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City Council Committees - Public Facilities Distict Board - 11/20/2007
SPECIAL MEETING of the CITY OF KENT SPECIAL EVENTS CENTER PUBLIC FACILITIES DISTRICT Tuesday, November 20, 2007, 8:00 a.m. I. Call to Order a. Introductions—All b. Approval of Minutes of the September 14, Special Meeting — Motion. II. Project Overview and Update — Ben Wolters and Brad Tong a. Overview of Project Budget b. Overview of Project Schedule c. Current Status of Construction d. Status of Selecting an Operator e. Status of Design and Marketing III. Finance Report — Bob Nachlinger, Hugh Spitzer, a. Financial Update b. Implementation of PFD tax collection by Department of Revenue c. Review of Strategy to Sell Bonds d. Selection of Bond Underwriter e. Selection of Financial Advisor IV. Action Items — Bob Nachlinger, Hugh Spitzer, William Tonkin a. Contingent Loan &Support Contract (Interlocal Agreement between the City and PFD for backing of the Bonds) - Adopt V. Other Business a. Scheduling Tours of Construction Site VI. Executive Session vii. Adjourn KENT Public Facilities District September 14, 2007 Board Members Present: Lew Sellers, Director of Communications for the Kent Valley Hockey Association, scorekeeper and statistician for the Western Hockey League, and off-ice official for the Seattle Thunderbirds; Greg Haffner, attorney with the Curran Law Firm; Mike Miller, Valley Bank and member of Citizens Advisory Committee; Randall Smith of All Pro Building Maintenance; and Cass Prindie, Regional Director of the Pacific Northwest Regional Council of Carpenters. Others Present: Mayor Suzette Cooke, City Attorney Tom Brubaker, City Finance Director Bob Nachlinger, City Events Center Project Manager and Economic Development Director Ben Wolters, and Bond Counsel for the City Hugh Spitzer of Foster Pepper PLLC. I. Call to Order a. Introductions. The meeting was called to order by Tom Brubaker at 9:30 a.m., and introductions were made. Mayor Cooke thanked the Board members for serving and said the Board will be making history within the city, the region and the state. b. Project Update. Ben Wolters updated the Board on the current status of the Events Center and outlined upcoming steps in the process. It was noted that the cost is projected to be $78,600,000. U. Organizational Structure a. Purpose and Description. Brubaker explained that the Public Facilities District is a separate, independent municipal entity, not a branch of the City of Kent, but that there is a strong relationship between the two. He outlined the formation, purpose and description of the Public Facilities District and explained that the PFD will issue the bonds and pay a portion of the debt through the sales tax revenue generated, and the City will back up the remainder. b. Financing Structure. Finance Director Nachlinger outlined the debt and financing, and explained other aspects of the financial structure as shown in the reports provided. A lengthy discussion was held and questions from Board members were answered by Nachlinger, Spitzer and Brubaker. In addition to financing, discussion was held on sponsorship, advertising, maintenance, recycling, and possible conflicts. Public Facilities District Board September 14, 2007 Page Two C. Board Member Duties and Responsibilities. Brubaker noted that the Board is subject to the State's Open Public Meetings Act and the Open Public Records Act, and explained those rules. Brubaker and Spitzer then answered questions on various subjects such as insurance, indemnification, and outside counsel. Mayor Cooke pointed out that the Board's fiduciary responsibility is to ensure that the revenues needed to repay the bonds are generated. III. Initial Meeting Action Items a. By-Laws. Spitzer led a brief discussion about the provisions of the by-laws, including what subjects can be discussed in Executive Session, reimbursement of expenses, compensation, and the purchase of insurance for Directors. It was noted that the District's records will be kept in the City Clerk's Office. b. Elect Officers. Haffner moved that Mike Miller be Chair, Smith seconded, and the motion carried. Sellers moved that Haffner be Vice-Chair, Smith seconded, and the motion carried. Haffner moved that Sellers be Secretary, Smith seconded, and the motion carried. It was noted that Finance Director