Contract - KR Acquisitions, Inc. - 12/5/2019 FIRST AMENDMENT TO
ECONOMIC DEVELOPMENT PROGRAM AGREEMENT
This First Amendment to Economic Development Program Agreement (this
"Amendment") is entered into this V& day o �', 0_19 (the "Effective Date"), by
and among the City of Round Rock, Texas, a T xaf�s[offe"rule municipal corporation (the
"CLty"),the Round Rock Transportation and Economic Development Corporation,a"Type
B corporation"created under the authority of Chapter 501,Texas Local Government Code
(the "TED Corp."), KR Acquisitions, LLC, a Delaware limited liability company (the
"Developer"), and KR CC, INC., a Delaware corporation (the "Tenant"). The City, the
TED Corp., the Developer and the Tenant are, collectively, the "Parties" to this
Amendment.
RECITALS
WHEREAS,the Parties entered into that Certain Economic Development Program
Agreement dated December 15,2016 (the "Agreement"); and
WHEREAS, all capitalized terms used in this Amendment shall be defined as
stated in the Agreement unless otherwise defined herein; and
WHEREAS, except as amended herein, all of the terms and provisions of the
Agreement shall remain in effect and shall apply to this Amendment; and.
WHEREAS, the Agreement contemplates the deposit of TXHOT and State Sales
Tax revenue into the Project Fund; and
WHEREAS, the TXHOT and State Sales Tax revenue that will be deposited into
the Project Fund will be rebated by the State of Texas pursuant to the provisions of Section
351.102, Texas Tax Code; and
WHEREAS, during the 86th Regular Texas Legislative Session, the Texas
Legislature adopted H.B. 4347 amending the provisions of Chapter 351, Texas Tax Code,
which amendments included the adoption of a new Subchapter C entitled Municipal Hotel
and Convention Center Projects ("Subchapter C"); and
WHEREAS, Subchapter C entitles the City to receive the TXHOT and State Sales
Tax revenue, among other tax revenue, generated,paid,and collected by a qualified hotel,
as defined therein (a "Qualified Hotel") and each restaurant, bar, and retail establishment,
as defined in Section 351.001(12)of the Texas Tax Code(a"Retail Establishment")located
in or connected to the hotel or the related qualified convention center facility, as defined
therein; and
WHEREAS, Subchapter C also entitles the City to receive the State Sales Tax
revenue generated, paid, and collected from a qualified establishment, as defined therein,
located in the City that is derived from restaurants,bars,and Retail Establishments,as well
as swimming pools and swimming facilities owned or operated by the related Qualified
Hotel; and
WHEREAS, the Project will, upon opening, meet all of the requirements of
Subchapter C necessary to entitle the City to receive the rebates described above; and
WHEREAS, under Section 5.04(a) of the Agreement, the Economic Incentive
Payments to be made to the Tenant, a corporation, are capped at$28.5 million, an amount
which all Parties believe will be met; and
WHEREAS,the Amendment does not change the amount of Economic Incentive
Payments to be made to the Tenant; and
WHEREAS, none of the Parties intend to impact the federal tax treatment of the
Economic Incentive Payments to be made to the Tenant; and
WHEREAS, the Parties intend for the Project to be subject to rebates of tax
revenue pursuant to the provisions of Subchapter C.
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,the TED Corp.,the Developer and the Tenant agree as follows:
ARTICLE I
AUTHORITY
1. Project Condition Precedent. The City has reviewed and approved for
construction the plans for the Project dated October 5, 2018 (the "Plans"). The City
acknowledges and agrees that the Project,will,if constructed materially in accordance with
the Plans in all relevant respects, satisfy the condition precedent in the first sentence of
Section 5.01(a)of the Agreement.
2. Pledge and Rebate. The City agrees to (a) pledge or commit the revenue
derived from the tax imposed under Chapter 351 from a qualified hotel, as defined in
Subchapter C, and the revenue to which the City is entitled under Sections 351.156 and
351.157, Texas Tax Code, for the payment of obligations related to the Project under the
Agreement; and (b) seek rebates of all eligible tax revenues under Subchapter C that are
generated, paid, and collected from the Project. The City and Developer agree to work
together to prepare all rebate applications that the City will file with the Texas
Comptroller's office pursuant to Subchapter C.
3. New Section 5.08. The following is added to the Agreement as a new
Section 5.08:
5.08. Amounts Held Under This Agreement. All amounts held in the Project
Fund shall be held in an interest-bearing account or otherwise invested in an
appropriate manner. For purposes of clarification, the Project Fund shall include
such interest and income earned thereon.
4. Other Changes.
a. The words "Section 5.01" in the definition of Project Fund is hereby
deleted and replaced with"Section 5.02."
b. The words "Section 5.02(a)-(e)" in the definition of Project Fund
Balance is hereby deleted and replaced with"Section 5.03(a)-(e)."
5. Legal Representation of the Parties. This Amendment was negotiated by
the Parties hereto with the benefit of legal representation and any rules of construction or
interpretation otherwise requiring this Amendment to be construed or interpreted against
any Party shall not apply.
6. Mutual Assistance. The City, the Developer and the Tenant will do all
things reasonably necessary or appropriate to carry out the terms and provisions of this
Amendment, and to aid and assist each other in carrying out such terms and provisions in
order to put each other in the same economic condition contemplated by this Amendment
regardless of any changes in public policy,the law, or taxes or assessments attributable to
the Property.
7. Representations and Warranties. The City represents and warrants to the
Developer and the Tenant that: (a) this Amendment is within its authority, (b) it is duly
authorized and empowered to enter into this Amendment, (c) this Amendment is
enforceable against the City;and(d)all obligations of the City other than issuing the Public
Improvement Debt and the Convention Center Debt are proprietary, unless otherwise
ordered by a court of competent jurisdiction. The Developer and the Tenant,respectively,
represents and warrants to the City that it has the requisite authority to enter into this
Amendment and this Amendment is enforceable against it.
8. Interpretation. Each of the Parties has been represented by counsel of their
choosing in the negotiation and preparation of this Amendment. Regardless of which party
prepared the initial draft of this Amendment, this Amendment 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.
9. Applicable Law. This Amendment is made, and shall be construed and
interpreted, under the laws of the State of Texas and venue shall lie in Williamson County,
Texas.
10. Paragraph Headings. The paragraph headings contained in this
Amendment are for convenience only and will in no way enlarge or limit the scope or
meaning of the various and several paragraphs.
EXECUTED to be effective as of the Effective Date.
(SIGNATURES ON FOLLOWING PAGES)
CITY OF ROUND ROCK, TEXAS,
a home rule city and municipal
corporation
By:
�aeMayA�&�a
Date:
APP ED as to for
Stephan . Sheets, City Attorney
ROUND ROCK TRANSPORTATION
AND ECONOMIC DEVELOPMENT
CORPO ION
By:
Craig Nf rgan, esident
Date:
APPR V Das tof rZm:4,,,
N
Stepha . Sheets, Corporation's Attorney
KR ACQUISITIONS, LLC
a Delaware limited liability company
Todd Nelson, President
Date: ell
l�
KR CC, INC.
a Delaware corporation
Todd Nelson, President
Date: �b