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16-029RESOLUTION NO. No. 16-029 A RESOLUTION OF THE CITY OF SOUTHLAKE, TEXAS, APPROVING THE TERMS AND CONDITIONS OF A PROGRAM TO PROMOTE ECONOMIC DEVELOPMENT AND STIMULATE BUSINESS AND COMMERCIAL ACTIVITY IN THE CITY; AUTHORIZING THE MAYOR TO EXECUTE AN AMENDED AND RESTATED AGREEMENT WITH SRH HOSPITALITY SOUTHLAKE INVESTMENTS, LLC, A TEXAS LIMITED LIABILITY CORPORATION, FOR SUCH PURPOSES; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, Chapter 380 of the Texas Local Government Code authorizes municipalities to establish and provide for the administration of programs that promote economic development and stimulate business and commercial activity in the City; and WHEREAS, On February 3, 2015 the City Council approved a Chapter 380 Agreement (the "Agreement") by and between the City of Southlake and SRH Hospitality Southlake Investments, LLC, a Texas Limited Liability Corporation, to promote economic development and stimulate business and commercial activity in the City; and WHEREAS, the City Council has been presented with a proposed Amended and Restated Agreement by and between the City of Southlake and SRH Hospitality Southlake Investments, LLC, a copy of which is attached hereto as Exhibit "A" and incorporated herein by reference (hereinafter called the Agreement); and WHEREAS, upon full review and consideration of the Agreement and all matters attendant and related thereto, the City Council is of the opinion that the Agreement will assist in implementing a program whereby economic development will be promoted and business and commercial activity will be stimulated in the City. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS, THAT: SECTION 1. The City Council finds that the terms of the Agreement will promote economic development and stimulate business and commercial activity in the City and otherwise meet the criteria of Section 380.001 of the Texas Local Government Code. SECTION 2. The City Council hereby adopts amendments to the economic development program whereby the City of Southlake will make economic development program payments to SRH Hospitality Southlake Investments, LLC, and take other specified actions, in accordance with the terms outlined in the Agreement. SECTION 3. The terms and conditions of the Agreement having been reviewed by the City Council of the City of Southlake and found to be acceptable and in the best interest of the City and its citizens, are hereby approved. SECTION 4. The Mayor is hereby authorized to execute the Agreement and all other documents in connection therewith on behalf of the City substantially according to the terms and conditions set forth in the Agreement. SECTION 5. This Resolution shall become effective from and after its passage. r PASSED AND APPROVED this the c2l'Xday of June, 2016 Laura Hill, Mayor ATTEST: ,,��ti�ra'rraara� Aya:O • ' « W. Lori Payne, TRMC ; c� EXHIBIT A AMENDED AND RESTATED WESTIN HOTEL SRH HOSPITALITY SOUTHLAKE INVESTMENTS, LLC ECONOMIC DEVELOPMENT PROGRAM AGREEMENT (Chapter 380 Agreement) This Amended and Restated Economic Development Program Agreement (the "Agreement") is made and entered into by and between the City of Southlake, Texas (the "City") and SRH Hospitality Southlake Investments, LLC, a Texas limited liability company ("SRH"). City and SRH may sometimes hereafter be referred to collectively as the "parties" and individually as a "party." RECITALS: WHEREAS, SRH has applied to the City for financial assistance to bring its Development (as defined below) to the City; and WHEREAS, the City desires to provide, pursuant to Chapter 380 of the Texas Local Government Code ("Chapter 380"), certain incentives to SRH to bring the Development to the City; and WHEREAS, the City has the authority under Article 52-a of the Texas Constitution and Chapter 380 to make loans or grants of public funds for the purposes of promoting local economic development and stimulating business and commercial activity within the City; and WHEREAS, the City has determined that a grant of funds to SRH will serve the public purpose of promoting local economic development and stimulating business and commercial activity within the City; and WHEREAS, on February 3, 2015, SRH and City previously entered into an Economic Development Program Agreement ("Original Agreement'); and WHEREAS, the parties desire to amend the Original Agreement to reallocate Program Payments and to amend the performance obligations of SRH; and WHEREAS, for convenience, this Agreement is intended to amend, restate and replace the Original Agreement. NOW THEREFORE, for and in consideration of the agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: SECTION 1. FINDINGS INCORPORATED The foregoing recitals are hereby incorporated into the body of this Agreement and shall be considered part of the mutual covenants, consideration and promises that bind the parties. SECTION 2. PROGRAM APPROVED A program authorized under Chapter 380 of the Texas Local Government Code is hereby established to bring the Development to the City. The terms of this Agreement shall implement the program. SECTION 3. DEFINITIONS The following definitions shall apply to the terms used in this Agreement: Ad Valorem Taxes: Means the real property taxes imposed by the City on the Property and Eligible Improvements and actually received by the City. Base Value: Means the Land Value of the Property on January 1, 2016. Building Permit: A permit issued by the City authorizing one to construct, enlarge, alter, repair, move, improve, remove, convert