MARKET LOFTS REDEVELOPMENT AGREEMENT

Transcription

1 KUTAK ROCK LLP SUITE GRAND BOULEVARD KANSAS CITY, MISSOURI F A C S I M I L E A TLANTA CHICAGO DENVER DES MOINES FAYETTEVILLE IRVINE LITTLE ROCK LOS ANGELES OKLAHOMA CITY OMAHA PASADENA RICHMOND SCOTTSDALE WASHINGTON WICHITA KATHRYN PRUESSNER PETERS kathryn.peters@kutakrock.com (816) MEMORANDUM TO: FROM: MAYOR CARL GERLACH COUNCIL PRESIDENT JIM HIX MEMBERS OF THE CITY COUNCIL MS. PETERS DATE: JULY 1, 2008 RE: MARKET LOFTS REDEVELOPMENT AGREEMENT This Memorandum summarizes key provisions of the Redevelopment Agreement (the Agreement ) between the City and Market Lofts, L.L.C. (the Developer ) relating to the proposed improvements to the Developer s mixed-use project known as Market Lofts (the Project ). The Memorandum supplements the City Manager s and Deputy City Manager s cover letter which identified other key provisions of the Agreement. The Project consists of the construction of a four-story mixed use building, which will be located at 80 th and Marty Streets in downtown Overland Park, Kansas. The building will have one above-grade floor of commercial retail uses, three above-grade floors containing an anticipated total of 30 residential condominium units and one below-grade floor of parking. The building will be condominiumized, and will include both residential and retail condominium units. The Project also includes site preparation and necessary infrastructure improvements. The Reimbursable Expenses (those are the eligible expenses under the TIF Act) identified in the Agreement total $1,849,414, but the Developer will only be reimbursed for an amount up to the Public Financing Cap (the net present value, based on a 5% discount rate, of $1,500,000 or a lower amount if the Developer s Equity IRR exceeds 16.0% or if the final Reimbursable Expenses are less than $1,500,000). The Reimbursement Expenses include property acquisition, site preparation, undergrounding of utilities and other utility improvements, landscaping, sidewalks and related project expenses including engineering and design fees associated with such costs. The Project is located in Project Area A of the redevelopment district that was created. The Project does not include any improvements in Project Area B of the redevelopment district,

2 KUTAK ROCK LLP and no TIF Revenues from Project Area B will be used to reimburse the Developer for Reimbursable Expenses. No TIF Bonds will be issued for this Project, instead, the Developer will be reimbursed on a pay-as-you-go basis. The TIF Revenues which will be available to reimburse the Developer are the Incremental Real Property Taxes, that is, the taxes generated within Project Area A (i.e., taxes relating to the mixed-use building) above the ad valorem real property taxes generated by levy on the baseline valuation of $143,850 for Project Area A and available under the TIF Act. An agreed-upon baseline valuation is being used to calculate the Incremental Real Property Taxes because the Developer demolished buildings on the Project Area A site prior to the establishment of the redevelopment district. The market value of the property in Project Area A following the demolition of the buildings was $265,930 assessed as vacant property, with an assessed value of $31,912. In the Redevelopment Agreement, the City and the Developer agree that the increment pledged to payment of the TIF eligible improvements is limited to the amount of increment over the baseline valuation of Project Area A. The market value of the property in Project Area A prior to the demolition of the buildings was $575,400 assessed as commercial property, with an assessed value of $143,850, and consequently $143,850 is the baseline valuation of Project Area A. There are a number of requirements that the Developer has to satisfy in order to receive any TIF funds, including the following: The Developer is required to complete the Project in conformance with the Redevelopment Project Plan, City Ordinances and development and construction plans approved by the Overland Park Planning Commission and the City. During construction and upon completion of the Project, the Developer has to file the appropriate paperwork with the City regarding the Project, construction in accordance with City requirements and the Reimbursable Expenses in order to qualify for any reimbursement. The Developer can begin receiving pay-as-you-go reimbursement once the City has been provided the Certificate of Occupancy for the mixed-used building (such Certificate of Occupancy requirement is for the building itself, and not for any individual residential or retail units to the extent that certificates of occupancy are issued for such individual units), the Completion Certificate relating to the completion of the Project and the engineer s certificate relating to the completion of the infrastructure improvements. Repayment of the Developer under a pay-as-you-go basis is limited to the available TIF Revenues, and limited to the TIF Term, which is 20 years or such shorter period as there has been complete reimbursement. There is no City obligation whatsoever to make any payments to the Developer from any other source. The City will receive its Annual Administrative Fee (the greater of $5,000 or 1% of the Incremental Real Property Taxes) before any payment is made to the Developer

3 KUTAK ROCK LLP The Developer agrees to keep the Project insured and maintained for the Term or cause the Project to be kept insured and maintained. The Developer agrees to provide the City with Certificates of Insurance and with an annual summary of major renovations and repairs upon request. When at least 80% of the residential condominium units have been sold, a homeowners association has been created and is operational with respect to the condominium development, and there is in force and effect a condominium declaration approved by the City which contains customary industry provisions relating to maintenance and insurance of the Project and the common elements thereof, the Developer has the right to assign the maintenance and insurance obligations for the Project to such homeowner s association to be carried out pursuant to the provisions of such condominium declaration, provided that such homeowner s association accepts such assignment. Prior to completion of the Project, the Developer cannot transfer its obligations under the Agreement or sell the building (through condominium units can be sold) without the consent of the City, except for certain limited circumstances involving transfers to related entities or assignments to entities with the same ownership as the Developer for tax planning purposes. Although City consent is not required after the Project is completed, any subsequent owner has to agree to continue to provide certain information during the Term, including the insurance certificates and major maintenance reports described above, as well as ongoing cooperation with the City in the determination of the Incremental Sales Tax Revenues. As noted above, it is expected that the homeowners association (which will include membership of both the retail condominium units and the residential condominium units) will assume responsibility for the insurance and maintenance requirements for the Term. I will be at the July 7, 2008 public hearing to answer any questions you may have. K.P.P. cc: Mr. Nachbar Ms. Stallings Mr. Watson Mr. Santos Mr. Ebel Ms. Owens

4 KUTAK ROCK LLP DRAFT 06/30/08 REDEVELOPMENT AGREEMENT FOR THE MARKET LOFTS, L.L.C. REDEVELOPMENT PROJECT THIS REDEVELOPMENT AGREEMENT (this Agreement ), is made and entered into as of the day of July, 2008 by and between the CITY OF OVERLAND PARK, KANSAS, a municipal corporation duly organized under the laws of the State of Kansas (the City ), and MARKET LOFTS, L.L.C., a Kansas limited liability company ( Market Lofts or the Developer ). RECITALS A. The City has the authority to undertake tax increment financing pursuant to the Kansas Tax Increment Redevelopment Act, constituting K.S.A et seq., as amended (the Act ). B. At the request of the Developer, the Overland Park Planning Commission granted its Downtown Plan Review Approval-Market Lofts on October 23, 2006 for the Developer s proposed mixed-use project (the Project ) to be located at 80 th and Marty Streets in downtown Overland Park, Kansas on the real property described on Exhibit A hereto and identified herein as Project Area A or the Redevelopment Project Area (the Project Site ), consisting of one above-grade floor of commercial retail uses, three above-grade floors containing an anticipated total of 30 residential condominium units and one below-grade floor of parking. On February 5, 2007, the Developer requested that the Governing Body approve tax increment financing assistance for the Project; the Developer had previously discussed with City staff the possibility of that tax increment financing for the Project. C. For the purposes of promoting the general and economic welfare of the City through the conservation of downtown Overland Park by means of the redevelopment of downtown real property and advancing the Comprehensive Plan of the City, the City desires to undertake the tax increment financing of the Project. D. The Governing Body adopted Resolution No on April 16, This resolution set May 21, 2007 for a public hearing to consider the establishment of a redevelopment district within the City. In advance of May 21, 2007, the Governing Body commissioned, received and reviewed a Conservation Area Study dated May 17, 2007 relating to the proposed District. By Ordinance No. RD-2663, adopted May 21, 2007, the Governing Body found and determined that the area of the District is a conservation area and an eligible area as defined by the Act, and established the District pursuant to the Act. E. The Developer presented background information necessary for a tax increment financing feasibility study (the TIF Study ) to the City. The City engaged Economics Research Associates to conduct the TIF Study. The City received the TIF Study on or about August 8,

