HomeMy WebLinkAboutPR 17524: DEVELOPMENT SERVICES AGREEMENT WITH NATIONAL DEVELOPMENT COUNCIL Interoffice
MEMORANDUM
To: Mayor, City Council, City Manager
From: Floyd Batiste, CEO
Date: January 29, 2013
Subject: P. R. No. 17524; Council Meeting of February 5, 2013
Attached is P. R. No. 17524 authorizing the City of Port Arthur
Section 4A Economic Development Corporation to enter into a
Development Services Agreement with The National Development
Council in an amount not to exceed $40,000.00
•
P.R. No. 17524
1/29/2013
RESOLUTION NO.
A RESOLUTION AUTHORIZING THE CITY OF PORT
ARTHUR SECTION 4A ECONOMIC DEVELOPMENT
CORPORATION TO ENTER INTO A DEVELOPMENT
SERVICES AGREEMENT WITH THE NATIONAL
DEVELOPMENT COUNCIL IN AN AMOUNT NOT TO
EXCEED $40,000.
WHEREAS, it is deemed in the best interest of the citizens of Port Arthur to enhance the
appearance of the downtown area and to create an environment conducive to business and
entertainment activities for the community; and
WHEREAS, the City of Port Arthur Section 4A Economic Development Corporation
(the "PAEDC ") desires to relocate its offices to downtown Port Arthur; and
WHEREAS, per Resolution No 12 -641, the City Council authorized the PAEDC to
pursue the building development plan to retrofit the property at 501 Procter based upon the cost
estimate attached hereto as Exhibit "A "; and
WHEREAS, at a special Board meeting on January 28, 2013, the PAEDC Board of
Directors determined that they need the professional services of a developer to manage the
redevelopment process of the structure located at 501 Proctor Street; and
WHEREAS, the National Development Council is willing to provide such developer
services to PAEDC utilizing its expertise in development activities as the owner's representative
on such terms and conditions as are attached in Exhibit "B "; and
WHEREAS, at the special Board meeting on January 28, 2013, the PAEDC Board of
Directors also voted that the amount of the agreement shall not exceed $40,000.00 and will
include all of National Development Council's time, travel expenses, supplies, postage,
telephone and other similar expenses.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF PORT ARTHUR, TEXAS:
Section 1. That the facts and opinions in the preamble are true and correct.
Section 2. That the City Council authorizes the PAEDC to enter into a Development
Services Agreement with the National Development Council for an amount not to exceed
$40,000.
Section 3. 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., 2013,
at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote:
AYES:
Mayor
Councilmembers
NOES:
Deloris "Bobbie" Prince, Mayor
ATTEST:
Sherri Bellard, City Secretary
#979128 Page 2
1
APPROVED:
Floyd Batiste, PAEDC CEO
APPROVED AS TO FORM:
7 0. , ,
Guy N. Goodson, PAEDC Attorney
APPROVED AS TO FORM:
a , • / l7
Valecia R. Tizeno, City Attorney
#979128 Page 3
EXHIBIT "A"
NMTC Sources and Uses Notes
While the New Market Tax Credit Program is tool for revitalization, it is not a guaranteed program and
there are upfront costs associated with it such as:
- Legal
- Audits
- CDE AM Fee
- Put Reserve
In regards to the rehabilitation project at 501 Proctor St, the costs associated with using NMTC are as
follows:
- Legal: $200,000
- IF Audit: $65,421
- Audit Fee: $78,321
- CDE AM Fee: $138,425
- Put Reserve: $63,549
$545,716 is the estimated cost associated with accessing $1,337,153 in NMTC equity. All costs are
included in the development budget and not taken out of operations.
