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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 12/05/2006 - RESOLUTION 2006-126 APPROVING AN AGREEMENT BETWEEN ITEM NUMBER: 30 AGENDA ITEM SUMMARY DATE: December5, 2006 FORT COLLINS CITY COUNCIL STAFF: Darin Atteberry Mike Freeman Chuck Seest SUBJECT Resolution 2006-126 Approving an Agreement Between the City and Front Range Retail Company to Provide Financial Assistance for the Front Range Village. RECOMMENDATION Staff recommends adoption of the Resolution. EXECUTIVE SUMMARY City staff has been negotiating diligently with Front Range Retail Company to develop an incentive agreement that will assist in ensuring the development known as"Front Range Village",a retail and commercial development totaling 910,000 square feet. The development is located on approximately 100 acres at the cross roads of Harmony and Ziegler roads in southeast Fort Collins. Front Range Village is the first significant retail project the City has seen in many years. This development is regionally significant and will help the City bolster retail trade activity that has eroded over the past five years with the coming of regional retail competition and the decline in Fort Collins specific retail venues. The proposed Financial Assistance Agreement is based the following philosophy: 1. Incentives should be based on project need. 2. The developers should have the ability to achieve a reasonable rate of return. 3. Incentives should be performance driven. 4. Sales tax share back should be minimized to the extent possible. The total incentive agreement is$22,000,000,with the vast majority of these funds being generated by a Public Improvement Fee (PIF), which is an optional sales fee levied by the developer on the retail sales at the development. The anticipated total net present value(today's dollars)of the Public Improvement Fee is $18,500,000. The remaining $3,500,000 comes from sales tax share back($1,500,000) and from Transportation Improvement reimbursements($2,000,000)to offset major transportation improvements related to this project on Harmony Road and Ziegler Road. December 5, 2006 -2- Item No. 30 The Front Range Village retail center will generate$2,200,000 in net new sales taxes to the City on an annual basis following the full first year of operations. Of that amount,$1,600,000 is unrestricted general fund dollars to be allocated to City Council priorities. The remaining$600,000 is allocated in equal amounts to Open Space, Building on Basics, and Transportation improvements related to dedicated sales tax funding streams. BACKGROUND The City of Fort Collins is projecting that sales and use taxes will continue to grow over the coming one to three years,but at a much lower rate of growth than had been seen in the past. It is projected that, without significant retail development, overall sales taxes will grow in the 1% to 2% range from 2007 through 2009. With the net new sales tax generated by the Front Range Village,the City will see a 4%increase in overall sales taxes (in addition to the 1%to 2% already projected)beginning in 2008. It has been a priority of the City to pursue additional retail sales opportunities through new retail development and through redevelopment which is outlined in the City's economic action plan. City staff engaged Economic Planning Systems in Denver to assist in the analysis of the Front Range Village and to advise on the overall net new sales taxes generated. Staff and EPS evaluated the overall project and developed the Financial Assistance recommendation for City Council consideration. PROJECT COSTS Project Costs Land Costs $17,982,811 Hard Costs $62,668,540 Onsite improvements • Offsite improvements • Building shells • Tenant allowances • Signs Soft Costs $34,780,505 • Development fees hnpact fees • Sales and use taxes Financing expenses • Overhead expenses • Marketing expenses • Appraisal expenses • Interest expenses • Engineering/architecture fees Total Project Costs $115 431 856 December 5, 2006 -3- Item No. 30 PROJECT REVENUES 10 Year Revenue Summary No Assistance 75% PIF/Incentives Gross Revenue $99,500,000 $131,000,000 DETAILS ON PROPOSED INCENTIVES Public Improvement Fee The incentive agreement allows the developer to impose up to a .75% PIF on retail sales on the lessees involved in Front Range Village. The PIF generates$18,500,000 in total revenues on a net present value basis (today's dollars). The City will collect the PIF fees and remit them to the developer. Sales Tax Share Back The City will remit to the developer up to $1,500,000 in sales taxes on a net present value basis (today's dollars) generated by the Front Range Village. These sales tax share back payments will be contingent upon the developer constructing and operating at least 550,000 square feet of retail shopping and those retail shops generating and remitting sales tax revenue to the City. If all contingencies are satisfied, the sales tax share back will be made in three payments approximately twelve months apart. If the developer fails to meet the contingency requirements for any particular payment, the City will not be obligated to make that payment. Transportation Improvement Costs The City will also remit$2,000,000 to the developer to offset a portion of the cost of the developer's share of the significant transportation improvements relating to this project. The City will pay these funds from dollars provided the City by the Colorado Department of Transportation for long-term maintenance and improvements for Harmony Road. OVERALL BENEFITS TO THE CITY OF FORT COLLINS The construction and operation of the Front Range Village Center will provide significant overall benefits to the community. These benefits include: 1. An overall increase in net new sales taxes of 4%. 