TIRZ #1, 2, 3 and 4/Power Center Board Meeting

AGENDA TIRZ #1, 2, 3 and 4/Power Center Board Meeting 12:00 PM - Wednesday, June 7, 2023 City Council Chambers, 201 E. Nash Street, Terrell, TX Board Members Juan Salazar, Chairman Terry Barber, Vice-Chairman Mike Hunt, Board Member Charles Whitaker, Board Member Donna Anderson, Board Member City Manager Mike Sims NOTICE IS HEREBY GIVEN that the TIRZ #1/Power Center Board will conduct a meeting at 12:00 p.m. on Wednesday, June 7, 2023, at Terrell City Hall located at 201 East Nash Street. The meeting is open to the public with limited seating in the Council Chambers. Page 1. CALL TO ORDER 2. INVOCATION 3. PLEDGE TO AMERICAN FLAG AND TEXAS FLAG. 4. ADOPTION OF MINUTES 4.1. Discuss and Consider Approval of the Minutes from the Tax Increment 3 - 4 Reinvestment Zone No. 1, 2, 3 and 4 and the Power Center Board Meetings on January 4, 2023. TIRZ #1, 2, 3 and 4/Power Center Board Meeting - Jan 04 2023 - Minutes - Pdf Page 1 of 26  5. NEW BUSINESS 5.1. Discuss Financial Report. 5-6 Financials_PWRCTR_043023 Financials_TIRZNo1_043023 5.2. Discuss Tax Increment Reinvestment Zone No. 1 Update. 5.3. Discuss Tax Increment Reinvestment Zone No. 2 Update. 5.4. Discuss Tax Increment Reinvestment Zone No. 3 Update. 5.5. Discuss Tax Increment Reinvestment Zone No. 4 Update. 5.6. Discuss Tax Increment Reinvestment Zone No. 2 Agreement and 7 - 26 Development Agreement for Arboretum Estates. ARBORETUM ESTATES presentation to TIRZ board June 2023 TIRZ 2 Resolution 2023-2 6. ADJOURN INTO EXECUTIVE SESSION IN ACCORDANCE WITH SECTION 551 OF THE TEXAS GOVERNMENT CODE TO DISCUSS THE FOLLOWING: 6.1. Section 551.087 Deliberations Regarding Economic Development Negotiations. 7. RECONVENE INTO REGULAR SESSION AND CONSIDER ACTION, IF ANY, ITEMS DISCUSSED IN EXECUTIVE SESSION. 8. ADJOURN. I, the undersigned authority, do hereby certify that the above NOTICE OF MEETING of the TIRZ #1/Power Center Board is a true and correct copy of said NOTICE, which has been posted on the front OUTDOOR BULLETIN BOARD CABINET FOR AGENDAS of the Terrell City Hall, Terrell, Texas, a place convenient and readily accessible to the General Public and on the website at cityofterrell.org, and which has been continuously posted for a period of seventy- two (72) hours prior to the date and time said meeting was convened. Posted Thursday, June 2, 2023 –5:00 p.m. _______________________________________ Dawn Steil, City Secretary This facility is wheelchair accessible and accessible parking spaces are available. Requests for accommodations or interpretive services must be made 48 hours prior to this meeting. Please contact the City Secretary’s office at 972-551-6600 for further information. Braille is not available. TIRZ #1/Power Center Board Reserves the Right to Adjourn into Executive Session to Seek Legal Counsel on a Matter Which the Canon of Legal Ethics Demands to Preserve the Attorney-Client Privilege Pursuant to Section 551.071(2) of the Texas Government Code. Page 2 of 26 ITEM 4.1. Draft MINUTES TIRZ #1, 2, 3 and 4/Power Center Board Meeting Meeting 8:30 AM - Wednesday, January 4, 2023 City Council Chambers, 201 E. Nash Street, Terrell, TX The City of Terrell Council met in TIRZ #1, 2, 3 and 4/Power Center Board Meeting on Wednesday, January 4, 2023 at 8:30 AM in the City Council Chambers, 201 E. Nash Street, Terrell, TX. MEMBERS Board Member Mike Hunt PRESENT: Chairman Juan Salazar Board Member Charles Whitaker Board Member Donna Anderson MEMBERS Vice-Chairman Terry Barber ABSENT: STAFF PRESENT: City Manager Mike Sims City Secretary Dawn Steil 1 CALL TO ORDER Juan Salazar called the meeting to order. 2 INVOCATION Charles Whitaker gave the invocation. 3 PLEDGE TO AMERICAN FLAG AND TEXAS FLAG. Juan Salazar led the pledge. 4 ADOPTION OF MINUTES a) Discuss and Consider Approval of Minutes from the Tax Increment Reinvestment Zone No. 1, 2, 3 and 4 and Power Center Boards on December 7, 2022. Mike Hunt moved to approve the Minutes from the Tax Increment Reinvestment Zone No. 1, 2, 3 and 4 and Power Center Boards on December 7, 2022, with Donna Anderson seconding the motion. Carried by the following votes: Ayes: Mike Hunt, Juan Salazar, Charles Whitaker, and Donna Anderson 5 NEW BUSINESS a) Discuss Financial Reports. City Manager Mike Sims presented this item to the Board for discussion. TIRZ #1, 2, 3 and 4/Power Center Board Meeting January 4, 2023 Meeting Page Page31ofof26 2 ITEM 4.1. Draft b) Discuss and Consider TIRZ No. 2 Resolution #2023-1 Authorizing Tax Increment Reinvestment Zone No. 2 Funding for Arboretum Estates Public Infrastructure Projects. Donna Anderson moved to approve TIRZ No. 2 Resolution #2023-1 Authorizing Tax Increment Reinvestment Zone No. 2 Funding for Arboretum Estates Public Infrastructure Projects, with Charles Whitaker seconding the motion. Carried by the following votes: Ayes: Mike Hunt, Juan Salazar, Charles Whitaker, and Donna Anderson 6 ADJOURN INTO EXECUTIVE SESSION IN ACCORDANCE WITH SECTION 551 OF THE TEXAS GOVERNMENT CODE TO DISCUSS THE FOLLOWING: Section 551.087 Deliberations Regarding Economic Development Negotiations. 7 RECONVENE INTO REGULAR SESSION AND CONSIDER ACTION, IF ANY, ITEMS DISCUSSED IN EXECUTIVE SESSION. 8 ADJOURN. Chairman Juan Salazar Attest: City Secretary Dawn Steil TIRZ #1, 2, 3 and 4/Power Center Board Meeting January 4, 2023 Meeting Page Page42ofof26 2 ITEM 5.1. City of Terrell Power Center Fund For the Period Ending April 30, 2023 Schedule of Revenues & Expenditures - Budget Vs. Actual (Unaudited) Current Fiscal Year 2022-2023 Apr 2023 Y-T-D Budget Y-T-D Y-T-D Actual Actual 2023 Variance % Budget Revenues Tax Collections - City of Terrell - - 516,528 (516,528) 0% Tax Collections - County - - 346,292 (346,292) 0% Interest income - City of Terrell - 195 750 (555) 26% Total Revenues - 195 863,570 (863,375) 0% Expenditures PC Administrative Costs - - 20,000 (20,000) 0% PC Reimburse Terrell Mkt Ctr - - 106,825 (106,825) 0% PC Reimburse Bucee's - - 79,278 (79,278) 0% PC Reimburse Crossroads - - 587,531 (587,531) 0% Engineering - - 100,000 (100,000) 0% Drainage Landscape Project - - 100,000 (100,000) 0% Total Expenditures - - 993,634 (993,634) 0% Excess/(Deficit) - 195 (130,064) 130,259 Beginning Fund Balance $ 292,390 Page 5 of 26 ITEM 5.1. City of Terrell TIRZ No.1 Increment Financing For the Period Ending April 30, 2023 Schedule of Revenues & Expenditures - Budget Vs. Actual (Unaudited) Current Fiscal Year 2022-2023 Apr 2023 Y-T-D Budget Y-T-D Y-T-D Actual Actual 2023 Variance % Budget Revenues Tax Collections - County - - 480,721 (480,721) 0% Tax Collections - City of Terrell - - 1,761,749 (1,761,749) 0% Interest income - County - 927 750 177 124% Total Revenues - 927 2,243,220 (2,242,293) 0% Expenditures Consultant Fees & Services 5,014 27,454 90,000 (62,546) 31% Senior/Library