Ordinance No. 12,584ORDINANCE NO. 12,584
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS,
AUTHORIZING AND DIRECTING THE CITY MANAGER TO EXECUTE AND
THE CITY CLERK TO ATTEST TO A CHAPTER 380 ECONOMIC DEVELOPMENT
AGREEMENT WITH SELECT HOSPITALITY, LLC; AUTHORIZING PAYMENT
BY THE CITY OF BAYTOWN AS AUTHORIZED IN SAID AGREEMENT;
MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR
THE EFFECTIVE DATE THEREOF. /?
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS:
Section 1: That the City Council of the City of Baytown hereby authorizes and directs the
City Manager to execute and the City Clerk to attest to a Chapter 380 Economic Development Agreement
with Select Hospitality, LLC. A copy of the agreement is attached hereto, marked Exhibit "A," and made
a part hereof for all intents and purposes.
Section 2: That the City Council of the City of Baytown authorizes payment in accordance
with the agreement authorized in Section 1 hereinabove.
Section 3: This ordinance shall take effect immediately from and after its passage by the
City Council of the City of Baytown.
INTRODUCED, READ and PASSED by the affirmative vote of the City Council of the City of
Baytown this the 24th day of July, 2014.
STEP N H. ONCARLOS, Mayor
ACID RAMIREZ, SR., i A Ly
IICOBFSOI\Legal \Karen\FilesTity CoundhOrdinances\2014Vuly 24, Hilton380EconomicDevelopmentAgreementOrdinance .doc
Exhibit "A"
CITY OF BAYTOWN / SELECT HOSPITALITY LLC
CHAPTER 380
ECONOMIC DEVELOPMENT AGREEMENT
STATE OF TEXAS §
COUNTY OF HARRIS §
This Chapter 380 Economic Development Agreement ( "Agreement ") is made and entered
into by and between SELECT HOSPITALITY LLC, a Texas limited liability company
( "SELECT HOSPITALITY ") and the CITY OF BAYTOWN, TEXAS, a home rule city and
municipal corporation ( "CITY ").
RECITALS
WHEREAS, SELECT HOSPITALITY is contemplating constructing the Project, as
hereinafter defined) on a certain tract of land totaling approximately 3.91 acres within the City of
Baytown, located as generally depicted on the aerial map marked as Exhibit "A" attached hereto
and incorporated herein for all purposes ( "Property"); and
WHEREAS, in accordance with Article III, Section 52 -a of the Texas Constitution and
Chapter 380 of the Texas Local Gov't Code, CITY may establish and provide for the
administration of a program for making loans and grants of public money to promote state or
local economic development and to stimulate business and commercial activity in the City of
Baytown; and
WHEREAS, in accordance with Chapter 380, Texas Local Gov't Code, CITY hereby
establishes such a program to provide incentives and financial assistance to SELECT
HOSPITALITY to encourage and promote the development of the Property thereby enhancing
and stimulating business and commercial activity in the City of Baytown; and
WHEREAS, as part of the Program and as a material inducement to SELECT
HOSPITALITY developing the Project, as hereinafter defined, on the Property, CITY has agreed
to offer incentives to SELECT HOSPITALITY, including, but not limited to, a sales tax and a
hotel occupancy tax rebate, for a period of five (5) years, which will enable SELECT
HOSPITALITY to develop the Project on the Property; and
WHEREAS, SELECT HOSPITALITY has agreed, in exchange and as consideration for
funding by CITY to satisfy and comply with certain terms and conditions, including the
construction of the Project as hereinafter defined; and
WHEREAS, CITY and SELECT HOSPITALITY agree that the provisions of this
Agreement substantially advance a legitimate interest of CITY by expanding the property tax
Chapter 380 Economic Development AereemenL Page I
base, the hotel occupancy tax base, and sales and use tax base of CITY, increasing employment
and promoting economic development;
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,
CITY and SELECT HOSPITALITY agree as follows:
I.
Recitals
1.01 Recitals. The recitals set forth above are declared true and correct and are hereby
incorporated into and made a part of this Agreement.
1.02. Public Purvose. CITY finds that the benefits provided by SELECT HOSPITALITY and
described in Article IV promote economic development in the City of Baytown and
stimulate business and commercial activity in the municipality.
II.
Authority
2.01 CITY. CITY's execution of this Agreement is authorized by Chapter 380 of the Texas
Local Government Code and constitutes a valid and binding obligation of CITY.
