BOARD OF SUPERVISORS BUSINESS MEETING ACTION ITEM

Transcription

1 BOARD OF SUPERVISORS BUSINESS MEETING ACTION ITEM Date of Meeting: March 22, 2018 # 19 SUBJECT: ELECTION DISTRICT(S): Incentive for American Real Estate Partners to Support the Recruitment of the General Services Administration and Customs and Border Protection Broad Run CRITICAL ACTION DATE: At the pleasure of the Board STAFF CONTACT(S): Buddy Rizer, Executive Director, Department of Economic Development PURPOSE: The purpose of this item is to present to the Board of Supervisors a recommended incentive package utilizing a 15-year grant from the Economic Development Authority (EDA) for the purposes of locating a major Customs and Border Protection (CBP) technology and research facility at Quantum Park in Ashburn. RECOMMENDATION(S): Staff recommends the Board support a resolution for an EDA incentive grant backed by a moral obligation from the Board of Supervisors (Board) to make annual appropriations to the EDA to support the recruitment of the consolidation of CBP offices in Loudoun County, including its Information Technology Group. BACKGROUND: The General Services Administration (GSA) requested proposals for 501,000 rentable square feet (RSF) for the consolidation of its Customs and Border Protection (CBP) offices in Northern Virginia, including its Information Technology Group. The requirement would accommodate a workforce of 3,700 engineers, technician, scientists and support personnel. CBP is a part of the Department of Homeland Security (DHS) who oversees all aspects of CBP s operations and facilities. DHS has recently undertaken a consolidation of its DC operations in a newly constructed state of the art HQ facility at the St. Elizabeth campus in upper Northeast Washington DC, including a new facility for the DC portion of CBP. All of this has highlighted the importance of the Northern Virginia consolidation for the agency. Working with Loudoun Economic Development (DED), American Real Estate Partners (AREP) proposed Quantum Park (formerly known as the Verizon Campus) as the new Northern Virginia offices for CBP. The requirement called for a base lease of 15 years with one or more 10 year options. GSA requested that occupancy take place by summer of 2020 to coordinate several existing and expiring leases. Quantum Park presented an ideal solution as the ability to modify an

2 Item # 19, Incentive for American Real Estate Partners Board of Supervisors Business Meeting March 22, 2018 Page 2 existing very high quality facility to meet the CBP s requirements can be accomplished in a much shorter time frame than new development. The CBP requirement has been established with a Level Four Security standard, which will entail several significant improvements and enhancements to the existing buildings, loading docks (substantially modified to security standards) and other aspects including the two new entrance pavilions that would be added to the existing buildings and provide for controlled access for CBP employees and guests. To consider Quantum Park as an alternative to new construction, the GSA will require several modifications to Quantum Park so that it complies with GSA s stated requirements for CBP. First, CBP plans to have over 3,700 employees working on site and with the reduction in space needs to house them at a much higher density than prior GSA standards. This will cause the developer to make enhancements in several areas, for example, to the existing HVAC to accommodate the higher density in the office areas and for the bathrooms to redesign and expand from what was a more traditional density. Second, GSA has requested that no more than two buildings be offered to meet the 501,000 RSF. Quantum Park has four interconnected pods (B1, B2, C1 & C2) that total 580,000 RSF but the GSA felt that this did not provide sufficient interconnectivity to meet the CBP requirements. For Quantum Park to comply with the minimum standards, AREP engaged Gensler to design infills between the respective pods that would slightly increase the office areas and create the interconnectivity sought by the GSA and CBP, allowing them to accept the proposed space as one building. Further, the expansion infills of approximately 63,000 SF, allowed AREP to propose three of the four pods (B1, B2 & C2) as meeting the minimum space requirements of 501,000 RSF and leave the remaining C1 pod for either future CBP expansion or for leasing to government contractors among potential alternatives for the building. CBP also requires a much higher than normal parking ratio for its employees. While it anticipates that Metro will be a critical part of their employee s commutes, they have requested over 2,800 parking spaces. Quantum Park does not have that amount of parking available in its existing garages for the B and C pods and will need to build the additional parking, predominately in surface lots adjacent to the existing buildings. GSA also requested that the offerors provide allowances of $150 per Usable SF for tenant fit out and $35 per usable square foot for additional security improvements specific to their use (such as perimeter fencing not provided by the landlord). The GSA also required that an area of 15,500 SF usable SF be offered with a mechanical system that met certain standards for an electronic lab space and provided for 24x7 conditioning. The existing build outs in the C2 pod are to be demolished and brought up to a GSA warm lit shell standard level of improvements (includes HVAC, ceiling and lights) before GSA applies any of its allowances. From the initial negotiations until present day AREP has worked with County staff on the below detailed incentive package in AREP s efforts to be the successful bidder on the project. On December 1, 2017, the Senate Environment and Public Works Committee approved the Customs and Border Protections Service GSA prospectus and on December 15, 2017, AREP received notice of their successful offer for the CBP.

