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HomeMy WebLinkAboutSpecial 2011-12-19 Item 5C - Briefing - Tukwila Village Draft Deal TermsCo uNcm A GENDA S YNOPS IS Initlall l TESYl 1 Y O. Meeting Date Prepared by Mayor's review Goutu {l review 12/19/11 I DCS I W 5-C. I ITEM INFORMATION STAFF SPONSOR: DCS I ORIGINAL. AGENDA DATE: 12/19/11 AGENDA ITEM TITLE Tukwila Village Proposed Development Terms CATEGORY Discussion Motion Resolution Ordinance BidAvard Public Hearing Other Mtg Date 12/19/11 Mtg Date Alltg Date Mtg Date b'Itg Dnte Mtg Date Mtg Date SPONSOR Council Mayor HR DCD Finance Fire IT P&R Police Pal% SPONSOR'S This item is for council discussion of the proposed terms and conditions for development of SUMMARY Tukwila Village. This items is for information only. REVIEWED BY COW Mtg. CA &P Cmte F &S Cmte Utilities Cmte Arts Comm. Parks Comm. DATE: COMMITTEE CHAIR: RECOMMENDATIONS:. SPONSOR /ADMIN. Mayors Office COMMITTEE Not Applicable COST IMPACT/ FUND SOURCE EXPENDI'T'URE REQUIRED AMOUNT BUDGETED Fund Source: Comments: MTG. DATE 1 Transportation Cmte Planning Comm. APPROPRIATION REQUIRED RECORD OF COUNCIL ACTION MTG. DA` E I ATTACHMENTS 12/19/12 I Informational Memorandum dated 12/1412 011 Summary of Proposed Terms and Conditions dated 12/14/11 Draft Site Plan dated 12- 19 -2 011 I I 15 x City of Tukwila_ Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM TO: FROM: DATE: SUBJECT ISSUE Mayor Haggerton Derek Speck, Economic Development Administrator December 14, 2011 Tukwila Village Proposed Development Terms This report is intended to provide an overview of the proposed terms for a development agreement between the City and the developer of Tukwila Village. BACKGROUND On June 6, 2011 the City Council selected Tukwila Village Development Associates, LLC (TVDA) as the developer for Tukwila Village. Since that time the City and TVDA have been negotiating a development agreement and TVDA has been performing due diligence and design work for the proposed development. The City and TVDA have also been negotiating with the King County Library System (KCLS) in order for a KCLS branch library to be built on the site. The City, TVDA, and KCLS are nearing completion of negotiating the main terms that would be included in a development agreement. We are tentatively scheduled to bring a proposed development agreement to Council in February 2012. The next steps are to finish negotiations and draft the development agreement. Since those steps will consume significant time and resources, this is a good opportunity for Council to provide feedback to ensure we are moving in the right direction. We have attached a "Summary of Proposed Terms and Conditions" which is intended to form the basis for a development agreement. This summary is not the development agreement. Although it has some language that may sound like it is an agreement, it is non binding and is simply to be used as a communication tool so all parties can be clear about intent. We have also attached a draft schematic site plan for the proposed development. This is a draft only and the City has made no commitments to approve it. The site plan has not been formally submitted nor reviewed by the City departments and the City, TVDA, and KCLS are still working on issues such as the location of the plaza. It is very likely the site plan will change as the project moves forward. DISCUSSION TVDA has proposed a development with, as a minimum, the following uses: King County Library Branch Police Resource Center 8,000 square feet 2,000 square feet 17 INFORMATIONAL MEMO Page 2 Office (medical /dental) Retail Indoor Community Commons Outdoor Community Plaza Age- Restricted Apartments Non -age Restricted Apartments 20,000 square feet 7,000 square feet 2,000 square feet 20,000 square feet 300 units 80 units The general concept for the development agreement is for the City to sell all of the Tukwila Village property to TVDA who would then develop the entire site with the exception that TVDA would sell or lease a portion of the site to KCLS. KCLS would then build and operate a branch library on the site. The following are brief summaries of the main terms and conditions: Phasing: TVDA anticipates developing the property in two phases: Phase 1 will be the property north of South 144 Street; Phase 2 will be the property south of South 144 Street. If TVDA constructs the site and frontage improvements for the library parcel, that would occur during Phase 1 although KCLS could construct its building as a later phase. Library Parcel: The parties intend for the library to be built on land the Northeast corner of the intersection of Tukwila International Boulevard and South 144 Street, which we refer to as the "library parcel KCLS has expressed intent to build a building of at least 8,000 square feet with the capacity for expansion up to 10,000 square feet if they are able to find sufficient funding. City Approval Process: Under the current approach, all City approvals related to the development are intended to occur through regular City processes; however, the development agreement provides some additional protections for the City. These protections are possible because the City owns the property and has the right to seek them. They are necessary if the City would like this project to set an example for excellent design and quality for future development along the Boulevard and to achieve the City's vision for the development. First, as part of approving the development agreement, the City Council would also approve a "preliminary site plan which would have a similar amount of detail as the site plan attached to this staff report. If TVDA later wants to submit a proposed site plan significantly different from the preliminary version, the new version must be approved by the City Administration or Council. Without this requirement, the Board of Architecture Review (BAR) would not have the ability to ensure the best location of the plaza, indoor commons, parking, etc. Second, the development agreement would give the Board of Architecture Review some additional responsibilities and criteria to use when approving the site plan and architecture submitted by TVDA and KCLS. These additional design standards are described in section thirteen of the attached Summary of Proposed Terms and Conditions. Plaza and Commons Size, Location, and Design: The attached site plan shows the parties' best prediction at this time for