HomeMy WebLinkAboutCOW 2014-05-12 Item 5C - Agreement - Fire Facilities Agreement with Segale Properties (Tukwila South)COUNCIL AGENDA SYNOPSIS
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Meeting Date
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05/12/14
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INFORMATION
ITEM No.
5.C.
37
STAFF SPONSOR: DAVID CLINE/SHELLEY KERSLAKE
ORIGINAL AGENDA ATE: 05/12/14
AG F,NDA LH N TrnE Fire Facilities Agreement with Segale Properties as part of the Tukwila South
Project.
05/12/14
Motion
Dale 05/19/14
— Resolution
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Ordinance
Altg Date
Bid Award
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Pub/ic Hearing
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Other
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C.vric.„;()Ry Discussion
MA Dale
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SP ONS() R Council Mayor HR
P Finance 7 Fire IT P&R Police PIF
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SP ONS0R' S Consideration of a Fire Facilities agreement with Segale Properties based on timelines
SUMMARY required in the original Development Agreement executed in 2009.
- INIIAVED BY COW Mtg. CA&P Cmte r F&S Cmte Transportation Cmte
Utilities Cmte Arts Comm. Parks Comm. _ Planning Comm.
DATE: COMMIYFEE CHAIR:
RECOMMENDATIONS:
SPoNsct/ADmiN.
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Mayor's Office/City Attorney
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COST IMPACT / FUND SOURCE
ExmNDITuRE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
so so so
Fund Source: N/A
Com Menls: n/a
MTG. DATE
RECORD OF COUNCIL ACTION
05/12/14
MTG. DATE
ATTACHMENTS
05/12/14
Informational Memorandum dated 5/6/14
Fire Facilities Agreement
05/19/14
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TO:
City of Tukwila
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Mayor Haggerton
Tukwila City Council
FROM: David Cline, City Administrator
Shelley Kerslake, City Attorney
[}ATE: May G.2014
SUBJECT: Fire Facilities Agreement
ISSUE
Whether to authorize the Mayor to enter into a Fire Facilities Agreement between Tukwila and
Segale Properties, LLC ("Segale").
BACKGROLJND AND DISCUSSION
In 2009, Tukwila signed a Development Agreement (DA) with Segale for the development of Tukwila
South. Section 4.8.3 of the DA requires that the City and Segale Properties agree on the
development of accounting protocols in order to track operation and maintenance costs associated
with providing Fire, Po|ims, Public Works and Parks services to Tukwila Gouth, as well as track
revenue generated by the deve|Vpnnent, including sales tox. REET, and utility taxes. If the protocols
are not developed or the DA amended to address this issue, the DA will terminate. The
development of these protocols has proven prob|emadc, for various neesnns, such as Tukwila's lack
of a unique zip code. For this reason, the City Administration believed that this was a good time to
reevaluate the need for the financial guarantee and approached Segale to see whether a more
appropriate alternative could be agreed upon.
After several months of negotiation the parties have reached a tentative agreement. Under this
proposal, Segale properties will pay the City $175 million in cash and they will pre-pay $3 million in
impact fees. These payments will be paid on a set schedule over a fifteen-year period. This
obligation will be secured by a deed of trust. This approach accomplishes several thingo, it gives
everyone certainh/, it allows for money to come to the City on an agreed upon schedule which will
provide payments for bonds that will be issued to build the new fire station in Tukwila 8outh, when it
is warranted and it frees up funds for operation and maintenance coverage, should it be needed.
RECOMMENDATION
The Council is being asked to authorize the Mayor to enter into the attached Fire Facilities
Agreement between Tukwila and Sega le.
This item is scheduled for the May 12, 2014 Committee of the Whole meeting.
ATTACHMENTS
Fire Facilities Agreement
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FIRE FACILITIES AGREEMENT
BY AND BETWEEN
THE CITY OF TUKWILA
AND SEGALE PROPERTIES LLC,
THIS FIRE FACILITIES AGREEMENT ( "Agreement ") is made and entered into this day
of May, 2014, by and between the CITY OF TUKWILA ( "City "), a non - charter, optional code
Washington Municipal Corporation, and SEGALE PROPERTIES LLC, a Washington limited
liability company ( "Segale "), formerly known as "LA PIANTA LLC."
