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HomeMy WebLinkAboutItem 05 - Gaylord ITEM MEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: BRUNO RUMBELOW, CITY MANAGER GR. MEETING DATE: MAY 5, 2009 SUBJECT: GAYLORD CONVENTION DEVELOPMENT & MARKETING AGREEMENT THIRD ADDENDUM RECOMMENDATION: City Council consider approving the Third Addendum to the Convention Development & Marketing Agreement with Opryland Hotel Texas Limited Partnership to: • extend the required commencement date for the hotel expansion from September 12, 2009 to September 12, 2012, • extend the renewal date of the option for Parcels 5 & 7 to September 12, 2012, authorize the City Manager to execute said Third Addendum, and take any necessary action. • BACKGROUND: Gaylord staff has briefed the City Council on the impact of the economic downturn on the hospitality industry. In these economic times, financing for the planned improvements to the hotel complex, including convention center expansion, new 500+ room hotel tower &water experience facility, is unavailable. In the presentation to the City Council, Bennett Westbrook asked the City to consider extending the commencement date for a period of 3 years. Council understood the situation that Gaylord was in and agreed to their request. The attached addendum formalizes the relief sought by Gaylord. Staff recommends approval. 0:\agenda\2009\5-5-09\Gaylord 3rd Addendum CD&Mrkting Agmt Memo April 30,2009(3:14PM) THIRD ADDENDUM TO CONVENTION DEVELOPMENT AND MARKETING AGREEMENT This Third Addendum to Convention Development and Marketing Agreement (the "Third Addendum") is entered into by and between the City of Grapevine, Texas (the "City"), and Opryland Hotel—Texas Limited Partnership, a Delaware limited partnership ("Gaylord"), on this day of , 2009. RECITALS: A. The City and Gaylord have entered into that certain Convention Development and Marketing Agreement, dated March 24, 1999 (the "Original Agreement"), which was amended by an Addendum to Convention Development and Marketing Agreement, and the Second Addendum to Convention Development and Marketing Agreement, dated September 12, 2007 (the "Second Addendum") (the Original Agreement, as amended, is referred to herein as the "Subject Agreement"); B. The parties desire to amend the Subject Agreement as set forth herein; C. This Third Addendum and the incentives provided for herein are authorized by, and in accordance with, the City's Policy on Economic Development and Chapter 380 of the Texas Local Government Code; and D. All legal prerequisites for the approval and execution of this Third Addendum have been met, including but not limited to the requirements of the Texas Open Meetings Act and the City Charter; NOW, THEREFORE, in consideration of $10.00, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the parties do hereby agree as follows: 1. The first sentence of Section 4 of the Second Addendum is deleted and is replaced by the following sentence: "In order for Gaylord to obtain the benefit of the revised definition of"Available CVB Funds" (as set forth in Section 2 of the Second Addendum), Gaylord must commence construction on both the new hotel building and convention center expansion by September 12, 2012." 2. The second, third, fourth and fifth sentences of paragraph A of Section 4.10 (as added by Section 6.h. of the Second Addendum) are hereby deleted and replaced by the following sentences: "City Property Taxes" means the amount determined by multiplying the City ad valorem tax rate for the year in question (the first year being the year in which construction of the Expansion commences (the "Expansion Year")), times the Page 1 "Incremental Increase." The "Incremental Increase" shall mean the positive difference between: (i) the final net taxable value of the "Project Property" for the year in question (the first year being the Expansion Year), minus (ii) the net taxable value of the Project Property for the tax year preceding the Expansion Year (the "Base Year") (for the purpose of this clause (ii), the Project Property shall not include the value of the Lease Property). With respect to clause (i) of the preceding sentence, the final net taxable value of the Project Property shall be determined each year, commencing with the Expansion Year, and re-determined each succeeding year. Such payment shall be made to Gaylord annually for a ten year period, on or before June 15th of each year, with the first payment due on June 15 of the year following the Expansion Year." 3. The second, third, fourth and fifth sentences of paragraph B of Section 4.10 (as added by Section 6.h. of the Second Addendum) are hereby deleted and replaced by the following sentences: "Tax Increments" means the amount determined by multiplying the GCISD maintenance and