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Item 4FCITY OF SOUTH LAKE MEMORANDUM October 24, 2011 To: Shana Yelverton, City Manager From: Greg Last, Director of Economic Development & Tourism Subject: Approve Resolution 11 -049, 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 agreement with Southlake Land Holdings, L.P., a Texas Limited Partnership, by Southlake Land Holdings GP, L.L.C. a Texas Limited Liability Company, its General Partner for such purposes; and providing an effective date. Action Requested: Approve Resolution 11 -049 as noted above. Background Information: The original Chapter 380 Agreement for the Southlake Regional Medical Center (SRMC) was approved on November 6, 2007. There have been two prior amendments extending deadlines for SRMC as well as the City. The development team is now ready to move forward with new partners Forest Park Medical Center and Vibrant Health Care. The Amendment Three does include provisions to separate the timing criteria for the Hospital and the Medical Office Building. The Hospital has a commencement date of March 31, 2012 and substantial completion of December 31, 2013. The first MOB has commencement date of June 30, 2013 and substantial completion of December 31, 2014. Square footage thresholds for both the Hospital and MOB were increased. Construction costs and taxable value criteria were modified for both with the combined criteria increasing from the current agreement to Amendment Three. Financial Considerations: Financial components remain the same, only timing is changed. Strategic Link: C4: Attract and keep top -tier businesses to drive a dynamic and sustainable economic environment. Citizen Input/ Board Review: Not applicable. Legal Review: The City Attorney's office has been involved in the preparation of these documents. Honorable Mayor and City Council Resolution 11 -049 Page 2 of 2 Alternatives: 1. Approve the Resolution as submitted 2. Approve the Resolution with amendments 3. Take no action on the Resolution. Supporting Documents: Attached is Resolution 11 -049 Staff Recommendation: Approve Resolution 11 -049 as submitted. RESOLUTION NO. 11 -049 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 AGREEMENT WITH SOUTHLAKE LAND HOLDINGS, L.P., A TEXAS LIMITED PARTNERSHIP, BY SOUTHLAKE LAND HOLDINGS GP, L.L.C. A TEXAS LIMITED LIABILITY COMPANY, ITS GENERAL PARTNER FOR SUCH PURPOSES; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, Chapter 3 80 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 November 7, 2007 the City Council approved a Chapter 380 Agreement (the "Agreement ") by and between the City of Southlake and Southlake Land Holdings, L.P. ( "Southlake Medical ") to promote economic development and stimulate business and commercial activity in the City; and WHEREAS, On August 4, 2009 the City Council approved Amendment One to the Agreement by and between the City of Southlake and Southlake Medical to promote economic development and stimulate business and commercial activity in the City; and WHEREAS, On January 5, 2010 the City Council approved Amendment Two to the Agreement by and between the City of Southlake and Southlake Medical to promote economic development and stimulate business and commercial activity in the City; and WHEREAS, the City Council has been presented with a proposed Agreement — Amendment Three by and between the City of Southlake and Southlake Medical, a copy of which is attached hereto as Exhibit "A" and incorporated herein by reference (hereinafter called "Amendment Three "); and WHEREAS, upon full review and consideration of Amendment Three and all matters attendant and related thereto, the City Council is of the opinion that Amendment Three will assist in implementing a program whereby economic development will be promoted and business and commercial activity will be stimulated in the City. Remainder of page left blank intentionally Resolution 11 -049 — Southlake Regional Medical Center - 380 Agreement - Amendment Three 2010 -10 -24 DRAFT - Page 1 of 3 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 Amendment Three 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 Southlake Medical, and take other specified actions, in accordance with the terms outlined in the Agreement, Amendments One, Two and Three. SECTION 3. The terms and conditions of Amendment Three, 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 Amendment Three and all other documents in connection therewith on behalf of the City substantially according to the terms and conditions set forth in Amendment Three. SECTION 5. This Resolution shall become effective from and after its passage. PASSED AND APPROVED this the day of , 2011 John Terrell, Mayor ATTEST: Alicia Richardson, TRMC City Secretary Resolution 11 -049 — Southlake Regional Medical Center - 380 Agreement - Amendment Three 2010 -10 -24 DRAFT - Page 2 of 3 EXHIBIT A Chapter 380 Agreement -- Amendment Three Resolution 11 -049 — Southlake Regional Medical Center - 380 Agreement - Amendment Three 2010 -10 -24 DRAFT - Page 3 of 3 SOUTHLAKE REGIONAL MEDICAL CENTER Chapter 380 Agreement — Amendment Three THIS AMENDMENT THREE TO ECONOMIC DEVELOPMENT AGREEMENT ( " Amendment Three ") is executed between the City of Southlake, Texas (the " City ") and Southlake Land Holdings, L.P., a Texas limited partnership ( " Southlake Medical "). Recitals WHEREAS, on November 6, 2007, the City adopted Resolution No. 07 -016 (the " Resolution ") establishing an Economic Development Program pursuant to Section 380.001 of the Texas Local Government Code and authorizing the Economic Development Program Agreement between the parties (the " Agreement ") as part of the Economic Development Program established by the Resolution (the " Program "); and WHEREAS, on August 4, 2009, the City adopted Resolution No. 09 -128 adopting amendments to the Agreement ( " Amendment One "); and WHEREAS, on January 5, 2010, the City adopted Resolution No. 10 -002 adopting amendments to the Agreement ( " Amendment Two "); and WHEREAS, Southlake Medical and the City wish to further amend the Agreement and Amendment One and Amendment Two; and WHEREAS, the City Council of the City of Southlake finds and determines that this Amendment Three to the Agreement will effectuate the purposes set forth in the Program and the Southlake Medical's performance of its obligations herein and in the Agreement will promote local economic development and stimulate business and commercial activity in the City. NOW, THEREFORE, in consideration of the mutual benefits and premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Unless otherwise defined herein, the terms used in this Amendment Three shall have the same meaning as given to such terms in the Agreement. - Remainder of page left blank intentionally - Southlake Regional Medical Center - 380 Agreement - Amendment Three Draft 2011 -10 -24 - Page 1 of 5 2. The Agreement is hereby amended to extend the following dates by the time periods shown or modify the sections as described: Agreement Description Original Date Amendment Amendment Amendment Section One Two Three 4A.i Commencement of December December 31, No change Reword section construction 31, 2009 2010 as noted below 4A.i Substantial completion December December 31, No change Reword section 31, 2011 2012 as noted below 5B.i White Chapel December December 31, No change June 30, 2014 construction 31, 2009 2011 5B.ii Construction deadline for October 1, January 1, December Obligation Highland Street 2009 2010 31, 2010 completed, reconstruction see note below deleting section 5B.iii Construction deadline for October 1, January 1, No change Obligation the Highland Water Line 2009 2010 completed, see note below deleting section 5B.iii Reimbursement timetable June 1, 2012; June 1, 2013; No change Reword section for on -site S.H. 114 water FY 2012 -13 FY 2013 -14 as noted below line FY 2013 -14 FY 2014 -15 5B.v Reimbursement timetable June 1, 2012; June 1, 2013; No change Reword section for off -site sanitary sewer FY 2012 -13 FY 2013 -14 as noted below line FY 2013 -14 FY 2014 -15 3. [Re: Section 2] The definition of "Building Permit" is hereby amended to delete demolition permits as the parties have agreed that issuance of a demolition permit for any portion of the Property will not trigger any actions, obligations or time periods under the Agreement. 4. Section 4.A is hereby amended to read as follows: "A. Construction As it relates to constructing a portion of the Eligible Improvements, the following criteria shall apply. i. Hospital & Parking Garage Commence construction of the Hospital and attached parking garage number 1 (as shown on the Concept Plan) by March 31, 2012 and be substantially completed no later than December 31, 2013, subject to extension as set forth in Subsection 4.A.iii below. The Hospital shall have a minimum of 130,000 gross square feet and the Hospital and parking garage together shall have a minimum construction value of Forty -Two Million Five Hundred Thousand Dollars ($42,500,000). Additionally, as of the January 1 of the year following the issuance of the certificate of occupancy for the Hospital, in order to qualify Southlake Regional Medical Center - 380 Agreement - Amendment Three Draft 2011 -10 -24 - Page 2 of 5 for Program Payments under this Agreement, the Hospital and parking garage shall satisfy at least one of the following conditions: (1) combined Construction Costs and Taxable Value of the Personal Property within the Hospital of not less than Forty -Six Million Five Hundred Thousand Dollars ($46,500,000); or (2) combined Taxable Value of the real property improvements and Personal Property within the Hospital of not less than Forty-Six Million Five Hundred Thousand Dollars ($46,500,000). ii. Medical Office Building (MOB) Commence construction of the first MOB by June 30, 2013 and be substantially completed no later than December 31, 2014, subject to extension as set forth in Subsection 4.A.iii below. The MOB shall have a minimum of 60,000 gross square feet and have a minimum construction value of Seven Million Five Hundred Thousand Dollars ($7,500,000). Additionally, as of the January 1 of the year following the issuance of the certificate of occupancy for the MOB, in order to qualify for Program Payments under this Agreement, the MOB shall satisfy at least one of the following