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HomeMy WebLinkAboutAgenda 04-07-2026; 8-q - Approval of Agreements for School Sales Tax Recapture 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 7, 2026 Action Agenda Item No. 8-q SUBJECT: Approval of Agreements for School Sales Tax Recapture DEPARTMENT: Finance and Administrative Services ATTACHMENT(S): INFORMATION CONTACT: Attachment 1. Resolution Gary Donaldson, (919) 245-2453 Attachment 2. Draft Agreements Kirk Vaughn, (919) 245-2153 Robert Jessup, (919) 933-9891 PURPOSE: To adopt a resolution approving agreements between Orange County and its two school systems to facilitate the recapture of a portion of sales taxes paid on County-funded school capital expenditures. These agreements establish a structured mechanism to maximize available financial resources and enhance the County's ability to support ongoing and future school capital investments. BACKGROUND: The County spends funds on school capital improvements for each of its school districts. Most of these funds are routed through the school boards for payments to vendors. Expenditures in future years will be higher, especially as the County rolls out spending from the proceeds of the voter-approved $300 million general obligation bonds. Under current North Carolina law, counties are eligible to recoup a portion of sales taxes paid on qualifying expenditures, whereas school boards are not. Historically, Orange County has utilized ownership transfer arrangements to enable such recapture for school-related projects, typically in conjunction with financing structures requiring collateral ization of school properties. The proposed agreements introduce a more efficient and flexible alternative through a lease/lease-back structure. This approach provides the County with a sufficient legal interest in school facilities to qualify for sales tax recapture without necessitating full ownership transfers. This model has been successfully implemented in other jurisdictions and is supported by legal counsel representing both school systems. (That law firm pioneered this approach with other clients and has suggested it for Orange County.) Key advantages of the proposed approach include: • Streamlined documentation and administrative processes; The documentation is simpler and more flexible. • Increased flexibility in incorporating additional school facilities into the recapture framework; It is simpler to bring a school facility within the regime for sales tax recapture. • Elimination of unnecessary ownership transfers, particularly relevant given that upcoming general obligation financings will not require school properties as collateral. 2 Representatives from both school systems and their legal counsel have reviewed and provided input on the draft agreements. Formal consideration by the respective school boards is anticipated in May 2026. Importantly, these agreements will not alter existing procedures governing school capital project delivery under the County's interlocal agreement framework. These arrangements for sales tax recapture will not affect the procedures for capital projects as contemplated by the separate interlocal agreement for construction and renovation of school projects. The proposed strategy is expected to generate additional financial capacity for school capital needs and related debt service, thereby strengthening the County's long-term fiscal stewardship and commitment to school infrastructure. FINANCIAL IMPACT: There is no financial impact related to this action. Sales taxes recaptured as a result of these agreements will provide additional funding for school capital projects and school-related debt service payments. ALIGNMENT WITH STRATEGIC PLAN: • GOAL 5: PUBLIC EDUCATION-LEARNING COMMUNITY OBJECTIVE 4. Improve learning environments by investing in facilities over a 10-year period that address repair, renovation, and educational adequacy needs. OBJECTIVE 5. Invest in and implement a plan that supports schools operational and facility funding needs. RECOMMENDATION(S): The Manager recommends that the Board adopt the proposed resolution in the form provided, thereby approving and authorizing the Chair and staff to sign all agreements and documents as necessary. 3 RES-2026-025 Attachment 1 s*h draft of March 23 Resolution approving agreements for school sales tax recoupment Whereas, the Board has been presented with information and draft documents related to a mechanism to facilitate the County's recapture of a portion of the sales tax paid from County funds related to spending on school capital projects; Be it resolved by the Board of Commissioners of Orange County, North Carolina, as follows: 1. That the Board determines to enter into the agreements for school sales tax recoupment presented to this meeting. The agreements must be in substantially the forms of draft master lease agreements dated March 23, 2026, that appear as Exhibits A and B to this resolution, which the Board hereby approves. The Board also approves the forms of the agreements to add or remove particular school facilities from the scope of the master agreements in Exhibits A and B. 2. That the Board authorizes and directs the County Manager, the Chief Financial Officer and all other County officers to take all actions necessary or appropriate to put the agreements into effect. The County's execution and delivery of any related agreement will be conclusive evidence of the County's approval of the final form of that Agreement. 3. That the Board authorizes and directs the County Manager and all other County officers to take all actions necessary or appropriate to put into place the documents to add or remove particular school facilities from the scope of the master agreements, from time to time and as many times as may be appropriate for the purpose, without the need for further Board approval. This approval includes authorizing the Chair and the County Manager, or either of them,to determine which school facilities are to be added or removed from the scope of the Master Agreements, and when, without the need for further Board approval. 4. That this resolution takes effect immediately. 4 Attachment 2 Exhibit A— draft sales tax master agreement for Orange County Schools s*h draft of March 23 Prepared by and return after recording to: Robert M. Jessup Jr. Emily S. Jessup Sanford Holshouser PLLC 209 Lloyd St., Suite 350 Carrboro, NC 27510 STATE OF NORTH CAROLINA ) MASTER LEASE ORANGE COUNTY ) Brief description: PIN: THIS MASTER LEASE is made and entered into as of July 1, 2026, by and between Orange County, North Carolina, a political subdivision of the State of North Carolina (called "Tenant"), and The Orange County Board of Education, a board of education organized and existing pursuant to N.C. Gen. Stat. Chapter 115C (called "Landlord"). RECITALS Tenant and Landlord have agreed to co-develop the construction, renovation and improvement of some or all of the schools owned by Landlord. As part of the co- development of the identified projects, Landlord shall Master Lease identified school 1 5 sites to Tenant so as to allow Tenant to reclaim sales and use taxes paid by project contractors and vendors. Tenant intends to apply the reclaimed sales tax amounts toward paying for additional capital projects for public schools or toward paying debt service on borrowings incurred for school capital projects. Tenant has designated Landlord as its agent to carry out the projects, and Landlord has accepted the appointment pursuant to the terms of the Interlocal Agreement, as defined below. N.C. Gen. Stat. Sections 115C-518, 160A-272 and 160A-274 authorize Landlord to Master Lease its property to Tenant. N.C. Gen. Stat. Sections 153A-11 and 153A-158 authorize Tenant to Master Lease property from Landlord. NOW, THEREFORE, for and in consideration of the mutual promises contained herein, the parties agree as follows: ARTICLE I BASIC MASTER LEASE INFORMATION 1.1 Defined Terms. In addition to the terms that are defined elsewhere in this Master Lease, these terms are used in this Master Lease: 1.1.1 LAND: The land described in Section 2.1, which is more specifically described on Schedule 1. 