Loading...
R-10-11-09-10B2 - 11/9/2010RESOLUTION NO. R -10-11-09-10B2 WHEREAS, the City of Round Rock ("City") has established an Economic Development Program to encourage South Education — Texas LLC ("South Education") to locate a branch university in the City of Round Rock at 1100 W. Louis Henna Blvd., Bldg 1, Suites 100 & 200, and WHEREAS, to further promote economic development, the City wishes to enter into an Economic Development Program Agreement ("Agreement") with South Education regarding South Education's development of a branch university in the City of Round Rock, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the Mayor is hereby authorized and directed to execute on behalf of the City, an Economic Development Program Agreement with South Education — Texas LLC, a copy of same being attached hereto as Exhibit "A" and incorporated herein for all purposes. The City Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Resolution was adopted was posted and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter hereof were discussed, considered and formally acted RESOLVED this 9th day of November, 2010. ALAN MCGRAW, Mayor City of Round Rock, Texas ATTEST: SARA L. WHITE, City Secretary O:\wdox\SCCInts\0112\ 1005\MUNICIPAL\00206989.DOC/rmc ECONOMIC DEVELOPMENT AGREEMENT This Economic Development Agreement ("Agreement") is entered into this day of October, 2010, by and between the City of Round Rock, Texas, a Texas home rule municipal corporation ("City"), and South Education — Texas LLC, a Texas limited liability company ("South Education"). WHEREAS, the City has adopted Resolution No. , attached as Exhibit A ("City Resolution"), establishing an economic development program and authorizing the Mayor to enter into this Agreement with South Education in recognition of the positive economic benefits to the City through South Education's location of a higher education facility in an existing vacant building located at 1100 West Louis Henna Boulevard, Round Rock, Texas (the "Property"); and WHEREAS, South Education will lease and occupy approximately forty thousand (40,000) square feet of space in two vacant buildings which together contain a total of two hundred eighty-seven thousand, five hundred sixty (287,560) square feet; and WHEREAS, the purpose of this Agreement is to promote economic development as contemplated by Chapter 380 of the Texas Local Government Code whereby South Education will expend significant sums to construct and install tenant improvements to the Property and lease, occupy, and operate the Facility in conformance with the City's development approvals for the Facility; and WHEREAS, the City agrees to provide performance based economic development grants to South Education to defray a portion of the Facility's costs; NOW, THEREFORE, in consideration of the mutual benefits and promises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City and South Education agree as follows: 1. Authority. The City's execution of this Agreement is authorized by Chapter 380 of the Texas Local Govemment Code, and the City Resolution, and constitutes a valid and binding obligation of the City in the event South Education proceeds with the Facility. The City acknowledges that South Education is acting in reliance upon the City's performance of its obligations under this Agreement in making its decision to commit substantial resources and money to improve and occupy the Property. 2. Definitions. 2.1 "Business Personal Property Tax Revenues" means the amount of property tax actually collected by the City from South Education for personal property placed in service at the Property. 2.2 "Economic Incentive Payment(s)" ("EIPs") means the amount paid by the City to South Education under the Program. South University EDA- City FINAL CLEAN 110210 kds.DOC 2.3 "Effective Date" is the date this Agreement is executed to be effective by the City, and South Education. 2.3 "Facility" is South Education's planned construction and installation of tenant improvements to the Property and plan to then lease and occupy the Property for a higher education facility. The Facility shall occupy approximately forty thousand (40,000) square feet of the existing two vacant buildings containing approximately two hundred eighty-seven thousand, five hundred sixty (287,560) square feet. 2.4 "Program" means the economic development program established by the City pursuant to Chapter 380 of the Texas Local Government Code and under the City Resolution to promote local economic development and stimulate business and commercial activity within the City. 2.5 "Property" means the building located at 1100 West Louis Henna Boulevard, Round Rock, Texas. 2.6 "Property Tax Revenues" means the amount of property tax actually collected by the City from the owner of the Property. 2.7 "Recapture Liability" means the total amount of all EIP's that were paid as result of this Agreement that are subject to recapture by the City from South Education in the event of a South Education default. 3. Term. This Agreement shall become enforceable upon its Effective Date for the tax years 2012, 2013 and 2014 and shall terminate on December 31, 2014. In the event the City is unable to appropriate funds for a particular year pursuant to Section 5.1.2 of this Agreement, the City shall extend this Agreement for another year(s). 4. Rights and Obligations of South Education. In consideration of the City's compliance with this Agreement, South Education agrees that it shall comply with the City's development approval processes and shall construct and install the tenant improvements and occupy and operate the Facility on the Property consistent with City ordinances, City development regulations and requirements. South Education also agrees that it will operate the Facility until at least December 31, 2020. 5. Rights and Obligations of the City. In consideration of South Education's compliance with this Agreement, the City agrees as follows: 5.1 Economic Incentive Payments. 