2.02 SELECT HOSPITALITY. SELECT HOSPITALITY'S execution and performance of this
Agreement constitutes a valid and binding obligation of SELECT HOSPITALITY.
III.
Definitions
3.01 "Effective Date" is , 2014.
3.02 "FTE' means full -time equivalent employee working 35 hours per week at the Project.
FTE's shall be quotient of the total numbers of hours worked per week by all employees
at the SELECT HOSPITALITY divided by 35 hours.
3.03 "HCAD" means the Harris County Appraisal District, or its successor.
3.04 "Hotel Occupancy Tax" or "HOT" means the tax authorized pursuant to Chapter 351 of
the Texas Tax Code and levied pursuant to Article III, Chapter 90 of the Code of
Ordinances, Baytown, Texas.
Chapter 380 Economic Development Agreement. Page 2
3.05 "Program" means the economic development program for this Project established by
CITY pursuant to Texas Local Government Code Chapter 380 to promote local economic
development and stimulate business and commercial activity within CITY.
3.06 "Project" means SELECT HOSPITALITY's construction and operation of a Hilton
Garden Inn on the Property, which facility shall include at least 5,000 square feet of
meeting space for guests coupled with a full- service kitchen, restaurant and bar.
3.07 "Property" means that property located within the City of Baytown, Harris County,
Texas, and more particularly described and depicted in Exhibit "A."
3.08 "Sales and Use Tax" means the one percent (1°/p) sales and use tax authorized pursuant to
Section 321.101(a) of the Texas Tax Code.
IV.
SELECT HOSPITALITY Obligations
4.01 Creation of Jobs. Between the Effective Date and one year after the date the certificate of
occupancy is issued for the Project, SELECT HOSPITALITY will cause the creation
and/or retention of at least ten (10) FTE jobs at the Project, which shall be maintained for
the term of this Agreement.
SELECT HOSPITALITY in filling the FTE's created shall give preference to Baytown
residents over other applicants who do not have greater qualifications so that at all times
at least fifty percent (50 %) of the employees of SELECT HOSPITALITY are selected
based upon this preference to hire persons, who reside within the corporate limits or
extraterritorial jurisdiction of the City of Baytown.
In the event of a voluntary or involuntary termination or elimination of a job after the
date of the issuance of the certificate of occupancy for the project that causes the number
of FTE's to fall below the minimum FTE level, SELECT HOSPITALITY shall continue
to receive the incentives set out in Article V below, provided the required number of
FTE's is re- established within one hundred twenty (120) days after the date of the
termination or elimination that caused the FTE's to fall below the minimum number of
FTE's.
DEVELOPER shall report in writing the number of FTE's and the percentage of
employees residing within the corporate limits and/or the extraterritorial jurisdiction of
the City of Baytown, each quarter during the term of this Agreement.
4.02 Creation of Taxable Value.
a. Project. SELECT HOSPITALITY shall:
Chapter 380 Economic Development Agreement, Page 3
1. commence construction of the Project on or before August 1, 2016; and
2. have completed 100% construction of the Project on or before August 1,
2018.
It is understood and agreed that the dates for commencement and completion of
construction of the Project as established in this section may be changed if both
parties agree in writing.
b. Minimum Value Created. Subject to subsection (c), from and after completion of
the construction of the Project, the taxable improvement value of the Project,
exclusive of business personal property and inventory, shall be at least FIVE
MILLION AND N01100 DOLLARS ($5,000,000.00), as assessed by HCAD.
The Project must maintain that value throughout the term of this Agreement. The
determination of whether the minimum values established in this section have
been satisfied shall be determined by the taxable value as assessed by HCAD.
Adiusted Minimum Value. If the total appraised value of property within CITY
as certified by HCAD in any tax year during years 3, 4 or 5 of this Agreement
decreases from the previous tax year by 10% or more, then the minimum value
established in subsection b of this section shall be decreased commensurate with
the percentage decrease in the total appraised value of the property within CIVY
as certified by HCAD for that year or the percentage decrease in the total
appraised value of the Project, whichever is less. If the minimum value is
adjusted downward pursuant to this subsection during the term of this Agreement
and the total appraised value of property within CITY as certified by HCAD in
any subsequent tax year increases from the previous tax year, the minimum value
will be increased commensurate with the percentage increase in the total
appraised value of property within CITY as certified for HCAD for that year;
provided that the required minimum value will never exceed the amount to which
the parties agreed in subsection b of this section.