1.1.2 IMPROVEMENTS: The improvements now or hereafter located on the Land whether placed thereon by Landlord, Tenant, or their respective agents. 1.1.3 LEASED PREMISES: The Land together with all easements and rights of access over and upon the Land, as defined more particularly in Section 2.1. 1.1.4 INTERLOCAL AGREEMENT: The interlocal agreement entitled "Agreement for the Construction and Renovation of Various School Projects" executed by Tenant and Landlord and dated as of , 2026,as the same maybe properly amended from time to time. 2 6 1.2 Schedules and Exhibits. The following exhibits are attached to this Master Lease and are made a part of this Master Lease: SCHEDULE 1: Properties Initially Subject to Master Lease EXHIBIT A: Property Additions Form EXHIBIT B: Property Removal Form 1.3 Consideration. The consideration for this Master Lease is Landlord's grant of Tenant's rights under this Master Lease, the parties' agreement to carry out the planned school projects. and the parties' agreement and mutual desire to seek recovery of sales taxes paid with respect to the school projects. ARTICLE II LEASED PREMISES; TERM; TERMINATION AND USE 2.1 Lease of Leased Premises. Under the limited terms, provisions and conditions of this Master Lease,and each in consideration of the duties, covenants and obligations of the other under this Master Lease, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord that certain land(s) owned by Landlord located in and more particularly described in Schedule 1, attached hereto and made a part hereof (the "Land"), together with all easements, rights-of-way, streets, alleys, passages, water and sewer rights and improvements, tenements, hereditaments, appurtenances and rights belonging or relating or appertaining to the Land and all rights, title and interest in, if any, of Landlord, now or hereafter affecting the Land, including all Improvements (collectively, with the Land, the "Leased Premises"), to have and to hold the Leased Premises,together with all privileges and appurtenances thereunto belonging, subject to the terms, provisions and conditions hereof. 2.1.1 Additional Property. Landlord and Tenant may add land and improvements and make them subject to this Master Lease by executing and delivering a "Property Addition Form" in substantially the form of Exhibit A (the "Property Addition Form") to define the added property and to evidence that the added property is subject to the Master Lease. The addition of any property does not otherwise affect the Term of this Master Lease. The additional properties are subject 3 7 to the same terms and conditions set forth in this Master Lease and constitute a portion of the Leased Premises for all purposes of this Master Lease 2.1.2 Removal of Properties. Landlord and Tenant may remove land and improvements that are subject to this Master Lease by executing and delivering a "Property Removal Form" in substantially the form of Exhibit B (the "Property Removal Form"). Upon Tenant's execution and delivery of a Property Removal Form, this Master Lease no longer applies to the property or properties identified in that Property Removal Form. 2.2 Title to Leased Premises. Landlord represents and warrants that as of the time of the execution of this Master Lease it has title to the Leased Premises and that it has full power and authority to grant this Master Lease to Tenant. 2.3 Term. This Master Lease shall continue in force for a term (the "Lease Term") commencing upon execution and delivery of this Master Lease by all parties (the "Commencement Date"), and ending pursuant to the terms and conditions as stated in Section 2.4. 2.4 Expiration and Termination. The Lease Term terminates automatically upon the earliest of the following: (a) The end of the calendar day on June 30, 2036,except that with respect to any part of the Leased Premises added through a Property Addition Form, the Lease Term ends on the later of(i) June 30, 2036, or (ii) the date that is five years from the effective date of that Property Addition Form. (b) The end of the calendar day sixty days following the date either party gives notice of termination to the other party. (c) The end of the calendar day thirty days following the expiration or termination of the Interlocal Agreement, for any reason. Termination of the Lease Terminates all Tenant's rights of possession under this Master Lease. Upon any termination other than pursuant to subsection (a), Landlord will file a notice of the termination in the Orange County Registry. 4 8 ARTICLE III LANDLORD'S COVENANTS Subject to Tenant's performance of its obligations hereunder, Landlord makes the following assurances to Tenant: 3.1 Leases, Easements, Roadway Dedications and Rights of Way. Landlord has the absolute right to negotiate and execute any lease,easement contract or dedication, or right of way contract or dedication upon a portion of the Leased Premises that it deems in its best interest to provide access for public infrastructure or other purposes over the Leased Premises. No grant terminates this Master Lease, but instead the Master Lease continues subject to the conveyance or dedication. Should Landlord require Tenant's execution of any document for Master Leases, easements or other partial interests, Landlord, as agent for Tenant, has the authority to execute in Tenant's name any Master Leases, easements, rights of way, and roadway dedications it deems necessary. 3.2 Use of Site. During the Lease Term, Landlord retains exclusive rights to possess, use, occupy, improve and insure all the Leased Premises for public school purposes, including without limitation (a) the right to conduct surveys, soil borings and other necessary testing upon any property prior to construction,and (b) the right to use, operate, maintain, and repair that property for such public school purposes as Landlord determines in its discretion, subject only to Tenant's limited grant of access to and use of the Leased Premises as described in Section 4.1. In addition, Landlord has full discretion and the sole right to authorize the use by third parties for non- school use, pursuant to Landlord's policies, of any of the Leased Premises. Tenant's limited rights of access to and use of the Leased Premises is subordinate to any such third-party use, unless otherwise indicated in writing by Landlord. Notwithstanding the foregoing, Landlord acknowledges that Tenant will issue and incur certain financing obligations (the "Bonds") to finance project costs. Tenant will not take any action with respect to the sale or disposition of any portion of the Leased Premises, or with respect to the use of any portion of the Leased Premises by private entities or the federal government, that Tenant advises Landlord would cause interest on the Bonds to be includable in gross income for federal income tax purposes. 5 9 3.3 Utilities. Landlord shall be responsible for all utilities with respect to the Leased Premises, including electrical, gas, telephone, water, sewer, and garbage removal. 