MAYOR AND BOARD OF A LDERMEN

Transcription

1 EXECUTIVE SUMMARY MAYOR AND BOARD OF A LDERMEN Date: 5/10/2018 Submitted By: Presented By: Others Present Meeting Dates Richard Griffin, AICP, CEcD - Director of Economic Development Richard Griffin, AICP, CEcD - Director of Economic Development Saundra Nickols, City Attorney Andrea Mattei, Esq. - Ballard Spahr, LLP Katie Barkdoll, Budget Director Workshop: 5/23/2018 Special Workshop 7PM Business Meeting: Public Meeting: 6/21/2018 Agenda Item: Discussion of an Amended and Restated Memorandum of Understanding with Plamondon Hospitality Partners regarding the Downtown Frederick Hotel and Conference Center Overview: The City of Frederick (City) executed an initial Memorandum of Understanding (MOU) with Plamondon Hospitality Partners (PHP) on December 23, 2015 following workshop discussion and public hearing. As anticipated under that MOU, the City and PHP have worked consistently to secure public and private financing commitments, gain site control, design the project, estimate construction costs, and obtain regulatory approvals from the City Historic Preservation Commission, Maryland Historic Trust, and Department of Housing and Community Development. Those joint efforts have resulted in a refined size, design, cost, and funding of the project. It is now necessary to amend and restate the original MOU to reflect such changes. At the direction of the Mayor s office a multi-discipline team from the City and PHP has prepared the Amended and Restated MOU including but not limited to: CITY: PHP: Mayor Michael O Connor City Attorney Saundra Nickols Andrea Mattei, Esq. Ballard Spahr, LLP Budget Director Katie Barkdoll Director of Economic Development Richard Griffin City Planning/Engineering/DPW Peter Plamondon, Jr., Co-President, PHP Ed Prensky, Chief Financial Officer, PHP Joe Briglia, Director of Real Estate Development, PHP David Weymer, Esq./Managing Director Berkadia Hotels David Edgerley, Consultant

2 Executive Summary Key Changes: Private Funding of Conference Center: No public funding will be used to construct the Conference Center or associated hotel. As of May, 2017, it was announced by the City and PHP that the conference center portion of the project will be solely privately funded by the developer/php, and that all revenue and risk from its operation will be retained by PHP. The original MOU anticipated that all or a portion of the conference center construction cost will be borne by public funding. Note: It has always been anticipated that the construction cost of the hotel will be solely privately funded by PHP. Reduction of Public Costs: The overall estimated public cost for site acquisition and preparation, historic mitigation, and construction of a public parking garage (with a podium roof), roadway, streetscape, and parkscape has decreased from an estimated $31 million to an estimated $17.5 million. Increased Size of Public Parking Garage: The size of the on-site below grade public parking garage has increased from 104 spaces in the original MOU to 160+/- spaces. Key Points/Terms: 2 P a g e PURPOSE: To develop a full-service downtown hotel and conference center to fill a demonstrated geographic and market need for full-service downtown overnight accommodations with sufficient meeting, conference, and event space to serve existing business, resident, and visitor needs as well as induce new economic impact. DEVELOPER: PHP was selected as the project developer following an RFP process in accordance with the City s Purchasing Policies. PHP is a local Frederick based company with deep experience in the local and regional hotel market operating 9 hotels in 3 states. including hotel development, ownership, and management. PROPOSAL: Development of a Full Service Marriott Hotel with associated meeting/event space to be constructed as a condominium unit on top of a new city-owned parking garage with a podium roof structure. 199 (+/-) Guest Rooms 22,000 (+/-) SF of Useable Meeting and Pre-Function Space 160 (+/-) space Public Parking Garage with Podium Roof Retail, Restaurant, and Rooftop Lounge Terrace on Carroll Creek Park Renovation of Historic Frederick Railroad Building

3 Executive Summary CONSTRUCTION CONTRACTS: PHP will act as the developer of the entire project on behalf of (1) itself for the hotel/conference center and (2) the City for the parking garage. Development costs will be shared equitably. PRIVATE COST: PHP is fully responsible for all costs of design, construction, ownership, operation, maintenance, and long-term capital improvements for the $55 million dollar hotel and conference center, as well as the $7 million renovation of the historic Frederick Railroad Building. GROUND LEASE TERMS: The City and PHP will enter into a 99-year ground lease to allow the privately owned hotel and conference center condominium to occupy space above the public parking garage and public land. The ground lease will be divided into four terms and will generate approximately $12 million over the life of the lease: Initial Term (Years 1-25) - $82,842 per year (after three year phase in) 2 nd Term (Years 26-50) Increases 1.25% per year 3 rd Term (Years 51-75) Increases 1.25% per year 4 th Term (Years 76-99) Increased 1.25% per year 3 P a g e PUBLIC COST: The City is responsible for the estimated $17.5 million in site acquisition and public infrastructure costs, utilizing funding from the City Parking Fund and bond proceeds from incremental city, county, and hotel tax revenue, along with state grants. Public infrastructure generally includes site acquisition (land), public parking, utilities, streetscape, creekscape, and related roadway improvements. SITE: The City intends to pay for and own the land which makes up the development site. PHP has negotiated for site control and intends to assign its land purchase agreements to the City. The City has conducted appraisals to gain a thirdparty evaluation of the land value. SITE PREPARATION: The City is responsible for the cost of site preparation including demolition, historic mitigation efforts (archeology etc.), grading, utilities, and other related site work. PARKING: The City intends to construct a 160 (+/-) space public parking garage with a podium roof to support the private hotel/conference center condominium. The parking garage will be open to the public as all other City owned parking facilities. The City reserves the right to operate the facility itself (parking department) or contract with PHP to operate the facility on its behalf for a fee. REIMBURSEMENTS: Both PHP and the City have expended dollars to advance the project forward. The MOU anticipates that such costs shall be allocated on a formula basis and are to be reimbursed equitably through the project funding. Certain eligible costs incurred by PHP on behalf of both itself and the City through April 30, 2017, with respect to design, planning, engineering, evaluations and other project management services shall be shared as follows:

