City Council

Agenda Request

Agenda Of:

12/16/08

Agenda Request No:

IV-J

Initiated By:

REgina Morales

Responsible Department:

economic development

Presented By:

regina morales

Department Head:

regina morales,

director of economic development   

 

 

Additional Department. Head (s):

n/a

Subject / Proceeding:

consideration of and action on amendment no. 1 to performance agreement between the city of sugar land and lake pointe town center, ltd.

Exhibits:

amendment no 1

Clearances

Approval

Legal:

eugenia cano, assistant city attorney

Executive Director:

joe esch, executive  director, business & intergov. relations

Purchasing:

n/a

Asst. City Manager:

n/a

Budget:

linda symank, director of fiscal services

City Manager:

Allen Bogard

Budget

Expenditure Required:  $

n/a

Current Budget:  $

n/a

Additional Funding:  $

n/a

Recommended Action

Approve Amendment No. 1 to Performance Agreement between the City of Sugar Land and Lake Pointe Town Center, Ltd.

Executive Summary

In October 2006, City Council approved a Performance Agreement with Lake Pointe Town Center, Ltd. (LPTC) to provide incentives for a premier mixed-use corporate, retail, and residential development.  Lake Pointe Town Center serves as one of the focal points for the City, by complementing existing development, attracting new quality development, and facilitating commerce in the City while augmenting sales tax revenues. The agreement was also designed to further the attraction of upscale development to the City of Sugar Land, to perpetuate and enhance the quality of life and vitality of the community.  The Lake Pointe Town Center is home to the recent relocation of Whole Foods to Sugar Land.

 

The original Agreement allocates infrastructure to the appropriate source of funding to aid in reimbursement, and serves to clarify and enhance the understanding that retail developments relocating from inside the City of Sugar Land to Lake Pointe Town Center do not qualify revenue source when calculating the infrastructure reimbursement under this performance agreement. A performance-based agreement, this instrument ensures no impact to City resources as the costs of incentives are funded from project revenues.

 

Original Deal Points:

1.                  LPTC will construct an approximately 200,000 sq ft space for mixed-use development, similar in tenant quality to those at the Woodlands Mall and Highland Village in Houston, as those developments exist today.

 

2.                  This Agreement provides City written approval on the architecture and aesthetics of the Lake Pointe retail development, including the pedestrian bridge across Brooks Lake, sidewalks, parking lots and garages, outdoor lighting and landscaping, and infrastructure and building improvements; as well as guarantees City approval on the caliber of the general retail establishment.

 

3.                  A maximum total performance-based reimbursement on specifically identified infrastructure improvement costs of up to $2,000,000.  The incentive requires construction completion deadlines  of July , 2008 and 85% percent of occupancy of the identified retail development prior to the payment of incentives being made.

 

4.                  Incentive payments are calculated at 37.5% of new sales taxes the City receives from Lake Pointe Town Center by tenants new to the Sugar Land area.

 

5.                  Rate of Reimbursement: Sales taxes collected beginning July 1, 2007, 37.5%  of the City’s $.02 of sales tax revenue is collected on the total annual sales in the development, until the City has paid $2,000,000 or for a period not to exceed ten (10) years (June 30, 2017).

 

6.     The City receives a purchase option on a 5.6052 acre tract of land on Lake Point Town Center.  The purchase option sets a price the City may purchase the property for use in pursuit of the development a second full service hotel and is in effect through March 2007.

 

The developer notified the City in April that they will not be able to meet the obligations in deal point #3 for construction completion and percent of occupancy due to changes in the retail market trends and growth based on a slowing economy. As a result, no reimbursement has been made to date.  All other obligations within the agreement have been met.

 

Provided for Council’s consideration and action is a proposed amendment to the Performance Agreement Between The City of Sugar Land, Texas and Lake Pointe Town Center, Ltd.   The following revisions are provided for in the Amendment:

 

  1. Reduces the amount of reimbursement by 20% of each reimbursement payment to be made by the City, but maintains the $2 million cap.  New payment of
  2. The term of the agreement remains unchanged and will expire June 30, 2017.
  3. Completion deadlines and occupancy requirements are removed.
  4. Tenant quality requirements remains as per the original agreement.
  5. Maintains requirement that sales tax must be new to the City
  6. Establishes first payment due date of August 1, 2009. Sales tax collection beginning Jan1, 2009 thru June 30, 2009 based on new terms with no retroactive payment.

 

The proposed amendment provides for reimbursement for infrastructure completed but at a lower reimbursement percentage due to the market changes that have impacted the construction and occupancy rates.

Exhibits