DEVELOPMENT AGREEMENT

THIS DEVELOPMENT AGREEMENT (the "Agreement"), is made and entered into this day of , 2011 by and between the CITY OF LAWRENCE,
KANSAS, a municipal corporation duly organized under the laws of the State of Kansas (the "City"), and EAST LAWRENCE HISTORIC PARTNERS, LLC (the "Developer").

WHEREAS, this Agreement pertains to real property in the area of 8^th Street and Pennsylvania Street (the “Project Area”) as described in Exhibit A, attached hereto and incorporated herein by reference; and

WHEREAS, the Developer is pursuing a residential redevelopment project that will offer 49 dwelling units and converts to beneficial use, an historic building known as the Poehler Building, (the “Project”); and

WHEREAS, the City finds that the rehabilitation, conservation or redevelopment of the Project Area is necessary to protect the public health, safety or welfare of the residents of the City; and

WHEREAS, in conjunction with the approval of the Project, the City is requiring the construction of certain public and private infrastructure in and around the Project Area; and

WHEREAS, the City finds and determines that said public infrastructure will benefit the community at large and accordingly the City commits to construct and maintain certain infrastructure set forth herein; and

WHEREAS, the City and the Developer desire to enter into this Agreement to address issues related to development of the Project and construction of the public and private infrastructure for the Project;

NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS AND RULES OF CONSTRUCTION

Section 1.01. Rules of Construction. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following rules of construction apply in construing the provisions of this Agreement:

A. The terms defined in this Article include the plural as well as the singular.

B. All references in this instrument to designated "Articles," "Sections" and other subdivisions are to be the designated Articles, Sections and other subdivisions of this instrument as originally executed.

C. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.

D. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

E. The following terms shall have the following meaning as defined below:

“Advanced Funds” means the sum of $75,000.00, to be held by the City pursuant to Section of this Development Agreement.

“Agreement” means this Development Agreement, as amended from time to time.

“Certificate of Substantial Completion” means a certificate evidencing Substantial Completion of the Project.

“City” means the City of Lawrence, Kansas.

“City Event of Default” means any event or occurrence defined in Section 5.01 of this Agreement.

“City Project” means the planned City project proposed in conjunction with this development and as described in Exhibit B, and as described in Section 2.02 herein.

“City Representative” means the City Manager of the City, and such other person or persons at the time designated to act on behalf of the City in matters relating to this Agreement.

“Construction Plans” means plans, drawings, specifications and related documents, and construction schedules for the construction of the Project, together with all supplements, amendments or corrections, submitted by the Developer and approved by the City in accordance with this Agreement.

“County” means Douglas County, Kansas.

“Developer” means East Lawrence Historic Partners, L.L.C., a corporation organized and existing under the laws of the State of Kansas, and any successors and assigns approved pursuant to this Agreement.

“Developer Event of Default” means any event or occurrence defined in Section 5.01 of this Agreement.

“Developer Representative” means Tony Krsnich and such other person or persons at the time designated to act on behalf of the Developer in matters relating to this Agreement as evidenced by a written certificate furnished to the City containing the specimen signature of such person or persons and signed on behalf of the Developer.

“Event of Default” means any event or occurrence as defined in Section 5.01 of this Agreement.

“Project Area” means the Area depicted in Exhibit A.

ARTICLE II
OBLIGATIONS OF CITY AND DEVELOPER WITH

RESPECT TO IMPROVEMENTS

Section 2.01. Developer’s Obligations. In exchange for the City’s commitment as set forth in Section 2.02, the Developer hereby agrees to do the following:

1. To restore and redevelop the Poehler building, according to the final approved site plan, and all other necessary land use and governmental approvals, into residential dwelling units.

2. To design and construct, in accordance with approved plans, improvements to parking spaces on 8^th Street not constructed by the City as set forth in Paragraph 2.02, and Pennsylvania Street, and to the parking lot adjacent to the existing duplex lot as shown on the attached Exhibit A.

3. To design, install, and maintain in accordance with applicable building codes, utility upgrades and all other necessary interior finishes or improvements to make the Poehler building aesthetically pleasing and suitable for residential occupancy.

4. To obtain design and construction plans from a qualified, licensed engineer, for the Delaware Street parking lot improvements as shown on Exhibit B and to timely provide the same to the City. Further, to maintain the Delaware Street parking lot, including landscaping, and snow removal.

