ECONOMIC DEVELOPMENT AGREEMENT
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1 ECONOMIC DEVELOPMENT AGREEMENT THIS Economic Development Agreement ( Agreement ) is made and entered into by and between the City of Forney, Texas, a Texas home-rule municipal corporation (the City ), and Forney Marketplace, LLC, a Texas limited liability company ( Developer ), effective as of the date the authorized representative for the City countersigns this Agreement ( Effective Date ). RECITALS WHEREAS, Developer owns certain land located within the corporate limits of the City of Forney consisting of approximately 32 acres of land located at the northwest corner of the intersection of Marketplace Blvd and the North Service Road of Highway 80, as more particularly described by legal description attached hereto as Exhibit A ( Property ), on which Developer intends to construct improvements to develop the vacant site, including retail and commercial development described on the Property ( Project ); and WHEREAS, Developer may construct certain public improvements to serve the Project, including street improvements, water, storm sewer, and sanitary sewer improvements, and traffic and mobility improvements as more particularly described in Exhibit B attached hereto ( Infrastructure ); and WHEREAS, the City recognizes the positive impact that the Project will bring to the City through the timely development and diversification of the economy, elimination of unemployment and underemployment through the creation and retention of new jobs, the attraction of new businesses, and the retention and growth of the ad valorem and sales and use tax revenues generated by the Project for the City; and WHEREAS, the City has established a program, in accordance with Article III, Chapter 52-a of the Texas Constitution and Chapter 380 of the Texas Local Government Code ( Chapter 380 ) pursuant to which the City has authority to enter into this Agreement, and has authority to use public funds for the public purposes of promoting local economic development and stimulating business and commercial activity within the City; and WHEREAS, consistent with Article III, Section 52-a of the Texas Constitution, Chapter 380, and other laws, the City agrees to enter into this Agreement with Developer to advance the public purposes of developing and diversifying the economy of the state, eliminating unemployment or underemployment in the state, and developing or expanding transportation or commerce in the state; and WHEREAS, in consideration of the design, timely construction, and development of the Project, which will bring additional ad valorem tax revenues and sales and use tax revenues to the City and additional jobs resulting from the construction of the Project, the City desires to enter into this Agreement pursuant to Chapter 380 and other applicable laws as an economic incentive for Developer to develop, finance and construct the Project; and Economic Development Agreement - Forney Marketplace, LLC Page 1
2 WHEREAS, the City has determined and hereby finds that this Agreement promotes economic development in the City and, as such, meets the requirements of Chapter 380 and the City s established economic development program, and, further, is in the best interests of the City and Developer; and WHEREAS, to ensure that the benefits the City provides under this Agreement are utilized in a manner consistent with Chapter 380 and other laws, Developer has agreed that its receipt of such benefits shall be conditioned upon its satisfaction of certain conditions enumerated herein, including performance conditions relating to the construction of the Project; and WHEREAS, to induce Developer to develop and finance the construction of the Project for the public purposes of developing and diversifying the economy of the state, to create jobs, and to operate the Project in accordance with the performance measures set forth herein, which will generate sales and use tax revenues and increased ad valorem property tax revenues for the City, the City agrees to grant to Developer a maximum reimbursement amount of nine Hundred Thousand Dollars ($900,000.00) toward Developer s costs of the Infrastructure plus sales tax rebates based on a performance schedule as set forth below. NOW, THEREFORE, in consideration of the promises and mutual agreements set forth herein, the City and Developer agree as follows: 1. Definitions. The following words shall have the following meanings when used in this Agreement. (a) Agreement. The word Agreement means this Chapter 380 Economic Development Program and Agreement, together with all exhibits attached hereto from time to time, if any. (b) City. The word City means the City of Forney, Texas. For purposes of this Agreement, the City s address is P.O. Box 826, 101 E. Main Street, Forney, Texas (c) Developer. The word Developer means Forney Marketplace, LLC, a Texas limited liability company whose address is 2600 Network Blvd., Ste. 305, Frisco, Texas 75034, Attn: Charles W. Stuber, Manager, its successors, grantees, transferees (except where otherwise noted herein), and permitted assigns. (d) Event of Default. The phrase Event of Default means and includes any of the Events of Default set forth below. (e) Infrastructure. The word Infrastructure means those items listed on Exhibit B. (f) Infrastructure Participation. The phrase Infrastructure Participation means that portion of the Developer s design and construction costs of the Project, including any related city permit fees or development-related fees, with all payments being subject to a maximum aggregate amount of City funding not to exceed Nine Hundred Thousand Dollars ($900,000.00). Economic Development Agreement - Forney Marketplace, LLC Page 2