4 Executive Summary PHP is responsible for 67% of such costs (related to the hotel). City is responsible for 33% of the costs and intends to reimburse PHP from public funding sources as available. (related to the public portions of the Project site acquisition, parking garage, utilities, roadway/streetscape/park improvements and conference center development). Certain eligible costs incurred by PHP on behalf of both itself and the City after May 1, 2017 with respect to design, planning, engineering, evaluations and other project management services shall be shared as follows: PHP is responsible for 78.2% of such costs (related to the hotel & conference center) City is responsible for 21.8% of such costs and intends to reimburse PHP from public funding sources as available. (related to the public portions of the Project site acquisition, parking garage, utilities, roadway/streetscape/park improvements). In no event will City reimbursement to PHP exceed the available funds for the capital improvement project. PROJECT HISTORY: The project has received considerable support since its inception from the City, County, and State as follows: 2009 Chamber Creates Downtown Hotel Advisory Committee (DHAC) 2010 DHAC conducts initial Market Analysis (Pinnacle & OPX) 2012 City/County approve Joint MOU in mutual support of the project 2012 $250,000 Bond Bill approved by State for Planning/Design 2012 $250,000 City CIP approved by City for Planning/Design 2012 Maryland Stadium Authority conducts updated Market Study (Crossroads/HGS) 2013 JLL Retained by City to advise on site/developer selection 2013 Stakeholder Outreach Meetings 2014 RFP for Downtown Hotel/Conference Center issued by City (2 Responses) 2014 $250,000 DHCD SDSGIF Grant awarded for site acquisition 2015 City Awards Project to Plamondon Hospitality Partners through MOU 4 P a g e

5 Executive Summary 2016 $500,000 DHCD SDSGIF Grant awarded for site acquisition 2017 State Capital Funding APPROVED o o FY18 $5.0 million ($1+$4) (Approved by City needs BPW approval) FY19 Pre-Authorized $7.5 million for related project capital costs o FY20 Pre-Authorized $3.5 million for related project capital costs 2017 Initial $250,000 DHCD SDSMIF Grant is lost due to spending deadline 2017 Frederick HPC approves demolition of rear of FNP Building 2017 Frederick HPC conditionally approved demolition of Birely Tannery Building 2017 Frederick HPC approves Level 1 design for the new construction of the Hotel/Conference Center/Parking Garage Facility 2017 Frederick HPC approves renovation design for the Frederick Railroad Building (old FNP Building) 2017 DHCD/MHT/Consulting Parties hold meetings to discuss mitigation/moa Draft MHT Agreement is pending approval by DHCD/MHT/CITY 2018 State Capital Funding - REAUTHORIZED FY19 $5.0 million ($1M+$4M) Needs City/BPW approval Committee Recommendations if Applicable: N/A Fiscal Impact: City Parking Fund CIP # The public funding sources for the project are incremental property taxes generated by the project, hotel taxes collected solely at this facility, along with State capital and departmental program grants which are supported from new state taxes and fees anticipated from the project. The City will own the land and public parking and will receive rent from PHP. PUBLIC FUNDING SOURCES $Millions Cash City Parking Fund Bond Funding City Parking Revenue City/County Tax Increment Ground Lease Revenue Hotel Tax Grants DHCD SDSGIF Grant FY16 MD Capital Grant FY12/17 MD Capital Grants FY18/ Total Funding $ P a g e

6 Executive Summary Recommendation: Discussion Move to 6/21/18 Public Hearing for Approval Supporting Documentation: 1. Amended and Restated MOU dated 5/10/2018 with Appendices 2. MOU with Plamondon Hospitality Partners dated 12/23/2015 Director: Date: 5/9/ P a g e

7 DISCUSSION DRAFT MAY 10, 2018 AMENDED AND RESTATED MEMORANDUM OF UNDERSTANDING by and between THE CITY OF FREDERICK, MARYLAND a municipal corporation of the State of Maryland and PLAMONDON HOSPITALITY PARTNERS, LLC a Maryland limited liability company, 2018

8 DISCUSSION DRAFT MAY 10, 2018 TABLE OF CONTENTS Page I. PURPOSE AND INTRODUCTION, APPROVALS... 2 (a) Purpose and Introduction... 2 (b) Approvals... 2 (c) No Partnership or Joint Venture... 2 II. TOTAL PROJECT COSTS; SOURCES AND USES... 3 (a) Public Funds, Private Funds and/or Equity... 3 (b) City Approval of Public Podium/Garage... 3 (c) Approval of Hotel, Conference Center, and Retail Area... 3 (d) General Contractor... 4 (e) Construction Oversight... 4 (f) Impact Fees and Similar Costs... 4 (g) Business Personal Property Taxes... 4 (h) Final Development Project Budget... 4 III. COST AND EXPENSE MANAGEMENT PLAN... 5 (a) Cost and Expense Management and Approval... 5 (b) City Costs and Developer Costs... 5 (c) Other Cost Allocations and Reimbursements... 6 (d) Maryland Historical Trust ( MHT ) Mitigation... 6 (e) Party Agreement as to Project Components; Additional Expenditures... 6 IV. PROJECT LEGAL STRUCTURE; CERTAIN TERMS AND CONDITIONS... 6 (a) City Property... 6 (b) Project Structuring... 6 (c) Ground Lease Structuring... 7 (d) Ground Lease Terms... 7 (e) Project Operator(s)... 7 (f) Hotel Brand Preapproval... 7 (g) Project Facilities Program... 8 (h) Status of Historical Preservation Approval... 8 (i) City Ownership of Public Podium/Garage... 8 (j) Other Public Benefits... 9 V. FINANCIAL CLOSING... 9 (a) Financial Closing... 9 (b) Conditions to Financial Closing VI. LEGAL AGREEMENTS i

9 DISCUSSION DRAFT MAY 10, 2018 VII. MILESTONES -TARGET DATES VIII. LIST OF APPENDICES IX. GENERAL CONDITIONS (a) Binding and Non-Binding Terms (b) Final Transaction Documents (c) Governmental Agencies (d) Compliance with Applicable Law, Permits, Approvals (e) Termination X. MISCELLANEOUS (a) Captions or Headings: Interpretation (b) Execution and Delivery (c) Amendments and Waivers (d) Ratification (e) Applicable Law (f) Sophistication of the Parties (g) Waiver of Trial by Jury (h) Notices (i) Computation of Periods APPENDIX A APPENDIX B APPENDIX C APPENDIX D APPENDIX E APPENDIX F Updated Site Plan and Project Schematic Design Project Development Budget and Sources and Uses of Funds Project Costs Incurred to Date Ground Lease Terms Project Facilities Program Milestone Schedule ii