5. To pay for all costs of the Poehler building’s fire sprinkler system subject to reimbursement from the City of a portion of the costs as set forth in Section 2.02. Developer agrees to timely submit to the City detailed invoices showing the actual costs of the fire sprinkler system installed in the Poehler building and to cooperate with the City to receive the City’s grant outlined in 2.02.

6. To timely execute this Agreement and to diligently proceed to commence construction of the Project in accordance with final approved plans.

7. To complete the Project in conformance with all applicable federal, state and building codes, subdivision regulations, the “Design Guidelines 8^th and Penn Neighborhood Redevelopment Zone” and the “8^th and Pennsylvania Urban Conservation Overlay District”, the Lawrence Development Code, the Preliminary Plat, the Final Plat, the City of Lawrence Standard Specifications and all other applicable rules and regulations (collectively “Applicable Law and Requirements”).

8. To be responsible for and to pay all costs for the project and related improvements, including attorneys fees’, engineering, architecture, and other design fees related thereto, other than the costs the City expressly agrees to be responsible for as set forth in Section 2.02 of this Agreement.

9. To deposit with the City upon execution of this Agreement the sum of $75,000 (the “Advanced Funds”) for the purpose of assuring the City that the Developer will proceed with Project as proposed to the City. Release of the funds to the Developer shall occur in accordance with Section 2.03 of this Agreement.

10. Not later than 30 calendar days following the City’s inspection of the completed parking lot, Developer shall transfer title to the Poehler building parking lot to the City. Developer shall maintain the Poehler building parking lot, including snow removal, lighting and landscaping maintenance, and pavement repair, until fifteen years after the issuance of the Poehler building certificate of occupancy. (After the passage of 15 years, unless the agreement is terminated earlier, the City will sell the parking lot to the Developer for one dollar ($1.00)).

Section 2.02. City’s Obligations. In exchange for the Developer’s commitment as set forth in Section 2.01, the City hereby agrees to do the following:

1. To reconstruct and pay for, in accordance with the City’s procedures and specifications, Delaware Street from 8th Street to 9th Street, including parking and storm water improvements (including storm sewer improvements along 8^th Street from Delaware Street and tying in at Pennsylvania Street), curbs and gutters, sidewalks, lighting, and landscaping at an estimated cost to the City of $800,000;

2. To construct and pay for a water line along Delaware Street from 8th Street to 9th Street, at an estimated cost to the City of $100,000.

3. To pave the parking lot adjacent to the Poehler building, including installing lighting, and to improve the alley between Pennsylvania and Delaware Street, from 8th Street south to the south edge of the Delaware Street parking lot, at an estimated cost to the City of $300,000.

4. To design and construct 8^th Street from Delaware west to the alley between Delaware and Pennsylvania Streets, including overlay, angle parking on 8^th Street, bulb-outs, lighting, and sidewalks

5. To pay for utility connections to the Poehler building for domestic water, fire line and sanitary sewer up to and not to exceed $36,980.

6. To reimburse the Developer 75% of the actual costs of the Poehler building fire sprinkler system up to and not to exceed $85,000.00, within 90 days of receiving detailed invoices from Developer showing the actual cost of the Poehler building fire sprinkler system.

7. To bid the public improvements described in Section 2.02, Paragraphs 1, 2, and 3 upon notice from the City’s Planning and Development Services Department Director that the Developer has received the building permit for the Poehler building [this may need to be revised Developer does work in phases.]

8. To release the Advanced Funds to the Developer in accordance with Section 2.03.

9. To sell the Poehler building parking lot to Developer after the passage of 15 years following the issuance of the occupancy permit for the Poehler building.

Section 2.03. Release of Advanced Funds. The Advanced Funds paid by Developer in accordance with this Agreement will be released to Developer as follows:

1. If the Developer notifies the City of its intent to not proceed with the project, the City shall release the Advanced Funds within 30 days of receipt of the Developer’s Notice.

2. When the Project is deemed by the City’s Director of Public Works to be 25% complete, the City shall release 25% of the Advanced Funds.

3. When the Project is deemed by the Director of Public Works to be 50% complete, the City shall release an additional 25% of the Advanced Funds.

4 When the Project is deemed by the Director of Public works to be 75% complete, the City shall release an additional 25% of the Advanced Funds.

