The URL can be used to link to this page

Home My WebLink About2004-12-28 - Agendas - Final Final Agenda Public Hearing Special City Council Meeting December 28, 2004 A Special meeting of the Fayetteville City Council will be held on December 28, 2004 at 5 : 30 p.m . in Room 219 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. Call to Order Roll Call Pledge of Allegiance A. Public Bearing: 1 . Highway 71 East Square Redevelopment District # 1 Creation: A Public Bearing to allow all members of the public and representatives of taxing entities to present their views on forming the Highway 71 East Square Redevelopment District Number One. B. New Business: 1 . Highway 71 East Square Redevelopment District #1 Adoption : An ordinance forming the Highway 71 East Square Redevelopment District Number One pursuant to Amendment 78 of the Arkansas Constitution, authorizing the preparation of a Project Plan, repealing Ordinance No. 4608 and declaring an emergency. PASSED AND SHALL BE RECORDED AS ORDINANCE NO. 4662, C. Public hearing: 1 . Highway 71 East Square Redevelopment District Proposed Project Plan: A Public Hearing to allow all members of the public and representatives of taxing entities to present their views on the Proposed Project Plan for the Highway 71 East Square Redevelopment District Number One. D. New Business : 1 . Highway 71 East Square Redevelopment District Project Plan Adoption : An ordinance adopting the Project Plan for the Highway 71 East Square Redevelopment District, finding the Plan is economically feasible, repealing Ordinance 4646 and declaring an emergency. PASSED AND SHALT. BE RECORDED AS ORDINANCE NO. 4663. City Council Meeting December 28,04 J Subject: Motion To: Motion By: Seconded: Cook Marr Rhoads Odom Lucas Jordan Reynolds Thiel Mayor Coody c _ Subject: �'S 'l Motion To: UXA /add dop Motion By: Seconded: Cook ' Marr Rhoads Odom Lucas Jordan Reynolds Thiel Mayor Coody City Council Meeting December 28, 0 • Subject: Motion To: `n Motion By: Seconded: Cook Marr ✓ ✓ Rhoads n Odom P Lucas Jordan �/ ✓ Reynolds Thiel Mayor Coody Subject: Motion To: Motion By: Seconded: Cook Marr Rhoads Odom / Lucas � Jordan Reynolds Thiel Mayor Coody City Council Meeting December 28,04 I • e Subject: / Motion To: Motion By: Seconded: Cook Marr I Rhoads Odom Lucas Jordan Reynolds Thiel Mayor Coody Subject: Motion To: w `t ( Q Motion By: Seconded: Cook ✓ Marr Rhoads ✓ ,/ ✓ Odom / t/ ( , l Lucas / ✓ �/ !� lY Jordan ✓ �✓ ,/ Reynolds Thiel Mayor Coody City Council Meeting December 2g, 0 • Subject: Motion To: Motion By: i Seconded: �� Cook arr Rhoads Odom Lucas Jordan Reynolds Thiel ✓ Mayor Coody Subject: Motion To: Motion By: Seconded: Cook Marr Rhoads Odom Lucas Jordan Reynolds Thiel Mayor Coody • Final Agenda • Public Hearing Special City Council Meeting December 28, 2004 A Special meeting of the Fayetteville City Council will be held on December 28, 2004 at 5 :30 p.m. in Room 219 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. Call to Order Roll Call Pledge of Allegiance A. Public Hearing: 1. Highway 71 East Square Redevelopment District ill Creation: A Public Hearing to allow all members of the public and representatives of taxing entities to present their views on forming the Highway 71 East Square Redevelopment District Number One. B. New Business: 1 . Highway 71 East Square Redevelopment District ill Adoption: An ordinance forming the Highway 71 East Square Redevelopment District Number One pursuant to Amendment 78 of the Arkansas Constitution, authorizing the preparation of a Project Plan, repealing Ordinance No. 4608 and declaring an emergency. C. Public Hearing: 1 . Highway 71 East Square Redevelopment District Proposed Project Plan: A Public Hearing to allow all members of the public and representatives of taxing entities to present their views on the Proposed Project Plan for the Highway 71 East Square Redevelopment District Number One. D. New Business: 1 . Highway 71 East Square Redevelopment District Project Plan Adoption: An ordinance adopting the Project Plan for the Highway 71 East Square Redevelopment District, finding the Plan is economically feasible, repealing Ordinance 4646 and declaring an emergency. 46 Final Agenda Public Hearing Special City Council Meeting December 28, 2004 A Special meeting of the Fayetteville City Council will be held on December 28, 2004 at 5 :30 p.m. in Room 219 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. Call to Order Roll Call Pledge of Allegiance A. Public Hearing: 1 . Highway 71 Fast Square Redevelopment District Project Plan : A Public Hearing to allow all members of the public and representatives of taxing entities to present their views on forming the Highway 71 East Square Redevelopment District Number One and the Proposed Project Plan for same. B. New Business. Highway 71 Fast Square Redevelopment District # 1 Creation - An ordinance I forming the Highway 71 East Square Redevelopment District Number One \ pursuant to Amendment 78 of' the Arkansas Constitution, authorizing the - preparation of a Project Plan, repealing Ordinance No. 4608 and declaring an 1\ emergency. 2r Highway 71 WSqu re a eve\p�nent Distcict�-P °�' ct Ptr lan Atjoption : An ordinance adopting the Project P ai�6 ttrtl e Highway 71 East Square Redevelopment District, finding the Plan is economically feasible, repealing Ordinance 4646 and declaring an emergency. More TIF madness I ■ Fayetteville is on the verge of approving another �f- tax increment finance district. R is the best of the TIF projects I've heard about and it's still a loser tmax antl ey for the state.Fayetteville will likely put a one-mile strip of ® arktimes.com ,� .