R99-006 01-25-99 FailedFAILED 01-25-99
RESOLUTION NO. R99-6
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND,
TEXAS, AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO
EXECUTE A DEVELOPMENT AGREEMENT WITH SHADOW CREEK
RANCH DEVELOPMENT COMPANY, L. P., A NEVADA LIMITED
PARTNERSHIP ("DEVELOPER"), OUTLINING THE RESPONSIBILITIES OF
THE CITY AND DEVELOPER FOR THE IMPLEMENTATION OF THE
PROJECT AND FINANCING PLAN FOR TAX INCREMENT
REINVESTMENT ZONE NO. 2.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That certain Development Agreement by and between the City of
Pearland and Shadow Creek Ranch Development Company, L.P., a Nevada limited
partnership, a copy of which is attached hereto as Exhibit "A" and made a part hereof
for all purposes, is hereby authorized and approved.
Section 2. That the City Manager or his designee is hereby authorized to
execute and the City Secretary to attest the original of the attached agreement for and
on behalf of the City of Pearland.
PASSED, APPROVED and ADOPTED this the ~ day of ,
A.D., 1 998.
ATTEST:
TOM REID
MAYOR
YOUNG LORFING
CITY SECRETARY
APPROVED AS TO FORM:
DARRIN M. COKER
CITY ATTORNEY
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is made and entered into as
of January 25, 1999, by and between the CITY OF PEARLAND, TEXAS, a home rule
municipality located in the counties of Brazoria, Harris, and Fort Bend, Texas (the "City"), and
SHADOW CREEK RANCH DEVELOPMENT COMPANY, L.P., a Nevada limited partnership
(the "Developer"), or its assigns, represented herein by its undersigned, duly authorized general
partner.
RECITALS
A. Capitalized terms used in these recitals are defined in Article I, below. The City has
the authority to adopt tax increment financing pursuant to the Act, for areas within its jurisdiction
designated by the City as reinvestment zones, and to implement incentive programs to encourage
economic development pursuant to T~x. CONST., article III, section 52-a, T~x. LOCAL GOV'T CODE,
ch. 380, and other economic development statutes.
B. The City has annexed the Property. Pursuant to the request of certain owners of
property within the annexed land, and in accordance with the Act, the City has, after giving all
notices required by law, conducted a public hearing with respect to the creation of a reinvestment
zone and its benefits to the City, and to property within the proposed reinvestment zone, on
December 14, 1998, and intends to create such reinvestment zone, and to designate the Property as
the "Tax Increment Financing Reinvestment Zone Number Two, City of Pearland, Texas," pursuant
to the terms and conditions of this Agreement. The Reinvestment Zone is intended and needed to
provide the financing and management tools to facilitate the development of the Project; therefore,
it is understood that absent such tools, the Project would not occur solely through private investment
in the foreseeable future, and would not consist of a master-planned community as contemplated by
the parties, thereby denying the benefits to the City and the Project as provided herein.
C. The City has authorized, or will authorize, the preparation of a preliminary project
plan and a preliminary reinvestment zone financing plan concerning the Reinvestment Zone.
D. In accordance with above authorization and the Act, the Board of Directors of the
Reinvestment Zone shall prepare a Project Plan and a Financing Plan substantially similar to the
Preliminary Project Plan and the Reinvestment Zone Financing Plan, dated October 2, 1998,
prepared by Knudsen & Associates, Vinson & Elkins, L.L.P., and LJA Engineering and Surveying,
Inc., submitted to the City. The City, in accordance with the Act and after making all findings
required by the Act, intends to adopt an ordinance approving the Plans.
E. The Developer is the holder of the right to acquire and develop the Property from the
owner. The City and the Developer intend that other land may be annexed to the Reinvestment Zone
with the agreement of the parties and in compliance with the Act.
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F. The Developer, in cooperation with and at the direction of the City, drafted the PUD
and the PUD has been approved by the City; consistent therewith, the Developer currently intends
to develop and improve all or a portion of the Property as a master-planned, mixed-use community
in various phases, with single family and multifamily residential dwelling units, commercial
development, industrial development, institutional development, public/community developments,
and other uses permitted in conformance with the City-approved PUD.
G. To facilitate the development of the Property, and subject to and in accordance with
the terms of this Agreement and the limitations hereinafter stated, the City has agreed either through
its City Council or by delegation to the Board of Directors of the Reinvestment Zone to (i) undertake
to construct, or cause to be constructed, various public improvements consisting of the TIRZ
Improvements and the City Improvements, and to incur Project Costs in connection with the TIRZ
Improvements and pay for such Project Costs using the proceeds of TIRZ Instruments or from the
City's implementation of other economic development or financing programs authorized by statute
or the home-rule powers of the City, in accordance with this Agreement, and (ii) use the proceeds
of the TIRZ Instruments or from the City's implementation of other economic development or
financing programs authorized by statute or the home-rule powers of the City to pay the costs of
those eligible Project Costs that either or both of the Developer and the City incurs in connection
with the acquisition, redevelopment (including, without limitation, site preparation, installation of
utilities, construction of public improvements, whether on site or off site), financing and use of the
Property.
H. The parties expect to create a PID to provide, for the benefit of the Property, certain
additional "public improvements" as defined in TEX. LOCAL GOV'T CODE, ch. 372, and to consider
the creation of a Management District to replace or support the PID, and the parties expect to
cooperate in the creation and operation thereof.
I. This Agreement has been submitted to the City for consideration and review, and the
City has taken all actions required to be taken prior to the execution of this Agreement in order to
make the same binding upon the City according to the terms hereof.
J. The City, after due and careful consideration, has concluded that the development of
the Property in the Reinvestment Zone as provided for herein will further the growth of the City,
facilitate the development of the entire Reinvestment Zone, improve the environment of the City,
increase the assessed valuation of the real estate situated within the City, foster increased economic
activity within the City, increase employment opportunities within the City, upgrade public
infrastructure within the Reinvestment Zone, and otherwise be in the best interests of the City by
furthering the health, safety, morals and welfare of its residents and taxpayers, and that entering into
this Agreement is necessary and convenient to implement the Plans and achieve their purposes.
K. The City desires to have the Developer undertake the Project to serve the needs of the
City, to produce increased tax revenues for the various taxing units authorized to levy taxes on real
property within the Reinvestment Zone, to stimulate and induce the development of the
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Reinvestment Zone, and to finance the Project Costs, using property tax increment revenues, tax
revenues and the proceeds of the TIRZ Instruments, all in accordance with the terms and provisions
and this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements herein contained, and other good and valuable consideration, the receipt and sufficient
of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE~I.
DEFINITIONS; INCORPORATION OF RECITALS
1.1 Definitions. Capitalized terms used herein, including the recitals hereto, shall have
the meanings set forth in this section, unless otherwise defined, or unless the context clearly requires
another definition.
1998 Dollars means aggregate payments that equate to a net present value on the date of this
Agreement, adjusted in accordance with the Engineering News Record regional construction index
applicable to the City, or in the event such publication no longer maintains such index, a similar
index mutually agreeable to the parties.
Act means the Tax Increment Financing Act, TEX. Tax CODE, ch. 311 (Vemon 1998), as
amended.
Administrative Fee means the City's fee for providing certain services to the Reinvestment
Zone in the amounts described in Section 5.3, below.
Certificates means general obligation certificates of obligation of the City issued pursuant
to Chapter 271, Subchapter C, TEX. LOC^L GOV'T CODE.
City means the City of Pearland, Texas, a home rule municipality located in the counties of
Brazoria, Harris, and Fort Bend, Texas.
City Improvements means various public improvements to be constructed and financed by
the City using funds other than the Tax Increment or the proceeds of TIRZ Instruments supported
thereby, as more fully set forth in Section 4.4(b) below.
City Increment means the City's "tax increment," as such term is defined in §311.012(a) of
the Act, within the Reinvestment Zone.
Developer means Shadow Creek Ranch Development Company, L.P., a Nevada limited
partnership.
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Financing Plan means the financing plan authorized by the City to be prepared by the Board
of Directors of the Reinvestment Zone
First Phase Master Improvements means the Master Improvements described on Exhibit C.
Fund means the Tax Increment Fund created by the City pursuant to the Act, this Agreement
and the ordinances adopted by the City relating to the Reinvestment Zone.
gpd means gallons per day of capacity, average daily flow.
Improvement Fund means the special sub-account of the Fund, the operation of which is
described in Section 5.1(g)(ii), below.
Improvements means the TIRZ Improvements and the City Improvements, collectively.
Instrument Proceeds means all net proceeds, after deducting all issuance costs and any
amounts for capitalized interest and reserves, received by the City in connection with the issuance
and sale of a TIRZ Instrument.
Letter of Acceptance means a certificate of the City certifying the completion of a discrete
portion of the Project or the TIRZ Improvements constructed by or under the supervision of the
Developer or a Subdeveloper in accordance with the applicable plans and regulations.
Management District means a municipal management district created pursuant to TEX.
LOCAL GOV'T CODE, ch. 375 (Vernon Supp. 1998) or special legislative authority.