3 Item # 19, Incentive for American Real Estate Partners Board of Supervisors Business Meeting March 22, 2018 Page 3 ISSUES: Per the County s adopted incentive guidelines, staff uses estimated property tax revenue as a basis for negotiating incentives. Because the end-user of this project is a federal agency, a traditional incentive package would not be viable. Instead, Staff recommends a program that provides AREP with a grant over 15 years based on a percentage of the New Taxable Real Estate Investment to allow AREP to reduce lease costs to a competitive level. Additionally, AREP has requested assistance, per GSA guidelines, for providing shuttle service to Quantum Park from the nearest Metro station. The Code of Virginia authorizes the Board to appropriate money to the EDA for the purpose of promoting economic development in the County. The Code also authorizes the EDA to make grants of money to business and governmental entities for the purpose of promoting economic development. Consistent with the authority granted to the Board and the EDA in the Virginia Code, and consistent with the Board s past practices of appropriating money to support the EDA s efforts to promote economic development in the County, the following proposed incentive package has been prepared for consideration by the Board and the EDA: The EDA will execute an Incentive Grant Agreement with Quantum Park LLC ( Quantum Park ), which is the landlord under the proposed GSA Lease, pursuant to which the EDA will make an annual grant to Quantum Park in the amount of $1,650,000 over the 15 year lease term (Attachment 2). The grant agreement would terminate if either Quantum Park s lease with GSA is terminated early, or if Quantum Park fails to pay its real estate and special district taxes each year. The Board will adopt a resolution reflecting its support of the EDA s efforts to promote economic development in the County, including the proposed incentive agreement with Quantum Park; and stating its intent to continue its practice of appropriating money to the EDA to support its economic development programs (Attachment 1). The County will execute an agreement with Quantum Park, whereby the County agrees to provide bus service between Quantum Park and the closest Metrorail station, at no cost to CBP employees, during the term of the lease (Attachment 3). PROPOSED INCENTIVE PACKAGE OVERVIEW: In evaluating the total incentive to the investment staff used the following information as a guideline to the projected costs to get the buildings ready for occupancy, and to complete the buildout to the GSA requirements detailed above: The tenant improvement and BSAC allowance amortization makes up about $10.91 psf of the $38.25 psf rental rate The construction schedule would cover about 2.5 years and cost approximately $175,066,768 The above investment amounts do not include financing costs and carry as it is contemplated as a cash investment. Financing the project would add another projected $3,500, The Board may also wish to consider other financial impacts when considering this deal. The Department of Economic Development (DED) utilizes the IMPLAN input-output model with data

4 Item # 19, Incentive for American Real Estate Partners Board of Supervisors Business Meeting March 22, 2018 Page 4 specific to Loudoun County as of 2016 to estimate economic impacts related to industry change. IMPLAN models the direct, indirect and induced impacts for employment and economic activity. IMPLAN Findings The direct impact of locating the CBP facility in Ashburn is estimated at $179M for construction and outfitting the buildings in the first year, along with $877M per year for operations with between 3,600 and 3,700 employees based at the facility on an ongoing basis. The facility will have approximately 500,000 occupied rentable square feet, with employees primarily focused on computer systems, research, and related activities. These are the set of assumptions applied to the IMPLAN model. The indirect impact of adding the CBP facility is estimated at $27M for construction and outfitting the buildings in the first year, along with $211M per year for operations. The indirect impacts constitute local industries buying goods and services from other local industries to support the business activity of the CBP facility. The induced impact of adding the CBP facility is estimated at $45M for construction and outfitting the buildings in the first year, along with $286M per year for operations. This is the economic activity that occurs through local spending of income generated by the industry change. Estimated Economic Activity of CBP Construction & Building fit-out (One-Time) Impact Type Employment Output Direct Effect 1,183 $ 179,000,000 Indirect Effect 140 $ 27,214,720 Induced Effect 308 $ 44,542,930 Total Effect 1,631 $ 250,757,650 Estimated Economic Activity of CBP Operations (per year, ongoing) Impact Type Employment Output Direct Effect 3,600 $ 796,276,000 Indirect Effect 1,427 $ 211,229,112 Induced Effect 2,004 $ 286,474,443 Total Effect 7,031 $1,293,979,555 Additionally, AREP has requested assistance, per GSA guidelines, for providing shuttle service to Quantum Park from the nearest Metro station. Based on the required timing of this service, the projected number of employees, and the options for fulfilling this requirement, DTCI has provided the following analysis:

