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HomeMy WebLinkAboutIL2016-0236 - Original - The City of Kent Special Events Center Public Facilities District - Interlocal Financing Agreement - 06/15/2016 L I' INTERLOCAL FINANCING AGREEMENT between CITY OF KENT, WASHINGTON and THE CITY OF KENT SPECIAL EVENTS CENTER PUBLIC FACILITIES DISTRICT I 10069 00012 fb246p08c0 !I� INTERLOCAL FINANCING AGREEMENT THIS INTERLOCAL FINANCING AGREEMENT (this "Agreement") dated April , 2016, entered into by and between the CITY OF KENT, a municipal corporation of the State of Washington (the "City"), and THE CITY OF KENT SPECIAL EVENTS CENTER PUBLIC FACILITIES DISTRICT, a municipal corporation of the State of Washington (the "District"); WITNESSETH: WHEREAS, the City is authorized by chapter 67.28 RCW to acquire and operate "tourism-related facilities;" and WHEREAS, the District is authorized by chapter 35.57 RCW to acquire, construct, own, remodel, maintain, equip, repair, finance, and operate one or more "regional centers" as defined in RCW 35,57.020, including related parking facilities, serving a regional population; and WHEREAS, the City and the District previously entered into an Interlocal Agreement for Development of Special Events Center dated September 18, 2007, as amended (the "Interlocal Agreement"), in connection with the design, development, construction, ownership, and operation of a regional center comprised of a multi-purpose arena for hockey and other public uses, together with related parking facilities, as such facilities may be expanded from time to time, located in the City and constituting a"regional center"within the meaning of chapter 3 5.5 7 RCW, as it may be amended from time to time (as further defined herein, the "Special Events Center"); and WHEREAS, under the Interlocal Agreement, the District agreed to promptly pay, or cause to be paid, all funds collected by or on behalf of the District from revenues of a sales and use tax imposed by the District pursuant to Resolution No. 2007-1 adopted by the Board of Directors of the District (the "Board") on September 14, 2007, as amended, and authorized by RCW 35.57040(1)(d) and RCW 82.14.390 (the "Sales Tax"), and other funds pledged therefor, to the City as intergovernmental project payments for the purposes set forth in the Interlocal Agreement, which may include paying debt service on bonds issued by the City to pay costs of the design and construction of the Special Events Center; and WHEREAS, construction of the Special Events Center was financed, in part, with proceeds of the District's Special Events Center Sales Tax Bonds, 2008 (the "Sales Tax Bonds") issued on February 29, 2008, pursuant to Resolution No. 2008-2 adopted by the Board on February 20, 2008 (the"Sales Tax Bond Resolution"); and WHEREAS, the principal of and interest on the Sales Tax Bonds are payable from revenues of the Sales Tax ("Sales Tax Revenue"), Special Events Center Revenues (as defined herein), and amounts loaned to the District by the City under the terms of the Contingent Loan and Support Agreement dated February 20, 2008, between the City and the District (the "Contingent Loan Agreement"); and WHEREAS, pursuant to the terms of the Contingent Loan Agreement, the City has loaned the District funds to pay the majority of the debt service due on the Sales Tax Bonds and the Revenue Bonds (as defined herein) for years 2009 through 2015, inclusive, and the City 2 I� expects that it will continue to be required to make loans to the District to pay some portion of the debt service due on the Sales Tax Bonds and the Revenue Bonds in the future; and WHEREAS, pursuant to an ordinance adopted by the City Council on April 19, 2016 (the "2016 Bond Ordinance"), the City has determined to issue its Limited Tax General Obligation Rending Bonds, 2016 (the "2016 Bonds") and to loan a portion of the proceeds thereof to the District for the purpose of providing funds to be used by the District and the City to refund, defease, pay and redeem all of the District's outstanding Sales Tax Bonds on their first optional redemption date of June 1, 2018, in order to realize a savings in interest costs that otherwise would be incurred with respect to the Sales Tax Bonds, and to pay related costs of issuance of that portion of the bonds and the administrative costs of the refunding (the portion of the 2016 Bonds allocated for such purpose is referred to herein as the "2016 Sales Tax Refunding Bonds"); and WHEREAS, debt service on the 2016 Sales Tax Refunding Bonds will be payable by the City from Sales Tax Revenue and Special Events Center Revenues, and to the extent required, City Advances pursuant to the terms of this Agreement; and WHEREAS, the City and the District now desire to enter into this Agreement to memorialize the obligation of the District, as evidenced by the District Bond (defined below), to pay Sales Tax Revenue and Special Events Center Revenues to the City for the purposes of enabling the City to pay debt service on the 2016 Sales Tax Refunding Bonds, and for the District's repayment to the City of City Contingent Loan Payments made by the City to the District pursuant to the Contingent Loan Agreement and any City Advances by the City to the District pursuant to this Agreement, and the pledge of Sales Tax Revenue and Special Events Center Revenues for such purposes; and WHEREAS, for purposes of RCW 35,57.020(4) and RCW 82.14.390(4), the District's obligation to pay the amounts due under this Agreement will be evidenced by a bond issued by the District in favor of the City (as further defined herein,the "District Bond"); NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained; the parties agree as follows. Section 1. Definitions. Unless the context clearly requires otherwise, capitalized terms used in this Agreement have the meanings given such terms in the recitals hereof and in the 2016 Bond Ordinance. The following terms shall have the following meanings: "Additional Revenue Bonds" shall have the meaning set forth in the Contingent Loan Agreement. "City" means the City of Kent, Washington. "City Advance"has the meaning set forth in Section 4(c) of this Agreement. "City Contingent Loan Payments" means any loan payments made by the City to the District for Required Debt Service pursuant to the Contingent Loan Agreement that are derived from City finds other than Special Events Center Revenues. 