4.03 Tourist Information Space. As part of the consideration provided to CITY for entering
into this agreement, SELECT HOSPITALITY agrees to provide mutually agreed upon
space for the display and dissemination of Baytown tourist information.
4.04 Certificate of Compliance and Inspection.
(a) SELECT HOSPITALITY shall annually deliver to CITY a Certificate of
Compliance utilizing the form attached as Exhibit B. The form is subject to
revision by CITY in its sole discretion.
(b) In the Certificate of Compliance, SELECT HOSPITALITY shall warrant to CITY
whether it is in full compliance with each of its obligations under this Agreement,
including the number of new Jobs maintained by SELECT HOSPITALITY for
the preceding year pursuant to Section 4.01, the taxable value created pursuant to
Chapter 380 Economic Development AmcmenL Page 4
Section 4.02, and an affirmation that SELECT HOSPITALITY has maintained
the information space at the Project in accordance with Section 4.03.
(c) CITY and/or its representative(s) have the right to inspect only such facilities and
pertinent records of SELECT HOSPITALITY as are reasonably necessary to
verify compliance with all requirements of this Agreement. Inspections shall be
preceded by at least two (2) weeks' notice in writing to SELECT HOSPITALITY.
SELECT HOSPITALITY shall make copies of the pertinent records available to
CITY at the Project or deliver them directly to CITY.
4.05 Failure to Meet Obligations. In the event that SELECT HOSPITALITY fails to fulfill its
obligations under the performance guidelines contained in Article IV after receipt of
notice and expiration of the cure period described in Section 6.02 below, CITY may, at
its option, terminate this Agreement, whereupon SELECT HOSPITALITY shall be
required to reimburse CITY within thirty (30) days for grants paid by CITY pursuant to
this Agreement in accordance with the following schedule based upon the year of the
breach:
V.
CITY Obligations
5.01 Economic Development Grants. As consideration for SELECT HOSPITALITY's
performance of its obligations under this Agreement, CITY will provide the following
grants to SELECT HOSPITALITY pursuant to Chapter 380 of the Texas Local
Government Code, provided that SELECT HOSPITALITY is not in default of its
obligations under this Agreement:
a. HOT Grant. CITY shall pay to SELECT HOSPITALITY a ITOT grant made
solely from HOT revenues collected at the Project and received by City for
occupancy of the Project. The HOT grant shall be calculated annually as 100% of
the annual HOT revenue collected at the Project and received by CITY for
occupancy of the Project in excess of ONE HUNDRED THOUSAND AND
N01100 DOLLARS ($100,000.00). The HOT grant shall be paid on a quarterly
basis for HOT revenue collected at the Project and received by CITY for
occupancy of the Project in excess of TWENTY -FIVE THOUSAND AND
N01100 DOLLARS ($25,000.00) beginning ninety (90) calendar days after the
QWter 380 Economic Devclopment Agreement Page 5
first calendar quarter in which CITY receives HOT revenues for occupancy at the
Project and ending five (5) years thereafter, unless this Agreement is earlier
terminated; provided, however, if in any calendar quarter, the HOT revenues for
occupancy at the Project and received by CITY are less than TWENTY -FIVE
THOUSAND AND NO /100 DOLLARS ($25,000.00), CITY shall be entitled to
deduct the shortfall from future HOT grants. It is expressly understood and
agreed that CITY shall be entitled to ONE HUNDRED THOUSAND AND
NO /100 DOLLARS ($100,000.00) annually from HOT revenue collected at the
Project and received by CITY for occupancy of the Project. However, it is
expressly understood and agreed that the total HOT Grant shall never exceed the
cost of the construction and operation of the Project.
b. BuyBe own Grant. CITY shall pay to SELECT HOSPITALITY a BuyBaytown
Grant in the form of payments made solely from Sales and Use Taxes paid by
SELECT HOSPITALITY for construction materials, furniture, fixtures and
equipment for the Project purchased in the City of Baytown. To receive this grant
SELECT HOSPITALITY shall submit quarterly its receipts for the previous
quarter along with a sworn statement signed by an officer of the limited liability
company averring that (i) SELECT HOSPITALITY purchased construction
materials, furniture, fixtures and equipment for the Project in the City of
Baytown, (ii) such construction materials, furniture, fixtures and equipment were
incorporated or used in the Project, and (iii) the attached receipts evidencing the
payment of Sales and Use Taxes for construction materials, furniture, fixtures and
equipment for the Project in the City of Baytown are true and correct. SELECT
HOSPITALITY shall submit its final BuyBaytown Grant request within thirty
(30) days of CITY'S issuance of a certificate of occupancy for the Project. Late
requests for the BuyBaytown Grant will not be funded and CITY shall not be
liable for the same.
