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HomeMy WebLinkAboutContract 31500-T1 J.._- CITY SECRETARY CONTRACT NO. 31,560-777 ci led" MUTUAL AGREEMENT TO TERMINATE �' icy-SEc9r�r'o�,8 ECONOMIC DEVELOPMENT PROGRAM AGREEMENT FTgRI,�! AND ROOM BLOCK & MEETING SPACE AGREEMENT BETWEEN CITY OF FORT WORTH AND DRH WORTHINGTON OWNER LIMITED PARTNERSHIP (CITY SECRETARY CONTRACT NO. 31475,AS AMENDED, AND CITY SECRETARY CONTRACT NO. 31500, AS AMENDED) This MUTUAL AGREEMENT TO TERMINATE ECONOMIC DEVELOPMENT PROGRAM AGREEMENT AND ROOM BLOCK & MEETING SPACE AGREEMENT ("Agreement") is entered into by and between the CITY OF FORT WORTH (the "City"), a home rule municipality organized under the laws of the State of Texas, and DRH WORTHINGTON OWNER LIMITED PARTNERSHIP ("Owner"), a Delaware limited partnership. The City and Owner hereby agree that the following statements are true and correct and constitute the basis upon which the City and Owner have entered into this Agreement: A. The City and BCM/CHI Worthington, Inc. previously entered into that certain Economic Development Program Agreement on file in the City Secretary's Office as City Secretary Contract No. 31475, as amended by that certain Amendment No. I to Economic Development Program Agreement on file in the City Secretary's Office as City Secretary Contract No. 32388 (collectively, the "EDPA"). The EDPA subsequently was assigned by BCM/CHI Worthington, Inc. to BCM/CHI Worthington Owner, L.P., followed by another assignment by BCM/CHI Worthington Owner, L.P. to Owner, to which the City consented pursuant to that certain Consent to Assignment of Economic Development Program Agreement on file in the City Secretary's Office as City Secretary Contract No. 32389. B. Under the EDPA, the City has agreed to pay Owner certain economic development Program Grants, as authorized by Chapter 380 of the Texas Local Government Code, in return for, among other things, a commitment by Owner to make or cause to be made certain improvements to the Worthington Renaissance Fort Worth Hotel (the Hotel'). Specifically, the EDPA required (i) that Owner expend or cause to be expended at least $6.7 million in Redevelopment Costs for specific upgrades to the Hotel, defined in the EDPA as the "Phase I Improvements", and that the Phase I Improvements be Substantially Complete by December 31, 2004 and (ii) that Owner expend or cause to be expended at least $4.5 million in Redevelopment Costs for specific Page 1 Mutual Agreement to Terminate Economic Development Program Agreement and Room Block&Meeting Space Agreement between City of Fort Worth and DRH Worthington Owner Limited Partnership OFFICIAL RECORD (City Secretary Contract Nos.31475,as Amended,and 31500,as Amended) CITY SECRETARY I'.WORTH,TX additional upgrades to the Hotel, defined in the EDPA as the "Phase II Improvements", and that the Phase II Improvements be Substantially Complete by December 31, 2008. C. Pursuant to Section 5.1 of the EDPA, the maximum amount of each annual Program Grant established under the EDPA will be the lesser of the incremental sales and hotel occupancy taxes generated by the Hotel in the calendar year preceding the year in which the Program Grant is due or a set amount specified in the EDPA for the year in which the Program Grant is due. This set amount is governed by and dependent on whether the Phase II Improvements were completed as required by the EDPA. If both the Phase I Improvements and the Phase II Improvements were completed as required by the EDPA, the maximum set amount for each annual Program Grant would be governed by the schedule attached to the EDPA as Exhibit `B-1." If the Phase I Improvements were completed as required by the EDPA, but the Phase II Improvements were not, the maximum set amount for each annual Program Grant would be governed by the schedule attached to the EDPA as Exhibit `B-2." (The failure to complete the Phase I Improvements as required by the EDPA constituted an Event of Default). The maximum amount of each annual Program Grant is also subject to reductions by the cumulative percentage by which Owner failed to meet construction spending goals with Fort Worth Companies and with Fort Worth Certified M/WBE Companies, as more specifically outlined in Sections 5.2.1.1 and 5.2.1.2 of the EDPA. D. Owner met all obligations to complete the Phase I Improvements as required by the EDPA. Owner also fully met its construction spending goals with Fort Worth Companies and Fort Worth Certified M/WBE Companies with respect to the Phase I Improvements. However, Owner did not complete the Phase II Improvements as required by the EDPA. Specifically, Owner expended only $2,396,974.00 in Redevelopment Costs for the Phase II Improvements, rather than the minimum $4.5 million required by the EDPA. As a result, the maximum set amount for each annual Program Grant is governed by the schedule set forth in Exhibit`B-2"of the EDPA. E. Owner