Assessment - - 120,000 (120,000) 0% TIRZ Administrative Costs 3,613 3,836 60,000 (56,164) 6% TIF Reimburse-Sinacola - - 11,371 (11,371) 0% TIF Reimburse-Baylor - - 87,129 (87,129) 0% TIF Reimburse-Terrell Mkt Ctr - - 87,129 (87,129) 0% TIF Reimbursement-Buc ee's - - 101,737 (101,737) 0% TIF Reimbursement-Crossroads - - 833,441 (833,441) 0% Downtown Project Office - 14,728 250,000 (235,272) 6% Town Square Master Plan 12,300 167,429 270,000 (102,571) 62% Downtown Sidewalk Grant - - 80,000 (80,000) 0% PINA Partnership - 74,700 75,000 (300) 100% BFTS Preconstruction - 31,655 90,000 (58,345) 35% Demolition 14,375 20,175 300,000 (279,825) 7% Drainage Landscape Project - - 100,000 (100,000) 0% Land Acquisition 11,200 24,200 130,000 (105,800) 19% Debt Service 242,329 242,329 346,184 (103,855) 70% Total Expenditures 288,831 606,506 3,031,990 (2,425,484) 20% Excess/(Deficit) (288,831) (605,579) (788,770) 183,191 Beginning Fund Balance $ 1,235,012 Page 6 of 26 ITEM 5.6. TIRZ NO. 2 RESOLUTION NO. 2023-2 A RESOLUTION OF THE TAX INCREMENT REINVESTMENT ZONE NO. 2 BOARD APPROVING A TIRZ AGREEENT WITH MM TERRELL 1098, LLC TO COLLECT TIRZ REVENUES AND DISTRUBUTE FUNDS FOR FINANCING CONSTRUCTION OF PUBLIC INFRASTRUCTURE IN THE PLANNED ABORTEUM ESTATES DEVELOPMENT IN TERRELL, TEXAS; AUTHORIZING THE MAYOR TO EXECUTE THE TIRZ AGREEMENT; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, Tax Increment Reinvestment Zone No. 2 was created on August 23, 2022 and includes the land shown graphically on Exhibit A, Property Description; and WHEREAS, the Tax Increment Reinvestment Zone No. 2 Board desires to promote development in Terrell and Kaufman County for the benefit of its citizens for residential, commercial, industrial and retail purposes; and WHEREAS, the Tax Increment Reinvestment Zone No. 2 Board has determined that a Development Agreement setting forth the terms for annexation, construction of certain public improvements, and the development of the Arboretum Estates property will serve the public purpose of promoting local economic development and enhancing business and commercial activity within the City of Terrell; and WHEREAS, the Tax Increment Reinvestment Zone No. 2 Board, the City of Terrell, Texas, and MM Terrell 1098, LLC, and the City of Terrell mutually desire a Tax Increment Reinvestment Zone (TIRZ) Agreement, attached hereto in concept form as Exhibit B; and WHEREAS, the City Council passed Resolution 2050 in support of this project and the TIRZ Board hereby affirms and supports Resolution 2050; NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF TERRELL, TEXAS THAT: Section I. That the findings and declarations contained in the preamble of this Resolution are incorporated herein as part of this Resolution. Section II. That the City Manager is authorized to negotiate and the Mayor is authorized to sign on behalf of the City and TIRZ No. 2, and the Tax Increment Reinvestment Zone No. 2 Board Chairman is authorized and instructed to execute a TIRZ Agreement among the Tax Increment Reinvestment Zone No. 2 Board and the City of Terrell to facilitate the development of the property as set forth in the Agreement. Section III. The City, in exercising its powers under the TIRZ Act, shall dedicate the following TIRZ#2 revenues actually received by the City and due to be transferred as follows: The Developer has requested that the City provide tax increment revenue generated from the Property within the TIRZ Page 7 of 26 ITEM 5.6. as follows: eighty percent (80%) of the maintenance and operation tax increment on non- residential development based on the City’s tax rate in effect on the date of establishment of the TIRZ for a period of thirty-six (36) years (the “City Participation”), and sixty percent (60%) of the maintenance and operation tax increment on residential development which will be collected by the City in accordance with the applicable TIRZ Project and Finance Plan. Section IV. The Parties further acknowledge that the County will participate in the TIRZ and contribute sixty percent (60%) of its collected maintenance and operation tax increment generated from the Property for a period of thirty-six (36) years, which will be collected by the County in accordance with the applicable TIRZ Project and Finance Plan. Section V. The City is authorized to include the TIRZ Agreement as part of an overall development agreement regarding land uses, annexation, fees, Public Improvement Districts, and other matters under the same terms as Section II, above. Section VI. The TIRZ No. 2 Fund may be utilized to offset PID assessments; however, the Fund may not be directly pledged or create a conveyance, transfer, assignment, mortgage, pledge, grant, or any other encumbrance that results in the City being an “obligated person” within the meaning of Rule 15c2- 12 of the United States Securities and Exchange Commission without the express written consent of the City. Section VII. This Resolution shall be effective immediately after its passage. PASSED AND APPROVED by the Tax Increment Reinvestment Zone No. 2 on this 7th day of June, 2023. ______________________________ Juan Salazar, Chairman ATTEST: __________________________________ Dawn Steil, City Secretary Page 8 of 26 ITEM 5.6. EXHIBIT A REINVESTMENT ZONE NUMBER 2, CITY OF TERRELL, TEXAS TIRZ#2 AGREEMENT This TIRZ#2 Agreement (this "Agreement") is executed between MM Terrell 1098, LLC, a Texas limited liability company (the "Developer"), the City of Terrell (the "City"), a Texas municipal corporation located in the County of Kaufman, Texas, and the Board of Directors of Reinvestment Zone Number 2, City of Terrell, Texas (the "Board"), to be effective ____________, 2023 (the "Effective Date"). The City, the Board, and the Developer are individually referred to as a "Party" and collectively as the "Parties." The City and the Board are collectively referred to as the "Public Parties." ARTICLE I RECITALS WHEREAS, Developer intends to develop or cause to be developed an approximately 1,100-acre parcel of real property in Kaufman County (the "County") that is generally located south of Interstate 20 and both north and south of FM 148, and described by metes and bounds on Exhibit A and depicted on Exhibit B (the "Property"); and WHEREAS, the Property is located within the City's extraterritorial jurisdiction ("ETJ"); and WHEREAS, the City and the Developer intend to enter into a Development Agreement (the "Development Agreement") that provides for annexation of the Property not already in the city limits and the Parties agree that this Agreement shall not take effect until such annexation is completed; and WHEREAS, capitalized terms shall have the meanings given to them in Article 2 of this Agreement, and, if not otherwise defined in Article 2, shall have the meanings given to them in the Agreement; and