Item 4ICITY OF
SOUTH LAKE
MEMORANDUM
April 29, 2014
To: Shana Yelverton, City Manager
From: Alison Ortowski, Assistant City Manager / Interim Director of
Economic Development & Tourism
Subject: Approve Resolution No. 14-016, 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 Hines Southlake Land Limited
Partnership, a Texas limited partnership, for such purposes; and
providing an effective date.
Action
Requested: Approve Resolution 14-016 as noted above.
Background
Information: In October 2007, Hines Southlake Land Limited Partnership
("Hines") acquired approximately 285 acres along the north
side of S.H. 114 between White Chapel and Carroll Avenue
for the Carillon mixed -use development. They began their
entitlement applications and processing in mid-2008 and
received City Council approval in November 2008. On
August 17, 2010, the City of Southlake entered into a
Chapter 380 Incentive agreement ("Agreement") with Hines
via adoption of Resolution 10-014. This Agreement outlined
terms for incentives related to the Carillon development and
focused on the following items:
• White Chapel Blvd
• Kirkwood Blvd
• Public Parks
• Retail Parking Garages
• Public Art
The Agreement also included the following primary aspects:
• Performance based: In order for Hines to receive any
incentive grants, the improvements must be constructed
and generating revenues for the City, a portion of which
we then return to Hines.
• Includes the use of General Fund revenues generated by
the development as follows:
Resolution 14-016
Page 2 of 11
o Ad Valorem taxes from real and personal property
from the commercial properties only. There is a
cap such that incentives granted shall never
exceed 50% of the revenues received.
o Sales taxes from the 1 % that goes to General
fund. There is a cap such that incentives granted
shall never exceed 50% of the revenues received.
The .5% that goes to SPDC and the .5% that goes
to CCPD are untouched as a revenue source and
all revenues received go to the designated Special
Revenue Fund.
• All incentives are capped not to exceed 10 years in
duration.
• Hines committed to constructing White Chapel Blvd. in a
full 4-lane section from S.H. 114 to the northern line of
their property and is obligated for 50% of the cost of the
east two lanes and the City is obligated for the other 50%
of the east two lanes as well as 100% of the west two
lanes and north -bound left turn lanes. Hines covers
100% of all turn lanes dedicated to their project.
• Roadway Impact Fees generated by the development are
utilized as a grant towards a portion of the cost of
constructing Kirkwood Boulevard.
• The development includes Hines' dedication of over 50
acres of public parks to the City; however, Hines retained
the obligation to maintain these parks in perpetuity. The
Agreement specifies that the City would grant an
incentive equal to the lesser of 50% of the cost of the
constructed improvements or caps as identified in the
agreement.
• The City would provide an incentive grant not to exceed
40% of the retail parking garages constructed on the
property.
• Public Art: The Agreement specifies that 15% of the
Hotel Occupancy Taxes (HOT) generated annually by a
hotel within the development would be granted to Hines
in an amount not to exceed 50% of the costs of the public
art installed.
Resolution 14-016
Page 3 of 11
Item
Commence
Construction
Date
Substantial
Completion
Date
Parking
Garage
On March 13, 2014, the City of Southlake received a letter
from Hines requesting updates to the Agreement as shown
below:
1. Extend the date to commence construction of Eligible Improvements to June
30, 2016, and the date to reach Substantial Completion of Phase 1
improvements to June 30, 2018.
2. Modify the language requiring (2) multi -level parking structures in the retail
area to allow one or more multi -level parking structures in the retail or office
area. (In addition to the option of building 2 small parking structures, the
development would have the flexibility to include one large parking structure in
either the retail area or the office area).
3. Now that Hines has completed the construction of 4 lanes of Kirkwood
Boulevard through Carillon, Hines would like to be able to start collecting the
reimbursement of the Roadway impact fees collected for the development as
discussed in section G of the 380 Agreement.
When compared to the list of included provisions, the
requested modifications are minimal. The table below
outlines the current provisions and proposed amendments.