5 Item # 19, Incentive for American Real Estate Partners Board of Supervisors Business Meeting March 22, 2018 Page 5 The required transit service schedule accommodates transit capacity equivalent to 750 passenger trips per day. Assuming 240 federal workdays per calendar year translates to 180,000 passengers per year capacity. Upon the start of revenue service at the Metrorail stations in Loudoun County, existing Routes 72 and 990 will be moved from the Wiehle-Reston East Metrorail station to the Ashburn Metrorail Station. Route 72 will travel from the Ashburn station to the George Washington University and the One Loudoun park and ride lot via Loudoun County Parkway with 15 to 20 minute headways during the am and pm peak periods, and 30 to 40 minute headways during the mid-day. Route 990 will travel from the Ashburn Metrorail station to Quantum Park and other employment sites along Pacific Blvd with 20 to 25 minute headways during the am and pm peak periods. Route 72 can easily be modified to serve Quantum Park on its regular route and would meet the GSA transit demand for this Economic Development Prospect. Although Route 990 is planned to operate with a 20 passenger bus; these trips would be over and above the GSA s transit demands. Should this become an issue, the equipment used on this route can be upgraded to a 30 passenger bus at the same operating cost per hour. Fare Analysis: The fare charged for a transit customer on either the Route 72 or 990 would be $1.00 per trip. The following table summarizes the value of fare collection lost in order to provide the service listed herein: Percent Utilization (Annual Average) Value of Fare Revenue Lost per Agreement 100 percent utilization $180, percent utilization $135, percent utilization $90, percent utilization $63,000 Why collaborating on transit with this GSA Prospect matters: Partnering with potential Loudoun County employers on public transportation services is vital to the county in many ways. The services provide mobility, can shape land use development patterns, generate jobs and enable economic growth and support public policies regarding energy use, air quality and carbon emissions. Should this Economic Development prospect agree to reside in Loudoun County, the existing transit options to the site could potentially remove 180 to 360 vehicle trips per day from Loudoun County roads. Assuming these employees would be coming from the Washington DC area, this would equate to 1.37 million to 2.75 million passenger miles per year being removed from the road network. The current net cost per passenger on the Route 72 is $10.92 per day. If only 90 (2.5% of total) employees were to ride the commuter buses to Quantum Park, the net cost per passenger on Route 72 would be reduced from $10.92 to $4.11 even with no additional revenue. Additionally, Routes 72 and 990 support the Board guidance to Incentivize transit services to the Metrorail Stations.

6 Item # 19, Incentive for American Real Estate Partners Board of Supervisors Business Meeting March 22, 2018 Page 6 FISCAL IMPACT: Based on the above analysis, if the Board agrees to the incentive agreement as proposed in June of 2017 the total impact over the 15-year lease would be $24,750, Additionally, the County s yearly transportation costs could range from $63,000-$180,000 in lost fare recovery based on the utilization rate of CBP employees, but the County would not incur additional transportation operating costs to accommodate the GSA shuttle service requirements than those expenses already allocated for existing routes. ALTERNATIVES: The Board may choose not to support the total incentive amount or the resolution in support of the EDA entering into an agreement for execution of the 15-year grant. DRAFT MOTIONS: 1. I move that the Board of Supervisors approve the proposed Resolution Supporting the Economic Development Authority of Loudoun County, Virginia, which is included as Attachment 1 to the Board of Supervisors March 22, 2018 Action Item. I further move that the Board of Supervisors approve the proposed Agreement for Bus Service between the County of Loudoun and Quantum Partners LLC, substantially in the form included as Attachment 3 to the Board of Supervisors March 22, 2018 Action Item, and authorize the County Administrator or his designee to execute the agreement in final form approved by the County Attorney or his designee. OR 2. I move an alternate motion. ATTACHMENT(S): 1. Resolution of the Board of Supervisors of Loudoun County Virginia Supporting the Economic Development Authority of Loudoun County, Virginia 2. Incentive Grant Agreement 3. Agreement for Bus Service

