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R-85-768 - 8/30/1985STATE OF TEXAS COUNTY OF WILLIAMSON fk RESOLUTION CONCERNING MEMORANDUM OF AGREEMENT WITH ROUND ROCK PARTNERS ON CITY HALL COMPLEX WHEREAS, the need for additional space for the operations of the City of Round Rock is critical and such needs will continue to grow as the City expands in future years; and WHEREAS, Round Rock Partners has proposed to provide said space on advantageous terms and conditions to satisfy the future needs of the City of Round Rock; and WHEREAS, said arrangement will allow the City to avoid issuing bonds or go into debt to construct said space; and WHEREAS; said parties now desire to document their agreement concerning the development of a City Hall complex; and WHEREAS, said agreement includes the eventual construction of 4 buildings and a parking garage in downtown Round Rock; and WHEREAS, the goal to be accomplished by both parties can best be done by the exchange of certain land owned by the City with land owned by Round Rock Partners; WHEREAS, said exchange will be accompanied with a simultaneous execution by the City of a lease of office space in the first building to be constructed by Round Rock Partners to be built on the land acquired from the City; and WHEREAS, said transaction will also include the option in the City to lease additional facilities and purchase certain of the aforementioned facilities at a fixed price; and WHEREAS, the general terms of said agreement between the parties are as described on the attached Memorandum of Agreement; NOW THEREFORE, BE IT RESOLVED BY THE CITY OF ROUND ROCK, TEXAS THAT: 1. The City of Round Rock hereby agrees in principle to the terms of an agreement with Round Rock Partners, the details of said agreement to be as described in the Memorandum of Agreement attached hereto. 2. The Mayor of the City of Round Rock, Texas is hereby authorized to execute said Memorandum of Agreement pursuant to the terms of this Resolution. 3. The terms and conditions of the Lease Agreement between the City of Round Rock and Round Rock Partners are still to be negotiated and said lease and other final documents will be executed at a later date, however the City hereby agrees to proceed with the transaction as described herein. 4. That the City Secretary is hereby directed to file a copy of this Resolution in the permanent records of her office. 1985. ATTEST: APPROVED this 3 day of E LAND, City Secretary 4 1- 7 1 MIKE ROSINSON, Mayor City of Round Rock, Texas 1 -k -1 MEMORANDUM OF AGREEMENT This Memorandum of Agreement is entered into on this 3.0 day of 6 , 1985, by and between the City of Round R ck, Texas, a municipal corporation ( "City ") and Round Rock Partners, a Colorado General Partnership composed of Paul R. Cronk and Charles Schreiner Nelson, general partners ( "Partners "). This document is intended to outline and document the basis of certain agreements reached by the parties hereto. It is understood and agreed that a more formal written document, specifically as it relates to certain leases and a land exchange to be executed by the parties, will follow at a later date. The parties hereto now agree as follows: 1. The City now owns lots 13 through 19 of Block 10 of the City of Round Rock. Partners now owns Lots 1 through 5 of said Block 10. The City also has an option to purchase Lot 6 through 10 of said Block 10. Upon execution of the lease contemplated herein, City will proceed to acquire legal title to said Lots 6 through 10. 2. Upon consummation of all transactions contemplated hereunder, the City will exchange Lots 17, 18 and 19 to Partners in exchange for Lots 1 through 5, inclusive. Lots 17, 18 and 19 have an area of approximately 11,250 square feet, and Lots 1 through 5, inclusive have an area of approximately 16,875 square feet. 3. The City and Partners will cooperate to immediately vacate approximately the easterly 210 feet of the alley of said Block 10. Upon vacation, adjoining property owners will own said property to the center line of the alley. 4. Simultaneous with said exchange, all land then owned by City in Block 10 will be leased to Partners for a period to coincide with the life of the bonds or other financing on the project plus five years at a lease rate of $10.00 per year. If City ever fails to renew any of its leases upon said property, said ground lease to Partners shall revert to a 99 year lease from the date of the original ground lease. City shall have the right to continue to use all structures currently existing on said Block 10 until such time as said structures are to be demolished as described on the proposed development schedule (see Appendix A) 5. It is the intent of both City and Partners that the entire Block 10 (with the exception of the Nelson Hardware Building already existing) be developed by Round Rock Partners according to the schedule described on Appendix A. Said plan provides for the building of 4 buildings, being 3 office /retail buildings of 2 to 3 stories, and a city council chamber, as well as a parking garage with drive -up facilities for payment of city bills and assessments. The intent of development is to provide for an orderly and timely expansion of space for the City as well as providing space for retail merchants and professional offices in the downtown area. ` 6. A Council subcommittee shall be allowed input into the overall design of the complex, and be given final design approval, which approval will not be unreasonably withheld. Said complex shall be designed and built in a quality manner and in keeping with the historic nature of downtown Round Rock and its existing buildings, but at the lowest reasonable cost. The size of all buildings on the aforementioned property will be compatible with the proposed site plan attached hereto as Appendix B. 7. City agrees to cooperate with Partners on all zoning and building code matters necessary to effectuate this agreement. 8. Subject to final negotiation of the parties as to the exact terms, City will sign a lease on Building A (see the attached description of buildings designated Appendix B). Such agreement will also include City's agreement to pay its proportionate share of debt service on common area facilities and on the parking garage. Said proportionate share will be calculated based upon the rentable space obligated to the City by lease and the rentable space built and leasable by Partners in the open market. Said lease by the City will have a base net rental equal to the debt service attributable to the square feet rented to the City. In addition to said base rent, the City will pay its proportionate share of all building, garage, and common area operating expenses including, but not limited to, charges for utilities, maintenance, insurance, and management. The lease to be executed by the City on Building A will be for a one year term; however, it is the understanding of the parties hereto that City intend such lease to continue for a minimum of ten (10) years. 