10 DISCUSSION DRAFT MAY 10, 2018 AMENDED AND RESTATED MEMORANDUM OF UNDERSTANDING THIS AMENDED AND RESTATED MEMORANDUM OF UNDERSTANDING (the MOU ) by and between THE CITY OF FREDERICK (the City ) and PLAMONDON HOSPITALITY PARTNERS, LLC (the Developer, each a Party and collectively, the Parties ) is made this day of, RECITALS WHEREAS, the Developer s response to RFP 14-J set forth a proposal for the construction, development and financing of a full service hotel (the Hotel ) and ancillary uses and meeting space (the Conference Center ), to be located on (i) that approximately 1.86 acre parcel of land known as 200/212 East Patrick Street, Frederick, Maryland and (ii) that approximately 8,500 square foot parcel of land adjacent to the southern boundary of 220 East Patrick Street, Frederick, Maryland (collectively, the Land ), which the Developer has the right to acquire via fully executed purchase and sale agreements with, respectively, East Patrick Street, LLC and La Scola & Sons, LLC (collectively, the PSA ); WHEREAS, in addition to the development of the Hotel and Conference Center, the Developer s response to RFP 14-J included development of a public parking garage, public features, and other related streetscape, parkscape, and roadway improvements, and other eligible public improvements and items constituting public infrastructure (the foregoing, collectively, the Public Podium/Garage ) upon the Land (defined below); WHEREAS, on September 3, 2014, the City of Frederick Mayor and Board of Aldermen and Frederick County, Maryland adopted Joint Resolution (the Joint Resolution ) To Support A Public Private Partnership For The Development Of A Frederick Downtown Hotel And Conference Center for funding the construction costs of certain related eligible public infrastructure such as transportation and streetscape improvements, parking, utilities, and other amenities as may be approved by the City; WHEREAS, the City and the Developer entered into that certain Memorandum of Understanding dated December 23, 2015 (the Initial MOU ) to memorialize the selection of Developer and to establish the terms for the creation of a public-private partnership between the City and the Developer solely for the purposes of constructing the Project as described in the Initial MOU; WHEREAS, as the Project has progressed and the terms and conditions of the Initial MOU are now refined, the Parties agreed to enter into this MOU to set out the anticipated sources and uses of public funds and private funds, the deployment of public funds and private funds in furtherance of the Project, and such other matters that are material to their relationship at this time. NOW THEREFORE, the Parties above hereby agree to amend and restate the Initial MOU in its entirety, subject to the following terms and conditions: 1

11 DISCUSSION DRAFT MAY 10, 2018 I. PURPOSE AND INTRODUCTION, APPROVALS. (a) Purpose and Introduction. Since the execution of the Initial MOU, the City and the Developer have continued a broad range of activities to advance the Project (as defined below), including the Hotel, Conference Center, Public Podium/Garage, and retail and restaurant venues (the Retail Area, and together with the Hotel, Conference Center, and Public Podium/Garage, the Project ). The Project will be located on all or a portion of the land depicted on the attached Updated Site Plan and Project Schematic Design included as Appendix A to this MOU (the Land ), as such Updated Site Plan and Project Schematic Design may be amended in accordance with this MOU. The Parties acknowledge and agree that the Land comprising the Project is expected to be acquired by the City by or through agreements with one or more parties, with public monies, and then subjected to a ground lease and subdivision (which may include a condominium structure) controlled by the City (discussed more fully, below). This proposed structure will result in the Project consisting of two basic components. One component will be the Public Podium/Garage, which will be located on the Land and will be developed, owned, operated, and managed by the City. The other component will be the Hotel, Conference Center, and Retail Area, which will also be located on the Land and subject to a ground lease in favor of the City, with those portions (the Hotel, Conference Center, and Retail Area) being leased to the Developer or an affiliate of the Developer (a private party), and operated and managed by the private party for its benefit. The City and the Developer may elect to convey the Retail Area to the Developer; if that step is taken, the Developer will pay to the City an agreed price for the Retail Area, and then the Developer will own, in fee simple, the Retail Area. (The Developer will then lease the Hotel and Conference Center from the City under the ground lease; a more detailed discussion of this structure is set out in Article IV, Project Legal Structure). To assure all constituencies interested in the Project that all sources, uses, and payment of funds for this Project occur in a manner consistent with the separation of ownership of public or municipal components and ownership, control, operation and management of the private components, the Parties have presented this MOU to highlight and explain those distinctions. (b) Approvals. Throughout this MOU, the terms City Approval and Developer Approval are utilized. In each instance where those terms are used, the concept of approval is agreed by the Parties to mean approval granted or withheld in the sole discretion of such Party. Such approval is presumed to have been granted or withheld only after the relevant Party has complied with and obtained, if needed, all necessary internal review and approvals, and administrative steps required by the Party as these steps apply within their organization. For clarity, City Approval may embrace approval of the City acting on its own behalf or on behalf of Governmental Agencies (defined below). (c) No Partnership or Joint Venture. The City and Developer are collaborating in this public/private partnership to bring the Project to fruition. For clarity, however, this collaboration does not create and is not intended by the Parties to create or establish any joint venture, partnership, agency or other similar relationship between the City and the Developer. Nothing in this MOU is to be construed as permitting or obligating the City or Developer to act as a financial or business advisor or consultant to one another, as permitting or obligating the City or the Developer to conduct or direct the business operations of one or the other or as creating any 2