5. The City shall release the remaining Advanced Funds within 21 days of the issuance of the occupancy permit for the Poehler building.

Section 2.04 Costs Previously Incurred for Plans for a Portion of the Project. The parties agree that the City has no responsibility or liability for payment, in whole or in part, to Bartlett and West Engineers, Inc. for design and engineering services procured by former and/or current owners of the Property related to the design of public improvements. The City agrees to use reasonable efforts to negotiate with Bartlett & West for the public improvement plans. The parties understand and agree that if the City is unable to acquire the public improvement plans from Bartlett & West, for a sum, in the City’s sole discretion deemed reasonable, then the City shall obtain the necessary public improvement plans to the bid the project through other means.

ARTICLE III
REPRENTATIONS OF THE CITY AND THE DEVELOPER

Section 3.01. Developer Representations. The Developer makes the following representations and warranties, which are true and correct on the date hereof:

A. No Litigation. No litigation, proceeding or investigation is pending or, to the knowledge of the Developer, threatened against the Project, the Developer or any officer, director, member or shareholder of the Developer. In addition, no litigation, proceeding or investigation is pending or, to the knowledge of the Developer, threatened against the Developer seeking to restrain, enjoin or in any way limit the approval or issuance and delivery of this Agreement or which would in any manner challenge or adversely affect the existence or powers of the Developer to enter into and carry out the transactions described in or contemplated by the execution, delivery, validity or performance by the Developer, of the terms and provisions of this Agreement.

B. No Material Change. There has been no material adverse change in the business, financial position, prospects or results of operations of the Developer, which could affect the Developer’s ability to perform its obligations pursuant to this Agreement from that shown in the financial information provided by the Developer to the City prior to the execution of this Agreement.

C. No Default. No default or Event of Default has occurred and is continuing, and no event has occurred and is continuing which with the lapse of time or the giving of notice, or both, would constitute a default or an event of default in any material respect on the part of the Developer under this Agreement, or any other material agreement or material instrument to which the Developer is a party or by which the Developer is or may be bound.

D. Approvals. Except for permitted subsequent approvals, the Developer has received and is in good standing with respect to all certificates, licenses, inspections, franchises, consents, immunities, permits, authorizations and approvals, governmental or otherwise, necessary to conduct and to continue to conduct its business as heretofore conducted by it and to own or lease and operate its properties as now owned or leased by it. Except for permitted subsequent approvals, the Developer has obtained all certificates, licenses, inspections, franchises, consents, immunities, permits, authorizations and approvals, governmental or otherwise, necessary to acquire, construct, equip, operate and maintain the Project. The Developer reasonably believes that all such certificates, licenses, consents, permits, authorizations or approvals which have not yet been obtained will be obtained in due course.

E. Compliance with Laws. The Developer is in compliance with all valid laws, ordinances, orders, decrees, decisions, rules, regulations and requirements of every duly constituted governmental authority, commission and court applicable to any of its affairs, business, operations as contemplated by this Agreement.

F. Other Disclosures. The information furnished to the City by the Developer in connection with the matters covered in this Agreement are true and correct and do not contain any untrue statement of any material fact and do not omit to state any material fact required to be stated therein or necessary to make any statement made therein, in the light of the circumstances under which it was made, not misleading.

G. Developer’s Acquisition of the Project Area. At the time that this Agreement is executed, Developer represents that it owns legal title to only a portion of the real Property in the Project Area. All of the real property acquired by the Developer, subject to the rights of assignment in this Development Agreement, shall be held in the name of the Developer and shall be subject to the terms, conditions and covenants contained in this Agreement and in the Project Plan immediately upon acquisition and prior to any encumbrances placed thereon.

H. Conditions to the Effective Date of this Agreement. Contemporaneously with the execution of this Agreement, and as a precondition to the effectiveness of this Agreement, the Developer shall submit the following documents to the City:

1. A legal opinion from counsel of the Developer in a form and substance acceptable to the City covering: (a) the due organization of the Developer and the power and authority of the Deveoper to execute this Agreement, and (b) the enforceability of this Agreement against the Developer; and

2. A title insurance commitment or policy in a form acceptable to the City regarding the Developer’s fee simple ownership of the parcels owned by the Developer in the Project Area, subject only to standard title excerptions, those exceptions to which the Developer did not object in connection with the purchase of the real property in the Project Area, and mortgages.