WHEREAS, unless otherwise specified, all references to "Section" mean a section of this Agreement; and WHEREAS, Tax Reinvestment Zone No. 2, City of Terrell, Texas (the "TIRZ #2") is a tax increment reinvestment zone created by the governing body of the City (the "City Council") by Ordinance No. ____, adopted ___________, 2022; and WHEREAS, in addition to creating the TIRZ#2, Ordinance No. ____City Council has also appointed the Board and has entered into a Participation Agreement with Kaufman County regarding TIRZ #2; and WHEREAS, on ___________, 2023, the Board (i) approved the Final Project Plan and Final Finance Plan for Reinvestment Zone Number 2, City of Terrell, Texas (the "Project and Finance Plans") for the TIRZ#2 and (ii) recommended approval of the Project and Finance Plan to the City Council; and Page 9 of 26 ITEM 5.6. WHEREAS, on __________, 2023, the City Council adopted Ordinance No. _________ approving the Project and Finance Plans; and WHEREAS, Section 311.008 of the Act authorizes the City to enter into agreements necessary to implement the Project and Finance Plans and otherwise achieve the purposes of the Project and Finance Plans; and WHEREAS, the Act authorizes the execution of a "TIRZ#2 Agreement" that the City and the Board determine to be necessary to implement the Project and Finance Plan; and WHEREAS, this Agreement is the "TIRZ#2 Agreement" authorized by the Act; and WHEREAS, the Parties intend that TIRZ#2 revenues will fund costs described in the Project and Finance Plans, including all of the Project Costs and the Rollback Tax Grant; and WHEREAS, the liability of the Public Parties under this Agreement is limited to amounts required to be deposited into the Arboretum Estates Fund; and WHEREAS, the reimbursements provided to the Developer under this Agreement are for the public purposes of: (i) developing and diversifying the economy of the state; (ii) eliminating unemployment and underemployment in the state; (iii) developing and expanding commerce in the state; (iv) stimulating business and commerce within the TIRZ#2; and (v) promoting development and redevelopment within the TIRZ#2; and WHEREAS, the Public Parties have an interest in creating jobs and expanding the tax base which accomplish a public purpose and create a benefit for the public in Kaufman County; and WHEREAS, the Parties acknowledge this Agreement constitutes an "obligation" pursuant to Chapter 311, Texas Tax Code. NOW THEREFORE, for and in consideration of the mutual benefits and promises of the Parties set forth in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are acknowledged and agreed by the Parties, the Parties agree as follows: ARTICLE II OPTION PERIOD The Parties agree that this Agreement shall not take effect until annexation of all portions of the Property not currently in the city limits pursuant to a development agreement is completed. If such annexation is not completed within sixty (60) days of the execution of this Agreement, this Agreement shall be null and void for all purposes and the Public Parties shall have no further obligations. ARTICLE III DEFINITIONS "Act" is defined in the Recitals. Page 10 of 26 ITEM 5.6. "Administrative Costs" means the actual administrative costs, including reasonable charges for the time spent by employees of the City in connection with the creation, management, reporting, compliance, and implementation of the Project and Finance Plans, which shall be limited to no more than $50,000 annually and no less than $25,000 annually. "Agreed Upon Procedures Report" means a report created by or on behalf of the District that confirms Project Costs and District Debt. "Agreement" is defined in the first paragraph hereof. "Assignee" is defined in Section 4.2. "Board" is defined in the first paragraph hereof. "City" means the City of Terrell, Texas, a home-rule municipality of the State of Texas. "City Council" means the governing body of the City. "City Representative" means the City Manager or designee. "County" means Kaufman County, Texas. "County Participation Agreement" means the agreement executed by the City and the County on _____________, 2022, and attached hereto as Exhibit C. "County Tax Increment" is defined and regulated in Article IV. "Developer" means MM Terrell 1098, LLC. "Development Agreement" means that certain Development Agreement relating to the Property that the City and the Developer intend to negotiate to facilitate voluntary annexation. "District" means a Municipal Utility District created consistent with the terms of the Consent Resolution, which District includes all of the Property. "District Debt" means the debt incurred by the District to fund Project Costs. “Arboretum Estates Fund” is defined in Section 4.2. "Effective Date" means the effective date of this Agreement, which is ___________, 2023. "ETJ Property" is defined in the Development Agreement. "Party" is defined in the first paragraph hereof. "Parties" is defined in the first paragraph hereof. "Project Costs" are the Administrative Costs and the actual costs of Public Infrastructure, which include, but are not limited to, all costs the District may reimburse to the Developer. Page 11 of 26 ITEM 5.6. "Project and Finance Plans" means that certain Final Project Plan and Final Finance Plan for Reinvestment Zone Number 2, City of Terrell, approved by the Board on ___________, 2023, and approved by the City Council by Ordinance No. _________, adopted on ___________, 2023. "Property" is defined in Exhibits A and B. "Public Infrastructure" has the meaning stated in Section 4.1. "Public Parties" is defined in the first paragraph hereof. "City Tax Increment" is defined and regulated in Article IV. "Term" means the term of this Agreement, beginning on the Effective Date and continuing for the Term of the TIRZ#2. "Term of the TIRZ#2" is defined in the Development Agreement. "TIRZ#2" means Reinvestment Zone Number 2, City of Terrell, Texas created in accordance with Section 6.1 of the Development Agreement and the Act, by Ordinance No._____ adopted by the City Council on _____________, 2022. "TIRZ#2 Fund" means a tax increment fund created by the City and segregated from all other funds and accounts of the City into which the County Tax Increment and City Tax Increment are deposited. "TIRZ#2 Ordinance" is defined in the Development Agreement. ARTICLE IV SOURCES AND USES OF TIRZ#2 REVENUE Section 4.1. Creation. Pursuant to and in accordance with the TIRZ Act, the City has created Tax Increment Refinance Zone No. 2, which includes both the Property and other land areas not under the ownership of Developer, all such land area being identified in the Participation Agreement. The City has adopted Final Project and Finance Plans, which include revenues and costs related to this Agreement and revenues and costs