1 USOC/City of Colorado Springs Proposed Economic Development Agreement Summary of Key Elements July 31, 2009

2 Economic Dev Agreement - Key Elements Project Elements 1.New USOC Headquarters: 5 floor, 80,881 sq. ft. class “A” office space condominium unit at 27 S. Tejon St. 2.NGB Building: 40,000 sq. ft. of renovated office space at 30 Cimino Drive for use by National Governing Bodies 3.OTC Improvements: 166 units of athlete housing, expansion and enhancement of Athlete Center including cafeteria facilities, renovation of Visitor Center, and infrastructure improvements

3 Economic Dev Agreement - Key Elements USOC Headquarters Colorado Springs Public Facilities Authority (PFA) to purchase core and shell of floors 2-6 of property at 27 S. Tejon Acquisition cost of $18.8 million to be financed through sale of COPs and use of City Parking Enterprise funds previously earmarked for a pedestrian skybridge Working with USOC, City to contract and manage the construction of 1 st floor lobby entrance and the lobbies of floors Working with USOC, City to contract and manage the construction of tenant improvements (interior finishes) of condo unit

4 Economic Dev Agreement - Key Elements USOC Headquarters City to contribute $2.7 million towards the cost of tenant improvements and a total of $249,000 towards the construction of the lobby spaces. USOC to pay all costs for any additional improvements and interior finishes in excess of $2.7 million Tenant improvement/lobby costs of $2.949 million to be financed through sale of COPs and use of City Parking Enterprise funds previously earmarked for a pedestrian skybridge Construction of condominium unit to be completed by March 31, USOC has right to terminate agreement if condo unit not delivered by that date City to make 240 parking spaces available for lease to USOC in the Nevada-Colorado Parking Garage

5 Economic Dev Agreement - Key Elements USOC Headquarters PFA to lease USOC HQ condo unit to City of Colorado Springs and City to sub-lease the unit to USOC for $1.00 per year with USOC bearing all utilities, insurance and building operating/maintenance costs associated with the condo unit (except any property taxes that may be due) Sub-lease to have a term of 30 years and will remain in effect so long as the USOC maintains in headquarters in the facility. At the end of 30 year term, title to the condo unit to be transferred to the USOC USOC to enter into sub-lease upon the execution of the EDA by all parties. The USOC’s obligations under the sub-lease, however, will be conditioned on the City’s performance regarding the timely completion of the HQ condo unit, the NGB Building renovation, and funding for OTC improvements being raised

6 Economic Dev Agreement - Key Elements USOC Headquarters The USOC will pay liquidated damages to the City in the event it no longer occupies the USOC condominium as its national headquarters. The liquidated damages through the first 15 years of the sub- lease will be all P&I paid by the City on COPs issued for the HQ and NGB Buildings as well as any cash contributions made by the City for those purposes. Liquidated damages during years to be paid by USOC on a sliding scale. During years 26-30, no liquidated damages, but USOC forfeits rights to ownership. Beginning in year 15, USOC has rights to accomplish a lease purchase buyout of the USOC condo and NGB Building at a price equal to the amount necessary retire any and all COPs issued for their construction/renovation. Liquidated damages still applicable if USOC Headquarters is relocated outside corporate boundaries of the City.

7 Economic Dev Agreement - Key Elements USOC Headquarters City has right to sub-sublease the first floor of the USOC condominium without payment of rent for a period of 10 years, with USOC having right, beginning in year 5, to terminate the lease with one year’s notice. The City would then be able to lease that space to qualifying 501 c (3) entities so long as those entities bear the cost of all utilities and operating expenses for the space and install tenant improvements in the unit to USOC specifications.

8 Economic Dev Agreement - Key Elements NGB Building City to take over management of contract with Copestone construction for renovation of property at 30 Cimino Drive Renovation of property to be completed in accordance with approved plans and specifications with renovations completed by December 31, 2009 Upon issuance of COPs, USOC shall enter into a PFA/City/USOC lease with an annual rental rate of $1.00 with USOC obligated to pay all utilities, insurance and building operating/maintenance costs associated with the building (except any property taxes that may be due) PFA/City/USOC lease to have a term of 30 years and remain in effect so long as the USOC maintains in headquarters in the facility. At the end of 30 year term, title to the property to be transferred to the USOC

9 Economic Dev Agreement - Key Elements OTC Improvements OTC Improvements to have two phases (I & II) A total of $13 million to be placed in escrow account for Phase I within 90 days of the execution of the EDA USOC has right to terminate the EDA if $13 million not available by December 31, 2009 A total of $3 million to be placed in an escrow account for Phase II within 25 months of the execution of the EDA. If $3 million not raised and deposited at that time, City to deliver a quit claim deed to USOC for City’s reversionary rights to land upon which a portion of the OTC is situated and any liquidated damages USOC would owe the City if it moved its headquarters from Colorado Springs would be reduced by any difference between what had been deposited and $3 million

