ground Lease Agreement. The City hereby approves the Ground Lease
Agreement with the District in substantially the form attached as Appendix A hereto (the
"Ground Lease Agreement "), with such changes as the City Manager shall approve.
Section 3. Approval of Development Agreement. The City hereby approves the
Design, Development, Construction, Financing, Lease and Operating Agreement with the
District in substantially the form attached as Appendix B hereto (the "Development
Agreement "), with such changes as the City Manager or the Director of Finance and Budget shall
approve.
4)
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0 Section 4. Authorization of Documents. The City Manager is hereby authorized to
execute the Ground Lease Agreement and the Development Agreement. The City Manager and
each of the other appropriate officers, agents and representatives of the City are 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 resolution.
Section 5. Authorization of Amendments to Ground Lease Agreement and
Development Agreement. In accordance with the terms of the Ground Lease Agreement and the
Development Agreement, in the event that it is economically feasible and the City acquires
certain real property located adjacent to the Capitol Theatre and the City thereafter determines to
construct additional improvements upon such property, which may include the construction of a
multi - purpose pavilion that would serve a number of functions related to the Capitol Theatre,
including but not limited to, a box office, concessions and a music venue, the City hereby agrees
to lease such land to the District pursuant to the terms and conditions of the Ground Lease
Agreement and to sublease such land from the District pursuant to the terms and conditions set
forth in the Development Agreement.
The City Manager is hereby authorized to execute in recordable form such amendments
to the Ground Lease Agreement and to the Development Agreement as may be necessary to
40 demise such land in accordance with the terms of the Ground Lease Agreement and the
Development Agreement. The City Manager, and each of the other appropriate officers, agents
and representatives of the City 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 resolution.
Section 6. Prior Acts. All acts taken pursuant to the authority of this resolution but
prior to its effective date, including, but not limited to, receipt of Sales Tax revenues by the City
from the District and use of such revenues to finance Predevelopment Costs (as defined in the
Development Agreement) of the Project, are hereby ratified and confirmed.
Section 7. Severability. If any provision of this resolution or its application to any
person or circumstance is held invalid, the remainder of the resolution or the application of the
provision to other persons or circumstances is not affected.
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Section 8. Effective Date. This resolution shall be in effect from and after its
adoption.
ADOPTED this 2nd day of June, 2009.
CITY OF YAKIMA, WASHINGTON
Mayor
ATTEST
City Clerk
APPROVED AS TO FORM:
City Attorney
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APPENDIX A
LEASE AGREEMENT
•
•
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P:121266 SC121266 0YB 05/27/09
• GROUND LEASE AGREEMENT
This GROUND LEASE AGREEMENT (the "Ground Lease ") is made as of ,
2009, 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 facilitate the design, development, construction,
rehabilitation, financing and operation of the Capitol Theatre, as expanded, pursuant to that
certain Design, Development, Construction, Lease and Financing Agreement dated ,
2009, between the City and the District (the "Development Agreement ").
1. Effective Date. This Ground 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 Ground
Lease are not and shall not be effective unless and until the Development Agreement becomes
effective. All capitalized terms not otherwise defined herein shall have the same definition as set
forth in the Development Agreement.
2. Leased Premises. From and after commencement of the Ground Lease Term (as
defined herein), the City hereby leases to the District and the District hereby leases from the City
0 certain real property located in the City of Yakima, Washington, and legally described in
Exhibit A attached hereto and _ by this reference incorporated (the "Land ") which may be
expanded in the future and certain improvements thereon consisting of the Capitol Theatre, and
further improvements to be constructed on the Land pursuant to the Development Agreement
(the "Improvements "). The Land and Improvements are hereinafter referred to collectively as
the "Premises." Such Premises are subject to all easements, reservations, encumbrances and
restrictions of record.
3. Term. The Term of this Ground Lease, and all obligation of the parties hereto as
lessor and lessee, shall commence on the effective date of the Development Agreement (the
"Ground Lease Term ") and shall automatically terminate upon expiration or termination of the
Development Agreement, unless otherwise terminated or amended as set forth herein. In all
cases, this Ground Lease 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. The
District shall be entitled to possession of the Premises upon commencement of the Ground Lease
Term hereunder.
4. Prepaid Rent. Within 60 days after the commencement of the Ground Lease
Term, the District shall pay $50 to the City, which amount represents prepaid rent for the entire
Ground Lease Term. The Parties acknowledge that the 2009 assessed value of the Premises and
Improvements existing as of the date of this Ground Lease is $6,414,100. The value of the
leasehold interest in the Premises granted under this Ground Lease is significantly in excess of
33% of the net present value of sales taxes the District projects that it will collect under
®
RCW 82.14.485 (approximately $10.3 million). It is the parties' intent that the City lease the
Premises to the District in satisfaction of the local match requirement under RCW 82.14.485.
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
Ground 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 ordinances applicable to the Premises and the
Improvements, and the ownership, use and occupancy thereof.
7. Liens and Encumbrances. Except as expressly provided in this Ground 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
or incurred as a result of the actions of the City and not the actions of the District. Provided,
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.
8. AS IS; Maintenance and Repair of Premises and Improvements.
A. Due Diligence: The District acknowledges that except as expressly
provided for in this Ground Lease, neither City nor any employee, officer, agent or
representative of City has made any representations or warranties whatsoever regarding the
Premises or the transaction described under this Ground Lease or any facts relating thereto,
including, without limitation, any representations or warranties concerning the physical condition
of the Premises, access, zoning laws, environmental matters, suitability, feasibility, utilities, or
any other matter affecting the Premises, the Improvements, the Project or the use thereof.
B. Maintenance and Repair of Premises and Improvements. The District
shall maintain the Premises and Improvements in good repair and working order, and shall make
such repairs necessary to so maintain the Premises and Improvements; provided, however, that
so long as the Development Agreement is in effect, the City shall maintain the Premises,
including the Improvements, in accordance with the terms, covenants and conditions set forth in
the Development Agreement.
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41) 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 Ground 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.
The District may, in good faith, contest the validity or amount of any tax, assessment or
other charge for which the District may be responsible under this Ground Lease and may at its
own cost and expense institute such proceedings as the District considers necessary. If the
District contests any such tax, assessment or other charge, the District may defer payment or pay
under protest while such action is being actively and diligently prosecuted, provided the District
shall protect the City and the Premises from any lien or liability for the amount of such contested
item by adequate surety bond or other appropriate security, so long as such deferral and/or
contest will not subject City to criminal prosecution or fine. District shall pay such tax or
assessment together with all interest and penalties accrued thereon, promptly upon final
resolution of any such contest.
The City appoints the District as the City's attorney -in -fact for the purpose of making all
payments to any taxing authorities and for the purpose of contesting any taxes, assessments or
other charges, conditioned on the District's preventing any lien from being levied on the
ill 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. Utility 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 Ground Lease Term liability insurance which satisfies the requirements of
Section VII.A(2) of the Development Agreement. The City shall procure and maintain all other
Property insurance and .liability insurance with respect to the City which satisfies the
. requirements of Section VII.A of the Development Agreement. -
13. Assignment; Subletting. Except as otherwise provided in Section 22 and 23, the
District shall not assign or transfer this Ground Lease or any interest therein, nor shall this
Ground 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 may be withheld or denied by City in its sole and absolute discretion. "Assign"
includes any transfer, whether voluntary or involuntary, of any interest in this Ground Lease and
includes transfers to a trustee in bankruptcy, receiver, or assignee for the benefit of creditors.
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For so long as the City is in occupancy of the Premises under the Development
0
Agreement, District shall not sublet any of its interest in the Premises or the Improvements
without City's prior written consent, which consent may be withheld or denied by City in its sole
and absolute discretion. "Sublease" or "sublet" includes any license or permission to occupy the
Premises or the Improvements. No consent by City to any assignment or sublease shall be
deemed or construed to relieve the District from obtaining City's written consent to any further
assignment or subletting.
Any attempted assignment or subletting contrary to the provisions of this Section 13 shall
be void and shall constitute an Event of Default by the District under this Ground Lease.
14. Eminent Domain.
A. The following definitions apply in construing provisions of this Ground
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 of the Premises
or the Improvements is taken by the condemnor, and the date on which the right to compensation
and damages accrues under applicable law. -
(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 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 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 to the Premises
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
written notice of the receipt and contents thereof.
