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Home My WebLink About12/16/2025 - Regular - Packet171. Meeting Location: Contact us: Council Phone (360) portor hard 4407 216 Prospect Street cityhall@portorchardwa.gov Port Orchard, WA 98366 www.portorchardwa.gov City Council Regular Meeting Tuesday, December 16, 2025 6:30 PM Pursuant to the Open Public Meetings Act, Chapter 42.30 RCW, the City Council is conducting its public meeting in a hybrid format with options for in -person attendance in the Council Chambers at City Hall or remote viewing and participation via Zoom (link below). The meeting is streamed live on the City's YouTube channel, click here. Remote Access Link: https://us02web.zoom.us/j/86090319918 Zoom Meeting ID: 860 9031 9918 Zoom Call -In: 1 253 215 8782 Guiding Principles Are we raising the bar in all of our actions? Are we honoring the past, but not living in the past? Are we building positive connections with our community and outside partners? Is the decision -making process building a diverse, equitable, and inclusive community? 1. Call to Order A. Pledge of Allegiance 2. Approval of Agenda 3. Citizen Comments (This is an opportunity for citizens to address the City Council on agenda items that are not associated with a Public Hearing on this agenda. Comments are limited to 3 minutes. Please approach the podium or raise your Zoom hand if viewing remotely and wait to be recognized by the Mayor. Then, state your name for the official record. If you are attending remotely by Zoom via telephone, enter *9 from your keypad to raise your hand.) 4. Consent Agenda (Items listed are to be considered routine in nature and are grouped together in a single motion. A Councilmember may remove an item for separate consideration upon request. In the event of such request, the item is placed under Business Items.) A. Approval of Vouchers and Electronic Payments B. Approval of Payroll and Direct Deposits C. Adoption of a Resolution Adopting the 2026 City Council Meeting Schedule (Wallace) December 16, 2025 Meeting Agenda D. Authorizing the Mayor to amend the agreement with Newalen LLC for derelict vessel removal services (Brown) 5. Presentation A. Kitsap Economic Development Alliance (Joe Morrison) 6. Public Hearing (Accepting public testimony from citizens limited to the specific item listed) A. CANCELLED - Public Hearing on Ordinance Vacating City Right -of -Way (Wallace) 7. Business Items A. Approval of an Ordinance Authorizing a Financing Contract through the Office of the State Treasurer LOCAL Program (Crocker) B. Approval of a Lease Agreement with Kitsap County for 730 Prospect Street (Archer) C. Approval of a Purchase with CivicPlus for City's Website, Public Records Request and Agenda Management Software (Wallace) 8. Discussion Items (No Action to be Taken) 9. Presentation A. Recognizing Councilmember Chang for his Service to the Public 10. Reports of Council Committees (Three council members serve on the committee with staff to make collaborative recommendations about work product. Staff then prepares the items for full council consideration based on the committee's discussion.) A. Council Advisory Committees 11. Report of Mayor 12. Report of Department Heads 13. Citizen Comments (This is an opportunity for citizens to address the City Council on any items that are not associated with a Public Hearing on this agenda. Comments are limited to 3 minutes. Please approach the podium or raise your Zoom hand if viewing remotely and wait to be recognized by the Mayor. Then, state your name for the official record. If you are attending remotely by Zoom via telephone, enter *9 from your keypad to raise your hand.) 14. Good of the Order 15. Executive Session Pursuant to RCW 42.30.110, the City Council may hold an executive session. The topic(s) and the session duration will be announced prior to the executive session. 16. Adjournment ADA Requirements In compliance with the American with Disabilities Act, if you need accommodations to participate in this meeting, please December 16, 2025 Meeting Agenda 2 contact the City Clerk's office at (360) 876-4407. Notification at least 48 hours in advance of meeting will enable the City to make arrangements to assure accessibility to this meeting. REMINDER: Please silence all electronic devices while City Council is in session. To subscribe to our general news & public notices click the link: http://portorchardwa.gov/subscribe For current City Council member and contact information, please visit https://portorchardwa.gov/departments/city- council/. For Committee Membership please visit https://portorchardwa.gov/city-council-advisory-committees/. December 16, 2025 Meeting Agenda 3 Ong City of Port Orchard ORCHARD 216 Prospect Street, Port Orchard, WA 98366 (360) 876-4407 • FAX (360) 895-9029 Agenda Staff Report Consent Agenda: Adoption of a Resolution Adopting the 2026 City Council Meeting Schedule (Wallace) Meeting Date: December 16, 2025 Prepared By: Brandy Wallace, MMC, CPRO, City Clerk Presenter: Brandy Wallace, MMC, CPRO, City Clerk Summary and Background: On July 11, 2017, City Council adopted O rdinance No. 026-17 which adopted the classification of non -charter code city for the City of Port Orchard. Pursuant to Port Orchard Municipal Code 2.04.010 Meeting Time and Place the city council shall hold a minimum of one meeting per month. The city council shall determine the annual schedule for these meetings for the next calendar year no later than the last regular business meeting of the preceding calendar year. City Council typically will meet for regular business meetings the 2nd and 4th Tuesday of each month, with a work study meeting the 3rd Tuesday of each month. All meetings start at 6:30 pm. However, during the month of August, the City Council will only meet for a regular business meeting on Tuesday, August 11, 2026, to allow for a summer break; and during the month of December, the City Council will only meet for two regular business meetings on December 8, and December 15, 2026, with no work study session to allow for a holiday break. The 2026 city council meeting calendar is as follows: January 13th, 20th and 27th February 10th, 17th and 24th March 10th, 17th and 24th April 14th, 21st and 28th May 12th, 19th and 26th June 9th, 16th and 23rd July 14th, 21st and 28th 4 August 11th September 8th, 15th and 22nd October 13th, 20th and 27th November 10th, 17th and 24th December 8th and 15th (Both Regular Business Meeting) Relationship to Comprenhensive Plan: N/A Recommendation: Staff recommends adoption of the resolution, as presented. Motion for Consideration: I move to adopt a resolution, adopting the 2026 City Council Meeting Schedule as presented. Has item been presented to Committee/Work Study? If so, which one: N/A Fiscal Impact: None. Alternatives: Do not adopt the resolution and provide recommendation to staff. Attachments: Council_ Schedule_ 2026 DRAFT.doc M RESOLUTION NO. A RESOLUTION OF THE CITY OF PORT ORCHARD, WASHINGTON, ADOPTING THE 2026 CITY COUNCIL MEETING SCHEDULE PURSUANT TO POMC 2.04.010 MEETING TIME AND PLACE. WHEREAS, on July 11, 2017, City Council adopted Ordinance No. 026-17 which adopted the classification of non -charter code city for the City of Port Orchard; and WHEREAS, on pursuant to Port Orchard Municipal Code 2.04.010 Meeting Time and Place the city council shall hold a minimum of one meeting per month. The city council shall determine the annual schedule for these meetings for the next calendar year no later than the last regular business meeting of the preceding calendar year; and WHEREAS, City Council typically meet for regular business meetings the 2 and 4th Tuesday of each month, with a work study session the 3rd Tuesday of each month. All meetings start at 6:30 pm; and WHEREAS, during the month of August, the City Council will only meet for a regular business meeting on Tuesday, August 11, 2026, to allow for a summer break; and WHEREAS, during the month of December, the City Council will only meet two regular business meetings on December 8, and December 15, 2026, with no work study session to allow for a holiday break; now therefore, THE CITY COUNCIL OF THE CITY OF PORT ORCHARD, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: THAT: The 2026 city council meeting calendar shall be adopted, and meetings shall be held on: January 13th, 20th and 27th February 10th, 17th and 24th March 10th, 17th and 24th April 14th, 21st and 28th May 12th, 19th and 26th June 9th, 16th and 23rd July 14th, 21st and 28th August 11th September 8th, 15th and 22nd October 13th, 20th and 27th November 10th, 17th and 24th December 8th and 15th (Both Regular Business Meeting) PASSED by the City Council of the City of Port Orchard, SIGNED by the Mayor and attested by the City Clerk in authentication of such passage this 16th day of December 2025. Robert Putaansuu, Mayor ATTEST: Brandy Wallace, MMC, City Clerk 6 Ong City of Port Orchard ORCHARD 216 Prospect Street, Port Orchard, WA 98366 1.. (360) 876-4407 • FAX (360) 895-9029 Agenda Staff Report Consent Agenda: Authorizing the Mayor to amend the agreement with Newalen LLC for derelict vessel removal services (Brown) Meeting Date: December 16, 2025 Prepared By: Matt Brown, Police Chief Presenter: Matt Brown, Police Chief Summary and Background: The City Council has made it a priority to address derelict vessels in Sinclair Inlet. The Police Department has partnered with the Department of Natural Resources (DNR) to enforce laws pertaining to illegal moorage on seafloor that is managed by DNR. The Port Orchard Police Marine Services Unit followed protocol in compliance with state law to seize two derelict/abandoned vessels that have been illegally moored in Sinclair Inlet. Both vessels are sailboats, approximately 25 feet long. One is named "Seahorse" and the other is named "Lookfar". These vessels have been lawfully seized and are awaiting disposal. Because the police department is following established guidelines and protocol, DNR has previously fully reimbursed the City of Port Orchard for the cost incurred for vessels that have been seized and destroyed. Over the past few years this has included vessels that have been abandoned in Sinclair Inlet, sunken vessels, and vessels that have been beached on our shoreline. Past reimbursement from DNR is estimated at $150,000. "Lookfar" and "Seahorse" were first contacted on May 8, 2025, at Dekalb Street Pier, violating the posted Moorage P.O.M.C's. They moved into Sinclair Inlet and have remained in Sinclair Inlet in violation of state law. In order to gain compliance and encourage the vessels to leave Sinclair Inlet, the vessels were posted with notices to move as required by law, letters were sent to the address of the last known owner, and the last known owner was told in person that if the vessels were not moved as required by law, they would be seized and disposed of. Because there was no compliance, the Port Orchard Police Department partnered with DNR, and began the process to seize and dispose of the abandoned/derelict vessels. As a result, the Port Orchard Police Department has lawfully seized the vessels, and DNR has earmarked funds to reimburse the City of Port Orchard for the cost of removing and disposing of these vessels. 7 The procurement process for soliciting bids included completing the Work Request Statewide Contract 16122 Vessel Removal, Disposal or Salvage Services for Derelict Vessels and sending this to the three known vendors. The lowest bid was received from Newalen LLC for a total cost of $15,710.40 (including applicable tax). Derelict Vessel - "Lookfar" WN 1823 S (partial hull number) Derelict Vessel - "Seahorse" WN 9353 KU On December 3, 2025, Newhalen LLC took custody of the "Lookfar," but advised that they were unable to abate the "Seahorse" after finding it was twice the weight as originally estimated. They provided an amended quote with an increase of $1,527.40 to cover the additional costs associated and disposal fees. Relationship to Comprenhensive Plan: N/A Recommendation: Staff recommends approval the Mayor to amend the agreement with Newalen LLC for derelict vessel removal services. Motion for Consideration: I move to authorize the Mayor to amend the agreement with Newalen LLC for derelict vessel removal services, with a cost increase of $1,527.40. Has item been presented to Committee/Work Study? If so, which one: No Fiscal Impact: The 2025-2026 Biennial Budget includes $50,000 for derelict vessel removal. The Department of Natural Resources is expected to reimburse the city fully for the removal of these two vessels. It is anticipated that there will be no impact to the fund balance. Alternatives: Do not approve and provide additional guidance. Attachments: Quote for 25' seahorse.pdf Change Order request PO 065-25 Seahorse Sailboat.pdf 8 WORK REQUEST STATEWIDE CONTRACT 16122 VESSEL REMOVAL, DISPOSAL OR SALVAGE SERVICES FOR DERELICT VESSELS Purchaser Requesting Work: Port Orchard Police Department Purchaser Work Request No. Purchaser Location: Sinclair Inlet — Port Orchard Purchaser Contact Name: Sgt. Holden Purchaser Phone No.: 360-337-9876 Purchaser Email: THolden@portorchardwa.gov Purchaser Billing Address: 546 Bay St. Purchaser Billing Email: NCrocker@portorchardwa.gov Category A — Low Risk Removals Category B — Low Risk Removals, up to 35' Check which Category Applies Category C — Higher Risk Removals Category D — Salvage Category E — Ship Deconstruction Date Issued October 16, 2025 Work Request Location: Sinclair Inlet Scope of Work: Approximately 25' Yellow Sailboat named "Seahorse" with that needs to be disposed of. Other Factors/Information: Bids must include ALL and Final Costs. Expected Period of Work: Commence after November 14, 2025 Site Visit Date & Time: At your convenience — Vessel is anchored in Sinclair Inlet, tied to another vessel. The name "Seahorse" is on the transom. Revised 10-20-2022 Work Request No.: BID DUE DATE & TIME: October 27th, 2025 @ 1800 Submit Proposals and/or Sgt. Holden Questions to: Proposals can be submitted via THolden@portorchardwa.gov on or before the bid due date. Awarded Contractor: Purchaser will determine if the proposal is responsive to Purchaser's published Work Request. Purchaser also will evaluate pricing. The Bidder with the lowest evaluation price will be SELECTED as ASB for Purchaser's Published Work Request. The Purchaser then will review the ASB's Work Plan, provided as part of the Bidder's response to Purchaser's published Work Request, for approval on a pass/fail basis. A Work Order/Contract for Purchaser's published Work Request will be awarded to the responsive Bidder who has the lowest cost. Prevailing Wages: The Department of Labor and Industries will publish prevailing wage rates on the first business day of February and August of each year. The wage rates will become effective thirty (30) days following publication. For all contracts, the prevailing wage rates which are in effect on the Bid opening date or on the effective date of any extension of the contract are the wage rates that must be paid for the duration of the contract. Questions should be directed to the Industrial Statistician, Department of Labor and Industries, Employment Standards Division, PO Box 44540, Tumwater, WA 98504-4540 (Telephone (360) 902-5334) or the Purchasing Activity. These wage rates are made part of this contract as though fully set forth herein. The Contractor must submit to the Industrial Statistician of the Department of Labor and Industries a "Statement of Intent to Pay Prevailing Wages." A copy of the approved intent statements must be submitted to the Purchaser in order to receive the first progress payment on this Contract. Following final acceptance of the project, Contractor must submit to the Industrial Statistician an "Affidavit of Wages Paid." An approved affidavit must be submitted to the Purchaser before they are authorized to release the retained funds. Each "Statement of Intent to Pay Prevailing Wages" or "Affidavit of Wages Paid" submitted for approval to the Industrial Statistician must be accompanied with the current filing fee. A copy of the approved Statement of Intent to Pay Prevailing Wages shall be posted at the job site with the address and telephone number of the Industrial Statistician, where a complaint or inquiry concerning prevailing wages may be made. If a dispute arises as to what are the prevailing rates of wages for a specific trade, craft or occupation, and such dispute cannot be adjusted by the parties in interest, including labor and management representatives, the matter shall be referred for arbitration to the Director of the Department of Labor and Industries, and his/her decision shall be final, conclusive and binding on all parties involved in the dispute. Vocationally handicapped workers, i.e., those individuals whose earning capacity is impaired by physical or mental deficiency or injury, may be employed at wages lower than the established prevailing wage. The Fair Labor Standards Act requires that wages based on individual productivity be paid to handicapped workers employed under certificates issued by the Secretary of Labor. These certificates are acceptable to the Department of Labor and Industries. Sheltered workshops for the handicapped may submit a request to the Department of Revised 3-1-2023 10 Work Request No.: Labor and Industries for a special certificate, which would, if approved, entitle them to pay their employees at wages, lower than the established prevailing wage. Prevailing wage requirements do not apply to: a) Sole owners and their spouses. b) Any partner who owns at least 30% of a partnership. c) The president, vice-president, and treasurer of a corporation if each one owns at least 30% of the corporation. d) Workers regularly employed on monthly or per diem salary by state or any political subdivision created by its laws. Bid Documents — FIRM OFFER Bidder certifies that its bid pertaining to Purchaser's published Work Request is a firm offer which cannot be withdrawn for a time period of thirty (30) days from and after the specified bid due date. Purchaser may accept such bid, with or without further negotiation, at any time within such period. In the event of a protest, Bidder's bid shall remain valid for such time period or until the protest and any related court action is resolved, whichever is later. WORK REQUEST - CONTRACT 16122 (VESSEL REMOVAL, DISPOSAL OR SALVAGE SERVICES FOR DERELICT VESSELS) VENDOR FORM Purchaser Work Request Number: Vendor Name: Newalen LLC Vendor Address: 3907 SW 282nd St, Newberry, FL 32669 Vendor Contact Name: Andrea Guild Vendor Phone No.: 509-953-4726 Vendor Email: Newalen@live.com Project Manager Name: Todd Snyder Project Manager Phone: 509-941-8200 Revised 3-1-2023 11 Work Request No.: Vendor's Work Plan: Work plan: 25' sailboat ( Seahorse ) Newalen will mobilize to the vessel after November 14 and within 10 days of contract award. We will tow the vessel from its current location to the Port Orchard boat ramp for removal. We will remove the mast while the vessel is still in the water at the ramp. We will then load the vessel onto our sailboat transport trailer and remove any hazardous material form the vessel at this point (fuel cans, batteries, fire extinguishers, oil, etc. for proper disposal or recycling as applicable. The vessel will then be transported to Shelco Landfill in Tulalip for final disposal. Newalen will pay prevailing wage and file an Intent and Affidavit for this project. Disposal receipt shall be submitted with final billing. Project Duration: 1 week Other Information: Weather & tides may affect the final schedule Quotation: $ 7,200.00 before tax, $7855.20 includes sales tax Vendor — provide pricing (fixed price) , do not add sales tax Prompt Payment Discount: N/A Days Subcontractors (if applicable): None Revised 3-1-2023 12 Work Request No.: WORK REQUEST STATE OF WASHINGTON This Purchaser work request ("Work Order") pertaining to Statewide Contract No. 16122 is made and entered into by and between Purchaser, and Newalen, LLC, a WA State Limited Liability Company ("Contractor") and is dated and effective as of October 26, 2025 This Work Order is subject to the terms and conditions of Statewide Contract No. 16122. Both the Purchaser and the Contractor are responsible for ensuring the work performed is within the scope of this Work Request. The Purchaser must monitor proper compliance with the terms of this Work Request. Statement of Work: Purchaser Fill In Description Note: Contractor must send invoices to the Purchaser Invoice Address specified on page 1 of the Work Request Form. Contractor Purchaser Approval (Authorized Signatory) Newalen, LLC 10/26/25 (Signature) (Date) (Signature) Authorized Representative (Date) Print Name: Phone: Email: W/O Manager (Print): Andrea Guild Telephone No.: 509-953-4726 Work Order Manager Approval Email: (Signature) (Date) Newalen@live.com Print Name: Phone: Email: Revised 3-1-2023 13 Newalen, LLC 3907 SW 282nd St Newberry, FL 32669 (509)953-4726 Newalen(a�live.com Re: Yellow Sailboat "Seahorse" PO#065-25 Change order request for the costs associated with vessel being a 30' sailboat rather than 25', resulting in a change in work plan: We are not able to take this 30' sailboat out at the Port Orchard boat ramp, and instead will need to tow it to the Port of Everett to be removed from the water with the travelift and placed on our trailer. The total of $1400 plus tax covers the additional towing, travelift costs, and disposal fees for the added weight. Total change order request: $1527.40 Includes Sales Tax Thank you, .c9h:Gtiz.