12 DISCUSSION DRAFT MAY 10, 2018 fiduciary obligation on the part of the City to the Developer or of the Developer to the City (other than as may be specifically agreed in writing by the Parties). II. TOTAL PROJECT COSTS; SOURCES AND USES. (a) Public Funds, Private Funds and/or Equity. The Project is subject in all respects to: (i) the appropriation, allocation, grant, and receipt, by and through the City, Frederick County and/or the State of Maryland, as applicable, either directly or through agencies or authorities, of funds sufficient to acquire the Land and develop the Public Podium/Garage and off-site improvements, if required, as set forth on the Project Development Budget and Sources and Uses of Funds attached hereto and made a part hereof as Appendix B (the Public Funds ); and (ii) the receipt of funds from private institutional and equity investors sufficient to finance the acquisition of certain portions of the Project from the City and/or to lease from the City, and to construct to full completion, opening, and operation each of the Hotel, Conference Center, Retail Area, and additional features (the Private Funds and/or Private Equity ). The timeframes to acquire, construct, open, and operate the Hotel, Conference Center, Retail Area, and Public Podium/Garage shall be determined prior to or in connection with the Financial Closing. These financial and other arrangements shall be subject to all necessary permitting and other approvals by the City for the Project and approval, as applicable, by (v) each public funding agency, (w) City Approval and Developer Approval, (x) Frederick County and the State of Maryland (as necessary), (y) investors in the Private Funds and/or Private Equity for the Project, and (z) the Developer s franchisor for the Hotel. Each Party acknowledges and agrees that no commitments, promises, or undertakings of any type with respect to either the Public Funds or the Private Funds and/or Private Equity have been made by any Party as an inducement to entering into this MOU. (b) City Approval of Public Podium/Garage. City Approval shall be required with respect to the design, plans, specifications, contracts, management, and operation of the Public Podium/Garage. City Approval may also include subcontractor agreements where consistent with customary municipal requirements. The construction and financial risk of completing, opening, operating, and maintaining the Public Podium/Garage shall be borne by the City. The Public Podium/Garage shall constitute a single cost center and general construction contract. The City and the Developer will collaborate on obtaining the Public Funds. (c) Approval of Hotel, Conference Center, and Retail Area. Developer Approval (with City Approval concurrence) shall be required with respect to the design, plans, specifications, contracts, management, and operation of the Hotel, Conference Center, and Retail Area. The construction and financial risk of completing, opening, operating, and maintaining the Hotel, Conference Center, and Retail Area, and any additional features shall be borne by the Developer. The Hotel, Conference Center, and Retail Area shall constitute a single cost center and general construction contract. Developer will be solely responsible for obtaining the Private Funds and Private Equity as shown on the Project Development Budget and Sources and Uses of Funds attached hereto as Appendix B. The obligations, performance, and/or agreements of the Developer in the future may be entered into or fulfilled by the Developer and one or more of its subsidiaries and affiliates; provided, however, the Developer shall be solely and fully responsible for the performance of the terms, covenants, and conditions of this MOU. Assignment by the Developer to any subsidiaries or affiliates of the Developer to be memorialized at the Financial 3

13 DISCUSSION DRAFT MAY 10, 2018 Closing shall occur following not less than ten (10) Business Days prior written notice to the City; provided, however, that any intended assignment of the Ground Lease and any agreements related to the Ground Lease and/or any proposed use or operation of the Public Podium/Garage shall only occur subject to such prior written notice to the City and City Approval. (d) General Contractor. Developer shall serve as the general contractor under each of the construction agreements (Hotel, Conference Center, Retail Area, Public Podium/Garage) which, at the option of the City, will be cross-defaulted. The City shall have the right to exercise City Approval (in its reasonable, as opposed to sole, discretion) for the construction contract(s) for the Hotel, Conference Center, and Retail Area with respect to matters relating to coordination and provisions for cross-default. City Approval of the construction contract for the Public Podium/Garage is mandatory. (e) Construction Oversight. Developer will oversee the construction and delivery of the Project and agrees to collaborate with state agencies involved in the Project. (f) Impact Fees and Similar Costs. The Project Development Budget and Sources and Uses of Funds assume the Hotel, Conference Center and Retail Area will pay all fees normally required, including without limitation Impact Fees (water, sewer, and parks) as such fees cannot be waived. The Public Podium/Garage will only pay such fees as required. If fees are assessed on the entire Project, the fees will be paid on a proportionate basis as part of the overall Project financing. (g) Business Personal Property Taxes. The Parties acknowledge that the City of Frederick is in the process of a phase-out of the Business Personal Property Tax (Section of the City of Frederick Code). The Developer intends to seek City Approval for commensurate monetary benefit or reimbursement from the City in an amount equal to One Hundred Percent (100%) of business personal property taxes paid by Developer, during the period beginning with the first year of operations of the Project and continuing until the first to occur of (i) the City no longer imposing a Business Personal Property Tax (due to an approved Business Personal Property Tax phase-out); or (ii) ten (10) years thereafter. The Developer acknowledges that this reimbursement approval is not in place and remains subject to City Approval. (h) Final Development Project Budget. As a condition precedent to the Financial Closing, the Parties shall use good faith efforts (including, without limitation, making agreed upon changes in scope) to prepare, negotiate, and complete a final development project budget which shall set forth the total anticipated costs for the Project ( Final Development Project Budget ). The Final Development Project Budget will be completed in accordance with the Milestone Schedule (attached to this MOU) in a manner which will allow the Parties to seek Public Funds and Private Funds and/or Private Equity required for the Project, and which will ultimately form the basis for draw schedules and disbursements of the Private Funds (and certain components of the Public Funds). Additional provisions relating to the Final Development Project Budget are set out in Article V, Financial Closing, below. 4

14 DISCUSSION DRAFT MAY 10, 2018 III. COST AND EXPENSE MANAGEMENT PLAN. (a) Cost and Expense Management and Approval. The Parties agree that they will actively manage the costs and expenses of the Project to assure its success. Through April 30, 2018, each of the City and the Developer have expended or advanced funds for third party services and project expenses as summarized in the Schedule attached hereto as Appendix C titled, Project Costs Incurred To Date. (i) For specific costs incurred by the Developer prior to April 30, 2017, with respect to design, planning, engineering, evaluations and other project management services incurred by and paid for by the Developer to third party contractors as identified on Appendix C, the Developer shall be responsible for an estimated 67% of such costs which are attributed to the non-public portions of the Project (primarily the Hotel). The City shall be responsible for reimbursing the Developer for the remaining estimated 33% of the costs associated with the public portions of the Project (primarily the Parking Garage, street work, streetscape upgrades, utility improvements, and Conference Center development) as identified in Appendix C. (ii) Commencing May 1, 2017, with respect to costs for design, planning, engineering, evaluations, architecture and construction planning and other project management services and other agreed costs incurred by the Developer for the Project, the Developer will pay 78.2% of such costs and the City, 21.8% of such costs. In no event will reimbursement exceed the available funds for the capital improvement project. The City s agreement to reimburse the Developer for 21.8% of the eligible costs will occur at the time of the Financial Closing, and is contingent upon the City s total Project Costs being included in the Project Budget for payment from available Public Funds. The Developer and the City shall each be responsible for the cost of any legal, financial, or other advisors and consultants required by each Party relating to their participation in the Project and shall not be a shared cost of the Project. (iii) For purposes of subsection (i) and (ii), above, the costs which are eligible for allocation and reimbursement between the Developer and the City will be determined by the Parties, subject to City Approval and Developer Approval. (b) City Costs and Developer Costs. The Project Costs incurred by the Developer and the City as of April 30, 2018 are shown on the schedule of Project Costs Incurred to Date attached hereto as Appendix C, which schedule shall be updated by the Developer and the City at periodic intervals as mutually agreed upon by the Parties, and in any event is subject to compilation and review at any time upon the request of either the City or the Developer. The Parties note that reimbursement to the Developer for various costs incurred in the land assemblage (discussed below) is a part of the Final Development Project Budget. Those portions of the various costs incurred in the land assemblage which are properly and proportionately allocated to the Public Podium/Garage shall be subject to payment from Public Funds. 5