Nachlinger is the Treasurer, and that he does not vote. C. Sales and Use Tax Imposition/Reallocation. Spitzer explained that this 0.033% sales tax is not a new tax, and that the state will remit a portion of the sales tax to the District. He outlined the resolution, after which Prindle moved to adopt Resolution No. 2007-1 which imposes a sales and use tax. Sellers seconded and the motion carried. d. Interlocal Agreement. Spitzer explained the contents of the interlocal agreement for development of the Events Center and clarified the roles of the Board members. Because the sales tax resolution was adopted before the by-laws were signed, Sellers moved to authorize and ratify all acts taken prior to this point in time. Prindle seconded and the motion carried. After a brief discussion regarding the wording of Section H, Sellers moved to adopt Resolution No. 2007- 2 authorizing the execution of the interlocal agreement, as amended. Haffner seconded and the motion carried. e. Public Records Index Requirements Exemption. Spitzer explained that the state requires a resolution which adopts a policy regarding public records requests and exempts the city from maintaining an index of all records. He explained the records Public Facilities District Board September 14, 2007 Page Three request process, emphasized that Board members should keep all their records, and noted that requestors should be referred to the City's Records Administrator. It was determined that the reference to the District's website should be removed from Section A of Exhibit A to the resolution. Haffner moved to adopt Resolution No. 2007-3 as amended. Sellers seconded and the motion carried. f. Travel Reimbursement Requirements. Spitzer noted that this resolution is required by state law as a way to track expenses. After Spitzer explained each section, Haffner moved to adopt Resolution No. 2007-4 relating to reimbursable business and travel expenses. Sellers seconded and the motion carried. IV. Other Business a. Meeting Times. After a brief discussion, it was determined that special meetings will be held until the bonds are set up, after which a regular meeting time could be set. V. Executive Session No Executive Session was held. VI. Adiourn Sellers moved to adjourn at 12:00. Haffner seconded and the motion carried. Brenda Jacober, CMC City Clerk = � . City of Kent Monthly Budget Report DENT EVENTS CENTER Life to Date Costs as oJNovember 15,2007 Architecture/Engineering(LMN) $ 4,072,229.00 $ 4,072,229.00 $ 3,026,158.24 $ 1,046,070.76 Sub-TOTAL $ 4,072,229.00 $ 4,072,229.00 $ 3,026,158.24 $ 1,046,070.76 Project Management(SOJ) $ 975975.00 $ 976,769.00 $ 474,397.12 $ 502371.38 Testing/Inspections(Shannon&Wilson) $ 214:025.00 $ 117,469.00 $ 51,455.37 $ 66:013.63 Testin Ins ections(Mayes) $ 95,762.00 $ 180.00 $ 95,582.00 Sub-TOTAL $ 1,190,000.00 $ 1,190,000.00 S 526,032.99 $ 663,967.01 , GC/CM Pre-Construction(incl.WSST) $ 217,800.00 $ 272,250.11 $ 272,250.00 $ - GC/CM Construction(hrel.WSST) $ 63,558,533.00 $ 63,915:696.00 $ 6,958,544.ti $ 56,957,152.00 Sub-TOTAL $ 63,776,333.00 $ 64,187,946.00 $ 7,230,794.00 S 56,957,152.00 i Operations Consultant $ 100,000.00 $ 100,000.00 $ 78,883.93 $ 21,116.07 Feasibility(B&D,Baldwm) $ 85,000.00 $ 85,000.00 $ 84,805.04 $ 194.96 Outside Legal(Foster Pepper) $ 250,000.00 $ 250,000.00 $ 231,088.99 $ 18,911.01 PR/Community,Outreach $ 120,000.00 $ 120,000.00 $ 104,846.45 $ 15,153.55 EIS&Transp(Blumen/Reffron) $ 160,000.00 $ 160,000.00 $ 243,531.87 $ (83,531,87) Lobbyist/External Fundraising $ 85,000.00 $ 85,000.00 $ 45,000.00 $ 40,000,00 Survey $ 10,000.00 $ 10,000.00 $ - $ 10,000.00 Geotechnical/Soils(S&W Piles) $ 75,000.00 $ 185,000.00 $ 176,777.79 $ 8,222.21 Wetlands Delineation(Legal&Scientist) $ 30,000.00 $ 30,000.00 $ 26,646.71 $ 3,353.29 Travel/Misc/Reimburseables $ 30,000.00 $ 50,000.00 $ 42,526.04 $ 7,473.96 Builders Risk Insurance $ 125,000.00 $ 210,980,60 $ 210,980.60 $ - Owners Permits/Entitlements $ 200,000.00 $ 200,000.00 $ 70,860.92 $ 129,139.08 Site Utility Connections/Fees $ 100,000.00 $ 100.000.00 $ - $ 100,000.00 Commissioning(EEl) $ 100,000.00 $ 93,774.00 $ 10,950.88 $ 72,823.12 FF&E(incl WSST) $ 3,000,000.00 $ 3,000,000.00 $ - $ 3,000,000.00 Owners LEED Costs $ - $ 153,000.00 $ 55,109.75 $ 97,890.25 Owners Separate Cost Estimating $ - $ 40,000.00 $ 21,000,00 $ 201D00.00 Special Services(LMN) $ 261,372.00 $ 261,372.00 $ - $ 261,372.00 Reltnbursables(LMN) $ 100,000. 