10 Economic Dev Agreement - Key Elements OTC Improvements USOC to manage the construction of the OTC improvements of both Phases Preference to be provided to local development management and general contractor firms City to install, at its cost, a traffic signal at new OTC entrance at Union and Willamette. Cost of traffic signal to be applied as a credit against Phase II obligation USOC to spend all funds deposited in escrow account for Phase I improvements within 4 years of date all development approvals received. A similar provision applies for Phase II improvements. Any unexpended funds after those dates to be returned to all contributors of the funds pro-rata

11 Economic Dev Agreement - Key Elements OTC Improvements Funding for Phase I from following sources: $9,500,000 PFA COP proceeds $1,500,000 El Pomar challenge grant $1,500,000 Community fundraising 1/ $500,000 Colorado Office of Econ Dev grant Funding for Phase II from following source: $3,000,000 Community fundraising 2/ 1/ to be raised within 90 days 2/ to be raised within 25 months

12 Economic Dev Agreement - Key Elements Affiliation and Marketing Relationship City will be given use rights to the USA 5-ring logo Right to use USOC emblem Publicly use the designation “Official Hometown of the USOC” Joint public relations outreach efforts involving Olympic athlete appearances at City events

13 Economic Dev Agreement - Key Elements Issuance of Certificates of Participation (COPs)  COP issuance process to begin immediately after execution of Settlement Agreement  COPS to be issued within 45 days  Given that USOC condo unit, NGB Building, OTC Improvements lack “essentiality” to City operations, COP purchasers will require other City assets to be pledged as collateral  City real estate associated with public safety operations typically deemed to be of greatest “essentiality” as they comprise essential services  COPs proposed to be issued with a mortgage on Police Operations Center and possibly one fire station

14 Economic Dev Agreement - Key Elements Issuance of Certificates of Participation (COPs) Summary of Uses of COP Proceeds: USOC HQ Condo Unit $21,461,000 OTC housing visitor center, cafeteria $9,500,000 TOTAL $30,961,000 Estimated 2010 COP Payment 1/ $1,720,000 1/ assumes a 30 year amortization, capitalized interest to the end of 2009, a one notch downgrade in City’s bond rating, bond insurance, 2% annual increase in payments, and current market conditions

15 Economic Dev Agreement - Key Elements Key Differences: 4/08 EDA vs. Current Proposed EDA City to now acquire only the core and shell of the USOC HQ condo from LandCo vs. a completed building under 4/08 agreement City to contract and manage the construction of the tenant improvements to USOC HQ condo City to assume construction contract and complete the renovation of the NGB Building Total purchase price of the USOC HQ Building under proposed new EDA: $21,749,000 which is $963,000 higher than original $20,786,000 price. Difference in price due to additional construction interest carry costs. USOC has increased the term of its commitment to keeping its HQ in Colorado Springs from 25 years to 30 years. This represents a stronger commitment from the USOC and allows a 30 year amortization of PFA COPs.

16 Economic Dev Agreement - Key Elements Key Differences: 4/08 EDA vs. Current Proposed EDA USOC has given City the right to sub-sublease the first floor of the USOC condominium without payment of rent for a period of 10 years Any possibility of an “Olympic Experience” on the ground floor and basement of the USOC HQ building has been dashed All of the necessary funding for the Project is not yet secured, as it was under the 4/08 EDA, with the deal now contingent upon $4.5 million of fundraising Funding of the pedestrian skybridge between the USOC HQ and City parking garage has been removed with any future construction dependent upon additional fundraising

17 Economic Dev Agreement - Key Elements Key Differences: 4/08 EDA vs. Current Proposed EDA Total cost of the Project is now $42.3 million vs. $52.9 million under the original EDA The $16 million for OTC improvements is no longer funded by LandCo but is now a responsibility of the City and community with up to $9.5 million of COP proceeds now being necessary for that element of the overall project The portion of the project to now be funded through COPs is increased from $27.2 million to $30.96 million. The USOC will manage the construction of the OTC improvements instead of LandCo Municipal bond market conditions now dictate that City real estate assets be pledged as collateral for the COPs vs. the pledge of the USOC condo unit and NGB building under the 4/08 EDA

18 Economic Dev Agreement - Key Elements Key Differences: 4/08 EDA vs. Current Proposed EDA The estimated first year (2010) annual COP payment to be made by the City is just over $1.7 million which is identical to the first year payment estimated under the 4/08 EDA. However, it should be noted that the original 2009 City Budget included a total of $2,200,495 (pg of 2009 City Budget) for the first year payment on COPs and the current 2010 projections assume a similar amount.

19 Questions