the approximate size and location of the outdoor plaza and indoor commons. TVDA is comfortable with this plan but both parties are working with the non profit organization, Project for Public Spaces (www.pps.org), over the next few weeks to see if there is a configuration that ensures better public access and usage of these amenities while also maintaining the proposed amount of onsite development. The parties will also agree on a 18 C: Itempl Content.OutlooklTD8KICPZ1Agenda 20111219 Adoc INFORMATIONAL MEMO Page 3 "statement of purpose and design" for the plaza and commons for the BAR to have criteria to evaluate those elements as it evaluates the entire site plan. Plaza Ownership and Management: The City and TVDA are still working on the terms for the ownership and management of the plaza. Both parties intend for a non profit to operate the plaza and be motivated to attract enough revenue to cover all operations and maintenance costs. This is a unique "business model" for owning and operating plazas and we are doing more research to increase our comfort level that this model will be successful. Part of this equation is the amount of parking available for the plaza and commons and we are still working on that estimate. Additional Height: The maximum building height allowed in the zone that includes Tukwila Village is 65 feet. Given the way the height is calculated and the grade on the site, it is possible that to achieve a six story building (five floors of wood frame over a ground floor of concrete) the height needs to be raised an extra five feet. This is important since the amount of development will significantly affect the price the City receives for the land. Police Resource Center: All parties support having a Police Neighborhood Resource Center of 2,000 square feet. We are still working on the terms related to this. Encouraged Uses: All parties have expressed interest to have certain uses such as a coffee shop, diner -style restaurant, and medical /dental clinic as commercial tenants. We are still working on language to provide an incentive to increase the likelihood that these uses will be included. Price: The price for the property TVDA develops would be based on a calculation of the "residual land value The residual land value approach is very similar to what is more conventionally called the "income approach The RLV approach uses a financial projection of the development's future net operating income to calculate the value of the project. The cost of the development is deducted from the value of the project to result in the land value. Since the library would not generate rental income and has non standard costs of construction due to its construction requirements, it is simpler and more appropriate to set the price for that parcel based on a standard appraisal. Termination Rights: Although the City would not desire to terminate the agreement, we would have the right to do so if TVDA is not moving forward with the project. As an example, if TVDA does not submit an application for Design Review within 90 days from when the City executes and delivers the Development Agreement, the City could terminate the agreement. We need to work on similar language if something happens and KCLS is unable to move forward with the project. Renegotiation Rights: The City would also have the right to renegotiate the agreement if the residual land value analysis results in an average land value of less than $10,000 per residential unit. If TVDA rejects the City's proposal then the agreement for that phase would be terminated. This term protects the City from being locked into selling the property at too low of a price. Staff currently estimates this would let the City terminate the agreement with TVDA if it does not result in a land price of at least $4 million. C: ltemplContent .Outlook\TD8KICPZ1Agenda 20111219 v1.doc 19 INFORMATIONAL MEMO Page 4 Clawback /Reversion: if TVDA purchases the property but does not progress with developing it, the City would have the right to repurchase the property. Of course, none of the parties intend to use this provision but this protection is important in case unforeseen events occur that prevent TVDA completing the project. We need to work on similar language if something happens and KCLS is unable to move forward with the project. RECOMMENDATION This item is for information only. Staff is scheduled to return to Council in February 2012 with a proposed development agreement and will seek Council approval at that time. ATTACHMENTS Summary of Proposed Terms and Conditions Draft Schematic Site Plan dated 12 -19 -2011 20 C: itemplContent .OutlooklTD8KJCPZ1Agenda 20111219 Adoc Tukwila Village City of Tukwila and Tukwila Village Development Associates, LLC Summary of Proposed Term and Conditions DRAFT 12/14/11 This draft summary of proposed terms and conditions is designed to serve as an expression of the intent of the parties with regard to the redevelopment of Tukwila Village. It is also intended to capture the key terms that all parties agree on and to serve as a blueprint to implement the intent of the parties and to draft binding legal agreements, including a definitive Development Agreement which shall be the governing agreement between the parties. All references to "City" refers to the Administration of the City of Tukwila unless otherwise noted or as otherwise required by law. All references to "Developer" refers to Tukwila Village Development Associates, LLC. All references to "KCLS" refers to the King County Library System. Sections 1. City's Vision Statement 2. Property Boundaries 3. Development Parcels 4. Site Plan Submittal 5. Intended and Required Uses 6. Allowed Uses 7. Library Parcel 8. Police Resource Center 9. Outdoor Community Plaza 10. Indoor Community Commons 11. Development Phasing 12. City Approvals 13. Design Standards 14. Community Plaza and Commons Ownership and Management 15. Entitlements and Vesting 16. Development Impact Fees 17. Additional Height 18. Environmental and Other Due Diligence 19. Vacation of 41 Avenue South and Access Easements 20: South 144 Street Improvements 21. Tukwila International Boulevard Improvements 22. Quality of Construction Materials 23. Signage 24. Naming Rights 25. Price and Payments 26. Development Schedule 27. Incentives for Types of Commercial Uses 21 28. Escrow 29. Termination /Renegotiation 30. Clawback /Reversion 31. Arbitration 32. Exclusivity (1) City's Vision