3 (g) Project. The phrase Project means the design and construction of multiple retail, restaurant and commercial development pad sites on approximately 32 acres (minimum of 15,000 total square feet of retail, restaurant or commercial space) and related parking and other improvements to be constructed on the Property. (h) Project Fund. The phrase Project Fund means the aggregate amount of funding provided by the City for the Infrastructure Participation, not to exceed Nine Hundred Thousand Dollars ($900,000.00). (i) Exhibit A. Property. The word Property means the approximate 32 acres as depicted on (j) Related Documents. The phrase Related Documents means without limitation all ancillary development agreements and all other instruments and documents relating to the subject matter of this Agreement, whether now or hereafter existing, executed in connection with the Developer s obligations to the City under this Agreement. (k) Sales and Use Tax Revenue. The phrase Sales and Use Tax Revenue means the City of Forney, Texas municipal sale and use tax, at the rate of one percent (1.0%), pursuant to Section (a) of the Texas Tax Code, as amended, or any successor tax or replacement tax of the same. 2. Title to Property Established. Developer represents and warrants that it is currently the owner of record of the Property in fee simple. Any substantial (outside of normal surveyor error or boundary dispute) misrepresentation or breach of the above representation and warranty shall entitle the City to terminate the Agreement. Prior to commencement of any construction of the Public Improvements on the Property, the Developer shall provide the City with evidence of ownership of the Property by a tender of a current title commitment or title report indicating the fee simple owner of the Property. In the event the legal description of the Property is different from the legal description contained in Exhibit A such exhibit shall be revised accordingly. The revised Exhibit A shall be affixed hereto and a memorandum of this Agreement reasonably acceptable to Developer and the City shall be filed in the Real Property Records of Kaufman County, Texas and shall become a covenant running with the land. Exhibit A as modified according to the verified and approved title commitment or title report shall be conclusive of the Property which is used to calculate the Public Improvements Participation. 3. Developer s Construction of the Project. (a) Obligations of City. (1) Project Fund. Notwithstanding that the Developer s contracted cost of construction of the Infrastructure with any contractor may exceed the Project Fund amount, the City shall reimburse the Developer up to a maximum amount of Nine Hundred Thousand Dollars ($900,000.00) for the Project. Economic Development Agreement - Forney Marketplace, LLC Page 3
4 (2) Use of the Project Fund. The Project Fund shall be utilized solely for the purposes stated herein. (3) Payments to the Developer for Infrastructure Participation. Upon acceptance of the Infrastructure by the City, the Developer may submit a reimbursement request to the City for the Project Fund along with a statement of Developer s costs for the Infrastructure design and construction. Within five (5) business days following the City s receipt of Developer s reimbursement request, the City shall verify the statement of Developer s costs. Upon successful review and verification by the City, the City shall pay Developer an amount up to nine hundred thousand dollars ($900,000.00), which shall consist of four hundred seventy-five thousand dollars ($475,000.00) for the design and construction of any roadway improvements and related drainage improvements for Trailhouse Road and four hundred twenty-five thousand dollars ($425,000.00) for the design and construction of sanitary sewer improvements for the Project. Payment shall be made within thirty (30) days following the receipt of such reimbursement request and shall be payable to Developer. Notwithstanding the payments described above and excluding any sale and use tax reimbursements, the City shall not be obligated for any amounts in excess of the Project Fund. (4) City Sales and Use Tax Reimbursement. Upon the development of the Property, The City covenants and agrees during the Term of this Agreement to pay Developer the following percentages of the City Sales and Use Tax Revenue generated by and attributed solely