3.4 Insurance. Landlord is solely responsible for carrying adequate property and general liability insurance on all the Leased Premises. Tenant shall not be required to carry any insurance covering the Leased Premises. Landlord shall provide for Tenant to be included as an additional insured with respect to general liability coverage for the Leased Premises. ARTICLE IV TENANT'S RIGHTS AND COVENANTS 4.1 Use of Site. During the Lease Term, Tenant has the limited right to access and use the Leased Premises only to extent necessary to effectuate the performance of the construction or renovation projects authorized by Landlord under the terms of the Interlocal Agreement, including the limited right to enter upon a site and inspect any identified construction or renovation project from time to time during construction or renovation. This limited right of access and use is subject to any and all applicable written policies of Landlord regarding access to and conduct on school properties. This limited right is also subordinate to any other interests in the subject properties granted by Landlord to third parties pursuant to any other deeds, Master Leases, conveyances, or joint use agreements of any kind,whether those interests are transferred by Landlord before or after the subject properties are made subject to this Master Lease, unless otherwise expressly indicated by Landlord in writing. 4.2 Alterations. Tenant shall not make any alterations, additions or improvements to the Leased Premises, unless made by Landlord as agent for Tenant, without Landlord's prior written consent. Tenant shall not make any alterations, additions or improvements to the Leased Premises which will contravene Landlord's policies insuring against loss or damage by fire or other hazards, including but not limited to commercial general liability, or which will prevent Landlord from securing such policies from companies acceptable to Landlord. 4.3 Assignment: Subletting. Tenant may not assign or encumber this Master Lease, and may not sublet any part or all of the Leased Premises. 6 10 ARTICLE V COVENANTS REGARDING CARE AND POSSESSION 5.1 Alterations. Improvements. and Changes Permitted. Landlord has the right to make such alterations, improvements, and changes to any of the Improvements as Landlord may deem appropriate, subject to all applicable governmental regulations. 5.1.1 Disposition of New Improvements.Any and all improvements constructed upon the Leased Premises by Tenant, or by Landlord as agent for Tenant pursuant to the Interlocal Agreement, automatically become Landlord's property upon completion of the construction or renovation, subject to Tenant's leasehold interest under this Master Lease. All improvements will remain upon the Leased Premises upon expiration or termination of the Master Lease. All other alterations, improvements, changes, or additions made by Landlord in or to the Leased Premises shall be Landlord's property, subject to Tenant's leasehold interest under this Master Lease 5.2 Fire or Other Casualty. If any portion of the Leased Premises is damaged by fire or other casualty, Landlord at its option may, either in its own capacity or as agent for Tenant pursuant to the Interlocal Agreement, rebuild or restore the improvements to as good or better condition than that existing immediately prior to said fire or other casualty, and this Master Lease shall not terminate. 5.3 Eminent Domain. If any portion of the Leased Premises is acquired by a taking (in this case, meaning any acquisition by any government authority in the valid exercise of its power of eminent domain or by private purchase in lieu of an involuntary acquisition), and that taking relates to a portion of the fee simple title to Leased Premises, as well as to the right, title and interest of Tenant, the rights and obligations of the parties under this Master Lease will continue except as to that portion of the Leased Premises subject to the taking. All compensation awarded for any taking will be Landlord's property, whether the award is for compensation for damages to Landlord's or Tenant's interest in the Leased Premises. Tenant hereby assigns all of its interest in any such award to Landlord. 11 5.4 Waiver of Subrogation. Landlord and Tenant hereby release each other from any loss or damage to property caused by fire or any other perils insured through or under either by way of subrogation or otherwise for any loss or damage to property caused by fire or any other perils insured in policies of insurance covering such property, even if such loss or damage has been caused by the fault or negligence of the other party, or anyone for whom such party may be responsible; provided, however, that this release shall be applicable and in force and effect only with respect to the loss or damage occurring during such times as the releasor's policies shall contain a clause or endorsement to the effect that any such release shall not adversely affect or impair said policies or prejudice the right of the releasor to recover thereunder and then only to the extent of the insurance proceeds payable under such policies. 5.5 Compliance with Interlocal Agreement. The respective obligation of the parties regarding construction and renovation projects on any part of the Leased Premises and the mechanism for recovering sales tax payments for those projects are governed by the Interlocal Agreement, and any amendments thereto. 5.6 Indemnity. To the extent allowed by law, Landlord shall indemnify, defend and hold harmless Tenant from and against all claims, suits, actions and proceedings whatsoever which may be brought or instituted on account of, growing out of, occurring from, incident to or resulting from, directly or indirectly any and all damages, claims or losses arising from any injuries or damages (including without limitation, death) to persons or property arising out of the construction, use, and/or management of the Leased Premises (including, without limitation, reasonable legal fees and costs). Landlord assumes, on behalf of Tenant, and will conduct with due diligence and in good faith, the defense of all such claims, suits, actions and proceedings against Tenant whether or not Landlord is joined therein, even if such claims, suits, actions or proceedings are groundless, false or fraudulent, and Landlord shall bear the costs of all judgments and settlements in connection therewith; provided, however, Tenant may defend or participate in the defense of any or all of such claims, suits, actions or proceedings at its own expense. 5.7 Recording. Landlord and Tenant agree that this Master Lease, each Property Addition Form and each Property Removal Form will be recorded in the Orange County Registry. 8 12 5.8. Disclaimer of Warranties. THE COUNTY MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR FITNESS FOR A PARTICULAR USE OF THE LEASED PREMISES OR ANY PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE LEASED PREMISES OR ANY PART THEREOF. In no event will the County be liable for any direct or indirect, incidental, special or consequential damage in connection with or arising out of this Master Lease or the existence, furnishing, functioning or use by any of them of any item, product or service provided for herein. The School Board acknowledges that the County has not designed the contemplated improvements to the Leased Premises, or any other aspect of Leased Premises, that the County has not supplied any plans or specifications with respect thereto and that the County (a) is not a manufacturer of, nor a dealer in, any of the component parts of the existing or planned improvements or similar facilities on the Land, (b) has not made any recommendation, given any advice nor taken any other action with respect to (1) the choice of any supplier, vendor or designer of, or any other contractor with respect to, the existing or planned improvements or any component part thereof or any property or rights relating thereto, or (2) any action taken or to be taken with respect to the existing or planned improvements or any component part thereof or any property or rights relating thereto at any stage of the construction thereof, (c) has not at any time had physical possession of the Land or the Leased Premises or any component part thereof or made any inspection thereof or any property or rights relating thereto,and (d) has not made any warranty or other representation, express or implied,that the existing or planned