or demolish any building or structure or portion thereof regulated by the City's building, plumbing, electrical, fire, energy, mechanical, and related codes. It does not include earth disturbance permits, tree removal permits or other non -building permits Business Personal Property Taxes: Means taxes imposed and received by City on tangible personal property, equipment and fixtures subject to ad valorem taxation, other than inventory or supplies, owned or leased by SRH, or an affiliate of SRH, on the Property. Capital Investment: Means the totality of actual costs incurred related to the acquisition, development, financing and construction of the Development, including the actual Construction Costs, labor and materials, soft costs, public infrastructure costs, financing costs, equity placement fees, construction insurance and bonding costs, engineering costs, surveying costs, fees of consultants, permit and inspection fees, and business personal property, equipment, and fixtures located on the Property. Certificate of Occupancv: A certificate issued by the City building official reflecting that construction has been completed in conformance with appropriate City codes. Commencement of Construction: The earlier of the approval and issuance of the appropriate building permits or the commencement of actual on -site physical excavation or site grading required for installation of Eligible Improvements, excluding permits for clearing and grubbing. Commercial Developer Agreement (CDA): That certain Commercial Developer Agreement (or multiple Agreements) relating to the construction of public infrastructure in form and substance to be mutually agreed upon by SRH and the City. Concept/Site Plans: The concept and site plans for the Property approved by the City on May 3, 2016 and attached hereto as Exhibit C. Construction Costs: The cost of design, construction document preparation, bidding, permits, fees, surveying, and construction of buildings, parking facilities, site improvements, landscaping, site grading and such other reasonable industry -standard costs. Construction Costs do not include the cost of land, interest on construction financing, or marketing costs. Construction Materials: All of the construction materials used will be reflective of the Concept/Site Plans attached hereto as Exhibit C, with reasonable efforts made to source all materials as they are available within a thirty (30) mile radius of the site to the extent competitive in price and quality. Development: The 6.83 acre hotel and conference center development, including all Eligible Improvements, proposed by SRH along the north side of S.H. 114 between N. Carroll Avenue to the west and Grace Lane to the east and as represented by the Concept/Site Plans referenced herein. Effective Date: The date that all parties have executed this Agreement Eligible Improvements: A minimum of 245,100 square feet of improvements to the Property, comprising of the Hotel and Parking Garage and all accessory improvements related to the Hotel and Parking Garage, as shown on the Concept/Site Plans. Force Majeure: Any acts of God or the public enemy, war, riot, civil commotion, insurrection, governmental or de facto governmental action, (except actions taken by the City pursuant to or permitted by the terms of this Agreement, and except actions taken as a result of acts or omissions of SRH), fire, explosion or flood, and strikes or other act beyond the reasonable control of SRH, or the City, but not including the lack of funds. Hotel: Means a minimum a 250 guest room Westin hotel consisting of a minimum of 205,000 square feet, and no more than 220,000 square feet, of which at least 25,000 square feet will be dedicated to conference/meeting space. HOT Revenue: means the amounts collected by the City as a result of the hotel occupancy taxes imposed by the City pursuant to Chapter 351 of the Texas Tax Code, as amended. Land Value: The appraised value of the Property as determined by the Tarrant Appraisal District. Minimum Hotel Operating Standards: Means the operating criteria and facilities standards necessary for a hotel property to receive either a Recommended rating as described in the Forbes Travel Guide (formerly Mobil Guide) or a four (4) diamond rating as so designated by the American Automobile Association on an annual basis, or as frequently as updated by each entity. Opening Date: Means the date after which a Certificate of Occupancy has been received by SRH for the Hotel and the Hotel is fully functional and open to accommodate hotel patrons and guests. Parking Garage: A minimum of one (1) single -deck parking structure, with a ground surface level and one elevated level, with a minimum of 250 parking spaces to be located within the Property, as shown on the Concept/Site Plans. Person: An individual or a corporation, partnership, limited liability company, trust, estate, unincorporated organization, association, or other entity. Program Payments: The grant payments to be made by the City to SRH pursuant to Section 6 of this Agreement. Property: The approximate 6.83 acres located along the north side of S.H. 114 between N. Carroll Avenue to the west and Grace Lane to the east, being real property located in Tarrant County, Texas, and as more particularly described on Exhibit B attached hereto. Rollback Taxes: Means the tax and/or penalty assessed against the Property, or portion thereof, as the result of the removal of agricultural and/or open space land designation(s) for the Property, or portion thereof, pursuant