November 9, 2000

City, Owners May Have TIF

News / Editorial

By Jon A. Brake

Why? That is the question. Why did the City Commission vote 5-0 to set November 21 for a public hearing on a
new Third Street TIF District?

Yes, this new proposal by a Chicago developer is different than the one killed by the Riley County Commission
last June. It is in two parts. The first takes in most of the third street area as the original proposal. This request
also involves a large chunck of the East Side Industrial Park.

But the question is why now? Commissioners Jim Williams and Russ Frey voted to kill the project last spring and
the chances are good they will vote the same this time. Williams will be going off the Commission in January and
the project may have had a better chance with new Commissioner Alvan Johnson.

And why put the Manhattan-Ogden School District Bus Depot in the East Side Business District TIF? The
School District does not pay taxes. It does not mean a thing that the City will tell the District that they are not in
the project. If the Bus Depot is in the footprint of the TIF District it can be "Taken." by the developer.

Here is a memo given to the Commissioners telling about the project:

BACKGROUND

The City previously entered into a Predevelopment Agreement with Plaza Manhattan, LLC, and took the initial
steps to create a Redevelopment District along north Third Street, all pursuant to K.S.A. 12-1770, et. seq., the
Tax Increment Financing law (TIF). This District was not completed because the Riley County Commission
exercised its statutory authority to determine that the proposed District would have an adverse impact on Riley
County. City Administration was reapproached by representatives of Plaza Manhattan, LLC, and First National
Development, Ltd., of Chicago, Illinois, to seek the City’s cooperation in redeveloping a smaller area along
North Third Street between Leavenworth Street and Laramie Street, as well as establishing a separate
redevelopment area in the East Side Business Park in an area generally north of McCall Road, east of Tuttle
Creek Boulevard, south of Levee Drive, and west of but including a portion of the McCall Pattern tract. It is City
Administration’s understanding that the developer has reached agreement for acquisition of property on some of
the parcels in this area subject to certain conditions and contingencies. One of the primary contingencies is for
the City to create, and finalize, Redevelopment Districts, pursuant to the TIF law. This is a lengthy process that
starts with a public hearing on the establishment of the boundaries of the District, and the action before the
commission at the present time is the setting of a date for that public hearing.

A second contingency for the proposed redevelopment projects, is the rezoning of the area in accordance with a
redevelopment plan that would be adopted as a part of the finalization of the creation of the Districts. The East
Business Park TIF District will also require an amendment to the Comprehensive Plan, prior to, and as a part of,
such rezoning process.

On August 15, 2000, the City Commission approved Resolution No. 081500-D, which authorized City
Administration to negotiate a new Pre-Development Agreement with the developer and which expressed an
interest in establishing the Redevelopment Districts.

DISCUSSION

The developer has requested the City’s cooperation in establishing two Redevelopment Districts, pursuant to the
TIF law, in order to make its developments viable. In most cases, it is very difficult and cost prohibitive to
redevelop property occupied by existing businesses, industry, and residential property, without some form of
local government cooperation and participation. The TIF law provides the mechanism to allow government
entities to assist with the redevelopment of various properties that meet certain conditions as established by that
law.

One of the mechanisms the TIF law provides, is a source of funds to assist with various portions of the project.
NONE of the taxes currently being generated within the Districts is used for the projects. Those taxes continue
to be paid to the County, the School District, the City and the State, the same as they would have if no District
was created. The funds available to assist with the project come from the increase in revenue from property taxes
and/or sales taxes, (the tax increment) which occurs because of the redevelopment. These funds can be utilized to
assist with the acquisition of property and existing structures thereon; razing or relocation of such structures;
relocation assistance to existing businesses or residences; infrastructure improvements in and adjacent to the
redevelopment area; site preparation; relocation of utilities; and other statutorily authorized expenses necessary
to redevelop and finance the project. A memorandum created by the City’s Bond Counsel concerning Tax
Increment Financing in Kansas is attached to help clarify the procedures and other information.

The proposed resolutions establishing the date, time, and location of a public hearing for the City Commission to
consider action regarding the establishment of the Redevelopment Districts are attached. Each resolution also
provides for giving specific notices of such public hearing to the affected Board of County Commissioners and the
U.S.D. 383 Board of Education, along with notices to each owner and occupant of land within the proposed district
as well as publication guidelines in the official City newspaper. The attached resolutions also provide legal
descriptions of the boundaries of the proposed districts with illustrative maps, as well as a summary of the
proposed improvements for each of the areas including a conceptual diagram. The City has the authority under
the TIF law, to establish these districts, as these areas are recognized as a qualifying Enterprise Zone previously
established by the State of Kansas according to statutes (see attached Enterprise Zone map).

