Complete 2012 forensic audit documents - Kansas Bioscience ...

On January 9, 2007, KBA’s BOD authorized entry into a benefit district in Olathe to build
infrastructure at KBA/KSU Olathe Innovation Campus. The estimated cost was to be $7.6
million to be paid over 20 years. The cost was to be prorated based on the acreage owned by
KBA, KSU and future companies locating in the research park. 43
KBA has worked with Olathe and KSU to develop the KBP on 92 acres of land that Olathe
transferred (for $10 each) to KSU and KBA as the developers. The K-State Innovation Campus
is an anchor tenant on its 38-acre (41.34%) research campus. KBA’s 54 acres (58.66%) was
developed to include KBA Venture Accelerator and a future business park for bioscience
commercialization.
Olathe closed out the benefit district contracts in March 2010 and initiated the sale of the bonds.
KBA’s BOD approved funding for KBA’s share of the estimated $7.9 million in infrastructure
improvements. The final cost of the improvements was approximately $6.6 million, and KBA’s
share was determined by Olathe to be $3,467,989.48. The first assessments of benefit district
taxes were due in 2010, and KBA paid a total of $293,322.55.
KBA has 44 developable acres. Two of those acres have been used for the Venture Accelerator.
A master plan has been developed to guide the use of the remaining 42 acres. The plan
designates which portions of land will be earmarked for use as graduation space for start-up
companies that have outgrown the Venture Accelerator or other bioscience incubators, yet does
not require KBA to develop additional infrastructure. The plan also designates which portions of
land will be reserved for the purpose of attracting or retaining established bioscience companies.
The master plan allows graduation space facilities to be developed by either KBA or an outside
development firm. The smallest building considered per the master plan is 25,000 square feet
(“sf”).
KBA is marketing the land in the park to candidates. KBA’s obligations to Olathe include
securing the start of construction of a second building by January 2016.
Development Agreement
Olathe, KSU and KBA entered into a Development Agreement (the “Agreement”) dated
September 20, 2007. Article 6 of the Agreement, Use and Operations, gives specificity to the
KBA facility to be built on the site. Subsection iv states, “KBA shall obtain a Final Certificate of
Occupancy for the construction of a building not less than 25,000 square feet in size within the
KBA Site pursuant to the Development Plan and shall obtain a Certificate of Occupancy for the
same no later than three years after the final approval of the Special Benefit District described in
3.6 above. KBA shall also continue to develop buildings within the KBA Site pursuant to the
Development Plan so that a new building is started within five years of issuance of a Final
Certificate of Occupancy of a prior building. Without the consent of Olathe, each subsequent
building shall contain not less than 50% of the area of the prior building.”
Exhibit 12 of the Agreement describes the Design Criteria, which were described as not absolute
criteria, but described as what should be used as the “target” in meeting the objectives of quality
development. Under the “Building Design Guidelines” section, the design criteria states that the
intent is to produce an “orderly and aesthetically pleasing environment that is compatible with
43 January 9, 2007 KBA Board minutes.
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