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. No agreement, settlement, sale or other transfer of the Premises or the Improvements to
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• or with the condemning authority shall be made without the consent of the City, the District and
all leasehold mortgagees.
D. The entire award with respect to the taking of the Premises including the
Improvements shall belong to the City, except that the District shall have the right to claim and
recover from the condemning authority compensation for the loss of any of the District's
personal property and moving expenses. The condemnation award payable in connection with
the taking or damaging of the Premises shall be paid to City. If the City has issued Bonds or
Additional Bonds, the condemnation award shall be used first, to effect an extraordinary
redemption of the Bonds or Additional Bonds, and the remainder, if any, shall be retained by the
City to compensate the City for the loss of its reversionary interest in the Premises under this
Ground Lease and its leasehold interest under the Development Agreement.
E. Within 5 days after the District receives notice of an intended 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 Ground Lease shall remain in full force and
effect, covering the remaining Premises. The entire award for any such partial taking shall be
0 paid to the City which shall, after deducting therefrom all costs and expenses incurred by City in
connection with such condemnation, use the award to pay for the costs of repair and restoration
of the Improvements in accordance with the requirements of the Development Agreement. The
remainder, if any, of said award shall be retained by the City.
G. Nothing in this Ground 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 caused by the gross negligence or willful misconduct of the City.
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.
0 16. Default. Time is of the essence in this Ground Lease, and in the event that (i) the
District shall default in the payment of taxes, assessments, utility charges or any other amounts
-5- P:\21266 SC121266 0Y8 05/28/09
due hereunder, and such default is not caused by the City's failure to meet its obligations under
0
the Development Agreement, and if such default shall continue for 10 days following written
notice and demand; (ii) the District shall default in the performance or observation of any other
requirements, covenants, conditions or agreements of this Ground 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 Ground Lease terminated and enter the
Premises 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. Such reentry shall not constitute
a termination of this Ground Lease and, notwithstanding any such 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 Ground 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 Ground 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
Ground 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 Ground 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 Ground 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, 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, 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,
-6- P:\21266 SC\21266 0Y8 05/28/09
III personnel or other item; or interruption, suspension, curtailment or other disruption of a utility).
Financial inability is not an event of Force Majeure.
19. Access by the City. At any time during the Ground 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 Ground
Lease, the District shall immediately return to the City the Premises in its condition following
completion of the Project, as defined in the Development Agreement, except reasonable wear
and tear and damage by fire or other casualty excepted. Upon termination of the Ground Lease
for any reason the District shall be liable for all costs and expense of restoring the Premises 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 Ground Lease.
21. Quiet Enjoyment. The District, upon fully complying. with and promptly
performing all of the terms, conditions, and covenants of this Ground Lease on its part to be
performed, shall have and quietly enjoy the Premises for the Ground Lease Term.
22. Leasehold Mortgages. During the Ground Lease Term, the District shall not
ip 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 under this Ground 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 Ground Lease Back. The Parties hereby acknowledge and agree that
they would not execute this Ground Lease but for: (a) the agreement by the City to operate and
maintain the Improvements, finance, construct, lease, rehabilitate, improve and operate the
Project and (b) the District's agreement to 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 Ground Lease and may not be severed herefrom without invalidating the entire Ground
Lease.
24. Termination. This Ground Lease may be terminated by the City after notice and
opportunity to cure any event of default by the District in accordance with Section 16. This
Ground Lease shall also automatically terminate upon termination of the Development
Agreement.
25. Amendment. This Ground 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.
-7- P:\21266 SC121266 0Y8 05/28/09
26. Entire Agreement. This Ground Lease and any collateral instruments referenced
0
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 Ground 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 Ground Lease.
27. Notices. All notices which may be or are requested to be given pursuant to this
Ground Lease shall be deemed given when hand delivered, or when deposited in the U.S. 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 the City: City of Yakima
Attn: Richard A. Zais, Jr., City Manager
129 N. 2 Street
Yakima, WA 98901
With a copy to: Jeffrey Cutter, Esq.
City Attorney
City of Yakima
129 N. 2 Street
Yakima, WA 98901
III
To the District: Yakima Regional Public Facilities District
Attn: President
10 N. 8th Street
Yakima, WA 98901
28. Severability. If any term or provision of this Ground 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 Ground 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 lessor under this Ground 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 deemed to be separate and
distinct from the City's interest, estate or rights as fee owner of the Premises and Improvements,
and as sublessee under the Development Agreement notwithstanding that any such interests,
estate or rights shall at any time be held or vested in the same, person, corporation or other
entity.
•
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0 30. Additional Land. In the event that the City acquires the real property more
particularly described in Exhibit B attached hereto (the "Additional . Land "), and the City
determines (in its sole discretion) to construct additional improvements to the Premises upon the
Additional Land, which may include the construction of a multi - purpose pavilion that would
serve a number of functions related to the Capitol Theatre, including but not limited to, a box
office, concessions and a music venue, the City agrees to lease the Additional Land to District
pursuant to the terms and conditions of this Ground Lease and District agrees to sublease the
Additional Land to City pursuant to the terms and conditions set forth in the Development
Agreement. The parties agree to execute in recordable form such amendments to this Ground
Lease and /or the Development Agreement as may be necessary to demise the Additional Land in
accordance with this Section 30.
31. Limited Obligation of the District. The District is, organized pursuant to
RCW 35.57.010, the Interlocal Cooperation Agreement to form a Public Facilities District by
and among the City of Yakima, Washington, the City of Selah, Washington and the City of
Union Gap, Washington, dated June 25, 2001 (the "Interlocal Agreement "), Ordinance No.
2001 -28 of the City of Yakima, Ordinance Nos. 2298 and 2300 of the City of Union Gap, and
motion of the City of Selah City Council approved on June 12, 2001. The Interlocal Agreement
provides as follows: "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 Cities of Yakima, Selah or Union Gap, their assets, credit, or
ID services, on account of any debts, obligations, liabilities or acts or omissions of the District."
32. 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 Ground
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.
33. Governing Law; Construction. This Ground Lease shall be governed by and
construed and enforced in accordance with the laws of the State of Washington. In the event any
action is brought to enforce the provisions of this Ground Lease, the venue of any such action
shall be in Yakima County, Washington and the parties do hereby stipulate to the jurisdiction and
venue of the Superior Court for Yakima County, Washington. Each agreement, term and
provision of this Ground Lease to be performed by District or City shall be construed to be both
a covenant and condition.
34. Covenants to Run with the Land. The terms, covenants, agreements and
conditions contained herein are and shall be deemed to constitute covenants running with the
land and the leasehold estate created by this Ground Lease and, subject to the provisions of
Section 13 hereof, shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns.
35. Memorandum of Ground Lease. Neither City or District shall record this Ground
I Lease without the written consent of the other party; provided, however, that either City or
District shall have the right to record a Memorandum of this Ground Lease in the form attached
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hereto as Exhibit C (the "Memorandum ") in the real property records of Yakima County,
•
Washington, and the parties shall cooperate in the execution of such Memorandum.
IN WITNESS WHEREOF, the Parties hereto have executed this Ground Lease as of
the day and year first above written.
DATED this day of , 2009.
CITY OF YAKIMA . YAKIMA REGIONAL PUBLIC
FACILITIES DISTRICT
By By
Richard A. Zais, Jr. President
City Manager Board of Directors
Attest:
City Clerk
Approved as to form:
IP
. City Attorney
III
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0 STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA )
I certify that I know or have satisfactory evidence that Richard A. Zais, Jr., is the person
who appeared before me, and said person acknowledged that he signed this instrument, on oath
stated that he was authorized to execute the instrument and acknowledged it as the City Manager
of the City of Yakima, a Washington municipal corporation, to be the free and voluntary act of
such party for the uses and purposes mentioned in the instrument.
Dated: , 2009.
Notary Public
Print /Type Name
• My commission expires
(Use this space for notarial stamp /seal)
•
ill 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
President of the Yakima Regional Public Facilities District, a Washington public facilities
district, to be the free and voluntary act of such party for the uses and purposes mentioned in the
instrument.
Dated: , 2009.