� land from Maple Street across the UA campus to Highway 62 in a TIF district. It will be six to nine blocks wide. Williams s;rys the Mountain Inn project conics The first goal is to float a $3.5 million bund issue closer than any lle's u'en to meeting the '1'11; ideal of so the city can buy and raze the derelict Mountain Inn revitalizing blighted arm. Ile says he's less certain and adjacent property for a new hotel and parking about projects in the works to create such districts on deck. The city would resell the land to private devel- 1-540 in Fayetteville (to match a giant TIF condor opers for $219,000. The deal is, in other words, a $3.3 Rogers has created) and a couple of otherTffs under million loser for the city from the get-go. But that's discussion near the university. not all. The theory is that TIF districts increase sales tax It will take millions in interest to pay off a $3.5 revenue and produce jobs, but it would take eons for million 25-year bond issue. Where would the money local sales taxes to offset the millions necessary to come from? It would come from the difference in subsidize the Mountain Inn alone. Little sales tax the property tax on the property before the construe- revenue reaches local schools. tion and after the construction of a new building. - If Williams were a lawyer in private practice, The city will capture the difference to pay off the he said he'd be inclined to look at the legality of ; bonds, instead of the Fayetteville School District, some of the TIFs being completed in a rush because the normal recipient. of an expectation that the legislature might tighten Why don't the schools care? Kit Williams, up the law. Rogers, for example, might have a hard Fayetteville city attorney, explains. 'The schools time proving that some parts of its TIF subsidy is say it's great. Their bond millage is protected. The creating jobs, as the statute requires. It plans to state treasury is going to make up the loss" That capture increased tax revenue on property where is the awful truth about TIFs. Under the new school construction was underway before a TIF district i_ finance law, school districts are guaranteed certain was formed. i levels of per pupil support. They can reduce their Williams wonder if any state legislator realized local tax effort by allowing city government to "how much money this was going to cost the state r plunder their millage, approved by voters specif- treasury." In the beginning years, the amount will ically for schools and only for schools, for other be relatively small. But as new projects come on projects. They know the state will subsidize them. line in the big TIF districts in booming Northwest . TIFs are possible only in the most prosperous areas, Arkansas, the local property tax lost to the schools making the subsidy doubly cruel for the people in will increase dramatically, all to be made up by the Delta and elsewhere paying the cost of a better the stale in future years. "It's going to be phenom- . Fayetteville. enal," Williams said. f3 Fax Sheet City of Fayetteville City Clerk's Office 113 West Mountain Fayetteville, AR 72703 (479)575-8323 cclerk@ci.fayetteville.ar.us Date: 12130/2004 # of Pages 6 To: Charles Howard From: Sondra E. Smith 521 -5453 FAX City Clerk 443-0919 City of Fayetteville Reference: Highway 71 East Square Redevelopment Phone: (479) 575-8323 Ordinance Fax: (479) 718-7695 Message: Attached is a copy of the unsigned ordinances that you requested. Per our telephone conversation Mayor Coody will not be available to sign the ordinances until Monday. If you need a signed copy please let me know. Have a Great Day! Sondra Smfth City Clerk 0 FAYETTENI LICE THE CITY Of iPYf fIFVRIF. ARKANSAS KIT WILLIAMS, CITY ATTORNEY I �� DAVID MUTAKER, ASST. CITY ATTORNEY - � - DEPARTMENTAL CORRESPONDENCE LEGAL DEPARTMENT TO: Dan Coody, Mayor City Council FROM : Kit Williams, City Attorney DATE: December 16, 2004 , RE: Ordinance Creating and Naming the East Square Highway 71 Redevelopment District The borders and name for the East Square Highway 71 Redevelopment • District has not changed since you passed Ordinance No. 4608 on August 17, 2004. Because of a minor technical notification problem, I recommend you readopt the ordinance creating the Redevelopment District and naming it the East Square Highway 71 Redevelopment District. Because the unanticipated notification problem has delayed the final adoption of the ordinance for at least three months, the City Council can rely upon the Arkansas Attorney General 's Opinion No. 2000-250 when he stated: "It is my opinion that in order to justify the inclusion of an emergency clause in a municipal ordinance, the city council must rely on facts that show ` some sudden or unexpected happening that creates a need for action. '" (citing Burroughs v. Ingram, 319 Ark. 530, 535 , 893 S .W. 2d 319, 321 ( 1995). Since time-sensitive funding could be jeopardized unless the ordinance is immediately effective, the entire Project Plan could be jeopardized without the emergency clause. Because the existing, blighted Mountain Inn constitutes a danger to public safety, peace and health, and the establishment of the Redevelopment District and adoption of the Project Plan are necessary to remove • this peril and replace it with a beneficial development, the City Council has sufficient facts to rely upon to pass an Emergency Clause. ORDINANCE NO. • AN ORDINANCE FORMING THE HIGHWAY 71 EAST SQUARE REDEVELOPMENT DISTRICT NUMBER ONE PURSUANT TO AMENDMENT 78 OF THE ARKANSAS CONSTITUTION, AUTHORIZING THE PREPARATION OF A PROJECT PLAN, REPEALING ORDINANCE NO. 4608 AND DECLARING AN EMERGENCY WHEREAS, the City Council after 15 day published notice has held a public hearing at which all interested parties were given the opportunity to express their views on the proposed creation of the Highway 71 East Square Redevelopment District Number One of Fayetteville, Arkansas and its proposed boundaries; and WHEREAS, prior to publication, a copy of said notice was sent by first-class mail to the chief executive officer of all local governmental and taxing entities having the power to levy taxes on property located within the proposed Highway 71 East Square Redevelopment District Number One of Fayetteville, Arkansas, and to the school board of any school district which includes property located within the proposed Highway 71 East Square Redevelopment District Number One of Fayetteville, Arkansas; and WHEREAS, the City Council has designated the boundaries of the proposed • Highway 71 East Square Redevelopment District Number One of Fayetteville, Arkansas. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1 : That the City Council of the City of Fayetteville, Arkansas hereby establishes the boundaries of the Highway 71 East Square Redevelopment District Number One of Fayetteville, Arkansas as set forth on the map attached hereto as Exhibit "A" and incorporated herein. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby names the District the following name for identification purposes: Highway 71 East Square Redevelopment District Number One of Fayetteville, Arkansas. Section 3 : That the City Council of the City of Fayetteville, Arkansas hereby creates the Highway 71 East Square Redevelopment District Number One of Fayetteville, Arkansas as of December 28, 2004. Section 4: That the City Council hereby finds that the real property within the Highway 71 East Square Redevelopment District Number One of Fayetteville, Arkansas, will be benefited by the redevelopment project by eliminating or preventing the • 0 0 • development or spread of blighted, deteriorated, or deteriorating areas, or discouraging the loss of commerce, or employment, or increasing employment, or any combination thereof. Section 5 : That the City Council of the City of Fayetteville, Arkansas hereby creates a separate and special fund into which shall be deposited all tax increment revenues, and all other revenues designated by the City for the benefit of the Highway 71 East Square Redevelopment District Number One of Fayetteville, Arkansas. All project costs shall be paid from this fund. This fund shall be known as the Highway 71 East Square Redevelopment District Number One of Fayetteville, Arkansas. Section 6: That the City Council of the City of Fayetteville, Arkansas hereby authorizes the preparation of a Redevelopment Project. Section 7 : That upon the effective date of this ordinance, Ordinance No. 4608 originally creating this Redevelopment District is hereby repealed. Section 8 : Emergency Clause. If this ordinance is not immediately effective, the goal of the Redevelopment District and its Project Plan to remove a dangerous, dilapidated firetrap could fail due to lack of time-sensitive funding. The City Council, therefore, determines and declares an emergency exists which would imperil the public • peace, health or safety, and consequently this ordinance shall be in full force and effect from the date of its passage and approval . PASSED and APPROVED this 28h day of December, 2004. APPROVED By: DA COODY, Mayor ATTEST: By: SONDRA SMITH, City Clerk • 1 r L j > { -+ALLEY 519 ^�' ! i f � \ Highway 71 East Square ri E w 'A',Esr f z , \ L `� RT�'A�N ST ` Redevelopment District bb I >^r1{ LAFAY� ETTE ST , '1 j If 1f i >• T (BOLES ST �w FALLEY 3C9 Ix - ALLEY,OJ3 1 1 , r - m'.l''\'g!: " ST _ w }��fpL l ._ Q l :_ � °rr '< }'" 4+ ,�"_ ' � .�tSU7TON�3T` r . UH II t+• It oi- i L '.r�i1 k Li_LJirflo DICKSON gr f4aT _Y - t W r � CONNER Si W ,i t o i L�rJir�xl II L ' ) �r4{"11rr j1 {(-�� a T ITi Ti SPRING STS y ry , Ll� ) ww 7 : i•� - 1 �MEAD ULJtl I1 �• J _ J L - CENTER 7jI ! F y L + ,zT.. S 4 . 71 0� I fC,ENTER STS . s • N F ��• � r NOS i 1 L. M UNT { �rsdt ! -N k� l 3= ri ', IMOUNTAIN* r �` mAlr� G" + n SSST - ^•i lb�� - -�1 MOUNTAIN ST a YITt 113 41 I �i Cti) o aocK sr 0, %a tl^�� 1 J _ . -'•rel I'� # '3W @ _ {'.IF it 81 r "4a. 31 .e r ,17'--fin cYIt IFz. 'o BOUT v y t9i 1 - P (BOUTNS T o j/ .{., 0 y^i <� 4TH 9T�� PRAIRIE ST d4TNST) • t5 \\ LIS r 1SM S LM. ' lr r FT f � f L . I11� S�TMJTi -i=� i • � 1.---; � u. .'_ 7 �y � ' " }4 o.-_ >`-� L i.¢ 1'"'—a N Y�'r` � Legend —_], OTIF District WQr� E 7��_� 1161+ f —� 1_ "-r � ONeoflm " Feb 14. 20pJ 0 250 5J0 I.WO Feet CITY ATTORNEY AGENDA REQUEST FORM • FOR: COUNCIL MEETING OF DECEMBER 28, 2004 FROM : KIT WILLIAMS, CITY ATTORNEY ORDINANCE OR RESOLUTION TITLE AND SUBJECT: An Ordinance Forming The Highway 71 East Square Redevelopment District Number One Pursuant To Amendment 78 Of The Arkansas Constitution;, Authorizing The Preparation Of A Project Plan, Repealing Ordinance No. 4608 And Declaring An Emergency APPROVED FOR AGENDA: • &�, 1(e , 6 Attorney Date Tim Conklin Date 24 i ?- Ilx �1 Mayor Date • 0 FAYETTEVI LLE THE CITY OF FAYETTEVILLE. ARKANSAS • KIT WILIJAMS, CITY ATTORNEY ---� DAVID wHITAKER, ASST. CrrY ATTORNEY DEPARTMENTAL CORRESPONDENCE LEGAL DEPARTMENT TO : Dan Coody, Mayor City Council FROM : Kit Williams, City Attorney DATE: December 16, 2004 RE : East Square Highway 71 Redevelopment Project Plan Ordinance The Project Plan for the East Square Mountain Inn TIF has not changed since you determined it was economically feasible and adopted the Project Plan • by Ordinance No. 4646 on December 7, 2004. Because of a minor technical notification problem, I recommend you readopt the Project Plan by the ordinance attached to this memo. The Project Plan remains as adopted by you on December 7, 2004 (although its financial feasibility might even be enhanced by the possible inclusion into the tax increment computations of the anticipated increased property values for the Hotel Complex replacing the blighted Mountain Inn, the Terminella project, and former city library buildings on Dickson Street). Because the unanticipated notification problem has delayed the final adoption of the ordinances for at least three weeks, the City Council can rely upon the Arkansas Attorney General ' s Opinion No. 2000-250 when he stated : "It is my opinion that in order to justify the inclusion of an emergency clause in a municipal ordinance, the city council must rely on facts that show ` some sudden or unexpected happening that creates a