7 RESOLUTION OF THE BOARD OF SUPERVISORS OF LOUDOUN COUNTY VIRGINIA SUPPORTING THE ECONOMIC DEVELOPMENT AUTHORITY OF LOUDOUN COUNTY, VIRGINIA WHEREAS, pursuant to the Industrial Development and Revenue Bond Act (the Act ), Chapter 49 of Title 15.2 of the Code of Virginia of 1950, as amended, the Board of Supervisors of Loudoun County, Virginia (the Board ), has created the Economic Development Authority of Loudoun County, Virginia ( EDA ), to promote economic development in Loudoun County (the County ) and for other purposes prescribed in the Act; WHEREAS, pursuant to the Act, the EDA is empowered, inter alia, to make grants to any business or governmental entity in furtherance of the purposes of Act, including for the purposes of promoting economic development; and WHEREAS, pursuant to Virginia Code (B), the Board is empowered to make appropriations of money to the EDA for the purposes of promoting economic development in the County; WHEREAS, the EDA has a history of making grants to attract new businesses and/or employers to the County and to incentivize such businesses and employers to make substantial capital investments in the County; and WHEREAS, the Board has a history of appropriating money to support the EDA s efforts to promote economic development in the County, including to provide funding for incentive grants made by the EDA, and the Board intends to continue this practice in the future; and WHEREAS, the Board is aware that Quantum Park LLC ( QP ) owns certain real property in the County, which QP desires to lease to the U.S. General Service Administration ( GSA ) for a term of 15 years, for development and operation of an approximately 500,000 square foot facility for U.S. Customs and Border Protection Services ( CBP Facility ); WHEREAS, the EDA has negotiated an Incentive Grant Agreement with QP ( QP Incentive ), pursuant to which the EDA would provide to QP an annual grant in the amount of $1,650,000 during the lease term, in order to induce and incentivize QP to execute a 15-year lease with GSA for the CBP Facility; WHEREAS, the CBP Facility is anticipated to generate approximately 3,700 new jobs in the County, to result in increased real estate tax revenues from QP, and to otherwise stimulate increased tax revenues and economic activity in the County; and WHEREAS, the Board desires to commend the EDA for its efforts to promote and encourage economic development in the County; and to announce its support for the QP Incentive. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF SUPERVISORS OF LOUDOUN COUNTY, VIRGINIA: Attachment 1

8 1. The Board commends and supports the EDA s efforts to promote and encourage economic development in Loudoun County, by making cash grants and by other means authorized in the Act; and 2. The Board intends to continue its practice of making appropriations of money to the EDA in accordance with the Act, Virginia Code (B), and other applicable law, in order to sufficiently fund the operations and obligations of the EDA. ATTEST: Phyllis J. Randall, Chairman Board of Supervisors of Loudoun County, Virginia Tim Hemstreet, Clerk to the Board of Supervisors of Loudoun County, Virginia Adopted by the Board of Supervisors of Loudoun County, Virginia, this day of March, 2018.

9 INCENTIVE GRANT AGREEMENT THIS INCENTIVE GRANT AGREEMENT ( Agreement ) is made this day of, 2018 (the Effective Date ) by and between QUANTUM PARK LLC, a Delaware limited liability company ( QP ), and the ECONOMIC DEVELOPMENT AUTHORITY OF LOUDOUN COUNTY, VIRGINIA, a political subdivision of the Commonwealth of Virginia ( EDA ). RECITALS: WHEREAS, QP represents that it owns, or has the exclusive right to own, certain real property located in Loudoun County, Virginia, as described in Exhibit A ( Quantum Park Property ); WHEREAS, QP represents that the U.S. General Services Administration ( GSA ) has identified the Quantum Park Property as the desired location for a new U.S. Customs and Border Protection Services Office of Information Technology Headquarters ( CBP ) facility, and QP has entered into lease negotiations with GSA for such facility (the CBP Facility ); and WHEREAS, QP anticipates that the CBP Facility will occupy approximately 444,595 rentable square feet, which will include approximately 63,000 square feet of new and repurposed space; and WHEREAS, QP anticipates that the CBP Facility will result in total project costs and capital investments in new and existing buildings, as well as related security facilities, in the aggregate amount of $175,066,768 ( Capital Investment ), which is inclusive of total project and capital expenditures by QP and capital expenditures by the U.S. Government (with allowances provided by QP to the U.S. Government) that are subject to the U.S. Government s control; and WHEREAS, QP represents that the U.S. Government will own certain tenant improvements and will own building specific capital related to specialty improvements including but not limited to security enhancements, as part of the CBP Facility; and WHEREAS, the EDA anticipates that development of the CBP Facility at the Quantum Park Property will generate approximately 3,700 new jobs in Loudoun County (the County ), will result in an increased assessed value of the Quantum Park Property, will result in increased real estate tax payments to the County by QP, and will otherwise stimulate increased tax revenues and economic activity in the Quantum Park development and the surrounding areas within the County; WHEREAS, in order to incentivize and induce QP to lease the Quantum Park Property to GSA for a term of at least fifteen (15) years, and to incentivize and induce QP and GSA to make the Capital Investment necessary to develop the CBP Facility at Quantum Park, the EDA intends to provide a grant to QP in an aggregate amount up $24,750,000, payable in annual installments of $1,650,000 over a period of fifteen years, conditioned upon GSA s execution of a lease for, and continued occupancy of the CBP Facility at the Quantum Park Property, and subject to an annual appropriation of funds by the Board of Supervisors of Loudoun County, Virginia ( Board of Supervisors ); and Attachment 2