Master Improvements means TIRZ Improvements required to serve and benefit the
Reinvestment Zone as a whole, and that are designated as such by the Developer in writing.
PID means a public improvement district created and operating pursuant to TEX. LOCAL
GOV'T CODE, ch. 372 (Vernon Supp. 1998).
Plans means the Project Plan and the Financing Plan.
Project means the real estate development planned for the Property, as more fully described
in Paragraph F of the recitals hereto.
Project Plan means the project plan authorized by the City to be prepared by the Board of
Directors of the Reinvestment Zone and approved by the City.
Project Costs means and includes all costs defined as "project costs" in § 311.002(1) of the
Act as now or hereafter provided, incurred in connection with the TIRZ Improvements.
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The Property means the approximately 3,320 acre tract legally described in Exhibit A-1
attached hereto and made a part hereof and depicted on Exhibit A-2 attached hereto and made a part
hereof (the "Property")
PUD means the Planned Unit Development for the Property adopted pursuant to §42.046,
TEX. LOCAL GOVERNMENT CODE (Vernon Supp. 1998).
Reinvestment Zone means the Tax Increment Financing Reinvestment Zone Number Two,
City of Pearland, Texas, created by the City to include the Property.
Subdeveloper means a developer within the Reinvestment Zone who is developing a portion
of the Reinvestment Zone as described in Section 5.1(h), below.
Subdeveloper Improvements means TIRZ Improvements required to serve and benefit only
a portion of the Reinvestment Zone, and which are designated as such by the Developer.
Tax Increment means the amount of tax revenue collected as determined pursuant to
§ 311.012 of the Act and deposited in the Fund in accordance with this Agreement and the
participation agreement with any participating taxing unit.
TIRZImprovements means the various improvements to be financed from the Tax Increment
or TIRZ Instruments supported thereby, as more fully set forth in Section 4.4(b)(i), below, and
Exhibit B.
TIRZ Instruments means a debt instrument or other instruments to finance TIRZ
Improvements (including the first phase improvements described in Section 5.1(g)) to be issued and
sold by the City in accordance with the Act or other applicable Texas law (and in accordance with
a schedule of issuance agreed to by the Parties) in the aggregate principal amount necessary to
produce Instrument Proceeds of $114,000,000 (in 1998 dollars) and, if issued pursuant to the Act,
having a term not to exceed the maximum term permitted by §311.015(1) of the Act.
Party orparties means all or any of the City, the Developer, and, with respect to Article V,
any Subdevelopers, as applicable.
1.2 Recitals incorporated. The representations, covenants and recitations set forth in the
recitals to this Agreement are material to this Agreement and are hereby found and agreed to be true
and correct, and are incorporated into and made a part hereof as though they were fully set forth in
this article.
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ARTICLE II.
COOPERATION
2.1 Actions of the parties; compliance with the Plans. The Parties agree to take such
actions, including the execution and delivery of such documents, instruments, petitions and
certifications (and, in the City's case, the adoption of such ordinances and resolutions), as may be
necessary or appropriate, from time to time, to carry out the terms, provisions and intent of this
Agreement and to aid and assist each other in carrying out said terms, provisions and intent. Further,
the City agrees (absent any uncured breach of the terms of this Agreement by the Developer resulting
in a default pursuant to Section 9.2 hereof) that it will not revoke or amend ordinances that are or
will be adopted by the City relating to the Reinvestment Zone, the PID, the PUD, and this Agreement
except as is consistent and in compliance with the Plans. The Parties shall cooperate fully with each
other in seeking from any or all appropriate governmental bodies (whether federal, state, county or
local) financial or other aid and assistance required or useful for the construction or improvement
of property and facilities in and on the Property or for the provision of services to the Property,
including, without limitation, grants and assistance for public transportation, roads and highways,
water and sanitary sewage facilities and storm water disposal facilities.
2.2 Renegofiation in the event of changed circumstances. The parties acknowledge that
their intentions with respect to this Agreement are predicated upon the cooperation of other taxing
entities in participating in the Tax Increment. However, all of the other taxing entities will not have
taken formal action with regard to their participation at the time of the approval of this Agreement.
As a result, the parties agree that the City may terminate this Agreement if the taxing entities do not
sign interlocal agreements agreeing to participate in the Reinvestment Zone, or if such interlocal
agreements provide for participation of the other taxing entities at levels that fall below the following
thresholds:
Taxing entity
Brazoria County
Fort Bend County
Brazoria Drainage
District No. 4
Years 1-10 Years 11-20 Years 21-30
100 percent 75 percent 50 percent
100 percent 75 percent 50 percent
50 percent 50 percent 50 percent
ARTICLE III.
EFFECTIVENESS OF AGREEMENT
This Agreement shall become effective from and after its approval and execution by both
parties. Without limitation of the foregoing, the City's obligations to construct the Improvements
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in accordance with Section 4.4 of this Agreement shall become effective and enforceable upon
execution.
ARTICLE IV.
DEVELOPMENT AND USE OF THE PROPERTY AND
CONSTRUCTION OF IMPROVEMENTS
4.1 Delegation of Powers. The City hereby acknowledges the authority of the Board of
Directors of the Reinvestment Zone pursuant to the Act to enter into such agreements as the
Reinvestment Zone Board considers necessary or convenient to implement this Agreement and the
Plans and to achieve its purposes. The City hereby delegates to the Reinvestment Zone Board all
powers relating to the implementation of the Plan, including without limitation the power to (i) retain
the Developer as project manager to assist in the implementation of the Plans; (ii) select and retain
other consultants, including without limitation, attorneys and administrators, and contracting with
the City to assist in the implementation of the Plans and to contract with the Developer and to
authorize it to perform those tasks; and (iii) approve plans and specifications, award contracts, and
approve change orders and payments in accordance with this Agreement; provided that nothing in
this section or this Agreement shall be construed to delegate to the Reinvestment Zone Board the
power to levy taxes.
4.2 The Project. All property within the Reinvestment Zone shall be developed in
accordance with the PUD's standards and conditions. The Developer shall construct the Project in
conformance with the approved PUD. The Project may be constructed in phases at the Developer's
sole discretion. The City agrees that it will ensure that the terms of the PUD will apply uniformly
to all applicable land within the Reinvestment Zone, including any land subsequently added by
annexation to the Reinvestment Zone, and that any changes, additions or alterations to the PUD will
be done only as may be consistent and in compliance with the Plans, and following notice to the
Developer so long as the Developer is the manager or developer of at least ten percent of the acreage
within the Reinvestment Zone.
4.3 Utilities and Fees. The City does not now levy or assess and in the future, shall only
levy or assess, any special taxes, fees, exactions, impositions, or assessments of any form against the
Property, not heretofore levied and assessed, if they are applicable to and apply to all other properties
in the City equally and uniformly and in the same manner, or are consistent with the terms of the
Plans; provided that, this section shall not affect such amounts (i) levied or assessed by or through
a PID, a municipal utility district, or a Management District, created in the Reinvestment Zone at the
request of the Developer or its assignee, (ii) that are paid on behalf of the property within the
Reinvestment Zone from funds received by the City from the Administrative Fee, or (iii) assessed
by the City as an impact fee to finance water and sewer capacity of general application throughout
the City in an amount initially not to exceed $1,997.00 per single family residential equivalent, and
subject to revision in accordance with applicable law from time to time.
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4.4 Construction of Improvements.
(a) The Improvements provided for in this Agreement consist of the TIRZ Improvements
and the City Improvements. Exhibit B, as supplemented in Subsection (b), below, designates the
TIRZ Improvements (both Master Improvements and Subdeveloper Improvements) and the City
Improvements. The City's obligation to construct or cause to be constructed the Improvements in
accordance with this section shall become effective and enforceable upon execution. The City and
the Developer shall cooperate and coordinate their activities with respect to the commencement and
construction of the Improvements and the Project so that the commencement and construction of the
Improvements shall occur at such times as are necessary to meet the construction time requirements
of the Plans. The parties agree to jointly prepare (and update, from time to time, as necessary) a
construction schedule of the Improvements in order to help implement the parties' obligations
pursuant to this section. The City further agrees to supply the Developer with copies of all contracts
to be entered into by the City with respect to the Improvements, as well as all change orders and
requests therefor pursuant to such contracts prior to their approval by the City, all for the Developer's
review and comment.