also failed to meet its construction spending goal with Fort Worth Companies with respect to the Phase II Improvements. Specifically, under Section 4.2.1 of the EDPA, Owner was required to expend at least 30% of the Redevelopment Costs it expended for the Phase II Improvements (or $719,092.00) with Fort Worth Companies. However, Owner expended only $214,006.00 in Redevelopment Costs for the Phase II Improvements with Fort Worth Companies, which amounted to a failure to meet this goal by 70.24%. Accordingly, pursuant to Section 5.2.1.2 of the EDPA, the maximum annual Program Grant payable by the City was required to be reduced by 70.24%. F. Because the amount of incremental sales and hotel occupancy taxes generated by the Hotel each year has significantly been higher than the set amount for each corresponding annual Program Grant set forth in Exhibit`B-2"of the EDPA,the set amounts in Exhibit `B-2" have constituted the maximum Program Grants payable under the EDPA in each Program Year. Page 2 Mutual Agreement to Terminate Economic Development Program Agreement and Room Block&Meeting Space Agreement between City of Fort Worth and DRH Worthington Owner Limited Partnership (City Secretary Contract Nos.31475,as Amended,and 31500,as Amended) G. The City has discovered that in calculating each Program Grant payable in and since the 2012 Program Year, with the exception of the 2016 Program Year, the City paid the maximum set amount for those Program Years established by Exhibit `B-2" without applying the 70.24% reduction to such Program Grants required by the EDPA. In the 2016 Program Year the overpayment was recognized and the City and Owner agreed to a reduced payment over time; however it has been discovered that this reduced payment was also an under-calculation of the payment overage. As a result, as of the 2016 Program Year, the City has overpaid Owner by$298,024.43 in the aggregate. H. In order to rectify this error, the parties wish to apply the $298,024.43 overpayment to the City's obligation to pay future Program Grants to Owner. Because the combined incremental sales and hotel occupancy taxes generated by the Hotel each year significantly exceed the set maximum amounts established by Exhibit `B-2", on the basis of Section 5.1 of the EDPA, the parties have concluded that the maximum amount of each future Program Grant will be the set maximum amounts for each Program Year set forth in Exhibit `B-2." As a result, the amount of each annual Program Grant can be calculated now, as reflected in Attachment 1 of this Agreement. Based on the calculations set forth in Attachment 1, application of the $298,024.43 aggregate overpayment to future Program Grants will mean that the City's only remaining obligations to Owner under the EDPA will be payment of a Program Grant of$20,486.13 in Program Year 19 (2023) and a Program Grant of $57,809.69 in Program Year 20 (2024), for a total of$78,295.82. I. In order to address this issue, rather than waiting until 2024 to close out the EDPA, the City now wishes to pay Owner the total remaining amount of$78,295.82 that the City will owe in future Program Grants under the EDPA, and Owner wishes to accept such amount in full satisfaction of all of the City's obligations under the EDPA. The parties also wish to specify that upon payment by the City of such $78,295.82, the EDPA will automatically terminate. J. As part of its obligations under the EDPA, BCM/CHI Worthington, Inc. previously entered into that certain Room Block & Meeting Space Agreement on file in the City Secretary's Office as City Secretary Contract No. 31500, as amended by that certain Amendment No. 1 to Room Block Agreement on file in the City Secretary's Office as City Secretary Contract No. 32390 (collectively, the "Room Block Agreement"), under which blocks of guest rooms at the Hotel were coordinated and set aside to accommodate visitors associated with conventions and meetings held at the Fort Worth Convention Center. The Room Block Agreement subsequently was assigned by BCM/CHI Worthington, Inc. to BCM/CHI Worthington Owner, L.P., followed by another assignment by BCM/CHI Worthington Owner, L.P. to Owner, to which the City consented pursuant to that certain Consent to Assignment of Room Block Agreement on file in the City Secretary's Office as City Secretary Contract No. 32391. Page 3 Mutual Agreement to Terminate Economic Development Program Agreement and Room Block&Meeting Space Agreement between City of Fort Worth and DRH Worthington Owner Limited Partnership (City Secretary Contract Nos.31475,as Amended,and 31500,as Amended) K. Under Section 5.02 of the Room Block Agreement, the Room Block Agreement expires contemporaneously upon expiration or earlier termination of the EDPA. Accordingly, the parties wish to confirm that upon termination of the EDPA in accordance with this Agreement, the Room Block Agreement will also terminate. NOW, THEREFORE, the