10 WHEREAS, on March 22, 2018, the Board of Supervisors adopted a resolution commending the EDA for its efforts to promote and encourage economic development in the County; noting its support of the EDA s desire to provide incentives for QP s lease of the Quantum Park Property to GSA, which lease will have a positive impact on economic development in Loudoun County; and reflecting its commitment to provide funding to the EDA on an annual basis to support the EDA s efforts to promote and encourage economic development in the County through the making of cash grants and other means authorized by the Industrial Development and Revenue Bond Act (Chapter 49 of Article 15.2 of the Code of Virginia of 1950, as amended); NOW, THEREFORE, in consideration of the foregoing, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, QP and the EDA do hereby agree as follows. AGREEMENT 1. Incorporation of Recitals. The foregoing recitals are hereby incorporated into this Agreement by this reference. 2. Incentive Payments. In the event QP and GSA enter into a lease for the CBP Facility at the Quantum Park Property for a minimum term of 15 years (the Lease ), the EDA will provide to QP a grant in an aggregate amount up to $24,750,000 ( Maximum Grant Amount ), payable in annual installments of $1,650,000 on January 1 each year ( Annual Incentive Payments ). (As used in this Agreement, the term EDA means the Economic Development Authority of Loudoun County, Virginia, and any successor entity that succeeds to the purpose, powers and obligations of the EDA.) Execution of the Lease is an express condition precedent to EDA s obligation to make the Annual Incentive Payments. The Agreement shall not become effective unless and until the Lease is executed by QP and GSA within 90 days of the date of this Agreement. Further, the EDA s obligation to make the Annual Incentive Payments is subject to the following terms and conditions: (a) (b) (c) The EDA must receive an annual appropriation of funds from the Board of Supervisors that is sufficient to enable the EDA to make each Annual Incentive Payment; the EDA shall not be obliged to make an Annual Incentive Payment in the absence of a sufficient appropriation by the Board of Supervisors. QP must pay the full amount of Loudoun County real property taxes and any applicable special district taxes due for the Quantum Park Property each year, plus all penalties and interest assessed for a late payment (if any), in order to receive the Annual Incentive Payment that would be due on January 1 the following year. The Annual Incentive Payments will commence on January 1, 2021, and will continue for the following fourteen (14) years on each January 1 st, provided that the CBP (or another U.S. Government agency) continues to lease the premises. For example, if the CBP (or another U.S. Government agency) commences its lease in 2020, and provided the other terms and conditions prescribed herein have been satisfied, the first Annual Incentive Payment will be made on January 1, 2021, and the last Annual Incentive Payment will be made on January 1, However, if 2

11 the CBP commences its lease after December 31, 2020, then the first Annual Incentive Payment will be made on the first calendar day of the month following the commencement of the Lease and thereafter on each January 1 st for the following fourteen (14) years. As used herein, the term Incentive Period shall mean the period that commences on January 1 in the year in which the first Annual Incentive Payment is made and continues until (but not including) the date of the last Annual Incentive Payment, for a total of fifteen (15) Annual Incentive Payments. (d) This MOA will terminate and the EDA will cease to make the Annual Incentive Payments in the event that (i) the Lease is terminated or declared void for any reason; or (ii) as prescribed in Section 5, QP files an administrative or judicial appeal challenging the assessed value of the Quantum Park Property for any year during the Incentive Period. 3. U.S. Government Benefits. The Lease will include a provision that QP must provide the full benefit of the Annual Incentive Payments received by QP from the EDA to the U.S. Government. QP may use the Annual Incentive Payments for any lawful purpose that is consistent with the terms and conditions of the Lease. 4. Project and Capital Costs. In order to facilitate an accurate annual assessment of the Quantum Park Property and the CBP Facility by the Loudoun County Commissioner of the Revenue (the Commissioner ), QP covenants and agrees that the Commissioner will have the benefit of seeing the detail all of project and capital costs invested by QP in the CBP Facility, including any allowances provided to the U.S. Government. QP will work to diligently to provide such detail as it may have with respect to any U.S. Government work at the Quantum Park Property, subject to any security requirements in sharing such information publicly. 5. Limited Covenant Not to Appeal. (a) As currently configured on the Effective Date, the Quantum Park Property is comprised of three parcels designated by the following Parcel Identification Numbers (PINs): (Land Unit C2), (Unit C2), and (Land Unit GC), as well as the portion of the convertible/withdrawable land designated as PIN required for the CBP/GSA transaction as more particularly described in Exhibit A. The assessed value of the Quantum Park Property for calendar year 2018 is the base assessment ( Base Assessment ). Following the Effective Date, the Commissioner and QP shall review the 2018 assessment for the parcels that comprise the Quantum Park Property and shall agree upon the Base Assessment amount for purposes of this Agreement, based upon an appropriate proration of the assessment for the parcel designated by PIN Notwithstanding anything in this Agreement to the contrary, QP reserves all rights to file either an appeal to the Board of Equalization ( BOE ) or a judicial appeal challenging the assessment of the Quantum Park Property for any year that is not within the Incentive Period. (b) The EDA has agreed to make the Annual Incentive Payments to QP, in part, in reliance on QP s representations regarding the Lease and the Capital Investment, and the expectation that the Lease and the Capital Investment will result in an increased assessed value for the Quantum Park Property. Therefore, as a condition of receiving the Annual Incentive Payments, 3

