TI (OFFICE OF THE COUNTY MANAGER. 2100 CarendonBodear, Sue 82 eto, VA 22201 ARLINGTON TPyoone0120 #7 NON-BINDING LETTER OF INTENT Identifying Terms and Conditions for Arlington County's Real Estate end Economic Development. Incentives for WETA This Letter of Intent ("LOM"), dated December 1, 2017, between the County Manager of Arlington County, Virginia ("Manager” or “County"} and Grester Washington Educational Telecommunication Associations, Inc. ("WETA"), sets forth the terms and conditions which the County Manager has reviewed with the County Board and will recommend to the County Board for necessary formal agreements to incentivize WETA to remain in Arlington County as described more fully below. ‘This LOI is non-binding and is contingent upon both the WETA Board and the County Board approval of necessary formal agreements. The LOI is not intended to limit necessary agreements and, thus, other terms and conditions than those set forth herein may be included in the final agreements, To move forward, WETA must return a fully executed LOI to the Arlington County Manager. Ifno response is received, this LOI will expire automatically on December 31, 2027. BACKGROUND AND PURPOSE In esrly 2016, the County began discussions with WETA about retaining its headquarters and studios in Arlington, VA. WETA empioys 282 people and occupies 89,418 square feet of office space and 30,685, square feet of studio space in the Shirlington area of Arlington, WETA's current studio space at 3620 27" Street South no longer suits the organization's needs end WETA began a site selection search looking at options for its headquarters and studio. The location search focused on Arlington, Alexandria and Washington, 0.C. Additionally, the County's current Four Mile Run Valley study identifies 3620 27° Street South as a possible future acquisition for park space to support an ‘expansion of Jennie Dean Park This LOI provides two options to WETA and lays out the significant terms and conditions of future ‘agreements between the County and WETA for each option. Option A Option A assumes that WETA will do the following for at least 15 years (provided WETA is operating for the full period): ‘© Retain occupancy of its existing 89,418 square foot building as its headquarters operation at 3939 Campbell Avenue in Shirlington ‘© Make at least $15 million in capital investments at 3939 Campbell Avenue to accommodate a new state of the art studio to replace the existing studio operations at 3620 27" Street South;Page 2 © Construct up to 10,000 square feet of new studio space at WETA’s existing headquarters building, In addition, WETA may potentially lease up to an additional 15,000 square feet of space in {Alington to accommodate displaced workers due to integration of studio operations at 3939 Campbell Avenue; ‘© Maintain at least 252 employees and subject to the EDI Grant below, and ‘© Work with Artington County to provide branding opportunities through WETA's programming to highlight that WETA broadcasts from Arlington, Virginia consistent with FCC and public television practices and procedures. In turn, the County {in conjunction with the County Board) will move forward with the following steps: ‘= Purchase 3620 27" South Street; = Leaseback 3620 27" South Street to WETA during construction of new studio for a period of up to five years from the date of ecquisition, according to terms below; © Underta%e streetscape improvements proximate to WETA’s headquarters at 3939 Campbell Avenue; © Take all steps necessary to present far approval by the County Board a Phased Development Site Plan amendment and Final Site Plan amendment! permitting additional density at 3939 Campbell Avenue for studio construction; Take all steps necessary to present for approval by the County Board a site plan amendment permitting a reduction of parking spaces within the WETA garage to accommodate construction of the studio space and reserve spaces for production staff; © Reimburse fees paid to the County related to site plan amendments applications and permits for construction of improvements; and ‘© Pursue performance-based Economic Development incentive (EDI) grants. © Any final purchase and sale agreement, and the final sa'e of the studio building, is contingent upon receipt of all site plan amendment approvals, and will cccur after al! said approvals are granted, ‘SUMMARY ‘The following table outlines the value associated with the real estate transection, design services, si plan amendments and economic development incentives for Option A. Description RealEstate Transoct — Burchase price for 3620 27" Street South Est. value of leaseback of 3620 27" Street South for up to 5 years** ‘TBD @ MKT period of __leaseback Design Services “ any ceferences to site plans (or ste plan amendments) are to be in accordance with provisions set forth in “Administrative Regulation 4.1 Governing the Submittal of Site Plons in Arhgton County.Page 3 Urban design services and streetscape Improvements (County in-kind $500,000 \centive for WETA} : ‘Site Plan Amendments { ‘Bonus density at 3839 Campbell Avenue 76D Value of fees reimbursed