(b)
will:
Without limitation of the generality of the foregoing, as City Improvements, the City
(i)
(ii)
(iii)
(iv)
construct and operate a 24-inch water line of sufficient capacity and delivered
at sufficient pressure to serve all of the Property, extending from existing City
of Houston water supply facilities into the Reinvestment Zone, along County
Road 48 to the South side of Clear Creek, to be completed on or before
August 1, 2000;
construct and operate a 16-inch water line of sufficient capacity and delivered
at sufficient pressure to serve all of the Property, from existing City water
supply facilities into the Reinvestment Zone, extending West across Highway
288, following County Road 92 to the Easterly property line of Shadow
Creek Ranch, to be completed on or before December 1, 1999;
construct and operate on-site water storage facilities and pressure pumps to
provide sufficient capacity and delivered at sufficient pressure to serve all of
the Property;
construct and operate all sanitary sewer tmnklines 12 inches in diameter or
greater within the Reinvestment Zone, up to a total cost of $4.3 million
(including design and permits), such construction to be in a time and manner
commensurate with the pace of development thereof; provided that, if any
of such $4.3 million remains following the construction of all such tmnklines,
the remainder will be used to construct additional sanitary sewer tmnklines
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within the Reinvestment Zone, as such lines will be designated by the
Developer;
(v)
assume lease payments on the temporary sewage treatment plant constructed
by the Reinvestment Zone as a TIRZ Improvement from the first phase
financing (described in Section 5.1(g)(i)(A), below) once there are any
residential connections connected thereto; provided that, the City's lease
payment obligation is limited to the extent of any revenues generated by
connections to the plant;
(vi)
construct and operate the initial phase of a permanent sewage treatment plant
with a minimum capacity of approximately 2 million gpd, the plant to
become operational by the time the temporary plant described in Item (v)
above reaches 90 percent capacity;
(vii)
construct and operate all additional phases to the permanent sewage treatment
plant sufficient to serve the ongoing and ultimate needs of the Reinvestment
Zone, each phase thereof to become operational when the permanent plant
reaches 90 percent capacity;
(viii)
construct regional parks and recreational improvements (A) in accordance
with a plan to be developed by the Reinvestment Zone Board of Directors and
approved by the City, and (B) to be completed by the later of(l) January 1,
2008, or (2) the time at which 5,000 residential units have been completed
within the Reinvestment Zone; and
(ix)
provide fire, police and other City services generally provided throughout the
City in the same manner as so provided, as development in the Reinvestment
Zone warrants.
(c) Fund~. The City Improvements described in Subsection (b), above, shall
be funded as provided in this subsection. Items (i) and (ii) will be paid from water and sewer impact
fee revenues, the proceeds of revenue bonds issued by the City secured by such impact fees, and
State grant funds; Item (iii) will be paid from water and sewer impact fees; Item (iv) will be paid
from current funds available from the proceeds of a State revolving fund loan; Item (v) will be paid
from water and sewer system revenues; Items (vi) and (vii) will be paid from water and sewer
impact fee revenues, and the proceeds of revenue bonds issued by the City secured by such impact
fees; and Items (viii) and (ix), will be paid from lawfully available funds that may be currently
available in the budget year in which such services are designated to be carded ont. The City agrees
to use its best efforts to collect such revenues, issue such bonds, and appropriate such funds as may
be required to finance the City Improvements.
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(d) (i) To the extent that any of the TIRZ Improvements to be constructed under the
management of the Developer are to be located in City owned rights-of-way, the City shall grant to
the Developer and its designees access thereto to enable the construction of such TIRZ
Improvements.
(ii) All plans and specifications for the TIRZ Improvements shall be submitted
to the City for review and approval prior to the commencement of construction.
(iii) The City and the Developer agree and acknowledge that the Developer may
seek and receive payment and reimbursement in accordance with this Agreement for all Project
Costs the Developer incurs, out of Instrument Proceeds and Tax Increment and other funds available
under this Agreement. Notwithstanding anything to the contrary contained in this Agreement, the
City's obligation to fund Project Costs by reimbursing the Developer or incurring such Project Costs
directly shall not exceed $114,000,000 (in 1998 dollars). The City's obligation to issue TIRZ
Instruments or Certificates shall not exceed $114,000,000 (in 1998 dollars), plus the cost of issuance,
capitalized interest and necessary reserve funds in connection with such TIRZ Instruments. To the
extent the Tax Increment generated from the Reinvestment Zone is insufficient to pay debt service
on the TIRZ Instruments described in the preceding sentence, the TIRZ Instruments may be reduced
or phased.
(iv) The City shall not terminate the Reinvestment Zone, as provided in
{}311.017(a) of the Act, unless all Project Costs with respect to the TIRZ Improvements, as well as
all TIRZ Instruments and interest thereon, have been paid in full.
4.5 Developer's Rights in the event of the City's Default. In the event the City fails to
complete the Improvements or defaults under this Agreement, then the Developer, in addition to its
rights under Section 9.2 of this Agreement, may compel the City to fund and complete the
Improvements by mandamus, specific performance or mandatory permanent injunction. Without
limitation, the City further covenants to require and enforce payment and performance bonds of
contractors constructing the Improvements.
4.6. Developer's obligations.
(a) The Developer's and Subdeveloper's contributions, in addition to the other obligations
described in this Agreement, include the following:
(i) petition for the creation of the Reinvestment Zone and the PIDand/or the
Management District;
(ii) implement the Plans and the PUD;
(iii) act as project manager for the TIRZ Improvements upon agreement with the
Reinvestment Zone board;
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(iv) adopt deed restrictions and other restrictive covenants, and promulgate the
Developer's guidelines regarding development standards, consistent with the PUD and
relevant City regulation;
(v) require Subdevelopers to abide by the Developer's development standards, and
provide for enforcement mechanisms for restrictive covenants through a Management
District or similar organizations;
(vi) assemble the Property for ownership and development (estimated cost
$30,000,000.00);
(vii) oversee and construct neighborhood improvements and amenities, such as water,
sanitary sewer and drainage facilities, lighting, landscaping and similar construction
(estimated cost $54,400,000.00);
(viii) oversee and construct community entry landscaping, monumentation and theme
walls (estimated cost $17,000,000.00);
(ix) advertise and market the Project (estimated cost over ten years $10,000,000.00);
(x) pay property taxes (estimated cost over 15 years $20,000,000.00);
(xi) maintain the Property (estimated cost over 15 years $3,500,000.00);
(xii) pay legal and other professional expenses (estimated cost over 15 years
$2,000,000.00);
(xiii) pay land planning, architectural, engineering, surveying, and design expenses
(estimated cost over 15 years $3,000,000.00);
(xiv) provide credit enhancement (e.g., letters of credit)(estimated cost
$4,000,000.00);
(xv) provide coverage of possible Tax Increment shortfall during early years
(estimated cost $5,000,000.00); and
(xvi) pay development financing costs (estimated cost $5,000,000.00).
(b) The above items describe the efforts and contributions of the Developer, both prior to and
during the term of this Agreement, to the Project. Amounts described are estimates only, and certain
items, such as (vii), (viii), and (xii) are intended to be partially or totally reimbursed to either the
Developer or a Subdeveloper pursuant to this Agreement or through the PID or other special district.
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4.7 Annexation of additional property. The parties agree and recognize that from time
to time the City may receive requests for the addition of property adjacent to the Reinvestment Zone
to be annexed into the Reinvestment Zone. The City agrees that property will not be annexed into
the Reinvestment Zone except as is consistent with the Plans.
ARTICLE V.
PAYMENT AND REIMBURSEMENT OF
ELIGIBLE PROJECT COSTS
5.1 TIRZ Instruments; reimbursements.
(a) The parties acknowledge that the development of the Property in the Reinvestment
Zone as provided in the Project Plan and this Agreement can only occur with the use of Instrument
Proceeds, which Instrument Proceeds, together with Tax Increment and other funds available under
this Agreement, shall be used to pay for eligible Project Costs. TIRZ Instruments shall be issued in
one or more installments to pay the Project Costs of the TIRZ Improvements, including both the
Master Improvements, and the Subdeveloper Improvements.
(b) The TIRZ Instruments and payment of other eligible Project Costs shall be secured,
in whole or in part, by the funds deposited, from time to time, in the Fund, which funds shall include
the Tax Increment and interest earned on investment of monies within the Fund. The City pledges
that it will deposit the entirety of such funds into the Fund. The amounts deposited in the Fund shall
be disbursed in accordance with this Agreement, the TIRZ Instrument and any trust indenture entered
into, or bond authorization documents adopted, in connection with the TIRZ Instrument (which trust
indenture or bond ordinance shall not conflict with the provisions of this Agreemen0. The City
covenants and agrees to deposit all Tax Increment into the Fund promptly upon the City's receipt of
any Tax Increment and to disburse funds from the Fund in accordance with this Agreement solely
(A) to make payments of principal and interest on TIRZ Instruments as and when due, (B) to pay
eligible expenses of the Reinvestment Zone, including creation costs and operating expenses, (C)
to pay Project Costs, and (D) to reimburse the Developer or a Subdeveloper amounts equal to
eligible Project Costs incurred by the Developer or a Subdeveloper in accordance with this
Agreement. Notwithstanding the above, to pay for services rendered by the City in the Reinvestment
Zone, including imputed administrative costs, including reasonable charges for the time spent by
employees of the City in connection with the implementation of the Plans, the City may withdraw
the Administrative Fee described in Section 5.3, below from the Tax Increment on or about
September 1 of each year, commencing in 2002.
(c) The City agrees to use its best efforts to issue the TIRZ Instruments in accordance
with the Developer's timing needs to develop the Project. In addition, the City will provide the
Developer with copies of any proposed bond ordinance or indenture in connection with the TIRZ
Instruments, and to allow the Developer to offer reasonable comments thereto.