Statement The Tukwila City Council adopted the following vision statement for Tukwila Village: "Tukwila Village will be a welcoming place where all residents can gather and connect with each other. This mixed -use development will draw upon Tukwila's strengths and include a library, a neighborhood police resource center, retail, restaurants, public meeting space, and an outdoor plaza. The Village may also include office, live /work, and residential space. This active, vibrant place will set high standards for quality and foster additional neighborhood revitalization and civic pride." (2) Property Boundaries The intent is for the City to sell all of the City -owned Tukwila Village property (the "Property to the Developer. The Property consists of (i) approximately 164,000 square feet of land, plus approximately 23,000 square feet of 41 Avenue right of way to be vacated, north of South 144 Street, and (ii) approximately 90,000 square feet of land south of South of 144 Street, for a total of approximately 6.4 acres or real property. The Property boundaries shall be confirmed by an ALTA survey and a legal description reflected in a title commitment from a title insurance company selected and paid by the City. (3) Development Parcels The Developer shall be allowed to sell or lease a portion of the Property to KCLS for the development and construction of a new library branch (the "Library Parcel The Developer shall be allowed to transfer portions of the Property other than the Library Parcel to other single asset entities owned or controlled by the Developer for purposes of facilitating the financing of the development of individual parcels (the "Development Parcels or to a non- profit organization formed to own /or and control and to promote the public use of an outdoor community plaza and indoor community commons (the "Plaza Parcel The boundaries of the Library Parcel, the Development Parcels and the Plaza Parcel shall be confirmed pursuant to boundary line adjustments proposed by the Developer and approved by the City. The Developer shall submit the boundary line adjustment application along with the design review application for City approval and it shall be recorded prior to issuance of the building permits. (4) Site Plan Submittal The Developer shall submit a site plan (the "Proposed Site Plan that reasonably conforms to the attached preliminary site plan (the "Preliminary Site Plan Any significant differences 2 Version Tukwila Village Draft Summary of Terms and Conditions 12 -14 -2011 v2.doc 22 between the Preliminary Site Plan and the Proposed Site Plan must be approved by the City Administration or Council. Significant differences include, but are not limited to, moving a building footprint, roadway, or parking area by more than ten (10) feet. (5) Intended and Required Uses The intent is for the development of the Property to consist of a mix of uses that serves the residents of the development, the surrounding neighborhood, and the entire City by providing a place where people can gather and connect with each other. The development shall include, at a, minimum, the following uses and sizes: King County Library Branch Office Police Resource Center Retail Indoor Community Commons Outdoor Community Plaza Age- Restricted Apartments Non -age Restricted Apartments 8,000 square feet 20,000 square feet 2,000 square feet 7,000 square feet 2,000 square feet 20,000 square feet 300 units 80 units The Developer shall use its best efforts to secure a medical /dental clinic consisting of approximately 20,000 square feet to occupy the office space shown above. With respect to the non -age restricted apartments, not more than approximately 20% of the units may be restricted to individuals and households earning less than 50% of the area median gross income for a period of not more than 30 years. With respect to the age- restricted apartments, units may be restricted to individuals and households earning less than 50% or 60% of the area median gross income, provided that at least 30% of the units are unrestricted or restricted to individuals and households earning less than 80% of the area median gross income for a period of not more than 30 years. (Note: We are revising this language. The intent is to set a minimum of senior units that have no income restriction and a maximum of non senior units that have incomes targeted to 50% of AMQ (6) Allowed Uses Beyond the minimum. required uses, the intent is for the development to be allowed to have any uses that are allowed under the City's zoning code. (7) Library Parcel The Developer shall use its best effort to reach agreement with KCLS to develop and construct a new library branch on the Library Parcel. If the Developer is unable to reach agreement with KCLS, the Developer must obtain City approval for an alternative use of the Library Parcel. The Developer may sell or lease the Library Parcel to KCLS for a new library branch building with at least 8,000 square feet of floor area and with a sufficient development capacity including Version Tukwila Village Draft Summary of Terms and Conditions 12 -14 -2011 v2.doc 23 parcel size, parking, utility infrastructure and easements to expand to at least 10,000 square feet. (8) Police Resource Center The Developer and the City shall execute a separate lease agreement for at least 2,000 square feet of office space to be used by the City as a neighborhood police resource center. The Developer shall provide such office space in a finished condition and in a location satisfactory to the Developer and the City in accordance with the final Site Plan. Such lease agreement shall include three (3) easily accessible, surface parking spaces reserved for Police use only. The City shall pay rent at the then fair market rental rate for like -kind commercial retail space comparable to the police neighborhood resource center in the vicinity and shall be subject to the good faith negotiation of the parties. The lease term shall be for a minimum of years and the lease agreement shall provide for an option to renew for a period of years. [Note: We are still working on the terms.] (9) Outdoor Community Plaza The development shall include an outdoor community plaza (the "Plaza on the Plaza Parcel consisting of at least 20,000 square feet located north of South 144 Street as reflected in the final Site Plan to be approved by the City. The Developer and the City shall mutually agree on a "Statement