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Home My WebLink About(07) 13148: MEDICAL OFFICE BLDGinteroffice MEMORANDUM To: Mayor, City Council, City Manager From: Mark T. Sokolow, City Attorney ~ ~ Date: May 20, 2005 Subject: P. R. No. 13148 - May 24, 2005 Council Meeting Attached is P. R. 13148 as it pertains to a $450,000 Incentive Agreement with Williams & Rao, LP for an enlarged Medical Office Building. Dr. Williams and Dr. Rao are still reviewing the incentive agreement. If they suggest any changes, we will notify you at the Council Meeting. MTS:ts Attachment VIA FACSIMILE (409) 722-9111 WILLIAMS & RAO, LP ATTN: Dr. Kirk Williams VIA FACSIMILE (409) 985-5569 WILLIAMS & RAO, LP ATTN= Dr. Rao-Kothapalli z .pr13148 .memo P. R. No. 13148 05/18/05 - ts RESOLUTION NO. A RESOLUTION AS IT PERTAINS TO A $450,000 INCENTIVE AGREEMENT WITH WILLIAMS & RAO, LP FOR AN ENLARGED MEDICAL OFFICE BUILDING WHEREAS, the City and the City of Port Arthur Section 4A Economic Development Corporation entered into an Incentive Agreement with IASIS for a hospital, and with Williams & Rao, LP for an enlarged Medical Office Building; and, WHEREAS, this Incentive Agreement has successfully brought in an new five (5) story, state-of-the-art hospital to the citizens of Port Arthur; and, · ~_~S, Williams & Rao, LP are in the process of constructing an enlarged Medical Office Building; and, WHEP~AS, Williams & Rao, LP have requested a loan of $450,000, in increments of $150,000 per year, with the collateral thereof being three (3) acres of land adjacent to the EDC Business Park on Jimmy Johnson Boulevard; and, WHEP~AS, Williams & Rao, LP has requested that the acreage will have fifty (50) linear feet of frontage on Jimmy Johnson Boulevard as not to interfere with their other development; and, WHEP~AS, Williams & Rao, LP will periodically report the status of their development of the adjacent tract. NOW, THEREFORE, BE IT BESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: Section 1. That the facts and opinions in the preamble are z.pr13148 true and correct. Sect£on 2. That the City Manager is authorized to execute an Agreement in substantially the same form as attached hereto as Exhibit "A", with the required frontage of Jimmy Johnson Boulevard being fifty <50) linear feet. Section 3. That the City Manager is herein authorized to exercise Option One as to loan Williams & Rao, LP $150,000. Section 4. That any future loans or purchases of property will require additional approval of the City Council. Section 5. That a copy of the caption of this Resolution be spread upon the Minutes of the City Council. READ, ADOPTED AND APPROVED on this __ day of , A.D., 2005, at a Regular Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor ; City Council ; NOES: OSCAR ORTIZ, MAYOR EVANGELINE GREEN, CITY SECRETARY APPROVED AS TO FORM: MARK T. SOKOLOW, CITY ATTORNEY APPROVED FOR ADMINISTRATION: STEVE FITZGIBBONS, CITY MANAGER z.prl314$ APPROVED AS TO THE AVAILABILITY OF FUNDS: REBECCA UNDERHILL, DIRECTOR OF FINANCE z.pr13148 EXHIBIT "A" STATE OF TEX~S COUNTY OF JEFFERSON AGREEMENT - OPTION TO PURCHASE AND LOAN WHEREAS, the City of Port Arthur Section 4A Economic Development Corporation and the City of Port Arthur entered into an Incentive Agreement with Williams & Rao, LP, IASIS Healthcare Corporation, and War Horse Development Corporation with an effective date of May 15, 2003; and, WHEREAS, IASIS agreed to build a hospital by June 30, 2005, and employ not less than five hundred full-time equivalent employees at the hospital within 120 days; and, WHEREAS, the IASIS hospital opened on April 16, 2005; and, WHEREAS, Williams & Rao, LP agreed to build a medical office building of at least 50,000 square feet by June 30, 2005, and employ not less than 150 full time equivalent employees within 120 days; and, WHEREAS, Willams & Rao, LP, on September 21, 2004, filed plans with the City of Port Arthur delineating LSI as the builder, Holste & Associates Inc. as the MEP Engineers, and Ingenium as the Structural Engineers, for a five (5) story medical office building with a gross square feet of 128,921, with the first floor of 26,295, second floor of 25,977, third floor of 25,977, fourth