HomeMy WebLinkAboutRES 15-071RESOLUTION NO.15-071
WHEREAS, the City of Beaumont has been approached by Pate Development,
L.P., ZJZ Hospitality, Inc., and Innovative Leisure Partners with a proposal for the
construction of a convention hotel and waterpark to be located at Ford Park; and,
WHEREAS; this project is intended to bolster local economic development by
stimulating business and commercial activity within the city; and,
WHEREAS, the developers have approached the City and Jefferson County
seeking economic development incentives in the form of hotel occupancy and ad valorem
tax abatements and have filed an application with the City for Chapter 380 economic
development incentives; and,
WHEREAS, the application has been reviewed and it has been determined that the
proposed project does satisfy the purpose and goals of the program in that it will enhance
the City's economic base and diversify and expand job opportunities; and,
WHEREAS, in orderto maintain sufficient controls to ensure thatthe public purpose
is carried out, it is necessary to enter into economic development agreements with the
developer establishing the expectations and terms of the transaction; and,
WHEREAS, the City Council is of the opinion that approval of an application for
Chapter 380 economic development incentives and entering into economic development
agreements with Pate Development, L.P., ZJZ Hospitality, Inc., and Innovative Leisure
Partners for a convention hotel and waterpark at Ford Park are in the best interest of the
City of Beaumont and its citizens;
NOW, THEREFORE, BE IT RESOLVED BY THE
CITY COUNCIL OF THE CITY OF BEAUMONT:
THAT the statements and findings set out in the preamble to this resolution are hereby, in
all things, approved and adopted; and,
THAT approval of an application for Chapter 380 economic development incentives
for Pate Development, L.P., ZJZ Hospitality, Inc., and Innovative Leisure Partners for a
convention hotel and waterpark at Ford Park is hereby approved; and,
r
BE IT FURTHER RESOLVED THAT the City Manager be and he is hereby
authorized to execute economic development agreements with Pate Development, L.P.,
ZJZ Hospitality, Inc., and Innovative Leisure Partners for a convention hotel and waterpark
at Ford Park. The agreements are substantially in the form attached hereto as Exhibits "1"
and "2," and made a part hereof for all purposes.
2015.
PASSED BY THE CITY COUNCIL of the City of Beaumont this the 14th day of April,
rii"fit7m,��.M%42121l/
CHAPTER 3 80
ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT
BETWEEN
THE CITY OFBEAUMONT, TEXAS
AND
PATE DEVELOPMENT LP, ZJZ
HOSPITALITY INC. or their assigns
-CHAP'TL� t, 80
This Chapter 380 Economic Development Incentive Agreement ("Agreement") is entered into as of
2015by and among the City of Beaumont, Texas, a home rule city
("City') and Pate Development, a Texas Limited Partnership, and ZJZ Hospitality Inc. ("Developers").
WHEREAS, Jefferson County solicited proposals for the development of a ford Park Convention Hotel
and Water Park inside the City Iimits; and
WHEREAS, the Developers submitted a joint venture proposal for the development of a Convention
Hotel and Water Park at Ford Park; and
WHEREAS, the Developers desires to develop a Water Park as more particularly described in the
conceptual plan for the project attached hereto as Exhibit "A" (the "Project") and more particularly defined
below, in Beaumont, Jefferson County, Texas; and
WHEREAS, the City has established a program in accordance with Article 111, Section 52-a of the
Texas Constitution and Chapter 380 of the Texas Local Government Code ("Chapter 380") under which
the City has the authority to make loans or grants of public funds or other incentives for the purposes of
promoting local economic development and stimulating business and commercial activity within the City;
and
WHEREAS, the Developers have applied for development incentives from the City of Beaumont
(Exhibit "D"); and
WHEREAS, the Beaumont City Council has adopted Resolution No.
authorizing City to make certain economic development incentives to Developers in recognition of,
conditioned upon and derived from the positive economic benefits that will accrue to City through Developers'
development of a Water Park project at a Capital Investment by Developers of at Ieast
$10,000,000, all as more particularly described herein on EXHIBIT "A;" and
WHEREAS, the incentives to Developers under this Agreement are exclusively performance-based
so that no abatements will be made to Developers until and unless the Water Park, as described below, are
constructed and operational; and
WHEREAS, Developers estimate the total Capital Investment in the Project (as defined herein) will be a
rn i n i m u rn o f Ten Million Dollars ($10,000,000), for the Water Park, all as more particularly described
herein and in the field notes and metes and bounds attached hereto as EXHIBIT "B,"; and
WHEREAS, the City has concluded and hereby finds' that this Agreement promotes economic
development in the City of Beaumont and, as such, meets the requirements under Chapter 380 and the
City's established economic development program, and, further, is in the best interests of the City and
Developers; and
WHEREAS, the City recognizes the positive economic impact that the Project will bring to the
City through development and diversification of the economy, reduction of unemployment and
underemployment through the production of new jobs, the attraction of new businesses, and the additional tax
revenue generated by the Project for the City; and
WHEREAS, in consideration of the development, construction and building of the Water Park,
which will assist in stabilizing the existing Sales Tax Revenues, Properly Tax Revenues and Hotel
Occupancy Tax Revenues (as defined herein) to the City and create approximately seven (7) full time jobs
and approximately one hundred ninety-three (193) part-time seasonal jobs located at the Project, the City
agrees to use such finds in order to provide the Reimbursement Amount (as defined herein) to the
Developers directly in the amounts described in Article V of this Agreement; and
WHEREAS, to ensure that the benefits the City provides under this Agreement are utilized in a
manner consistent with Article III, Section 52-a of the Texas Constitution, Chapter 380 and other law, the
Developers has agreed to comply with certain conditions to the payment of those benefits;
NOW, THEREFORE, in consideration of the mutual benefits described in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, City
and Developers agree as follows:
ARTICLE I
REPRESENTATIONS
I.1 Representations of the City. The City hereby represents to the Developers that as of the date hereof
(A) The City is a duly created and existing municipal corporation and home rule municipality of
the State of Texas under the laws of the State of Texas and is duly qualified and authorized to carry oil the
governmental fiuictions and operations as contemplated by this Agreement.
(I3) The City has the power, authority and legal right under the laws of the State of Texas and the City
Charter to enter into and perform this Agreement and the execution, delivery and performance hereof
(i) will not, to the best of its knowledge, violate any applicable judgment, order, law or regulation, and
(ii) do not constitute a default under, or result in the creation of any lien, charge, encumbrance or security
interest upon any assets of the City under airy agreement or instrument to which the City is a party or by which
the City or its assets may be bound or affected.
(C) This Agreement has been duly authorized, executed and delivered by the City and,
constitutes a legal, valid and binding obligation of the City, enforceable in accordance with its terms except to
the extent that (i) the enforceability of such instruments may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws of general application in effect from time to time relating to or
affecting the enforcement of creditors` rights and (ii) certain equitable remedies including specific performance
may be unavailable.
(D) The execution, delivery and performance of this Agreement by the City does not require the consent or
approval of any Pei -'soil which has not been obtained.
1.2 Representations of the Developers. The Developers hereby represents to the City that as of the date of
execution hereof;
(A) The Developers are duly authorized and existing and in good standing as a limited partnership
under the laws of the State of Texas, and shall remain in good standing as such in.the State of Texas during the
Tenn ofthis Agreement. .
(B) The Developers has the power, authority and legal right to enter into and perforin its
obligations set forth in this Agreement, and the execution, delivery and performance hereof, (i) have been duly
authorized, and will not, to the best of its knowledge, violate any judgment, order, law or regulation applicable
to tale Developers or of the provisions of Developers' partnership agreement or instrument to which Developers
is a party or by which it may be bound, and (ii) do not constitute a default under or result in the creation of,
any lien, charge, encumbrance or security interest upon any assets of the Developers under any agreement or
instrument to which the Developers is a party or by which the Developers or its assets may be bound or affected.
(C) The Developers agrees to provide evidence to the City, no later than the date it Commences
Construction of tile! Water Park, which evidence is subject to the administrative approval of the City or its
designee(s), whose approval shall not be unreasonably withheld, o f sufficient available fluids to perform
its obligations under Article IV herein to complete the convention hotel and Water Park, at the time it needsto
have the funds in order to do so.
(D) This Agreement has been duly authorized, executed and delivered and constitutes a legal,
valid and binding obligation of the Developers, enforceable in accordance with its terms except to the extent
that (i) the enforceability of such instruments may be limited by bankruptcy; reorganization, insolvency,
moratorium or other similar laws of general application in effect from time to time relating to or affecting the
enforcement of creditors' rights and (ii) certain equitable remedies including specific performance may be
unavailable.
ARTICLE II
DEFINITIONS
The recitals to this Agreement are hereby incorporated for all purposes. The tenns, "Agreement;" "Chapter
380," "City," "Developers," and "Project," shall have the meanings as referenced above, and the following words
or phrases shall have the following meanings:
2.1 "Act of Default" or "Default" means failure to timely, fully, and completely comply with one or more
requirements, obligations, performance criteria, duties, terms, conditions or warranties, as stated in this Agreement.
2.2 "Annual Approved Spending Plan" means a detailed plan stating Developers' proposed use of Hotel Occupancy
Tax revenues to be spent on the Project, accompanied by.an opinion by the Texas Attorney General or other legal
opinion, the source of which is agreed upon by Developers and City, confirming that said Spend'urg Plan complies
with the terns of Section 351 of the Texas Tax Code, as it may be amended from time to time, applicable to
the Hotel Occupancy Tax Revenues.
2.3 "Assessed Taxable Value" means the taxable assessed ad valorem tax values set annually by the
Jefferson County Appraisal District with respect to the Property, improvements, and tangible personal
property included in the Project, including all improvements now or hereafter included therein, but excluding any
assessed value attributable to the Property as of January 1, 2015 and excluding any assessed value attributable
to inventory.
2.4 "Base Year Value" means the "Taxable Value" of all realty improvements of the Developers and/or its Affiliates,
and which are located within the County as of January 1; 2015, as certified by the Jefferson County Appraisal
District.
2.5 "Certificate of Occupancy" shall mean that document entitled "Certificate of Occupancy" (or. other similar
title) issued by City upon substantial completion of certain portions of the Protect in accordance with all
applicable codes, regulations, and ordinances of City. A Certificate of Occupancy shall not include a
certificate issued in error, mistake or misrepresentation of facts, but shall include any temporary certificate of
occupancy or other document authorizing temporary or conditional occupancy.
2.6 "Chapter 380 Payment(s)" means the amounts) payable by City to Developers under Article V of this
Agreement, to be paid from Property Tax Revenue or Hotel Occupancy Tax Revenue.
2.7 "Commence Construction" means (i) to commence the work of constructing the improvements or features
with all approvals thereof required by applicable governmental authorities obtained as necessary; (ii) a notice to
proceed lips been issued to the contractor; (iii) onsite construction of the site development components (such as
drainage, extensive grading or utilities) is underway and being pursued; and (iv) sufficient available funds are
evidenced as required in Section 1.2 (C) herein.
2.8 "Completion" means, issuance of Certificates of Occupancy for the improvements or features for which
Certificates of Occupancy may be issued, and all the improvements or features as outlined in Article IV are ready to
Open for Business.
2.9 "Compliance" means timely, fully and completely perfonning or meeting each and every term,
requirement; obligation, performance criteria, duty, condition or warranty as stated in this Agreement.
2.10 "Construction Sales and Use Tax Revenues" means the locally paid portion of sales and/or use tax
revenues paid to the City by the Texas State Comptroller as the result of purchases of taxable items in
connection with the construction of an improvement or feature of the Project during the term of the
Agreement, with a goal to use suppliers and providers local to Beaumont.
2.11 "Continuously Operate" means (i) operation in accordance with the standards of operation of
comparable facilities, without interruption for any reason other than Down Times and (ii) possession of
all personal property and inventory necessary for the operation in accordance with the standard of
operation of comparable facilities.
2.12 "Water Park Area" means an approximately 13.22 acre area depicted in Exhibits "A" and "B" that may
include parking area similar to the space within the area depicted for the lease area.
2.13 "Development Fees" means any and all fees imposed by City upon Developers (including but not
limited to Developers' affiliates, assigns, successors, related parties, contractors and subcontractors) in any
way related to Developers' platting, zoning, permitting, designing, building, constructing or developing
the Project. Development Fees shall include but not be limited to pernmitting/approval fees, inspection fees
and supervision fees.
