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R2004-170 10-11-04 RESOLUTION NO. R2004-170 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO ENTER INTO AN AGREEMENT WITH REINVESTMENT ZONE NUMBER TWO, CITY OF PEARLAND, TEXAS AND THE DEVELOPMENT AUTHORITY OF PEARLAND. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That certain agreement by and between the City of Pearland, Reinvestment Zone Number Two and the Development Authority of Pearland, 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 a contract with Reinvestment Zone Number Two and the Development Authority of Pearland. PASSED, APPROVED and ADOPTED this the llth day of October , A.D., 2004. ATTEST: ~pfJ N G/~.~RI~I I~, TJ~C ~I:ITY SECRETARY" APPROVED AS TO FORM: DARRIN M. COKER CITY ATTORNEY TOM REID MAYOR AGREEMENT BY AND BETWEEN THE CITY OF PEARLAND, TEXAS, REINVESTMENT ZONE NUMBER TWO, CITY OF PEARLAND, TEXAS, AND THE DEVELOPMENT AUTHORITY OF PEARLAND This AGREEMENT (this "Agreement"), effective as of _, 2004, is made by and between the CITY OF PEARLAND, TEXAS, a municipal corporation and a home-rule city in the State of Texas (the "City"); REINVESTMENT ZONE NUMBER TWO, CITY OF PEARLAND, TEXAS, a reinvestment zone created by the City pursuant to Chapter 311, Texas Tax Code (the "Zone"); and the DEVELOPMENT AUTHORITY OF PEARLAND, a nonprofit local government corporation organized and existing under the laws of the State of Texas (the "Authority"). RECITALS WHEREAS, the City authorized the creation of the Authority to aid, assist and act on behalf of the City in the performance of certain of the City's governmental and proprietary functions; and WHEREAS, the City created the Zone pursuant to Chapter 311, Texas Tax Code (the "TIRZ Act"); and WHEREAS, the Board of Directors of the Zone ("Zone Board") and the City Council of the City each approved and adopted a Project Plan and a Reinvestment Zone Financing Plan for the Zone (the "TIRZ Plan"); and WHEREAS, the City and Shadow Creek Ranch Development Company, L.P. (the "Developer") have entered into that certain Development Agreement dated September 13, 1999 (the "Development Agreement"); and WHEREAS, the Zone Board and the Developer have entered into that certain Master Developer Reimbursement Agreement dated September 22, 1999, together with numerous letter financing agreements in accordance therewith (the "Reimbursement Agreement" and together with the Development Agreement, the "Financing Agreements"); and WHEREAS, the Zone Board will continue to enter into letter financing agreements with the Developer in accordance with the Reimbursement Agreement; and WHEREAS, the Financing Agreements provide that the Developer will construct certain public works and improvements to implement the TIRZ Plan and the Zone and the City will reimburse the Developer all or a portion of the Project Costs (defined below) of such public works and improvements; and WHEREAS, the City and the Zone Board have determined that it is advisable to have the Authority facilitate the TIRZ Plan and assist the City with reimbursement to developers of certain ProjeCt Costs through the issuance by the Authority of its bonds and with certain other monies available to the Authority; and WHEREAS, the City and the Zone desire to contract' with the Authority as provided herein to finance the efforts of the Authority using tax increments as provided herein; WHEREAS, the City, the Zone Board and the Authority agree that certain of the City's obligations under the Financing Agreements will be delegated to the Authority under the terms of this Agreement; and WHEREAS, the City, the Zone Board and the Authority desire that the Authority shall perform certain of the City's obligations under the Agreements subject to the same conditions, covenants and restrictions imposed upon the City and the Zone; NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements herein contained, the City, the Zone and the Authority agree as follows: DEFINITIONS The terms "Agreement, .... Authority, .... City," "Developer," "Development Agreement, .... Financing Agreements, .... Reimbursement Agreement," "Zone," "Zone Board, .... TIRZ Plan," and "TIRZ Act," have the meanings set forth in the preamble hereof, and the following capitalized terms shall have the meanings provided below, unless otherwise defined or the context clearly requires otherwise. For purposes of this Agreement the words "shall" and "will" are mandatory, and the word "may" is permissive. "AISD" shall mean the Alvin Independent School District. "Bonds" shall mean the bonds, notes and other obligations of the Authority payable from a pledge of all or a part of the TIRZ 2 Revenue Fund. "Captured Appraised Value" shall mean the total appraised value of property in the Zone as of January 1 of any year less the Tax Increment Base of the Zone, all as