conditions: (1) combined Construction Costs and Taxable Value of the Personal Property within the MOB of not less than Eight Million Five Hundred Thousand Dollars ($8,500,000); or (2) combined Taxable Value of the real property improvements and Personal Property within the MOB of not less than Eight Million Five Hundred Thousand Dollars ($8,500,000). iii. Extensions Southlake Medical shall have additional time to complete the Hospital, the parking garage and the first MOB (1) if in the sole opinion of the City, Southlake Medical has made substantial progress towards the completion of the Hospital, parking garage and MOB, as the case may be, or (2) in the event of Force Majeure." iv. Southlake Medical agrees and covenants that it will diligently and faithfully in a good and workmanlike manner pursue (or cause to be pursued) the completion of the Eligible Improvements as a good and valuable consideration of this Agreement. Southlake Medical further covenants and agrees that all construction of the Medical Campus will be in accordance with all applicable state and local laws and regulations or valid waiver thereof. 5. All references to Section 4.A.i in the Agreement shall now reference Section 4.A. 6. Section 4.1 is hereby amended to read as follows: "The Medical Campus shall be entitled `Forest Park Medical Center at Southlake' or such other similar name, but must include ` Southlake' in the title." Southlake Regional Medical Center - 380 Agreement - Amendment Three Draft 2011 -10 -24 - Page 3 of 5 7. Section 5B.ii shall be deleted in its entirety. All parties agree that the City's obligations as it relates to reconstruction of Highland Street have been completed. S. Section 5B.iii is hereby amended to read as follows: " S.H. 114 Water Line The City agrees to reimburse Southlake Medical for all costs, exclusive of interest costs, related to designing and constructing a minimum twelve inch (12 ") water line within the Property for approximately 1130 linear feet along the south side of S.H. 114 (the "S.H. 114 Water Line "). The S.H. 114 Water Line will be constructed by Southlake Medical concurrent with the development of the Project. This reimbursement shall include 1) Water impact fee credits for fees due with Phase I construction of the Medical Campus as described in Section 4.A, and 2) Two payments, each being fifty percent (50 %) of the total reimbursement amount described above less the credits, the first payment to be in the first City Fiscal Year after the issuance of the first Certificate of Occupancy, and the second payment to be in the second City Fiscal Year after the issuance of the first Certificate of Occupancy." 9. Section 5B.v is hereby amended to read as follows: "Off -Site Sanitary Sewer Line The City agrees to reimburse Southlake Medical for all costs, exclusive of interest costs, and not to exceed eighty thousand dollars ($80,000), related to designing and constructing the twelve inch (12 ") sanitary sewer line from the northeast corner of the Property easterly along S.H. 114 for approximately 730 linear feet to the existing manhole on the existing 12" sewer line ( "Off -site Sewer Line "). Southlake Medical shall provide the City all documentation and exhibits necessary to acquire adequate off -site easements and /or right -of -way for this line. The City will acquire all easements and right -of- way necessary to construct the line ( "Off -site Sewer Easement ") within twelve (12) months after receipt of adequate easement documents. This reimbursement shall include 1) Wastewater impact fee credits for fees due with Phase I construction of the Medical Campus as described in Section 4.A, and 2) Two payments, each being fifty percent (50 %) of the total reimbursement amount described above less the credits, the first payment to be in the first City Fiscal Year after the issuance of the first Certificate of Occupancy, and the second payment to be in the second City Fiscal Year after the issuance of the first Certificate of Occupancy." 10. Section 6 shall be amended by deleting "Highland Turn Lane, the two 8 inch stubs to the Highland Water Line," from the second paragraph in that section. 11. This Amendment Three may be executed in multiple original counterparts. Each counterpart shall be deemed an original, and when the counterparts are taken together, they shall be deemed to be one in the same instrument. Signed facsimiles of this Amendment Three shall be effective as originals. Southlake Regional Medical Center - 380 Agreement - Amendment Three Draft 2011 -10 -24 - Page 4 of 5 12. Except as modified hereby, the Agreement remains unchanged and in full force and effect, and by their execution hereof, the City and Southlake Medical ratify and confirm all of the terms and provisions thereof. IN WITNESS WHEREOF, the City and Southlake Medical have executed this Amendment Three as of the day of , 2011. CITY THE CITY OF SOUTHLAKE IM John Terrell, Mayor SOUTHLAKE MEDICAL SOUTHLAKE LAND HOLDINGS, L.P. By: Southlake Land Holdings GP, L.L.C. a Texas limited liability company Jim Williams, Jr., President Southlake Regional Medical Center - 380 Agreement - Amendment Three Draft 2011 -10 -24 - Page 5 of 5