Section 3.02. City Representations. The City makes the following representations and warranties, which are true and correct on the date hereof:

A. Due Authority. The City has full power and authority, under current applicable law, to execute and perform the terms and obligations of this Agreement, and all of the foregoing have been or will be duly and validly authorized and approved by all necessary City proceedings, findings, and actions.

B. No Defaults or Violation of Law. The execution and delivery of this Agreement, the consummation of the transactions contemplated thereby, and the fulfillment of the terms and conditions hereof do not and will not conflict with or result in a breach of any of the terms or conditions of any agreement or instrument to which the City is now a party, and do not and will not constitute a default under any of the foregoing.

ARTICLE IV
SALE OF PROPERTY AND DEVELOPER ASSIGNMENT

Section 4.01. Sale or Disposition of Property and Assignment.

A. Sale or Lease. The Developer may sell, transfer, convey, lease or otherwise dispose of real property owned by Developer.

B. Assignment of Obligations. This Agreement and the rights, duties and obligations hereunder may not be assigned by the Developer without the prior approval of the City, which shall not be unreasonably withheld.

ARTICLE V
DEFAULTS AND REMEDIES

Section5.01. Default. This Agreement shall be in default if there is a failure by either party to observe and perform any covenant, condition or agreement required of such party under this Agreement for a period of sixty (60) days after written notice of such default has been given to the defaulting party by the non-defaulting party during which time such default is neither cured by the defaulting party nor waived in writing by the non-defaulting party (“Event of Default”), provided that, the defaulting party shall not be in default if the failure stated in the notice cannot be corrected within said sixty (60) day period and the corrective action is instituted within the sixty (60) day period and diligently pursued to completion.

Section5.02. Remedies on Default.

A. Whenever any Event of Default by Developer shall have occurred and be continuing, the City may take any one or more of the following remedial steps: (i) Refuse to issue any further Certification of Expenditures and/or Tax Rebates; or (ii) Terminate this Agreement. Notwithstanding the foregoing, the City shall be obligated to provide Tax Rebates to Developer for all Project Infrastructure expenditures incurred by Developer up to the date of refusal to issue any further Certification of Expenditures or termination of this Agreement.

B. Whenever any Event of Default by City shall have occurred, Developer may take any one or more of the following remedial steps (i) Terminate this Agreement, or (ii) have available all remedies at law and in equity.

Section 5.03. Legal Actions. Any legal actions related to or arising out of this Agreement must be instituted in the District Court of Douglas County, Kansas or, if federal jurisdiction exists, in the Federal District Court in the District of Kansas.

Section 5.04. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party.

Section 5.05. Inaction Not a Waiver of Default. Any failures or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any action or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.

Section 5.06. Enforced Delay; Extension of Times of Performance. In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where party seeking the extension has acted diligently and delays or defaults are due to events beyond the reasonable control of the party such as but not limited to: default of other party; war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; market conditions; quarantine restrictions; freight embargoes; lack of transportation; unusually severe weather; or any other causes beyond the control or without the fault of the party claiming an extension of time to perform. Times of performance under this Agreement may also be extended in writing by the mutual agreement of City and the Developer.

ARTICLE VI
GENERAL PROVISIONS

Section 6.01. Time of Essence. Time is of the essence of this Agreement. The City and Developer will make every reasonable effort to expedite the subject matters hereof and acknowledge that the successful performance of this Agreement requires their continued cooperation.

Section 6.02. Amendment. This Agreement, and any exhibits attached hereto, may be amended only by the mutual consent of the parties, upon official action of the City's governing body approving said amendment, and by the execution of said amendment by the Parties or their successors in interest.

Section 6.03. Immunity of Officers, Employees and Members of the City. No personal recourse shall be had for the City’s commitment to install the public improvements as specified herein or for any claim based thereon or upon any representation, obligation, covenant or agreement in this Agreement against any past, present or future officer, member, employee or agent of the City, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and any liability of any such officers, members, directors, employees or agents is hereby expressly waived and released as a condition of and consideration for the execution of this Agreement. Furthermore, no past, present or future officer, member, employee or agent of the City shall be personally liable to the Developer, or any successor in interest, for any default or breach by the City.