5,2 00 $ 100'000.0 0 $ $ 100,000.00 Sub-TOTAL $ 4,831,372.00 $ 24,126.60 S 1,402,008.97 $ 3,822,117.63 r _ Mitigation Costs $ 2,112.000.00 $ 2.112.000.00 $ - $ 2,112,000.00 Financing Costs $ 2,600,000.00 $ 2,600,00000:1 $ $ 2,600,000.00 Sub-TOTAL $ 4,712,000.00 $ 4,712,000.00 11$ $ 4,712,000.00 I , _ Contingency $ - - Is 804,367.60 $ $ 804,367.60 Sub-TOTAL $ $ 804,367.60 $ $ 804,36Z60 PROJECT TOTAL COSTS $ 78,581,934.00 IS 78,531,934.00 11$ 12,184,994.20 $ 67,201,307.40 U N N c t, 0 2 F- m aNi c N o c _ y d F-, N I- ._ c .c N Y E ""' N O J N O O C O +- U q .0 o f -j N m o m ¢ m ac c 3 0 ? 0d � '' min ca = No ((3 L m N : c m a d U. < f0) N f0 y Q >, N >0 c ° ul Q Z O C U ) U K 0 0 N E E 0 - p N 0) N N U O N m y u E L �..• r >O 0 ry C�.Z LL tE`-O N wN W 0 LL r •� uj ; d' K J I -ice c o0) W N 0 IILd O Z m (Ep fi y Q U- O 6 W CO 7 0 Ltj 0 N O N W E w Q 0 cc N 0 c C U) �2 N f6 V T c y.J N c d Y > 0 N =O LL C.) 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O y O O O F O F U W N ? ¢ ¢ rwil O Q O 0 O E m m C M N M N y N O O � O r E > J OE N w E E y a° Ea c S y = E 'U `a N J « y w C r Q w' `m m' u a' E w E Q N m W a v O W = o U o m 3 m n c w a v E a c w U e ' ' u.c 'c u. y 17 J9 p p O Y E E J9 19 E E O O N N O O c c c c W y U U S E U U 0 0 o O O O o N O N O O N Q d d d d O 60 d d d 00 O O o N N N UJ a 0N N N m N N FP DRAFT OF 11/08/2007 CONTINGENT LOAN AND SUPPORT AGREEMENT REGARDING FINANCING FOR KENT SPECIAL EVENTS CENTER BY AND BETWEEN THE CITY OF KENT AND THE CITY OF KENT SPECIAL EVENTS CENTER PUBLIC FACILITIES DISTRICT 50853182.2 CONTINGENT LOAN AND SUPPORT AGREEMENT REGARDING FINANCING FOR KENT SPECIAL EVENTS CENTER THIS CONTINGENT LOAN AND SUPPORT AGREEMENT (this "Agreement') is dated as of the day of , 2007, and is made by and between THE CITY OF KENT, WASHINGTON (the "City"), and THE CITY OF KENT SPECIAL EVENTS CENTER PUBLIC FACILITIES DISTRICT(the "District'); RECITALS WHEREAS, Chapter 35.57.020 of the Revised Code of Washington ("RCW") provides that a public facilities district may acquire, construct, own, remodel, maintain, equip, repair, finance, and operate one or more regional centers; and WHEREAS, the City has previously determined that the acquisition and operation of such a regional center is in the interest of the City, and by Ordinance No. 3853 passed on August 7, 2007 (the "District Formation Ordinance"), established the District pursuant to 35.57 RCW, to assist in the design, construction, ownership, operation and/or financing of a regional center as defined in RCW 35.57.020 as a convention, conference or special events center, and related parking facilities, serving a regional population (the "Special Events Center"); and WHEREAS, the Washington Interlocal Cooperation Act (RCW 39.34) authorizes a public facilities district to contract with any other public agency of the State of Washington (the "State") to perform any governmental service, activity or undertaking which each entity is authorized to perform; and WHEREAS, the City and the District previously entered into an Interlocal Agreement for Development of Special Events Center dated September 14, 2007 ("Interlocal Agreement No. 1"), pursuant to the Washington Interlocal Corporation Act (39.34 RCW) in connection with the development and operation of the Special Events Center; and WHEREAS, the City began construction of the Special Events Center in July, 2007, with available funds of the City; WHEREAS, pursuant to state law, the District Formation Ordinance and Interlocal Agreement No. 1, for the purpose of providing for part of the cost of joint development of the Special Events Center, the District is authorized to issue revenue bonds or general obligation bonds in principal amounts approved by the City consistent with RCW 35.57.030, 35.57.090 and other applicable provisions of state law; and WHEREAS, all such bonds of the District will be satisfied exclusively from the assets, revenues and credit of the District except and to the extent the City expressly agrees to make a loan to the District to provide for the payment of such obligations; and WHEREAS, under Interlocal Agreement No. I and Resolution No. 2007-1 of the Board of Directors of the District adopted on September 14, 2007 (the "PFD Tax Resolution"), the 1 50953182.2 District imposed