2.14 "Down Times" means temporary cessation of operation of all or substantially all of a facility for, and
only for, limited periods of time for the limited purpose of, and only for the limited purpose of, one or
more of the following circumstances for the applicable period specified below:
(a) during the period following any fire or other casualty or condemnation or other exercise by a
governmental authority of time power of eminent domain, to the extent, and only to the extent, necessary to
adjust time claim and take other actions related to the repair and restoration of the facility;
(b) as a result of such commercially reasonable interruptions for repairs, remodeling or installation of
new equipment as are incidental to t'Ihe normal operation of the facility after notice to the City with regard
thereto;
(c) during any period required by applicable law, to the extent, and only to the extent, that tlhe necessity of
compliance is not the result of Developers' failure to timely fulfill its obligations under this Agreement;
(d) in keeping with the standard hours and days of operation of comparable facilities taking into account
the seasonal nature of the Projectand the fact that operation of portions of the Proiect are subject to
weather conditions; or
(e) during any period of Force Majeure or during any period Developers, or any operator of any element
of the Project reasonably deems it is socially irresponsible to operate all or part of the facilities due
to circumstances which are not Force Majeure but under which a socially responsible operator would
temporarily curtail or cease operations, such as if a pervasive flu or other communicable illness were
present or threatened; provided, however, that during the Down Times described in clauses (a) through .
(e) above, Developers shall (i) use its commercially reasonable efforts to minimize the disruption of
such Down Time and (ii) use its commercially reasonable efforts to minimize the disruption to the
areas of the facility which remain open to the public, if any, and the services, aesthetic appearances and
public and guest access to and in such portions of the facility.
"Effective Date" means the first date by which this Agreement has been signed by all of the parties hereto.
2.15 "EIigible Property" means that property identified and described in Exhibit "B" which is eligible for
the tax incentives provided for herein.
2:16 "Federal Bankruptcy Code" means Title 11, United States Code, as amended, and any successor statute.
2.17 "Fiscal Year" shall mean the twelve consecutive month period designated by the City as its fiscal year.
As of the date of this Agreement, the City's fiscal year commences on October] and ends on September30.
2.18 "Force Majeure" means any act that (a) materially and adversely affects the affected Parry's ability to perform
the relevant obligations under this Agreement or delays such affected Party's ability to do so, (b) is beyond the
reasonable control of the affected Party, (c) is not due to the affected Party's negligence or willful misconduct
and (d) could not be avoided by the Party who suffers it by the exercise of commercially reasonable efforts
(provided that such commercially reasonable efforts shall not require such Party to expend a material amount of
money to avoid tlhe act giving rise to a Force Majeure). Subject to the satisfaction of the conditions set forth in (a)
through (d) above, Force Majeure shall include but not be limited to: (i) natural phenomena, such as storms,
floods, lightning and earthquakes; (ii) wars, civil disturbances, revolts, insurrections, terrorism, sabotage and
threats of sabotage or terrorism; (iii) transportation disruption, whether by ocean, rail, land or air, (iv) strikes or
other labor disputes that are not due to the breach of any labor agreement by the affected Party; (v) fires; (vi)
the unavailability of necessary and essential equipment or supplies; (vii) a breach by the City of this Agreement or
any other actions, omissions of or delays by a Governmental Authority (including the actions of City in its
capacity as a Governmental Authority) that were not voluntarily induced or promoted by the affected Party, or
brought about by the breach or noncompliance by the affected Party of its obligations under this Agreement
or any applicable Iaw; and (viii) failure of the other Party to perform any of its obligations under this
Agreement within the time or by the date required pursuant to the terns of this Agreement for the performance
thereof; provided, however, that under no circumstances shall Force Majeure include any of the following events:
(A) economic hardship; (B) changes in market condition; or (C) weather conditions which could be
anticipated by experienced contractors operating at the relevant location and exercising commercially reasonable
business judgment.
2.19 "Hotel" means a 200 room Embassy Suites Convention Hotel.
2.20 "Insolvent" means failure to timely pay debts in the ordinary course of business or failure to pay all debts when
and as they become due, or insolvent within the meaning ofthe Federal Bankruptcy Code.
2.21 "Licensing Agreement" has the meaning assigned to such term in Article IV.
2.22 "Management Agreement" has the meaning assigned to such term in Article IV.
2.23 "Maximum City Commitment" shall mean the largest commitment due by the City to the Developers as
detennined in Article. V.
2.24 "Open for Business" means open for full-time business operations with products and/or services that
are necessary for Continuous Operation of the Water Park.
2.25 "Property Tax Revenues" means the M&O portion only of the City ad valorem taxes attributable to a
completed feature or improvement of.the Project for the Term of the Agreement and collected by the
City in each Fiscal Year.
2.26 "Reimbursement Amount" shall mean the portion' of the Property Tax Revenues, that the City
agrees to pay to the Developers during the Term of the Agreement, but limited to the maximum City
Commitment as stated herein, if the Developers satisfies the conditions thereto stated in. this Agreement. The
Reimbursement Amount shall not include any other revenues or other fees collected by the City from the
Project.
2.27 "Reimbursement Account" shall mean the special account created by the City as described in Article V of
this Agreement.
2.29 "Tenn" means the period defined in Article III of this Agreement.
2.30 "Waterpark"/ "Project" means a waterpark costing a minimum of $1 Million and include but not be limited to
such elements as tube chutes, momentum rivers, torrent rivers, water slides, pools, shade structures, and other elements
typically found in a three (3) acre or greater waterpark.
ARTICLE III
TE
The term of this Agreement (the "Term") will begin on the Effective Date and will terminate upon the
first to occur of (a) Ten (10) frill calendar years after the Completion of the Project; (b) payment in full from City
to Developers of the entire City Commitment contemplated herein; or (e) ierrnination as providedforherein.
ARTICLE IV
DEVELOPERS REQUIREMENTS
4.1 Development of Proiect. If the Developers performs the following requirements, pertaining to the Water
Park, City agrees to pay the Chapter 380 Payments as stated in this Agreement with respect to the Project:
(A) if Developers achieves Completion of the Water Park within the time fume described below, subject to
extension for Force Majeure or delay due to meeting governmental environmental compliance requirements,
Developers shall receive the Chapter 380 Payments as stated herein. Should Developers fail to achieve
Completion of the Water Park within this time .frame Developers shall forfeit all Chapter 380 Payments and this
Agreement shall terminate.
(I3) Developers must Commence Construction of the Water Park no later than Fifteen (15) months
after the Effective Date of this Agreement, subject to extension upon approval by the City Manager or
designee, and must reach Completion of the Water Park no later than Thirty Six (36) months after it Commences
Construction, subject to extension upon approval by the City Manager or his designee. Notwithstanding the
foregoing, this Section 4.1 (B) is subject to whole or partial exception only if approved by Resolution of the
Beaumont City Council.
(C) The Developers shall pay, or cause third parties to pay, its engineering, planning, accounting,
architectural, legal fees and expenses, survey, testing, laboratory costs, license fees, land clearing and
grading costs, advertising and other bidding costs, amounts due under construction contracts, costs of labor and
material, insurance premiums, interest, cany cost, financing fees and other costs and expenses inured in
connection with the construction of Developers improvements and features.
(D) If requested by the City, the Developers Hurst reasonably assist the City in the preparation of any
documentation necessary to enable the City to prepare and obtain approval of any of the documents or actions
required of the City to perform any of its obligations under this Agreement. The City shall not be responsible for
any of such costs out of its current revenues or other sources, except in accordance with payment of Chapter 380
Payments to the Developers as provided in this Agreement.
(E)Upon Completion of the Project and during the term of this Agreement, the Developers and/or its
designee shall maintain the property, improvements and premises in a commercially reasonable manner, comparable
to the maintenance of similar establishments, and minimize Down Times.
(F) Developers may spend Chapter 380 Payments received as Reimbursement Amounts or in satisfaction
of other City Commitment on improvements or other lawful uses only within the Project boundaries.
4.2 Operational Requirement. During the Term following Completion of a Water Park on the Ford Park Project
site, a Water Park must be Continuously Operated, subject only to seasonal considerations, legitimate Down Time,
or to Force Majeure. If a Water Park once in operation is not Continuously Operated during any calendar year,
subject to the foregoing, then upon written notice thereof being given to Developers or Operator by the City and the
failure of Developers, within sixty (60) days after the city gives said notice, to commence Continuous Operation of
the Water Park, Developers shall not be entitled to any Chapter 380 Payments for the remainder of the Term unless
Developers obtains a Variance under Section 13.18herein. Failure of the Water Park to Continuously Operate as
defined herein will be considered an incident of default and will jeopardize the Chapter 380 payments to both the
Water Park Developers and the Hotel Developers for the remainder of the term.
4.3 Trade name and Related Matters. Prior to when Developers Commence Construction of the Water Park,
(and as a condition precedent to such being deemed to have occurred), Developers shall enter into a Management
agreement (the "Management Agreement") (Exhibit "D") and a licensing agreement (the "Licensing Agreement")
(Exhibit "E") with an operator.
4AManagenlent, The Management Agreement (Exhibit "C") will provide that (i) Developers and operator
will include the trade name described in Section 4.4 and "13=1111011fin the signage and promotional materials pertaining
to the Water Park so long as the Licensing Agreement is in full force and effect and (ii) the operator will
operate the Water Park and will, among other things, provide the employees and the expertise and
management required for such operation. If the Management Agreement is terminated or expires during the
Term of this Agreement; City shall have the right to approve the replacement operator or the replacement party
who does so control the operations and policies of the operator, as applicable, provided in all events City shall
exercise its approval right in a reasonable planner. If City and Developers are not able to agree on a
replacement operator or a replacement control patty for operator within sixty (60) days following the
recommendation of Developers or operator, as applicable, Developers may proceed to retain fihe replacement
operator or operator may transfer control to the replacement control panty, as applicable, but City may elect to
suspend payment of any further Chapter 380 Payments for the Water Park Project and any expansion of the Water
Park Project in file event that during the thirty-six (3 6) month period immediately subsequent to such replacement, for
a period of twelve (12) consecutive months the Water Park (i) fails to achieve revenue at least equal to eighty percent
(80%) of its revenue during the twelve (12) months immediately preceding such replacement; or (ii) it is not operated
and maintained to the same standards of operation, maintenance, and aesthetics as water parks in demographically
similar markets, including with respect to safety.
4.5 Compliance with City Standards. Developers acknowledges that, unless specifically otherwise
provided in this Agreement, development of the Project must comply with all applicable City codes and
ordinances. For any development requirements not covered in this Section or in the remainder of the
Agreement, the applicable City code and ordinance provisions shall control.
ARTICLE V
5.1 Project Financing: Reimbursement Account / Reimbursement Amount. The City hereby covenants
and agrees upon the Effective Date of this Agreement to create a special account (tile "Reimbursement
Account") for the benefit of the Developers for the purpose of paying the Reimbursement Amount. The
City shall fund the Reimbursement Account through the Terni of this Agreement from the following
sources and in the following manner: (i) with respect to the portion of the Reimbursement Amount
calculated based on the M&O portion only of the Property Tax Revenues, the City shall annually fund the
Reimbursement Account from the M&O portion only of the Property Tax Revenues collected within the
Project. The City shall establish a separate account for Reimbursement. This account shall always remain
unencumbered by the City and segregated from ail other funds of the City.
5.2 Ci , Commitment.
(A) Pursuant to its authority under Chapter 380, the City hereby agrees to pay the Reimbursement
Amount to the Developers. It is intended by the parties that the Reimbursement Amount will be paid by
the City solely out of the Reimbursement Account and used to make Chapter 380 Payments to the
Developers as provided in this Agreement (tile "City Commitment"). The City Commitment will
commence upon Completion of the Water Park and will continue through and until the Reimbursement
Amount has been paid. The City agrees that it will pay the Reimbursement Amount during the term of
this Agreement, as an unconditional obligation of the City (but solely from the Reimbursement Account), if
the Project is Commenced and Completed as required herein and generates the Reimbursement Amount.
TIIe reimbursement will not begin until the Water Park is completed and operational.
(B) The Parties agree that the maximum City Commitment shall be as stated in Sections 5.3and
6.1 herein, and such obligation on behalf of the City will be limited solely to the finds deposited into the
Reimbursement Account pursuant to this Agreement. Upon such time as the City has paid the maximum
City Commitment in full, the City shall have no further obligation under this Agreement.