5 F. On or about April 9, 2008, the Developer filed with the City Clerk a Redevelopment Project Plan (the Redevelopment Project Plan ) for Project Area A of the District, as legally described on the attached Exhibit A and shown via sketch on the attached Exhibit B (the Redevelopment Project Area ). The Redevelopment Project Plan is attached as Exhibit C, and includes, among other things, a description of the Project. The Site Plan and description of the proposed improvements to be made pursuant to the Redevelopment Project Plan are shown on Exhibit D attached hereto. G. The Governing Body adopted Resolution No on April 14, 2008, setting May 19, 2008 for a public hearing to consider the proposed Redevelopment Project Plan for the Redevelopment Project Area. Pursuant to the Act, the Governing Body held a public hearing commencing on May 19, 2008, which hearing was continued on June 16, 2008 and on July 7, 2008, regarding the proposed Redevelopment Project Plan for the Redevelopment Project Area. H. On, 2008, the Governing Body took up the Redevelopment Project Plan as a regular agenda item at a public meeting of the Governing Body and at the conclusion thereof, the Governing Body adopted the Redevelopment Project Plan by Ordinance No.. I. The real property to be improved and redeveloped pursuant to this Agreement is the Redevelopment Project Area included in the Redevelopment Project Plan, which was approved by the Overland Park Planning Commission on March 24, 2008 as being consistent with the Comprehensive Plan of the City. Such real property is legally described on Exhibit A and shown in the cross-hatched area on the sketch on Exhibit B (the Redevelopment Project Area ). J. The Developer has submitted to the City the Project Budget attached as Exhibit F identifying the Developer s sources and uses of funds to pay for the Project, including evidence of the Developer s financing commitments with respect to the Project and of the Developer s equity contribution of at least $1,500,000 for the Project. K. The Redevelopment Project Plan and associated pay-as-you-go tax increment financing constitute the general development and financing program for the Redevelopment Project Area upon which the Developer and City have agreed. L. The City and the Developer now desire to enter into this Agreement to formalize the development and financing program and to address implementation of the Redevelopment Project Plan and the financing of the necessary improvements as called for in the Redevelopment Project Plan. NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

6 ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION Section Definitions of Words and Terms. Capitalized words used in this Agreement shall have the meanings set forth in the Recitals to this Agreement or they shall have the following meanings: Agreement means this Agreement as may be amended in accordance with the terms hereof. Bond Counsel means Kutak Rock LLP, Kansas City, Missouri, or such other firm of attorneys selected by the City whose expertise in matters relating to the issuance of obligations by states and their political subdivisions is nationally recognized. City means the City of Overland Park, Kansas. City Annual Administrative Fee means an amount equal to the greater of $5,000 or 1% of the Incremental Real Property Taxes collected for the preceding calendar year. City Representative means the City Manager and such other person or persons at the time designated to act on behalf of the City in matters relating to this Agreement as evidenced by a written certificate furnished to the Developer containing the specimen signature of such person or persons and signed on behalf of the City. City Staff means the engineering and inspection staffs in either the Public Works Department and/or the Planning and Development Services Department of the City charged with the planning and execution of construction of all public infrastructure whether such infrastructure is publicly financed or privately financed. Developer means Market Lofts, L.L.C., a Kansas limited liability company, and its lawful successors and assigns. Developer Representative means Mr. Paul Goehausen, and such other person or persons at the time designated to act on behalf of the Developer in matters relating to this Agreement as evidenced by a written certificate furnished to the City containing the specimen signature of such person or persons and signed on behalf of the Developer. District means the Market Lofts Redevelopment District established by Ordinance No. RD-2663, which District includes Project Area A and Project Area B, as shown on said Ordinance. This Agreement relates only to Project Area A. Event of Default means any event or occurrence as defined in Article X of this Agreement. Governing Body means the Mayor and City Council of the City of Overland Park, Kansas

7 Incremental Real Property Taxes means the incremental increase in ad valorem real property taxes generated within the Redevelopment Project Area above the ad valorem real property taxes generated by levy on the January 1, 2006 taxable valuation of the Redevelopment Project Area (prior to the demolition of the buildings in the Redevelopment Project Area) and available under the Act, received by the City from Johnson County, Kansas. Such January 1, 2006 taxable valuation was $575,400. Exhibit E attached hereto sets forth the City s expected model for the calculation and transfer to the TIF Fund of Incremental Real Property Taxes. Pay-As-You-Go TIF Reimbursement means the reimbursement of Reimbursable Expenses to the Developer with Incremental Real Property Taxes, from time to time as such expenses are incurred and documented as provided herein, but only if and when Incremental Real Property Taxes are available and on deposit in the TIF Fund for such purpose. Project or Redevelopment Project means the private improvements and public improvements described in Recital B hereof and the Redevelopment Project Plan. Project Budget means the Developer s budget for the Project, attached as Exhibit F, as such Project Budget may be modified from time to time based on actual costs and expenses incurred, and the Developer s actual receipts from its sales of condominium units of the Project. Public Financing Cap means an amount which represents the net present value, calculated through the date of final reimbursement, discounted at 5.00% per annum, of One Million Five Hundred Thousand and No/100 Dollars ($1,500,000), in maximum combined reimbursement to the Developer from all Public Financing Sources, subject to reduction as described in Section 2.01(d). The Public Financing Cap has been determined as described in Section 2.01(d). Public Financing Sources means the Pay-As-You-Go TIF Reimbursement. Redevelopment Project Area means Project Area A of the District, as legally described on the attached Exhibit A and cross-hatched on the sketch on the attached Exhibit B. Redevelopment Project Plan means the Market Lofts Tax Increment Financing Plan, attached as Exhibit C, which includes a description of the components of the Project. Reimbursable Expenses means expenses related to the Project to the extent such expenses are redevelopment project costs as defined in the Act, the estimated amounts of which Reimbursable Expenses are shown at Exhibit H. Site Plan means the Redevelopment Project Area site plan attached hereto as Exhibit D. State means the State of Kansas. Term shall have the meaning set forth in Section 3.02(d) of this Agreement. TIF means tax increment financing

8 TIF Fund means the TIF Fund-Market Lofts Account established and administered by the City in compliance with the laws of the State, into which Fund shall be deposited the Incremental Real Property Taxes generated in the Redevelopment Project Area, and from which moneys shall be used to pay the Reimbursable Expenses, subject to the Public Financing Cap, on a pay-as-you-go basis. Section Rules of Construction. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following rules of construction apply in construing the provisions of this Agreement: (a) The terms defined in this Article include the plural as well as the singular. (b) All accounting terms not otherwise defined herein shall have the meanings assigned to them, and all computations herein provided for shall be made, in accordance with generally accepted accounting principles. (c) All references herein to generally accepted accounting principles refer to such principles in effect on the date of the determination, certification, computation or other action to be taken hereunder using or involving such terms. (d) All references in this instrument to designated Articles, Sections and other subdivisions are to be the designated Articles, Sections and other subdivisions of this instrument as originally executed. (e) The words herein, hereof and hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. (f) The Article and Section headings herein are for convenience only and shall not affect the construction hereof. ARTICLE II REDEVELOPMENT STRUCTURE Section Subject to the other terms of this Agreement, the City and the Developer agree that the Redevelopment Project Area shall be developed by the Developer pursuant to the Redevelopment Project Plan in the following manner and the Developer shall bear the costs of the development of such Redevelopment Project Area except as set forth herein. (a) The Developer is hereby given exclusive development rights to the land within the Redevelopment Project Area to the extent provided in Article VI. (b) Subject to the terms of Article X, the Developer shall complete the public improvements and private improvements substantially in conformance with the Redevelopment Project Plan, City Ordinances and development and construction plans approved by the Overland Park Planning Commission and the City. The components of the Project, as set out in the Redevelopment Project Plan, and the construction schedule

