Contract - EastGroup - 9/26/2019 ECONOMIC DEVELOPMENT PROGRAM AGREEMENT
This.Economic Development Program Agreement ("Agreement") is entered into this t%-day
of 2019, by and between the City of Round Rock, Texas, a Texas home
rule municipal corporation ("City"), the Round Rock Transportation and Economic
Development Corporation, a Type B Corporation created pursuant to Chapter 505 of the Texas
Local Government Code ("TEDCO"), and EastGroup Properties, L.P., a Delaware limited
partnership ("EGP' . The foregoing are referred to collectively as the"Parties."
WHEREAS, the City has adopted Resolution I.-201q-0'�11ttached ("City as Exhibit A
Resolution"), establishing an economic development program for EGP in recognition of the
positive economic benefits to the City through the construction by EGP of two new buildings(the
"Facility") for industrial and warehousing occupancy to be constructed on the site described in
Exhibit B, (the"Property"); and
WHEREAS,the City has determined that this Agreement will promote economic development as
contemplated by Chapter 380 of the Texas Local Government Code whereby EGP will expend at
least$9,000,000 in the construction of the Facility and to lease the Facility to one or more industrial
and warehousing tenants in conformance with the City's development approvals for the Facility;
and
WHEREAS, the City and TEDCO have determined that the construction of the Facility for
industrial and warehousing uses will result in the creation of primary jobs to the City, as
contemplated by §501.101 of the Texas Local Government Code; and
WHEREAS, the City and TEDCO agree to provide performance based economic development
grants to EGP to defray a portion of EGP's expenses;
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,TEDCO, and EGP 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 EGP proceeds with construction of the Facility.
The TEDCO's execution of this Agreement is authorized by §501.158 of the Texas Local
Government Code. The City and TEDCO acknowledge that EGP is acting in reliance upon
the City's and TEDCO's performance of their obligations under this Agreement in making
its decision to commit substantial resources and money to construct the Facility.
2. Definitions.
2.1 "Economic Incentive Payment(s)" ("EIPs") means the amount paid by the City
and/or TEDCO to EGP under the Program.
2.2 "Effective Date" is the date this Agreement is executed to be effective by the
Parties.
00431517.DOCX
2.3 "Facility"means the two buildings designated as`Building 3"and"Building 4"to
be constructed by EGP on the Property located in the city limits of City and.depicted
on Exhibit C.
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 tract of land described in Exhibit B.
2.6 "Real Property Improvements"means the cost of real property improvements to
the Facility directly related to the design and construction of the Facility. It does
not include any other costs, such as financing cost, attorney fees, insurance,
permitting and other similar costs.
2.6 "Recapture Liability" means the total amount of all EIP's that are paid as result
of this Agreement that are subject to recapture by the City and/or TEDCO from
EGP in the event of an EGP default.
3. Term. This Agreement shall become enforceable upon its Effective Date and shall
terminate on the date the final EIP is made in 2026, in accordance with 5.1 below.
4. Rights and Obligations of EGP.
4.1 Facilily. EGP agrees to spend at least $9,000,000.00 in Real Property
Improvements to the Facility on or before the 31St day of December, 2021. EGP
agrees to provide the City with documentation that shows proof that this obligation
has been satisfied, and the City shall have the right to audit EGP's records to verify
same.
4.2 Compliance with regulations. EGP agrees that it will comply with the City's
development approval processes and shall lease and operate the Facility consistent
with City ordinances, development regulations, and requirements.
4.6 Continuous operation. EGP agrees that it will continuously operate the Facility
during the term of this Agreement, including any extensions.
5. Rights and Obligations of the City.
In consideration of EGP's compliance with this Agreement,the City and TEDCO agree as
follows:
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5.1 Economic Incentive Payment("EM.
