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Item 4LM E M O R A N D U M November 25, 2019 To: Shana Yelverton, City Manager From: Sharen Jackson, Chief Financial Officer Subject: Approve second amendment to Parking Garage Property Operating Agreement with Town Square Ventures, II L.P., SLTS Grand Avenue, L.P., and Southlake Town Square Association, Inc. Action Requested: Approval of second amendment to Parking Garage Property Operating Agreement. Background Information: In March 2005, Town Square (Project Owner) and City Council entered into a Parking Garage Property Operating Agreement (the agreement) to define the use and payment for the operating expenses associated with the East and W est parking garages. The agreement defined the proportionate share (%) as the square footage owned by the applicable party within the property (excluding the West and East parking garage). The agreement requires each project owner to pay an annual maintenance fee representing its proportionate share of the annual operating expenses incurred by the City with respect to the operation of the parking garages. Subsequent to the approval of the operating agreement, the project owner sold a parcel of the land (hotel site). The hotel owner agreed to assume the maintenance and repair obligations associated with the Hotel Parcel and related common areas. In consideration of the Hotel Owner’s assumption of maintenance and repair obligations, the Project Owner and the City agreed to exempt and release the Hotel Owner from the payment of its annual maintenance fee. In September 2005, the City and Project Owner entered into the First Amendment to Parking Garage Property Operating Agreement to memorialize their agreement to exempt the Hotel from the parking agreement. The Project Owner has requested a second amendment to the agreement to exempt Parkview Residences from the obligation to share in the costs of the City’s parking garages. The basis for the request is as follows: •Parkview is constructing its required parking within an on-site structured parking garage on the Parkview Residential Parcel; Item 4L Honorable Mayor and City Council Page 2 of 2 • Parkview has agreed to assume the maintenance and repair obligations associated with the Parkview Residential Parcel and related common areas If the second amendment is approved, the City (8.25%) and Project Owner’s (91.75%) proportionate share would remain the same. Financial Considerations: The City’s share of the parking garages operating cost would remain the same at 8.25%. Strategic Link: B2 Collaborate with select partners to implement service solutions F2 Invest to provide and maintain high quality public assets Citizen Input/ Board Review: None required Legal Review: City Attorney prepared the Amendment Alternatives: None Supporting Documents: Second Amendment to Parking Garage Property Operating Agreement Staff Recommendation: Approval of the Amendment 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) SECOND AMENDMENT TO PARKING GARAGE PROPERTY OPERATING AGREEMENT This Second Amendment to Parking Garage Property Operating Agreement (“Amendment”) is entered into as of the _____ day of _______________, 2019, by and between THE CITY OF SOUTHLAKE, a Texas municipal corporation of Tarrant County and Denton County, Texas (“City”); TOWN SQUARE VENTURES, L.P., an Illinois limited partnership (“TSVI”); TOWN SQUARE VENTURES II, L.P., a Texas limited partnership (“TSVII”) (TSVI and TSVII are collectively referred to herein as the “TSV”); SLTS GRAND AVENUE, L.P., a Texas limited partnership (“SLTSGA”); (TSV and SLTSGA and Parkview are hereinafter collectively referred to as the “Project Owners”); and SOUTHLAKE TOWN SQUARE ASSOCIATION, INC., a Texas non-profit corporation (the “Association”). RECITALS WHEREAS, Except for the City and other than as described below, Project Owners collectively own the land consisting of Phase I (being that certain real property described on EXHIBIT “A-1” attached hereto and herein so called) and Phase IV (being that certain real property described on EXHIBIT “A-2” attached hereto and herein so called) of Southlake Town Square, a development in the Downtown District, Southlake Town Square Addition, Southlake, Texas; WHEREAS, Block 12, Lot 3 of Phase IV is owned by Hobbs & Curry Family Limited Partnership, an Arkansas limited partnership (“Hotel Owner”), for the operation of a hotel, such parcel being more particularly described on EXHIBIT “E” attached hereto and incorporated herein for all purposes (“Hotel Parcel”); WHEREAS, on February 28, 2018, SLTSGA sold Block 4R1, Lot 4, being a portion of Phase IV, to 2016 Parkview Condominiums Development, LLC (“Parkview”), such parcel being more particularly described on EXHIBIT “F” attached