Current Provision
12/31 /2011
`f�aK1(iVX1]1191
Minimum of 2 retail parking garages
Reimbursement to Hines of any
Roadway Roadway Impact Fees paid by others
Impact Fees (reimbursement triggered by
construction of Eligible
Improvements*)
Amendment
6/30/2016
CyK11IN11114
Modify language to
allow one or more
garages in the retail or
office
Modify language to
allow reimbursement
of fees collected to
date ($299,085) as
well as to allow future
reimbursement
annually
Resolution 14-016
Page 4 of 11
Financial
Considerations:
Strategic Link:
Citizen Input/
Board Review:
Legal Review:
Alternatives:
Supporting
Documents:
When compared to the financial commitments of the original
agreement, these modifications require no additional financial
commitments by the City.
C4: Attract and keep top -tier businesses to drive a dynamic and
sustainable economic environment.
Not applicable.
The City Attorney's office has been involved in the preparation of
these documents.
1. Approve the Resolution as submitted
2. Approve the Resolution with amendments
3. Take no action on the Resolution.
Resolution 14-016 with accompanying agreement
Staff
Recommendation: Approve Resolution 14-016 as submitted.
RESOLUTION NO. 14-016
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
HINES SOUTHLAKE LAND LIMITED PARTNERSHIP, A TEXAS LIMITED
PARTNERSHIP, 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 August 17, 2010 the City Council approved a Chapter 380 Agreement (the
"Agreement") by and between the City of Southlake and Hines Southlake Land Limited
Partnership, a Texas Limited Partnership ("Hines") 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 One by and between the City of Southlake and Hines, a copy of which is attached
hereto as Exhibit "A" and incorporated herein by reference (hereinafter called "Amendment
One"); and
WHEREAS, upon full review and consideration of Amendment One and all matters
attendant and related thereto, the City Council is of the opinion that Amendment One 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 Amendment One 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 Hines,
and take other specified actions, in accordance with the terms outlined in the Agreement and
Amendment One.
SECTION 3.
The terms and conditions of Amendment One, 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 Amendment One and all other documents in
connection therewith on behalf of the City substantially according to the terms and conditions
set forth in Amendment One.
SECTION S.
This Resolution shall become effective from and after its passage.
PASSED AND APPROVED this the day of _ , 2014
John Terrell, Mayor
ATTEST:
Alicia Richardson, TRMC
City Secretary
EXHIBIT A
Chapter 380 Agreement -- Amendment One
Carillon
Chapter 380 Agreement — Amendment One
THIS AMENDMENT ONE TO ECONOMIC DEVELOPMENT AGREEMENT ("Amendment
One") is executed between the City of Southlake, Texas (the "City") and Hines Southlake Land
Limited Partnership, a Texas limited partnership ("Hines"). City and Hines are sometimes
hereinafter referred to collectively as the "parties" or individually as a "party".
Recitals
WHEREAS, on August 17, 2010, the City adopted Resolution No. 10-014 (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, Hines and the City wish to amend the Agreement; and
WHEREAS, the City Council has been presented with this proposed Amendment One;
and
WHEREAS, the City Council of the City of Southlake finds and determines that this
Amendment One will effectuate the purposes set forth in the Program and Hines' 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 One shall
have the same meaning as given to such terms in the Agreement.
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 One
Section
4.A.ii
Construction
Commencement
December 31, 2011
June 30, 2016
4.A.iii
Substantial Completion
December 31, 2013
June 30, 2018
Carillon - 380 Agreement - Amendment One - 2014-05-06 - Page 1 of 11
3. Section 2 of the Agreement is amended by deleting the definition of "Retail
Parking Garages" and by adding a new definition for "Parking Garages" to read as follows:
"Parking Garages: Shall mean multi -level parking structures constructed within
the Property in accordance with the Concept Plan."
4. Section 4.E of the Agreement is amended in its entirety to read as follows:
"E. Parking Garages: Hines agrees to construct one or more Parking Garages
in proximity of the retail or office uses within the Property. These Parking
Garages may or may not be included in Commercial Phase I.
