REDEVELOPMENT PROJECT PLAN FOR THE VALLEY VIEW SHOPPING CENTER PROJECT

Transcription

1 REDEVELOPMENT PROJECT PLAN FOR THE VALLEY VIEW SHOPPING CENTER PROJECT In order to promote, stimulate and develop the general and economic welfare of the City of Overland Park, Kansas ( City ), the Overland Park City Council on December 6, 2010, passed City Ordinance No. RD-2891 establishing a Redevelopment District ( District ) pursuant to K.S.A et seq., as amended (the Act ), which District is also referred to as the Valley View Shopping Center Project. The owner of the Valley View Shopping Center (not including the two buildings which are not part of the District) as of the date of this Redevelopment Project Plan for the Valley View Shopping Center Project ( Project Plan ) is American National Insurance Company. The Valley View Shopping Center is under contract for purchase by Hy-Vee, Inc. ( Hy-Vee ). With the Valley View Shopping Center under contract for purchase, The R.H. Johnson Company ( RHJ ) and Hy-Vee have worked closely together to develop, finance, and advance a plan to redevelop the District with a completely new, Hy-Vee anchored shopping center (the Project ). As part of that process, on behalf of RHJ and Hy-Vee, RHJ submitted an Application for Tax Increment Financing (the TIF Application ), incorporated herein by reference. RHJ and Hy-Vee have advised the City that it is anticipated that Hy-Vee will close on the purchase of the Valley View Shopping Center and act as developer for the Project. Hy-Vee would complete demolition, site work, and construction of all public infrastructure for the District, as well as construction of the new Hy-Vee grocery store. It is also anticipated that RHJ will purchase from Hy-Vee and develop the three proposed outlots. RHJ and Hy-Vee have further advised the City that although the development expectations on the date of this Project Plan are as set forth in the preceding paragraph, it is also possible that there will be a subsequent determination that RHJ will act as developer of the District, in which case Hy-Vee would lease its grocery store from RHJ. Whether the developer is ultimately Hy-Vee or RHJ, the developer (the Developer ) will be bound by all developer obligations under a development agreement entered into with the City. Additionally, as stated in the TIF Application, the Developer may act through a new or existing S-Corporation or other entity, which shall be owned and controlled by Hy-Vee or RHJ, or a majority of its principals. Pursuant to K.S.A and the establishment of the District, the City in cooperation with the Planning Commission, have prepared this Project Plan that provides as follows: 1. Comprehensive Feasibility Study. An economic impact and feasibility study and analysis, as amended and restated (the Study ), for the Valley View Shopping Center Project has been prepared by City staff. The Study is attached as Exhibit A to this Project Plan. Projections on development within the District are integral to the reliability of the Study. In summary, the Study indicates that (a) some form of subsidy is required for the Developer to achieve an acceptable rate of return on the Project; and (b) if redevelopment costs, assessed values and sales tax revenues are as projected, the District is expected to produce sufficient tax increment revenues and incremental sales tax

2 revenues to pay for a portion of the costs of the TIF eligible improvements described in this Project Plan. 2. Redevelopment District Plan and Redevelopment Project Plan Area. The District area includes the land within the City of Overland Park, Kansas as legally described on Exhibit B attached hereto, but generally described as an area of approximately acres located at the southeast corner of 95 th Street and Antioch Road. As indicated on Exhibit B, the legal description includes certain rights of way, which are part of the Redevelopment District. The Redevelopment District Plan and this Project Plan contemplate the demolition of existing improvements and construction of a new shopping center consisting of an anchor grocery store and one or more additional buildings on the outlots, which may include, but is not limited to, general retail, specialty retail, restaurants, and non-retail uses customarily found in shopping centers, including related public and private infrastructure. TIF funds would be used to pay for eligible project expenses within the District, including but not limited to land acquisition; site preparation, including demolition of buildings and infrastructure, remediation, grading and costs relating thereto; street improvements and their appurtenances; sidewalks; sewers and other utility improvements; parking facilities; landscaping; water mains; plazas; and other eligible costs incurred in the design and development of the Project and implementation of the Project Plan. 3. Map of Redevelopment District/Project Area. A map of the District which includes the entire Project Area to be developed is attached as Exhibit C to this Project Plan. 4. Relocation Assistance Plan. The Owner owns all five buildings in the District, all of which are used for commercial purposes and are under contract for sale to Developer. As part of the Project, all of the buildings will be demolished. The Owner is a party to leases with tenants in certain of the buildings. A majority of the leases provide for month-to-month occupancy. The Owner and Developer are in the process of negotiating the terms of lease termination, if applicable, with each separate tenant. 5. Description of the Buildings and Facilities Proposed to be Constructed or Improved. The Developer proposes to demolish the five existing buildings in the District comprising comprising an aggregate of approximately 102,773 square feet. The Developer proposes to replace such buildings with a new shopping center consisting of approximately 102,920 square feet, including a Hy-Vee Supermarket of approximately 83,620 square feet, of which approximately 5,000 square feet is for outdoor sales, and other retail and commercial uses of approximately 19,300 square feet. The Developer s expectation is that these other uses will include a financial institution and small retail shops. All buildings and improvements will be constructed, improved and renovated in accordance with the requirements of the City Planning Commission and City Ordinances. A description of buildings and improvements anticipated to be constructed or improved as provided herein are available for review at Overland Park City Hall, in the Office of the City Manager

3 6. Other Relevant Information. The City will not issue general obligation bonds to finance the costs of the TIF eligible improvements. The City may issue special obligation bonds to finance that portion of the TIF eligible improvements agreed upon by the City, provided that such bonds shall be payable solely from tax increment revenues and incremental sales tax revenues approved by the City

4 EXHIBIT A ECONOMIC IMPACT AND FEASIBILITY STUDY AND ANALYSIS [attached]

5 City Hall 8500 Santa Fe Drive Overland Park, Kansas December 30, 2010 Mayor Carl Gerlach Council President Dave Janson And Members of the Governing Body VALLEY VIEW SHOPPING CENTER TAX INCREMENT FINANCING ( TIF ) PROPOSAL REVIEW AMENDMENT AND RESTATEMENT OF REPORT DATED DECEMBER 14, 2010 On December 6, 2010, the City Council adopted Ordinance RD-2891 creating a redevelopment district on the southeast corner of 95 th and Antioch. This is the first step in the process to consider a TIF request for the redevelopment of Valley View Shopping Center. The developer of the project, The R.H. Johnson Company ( Developer ), has requested $4,059,479 in tax increment financing on a pay-as-you go basis and, depending on market conditions, issuance of special obligations bonds payable from the tax increment generated following redevelopment. The Developer has requested utilization of 100% of the eligible incremental real property tax and 100% of the sales tax increment generated as a result of the redevelopment. We have worked with the Developer to review and analyze the proposed project. The focus of the analysis has been to review the cost estimates and assumptions for the project, analyze the potential incremental increases in tax revenues that would be generated by the project and evaluate the projected return on the developer s investment with and without TIF assistance. The analysis is based on a variety of assumptions and estimates intended to realistically model a pro forma for the project. While many if not all of these assumptions and estimates will differ from actual information once the project is complete, we believe that these estimates are reasonable and reflect likely costs and returns that can be anticipated for the redevelopment project. This Amendment and Restatement of the December 14, 2010 Report reflects revisions to the analysis as a result of the successful appeal of the valuation of the property described under the caption Tax Increment Property Tax Increment. Project Description As outlined in the Conservation Area Study the proposed redevelopment project calls for demolition of the existing five buildings on the site (consisting of 102,997 square feet) and construction of a new shopping center consisting of approximately 102,920 square feet. The new construction would consist of a HyVee Supermarket of approximately 83,620 square