of Purpose and Design" for the Plaza to describe the intended use and design guidelines for the Plaza and include design elements, including surface materials, structures, landscaping, fencing, gates, furniture, and artwork. The City's Board of Architecture Review shall consider the "Statement of Purpose and Design" as criteria when approving the Site Plan and Plaza design elements. (10) Indoor Community Commons The Development shall include a finished indoor community space (the "Commons consisting of at least 2,000 square feet of floor area located adjacent to the Plaza and /or active retail or residential space as reflected in the final Site Plan to be approved by the City. The Developer and the City shall mutually agree on a "Statement of Purpose and Design" for the Commons to describe the intended use and design guidelines for the Commons. The City's Board of Architecture Review shall consider the "Statement of Purpose and Design" as criteria when approving the Site Plan and Commons design elements. (11) Development Phasing The intent is that the Developer shall have the ability to phase the development and construction of the Tukwila Village project in terms of creating separate Development Parcels to facilitate financing and ownership and in terms of timing of construction to adjust to market demand and other factors. The Tukwila Village project could have up to four (4) Development Parcels and phases, each of which could be developed, owned, and managed separately under the control of the Developer. version Tukwila village Draft Summary of Terms and Conditions 12 -14 -2011 v2.doc 24 The intent is for the City to have the right to approve each phase of development, including the development of the Library Parcel and the Plaza Parcel, such that each phase can function on its own even if other subsequent phases are not completed. The City shall have the right to require and approve easements for utilities, vehicular access, pedestrian access, shared parking, and shared maintenance for each phase to ensure that the entire development functions as an integrated whole even if the Development Parcels and phases are under different ownership. The Developer or KCLS shall submit a conceptual site plan of the Library Parcel and a conceptual architectural design of the library at the time the design review application is submitted for Phase 1. This is to ensure the City has information on how the site plan and the architectural design of the library will be compatible with Phase 1 of the development. The Library Parcel site plan shall show the building footprint, building entrances, vehicle and pedestrian access to city streets and Phase 1. The Developer or KCLS will also provide information explaining maintenance, utility, and access easements, and conceptual architectural design to ensure compatibility with Phase 1. If the library will be built in phases (e.g. an 8,000 square foot building with a 2,000 square foot expansion), the conceptual site plan and architectural design will include a description of the phasing. (12) City Approvals The boundaries of the Property to be sold to Developer shall be approved by the City Council and shall be confirmed by an ALTA survey and a legal description reflected in a title commitment from a title insurance company selected by the City. All other City approvals shall be issued in accordance with normal City development approval processes unless otherwise provided herein and in the governing Development Agreement. The Site Plan and building design shall be approved by the City's Board of Architecture Review as part of the City's normal design review approval process; provided, however, the City's Board of Architecture Review shall consider the City's vision statement for Tukwila Village and the intent of the parties and the terms and conditions contained in the Development Agreement when approving the Site Plan and building design. (13) Design Standards In addition to other existing City design standards, the BAR shall use the following additional criteria for approving the development: Buildinq Entrances and Setbacks: In order to activate the street frontage and sidewalks, each building that is adjacent to Tukwila International Boulevard may be set back no more than 10 feet from the City's right of way, shall include at least one public entrance located along the Tukwila International Boulevard frontage, and shall not have surface parking located between the building and the sidewalk. The public entrance requirement may be waived if the public entrance is sufficiently visible from Tukwila International Boulevard or if the building serves an active use and provides an exceptionally high quality of building design in terms of transparency, visibility, and materials. [Note. we are still working on the definition of "adjacent".] Version Tukwila Village Draft Summary of Terms and Conditions 12 -14 -2011 v2.doc 25 Focal Point Desiqn: The Preliminary Site Plan identifies key focal points in terms of the relationship of the buildings to the plaza or the neighborhood and the City and, as such, the prominent building corners at these focal points must have a defined architectural expression and visual interest such as a rounded or chamfered wall, a tower, transparency, architectural lighting at night, etc. Library Parcel Buildinq(s): Any building(s) constructed on the Library Parcel will be highly visible to pedestrians and vehicular drivers and passengers on the aforementioned City streets and will be in a location that is key to the sense of connection between the Plaza and the greater neighborhood. Accordingly, all facades of such building(s) shall be of high quality in terms of design, transparency, visibility, and materials. The location of any expansion space for such building(s) shall not be located predominantly along the right of way of either Tukwila International Boulevard or South 144 Street. Building Facades Along Eastern Boundary of Phase 1: [Note: We are working on language to ensure building mass relief for properties along the eastern boundary of Phase 1.] Minimum Interior Height: Space designed for ground level retail use shall have a minimum interior height of feet from floor to dropped ceiling or feet from floor to floorplate. (14) Community Plaza and Commons Ownership and Management The Developer and the City shall initiate the creation of an independent, community -based non- profit organization