floor of 25,977, and fifth floor of 24,695 square feet; and, z.edc_williams & rao_2option agreement 1 ~EREAS, a building permit was issued to LSI on January 6, 2005 as to construct the medical office building; and, W~EREAS, it is expected that the medical office building will be completed on January 30, 2006; and, W~EREAS, Williams & Rao, LP has requested a loan of $450,000 over a three (3) year period and is willing to pay interest thereon, as well as to commit to a minimum payroll that either Williams & Rao, LP or the tenants of the medical office building will create; and, W~ER~AS, the City can give loans for economic development under Chapter 380 of the Local Government Code; and, W~ER~AS, the City of Port Arthur is interested in purchasing additional land for public use; and, W~R~AS, the City of Port Arthur is interested in making these options available to the City of Port Arthur affiliated corporations, which includes the Section 4A Economic Development Corporation (EDC) and the Port Arthur Municipal Non-Profit Corporation. NOW THEREFORE, the City of Port Arthur and Williams & Rao, LP agree to the following: Section 1. Williams & Rao, LP agree that the City of Port Arthur and its affiliated corporations can exercise the following options at their sole discretion: O~tion 1 - Loan Williams & Rao, LP up to $450,000 over a three (3) year period with a first lien to be on three (3) z.edc_willi~s & rao_2option agreement 2 acres of the City's choice adjacent to Jimmy Johnson Boulevard and with frontage of 50 linear feet. Williams & Rao, LP will sign the notes and deeds of trust in a form to be approved by the City Attorney and Williams & Rao, LP will provide a mortgagee title insurance policy. The schedule of note payments will be as follows: (a) The City of Port Arthur or a City's affiliated corporation will loan Williams & Rao, LP $150,000, at an interest rate of ten percent (10%) per annum with said sums to be repaid on or before June 1, 2006. The moneys will only be used for development of the Medical Office Building adjacent to the IASIS Hospital or for ancillary medical facilities. The City or the City's affiliated corporation will have a first lien on one (1) acre with 50 linear feet of frontage of Jimmy Johnson Boulevard, and with said acreage to be adjacent to the EDC Business Park (Parcel 6). If the medical office building is completed by January 30, 2006, and if $500,000 in payroll is created at the facility by June 1, 2006, then the repayment of this loan will be deferred to June l, 2007, at an interest rate of seven percent (7%) per annum. If $3,000,000 in payroll is created at the facility by June 1, 2007, then the $150,000 loan will again be deferred to June z.edc_williams & rao_2optlon agreement 3 1, 2008, at an interest rate of three percent (3%) per annum. (b) If $500,000 in payroll is created at the facility by June 1, 2006, then the City of Port Arthur or a City affiliated corporation will have the option to loan Williams & Rao, LP an additional $150,000 by June 1, 2006, at an interest rate of seven percent (7%) per annum for the total loan sum of $300,000 with said sums to be repaid on June 1, 2007. The City or the City's affiliated corporation will have first liens on two (2) acres with 50 linear feet of frontage on Jimmy Johnson Boulevard and with said acreage to be adjacent to EDC Business Park. If $3,000,000 in payroll is created at the facility by June 1, 2007, then the repayment of this loan will be deferred to June 1, 2008 at an interest rate of three percent (3%) per annum. (c) If $3,000,000 in payroll is created at the facility by June 1, 2007, then the City of Port Arthur or the City's affiliated corporation will have the option to loan an additional $150,000 at an interest rate of three percent (3%) per annum for a total of $450,000 to be repaid by June 1, 2008. The City or the City's affiliated corporation will have first liens on three (3) acres with 50 linear feet of frontage on Jimmy z.edc_willi~s & rao_2option agre~ent 4 Johnson Boulevard and with said acreage to be adjacent to the EDC Business Park. (d) Williams & Rao, LP will provide written reports every six (6) months as to the status of their development and their retention of employees. Failure to hire employees in the timetables as delineated in the Incentive Agreement approved by 03-082, shall be considered a default of the loan documents. Initial Loan June 1, 2006 June 1, 2007 June 1, 2008 2005 June 2005 Loan If $500,000 in If $3,000,000 If at least of $150,000 at payroll, then in payroll, $3,000,000 in 10% Interest $300,000 in then $450,000 payroll is per annum loans at 7% in loans at 3% created then interest per interest per loans are annum (June annum (June repaid at 3% 2005 $150,000 2005 - $150,000 interest per note and June note , June 1, annum. 