the sales and use taxes authorized by RCW 82.14.390 at the rate of 0,033% 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 (the "Sales and Use Tax") and agreed to set aside the proceeds of such Sales and Use Tax either to be paid to the City for the purpose of providing for part of the cost of designing, constructing, owning and operating the Special Events Center, and/or to provide part of the debt service on District bonds or obligations issued to provide for part of such costs; and WHEREAS, the City has requested that the District issue (i) its Limited Sales Tax Obligation Bonds, Series 2007, in an original principal amount not to exceed [$ (the "2007 Sales Tax Bonds") payable from the Sales and Use Tax, and (ii) its Revenue Bonds, Series 2007A, and Revenue Bonds, Series 2007B (Taxable), in an original aggregate principal amount not to exceed [$ 1 (the "2007 Revenue Bonds") payable from Special Events Center Revenues, to pay for a portion of the capital costs of the Special Events Center; and WHEREAS, the District intends to issue its 2007 Sales Tax Bonds and 2007 Revenue Bonds to pay for a portion of the capital costs of the Special Events Center; and WHEREAS, the District has requested that the City provide credit support to the District to permit the District to obtain financing for the capital costs of the Special Events Center at the lowest interest rates available; and WHEREAS, the City is willing to provide credit support for the District's 2007 Sales Tax Bonds and 2007 Revenue Bonds and to pay operating and maintenance expenses of the Special Events Center as provided in this Agreement, and the City Council of the City by Ordinance No. has authorized the City to enter into this contingent loan and support agreement; NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the parties hereto covenant and agree as follows. Section 1. Definitions and Interpretation. 1.1 Definitions. As used or referred to in this Agreement, unless the context otherwise requires, the following terms shall have the meanings given to them in the Recitals of this Agreement: Agreement 2007A Revenue Bonds City 2007B Revenue Bonds District 2007 Revenue Bonds District Formation Ordinance Sales and Use Tax Interlocal Agreement No. 1 2007 Sales Tax Bonds PFD Tax Resolution Special Events Center RCW State 2 SOBSl182.2 In addition, unless the context requires otherwise, the terms defined in this section shall, for all purposes of this Agreement, have the meanings specified herein, to be equally applicable to both the singular and plural forms of any of the terms defined herein. "Bonds" means (i) the 2007 Revenue Bonds and the 2007 Sales Tax Bonds and (ii) any note, bond or other obligation issued from time to time to refinance any obligations described in clause (i) or (ii), so long as the latest maturity date of any obligation issued to refinance the 2007 Sales Tax Bonds is not later than the latest maturity date of the 2007 Sales Tax Bonds; the latest maturity date of any obligation issued to refinance the 2007 Revenue Bonds is not later than the date that is thirty years after the issue date of the 2007 Revenue Bonds; and the aggregate principal amount of Bonds outstanding at any time does not exceed [$62,700,000]. "Fiscal Agent" means the fiscal agent of the State, initially The Bank of New York. "Project"means the design and construction of the Special Events Center. "Sales and Use Tax Revenues" means all revenues collected by or on behalf of the District from the Sales and Use Tax and from interest earnings thereon. "Special Events Center Operating 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; the costs of advertising, marketing and business promotion; deposits, premiums, assessments or other payments for insurance; taxes and assessments; all as determined in accordance with generally accepted accounting principles applicable to the City and its operations. The term Special Events Center Operation and Maintenance Expenses does not include any depreciation of or capital expenditure for the Special Events Center. "Special Events Center Revenues" means all revenue, earnings and money received by the City from or an account of the operation and/or ownership of the Special Events Center, including but not limited to license fees received by the City from Thunderbird Hockey Enterprises, LLC (the "Team"), pursuant to the License Agreement dated August 7, 2007 (the "License Agreement'), by and between the City and the Team, facility fees, concession revenues, advertising revenues, suite license revenues, club seat revenues, parking revenues and naming rights revenues. 