improvements or any component part thereof or any property or rights relating thereto (1) will not result in or cause injury or damage to persons or property, (2) have been or will be properly designed, or will accomplish the results which the School Board intends therefor, or (3) are safe in any manner or respect. ARTICLE VI DEFAULT: REMEDIES The failure by either party in the performance or compliance with any of the agreements, terms, covenants or conditions under this Master Lease, for a period of thirty days after written notice, constitutes a breach of this Master Lease; provided, 9 13 however, that if the failure stated in the notice cannot reasonably be corrected within the applicable period and the defaulting party institutes corrective action within the applicable period, no Event of Default will be deemed to have occurred so long as the defaulting party diligently pursues the corrective action. The non-defaulting party may pursue any remedy available at law or in equity. ARTICLE VII ADDITIONAL PROVISIONS 7.1 Notices.Any communication which may or shall be made under this Master Lease must be in writing. For the purposes of this Master Lease, "writing" does not include facsimile transmission or electronic mail. Any communication under this Master Lease will be considered given on the delivery date shown on a United States Postal Service certified mail receipt, or a delivery receipt (or similar evidence) from a national commercial package delivery service, if addressed as follows: (a) if to Tenant, to Orange County- County Manager, Re: Notice under 2026 School Master Lease, Post Office Box 8181, Hillsborough, NC 27278 (b) if to Landlord, to Orange County Schools, Attn: Superintendent, Re: Notice under 2026 School Master Lease with Orange County, 200 East King St., Hillsborough, NC 27278 Any addressee may designate additional or different addresses for communications by notice given under this Section to each of the others. 7.2 Entire Agreement. This Master Lease and all of its exhibits hereto, together with the Interlocal Agreement and all Property Addition Forms and Property Removal Forms properly delivered between the parties constitute the entire agreement between Landlord and Tenant as to this general subject matter. No other prior written or prior or contemporaneous oral promises or representations are binding. Subject to Sections 2.1.1 and 2.1.2, this Master Lease may not be changed except by written instrument signed by both parties. 10 14 7.3 Interpretation. Pronouns, where used in this Master Lease, of whatever gender, include natural persons, corporations, and associations of every kind and character, and the singular includes the plural and vice versa where and as often as may be appropriate. Article and section headings under this Master Lease are for convenience of reference and shall not affect the construction or interpretation of this Master Lease. Whenever the terms "hereof," "hereby," "herein," or words of similar import are used in this Master Lease, they shall be construed as referring to this Master Lease in its entirety rather than to a particular section or provision, unless the context specifically indicates to the contrary.Any reference to a particular "Article" or "Paragraph" shall be construed as referring to the indicated Article or Paragraph of this Master Lease. Statements in this Master Lease in respect to compliance with applicable law or text of similar import shall be construed to require compliance with applicable law as now or hereafter in effect. 7.4. Governing Law. The parties intend that North Carolina law will govern this Master Lease and all matters of its interpretation. To the extent permitted by law, the parties agree that any action brought with respect to this Master Lease must be brought (a) in the North Carolina General Court of Justice in Orange County, North Carolina, or (b) if an action by law may be brought only in the United States federal courts, the action must be brought in the United States District Court for the Middle District of North Carolina. 7.5 Binding Effect. The provisions of this Master Lease shall be binding upon and inure to the benefit of the heirs, executors,administrators,successors and assigns or the parties, but this provision shall in no way alter the restrictions on assignment and subletting applicable to Tenant hereunder. 7.6 Severability If any term, covenant or condition of this Master Lease or the application thereof to any person or circumstance is to any extent held invalid or unenforceable by a court, the remainder of this Master Lease, or the application of that term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, will not be affected by the finding, and each term, covenant or condition of this Master Lease will continue to be valid and enforceable to full extent permitted by law. 11 15 7.7 No Waiver. The waiver by either party of any agreement, condition, or provision contained in this Master Lease will not be deemed to be a waiver of any subsequent breach of the same or any other agreement, condition, or provision contained in this Master Lease, nor will any custom or practice that may grow up between the parties in the administration of the terms of this Master Lease be construed to waive or lessen the right of one party to insist upon the performance by the other party in strict accordance with the terms of this Master Lease. 7.8 Non-Merger of Fee and Leasehold Estate. If both the estate of Landlord and the estate of Tenant in the Leased Premises, or any part of the Leased Premises, become vested in the same owner, this Master Lease shall not be terminated by application of the doctrine of merger, except by mutual consent of Tenant and Landlord. [The remainder of this page has been left blank intentionally.] 12 16 IN WITNESS WHEREOF, the parties hereto have caused this Master Lease to be executed in their corporate names by their duly authorized officers, all as of , 2026. [SEAL] THE ORANGE COUNTY ATTEST: BOARD OF EDUCATION By: [Chair] [Secretary] Chair Secretary STATE OF NORTH CAROLINA; ORANGE COUNTY I, . a Notary Public of said State and County, do hereby certify that [Chair] and [Secretary]personally came before me this day and acknowledged that they are the Chair and the Secretary, respectively, of The Orange County Board of Education, and that by authority duly given and as the act of such Board, the foregoing instrument was signed in the Board's name by such Chair, sealed with its corporate seal and attested by such Secretary. Witness my hand and official seal this day of , 2026. Notary Public My commission expires: [Master Lease dated as of 2026] [Signatures continue on the following page] 13 17 IN WITNESS WHEREOF, the parties hereto have caused this Master Lease to be executed in their corporate names by their duly authorized officers, all as of , 2026. [SEAL] ORANGE COUNTY, ATTEST: NORTH CAROLINA By: Laura Jensen Travis Myren Clerk, Board of Commissioners County Manager This instrument has been preaudited in the manner required by The Local Government Budget and Fiscal Control Act. Gary Donaldson Finance Officer Orange County, North Carolina STATE OF NORTH CAROLINA; ORANGE COUNTY I, . a Notary Public of said State and County, do hereby certify that Travis Myren and Laura Jensen personally came before me this day and acknowledged that they are the County Manager and the Clerk of the Board of Commissioners, respectively, of Orange County, North Carolina, and that by authority duly given and as the act of such County, the foregoing instrument was signed in the County's name by such County Manager, sealed with its corporate seal and attested by such Clerk. Witness my hand and official seal this day of . 2026. Notary Public My commission expires: [Master Lease dated as of 2026] 14 18 Schedule 1 - Properties Subject to this Master Lease [To come] As provided in Section 2.1.1, the parties may agree to add additional properties to be subject to the terms of this Master Lease. 