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(d) To the fullest extent permitted by law, the City agrees that (i) it will not pledge or
apply the Tax Increment or any other monies in the Fund to any other purpose or payment of any
obligation of the City except for the TIRZ Instruments and obligations arising under this Agreement;
(ii) it will not commingle the Tax Increment with any other funds of the City; (iii) it will not take
any action or omit to take any action that will affect the continued existence of the Fund or the
availability of the Tax Increment to pay the TIRZ Instrument and the other obligations under this
Agreement; (iv) it will take all actions and submit all documents in a timely manner to receive all
Tax Increment; (v) it will institute and pursue to a final order or judgment any bond validation
action or suit upon reasonable request by the Developer; (vi) it will not refund the TIRZ Instruments
in any manner inconsistent with the Plans; and (vii) it will direct the investment of the Tax
Increment in accordance with Texas law applicable to investment of funds by municipalities.
(e) The parties and any assignees of the parties will take all actions necessary to ensure
that the interest payable qn the TIRZ Instruments is and remains exempt from taxation under the
Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder.
(f) Notwithstanding the provisions of this section relating to the issuance of TIRZ
Instruments to finance TIRZ Improvements, including Developer and Subdeveloper reimbursements,
such payments may be made directly from the accrued Tax Increment if the parties agree that such
funds are available therefrom for such purpose.
(g) Master Improvements.
(i) The Master Improvements are described in Exhibit B (and may not be
changed except upon agreement of the Developer and the Reinvestment Zone Board) and
will be funded in advance as provided in this subsection. The City agrees upon the written
request of the Developer to promptly commence the process to issue and sell TIRZ
Instruments in phases, and shall hold and disburse the Instrument Proceeds as provided in
this Agreement. The bonds issued to finance the First Phase Master Improvements shall be
issued as City Certificates, although the Tax Increment may be used to pay debt service
thereon; provided that (1) at the earliest opportunity after the City's financial advisor
determines it to be feasible, the proceeds of TIRZ Instruments payable solely from available
Tax Increments will be used to retire or refund the Certificates, and (2) at the time of
issuance of the Certificates (described in Item (A) below), the Developer shall provide the
City with a letter of credit, issued by a financial institution and in a form, both acceptable to
the City, in the amount determined by the City's financial advisor to be required to secure
payment of debt service on the Certificates to be issued payable in the event of, and in the
amount that, the Tax Increment generated is insufficient to pay debt service on the
Certificates. The letter of credit shall have an initial term of five years, and shall provide that
it shall be automatically extended each year for an additional year, unless the issuer thereof
provides the City with written notice of its intent no to so extend. If a notice of non-renewal
is received, and the Developer does not provide a similar replacement letter of credit issued
by a financial institution of equal or greater credit within 180 days of notice thereof by the
VEHOU09:74890.1 13
City, the City may draw on the letter of credit for the full amount thereof at any time prior
to its expiration date.
(A) First phase. The First Phase Master Improvements to be financed
by Certificates or TIRZ Instruments as provided in (i), above, shall equal
approximately $15 million, issued in three installments (expected to be
approximately $5 million each) during the first 18 months following the effective
date of this Agreement.
(B) Subsequent phases. In the period following the first 18 months of
this Agreement, subsequent phases of TIRZ Instruments shall be issued sufficient to
fund the remaining Master Improvements. Such subsequent phase installments shall
be issued on a schedule consistent with the ability of the Tax Increment to support
such debt, but only after the first phase certificates of obligation have been retired,
refunded or replaced with Tax Increment-backed TIRZ Instruments. With respect to
subsequent phase TIRZ Instruments, the letter of credit described in Paragraph (i),
above shall only be required from the Developer if, in the judgment of the City and
the Developer, the Tax Increment is not considered to be sufficient to support the
debt service of the TIRZ Instruments.
(ii) Disbursement of Funds and Method of Payment. All Instrument Proceeds of
TIRZ Instruments issued to finance Master Improvements under this subsection shall be
deposited, pending their disbursement from time to time in accordance with this Agreement,
in the Improvement Fund. None of the funds contained in the Improvement Fund shall at any
time be commingled with any other funds of the City or with any other funds in the Fund
(except to the extent applied to pay principal or interest on TIRZ Instruments as may be
provided in the applicable bond documents). Disbursement of the funds deposited in the
Improvement Fund shall be made in the following manner. Since the Fund is a special fund,
the deposits into and withdrawals from the Improvement Fund shall not be subject to the
appropriation process of the City and the amounts deposited in the Improvement Fund shall
be disbursed in accordance with this Agreement, the TIRZ Instrument, and the ordinances
or resolutions authorizing the TIRZ Instrument without further action by the City. The
Developer, an authorized Subdeveloper or the Reinvestment Zone board shall enter into
contracts, on behalf of and as agent for the City, for the design, engineering and construction
of the TIRZ Improvements. As payments become due under such contracts, the Developer,
an authorized Subdeveloper or the Reinvestment Zone board shall notify the City of the
amount of such payments then due and the City shall disburse, or cause to be disbursed, from
the Improvement Fund the amount necessary to make such payment. The City shall disburse,
or cause to be disbursed, from the Improvement Fund amounts necessary to pay other eligible
Project Costs that are incurred as such Project Costs are incurred (including amounts required
to reimburse the Developer for funds advanced in connection with the creation of the
Reinvestment Zone and the conception, design and construction of the TIRZ Improvements
plus simple interest until paid, computed using the Developer's actual borrowing rate) and
VEHOU09:74890.1 14
funds are deposited into the Improvement Fund from the issuance of the TIRZ Instrument.
(h) Subdeveloper Improvements.
(i) The Subdeveloper Improvements are described in Exhibit B, and shall not be
changed except as may be consistent with the Plans. The Subdeveloper Improvements will
be advance-fimded by a Subdeveloper, subject to reimbursement from TIRZ Instrument
proceeds, as provided in this subsection. To the extent that any of the Subdeveloper
Improvements are constructed by someone other than the Developer, such Subdeveloper
shall submit to the Reinvestment Zone Board a description of the Subdeveloper
Improvements to be constructed for review and approval with regard to compliance with the
requirements of this Agreement and the Plans.
(ii) The total amounts owing or to become owing for funds advanced from time
to time under this subsection shall bear simple interest commencing at the time the funds are
advanced to pay for the applicable Subdeveloper Improvements continuing until paid, up to
a maximum of five years. The interest rate shall be equal to the net effective interest rate of
the TIRZ Instruments sold to make the applicable reimbursements.
(iii) Subdeveloper reimbursements.
(A) The City shall reimburse a Subdeveloper as soon as practicable once (1)
the applicable Subdeveloper Improvements have been completed and the Letter of
Acceptance received with respect thereto, and (2) the City has issued TIRZ
Instruments for such purpose as described below, but only from available Instrument
Proceeds thereof.
(B) Generally stated, it is the intention of the parties that a particular
Subdeveloper shall have the benefit of the Tax Increment attributable to such
Subdeveloper's development, subject to the financing of the Master Improvements,
and further subject to the preservation of the general creditworthiness of the
Reinvestment Zone as a whole. Consistent therewith, the City agrees to sell TIRZ
Instruments to reimburse the Subdeveloper for the full amount of eligible
Subdeveloper Improvements, plus interest as herein provided, at such time as the Tax
Increment generated by the portion of the Reinvestment Zone developed or under
development by the applicable Subdeveloper is sufficient to support the applicable
TIRZ Instrument bearing interest at the then-current rate of interest for comparable
issues, with a debt coverage of not less than 1.25 after taking into account the portion
of the Tax Increment required to pay the Administrative Fee and to support all
outstanding TIRZ Instruments issued to finance Master Improvements or public
school facilities financed by the Reinvestment Zone.
VEHOU09:74890.1 15
(C) Notwithstanding the above, the obligation to issue TIRZ Instruments
pursuant to this Item (iii) is conditioned upon (1) the Subdeveloper entering into an
agreement with the Reinvestment Zone board specifying the Subdeveloper
Improvements to be constructed, the area over which the available Tax Increment is
to be computed, and related matters; (2) compliance with all competitive bidding and
other laws relating to the solicitation and award of public works contracts, as such
are applicable to similar City public improvement contracts; and (3) a determination
of the Reinvestment Zone's financial advisor that the (y) TIRZ Instruments required
for such reimbursement are reasonably marketable, and (z) issuance thereof will not
have a materially detrimental effect on the viability of the outstanding TIRZ
Instruments.
(iv) Reimbursement to the Developer or a Subdeveloper for real property required for
TIRZ Improvements shall be made in an amount equal to the lesser of either (1) the Developer or
Subdeveloper's actual cost plus simple interest (calculated as applicable to the recipient), or (2) the
appraised unimproved value of the real property at the time of the reimbursement.