(C) Property Tax Revenues. During the Term of this Agreement, the City shall determine
annually the amount of the Property Tax Revenues received by the City and attributable to completed
features within the Project boundaries in cooperation with the Developers. The City hereby agrees to deposit
into the Reimbursement Account annually from available fiords in the City's General Fund an amount
equal to the M&O portion only of said Property Tax Revenues in the percentages stated in Section 5.3
herein, and hereby pledges such fund to the payment of the City Commitment as provided herein. The City
shall maintain complete books and records showing deposits to and disbursements from the Reimbursement
Account, which books and records shall be deemed complete if kept in accordance with generally accepted
accounting principles as applied to Texas municipalities. Such books and records shall be available for
examination by the duly authorized officers or agents of the Developers during normal business hours upon
request made not less than five (5) business days prior to the date of such examination. The City shall
maintain such books and records throughoutthe tenn ofthis Agreement and store the same for four years thereafter.
5.3 Reimbursement Amounts to be Paid by City to Developers.
Property Tax Revenues: Developers shall provide the City an annual paid property flax bill, no later
than March I of each year, stating Developers' figures attributable to the completed features within the
Project boundaries and the corresponding amount of Property Tax Revenues. Within Sixty (60) days of
receiving written .request from Developers, accompanied by all reasonable supporting documentation from
Developers that it has fully complied with its performance requirements, subject to the satisfaction of
Developers' Commitments under Article IV herein and Developers' timely and full compliance with all
applicable terms and conditions contained in this Agreement, City shall pay to Developers the applicable
Chapter 380 Payments attributable to the completed features of the Water Park within the Project boundaries
based on the percentages stated below for the applicable Tax Revenues collected by City on the completed
Water Park features, subject to the limitations set forth herein. Developers may spend said Chapter 380
Payments received as Reimbursement Amounts or in satisfaction of other City Commitment on
improvements or other lawful uses only within the Project boundaries.
ARTICLE VI
COMMITMENT OF PARTIES
6.1 Tine City Incentive Commitment to the Water Park Project is as follows:
Ad Valorem Tax abatement reimbursement at 100% for a period of tell (10) years.
6.2 The obligation and commitment of the Developers is as follows:
(A) Developers are obligated to construct and maintain during tine term of this agreement a Water
Park with a minimum of a ten acre area together with at least a $10 million Water Park improvement.
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If the Developers shall have made any false or substantially misleading statement herein or failed to
timely and fully perform as required in this Agreement, such shall be an Act of Default by Developers,
subject to Section 11.1 herein. Failure to fully comply with any one covenant or warranty shall
constitute an Act of Default by Developers, subject to Section 11.1 herein. Developers, as of the
Effective Date, make the following covenants and warranties to City, and agrees to timely and fully
perform the following obligations and duties.
7.1 Litigation. No litigation or governmental proceeding is pending or, to the knowledge of Developers,
or its respective general partner and officers, threatened against or affecting Developers, or tine
Property that may result in any material adverse change in Developers' business, properties or operation.
7.2 Untrue Statements. To the best of its knowledge, no certificate or statement delivered by Developers to
City in connection herewith, or in connection with any transaction contemplated hereby, contains any
untrue statement or fails to state any fact necessary to keep the statements contained therein from being
misleading except those which have been replaced by subsequent certificates or statements heretofore
given to the City in substitution.
7.3 Bankruptcy. There are no bankruptcy proceedings or other proceedings currently pending or.
contemplated, and Developers has not been informed of any potential involuntary bankruptcy proceedings.
7.4 Licenses and Authority. To the best of its knowledge, Developers have acquired and maintained all
necessary rights, licenses, permits and authority to carry on its respective businesses in Beaumont, Texas,
and will continue to use commercially reasonable efforts to maintain all necessary rights, licenses, permits and
authority to do so.
7.5 Payment of Taxes. Developers shall timely pay all taxes due and owing by it to all taxing authorities
having jurisdiction. In addition, Developers shall timely pay all employment, income, fi-anchise, and all
other taxes hereafter to become due and owing by it, respectively, to all local, state, and federal entities
subject, however to its right to contest the same in a lawful manner.
7.6 Timely Commencement, Continuous Operations. Developers acknowledge and agrees that if it fails to
Commence Construction of the Water Park and pursue its Completion within the time periods herein
provided, and Operator acknowledges and agrees that if the operator fails to Continuously Operate the
Water Park as herein provided, in either of said cases or events, the City has the right to terminate this
Agreement as herein provided.
7.7 Management Changes. Developers shall notify City in writing of any substantial changes in management
of Developers or operator within seven (7) days after Developers' or operator's knowledge thereof.
Substantial changes mean changes in Chairman of the Board, President, or Chief Executive Officer.
7.8 Ownership Changes. Developers shall notify City. in writing of any changes in ownership of any part of
the Project or of Developers or operator within seven (7) days after Developers' or operator's
knowledge thereof.
7.9 Succession of Ownership. No change of ownership or management of any part of the Project and/or a
change of ownership or management of Developers or of operator shall abate, waive, terminate or in any
way relieve Developers of its respective obligations herein.
7.10 Non-discrimination. Developers agree that, as to all of the programs and activities arising out of this
Agreement, it will not discriminate against any person on the basis of race, color, national origin, sex, or by
reason of being disabled.
7.11 Lessee/Owner Lists. Developers or operator shall provide to City in writing lists of all Project tenants or
other persons making sales or purchases of taxable items or real property in the Project, (the "Lessee/Owner
List"). Developers or operator will periodically and timely notify City of changes to the Lessee/Owner
List. Developers and operator are responsible as herein provided for supplying to City such identifying
infonnation for each person on the Lessee/Owner List as is required by the Comptroller to issue their sales tax
area reports.
7.12 Employment of Undocumented Workers. The Developers does not and agrees that it will not
knowingly employ any undocumented worker.
ARTICLE VIII
[Intentionally Left Blank)
ARTICLE IX
Subject to the terms of Article V herein, City, under the following circumstances, and at its sole discretion,
may temporarily suspend making Chapter 380 Payments under this Agreement and/or terminate this
Agreement, without liability to Developers, and all fixture payment obligations shall automatically cease upon
anyone of the following events:
9.1 Receiver. The appoinbrient of a receiver for Developers, or of all or any substantial part of its property,
and the failure of such receiver to be discharged within sixty (60) days thereafter.
9.2 Bankruptcy. The adjudication of Developers as a bankrupt.
9.3 Bankruptcy Petition. The fling by Developers of a petition or an answer seeking bankruptcy,
receivership, reorganization, or admitting the material allegations of a petition filed against it in any bankruptcy
or reorganization proceeding.
9.4 Failure to Comply with Audit Requirements. The failure, of Developers or Operator to reasonably cooperate
with the City in the monitoring process described in Article X below.
ARTICLE X
REPORTING AND AUDITING
10.1 Audit by the City. The City may audit Developers' and operator's records to determine their
compliance with the terns of this Agreement. This audit will be done by the City on an annual basis in March of
each year. During the monitoring process, the City will make maximum use of any State submissions for the
determination of Reimbursement Amount. Developers and operator shall provide the City an annual report; no
later than March l of each year, stating Developers' and operator's figures attributable to the completed features
within the Project boundaries and the corresponding amount of Ad Valorem, Property Tax paid to the City by
Developers:
10.2 Access to Records / Right to Audit. Developers and operator, during normal business hours shall allow City
reasonable access to its records and books and all other relevant records related to each of the economic
development considerations and incentives and performance requirements, as stated in this Agreement, but the
confidentiality of such records and information shall be maintained by City unless disclosure of such records and
information shall be required by a court order, a lawfully issued subpoena, or at the direction of the Office of the
Texas Attorney General.
ARTICLE XI
DEFAULT
11.1 Default. Subiect to Force Majeure and any consent given under Section 11.2 or Variance granted
under Section 13.I 8, should Developers fail to timely, fully and completely_ keep or perform any one or more of
the covenants or warranties made by Developers in this Agreement (but excluding achieving satisfaction of any
condition to file Developers' right to receive Chapter 380 Payments under this Agreement), such failure to
perforn shall be an Act of Default by Developers and, if not cured and corrected within sixty (60) days after
written notice to do so or by express waiver by the Beaumont City Council, City may terminate this Agreement
and cease making any further Chapter 380 Payments which have not been earned by performance by Developers
theretofore. Developers shall be liable to City for any actual damages sustained by the City as a result of said
Act of Default by Developers underthis Agreement, subject to the provisions of Section 13.20.
11.2 Consent and Excuse. In the event of unforeseeable third party delays which are not Force Majeure
and upon a reasonable showing by Developers that it has immediately and in good faith commenced and is
diligently and continuously pursuing the correction, removal or abatement of such delays by using
commercially reasonable efforts, the Beaumont City Council may consent to and excuse any such delays,
which consent and excuse shall not be unreasonably withheld, delayed, or conditioned.
11.3 City Dela . Any delay for any amount of time by City in providing notice of Default to Developers or Operator
hereunder, shall in no event be deemed or constitute a waiver of such Default by City of any of its rights and
remedies available in law or in equity.
11.4 City Waiver. Any waiver granted by City to Developers or Operator of an Act of Default shall not be deemed or
constitute a waiver of any other existing or future Act of Default by Developers or of a subsequent Act of
Default ofthe same act or event by Developers.
ARTICLE XII
CITY'S LIABILITY LIMITATIONS
Should City fail to timely, fully and completely comply with any one or more of the requirements, obligations,
duties, terms, conditions or warranties of this Agreement, such failure shall be an Act of
Default by City and City shall have sixty (60) days to cure and remove the Default after receipt of written
notice to do so fiom Developers or Operator.
ARTICLE XIH
13.1 Sigii_Permitting. Prior to submitting any building permit applications for any sign, Developers shall
obtain necessary approval from City for plans for signs in compliance with City codes and ordinances.
13.2 Permitting. Subject to Developers' complying with all applicable laws, City agrees to cooperate with Developers
to expeditiously process permits, including plat applications, site plan applications, building permit applications,
building and construction inspections required for the Project to be in a state of Completion.
13.3 Binding; Effect, This Agreement will be binding on and inure to the benefit of the parties and their
respective successors and assigns.
13.4 Assignment. Except as provided below, Developers may not assign all or part of its rights and
obligations under this Agreement to a third party without prior written approval of City, which approval
will not be unreasonably withheld, delayed or conditioned. The City does, however, in the best interest
of the citizens of Beaumont, reserve the right to exercise its, right to withhold approval should it
reasonably determine that a prospective third party does not satisfy the requirements established
herein. The City agrees, however, that the Developers may assign all or part of its rights and obligations
under this Agreement to any entity affiliated with the Developers by reason of controlling, being controlled
by, or being under common control with the Developers; to a subsequent Developers of all or any part
of the Project; to a tenant in the Project or to a third party lender o r R E I 'T advancing funds for the
construction or operation of the Project. The City expressly consents to any assignment described in
the preceding sentence, and agrees that no further consent of City to such. an assignment will be
required. The Developers agrees to provide City with written notice of any such assignment.
13.5 Termination. If Developers elects not to proceed with the development of a Water Park as
contemplated by this Agreement, Developers will notify City in writing, and this Agreement and the
obligations of the parties will be deemed terminated and of no further force or effect as of the date of such
notice Developers and all parties shall be fully released of any further obligations under this Agreement
relating to Project.
13.6 Notice. Any notice or other communication ("Notice") given under this Agreement must be in
writing, and may be given: (i) by depositing the Notice in the United States Mail, postage paid, certified,
and addressed to the party to be notified with return receipt requested; (ii) by personal delivery of the
Notice to the party, or an agent of the party; or (iii) by confirmed facsimile, provided that a copy of the
Notice is also given in one of the manners specified in (i) or (ii). Notice deposited in the mail in the
manner specified will be effective three (3) business days after deposit. Notice given in any other
manner will be effective only if and when received by the party to be notified, For the purposes of Notice,
the addresses of the parties will, until changed as provided below, be as follows:
Developers: Pate Development, LP
Attention: Britt Pate
550N. 159th St. E., Suite 204
Wichita, Kansas 67230
Ph: (316) 448-1000
Facsimile: (316) 219-5256
Deven l3hakta
ZJZ Hospitality laic.
