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HomeMy WebLinkAboutResolution - 4372 - Lease Agreement - Lubbock Downs Inc - Horse Racing Facility - 01_27_1994Resolution No. 4372 January 27, 1994 Item #30 RESOLUTION RESOLUTION CONCERNING INTENT TO EXECUTE AND DELIVER A LIMxrED OBLIGATION LEASE AGREEMENT, SUBJECT TO ANNUAL APPRO- PRIATION OF CERTAIN FACILITIES TO BE USED IN CONNECTION WITH A CLASS lI TRACK BY LUBBOCK DOWNS, INC. WHEREAS, the City of Lubbock, Texas (the "City") is empowered by Tex. Rev. Civ. Stat. Ann. art. 835s (the "Act") to acquire, by any lawful means other than eminent domain, land and to construct or otherwise acquire a building or other facility for the purpose of leasing the land, building, or other facility to a political subdivision or agency of the state for public use or to an individual, private corporation, or other private entity for use in manufacturing or another commercial activity; WHEREAS, Lubbock Downs, Inc. (the "Corporation") has requested that the City enter into a limited obligation, subject to annual appropriation, lease agreement (the "Lease") of the project described in Exhibit A attached hereto (the "Project") and further that the City adopt this Resolution with respect to its intent to execute and deliver the Lease subject to the terms and conditions set forth in this Resolution; WHEREAS, the City understands the governing body of the City of Slaton, Texas, proposes to adopt a resolution substantially similar to this resolution with respect to the Project, and the City declares its intent to work in cooperation with the City of Slaton, Texas, concerning the Project; and WHEREAS, the City finds, intends, and declares that this Resolution shall constitute its official action, subject to the terms hereof, evidencing its intention to execute and deliver the Lease pursuant to the Act. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK, TEXAS, THAT: SECTION 1. Subject to the terms hereof, the City declares that it will: (a) Execute and deliver the Lease. (b) Cooperate with the Corporation with respect to the execution and delivery of the Lease, and, if arrangements therefor satisfactory to the Corporation and the City can be made, the City will take such action, authorize the execution of such documents, and will take such further action as may be necessary or advisable, in the sole discretion of the City, for the authorization, execution, and delivery of any contracts or agreements deemed necessary or desirable by the Corporation or the City in connection with the execution and delivery of the Lease (collectively, the "Contracts"), providing among other things for payment by the City of lease payments; payment by the Corporation of fees and charges of the City; acquisition, construction, and installation of the Project; and use, operation, and maintenance of the Project (and the execution of any appropriate and necessary guaranty agreements for the benefit of the City), all as shall be authorized, required, or permitted by law and as shall be mutually satisfactory to the City and the Corporation. (c) Take or cause to be taken such other actions as may be required, in the sole discretion of the City, to implement the aforesaid undertakings or as it may deem appropriate in pursuance thereof. SECTION 2. It is understood by the City, and the Corporation has represented to the City, that: (a) Prior to or contemporaneously with the execution and delivery of the Lease, and Corporation will enter into the Contracts with the City under the terms of which the Corporation will unconditionally obligate itself to (1) provide for a sub -lease of the Project by the Corporation from the City pursuant to which the City (or to a Trustee, as the case may be) receives payments equal to or greater than the lease payments of the City under and pursuant to the Lease, as and when the same become due and payable; (2) convey to the City by general warranty deed, as a gift, the land on which the Project is to be located; and (3) provide for a ground lease pursuant to which the City receives payments from the Corporation for the Corporation's use of the land and the City receives the reversionary interest in the land and the Project upon termination of the ground lease. (b) The Corporation will (1) pay all Project costs and (2) at all times, indemnify and hold harmless the City against all losses, costs, damages, expenses, and liabilities of whatsoever nature (including but not limited to attorneys' fees, litigation and court costs, amounts paid in settlement, and amounts paid to discharge judgments) directly or indirectly resulting from, arising out of or related to the execution and delivery of the Lease, or the design, construction, installation, operation, use, occupancy, maintenance, or ownership of the Project. SECTION 3. It is understood by the City that all declarations of the City with respect to the Project and the Lease are subject to the condition that the Lease shall have been executed and delivered no later than six months from the date of this Resolution, or such other later date as shall be satisfactory to the City and to the further conditions as follows: (a) Prior to the execution and delivery of the Lease, the City shall have received a feasibility report with respect to the Project, prepared by an independent third party satisfactory to the City, at the expense of the Corporation, which demonstrates the financial feasibility of the Project for the term of the