6 Valley View TIF Proposal Review Page 2 December 29, Amendment and Restatement of Report dated December 14, 2010 feet, of which 5,000 square feet is for outdoor sales, and other retail and commercial uses of approximately 19,300 square feet. During the past ten years the shopping center has experienced rising vacancy rates and substantial structural deterioration including failing roofs, non-functioning rooftop HVAC equipment, water damaged ceilings, mold, mildew, standing water, and crumbling and shearing building foundations and facades. As of October 31, 2010 the shopping center is approximately 67% vacant which equates to 68,882 square feet. The existing property currently has twelve (12) tenants. In addition, changing retail concepts combined with the aging center has resulted in space that has become increasingly obsolete in the current retail environment. In the TIF Application, the Developer stated: As a whole, the shopping center, in its present configuration is economically obsolete in that the center is made up almost entirely of small shop spaces. Modern neighborhood shopping centers of this size are not economically sustainable without an anchor and mid-size spaces supplementing the smaller shops. (Valley View Shopping Center TIF Application, October 11, 2010; page 4.) Project Cost The total project cost submitted by the Developer is $20,985,800. These costs, by category, are summarized in Table 1. Table 1 also itemizes costs recommended for TIF reimbursement totaling $6,903,930, an amount which exceeds the Developer s TIF request for $4,059,479 in net TIF funds applied to the project. These are eligible costs as outlined by the Kansas TIF Act; a complete list of eligible redevelopment project costs that can be paid with TIF funds is included in Exhibit A. TABLE 1 Project Costs Total Cost TIF Eligible Non-TIF Land Acquisition $ 3,600,000 $ 3,600,000 $ 0 Demolition of Buildings & Site Buildings/Site Remediation (environmental/materials/soil) 125, ,000 0 Demolition of Buildings 157, ,500 0 Demolition of Parking Lot 255, ,000 0 Demolition of Utilities 100, ,000 0 Site Work Grading, Utilities, Parking, Curbs, Landscaping 2,150,000 1,720, ,000 Deceleration Lanes, Demo &Construction 95 th St, islands 190, ,000 0 Site Enhancements (per zoning: fencing/landscaping) 292, ,000 0 Building Construction HyVee 6,800,000 6,800,000 Shops 2,509,000 2,509,000

7 Valley View TIF Proposal Review Page 3 December 29, Amendment and Restatement of Report dated December 14, 2010 Professional Fees TABLE 1 Project Costs Total Cost TIF Eligible Non-TIF Legal Fees 200, ,000 Architect Fees HyVee 325, ,000 Architect Fees Shops 96,500 96,500 Civil Engineering 300, ,200 79,800 Development & Construction Administration Project Construction Management 542, , ,535 City Fees 150, ,000 Development Fees 0 0 Taxes & Insurance 224, ,000 Tenant Relocations 1,100,000 1,100,000 Contingency 480, , ,235 Construction Financing Loan Fees & Costs 254, ,000 Construction Interest 810, ,000 Leasing Commissions HyVee Commission 210, ,000 Shops Commissions 115, ,800 TOTAL PROJECT COST $ 20,985,800 $ 6,903,930 $ 14,081,870 We reviewed specific project cost components, as outlined below. Our conclusion from this analysis is that all of the costs are reasonable and represent an appropriate basis upon which to further review the financial feasibility of the project. We have reviewed the purchase contract and verified the $3,600,000 land acquisition cost. Construction costs have been reviewed in comparison to a third-party construction data source: RS Means Construction Cost Data Services. The following summarizes a comparison of square foot costs according to RS Means with the per foot costs of the proposed project. Project Cost per square foot RSMeans per square foot Demolition of Buildings $1.40 $2.83 Demolition of Parking Lot $1.19 $5.63 HyVee Construction $81.32 $88.00 Shops Construction $ $102.00

8 Valley View TIF Proposal Review Page 4 December 29, Amendment and Restatement of Report dated December 14, 2010 Professional fees (engineering and architectural) represent 5.75% of the development costs. Construction management costs represent approximately 4.3% of the total development costs (demolition, site work and construction), which is below an industry standard range of 5 10%. We reviewed documentation regarding the cost of tenant relocations; the total included in the project cost is higher than indicated by the documentation. We have taken this difference into account in the analysis of the project pro forma. Project Contingency represents 3.8% of development costs (construction, parking, and professional fees), and 3.6% when professional fees (architectural and engineering) are included. This is well within industry standards. The project costs do not include a development fee. The costs do include leasing commissions, fees paid to commercial real estate brokers for leasing space in the shopping center. Commissions reflect approximately 2% of the total development costs. Pro forma Analysis Our development of a Pro forma has focused on the following elements: understanding and verifying assumptions regarding the projected cash flow and net operating income expected to be generated by the property; establishing baseline property valuation and sales tax data which is then projected out over the life of the project; calculating the return that the operating income represents when compared to the equity investment in the redevelopment; and reviewing the expected return on investment in comparison to current market returns. We have also analyzed different scenarios using varying assumptions regarding project cost as well as revenue, expenditures and income from the project to evaluate whether and to what extent changes in basic assumptions could create benefits for the Developer with TIF assistance that would exceed market returns. We have also used independent sources of information to evaluate the assumptions. These sources include The Korpacz Real Estate Investor Survey for the Third Quarter 2010 ( Q Korpacz ) published quarterly by PricewaterhouseCoopers LLP, a widely recognized source for property market information, and 2008 Dollars & Cents of Shopping Centers/The SCORE ( Dollars & Cents ) a joint publication of the Urban Land Institute (ULI) International Council of Shopping Centers (ICSC). It should be noted that the 2008 Dollars & Cents publication is the most recent data that is available, and has not been adjusted to account for economic events during the last two years.