4639 Corona Drive, Suite 55
Corpus Christi, TX 78411
with a copy to:
Attorney: David G. Crockett
I005 N. Market
Wichita, Kansas 67214
Ph: (316) 263-9662
Facsimile: (316) 263-7220
Willi a copy to:
City: City of Beaumont Attim City Manager
P.O. Box 3827
Beaumont, Texas 77704
Ph: (409) 880-3716
Facsimile: (409) 880-3112
Willi a copy to:
CityAttomey
P.O. Box 3827 Beaumont,
Texas 77704 Ph. (409) 880-
3715
Facsimile: (409) 880-3121
Any party may designate a different address at anytime by giving Notice to the other party.
13.7 Interpretation. Each of the parties has been represented by counsel of their choosing in the negotiation
and preparation of this Agreement. In the event of any dispute regarding the interpretation of this Agreement,
this Agreement will be interpreted fairly and reasonably and neither more strongly for nor against any party
based on draftsmanship.
13.8 Relationship of the Parties. This Agreement will not be construed as establishing a partnership or joint
venture, joint enterprise, express or implied agency, or employer-employee relationship between the parties. Neither
City, nor its past, present or future officers, elected officials, employees or agents, assume any responsibility
or liability to any third party in connection with the development of the Project or the design, construction or
operation of any portion ofthe Project.
13.9 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or
future laws, it is the intention of the parties that the remainder of this Agreement not be affected and it is.also
the intention of the parties that, in lieu of each provision that is found to be illegal, invalid or unenforceable, a
provision be added to this Agreement which is legal, valid or enforceable and is as similar in terms as
possible to the provision found to be illegal, invalid or unenforceable.
13.10 Para aph Headings, Etc. Theparagraph headings contained in this Agreement are for
convenience only and will in no way enlarge or limit the scope or meaning of the paragraphs.
13.11 No Third Party Beneficiaries. This Agreement is not intended to confer any rights, privileges or causes of
action upon any third party.
Indemnity:
13.12 Developers agrees to defend, indemnify and hold harmless City, including its employees,
agents and representatives (collectively indemnitees), from and against any claim, demand, cause of
action, liability, loss or expense arising from injury, death or from damage to or loss of property to
the extent arising directly or indirectly or out of any acts or omissions of Developers, its contractors
or subcontractors. Developers' defense and indemnity obligations hereunder include claims and
damages arising from non -delegable duties of Indemnitees or arising from use by Developers of
construction equipment, tools, signs or facilities furnished to Developers by Indemnitees.
13.13 Developers' defense and indemnity obligations shall include the duty to reimburse any
attorney's fees and expenses incurred by Indemnitees for legal action to enforce Developers'
indemnity obligations. Developers' duty to defend Indemnitees shall be independent and in
addition to the duty to indemnify and hold harmless, such that Developers shall not be entitled to
reimbursement from Indemnitees for defense costs and attorneys' fees incurred in defending
Indemnitees, even in the event that a claim proves to lack merit. This indemnification obligation
shall not be limited in any way by any limitation on the amount of type of damages, compensation
or benefits payable by Developers or any of its contactors or subcontractors under Workers'
Compensation acts, disability acts or other employee benefits. In the event Developers is obligated
to defend City, Developers shall provide competent counsel for such defense within ten (10)
calendar days of City's request for defense. In the event Developers does not provide counsel
within such time period, then City may appoint its own counsel, which will be for Developers'
account until Developers substitutes counsel of its choice acceptable to the City.
13.14 In the event that the indemnity provisions in this Contract are contrary to the law governing
this Contract, then the indemnity obligations applicable hereunder shall be construed to be to the
fullest extent allowed by applicable law.
Insurance:
13.15 Developers shall, at its sole cost, require its contractors and subcontractors of all tiers to,
obtain and maintain in force for the duration of the Contract insurance of the following types, with
limits not less than those set forth below for: 1) all Developers' work, both on and off worksite,
and 2) all contractors' and subcontractors' work on and off the worksite.
13.15.1 Workers' Compensation Insurance, including occupational illness or disease coverage, in
accordance with the laws of the State of Texas with a minimum limit of (proper amount TBD) per
accident and, for bodily injury by disease of (proper amount TBD)_per employee. Developers shall
not utilize occupational accident or health insurance policies, or the equivalent, in lieu of mandatory
Workers' Compensation Insurance or otherwise attempt to opt out of the statutory Workers'
Compensation system. '
13.15.2 Commercial General Liability Insurance with a minimum combined single limit of liability
of (proper amount TBD) each occurrence for bodily injury and property damage; with a minimum
of liability of (proper amount TBD) each person for personal and advertising injury liability. The
policy shall be endorsed by City, including its respective agents and representatives as additional
insureds with coverage identical to those provided in this section.
13.15.3 Automobile Liability Insurance covering use of all owned, non -owned and hired
automobiles with a minimum combined single limit of liability for bodily injury and property
damage of (proper amount TBD) per occurrence.
13.15.4 If Developers will utilize tools or equipment in the performance of its services under the
Contract, Equipment Floater Insurance (Tools and Equipment Insurance) covering physical damage
to or loss of all major tools and equipment, construction office trailers and vehicles shall be
obtained.
13.15.5 All insurance provided by Developers under this Section 13.15 shall include a waiver of
subrogation by the insurers in favor of City. Developers hereby releases City, including its
erxrployees, agents and representatives, for losses or claims for bodily injury, property damage or
other insured claims, REGARDLESS OF THE CAUSE INCLUDING NEGLIEGENCE OF CITY,
arising out of Developers' performance under the Contract.
13.15.6 Certificates of Insurance satisfactory in form to City shall be supplied to City evidencing
that the insurance required above is in force, that not less than thirty (30) days written notice will be
given to City prior to any cancellation or restrictive modification of the policies, and that the
waivers of subrogation are in force. Developers shall also provide with its Certificate of Insurance
executed copies of the additional insured endorsements and dedicated limits endorsements required
in this Article 13.16.
13.15.7 Additional Insured: Developers will add City to its Comprehensive General Liability
Insurance Policy as an additional insured to be given the same liability insurance coverage as
Developers. Developers shall also provide with its Certificate of Insurance executed copies of the
additional insured endorsements and dedicated limits endorsements.
13.15.8 Certificates of Insurance satisfactory in form to City shall be supplied to City evidencing
that the insurance required above is in force, that not less than thirty (30) days written notice will be
given to City prior to any cancellation or restrictive modification of the policies, and that the
waivers of subrogation are in force.
13.16 Counterparts. -This Agreement may be executed simultaneously in two or more counterparts, each of
which will- be deemed an original, but all of which will constitute one and the same instrument. A
facsimile signature will be deemed to be an original signature for all purposes.
13.17 Exhibits. The following exhibits are attached to and incorporated into this Agreement for all
purposes:
Exhibit "A:" Water Park Project Description
Exhibit "B:" Project Boundaries: Field Notes/Metes and Bounds
Exhibit "C:" Management Agreement
Exhibit "D:" Application for 380 Incentives
13.18 Variances. The Beaumont City Council, in its sole discretion, may grant and approve variances to
Developers or Operator from the perfor►nance criteria and development standards described herein upon
application in writing therefore by Developers on behalf of itself or the Operator.
13.19 Balance Owed under the Agreement. The total amount of money awarded in an adjudication
brought against City for breach of this Agreement is limited to the following: (i) the balance then due and
owed by City under the Agreement plus any balance which may become due by City during the
remaining term of the Agreement, including any amendments thereto; (ii) interest as allowed by law; and
(iii) attorney's fees as allowed`by law.
13.20 Damages not included. Damages awarded in an adjudication brought against City or Developers
arising under the Agreement, including any amendments thereto, may not include: (i) consequential
damages, except as )expressly allowed under Section 13 . 1 9 above; (ii) exemplary damages; or (iii)
damages for unabsorbed home office overhead.
ARTICLE XIV
GENERAL TERMS
14.1 Entire Agreement. This Agreement embodies the complete Agreement of the parties hereto,
superseding all oral or written, previous and contemporary, agreements between the parties relating to
matters in this agreement; and, except as otherwise provided herein, this Agreement cannot be modified or
amended without a written agreement of the parties.
14.2 Law. This Agreement is subject to all legal requirements in City Charter and Code of Ordinances of
City of Beaumont, Texas and all other applicable County, State and Federal laws, and Developers and Operator
agree that it will promptly comply with all such applicable laws, regulations, orders and rules of the State,
City and other applicable governmental agencies. This Agreement shall be governed by and construed in
accordance with the laws and court decisions of the State of Texas without regard, however, to the conflicts of
laws provisions of Texas law.
14.3 Venue. Venue for any legal action related to this Agreement is in Jefferson County, Texas.
14.4 Confidential. City, its officers and employees, and its agents or contractors retained to perform
economic development services for City, shall treat as confidential the financial statements and
information together with any proprietary information delivered by Developers, Operator or their
respective representatives to City .and its representatives and shall not release such information to the
public, unless required by law or court order. City shall immediately notify Developers of requests or court
orders to release such information.
14.5 Exhibits. Exhibits "A" through "E" attached hereto are made a pall of this Agreement for all
purposes as if they were set forth herein in their entirety.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
MECUIEDtobeefledi-w asofthis dayol: .2015
PATE DEYLMENT,Signed on thPwtner
'Ld'L HOSPITALLITY, INC
Signed on this - o�� 2015
B•
Deven Bhalda
CITY OF BEAUMONT, TEE, a home -role municipal corporation
Signed on this day of .2015
AIIESC: CITY OF BEAUMONT
•I,inaBMMw1 i, Cityclerk Kylo I UC),c&, Chy anger
CHAPTER 3 80
ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT
BETWEEN
THE CITY OF BEAUMONT, TEXAS AND
PATE DEVELOPMENT, L.P.
AND
ZJZ HOSPITALITY, INC.
CHAPTER 380
ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT
This Chapter 380 Economic Development Incentive Agreement ("Agreement") is entered
into as of , 2015 by and among the CITY OF BEAUMONT, TEXAS, a
h o me rule city ("City'), ZJZ Hospitality, Inc., a Texas corporation ("Operator" and "Developer"),
and Pate Development, L.P, a Texas limited partnership or its assigns ("Developer").
RECITALS
WHEREAS, Jefferson County solicited proposals for the development of a Ford Park Convention
Hotel and Waterpark inside the City limits; and
WHEREAS, the Developers submitted a proposal for the development of a Convention
Hotel and Waterpark at Ford Park; and
WHEREAS, the Developers desire to develop a200 room Embassy Suites Convention Hotel as
more particularly described in the conceptual plan for the project attached hereto as Exhibit "A"
(the "Project") as more particularly defined below), in Beaumont, Jefferson County, Texas; and
WHEREAS, the City has established a program in accordance with Article III, Section 52-a
of the Texas Constitution and Chapter 380 of the Texas Local Government Code ("Chapter 380")
under which the City has the authority to make loans or grants of public funds for the purposes
of promoting local economic development and stimulating business and commercial activity within
the City; and
WHEREAS, the Developers have applied for development incentives from the City of
Beaumont (Exhibit "E"); and
WHEREAS, the Beaumont City Council has adopted Resolution No.
authorizing City to make certain economic development incentives to Developers in
recognition of, conditioned upon and derived from the positive economic benefits that will
accrue to City through Developers' development of a convention hotel project at an
approximate Capital Investment by Developers of $30,000,000, all as more particularly
described herein on EXHIBIT "A;" and
WHEREAS, the incentives to Developers tinder this Agreement are exclusively
perfonnance-based so that no abatements will be made to Developers until and unless the 200
room Embassy Suites Convention Hotel and Waterpark, as described, below, are constructed and
operated; and
WHEREAS, Developers estimate the total Capital Investment in the Project (as defined herein)
will be approximately Thirty Million Dollars ($30,000,000), for the convention suites hotel, all as
more particularly described herein and in the field notes and metes and bounds attached hereto as
EXHIBIT "B,"; and
WHEREAS, the City has concluded and hereby finds that this Agreement promotes
economic development in the City of Beaumont and, as such, meets the requirements under
Chapter 380 and the City's established economic development program, and, further, is in the best
interests of the City, Developers and Operator; and
WHEREAS, the City recognizes the positive economic impact that the Project will bring
to the City through development and diversification of the economy, reduction of
unemployment and underemployment through the production of new jobs, the attraction of new
businesses, and the additional tax revenue generated by the Project for the City; and
WHEREAS, in consideration of the development, construction and building of the 200
room Embassy Suites convention hotel, which will assist in stabilizing the existing Sales Tax
Revenues, Property Tax Revenues and Hotel Occupancy Tax Revenues (as defined herein) to
the City and create approximately fifty-one (51) full time equivalent (1?TE) jobs located at
the Project, the City agrees to use such funds in order to provide the Reimbursement Amount
(as defined herein) to the Developers directly in the amounts described in Article V of this
Agreement; and
WHEREAS, to ensure that the benefits the City provides under this Agreement are utilized
in a manner consistent with Article III, Section 52-a of the Texas Constitution, Chapter 380 and
other law, the Developers have agreed to comply with certain conditions to the payment of those
benefits;
NOW, THEREFORE, in consideration of the mutual benefits described in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, City and Developers agree as follows:
ARTICLE I
REPRESENTATIONS
1.1 Representations of the City. The City hereby represents to the Developers that as of the date hereof
(A) The City is a duly created and existing municipal corporation and home rule
municipality of the State of Texas under the laws of the State of Texas and is duly qualified and
authorized to cant' on the governmental functions and operations as contemplated by this Agreement.