5.02 Limitations on Grants. CITY'S obligation to pay the HOT Grant to SELECT
HOSPITALITY shall be restricted to the HOT revenues revenue collected at the Project
and received by CITY for occupancy of the Project. Likewise, CITY'S obligation to pay
the BuyBaytown Grant to SELECT HOSPITALITY shall be restricted to the Sales and
Use Taxes paid by SELECT HOSPITALITY for construction materials, furniture,
fixtures and equipment for the Project purchased in the City of Baytown. CITY shall not
be obligated to pay either the HOT Grant or the BuyBaytown Grant from ad valorem
taxes or any other source of revenue. Furthermore, the grants shall expire in accordance
with the terms of the respective grants specified in Section 5.01.
VL
General Terms
6.01 Term. This Agreement shall become enforceable upon execution by the City Manager of
CITY and shall be effective on the Effective Date. Unless terminated earlier in
Chapter 380 Economic Development grcement. Page 6
accordance with its terms, this Agreement shall expire five (5) years after the first
calendar quarter in which CITY receives HOT revenues for occupancy at the Project.
6.02 Default. If either CITY or SELECT HOSPITALITY should default in the performance of
any obligations of this Agreement, the other party shall provide such defaulting party
written notice of the default, specifying in detail the provision or provisions of this
Agreement that have allegedly been breached and what specific action must be taken to
cure or correct the default. If the alleged default is not cured within sixty (60) days of the
receipt of the notice of default, the non - reaching party may terminate this Agreement in
writing. If the Agreement is terminated due to a breach by SELECT HOSPITALITY,
SELECT HOSPITALITY shall be required to reimburse CITY for all monies paid
pursuant to Section 4.05 bereinabove. CITY and SELECT HOSPITALITY shall each
have the right to terminate this Agreement without cause by providing thirty (30) days'
notice of termination to the other party; provided the terminating party is not in default at
neither the time of the notice nor at the time of termination.
6.03 No Joint Venture. It is acknowledged and agreed by the parties that the terms of this
Agreement are not intended to and shall not be deemed to create any partnership or joint
venture among the parties. CITY, its past and future officers, elected officials, employees
and agents do not assume any responsibilities or liabilities to any third party in
connection with SELECT HOSPITALITY facilities or the design, construction or
operation of any portion of the facilities.
6.04 Entire Agreement. This Agreement contains the entire agreement between the parties. All
prior negotiations, discussions, correspondence, and preliminary understandings between
the parties and others relating hereto are superseded by this Agreement. This Agreement
may only be amended, altered or revoked by written instrument signed by CITY and
SELECT HOSPITALITY.
6.05 Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties
and their respective successors and assigns.
6.06 Assignment. Except as provided below, SELECT HOSPITALITY may not assign all or
part of its rights and obligations to a third party without prior written approval of CITY,
which approval shall not be unreasonably withheld or delayed. Notwithstanding anything
to the contrary, SELECT HOSPITALITY may assign all or part of its rights and
obligations without the prior consent of CITY to an affiliate of SELECT HOSPITALITY
and to a third party lender advancing funds for the acquisition, construction or operation
of the Project.
6.07 Release. By this Agreement, CITY does not consent to litigation or suit, and CITY
hereby expressly revokes any consent to litigation that it may have granted by the terms
of this Agreement or any other contract or agreement, any charter, or applicable state law.
Nothing contained herein shall be construed in any way so as to waive in whole or part
CITY's sovereign immunity. SELECT HOSPITALITY assumes full responsibility for
its obligations under this Agreement performed hereunder and hereby releases,
Chaster Mo Economic Development AQreemcnt Page 7
relinquishes, discharges, and holds harmless CITY, its officers, agents, and employees
from all claims, demands, and causes of action of every kind and character that is caused
by or alleged to be caused by, arising out of, or in connection with SELECT
HOSPITALITY'S obligations hereunder. This release shall apply with respect to
SELECT HOSPITALITY'S work regardless of whether said claims, demands, and
causes of action are covered in whole or in part by insurance. Notwithstanding the
foregoing, the foregoing release and waiver does not and is not intended to release CITY
of its obligation to make the payments to SELECT HOSPITALITY as required herein.