15 DISCUSSION DRAFT MAY 10, 2018 (c) Other Cost Allocations and Reimbursements. The City and Developer may agree to split other costs (subject to City Approval) on a proportionate basis, in each case estimated as a percentage based on the Project Development Budget and Sources and Uses of Funds as allocated to each component of the Project. (d) Maryland Historical Trust ( MHT ) Mitigation. Each party will fund, as incurred, its equitable allocation of the costs associated with the MHT mitigation agreement, which equitable allocation will be mutually agreed by the City and the Developer. With respect to the MHT Mitigation Agreement, the Parties agree that the City will bear land related mitigation costs, such as archeological, and that the Developer will bear internal costs such as costs associated with displaying pictures, signs, and narrative markers or posters located within the Hotel. (e) Party Agreement as to Project Components; Additional Expenditures. Subject to future negotiation and compromise, the City and Developer are in general agreement with the planning process, timing, and anticipated third party service costs related to the acquisition of the various parcels comprising the Land and the design and development of the Conference Center and specific on-site and off-site project enhancements and improvements. The Parties anticipate spending additional funds to advance the Project through building design, building demolition, and final site plan approvals, and all such expenditures before made shall be mutually reviewed, examined, and as required, approved. IV. PROJECT LEGAL STRUCTURE; CERTAIN TERMS AND CONDITIONS. (a) City Property. At the Financial Closing, the City is anticipated to acquire fee simple title to the Land and any existing improvements thereon ( City Fee Interest ). City Approval shall have, in each instance, been granted to all terms of the PSA and any purchase and other agreements relating to the Land, as for example, the purchase price, allocation of carrying costs, adjustments and prorations, and easements. The City Fee Interest acquired at the Financial Closing (i) will include the property subject to the PSA; and (ii) may include such other additional parcels which the City and the Developer agree are necessary and/or beneficial to the Project and which have been, in each instance, placed under contract by Developer subject to the prior receipt of written City Approval to the terms and conditions thereof in all respects (collectively, City Property ). The costs of acquiring the City Property shall be included in the Project Development Budget, Sources and Uses of Funds and Final Project Development Budget. To the extent any portion of the City Property does not benefit the Public Podium/Garage, the Parties will determine a mutually acceptable manner of equitable allocation of such costs, and shall compensate the City for its portion of such costs in connection with the Financial Closing. (b) Project Structuring. Simultaneously with the Financial Closing, the City Property is anticipated to be subdivided, which subdivision may include a condominium plat demarcating the various parcels (i.e., Hotel/Conference Center Component, Retail Area Component, Public Podium/Garage Component) (the Land Regime ). The Land Regime will also include a costsharing arrangement for future use, costs, and benefits of the Developer Property (defined below) with the Public Podium/Garage, and will allocate responsibility for various aspects of the Developer Property between the City and the Developer. The City Property may be divided in a 6

16 DISCUSSION DRAFT MAY 10, 2018 manner which creates separate parcels, including the separation of portions of the various improvements of a parcel located on the City Property. At the time any proposed contract for acquisition by the City is submitted for City Approval, the City and the Developer will agree, as a condition to the granting of City Approval, on the manner of the division, if any, of the parcel component and the associated pricing before City Approval for the underlying contract is granted. Unless otherwise agreed by the Parties, the costs of the various parcels shall be determined based on the purchase price of the parcels and an appraisal received by the City and the Developer for certain parcels, as allocated to each parcel on a cost-per-square-foot-basis. (c) Ground Lease Structuring. Simultaneously with the Financial Closing, the City and the Developer (or a subsidiary or affiliate of the Developer pursuant to an assignment as permitted by Article II (c)) will enter into a Ground Lease. The City will be the Ground Lessor and will lease to the Developer the Hotel/Conference Center Component and, if it is not acquired in fee simple by the Developer, the Retail Area Component ( Developer Property ), together with such other common elements and/or interests as the City and the Developer may determine. The City will own the Public Podium/Garage (which will not be subject to the Ground Lease or secure any of the financing of the Project). (d) Ground Lease Terms. The Ground Lease shall be commercially reasonable and financeable on terms customary to the industry, including without limitation, a triple net lease with an initial Twenty-five (25) year term, a second renewal term and a third renewal term of Twenty-five (25) years each, and a fourth and final renewal term of Twenty-four (24) years; if each renewal term is exercised, the full Term will total of Ninety-nine (99) years. Annual Rent payments to the City and such other terms and conditions to which the City and Developer will mutually agree are set out as the Ground Lease Terms attached hereto as Appendix D. (e) Project Operator(s). The Developer may form one or more single purpose ownership entities to own and operate the Developer Property. The Developer may form a separate single purpose ownership entity to (i) own, develop, and operate the Hotel or Conference Center ( Hotel Operator ) and (ii) the Retail Area ( Retail Operator ), in which case each of the Hotel Operator and the Retail Operator will be joint tenants under the Ground Lease, jointly and severally liable for all rents and other obligations of the lessee thereunder (the Hotel Operator and Retail Operator, collectively, the Project Operator ). In the event Developer acquires the Retail Area, the term Project Operator will also mean Owner for such area, and the ground lease will not apply thereto. The City and the Developer may also agree to enter into an exchange of ownership of the Retail Area and a portion of any additional land which the Developer places under contract, as the City and the Developer may agree. The Parties recognize that any determination of the manner of exchange or conveyance of all or any portion of the Project (i.e., the Hotel or Retail Area components) will be addressed and mutually agreed in connection with the creation and completion of the subdivision and the Land Regime prior to the Financial Closing. (f) Hotel Brand Preapproval. The Project is expected to be branded as an upscale full-service hotel by and through one of the full service systems within the Marriott International, Hilton Worldwide, or Hyatt Hotels Corporation brands (the Pre-Approved Brands ), such brand to be determined by the Developer and approved by the City. The Hotel will be managed by an affiliate of Developer or by another professional manager, either of which shall be experienced 7