5.1.1 City Payments. City shall, subject to the conditions set out herein, make annual EIP's to South Education. The number of square feet occupied by South Education (40,000) is approximately 14% of the number of total square feet in the vacant buildings 2 (287,560). Therefore, the EIP's will be an amount equal to fourteen percent (14%) of the Property Tax Revenues plus one -hundred percent (100%) of the Business Personal Property Tax Revenues for the tax years 2012, 2013, and 2014. The EIP's shall be made on or before sixty (60) days following receipt by the City of a written request therefor from South Education accompanied with proof of payment, including but not limited to copies of cancelled checks, electronic payment confirmations, or receipts of the Property Tax Revenues and/or the Business Personal Property Tax Revenues. 5.1.2 Payments Subject to Future Appropriations. Although certain payments under this Agreement are calculated based on a formula applied to property tax revenues, this Agreement shall not be construed as a commitment, issue or obligation of any specific taxes or tax revenues for payment to South Education. All payments by the City under this Agreement are subject to the City's appropriation of funds for such payments in the budget year for which they are made. The payments to be made to South Education, if paid, shall be made solely from annual appropriations from the general funds of the City or from such other funds of the City as may be legally set aside for the implementation of Article III, Section 52a of the Texas Constitution or Chapter 380 of the Local Government Code or any other economic development or financing program authorized by statute or home rule powers of the City under applicable Texas law, subject to any applicable limitations or procedural requirements. In the event that the City does not appropriate funds in any fiscal year for payments due under this Agreement, such failure shall not be considered a default under Section 7.3, and the City shall not be liable to South Education for such payments, however, the City shall extend this Agreement for another year(s). In addition, South Education shall have the right but not the obligation to rescind this Agreement. To the extent there is a conflict between this paragraph and any other language or covenant in this Agreement, this paragraph shall control. 5.1.3 Permitting. The City shall cooperate with South Education to expeditiously process all City permit applications and City inspections. 6. EIP Recapture. In the event the South Education is in default of this Agreement, the City may recapture and collect from South Education the Recapture Liability after providing South Education written notice and a minimum period of thirty (30) days to cure such default, and the default has not been cured within said time. In the event South Education does not so cure, South Education shall pay to the City the Recapture Liability within thirty (30) days after the City makes demand for same, subject to any and all lawful offsets, settlements, deduction, or credits to which South Education may be entitled. The City shall have all remedies for the collection of the Recapture Liability as provided generally in the Tax Code for the collection of delinquent property taxes. 7. Miscellaneous. 7.1 Mutual Assistance. The City and South Education will do all things reasonably necessary or appropriate to carry out the terms and provisions of this Agreement, and to aid and assist each other in carrying out such terms and provisions, regardless of any changes in public policy, the law, or taxes or assessments attributable to the Property. 3 7.2 Representations and Warranties. The City represents and warrants to South Education that the Program and this Agreement are within its authority, and that it is duly authorized and empowered to establish the Program and enter into this Agreement, unless otherwise ordered by a court of competent jurisdiction. South Education represents and warrants to the City that it has the requisite authority to enter into this Agreement. 7.3 Default. If either the City or South Education should default in the performance of any obligations of this Agreement, the other party shall provide such defaulting party written notice of the default, and a minimum period of thirty (30) days to cure such default, prior to instituting an action for breach or pursuing any other remedy for default. If the City remains in default after notice and opportunity to cure, South Education shall have the right to pursue any remedy at law or in equity for the City's breach. If South Education remains in default after notice and opportunity to cure, the City's remedy shall be limited to a termination of the EIPs, which accrue after the date of such default. Any EIPs from City to South Education which is not timely paid by City shall incur interest at the highest rate per annum allowed by the applicable law of the State of Texas from the date such ETPs are due until paid. Any funds owed by South Education to the City which are not timely paid by South Education shall incur interest at the highest rate per annum allowed by the applicable law of the State of Texas from the date such funds are due until paid. 7.4 Attorney's Fees. In the event any legal action or proceeding is commenced in a court of competent jurisdiction between the City and South Education to enforce provisions of this Agreement and recover damages for breach, the prevailing party in such legal action shall be entitled to recover its reasonable attorney's fees and expenses incurred by reason of such action, to the extent allowed by law. 7.5 Entire Agreement. This Agreement contains the entire agreement between the parties. This Agreement may only be amended, altered or revoked by written instrument signed by the City and South Education. 7.6 Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties, their respective successors and assigns. 7.7 Assignment. South Education may not assign all or part of its rights and obligations to a third party without the express written consent of the City provided, however, that this Agreement may be assigned by either party without the consent of the other to an affiliate or to any third party who succeeds to substantially all of its business or assets. 7.8 Amendment. This Agreement may be amended by the mutual written agreement of the parties. 7.9 Termination. In the event South Education elects not to proceed with the Facility as contemplated by this Agreement, South Education shall notify the City in 4 writing, and this Agreement and the obligations on the part of both parties shall be deemed terminated and of no further force or effect. 