3 i "City Special Events Center Payments" means all payments required to be made by the City to the District for the First through Fourth purposes listed in Section 4.2 of the Contingent Loan Agreement and Section 6(b) of this Agreement that are derived from and represent Special Events Center Revenues. "Contingent Loan Agreement" means the Contingent Loan and Support Agreement Regarding Financing for the Kent Special Events Center between the City and the District dated February 20, 2008, as it may be amended from time to time. "District" means the City of Kent Special Events Center Public Facilities District, established by the City under chapter 35.57 RCW. "District Bond" means the bond issued by the District solely for purposes of RCW 35.57.020(4) and RCW 82.14.390(4).to evidence its payment obligations to the City under the terms of this Agreement (a) to pay debt service on the 2016 Sales Tax Refunding Bonds as the same shall come due on their scheduled maturity dates, mandatory installment redemption dates or redemption dates, (b) to repay City Contingent Loan Payments, and (c)to repay any City Advances to the District under this Agreement, consistent with Section 6 of this Agreement "Interloeal Agreement" means the Interlocal Agreement for Development of the Special Events Center between the District and the City, dated September 18, 2007, as it may be amended from time to time. "License Agreement" means the License Agreement dated August 7, 2007 between the City and the Team, as it may be amended from time to time. "Operation and Maintenance Expenses" means all reasonable expenses incurred in causing the Special Events Center to be operated and maintained in good repair, working order and condition, including without limitation: management fees or other payments to third parties payable in respect of the operation of the Special Events Center; personnel costs; the cost of ordinary maintenance and repair; utilities; supplies; food and beverage service and supply costs; equipment purchase and lease payments; administrative expenses, including administrative expenses of the District; the costs of advertising, marketing and business promotion; deposits, premiums, assessments or other payments for insurance; and taxes and assessments; all as determined in accordance with generally accepted accounting principles applicable to the City and its operations. The term "Operation and Maintenance Expenses" does not include any depreciation of or capital expenditure for the Special Events Center. "Required Debt Service" means, for any calendar year, with respect to the Revenue Bonds, any Additional Revenue Bonds, and the Sales Tax Bonds, the amount required to make scheduled payment of principal of (including mandatory redemption payments with respect to Term Bonds) and interest on such bonds in that calendar year. "Revenue Bond Debt Service Fund" has the meaning set forth in the Contingent Loan Agreement. "Revenue Bond Insurance Policy" has the meaning set forth in the Contingent Loan Agreement. 4 "Revenue Bond Insurer"has the meaning set forth in the Contingent Loan Agreement. "Revenue Bonds" mean the District's Special Events Center Revenue Bonds, 2008 (Taxable), issued in the original principal amount of $10,130,000 pursuant to Resolution No, 2008-3 adopted by the Board on February 20, 2008 and maturing on December 1, 2020. "Sales Tax" means the sales and use taxes imposed by the District pursuant to Resolution No. 2007-1 adopted by the Board on September 14, 2007 and authorized by RCW 35.57.040(1)(d) and RCW 82.14.390 at the rate of 0.037% of the selling price (in the case of a sales tax) or the value of the article used (in the case of a use tax). "Sales Tax Bond Resolution" means Resolution No. 2008-2 adopted by the Board on February 20, 2008 authorizing the issuance of the Sales Tax Bonds. "Sales Tax Bonds" mean the District's Special Events Center Sales Tax Bonds, 2008, issued on February 28,2008 pursuant to the Sales Tax Bond Resolution. ` I "Sales Tax Revenue" means all the money received by the District from the Washington State Department of Revenue on account of the Sales Tax imposed by and collected for the District. "Special Events Center" means the land, real property improvements,buildings, facilities, fixtures, equipment, support facilities and related parking facilities comprising a special events center of approximately 153,000 square feet, including an ice arena, as such facilities may be expanded from time to time, located in the City and constituting a "regional center" within the meaning of chapter 3 5.5 7 RCW, as it may be amended from time to time. "Special Events Center Revenues" means all revenue, eamings and money received by the City from or on account of the operation and/or ownership of the Special Events Center, including but not limited to license fees received by the Team pursuant to the License Agreement, facility fees, concession revenues, advertising revenues, suite license revenues, club seat revenues, parking revenues and naming rights revenues. "State"means the State of Washington. "Team"means Thunderbird Hockey Enterprises,LLC, or its successor. "2016 Bond Ordinance" means Ordinance No. 4198 passed by the City Council on April 19, 2016 authorizing the issuance of the 2016 Bonds. "2016 Bonds" means the City's Limited Tax General Obligation Refunding Bonds, 2016 issued pursuant to the 2016 Bond Ordinance. "2016 Sales Tax Refunding Bonds" means the portion of the 2016 Bonds allocated to and issued for the purpose of refunding, defeasing, paying and redeeming the Sales Tax Bonds and paying costs of issuance and the administrative costs of the refunding, and any bonds issued to refund and/or defease the allocable portion of such 2016 Bonds. 