17 DISCUSSION DRAFT MAY 10, 2018 in the management of hospitality properties. The Hotel will be designed, constructed and operated to meet the requirements for the Frederick County Tourism Council s hotel infrastructure program. (g) Project Facilities Program. The Developer hereby covenants and agrees to observe and abide by each and all of the requirements of the City s Development and Review Process and all applicable laws, ordinances, and regulations. The Project Facilities Program as revised and updated here is set forth as Appendix E to this MOU ( Project Facilities Program ). The City and the Developer acknowledge that the final Project Facilities Program may be modified by mutual agreement of the City and the Developer in accordance with the provisions set forth below. The City and the Developer acknowledge that the Project Facilities Program is not final and that there is potential for the Project Facilities Program to be modified due to a change in conditions for the Project, changes required by the City s Development Review Process, or a change in the amount of Public Funds available to the Project. The City and Developer agree that they will use good faith efforts to approve necessary changes in the Project Facilities Program and that should a change in the Project Facilities Program be made, they will work in good faith to modify this MOU. (h) Status of Historical Preservation Approval. As of April 30, 2018, the Project has received several approvals from the City Historic Preservation Commission ( HPC ). (i) On July 13, 2017, the HPC approved demolition of the non-contributing rear press room portion of the FNP/Trolley Building which occupies a portion of the Land. (ii) On September 14, 2017, the HPC conditionally approved demolition of the contributing Birely Tannery building which occupies a portion of the Land. The City has worked collaboratively with the Maryland Department of Housing and Community Development ( DHCD ) and the Maryland Historical Trust ( MHT ) to produce a draft Memorandum of Agreement and Mitigation Work Plan for execution by the City, DHCD, and MHT. (iii) On November 9, 2017, the HPC approved the Level 1 Design of the new construction of the Hotel, Conference Center and Parking Garage. (iv) On February 8, 2018, the HPC approved the design for the renovation of the FNP/Trolley/Railroad Building. (i) City Ownership of Public Podium/Garage. The Public Podium/Garage shall be owned in fee simple by the City and the City shall own, manage and control the Public Podium/Garage consistent with the City s ownership and management of its other garage and parking locations, including without limitation, the determination of management and pricing by the City. The number of parking spaces and use of the Public Podium/Garage will be determined by the City based on the financing and design requirements in accordance with The City of Frederick Code, giving consideration to on-site parking needs for the Hotel as required by The City of Frederick Code. 8

18 DISCUSSION DRAFT MAY 10, 2018 (j) Other Public Benefits. Among other agreements, in exchange for the Public Funds and future pubic investment in the Project, Developer agrees to: (i) Provide the City (as determined by the Mayor in furtherance of governmental purposes for the benefit of the City from time to time) exclusive use of the Conference Center ballrooms, meeting space, and pre-function areas free of rental charge a minimum of six (6) days/nights per calendar year in perpetuity with at least six (6) months prior written notice of the dates selected. (ii) Develop and implement programs/techniques in partnership with Frederick County Tourism Council, Downtown Frederick Partnership and The City of Frederick Economic Development Department to encourage and track hotel guest and group patronage of downtown Frederick businesses - particularly restaurants, retail shops, museums, arts, Carroll Creek Park, etc. (iii) Cultivate usage of the Conference Center by large groups (businesses, associations, etc.) for multi-day meetings and conferences which generate hotel room demand in the entire Frederick hotel market and which increase retail foot traffic downtown. The Parties acknowledge that maximizing the number of high quality, profitable group events is critical to the overarching financial success and economic impact of the Project. V. FINANCIAL CLOSING. (a) Financial Closing. The Parties shall use good faith efforts (to include, without limitation, making agreed upon changes in scope) to complete the Project within the Final Development Project Budget. If and to the extent that the final consolidated costs of the Project are less than the amounts shown in the Final Development Project Budget, Developer will share the savings with the City in proportion to the ratio of Public Funds to Private Funds and Private Equity relative to the Public Funds. The Parties hereby acknowledge that as the scope of the final Project Facilities Program is agreed upon, the Public Funds, as well as the Private Funds and/or Private Equity requirements, shall be adjusted in a manner which considers whether the scope change was driven by the City or by the Developer. To the extent that common aspects of the combined Project may increase the costs of the design, construction or plans and specifications attributed to the entire Project, the Parties will act in good faith to proportionally allocate such costs. Once the final Project Facilities Program is agreed, the Developer shall bear all responsibility for cost overruns beyond the amounts set forth as contingency in the Final Development Project Budget, unless the reason for the cost overrun was a scope change requested by the City following City Approval. Delivery and exchange of the final, definitive documents memorializing the transaction and binding upon all Parties will occur concurrently with the completion of all financial arrangements and all approvals and release of funds. All documents, agreements, and understandings required by and between third parties and the City and the Developer which shall have been completed and memorialized in writing are collectively referred to as the Transaction Documents. The Transaction Documents will be exchanged and delivered at closing and funding of the entire Project (the Financial Closing ) and the Public Funds, which are subject to additional legislative and other funding source approvals and requirements, will be deposited with and held by a bond trustee or similar fiduciary custodian for 9

19 DISCUSSION DRAFT MAY 10, 2018 disbursement to the Developer in accordance with the Transaction Documents for eligible Project costs in concert with all other sources of funding provided by or through the Developer. (b) Conditions to Financial Closing. The Financial Closing and the delivery of the Transaction Documents are dependent upon satisfaction of, among other things and without limitation, the following conditions: (i) The approval, prior to the execution of the Transaction Documents, of The City of Frederick and/or Frederick County for a bond issue or similar form of public finance and/or other Public Funds and the assignment as allowable of such proceeds therefrom to Developer to be used for the development of the Project; (ii) City Approval and Developer Approval shall be required prior to execution of the Transaction Documents; and, as needed, approval by Frederick County and the State of Maryland. Each of the Developer, the City, Frederick County, and the State of Maryland shall all have confirmed their authority to enter into the Transaction Documents; (iii) Developer shall have secured the Private Funds and raised the Private Equity. The City acknowledges that the amount of each may vary so long as the total of the Private Funds and the Private Equity, when taken together, is sufficient to meet the Developer s obligations to complete construction of the Project in accordance with the approved plans and specifications, such approval requiring City Approval. Public Funds, Private Debt, and Private Equity shall all have been committed and secured in amounts sufficient for completion of the Project; (iv) The Developer shall submit an executed copy of the franchise agreement with one of the Pre-Approved Brands; (v) The Developer shall provide reasonable evidence to the City that Developer is positioned to commence and complete the Project; (vi) The City shall have approved the Final Development Project Budget; (vii) The City and the Developer, shall have each approved, executed and delivered the Transaction Documents setting forth in detail the roles and responsibilities of the Parties related to the development, construction and financing of the Project. To the extent required, the City and the Developer shall have obtained the review, approval, and execution and delivery of any Transaction Documents required from Frederick County and/or the State of Maryland; (viii) The Developer shall provide satisfactory evidence that the selected contractor (or contractors) has or will obtain payment and performance bonds reasonably acceptable to the City and other public funding agencies securing its obligations to complete the Project; and 10