7.10 Notice. Any notice and or statement required and permitted to be delivered shall be deemed delivered by actual delivery, facsimile with receipt of confirmation, or by depositing the same in the United States mail, certified with return receipt requested, postage prepaid, addressed to the appropriate party at the following addresses: If to City: City of Round Rock 221 E. Main Street Round Rock, TX 78664 Attn: City Manager Phone: (512) 218-5400 Fax: (512) 218-7097 With a required copy to: Sheets & Crossfield 309 E. Main Street Round Rock, TX 78664 Attn: Stephan L. Sheets Phone: (512) 255-8877 Fax: (512) 255-8986 If to South Education: South University LLC 709 Mall Boulevard Savannah GA 31406 Attn: Chancellor Phone: 912-201-8000 With required copies to: Education Management LLC 210 Sixth Avenue Pittsburgh, PA 15222 Attn: Law Department Phone: 412-562-0900 Either party may designate a different address at any time upon written notice to the other party. 5 7.11 Interpretation. Each of the parties have been represented by counsel of their choosing in the negotiation and preparation of this Agreement. Regardless of which party prepared the initial draft of this Agreement, this Agreement shall, in the event of any dispute, however its meaning or application, be interpreted fairly and reasonably and neither more strongly for or against any party. 7.12 Applicable Law. This Agreement is made, and shall be construed and interpreted, under the laws of the State of Texas and venue shall lie in Williamson County, Texas. 7.13 Severability. In the event any provisions of this Agreement are illegal, invalid or unenforceable under present or future laws, and in that event, it is the intention of the parties that the remainder of this Agreement shall not be affected. It is also the intention of the parties of this Agreement that in lieu of each clause and 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. 7.14 Paragraph Headings. 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 various and several paragraphs. 7.15 No Third Party Beneficiaries. This Agreement is not intended to confer any rights, privileges or causes of action upon any third party. 7.16 Force Majeure. Except as otherwise provided herein, an equitable adjustment shall be made for delay or failure in performing if such delay or failure is caused, prevented, or restricted by conditions beyond that Party's reasonable control (a `force majeure event"). Aforce majeure event for the purposes of this Agreement shall include, but not be limited to, acts of God, fire; explosion, vandalism; storm or similar occurrences; orders or acts of military or civil authority; litigation; changes in law, rules, or regulations outside the control of the affected Party; national emergencies or insurrections; riots; acts of terrorism; or supplier failures, shortages or breach or delay. Except as otherwise expressly provided, herein, there shall be an equitable adjustment allowed for performance under this Agreement as the result of any event of farce majeure. 7.17 Exhibits. The following exhibit is attached and incorporated by reference for all purposes: Exhibit "A": City Resolution No. 7.18 No Joint Venture. It is acknowledged and agreed by the parties that the terms hereof are not intended to and shall not be deemed to create any partnership or 6 joint venture among the parties. The City, its past, present and future officers, elected officials, employees and agents of the City, do not assume any responsibilities or liabilities to any third party in connection with the development of the Facility or the design, construction or operation of any portion of the Facility. EXECUTED to be effective as of the day of November, 2010 (the "Effective Date"). APPROVED as to form: Stephan L. Sheets, City Attorney CITY OF ROUND ROCK, TEXAS, By: Alan McGraw, Mayor South Education — Texas LLC By: 1/4j.%A,/t;e 9,1 gatthr -Kr Its: //le -E= P2F5iAr/VT DF Date: ///4141 7 EXHIBIT "A" CITY RESOLUTION NO. ROUND ROCK, TEXAS PURPOSE. PASSION. PROSPERITY Agenda Item No. 1062. CiyCouncil Agenda Summar Sheet Consider a resolution authorizing the Mayor to execute an Economic Development Agenda Caption: Agreement with South Education — Texas LLC Meeting Date: November 9, 2010 Department: Administration Staff Person making presentation: Cindy Demers Assistant City Manager Item Summary: The purpose of this agreement is to promote economic development and stimulate business and commercial activity in the City of Round Rock as contemplated by Chapter 380 of the Texas Local Government Code. With this agreement, the City will provide performance based economic development grants to South Education to defray a portion of the costs incurred by South Education — Texas LLC to locate a South University Campus in an existing vacant building located at 1100 West Louis Henna Boulevard. Significant sums will be expended by South Education to construct and install tenant improvements to this property and to lease, occupy, and operate the facility in conformance with the City's development approvals for the facility. Two components of this program are a cash payment equal to three years of ad valorem tax abatement for the pro rata share of the taxes paid for the real estate and personal property occupied in Frontera Vista and a building permit fee waiver for all tenant finish out. Strategic Plan Relevance: 16.0 — Develop financial capital needed to support business growth and development, and improve the financial advantages of operating in the City. Cost: Source of Funds: Date of Public Hearing (if required): N/A Recommended Action: Approval EXECUTED DOCUMENT FOLLOWS ECONOMIC DEVELOPMENT AGREEMENT This Economic Development Agreement ("Agreement") is entered into this qt. day of f, 2010, by and between the City of Round Rock, Texas, a Texas home rule municipal corporation ("City"), and South Education — Texas LLC, a Texas limited liability company ("South Education"). WHEREAS, the City has adopted Resolution Nok-1)-±Laity2attached as Exhibit A ("City Resolution"), establishing an economic development program and' authorizing the Mayor to enter into this Agreement with South Education in recognition of the positive economic benefits