HomeMy WebLinkAboutJanuary 11, 2011 AgendaAGENDA
CITY OF DENTON CITY COUNCIL
January 11, 2011
After determining that a quorum is present, the City Council of the City of Denton, Texas will
convene in Special Called Session on Tuesday, January 11, 2011 at 4:00 p.m. in the City Council
Chambers at City Hall, 215 E. McKinney Street, Denton, Texas.
1. Proclamation for Guyer High School football team
2. Proclamation for Ryan High School football team
Following the completion of the Special Called Session, the City Council of the City of Denton,
Texas will convene in 2" d Tuesday Session in the City Council Work Session Room at which the
following items will be considered:
NOTE: A 2" d Tuesday Session is used to explore matters of interest to one or more City Council
Members or the City Manager for the purpose of giving staff direction into whether or not such
matters should be placed on a future regular or special meeting of the Council for citizen input,
City Council deliberation and formal City action. At a 2" d Tuesday Session, the City Council
generally receives informal and preliminary reports and information from City staff, officials,
members of City committees, and the individual or organization proposing council action, if
invited by City Council or City Manager to participate in the session. Participation by
individuals and members of organizations invited to speak ceases when the Mayor announces the
session is being closed to public input. Although 2" d Tuesday Sessions are public meetings, and
citizens have a legal right to attend, they are not public hearings, so citizens are not allowed to
participate in the session unless invited to do so by the Mayor. Any citizen may supply to the
City Council, prior to the beginning of the session, a written report regarding the citizen's
opinion on the matter being explored. Should the Council direct the matter be placed on a
regular meeting agenda, the staff will generally prepare a final report defining the proposed
action, which will be made available to all citizens prior to the regular meeting at which citizen
input is sought. The purpose of this procedure is to allow citizens attending the regular meeting
the opportunity to hear the views of their fellow citizens without having to attend two meetings.
1. Receive a briefing and hold a discussion regarding the annexation procedures in
accordance with Texas Local Government Code. The briefing and discussion will
including: (1) the requirements of a 3-year Annexation Plan; (2) the provision of
municipal services; and (3) the provision of non-annexation development agreement for
property appraised for ad valorem tax purposes as land for agricultural, timber land or
wildlife management.
The proposed annexation consists of three (3) distinct areas under multiple ownerships
and of an approximate total of 1,595 acres. The 3 areas are identified and generally
located as follows:
1. DH-7: 143 acres, located east and north of Teasley Lane, south of Teasley
Harbor Subdivision and west of Southlake Drive;
2. DH-9: 298 acres, located north of Pockris Page Road, north, south and northeast
of Edwards Road; and
3. DH-12: 1,154 acres, located south of E. University Drive, east of N. Mayhill
Road, north and south of Blagg Road, north and south of Mills Road, east and
west of S. Trinity Road.
City of Denton City Council Agenda
January 11, 2011
Page 2
2. Receive a report, hold a discussion and give staff direction regarding a proposed lease of
property located on the Denton Municipal Airport, specifically the area northeast of the
Airport Terminal parking lot and the lease of said property to NE Interests, Ltd. for the
constriction and operation of a restaurant.
Following the completion of the 2" d Tuesday Session, the City Council will convene in a Closed
Meeting to consider specific items when these items are listed below under the Closed Meeting
section of this agenda. The City Council reserves the right to adjourn into a Closed Meeting on
any item on its Open Meeting agenda consistent with Chapter 551 of the TEXAS
GOVERNMENT CODE, as amended, as set forth below.
CLOSED MEETING
1. Closed Meeting:
A. Consultation with Attorney - Under Texas Government Code Section 551.071.
1. Consult with City's attorneys regarding legal issues associated with the
proposed annexation of three areas previously identified in the City's most
recent Growth Management Plan as areas DH-7, DH-9, and DH-12,
generally described and located as follows:
1. DH-7: 143 acres, located east and north of Teasley Lane, south of
Teasley Harbor Subdivision and west of Southlake Drive;
2. DH-9: 298 acres, located north of Pockris Page Road, north,
south and northeast of Edwards Road; and
3. DH-12: 1,154 acres, located south of E. University Drive, east of
N. Mayhill Road, north and south of Blagg Road, north and south
of Mills Road, east and west of S. Trinity Road.
2. Consult with City's attorneys regarding legal issues associated with the
referendum petition to repeal Ordinance No. 2010-292.
B. Deliberations Regarding Real Property - Under Texas Government Code Section
551.072; Deliberations regarding Economic Development Negotiations - Under
Texas Government Code Section 551.087, and Consultation with Attorney -
Under Texas Government Code Section 551.071.
1. Receive a report, hold a discussion and give staff direction regarding the
value of real property located on the Denton Municipal Airport,
specifically the area northeast of the Airport Terminal parking lot and the
lease of said real property to NE Interests, Ltd. for the constriction and
operation of a restaurant where deliberation in an open meeting would
have a detrimental effect on the position of the City of Denton in
negotiations with a third person.
Following the completion of the Closed Meeting, the Council will convene in a Special Called
Session to consider the following:
City of Denton City Council Agenda
January 11, 2011
Page 3
1. Consider adoption of an ordinance approving a Commercial Operator Airport Lease
Agreement between the City of Denton, Texas and NE Development and Constriction at
the Denton Municipal Airport for lease of property on which to build and operate a
restaurant; and providing an effective date. The Airport Advisory Board recommends
approval (5-0).
2. Consider adoption of an ordinance establishing an economic development program under
Chapter 380 of the Local Government Code for making grants of public money to
promote economic development and to stimulate business activity in the City of Denton;
approving an economic development program grant agreement with NE Interests, Ltd.
regarding the constriction of a restaurant at the Denton Municipal Airport in the City of
Denton, Texas; authorizing the expenditure of funds therefor; and providing an effective
date. The Airport Advisory Board recommends approval (5-0).
CERTIFICATE
I certify that the above notice of meeting was posted on the bulletin board at the City Hall of the
City of Denton, Texas, on the day of 2011 at o'clock
(a.m.) (p.m.)
CITY SECRETARY
NOTE: THE CITY OF DENTON CITY COUNCIL WORK SESSION ROOM IS
ACCESSIBLE IN ACCORDANCE WITH THE AMERICANS WITH DISABILITIES ACT.
THE CITY WILL PROVIDE SIGN LANGUAGE INTERPRETERS FOR THE HEARING
IMPAIRED IF REQUESTED AT LEAST 48 HOURS IN ADVANCE OF THE SCHEDULED
MEETING. PLEASE CALL THE CITY SECRETARY'S OFFICE AT 349-8309 OR USE
TELECOMMUNICATIONS DEVICES FOR THE DEAF (TDD) BY CALLING 1-800-
RELAY-TX SO THAT A SIGN LANGUAGE INTERPRETER CAN BE SCHEDULED
THROUGH THE CITY SECRETARY'S OFFICE.
AGENDA INFORMATION SHEET
AGENDA DATE: January 11, 2011
DEPARTMENT: Planning and Development
ACM: Fred Greener,
SUBJECT - Municipal Annexation Plan - Three-Year Annexation Plan
Receive a briefing and hold a discussion regarding the annexation procedures in accordance with
Texas Local Government Code. The briefing and discussion will include: (1) the requirements
of a 3-year Annexation Plan; (2) the provision of municipal services; and (3) the provision of
non-annexation development agreements for properties appraised for ad valorem tax purposes as
land for agricultural, timber land or wildlife management.
The proposed annexation consists of three (3) distinct areas under multiple ownerships and of an
approximate total of 1,595 acres. The 3 areas are identified and generally located as follows:
1. DH-7: 143 acres, located east and north of Teasley Lane, south of Teasley Harbor
Subdivision and west of Southlake Drive;
2. DH-9: 298 acres, located north of Pockrus Page Road, north, south and northeast of
Edwards Road; and
DH-12: 1,154 acres, located south of E. University Drive, east of N. Mayhill Road, north
and south of Blagg Road, north and south of Mills Road, east and west of S. Trinity
Road.
BACKGROUND
In 2009, via several City Council work sessions, staff recommended the annexation of eighteen
(18) areas totaling approximately 9,035 acres of land within the City of Denton's Extra
Territorial Jurisdiction (ETJ). Of the 18 areas identified, all but three (3) areas were exempted
from the 3-year annexation plan requirement under Section 43.052 of the Texas Local
Government Code (Tx. LGC). The fifteen (15) areas that were exempted from the requirement
of the 3-year annexation plan were annexed on May 4, 2010, save and except all properties that
qualified for Non-Annexation Agreements (NAA) due to them being appraised for ad valorem
tax purposes as land for agricultural use, timber land or wildlife management. Owners of these
qualified properties were offered, and most accepted a 5-Year NAA. These NAAs are governed
under Section 212.172 of the Tx. LGC.
The properties that were identified for annexation and are not exempted from the 3-year
annexation plan requirement under Section 43.052 of the Tx. LGC are located within three (3)
distinct areas of the City's ETJ, are under multiple ownerships and are of an approximate total of
1,595 acres. The 3 areas are identified in Exhibits 1-4, and are generally located as follows:
1. DH-7: 143 acres, located east and north of Teasley Lane, south of Teasley Harbor
Subdivision and west of Southlake Drive;
2. DH-9: 298 acres, located north of Pockris Page Road, north, south and northeast of
Edwards Road; and
DH-12: 1,154 acres, located south of E. University Drive, east of N. Mayhill Road, north
and south of Blagg Road, north and south of Mills Road, east and west of S. Trinity
Road.
ANNEXATION PROCEDURE UNDER TEXAS LOCAL GOVERNMENT CODE
Tx LGC §43.052 establishes the standards by which municipalities must abide with regards to
annexation. The following is a description of the steps that must be followed during the
annexation procedure.
Adoption of an Annexation Plan:
Per Tx LGC §43.052, a home-rile municipality such as the City of Denton (the City) must adopt
an Annexation Plan. The Annexation Plan must identify all areas proposed for annexation and
annexation of the area may not occur prior to the 3rd anniversary of the date the plan is adopted
or amended. Id. at §43.052(c). The "three-year waiting period" is a misnomer, because the City
must begin notice, hearing and negotiation procedures almost immediately after placing an area
in the Annexation Plan.
Amendments to the Annexation Plan:
The City may add an area or areas to the Annexation Plan at any time. However, the area(s) may
not be annexed until on or after the third (3rd) anniversary of the date the Annexation Plan was
amended. Id. at Tx.LGC §43.052(c). The City may also amend the Annexation Plan to remove
an area proposed for annexation; however, if the area is removed before the 18th month after the
month the area is included in the Annexation Plan, the City may not amend the Annexation Plan
to include the affected area until one (1) year has passed since the area was removed from the
Annexation Plan. Additionally, if the area is removed from the Annexation Plan during or after
the 18th month after the month the area is included in the Annexation Plan, the City may not
amend the Annexation Plan again to include the area until the second (2" d) anniversary of the
date the City amended the Annexation Plan to remove the area. Id at Tx.LGC §43.052(c)
Annexation Completion Deadlines and Restrictions:
The annexation of the areas identified in the Annexation Plan must be completed before the 31st
day after the third (3rd) anniversary of the date the area was included in the annexation plan. If
the annexation is not completed within the prescribed period, the City may not annex the areas
proposed for annexation before the fifth (5th) anniversary of the last day for completing the
annexation.
Written Notice and Internet Posting Requirement:
Written Notice Requirement:
Prior to the 90th day after the date the City adopts or amends the Annexation Plan, the City shall
give written notice to (1) each property owner in the affected area, as indicated by the appraisal
Page - 2
records furnished by the appraisal district for each county in which the affected area is located:
(2) each public entity, as defined by Tx.LGC §43.053, or private entity that provides services in
the area proposed for annexation; and (3) each railroad company that serves the municipality and
is on the municipality's tax roll if the company's right-of-way is in the area proposed for
annexation. The notice shall state that the area has been included in or removed from the
municipality's annexation plan.
A "public entity" includes a municipality, county, fire protection service provider, including a
volunteer fire department, emergency medical services provider, including a volunteer
emergency medical services provider, or a special district, as that term is defined by Tx.LGC
§43.052. Id. at Tx.LGC 43.033(a).
The City must also provide the written notice to all school districts located in an area to be
annexed within the period prescribed for publishing of the first public hearing. The notice must
include any financial impact on the district that may result from the annexation and the city's
proposal to limit the effects of that financial impact. (Id. at Tx.LG( 13.905)
Internet Posting Requirement:
In addition to the above written notice requirement, since the City has an internet website, the
City is required to: (1) post and maintain the posting of the Annexation Plan on the city's
Internet website; (2) post and maintain the posting of any amendments to include all areas in the
Annexation Plan until the date the areas are annexed; and (3) post and maintain the posting of
any amendments to remove any areas from the Annexation Plan until the date the City may again
include the area in the Annexation Plan.
Inventory of Services and Facilities - Tx.LGC § 43.053:
Prepare an Inventory of Services and Facilities:
Per Tx.LGC §43.053, the City of Denton must compile a comprehensive Inventory of Services
and Facilities (ISF) provided by public and private entities, directly or by contract, in each area
proposed for annexation, after adopting or amending the Annexation Plan. The ISF must include
all services and facilities the City is required to provide or maintain following the annexation.
This ISF must be completed, and made available for public inspection, on or before the 60th day
after the date the City receives the required information from service providers in the area. Id. at
Tx.LGC 43.033(g).
To accomplish this task, the City is required to request, in the notice required under Tx.LGC §
43.05.(1), the information necessary to complete the inventory from all public and private
providers. Additionally, the public and private providers are required to provide the information
requested by the City within 90 days of receipt of the request; however, the service provider and
the City may agree to extend the period for providing the information. Should a provider fail to
provide the necessary information within the 90 day period, the City is not required to include
the information in the inventory. Id. at Tx.LGC §43.053(c). The City may monitor the services
provided and verify the information provided. Id. at Tx.LGC § l3.053(h).
Page - 3
Information required to be Included in the Inventory of Services:
The information required in the ISF shall be based on the services and facilities provided during
the year preceding the date the City adopts the Annexation Plan or amended the Annexation Plan
to include additional areas.
Per Tx.LGC 43.053(e), the information required to be provided by service providers, and
included in the ISF must include the type of service provided, the method of service delivery,
and the following information:
(e) For utility facilities, roads, drainage strictures and other infrastructure provided or
maintained by public or private entities, the inventory must include:
(1) an engineer's report that describes the physical condition of all infrastructure
elements in the area; and
(2) a summary of capital, operational and maintenance expenditures for that
infrastructure.
(f) For police, fire and emergency medical services provided by public or private entities, the
inventory must include:
(1) the average dispatch and delivery time;
(2) a schedule of equipment including vehicles;
(3) a staffing schedule that discloses the certification and training levels of personnel;
and
(4) a summary of operating and capital expenditures. Tx.LGC § 43.053(c),(e) and (f).
