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6.1 Transfer Property - Lambertz AdditionCITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE TIME 6/24/09 11:00 A.M. AGENDA SECTION ORIGINATING DEPARTMENT: APPROVED FOR NO: 6 AGENDA: City Manager’s Office ITEM NO. 1 BY: Mike Schrage, Deputy City Mgr. BY: Page 1 ITEM:Resolution No. 09-6642 A resolution consenting to the assignment of a portion of the development agreement in connection with the Lambertz Addition Tax Increment Financing District from Salina Partners, LLC to One Kansas, LLC. BACKGROUND: As part of the authorization and creation of the Kohl’s Tax Increment Finance District, a development agreement was negotiated and execut ed between the City of Salina and the developers, Salina Partners, LLC. In addition to stipulating conditions related to construction of the project such as the development plan and reimbursement conditions, the agreement also includes provisions that are applicable beyond completion of the Kohl’s project such as on-going insurance requirements until the TIF bonds are paid off as well as tenant and land use restrictions for the remainder of the property. Salina Partners, LLC has agreed to transfer title of the parcel of ground on which Kohl’s is located to one of its primary investors, One Kansas, LLC, in order to facilitate One Kansas’ ability to realize tax benefits from their investment in the project. Very recently they realized that, pursuant to the provisions of the development agreement, such a transfer of title requires the consent of the City of Salina. Additionally, the transfer needs t o be complete by June 26, 2009 in order for them to be compliant with IRS regulations and realize the tax benefits they are trying to accomplish. The original party to the agreement, Salina Partners, LLC will not be relieved of any responsibilities pursuant to the agreement. Rather, Salina Partners, LLC is agreeing to assign some of its rights to One Kansas, LLC and One Kansas, LLC is agree ing to be bound by the provisions of the development agreement. The development agreement further provides that such a transfer is subject to verification by the City Attorney that the transfer complies with the terms of the agreement as well as a determination by the City Manager that the proposed assignee has qualifications and financial responsibility, as reasonably determined by the City Manager, necessary to adequately fulfill the obligations of the developer with respect to the portion of the Redevelopment District being transferred. The proposed transfer has been reviewed by both the City Attorney and the City’s bond counsel and deemed to be compliant with the development agreement. With respect to the assignee’s ability to fulfill the obligations of the developer with respect to the portion of the Redeve lopment District being transferred, the Kohl’s project has been completed and the vast majority of those obligations have already been fulfilled. The remaining obligations relate to proof of insurance which will be fulfilled by both Salina Partners, LLC and One Kansas, LLC. Lastly, the development agreement further provides that City approval shall n ot be unreasonably withheld, conditioned or delayed. CITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE TIME 6/24/09 11:00 A.M. AGENDA SECTION ORIGINATING DEPARTMENT: APPROVED FOR NO: 6 AGENDA: City Manager’s Office ITEM NO. 1 BY: Mike Schrage, Deputy City Mgr. BY: Page 2 CONFORMANCE WITH STRATEGIC PLAN: The proposed action is consistent with the following components of the City’s shared vision statement: Salina will be a city that is exciting to live in and thriving both economically and socially. Salina will be a place with a quality of life that not only appeals to residents, but also to visitors. Salina will encourage and be supportive of i ndustrial development, economic expansion, market-driven tax base growth, and home grown entrepreneurialism. The proposed action is also consistent with the following goals contained in the City’s strategic plan: Goal #4: The city will maintain growth and development policies that are updated to reflect current conditions and desired growth direction. FISCAL NOTE: There is no fiscal impact to approving assignment of some of the rights and responsibilities of Salina Partners, LLC to One Kansas, LLC. Since Sali na Partners, LLC is not being relieved of any responsibilities in as a result of this approval, this action does not represent any additional risk related to performance of or compliance with the Lambertz Addition Development Agreement. RECOMMENDED ACTION: Since the proposed assignment is compliant with the provisions of the development agreement and the development agreement specifically provides that City approval shall not be unreasonably withheld, it is recommended that the City Commission approve Resolution No. 09-6642 consenting to the assignment of a portion of the development agreement in connection with the Lambertz Addition Tax Increment Financing District from Salina Partners, LLC to One Kansas, LLC.