HomeMy WebLinkAboutResolution - 2006-R0092 - Master Development Agreement - Overton Park Hotel, Garfield Traub Development - 02_24_2006Resolution No. 2006-R0092
February 24, 2006
Item No. 6.11
RESOLUTION
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK:
THAT the Mayor Pro Tern of the City of Lubbock BE and is hereby authorized
and directed to execute for and on behalf of the City of Lubbock a Master Development
Agreement between the City of Lubbock, Overton Park Hotel, L.P., and Garfield Traub
Development, LLC regarding the design and construction of a full service hotel and
conference/civic center to be located in Overton Park. Said Agreement is attached hereto
and incorporated in this Resolution as if fully set forth herein and shall be included in the
minutes of the Council.
Passed by the City Council this24th day of February, 2006.
e"�t
— e �/"' TOM MARTIN, MAYOR PRO TEM
ATTEST:
Rebecca Garza, City Secretary
APPR VED CONTENT:
Rob=opment
n, Ex irector of
De Services
APPROVED AS TO FORM:
Linda L. Chamales, Senior Attorney
Office Practice Section
City Att / Linda: Res -Hotel Master Dev. Agmt
February 14, 2006
02/23/06
MASTER DEVELOPMENT AGREEMENT
among
City of Lubbock, Texas,
Overton Park Hotel, LP
and
Garfield Traub Development LLC
(Lubbock Hotel, Conference/Civic Center, and Parking Facilities)
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TABLE OF CONTENTS
Page
RECITALS......................................................................................................................................I
ARTICLE 1
DEFINITIONS
1.1. Definition of Terms..............................................................................................................3
ARTICLE 2
THE PROJECT
2.1. Project Development............................................................................................................6
2.2. Project Phases......................................................................................................................8
ARTICLE 3
PRE -DEVELOPMENT ACTIVITIES
3.1. Developer Services............................................................................................................10
3.2. Project Financing............................................................................................................... I I
ARTICLE 4
DESIGN DEVELOPMENT ACTIVITIES
4.1. Developer Services............................................................................................................12
4.2. Project Agreements............................................................................................................15
4.3. Design Development Budget.............................................................................................18
4.4. Satisfaction of Design Development Period Requirements...............................................19
ARTICLE 5
CONSTRUCTION ACTIVITIES
5.1. Construction Phase.............................................................................................................19
5.2. General...............................................................................................................................21
5.3. Pre -Opening Activities.......................................................................................................22
5.4. Post Construction Phase.....................................................................................................22
ARTICLE 6
PURCHASING SERVICES
6.1. Purchasing Services...........................................................................................................23
6.2. Payment for FF&E.............................................................................................................24
6.3. General Provision...............................................................................................................25
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(i)
ARTICLE 7
OBLIGATIONS OF THE CITY AND OWNER
7.1.
Approvals...........................................................................................................................26
7.2.
Notice to Proceed....................................................................:..........................................26
7.3.
Infrastructure......................................................................................................................27
7.4.
Zoning................................................................................................................................27
7.5.
Permits...........................................................................................................................27
7.6.
Public Improvements.........................................................................................................27
7.7.
Certification.......................................................................................................................28
7.8.
Reserved.............................................................................................................................28
ARTICLE 8
SCOPE OF DEVELOPER'S RESPONSIBILITIES
8.1. Standard of Care................................................................................................................28
8.2. Contractors, Specialists and Consultants...........................................................................29
8.3. Operation and Maintenance of the Hotel...........................................................................29
8.4. Legal Opinion ............................................................... .....................................................29
ARTICLE 9
PAYMENT OF DEVELOPMENT FEE, TECHNICAL SERVICES FEE
AND EXPENSE REIMBURSEMENT
9.1.
Development Fee...............................................................................................................29
9.2.
Technical Services Fee......................................................................................................29
9.3.
Payment of Fees.................................................................................................................29
9.4.
Fee Base.............................................................................................................................30
9.5.
Cost Savings.......................................................................................................................30
9.6.
Expense Reimbursement.......................................:............................................................30
9.7.
Shared Expenses................................................................................................................30
9.8.
Monthly Draw Requests....................................................................................................31
9.9.
City Contribution Limitation
.............................................................................................31
9.10.
City Payments....................................................................................................................31
ARTICLE 10
INSURANCE
10.1. Types of Coverage.............................................................................................................32
10.2. Policy Requirements..........................................................................................................32
ARTICLE 11
EVENTS OF DEFAULT AND REMEDIES
11.1. Default by Developer or Owner.........................................................................................33
11.2. Default by the City.............................................................................................................34
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11.3.
[Intentionally omitted]
.......................................................................................................35
11.4.
Remedies............................................................................................................................35
11.5.
Accounting.........................................................................................................................35
ARTICLE 12
NO FEDERAL ASSISTANCE
12.1. No Federal Assistance........................................................................................................35
ARTICLE 13
RESERVED
ARTICLE 14
MISCELLANEOUS
14.1. Assignment........................................................................................................................35
14.2. Modification.......................................................................................................................36
14.3. Arbitration..........................................................................................................................36
14.4. Waiver................................................................................................................................36
14.5. Severability........................................................................................................................37
14.6. Exhibits..........................................................................................................................37
14.7. Documents.........................................................................................................................37
14.8. Other Documentation.........................................................................................................37
14.9. Applicable Law..................................................................................................................37
14.10. Interpretation......................................................................................................................3 7
14.11. "Including".........................................................................................................................37
14.12. Notices...............................................................................................................................37
14.13. [Intentionally Omitted.].....................................................................................................39
14.14. Entire Agreement...............................................................................................................39
14.15. Further Assurances.............................................................................................................39
14.16. Counterparts.......................................................................................................................39
Exhibit A — Legal Description of Property
Exhibit B — Reserve Percentages
Exhibit C — Direct City Participation and TIF Funding
Exhibit D — Developer Participation
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MASTER DEVELOPMENT AGREEMENT
THIS MASTER DEVELOPMENT AGREEMENT (the "Agreement"), is made as of this
day of , 2006 (the "Effective Date"), among the City of Lubbock,
Texas, a political subdivision of the State of Texas (the "City"), Overton Park Hotel, LP
("Owner"), and Garfield Traub Development, LLC, a Delaware limited liability company
("Developer") (any of them individually, a "Party," or collectively, the "Parties").
RECITALS:
A. Owner is a Texas Limited Partnership whose partners consist of GTHC Overton Park
GP, LP and Developer (or its affiliate).
B. McCanton Woods, Ltd., a Texas Corporation, is the master developer of certain property
located in the City of Lubbock, Texas, generally known as "Overton Park," and as such is
the current owner of that certain real property known as Tract 7 and more particularly
described in Exhibit A attached hereto and made part hereof (the "Property").
C. Owner has expressed the intent to purchase or otherwise acquire and develop the
Property situated within the North Overton Tax Increment Financing Reinvestment Zone
(the "TIF District") and in conjunction with Developer intends to develop the Property as
a hotel, conference/civic center and related parking (herein further defined as the
"Project") as part of the retail, office, entertainment, conference/civic center and hotel
portion of Overton Park.
D. The City, after due and careful consideration, has concluded that the redevelopment of
Tract 7 as a portion of the TIF District as provided herein and in the Project and Finance
Plan will further the growth of the City, facilitate the redevelopment of the entire TIF
District, improve the environment of the City, increase the assessed valuation of the real
estate situated within the City, foster increased economic activity within the City,
increase employment opportunities within the City, upgrade public infrastructure within
the TIF District, and otherwise be in the best interest of the City by furthering the health,
safety, and welfare of its residents and taxpayers, and that entering into this Agreement is
necessary and convenient to implement the Project and Finance Plan and achieve their
purposes.
E. The City is desirous of having Developer undertake the development of the Project in
order to serve the needs of the City and in order to produce increased tax revenues for the
various taxing units authorized to levy taxes on real property within the TIF District and
the City and in order to stimulate and induce the redevelopment of the TIF District, the
City had developed a plan to participate by applying a portion of the revenue in the Tax
Increment Fund toward the Project, all in accordance with the terms and provisions of the
Tax Increment Financing Act, Chapter 311, Texas Tax Code, as amended, with the
guidelines set up by the City to be followed in accordance with the terms of this
Agreement.
F. The City is desirous of having Developer undertake the Project in order to promote
tourism and the convention and hotel industry. The Project will generate a measurable
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amount of Municipal Hotel Occupancy Taxes, a portion of which may be committed as
debt service for construction of the conference/civic center and parking lot over a twenty-
year period or for other Project costs or purposes.
G. The City and Developer entered into a Memorandum of Understanding, dated
September 29, 2005 (the "MOU") and Preliminary Master Development Agreement
dated January 26, 2006, indicating the intent of the parties thereto to develop the Project.
The City, Developer and Owner, are entering into this Agreement as contemplated in the
MOU. This Agreement supercedes the MOU and the Preliminary Master Development
Agreement.
H. Preliminary designs indicate that the hotel and the conference/civic center will require
coordinated design, development and construction.
I. The Parties intend that the development of the Project will proceed as follows: (i) Owner
will acquire all of the Property referred to herein as the "City Facilities Land" and the
"Hotel Land," (ii) the owner will lease to the City the portion of the property referred to
herein as "City Facilities Land".(ii) the Owner will construct a full service hotel (the
"Hotel") on the Hotel Land with a minimum of 274 rooms, including facilities and
improvements, with an expected stabilized value for the Project of more than $35 million,
(iii) the City will construct a conference/civic center containing approximately 30,000
square feet of meeting and support space including a ballroom of approximately 12,000
square feet (the "Conference/Civic Center") and a parking lot with approximately 300
parking spaces (the "Parking Lot," and together with the Conference/Civic Center, the
"City Facilities") on the City Facilities Land, and (iv) the City will lease the City
Facilities to the Owner to be operated as a public facility.
J. Developer is willing to act as the developer in the development, construction, furnishing
and equipping of the Hotel, and to act as development manager to the City in the
development, construction, furnishing and equipping of the City Facilities.
K. The City intends to finance the City Facilities through the issuance of municipal bonds or
obligations (the "City Contribution") to provide for the development, construction,
furnishing and equipping of the City Facilities.
L. Developer intends to raise private funds for Owner (the "Private Financing
Contribution"), which together with certain equity contributions, will be sufficient for the
purpose of acquiring, developing, constructing, furnishing and equipping the Hotel and to
pay that portion of the cost of developing the Project that is not funded by the City, all as
described herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants herein
contained, and for other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
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ARTICLE 1
DEFINITIONS
1.1. Definition of Terms. When used in this Agreement with an initial capital letter
or letters, each of the following terms shall have the meaning given it below.
"Agreement" means this Master Development Agreement among the City, the Developer
and the Owner.
"City" means the City of Lubbock, Texas, a political subdivision of the State of Texas, or
other corporation created by the City of Lubbock, Texas, to act on behalf of the City of Lubbock
for the purposes of this Agreement.
"City Contribution" is defined in Recital K.
"City Delay" means (i) any delay in completion of construction of the Project resulting
from any act or delay of the City, its employees or agents, other than delays resulting from acts
that the City or its employees or agents are expressly permitted or obligated to perform pursuant
to the City's police power or pursuant to this Agreement, and (ii) any delay in completion of
construction of the Project resulting from the failure by the City to perform timely any of its
obligations under this Agreement.
"City Facilities" is defined in Recital I.
"City Facilities Budget" means the budget for the development of the City Facilities
prepared by the Developer and approved by City and Developer pursuant to Sections 3.1.7 and
3.2.1.
"City Facilities Lease" has the meaning given such term in Section 4.2.3.
"City Specialists and Consultants" means the planning, architectural, engineering,
interior design and other specialists and consultants engaged by the City to act as its
representatives with respect to the Project.
"Closing" means the consummation and closing of the transactions contemplated by the
Property Sale Agreement, the Hotel Loan Agreement, and the City Contribution, all of which are
anticipated to occur approximately simultaneously prior to commencement of the construction
phase of the Project.
"Completed" means, with respect to any portion of the Project, when the Project
Architect certifies in writing to the applicable Party(ies) that the construction of such portion of
the Project is substantially completed in accordance with the Development Plan to permit use
thereof for the purposes for which it is intended, which date may precede the full completion of
all punch list items, landscaping and similar design and development functions.
"Conference/Civic Center" is defined in Recital I.
