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R2006-208 12-11-06 RESOLUTION NO. R2006-208 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, APPROVING THE FIRST AMENDMENT TO THE DEVELOPMENT AGREEMENT BETWEEN THE CITY OF PEARLAND, THE PEARLAND ECONOMIC DEVELOPMENT CORPORATION AND PEARLAND LIFESTYLE CENTER, LLC. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That certain First Amendment to the Development Agreement by and between the City of Pearland, the Pearland Economic Development Corporation and Pearland Lifestyle Center, LLC, 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 First Amendment to the Development Agreement. PASSED, APPROVED and ADOPTED this the 11th day of December, A.D., 2006. ~lL TOM REID MAYOR ATTEST: APPROVED AS TO FORM: Q, -_ -)( (1L- DA RIN M. COKER CITY ATTORNEY EXHIBIT FIRST AMENDMENT TO DEVELOPMENT AGREEMENT ~ j ~A" FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged by all Parties, the CITY OF PEARLAND, TEXAS (the "City"), the PEARLAND ECONOMIC DEVELOPMENT CORPORA nON (the "EDC") and PEARLAND LIFESTYLE CENTER, LLC successor in interest to Poag & McEwen Lifestyle Centers - Houston, LLC (the "Developer") (individually, a "Party" and collectively, the "Parties") make and enter into this First Amendment (the "Amendment") to the Development Agreement (the "Agreement") made and entered by and among them as of December 20, 2004 (a true and correct copy of the Agreement is attached as Exhibit A and is incorporated for all purposes). This Amendment is executed pursuant to Article IX, Section 9.6 of the Agreement. Except to the extent expressly set forth herein, the Agreement shall remain and remains in full force and effect. In the event of any conflict between the terms of the Agreement and the terms of this Amendment, the terms of the Amendment control. Recital B of the Agreement is deleted and the following is substituted in its place and stead: The Developer desires to purchase and develop the Tract to include an upscale commercial, hotel, restaurant, retail and multi-family residential development comprised of no less than 900,000 square feet of such mixed space. The Parties acknowledge that the Project will benefit the City by generating significant property taxes and other revenues, as well as creating numerous permanent jobs and drawing additional mixed use and office development to the surrounding area; however, there are significant costs associated with the construction and development of the Project and with providing Public Infrastructure for the Project. Recital C of the Agreement is deleted and the following is substituted in its place and stead: The City and the EDC desire that the Tract be developed to promote new and expanded business development in the area of the Project and the City, in particular, the Spectrum development, to assist with the creation and retention of jobs, to maximize public revenues and to provide a major amenity for the benefit of City residents. The City and the EDC recognize that, in the absence of public assistance, the Project would not occur solely through private investment in the foreseeable future, and would not consist of the upscale mixed use development as contemplated by the Parties, thereby denying the benefits to the City and EDC as provided herein. A new Recital F is added to the Agreement: The Parties recognize that even though the Project is going to be developed and financed in Phases, because the City Commitment and EDC Commitment (as defined herein) are based on volume of sales tax generated from the Project, the 35 year time limits contained herein in Sections 4.3(b), 5.1 (a) and (b), and 6.1 (a) and (b) are not extended in order to accommodate the Developer's phasing of the Project. The definition of "Proiect" in Article I, Section 1.1 of the Agreement is deleted and the following is substituted in its place and stead: Project means an upscale commercial, hotel, restaurant, retail and multi-family residential development to be constructed on the Tract, of not less than 900,000 square feet of such mixed use. All such development shall be consistent with the City's comprehensive land use plan and First Amendment(Poag) applicable City zoning requirements. It is expressly understood that the Project may, in Developer's sole discretion, be designed and constructed in phases, with the first phase ("Phase I") to include no less than 525,000 square feet of such mixed use space, of which at least 275,000 square feet shall be restaurant and retail space, and the second phase ("Phase II") to include no less than 375,000 square feet mixed use space of which at least 275,000 square feet shall be restaurant and retail space. Article V, Section 5.1.b of the Agreement is deleted and the following is substituted in its place and stead: The Parties agree that the maximum City Commitment will be an amount sufficient to service bonded District debt issued in an amount yielding net proceeds equal to $20 million (plus interest calculated pursuant to Section 7.4) (in sum, the "Specified Amount") and that such obligation on behalf of the City will be limited solely to the City Sales Taxes and from no other source; provided that the City shall have the right, but shall have no obligation to do so, to pay the City Commitment from any other source oflegally available funds of the City. If the District uses City Commitment funds to pay the Developer directly (rather than from bond proceeds), the amount of such direct payment will be subtracted from the $20 million obligation described above. Upon the earlier of (i) 35 years from the date any District bonds are issued pursuant to this Agreement, or (ii) such time as the City has contributed the Specified Amount and the District debt secured thereby is retired, the City shall have no further obligation under this Agreement and the City Sales Taxes levied and collected within the Project shall belong solely to the City. The actual amount of bonded District debt issued for each phase will be based upon the tax revenue stream available to service it. Article V, Section 5.4 of the Agreement is deleted and following is substituted in its place and stead: In consideration of the City's agreement to pay the City Commitment to the District as provided herein, the Developer agrees that the Project, when all phases are completed, shall have generated a minimum of 700 permanent jobs. In this regard, the Developer agrees that Phase I will generate approximately 420 permanent jobs, on or before three years after the initial payment of the City Commitment. Article VI, Section 6.I.b of the Agreement is deleted and the following is substituted in its place and stead: The Parties agree that the maximum EDC Commitment will be an amount sufficient to service bonded District debt issued in an amount yielding net proceeds equal to $10 million (plus interest calculated pursuant to Section 7.4) (in sum, the "Specified Amount") and that such obligation on behalf of the EDC will be limited solely to the EDC Sales Taxes and from no other source; provided that the EDC shall have the right, but shall have no obligation to do so, to pay the EDC Commitment from any other source of legally available funds of the EDC. If the District uses EDC Commitment funds to pay the Developer directly (rather than from bond proceeds), the amount of such direct payment will be subtracted from the $10 million obligation described above. Upon the earlier of (i) 35 years from the date any District bonds are issued pursuant to this Agreement, or (ii) such time as the EDC has contributed the Specified Amount and the District debt secured thereby is retired, the EDC shall have no further obligation under this Agreement and the EDC Sales Taxes levied and collected within the Project shall belong solely to the EDC. The actual amount of bonded District debt issued for each phase will be based upon the tax revenue stream available to service it. First Amendment(Poag) -2- 2 Article VI, Section 6.4 ofthe Agreement is deleted and following is substituted in its place and stead: In consideration of the EDC's agreement to pay the EDC Commitment to the District as provided herein, the Developer agrees that the Project, when all phases are completed, shall have generated a minimum of 700 permanent jobs. In this regard, the Developer agrees that Phase I will generate approximately 420 permanent jobs, on or before three years after the initial payment of the EDC Commitment. A new Article VII, Section 7.4 is added: Developer Interest. The Developer shall be entitled to be paid simple interest on the pre- financing of the Project at the rate of 8% per annum. To the extent Developer Interest is payable from the City Commitment and/or the EDC Commitment, it shall be calculated and commenced in phases as follows: Phase I interest amount: 8% per annum on unpaid portion until the Developer has been paid $17 million dollars in net bond proceeds; and Phase I interest commencement date: 100 days after 60% of the square footage of the sales tax producing commercial entities included in Phase I are open for business; and Phase I interest end date: 5 years from the Phase I interest commencement date; and Phase II interest amount: 8% per annum on unpaid portion until the Developer has been paid $13 million dollars in net bond proceeds; and Phase II interest commencement date: 100 days after 60% of the square footage of the sales tax producing commercial entities included of Phase II are open for business and 80% of Phase I sales tax producing commercial space is occupied; and Phase II interest end date: 5 years from the Phase II interest commencement date. The caption and first sentence of Article IX, Section 9.3 of the Agreement are deleted and the following caption is substituted: Performance of the Parties' Obligations. [The remainder of Article IX, Section 9.3 remains unchanged. ] First Arnendrnent(Poag) -3- 3