defined in the TIRZ Act. "City" is defined in the recitals hereto. "City Council" shall mean the City Council of the City. 35317.4.2 2 "Counties" shall mean Brazoria County, Texas and Fort Bend County, Texas. "FBISD" shall mean the Fort Bend Independent School District. "Interlocal Agreements" means the Interlocal Agreements between the City, the Zone and the Counties with respect to the participation of the Counties in the Zone, the Interlocal Agreement between the City, the Zone and AISD with respect to the participation of AISD in the Zone and, if FBISD participates in the Zone, the Interlocal Agreement between the City, the Zone and FBISD with respect to the participation of FBISD in the Zone, as such agreements may be amended from time to time. "Project Costs" shall mean those costs of public works and improvements and other costs for which payment can be made pursuant to the TIRZ Act that are identified in the TIRZ Plan. "TIRZ 2 Revenue Fund" shall mean the Authority account into which the Tax Increments are deposited by the City for the use of the Authority hereunder and all other accounts or funds of the Authority to which monies from the TIRZ 2 Revenue Fund are transferred. "School District Educational Facilities Costs" means the money to be paid annually to AISD or FBISD (if FBISD participates in the Zone) for educational facilities project costs pursuant to an Interlocal Agreement. "Tax Increment" shall mean the amount of property taxes collected each year by each Taxing Unit participating in the Zone (to the extent of their participation) on the Captured Appraised Value. "Tax Increment Base" shall mean the total appraised value of all real property taxable by the City and located in the Zone as of January 1, 1998, the year in which the Zone was effective and designated as a reinvestment zone, plus the total appraisal of all real property taxable by the City and the other Taxing Units participating in the Zone and annexed to the Zone determined as of January 1 of the year in which any future area is annexed to the Zone. "Tax Increment Fund" shall mean the Tax Increment Fund created by the City for the Zone including any subaccount therein into which all Tax Increments shall be deposited by the City. "Taxing Unit" shall mean the Counties, AISD, FBISD, and any other Taxing Unit that participates in the TIRZ. 35317.4.2 3 II. SCOPE OF SERVICES BY AUTHORITY To the extent of available funds in the TIRZ 2 Revenue Fund and subject to the limitations of this Agreement, the Authority shall assist the C. ity by issuing Bonds to facilitate the TIRZ Plan and making reimbursements to developers. The Authority may provide the services required by this Agreement through City staff, or contractual arrangements with subcontractors, and consultants. III. POWERS OF THE AUTHORITY A. General Statement. The Authority has the authority to enter into contracts with consultants and others to be paid from the TIRZ 2 Revenue Fund, and further, the Authority may issue Bonds, but only with the consent of the City Council; provided that nothing in this Agreement shall be construed to authorize the Authority to expend any of the Tax Increment funds received pursuant to this Agreement for any purpose other than: (i) payment of Bonds issued in accordance with this Article III, (ii) to make developer reimbursements in accordance with Article VII below, and (iii) to pay the administrative and operational expenses of the Authority. B. Approval of Bonds and Other Obligations. The Authority may issue Bonds secured by payments made pursuant to this Agreement only with the approval of City Council. C. Creation and Pledge of TIRZ 2 Revenue Fund. The City, the Zone and the Authority hereby acknowledge and approve of the creation of the TIRZ 2 Revenue Fund by the Authority for the purpose of receiving the monies to be deposited therein by the City pursuant to this Agreement. The Authority may pledge and assign all or a part of the TIRZ 2 Revenue Fund under this Agreement to the owners and holders of Bonds. The City consents to any assignment and pledge for the benefit of bondholders consistent with this Agreement. D. The Financing Agreements. In the Financing Agreements, the City and the Zone have made certain representations and covenants with regards to the issuance of bonds, including the Bonds, and reimbursement to the Developer for Project Costs. As a condition to the creation of the TIRZ 2 Revenue Fund and the deposit of the monies as provided for herein, the Authority agrees to abide by the terms and conditions of the Financing Agreements relating to the issuance of bonds and the reimbursement to the Developer of Project Costs. The City and the Zone agree that this Agreement is solely for the purpose of authorizing the Authority to aid, assist and act on behalf of the City in performing certain