5.2 City Accounting. The City shall maintain complete books and records showing
deposits to and disbursements from the Fund and Improvement Fund of Tax Increment and
Instrument Proceeds, which books and records shall be deemed complete if kept in accordance with
generally accepted accounting principles as applied to Texas municipalities and in accordance with
the provisions of the Act. Such books and records shall be available for examination by the duly
authorized officers or agents of the Developer and any Subdeveloper during normal business hours
upon request made not less than five business days prior to the date of such examination. The City
shall maintain such books and records throughout the term of this Agreement and for four years
thereafter, all subject to the requirements of the Act.
5.3 Administrative Fee. The Administrative Fee shall be the following amounts in the
applicable calendar years commencing January 1, 1999:
Years 1-3 (1999-2001)
No Administrative Fee.
Years 4-8 (2002-2006)
36 percent of the City Increment.
Years 9-30 (2007-2028)
64 percent of the City Increment.
provided that, the amount deposited and retained annually in the Fund attributable to the City
Increment for the applicable year shall in no event be less than (i) in years 4-8, 44¢ per $100.00 of
the "captured appraised value" (as such term is defined in §311.012(b) of the Act) of the City
Increment, and (ii) in years 9-30, 25½¢ per $100.00 of such amount.
VEHOU09:74890.1 16
ARTICLE VI
COMPLETION OF IMPROVEMENTS
Promptly upon the completion of construction of any portion of the Project or of any of the
TIRZ Improvements, the City shall furnish a Letter of Acceptance so certifying. Each Letter of
Acceptance shall be in a recordable form, and shall be a conclusive determination of satisfaction and
termination of the covenants in this Agreement with respect to the obligations of the Developer or
a Subdeveloper to construct such portion of the Project or of the TIRZ Improvements. Upon written
request for a request for a Letter of Acceptance, the City shall have 30 days after receipt thereof to
provide a Letter of Acceptance or a written statement indicating in detail why the certificate cannot
be issued, and what measures or acts will be necessary, in the reasonable opinion of the City citing
applicable laws and ordinances for the Developer or Subdeveloper to take or perform in order to
obtain issuance of such Letter of Acceptance. The Developer or Subdeveloper will follow standard
City requirements applicable to all developers within the City with regard to the acceptance of
facilities by the City.
ARTICLE VII
PUBLIC SAFETY AND OTHER IMPROVEMENTS
7.1 Police and Fire Protection. The Developer and the City recognize that providing
a Project that is safe and secure is in the best interests of both the Developer and the City. To that
end, the City commits to providing a law enforcement and fire fighting presence in the Project. The
City shall finance such services from the Administrative Fee and other available City revenues.
7.2 Improvements by other entities.
(a) Generally. The parties recognize that other improvements are expected to be carried out
within the area of the Reinvestment Zone by other entities than the parties. Specifically, the parties
contemplate the creation of one or more PIDs to provide "public improvements" as such term is
defined in TEX. LOCAI~ GOV'T CODE, § 372.003, or one or more municipal utility districts under TEx.
WATER CODE, ch. 54, pursuant to then-current city requirements. Upon the submission of a legally
sufficient petition therefor, the City will cooperate with the petitioners to create either of such
districts, and once the PID is created to levy a PID assessment thereunder reasonably sufficient to
carry out the purposes for which the PID may be created. In addition, or in the alternative, the
Developer may request the establishment of a Management District. The City will cooperate with
the Developer in the establishment of such a Management District.
(b) The PID. Without limitation of the generality of subsection (a), it is currently anticipated
that the PID may be created to levy assessments within the area of the Reinvestment Zone to finance
the construction of recreation centers, a visitor center, way-finding signage and identity package,
community theme walls, internal, secondary public water, sewer and drainage facilities and
VEHOU09:74890.1 17
improvements, major thoroughfare hardscape/landscape, including contingencies, and engineering
and legal services. In addition, the parties anticipate that certain supplemental services, including
maintenance of public improvements and common areas and general administrative expenses will
be financed by a separate assessment of the PID. The cost of the PID improvements is anticipated
at approximately $72,000,000. Each assessment is expected to be made on the basis of the area of
the tracts to be benefited by the applicable PID improvements.
ARTICLE VIII
AUTHORITY; COVENANTS
8.1 Actions. The City covenants to the Developer and agrees that upon application of the
Developer, the City will use its best efforts to the extent permitted by law to take such actions as may
be required and necessary to process any amendments, variations, special use approvals and permit
applications relating to the Zoning Ordinance and the City's other ordinances, codes and regulations,
as may be necessary or proper in order to insure the development of the Property and the Project in
accordance with the Project Plan, this Agreement and the PUD and to enable the City to execute this
Agreement and to carry out fully and perform the terms, covenants, agreements, duties and
obligations on its pact to be kept and performed as provided by the terms and provisions hereof,
including without limitation the use if its eminent domain powers.
8.2 Powers.
(a) The City hereby represents and warrants to Developer that the City has full
constitutional and lawful right, power and authority, under currently applicable law, to
execute and deliver and perform the terms and obligations of this Agreement, and all of the
foregoing have been or will be duly and validly authorized and approved by all necessary
City proceedings, findings and actions. Accordingly, this Agreement constitutes the legal,
valid and binding obligation of the City, is enforceable in accordance with its terms and
provisions and does not require the consent of any other governmental authority.
(b) The Developer hereby represents and warrants to the City that Developer has
full lawful right, power and authority to execute and deliver and perform the terms and
obligations of this Agreement and all of the foregoing have been or will be duly and validly
authorized and approved by all necessary actions of Developer. Concurrently with
Developer's execution of this Agreement, Developer has delivered to the City copies of the
resolutions or other corporate actions authorizing the execution of this Agreement and
evidencing the authority of the persons signing this Agreement on behalf of Developer to do
so. Accordingly, this Agreement constitutes the legal, valid and binding obligation of
Developer, and is enforceable in accordance with its terms and provisions.
VEHOU09:74890.1 18
8.3 Authorized Parties. Whenever under the provisions of this Agreement and other
related documents and instruments or any supplemental agreements, any request, demand, approval,
notice or consent of the City or Developer is required, or the City or Developer is required to agree
or to take some action at the request of the other, such request, demand, approval, notice or consent,
or agreement shall be given for the City, unless otherwise provided herein, by the City Mayor or his
designee and for Developer by any officer of Developer so authorized (and, in any event, the officers
executing this Agreement are so authorized); and any party shall be authorized to act on any such
request, demand, approval, notice or consent, or agreement.
8.4 Covenants regarding ad valorem taxes.
(a) No inventory, valuation. The Developer, as well as all Subdevelopers, shall value all real
property within the Reinvestment Zone for taxation in accordance with TEX. T^x CODE, §23.01, and
that they will not request such property to be valued for taxation on the basis of inventory as
permitted by TEx. T^x CODE, §23.12.
(b) Agricultural valuation. This Agreement shall not be construed to prevent any owner from
claiming agricultural valuation on the Property. For the base year 1998, the Property has an
agricultural use valuation. The difference between the agricultural value and the Reinvestment
Zone's base year market value (both as determined by the applicable county's central appraisal
district) shall be called the "enhanced value." The Developer will pay the City each year an amount
equal to the taxes the City would otherwise collect on the enhanced value were the Property not
subject to agricultural valuation. The Developer will be entitled to a refund from the City with
respect to payments made pursuant to the preceding sentence to the extent that the agricultural
valuation is recouped by the City in accordance with applicable provisions of TEX. T^x CODE,
Chapter 23.
(c) Application of ad valorem tax covenants to successors. This Section 8.4 is binding upon
all furore owners of the Property purchasing from or otherwise succeeding the Developer, other than
current owners (except for the Developer) or current lienholders. The Developer agrees that it will
require subsequent purchasers of the Property to agree to abide by the terms of this section.
8.5 Cooperation. The Developer agrees that it will cooperate with the City and the
Reinvestment Zone and will provide all necessary information to the Reinvestment Zone and its
consultants to assist the Reinvestment Zone in complying with this Agreement.
ARTICLE IX
GENERAL PROVISIONS
9.1 Time of the Essence. Time is of the essence of this Agreement. The parties will
make every reasonable effort to expedite the subject matters hereof and acknowledge that the
VEHOU09:74890.1 19
successful performance of this Agreement requires their continued cooperation. All dates and time
periods provided for in this Agreement shall be delayed during any pending or threatened litigation
that would affect the ability to issue the TIRZ Instruments, acquire the Property or commence or
continue with construction of the Improvements or the Project, for a time period equal to the duration
of such litigation.
9.2 Default.
(a) A party shall be deemed in default under this Agreement (which shall be
deemed a breach hereunder) if such party fails to materially perform, observe or comply with
any of its covenants, agreements or obligations hereunder or breaches or violates any of its
representations contained in this Agreement.