hereto and incorporated herein for all purposes (“Parkview Residential Parcel”), for the construction and operation of a residential condominium building and related improvements (the “Residential Improvements”); WHEREAS, Phase I and IV constitute the “Project” and are depicted and shown on EXHIBIT “D” attached hereto; WHEREAS, City is the owner and operator of two (2) public parking garages located on Block 4R1, Lot 5 and Block 3R2R, Lot 7R of Phase IV (“Parking Garages”); WHEREAS, Project Owners and Association have imposed restrictions upon the tenants, successors, and assigns within the Project and to pay for a proportionate share of the expenses of maintenance for the Parking Garages; WHEREAS, to evidence their agreement as to the foregoing matters, TSV, SLTSGA and City entered into that certain Parking Garage Property Operating Agreement dated March 29, 2005, as amended by First Amendment to Parking Garage Operating Agreement dated as of September 6, 2005 (collectively, the “Agreement”) (unless otherwise defined herein, all defined terms used in this Amendment will have the same meaning as in the Agreement); WHEREAS, pursuant to Section 5.A.1 of the Agreement, each Project Owner must pay an Annual Maintenance Fee representing its Proportionate Share of the annual Operating Expenses incurred by the 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) 2 City with respect to the operation of the Parking Garages for each year of the Agreement, and this obligation is binding upon the successors, heirs, and assigns of any Project Owner which acquire any right, title or interest in any property within the Project; WHEREAS, Hotel Owner agreed to assume the maintenance and repair obligations associated with the Hotel Parcel and related common areas that would otherwise be the responsibility of the Association under the Declaration (“Hotel Owner’s Assumption of Maintenance and Repair Obligations”), in consideration for which the Association and the Project Owners agreed, with City’s consent, to exempt and release the Hotel Owner from the payment of its Annual Maintenance Fee; and WHEREAS, Parkview is constructing its required parking within an on-site structured parking garage as part of the Residential Improvements on the Parkview Residential Parcel, and has agreed to assume the maintenance and repair obligations associated with the Parkview Residential Parcel and related common areas thereon that would otherwise be the responsibility of the Association under the Declaration (“Parkview’s Assumption of Maintenance and Repair Obligations”), in consideration for which the Association and the other Project Owners have agreed to exempt and release Parkview from the payment of Regular Assessments and Special Group Assessments and, accordingly, when determining the amount of any Assessment due from the Project Owners, the Association will exclude the total gross area contained within the Residential Improvements from the ratio used to calculate the other Owners’ share of such Assessments; WHEREAS, in consideration of Parkview’s Assumption of Maintenance and Repair Obligations, Parkview has requested, and Project Owners have agreed with the City’s consent, that it be exempted and released from payment of the Annual Maintenance Fee, and that the total gross area contained within the Residential Improvements on the Parkview Residential Parcel be excluded from the calculation of “Proportionate Share” under the Parking Garage Operating Agreement; WHEREAS, City, the Project Owners and the Association desire to enter into this Amendment to evidence their agreement with respect to the foregoing matters and to correct certain other matters set forth in the Agreement; NOW, THEREFORE, for good and valuable consideration, the receipt which the parties acknowledge receiving, City, the Project Owners and Association agree as follows: 1. In Section 2 of the Agreement, the definition of “Declaration of Covenants, Restrictions, and Easements” or “CRE” is changed to mean (i) that certain Second Amended and Restated Declaration of Covenants, Restrictions, and Easements for Southlake Town Square dated effective as of October 18, 2006, and recorded on October 25, 2006, under Instrument No. D206334031 of the Official Records of Tarrant County, Texas, as amended by Amendment to Second Amended and Restated Declaration of Covenants, Restrictions, and Easements for Southlake Town Square dated effective as of December 30, 2016, and recorded on December 30, 2016, under Instrument No. D216304991 of the Official Records of Tarrant County, Texas and (ii) any amendments, modifications, or restatements of either, or both, of the foregoing documents. 