Item 4G Resolution No. 18-031
RESOLUTION NO. 18-031
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 June 21, 2016 the City Council approved a Amended and Restated
Chapter 380 Agreement (the “Agreement”) by and between th e 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 (“SRH”), 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 as well as Chapter 312
of the Texas Tax Code.
SECTION 2.
The City Council hereby adopts an economic development program whereby the City
of Southlake will make economic development program payments to SRH, 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.
PASSED AND APPROVED this the 19th day of June, 2018.
_________________________________
Laura Hill, Mayor
ATTEST:
______________________________
Carol Borges, TRMC
City Secretary
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 financia l 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 placeme nt
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 Occupancy: 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 fund s.
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, 2021.
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.B. 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 ($2,322,31 0). 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 until2018.
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 Occupancy 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.(l) 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 Assignment. 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
1-30 at Bryant-Irvin Road
Fort Worth, Texas 76107
Attention: Drew Larkin
K. Interpretation: 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.F. 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 Agreement/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.
Executed on this _____________ day of _________________, 2018
THE CITY OF SOUTHLAKE
By: ___________________________________
Laura Hill, Mayor
SRH HOSPITALITY SOUTHLAKE INVESTMENTS, LLC,
a Texas limited liability company
By: ___________________________________
Paul Barham, CEO, Harrell Hospitality Group
ATTEST
____________________________
City Secretary APPROVED AS TO FORM
____________________________
City Attorney
EXHIBIT B
Description of Property
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 Summa ry 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.
Site Plan
Landscape Plan
Hotel Elevations
Conceptual Floor Plan