to Tax Code, Chapter 23 and collected by the City. Sales and Use Tax: Means the City's municipal sales and use tax, currently at the rate of one percent (1.0%), pursuant to Section 321.103 of the Texas Tax Code, as amended, generated from the businesses operating within the Property and received by the City; provided, should the Texas Legislature amend the applicable tax code provision to increase or decrease the amount of allowed municipal sales and use tax, then in the event of a decrease, Sales and Use Tax shall mean the actual amount of sales and use tax received by the City, and in the event of an increase, the Sales and Use Tax shall mean one percent (1.0%). This specifically excludes sales taxes collected for the Southlake Park Development Corporation or the Crime Control and Prevention District, or any other Economic Development Tax collected now or in the future. SRH Affiliate: Means any entity that owns or controls, is owned or controlled by, or is under common ownership or control with SRH. Substantial Completion: The date a Certificate of Occupancy is issued for occupancy of the Eligible Improvements. Taxable Value: Appraised value after the application of any lawful exemptions as determined by the Tarrant Appraisal District. Term: Means the term of this Agreement as specified in Section 4 of this Agreement. SECTION 4. TERM This Agreement shall be effective as of the Effective Date and shall terminate upon completion of the Program Payments as provided in Section 6, unless earlier terminated pursuant to the terms of this Agreement. SECTION 5. SRH OBLIGATIONS In consideration and as a prerequisite of receiving the City's Program Payments under this Agreement, SRH agrees to the following: A. Construction Commencement: Commencement of Construction of Eligible Improvements must occur no later than June 30, 2017. B. Certificate of Occupancy: SRH must receive a Certificate of Occupancy for the Eligible Improvements no later than June 30, 2019. C. Compliance with Laws and Regulations: All construction of the Eligible Improvements will be in accordance with all applicable federal, state and local laws and regulations. D. Commercial Developer Agreement: Prior to Commencement of Construction, SRH must execute the City's Commercial Developer Agreement(s) in such form as mutually agreed upon by SRH and the City. E. Inspection: SRH agrees that the City and its agents and employees, upon reasonable five (5) business days prior written notice to SRH, shall have reasonable right of access to the Property to inspect the Eligible Improvements in order to insure that the construction of the Eligible Improvements are in accordance with this Agreement; and subject to SRH's reasonable security requirements, they shall have the continuing right to inspect the Property to insure that the Eligible Improvements are thereafter maintained, operated and occupied in accordance with this Agreement and the Minimum Hotel Operating Standards defined herein. F. Parking Garage: SRH or their successors shall continue to own, maintain and operate the Parking Garage once constructed. The City will not own, maintain, or operate the Parking Garage. G. Ad Valorem Taxes: SRH must remain current on payment of Ad Valorem Taxes for the term of this Agreement; provided, however, SRH retains the right to timely and properly protest and contest any such Ad Valorem Taxes and so long as SRH is timely and properly protesting or contesting the same, it shall not constitute an event of default under this Agreement. H. Rollback Taxes: SRH agrees to remain current on payment of Rollback Taxes payable as land parcels within the Property are developed. I. Design: The Eligible Improvements shall conform to the Concept/Site Plans unless amended and approved by the City and SRH during subsequent development plan approvals and amendment of this Agreement. J. Documentation: SRH shall submit to the City reasonably detailed evidence of compliance with Section 5 herein, including detailed invoicing from contractors and payments made by SRH sufficient to identify the Construction Costs directly related to this Section 5. K. Operating Standards: SRH will operate, or cause the operation of the Hotel in accordance with the Minimum Hotel Operating Standards. If Westin or any subsequent other brand hotel fails to continue to operate the Hotel at such standards after a one (1) year notice and cure period, the City may suspend the payment of Program Payments outlined in Section 6 until such time as the Hotel resumes operating the Hotel at such standards. The notice and cure period provided in this section is separate and independent of that described in Section 7.13. of this Agreement. L. Competitive Name Brand: SRH intends for the Hotel to be branded as a Westin Hotel, but may brand the Hotel under a different "first tier flag" hotel brand that meets the Minimum Hotel Operating Standards; provided, however, that the City Council must approve any brand other than that of Westin. Throughout the Term of this Agreement, the Hotel must be operated and marketed under a brand name that includes the word "Southlake", such as "Westin Hotel Southlake," "Southlake Westin Hotel," or "Westin Southlake Hotel". Any deviation from the three brand name examples provided in this section must require prior approval from the City Council. M. Hotel Usage/Room Block Agreement: The Hotel will make available to the City, at no cost, and at a time convenient for the City subject to room availability, a minimum of 24 room nights annually during a period of time