5 I Section 2. Joint Development of the Special Events Center. The City and the District have developed and will operate the Special Events Center in accordance with this Agreement and the Interlocal Agreement, as both a "tourism related facility" within the meaning of RCW 67.28.080(7) and a "regional center" within the meaning of RCW 35.57.020. The Special Events Center is intended to serve the City, the District and their residents, as well as serving a broader population in the region and the State. Section 3. Special Events Center Ulcerations. Pursuant to the Interlocal Agreement, the Contingent Loan Agreement and this Agreement, the City shall directly or through third parties, manage and operate the Special Events Center and make all decisions relative to the management and operation of the Special Events Center. The City shall own and operate the Special Events Center for and on behalf of the District and the City. The District's interest in the Special Events Center shall terminate and revert to the City upon the retirement, redemption or defeasance of all bonds issued to finance or refinance the Special Events Center, the final distribution to the District of Sales Tax Revenue, the termination of the District's obligation to make project payments to the City, or when mutually agreed between the District and the City consistent with applicable law. The District's ownership interests in the Special Events Center also shall be transferred to the City if the District ceases to exist; provided that any District obligations with respect to the Special Events Center shall have been retired or fully provided for, or, if not, that the City shall assume all remaining obligations of the District. The City, on behalf of the District and itself, will: (a) be the agency with the primary responsibility for the operation of the Special Events Center as both a "tourism-related facility" within the meaning of RCW 67.28.080(7) and a"regional center"within the meaning of RCW 35.57.020; (b) refinance, operate and maintain the Special Events Center; and(c) otherwise administer the operation of the Special Events Center for the benefit of itself and the Special Events Center and in cooperation with the District. Section 4. -Re ayment of 2016 Sales Tax Refunding Bonds, Loans said Advances. (a) Loans to the District pursuant to the Contingent Loan Agreement. Pursuant to Section 3 of the Contingent Loan Agreement, in the event that the District has been or is unable to timely provide for Required Debt Service, the City agreed to lend the District the amount necessary to make such timely payment("City Contingent Loan Payments"). The District agreed to borrow the amounts described therein from the City pursuant to the Contingent Loan Agreement and to apply those amounts immediately for the purpose of paying Required Debt Service. The District shall repay to the City the principal amount or amounts of City Contingent Loan Payments made to the District made pursuant to ,Section 3 of the Contingent Loan Agreement as revenues for that purpose become available consistent with Section 6 below, and the outstanding principal amount of any such City Contingent Loan Payments shall bear interest at a rate set by the City's Finance Director on the date a loan is made, based on the then-current yield of the City's pooled investments. The rate of interest on the outstanding principal amount of any City Contingent Loan Payments shall be revised each year during the City's budget process based on the then-current yield of the City's pooled investments, and effective on the same date that the City's interfund loan interest rate is adjusted for all City interfund loans. 6 I (b) 2016 Sales Tax Refunding Bonds. The City hereby agrees to lend.the District the proceeds of the 2016 Sales Tax Refunding Bonds, and the District hereby borrows said slain from the City pursuant to this Agreement for the purpose of refunding, defeasing, paying and redeeming the Sales Tax Bonds on June 1, 2018, the earliest optional redemption date for the Sales Tax Bonds, and paying costs of issuance of the 2016 Sales Tax Refunding Bonds and the administrative costs of the refunding. Pursuant to the Interlocal Agreement and this Agreement, the District agrees, in satisfaction of the District Bond, to remit all Sales Tax Revenue and City Special Events Center Payments which are received by and available to the District to the City for the purpose of enabling the City to pay the principal of and interest on the 2016 Sales Tax Refunding Bonds as the same shall come due on their scheduled maturity dates or earlier mandatory installment redemption dates, in accordance with the terms of the 2016 Bond Ordinance, consistent with Section 6 below. (c) City Advances. If Sales Tax Revenue and City Special Events Center Payments collected by or on behalf of the District and allocated consistent with Section 6 below are at any time insufficient to provide for the payment of principal of and interest on the 2016 Sales Tax Refunding Bonds,the City shall provide for that deficiency from other available City revenues (a "City Advance"), and the amount of the City Advance shall be deemed an additional loan by the City to the District. The District shall repay any City Advances from available Sales Tax Revenue and City Special Events Center Payments, consistent with Section 6 below. The outstanding principal amount of any City Advance shall bear interest at the same rate that applies to City Contingent Loan Payments made pursuant to the Contingent Loan Agreement as described in Section 4(a) above. Section 5. District Paments° issuance of District Bond. The District agrees to pay , or cause to be paid, all Sales Tax Revenue and City Special Events Center Payments that are received by and available to the District to the City for application by the City (a) to pay debt service on the 2016 Sales Tax Refunding Bonds as the same shall come due on their scheduled maturity dates, mandatory installment redemption dates or redemption dates, (b) to repay City Contingent Loan Payments, and (c) to repay City Advances to the District under this Agreement, consistent with Section 6 below. The