to taxable sales occurring on the Property and remitted to the City by the State Comptroller s Office to the City: i. Effective Date through the third anniversary of the Agreement: sixty percent (60%) of the City Sales and Use Tax Revenue collected from the occupancies of the Property (receiving a Certificate of Occupancy before February 1, 2019) and remitted by the State Comptroller s Office to the City; ii. Third anniversary through the sixth anniversary of the Effective Date of the Agreement: forty percent (40%) of the City Sales and Use Tax Revenue collected from the occupancies of the Property (receiving a Certificate of Occupancy before February 1, 2021) and remitted by the State Comptroller s Office to the City; iii. Sixth anniversary of the Effective Date of the Agreement through the end of the Term of the Agreement: twenty-five percent (25%) of the City Sales and Use Tax Revenue collected from the occupancies of the Property (receiving a Certificate of Occupancy before February 1, 2024) and remitted by the State Comptroller s Office to the City. (b) Obligations of Developer. (1) The Developer shall design and construct the Infrastructure in accordance with the standards set forth in the City s land development ordinances including the City s Engineering Design Standards. Economic Development Agreement - Forney Marketplace, LLC Page 4
5 (2) The Developer expressly acknowledges that by entering into this Agreement, the Developer, its successors, assigns, vendors, grantees, and/or trustees, shall not construe any language contained herein or in any Exhibits attached hereto as waiving any of the requirements of the Zoning Ordinance or Subdivision Ordinance applicable to the Project at the time of development. (3) The Developer shall plat, at a minimum, the first phase of the Property and commence construction of the Project on or before October 1, Event of Default by the City. The following shall constitute an Event of Default by the City under this Agreement: (a) The failure of the City to remit payment to the Developer upon the due date, as prescribed in Paragraph 3 (a) (2) above, after City s receipt of a timely request for payment of the Infrastructure Participation and verification of the required supporting documentation. (b) Failure of the City to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents, or failure of the City to comply with or perform any other term, obligation, covenant or condition contained in any other agreement between the City and the Developer, and the City fails to cure such failure within thirty (30) days after written notice from the Developer describing such failure, or if such failure cannot be cured within such thirty (30) day period in the exercise of all due diligence, then if the City fails to commence such cure within such thirty (30) day period or fails to continuously thereafter diligently prosecute the correction of such failure. 5. Events of Default by the Developer. (a) Failure to Timely Commence Infrastructure. The Developer s failure to timely commence construction of the Infrastructure on or before October 1, 2018, except to the extent such failure is caused by any act or failure to act on the part of the City as described specifically in Paragraph 3, or force majeure, as hereinafter defined. (b) False Statements. Any representation or statement made or furnished to the City by or on behalf of the Developer through an authorized representative, under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished, or if the Developer learns that any such representation or statement has become false or misleading at the time it was made, and the Developer fails to provide written notice to the City of the false or misleading nature of such representation or statement within ten (10) days after the Developer learns of its false or misleading nature. (c) Insolvency. The dissolution or termination of the Developer s existence as a going business, the Developer s insolvency, appointment of a receiver for any part of the Developer s property, any assignment of all or substantially all of the assets of the Developer for the benefit of creditors of the Developer, any type of creditor workout for the Developer, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against the Economic Development Agreement - Forney Marketplace, LLC Page 5
