R2007-109 2007-07-09RESOLUTION NO. R2007-109
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND,
TEXAS, AMENDING A HOTEL OCCUPANCY TAX REIMBURSEMENT
AGREEMENT.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That certain amended Hotel Occupancy Tax Reimbursement
Agreement, 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 an amended contract for Hotel Occupancy Tax
Reimbursement Agreement.
PASSED, APPROVED and ADOPTED this the 9th day of July, A.D., 2007.
TO EID
MAYOR
ATTEST:
FIN ,T
TY SECRETARY
APPROVED AS TO FORM:
DARRIN M. COKER
CITY ATTORNEY
Exhibit "A"
Resolution 2007-109
AMENDMENT No. 2
HOTEL OCCUPANCY TAX REIMBURSEMENT AGREEMENT
This Amendment (hereinafter "Amendment") is made between the City of
Pearland, Texas (hereinafter "City"), and Shadow Creek Hilton Garden Inn, LLC
(hereinafter "Developer") to amend that contract (the "Contract") between the City
and the Developer executed on October 11, 2005 and subsequently amended on
May 21, 2007.
1. Amended Terms. The City and the Developer hereby agree that the
Contract is amended as follows:
A. Section 2. Pursuant to its authority under Chapter 30. TEX LOCAL
GOV'T Code, as amended, the City agrees, to reimburse Developer
seventy one percent (71%) of the Hotel Occupancy Tax Revenues
generated by the Improvements and collected by the City for a period
of thirteen (13) years from the date of issuance of Certificate of
Occupancy for the Improvements, but in no event shall the amount
reimbursed to Developer exceed $2.2 million dollars. All amounts
reimbursed pursuant to this section shall occur within thirty (30) days of
the Developers filing of the Quarterly Reports as defined in City of
Pearland Ordinance No. 718.
2. Contract to Remain in Force. Other than the provisions of the
Contract expressly amended herein, the Contract shall remain in full force and its
enforceability shall be unaffected by this Amendment.
EXECUTED and EFFECTIVE as of the 9th day of July
2007.
ATTEST:
v,ung�. '11•>
• ity S retary
CITY OF PEARLAND
By:
City Manager 7-9-07
PEARLAND CAPITAL GROUP LP
By: William F. Harrjieyer,
Manager of its General Partner
Shadow Creek Investment Group LLC,
dba Shadow Creek Hilton Garden
Pearland EDC
Memo
To: Bill Eisen
From: Fred Welch
CC: City Council •
Date: 7/5/2007
Re: Hilton Garden Inn Project
Bill:
When I assembled the data and recommendation for the Hilton Garden Inn Project I was going straight
from the data sheets presented by their attorney. One of the big issues I had in the analysis was the
amount of land going into the actual conference center. Using standard assumptions for land use I
assumed that the development would need about 8,000 square.feet of additional land used in my
analysis.
It does appear that the requirements for the conference center will exceed 8,000 square feet.After the
visit with the developer of the property (Zuli) in your office and his rendering that shows two separate
entrances into the property(one for the hotel and a port a cue' entrance to the conference center) it is
more apparent that an up to one acre of land or 43,560 square feet to accommodate space for the
second drive way, entrance and landscape requirements. Land cost alone would increase the project
cost an additional$375,513 over my analysis.
Mr. Zuli asked for the city to reconsider the reimbursement under his agreement (now around $1.84
million over 10 years at 5%refund of the hotel tax collected from the Hilton Garden Inn Project)to$2.2
million dollars and utilizing a refund of the hotel tax collected.
1 have no issue with increasing the reimbursement level to the $2.2 million amount as this more fairly
represents the actual costs to develop and construct the facility. I believe this has been the intent all
along. In order for him to receive the$2.2 million over time the number of years to achieve that level of
reimbursement would most likely go out to 13.5 years under their income scenario. This would
necessitate Council considering an extension of the period of reimbursement or the percentage of
reimbursement.
Going from five percent to six percent reimbursement will add about $15,000 per year on average to
the reimbursement. I would rather see the$15,000 go towards advertising and promotion of events into
the facility to get his room nights above 65% occupied. If that is achieved in the first two years instead
of five years as in the projections shown to staff there is a high probability the whole project could be
reimbursed in 10 to 11 years.
Council has a couple of options here
1
1. Keep the agreement as approved recently at$1.84 million over 10 years at 5% refund of the
HOT developed from the project each year
2. Increase the reimbursement to $2.2 million — Staff would still recommend keeping the HOT
refund at 5% but taking it out 13 years or to$2.2 million whichever occurs first. Using the extra
2% of HOT funds in the early years will assist in achieving both the occupancy and average
room rate income objectives needed to support this endeavor.
Fred Welch
HOT refund schedule
Year
1 $134,722.00
2 $147,500.00 •
3 $152,499.00
4, $161,263.00
5 $167,046.00
6 $175,631.00
7 $178,337.00
8 $186,111.00
9 $193,555.44
10 $201,297.66
11 $209,349.56
12 $217,723.55
13 $226,432.49 $2,351,467.70
14 $235,489.79
Total $2,586,957.48
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