obligation of the District to make the payments to the City solely from the sources identified herein and to perform and observe the other obligations on its part contained herein shall be absolute and unconditional and shall not be subject to diminution by setoff, counterclaim, abatement or otherwise. Solely for the purposes of RCW 35.57.020(4) and RCW 82.14.390(4), the District's payment obligations to the City under this Agreement shall be evidenced by a bond (the "District Bond"). The District Bond shall be payable from and secured solely by Sales Tax Revenue and Special Events Center Revenues received by and available to be used by or on behalf of the District for that purpose under this Agreement, Any failure or inability of the District to meet its payment obligations to the City under this Agreement with respect to the 2016 Sales Tax Refunding Bonds as a result of any deficiency in receipts of Sales Tax Revenue and/or Special Events Center Revenues required for that purpose shall not constitute a default by the District under the District Bond or this Agreement,provided that the amount of principal of and interest of any such deficiency shall be deemed to be a City Advance in a principal amount equal to the 7 total amount of the deficiency, bearing interest as set forth in Section 4(c), above, and to be repaid to the City from the sources and in the priority as provided by Section 6(a) and Section 6(b) of this Agreement. The District Bond shall be nontransferable. The District Bond shall be executed and delivered by the District to the City, at a price of par, upon the effective date of this Agreement. The District Bond shall be payable in the amounts and on the dates as described in the payment schedules attached to the District Bond, which may be modified, added to, or replaced from time to time to reflect any payments made by the District to the City under this Agreement, or to include any additional City Advance. In no event, however, shall the principal amount of the District Bond cause the District to exceed its debt capacity for nonvoter-approved general obligation indebtedness as specified by RCW 35.57.030(l). The District shall inform the City immediately if the District fails to make any such deposit in full, and the District shall also inform the City at any time that the District determines that there is a reasonable possibility that the District may not be able to timely and fully provide for a debt service payment on such obligations when due. Section 6. Priority ol'Pavment from District Revenues ("Flow of Funds"), (a) Sales Tax Revenue. Consistent with the Contingent Loan Agreement and the Interlocal Agreement, all Sales "fax Revenue shall be transferred to and deposited into the Sales Tax Revenue Fund when and as received by the District or by the Finance Director of the City, as ex offcio Treasurer of the District. Sales Tax Revenue deposited into the Sales Tax Revenue Fuid shall be allocated and applied in the priority set forth below, and the following "flow of funds" for those revenues shall supplement and supersede the provisions of Section 4.1 of the Contingent Loan Agreement to the extent of any inconsistency: First, payment of principal of and interest on the 2016 Sales Tax Refunding Bonds; Second, repayment of principal of and interest on City Contingent Loan Payments due under the Contingent Loan Agreement and Section 4(a) of this Agreement; Third, repayment of principal of and interest on any City Advances under Section 4(c) of this Agreement; and Fourth, to provide for costs of and reserves for long-term capital repairs, renewals and replacements of the Special Events Center, and for other lawful purposes, in no particular order of preference and all as determined by the City in consultation with the District. (b) Special Events Center Revenues. Consistent with the Contingent Loan Agreement and the Interlocal Agreement, the City for itself and on behalf of the District shall collect Special Events Center Revenues and shall transfer City Special Events Center Payments to the District for deposit into the District Revenue Fund. Special Events Center Revenues deposited into the District Revenue Fund shall be allocated and applied in the priority set forth below, and the following "flow of funds" for those revenues shall supplement and supersede the provisions of Section 4,2 of the Contingent Loan Agreement to the extent of any inconsistency: 8 First, to make the required deposits to the Revenue Bond Debt Service Fund for the payment of interest due on the Revenue Bonds and any Additional Revenue Bonds; Second, to make the required deposits into the Revenue Bond Debt Service Fund for the payment of principal of the Revenue Bonds and any Additional Revenue Bonds at maturity or upon mandatory sinking fund redemption prior to scheduled maturity; Third, to reimburse any Revenue Bond Insurer for any payments made under any Revenue Bond Insurance Policy and other amounts due and owing to any Revenue Bond Insw•er in respect of the Revenue Bonds and any Additional Revenue Bonds; Fourth, to repay principal of and interest on any City Contingent Loan Payments made by the City to the District as provided in Section 33 of the Contingent Loan Agreement and Section 4(a) of this Agreement, and, after taking into account Sales Tax Revenue available to the District for the payment of principal of and interest on the 2016 Sales Tax Refunding Bonds, to pay principal of and interest on the 2016 Sales Tax Refunding Bonds; and Fifth, to provide for costs of and reserves for long-term capital repairs, renewals and replacement of the Special Events Center, and for other lawful purposes, in no particular order of preference and all as determined by the City in consultation with the District. The District and the City shall exercise due regard for the anticipated financial requirements to be satisfied as priorities First through Fourth of this Section 6(b) in each calendar year prior to authorizing or making any disbursement of money in the Special Events Center Revenue Fund for the purposes identified as priority Fifth. Any amounts