need for action. "' (citing Burroughs v. Ingram, 319 Ark. 530, 535, 893 S .W. 2d 319) 321 ( 1995). • 0 0 Since time-sensitive funding could be jeopardized unless the ordinance • is immediately effective, the entire Project Plan could be jeopardized without the emergency clause. Because the existing, blighted Mountain Inn constitutes a danger to public safety, peace and health, and the Project Plan is necessary to remove this peril and replace it with a beneficial development, the City Council has sufficient facts to rely upon to pass an Emergency Clause. • • 0 0 • ORDINANCE NO. AN ORDINANCE ADOPTING THE PROJECT PLAN FOR THE HIGHWAY 71 EAST SQUARE REDEVELOPMENT DISTRICT, FINDING THE PLAN IS ECONOMICALLY FEASIBLE , REPEALING ORDINANCE 4646 AND DECLARING AN EMERGENCY WHEREAS, on July 27, 2004, the Fayetteville City Council held a Public Hearing concerning the creation of the Highway 71 East Square Redevelopment District; and WHEREAS, on August 17, 2004, the City Council passed Ordinance No. 4608 creating the Highway 71 East Square Redevelopment District and authorized preparation of a Redevelopment Project Plan; and WHEREAS, the City with input from the proposed redevelopers of a Twenty- Two Million Dollar hotel project to be constructed after removal of the blighted Mountain Inn has prepared a proposed Project Plan attached as Exhibit "A"; and WHEREAS, on November 30, 2004, the City held a Public Hearing on the Project Plan proposed for the Redevelopment District; and • WHEREAS, on December 7, 2004, the City had a further public hearing on the Project Plan and passed Ordinance 4646 adopting the Project Plan; and WHEREAS, because of a minor, technical notification discrepancy, the City determined the need to renotify all statutorily required officials and republish notice of the public hearings for the Redevelopment District. WHEREAS, the City Council after 15 day published notice has held another public hearing at which all interested parties were given the opportunity to express their views on the proposed adoption of the Project Plan for the Highway 71 East Square Redevelopment District Number One of Fayetteville, Arkansas; and WHEREAS, prior to publication, a copy of said notice was sent by first-class mail to the chief executive officer of all local governmental and taxing entities having the power to levy taxes on property located within the proposed Highway 71 East Square Redevelopment District Number One of Fayetteville, Arkansas, and to the school board of any school district which includes property located within the proposed Highway 71 East Square Redevelopment District Number One of Fayetteville, Arkansas; and WHEREAS, the Project Plan includes: (a) The kind, number and location of all public works or • improvements within the district including the acquisition of real property, demolition of blighted/vacant buildings, and sale • of the cleared land to the redevelopers; (b) an economic feasibility study; (c) a detailed list of estimated project costs; (d) a description of financing including tax increment bonds; (e) a certification of the county tax assessor of the base value, ad valorem rate, debt service ad valorem rate, and ad valorem rate for the redevelopment district; (f) no other funds are expected to be deposited into the special funds; (g) a map showing existing uses and conditions of real property in the district; (h) a map of proposed improvements and uses in the district; (i) no zoning changes are anticipated; 0) reference to the Downtown Master Plan; (k) non-project costs include financial advice, bond costs, economic • forecasting; (1) no persons are anticipated to be displaced; (m) the amount of TIF indebtedness; (n) the amount of tax increment estimated to be generated by the project; (o) no other revenues are anticipated to be used to secure the tax increment financing. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS : Section 1 : That the City Council of the City of Fayetteville, Arkansas hereby finds that the Project Plan for the Highway 71 East Square Redevelopment District (attached as Exhibit A) is economically feasible. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby adopts the Project Plan for the Highway 71 East Square Redevelopment District and determines it has complied with all requirements set forth in A.C.A. § 14- 168-306. • 0 0 • Section 3 : That upon the effective date of this ordinance, Ordinance No. 4646 originally adopting the Project Plan for this Redevelopment District is hereby repealed. Section 4: Emergency Clause. If this ordinance is not immediately effective, the goal of the Redevelopment District and its Project Plan to remove a dangerous, dilapidated firetrap could fail due to lack of time-sensitive funding. "rhe City Council, therefore, determines and declares an emergency exists which would imperil the public peace, health or safety, and consequently this ordinance shall be in full force and effect from the date of its passage and approval . PASSED and APPROVED this 28'" day of December, 2004. APPROVED : By: DAN COODY, Mayor ATTEST: • By: SONDRA SMITH, City Clerk • 0 0 CITY ATTORNEY AGENDA REQUEST FORM • FOR: COUNCIL MEETING OF DECEMBER 28, 2004 FROM: KIT WILLIAMS, CITY ATTORNEY ORDINANCE OR RESOLUTION TITLE AND SUBJECT: An Ordinance Adopting The Project Plan For The Highway 71 East Square Redevelopment District, Finding The Plan Is Economically Feasible, Repealing Ordinance 4646 And Declaring An Emergency APPROVED FOR AGENDA: 14 , oaf Attorney Date • I � ^ % ZI a Mayor Date • EA.71 REDEVELDRAFNT ti 'The Mountain Inn Reborn' To: STEPHEN DAVIS, FINANCE R INTERNAL SERVICES DIRECTOR DATE: DECEMBP.R21 , 2004 SuLuecr. HIGHWAY 71 EAST SQUARE RFDEvELOPMeNT DIsTRIcr PER YOUR REQUEST PRASE PND ENCLI75ED: 1 . FeAsimny STUDY PREPARED HY 1NrERNAnONAL HOsmALny ADVISORS, INC. AND SUBSEQUENT UPDATE LETTERS FOR THE DEVELOPMENT OF THE HOTEL PROJECT ATYHp CURRENT MOUNTAIN INN SITE. 2. HEARTLAND RENAISSANCE COMMITMENT LETTER OUTLINING $8,000,000 NEW MARKET TAX CREDIT ALLOCATION FOR THE HOTEL PORTION oPTHe PRojECT TO THE BANK OF FAYETTP.VILLF.. 