beginning on the Opening Date and continuing for ten (10) years thereafter ("10-year Period"). These rooms are to be booked only by the City Department of Economic Development and Tourism subject to room availability. At no time will the City request more than six (6) room nights per reservation. Additionally, during the 10-year Period, the Hotel will provide the City one event per year where event room usage fees are waived and the City will be provided a Ten Thousand Dollar ($10,000) total discount off of food, beverages, and services for the same event. For an additional ten (10) year period after the 10- year Period expires, the Hotel will provide the City one event per year where event room usage fees are waived and the City will be provided a fifty percent (50%) discount off of food, beverages and services (up to a Ten Thousand Dollar ($10,000) total discount off of food, beverages and services) for the same event. As a tax-exempt entity, at no time will the City be charged any taxes for rooms, products or services to the extent permitted by applicable law. The City will provide its tax exemption certificate to the Hotel at the time of booking rooms or an event. In all cases (whether during the 10-year Period or the subsequent 10-year period thereafter), the City will be responsible for applicable surcharges and applicable and customary employee tips for said event and services. All discounts will be calculated off of the Hotel's regular published rates for each item, without the inclusion of taxes, tips or surcharges. N. Compliance: SRH shall comply with any and all remaining terms and provisions of this Agreement. In addition to any assignment provisions in this Agreement, should SRH transfer ownership or operating interest of the Hotel or Parking Garage after the Effective Date and during the Term of this Agreement, SRH agrees to enter into an agreement with such subsequent owner or operator requiring such subsequent owner or operator to comply with all of the obligations of this Agreement. O. Capital Investment/Taxable Value: On or before Substantial Completion, SRH must make a Capital Investment in the Development in an amount of no less than Seventy-five Million Dollars ($75,000,000). Within 120 days of Substantial Completion, SRH must provide sufficient documentation to the City for the Capital Investment in a format reasonably acceptable to the City. On January 1 of the first calendar year following Substantial Completion and continuing for the Term of this Agreement, the Property and the Eligible Improvements and business personal property must have a value appraised by the Tarrant County Appraisal District of not less than Fifty-five Million Dollars ($55,000,000.00). If the value appraised by Tarrant County Appraisal District falls below Fifty-five Million Dollars ($55,000,000), the grant to SRH will be reduced as outlined in Section 6.A below. The deadlines in this section may be extended provided that SRH is diligently pursuing completion of the Eligible Improvements in the event of "Force Majeure", or if in the sole opinion of the City, SRH has made substantial progress toward completion of the Eligible Improvements. P. Undocumented Workers: SRH certifies that it does not and will not knowingly employ an undocumented worker in accordance with Chapter 2264 of the Texas Government Code, as amended. If during the Term of this Agreement, SRH is convicted of a violation under 8 U.S.C. § 1324a(f), SRH shall repay the amount of the public subsidy provided under this Agreement plus interest, at the rate of the prime rate plus two percent (2%) per annum, not later than the 120th day after the date the City notifies SRH of the violation. SRH is not liable for a violation of Chapter 2264 of the Texas Government Code by a subsidiary, affiliate, or franchisee of SRH, or by a person with whom SRH contracts. SECTION 6. CITY OBLIGATIONS Subject to SRH's performance of its obligations as required by this Agreement, and subject to the provisions of this section, the City shall grant SRH the following Program Payments: A. Ad Valorem Taxes: City agrees to pay SRH a grant equal to eighty percent (80%) of the Ad Valorem Taxes assessed and paid to the City for the Property and Eligible Improvements and Business Personal Property Taxes paid to the City (to the extent the value of the Property and Eligible Improvements exceeds the assessed Base Value), commencing on January 1 of the first calendar year following the date of Substantial Completion and continuing thereafter for twelve (12) years. If the value of the Property, Eligible Improvements, and business personal property is below Fifty-five Million Dollars ($55,000,000) but greater than Forty-five Million Dollars ($45,000,000), the City agrees to pay SRH a grant equal to seventy percent (70%) of the Ad Valorem Taxes and Business Personal Property Taxes. If the value of the Property, Eligible Improvements, and business personal property falls below Forty-five Million Dollars ($45,000,000), the City will pay no grant to SRH until the valuation exceeds Forty-five Million Dollars ($45,000,000), at which time 70% of the Ad Valorem Taxes and Business Personal Property Taxes would be granted. If the valuation subsequently reaches Fifty-five Million ($55,000,000), the grant would again reach 80% of Ad Valorem Taxes and Business Personal Property Taxes. Under no circumstances will the grants pursuant to this section 6.A. in the aggregate exceed Two Million Three Hundred Twenty-two Thousand Three Hundred Ten Dollars ($2,322,310). Payments