Notary Public
Print /Type Name
My commission expires
(Use this space for notarial stamp /seal)
— 1 1 — P:\21266_SC\21266_0Y8 05/28/09
EXHIBIT A
LEGAL DESCRIPTION OF LAND
Lots 29, 30, 31 and 32, Block 71, Town of North Yakima, now Yakima, Washington, according
to the official plat thereof recorded in Volume "A" of Plats, page 10, and re- recorded in
Volume "E" of Plats, page 1, records of Yakima County, Washington.
A -1 P:\21266 SC\21266 0V8 05/28/09
• EXHIBIT B
LEGAL DESCRIPTION OF ADDITIONAL LAND
Lots 1 and 2, Block 71, of TOWN OF NORTH YAKIMA, now Yakima, recorded in Volume
"E" of Plats, Page 1, records of Yakima County, Washington.
•
B -1 P:\21266 SC\21266 0Y8 05/28/09
EXHIBIT C
MEMORANDUM OF GROUND LEASE
(attached)
•
C -1 P:\21266 SC\21266 0Y8 05/28/09
0
RECORDED AT THE REQUEST
OF AND WHEN RECORDED
RETURN TO:
K &L PRESTON GATES ELLIS
925 4 Avenue, Suite 2900
Seattle, WA 98104
Attention: Deanna Gregory, Esq.
MEMORANDUM OF GROUND LEASE
This Memorandum of Ground Lease ( "Memorandum "), dated as of ,
2009, is entered into 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"), a public facilities district
created by the City, the City of Selah and the .City of Union Gap, Washington.
RECITALS
0 A. The City and the District have entered into that certain Ground Lease Agreement
dated as of , 2009 (the "Ground Lease"), pursuant to which the City, as lessor, has
agreed to lease to the District, as lessee, certain real property and improvements thereon
including the Capitol Theatre, located in Yakima County, Sate of Washington, as more
particularly set forth in Exhibit A attached hereto (the "Property ").
B. The District and the City have entered into that certain Design, Development,
Construction, Financing, Lease and Operating Agreement dated as of , 2009 (the
"Development Agreement"), pursuant to which the City has agreed to lease -back the Property
and the improvements thereon from the District for the purpose of assisting with the design,
development, acquisition, construction, operation, financing, rehabilitation, improvement and
management of the Capitol Theatre.
C. The City and the District desire now to execute and record this Memorandum to
evidence the Ground Lease.
AGREEMENT
1. Pursuant to the Ground Lease, the City leases to the District that certain real
property and all appurtenances described in the attached Exhibit A.
2. This Memorandum is made upon all of the terms, covenants and conditions set
el forth in the Ground Lease, all of the terms and conditions of which are incorporated here as
though set forth in full. The Ground Lease shall expire upon termination of the Development
Agreement. In all cases, the Ground Lease shall terminate on the later of the date - that the bonds
C -2 P:\21266 SC\21266 0Y8 05/28/09
and any additional bonds issued by the City for the purpose of financing the construction,
0
improvement and rehabilitation of the Capitol Theatre are no longer outstanding and the date on
which the sales tax collected by the District pursuant to RCW 82.14.485 expires.
3. The City and the District have entered into this Memorandum in order that third
parties may have notice of the existence of the Ground Lease and some of its specific provisions.
This Memorandum is not a complete summary of the Ground Lease. This Memorandum is not
intended to amend, modify, or otherwise change the terms and conditions of the Ground Lease.
Provisions in this Memorandum shall not be used in interpreting the provisions of the Ground
Lease. In the event of a conflict between this Memorandum and the Ground Lease, the Ground
Lease shall control.
This Memorandum is made as of , 2009.
[Signature page follows]
•
•
•
C -3 P:\21266_SC\21266_0Y8 05/28/09
SIGNATURE PAGE
to Memorandum of Ground Lease
IN WITNESS WHEREOF, the parties have executed this Memorandum as of the date set
forth above.
CITY OF YAKIMA, as lessor
By
Richard A. Zais, Jr.
City Manager
YAKIMA REGIONAL PUBLIC
FACILITIES DISTRICT, as lessee •
By
President
Board of Directors
•
C-4 P.\21266 SC\21266 0Y8 05/28/09
•
STATE OF WASHINGTON)
) ss.
COUNTY OF YAKIMA
I certify that I know or have satisfactory evidence that Richard A. Zais, Jr., is the person
who appeared before me, and said person acknowledged that he signed this instrument, on oath
stated that he was authorized to execute the instrument and acknowledged it as the City Manager
of the City of Yakima, a Washington municipal corporation, to be the free and voluntary act of
such party for the uses and purposes mentioned in the instrument.
Dated: , 2009.
•
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
President of the Yakima Regional Public Facilities District, a Washington public facilities
district to be the free and voluntary act of such party for the uses and purposes mentioned in the
instrument.
Dated: , 2009.
Notary Public
Print /Type Name
My commission expires
(Use this space for notarial stamp /seal)
C -5 P:121266 SC121266 0Y8 05/28/09
41110
Exhibit A to
to Memorandum of Ground Lease
LEGAL DESCRIPTION OF PROPERTY
Lots 29, 30, 31 and 32, Block 71, Town of North Yakima, now Yakima, Washington, according
to the official plat thereof recorded in Volume "A" of Plats, page 10, and re- recorded in
Volume "E" of Plats, page 1, records of Yakima County, Washington.
•
•
C - P:121266 SC\21266 0Y8 05/28/09
• APPENDIX B
DEVELOPMENT AGREEMENT
III •
•
110
P:121266 SC\21266 0Y8 05/27/09
•
DESIGN, DEVELOPMENT,
CONSTRUCTION, FINANCING, LEASE AND OPERATING AGREEMENT
BY AND BETWEEN
CITY OF YAKIMA, WASHINGTON
and
YAKIMA REGIONAL PUBLIC FACILITIES DISTRICT
, 2009
•
TABLE OF CONTENTS 4111
Page
I. RECITALS; DEFINITIONS 2
II. INTENT AND RELATIONS 8
A. Intent 8
B. Description 8
C. Yakima's Regulatory Role Reserved 8
D. Governing Law and Venue 9
E. Scope of the Regional Center 9
III. SCOPE OF COMMITMENTS 9
A. Commitments by the District 9
B. Commitments by Yakima 12
C. Commitment by Yakima to Replenish Sales Tax Shortfall 14
IV. PROJECT COMPONENTS AND OPERATION CRITERIA 15
A. Project Components 15
B. Project Purpose 15
C. Project Contracting and Management 16 •
V. DEVELOPMENT CRITERIA AND OVERSIGHT 16
A. Generally 16
B. Standards of Performance 17
C. Development Schedule and Substantial Completion Date 17
VI. PROJECT COSTS 17
VII. INSURANCE 17
A. Insurance Requirements 17
B. Insurance Policies 18
C. Adjustments 19
VIII. AS IS 19
A. Acceptance 19
B. Environmental Contamination 19
IX.. LIABILITY 19
X. DESTRUCTION OR CONDEMNATION 20
A. Total or Partial Destruction 20
B. Condemnation 20
a
- 1 - P.\21266 SC\21266 0Y9 05/28/09
• XI. RIGHT TO ASSIGN OR OTHERWISE TRANSFER 20
XII. DEFAULT 21
A. Event of Default of the District 21
B. Force Majeure 21
XIII. REMEDIES 21
A. Remedies Upon Default 21
B. No Waiver by Yakima 22
C. Termination 23
D. Reversion of the Title to Property to Yakima 23
E. Certain Provisions Survive Termination 23
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 24
A. Sublease 24
B. Rent 24
C. Ground Lease Obligations Assumed 24
XVI. MISCELLANEOUS 24
A. Captions 24
B. Construction 25
C. Entire Agreement 25
D. Successors and Assigns 25
E. Notices 25
F. Incorporation by Reference 25
G. Execution in Counterparts 26
H. Limited Obligations of the District 26
I. Waiver 26
J. Exculpation 26
K. Severability 26
L. Term 26
M. Amendments 27
N. Memorandum of Agreement 27
EXHIBIT A — LEGAL DESCRIPTION OF THE PROPERTY
EXHIBIT B — DEBT SERVICE SCHEDULE
EXHIBIT C — LEGAL DESCRIPTION OF ADDITIONAL LAND
EXHIBIT D — MEMORANDUM OF AGREEMENT
i
- P:\21266 SC\21266 0Y9 05/28/09
DESIGN, DEVELOPMENT, 1110
CONSTRUCTION, FINANCING, LEASE AND OPERATING AGREEMENT
This DESIGN, DEVELOPMENT, CONSTRUCTION, FINANCING, LEASE AND
OPERATING AGREEMENT (the "Agreement") is made as of , 2009, 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 (together with Yakima, the "Cities ").