3. ANALYSIS OF POTENTIAL TAXES GeNF.RATED BY THE DEVFLoPMENr OF THE MOUNTAIN INN PROJECT. AS WE DISCUSSED IN OUR McEITI1G THIS MORNING THE BANK OF FAYEITEVILLF, WILL ACTUALLY FUND THE IROJeer BY FIRST FUNDING HEARTLAND RENAISSANCE FUND SUB II, LLC - Qunumv EQUITY INVESTMENT. tr Is nus CDE (COMMUNITY DEVELOPMENT ENIENIHISe) THAT ACTS AS TIIE CONDUIT FOR THE FINANCING FOR THE HOTEL. PORTON OF THE PROJECT. • ALSO, PURSUANT TO THEIR COMMIiMeNT To HRF, BOF IS REQUIRED TO FUND $4 MILLION OF THE New MARKET TAX CREDIT ALLOCATION PRIOR To DECEMBER 31 , 2004 OR THE PRQJE.Cr WILL LOSE THE SAID TAX CREDIT ALLOcAnom As A PtAcncAL MATTER ANY DELAY IN RP PASSAGE OF THE PROJF.(T MAN PAST DECeMBeR 28TM WILL SERIOUSLY JEFARDP.E THE FUNDING FOR TIIE P mF.Cr. DEVELOPERS ALSO HAVE PRELIMINARY FINANCING COMMITMENTS FROM TWO AREA BANKS FOR THE CONDOMINIUMS, PARKING DECK AND MEETINO/conveirT10N PORTIONS OF Tie PROUECr. THESE, COMMITMENTS ARE SPECIFICALLY SUBJECT 70 THE PASSAGE OF THE HIGHWAY 71 EAST SQUARE REDEVELOPMENT DISTRICT PRQIeCT PLAN, THE ISSUANCE OF BONDS AS OUTUNED IN THE PR(UECT PLAN AND TIE SALE OF THE SUBJECT PROPERTY BACK TO THE DEVELOPERS. ADDITIONALLY, DEVELOPERS HAVE TIE NECEASSARY CASH EQUITY FOR ANY REMAINING PORTON OF THE FINANCING FROM QUALIFIED EQUITY INVESTORS. PURSUANT WITH OUR MEETING WTH THE CTY ATTORNEY R WAS THE DEVELOPERS UNDERSTANDING THAT Suasowe1YT TO THE PRQJECT PLAN , THE CITY AND THE DEVELOPERS WOULD eWMR INTO AN AGREEMENT WHEREBY THE CRY WOULD SELL THE SHJE.Cr PROPERTY TO THE DEVELOPERS AT AN AGREED PRICE AND THAT AT TIE TIME OF THE SALE AND AS A CDNDTTON OF ANY SALE, THE DEVELOPERS WOULD DEMONSTRATE TO THE CRY IN A FORM SATISFACTORY To THE CITY THAT THE DEVELOPERS WILL BE ABLE To COMMENCE AND COMPIRTE THE PROJECT AS OUTLINED M THE PRQJECr PLAN. IT IS LMPORrANT TO NOTE THAT THE PROJECT RAN AS PREVIOUSLY PASSED sPe(7FICAU.Y DID NOT RELY ON ANY INCREMENTAL GROWTH IN TAX COLLECTIONS FROM THE MOUNTAIN INN REDEVELOPMENT PROJECT OR ANT OTHER KNOWN DEVELOPMENT PROJECTS BANNED IN THE DISTRICT. HOWEVER, THE ATTACHED ANALYSIS OF POTENTIAL TAXES GeN 74D LISTS A RETURN TO TAXPAYERS OF OVER SW MILLION DOLLARS. IF we MAY PRovi nDnrn L IM70RUATION PLEASE DO NOT HESITATE TO REQUEST R. SINCERELY, Dndopv • THE DeveLO Rs Riellald aVmmxkY P6�. 479-SI1-9I98 ,0111 XIGCL Pbo : 479 5306799 1 RINAAISRSA )N ( EAfUN0 November 16, 2004 Mr. Fred Shefte Bank of Fayetteville Fayetteville, AR Re: Heartland Renaissance Fund Sub II, LLC - Qualified Equity Investment Dear Fred: We are pleased to inform you that, subject to the terms and conditions set forth in this letter of interest, the Governing Board of Heartland Renaissance Fund, LLC, ("HRF") has approved Bank of Fayetteville ("BOF") to acquire an ownership interest in Heartland Renaissance Fund Sub 11, LLC ("Sub II"), a subsidiary allocatee of HRF, up to but not more than $8,000,000 ("QEI"). This ownership interest will be deemed a Qualified Equity Investment if all requirements are met in • accordance with Section 45D of the Internal Revenue Code ("Code"). HRF has received a $15 million allocation of New Markets Tax Credits ("NMTC") from the Community Development Financial Institutions Fund ("CDFI Fund") pursuant to an Allocation Agreement between HRF and CDFI Fund. Sub 11 has been certified as a "Subsidiary Allocatee" of HRF by the CDFI Fund. Pursuant to the terms and conditions proposed herein, HRF would agree to suballocate up to $B4OOO,OOO of its allocation of New Markets Tax Credit ("NMTC") to Sub II in accordance with the Allocation Agreement. This letter is based on certain assumptions and information that is material to and has been relied upon by HRF in connection with the issuance of this letter of interest The suballocation is conditioned upon final approval of this letter of interest by the Governing Board, satisfactory conclusion of HRF's due diligence review process and successful documentation and closing of the transaction. At closing, HRF Management, LLC, an affiliate of HRF, will enter into the Sub II Operating Agreement and related agreements that will incorporate the terms and conditions set forth below and include other customary or necessary terms, subject to HRF's review and approval. • • Material AssusnptigDs: Membership Interests Heartland Renaissance Fund Sub Il, LLC HRF Management, LLC 00.01% Managing Member Bank of Fayetteville 99.99% Non-Managing Member Heartland Renaissance Fund, LLC (CDE) HRF Management, LLC 1% Managing Member Arkansas Capital Corporation 99% Non-Managing Member Estimated Qualified Eauily Investment The total Qualified Equity Investment for NMTC purposes is estimated to be $8,000,000 ("QEI"). This QEI is projected to generate $3, 120,000 of NMTC. HRF makes no representations concerning the ability of BOF to use the NMTC. BOF should consult with its legal and/or tax counsel to determine the qualification of the investment for NMTC and its ability to benefit from the NMTC. The final suballocation amount is subject to determination by HRF upon a review of the investment proposal to be provided by BOF. Epuity Contributions to Heartland Renaissance Fund Sub II. LLC • Subject to final approval by HRF, Sub II will be capitalized with an equity contribution of up to $8,000,000 from BOF with a closing to occur on or before December 15, 2004. Due to NMTC requirements that the investments in the project are made within 12 months of issuance of the QEI, it may be determined by HRF that BOF's contribution will be made in two installments with approximately $3 million contributed at closing on or before December 15, 2004 for acquisition costs, and up to $5 million at the commencement of construction. The timing of the QEI(s) will be determined upon review by HRF of the investment proposal. Subject to compliance with NMTC requirements, the equity