INTERLOCAL AGREEMENT
BETWEEN COWLITZ COUNTY
AND
COWLITZ COUNTY PUBLIC FACILITIES DISTRICT
This Interlocal Agreement is entered into between Cowlitz County a political
subdivision of the State of Washington County and Cowlitz County Public Facilities
District a municipal corporation duly organized and existing under the laws of the State of
Washington PFD
PURPOSE This agreement is intended to allow the County and the PFD to share
the costs of the analysis of Kennedy Mohn P
S Consultant with which the PFD is
contracting to evaluate the market feasibility of developing a hotel near the Conference
Center The letter of Consultant dated February 20 2012 approved as to Phase I and
signed by the PFD on March 14 2012 is incorporated herein by this reference
II
COST SHARE AND BILLING The County and the PFD shall share equally the cost
of the services of Consultant County shall be responsible upon PFD invoicing and proof of
expenditure by Consultant to pay to the PFD onehalf 1
2 of the following costs and fees
of the Consultant
A
The total fee of the Consultant shall not exceed 10
00 plus
500
reimbursement of reasonable costs This sum is the total for a twophase
analysis as defined in said letter
B
The total fee for Phase I is 00
500 plus costs which are not expected to
7
exceed 925
00 The share of each party is not to exceed 50
212
4
C
The retainer for Phase I which is a part of the fee and is to be paid prior to
commencement of the study is 00
000 to be promptly paid in equal
6
shares by both parties
D
The additional fee for Phase II if and when contracted is 00
000 plus
3
costs The Parties agree each will contribute equally to the fees and
expenses of Phase II
III
ADMINISTRATIVE PROVISIONS
A This agreement will be jointly administered by Cowlitz County and the PFD The
parties stipulate that the following persons shall be the contact person for their
respective jurisdiction
Interlocal Agreement Between
Cowlitz County and Cowlitz County Public
Facilities District
1
a
COWLITZ COUNTY
KELSO WA 98626
360
b
COWLITZ PFD
1900 7th Avenue
Longview WA 98632
360
The County and the PFD may mutually amend this agreement Such
amendments shall not be binding unless they are in writing and signed by
personnel authorized to bind the County and the PFD
C
This agreement will be governed by the laws of the State of Washington both
as to interpretation and performance Any action at law suit in equity or other
judicial proceeding for the enforcement of this agreement may be instituted
only in a court of competent jurisdiction in the State of Washington County of
Cowlitz
D
Any provision of this agreement which is declared invalid or illegal shall in no
way effect or invalidate any other provision In the event either of the parties
defaults on the performance of any terms of this agreement or either party
places the enforcement of this Agreement in the hands of an attorney or files
a lawsuit each party shall pay all its own attorneys fees costs and
expenses
E
This instrument embodies the whole agreement of the parties
F
This agreement will take effect upon the on the date last executed by the
parties and will expire when the study defined herein is completed
G
A copy of this agreement shall be recorded in the Cowlitz County Auditor
s
Office
Interlocal Agreement Between
Cowlitz County and Cowlitz County Public
Facilities District
2
Dated Mareb
I
wt
Dated March 1 2012
2012
COWLITZ COUNTY PUBLIC
COWLITZ COUNTY BOARD OF
FACILITIES DISTRICT
COMMI
RICKSON Chair
GEO
TONERS
E RAITE Chair
I HAEL A KARNOF KI
Commissioner
Paul R Roesch
v ER
ar
n r
Attorney for PFD
Attest
Y
1
e
9
0
Clerk of the Board
woo
Approved as to For
Jensen Chief Civil
Douglas
Deputy rosecuting Attorney
Interlocal Agreement Between
Cowlitz County and Cowlitz County Public
Facilities District
3
z
A
1
s O
Kennedy
Mohn P
S
Hotel Brokerage Consulting
Appraisals
com
HotelRealtyNW
www
February 20 2012
Mr Nelson A Graham Administrator
Cowlitz County Public Facilities District PFD
157 McCormack Road Spur 2
Castle Rock Washington 98611
Transmitted by email nelsongr@cni
net trevor@wddcorp
com
Dear Mr Graham
As requested I am pleased to resubmit this proposal to assist you in evaluating the market
feasibility of developing a hotel in Longview Washington at one of the sites previously
identified
near
the Cowlitz
County Expo
Conference Center
As I understand you currently have an agreement from the Cowlitz County Commissioners to
fund up to 50 percent of the cost of a hotel feasibility study and you are also seeking a decision
form the PFD Board to fund the remaining 50 percent of the study The results of the study
might then be used to identify a developer that would be interested in pursuing hotel
development in the area We propose to complete the study in one or two phases Phase I of our
study will include a review of the local lodging market to evaluate whether there is sufficient
demand to support more hotel rooms and if so make recommendations regarding the type size
affiliation and quality level of property best suited for the market This phase will also include a
recommendation as to the most appropriate site