I. RECITALS
WHEREAS, the City and Segale entered into a certain Development Agreement relating
to the Tukwila South development ( "Tukwila South "), dated June 10, 2009 (the "Development
Agreement ") as amended pursuant to that certain First Amendment to Development Agreement
dated May 18, 2010 (the "First Amendment ") and that certain Second Amendment to
Development Agreement dated November 21, 2012 (the "Second Amendment "); and
WHEREAS, pursuant to Section 4.6.2 of the Development Agreement, Segale dedicated
to the City, for use as a fire station, the real property legally described on the attached Exhibit A
(the "Fire Station Property "); and
WHEREAS, pursuant to Tukwila Municipal Code chapter 16.26, development activity
with the City of Tukwila is required to pay a fire impact fee; and
WHEREAS, parties agree that there is mutual benefit in the timely construction of a fire
station on the Fire Station Property; and
NOW, THEREFORE, in consideration of the mutual promises set forth herein and the
long -term benefit to both the City and Segale, the parties hereby agree as follows:
II. AGREEMENT
1. Defined Terms. Defined terms used herein shall have the meaning set forth in the
Development Agreement and Tukwila Municipal Code chapter 16.26.
2. Fire Impact Fees. The City is authorized under RCW 82.02.050 through RCW
82.02.090 to collect an Impact Fee to fund fire facilities needed to serve growth and
development. The terms of this Agreement are expressly contingent on the City,
during the Term of this Agreement, keeping in full force and effect the provisions of
Tukwila Municipal Code chapter 16.26, which may be amended from time -to -time,
and assessing an Impact Fee on all Development Activity within the Tukwila South
Project. However, the City retains the ability to waive or otherwise reduce impact
fees on a development by development basis, pursuant to state law; provided that the
reduction in fees does not fall below the City refund requirement pursuant to this
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agreement. For purposes of this Agreement, the Impact Fee collected by the City
from Development Activity within the Tukwila South Project shall be referred to as
the "Project Impact Fee(s)."
3. Impact Fee Payment. In order to mitigate the impacts of the Tukwila South Project
on the City's fire facilities, Segale shall make the following payments, which shall be
paid in annual installments commencing December 1, 2017 (the "Annual
Installments "), in accordance with the payment schedule set forth in the attached
Exhibit B (the "Payment Schedule "):
a. Segale shall pay the City a non - refundable mitigation fee in the amount of
One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00) (the
"Mitigation Payment ").
b. Segale shall pay the City a refundable Impact Fee deposit in the amount of
Three Million Dollars ($3,000,000.00) (the "Impact Fee Deposit ").
4. Refund of Deposit. The City shall provide Segale with a refund of the Impact Fee
Deposit (the "Refund "), provided that the Project Impact Fees shall be the sole source
of revenue for the Refund, and provided further, Segale shall not be entitled to receive
interest on the Impact Fee Deposit. Commencing January 1, 2018, the Refund shall
be paid by the City annually, no later than January 31St of each year, in an amount
equal to the Project Impact Fees collected by the City during the preceding year (the "
Annual Refund "); provided, the Annual Refund amount shall not exceed the total
amount of Annual Installments paid as of the date of the Annual Refund and in the
event the annual amount of Project Impact Fees exceeds the total Annual
Installments, the balance shall be carried forward and refunded in subsequent years.
5. Record Keeping. The City shall maintain records of the Project Impact Fees, and the
City shall provide Segale with quarterly reports indicating the amount of Project
Impact Fees collected during the preceding quarter.
6. Use of Impact Fee. The City shall use the Mitigation Payment and the Impact Fee
Deposit solely for financing the design, construction and operation of fire facilities on
the Fire Station Property, and for no other purpose. The City shall commence
construction of a fire station on the Fire Station Property by the end of the payment
schedule set forth in Section 2.b.
7. Security for Payment. Segale's obligation to pay the Mitigation Payment and the
Impact Fee Deposit shall be secured by a deed of trust, in the form of the attached
Exhibit C (the "Deed of Trust "), recorded against the real property legally described
in the attached Exhibit D (the "Encumbered Property "). Segale shall have the right to
substitute as security from time to time one or more deeds of trust in the same or
similar form on other real estate acceptable to the City in the exercise of reasonable
discretion so long as the unencumbered value of the substituted collateral is equal to
or greater than Segale's financial obligation under this Agreement.