9 Valley View TIF Proposal Review Page 5 December 29, Amendment and Restatement of Report dated December 14, 2010 Project Cash Flow: Revenue, Expenditures and Income The pro forma analysis has been prepared based on two scenarios. The first is outlined below. In the original analysis of this project this scenario was referred to as the base case. This scenario takes into consideration the potential income from leasing the property to various tenants, including HyVee, and offsets this revenue to account for vacancies and operating costs. The base case pro forma uses the Developer s estimated rental rates for the project. This rent information has been evaluated in comparison to Dollars & Cents; Table 2 compares the average rent anticipated for the redeveloped center with data presented by Dollars & Cents. The proposed rent is within range of rents reported in from Dollars & Cents for Neighborhood Shopping Centers. Proposed 95 th & Antioch TABLE 2 Rents Dollars & Cents of Shopping Centers/The SCORE 2008 U.S. Neighborhood Shopping Centers/Age Group 1, 2, and 3 yrs old: Center Size, Center Sales, and Operating Results s.f. Proposed Rent Per s.f. Average Median Lower Decile Upper Decile Supermarket 83,620 $14.00 $8.50 Financial 4,500 $20.00 $22.28 Small Shops 14,800 $20.00 Combined 102,920 $15.13 $13.87 $13.63 $9.44 $18.55 The base case pro forma also takes into consideration expenses associated with operating the project including operation, repair and maintenance of common areas. Examples of these expenses include property management fees, insurance, utilities, landscaping and snow removal. The fees used in the pro forma estimate a combined fee of $0.33 per square foot. If HyVee is excluded, and only the Small Shops are included in the calculation, the fee is $0.60 per square foot. Both are below the range of data for reported common charges in Dollars & Cents for U.S. Neighborhood Shopping Centers; the average of reported charges are $2.20 per s.f., and range from the Lower Decile of $0.92 to the Upper Decile of $4.80. Debt Service has also been estimated using data provided by the Developer. The assumptions include 25% equity contribution and the balance financed over twenty years at a 7% interest rate. The Korpacz Real Estate Investor Survey for the Third Quarter 2010 reports interest rates (nationally) for Strip Shopping Centers from a low of 5% to a high of 8.5% and an average of 6.54%. The base case pro forma incorporates these assumptions, and escalates rental rates by 3% every fifth year during the twenty year period. This pro forma is attached in Exhibit B.

10 Valley View TIF Proposal Review Page 6 December 29, Amendment and Restatement of Report dated December 14, 2010 Return on Investment without TIF Assistance The income generated from operating the redeveloped shopping center is the source for providing a return on the original investment in the project. The capital costs to redevelop the property, as outlined in the Project Costs section, represent the original investment. The equity contribution assumed in our analysis is 25%. As was the practice adopted during consideration of prior TIF project requests, the analysis of returns has been based on the internal rate of return (IRR) which measures a return over time based on cash flows into and out of the investment at intermediate points in time. A project IRR, or the return on all of the costs of the project (unleveraged), as well as an equity return, have been calculated. To understand what an appropriate rate of return should be, we have referred to the Q Korpacz report. For the third quarter of 2010, the survey reports, for non-institutional investors, an average IRR for strip shopping development projects of 12.0%, with a range between 6.5% and 20.5%. As previously noted, the equity contribution for the Valley View project is based on the assumption that the developer will make a 25% equity contribution to the project and the remainder will be financed with debt. The revenues created by the property from lease payments, less expenses and debt payments form the cash flow generating the return. In addition, the value of the property at the end of the 20 year TIF period has been estimated based on the income capitalized at the current commercial capitalization rate of 8.75%. This cash flow, generated over the twenty-year TIF period creates the return used on calculating the IRR for the project. The IRR generated by the project on the equity investment (Equity IRR) is estimated to be 6.9% and the project return is 7.2%, both at the low end of the range of reported development returns. Because returns are ultimately based on the operating pro forma, varying assumptions in that pro forma can alter the ultimate returns. The primary driver of return in this proposed project is rental rates. However, to generate a rate of return over 10% significant increases to rents would need to be applied, well beyond what is realistic given Dollars and Cents data and the current market conditions for that area. Tax Increment In order to improve the return anticipated for this redevelopment, the Developer has requested that 100% of both the Property and Sales Tax increment generated from the project after redevelopment be applied to eligible TIF costs. The projection of the Tax Increment generated by the redevelopment is attached in Exhibit C and further described on the following page.

11 Valley View TIF Proposal Review Page 7 December 29, Amendment and Restatement of Report dated December 14, 2010 Property Tax Increment The current market valuation of the property is $3,600,000, and the assessed valuation is $900,000. This reflects 2010 valuation, after resolution of an appeal of the valuation that was in process when the developer submitted the TIF application.) The prior market valuation and assessed valuation was $5,661,000 and $1,415,215, respectively.) The new valuation of $3,600,000 is the basis for taxes payable in December of 2010 and May of The new valuation data has been used in this Amended and Restated Analysis of the Valley View TIF Project. The 2010 mill levies have been applied to this valuation. The projected assessed valuation of the redeveloped property has been based on comparisons with other shopping centers anchored by grocery stores, including HyVee locations within Johnson County as well as the valuation of adjacent small shops located at 9511 Antioch, constructed in A summary of the information used in estimating the valuation after redevelopment, $8,694,895 is attached in Exhibit D. The pro forma developed for the project includes assumptions regarding the phasing and timing of the development. For purposes of this analysis, it has been assumed that the HyVee will be constructed during 2011/2012, and open mid Construction of the shops has been assumed to occur during As such, the valuation has been "ramped up" between 2011 and 2013 as shown on Exhibit C. The state law excludes from the tax increment eligible to be used for a TIF project the State of Kansas levy of 1.5 mills and 20 mills of the total school levy. Table 3 summarizes the 2010 tax rates and those eligible to be applied to a TIF project. TABLE 3 TIF Eligible Tax Rates 2010 Tax Rate TIF Excluded Tax Rates TIF Eligible Tax Rates State of Kansas Johnson County Johnson County Library Johnson County Park & Rec JCCC City of Overland Park SMSD TOTAL As stated earlier, for the purpose of the pro forma analysis, the property tax revenue has been "ramped up" between 2011 and 2013; Table 4 summarizes the projected property tax and estimated increment that would exist upon full development of the project. The table also depicts the allocation of that increment available to the project. (continued on the next page)