15 19 Exhibit A - Property Addition Form Prepared by and return after recording to: Robert M. Jessup Jr. Emily S. Jessup Sanford Holshouser PLLC 209 Lloyd St., Suite 350 Carrboro, NC 27510 STATE OF NORTH CAROLINA ) ADDITION TO MASTER LEASE ORANGE COUNTY ) Brief description: PIN: Modifies Book , Page THIS ADDITION TO MASTER LEASE is made and entered into as of , by and between Orange County, North Carolina, a political subdivision of the State of North Carolina (called "Tenant"), and The Orange County Board of Education, a board of education organized and existing pursuant to N.C. Gen. Stat. Chapter 115C (called "Landlord"). Pursuant to Section 2.1.1 of the Master Lease by and between Landlord and Tenant dated as of July 1, 2026, and recorded at Book , Page , Orange County Registry,the following property or properties are hereby added to the Master Lease, and shall be subject to all terms and conditions of the Master Lease as part of the Leased Premises as if it or they had been described in the Master Lease originally, all as of the date of the execution and delivery of this instrument between Tenant and Landlord. The Property: 16 20 [to come] Landlord represents and warrants that it has title to the property described above, and that it has full power and authority to lease this property to Tenant pursuant to the terms of this agreement and the Master Lease. [signature and notary pages to be added] 17 21 Exhibit B - Property Removal Form Prepared by and return after recording to: Robert M. Jessup Jr. Emily S. Jessup Sanford Holshouser PLLC 209 Lloyd St., Suite 350 Carrboro, NC 27510 STATE OF NORTH CAROLINA ) REMOVAL FROM MASTER LEASE ORANGE COUNTY ) Brief description: PIN: Modifies Book , Page and Book , Page (to reference original Master Lease and instrument by which the school now to be removed was first added) THIS REMOVAL FROM MASTER LEASE is made and entered into as of , by and between Orange County, North Carolina, a political subdivision of the State of North Carolina (called "Tenant"), and The Orange County Board of Education, a board of education organized and existing pursuant to N.C. Gen. Stat. Chapter 115C (called "Landlord"). By an instrument dated as of and entered into between Tenant and Landlord, the property described below (the "Property") was made subject to a Master Lease between Tenant and Landlord. As provided by Section 2.1.2 of the 18 22 Master Lease,Tenant and Landlord now desire to remove the Property from the scope of the Master Lease. Now therefore, the parties agree that the Property is removed from the terms of the Master Lease, and all Tenant's rights to the Property are terminated, all as of the date of the execution and delivery of this instrument between Tenant and Landlord. The Property: [to come] This is the same property subject to the 'Addition to Master Lease" dated as of and recorded at Book , Page , Orange County Registry. [signature and notary pages to be added] 19 23 Exhibit B — draft sales tax master agreement for CH-C Schools s*h draft of March 23 Prepared by and return after recording to: Robert M. Jessup Jr. Emily S. Jessup Sanford Holshouser PLLC 209 Lloyd St., Suite 350 Carrboro, NC 27510 STATE OF NORTH CAROLINA ) MASTER LEASE ORANGE COUNTY ) Brief description: PIN: THIS MASTER LEASE is made and entered into as of July 1, 2026, by and between Orange County, North Carolina, a political subdivision of the State of North Carolina (called "Tenant"), and The Chapel Hill-Carrboro City Board of Education, a board of education organized and existing pursuant to N.C. Gen. Stat. Chapter 115C (called "Landlord"). RECITALS Tenant and Landlord have agreed to co-develop the construction, renovation and improvement of some or all of the schools owned by Landlord. As part of the co- development of the identified projects, Landlord shall Master Lease identified school 1 24 sites to Tenant so as to allow Tenant to reclaim sales and use taxes paid by project contractors and vendors. Tenant intends to apply the reclaimed sales tax amounts toward paying for additional capital projects for public schools or toward paying debt service on borrowings incurred for school capital projects. Tenant has designated Landlord as its agent to carry out the projects, and Landlord has accepted the appointment pursuant to the terms of the Interlocal Agreement, as defined below. N.C. Gen. Stat. Sections 115C-518, 160A-272 and 160A-274 authorize Landlord to Master Lease its property to Tenant. N.C. Gen. Stat. Sections 153A-11 and 153A-158 authorize Tenant to Master Lease property from Landlord. NOW, THEREFORE, for and in consideration of the mutual promises contained herein, the parties agree as follows: ARTICLE I BASIC MASTER LEASE INFORMATION 1.1 Defined Terms. In addition to the terms that are defined elsewhere in this Master Lease, these terms are used in this Master Lease: 1.1.1 LAND: The land described in Section 2.1, which is more specifically described on Schedule 1. 1.1.2 IMPROVEMENTS: The improvements now or hereafter located on the Land whether placed thereon by Landlord, Tenant, or their respective agents. 1.1.3 LEASED PREMISES: The Land together with all easements and rights of access over and upon the Land, as defined more particularly in Section 2.1. 1.1.4 INTERLOCAL AGREEMENT: The interlocal agreement entitled "Agreement for the Construction and Renovation of Various School Projects" executed by Tenant and Landlord and dated as of , 2026,as the same maybe properly amended from time to time. 2 25 1.2 Schedules and Exhibits. The following exhibits are attached to this Master Lease and are made a part of this Master Lease: SCHEDULE 1: Properties Initially Subject to Master Lease EXHIBIT A: Property Additions Form EXHIBIT B: Property Removal Form 1.3 Consideration. The consideration for this Master Lease is Landlord's grant of Tenant's rights under this Master Lease, the parties' agreement to carry out the planned school projects. and the parties' agreement and mutual desire to seek recovery of sales taxes paid with respect to the school projects. ARTICLE II LEASED PREMISES; TERM; TERMINATION AND USE 2.1 Lease of Leased Premises. Under the limited terms, provisions and conditions of this Master Lease,and each in consideration of the duties, covenants and obligations of the other under this Master Lease, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord that certain land(s) owned by Landlord located in and more particularly described in Schedule 1, attached hereto and made a part hereof (the "Land"), together with all easements, rights-of-way, streets, alleys, passages, water and sewer rights and improvements, tenements, hereditaments, appurtenances and rights belonging or relating or appertaining to the Land and all rights, title and interest in, if any, of Landlord, now or hereafter affecting the Land, including all Improvements (collectively, with the Land, the "Leased Premises"), to have and to hold the Leased Premises,together with all privileges and appurtenances thereunto belonging, subject to the terms, provisions and conditions hereof. 2.1.1 Additional Property. Landlord and Tenant may add land and improvements and make them subject to this Master Lease by executing and delivering a "Property Addition Form" in substantially the form of Exhibit A (the "Property Addition Form") to define the added property and to evidence that the added property is subject to the Master Lease. The addition of any property does not otherwise affect the Term of this Master Lease. The additional properties are subject 3 26 to the same terms and conditions set forth in this Master Lease and constitute a portion of the Leased Premises for all purposes of this Master Lease 2.1.2 Removal of Properties. Landlord and Tenant may remove land and improvements that are subject to this Master Lease by executing and delivering a "Property Removal Form" in substantially the form of Exhibit B (the "Property Removal Form"). Upon Tenant's execution and delivery of a Property Removal Form, this Master Lease no longer applies to the property or properties identified in that Property Removal Form. 2.2 Title to Leased Premises. Landlord represents and warrants that as of the time of the execution of this Master Lease it has title to the Leased Premises and that it has full power and authority to grant this Master Lease to Tenant. 