08. Goodale/Barbieri Secondary Loan Agreement AmendmentTHIS AGREEMENT made and entered into this day of
February, 1994, by and between the City of Kalispell, a municipal
corporation, of Kalispell, Montana, hereinafter referred to as
"City", and Kalispell Center Limited Partnership, a Washington
limited partnership, of Spokane, Washington, hereinafter referred
to as "Partnership".
W I T N E S E T H:
WHEREAS, the United States Department of Housing and Urban
Development (HUD) has awarded the City an Urban Development
Action Grant (UDAG) under Section 119 of the Housing and Urban
Development Act of 1974, which is grant number B-84-AB-30-0011
(as most recently amended), referred to hereafter as "UDAG Grant
Agreement", to assist in funding the construction of a 171,000
square foot shopping mall and 134 room hotel and restaurant
located on the Project Site; and,
WHEREAS, pursuant to the UDAG Grant Agreement the City has
provided and appropriated UDAG funds to the Partnership in the
form of a loan by the City to the Partnership to partially fund
the construction of said shopping mall and hotel; and,
WHEREAS, the City and the Partnership have, as required by
the terms of the UDAG Grant Agreement, entered into a Loan
Agreement dated June 29, 1984 and Addendum thereto dated December
14, 1984 and Second Addendum thereto dated February 28, 1985
(collectively referred to hereafter as "Secondary Loan
Agreement") covering the appropriation of UDAG funds to the
Partnership; and,
WHEREAS, the City has requested that certain portions of the
Secondary Loan Agreement be clarified by expanded language and
the current status of the Secondary Loan Agreement confirmed by
the parties;
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein and contained in the Secondary Loan
Agreement, the City and Partnership agree as follows:
1. Paragraph 8 of the Secondary Loan Agreement is expanded and
is replaced to read in its entirety as follows:
Third Addendum: Pg. 1
Third Addendum: Pg. 2
8. The City shall receive 15 percent (15%) of the Cumulative
Annual Net Cash Flow of the Project until this loan is
paid in full, said payment shall be accounted for as an
interest payment in the same year in which it is paid,
however this payment shall not be deducted as an
additional expense in calculating future participation
by the City. See the attached Exhibit "A" which is an
example of how the calculation is performed.
A. As used herein for the purpose of this
Agreement, "Cumulative Annual Net Cash Flow"
shall mean the Project Operating Income in
each Partnership fiscal year, less debt.
service on the first mortgage and this loan
(debt service includes both interest and
principal), less a preferred return to the
Partnership of fifteen percent (15%) per
annum on $1,776,056 (City and Partnership
having agreed that this amount is the
documented cash equity contributed to the
project by the Partnership prior to 90 days
after substantial completion of the project
as provided in the Secondary Loan Agreement),
less real estate taxes, less Reasonable
Expenses Allowable For Federal Income Tax
Purposes (exclusive of capital improvement
reserves, depreciation and other non -cash
items) and less a management fee which shall
not exceed four percent (0) of the Project
Operating Income (said management fee as of
this date is acknowledged to be 4% of the
gross proceeds from the mall and 3% of the
gross proceeds of the hotel operations).
B. As used herein "Project Operating Income" shall mean
the gross income received from all sources of
the operation including but not limited to;
the sale of products and services,
commissions, lease income, and fees; but
exclusive of income from refinancing or sale
of the Project.
C. As used herein Reasonable Expenses allowable for
Federal Income Tax Purposes shall include all
items which are deductible for Federal Income
Tax Purposes including but not limited to:
interest, leases, insurance, goods, services,
Third Addendum: Pg. 3
fees, and any other reasonable expense to carry out the
business of the Project; provided, however, that if
Partnership borrows funds from the General Partner of
the Partnership for use in the Project, interest on
funds borrowed from the General Partner shall be
included in the Reasonable Expenses only up to a
maximum of Citibank Prime Rate plus 2 percent. This
provision shall not obligate the General Partner to
loan any funds to the Partnership or the Project, and
the Partnership shall not be limited in deducting
interest expenses provided said loans are procured from
a source other than the General Partner or its parent
or subsidiary if any.
D. The Partnership's fifteen percent (15%)
per annum preferred return on $1,766,056 is
agreed by City and Partnership to have begun
on October 1,1986.
E. Attached Exhibit "B" is a cumulative
statement as of October 31, 1993, which has
been modified to conform with the above
agreed to definitions and calculations. Both
City and Partnership agree Exhibit "B" is an
accurate representation of the Project's
performance and the current status of the
Cumulative Annual Net Cash Flow for all
calculation purposes under the Secondary Loan
Agreement.
The Partnership shall deliver a Reviewed Statement to the City
from an independent Certified Public Accountant within 90 days of
the close of each Partnership fiscal year during the term of the
loan attesting to: (a) Gross Income; (b) Project Operating Income
(c) Operating Expenses; (d) Net Annual Cash Flow; (e) Partnership
Cash Equity (through 90 days after substantial completion of the
construction); (f) Net Proceeds, if applicable; and (g) the
amount of participation in the Net Annual Cash Flow and Net
Proceeds, if applicable, due the City.
2. This Addendum does not materially modify the terms and
conditions of the Secondary Loan Agreement. The purpose of this
Addendum has been to clarify terminology and calculations and
accurately describe the current status of the Secondary Loan
Agreement.
Third Addendum: Pg. 4
IN WITNESS WHEREOF, the undersigned have hereunto executed
this Agreement the day and year first above written.
ATTEST:
City Clerk
City of Kalispell
M
Mayor
Kalispell Center Limited
Partnership, by Goodale and
Barbieri Companies its General
Partner
By
President