12 Valley View TIF Proposal Review Page 8 December 29, Amendment and Restatement of Report dated December 14, 2010 TABLE 4 Estimated Property Tax Increment 2010 Tax Rate Current/Base Property Tax Projected Property Tax Market Value $ 3,600,000 $ 8,694,895 Assessed Value (25% of MV) 900,000 2,173,724 Increment Applied to TIF Project Increment to Jurisdiction State of Kansas* ,350 3, ,911 Johnson County ,973 38,579 22,606 0 Johnson County Library ,842 6,865 4,022 0 Johnson County Park & Rec ,115 5,108 2,993 0 JCCC ,919 19,127 11,208 0 City of Overland Park ,989 19,294 11,306 0 SMSD* ,000 43, ,474 SMSD ,473 80,845 47,372 0 TOTAL $ 89,661 $ 216,553 $ 99,507 $ 27,385 If TIF assistance for this project is approved, $89,661 will continue to be paid annually to all taxing entities as depicted above, as the base property tax. Increased property tax resulting from levies not eligible for use in a TIF project paid (21.5 mills as noted Table 4), totaling $27,385, will be paid to the State of Kansas. The estimated $99,507 incremental increase resulting from TIF eligible mill levies will be applied to the project. In addition, the pro forma includes an assumption that property taxes will grow by 1% per year over twenty years. This could be the result of increases in either the tax rate or in the assessed valuation. Sales Tax Increment The state law also provides that city sales taxes can be applied to a TIF project. The developer has requested that 100% of the incremental sales tax increase, based on the City s 1-cent sales tax rate be made available to the project. Based on City of Overland Park sales tax collection data, we have determined the total base sales at the Valley View Shopping Center to be $7,447,286. Table 5 summarizes estimated sales tax collections for all taxing jurisdictions based on base sales at the center. (continued on the next page)

13 Valley View TIF Proposal Review Page 9 December 29, Amendment and Restatement of Report dated December 14, 2010 TABLE 5 Sales Tax Currently Generated Base Tax Rate Sales Tax Total Sales $7,447,286 State of Kansas 6.300% 469,179 Johnson County Government 1.100% 81,920 Overland Park 1.000% 1.000% 84,473 Overland Park 0.125% 0.125% 9,309 Research Triangle 0.125% 9,309 Total 8.650% $ 644,190 We have projected sales tax that would be collected at a redeveloped Valley View Shopping Center based on the plan presented by the Developer. TABLE 6 Estimate of Total Sales after Redevelopment Total s.f. Proposed 95 th & Antioch Estimated Sales Per s.f. Total Sales Supermarket 83,620 $ $34,955,000 Financial 4,500 $0.00 Small Shops 14,800 $ ,090,000 Combined 102,920 $ $ 37,055,000 For the purpose of the pro forma analysis, the sales tax increment has also been "ramped up" between 2011 and Table 7 summarizes the increment that would exist upon full development. In addition, the pro forma includes an assumption that sales and therefore sales taxes will grow by 1% per year over twenty years. TABLE 7 Sales Tax Increment Tax Rate Base Sales Tax Projected Sales Tax Total Sales $7,447,286 $37,055,000 Increment Applied to TIF Project Increment to Jurisdiction State of Kansas 6.300% 469,179 2,337,300 $1,868,121 Johnson County Government 1.100% 81, , ,180 Overland Park - General 1.000% 84, , ,527 Overland Park - Streets 0.125% 9,309 46,375 37,066 Research Triangle 0.125% 9,309 46,375, 37,066 Total 8.650% $ 644,190 $3,209,150 $296,527 $2,268,443

14 Valley View TIF Proposal Review Page 10 December 29, Amendment and Restatement of Report dated December 14, 2010 If the requested TIF assistance for this project is approved, the currently collected City onepercent (1%) sales tax totaling $84,473 will continue to be received by the City. The incremental increase of $296,527 generated by the City s one-cent sales tax would be applied to the project. The incremental increase generated from these new sales for the City s one-eighth of one percent (0.125%) sales tax which equals $37,066 as well as all of the incremental increase generated by the sales tax rates of other taxing jurisdictions will be fully paid to those jurisdictions. As depicted in Exhibit F, the total estimated value of the Tax Increment over a twenty year period is $8,714,158. The Developer has requested $4,059,479 in tax increment financing assistance for the project. The net present value (NPV) of this twenty year total is $4,067,446. The NPV has been calculated using a discount rate of 7%; the discount rate submitted by the Developer in the TIF application. In addition, because the NPV is slightly higher than the requested TIF amount, in order to calculate the return on the requested TIF amount, the proforma analysis has adjusted the sales tax increment that would be applied to the project to slightly less than 100%. Return on Investment with TIF Assistance As previously noted, without TIF assistance, the IRR generated by the project on the equity investment is estimated to be 6.9% and the project return is 7.2%, both at the low end of the range of reported development returns. With the full amount of TIF assistance requested by the Developer, $4,059,479, applied to the project, the IRR generated by the project on the equity investment is estimated to be 11.7% and the project return is 9.5%. (These amounts are only slightly higher than the equity return of 11.3% and project return of 9.3%, returns generated when the TIF applied to the project was based on the previous, higher, base valuation of the property). These returns are within the Korpacz reported range for strip shopping development projects between 6.5% and 20.5%, and an average of 12%. TABLE 8 Base Pro Forma Without TIF With TIF Property and Sales Tax Growth Rate 1.00% 1.00% Net Present Value of Increment $4,059,479 Equity IRR 6.9% 11.3% Project IRR 7.2% 9.3% Growth in the increment beyond what has been assumed in the analysis will result in a faster repayment of the investment, and earlier return of the full sales and property taxed from the project to the tax rolls.

15 Valley View TIF Proposal Review Page 11 December 29, Amendment and Restatement of Report dated December 14, 2010 Alternative Development Scenario The "base case" pro forma presumes that one development entity will own, redevelop and operate the property and achieve the return on the investment in that property. A likely alternative scenario was also analyzed contemplating that HyVee, the entity under contract to purchase the existing Valley View Shopping Center, will clear the property, install all of the infrastructure and utilities, develop the proposed grocery store and then sell the portion of the property upon which the small shops are to be constructed. Based on ongoing discussions with the Developer, this is the MOST likely development scenario that will take place. A copy of this proforma is included in Exhibit B. This scenario has been modeled based on the assumption that the redevelopment of the site would require expenditure of all of the capital costs outlined in Table 1 with the exception of Building Construction, Architectural Fees, Leasing Commissions for the Shops and fees and expenses associated with the construction of the shops. The total of these expenditures (exclusive of the land) is $2.84 million; the balance of the project costs, $18.15 million, would be expenses born by HyVee in redevelopment of the site, construction of the grocery store and preparation of the property for construction of the small shops. This alternate scenario also assumes that, once redevelopment was complete, HyVee would sell the property upon which the shops could be developed. The Developer has indicated that the likely sales price of this portion of the property would be the costs of the redevelopment, apportioned based on square footage of the vertical construction (19.7%) less TIF proceeds used to pay for land improvements completed by HyVee. The estimated land on the site required to construct 19,300 square feet of small shops is 87,360 square feet. The sales price for the land by HyVee to the Developer is estimated to be between $1.24 million to $1.82 million which equates to $14.21 to $20.82 cents per square foot respectively. The total cost of the small shops development including land and vertical construction is between $4.66 million and $4.88 million. For the purposes of developing the alternate scenario, we have assumed the same timing of development, and further assumed that for HyVee, a portion of the return on the investment in the redevelopment of the property would be recovered in 2013 through the sale of land for development of the small shops. In addition, this alternative scenario assumes that HyVee would be the entity that received the return afforded by the TIF applied to the costs of redevelopment. Table 9 summarizes the range of returns that would be generated based on these assumptions for the redevelopment of the property. (continued on the next page)