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"Consulting Fees" means, collectively, the Development Fee and the Technical Services
Fee to be paid to Developer hereunder, as described in ARTICLE 9.
"Contractors" means, collectively, the General Contractor and its subcontractors for
construction of the Project.
"Design Development Period" means the period of time commencing upon the expiration
of the Pre -Development Feasibility Period, provided this Agreement is not terminated in
accordance with Section 3.2 prior thereto, and ending upon the date which is six (6) months
thereafter, as such date may be extended by mutual agreement of the Parties, during which the
Parties shall diligently and in good faith attempt to accomplish and mutually agree upon all of
the matters enumerated in ARTICLE 4 hereof.
"Design Development Budget" has the meaning set forth in Section 4.3 hereof.
"Design Professionals" means the planning, architectural, engineering, interior design
and other specialists and consultants engaged by Developer for the design and construction of the
Project, including the Project Architect.
"Developer" means Garfield Traub Development LLC, a Delaware limited liability
company, or its affiliate.
"Development Budget" means, collectively, the Hotel Budget, and the City Facilities
Budget, exclusive of the underlying value of the land.
"Development Fee" means the fee to be paid by the City to Developer for the work and
services to be performed by Developer under this Agreement in the development and
construction of the City Facilities (but excluding the Technical Services Fee), as described in
Section 9.1.
"Development Plan" means the detailed plan concerning the Project and all items which
will be required to cause Final Completion of the Project, which shall include, without limitation,
the final drawings and specifications, development schedule, and Development Budget
established during the Design Development Period, as approved by the City, as the same shall
have been amended with the approval of the City during the construction phase of the Project.
"Effective Date" is defined in the Preamble.
"Event of Default" or "Events of Default" is defined in ARTICLE 11.
"Fee Base" is defined in Section 9.4.
"FF&E" means those items of furnishings, fixtures, equipment, accessories and materials
for use in the operation of the Project.
"FF&E Budget" means the preliminary cost estimate to be developed for purchasing the
FF&E for the Project, and shall include, without limitation, any taxes and freight charges
incurred in connection with the purchase and delivery of such FF&E, installation costs and
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me
reimbursable expenses relative thereto, which shall be included in the City Facilities Budget, as
applicable.
"FF&E Schedule" is defined in Section 6.1.1.
"FF&E Specifications" is defined in Section 6.1.2.
"Final Completion" means, with respect to any portion of the Project, completion of all
punch list items, delivery and installation of all remaining FF&E and obtaining all final permits
which remain undone or not complete following Completion thereof.
"First Class Manner" means the standard for maintenance of any part of the Project that
is consistent with the broad or franchise standards required by the Hotel Franchisor, in the
Franchise Agreement as of the date when the Franchise Agreement is initially executed by
Developer (or Operator) and the Hotel Franchisor. If there is no Hotel Franchisor, the Owner and
Developer will submit standards for maintenance for approval by the City.
"Force Majeure" means war, riots, civil commotion, strikes, labor disputes, embargoes,
natural disasters, Acts of God or any other cause or contingency similarly beyond the control of
the Parties.
"Franchise Agreement" means the franchise agreement for the Hotel to be executed by
and between Developer or Operator and Hotel Franchisor, which shall be subject to the approval
of the City, such approval not to be unreasonably withheld.
"General Contractor" is defined in Section 4.1.1(i).
"Hotel" is defined in Recital I, and further described in Section 2.1.1(b).
"Hotel and City Facilities Management Agreement" is defined in Section 4.2.7.
"Hotel Budget" means a budget for development of the Hotel, prepared by Developer and
submitted for informational purposes to City and Developer pursuant to Sections 3.1.7 and 3.2.1
or as modified pursuant to this Agreement.
"Hotel Franchisor" means such hotel franchise and franchisor as the City and Developer
may approve, if one is selected, otherwise this term shall mean the Operator.
"Hotel Loan Agreement" has the meaning set forth in Section 4.2.10.
"LP&L " means Lubbock Power & Light, the City -owned electric utility.
"Notice to Proceed" means written notice from the City to Developer to commence
construction of the City Facilities, as provided in Section 7.2.
"Operator" means 1859 Historic Hotels, Ltd., a Texas Limited Partnership (an affiliate of
Gal -Tex Hotel Corporation), or its affiliate, or such other management entity as the City and
Developer may approve.
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"Owner" means Overton Park Hotel, LP.
"Parking Lot" is defined in Recital I.
"Pre -Development Budget" is defined in Section 3.3.
"Pre -Development Feasibility Period" means the period from the Effective Date until 90
days, as such date may be extended by mutual agreement of the Parties, during which the Parties
shall diligently and in good faith attempt to accomplish and mutually agree upon all of the
matters enumerated in ARTICLE 3 hereof.
"Principals" means Gal -Tex Hotel Corporation, Raymond Garfield, Jr., Eric A. "Tony"
Traub, and Greg Garfield.
"Project" means, collectively, the Hotel, the City Facilities, together with the FF&E to be
installed therein and the landscaping, hardscaping and other amenities to be included in the
Development Plan.
"Project Architect" means DLR Group, or such other architect as the City and Developer
may approve.
"Project and Finance Plan" means the approved North Overton Tax Increment Financing
Reinvestment Zone (TIF) Project and Finance Plan as amended by the North Overton TIF Board
and the City Council of the City.
"Project Standard" means the quality standards for conference hotel facilities owned,
operated and/or franchised by the Hotel Franchisor, such as other similar facilities in the United
States developed by Developer or their affiliates and acceptable to the City.
"Property" means the real property described in Exhibit A.
"Property Sale Agreement" is defined in Section 4.2.1.
"Technical Services Fee" means the fee to be paid by the City to Developer for the
services to be performed by Developer pursuant to ARTICLE 6 in connection with the furnishing
and equipping of the City Facilities, as described in Section 9.2.
ARTICLE 2
THE PROJECT
2.1. Project Development.
2.1.1. Summary of Proposed Development. Subject to the terms and
conditions of this Agreement and of the other instruments and agreements to be entered
into pursuant to this Agreement, the City and Developer shall cause the Project to be
developed and constructed as follows:
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.IM
(a) City Facilities. As provided in Section 3.2, the City shall commit
the City Contribution for development, in the manner provided in this Agreement,
of the following City Facilities:
(i) a conference/civic center containing approximately 30,000
square feet of meeting and support space, including a ballroom of
approximately 12,000 square feet, with appurtenant facilities and
amenities normally associated with a conference/civic center consistent
with the Project Standard; and
(ii) a parking lot with approximately 300 spaces with
appurtenant facilities and amenities normally associated with a parking lot
consistent with the Project Standard.
The City Facilities shall be constructed of a quality comparable to and
compatible with the standards of quality and efficiency found in the Hotel, and
otherwise in accordance with designs, plans and specifications approved by the
City, Hotel Franchisor, and Developer as provided herein, and in accordance with
all applicable zoning and building codes and other laws, and all requirements of
the City not inconsistent with the Franchise Agreement, if any. The
Conference/Civic Center shall contain ballrooms and such other meeting and
banquet rooms as may reasonably be required to serve as the Hotel's primary
meeting space. The City Facilities are public facilities and must be open to the
public as required by state and federal law.
(b) Hotel. As provided in Section 3.2, Developer intends to obtain (in
conjunction with Owner) and expend as a minimum amount the Private Financing
Contribution for development on behalf of Owner in the manner provided in this
Agreement of a full -service Hotel consistent with the Project Standard, having a
minimum of two hundred seventy four (274) rooms to include guestrooms and
suites, appropriate support facilities such as a restaurant(s), a lounge(s) or bar(s),
supporting back -of -the -house areas, food preparation facilities, together with such
other amenities and features characteristic of a full -service hotel, to be operated
pursuant to the Franchise Agreement, if any. The Hotel shall be constructed of a
quality comparable to and compatible with the standards of quality and efficiency
found in the Conference/Civic Center, subject to the approved Development
Budget and otherwise in accordance with designs, plans and specifications
approved by the Hotel Franchisor, and Developer as provided herein, and in
accordance with all applicable zoning and building codes, Overton Park Design
Guidelines and other laws, and all requirements of the City not inconsistent with
the Franchise Agreement, if any.
2.1.2. Coordinated Design Team. Developer will coordinate development of
the City Facilities and will cause its Design Professionals and Contractors to coordinate
their efforts with the City Specialists and Consultants. The City hereby acknowledges
that Developer will have to coordinate approval of construction and design criteria for the
Project with the Hotel Franchisor, and hereby further acknowledges that the Hotel
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Franchisor will have approval rights with respect to many aspects of the construction and
development of the Project, as shall be set forth in the Franchise Agreement, if any. The
Parties also hereby acknowledge that the Property is subject to, and that they will have to
coordinate architectural design approval for the Project with Overton Park Public
Improvements Site Design Guidelines. The City shall retain, at its sole cost and expense
(which will not be included in the City Contribution), subject to the provisions of the
Texas Professional Services Procurement Act, City Specialists and Consultants necessary
to advise the City on the development of the Project. However, nothing shall prevent the
City from retaining the Design Professionals (whose services shall be included in the
Development Budget) retained by Developer to act as the City Specialists and
Consultants and advise the City on the Project.
2.1.3. Appointment of Developer. The City hereby agrees that Developer
will act as development manager for the Project with respect to design, development and
construction of the City Facilities, and to perform the duties and services of Developer set
forth herein, all in accordance with the terms and conditions of this Agreement.
Developer shall be an independent contractor and nothing contained in this Agreement
shall be construed to create a partnership, joint venture, or agency relationship between
Developer and the City. Developer agrees to coordinate all development activities with
the City and the City Specialists and Consultants.
2.1.4. Sole General Contractor Required. Because it is anticipated that the
structures constituting the Project will exist essentially as one building and be connected
internally, at one or more levels, and will share certain facilities, the structural integrity of
the overall Project would be threatened by the possible failure of any of the individual
structures. Accordingly, one entity is needed to coordinate construction and to insure the
successful development of the Project, and therefore a single general contractor is needed
and shall be mutually appointed by the Parties in accordance with the procedures set forth
in Section 4.1.1(i).
2.2. Project Phases. The Parties shall undertake the design, planning, development
and construction of the Project and perform their various obligations as outlined in this
Agreement in accordance with the following schedule of phases:
2.2.1. Pre -Development Feasibility Period. As detailed in ARTICLE 3,
preliminary schematic design, planning and budgeting for the Project has commenced
pursuant to the MOU and shall be continued during the Pre -Development Feasibility
Period. Upon establishment of the preliminary Development Budget, the Parties shall
confirm the feasibility of the Project and seek to obtain commitments for the Private
Financing Contribution and the City Contribution. If the Parties determine that the
Project is feasible and commitments for such financing contributions can be obtained and
thus the Project is not terminated during the Pre -Development Feasibility Period, the
Parties shall continue to the Design Development Period.
2.2.2. Design Development Period. As detailed in ARTICLE 4, if the Parties
determine to proceed with the Project following the Pre -Development Feasibility Period,
detailed design development, planning and budgeting for the Project shall occur during
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5.11
the Design Development Period, with the objective of preparing plans and specifications
for the Project sufficiently complete and detailed so as to obtain guaranteed maximum
price bids from qualified Contractors and establishing a detailed Development Budget
therefrom. During the Design Development Period, the Parties shall also prepare,
negotiate and finalize the form of the various documentation necessary for the funding,
development, construction, completion and ongoing occupancy, use, operation,
maintenance and repair of the Project. Upon completion of and satisfaction of all of the
requirements to be completed during the Design Development Period (if the Project is not
terminated during the Design Development Period as set forth in ARTICLE 4), the
Parties shall proceed to Closing.
2.2.3. Closing. Upon satisfaction of all of the conditions and requirements to
be completed during the Design Development Period, Closing shall occur as follows:
(a) The City shall close upon the City Contribution, Developer and
Owner shall close upon the Private Financing Contribution, and the proceeds of
such financing contributions shall be invested in the Project or made available for
disbursement as development of the Project proceeds in accordance with industry -
standard construction disbursement procedures or otherwise applied toward the
Project as agreed among the parties.
(b) The Property shall be acquired by the Owner.
(c) The City and Owner shall enter into a lease (the "Ground Lease")
pursuant to which the Owner will lease the City Facilities Land to the City.