2. Increases of 60$ 0,000 overall in dedicated sales taxes for open space, transportation and Building on Basics. 3. Provision of shopping opportunities in southeast Fort Collins to address sales tax leakage occurring in that part of the community. 4. Major transportation improvements will be realized along the Harmony corridor and along Ziegler Road. RESOLUTION 2006-126 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROVING AN AGREEMENT BETWEEN THE CITY AND FRONT RANGE RETAIL COMPANY TO PROVIDE FINANCIAL ASSISTANCE FOR THE FRONT RANGE VILLAGE WHEREAS, on August 19, 2003, the City Council approved amendments to the Harmony Corridor Standards and Guidelines and the City's Land Use Code to allow for the potential development of a Lifestyle Shopping Center in the Harmony Corridor; and WHEREAS, on October 16,2003,the Planning and Zoning Board of the City approved the "Summit Fort Collins Shopping Center Phase I Project Development Plan" at the location of Harmony Road and Ziegler Road; and WHEREAS, the Summit Front Range Shopping Center has been redesigned and on September 21,2006,the Planning and Zoning Board of the City approved the"Front Range Village Amended Overall Development Plan and Front Range Village Regional Shopping Center Major Amendment"(the "Village") at the same location; and WHEREAS, the Village will be approximately 910,000 square feet in size and will encompass approximately 101 acres; and WHEREAS, the Village will be a retail center with amenities and retail outlets sufficient to attract new shoppers to the Fort Collins area; and WHEREAS,the development of the Village will enable the City to better maintain its place as the regional retail center of Northern Colorado in the face of competing retail facilities that could otherwise draw significant retail sales revenues out of the Fort Collins community; and WHEREAS,subsequent to the Planning and Zoning Board's approval ofthe Lifestyle Center, City staff has been working with the developer of the Village to discuss ways in which the City can provide financial assistance that will enhance the likelihood that the Village will actually be developed; and WHEREAS, the developer estimates that the total private investment in the Village, including its own investment and that of tenants who build their own buildings, will exceed $150 million,including approximately$5,000,OOO for public improvements that will be necessary to offset the impacts of the Village and that will also benefit future development and the community at large; and WHEREAS,the developer of the Village will also pay an estimated$12,000,000 in City fees and taxes related to the construction of the Village; and WHEREAS,the City hired Economic Planning Systems,Inc.("EPS")to analyze and prepare a report on the economic impact of the Village; and WHEREAS, EPS concluded that, in its first year of operation, the Village will generate approximately$4.5 million worth of sales tax revenue for the City, including approximately $2.2 million in net new revenue, which revenues will constitute a substantial increase to the tax base of the City; and WHEREAS, according to EPS, the development of the Village will also prevent additional sales from leaving Fort Collins to other shopping venues in Northern Colorado and elsewhere; and WHEREAS, City staff and the developer have discussed a package of financial assistance for the Village consisting of three components: the collection of a public improvement fee to be imposed by the developer and its tenants upon the purchase of all goods and services at the Village except the purchase of food for domestic home consumption as referenced in Sec.25-71 of the Code; the sharing of new tax revenues generated by the Village; and the sharing of costs for transportation improvements that would normally be the sole responsibility of the developer; and WHEREAS,the City Council has determined that the provision of such financial assistance is in the best interests of the City and will serve the important public purposes of increasing employment in the City, stabilizing and improving the long term tax base of the City and providing additional economic development benefits to the City; and WHEREAS, City staff has prepared for Council's consideration an agreement between the City and the developer which sets forth the terms and conditions upon which financial assistance will be provided to the developer by the City(the "Agreement"); and WHEREAS, the City Council believes that the Agreement is in the best interests in the City. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby finds that the City's provision of financial assistance to the developer of the Village, Front Range Retail Company, upon the terms and conditions contained in the Agreement, is in the best interests of the City and serves the important public purposes of increasing employment within the City, stabilizing and improving the long-term tax base of the City, and promoting economic development within the City. Section 2. That the Agreement,in substantially the form contained in Exhibit"A" attached hereto and incorporated herein by this reference, is hereby approved by the Council, subject to any minor modifications in form or substance that the City Manager, in consultation with the City Attorney, may determine to be necessary by in order to further the purposes of the Agreement. Section 3. That the City Manager is hereby authorized to execute the Agreement on behalf of the City. -2- Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 5th day of December, A.D. 2006. Mayor ATTEST: City Clerk -3- EXHIBIT "A" FINANCIAL ASSISTANCE AGREEMENT PERTAINING TO THE DEVELOPMENT OF THE THE FRONT RANGE VILLAGE THIS AGREEMENT is entered into this day of , 2006, by and between the City of Fort Collins, Colorado, a Colorado home rule municipality and Front Range Retail Company LLC, a Delaware Limited Liability Corporation. RECITALS WHEREAS, on October 16, 2003, the Planning and Zoning Board of the City approved the "Summit Fort Collins Shopping Center Overall Development Plan and Phase I Project Development Plan" (also known as the Summit Front Range Shopping Center) at the location of Harmony Road and Ziegler Road; and WHEREAS, the Summit Front Range Shopping Center has been redesigned and on September 21, 2006 the Planning and Zoning Board of the City approved the "Front Range Village Amended Overall Development Plan and Front Range Village Regional Shopping Center Major Amendment' at the same location; and WHEREAS, the Village will be approximately 910,000 square feet in size and will encompass approximately 101 acres; and WHEREAS, the Village will be a retail center with amenities and retail outlets sufficient to attract new shoppers to the Fort Collins area; and WHEREAS, the development of the Village will enable the City to better maintain its place as the regional retail center of Northern Colorado in the face of competing retail facilities that could otherwise draw significant retail sales revenues out of the Fort Collins community, and WHEREAS, the Developer estimates that the total investment in the Village will total more than $150 million, including approximately $6,900,000 for public improvements that will be necessary to offset the impacts of the Village, and that will also benefit future development and the community at large; and WHEREAS, the Developer and its tenants and occupants will pay an estimated $12,000,000 in City fees and taxes related to the construction of the Village; and WHEREAS, the City hired Economic Planning Systems, Inc. ("EPS") to analyze and prepare a report on the economic impact of the Village and EPS concluded that, in its first year of operation, the Village will generate approximately $4.5 million worth of sales tax revenue for the City, including approximately $2.2 million in net new revenue, which revenues will constitute a substantial increase in the tax base of the City; and WHEREAS, according to EPS, the development of the Village will prevent additional sales from leaving Fort Collins to other shopping venues in Northern Colorado and elsewhere; and WHEREAS, in order to encourage the development of the Village, the City Council has determined, through the adoption of Resolution 2006-126 on December 5, 2006, that it is in the best interests of the City to provide a package of financial assistance for the Village consisting of three components: the collection of a public improvement fee to be imposed by the Developer and their tenants upon the purchase of all goods and services at the Village except the purchase of food for domestic home consumption as referenced in Sec. 25-71 of the Code; the sharing of new tax revenues generated by the Village; and the sharing of costs for transportation improvements that would normally be the sole responsibility of the Developer; and WHEREAS, the City Council has further determined, through the adoption of Resolution 2006-126 that providing the financial assistance described in this Agreement to the Village will serve the important public purposes of increasing employment in the City, stabilizing and improving the long term tax base of the City, and providing additional economic development benefits to the City. NOW, THEREFORE, in consideration of the promises contained in this Agreement, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows. SECTION 1. DEFINITIONS In this Agreement, unless a different meaning clearly appears from the context, the following definitions shall apply: "Affiliate" shall mean any person directly or indirectly controlling, controlled by, or under common control with the Developer. For the purposes of this definition, "control' (including with correlative meaning, the terms "controlling," "controlled by," and "under common control'), as applied to any person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that person, whether through the ownership of voting securities, by contract or otherwise, and "person" means and includes natural persons, corporations, limited partnerships, general partnerships, joint stock companies, joint ventures, associations, limited liability companies, trusts, land trusts, business trusts or other organizations, whether or not legal entities. "Agreement" shall mean this Financial Assistance Agreement Pertaining to the Development of the Front Range Village, and all attached exhibits. "Calendar Quarter" shall mean any three (3) month period beginning on January 1, April 1, July 1 or October 1, commencing with the first calendar quarter after the date of execution of this Agreement. "Calendar Year" shall mean that twelve month period beginning on