16 Valley View TIF Proposal Review Page 12 December 29, Amendment and Restatement of Report dated December 14, 2010 TABLE 9 Alternative Development Scenario Pro Forma Without TIF With TIF Property and Sales Tax Growth Rate 1.00% 1.00% Net Present Value of Increment $4,059,479 Purchase Price (in millions) $1.24 $1.82 $1.24 $1.82 Summary and Next Steps Equity IRR 7.2%-7.9% 13.7%-14.8% Project IRR 5.4%-5.6% 7.3%-7.4% Based on our analysis and comparison of information to external sources, the development assumptions, as well as returns generated from the project under both development scenarios are reasonable when compared to information sources that are independent from information provided by the developer. The Kansas TIF Act requires that following acceptance of a Redevelopment Project Plan the Planning Commission must review and make a finding as to whether the project plan is consistent with the Comprehensive Plan for development of the City (K.S.A (6) (b)). If the Planning Commission makes this finding, the Governing Body can then provide notice of a public hearing to consider adoption of the Redevelopment Project Plan. Consideration of TIF approval and adoption of the Redevelopment Project Plan can only occur following the public hearing. If the determination of the Committee of the Whole and City Council is to forward the project plan to the Planning Commission, this review would be held at the next regularly scheduled Planning Commission meeting, January 10, If directed to proceed, the staff will complete negotiations of a Redevelopment Agreement with the developer. It is recommended that a review of the Development Agreement, be scheduled for a Special City Council meeting on January 19, 2011 prior to the regularly scheduled meeting of the Finance, Administration and Economic Development Committee. At this meeting the City Council could also consider adoption of a resolution scheduling consideration of the Project Plan. This scheduling would allow the public hearing to be held on February 21, 2011 and accommodate the Developer s schedule related to an outstanding contract for purchase of the Valley View Shopping Center. KRISTY STALLINGS INTERIM CITY MANAGER BILL EBEL DIRECTOR OF PLANNING & DEVELOPMENT SERVICES

17 EXHIBIT A TIF ELIGIBLE PROJECT COSTS K.S.A a. defines the following as "Redevelopment project costs" which are eligible to be paid with Tax Increment Financing. - Acquisition of property within the redevelopment project area; - payment of relocation assistance pursuant to a relocation assistance plan as provided in K.S.A , and amendments thereto; - site preparation including utility relocations; - sanitary and storm sewers and lift stations; - drainage conduits, channels, levees and river walk canal facilities; - street grading, paving, graveling, macadamizing, curbing, guttering and surfacing; - street light fixtures, connection and facilities; - underground gas, water, heating and electrical services and connections located within the public right-of-way; - sidewalks and pedestrian underpasses or overpasses; - drives and driveway approaches located within the public right-of-way; - water mains and extensions; - plazas and arcades; - parking facilities; - Major multi-sport athletic complex - Museum facility - Parking facilities including multi-level parking facilities - landscaping and plantings, fountains, shelters, benches, sculptures, lighting, decorations and similar amenities; and - related expenses to redevelop and finance the redevelopment project, Redevelopment project costs cannot include costs incurred in connection with the construction of buildings or other structures to be owned by or leased to a developer. The statute does provide however that a multilevel parking facility owned by or leased to a developer is an eligible project cost.

18 EXHIBIT B PRO FORMA

19 VALLEY VIEW PROJECT PRO FORMA Construction Year 1 2 IRR CALC YEAR TIF YEAR Revenue Rent s.f. HyVee 83, ,340 1,170,680 1,170,680 1,170,680 1,170,680 1,205,800 1,205,800 1,205,800 1,205,800 Financial Institution 4, ,500 90,000 90,000 90,000 92,700 92,700 92,700 92,700 Small Shops 14, , , , , , , , ,880 Total Potential Gross Rental Income - 585,340 1,267,180 1,556,680 1,556,680 1,556,680 1,603,380 1,603,380 1,603,380 1,603,380 Less: Vacancy Allowance - - (4,825) (19,300) (19,300) (19,300) (19,879) (19,879) (19,879) (19,879) Gross Income 102, ,340 1,262,355 1,537,380 1,537,380 1,537,380 1,583,501 1,583,501 1,583,501 1,583,501 Expenses General & Administrative 2.00% - 11,707 25,247 30,748 30,748 30,748 31,670 31,670 31,670 31,670 Non-Reimbursed Expenses 0.00% ncluded in G&A Management Fee 1.00% on Fin Inst & Small Shops Only ,667 3,667 3,667 3,777 3,777 3,777 3,777 Total Expenses 2.0% - 11,707 26,164 34,415 34,415 34,415 35,447 35,447 35,447 35,447 NET OPERATING INCOME - 573,633 1,236,191 1,502,965 1,502,965 1,502,965 1,548,054 1,548,054 1,548,054 1,548,054 Debt Service Hy Vee - (631,575) (1,263,151) (1,263,151) (1,263,151) (1,263,151) (1,263,151) (1,263,151) (1,263,151) (1,263,151) Financial Institution & Small Shops - - (50,293) (201,173) (201,173) (201,173) (201,173) (201,173) (201,173) (201,173) Open NET INCOME AFTER DEBT & RESERVES - (57,942) (77,253) 38,641 38,641 38,641 83,730 83,730 83,730 83,730 Net Proceeds to Developer Equity Reversion Year 20 Loan Payoff HyVee Loan Payoff Small Shops Sales Price - NOI 8.75% Less marketing \ Sales costs of 5% Less Remaining Debt Net Sales Proceeds Developer Equity (5,246,450) Net Income / Return to Equity (5,246,450) (57,942) (77,253) 38,641 38,641 38,641 83,730 83,730 83,730 83,730 Equity IRR 6.9% Project Return (20,400,460) 1,262,355 1,537,380 1,537,380 1,537,380 1,583,501 1,583,501 1,583,501 1,583,501 Project IRR 7.2% Tax Increment Applied to Project , , , , , , , , ,970 CUMULATIVE VALUE 8,714,163 NET PRESENT VALUE (NPV) 7.00% 4,059,479 Net Income / Return to Equity INCLUDING TIF PROCEEDS (5,245,747) 43, , , , , , , , ,700 Equity IRR 11.7% Project Return (20,299,020) 1,620,135 1,946,290 1,951,830 1,957,420 2,009,191 2,014,891 2,020,651 2,026,471 Project IRR 9.5%