(b) Before any failure of any party to perform its obligations under this
Agreement shall be deemed to be a breach of this Agreement, the party claiming such failure
shall notify, in writing, the party alleged to have failed to perform of the alleged failure and
shall demand performance. No breach of this Agreement may be found to have occurred if
performance has commenced to the reasonable satisfaction of the complaining party within
30 days of the receipt of such notice, subject, however, to the terms and provisions of
Section 9.2(c). Upon a breach of this Agreement, the non-defaulting Party, in any court of
competent jurisdiction, by an action or proceeding at law or in equity, may secure the specific
performance of the covenants and agreements herein contained, may be awarded damages
for failure of performance, or both. Except as otherwise set forth herein, no action taken by
a Party pursuant to the provisions of this Section pursuant to the provisions of any other
Section of this Agreement shall be deemed to constitute an election of remedies and all
remedies set forth in this Agreement shall be cumulative and non-exclusive of any other
remedy either set forth herein or available to any Party at law or in equity. Each of the
Parties shall have the affirmative obligation to mitigate its damages in the event of a default
by the other Party.
(c) Notwithstanding anything in this Agreement which is or may appear to be to
the contrary, if the performance of any covenant or obligation to be performed hereunder by
any Party is delayed as a result of circumstances which are beyond the reasonable control of
such Party (which circumstances may include, without limitation, pending or threatened
litigation, acts of God, war, acts of civil disobedience, fire or other casualty, shortage of
materials, adverse weather conditions [such as, by way of illustration and not limitation,
severe rain storms or below freezing temperatures, or tornados] labor action, strikes or
similar acts) the time for such performance shall be extended by the amount of time of such
delay. The Party claiming delay of performance as a result of any of the foregoing "force
majeure" events shall deliver written notice of the commencement of any such delay resulting
from such force majeure event not later than seven days after the claiming Party becomes
aware of the same, and if the claiming Party fails to so notify the other Party of the
occurrence of a "force majeure" event causing such delay, the claiming Party shall not be
VEHOU09:74890.1 20
entitled to avail itself of the provisions for the extension of performance contained in this
Section.
(d) In addition to any other right or remedy available to Developer pursuant to
this Agreement, in the event of a material breach by the City under this Agreement which
continues for 30 days after written notice to the City thereof and the City's failure to cure or
diligently proceed to cure such breach to Developer's reasonable satisfaction, Developer shall
have the right (but not the obligation), in its sole discretion, to exercise its rights under
Section 4.5, with regard to mandamus, specific performance or mandatory permanent
injunction to require the City to do so.
9.3 Personal Liabili _ty of Public Officials. To the extent permitted by State law, no public
official or employee shall be personally responsible for any liability arising under or growing out of
this Agreement.
9.4 Liabili _ty of the Developer, its Successors and Assignees. Any obligation or liability
of the Developer whatsoever that may arise at anytime under this Agreement or any obligation or
liability which may be incurred by the Developer pursuant to any other instrument, transaction or
undertaking contemplated hereby shall be satisfied, if at all, out of the assets of the Developer only.
No obligation or liability shall be personally binding upon, nor shall resort for the enforcement
thereof be had to, the property of any of partners, officers, employees, shareholders or agents of the
Developer, regardless of whether such obligation or liability is in the nature of contract, tort or
otherwise.
9.5 Notices. Any notice sent under this Agreement (except as otherwise expressly
required) shall be written and mailed, or sent by rapid transmission confirmed by mailing written
confirmation at substantially the same time as such rapid transmission, or personally delivered to an
officer of the receiving party at the following addresses:
If to the City:
City Manager
City of Pearland
3519 Liberty Drive
Pearland, Texas 77581
RE: REINVESTMENT ZONE NUMBER TWO
with a copy to:
City Attorney
City of Pearland
3519 Liberty Drive
Pearland, Texas 77581
RE: REINVESTMENT ZONE NUMBER TWO
VEHOU09:74890.1 21
If to the Developer:
Shadow Creek Ranch Development Company, L.P.
10777 Westheimer, suite 1100
Houston, Texas 77042
Attention: Gary Cook
with a copy to:
Lynne B. Humphries
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin
Houston, TX 77002-6760
Fax No.: (713) 615-5601
Each party may change its address by written notice in accordance with this Section, Any
communication addressed and mailed in accordance with this Section shall be deemed to be given
when so mailed, any notice so sent by rapid transmission shall be deemed to be given when receipt
of such transmission is acknowledged, and any communication so delivered in person shall be
deemed to be given when receipted for by, or actually received by, an authorized officer of the City
or the Developer, as the case may be.
9.6 Amendments and Waivers. Any provision of this Agreement may be amended or
waived if such amendment or waiver is in writing and is signed by the City and the Developer. No
course of dealing on the part of the City or the Developer nor any failure or delay by the City or the
Developer with respect to exercising any right, power or privilege pursuant to this Agreement shall
operate as a waiver thereof, except as otherwise provided in this Section.
9.7 Invalidity. In the event that any of the provisions contained in this Agreement shall
be held unenforceable in any respect, such unenforcability shall not affect any other provisions of
this Agreement and, to that end, all provisions, covenants, agreements or portions of this Agreement
are declared to be severable.
9.8 Successors and Assigns. No party to this Agreement shall have the right to assign
its rights under this Agreement or any interest herein, without the prior written consent of the other
parties, except that the Developer may assign its rights and responsibilities hereunder to any entity
to which substantially all of its assets and its rights to proceed with development of the property
within the Zone are transferred. In connection with an assignment by the Developer of its
development rights and obligations under this section, the Developer may file a memorandum of this
Agreement in the official real property records of the applicable county to evidence the rights and
obligations of such assignee and its successors hereunder.
9.9 Exhibits, Titles of Articles, Sections and Subsections. The exhibits attached to this
Agreement are incorporated herein and shall be considered a part of this Agreement for the purposes
VEHOU09:74890.1 22
stated herein, except that in the event of any conflict between any of the provisions of such exhibits
and the provisions of this Agreement, the provisions of this Agreement shall prevail. All titles or
headings are only for the convenience of the parties and shall not be construed to have any effect or
meaning as to the agreement between the parties hereto. Any reference herein to a section or
subsection shall be considered a reference to such section or subsection of this Agreement unless
otherwise stated. Any reference herein to an exhibit shall be considered a reference to the applicable
exhibit attached hereto unless otherwise stated.
9.10 A~lp.]J.C,.0~&~. This Agreement is a contract made under and shall, be construed
in accordance with and governed by the laws of the United States of America and the State of Texas,
and any actions concerning this Agreement shall be brought in either the Texas State District Courts
of Brazoria County, Texas or the United States District Court for the Southern District of Texas.
9.11 Entire Agreement. This written agreement represents the final agreement between
the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the parties.
9.12. Term of Agreement. The term of this Agreement shall commence on the date first
above written and shall continue until the date which is the earlier of (a) the completion of the
Project and the payment to Developer of all costs Developer or any Subdeveloper has incurred for
eligible Project Costs, or (b) December 31, 2028.
9.13 No waiver of City standards. Except as may be specifically provided in this
Agreement, the City does not waive or grant any exemption to the Property or the Developer with
respect to City regulations or ordinances, including without limitation platting, permitting or similar
provisions.
9.14 Approval by the parties. Whenever this Agreement requires or permits approval or
consent to be hereafter given by any of the parties, the parties agree that such approval or consent
shall not be unreasonably withheld or delayed.
9.15 Counterparts. This Agreement may be executed in several counterparts', each of
which shall be an original and all of which shall constitute but one and the same agreement.
9.16 Interpretation. This Agreement has been jointly negotiated by the parties and shall
not be construed against a party because that Party may have primarily assumed responsibility for
the drafting of this Agreement.
[Signatures Begin on Following Page]
VEHOU09:74890.1 23
IN WITNESS WHEREOF, the Parties have duly executed this Agreement pursuant to all
requisite authorizations as of the date first above written.
CITY:
CITY OF PEARLAND, TEXAS, a home rule
municipality
ATTEST:
By:
City Mayor
City Secretary
(SEAL)
COUNTERSIGNED:
City Manager
Date countersigned:
APPROVED AS TO FORM:
City Attorney
Date:
DEVELOPER:
SHADOW CREEK RANCH DEVELOPMENT
COMPANY, L.P., a Nevada limited partnership,
by
SHADOW CREEK RANCH, INC.
By:
Gary W. Cook, President
VEHOU09:74890.1 24
Exhibits
A-1
A-2 -
B -
C -
Legal Description of Reinvestment Zone
Depiction of Reinvestment Zone
TIRZ Improvements/City Improvements
First Phase Master Improvements
VEHOU09:74890.1 25
E.xhibit A-1-Legal Description ot' Reinvestment Zone
DESCRIPTION OF
3467 ,ACRES. MORE OR LESS
SHADOW CREEK RANCH
TAX INCREMENT REINVESTMENT ZONE
No,,ember 3. 1008
Job 5.'0. 1545-9803. O0
Being 3467 acres of land, more or less. located in the Dupuy and Roberts Survey. ,Abstract 726, Brazor~a
Count),'; William Morris Survey, Abstract 344. Brazoria Count),': T. C. R. R. Co. Survey. Section 3, Abstract 678,
Brazoria County; T. C. R .R. Co. Survey, Section 4 (John W. Maxcy), Abstract 675, Brazoria County': Obediah Pitts
Survey, Abstract 717, Brazoria Counb': H.T. & B. R. R. Co. Survey, Section 80 (J.S. Talmage), Abstract 564, Brazoria
County: H. T. & B. R. R. Co. Survey, Section 81, Abstract300, BrazoriaCounty: H. T. & B. R. R. Co. Sur~ey. Section
82 (J. S. Talmage), Abstract 565. Brazoria Count.',': H. T. & B. R. R. Co. Survey, Section 8.3. Abstract 305 in Brazoria
County' and Ab ,tract 761 in Fort Bend County: S.G. Hayme Surve,,,, Abstract 212 in Brazoria Courtb and Abstract 620
in Fort Bend Count),,': Franklin Hooper Survey, Abstract 198. Fort Bend Count,,,: George W. McDonald Surve,~, Abstract
577, Fort Bend County; I. C. Stafford Survey. Abstract 668. Fort Bend County and the H. Levering Survey. Abstract
279, Fort Bend County, Texas; said 3467 acres, more or less, being more particularly' described as tbllows:
BEGINNING at the common north comer of Lots 3 and 4, Block 10 of the ALLISON - RICHEY GULF
COAST HOMECO'SPARTOFSUBURBANGARDENS. SEC.'S3&4. T.C.R.R. SURVEY AND SEC. 82. H T.