contributions will be designated as one or more QEIs. The equity contributions will be made under terms and conditions acceptable to HRF and in compliance with Section 45D of the Internal Revenue Code. BOF would commit pursuant to the Sub II Operating Agreement to make the full amount of the QEIs within six (6) months of closing. Prior to disbursement to the project, the QEIs shall be held at an account in the name of Sub II. Interest earned thereon until disbursement of the QLICI shall be used as a credit towards Sub II's reasonable operating expenses. Qualified Low-Income Community Investment Proceeds of the equity contribution will be used to make a loan to and/or an equity investment in East Square Redevelopment Project ("ESRP") located in downtown Fayetteville, Arkansas, and to pay fees to HRF Management, LLC as described below. ESRP must meet the requirements to be defined as a Qualified Low-Income Community Investment ("QLICB") under Section 45D of the Code. The expected proposed general terms of the loan and/or investment shall be presented by BOF to HRF within fourteen (14) days of the execution of this Letter of Interest and shall be subject to HRF's • Page 2 of 7 approval in its sole discretion and must constitute a Qualified Low-Income Community Investment • ("QLICI") as defined under Section 45D of the Code. Such proposal shall include a statement of the proposed sources and uses of the project, the terms of the proposed QLICIs (equity and/or debt), commitment letters from other financing sources, a construction schedule, and projected cash flows from the project during the 7-year NMTC recapture period. The documentation of the actual loan and/or investment shall also be subject to HRF's review and approval in its sole discretion. The party responsible for documentation of the QLICIs shall be determined, provided that the reasonable legal costs incurred may be funded out of the QEI, and the documents shall include such provisions as HRF shall require in order to comply with the NMTC program. The terms of the loan and/or investment shall include flexible, non-conventional or nonconforming terms with reference to standard practice in the applicable market as required by HRF's Allocation Agreement. The loan and/or investment must meet the requirement of being located in one of the target areas listed in Section 3.2(h) of HRF's Allocation Agreement. The terms of the loan and/or investment shall also require ESRP to provide such information as is reasonably required by HRF for purposes of compliance with HRF's NMTC reporting requirements and to monitor performance. A cash penalty may be imposed by HRF upon ESRP for failure to provide information in a timely and satisfactory manner. BOF acknowledges that pursuant to Section 45D of the Code, the QLICIs have to be issued within 12 months of the issuance of the QEI(s) for BOF to be eligible to claim the NMTC. BOF represents to HRF that it is reasonably anticipated that the QLICI with respect to acquisition costs shall be made within two (2) months of issuance of the QEI of approximately $3 million. Contingent upon HRF's review of the investment proposal, HRF may determine that approximately $5 million of the • estimated $8 million to be contributed shall be funded pursuant to the Sub 11 Operating Agreement at the commencement of construction, with disbursement to occur pursuant to construction draws during a 12-month period. BOF agrees that any portion of the construction QLICI not disbursed within 12 months of issuance of the QEI may be placed in a reserve in the borrower's name and withdrawn subject to approval by BOF and HRF. HRF anticipates that BOF will exercise construction oversight, inspection and disbursement responsibilities. The second installment of up to $5 million may be subject to certain conditions relating to the feasibility of the project at the time of commencement of construction. If the second installment of the QEI is not made, BOF and HRF may negotiate the right to withdraw the initial investment from the project, provided the parties agree to reinvest in a qualified investment in the appropriate time period to avoid NMTC recapture. These terms are subject to HRF review of the investment proposal and its due diligence investigation. BOF agrees to facilitate issuance of the QLICIs within 12 months of the applicable QEI to the project or to another qualified project within the applicable time period to prevent a recapture of NMTC. BOF accepts full responsibility for the timely closing of the QLICIs and any recapture of NMTC that occurs as a result of a delay in closing the QLICIs unless caused by the gross negligence, willful misconduct or fraud of HRF. HRF agrees to cooperate with BOF to facilitate timely closings of the QLICI. BOF shall not expect HRF to perform any due diligence investigation of the QLICI and shall not rely on any due diligence investigation conducted by HRF. HRF's role shall be limited to providing a suballocation of NMTC and performing management and NMTC compliance responsibilities. HRF is • Page 3 of 7 0 Of • not responsible for and will not make any representations regarding the operational results, commercial viability or financial performance of the QLICI and BOF shall have no recourse against HRF or its affiliates for any failure by the QLICI to achieve projections or provide any investment return. The QLICI documents shall provide that HRF shall have a role in the administration of the QLICI including compliance with the NMTC program and the exercise of remedies in the event of default, workout or foreclosure. HRF Fees HRF shall be entitled to the fees set forth below as compensation for its role in the QEI and its provision of services in support of the transaction: Closing Fee: Concurrent with the closing of the QEI in Sub II, HRF shall be entitled to a closing fee equal to 5% of the QEI to be funded by the QEI. Administration and Compliance Fee: On or