9 of the Project, as set out in the attached Exhibit J, are subject to such additions, deletions, changes or modifications as shall be reported by the Developer to the City and approved in writing by the City Manager or his designee (which approval shall not be unreasonably withheld), and as applicable, the Overland Park Planning Commission. (c) Upon satisfaction of the conditions set forth in Sections 3.02(f) and 4.03 and completion of the construction of improvements to the Redevelopment Project Area, as evidenced by the Developer s delivery to the City of the Certificate of Occupancy for the mixed-used building being constructed by the Developer (such Certificate of Occupancy requirement shall be for the building itself, and not for any individual residential or retail units to the extent that certificates of occupancy are issued for such individual units), the Completion Certificate as set forth in Section 5.07(a) and the engineer s certificate as set forth in Section 5.07(b), the Developer shall be entitled to receive reimbursement from the TIF Fund for Reimbursable Expenses. Reimbursement from the TIF Fund shall require proper verification of Reimbursable Expenses and shall be limited in aggregate amount to the Public Financing Cap. The Public Financing Cap does not and shall not exceed the aggregate amount of the Reimbursable Expenses. (d) The maximum Public Financing Cap as defined herein represents the net present value of the Reimbursable Expenses shown on Exhibit H as calculated for a period of 20 years, discounted at 5.00% per annum, and has been initially established at $1,500,000. Upon substantial completion of the Project, as evidenced by the Certificate of Occupancy for the Project, the Completion Certificate as set forth in Section 5.07(a) and the engineer s certificate as set forth in Section 5.07(b), the Developer shall update each of the numbers highlighted in the Equity IRR Formula attached hereto as Exhibit K, and provide the City with such updated Equity IRR Formula, along with evidence of such updated costs, revenues and other figures to the reasonable satisfaction of the City. (i) If the updated Equity IRR Formula produces a projected equity internal rate of return to the Developer that exceeds 16.00%, the Public Financing Cap shall at that time be reduced so that the Equity IRR Formula produces a projected equity internal rate of return to the Developer that is equal to 16.00%. (ii) If the updated Equity IRR Formula produces a projected equity internal rate of return to the Developer that does not exceed 16.00%, the Public Financing Cap shall not be reduced. (iii) Thereafter, the Public Financing Cap shall not be subject to further review or adjustment. (e) The Developer hereby acknowledges that the City shall have no financing or reimbursement obligations with respect to the Project and the Reimbursable Expenses except for the reimbursement of Reimbursable Expenses as expressly provided in this Agreement

10 ARTICLE III FINANCING Section Development Costs, City Expenses and Administrative Fee. The Developer shall be responsible for funding the cost of implementing the Project with available resources, including its equity contribution, other private sources and the Public Financing Sources set forth herein, and these costs shall not be an obligation of the City. The Developer shall contribute equity in the amount of at least $1,500,000 towards the costs of the Project, which equity may be from any sources available to the Developer except Public Financing Sources. In addition, the Developer shall be responsible for and pay, within 20 days of applicable invoice, the reasonable City expenses for financial, legal and administrative expenses incurred in connection with the Project including those expenses which accrued prior to the execution of this Agreement. Said reimbursements to the City shall be deemed City Expenses. Anticipated City Expenses are set forth on the attached Exhibit G. Further, the Developer shall be responsible for the City Annual Administrative Fee payment (payable on the anniversary date of this Agreement) until the City s obligations with respect to the Public Financing Sources have been satisfied. The Incremental Real Property Taxes shall be used to pay the City Annual Administrative Fee prior to any Pay-As-You-Go TIF Reimbursement to the Developer and the Developer shall pay any difference due on the City Annual Administrative Fee if the Incremental Real Property Taxes are insufficient to pay the entire City Annual Administrative Fee. City Expenses and the City Annual Administrative Fee shall be deemed Reimbursable Expenses. The Public Financing Cap shall be increased by any amount of payment by the Developer for City Annual Administrative Fees not paid by the Incremental Real Property Taxes and any such amount paid by the Developer shall be a Reimbursable Expense. Section TIF Financing. (a) City Improvements and Reimbursable Expenses to be Funded By Public Financing Sources. In consideration of Developer s agreement to construct the public improvements and private improvements in conformance with the Redevelopment Project Plan, the City agrees to the reimbursement of all Reimbursable Expenses as set forth in the Redevelopment Project Plan and as further defined herein up to the Public Financing Cap; provided that such reimbursement shall only be made from the Public Financing Sources. The procedures and method of reimbursement shall be as set forth in this Section (b) Pay-As-You-Go TIF Reimbursement. The Developer shall be entitled to receive disbursements of Pay-As-You-Go TIF Reimbursement from the TIF Fund as provided by Section 2.01(c) when the Developer complies with the provisions of subsection (C) below. (c) All Incremental Real Property Taxes Captured. Except as otherwise set forth herein, all Incremental Real Property Taxes generated within the Redevelopment Project Area shall be made exclusively available for and dedicated to reimbursing the Developer for the Reimbursable Expenses associated with the Project for the duration of the Term as defined in subsection (d) below or until the City s obligations under this

11 Agreement with regard to reimbursement in an amount not exceeding the Public Financing Cap have been satisfied, whichever is first, and shall be utilized according to the procedures set forth herein in the following order of priorities: (i) First, to pay or reimburse the City for all City Expenses including the City Annual Administrative Fee; and (ii) Second, to reimburse the Developer for Reimbursable Expenses or to pay the principal or and interest on TIF Bonds issued to finance such Reimbursable Expenses. (d) Term. The term of the Redevelopment Project Plan, subject to earlier termination as provided in subsection (c) and this subsection (d), shall be for a maximum term of 20 years from the date of adoption of the Redevelopment Project Plan (the Term ), unless the City takes the appropriate actions required by law to terminate the TIF or amend the term. Notwithstanding the foregoing, the parties hereby agree that this Agreement shall automatically terminate upon full reimbursement of the Reimbursable Expenses up to the Public Financing Cap. After the termination of this Agreement, the parties shall have no further obligations or liabilities hereunder except as expressly set forth in Section hereof. The City shall not, under any circumstances other than by a future agreement between the City and the Developer, terminate or modify the Redevelopment Project Area, amend the Redevelopment Project Plan or reduce the Term in a manner which would adversely impact the ability of the Developer to finance or be reimbursed for Reimbursable Expenses, except as specifically provided in this Agreement. (e) Pay-As-You-Go TIF. The City agrees to provide Pay-As-You-Go TIF Reimbursement for Reimbursable Expenses pursuant to the following terms: (i) Amount. The aggregate amount of Pay-As-You-Go TIF Reimbursement shall not exceed the Public Financing Cap. (ii) Source of Reimbursement. Incremental Real Property Taxes will be deposited into the TIF Fund and are the only revenue source which will be dedicated to or available for the payment or reimbursement of Reimbursable Expenses. (f) Conditions Precedent. The availability of Pay-As-You-Go TIF Reimbursement shall be conditioned upon Developer complying with the terms of this Agreement and providing to the City the following documentation, in addition to the Certificate of Occupancy, Completion Certificate pursuant to Section 5.07(a), engineer s certificate pursuant to Section 5.07(b) and Certification of Expenditure pursuant to Section 4.03, satisfactory to the City: (i) Construction loan documentation for the construction, in a manner consistent with the Redevelopment Project Plan, of the buildings and facilities comprising the Project, which is intended to generate the Incremental Real Property Taxes