1.2 Interpretation. Unless otherwise clear from the context of the terms, words or phrases, the following principles govern the interpretation of terms, words and phrases used in this Agreement: (a) Sections, paragraphs and clauses mentioned by number only without reference to another document are those so numbered that are contained in this Agreement. 3 50853182.2 (b) Captions, titles or headings preceding any article, section or subsection herein, and any table of contents or index attached hereto, are solely for convenience of reference and are not part of this Agreement and shall not affect its meaning, construction or effect. (c) Terms such as "herein," "hereunder," "hereby," "hereto" and "hereof' refer to this Agreement as a whole and not to any particular section hereof unless so indicated; "heretofore" and "hereafter"mean before and after the date of this Agreement. (d) Words importing any gender include masculine, feminine and neuter genders, where applicable. (e) Words importing the singular number include the plural number, and vice versa, where applicable. Section 2. Reaffirmation of Past Commitments. Except to the extent supplemented or expressly provided in this Agreement, all obligations of the City and the District set forth in Interlocal Agreement No. 1 shall remain in full force and effect. Section 3. City Contingent Loan Commitment for Bonds. 3.1 City Contingent Loan Commitment for Bonds. In the event that the District is unable to timely provide for the payment of principal of or interest on any Bonds, the City shall loan the District the amount necessary to make such timely payment. The District agrees to borrow the amounts described above from the City pursuant to this Agreement and to apply those amounts immediately for the purpose of meeting its obligations under the Bonds. The District shall transfer the proceeds of each City loan directly to the Fiscal Agent to be applied to the payment of debt service on the Bonds. The City on behalf of the District may transfer those loan amounts directly to the Fiscal Agent. In the event that the District has not timely transferred to the Fiscal Agent sufficient amounts to make a debt service payment on any Bonds, or the District has informed the City that there is a reasonable possibility that the District may not be able to timely and fully provide for a debt service payment when due, the City shall transfer to the Fiscal Agent the amount of the deficiency or expected deficiency. The total amount of funds to be loaned by the City pursuant to this Section 3.1 shall not exceed the principal amount of the Bonds plus interest due and unpaid thereon. The obligation of the City to advance funds to the District in the amounts, at the times and in the manner described herein shall be absolute and unconditional, and shall not be subject to diminution by setoff, counterclaim, abatement or otherwise. The full faith, credit and resources of the City are pledged irrevocably for the payment to the Fiscal Agent of the amounts described herein. 3.2 District Repayment to City for Amounts Loaned pursuant to Contingent Loan Commitment. If the City lends money to the District pursuant to this Section 3, the District shall repay the principal amount or amounts loaned as revenues for that purpose become available consistent with Section 4, below, and the outstanding principal amount of any such loan 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 shall be revised each year during the budget process based on the then-current yield of the City's 4 50853182,2 pooled investments, and effective on the same date that the City's interfund loan interest rate is adjusted for all City interfund loans. 3.3 District Disclosure Documents. The District may, in disclosure documents related to the Bonds, describe this Agreement and the City's contingent commitment under Section 3.1, above. However, those disclosure documents shall contain a statement to the effect that the Bonds are payable solely from the specified sources and other money of the issuer legally available therefor, and from the transfer of the funds by the City to the Fiscal Agent, but that the Bonds are not obligations of the City. Section 4. Priority of Payments from Sales and Use Tax Revenues, Special Events Center Revenues ("Flow of Funds"). 