20 VALLEY VIEW PROJECT PRO FORMA Revenue Rent HyVee Financial Institution Small Shops Total Potential Gross Rental Income Less: Vacancy Allowance Gross Income Expenses General & Administrative Non-Reimbursed Expenses Management Fee Total Expenses NET OPERATING INCOME Debt Service Hy Vee Financial Institution & Small Shops Open NET INCOME AFTER DEBT & RESERVES Net Proceeds to Developer Equity Reversion Year Loan Payoff HyVee Loan Payoff Small Shops Sales Price - NOI Less marketing \ Sales costs of Less Remaining Debt Net Sales Proceeds Developer Equity Net Income / Return to Equity ,205,800 1,241,974 1,241,974 1,241,974 1,241,974 1,241,974 1,279,234 1,279,234 1,279,234 1,279,234 1,279,234 92,700 95,481 95,481 95,481 95,481 95,481 98,345 98,345 98,345 98,345 98, , , , , , , , , , , ,447 1,603,380 1,651,482 1,651,482 1,651,482 1,651,482 1,651,482 1,701,026 1,701,026 1,701,026 1,701,026 1,701,026 (19,879) (20,475) (20,475) (20,475) (20,475) (20,475) (21,090) (21,090) (21,090) (21,090) (21,090) 1,583,501 1,631,006 1,631,006 1,631,006 1,631,006 1,631,006 1,679,937 1,679,937 1,679,937 1,679,937 1,679,937 31,670 32,620 32,620 32,620 32,620 32,620 33,599 33,599 33,599 33,599 33, ,777 3,890 3,890 3,890 3,890 3,890 4,007 4,007 4,007 4,007 4,007 35,447 36,510 36,510 36,510 36,510 36,510 37,606 37,606 37,606 37,606 37,606 1,548,054 1,594,496 1,594,496 1,594,496 1,594,496 1,594,496 1,642,331 1,642,331 1,642,331 1,642,331 1,642, (1,263,151) (1,263,151) (1,263,151) (1,263,151) (1,263,151) (1,263,151) (1,263,151) (1,263,151) (1,263,151) (1,263,151) (1,263,151) (201,173) (201,173) (201,173) (201,173) (201,173) (201,173) (201,173) (201,173) (201,173) (201,173) (201,173) , , , , , , , , , , ,007 (618,879) (330,439) 18,769,496 (938,475) ,881,703 83, , , , , , , , , ,007 17,059,710 Project Return 1,583,501 1,631,006 1,631,006 1,631,006 1,631,006 1,631,006 1,679,937 1,679,937 1,679,937 1,679,937 18,561,640 Tax Increment Applied to Project 448, , , , , , , , , , ,930 CUMULATIVE VALUE NET PRESENT VALUE (NPV) Net Income / Return to Equity INCLUDING 532, , , , , , , , , ,447 17,570,640 Project Return 2,032,341 2,085,786 2,091,776 2,097,826 2,103,946 2,110,116 2,165,287 2,171,587 2,177,947 2,184,377 19,072,570

21 VALLEY VIEW PROJECT PRO FORMA Construction Year 1 2 IRR CALC YEAR TIF YEAR Revenue Rent s.f. HyVee 83, ,340 1,170,680 1,170,680 1,170,680 1,170,680 1,205,800 1,205,800 1,205,800 1,205,800 Financial Institution 4, Small Shops 14, Total Potential Gross Rental Income - 585,340 1,170,680 1,170,680 1,170,680 1,170,680 1,205,800 1,205,800 1,205,800 1,205,800 Less: Vacancy Allowance Gross Income 102, ,340 1,170,680 1,170,680 1,170,680 1,170,680 1,205,800 1,205,800 1,205,800 1,205,800 Expenses General & Administrative 2.00% - 11,707 23,414 23,414 23,414 23,414 24,116 24,116 24,116 24,116 Non-Reimbursed Expenses 0.00% included in G&A Management Fee 1.00% on Fin Inst & Small Shops Only Total Expenses 2.0% - 11,707 23,414 23,414 23,414 23,414 24,116 24,116 24,116 24,116 NET OPERATING INCOME - 573,633 1,147,266 1,147,266 1,147,266 1,147,266 1,181,684 1,181,684 1,181,684 1,181,684 Debt Service Hy Vee - (633,115) (1,266,230) (1,161,972) (1,161,972) (1,161,972) (1,161,972) (1,161,972) (1,161,972) (1,161,972) Financial Institution & Small Shops Open NET INCOME AFTER DEBT & RESERVES - (59,482) (118,964) (14,705) (14,705) (14,705) 19,713 19,713 19,713 19,713 Net Proceeds to Developer Equity Reversion Year 20 Loan Payoff HyVee 1,242,000 Loan Payoff Small Shops Sales Price - NOI 8.75% Less marketing \ Sales costs of 5% (62,100) Less Remaining Debt Net Sales Proceeds - - 1,179, Developer Equity (4,536,709) Net Income / Return to Equity (4,536,709) (59,482) 1,060,936 (14,705) (14,705) (14,705) 19,713 19,713 19,713 19, % Equity IRR 7.2% Project Return (20,400,460) 2,350,580 1,170,680 1,170,680 1,170,680 1,205,800 1,205,800 1,205,800 1,205, % Project IRR 5.4% Tax Increment Applied to Project , , , , , , , , ,970 CUMULATIVE VALUE 8,714,163 NET PRESENT VALUE (NPV) 7.00% 4,059,479 Net Income / Return to Equity INCLUDING TIF PROCEEDS (4,536,006) 41,958 1,418, , , , , , , , % Equity IRR 13.7% Project Return (20,299,020) 1,528,460 1,579,590 1,585,130 1,590,720 1,631,490 1,637,190 1,642,950 1,648, % Project IRR 7.3%

22 VALLEY VIEW PROJECT PRO FORMA Revenue Rent HyVee Financial Institution Small Shops Total Potential Gross Rental Income Less: Vacancy Allowance Gross Income Expenses General & Administrative Non-Reimbursed Expenses Management Fee Total Expenses NET OPERATING INCOME ,205,800 1,241,974 1,241,974 1,241,974 1,241,974 1,241,974 1,279,234 1,279,234 1,279,234 1,279,234 1,279, ,205,800 1,241,974 1,241,974 1,241,974 1,241,974 1,241,974 1,279,234 1,279,234 1,279,234 1,279,234 1,279, ,205,800 1,241,974 1,241,974 1,241,974 1,241,974 1,241,974 1,279,234 1,279,234 1,279,234 1,279,234 1,279,234 24,116 24,839 24,839 24,839 24,839 24,839 25,585 25,585 25,585 25,585 25, ,116 24,839 24,839 24,839 24,839 24,839 25,585 25,585 25,585 25,585 25,585 1,181,684 1,217,135 1,217,135 1,217,135 1,217,135 1,217,135 1,253,649 1,253,649 1,253,649 1,253,649 1,253,649 Debt Service Hy Vee Financial Institution & Small Shops Open NET INCOME AFTER DEBT & RESERVES (1,161,972) (1,161,972) (1,161,972) (1,161,972) (1,161,972) (1,161,972) (1,161,972) (1,161,972) (1,161,972) (1,161,972) (1,161,972) ,713 55,163 55,163 55,163 55,163 55,163 91,677 91,677 91,677 91,677 91,677 Net Proceeds to Developer Equity Reversion Year Loan Payoff HyVee Loan Payoff Small Shops Sales Price - NOI Less marketing \ Sales costs of Less Remaining Debt Net Sales Proceeds Developer Equity Net Income / Return to Equity ,327,417 (716,371) ,611,046 19,713 55,163 55,163 55,163 55,163 55,163 91,677 91,677 91,677 91,677 13,702,723 Project Return 1,205,800 1,241,974 1,241,974 1,241,974 1,241,974 1,241,974 1,279,234 1,279,234 1,279,234 1,279,234 14,890,280 Tax Increment Applied to Project 448, , , , , , , , , , ,930 CUMULATIVE VALUE NET PRESENT VALUE (NPV) Net Income / Return to Equity INCLUDING 468, , , , , , , , , ,117 14,213,653 Project Return 1,654,640 1,696,754 1,702,744 1,708,794 1,714,914 1,721,084 1,764,584 1,770,884 1,777,244 1,783,674 15,401,210