will terminate after twelve (12) years or when SRH has been paid Two Million Three Hundred Twenty-two Thousand Three Hundred Ten Dollars ($2,322,310), whichever occurs sooner. Under no circumstances will the grant period exceed twelve (12) years regardless of grant amount paid to SRH. Each annual grant shall be paid by the City to SRH on or before forty-five (45) days following the date City receives the Ad Valorem Taxes and Business Personal Property Taxes, as applicable. By way of example, if Substantial Completion of the Hotel is obtained in September 2016, then the twelve year ad valorem tax incentive period would begin with the 2017 tax year, which 2017 taxes would not be received by the City and paid to SRH until 2018. B. Sales and Use Taxes: City agrees to pay SRH an amount equal to eighty percent (80%) of the City's one percent (1.0%) Sales and Use Tax generated by and attributed solely to the sale of taxable items by businesses operating within the Property during a period beginning on the second full calendar quarter after the Opening Date, and continuing thereafter for twelve (12) years; provided, however, that under no circumstances will the grants under this subsection exceed Four Hundred Four Thousand Dollars ($404,000), in the aggregate. Payments will terminate after twelve (12) years or when SRH has been paid Four Hundred Four Thousand Dollars ($404,000), whichever occurs sooner. Such payments will be paid on a quarterly basis to SRH within forty- five (45) days after receipt from the Comptroller of Public Accounts of the State of Texas of the Sales and Use Tax for the applicable quarter. C. Hotel Occuvancv Taxes: (1) Program Payments: City agrees to pay SRH grants in an amount equal to no more than sixty-five percent (65%) of the hotel occupancy tax charged, collected and remitted to the City of Southlake from Hotel operations as a tax rebate, said grant period beginning on the second full calendar quarter after the Opening Date and continuing thereafter for five (5) years; provided, however, that under no circumstances will the grant under this subsection exceed Two Million Three Hundred Seventy -Five Dollars ($2,375,000), in the aggregate. Payments will terminate after five (5) years or when SRH has been paid Two Million Three Hundred Seventy -Five Dollars ($2,375,000), whichever occurs sooner. Grant Payments will be paid on a quarterly basis on or before forty-five (45) days following the date City receives (1) the HOT Revenue for the applicable quarter, and (2) sufficient documentation from SRH, in a form reasonably acceptable to City, that it has met the performance standards in section 6.C.(2) below. (2) Continued Performance Standards: Continued Program Payments under this Section 6.C. will be directly tied to the Hotel's performance. At the end of the third full year of operations of the Hotel, and thereafter, calculated on the average of the preceding four calendar quarters, the Hotel must maintain a minimum of sixty percent (60%) occupancy in order to receive the full sixty-five percent (65%) of hotel occupancy taxes as provided under 6.C.(1) above. If during the applicable preceding twelve month period, the average occupancy for the preceding four calendar quarters falls below sixty percent (60%), the grant payment payable to the Hotel for the last quarter of such twelve month period will be reduced to sixty percent (60%) of the HOT Revenue collected for that quarter. If the average hotel occupancy for the preceding four calendar quarters falls below fifty percent (50%), the grant payment payable to the Hotel for the last quarter of such twelve month period will be reduced to fifty percent (50%) of the HOT Revenue collected for that quarter. By way of example, if the occupancy rate for the four quarters of the third full year of Hotel operations is fifty percent (50%), fifty-five percent (55%), sixty percent (60%) and sixty-five percent (65%), the average occupancy for such year would be fifty-seven and one-half percent 57.5%. In such case, the grant payment made to SRH attributable to the fourth quarter of the third year would be reduced to sixty percent (60%) of the HOT Revenue collected for that quarter. If the occupancy rate for the first quarter of the fourth year is sixty percent (60%), then the average occupancy for the preceding four quarters would be 60% [(55% + 60% + 65% + 60%) - 4], and the grant payment made to SRH for such quarter would be the full sixty-five percent (65%) of the HOT Revenue collected for that quarter. (3) Compliance with Tax Code: SRH agrees that Program Payments under this section must be expended in a manner directly enhancing and promoting tourism and the convention and hotel industry and only as permitted by Chapter 351 of the Texas Tax Code, as amended, with detailed proof of expenditures provided quarterly to the City. Qualified expenditures include, but are not limited to, the following: (i) advertising/promotional programs to attract tourists; and (ii) transportation system to transport tourists to and from the Hotel. D. Sales Tax — Construction Materials: The City agrees that it shall pay to SRH an amount equal to one hundred percent (100%) of the Sales and Use Tax received by the City for the purchase of construction materials by SRH or contractors retained by SRH within a two year period in connection with the construction of the Eligible Improvements prior to the date of Substantial Completion; provided, however, that under no circumstances will the payments exceed Three Hundred Thousand Dollars ($300,000). The