¢.CL �G!GY.c�i Andrea Guild Manager Newalen, LLC 14 Ong City of Port Orchard ORCHARD 216 Prospect Street, Port Orchard, WA 98366 1.. (360) 876-4407 • FAX (360) 895-9029 Agenda Staff Report Public Hearing: CANCELLED - Public Hearing on Ordinance Vacating City Right -of -Way (Wallace) Meeting Date: December 16, 2025 Prepared By: Brandy Wallace, MMC, CPRO, City Clerk Presenter: Brandy Wallace, MMC, CPRO, City Clerk Summary and Background: In 2022, the City received a petition to vacate City rights -of -way from Kitsap County. The purpose of the vacation is for the construction of new surface parking lots to serve a future courthouse expansion and remodel project. The project is phased and the first phase includes the construction of these parking lots, subject to all necessary permits. Over the last year or so, Kitsap County and the City have been negotiating the fair market value of the right-of-ways. On December 11, 2025, the city was notified that the petitioner wishes to withdraw the petition. They stated the goal of their negotiations was to cover all needed ROW for the project. Further, they assumed the negotiations for the agreement would lead to a Council -initiated ROW vacation. As well, because no current staff at the County was involved in this issue in 2022, no one here was aware the City was retaining a petition from that date for action. To avoid a vote on an inaccurate petition, Kitsap County has officially withdraw the 2022 petition. The County will resubmit an updated petition that accurately reflects agreements made between the City and the County. Relationship to Comprenhensive Plan: N/A Recommendation: Staff recommends the public hearing is cancelled, as the petitioner, Kitsap County, has withdrawn the petition to better define all the areas needed for the project. Motion for Consideration: N/A Has item been presented to Committee/Work Study? If so, which one: Land Use Committee Fiscal Impact: None. Alternatives: None. 15 Attachments: 16 Ong City of Port Orchard ORCHARD 216 Prospect Street, Port Orchard, WA 98366 1.. (360) 876-4407 • FAX (360) 895-9029 Agenda Staff Report Business Items: Approval of an Ordinance Authorizing a Financing Contract through the Office of the State Treasurer LOCAL Program (Crocker) Meeting Date: December 16, 2025 Prepared By: Noah Crocker, M.B.A., Finance Director Presenter: Noah Crocker, M.B.A., Finance Director Summary and Background: The City of Port Orchard declared its intent to reimburse itself for the purchase of a parcel of real property (1333 Lloyd Pkwy) from a future borrowing with Resolution 050- 25. The City completed the acquisition of 1333 Lloyd Parkway on October 3, 2025. The City of Port Orchard will be utilizing a low-cost tax-exempt financing program offered through the Washington State Treasurer's Office called LOCAL. The LOCAL Program allows participants access to the national tax-exempt market through a competitive bid process, regardless of the size of their financing contract. By pooling with the State's Aa1 rated COP issuances, LOCAL participants are able to take advantage of the State's very low tax-exempt interest rates. Local governments participating in the program benefit from reduced financing cost in addition to the State's Credit rating. The City will be borrowing $2.5 million for a term of 20 years as part of the February 2026 offering. Payments will be do semi-annually with the 1st interest only payment due on June 1, 2026 followed by Principal and Interest due December 1, 2026. Relationship to Comprenhensive Plan: Facilities Plan Recommendation: Approve the Ordinance authorizing the financing of the property through the LOCAL Program, including designation of the authorized agency representatives for participation. Motion for Consideration: I move to approve the Ordinance authorizing the execution of documents associated with the Office of the State Treasurer, LOCAL Program, relating to the purchase of a parcel of real property located at 1333 Lloyd Parkway. Has item been presented to Committee/Work Study? If so, which one: Work Study Fiscal Impact: This will be a $2.5 million borrowing amortized over 20 years with the debt service payments paid from the appropriate funds. Alternatives: Do not approve and provide alternative guidance 17 Attachments: Ordinance-_LOCAL_Program_Authorization_form-Final.doc Annex 1 -Notice of Intent.pdf Annex 2 -Port Orchard - Site Lease - COPs 2026A(104515952.1).pdf Annex 3 -Port Orchard - Financing Lease - COPs 2026A(104515950.1).pdf Annex 4 -Certificate of Authorized Agency Representatives.doc Port Orchard - Tax Certificate - COPs 2026A(104515949.1).pdf 18 ORDINANCE NO. AN ORDINANCE OF THE CITY OF PORT ORCHARD, WASHINGTON, AUTHORIZATION FOR THE ACQUISITION OF REAL PROPERTY AND EXECUTION OF A LOCAL AGENCY FINANCING LEASE AND RELATED DOCUMENTATION RELATING TO THE ACQUISITION OF SAID REAL PROPERTY; PROVIDING FOR SEVERABILITY AND PUBLICATION; AND SETTING AN EFFECTIVE DATE. WHEREAS, the City of Port Orchard (the "Local Agency") has executed a Notice of Intent to the Office of State Treasurer, in the form attached hereto as Annex 1 (the "NOI"), in relation to the acquisition of and the financing of the acquisition, improvement and betterment (collectively, the "acquisition") of the Property, as defined below, under the provisions of RCW ch 39.94; and WHEREAS, it is deemed necessary and advisable by the City Council of the Local Agency that the Local Agency acquire the real property identified on Annex 1 attached hereto ("Property"); and WHEREAS, it is deemed necessary and advisable by the City Council of the Local Agency that the Local Agency enter into a Local Agency Site Lease with the Washington Finance Officers Association in the form attached hereto as Annex 2 to facilitate the financing of the Property; and WHEREAS, it is deemed necessary and advisable by the City Council of the Local Agency that the Local Agency enter into a Local Agency Financing Lease with the Office of the State Treasurer, in the form attached hereto as Annex 3 (the "Local Agency Financing Lease"), in an amount not to exceed $2,500,000, plus related financing costs, in order to acquire the Property, and finance the acquisition of the Property; and WHEREAS, the Local Agency will undertake to acquire and/or improve the Property on behalf of and as agent of the Washington Finance Officers Association (the "Corporation") pursuant to the terms of the Local Agency Financing Lease, and in accordance with all applicable purchasing statutes and regulations applicable to the Local Agency; and WHEREAS, the Local Agency desires to appoint the individuals set forth in Annex 4 as the representatives of the Local Agency in connection with the acquisition of the Property and execution of the Local Agency Financing Lease (each an "Authorized Agency Representative"); NOW, THEREFORE, BE IT ORDAINED, by the City Council of the City of Port Orchard as follows: 11162647.1 - 366922 - 0001 19 Ordinance No. Page 2 of 3 THE CITY COUNCIL OF THE CITY OF PORT ORCHARD, WASHINGTON, DO ORDAIN AS FOLLOWS: SECTION 1. The individuals holding the offices or positions set forth in Annex 4 are each hereby appointed as a representative of the Local Agency in connection with the acquisition of the Property and execution of the Local Agency Financing Lease and all other related documents. A minimum of 1 Authorized Agency Representatives shall be required to execute any one document in order for it to be considered duly executed on behalf of the Local Agency. SECTION 2. The form of the Local Agency Site Lease attached hereto as Annex 2 is hereby approved and the Authorized Agency Representatives are hereby authorized and directed to execute and deliver the Local Agency Site Lease, in substantially the form attached hereto with such changes as may be approved by the Authorized Representatives, to facilitate the acquisition and/or improvement of the Property and financing of the acquisition of the property. SECTION 3. The form of the Local Agency Financing Lease attached hereto as Annex 3 is hereby approved and the Authorized Agency Representatives are hereby authorized and directed to execute and deliver the Local Agency Financing Lease, in an amount not to exceed $2,500,000, plus related financing costs, and in substantially the form attached hereto with such changes as may be approved by the Authorized Representatives, for the acquisition of the property and financing of the acquisition of the Property. SECTION 4. The Local Agency hereby authorizes the acquisition of the property as agent of the Corporation in accordance with the terms and provisions of the Local Agency Financing Lease. SECTION 5. The Authorized Representatives are hereby authorized to execute and deliver to the Office of State Treasurer all other documents, agreements and certificates, and to take all other action, which they deem necessary or appropriate in connection with the financing of the property, including, but not limited to, any amendment to the NO1, any tax certificate and any agreements relating to initial and ongoing disclosure in connection with the offering of securities related to the financing. SECTION 6. Severability. If any section, sentence, clause or phrase of this Ordinance should be held to be unconstitutional or unlawful by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of any other section, sentence, clause or phrase of this Ordinance. SECTION 7. Publication. This Ordinance shall be published by an approved summary consisting of the title. 11162647.1- 366922 - 0001 20 Ordinance No. Page 3 of 3 SECTION 8. Effective Date. This Ordinance shall take effect and be in full force and effect five days after publication, as provided by law. PASSED by the City Council of the City of Port Orchard, APPROVED by the Mayor and attested by the Clerk in authentication of such passage this 16th day of December 2025. Robert Putaansuu, Mayor ATTEST: Brandy Wallace, MMC, City Clerk F -11»:t. �IleX2t iI•]IN &F Charlotte A. Archer, City Attorney PUBLISHED: EFFECTIVE DATE: 11162647.1- 366922 - 0001 21 Notice of Intent State of Washington LOCAL PROGRAM Local Agency Information Legal Name: City of Port Orchard County: Kitsap County Address: 216 Prospect St Contact Person: Noah Crocker Phone: 360-876-7023 E-mail: ncrocker@portorchardwa.gov Property (Real Estate or Equipment) MCAG No.: Zip: 98366 Title: Finance Director Fax: Property description (include quantity, if applicable): Purpose of property (Please be s ecific and include dept. of use): The new building will house the public works department employees and equipment Total Project/Property Cost $ 2,600,000 Finance term: 20 Local Funds $ ($2,600,000 ) Useful life: 50 Grants/Other $ ( ) Desired financing date: February 2026 LOCAL Financing Request: $ 2,500,000 If real estate, the Real Estate Worksheet: ✓0 Is attached 0 Will be provided by (date): Expected date of closing or executed Construction Contract: Oct. 4, 2025 If equipment, expected property delivery date: Select how the property purchase price will be paid: 0 Reimbursement to Local Agency. If expenditures are made prior to the COP closing date, a Reimbursement Resolution will be required with your financing documents. To comply with IRS requirements, expenditures made more than 60 days prior to the date of the resolution cannot be reimbursed. fl Direct payment to vendor. Confirm the vendor is registered in the Statewide Vendor System at https://oftmwa.gov/it-systems/statewide-vendorpayee-services or call 360.407.8180. Security Pledge ❑Voted general obligation of local government 0 Non -voted general obligation of local government Other Information If any of the following apply, please provide a complete discussion on a separate page: Yes 0 No Is the local agency a party to significant litigation? 0 Yes No Has the agency received a bond rating in the last two years? If yes, bond rating(s): AA (attach rating agency letter) The Local Agency reasonably expects to be reimbursed for original expenditures made to acquire the personal/real property from sale proceeds of certificates of participation in a Personal/Real Property Financing Lease with the State Treasurer in the maximum amount expected to be financed as identified above. The Local Agency reasonably expects that the personal/real property will be used for its governmental purpose anti not by any nongovernmental person for private business use. Signature:' r t'c Date: 2025.09.09 Printed Name: Noah Crocker Title: Finance Director *To use electronic signatures, please email the completed form to OST 22 Transaction No. 0455-1-1 LOCAL AGENCY SITE LEASE, SERIES 2026A by and between the CITY OF PORT ORCHARD, WASHINGTON, as lessor and the WASHINGTON FINANCE OFFICERS ASSOCIATION, as lessee Dated as of February 24, 2026 FG: 104515952.1 23 LOCAL AGENCY SITE LEASE, SERIES 2026A THIS LOCAL AGENCY SITE LEASE, SERIES 2026A (the "Site Lease"), dated as of February 24, 2026 (the "Dated Date"), is entered into by and between the City of Port Orchard, Washington, a municipal corporation duly organized and existing under and by virtue of the laws of the state of Washington (the "Local Agency"), and the Washington Finance Officers Association, a Washington nonprofit corporation (the "Corporation"). RECITALS: The Parties are entering into this Site Lease based upon the following facts and expectations: 1. Chapter 39.94 RCW (the "Act") authorizes the state of Washington (the "State"), acting by and through the State Treasurer (the "State Treasurer"), to enter into financing contracts, including but not limited to financing leases, on behalf of certain "other agencies" ("Local Agencies") for the use and acquisition for public purposes of real and personal property by such Local Agencies; and 2. the Local Agency has determined that it is necessary and desirable to lease the Site legally described in Exhibit A to the Corporation for the purpose of enabling the Corporation to sublease the Site to the State, and further to enable the State to sublease the Site back to the Local Agency, to provide financing or refinancing for the acquisition or construction of improvements on the Site (the "Project," and, together with the Site, the "Property"); and 3. simultaneously with the execution and delivery of this Site Lease, the State is entering into a Master Financing Lease, Series 2026A, dated as of the Dated Date (the "Master Financing Lease"), with the Corporation to provide financing for the costs of acquisition or improvement of various parcels of real property for and on behalf of certain State Agencies and Local Agencies, including the Local Agency, under the terms set forth therein; and 4. pursuant to the Master Financing Lease, the State is obligated to make Rent Payments to the Corporation for the lease of the Property; and 5. simultaneously with the execution and delivery of the Master Financing Lease, the State will sublease the Property to the Local Agency pursuant to a Local Agency Financing Lease, Series 2026A (the "Agency Financing Lease"), dated as of the Dated Date; and 6. the Corporation will grant, sell, assign, transfer and convey without recourse to the Trustee all of its rights to receive the Rent Payments scheduled to be made by the State under the Master Financing Lease, together with all of its remaining right, title and interest in, to and under this Site Lease, the Master Financing Lease, the Agency Financing Leases and the Property by means of a Master Assignment, Series 2026A (the "Master Assignment"), dated as of the Dated Date; and 7. in consideration of such assignment and pursuant to the Trust Agreement, Series 2026A (the "Trust Agreement"), dated as of the Dated Date, by and among the Trustee, the State and the -1- FG: 104515952.1 24 Corporation, the Trustee has agreed to execute and deliver the State of Washington Certificates of Participation, Series 2026A (State and Local Agency Real and Personal Property), in an aggregate principal amount of $ (the "Certificates"), a portion of the proceeds of which will be used to finance or refinance the costs of the Project; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other valuable consideration, the Parties agree as follows: SECTION 1. Definitions; Construction; Miscellaneous Provisions, Supplements. Appendix 1 to the Series 2026A Agreements ("Appendix 1") is incorporated as part of this Site Lease by this reference. Appendix 1 provides (i) definitions for the capitalized terms used and not otherwise defined in this Site Lease; (ii) certain rules for interpreting this Site Lease; (iii) miscellaneous technical provisions that apply to this Site Lease; and (iv) rules on how this Site Lease may be amended or supplemented. SECTION 2. Lease of the Site; Ownership. (a) The Local Agency leases to the Corporation on the terms and conditions hereinafter set forth, the Site legally described in Exhibit A, subject to all easements, covenants, conditions and restrictions existing as of the date hereof. (b) The Local Agency represents and warrants that it is the owner in fee of the Site, subject only to Permitted Encumbrances. SECTION 3. Term. The term of this Site Lease shall commence on the Dated Date, and shall end on , 20_, unless such term is extended or sooner terminated as hereinafter provided. If on such date, the Local Agency Financing Lease shall not be discharged by its terms, then the term of this Site Lease shall be extended until 10 days after all amounts due under the Local Agency Financing Lease shall have been paid and the Local Agency Financing Lease shall have been discharged by its terms, except that the term of this Site Lease shall in no event be extended beyond , 20_. If prior to , 20_, all amounts due under the Local Agency Financing Lease shall have been paid and the Local Agency Financing Lease shall have been discharged by its terms, the term of this Site Lease shall end 10 days thereafter or 10 days after written notice by the Local Agency to the Corporation, whichever is earlier. SECTION 4. Rental. The Corporation shall pay to State Treasurer, for the benefit of the Local Agency pursuant to the Master Financing Lease and the Local Agency Financing Lease, as the total rent due hereunder, the amount set forth in Exhibit B (the "Prepaid Site Lease Rent"), all of which shall be payable on the Closing Date. The Parties agree that the amount of the Prepaid Site Lease Rent represents fair consideration for the leasehold interest being transferred hereunder, given the purposes, terms and provisions hereof. The Corporation shall not be obligated to pay such rent other than from the proceeds of the Certificates. Anything herein to the contrary notwithstanding, the Corporation waives any right that it may have under the laws of the State to a rebate or -2- FG: 104515952.1 25 repayment of any portion of such rent in the event that there is substantial interference with the use or right to possession by the Corporation of the Site or any portion thereof as a result of material damage, destruction or condemnation. SECTION 5. Purpose. The Corporation shall use the Site solely for the purpose of subleasing the Property to the State pursuant to the Master Financing Lease, to enable the State to sublease the Property to the Local Agency pursuant to the Local Agency Financing Lease, and for such purposes as may be incidental thereto; provided, that in the event of a default by the State under the Master Financing Lease or by the Local Agency under the Local Agency Financing Lease, the Corporation may exercise the remedies provided therein. SECTION 6. Assignments and Subleases. (a) The Corporation shall not grant, sell, assign, mortgage, pledge, sublet or transfer any of its right, title or interest in, to or under this Site Lease or the Site except as expressly provided in the Master Assignment, the Master Financing Lease and the Local Agency Financing Lease, without the prior written consent of the Local Agency. The Local Agency consents to the sublease of the Property pursuant to the Master Financing Lease, and the assignment of the Corporation's right, title and interest hereunder to the Trustee pursuant to the Master Assignment for the benefit of the Owners of the Certificates. (b) Upon the occurrence and continuance of an Event of Default or Agency Event of Default with respect to the Property, the Corporation shall have the right, pursuant to the Master Assignment, the Trust Agreement and the Master Financing Lease, to sublease all or any portion of the Property; provided, that the subtenant and the terms and provisions of the sublease shall be subject to the prior written approval of the Local Agency, which approval shall not be unreasonably withheld or delayed. SECTION 7. Right of Entry. The Local Agency reserves the right for any of its duly authorized representatives to enter upon the Site at any reasonable time (or in an emergency at any time) to inspect the same, or to make any repairs, improvements or changes necessary for the preservation thereof. SECTION 8. Termination. The Corporation agrees, upon the termination or expiration of this Site Lease, to quit and surrender the Site in the same good order, condition and repair as the same was in at the time of commencement of the term hereunder, except for acts of God, reasonable wear and tear, and any actions by the Local Agency that affect the condition of the Site. The Corporation agrees that any permanent improvements and structures existing upon the Site at the time of such termination or expiration of this Site Lease shall remain thereon and title thereto shall vest in the Local Agency. The Corporation shall thereafter execute, acknowledge and deliver to the Local Agency such instruments of further assurance as in the reasonable opinion of the Local Agency are necessary or desirable to confirm the Local Agency's right, title and interest in and to the Site. -3- FG: 104515952.1 26 SECTION 9. Default. In the event that the Corporation shall be in default in the performance of any obligation on its part to be performed under the terms of this Site Lease, which default continues for 60 days following notice and demand for correction thereof to the Corporation, the Local Agency may exercise any and all remedies granted by law, except that as described in Section (k) of Part 3 of Appendix 1, no merger of this Site Lease shall be deemed to occur as a result thereof; provided, however, that the Local Agency shall have no power to terminate this Site Lease by reason of any default on the part of the Corporation; and provided further, that so long as any Certificates are outstanding and unpaid in accordance with the terms of the Trust Agreement and the Master Financing Lease, the Rent Payments or Additional Rent or any part thereof payable to the Corporation shall continue to be paid to the Corporation. So long as the Trustee shall duly perform the terms and conditions of this Site Lease, the Master Assignment, the Master Financing Lease and of the Trust Agreement, the Trustee shall be deemed to be and shall become the tenant of the Local Agency hereunder and shall be entitled to all of the rights and privileges granted to the Corporation hereunder and under the Master Assignment, the Master Financing Lease and the Trust Agreement. SECTION 10. Waiver. No delay or omission to exercise any right or remedy accruing upon a default hereunder shall impair any such right or remedy or shall be construed to be a waiver of such default, but any such right or remedy may be exercised from time to time and as often as may be deemed necessary or expedient. In order to exercise any remedy reserved to the Local Agency hereunder, it shall not be necessary to give any notice, other than such notice as may be required hereunder. A waiver by the Local Agency of any default hereunder shall not constitute a waiver of any subsequent default hereunder, and shall not affect or impair the rights or remedies of the Local Agency in connection with any such subsequent default. SECTION 11. Quiet Enjoyment. The Corporation and its authorized assignees and sublessees at all times during the term of this Site Lease, subject to the provisions of Section 9, shall peaceably and quietly have, hold and enjoy all of the Site without suit, trouble or hindrance from the Local Agency. SECTION 12. Taxes. The Local Agency covenants and agrees to pay any and all Impositions of any kind or character, including but not limited to possessory interest taxes, levied or assessed upon the Property (including both land and improvements), or with respect to this Site Lease, the Local Agency Financing Lease, or the lease of the Property pursuant to the Master Financing Lease; provided, however, that the Local Agency shall not pay any possessory interest taxes levied as a result of any assignment or sublease of or with respect to all or any part of the Property then in effect between the Corporation and any assignee or subtenant of the Corporation (other than as lessee under the Local Agency Financing Lease). -4- FG: 104515952.1 27 SECTION 13. Eminent Domain; Loss of Title. In the event the whole or any part of the Property is taken permanently or temporarily under the power of eminent domain (or sold under threat of condemnation), or there is a loss of title to the whole or any part of the Property, the interest of the Corporation in the Property shall be recognized and is hereby determined to be an amount not less than the then unpaid indebtedness incurred by the Local Agency under its Local Agency Financing Lease. The term "unpaid indebtedness," as used in the preceding sentence, includes all unpaid Agency Principal Components, Agency Interest Components and all other payments required to be made by the Local Agency pursuant to the Local Agency Financing Lease, until all Agency Rent Payments due thereunder have been paid or the payment thereof provided for in accordance therewith. The amount of any such award, judgment or payment shall be paid to the Corporation, and the balance, if any, in excess of the unpaid indebtedness shall be paid to the Local Agency. -5- FG: 104515952.1 28 IN WITNESS WHEREOF, the Local Agency and the Corporation have caused this Site Lease to be executed in their respective names by their respective duly authorized officers, all as of the Dated Date. CITY OF PORT ORCHARD, WASHINGTON, as lessor By Authorized Agency Representative By Authorized Agency Representative By Authorized Agency Representative WASHINGTON FINANCE OFFICERS ASSOCIATION, as lessee Authorized Corporation Representative -6- FG: 104515952.1 29 STATE OF WASHINGTON ) ) ss. COUNTY OF KITSAP ) I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that [s]he signed this instrument, on oath stated that [s]he was authorized to execute the instrument and acknowledged it as of the CITY OF PORT ORCHARD, WASHINGTON to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: (Signature of Notary) Print Name (Legibly Print or Stamp Name of Notary) Notary public in and for the state of Washington, residing at My commission expires (Use this space for notarial stamp/seal) N-1 FG: 104515952.1 30 STATE OF WASHINGTON ) ) ss. COUNTY OF KITSAP ) I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that [s]he signed this instrument, on oath stated that [s]he was authorized to execute the instrument and acknowledged it as of the CITY OF PORT ORCHARD, WASHINGTON to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: (Signature of Notary) Print Name (Legibly Print or Stamp Name of Notary) Notary public in and for the state of Washington, residing at My commission expires (Use this space for notarial stamp/seal) N-2 FG: 104515952.1 31 STATE OF WASHINGTON ) ) ss. COUNTY OF KITSAP ) I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that [s]he signed this instrument, on oath stated that [s]he was authorized to execute the instrument and acknowledged it as of the CITY OF PORT ORCHARD, WASHINGTON to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: (Signature of Notary) Print Name (Legibly Print or Stamp Name of Notary) Notary public in and for the state of Washington, residing at My commission expires (Use this space for notarial stamp/seal) N-3 FG: 104515952.1 32 STATE OF WASHINGTON ) ) ss. COUNTY OF SNOHOMISH ) I certify that I know or have satisfactory evidence that MURIEL COOPER is the person who appeared before me, and said person acknowledged that she signed this instrument, on oath stated that she was authorized to execute the instrument and acknowledged it as the President of the WASHINGTON FINANCE OFFICERS ASSOCIATION to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: (Signature of Notary) Print Name Bridgette Ruis (Legibly Print or Stamp Name of Notary) Notary public in and for the state of Washington, residing at Edmonds, WA My commission expires March 15, 2027 (Use this space for notarial stamp/seal) N-4 FG: 104515952.1 33 EXHIBIT A Description of Site A-1 FG: 104515952.1 34 EXHIBIT B Prepaid Site Lease Rent Ten Dollars ($10.00) B-1 FG: 104515952.1 35 TRANSACTION NO. 0455-1-1 LOCAL AGENCY FINANCING LEASE (Real Property) by and between the STATE OF WASHINGTON and the CITY OF PORT ORCHARD, WASHINGTON, a municipal corporation ("Local Agency") Relating to State of Washington Certificates of Participation, Series 2026A (State and Local Agency Real and Personal Property) Dated as of February 24, 2026 FG: 104515950.1 36 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; CONSTRUCTION; MISCELLANEOUS PROVISIONS; SUPPLEMENTS................................................................................................. 