that will own the Plaza Parcel and manage the Plaza and Commons spaces and facilities with a goal of being financially self- sufficient from the collection of rental and user fees. The Developer and that City shall agree on the mission, composition of board and officer positions, and all other formation and formal decision making processes, including initial board member selection, the articles of incorporation and initial by -laws. The board shall represent the interests of the community at large and shall protect the interests of the private owners of the Development Parcels and the Library Parcel. The non profit organization shall have the responsibility for setting usage policies, rental rates, user fees and security deposits, managing the scheduling of use of the Plaza and Commons spaces and facilities, paying any property taxes, insurance and utilities, maintaining the grounds and facilities, and repairing all damage caused by authorized or unauthorized users of the grounds and facilities. The non profit organization shall retain and apply all rental revenues, user fees and forfeited security deposits to pay all of its staffing, property taxes, insurance and utilities, maintenance and repairs and other expenses. The Developer shall maintain the adjacent landscaping and infrastructure not located on the Plaza Parcel, and shall be responsible for both structural repairs and repairs attributable to ordinary wear and tear.to the Commons if the Commons is not located on the Plaza Parcel. The non profit organization shall have the right to manage the Plaza and Commons spaces and facilities; provided, however, that the articles of incorporation of the non- profit organization shall provide that, in the event of the termination and liquidation of the non- profit organization, the net assets of the non profit organization (including but not limited to the Plaza Parcel) shall be transferred to another non profit organization approved by the City and the Developer. In the event the City and Developer are unable to agree on another non profit, ownership of the Plaza Parcel will be transferred to the City. The Developer shall make a one- time start -up donation of not less than $25,000 to the non profit organization at the time of the closing of the purchase of the Development Parcel(s) involved in the first phase of the development of Tukwila Village. Neither the Developer nor the City shall have any responsibility Version Tukwila Village Draft Summary of Terms and Conditions 12 -14 -2011 v2.doc 26 to pay the non profit organization's ongoing operating expenses. [Note: We are still working on these terms and need to get a better estimate of the non profit's ability to earn sufficient revenue to cover the costs, plus what share the adjacent property owners or tenants should contribute to ongoing expenses of the Plaza.] (15) Entitlements and Vesting The intent is for the Property to be developed under entitlements and vesting in effect at time the building permit application is deemed complete; provided, however, the Developer shall not be subject to any impact fees or like assessments adopted after the determination of the applicable purchase price of any corresponding Development Parcel(s). See the Price and Payments section below for more detail on the valuation of the Development Parcels. (16) Development Impact Fees Developer shall pay all applicable traffic, fire, and parks impact fees. These costs shall be included in the residual land value analysis. If the City is required under State law to return said impact fees to developer such as if the City does not complete the projects identified in the impact fee plan, the Developer will return those fees to the City. (17) Additional Height The Developer has indicated an intent to request City approval to increase the existing maximum building height limitation from 65 feet to 70 feet to accommodate the newly adopted building code amendment allowing up to five (5) floors of Type V (wood- frame) construction. The City Administration supports the request and agrees to process the necessary zoning amendment application as quickly as possible. (18) Environmental and Other Due Diligence The Developer shall conduct and pay for its own due diligence, including (but not limited to) (i) environmental testing and assessments, (ii) geotechnical testing and exploration, and (iii) the performance of inspections and a survey of the Property and the review of the condition of and exceptions to title to the Property. The Developer acknowledges that the City has granted the Developer a right of entry to the Property to perform inspections and conduct testing and other due diligence. The City acknowledges that the Developer has conducted substantial due diligence to date at substantial expense to the Developer. The City agrees to respond to any customary or routine written or oral inquiries or questionnaires regarding environmental or other conditions of the Property. The Developer shall provide the City copies of any environmental testing and assessments, any geotechnical testing and exploration, and any survey, as each step is completed. If, during such due diligence, environmental or geotechnical hazards become evident that were not previously identified, the Developer and the City may renegotiate the terms and conditions or terminate their agreement. At the Developer's request, the City shall agree to allow the Developer to perform any necessary and appropriate environmental remediation or abatement to the Property before the closing escrow on the purchase of such portion of the Property, provided that the City approves the remediation or abatement plan. The Version Tukwila Village Draft Summary of Terms and Conditions 12 -14 -2011 v2.doc 27 costs associated with any necessary and appropriate environmental remediation or abatement to the Property, whether performed before or after the closing escrow on the purchase of such portion of the Property, shall be taken into account in the determination of the applicable purchase price of any corresponding Development Parcel(s). See the Price and Payments section below for more detail on the valuation of the Development Parcels. (19) Vacation of 41 Avenue South and Access Easements The City shall vacate that portion of 41 Avenue South north of South 144 Street that lies within the boundaries of the Property that will be sold to the Developer. The Developer shall grant an