12 (ii) Construction contracts for the Project. (iii) The Project Budget showing that the Project that will produce the Incremental Real Property Taxes can be constructed with the capital available from a combination of the Public Financing Sources, equity contributions from the Developer and conventional financing utilized by the Developer, tenants, purchasers or joint venture partners. (iv) Such documentation as is required by the City showing that the development and operation of the Project will generate Incremental Real Property Taxes sufficient in aggregate amount to at least equal the Public Financing Cap. (v) Periodic certified reports and a final report of sales of Project condominium units, showing sales prices, commissions paid and net sale proceeds. However, the City acknowledges that the final sale of Project condominium units to third parties is not a condition precedent to Developer s right to receive disbursements from the TIF Fund. (g) Satisfaction of Conditions. Upon receipt of information set forth in subsection (f) above, the City shall within a reasonable time thereafter either: (i) Provide written notice to Developer that subsection (f) has not been satisfied; or (ii) Provide affirmative notice to Developer that the conditions precedent to the City s obligation to deposit Incremental Real Property Taxes into the TIF Fund and make available Pay-As-You-Go TIF Reimbursement to the Developer as provided herein will become irrevocable. (h) TIF Fund. All Incremental Real Property Taxes from the Property shall be deposited in the TIF Fund, which deposits shall be made by the City following the City s receipt of the Incremental Real Property Taxes as collected by Johnson County. The TIF Fund shall be created and administered by the City and will be utilized solely to provide Pay-As-You-Go TIF Reimbursement for the purpose of paying or reimbursing Reimbursable Expenses in accordance with Article IV. As provided in Section 4.04(e), after the Reimbursable Expenses have been established and the City has approved the Certificate(s) of Expenditure for payment or reimbursement of the costs identified therein, disbursements from the TIF Fund to the Developer shall be made within thirty (30) days of deposit of moneys into the TIF Fund. There shall be no penalty to the City if a payment is not made within such thirty (30) day period. (i) Annual Calculations. As described in this Agreement, the Developer will be reimbursed for Reimbursable Expenses up to the Public Financing Cap (which represents the net present value of $1,500,000 (subject to reduction as described herein), discounted at 5.00% per annum, as more fully defined herein). The City shall annually calculate the aggregate amount of the Reimbursable Expenses reimbursed to the date of calculation and the net present value thereof, and shall determine whether the Public Financing Cap has been achieved. Exhibit E-1 attached hereto sets forth the model for

13 the annual calculation of such amounts. Such annual calculation shall be delivered within sixty (60) days following the distribution to the Developer of the Incremental Real Property Taxes attributable to property taxes due May 20 of such year. July 1 is the presumed date as of which such calculation shall be made, following a June distribution of such Incremental Real Property Taxes. ARTICLE IV REIMBURSABLE EXPENSES Section Reimbursement from Public Financing Sources. The Public Financing Sources shall be utilized to reimburse the Developer for Reimbursable Expenses, as shown in the Project Budget at Exhibit F, subject to the terms of the Act and this Agreement. Attached Exhibit F and Exhibit H respectively detail the Project Budget and the estimated categories and amounts of Reimbursable Expenses associated with the Redevelopment Project Plan. The parties acknowledge that such Exhibits contain preliminary estimates. It is expected that the Reimbursable Expenses estimates will change significantly prior to and during actual construction of the Project, within and among the categories of Reimbursable Expenses, and that the final Project Budget will be different from the estimated Project Budget. The parties acknowledge that Exhibit H may not contain all categories of eventual Reimbursable Expenses or private sources of financing. Section Categories of Reimbursable Expenses. The parties acknowledge that all Reimbursable Expenses will be reimbursed from Public Financing Sources subject to the Public Financing Cap in accordance with the terms of this Agreement, irrespective of whether a particular Certification of Expenditure (or an expenditure itemized therein) is of a different amount or category than as set out in the Project Budget. Section Certification of Expenditure. In order to receive reimbursement, the Developer shall submit (i) in conjunction with its submission of the Certification of Expenditure for the initial reimbursement request, a Certificate of Occupancy for the Project building as duly issued to the Developer by the responsible official of the City, a Completion Certificate as described in Section 5.07(a) and an engineer s certificate as described in Section 5.07(b), and (ii) in conjunction with the initial and each succeeding reimbursement request, a Certification of Expenditure in substantially the form attached hereto as Exhibit I attesting to the expenditure of qualified Reimbursable Expenses in accordance with the procedures outlined in Section 4.04 below. Section Procedures for Certification of Expenditures. For Certifications of Expenditures to be made in connection with the Reimbursable Expenses: (a) The Developer shall submit to the City a Certification of Expenditure as shown on the attached Exhibit I setting forth the total amount for which reimbursement is sought and an itemized listing of the related Reimbursable Expenses. (b) Each Certification of Expenditure shall be accompanied by such bills, contracts, invoices, lien waivers and proof of current paid ad valorem property taxes or

14 other evidence as the City shall reasonably require to document appropriate payment of Reimbursable Expenses. (c) The City reserves the right, at its cost (provided however that such cost shall be reimbursable as a City Expense), to have its engineer, City Staff or other agents or employees inspect all work in respect of which a Certification of Expenditure is submitted, to examine the Developer s and others records relating to all Reimbursable Expenses to be paid, and to obtain from such parties such other information as is reasonably necessary for the City to evaluate compliance with the terms hereof. (d) The City shall have 30 calendar days after receipt of any Certification of Expenditure to review and respond by written notice to the Developer; provided that the City may, prior to the end of such 30 day period, advise the Developer if additional time is needed to review and respond to such Certification, in which event the City shall respond by the extended date so indicated, which date shall not be more than 60 days after the date of such notice. If the documentation submitted by the Developer reasonably demonstrates that: (i) the Certification of Expenditure relates to Reimbursable Expenses, (ii) the expense was incurred, (iii) Developer is not in material default under this Agreement, (iv) the ad valorem property taxes for the Redevelopment Project Area are current and (v) there is no fraud on the part of the Developer, then the City shall approve the Certification of Expenditure, and if there are sufficient funds available in the TIF Fund as set forth herein, the City shall make, or cause to be made, reimbursement within 30 calendar days of the approval of the Certification. Approval by the City of a Certification of Expenditure for reimbursement of Reimbursable Expenses shall not be unreasonably delayed or withheld. If the City disapproves the Certification of Expenditure, the City shall notify the Developer in writing of the reason for such disapproval within such 30 calendar-day period (and as the same may be extended as provided herein), and the reason for disapproval must be reasonable. In the event of a City disapproval, the Developer shall have 30 calendar days after receipt of the City s notice of disapproval to respond by written notice to the City, which response may include supplements to and modifications of the Certification of Expenditure, and the City shall have 30 calendar days after receipt of the Developer s response to review and either approve the Certification of Expenditure as it may be supplemented or modified or to notify the Developer as aforesaid of the reasons for disapproval. (e) In the event the Certification of Expenditure is approved by the City, the City shall take such further action as is necessary to disburse Pay-As-You-Go TIF Reimbursement from the TIF Fund to the Developer as provided by this Agreement. On an ongoing basis, disbursements from the TIF Fund to the Developer to reimburse costs which have been the subject of a previously approved Certificate of Expenditure shall be made within thirty (30) days of deposit of moneys into the TIF Fund. There shall be no penalty to the City if a payment is not made within such thirty (30) day period