2 Section 1.1 Appendix 1 and Exhibits Incorporated................................................................ 2 Section 1.2 Notice of Intent; Certificate Designating Authorized Agency Representative........................................................................................................................... 2 Section 1.4 Sublease of Property............................................................................................ 2 Section 1.5 Agency Rent Payments........................................................................................ 3 Section1.6 Term..................................................................................................................... 3 ARTICLE II ACQUISITION AND CONSTRUCTION OF THE PROJECT ............................... 3 Section 2.1 Local Agency Financing Lease Consolidated with Master FinancingLease........................................................................................................................ 3 Section 2.2 Appointment as Agent; Acquisition and Construction of Project ....................... 3 Section 2.3 Title to the Property ............................................................................................. 5 Section2.4 Assignment.......................................................................................................... 5 Section 2.5 Disclaimer of Warranties..................................................................................... 5 Section 2.6 State Not Liable................................................................................................... 5 ARTICLE III AGENCY RENT PAYMENTS; CONDITIONAL PAYMENT BY STATE; FULL FAITH AND CREDIT OBLIGATION .....................................6 6 Section 3.1 Agency Rent Payments........................................................................................ 6 Section 3.2 Sources of Payment of Agency Rent Payments ...................................................6 6 Section3.3 Net Lease............................................................................................................. 7 Section 3.4 Assignments by the Corporation.......................................................................... 8 ARTICLE IV OPTIONAL AND EXTRAORDINARY PREPAYMENT OF AGENCY RENTPAYMENTS............................................................................................ 8 Section 4.1 Optional Prepayment........................................................................................... 8 Section 4.2 Extraordinary Prepayments.................................................................................. 9 Section 4.3 Revision of Agency Rent Payments upon Prepayment .......................................9 9 Section 4.4 Discharge of Agency Local Agency Financing Lease .........................................9 9 ARTICLE V EMINENT DOMAIN; LOSS OF TITLE; DAMAGE AND DESTRUCTION................................................................................................ 10 Section 5.1 Eminent Domain................................................................................................ 10 -i- FG: 104515950.1 37 TABLE OF CONTENTS (continued) Page Section5.2 Loss of Title....................................................................................................... 10 Section 5.3 Damage or Destruction...................................................................................... 10 ARTICLE VI REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS................................................................................................ 11 Section 6.1 Representations and Warranties of the Local Agency .......................................11 11 Section 6.2 Covenants and Agreements of the Local Agency ..............................................12 12 ARTICLE VII EVENTS OF DEFAULT; REMEDIES............................................................... 17 Section 7.1 Agency Event of Default................................................................................... 17 Section 7.2 Rights of State Following Agency Event of Default .........................................18 18 Section 7.3 No Remedy Exclusive; Non-Waiver................................................................. 20 Section 7.4 Default by State.................................................................................................. 21 ARTICLE VIII MISCELLANEOUS PROVISIONS................................................................... 21 Section 8.1 Indemnification of State and the Corporation.................................................... 21 Section8.2 Term................................................................................................................... 21 Section8.3 Termination........................................................................................................ 22 Section 8.4 Notices to Agency.............................................................................................. 23 Exhibit A — Notice of Intent Exhibit B — Certificate Designating Authorized Agency Representative Exhibit C — Legal Description Exhibit D — Agency Rent Payments -ii- FG: 104515950.1 38 LOCAL AGENCY FINANCING LEASE, SERIES 2026A (Real Property) This Local Agency Financing Lease, Series 2026A (the "Local Agency Financing Lease"), is entered into by and between the state of Washington (the "State"), acting by and through the State Treasurer (the "State Treasurer"), and the City of Port Orchard, Washington, a municipal corporation of the State (the "Local Agency"). RECITALS The Parties are entering into this Local Agency Financing Lease based upon the following facts and expectations: 1. Chapter 39.94 RCW (the "Act") authorizes the State to enter into financing contracts for itself, including for state agencies, departments or instrumentalities, the state board for community and technical colleges, and any state institution of higher education ("State Agencies"), for the use and purchase of real and personal property by the State; and 2. the Act also authorizes the State to enter into financing contracts on behalf of certain "other agencies" ("Local Agencies"), including the Local Agency, for the use and acquisition for public purposes of real and personal property by such Local Agencies; and 3. the Act authorizes the State Finance Committee to consolidate existing or potential financing contracts into master financing contracts with respect to property acquired by one or more State Agencies or Local Agencies (together, "Agencies"); and 4. Chapter 43.33 RCW provides that the State Treasurer shall act as chair of the State Finance Committee and provide administrative assistance for the State Finance Committee, and the State Treasurer on behalf of the State Finance Committee has established a consolidated program for the execution and delivery of certificates of participation in master financing contracts in series from time to time in order to provide financing or refinancing for the costs of acquisition of such real and personal property by Agencies; and 5. the State Finance Committee has approved the form of this Local Agency Financing Lease by Resolution No. 1190 adopted on October 31, 2016; and 6. the Washington Finance Officers Association (the "Corporation"), a Washington nonprofit corporation, and the Local Agency have entered into a Local Agency Site Lease, Series 2026A, dated as of the Dated Date (the "Site Lease"), for the lease of certain real property legally described in the Site Lease (the "Site") for the sole purpose of enabling the Corporation to sublease the Site to the State, and for the State to further sublease the Site back to the Local Agency pursuant to this Local Agency Financing Lease, in order to finance or refinance the acquisition or construction of improvements on the Site as described herein (the "Project," and, together with the Site, the "Property"); and 7. simultaneously with the execution and delivery of this Local Agency Financing Lease, the State is entering into a Master Financing Lease, Series 2026A, dated as of the Dated Date (the -1- FG: 104515950.1 39 "Master Financing Lease") with the Corporation, to provide financing or refinancing for the Project on behalf of the Local Agency, among others, through the sublease of the Property from the Corporation; and 8. the Local Agency has determined that it is necessary and desirable to enter into this Local Agency Financing Lease, in conjunction with the State's entry into the Master Financing Lease, to obtain financing or refinancing for the Project for the Local Agency; NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other valuable consideration, the Parties hereto mutually agree as follows: ARTICLE I DEFINITIONS; CONSTRUCTION; MISCELLANEOUS PROVISIONS; SUPPLEMENTS Section 1.1 Appendix 1 and Exhibits Incorporated. Appendix 1 to the Series 2026A Agreements ("Appendix 1") and Exhibits A, B, C and D to this Local Agency Financing Lease are incorporated as part of this Local Agency Financing Lease by this reference. Appendix 1 provides (i) definitions for the capitalized terms used and not otherwise defined in this Local Agency Financing Lease; (ii) certain rules for interpreting this Local Agency Financing Lease; (iii) miscellaneous technical provisions that apply to this Local Agency Financing Lease; and (iv) rules on how this Local Agency Financing Lease may be amended or supplemented. Section 1.2 Notice of Intent; Certificate Designating Authorized Agency Representative. The Local Agency has delivered a Notice of Intent to the State Treasurer in the form of Exhibit A. The Local Agency has delivered a Certificate Designating Authorized Agency Representatives to the State Treasurer in the form of Exhibit B. That Certificate is currently in force and has not been amended, withdrawn or superseded, and the signatures shown thereon are true and correct originals of the signatures of the persons who hold the titles shown opposite their names. The signature of any one of the individuals shown on that Certificate is sufficient to bind the Local Agency under this Local Agency Financing Lease with respect to any of the undertakings contemplated herein. Section 1.3 Performance by Representatives. Any authority granted or duty imposed upon the State hereunder may be undertaken and performed by the State Treasurer or the Treasurer Representative. Any authority or duty imposed upon the Local Agency hereunder may be undertaken and performed by the Authorized Agency Representative. Section 1.4 Sublease of Property. The State subleases to the Local Agency, upon the terms and conditions set forth in this Local Agency Financing Lease, the Site legally described in Exhibit C, together with all improvements, if any, to be constructed on the Site, including but not limited to the Project (collectively, the "Property"), subject to all easements, covenants, conditions and restrictions existing as of the Dated Date. The Local Agency acknowledges and agrees that this Local Agency Financing Lease shall be subject and subordinate in all respects to the terms and provisions of the Master Financing Lease. The Local Agency at all times during the term of this Local Agency Financing Lease, subject to the provisions of Section 7.1, shall peaceably and quietly hold and enjoy all of the Property without suit, trouble or hindrance from the State. -2- FG: 104515950.1 40 Section 1.5 Agency Rent Pam. In consideration of the sublease of the Property and the covenants and agreements of the State in this Local Agency Financing Lease, the Local Agency promises to pay to the State the following amounts at the following times: (a) On each Agency Rent Payment Date, the Agency Rent Payment set forth in Exhibit D, consisting of an Agency Principal Component and/or an Agency Interest Component as set forth in Exhibit D; and (b) all Additional Rent incurred by the State in connection with the sublease of the Property to the Local Agency, the execution and delivery of the Certificates, and the observance and performance of the Series 2026A Agreements, within 30 days following receipt of an invoice from the State that includes (i) a brief description of each item of Additional Rent, (ii) the party to whom payment is due, (iii) the amount thereof, and (iv) such additional information as the Local Agency may reasonably request. Section 1.6 Term. The term of this Local Agency Financing Lease shall commence on the Dated Date, and shall end on the scheduled termination date for this Local Agency Financing Lease as set forth in Section 8.2, unless the term is extended or sooner terminated as provided in Section 8.2. ARTICLE II ACQUISITION AND CONSTRUCTION OF THE PROJECT Section 2.1 Local Agency Financing Lease Consolidated with Master Financing Lease. The Local Agency acknowledges that the State Treasurer, acting on behalf of the State Finance Committee, has consolidated this Local Agency Financing Lease with the Master Financing Lease pursuant to RCW 39.94.030(1)(a). Section 2.2 Appointment as Agent; Acquisition and Construction of Project. (a) Appointment as Agent. The Local Agency accepts its appointment in the Master Financing Lease as agent of the Corporation in connection with the design, acquisition and/or construction of the Project and the financing or refinancing of the Property and acknowledges that such appointment is irrevocable, and shall not be terminated by any act of the Local Agency, the State Treasurer or otherwise. (b) Acquisition and Construction of the Project. The Local Agency agrees that (i) it has caused or will cause the Project to be designed, acquired and/or constructed with all reasonable dispatch, as agent for the Corporation, in accordance with the plans, specifications, bidding documents, and construction and other contracts approved by the Local Agency, and in accordance with applicable laws and regulations; and (ii) it will pay or cause to be paid the Project Costs from funds available to it pursuant to this Local Agency Financing Lease and the Master Financing Lease. The Local Agency shall file requisitions with the State Treasurer for the Project Costs of its Project or reimbursement therefor in such form as the State Treasurer shall reasonably require. Neither the Corporation nor the State shall have any responsibility, liability or obligation with respect to the design, acquisition and/or construction of the Project. (c) Payment of Project Costs if Project Fund Not Sufficient. If money in the Project Fund allocable to the Local Agency shall not be sufficient to pay the Project Costs in full, the Local Agency shall cause the Project Costs in excess of the allocable amount in the Project Fund to be -3- FG: 104515950.1 41 paid from other money of the Local Agency. Neither the Corporation nor the State Treasurer as agent for the Corporation for the disbursement of funds from the Project Fund makes any representation or warranty, either express or implied, that the money which will be deposited into the Project Fund allocable to the Local Agency will be sufficient to pay the Project Costs. Neither the Corporation nor the State Treasurer as agent for the Corporation for the disbursement of funds from the Project Fund shall have any obligation or liability for the payment of the Project Costs other than from the proceeds of the Certificates and any other amounts that may be provided by the Local Agency. If the Local Agency shall pay or cause the payment of any Project Costs in excess of the allocable amounts in the Project Fund available for such purpose from other funds, the Local Agency shall not be entitled to any reimbursement from the Corporation or the State Treasurer as agent for the Corporation for the disbursement of funds from the Project Fund for such payments, nor shall the Local Agency be entitled to any diminution, reduction, abatement, postponement, counterclaim, defense or set-off of the Agency Rent Payments, Additional Rent or other amounts otherwise required to be paid hereunder. (d) Additions to the Property. The Local Agency shall have the right during the term of this Local Agency Financing Lease, at its cost and expense, to make additions, betterments and improvements to the Property, and to attach fixtures, structures and signs thereto; provided, that such additions, betterments and improvements and fixtures, structures and signs (i) shall be constructed and installed in accordance with applicable laws and regulations, and not in violation of any easements, restrictions, conditions or covenants affecting title to the Property; and (ii) shall not diminish the value, capacity or usefulness of the Property. The Local Agency also shall have the right during the term of this Local Agency Financing Lease, without the consent of any Owners, to enter into Additional Local Agency Financing Leases and Additional Site Leases with the Corporation to finance all or any portion of the cost of such additions, betterments and improvements to the Property so long as such leases do not reduce the obligation of the State to perform its obligations under the Master Financing Lease, including without limitation its obligation to make Rent Payments, and will not, in an Opinion of Counsel, adversely affect the tax-exempt status of the Interest Component of Rent Payments evidenced and represented by the Certificates. If the Local Agency enters into any Additional Local Agency Financing Lease for this purpose, the Corporation may be granted an interest in the Property under an Additional Site Lease of all or any portion of the Property, which leasehold interest may be assigned to the Trustee for the benefit of owners of certificates of participation in the Additional Master Financing Lease to which such Additional Local Agency Financing Lease is related. The occurrence of an Event of Default with respect to this Local Agency Financing Lease shall constitute a like event under any Additional Local Agency Financing Lease, and the occurrence of any such like event under any Additional Local Agency Financing Lease shall constitute an Event of Default under this Local Agency Financing Lease. The owners of certificates of participation in any Additional Master Financing Lease shall be secured pari passu with the Owners with respect to any amounts received by the Trustee with respect to the Property following the occurrence of an Event of Default. (e) Release of Property. After design, acquisition, construction, financing or refinancing of the Project, the Local Agency, with the prior written consent of the State Treasurer and only upon the satisfaction of the requirements set forth in Section 2.2(d) of the Master Financing Lease, may release a portion of the Property leased under the Site Lease, and subleased under and pursuant to the Master Financing Lease and this Local Agency Financing Lease. As a condition to any such release, the Local Agency shall (i) deliver to the State Treasurer an appraisal -4- FG: 104515950.1 42 or other written evidence from an independent, disinterested real property appraiser acceptable to the State Treasurer to the effect that the remaining portion of the Property has an estimated fair rental value for the remaining term of this Local Agency Financing Lease equal to or greater than the Agency Rent Payments due from time to time hereunder; (ii) provide any necessary easements, reciprocal agreements or other rights as may be necessary to provide comparable pedestrian and vehicular access, and other uses and amenities (including but not limited to water, sewer, electrical, gas, telephone and other utilities) as existed prior to such release. The State, the Trustee, as assignee of the Corporation, and the Local Agency shall execute, deliver and record such amendments and modifications to the Site Lease, the Master Financing Lease, the Master Assignment and this Local Agency Financing Lease, and such other documents, agreements and instruments, as the State shall deem necessary or desirable in connection with such release. Section 2.3 Title to the Property. Fee title to the Property, and all additions, modifications, repairs and improvements thereto, shall remain and vest in the Local Agency, subject to the respective leasehold estates under the Site Lease, the Master Financing Lease and this Local Agency Financing Lease, without any further action by the State, the Local Agency or the Corporation. Section 2.4 Assignment. In order to secure the payment and performance of the State of its obligations under the Master Financing Lease, the State has assigned and transferred to the Corporation the State's interest in this Local Agency Financing Lease and the rentals, income and profits to be received under this Local Agency Financing Lease, including without limitation the Agency Rent Payments. The Local Agency acknowledges and agrees to such assignment and transfer. The State irrevocably authorizes and directs the Local Agency, upon receipt of written notice from the Trustee, as assignee of the Corporation, that an Event of Default has occurred and is continuing under the Master Financing Lease, to pay to the Trustee, as assignee of the Corporation, the Agency Rent Payments and other amounts due and to become due hereunder. The State shall not have any right or claim against the Local Agency for any Agency Rent Payments or other amounts so paid by the Local Agency to the Trustee as assignee of the Corporation. Section 2.5 Disclaimer of Warranties. The Local Agency acknowledges and agrees that it has had adequate opportunity to inspect the Property, and that such Property, including but not limited to the structures and improvements thereon, is acceptable to the Local Agency in its present condition. The Local Agency subleases the Property in its present condition, "as is." The State makes no warranty or representation, either express or implied, and assumes no responsibility, liability or obligation, as to the value, design, structural or other condition, usability, suitability, occupancy or management of the Property, as to the income from or expense of the use or operation thereof, as to title to the Property, as to compliance with applicable zoning, subdivision, planning, safety, fire, health or environmental laws, regulations, ordinances or codes, or as to compliance with applicable covenants, conditions or restrictions, or any other representation or warranty with respect to the Property. Section 2.6 State Not Liable. The State and its officers and employees shall not be liable to the Local Agency or to any other Person for any death, injury or damage that may result to any Person or property by or from any cause whatsoever in, on, about or relating to the Property. -5- FG: 104515950.1 43 ARTICLE III AGENCY RENT PAYMENTS; CONDITIONAL PAYMENT BY STATE; FULL FAITH AND CREDIT OBLIGATION Section 3.1 Agency Rent Pam. Each Agency Rent Payment shall consist of an Agency Principal Component and/or an Agency Interest Component as set forth in Exhibit D to this Local Agency Financing Lease. Interest shall accrue and be calculated as determined by the State Treasurer, which determination shall be binding and conclusive against the Local Agency, absent manifest error. Each Agency Rent Payment shall be paid to or upon the order of the State Treasurer by electronic funds transfer (or by other means acceptable to the State Treasurer) in lawful money of the United States of America at such place as the State Treasurer shall direct in writing not less than 10 Business Days prior to the Agency Rent Payment Date. Payments of Additional Rent shall be made to or upon the order of the State Treasurer. Each Agency Rent Payment shall be applied first to the Agency Interest Component, and then to the Agency Principal Component. The Agency Rent Payments and Additional Rent for each rental payment period during the term of this Local Agency Financing Lease shall constitute the total rental due for such period, and shall be paid for and in consideration of the use and occupancy and continued quiet enjoyment of the Property for such period. The Parties have determined and agreed that such total rental does not exceed the fair rental value of the Property for each such rental period, given the purposes, terms and provisions of this Local Agency Financing Lease. Anything herein to the contrary notwithstanding, the Local Agency waives any right that it may have under the laws of the State to a rebate or repayment of any portion of such rental in the event that there is substantial interference with the use or right to possession by the Local Agency of the Property or any portion thereof as a result of material damage, destruction or condemnation. Section 3.2 Sources of Payment of Agency Rent Pam. (a) Local Agency Financing Lease. The Local Agency acknowledges and agrees that the State is subleasing