appropriate access easement satisfactory to the City for the benefit of the adjacent Normandy Court property for access to and from its parking lot and for the benefit of the adjacent Samara property for access for Fire Department vehicles. (20) South 144 Street Improvements The Developer is not exempt from standard City requirements to construct public infrastructure frontage improvements along the City right of way abutting the Property. Those costs shall be included in the residual land value analysis. The City's Capital Improvement Plan (CIP) includes a project to rebuild South 144 Street between Tukwila International Boulevard and 42 Avenue South. This project is currently unfunded, but the City agrees to start a study to evaluate the project and design the improvements. The City agrees to make this a high priority project and to actively seek outside funding to design and construct the improvements. If the City is successful in receiving funding to construct the City's South 144 Street CIP project, such that the Developer does not have to construct frontage improvements, the Developer's frontage improvement costs will not be included in the residual land value analysis. The Developer has indicated its intent to request City approval to allow for some limited parallel street parking on both sides of South 144 Street adjacent to the Property, subject to the recommendation of the Developer's traffic consultant. If the City's Traffic Engineer supports this request, the City Administration will support the request and agrees to process the request and evaluate the recommendation of the Developer's traffic consultant as quickly as possible. (21) Tukwila International Boulevard Improvements [Note: We are working on language in case the Developer would like to set aside some land along the Boulevard for future on street parking.] (22) Quality of Construction Materials The Developer agrees to utilize high quality construction materials consistent with mixed -use development and market rate residential rental apartment properties, notwithstanding that a portion of the rental apartments included in the development are intended to be restricted and affordable to low- to moderate income individuals and households. Examples of the quality of version Tukwila Village Draft Summary of Terms and Conditions 12 -14 -2011 v2.doc 28 such construction materials include the Developer's Arrowhead Gardens development in West Seattle and Victoria Park development in Lake City. Materials such as synthetic stucco, plastic storefront window systems, cinder block, aluminum /plastic /vinyl siding, or faux cladding shall not be used on facades. (23) Signage The Developer has indicated an intent to include one or more monument signs to identify the Tukwila Village development. Such monument sign(s) shall be reflected on the Site Plan and shall be approved through the City's normal sign approval process. (24) Naming Rights Upon close of escrow, the Developer has the right to name the Development. (25) Price and Payments With respect to the Library Parcel to be sold to KCLS, City shall sell the parcel at an appraised value. KCLS and the City shall mutually select one appraisal firm, mutually agree on the appraisal instructions, and share the cost of the appraisal equally. The City may determine certain uses, such as a fast food restaurant, which the City would not want on this parcel, and therefore may offer to exclude those from consideration as "highest and best use" for calculating the appraised value. With respect to each Development Parcel to be sold to the Developer, the City shall sell each Development Parcel based on a residual land value analysis based on the development as proposed at the time immediately preceding the close of escrow (including the impact of any denial of the requested increase in the applicable building height limitation referenced above). The Developer shall provide the residual land value analysis including a comprehensive development and construction budget, sources and uses of funds, and sufficient supporting documentation reasonably satisfactory to the City including a binding construction contract for all buildings and improvements to be situated on or adjacent to such Development Parcel, binding contracts for environmental remediation or abatement, firm commitments for all debt financing and equity investment, and an explanation of the nature and amount of each material item in the development and construction budget. Development and construction costs that are attributable to or that benefit more than one Development Parcel may be allocated among such Development Parcels, provided that such allocation methodology is disclosed to the City and is consistently applied to avoid any duplication. The Developer and the City shall mutually agree on all material factors and calculations reflected in the residual land value analyses. The Developer shall pay the City a deposit of $100,000 within one (1) month of execution of a definitive Development Agreement. Such deposit shall be fully refundable during the first two (2) months after execution of the Development Agreement. Thereafter, the refundable portion of the deposit shall decrease by 10% for each month after the first two months until it is no longer refundable. The deposit shall be applicable against the purchase price of the Development Parcels and shall be allocated among the Development Parcels based on the relative site area of each Development Parcel to the total site area of all of the Development Parcels. Version Tukwila Village Draft Summary of Terms and Conditions 12 -14 -2011 v2.doc 29 For each .phase of development, Developer shall pay the City in full for the price of the corresponding Development Parcel(s) following approval of but prior to actual issuance of the applicable building (construction) permits. The Plaza Parcel shall be transferred at no cost to the independent, community -based non- profit organization referenced above that will own the Plaza Parcel and manage the Plaza and Commons spaces and facilities. The transfer of the Plaza Parcel shall take place immediately following the close of escrow on the purchase of the first Development Parcel by the Developer. The non profit organization shall pay for any transaction costs related to the acquisition of the Plaza Parcel (e.g., escrow and closing costs) from the one -time donation made by the Developer. (26) Development