23 EXHIBIT C PROJECTED TAX INCREMENT

24 VALLEY VIEW TIF ANALYSIS Property and Sales Tax Increment PROPERTY TAX INCREMENT MARKET VALUE FOR PROPERTY TAX USING SIMILAR PROPERTIES 1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 for FY 2011 for FY 2012 for FY 2013 for FY 2014 for FY 2015 for FY 2016 for FY 2017 for FY 2018 Market Value of Property $3,600,000 $3,600,000 $3,600,000 $7,207,227 $8,694,895 $8,694,895 $8,694,895 $8,694,895 PROPERTY TAX RATE 2010 levy 2011 levy 2012 levy 2013 levy 2014 levy 2015 levy 2016 levy 2017 levy for FY 2011 for FY 2012 for FY 2013 for FY 2014 for FY 2015 for FY 2016 for FY 2017 for FY 2018 Property Tax Growth Rate 1.00% 1 00% 1.00% 1.00% 1.00% 1 00% 1.00% 1.00% Property Tax Rate in mills CALCULATION OF PROPERTY TAX INCREMENT Base Valuation Market Value 1 1 value $3,600,000 $3,600,000 $3,600,000 $3,600,000 $3,600,000 $3,600,000 $3,600,000 $3,600,000 Assessed Value AV % 25% $900,000 $900,000 $900,000 $900,000 $900,000 $900,000 $900,000 $900,000 (Base) Property Tax Revenue $70,311 $70,311 $70,311 $70,311 $70,311 $70,311 $70,311 $70,311 Value After Redevelopment Appraised Value $3,600,000 $3,600,000 $3,600,000 $7,207,227 $8,694,895 $8,694,895 $8,694,895 $8,694,895 Assessed Value AV % 25% $900,000 $900,000 $900,000 $1,801,807 $2,173,724 $2,173,724 $2,173,724 $2,173,724 Property Tax Revenue $70,311 $71,014 $71,724 $145,028 $176,713 $178,480 $180,265 $182,068 PROPERTY TAX INCREMENT $0 $703 $1,413 $74,717 $106,402 $108,170 $109,954 $111,757

25 VALLEY VIEW TIF ANALYSIS Property and Sales Tax Increment PROPERTY TAX INCREMENT MARKET VALUE FOR PROPERTY TAX USING SIMILAR PROPERTIES PROPERTY TAX RATE Market Value of Property Property Tax Growth Rate 1.00% Property Tax Rate in mills CALCULATION OF PROPERTY TAX INCREMENT Base Valuation Market Value 1 1 value Assessed Value AV % 25% (Base) Property Tax Revenue Value After Redevelopment Appraised Value Assessed Value AV % 25% Property Tax Revenue PROPERTY TAX INCREMENT 1/1/2018 1/1/2019 1/1/2020 1/1/2021 1/1/2022 1/1/2023 1/1/2024 for FY 2019 for FY 2020 for FY 2021 for FY 2022 for FY 2023 for FY 2024 for FY 2025 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $8,694, levy 2019 levy 2020 levy 2021 levy 2022 levy 2023 levy 2024 levy for FY 2019 for FY 2020 for FY 2021 for FY 2022 for FY 2023 for FY 2024 for FY % 1 00% 1.00% 1 00% 1 00% 1.00% 1.00% $3,600,000 $3,600,000 $3,600,000 $3,600,000 $3,600,000 $3,600,000 $3,600,000 $900,000 $900,000 $900,000 $900,000 $900,000 $900,000 $900,000 $70,311 $70,311 $70,311 $70,311 $70,311 $70,311 $70,311 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $2,173,724 $2,173,724 $2,173,724 $2,173,724 $2,173,724 $2,173,724 $2,173,724 $183,888 $185,727 $187,585 $189,460 $191,355 $193,269 $195,201 $113,578 $115,417 $117,274 $119,150 $121,044 $122,958 $124,891

26 VALLEY VIEW TIF ANALYSIS Property and Sales Tax Increment PROPERTY TAX INCREMENT MARKET VALUE FOR PROPERTY TAX USING SIMILAR PROPERTIES PROPERTY TAX RATE Market Value of Property Property Tax Growth Rate 1 00% Property Tax Rate in mills CALCULATION OF PROPERTY TAX INCREMENT Base Valuation Market Value 1 1 value Assessed Value AV % 25% (Base) Property Tax Revenue Value After Redevelopment Appraised Value Assessed Value AV % 25% Property Tax Revenue PROPERTY TAX INCREMENT 1/1/2025 1/1/2026 1/1/2027 1/1/2028 1/1/2029 1/2/2029 1/2/2029 for FY 2026 for FY 2027 for FY 2028 for FY 2029 for FY 2030 for FY 2031 for FY 2031 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $8,694, levy 2026 levy 2027 levy 2028 levy 2029 levy 2030 levy 2030 levy for FY 2026 for FY 2027 for FY 2028 for FY 2029 for FY 2030 for FY 2031 for FY % 1.00% 1.00% 1 00% 1.00% 1 00% 1.00% $3,600,000 $3,600,000 $3,600,000 $3,600,000 $3,600,000 $3,600,000 $3,600,000 $900,000 $900,000 $900,000 $900,000 $900,000 $900,000 $900,000 $70,311 $70,311 $70,311 $70,311 $70,311 $70,311 $70,311 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $8,694,895 $2,173,724 $2,173,724 $2,173,724 $2,173,724 $2,173,724 $2,173,724 $2,173,724 $197,153 $199,125 $201,116 $203,127 $205,158 $207,210 $209,282 $126,843 $128,814 $130,805 $132,816 $134,848 $136,899 $138,971