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8. Term of Agreement. This Agreement shall remain in effect for the latter of (i) fifteen
(15) years, or (ii) until Segale receives a full refund of the Impact Fee Deposit.
9. Assignment of Rights. In its sole discretion, Segale may assign this Agreement to
any party who acquires, through lease or purchase, 50% or more of the property
within the Tukwila South Project.
10. Default. No party shall be deemed in default under this Agreement unless it has
failed to perform as required for a period of thirty (30) after written notice of default
from the other party. A party not in default under this Agreement shall have all rights
and remedies provided by law or equity, including without limitation damages,
specific performance, or writs to compel performance or require action consistent
with this Agreement. In the event the City defaults in the performance of its
obligation under this Agreement, Segale shall, in addition to all remedies available at
law or equity, be entitled to suspend performance of its obligations until the City's
default is cured.
11. General Provisions.
a. Notice. All communications, notices, and demands of any kind that a party
under this Agreement requires or desires to give to any other party shall be in
writing and either (i) delivered personally, (ii) sent by facsimile transmission
with an additional copy mailed first class, or (iii) deposited in the U.S. mail,
certified mail postage prepaid, return receipt requested, and addressed as
follows:
If to the City: City of Tukwila
6300 Southcenter Boulevard
Tukwila, Washington 98188
Attn: Mayor's Office and
Director of Public Works and
Director of Community Development
If to Segale:
Segale Properties LLC
P.O. Box 88028
Tukwila, Washington 98138 -2028
Attn: Mr. Mark A. Segale
Notice by hand delivery or facsimile shall be effective upon receipt, provided
that notice by facsimile shall be accompanied by mailed notice as set forth
herein and shall be evidenced by a machine - printed confirmation of successful
transmission. If deposited in the mail, certified mail, return receipt requested,
notice shall be deemed delivered forty -eight (48) hours after deposited. Any
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party at any time by notice to the other party may designate a different address
or person to which such notice or communication shall be given.
b. Payments. Any payment required to be made pursuant to the terms of this
Agreement, which is not paid by the due date set forth herein, shall be subject
to an interest charge at the rate of 12% per annum.
c. Authority. Each party respectively represents and warrants that it has the
power and authority, and is duly authorized, to enter into this Agreement on
the terms and conditions herein stated, and to deliver and perform its
obligations under this Agreement.
d. Exhibits Incorporated. Exhibits A through D are incorporated herein by this
reference as if fully set forth.
e. Headings. The headings in this Agreement are inserted for reference only and
shall not be construed to expand, limit or otherwise modify the terms and
conditions of this Agreement.
f. Time of the Essence. Time is of the essence of this Agreement and of every
provision hereof. Unless otherwise set forth in this Agreement, the reference
to "days" shall mean calendar days. If any time for action occurs on a
weekend or legal holiday in the State of Washington, then the time period
shall be extended automatically to the next business day.
g. Entire Agreement. This Agreement represents the entire agreement of the
parties with respect to the subject matter hereof. There are no other
agreements, oral or written, except as expressly set forth herein.
DATED this day of April, 2014.
CITY OF TUKWILA
SEGALE PROPERTIES LLC
By: Metro Land Development, Inc.,
Its: Manager
By:
Jim Haggerton, Mayor By:
M. A. Segale, President
Attest /Authenticated:
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City Clerk
Approved as to Form:
Office of the City Attorney
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EXHIBIT A
Legal Description of Fire Station Property
New Parcel C of City of Tukwila Boundary Line Adjustment No. L 13 -005, as
recorded in the public records of King County, Washington, under recording no.
20130227900005.