Schedule The Developer and the City agree that the following development schedule is based on mutual intent and is not intended to be strictly binding against the Developer to the extent that such tasks or milestones are beyond the control of the Developer; provided, however, that the Developer and the City agree to cooperate and use their best efforts to expedite the development process consistent with the proposed development schedule. Phase 1 refers to the Development Parcels situated north of South 144 Street. Phase 2 refers to the Development Parcel(s) situated south of South 144 Street. Phase Task /Milestone Completion Date Phase 1 Execute Development Agreement Submit for Design Review Design Review Approval Construction Documents Submit Permit Applications Permit Approval Escrow Closing Grading Start Foundation Start Certificate of Occupancy Phase Task /Milestone Phase 2 Execute Development Agreement Submit for Design Review Design Review Approval Construction Documents Submit Permit Applications Permit Approval Escrow Closing Grading Start Foundation Start Certificate of Occupancy March 2012 June 30, 2012 October 31, 2012 February 28, 2012 February 28, 2012 June 30, 2013 July 15, 2013 July 31, 2013 September 30, 2013 December 31, 2014 Completion Date March 2012 June 30, 2013 September 30, 2013 December 31, 2013 December 31, 2013 April 30, 2014 May 15, 2014 May 30, 2014 July 30, 2014 September 30, 2015 10 Version Tukwila Village Draft Summary of Terms and Conditions 12 -14 -2011 v2.doc T Library Parcel Execute Development Agreement Submit for Design Review Design Review Approval Construction Documents Submit Permit Applications Permit Approval Escrow Closing Grading Start Foundation Start Certificate of Occupancy (27) Incentives for Types of Commercial Uses March 2012 June 30, 2012 October 31, 2012 [Note: We are working on language that is intended to provide incentives for the Developer secure a coffee shop, a diner or other restaurants, and a medical /dental clinic (e.g., HealthPoint), to occupy retail or other commercial or office space identified on the Preliminary Site Plan.] (28) Escrow (Note: We will include a section explain the intent for closing escrow for each development parcel after building permits the city is ready to issue building permits.J (29) Termination /Renegotiation This section is intended to allow the City to terminate or renegotiate the Development Agreement if the Developer is not appropriately pursuing or executing the design, development and approval process in a reasonable timeframe or if there is an unanticipated or unintended consequence that occurs. If the Developer does not (i) submit for Design Review within 90 days of the City's execution and delivery of the Development Agreement, (ii) complete Construction Documents within 90 days of Design Review Approval, or (iii) submit Permit Applications within 120 days of the above Design Review Approval, or (iv) close escrow and take ownership of the Property within 60 days of Building Permit Approval, then, unless the Developer can demonstrate that such delay was beyond its control or was caused by the action or inaction of the City, then the City may terminate the Development Agreement or propose the renegotiation of specific terms and conditions of the Development Agreement with respect to any affected phase or Development Parcel. The Development Agreement shall remain in full force and effect with respect to any completed or otherwise unaffected phase or Development Parcel. Notice of such termination and the right to cure shall be given to the Developer. In the case of the termination of the Development Agreement, if the Developer fails to cure (within days) after receipt of notice of such termination, then the Development Agreement shall be considered terminated with respect to any affected phase or Development Parcel. In the case of the proposed renegotiation of the Development Agreement, if the Developer rejects the changes to the specific terms and conditions of the Development Agreement proposed by the City, then the Development Agreement shall be considered terminated with respect to any affected phase or Development Parcel. Alternatively, the Developer may make a counterproposal to the changes to the specific terms and conditions of the Development Agreement proposed by the City, but if 11 version Tukwila Village Draft Summary of Terms and Conditions 12 -14 -2011 v2.doc 31 the City rejects such counterproposal, then the Development Agreement shall be considered terminated with respect to any affected phase or Development Parcel. [Note: We need to define "unaffected" to indicate it includes completed phases or parcels only.] if the Developer is unable to arrange financing for any phase or Development Parcel, then the City may terminate the Development Agreement with respect to any affected phase or Development Parcel. The Development Agreement shall remain in full force and effect with respect to any completed or otherwise unaffected phase or Development Parcel. If the residual land value analysis results in an average land value (taking into account any affected phase or Development Parcel and any previous completed or otherwise unaffected phase or Development Parcel) of less than $10,000 per residential dwelling unit, then the City may propose the renegotiation of the purchase price with respect to such affected phase or Development Parcel. For purposes of applying the foregoing average land value formula, any retail, commercial or office space shall be converted into an equivalent number of residential dwelling units based on the average floor area of the actual residential dwelling units in any affected phase or Development Parcel and any previous completed or otherwise unaffected phase or Development Parcel. In the case of the proposed renegotiation of the purchase price with respect to such affected phase or Development Parcel, if the Developer rejects the change in the purchase price proposed by the City, then the Development Agreement shall be considered terminated with respect to any affected phase or Development Parcel. Alternatively, the Developer may make a counterproposal to the change in purchase price proposed by the City, but if the City rejects such counterproposal, then the Development Agreement shall be considered terminated with respect to any affected phase or Development Parcel. The Development Agreement shall remain in full force