15 ARTICLE V DEVELOPMENT AND CONSTRUCTION OF REDEVELOPMENT PROJECT Section Authorization to Construct. In order to further the development of the Project, the City hereby authorizes the Developer, and Developer agrees to construct and develop the Project in accordance with the provisions and the requirements of this Agreement and the Redevelopment Project Plan, and applicable City Ordinances and requirements of the Overland Park Planning Commission. Section Plan Approval; Additional Redevelopment Project Area Development Approval. Developer previously has obtained from the Overland Park Planning Commission the Downtown Plan Review Approval-Market Lofts, and has caused to be submitted to the City a development and construction plan for the Project. The Developer shall submit such amended supplemental or additional plans and other documentation as shall be necessary for any final zoning approvals of the development and construction plans as are required by the construction codes adopted by the City. Whenever this Agreement requires the Developer to submit plans, drawings or other documents to the City for approval, the City shall, to the extent possible, expedite its procedures for review and approval of such submissions so as to not unduly hinder or delay the development. Section Insurance and Indemnification. The parties hereby agree as follows: (a) The Developer agrees to defend, indemnify and hold the City, its officers, agents and employees, harmless from and against all liability for damages, costs and expenses, including attorney fees, arising out of any claim, suit, judgment or demand arising from the negligent or intentional acts or omissions of the Developer, its contractors, subcontractors, agents or employees relating to the Project and the activities of the Developer and its contractors, subcontractors, agents and employees under this Agreement, including, but not limited to, claims for loss or damage to any property or injury to or death of any person, asserted by or on behalf of any person, firm, corporation or governmental authority arising out of or in any way connected with any property of the Developer, or the conditions, occupancy, use, possession, conduct or management of, or any work done in or about the Project by the Developer or its agents. The Developer shall give the City immediate written notice of any claim, suit or demand which may be subject to this provision. (b) Not in derogation of the indemnification provisions set forth herein, the Developer shall, at its sole cost and expense, throughout the Term and during all phases of the development described herein, maintain or cause to be maintained insurance with respect to the Project covering such risks that are of an insurable nature and of the character customarily insured against by organizations operating similar properties and engaged in similar operations, similar development projects and similar condominium projects (including but not limited to property and casualty, worker s compensation, general liability and employee dishonesty) and in such amounts as, in the commercially reasonable judgment of the Developer, or if applicable, the homeowner s association as described herein, are adequate to protect the Developer and the Project. Throughout the

16 Term, the Developer agrees to provide the City upon request an Evidence of Property Insurance and Certificate of Liability Insurance listing all coverages applicable to the Project. It is understood and agreed that the building will be condominiumized, and there will be both residential and retail condominium units. The obligations described in this Section may be assigned to the homowners association of such condominium units pursuant to Section 8.03(b). The Developer shall take the appropriate actions to provide for notification to the homeowners association and to the owners of the condominium units of the nature and extent of the obligations described in this Section. Section Local, State and Federal Laws. The Developer agrees that it shall abide by, and the Project shall be completed in conformity with, all applicable federal, state and local laws and regulations. Section Hazardous Materials. The Developer represents and warrants that it has had conducted on the Redevelopment Project Area a Phase I environmental study, which study did not disclose the presence of any hazardous materials in, on or below the Redevelopment Project Area, and a copy of which has been provided to the City. Section Compliance with Equal Opportunity Laws, Regulations and Rules and Other Laws. (a) In accordance with the City s standard contracting requirements, the Developer agrees that: (i) The Developer shall observe the provisions of the Kansas Act Against Discrimination (K.S.A et seq.) and shall not discriminate against any person in the performance of work under the Agreement because of race, religion, color, sex, national origin, ancestry or age; (ii) In all solicitations or advertisements for employees, the Developer shall include the phrase, "equal opportunity employer," or a similar phrase to be approved by the Kansas Human Rights Commission ("Commission"); (iii) If the Developer fails to comply with the manner in which the Developer reports to the commission in accordance with the provisions of K.S.A and amendments thereto, the Developer shall be deemed to have breached the Agreement and it may be canceled, terminated or suspended, in whole or in part, by the contracting agency; (iv) If the Developer is found guilty of a violation of the Kansas Act Against Discrimination under a decision or order of the commission which has become final, the Developer shall be deemed to have breached the Agreement and it may be canceled, terminated or suspended, in whole or in part, by the contracting agency; and (v) The Developer shall include the provisions of paragraphs (i) through (iv) above in every contract, subcontract or purchase order so that such provisions will be binding upon such contractor, subcontractor or vendor

17 (b) The Developer further agrees that the Developer shall abide by the Kansas Age Discrimination In Employment Act (K.S.A et seq.) and the applicable provision of the Americans With Disabilities Act (42 U.S.C et seq.) as well as all other federal, state and local laws, ordinances and regulations applicable to this Project and to furnish any certification required by any federal, state or local laws, ordinances and regulations applicable to this Project and to furnish any certification required by any federal, state or local governmental agency in connection therewith. Section Evidence of Completion. The parties hereby agree as follows: (a) Upon substantial completion of the Project, the Developer shall deliver to the City Manager a certificate of completion for the Project executed by the architect of record who signed the approved construction plans therefor (the Completion Certificate ), certifying to the City that the same has been completed substantially in conformance with the Redevelopment Project Plan, the City Ordinances and the plans approved by the Overland Park Planning Commission. The Certificate of Completion requirement pertains to the completion of the building itself, not to the completion of individual residential or retail units prior to the occupancy thereof. (b) Upon substantial completion of the infrastructure improvements, the Developer shall deliver to the City Manager an engineer s certificate, certifying to the City that the same has been completed substantially in conformance with the Redevelopment Project Plan, the City Ordinances and the plans approved by the Overland Park Planning Commission. (c) For purposes of this Section, substantial completion means the point at which the site improvement work or building project, or a designated portion of the site improvement work or building project thereof is sufficiently complete, in accordance with the construction contract documents, so that the owner may have beneficial use or occupy the site improvement work or building project or designated portion thereof for the intended use for which it is originally designed and intended, without regard to occupancy permits that may be issuable under applicable law. This may include the completion of all life safety systems, weather-tight envelope, and adequate protection of building occupants and or equipment from hazards posed by additional or possible construction activities or other potential harmful conditions that may exist or become evident during the final work effort to complete the project per the construction contract documents. Section Modifications. The construction of the public improvements and private improvements may be modified or revised by written agreement of the City and Developer, to provide for other improvements generally consistent with the Redevelopment Project Plan. The City will not be unreasonable in its consideration of such modifications and revisions. Substantial changes as defined in K.S.A a(w) may require amendment of the Redevelopment Project Plan in accordance with the City s then existing policies and procedures. Section Utilities and Fees. The City hereby agrees that the Developer shall have the right to connect to any and all City utility lines constructed in the vicinity of the

18 Redevelopment Project Area, if any, subject to compliance with the City s codes and procedures for such connections. The City agrees that the Developer shall be obligated to pay, in connection with the Project, only those storm sewer, building permit, engineering, inspection, and other fees of general applicability. Section City and Other Governmental Permits. Before commencement of construction or development of any buildings, structures or other work or improvement that is a portion of the Project the Developer shall, at its own expense, secure or cause to be secured any and all permits which may be required by the City and any other governmental agency having jurisdiction as to such construction, development or work. The City shall follow its standard procedures for providing assistance to the Developer in securing these permits. Section Public Bidding Not Required. Notwithstanding the fact that certain of the improvements herein will be financed or reimbursed in whole or in part by Public Financing Sources and will be deemed public improvements, public bidding for the Project, and any component thereof, will not be required; however, all plans for public improvements shall require approval of the City Staff and shall comply with standard City inspection and testing requirements, the costs of which will be borne by the Developer but shall be a Reimbursable Expense prior to commencement of construction of said improvements. Section Operation and Maintenance of Project. The Developer shall throughout the Term at its own expense (i) keep and maintain the Project and all parts thereof within the Developer s control in good repair and operating condition, making from time to time all necessary repairs thereto and renewals and replacements thereof, and (ii) keep the Project and all parts thereof in safe condition and free from contamination by filth, nuisance or conditions unreasonably increasing the danger of fire. The Project will be operated in compliance with all applicable building and zoning, environmental and safety regulations and laws and all other applicable laws, rules and regulations. Upon request of the City, the Developer shall provide the City with a report of major repairs, renewals and renovations to the Project made within the prior year and those made and scheduled to be made during the current year. It is understood and agreed that the building will be condominiumized, and there will be both residential and retail condominium units. The obligations described in this Section may be assigned to the homeowners association of such condominium units pursuant to Section 8.03(b). The Developer shall take the appropriate actions to provide for notification to the homeowners association and to the owners of the condominium units of the nature and extent of the obligations described in this Section. ARTICLE VI DEVELOPER OF RECORD Section Exclusive Developer of Record. Developer currently owns all land within the Redevelopment Project Area and agrees to develop such property in conformance with the Redevelopment Project Plan as contemplated by this Agreement. Market Lofts is hereby designated as the exclusive Developer of Record for a period of 360 days from the date of publication of the ordinance adopting the Redevelopment Project Plan. Nonetheless, if any owner of any real property (except Developer, transferee of Developer or a condominium owner)