Prepare a Service Plan:
Tx.LGC § 43.056 sets forth the requirements relative to scheduling for the provision of
municipal services. The City must complete a Service Plan for the areas included in the
Annexation Plan before the first (1s) day of the 10th month after the month in which the ISF is
completed. Id. at §43.056(a). Tx.LGC §43.056(c) defines "full municipal services" as "services
provided by the annexing municipality within its full-purpose boundaries, including water and
wastewater services and excluding gas or electrical service."
Immediate Services:
The City is required to provide the following services on the effective date of the annexation:
(1) police protection;
(2) fire protection;
(3) emergency medical services;
(4) solid waste collection, except as provided by subsection (o). Subsection (o) provides that
a municipality is not required to provide collection service to a person who continues to
use the collection services of a privately owned collection service;
Page - 4
(5) operation and maintenance of water and wastewater facilities in the annexed area that are
not within the service area of another water or wastewater utility;
(6) operation and maintenance of roads and streets, including road and street lighting;
(7) operation and maintenance of parks; and
(8) operation and maintenance of any other publicly owned facility, building or service.
Level of Services:
The Service Plan may not provide for services in the annexed area that would reduce the level of
fire, police and emergency medical services within the city. Id. at Tx.LGC § 13.056(t)(3).
Second, the service plan must provide the area with a level of services comparable to or superior
to the level of services available in other parts of the City with land-uses and population densities
similar to those reasonably contemplated or projected in the area; however, if the area had a level
of services equal to the services provided within the corporate boundaries of the City the Service
Plan must maintain that same level of services. Finally, if the annexed area had a level of
services for maintaining the infrastructure of the area superior to the level of services provided
within the City, the Service Plan must maintain the infrastructure of the annexed area at a level
of services that is equal or superior to the level of services previously enjoyed in the annexed
area. Id. at Tx.LGC § 13.056(g).
Timing of Extending Utilities:
Tx.LGC §43.056 does not require that the City provide a "uniform level of full municipal
services" to each area of the municipality if different characteristics of topography, land use and
population density constitute a sufficient basis for providing different levels of service. Id. at
13.056(m). The analogous subsection in the prior law was the basis of a Texas Attorney
General's Opinion, which stated that differences in the levels of services provided in annexed
areas and existing areas of the city must be based on differences in topography, land use, and
population density. Please see Exhibit 5.
It is apparent that a city is not required to extend its services to a newly annexed territory prior to
the extension of services to like areas within the City; however, to the extent that services in the
annexed area are equal to or superior to those provided in the City boundaries (Id. at §43.056(g))
applies and the City must maintain that level of services.
Length of Validity of Service Plan:
A Service Plan is effective for ten (10) years. A person residing or owning land in an annexed
area in a municipality with a population of less than 1.6 million such as the City of Denton, may
enforce the Service Plan by applying for a writ of mandamus no later than the second (2"`)
anniversary of the date the person knew or should have known the municipality was not
complying with the Service Plan. Upon application for a writ of mandamus, the City has the
burden of proving the services have been provided in accordance with the Service Plan. Id. at
Tx.LGC §43.036(1).
Page - 5
Negotiations for Services:
After conducting the public hearings required by Section 43.0561, the City and the property
owners of the area proposed for annexation shall negotiate for the provision of services to the
area after annexation or for the provision of services to the area in lieu of annexation. For
purposes of these negotiations, the Commissioner's Court of Denton County shall select five (5)
representatives to negotiate with the City. Id at Tx.LGC §43.0562(a) (1) & (b).
Arbitration:
Per Tx.LGC §43.0564, if the City and the representatives of the area proposed for annexation
cannot reach an agreement for the provision of services, either party by majority decision of the
party's representatives may request the appointment of an arbitrator to resolve the service plan
issues in dispute. The request must be made in writing to the other party before the 60th day after
the date the service plan is completed. The municipality may not annex the area during the
pendency of the arbitration proceeding or an appeal from the arbitrator's decision.
If the parties cannot agree on the appointment of an arbitrator before the 11th business day after
the date arbitration is requested, the Mayor of the City of Denton shall immediately request a list
of seven (7) neutral arbitrators from the American Arbitration Association or the Federal
Mediation and Conciliation Service. If the parties cannot agree on the appointment of an
arbitrator from this list before the 11th business day after the date the list is provided to the
parties, each party or the party's designee may alternately strike a name from the list. The
remaining person on the list shall be appointed as the arbitrator.
The arbitrator shall set a hearing to be held not later than the 10th day after the date he or she is
appointed, and shall notify the parties to the arbitration in writing of the time and place of the
hearing not later than the 8th day before the date of the hearing.
The authority of the arbitrator is limited to issuing a decision relating only to the service plan
issues in dispute. The arbitrator may: (1) receive in evidence any documentary evidence or other
information the arbitrator considers relevant; (2) administer oaths; and (3) issue subpoenas to
require:
1. the attendance and testimony of witnesses; and
2. the production of books, records, and other evidence relevant to an issue presented to the
arbitrator for determination.
Unless the parties to the dispute agree otherwise, the arbitrator shall complete the hearing within
two (2) consecutive days. The arbitrator shall permit each party one (1) day to present evidence
and other information. The arbitrator, for good cause shown, may schedule an additional hearing
to be held not later than the seventh day after the date of the first hearing. Unless otherwise
agreed to by the parties, the arbitrator must issue a decision in writing and deliver a copy of the
decision to the parties not later than the 14th day after the date of the final hearing.
If the City does not agree with the terms of the arbitrator's decision, the City may not annex the
area proposed for annexation before the fifth (5th) anniversary of the date of the arbitrator's
decision.
Page - 6
Except as provided by the Tx LGC, the City shall pay the cost of arbitration. If the arbitrator
finds that the request for arbitration submitted by the representatives of the area proposed for
annexation was groundless or requested in bad faith or for the purposes of harassment, the
arbitrator may require the area proposed for annexation to pay all or part of the cost of
arbitration.
Annexation of Area Qualified for Agricultural Use:
Per Tx LGC §43.035, a municipality is prohibited from annexing land that is appraised for ad
valorem tax purposes as land for agricultural use under Chapter 23 of the Texas Tax Code unless
the municipality offers to make a fifteen (15) year development agreement with the landowner
under Tx LGC §212.172 of the Texas Local Government Code and the landowner refuses. The
proffered development agreement may not exceed forty-five (45) years, and must guarantee the
continuation of the ETJ status of the qualifying area and authorize the enforcement of all
regulations and planning authority of the municipality that do not interfere with the use of the
area for agriculture. Id. at §43.035(b).
The development agreement restricting the municipality's right to annex all or part of the
property is void if the landowner files any type of subdivision plat or related development
document for the area regardless of how the area is appraised for ad valorem tax purposes, and
that such a development agreement is not a permit under the Vested Rights Act. Id. at
43.033(d) and (3).
Prepared by:
l~~faCw-E--
Mark A. Cunningham, AICP
Director, Planning and Development Division
Respectfully submitted:
Fred Greene
Assistant City Manager
Page - 7
ATTACHMENTS:
1. Exhibit 1 - Comprehensive Map of Annexation Areas;
2. Exhibit 2 - Map of Annexation Area - DH-7;
3. Exhibit 3 - Map of Annexation Area - DH-9;
4. Exhibit 4 - Map of Annexation Area - DH-12;
5. Exhibit 5 - Texas Attorney General's Opinion;
6. Exhibit 6 - Matrix of 3-Year Annexation Process Summary;
7. Exhibit 7 - 3-Year Annexation Schedule; and
8. Exhibit 8 - Service Plan
9. Appendix 1 - Tx.LGC § 43.035 - Development Agreement for Agricultural Uses;
10. Appendix 2 - Tx.LGC § 212.172 - Development Agreement;
11. Appendix 3 - Tx.LGC § 43.052 - Annexation Plan;
12. Appendix 4 - Tx.LGC § 43.053 - Inventory of Services and Facilities;
13. Appendix 5 - Tx.LGC § 43.056 - Provision of Services (Service Plan);
14. Appendix 6 - Tx.LGC § 43.0562 - Negotiations; and,
15. Appendix 7 - Tx.LGC § 43.0564 - Arbitration Regarding Negotiation for Services;
Page - 9
EXHIBIT 1
Comprehensive Annexation Area Map
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EXHIBIT 2
Proposed Annexation Area DH-7
DH-7 encompasses approximately 143 acres and is bounded on the north, west and south by
current city limits. It is located on the east and north sides of Teasley Lane, south of Teasley
Harbor Subdivision and west of Southlake Drive. This area is outlined in yellow on the aerial
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EXHIBIT 3
Proposed Annexation Area DH-9
DH-9 encompasses approximately 298 acres of land and is bounded by current city limits on all
sides; north, south, east and west. DH-9 is located north of Pockrus Page Road, north, south and
northeast of Edwards Road. This area is outlined in yellow on the aerial map below.
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EXHIBIT 4
Proposed Annexation Area DH-12
DH-12 encompasses approximately 1,154 acres of land and is bounded by current city limits on
all sides; north, south, east and west. DH-12 is located south of E. University Drive, east of N.
Mayhill Road, north and south of Blagg Road, north and south of Mills Road, and east and west
of S. Trinity Road. This area is outlined in yellow on the aerial map below.
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Exhibit 5
Texas Attorney General's Opinion
Provision of sewer service by a municipality to newly annexed territory
(RQ-1380)
ref iy
Office of the Attorney General
State of Texas
August 23, 1988
Honorable Mark W. Stiles
Chairman
County Affairs Committee
Texas House of Representatives
P. O. Box 2910
Austin, Texas 78769
Opinion No. JM-944
Re: Provision of sewer service by a
municipality to newly annexed
territory (RQ-1380)
Dear Representative Stiles:
You ask three questions with regard to the proposed annexation of the Commanche
Hills Utility District [CHUD] by the City of Harker Heights. The first we address is:
Can a city annex in one year an amount of area under thirty percent (30%) of its
incorporated area as of January 1 of that year and then in the same year also annex a
municipal utility district which encompasses an area equal to sixty percent of the city's
incorporated area as of January 1 of that year?
We assume that by 'municipal utility district' you mean to refer to the Commanche
Hills Utility District [CHUD]. We do not find, however, that the CHUD is a municipal
utility district. The law creating the district referred to it as a 'conservation and
reclamation district.' Acts 1967, 60th Leg., ch. 624, s 1. Section 5 of that act provides
that CHUD shall have the rights, powers, etc., applicable to a `water control and
improvement district' to the extent such rights, powers, etc., are not inconsistent with
the provisions of the act.
Page - 13
CHUD under its creating act, appears to be a 'Nvater or sewer district' Nvithin the
meaning of section 43.071 of the Local Government Code. Section 43.071, provides in
part:
(a) In this section, 'Nvater or sewer or district' means a district or authority created under
Article III, Section 52, Subsections (b)(1) and (2), or under Article XVI, Section 59, of
the Texas Constitution that provides or proposes to provide, as its principal function,
water services or seNver services or both to household users. The term does not include
a district or authority the primaiv function of which is the whole-sale distribution of
water.
(b) A municipality may not annex area in a water or sewer district unless it annexes the
entire part of the district that is outside the municipality's boundaries. This restriction
does not apply to the annexation of area in a Nvater or sewer district if the district is
wholly or partly in the extraterritorial jurisdiction of more than one municipality.
(c) An annexation subject to Subsection (b) is exempt from the provisions of this
chapter that limit annexation authority to a municipality's extraterritorial jurisdiction if
(1) immediately before the annexation, at least one-half of the area of the Nvater or
seNver district is in the municipality or its extraterritorial jurisdiction; and
(2) the municipality does not annex in the annexation proceeding any area outside its
extraterritorial jurisdiction except the part of the district that is outside its
extraterritorial jurisdiction.
(d) Area annexed under Subsection (b) is included in computing the amount of area
that a municipality may annex under Section 43.055 in a calendar year. If the area to be
annexed exceeds the amount of area the municipality Nvould othei-vvise be able to
annex, the municipality may annex the area but may not annex additional area during
the remainder of that calendar year, except area subject to Subsection (b) and area that
is excluded from the computation under Section 43.055. (Emphasis added.)
Section 43.071(4) refers to the limitations on amount of territory- which may be
annexed in a year under section 43.055. Section 43.055 reads:
(a) In a calendar year, a municipality may not annex a total area greater than 10 percent
of the incorporated area of the municipality as of Januaiv 1 of that year, plus any
amount of area carried over to that year under Subsection (b). In determining the total
area annexed in a calendar year, an annexed area is not included if it is:
(1) annexed at the request of a majority of the qualified voters of the area and the
oNvners of at least 50 percent of the land in the area,
(2) oNvned by the municipality, a county, the state, or the federal government and used
for a public purpose;
(3) annexed at the request of at least a majority of the qualified voters of the area, or
Page - 14
(4) annexed at the request of the oN-,ners of the area.
(b) If a municipality fails to annex in a calendar year the entire 10 percent amount
permitted under Subsection (a), the municipality may carry over the unused allocation
for use in subsequent calendar years.
(c) A municipality carrying over an allocation may not annex in a calendar year a total
area greater than 30 percent of the incorporated area of the municipality as of JanuaiN- 1
of that year. LEN ll (Emphasis added.)
Because your question is based on the city's having annexed 'under thirty percent of its
incorporated area,' vve assume that the City of Harker Heights has carried over
allocations from previous years pursuant to subsections (b) and (c) of section 43.055.
In the circumstances you describe, the city has authority, under section 43.071(4), to
annex the territoiv involved.
Your other two question are:
(1) If a city provides sewer service and has previously extended sewer lines within its
existing city limits and such city annexes an area that has no sewer service, is the city
required to extend lines to those newly annexed areas with land uses and population
densities similar to the ones in the previous city limits?
(2) If a city provides sewer service but has not previously extended sewer lines within
its existing city limits and such city annexes an area that has no sewer service, is the
city required to extend lines to those newly annexed areas with land uses and
population densities similar to the ones in the previous city limits? (Emphasis added.)
We note first that vve find no requirement in the pertinent statutoiy provisions that a
higher level of services be provided in any area to be annexed than are provided in an
area of the city having similar characteristics of topography, land utilization, and
population density. Section 43.056 of the Local Government Code speaks only of
maintenance of existing services, in subsection (b)(4), and uniform levels of services in
subsection (d). Therefore, in answer to question number 2, vve conclude that no
extension of sewer services to annexed areas is required, either in fact or under a
'service plan,' where such services are not provided in equivalent areas within the
existing city limits.
Moreover, turning to question number 1, vve further conclude that a city may in no case
literally be required to provide any given services to annexed areas.
Section 43.056 of the Local Government Code requires an annexing city to develop a
'service plan' for provision of services to the annexed area:
(a) Before the publication of the notice of the first hearing required under Section
43.052, the governing body of the municipality proposing the annexation shall direct
its planning department or other appropriate municipal department to prepare a service
plan that provides for the extension of municipal services to the area to be annexed.