the Property from the Corporation for and on behalf of the Local Agency. Concurrently with the execution of this Local Agency Financing Lease, the State shall execute and deliver the Master Financing Lease with the Corporation, pursuant to which the State agrees to make Rent Payments for the sublease of the Property for and on behalf of the Local Agency, at such times and in such amounts as provided therein, that will be sufficient in the aggregate to pay the Project Costs of the Project to be designed, acquired and/or constructed by the Local Agency, but only to the extent such Project Costs are financed under the Master Financing Lease. The Agency Rent Payments by the Local Agency under this Local Agency Financing Lease shall be sufficient in the aggregate to pay, on each Rent Payment Date, the Rent Payment for the Property subleased by the State from the Corporation for and on behalf of the Local Agency under the Master Financing Lease. The Local Agency pledges its full faith and credit to make the Agency Rent Payments that are required to be paid to the State under this Local Agency Financing Lease. Rent Payments allocable to Project Costs of Local Agencies shall be payable by the State solely from Agency Rent Payments to be made by the respective Local Agencies, including the Local Agency, except as otherwise provided in Sections 3.2(c) and 3.2(d) of the Master Financing Lease and Sections 3.2(b) and 3.2(c) of this Local Agency Financing Lease. -6- FG: 104515950.1 44 (b) Intercept of Local Agency Share of State Revenues. In the event that the Local Agency fails to make any payment due under this Local Agency Financing Lease, pursuant to RCW 39.94.030(1), the State Treasurer shall withhold an amount sufficient to make such payment from the Local Agency's share of State revenues or other amounts authorized or required by law to be distributed by the State to the Local Agency; but (i) only if the use of any such revenues or amounts to make such payments is otherwise authorized or permitted by State law, and (ii) only to the extent the Local Agency is otherwise entitled to receive such share of State revenues or other amounts. Such withholding shall continue until all such delinquent payments have been made. Amounts withheld by the State Treasurer pursuant to this Section 3.2(b) shall be applied to make any such payment due under this Local Agency Financing Lease on behalf of the Local Agency, or to reimburse the State for any such payment made pursuant to Section 3.2(c). The Local Agency authorizes, approves and consents to any such withholding. (c) Conditional Payment of Agency Rent Payments. Upon the failure of the Local Agency to make any Agency Rent Payment at such time and in such amount as required pursuant to this Local Agency Financing Lease, the State shall, to the extent of legally available appropriated funds and subject to any Executive Order reduction, make such payment into the Agency Rent Payment Fund (established under the Master Financing Lease) on behalf of such Local Agency within 15 Business Days after such Agency Rent Payment Date. The Local Agency shall reimburse the State for such payments made on its behalf immediately thereafter and in any case not later than 10 Business Days after such Agency Rent Payment Date, together with interest thereon at a rate equal to the State Reimbursement Rate. Anything herein to the contrary notwithstanding, failure of the Local Agency to reimburse the State Treasurer for any such payment shall not constitute an Agency Event of Default, but the State may institute such legal action and pursue such other remedies against the Local Agency as the State deems necessary or desirable including but not limited to actions for specific performance, injunction and/or the recovery of damages. (d) Payments by Local Agency Treasurer. The treasurer of the Local Agency shall establish and/or maintain a special fund in the "bonds payable" category of accounts of the Local Agency for the purposes of paying the Local Agency's Agency Rent Payments and Additional Rent. The treasurer of the Local Agency shall remit each Agency Rent Payment to the State on each Agency Rent Payment Date and any Additional Rent when due hereunder from any legally available funds of the Local Agency. Section 3.3 Net Lease. The obligation of the Local Agency to make Agency Rent Payments from the sources set forth herein and to perform its other obligations hereunder shall be absolute and unconditional. This Local Agency Financing Lease shall be deemed and construed to be a "triple net lease" with respect to the State. The Local Agency shall pay the Agency Rent Payments, Additional Rent and all other amounts due hereunder, as well as taxes, assessments, insurance, utilities, and all normal maintenance and operating costs for the Project, as further described in part in Sections 6.2(k), (1) and (n) of this Local Agency Financing Lease. The Local Agency shall pay such obligations without notice or demand, and without any diminution, reduction, postponement, abatement, counterclaim, defense or set-off as a result of any dispute, claim or right of action by, against among the Local Agency, the State, the Corporation, the Trustee, and/or any other Person, or for any other reason; provided, that nothing in this Section 3.3 -7- FG: 104515950.1 45 shall be construed to release or excuse the State from the observance or performance of its obligations hereunder. Section 3.4 Assignments by the Corporation. The Local Agency acknowledges and agrees that, concurrently with the execution and delivery of this Local Agency Financing Lease, the Corporation will unconditionally assign to the Trustee pursuant to the Master Assignment, without recourse, (i) all of its rights to the Sites pursuant to the Site Leases, (ii) all of its rights to receive the Rent Payments and any Additional Rent under the Master Financing Lease, (iii) its right to take all actions, exercise all remedies, and give all consents under the Site Leases and the Master Financing Lease, (iv) all of its remaining right, title and interest in, to and under the Site Leases, the Master Financing Lease and this Local Agency Financing Lease, and in and to the Property and any rents or profits from the Property, and (v) its right of access described in the Master Financing Lease, in consideration for the Trustee's causing to be paid to the State Treasurer, as agent of the Corporation, of the proceeds of the sale of the Certificates. The State and the Corporation have acknowledged and agreed that such assignment by the Corporation is intended to be a true sale of the Corporation's right, title and interest, and that upon such assignment the Corporation shall cease to have any rights or obligations under the Site Leases and Master Financing Lease or with respect to the Property, and the Trustee shall thereafter have all the rights and obligations of the Corporation under the Site Leases and Master Financing Lease as if the Trustee had been the original party thereto. Except where the context otherwise requires, every reference in the Site Leases, Master Financing Lease and this Local Agency Financing Lease to the Corporation shall be deemed to be a reference to the Trustee in its capacity as assignee of the Corporation. ARTICLE IV OPTIONAL AND EXTRAORDINARY PREPAYMENT OF AGENCY RENT PAYMENTS Section 4.1 Optional Prepayment. (a) The Local Agency may, at its option and upon approval of the State Treasurer, prepay its Agency Rent Payments then unpaid, in whole or in part on any date, by causing to be deposited with the State Treasurer money and/or Government Obligations in an amount sufficient for the State to provide for the payment or defeasance of the portion of the State's Rent Payments corresponding thereto in accordance with Section 4.1(a) or 4.1(b), respectively, of the Master Financing Lease and to pay any Additional Rent in connection therewith. (b) The Local Agency shall provide the State Treasurer with not less than 60 days' prior written notice of its intention to prepay any of its Agency Rent Payments, which notice shall specify the date of prepayment, and the amount and the Agency Rent Payment Dates of the Agency Rent Payments to be prepaid. The State Treasurer shall notify the Local Agency within 15 Business Days after receipt of such notice from the Local Agency as to the amount required to be paid in connection with such prepayment or provision for payment of the corresponding Rent Payments, including any Additional Rent in connection therewith. The determination by the State Treasurer of the amount to be paid by the Local Agency shall be binding and conclusive against such Local Agency, absent manifest error. -8- FG: 104515950.1 46 Section 4.2 Extraordinary Prepayments. (a) Eminent Domain; Loss of Title. The Local Agency shall prepay or cause to be prepaid from eminent domain awards or sale proceeds received pursuant to Section 5.1, and from the net proceeds of title insurance received pursuant to Section 5.2, Agency Principal Components then unpaid, in whole or in part on any date, at a prepayment price equal to the sum of the Agency Principal Components so prepaid, plus accrued interest to the date of prepayment. The aggregate annual Agency Rent Payments for the related Property from and after such prepayment date shall be in approximately equal amounts. (b) Insurance Proceeds. The Local Agency may, at its option and upon approval of the State Treasurer, prepay or cause to be prepaid from net insurance proceeds received pursuant to Section 5.3, Agency Principal Components then unpaid, in whole or in part on any date, at a prepayment Price equal to the sum of the Agency Principal Components so prepaid, plus accrued interest to the date of prepayment. The aggregate annual Agency Rent Payments for the related Property from and after such prepayment date shall be in approximately equal amounts. Section 4.3 Revision of Agency Rent Payments upon Prepayment. The Agency Principal Component and Agency Interest Component of the Agency Rent Payment due on each Agency Rent Payment Date on and after the date of any prepayment pursuant to Sections 4.1 or 4.2, as set forth in Exhibit D, shall be reduced by the State Treasurer to reflect such prepayment, in such amounts and on such Agency Rent Payment Dates as the Local Agency shall elect in its written notice to the State Treasurer pursuant to Section 4.1(b). Section 4.4 Discharge of Agency Local Agency Financing Lease. All right, title and interest of the State and all obligations of the Local Agency under this Local Agency Financing Lease shall terminate and be completely discharged and satisfied (except for the right of the State and the Corporation and the obligation of the Local Agency to have the money and Government Obligations set aside pursuant to Section 4.4(b) applied to make the remaining Agency Rent Payments) when either: (a) all Agency Rent Payments and all Additional Rent and other amounts due hereunder have been paid in accordance herewith; or (b) (i) the Local Agency shall have delivered a written notice to the State Treasurer of its intention to prepay all of the Agency Rent Payments remaining unpaid; (ii) the Local Agency shall have caused to be deposited with the State Treasurer (A) money and/or Government Obligations in accordance with Section 4.1; and (B) an Opinion of Counsel to the effect that such actions are permitted under this Local Agency Financing Lease, the Master Financing Lease and the Trust Agreement and will not cause interest evidenced and represented by the Certificates to be includable in gross income for federal income tax purposes under the Code; and (iii) for so long as any Rent Payments remain unpaid, provision shall have been made satisfactory to the Corporation for payment of all Additional Rent. -9- FG: 104515950.1 47 ARTICLE V EMINENT DOMAIN; LOSS OF TITLE; DAMAGE AND DESTRUCTION Section 5.1 Eminent Domain. If all of the Property subleased to the Local Agency pursuant to this Local Agency Financing Lease, or so much of it that the remainder becomes unsuitable for the Local Agency's then -existing needs, is taken under the power of eminent domain (or sold under threat of condemnation), the sublease of the Property pursuant to this Local Agency Financing Lease shall cease as of the day that the Local Agency is required to vacate the Property. If less than all of the Property is taken under the power of eminent domain (or sold under threat of condemnation), and the remainder is suitable for the Local Agency's then -existing needs, as reasonably determined by the State, then this Local Agency Financing Lease shall continue in effect as to the remainder, and the Parties waive any benefits of the law to the contrary. In that event, there shall be no abatement of the rental due from the Local Agency. So long as any Agency Rent Payments under this Local Agency Financing Lease remain unpaid, any eminent domain award and any proceeds of sale under threat of condemnation for all or any part of the Property shall be applied to the prepayment of Agency Rent Payments as provided in Section 4.2(a). Any award or proceeds in excess of the amount necessary to prepay the Agency Rent Payments, and thereby to prepay or provide for the payment of the corresponding portion of the Rent Payments under the Master Financing Lease, shall be paid to the Corporation, the State and the Local Agency as their respective interests may appear. Section 5.2 Loss of Title. If there is a loss of title to the Property which is insured under a policy or policies of title insurance, or so much of it that the remainder becomes unsuitable for the Local Agency's then -existing needs, then the Local Agency's sublease of the Property shall cease as of the day that the Local Agency is required to vacate the Property. If there is a loss of title to less than all of the Property, and the remainder is suitable for the Local Agency's then - existing needs, as reasonably determined by the State Treasurer, then this Local Agency Financing Lease shall continue in effect as to the remainder, and the Parties waive any benefits of the law to the contrary. In that event, there shall be no abatement of the rental due from the Local Agency. So long as any Agency Rent Payments under this Local Agency Financing Lease remain unpaid, any payments under any title insurance policy or policies with respect to the Property shall be applied to the prepayment of Agency Rent Payments as provided in Section 4.2(a). Any payment in excess of the amount necessary to prepay such Agency Rent Payments, and thereby to prepay or provide for the payment of the corresponding portion of the Rent Payments due under the Master Financing Lease, shall be paid to the Corporation, the State and the Local Agency as their respective interests may appear. Section 5.3 Damage or Destruction. If all or any portion of the Property subleased to the Local Agency pursuant to this Local Agency Financing Lease is damaged or destroyed by fire or other casualty, this Local Agency Financing Lease shall not terminate, and there shall be no abatement of the rent due from the Local Agency. So long as any Agency Rent Payments remain unpaid, any payments under the property insurance policy or policies with respect to the Property may be applied to the prepayment of Agency Rent Payments as provided Section 4.2(b), or may be paid to the State Treasurer and applied as provided in Section 5.03 of the Trust Agreement. -10- FG: 104515950.1 48 ARTICLE VI REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS Section 6.1 Representations and Warranties of the Local Agency. The Local Agency represents and warrants as follows: (a) The Local Agency is an "other agency" within the meaning of the Act, duly organized and validly existing under the Constitution and laws of the State. (b) The Local Agency is authorized under the laws of the State and its charter or other constituent document, if any, to enter into and perform its obligations under this Local Agency Financing Lease. (c) Neither the execution and delivery by the Local Agency of this Local Agency Financing Lease, nor the observance and performance of its terms and conditions, nor the consummation of the transactions contemplated by it, conflicts with or constitutes a breach of or default under any agreement or instrument to which the Local Agency is a party or by which the Local Agency or its property is bound, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon the Site or the Project, except as expressly provided in this Local Agency Financing Lease and the Master Financing Lease. (d) The Local Agency has duly authorized, executed and delivered this Local Agency Financing Lease. (e) This Local Agency Financing Lease constitutes valid and binding general obligation indebtedness of the Local Agency, enforceable against it in accordance with its terms, except as such enforceability may be affected by bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors' rights generally, to the application of equitable principles, and to the exercise of judicial discretion in appropriate cases. (f) The Site and the Project thereon to be designed, acquired and/or constructed pursuant to this Local Agency Financing Lease is essential to the Local Agency's ability to carry out its governmental functions and responsibilities, and the Local Agency expects to make immediate and continuing use of such Property during the term of this Local Agency Financing Lease. (g) The useful life of the Property is equal to or exceeds the term of this Local Agency Financing Lease. (h) The obligations of the Local Agency under this Local Agency Financing Lease, together with all other outstanding indebtedness of the Local Agency, do not exceed any statutory or constitutional debt limit applicable to the Local Agency. (i) The Local Agency is the owner in fee of the Property. (j) The Local Agency is not in violation of, or subject to any pending or threatened investigation by, any governmental authority under any federal, State or local law, regulation, or ordinance pertaining to the handling, transportation, storage, treatment, usage or disposal of Toxic -11- FG: 104515950.1 49 or Hazardous Substances, air emissions, other environmental matters or any zoning or land use matters with respect to the Property or the Project. Section 6.2 Covenants and Agreements of the Local Agency. The Local Agency covenants and agrees as follows: (a) Preservation ofExistence. The Local Agency will do or cause to be done all things necessary to preserve its existence as an "other agency" within the meaning of the Act. (b) Budget. The Local Agency shall take such action as may be necessary to include all the Agency Rent Payments and Additional Rent due hereunder in its annual budget and to make any necessary appropriations for all such Agency Rent Payments and Additional Rent. (c) Levy of Taxes. If and to the extent authorized by law, the Local Agency covenants that it will levy taxes in such amounts and at such times as shall be necessary, within and as a part of the tax levy, if any, permitted to be made by the Local Agency without a vote of its electors, to provide funds, together with other legally available money, sufficient to make the Agency Rent Payments and the other payments required under this Local Agency Financing Lease. (d) Notice of Nonpayment. The Local Agency shall give written notice to the State Treasurer and the Corporation prior to any Agency Rent Payment Date if the Local Agency knows prior to such date that it will be unable to make all or any portion of the Agency Rent Payment due on such date. (e) Tax -Exemption. The Local Agency shall not make any use of the proceeds of this Local Agency Financing Lease or the Certificates or of any other amounts, regardless of the source, or of any property, and shall not take or refrain from taking any action, that would cause the Master Financing Lease or the Certificates to be "arbitrage bonds" within the meaning of Section 148 of the Code. The Local Agency shall not use or permit the use of the Property or any part thereof by any Person other than a "governmental unit" as that term is defined in Section 141 of the Code, in such manner or to such extent as would result in the loss of the exclusion from gross income for federal income tax purposes of the Interest Component of the Rent Payments under Section 103 of the Code. The Local Agency shall not make any use of the proceeds of this Local Agency Financing Lease or the Certificates or of any other amounts, and shall not take or refrain from taking any action, that would cause the Master Financing Lease or the Certificates to be "federally guaranteed" within the meaning of Section 149(b) of the Code or "private activity bonds" within the meaning of Section 141 of the Code, or "hedge bonds" within the meaning of Section 149 of the Code. To that end, for so long as any Agency Rent Payments remain unpaid, the Local Agency, with respect to such proceeds and other amounts, will comply with all requirements under such Sections and all applicable regulations of the United States Department of the Treasury promulgated thereunder. The Local Agency will at all times do and perform all acts and things permitted by law which are necessary or desirable in order to assure that the Interest Components of the Rent Payments will not be included in gross income of the Owners of the Certificates for federal income tax purposes under the Code, and will take no action that would result in such interest being so included. The Local Agency shall comply with the applicable provisions of the Tax Certificate. -12- FG: 104515950.1 50 (f) No Liens, Assignments or Subleases. The Local Agency shall not create, incur or assume any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Property or any part thereof, except for Permitted Encumbrances. The Local Agency shall promptly, at its own expense, take such action as may be necessary to duly discharge any such mortgage, pledge, lien, charge, encumbrance or claim if the same shall arise at any time. The Local Agency shall not grant, sell, transfer, assign, pledge, convey, mortgage, pledge, sublet or otherwise dispose of any of the Property or any interest therein during the term of this Local Agency Financing Lease, and any such attempted grant, sale, transfer, assignment, pledge, conveyance or disposal shall be void. (g) Performance. The Local Agency shall punctually pay the Agency Rent Payments and Additional Rent in conformity with the terms and provisions of this Local Agency Financing Lease, and will faithfully observe and perform all the covenants, terms and other obligations contained herein required to be observed and performed by the Local Agency. The Local Agency will not suffer or permit any default to occur hereunder, or do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission or refraining from doing anything, would or might be ground for cancellation or termination of this Local Agency Financing Lease. (h) Further Assurances. The Local Agency will preserve and protect the rights of the State hereunder, and will warrant and defend such rights against all claims and demands of all Persons. The Local Agency will promptly execute, make, deliver, file and record any and all further assurances, instruments and agreements, and do or cause to be done such other and further things, as may be necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming to the State the rights and benefits provided to it hereunder. (i) Use of Property. During the term of this Local Agency Financing Lease, the Local Agency will use the Property for the purposes of performing one or more of its essential governmental functions or responsibilities. (j) Financial Statements. The Local Agency shall prepare annual financial statements and obtain audits thereof as required by law. Upon the Written Request of the State Treasurer, the Local Agency shall provide the State Treasurer with a copy of its most recent audited and unaudited financial statements. (k) Maintenance; Repairs. For so long as the Local Agency is in possession of the Property, the Local Agency shall be solely responsible for the maintenance and repair, both ordinary and extraordinary, of the Property. The Local Agency will (i) keep and maintain the Property in good repair and condition, protect the same from deterioration other than normal wear and tear, and pay or cause to be paid all charges for utility services to the Property; (ii) comply with the requirements of applicable laws, ordinances and regulations and the requirements of any insurance or self-insurance program required under Section 6.2(n) in connection with the use, occupation and maintenance of the Property; (iii) obtain all permits and licenses, if any, required by law for the use, occupation and maintenance of the Property; and (iv) pay all costs, claims, damages, fees and charges arising out of its possession, use or maintenance of the Property. -13- FG: 104515950.1 51 (1) Impositions. If during the term of this Local Agency Financing Lease, any Imposition is imposed or incurred in connection with the sublease of the Property by the Corporation to the State, or by the State to the Local Agency, or the ownership, operation, possession or use of the Property by the Corporation, the