to the City through South Education's location of a higher education facility in an existing vacant building located at 1100 West Louis Henna Boulevard, Round Rock, Texas (the "Property"); and WHEREAS, South Education will lease and occupy approximately forty thousand (40,000) square feet of space in two vacant buildings which together contain a total of two hundred eighty-seven thousand, five hundred sixty (287,560) square feet; and WHEREAS, the purpose of this Agreement is to promote economic development as contemplated by Chapter 380 of the Texas Local Government Code whereby South Education will expend significant sums to construct and install tenant improvements to the Property and lease, occupy, and operate the Facility in conformance with the City's development approvals for the Facility; and WHEREAS, the City agrees to provide performance based economic development grants to South Education to defray a portion of the Facility's costs; NOW, THEREFORE, in consideration of the mutual benefits and promises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City and South Education agree as follows: 1. Authority. The City's execution of this Agreement is authorized by Chapter 380 of the Texas Local Government Code, and the City Resolution, and constitutes a valid and binding obligation of the City in the event South Education proceeds with the Facility. The City acknowledges that South Education is acting in reliance upon the City's performance of its obligations under this Agreement in making its decision to commit substantial resources and money to improve and occupy the Property. 2. Definitions. 2.1 "Business Personal Property Tax Revenues" means the amount of property tax actually collected by the City from South Education for personal property placed in service at the Property. 2.2 "Economic Incentive Payment(s)" ("EIPs") means the amount paid by the City to South Education under the Program. South University EDA- City FINAL CLEAN 110210 kds.DOC ��w1-Y1-10 2.3 "Effective Date" is the date this Agreement is executed to be effective by the City, and South Education. 2.3 "Facility" is South Education's planned construction and installation of tenant improvements to the Property and plan to then lease and occupy the Property for a higher education facility. The Facility shall occupy approximately forty thousand (40,000) square feet of the existing two vacant buildings containing approximately two hundred eighty-seven thousand, five hundred sixty (287,560) square feet. 2.4 "Program" means the economic development program established by the City pursuant to Chapter 380 of the Texas Local Government Code and under the City Resolution to promote local economic development and stimulate business and commercial activity within the City. 2.5 "Property" means the building located at 1100 West Louis Henna Boulevard, Round Rock, Texas. 2.6 "Property Tax Revenues" means the amount of property tax actually collected by the City from the owner of the Property. 2.7 "Recapture Liability" means the total amount of all EIP's that were paid as result of this Agreement that are subject to recapture by the City from South Education in the event of a South Education default. 3. Term. This Agreement shall become enforceable upon its Effective Date for the tax years 2012, 2013 and 2014 and shall terminate on December 31, 2014. In the event the City is unable to appropriate funds for a particular year pursuant to Section 5.1.2 of this Agreement, the City shall extend this Agreement for another year(s). 4. Rights and Obligations of South Education. In consideration of the City's compliance with this Agreement, South Education agrees that it shall comply with the City's development approval processes and shall construct and install the tenant improvements and occupy and operate the Facility on the Property consistent with City ordinances, City development regulations and requirements. South Education also agrees that it will operate the Facility until at least December 31, 2020. 5. Rights and Obligations of the City. In consideration of South Education's compliance with this Agreement, the City agrees as follows: 5.1 Economic Incentive Payments. 5.1.1 City Payments. City shall, subject to the conditions set out herein, make annual EIP's to South Education. The number of square feet occupied by South Education (40,000) is approximately 14% of the number of total square feet in the vacant buildings 2 (287,560). Therefore, the EIP's will be an amount equal to fourteen percent (14%) of the Property Tax Revenues plus one-hundred percent (100%) of the Business Personal Property Tax Revenues for the tax years 2012, 2013, and 2014. The EIP's shall be made on or before sixty (60) days following receipt by the City of a written request therefor from South Education accompanied with proof of payment, including but not limited to copies of cancelled checks, electronic payment confirmations, or receipts of the Property Tax Revenues and/or the Business Personal Property Tax Revenues. 5.1.2 Payments Subject to Future Appropriations. Although certain payments under this Agreement are calculated based on a formula applied to property tax revenues, this Agreement shall not be construed as a commitment, issue or obligation of any specific taxes or tax revenues for payment to South Education. All payments by the City under this Agreement are subject to the City's appropriation of funds for such payments in the budget year for which they are made. The payments to be made to South Education, if paid, shall be made solely from annual appropriations from the general funds of the City or from such other funds of the City as may be legally set aside for the implementation of Article III, Section 52a of the Texas Constitution or Chapter 380 of the Local Government Code or any other economic development or financing program authorized by statute or home rule powers of the City under applicable Texas law, subject to any applicable limitations or procedural requirements. In the event that the City does not appropriate funds in any fiscal year for payments due under this Agreement, such failure shall not be considered a default under Section 7.3, and the City shall not be liable to South Education for such payments, however, the City shall extend this Agreement for another year(s). In addition, South Education shall have the right but not the obligation to rescind this Agreement. To the extent there is a conflict between this paragraph and any other language or covenant in this Agreement, this paragraph shall control. 