proprietary and governmental functions, and the terms, conditions, covenants 35317.4.2 4 and provisions of the Financing Agreements are hereby ratified and confirmed, including the letter financing agreements heretofore approved by the Zone. The Authority shall act on behalf of the City and perform the City's functions with regard to the financing of Project Costs, defined as TIRZ Costs under the Fi'nancing Agreements, that are payable solely from the Tax Increment. The City shall continue to be obligated to provide the City Improvements described in Article IV, Section 4.4(b) and to pay for such improvements from the funding sources described in Section 4.4(c) of Article IV. IV. DUTIES AND RESPONSIBILITIES OF THE CITY AND THE ZONE A. Tax Increment Fund. The City hereby confirms that it has established and currently maintains a separate Tax Increment Fund, including subaccounts if necessary, in the City treasury into which Tax Increments are and shall be deposited. B. Limitation of Source of Payment. The City and the Zone shall have no financial obligation to the Authority other than as provided in this Agreement or in other agreements between the City, the Zone and the Authority. The obligation of the City and the Zone to the Authority under this Agreement is limited to the Tax Increments that are collected by the City. This Agreement shall create no obligation on the City or the Zone that is payable from taxes or other moneys of the City other than the Tax Increments that are collected by the City. The obligation of the City and the Zone to the Authority under this Agreement shall be subject to the rights of any of the holders of Bonds or other obligations that have heretofore been or are hereafter issued by the City, the Counties, AISD, FBISD (if FBISD participates in the Zone), and any other Taxing Units that are payable from or secured by a general levy of ad valorem taxes throughout the taxing jurisdiction of the City, the Counties, AISD, FBISD (if FBISD participates in the Zone), and any other Taxing Units. C. Collection and Payment of Tax Increments by the City and the Zone. The City and the Zone covenant and agree that they will, as authorized under the TIRZ Act and other applicable laws, continuously collect the Tax Increments from the Taxing Units in accordance with the Interlocal Agreements during the term of this Agreement in the manner and to the maximum extent permitted by applicable law. To the extent the City and the Zone may legally do so, the City and the Zone also covenant and agree that they will not permit a reduction in the Tax Increments paid by the Taxing Units except to the extent provided in the Interlocal Agreements. In addition, the City covenants and agrees that it will not dissolve the Authority and that any repeal of the right and power to collect the Tax Increments will not be effective until all the Bonds have been paid in full or until they are legally defeased. The City and the Zone further covenant and agree that they will make all payments as set forth in Article V below, by a direct deposit into the TIRZ 2 Revenue Fund, without counterclaim or offset, but minus any amounts retained by the City pursuant to the provisions set forth in Article V below. 3 5 317.4.2 5 D. Obligations of City and the Zone to be Absolute. The obligation of the City and the Zone to make the payments to the Authority set forth in Article V of this Agreement shall be absolute and unconditional, and until such time as the Bonds have been fully paid or provision for payment thereof shall have been made in accordance with their terms (or, with respect to the Tax Increments, the date of expiration of the Zone, if earlier), the City and the Zone will not suspend or discontinue any payments provided for in this Agreement and will not terminate this Agreement for any cause, including, without limiting the generality of the foregoing, the failure of the Authority to perform and observe any agreement, whether express or implied, or any duty, liability, or obligation arising out of or connected with this Agreement. Nothing contained in this section shall be construed to release the Authority from performance of any of the agreements on its part contained in this Agreement, and in the event the Authority shall fail to perform any such agreement on its part, the City may institute such action against the Authority as the City may deem necessary to compel performance so long as this action does not abrogate the obligations of the City and the Zone to make the payments set forth in this Agreement. Me CITY PAYMENT TO AUTHORITY The City, on behalf of itself and the Zone, will pay the Authority, on the date of the closing of the first series of Bonds and thereafter not later than the fiftebnth day of each August during the term of this Agreement, solely from the Tax Increment