2. In Section 2 of the Agreement, a new definition for “Parkview Residential Parcel” is added as follows: Parkview Residential Parcel means that certain 0.630 acre tract of land located within Phase IV and more particularly described on EXHIBIT “F” attached hereto, together with all improvements now or hereafter located thereon. 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) 3 3. In Section 2 of the Agreement, the definition of “Proportionate Share” is amended by adding a sentence at the end of the definition to read as follows: For purposes of calculating the Proportionate Share, the total square footage of all buildings situated on the Parkview Residential Parcel shall be excluded from the Phase I and Phase IV Property. 4. Section 5.B .2. of the Agreement is amended to read as follows: 2. collect the Annual Maintenance Fee from the owners of property within Phase I and Phase IV (other than the owner of the Hotel Parcel and the owner of the Parkview Residential Parcel pursuant to Sections 18 and 21 of the Agreement). The Project Owners hereby appoint the Association as the party responsible for assessing and collecting from each Project Owner the Annual Maintenance Fee pursuant to, and in accordance with, the applicable terms of the CRE and this Agreement. 5. In Section 8.B of the Agreement, amend the sixth sentence to read as follows: Each Project Owner (other than the owner of the Hotel Parcel pursuant to Section 18 and the owner of the Parkview Residential Parcel pursuant to Paragraph 21 of the Agreement) by acquisition of its parcel grants to the City a power of sale in connection with the lien rights in favor of the City created pursuant to this Agreement. 6. A new Section 21 is added to the Agreement as follows: 21. PARKVIEW RESIDENTIAL PARCEL. Pursuant to the CRE and this Amendment, the Association and the City have agreed to exempt Parkview and the building improvements on the Parkview Residential Parcel from assessment for and in consideration of the assumption by Parkview, at its sole cost and expense, of the construction of its own structured parking garage on the Parkview Residential Parcel and of the management, maintenance, repair and other obligations associated with the Parkview Residential Parcel common areas located on the Parkview Residential Parcel that would otherwise be the responsibility of the Association pursuant to the CRE. Accordingly, and notwithstanding any provision to the contrary contained in this Agreement, for and in consideration of such assumption of obligations by the owner(s) of the Parkview Residential Parcel, the parties hereto agree that the floor area of the Parkview Residential Parcel building improvements shall be excluded from the calculation of Phase I and Phase IV total buildings square footage, and therefor there shall be no Annual Maintenance Fee allocated to the Parkview Residential Parcel, and the City shall have no right to impose a lien on the Parkview Residential Parcel pursuant to Section 8.B for any failure to pay the Annual Maintenance Fee. 7. EXHIBIT “F” to this Amendment is hereby added to the Agreement as a new Exhibit ”F.” 8. As amended by this Amendment, the Agreement will continue in full force and effect, and all parties to this Amendment hereby ratify and confirm the Agreement, as modified by this Amendment, and agree to be bound by the terms thereof, as amended. 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) 4 12 This Amendment may be executed in any number of counterparts, each of which will be an original, and all of which, taken together, will constitute a single document. Signature pages from any counterpart may be attached to any other counterpart to form a single document. Effective as of the date first set forth above. CITY: CITY OF SOUTHLAKE, a Texas municipal corporation of Tarrant County and Denton County, Texas By: Name: Title: STATE OF TEXAS § § COUNTY OF TARRANT § This instrument was acknowledged before me on the _____ day of ____________________, 2019, by _____________________________________, _____________________________________ of the City of Southlake, a Texas municipal corporation of Tarrant County and Denton County, Texas, on behalf of such municipal corporation. Notary Public, State of Texas 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) 5 Effective as of the date first set forth above. TSV: TOWN SQUARE VENTURES, L.P. an Illinois limited partnership By: Western Town Square Ventures GP, L.L.C., a Delaware limited liability company, its general partner By: Inland Western Retail Real Estate Trust, Inc., a Maryland corporation, its sole member By: Inland Southwest Management L.L.C., a Delaware limited liability company as managing agent By: Name: Title: STATE OF ____________ § § COUNTY OF __________ § This instrument was acknowledged before me on the _____ day of ________________, 