The municipality shall provide the services by any of the methods by which it extends
Page - 15
the services to any other area of the municipality.
(b) The service plan must include a program under which the municipality will provide
the following services in the area within 60 days after the effective date of the
annexation of the area:
(1) police protection;
(2) fire protection;
(3) solid waste collection;
(4) maintenance of Nvater and wastewater facilities;
(5) maintenance of roads and streets, including road and street lighting;
(6) maintenance of parks, playgrounds, and swimming pools; and
(7) maintenance of any other publicly owned facility, building, or service.
(c) The service plan must also include a program under which the municipality- will
initiate the acquisition or construction of capital improvements necessaiv for providing
municipal services for the area. The construction shall begin within 2 1/2 years after
the effective date of the annexation of the area. The acquisition or construction of the
facilities shall be accomplished by purchase, lease, or other contract or by the
municipality succeeding to the poNvers, duties, assets, and obligations of a conservation
and reclamation district as authorized or required by lave. Money received from the sale
of bonds or evidenced by other instruments of indebtedness may not be allocated to the
area for a period of 180 days.
(d) A service plan may not provide fewer services or a louver level of services in the
area than Nvere in existence in the area immediately preceding the date of the
annexation. This section does the require that a uniform level of services be provided
to each area of the municipality if different characteristics of topography, land use, and
population density are considered a sufficient basis for providing different levels of
service.
(e) If only a part of the area to be annexed is actually annexed, the governing body
shall direct the department to prepare a revised service plan for that part.
(f) The proposed service plan must be made available for public inspection and
explained to the inhabitants of the area at the public hearings held under Section
43.052. The plan may be amended through negotiation at the hearings, but the
provision of any service may not be deleted. On completion of the public hearings, the
service plan shall be attached to the ordinance annexing the area and approved as part
of the ordinance.
(g) On approval by the governing body, the service plan is a contractual obligation that
is not subject to amendment or repeal except that if the governing body determines at
Page - 16
the public hearings required by this subsection that changed conditions or subsequent
occurrences make the service plan unNvorkable or obsolete, the governing body may
amend the service plan to conform to the changed conditions or subsequent
occurrences. An amended service plan must provide for services that are comparable to
or better than those established in the service plan before amendment. Before any
amendment is adopted, the governing body must provide an opportunity for interested
persons to be heard at public hearings called and held in the manner provided by
Section 43.052.
(h) A service plan is valid for 10 years. Renewal of the service plan is at the discretion
of the municipality.
(i) A municipality that annexes an area shall provide the area or cause the area to be
provided with services in accordance with the service plan for the area. LEN
(Emphasis added.)
In Larkins v. City of Denison, 683 S.W.2d 754 (Tex. App.--Dallas 1984, no writ),
landowners of an area which was the subject of a city annexation ordinance sought
injunctive relief from the ordinance on the grounds that the city 'did not have the
resources necessary to implement the services which art. 970a (Vernon's 1963 and
Vernon Supp. 1984) requires it to provide for newly annexed areas.' Id. at 755. See
Local Gov't Code s 43.056 (present codification of article 970a). The court overruled
the appellant landowners' contention in this regard and affirmed the trial court's denial
of injunctive relief, holding that section 10(F) of article 970a (currently codified as
section 43.141 of the Local Government Code), provided disannexation as the
exclusive remedy for the city's failure to meet the service plan if and when such failure
occurs. The court also ruled with respect to the appellants' contentions that the
annexation was fraudulent and/or improperly motivated as follows:
It is well-settled that the determination of municipal boundaries is a question for
political rather than judicial resolution. [Citation omitted.] Under article 970a, the
legislature delegated its powers in this regard to the cities, subject to certain
limitations. Because those limitations apply to the location of the annexed area rather
than to the purposes for which annexation is sought, appellants may not judicially
challenge the validity of the annexation ordinance on the basis that it was improperly
motivated.
Id. at 756. Thus, despite the language of, for example, subsections (a) and (i) of section
43.056, to the effect that the municipality 'shall' provide services, it would appear in
light of Larkins that the exclusive remedy for the city's not providing such services in
accordance with the service plan is disannexation under current section 43.141 of the
Local Government Code.
We construe your question then as asking whether a city proposing to annex an area is
required to provide in the service plan required by section 43.056 for the sewer service
extensions about which you inquire. EN31
Differences in levels of service provided annexed areas and existing areas of the city
must be based on differences, or reasonably contemplated differences in topography,
land use, and population density. Section 43.056, subsection (d). It is the prerogative of
Page - 17
the city, in the first instance, to make determinations in the service plan about levels of
service in annexed areas. fFN41 If the service plan adopted were itself legally defective
to the extent of being void or voidable--for example, if it were not adopted in
compliance with the hearings requirements of section 43.052, or if it did not reflect any
consideration by the city of differences in topography, land use, and population density
factors--we believe an aggrieved party might obtain relief by way of an injunction
action, or by way of a quo warranto proceeding brought by the state.
SUMMARY
If all other legal requirements are met, the City of Harker Heights may annex the
Commanche Hills Utility District, even though the city has annexed, in the same year,
other territory- equaling up to thirty percent of the city's territory.
A city may not literally be required to provide services to an annexed area. If the city
does not provide services in accordance with the service plan developed pursuant to
Local Government Code section 43.056, disannexation under section 43.141 is the
exclusive remedy available to aggrieved persons.
The determination of the city governing body whether the topography, land use, and
population density factors are a sufficient basis for providing a given level of services
under section 43.056, subsection (d), is in the first instance the prerogative of the
annexing city.
However, a service plan which is itself legally defective might be subject to relief other
than disannexation.
Vein truly yours,
Jim Mattox
Attornev General of Texas
Maims- Keller
First Assistant Attornev General
Lou MCCreaiv
Executive Assistant Attornev General
Judge Zollie Steakley
Special Assistant Attorney General
Rick Gilpin
Chairman
Opinion Committee
Prepared by
Page - 18
William Walker
Assistant Attorney General
Footnotes
FN1. Acts 1987, 70th Leg., ch. 1077 added language to these provisions, which takes
effect as part of the Local Government Code pursuant to V.T.C.A. Government Code
and section 311.031. None of the provisions of the amendatory- act, however, alter the
conclusions vve reach here with respect to the issues presented.
FN2. See footnote 4.
FN'). The City of Austin in its brief in this matter suggested that sewer extensions may
not be among the services contemplated by section 43.056. The only specific reference
to sewer services in section 43.056 is found in subsection (b)(4) of that section, which
requires provision in the service plan for 'maintenance of water and wasteNvater
facilities' within 60 days of the date of annexation (emphasis added). Subsection (a) of
section 43.056, however, provides in part:
[T]he governing body of the municipality proposing the annexation shall direct its
planning department or other appropriate municipal department to prepare a service
plan that provides for the extension of municipal services to the area to be annexed.
The municipality shall provide the services by any of the methods by which it extends
the services to any other area of the municipality. (Emphasis added.)
Subsection (c) of that section provides in part:
The service plan must also include a program under which the municipality will initiate
the acquisition or construction of capital improvements necessary for providing
municipal services for the area. The construction shall begin within 2 1/2 years after
the effective date of the annexation of the area.
We believe that the restriction of wasteNvater services to 'maintenance' of existing
services applies only to the requirement of subsection (b) that maintenance of such
services be provided within 60 days of annexation, but that subsections (a) and (c)
clearly contemplate extension, i.e., improvement of such services. Therefore, sewer
extensions are, vve believe, 'municipal services' within the meaning of section 43.056.
FN4. Acts 1987, 70th Leg., ch. 1077 amended section 10 of article 970a, now codified
in the Local Government Code, by, inter alia, adding the folloNving underlined
language to the provision now codified as the first sentence of section 43.056,
subsection (d) of the Local Government Code.
In no event shall a service plan provide fewer services or a louver level of services in
the area to be annexed than Nvere in existence in that area at the time immediately
preceding the annexation or which are otheitivise available in other areas of the city
with land uses and population densities similar to those reasonably contemplated or
Page - 19
projected in the ne-,-,-1y annexed area.
Pursuant to Government Code section 311.031(c) the amendment takes effect as part of
the Local Government Code. Hov ever, a reading of this amendment does not alter our
conclusion that the determination of N-,-hether topography, land use, and population
density factors N-arrants provision of a given level of services is a political matter
subject to the consideration given the relevant factors by the city. Note that this
amendatory act also amended other provisions noN-,- codified under section 43.056, but
again v e do not find that such amendments affect the conclusions v e reach here.
Texas OAG home pale I Opinions & Open Government
Page - 20
EXHIBIT 6
Three-Year Annexation Process Summary
The following is a summary of the 3-year annexation process in the state of Texas. The
summary identifies activities, deadlines, and provides notes relevant to each required activity.
For your convenience, also included are relative Texas Local Government Code (Tx LGC)
references and Texas Attorney General's opinions.
Activity
1. Prepare 3-year
Annexation Plan.
Due By
Prior to conducting the
Inventory of Services and
Facilities.
Notes
The Plan covers DH 7, 9
and 12; and must be posted
on the city's internet until
the areas are annexed.
43.052.(j)
Tx.LGC
43.052
ProN idc ~v rittcn Notice
Prior to the 90" day after
Scnd notices to propcrty
4 3.052.(1)
of Intent to Annex.
the cite adopts the
owners. DISD. railroad
allllC\at1011 1)1a11.
cOlllpa111cs. a11d public a11d
prly atc scrvlcc proNldcrs.
Noticc to scrvicc proNidcrs
IlulSt Include Illforlllatl011
IICCCSS1111 to coillpllc
Ill\ clltoi-\ of ScrV lccs a11d
Facilities. 43.053.(c)
The Cite must 11SO proNidc
the m-lacn noticc to DISD
N\ ithin the period prescribed
for publishing of the I"
public hearing. The noticc
I11USt II1CIUdc im 1111a11c1a1
4'.O05
Illlpact OIl the district that
IllaN rcSUlt fi'Olll the
alineyUt1011 alld the clty 'S
proposal to 111111t the cf cctS
of that llllallclal Illlpact.
3. Conduct Inventory of
After adopting the
The information provided
43.053
Services and Facilities.
Annexation Plan.
must include the type of
services provided, the
method of service delivery,
and all information
prescribed by Subsections
(e) and (f).
Must be completed Nvithin 5
months after adopting the
Annexation Plan. (Service
Page - 21
providers are given 90 days
to provide information to
the city, and the city has 60
days to complete the
inventor- and make it
available to the public) -
43.053.(c) and (g)
4. Prcp,1rc Service Plan for
Must be complcted vv ithin
It is Merv
i
mport
an
to rcad
t
~.USh
4
the extcnsion Of full
Q months aftcr
this enti
rc
ion
Sc
ct
to
municipal services.
complcting the Im cntoly
ctcrnlinc (I) the tinting, of
d
of Scrv ices and Facilitics.
scrv icc deli-\. (2) the
Also scc Teas
IcNcl of service dclivcrv_
Attorney
and the rcquircd
Gcncral-s opinions
scrN ices to be dcliv crcd.
- GA-0459.
The Scrvice Plan nl,1v not
proNidc for serviccs in the
a1111cxcd area that \\OUld
rcdUCC the ICN CI Of fll'C.
police and c1llcr(,ellcv
Illcdlcal sel'VlccS \N lth111 the
clty . Sccond. the scl'vlce
1)1,111 IIIUSt proNldc the arca
vvlth a ICN CI Of Sel'NICCS
cO1llparablc to or Supcr10r
to the ICN C1 Of SCI'VICCS
aN,111,1b1c 111 Other parts of
the clt\ \Vlth 1a11d USCS and
population dcllsltlcs s111111,1r
to thOSC rcasonabk
contclll1)latcd or prOlcctcd
111 the arca_ h0\\ eN er. If the
arca had ,1 IcNcl of scl'NICCS
equ,11 to the Sel'VICCS
proNldcd \V1th111 the clt\.
the SCI'VICC P1,111 I1IUSt
I11a111ta111 that S,1Illc ICN CI Of
Sel'VICCS. FIIl,1lk. If the
a1111c\cd arc,1 had ,1 IcNcl of
Sel'VICCS for I11a111ta111111g, the
IllfraStrUCtUrC Of the 11-C,1
Supcr10r to the ICN CI Of
scl'NlccS proNldcd \V1th111
the Clt\. the SCI'V ICC P1111
IIIUSt I11a111ta111 the
Illfr,1Stl'UCtUrC Of the
,1IIIICScd arca at ,1 IcNcl of
SCI'v ICCS that IS equ,11 Or
Supcr10r to the 1c\e1 Of
scl'Vlccs IrcN iousk clllOA cd
Page - 22
ill the qllllCXCd 11-ca.
5. City Council conducts
Not later than the 90th day
43.0561.(a)
two (2) public hearings.
after the date the
inventor- is available to
the public
Note: At least one (1) of
the hearings must be held
in the area proposed for
annexation if a suitable
site is reasonablv
available and more than
twenty (20) adults who
are permanent residents
of the area file a written
protest of the annexation
Nvith the Citv Secretaiv
within ten (10) days after
the date of the publication
of the annexation notice.
If a suitable site is not
reasonablv available in
the area proposed for
annexation, the hearing
may be held outside the
area proposed for
annexation if the hearing
is held in the nearest
suitable public facility.
h. Post notices of the
Must be publishcd at Icast
Noticc of the hca61111S must
4,.O- .(c)
public hearings.
once on or after the ?U`"
be publishcd in the Dcnton
div but before the 10"
Record-(hrOlllclc alld
daN bclorc the date of the
posted oil the (Itv 'S Illtcrllct
hcariil".
NN cbSltc.
Must alNc addltioilal
Iloticc bN~ certified I11a11 to
cacti public eiltit\. Utiht\
ScrNicc proNidcr that
proNldcs services in the
arca proposed for
annexation: and cacti
railroad cO111pam that
scl'Ncs the clty aild is Oil
the cltV,s tax roll if the
coillpam'S right-Of-\\aN IS
111 the arca proposed for
a1111c\atioil.
Page - 23
7. Conduct negotiation for
services for the
provision of services.
8. Arbitration. if rcquircd
After the 2"a public
hearing, but before
adoption of the
Annexation Ordinance.
The rcqucst must be
made in \\ritin- to the
other party bcforc the 60th
day after the date the
sericc plan is complctcd
Denton Count-
commissioner's court shall
select 5 representatives to
negotiate ivith the city for
the provision of services.
If the cite and the
representatives of the arca
proposed for annexation
cannot reach an a,rccmcnt
for the provision of
scrv ices. either party by
majority dccision of the
party's rcpresentativcs MIN
request the appointment of
an arbitrator to resolNe the
serNicc plan issues in
dispute.
43.0562
9. The City- Council passes
the Annexation
Ordinance.
W. Proper post-all IICvItIi Oil
preclearance and
notice is complctcd.