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EXHIBIT B
Payment Schedule
Payment Date
Payment
Amount
Dec. 1, 2017
$ 500,000.00
Dec. 1 2018
$ 300,000.00
Dec. 1, 2019
$ 300,000.00
Dec. 1, 2020
$ 300,000.00
Dec. 1, 2021
$ 300,000.00
Dec. 1, 2022
$ 300,000.00
Dec. 1, 2023
$ 300,000.00
Dec. 1, 2024
$ 300,000.00
Dec. 1, 2025
$ 300,000.00
Dec. 1, 2026
$ 300,000.00
Dec. 1, 2027
$ 300,000.00
Dec. 1, 2028
$ 300,000.00
Dec. 1, 2029
$ 300,000.00
Dec. 1, 2030
$ 300,000.00
Dec. 1, 2031
$ 350,000.00
Total
Payments
$ 4,750,000.00
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EXHIBIT C
Form of Deed of Trust
DEED OF TRUST
(For Use in the State of Washington)
THIS DEED OF TRUST, made this _ day of 2014, between SEGALE PROPERTIES LLC, a
Washington limited liability company, GRANTOR, whose address is 5811 Segale Park Drive C, Tukwila, WA
98188, COMMONWEALTH LAND TITLE COMPANY OF PUGET SOUND, LLC, a Washington limited liability
company, TRUSTEE, whose address is 14450 N.E. 29`h Place, #200, Bellevue, WA 98007, and THE CITY OF
TUKWILA, a non - charter, optional code Washington municipal corporation, BENEFICIARY, whose address is
6200 Southcenter Boulevard, Tukwila, WA 98188.
WITNESSETH: Grantor hereby bargains, sells, and conveys to Trustee in trust, with power of sale, the following
described real property in King County, Washington:
[See Exhibit A attached hereto and incorporated herein]
Assessor's Tax Parcel ID# 3523049120
which real property is not used principally for agricultural or farming purposes, together with all tenements,
hereditaments, and appurtenances now or hereafter thereunto belonging or in any wise appertaining, and the rents,
issues and profits thereof.
This deed is for the purpose of securing performance of each agreement of grantor herein contained, and
Grantor's obligation under that certain Fire Facilities Agreement between Grantor and
Beneficiary dated the _ day of , 2014 and approved by the Beneficiary's City Council as
Ordinance on 2014.
To protect the security of this Deed of Trust, Grantor covenants and agrees:
1. To keep the property in good condition and repair, to permit no waste thereof; to complete any building, structure
or improvements being built or about to be built thereon, to restore promptly any building, structure, or
improvement thereon which may be damaged or destroyed; and to comply with all laws, ordinances, regulations,
covenants, conditions and restrictions affecting the property.
2. To pay before delinquent all lawful taxes and assessments upon the property; to keep the property free and clear
of all other charges, liens or encumbrances impairing the security of this Deed of Trust.
3. To keep all buildings now or hereafter erected on the property described herein continuously insured against loss
by fire or other hazards in an amount not less than 90% of the insurable value thereof. All policies shall name
Beneficiary as a loss payee as its interest may appear. In the event of foreclosure, all rights of the Grantor in
insurance policies then in force shall pass to the purchaser at the foreclosure sale.
4. To defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary
or Trustee, and to pay all costs and expenses, including cost of title search and attorney's fees in a reasonable
amount, in any such action or proceeding, in any suit brought by Beneficiary to foreclose this Deed of Trust.
5. To pay all costs, fees and expenses in connection with this Deed of Trust, including the expenses of the Trustee
incurred in enforcing the obligation secured hereby and Trustee's and attorney's fees actually incurred, as provided
by statute.
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6. Should Grantor fail to pay when due any taxes, assessments, insurance premiums, liens, encumbrances or other
charges against the property hereinabove described, Beneficiary may pay the same, and the amount so paid, with
interest at the rate set forth in the note secured hereby, shall be added to and become a part of the debt secured in this
Deed of Trust.
IT IS MUTUALLY AGREED THAT
1. In the event any portion of the property is taken or damaged in an eminent domain proceeding, the entire amount
of the award or such portion as may be necessary to fully satisfy the obligation secured hereby, shall be paid to the
Beneficiary to be applied to said obligation.
2. By accepting payment of any sum secured hereby after its due date, Beneficiary does not waive its right to
require prompt payment when due of all other sums so secured or to declare default for failure to so pay.
3. The Trustee shall reconvey all or any part of the property covered by this Deed of Trust to the person entitled
thereto, on written request of the Grantor and the Beneficiary, or upon satisfaction of the obligation secured and
written request for reconveyance made by the Beneficiary or the person entitled thereto.
4. Upon default by Grantor in the payment of any indebtedness secured hereby or in the performance of any
agreement contained herein, all sums secured hereby shall immediately become due and payable at the option of the
Beneficiary. In such event and upon written request of Beneficiary, Trustee shall sell the trust property, in
accordance with the Deed of Trust Act of the State of Washington, at public auction to the highest bidder. Any
person except Trustee may bid at Trustee's sale. Trustee shall apply the proceeds of the sale as follows: (1) to the
expense of the sale, including a reasonable Trustee's fee and attorney's fee; (2) to the obligation secured by this
Deed or Trust; and (3) the surplus, if any, shall be distributed to the persons entitled thereto.