1
With NMTC
Sources Uses
I/O Loan - PAEDC $ 4,066,847 Acquisition $ 200,000
I/O Loan - NMTC Equity $ 1,283,667 Site Improvements $ 27,500
Deferred Loan - NDC $ 53,486 Construction $ 4,011,811
Professional Fees $ 489,982
Construction Finance $ 76,395
Permanent Finance $ -
Soft Costs $ 6,000
Reserves $ 46,596
Legal $ 200,000
IF Audit $ 65,421
Audit Fee $ 78,321
CDE AM Fee $ 138,425
Put Reserve $ 63,549
Total Development Sources $ 5,404,000 Total Development Costs $ 5,404,000
Gap $ -
NMTC Equity NMTC Costs
I/O Loan - NMTC Equity $ 1,283,667 Legal $ 200,000
Deferred Loan - NDC $ 53,486 IF Audit $ 65,421
Total NMTC Equity $ 1,337,153 Audit Fee $ 78,321
CDE AM Fee $ 138,425
Put Reserve $ 63,549
Total NMTC Costs $ 545,716
NMTC Equity $ 1,337,153
NMTC Cost $ 545,716
Net NMTC Proceeds $ 791,437
1
W/O NMTC
Sources Uses
I/O Loan - PAEDC $ 4,858,284 Acquisition $ 200,000
Site Improvements $ 27,500
Construction $ 4,011,811
Professional Fees $ 489,982
Construction Finance $ 76,395
Permanent Finance $ -
Soft Costs $ 6,000
Reserves $ 46,596
Total Development Sources $ 4,858,284 Total Development Costs $ 4,858,284
Gap $ -
Additional Funding Needed $ 791,437
RTC Sources and Uses Notes
While the Historic Rehabilitation Tax Credit Program is tool for revitalization on historic properties, it
requires compliance with the National Parks Service standards for historic properties and there are
ongoing operating costs associated with it such as:
- RTC Investor Exit Tax or Put
- Annual RTC Investor Return on Investment
- Administrative Fee
- Annual Property Taxes (property must owned by a for - profit entity)
In regards to the rehabilitation project at 501 Proctor St, the costs associated with using RTC are as
follows:
- RTC Investor Return: 15% of Equity = $100,065
- RTC Investor Return on Investment: 3% COC, 20,013 x 5 years = $100,065
- Administrative Fee: $1,000 x 5 years = 5,000
- Est. Property Taxes on $3M: $77,342 a year
$591,845 is the estimated cost and ongoing property taxes associated with accessing $667,116 in RTC
equity. Using NMTC will extend the compliance period to seven years bringing the estimated operating
cost increase to $828,583 which is $161,467 over the $667,116 in RTC equity.
1
With RTC
Sources Uses
I/O Loan - PAEDC $ 4,211,168 Acquisition $ 200,000
RTC Equity $ 667,116 Site Improvements $ 27,500
Construction $ 4,011,811
Professional Fees $ 489,982
Construction Finance $ 76,395
Permanent Finance $ -
Soft Costs $ 26,000
Reserves $ 46,596
Total Development Sources $ 4,878,284 Total Development Costs $ 4,878,284
Gap $ -
Operating Cost Comparison Year 1 Year 2 Year 3 Year 4 Year 5
RTC Investor Ret (15 %) 20,013 20,013 20,013 20,013 20,013
RTC Investor ROI + Admin 21,013 21,013 21,013 21,013 21,013
Property Taxes 77,342 77,342 77,342 77,342 77,342
Operating Expenses w RTC $ 118,369 $ 118,369 $ 118,369 $ 118,369 $ 118,369
RTC Equity $ 667,116 RTC Equity $ 667,116
Operating Increase 591,845 Operating Increase 828,583
RTC Operating Difference @ 5 years $ 75,271 RTC Operating Difference @ 7 years $ (161,467)
W/O RTC
Sources Uses
I/O Loan - PAEDC $ 4,858,284 Acquisition $ 200,000
Site Improvements $ 27,500
Construction $ 4,011,811
Professional Fees $ 489,982
Construction Finance $ 76,395
Permanent Finance $ -
Soft Costs $ 6,000
Reserves $ 46,596
Total Development Sources $ 4,858,284 Total Development Costs $ 4,858,284
Gap $ -
Additional Funding Needed $ 647,116
EXHIBIT "B"
DEVELOPER SERVICES AGREEMENT
This Developer Services Agreement is made and entered into this First day of February,
2013, by and between the Port Arthur Section 4A Economic Development Corporation
(hereinafter called "the client "), Texas non - profit industrial development corporation created
pursuant to Chapter 501 and 504, Texas Local Government Code, whose address is 4173 39
Street, Port Arthur, Texas 77642 (hereinafter called "Client ") and NATIONAL DEVELOPMENT
COUNCIL, a New York non - profit corporation, which is a tax - exempt organization under Section
501(c)(3) of the Internal Revenue Code, whose address is 708 Third Avenue, Suite 710, New
York, New York 10017 (hereinafter called "NDC ").
WITNESSETH:
WHEREAS, the Client has determined that they need the professional services of a
developer to manage the redevelopment process of the structure 501 Proctor Street, Port
Arthur, Texas 77640 (hereinafter called " the bank building "), and
WHEREAS, NDC is willing to provide, on such terms and conditions as are hereinafter
provided, developer services to the Client utilizing its expertise in development activities as the
owner's representative.
NOW THEREFORE, the Client and NDC do hereby agree as follows:
I. SCOPE OF SERVICES
The Client acknowledges that NDC regularly performs services for various clients
located across the United States. The purpose of this Agreement is to set forth the terms upon
which the NDC will provide the Client with development services they have requested which are
generally described as development services. NDC agrees to perform such services as are
requested from time to time by Client and to provide such services as it deems necessary to
accomplish the goals requested. Exhibit A attached hereto fully describes the services to be
offered to the Client by NDC. In performing the requested services, NDC shall consult with
public stake holders, architects, engineers, contractors and the Client and shall meet, as
appropriate, with such representatives or other entities when necessary, including without
limitation State and Federal officials and other local organizations.