9. Simultaneous with the execution of this lease, City and Partners will execute an option granting City the option to acquire Building A and proportionate share of parking garage and common areas at any time after final construction and occupancy. Such property may be acquired at a price equal to the then outstanding debt attributable to Building A and proportionate share of the parking garage and common areas. 10. (a) Building C, as shown on the attached Appendix, may likewise be acquired by City under option for a price equal to the then outstanding debt attributable to Building C. Based upon the completed space studies, it is expected that such property will be leased by the City in 1990. It is the present intent of the parties that Building C will be constructed immediately upon vacation of the existing City Hall Annex. It is hoped that said completion of Building C will be in early 1987. Because said Building C can be acquired by the City at any time for the outstanding debt, plus proportionate share of parking garage and common areas, Partners cannot take the risk of constructing and leasing said building prior to the City's expansion unless and until Partners is thoroughly satisfied the building can be timely leased in the open market prior to City's eventual occupancy. If Partners determines to construct Building C prior to the execution of a lease with City and /or acquisition by City, Partners may do so. In such event Partners will be liable for any debt on Building C and the proportionate share for common area and parking garage, but any profits generated out of that Building by Partners will belong to Partners. (b) If the City needs the expansion space of Building C prior to Partners willingness to construct, and if City desires to lease rather than acquire, City may choose to commence the development of that property. Should City choose Partners to develop Building C, Partners would be entitled to a development fee. In such event City agrees to lease the entire building and bear its proportionate share of debt service on the common area and parking garage and thereby acquire the opportunity to rent unused space to other tenants. Should City master lease Building C from Partners, any space subleased by City shall be at market rate as determined by the parties hereto or by an independent appraiser. Partners agrees to assist the City if requested to lease any excess space, and Partners will be paid a leasing fee for this service; however, City shall receive all profits generated by said sublease agreements. (c) In order to protect the interest of City, should City not ,be,satisfied with the performance of Partners in development of this property, City may choose another developer to construct Building C. If City chooses to use another developer, must deliver written notice to Partners that „the work of Partners is not satisfactory within 2 months after the completion of Building A or prior to Partners commencing the construction of Building C. Said notice shall state in detail the reasons why such work was not satisfactory. If said notice is not delivered within said time period, the option of City to use another developer for Building C will be waived. If City does exercise said option to use another developer, the ground lease to the extent it covers the building foot print for Building C, as shown on Appendix B, will be terminated immediately. Any costs incurred by Partners and attributable to such Building C will be reimbursed by City immediately upon said ground lease termination. City agrees that, if built by another developer, Building C shall be built in „conformance with the original plans and specifications, and that quality workmanship will be used throughout said building. City shall be liable'for the debt service of Building C and the appropriate proportionate share of common area and parking garage. - 11. Building Dwill be built.,and leased to the City upon City exercising its option for Building b to be constructed. It is the present intent of the parties that Building D will be completed by March, 1987. The City will also have an option to purchase Building D identical to that for Building C and Building A along with its appropriate share of the parking garage and common areas. 12. ( Financing of the project will be arranged by Partners. Because City's lease payments are based upon the debt service payments on the buildings, City shall have the right of approval of any financing which will provide for an interest rate of greater than 9 1/2 %, and any term shorter than a ten year term amortized over 25 years. It is presently anticipated that such financing will be by method of industrial revenue bonds, and the user of those funds will be the Partners. 13. City shall be entitled to purchase from Partners Buildings A, C, and /or D plus the appropriate proportionate share of the parking garage and common areas at any time. It is stipulated and agreed that the purchase price for said buildings shall be the then outstanding debt on the facility and said proportionate debt on common facilities. 14. City shall be given the first right to purchase Building B. The exact terms of said preferential right to purchase shall be determined by the parties at the time of execution of the lease described hereini,,however, City shall not` be given 'longer than 90 days to exercise any preferential, right to purchase after notification by Partners. 15. Any future "expansion of the parking garage to be constructed pursuant to this agreement, shall be made by the City at the City's expense. It is agreed that the parking garage will be designed so that expansion will be structurally possible. 16. It is understood by the parties hereto that any space acquired, leased, or constructed by City may be leased by City to non -city tenants; however, City hereby agrees that any leasing of said City leased space to non -city tenants shall be at fair market value as determined by the parties hereto at the time of lease between City and non -city tenants. If any dispute arises between City and Partners as to said market value, it shall be as determined by independent appraisal. 17. This agreement shall be executed by Partners on or before ten (10) days after execution by City. If not so executed, this agreement of City shall terminate. ATTEST: EXECUTED this LAND, City Secretary day of A`J , 1985. MIKE ROBINSON, Mayor City of Round Rock, Texas EXECUTED this day of 10 -' , 1985. ROUND ROCK PARTNERS BY: AP UL R. CRONK, General Partner ALBION PROPERTY CORPORATION Mr. Jack A. Harzke City Manager, City of Round Rock 214 East Main Street Round Rock, Texas 78664 Dear Jack, PRC:lw Enclosures: As stated. cc: Mr. Marty Shelton September 4, 1985 Re: City Hall Complex I am pleased to enclose fully executed original resolution and memorandum for your files. I understand that Sam Huey, Marty Shelton, Don Wolf and Rick Akins are working on suitable lease, trade, land lease documents. In the meantime, I am working on the financing. I expect to be in Austin and Round Rock on either the 10th or llth September and will bring down relevant financials and resumes on Schreiner Nelson and myself for City review. Yours very truly, ALBION PROPERTY CORPORATION Paul R. Cronk President 1860 Blake Street Suite 500 Denver, Colorado 80202 303/298 -2000 7 (,IR tP