January 1 and ending on December 31 commencing with the first calendar year of the execution date of this Agreement. "Charter" shall mean the Charter of the City. "City" shall mean the City of Fort Collins, Colorado. "City Council" shall mean the Council of the City. "Code" shall mean the Code of the City as maintained in the office of the Fort Collins City Clerk and as amended from time to time by the City Council. "Developer" shall mean Front Range Retail Company LLC, a Delaware limited liability Company, the principals of Front Range Retail Company LLC, or any other Affiliate of any of the foregoing that is the owner or ground lessee of the Village, or any permitted assignee as provided under Section 9 of this Agreement. "Development Agreement" shall mean the development agreement to be executed between the City and the Developer setting forth the specific terms and conditions upon which the Village has been approved in the City. "Public Improvement Fee" shall mean a fee on the full purchase price paid or charged for tangible personal property and taxable services sold or purchased at retail at the Village except those specifically exempted under Sec. 25-73(c) of the Code and except "food" as defined in Sec. 25-71 of the Code. "Sales Tax Revenues" shall mean those tax revenues produced by sales of tangible personal property and taxable services sold or purchased at retail at the Village except those specifically exempted under Sec. 25-73(c) of the Code and except "food" as defined in Sec. 25- 71 of the Code. "Village" shall mean the "Front Range Village Amended Overall Development Plan and Front Range Village Regional Shopping Center Major Amendment" as approved by the City's Planning and Zoning Board on September 21, 2006. SECTION 2. COLLECTION OF PUBLIC IMPROVEMENT FEE 2.1 The Public Improvement Fee is not a tax in any form and any rights therein are the result of a contractual agreement only and not the exercise of the taxing power of any governmental entity, including the City. 2.2 The Developer agrees to use its best commercially reasonable efforts to include in all agreements between the Developer and retail tenants or occupants at the Village, or in recorded instruments affecting the Village, a provision requiring such retail tenants and other occupants to pay the Public Improvement Fee, and the City agrees to collect all revenues generated by that fee at the same time and in the same manner as it collects City sales taxes due from the tenants or occupants. The Public Improvement Fee will be imposed upon all tenants and occupants until the thirtieth anniversary of the trigger date defined in Paragraph 3.3, namely the opening and commencement of operations of stores occupying no less than five hundred fifty thousand square feet (550,000 sq. ft.), as evidenced by certificates of occupancy, and the issuance of sales tax licenses. The amount of the Public Improvement Fee will be determined by the Developer but shall not exceed .75 per cent of the purchase price of the tangible personal property and taxable services that are subject to the Public Improvement Fee. 2.3 The proceeds of the Public Improvement Fee, when collected by the City, will be the property of the Developer and will be deposited into a separate, internal, interest bearing escrow account for the benefit of the Developer. The proceeds will not be considered revenue of the City or property of the City for any purpose. The proceeds will be held solely for disbursement to the Developer pursuant to the terms and condition of this Agreement. Within sixty (60) days following the close of each Calendar Quarter, the City will pay to the Developer the Public Improvement Fee revenues received by the City during that Calendar Quarter. 2.4 The City is not the agent of the Developer and has only those obligations expressly stated herein. The City's obligations to pay the Developer the proceeds of the Public Improvement Fee will not constitute a multiple fiscal year direct or indirect debt or other financial obligation of the City, because the Public Improvement Fee is not revenue to the City; rather, the City is acting only as a pass-through in the collection of the Public Improvement Fee and its remittance to the Developer. 2.5 The parties acknowledge their current intent is that the City collect, account, and disburse the Public Improvement Fee as provided above. The parties also understand that the City may decide to cease collecting, accounting for, and disbursing the Public Improvement Fee or the Developer may choose another entity to perform those services. If either party decides to change the Public Improvement Fee collection arrangement set out in this Agreement, that party will provide one hundred eighty (180) days written notice to the other party. The Developer must then find a replacement and the City will reasonably cooperate with the transfer of records. 2.6 The City will prepare, in consultation with the Developer, an information booklet explaining the Public Improvement Fee. The City will supply the information booklet on or before January 1 of each year to every retailer or occupant of the Village. The information booklet will include information regarding the imposition and collection of the Public Improvement Fee. SECTION 3. REIMBURSEMENT OF SALES TAX REVENUES 3.1 The City shall collect the Sales Tax Revenues from retail sales at the Village in a manner consistent with the City's overall efforts to collect sales tax revenues. Nothing in this Agreement will be construed as imposing upon the City any obligation to exert special efforts in the collection of these revenues. 