II. DURATION, TERMINATION
NDC agrees to commence work for the Client effective as of February 1, 2013 subject to
approval by the City of Port Arthur, Texas and shall continue providing development services
until project completion. Either party may, at any time, terminate this Agreement with or without
cause by sending written notice to the other party, in which event this Agreement shall be
terminated effective 30 days after receipt of such notice.
III. COMPENSATION
DEVELOPMENT SERVICES AGREEMENT - Page 1
The Client shall compensate NDC for performance of services received hereunder in the
amount of $40,000 as follows: $10,000 on the date of execution of the construction contract;
$10,000 at 50% of project completion; $20,000 at project completion (certificate of occupancy)
plus any unpaid amounts from prior installments, if any, at project completion. This amount
includes all of NDC's time, travel expenses, supplies, postage, telephone, and other similar
expenses. As an independent contractor, NDC is responsible for all taxes and other benefits of
the employees of NDC and nothing contained herein shall be interpreted as creating a
relationship of servant, employee, partnership, or agency between the Client and the NDC.
Payment by the Client for services rendered under this Development Services Agreement
evidences Clients' acceptance of such services in accordance with the terms of the Agreement.
PAEDC will be paying 100% of the contract price. The project needs to be primarily
projects consistent with the authority and limits of the PAEDC.
IV. MISCELLANEOUS PROVISIONS
4.1 Ownership of Material and Documents. All final reports and other materials prepared
by NDC for the Client shall be the property of Clients, however all work papers and other source
materials shall be the property of the NDC. NDC shall deliver such materials to Client in
accordance with the terms and conditions of this Agreement. Client shall not, without NDC's
written consent, associate NDC's name with the report\product, if a subsequent change is made
in such report \product after submission to Client.
4.2 Right to Audit. NDC shall establish and maintain appropriate procedures which will
assure the proper accounting of all funds paid to it under this Agreement. The Client or any of
its duly authorized representatives shall have access to any books, documents, papers and
records of NDC and /or its subcontractors which are directly pertinent to a specific program for
the purpose of making an audit, an examination, excerpts and transcriptions. All such books
and records shall be retained for such periods of time as required by law, provided, however,
notwithstanding any shorter periods of retention, all books, records and supporting details shall
be retained for a period of at least three (3) years after the expiration of the term of this
Agreement.
4.3 Confidentiality of Reports. NDC shall keep confidential all reports, information and
data given to, prepared or assembled by NDC pursuant to NDC's performance hereunder and
the Client designates as confidential. Such information shall not be made available to any
person, firm, corporation or entity without the prior written consent of the Client first obtained.
4.4 Equal Opportunity. NDC shall comply with all provisions of Title VI of the Civil Rights
Act of 1964 and of the rules, regulations and relevant order of the Secretary of Labor regarding
discrimination.
4.5 Conflicts of Interest. No board member, officer or employee of the Client or its
designees or agents, and no other public official who exercises any functions or responsibilities
with respect to any requested development services, shall be permitted to financially benefit
from this Agreement or have any interest, direct or indirect, in any contract or subcontract, or the
proceeds thereof, for work to be performed in connection with this Agreement.
DEVELOPMENT SERVICES AGREEMENT - Page 2
4.6 Notices. All notices shall be sent by certified mail, hand - delivery or ovemight mail and
in all events with a written acknowledgment of receipt to the address set forth at the beginning
of this Agreement.
4.7 Responsibility for Claims:
a. The Client will indemnify and hold harmless NDC, its directors, officers, agents,
representatives, contractors, and employees against any and all claims, demands, or causes of
action, and all costs, losses, liabilities, expenses, and judgment incurred in connection
therewith, including reasonable attorney's fees and court costs, brought by any of Client's
employees or representatives or by any third party, based upon, in connection with, resulting
from, or arising out of NDC's actions or inactions under this Agreement or Client's use of the
Services; provided, however, that Client's contractual obligations of indemnification shall not
extend to the consequences of NDC's negligence or other fault. The City of Port Arthur will only
indemnify NDC to the extent of its liability limits under the Texas Tort Claims Act.
b. Conversely, NDC agrees to indemnify and hold harmless the Client, its directors,
officers, agents, contractors, representatives, and employees against any and all claims,
demands, or causes of action and all costs, losses, liabilities, expenses, and judgments incurred
in connection therewith, including reasonable attorney's fees and court costs, brought by any of
NDC's employees or representatives or by any third party, based upon, in connection with,
resulting from, or arising out of NDC's actions or inactions under this Agreement; provided,
however, NDC's contractual obligation of indemnification shall not extend to the consequences
of Client's negligence or other fault.