2019, by _____________________________, ____________________________ of Inland Southwest Management, L.L.C., a Delaware limited liability company, managing agent for Inland Western Retail Real Estate Trust, Inc., a Maryland corporation, sole member of Western Town Square Ventures GP, L.L.C., a Delaware limited liability company, as general partner of Town Square Ventures, L.P., an Illinois limited partnership, on behalf of such corporation, limited liability company and limited partnership. Notary Public, State of 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) 6 Effective as of the date first set forth above. TSVII: TOWN SQUARE VENTURES II, L.P., a Texas limited partnership By: Town Square Ventures II GP, L.L.C., a Texas limited liability company, its general partner By: C&S Southlake Capital Partners I, L.P., a Texas limited partnership, its member By: Western Town Square Ventures GP, LLC, a Delaware limited liability company its general partner By: Inland Western Retail Real Estate Trust, Inc., a Maryland corporation, its sole member By: Name: Title: STATE OF ____________ § § COUNTY OF __________ § This instrument was ACKNOWLEDGED before me on the _____ day of ________________, 2019, by _____________________________, ____________________________ of Inland Western Retail Real Estate Trust, Inc., sole member of Western Town Square Ventures GP, L.L.C., general partner of C&S Southlake Capital Partners I, L.P., a Texas limited partnership, member of Town Square Ventures II GP, L.L.C., a Texas limited liability company, general partner of Town Square Ventures II, L.P., a Texas limited partnership, on behalf of such corporation, limited liability companies and limited partnerships. Notary Public, State of 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) 7 Effective as of the date first set forth above. SLTSGA: SLTS GRAND AVENUE, L.P., a Texas limited partnership By: SLTS Grand Avenue Genpar, L.L.C., its general partner By: Cooper & Stebbins, L.P., its sole member By: Frank L. Bliss, President STATE OF TEXAS § § COUNTY OF TARRANT § This instrument was acknowledged before me on the _____ day of ____________________, 2019, by Frank L. Bliss, President of Cooper & Stebbins, L.P., as sole member of SLTS Grand Avenue Genpar, L.L.C., a Texas limited liability company, the general partner of SLTS Grand Avenue, L.P., a Texas limited partnership, on behalf of such limited liability companies and limited partnerships. Notary Public, State of Texas 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) 8 Effective as of the date first set forth above. ASSOCIATION: SOUTHLAKE TOWN SQUARE ASSOCIATION, INC., a Texas non-profit corporation By: Name: Title: STATE OF TEXAS § § COUNTY OF TARRANT § This instrument was acknowledged before me on the _____ day of ____________________, 2019, by _____________________________________, _____________________________________ of Southlake Town Square Association, Inc., a Texas non-profit corporation, on behalf of such non-profit corporation. Notary Public, State of Texas 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) EXHIBIT “A-1” LEGAL DESCRIPTION OF PHASE I PHASE I OWNERS Town Square Ventures, L.P. Lots 1, 2, 3, 4 and 5, Block 5R of SOUTHLAKE TOWN SQUARE - PHASE I, an Addition to the City of Southlake, Tarrant County, Texas, according to plat recorded in Cabinet A, Slide 6888 and 6889, Plat Records of Tarrant County, Texas; and Lot 2R, Block 4R1 of the “Final Plat/Plat Revision, Blocks 12-14, 17, and 18, Southlake Town Square, Phase IV and Blocks 3R2, 4R1 Southlake Town Square, Phase I, an Addition to the City of Southlake, Tarrant County, Texas,” as recorded in Cabinet A, Slide 10949, 10950, 10951, and 10952 of the Plat Records of Tarrant County, Texas. Lots 1, 2 & 4, Block 1R; Lots 1, 2 & 3, Block 2R1; Lot 1, Block 4R; Lots 1, 2, 3 & 5, Block 5R, Southlake Town Square - Phase I, an addition to the City of Southlake, Tarrant County, Texas, according to the plat recorded in Cabinet A, Slide 6888, Plat Records, Tarrant County, Texas. Lots 3R, and 5, Block 1R, Southlake Town Square, an addition to the City of Southlake, Tarrant County, Texas, according to the plat recorded under Clerk's File No. D213317994, Plat Records, Tarrant County, Texas. Lot 4R, Block 2R1, Southlake Town Square, an addition to the City of Southlake, Tarrant County, Texas, according to the plat recorded under Clerk's File No. D216064990, Plat Records, Tarrant County, Texas. Lot 2R, Block 4R1, Southlake Town Square - Phase I, an addition to the City of Southlake, Tarrant County, Texas, according to plat recorded in Cabinet A, Slide 10949, Deed Records of Tarrant County, Texas. Lot 4R, Block 5R, Southlake Town Square, an addition to the City of Southlake, Tarrant County, Texas, according to the plat recorded under Clerk's File No. D215168298, Plat Records, Tarrant County, Texas. Town Square Ventures II, L.P. Lot 1, Block 3R1 of SOUTHLAKE TOWN SQUARE - PHASE I, an Addition to the City of Southlake, Tarrant County, Texas, according to plat recorded in Cabinet A, Slide 6888 and 6889, Plat Records of Tarrant County, Texas. 