6 Developer unless, in the case of involuntary proceedings, such proceedings are discharged within sixty (60) days after filing, any of which occur prior to the completion of the Infrastructure. (d) Property Taxes. Prior to the completion of the Infrastructure, the Developer allows its property taxes applicable to the Property owed to the City to become delinquent and fails to timely and properly follow the legal procedures for protest and/or contest of such taxes and to cure such failure within thirty (30) days after written notice thereof from the City and/or the Kaufman County Central Appraisal District. (e) Other Defaults. Failure of the Developer to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents, or failure of the Developer to comply with or perform any other term, obligation, covenant or condition contained in any other agreement between the Developer and the City, and the Developer fails to cure such failure within thirty (30) days after written notice from the City describing such failure, or if such failure cannot be cured within such thirty (30) day period in the exercise of all due diligence, then if the Developer fails to commence such cure within such thirty (30) day period or fails to continuously thereafter diligently prosecute the correction of such failure. 6. Representation and Warranties of the Developer Relative to Construction of Infrastructure. The Developer covenants and agrees with the City that, while this Agreement is in effect, the Developer shall comply with the following terms and conditions: (a) The Infrastructure shall be subject to the City s inspection and approval upon completion under all applicable codes and ordinances. (b) The Developer agrees to make, execute and deliver to the City such other documents and agreements as the City or its attorneys may reasonably request to effectuate this Agreement. 7. Representation and Warranties of the City. The City represents that: (a) The City is a home rule Texas municipal corporation and has the power to enter into and has taken all actions to date required to authorize this Agreement and to carry out its obligations hereunder. (b) The City knows of no litigation, proceedings, initiative, referendum, investigation or threat of any of the same contesting the powers of the City or its officials with respect to this Agreement that has not been disclosed in writing to Developer. (c) The City knows of no law, order, rule or regulation applicable to the City or to the City s governing documents that would be contravened by or conflict with the execution and delivery of this Agreement. (d) This Agreement constitutes a valid and binding obligation of the City, enforceable according to its terms, except to the extent limited by bankruptcy, insolvency and other laws of Economic Development Agreement - Forney Marketplace, LLC Page 6
7 general application affecting creditors' rights and by equitable principles, whether considered at law or in equity. The City will defend the validity of this Agreement in the event of any litigation arising hereunder that names the City as a party or which challenges the authority of the City to enter into or perform its obligations hereunder. City recognizes that Developer intends to commence construction and expend substantial monies in reliance upon the accuracy of the representations and warranties of the City as set forth in this Section Impact Fee Payments. Impact Fee Payments to be collected. Notwithstanding any provision herein to the contrary, all development on the Property shall be subject to the assessment, collection, and payment of impact fees under applicable City ordinances or state law, as such shall exist or be amended in the future. 9. Remedies for City and Developer upon Default. (a) Termination of the City s Obligations. If any Event of Default by the Developer (including but not limited to default under Paragraphs 2, 3 and 5) in the construction obligations for the Infrastructure shall occur and the Developer shall fail to cure such event of default within the applicable time period, the City may by written notice to the Developer elect to terminate the City s obligations hereunder, including any obligation to make an Infrastructure Participation reimbursement payment for the Project, except for an Event of Default described in the Insolvency subsection above, in which case such termination of obligations shall be automatic and not optional. (b) Remedies of the Developer. In the event the City defaults under its obligation to make payments for the Project, and fails to cure within thirty (30) days after written notice by the Developer and the Developer is not otherwise in default, the Developer may seek actual damages for the City s failure to make required Project payments and all other remedies available at law or in equity, including, but not limited to, the right of specific performance. 10. Force Majeure. The Developer shall commence construction of the Infrastructure no later than October 1, Notwithstanding the foregoing, the Developer shall have such additional time to commence construction of the Infrastructure as may be required in the event of force majeure if the Developer is diligently and faithfully pursuing commencement thereof. For the Infrastructure only, force majeure shall mean any contingency or cause beyond the reasonable control of the Developer including, without limitation, acts of God or public enemy, war, riot, civil commotion, insurrection, governmental or de facto governmental action (unless caused by acts or omissions of the Developer), fires, explosions or floods, strikes, unforeseeable shortages in labor or materials. 11. Indemnity. To the extent allowed by applicable law, the Developer and its successors, grantees, transferees, and assigns shall indemnify, save and hold harmless the City, its elected officials, officers, agents, attorneys and employees (collectively, the lndemnitees ) from and against: (i) any and all claims, demands, actions or causes of Economic Development Agreement - Forney Marketplace, LLC Page 7