RECITALS
WHEREAS, the District is a public facilities district created pursuant to chapter 35.57
RCW (the "Act") and the Interlocal Agreement dated as of June 25, 2001, among the Cities (the
"Interlocal Agreement); and
WHEREAS, the District is authorized by the Act and the Interlocal Agreement to
acquire, construct, own, remodel, maintain, reequip, repair, finance and operate one or more
"regional centers" as defined in RCW 35.51.020, including, but not limited to, convention,
conference or special event centers, or any combination of such facilities, with associated
parking; and
• WHEREAS, Yakima currently owns and operates the Capitol Theatre, a "regional
center" with two thousand or fewer permanent seats, originally built in 1920; and
WHEREAS, Yakima desires to expand, rehabilitate and improve the Capitol Theatre,
which may include expanding the Theatre complex to include a multi- purpose pavilion and other
facilities constructed on adjacent property (the "Project"); and
WHEREAS, the Capitol Theatre, as expanded, rehabilitated and improved by the Project,
will serve as a "regional center" under RCW 35.57.030, benefiting the region including residents
of the Cities by stimulating economic development, creating jobs, realizing additional sales and
lodging tax revenues, attracting commercial business and tourism, and providing facilities for
special events and community events including artistic, musical, theatrical and other cultural
exhibitions, presentations and performances; and
WHEREAS, construction of the Project commenced on June 30, 2008, in satisfaction of
the requirement of RCW 82.14.485(1) that rehabilitation of an existing regional center be
commenced prior to January 1, 2009; and
WHEREAS, the District, as authorized by RCW 82.14.485, imposed a 0.025% sales and
use tax (the "Sales Tax "), effective January 1, 2008, to assist in financing the design,
development, acquisition, construction, operation, rehabilitation, improvement and management
of the Capitol Theatre; and
ill WHEREAS, the Sales Tax operates to shift 0.025% of the retail sales and use taxes
generated within the District boundaries to the District; and
0
WHEREAS, the Act and RCW 82.14.485(4) require a local match of 33% of the amount
of the Sales Tax collected in order for the District to impose the Sales Tax; and
WHEREAS, Yakima has entered into a Ground Lease Agreement of even date herewith
(the "Ground Lease ") granting the District a leasehold interest in the real property legally
described in Exhibit A hereto (the "Property ") (the 2009 assessed value of the property is
approximately $6,414,100) in satisfaction of this local match .requirement (approximately $3.4
million); and
WHEREAS, the District will lease back the Property to Yakima pursuant to this
Agreement; and
WHEREAS, subject to certain limitations set forth herein, Yakima will issue bonds to
finance the Project, in consideration for the District's pledge of Sales Tax receipts to pay debt
service on the bonds and other costs of the Project; and
WHEREAS, Yakima will apply the net proceeds of the bonds to improve, rehabilitate
and construct the Project, under the terms set forth herein; and
WHEREAS, to provide for stable financing and operation of the Project in light of the
4110 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 Capitol Theatre, as expanded, improved and
rehabilitated by the Project, and will apply certain City lodging taxes (in an amount, if any,
determined annually by the Yakima City Council) to pay a portion of the costs of operation and
maintenance of the Capitol Theatre and to pay the principal of and interest on bonds issued by
Yakima as described herein; and
WHEREAS, the Parties desire that Yakima finance, design, develop, rehabilitate,
improve, construct, lease and operate the Capitol Theatre 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 premises 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. RECITALS; DEFINITIONS
Each recital set forth above is incorporated into this Agreement as though fully set forth
herein. For purposes of this Agreement, and any agreements 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
p g Y
-2- P:121266 SC121266 0Y9 05/28/09
•
Additional Land shall mean the real property described in Exhibit C attached hereto or as
hereafter amended.
• 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, and any other revenue derived from the ownership, lease or operation of
the facilities of the District, including investment income; but excluding Sales Tax Revenue and
amounts received from Yakima pursuant to Section III(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 annual 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 District (or by Yakima on behalf of
the District) for admission to its facilities, including charges for tickets, season tickets or
subscriptions; cover charges, or charges for use of seats and tables, and other similar
accommodations; charges 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, Lease and
Operating Agreement.
Beneficial Occupancy shall mean when the Project is granted a temporary or permanent
Certificate of Occupancy for the Capitol Theatre 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 mean 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
financing is determined by Yakima to no longer be economical.
r
-3- P:\21266 SC\21266 0Y9 05/28/09
III 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 mean 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, rehabilitation, improvement 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, developing, rehabilitating, improving 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 hereto 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 and /or 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 XII herein.
Favorable Opinion of Bond Counsel means a written legal opinion of Bond Counsel
addressed to Yakima, to the effect that such action is permitted under the laws of the State and
0 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
-4- P:\21266 SC\21266 0Y9 05/28/09
other bonds of Yakima from gross income for federal income tax purposes under the Code
1 1)
(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
(including, 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,
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). Financial inability is not an
event of Force Majeure.
Governmental Authority shall mean any board, bureau, commission, department, or body
of any municipal, county, state, or federal governmental or quasi - governmental unit, or any
subdivision thereof, having, asserting, or acquiring jurisdiction over the Property or the
management, operation, use, or improvement thereof.
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 Capitol
Theatre, the multi - purpose pavilion, 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 Capitol Theatre 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 Cooperation Agreement to form a Public
Facilities District 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 chapter 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.
-5- P:121266 SC\21266 0Y9 05/28/09
ill Operation and Maintenance Costs means all necessary costs to Yakima of operating and
maintaining the Capitol Theatre 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.
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 Date 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 mean investments permitted by State law and Yakima investment
policies 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 Costs mean 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, rehabilitation, improvement and operation of the
additions to the Capitol Theatre, as described in the Project Documents. In the event that
Yakima acquires title to the real property located adjacent to the Capitol Theatre and legally
described in Exhibit C hereto, and determines to construct additional improvements on such
0 property, the Project shall also mean the design, construction, rehabilitation, improvement and
-6- P:\21266 SC121266 0Y9 05/28/09
operation of the improvements to be constructed thereon, as described in the Project Documents
relating to such property.
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 Bonds 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 82.14.485 at a rate not to exceed 0.025% 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 Bonds are retired, or, in any event,
not more than 25 years after the Sales Tax is first collected. Sales Taxes shall also include any
other Sales Tax lawfully imposed by the District in the future for the purpose of paying costs of
the Project.
Sales Tax Revenue means all Sales Tax received by the District.
State means the State of Washington.
Substantial Completion shall mean when the Beneficial Occupancy of the Capitol
Theatre 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.
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.
•
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0 II. 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 capital, operating and maintenance costs associated with the
Project 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, rehabilitation, improvement and construction standards and other
0 performance criteria for the Project.
3. Operation. It is the intent of the Parties that Yakima operate and maintain
the Capitol Theatre and the Project, and that Yakima retain all rents, receipts, profits and other
revenues of the Capitol Theatre as expanded by the Project. In consideration for Yakima's
agreement to operate and maintain the Capitol Theatre and the Project, it is the intent of the
Parties that the District pay Additional Revenue, if any, to Yakima, and that Yakima 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. Lodging Tax revenues may also be applied by
Yakima to pay Debt Service on Bonds and any Additional Bonds, as further provided herein.
B. Description. The Property is located at 19 S. 3rd Street, Yakima, Washington
98901, and is legally described on the attached Exhibit A. In the event that Yakima acquires title
to the real property more particularly described in Exhibit C (the "Additional Land "), and
Yakima, in its sole discretion, determines to construct additional improvements to the Project on
such Additional Land, the Property will also include the Additional Land, and the District agrees
to lease the Additional Land to Yakima pursuant to the terms and conditions set forth in this
Agreement. The parties agree to execute in recordable form such amendments to the Ground
Lease and this Agreement as may be necessary to demise the Additional Land.
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
0 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,
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prejudiced or predetermined in any way by this Agreement. Nothing in this Agreement is •
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 applications 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.
