Memorandum

City of Lawrence

TO:	David Corliss, City Manager
FROM:	Jonathan Douglass, Assistant to the City Manager/City Clerk
Date:	April 15, 2010
CC:	Ed Mullins, Finance Director Toni Wheeler, Director of Legal Services
RE:	Sunshine Property, LLC – Microtech – IRB Series 1997

The City of Lawrence, Kansas (the “City”) issued its Industrial Revenue Bond, Series 1997 (Sunshine Property, L.L.C. Project), in the aggregate original principal amount of $775,000 (the “Bond”) to acquire, construct and equip certain property, including the real property known as:  Lots 3 and 4, in Oread West No. 13, a Subdivision in the City of Lawrence, Douglas County, Kansas (the real property and improvements financed in whole or in part out of Bond proceeds being collectively referred to as the “Project”); and

In connection with the Bond, the City, as landlord, and Sunshine Property, L.L.C., as tenant (the “Tenant”) entered into a Lease dated as of October 1, 1997 (the “Lease”) which subleased the Project to Microtech Computers, Inc., a Kansas Corporation (the ”Subtenant”).

The City also entered into a performance agreement on October 1, 1997 with the Tenant and the Company (the “Performance Agreement”) in consideration of the Tenant’s and the Company’s commitment to purchase, construct and equip the Project and to create a certain number of jobs.  Due to a change in business conditions, the Company had reduced its total work force below the projected 48 employees, and the Company asked the City to amend the Performance Agreement to increase the payments the Company made to the City in lieu of taxes to 100% of the ad valorem taxes which would otherwise be due with respect to the Project if it were not exempt from ad valorem taxation, which was authorized by Resolution No. 6625.     

Pursuant to the Lease Agreement, Sunshine Property L.L.C., has the option to purchase the Project upon full payment of all amounts due under the Lease Agreement including the Bonds. The tenant has paid the Bond in full and desires to exercise its option to purchase the Project.

Gilmore & Bell, Bond Counsel in connection with the issuance of the bonds, has prepared Resolution No. 6882 for adoption by the City Commission authorizing the sale and conveyance of the Project to Sunshine Property L.L.C., together with the execution and delivery of the necessary conveyance documents. Bond Counsel requests and recommends that the City Commission adopt Resolution No. 6882 and that the documents be executed by the Mayor and City Clerk.