received by the City or the District as governmental grants or private contributions for the Special Events Center shall be deposited in a special capital account in the Public Facilities District Special Events Center Revenue Fund and be used for the construction, renewal and replacement of facilities comprising the Special Events Center, unless another use is required by the terms of any such governmental grant or private contribution. Section 7. Pledj�e_of'Funds. The full faith and credit of the District is hereby pledged for payment of the District's obligations under this Agreement, as evidenced by the District Bond, specifically including the District's obligation to pay Sales Tax Revenue and City Special Events Center Payments to the City for application by the City (a) to pay debt service on the 2016 Sales Tax Refunding Bonds, (b) to repay City Contingent Loan Payments, and (c) to repay any City Advances. Sales Tax Revenue and City Special Events Center Payments are hereby pledged to the City and for the equal and ratable benefit of the owners from time to time of the 2016 Sales Tax Refunding Bonds, for payment of the principal of and interest on the 2016 Sales Tax Refunding Bonds, and to the City for payment of principal of and interest on City Contingent Loan Payments and any City Advances to the District under the Agreement, subject to the priorities set forth in Section 6 hereof. The District's obligation to impose the sales tax under RCW 82.14.390 and to distribute Sales Tax Revenue and City Special Events Center Payments under this Agreement and the District Bond shall be absolute and unconditional, and shall not be subject to diminution by setoff, counterclaim, abatement or otherwise. Except to the extent that the District's legal 9 authority to impose and collect the Sales Tax expires pursuant to RCW 82.14.390, as amended, or any applicable successor statute, the District's obligations under this Agreement shall continue in effect and shall survive until the full repayment, defeasance, or early redemption of(a) the 2016 Sales Tax Refunding Bonds, (b) City Contingent Loan Payments, and (c) any City Advances, together with any costs owed to the City hereunder. Section 8. Remittance of Sales Tax Revenue. The District shall remit, or enter into an agreement with the State Department of Revenue to directly remit, all Sales Tax Revenue to the City when received for deposit into the Sales Tax Revenue Fund to be used in the order of priority as set forth in Section 6. Section 9. District Acknowledgments. The District acknowledges and agrees that its pledge of Sales Tax Revenue and City Special Events Center Payments pursuant to the terms of this Agreement to the City for the payment of the 2016 Sales Tax Refunding Bonds will be material to the offer and sale of the 2016 Sales Tax Refunding Bonds, and will be disclosed to potential purchasers and purchasers of the 2016 Sales Tax Refunding Bonds. The City and the District consider this Agreement to be a binding contract and acknowledge that 2016 Sales Tax Refunding Bond owners and financial institutions providing credit support for the 2016 Sales Tax Refunding Bonds, if any, will rely on the terms of this Agreement, including the commitment by the District to remit Sales Tax Revenue and City Special Events Center Payments to the City as set forth in Section 6. Section 10. Imposition of Sales Tax. The District hereby irrevocably covenants, for as long as any of the 2016 Sales Tax Refunding Bonds are outstanding or any amounts remain due and owing to the City hereunder and under the District Bond, including City Contingent Loan Payments or any City Advances, that each year it will continue to impose the sales tax at the rate of not less than 0.037 percent of the selling price (in the case of a sales tax) or value of the article used (in the case of a use tax) and apply Sales Tax Revenue as provided in this Agreement; provided however, this covenant shall not extend beyond the maximum period of time the Sales Tax may be imposed under RCW 82.14.390;provided further, this covenant shall automatically be extended to reflect any amendments to such statute to extend the maximum period of time such tax may be imposed. Section 11. City Event Center Payments- 0 eratioti of the Special Events Center. (a) City Events Center Payments. For so long as any Revenue Bonds, Additional Revenue Bonds, 2016 Sales Tax Refunding Bonds, City Contingent Loan Payments, or City Advances remain outstanding, the City for itself and on behalf of the District shall collect Special Events Center Revenues and shall transfer City Special Events Center Payments to the District for deposit into the District Revenue Fund sufficient to pay the First through Fourth purposes listed in Section 6 of this Agreement, The City Special Events Center Payments shall have priority over other uses of Special Events Center Revenues, including but not limited to for the payment of Operation and Maintenance Expenses. (b) Operation and Maintenance of Special Events Center. For so long as any Revenue Bonds, Additional Revenue Bonds, 2016 Sales Tax Refunding Bonds, City Contingent Loan Payments, or City Advances are outstanding, the City, for itself and on behalf of the 10 j District, shall take all actions necessary to: (i) operate or cause the Special Events Center to be operated properly as a "regional center" (as that term is defined in chapter 35.57 RCW) and a "tourism-related facility" (as that term is defined in chapter 67.28 RCW) in a sound and economical manner consistent with commercially reasonable industry practices and standards for facilities similar to the Special Events Center and in accordance with the License Agreement, (ii) maintain or cause the Special Events Center to be maintained in compliance with all applicable legal requirements and promptly remedy (or contest in good faith) any violations thereof, and (iii) maintain,preserve and keep the Special Events Center, or cause the Special Events Center to be maintained, preserved and kept, with the appurtenances and every part and parcel thereof, in lawful order