3.2 To the extent permitted by the constitution and laws of the State of Colorado and the Charter, the City will pay the Developer a portion of the Sales Tax Revenues under the terms and conditions set forth in paragraph 3.3 below. If, as presently contemplated by the parties, the contingencies described in paragraph 3.3 are satisfied as to each of the three payments provided for therein, the total amount of Sales Tax Revenues to be paid by the City will equal the net present value of One Million Five Hundred Thousand Dollars (1,500,000) as of January 1, 2007, using an eight percent(8%) discount rate. 3.3 The payments of Sales Tax Revenues referenced in paragraph 3.2 above will be made by the City to the Developer when at least five hundred fifty thousand (550,000) square feet of the Village (the "Minimum Square Footage") is open and occupied by retail stores, as evidenced by the issuance of certificates of occupancy and sales tax licenses for such stores, and such stores have actually generated and remitted to the City sales tax revenues for the minimum periods of time specified below. If either of these contingencies has not been satisfied on or before the dates specified, the payments will not be made. (a) A payment of approximately $628,615 (one-third of the net present value of $1,500,000 at 8%) (the "First Payment") will be due and payable as soon as the above-referenced occupancy requirement has been met and all stores occupying the Minimum Square Footage have remitted to the City sales tax revenues for at least three (3) consecutive months; provided, however, that if all such stores have not remitted sales tax revenues to the City for at least three (3) consecutive months by June 30, 2010, ("the First Date of Forfeiture"), the First Payment will be forever forfeited by the Developer. (b) Whether or not the First Payment has been made or forfeited under subparagraph (a) above, a payment of approximately $628,615 (one-third of the net present value of $1,500,000 at 8%) (the "Second Payment") shall be due and payable as soon after the date of the First Payment or the First Date of Forfeiture, whichever is applicable, as all stores occupying the Minimum Square Footage have remitted to the City sales tax revenue for at least twelve (12) consecutive months; provided, however, that if this contingency has not been met by June 30, 2011, (the "Second Date of Forfeiture"), the Second Payment will be forever forfeited by the Developer. (c) Whether or not the First Payment and Second Payment have been made or forfeited under subparagraphs (a) and (b) above, a payment of approximately $628,615 (one-third of the net present value of$1,500,000 at 8%) (the "Final Payment") shall be due and payable as soon after the date of the Second Payment or the Second Date of Forfeiture, whichever is applicable, as all stores occupying the Minimum Square Footage have remitted to the City sales tax revenue for at least twelve (12) consecutive months; provided however, that if this contingency has not been met by June 30, 2012, the Final Payment will be forever forfeited by the Developer. 3.4 The parties agree that no less than twice a year the City may require the Developer to make available to the City leases or other documents that verify the occupancy of the required five hundred fifty thousand square feet (550,000 sq. ft.). The City agrees that such documents constitute privileged information and/or confidential, commercial and financial data within the meaning of the Colorado Open Records Act, and, to the extent permitted by law, the City shall deny the right of inspection of such documents to any third party without the consent of the Developer. 3.5 The City, in its sole discretion, may pre-pay any amount of Sales Tax Revenues without prepayment penalties. If the City elects to pre-pay, the amount may vary from the table in paragraph 3.2 as necessary to provide the net present value of One Million Five Hundred Thousand Dollars ($1,500,000) as of January 1, 2007, using an eight percent(8%) discount rate. 3.6 The City's payment obligation under this Section shall be limited to the amount of the Sales Tax Revenues indicated above. The Developer agrees to assume the entire risk that the Village will be unable to begin and maintain retail operations at the levels identified in paragraph 3.3 above and that one or more such payments will be forfeited unless the requirements in paragraph 3.3 have been met. 3.7 The obligations of the City hereunder do not constitute an indebtedness of the City within the meaning of any constitutional or statutory limitation or provision. The obligations of the City for payment of the Sales Tax Revenues under this Agreement are from year to year only and do not constitute a mandatory payment obligation of the City in any fiscal year beyond the present fiscal year. This Agreement does not directly or indirectly obligate the City to make any payments of Sales Tax Revenues beyond those appropriated for any fiscal year in which this Agreement is in effect. The City Manager (or any other officer or employee at the time charged with the responsibility of formulating budget proposals) is hereby directed to include in the budget proposals and appropriation ordinances submitted to the City Council, in each year prior to expiration of this Agreement, amounts sufficient to meet its obligations hereunder, but only if it receives such amounts in the form of Sales Tax Revenues, it being the intent, however, that the decision as to whether to appropriate such amounts is in the discretion of the City Council. SECTION 4. SHARING OF TRANSPORTATION IMPROVEMENT COSTS 4.1 The provisions of Division 3.6 of the Fort Collins Land Use Code and Section 24- 95 of the Code require the Developer to construct certain street improvements as a condition of development approval and the issuance of building permits. The City and Developer estimate that the cost of the required transportation improvements is approximately Five Million Dollars ($5,000,000). 