2.3 Term. This Master Lease shall continue in force for a term (the "Lease Term") commencing upon execution and delivery of this Master Lease by all parties (the "Commencement Date"), and ending pursuant to the terms and conditions as stated in Section 2.4. 2.4 Expiration and Termination. The Lease Term terminates automatically upon the earliest of the following: (a) The end of the calendar day on June 30, 2036,except that with respect to any part of the Leased Premises added through a Property Addition Form, the Lease Term ends on the later of(i) June 30, 2036, or (ii) the date that is five years from the effective date of that Property Addition Form. (b) The end of the calendar day sixty days following the date either party gives notice of termination to the other party. (c) The end of the calendar day thirty days following the expiration or termination of the Interlocal Agreement, for any reason. Termination of the Lease Terminates all Tenant's rights of possession under this Master Lease. Upon any termination other than pursuant to subsection (a), Landlord will file a notice of the termination in the Orange County Registry. 4 27 ARTICLE III LANDLORD'S COVENANTS Subject to Tenant's performance of its obligations hereunder, Landlord makes the following assurances to Tenant: 3.1 Leases, Easements, Roadway Dedications and Rights of Way. Landlord has the absolute right to negotiate and execute any lease,easement contract or dedication, or right of way contract or dedication upon a portion of the Leased Premises that it deems in its best interest to provide access for public infrastructure or other purposes over the Leased Premises. No grant terminates this Master Lease, but instead the Master Lease continues subject to the conveyance or dedication. Should Landlord require Tenant's execution of any document for Master Leases, easements or other partial interests, Landlord, as agent for Tenant, has the authority to execute in Tenant's name any Master Leases, easements, rights of way, and roadway dedications it deems necessary. 3.2 Use of Site. During the Lease Term, Landlord retains exclusive rights to possess, use, occupy, improve and insure all the Leased Premises for public school purposes, including without limitation (a) the right to conduct surveys, soil borings and other necessary testing upon any property prior to construction,and (b) the right to use, operate, maintain, and repair that property for such public school purposes as Landlord determines in its discretion, subject only to Tenant's limited grant of access to and use of the Leased Premises as described in Section 4.1. In addition, Landlord has full discretion and the sole right to authorize the use by third parties for non- school use, pursuant to Landlord's policies, of any of the Leased Premises. Tenant's limited rights of access to and use of the Leased Premises is subordinate to any such third-party use, unless otherwise indicated in writing by Landlord. Notwithstanding the foregoing, Landlord acknowledges that Tenant will issue and incur certain financing obligations (the "Bonds") to finance project costs. Tenant will not take any action with respect to the sale or disposition of any portion of the Leased Premises, or with respect to the use of any portion of the Leased Premises by private entities or the federal government, that Tenant advises Landlord would cause interest on the Bonds to be includable in gross income for federal income tax purposes. 5 28 3.3 Utilities. Landlord shall be responsible for all utilities with respect to the Leased Premises, including electrical, gas, telephone, water, sewer, and garbage removal. 3.4 Insurance. Landlord is solely responsible for carrying adequate property and general liability insurance on all the Leased Premises. Tenant shall not be required to carry any insurance covering the Leased Premises. Landlord shall provide for Tenant to be included as an additional insured with respect to general liability coverage for the Leased Premises. ARTICLE IV TENANT'S RIGHTS AND COVENANTS 4.1 Use of Site. During the Lease Term, Tenant has the limited right to access and use the Leased Premises only to extent necessary to effectuate the performance of the construction or renovation projects authorized by Landlord under the terms of the Interlocal Agreement, including the limited right to enter upon a site and inspect any identified construction or renovation project from time to time during construction or renovation. This limited right of access and use is subject to any and all applicable written policies of Landlord regarding access to and conduct on school properties. This limited right is also subordinate to any other interests in the subject properties granted by Landlord to third parties pursuant to any other deeds, Master Leases, conveyances, or joint use agreements of any kind,whether those interests are transferred by Landlord before or after the subject properties are made subject to this Master Lease, unless otherwise expressly indicated by Landlord in writing. 4.2 Alterations. Tenant shall not make any alterations, additions or improvements to the Leased Premises, unless made by Landlord as agent for Tenant, without Landlord's prior written consent. Tenant shall not make any alterations, additions or improvements to the Leased Premises which will contravene Landlord's policies insuring against loss or damage by fire or other hazards, including but not limited to commercial general liability, or which will prevent Landlord from securing such policies from companies acceptable to Landlord. 4.3 Assignment: Subletting. Tenant may not assign or encumber this Master Lease, and may not sublet any part or all of the Leased Premises. 6 29 ARTICLE V COVENANTS REGARDING CARE AND POSSESSION 5.1 Alterations. Improvements. and Changes Permitted. Landlord has the right to make such alterations, improvements, and changes to any of the Improvements as Landlord may deem appropriate, subject to all applicable governmental regulations. 5.1.1 Disposition of New Improvements.Any and all improvements constructed upon the Leased Premises by Tenant, or by Landlord as agent for Tenant pursuant to the Interlocal Agreement, automatically become Landlord's property upon completion of the construction or renovation, subject to Tenant's leasehold interest under this Master Lease. All improvements will remain upon the Leased Premises upon expiration or termination of the Master Lease. All other alterations, improvements, changes, or additions made by Landlord in or to the Leased Premises shall be Landlord's property, subject to Tenant's leasehold interest under this Master Lease 5.2 Fire or Other Casualty. If any portion of the Leased Premises is damaged by fire or other casualty, Landlord at its option may, either in its own capacity or as agent for Tenant pursuant to the Interlocal Agreement, rebuild or restore the improvements to as good or better condition than that existing immediately prior to said fire or other casualty, and this Master Lease shall not terminate. 