Fund and from no other source, all monies then available in the Tax Increment Fund, subject to the retention by the City of (i) an amount equal to the City's administrative costs connected with the Zone and the TIRZ Plan, as provided in the TIRZ Plan (36% of the City's Tax Increment, but not more than $0.255, in years four through eight, and 64% of the City's Tax Increment, but not more than $0.44, in years nine through 30); (ii) the School District Educational Facilities Costs, if applicable; (iii) amounts required to be maintained in the "AISD Suspense Account" pursuant to the terms of the Interlocal Agreement with AISD; and (iv) an amount sufficient to pay reasonable current and anticipated administrative and operating costs of the Zone, as determined by the Zone Board. The Authority shall deposit the payments received pursuant to this section into the TIRZ 2 Revenue Fund and use the monies in the TIRZ 2 Revenue Fund solely for payment of its obligations to the holders of the Bonds, while any are outstanding, developer reimbursements in accordance with Article VII hereof, and Authority operation and administration expenses. The obligation to make these payments shall survive a termination of this Agreement as provided by Article XVII hereof. VI. ACCOUNTING AND AUDITS A. Accounts, records, and accounting reports. The Authority will maintain books of records and accounts in which full, true, and proper entries will be made on all 35317.4.2 6 dealings, transactions, business, and matters that in any way affect or pertain to the operation of the Zone, and the allocation and application of funds in the TIRZ 2 Revenue Fund. All such records shall be maintained in accordance with generally accepted accounting principles and shall be clearly identified and readily accessible. The Authority shall provide free access to the books and records of the Authority relating to the TIRZ 2 Revenue Fund at all times to the City and the Zone or their representatives and shall permit them to examine and audit the same and make copies thereof. The Authority shall further allow the City and the Zone and their representatives to make inspections of all work data, documents, proceedings, and activities related to this Agreement. Such right of access and audit shall continue for a period of three years from the date of final payment under this Agreement. The Authority will operate on the basis of the same fiscal year as the City. B. Audit.. At the end of each fiscal year (beginning with the fiscal year or fraction thereof during which this Agreement is executed), the Authority will have an audit prepared by an independent Certified Public Accountant for that fiscal year that shall be submitted to the Authority, the Zone and the City within 90 days after the end of the fiscal year. The Authority shall furnish copies of the audit to the City and the Zone Board. C. Authority Depository. Any moneys received from investing and reinvesting the moneys paid by the City and the Zone to th~ Authority shall remain in the TIRZ 2 Revenue Fund until used by the Authority for one of the purposes permitted by this Agreement, and may be commingled with other moneys of the Authority; provided that these funds shall be accounted for separately. Such funds shall be invested and reinvested by the Authority only in investments that would be eligible for investment by the City pursuant to the provisions of the Public Funds Investment Act (Chapter 2256, Texas Government Code). Such funds will be secured by the depository bank in the same manner as City funds are required to be secured and in accordance with applicable law, including the Public Funds Collateral Act (Chapter 2257, Texas Government Code) and City procedures. VII. REIMBURSEMENT TO DEVELOPER The Financing Agreements provide a framework for reimbursing the Developer for certain Project Costs and the Authority agrees to abide by the terms and conditions of the Financing Agreements with respect to making reimbursements to the Developer. As projects implementing the TIRZ Plan are completed, the Zone Board may recommend to the City that the Authority reimburse developers on behalf of the Zone and the City. The Zone Board will forward to the City and the Authority all of the necessary and required documentation supporting the requested reimbursement and a determination of the exact amount requested for reimbursement, including a calculation of the amount of interest to be reimbursed on funds advanced for the project. The City 35317.4.2 7 will consider the recommendation of the Zone Board and will ~ the Authority to take appropriate action. The Zone, the City and the Authority hereby agree and confirm that any reimbursements made by the Authority pursuant to this Artic|¢ VII shall be in strict compliance with the Financing Agreements. Upon written 2:rcctlc, n"by