Must be completed before
the 3I" day after the 3ra
anniversary of the date
the area tivas included in
the annexation plan
(adoption of the
annexation plan).
4_1.0504
If the cite does not agrcc
\Nith the terms of the
arbitrator's dccision- the
cite may not annc-\ the arca
bcforc the 5" annIN crsai- of
the date of the arbitrator's
dccision.
If the annexation is not
completed by the deadline,
the city may not annex the
area before the fifth 5"
anniversary of the last day
for completing the
annexation. This means 8
years from the adoption
of the Annexation Plan.
43.052.(g)
-13.906
Page - 24
EXHIBIT 7
Three-Year Plan Annexation Schedule
DH-7, DH-9, DH12
1 Adopt Annexation Plan and post 4/6/2010
plan on website (Tx.LGC 43.052)
2 Notice of Intent to all property Prior to the 90th day after the 6/30/2010
owners, public/private entities, CC adopts the plan
railroad companies and post on
website (Tx.LGC 43.052.f)
3 Request Inventory of Services and = Shall be requested at the time 6/30/2010
Facilities provided by of the Notice of Intent
public/private entities (Tx.LGC
43.053c)
4 Receive information provided by 90 days after request is made 9/27/2010
public and private service
providers (Tx.LGC 43.053.c)
5 Complete Inventory of Services On or before the 60th day after 11/24/2010
and Facilities and make available the information is received
for public inspection (Tx.LGC
43.053.g and Tx.LGC 43.056j)
6 Notice of 151 Public Hearing (Tx.LGC On or after the 20th day, but 1/26/2011
43.0561.c) before the 10th day before the
date of the hearing
7 Notice of 2nd Public Hearing On or after the 20th day, but < 1/26/2011
(Tx.LGC 43.0561.c) before the date of the hearing
8 Proposed Service Plan must be Prior to public hearings 1/25/2011
made available for public
inspection and explained at the
public hearings (Tx.LGC 43.056.j)
. . .
9 15t Public Hearing (Tx.LGC < Not later than the 90th day 2/1/2011
43.05 & Tx.LGC 43.0561.c) < after the Inventory is made
available to the public
10 2nd Public Hearing (Tx.LGC Not later than the 90th day 12/15/2011
43.05 & Tx.LGC 43.0561.c) after the Inventory is made
available to the public.
Must also consider that public
hearings must take place on or
Curnpleted
Completed
Completed
Completed
Completed
Page - 25
before the 20"' day, but after
the 10th day after the date of
the notice of public hearing in
accordance with 43.0561.C.
Therefore, both hearings must
take place by 2/15/20, which
is 20 days after 1/26/2011
public hearing notice date.
11 Negotiations for Provision of After the 2nd public hearing, 3/8/2011
Services after annexation or in lieu but before adoption of the
of annexation (Tx.LGC 43.0562) Annexation Ordinance
12 Final Service Plan (Tx.LGC Before the 1st day of the 10th 8/26/2011
43.056.a) month after the month in
which the inventory is
prepared.
13 Request arbitration regarding Before the 60th day after the , 10/10/2011
negotiations (if required) (Tx.LGC = date the service plan is
43.0564) completed.
154 1st Reading of the Ordinance 1/10/2012
15 < Non-Annexation Agreements - < October, 2011
offered to property owners with
Ag. exemptions (Tx.LGC 43.035)
16 Ordinance Publication The ordinance or any 3/6/2013
amendment thereof shall not
be acted upon until at least 30
days after newspaper
publication date. (Charter)
2nd Reading of the Annexation Approve on 2nd Reading TBD
Ordinance before 3 years + 31 days 5/7/2013
Page - 26
EXHIBIT 8
Service Plan
1. AREA ANNEXED
The areas to be annexed include approximately 1,595 acres of land contained in three (3) distinct
areas as shown on the attached maps. The 3 areas are unincorporated pockets located within
City of Denton's Extraterritorial Jurisdiction (ETJ), Division 1, and are identified as DH-7, DH-9
and DH-12. The proposed annexation contains multiple owners. A general description of each
area is also attached.
II. INTRODUCTION
This service plan has been prepared in accordance with the Texas Local Government Code,
Sections 43.021; 43.065; and 43.056(b)-(o) (Vernon 2008, as amended). Municipal facilities and
services to the annexed areas described above will be provided or made available on behalf of
the City of Denton in accordance with the following plan. The City of Denton shall provide the
annexed tract the levels of service, infrastructure, and infrastructure maintenance that are
comparable to the levels of service, infrastructure, and infrastructure maintenance available in
other parts of the City of Denton with similar topography, land use, and population density.
III. AD VALOREM (PROPERTY OWNER) TAX SERVICES
A. Police Protection
Police protection from the City of Denton Police Department shall be provided to
the areas annexed at a level consistent with current methods and procedures
presently provided to similar areas on the effective date of the ordinance. Some
of these services include:
Normal patrols and responses;
Handling of complaints and incident reports;
Special units, such as traffic enforcement, investigations and special
weapons; and
Coordination with other public safety support agencies.
As development commences in these areas, sufficient police protection, including
personnel and equipment will be provided to furnish these areas with the level of
police services consistent with the characteristics of topography, land utilization
and population density of the areas.
Upon ultimate development, police protection will be provided at a level
consistent with other similarly situated areas within the city limits.
B. Fire Protection
The Denton Fire Department (DFD) will provide emergency and fire prevention
services to the annexation areas. These services include:
1. Fire suppression and rescue;
Page - 27
2. Pre-hospital medical services including triage, treatment and transport
by Advanced Life Support (ALS) fire engines, tricks and ambulances;
3. Hazardous materials response and mitigation;
4. Emergency prevention and public education efforts;
5. Technical rescue response; and
6. Constriction Plan Review and required inspections.
Fire protection from the City of Denton shall be provided to the areas annexed at
a level consistent with current methods and procedures presently provided to
similar areas of the City of Denton on the effective date of the ordinance.
As development commences in these areas, sufficient fire protection, including
personnel and equipment will be provided to furnish these areas with the level of
services consistent with the characteristics of topography, land utilization and
population density of the areas. It is anticipated that fire stations planned to serve
areas currently within the City of Denton will be sufficient to serve areas now
being considered for annexation.
Upon ultimate development, fire protection will be provided at a level consistent
with other similarly situated areas within the city limits.
C. Emmency Medical Service
The Denton Fire Department (DFD) will provide the following emergency and
safety services to the annexation areas. These services include:
1. Emergency medical dispatch and pre-arrival First Aid instructions;
2. Pre-hospital emergency Advanced Life Support (ALS) response; and
transport;
3. Medical rescue services.
Emergency Medical Services (EMS) from the City of Denton shall be provided to
the areas annexed at a level consistent with current methods and procedures
presently provided to similar areas of the City of Denton on the effective date of
the ordinance.
As development commences in these areas, sufficient EMS, including personnel
and equipment will be provided to furnish these areas with the level of services
consistent with the characteristics of topography, land utilization and population
density of the areas.
Upon ultimate development, EMS will be provided at a level consistent with other
similarly situated areas within the city limits.
D. Solid Waste
Solid Waste and Recycling Collection Services will be provided to the newly
annexed property immediately upon the effective date of the annexation at a level
Page - 28
consistent with current methods and procedures presently provided to similar
areas within the city. Private solid waste collection service providers operating in
the affected area immediately prior to annexation and currently providing
customers with service may continue to provide their existing service for up to 2
years in accordance with Texas Local Government Code.
E. Wastewater Facilities
The proposed annexation areas are within the City of Denton Sewer Service Area
as defined by Certificate of Convenience and Necessity (CCN) Number 20072 as
issued by the Texas Commission on Environmental Quality (TCEQ).
As development commences in these areas, sanitary sewer mains will be extended
in accordance with the provisions of the City's codes, ordinances and regulations.
City participation in the costs of these extensions shall be in accordance with
applicable City ordinances and regulations. Capacity shall be provided consistent
with the characteristics of topography, land utilization, and population density of
the areas.
Sanitary sewer mains and lift stations installed or improved to City standards
within the annexed areas which are located within dedicated easement, rights-of-
way, or any other acceptable location approved by the City Engineer, shall be
maintained by the City on the effective date of this ordinance.
Operation and maintenance of wastewater facilities in the annexed areas that are
within the service area of another water utility will be the responsibility of that
utility. Operation and maintenance of private wastewater facilities in the annexed
area will be the responsibility of the owner.
F. Water Facilities
The proposed annexation areas are within the City of Denton Water Service Area
as defined by Certificate of Convenience and Necessity (CCN) Number 10195 as
issued by the Texas Commission on Environmental Quality (TCEQ).
Connections to existing City of Denton water distribution mains for water service
will be provided in accordance with existing City ordinances and policies. Upon
connection to existing distribution mains, water service will be provided at rates
established by city ordinance.
As new development occurs within these areas, water distribution mains will be
extended in accordance with Denton's Codes, ordinances and utility service
policies. City participation in the costs of these extensions shall be in accordance
with Denton's codes and ordinances. Water service capacity shall be provided
consistent with the characteristics of topography, land use and population density
of the area.
Page - 29
Operation and maintenance of water facilities in the annexed area that are within
the service area of another water utility will be the responsibility of that utility.
Existing developments, businesses or homes that are on individual water wells or
private water systems will be allowed to continue to remain on these systems until
a request for water service is made to the City. These requests for service will be
handled in accordance with the applicable utility service line extension and
connection policies currently in place at the time the request for service is
received.
G. Roads and Streets
Emergency street maintenance shall be provided within the annexation areas on
the effective date of the applicable ordinance of acceptance. Routine maintenance
will be provided within the annexation areas and will be scheduled as part of the
City's annual program and in accordance with the current policies and procedures
defined by the ordinance and/or as established by the City Council.
Any constriction or reconstruction will be considered within the annexation areas
on a City wide basis and within the context of the City's CIP and/or yearly fiscal
budgetary allotments by the City Council.
Roadway signage and associated posts will be replaced in priority of importance
starting with regulatory signs, then warning signs, then informational signs and in
conformance with fiscal allotments by the City Council. If a sign remains, it will
be reviewed and placed on the City's inventory listing for routine replacement.
All exiting signs will be reviewed for applicability and based upon an engineering
study. New signs will be installed when necessary and based upon an engineering
study.
Routine maintenance of road/street markings will be placed on a priority listing
and scheduled within the yearly budgetary allotments by the City Council.
H. Parks, Playgrounds, Swimming Pools
Residents within the areas annexed may utilize all existing park and recreation
facilities, on the effective date of this ordinance. Fees for such usage shall be in
accordance with current fees established by ordinance.
As development commences in these areas, additional park and recreation
facilities shall be constricted based on park policies defined in the Park Master
Plan and as specified in the Park Dedication and Development Ordinance. The
general planned locations and classifications of parks will ultimately serve
residents from the current City limits and residents from areas being considered
for annexation.
L Publicly Owned Facilities
Any publicly owned facility, building, or service located within the annexed area,
and not otherwise owned or maintained by another governmental entity, shall be
Page - 30
maintained by the City of Denton on the effective date of the annexation
ordinance.
J. Other Services
Other services that may be provided by the City of Denton, such as municipal and
general administration will be made available on the effective date of the
annexation. The City of Denton shall provide level of services, infrastructure, and
infrastructure maintenance that is comparable to the level of services,
infrastructure, and infrastructure maintenance available in other parts of the City
of Denton with topography, land use, and population density similar to those
reasonably contemplated or projected in the area.
III. UNIFORM LEVEL OF SERVICES IS NOT REQUIRED
Nothing in this plan shall require the City of Denton to provide a uniform level of full municipal
services to each area of the City, including the annexed area, if different characteristics of
topography, land use, and population density are considered a sufficient basis for providing
different levels of service.
IV. TERM
This service plan shall be valid for a term of ten (10) years. Renewal of the service plan shall be
at the discretion of City Council.
V. AMENDMENTS
The service plan may be amended if the City Council determines at a public hearing that changed
conditions or subsequent occurrences make this service plan unworkable or obsolete. The City
Council may amend the service plan to conform to the changed conditions or subsequent
occurrences pursuant to Texas Local Government Code, Section 43.056.
Page - 31
EXHIBIT I
Proposed Annexation Area DH-7
DH-7 encompasses approximately 143 acres and is bounded on the north, west and south by
current city limits. It is located on the east and north sides of Teasley Lane, south of Teasley
Harbor Subdivision and west of Southlake Drive. This area is outlined in yellow on the aerial
map below.
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Page - 32
EXHIBIT 2
Proposed Annexation Area DH-9
DH-9 encompasses approximately 298 acres of land and is bounded by current city limits on all
sides; north, south, east and west. DH-9 is located north of Pockrus Page Road, north, south and
northeast of Edwards Road. This area is outlined in yellow on the aerial map below.
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Page - 33
EXHIBIT 3
Proposed Annexation Area DH-12
DH-12 encompasses approximately 1,154 acres of land and is bounded by current city limits on
all sides; north, south, east and west. DH-12 is located south of E. University Drive, east of N.
Mayhill Road, north and south of Blagg Road, north and south of Mills Road, and east and west
of S. Trinity Road. This area is outlined in yellow on the aerial map below.
Page - 34
APPENDIX 1
Tx.LGC Section 43.035 - Areas with Agricultural, Wildlife management and
Timber Land Uses.
§ 43.035. Authority of Municipality to Annex Area Qualified for Agricultural or Wildlife
Management Use or as Timber Land
(a) This section applies only to an area:
(1) eligible to be the subject of a development agreement under Subchapter G,
Chapter 212; and
(2) appraised for ad valorem tax purposes as land for agricultural or wildlife
management use under Subchapter C or D, Chapter 23, Tax Code, or as timber
land under Subchapter E of that chapter.
(b) A municipality may not annex an area to which this section applies unless:
(1) the municipality offers to make a development agreement with the landowner
under Section 212.172 that would:
A. guarantee the continuation of the extraterritorial status of the area; and
B. authorize the enforcement of all regulations and planning authority of the
municipality that do not interfere with the use of the area for agriculture,
wildlife management, or timber; and
(2) the landowner declines to make the agreement described by Subdivision (1).
(c) For purposes of Section 43.021 or another law, including a municipal charter or
ordinance, relating to municipal authority to annex an area adjacent to the municipality,
an area adjacent or contiguous to an area that is the subject of a development agreement
described by Subsection (b)(1) is considered adjacent or contiguous to the municipality.
(d) A provision of a development agreement described by Subsection (b)(1) that restricts or
otherwise limits the annexation of all or part of the area that is the subject of the
agreement is void if the landowner files any type of subdivision plat or related
development document for the area with a governmental entity that has jurisdiction over
the area, regardless of how the area is appraised for ad valorem tax purposes.
(e) A development agreement described by Subsection (b)(1) is not a permit for purposes of
Chapter 245.
Page - 35
APPENDIX 2
Tx.LGC Section 212.172 - Development Agreement
§ 212.172.Development Agreement.