as described below Approximately $100,000 ‘Economic Development EDI grant for achieving performance metrics $2,250,000 “Purchase Price incentive value reflects the difference between $8 million and $6.7 million. ++ Market rate of leaseback will be negotiated between Arlington County and WETA as part of purchase and sale agreement. Market rate will be determined by examining spaces similar to 3620 27" Street South (in type, size, location, age, tc.) in Arlington, Alexandra, and Falls Church, TOTAL ‘$780 (efter determination of market value of leaseback) FURTHER TERMS AND CONDITIONS The County and WETA agree that the following terms and conditions willbe included, as such may be further refined through continued negotiation, in the necessary formal agreements: 1. REAL ESTATE TRANSACTION © The County's current Four Mile Run Valley study identifies 3620 27" Street South 2s 2 possible future acquisition for park space to support an expansion of Jennie Dean Park, The County will offer to purchase the two-story building and land from WETA for $B million (assuming clear ttle, environmental site assessment, et.) ©The County, through its Industrial Development Authority (IDA), will leeseback 3620 27" Street South to WETA for four years for $1 annually, and year five for $200,000 from the time the County acquires the property, while WETA constructs Its new studio in Arlington + Any final purchase and sale agreement, and the final sale ofthe stuclo building is contingent upon receipt of all site plan amendment approvals, and will occur afterall said approvals are granted, 2, SITE PLAN AMENOMENTS AND PERMITTING FEES © Incrder to construct a new studio space, WETA will need to increase the amount of density permitted at 3939 Campbell Avenue, WETA has requested approximately 10,000 square feet of additional density to construct new studio space in the open area between thelr existing building and part of their existing garege. ‘© To achieve the additional density, WETA would need to concurrently pursue: ‘© An amendment to the Shirlington Village Phased Development Site Plan (POSP) (SP #106) to increase the amount of density and allocate the density to 2939 Campbell Avenue,Page 4 including the construction/demolition into the existing garage required to accomplish said density © Asite pian amendment for 3939 Campbell Avenue (SP #106, $P-3) to permit 2 modification of the Zoning Ordinance to allow for the additional density at 3939 Campbell Avenue, including the construction/demolition into the existing garage required to accomplish said density which will involve a reduction in parking, for which no compensation will be required for earning this addtional density ‘+ The Board through its 1DA, will reimburse WETAYS filing fees pad to the County associated with the process of obtaining the necessary amendments to both the Shirlington Village POSP and the final site plan for 3938 Campbell Avenue, but not to exceed One Hundred Thousand Dollars {$100,000}, such amount to be in addition to the ED! incentives set forth below in Section 6 + The County will tate all steps necessary to process the applications for the necessary amendments to the PDSP and final ste plan, proceed through public review, and hold public earings of the Plenning Commission and the County Board to consider the applications, all within 120 days of the County's acceptance of the complete appl cations. URBAN DESIGN SERVICES (this is a County in-kind incentive for WETA. No money will be disbursed to WETA for this benefit} ©The County will provide key infrastructure improvernents designed to engage the public through place-making and design solutions. Urban design and place-making efforts may include: © Extending decorative crosswalk paving ©. Pedestrian refuge with seating © New street trees © Public art—focal point © Median widening PARKING ‘= The County will tke all steps necessary to present for approval by the County Board a site plan ‘amendment permitting a reduction of parking spaces within the WETA garage to accommodate construction of the studio space. ‘+ The County will take all steps necessary to present for approval by the County Board a site plan ‘amendment involving a condition(s) permitting a reservation of up to seventy (70) parking spaces within the WETA garage for WETA production staff for their sole use unt! 7:00 pm weekdays. ‘* WETA will agree that the parking spaces within the WETA garage be available for public use outside of standard business hours (i.e, weekday evenings and weekends) as generally described in SP #106, with the exception of the up to seventy (70) reserved parking spaces, which would be made available for public use after 7:00 pm weekdays. SIGNAGE ‘© The County will support signage improvements on the WETA property, so long as they are consistent with the applicable provisions of the Zoning Ordinance and the governing Comprehensive Sign Pian for Shirlington Village, which allows for 634 square feet of signage on the WETA property. Al signs exsting and proposed, must meet the criteria of thePage 5 Comprehensive Sign Plan and the Zoning Ordinance, and may be approved by the County administratively as long as they meet these criteria ‘* The County will take all steps necessary to present for approval by the County Board a site plan amendment permitting a large madia screen, in accordance with § 13.13.4 of the Zoning, Ordinance, which may contain non-commercial content consistent with standards acceptable to and approved by the Zoning Administrator, such as public service announcements, art, photos, and potentially other non-commercial content. 