8 action that are asserted against any lndemnitee if the claim, demand, action or cause of action directly or indirectly relates to wrongful or negligent use by such party of the Infrastructure Participation payments; (ii) any claim, demand, action or cause of action which directly or indirectly contests or challenges the legal authority of such party to enter into this Agreement; and (iii) any and all liabilities, losses, costs or expenses (including attorneys fees and disbursements) that any Indemnitee suffers or incurs as a result of any of the foregoing; and specifically (iv) any claim asserted by the Developer or any transferee of the Property or other person with appropriate standing which contests the payment of the Infrastructure Participation as being an unlawful disbursement of public funds or files suit seeking to declare any ordinance inapplicable to such person or seeks to invalidate any ordinance utilized to collect development fees on the Property or claim or suit seeking reimbursement of development fees paid by any person incident to the Property; provided, however, that there shall be no obligation under this Paragraph to an lndemnitee with respect to any of the foregoing arising out of the gross negligence or willful misconduct of such lndemnitee or the breach by an lndemnitee of this Agreement. The indemnification shall include costs of defense, which shall be an attorney of the individual lndemnitee's choice, together with court costs, and any judgment. If any claim, demand, action or cause of action is asserted against any lndemnitee, such Indemnitee shall promptly notify the other party, but the failure to so promptly notify such party shall not affect such party s obligations under this Paragraph unless such failure materially prejudices such party s right to participate in the contest of such claim, demand, action or cause of action, as hereinafter provided. If requested by the party having the obligation to indemnify in writing, so long as no Default or Event of Default shall have occurred and be continuing, such Indemnitee shall in good faith contest the validity, applicability and amount of such claim, demand, action or cause of action and shall permit the indemnifying party to participate in such contest. Any Indemnitee that proposes to settle or compromise any claim, demand, action, cause of action or proceeding for which the other party may be liable for payment of indemnity hereunder shall give such party written notice of the terms of such proposed settlement or compromise reasonably in advance of settling or compromising such claim or proceeding and shall obtain such party s concurrence thereto. 12. Release by Subsequent Developers. Each grantee or transferee of the Developer, and any subsequent Developer of any part of the Property, releases the Developer, its Affiliates, officers, partners, employees, attorneys, successors and assigns and the City, its elected officials, officers, agents, attorneys and employees (collectively the Released Parties ) from any and all claims, demands, actions or causes of action directly or indirectly related to any one or more of the following: (i) the wrongful or negligent use by any person or entity of the Infrastructure Participation reimbursement payments; (ii) the legal authority of any party to enter into this Agreement; and (iii) any development ordinance applicable to such person or to the Property. The foregoing release shall survive and continue to be enforceable notwithstanding any development approvals on any part of the Property granted by the City. 13. General Provisions. The following general provisions are a part of this Agreement: (a) Entire Agreement; No Oral Modification. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the Economic Development Agreement - Forney Marketplace, LLC Page 8
9 matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the signatories hereto or their respective heirs, successors and assigns. (b) Jurisdiction and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, and all obligations of the parties created hereunder are performable in Kaufman County, Texas. Exclusive venue for any action arising under this Agreement shall lie in Kaufman County, Texas. (c) No Vested Rights. The signatories hereto shall be subject to all ordinances of the City, whether now existing or in the future arising, save and except only to the extent expressly waived in this Agreement. This Agreement shall confer no vested rights on the Property unless specifically enumerated herein. (d) Authority. This Agreement shall become a binding obligation on the signatories upon execution by all signatories hereto. The City warrants and represents that the individual executing this Agreement on behalf of the City has full authority to execute this Agreement and bind the City to the same. The Developer