5.3 Eminent Domain. If any portion of the Leased Premises is acquired by a taking (in this case, meaning any acquisition by any government authority in the valid exercise of its power of eminent domain or by private purchase in lieu of an involuntary acquisition), and that taking relates to a portion of the fee simple title to Leased Premises, as well as to the right, title and interest of Tenant, the rights and obligations of the parties under this Master Lease will continue except as to that portion of the Leased Premises subject to the taking. All compensation awarded for any taking will be Landlord's property, whether the award is for compensation for damages to Landlord's or Tenant's interest in the Leased Premises. Tenant hereby assigns all of its interest in any such award to Landlord. 30 5.4 Waiver of Subrogation. Landlord and Tenant hereby release each other from any loss or damage to property caused by fire or any other perils insured through or under either by way of subrogation or otherwise for any loss or damage to property caused by fire or any other perils insured in policies of insurance covering such property, even if such loss or damage has been caused by the fault or negligence of the other party, or anyone for whom such party may be responsible; provided, however, that this release shall be applicable and in force and effect only with respect to the loss or damage occurring during such times as the releasor's policies shall contain a clause or endorsement to the effect that any such release shall not adversely affect or impair said policies or prejudice the right of the releasor to recover thereunder and then only to the extent of the insurance proceeds payable under such policies. 5.5 Compliance with Interlocal Agreement. The respective obligation of the parties regarding construction and renovation projects on any part of the Leased Premises and the mechanism for recovering sales tax payments for those projects are governed by the Interlocal Agreement, and any amendments thereto. 5.6 Indemnity. To the extent allowed by law, Landlord shall indemnify, defend and hold harmless Tenant from and against all claims, suits, actions and proceedings whatsoever which may be brought or instituted on account of, growing out of, occurring from, incident to or resulting from, directly or indirectly any and all damages, claims or losses arising from any injuries or damages (including without limitation, death) to persons or property arising out of the construction, use, and/or management of the Leased Premises (including, without limitation, reasonable legal fees and costs). Landlord assumes, on behalf of Tenant, and will conduct with due diligence and in good faith, the defense of all such claims, suits, actions and proceedings against Tenant whether or not Landlord is joined therein, even if such claims, suits, actions or proceedings are groundless, false or fraudulent, and Landlord shall bear the costs of all judgments and settlements in connection therewith; provided, however, Tenant may defend or participate in the defense of any or all of such claims, suits, actions or proceedings at its own expense. 5.7 Recording. Landlord and Tenant agree that this Master Lease, each Property Addition Form and each Property Removal Form will be recorded in the Orange County Registry. 8 31 5.8. Disclaimer of Warranties. THE COUNTY MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR FITNESS FOR A PARTICULAR USE OF THE LEASED PREMISES OR ANY PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE LEASED PREMISES OR ANY PART THEREOF. In no event will the County be liable for any direct or indirect, incidental, special or consequential damage in connection with or arising out of this Master Lease or the existence, furnishing, functioning or use by any of them of any item, product or service provided for herein. The School Board acknowledges that the County has not designed the contemplated improvements to the Leased Premises, or any other aspect of Leased Premises, that the County has not supplied any plans or specifications with respect thereto and that the County (a) is not a manufacturer of, nor a dealer in, any of the component parts of the existing or planned improvements or similar facilities on the Land, (b) has not made any recommendation, given any advice nor taken any other action with respect to (1) the choice of any supplier, vendor or designer of, or any other contractor with respect to, the existing or planned improvements or any component part thereof or any property or rights relating thereto, or (2) any action taken or to be taken with respect to the existing or planned improvements or any component part thereof or any property or rights relating thereto at any stage of the construction thereof, (c) has not at any time had physical possession of the Land or the Leased Premises or any component part thereof or made any inspection thereof or any property or rights relating thereto,and (d) has not made any warranty or other representation, express or implied,that the existing or planned improvements or any component part thereof or any property or rights relating thereto (1) will not result in or cause injury or damage to persons or property, (2) have been or will be properly designed, or will accomplish the results which the School Board intends therefor, or (3) are safe in any manner or respect. ARTICLE VI DEFAULT: REMEDIES The failure by either party in the performance or compliance with any of the agreements, terms, covenants or conditions under this Master Lease, for a period of thirty days after written notice, constitutes a breach of this Master Lease; provided, 9 32 however, that if the failure stated in the notice cannot reasonably be corrected within the applicable period and the defaulting party institutes corrective action within the applicable period, no Event of Default will be deemed to have occurred so long as the defaulting party diligently pursues the corrective action. The non-defaulting party may pursue any remedy available at law or in equity. ARTICLE VII ADDITIONAL PROVISIONS 7.1 Notices.Any communication which may or shall be made under this Master Lease must be in writing. For the purposes of this Master Lease, "writing" does not include facsimile transmission or electronic mail. Any communication under this Master Lease will be considered given on the delivery date shown on a United States Postal Service certified mail receipt, or a delivery receipt (or similar evidence) from a national commercial package delivery service, if addressed as follows: (a) if to Tenant, to Orange County- County Manager, Re: Notice under 2026 School Master Lease, Post Office Box 8181, Hillsborough, NC 27278 (b) if to Landlord,to The Chapel Hill-Carrboro City Board of Education, Attn: Superintendent, Re: Notice under 2026 School Master Lease with Orange County, 750 S. Merritt Mill Rd., Chapel Hill, NC 27516 Any addressee may designate additional or different addresses for communications by notice given under this Section to each of the others. 7.2 Entire Agreement. This Master Lease and all of its exhibits hereto, together with the Interlocal Agreement and all Property Addition Forms and Property Removal Forms properly delivered between the parties constitute the entire agreement between Landlord and Tenant as to this general subject matter. No other prior written or prior or contemporaneous oral promises or representations are binding. Subject to Sections 2.1.1 and 2.1.2, this Master Lease may not be changed except by written instrument signed by both parties. 10 33 7.3 Interpretation. Pronouns, where used in this Master Lease, of whatever gender, include natural persons, corporations, and associations of every kind and character, and the singular includes the plural and vice versa where and as often as may be appropriate. Article and section headings under this Master Lease are for convenience of reference and shall not affect the construction or interpretation of this Master Lease. Whenever the terms "hereof," "hereby," "herein," or words of similar import are used in this Master Lease, they shall be construed as referring to this Master Lease in its entirety rather than to a particular section or provision, unless the context specifically indicates to the contrary.Any reference to a particular "Article" or "Paragraph" shall be construed as referring to the indicated Article or Paragraph of this Master Lease. Statements in this Master Lease in respect to compliance with applicable law or text of similar import shall be construed to require compliance with applicable law as now or hereafter in effect. 