E. Scope of the Project. It is the intent of the Parties that the Capitol Theatre, as
constructed, expanded, rehabilitated, and improved by the Project, which may include the
Additional Land, shall serve as. a "regional center" as defined in RCW 35.51.020, separate from
other regional centers constructed and improved by the District and Yakima, including, but not
limited to, the Yakima Convention Center. The Parties hereby acknowledge that Sales Tax
Revenue received by Yakima from the District under the terms of this Agreement shall be used
for the purposes set forth herein, shall not be used for other regional center projects, and shall be
kept separate from sales tax revenues received by Yakima for other purposes, including but not
limited to, financing the Yakima Convention Center pursuant to the Design, Development,
Construction, Financing and Operating Agreement between Yakima and the District dated
.July 27, 2001.
ill
III. SCOPE OF COMMITMENTS
A. Commitments by the District
1. Payment Obligation.
(a) Payment of Debt Service and Predevelopment Costs. In
consideration for Yakima's agreement to issue the Bonds and design, develop, rehabilitate,
improve 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 capital, operating and maintenance costs associated with the Project including but not
limited to costs associated with utility relocation, 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 capital, operating and maintenance costs associated with
the Project 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 and to perform and observe the other obligations on
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110 its part contained herein shall be absolute and unconditional, and shall not be subject to
diminution by setoff, counterclaim, abatement or 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 the 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 iri purchasing the Bonds. So long as the Bonds or any Additional Bonds are Outstanding,
without the prior written consent of the City 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 shall be paid to Yakima to pay Debt Service,
Predevelopment Costs and other capital, operating and maintenance costs associated with the
• Project, including but not limited to funding and /or replenishing the Debt Service Reserve Fund
-10- P:\21266 SC\21266 0Y9 05/28/09
and PFD Revenue Reserve Fund and reimbursing Yakima for deposits made to the Debt Service 0
Fund pursuant to Section III(C). .
(b) Additional Revenue Fund. The District shall deposit in the
Additional Revenue Fund all Additional Revenue received by the District and all net earnings on
investments of money in the Additional Revenue Fund. Amounts received from Yakima 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 shall 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:
(i) To the Administrative Fund to pay Administrative Costs;
and
(ii) The remainder, to Yakima.
To the extent that Additional Revenues are received by Yakima on behalf of the District,
Yakima shall apply such Additional Revenues to pay (i) Administrative Costs, (ii) Operation and
Maintenance Costs, and (iii) any other lawful use of such funds.
(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 Administrative Fund
and shall be used to pay Administrative Costs.
Amounts in the Administrative 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 Administrative Fund, and such income and
interest shall become part of the Administrative Fund unless otherwise applied 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.
III
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• B. Commitments by Yakima.
1. Site Availability. Pursuant to the terms of the Ground Lease, Yakima has
leased to the District the Property described in Exhibit A. The Ground Lease may hereafter be
amended to include the Additional Land in the event that Yakima acquires title to the Additional
Land and Yakima determines to construct a portion of the Project on the Additional Land. The
Parties agree that the leasehold interest in the Property is demised (for nominal consideration in
the form of $50 in rent) by Yakima to the District to be used for the construction, rehabilitation,
and improvement of the Capitol Theatre, an existing "regional center" as defined in
RCW 35.57.030. Moreover, the Parties agree that the 2009 assessed value of the Property is
$6,414,100. The value of the leasehold interest in the Property demised under the Ground Lease
significantly exceeds 33% of the net present value of the total Sales Taxes projected to be
received by the District (approximately $10.3 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, Yakima determines, at its sole discretion, the financing is no longer economical.
The Bonds shall be in an aggregate principal amount to be determined by Yakima.
3. Application of Net Proceeds. Yakima agrees to apply Net Proceeds to pay
Predevelopment Costs and Costs of the Project as follows.
1111 (a) Predevelopment Costs. Yakima has incurred and will continue to
incur Predevelopment Costs for the benefit of the District. Yakima has paid and will continue to
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, Rehabilitation, Improvement 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 but not limited to the Capitol Theatre, 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 but
not limited to the Capitol Theatre, related parking and the Project as a first class special events
center, to be kept at all times in a safe and clean condition.
al Yakima shall provide (directly or by contract) all management, supervision, personnel,
materials, equipment, services and supplies necessary to operate, maintain and repair the
-12- P:\21266 SC\21266 0Y9 05/28/09
•
Improvements and shall take all reasonable precautions to prevent personal injury or property
0
damage to any person or property arising out of the operation and maintenance of the
Improvements in accordance with this Agreement. Yakima shall be responsible for the
supervision of its employees and other parties implementing the performance of Yakima's
duties, obligations and functions under this Agreement.
Yakima shall comply with all applicable Laws and Ordinances relating to the operation
and maintenance of the Improvements. Yakima shall obtain all 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 as a first class special events center.
Yakima shall undertake all modifications to the Improvements 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) Insurance. Yakima shall maintain insurance as set forth in
Article VII.
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 Capitol Theatre
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 Capitol
Theatre and the Project shall be retained by, and shall be the property of, Yakima, and shall be
applied by Yakima 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 Capitol Theatre 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, if any, 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 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. Lodging Tax revenues
may also be applied by Yakima to pay Debt Service on Bonds and any Additional Bonds, as
further provided herein.
-13- P:\21266 SC\21266 0Y9 05/28/09
i Yakima's obligation hereunder is limited only to the amounts designated, if any, 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 (including acquiring, constructing, owning,
remodeling, maintaining, equipping, reequipping, repairing, financing, and operating the Capital
Theater as expanded by the Project). Receipts that are Additional Revenues shall be applied by
Yakima as provided in Section III(A)(2)(b).
Yakima's obligation hereunder is limited to the amounts actually received from the
District pursuant to Section III(A)(2)(a) and (2)(b)(ii). Yakima does not hereby guaranty any
debt obligations or liability of the District.
• 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
Capitol Theatre, shall be retained by and be the property of Yakima to be applied to pay
Operation 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
of the Yakima City Manager or his or her designee. Yakima hereby grants to the extent
permitted by law such person or persons the power, authority, and right to carry out all 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. The Parties hereby acknowledge that Yakima expects
0 to covenant and agree in the Bond Ordinance authorizing the issuance of Bonds and any
Additional Bonds, that for as long as any of such Bonds are outstanding and unpaid, each year it
will include in its budget and levy ad valorem taxes upon all the property within Yakima subject
-14- P:\21266 SC121266 0Y9 05/28/09
to taxation in an amount that will be sufficient, together with the Sales Tax Revenue and
0
Lodging Taxes and all other revenues and money of Yakima legally available for such purposes,
to pay the principal of and interest on such Bonds as the same shall become due and payable.
Yakima's obligation hereunder is limited to the amount necessary 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.
IV. PROJECT COMPONENTS AND OPERATION CRITERIA
A. Project Components. Yakima shall finance, design, rehabilitate, improve 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 solely responsible for management, operation and
maintenance of the Capitol Theatre, as expanded by the Project, consistent with the terms of this
Agreement.
1. Public Access. Yakima shall provide regular hours during which the
Capitol Theatre will be open to the public (subject to reasonable Admission Charges); provide
public programs; and make available for reasonable public use any auditorium, theater, meeting
rooms or other public spaces in the Capitol Theatre (subject to reasonable charges and security
measures).
III
- 1 5- P.\21266_SC\21266_0Y9 05/28/09
III 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) 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.
(b) The District shall not impose Admission Taxes or Parking Taxes
without the prior approval of the Yakima Council.
(c) 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.
(d) 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, or
its designee:
C. Project Contracting and Management
1. Yakima shall construct the Project according to the Project Documents.
III 2 . Yakima will select the contractor(s) for the Project pursuant to the Laws of
the State. .
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 construction
methods. 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, except to the extent
caused by the negligence or willful misconduct of the District.
V. DEVELOPMENT CRITERIA AND 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, mechanical and other required permits or
approvals required for construction of the Project. Yakima shall promptly comply with all
applicable Laws and Ordinances as they relate to the Property and the Project. Yakima's
0 responsibility to finance such construction is limited to the extent of Net Proceeds.
-16- P:\21266 SC121266 01'9 05/28/09
B. Standards of Performance. Yakima shall cause its contractors and subcontractors •
to comply with the following standards:
1. Performance of construction in a good and workmanlike manner and in
compliance with all applicable Laws and Ordinances.
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. Construction, rehabilitation, and improvement of the Project commenced
on June 30, 2008, in satisfaction of the requirement of RCW 82.14.485(1) that rehabilitation of
an existing regional center be commenced prior to January 1, 2009.