Ownership and Maintenance: Hines or their successors shall
continue to own and maintain the Parking Garages. The City shall at
no time own or maintain any of the Parking Garages."
5. Section 5.0 of the Agreement is amended in its entirety to read as follows:
"C. Parking Garages: The City agrees that Hines shall be eligible for the
following economic development incentive after Hines constructs one or
more Parking Garages as noted in Section 4.E herein.
Cap One: The amount of this incentive shall be capped not to
exceed forty percent (40%) of the actual Building Construction Cost
of the Parking Garages.
ii. Cap Two: This incentive shall not exceed five million, four -hundred
and eighty thousand dollars ($5,480,000).
iii. Program Costs: The lesser of Cap One or Cap Two noted for this
incentive shall be included in the Program Costs summarized in
Section 5.J herein."
6. Section 5.G of the Agreement is amended in its entirety to read as follows:
"G. Kirkwood Blvd.: The City shall grant Hines the following economic
development incentives for constructing the Kirkwood Blvd. roadway
improvements noted in Section 4.G.
Roadway Impact Fees Paid to Date: The City shall collect any
Roadway Impact Fees paid by Hines or other parties for
construction within the Property as of May 1, 2014, and make a
one-time payment to Hines of the entirety of these fees no later
than August 1, 2014.
Carillon - 380 Agreement - Amendment One - 2014-05-06 - Page 2 of 11
ii. Future Roadway Impact Fees: The City shall collect any Roadway
Impact Fees paid after May 1, 2014 by Hines or other parties for
construction within the Property, and in the first quarter of each
calendar year shall pay to Hines one hundred percent (100%) of
Roadway Impact Fees paid in the prior calendar year.
iii. Cap One: This incentive shall not exceed the lesser of the actual
Roadway Construction Costs for the Kirkwood Blvd. roadway
improvements or actual Roadway Impact Fees collected by the City
from development within the Property.
iv. Cap Two: Grant incentive payments under this Section 5.G shall
only apply to Roadway Impact Fees paid and received by the City
on or before December 31, 2023."
7. Section S.J.i of the Agreement is amended by replacing the term "Retail Parking
Garages" with the term "Parking Garages."
8. Section S.K.i of the Agreement is amended in its entirety to read as follows:
"i. Payment Schedule: Beginning the first calendar year after the
issuance of a Certificate of Occupancy, the Program Payments shall
be paid once per year within ninety (90) days after all ad valorem
and sales taxes have been paid and received by the City.
a. Timing Example Only:
• November 2015: C.O. issued
• Nov — Dec 2015: Businesses operate
• January 31, 2016: 2015 taxes due to Tarrant County
• Feb 2016: AV taxes received by City
• Feb 2016: All 2015 sales taxes received by City
• April 2016: Program Payment made"
9. Exhibit C-2, Section 6 of the Agreement is amended by replacing the term "Retail
Parking Garages" with the term "Parking Garages."
10. This Amendment One 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 One
shall be effective as originals.
Carillon - 380 Agreement - Amendment One - 2014-05-06 - Page 3 of 11
11. Except as amended hereby, the Agreement remains unchanged and in full force
and effect, and by their execution hereof, the City and Hines ratify and confirm all of the terms
and provisions thereof.
IN WITNESS WHEREOF, the City and Hines have executed this Amendment One as of the
day of 12014.
ATTEST:
CITY:
THE CITY OF SOUTHLAKE
LIN
John Terrell, Mayor
HINES:
HINES SOUTHLAKE LAND LIMITED PARTNERSHIP,
a Texas limited partnership
By: Hines Southlake Land GP LLC,
a Delaware limited partnership,
its General Partner
By: Hines Interests Limited Partnership,
a Delaware limited partnership,
its sole Member
By: Hines Holding, Inc.,
a Texas corporation,
its General Partner
By:
Name: Mark Cover
Title: Senior Managing Director /
CEO — Southwest Region
APPROVED AS TO FORM:
Alicia Richardson, TRMC City Attorney
City Secretary
Carillon - 380 Agreement - Amendment One - 2014-05-06 - Page 4 of 11