4.8 Release of News Information. No news release, including photographs, public
announcements or confirmation of same, or any part of the subject matter of this Agreement or
any phase of any program hereunder shall be made without prior written approval of the NDC
and PAEDC.
4.9 Compliance with Laws. NDC agrees to comply with all applicable federal, state and
local laws in the conduct of the work hereunder. This Agreement shall be construed, interpreted
and the rights of the parties determined, in accordance with the laws of the State of Texas and
venue shall lie in Jefferson County, Texas.
4.10 Assignment. Neither this Agreement nor any rights, duties, or obligations described
herein may be assigned by either party without the prior expressed written consent of the other
party.
4.11 Severability. A determination that any part of this Agreement is invalid shall not
invalidate or impair the force of the remainder of this Agreement.
4.12 Dispute Resolution. If both parties agree, any disputes or claims under this Agreement
shall be submitted to arbitration in a manner provided under the Commercial Arbitration Rules of
the American Arbitration Association then in effect, such arbitration to be conducted before
three arbitrators chosen in accordance with the rules of the State of Texas and shall be binding
on the parties.
DEVELOPMENT SERVICES AGREEMENT - Page 3
1
4.13 Additional Provisions. Any one of the parties may require additional provisions which
will govem the agreement between the parties by attaching hereto such additional provisions as
Exhibit "B ".
4.14 Entire Agreement. This Agreement contains the final agreement between the parties
regarding the matters covered and supersedes any and all other agreement, either oral in
writing, regarding the matters contained herein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the day and year first written above.
Approved as to form:
Valecia Tizeno, City Attorney Guy Goodson, General Counsel for PAEDC
CLIENTS: NDC:
City of Port Arthur Section 4A National Development Council
Economic Development Corporation
By: By:
President Robert W. Davenport, President
B Date:
Secretary
City of Port Arthur, Texas
By:
Floyd Johnson, City Manager
1
DEVELOPMENT SERVICES AGREEMENT - Page 4
501 PROCTOR ST. NDC DEVELOPMENT SERVICES AGREEMENT
SCOPE OF SERVICES
EXHIBIT A
NDC will provide development services to the Port Arthur Economic Development Corporation
(PAEDC) in the pre - development and rehabilitation of the commercial structure at 501 Proctor
St.
This Scope of Services describes the services available under this Development Services
Agreement during the specified contract period. The Client and NDC by mutual agreement may
revise this Scope. The Chief Executive Officer of the PAEDC will direct NDC's activities and
determine which services will be rendered by NDC, based on the direction from the PAEDC
Board. Payment by the Client evidences the Client's acceptance of the assistance provided under
this Agreement. The assistance offered includes:
1. NDC will manage the development process of 501 Proctor St. This may include, as directed:
(a) Review and provide recommendations as to engineering surveys, and Plans and Specifications
for Project.
(b) Manage the preparation of and review a construction budget for the Project and make
recommendations to the Client regarding any necessary modifications needed.
(c) Assist in the development of and negotiation, as appropriate, of contracts, financing
commitments, surveys, budgets, Plans and Specifications and other items prepared or
obtained as to the Projects.
(d) Assist the procurement of construction contract(s) (the "Construction Contract); in an
amount not to exceed the amount provided from a licensed general contractor (the
"Contractor'), for the Project.
(e) Manage and review the general administration and supervision of the construction of
the Project:
(i) administration and supervision of the activities of the Contractor
and all other contractors, subcontractors and others employed in connection with
the construction of the Project;
(ii) Preparation of construction schedules;
(iii) periodic inspection of construction in progress, including but not
limited to inspection at completion, for defects in construction and to assure
compliance with the Plans and Specifications, and supervision of correction of
any and all deficiencies;
(iv) Processing and payment of applications for progress payments
DEVELOPMENT SERVICES AGREEMENT - Page 5
made by the Contractor; and
(v) analysis of requests for any and all change orders to or variations
from the Projections and the Plans and Specifications and submission of such
requests to the Client for approval.
(0 Manage contracts, letter agreements, purchase orders, and similar documents as for
timely completion of the construction of the Project.
(g) Cause the Project to be completed on or before a target completion date:
(i) the Plans and Specifications;
(ii) all obligations of the Client under any documents executed by the
Client under the Loan Documents; and
(iii) all municipal, state, and other governmental laws, ordinances, and
regulations governing the construction of the Project.
(h) Cause to be maintained builders risk, contractor's liability; and workers' compensation
insurance required by law or by the Limited Partner with the Client.
(i) Manage and review separate project accounts and cost records and prepare and
furnish upon request financial and progress reports and statements with respect to
construction of the Project.
(j) Make available to the Client upon request copies of all contracts and subcontracts.
All third party costs associated with the Project are the responsibility of the Client.
DEVELOPMENT SERVICES AGREEMENT - Page 6