4.2 In consideration of the benefits outlined in this Agreement, the City agrees to reimburse the Developer up to Two Million Dollars ($2,000,000) to defray the Developer's cost of constructing these transportation improvements ("Transportation Cost Sharing Payment"). This amount will be in addition to any payments the City makes to the Developer from the City's Street Oversizing Fund under the Development Agreement ("Street Oversizing Payment"); provided, however, that the Transportation Cost Sharing Payment will be applied only to the Developer's local portion of the street improvements required under the Development Agreement. 4.3 Within sixty (60) days following the close of each Calendar Year, the City will pay to the Developer the Transportation Cost Sharing Payment and the Street Oversizing Payment. Requests for the payments by the Developer must be submitted to and approved by the City Engineer for that Calendar Year. The City Engineer's approval will be based upon a review of receipts and inspection of the improvements; the City Engineer may consult with the Developer and any other City staff he determines is appropriate. 4.4 Any work that has been completed and the costs of which were defrayed pursuant to payments under this Section will nonetheless require compliance with the warranty period as set out in the Development Agreement, the Code, and the City's Land Use Code. SECTION 5. PARTY ENTITLED TO RECEIVE PAYMENTS UNDER THIS AGREEMENT The Developer will at all times during the term of this Agreement provide to the City's Financial Officer the name and address of the party or parties who are duly authorized by the Developer to receive the proceeds of the Public Improvement Fee, the Sales Tax Revenues, and the Sharing of Transportation Improvement Costs under the provisions of this Agreement. Payment by the City to the party or parties so identified by the Developer will fully satisfy the City's obligation to make such payments to the Developer or to any assignee of the Developer. SECTION 6. CITY'S RIGHT TO WITHHOLD OR OFFSET PAYMENTS The Developer agrees to comply with all City codes, ordinances, resolutions and regulations, and to pay all taxes, fees and expenses due to the City under the Code, the City's Land Use Code or this Agreement, subject to any variances or modifications of standards that may be granted to the Developer under the Code or the City's Land Use Code, and to comply with the terms and conditions of the Development Agreement. If the Developer is in violation of the provisions of the Code, the City's Land Use Code, this Agreement or the Development Agreement, the City will provide written notice to the Developer of such violation, and allow the Developer a period of ninety (90) days in which to cure such violation. The City may thereafter withhold any payments of Sales Tax Revenues or Sharing of Transportation Improvement Costs due to the Developer under this Agreement until such time as the violations are cured or abated. In addition to the foregoing, the City, at its option, may, after the notice and after the expiration of the cure period if such violations have not been cured or abated, apply any Sales Tax Revenues or Sharing of Transportation Improvement Costs that would otherwise be payable to the Developer under this Agreement to any unpaid amounts theretofore due and payable to the City by the Developer under this Agreement, the Code, the City's Land Use Code, or the Development Agreement, in which event the Developer will be credited with the full amount of any such payments. SECTION 7. REPRESENTATIONS AND WARRANTIES 7.1 The Developer represents and warrants that: (a) Front Range Retail Company LLC, is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, has the legal capacity and the authority to enter into and perform its obligations under this Agreement and the documents to be executed and delivered hereto; the execution and delivery of this Agreement and such documents and the performance and observance of the terms, conditions and obligations have been duly and validly authorized by all necessary action on its part to make this Agreement, such documents and such performance and observance valid and binding upon the Developer; (b) The execution and delivery of this Agreement and the documents required hereunder and the consummation of the transactions contemplated by the Agreement will not (i) conflict with or contravene any law, order, rule or regulation applicable to the Developer or to the Developer's governing documents, (ii) result in the breach of any of the terms or provisions or constitute a default under any agreement or other instrument to which the Developer is a party or by which it may be bound or affected, or (iii) permit any party to terminate any such agreement or instruments or to accelerate the maturity or any indebtedness or other obligation of the Developer; and (c) The Developer has the necessary legal ability to execute and perform the Agreement and has or will obtain the necessary financing to construct the public and private improvements required by the City as a condition of approval of the Village. 