prior to the first day of each calendar quarter following the closing of the QEI, an administration and compliance fee equal to .1071% of the QEI ($8,571) shall be payable to HRF in consideration for NMTC administration and compliance services to be rendered by HRF. This fee shall be funded by cash flow from the project and shall accrue to the extent unpaid. • HRF shall perform such services as may be required to maintain compliance with the NMTC requirements. HRF shall be responsible for maintaining the status of HRF and Sub If as Community Development Entities, including maintaining accountability to residents of low-income communities and the submission of certifications, notices and reports to the CDFI Fund. HRF shall provide BOF with copies of all such submissions. HRF shall provide to BOF a semi-annual calculation regarding satisfaction of the requirement that substantially all of the QEI remains invested in the QLICI. BOF agrees to cooperate with HRF to assure ongoing compliance with this requirement. Based upon recommendations provided by HRF, HRF and BOF shall reach a mutual agreement regarding permissible distributions by Sub II to BOF as may be required to comply with the NMTC program. Termination Fee: A termination fee shall be payable to HRF in cash equal to 2.0% of the QEI upon the withdrawal of BOF from Sub II which shall occur as soon as it is feasible after the seven-year anniversary of the closing of the QEI. ESRP shall guarantee payment of this fee. In addition, Sub II's audit and accounting expenses, as well as expenses incurred in connection with extraordinary events, including the pursuit of remedies relating to the QLICI, shall be recoverable. The terms of the QLICI will be structured to cover Sub II's reasonable annual operating expenses, including third parry audit, compliance and accounting expenses. These fees are estimated at $ 13,500-$ 15,000/year. BOF shall agree to reimburse Sub II for its reasonable expenses incurred in connection with extraordinary events, including the exercise of remedies with respect to the QLICI and legal action taken by Sub II at the request of BOF. is Page 4 of 7 Requirements: • • BOF agrees to comply with HRF's Allocation Agreement with the CDFI Fund by signing this Letter of Interest • Execution of the Sub II Operating Agreement in a form satisfactory to HRF and issuance of QEI in an amount of up to $8,000,000 by December 15, 2004 • Receipt of an investment proposal from BOF within fourteen (14) days of the date hereof. • Satisfactory due diligence is conducted by HRF of the proposed QLICI. HRF shall have fourteen (14) days to review the proposed terms of the QLICI and underlying due diligence documents provided by BOF to HRF regarding the proposed QLICI. If the foregoing requirements are not met, HRF shall have the right to terminate this letter of interest, or to request modifications. Termination shall be deemed effective three (3) business days after mailing of written notice by first class mail, the first day following placement with an overnight delivery service, or the day of facsimile transmission by HRF. NMTC Recapture HRF shall have no liability to BOF with respect to any NMTC recapture event attributable to the actions or inactions of BOF or ESRP. Pursuant to the Sub II Operating Agreement, BOF will have approval rights regarding distributions from Sub II and reinvestment of any principal payments received from the QLICI in order to minimize risk of potential recapture events. HRF and BOF will reasonably cooperate to reinvest the proceeds in a manner that will not result in NMTC recapture in the event of a default or foreclosure. • The QLICI loan/investment documents shall include an obligation of ESRP to maintain compliance with the QLICI requirements and if required by BOF, an obligation to indemnify BOF for any recapture of NMTC, with interest, that results from the actions or inactions of ESRP. Distributions Distributions, if any, shall be made by Sub II to BOF on a monthly or quarterly basis, after payment of Sub II's reasonable operating expenses and any fees due to HRF, in amounts to be determined based upon the investment proposal. Exit For a twelve (12) month period after the 7th anniversary of the QEI, BOF shall have the right to put its interest in Sub II to HRF for a nominal amount. After expiration of the put period, HRF shall have a call option for a period of twelve (12) months to purchase BOF's interest in Sub II for an amount equal to the fair market value of its interest Removal of Managing Member of Sub II The Sub II Operating Agreement shall provide BOF with the right to remove the managing member of Sub II for gross negligence or willful misconduct likely to have a material adverse effect on BOF; provided that if such removal would result in a violation of the Allocation Agreement or a NMTC • Page 5 of 7 0 0 • recapture event, BOF shall not have a removal right, but shall have the right to appoint a second manager to cure the default. HRF shall have thirty (30) days within which to cure a default, provided that if such default is incapable of cure during that period, HRF shall have such longer period as may be required provided that HRF is diligently pursuing a cure. Any fees earned prior to removal shall be paid as a result of the removal. Legaland Consulting Fees BOF shall be responsible for payment of its own legal and consulting fees and out-of-pocket expenses incurred in connection with the closing of the QEI and each separate QLICI; provided that such fees up to a fixed amount may be paid out of the QEls subject to HRF review of the investment proposal. In the event that BOF accepts the terms set forth herein and HRF is prepared to suballocate NMTC to Sub ll, if BOF chooses not to proceed or fails to close with HRF by December 15, 2004, BOF shall be responsible for HRF's actual out-of-pocket third party fees and expenses, including but not limited to attorneys' and