and effect with respect to any completed or otherwise unaffected phase or Development Parcel. [Note: We need a section for site plan, design, and permitting timeframe maximums for the Library.] (30) Clawback /Reversion This section is intended to provide for the termination of the Development Agreement, and for the re- purchase or reversion of ownership of portions of the Property to the City if the Developer has taken ownership of the land and is not appropriately pursuing or executing the completion of the proposed development in a reasonable timeframe. If the Developer does not (i) obtain the issuance of grading, foundation, building, structural, mechanical, electrical, or plumbing permits within 60 days after permit approval, (ii) begin grading within 60 days of receiving grading permits, (iii) begin foundation construction by the later of 60 days from the receipt of foundation permits, 90 days from the receipt of grading permits, or 30 days from the completion of grading, or (iv) complete construction within 18 months of the receipt of full building (construction) permits including grading and foundation permits, then the City may terminate the Development Agreement with respect to any affected phase or Development Parcel and the Developer shall transfer land ownership with respect to such affected phase or Development Parcel back to the City at cost, less the applicable non refundable deposit and any applicable transaction costs and legal fees incurred by the City. Notice of such termination and the right to cure shall be given to the Developer, any lender of record with a security interest in the Property, and to any lender or investor disclosed in the firm commitments for all debt financing and equity investment submitted to the City by the Developer in connection with the residual land value analysis for the 12 Version Tukwila Village Draft Summary of Terms and Conditions 12 -14 2011 v2.doc 32 corresponding Development Parcel(s). The Development Agreement shall remain in full force and effect with respect to any completed or otherwise unaffected phase or Development Parcel. [Note: We need a section to give City ownership rights to the Developer's environmental documents and all design and engineering work.] [Note: We need a section for site plan, design, and permitting timeframe maximums for the Library.] (31) Arbitration The Developer and the City agree that any dispute arising under the Development Agreement (other than for the non payment of the deposit, or for the failure to close and non payment of the purchase price), whether before or after termination, which is not first settled by mutual agreement of the parties, shall be submitted to binding arbitration in the City of Tukwila or Seattle, Washington. The arbitration shall be administered by and subject to the arbitration rules of JAMS, which shall appoint a single arbitrator for the purpose of determining all matters submitted to arbitration. The arbitrator shall be a person who, by virtue of background, training, or experience, is knowledgeable in matters of the type covered by the Development Agreement and the selection of such arbitrator shall be subject to the consent of both parties, which consent shall not be unreasonably withheld, conditioned or delayed. Either party may commence arbitration by serving upon the other party a written demand for arbitration in a manner consistent with the notice requirements of this Agreement, with a copy of same to be delivered to the local JAMS office in Tukwila or Seattle, Washington. To the maximum extent practicable, any arbitration proceeding hereunder shall be concluded within 90 days of the filing of the dispute with JAMS. No provision of, nor exercise of any rights under, this section shall limit the rights of either party and the submission of any matter to arbitration shall not suspend the performance of either party, including (but not limited to) the payment of the deposit or other amounts due from the Developer under the Development Agreement. The decision of the arbitrator shall be conclusive, final and binding upon the parties. The arbitrator shall be entitled to award compensatory and equitable relief only and may not award punitive damages. Each party shall pay its own costs and expenses including attorneys' fees, except when the matter was submitted to arbitration by the substantially non prevailing party and is determined by the arbitrator to be frivolous in nature, in which case, upon the request of the substantially prevailing party, the arbitrator shall be entitled to award costs and expenses including reasonable attorneys' fees with respect to such frivolous matter to the substantially prevailing party. Judgment upon any award obtained from arbitration may be entered in a court of appropriate jurisdiction. (32) Exclusivity The Development Agreement shall be exclusively between the City of Tukwila (City) and Tukwila Village Development Associates, LLC (Developer). The Developer may not (i) sell or transfer its rights under the Development Agreement except to a single asset entity under the ownership or control of the Developer formed for the sole purpose of acquiring, financing, owning and developing the corresponding phase or Development Parcel on behalf of the Developer, or (ii) sell or transfer any portion of the Property purchased under the Development Agreement or sell or transfer any portion of its interest in any single asset entity formed for the 13 Version Tukwila Village Draft Summary of Terms and Conditions 12 -14 -2011 v2.doc 33 sole purpose of acquiring, financing, owning and developing the corresponding phase or Development Parcel on behalf of the Developer, without City's approval until all phases of the development have been completed and received certificates of occupancy as contemplated the Development Agreement or the Development Agreement has been terminated with respect to any future phase or Development Parcel. Tukwila Village Development Associates, LLC is currently owned by the Senior Housing Assistance Corporation "SHAC and Pacific Northern Construction Company, Inc. "PNCC If SHAC or PNCC sell or transfer their ownership or management rights with respect to Tukwila Village Development Associates, LLC, the City may terminate the Development Agreement with respect to any future phase or Development Parcel. 14 Version Tukwila Village Draft Summary of Terms and Conditions 12 -14 -2011 v2.doc 34 35