(B) The City has the power, authority and legal right under the laws of the State of Texas and the
City Charter to enter into and perform this Agreement and the execution, delivery and performance hereof
(i) will not, to the best of its knowledge, violate any applicable judgment, order, law or regulation, and
(ii) do not constitute a default under, or result in the creation of any lien, charge, encumbrance or
security interest upon any assets of the City under any agreement or instrument to which the City is a
party or by which the City or its assets may be bound or affected.
(C) This Agreement has been duly authorized, executed and delivered by the City and,
constitutes a legal, valid and binding obligation of the City, enforceable in accordance with its terns
except to the extent that (i) the enforceability of such instruments may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws of general application in effect from time to
time relating to or affecting the enforcement of creditors' rights and (ii) certain equitable remedies
including specific performance may be unavailable.
(D) The execution, delivery and performance of this Agreement by the City does not require the
consent or approval of any person which has not been obtained.
1.2 Representations of the Developers. The Developers hereby represent to the City that as of the date
of execution hereof;
(A) The Developers are duly authorized and existing and in good standing as a limited
partnership under the laws of the State of Texas, and shall remain in good standing as such in the State of
Texas during the Term of this Agreement. .
(13) The Developers have the power, authority and legal right to enter into and perform its
obligations set forth in this Agreement, and the execution, delivery and performance hereof, (i) have
been duly authorized, and will not, to the best of its knowledge, violate any judgment, order, law or
regulation applicable to the Developers or of the provisions of Developers' partnership agreement or
instruinent to which Developers are a party or by which it may be bound, and (ii) do not constitute a
default under or result in the creation of, any lien, charge, encumbrance or security interest upon any
assets of the Developers under any agreement or instrument to which the Developers are a party or by
which the Developers or their assets may be bound or affected.
(C) The Developers agrees to provide evidence to the City, no later than the date it Commences
Construction of the 200 room 1Jmbassy Suites Convention hotel, which evidence is subject to the
administrative approval of the City or its designee(s), whose approval shall not be unreasonably
withheld, of sufficient available fiends to perform its obligations under Article IV herein to complete the
convention hotel and water park, at the time it needs to have the funds in order to do so,
(D) This Agreement has been duly authorized, executed and delivered and constitutes a
legal, valid and binding obligation of the Developers, enforceable in accordance with its terms except
to the extent that (i) the enforceability of such instruments may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws of general application in effect from time to
time relating to or affecting the enforcement of creditors' rights and (ii) certain equitable remedies
including specific performance may be unavailable.
ARTICLE II
DEFINITIONS
The recitals to this Agreement are hereby incorporated for all purposes. The teens, "Agreement,"
"Chapter 380," "City," "Developers," "Operator," and "Project," shall have the meanings as referenced
above, and the following words or phrases shall have the following meanings:
2.1 "Act of Default" or "Default" means failure to timely, fully, and completely comply with one or more
requirements, obligations, performance criteria, duties, terms, conditions or warranties, as stated in this
Agreement.
2.2 "Annual Approved Spending Plan" means a detailed plan stating Developer's proposed use of Hotel
Occupancy Tax revenues to be spent on the Project, accompanied by an opinion by the Texas Attorney
General or other legal opinion, the source of which is agreed upon by Developers and City, confirming that
said Spending Plan complies with the tenors of Section 351 of the Texas Tax Code, as it may be
amended from tune to time, applicable to the Hotel Occupancy Tax Revenues.
2.3 "Assessed Taxable Value" means the taxable assessed ad valorem tax values set annually by
the Jefferson County. Appraisal District with respect to the Property, improvements, and tangible
personal property included in the Project, including all inprovements now or hereafter included therein,
but excluding any assessed value attributable to the Property as of January 1, 2015 and excluding any
assessed value attributable to inventory.
2.4 "Base Year Value" means the "Taxable Value" of all realty improvements of the Developers and/or their
Affiliates, and which are located within the County as of January 1, 2015, as certified by the Jefi'erson
County Appraisal District.
2.5 "Certificate of Occupancy" shall mean that document entitled "Certificate of Occupancy" (or other
similar title) issued by City upon substantial completion of certain portions of the Project in
accordance with all applicable codes, regulations, and ordinances of City. A Certificate of
Occupancy shall not include a certificate issued in error, mistake or misrepresentation of facts, but shall
include any temporary certificate of occupancy or other document authorizing temporary or conditional
occupancy.
2.6 Chapter 380 Payment(s)" means the annount(s) payable by City to Developers under Article V of this
Agreement to be paid from Property Tax Revenue or Hotel Occupancy Tax Revenue.
2.7 "Commence Construction" means (i) to commence the work of constructing the improvements or
features with all approvals thereof required by applicable governmental authorities obtained as
necessary; (ii) a notice to proceed has been issued to the contractor; (iii) onsite construction of the site
development components (such as drainage, extensive grading or utilities) is underway and being
pursued; and (iv) sufficient available funds are evidenced as required in Section 1.2 (C) herein.
2.8 "Completion" means, issuance of Certificates of Occupancy for the improvements or features for
which Certificates of Occupancy may be issued, and all the improvements or features as outlined in
Article IV are ready to Open for Business.
2.9 "Compliance" means timely, fully and completely performing or meeting each and every term,
requirement, obligation, performance criteria, duty, condition or warranty as stated in this Agreement.
2:10 "Construction Sales and Use Tax Revenues" means the locally paid portion of sales and/or
use tax revenues paid to the City by the Texas State Comptroller as the result of purchases of
Oki
taxable items in connection with the construction of an improvement or feature .of the Project
during the term of the Agreement, with a goal to use suppliers and providers local to Beaumont.
2.11 "Continuously Operate" means (i) operation in accordance with the standards of operation
of comparable facilities, without interruption for any reason other than Down Times and (ii)
possession of all personal property and inventory necessary for the operation in accordance
with the standard of operation of comparable facilities.
2.12 "Convention Hotel Area" means an approximately 3.329 acre area depicted in Exhibits "A" and
"B" that may include parking area similar to the space within the area depicted for the lease area.
2.13 "Development Fees". means any and all fees imposed by City upon Developers (including
but not limited to Developer's affiliates, assigns, successors, related parties, contractors and
subcontractors) in any way related to Developer's platting, zoning, permitting, designing,
building, constructing or developing the Project. Development Fees shall include but not be
limited to permitting/approval fees, inspection fees and supervision fees.
2.14 "Down Times" means temporary cessation of operation of all or substantially all of a facility
for, and only for, limited periods of time for the limited purpose of, and only for the limited
purpose of, one or more of the following circumstances for the applicable period specified below:
(a) during the period following, any fire or other casualty or condemnation or other exercise
by a governmental authority of the power of eminent domain, to the extent, and only to the extent,
necessary to adjust the claim and take other actions related to the repair and restoration of the facility;
(b) as a result of such commercially reasonable interruptions for repairs, remodeling or
installation of new equipment as are incidental to the normal operation of the facility after notice to
the City with regard thereto;
(c) during any period required by applicable law, to the extent, and only to the extent, that the
necessity of compliance is not the result of Developer's failure to timely fulfill its obligations under
this Agreement;
(d) in keeping with the standard hours and days of operation of comparable facilities taking into
account the seasonal nature of the Project and the fact that operation of portions of the Project
are subject to weather conditions; or
(e) during any period of Force Majeure or during any period Developers, Operator or any other
operator of any element of the Project reasonably deems it is socially irresponsible to operate
all or part of the facilities due to circumstances which are not Force Majeure but under
which a socially responsible operator would temporarily curtail or cease operations, such as -if a
pervasive flu or other communicable illness were present or threatened; provided, however, that
during the Down Times described in clauses
(a) through (e) above, Developers and Operator shall (i) use their commercially reasonable
efforts to minimize the disruption of such Down Time and (ii) use their commercially
reasonable efforts to minimize the disruption to the areas of the facility which remain open to
the public, if any, and the services, aesthetic appearances and public and guest access to and in such
portions of the facility.
2.15 "Effective Date" means the first date by which this Agreement has been signed by all of the
parties hereto.
2.16 "Eligible Property" means that property identified and described in Exhibit "B" which is
eligible for the tax incentives provided for herein.
2.17 "Federal Bankruptcy Code" means Title 11, United States Code, as amended, and any
successor statute.
2.18 "Fiscal Year" shall mean the twelve consecutive month period designated by the City as its
fiscal year. As of the date of this Agreement, the,City's fiscal year commences on Octoberl and ends on
September 30.
2.19 "Force Majeure" means any act that'(a) materially and adversely affects the affected Party's ability to
perform the relevant obligations under this Agreement or delays such affected Patty's ability to do so,,
(b) is beyond the reasonable control of the affected Party, (c) is not due to the affected Party's
negligence or willful misconduct and (d) could not be avoided by the Party who suffers it by the
exercise of commercially reasonable efforts (provided that such commercially reasonable efforts
shall not require such Patty to expend a material amount of money to avoid the act giving rise to a Force
Majeure). Subject to the satisfaction of the conditions set forth in (a) through (d) above, Force Majeure
shall include but not be limited to: (i) natural phenomena, such as storms, floods, lightning and
earthquakes; (ii) wars, civil disturbances, revolts, insurrections, terrorism, sabotage and threats of
sabotage or terrorism; (iii) transportation disruption, whether by ocean, rail, land or air, (iv) strikes or
other labor disputes that are not due to the breach of any labor agreement by the affected Party; (v)
fires; (vi) the unavailability of necessary and essential equipment or supplies; (vii) a breach by the City of
this Agreement or any other actions, omissions of or delays by a Governmental Authority (including the
actions of City in its capacity as a Governmental Authority) that were not voluntarily induced or
promoted by the affected Party, or brought about by the breach or noncompliance by the affected
Party of its obligations under this Agreement or any applicable law; and (viii) failure of the other
Party to perform any of its obligations under this Agreement within the time or by the date required
pursuant to the terms of this Agreement for the performance thereof; provided, however, that under no
circumstances shall Force Majeure include any of the following events: (A) economic hardship; (B)
changes in market condition; or (C) weather conditions which could be anticipated by experienced
contractors operating at the relevant location and exercising connnercially reasonable business
judgment.
2.20 "Hotel"/ "Project" means a 200 room Embassy Suites Convention Hotel.
2.21 "Hotel Occupancy Tax Revenues" means the seven percent (7%) Hotel Occupancy Tax revenues
derived from the operation by Developers of the Project for the Terni of the Agreement received by City
from the imposition by City of a municipal sales and use tax on the price paid for use or possession of
rooms in a hotel or other transient lodging accommodations at a rate of seven percent (7%) pursuant to
Chapter 351, Texas Tax Code, as it may be amended from time to time, or any successor statute but does
not mean the additional two percent (2%) collected by Jefferson County.
2.22 "Insolvent" means failure to timely pay debts in the ordinary course of business or failure to pay all
debts when and as they become due, or insolvent within the meaning of the Federal Bankruptcy Code.
2.23 "Licensing Agreement" has the meaning assigned to such terra in Article IV.
2.24 "Management Agreement" has the meaning assigned to such term in Article IV.
2.25 "Maximum City Cornmitrnent" shall mean the largest commitment due by the City to the
Developers as determined in Article. V.
2.26 "Open for Business" means open for full-time business operations with products and/or
services that are necessary for Continuous Operation of the Hotel.
2.27 "Property Tax Revenues" means the M&O portion only of the City ad valorem taxes
attributable to a completed feature or improvement of the Project for the Term of the Agreement
and collected by the City in each Fiscal Year.