4.1 Sales and Use Tax Revenues. The District shall transfer or cause to be transferred to the Finance Director of the City, as ex officio Treasurer of the District, all Sales and Use Tax Revenues for deposit in the Public Facilities.District Sales and Use Tax Revenue Fund. Sales and Use Tax Revenues shall be allocated and applied to the following purposes in the priority set forth below, and the following "flow of funds" for those Sales and Use Tax Revenues shall supplement and supersede the provisions of Section C.1 of Interlocal Agreement No. 1 to the extent of any inconsistency: (a) Payment of principal of and interest and any redemption premium on the 2007 Sales Tax Bonds; (b) Repayment of principal of and interest on City loans to the District under Section 3.2 with respect to payments by the City of principal of or interest on the 2007 Sales Tax Bonds; (c) If and only to the extent the Special Events Center Revenues available from the flow of funds under Section 4.2 are not sufficient to pay such expenses, payment of Special Events Center Operation and Maintenance Expenses; and (d) To provide for costs of and reserves for long term capital repairs of and replacements to the Special Events Center, and for other lawful District purposes, including, at the option of the City, payment of principal of and interest and any redemption premium on the 2007 Revenue Bonds, in no particular order of preference and all as determined by the City in consultation with the District. The reservation of the optional right to apply Sales and Use Tax Revenues to the payment of debt service on the 2007 Revenue Bonds shall not be deemed a pledge by the District or the City to apply those tax revenues in that manner. 4.2 Special Events Center Revenues. The City for itself and on behalf of the District shall collect and deposit all Special Events Center Revenues and interest earnings thereon in the Public Facilities District Special Events Center Revenue Fund. Special Events Center Revenues shall be allocated and applied to the following purposes in the priority set forth below, and the following "flow of funds" for those Special Events Center Revenues shall supplement and supersede the provisions of Section C.3 of Interlocal Agreement No. 1 to the extent of any inconsistency: 5 50853182.2 (a) Payment of principal of and interest and any redemption premium on the 2007 Revenue Bonds; (b) Repayment of principal of and interest on City loans to the District under Section 3.2 with respect to payments by the City of principal of or interest on the 2007 Revenue Bonds; (c) Payment of Special Events Center Operation and Maintenance Expenses; and (d) To provide for costs of and reserves for long term capital repairs of and replacements to the Special Events Center, and for other lawful District purposes, including, at the option of the City, payment of principal of and interest and any redemption premium on the 2007 Sales Tax Bonds, in no particular order of preference and all as determined by the City in consultation with the District. 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 5. City Responsible for Operation and Maintenance of Special Events Center. 5.1 Operation and Maintenance of Special Events Center. The City for itself and on behalf of the District shall take all actions necessary to: (i) operate or cause the Special Events Center to be operated in a 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 or cause the Special Events Center to be maintained in lawful order and in good operating condition and repair, reasonable wear and tear excepted, and not commit or suffer any unreasonable waste with respect thereto. 5.2 Payment of Special Events Center Operation and Maintenance Expenses. The City shall pay or cause to be paid all Special Events Center Operation and Maintenance Expenses from the following sources of funds and in the following order: (1) Special Events Center Revenues to the extent available from the flow of funds under Section 4.2; (2) Sales and Use Tax Revenues to the extent available from the flow of funds under Section 4.1; and (3) any other City money legally available therefor. 