City and Owner, for and in consideration of the terms and conditions set forth herein, do hereby contract, covenant and agree as follows: 1. Within thirty (30) calendar days following execution of this Agreement by both the City and Owner, the City will pay Owner $78,295.82 (the "Final Payment") in full satisfaction of all of the City's obligations to Owner under the EDPA. Owner hereby understands and agrees that payment by the City of the Final Payment will satisfy all of the City's obligations to Owner under the EDPA. Notwithstanding anything to the contrary in the EDPA, upon payment by the City of the Final Payment, the City shall be fully released and discharged from any further obligation to Owner under the EDPA, and Owner hereby waives any other right or claim against the City that it may have under the EDPA. In addition, the EDPA shall automatically terminate immediately upon payment by the City of the Final Payment. 2. The City and Owner hereby agree that the Room Block Agreement will automatically terminate contemporaneously upon termination of the EDPA in accordance with Section 1 above, at which point Owner will be fully released and discharged from any further obligation to the City under the Room Block Agreement. 3. If any action, whether real or asserted, at law or in equity, arises on the basis of any provision of this Agreement, venue for such action shall lie in state courts located in Tarrant County, Texas or the United States District Court for the Northern District of Texas—Fort Worth Division. This Agreement shall be construed in accordance with the laws of the State of Texas. 4. The provisions and conditions of this Agreement are solely for the benefit of the City and Owner, and are not intended to create any rights, contractual or otherwise, to any other person or entity. 5. Capitalized terms used but not identified in this Agreement shall have the same meanings assigned to them in the EDPA. 6. This Agreement contains the final written expression of the City and Owner with respect to the subject matter hereof. This Agreement may be executed in multiple counterparts, each of which shall be considered an original, but all of which shall constitute one instrument. Page 4 Mutual Agreement to Terminate Economic Development Program Agreement and Room Block&Meeting Space Agreement between City of Fort Worth and DRH Worthington Owner Limited Partnership (City Secretary Contract Nos.31475,as Amended,and 31500,as Amended) EXECUTED to be effective as of the last date indicated below: CITY OF FORT WORTH: By: ti�--� Jesus J. Chapa Assistant City Manager Date: �< V APPROVED AS TO FORM AND LEGALITY: By: Peter Vaky Deputy City Attorney M&C: none required Form 1295: none required CONTRACT COMPLIANCE MANAGER: By signing below, I hereby acknowledge that I am the person responsible for the monitoring and administration of this contract, including ensuring all performance and reporting requirements: ...•• T AU88tsd by:Bv((,-,. J Carol Y cTt:. title � ary J. Ka tarecmw� Business DeN e lopment Coordinator N, oJcvnC . Page 5 Mutual Agreement to Terminate Economic Development Program Agreement and Room Block&Meeting Space Agreement between City of Fort Worth and DRH Worthington Owner Limited Partnership OFFICIAL RECORD (City Secretary Contract Nos.31475,as Amended,and 31500,as Amended) CITY SECRETARY FT.WORTH,TX DRH WORTHINGTON OWNER LIMITED PARTNERSHIP: By: DRH Worthington Owner General, LLC, a Delaware limited liability company and its general partner By: a�L= Name: T�,O -�Y7)�4 r2 - Q— nn Title: f>,-,(-t el o Date: + ( awl ( t Page 6 Mutual Agreement to Terminate Economic Development Program Agreement and Room Block&Meeting Space Agreement between City of Fort Worth and DRH Worthington Owner Limited Partnership (City Secretary Contract Nos.31475,as Amended,and 31500,as Amended) Attachment 1 Remaining Program Grant Calculations With $298,024.43 Overpayment Applied Compliance Grant Paid in Reduction of Adjustment for Overpayment Program Year Year Year Max Grant 70.24% Grant Payable Overpayment Remainingtnl$298,024.43 13 2016 2017 $124,587.00 $87,50991 $37,077.09 $37,077.09 $260,947.3414 2017 2018 $133,537.00 $93,796.39 $39,74061 $39,740.61 $221,206.7315 2018 2019 $142,553.00 $100,129.23 $42,423.77 $42,423.77 $178,782.95 16 2019 2020 $152,003.00 $106,766.91 $45,236.09 $45,236.09 $133,546.86 1 $0.00 17 2020 2021 $161,906.00 $113,722.77 $48,183.23 $48,183.23 $85,363.84 $0.00 18 2021 2022 $172,280.00 $121009.47 $51,270.53 $51,270.53 $34,093.11 $0.00 19 2022 2023 $183,398.00 $128,818.76 $54,579.24 $34,093.11 $0.00 $20,486.13 20 2023 1 2024 $194,253.00 $136,443.31 $57,809.69 $0.00 1 $0.00 $57,809.69 Page 7 Mutual Agreement to Terminate Economic Development Program Agreement and Room Block&Meeting Space Agreement between City of Fort Worth and DRH Worthington Owner Limited Partnership (City Secretary Contract Nos.31475,as Amended,and 31500,as Amended)