19 within the Redevelopment Project Area files an application for a building permit or development approval during the period set forth above, the City shall give notice thereof to the Developer within 10 days of the date of the application and no action shall be taken on such application until Developer has been given a reasonable opportunity to negotiate with said property owners. ARTICLE VII REAL ESTATE TAXES Section Agreement to Pay Taxes and Assessments; Request for Reclassification. The Developer agrees that to the extent it is obligated to pay any portion of the real estate taxes and assessments for the Redevelopment Project Area it shall pay such taxes and assessments promptly and in full on or before the due date of such tax bills. The Developer or its successors shall have the right to pay said taxes under protest in accordance with applicable law. The Developer shall not request a change in taxation classification without prior written City approval. Section Notice of Protest or Appeal. The Developer shall promptly notify the City in writing of its protest or appeal of real estate taxes or valuation of any property within the Redevelopment Project Area by the County Assessor. ARTICLE VIII USE, ASSIGNMENT, SALES & LEASING Section Recorded Notice of Agreement. The parties agree to execute and deliver a memorandum of this Agreement in proper form for recording in the real property records of Johnson County, Kansas, alerting future owners of the existence of a TIF District and of this Agreement. Section Use Restrictions. The allowable uses within the Redevelopment Project Area will be subject to the lawful zoning power of the City and will not be subject to use restrictions solely by virtue of this Agreement. Section Restrictions on Transfer and Assignments. The qualifications and identity of the Developer are of particular concern to the City. It is in part because of its qualifications and identity that the City has entered into this Agreement with the Developer. Therefore, the Developer shall not assign or transfer all or any of its rights or duties under this Agreement nor convey the Project Site (except as described below) without the prior written approval of the City (which will not be unreasonably withheld), except for assignments, transfers and conveyances of all or substantially all of Developer s rights and duties under this Agreement and in and to the Project Site (a) to a subsidiary which is owned or controlled by the Developer or any entity owned or controlled, directly or indirectly by the ownership of fifty percent (50%) or more of the partnership interests in, or voting stock of, along with complete management authority, constituting control by the Developer and (b) which enters into a written agreement assuming all of the obligations of the Developer under this Agreement. In addition, Developer may, without the approval of City, effectuate a change in type of entity, whether voluntary or by operation of law, or may assign this

20 Agreement to another entity with ownership the same as ownership of Developer, for tax planning purposes, provided that such entity enters into a written agreement assuming all of the obligations of the Developer under this Agreement. Transfers described in the immediately preceding sentence and in (a) and (b) of the next preceding sentence are referred to herein as Permitted Transfers. In the event of a transfer pursuant to this Section 8.03 that does not require the consent of the City, the Developer shall nonetheless promptly provide written notice of the same to the City. (a) Transfer of Obligations. In addition to Permitted Transfers as described in the preceding paragraph, the rights, duties and obligations hereunder of the Developer may be assigned, in whole or in part, to another entity with the prior written approval of the City following verification by the City Attorney that the assignment complies with the terms of this Agreement. Any proposed assignee shall have qualifications and financial responsibility, as reasonably determined by the City Manager in the case of an assignment that is subject to the prior consent of the City, necessary and adequate to fulfill the obligations of the Developer with respect to the portion of the Redevelopment Project Area being transferred. Any proposed assignee shall, by instrument in writing, for itself and its successors and assigns, and expressly for the benefit of the City, assume all of the obligations of the Developer under this Agreement and agree to be subject to all the conditions and restrictions to which the Developer is subject (or, in the event the transfer is of or relates to a portion of the Redevelopment Project Area, such obligations, conditions and restrictions to the extent that they relate to such portion). The Developer shall not be relieved from any obligations set forth herein or any liabilities arising herefrom unless and until the City specifically agrees to release the Developer. The Developer agrees to record all assignments in the office of the Register of Deeds of Johnson County, Kansas, in a timely manner following the execution of such assignments. (b) Assumptions of Obligations. The respective obligations of the City and the Developer under this Agreement, unless earlier satisfied, shall inure to and be binding upon the heirs, executors, administrators, successors and assigns of the respective parties as if they were in every case specifically named and shall be construed as a covenant running with the land, enforceable against the purchasers or other transferees as if such purchaser or transferee were originally a party and bound by this Agreement. Notwithstanding the foregoing, no tenant or condominium owner of a portion of the Redevelopment Project Area shall be bound by any obligation of Developer solely by virtue of being a tenant or condominium owner of a portion of the Redevelopment Project Area; provided, however, that no transferee or owner of property within the Redevelopment Project Area except the Developer shall be entitled to any rights whatsoever or claim upon the Public Financing Sources set forth herein, except as specifically authorized in writing by the Developer and consented to in writing in advance by the City. Notwithstanding the foregoing, it is understood that at such time as at least 80% of the residential condominium units have been sold, a homeowners association has been created and is operational with respect to the condominium development, and there is in force and effect a condominium declaration approved by the City which contains customary industry provisions relating to maintenance and insurance of the Project and the common elements thereof, the Developer shall have the right to assign the maintenance and insurance obligations for the Project described in Sections

21 5.03(b) and 5.12 to such homeowner s association to be carried out pursuant to the provisions of such condominium declaration, provided that such homeowner s association accepts such assignment. (c) The foregoing restrictions on assignment, transfer and conveyance shall not apply to (a) any security interest or collateral assignment of rights and benefits granted to secure indebtedness to any construction or permanent lender from which the Developer has borrowed funds to finance all or a portion of the Project and in whose favor Developer has agreed to provide a security interest as collateral for such loan, and (b) the leasing of portions of the Project Site for the uses permitted under the terms of this Agreement or to arm s-length purchases of the Project s condominium units; provided that the purchasers shall be owner-occupiers of such units and shall not be related to or affiliated with the Developer, except that no more than two (2) residential condominium units may be purchased by the Developer or a person related to or affiliated with the Developer at the fair market value of such condominium unit. (d) All restrictions on the sale or conveyance of the Project Site shall terminate upon issuance of a Certificate of Completion; provided that before the Developer can be relieved of any ongoing obligations under Section 5.03(b) or Section 5.12 hereof, the homeowners association of the condominium units described in subsection (b) above shall have executed a consent filed with the Register of Deeds, with a copy to the City, agreeing to be bound by the Insurance provisions set forth in Section 5.03(b) and the operation and maintenance obligations set forth in Section 5.12, and provided further that if any subsequent purchaser or any commercial retail or office property is not a member of the homeowner s association, then such subsequent purchaser shall also be required to execute such a consent. This paragraph does not relieve the Developer of its obligations to comply with all provisions of this Agreement which shall survive such sale, lease or conveyance of the Project Site unless the City has expressly consented, in writing, to the assignment of this Agreement in accordance with Section 8.03(a). (e) Notwithstanding the provisions of this Section 8.03, the Developer may assign or pledge its right to receive reimbursement for Reimbursable Expenses incurred by providing the City with notice of any such assignment or pledge. Such assignment or pledge shall not create any contractual relationship between the City and any person or entity to which the Developer has assigned or pledged its right to receive reimbursement, nor cause such person or entity to succeed to the rights and obligations of the Developer under this Agreement. Such person or entity shall not be entitled to any rights or claim upon the Public Financing Sources set forth herein, unless consented to in writing in advance by the City. ARTICLE IX AUTHORITY Section Actions. Only the Developer or designated Developer s Representative is authorized to act on Developer s behalf to carry out the terms of this Agreement. The City