(a) In this subchapter, "extraterritorial jurisdiction" means a municipality's extraterritorial
jurisdiction as determined under Chapter 42.
(b) The governing body of a municipality may make a written contract with an owner of land
that is located in the extraterritorial jurisdiction of the municipality to:
(1) guarantee the continuation of the extraterritorial status of the land and its
immunity from annexation by the municipality for a period not to exceed 15
years;
(2) extend the municipality's planning authority over the land by providing for a
development plan to be prepared by the landowner and approved by the
municipality under which certain general uses and development of the land are
authorized;
(3) authorize enforcement by the municipality of certain municipal land-use and
development regulations in the same manner the regulations are enforced within
the municipality's boundaries;
(4) authorize enforcement by the municipality of land-use and development
regulations other than those that apply within the municipality's boundaries, as
may be agreed to by the landowner and the municipality;
(5) provide for infrastructure for the land, including:
(A) streets and roads;
(B) street and road drainage;
(C) land drainage; and
(D) water, wastewater, and other utility systems;
(6) authorize enforcement of environmental regulations;
(7) provide for the annexation of the land as a whole or in parts and to provide for the
terms of annexation, if annexation is agreed to by the parties;
(8) specify the uses and development of the land before and after annexation, if
annexation is agreed to by the parties; or
(9) include other lawful terms and considerations the parties consider appropriate.
(c) An agreement under this subchapter must:
(1) be in writing;
(2) contain an adequate legal description of the land;
(3) be approved by the governing body of the municipality and the landowner; and
Page - 36
(4) be recorded in the real property records of each county in which any part of the
land that is subject to the agreement is located.
(d) The parties to a contract may renew or extend it for successive periods not to exceed 15
years each. The total duration of the original contract and any successive renewals or
extensions may not exceed 45 years.
(e) A municipality in an affected county, as defined by Section 16341, Water Code, may not
enter into an agreement under this subchapter that is inconsistent with the model riles
adopted under Section 16.343, Water Code.
(f) The agreement between the governing body of the municipality and the landowner is
binding on the municipality and the landowner and on their respective successors and
assigns for the term of the agreement. The agreement is not binding on, and does not
create any encumbrance to title as to, any end-buyer of a fully developed and improved
lot within the development, except for land use and development regulations that may
apply to a specific lot.
(g) An agreement under this subchapter constitutes a permit under Chapter 245.
(h) An agreement between a municipality and a landowner entered into prior to the effective
date of this section and that complies with this section is validated.
Page - 37
APPENDIX 3
Tx.LGC Section 43.052 - Municipal Annexation Plan Required
§ 43.052. MUNICIPAL ANNEXATION PLAN REQUIRED
(a) In this section, "special district" means a municipal utility district, water control and
improvement district, or other district created under Section 52, Article III, or Section 59,
Article XVI, Texas Constitution.
(b) A municipality may annex an area identified in the annexation plan only as provided by
this section.
(c) A municipality shall prepare an annexation plan that specifically identifies annexations
that may occur beginning on the third anniversary of the date the annexation plan is
adopted. The municipality may amend the plan to specifically identify annexations that
may occur beginning on the third anniversary of the date the plan is amended.
(d) At any time during which an area is included in a municipality's annexation plan, a
municipal utility district or other special district that will be abolished as a result of the
annexation, excluding an emergency services district, in which the area is located may
not without consent of the municipality:
(1) reduce the tax rate applicable to the area if the amount that would remain in the
debt service fund after the reduction and after subtracting the amount due for debt
service in the following year is less than 25 percent of the debt service
requirements for the following year;
(2) voluntarily transfer an asset without consideration; or
(3) enter into a contract for services that extends beyond the three-year annexation
plan period other than a contract with another political subdivision for the
operation of water, wastewater, and drainage facilities.
(e) A municipality may amend its annexation plan at any time to remove an area proposed
for annexation. If, before the end of the 18th month after the month an area is included in
the three-year annexation cycle, a municipality amends its annexation plan to remove the
area, the municipality may not amend the plan to again include the area in its annexation
plan until the first anniversary of the date the municipality amended the plan to remove
the area. If, during or after the 18 months after the month an area is included in the three-
year annexation cycle, a municipality amends its annexation plan to remove the area, the
municipality may not amend the plan to again include the area in its annexation plan until
the second anniversary of the date the municipality amended the plan to remove the area.
(f) Before the 90th day after the date a municipality adopts or amends an annexation plan
under this section, the municipality shall give written notice to:
(1) each property owner in the affected area, as indicated by the appraisal records
furnished by the appraisal district for each county in which the affected area is
located, that the area has been included in or removed from the municipality's
annexation plan;
Page - 38
(2) each public entity, as defined by Section 43.053, or private entity that provides
services in the area proposed for annexation; and
(3) each railroad company that serves the municipality and is on the municipality's
tax roll if the company's right-of-way is in the area proposed for annexation.
(g) If an area is not removed from the municipality's annexation plan, the annexation of the
area under the plan must be completed before the 31st day after the third anniversary of
the date the area was included in the annexation plan. If the annexation is not completed
within the period prescribed by this subsection, the municipality may not annex the area
proposed for annexation before the fifth anniversary of the last day for completing an
annexation under this subsection.
(h) This section does not apply to an area proposed for annexation if:
(1) the area contains fewer than 100 separate tracts of land on which one or more
residential dwellings are located on each tract;
(2) the area will be annexed by petition of more than 50 percent of the real property
owners in the area proposed for annexation or by vote or petition of the qualified
voters or real property owners as provided by Subchapter B;
(3) the area is or was the subject of:
A. an industrial district contract under Section 42.044; or
B. strategic partnership agreement under Section 43.0751;
(4) the area is located in a colonia, as that term is defined by Section 2306.581,
Government Code;
(5) the area is annexed under Section 43.026, 43.027, 43.029, or 43.031;
(6) the area is located completely within the boundaries of a closed military
installation; or
(7) the municipality determines that the annexation of the area is necessary to protect
the area proposed for annexation or the municipality from:
A. imminent destruction of property or injury to persons; or
B. a condition or use that constitutes a public or private nuisance as defined
by background principles of nuisance and property law of this state.
A municipality may not circumvent the requirements of this section
by proposing to separately annex two or more areas described by
Subsection (h)(1) if no reason exists under generally accepted
municipal planning principles and practices for separately
annexing the areas. If a municipality proposes to separately annex
areas in violation of this section, a person residing or owning land
in the area may petition the municipality to include the area in the
municipality's annexation plan. If the municipality fails to take
action on the petition, the petitioner may request arbitration of the
dispute. The petitioner must request the appointment of an
arbitrator in writing to the municipality. Sections 43.0564(b), (c),
Page - 39
and (e) apply to the appointment of an arbitrator and the conduct of
an arbitration proceeding under this subsection. Except as
provided by this subsection, the municipality shall pay the cost of
arbitration. If the arbitrator finds that the petitioner's request for
arbitration was groundless or requested in bad faith or for the
purposes of harassment, the arbitrator shall require the petitioner to
pay the costs of arbitration.
0) If a municipality has an Internet website, the municipality shall:
(1) post and maintain the posting of its annexation plan on its Internet website;
(2) post and maintain the posting on its Internet website of any amendments to
include an area in its annexation plan until the date the area is annexed; and
(3) post and maintain the posting on its Internet website of any amendments to
remove an area from its annexation plan until the date the municipality may again
include the area in its annexation plan.
Page - 40
APPENDIX 4
§ 43.053. Inventory of Services and facilities Required
§ 43.053. Inventory of Services and facilities Required
(a) In this section, "public entity" includes a municipality, county, fire protection service
provider, including a volunteer fire department, emergency medical services provider,
including a volunteer emergency medical services provider, or a special district, as that
term is defined by Section 43.052.
(b) After adopting an annexation plan or amending an annexation plan to include additional
areas under Section 43.052, a municipality shall compile a comprehensive inventory of
services and facilities provided by public and private entities, directly or by contract, in
each area proposed for annexation. The inventory of services and facilities must include
all services and facilities the municipality is required to provide or maintain following the
annexation.
(c) The municipality shall request, in the notice provided under Section 43.052(f), the
information necessary to compile the inventory from each public or private entity that
provides services or facilities in each area proposed for annexation. The public or private
entity shall provide to the municipality the information held by the entity that is necessary
to compile the inventory not later than the 90th day after the date the municipality
requests the information unless the entity and the municipality agree to extend the period
for providing the information. The information provided under this subsection must
include the type of service provided, the method of service delivery, and all information
prescribed by Subsections (e) and (f). If a service provider fails to provide the required
information within the 90-day period, the municipality is not required to include the
information in an inventory prepared under this section.
(d) The information required in the inventory shall be based on the services and facilities
provided during the year preceding the date the municipality adopted the annexation plan
or amended the annexation plan to include additional areas.
(e) For utility facilities, roads, drainage strictures, and other infrastructure provided or
maintained by public or private entities, the inventory must include:
(1) an engineer's report that describes the physical condition of all infrastructure
elements in the area; and
(2) a summary of capital, operational, and maintenance expenditures for that
infrastructure.
(f) For police, fire, and emergency medical services provided by public or private entities,
the inventory must include for each service:
(1) the average dispatch and delivery time;
(2) a schedule of equipment, including vehicles;
(3) a staffing schedule that discloses the certification and training levels of personnel;
and
Page - 41
(4) a summary of operating and capital expenditures.
(g) The municipality shall complete the inventory and make the inventory available for
public inspection on or before the 60th day after the date the municipality receives the
required information from the service providers under Subsection (c).
(h) The municipality may monitor the services provided in an area proposed for annexation
and verify the inventory information provided by the service provider.
Page - 42
APPENDIX 5
§ 43.056. Provision of Services to Annexed Area.
§ 43.056. Provision of Services to Annexed Area.
(a) Before the first (1st) day of the 10th month after the month in which the inventory is
prepared as provided by Section 43.053, the municipality proposing the annexation shall
complete a service plan that provides for the extension of full municipal services to the
area to be annexed. The municipality shall provide the services by any of the methods by
which it extends the services to any other area of the municipality.
(b) The service plan must include a program under which the municipality will provide full
municipal services in the annexed area no later than 2-1/2 years after the effective date of
the annexation, in accordance with Subsection (e), unless certain services cannot
reasonably be provided within that period and the municipality proposes a schedule for
providing those services. If the municipality proposes a schedule to extend the period for
providing certain services, the schedule must provide for the provision of full municipal
services no later than 4-1/2 years after the effective date of the annexation. If the area
was annexed after December 1, 1998, and before September 1, 1999, the municipality
shall provide sewer services in the annexed area as provided by this subsection, except
that, no later than five (5) years after the effective date of the annexation, the
municipality may not provide sewer services in the annexed area by means of a package
wastewater treatment plant. However, under the program if the municipality provides
any of the following services within the corporate boundaries of the municipality before
annexation, the municipality must provide those services in the area proposed for
annexation on the effective date of the annexation of the area:
(1) police protection;
(2) fire protection;
(3) emergency medical services;
(4) solid waste collection, except as provided by Subsection (o);
(5) operation and maintenance of water and wastewater facilities in the annexed area
that are not within the service area of another water or wastewater utility;
(6) operation and maintenance of roads and streets, including road and street lighting;
(7) operation and maintenance of parks, playgrounds, and swimming pools; and
(8) operation and maintenance of any other publicly owned facility, building, or
service.
(c) For purposes of this section, "full municipal services" means services provided by the
annexing municipality within its full-purpose boundaries, including water and wastewater
services and excluding gas or electrical service.
(d) A municipality with a population of 1.5 million or more may provide all or part of the
municipal services required under the service plan by contracting with service providers.
If the municipality owns a water and wastewater utility, the municipality shall, subject to
Page - 43
this section, extend water and wastewater service to any annexed area not within the
service area of another water or wastewater utility. If the municipality annexes territory
included within the boundaries of a municipal utility district or a water control and
improvement district, the municipality shall comply with applicable state law relating to
annexation of territory within a municipal utility district or a water control and
improvement district. The service plan shall summarize the service extension policies of
the municipal water and wastewater utility.
(e) The service plan must also include a program under which the municipality will initiate
after the effective date of the annexation the acquisition or constriction of capital
improvements necessary for providing municipal services adequate to serve the area.
The constriction shall be substantially completed within the period provided in the
service plan. The service plan may be amended to extend the period for constriction if
the constriction is proceeding with all deliberate speed. The acquisition or constriction
of the facilities shall be accomplished by purchase, lease, or other contract or by the
municipality succeeding to the powers, duties, assets, and obligations of a conservation
and reclamation district as authorized or required by law. The constriction of the
facilities shall be accomplished in a continuous process and shall be completed as soon as
reasonably possible, consistent with generally accepted local engineering and
architectural standards and practices. However, the municipality does not violate this
subsection if the constriction process is interrupted for any reason by circumstances
beyond the direct control of the municipality. The requirement that constriction of
capital improvements must be substantially completed within the period provided in the
service plan does not apply to a development project or proposed development project
within an annexed area if the annexation of the area was initiated by petition or request of
the owners of land in the annexed area and the municipality and the landowners have
subsequently agreed in writing that the development project within that area, because of
its size or projected manner of development by the developer, is not reasonably expected
to be completed within that period.
(f) A service plan may not:
(1) require the creation of another political subdivision;
(2) require a landowner in the area to fund the capital improvements necessary to
provide municipal services in a manner inconsistent with Chapter 395 unless
otherwise agreed to by the landowner; or
(3) provide services in the area in a manner that would have the effect of reducing by
more than a negligible amount the level of fire and police protection and
emergency medical services provided within the corporate boundaries of the
municipality before annexation.
(g) If the annexed area had a lower level of services, infrastructure, and infrastructure
maintenance than the level of services, infrastructure, and infrastructure maintenance
provided within the corporate boundaries of the municipality before annexation, a service
plan must provide the annexed area with a level of services, infrastructure, and
infrastructure maintenance that is comparable to the level of services, infrastructure, and
infrastructure maintenance available in other parts of the municipality with topography,
land use, and population density similar to those reasonably contemplated or projected in
Page - 44
the area. If the annexed area had a level of services, infrastructure, and infrastructure
maintenance equal to the level of services, infrastructure, and infrastructure maintenance
provided within the corporate boundaries of the municipality before annexation, a service
plan must maintain that same level of services, infrastructure, and infrastructure
maintenance. Except as provided by this subsection, if the annexed area had a level of
services superior to the level of services provided within the corporate boundaries of the
municipality before annexation, a service plan must provide the annexed area with a level
of services that is comparable to the level of services available in other parts of the
municipality with topography, land use, and population density similar to those
reasonably contemplated or projected in the area. If the annexed area had a level of
services for operating and maintaining the infrastructure of the area, including the
facilities described by Subsections (b)(5)-(8), superior to the level of services provided
within the corporate boundaries of the municipality before annexation, a service plan
must provide for the operation and maintenance of the infrastructure of the annexed area
at a level of services that is equal or superior to that level of services.