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) EXHIBIT “A-2” LEGAL DESCRIPTION OF PHASE IV (excluding the SLTSGA Parcel, the Hotel Parcel, and the Parkview Residential Parcel PHASE IV OWNERS TSVII Lots 2R1, 3R, 4R and 5R, in Block 3R2R, of BLOCK 3R2R, SOUTHLAKE TOWN SQUARE, PHASE I, AND PHASE IV, an Addition to the City of Southlake, Tarrant County, Texas, according to the Revised Plat thereof recorded in Cabinet A, Slide 11892, Plat Records of Tarrant County, Texas; and Lots 3R, 6, and 7, in Block 4R1; Lots 4, 5, 6, 7, and 8, in Block 12; Lots 1, 3, 4, 5, 6, and 7, in Block 13; Lots 1, 2, 3, 4, 5, and 6, in Block 14; and Lot 1, in Block 18, of BLOCKS 3R2, 4R1, SOUTHLAKE TOWN SQUARE, PHASE I, AND BLOCKS 12-14, 17 AND 18, SOUTHLAKE TOWN SQUARE, PHASE IV, an Addition to the City of Southlake, Tarrant County, Texas, according to the Revised Plat thereof recorded in Cabinet A, Slide 10949, Plat Records of Tarrant County, Texas; SAVE AND EXCEPT those certain portions of Lot 3R, Block 4R1, as conveyed to The City of Southlake, Texas, by Special Warranty Deed filed April 1, 2009 under Clerk's File No. D209086233, of the Real Property Records of Tarrant County, Texas. Lot 1R, Block 17, Southlake Town Square, an addition to the City of Southlake, Tarrant County, Texas, according to the plat recorded under Clerk's File No. D217267076, Plat Records, Tarrant County, Texas. SLTS Grand Avenue, L.P. Lot 6R in Block 3R2R, of BLOCK 3R2R, SOUTHLAKE TOWN SQUARE, PHASE I, AND PHASE IV, an Addition to the City of Southlake, Tarrant County, Texas, according to the Revised Plat thereof recorded in Cabinet A, Slide 11892, Plat Records of Tarrant County, Texas; SAVE AND EXCEPT those certain portions of Lot 6R, Block 3R2R as conveyed to The City of Southlake, Texas, by Special Warranty Deed filed April 1, 2009 under Clerk's File No. D209086233, of the Real Property Records of Tarrant County, Texas. 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) EXHIBIT “B” INTENTIONALLY OMITTED 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) EXHIBIT “C” INTENTIONALLY OMITTED 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) EXHIBIT “D” INTENTIONALLY OMITTED 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) EXHIBIT “E” LEGAL DESCRIPTION OF THE HOTEL PARCEL Lot 3, Block 12 of the “Final Plat/Plat Revision, Blocks 12-14, 17, and 18, Southlake Town Square, Phase IV and Blocks 3R2, 4R1 Southlake Town Square, Phase I, an Addition to the City of Southlake, Tarrant County, Texas,” as recorded in Cabinet A, Slide 10949, 10950, 10951, and 10952 of the Plat Records of Tarrant County, Texas. 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) EXHIBIT “F” LEGAL DESCRIPTION OF THE PARKVIEW RESIDENTIAL PARCEL Lot 4, Block 4R1 of BLOCKS 3R2, 4R1, SOUTHLAKE TOWN SQUARE, PHASE 1, AND BLOCKS 12-14, 17 AND 18, SOUTHLAKE TOWN SQUARE, PHASE IV, an addition to the City of Southlake, Tarrant County, Texas, according to the Revised Plat thereof recorded in Cabinet A, Slide 10949, Plat Records, Tarrant County, Texas. 2019.10.11 RL Second Amendment to Parking Garage Property Operating Agreement - for Cooper review (2) CONSENT AND SUBORDINATION [if required] The undersigned, beneficiary and holder of the liens and security interests created pursuant to, among other security instruments, ______________________________________________________ (such deeds of trusts, together with all related security documents, are collectively called the “Security Documents”), hereby consents to the execution of the foregoing Second Amendment to Parking Garage Property Operating Agreement (“Parking Agreement”) and agrees that the Security Documents and all other security instruments in favor of the undersigned are, and shall at all times continue to be, subject, inferior, and subordinate in all respects to the Parking Agreement. Effective as of the _____ day of ___________, 2019. [Bank]_____________________________________ By: Name: Title: STATE OF § § COUNTY OF § This instrument was acknowledged before me on the _____ day of _______________, 2019, by ____________________________________, ______________________________________________ of ___________________________________________________________________________ (the “Noteholder”) by and through its _________________________________________________, on behalf of said __________________________________________________________________________. Notary Public, State of