Phase II of our study will include the
preparation of performance projections which include rate and occupancy and net operating
income projections that the proposed hotel could reasonably be expected to achieve during its
first five years of operation
If at any stage of the assignment we conclude that the feasibility of the proposed hotel is
questionable we will stop our work and report to you with our findings At that point you will
have the option of stopping the assignment and paying for that portion of the project that has
been completed plus any outofpocket expenses incurred or authorizing us to complete the
assignment
QUALIFICATIONS OF KENNEDY
MOHN P
S
Kennedy
Mohn is one of the leading professional services
firm in the Northwest and Upper
Rocky Mountain states that is devoted solely to the hospitality industry The firm which has
Thomas P Kennedy CHA
14108 SE 182
Renton WA 98058
Tel 425 277
5755 Fax 425 2775759
com
tkenttedy@HotelRealhiNW
Michael J Mohn MAI
19709 51 Ave SE Bothell WA 98012
Tel 425 4857925 Fax 425 4859114
com
mmohn@HotelRealtyWW
Mr Nelson A Graham
February 20 2012
Page 2
been in existence since 1988 has two professionals with a combined total of more than 60 years
of experience in the hospitality industry
Kennedy
Mohn P
S provides services in three primary areas
Management consulting services including market and economic feasibility analyses
strategic planning services acquisitions due diligence litigation support and other
general consulting services
Appraisal services Our firm has completed appraisals of hospitality properties located
throughout the West Coast and Alaska ranging from small limitedservice hotels to
100 million resorts These appraisals have been completed for a wide variety of
major lending institutions and private developers for planning or acquisition purposes
property tax appeals or estate tax planning
Michael J Mohn holds the MAI
designation from the Appraisal Institute and appraisal licenses in multiple states
Brokerage services Thomas P Kennedy and Michael J Mohn are licensed real estate
brokers Our vast experience in the industry and wide range of contacts provides
invaluable assistance to buyers and sellers of hospitality properties We began offering
brokerage services in 1999 and since this time we have successfully represented the
interests of our clients as buyers and sellers in numerous transactions throughout the
Pacific Northwest representing more than 147 million in asset value
The following characteristics distinguish our firm from other hospitality consulting firms
Kennedy
Mohn not only provides the benefit of many years of experience in
observing and analyzing what does and doesn
t work in the hospitality industry but we
also know what needs to be done to implement consulting theory and
recommendations We are not in the business of delivering reports that look good but
simply gather dust on the shelf
Kennedy
Mohn has developed an excellent reputation for delivering insightful well
researched high quality work and for telling it like it is rather than simply telling the
client what they want to hear We have purposely kept the firm small so the principals
can be directly involved with each client thus ensuring high quality services You may
learn more about our company our philosophy and our experience by visiting our web
site at www
com
HotelRealtyNW
Hotel
KENNEDY
MOHN P
S
Brokerage Consulting Appraisals
Mr Nelson A Graham
February 20 2012
Page 3
SCOPE OF WORK
Phase 1 Market Feasibility Study
Our market research and analysis will include the following scope of work
At the outset of the study we will meet with you to review your preliminary plans and
or
vision for the project and to gather any additional information that would be useful to our
research and analysis
Reviewing the market suitability of one or more of your sites previously identified in an
April 2010 Master Plan prepared for the Cowlitz County PFD and the Cities of Kelso and
Longview by Berger ABAM Our review would include an assessment of each sites
Proximity to demand generators
Access and visibility
Surrounding neighborhood characteristics and how they affect the desirability
for lodging use including a definition of the competitive market area in Kelso
Longview
Advantages and disadvantages of each site compared to the sites of primary
competitors
Conducting interviews with state and local officials regarding economic tourism and
development conditions and trends in the area and the impact of any changes on the
demand for hotel rooms As considered appropriate we will interview representatives
of the following organizations
Kelso Longview Chamber of Commerce Economic development and area data
Cowlitz
County Expo
Conference Center
Cowlitz Economic Development Council CEDC
Community Development Zoning
parkingproposed hotels
Cowlitz County
Washington State Department of Transportation traffic volumes
highway changes
Port of Longview importsexports projects tenants
Washington Employment Security Department employment trends
Other pertinent organizations as determined in the course of our fieldwork