(h) A municipality with a population of 1.6 million or more may not impose a fee in the
annexed area, over and above ad valorem taxes and fees imposed within the corporate
boundaries of the municipality before annexation, to maintain the level of services that
existed in the area before annexation. This subsection does not prohibit the municipality
from imposing a fee for a service in the area annexed if the same fee is imposed within
the corporate boundaries of the municipality before annexation.
(i) If only a part of the area to be annexed is actually annexed, the governing body shall
direct the department to prepare a revised service plan for that part.
(j) The proposed service plan must be made available for public inspection and explained to
the inhabitants of the area at the public hearings held under Section 43.0561. The plan
may be amended through negotiation at the hearings, but the provision of any service
may not be deleted. On completion of the public hearings, the service plan shall be
attached to the ordinance annexing the area and approved as part of the ordinance.
(k) On approval by the governing body, the service plan is a contractual obligation that is not
subject to amendment or repeal except that if the governing body determines at the public
hearings required by this subsection that changed conditions or subsequent occurrences
make the service plan unworkable or obsolete, the governing body may amend the
service plan to conform to the changed conditions or subsequent occurrences. An
amended service plan must provide for services that are comparable to or better than
those established in the service plan before amendment. Before any amendment is
adopted, the governing body must provide an opportunity for interested persons to be
heard at public hearings called and held in the manner provided by Section 43.0561.
(1) A service plan is valid for 10 years. Renewal of the service plan is at the discretion of the
municipality. A person residing or owning land in an annexed area in a municipality with
a population of 1.6 million or more may enforce a service plan by petitioning the
municipality for a change in policy or procedures to ensure compliance with the service
plan. If the municipality fails to take action with regard to the petition, the petitioner may
request arbitration of the dispute under Section 43.0565. A person residing or owning
land in an annexed area in a municipality with a population of less than 1.6 million may
Page - 45
enforce a service plan by applying for a writ of mandamus not later than the second (2" d)
anniversary of the date the person knew or should have known that the municipality was
not complying with the service plan. If a writ of mandamus is applied for, the
municipality has the burden of proving that the services have been provided in
accordance with the service plan in question. If a court issues a writ under this
subsection, the court:
(1) must provide the municipality the option of disannexing the area within a
reasonable period specified by the court;
(2) may require the municipality to comply with the service plan in question before a
reasonable date specified by the court if the municipality does not disannex the
area within the period prescribed by the court under Subdivision (1);
(3) may require the municipality to refund to the landowners of the annexed area
money collected by the municipality from those landowners for services to the
area that were not provided;
(4) may assess a civil penalty against the municipality, to be paid to the state in an
amount as justice may require, for the period in which the municipality is not in
compliance with the service plan;
(5) may require the parties to participate in mediation; and
(6) may require the municipality to pay the person's costs and reasonable attorney's
fees in bringing the action for the writ.
(m) This section does not require that a uniform level of full municipal services be provided
to each area of the municipality if different characteristics of topography, land use, and
population density constitute a sufficient basis for providing different levels of service.
Any disputes regarding the level of services provided under this subsection are resolved
in the same manner provided by Subsection (1). Nothing in this subsection modifies the
requirement under Subsection (g) for a service plan to provide a level of services in an
annexed area that is equal or superior to the level of services provided within the
corporate boundaries of the municipality before annexation. To the extent of any conflict
between this subsection and Subsection (g), Subsection (g) prevails.
(n) Before the second (2" d) anniversary of the date an area is included within the corporate
boundaries of a municipality by annexation, the municipality may not:
(1) prohibit the collection of solid waste in the area by a privately owned solid waste
management service provider; or
(2) impose a fee for solid waste management services on a person who continues to
use the services of a privately owned solid waste management service provider.
(o) A municipality is not required to provide solid waste collection services under Subsection
(b) to a person who continues to use the services of a privately owned solid waste
management service provider as provided by Subsection (n).
Page - 46
APPENDIX 6
§ 43.0562. NEGOTIATIONS REQUIRED.
(a) After holding the hearings as provided by Section 43.0561:
(1) if a municipality has a population of less than 1.6 million, the municipality and
the property owners of the area proposed for annexation shall negotiate for the
provision of services to the area after annexation or for the provision of services
to the area in lieu of annexation under Section 43.0563; or
(2) if a municipality proposes to annex a special district, as that term is defined by
Section 43.052, the municipality and the governing body of the district shall
negotiate for the provision of services to the area after annexation or for the
provision of services to the area in lieu of annexation under Section 43.0751.
(b) For purposes of negotiations under Subsection (a)(1), the commissioners court of the
county in which the area proposed for annexation is located shall select five
representatives to negotiate with the municipality for the provision of services to the area
after annexation. If the area proposed for annexation is located in more than one county,
the commissioner's court of the county in which the greatest number of residents reside
shall select three representatives to negotiate with the municipality, and the
commissioners courts of the remaining counties jointly shall select two representatives to
negotiate with the municipality.
(c) For purposes of negotiations under Subsection (a)(2), if more than one special district is
located in the area proposed for annexation, the governing boards of the districts may
jointly select five representatives to negotiate with the municipality on behalf of all the
affected districts.
Page - 47
APPENDIX 7
§ 543.0564. ARBITRATION REGARDING NEGOTIATIONS FOR
SERVICES.
(a) If the municipality and the representatives of the area proposed for annexation cannot
reach an agreement for the provision of services under Section 43.0562 or if the
municipality and the property owner representatives cannot reach an agreement for the
provision of services in lieu of annexation under Section 43.0563, either party by
majority decision of the party's representatives may request the appointment of an
arbitrator to resolve the service plan issues in dispute. The request must be made in
writing to the other party before the 60th day after the date the service plan is completed
under Section 43.056. The municipality may not annex the area under another section of
this chapter during the pendency of the arbitration proceeding or an appeal from the
arbitrator's decision.
(b) The parties to the dispute may agree on the appointment of an arbitrator. If the parties
cannot agree on the appointment of an arbitrator before the 11th business day after the
date arbitration is requested, the mayor of the municipality shall immediately request a
list of seven (7) neutral arbitrators from the American Arbitration Association or the
Federal Mediation and Conciliation Service or their successors in function. An arbitrator
included in the list must be a resident of this state and may not be a resident of a county
in which any part of the municipality or any part of the district proposed for annexation is
located. The parties to the dispute may agree on the appointment of an arbitrator
included in the list. If the parties cannot agree on the appointment of an arbitrator before
the 11th business day after the date the list is provided to the parties, each party or the
party's designee may alternately strike a name from the list. The remaining person on the
list shall be appointed as the arbitrator. In this subsection, "business day" means a day
other than a Saturday, Sunday, or state or national holiday.
(c) The arbitrator shall:
(1) set a hearing to be held not later than the 10th day after the date the arbitrator is
appointed; and
(2) notify the parties to the arbitration in writing of the time and place of the hearing
not later than the 8th day before the date of the hearing.
(d) The authority of the arbitrator is limited to issuing a decision relating only to the service
plan issues in dispute.
(e) The arbitrator may:
(1) receive in evidence any documentary evidence or other information the arbitrator
considers relevant;
(2) administer oaths; and
(3) issue subpoenas to require:
(A). the attendance and testimony of witnesses; and
Page - 48
(B). the production of books, records, and other evidence relevant to an issue
presented to the arbitrator for determination.
(f) Unless the parties to the dispute agree otherwise, the arbitrator shall complete the hearing
within two (2) consecutive days. The arbitrator shall permit each party one (1) day to
present evidence and other information. The arbitrator, for good cause shown, may
schedule an additional hearing to be held not later than the seventh day after the date of
the first hearing. Unless otherwise agreed to by the parties, the arbitrator must issue a
decision in writing and deliver a copy of the decision to the parties not later than the 14th
day after the date of the final hearing.
(g) Either party may appeal any provision of an arbitrator's decision that exceeds the
authority granted under Subsection (d) to a district court in a county in which the area
proposed for annexation is located.
(h) If the municipality does not agree with the terms of the arbitrator's decision, the
municipality may not annex the area proposed for annexation before the fifth (5th)
anniversary of the date of the arbitrator's decision.
(i) Except as provided by this subsection, the municipality shall pay the cost of arbitration.
If the arbitrator finds that the request for arbitration submitted by the representatives of
the area proposed for annexation was groundless or requested in bad faith or for the
purposes of harassment, the arbitrator may require the area proposed for annexation to
pay all or part of the cost of arbitration.
Page - 49
AGENDA INFORMATION SHEET
AGENDA DATE: January 11, 2011
DEPARTMENT: Airport
ACM: Jon Fortune YT_
SUBJECT
Receive a report, hold a discussion and give staff direction regarding a proposed lease of
property located on the Denton Municipal Airport, specifically the area northeast of the Airport
Terminal parking lot and the lease of said property to NE Interests, Ltd for the constriction and
operation of a restaurant.
BACKGROUND
Airport staff was approached in September 2010 by Charles Nicholas, President of NE
Development and Constriction (NE Development), regarding his interest in developing a
restaurant at the Denton Airport. Terms and conditions for the Airport restaurant ground lease
were discussed with senior staff, the Airport Advisory Board, the City Council and an
independent property management consultant. Following input from these stakeholders, Airport
staff completed negotiation of the Airport Lease Agreement Commercial Operator (Agreement)
which is presented as an Action Item on the City Council agenda for January 11, 2011.
The basic terms of the Agreement include the following:
1. NE Development will constrict a full service, stand-alone restaurant with a seating capacity
of 150;
2. The restaurant will include a banquet/meeting room with a seating capacity of 75 which is
one-half of the total seating capacity;
3. The location of the restaurant will be adjacent to the existing Airport Terminal parking lot
on a lot one (1) acre in size;
4. The City will reimburse the developer for constriction of on-site service roads, public
parking, landscaping and other site development costs in an amount not-to-exceed $225,000.
The total development cost is estimated to be at least $750,000;
5. The ground lease will be a 30-year initial term with two (2) options to renew for five (5)
years each, for a total of forty (40) years;
6. The tenant will pay a base annual ground lease of $21,780, plus additional rent in the
amount of three percent (3%) of the gross revenue over $1 million each year. The business
pro forma projects a total annual lease revenue to the Airport of $51,780;
7. The reimbursement of developer constriction cost for public infrastructure will be made
under a Chapter 380 Economic Development Agreement between the City of Denton and
NE Development.
Agenda Information Sheet
January 11, 2011
Page 2
Typically, Chapter 380 agreements are discussed, reviewed, and recommended for approval by
the Economic Development Partnership Board (EDPB) prior to any City Council consideration.
However, since this particular Chapter 380 agreement does not involve property and sales tax
revenue, this agreement was reviewed and recommended for approval by the Airport Advisory
Board.
During the process of negotiating the Agreement, staff was asked to provide additional
information on a number of specific lease terms. While the identified concerns of various
stakeholders have been included in the Agreement being proposed to the City Council for
deliberation, some information regarding the proposed operation of the Airport restaurant are
best addressed by the developer. NE Development will have representatives available at the
City Council Work Session on January 11, 2011 to present their business plan for operation of
the restaurant, which will be a sit-down, full service restaurant with a breakfast, lunch and
dinner menu. The Agreement will allow the City architectural and constriction specification
control to assure a facility compatible with current and future development at Denton Airport.
Representatives of NE Development will be available to address the planned constriction and
operation of the restaurant.
FISCAL IMPACT
The Chapter 380 reimbursement funding for this project will be provided primarily by Airport
Gas Well funds. The proposed Airport restaurant Agreement will produce a minimum of
$21,780 annually, adjusted by a Consumer Price Index factor throughout the lease term, plus an
additional rent estimated to be $30,000 annually once the restaurant reaches full operation. The
base lease amount would recover the reimbursement for public infrastructure constriction in ten
(10) years. The estimated total lease revenue will recover the reimbursement economic
development incentive in four (4) years. The current ground lease rate for Airport tenants
would produce approximately $5,880 annually as an alternative if a developer requested this
type of agreement in order to build a restaurant independently.
EXHIBITS
1. General information regarding NE Development and Constriction
2. List of specific restaurants constricted and operated by NE Development
Respectfully submitted:
Quentin Hix
Airport Manager
EXHIBIT 1
ABOUT US - Company Profile
Based out of Lewisville, TX, N,E, Construction, LLP has been in business since
the 1980's. We specialize in large multi-million dollar projects nation-wide in
both the public and private sectors. The company is directed by Charlie M,
Nicholas. Mr, Nicholas has been the president of NE Construction, LLP since its
existence.
N,E. Construction, LLP offers a variety of construction services to a wide range
of customers, striving to offer competitive pricing and on-time delivery on all
projects, As a privately held, licensed and insured company with impressive
bonding capacity and financial power, we complete projects on a nationwide
scale without sacrificing personalized service, With a determination to
consistently evolve based on industry demands, we also strive to remain both
customer focused and customer driven. As a result, we have consistently
grown and prospered through building and maintaining client relationships and
are committed to excellence on every project,
N.G. Construction, LLP - 420 Southfork Drive - Lewisville, TX 75057 - Tel: 972.221,00951 Fax: 972.221.0098 - email: contactus@neconstruction,net
http://neconstruction.net/companyinfo.html 10/7/2010
EXHIBIT 1
ABOUT US • Hounder & CEO
Mr. Charlie Nicholas, a proven entrepreneur and founder of
N.E. Construction, has been involved in a myriad of business
ventures, such as general construction, real estate
acquisitions, apartment ownership and development, as well
as the restaurant and trucking service station industries. His
background includes over 20 years of ownership and
investment in various businesses from sole proprietorships
and partnerships to corporations. Under his strategic
leadership, he has driven N.E. Construction. to hit
phenomena] records of growth year after year. His
entrepreneurial spirit and true passion for success drive him
to aggressively pursue channels of growth and upcoming
opportunities.
N.E. Construction, LLP - 420 Southfork Drive • Lewisville, TX 75057 - Tei: 972.221.0095 / Fax; 972,221.0096 - email: contactus@neconstruction.net
http://neconstruction.net/founder.html 10/7/2010
EXHIBIT 1
ABOUT US - Mission Statement
To maintain flexibility in an ever-changing business market
To consistently strive to deliver quality projects on time and within
budget
To continually build and maintain positive and long-standing client
relationships.
NE Construction, LLP is a financially stable company that has been on
a constant rate of growth since Inception. We have no outstanding
liabilities, except for normal business purchases of supplies and
materials, which are paid monthly. We implement a flexible
administrative system allowing us to better serve and accommodate our Clients' needs. Our projects are
completed In a timely manner, where most are ahead of schedule and within budget,
We are a hands-on organization that wants to get projects done to the complete satisfaction of our Clients,
and at the best possible cost without compromising quality. We have crews and forces in-house that are
readily available when needed to control costs, ensure quality and to aid with any issues that may arise
during a project. Any concerns our Clients may have regarding dependency on subcontractors is alleviated
by maintaining these forces within our organization,
NE Construction. LLP holds a strong belief in building long-term successful relationships with our Clients.