5.1.3 Permitting. The City shall cooperate with South Education to expeditiously process all City permit applications and City inspections. 6. EIP Recapture. In the event the South Education is in default of this Agreement, the City may recapture and collect from South Education the Recapture Liability after providing South Education written notice and a minimum period of thirty (30) days to cure such default, and the default has not been cured within said time. In the event South Education does not so cure, South Education shall pay to the City the Recapture Liability within thirty (30) days after the City makes demand for same, subject to any and all lawful offsets, settlements, deduction, or credits to which South Education may be entitled. The City shall have all remedies for the collection of the Recapture Liability as provided generally in the Tax Code for the collection of delinquent property taxes. 7. Miscellaneous. 7.1 Mutual Assistance. The City and South Education will do all things reasonably necessary or appropriate to carry out the terms and provisions of this Agreement, and to aid and assist each other in carrying out such terms and provisions, regardless of any changes in public policy, the law, or taxes or assessments attributable to the Property. 3 7.2 Representations and Warranties. The City represents and warrants to South Education that the Program and this Agreement are within its authority, and that it is duly authorized and empowered to establish the Program and enter into this Agreement, unless otherwise ordered by a court of competent jurisdiction. South Education represents and warrants to the City that it has the requisite authority to enter into this Agreement. 7.3 Default. If either the City or South Education should default in the performance of any obligations of this Agreement, the other party shall provide such defaulting party written notice of the default, and a minimum period of thirty (30) days to cure such default, prior to instituting an action for breach or pursuing any other remedy for default. If the City remains in default after notice and opportunity to cure, South Education shall have the right to pursue any remedy at law or in equity for the City's breach. If South Education remains in default after notice and opportunity to cure, the City's remedy shall be limited to a termination of the EIPs, which accrue after the date of such default. Any EIPs from City to South Education which is not timely paid by City shall incur interest at the highest rate per annum allowed by the applicable law of the State of Texas from the date such EIPs are due until paid. Any funds owed by South Education to the City which are not timely paid by South Education shall incur interest at the highest rate per annum allowed by the applicable law of the State of Texas from the date such funds are due until paid. 7.4 Attorney's Fees. In the event any legal action or proceeding is commenced in a court of competent jurisdiction between the City and South Education to enforce provisions of this Agreement and recover damages for breach, the prevailing party in such legal action shall be entitled to recover its reasonable attorney's fees and expenses incurred by reason of such action, to the extent allowed by law. 7.5 Entire Agreement. This Agreement contains the entire agreement between the parties. This Agreement may only be amended, altered or revoked by written instrument signed by the City and South Education. 7.6 Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties, their respective successors and assigns. 7.7 Assignment. South Education may not assign all or part of its rights and obligations to a third party without the express written consent of the City provided, however, that this Agreement may be assigned by either party without the consent of the other to an affiliate or to any third party who succeeds to substantially all of its business or assets. 7.8 Amendment. This Agreement may be amended by the mutual written agreement of the parties. 7.9 Termination. In the event South Education elects not to proceed with the Facility as contemplated by this Agreement, South Education shall notify the City in 4 writing, and this Agreement and the obligations on the part of both parties shall be deemed terminated and of no further force or effect. 7.10 Notice. Any notice and or statement required and permitted to be delivered shall be deemed delivered by actual delivery, facsimile with receipt of confirmation, or by depositing the same in the United States mail, certified with return receipt requested, postage prepaid, addressed to the appropriate party at the following addresses: If to City: City of Round Rock 221 E. Main Street Round Rock, TX 78664 Attn: City Manager Phone: (512) 218-5400 Fax: (512) 218-7097 With a required copy to: Sheets & Crossfield 309 E. Main Street Round Rock, TX 78664 Attn: Stephan L. Sheets Phone: (512) 255-8877 Fax: (512) 255-8986 If to South Education: South University LLC 709 Mall Boulevard Savannah GA 31406 Attn: Chancellor Phone: 912-201-8000 With required copies to: Education Management LLC 210 Sixth Avenue Pittsburgh, PA 15222 Attn: Law Department Phone: 412-562-0900 Either party may designate a different address at any time upon written notice to the other party. 5 7.11 Interpretation. Each of the parties have been represented by counsel of their choosing in the negotiation and preparation of this Agreement. Regardless of which party prepared the initial draft of this Agreement, this Agreement shall, in the event of any dispute, however its meaning or application, be interpreted fairly and reasonably and neither more strongly for or against any party. 7.12 Applicable Law. This Agreement is made, and shall be construed and interpreted, under the laws of the State of Texas and venue shall lie in Williamson County, Texas. 