22 Representative is authorized by the execution of this Agreement to carry out the terms hereof on behalf of the City. Section Powers. The City hereby represents and warrants that the City has full constitutional and lawful right, power and authority, under currently applicable law, to execute and deliver and perform the terms and obligations of this Agreement, and all of the foregoing have been or will be duly and validly authorized and approved by all necessary City proceedings, findings and actions. Accordingly, this Agreement constitutes the legal, valid and binding obligation of the City, enforceable in accordance with its terms and provisions and does not require the consent of any other governmental authority. ARTICLE X DEFAULTS AND REMEDIES Section Defaults General. The following events shall constitute an Event of Default under this Agreement: (a) Subject to the extensions of time set forth in Section 10.06, failure or delay by either party to perform any term or provision of this Agreement, after receiving written notice and failing to cure, as set forth in subsection (b) below, constitutes a default under this Agreement. A party claiming a default (claimant) shall give written notice of default to the other party, specifying the default complained of. (b) The claimant shall not institute proceedings against the other party, nor be entitled to damages if the other party within 14 days from receipt of such written notice, with due diligence, commences to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy within 30 days from the date of receipt of such notice or, if such cure, correction or remedy by its nature cannot be effected within such 30 day period, such cure, correction or remedy is diligently and continuously prosecuted until completion thereof. Section Remedies on Default. (a) Whenever any Event of Default by Developer shall have occurred and be continuing, subject to applicable cure periods, the City may take one or more of the following remedial steps: (i) refuse to approve any further Certificates of Expenditures and make any disbursements until such Event of Default is cured by Developer; (ii) pursue any remedy at law and in equity; or (iii) in the case of a material Event of Default by the Developer, terminate this Agreement

23 (b) Whenever any material Event of Default by the City shall have occurred and be continuing, subject to applicable cure periods, the Developer shall have the right to terminate this Agreement in addition to all remedies at law or in equity. (c) Except as otherwise expressly stated in this Agreement, the rights and remedies or the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default of the other party. Section Legal Actions. (a) Institution of Legal Actions. Any legal actions related to or arising out of this Agreement must be instituted in the District Court of Johnson County, Kansas or, if federal jurisdiction exists, in the Federal District Court in the District of Kansas. (b) Applicable Law. The laws of the State of Kansas shall govern the interpretation and enforcement of this Agreement. (c) Acceptance of Service of Process. (i) In the event that any legal action is commenced by the Developer against the City, service of process on the City shall be made by personal service upon the City Clerk or in such other manner as may be provided by law. (ii) In the event that any legal action is commenced by the City against the Developer, service of process on the Developer shall be made by personal service upon an officer or agent of the Developer and shall be valid whether made within or without the State or in such other manner as may be provided by law. Section Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. Section Inaction Not a Waiver of Default. Any failures or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any action or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. Section Enforced Delay; Extension of Times of Performance. (a) In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where party seeking the extension has acted diligently and delays or defaults are due to events beyond the reasonable control of

24 the party such as but not limited to: default of other party; war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; market conditions; quarantine restrictions; freight embargoes; intergalactic invasion; lack of transportation; unusually severe weather; or any other causes beyond the control or without the fault of the party claiming an extension of time to perform. (b) Times of performance under this Agreement may also be extended in writing by the mutual agreement of City and the Developer. ARTICLE XI GENERAL PROVISIONS Section Time of Essence. Time is of the essence of this Agreement. The City and Developer will make every reasonable effort to expedite the subject matters hereof and acknowledge that the successful performance of this Agreement requires their continued cooperation. Section Amendment. This Agreement, and any exhibits attached hereto (except as otherwise provided hereby), may be amended only by the mutual consent of the parties, upon official action of the City s Governing Body approving said amendment, and by the execution of said amendment by the parties hereto or their successors in interest. Section Immunity of Officers, Employees and Members of the City. No personal recourse shall be had for the payment or reimbursement of the Project costs, including without limitation Reimbursable Expenses, or for any claim based thereon or upon any representation, obligation, covenant or agreement in this Agreement against any past, present or future officer, member, employee or agent of the City, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and any liability of any such officers, members, directors, employees or agents is hereby expressly waived and released as a condition of and consideration for the execution of this Agreement. Furthermore, no past, present or future officer, member, employee or agent of the City shall be personally liable to the Developer, or any successor in interest, for any default or breach by the City. Section Right to Inspect. The Developer agrees that the City, with reasonable advance notice and during normal business hours, shall have the right and authority to review, inspect, audit, and copy, from time to time, all of the Developer s books and records relating to the Project as pertinent to the purposes of this Agreement. Section Right of Access. For the purposes of assuring compliance with this Agreement, representatives of the City shall have the right of access to the Project, without charges or fees, at normal construction hours during the period of construction for purposes related to this Agreement, including, but not limited to, the inspection of the work being performed in constructing the improvements. Such representatives of the City shall carry proper identification, and shall not interfere with the construction activity

25 Section No Other Agreement. Except as otherwise expressly provided herein, this Agreement and all documents incorporated herein by reference supersede all prior agreements, negotiations and discussions, both written and oral, relative to the subject matter of this Agreement and is a full integration of the agreement of the parties. Section Assignments and Transfers. This Agreement shall be binding upon the parties and their respective successors and assigns. The Developer may not assign this Agreement without the prior written consent of the City, except as set forth in Section Section Right to Mortgage. Notwithstanding any other provisions of this Agreement, Developer shall at all times have the right, from and after execution of this Agreement, to enter into or grant one or more Mortgages on any property in the Redevelopment Project Area owned by Developer (the Developer Property ). Developer may encumber, pledge, grant, or convey its rights, title and interest in and to the Developer Property, or any portion or portions thereof, and/or to this Agreement by way of a mortgage (or assignment) to secure the payment of any loan or loans obtained by Developer to finance or refinance the Project and other project improvements from time to time. (a) For purposes of this Section 11.08, the following terms shall have the following meanings: Mortgage means, with respect to the Developer Property (or any portion thereof) a mortgage, deed of trust (whether securing a direct obligation or a guaranty of obligations in connection with a loan secured by an indemnity deed of trust or mortgage), deed to secure debt, security deed, indenture, sale-leaseback documents, lease-leaseback documents, or any other instrument securing payment of a debt that encumbers Developer s interest in the Developer Property. Mortgage shall not include a mortgage, deed of trust, deed to secure debt, security deed, indenture, sale-leaseback documents, lease-leaseback documents, fixture filings, or any other instrument securing payment of a debt of a condominium owner or a retail tenant and/or any or all of its respective affiliates that encumbers the interests of such owner or tenant in the Developer Property and/or Redevelopment Project. Mortgagee means (a) the holder of, or beneficiary under, a Mortgage, (b) in the case of a sale-leaseback transaction, the owner of the reversionary estate, or (c) otherwise, the person to which all or any part of any interest of Developer in the Developer Property (or an interest therein) and/or the Project (or an interest therein) is transferred as security under a Mortgage. (b) Notice of Breaches to Mortgagees. In the event the City gives written notice to the Developer of a breach of its obligations under this Agreement, the City shall forthwith furnish a copy of the notice to the Mortgagees that have been identified in writing to the City by the Developer. To facilitate the operation of this Section, the Developer shall at all times keep the City provided with up-to-date lists of Mortgages and Mortgagees. There shall be no penalty to the City if the City fails to give such notice to any Mortgagee pursuant to this Section