aforementioned two-year period will commence upon SRH's purchase of the first taxable item in connection with the construction of the Eligible Improvements. To receive payments under this section, SRH must submit proof of taxes paid on construction materials to the City within one hundred eighty (180) days after Substantial Completion. City's payment will be made within thirty (30) days of City's receipt of verification from the State Comptroller that the City has received Sales and Use Tax attributable to the purchase of construction materials in connection with the Eligible Improvements. SECTION 7. MISCELLANEOUS PROVISIONS A. Conflict of Interest: The Property is not owned or leased to any member of the Southlake City Council or any member of the Southlake Planning and Zoning Commission. In addition, SRH agrees to complete a Conflict of Interest Questionnaire as required by Chapter 176 of the Texas Local Government Code. B. Default and Termination: If either party should fail to comply with the terms of this Agreement, or if a bankruptcy or other insolvency proceeding shall be filed by or against either party and such proceeding is not vacated within sixty (60) days, it shall be deemed a default and the party shall have sixty (60) days after delivery of written notice of such default from the other party to cure such default. If the noncompliance is not cured within that period, the non - defaulting party may terminate this Agreement by written notice and shall have no further obligation to the other party; provided that the City shall grant SRH an extension to cure the default if SRH demonstrates, to the reasonable satisfaction of the City Council that: (1) the default cannot be cured by the payment of monies, (2) cannot be reasonably cured within sixty (60) days and (3) that SRH has been and is diligently pursuing cure. Notwithstanding the foregoing, in the event either party fails to pay the other party any monetary amounts owing under this Agreement when due, and such failure continues for a period of thirty (30) days after delivery of written notice of such default, then such outstanding amounts shall accrue interest from the date owing until paid at the rate in effect on September 1 of the City's fiscal year in which the payment becomes overdue. That rate in effect on September 1 is equal to the sum of: (1) one percent; and (2) the prime rate as published in the Wall Street Journal on the first day of July of the City's preceding fiscal year that does not fall on a Saturday or Sunday. In the event the City terminates this Agreement as a result of the foregoing, it will have no further obligation to make any remaining Program Payments under this Agreement and SRH shall be deemed to have forfeited all currently owing or future Program Payments to be paid to SRH under this Agreement. C. Force Majeure: Either party may be excused from performance under this Agreement when its performance is prevented as the result of Force Majeure as defined in Section 3. If a party suffers an event of Force Majeure, it shall provide written notice of the event to the other party promptly after its occurrence. Subject to this provision, such nonperformance shall not be deemed an event of default. Following the occurrence of any event of Force Majeure, SRH shall have such additional time to complete the applicable portion of the Eligible Improvements or perform such other obligation required hereunder as may be reasonably required if SRH is diligently and faithfully pursuing the completion of the same. D. Indemnification: SRH EXPRESSLY AGREES TO FULLY AND COMPLETELY DEFEND, INDEMNIFY, AND HOLD HARMLESS THE CITY, AND ITS OFFICERS, AND EMPLOYEES, AGAINST ANY AND ALL CLAIMS, LAWSUITS, LIABILITIES, JUDGMENTS, COSTS, AND EXPENSES FOR PERSONAL INJURY (INCLUDING DEATH), PROPERTY DAMAGE OR OTHER HARM, DAMAGES OR LIABILITY FOR WHICH RECOVERY OF DAMAGES IS SOUGHT, SUFFERED BY ANY PERSON OR PERSONS, THAT MAY ARISE OUT OF OR BE OCCASIONED BY ANY NEGLIGENT, GROSSLY NEGLIGENT, WRONGFUL, OR STRICTLY LIABLE ACT OR OMISSION OF SRH OR ITS AGENTS, EMPLOYEES, OR CONTRACTORS, ARISING OUT OF THE PERFORMANCE OF THIS AGREEMENT (EXCEPT WHEN SUCH CLAIMS, LAWSUITS, LIABILITIES, JUDGMENTS, COSTS, EXPENSES, INJURIES, DEATHS OR DAMAGES ARISE FROM OR ARE ATTRIBUTED TO THE SOLE NEGLIGENCE OR WILLFUL MISCONDUCT OF THE CITY). IN THE EVENT OF JOINT OR CONCURRENT NEGLIGENCE OF BOTH THE CITY AND SRH, THE RESPONSIBILITY, IF ANY, SHALL BE APPORTIONED COMPARATIVELY IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT, HOWEVER, WAIVING ANY DEFENSES OF THE PARTIES UNDER TEXAS LAW. Nothing in this paragraph may be construed as waiving any immunity available to the City under state law. This provision is solely for the benefit of SRH and the City and is not intended to create or grant any rights, contractual or otherwise, in or to any other Person. SRH's obligations within this section will survive the Term of this Agreement. E. Section or Other Headings: Section or other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. F. Attorney 's Fees: The prevailing party in the adjudication of any proceeding relating to this Agreement shall be authorized to recover its reasonable and necessary attorney's fees. G. Entire Agreement: This Agreement contains the entire agreement between the parties with respect to the transactions contemplated herein. H. Amendment: This Agreement may only be amended, altered, or revoked by written instrument signed by SRH and the City. I. Successors and Assigns: (1) Assignment. This Agreement shall be