7.13 Severability. In the event any provisions of this Agreement are illegal, invalid or unenforceable under present or future laws, and in that event, it is the intention of the parties that the remainder of this Agreement shall not be affected. It is also the intention of the parties of this Agreement that in lieu of each clause and 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. 7.14 Paragraph Headings. 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 various and several paragraphs. 7.15 No Third Party Beneficiaries. This Agreement is not intended to confer any rights, privileges or causes of action upon any third party. 7.16 Force Majeure. Except as otherwise provided herein, an equitable adjustment shall be made for delay or failure in performing if such delay or failure is caused, prevented, or restricted by conditions beyond that Party's reasonable control (a `force majeure event"). Aforce majeure event for the purposes of this Agreement shall include, but not be limited to, acts of God, fire; explosion, vandalism; storm or similar occurrences; orders or acts of military or civil authority; litigation; changes in law, rules, or regulations outside the control of the affected Party; national emergencies or insurrections; riots; acts of terrorism; or supplier failures, shortages or breach or delay. Except as otherwise expressly provided, herein, there shall be an equitable adjustment allowed for performance under this Agreement as the result of any event of force majeure. 7.17 Exhibits. The following exhibit is attached and incorporated by reference for all purposes: Exhibit "A": City Resolution No. i%(— (DU -- 7.18 No Joint Venture. It is acknowledged and agreed by the parties that the terms hereof are not intended to and shall not be deemed to create any partnership or 6 joint venture among the parties. The City, its past, present and future officers, elected officials, employees and agents of the City, do not assume any responsibilities or liabilities to any third party in connection with the development of the Facility or the design, construction or operation of any portion of the Facility. EXECUTED to be effective as of thea day of November, 2010 (the "Effective Date"). CITY OF ROUND ROCK, TEXAS, APPR D as o form: Steph . Sheets, City Attorney By: an McGraw, Mayor South Education — Texas LLC Its: I je-E. f 12 ,Arr�A� Tkc s Date: WW1 7 EXHIBIT "A" CITY RESOLUTION NO. RESOLUTION NO. R -10-11-09-10B2 WHEREAS, the City of Round Rock ("City") has established an Economic Development Program to encourage South Education — Texas LLC ("South Education") to locate a branch university in the City of Round Rock at 1100 W. Louis Henna Blvd., Bldg 1, Suites 100 & 200, and WHEREAS, to further promote economic development, the City wishes to enter into an Economic Development Program Agreement ("Agreement") with South Education regarding South Education's development of a branch university in the City of Round Rock, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the Mayor is hereby authorized and directed to execute on behalf of the City, an Economic Development Program Agreement with South Education — Texas LLC, a copy of same being attached hereto as Exhibit "A" and incorporated herein for all purposes. The City Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Resolution was adopted was posted and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter hereof were discussed, considered and formally acted RESOLVED this 9th day of November, 2010. ALAN MCGRAW, Mayor City of Round Rock, Texas ATTEST: SARA L. WHITE, City Secretary O:\wdo x\SCClnts\0112\ 1005\MUNICIPAL\00206989.DcJC/rmc EXHIBIT „A» ECONOMIC DEVELOPMENT AGREEMENT This Economic Development Agreement ("Agreement") is entered into this day of October, 2010, by and between the City of Round Rock, Texas, a Texas home rule municipal corporation ("City"), and South Education — Texas LLC, a Texas limited liability company ("South Education"). WHEREAS, the City has adopted Resolution No. , attached as Exhibit A ("City Resolution"), establishing an economic development program and authorizing the Mayor to enter into this Agreement with South Education in recognition of the positive economic benefits to the City through South Education's location of a higher education facility in an existing vacant building located at 1100 West Louis Henna Boulevard, Round Rock, Texas (the "Property"); and WHEREAS, South Education will lease and occupy approximately forty thousand (40,000) square feet of space in two vacant buildings which together contain a total of two hundred eighty-seven thousand, five hundred sixty (287,560) square feet; and WHEREAS, the purpose of this Agreement is to promote economic development as contemplated by Chapter 380 of the Texas Local Government Code whereby South Education will expend significant sums to construct and install tenant improvements to the Property and lease, occupy, and operate the Facility in conformance with the City's development approvals for the Facility; and WHEREAS, the City agrees to provide performance based economic development grants to South Education to defray a portion of the Facility's costs; NOW, THEREFORE, in consideration of the mutual benefits and promises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City and South Education agree as follows: 1. Authority. The City's execution of this Agreement is authorized by Chapter 380 of the Texas Local Government Code, and the City Resolution, and constitutes a valid and binding obligation of the City in the event South Education proceeds with the Facility. The City acknowledges that South Education is acting in reliance upon the City's performance of its obligations under this Agreement in making its decision to commit substantial resources and money to improve and occupy the Property. 2. Definitions. 2.1 `Business Personal Property Tax Revenues" means the amount of property tax actually collected by the City from South Education for personal property placed in service at the Property. 2.2 "Economic Incentive Payment(s)" ("EIPs") means the amount paid by the City to South Education under the Program. South University EDA- City FINAL CLEAN 110210 kds.DOC 2.3 "Effective Date" is the date this Agreement is executed to be effective by the City, and South Education. 