5.3 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. Except to the extent provided by Section 4.1(c), the District shall not be responsible for payment of Special 6 508531822 Events Center Operation and Maintenance Expenses and no District funds shall be applied to payment of Special Events Center Operation and Maintenance Expenses. 5.4 District Administrative Expenses. The City shall pay or reimburse the District for its administrative expenses and other costs reasonably incurred in connection with the financing of the Special Events Center, including compliance by the District with continuing disclosure requirements and post-issuance compliance with federal tax requirements in respect of the Bonds, as well as in connection with the District's collection of Sales and Use Taxes and maintenance of the District in good standing as a public facilities district under chapter 35.57 RCW or any successor law. Section 6. District Covenants. 6.1 Reporting Requirements. The District shall provide the City (at the notice address set forth in Section 9.4) with a quarterly report summarizing actual financial activity and financial expectations for the following four quarters. 6.2 Restriction on Issuance of Additional Parity Bonds, The District shall not issue the Bonds in aggregate principal amounts in excess of $ payable from Sales Tax Revenues, or in excess of $ payable from Special Events Center Revenues, except as otherwise approved by the City's Finance Director. The amount, terms and conditions of the Bonds must be as approved by the City's Finance Director. 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 and use tax authorized by RCW 82.14.390, other than the 2007 Sales Tax Bonds, without the City's prior written approval; or (2) borrow money or incur any obligations, without the City's prior written approval. Section 7. Defaults. 7.1 Remedies of City on District Default. Upon the occurrence of a default by the District in its obligations hereunder (a "District Default"), 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. In the event of a District Default, the City may, without limiting any of its other remedies hereunder, require the District to redeem or defease the Bonds. 7.2 Remedies of District Upon City Default. Upon the occurrence of a default by the City in its obligations to make loans to the District hereunder (a "City Default"), 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. 7.3 No Remedy Exclusive. 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 and shall be in addition to every other 7 50853182,2 remedy given under this Agreement or now or hereafter existing at law or in equity or by statute, and either party hereto shall be free to pursue, at the same time, each and every remedy, at law or in equity,which it may have under this Agreement, or otherwise. 7.4 No Implied 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 not be necessary to give any notice, other than such notice as may be expressly required herein. Section 8. Compliance with Continuing Disclosure Requirements. To meet the conditions of paragraph (d)(2) of United States Securities and Exchange Commission ("SEC") Rule 15c2-12 (the "Rule"), as applicable to a participating underwriter for the Bonds, the City undertakes for the benefit of holders of the Bonds to provide to each NRMSIR and the SID (as those terms are defined in the Rule), the following annual financial information: (i) annual financial statements for the City prepared (except as noted in the financial statements) in accordance with generally accepted accounting principles applicable to governmental units, as such principles may be changed from time to time, which statements need not be audited, except, however, that if and when audited financial statements are otherwise prepared and available to the City they will be provided; (ii) statements of authorized, issued and outstanding general obligation debt of the City; (iii) statements of assessed valuation of property within the City subject to ad valorem taxation for the fiscal year; and (iv) the ad valorem regular property tax levy rate and regular property tax levy rate limit for the fiscal year. Such annual financial information shall be provided not later than the last day of the ninth month after the end of each fiscal year of the City (currently, a fiscal year ending