We will research the better quality hotels currently operating in the KelsoLongview
market that might be competitive with a hotel located on your site to establish a baseline of
historical performance in the market In addition as appropriate we will interview owners
Hotel
KENNEDY
MOHN P
S
Brokerage Consulting Appraisals
Mr Nelson A Graham
February 20 2012
Page 4
managers or corporate representatives of the directly competitive hotels to gather
additional information concerning the local lodging market
Based on information
gathered through these sources we will complete a profile of existing and proposed hotels
in the area that would be most directly competitive with a hotel if built on your site We
will inspect the competitive hotels and gather information to ascertain the following
Physical characteristics of property including food and beverage and banquet and
meeting capacity
Management and franchise affiliations
Published room rates including published banquet and meeting space rates
Estimated occupancy average room rate and RevPAR
Competitive advantages and disadvantages of each property
Status of proposed hotel projects
Outlook for the competitive hotel market
Based on this research we will project market occupancy rates for the competitive market
through your proposed hotel
s fifth year of operation based on anticipated changes in the
supply and demand for hotel rooms in order to determine the likely strength or weakness of
the market
If development of a hotel is warranted as appropriate we will make recommendations
regarding the type and quality hotel best suited for the market the number mix and
approximate size of guestrooms the number and approximate size of meeting and banquet
rooms and food and beverage outlets that should be included in the hotel and any additional
guest amenities that may enhance the performance of the hotel We will also comment on
management alternatives the suitability of the proposed hotel and its brand if affiliated and
the recommended market positioning of the hotel relative to its competition
Phase II
Performance Projections
Once we have reached agreement with you regarding the type and quality of hotel and number
and mix of hotel guestrooms affiliation and amenities and have your written authorization to
proceed we will then
Project the occupancy rate and average room rate the proposed hotel could reasonably be
expected to achieve during its first five years of operation
Project the net operating income the proposed hotel could reasonably be expected to achieve
during its first five years of operation based on industry averages and actual operating results
of comparable hotels Net operating income is defined as income available for debt service
before deducting depreciation interest rent amortization and income taxes Our projections
Hotel
KENNEDY
MOHN P
S
Brokerage Consulting Appraisals
Mr Nelson A Graham
February 20 2012
Page 5
will assume the hotel will be professionally managed and marketed Our report will include
supporting rationale for our projections
COMMUNICATION OF STUDY RESULTS
At the completion of our Phase I study we will prepare a letter report outlining our findings and
conclusions in a summary format Should you elect to proceed with the second phase of the
assignment we will amend our Phase I report and issue a final report summarizing our findings
and conclusions from both phases at the completion of Phase II If both phases of the study are
completed simultaneously one final report summarizing our findings and conclusions from both
phases will be provided following completion of the assignment Our analysis and report
s will
be subject to a number of assumptions and limiting conditions which are attached to this letter
PROFESSIONAL FEES AND TIMETABLE
Our professional fee for completion of our market feasibility study and financial projections will
be 7
500 for Phase I and 3
000 for Phase II Should you elect to contract both phases
simultaneously the total fee will be reduced to 10
000 In addition to our professional fees we
will be reimbursed for outofpocket costs incurred for travel during our research time in the
local market and the cost of a Smith Travel Report if deemed appropriate
We will require receipt of a 6
000 retainer prior to beginning the study The balance of our
professional fees and outofpocket expenses will be due upon delivery of our draft report
Given our present scheduling we can begin the study within approximately two to three weeks
of receiving the requested retainer and your written authorization to proceed Barring unforeseen
circumstances we will complete Phase I of the study within approximately four weeks Phase II
within approximately three weeks of the start of Phase II or five weeks if Phases I and II are
combined Once the report is reviewed by you three signed and bound copies and one signed
and unbound copy of the final report will be issued
Additional hourly consulting or meetings beyond the scope of this assignment will be billed at
our standard hourly rate of 300
hour
If any suit or action is filed by any party based on the subject matter of this proposal the