7.2 The City represents and warrants that: (a) The City is a home rule Colorado municipal corporation and has the power to enter into and has taken all actions required to date to authorize this Agreement and to carry out its obligations hereunder; and (b) The City acknowledges that the construction of the Village and related public improvements serves a valid public purpose and will be of substantial benefit to the health, safety and welfare of its citizens. SECTION 8. RESTRICTIONS ON ASSIGNMENT 8.1 The qualifications and identity of the Developer are of particular concern to the City. Therefore, no voluntary or involuntary successor in interest of Developer shall acquire any rights or powers under this Agreement except as expressly set forth herein and the Developer shall not assign all or any part of this Agreement except as follows: (a) with the prior written approval of the City Council; or (b) to Affiliates as defined herein; or (c) as collateral to a lender in connection with the financing of the Village; or (d) after the City's payment obligations as described in Sections 3 and 4 of this Agreement have terminated. 8.2 The Developer must notify the City within fifteen (15) days of any and all changes whatsoever in the identity of the parties in control of the Developer, or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. SECTION 9. NOTICES All notices required or permitted hereunder shall be in writing and shall be effective upon mailing, deposited in the United States Mail, postage prepaid, and addressed to the intended recipient as follows. Any party can change its address by written notice to the other given in accordance with this paragraph. City of Fort Collins: City of Fort Collins Attention: City Manager 300 LaPorte Avenue, PO Box 580 Fort Collins, CO 80522-0580 With a copy to: City of Fort Collins Attention: City Attorney 300 LaPorte Avenue, PO Box 580 Fort Collins, CO 80522-0580 Developer: Front Range Retail Company LLC Attention: General Counsel 2222 Arlington Avenue Birmingham, AL 35205 With a copy to: SECTION 10. RECORDS AND AUDITS 10.1 The Developer must keep true, accurate and complete records of all income received by the Developer from the Village, together with true, accurate and complete records of all expenses incurred by the Developer in constructing and operating the Village, which records will be available for inspection by the City without unreasonable delay and without expense. The Developer agrees that the City has the right, through its duly authorized agents or representatives, to examine all such records upon ten (10) days notice at all reasonable times, for the purpose of determining the accuracy and propriety of the financial representations which have been made by the Developer. This right of review terminates upon termination of the later of the City's payments of Sales Tax Revenues as provided in Section 3 of this Agreement and the Sharing of Transportation Improvement Costs as provided in Section 4 of this Agreement. In the event that the City becomes the custodian of any such records which may contain trade secrets or confidential or proprietary information, and are so marked, the City will, to the extent permitted by law, protect the confidentiality of such information and deny any request for inspection of such records. 10.2 The City will keep, or cause to be kept, true, accurate and complete records of all calculations relating to the Sales Tax Revenues; the amounts deposited into and paid out from the Special Fund and Public Improvement Fee escrow account; interest credited to these accounts; and such other calculations, allocations and payments required by this Agreement, and will make such records available for inspection by the Developer upon ten (10) days notice at all reasonable times, to the extent permitted by law. The City will also, at the request of the Developer or any lender, provide a letter stating that the Developer is in compliance with the terms of this Agreement or, if not, stating the nature of any noncompliance. SECTION 11. MISCELLANEOUS 11.1 Binding Effect. This Agreement inures to the benefit of and is binding upon the City and the Developer and the Developer's assignees which are pennitted pursuant to Section 8 of this Agreement. 11.2 No Third Party Beneficiaries.The City is not obligated or liable under the terms of this Agreement to any person or entity not a party hereto except any assignee permitted pursuant to Section 8 of this Agreement. Further, the City is not bound by any contracts or conditions that the Developer may negotiate with third parties related to the Project, other than customary rights required by a lender. 11.3 Interpretation. Jurisdiction and Venue. This Agreement is being executed and delivered and is intended to be performed in the State of Colorado, and the laws of Colorado govern the validity, construction, enforcement and interpretation of this Agreement. Exclusive jurisdiction and venue for resolution of any dispute arising hereunder will be in the Larimer County, Colorado District Court. 