State or the Local Agency, or the payment of the Agency Rent Payments by the Local Agency, or the payment of the Rent Payments payable therefrom by the State, the Local Agency shall pay all such Impositions when due. The Local Agency at its own expense may contest any such Impositions until it obtains a final administrative or judicial determination with respect thereto, unless the Property is encumbered by any levy, lien or any other type of encumbrance because of the Local Agency's failure to pay such Impositions. If the Corporation or the State pays any such Impositions for which the Local Agency is responsible or liable hereunder, the Local Agency shall reimburse the Corporation or the State for such payments as Additional Rent. (m) Hazardous Substances. (i) Use. The Property does not currently violate, and neither the Local Agency nor its officers, agents, employees, contractors, or invitees, shall use the Property in a manner that violates, any applicable federal, state or local law, regulation or ordinance, including, but not limited to, any such law, regulation or ordinance pertaining to air and water quality, the handling, transportation, storage, treatment, usage and disposal of Toxic or Hazardous Substances, air emissions, other environmental matters, and all zoning and other land use matters. The Local Agency shall not cause or permit the release or disposal of any Toxic or Hazardous Substances on or from the Property. (ii) Indemnity. The Local Agency, to the extent permitted by law, agrees to protect, indemnify, defend (with counsel satisfactory to the Local Agency) and hold the State, the Corporation and the Trustee, and their respective directors, officers, employees and agents harmless from any claims, judgments, damages, penalties, fines, expenses, liabilities or losses arising out of or in any way relating to the presence, release or disposal of Toxic or Hazardous Substances on or from the Property; provided, however, that the Local Agency shall not be obligated to indemnify such parties, in its capacity as Lessor under the Site Lease, from any such claims, judgments, damages, penalties, fines, expenses, liabilities or losses relating to the presence, release or disposal of Toxic or Hazardous Substances on or from the Property occurring when the Local Agency is not or was not in possession of the Property. Such indemnity shall include, without limitation, costs incurred in connection with: (A) Toxic or Hazardous Substances present or suspected to be present in the soil, groundwater or soil vapor on or under the Property; or (B) Toxic or Hazardous Substances that migrate, flow, percolate, diffuse, or in any way move onto or under the Property; or (C) Toxic or Hazardous Substances present on or under the Property as a result of any discharge, dumping, spilling (accidental or otherwise) onto the Property by any person, corporation, partnership, or entity other than the Local Agency, its officials, officers, employees or agents. -14- FG: 104515950.1 52 The indemnification provided by this subsection shall also specifically cover, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision or other third party because of the presence or suspected presence of Toxic or Hazardous Substances in the soil, groundwater, or soil vapor on or under the Property. Such costs may include, but not be limited to, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Property, sums paid in settlements of claims, attorney's fees, consultants fees, and expert fees. (iii) Notification Requirements. The Local Agency shall promptly notify the other Parties in writing of all spills or releases of any Toxic or Hazardous Substances, all failures to comply with any federal, state, or local law, regulation or ordinance, all inspections of the Property by any regulatory entity concerning the same, all notices, orders, fines or communications of any kind from any governmental entity or third party that relate to the existence of or potential for environmental pollution of any kind existing on or resulting from the use of the Property or any activity conducted thereon, and all responses or interim cleanup action taken by or proposed to be taken by any government entity or private party on the Property. Upon request by any Party, the Local Agency shall provide such Party with a written report (A) listing the Toxic or Hazardous Substances that were used or stored on the Property; (B) discussing all releases of Toxic or Hazardous Substances that occurred or were discovered on the Property and all compliance activities related to Toxic or Hazardous Substances, including all contacts with and all requests from third parties for cleanup or compliance; (C) providing copies of all permits, manifests, business plans, consent agreements or other contracts relating to Toxic or Hazardous Substances executed or requested during that time period; and (D) including such other information requested by such Party. (iv) Inspection Rights. The Parties, and their officers, employees and agents, shall have the right, but not the duty, to inspect the Property and the Local Agency's relevant environmental and land use documents at any time and to perform such tests on the Property as are reasonably necessary to determine whether the Local Agency is complying with the terms of this Local Agency Financing Lease. The Local Agency shall be responsible for paying for any testing that is conducted if the Local Agency is not in compliance with this Local Agency Financing Lease and such Party has reason to believe such noncompliance is due to the Local Agency's operations or use of the Property. If the Local Agency is not in compliance with this Local Agency Financing Lease, such Party, without waiving or releasing any right or remedy it may have with respect to such noncompliance, shall have the right to immediately enter upon the Property to remedy any contamination caused by the Local Agency's failure to comply notwithstanding any other provision of this Local Agency Financing Lease. The Party shall use reasonable efforts to minimize interference with the Local Agency's business but shall not be liable for any interference caused thereby. -15- FG: 104515950.1 53 (v) Corrective Action. In the event any investigation, site monitoring, containment, cleanup, removal, restoration or other remedial work ("Remedial Work") of any kind is necessary under any applicable federal, state or local laws, regulations or ordinances, or is required by any governmental entity or other third person because of or in connection with the presence or suspected presence of Toxic or Hazardous Substances on or under the Property, the Local Agency shall assume responsibility for all such Remedial Work and shall promptly commence and thereafter diligently prosecute to completion all such Remedial Work. The Local Agency shall pay for all costs and expenses of such Remedial Work, including, without limitation, the Party's reasonable attorneys' fees and costs incurred in connection with monitoring or review of such Remedial Work. In the event the Local Agency shall fail to timely commence, or cause to be commenced, or fail to diligently prosecute to completion, such Remedial Work, such Party may, but shall not be required to, cause such Remedial Work to be performed and all costs and expenses thereof, or incurred in connection therewith, shall become immediately due and payable as Additional Rent due to the State from the Local Agency. (n) Insurance. (i) The Local Agency shall maintain, or cause to be maintained, in full force and effect, comprehensive general liability insurance with respect to the Property in such amounts as may be reasonably determined by the Local Agency from time to time but in any event not less than $1,000,000 per occurrence, or such greater amount as the State Treasurer may reasonably require from time to time. Such insurance may be carried under a blanket policy with umbrella coverage. Such insurance shall cover any and all liability of the Local Agency and its officials, officers, employees and volunteers. Such insurance shall include (A) coverage for any accident resulting in personal injury to or death of any person and consequential damages arising therefrom; and (B) comprehensive property damage insurance. (ii) The Local Agency shall maintain or cause to be maintained in full force and effect fire and extended coverage insurance with respect to the Property in such amounts and covering such risks as the Local Agency may reasonably determine from time to time, but in any event not less than the aggregate amount of the Agency Principal Components of Agency Rent Payments due hereunder which remain unpaid. Such insurance may be carried under a policy or policies covering other property of the Local Agency. Such property insurance shall be "all risk" insurance, and shall cover physical loss or damage as a result of fire, lightning, theft, vandalism, malicious mischief, flood, earthquake, and boiler and machinery; provided, that the State Treasurer may waive the requirement for earthquake or flood insurance if it determines, in its reasonable discretion, that the same is not available from reputable insurers and commercially reasonable rates. Such extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as the Local Agency may reasonably determine from time to time. Such policies of insurance shall provide that all proceeds thereunder shall be payable to the Trustee, as assignee of the Corporation, pursuant to a lender's loss payable endorsement in a form approved in writing by the State Treasurer, which approval shall not be unreasonably withheld or delayed. The net proceeds of such insurance shall be applied as provided in Section 5.03 of the Trust -16- FG: 104515950.1 54 Agreement. Such insurance may at any time include a deductible of not to exceed $5,000 for losses in any year, or such greater amount as the State Treasurer may approve in writing. (iii) The insurance required under paragraphs (i) and (ii) above (A) shall be provided by a financially responsible insurance company authorized to do business in the State; (B) except for the insurance required under paragraph (ii) above and as provided in paragraph (iv) below, shall name the State and the Trustee as additional insureds thereunder; (C) shall provide that the same may not be canceled or given notice of non - renewal, nor shall the terms or conditions thereof be altered, amended or modified, without at least 45 days' prior written notice being given by the insurer to the State Treasurer; and (D) may be provided in whole or in part through a funded program of self-insurance reviewed at least annually by an insurance actuary. (iv) In the event that the Local Agency provides the insurance required under paragraph (i) above through its membership in a local government risk pool established under chapter 48.62 RCW, the State and the Trustee shall not be required to be named as additional insureds under such insurance; provided, however, that in such event the Local Agency agrees to protect, indemnify, and hold the State and the Trustee harmless from any claims, judgments, damages, expenses and losses covered by such insurance. (v) A certificate of insurance with respect to the required coverages shall be provided by the Local Agency to the State Treasurer annually on or prior to December 1 with respect to any required insurance maintained pursuant hereto. (vi) Unless otherwise agreed by the State, the Local Agency shall obtain a policy or policies of title insurance on the Property, subject only to Permitted Encumbrances, in an amount equal to the aggregate amount of Agency Rent Payments to become due hereunder, payable to the State and the Trustee, in a form and from a provider approved in writing by the State Treasurer, which approval shall not be unreasonably withheld or delayed. The proceeds received under any such policy shall be applied as provided in Section 5.2. (vii) The Local Agency will pay or cause to be paid when due the premiums for all insurance policies required by this Section 6.2(n). ARTICLE VII EVENTS OF DEFAULT; REMEDIES Section 7.1 Agency Event of Default. Each of the following shall constitute an "Agency Event of Default" hereunder: (a) Failure by the Local Agency to pay or cause to be paid any Agency Rent Payment required to be paid hereunder within ten 10 Business Days of the respective Agency Rent Payment Date; (b) Failure by the Local Agency to observe or perform any covenant, agreement, term or condition on its part to be observed or performed hereunder, other than as set forth in paragraph (a) above, for a period of 30 days after written notice from the State or the Trustee to the Local -17- FG: 104515950.1 55 Agency specifying such failure and requesting that it be remedied; provided, however, that such period shall be extended for an additional 60 days if such failure cannot be corrected within such period, and the corrective action is commenced by the Local Agency within such period and diligently pursued until the failure is corrected; (c) If any statement, representation, or warranty made by the Local Agency in this Local Agency Financing Lease or in any writing delivered by the Local Agency pursuant hereto or in connection herewith is false, misleading, or erroneous in any material respect; (d) If the Local Agency shall abandon or vacate the Property; and (e) Inability of the Local Agency to generally pay its debts as such debts become due, or admission by the Local Agency, in writing, of its inability to pay its debts generally, or the making by the Local Agency of a general assignment for the benefit of creditors, or the institution of any proceeding by or against the Local Agency seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding -up, reorganization, reimbursement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or for appointment of a receiver, trustee, or other similar officer of it or any substantial part of its property, or the taking of any action by the Local Agency to authorize any of the actions set forth above in this Section 7.1(e). (f) If an event of default shall occur under any Additional Financing Lease Agreement. Notwithstanding the foregoing provisions of this Section 7.1, if by reason of force majeure the Local Agency is unable in whole or in part to carry out the covenants, agreements, terms and conditions on its part contained in this Local Agency Financing Lease, the Local Agency shall not be deemed in default during the continuance of such inability. The term "force majeure" means the following: acts of God; strikes; lockouts or other industrial disturbances or disputes; acts of public enemies; orders or restraints of any kind of the government of the United States of America or any of its departments, agencies or officials, or of its civil or military authorities; orders or restraints of the State or of any of its departments, agencies or officials or civil or military authorities of the State; wars, rebellions, insurrections; riots; civil disorders; blockade or embargo; landslides; earthquakes; fires; storms; droughts; floods; explosions; or any other cause or event not within the control of the Local Agency. The State Treasurer, with the prior written consent of the Corporation, may, at its election, waive any default or Agency Event of Default and its consequences hereunder and annul any notice thereof by written notice to the Local Agency to such effect, and thereupon the respective rights of the Parties hereunder shall be as they would have been if such default or Agency Event of Default had not occurred. Section 7.2 Rights of State Following Agency Event of Default. Whenever an Agency Event of Default hereunder shall have occurred and be continuing, the State shall have the following rights and may exercise any one or more of the following remedies: (a) Continuation; Reentry and Reletting. The State may continue this Local Agency Financing Lease in full force and effect, and (i) collect rent and other amounts as they become due hereunder, (ii) enforce every other term and provision hereof to be observed or performed by the -18- FG: 104515950.1 56 Local Agency, and (iii) exercise any and all rights of entry and reentry upon the Property. In the event that the State does not elect to terminate this Local Agency Financing Lease in the manner provided pursuant to paragraph (b) of this Section, the Local Agency agrees to observe and perform all terms and provisions herein to be observed or performed by it, and, if the Property is not relet, to pay the full amount of the rent and other amounts due hereunder for the term of this Local Agency Financing Lease, or, if the Property or any part thereof is relet, to pay any deficiency that results therefrom, in each case at the same time and in the same manner as otherwise provided herein, and notwithstanding any reentry or reletting by the State, or suit in unlawful detainer or otherwise brought by the State for the purpose of effecting such re-entry or obtaining possession of all or any part of the Property. Should the State elect to re-enter or obtain possession of all or any part of the Property, the Local Agency hereby irrevocably appoints the State as the Local Agency's agent and attorney -in -fact (i) to relet the Property, or any part thereof, from time to time, either in the name of the State or otherwise, upon such terms and conditions and for such use and period as the State may determine in its discretion, (ii) to remove all persons in possession thereof and all personal property whatsoever situated upon the Property, and (iii) to place such personal property in storage in any warehouse or other suitable place for the Local Agency in the county in which such personal property is located, for the account of and at the expense of the Local Agency. The Local Agency shall be liable for, and hereby agrees to pay the State, the State's costs and expenses in connection with reentry of the Property, removal and storage of any personal property, and reletting of the Property. The Local Agency hereby agrees that the terms of this Local Agency Financing Lease constitute full and sufficient notice of the right of the State to reenter and relet the Property or any part thereof without effecting a surrender or termination of this Local Agency Financing Lease. Termination of this Local Agency Financing Lease upon an Agency Event of Default shall be effected solely as provided in paragraph (b) of this Section. The Local Agency further waives any right to, and releases, any rental obtained by the State upon reletting in excess of the rental and other amounts otherwise due hereunder. (b) Termination. The State may terminate this Local Agency Financing Lease, but solely upon written notice by the State to the Local Agency of such election. No notice to pay rent, notice of default, or notice to deliver possession of the Property or of any part thereof, nor any entry or reentry upon the Property or any part thereof by the State, nor any proceeding in unlawful detainer or otherwise brought by the State for the purpose of effecting such reentry or obtaining possession, nor any surrender of the Property or any part thereof by the Local Agency, nor any other act shall operate to terminate this Local Agency Financing Lease, and no termination of this Local Agency Financing Lease on account of a Master Financing Lease Event of Default shall be or become effective by operation of law or acts of the Parties or otherwise, unless and until such notice of termination shall have been given by the State. Upon such termination, the State may (i) reenter the Property or any part thereof and remove all persons in possession thereof and all personal property whatsoever situated upon the Property, and (ii) place such personal property in storage in any warehouse or other suitable place for the Local Agency in the county in which such personal property is located, for the account of and at the expense of the Local Agency. Upon such termination, the Local Agency's right to possession of the Property shall terminate, and the Local Agency shall surrender possession thereof to the State. In the event of such termination, the Local Agency shall remain liable to the State for damages in an amount equal to the rent and other amounts that would have been due hereunder for the balance of the term hereof, less the net proceeds, if any, of any reletting of the Property or any part thereof by the State subsequent to such termination, after deducting the expenses incurred by the State in connection with any such reentry, -19- FG: 104515950.1 57 removal and storage of personal property, and reletting. The State shall be entitled to collect damages from the Local Agency on the respective Agency Rent Payment Dates. (c) Other Remedies. In addition to the other remedies set forth in this Section, upon the occurrence and continuance of an Agency Event of Default, the State shall be entitled to proceed to protect and enforce the rights vested in them by this Local Agency Financing Lease or by law. The terms and provisions of this Local Agency Financing Lease and the duties and obligations of the Local Agency hereunder, and the officers and employees thereof, shall be enforceable by the State by an action at law or in equity, for damages or for specific performance, or for writ of mandate, or by other appropriate action, suit or proceeding in any court of competent jurisdiction. Without limiting the generality of the foregoing, the State shall have the right to bring the following actions: (i) Accounting. By action or suit in equity to require the Local Agency and its officers and employees to account as the trustee of an express trust; (ii) Injunction. By action or suit in equity to enjoin the violation of the rights of the State. (iii) Mandate. By writ of mandate or other action, suit or proceeding at law or in equity to enforce the State's rights against the Local Agency and its officers and employees, and to compel the Local Agency to perform and carry out its duties and obligations under the law and its covenants and agreements with the State as provided herein. In the event that the State shall prevail in any action, suit or proceeding brought to enforce any of the terms of provisions of this Local Agency Financing Lease, the Local Agency shall be liable for the reasonable attorneys' fees of the State in connection therewith. The Local Agency hereby waives any and all claims for damages caused or which may be caused by the State in reentering and taking possession of the Property or any part thereof as provided herein, and all claims for damages that may result from the destruction of or injury to the Property or any part thereof, and all claims for damages to or loss of any personal property that may be in or upon the Property. Section 7.3 No Remedy Exclusive; Non -Waiver. No remedy conferred upon or reserved to the State hereunder or under applicable law is intended to or shall be exclusive, and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Local Agency Financing Lease or now or hereafter existing at law or in equity. No delay or omission to exercise any right or remedy accruing upon a default or an Agency Event of Default hereunder shall impair any such right or remedy or shall be construed to be a waiver of such default or Agency Event of Default, but any such right or remedy may be exercised from time to time and as often as may be deemed necessary or expedient. In order to exercise any remedy reserved to the State hereunder, it shall not be necessary to give any notice, other than such notice as may be required hereunder. A waiver by the State of any default or Agency Event of Default hereunder shall not constitute a waiver of any subsequent default or Agency Event of Default, and shall not -20- FG: 104515950.1 58 affect or impair the rights or remedies of the State Treasurer in connection with any such subsequent default or Agency Event of Default. No acceptance of less than the full amount of a rental payment due hereunder shall constitute an accord and satisfaction or compromise of any such payment unless the State specifically agrees to such accord and satisfaction or compromise in writing. Section 7.4 Default by State. Anything herein to the contrary notwithstanding, the State shall not be in default in the observance or performance of any of the covenants, agreements, terms or conditions to be observed or performed by it hereunder unless and until the State shall have failed to observe or perform such covenant, agreement, term or condition for a period of 60 days after written notice by the Local Agency to the State Treasurer specifying such failure and requesting that it be remedied; provided, however, that such period shall be extended for such additional time as shall be reasonably required to correct such failure if corrective action is commenced by the State within such period and diligently pursued until the failure is corrected. ARTICLE VIII MISCELLANEOUS PROVISIONS Section 8.1 Indemnification of State and the Corporation. To the extent permitted by law, the Local Agency hereby releases the State and the Corporation from, agrees that the State and the Corporation shall not be liable for, and agrees to indemnify and hold the State and the Corporation and their respective