8,: B. R. R. CO. SURVEY & OBEDIAH PITTS SURVEY. a subdivision of record in Volume 2, Page 99 of the Plat
Records of Brazoria County, Texas (B.C.P.R.I also being on the common line of the aforementioned T.C.R.R. Co.
Survey, Section 4 and the Dupuy and Roberts Survey:
THENCE, SOUTHERLY, 782 feet, more or less, along the common line of said Lots 3 and 4, to a point for
comer on the southerly right-of-way line of Farm to Market Road 2234, 160 feet wide;
THENCE, EASTERLY, 998 feet, more or less, along said southerly right-of-way line and its easterly
extension, to a point for comer on the west line of the J. Crawley Survey, Abstract 174, Brazoria County, Texas:
HENCE, SOUTHERLY, .~482 feet, more or less, along the west line of said J. Crawley Survey to a point for
comer on the centerline of Hughes Ranch Road, also being the southwest comer of said J. Crawley Survey;
THENCE, EASTERLY, 421 feet, more or less, along the southerly line of said J. Crawlev Survey and along
said centerline of Hughes Ranch Road, to a point for comer on the centerline of State Highway 288;
3467 Acres
No~ember
Job No. 1545-9803-
THENCE, SOUTHERLY. 5326 feet, more or less, along said centerline of State High~a? 288 to a point tbr
comer on the southerly line of Count,,' Road 92, 40 tbot ~ide, a dedicated road as sho~'n on atbrementioned
ALLISON-RiCHEY GULF COAST HOME CO.'S PART OF SUBURBAN GARDENS;
THENCE, WESTERLY, 9448 feet, more or less, along the southerly line of said County Road 92, to a point
for comeron the west line of aforementioned H. T. & B. R. R. Co. Survey, Section 80 and the east line the H. T. & B.
R. R. Co. Survey. Section 84 (R. B. Lyle), Abstract 538 in Brazoria Count,,' and Abstract 767 in Fort Bend Count>:
THENCE, NORTHERLY, 20 feet. more or less, along the common line of said H. T. & B. R. R. Co.
Section g0 and Section 84, to a point for comer, same being the common comer of said H. T. & B. R. R. Co. Survey,
Section 80 and Section 84 and aforementioned H. T. & B. R. R. Co. Survey, Section 82 and Section 83:
THENCE, WESTERLY, 5280 feet, more or less, along the common line of said H. T. & B. R. R. Co. Survey.
Section 83 and Section 84, to a point for comer on the east line of aforementioned Franklin Hooper Survey, same being
the common west comer of said H. T. & B. R. R. Co. Survey. Section 83 and Section 84:
THENCE, SOUTHERLY. 158 feet, more or less. along the common line of said H. T. & B. R. R. Co. Sur~ey,
Section 84 and the Franklin Hooper Survey, to a point for comer, same being the southeast comer of said Franklin
Hooper Survey and the northeast comer of the A.B. Langerman Survey, Abstract 555, Fort Bend Counw, Texas;
THENCE, EASTERLY, 2636 feet, more or less, along the common line of said Franklin Hooper Survey and
said A.B. Langerman Survey, to a point for comer on the easterly right-of-way line of Farm to Market Road 521'
THENCE, NORTHEASTERLY, 9667 feet, more or less, along said easterly right-of-way line, to a point for
comer on the centertine of Clear Creek;
THENCE, NORTHEASTERLY, 1327 feet, more or less, along the centerline of Clear Creek to a point for
comer on the aforementioned southerly right-of-way line of Farm to Market Road 2234;
THENCE, SOUTHEASTERLY, 1519 feet, more or less, along said southerly right-of-way line to a point for
comer on the of Fort Bend and Brazoria County line:
Page 2 of 3
346, .Acres
Xoxe,'~]ber 3. Ioo$
.lob No. I545-q803_i00
THENCE, NORTHEASTERL'f. 5"" t'eet, more or less. alon~ said cotl~t~ line. to a poin~ tbr corner at rbe
common comer of Brazoria. Fo~ Bend and Harris Counties:
THENCE, NORTHEASTERLY. 2426 feet. more or less, along the or' Brazoria and Harris County line, to a
point for comer in the atbremention centerline of Clear Creek:
THENCE, EASTERLY, 8250 feet, more or less, along the centerline meanders of Clear Creek to a point tbr
comer on the northerly line of aforementioned Lot 3, Block l0 of said ALLISON-RICHEY GULF COAST HOME
CO'S PARTOF SUBURBAN GARDENS, same being on the aforementioned common survey line of the T. C. R. R.
Co. Survey, Section 4 and the Dupuy and Roberts Surve5:
THENCE, EASTERLY, 453 feet. more or less, along said north line of Lot 3. Block 10 and said common
survey line to the POINT OF BEGI.~ING and containing 3467 acres, more or less.
LJA Engineering & Survevino Inc,
Page 3 of 3
Items
Streets
Shadow Creek Ranch
T.I.R.Z. Summary of Costs
Total Costs City
Pavement ** $ 18,485,700
Sidewalks * $ 1,239,600
Lighting * $ 778,220
Landscaping andirfigat~on $ 9,298,500
Water System"
Waetewater System **
Storm Sewer System **
Exhibit B
TIRZ TxDOT
$ 12,610,050 $ 5,875,650 ¢1
$ 1,239,600
$ 778,220
$ 9,298,500
5,544,663 (z) $ 5,544,663
9,698,000 r~) $ 3,500,000 (4) $ 6,198,000
12,221,067 $ 12,221,067
Lakes & Channels
Improvements ** $ 26,276,746
Land Cost $ 4,491,889
Parks & Recreation
Improvements *
Land Cost
$ 26,276,746 (s)
$ 4,491,889
$ 8,464,142 $ 4,830,804 (m $ 3,633,338
$ 2,071,301 $ 2,071,301
Major Infrastructure
Water Plants
Improvements ** $ 4,160,881 $ 4,160,881m
Land Cost $ 20,000 $ 20,000
W.W.T.P** $ 20,540,000 $ 20,200,000 m.(a $ 340,000 ~
Lift Station -- $ 300,000 $ 300,000
Traffic Signals ** $ 1,700,000 $ 600,000 $ 1,100,000
McHard Rd Reimbursables
Miscellaneous ** $ 150,000
Signal ** $ 100,000
FM 2234 Bddge Widening * $ 148,500 $ 148,500
SH 288 ** $ 2,000,000 em $ 1,00o,0oo $ 1,000,000
EDA Water Line $ 2,258,000$ 2,258,000
Subtotal$ 129,947,208 $ 34,949,685
Contingencies (10 %) $ 12,110,602 3,269,169
Engineering (15 %) $ 17,015,424 4,669,507
TOTAL $ 159,073,233 $ 42,888,361
$ 86,873,373 $ 8,124,150
8,029,018 812,415
11,005,431 1,340,485
$ 105,907,823 $ 10,277,050
Public Facilities [to be constructed contingent upon degree of school district participation. Terms subject to agreement with the appropriate school districts.]
Elementary School
Improvements $ 28,897,500 $ 28,897,500
Land Cost $ 1,102,500 $ 1,102,500
Jr. High School
Improvements $ 38,824,000 $ 38,824,000
Land Cost $ 1,176,000 $ 1,176,000
High School
Improvements $ 37,889,500 $ 37,889,500
Land Cost $ 2,1t0,500 $ 2,110,500
Subtotal $ 110,000,000 $
$ 110,000,000 $
City Facilities
Library
Improvements $ 2,395,000
Land Cost $ 105,000
Fire / Police Station
tmproverrmnts $ 2,255,000
Land Cost $ 245,000
Subtetal$ 5,000,000 $
Reimbursable TIRZ Creation Co $ 400,000
GRAND TOTAL $ 274,473,233 $ 42,888,361
Notes:
$ 2,395,000
$ 105,000
$ 2,255,000
$ 245,000
$ 5,000,000$
$ 400,000
$ 221,307,823 $ 10,277,050
Cost analysis determined using land plan provided by Kerry Gilbert & Associates, Inc. dated 8/18¢J8
(1) TxDOT to pay for FM 2234 and future FM 518 improvements.