(d) The parties, as appropriate, shall enter into the various documents
necessary for the funding, development, construction, completion and ongoing
occupancy, use, operation, maintenance and repair of the Project in the forms
therefor agreed upon during the Design Development Period.
2.2.4. Construction Phase. Following Closing, Developer shall complete
final construction plans and specifications for the Project, and shall be directed to
commence construction of the Project in accordance therewith. During construction,
Developer shall act as development manager for the Project on behalf of the Owner and
the City, and shall coordinate and oversee all aspects of the development and construction
of the Project in conjunction with the Design Professionals engaged by Developer and the
City Specialists and Consultants engaged by the City, all in accordance with ARTICLE 5,
and provide services with respect to FF&E for the Project as set forth in ARTICLE 6.
2.2.5. Post Construction. Following completion of construction of the
Project, the City Facilities shall be leased to Owner or its designee(s), pursuant to the
City Facilities Lease, and the Owner will engage Operator to oversee the use, operation,
management, maintenance and repair of the Hotel and City Facilities pursuant and
subject to the City Facilities Management Agreement, and subject to the Franchise
Agreement, if any, for the Hotel entered into by Owner or Operator, the City Facilities
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Lease, and any reciprocal use, access and operating agreements entered into by the
Parties with respect to the various facilities.
2.2.6. Asset Management. Following completion of the Project, Developer
will enter into an Asset Management Agreement with the City to oversee operations of
the City Facilities on behalf of the City.
ARTICLE 3
PRE -DEVELOPMENT ACTIVITIES
3.1. Developer Services. Prior to the Effective Date, Developer has performed
various of the services outlined below with respect to the initial planning and design of the
Project pursuant to the MOU and this Agreement. During the Pre -Development Feasibility
Period Developer shall continue to work with the City and Owner as provided herein to
coordinate pre -development activities and shall provide the following services in order to refine
and finalize the preliminary designs, plans and budgets for the Project:
3.1.1. Recommendation to the City of City Specialists and Consultants for
the City Facilities and Design Professionals for the Project, including the architect of the
City Facilities, which architect shall be subject to the approval of the City;
3.1.2. Establishment of the Project program and design criteria with the City,
the City Specialists and Consultants and the Design Professionals, including, without
limitation, conclusions with respect to the scope, design and nature of the physical
facilities and related amenities that will be included in the Project;
3.1.3. Preparation of preliminary schematic design concepts and drawings
and specifications for the Project in accordance with the approved design criteria;
3.1.4. Preparation of a preliminary site plan for the Project in accordance
with the approved design criteria and schematic design concepts, for review and.
approval by the City and Owner;
3.1.5. Reviewing, commenting on and coordinating changes in such
preliminary site plan, drawings and specifications that are requested by the City or
Owner, as applicable.
3.1.6. Preparation of a preliminary development and construction schedule
(including the design development and construction phases) and projected opening date
for the Project, based upon the approved design criteria and schematic design concepts;
3.1.7. Preparation of the Hotel Budget;
3.1.8. Preparation of the proposed City Facilities Budget and the proposed
Design Development Budget; and
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3.1.9. If applicable, obtaining a letter of intent or other evidence acceptable
to the Parties from the Hotel Franchisor indicating its commitment to enter into a
Franchise Agreement at the Closing, subject to satisfaction of the Hotel Franchisor's
criteria and conditions.
3.2. Project Financing.
3.2.1. Within forty-five (45) days of the Effective Date, unless a later date is
agreed to by the parties, Developer shall submit to the City and Owner, for their approval,
the City Facilities Budget and the Design Development Budget prepared in accordance
with Section 3.1.8. The City and Owner shall review and approve or provide any
comments or changes to such preliminary budgets within thirty (30) days of receipt. If
neither approval nor comments or changes to such preliminary budgets have been
received by Developer from City or Owner within such thirty (30) day period, then such
preliminary budgets shall be deemed approved by City and Owner, unless one or more of
the parties request consent of the parties to an extension- of such 30-day period, which
consent shall not be unreasonably withheld.
3.2.2. Upon receipt by Developer of comments or changes by City or Owner
to the City Facilities Budget and the Design Development Budget, if any, the City,
Owner and Developer shall make a preliminary determination, prior to the expiration of
the Pre -Development Feasibility Period, as to whether they believe the Project is feasible.
If, based on the Development Budget (incorporating the comments and changes of the
City and Owner to the City Facilities Budget and Design Development Budget), the City,
Owner, or Developer determines that the Project is not feasible, then any Party making
such a determination shall notify the other Parties and the obligations to proceed with the
Project pursuant to this Agreement shall terminate. If the Parties determine that the
Project is feasible, then the Parties shall confirm such determination in writing and
attempt to secure the financing contributions outlined in Sections 3.2.3 through 3.2.5
below.
3.2.3. Developer will attempt to secure financing to construct facilities and
improvements, with an expected stabilized value of more than $35 million (including
land) for the development of the Project (to be funded as development progresses in
accordance with the approved Development Budget) through private equity and debt
financing based on the approved Development Budget, projected cash flows for the
Project and a reasonable internal rate of return on the private investment (the "Private
Financing Contribution"). Developer's obligation to commit the Private Financing
Contribution to the Project is further subject to the City providing its City Contribution as
set forth in Section 3.2.4.
3.2.4. Based on the approved Development Budget, the City agrees that it
shall, and is prepared to, provide the City Contribution (to be funded as development
progresses in accordance with the approved Development Budget) in an amount equal to
the City Facilities Budget provided that the City shall never be obligated to contribute
more than $8,400,000 (exclusive of the $1,000,000 for TIF District streetscape, utilities,
etc.) to the Project, including the Development Fee, the Technical Services Fee, and all
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other development costs for the City Facilities. The City's obligation to commit the City
Contribution to the Project is further subject to Developer providing its Private Financing
Contribution, and to the City's ability to obtain and provide the City Contribution on
terms and conditions acceptable to the City. If Developer believes that the City
Contribution is insufficient, Developer shall notify the City and the obligations to
proceed with the development of the Project pursuant to this Agreement shall terminate.
Developer recognizes that the City has only $8,400,000 to invest in all phases of the
Project (exclusive of the $1,000,000 in TIF District streetscape, utilities, etc), now and in
the future, and that the City shall have no further financial obligation to the Project,
except as provided in Section 9.9.
3.2.5. If, prior to the expiration of the Pre -Development Feasibility Period,
(a) Developer is unable to provide written evidence to the City and Owner, in form
reasonably acceptable to the City and Owner, that it has secured the entire amount of the
Private Financing Contribution through firm commitments for private equity and debt
financing on commercially reasonable terms and conditions acceptable to Developer, (b)
the City is unable to provide written evidence to Owner and Developer, in form
reasonably acceptable to Owner and Developer, that it has secured the entire amount of
the City Contribution on terms and conditions acceptable to the City, then Owner, the
City or Developer, as the case may be, shall so notify the other Parties and the obligations
to proceed with the Project pursuant to this Agreement shall terminate. If the Parties are
able to provide such commitments for the financing contributions, then the Parties shall
proceed to Design Development and Closing as set forth ARTICLE 4.
ARTICLE 4
DESIGN DEVELOPMENT ACTIVITIES
4.1. Developer Services. Upon the continuance of this Agreement following the Pre
Development Feasibility Period, Developer shall coordinate with the City and Owner and with
the Design Professionals and the City Specialists and Consultants to obtain a final site plan for
the Project acceptable to the City and Owner, and a "bid package" of drawings and specifications
for the Project acceptable to the City, and Developer. If the engineer or architect is not a full-
time employee of the Developer, the Developer shall select the engineer or architect on the basis
of demonstrated competence and qualifications as provided by Section 2254.004, Government
Code. The method of selecting a contractor for construction must comply with Chapter 252 and
Chapter 271, Texas Local Government Code.
4.1.1. City Facilities. Developer shall provide the following services during
the Design Development Period to the City with respect to the City Facilities:
(a) Providing general descriptions of the categories of the FF&E,
operating supplies, fixed asset supplies and the like anticipated to be required for
the City Facilities for approval by the City, the City Specialists and Consultants
and Owner;
(b) Working with the City, the Design Professionals and the City
Specialists and Consultants to enhance compatibility of the architectural drawings
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for the Conference/Civic Center with other elements such as interior design, front
desk design, kitchen and laundry facilities and the like;
(c) Obtaining cost estimates from the Design Professionals and
Contractors and preparation of revisions to the City Facilities Budget for the
construction phase in light of design development (so long as any such revisions
to the City Facilities Budget do not exceed five percent (5%) thereof, the revised
City Facilities Budget shall still be deemed approved by City and Owner);
(d) Preparation of a development schedule for the City Facilities, in
conjunction with the development schedule for the Hotel;
(e) Preparation of a recommended listing of and qualifications for
proposed general contractors for the Project for approval by the City and Owner
(those potential contractors ultimately approved by the City and Owner being
referred to herein as the "Preapproved GCs"), which approval or disapproval shall
be made within thirty (30) days of receipt by City and Owner of such listing of
and qualifications for proposed general contractors, or all such general contractors
shall be deemed approved;
(f) Timely submitting to the City and Owner, for their approval,
design development drawings and specifications for the City Facilities (which
approval or disapproval shall be made within thirty (30) days of receipt by City
and Owner of such drawings and specifications, unless the City or Owner shall
request an extension, consent to which will not be unreasonably withheld by the
other parties), including landscaping plans, mechanical and electrical drawings,
architectural appearance, interior design schemes and specialized area plans for
the kitchen, communication systems, security systems, and the like, with
sufficient information and detail to obtain guaranteed maximum pricing from the
Preapproved GCs;
(g) Preparing a bid package in compliance with state law regarding
such design development plans and specifications and soliciting bids from the
Preapproved GCs;
(h) Collecting all bids submitted by the Pre -approved GCs responding
to the bid solicitation, preparing and delivering to the City and Owner an
evaluation, explanation and summary of the bids received, copies of the bids, and
recommendations to the City and Owner as to the favored bids with an
explanation detailing Developer's reasons for recommending a particular bid.
The City and Owner hereby acknowledge that the most favored bids
recommended by Developer may not be the lowest bids submitted, but that
Developer's recommendations will be based on a number of factors, including
without limitation, each respective contractor's perceived reputation, experience,
ability to perform and the like, in addition to price and Developer acknowledges
that the bidding process must comply with Chapter 252 and Chapter 271, Texas
Local Government Code;
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(i) Coordinating with and assisting the City and Owner in selecting a
mutually agreeable general contractor for the Project from the Preapproved GCs
(the "General Contractor");
0) Negotiating, reviewing, evaluating and finalizing the guaranteed
maximum price contracts with the General Contractor whose bid is ultimately
selected by the City, Owner and Developer, for approval of the City and Owner, it
being understood that it is anticipated that there shall be separate construction
contracts for the Hotel on the one hand, and for the City Facilities on the other
hand, but that all subcontractors shall (whenever possible) bid on a single,
combined basis for the Hotel and for the City Facilities. Neither the City nor the
Owner may unreasonably withhold approval of the guaranteed maximum price
contract(s) recommended by Developer, so long as the portion of such contract(s)
relating to the City Facilities does not exceed the City Facilities Budget by more
than five percent (5%) thereof, as provided in Section 4.1.1(c), and not to exceed
a total city expenditure of $8.4 million as specified in Section 3.2.4. Developer
agrees to retain the General Contractor pursuant to a guaranteed maximum price
contract for the construction of the Hotel to be entered into upon Closing. The
City agrees to retain the General Contractor pursuant to a guaranteed maximum
price contract entered into under a method provided by Chapter 271, Subchapter
H, Texas Local Government Code, for the construction of the City Facilities to be
entered into upon Closing, and Developer shall administer such contract on the
City's behalf as development manager for the City during the construction phase
of the Contract. The contracts with the General Contractor shall require the
General Contractor provide payment and performance bonds in accordance with
general Texas law applicable to municipalities; and
(k) Subject to Section 7.5, obtaining, on behalf and with the
cooperation and assistance of the City, all building, development and other
permits necessary to commence construction of the Project.