prevailing party shall be entitled to recover reasonable attorney fees incurred in preparation or in
prosecution or defense of any suit or action as fixed by the trial court and if any appeal is taken
from the decision of the trial court reasonable attorney fees as fixed by the appellate court
Hotel
KENNEDY MOHN P
S
Brokerage Consulting Appraisals
Mr Nelson A Graham
February 20 2012
Page 6
ACCEPTANCE
If this letter correctly states the nature of the work you would like performed and the other
arrangements are satisfactory please sign and return a copy via email or facsimile and mail the
required retainer as our authorization to begin the study This proposal letter is valid for fifteen
days from its issue date
Please call if you have any questions after you have reviewed this letter We look forward to
working with you
Sincerely
PHASE I
ACCEPTED BY
Signature
Date
Signature
Date
PHASE II
ACCEPTED BY
Hotel
KENNEDY MOHN P
S
Brokerage Consulting Appraisals
Mr Nelson A Graham
February 20 2012
Page 7
GENERAL ASSUMPTIONS
This feasibility study report has been prepared under the following general assumptions
No responsibility is assumed for matters of a legal nature
Responsible ownership and competent property management are assumed
The information provided by others is believed to be reliable However no warranty is given
for its accuracy
All engineering is assumed to be correct The plot plans and illustrative material in this
report are included only to assist the reader in visualizing the property
It is assumed there are no hidden or unapparent conditions of the property subsoil or
structures that render it more or less useful No responsibility is assumed for such conditions
or for arranging for engineering studies that may be required to discover them
Full compliance with all applicable federal state and local environmental regulations and
laws is assumed
Full compliance with all applicable zoning and use regulations and restrictions is assumed
It is assumed that all required licenses certificates of occupancy consents or other
legislative or administrative authority from any local state or national government or private
entity or organization have been or can be obtained
It is assumed that the utilization of the land and improvements is within the boundaries or
property lines of the property described and that there is no encroachment or trespass
Hotel
KENNEDY MOHN P
S
Brokerage Consulting Appraisals
Mr Nelson A Graham
February 20 2012
Page 8
LIMITING CONDITIONS
This feasibility study report has been prepared under the following general limiting conditions
Possession of this report or a copy thereof does not carry with it the right of publication It
may not be used for any purpose by any person other than the party to whom it is addressed
Kennedy
Mohn P
S and in any event only with proper
written qualification and only in its entirety
without the written consent of
Kennedy
Mohn P
S is not required to give further consultation testimony or be in
attendance in court with reference to this report unless arrangements have been previously
made
Projections of future revenue expenses net operating income mortgage debt service capital
outlays cash flow or inflation represent our judgment of the assumptions likely to be used by
informed persons in the marketplace
These estimates are intended solely for analytical
purposes and are not intended to accurately predict future results or events Actual performance
will differ from these projections and these differences may be significant
Estimates of project cost and operating performance are based on building plans and
specifications provided by the client during the course of the study Cost figures are intended as
approximations only and should be verified by competent architectural and engineering firms
In addition to the extent that the eventual design and construction of the project vary from the
plans and specifications provided the actual development costs and operating performance of
the project will differ from the estimates presented herein
Unless otherwise stated in this report the existence of hazardous substances including without
limitation asbestos polychlorinated biphenyls petroleum leakage or agricultural chemicals
which may or may not be present on the property or other environmental conditions were not
called to the attention of nor did the consultant become aware of such during the consultant
s
inspection The consultant has no knowledge of the existence of such materials on or in the
property unless otherwise stated
The consultant however is not qualified to test such
substances or conditions The presence of such substances such as asbestos urea formaldehyde
foam insulation or other hazardous substances or environmental conditions may affect the
feasibility of the project Our analysis is predicated on the assumption that there is no such
condition on or in the property or in such proximity thereto No responsibility is assumed for
any such conditions nor for any expertise or engineering knowledge required to discover them
KENNEDY
Hotel
MOHN S
P
Appraisals
Brokerage Consulting