20 DISCUSSION DRAFT MAY 10, 2018 (ix) The Project has received final site plan approvals and required City permitting approvals to commence construction. VI. LEGAL AGREEMENTS. The Parties agree to use reasonable good faith efforts to negotiate and execute and to cause other third parties to negotiate agreements and complete related transactional requirements so as to complete the Financial Closing within the timeframe set forth on the Milestone Schedule attached hereto as Appendix F. The Parties may, at their option, endeavor to negotiate and complete a master development and funding agreement ( Master Development Agreement ) or determine instead to proceed to the negotiation and completion of the Transaction Documents to avoid duplication of effort and expense. VII. MILESTONES -TARGET DATES. The Parties agree to give their good faith efforts to achieve the development target dates as outlined in the Milestone Schedule, attached as Appendix F, acknowledging however that Appendix F may be revised and amended from time to time. VIII. LIST OF APPENDICES. Each of the Appendices to this Agreement will be updated prior to execution of the Transaction Documents, as necessary, to reflect the Final Facilities Program. IX. GENERAL CONDITIONS. (a) Binding and Non-Binding Terms. This MOU sets forth the efforts of the Parties to provide a mutually satisfactory understanding of all aspects of the proposed transaction and the steps forward to completion. ACCORDINGLY, EXCEPT FOR THE ITEMS SET FORTH IN (i) THROUGH (vii), BELOW, THIS MOU IS NOT BINDING UPON THE PARTIES, EXCEPT TO THE EXTENT IT REFLECTS THE INTENT TO PROCEED WITH AND NEGOTIATE IN GOOD FAITH DEFINITIVE WRITTEN AGREEMENTS WITH RESPECT TO THE BUSINESS TERMS AND CONDITIONS SET FORTH HEREIN. (i) This MOU grants to the Developer the continuing and exclusive right to negotiate and finalize with the City (a) a definitive written agreement regarding the construction, development and financing of the Project (the Master Joint Development and Funding Agreement ) and (b) the Transaction Documents, together with any other required documents to effectuate the Project, for a period though and until December 31, 2019, unless terminated or extended prior to that date by mutual written agreement of the City and the Developer; (ii) Article I, Section (b) and Article I, Section (c); (iii) Article II, which specifies that public funding as available will occur through future agreements, which future agreements will specify terms of ownership and operations and the receipt of which the Parties acknowledge is a mutual and fundamental contingency of this MOU, together with other conditions 11

21 DISCUSSION DRAFT MAY 10, 2018 and requirements which the Parties have agreed to observe and perform relating to the Project and its financing; (iv) (v) Article III, Cost and Expense Management Plan; Article IV, Sections (g), (i), and (j); (vi) Article IX, Section (d); (Compliance with Applicable Law, Permits, Approvals); and Section (e), (Termination); and (vii) Article X, Miscellaneous. (b) Final Transaction Documents. This MOU identifies certain material terms relevant to portions of the proposed Project and the understanding of the Parties on some material points; acknowledging, however that this MOU will be superseded by the final Transaction Documents, which shall control. (c) Governmental Agencies. The obligations and/or agreements of the City may be entered into or fulfilled by an authority or agency designated by the City, Frederick County, Maryland and/or the State of Maryland (the foregoing, the Governmental Agencies ). The City shall be responsible for coordinating with Frederick County, Maryland and/or the State of Maryland as necessary; provided, however, the City makes no guaranty or warranty of the performance of such entities. The obligations and/or agreements of the Developer may be entered into or fulfilled by the Developer and its subsidiaries and affiliates; provided, however, any such assignment or delegation shall occur in connection with the Financial Closing, consistent with the provisions of Article II (c) concerning written notice to and approval by the City. (d) Compliance with Applicable Law, Permits, Approvals. Developer will at all times comply with all federal, state and local laws, ordinances and regulations, including without limitation the City, Frederick County, Maryland and/or State of Maryland requirements in connection with the design, plans, specifications, contracts, management, construction and operation of the Project. The Developer and the City will agree on the full list of permits and approvals required by the City, Frederick County, the State of Maryland, and the United States. (e) Termination. Prior to the Financial Closing, either party may terminate this MOU, for any reason or no reason, by providing thirty (30) days prior written notice to the nonterminating party of its intention to do so ( Termination Notice Period ). At the time of notice of termination, Developer and the City agree to review and determine the amounts, if any, agreed by the Developer and the City in accordance with Article III, Cost and Expense Management Plan, which remain to be reconciled and paid between the Parties. Upon such termination, the City and the Developer shall be released from any and all obligations hereunder, except any obligations which City and Developer agree expressly survive. NEITHER THE CITY NOR THE DEVELOPER SHALL BE ENTITLED TO PURSUE ANY SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH SUCH TERMINATION, AND THE SOLE REMEDY OF THE CITY AND THE DEVELOPER HEREUNDER IS TO SEEK PAYMENT OF THOSE AMOUNTS WHICH ARE AGREED AS 12