4.1.2. Hotel. Developer shall cause the design and construction of the Hotel
to occur simultaneously with the City Facilities and shall attempt, without guaranteeing,
to complete construction of the Hotel on approximately the same day the City Facilities
are completed. During the Design Development Period and prior to commencement of
construction of the Hotel, Developer shall provide the City and Owner the documents
listed below as well as any other documents reasonably required, and where necessary
shall make the requisite filings of such documents with appropriate officials:
(a) If applicable, a copy of a comfort agreement or letter executed by
Hotel Franchisor whereby Hotel Franchisor agrees to manage or approve
acceptable substitute management to operate the Hotel in the event Owner
defaults under the Hotel Loan Agreement or the Franchise Agreement, provided
that the Hotel Lender is given written notice and an opportunity to cure the
default;
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(b) Two copies each of (i) the plan of development for the Hotel which
Developer will submit to the City in accordance with the City's zoning
regulations, and (ii) the application for the foundation permit for the Hotel;
(c) A certificate of insurance evidencing that all insurance required
hereunder with respect to the Project has been procured;
(d) The Hotel Budget;
(e) Preliminary operating projections for the Hotel and
Conference/Civic Center;
(f) A development schedule for Hotel, in conjunction with the
development schedule for the City Facilities;
(g) An executed copy of the Franchise Agreement, if applicable; and
(h) Such Other documentation, including plans and specifications,
schematic drawings and renderings of the Hotel, as may reasonably be requested
by the City or Owner to ensure the orderly development of the Project.
4.1.3. Budget Adjustments after Design Development Period.
(a) After the receipt of the guaranteed maximum price for the Project
and the Development Budget has been adjusted in accordance with this
Section 4.1.1(c) the City's Contribution shall be adjusted in the same manner
provided in Section 3.2 of this Agreement.
(b) In the event that the costs to develop the Project as determined
during the Design Development Period exceed five percent (5%) of the costs
reflected in the Development Budget, and to the extent that the City, Owner or
Developer determine that the Project is not feasible by reason thereof, then any
such Party may terminate this Agreement by written notice to the others prior to
the expiration of the Design Development Period, and thereupon this Agreement
shall be of no further force or effect, except as expressly set forth herein. In the
event of any such termination, the provisions of Section 4.4 shall control with
respect to the payment of expenses incurred by Developer during the Design
Development Period.
4.2. Project Agreements. During the Design Development Period the City,
Developer (on behalf of Owner to the extent applicable) and Operator (with respect to the Hotel
and Conference/Civic Center Management Agreement described in Subsection 4.2.7 below) shall
diligently and in good faith negotiate mutually acceptable forms of the following agreements to
be entered into at the Closing or upon, opening of the Project:
4.2.1. Property Sale Agreement. An agreement or agreements, as required,
for the sale and purchase of the Property by the Owner.
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4.2.2. Ground Lease. The Owner, or its designee, as "lessor" therein, and the
City, as "lessee" therein, shall enter into a Ground Lease for the City Facilities Land
providing for a term of 40 years with fixed rent equal to $1.00 per year and such
additional terms as shall be agreed to between the City and the Owner.
4.2.3. City Facilities Lease. The City, as "landlord" or "lessor" therein, and
the Owner, or its designee, as "tenant" or "lessee" therein, shall enter into the City
Facilities Lease for the City Facilities providing for:
(a) a term of 40 years, fixed rent equal to $1.00 per year, and incentive
rent beginning in the fourth year and continuing through the twentieth year of
operations equal to the greater of $65,000 plus annual CPI increases, or 15% of all
net annual cash flow (net hotel cash flow less debt service, incentive management
fees, hotel asset management fees, if any, and preferred return on total equity),
and net sale or refinance proceeds arising from time to time from the Project in
excess of the amount necessary to generate a cumulative, annual preferred return
of 10% on the then current owner's private capital (debt and equity) invested in
the Project;
(b) an obligation of Owner to operate and maintain the City Facilities
in a First -Class Manner for the term of the lease. Such obligation shall clearly
state that the City shall have no obligation or responsibility, financial or
otherwise, to operate or maintain the City Facilities during the term of the lease
and that Owner shall have such obligation regardless of any amounts in the
AR&R Fund described below;
(c) the creation of an asset replacement and renewal reserve account
for capital expenditures in connection with the operation and maintenance of the
City Facilities and for repairs and replacements by Owner of all portions of the
City Facilities that are subject to deterioration, including the City Facilities FF&E
and other relevant items in the City Facilities (the "AR&R Fund") to be used
solely to pay for such capital expenditures and repairs and replacements. Owner
shall, or shall cause the Operator to, annually contribute to the AR&R Fund, and
to a similar reserve fund established for the Hotel, from gross revenues received
by Owner or the Operator from the Hotel and the City Facilities (if any), an
aggregate amount equal to the percentage of such gross revenues equal to the
greater of (i) the applicable percentage specified in the Franchise Agreement, if
any, (ii) the applicable percentage specified in the Hotel Loan Agreement then in
effect, or (iii) the applicable reserve percentage for that operating year as
specified in Exhibit B attached hereto. An amount equal to twenty percent (20%)
of aggregate amount of the funds thus contributed from the Project gross revenues
shall be deposited into the AR&R Fund, and the remainder shall be deposited in
the reserve fund for the Hotel. The AR&R Fund shall be segregated and
maintained separately from the Hotel reserve account. The parties acknowledge
that the City shall have no control over the funds in the Hotel reserve account or
the expenditures made with such funds;
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(d) provisions for the joint control of the AR&R Fund that limit the
use of such funds for appropriate expenditures as included in the annual capital
budgets for the City Facilities approved by the City in accordance with the lease
or as required in an emergency, or otherwise with the approval of the City, and
the City's ability to utilize the AR&R Fund for such purposes in the event of a
failure by Owner to perform such capital expenditures or repairs and
replacements;
(e) a clear list of events of default by Owner and specific remedies for
such default including self-help remedies with reimbursement and for the hiring
of a third -party management consultant to arbitrate disputes as to whether the City
Facilities are being operated and maintained in the manner provided in the lease;
(f) a provision providing the City with the right to audit Owner to
determine whether or not the rent payments and AR&R Fund obligations
contemplated under the lease have been properly conducted or honored;
(g) an obligation by Owner to maintain the Hotel Franchise, (if any)
and to maintain and operate the Hotel in a First Class Manner, and cross default
provisions for defaults under the Hotel Loan Agreement and the Franchise
Agreement, if any;
(h) provisions as reasonably required by the Hotel Lender providing
that the Hotel Lender shall be given a concurrent copy of any notice of default by
Owner under the City Facilities Lease, and the right, at its option, to cure any such
default in the place and stead of Owner, and a reasonable time as may be required
by the Hotel Lender to effect such cure and enforce its rights under the Hotel
Loan Agreement and related documents, provided the Franchise Agreement, if
any, or a substitute franchise agreement with an approved Hotel Franchisor
remains in full force and effect during the period of such cure; and
(i) prior to the termination of the City Facilities Lease, and only with
the prior approval of the City (which approval shall not be unreasonably
withheld), the right of the Owner to sell the Hotel and transfer or assign the City
Facilities Lease to the new owner provided that the new owner shall agree to
honor the commitments of the Owner contained in this Agreement.
4.2.4. Reciprocal Access Agreement. One or more Reciprocal Access,
Easement and Use Agreements, in recordable form, between the City, as the owner of the
City Facilities, and Owner, as the owner of the Hotel, providing for the shared use of and
access to the Hotel and City Facilities, and creating mutual reciprocal easements therefor,
which shall be considered covenants running with the land and which shall benefit and
bind title to the Hotel and the City Facilities (the "Reciprocal Access Agreement").
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4.2.5. [Intentionally Omitted].
4.2.6. Hotel Development Agreement. A Hotel Development Agreement
between Owner and Developer pursuant to which Owner shall engage Developer to
perform development services in connection with the development of the Hotel.
4.2.7. Hotel and City Facilities Management Agreement. A Hotel and City
Facilities Management and Operating Agreement (the "Hotel and City Facilities
Management Agreement") between Owner and Operator, which will govern the
exclusive use, operation, management, maintenance and repair of the Hotel and the City
Facilities and which shall be subject to the approval of the City, such approval not to be
unreasonably withheld, and subject to the approval of the Hotel Franchisor pursuant to
the Franchise Agreement, if any.
4.2.8. rIntentionally omitted]
4.2.9. [Intentionally omittedl
4.2.10. Private FinancingContribution. Owner and the lender providing the
construction debt portion of the Private Financing Contribution (the "Hotel Lender") in
accordance with the financial structure for the Project established pursuant to Section 3.2
shall have mutually agreed upon the form of the loan agreement to be entered into at the
Closing (the "Hotel Loan Agreement"); and Owner or Developer shall have obtained a
commitment for the permanent financing for the Hotel from the Hotel Lender or a
successor Hotel Lender (unless the construction loan provides a "mini -perm" period
following the'opening of the Hotel). The Hotel Loan Agreement shall provide that the
Hotel Lender shall not have any liens on the City Facilities or any fund created to benefit
the City. Owner and the investor or investors providing the equity portion of the Private
Financing Contribution shall have mutually agreed upon the form of the venture
documentation to be entered into at the Closing providing for the investment of such
equity capital.
4.2.11. City Contribution. The City shall have secured the sources for the
City Contribution for the costs of constructing, furnishing and equipping the City
Facilities and performance of the City's obligations to Developer hereunder, in
accordance with the financial structure for the Project established pursuant to Section 3.2.
4.2.12. Hotel Franchise Agreement. If applicable, Owner (in conjunction with
Developer) or Operator shall have obtained a Franchise Agreement with the Hotel
Franchisor. The Franchise Agreement shall state that Owner or Operator shall maintain
the Hotel to the standards required of the Franchisor and shall provide for a furniture,
fixture and equipment reserve fund on the Franchisor's standard terms. If an agreement
with a Hotel Franchisor is not obtained, all parties agree to amend this Agreement to add
standards and amenities required for the development of the Project.
4.3. Design Development Budget. As part of the Development Budget prepared in
accordance with Section 3.1.7 and approved in accordance with Section 3.2.1 during the Pre -
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Development Feasibility Period, Developer shall prepare and the City, Developer and Owner
shall mutually review, finalize and approve a proposed design development budget (the "Design
Development Budget"), which will summarize the costs and expenses anticipated to be incurred
in the Design Development Period assuming this Agreement is not terminated in accordance
with Section 3.2 prior thereto, and which will include all fees payable to Developer during the
Design Development Period. Developer acknowledges and agrees that the costs and expenses to
be incurred in the Design Development Period may not exceed the amount therefor set forth in
the approved Design Development Budget, without the prior written consent of the City and
Owner, which consent shall not be unreasonably withheld. The approved Design Development
Budget, as the same may be modified by agreement of the Parties as set forth herein shall also set
forth an allocation of the costs and expenses to be incurred during the Design Development
Period as between the City, Developer and Owner. The parties anticipate that such design
development costs will be reimbursed out of the proceeds of the Private Financing Contribution
and the City Contribution.
4.4. Satisfaction of Design Development Period Requirements. In the event that
any of the foregoing items or agreements as set forth in this ARTICLE 4 are not, after the good
faith, diligent efforts of the Parties, completed or agreed -upon on or before the expiration of the
Design Development Period, as such period may be extended by mutual, good faith agreement of
the Parties, then the City or Developer may terminate this Agreement by written notice to the
other Parties prior to the expiration of the Design Development Period, and thereupon this
Agreement shall be of no further force or effect, except as expressly set forth herein. In the event
that this Agreement is so terminated by the mutual agreement of all parties prior to Closing, then
upon such termination, the City and Owner shall each reimburse Developer for its respective
allocated share of the design development costs incurred, but not yet reimbursed, in accordance
with Section 4.3 up to the date of termination, within fifteen (15) days of receipt of a final
invoice with such supporting documentation as is reasonably necessary to document such costs.
Other than the design development costs advanced by Developer pursuant to Section 4.3, the
Parties each recognize that their pro rata share of the design development costs are not subject to
reimbursement from the other Parties to this Agreement for any reason. In the event all of the
foregoing items and agreements are completed or agreed upon during the Design Development
Period and the Parties elect to continue with the development of the Project, the Parties shall
proceed to Closing, and shall commence construction of the Project as set forth in ARTICLE 5.