and in good repair, working order and condition, from time to time to make or, cause to be made, all necessary and proper repairs, replacements and renewals so that at all times the operation thereof may be properly and advantageously conducted, and not commit or suffer any unreasonable waste with respect thereto. i (c) Payment of Operation and Maintenance Expenses. The City shall pay or cause to be paid all Operation and Maintenance Expenses from Special Events Center Revenues and other City money legally available therefor. (d) District Not Responsible for Operation and Maintenance of the Special Events Center. It is understood that the District shall have no responsibility for the operation or maintenance of the Special Events Center or for the acts of the City, its employees, agent, users of the Special Events Center or its or their officers, directors, managers, members or shareholders, or any party acting by, through or on behalf of any such parties. The District shall not be responsible for payment of Operation and Maintenance Expenses. As of the date of this agreement and at any time that Revenue Bonds are insured by the Revenue Bond Insurer, the District does not and shall not conduct any management operations or own any property. (e) Fees, Rates and Charges for Use of Special Events Center. Subject to the terms of the License Agreement, the City for itself and on behalf of the District shall cause fees, rates and charges to be fixed, maintained and collected for the use of the services and facilities and all commodities sold, furnished or supplied by or through the Special Events Center, which fees, rates and charges shall be adjusted from time to time as necessary, so that (i) such fees,rates and charges will be at optimal levels to produce total Special Events Center Revenues that will at all times be at least sufficient to enable the City to make City Special Events Center Payments to the District in the amounts required, together with Sales Tax Revenue, for the District to meet Required Debt Service, as and when the same shall become due and payable, and to make all other payments which the District is required to make pursuant to the bond resolution authorizing the issuance of the Revenue Bonds, to make any payments required to be made on account of the Revenue Bonds as and when the same shall become due and payable, and to make any payments required to be made on account of the 2016 Sales Tax Refunding Bonds and under this Agreement as and when the same shall become due and payable. (f) Insurance. The City shall acquire and maintain insurance in form and amounts consistent with the coverage of comparable special events center facilities and undertakings related to said facilities as contemplated by the Interlocal Agreement and shall name the District as an additional named insured for at least so long as any Revenue Bonds, Additional Revenue Bonds, 2016 Sales Tax Refunding Bonds, City Contingent Loan Payments, or City Advances remain outstanding. Such insurance may, without limitation, including self-insurance and/or pool 1l insurance. (g) Sale, Transfer or Disposition of the Special Events Center. Neither the City nor the District will sell, transfer or otherwise dispose of(each such sale, transfer or other disposition a "transfer") any interest in the real or personal properties, facilities or other part of the Special Events Center that are owned by it, except for a transfer by the City to the District, unless the conditions of paragraph (1) are satisfied and the transfer is consistent with one or more of the subparagraphs of paragraph (2), as follows: (1) The transfer(other than a transfer to the District): (A) is carried out in a bonafide, arm's-length transaction, (B) the City or the District, as applicable, receives from the transferee consideration equal to the fair market value of the portion of the Special Events Center transferred, for which purpose "fair market value" means the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the willing buyer and willing seller each acting prudently and knowledgeably and (C) the transfer is approved by ordinance of the City or by resolution of the District, as applicable; and (2) The City or the District in its discretion may carry out a transfer of facilities or property owned by it that is consistent with one or more of the following: (A) the facilities or property to be transferred are not material to the operation of the Special Events Center, or shall have become unserviceable, inadequate, obsolete or unfit to be used in the operation of the Special Events Center or are no longer necessary, material or useful to the operation of the Special Events Center; or (B) the Special Events Center Revenues received from the operation of those facilities or property to be transferred during the twelve fill calendar months before the transfer was less than 10% of total Special Events Center Revenues received during that same period. The proceeds of any transfer shall be used (i) to promptly redeem, or irrevocably set aside for the redemption of,first, the Revenue Bonds, second, the 2016 Sales Tax Refunding Bonds, City Contingent Loan Payments, and any City Advances, in the order determined by the City, and/or (ii) to provide for all or part of the cost of capital improvements and/or additions to or expansions of the Special Events Center and/or for other regional center or tourism-related facilities authorized under chapters 35.57 and 67.28 RCW, as directed by the City. Section 12. Covenants of the District. (a) Dissolution. The District hereby covenants, for so long as any of the Revenue Bonds or the 2016 Sales Tax Refunding Bonds are outstanding, or any amounts remain due and I 12 owing to the City hereunder, including City Contingent Loan Payments and all City Advances, that it will not voluntarily commence proceedings under Washington law to dissolve the District. (b) Reporting Requirements. The District shall provide the City (at the notice address set forth in this Agreement) with a quarterly report summarizing actual financial activity and financial expectations for