Each resolution establishes a public hearing to be held on November 21, 2000, at 7:00 p.m., at City Hall, 1101
Poyntz Avenue. Exhibit A of each resolution illustrates a map of the proposed Redevelopment District. Exhibit B
of the resolution provides a summary of the proposed comprehensive plan that identifies the proposed
redevelopment project areas, and identifies in a general manner the types of buildings and facilities being
proposed within the redevelopment project area. The resolution also indicates that the proposed comprehensive
plan and related public records are available for public inspection during regular office hours at the Office of the
City Clerk.

Since the August 15, 2000 City Commission meeting, there have been a few changes in the proposed boundaries
of the TIF districts with all property east of North Third Street between Leavenworth Street and Bluemont added
and deletion of any property south of McCall Road.

Also attached is a cover letter and new Pre-Development Agreement with Plaza Manhattan, LLC. The letter
updates the City Commission regarding activities since August 15 (attached). The purpose of this new
Pre-Development agreement is to designate this developer as the exclusive developer with which the City will
negotiate for the redevelopment of the sites, to provide for certain compensation to the City for expenses
covered under this Pre-Development Agreement, and to establish the various issues that need to be explored and
addressed along with the responsibilities of the parties prior to executing a final development agreement. The
Pre-Development Agreement sets forth terms and responsibilities for the initial Development Planning Stage and
the Agreement Stage. A significant component of the Pre-Development agreement calls for the parties to
cooperate in the development of an analysis, and plan, for all necessary traffic improvements to address the
redevelopment projects as well as two development projects located outside of the TIF boundaries, but adjacent
to them as proposed by Wal-Mart and Walgreen’s. The developer is required to enter into an agreement with a
traffic engineer and other necessary consultants and provide a copy of said agreement to the City. The scope of
said agreements and the firms selected are subject to approval by the City. It is City Administration’s
understanding that Plaza Manhattan, LLC has engaged the firm of Peters & Associates in cooperation with
Wal-Mart and Walgreen’s. It is also City Administration’s understanding that Plaza Manhattan LLC plans to
retain the services of TransSystems Corporation to assist the Developers and the City in analyzing the scope and
results of the traffic study. TransSystems has extensive knowledge of traffic issues in this area having completed
the City’s Comprehensive Traffic Study adopted in 1999 as well as having been the Project Engineer for the
McCall/Tuttle Creek Blvd., Leavenworth/Tuttle Creek Blvd., and McCall/U.S. 24 intersection improvements as
well as the Eastside frontage road improvements. City Administration believes these two firms are qualified to
perform this traffic analysis and approves of their selection.

Further attachments provide additional background information updating previous information provided by the
developer.

The proposed timeframe for establishment of the districts includes the public hearing on November 21, 2000,
when the City Commission would consider first reading of ordinances establishing the districts, as well as
resolutions making certain findings. Then in January of 2001, the City Commission would consider second
reading of the ordinances establishing the districts. The reason for the longer time frame between first and
second readings is that the statute necessitates a 30-day timeframe for the other taxing entities to consider the
issue if they so desire and to allow for scheduling around the holidays. In this case, the Board of Riley County
Commissioners, Board of Pottawatomie County Commissioners, and the U.S.D. 383 Board of Education will be
notified of the proposed actions. In the event any of those entities take specific action to make a finding that the
creation of these districts would have an adverse impact on them within that 30-day timeframe, the district cannot
be established and the process ends.

In the event the City Commission approves the ordinances establishing the districts, the next step would be to
continue to develop redevelopment plans and related documents and a final development agreement consistent
with terms of the redevelopment plan and the Pre-development Agreement. The redevelopment plan phase would
include the following components:

* a comprehensive feasibility study which would need to illustrate that the economic benefits of the project
exceed the costs and that the income derived from the projects will appropriately fund the costs;

* a comprehensive relocation assistance plan which would outline the relocation process, property acquisition
plan and assistance that would be provided to those needing to relocate;

* a detailed project plan including a description of the buildings and facilities proposed to be constructed or
improved and related infrastructure improvements.

* a final development agreement , which would address, among other things, the relative responsibilities of the
parties to fund all portions of the project, including the infrastructure improvements made necessary by the
project.

At the August 15, 2000 meeting, the City Commission requested that potential relocation sites be identified for
the businesses that exist within the proposed districts. While actual relocation plans will not be developed unless
the process proceeds to the Redevelopment Plan phase if the districts are created, City Administration, the
Manhattan Area Chamber of Commerce, Pottawatomie County Economic Development and the developer have
preliminarily identified some potential relocation sites. Viability of these sites will depend on a variety of factors,
including the businesses’ desire to relocate to that specific location. Attached is a map outlining possible
relocation areas. These areas include the Manhattan Corporate Technology Park, Green Valley Industrial Park
(in Pottawatomie County), approximately 67,000 square feet of space in the proposed East Side Business Park
Tax Increment Financing District along the northern side of McCall Drive east of Hayes Drive, and along K-18
east and south of the Manhattan Regional Airport.