2.28 "Reimbursement Amount" shall mean the portion of the Property Tax Revenues, and Hotel
Occupancy Tax Revenues that the City agrees to pay to the Developers during the Term of the
Agreement, but limited to the maximum City Commitment as stated herein, if the Developers
satisfy the conditions thereto stated in this Agreement. The Reimbursement Amount shall not
include any other revenues or other fees collected by the City from the Project.
2.29 "Reimbursement Account" shall mean the special account created by the City as described in
Article V of this Agreement.
2.30 "Resort Lodging" means any lodging unit, rented for less than thirty (30) days at one time
that generates Hotel Occupancy Tax Revenues for the City.
2.31 "Resort Retail" means the sale of goods and services by retailers of varying types each of
whose site square footage shall not exceed 20,000 square feet, an exception to which may be
made subject to approval by the City Manager or designee.
2.32 "Resort Residential" means any residential unit that does not generate Hotel Occupancy
Tax Revenues for the City and from which Property Tax Revenues shall not be generated as stated
herein for purposes of computation of the Reimbursement Amount to be paid to Developers as stated
herein.
2.33 "Term" means the period defined in Article III of this Agreement.
2.34 "Waterpark" means a waterpark costing at least $10 Million and include but not be limited to such
elements as tube chutes, momentum rivers, torrent rivers, water slides, pools, shade stiuctures, and other
elements typically found in a three (3) acre or greater waterpark.
ARTICLE III
TERM
This AGREEMENT shall be enforceable upon execution by both parties which date is defined
herein as the `Effective Date." The term of this Agreement (the "Term") will begin on the effective
date and will terminate on the first to occur of (a) Twelve (12) full calendar years after the Completion of
the Project; (b) payment in full from City to Developers of the entire City Commitment contemplated
herein; or ( c ) termination as provided for herein.
ARTICLE IV
DEVELOPER REQUIREMENTS
4.1 Development of Project. If the Developers performs the following requirements, pertaining to the
hotel, City agrees to pay the Chapter 380 Payments as stated in this Agreement with respect to the
Project:
(A) If Developers achieve Completion of the Hotel within the time frame described below,
subject to extension. for Force Majeure or delay due to meeting govenuZlental envirorunental compliance
requirements, Developers shall receive the Chapter 380 Payments as stated herein. Should Developers
fail to achieve Completion of the Hotel within this time frame Developers shall forfeit all Chapter 380
Payments and this Agreement shall terminate.
(B) Developers must Commence Construction of the Hotel no later than Fifteen (15) months
after the Effective Date of this Agreement, subject to extension upon approval by the City Manager or
designee, and must reach Completion of the Hotel no later than Thirty Six (36) months after it
Continences Construction, subject to extension upon approval by the City Manager or his designee.
Notwithstanding the foregoing, this Section 4.1 (B) is subject to whole or partial exception only if
approved by Resolution of the Beaumont City Council.
(C) The Developers shall pay, or cause third parties to pay, its engineering, planning, accounting,
architectural, legal fees and expenses, survey, testing, laboratory costs, license fees, land clearing
and grading costs, advertising and other bidding costs, amounts due under construction contracts, costs
of labor and material, insurance premiums, interest, carry cost, financing fees and other costs and
expenses incurred in connection with the construction of Developer improvements and features.
(D) If requested by the City, the Developers must reasonably assist the City in the preparation of
any documentation necessary to enable the City to prepare and obtain approval of any of the documents
or actions required of the City to perforin any of its obligations under this Agreement. The City shall
not be responsible for any of such costs out of its current revenues or other sources, except in accordance
with payment of Chapter 380 Payments to the Developers as provided in this Agreement.
(E)Upon Completion of the Project and during the term of this Agreement, the Developers and/or
Operator or the designee of one or both of them shall maintain the property, improvements and premises in a
commercially reasonable manner, comparable to the maintenance of similar establishments, and minuilize
Down Times.
(F) Developers may spend Chapter 380 Payments received as Reimbursement Amounts or in
satisfaction of other City Cominitment on improvements or other lawful uses only within the Project
boundaries.
(G) The Developers shall complete construction of an adjacent Waterpark with improvements
valued at a minimum of $10 Million.
4.2 Operational Requirement During the Term following Completion of a 200 room Embassy Suites
Convention Hotel on the Ford Park Project site, an Embassy Suites Hotel must be Continuously
Operated, 'subject only to legitimate Down Time or to Force Majeure. If an Embassy Suites Hotel once
in operation is not Continuously Operated during any calendar year, subject to Force Majeure, then upon
written notice thereof being given to Developers or Operator by the City and the failure of Developers,
within sixty (60) days after the city gives said notice, to commence Continuous Operation of the
Embassy Suites Hotel, Developers shall not be entitled to any Chapter 380 Payments for the remainder of
the Term unless Developers obtains a Variance under Section 13.18 herein.
4.3 Trade name and Related Matters. Prior to when Developers Continence Construction of the
Embassy Suites Hotel, (and as a condition precedent to such being deemed to have occurred),
Developers shall. enter into Management agreement (the "Management Agreement") with the
Developer/Operator (Exhibit "C"). The Developer/Operator shall secure and provide to City upon receipt a
franchise agreement with Hilton Worldwide (Exhibit "D") to operate an Embassy Suites Hotel and use
the trademarks and products or service systems that the franchisor has developed and established.
4.4 Franchise. The Franchise Agreement will provide that (i) Developers/Operator and their successors
will have a license to use the "Embassy Suites" trade name in connection with the Convention Hotel for
the entire term of this Agreement, subject to compliance with the terms and conditions of the Franchise
Agreement and (ii) Developers/Operator and their successors will have the right for the entire Term
of this Agreement to incorporate the most current state of the ark hotel amenities available to Developers
and Operator that are available from time to time to all other Hotels operating under the "Embassy
Suites" trade name (and once purchased, Developers, Operator and their successors retain the rights to
use such amenities regardless of the existence of the Management Agreement and subject to the
Franchise Agreement). If prior to the expiration of the Tenn of the Franchise Agreement, (i) the
Franchise Agreement is terminated or expires for any reason or (ii) Developers and Operator are no
longer permitted to use the "Embassy Suites" trade name or technology in connection with the Hotel,
then upon written notice thereof being given to Developers by the City and the failure of
Developers, within sixty (60) days after the City gives said notice, to re-establish its right to use
the "Embassy Suites" name or technology in connection with the Convention Hotel, Developers
shall not be entitled to any Chapter 380 Payments for the remainder of the Term unless
Developers obtains a Variance pursuant to Section 13.18 herein.
4.5 Management, The Management Agreement will provide that (i) Developers and Operator will
include the terms "Embassy Suites Hotel' and "Beaumont" in the signage and promotional materials
pertaining to the Hotel if allowed by Hilton Worldwide, subject to the Franchise
Agreement so long as the franchise Agreement is in full force and effect and (ii) the Operator
will operate the Hotel and will, among other things, provide the employees and the expertise and
management required for such operation. If the Management Agreement is terminated or expires
during the Tenn of this Agreement, City shall have the right to approve the replacernent' operator or
the replacement party who does so control the operations and policies of the Operator, as applicable,
provided in all events City shall exercise its approval right in a reasonable manner. If City and
Developers are not able to agree on a replacement operator or a replacement control party for Operator
within sixty (60) days following the recommendation of Developers or Operator, as applicable, Developers
may proceed to retain the replacement operator or Operator may transfer control to the replacement
control party, as applicable, but City may elect to suspend payment of any further Chapter 380 Payments
-for the Hotel Project and any expansion of the Hotel Project in the event that during the thirty-six (36) month
period unmediately subsequent to such replacement; for a period of twelve (12) consecutive months the Hotel (i)
fails to achieve an occupancy rate at least equal to eighty percent (80%) of the HoteI's occupancy rate during the
twelve (12) months immediately preceding such replacement; or (ii) the Hotel is not operated and maintained to
the same standards of operation, maintenance, and aesthetics as Embassy Suites hotels it demogeaplically
similar markets, including with respect to safety
4.6 Compliance with City Standards. Developers acknowledges that, unless specifically
otherwise provided in thus Agreement, development of the Project must comply with all
applicable City codes and ordinances. For any development requirements not covered in this
Section or in the remainder of the Agreement, the applicable City code and ordinance provisions
shall control.
4.7 Resort Rentals Ownership. Resort Rental properties may be owned by Developers, person or
entity for rentals by customers of. less than thirty (30) days at a time. Hotel Occupancy Tax
Revenues and the M&O portion of Property Tax Revenues generated by Completed Resort Rental
properties owned by Developers, another person or entity and rented as stated herein are eligible
for the Chapter 380 Payments to Developers as stated herein. Hotel Occupancy Tax Revenues, and
Property Tax Revenues, generated by Completed Resort Rental properties owned by persons other
than Developers and rented as stated herein are eligible for the Chapter 380 Payments to Developers
as stated herein.
ARTICLE V
PROJECT FINANCING AND FUNDING
5.1 Project Financing: Reimbursement Account / Reimbursement Amount. The City hereby
covenants and agrees upon the Effective Date of this Agreement to create a special account (the
"Reimbursement Account") for the benefit of the Developers for the purpose of paying the
Reimbursement Amount. The City shall fund the Reimbursement Account through the Term of
this Agreement from the following sources and in the following manner: (i) with respect to
the portion of the Reimbursement Amount calculated based on the M&O portion only of the
Properly Tax Revenues, the City shall annually fund the Reimbursement Account from the M&O
portion only of the Property Tax Revenues collected within the Project, (ii) with respect to the
portion of the Reimbursement Amount calculated based on the Hotel Occupancy Tax Revenues,
the City shall timely fund the Reimbursement Account in an amount equal to the Hotel Occupancy
Tax Revenues from the Hotel Occupancy Tax Revenues collected for the Term of this Agreement.
The. City shall establish a separate account for Reimbursement. This account shall always
remain unencumbered by the City and segregated from all other funds of the City.
5.2 City Commitment.
(A) Pursuant to its authority under Chapter 380, the City hereby agrees to pay the
Reimbursement Amount to the Developers. It is intended by the parties that the Reimbursement
Amount will be paid by the City solely out of the Reimbursement Account and used to make
Chapter 380 Payments to the Developers as provided in this Agreement (the "City
Commitment"). The City Commitment will commence upon Completion of . the Hotel and
Waterpark and will continue through and until the Reimbursement Amount has been paid. The
City agrees that it will pay the Reimbursement Amount during the term of this Agreement, as an
unconditional obligation of the City (but solely from the Reimbursement Account), if the Project
is Convinced and Completed as required herein and generates the Reimbursement Amotmt. In
the event the hotel project is completed prior to the completion of the
Waterpark, the reimbursement will not begin until both the Hotel and
Waterpark are completed and operational.
(B) The Parties agree that the maximum City Commitment shall be as stated in Sections
5.3and 6.1 herein, and such obligation on behalf of the City will be limited solely to the funds
deposited into the Reimbursement Account pursuant to this Agreement. Upon such time as the
City has paid the maximum City Commitment in full, the City shall have no further obligation
under this Agreement.
(C) Property Tax Revenues. During the Term of this Agreement, the City shall
determine annually the amount of the Property Tax Revenues received by the City and
attributable to completed features within the Project boundaries in cooperation with the Developers.
The City hereby agrees to deposit into the Reimbursement Account annually from available
funds in the City's General Fund an amount equal to the M&O portion only of said Property Tax
Revenues in the percentages stated in Section 5.3 herein, and hereby pledges such fund to the
payment of the City Commitrmeni as provided herein. The City shall maintain complete books and
records showing deposits to and disbursements from the Reimbursement Account, which books and
records shall be deemed complete if kept in accordance with generally accepted accounting
principles as applied to Texas municipalities. Such books and records shall be available for
examination by the duly authorized officers or agents of the Developers during normal business
hours upon request made not less than five (5) business days prior to the date of such
examination. The City shall maintain such books and records throughout the term of this Agreement and
store the same for four years thereafter.