not related to this Agreement. The Parties agree that costs in the Final Project and Finance Plans related to this Agreement are more generally estimated and shown in concept form on the maps in Exhibit D (“Public Infrastructure Phasing Concepts”) and preliminary cost estimates are provided in Exhibit E (“Current Estimate of Public Infrastructure”). Exhibit D and Exhibit E are subject to change and additional such facilities may be included. All such facilities shown in concept form in Exhibit D, Exhibit E, and all final such facilities approved and accepted for public ownership by the City through the final platting process are collectively referred to as the "Public Infrastructure." However, any Public Infrastructure not eligible under state law for TIRZ#2 reimbursement shall be excluded from the term Public Infrastructure. The Parties further agree that the Development Agreement may be used to exclude certain infrastructure projects from eligibility for TIRZ#2 reimbursement. Section 4.2. TIRZ Fund Accounts. The City shall create multiple subaccounts within the TIRZ#3 Fund (“TIRZ#3 Subaccounts”): one subaccount that corresponds to the Property and Page 12 of 26 ITEM 5.6. other subaccounts that correspond to other land areas within TIRZ#2, in order to identify and allocate the City Tax Increment and County Tax Increment as set forth herein and in the TIRZ#2 Project and Finance Plans. The subaccount attributable to the Property shall be designated the “Arboretum Estates Fund” and shall be further divided between the tax increments collected from the residential and commercial portions of the Property. In accordance with the applicable TIRZ Project and Finance Plan, the tax increment collected from the residential portion of the Property within the TIRZ shall be placed into the “Residential Subaccount” of the Arboretum Estates Fund and the tax increment collected from the nonresidential portion of the Property within the TIRZ shall be placed into the “Commercial Subaccount” of the TIRZ Fund. The monies in the Residential Subaccount of the TIRZ Fund shall be used to offset the Assessments levied upon the residential portion of the Property within the TIRZ on a parcel-by-parcel basis as shown in the Service and Assessment Plan. The monies in the Commercial Subaccount of the TIRZ Fund shall be used to reimburse the Developer for TIRZ Projects. Amounts in each subaccount of the TIRZ fund shall not be comingled and each subaccount of the TIRZ Fund shall be held separate and apart from all other subaccounts of the TIRZ Fund. The specific terms, allocations, and structure shall be more fully described in the TIRZ Project and Finance Plan. Solely at the written request of Developer, and with subsequent approval of the TIRZ#2 Board, additional subaccounts of the Arboretum Estates Fund may be established as needed for administrative or accounting purposes. Section 4.3. Tax Increment Amounts. The City, in exercising its powers under the TIRZ Act, shall dedicate the following TIRZ#2 revenues actually received by the City and due to be transferred as follows: The Developer has requested that the City provide tax increment revenue generated from the Property within the TIRZ as follows: eighty percent (80%) of the maintenance and operation tax increment on non-residential development based on the City’s tax rate in effect on the date of establishment of the TIRZ for a period of thirty-six (36) years (the “City Participation”), and sixty percent (60%) of the maintenance and operation tax increment on residential development which will be collected by the City in accordance with the applicable TIRZ Project and Finance Plan. The Parties acknowledge that the County will participate in the TIRZ and contribute sixty percent (60%) of its collected maintenance and operation tax increment generated from the Property for a period of thirty-six (36) years, which will be collected by the County in accordance with the applicable TIRZ Project and Finance Plan. Section 4.4. Administrative Uses. The Parties agree that the City shall be entitled to the first $120,000.00 from the TIRZ and the first $25,000.00 each year from the TIRZ after the first year. The City shall expend available City Tax Increment and County Tax Increment monies on the Administrative Costs of the Zone prior to the use of any other funds and prior to transferring any funds to any subaccount. These Administrative Cost payments shall be limited to Administrative Costs approved by the TIRZ#2 Board. The Parties agree that Administrative Costs allocated to revenues from the Property shall be limited to no more than fifty thousand dollars ($50,000) annually of the TIRZ#2 revenues generated from the Property. Section 4.5. TIRZ#2 Eligible Costs. Revenue in the TIRZ#2 Fund may fund any cost eligible for funding pursuant to the TIRZ Act other than the EDC Water Improvements, including one hundred percent (100%) of all Public Infrastructure costs the District may reimburse to the Developer. Revenue in the Arboretum Estates Fund may not be pledged for the repayment of District bonds and other obligations. However, revenue in the Arboretum Estates Fund shall be used by the District for the repayment of District bonds and other obligations and to reimburse the Page 13 of 26 ITEM 5.6. Developer for Public Infrastructure costs paid by or at the direction of the Developer. Interest and finance costs of Public Infrastructure accepted by the City Engineer are eligible Project Costs. Section 4.6. TIRZ#2 Fund. Commencing on the Effective Date, continuing for the Term of the TIRZ#2, and after Administrative Costs, the City shall cause to be deposited into the Arboretum Estates Fund: (a) the City Tax Increment; and (b) the County Tax Increment. Funds in the Arboretum Estates Fund attributable to the Property shall be used only to reimburse the Developer or the District, as applicable, for Project Costs of Public Infrastructure that are accepted as complete by the City Engineer. The City, by entering into this Agreement, approves such transfers to the Arboretum Estates Fund and such reimbursement to the Developer or District of Projects Costs of Public Infrastructure that the City Engineer has accepted as complete, and agrees that no additional approvals of such payments are required from the City. However, no such reimbursement payment to Developer or District shall be made by the City without an invoice from the Developer or the District with a complete documentation of applicable Project Costs. Section 4.7. Construction of Public Infrastructure. In conjunction with the development of the Property, the Developer or District, as appropriate, will cause the Public Infrastructure necessary for full development of the Property to be constructed. Prior to construction, the Developer or District shall make, or cause