the following four quarters. (c) Restriction on Issuance of Additional Debt or Imposition of Additional Taxes. So long as the City is not in default of its obligations under this Agreement, the District shall not (1) issue any bonds or other obligations payable from the Sales Tax without the City's prior written approval; or (2) borrow money or incur any obligations, without the City's prior written approval. Further, in accordance with Section CA. of the Interlocal Agreement, without the City's written concurrence, the District shall not impose any taxes or engage in the development, financing, ownership or operation of any Regional Center (as that term is defined in chapter 35.57 RCW) or other facility other than the Special Events Center. Further, upon the City's reasonable request, the District shall impose such taxes or fees to support the Special Events Center as the District may be authorized to impose under applicable law. The District also agrees that it will not amend Article V ("Purpose") of its bylaws without approval by the City Council. (d) Preservation of Tax Fxemption for Interest on the 2016 Sales Tax Refunding Bonds. The District hereby agrees that it will take all actions necessary to prevent interest on the 2016 Sales Tax Refunding Bonds from being included in gross income for federal tax purposes, and it will neither take any action nor make or permit any use of the Special Events Center at any time while the 2016 Sales Tax Refunding Bonds are outstanding which will cause interest on the 2016 Sales Tax Refunding Bonds to be included in gross income for federal income tax purposes. Section 13, Remedies cif City on Default. Upon the occurrence of a default by the District in its obligations hereunder, the City may proceed to protect and enforce its rights in equity or at law, either in mandamus or for the specific performance of any covenant or agreement contained herein, or for the enforcement of any other appropriate legal or equitable remedy, as the City may deem most effectual to protect and enforce any of its rights or interests hereunder. Section 14. Remedies of District on Default. Upon the occurrence of a default by the j City in its obligations hereunder, the District may proceed to protect and enforce its rights in equity or at law, either in mandamus or for the specific performance of any covenant or agreement contained herein, or for the enforcement of any other appropriate legal or equitable remedy, as the District may deem most effectual to protect and enforce any of its rights or interests hereunder. Section 15. No Remedy EXclusie. No remedy conferred upon or reserved to either party by this Agreement is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative. Either party shall be free to pursue, at tine 13 i same time, each and every remedy, at law or in equity, which it may have under this Agreement, or otherwise. Section 16. No linpled Waiver. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. For the exercise of any remedy, it shall Dot be necessary to give any notice, other than such notice as may be expressly required herein. Section 17. Agreement to Pay Attorneys' Fees and Fxxpenses. If a default arises under any of the provisions of this Agreement and either party hereto should employ attorneys or incur other expenses for the collection of amounts due under this Agreement or the enforcement of performance or observance of any obligation or agreement on the part of the other party contained in this Agreement, on demand therefor, the nonprevailing party shall pay or reimburse the prevailing party for the reasonable fees of such attorneys and such other expenses so incurred. Section 18. Continuing Disclosure. (a) Annual Financial Information To Be Provided. To meet the conditions of paragraph (b)(5) of United States Securities and Exchange Commission Rule 15c2-12 (the "Rule"), as applicable to a participating underwriter for the 2016 Sales Tax Refunding Bonds, the District shall undertake for the benefit of holders of the 2016 Sales Tax Refunding Bonds to provide, or cause to be provided, annual financial information as provided in a continuing disclosure certificate ("Continuing Disclosure Certificate") executed by the District in connection with the issuance of the 2016 Sales Tax Refunding Bonds. (b) Agreement To Assist District's Undertaking. The City agrees to submit copies of the District's annual financial information, as and when required of the District under the Continuing Disclosure Certificate. The District hereby authorizes and directs the City to make such filings on its behalf. Section 19. Initial Disclosure. The District Agrees to assist the City in preparation of information about or pertaining to the District for inclusion in a primary offering document to be prepared in connection with the issuance and sale of the City's 2016 Bonds. Section 20. Interlocal Cooperation Act lrovisions. The parties acknowledge that: (i) they have entered into this Agreement pursuant to the express authority granted to them by chapter 35.57 RCW and RCW 67.28.130; (ii) pursuant to RCW 39.34.100, the powers and authority conferred by the Interlocal Cooperation Act (chapter 39.34 RCW) are supplemental to powers or authority conferred by RCW 67.28.130 and chapter 35.57 RCW; and (iii)nothing contained in the Interlocal Cooperation Act limits the power or authority of either party to contract pursuant to RCW 67.28.130 and chapter 35.57 RCW. To avail themselves of the supplemental powers and authority granted by the Interlocal Cooperation Act, the parties agree that: 14 i (a) No separate legal or administrative entity within the meaning of RCW 39,34,030(3)(b) or"joint board" within the meaning of RCW 39.34.030(4)(a) is created by this Agreement; (b) The Mayor is appointed as the "administrator" within the meaning of RCW 3934.030(4)(a) responsible for administering the City's rights and duties set forth in this Agreement, and the District's Chair is appointed as the "administrator" within the meaning of RCW 3934.030(4)(a) responsible for administering the District's rights and duties set forth in this