(D) Hotel Occupancy Tax Revenues. The City hereby agrees to deposit timely from available
funds in the City's Hotel Occupancy Tax Fund an amount equal to said Hotel Occupancy Tax Revenues
portion of the City Commitment in the percentages stated in Section 5.3 herein into the Reimbursement
Account, and hereby pledges such fund to the payment of the City Coma-itrment as provided herein. The
City shall maintain complete books and records showing deposits to and disbursements from the
Reimbursement Account, which books and records shall be deemed complete if kept in accordance
with generally accepted accounting principles as applied to Texas municipalities. Such books and
records shall be available for examination by the duly authorized officers or agents of the Developers
during normal business hours upon request made not less than five business days prior to the date of
such examination. The City shall maintain such books and records throughout the term of this
Agreement and store the same for four years thereafter. ' Developers shall comply with the terns of
Section 351 of the Texas Tax Code, as it may be amended from time to time, applicable to the Hotel
Occupancy Tax Revenues, Further, Developers shall deliver to City, upon the City's request, such
information and reports which the City reasonably requests as evidence that Developers are in
compliance with such statutes. Should any expenditure of Hotel Occupancy Tax Revenues by
Developers be for a use that is found to be illegal, the City shall have no liability in connection
thereof.
5.3 Reimbursement Amounts to be Paid by City to Developers.
(A) Property Tax Revenues: Developers shall provide the City an annual paid property tax
bill, no later than March I of each year, stating Developers' figures attributable to the completed
features within the Project boundaries and the corresponding amount of Property Tax Revenues,
Within Sixty (60) days of receiving written request from Developers, accompanied by all
reasonable supporting documentation from Developers that it has fully complied with its
performance requirements, subject to the satisfaction of Developers' Commitments under Article
IV herein and Developers' timely and full compliance with all applicable terms and conditions
contained in this Agreement, City shall pay to Developers the applicable Chapter 380 Payments
attributable to the completed features of the Hotel within the Project boundaries based on the
percentages stated below for the applicable Tax Revenues collected by City on the completed Hotel
features, subject to the limitations set forth herein. Developers may spend said Chapter 380
Payments received as Reimbursement Amounts or in satisfaction of other City Commitment on
improvements or other lawful uses only within the Project boundaries.
(B) Hotel Occupancy Tax Revenues: Developers shall provide the City a semi-annual report,
no later than March 1 and September 1 of each year, stating Developers' or Operator's
occupancy figures attributable to the completed features of. the Convention Hotel within the
Project boundaries and the corresponding amount of Hotel Occupancy Tax paid to the City.
Within Sixty (60) days of receiving written request from Developers, accompanied by
Developers' annual Approved Spending Plan (as defined herein) and all reasonable supporting
documentation from Developers that it has fully complied with its performance requirements,
subject to the satisfaction of Developers' Commitments under Article IV herein and Developers'
timely and full compliance with all applicable terms and conditions contained in this Agreement,
City shall pay Developers an amount not to exceed the applicable Chapter 380 Payments
attributable to the completed features within the Project boundaries, in an amount equal to the
amount indicated in the annual Approved Spending Plan, based on the percentages stated
below for the Hotel Occupancy Tax Revenues collected by City on the completed features,
subject to the limitations set forth herein; provided, however, that Developers must comply with
the terms of Section 351 of the Texas Tax Code, as it may be amended frons time to time,
applicable to the Hotel Occupancy Tax Revenues. Further, Developers shall deliver to City, upon
the City's request, such information and reports which City reasonably requests in order for City
to verify that Developers are in compliance with said statutes. Any Hotel Occupancy Tax Revenues
remaining unspent by Developers, and all accrued interest thereon, if any, at the expiration or
earlier termination of this Agreement shall be returned by Developers, to City, which obligation shall
survive the -expiration or earlier termination of this Agreement. -By this Agreement, City is
delegating, pursuant to Section 351.101(c) of the Texas Tax Code, as it may be amended from
time to time, the management or supervision of certain programs and activities to be funded
by Hotel Occupancy Tax Revenues. Developers may spend such fiends received as Reimbursement
Amounts or in satisfaction of other City Commitment on improvements or other lawful uses .only
within the Hotel Project boundaries.
Developers shall apply for reimbursement for the applicable City Tax Revenues only from the City.
Failure to do so would be an Act of Default hereunder.
ARTICLE VI
COMMITMENT OF
PARTIES
6.1 The City Incentive Commitment to the Embassy Suites Convention Hotel Project is as follows:
(A) Ad Valorem Tax abatement reimbursement at 100% for a period of ten (10) years.
(B) Hotel Occupancy Tax reimbursement at 100% for a period of twelve (12) years.
6.2 The obligation and commitment of the Developers is as follows:
(A) Developers are obligated to construct and maintain during the term of this
agreement an Embassy Suites Convention Hotel with a minimum of 200 guest rooms together with
at least an approximately $10 Million Waterpark improvement.
(B) Developers are obligated to pay the City $25,000.00 per year upon reaching a net
operating income of $250,000.00 per year from hotel operations and an additional $25,000.00 per
year upon reaching a net operating income of $500,000.00 per year from hotel operations.
ARTICLE VTI
COVENANTS, 'WARRANTIES, OBLIGATIONS AND
DUTIES OF DEVELOPERS AND OPERATOR
If the Developers or Operator shall have made any false or substantially misleading statement
herein or failed to timely and fu I I y perform as required in this Agreement, such shall be an
Act of Default by Developers, subject to Section 11.1 herein. Failure to comply with any one
covenant or warranty shall constitute an Act of Default by Developers or Operator, subject to
Section 11.1 herein. Developers and Operator, as of the Effective Date, make the following
covenants and warranties to City, and agree to ,timely and fully perform the following obligations
and duties.
7.1 Litia[ion, No litigation or governmental proceeding is pending or, to the knowledge of
Developers, Operator or their respective general partner and officers, threatened against or
affecting Developers, Operator or the Property that may result in any material adverse change
in Developers' or Operator's business, properties or operation.
7.2 Untrue Statements. To the best of their knowledge, no certificate or statement delivered by
Developers or Operator to City in connection herewith, or in connection with any transaction
contemplated hereby, contains any untrue statement or fails to state any fact necessary to keep the
statements contained therein fiorn being misleading except those which have been replaced by
subsequent certificates or statements heretofore given to the City in substitution.
7.3 Bankruptcy. There are no bankruptcy proceedings or other proceedings currently pending or
contemplated, and Developers and Operator have not been informed of any potential involuntary
bankruptcy proceedings.
7.4 Licenses and AuthorityTo the best of their knowledge, Developers or Operator have
acquired and maintained all necessary rights, licenses, permits and authority to carry on their
respective businesses in Beaumont, Texas, and will continue to use commercially reasonable efforts
to maintain all necessary rights, licenses, permits and authority to do so.
7.5 Payment of Taxes. Developers and Operator shall timely pay all taxes due and owing by them
to all taxing authorities having jurisdiction. In addition, Developers and Operator shall timely
pay all employment, income, franchise, and all other taxes hereafter to become due and owing by
them, respectively, to all local, state, and federal entities subject, however to their right to contest
the same in a lawful manner.
7.6 Timely Commencement; Continuous Operations. Developers acknowledge and agree that if it fails to
Commence Construction of the Hotel and pursue its Completion within the time periods herein
provided, and Operator acknowledges and agrees that if it fails to Continuously Operate the
Embassy Suites Hotel or another hotel as, mutually agreed by the parties, as herein
provided, in either of said cases or .events, the City has the right to terminate this Agreement as
herein provided.
7.7 Management Changes. Developers and Operator shall notify City in writing of any substantial
changes in management of Developers or Operator within seven (7) days after Developers' or
Operator's knowledge thereof. Substantial changes mean changes in Chairman of the Board,
President, or Chief Executive Officer.
7.8 Ownership Changes. -Developers and Operator shall notify City in writing of any changes in
ownership of any part of the Project or of Developers or Operator within seven (7) days
after Developers' or Operator's knowledge thereof.
7.9 Succession of Ownership. No change of ownership or management of any part of the Project
and/or a change of ownership or management of Developers or of Operator shall abate, waive,
terminate or in any way relieve Developers or Operator of their respective obligations herein.
7.10 Non-discrimination, Developers agree that, as to all of the. programs and activities arising out of
this Agreement, it will not discriminate against any person on the basis of race, color, national
origin, sex, or by reason of being disabled.
7.11 Lessee/Owner Lists. Developers or Operator shall provide to City in writing lists of all Project
tenants or other persons making sales or purchases of taxable items or real property in the Project,
(tine "Lessee/Owner List"). Developers or Operator will periodically and timely notify City of
changes to the Lessee/Owner List. The Lessee/Owner List shall include Developers and/or
Operator. Developers and Operator are responsible as herein provided for supplying to City
such identifying information for each person on the Lessee/Owner List as is required by the
Comptroller to issue their sales tax area reports and Hotel Occupancy Tax area reports.
7.12 Employment of Undocumented Workers. The Developers do not and agree that they will
not knowingly employ any undocumented worker.
ARTICLE VIII
[hitentionally Left Blank]
ARTICLE IX
SUSPENSIONS/TERMINATION
Subject to the terms of Article V herein, City, under the following circumstances, and at its sole
discretion, may temporarily suspend making Chapter 380 Payments under this Agreement and/or
terminate this Agreement, without liability to Developers, and all future payment obligations shall
automatically cease upon anyone of the following events:
9.1 Receiver. The appointment of a receiver for Developers, or of all or any substantial part of its
property, and the failure of such receiver to be discharged within sixty (60) days thereafter.
9.2 Bank r VLey_The adjudication of Developers as a bankrupt.
9.3 Bankruptcy Petition. The filing by Developers of a petition or an answer seeking bankruptcy,
receivership, reorganization, or admitting the material allegations of a petition filed against it in any
bankruptcy or reorganization proceeding.
9.4 Failure to Comply with Audit Requirements. The failure of Developers or Operator to reasonably
cooperate with the City in the monitoring process described in Article X below.
ARTICLE X
REPORTING AND AUDITING
10.1 Audit by the City. The City may audit Developers' and Operator's records to determine their
compliance with the terms of this Agreement. This audit will be done by the City on an annual basis in
March of each year. During the monitoring process, the City will make maximum use of any State
submissions for the determination of Reimbursement Amount. Developers and Operator shall provide the
City an annual report, no later than March 1 of each year, stating Developers' and Operator's
occupancy and sales figures attributable to the completed features within the Project boundaries and
the corresponding amount of Ad Valorem, Property Tax and Hotel Occupancy Tax paid to the City by
Developers.
10.2 Access to Records / Right to Audit. Developers and Operator, during normal business hours shall
allow City reasonable access to its records and books and all other relevant records related to each of
the economic development considerations and incentives and performance requirements, as stated in
this Agreement, but the confidentiality of such records and information shall be maintained by City
unless disclosure of such records and information shall be required by a court order, a lawfully issued
subpoena, or at the direction of the Office of the Texas Attorney General.
ARTICLE XI
DEFAULT
11.1 Default. Subject to Force Majeure and any consent given under Section 11.2 or Variance
granted under Section 13.18, should Developers fail to timely, fully and completely keep or perform
any one or more of the covenants or warranties made by Developers in this Agreement (but excluding
achieving satisfaction of any condition to the Developers' right to receive Chapter 384 Payments
under this Agreement), such failure to perform shall be an Act of Default by Developers and, if not
cured and corrected within sixty (60) days after written notice to do so or by express waiver by the
Beaumont City Council, City may terminate this Agreement and cease making any further Chapter
380 Payments which have not been earned by performance by Developers theretofore. Developers shall
be liable to City for any actual damages sustained by the City as a result of said Act of Default by
Developers under this Agreement, subject to the provisions of Section 13.20.
11.2 Consent and Excuse. In the event of unforeseeable third party delays which are not Force
Majeure and upon a reasonable showing by Developers that it has immediately and in good faith
comrnenced and is diligently and continuously pursuing the correction, removal or abatement of such
delays by using commercially reasonable efforts, the Beaumont City Council may consent to and
excuse any such delays, which consent and excuse shall not be unreasonably withheld, delayed or
conditioned. Provided however, the City reserves its right to exercise consent and or excuse such delays
in a reasonable and prudent manner which is in the best interest of the citizens of the City of Beaumont.
11.3 City Ddgy. Any delay for any amount of time by City in providing notice of Default to Developers or
Operator hereunder, shall in no event be deemed or constitute a waiver of such Default by City of any of
its rights and remedies available in law or in equity.
11.4 City Waiver. Any waiver granted by City to Developers or Operator of an Act of Default shall not be
deemed or constitute a waiver of any other existing or fixture Act of Default by Developers or of a
subsequent Act of Default of the same act or event by Developers.