ARTICLE 5
CONSTRUCTION ACTIVITIES
5.1. Construction Phase. Upon Closing, Developer will cause to be prepared final
construction plans and specifications for the Project for the approval of the City and Owner, and
Developer shall cause construction of the Project to commence promptly upon receiving the
Notice to Proceed from the City as described in Section 7.2, and will expeditiously pursue
completion of construction with a completion date not later than eighteen (18) months following
such notice, subject to City Delay and Force Majeure. Developer shall consult with the City and
Owner regarding any proposed changes and modifications to the final drawings and
specifications of the Project which may result in a material change in the design or character of
the City Facilities or increase the City Contribution, and coordinating issuance of change orders
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with the approval of the City and other necessary parties; provided, however, Developer hall
have the right to approve and implement de minimus change orders, without the approval of the
City, which do not exceed $10,000 in any individual instance or $50,000 in the aggregate,
provided no such change may result in a material change in the design or character of the City
Facilities or increase the City Contribution without the prior written approval of the City. The
City may also request through action of the City Council proposed changes or modifications to
the scope or character of the Project, subject to the approval of Owner and Developer, as
applicable. Once construction of the Project commences, Developer shall serve as development
manager and shall provide the following services with respect to the Project:
5.1.1. City Facilities. Developer shall provide the following services during
the construction phase to the City with respect to the City Facilities:
(a) Providing on site supervision including, at a minimum, an on site
project manager/superintendent.
(b) Making periodic visits to the job site to review the work and
progress of construction with the Contractors, the Design Professionals and the
City Specialists and Consultants;
(c) Responding to any questions from the City, Owner or the Hotel
Franchisor regarding the work or progress of construction, construction methods,
scheduling, and the like;
(d) Coordinating the turnover of the City Facilities, as and when the
same are appropriately completed, to Owner as the lessee under the City Facilities
Lease;
(e) Coordinating efforts by all appropriate Parties to complete the City
Facilities substantially in accordance with the final drawings and specifications,
as the same may be amended from time to time with the approval of all necessary
Parties, such efforts to include assisting in the scheduling of inspections and the
preparation of punch lists;
(f) Obtaining, or causing the Project Architect or General Contractor
to obtain, on behalf of the City, a temporary, if applicable, and permanent
certificate of occupancy (or other appropriate and necessary governmental
permission to occupy) with respect to the City Facilities.
5.1.2. Hotel. During construction of the Hotel, Developer agrees to the
following conditions and instructions:
(a) To construct or cause to be constructed the Hotel in conformance
with the final plans and specifications approved by the City and Owner and in
accordance with any and all rights of review or approval of the Hotel Franchisor
and the Hotel Lender, and in accordance with all applicable building codes and
regulations;
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(b) (To be fully responsible for causing the Hotel to be constructed, to
pay all development costs of the Hotel as they come due, and under no
circumstances require the City to pay for any labor or material ordered or
purchased by Developer or Owner in and about the construction of the Hotel;
(c) To cause all electric and telephone utility lines and equipment for
the Property to be placed under ground within public rights -of -way or utility
easements located within the Property lines; and
(d) Commits to utilizing LP&L for electric utility services, so long as
LP&L rates are competitive on a state-wide basis; and
(e) To apply for or cause to be applied for the balance of the building
permit, utility permits, utility easements, certificates of occupancy and all other
licenses and permits required for the operation of the Hotel, including an
alcoholic beverage permit.
(f) Agrees to pay for the hardscape (which is defined as the hard
surface portion of the landscaping in the parkway such as stone, concrete, brick or
other approved surfaces) and the irrigation systems not to exceed $100,000, all as
further detailed in Exhibit D hereto. Developer also agrees to follow the Design
Guidelines including the Landscape Plan for the North Overton Project, subject to
such modifications and variances, as may be agreed upon by the City and
Developer.
5.2. General. During the construction phase of development of the Project,
Developer shall do the following:
5.2.1. Provide the City and Owner with monthly written progress reports that
reflect construction progress and all costs due or paid under the Development Budget
during the preceding month and which also reflect a comparison of aggregate costs paid
for budgeted items through the end of the preceding month with total budgeted costs for
such items;
5.2.2. Prepare and submit to the City and Owner supplements and
refinements to the Development Budget for the City's and Owner's approval as
development of the City Facilities moves through its various phases to completion,
provided Developer shall have the right, with City Manager approval (which approval
shall not be unreasonably withheld), to reallocate the costs of developing the Project
among the various line items in the Development Budget, provided the City Contribution
is not increased, and the same shall not result in a material change in the design or
character of the Project;
5.2.3. Notify the City and Owner promptly of any actual or anticipated
increase in the Development Budget of which Developer becomes aware;
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5.2.4. Notify the City promptly of any actual or anticipated change or delay
in the Development Plan of which Developer becomes aware;
5.2.5. Assist in refining the design of the Project (or assist in the process of
approving any changes to the design of the Project) by providing information based on
Developer's hotel and conference center development and operating experience;
5.2.6. Supervise the timely and efficient performance of Contractors and the
Design Professionals under their respective contracts with Developer or the City, as the
case may be, to confirm that all work is being performed in a professional and
workmanlike manner; and
5.2.7. Assure that all design and construction criteria that are specifically
required by the Franchise Agreement, if any, are correctly integrated into the design and
construction of the Project, and that any on site inspections and approvals specifically
required by such agreement are arranged and carried out on a timely basis.
5.3. Pre -Opening Activities. The City, Owner and Developer each recognize that
certain activities must be undertaken in advance of Final Completion of the Project so that the
Project can function in an appropriate and orderly manner. Accordingly, Developer shall cause
Owner to contract with Operator to undertake, or cause to be undertaken, the following steps,
procedures and activities, all of which shall be costs of the Project and allocated among the
various Project components in accordance with the Development Budget:
5.3.1. recruit, train and employ, through Operator, the staff required for the
operation of the Project;
5.3.2. undertake pre opening promotion and advertising, including opening
celebrations and related activities. Operator shall provide on site or locally assigned
personnel to conduct such activities beginning at least ten (10) months prior to the
projected opening of the Project;
5.3.3. test and, if necessary, implement modifications to the operations of the
Project;
5.3.4. apply for the initial licenses and permits required for the operation of
the Project; and
5.3.5. in general, render such other miscellaneous services incidental to the
preparation and organization of the Project's operations as may be reasonably required
for the Project to be adequately staffed and capable of operating upon opening as
contemplated in the Hotel and City Facilities Management Agreement.
5.4. Post Construction Phase. Upon Final Completion of construction of the Project
substantially in accordance with this Agreement, the Parties shall in good faith mutually agree
upon and render to the taxing authorities having jurisdiction over the Property for consideration
in establishing the assessed value of the Project, the total construction costs incurred in
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connection with the Project. The Parties acknowledge, however, that the local taxing authorities
shall be under no obligation to accept such rendered value as the value of the Project for
assessment purposes. In addition, upon Final Completion Developer shall provide the City and
Owner with the following:
5.4.1. A copy of the final certificate of occupancy for the Hotel, City
Facilities from the appropriate officials of the City;
5.4.2. A long form release of mechanic's liens executed by the General
Contractor, or a letter in form reasonably acceptable to Owner, and the City from a title
insurance underwriter reasonably acceptable to Owner and the City stating that it will
issue owner's title policies to Owner and the City, as applicable, and a mortgagee's title
policy to the Hotel Lender, without excepting filed and unfiled mechanic's liens from
coverage under such policies;
5.4.3. A certification from the Project Architect that the Hotel, City Facilities
have been substantially completed in accordance with the final plans and specifications;
5.4.4. An "as -built" survey of all improvements on the Property prepared by
a registered surveyor or engineer, the cost of which will be shared between the Hotel and
City Facilities in accordance with the terms of Section 9.7;
5.4.5. A summary of any cost savings available upon Final Completion as
contemplated in Section 9.5, if any, with a corresponding reduction of the City
Contribution.
ARTICLE 6
PURCHASING SERVICES
6.1. Purchasing Services. During the course of development of the Project,
Developer shall perform or cause to be performed the following services with respect to FF&E to
be installed in the City Facilities:
6.1.1. FF&E Schedule. The Development Plan prepared by Developer with
the approval of the City and Owner shall include a prototypical schedule setting forth by
category the types of FF&E for the Hotel and the City Facilities (hereinafter referred to as
the "FF&E Schedule").
6.1.2. FF&E Specifications. The FF&E shall be those items specified in
specifications therefor (hereinafter referred to as "FF&E Specifications") as coordinated
by Developer and approved by the City and Owner. Developer shall appoint a
purchasing agent for the FF&E for the Project, who shall coordinate purchasing of the
FF&E for the City Facilities pursuant to purchase orders naming the City as owner. All
purchases under this Article shall comply with Chapter 252 and Chapter 271, Texas
Local Government Code.
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6.1.3. Approval of FF&E Specifications. Developer shall cause the FF&E
Specifications to be delivered, prepared and submitted to the City and Owner for their
approval as promptly as reasonably practicable during the design development or
construction phases.
6.1.4. Pricing and Procurement. Developer shall diligently seek to obtain the
most favorable prices and terms available in connection with the purchase of the FF&E to
the extent allowable by Chapter 252 and Chapter 271, Texas Local Government Code.
All pricing shall be quoted "DDP (Lubbock, Texas, USA)" pre -paid.
6.1.5. Delivery Schedule. Developer shall prepare a projected delivery
schedule for goods purchased based on production and delivery dates furnished by
suppliers. Developer shall use reasonable efforts to coordinate the schedule with the
construction schedule under the construction contracts and place purchase orders within
sufficient time to allow delivery in accordance with the projected construction schedule.
6.1.6. Records. Developer shall maintain proper, accurate and complete
accounting records including competitive bids and proposals, purchase orders, purchasing
receipts and disbursements made in connection with the purchase of the FF&E for the
City Facilities. Developer shall make available these records for audit, inspection and
photocopying by the City or Owner, or any other persons designated by the City or
Owner, upon five (5) business days' notification. Following Final Completion of the
City Facilities or termination of this Agreement, Developer shall and at the City's or
Owner's sole cost, as applicable, deliver to the City or Owner a copy of all such records.
Developer shall retain copies of such records for a period of three (3) years from Final
Completion.
6.1.7. Inventory. Developer shall provide an inventory of goods and
materials to the City or Owner, or such other persons, as may be designated by the City
or Owner, within one hundred twenty (120) days after delivery of the last item of FF&E
for the City Facilities.
6.1.8. Coordinator. When appropriate, Developer shall provide an on site
coordinator at the Project to coordinate FF&E delivery and installation.
6.2. Payment for FF&E.
6.2.1. The City, through the purchasing agent appointed by Developer, shall
purchase the FF&E for the City Facilities of the type and quantity described in the FF&E
Schedule as prepared by Developer and approved by the City and Owner in accordance
with the FF&E Budget and this Agreement. The City agrees to make directly to
Developer in its capacity as development manager for the City, monthly payments based
upon invoices received for purchases of FF&E for the City Facilities, for payments
required during such month not to exceed the amounts specified in the FF&E Budget.
Developer shall substantiate to the City in draw requests such purchases with copies of
purchase orders, suppliers' invoices and/or Developer's verifications of goods received.
Payments to Developer shall include all state and local sales and use taxes, if any, due on
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such FF&E, and Developer shall remit same to the proper authorities on behalf of the
City; provided, however, the Parties anticipate that such purchases by the City shall be
exempt from sales taxes upon the City providing a sales tax exemption certificate or
number or the like to the FF&E purchasing agent. Should such estimated payments not
be sufficient to cover the actual cost of the FF&E for the City Facilities, freight and taxes,
Developer shall submit to the City the actual purchase orders and supplier's invoices
evidencing the increased cost, and the City shall pay Developer, within fifteen (15) days
of receipt by the City thereof, the amount of the actual costs, freight and taxes.
Developer shall refund any overage to the City. Final invoicing shall be done within one
hundred twenty (120) days after delivery of the last item of such FF&E.
6.2.2. Purchased for the City's Account. It is understood that all purchase
orders and agreements for FF&E for the City Facilities executed by Developer shall
specify the FF&E as being acquired for the account of the City (provided the City shall
not be required to contribute to or expend any amount in connection with the Project in
excess of the City Contribution), and Developer shall not be responsible for payment of
any such purchase orders and agreements, except to the extent of funds therefor actually
received from the City or except to the extent that such amounts exceed the total amount
of the City Contribution.
6.3. General Provision.
6.3.1. Contractor Failure. Developer shall not be responsible for
malfeasance, neglect or failure of any Contractors or suppliers to meet their schedules for
completion or to perform their duties and responsibilities under their respective
agreements with respect to the FF&E for the City Facilities.