6. ECONOMIC DEVELOPMENT INCENTIVES = The County will provide up to $2.25 million in performance-based EDI grants over the performance period defined below. + Following acceptance of the incentive package, an EDI grant agreement detailing the ‘expectations associated with the incentive must be approved by the Arlington County Board at a public County Board meeting. ‘© Grant Distribution Conditions: ‘Annwal grant payments will begin after the following criteria are satisfied: © Existing studio space at 3620 27” Street South has been purchased by Arlington County; and © Permits have been obtained for the construction of new studio space at 3939 Campbell Avenue. To receive its annual EDI grant disbursement, WETA must be current on taxes and submit an annual performance report verifying its achievement of the following performance targets: © Jobs? ~ Maintain 282 employees To receive the annual Jobs portion of the EDI grant, which is worth $75,000, |WETA must maintain 70% of the Jobs terget to receive the annual Jobs portion of the EDI grant. If WETA's total number of Jobs dips below 204, WETA will not receive its annual alotment of this grant. + Fifteen days after the end of the first performance year and at the end of each of the following 14 performance years, WETA will submit a report ofits total Jobs (see Exhibit A for an example performance period schedule). fit has the minimum of 204 Jobs, WETA will be eligible for, and receive, the full Jobs grant for that year. The County will have the right, each yeer, at its expense, to audit the Jobs number reported in any given veer. (© Base Square Feet - Maintain the occupancy of the existing 89,418 square feet building at 3939 Campbell Avenue as WETA’s headquarters. 2 Temporary positions, and jobs with construction contractors, vendors, and suppliers and similar multiphier or spin- off jobs do not qualify as Jobs. However, al other fulltime jobs, as submitted by WETA in its annual report, willbe reviewed and will be accepted on the batis of whether that person has been hired for a fulltime Job. WETA must provide each employee with a Job with competitive compensation. WETA's business, television production work, is by nature cyclical, and therefore Jabs are denendent on the political and social events of the day, 2s well as on specialty programming, to include but not be limited to: potest conventions, or additional event-driven political coverage; documentaries or other projects that have been grant funded,Page 6 ne annual Base Square Feet portion of the EDI grant is worth $37,500. WETA must maintain occupancy of 90% of the Base Square Feet target to receive the annual Base Square Feet portion of the ED! grant. = Fifteen days after the end of the first performance year and at the end of each of the following 14 performance years, WETA will submit e report ofits Base Square Feet. If it has the minimum of 80,476 square feet, WETA will be eligible for, and receive, the full Base Square Feet grant for that year, © Bonus Square Feet - WETA can achieve additonal EDI grant money through (1) ‘constructing up to 10,000 square feet of new studio space as approved by the County Board and/or (2) potentially leasing up to an additional 15,000 square feet of gross floor area in Arlington for a total occupied square footage of up to 114,418 of gross floor area. 1 Fifteen days after the end of the first performance year and at the end of each of the following 14 performance years, WETA will submit a report of its Bonus Square Feet. Whether WETA fulfills just Option 1 or both Option 1 and 2, for every useable square foot of space either constructed or leased above the B2s2 Square Feet, Arlington County will provide a performance-based EOI grant on a pro-rata basis of $1.50/PSF annually for up to 25,000 square feat. The Bonus ‘Square Feet portion of the ED! grant is worth up to $37,500 annually © Additional Terms: © The Board, through its 'DA, and in addition to the EDI grants described above, will reimburse WETA for filing fees paid to the County associated with the amendments to both the Shirlington Village POSP and fina site plan for 3939 Campbell Avenue. © WETAwill work with the County to provide acknowledgement that WETA’s programming, ts broadcast from Ariington, Virginia, whenever possib’e, through a mutually agreed upon tactic to achieve marketing exposure for the County consistent with WETA broadcasting standards, and FCC rules and regulations. After the LOI has been approved, Arlington, ‘County and WETA marketing teams will determine the appropriate marketing methods such as separate interstitial spots or similar format. The agreed