Lease; 2 (b) Prior to the execution and delivery of the Lease, the City shall have received pro forma financial statements with respect to the Corporation prepared in conjunction with, or based upon the assumptions contained in, the feasibility report referred to in Section 3(a) above; (c) Prior to the execution and delivery of the Lease, the Corporation shall have demonstrated to the City's satisfaction, that the Corporation has access to sufficient amounts of capital to implement the Project as described in the feasibility report referred to in Section 3(a) above; (d) The Lease shall contain no provision creating any obligation of the City to make any payment other than payments for which provision is made by annual appropriation; (e) The Lease shall contain no provision creating any obligation of the City to make any payment other than from amounts received from the Corporation pursuant to the sub -lease of the Project by the Corporation from the City; (f) The Lease shall provide that no amounts paid by the City pursuant to the Lease are to be characterized as interest paid by or on behalf of the City, nor are any such amounts to be pledged or otherwise used to secure any obligation of any person unless the person or entity to whom or which such obligation is owed has delivered to the City, prior to incurring such obligation, evidence satisfactory to the City, that such person or entity has read and understood the Lease and the limited and conditional nature of the City's agreement to make payments pursuant to the Lease; (g) The Lease shall provide that no securities shall be offered in connection with the Project using the corporate name of the City as the obligor of such securities or identifying such securities in any manner as obligations of the City; (h) The Lease shall contain the agreement of the Corporation not to claim any exemption from taxation by any taxing jurisdiction as a consequence of the City's connection with the Lease or the Project; and (i) Prior to acceptance of the general warranty deed for the land and the execution and delivery of the Lease, the City shall have received a Phase II environmental audit, prepared by an independent third party acceptable to the City, relating to the land which demonstrates that the City will incur no obligation by virtue of ownership of the land. SECTION 4. The City declares that this Resolution represents a conditional statement of policy based on preliminary facts presented to the City Council in the public meeting at which this Resolution is adopted. The City Council expressly reserves the unconditional right to alter or revise its policy concerning the Project or Lease if additional facts or the failure to satisfy any of the conditions set forth in this Resolution so warrant. The adoption of this Resolution by the City Council is not intended to create, and does not create, any obligation to any person other than the Corporation and to the Corporation only to the extent and subject to all conditions set forth herein. This Resolution does not create any kind of partnership, joint venture, contractual relationship, fiduciary relationship, or obligation of the City to expend funds. SECTION 5. This Resolution shall be effective from and after its date of adoption as shown below. PASSED AND APPROVED ATTEST: Betty M. Johnson, City Secretary APPROVED AS TO CONTENT: Robert Massengale, As stant City Manager of Financial Services APPROVED AS TO FORM: C. Ross, Jr., City Attorney JCR:da/ccdocs/LBKDOWNS.res January 25, 1994 4 EXHIBIT A LUBBOCK DOWNS PROJECT The Lubbock Downs project involves a new Class 2 pari-mutuel horse racing facility, licensed by the State of Texas. It will be the only race track, licensed by the State, within 300 miles of the Lubbock County location. Lubbock Downs intends to seek a minimum of 102 days of live racing, beginning in mid -March each year and continuing through the month of October. Live race meets will be held each Friday, Saturday, Sunday and major holiday during this period. Lubbock Downs also intends to seek a minimum of 50 days of simulcast racing from major tracks when live racing is not in progress The facility, which will be built pursuant to a publiclprtyate p=Mershtp, will be located in Lubbock County on a site adjacent to the City of Slaton, Texas. Slaton will annex the property so that city services will be available to the track. Construction plans include a grandstand to seat approximately 4,000 attendees. It will also include a second level Club House and restaurant which will accommodate approximately 700. The stable area will have concrete stalls for 700 horses as wIl as a track kitchen, treatment facility and racing off ces. A pre -holding area, jockey quarters, test barn and saddling paddock will also be built. The track, itself will be a 7/8 mile oval. The Lubbock Downs race meet will feature mixed racing for thoroughbreds, quarter horses, appaloosas and paints. The initial annual operating budget for Lubbock Downs includes compensation of approximately $2 million for 300 employees (including full-time and part -timed In addition, the "back side" trainers will employ at least 300 more as jockeys, exercise hands and grooms. Additional facilities will be maintained at the existing Lubbock Downs site as 250-300 new barns will be built and the facility will be used as a training site for the new track Construction is scheduled to begin in the Spring of 1994 with opening planned for late Spring of 1995.