12 QP covenants and agrees that, during the Incentive Period, so long as the assessed value of the Quantum Park Property does not exceed the sum of the Base Assessment plus the Capital Investment in any year during the Incentive Period, QP shall not file either an appeal to the BOE or a judicial appeal challenging the annual assessment of the Quantum Park Property (or any portion thereof) by the Commissioner. In the event that either a BOE or a judicial appeal is filed for any year during the Incentive Period, and the assessed value of the Quantum Park Property is less than the sum of the Base Assessment plus the Capital Investment, this Agreement shall terminate and QP shall forfeit its right to receive any further Annual Incentive Payments. For the avoidance of doubt, this Section 5 applies only to the Quantum Park Property (as that term is defined in Exhibit A) or any portion thereof. Furthermore, this Section 5 does not apply to, and shall not limit QP s right to pursue, an application to the Commissioner for correction of an assessment pursuant to Virginia Code and , as amended. (c) Notwithstanding anything in this Agreement to the contrary, in the event QP files a BOE or judicial appeal that violates the limited covenant contained in this Section 5, the EDA shall provide written notice to QP ( Violation Notice ), and QP shall have a period of thirty (30) days to dismiss the appeal. If QP fails to dismiss any appeal that violates the limited covenant within thirty (30) days after receiving the Violation Notice, this Agreement shall terminate and QP shall forfeit its right to receive any further Annual Incentive Payments. QP shall be solely responsible for providing documentation to the EDA demonstrating that an appeal has been timely dismissed. MISCELLANEOUS 6. Notices. Any notices given regarding the terms of this Agreement shall be sent as follows: If to QP: Quantum Park LLC c/o American Real Estate Partners 2350 Corporate Park Drive, Suite 110 Herndon, VA Attn: Scott Sterling, Esq. ssterling@americanrepartners.com With a copy to: Cooley LLP Freedom Drive Reston, Virginia Attn: Mark C. Looney, Esq. mlooney@cooley.com 4

13 If to the EDA: Economic Development Authority of Loudoun County Central Station Drive, Suite 300 Ashburn, Virginia Attn: Chairman With a copy to: Office of the County Attorney 1 Harrison Street, S.E., Fifth Floor P.O. Box 7000 Leesburg, Virginia Attn: Courtney R. Sydnor, Counsel to EDA courtney.sydnor@loudoun.gov 7. Remittance of Incentive Payments. The EDA shall forward the Annual Incentive Payments to QP or to such other person, entity or escrow agent as QP may designate in writing. In the absence of alternative written instructions received from an authorized representative of QP, the Annual Incentive Payments will be made payable to QP and forwarded to the notice address specified in Section Counterparts. This Agreement shall be executed in duplicate, and may be executed in counterparts each of which shall be deemed an original, but which together shall constitute one and the same instrument. 9. Amendment. Except as expressly provided in Sections 2, 5 and 10 herein, this Agreement may be amended, rescinded or terminated only by the mutual written agreement of QP and the EDA. 10. Termination. In the event GSA awards a lease for the CBP Facility to another property which is not the Quantum Park Property, this Agreement shall automatically terminate upon such lease award and shall be of no further force or effect. Further, this Agreement shall automatically terminate and be of no further force or effect if GSA fails to enter into or terminates the Lease for the CBP Facility (provided, however, that the assignment of the Lease to another U.S. Government agency or the occupancy or use of the CBP Facility by another U.S. Government agency shall not constitute a termination of the Lease). 11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia. 12. Recordation. QP may record this Agreement among the land records of Loudoun County, Virginia, and it shall be binding upon the parties, their successors and assigns. 13. Captions. The captions set forth in this Agreement are intended for ease of reference only and shall have no force or effect in the interpretation of this Agreement. 5

14 14. Validity and Severability. If any term, provision, or condition contained in this Agreement shall to any extent be deemed invalid or unenforceable by a judgment or court order, the remainder of this Agreement shall not be affected thereby, and each term, provision, and condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the Effective Date set forth above. [SIGNATURE PAGES FOLLOW] 6

15 ECONOMIC DEVELOPMENT AUTHORITY OF LOUDOUN COUNTY, VIRGINIA a political subdivision of the Commonwealth of Virginia By: Name: Brian Chavis Title: Chairman COMMONWEATLH OF VIRGINIA, COUNTY OF LOUDOUN, TO-WIT: I,, a notary public in and for the State and County aforesaid, do certify that Brian Chavis, Chairman, whose name is signed to the foregoing instrument dated, 2018, has acknowledged the same before me. GIVEN under my hand this day of, Notary Public Registration No.: My Commission Expires: 7