binding on and inure to the benefit of the parties, their respective successors and assigns. SRH may assign all or part of its rights and obligations hereunder (a) to any SRH Affiliate effective upon written notice to the City, provided the SRH Affiliate agrees in writing to comply with each and every obligation of SRH in this Agreement including constructing the Eligible Improvements to a design standard consistent with the Concept/Site Plans, or (b) to any Person other than an SRH Affiliate with the prior written approval of the City, which approval shall not be unreasonably withheld or delayed, so long as in the City's reasonable discretion the Eligible Improvements will be constructed to a design standard consistent with the Concept/Site Plans and the assignee is financially able to perform this Agreement and is experienced in high quality hotel development. After Substantial Completion of the Eligible Improvements, SRH's obligations under this Agreement may be assigned to any Person (including an SRH Affiliate) upon written notice to the City, but without requiring the City's approval. Any assignment must be made by written agreement, and the assignee must agree to comply with each and every obligation of SRH contained herein. Nothing in this section shall release SRH from SRH's obligations under this Agreement unless the City gives its express written consent. (2) Collateral Assienment. SRH shall have the right to collaterally assign, pledge, or encumber, in whole or in part, to any lender as security for any loan in connection with construction of the Development, all rights, title, and interests of SRH to receive Program Payments under this Agreement. Such collateral assignments (a) shall require the prior written consent of the City, which shall not be unreasonably delayed or withheld, and City agrees to execute such reasonable consent forms as may be required to evidence such consent, (b) shall require notice to the City together with full contact information for such lenders, (c) shall not create any liability for any lender under this Agreement by reason of such collateral assignment unless the lender agrees, in writing, to be bound by this Agreement; and (d) may give lenders the right, but not the obligation, to cure any failure of SRH to perform under this Agreement. No collateral assignment shall relieve SRH from any obligations or liabilities under this Agreement. J. Notice: Any notice and/or statement required and permitted to be delivered shall be deemed delivered by hand delivery, depositing same in the United States mail, certified with return receipt requested, postage prepaid, addressed to the appropriate party at the following addresses, or at such other addresses provided by the parties in writing: SRH: SRH Hospitality Southlake Investments, LLC Tindall Square Building No. 2 505 Pecan Street, Suite 101 Fort Worth, Texas 76102 Attention: Jerry Crenshaw SRH Hospitality Southlake Investments, LLC 16800 Westgrove Drive, Suite 100 Addison, Texas 75001 Attention: Warner E. Stone City: City of Southlake 1400 Main Street, Suite 460 Southlake, Texas 76092 Attention: Mayor With a copy to: Taylor, Olson, Adkins, Sralla & Elam, L.L.P. 6000 Western Place, Suite 200 I-30 at Bryant -Irvin Road Fort Worth, Texas 76107 Attention: Drew Larkin K. Intemretation: Regardless of the actual drafter of this Agreement, this Agreement shall, in the event of any dispute over its meaning or application, be interpreted fairly and reasonably, and neither more strongly for or against any party. L. Applicable Law and Venue: This Agreement is made, and shall be construed and interpreted under the laws of the State of Texas and is fully performable in Tarrant County, Texas, and venue of any dispute relating to this Agreement shall lie in Tarrant County, Texas. M. Counterparts: This Agreement may be executed in multiple counterparts, each of which shall be considered an original, but all of which shall constitute one instrument. N. Limitation on Liability: SRH agrees that City shall not be liable to SRH or any other party for any special or consequential damages, direct or indirect, punitive damages, interest, or cost of court or expenses related to litigation other than reasonable and necessary attorney's fees, as provided in Section 7.17. hereof for any act of default by City under this Agreement. O. Representations: SRH represents and warrants to the City that it has the requisite authority to enter into this Agreement. P. No Joint Venture: The parties agree that the terms hereof are not intended to and shall not be deemed to create a partnership or joint venture among the parties. The City, its elected officials, directors, employees and agents do not assume any responsibility to any third party in connection with SRH's construction or operation of the Eligible Improvements or Development. Q. Conflicting Agreements: Where conflicts might arise between this Agreement and the Commercial Developer Agreement or other agreements between the City and SRH, this Agreement shall prevail. SRH agrees to comply with the City's normal development regulations while developing the Property, except where those regulations conflict with the provisions of this Agreement. R. Revenue Sharing Aareement/Sales Tax Reports: The City designates this Agreement as a revenue sharing agreement, thereby entitling the City to request Sales and Use Tax information from the State Comptroller, pursuant to Section 321.3022 of the Texas Tax Code, as amended. In addition, SRH shall authorize the State Comptroller to issue