6.3.2. Cancellation. The City acknowledges that cancellation and return of
FF&E cannot be made except under terms and conditions acceptable to the manufacturer
and/or vendor thereof, and that custom items of FF&E are non cancelable and non
returnable.
6.3.3. No Warranty. Developer shall use reasonable diligence in making
recommendations regarding the procurement of FF&E for the City Facilities, but
Developer extends no guarantees and makes no warranty, express or implied, of
merchantability or fitness for a particular purpose or otherwise with respect to any of
such FF&E purchased hereunder. Claims made against such guarantees as may be
offered by the manufacturers or vendors of FF&E for the City Facilities must be settled
directly with the manufacturers or vendors. Developer shall assist and coordinate with
the City, however, in the processing, prosecution and enforcement of such claims
provided it incurs no additional costs, expenses or liability on account thereof. Where
Developer has not previously paid for FF&E which has been received by the City and, if
prior to such payment, Developer determines that the goods are defective or otherwise do
not conform to the contract, Developer shall not pay for such FF&E and shall make all
necessary provisions, at the vendor's expense, for return of such FF&E to the supplier.
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6.3.4. Risk of Loss. Unless otherwise agreed to in writing, all FF&E for the
City Facilities shall be shipped to the City Facilities or a warehouse arranged for by
Developer on behalf of the City. Developer shall provide for all such FF&E to be
shipped "DDP (Lubbock, Texas, USA)" pre -paid.
6.3.5. Overages. The City hereby acknowledges that it is customary for
manufacturers to ship additional quantities of certain types of FF&E (fabric, wallpaper,
carpet, etc., commonly referred to as "attic stock"") above and beyond the actual amount
ordered. This is a common practice in the industry over which Developer has no control.
The City agrees to accept such overages and to pay for its share of the same; provided,
however, in no event shall the City ever be liable for any costs in excess of the City
Contribution without the prior written approval of the City. All overages in FF&E for the
City Facilities shall be the property of the City. Allowances for such overages shall be
included in the FF&E Budget.
6.3.6. Developer Indemnity. Developer hereby indemnifies and agrees to
hold the City, Owner, and their respective officers, directors, members, agents and
employees harmless and defend from and against any and all loss, cost, liability, claim,
demand, damage or expense (including, without limitation, reasonable attorneys, fees and
litigation expenses) which any of the foregoing indemnities may incur or sustain or which
may be claimed or asserted against any of the foregoing on account of, in connection
with, or arising from injuries, death, loss or damage to persons or property (including,
without limitation, the Hotel) including any claim for payment or demand for payment
caused by or in any way whatsoever arising out of, or resulting from (i) any gross
negligence on the part of Developer or its members, officers, directors, contractors,
agents, and employees arising out of or resulting from this Agreement or any of the other
agreements contemplated to be entered into with respect to the Project as described
herein; (ii) any FF&E that Developer has purchased in the name of the City that does not
substantially conform with the FF&E Specifications, (iii) any material breach of any
representation or warranty of Developer herein contained, or (iv) any claim arising out of
employment, non employment or discharge of Developer's employees or agents;
provided, however, the City shall seek recovery first from any insurance proceeds which
are made available with respect to the liabilities and losses described above, prior to
seeking any recovery directly from Developer. This indemnity shall survive the
expiration or termination of this Agreement.
ARTICLE 7
OBLIGATIONS OF THE CITY AND OWNER
7.1. Approvals. Whenever a matter requires the approval of the City or Owner under
this Agreement, the City and Owner shall work closely and in good faith with Developer to
achieve the City Facilities in a First Class Manner as contemplated by this Agreement, and so
that all of the Project's facilities can be completed on the same date.
7.2. Notice to Proceed. At such time as the City shall have approved the
Development Plan and the Development Budget, as adjusted during the Design Development
Period, the Closing shall have occurred and Developer shall have obtained all necessary permits
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for the commencement of construction of the Project, the City shall give Developer written
Notice to Proceed with the construction of the Project.
7.3. Infrastructure. All connection fees and tap fees for the City Facilities shall be
paid (or waived) by the City. The cost of utilities usage, permanent and temporary, for the
Project after the date hereof and prior to the opening of the Project shall be a cost of the Project
to be paid by Owner (or Developer), or the City based upon the portion of the Project served and
the ownership thereof. From and after the opening of the Project, the cost of utilities used in the
operation of the Hotel and City Facilities shall be paid by Operator in accordance with the Hotel
and City Facilities Management Agreement. Owner agrees to utilize LP&L for electrical
services for the Project for a period of at least twenty (20) years, so long as LP&L rates are
competitive on a state-wide basis.
7.4. Zoning. Developer shall assure that the Property is properly zoned for use as a
hotel and conference/civic center with associated parking to permit development in accordance
with the Development Plan. The City and Owner shall cooperate with and assist Developer as
reasonably required in connection with obtaining the zoning approvals required for development
of the Project.
7.5. Permits. The City shall execute, as owner to the extent applicable, and cooperate
with Developer and all Contractors in connection with the issuance of, all building permit
applications, plans of development, utility permit applications, utility. easements, requests for
certificates of occupancy and such other documents as may reasonably be required for Developer
to obtain building permits, licenses, approvals, certificates, utility services and other permits and
authorizations as may be necessary for the development, construction and operation of the
Project. It shall be the ultimate responsibility of Developer at the City's sole expense, as
included in the City Facilities Budget, to secure all such licenses and permits required to be
obtained by Developer (or Owner, as applicable) or the City with respect to construction,
completion and occupancy of the City Facilities, including any necessary building, occupancy,
sewer and utility permits. Developer at its sole expense as included in the Development Budget
shall secure all such licenses and permits required to be obtained with respect to the construction,
completion and occupancy of the Hotel, including any necessary building, occupancy, sewer and
utility permits.
7.6. Public Improvements. The City will pay for and construct necessary public
improvements meeting the Design Guidelines including landscaping, street improvements, curb
and gutter underground Water/Wastewater/LP&L utilities and pedestrian lighting for the
development except for those amounts required to be paid by Developer in Section 5.1.2(f). City
shall be responsible for the design and preparation of construction documents for the public
improvements, subject to the design guidelines and financial limitations herein. The City will
coordinate and seek concurrence with the Developer on design and implementation of public
improvements. Such public improvements shall not exceed $1 million of City funds and are over
and above the Public Financing Contribution. The public improvements and expenditures shall
be those set forth in Exhibit C except as revised upon agreement between the City and
Developer. Owner acknowledges that the City will be issuing debt backed by revenue in the TIF
District Tax Increment Fund to fund the public improvements referenced in this Section, and
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Owner therefore agrees that the Hotel shall not be sold or transferred to any entity that is exempt
from the payment of property taxes for the Project for a period of twenty years from the date of
this Agreement unless Owner or the new owner agrees to pay into the Tax Increment Fund a sum
equal to the amount of increment that would have been generated by that property over the
remainder of the twenty year period at the effective tax rate on the date of the sale.
7.7. Certification. Promptly after the City Facilities are completed and a certificate of
occupancy has been issued, the City will furnish Developer an appropriate instrument certifying
that Developer has complied with the provisions hereof relating to the construction of the City
Facilities. Upon Completion of Hotel and the issuance of a certificate of occupancy, the City
will furnish Developer an appropriate instrument certifying that Developer has complied with the
provisions hereof relating to the construction of the Hotel. If the City shall, for cause, refuse or
fail to provide either certification, the City shall, within fifteen (15) days after written request by
Developer, provide Developer with a written statement indicating in detail how Developer has
failed to complete the construction of the Hotel or City Facilities in conformity with this
Agreement, or is otherwise in default, and what measures or acts will be reasonably necessary in
the opinion of the City for Developer to take or perform in order to obtain such certifications.
7.8. Reserved.
ARTICLE 8
SCOPE OF DEVELOPER'S RESPONSIBILITIES
8.1. Standard of Care. In performing its services hereunder with respect to
development and construction of the Project, Developer makes no representations or warranties,
express or implied, regarding the sufficiency of any design, plans or drawings prepared by
others, but agrees to work with such persons to correct such designs, plans or drawings with such
corrections to be made at no additional expense to the City if and to the extent such corrections
are not required due to the fault of the City, or its employees, agents, or other contractors or
consultants. Any responsibility of Developer hereunder for development and construction of the
City Facilities shall be for services directly performed by it; shall be limited solely to
deficiencies that are directly attributable to Developer's failure to exercise the reasonable care
usually exercised by individuals and firms providing similar services; and in no event shall
Developer be liable for defects in materials or workmanship in the Project. Developer shall use
reasonable good faith to protect the economic interests of the City with respect to design,
development and construction of the City Facilities; provided, however, that nothing in this
Section shall require Developer to allocate costs for the Project to the Hotel Budget in
proportions not reasonably related to the respective benefits of such facilities to the various
Project components. Upon completion of the Project or its earlier termination, Developer shall
assign (i) to Owner all warranties from the Contractors and any and all suppliers of goods and/or
services to the Hotel (for Owner to use in connection with its obligations to maintain and repair
the Hotel as the owner thereof), and (ii) to the City all warranties from the Contractors and any
and all suppliers of goods and/or services to the City Facilities. Developer shall cooperate fully
with Owner and the City in pursuing such warranties, including without limitation, providing
copies of documentation needed to support such claim.
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8.2. Contractors, Specialists and Consultants. Developer shall use reasonable care
to ensure that all Contractors and Design Professionals selected in connection with the design
and construction of the Project shall be highly qualified to do the work they are engaged to
perform, and Developer shall make reasonable inquiries as to such persons' background,
experience and reputation to assure they are well qualified to undertake such work.
8.3. Operation and Maintenance of the Hotel. Owner shall continuously operate
and maintain the Hotel in a First Class Manner for the term of the City Facilities Lease. Owner
agrees to not seek any waivers of the standards contained in the Franchise Agreement, if any, and
to not seek or adhere to any lessening of operational and maintenance standards by the Hotel
Franchisor without the approval of the City. Owner's obligation to operate and maintain the
Hotel in a First Class Manner shall survive the expiration of this Agreement.
8.4. Legal Opinion. Developer will provide to the City a written opinion of qualified
legal counsel in Texas that Developer has the legal right, power and authority to enter into this
Agreement and to consummate the transactions contemplated herein, that the execution, delivery
and performance of this Agreement have been duly authorized and no other action by Developer
is a prerequisite to the valid and binding execution, delivery and performance of this Agreement,
and that this Agreement is the valid and binding obligation of Developer, enforceable against
Developer in accordance with its terms, subject to customary bankruptcy, creditors' rights,
judicial and equitable limitations.
ARTICLE 9
PAYMENT OF DEVELOPMENT FEE, TECHNICAL SERVICES FEE
AND EXPENSE REIMBURSEMENT
9.1. Development Fee. For the work and services to be performed by Developer
under this Agreement, the City shall pay Developer a Development Fee of four percent (4.0%) of
the "Fee Base," as hereafter defined.
9.2. Technical Services Fee. For the hospitality industry knowledge, technical
services, and purchasing services to be performed by Developer pursuant to ARTICLE 6 of this
Agreement, the City shall pay Developer a Technical Services Fee of one percent (1%) of the
Fee Base.
9.3. Payment of Fees. The Consulting Fees (comprised of the Development Fee and
the Technical Services Fee) due to Developer hereunder shall be paid in installments according
to the following schedule:
9.3.1. Twenty-five percent (25%) of the Technical Services Fee shall be paid
in equal monthly installments during the Design Development Period, however the
portion of this fee that relates to the City Facilities shall be earned but deferred and paid
at closing;
9.3.2. Twenty-five percent (25%) of the estimated remaining total Consulting
Fees shall be paid to Developer at closing, provided this Agreement is not terminated
prior to closing;
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9.3.3. Seventy percent (70%) of the estimated remaining total Consulting
Fees shall be paid to Developer over the then projected construction phase, with
payments to be made in equal monthly installments during the Construction Phase; and
9.3.4. The total remaining amount of the Consulting Fees shall be paid to
Developer when the City Facilities are completed.
Payments of the Consulting Fees that become due during the course of development and
construction as provided in Section 9.3.2 above are payable by the City within fifteen (15) days
after the City receives a monthly draw request from Developer for same in accordance with
Section 9.8. Each installment of the Consulting Fees will be deemed earned upon the date the
payment obligation accrues in accordance with this Section 9.3.