Agreement; (c) The City and the District will file or post this Agreement as required by RCW 39.34.040. Nothing set forth in this Agreement is intended to limit the rights and duties of the parties relating to the Special Events Center that are established through other contracts between the parties. Section 21. Governing Law: Venue. This Agreement is governed by and shall be construed in accordance with the substantive laws of the State of Washington and shall be liberally construed so as to carry out the purposes hereof. Except as otherwise required by applicable law, any action under this Agreement shall be brought in the Superior Court of the State of Washington in and for King County. Section 22. Notices. Except as otherwise provided herein, all notices, consents or other communications required hereunder shall be in writing and shall be sufficiently given if addressed and hand delivered or mailed by first-class mail, as follows: To the City: City of Kent 220 Fourth Avenue South Kent WA 98032 Attention: Finance Director To the District City of Kent Special Events Center PFD 220 Fourth Avenue South Kent WA 98032 Attention: Treasurer 'the City or the District may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates, requests or other communications shall be sent. Notices shall be deemed served upon deposit of such notices in.the United States mail in the manner provided above. Section 23, Binding I} tfeet. This Agreement shall inure to the benefit of and shall be binding upon the City and the District and their successors. This Agreement may not be assigned. 15 i Section 24. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 25. Amendments. This Agreement may be amended in writing by the City and the District(or their successors in title). Section 26. Third Party Rights. The terms of this Agreement are not intended to establish nor to create any rights in any persons or entities other than the City, the District and the respective successors and assigns of each. Section 27. Time of Essence. Time and all terms and conditions shall be of the essence in this Agreement. Section 28. Effective Date of and Termination of Agreement. This Agreement shall become effective on the date of issuance of the 2016 Sales Tax Refunding Bonds. This Agreement shall terminate upon payment in full of all principal of and interest on the 2016 Sales Tax Refunding Bonds, and any amounts due and owing to the City hereunder, including the City Contingent Loan Payments and any City Advances. Section 29. Disclaimers with Respect to Loans and the District. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY, EXTEND CREDIT, OR FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW. Section 30. Termination of Contingent Loan Agreement, Pursuant to Section 10.1 of the Contingent Loan Agreement, the Contingent Loan Agreement shall terminate upon the repayment or defeasance of all of the Sales Tax Bonds and the Revenue Bonds and the repayment of any obligations owed by the District to the City under the Contingent Loan Agreement, or to a credit enhancement provider, Section 31. Effect-on—Existing Agruernmus; Contingent [oan Agreemcnt to Remain Outst<'uulitig. This Agreement supplements the Interlocal Agreement and the Contingent Loan Agreement, and except as provided in Section 6 and Section 11 which are intended to amend certain provisions of the Contingent Loan Agreement, this Agreement does not modify the parties' respective obligations under the earlier agreements or under any other agreements between the City and the District. Except as provided in Section 6 and Section 11 above and the respective amendments to the Contingent Loan Agreement, all such existing agreements shall remain in full force and effect. Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be construed to terminate, limit, or otherwise impair the District's right to receive from the City, and the City's obligation to pay to the District, City Special Events Center Payments and City Contingent Loan Payments when and as required under the Contingent Loan Agreement so long as the Revenue Bonds remain outstanding. [signature page follows] 16 IN WITNESS WHEREOF, the City and the District have caused this Agreement to be executed in their respective names by their duly authorized officers, and have caused this Agreement to be dated as of the date set forth on the first page hereof. CITY OF KENT, WASHINGTON THE CITY OF KENT SPECIAL EVENTS CF"N I'P PUBLIC FACILITIES DISTRICT ayor Ch ' and Board Member` ATTEST ATTEST I finance Director S t`r ary and 13p •d Member �fAp�pprroovyed as to Form: Approved as to7 Form: tip] fi Effective Date of Agreement: cn } tj i 17 ACKNOWLEDGMENTS STATE OF WASHINGTON ) ss. COUNTY OF KING ) On this ltday of 2016, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared Suzette Cooke,to me known to be the Mayor of the CITY OF KENT, a municipal corporation of the State of Washington that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said city, for the uses and purposes therein mentioned, and on oath stated that she was authorized to execute the said instrument. "c r1 G S lily hand and official seal hereto affixed the day and year in this certificate al3o�j wr�ttan U f NOTARY PUBLIC ' r and far the St to of N Q $ vf' ��o �� Washington, siVig at lyt 0 q F h AN Print Name: L 'lf , ,•'P' My commission expires: 'gltreaUu+, STATE`OF WASHINGTON ) ss. COUNTY OF KING ) On this day of WV t/ 2016, before me, the undersigned, a Notary Public inland to ,the State of Washington, duly commissioned and sworn, personally appeared �� to me known to be the Chair of THE CITY OF KENT SPECIAL EVENTS CENTER PUBLIC FACILITIES DISTRICT, a municipal corporation of the State of Washington that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said district, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute the said instrument. WITNESS my hand and official seal hereto affixed the day and year in this certificate above written. 4 AGA ... Y NOTARY BLIC in an lfRir the S e of a f _ Washin on to 'd at Print Name: i P u e 0 My commission expires 0,+. y 1� A-1 10069 00012 tb246p08c8