sales tax reports to the City for the total taxable sales consummated at the Property on a quarterly basis. Notwithstanding anything in this Agreement to the contrary, the City's obligations to make Program Payments are contingent upon receipt of the sales tax reports. S. Remedies Cumulative: The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by either party shall not preclude or waive its rights to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise. T. Waiver: No waiver by a party in any event of default, or breach of any covenant, condition or stipulation herein contained shall be treated as waiver of any subsequent default or breach of the same or any other covenant, condition or stipulation hereof. U. Right to Offset: City may, at its option, offset any amounts due and payable to SRH under this Agreement against any debt (including taxes) lawfully due to City from SRH and which are delinquent under applicable law or by agreement, regardless of whether the amount due arises pursuant to the terms of this Agreement or otherwise, provided that if SRH is in good faith challenging the validity of any debt, in accordance with applicable laws, the City may not offset unless and until such challenge is finally resolved. V. Erroneously Paid Sales Tax: In the event the State Comptroller determines, for any reason, that any Sales and Use Taxes were erroneously paid to City from the sales provided for herein and City is required to rebate or repay any portion of such taxes, the amount of such rebate or repayment shall be deducted from the calculation of the Sales and Use Taxes received by City under this Agreement, and in the event the calculation of Sales and Use Taxes paid for a Program Payment shall reflect an overpayment by City to SRH, SRH agrees to reimburse City the amount of such overpayment. Notification of any such required adjustment will be provided to SRH at the earliest practical date. This section will survive termination of this Agreement. r Executed this 2I i day of wne� , 2016. THE CITY OF OUTHLAKE By: Laura 14ill, Mayor SRH HOSPITALITY SOUTHLAKE INVESTMENTS, LLC, a Texas limite liability company By: Paul Barh nage' r CITY APPROVED AS TO CITY ATTORNEY/ EXHIBIT B Description of Property Vicinity Map Westin Hotel w oQ �D Z J 7 �O u 1361 � 1050 1009 U 7!IR�S�1170 0 1201 1213 D 1075 s 979 950 T 7'sr v. loco 01) LN ' 75 1025 n 1000 105 7207 o D 975 1025 S' P 975 1L 5 0 950 970 v v ��• W E .1 i� ZA14-006 s Zoning Change & Site Plan F,. 0 400 800 1,600 Feet EXHIBIT C Westin Requirements/Concept-Site Plans Westin Hotel — City Council Approval May 3, 2016 A motion was made to approve Ordinance No. 480-714, (ZA16-022), 2nd Reading, Zoning Change and Site Plan for Westin Hotel subject to Staff Report dated April 27, 2016 and Site Plan Review Summary No. 2, dated April 27, 2016 granting the following variance requests: • To allow approximately 35-feet of stacking depth where 150-feet minimum is required and as shown on the site plan and previously approved. Noting the following: • Minimum room count will 250; • Minimum room sizes will meet the square footage outline in the SP-1 regulations provided on Attachment C, Page 5 of the staff report which reflect the standard guest rooms will be a minimum of 351 square feet, shot gun style suites a minimum of 455 square feet, two -bay suites will be a minimum of 702 square feet; • Noting the minimum meeting space will be 25,000 square feet; • Noting the minimum food and beverage space will be 13,000 square feet; • Noting the retail space will be a minimum of 600 square feet; • Noting the minimum hotel lodging space will be 140,000 square feet; • Noting the minimum total hotel square footage will be 205,000 square feet and a maximum of 220,000 square feet; • Noting the minimum number of parking spaces provided in the structure will be 250 spaces; • Noting the 2nd level roof top functions will be provided as presented; • Accepting the SP-1 regulations as presented specifically noting that all the services, indoor facilities, and amenities listed in these regulations will be provided at the time of the opening of the hotel; • Approving the updated site plan and landscape plan presented this evening; • Noting the fence is a Rhinorock fence with pre -fabricated panels and not a wood fence; • Noting the applicant's agreement there will be no PTAC or VTAC room ventilation systems permitted; • Noting that Grace Lane will be built to Kirkwood prior to a certificate of occupancy being issued; • Noting that a lighting package will be included in the sign package application; • Noting that the 20 parking spaces indicated on the plan presented tonight will be optional; • Noting the applicant's agreement of a maximum impervious coverage of 85% with 15% open space; • Noting that hotel will be a 4 star -rated hotel; and, • Noting the maximum building height will be 85 feet. a � C � - ��a R C Ij 2 �R - n off§ S, Site Plan s oxr wo o :L8AA qq qq @C@LdCd6 q g q q q pF�� CV z 8 IE KPs� �a Landscape Plan MIT y 1? v �r �e y'N ``-- � �k ,:_. rig r • !'GSLTMCKPARKING v; GARAGE ■ TOP LEVEL=663.00 AND ­R •••• ■ 0 BUILDING ENTRANMMOT �r ,may IL,VU Al M B FERYARU HP P� r� STgs�9 g 4 Sj 4e 4 4 EXMING� &GN EGMT sc / r / /i MG / XGRACE LANE fuL B CN s LAND E / +8 ML /2 BUFFERY B JAG O� I Ela 4 oo OP NON EfR �N Hotel elevations WEST ELEVATION I i SCALE: 1'=8P-0' WI ii iG F i■i TIT ff ■ ■i i■ a■i � —I ■ If ■- I ■ I .. - FF �I a ®77 _ � ■ III � 1J _ NORTH ELEVATION 1 3 SCALE: 1' = 80'-0' 1 A3.1 Conceptual floor plan // 0 Y/ a 0 A �LU J a y/ w z z O J w 0000d till