22 DISCUSSION DRAFT MAY 10, 2018 DUE AND OWING IN ACCORDANCE WITH ARTICLE III, COST AND EXPENSE MANAGEMENT PLAN. X. MISCELLANEOUS. (a) Captions or Headings: Interpretation. The captions or headings of the sections and subsections of this Agreement are for convenience only, and shall not control or affect the meaning or construction of any of the terms or provisions of this MOU. Wherever in this MOU the singular number is used, the same shall include the plural and vice versa and the masculine gender shall include the feminine gender and vice versa as the context shall require. (b) Execution and Delivery. The Parties mutually and reciprocally confirm that each is duly authorized to enter into this MOU, that such Party has duly executed and delivered this MOU, and that this MOU constitutes a valid and legally binding (to the extent set forth herein) agreement of the Parties, enforceable against such Party in accordance with its terms, subject to general equitable principles. (c) Amendments and Waivers. No change, alteration, amendment, modification, or waiver of any of the terms or provisions of this MOU shall be valid, unless the same shall be in writing and signed by the City and the Developer. (d) Ratification. This MOU amends and restates in its entirety the Initial MOU, and is intended to ratify, supercede and control all prior understandings of the Parties. (e) Applicable Law. This MOU shall be governed and construed according to the laws of the State of Maryland. (f) Sophistication of the Parties. Each Party hereto hereby acknowledges and agrees that it has consulted competent legal counsel in connection with the negotiation of this MOU and that it has bargaining power equal to that of the other parties hereto in connection with the negotiation and execution of this MOU. Accordingly, the Parties agree the rule of contract construction to the effect that an agreement shall be construed against the draftsman shall have no application in the construction or interpretation of this MOU. (g) Waiver of Trial by Jury. CITY AND DEVELOPER EACH IRREVOCABLY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY IN CONNECTION WITH THIS MOU. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY THE CITY AND THE DEVELOPER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EITHER PARTY IS AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER PARTY. (h) Notices. All notices given by either Party to the other shall be in writing and shall be sent (i) by United States Postal Service registered or certified mail, postage prepaid, return receipt requested, or (ii) by prepaid nationally recognized overnight courier service for next Business Day delivery, addressed to the other Party at the address(es) listed below, or (iii) via 13

23 DISCUSSION DRAFT MAY 10, 2018 electronic or facsimile transmission to the electronic or facsimile numbers listed below; provided, however, that if such communication is given via electronic or facsimile transmission, an original counterpart of such communication shall concurrently be sent in the manner specified in subsection (ii) above. Addresses and facsimile numbers of the Parties are as follows: As to the Developer: PLAMONDON HOSPITALITY PARTNERS, LLC 4991 New Design Road Suite 109 Frederick, MD Attn: Peter H. Plamondon, Jr. with a copy to: David J. Weymer, Esq. The Law Offices of David J. Weymer 15 Franklin Street Annapolis, MD djweymer@aol.com As to the City: THE CITY OF FREDERICK, MARYLAND Michael C. O Connor, Mayor Office of the Mayor City Hall 101 North Court Street Frederick, MD with a copy to: Saundra A. Nickols, Esq. City Attorney City of Frederick 101 North Court Street Frederick, MD snickols@cityoffrederick.com and Ballard Spahr, LLP 300 East Lombard Street, 18 th Floor Baltimore, MD Attn: Andrea M. Mattei, Esq. Fax: (410)

24 DISCUSSION DRAFT MAY 10, or to such other address as the respective Parties may hereafter designate by notice in writing in the manner specified above. Any notice may be given on behalf of any Party by its counsel. Notices given in the manner aforesaid shall be deemed sufficiently served or given for all purposes under this MOU upon the earliest of (i) actual receipt (including receipt of an electronic or facsimile transmission copy, but only if an original of such electronic or facsimile transmission copy is properly sent by overnight courier as provided above) or refusal by the addressee, or (ii) three (3) Business Days following the date such notices, demands, or requests shall be deposited in any Post Office, or branch Post Office regularly maintained by the United States Government, or (iii) one (1) Business Day after delivered to the overnight courier service, as the case may be. (i) Computation of Periods. If the final day of any period of time in any provision of this MOU falls upon a Saturday, Sunday, or a holiday observed by federally insured banks in the State of Maryland or by the United States Postal Service (any of the foregoing, a Holiday ), then, the time of such period shall be extended to the next day which is not a Saturday, Sunday, or Holiday. Unless otherwise specified, in computing any period of time described in this MOU, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period is so computed is to be included, unless such last day is a Saturday, Sunday or Holiday in which event the period shall run until the end of the next day which is neither a Saturday, Sunday or Holiday. A Business Day shall be any day that is not a Saturday, Sunday or Holiday. [SIGNATURES APPEAR ON THE FOLLOWING PAGE] 15

25 DISCUSSION DRAFT MAY 10, 2018 The Parties to this MOU hereby acknowledge their intent to negotiate upon and finalize Transaction Documents pursuant to the terms herein as of this day of, THE CITY OF FREDERICK, MARYLAND PLAMONDON HOSPITALITY PARTNERS, LLC Michael C. O Connor, Mayor By: Name: Title: Approved as to Form: Saundra A. Nickols, City Attorney 16

26 DISCUSSION DRAFT MAY 10, 2018 APPENDIX A: UPDATED SITE PLAN and PROJECT SCHEMATIC DESIGN Appendix A Page 1

27 Appendix A Page 2

28 Appendix A Page 3

29 Appendix A Page 4

30 Appendix A Page 5

31 Appendix A Page 6

32 Appendix A Page 7

33 Appendix A Page 8

34 Appendix A Page 9

35 DISCUSSION DRAFT MAY 10, 2018 APPENDIX B: PROJECT DEVELOPMENT BUDGET and SOURCES AND USES OF FUNDS Appendix B Page-1

36 DISCUSSION DRAFT MAY 10, 2018 APPENDIX C: PROJECT COSTS INCURRED THROUGH APRIL 30, 2018 Appendix C Page-1

37 DISCUSSION DRAFT MAY 10, 2018 APPENDIX D: GROUND LEASE TERMS 1. Initial Term (Years 1-25): The Initial Term shall begin at issuance of the City Occupancy Permit for the Project. Rent payments during construction shall be zero. During Stabilization, payment of Rent will be phased in at 25% of the annual Rent for the first year, 50% in the second year, and 75% in the third year. It is understood and agreed that the annual Rent will be adjusted based on the final actual land purchase price. Using this formula and based on the current estimated purchase price of the Land, annual Rent beginning in the fourth year of the Initial Term (and for the balance of the Initial Term), will be Eighty-Two Thousand, Eight Hundred and Forty-Two Dollars and No/100 ($82,842.00); 2. Second Term (Years 26-50): The Rent shall be the same as that in Year 25 and shall be increased thereafter at 1.25% per year on a cumulative basis. 3. Third Term (Years 51-75): The Rent shall be the same as that in Year 50 and shall be increased thereafter at 1.25% per year on a cumulative basis. 4. Fourth and Final Term (Years 76-99): The Rent shall be the same as that in year 75 and shall be increased thereafter at 1.25% per year on a cumulative basis; and 5. Lease of the Land shall include a Right of First Offer on terms acceptable to the City and the Developer. Appendix D Page 1

38 DISCUSSION DRAFT MAY 10, 2018 APPENDIX E Appendix E Page 1

39 Appendix E Page 2