ARTICLE XII
CITY'S LIABILITY LIMITATIONS
Should City fail to timely, fully and completely comply with any one or more of the requirements,
obligations, duties, terns, conditions or warranties of this Agreement, such failure shall be an Act of
Default by City and City shall have sixty (60) days to cure and remove the Default after receipt of
written notice to do so from Developers or Operator.
ARTICLE XIII
MISCELLANEOUS
PROVISIONS
13.1 Sign Permittiny.Prior to submitting any building permit applications for any sign, Developers shall
obtain necessary approval from City for plans for signs in compliance with City codes and ordinances.
13.2 Pennitting. Subject to Developers' complying with all applicable laws, City agrees to cooperate with
Developers to expeditiously process permits, including plat applications, site plan applications, building
permit applications, building and construction inspections required for the Project to be in a state of
Completion.
13.3 Binding Effect. This Agreement will be binding on and inure to the benefit of the patties and
their respective successors and assigns.
13.4 Assignment. Except as provided below, Developers may not assign all or part of their
rights and obligations under this Agreement to a third party without prior written approval of City,
which approval will not be unreasonably withheld, delayed or conditioned. The City does,
however, in the best interest of the citizens of Beaumont, reserve the right to exercise its
right to withhold approval should it reasonably determine that a prospective third party
does not satisfy the requirements established herein. The City agrees, however, that the
Developers may assign all or part of their rights and obligations under this Agreement to any entity
affiliated with the Developers by reason of controlling, being controlled by, or being under
common control with the Developers; to a subsequent Developers of all or any part of the
Project; to a tenant in the Project or to a third party lender o r R E I T advancing funds for the
construction or operation of the Project. The City expressly consents to any assignment
described in the preceding sentence, and agrees that no further consent of City to such an
assignment will be required. The Developers agree to provide City with written notice of any
such assignment.
13.5 Termination. If Developers elect not to proceed with the development of a 200 room
Embassy Suites Convention Hotel or Waterpark as contemplated by this Agreement, Developers
will notify City in writing, and this Agreement and the obligations of the parties will be deemed
terminated and of no further force or effect as of the date of such notice Developers and all
parties shall be fully released of any further obligations under this Agreement relating to said
Proj ect.
13.6 Notice. Any notice or other communication ("Notice") given under this Agreement must
be in writing, and may be given: (i) by depositing the Notice in the United States Mail, postage
paid, certified, and addressed to the party to be notified with return receipt requested; (ii) by
personal delivery of the Notice to the party, or an agent of the party; or (iii) by confirmed
facsimile, provided that a copy of the Notice is also given in one of the manners specified in (i)
or (ii). Notice deposited in the mail in the manner specified will be effective three (3) business
days after deposit. Notice given in any other manner will be effective only if and when received
by the party to be notified. For the purposes of Notice, the addresses of the parties will, until changed
as provided below, be as follows:
Developers: Pate Development
Attention: Britt Pate
550 N. 159th St. E., Suite 204
Wichita, Kansas 67230
Ph: (316) 448-1000
Facsimile: (316) 219-5256
Deven Bhakta
ZJZ Hospitality Inc.
4639 Corona Drive, Suite 55
Corpus Christi, TX 78411
With a copy to:
Attorney David G. Crockett
Crockett & Gilhousean
1005 N. Market Street
Wichita, Kansas 67214
Ph: (316) 263-9662
Facsimile: (316) 263-7220
with a copy to:
City: City of Beaumont Attn.:
City Manager
P.O. Box 3827
Beaumont, Texas 77704
Ph: (409) 880-3716
Facsimile: (409) 880-3112
with a copy to: City Attorney
P.O. Box 3827 Beaumont,
Texas 77704 Ph. (409)
880-3715
Facsimile: (409) 880-3121
Operator:
Any party may designate a different address at any time by giving Notice to the other party.
13.7 Interpretation. Each of the parties has been represented by counsel of their choosing in the
negotiation and preparation of this Agreement. hi the event of any dispute regarding the interpretation of
this Agreement, this Agreement will be interpreted fairly` and reasonably and neither more
strongly for nor against any party based on draftsnnanship.
13.8 Relationship of the Parties. This Agreement will not be construed as establishing a partnership or
joint venture, joint enterprise, express or implied agency, or employer-employee relationship between the
parties. Neither City, nor its past, present or future officers, elected officials, employees or agents,
assume any responsibility or liability to any third party in connection with the development of the
Project or the design, construction or operation of any portion of the Project.
13.9 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under
present or future laws, it is the intention of the parties that the remainder of this Agreement not be
affected and it is also the intention of the parties that, in lieu of each provision that is found to be
illegal, invalid or unenforceable, a provision be added to this Agreement which is legal, valid or
enforceable and is as similar in terms as possible to the provision found to be illegal, invalid or
unenforceable.
13.10 Parapph Headings, Etc. The paragraph headings contained in this Agreement are for
convenience only and will in no way enlarge or limit the scope or meaning of the paragraphs.
13.11 No Third Party Beneficiaries. This Agreement is not intended to confer any rights, privileges or
causes of action upon any third party.
Indemnity:
13.12 Developers agree to defend, indemnify and hold harmless City, including its employees,
agents and representatives (collectively indemnitees), from and against any claim, demand, cause of
action, liability, loss or expense arising from injury, death_or from damage to or loss of property to
the extent arising directly or indirectly or out of any acts or omissions of Developers, its contractors
or subcontractors. Developers' defense and indemnity obligations hereunder include claims and
damages arising from non -delegable duties of Indemnitees or arising from use by Developers of
construction equipment, tools, signs or facilities furnished to Developers by Indemnitees.
13.13 Developers' defense and indemnity obligations shall include the duty to reimburse any
attorney's fees and expenses incurred by Indemnitees for legal action to enforce Developers's
indemnity obligations. Developers's duty to defend Indemnitees shall be independent and in
addition to the duty to indemnify and hold harmless, such that Developers shall not be entitled to
reimbursement from Indemnitees for defense costs and attorneys' fees incurred. in defending
Indemnitees, even in the event that a claim proves to lack merit. This indemnification obligation
shall not be limited in any way by any limitation on the amount of type of damages, compensation
or benefits payable by Developers or any of their contactors or subcontractors under Workers'
Compensation acts, disability acts or other employee benefits. In the event Developers is obligated
to defend City, Developers shall provide competent counsel for such defense within ten (10)
calendar days of City's request for defense. In the event Developers do not provide counsel within
such time period, then City may appoint its own counsel, which will be for Developers' account
until Developers substitutes counsel of their choice acceptable to the City.
13.14 In the event that the indemnity provisions in this Contract are contrary to the law governing
this Contract, then the indemnity obligations applicable hereunder shall be construed to be to the
fullest extent allowed by applicable law.
Insurance:
13.15 Developers shall, at theirs sole cost, require its contractors and subcontractors of all tiers to,
obtain and maintain in force for the duration of the Contract insurance of the following types, with
limits not less than those set forth below for: 1) all Developers' work, both on and off worksite,
and 2) all contractors' and subcontractors' work on and off the worksite.
13.15.1 Workers' Compensation Insurance, including occupational illness or disease
coverage, in accordance with the laws of the State of Texas with a minimum limit of (proper
amount TBD)_ _per accident and, for bodily injury by disease of (proper amount TBD)_
_per employee. Developers shall not utilize occupational accident or health insurance
policies, or the equivalent, in lieu of mandatory Workers' Compensation Insurance or
otherwise attempt to opt out of the statutory Workers' Compensation system.
13.15.2 Commercial General Liability Insurance with a minimum combined single limit of
liability of (proper amount TBD)` each occurrence for bodily injury and property damage,
with a minimum of liability of (proper amount TBD) each person for personal and
advertising injury liability. The policy shall be endorsed by City, including its respective
agents and representatives as additional insureds with coverage identical to those provided in
this section.
13.15.3 Automobile Liability Insurance covering use of all owned, non -owned and hired
automobiles with a minimum combined single limit. of liability for bodily injury and property
damage of (proper amount TBD)_ per occurrence.
13.15.4 If Developers will utilize tools or equipment in the performance of their services
under the Contract, Equipment Floater Insurance (Tools and Equipment Insurance) covering
physical damage to or loss of all major tools and equipment, construction office trailers and
vehicles shall be obtained.
13.15.5 All insurance provided by Developers under this Section 13.15 shall include a
waiver of subrogation by the insurers in favor of City. Developers hereby releases City,
including its employees, agents and representatives, for losses or claims for bodily injury,
property damage or other insured claims, REGARDLESS OF THE CAUSE INCLUDING
NEGLIEGENCE OF CITY, arising out of Developers' performance under the Contract.
13.15.6 Certificates of Insurance satisfactory in form to City shall be supplied to City
evidencing that the insurance required above is in force, that not less than thirty (30) days
written notice will be given to City prior to any cancellation or restrictive modification of the
policies, and that the waivers of subrogation are in force. Developers shall also provide with
their Certificate of Insurance executed copies of the additional insured endorsements and
dedicated limits endorsements required in this Article 13.16.
13.15.7 Additional Insured: Developers will add City to its Comprehensive General
Liability Insurance Policy as an additional insured to be given the same liability insurance
coverage as Developers. Developers shall also provide with their Certificate of Insurance
executed copies of the additional insured endorsements and dedicated limits endorsements.
13.15.8 Certificates of Insurance satisfactory in form to City shall be supplied to City
evidencing that the insurance required above is in force, that not less than thirty (30) days
written notice will be given to City prior to any cancellation or restrictive modification of the
policies, and that the waivers of subrogation are in force.
13.16 Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which will constitute one
and the same instrument: A facsimile signature will be deemed to be an original signature for
all purposes.
13.17 Exhibits. The following exhibits are attached to and incorporated into this
Agreement for all purposes:
Exhibit "A:"Embassy Suites Hotel Project Description
Exhibit "B:" Project Boundaries: Field Notes/Metes and Bounds
Exhibit "C:" Management Agreement
Exhibit "D:" Franchise Agreement
Exhibit "E" Application for 380 Incentives
13.18 Variances. The Beaumont City Council, in its sole discretion, may grant and approve
variances to Developers or Operator from the performance criteria and development
standards described herein upon application in writing therefore by Developers on behalf of
itself or the Operator.
13.19 Balance Owed under the Agreement. The total amount of money awarded in an
adjudication brought against City for breach .of this Agreement is limited to the following: (i)
the balance then due and owed by City under the Agreement plus any balance which
may become due by City during the remaining term of the Agreement, including any
amendments thereto; (ii) interest as allowed by law; and(iii) attorney's fees as allowed by law.
13.20 Damages not included. Danmages awarded in an adjudication brought against City or
Developers arising under the Agreement, including any amendments thereto, may not
include: (i) consequential damages, except as expressly allowed under Section 13. 19
above; (ii) exemplary damages; or (iii) damages for unabsorbed home office overhead.
ARTICLE XIV
GENERAL TERMS
14.1 Entire Agreement. This Agreement embodies the complete- Agreement of the parties hereto,
superseding all oral or written, previous and contemporary, agreements between time parties
relating to matters in this agreement; and, except as otherwise provided herein, this Agreement
cannot be modified or amended without a written agreement of the parties.
14.2 Law. This Agreement is subject to all legal requirements in City Charter and Code of
Ordinances of City of Beaumont, Texas and all other applicable County, State and Federal laws, and
Developers and Operator agree that it will promptly comply with all such applicable laws,
regulations, orders and rules of the State, City and other applicable governmental agencies. This
Agreement shall be governed by and construed in accordance with the laws and court decisions of
the State of Texas without regard, however, to the conflicts of laws provisions of Texas law.
14.3 Venue. Venue for any legal action related to this Agreement is in Jefferson County, Texas.
14.4 Confidential. City, its officers and employees, and its agents or contractors retained to
perform economic development services for City, shall treat as confidential the financial
statements and information together with any proprietary information delivered by Developers,
Operator or their respective representatives to City and its representatives and shall not release
such information to the public, unless required by law or court order. City shall inunediately notify
Developers of requests or court orders to release such information.
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Fxl'Ctlil•:i) W He enbcdve as ot•this I dny at:__„_ , 2015
PATF. DFVELO .'EENT, L. .
Signal on this day f 201 S
Pat idem oral Partner
LJZ HOSPIT' HA71', IN(
Signed on this 1i1 2015
13
Deven Bhakta
CLTY OF BEAt )MONT,TEXAS, a home -rule municipal corporation
Signed onthis day of ,2015
A•P[EST`. CITY OF BEAUMONT
Tina Brottssard.City Clerk Kyo )res tty onager