warrants and represents that the individual executing this Agreement on its behalf has full authority to execute this Agreement and bind the Developer to the same. (e) Severability. In the event any provision of this Agreement shall be determined by any court of competent jurisdiction to be invalid or unenforceable, the remaining provisions of the Agreement shall, to the extent reasonably possible, remain in force as if such invalid provision were not a part hereof. (f) Covenant Running with the Land. A memorandum of this Agreement acceptable to Developer and the City shall be filed in the Real Property Records of Kaufman County, Texas. The provisions of this Agreement shall be deemed to run with the Property and shall be binding on the heirs, successors and assigns of the Developer. (g) Audits. The Developer agrees to allow the City, at its sole cost and expense, and upon reasonable advance written notice, to audit all of the Developer s records, documents, agreements and other instruments related to the cost of the Infrastructure at the location where the Developer maintains such items and during Developer s regular business hours. (h) Notices. All notices required to be given under this Agreement shall be given in writing and shall be effective when actually delivered or when deposited in the United States mail, first class, postage prepaid, addressed to the party to whom the notice is to be given at the addresses shown above. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party s address. For notice purposes, each party agrees to keep the other informed at all times of its current address. (i) Warranties. All warranties, representations and covenants made by the Developer or the City in this Agreement or in any certificate or other instrument delivered by either party Economic Development Agreement - Forney Marketplace, LLC Page 9
10 under this Agreement shall be considered to have been relied upon by the parties hereto and will survive the making of any payment and/or delivery to the City of the Related Document Developer, regardless of any investigation made by the City or on the City s behalf. (j) Time. Time is of the essence in the performance of this Agreement. (k) Term. The term of this Agreement shall extend for a period of ten (10) years following the effective date unless this Agreement as set forth below, or any specific provision thereof, is earlier terminated under those applicable provisions or its term is modified by written amendment to this Agreement. (l) Assignment. The Developer may not assign its rights and obligations under this Agreement without the written approval of the City; however the Developer shall not be released from its obligations upon any approved assignment unless City executes an express release incident to any approved assignment. Notwithstanding the foregoing, Developer may assign its rights and obligations under this Agreement to any parent, subsidiary or other affiliate of Developer without the approval of the City. Notwithstanding any such assignment by Developer, Developer shall have the right to retain and receive all or a portion of the payments due to Developer under this Agreement. (m) Other Documents. The City agrees to make, execute and deliver to the Developer such other documents and agreements as the Developer or its attorneys may reasonably request to effectuate this Agreement. [Signature Page to Follow] Economic Development Agreement - Forney Marketplace, LLC Page 10
11 EXECUTED to be effective as of the day of August, DEVELOPER FORNEY MARKETPLACE, LLC A Texas limited liability company By: Chuck Stuber, Manager STATE OF TEXAS COUNTY OF DALLAS BEFORE ME, the undersigned authority, in and for said County, on this day personally appeared Chuck Stuber, in his capacity as Manager of Forney Marketplace, LLC, a Texas limited liability company, known to me to be the person whose name is subscribed to the foregoing instrument, and averred that he executed the same on behalf of and as the act of said company. GIVEN UNDER MY HAND AND SEAL OF OFFICE, THIS THE DAY OF, Notary Public, State of Texas My commission expires Economic Development Agreement - Forney Marketplace, LLC Page 11
12 CITY OF FORNEY, TEXAS By: James Fisher, City Manager ATTEST: Dorothy Brooks, City Secretary, TRMC, CMC APPROVED AS TO FORM: Jon Thatcher, City Attorney STATE OF TEXAS COUNTY OF KAUFMAN This instrument was acknowledged before me on the day of, 2017, by James Fisher, City Manager of the City of Forney, a Texas municipal corporation, on behalf of said corporation. GIVEN UNDER MY HAND AND SEAL OF OFFICE, THIS THE DAY OF, Notary Public, State of Texas My commission expires Economic Development Agreement - Forney Marketplace, LLC Page 12
13 EXHIBIT A The Property Tract 1 Parcel ID 6574, being acres in the John Gregg Survey; Tract 2 Parcel ID 6575, being acres in the John Gregg Survey; Economic Development Agreement - Forney Marketplace, LLC Page 13
14 EXHIBIT B Infrastructure Economic Development Agreement - Forney Marketplace, LLC Page 14
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