9.4. Fee Base. The "Fee Base" as used herein shall mean the total amount of the
Development Budget for the City Facilities (i.e., the total amount of the City Facilities Budget,
less land cost and construction period interest).
9.5. Cost Savings. Cost savings realized in Development Budget categories for the
City Facilities during the course of development thereof may be retained by Developer and
applied to cost overruns, if any, in other Development Budget categories for the City Facilities
(excluding, however, Consulting Fees payable to Developer hereunder), or, if there are no such
cost overruns, the cost savings (other than de minimus amounts) shall be used for upgrades to the
City Facilities or enhancements to the furniture, fixtures and equipment installed therein, subject
to any required approval of the City and Owner pursuant to Section 5.1. In any other event, any
cost savings in the actual final cost of the City Facilities shall be credited solely toward the City
Contribution and the City Contribution shall be reduced accordingly.
9.6. Expense Reimbursement. To the extent that such costs have been approved as a
portion of the preliminary Development Budget approved by the Parties in accordance with
Section 3.2.1, the City shall reimburse Developer for reasonable and verifiable out of pocket
costs and expenses incurred by Developer in the performance of its obligations under this
Agreement (and the MOU prior to the date of this Agreement) as they directly relate to
development of the City Facilities, up to a maximum amount of such expenses as approved in the
preliminary Development Budget established in accordance with Section 3.2.1 and otherwise
subject to the limitations set forth in Section 9.7. The City shall reimburse all such approved
expenses to Developer within fifteen (15) days after the City receives the monthly draw request
in accordance with Section 9.8 from Developer requesting payment for same. The types of such
costs for which the City shall reimburse Developer shall include the pro rata portion of employee
related costs for Developer's employees allocated to the Conference/Civic Center and actual out
of pocket costs incurred in performing this Agreement, including all expenses for contracted
pursuant to this Agreement, and any other incidental expenses that are directly related to the
planning, development and construction of the City Facilities and reasonably incurred by
employees of Developer.
9.7. Shared Expenses. Notwithstanding anything to the contrary contained in
Section 9.6, whenever travel consulting or similar expenses are incurred by Developer in
connection with the Project as whole, such expenses shall be allocated as follows:
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9.7.1. Where the proportional benefits to the City Facilities and Hotel of such
expenses can be reasonably ascertained, subject to the mutual approval of the City,
Developer and Owner, the expenses shall be allocated to each component in proportion to
the respective benefits to each;
9.7.2. Where the proportional benefits to the City Facilities and Hotel of such
expenses cannot be reasonably ascertained, the expenses shall be allocated among the
Hotel and City Facilities in the same proportions which the respective portion of the
original Development Budget approved in accordance with Section 3.2.1 allocable to
each such unit bears to said total approved Development Budget.
9.8. Monthly Draw Requests. Developer's requests for (i) payments of the
Consulting Fees pursuant to Section 9.3.2, (ii) reimbursement of costs and expenses pursuant to
Section 9.6, and (iii) payments that are due and payable on contracts with the Contractors for the
City Facilities, shall be made by Developer in written draw requests given monthly by Developer
to the City during the term of this Agreement. Each such draw request shall include
documentation of all costs and expenses in reasonably sufficient detail to permit the City to
determine the appropriateness of such reimbursement payment and, with respect to draw requests
during the period of construction of the City Facilities, shall include a certification by the Project
Architect of the status of completion of the City Facilities in accordance with the Development
Plan, and a partial release of mechanic's liens from the General Contractor with respect to all
portions of the Project for which payment to the General Contractor has been made. The City
shall pay the amounts set forth in such draw requests to, or as directed by, Developer within
fifteen (15) days after receipt of each such draw request.
9.9. City Contribution Limitation. In no event shall any payment required by this
Article obligate the City to make any payment in excess of the city's City contribution described
in Section 3.2.4. In the event such amounts exceed the City Contribution, such payment shall be
the obligation of Developer or Owner. Not withstanding the foregoing, any costs or expenses in
excess of the City Contribution which arise as a result of City Delay or as a result of change
orders or other revisions to the Project scope or character requested by the City, shall not be the
responsibility of the Developer or the Owner and shall either be paid by the City outside the
limitation on City Contribution or shall result in an equivalent downsizing of the City Facilities.
Any costs or expenses which arise as a result of Force Majeure shall be divided among the
parties with the City paying only for expenses related to the City Facilities.
9.10. City Payments. In any instance in which this Agreement provides that the City
shall make payments to or at the direction of Developer within fifteen (15) days of receipt of an
invoice, draw request or the like, the City shall endeavor to make such payment within fifteen
(15) days or such other period less than thirty (30) days to the extent reasonably possible in light
of the City's procedural requirements, but in all events such payments shall be made within no
more than thirty (30) days after the City's receipt of the applicable documentation.
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ARTICLE 10
INSURANCE
10.1. Types of Coverage. Developer and/or Owner shall carry, or cause the General
Contractor to carry, the following insurance coverage throughout the term of this Agreement,
with insurers reasonably approved by the City (provided that insurance coverage meeting the
requirements of this Section 10.1 furnished by Owner, if required to be furnished by Owner
during the term of this Agreement pursuant to the City Facilities Lease, shall be deemed to
satisfy the obligations of Developer or Owner hereunder):
10.1.1. Builder's Risk Insurance in the amount of 100% of the project cost.
10.1.2. Comprehensive general liability insurance insuring the City, Owner
and Developer, and each of the Members of Developer or Owner against any and all
liability for injury to or death of a person or persons and for damage to property in any
way occasioned by or arising out of the activities of the City, Owner and Developer and
their respective agents, contractors or employees, in connection with the design and
construction of the Project, in the amount of Five Million Dollars ($5,000,000) (including
umbrella liability) for property damage and for bodily injury or death of persons.
10.1.3. Developer and/or Owner shall elect to obtain workers' compensation
coverage pursuant to Section 406.002 of the Texas Labor Code. Coverage shall be
maintained throughout the term of the contract and shall comply with all provisions of
Title 5 of the Texas Labor Code to ensure coverage is maintained. Any termination of
workers' compensation insurance coverage shall be a material breach of this contract.
The policy must be endorsed to include a waiver of subrogation in favor of the City.
Employer's Liability with limits of at least $1,000,000 each accident, $1,000,000
by disease policy limit and $1,000,000 by disease each employee shall also be obtained
and maintained throughout the term of this contract.
10.2. Policy Requirements. The following general requirements shall apply to all
insurance coverage carried by Developer or Owner pursuant to Section 10.1:
10.2.1. To the extent available, each policy shall contain a clause whereby the
insurer waives all rights of subrogation against Owner, the City and Developer, and each
of the Members of Developer and Owner;
10.2.2. The City, Owner and Developer and each of the Members of Owner
and Developer shall be named as additional insureds in all policies hereunder as their
respective interests may appear,
10.2.3. Such policies shall be with reputable insurance companies reasonably
acceptable to the City, Developer and Owner and licensed to do business in the State of
Texas;
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10.2.4. Developer or Owner shall provide the City with policies or certificates
of insurance evidencing such coverage prior to the start of construction;
10.2.5. Within thirty (30) days prior to expiration of coverage, or as soon as
practicable, renewal policies or certificates of insurance evidencing renewal and payment
of premium (the cost of which shall be a reimbursable expense pursuant to Section 9.6)
shall be provided by Developer or Owner; and
10.2.6. The coverages must be non cancelable unless the carrier provides to
the City, Owner and Developer thirty (30) days' prior written notice of cancellation.
ARTICLE 11
EVENTS OF DEFAULT AND REMEDIES
11.1. Default by Developer or Owner. The occurrence of any of the following shall
be an "Event of Default" by Developer or Owner under this Agreement:
11.1.1. The filing by Owner or Developer of a voluntary proceeding under
present or future bankruptcy, insolvency, or other laws respecting debtors, rights;
11.1.2. The consent by Owner or Developer to an involuntary proceeding
under present or future bankruptcy, insolvency, or other laws respecting debtor's rights;
11.1.3. The entering of an order for relief against Owner or Developer or the
appointment of a receiver, trustee, or custodian for all or a substantial part of the property
or assets of Owner or Developer in any involuntary proceeding, and the continuation of
such order, judgment or degree unstayed for any period of ninety (90) consecutive days;
11.1.4. Owner's or Developer's failure to pay or cause to be paid when due
any sum of money owed by Owner or Developer to the City pursuant to this Agreement,
and the continuation of such failure for fifteen (15) days after written notice from the City
as applicable, specifying the nature and extent of any such default with opportunity to
cure;
11.1.5. The failure of Owner or Developer to perform or to observe any
covenant, obligation or requirement of this Agreement not otherwise specifically named
as a default in this Section 11.1, and the continuation of such failure for thirty (30) days
after written notice from the City specifying the nature and extent of any such default, or,
if such default cannot reasonably be cured within such thirty (30)-day period, the failure
either (i) to commence to cure such default within such thirty (30)-day period and to
diligently continue to pursue such efforts to cure to completion, or (ii) to cure such
default within a reasonable time after the expiration of the first thirty (30)-day period, in
no event to exceed ninety (90) days after the written notice of default;
11.1.6. The termination of the Franchise Agreement, if any, for any reason
except the actions of the City or its employees, agents or other contractors or consultants;
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11.1.7. The failure of Owner or Developer to begin construction on the Project
within three (3) months of Closing, or to have the Project Completed within eighteen (18)
months after the City gives Developer the Notice To Proceed, unless the delay in
completion is attributable to any Force Majeure, City Delay, or the institution of litigation
concerning the Project or any component thereof by a third party;
11.1.8. A termination of the City Facilities Lease resulting from a material
default by Owner thereunder; or
11.1.9. Subject to the City's satisfaction of its payment obligations hereunder,
the failure of Owner or Developer to remove or cause to be removed any and all liens for
work done or materials furnished with respect to the City Facilities within thirty (30) days
after notice to Owner and Developer of the filing thereof.
11.2. Default by the City. The occurrence of any of the following shall be an "Event
of Default" by the City under this Agreement:
11.2.1. The filing by the City of a voluntary proceeding under present or
future bankruptcy, insolvency, or other laws respecting debtors' rights;
11.2.2. The consent by the City to an involuntary proceeding under present or
future bankruptcy, insolvency, or other laws respecting debtor's rights;
11.2.3. The entering of any order for relief against the City or the appointment
of a receiver, trustee, or custodian for all or a substantial part of the property or assets of
the City in any involuntary proceeding, and the continuation of such order, judgment or
decree unstayed for any period of ninety (90) consecutive days;
11.2.4. The City's failure to pay or cause to be paid when due any sum of
money owed by the City to Owner or Developer pursuant to this Agreement, and the
continuation of such failure for fifteen (15) days after written notice from Owner or
Developer, as applicable, specifying the nature and extent of any such default with
opportunity to cure;
11.2.5. The failure of the City to perform or to observe any nonmonetary
covenant, obligation or requirement of this Agreement and the continuation of such
failure for thirty (30) days after written notice from Owner or Developer specifying the
nature and extent of any such default, or, if such default cannot reasonably be cured
within such thirty (30)-day period, the failure either (i) to commence to cure such default
within such thirty (30)-day period and to diligently continue to pursue such efforts to cure
to completion, or (ii) to cure such default within a reasonable time after the expiration of
the first thirty (30)-day period, in no event to exceed ninety (90) days after the written
notice of default; or
11.2.6. A termination of the City Facilities Lease resulting from a material
default by the City thereunder.
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11.3. [Intentionally omitted] .
11.4. Remedies. Upon the occurrence and continuance of an Event of Default
described in Section 11.1, the City and Owner may elect (after written notice to the Hotel Lender
and subject to the Hotel Lender's right to cure) to terminate this Agreement by giving written
notice of such termination to Owner and Developer and the other (non defaulting) Party, and this
Agreement shall terminate as of the date specified in such notice (which date shall be on or after
the date of the notice of termination). Upon the occurrence of an Event of Default, Owner or
Developer may elect to terminate this Agreement by giving written notice of such termination to
the City and the other (non defaulting) Party, and this Agreement shall terminate as of the date
specified in such notice (which date shall be on or after the date of the notice of termination), but
the City will be required to pay to Owner or Developer, as applicable, any Consulting Fees owed
to Developer under Section 9.3, and the City will be required to reimburse Owner or Developer,
as applicable for their respective pro rata shares of pre development and design development
expenses incurred in accordance with Sections 3.3 and 4.4, at the time of such termination. In
addition to the remedies of termination described above, a nondefaulting Parry shall have
available to it all other rights and remedies provided at law or in equity. All remedies under this
Agreement shall be cumulative and not restrictive of other remedies.