operation ("M&O") tax rate for the year in question (the first year being the Expansion Year), times the "Incremental Increase of the Property Within the TIF." The "Incremental Increase of the Property Within the TIF" shall mean the positive difference between: (i)the final net taxable value of the "TIF Property" for the year in question (the first year being the Expansion Year), minus (ii) the net taxable value of the TIF Property for the Base Year (for the purpose of this clause (ii), the TIF Property shall not include the value of the Lease Property). With respect to clause (i) of the preceding sentence, the final net taxable value of the TIF Property shall be determined each year, commencing with the Expansion Year, and re-determined each succeeding year. Such payment shall be made to Gaylord annually for a ten year period, on or before June 15th of each year, with the first payment due on June 15 of the year following the Expansion Year." 4. As provided for in Section 10 of the Second Addendum, Gaylord exercised the Option Election and paid the sum of$54,000 to the City; accordingly, Gaylord currently has the option to lease the Western Amenity Parcel. Section 10 of the Second Addendum is hereby amended to provide that, for no additional charge, Gaylord's option to lease the Western Amenity Parcel shall remain in effect until the earlier of (i) September 12, 2012, or (ii) the commencement of construction of the new hotel building or convention center expansion. At such time, if Gaylord wishes to keep the lease option in effect, Gaylord must pay annual rent at the rate of three percent(3%) of the appraised value of the Western Amenity Parcel. 5. All provisions of the Subject Agreement not specifically amended herein shall remain in full force and effect and are hereby confirmed, ratified and approved. Capitalized terms which are not defined herein shall have the same meaning as set forth in the Subject Agreement. Page 2 THE CITY OF GRAPEVINE, TEXAS By: Bruno Rumbelow, City Manager OPRYLAND HOTEL—TEXAS LIMITED PARTNERSHIP By: Opryland Hospitality, LLC, General Partner By: Name: Title: AGREED: The undersigned agrees to the provisions of Sections 2 and 3 above. Tax Increment Financing Reinvestment Zone Number Two, City of Grapevine, Texas, as established by that certain Ordinance No. 98-140 of the City of Grapevine By: Name: Title: Page 3 ACKNOWLEDGEMENT: THE STATE OF TEXAS COUNTY OF TARRANT Before me, the undersigned, on this day personally appeared Bruno Rumbelow, the City Manager of the City of Grapevine, Texas, proved to me through the presentation of a valid Texas driver's license to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. Mr. Rumbelow furthermore attested that he is signing this agreement in his capacity as City Manager of the City of Grapevine, Texas, and that such capacity makes his signature valid to bind the City of Grapevine, Texas. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of 2009. (Notary Seal) Notary Public in and for the State of Texas Print Name: My Commission Expires: Page 4 ACKNOWLEDGEMENT: THE STATE OF TENNESSEE COUNTY OF DAVIDSON Before me, the undersigned, on this day personally appeared the of Opryland Hospitality, LLC, in its capacity as the general partner of OPRYLAND HOTEL — TEXAS LIMITED PARTNERSHIP, a limited partnership, proved to me through the presentation of a valid Tennessee driver's license to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed. Mr./Ms. furthermore attested that he/she is signing this agreement in his/her capacity as the of Opryland Hospitality, LLC, in its capacity as the general partner of OPRYLAND HOTEL — TEXAS LIMITED PARTNERSHIP, and that such capacity makes his signature valid to bind the partnership. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of 2009. (Notary Seal) Notary Public in and for the State of Tennessee Print Name: Page 5 ACKNOWLEDGEMENT: THE STATE OF TEXAS COUNTY OF TARRANT Before me, the undersigned, on this day personally appeared the of Tax Increment Financing Reinvestment Zone Number Two, City of Grapevine, Texas, as established by that certain Ordinance No. 98-140 of the City of Grapevine, proved to me through the presentation of a valid Texas driver's license to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed. Mr./Ms. furthermore attested that he/she is signing this agreement in his/her capacity as of the Tax Increment Financing Reinvestment Zone Number Two, City of Grapevine, Texas, and that such capacity makes his signature valid to bind the Tax Increment. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of 2009. (Notary Seal) Notary Public in and for the State of Texas Print Name: My Commission Expires: J:\DOCS\8's Clients\8012-002 Gaylord Texan\THIRD ADDENDUM TO CONVENTION DEVELOPMENT(4 23 09)v8.doc Page 6