5.1.1 EIP. City and/or TEDCO shall, subject to EGP's satisfaction of its
obligations set forth herein, make EIPs to EGP as set forth herein. The EIP's shall
be made in annual payments on or before March 1 of each year, as follows:
Year EIP Amount
2022 $24,000
2023 $24,000
2024 $16,000
2025 $16,000
2026 $16,000
5.1.2 EIP Subject to Future Appropriations. This Agreement shall not be
construed as a commitment,issue or obligation of any specific taxes or tax revenues
for payment to EGP. The EIPs by the City and/or TEDCO under this Agreement
are subject to the City's and TEDCO's appropriation of funds for such payments in
the budget year for which they are made. The EIPs to be made to EGP,if paid,shall
be made solely from annual appropriations from the general funds of the City and/or
TEDCO or from such other funds of the City or TEDCO 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 and/or
TEDCO under applicable Texas law, subject to any applicable limitations or
procedural requirements. In the event that the City and/or TEDCO do not
appropriate funds in any fiscal year for the EIP due under this Agreement, such
failure shall not be considered a default under Section 7.3, and the City and/or
TEDCO shall not be liable to EGP for such EIP, however, the City and TEDCO
shall extend this Agreement for another year(s), until EGP has received all of the
EIPs provided for herein.In addition,EGP shall have the right but not the obligation
to rescind this Agreement, which shall not be deemed to constitute a default by
EGP. To the extent there is a conflict between this paragraph and any other
language or covenant in this Agreement,this paragraph shall control.
6. EIP Recapture. In the event the City and/or TEDCO terminate this Agreement as a result
of EGP's default, the City and/or TEDCO may recapture and collect from EGP the Recapture
Liability. EGP shall pay to the City and/or TEDCO 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 EGP may be entitled. Notwithstanding anything herein to the contrary, such
Recapture Liability shall not exceed, in the aggregate, an amount equal to all EIPs that were paid
pursuant to this Agreement from the Effective Date to the date of termination (together with
interest thereon to be charged at the statutory rate for delinquent taxes as determined by Section
33.01 of the Property Tax Code of the State of Texas, but without the addition of a penalty). The
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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 Parties will do all things reasonably necessary or
appropriate to carry out the terms and provisions of this Agreement.
7.2 Representations and Warranties. The City represents and warrants to EGP 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. EGP represents and
warrants to the City that it has the requisite authority to enter into this Agreement.
7.3 Default. If either the City, TEDCO or EGP should default in the performance of
any obligations of this Agreement, the other parry 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,EGP
shall have the right to terminate this Agreement by giving written notice thereof to
City and to pursue any remedy at law or in equity for the City's breach. If EGP
remains in default after notice and opportunity to cure, City shall have the right to
terminate this Agreement by giving written notice thereof to EGP and to pursue any
remedy at law or in equity for EGP's breach,in addition to the right of EIP recapture
set forth above.
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 EGP 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 with respect to the EIP. This Agreement may only be amended, altered or
revoked by written instrument signed by the Parties.
7.6 Binding. This Agreement shall be binding on and inure to the benefit of the
Parties,their respective successors and assigns.
7.7 Assignment. EGP may not assign all or.part of their rights and obligations to a
third party without the express written consent of the City,which consent shall not
be unreasonably withheld, conditioned or delayed, provided, however, that EGP
may assign this Agreement without the consent of the City to an entity which
controls, is controlled by or is under common control with EGP, any successor
entity to EGP by way of merger, consolidation or other non-bankruptcy corporate
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reorganization, or an entity which acquires all or substantially all of EGP's assets,
partnership or membership interests, or capital stock.
7.8 Amendment. This Agreement may be amended by the mutual written agreement
of the Parties.
7.9 Termination. In the event EGP elects not to lease the building as contemplated by
this Agreement, EGP shall notify the City in writing, and this Agreement and the
obligations on the part of all 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 and/or
TEDCO: City of Round Rock
221 E. Main Street
Round Rock, TX 78664
Attn: City Manager
Phone: (512)218-5400
Email: Ihadley@roundrocktexas.gov
With a required copy to:
Sheets & Crossfield
309 E. Main Street
Round Rock, TX 78664
Attn: Stephan L. Sheets
Phone: (512)255-8877
Email: steve(2scrrlaw.com
If to EGP: EastGroup Properties, L.P.
7301 N. State Highway 161, Suite 215
Irving,Texas 75039
Attn: Asset Manager
Email: david.hicks@eastgroup.net
With a required copy to:
EastGroup Properties
190 E. Capitol Street, Suite 400
5
Jackson,Mississippi 39201
Attn: CFO
Email: brent.wood@eastgroup.net
Any party may designate a different address at any time upon written notice to the other Parties.