6.08 Notice. Any notice and/or statement required or permitted to be delivered shall be
deemed delivered by actual delivery, by 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:
SELECT HOSPITALITY:
Select Hospitality LLC
1606 North Main Street
Jewett, Texas 75846
FAX: 903- 626 -7201
Attn: Amit Patel
CITY:
City of Baytown
P.O. Box 424
Baytown, TX 77522
FAX: 281420 -6586
Attn: City Manager
Either party may designate a different address at any time upon written notice to the other
party-
6.09 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
regarding its meaning or application, be interpreted fairly and reasonably and neither
more strongly for, nor against any party.
6.10 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 the State courts of Harris County,
Texas.
6.11 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 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
Chanter 380 Economic Development Agreement Page 8
enforceable and is as similar in tens as possible to the provision found to be illegal,
invalid or unenforceable.
6.12 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.
6.13 No Third Party Beneficiaries. This Agreement is not intended to confer any rights,
privileges or causes of action upon any third party.
6.14 Public Information Records and information provided to CITY or its representative(s) to
verify compliance with this Agreement shall be available for public inspection.
6.15 Exhibits. The following Exhibits "A" and "B" are attached and incorporated by reference
for all purposes.
6.16 Multiple Ori,gi,, gals. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, and all of which, taken together, shall constitute but
one and the same instrument, which may be sufficiently evidenced by one counterpart.
6.17 Authority to Enter Contract. Each party has the full power and authority to enter into and
perform this Agreement, and the person signing this Agreement on behalf of each party
has been properly authorized and empowered to enter into this Agreement. The persons
executing this Agreement hereby represent that they have authorization to sign on behalf
of their respective entities.
6.18 Non - Waiver. Failure of either party hereto to insist on the strict performance of any of
the agreements contained herein or to exercise any rights or remedies accruing hereunder
upon default or failure of performance shall not be considered a waiver of the right to
insist on and to enforce by an appropriate remedy, strict compliance with any other
obligation hereunder to exercise any right or remedy occurring as a result of any future
default or failure of performance.
EXECUTED by the authorized representatives of the parties on the dates indicated
below.
CITY OF BAYTOWN, TEXAS
ROBERT D. LEIPER, City Manager
(Date)
Chapter 330 Ewnomic Dey ftnent Agreement. Page 9
ATTEST:
LETICIA BRYSCH, City Clerk
APPROVED AS TO FORM:
IGNACIO RAMIREZ, SR., City Attorney
SELECT HOSPITALITY, LLC
i�t4;r► Imo/
m
D.
STATE OF TEXAS §
COUNTY OF Ltoy% §
Before me, 1kgy% a L`IOQk ewA i the undersigned notary public, on this day
personally appeared AMIT PATEL in his capacity as —1 r ky% of SELECT
HOSPITALITY LLC, a Texas limited liability company,
known to me
proved to me on the oath of or
proved to me through his current {description of
identification card or other document issued by the federal government or any state government
that contains the photograph and signature of the acknowledging person)
(check one)
to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me
that he executed that instrument for the purposes and consideration therein expressed.
e tL und= naw f office this day of '2014.
��, •w�� NANETTE PARWELL
Notary PA
STATE OF TEXAS
Qm=.E=DewnW102016 No Pu lic in and for the State of Texas
My c mmission expires:
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Exhibit "B"
Economic Development Agreement Reporting Form
City of Baytown
REPORTING YEAR 20_
1.0 Employment.
Percentage FTE's residing in Baytown or its ETJ
Number of FTE's at Project for reporting year:
2.0 Improvement Value.
HCAD improvement value for first year of the agreement:
HCAD appraised value for subsequent reporting years:
3.0 Tourist Information Space.
Provided?
I, the authorized representative of SELECT HOSPITALITY, LLC,
hereby certify that the above information is correct and accurate pursuant to the terms of the Agreement.
SELECT HOSPITALITY, LLC
(Signature)
(Printed Name)
(Title)
Exhibit "B.- Solo