to be made, application for any necessary permits and approvals required by the City to be issued for the construction of the Public Infrastructure. The Developer or District shall require the design, inspection, and supervision of the construction of the Public Infrastructure to be undertaken in accordance with City requirements. Section 4.8. Priority of Payments. The City agrees to pay all Arboretum Estates Subaccount revenue collected within the District on a priority basis to first pay the Administrative Costs, then next to reimburse the Developer for Public Infrastructure costs not eligible for District reimbursement, and then next to the District so that the District may (i) reimburse the Developer from Arboretum Estates Fund revenue for all amounts expended to fund public improvements required for full development of the Property, including all of the Public Infrastructure, the costs of which are not reimbursed from the District's net bond proceeds, but excluding the EDC Water Improvements; and (ii) Arboretum Estates Fund revenue to the repayment of District bonds. No reimbursements shall be made absent the submission of a detailed written invoice by the Developer or District to the City clearly identifying the costs incurred and the resulting priority of payments. Section 4.9. Use of Arboretum Estates Fund. The Arboretum Estates Fund shall only be used to pay Project Costs of Public Infrastructure accepted by the City as complete and owned by the Public in accordance with this Agreement, the Project and Finance Plans, and the Act. After payment of the Administrative Costs, and notwithstanding any other provision of this Article III or the Project and Finance Plans, the initial costs to be paid from the Arboretum Estates Fund revenue generated from the Property will be limited to the Project Costs of City Engineer-accepted Public Infrastructure until such costs are reduced to zero. After such Project Costs are funded, and only if there are sufficient Arboretum Estates Fund revenues remaining after such obligations are satisfied, will such excess Arboretum Estates Fund revenues be paid to satisfy other obligations in the Project and Finance Plans. The City agrees to reimburse either the Developer or the District, at the Developer's option, all revenue in the Arboretum Estates Fund generated from the Property (other than revenue attributable to the Administrative Costs) up to the total costs of the City Engineer-accepted Public Infrastructure for the Term of the TIRZ#2. Page 14 of 26 ITEM 5.6. Section 4.10. TIRZ#2 Ordinance. The TIRZ#2 Ordinance identifies the City's TIRZ#2 participation rate, a portion of which is reserved for municipal services. If the City modifies or revokes any of the District Consents (as defined City Resolution No. 2036), the City's Arboretum Estates Fund contribution will automatically increase, pursuant to the terms of the TIRZ#2 Ordinance, to an amount equal to one hundred percent (100%) of the City ad valorem real property taxes collected by the City from the Property or an equivalent amount from any other legally permitted sources. In addition, if the County lawfully utilizes a provision in the Participation Agreement to reduce or eliminate the County Tax Increment, the City’s Arboretum Estates Fund contribution shall automatically be increased from City property taxes collected from the Property or an equivalent amount from any other legally permitted sources to cover any shortfall resulting from a lower County TIRZ#2 participation rate. Section 4.11. Use of County Tax Increment. The County Tax Increment included in the Arboretum Estates Fund may be used for the repayment of District bonds pursuant to this Agreement. Section 4.12. Obligations Absolute. None of the Public Parties shall take any actions the effect of which would be to reduce or adversely affect the City Tax Increment or the County Tax Increment or otherwise reduce or adversely affect the timely deposit of funds into the Arboretum Estates Fund or payments from the Arboretum Estates Fund pursuant to the terms of this Agreement. The obligation of the Public Parties to use the Arboretum Estates Fund or to make payments, as applicable, as set forth in this Agreement are absolute and unconditional, and the Public Parties shall not suspend or discontinue any deposits into the Arboretum Estates Fund or reimbursements to the Developer or District for City Engineer-accepted Public Infrastructure provided for in this Agreement. Section 4.13. Procedure for Payment. The Developer and the District agree that, each year before receiving the Arboretum Estates Fund payment, they, or one of them, shall provide documentation to the City demonstrating that no Arboretum Estates Fund costs have been reimbursed to the Developer from District bond proceeds. Documentation shall be in the form of an independent accounting firm's "Agreed Upon Procedures Report." The Developer or the District will present to the City Representative not more frequently than monthly invoices evidencing expenditures for Project Costs (including supporting documentation and engineering certifications reasonably requested by the City Representative) or, in the alternative, an Agreed Upon Procedures Report. The City Representative shall review the expenditures or the Agreed Upon Procedures Report and shall approve or deny them on behalf of the Public Parties within forty-five (45) days (which approvals shall not be unreasonably withheld). If the City Representative takes no action within such 45-day period, the invoices shall be deemed approved. Invoices that have been approved by the City Representative or that are deemed approved shall be paid to the Developer or the District exclusively from actual revenues of the Arboretum Estates Fund within twenty (20) days after the end of the next calendar month, provided funds are available in the Arboretum Estates Fund. If no funds are available in the Arboretum Estates Fund to pay approved Project Costs, such costs will accrue until paid on a first-in-first-out basis in accordance with the requirements of Section 4.8, Priority of Payments. The Parties will use all reasonable efforts to resolve disputes within thirty (30) days, after which time the Developer may pursue its remedies under this Agreement. Page 15 of 26 ITEM 5.6. Section 4.14. Records. Each Party shall maintain complete books and records showing its compliance with its obligations, its satisfaction of performance criteria for incentives under this Agreement, which books and records shall be deemed complete if kept in accordance with generally acceptable accounting principles. Such books and records shall be available for examination by the duly authorized officers or agents of the inspecting Party during normal business hours upon request made not less than ten (10) business days prior to the date of such examination. Each Party shall maintain such books and records throughout the term of this Agreement. Upon written request by a Party not more than once per year, the Party in receipt of the request shall give the requesting Party access to all records controlled by, or in the direct or indirect possession of, the Party (other than records subject to legitimate claims of attorney-client privilege) relating to that Party's compliance with performance criteria or obligations and permit the inspecting Party to review such records in connection with conducting a reasonable audit of such conditions. Any discrepancy in grant or reimbursement payments found in the audit shall be submitted to the audited Party for review and each Party shall make appropriate adjustment in incentive payments during the next payment period. Section 4.15. Remaining Balance. Any balance remaining in the Arboretum Estates Fund upon expiration of the Term of the TIRZ#2 that is not otherwise legally committed to Project Costs of City Engineer-accepted Public Infrastructure shall be returned to the City as required by the Act. ARTICLE V MISCELLANEOUS Section 5.1. Term. This Agreement shall expire at the end of the Term of the TIRZ#2. This Agreement may also terminate by mutual written agreement of the Parties or by a full reimbursement of Project Costs of City Engineer-accepted Public Infrastructure and a written statement by the District that no additional Public Infrastructure will be initiated. Section 5.2. Assignment. The Developer has the right, from time to time without the consent of the City, but upon written notice to the City, to assign this Agreement, in whole or in part, including any obligation, right, title, or interest of the Developer under this Agreement, to the following (an "Assignee"): (a) any person or entity that is or will become an owner of or who leases any portion of the Property; (b) any entity that is controlled by or under common control with the Developer; or (c) the District. Each assignment shall be in writing executed by the Developer and the Assignee and shall obligate the Assignee to be bound by this Agreement to the extent this Agreement applies or relates to the obligations, rights, title, or interests being assigned. A copy of each assignment shall be provided to the City within 15 days after execution. From and after such assignment and notwithstanding anything to the contrary in this Agreement, the City agrees to look solely to the Assignee for the performance of all obligations assigned to the Assignee and agrees that the Developer shall be released from subsequently performing the assigned obligations and from any liability that results from the Assignee’s failure to perform the assigned obligations; provided, however, if a copy of the assignment is not received by the City within 15 days after execution, the Developer shall not be released until the City receives such assignment. An Assignee shall be considered the "Developer" and a "Party" for the purposes of this Agreement. Page 16 of 26 ITEM 5.6. Section 5.3. Collateral Assignment. The Developer shall have the right to collaterally assign, pledge, or encumber, in whole or in part, to any lender as security for any loan in connection with development within the Property, all rights, title, and interests of the Developer to receive payments under this Agreement. Such collateral assignments (i) shall not require the consent of the Public Parties, (ii) shall require notice to the Public Parties together with full contact information for such lenders, (iii) shall not create any liability for any lender under this Agreement by reason of such collateral assignment unless the lender agrees, in writing, to be bound by this Agreement; and (iv) may give lenders the right, but not the obligation, to cure any failure of the Developer to perform under this Agreement. No collateral assignment shall relieve the Developer from any obligations or liabilities under this Agreement. Section 5.4. Events of Default. No Party shall be in default under this Agreement until notice of the alleged failure of such Party to perform has been given (which notice shall set forth in reasonable detail the nature of the alleged failure) and until such Party has been given 30 days to perform. If the default cannot reasonably be cured within such 30-day period, and the Party in default has diligently pursued such remedies as shall be reasonably necessary to cure such default, then the non-defaulting Party may, at its sole option, extend the period in which the default must be cured. Section 5.5. REMEDIES. IF A PARTY IS IN DEFAULT, THE AGGRIEVED PARTY'S REMEDIES SHALL BE GOVERNED BY SECTION 9.2 OF THE DEVELOPMENT AGREEMENT. Section 5.6. Notice. Any notice required or permitted to be delivered hereunder shall be deemed received three (3) days thereafter sent by United States Mail, postage prepaid, certified mail, return receipt requested, addressed to the Party at the address set forth below or on the day actually received if sent by courier or otherwise hand delivered: To the City: City of Terrell Attn: City Manager P. O. Box 310 201 E. Nash Street Terrell, Texas 75160 E-mail: mikesims@cityofterrell.org To the Board: Tax Increment Reinvestment Zone Number 2 Attn: Board of Directors P. O. Box 310 201 E. Nash Street Terrell, Texas 75160 E-mail: ________________ With copy to: City Attorney Attn: Mary Gayle Ramsey 201 E. Nash Street Terrell, Texas 75160 E-mail: Page 17 of 26 ITEM 5.6. To the Developer: MM Terrell 1098, LLC Attn: Mehrdad Moayedi E-mail: With a copy to: Attn: Email: Any Party may designate a different address at any time upon written notice to the other Parties. Section 5.7. Governing Law and Venue. This Agreement shall be interpreted and the rights of the Parties hereto determined in accordance with the laws of the State of Texas without regard to the conflicts of laws or principles thereto, and venue shall be in the District Court in Kaufman County, Texas. Section 5.8. Compliance with Laws. The City and Developer shall comply in all material respects with all applicable laws in connection with the development and construction of the Property. Section 5.9. Entire Agreement; Severability. This Agreement and the Development Agreement constitute the entire agreement between the Parties and supersede all prior agreements, whether oral or written, covering the subject matter of this Agreement. This Agreement shall not be modified or amended except in writing signed by the Parties. If any provision of this Agreement is determined by a court of competent jurisdiction to be unenforceable for any reason, then (a) such unenforceable provision shall be deleted from this Agreement; (b) the unenforceable provision shall, to the extent possible, be rewritten to be enforceable and to give effect to the intent of the Parties; and (c) the remainder of this Agreement shall remain in full force and effect and shall be interpreted to give effect to the intent of the Parties. Section 5.10. Amendment. Except as expressly set forth herein, this Agreement may not be amended or terminated without the written consent of the Parties hereto. Section 5.11. Waiver. No term or condition of this Agreement shall be deemed to have been waived, nor has there been any estoppel to enforce any provision of this Agreement, except by written instrument of the Party charged with such waiver or estoppel. Section 5.12. Third-Party Beneficiaries. The District is a third party beneficiary of this Agreement. With the exception of the District, the Parties hereto intend that this Agreement shall not benefit or create any right or cause of action in or on behalf of any third-party beneficiary, or any individual other than the Parties hereto and their permitted assigns. Page 18 of 26 ITEM 5.6. Section 5.13. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. Section 5.14. Headings. The headings of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. Section 5.15. Draftsmanship and Interpretation. This Agreement shall be deemed drafted equally by all Parties hereto. The language of all parts of this Agreement shall be construed as a whole according to its fair meaning, and any presumption or principle that the language herein is to be construed against any Party shall not apply. In the event of a dispute or disagreement arising under this Agreement, this Agreement shall be interpreted in accordance with its fair meaning and shall not be interpreted for or against any party on the ground that such party drafted or caused to be drafted this Agreement. Section 5.16. Conflicts. To the extent there is a conflict between the terms of this Agreement and the TIRZ#2 Ordinance, the terms of the TIRZ#2 Ordinance shall control. Section 5.17. Employment of Undocumented Workers. To the extent this Agreement constitutes an incentive, during the term of this Agreement, the Developer agrees not to knowingly employ any undocumented workers and, if convicted of a violation under 8 U.S.C. Section 1324a(f), the Developer shall repay the incentives granted herein within 120 days after the date the Developer is notified by the City of such violation, plus interest at the rate of six percent (6%) compounded annually from the date of violation until paid. Pursuant to Section 2264.101(c), Texas Government Code, a business is not liable for a violation of Chapter 2264 by a subsidiary, affiliate, or franchisee of the business, or by a person with whom the business contracts. Section 5.18. No Boycott of Israel. To the extent this Agreement constitutes a contract for goods or services for which a written verification is required under Section 2271.002, Texas Government Code, the Developer hereby verifies that it and its parent company, wholly- or majority-owned subsidiaries, and other affiliates, if any, do not boycott Israel and will not boycott Israel during the term of this Agreement. The foregoing verification is made solely to enable compliance with such Section and to the extent such Section does not contravene applicable Federal or Texas law. As used in the foregoing verification, ‘boycott Israel,’ a term defined in Section 2271.001, Texas Government Code, by reference to Section 808.001(1), Texas Government Code, means refusing to deal with, terminating business activities with, or otherwise taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations specifically with Israel, or with a person or entity doing business in Israel or in an Israeli- controlled territory, but does not include an action made for ordinary business purposes. Section 5.19. Iran, Sudan and Foreign Terrorist Organizations. The Developer represents that neither it nor any of its parent company, wholly- or majority-owned subsidiaries, and other affiliates is a company identified on a list prepared and maintained by the Texas Comptroller of Public Accounts under Section 2252.153 or Section 2270.0201, Texas Government Code, and posted on any of the following pages of such officer's internet website: Page 19 of 26 ITEM 5.6. https://comptroller.texas.gov/purchasing/docs/sudan-list.pdf, https://comptroller.texas.gov/purchasing/docs/iran-list.pdf, or https://comptroller.texas.gov/purchasing/docs/fto-list.pdf. The foregoing representation is made solely enable the City to comply with Section 2252.152, Texas Government Code, and to the extent such Section does not contravene applicable Federal law and excludes the Developer and each of its parent company, wholly- or majority-owned subsidiaries, and other affiliates, if any, that the United States government has affirmatively declared to be excluded from its federal sanctions regime relating to Sudan or Iran or any federal sanctions regime relating to a foreign terrorist organization. Section 5.20. No Discrimination Against Fossil Fuel Companies. To the extent this Agreement constitutes a contract for goods or services for which a written verification is required under Section 2274.002 (as added by Senate Bill 13 in the 87th Texas Legislature, Regular Session), Texas Government Code, as amended, the Developer hereby verifies that it and its parent company, wholly- or majority-owned subsidiaries, and other affiliates, if any, do not boycott energy companies and will not boycott energy companies during the term of this Agreement. The foregoing verification is made solely to enable the City to comply with such Section and to the extent such Section does not contravene applicable Federal or Texas law. As used in the foregoing verification, "boycott energy companies," a term defined in Section 2274.001(1), Texas Government Code (as enacted by such Senate Bill) by reference to Section 809.001, Texas Government Code (also as enacted by such Senate Bill), shall mean, without an ordinary business purpose, refusing to deal with, terminating business activities with, or otherwise taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations with a company because the company (A) engages in the exploration, production, utilization, transportation, sale, or manufacturing of fossil fuel-based energy and does not commit or pledge to meet environmental standards beyond applicable federal and state law; or (B) does business with a company described by (A) above. Section 5.21. No Discrimination Against Firearm Entities and Firearm Trade Associations. To the extent this Agreement constitutes a contract for goods or services for which a written verification is required under Section 2274.002 (as added by Senate Bill 19 in the 87th Texas Legislature, Regular Session), Texas Government Code, as amended, the Developer hereby verifies that it and its