2.3 "Facility" is South Education's planned construction and installation of tenant improvements to the Property and plan to then lease and occupy the Property for a higher education facility. The Facility shall occupy approximately forty thousand (40,000) square feet of the existing two vacant buildings containing approximately two hundred eighty-seven thousand, five hundred sixty (287,560) square feet. 2.4 "Program" means the economic development program established by the City pursuant to Chapter 380 of the Texas Local Government Code and under the City Resolution to protnote local economic development and stimulate business and commercial activity within the City. 2.5 "Property" means the building located at 1100 West Louis Henna Boulevard, Round Rock, Texas. 2.6 "Property Tax Revenues" means the amount of property tax actually collected by the City from the owner of the Property. 2.7 "Recapture Liability" means the total amount of all EIP's that were paid as result of this Agreement that are subject to recapture by the City from South Education in the event of a South Education default. 3. Term. This Agreement shall become enforceable upon its Effective Date for the tax years 2012, 2013 and 2014 and shall terminate on December 31, 2014. In the event the City is unable to appropriate funds for a particular year pursuant to Section 5.1.2 of this Agreement, the City shall extend this Agreement for another year(s). 4. Rights and Obligations of South Education. In consideration of the City's compliance with this Agreement, South Education agrees that it shall comply with the City's development approval processes and shall construct and install the tenant improvements and occupy and operate the Facility on the Property consistent with City ordinances, City development regulations and requirements. South Education also agrees that it will operate the Facility until at least December 31, 2020. 5. Rights and Obligations of the City. In consideration of South Education's compliance with this Agreement, the City agrees as follows: 5.1 Economic Incentive Payments. 5.1.1 City Payments. City shall, subject to the conditions set out herein, make annual EIP's to South Education. The number of square feet occupied by South Education (40,000) is approximately 14% of the number of total square feet in the vacant buildings 2 (287,560). Therefore, the EIP's will be an amount equal to fourteen percent (14%) of the Property Tax Revenues plus one -hundred percent (100%) of the Business Personal Property Tax Revenues for the tax years 2012, 2013, and 2014. The EIP' s shall be made on or before sixty (60) days following receipt by the City of a written request therefor from South Education accompanied with proof of payment, including but not limited to copies of cancelled checks, electronic payment confirmations, or receipts of the Property Tax Revenues and/or the Business Personal Property Tax Revenues. 5.1.2 Payments Subject to Future Appropriations. Although certain payments under this Agreement are calculated based on a formula applied to property tax revenues, this Agreement shall not be construed as a commitment, issue or obligation of any specific taxes or tax revenues for payment to South Education. All payments by the City under this Agreement are subject to the City's appropriation of funds for such payments in the budget year for which they are made. The payments to be made to South Education, if paid, shall be made solely from annual appropriations from the general funds of the City or from such other funds of the City as may be legally set aside for the implementation of Article III, Section 52a of the Texas Constitution or Chapter 380 of the Local Government Code or any other economic development or financing program authorized by statute or home rule powers of the City under applicable Texas law, subject to any applicable limitations or procedural requirements. In the event that the City does not appropriate funds in any fiscal year for payments due under this Agreement, such failure shall not be considered a default under Section 7.3, and the City shall not be liable to South Education for such payments, however, the City shall extend this Agreement for another year(s). In addition, South Education shall have the right but not the obligation to rescind this Agreement. To the extent there is a conflict between this paragraph and any other language or covenant in this Agreement, this paragraph shall control. 5.1.3 Permitting. The City shall cooperate with South Education to expeditiously process all City permit applications and City inspections. 6. EIP Recapture. In the event the South Education is in default of this Agreement, the City may recapture and collect from South Education the Recapture Liability after providing South Education written notice and a minimum period of thirty (30) days to cure such default, and the default has not been cured within said time. In the event South Education does not so cure, South Education shall pay to the City the Recapture Liability within thirty (30) days after the City makes demand for same, subject to any and all lawful offsets, settlements, deduction, or credits to which South Education may be entitled. The City shall have all remedies for the collection of the Recapture Liability as provided generally in the Tax Code for the collection of delinquent property taxes. 7. Miscellaneous. 7.1 Mutual Assistance. The City and South Education will do all things reasonably necessary or appropriate to carry out the terms and provisions of this Agreement, and to aid and assist each other in carrying out such terms and provisions, regardless of any changes in public policy, the law, or taxes or assessments attributable to the Property. 3 7.2 Representations and Warranties. The City represents and warrants to South Education that the Program and this Agreement are within its authority, and that it is duly authorized and empowered to establish the Program and enter into this Agreement, unless otherwise ordered by a court of competent jurisdiction. South Education represents and warrants to the City that it has the requisite authority to enter into this Agreement. 