Section 6.04. Right of Access. For the purposes of assuring compliance with this Agreement, representatives of the City shall have the right of access to the Property, without charges or fees, at normal construction hours during the period of construction for purposes related to this Agreement, including, but not limited to, the inspection of the work being performed in constructing the Project. Such representatives of the City shall carry proper identification, and shall not interfere with the construction activity.

Section 6.05. No Other Agreement. Except as otherwise expressly provided herein, this Agreement and all documents incorporated herein by reference supersedes all prior agreements, negotiations and discussions, both written and oral, relative to the subject matter of this Agreement and is a full integration of the agreement of the parties.

Section 6.06. Severability. If any provision, covenant, agreement or portion of this Agreement, or its application to any person, entity or property, is held invalid or unenforceable in whole or in part, this Agreement shall be deemed amended to delete or modify, in whole or in part, if necessary, the invalid or unenforceable provision or provisions, or portions thereof, and to alter the balance of this Agreement in order to render the same valid and enforceable. In no such event shall the validity or enforceability of the remaining valid portions hereof be affected.

Section 6.07. Amendment to Carry Out Intent. If any provision, covenant, agreement or portion of this Agreement, or its application to any person, entity or property, is held invalid, the parties shall take such reasonable measures including, but not limited to, reasonable amendment of this Agreement or the Plan to cure such invalidity where the invalidity contradicts the clear intent of the parties in entering into this Agreement.

Section 6.08. Kansas Law. This Agreement shall be construed in accordance with the laws of the State of Kansas.

Section 6.09. Term. The term of the agreement shall be until such time as the City transfers title to the parking lot at the end of fifteen (15) years, unless terminated as herein provided. [this could use some work.]

Section 6.10. Notice. All notices and requests required pursuant to this Agreement shall be in writing and shall be sent as follows:

To the Developer:

Tony Krsnich

East Lawrence Historic Partners, LLC

10334 Lee Blvd.

Leawood, KS 66206

To the City:

David Corliss, City Manager City of Lawrence

P.O. Box 708

6 East 6th

Lawrence, KS 66044

or at such other addresses as the parties may indicate in writing to the other either by personal delivery, courier, or by registered mail, return receipt requested, with proof of delivery thereof. Mailed notices shall be deemed effective on the third day after mailing; all other notices shall be effective when delivered.

Section 6.11. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement.

Section 6.12. Consent or Approval. Except as otherwise provided in this Agreement, whenever consent or approval of either party is required, such consent or approval shall not be unreasonably withheld.

Section 6.13. Survivorship. Notwithstanding the termination of this Agreement, Developer’s obligations with respect to any terms and conditions of this Agreement which by their nature should survive termination, shall survive the termination of this Agreement.

Section 6.14. Incorporation of Exhibits. The Exhibits attached hereto and incorporated herein by reference are a part of this Agreement to the same extent as if fully set forth herein.

Section 6.15. Indemnity and Release. Devloper covenants and agrees, at its expense, to indemnify and hold the City and its repective members, officers, employees, and agents harmless from and against any loss, liabilty, damage or expense arising out of any and all claims, demands, expenses, penalties, fines, taxes of any character or nature arising from the this Agreement, including but not limited to, claims for loss or damage to any property or injury to or death of any person arising out of Developer’s obligations under this Agreement. If any action or proceeding is brought against the City or its respective members, directors, officers, employees or agents by reason of any such claim or demand for which Developer is obligated to defend hereunder, upon notice from the City, Developer covenants to defend such action or proceeding on demand of the City or its respective members, directors, officers, employee or agants. Notwithstanding the forgoing, neither the City nor its respective members, directors, officers, employees or agents shall be indemnified against liablity for damage arising out of bodily injury to persons or damage to property caused by its own act or omision or the acts or omisions of its own members, directors, officers, employees or agents.

ARTICLE VII

EFFECTIVE DATE

Section 7.01. Effective Date. This Agreement shall be become effective upon the later of (i) both parties executing this Agreement.

IN WITNESS WHEREOF, the City and the Developer have duly executed this Agreement pursuant to all requisite authorizations as of the date first above written.

CITY OF LAWRENCE, KANSAS

_______________________________

Aron E. Cromwell, Mayor

ATTEST:

____________________________

Jonathan M. Douglass, City Clerk

APPROVED AS TO FORM:

___________________________

Toni R. Wheeler

Director, Legal Department