We, as a General Contractor take the path of partnering up with our Clients where we can work together
as a team with a focus on one common goal, which is to deliver a high quality product, on time and at the
lowest cost possible. This belief has afforded NE Construction, LLP the luxury of having a stable and very
reliable Client base.
Customer satisfaction Is a primary goal of both Mr. Nicholas and NE Construction, LLP Since the company
has been in existence, there have been no projects that were not completed as agreed or have had a
customer indicate any dissatisfaction through legal action,
N.E. Construction, LLP - 420 Southfork Drive - Lewisville, TX 75057 - Tel: 072.221.00961 Fax: 972,221.0098 - email: eontactus@neconstroction.net
http,//neconstiuction.net/mission.html 10/7/2010
EXHIBIT 1
ABOUT US - References
"I have used N.C. Construction. on many projects over the past ten or so
years. These projects Include new construction and rehab of multi-tenant
office, medical office, retail, residential and multi-family. The quality of their
work is consistently at a very high level." - Neal C. Small, M.D., President, N
Investments
"it is amazing how a top quality construction company can revive a tired run down property." - Doug Hickok, Marquis
Management
http://neconstruction.net/references.html 10/7/2010
EXHIBIT 1
N.E. Construclion, LLP • 420 $OuihfOtk Drive • Lewisville, TX 75057 • Tel: 972.221.0095 / Fax: 072,221.0098 - email: contactus@neconslruction.net
10/7/201.0
http.//neconstr,uction.net/references.html
EXHIBIT 1
PORTFOLIO - Multifamily Projects
New Construction Rehabilitation
MID is a**+
Blvelake at Marine rmn
Creekside at N rhl k rmn *
Qrest Place Apartments*
p_prc ar Clarksville Agar m nts*
Parc at Maumelle Apartments"
Parc at Metro Center Apartments*
Parc at Rogers Apartments*
Plaza at Chase Oaks Apartment
on gate Apartment *
Summit r VIII
Triangle protect-*
Pavilion Apartments
Ridap,view Apart
Rivers one Apartm
51)effield Square
Summit View Apartments
*Housing and Urban Development (HUD) Project
Tax Credit Project
+ Senior Project
N.E, Construction, LLP - 420 Southfork Drive - Lewisville, TX 75057 - Tel: 972.221.00951 Fax: 972.221.0090 - email: eontactus@neconstruction.net
http://neconstraction.net/portfolio-multifamily.htmi 10/7/2010
EXHIBIT 1
PORTFOLIO - Community Projects
Educational Facilities Municipalities Religious Facilities
ASU Physical Therapy Building QItKof Andrews Public Safety Building Our Lady of Lebanon Maronitq Church
Angelg State Uii1yefsity MIR Cen er Lewisville Munigipal Annex St. Job h Cajhgli~; Church
Son Angglo State School
N.E. Construction, LLP - 420 South(ork Nve - Lewisville, TX 75057 - Tel 972,221.00951 Fax; 972.221.0098 -email: contaolus@neconstruction.net
http://neconstruction.net/portfolio_community.html 10/7/2010
EXHIBIT 1
PORTFOLIO - Commercial Projects
Brinker Crossing
Cabochon at Lgis Colinas
Qabochon at Rlver Oaks in liouston
Elysium Designs
Mercer Crossing
MansQald Retail & Office Comotex
NASR Brother Jewelers
Triangle project
N.E. Construction, LLP - 420 Southfork Drive- Lewisville, TX 75057 - Tel: 972.221.0095 / Fax: 972.221.0098 - email: contactus@neconstruction,net
http;//neconstruction.net/portfolio_commercial.html 10/7/2010
EXHIBIT 2
NE Development and Construction
Restaurant Development References
1. ACHunting Ranches.com
Located in the Austin Hill Country
2. RoughCreek.com
This is a resort in Glen Rose with an award winning restaurant (Bon Apitite)
and favorable reviews from culinary magazines.
Charles Nicholas plans to make the Airport restaurant a four-star facility
with steaks prepared from beef raised on the NE Development ranch in
Texas.
The restaurant will include a glass walled meat locker with steak selected
by each patron and prepared to order. No imported beef or frozen meat;
3. The Villages development included five (5) restaurants.
4. Charles Nicholas participated with the development of Hot Skillet
restaurants, which were sold and became Iron Skillet restaurants
throughout the country.
AGENDA INFORMATION SHEET
AGENDA DATE: January 11, 2011
DEPARTMENT: Airport
Al-L
ACM: Jon Fortune n
SUBJECT
Consider adoption of an ordinance approving a Commercial Operator Airport Lease Agreement
between the City of Denton, Texas and NE Development and Constriction at the Denton
Municipal Airport for lease of property on which to build and operate a restaurant; and providing
an effective date. (Airport Advisory Board recommends approval 5-0)
BACKGROUND
Airport staff was approached in September 2010 by Charles Nicholas, President of NE
Development and Constriction (NE Development), regarding his interest in developing a
restaurant at the Denton Airport. NE Development maintains a corporate flight headquarters at
Denton Airport and was recommended to Airport staff by Damon Ward, President of Business
Air Management, and a Denton Airport Fixed Base Operator contractor. Subsequent discussions
with Mr. Nicholas resulted in identification of terms and conditions under which an Airport
ground lease might be negotiated. Airport staff negotiated an initial ground lease that included
certain site improvements to be constricted by the Airport to support the restaurant and a ground
lease rate that is higher than the normal ground lease rate at the Airport.
Terms and conditions for the Airport restaurant ground lease were discussed with senior staff,
the Airport Advisory Board, the City Council and an independent property management
consultant. Following input from these stakeholders, Airport staff completed negotiation of the
Airport Lease Agreement Commercial Operator (Agreement) that is attached to and made a part
of the ordinance. The basic terms of the Agreement include the following:
1. NE Development will constrict a full service, stand-alone restaurant with a seating capacity
of 150;
2. The restaurant will include a banquet/meeting room with a seating capacity of 75 which is
one-half of the total seating capacity;
3. The location of the restaurant will be adjacent to the existing Airport Terminal parking lot on
a lot one (1) acre in size;
4. The City will reimburse the developer for constriction of on-site service roads, public
parking, landscaping and other site development costs in an amount not-to-exceed $225,000.
The total development cost is estimated to be at least $750,000;
5. The ground lease will be a 30-year initial term with two (2) options to renew for five (5)
years each, for a total of forty (40) years;
6. The tenant will pay a base annual ground lease of $21,780, plus additional rent in the amount
of three percent (3%) of the gross revenue over $1 million each year. The business pro forma
projects a total annual lease revenue to the Airport of $51,780;
Agenda Information Sheet
January 11, 2011
Page 2
7. The reimbursement of developer constriction cost for public infrastructure will be made
under a Chapter 380 Economic Development Agreement between the City of Denton and NE
Development.
Typically, Chapter 380 agreements are discussed, reviewed, and recommended for approval by
the Economic Development Partnership Board (EDPB) prior to any City Council consideration.
However, since this particular Chapter 380 agreement does not involve property and sales tax
revenue, this agreement was reviewed and recommended for approval by the Airport Advisory
Board.
NE Development will have representatives available at the 2" d Tuesday Session on January 11,
2011, to present their business plan for operation of the restaurant, which will be a sit-down, full
service restaurant with a breakfast, lunch and dinner menu. The Agreement will allow the City
architectural and constriction specification control to assure a facility compatible with current
and future development at Denton Airport.
The Airport staff, in conjunction with other stakeholders, has prepared a risk mitigation strategy
(Exhibit 2) to protect the public interest associated with the proposed economic development
incentive of investing Airport Fund resources in this public/private partnership facility. In
addition to the investment being made directly by NE Development, there are designed
alternative uses for the facility should future circumstances require a change in the operation of
the building to be constricted.
OPTIONS
1. Approve the Airport Lease Agreement Commercial Operator with NE Development for
constriction and operation of an Airport restaurant;
2. Deny the Airport Lease Agreement Commercial Operator with NE Development for
constriction and operation of an Airport restaurant;
3. Modify the Airport Lease Agreement Commercial Operator with NE Development for
constriction and operation of an Airport restaurant based upon discussion with the developer
and staff.
PRIOR ACTION
The Airport Advisory Board recommended approval of this item on January 5, 2011.
FISCAL IMPACT
The Chapter 380 reimbursement funding for this project will be provided primarily by Airport
Gas Well funds. The proposed Airport Restaurant Agreement will produce a minimum of
$21,780 annually, adjusted by a Consumer Price Index factor throughout the lease term, plus an
additional rent estimated to be $30,000 annually once the restaurant reaches full operation.
Agenda Information Sheet
January 11, 2011
Page 3
The base lease amount would recover the reimbursement for public infrastructure constriction in
ten (10) years. The estimated total lease revenue will recover the reimbursement economic
development incentive in four (4) years. The current ground lease rate for Airport tenants would
produce approximately $5,880 annually as an alternative if a developer requested this type of
agreement in order to build a restaurant independently.
EXHIBITS
Ordinance
Risk Mitigation Summary
Airport Advisory Board Minutes (Excerpt)
Respectfully submitted:
Quentin Hix
Airport Manager
lkoodadldepartmentsllegMour documentslordinances\I11airport ne development restaurant.doe
ORDINANCE NO.
AN ORDINANCE APPROVING A COMMERCIAL OPERATOR AIRPORT LEASE
AGREEMENT BETWEEN THE CITY OF DENTON, TEXAS AND NE DEVELOPMENT
AND CONSTRUCTION AT THE DENTON MUNICIPAL AIRPORT FOR LEASE OF
PROPERTY ON WHICH TO BUILD AND OPERATE A RESTAURANT; AND PROVIDING
AN EFECTIVE DATE.
THE CITY COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The City Manager or his designee is hereby authorized to execute an airport
lease agreement for commercial operator between the City of Denton and NE Development and
Construction at the Denton Municipal Airport, in substantially the form of the Airport Lease
Agreement which is attached to and made a part of this ordinance for all purposes.
SECTION 2. This ordinance shall become effective immediately upon its passage and
approval.
PASSED AND APPROVED this the day of , 2011.
MARK A. BURROUGHS, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPROVED AS TO LEGAL FORM:
ANITA BURGESS, CITY ATTORNEY
BY:
Least Agreement rev A.doc
AIRPORT LEASE AGREEMENT
C01•2yffiRCIAL OPERATOR
This Lease Agreement is made and executed to be effective as of the 10th day
following approval of the site plan by the City of Denton (the "Effective Date") at Denton,
Texas, by and between the City of Denton, Texas, a municipal corporation, hereinafter
referred to as "Lessor", and NE Development And Construction, hereinafter referred to as
"Lessee".
WITNESSETH:
WHEREAS, Lessor now owns, controls and operates the Denton Municipal Airport
(the "Airport") in the City of Denton., County of Denton, State of Texas; and
WHEREAS, Lessee desires to lease certain premises at the Airport and construct and
maintain a restaurant thereon;
NOW, THEREFORE, for and in consideration of the promises and the mutual
covenants contained in this Agreement, the parties agree as follows:
I. CONDITIONS OF LEASE AGREEMENT
NOTWITHSTANDING ANY LANGUAGE TO THE CONTRARY HEREINAFTER
CONTAINED, THE LANGUAGE IN PARAGRAPHS A THROUGH D OF THIS
SECTION SHALL BE BINDING.
A. PRINCIPLES OF OPERATIONS. The right at Denton Airport to conduct a food
service business and restaurant related services to the public is granted to Lessee subject to
Lessee agreeing:
To fiunish said services on a fair, equal and not unjustly discriminatory basis
to all users thereof; and
2. To charge fair, reasonable and not unjustly discriminatory prices for each unit
or service; provided, that Lessee may be allowed to make reasonable and
nondiscriminatory discounts, rebates, or other similar types of price reductions
to volume purchasers.
B. NON-DISCRIIVENATION: Lessee, for itself, its personal representatives,
successors, and assigns, as a part of the consideration hereof, does hereby covenant and
agree as a covenant running with the land that:
1. No person on the grounds of race, religion, color, sex, or national origin shall
be excluded from participation in, denied the benefits of, or be otherwise
subjected to discrimination in the use of said facilities;
2. In the construction of any improvements on, over, or under such land and the
furnishing of services thereon, no person on the grounds of race, religion,
color, sex, or national origin shall be excluded from participation in, denied
the benefits of, or otherwise be subjected to discrimination;
3. Lessee shall use the premises in compliance with all other requirements
imposed by or pursuant to Title 49, Code of Federal Regulations, Department
of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimi-
nation in Federally assisted programs of the Department of Transportation -
Effectual of Title VI of the Civil Rights Act of 1964, as said Regulations may
be amended.
C. RIGHT OF IINDNIDUALS TO 1VIAINTAIN AIRCRAFT. It is clearly
understood by Lessee that no right or privilege has been granted which would operate to
prevent any person, fum or corporation operating an aviation related business on the Airport
from performing any services on its own leased premises to serve its own regular employees
(including, but not limited to, cafeteria or food vending service) that it may choose to
perform.
D. NON-EXCLUSIVE RIGHT. It is understood and agreed that nothing herein
contained shall be construed to grant or authorize the granting of an exclusive right within
the meaning of Title 49 U.S.C. Appendix. § 1349.
E. PUBLIC AREAS.
1. Lessor reserves the right to further develop or improve the land area of the
Airport as it sees fit, regardless of the desires or views of Lessee, and without
interference or hindrance.
2. Lessor shall be obligated to maintain and keep in good repair the public land
area of the Airport and all publicly owned facilities of the Airport, together
with the right to direct and control all activities of Lessee in this regard.
3. During time of war or national emergency, Lessor shall have the right to lease
the land area of the Airport or any part thereof to the United States
Government for military or naval use, and, if such lease is executed, the
provisions of this instrument insofar as they are inconsistent with the
provisions of the lease to the Government, shall be suspended.
4. Lessor reserves the right to take any action it considers necessary to protect the
aerial approaches of the Airport against obstruction, together with the right to
prevent Lessee from erecting, or permitting to be erected, any building or other
structure on or adjacent to the Airport which, in the opinion of Lessor, would
limit the usefulness or safety of the Airport or constitute a hazard to aircraft or
to aircraft navigation. The restaurant facility as currently proposed as
provided in Section II.C. does not violate this provision.
NE Interests Ltd - Page 2
5. This Lease Agreement shall be subject to all federal, state and local laws,
statutes, constitutional provisions, charters, ordinances, rules regulations,
directives, policies, permits, standards and orders (including without
limitation, the City of Denton, Texas, the State of Texas, the Federal Aviation
Administration, and, the Texas Department of Transportation) whether in
existence now or enacted in the future, including any grant agreements or
grant assurances now existing or agreed to in the future.