parent company, wholly- or majority-owned subsidiaries, and other affiliates, if any, do not have a practice, policy, guidance, or directive that discriminates against a firearm entity or firearm trade association and will not discriminate against a firearm entity or firearm trade association during the term of this Agreement. The foregoing verification is made solely to enable the City to comply with such Section and to the extent such Section does not contravene applicable Federal or Texas law. As used in the foregoing verification and the following definitions (a) ‘discriminate against a firearm entity or firearm trade association,’ a term defined in Section 2274.001(3), Texas Government Code (as enacted by such Senate Bill), (A) means, with respect to the firearm entity or firearm trade association, to (i) refuse to engage in the trade of any goods or services with the firearm entity or firearm trade association based solely on its status as a firearm entity or firearm trade association, (ii) refrain from continuing an existing business relationship with the firearm entity or firearm trade association based solely on its status as a firearm Page 20 of 26 ITEM 5.6. entity or firearm trade association, or (iii) terminate an existing business relationship with the firearm entity or firearm trade association based solely on its status as a firearm entity or firearm trade association and (B) does not include (i) the established policies of a merchant, retail seller, or platform that restrict or prohibit the listing or selling of ammunition, firearms, or firearm accessories and (ii) a company’s refusal to engage in the trade of any goods or services, decision to refrain from continuing an existing business relationship, or decision to terminate an existing business relationship (aa) to comply with federal, state, or local law, policy, or regulations or a directive by a regulatory agency or (bb) for any traditional business reason that is specific to the customer or potential customer and not based solely on an entity’s or association’s status as a firearm entity or firearm trade association; (b) ‘firearm entity,’ a term defined in Section 2274.001(6), Texas Government Code (as enacted by such Senate Bill), means a manufacturer, distributor, wholesaler, supplier, or retailer of firearms (defined in Section 2274.001(4), Texas Government Code, as enacted by such Senate Bill, as weapons that expel projectiles by the action of explosive or expanding gases), firearm accessories (defined in Section 2274.001(5), Texas Government Code, as enacted by such Senate Bill, as devices specifically designed or adapted to enable an individual to wear, carry, store, or mount a firearm on the individual or on a conveyance and items used in conjunction with or mounted on a firearm that are not essential to the basic function of the firearm, including detachable firearm magazines), or ammunition (defined in Section 2274.001(1), Texas Government Code, as enacted by such Senate Bill, as a loaded cartridge case, primer, bullet, or propellant powder with or without a projectile) or a sport shooting range (defined in Section 250.001, Texas Local Government Code, as a business establishment, private club, or association that operates an area for the discharge or other use of firearms for silhouette, skeet, trap, black powder, target, self-defense, or similar recreational shooting); and (c) ‘firearm trade association,’ a term defined in Section 2274.001(7), Texas Government Code (as enacted by such Senate Bill), means any person, corporation, unincorporated association, federation, business league, or business organization that (i) is not organized or operated for profit (and none of the net earnings of which inures to the benefit of any private shareholder or individual), (ii) has two or more firearm entities as members, and (iii) is exempt from federal income taxation under Section 501(a), Internal Revenue Code of 1986, as an organization described by Section 501(c) of that code." Section 5.22. Form 1295. Submitted herewith is a completed Form 1295 generated by the Texas Ethics Commission's (the "TEC") electronic filing application in accordance with the provisions of Section 2252.908 of the Texas Government Code and the rules promulgated by the TEC (the "Form 1295"). The City hereby confirms receipt of the Form 1295 from the Developer, and the City agrees to acknowledge such form with the TEC through its electronic filing application not later than the 30th day after the receipt of such form. The Parties understand and agree that, with the exception of information identifying the City and the contract identification number, neither the City nor its consultants are responsible for the information contained in the Page 21 of 26 ITEM 5.6. Form 1295; that the information contained in the Form 1295 has been provided solely by the Developer; and, neither the City nor its consultants have verified such information. Exhibits to the TIRZ #2 Agreement regarding Arboretum Estates Exhibit A Legal Description Exhibit B Map of Property Exhibit C Participation Agreement Exhibit D Public Infrastructure Phasing Concepts Exhibit E Current Estimate of Public Infrastructure [SIGNATURE PAGES FOLLOW] Page 22 of 26 ITEM 5.6. EXECUTED this ______ day of ___________________, 2023. ATTEST: CITY OF TERRELL, TEXAS By:_________________________________ Name:_____________________________ Name:______________________________ Title: City Secretary Title:_______________________________ Date:_______________________________ APPROVED AS TO FORM AND LEGALITY: Name:_____________________________ Mary Gayle Ramsey, City Attorney Page 23 of 26 ITEM 5.6. REINVESTMENT ZONE NUMBER 2, CITY OF TERRELL, TEXAS By:___________________________ ____________________, Board Chairman STATE OF TEXAS § § COUNTY OF _________________ § This instrument was acknowledged before me on this ____ day of ____________, 2023 by __________________________, the Board Chairman of the Reinvestment Zone Number 2, City of Terrell, Texas, on behalf of said entity. _______________________________________ Notary Public - State of Texas Page 24 of 26 ITEM 5.6. DEVELOPER: MM Terrell 1098, LLC a Texas limited liability company By: MM Terrell 1098, LLC its Manager By:___________________________________ Name: ________________________________ Title: _________________________________ Date: _________________________________ STATE OF TEXAS § § COUNTY OF _________________ § This instrument was acknowledged before me on this ____ day of ____________, 2023 by __________________________, the _______________ of MM Terrell 1098, LLC, a Texas limited liability company, on behalf of such limited liability company. _______________________________________ Notary Public - State of Texas [SEAL] Page 25 of 26 ITEM 5.6. EXHIBIT B: SITE PLAN Page 26 of 26