11.4 Entire Agreement. This Agreement embodies the whole agreement of the parties concerning financial assistance by the City for the Village. Although it is anticipated there will be at least one other agreement governing general development issues related to the Village, there are no promises, terms, conditions, or obligations other than those contained herein exist with respect to the financial assistance package. This Agreement supersedes all provisions, communications, representations, or agreement, either verbal or written, between the parties with respect to the financial assistance package. 11.5 Waiver of Breach. A written waiver by either party to this Agreement of the breach of any term or provision of this Agreement will not operate or be construed as a waiver or any subsequent breach by another party. 11.6 Article and Section Captions. The captions of the articles and sections of this Agreement are set forth only for the convenience and reference of the parties and are not intended in any way to define, limit, or describe the scope or intent of this Agreement. 11.7 City and Developer Not a Partner. Notwithstanding any language in this Agreement, the City is not a member, partner, or joint venturer of the Developer, and the City shall not be responsible for any debt or liability of the Developer or its contractors or agents. The Developer is not responsible for any debt or liability of the City or their contractors or agents. 11.8 Severability. If any portion or portions of this Agreement are determined to be illegal or unenforceable, the remainder of this Agreement will not be affected thereby and will remain in full force and effect as if such illegal or unenforceable portion or portions did not exist. If all or any portion of the payments required by the terms of this Agreement are determined, by a court of competent jurisdiction in a final non-appealable judgment, to be contrary to public policy or otherwise precluded, and if the decision of such court clearly indicates how the payments may be made differently and in a manner that is legal, valid and enforceable, then the Parties will utilize their reasonable, best, good faith efforts to promptly restructure and/or amend this Agreement in accordance with such court decision, or to enter into a new agreement, to assure, to the extent legally permissible, that all payments are made to the Developer as contemplated by this Agreement. SECTION 12. EVENTS OF DEFAULT; REMEDIES 12.1 Default or an event of default by the Developer shall mean one or more of the following events: (a) The Developer assigns or attempts to assign this Agreement in violation of Section 8 of this Agreement; or (b) The Developer fails to substantially observe or perform any other material covenant, obligation or agreement required under this Agreement. 12.2 Upon the occurrence of any event of default, the City shall provide written notice to the Developer. The Developer shall immediately proceed to cure or remedy such default, and in any event, such default shall be cured within thirty(30) days after receipt of the notice, or such longer time as the City and the Developer agree in writing. Upon the failure of the Developer to so cure any such default, the City shall have all remedies available to it, in law or in equity, including, but not limited to, specific performance. 12.3. Default or an event of default by the City shall mean one or more of the following events: (a) Any representation or warranty made in this Agreement by the City was materially inaccurate when made or shall prove to be materially inaccurate; (b) The City fails to deposit the proceeds of the Public Improvement Fee in a separate escrow account as required under Section 2.2 above; or fails to pay the proceeds of the Public Improvement Fee, the Sales Tax Revenues, or the Transportation Cost Sharing Payment as and when provided in this Agreement (except to the extent such failure is the result of the action, inaction or failure of the Developer or other owner or tenant of the Property to document liability for, collect, account for or pay the Public Improvement Fee or Sales Tax Revenues, or to the extent such failure is the result of the Developer's failure to identify the party to whom such payment(s) should be made as required under Section 5 above). (c) The City fails to pay or perform any other material covenant, obligation or agreement required of it under this Agreement. 12.4 Upon the occurrence of any event of default, the Developer shall provide written notice to the City. The City shall immediately proceed to cure or remedy such default, and in any event, such default shall be cured within thirty (30) days after receipt of the notice, or such longer time as the City and the Developer agree in writing. Upon the failure of the City to so cure any such default, the Developer shall have all remedies available to it, in law or in equity, including,but not limited to, specific performance. IN WITNESS WHEREOF, the City and the Developer have executed this Agreement of the date first above written. CITY OF FORT COLLINS, COLORADO a municipal corporation By: Darin A. Atteberry, City Manager Attest: City Clerk Approved as to form: City Attorney FRONT RANGE RETAIL COMPANY LLC a Delaware limited liability company By: Name and title State of ) )ss. County of ) The foregoing was acknowledged before me this day of 2006, by as of FRONT RANGE RETAIL COMPANY LLC, a Delaware limited liability company. Witness my hand and official seal. My commission expires: Notary Public