2. Yakima shall pursue the design, rehabilitation, development and
construction of the Project to achieve Substantial Completion within a reasonable time as agreed
upon by the Parties.
VI. PROJECT COSTS. Yakima shall finance, design, construct and complete the Project
from Net Proceeds, from other amounts paid by the District to Yakima pursuant to this •
Agreement, and from other sources that are legally available to Yakima for this purpose,
including but not limited to donations from the Capitol Theatre Board.
VII. INSURANCE
A. Insurance Requirements. Yakima shall maintain and keep in force insurance on
the Project and 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 Capitol Theatre and parking . facilities, insured under the terms of a Builders All Risk
Comprehensive Coverage form of insurance policy (including earth movement and flood) in an
amount not less than one hundred percent (100 %) of the completed "Replacement Cost," being
the cost of replacing the Project components, and all fixtures, equipment, improvements and
betterments thereto. Yakima shall maintain or cause its contractors to maintain the Builder's
Risk policy from commencement of construction until final completion of the Project.
2. Commercial General Liability and Umbrella Liability. At all times during
the term of this Agreement Yakima shall carry, and shall require its construction contractor to
carry during the construction of the Project, Commercial General Liability and Umbrella
Liability insurance providing coverage against claims for third -party bodily injury, death or
property damage. The Commercial Liability and Umbrella Liability shall be written for
combined limits of liability of no less than Ten Million Dollars ($10,000,000) and shall include a
-17- - P:121266 SC121266 0Y9 05/28/09
III per project aggregate endorsement. The liability limit may be adjusted from time to time with
coverage deemed customary under like conditions.
3. Property Insurance. Yakima shall carry property insurance covering the
Property including all Improvements 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 and also
include Boiler & Machinery coverage. Yakima shall further cause the Property, including all
Improvements, to be insured against the perils of earthquake and flood either as part of the
aforementioned commercial property policy, or under a separate policy or policies so long as
such coverage is available at a commercially reasonable cost and in coverage amounts which are
commercially available, but shall not be in default under this Agreement if coverage is no longer
available, for properties comparable to the Property and the Improvements or is not available at
commercially reasonable premium amounts. Yakima shall be responsible for payment of any
deductibles under said insurance policies and any costs of restoration resulting from Yakima's
failure to maintain insurance with coverage and in the amount required under this Agreement.
B. Insurance Policies. Insurance policies required herein if provided by •the
Contractor rather than the City:
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 "IX" 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
(c) The Parties and their respective officers, officials, employees and
agents are to be covered as additional insureds under all commercial liability policies obtained
under the Ground Lease or this Agreement.
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
(10 days for nonpayment of premiums); (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 carrier waives all rights of subrogation against the
Parties hereto; and (4) an endorsement pursuant to which this insurance is primary and
noncontributory with any insurance carried by the other Party.
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
0 required for strict compliance with this Section VII.
18- P:121266 SC121266 0Y9 05/28/09
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.
C. Adjustments. The types of policies, risks insured, coverage amounts, deductibles
and endorsements may be adjusted from time to time as the District and Yakima may mutually
determine.
VIII. AS IS
A. Acceptance. Except as expressly provided for in this Agreement, Yakima shall
sublease 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 sublease by
Yakima of the Property under this Agreement, Yakima shall be deemed to have accepted the
Property in its then condition 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 therefore, 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.
B. Environmental Contamination. Yakima agrees to indemnify and hold harmless
the District for any environmental contamination existing as of the date of this Agreement. •
Yakima agrees to design and develop 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 during the construction of the Project, Yakima shall be responsible for all
costs of remediating the contaminated soil, and for seeking recovery from responsible parties.
The Parties agree that in the event contaminated soils are encountered during the
construction of the Project and any Party incurs remediation costs, the Parties shall fully
cooperate in pursuing claims against those entities that may be liable.
IX. LIABILITY
During the term of this Agreement, to the maximum extent not prohibited by law, the
District agrees to and shall protect, defend, 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) claims arising from the gross negligence or willful misconduct of
• Yakima, its contractors or subcontractors or their respective officials, servants, employees or
officers.
•
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i X. DESTRUCTION OR CONDEMNATION
A. Total or Partial Destruction.
1. If the Capitol Theatre 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 following such damage or 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 the Project or
repair the damage or to terminate this Agreement by delivery of written notice to the District
within a reasonable time period after the destruction.
2. If Yakima elects not to reconstruct the Project or repair the damage, this
Agreement and the Ground Lease shall terminate and title to the Property shall revert to Yakima
0 pursuant to Section XIII. The District shall deliver possession of the Property in its then
condition to Yakima, along with any Insurance Proceeds paid or payable to District and
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
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 used herein, "substantial" shall be defined as reasonably preventing
the conduct of Yakima's activities. District agrees that all condemnation proceeds shall be paid
to Yakima; provided, however, that the District shall have the right to claim and recover from
the condemning authority such compensation as may be separately awarded or recoverable by
the District for damage or destruction to District's personal property. The District shall pay to
Yakima that portion of its condemnation proceeds, if any, paid to District equal to the amount of
Debt Service on the Outstanding Bonds and Additional Bonds, if any.
XI. RIGHT TO ASSIGN OR OTHERWISE TRANSFER
Except as otherwise provided herein, the District shall not assign or transfer this
Agreement or any interest therein, nor shall this Agreement 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 Yakima, which consent may be withheld or denied by
Yakima in its sole and absolute discretion. "Assign" includes any transfer, whether voluntary or
• involuntary, of any interest in this Agreement and includes transfers to a trustee in bankruptcy,
receiver, or assignee for the benefit of creditors.
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XII. DEFAULT
A. Event of Default of the District. This section shall apply if the District fails to
keep, observe, or perform any of its duties or obligations under this Agreement (an "Event of
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 any 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 exercise remedies
as a result of such 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 by the District and to
obtain a judgment or order specifically prohibiting a violation or breach of any such term or •
provision of this Agreement by the District without, in either case, being required to prove or
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• 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 as a result of the occurrence of an Event of Default by District hereunder.
3. Terminate for Default.
(a) Yakima shall be entitled to immediately terminate this Agreement
if any Event of Default by the District continues for a period of 30 days after written notice
thereof from Yakima to the District, or in the case such Event of Default which cannot with due
diligence and in good faith be cured within 30 days, the District fails to proceed within such 30
day period to cure such Event of Default or fails to diligently and in good faith prosecute such
cure to completion; provided, that in such event additional time to cure may be granted 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
r Yakima for any amounts paid pursuant to Section I1I(C).
(ii) Immediately terminate the Ground Lease.
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
occurrence of an Event of Default by the District hereunder and to recover all such direct
damages, costs and expenses, including reasonable attorneys' fees costs.
B. No Waiver 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 by the District
hereunder shall be implied from any failure 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.
• •
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C. Termination
Notwithstanding anything to the contrary contained in this Agreement:
1. Termination by Mutual Agreement Prior to Beneficial Occupancy. 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 Title to Property to Yakima. In the event that this Agreement
terminates prior to Beneficial Occupancy, Yakima may immediately terminate the Ground Lease
and reenter and retake possession of 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 filed against the Property or upon the Project (or
claims which with notice or passage of time or both would mature into a lien).
Yakima shall thereafter be vested in, and entitled to retain fee title to the Property and all
Improvements, including the Capitol Theatre 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
fee title of the Property and Improvements in Yakima:
1. As Is (Section VIII);
2. Liability (Section IX); and
3. Destruction or Condemnation (Section X).
•
-23- PA21266 SC121266 0Y9 05/28/09
• XIV. REPRESENTATIONS AND WARRANTIES
A. Yakima's Representations. Yakima hereby represents and warrants to the District
that 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 statutory right, power and authority to enter into this
Agreement and perform in accordance with its terms and provisions; that the parties signing this
Agreement on behalf of the District have the authority to bind the District and to enter into this
transaction; and that 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 all or a portion of the Bonds and
Additional Bonds are to be issued as tax - exempt obligations. The District covenants that it will
not make any use of the proceeds from the sale of such tax- exempt Bonds or Additional Bonds
or any other money or obligations of Yakima that may be deemed to be proceeds of such Bonds
or Additional Bonds pursuant to Section 148(a). of the Code that will cause such Bonds or
0 Additional Bonds to be "arbitrage bonds" within the meaning of said Section and said
regulations, or act or fail to act in a manner that will cause such Bonds or Additional Bonds to be
considered obligations not described in Section 103(a) of the Code.