27 VALLEY VIEW TIF ANALYSIS Property and Sales Tax Increment SALES TAX INCREMENT Base Sales Tax Total Base Sales 2010 $7,447,286 $7,447,286 $7,447,286 $7,447,286 $7,447,286 $7,447,286 $7,447,286 $7,447,286 Sales Tax Collections sales tax rate 1% $74,473 $74,473 $74,473 $74,473 $74,473 $74,473 $74,473 $74,473 After Redevelopment Total Est Sales 37,100,000 sales per foot $ Total s.f. 102,920 Sales Tax Growth Rate 1.00% 1 00% 1.00% 1.00% Total Project Sales $7,447,286 $0 $17,476,580 $35,828,092 37,778,335 $38,156,118 $38,537,679 $38,923,056 Sales Tax Collections sales tax rate 1% $74,473 $0 $174,766 $358,281 $377,783 $381,561 $385,377 $389,231 TOTAL INCREMENTAL SALES TAX REVENUE $0 $0 $100,293 $283,808 $303,310 $307,088 $310,904 $314,758 SALES TAX INCREMENT % $0 $0 $100,029 $283,061 $302,512 $306,280 $310,086 $313,930 TOTAL TAX INCREMENT $0 $703 $101,442 $357,778 $408,915 $414,450 $420,040 $425,687 CUMULATIVE VALUE 8,714,158 NET PRESENT VALUE (NPV) 7.00% 4,059,478

28 VALLEY VIEW TIF ANALYSIS Property and Sales Tax Increment SALES TAX INCREMENT Base Sales Tax Total Base Sales 2010 Sales Tax Collections sales tax rate 1% $7,447,286 $7,447,286 $7,447,286 $7,447,286 $7,447,286 $7,447,286 $7,447,286 $74,473 $74,473 $74,473 $74,473 $74,473 $74,473 $74,473 After Redevelopment Total Est Sales 37,100,000 sales per foot $ Total s.f. 102,920 Sales Tax Growth Rate 1.00% Total Project Sales Sales Tax Collections sales tax rate 1% TOTAL INCREMENTAL SALES TAX REVENUE SALES TAX INCREMENT % TOTAL TAX INCREMENT 1.00% 1 00% 1.00% 1 00% 1 00% 1.00% 1.00% $39,312,286 $39,705,409 $40,102,463 $40,503,488 $40,908,523 $41,317,608 $41,730,784 $393,123 $397,054 $401,025 $405,035 $409,085 $413,176 $417,308 $318,650 $322,581 $326,552 $330,562 $334,612 $338,703 $342,835 $317,812 $321,733 $325,693 $329,692 $333,732 $337,812 $341,933 $431,389 $437,149 $442,966 $448,842 $454,776 $460,770 $466,823 CUMULATIVE VALUE NET PRESENT VALUE (NPV) 7.00%

29 VALLEY VIEW TIF ANALYSIS Property and Sales Tax Increment SALES TAX INCREMENT Base Sales Tax Total Base Sales 2010 Sales Tax Collections sales tax rate 1% $7,447,286 $7,447,286 $7,447,286 $7,447,286 $7,447,286 $7,447,286 $7,447,286 $74,473 $74,473 $74,473 $74,473 $74,473 $74,473 $74,473 After Redevelopment Total Est Sales 37,100,000 sales per foot $ Total s.f. 102,920 Sales Tax Growth Rate 1.00% Total Project Sales Sales Tax Collections sales tax rate 1% TOTAL INCREMENTAL SALES TAX REVENUE SALES TAX INCREMENT % TOTAL TAX INCREMENT 1 00% 1.00% 1.00% 1 00% 1.00% 1 00% 1.00% $42,148,092 $42,569,573 $42,995,269 $43,425,221 $43,859,474 $44,298,068 $44,741,049 $421,481 $425,696 $429,953 $434,252 $438,595 $442,981 $447,410 $347,008 $351,223 $355,480 $359,779 $364,122 $368,508 $372,938 $346,095 $350,299 $354,545 $358,833 $363,164 $367,538 $371,956 $472,938 $479,113 $485,350 $491,649 $498,012 $504,438 $510,928 CUMULATIVE VALUE NET PRESENT VALUE (NPV) 7.00%

30 EXHIBIT D ESTIMATED PROPERTY VALUATION AFTER REDEVELOPMENT

31 Valley View Shopping Center Property Value Analysis Store CY Location Lot SF SF Land per SF Improvements per SF Total Assessed Value Current Valuation of Property Valley View Center th & Antioch 443,441 67,202 2,568, ,092, ,661,000 1,415,250 Stores being Closed w/in next 2 3 years HyVee st & Metcalf 259,738 67,202 1,818, ,395, ,214,000 1,053,500 HyVee th & Quivira 195,520 62,801 2,346, ,977, ,324,000 1,081,000 Stores Comparable in Size & Type to New 95th & Metcalf) HyVee th & Ridgeview 375,487 70,104 3,002, ,273, ,276,000 1,319,000 HyVee th & Antioch 383,328 66,770 2,682, ,211, ,894,050 1,223,513 Hen House th & Lackman 424,710 91,989 2,870, ,848, ,719,000 2,179,750 Hen House th & Metcalf 651, ,474 5,215, ,855, ,071,008 3,767,752 HyVee Martway 446,490 77,540 2,430, ,822, ,253,005 1,313,251 Average Valuation of similar small shops 119th & Ridgeview UMB th & Ridgeview 38,768 4, , , ,138,000 Valuation of Property adjacent to Valley View Shops Adjacent to Site Antioch 22,375 6, , , ,000 Proposed Development HyVee & Small Shops 95th & Antioch 443, ,920 Valuation for New Valley View Land based on adjacent and similar properties applied to s.f. 443,441 3,104, Grocery Average of All HyVee Stores 83,620 4,103, Shops based on per foot of adjacent small shops 19,300 1,487, Valuation for HyVee & SmallShops 8,694,895 Valuation for HyVee Only 7,207,227

32 EXHIBIT B LEGAL DESCRIPTION OF REDEVELOPMENT DISTRICT AND REDEVELOPMENT PROJECT AREA All of Lot 1, Block 17, Sylvan Grove, a subdivision lying in the Northwest Quarter of Section 6, Township 13 South, Range 25 East, in the City of Overland Park, Johnson County, Kansas, together with all that part of the right of way for Antioch Road, 95 th Street and Hadley Drive, as bounded by the East and West prolongations of the South line of said Lot 1, the West line of the Northwest Quarter of said Section 6, the North right of way line of 95 th Street, and the centerline of Hadley Drive

33 EXHIBIT C MAP OF REDEVELOPMENT DISTRICT/PROJECT AREA [attached]

34 94TH ST Proposed Redevelopment District MACKEY ST WOODWARD ST HADLEY ST 95TH ST HADLEY DR ANTIOCH RD 96TH ST 96TH ST 97TH ST 97TH ST 97TH TER Legend Proposed Redevelopment District Buildings 10/13/2010