directors, officers, officials, employees, and agents harmless from, any liability for any loss or damage to property or any injury to or death of any person that may be occasioned by any cause whatsoever arising out of the ownership or operation of the Property or the design, acquisition, construction, financing or refinancing thereof. To the extent permitted by law, the Local Agency agrees to indemnify and hold the State and the Corporation and their respective directors, officers, officials, employees, and agents harmless from any losses, costs, charges, expenses (including reasonable attorneys' fees), judgments and liabilities incurred by it or them, as the case may be, in connection with any action, suit or proceeding instituted or threatened in connection with the transactions contemplated by this Local Agency Financing Lease or the exercise of rights or the performance of duties of the State or the Corporation under this Local Agency Financing Lease, the Master Financing Lease or the other Series 2026A Agreements, except to the extent caused by the gross negligence or willful misconduct of such indemnified party. The indemnification provided in this Section 8.1 shall survive the final payment of the Agency Rent Payments and the termination of this Local Agency Financing Lease for any reason. Section 8.2 Term. If on , 20_ (the "Scheduled Termination Date"), all amounts due hereunder shall not have been paid or the payment thereof duly provided for pursuant to Section 4.4, then the term of this Local Agency Financing Lease shall be extended until 10 days after all amounts due hereunder shall have been paid or the payment thereof so provided for, except that the term of this Local Agency Financing Lease shall in no event be extended more than five years beyond the Scheduled Termination Date. If prior to the Scheduled Termination Date, all amounts due hereunder shall have been paid or the payment thereof so provided for, the term of this Local Agency Financing Lease shall end 10 days thereafter or 10 days after written notice by the Local Agency to the State Treasurer, whichever is earlier. -21- FG: 104515950.1 59 Section 8.3 Termination. The Local Agency agrees, upon the termination of this Local Agency Financing Lease, to quit and surrender the Property (i) in the same good order, condition and repair as the same was in at the time of commencement of the term hereunder, except for acts of God and reasonable wear and tear, that affect the condition of the Property; and (ii) free and clear of all leases, occupancies, liens and encumbrances, other than those existing as of the Dated Date or subsequently created in accordance herewith. The Local Agency agrees that any permanent improvements and structures existing upon the Property at the time of such termination of this Local Agency Financing Lease shall remain thereon. The Local Agency shall thereafter execute, acknowledge and deliver to the State such instruments of further assurance as in the reasonable opinion of the State Treasurer are necessary or desirable to confirm the State's leasehold right, title and interest in and to the Property. -22- FG: 104515950.1 60 Section 8.4 Notices to Agency. The notice address for the Local Agency shall be as set forth in the Notice of Intent. STATE OF WASHINGTON OFFICE OF THE STATE TREASURER By Treasurer Representative CITY OF PORT ORCHARD, WASHINGTON as Local Agency By Authorized Agency Representative By Authorized Agency Representative By Authorized Agency Representative -23- FG: 104515950.1 61 STATE OF WASHINGTON) ) ss. COUNTY OF THURSTON ) I certify that I know or have satisfactory evidence that JASON P. RICHTER is the person who appeared before me, and said person acknowledged that he signed this instrument, on oath stated that he was authorized to execute the instrument and acknowledged it as the Deputy State Treasurer Debt Management of the STATE OF WASHINGTON to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: (Signature of Notary) Print Name (Legibly Print or Stamp Name of Notary) Notary public in and for the state of Washington, residing at My commission expires (Use this space for notarial stamp/seal) N-1 FG: 104515950.1 62 STATE OF WASHINGTON) ) ss. COUNTY OF KITSAP ) I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that [s]he signed this instrument, on oath stated that [s]he was authorized to execute the instrument and acknowledged it as of the CITY OF PORT ORCHARD, WASHINGTON, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: (Signature of Notary) Print Name (Legibly Print or Stamp Name of Notary) Notary public in and for the state of Washington, residing at My commission expires (Use this space for notarial stamp/seal) N-2 FG: 104515950.1 63 STATE OF WASHINGTON) ) ss. COUNTY OF KITSAP ) I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that [s]he signed this instrument, on oath stated that [s]he was authorized to execute the instrument and acknowledged it as of the CITY OF PORT ORCHARD, WASHINGTON, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: (Signature of Notary) Print Name (Legibly Print or Stamp Name of Notary) Notary public in and for the state of Washington, residing at My commission expires (Use this space for notarial stamp/seal) N-3 FG: 104515950.1 64 STATE OF WASHINGTON) ) ss. COUNTY OF KITSAP ) I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that [s]he signed this instrument, on oath stated that [s]he was authorized to execute the instrument and acknowledged it as of the CITY OF PORT ORCHARD, WASHINGTON, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: (Signature of Notary) Print Name (Legibly Print or Stamp Name of Notary) Notary public in and for the state of Washington, residing at My commission expires (Use this space for notarial stamp/seal) N-4 FG: 104515950.1 65 EXHIBIT A NOTICE OF INTENT FG: 104515950.1 66 EXHIBIT B CERTIFICATE DESIGNATING AUTHORIZED AGENCY REPRESENTATIVE FG: 104515950.1 67 EXHIBIT C LEGAL DESCRIPTION FG: 104515950.1 68 EXHIBIT D AGENCY RENT PAYMENTS FG: 104515950.1 69 Certificate Designating Authorized Agency Representatives I, Brandy Wallace, City Clerk of the City of Port Orchard (the "Local Agency"), hereby certify that, as of the date hereof, pursuant to Ordinance No. _, the following individuals are each an "Authorized Agency Representative," as indicated by the title appended to each signature, that the following individuals are duly authorized to execute and deliver the Local Agency Financing Lease to which this Certificate is attached as Exhibit B, and all documentation in connection therewith, including but not limited to the Local Agency Site Lease, that the signatures set forth below are the true and genuine signatures of said Authorized Agency Representatives and that pursuant to such ordinance, One of the two following signature(s) [is/are] required on each of the aforementioned documents in order to consider such documents executed on behalf of the Local Agency: Robert Putaansuu, Mayor (signature) Noah Crocker, Finance Director (signature) Dated this 16th day of December, 2025. Brandy Wallace City of Port Orchard SUBSCRIBED AND SWORN TO before me this _ _ day of _ _, 20 By: NOTARY PUBLIC in and for the State of Washington, residing at: Printed Name: My Commission Expires: LOCAL AGENCY TAX CERTIFICATE (Real Property) This Local Agency Tax Certificate is executed and delivered by the CITY OF PORT ORCHARD, WASHINGTON, a municipal corporation (the "Local Agency") of the State of Washington (the "State"), in connection with the Local Agency Financing Lease by and between the State, acting by and through the State Treasurer, and the Local Agency dated the Dated Date (the "Local Agency Financing Lease"), under which the Local Agency is obligated to make Agency Rent Payments, including principal components thereof in the aggregate amount of $ plus issuance costs allocable to the Local Agency. The Authorized Agency Representative[s] certif[ies/y] as follows: 1. General. 1.1 Purpose of Certificate. The State intends to cause the execution and delivery of Certificates of Participation, Series 2026A (State and Local Agency Real and Personal Property) (the "Certificates"), dated, delivered and paid for on the same date as the date of this certificate (the "issue date"), evidencing undivided and proportionate interests in Rent Payments of the State payable under a Master Financing Lease. A portion of the principal and interest components of such Rent Payments are payable from Agency Rent Payments on the Local Agency Financing Lease. This certificate is executed to establish the facts, estimates and circumstances in existence on the issue date and the bona fide reasonable expectations of the Local Agency on the issue date as to future events in connection with the Local Agency Financing Lease and the Certificates for the purposes of the applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and applicable Treasury Regulations under Sections 103, 141 and 148-150 of the Code. 1.2 Defined Terms. Capitalized words used but not otherwise defined in this certificate have the meaning set forth in Appendix 1 to the Local Agency Financing Lease. For the purposes of this certificate, the term "proceeds of the Certificates" shall mean and refer to those sale and investment proceeds of the Certificates that are allocated and made available by the State Treasurer to the Local Agency for costs of the Project. 1.3 Reasonable Basis for Expectations. To the best of my knowledge, information and belief, this certificate accurately summarizes the facts, estimates and circumstances in existence on the issue date, and the expectations of the Local Agency on the issue date about future events in connection with the Local Agency Financing Lease and the Certificates are reasonable. 2. Purpose of Financing. 2.1 Governmental Purpose. The Local Agency is entering into the Local Agency Financing Lease and the State is issuing the Certificates allocable to the Local Agency to finance a portion of the costs of acquisition of real property for use by the City's Public Works Department (the "Project"). 2.2 Reimbursement of Original Expenditures. A portion of the proceeds of the Certificates allocable to the Local Agency may be allocated within 30 days after the issue date to FG: 104515949.1 71 reimburse the Local Agency for certain capital expenditures made for the Project prior to the issue date. For the purposes of certain federal regulations relating to use of proceeds of tax-exempt obligations to reimburse prior expenditures (the "reimbursement regulations"), the Local Agency executed and delivered to the State Treasurer a Notice of Intent to Lease/Purchase the Project to evidence a declaration of official intent to be reimbursed from proceeds of the Certificates for expenditures made for the Project prior to the issue date of the Certificates with funds that were not, and were not reasonably expected to be, reserved, allocated on a long-term basis or otherwise set aside to pay such costs. Any of the original expenditures that are reimbursed to the Local Agency with proceeds of the Certificates will have been made either after or not more than 60 days before the date of the Local Agency's declaration of official intent, except for (i) qualified "preliminary expenditures" within the meaning of the reimbursement regulations in an amount that does not exceed 20% of the proceeds of the Certificates; and (ii) other expenditures for the Project in an aggregate total amount not exceeding the lesser of $100,000 or 5% of the proceeds of the Certificates. The Project has not been placed in service for more than 18 months. Therefore, any reimbursement allocations made with proceeds of the Certificates will occur not later than 18 months after the date the Project was first placed in service and not later than 3 years after the date of the earliest original expenditure for the Project, except for reimbursement for expenditures in an aggregate total amount not exceeding the lesser of $100,000 or 5% of the proceeds of the Certificates. 2.3 No Impermissible Private Business Use. The Project financed with proceeds of the Certificates will be owned by the Local Agency and used solely for its governmental purposes during the entire term of the Local Agency Financing Lease. The Local Agency will not allow more than 10% of the proceeds of the Certificates (or of a corresponding portion of the Project being financed or refinanced with proceeds of the Certificates) to be used for any private business use. No more than 5% of the proceeds of the Certificates (or of a corresponding portion of the Project being financed with proceeds of the Certificates) will be used either for any private business use that is unrelated to the governmental purpose of the Local Agency Financing Lease or for any private business use that is related to a governmental purpose of the Local Agency Financing Lease but exceeds the amount of proceeds of the Certificates that are expected to be used for that governmental purpose. No proceeds of the Certificates will be used directly or indirectly by the Local Agency to make or finance loans, except a loan that constitutes a nonpurpose investment within the meaning of Section 148 of the Code. 2.4 Types of Private Business Use Taken Into Account. In making the certification in Section 2.3, the Local Agency is taking into account its reasonable expectations about whether the federal government or any other nongovernmental person will be treated as using the proceeds of the Certificates for private business use as a result of: (i) the ownership of any portion of the property, buildings, facilities, improvements or equipment that will comprise the Project; (ii) the lease of any portion of the property, buildings, improvements or equipment that will comprise the Project; (iii) the operation or management of any portion of the property, buildings, improvements or equipment (including parking lots or garages, food service facilities, and meeting facilities, for example) that will comprise the Project pursuant to a management or service contract that would not comply with the requirements of Internal Revenue Service ("IRS") Revenue Procedure 2017- 13 (or any future guidance provided by the IRS) for "qualified" management or service contracts -2- FG: 104515949.1 that are not treated as resulting in "private business use" within the meaning of Section 141 of the Code; and (iv) any other special legal entitlement to use the property, buildings, improvements or equipment that will constitute the Project pursuant to any other arrangement similar to those described in clauses (i) through (iii). For this purpose, private business use by a "nongovernmental person" means use of the Project by any person other than a State agency or another local government unit of the State, such as use by any federal government agency, any business corporation, partnership, association, nonprofit corporation, or any individual engaged in a trade or business activity under special legal entitlements. Certain Use Arrangements Not Giving Rise to Private Business Use. However, as permitted by Treasury Regulations §1.141-3(c) and (d), certain uses of the Project by a nongovernmental person under certain types of use arrangements may not be treated as giving rise to any private business use within the meaning of Section 141 of the Code. These use arrangements may include, for example, short-term use under arrangements available to the general public on the basis of rates that are generally applicable and uniformly applied, with different rates that may reasonably apply to different classes of users; short-term use arrangements with terms of use not exceeding 100 days that would be treated as general public use except that it is not available to natural persons not engaged in a trade or business; short-term use arrangements with terms of use not exceeding 50 days for specially negotiated, arm's -length, fair market value rates and charges; use by nongovernmental persons under management or service contracts that are properly structured to constitute "qualified" management contracts under IRS Revenue Procedure 2017-13 (or any future guidance provided by the IRS); use by nongovernmental persons under service contracts that are not treated as management contracts because they are solely incidental to the primary governmental functions of the Project; and nonpreferential use of the Project by nongovernmental persons as members of the general public. Measurement of Private Business Use. Further, as required by Treasury Regulations § 1.141-3(g), to the extent, if any, that the Project may be used for any private business use within the meaning of Section 141 of the Code, the amount of such private business use will be measured on an average basis during a measurement period that commences on the date the Project is first placed in service and ends on the final Principal Payment Date of the Local Agency Financing Lease (without regard to optional prepayment dates), which is a period shorter than the reasonably expected economic life of the Project as determined under IRS Revenue Procedure 62-21 for structures. 2.5 Allocation of "Equity" Funds to Any Portion of Project Used for a Private Business Use. The Local Agency intends that any "equity" funds which are available and to be used by the Local Agency to pay costs of the Project shall be allocated first to any expenditures for that portion, if any, of the Project which may be treated as used for a private business use under the rules described in Section 2.4. Such "equity" funds may include, for example, grants, gifts, and accumulated funds on hand which are available and to be used to pay costs of the Project. Such "equity" funds shall not include any sale or investment proceeds of the Certificates. 3. The Project. 3.1 Project Schedule. The Local Agency has entered into a contract for the acquisition of the Project, and the acquisition occurred in October, 2025. -3- FG: 104515949.1 73 3.2 Cost of the Project. The cost of the Project is estimated to be $2,600,000, which cost will be paid from the proceeds of the Certificates and any equity funds available and to be used for the Project. The net amount received from the sale of the Certificates allocable to the Local Agency is not expected to exceed the amount necessary to pay the costs of the Project and the issuance costs allocable to the Local Agency. 3.3 Expenditures for the Project. As described in Section 2.2, all of the sale proceeds of the Certificates allocable to the Project will used to reimburse the Local Agency for the costs of the Project within 30 days after the issue date of the Certificates and therefore be treated as spent on the issue date. 3.4 No Sale of Project Expected. The Project is not expected to be sold or otherwise disposed of in whole or in part prior to the final Principal Payment Date of the Local Agency Financing Lease, other than to dispose of any portion of the Project that becomes inadequate, obsolete, worn out, unfit or no longer necessary or useful for the operation of the Project. 4. Other Arbitrage Restrictions. 4.1 No Replacement of Funds Invested in Higher Yielding Investments. No portion of the proceeds of the Certificates will be used directly or indirectly to replace funds of the Local Agency invested in a yield exceeding the yield on the Certificates. 4.2 No Abusive Arbitrage Device. The primary, bona fide governmental purpose of entering into the Local Agency Financing Lease and the issuance of the Certificates allocable to the Local Agency is to finance the cost of the Project. No action is being taken or will be taken in connection with the issuance of the Certificates that has the effect of (i) enabling the Local Agency to exploit the difference between tax-exempt and taxable interest rates to obtain a material financial advantage by investing any portion of the gross proceeds of the Certificates over any period of time, and (ii) overburdening the tax-exempt bond market as a result of entering into the Local Agency Financing Lease in a larger principal amount, entering into the Local Agency Financing Lease earlier, or allowing the Local Agency Financing Lease to remain outstanding longer than is otherwise reasonably necessary to finance the Project. 4.3 No Intent To Earn Impermissible Arbitrage Profit. The Local Agency will not take any intentional action to earn any impermissible arbitrage profit from the investment of gross proceeds of the Certificates. 5. Reliance Upon Local Agency's Expectations. The Local Agency acknowledges that the State Treasurer and Certificate Counsel to the State will rely upon the foregoing facts, estimates and circumstances in existence on the issue date and the reasonable expectations of the Local Agency as to future events respecting the use of proceeds of the Certificates to enable them to conclude that it is not expected that proceeds of the Certificates will be used in any manner that would cause the Certificates to be arbitrage bonds under Section 148 of the Code or private activity bonds under Section 141 of the Code, and for Certificate Counsel to the State to provide their opinion that the Certificates are governmental obligations the interest on which is excluded from gross income for federal income tax purposes under Section 103 of the Code. -4- FG: 104515949.1 74 [Signature page of Local Agency Tax Certificate of the City of Port Orchard, Washington — COPs 2026A] DATED the Dated Date. CITY OF PORT ORCHARD, WASHINGTON Authorized Agency Representative By Authorized Agency Representative Authorized Agency Representative FG: 104515949.1 75 Ong City of Port Orchard ORCHARD 216 Prospect Street, Port Orchard, WA 98366 1.. (360) 876-4407 • FAX (360) 895-9029 Agenda Staff Report Business Items: Approval of a Lease Agreement with Kitsap County for 730 Prospect Street (Archer) Meeting Date: December 16, 2025 Prepared By: Charli Archer, City Attorney Presenter: Denis Ryan, CPWP-M, CPRP, Public Works Director Summary and Background: In 2023, the City of Port Orchard purchased the real property located at 730 Prospect Street, subject to an existing lease between the former owner and Kitsap County. The existing lease expires on December 31, 2025, and the City and County have negotiated a new lease. The County has requested a one-year term for the lease due to funding concerns, and the City negotiated favorable terms and conditions that off -set the one-year term. Under the terms of the lease, the rental rate is $95,700 for the year, tenant will be responsible for utility costs, and the City will maintain control and use of eight parking stalls in the lot for use by City employees. Relationship to Comprenhensive Plan: N/A Recommendation: Draft lease agreement has been negotiated by the Mayor and Staff for Council consideration. Motion for Consideration: I move to authorized the Mayor to execute a lease with Kitsap County for the 730 Prospect Building. Has item been presented to Committee/Work Study? If so, which one: N/A Fiscal Impact: Rental payments will offset costs associated with ownership, operation and maintenance of the building. Alternatives: Do not approve and provide alternative guidance. Attachments: 730 Prospect Lease Agreement.pdf 76 LEASE AGREEMENT THIS LEASE AGREEMENT ("Lease") is entered into as of this 1St day January 2026 ("Effective Date"), by and between the CITY OF PORT ORCHARD, a Washington municipal corporation with a mailing address of 216 Prospect Street, Port Orchard, WA 98366, ("Lessor"), and KITSAP COUNTY, a subdivision of the State of Washington, with a mailing address of 614 Division Street, MS 35-B, Port Orchard, WA 98366-7148 ("Lessee"). WHEREAS, Lessor purchased real property located at 730 Prospect St., Port Orchard, WA 98366, Kitsap County Tax Parcel No. 4650-015-006-0007 in 2023, subject to an existing lease between Lessee and the previous owner, which expires on December 31, 2025; and WHEREAS, Lessee has occupied this real property for over twenty years, and desires to remain a Lessee; and WHEREAS, Lessor and Lessee desire to execute a new lease subject to the terms and conditions set forth herein; and NOW, THEREFORE, in consideration of the promises and covenants of the parties herein setting forth the good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged by Lessor and Lessee, Lessor and Lessee agree as follows: Section 1. General Lease Provisions (a) Premises. Lessor is the owner of a parcel of real property and all improvements thereon, consisting of approximately 11,326 sq. ft., located at 730 Prospect St., Port Orchard, WA 98366, Kitsap County Tax Parcel No. 4650-015-006-0007, legally described on Exhibit A attached hereto and incorporated herein by this reference. The leased portion of this real property consists of an 8,028 square foot office building and surrounding surface parking, depicted on Exhibit B attached hereto and incorporated herein by this reference, and subject to the terms set forth in this Agreement (collectively, the "Premises"). (b) Agreement to Lease. Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the Premises for the operation of the Kitsap County Prosecutor's Family Support Division, including general Kitsap County Prosecutor Office activities and meetings, and activities incident thereto. No other activities are permitted on the Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. During the Term, Lessee will, at its own cost and expense, promptly observe and comply with all laws, ordinances, and regulations of the federal, state, and county governments and of all other governmental authorities affecting Lessee's use and occupation of the Premises. (c) Parking Rights. Notwithstanding the foregoing leasehold grants and reservations, Lessor and Lessee hereby agree and acknowledge that Lessee shall have the exclusive right to use the parking areas on the Premises depicted on Exhibit B ("Lessee's Parking Stalls"), as well as a non-exclusive right for ingress and egress over and across the driveway(s) and parking lot to access and utilize these parking areas, except that Lessor shall have exclusive rights to utilize eight (8) designated parking stalls currently identified as stalls seven (7) through twelve (12), and stalls twenty (20) and twenty-one (21), and depicted on Exhibit B ("City Parking Stalls"). Lessor shall install and maintain signage and pavement markings to identify the City Parking Stalls as exclusively for Lessor's use (which requires a City -issued parking permit), to be enforced by City Parking Enforcement Staff consistent with the Port Orchard Municipal Code. Lessor shall install and maintain signage for the Lessee's Parking Stalls as designated for "Kitsap County Family Support." Lessee agrees that City's parking shall be reserved exclusively for use by the City and that Lessee shall notify its employees, agents, and visitors to not park in or otherwise use the City Parking Stalls. Lessor agrees that the Lessee's Parking Stalls shall be reserved exclusively for use by the Lessee and its employees, agents and visitors and that Lessor shall notify its employees, agents and visitors to not park in or otherwise use Lessee's Parking Stalls. (d) Signs. Lessee will have the right to install, maintain and replace such signs and advertising on the Premises as Lessee may determine are desirable, including, without limitation, at least one (1) monument sign. Lessee will comply with all applicable laws and will obtain any necessary permits for its signs. Lessee acknowledges that the Premises has signage rights on the Prospect Street side of the real property. (e) Condition. Except as otherwise set forth herein, Lessor and Lessee acknowledge that the Premises, including the parking lot but excluding the elevator, currently exist and are acceptable in such condition for their purposes under this Lease. Except as otherwise set forth herein, Lessee has inspected the Premises and shall accept the Premises in its current "AS IS, WHERE IS" condition. Section 2. Term. (a) The term of this Lease will commence on the 1st day of January 2026 ("Commencement Date") and will terminate on 31st day of December 2026 ("Term"). Lessor will deliver to Lessee full and exclusive possession of the Premises on the Commencement Date. (b) If the Lessee provides notice of intent to seek a new lease by October 1, 2026, the parties may negotiate to extend the term and upon conditions as agreed for the extended term. (c) Holdover. If Lessee does not surrender possession of the Premises to Lessor as set forth herein, in addition to any other rights or remedies Lessor may have hereunder or at law, Lessee, at the option of Lessor, shall be deemed to be occupying the Premises from month -to -month, subject to such occupancy being terminated by either party upon at least thirty (30) days' written notice. In such event, Lessee shall pay to Lessor an amount equal to 110% the portion of the Minimum Annual Rent payable during the last month of the Lease Term, with such Minimum Annual Rent prorated on the basis of a 365 - day year. No provision of this Lease shall be deemed to permit Lessee to retain possession of the Premises after the expiration of the Term. Except as otherwise specifically stated in this Lease, all of the terms and conditions of this Lease shall remain in effect following any extension, renewal, or holdover of the original Lease Term. Section 3. Rent. (a) Lessee agrees to pay the following amounts commencing upon the Commencement Date, due in advance on the first day of each month, in the amount and method of payment as set forth as follows: (i) "Minimum Annual Rent" during the Lease Term shall mean Ninety -Five Thousand Seven Hundred Dollars ($95,700.00) per annum, payable in equal monthly installments of Seven Thousand Nine Hundred Seventy -Five Dollars ($7,975.00). 78 (b) Payments. All Rent payable by Lessee to Lessor under this Lease will be paid by (i) check delivered to Lessor at the address set forth herein or such other address as Lessor may designate by written notice to Lessee, or (ii) electronic transfer as an Automated Clearing House ("ACH") transaction as provided for below. Within five (5) days after receiving a written request from Lessee, but in any event on or before the Commencement Date, Lessor shall promptly execute and deliver to Lessee any documents, instruments, authorizations, or certificates required by Lessee to effectuate ACH transfers pursuant to which Lessee shall be authorized and enabled to make all payments owed by Lessee of whatsoever nature required or contemplated by this Lease. Any such ACH transfers shall be paid by Lessee from Lessee's account in a bank or financial institution designated by Lessee and credited to Lessor's bank account as Lessor shall have designated in writing to Lessee ("Lessor's ACH Account Information"). Lessor's ACH Account Information shall be provided by Lessor. If Lessee elects to pay any amounts due hereunder by ACH transfer, then Lessee shall not be in default of Lessee's obligation to pay such amounts if and for so long as Lessee timely complies with ACH transfer requirements and accurately states Lessor's ACH Account Information. Accordingly, if Lessee shall have timely complied with ACH transfer requirements, but the applicable funds thereafter shall have been misdirected or not accounted for properly by the recipient bank designated by Lessor, then the same shall not relieve Lessee's obligation to make the payment so transferred, but shall toll the due date for such payment until the applicable funds shall have been located and deposited in Lessor's bank account. In the event that Lessor elects to designate a different bank or financial institution into which any ACH transfer is to be deposited, notification of such change and the required documents, instruments, authorizations, and any modified Lessor's ACH Account Information specified in this Lease, must be received by Lessee no later than thirty (30) days prior to the date such change is to become effective. (c) Late Charge. If Lessee shall fail to pay any amount of Minimum Annual Rent or Rent within thirty (30) days following the date the same became due and payable as provided in this Lease, Lessee shall pay to Lessor a late charge equal to the greater of (a) $300; or (b) five percent (5%) of such delinquent payment. Lessor and Lessee agree that such late charge represents a reasonable estimate of additional administrative expenses incurred by Lessor in processing the delinquency. Provision herein for payment of the late charge shall not be construed to extend the date for payment of any sums required to be paid by Lessee hereunder or relieve Lessee of its obligation to pay all such sums at the times herein stipulated. Section 4. Utility Expenses. (a) Beginning on the Commencement Date, Lessee shall be solely responsible for and shall promptly pay all charges for water, sewer, trash, gas services, and electric services supplied to the Premises, and any other utility used or consumed in the Premises or in providing heating and air-conditioning to the Premises ("Utility Services"), including in each instance, all sales and other taxes applicable to the sale or supply of such utilities, said responsibility commencing on the Commencement Date. Lessee agrees that it shall be Lessee's responsibility (at Lessee's sole cost and expense, including all deposits, charges, connections, hook-up fees, testing fees, and the like) to contract directly with all local utility companies for all Utility Services required for the Premises. (b) Any other services that Lessee determines it requires at the Premises after the Commencement Date (e.g. internet, telephone, cable) shall be obtained by Lessee at its sole responsibility and at its sole cost and expense. (c) Lessor shall not be responsible or liable in any manner for the impairment, interruption, stoppage, or other interference with any Utility Services to the Premises not caused by Lessor or its agents, employees, contractors, invitees or licensees. In any event, no interruption, termination or cessation of 79 utility services to the Premises shall relieve Lessee of its duties and obligations pursuant to this Lease, including, without limitation, its obligation to pay all Rent as and when the same shall be due hereunder. (d) Lessor covenants and agrees to execute commercially reasonable easement agreements necessary for the establishment of Utility Services by the Lessee) and to take all other actions reasonably required in order to effectuate the same, the reasonable costs and expenses of which will be Lessee's responsibility. Section 5. Taxes. Lessor shall pay, before the same become delinquent, all taxes and special assessments levied against the Premises. Lessee shall pay, before the same become delinquent, all taxes assessed against Lessee's furniture, trade fixtures, equipment, and other personal property in the Premises. Section 6. Improvements, Repairs, Additions, Replacements; Maintenance; Liens. (a) Lessee shall not construct, reconstruct, remove, replace and alter the buildings and other improvements on the Premises without Lessor's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. All of Lessee's alterations, construction, and improvements will comply with all applicable building codes and ordinances, will not pose a public health or safety risk, and will be in good operating condition. Any improvement, fixture, or alteration installed by Lessee shall become the property of Lessor upon installation, except for Lessee's removable personalproperty that can be detached without damage to the Premises. All other items, including any improvement affixed to or integrated with the Premises, shall remain with and become part of the Premises at the end of the lease term. (b) Lessor shall have the right, at its sole cost and expense, to install electric vehicle (EV) charging stations along City Parking Stalls numbered 7 through 12). Such installation may include all necessary equipment, infrastructure, signage, and utility connections as determined by Lessor. Lessee agrees to reasonably cooperate with Lessor to facilitate such installation, provided that it does not unreasonably interfere with Lessee's use of the Premises, including Lessee's parking stalls. Upon completion of installation, the Designated Spaces shall be reserved exclusively for use by the City for the purpose of charging and parking electric vehicles. Lessee shall not permit its employees, agents, or visitors to, park in or otherwise use the City Parking Stalls. Lessor shall be responsible for the maintenance and repair of the EV charging stations and related infrastructure, and shall ensure their continued compliance with applicable laws and regulations. (c) Lessee's maintenance and repair obligations. Except as provided in subsection (d) below or subsection (e) below, Lessee shall, at Lessee's sole expense, maintain all interior portions of the Premises in a good, clean, and sanitary condition, excepting normal wear and tear, and performing small maintenance tasks therefor. This includes painting interior walls and ceilings, cleaning floors and carpeting, replacing door handles, locks and hinges, cleaning windows and window coverings, replacing broken mirrors, replacing lightbulbs, maintaining faucets and toilet seats, unclogging drains, and the maintenance and repair or replacement all trade fixtures and equipment installed for use by Lessee. Trade fixtures include, but are not limited to, the security system. Lessee shall also be responsible for engaging any janitorial services or interior pest control services necessary for Lessee's maintenance obligations. (d) Lessor's maintenance and repair obligations. Except as provided in subsection (c) above or subsection (e) below, Lessor shall, at Lessor's sole expense, maintain all structural elements and permanent fixtures of the Premises. This includes the painting and replacement of exterior walls and siding, cleaning and repairing the roof, gutters, downspouts, etc., fixing any broken portion of foundation or the structural floor slab, the basement sump pump, the HVAC and other mechanical, plumbing and electrical systems, inspecting and repairing the elevator, replacing toilets, sinks, light fixtures, and 4 80 windows. Lessor shall not be obligated to repair or replace any fixtures or equipment installed by Lessee, and Lessor shall not have any obligation to maintain or repair the interior of the Premises under subsection (c), except where the improvements, maintenance or repairs to the interior of the Premises are needed as a result of damages caused by a component to be maintained by the Lessor in which case Lessor shall be obligated to make the required improvements, maintenance, and/or repairs. (e) Landscaping and parking lot. Lessee shall be responsible for maintaining the parking lot in good, clean and sanitary condition and the Lessor shall be responsible for all necessary maintenance and repair to the parking lot surface (including driveways and drive aisles) and shall restripe as necessary. Lessor shall be responsible for maintaining all mown and landscaped areas of the Premises in a professional manner. (f) All maintenance and repairs by either party shall be performed in a good and workmanlike manner and in compliance with all applicable laws, ordinances, and regulations. (g) Lessor may inspect the Premises at all reasonable times, and enter the same for the purpose of cleaning, repairing, altering, improving or exhibiting the same, but nothing herein shall be construed as imposing any obligation on Lessor to perform any such work. Lessee shall notify Lessor as soon as reasonably possible when Lessee becomes aware of any repair or maintenance issues concerning the Premises that are Lessor's responsibility. (h) All personal property, trade fixtures, equipment and inventory will at all times be owned solely by Lessee. Lessor hereby waives any statutory lien on Lessee's personal property, trade fixtures, equipment and inventory. On the expiration or termination of this Lease, if Lessee fails to remove any personal property or any items that make up Lessee's trade style, Lessee will be deemed to have abandoned the same. (i) If, because of any work or services performed for Lessee (or any judgment against Lessee), any lien is filed against the interest of Lessor in the Land, Lessee will cause the lien to be discharged of record or bonded within thirty (30) days after written notice from Lessor. Section 7. Assignment and Subletting. (a) Except as otherwise expressly provided herein, this Lease may not be assigned without the prior written consent of Lessor. No such consent to assignment of this Lease shall release the assignor from the performance of all of the obligations on the part of Lessee thereafter to be performed. (b) Except as otherwise expressly provided herein, Lessee shall not sublease all or any part of the Premises without the prior written consent of Lessor. Section 8. Ouiet Enjoyment. Lessor agrees that so long as Lessee is not in default of any of its obligations hereunder, Lessee may quietly have, hold, and enjoy the Premises from and after Lessor's delivery of the Premises to Lessee and until the end of the Lease Term, subject, however, to those matters to which this Lease is or shall become subordinate as expressly provided herein. Section 9. Indemnification. 81 (a) General Indemnification. Each party agrees to defend, indemnify, and hold harmless the other party and its elected and appointed officials, officers, employees and agents against all claims, losses, damages, suits and expenses, including reasonable attorneys' fees and costs, to the extent they arise out of, or result from, the negligence or willful misconduct of the indemnitor or its elected or appointed officials, officers, employees and agents in the performance of this lease. The indemnitor's duty to defend, indemnify, and hold harmless extends to claims by the elected or appointed officials, officers, employees or agents of the indemnitor or of any contractor or subcontractor of indemnitor. The indemnitor waives its immunity under Title 51 (Industrial Insurance) of the Revised Code of Washington solely for the purposes of this provision and acknowledges that this waiver was mutually negotiated. This provision shall survive the expiration or termination of this lease. (b) Lessor's Indemnity Obligations for Use of Parking Lot. Lessor shall indemnify, protect, defend, and hold Lessee harmless from and against any and all Claims arising out of or in connection with the Lessor's use of the City Parking Stalls, except where caused by the sole negligence or willful misconduct of any Lessee Parties. (c) The obligations of this Section shall survive the expiration of this Lease. Section 10. Insurance. (a) Lessee's Insurance Obligations. At all times from and after the Commencement Date, Lessee shall maintain, at its sole cost and expense, the following policies of insurance: (i) General Liability Insurance. Lessee shall, at Lessee's sole expense, maintain Commercial general liability insurance with broad form contractual liability coverage and with coverage limits of not less than $1,000,000 combined single limit, per occurrence, and $2,000,000 general aggregate, insuring against any and all claims for injury to or death of persons, and loss of or damage to property, occurring upon, in or about the Premises. Lessee shall maintain umbrella or excess insurance in an amount of not less than $5,000,000. (ii) Lessee's Personal Property and Improvements. Property insurance covering any peril generally included in the classification "special causes of loss coverage" covering all: (i) Improvements made by Lessee; and (ii) Personal Property owned or leased by Lessee (or for which Lessee is legally liable) and located on the Premises, in an amount not less than the full replacement cost and with a commercially reasonable deductible not to exceed $1,000,000. Such coverage shall include insurance against loss of business income, vandalism, malicious mischief, and sprinkler leakage or other sprinkler damage, boiler and pressure vessel insurance, and any policy proceeds shall be used for the repair or replacement of the property damaged or destroyed, unless this Lease is terminated under the provisions hereof. Lessee will be permitted to maintain a self -insured retention with respect to its commercial general liability coverage. (iii) Lessee will keep Lessee's buildings and improvements on the Premises insured against loss or damage by fire and customary extended coverage on a replacement cost basis (but excluding the cost of the foundation, excavation, and footings). All proceeds payable by any insurance company under such property insurance policies will be payable to Lessee, and Lessor will not be entitled to, and will have no interest in, the proceeds. Notwithstanding anything to the contrary contained herein, Lessee shall have the right to self -insure the risks that would otherwise be covered by the insurance policy required to be maintained by Lessee under this subsection. Lessee shall be deemed to have exercised such right to self -insure unless Lessee notifies Lessor that Lessee has obtained a third -party insurance policy and delivers a certificate of insurance to 82 Lessor evidencing same. During any period that Lessee self -insures, Lessee shall assume the risks of and shall pay from its assets the costs, expenses, damages, claims, losses, and other amounts, if and to the same extent that a third party insurance company would have paid those amounts if the insurance company were insuring those risks under the policy described in this subsection. All amounts which Lessee pays or is required to pay and all loss or damage resulting from risks for which Lessee has elected to self -insure shall be subject to the waiver of subrogation provisions in Section 14 hereof. (b) Except with respect to insurance that Lessee elects to self -insure in accordance with subsection (b), Lessee will carry its insurance with a good and solvent insurance company or companies licensed to do business in Washington state. Lessee's policy will include Lessor as an additional insured with respect to Lessee's commercial general liability policy for bodily injury or property damage resulting from Lessee's negligence. Lessee agrees to deliver certificates of its insurance on a standard ACORD form to Lessor upon written request by Lessor. Each policy shall contain a provision that the insurer will not cancel or fail to renew the coverage provided by such policy without first endeavoring to give thirty (30) days' prior written notice to Lessor. Lessee's insurance may be carried under blanket insurance policies covering the Premises and other locations of Lessee provided the blanket insurance complies with all of the other requirements of this Lease. (c) Waiver of Subrogation. All insurance policies carried by either party covering the Premises will expressly waive any right on the part of the insurer against the other party. As to any loss or damage which may occur and be covered (or required by the terms of this Lease to be covered) under any insurance policy(ies), the party obligated to carry the insurance hereby releases the other from any amount of liability for such loss or damage. The release includes a release of liability for the full amount of any deductible maintained by a party under its insurance policy. Section 11. Damage or Destruction. If the Premises are damaged or destroyed by fire or any cause other than any act or omission of Lessee, its employees, agents, invitees or licensees, Lessor shall restore the Premises, except for such fixtures, improvements and alterations as are installed by Lessee, as nearly as practicable to their condition immediately prior to such damage or destruction. Lessee, at Lessee's expense, shall so restore all such fixtures, improvements and alterations installed by Lessee. Lessor, at Lessee's expense, shall so restore the Premises with respect to all damages caused by any act or omission of Lessee, its employees, agents, invitees or licensees; and Lessee agrees to reimburse Lessor upon demand for all expenses of every kind and nature, from time to time, for such restoration. The obligations to restore provided in this paragraph shall be subject to Lessor's and Lessee's termination rights provided hereinafter. Any restoration shall be promptly commenced and diligently prosecuted. Lessor shall not be liable in any fashion to Lessee for any consequential damages incurred by Lessee by reason of any such damage or destruction. Notwithstanding any of the foregoing provisions of this section, in the event the Premises shall be destroyed or damaged to such an extent that Lessor deems it not economically feasible to restore the same, then Lessor may terminate this lease as of the date of the damage or destruction by giving Lessee written notice to that effect. In the event the Premises shall be destroyed or damaged to such an extent that the same cannot be used for the conduct of the business stated herein for a period exceeding ninety (90) days, then either party may terminate this lease as of the date of the damage or destruction by giving the other notice to that effect not later than twenty (20) days after the occurrence of said damage or destruction; provided, however, Lessee shall have no such right to terminate this lease if such damage or destruction is caused by any act or omission of Lessee, its employees, agents, invitees or licensees. If Lessor undertakes to restore the Premises, as provided in this Section, then commencing with the date of the damage or destruction, and continuing through the period of restoration, the rent for the Premises 83 shall be abated for such period in the same proportion as the untenable portion of the Premises bears to the whole thereof, except that there shall be no abatement to the extent any such damage or destruction was caused by any act or omission of Lessee, its employees, agents, invitees, or licensees. Section 12. Default by Lessee. (a) The occurrence of any of the following shall constitute a default by Lessee and a breach of this Lease: (i) The failure by Lessee to pay any Rent, Minimum Annual Rent, or other sum required to be paid hereunder if such failure continues for thirty (30) days after receipt by Lessee of notice from Lessor specifying such default; (ii) If Lessee defaults in performing any covenant, condition, term, or provision of this Lease to be performed by Lessee, and fails to cure such default within the grace or time period for cure specified in this Lease or, if no grace or time