the City and upon compliance with this Article VII, the Authority shall reimburse developers in accordance with the recommendations of the Zone Board as approved by the City, the Financing Agreements and the TIRZ Plan. VIII. PERSONAL LIABILITY OF DIRECTORS, EMPLOYEES, AND PUBLIC OFFICIALS To the extent permitted by State law, no director of the Authority, nor any employee, consultant or agent of the Authority, no director of the Zone, nor any employee or agent of the Zone, and no employee of the City, nor any agent of the City, shall be personally responsible for any liability arising under or growing out of the Agreement, or operations of the Authority under the terms of this Agreement. IX. INDEPENDENT CONTRACTOR Except as provided by Article III, Section D of this Agreement, it is expressly understood and agreed that the Authority shall perform all work and services described herein as an independent contractor and not as an officer, agent, servant, or employee of the City or the Zone. INSURANCE The Authority shall obtain and maintain insurance coverage continuously during the term of this Agreement, of a type and in an amount as is suitable and reasonable for a nonprofit local government corporation such as the Authority. XI. ADDRESS AND NOTICE Any notice sent under this Agreement (except as otherwise expressly required) shall be written and mailed, or sent by electronic or facsimile transmission confirmed by mailing written confirmation at substantially the same time as such electronic or facsimile transmission, or personally delivered to an officer of the receiving party at the following addresses: 35317.4.2 ~ Development Authority of Pearland c/o City of Pearland 3519 Liberty Dr Pearland, TX 77581 Attn: Chair, Board of Directors Reinvestment Zone Number Two c/o Knudson & Associates 8588 Katy Freeway, Suite 441 Houston, TX 77024 Attn: Chair, Board of Directors City of Pearland 3519 Liberty Dr Pearland, TX 77581 Attention: City Manager 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 electronic or facsimile 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, the Authority, the Zone, or the City, as the case may be. XII. APPLICABLE LAWS This Agreement is made subject to the Constitution and laws of the State of Texas and the Charter of the City. XIII. CAPTIONS The captions at the beginning of the Articles of this Agreement are guides and labels to assist in locating and reading such Articles and, therefore, will be given no effect in construing this Agreement and shall not be restrictive of the subject matter of any article, section, or part of this Agreement. XIV. SUCCESSORS AND ASSIGNS This Agreement shall bind and benefit the respective parties and their legal successors, and shall not be assignable, in whole or in part, by any party hereto without first obtaining the written consent of the other parties. 35317.4.2 9 XV. TERM AND TERMINATION, DISSOLUTION OF AUTHORITY A. In general. This Agreement shall become effective, and its initial term shall begin, on the date first set forth above, and end upon the latter of the termination of the Zone or the full payment or defeasance of all Bonds. B. Termination for cause. A party may terminate its performance under this Agreement only upon default by one of the other parties hereto. Default by a party shall occur if the party fails to perform or observe any of the terms and conditions of this Agreement required to be performed or observed by that party. Should such a default occur, the party against whom the default has occurred shall have .the right to terminate all or part of its duties under this Agreement as of the 90th day following the receipt by the defaulting party of a notice describing such default and intended termination, provided: (i) such termination shall be ineffective if within said 90-day period the defaulting party cures the default, or (ii) such termination may be stayed, at the sole option of the party against whom the. default has occurred, pending cure of the default. No termination of this Agreement will affect the obligation of the City and the Zone to pay an amount that will permit the Authority to pay its Bonds issued or incurred pursuant to and consistent with this Agreement prior to termination. C. Dissolution of Authority. The City agrees not to dissolve the Authority or the Zone unless it makes satisfactory arrangements to provide for the payments of the Bonds incurred prior to the Authority's dissolution. In the event of the dissolution of the Authority, the City shall deposit in the Tax Increment Fund all monies in the TIRZ 2 Revenue Fund. XVI. AMENDMENT OR MODIFICATIONS Except as otherwise provided in this Agreement, this Agreement shall be subject to change, amendment, or modification only by the mutual written consent of the parties hereto. [EXECUTION PAGE FOLLOWS] 35317.4.2 1 0