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HomeMy WebLinkAboutAD05-332 - Original - Springboard Holdings, LLC - Replacement Parking Agreement - 07/21/2006 ORIGINAL July 21, 2006 Springboard Holdings, LLC Second Avenue Real Estate LLC 2018-156`'Avenue NE 1301 Fifth Avenue, Suite 2600 Bellevue,Washington 98007 Seattle,Washington 98101 Attn. Ben Errez Attn Ben Porter Re. Replacement Parking Agreement dated as of October 12, 2005 by and among Springboard Holdings, L L C , a Washington limited liability company ("Developer"), Second Avenue Real Estate LLC, a Washington limited liability company ("Second Avenue") and the City of Kent, a Washington municipal corporation ("City") (the "Replacement Parking Agreement") Gentlemen. Pursuant to the provisions of Section 12 5 and Section 15 of the Replacement Parking Agreement, Developer was required to commence construction of the Parking Garage on or before March 31, 2006 Developer was unable to commence construction of the Parking Garage because it had not yet obtained all permits necessary to construct the Parking Garage nor had Developer obtained the equity and debt financing necessary to pay for the cost of the Parking Garage Pursuant to forbearance agreement accepted by the Developer May 17, 2006, the City had agreed to forbear declaring an Event of Default under the Replacement Parking Agreement and the City Deed of Trust until June 16, 2006 provided that the conditions set forth thereon were met to the reasonable satisfaction of the City or waived by the City in its sole discretion on or before May 30, 2006 The Developer was unable to meet those conditions and is now in default. Developer has requested a further forbearance and further extension of the date by which Developer must obtain all equity and debt financing necessary to pay for the cost of the Parking Garage, obtain all permits necessary to commence construction of the Parking Garage and commence construction of the Parking Garage The Developer's continuing defaults have adversely affected the City's ability to complete the construction of the City's Town Square Plaza, as designed (with the water feature installed and operational)by June 1, 2007 The continuing delays in obtaining financing and commencing construction of the Parking Garage are of grave concern to the City Nevertheless, the City is willing in this instance only to further forbear declaring an Event of Default under the Replacement Parking Agreement and the City Deed of Trust until August 29, 2006, provided each of the conditions (1) through (14) set forth below has been met to the reasonable satisfaction of City or waived by City in its sole discretion on or before August 15, 2006 (or such earlier date as may be specified below for a particular condition) (1) Evidence reasonably acceptable to City that the cash equity not funded through the construction loan that is needed to build the entire parking garage structure (which must include at least 350 parking spaces) has either been deposited with the construction lender or other closing escrow or is available without additional conditions or requirements, to pay for the initial construction costs of the parking garage (2) Developer's construction lender has advised City that all conditions to its commitment letter which are required to be met prior to closing of its construction loan have been met and it is in a position to close its construction loan for Phase I of Project Springboard Phase I shall mean construction of the Parking Garage (and associated sidewalks, driveways and private streets connecting Smith and Harrison Streets, and retail space) (3) City has reviewed the final project budget for Phase I certificated as to accuracy and completeness by Developer showing all hard and soft costs associated with construction of Phase 1, which has been approved by the proposed construction lender and any equity participants in Developer (4) City has reviewed the final guaranteed maximum price construction contract for Phase I of the Project Springboard improvements executed by the general contractor in an amount not in excess of the amount set forth in the final project budget which has been approved by the construction lender, any equity participants in Developer and Developer (5) City has reviewed final construction loan documents for Phase I of the Project Springboard improvements which are consistent with the requirements of the consent and subordination agreement described in(6)below. (6) The Consent and Subordination Agreement has been executed by the construction lender in substantially the form attached to this agreement as exhibit A. (7) Developer has obtained all permits necessary to commence construction of Phase I of the Project Springboard improvements including, but not limited to, a building permit for construction of the Parking Garage and paid all permit fees necessary for the issuance of such penruts. (8) Developer has provided City with executed assignments of the construction contract and architectural agreements for Phase I of the Project Springboard improvements in substantially the forms attached hereto as Exhibits B and C, executed by the general contractor and architect respectively in favor of the City, as additional security for the performance of Developer's obligations under the Replacement Parking Agreement as required under Section 15 10 thereof (9) On or before July 21, 2006,Developer has recorded an easement in favor of City and in substantially the form attached hereto as Exhibit D, for the mechanical chase rooms, public restrooms and related utilities (the "Ancillary Improvements") and has deposited funds with City, provided a set-aside letter from a financial institution acceptable to City or otherwise reserved funds in a manner and form acceptable to the City in an amount equal to $300,000, which reflects the City's estimated cost to design and construct the Ancillary Improvements as a stand-alone structure in accordance with the cost estimate and construction timeline recommended by the architect retained by the City to design the Town Square Plaza. Upon completion of the construction of the Ancillary Improvements in accordance with the