16 QUANTUM PARK LLC a Delaware limited liability company By: Quantum Park Venture LLC, a Delaware limited liability company, its sole member By: DKJV Ashburn LLC, a Delaware limited liability company, its manager By: Midtown Acquisitions L.P., a New York limited partnership, its manager By: Midtown Acquisitions GP LLC, a Delaware limited liability company, its general partner By: Name: Title: STATE OF, CITY/COUNTY OF, TO-WIT: I,, a notary public in and for the State and County aforesaid, do certify that, as of, whose name is signed to the foregoing instrument dated, 2018, has acknowledged the same before me. GIVEN under my hand this day of, Notary Public Registration No.: My Commission Expires: 8

17 EXHIBIT A QUANTUM PARK PROPERTY The Quantum Park Property consists of the following: Unit C2 under that certain Declaration of Quantum Park Building Condominium dated September 28, 2016, and recorded as Instrument # among the land records of Loudoun County, Virginia (the Building Condominium Declaration ); and Land Unit C2 and Land Unit GC under that certain Declaration of Quantum Park Land Condominium dated September 28, 2016, and recorded as Instrument # among the land records of Loudoun County, Virginia (the Land Condominium Declaration ); and The additional/convertible/withdrawable land areas identified as ACW1 and ACW2 and as more particularly described in the Building Condominium Declaration; and The convertible/withdrawable land areas identified as CW 5, 6, 7, 8, 9, 11, 12, 13, 14, 15, 16, 17, 18, and 20 and as more particularly described in the Land Condominium Declaration. 9

18 AGREEMENT FOR BUS SERVICE THIS AGREEMENT FOR BUS SERVICE ( Service Agreement ) is made this day of, 2018 (the Effective Date ) by and between QUANTUM PARK LLC, a Delaware limited liability company ( QP ), and the COUNTY OF LOUDOUN, VIRGINIA, a political subdivision of the Commonwealth of Virginia ( County ). RECITALS: WHEREAS, QP represents that it owns, or has the exclusive right to own, certain real property located in Loudoun County, Virginia, as described in Exhibit A ( Quantum Park Property ); WHEREAS, QP represents that the U.S. General Services Administration ( GSA ) has identified the Quantum Park Property as the desired location for a new U.S. Customs and Border Protection Services Office of Information Technology Headquarters ( CBP ) facility, and QP has entered into lease negotiations with GSA for such facility (the CBP Facility ); and WHEREAS, QP anticipates that the CBP Facility will occupy approximately 444,595 rentable square feet, which will include approximately 63,000 square feet of new and repurposed space; and WHEREAS, QP anticipates that the CBP Facility will result in total project costs and capital investments in new and existing buildings, as well as related security facilities, in the aggregate amount of $175,066,768 ( Capital Investment ), which is inclusive of total project and capital expenditures by QP and capital expenditures by the U.S. Government (with allowances provided by QP to the U.S. Government) that are subject to the U.S. Government s control; and WHEREAS, the County anticipates that development of the CBP Facility at the Quantum Park Property will generate approximately 3,700 new jobs in Loudoun County, will result in an increased assessed value of the Quantum Park Property, will result in increased real estate tax payments to the County by QP, and will otherwise stimulate increased tax revenues and economic activity in the Quantum Park development and the surrounding areas within the County; WHEREAS, as a condition of its lease for the CBP Facility, QP is required to provide bus service between the CBP Facility and the closest Metrorail station at no cost to CBP employees, in accordance with frequency requirements specified by GSA; and WHEREAS, the County operates existing bus routes that transport passengers between Metrorail and various employment centers in the County, including Quantum Park; WHEREAS, in order to incentivize and induce QP to lease the Quantum Park Property to GSA for a term of at least fifteen (15) years, and to incentivize and induce QP and GSA to make the Capital Investment necessary to develop the CBP Facility at Quantum Park, the County will provide bus service between the Quantum Park Property and the closet Metrorail station at no cost to CBP employees, in accordance with the frequency requirements specified by GSA. Attachment 3

19 NOW, THEREFORE, in consideration of the foregoing, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, QP and the County do hereby agree as follows. AGREEMENT 1. Incorporation of Recitals. The foregoing recitals are hereby incorporated into this Service Agreement by this reference. 2. Bus Service. In the event QP and GSA enter into a lease for the CBP Facility at the Quantum Park Property for a minimum term of 15 years (the Lease ), the County will provide bus service, at no charge to CBP employees, between the Quantum Park Property and the closet Metrorail station (currently the Wiehle-Reston East Metro Station and, upon completion and opening of Phase II of the Silver Line, the Ashburn Metro Station) for the duration of the Lease term. Such bus service shall run continuously throughout the day Monday through Friday, excluding Federal holidays, so as to ensure pick-up and drop-off at both the Quantum Park Property and the closest Metrorail station at least every twenty (20) minutes between the morning peak hours of 6:30 AM to 9:30 AM and the afternoon peak hours of 3:30 PM to 7:00 PM and every sixty (60) minutes during the non-peak hours of 9:30 AM to 3:30 PM. The bus shall be a 30- passenger bus or larger, with a wheel chair lift, and shall meet the requirements of the Americans with Disabilities Act. 3. Notices. Any notices given regarding the terms of this Service Agreement shall be sent as follows: If to QP: Quantum Park LLC c/o American Real Estate Partners 2350 Corporate Park Drive, Suite 110 Herndon, VA Attn: Scott Sterling, Esq. ssterling@americanrepartners.com With a copy to: Cooley LLP Freedom Drive Reston, Virginia Attn: Mark C. Looney, Esq. mlooney@cooley.com 2