XV. LEASE BACK
A. Sublease. The District hereby leases to Yakima and Yakima hereby leases from
the District the Property and the improvements thereon, including but not limited to the Capitol
Theatre as constructed, expanded, rehabilitated, and improved by the Project. Such Property is
subject to all easements, reservations, encumbrances and restrictions of record, including in
particular that certain Ground Lease between Yakima, as lessor, and the District, as lessee.
B. Rent. Within 60 days following the date of this Agreement, Yakima shall pay to
the District $50, which represents prepaid rent for the entire term of this Agreement.
C. Ground Lease Obligations Assumed. Except as otherwise provided herein,
Yakima agrees to assume all duties and obligations of the District under the Ground Lease.
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.
-24- P:121266 SC121266 0Y9 05/28/09
B. Construction. All pronouns and 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
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. 2 Street
Yakima, WA 98901
With a copy to: Jeffrey Cutter, Esq.
City Attorney
City of Yakima
129 N. 2 Street
Yakima, WA 98901
To the District: Yakima Regional Public Facilities District
Attn: President
10 N. 8th Street
Yakima, WA 98901
F. Incorporation by Reference. All exhibits and appendices annexed hereto are
hereby incorporated by reference herein.
•
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0 G. Execution in Counterparts.
1. 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. Limited Obligation of the District. The District is organized pursuant to
RCW 35.57.010, the Interlocal Agreement by and among the City of Yakima, Washington, the
City of Selah, Washington and the City of Union Gap, Washington, dated June 25, 2001 (the
"Interlocal Agreement "), Ordinance No. 2001 -28 of the City of Yakima, Ordinance Nos. 2298
and 2300 of the City of Union Gap, and motion of the City of Selah City Council approved on
June 12, 2001. The Interlocal Agreement provides as follows: "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 Cities of Yakima,
Selah or Union Gap, their assets, credit, or services, on account of any debts, obligations,
liabilities or acts or omissions of the District."
• I. 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
waiver by such Party of any other covenant, condition, or promise hereunder. The waiver by
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.
J. 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.
K. Severability. If any term or provision of this Agreement or the application thereof
to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of
this Agreement 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.
L. 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.
111
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M. Amendments. This Agreement may be amended, only with the written consent of
0
the Parties.
N. Memorandum of Agreement. Neither Yakima nor District shall record this
Agreement without the consent of the other Party; provided, however, that either Yakima or
District shall have the right to record a Memorandum of this Agreement in the form attached
hereto as Exhibit D (the "Memorandum ") in the real property records of Yakima County,
Washington and the parties shall cooperate in the execution of such Memorandum.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
day and year first above written.
DATED this day of , 2009.
CITY OF YAKIMA YAKIMA REGIONAL PUBLIC
FACILITIES DISTRICT
By By
Richard A. Zais, Jr. President
City Manager Board of Directors
0
Attest:
City Clerk
Approved as to form:
City Attorney
III
-27- P:121266 SC\21266 0Y9 05/28/09
• • STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA )
I certify that I know or have satisfactory evidence that Richard A. Zais, Jr., is the person •
who appeared before me, and said person acknowledged that he signed this instrument, on oath
stated that he was authorized to execute the instrument and acknowledged it as the City Manager
of the City of Yakima, a Washington municipal corporation, to be the free and voluntary act of
such party for the uses and purposes mentioned in the instrument.
Dated: , 2009.
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
President of the Yakima Regional Public Facilities District, a Washington public facilities
district to be the free and voluntary act of such party for the uses and purposes mentioned in the
instrument.
Dated: , 2009.
Notary Public
Print/Type Name .
My commission expires
• (Use this space for notarial stamp /seal)
•
-20= P:\21266 SC\21266 0Y9 05/28/09
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
Lots 29, 30, 31 and 32, Block 71, Town of North Yakima, now Yakima, Washington, according
to the official plat thereof recorded in Volume "A" of Plats, page 10, and re- recorded in
Volume "E" of Plats, page 1, records of Yakima County, Washington.
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• EXHIBIT B
DEBT SERVICE SCHEDULE
(To be attached and incorporated into the Agreement at the time that the Bonds and any
Additional Bonds are issued)
410
•
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EXHIBIT C
LEGAL DESCRIPTION OF ADDITIONAL LAND
Lots 1 and 2, Block 71, of TOWN OF NORTH YAKIMA, now Yakima, recorded in Volume
"E" of Plats, Page 1, records of Yakima County, Washington.
411
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•
EXHIBIT D
MEMORANDUM OF DESIGN, DEVELOPMENT,
CONSTRUCTION, FINANCING, LEASE AND OPERATING AGREEMENT
(attached)
•
4110
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RECORDED AT THE REQUEST
0
OF AND WHEN RECORDED
RETURN TO:
K &L PRESTON GATES ELLIS
925 4 Avenue, Suite 2900
Seattle, WA 98104
Attention: Deanna Gregory, Esq.
MEMORANDUM OF DESIGN, DEVELOPMENT,
CONSTRUCTION, FINANCING, LEASE AND OPERATING AGREEMENT
This Memorandum of Design, Development, Construction, Financing, Lease and
Operating Agreement ( "Memorandum "), dated as of , 2009, is entered into by
and between the YAKIMA REGIONAL PUBLIC FACILITIES DISTRICT (the "District "), a
public facilities district created by the City of Yakima, the City of Selah and the City of Union
Gap, Washington, and the CITY OF YAKIMA, WASHINGTON (the "City "), a municipal
corporation and first class city of the State of Washington.
RECITALS
ID
A. The City and the District have entered into that certain Ground Lease Agreement
dated as of , 2009 (the "Ground Lease "), pursuant to which the City, as lessor, has
agreed to lease to the District, as lessee, certain real property and improvements thereon
including the Capitol Theatre, located in Yakima County, State of Washington, as more
particularly set forth in Exhibit A attached hereto (the "Property ").
B. The District and the City have entered into that certain Design, Development,
Construction, Financing, Lease and Operating Agreement dated as of , 2009 (the
"Development Agreement "), pursuant to which the City has agreed to lease -back the Property
from the District for the purpose of assisting with the design, development, acquisition,
construction, operation, financing, rehabilitation, improvement and management of the Capitol
Theatre.
C. The District and the City desire now to execute and record this Memorandum to
evidence the Development Agreement.
AGREEMENT
1. Pursuant to the Development Agreement, the District leases to the City that
certain real property and all appurtenances described in the attached Exhibit A.
410 2. This Memorandum is made upon all of the terms, covenants and conditions set
forth in the Development Agreement, all of the terms and conditions of which are incorporated
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here as though set forth in full. The Development Agreement shall expire on the later of the date
that the bonds and any additional bonds issued by the City for the purpose of financing the
construction, improvement and rehabilitation of the Capitol Theatre are no longer outstanding
and the date on which the sales tax collected by the District pursuant to RCW 82.14.485 expires.
3. The District and the City have entered into this Memorandum in order that third
parties may have notice of the existence of the Development Agreement and some of its specific
provisions. This Memorandum is not a complete summary of the Development Agreement.
This Memorandum is not intended to amend, modify, or otherwise change the terms and
conditions of the Development Agreement. Provisions in this Memorandum shall not be used in
interpreting the provisions of the Development Agreement. In the event of a conflict between
this Memorandum and the Development Agreement, the Development Agreement shall control.
This Memorandum is made as of , 2009.
[Signature page follows]
•
•
•
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SIGNATURE PAGE
to Memorandum of Design, Development,
Construction, Financing, Lease and Operating Agreement
IN WITNESS WHEREOF, the parties have executed this Memorandum as of the date set
forth above.
YAKIMA REGIONAL PUBLIC
FACILITIES DISTRICT, as lessor
By
President
Board of Directors
CITY OF YAKIMA, as lessee
By • Richard A. Zais, Jr.
City Manager
•
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• STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA )
I certify that I know or have satisfactory evidence that Richard A. Zais, Jr., is the person
who appeared before me, and said person acknowledged that he signed this instrument, on oath
stated that he was authorized to execute the instrument and acknowledged it as the City Manager
of the City of Yakima, a Washington municipal corporation, to be the free and voluntary act of
such party for the uses and purposes mentioned in the instrument.