consultants' fees and expenses, incurred in connection with evaluating and closing the QEI; provided however such reimbursement shall not exceed $15,000 in the aggregate. Tax Opinion • Garvey Schubert Barer, counsel to HRF shall provide the tax opinion to BOF satisfactory to BOF which shall be delivered at closing. Tax opinion fees shall be paid at closing of the QEI, to be funded by BOF. Reporting Requirements HRF shall provide such reports as BOF and HRF mutually agree which shall include provision on an annual basis of all necessary tax reporting information; copies of Sub II's tax returns, audited financial statements and reports submitted to the CDFI Fund. In addition to the above, BOF and HRF acknowledge that the transactions will be structured to comply with the NMTC program and all related rules and regulations. Furthermore, BOF reserves its rights to monitor ongoing compliance and reporting with respect to the NMTC Program. You agree and understand that HRF has spent substantial time on the proposed investment from BOF. Accordingly, you agree that with respect to the speck investment in ESRP as submitted to HRF for review, BOF shall not make such investment directly to ESRP without HRF's consent for a period of ninety (90) days from the date of your acceptance of this Letter of Interest unless we mutually agree to discontinue our efforts to complete the investment. You acknowledge that this letter of interest contains confidential information and agree not to disclose either orally or in writing its contents to any third party other than your accountant(s) and/or attorney(s), without the express written consent of HRF and you further agree to advise your • Page 6 of 7 representative that such representatives shall not disclose either orally or in writing the contents of • this letter of interest. If the terms and conditions outlined herein are agreeable, please countersign this letter where indicated below. We look forward to working you. This offer is valid for ten ( 10) days from the date or this letter. Sincerely, Todd Brogdon Chief Operating Officer • • 0 0 • ANALYSIS OF POTENTIAL TAXES GENERATED BY THE REDEVELOPMENT PROJECT x . _ x a z 0 0 741;0,� $12 3e5.000.00 5,000.00 S 27.50o,0 0 7,500.00 S . 3 — 85.936.00 4` $ 436.360.00 s 226,193.00 6 212,430.00 S 78,325.00 $ 30,112.50 $ 943,420.50 5 $ 475,221.00 f 234,110.00 $ 232,610.85 $ 41,965.88 $ 72,973.19 $ 1,0164830.91 ' 6 $ 489,656.00 s 242.303.0 3 254.708.88 $ 45,952.63 $ 36,105.64 $ 1,068,726.15 7 S 504,090.00 s 250.784.00 S 278,906.22 $ 50,318.13 $ 39,535.68 $ 1,127,634.03 3 $ 518,524.00 S 253,266.0 $ 305,402.32 3 55,098.36 $ 43;291.57 $ 1.180,582.24 9 s 534,069.00 f 265,996.00 S 334,415.54 $ 60,332.70 3 47.404.26 3 1,242,217.50 10 3 564,724.00 s 273,984.00 3 366,185.01 3 66,064.71 $ 51,907.67 $ 1,312,864.99 11 f 567,379.00 s 282,239.00 3 400,972.59 f 72,340.42 $ 56,838.90• S 1,379,169.90 • -12 3 584,034.00 $ 290.768.00 3 439,064.98 f _ 79,212.75 $ — 624238.59 S 1,455,318.33 13 $ 598,634.95 $ 298,037.20 3 430.776.16 f 86,737.97 $ 68,151.26 S 1,532,337.43 14 S 613,600.72 $ 705.488.13 f 526,449.39 f 94.978.07 s 74,625.63 $ 1,615,142.45 s 628,940.74 $ 313,125.33 $ 576,462.63 $ 104;000.99 $ 81,715.06 $ 1,704;24:76 •� 16 $ 64,664.26 $ 720,957.47 S 631;226.58 -3 113.631.08 $ 89;47799 3 '. 1,800203.39 17 3 660,780.86 S 323.9MM $ 691,193.11 $ 124.699.79 - 3 97,978.40' $ 1,903.629.47 %18: S 677,300.39 -f 737,201.74 S 756,856.5• '3: 176;54647: 131 107;366133• 4 2.015;161119 I . 19uy.- , 3 694,232.90 13 645.631.73 823,757.82 tf' -' t / 14951816 3 " 1 117!47856 ',f ' 2175619:211 :1{''1• _ . 5 .. - ..^t 3 907,489 31 3 163 722.9, 3 "it123 639 02 f 2 265712.51. 2D 's111seea2 's. 364znsi� 1.. , a _ �.. 4 21 ` 3r 729,170M ',S 763/2939/ kn .997,70164? F',: �.4 179276.0t1r 5, �pI,ty0�859r] :S - 140634:80: 22 jS 747:612 90 S`- . 372207 6T 13 1 08811 D2 97 3 `- 1%5707.21' f :154 241 w f 2 553 411:12{ qg ( . ,c • 2341 S- 766,307.21 '_3 331,512:81 ;$ 1.191.472Y5 f � ' 2U 956.12• S X16139473 5; 2723139:54' r f,24y.I, t S 785'46080 If_ - 391050.63 13 1304;66266 tf ` 27317729] 13 tA8j93929) f_ 290149076E I. :ih Y 1 25 3 305,097 32 S " ' 4400 826.99001 1S �x' 1.428;605 67 3 I5�64 13� 30 . 202150!5] S, 3 064,776 N'- eJw:�...�....id �ILL.�.a.16iL4. 1 - - 71F Proceeds Kr Land Apprblsed Proposed Retur to • - Value Purchase Taxpayers f 3.500,000.00 3 213,000.00 S 300,000.00 S 37,065,654.67 Nde: M nu fs ars peWm aW tmW utxn assuriCalbl$ mat may a may " actu^ occur Via Facsimile Transmission March 7, 2002 Mr. Stephen L. Goodman RiskPRO 4695 Chabot, Suite 114 Pleasanton, CA 94588 Re: Proposed 125-Room Crowne Plaza Hotel - Fayetteville, Arkansas • Dear Mr. Goodman : In accordance with the terms of our proposal agreement and subsequent conversations, this letter provides you with the findings of our primary market research conducted during the week of February 11 , 2002, in connection with the abovementioned project. The purpose of the update was to determine if current market conditions had changed materially since the completion of our "Study of Potential Market Demand and Statements of Estimated Operating Results for the Re-Development of the Closed Mountain Inn Located in Fayetteville, Arkansas to an 105-Unit Crowne Plaza-Affiliated Boutique Flotel" that was issued in August 2000. In addition, given the increase in room inventory to 125 units we have prepared revised statements of estimated annual operating results. This letter should be read in conjunction with our August 2000 report. As per your request, we further prepared a valuation of the proposed hotel based on current market factors, the revised estimates of potential operating results and an income approach to value analysis. Salient Observations Following are our observations that are salient to the overall market and the proposed project based on our primary research. • • The proposed site and its conditions as described in our market study remain unchanged.