11.5. Accounting. Upon the termination of this Agreement by reason of a default
under Section 11.1, Developer shall render an accounting to the City and Owner, and, without
diminishing the rights and remedies referred to in Section 11.4, from and after such date, the City
shall not have any further rights or obligations under this Agreement.
ARTICLE 12
NO FEDERAL ASSISTANCE
12.1. No Federal Assistance. The City represents and warrants to Owner and
Developer that no Federal funds or federally assisted project activities as administered by or
under the control of the City are involved in this project at this time. City further agrees that it
does not have any intention or plans to participate in the future in any federally assisted project
activities in the North Overton Tax Increment Finance Reinvestment Zone.
Owner and Developer represent and warrant to the City that Owner and Developer have
no federal funds involved in this project at this time. Owner and Developer further agree that
they will not in the future participate in any federally assisted project activities in the North
Overton Tax Increment Finance Zone.
ARTICLE 13
RESERVED
ARTICLE 14
MISCELLANEOUS
14.1. Assignment. The Parties recognize that the City has selected Developer and
Owner because of their unique abilities to develop the Project, therefore Developer or Owner
shall have the right, with the consent of the City which shall not be unreasonably withheld or
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delayed, to assign its rights and obligations under this Agreement to (A) any entity controlling,
controlled by or under common control with Developer or Owner, as applicable, and (i) in which
the Principals (or any of them) own at least fifty one (51%) of the economic interest and voting
control, or (ii) of which any of the Principals (or any of them, or an entity controlled by any of
them) is the managing member or general partner or; (B) the Hotel Lender, as security for the
Hotel Loan Agreement. Any other assignment by Developer or Owner shall be subject to the
consent of the City, through action of the City Council. The City shall have the right to assign its
rights and obligations under this Agreement to any government agency or authority, provided
such assignee is empowered to perform this Agreement and has the financial ability to perform
hereunder. Except as provided in the preceding three sentences, neither Parry shall assign or
transfer, or permit the assignment or transfer of, this Agreement without the prior written consent
of the other Parties. A permitted assignment by any Party of its interests in this Agreement shall
not relieve the assigning Party from its obligations under this Agreement unless the nonassigning
Parties shall expressly consent in writing to any such release. Any assignee of any Party's rights
under this Agreement, as a condition of such assignment, shall execute an assumption of the
assigning Parry's duties and obligations under this Agreement, such assumption to be in form
reasonably acceptable to the other Parties to this Agreement.
14.2. Modification. If in connection with Developer's obtaining the Private Financing
Contribution, any lender or investor shall request reasonable modifications of this Agreement as
a condition to such investment or financing, the City will consider such modification of this
Agreement. Such consideration shall not be unreasonably withheld or delayed by the City,
provided such modifications do not increase the financial obligations of the City or materially
and adversely affect any of the rights created by this Agreement, which shall be determined in
the City's sole discretion.
14.3. Arbitration. Any dispute arising between or among an Owner, the City and
Developer concerning the allocation of costs or expenses between the Hotel, City Facilities shall
be settled by a two step process. Owner, the City and Developer shall submit to mediation
before a mediator upon which they agree or, failing agreement, request that the Dispute
Resolution Center of Lubbock County, Texas appoint a mediator. Should mediation not settle
the dispute, it shall be settled by arbitration. Developer, the City and Owner shall attempt to
agree upon a single arbitrator who is experienced in the hotel and conference center industry. If
they cannot agree on a single arbitrator within fifteen (15) days of the conclusion of the
mediation, Owner, the City and Developer shall petition the American Arbitration Association
for a list of qualified arbitrators and the arbitrator shall be selected by use of the strike method.
Arbitration proceedings shall be conducted according to the Commercial Rules of the American
Arbitration Association. The decision of the arbitrator shall be binding and conclusive. The
costs and expenses of such arbitration hereunder and their apportionment between the Parties
shall be determined by the arbitrator(s) in the award or decision.
14.4. Waiver. The failure of any Party to insist upon strict performance of any of the
terms or provisions of this Agreement or to exercise any option, right or remedy contained in this
Agreement, shall not be construed as a waiver or as a relinquishment for the future of such term,
provision, option, right or remedy. No waiver by any Party of any term or provision of this
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Agreement shall be deemed to have been made unless expressed in writing and signed by such
Parry.
14.5. Severability. If any clause or provision of this Agreement is or becomes illegal,
invalid, or unenforceable because of present or future laws or any rule or regulation of any
governmental body or entity, then the remaining parts of this Agreement shall not be affected,
unless such invalidity would create undue hardship on a Party, or is essential to the rights of any
of them, in which event such Party has the right to terminate this Agreement on written notice to
the other Parties.
14.6. Exhibits. Each exhibit referred to in this Agreement is attached to and
incorporated by reference in this Agreement.
14.7. Documents. Subject to any limitations which may be set forth in of the Franchise
Agreement, if any, all as built drawings, plans, specifications and other documents prepared for
the City for the City Facilities pursuant to this Agreement shall, upon reimbursement by the City
of any costs incurred by Developer with respect to such items pursuant to this Agreement,
become or remain the property of the City whether or not the City Facilities are completed;
provided, however, Developer may use such drawings, plans, specifications and other
documents, or modifications of them, for any other project in which Developer has an interest.
14.8. Other Documentation. Each Parry will provide to the other Parties any other
information or documentation, reasonably requested and consistent with the terms of this
Agreement.
14.9. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Texas.
14.10. Interpretation. For the purpose of construing this Agreement, unless the context
indicates otherwise, words in the singular number shall be deemed to include words in the plural
number and vice versa, words in one gender shall be deemed to include words in other genders,
and the word "person" shall be deemed to include a corporation, partnership or other legal entity.
Headings of Articles and Sections are inserted only for convenience and are not, and shall not be
deemed, a limitation on the scope of the particular Articles or Sections to which they refer.
14.11. "Including". In this Agreement, whenever general words or terms are followed
by the word "including" (or other forms of the word "include") and words of particular and
specific meaning, the phrase "including without limitation," and the general words shall be
construed in their widest extent, and shall not be limited to persons or things of the same general
kind or class as those specifically mentioned in the words of particular and specific meaning.
14.12. Notices. All notices or other communications required or desired to be given with
respect to this Agreement shall be in writing and shall be delivered by hand or by courier service,
sent by registered or certified mail, return receipt requested, bearing adequate postage, or sent by
nationally recognized overnight delivery service (such as Federal Express or UPS), or sent by
facsimile, and properly addressed as provided below. Each notice given by mail shall be deemed
to be given by the sender when received or refused by the Party intended to receive such notice;
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each notice delivered by hand or by courier service shall be deemed to have been given and
received when actually received by the Parry intended to receive such notice or when such Party
refuses to accept delivery of such notice; each notice given by overnight delivery service shall be
deemed to have been given and received on the next business day following deposit thereof with
the overnight delivery company; and each notice given by facsimile shall be deemed to have
been given and received upon transmission, provided confirmation of receipt is received back by
the sending facsimile prior to 5:00 p.m. local time at the sending location, or on the next business
day if after 5:00 p.m. local time at the sending location. Upon a change of address by either
Parry, such Parry shall give written notice of such change to the other parties in accordance with
the foregoing. Inability to deliver because of changed address or status of which no notice was
given shall be deemed to be receipt of the notice sent, effective as of the date such notice would
otherwise have been received.
To the City:
City Manager
City of Lubbock
P.O. Box 2000
Lubbock, Texas 79457
with a copy to:
City Attorney
City of Lubbock
P.O. Box 2000
To Owner:
with copies to:
Lubbock, Texas 79457
Overton Park Hotel, LP
c/o Gal -Tex Hotel Corporation
2302 Postoffice Street, Suite 500
Galveston, Texas 77550-1935
Fax No.: (409) 763-5304
Attn: Eugene Lucas
GTHC Overton Park GP, LC
c/o Gal -Tex Hotel Corporation
2302 Postoffice Street, Suite 500
Galveston, Texas 77550-1935
Fax No.: (409) 763-5304
Attn: Eugene Lucas
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To Developer:
with a copy to:
Munsch Hardt Kopf & Han PC
3800 Lincoln Plaza
500 N. Akard Street
Dallas, Texas 75201-6659
Fax No.: (214) 978-4372
Attn: John C. Rutherford
Garfield Traub Development LLC
13455 Noel Road, Suite 2150
Dallas, Texas 75240
Attn: Jerry R. Thoele
Hughes & Luce, LLP
Suite 2800, Bank One Tower
1717 Main Street
Dallas, Texas 75201
Attn: Daniel K. Hennessy
14.13. [Intentionally Omitted.]
14.14. Entire Agreement. This Agreement constitutes the entire agreement between the
Parties with respect to the Project and supersedes all prior understandings and writings,
including, without limitation, the MOU which shall be of no further force or effect upon
execution of this Agreement, and this Agreement may be amended or modified only by a writing
signed by the City, Owner and Developer.
14.15. Further Assurances. The Parties covenant to execute such additional documents
and instruments as may be reasonably necessary to provide for the coordinated development,
financing and operation of the Project.
14.16. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall comprise but a
single document.
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WITNESS the following signatures:
ATTEST:
Rebecca Garza, City Secretary
APPROWD AS TO CONTENT
Rob Allison,
CITY OF LUBBOCK, TEXAS
TOM MARTIN, MAYOR PRO TEM
OVERTON PARK HOTEL, LP, a Texas
Limited Partnership
By: GTHC Overton Park GP, LP, a Texas
Limited Partnership, As General Partner
By: Gal -Tex Hotel Corporation, a Texas
Corporation, As General Partner
By:
Name: EUGENE LUCAS
Title: President
GARFIELD TRAUB D LOPMENT LLC
By:
Name: RA MOND GARFIELD, JR.
Title: Member
Signature Page of Master Development Agreement
WITNESS the following signatures:
ATTEST:
Rebecca Garza, City Secretary
APPROVED AS TO CONTENT
Rob Allison, Executive Director of
Development Services
CITY OF LUBBOCK, TEXAS
TOM MARTIN, MAYOR PRO TEM
OVERTON PARK HOTEL, LP, a Texas
Limited Partnership
By: GTHC Overton Park GP, LP, a Texas
Limited Partnership, As General Partner
By: Gal -Tex Hotel Corporation, a Texas
Corporation, As General Partner
By:
Name: EUGENE LUCAS
Title: President
GARFIELD TRAUB DEVELOPMENT LLC
I0
Name: RAYMOND GARFIELD, JR.
Title: Member
Signature Page of Master Development Agreement
Exhibit A
Legal Description of Property
Master Development Agreement - Lubbock 2006 final
[Attached hereto]
A-1
Exhibit B
Reserve Percentages
Operating Year
(from Opening)
and thereafter
Master Development Agreement - Lubbock 2006 final
AR&R Reserve
Percentage
Exhibit C
Direct City Participation And TIF Funding
Phase One Bond Issue Three Tract #7
Project % Participation
Cost Estimate
Street Reconstruction/Resurfacing
100%
$ 426,190
(Tract #7)
A/E Services
Reconstruction of Ave X, 6`h St
Landscaping in the Parkway
100%
$ 231,000
Softscape
A/E services
Adjacent to Ave. X, 6`h St.
Landscape Entrance at 4th St.
%100
$ 50,000
Water/Waste Water
100%
$110,000
Replacement vs. Relocation
Electric Utility (LP&L)— Underground
100%
$130,000
Removal & relocation*
Total $947,190
Master Development Agreement - Lubbock 2006 final
C-1
Exhibit D
Developer Participation
Phase One Bond Issue Three Tract #7
Project % Participation Cost Estimate
Street Reconstruction/Resurfacing 0% - 0 -
(Tract #7)
Reconstruction of Ave X,
Landscaping in the Parkway 100% $100,000
Hardscape (concrete, pavers, irrigation)
Adjacent to Ave. X & 6th St.,
Water/Waste Water 0% - 0 -
Replacement vs. Relocation
Electric Utility — Underground 0% -0-
removal & relocation
Total $100,000
Master Development Agreement - Lubbock 2006 final
D-1