¢) Water system cost based on preliminary design to serve only Shadow Creek Ranch
(3) Wastewater system cost based on preliminary design to serve only Shadow Creek Ranch
(4) Funded by grant through City of Peadand.
(~Lake cost determined using land plan provided by Ker~ Gilbert & Associates, Inc dated 9/1/98
(~City to pay for park improvements, TIRZ to pay for linear park improvements and land cost for all parks.
m To be paid by impact fees.
(*) Total cost for permanent WWTP includes onsite lift station, site improvements, controt building, and intedm plant - phase two ($200,000)
(~Temporary ~q'p facilities
¢o) SH288 Frontage Road Total cost $2,000,000. per TxDOT estimate
Contingencies comprised of these items.
** Contingencies & Engineering fees comprised of these items.
EXHIBIT B
Master Improvements
The following categories of TIRZ Improvements are Master Improvements, to the extent that
they are required to serve and benefit the Reinvestment Zone as a whole, and are designated as such
by the Developer in writing.
Streets
Pavement
Sidewalks
Lighting
Landscaping and Irrigation
Comer Monuments
Water System
Storm Sewer System
Lakes
& Channels
Improvements
Land Cost
Parks & Recreation [City to pay for park improvements, TIRZ to pay for linear park
improvements and land cost for all parks.]
Improvements
Land Cost
Major
Infrastructure
Interim wastewater treatment plant
McHard Rd.
Miscellaneous
Signals
VEHOU09:72945.1
Exhibit B
Subdeveloper Improvements
The following categories of TIRZ Improvements are Subdeveloper Improvements, to the
extent that they are required to serve and benefit only a portion of the Reinvestment Zone, and are
designated as such by the Developer in writing.
Streets
Pavement
Sidewalks
Lighting
Landscaping and Irrigation
Water System
Wastewater System
Storm Sewer System
Lakes & Channels
Improvements
Land Cost
Parks & Recreation [City to pay for park improvements, TIRZ to pay for linear park
improvements and land cost for all parks.]
Improvements
Land Cost
Major Infrastructure
Water Plants
Land Cost
Lift Station
Traffic Signals
SH288 Frontage Road (excluding TxDoT funded improvements)
VEHOU09:72945.1
EXHIBIT C 1/18t99
Streets
Items
Shadow Creek Ranch
Phase One Summary of Costs
Total Costs City TIRZ
Developer
TxDOT
Pavement ** $ 1,166,200 $
Sidewalks * $ 74,120 $
Lighting * $ 108,884 $
Landscaping and Irrigation * $ 495,600 $
Comer Monuments $ 900,000 $
Water System --
Wastewater System.
Storm Sewer System
$ 1,799.281 (2) $
$ 21813,000 (3) $ 2.813.000 ;'} $
$ 2.026.618 $
Lakes & Channels
Improvements" $ 3,707,321 $
Land Cost $ 724,000 $
Parks & Recreation
Improvements * $ 557,568 $
Land Cost $ 128,000 $
Major Infrastructure
Water Plants Improvements **
Land Cost
W.W.T.P"
Lift Station **
Traffic Signals"
McHard Rd Reimbursables
Miscellaneous **
Signal **
EDA Water Line
$ 340,000 $
50,000 $
100,000 $
2.258.000 $ 2.258,000
1,141,200
74,120
108,884
495,600
900,000
1,799,281
2,026,618
3.707.321 (5)
724.000
557,568 is}
128,000
340,000 (7)
25,000
150,000
Subtotal
Contingencies
Engineering (15 %)
Reimbursable TIRZ Creation Costs
Bond Issuance Costs
$ 17.498,591 $ 5,071,000
$ 1.332,609 $ 265,050
$ 1,997,997 $ 421,950
$ 400.000
$ 2,737.500
12,252,591
1,050,059
1,547,172
400,000
Notes:
TOTAL $ 23,966,697 $ 5,758,000
15,249,822 (8) $
Cost analysis determined using land plan provided by Kerry Gilbert & Associates, Inc. dated 8/18/98
TxDOT to pay for turning lane and signal at FM 2234 / Kirby.
Water system cost based on preliminary design to serve only Shadow Creek Ranch
(3) Wastewater system cost based on preliminary design to serve only Shadow Creek Ranch
Funded by grant through City of Peadand.
Lake cost determined using land plan provided by Kerry Gilbert & Associates, Inc. dated 9/1/98
City to pay for park improvements, TIRZ to pay for linear park improvements and land cost for all parks.
Temporary W~rFP facilities
Developer to advance any difference in the TIRZ projected improvements for phase 1 not covered by the City C.O.'s
Contingencies comprised of these items.
"Contingencies & Engineenng fees comprised of these items.
$
$
$
2,737,500
2,737,500 $
175,000
17.500
28~875
22t,375
COUNCIL ACTION - RESOLUTION NO. R99-6 -A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF PEARLAND, TEXAS, AUTHORIZING THE CITY MANAGER OR HIS
DESIGNEE TO EXECUTE A DEVELOPMENT AGREEMENT WITH SHADOW CREEK
RANCH DEVELOPMENT COMPANY, L. P., A NEVADA LIMITED PARTNERSHIP
("DEVELOPER"), OUTLINING THE RESPONSIBILITIES OF THE CITYAND DEVELOPER
FOR THE IMPLEMENTATION OF THE PROJECT AND FINANCING PLAN FOR TAX
INCREMENT REINVESTMENT ZONE NO. 2.
Councilmember Berger made the motion, seconded by Councilmember Tetens, to
approve Resolution No. R99-6.
Councilmember Berger stated that he has spent many hours of workshops, meetings, and
public hearings talking to different individuals regarding this matter. He said, if you recall
from the TIRZ vote, he made it very clear that he was going to be concerned about the
financial impact and risk to the City. Councilmember Berger further addressed his
concerns regarding the "quick start" funding of the Shadow Creek Project, that he has a
philosophical problem with the City using its credit rating for the benefit of a developer.
The only advantage of the City getting involved with the $15,000,000 "quick start" would
be the lower interest rate that the developer would get verses having to go out on their
own. Councilmember Berger said that he will not support the Development Agreement
with the $15,000,000 in the Agreement. He would like to see the TIRZ stand on its own
through the use of bonds not backed by the City. He suggested that the TIRZ be
responsible for issuing "quick start" money that is needed, not the City. He also addressed
his concerns about the creation of a Maintenance District, and he wants to learn more
about a Maintenance District.
Councilmember Seeger stated he had concerns that the Agreement states that the project
could be constructed in phases, in order the developers deem necessary. He stated he
would like to see a three to one ratio. He does not want just apartments to be built all at one
time and then the building of homes to slow down. He also is concerned about the TIRZ
Board of Directors and the breakdown in the make up of the board. He said the City of
Pearland will have 50% participation and will only be getting 30% representation. He would
like to see that equalized.
Councilmember Tetens stated that he fully supports the Shadow Creek Ranch Agreement
as it is, and he supports the "jump start" financing. It is backed a letter of credit and is not
a risk to the City. Councilmember Tetens said the project will be a "great boom" for the City
of Pearland, a real push for development in the area. It will help get commercial businesses
in that area, and fully supports the issue as it is.
Page 8 of 21 - 1/25/1999
Mayor Pro-Tem Wilkins stated that his position has been clear on this since the very
beginning. Mayor Pro-Tem Wilkins read his statement concerning the project when the
majority of the children will be attending Alvin Schools. He also stated that parents and
children seem to get involved in school related activities and other functions in the City in
which they attend school. In closing, he stated that he is opposed to giving the $15,000,000
"jump start" to this project. Also, it will not help selling homes when they find out their
children will be bused to Alvin, and he does foresee a feeling of community with this project.
Mayor Reid stated that regardless how the area is developed it is still in the Alvin
Independent School District. He also stated that the 3,600 acres being planned, and the
plans being approved by the City, is a greater benefit to the City as a community, than if it
was developed "piece mill." Mayor Reid said that the best way to develop that area as a
Planned Unit Development. As it is planned it is going to be another First Colony.
There was additional discussion among the Council regarding the project and the financing
of the project.
Councilmember Beckman stated that she concurs with Mayor Reid and Councilmember
Tetens regarding the support of the Shadow Creek Ranch Project. She further stated that
she does not that the school district is the point at all. She said she feels secure with
$15,000,000 and does not have a problem with it. She also stated that with a higher interest
rate it will take longer to pay off the debt, and if you look at the complete project and the
benefits that Pearland can derive from it is well worth passing the Development Agreement
as it is.
Mayor Reid stated that the Council is in agreement that it is a great development. Each
Councilmember has a concern and has a position they have to support. Mayor Reid called
for the vote.
Voting "Aye" Councilmembers Beckman, and Tetens.
Voting "Nay" Councilmembers Seeger, Berger, and Wilkins.
Motion Failed 3 to 2.
Page 9 of 21 - 1/25/1999