7.11 Interpretation. Each of the Parties has 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"). A force 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 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 joint
venture among the Parties. The City, its past, present and future officers, elected
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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.
7.18 Estoppel Certificate. EGP may request an estoppel certificate from City so long as
the certificate is requested in connection with a bona fide business purpose and
requests commercially reasonable certifications. City agrees to promptly execute
and deliver any estoppel certificate reasonably requested pursuant to this Section
7.18. The certificate, which will upon request be addressed to EGP, or a lessee,
purchaser or assignee of EGP, shall include, but not necessarily be limited to,
statements (qualified to the best knowledge of the City) that this Agreement is in
full force and effect without default(or if a default exists,the nature of such default
and any curative action which should be undertaken to cure same), the remaining
term of this Agreement, and such other matters reasonably requested by the
party(ies)to receive the certificate.
EXECUTED to be effective as of theme day12019 (the"Effective Date").
CITY OF ROUND ROCK, TEXAS,
By:
. 4 M X
Crai M rgant0ayor
Date: 0 2019
AAPP ED as to rm:
Steph . Sheets, City Attorney
ROUND ROCK TRANSPORTATION AND
ECONOMIC DEVELOPMENT CORPORATION
By: X M /
Craig organ, ident
7 r
EASTGROUP PROPERTIES, L.P.,
a Delaware limited partnership
By: EastGroup Properties General Partners, Inc., a
Delaware corporation, its general partner
By: �----
Its:
By:
Its:
Date: SeP�qwnbpr S 52017
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EXHIBIT
„A„
RESOLUTION NO. R-2019-0394
WHEREAS, EastGroup Properties, L.P., ("EGP") has expressed to the City of Round Rock
("City") its desire to construct two buildings for industrial and warehousing use in the City which will
provide primary jobs and additional tax base to the City, and
WHEREAS, §380.001 Local Government Code provides that a municipality may establish an
economic development program ("Program") to promote local economic development and to stimulate
business and commercial activity in the municipality, and
WHEREAS, the City Council has determined that the Program described in Exhibit "A" will
meet the goals set forth in said §380.001 and will be of mutual benefit to both parties,Now Therefore
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK,TEXAS,
That the City offers to EGP a §380.001 Program in exchange for EGP constructing two
industrial use buildings in the City, and
BE IT FURTHER RESOLVED
That the offer of the Program shall be as generally outlined in Exhibit "A" attached hereto 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 upon, all as required by the Open Meetings Act,
Chapter 551, Texas Government Code, as amended.
RESOLVED this 26th day of September, 2019.
0112.1902;00431689
4m /
CRAIG.N,jOkG4X, Mayor
City of Round R ck, Texas
ATTEST:
EXHIBIT A
ECONOMIC DEVELOPMENT PROGRAM
The terms of the §380.001 Economic Development Program to be offered to EastGroup
Properties,_ ., ("EGP") in exchange for EGP's constructing two new industrial and
warehousing use buildings in the City of Round Rock are as generally outlined below:
1. EGP's obligations:
1.1. EGP agrees to construct two new buildings in the City that are suitable for industrial
and warehousing purposes.
2. City's obligations:
2.1. City shall, subject to EGP's satisfaction of its obligation to construct two new buildings
in the City make Economic Incentive Payments to EGP as follows:
City subject to EGP's satisfaction of its obligations to construct two new buildings,
make EIPs to EGP as set forth herein. The EIP's shall be made in annual payments on
or before March 1 of each year. EIP's shall be paid as follows:
Year EIP Amount
2022 $24,000
2023 $24,000
2024 $16,000
2025 $16,000
2026 $16,000
3. The terms and provisions of this Program will be set out in more detail in the Economic
Development Program Agreement of even date herewith.
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EXHIBIT "B"
TO THE ECONOMIC DEVELOPMENT PROGRAM AGREEMENT
Property Description
Lots 1 A and 2A,Block A,Chandler Crossing Replat of Lot 1,a subdivision
in Williamson County, Texas, according to the map or plat thereof,
recorded in Cabinet FF, Slides 205, 206, 207 and 208 of the Plat Records
of Williamson County, Texas.
EXHIBIT C
TO THE ECONOMIC DEVELOPMENT PROGRAM AGREEMENT
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