7.4. Governing Law. The parties intend that North Carolina law will govern this Master Lease and all matters of its interpretation. To the extent permitted by law, the parties agree that any action brought with respect to this Master Lease must be brought (a) in the North Carolina General Court of Justice in Orange County, North Carolina, or (b) if an action by law may be brought only in the United States federal courts, the action must be brought in the United States District Court for the Middle District of North Carolina. 7.5 Binding Effect. The provisions of this Master Lease shall be binding upon and inure to the benefit of the heirs, executors,administrators,successors and assigns or the parties, but this provision shall in no way alter the restrictions on assignment and subletting applicable to Tenant hereunder. 7.6 Severability If any term, covenant or condition of this Master Lease or the application thereof to any person or circumstance is to any extent held invalid or unenforceable by a court, the remainder of this Master Lease, or the application of that term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, will not be affected by the finding, and each term, covenant or condition of this Master Lease will continue to be valid and enforceable to full extent permitted by law. 11 34 7.7 No Waiver. The waiver by either party of any agreement, condition, or provision contained in this Master Lease will not be deemed to be a waiver of any subsequent breach of the same or any other agreement, condition, or provision contained in this Master Lease, nor will any custom or practice that may grow up between the parties in the administration of the terms of this Master Lease be construed to waive or lessen the right of one party to insist upon the performance by the other party in strict accordance with the terms of this Master Lease. 7.8 Non-Merger of Fee and Leasehold Estate. If both the estate of Landlord and the estate of Tenant in the Leased Premises, or any part of the Leased Premises, become vested in the same owner, this Master Lease shall not be terminated by application of the doctrine of merger, except by mutual consent of Tenant and Landlord. [The remainder of this page has been left blank intentionally.] 12 35 IN WITNESS WHEREOF, the parties hereto have caused this Master Lease to be executed in their corporate names by their duly authorized officers, all as of , 2026. [SEAL] THE CHAPEL HILL-CARRBORO CITY ATTEST: BOARD OF EDUCATION By: [Chair] Chair [Secretary] Secretary STATE OF NORTH CAROLINA; ORANGE COUNTY I, , a Notary Public of said State and County, do hereby certify that [Chair] and [Secretary] personally came before me this day and acknowledged that they are the Chair and the Secretary, respectively, of The Chapel Hill-Carrboro City Board of Education, and that by authority duly given and as the act of such Board, the foregoing instrument was signed in the Board's name by such Chair, sealed with its corporate seal and attested by such Secretary. Witness my hand and official seal this day of . 2026. Notary Public My commission expires: [Master Lease dated as of 2026] [Signatures continue on the following page] 13 36 IN WITNESS WHEREOF, the parties hereto have caused this Master Lease to be executed in their corporate names by their duly authorized officers, all as of , 2026. [SEAL] ORANGE COUNTY, ATTEST: NORTH CAROLINA By: Laura Jensen Travis Myren Clerk, Board of Commissioners County Manager This instrument has been preaudited in the manner required by The Local Government Budget and Fiscal Control Act. Gary Donaldson Finance Officer Orange County, North Carolina STATE OF NORTH CAROLINA; ORANGE COUNTY I, . a Notary Public of said State and County, do hereby certify that Travis Myren and Laura Jensen personally came before me this day and acknowledged that they are the County Manager and the Clerk of the Board of Commissioners, respectively, of Orange County, North Carolina, and that by authority duly given and as the act of such County, the foregoing instrument was signed in the County's name by such County Manager, sealed with its corporate seal and attested by such Clerk. Witness my hand and official seal this day of . 2026. Notary Public My commission expires: [Master Lease dated as of 2026] 14 37 Schedule 1 - Properties Subject to this Master Lease [To come] As provided in Section 2.1.1, the parties may agree to add additional properties to be subject to the terms of this Master Lease. 15 38 Exhibit A - Property Addition Form Prepared by and return after recording to: Robert M. Jessup Jr. Emily S. Jessup Sanford Holshouser PLLC 209 Lloyd St., Suite 350 Carrboro, NC 27510 STATE OF NORTH CAROLINA ) ADDITION TO MASTER LEASE ORANGE COUNTY ) Brief description: PIN: Modifies Book , Page THIS ADDITION TO MASTER LEASE is made and entered into as of , by and between Orange County, North Carolina, a political subdivision of the State of North Carolina (called "Tenant"), and The Chapel Hill- Carrboro City Board of Education, a board of education organized and existing pursuant to N.C. Gen. Stat. Chapter 115C (called "Landlord"). Pursuant to Section 2.1.1 of the Master Lease by and between Landlord and Tenant dated as of July 1, 2026, and recorded at Book , Page , Orange County Registry,the following property or properties are hereby added to the Master Lease, and shall be subject to all terms and conditions of the Master Lease as part of the Leased Premises as if it or they had been described in the Master Lease originally, all as of the date of the execution and delivery of this instrument between Tenant and Landlord. The Property: 16 39 [to come] Landlord represents and warrants that it has title to the property described above, and that it has full power and authority to lease this property to Tenant pursuant to the terms of this agreement and the Master Lease. [signature and notary pages to be added] 17 40 Exhibit B - Property Removal Form Prepared by and return after recording to: Robert M. Jessup Jr. Emily S. Jessup Sanford Holshouser PLLC 209 Lloyd St., Suite 350 Carrboro, NC 27510 STATE OF NORTH CAROLINA ) REMOVAL FROM MASTER LEASE ORANGE COUNTY ) Brief description: PIN: Modifies Book , Page and Book , Page (to reference original Master Lease and instrument by which the school now to be removed was first added) THIS REMOVAL FROM MASTER LEASE is made and entered into as of , by and between Orange County, North Carolina, a political subdivision of the State of North Carolina (called "Tenant"), and The Chapel Hill- Carrboro City Board of Education, a board of education organized and existing pursuant to N.C. Gen. Stat. Chapter 115C (called "Landlord"). By an instrument dated as of and entered into between Tenant and Landlord, the property described below (the "Property") was made subject to a Master Lease between Tenant and Landlord. As provided by Section 2.1.2 of the 18 41 Master Lease,Tenant and Landlord now desire to remove the Property from the scope of the Master Lease. Now therefore, the parties agree that the Property is removed from the terms of the Master Lease, and all Tenant's rights to the Property are terminated, all as of the date of the execution and delivery of this instrument between Tenant and Landlord. The Property: [to come] This is the same property subject to the 'Addition to Master Lease" dated as of and recorded at Book , Page , Orange County Registry. [signature and notary pages to be added] 19