Dated: , 2009.
•
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
President of the Yakima Regional Public Facilities District, a Washington public facilities
district to be the free and voluntary act of such party for the uses and purposes mentioned in the
instrument.
Dated: , 2009.
Notary Public
Print/Type Name
My commission expires
• (Use this space for notarial stamp /seal)
•
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•
•
Exhibit A to
to Memorandum of Design, Development,
Construction, Financing, Lease and Operating Agreement
LEGAL DESCRIPTION OF PROPERTY
Lots 29, 30, 31 and 32, Block 71, Town of North Yakima, now Yakima, Washington, according
to the official plat thereof recorded in Volume "A" of Plats, page 10, and re- recorded in
Volume "E" of Plats, page 1, records of Yakima County, Washington.
111
•
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RESOLUTION B
•
•
ill RESOLUTION NO. R- 2009 -_
A RESOLUTION of the City of Yakima, Washington, authorizing one
or more draws in the aggregate principal amount of not to exceed
$4,500,000 from the City's line of credit to fund costs associated
with the construction, rehabilitation, and improvement of the
Capitol Theatre.
WHEREAS, the City Council of the City of Yakima, Washington (the "City ") passed
Ordinance No. 97 -29 on May 6, 1997 establishing a line of credit in the aggregate principal
amount of not to exceed $5,000,000 to provide funds for various City capital projects; and
WHEREAS, the City issued its Limited Tax General Obligation Bond, 1997 ( KeyBank
Line of Credit), dated June 9, 1997 (the "Bond "), to KeyBank National Association (the "Bank ")
to evidence the line of credit; and
WHEREAS, Ordinance No. 2002 -31 of the City, passed on May 21, 2002, amended
III certain terms of Ordinance No. 97 -29, including extending the maturity date of the Bond until
June 1, 2007; and
WHEREAS, Ordinance No. 2007 -19 of the City, passed on April 17, 2007, further
amended certain terms of Ordinance No. 97 -29, including extending the maturity date of the
Bond until June 1, 2012; and
WHEREAS, Section 11 of Ordinance No. 97 -29, as amended by Ordinance No. 2002 -31
and Ordinance No. 2007 -19 (together, the "Ordinance "), authorizes the City to draw on the Bond
in a minimum amount of $10,000 subject to the approving legal opinion of bond counsel; and
WHEREAS, the City currently owns and operates the Capitol Theatre, a performing arts
and special events center, and is working with the Yakima Regional Public Facilities District (the
"District ") on the expansion, rehabilitation and improvement of the Capitol Theatre (the
ip "Project "); and
WHEREAS, the Capitol Theatre, as expanded, rehabilitated and improved by the Project,
0
will serve as a "regional center" under RCW 35.57.030; and
WHEREAS, construction of the Project commenced on June 30, 2008, in satisfaction of
the requirement of RCW 82.14.485(1) that rehabilitation of an existing regional center be
commenced prior to January 1, 2009; and
WHEREAS, the District, as authorized by RCW 82.14.485, imposed a 0.025% sales and
use tax (the "Sales Tax "), effective . January 1, 2008, to assist in financing the design,
development, acquisition, construction, operation, rehabilitation, improvement and management
of the Capitol Theatre; and
WHEREAS, the Sales Tax operates to shift 0.025% of the retail sales and use taxes
generated within the District boundaries to the District; and
• WHEREAS, the City intends to issue bonds and apply bond proceeds to finance the
Project, in consideration of the District's pledge of all Sales Tax receipts to the City to pay debt
service on the bonds and other Project costs; and
WHEREAS, to provide interim financing for costs of the Project, the City hereby finds it
in the best interest of the City to authorize one or more draws on the Bond in the aggregate
principal amount of not to exceed $4,500,000 as further provided herein;
NOW, THEREFORE, BE IT RESOLVED BY the City of Yakima, Washington, as
follows:
Section 1. Authorization of Draws. In accordance with Section 11 of Ordinance
No. 97 -29, as amended (the "Ordinance "), the City Council hereby authorizes one or more draws
on the City's Limited Tax General Obligation Bond, 1997 (KeyBank Line of Credit) (the
le "Bond ") in the aggregate principal amount of not to exceed $4,500,000, to provide funds for the
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• construction, rehabilitation, and improvement of the Capitol Theatre (the "Project "). The
outstanding principal balance of the draws shall bear interest and shall be payable as provided in
the Ordinance. All proceeds received from draws on the Bond pursuant to this authorization
shall be deposited into the fund or account designated by the Director of Finance and Budget and
used to finance costs of the Project. The City hereby authorizes to the Director of Finance and
Budget to take any actions and execute such documents as may be necessary and required by the
Bank to complete such draws and to carry out the terms of this resolution'
Section 2. Authorization of Bonds. For the purpose of providing funds necessary to
repay the Bond and to provide long -term financing for the Project, the City Council is hereby
authorized to issue limited tax general obligation bonds (the "Bonds ") in such amount and form
and with such terms, as shall be determined by ordinance of the City Council. The proceeds of
t he Bonds shall be paid into the proper accounts held by the City and applied, together with other
available funds, in amounts sufficient to repay the Bond.
Section 3. Provision for Tax Levy Payments. Pursuant to Section 8 of the Ordinance,
the City has irrevocably covenanted and agreed that for as long as the Bond is outstanding and
unpaid, each year it will include in its budget and levy ad valorem taxes upon all the property
within the City subject to taxation in an amount that will be sufficient to pay the principal of and
interest on the Bond as the same shall become due and payable. The City hereby also
irrevocably pledges the sales and use tax levied pursuant to RCW 82.14.485 and hotel /motel
taxes levied pursuant to chapter 67.28 RCW and all other revenues and money of the City legally
available for such purposes, toward the payment of principal of and interest on the Bond as the
same shall become due and payable.
Ill
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Section 4. General Authorization; Ratification of Prior Acts. The Director of
Finance and Budget and other appropriate officers of the City are authorized to take any actions
and to execute documents as in their judgment may be necessary or desirable in order to carry
out the terms of, and complete the transactions contemplated by, this resolution. All acts taken
pursuant to the authority of this resolution but prior to its effective date are hereby ratified.
Section 5. This resolution shall be in effect from and after its adoption in accordance
with law. -
ADOPTED at a regular meeting of the City Council of the City of Yakima, Washington,
this 2 day of June, 2009.
CITY OF YAKIMA, WASHINGTON
David Edler, Mayor
1111
ATTEST:
Deborah J. Moore, City Clerk
APPROVED AS TO FORM:
City Attorney
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•K&L GATES K &t Preston Gates Ellis «P
925 Fourth Avenue
Suite 2900
Seattle, WA 98104 -1158
T 206,623.7580 www.klgates.com
June 2, 2009
City of Yakima
Yakima, Washington
KeyBank National Association
Re: Request for Draw on the City of Yakima, Washington, Limited Tax General Obligation
Bond, 1997 (KeyBank Line of Credit)
Ladies and Gentlemen:
• We have acted as bond counsel for the City of Yakima, Washington (the "City "), in
connection with its Limited Tax General Obligation Bond, 1997 (KeyBank Line of Credit),
originally issued in the aggregate principal amount of not to exceed $5,000,000 (the "Bond "),
establishing a line of credit with KeyBank National Association (the "Bank ") to provide funds
for acquiring and constructing various City capital projects. The Bond was issued pursuant to
Ordinance No. 97 -29 of the City passed on May 6, 1997, as amended by Ordinance No. 2002 -31,
as further amended by Ordinance No. 2007 -19 (collectively, the "Bond Ordinance "). Pursuant to
the Bond Ordinance, draws on the line of credit are subject to the prior written approval of bond
counsel to the City. Pursuant to a resolution of the City adopted on June 2, 2009 (the
"Resolution "), the City has authorized and intends to make one or more draws on the Bond in an
aggregate principal amount of not to exceed $4,500,000 to provide interim financing for the
construction, rehabilitation and improvement to the City's Capitol Theatre (the "Project ").
Based upon our examination of the Bond Ordinance, the Resolution and other documents
that we believe to be necessary, it is our opinion that the City's draws on the Bond for the Project
are consistent with the Bond Ordinance and are consistent with the tax - exempt status of the
Bond.
Very truly yours,
K &L PRESTON GATES ELLIS
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