26 (c) Mortgagee May Cure Breach of Developer. (i) In the event that the Developer receives notice from the City of a breach by the Developer of any of its obligations under this Agreement and such breach is not cured by the Developer pursuant to the provisions of this Agreement, the City shall, in addition to the notice described in subsection (b) above, give notice of the failure to cure on the part of the Developer to the Mortgagees at the expiration of the period within which the Developer may cure as set forth in this Agreement. There shall be no penalty to the City if the City fails to give such notice to any Mortgagee pursuant to this Section. A Mortgagee may then proceed to cure any such failure and the Mortgagee, if it elects to cure such default, shall give the City written notice of its intention so to cure within fourteen (14) days after the receipt of the additional notice herein set forth. In the event that a Mortgagee elects to proceed to cure any such default, the Mortgagee shall do so within the applicable cure period contained in this Agreement; provided, however, that the commencement of the cure period for the Mortgagee shall commence on the date the Mortgagee notifies the City of the Mortgagee s election to cure such default. (ii) In the event the Mortgagee elects to exercise its rights of foreclosure under a Mortgage (or appoint a receiver or accept a deed-in-lieu of foreclosure), after foreclosure of Developer s interest in and to the Developer Property (or after the appointment of a receiver or the obtaining of title to the Developer s Property via a deed-in-lieu of foreclosure), the Mortgagee may at its option: (A) elect to assume the position of Developer hereunder, provided that the Mortgagee meets the requirements for transfer under Section 8.03(a) of this Agreement, including obtaining the consent of the City to such transfer. In the event that the Mortgagee elects to assume the obligations of the Developer under this Agreement and the City has terminated the Agreement because of the Developer s default hereunder, the City agrees that this Agreement shall be deemed reinstated upon the assumption hereof by the Mortgagee. If the Mortgagee assumes the Agreement, the Mortgagee shall cure any default by Developer hereunder of which the Mortgagee had received notice, which cure shall be effected within the time frames contained in this Agreement, and shall cause the Project to be substantially completed in accordance with the provisions of this Agreement; or (B) Agreement. elect not to assume the position of the Developer under this If the Mortgagee assumes the position of the Developer hereunder as described in this Section and thereafter (1) fails to timely cure any default by Developer hereunder of which the Mortgagee had notice as described above or to cause the Project to be substantially completed in

27 accordance with the provisions of this Agreement, or (2) fails to timely cure any default which arises or continues hereunder following the Mortgagee s assumption of the position of the Developer of which the Mortgagee is given notice in its capacity as the successor to the Developer, then the Mortgagee shall be subject to all remedies against the Developer which are available to the City hereunder. (iii) For purposes of this Section, the term Mortgagee shall include not only the Mortgagee, as that term is defined in Section hereof, but shall also include any person or entity that obtains title to all or any portion of the Developer Property as a result of the Mortgagee s exercise of its foreclosure rights or the transfer of title to the Developer Property at the direction of the Mortgagee by Developer to a person or entity by deed-in-lieu of foreclosure. (d) Estoppel Certificates. At any time and from time to time, upon the written request of the Developer or the Mortgagee, the City shall execute, acknowledge and deliver to the Developer or the Mortgagee within twenty (20) days of written request, a certificate certifying (a) that this Agreement is unmodified and is in full force and effect (or, if there have been modifications, that this Agreement is in full force and effect, as modified, and stating the date and nature of each such modification); (b) that no notice has been received by the City or issued by the City regarding any default which as not been cured, except as to defaults specified in said certificate; and (c) such other matters relating to the status of the Agreement as may be reasonably requested by the Mortgagee or the Developer. Any such certificate may be relied upon by any prospective purchaser or mortgagee. Section Severability. If any provision, covenant, agreement or portion of this Agreement, or its application to any person, entity or property, is held invalid or unenforceable in whole or in part, this Agreement shall be deemed amended to delete or modify, in whole or in part, if necessary, the invalid or unenforceable provision or provisions, or portions thereof, and to alter the balance of this Agreement in order to render the same valid and enforceable. In no such event shall the validity or enforceability of the remaining valid portions hereof be affected. Section Amendment to Carry Out Intent. If any provision, covenant, agreement or portion of this Agreement, or its application to any person, entity or property, is held invalid, the parties hereto shall take such reasonable measures including but not limited to reasonable amendment of this Agreement or the Redevelopment Project Plan to cure such invalidity where the invalidity contradicts the clear intent of the parties in entering into this Agreement. Section Kansas Law. This Agreement shall be construed in accordance with the laws of the State of Kansas. Section Notice. All notices and requests required pursuant to this Agreement shall be in writing and shall be sent as follows:

28 To the Developer: With copies to: To the City: With a copy to: Mr. Paul Goehausen Market Lofts, L.L.C Cherokee Lane Leawood, KS Greg Musil, Esq. Shughart Thomson & Kilroy 9225 Indian Creek Parkway Suite 1100, Building #32 Overland Park, KS Ms. Kristy Stallings Deputy City Manager City of Overland Park City Hall 8500 Santa Fe Overland Park, KS Kathryn P. Peters, Esq. Kutak Rock LLP Suite Grand Boulevard Kansas City, MO or at such other addresses as the parties may indicate in writing to the other either by personal delivery, courier, or by registered mail, return receipt requested, with proof of delivery thereof. Mailed notices shall be deemed effective on the third day after mailing; all other notices shall be effective when delivered. Section Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement. Section Consent or Approval. Except as otherwise provided in this Agreement, whenever consent or approval of either party is required, such consent or approval shall not be unreasonably withheld. Section Survivorship. Notwithstanding the termination of this Agreement, the Developer s obligations with respect to Section 5.03(a) shall survive the termination of this Agreement. Section Incorporation of Exhibits. The Exhibits attached hereto are incorporated herein by reference and shall be a part of this Agreement to the same extent as if fully set forth herein

29 IN WITNESS WHEREOF, the City and the Developer have duly executed this Agreement pursuant to all requisite authorizations as of the date first above written. CITY OF OVERLAND PARK, a Kansas municipal corporation By Carl R. Gerlach, Mayor ATTEST: Marian Cook, City Clerk APPROVED AS TO FORM: Michael R. Santos, Deputy City Attorney MARKET LOFTS, L.L.C., a Kansas limited liability company By Its:

30 STATE OF KANSAS ) ) ss. COUNTY OF JOHNSON ) On this day of July, 2008, before me appeared Paul Goehausen, to me personally known, who, being by me duly sworn did say that he/she is the Manager of Market Lofts, L.L.C., a limited liability company of the State of Kansas, and that said instrument was signed on behalf of said company by authority of its Board of Directors, and said Paul Goehausen acknowledged said instrument to be the free act and deed of said company. In Testimony Whereof, I have hereunto set my hand and affixed my official seal the day and year first above written. [SEAL] NOTARY PUBLIC My Commission Expires:

31 EXHIBITS Exhibit A Exhibit B Exhibit C Exhibit D Exhibit E Exhibit F Exhibit G Exhibit H Exhibit I Exhibit J Exhibit K Legal Description of Redevelopment Project Area, Project Area A (the Project Site) Sketch of Redevelopment Project Area Redevelopment Project Plan Site Plan and Improvements Incremental Real Property Taxes Calculation and Transfer Model, and Pay-As- You-Go Reimbursement Calculation Model Project Budget City Expenses Reimbursable Expenses Form of Certification of Expenditure Construction Schedule Equity IRR Formula

32 EXHIBIT A LEGAL DESCRIPTION FOR REDEVELOPMENT PROJECT AREA, PROJECT AREA A (THE PROJECT SITE) A tract of land in the NE quarter of Section 30, Township 12 South, Range 25 East, in the City of Overland Park, Johnson County, Kansas, more particularly described as follows: All of Lots 16 through 19 inclusive, Block 1, RESURVEY OF LOTS 1 TO 18 INCLUSIVE IN OVERLAND HILL, a subdivision of land in the City of Overland Park, Johnson County, Kansas; and also a 30 wide tract of land abutting the north side of Lots 16 through 24 inclusive, Block 1, of said subdivision, except that part in the right of way line of what is now known as Overland Park Drive (platted as The Santa Fe Trail Boulevard); and also the west half of the right of way for Marty Avenue abutting the east side of said Lot 16 and also abutting the east end of said 30 wide tract of land

33 EXHIBIT B SKETCH OF REDEVELOPMENT PROJECT AREA

34 EXHIBIT C REDEVELOPMENT PROJECT PLAN

35 EXHIBIT D SITE PLAN AND IMPROVEMENTS

36 80TH ST MARTY ST

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