upon method and frequency willbe laid out in a MOA and signed by Arlington County and WETA. 0 WETA must make at least $15 milion in capita! investments at 3939 Cambell Avenue to Incorporate studio operations. Payment of ED! Grant: WETA willbe assessed annually for the various components of the EDI grant, and will receive (or not receive) the grant amount owed based on the agreed-to parameters above. © Repayment of the ED! Grant: Temporary space oF “swing space” leased specifically for the construction period by WETA fr less than 24 months does not qualify as Bonus Square Feet. All other swing space leases, f dane for the purpose of a particular grant, show, or other business purpose, whether short term or long-term, shall count toward that year’s ED! grantif tis leased for at least 24 monthsPage 7 To receive its annual grant disbursement, WETA must submit an annual performance report within 15 days of the completion of a performance year (for exemple, if 3 performance year is from Jan 2, 2018 - Dec 31, 2018, WETA’s report will be due by January 15, 2019) Jn years four, eight, 12 and 15, WETA’s annual report will be examined to see if WETA has at least 70% of its jobs target {204 jobs) and at least 90% of its base square feet target (80,476 square feet). If WETA has not met one or both of those targets, itis subject to the following repayment conditions: © Jobs WETA must meet 70% of the Jobs target (204) jobs, or repay alt EDI grant money received in connection with the Jobs target over the previous four performance years (years 1-4, 5-8, 912, 13-15). © Base Square Feet WETA must maintain 90% of the Base Square Feet target (80,476 square feet), or repay all the £0 grant money received in connection with the Base Square Feet target aver the previous four performance years (years 1-4, 58, 9-12, 13-15), Summary of Performance Targets and Corresponding Grant Payment Total Grants AnnualGrant | Over 15-Year Performance Period Performance Target jobs Positions 292 292 ‘Base Square Feat occupancy of existing square feet at 3939 5418 39,418 Campbell Ave} ‘Bonus Square Feet (based on additional GFA (Option 1 and/or 25,000 25,000 2 above) Corresponding Maximum Grant Amount Jobs €D1 Grant $75,000 [$1,125,000 Base Square Feet EDI Grant $37,500 $562,500 Bonus Square Feet EDI Grant (61.50/PSF) $37,500 $562,500 TOTAL $150,000 | "$2,250,000 Option B Option B is conditioned on WETA doing the following: ‘© Retsin occupancy of its existing 89,418 square foot headquarters building at 3939 Campbell Avenue in Shielington end maintaining its headquarters in said building. Initurn, the County will move forward with the following steps:Page 8 Purchase 3520 27" South Street; and © Leaseback 362027" South Street to WETA for three years from time of acquisition, suMMaRy ‘Tne following tab'e outlines the value associated with the real estate transaction, design services, site plan amendments and economic development incentives for Option B ‘Approximate __Incentive ie Plen Amendments Bonus density at 3938 Campbell Avenue Value of fees reimbursed _ | Economic Development EDI grant for achieving performance EURTHER TERMS AND CONDITIONS The County and WETA agree that the following terms and conditions will be included, as such may be further refined through continued negotiations, in the necessary formal agreements: 1. REAL ESTATE TRANSACTION © The County's current Four Mile Run Valley study identifies 3620 27" Street South as a possible future acquisition for park space to support an expansicn of Jennie Dean Park. The County will cffer to purchase the two-story building and land from WETA for $6.7 million {assuming clear title, environmental site assessment, etc.) '® The County, through its DA, will eascback 3620 27" Street South to WETA for three years from the time of acquisition by the County at market rate" [Signatures and acknowledgments appear on the following pages} + Market rate of leateback wi! be negotiated between Arlington County and WETA as part of purchase and sale agreement. Market rate wil be determined by examining spaces similar to 3620 27" Street South in type, size, location, age, etc.) in Arlington, Alexandria, and Falls Church,Page 9 ‘Ths Letter of Intent is made, on the date of full execution, between the County Manager of Arlington County, Virginia and WETA: ‘The County Manager of Adlington County, Virginia Mark J. Schwartz, County Manager Greater Washington Educstional Telecomm ication Associations, Inc. (WETA) By: Date: Li/4 olfPage 10 EXHIBIT A ‘Sample 15-Year EDI GRANT Performance Period Schedule “Performance Year | PY Start Date PYEnd Date Performance Disbursement of] [eee eee eater ue Grant Apo 12/31/2018 1/15/2019, 2/18/2018 1/4/2019 /2018 1/15/2020 2/5/2020 1if2oz0 | 12/3/2020 | 1/1s/20z1_—| 2/18/2021 12/31) - 1/15/2022 2/15/2022 | ____/1/2022 12/31/2022 1/isjozs | 3/15/2023 1/3/2023 | 12/31/2023 1/15/2024 “| RAi/2020 =1/15/2025 3/2028 | —_(12/31/2025 1/15/2026 1/1/2026 12/31/2026 | 1/15/2027 ajo? | 12/31/2027 | _3/3s/2028_ wi20% | “| _ 15/2023 ~afjaos | 12/33/2009 | 1/15/2030 | 3/1/2030 | 12/31/2030 1/15/2031 ~_-A/2031 : p2 ~ 1/15/2032 2032 1/15/2033