Item 4C Memo
M E M O R A N D U M
August 28, 2019
To: Shana Yelverton, City Manager
From: Daniel Cortez, Deputy Director of Economic Development
Subject: Item 4C: Consider ratification of the collateral assignment of a Chapter
380 agreement with SRH Hospitality Southlake Investments, LLC
Action
Requested: Ratify the Collateral Assignment of the Chapter 380 Agreement with
SRH Hospitality Southlake Investments, LLC.
Background
Information: On August 6, 2019, the City of Southlake entered into an Amended and
Restated 380 Agreement with SRH Hospitality Southlake Investments,
LLC through Resolution No. 19-027. Per the provision of successors and
assigns under Section 7 of that 380 Agreement, the developer has 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. The agreement also notes that, as a matter of procedure,
collateral assignments require written consent from the City of Southlake
per the approved 380 Agreement with SRH Hospitality Southlake
Investments.
Collateral Assignments do not in any way change the terms of the 380
agreement or alter the requirements placed on the developer.
Due to constraints with the closing date with their lender and the next
available City Council meeting, City Manager Shana Yelverton executed
the collateral assignment upon advice of the City Attorney. This item
seeks ratification of that execution, per the terms of the investment
agreement which specify approval of the City Council.
As such, SRH Hospitality is requesting the City Council ratify the
execution of the Collateral Assignment between SRH Hospitality and
their financing bank.
Strategic Link: C4 - Attract & keep top-tier businesses to drive a dynamic & su stainable
economic environment
Citizen Input/
Board Review: N/A
Financial
Considerations: N/A
Legal Review: The Collateral Assignment was reviewed by the City Attorney.
Alternatives: Ratify the Collateral Assignment of the Chapter 380 Agreement with
SRH Hospitality Southlake Investments, LLC.
Supporting
Documents: Exhibit A : Approved Amended and Restated 380 Agreement
Staff Contact: Daniel Cortez (817) 748-8039
ARJSING OUT OF THE PERFORMANCE OF THIS AGREEMENT (EXCEPT WHEN
SUCH CLAIMS, LAWSUITS, LIABILITIES, nJDGMENTS, COSTS, EXPENSES,
INJURIES, DEATHS OR DAMAGES ARJSE FROM OR ARE ATTRJBUTED 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, WA IVING 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.Enti re 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 si gned by SRH and the City.
I.Successors and Assigns:
(I)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 desi gn 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
encmnber, 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