20 If to the County: County of Loudoun, Virginia c/o Department of Economic Development Central Station Drive, Suite 300 Ashburn, Virginia Attn: Buddy Rizer, Executive Director With a copy to: Office of the County Attorney 1 Harrison Street, S.E., Fifth Floor P.O. Box 7000 Leesburg, Virginia Attn: Courtney R. Sydnor courtney.sydnor@loudoun.gov 4. Counterparts. This Service Agreement shall be executed in duplicate, and may be executed in counterparts each of which shall be deemed an original, but which together shall constitute one and the same instrument. 5. Amendment. Except as expressly provided in Section 6 herein, this Service Agreement may be amended, rescinded or terminated only by the mutual written agreement of QP and the County. 6. Termination. In the event GSA awards a lease for the CBP Facility to another property which is not the Quantum Park Property, this Service Agreement shall automatically terminate upon such lease award and shall be of no further force or effect. Further, this Service Agreement shall automatically terminate and be of no further force or effect if GSA fails to enter into the Lease (as that term is defined in Section 2 above), or if the Lease is terminated for any reason (provided, however, that assignment of the Lease to another U.S. Government agency or the occupancy or use of the CBP Facility by another U.S. Government agency shall not constitute a termination of the Lease). 7. Governing Law. This Service Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia. 8. Recordation. QP may record this Service Agreement among the land records of Loudoun County, Virginia, and the agreement shall be binding upon the parties, their successors and assigns. 9. Captions. The captions set forth in this Service Agreement are intended for ease of reference only and shall have no force or effect in the interpretation of this agreement. 10. Validity and Severability. If any term, provision, or condition contained in this Service Agreement shall to any extent be deemed invalid or unenforceable by a judgment or court 3

21 order, the remainder of this agreement shall not be affected thereby, and each term, provision, and condition of this agreement shall be valid and enforceable to the fullest extent permitted by law. IN WITNESS WHEREOF, the parties have caused this Service Agreement to be executed as of the Effective Date set forth above. [SIGNATURE PAGES FOLLOW] 4

22 COUNTY OF LOUDOUN, VIRGINIA a political subdivision of the Commonwealth of Virginia By: Name: Tim Hemstreet Title: County Administrator COMMONWEATLH OF VIRGINIA, COUNTY OF LOUDOUN, TO-WIT: I,, a notary public in and for the State and County aforesaid, do certify that Tim Hemstreet, County Administrator, whose name is signed to the foregoing instrument dated, 2018, has acknowledged the same before me. GIVEN under my hand this day of, Notary Public Registration No.: My Commission Expires: 5

23 QUANTUM PARK LLC a Delaware limited liability company By: Quantum Park Venture LLC, a Delaware limited liability company, its sole member By: DKJV Ashburn LLC, a Delaware limited liability company, its manager By: Midtown Acquisitions L.P., a New York limited partnership, its manager By: Midtown Acquisitions GP LLC, a Delaware limited liability company, its general partner By: Name: Title: STATE OF, CITY/COUNTY OF, TO-WIT: I,, a notary public in and for the State and County aforesaid, do certify that, as of, whose name is signed to the foregoing instrument dated, 2018, has acknowledged the same before me. GIVEN under my hand this day of, Notary Public Registration No.: My Commission Expires: 6

24 EXHIBIT A QUANTUM PARK PROPERTY The Quantum Park Property consists of the following: Unit C2 under that certain Declaration of Quantum Park Building Condominium dated September 28, 2016, and recorded as Instrument # among the land records of Loudoun County, Virginia (the Building Condominium Declaration ); and Land Unit C2 and Land Unit GC under that certain Declaration of Quantum Park Land Condominium dated September 28, 2016, and recorded as Instrument # among the land records of Loudoun County, Virginia (the Land Condominium Declaration ); and The additional/convertible/withdrawable land areas identified as ACW1 and ACW2 and as more particularly described in the Building Condominium Declaration; and The convertible/withdrawable land areas identified as CW 5, 6, 7, 8, 9, 11, 12, 13, 14, 15, 16, 17, 18, and 20 and as more particularly described in the Land Condominium Declaration. 7