requirements of the Replacement Parking Agreement and in substantial compliance with the plans and specifications approved by the City's architect on or before March 1, 2007, City will release the reserved funds to Developer. In the event that the construction of the Ancillary Improvements has not been completed by March 1, 2007, City shall ha,,e the right to use the reserved funds to construct the Ancillary Improvements at Developer's cost. (10) On or before July 21, 2006, Developer has recorded an easement in favor of the City in the form attached hereto as Exhibit E granting the City the right to use the surface of the Project Springboard Property for public parking. (11) Developer acknowledges that Developer shall have no right to utilize any portion of the Town Square Plaza Site for construction stage purposes or make any private use of the Town Square Plaza Site before or after completion of construction of the Parking Garage and other Project Springboard improvements. Developer further agrees to demolish all buildings 2 } currently located on the Town Square Site in compliance with all applicable legal requirements at the same time that it commences utility relocation or on or before August 29 , 2006 (12) Developer has provided the City with certificates of insurance evidencing that all insurance required under the Replacement Parking Agreement, the City Deed of Trust and other easements in favor of the City and any insurance required under the Developer's construction and other financing is in place (13) City has reviewed a commitment letter from a hotel operator to operate the hotel to be constructed as part of the Project Springboard improvements which shall be reasonably acceptable to City. (14) Developer has provided a payment and performance bond for the Parking Garage or a guaranty of completion from the general contractor as required under the Banks construction loan documentation Upon fulfillment of the foregoing conditions to the reasonable satisfaction of the City and only upon the fulfillment of the foregoing conditions, City shall deliver to Developer written notice confirming that all such conditions have been met Following receipt of such notice from City, Developer is authorized to commence construction Developer shall thereafter commence construction of utility work on or before the close of business on August 29, 2006 and shall commence construction of the Parking Garage on or before the close of business on September 12, 2006 For purposes of this forbearance agreement, Developer will have commenced construction of the utility work when its general contractor has commenced excavation of the Project Springboard property to remove and/or relocate utility lines installed within the vacated alley, and will have commenced construction of the Parking Garage when its general contractor has commenced "pre-loading" of the Property which is required prior to installation of underground utilities and installation of the foundations for the parking garage Following completion of "pre-loading" of approximately 58 days, all pre-load materials will be removed from the entire Property and the general contractor will immediately commence construction of foundations for the Parking Garage. Once construction commences Developer shall diligently and continuously prosecute construction of the Parking Garage improvements to completion In the event each of the foregoing conditions (1) through (14) is met to the reasonable satisfaction of City on or before August 15, 2006 and Developer demolishes the existing building on the Town Square Plaza site and commences construction of the utility work on or before August 29, 2006, and commences the "preloading" required prior to the construction of the Parking Garage on or before the dates set forth in the immediately preceding paragraph, City will extend the date for Substantial Completion of the Parking Garage to May 12, 2007, and the Outside Completion Date for the Parking Garage to November 12, 2007. Time is of the essence of each provisions of this forbearance agreement The City considers each of the foregoing conditions to be material and satisfaction of each condition (a) is required in order for City to agree to forbear declaring an Event of Default under the Replacement Parking Agreement and the City Deed of Trust, and (b) is an express condition precedent to City's agreement to extend the dates for Substantial Completion of the Parking Garage Failure to satisfy any of the foregoing conditions on or before the dates set forth above which is not waived by the City in its sole discretion shall constitute an Event of Default and City shall have the right to immediately declare an Event of Default under the Replacement Parking Agreement and the City Deed of Trust without further notice to Developer or demand for performance. Nothing contained herein shall constitute a waiver of any provision of the Replacement Parking Agreement Nothing contained herein shall be deemed to or shall constitute a continuing 3 r` waiver of any of the provisions of the Replacement Parking Agreement except to the extent expressly set forth above. Nothing contained herein shall directly or indirectly (a) create any obligation to consent to any further extension of tune for commencement or completion of construction of the Parking Garage, (b) constitute consent to, or waiver of, any other present Event of Default or other violation of any other provision of the Replacement Parking Agreement, or (c) constitute a course or dealing or other basis for altering any of Developer's obligations to City under the Replacement Parking Agreement All capitalized terms not otherwise defined herein shall have the same meaning as in the Replacement Parking Agreement This letter agreement shall be governed by Washington law Notice re Oral Commitments. Oral agreements or oral commitments to loan money, extend credit or to forbear from enforcing replacement of a debt are not enforceable under Washington law. Very truly yours, CIT NT /-�- N e I ACCEPTED AND AGREED this 21 day of , 2006 SPRINGBOARD HOLDINGS,L L C., A Washington limited liability company By Name _�Trr-Al IRA Its K=0931000MDRS%DRS_A23C0 4