7.3 Default. If either the City or South Education should default in the performance of any obligations of this Agreement, the other party shall provide such defaulting party written notice of the default, and a minimum period of thirty (30) days to cure such default, prior to instituting an action for breach or pursuing any other remedy for default. If the City remains in default after notice and opportunity to cure, South Education shall have the right to pursue any remedy at law or in equity for the City's breach. If South Education remains in default after notice and opportunity to cure, the City's remedy shall be limited to a termination of the EIPs, which accrue after the date of such default. Any EIPs from City to South Education which is not timely paid by City shall incur interest at the highest rate per annum allowed by the applicable law of the State of Texas from the date such EIPs are due until paid. Any funds owed by South Education to the City which are not timely paid by South Education shall incur interest at the highest rate per annum allowed by the applicable law of the State of Texas from the date such funds are due until paid. 7.4 Attorney's Fees. In the event any legal action or proceeding is commenced in a court of competent jurisdiction between the City and South Education to enforce provisions of this Agreement and recover damages for breach, the prevailing party in such legal action shall be entitled to recover its reasonable attorney's fees and expenses incurred by reason of such action, to the extent allowed by law. 7.5 Entire Agreement. This Agreement contains the entire agreement between the parties. This Agreement may only be amended, altered or revoked by written instrument signed by the City and South Education. 7.6 Sinding Effect. This Agreement shall be binding on and inure to the benefit of the parties, their respective successors and assigns. 7.7 Assignment. South Education may not assign all or part of its rights and obligations to a third party without the express written consent of the City provided, however, that this Agreement may be assigned by either party without the consent of the other to an affiliate or to any third party who succeeds to substantially all of its business or assets. 7.8 Amendment. This Agreement may be amended by the mutual written agreement of the parties. 7.9 Termination. In the event South Education elects not to proceed with the Facility as contemplated by this Agreement, South Education shall notify the City in 4 writing, and this Agreement and the obligations on the part of both parties shall be deemed terminated and of no further force or effect. 7.10 Notice. Any notice and or statement required and permitted to be delivered shall be deemed delivered by actual delivery, facsimile with receipt of confirmation, or by depositing the same in the United States mail, certified with return receipt requested, postage prepaid, addressed to the appropriate party at the following addresses: If to City: City of Round Rock 221 E. Main Street Round Rock, TX 78664 Attn: City Manager Phone: (512) 218-5400 Fax: (512) 218-7097 With a required copy to: Sheets & Crossfield 309 E. Main Street Round Rock, TX 78664 Attn: Stephan L. Sheets Phone: (512) 255-8877 Fax: (512) 255-8986 If to South Education: South University LLC 709 Mall Boulevard Savannah GA 31406 Attn: Chancellor Phone: 912-201-8000 With required copies to: Education Management LLC 210 Sixth Avenue Pittsburgh, PA 15222 Attn: Law Department Phone: 412-562-0900 Either party may designate a different address at any time upon written notice to the other party. 5 7.11 Interpretation. Each of the parties have been represented by counsel of their choosing in the negotiation and preparation of this Agreement. Regardless of which party prepared the initial draft of this Agreement, this Agreement shall, in the event of any dispute, however its meaning or application, be interpreted fairly and reasonably and neither more strongly for or against any party. 7.12 Applicable Law. This Agreement is made, and shall be construed and interpreted, under the laws of the State of Texas and venue shall lie in Williamson County, Texas. 7.13 Severability. In the event any provisions of this Agreement are illegal, invalid or unenforceable under present or future laws, and in that event, it is the intention of the parties that the remainder of this Agreement shall not be affected. It is also the intention of the parties of this Agreement that in lieu of each clause and 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. 7.14 Paragraph Headings. 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 various and several paragraphs. 7.15 No Third Party Beneficiaries. This Agreement is not intended to confer any rights, privileges or causes of action upon any third party. 7.16 Force Majeure. Except as otherwise provided herein, an equitable adjustment shall be made for delay or failure in performing if such delay or failure is caused, prevented, or restricted by conditions beyond that Party's reasonable control (a `force majeure event"). Aforce majeure event for the purposes of this Agreement shall include, but not be limited to, acts of God, fire; explosion, vandalism; storm or similar occurrences; orders or acts of military or civil authority; litigation; changes in law, rules, or regulations outside the control of the affected Party; national emergencies or insurrections; riots; acts of terrorism; or supplier failures, shortages or breach or delay. Except as otherwise expressly provided, herein, there shall be an equitable adjustment allowed for performance under this Agreement as the result of any event of force majeure. 7.17 Exhibits. The following exhibit is attached and incorporated by reference for ail purposes: Exhibit "A": City Resolution No. 7.18 No Joint Venture. It is acknowledged and agreed by the parties that the terms hereof are not intended to and shall not be deemed to create any partnership or 6 joint venture among the parties. The City, its past, present and future officers, elected officials, employees and agents of the City, do not assume any responsibilities or liabilities to any third party in connection with the development of the Facility or the design, construction or operation of any portion of the Facility. EXECUTED to be effective as of the day of November, 2010 (the "Effective Date"). CITY OF ROUND ROCK, TEXAS, APPROVED as to form: Stephan L. Sheets, City Attorney By: Alan McGraw, Mayor South Education — Texas LLC By: e/J4&t4e 91 ' /4(AW-t' "Kr Its: // Al; >p Act _5 Date: ///7,// f) 7 EXHIBIT "A" CITY RESOLUTION NO.