1, 2006 - 2006 - $150,000 $150,000) note and June 1, 2007 $150,000 note) Option 2 - Purchase acreage of land from Williams $ Rao, LP at a cost of $150,000 per acre within the Parcel 31 described in Exhibit "A" with the City of Port Arthur or the City's affiliated corporation designating the dimensions of the acreage adjacent to Jimmy Johnson Boulevard and with frontage of fifty (50) linear feet as the City or the City's affiliated corporation determines in its sole discretion with such land being used for such public purposes as the City of Port Arthur or the City's affiliated corporation in z.edc_williams & rao_2option agreement 5 its sole discretion deems appropriate, including the usage thereof as a business park. If this option is exercised, Williams & Rao, LP will deed clear and marketable title from one (1) to three (3) acres within Parcel 31 to the City or to the City of Port Arthur Section 4A Economic Development Corporation (EDC), or to the Port Arthur Municipal Nonprofit Corporation in the following schedule: · June 2005 - Deed of one (1) acre with frontage on Jimmy Johnson Boulevard of fifty (50) linear feet at a cost of $150,000. · June 1, 2006 - Deed of an additional adjacent acre at a cost of $150,000. · June 1, 2007 - Deed of an additional adjacent acre at a cost of $150,000. Section 2. The cost of surveys as to delineate Parcel 31, and as to delineate acreage therein for collateral or for sale, to update the overall plat for the Jimmy Johnson Park Central area (Parcels 1 to 32), title insurance, and closing costs will be paid by Williams & Rao, LP. Section 3. The calculation of employees for Williams & Rao, LP shall not include employees of IASIS Healthcare, Inc. Section 4. If Williams & Rao, LP default in any of its obligations to the City or to the City of Port Arthur Section 4A z.edc_williams & rao_2opt±on agreement 6 Economic Development Corporation, then this Agreement can be terminated at the sole discretion of the City, Section 5. This Agreement is subject to the availability of funds and the allocations of funds in the City's annual budget process. SIGNED AND AGREED to on the day of , 2005. CITY OF PORT ARTHUR Stephen Fitzgibbons, City Manager ACKNOWLEGEMENT STATE OF TEXAS COUNTY OF JEFFERSON BEFORE ME, the undersigned Notary Public, on this day, personally appeared Stephen Fitzgibbons, City Manager, City of Port Arthur, known to me to be the person whose name is described in the foregoing instrument, and acknowledged to me that he/she executed the same as the act and deed of the City of Port Arthur, for the purposes and considerations therein expressed, and the capacities therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of , 2005. Notary Public, State of Texas z.edc_williams & rao_2option agreement 7 SI~NED ~ A~REED to on the day of 2005. WILLIAMS AND RAO, LP, a Texas Limited Partnership BY: Its general partner, P. AO & WILLIAMS, L.L.C. Kirk Williams, President ACKNOWLE~EMENT STATE OF TEXAS COUNTY OF JEFFERSON BEFORE MB, the undersigned Notary Public, on this day, personally appeared known to me to be the person whose name is described in the foregoing instrument, and acknowledged to me that he/she executed the same as the act and deed of the Williams & Rao, LP, and Rao & Williams, LLC, for the purposes and considerations therein expressed, and the capacities therein stated. ~IVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of , 2005. Notary Public, State of Texas z.edc_williams & rao_2option agreement 8 EXHIBIT "A" Legal Description for Parcel 31 (to be inserted) z.edc_williams & rao_2option agreement 9