December 31), as such fiscal year may be changed as required or permitted by State law, commencing with the City's fiscal year ending [December 31, 20071. It may be provided in a single or multiple documents, and may be incorporated by reference to other documents that have been filed with each NRMSIR and the SID, or, if the document incorporated by reference is a "final official statement" with respect to obligations of the City, that has been filed with the MSRB. The City's obligations under this undertaking shall terminate upon the legal defeasance of all of the Bonds. In addition, the City's obligations under this undertaking shall terminate if those provisions of the Rule which require the City to comply with this undertaking become legally inapplicable in respect of the Bonds for any reason, as confirmed by an opinion of nationally recognized bond counsel or other counsel familiar with federal securities laws delivered to the City and the District, and the District provides timely notice of such termination to each NRMSIR or the MSRB and the SID. To the extent authorized by the SEC, the City may satisfy this undertaking by transmitting the required filings using http://www.disclosureusa.org (or such other centralized dissemination agent as may be approved by the SEC). Section 9. Miscellaneous. 9.1 Termination. This Agreement shall terminate only upon the repayment or defeasance of all of the Bonds and the repayment of any obligations owed by the District to the City under this Agreement, [or to a credit enhancement provider]. 8 50853182.2 9.2 Governing Law; Venue. This Agreement is governed by and shall be construed in accordance with the laws of the State and shall be liberally construed to carry out the purposes hereof. Except as otherwise required by applicable law, any legal action under this Agreement shall be brought in the Superior Court of the State of Washington in and for King County. 9.3 Joint Exercise of Powers; Administrator. The City's and the District's actions and obligations under this Agreement are declared to be a joint exercise of powers, privileges and authority under RCW 39.34,030 and RCW 67.28.120. The Board of Directors of the District and the Kent City Council shall each designate a person to jointly administer this Agreement. There shall be no joint board with respect to this Agreement. 9.4 Notices. Except as otherwise provided herein, all notices, consents or other communications required hereunder shall be in writing, delivered as follows: To the City: Mayor City of Kent 220 Fourth Avenue South Kent, WA 98032 With a copy to: Finance Director City of Kent 220 Fourth Avenue South Kent, WA 98032 To the District: Chair, Board of Directors The City of Kent Special Events Center Public Facilities District [220 Fourth Avenue South] [Kent, WA 98032] With a copy to: Finance Director City of Kent Ex Officio Treasurer of the District 220 Fourth Avenue South Kent, WA 98032 9.5 Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon the City and the District and their successors. 9.6 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. 9 50853182.2 9.7 Amendments. This Agreement may not be effectively amended, changed, modified, altered or terminated except by an instrument in writing duly executed by the City and the District(or their successors in title). 9.8 No Rights Created in Third Parties. The terms of this Agreement are not intended to establish or to create any rights in any persons or entities other than the City and the District and the respective successors and assigns of each. 9.9 Execution in Counterparts. This document may be executed in counterparts, and all such counterparts so executed constitute one agreement binding on all the parties notwithstanding that all the parties are not signatories to the same counterpart. 9.10 Effective Date. This Agreement shall be come effective upon its full execution. 10 50853182.2 ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY, EXTEND CREDIT, OR FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW. IN WITNESS WHEREOF, the City and the District have caused this Agreement to be executed by their duly authorized officers. CITY OF KENT THE CITY OF KENT SPECIAL EVENTS CENTER PUBLIC FACILITIES DISTRICT By By Mayor Chair . ATTEST: ATTEST: Finance Director Treasurer Approved as to Form: Approved as to Form: S-1 50853182.2