period for cure is specified, within thirty (30) days after written notice thereof (or such longer period, if any, as may be reasonably required to cure the failure if the failure reasonably cannot be cured within a thirty (30) day period, provided Lessee commences to cure within such thirty (30) day period and thereafter continuously and diligently pursues such cure at all times until such default is cured); (iii) A determination by Lessor that Lessee has submitted a false report required to be furnished hereunder; (iv) The discovery by Lessor that any representation, warranty or financial statement given to Lessor by Lessee under this Lease was intentionally and materially false or misleading; (v) If Lessee abandons or vacates the Premises for a continuous period of fifteen (15) days, except in the case of a Force Majeure event; (vi) This Lease or Lessee's interest herein or in the Premises or any improvements thereof or any property of Lessee are executed upon or attached; (vii) Any claim or lien is asserted or recorded against the interest of Lessor in the Premises or any portion thereof, on the account of, or extending from any improvement or work done by or at the instance, or for the benefit of Lessee, or any person claiming by, through, or under Lessee or from any improvement or work the cost of which is the responsibility of Lessee which is not cured within 30 days. (b) To the extent permitted by applicable state law, the grace or time periods provided in this Section for cure of Lessee's defaults under this Lease shall be in lieu of, and not in addition to, any similar time periods prescribed by applicable state law as a condition precedent to the commencement of legal action against Lessee for possession of the Premises. Where, however, state law provides longer periods those periods shall govern. (c) Lessor's Rights and Remedies. Should Lessee default under this Lease, Lessor shall have, in addition to any other remedies available to Lessor at law or in equity, the right to terminate this lease upon providing any notices required by law to Lessee, and thereafter re-enter the Premises, provided, however, that any such re-entry shall be conducted in a manner consistent with and subject to the confidentiality and security requirements applicable to Lessee's work, to the extent such requirements have been previously disclosed to Lessor. Notwithstanding such re-entry by Lessor, Lessee covenants and agrees 84 to pay Lessor any deficiency arising from a reasonable re-entry and re -letting of the Premises at a lesser rental to a new third -party tenant than agreed to in this lease. Lessee shall pay such deficiency each month as the amount thereof is ascertained by Lessor. Lessor shall apply the proceeds of any re -letting first to the payment of such reasonable expenses as Lessor may have incurred in recovering possession of the Premises and removing persons and property therefrom, and in putting the same into good order or condition or preparing or altering the same for re - letting, and all other expenses incurred by Lessor by re- letting the Premises, and then to Lessee's obligation to pay rent. Any such re -letting may be for the remainder of the term of this lease or for a longer or shorter period. In any such case, and whether or not the Premises, or any part thereto be re -let, Lessee shall pay to Lessor the rent and all other charges required to be paid by Lessee up to the time of such termination of this lease; and thereafter, Lessee agrees to pay the equivalent of the amount of all rent reserved herein, and all other charges required to be paid by Lessee less the net proceeds of re -letting, if any, and the same shall be due and payable by Lessee monthly as the amount thereof is ascertained by Lessor, and Lessor may bring an action therefore as such monthly deficiencies arise. In any of the circumstances hereinbefore mentioned, Lessor shall have the option, instead of holding Lessee liable for the amount of all the rent and all other charges required to be paid be Lessee, less the net proceeds of re -letting, if any, forthwith to recover from Lessee an aggregate sum representing, at the time of such termination of this lease, the then present worth of the excess, if anyl of the aggregate of the rent, and all other charges payable by Lessee hereunder that would have accrued until the end of the lease term, over the aggregate rental value of the Premises during such term. (d) Lessor may pursue any other rights and/or remedies available under applicable state law or in equity. All rights and remedies reserved by, or granted to, Lessor under this Lease, at law or in equity, are distinct, separate, and cumulative, and the exercise of any one of them shall not be deemed to preclude, waive, or prejudice Lessor's right to exercise any or all others. Section 13. Eminent Domain. If all of the Premises are taken by any public authority under the power of eminent domain, this lease shall terminate as of the date possession is taken by said public authority pursuant to such condemnation. If any part of the Premises is so taken and, in the opinion of either Lessor or Lessee, it is not economically feasible to continue this lease in effect, either party may terminate this lease. Such termination by either party shall be made by notice to the other, given no later than thirty (30) days after possession is so taken, the termination to be effective as of the later of thirty (30) days after said notice, or the date possession is so taken. If part of the Premises are so taken, and neither Lessor nor Lessee elects to terminate this lease, or until termination is effective, as the case may be, the rental shall be abated in the same proportion as the portion of the Premises so taken bears to the whole of the Premises; and Lessor shall make such repairs or alterations, if any, as are required to render the remainder of the Premises tenantable. All damages awarded for the taking or damaging of all or any part of the Premises shall belong to and be the property of Lessor, and Lessee hereby assigns to Lessor any and all claims to such award; but nothing herein contained shall be construed as precluding Lessee from asserting any claim Lessee may have against such public authority for disruption or relocation of Lessee's business on the Premises. 85 Section 14. Notices. All notices, demands and requests to be given by either party to the other shall be in writing, and shall be sent by United States registered or certified mail, postage prepaid, with a copy sent via electronic mail as follows: Lessor: City of Port Orchard c/o Mayor Rob Putaansuu 216 Prospect Street Port Orchard, WA 98366 Lessee: Kitsap County Prosecutor c/o Family Support / Paternity Division 614 Division Street, MS -35B Port Orchard, WA 98366-7148 Notice, demands, and requests served upon Lessor or Lessee, as provided in this section, in the manner aforesaid, shall be deemed sufficiently served or given for all purposes hereunder two business days after the time such notice, demand or request is mailed in any post office in Kitsap County, Washington. Each party may change their representative by providing fifteen (15) days prior notice to the other party. Section 15. Performance of Covenants. If Lessee shall fail to make any payment, or perform any of Lessee's obligations under this lease, Lessor may, without notice to or demand upon Lessee, and without waiving or releasing Lessee from any obligations of Lessee under this lease, make said payment or perform said obligation in such manner and to such extent as Lessor deems desirable. All sums so paid by Lessor, and all necessary costs and expenses in connection with the performance of any such obligation by Lessor, together with interest thereon at the rate of twelve per cent (12%) per annum, compounded monthly from the date of the making of such expenditure by Lessor, shall be deemed additional rent hereunder, and shall be payable to Lessor on demand. Section 16. Surrender of Premises. Subject to Lessor's obligations pursuant to this lease regarding maintenance of the leasehold Premises, Lessee, at the expiration or sooner termination of this lease, shall quit and surrender the Premises in good, neat, clean and sanitary condition, except for reasonable wear and tear. Section 17. Force Maleure. Lessor's failure to perform any of its obligations under this lease shall be excused if due to causes beyond the control and without the fault or negligence of Lessor, including but not restricted to acts of God, acts of the public enemy, acts of any government, fires, floods, epidemics and strikes. Section 18. General Provisions. (a) Nonwaiver. No failure of Lessor to insist upon the strict performance of any provision of this lease shall be construed as depriving Lessor of the right to insist on strict performance of such provision, or any other provision in the future. No waiver by Lessor of any provision of this lease shall be deemed to have been made unless expressed in writing and signed by Lessor. No acceptance of rent or of any other payment by Lessor from Lessee after any default by Lessee shall constitute a waiver of any such default or any other default. Consent of Lessor in any one instance shall not dispense with necessity of consent by Lessor in any other instance. (b) Attorney's Fee. If, by reason of any default on the part of either Lessor or Lessee, it becomes necessary for the other party to employ an attorney, or if an action be commenced by either party to enforce any of the provisions of this lease, each side shall bear their own fees and expenses. 10 86 (c) Execution in Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. (d) Partial Invalidity. If any term or provision of this lease, or the application thereof to any person or circumstances, shall to any extent be invalid or unenforceable, the remainder of this lease, or the application of such term or provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this lease shall be valid and enforced as written to the fullest extent of the law. (e) Governing Law: This lease shall be governed by the laws of the State of Washington. (f) Entire Agreement: This document contains the entire and integrated agreement of the parties and may not be modified except in writing, signed and acknowledged by all parties. (g) Interpretation: This lease has been submitted to the scrutiny of all parties hereto, and their counsel. if desired, and shall be given a fair and reasonable interpretation in accordance with the words hereof, without consideration or weight being given to its having been drafted by any party hereto, or its counsel. (h) Remedies Cumulative: The specified remedies of which Lessor may resort under the terms of this lease are cumulative, and are not intended to be exclusive of any other remedies or means of redress to which Lessor may lawfully be entitled in case of any breach or threatened breach by Lessee of any provision of this lease. In addition to the other remedies in this lease provide Lessor shall be entitled to the restraint by injunction of the violation, or attempted or threatened violation, of any of the covenants, conditions or provisions of this lease. (i) Number; Gender; Permissive Versus Mandatory Usage: Where the context permits, references to the singular shall include the plural, and vice versa, and to the neuter gender shall include the feminine and masculine. Use of the word "may" shall denote an option or privilege and shall impose no obligation upon the party which may exercise such option or privilege; use of the word "shall" shall denote a duty or an obligation. (j) Time is of the essence to this lease. Wherever there is a day or time period established for performance and the day or the expiration of such time period is a Saturday, Sunday or holiday, then the time for performance will be automatically extended to the next business day. (k) Conflict of Provisions: In case of conflict, the more specific provisions of this lease shall control. (1) Binding Effect: Subject to the provisions of Section 15 hereof, this Lease shall be binding upon the parties hereto and upon their respective executors, administrators, legal representatives, successors and assigns. REMAINDER OF PA GE INTENTIONALLY LEFT BLANK SIGNATURES COMMENCE ON FOLLOWING PAGE 11 87 Lessor has executed this Lease as of 202_ "LESSOR" CITY OF PORT ORCHARD By= Rob Putaansuu Mayor 12 Lessee has executed this Lease as of 1 /Y. l `y , 2025 r.; r 4� BOARD OF COUNTY COMMISSIONERS Kitsap County, Washington ATTES -` •'' " r STINE ROLFES, Chair ORAN ROOT, Commissioner ana Daniels, Clerk of the Board KATHERINE T. WALTERS, Commissioner 13 89 3��iF9y� 90 DESCRIPTION OF LAND PART OF LOTS 12 AND 13, BLOCK 15, PLAT OF SIDNEY DESCRIBED AS FOLLOWS: BEGINNING 100 FEET NORTH OF THE SOUTHWEST CORNER OF LOT 12, HENCE EAST PARALLEL TO THE SOUTH LINE OF SAID LOT 37.98 FEET; THENCE NORTH 23°EAST 98.79 FEET, MORE OR LESS, TO THE NORTHERLY LINE OF LOT 13;THENCE NORTHWESTERLY ALONG THE NORTHERLY LINE OF SAID LOTS 12 AND 13, A DISTANCE OF 42.77 FEET TO THE NORTHWEST CORNER OF LOT 12; THENCE SOUTH 22 1/2° WEST ALONG THE WESTERLY LINE OF LOT 12, 95.19 FEET; THENCE SOUTH ALONG TIIB WEST LINE OF LOT 12, TO THE PLACE OF BEGINNING, KITSAP COUNTY, WASHINGTON; ALSO LOT 6, BLOCK 15, S.M. STEVEN'S TOWN PLAT OF SIDNEY, ACCORDING TO PLAT RECORDED IN VOLUME 1 OF PLATS, PAGE 1, IN KITSAP COUNTY, WASHINGTON; ALSO THE EASTERLY 10 FEET OF LOT 5, BLOCK 15, S.M. STEVEN'S TOWN PLAT OF SIDNEY AS PER PLAT RECORDED IN VOLUME 1 OF PLATS ON PAGE 1, RECORDS OF KITSAP COUNTY AS MEASURED ALONG THE NORTH LINE THEREOF. ALL SITUATE IN KITSAP COUNTY, WASHINGTON. A-1 91 DEPICTION OF PREMISES M. i Ong City of Port Orchard ORCHARD 216 Prospect Street, Port Orchard, WA 98366 1.. (360) 876-4407 • FAX (360) 895-9029 Agenda Staff Report Business Items: Approval of a Purchase with CivicPlus for City's Website, Public Records Request and Agenda Management Software (Wallace) Meeting Date: December 16, 2025 Prepared By: Brandy Wallace, MMC, CPRO, City Clerk Presenter: Brandy Wallace, MMC, CPRO, City Clerk Summary and Background: During the 2024 City Council retreat, it was discussed that an updated website is desired. During the 2025 Biennial -Budget process, staff presented to the City Council the need and cost for such service. In 2025, Clerk's office and IT sought quotes from various website vendors. After assessing the needs, cost, and what each has to offer; staff is asking Council for the approval authorizing the mayor to execute a contract with CivicPlus for a new website. Staff has obtained the vendor through the proper procurement process, in that we will piggy -back off of the GSA contract to allow for more competitive pricing. This allows staff to save on the cost of the software. In addition, we discovered that the public records software is outdated and can provide a more streamline process for City staff, as well as the public. Also, in looking at the Agenda management software CivicPlus has the ability to incorporate the recordings of the meetings to allow for the public to access all legislation at once, versus different sections of the website and few other features to benefit staff, council and the public. By approving these purchases, it allows staff to continue on the path of councils goal to improve the communication efforts with the public in a more effective and efficient manner. Relationship to Comprenhensive Plan: N/A Recommendation: Staff recommends approval to purchase software for a new website and updated Public Records and Agenda Management software, as presented. Motion for Consideration: I move to authorize the Mayor to sign the agreement with CivicPlus to purchase software for a new City website and updated Public Records and Agenda Management software in an amount not to exceed $55,960 including tax, as presented. Has item been presented to Committee/Work Study? If so, which one: No 93 Fiscal Impact: $50,000 has been allocated in the 2026 Updated budget. In addition, $8,750 has already been budgeted for Agenda Management and another $5,800 for the GOVQA Public Records Request software. All three items are within the City's 2026 budget. Alternatives: Do not support the purchase and provide further direction. Attachments: WA Port Orchard - Website - Agenda -NR - 2025 tech pkg.docx GSA Civic Plus Contract 053-25 - Resolution - Procurement of Goods and Services.pdf 94 • # • • i Implementation &Annual Fee I 844,248.00 $16,598.00 Bundle Discount $0.00 Total S44,248.00 Implementation &Annual Fee $20,150.00 1:' :', :' ' Bundle Discount $14,700.00 Total $5,450.00 Implementation &Annual Fee 812,288.00 810,788.00 Bundle Discount $10,788.00 Total S1,500.00 PAS list Price $76,686.00 PA KAE Bundle Savings $25,488.00 • ' i $42,086.00 95 CGSA Statement of Work for Port Orchard, WA GSA Contract GS -35F -0124U GSA CivicPlus Statement of Work Labor Category GSA Hourly Rate with IFF Hours Total Cost Website Consultant $149.01 2 $298.02 Project Manager $135.86 92 $12,499.12 Network Consultant $135.86 0 $0.00 Wireless Network Technician $135.86 0 $0.00 Programmer $131.48 90 $11,833.20 Graphic Designer $109.57 84 $9,203.88 Writer $109.57 0 $0.00 Server and Network Technician $109.57 78 $8,546.46 Trainer $109.57 22 $2,410.54 PC Technician $89.41 0 $0.00 Content Developer $80.64 145 $11,692.80 Subtotal $56,484.02 Discount ($5,286.' $51,198.00 Total Fees Year 1 Project Implementation and Deployment ■ Annual - Municipal Websites Central • Hosting & Security Annual Fee - Municipal Websites Central • Guardian Security (Cloudflare Tier 1 WAF/CDN) • SSL Management CivicPlus Provided: https://portorchardwa.gov/ • DNS Hosting for .GOV Annual Fee: https://portorchardwa.gov/ • Premium Implementation - Municipal Websites • Website New Customer Virtual System Training - Up to 3 hours and 12 attendees: QTY: 6 • Website Content Development - 1 Page: QTY: 150 • AudioEye Managed: https:// portorchardwa.gov/ • Premium Department Header Annual Fee: Police Department • Premium Department Header Implementation - Municipal Websites • CivicPlus Chatbot Subscription: Powered by Al technology, the Frase Answer Engine for Local Government uses website content to answer citizen questions. This solution includes dashboard analytics and language translation. • AMM Select: Pro Annual Fee • AMM Select: Pro Premium Implementation: Pro Premium Implementation; Includes config. of up to 10 meeting types, up to 10 boards, 1 approval workflow per meeting type, 4 hrs of training, and 2 hrs of consulting; Includes 1 original agenda, 1 original minutes, and 1 original staff report design • CivicPlus Media Annual Fee: Unlimited storage, unlimited users, up to 3 concurrent streams • CivicPlus Media: Implementation Fee • AMM Select: Live Meeting Manager Annual Fee • AMM Select: Live Meeting Manager Implementation Fee Page I CivicPlus • 302 S. 4th Street, Suite 500 • Manhattan, KS 66502 • www.CivicPlus.com Toll Free 888-228-2233 • Accounting Ext. 291 • Support Ext. 307 • Fax 785-587-8951 96 C p GSA Statement of Work for Port Orchard, WA GSA Contract GS -35F -0124U NextRequest PT Standard Plan: NextRequest Standard Plan for local agencies; Unlimited Staff Users, Up to 10 Admin-Publisher Users, Up to 2TB Storage. Core Features: Review & Redaction Features, Payments, IT & Compliance Features NextRequest PT Standard Implementation: Standard Implementation (Virtual Only): Admin Users: 1 Kickoff Call, 1 Admin Training. Staff Users have Access to a monthly webinar for general training and questions Renewal Term Annual Services $42,086.00 1. Performance and payment under this Statement of Work ("SOW") by and between Port Orchard, WA ("Customer") and CivicPlus ("CivicPlus") shall be subject to the terms & conditions of the Agreement by and between the General Services Administration and CivicPlus and the terms and conditions of the CivicPlus Master Services Agreement and the applicable Solution and Services terms and conditions located at https://www.civicplus.help/hc/en-us/p/legal-stuff. 2. This SOW shall remain in effect beginning at signing and continuing for 24 months. Total Initial Term Fees refers to the first 12 months of the agreement. Renewal Term Annual Services refers to the second 12 months of this agreement. This SOW may be renewed for an additional 1 -year Renewal Term upon mutual agreement of the Parties. 3. The Total Initial Term Fees will be invoiced as follows: 100% upon signing. 4. Renewal Term Annual Services shall be invoiced on the first day of each Renewal Term. Annual services, including but not limited to hosting, support and maintenance services, shall be subject to a 5% annual increase beginning in Year 2 of service. Page 2 CivicPlus • 302 S. 4th Street, Suite 500 • Manhattan, KS 66502 • www.CivicPlus.com Toll Free 888-228-2233 • Accounting Ext. 291 • Support Ext. 307 - Fax 785-587-8951 97 C GSA Statement of Work for Port Orchard, WA GSA Contract GS -35F -0124U Acceptance We, the undersigned, agreeing to the conditions specified in this document, understand and authorize the provision of services outlined in this SOW. Authorized Client Signature By Name: Title: Date: Organization Legal Name: Billing Contact: Title: Billing Phone Number: Billing Email: Billing Address: Mailing Address: (If different from above) CivicPlus By: Name: Title: Date: PO Number: (Info needed on Invoice (PO or Job#) if required) Page 3 CivicPlus • 302 S. 4th Street, Suite 500 • Manhattan, KS 66502 • www.CivicPlus.com Toll Free 888-228-2233 • Accounting Ext. 291 • Support Ext. 307 • Fax 785-587-8951 98 Docusign Envelope ID: 22730BDE-29CA-4A74-8AA4-ADF853D8D55A RESOLUTION NO. 053-25 A RESOLUTION OF THE CITY OF PORT ORCHARD, WASHINGTON, AUTHORIZING THE PROCUREMENT OF GOODS AND SERVICES FROM OR THROUGH THE UNITED STATES FEDERAL GOVERNMENT, GENERAL SERVICES ADMINISTRATION (GSA), PRUSUANT TO RCW 39.31.090. WHEREAS, RCW 39.34, the Interlocal Cooperation Act, authorizes local governments to cooperate with other governmental entities to make efficient use of their powers and resources; and WHEREAS, RCW 39.32.090 permits any city or town to acquire supplies, materials, or equipment from and through the United States federal government in reliance on the procurement process utilized by the federal government where such purchases are made pursuant to duly adopted rules or regulations of the governing body; and WHEREAS, the City Council of the City of Port Orchard desires to authorize the City to utilize the United States General Services Administration (GSA) contracts as an additional means of streamlined and effective procurement; and WHEREAS, the City Council finds that utilizing GSA contracts will provide the City with competitive pricing and streamlined procurement processes consistent with applicable State and City procurement requirements; now, therefore, THE CITY COUNCIL OF THE CITY OF PORT ORCHARD, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: THAT: The Port Orchard City Council hereby authorizes the use of United States General Services Administration (GSA) contracts for the procurement of materials, equipment, supplies, and services for the City. THAT: The mayor, or designee, is authorized to take such actions and execute such agreements as may be necessary to carry out the intent of this resolution. THAT: The Resolution shall take full force and effect upon passage and signatures hereon. PASSED by the City Council of the City of Port Orchard, SIGNED by the Mayor and attested by the Clerk in authentication of such passage this 9th da Sofe§�yptember 2025. 383649�F� E�-0... Robert Putaansuu, Mayor ATTEST: Brandy Wallace, MMC, City Clerk 99 CITY COUNCIL ADVISORY COMMITTEE MEETING DATES STANDING COMMITTEE Date & Time Location Economic Development and Tourism TBD, 2026 Remote Access Utilities TBD, 2026 Remote Access Finance TBD Remote Access Transportation January 27, 2026; 4:30pm Remote Access Land Use TBD, 2026 Remote Access Lodging Tax Advisory December 17, 2025; 9:00am City Hall Sewer Advisory February 2026; 3:00pm WSUD Outside Agency Committees Varies Varies Coffee with Council January 3, 2026; 10:00AM 701 Bay Street **Dates subject to change I1T11e\Y97:7 Robert (Rob) Putaansuu Mayor Administrative Official ,sl I I I'L(.1u1 ► I'I I I Fred Chang Councilmember Position 6 (Mayor Pro-Tempore) E/D & Tourism Committee Finance Committee Eric Worden Councilmember Position 4 Land Use Committee Utilities/Sewer Advisory Committee KRCC-alt DEPARTMENT DIRECTORS Mark Trenary Councilmember Position 1 Finance Committee, Chair Transportation Committee, Chair KRCC PSRC-alt Heidi Fenton Councilmember Position 5 Utilities/Sewer Advisory Committee E/D & Tourism Committee Transportation Committee Jay Rosapepe Councilmember Position 2 Utilities/Sewer Advisory Committee, Chair Land Use Committee, Chair KEDA-alt John Morrissey Councilmember Position At -Large Finance Committee E/D & Tourism Committee Lodging Tax, Chair Kitsap Economic Development Alliance PSRC EDD-alt Tim Drury Debbie Lund, CEBS SPHR SHRM-SCP Noah Crocker, M.B.A. Municipal Court Judge Human Resources Director Finance Director Matt Brown Nicholas Bond, AICP Denis Ryan, CPWP-M, CPRP Police Chief Community Development Director Public Works Director Scott Diener Councilmember Position 3 Land Use Committee Transportation Committee Kitsap Public Health District Brandy Wallace, MMC, CPRO City Clerk 100