5. Trustee shall deliver to the purchaser at the sale its deed, without warranty, which shall convey to the purchaser
the interest in the property which Grantor had or had the power to convey at the time of his execution of this Deed of
Trust, and such as he may have acquitted thereafter, Trustee's deed shall recite the facts showing that the sale was
conducted to compliance with all the requirements of law and this Deed of Trust, which recital shall be prima facie
evidence of such compliance and conclusive evidence thereof in favor of bona fide purchaser and encumbrances for
value.
6. The power of sale conferred by this Deed of Trust and by the Deed of Trust Act of the State of Washington is not
an exclusive remedy; Beneficiary may cause this Deed of Trust to be foreclosed as a mortgage.
7. In the event of the death, incapacity, disability, or resignation of Trustee, Beneficiary may appoint in writing a
successor trustee, and upon the recording of such appointment in the mortgage records of the county in which this
Deed of Trust is recorded, the successor trustee shall be vested with all powers of the original trustee. The trustee is
not obligated to notify any party hereto of pending sale under any other Deed of Trust or of an action or proceeding
in which Grantor, Trustee or Beneficiary shall be a party unless such action or proceeding is brought by the Trustee.
8. This Deed of Trust applies to, inures to the benefit of, and is binding not only on the parties hereto, but on their
heirs, devisees, legatees, administrators, executors and assigns. The term Beneficiary shall mean the holder and
owner of the note secured hereby, whether or not named as Beneficiary herein.
Segale Properties LLC
By Metro Land Development, Inc.
Its Manager
Mark A. Segale, Vice President
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STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this day of , 2014, before me, the undersigned, a Notary Public in and for the State of
Washington, duly commissioned and sworn, personally appeared Mark A. Segale, to me known to be the person
who signed as Vice President of Metro Land Development, Inc., Manager of SEGALE PROPERTIES LLC, the
limited liability company that executed the within and foregoing instrument, and acknowledged said instrument to
be the free and voluntary act and deed of said partnership for the uses and purposes therein mentioned, and on oath
stated that Mark A. Segale was authorized to execute said instrument on behalf of the company.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.
(Signature of Notary)
(Print or stamp name of Notary)
NOTARY PUBLIC in and for the State of Washington,
residing at
My appointment expires:
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EXHIBIT "A" to Deed of Trust
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EXHIBIT D
Legal Description of Encumbered Property
THAT PORTION OF THE SOUTHWEST 1/4 OF THE NORTHEAST 1/4 OF SECTION 35, TOWNSHIP 23
NORTH, RANGE 4 EAST, W.M., DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF THE SOUTHWEST 1/4 OF THE NORTHEAST 1/4 OF
SAID SECTION 35;
THENCE SOUTH 87 °50'09" EAST ALONG THE NORTH LINE THEREOF 449.30 FEET;
THENCE SOUTH 02 °09'51" WEST 36.00 FEET TO THE SOUTH MARGIN OF SOUTH 180TH STREET
AND THE TRUE POINT OF BEGINNING;
THENCE SOUTH 87 °50'09" EAST ALONG SAID SOUTH MARGIN 786.92 FEET;
THENCE ALONG A CURVE TO THE RIGHT HAVING A RADIUS OF 50.00 FEET THROUGH A CENTRAL
ANGLE OF 95 °35'05" AN ARC DISTANCE OF 83.41 FEET;
THENCE SOUTH 07 °44'56" WEST 348.56 FEET;
THENCE NORTH 87 °50'09" WEST 802.76 FEET;
THENCE NORTH 02 °09'51" EAST 401.77 FEET TO THE TRUE POINT OF BEGINNING;
(ALSO KNOWN AS LOT 3 OF CITY OF TUKWILA BOUNDARY LINE ADJUSTMENT NO. 93 -0085,
RECORDED UNDER KING COUNTY RECORDING NO. 9311301961);
SITUATE IN THE CITY OF TUKWILA, COUNTY OF KING, STATE OF WASHINGTON.
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