U. LEASED PREMISES
Lessor, for and in consideration of the covenants and agreements herein contained, to
be kept by Lessee, does hereby demise and lease unto Lessee, and Lessee does hereby lease
from. Lessor, for the lease term described in Article R the following described land situated
in Denton County, Texas:
A. LAND. A tract of land, being approximately one 1) acre; or, 43,560 square feet ,
drawn and outlined on Attachment "A", legally described in Attachment "B" and with the
improvements shown on a Site Plan in Attachment "C" delineating all proposed
improvements to be constructed by Lessee and Lessor, such attachments being incorporated
herein by reference (the "Leased Premises").
Together with the right of ingress and egress to the Leased Premises; and the right in
common with others so authorized of passage upon the Airport property generally, subject
to reasonable regulations by the City of Denton and such rights shall extend to Lessee's
employees, passengers, patrons and invitees. For purposes of this agreement, the term
"Leased Premises" shall mean all property located within the metes and bounds described
and identified within Attachment "B", including leasehold improvements constructed by the
Lessee and Lessor as shown on Attachment "C", and including certain easements or
property owned and/or controlled by the Lessor.
A legal description of the leased premises is not currently attached as Attachment "B".
Lessee shall deliver to Lessor no later then 30 days after the date of this Agreement a legal
description of the leased premises accurately describing the leased premises that is
acceptable to Lessor. If Lessee fails to do so, Lessor at its option may terminate this
Agreement, in which case it will have no further force and effect. The approved legal
description will be attached to this Agreement as Attachment "B".
A Site Plan delineating all improvements to be constructed by Lessee and Lessor is
not currently attached as Attachment "C". Lessee shall deliver to Lessee prior to
construction of said improvements a Site Plan that accurately depicts all improvements to
be constructed by Lessee and Lessor that is acceptable to Lessor. If Lessee fails to do so,
Lessor at its option may terminate this Agreement, in which case it will have no further
force and effect. The approved Site Plan will be attached to this Agreement as
Attachment "C".
NE Interests Ltd - Page 3
B. IMPROVEMENTS PROVIDED BY LESSOR: hi addition to the general
easements as set forth in Article II.D. "Access to Utilities" below, Lessor shall reimburse
Lessee according to terms of an Economic Development Grant Agreement approved
between Lessor and Lessee dated January 11, 2011 for the construction cost of the
following improvements to Lessee's ieased premises:
1. Perimeter access roads on the north, west and south sides of the property within
the lease boundaries as shown on Attachment "A" to this lease agreement, said
improvements to be constructed to specifications agreed upon by Lessor and
Lessee;
2. Vehicle parking on the east side of the property within the lease boundaries as
shown on Attachment "C" to this lease agreement, said improvements to be
constructed to specifications agreed upon by Lessor and Lessee;
3. All site improvements including utilities;
4. Landscaping at various locations within the lease boundaries as shown on
Attachment "C" to this lease agreement, said improvements to be constructed
to specifications agreed upon by Lessor and Lessee;
5. The total expenditure to be reimbursed by Lessor to Lessee for road, parking,
site improvements, utilities and landscaping improvements within the lease
boundaries as shown on Attachment "C" to this lease agreement shall not
exceed an amount of two hundred twenty five thousand dollars ($225,000.00).
6. Qualified expenditures for Lessor reimbursed improvements may include all
design, engineering, surveying, testing, and other such costs deemed
appropriate by Lessor in Lessor's sole discretion in addition to all hard
construction costs.
The term "Lessor improvements" shall mean those things on or adjacent to the
Leased Premises belonging to, constructed by, or to be constructed by the Lessor. Unless
otherwise noted herein, all Lessor improvements are and will remain the property of Lessor.
All Lessor improvements must be described in detail above, or above referenced and
attached to this Agreement in an exhibit approved by Lessor.
C. IMPROVEMENTS PROVIDED BY LESSEE On the Leased Premises, Lessee
shall construct a facility to be used as a restaurant of not less than _5,000 square feet.
Lessee shall also construct appropriate culverts or drainage as required by City
ordinances within the lease boundaries as well as other improvements as determined
necessary by City ordinances (All above described improvements to be constructed by
Lessee are called the "Lessee's huprovements' Construction of Lessee's Improvements
shall be commenced no later than 270 days (the "Commencement Period") and completed
no later than 720 days after the Effective Date (the "Construction Period). Construction of
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Lessee's Improvements is considered commenced upon issuance of a building permit and
construction of any portion of the facility. Construction of Lessee's Improvements is
considered complete upon the issuance of a Certificate of Occupancy for the entire facility,
and drainage and utility improvements are completed. In addition, as a condition precedent
to the effectiveness of this Lease Agreement, within 60 days after the Effective Date of this
Lease Agreement, Lessee shall provide to Lessor (i) a written estimate of the cost to
construct Lessee's Improvements prepared by a contractor who has demonstrated
experience in the successful construction of improvements similar to Lessee's
Improvements (the "Construction Cost Estimate"), (ii) a written schedule of construction to
complete Lessee's Improvements, and (iii) a written loan commitment from a lending
institution providing for sufficient funding to cover the Construction Cost Estimate (called
"Conditions Precedent"). Should the Conditions Precedent not be met either party may
terminate this Lease Agreement by giving the other party written notice, in which case this
Lease Agreement shall be null and void and of no further force and effect. Such termination
shall not prevent the Lessee from submitting a new proposed lease request at a later date.
The parties may extend the 60 day time period if in writing signed by both parties- Lessee is
not entitled to take possession of the Leased Premises under this Lease Agreement until the
Conditions Precedent have been fulfilled.
Notwithstanding anything contained in this Lease Agreement to the contrary, a
failure to commence the Lessee's Improvements within the Commencement Period or
to complete the Lessee's Improvements within the Construction Period may, at the
sole option and discretion of the Lessor, result in the immediate termination and
cancellation of this Lease Agreement upon 30 days written notice of cancellation to
Lessee. Upon receipt of such notice of cancellation, Lessee's rights and/or Lessee's
right to cure or remedy the failure to perform under the Lease Agreement will
immediately cease and be forfeited, and all of Lessee's Improvements shall
immediately become the property of Lessor at no cost, expense or other compensation
paid by Lessor to Lessee; and Lessee shall immediately vacate the Leased Premises.
D. EASEMENTS. Lessor and Lessee by mutual agreement may establish, on the
Leased Premises, easements for public access on roads and taxiways. All such easements
shall be by written agreement and publicly recorded in official county public records.
E. ACCESS TO UTILITIES. Lessor represents that there are water, sewer and 3-
phase electricity lines within close proximity to the Leased Premises available to "tap-in" by
Lessee, and that the same are sufficient for usual and customary service on the Leased
Premises. Lessee's connections to said utilities are to be made at Lessee's sole cost, expense
and risk, including all customary utility fees assessed by the respective service provider.
Lessee agrees to execute or otherwise grant appropriate customary utility easements
required by a utility service provider on the Leased Premises or to the Leased premises.
F. REQUIRED FILING. Prior to commencing construction, Lessee must submit,
or cause to have submitted, a Federal Aviation Administration (FAA) Form 7960-1 as
required, and submit to Lessor copies of all FAA findings and related correspondence upon
receipt of same.
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III. TERM
The term of this Lease Agreement shall be for a period of thirty (30) years, com-
mencing on the 10th day following the approval of the site plan by the City of Denton.
Lessee has the option to renew for two (2) additional five (5) year terms. In order to
exercise the first option Lessee must provide written notice to Lessor of its intent to exercise
the first 5 year option no later than 180 day before the expiration of the 30 year primary
term. To exercise the second option such written notice must be provided no later than 180
days before the expiration of the first 5 year option term. The rental and terms to be
negotiated for the option periods shall be reasonable and consistent with the then value,
rentals and terms of similar property on the Airport. Lessee may only exercise its option
rights if not in default of this Agreement at the time of exercising the option or at the time
the option is due to commence.
IV. PAYMENTS, RENTALS AND FEES
Lessee covenants and agrees to pay Lessor, as consideration for this Lease Agreement,
the following payments, rentals and fees:
A. LAND AND RENTAL. Rental shall be due and payable to Lessor in the form
of a base ground lease amount plus an additional rent on gross sales as follows:
1. Lessee shall pay a base lease amount in the sum, of $0.50 per square foot or
$21,780 per year (the "Base Rent"), payable in twelve (12) equal monthly
installments in the sum of one thousand eight hundred fifteen dollars
($1,815.00) in advance, on or before the 1st day of each and every month
during the term of this Lease Agreement. Lessee has the option to pay annual
base rental in whole on or before the 1 st day of October, at the beginning of the
City's fiscal year, each and every year of this Lease Agreement; and,
2. Lessee shall pay additional rent to Lessor on gross sales calculated for each
twelve (12) month period and payable in lump sum in the first month following
each twelve (12) month period during the term of this lease in the amount of
three percent (3%) of the gross sales in excess of one million dollars
($1,000,000.00) calculated for each twelve (12) month period of this
Agreement during the term of this lease beginning February 1, 2010.
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3. Additional rent shall be calculated for each twelve (12) month period of this
Agreement based upon the total gross income from all types of sales received
by or due and payable to Lessee (or any of its affiliates or related entities
conducting business operations at any time from the Leased Premises), without
any offset or deductions including, without limitation, all food and non-
alcoholic beverages, alcoholic beverages, catering services, vending machines
or any other pay-for-service type devices, meeting and/or banquet services and
other uses or activities either pre-approved or not approved by Lessor.
4. Lessee shall be required to keep its financial books and records, including state
and federal tax records, for each of the previous five (5) full calendar years for
the duration of this Agreement, to be made available for the Lessor's inspection
and audit at Lessor's request. Lessor shall have the right, at any reasonable
time, to examine and perform audits of Lessee's records pertaining to its
operations on the Leased Premises. The cost of any such audits will be bome
by the Lessor and Lessee shall pay upon demand any proven deficiencies in
additional rent. If the Lessor's audit finds that the gross sales were under
reported by five percent (51/o) or more, the Lessee shall pay the proven
deficiency plus reimburse Lessor for the cost of the audit, upon Lessor's written
demand.
B. LESSOR IMPROVEMENTS RENTALS. NONE: Lessor improvements as
described in Article H, B. 1., 2., and 3. on the Leased Premises are included as a. part of the
ground lease rental as described in Article IV, A., 1., and 2..
C. PAYMENT PENALTY ADJUSTMENTS. All payments due Lessor from
Lessee shall be made to Lessor at the offices of the Finance Department of the City of
Denton, Customtr Service Division., 601 West Hickory, Denton, Texas, unless otherwise
designated in writing by the Lessor. If payments are not received on or before the 15th day
of the month, a five percent (5%) penalty will be due as of the 16th. If payments are not
received by the first of the subsequent month, an additional penalty of one percent (1%) of
the unpaid rental/fee amount will be due. A one percent (1%) charge will be added on the
first of each subsequent month until the unpaid rental/fee payment is made. The Original
Rent for the Leased Premises shall be readjusted at the end of each five (5) year period
during the Lease Term on the basis of the proportion that the then current United States
Consumer Price Index for all urban consumers (CPI-U) for the Dallas-Fort Worth Bureau of
Labor Statistics bears to the last month of the previous calendar quarter index
(_September_), which was 218.439 at the beginning of this lease (1982-84 = 100). Each
rental adjustment, if any, shall occur on the 1st day of each fifth (5th) year of this
Lease Agreement.
The adjustments in the yearly rent shall be determined by multiplying the Original
Rent by a fraction., the numerator of which is the index number for the last month of the
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previous calendar quarter index S tember prior to the adjustment, and the
denominator of which is the index number applicable at the execution of this Lease
Agreement. If the product of this multiplication is greater than the Original Rent, Lessee
shall pay this greater amount as the yearly rent until the time of the next rental adjustment
as called for in this section. If the product of this multiplication is less than the Base Rent
there shall be no adjustment in the annual rent at that time, and Lessee shall pay the
previous year's annual rent until the time of the next rental adjustment as called for in this
section. In no event shall any rental adjustment called for in this section result in an
annual rent less than the previous year's annual rent. The adjustment shall be limited so
that the annual rental payment determined for any given five-year period shall not exceed
the annual rental payment calculated for the previous CPI adjustment by more than twenty
percent (20%) percent.
If the consumer price index for all urban consumers (CPT-U) for the Dallas-Fort
Worth geographical region, as compiled by the U.S. Department of Labor, Bureau of Labor
Statistics, is discontinued during the Lease Term, the remaining rental adjustments called
for in this section shall be made using the formula set forth above, but by substituting the
index numbers for the Consumer Price Index-Seasonally Adjusted U.S. City Average For
All Items For All Urban Consumers (CPI-U) for the index numbers for the CPI-U
applicable to the Dallas-Fort Worth geographical region. If both the CPI-U for the Dallas-
Fort Worth geographical region and the U.S_ City Average are discontinued during the
Lease Term, the remaining rental adjustments called for in this section shall be made using
the statistics of the Bureau of Labor Statistics of the United States Department of Labor that
are most nearly comparable to the CPI-U applicable to the Dallas-Fort Worth geographical
region. If the Bureau of Labor Statistics of the United States Department of Labor ceases to
exist or ceases to publish statistics concerning the purchasing power of the consumer dollar
during the Lease Term, the remaining rental adjustments called for in this section shall be
made using the most nearly comparable statistics published by a recognized financial
authority selected by Lessor.
V. RIGHTS AND OBLIGATIONS OF LESSEE
A. USE OF LEASED PREMISES. Lessee is granted the non-exclusive privilege to
engage in owner/operator activities providing the following restaurant services:
1. Restaurant Food Service. Lessee is granted the non-exclusive right to sell
prepared food to public patrons at the leased premises location on the Denton
Airport during the term of this lease agreement;
2. Meeting and/or Banquet Food Service. Lessee is granted the non-exclusive
right to rent banquet and/or meeting room space to the public at Denton
Airport and the right to sell prepared food to public patrons in the restaurant
facility, including a banquet and/or meeting room, located on the leased
premises;
3. Food Catering Service. Lessee is granted the non-exclusive right to provide
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food service to third parties on Denton Airport property in facilities and at
locations owned and operated by third parties at Denton Airport;
Lessee, its tenants, employees, invitees and guests shall not. be authorized to conduct
any services not specifically listed in this Lease Agreement. The use of the Leased Premises
by Lessee, its tenants, employees, invitees or guests shall be limited to only those private,
commercial, retail or industrial activities having to do with or related to restaurant food
service. Except as specifically authorized in this Lease Agreement, no person, business or
corporation may operate a commercial, retail or industrial business upon the Leased
Premises or upon the Airport without a lease or license from Lessor authorizing such
commercial, retail or industrial activity. The Lessor shall not unreasonably withhold
authorization to conduct food related services.
B. STANDARDS. Lessee shall meet or exceed the following standards:
1. Address. Lessee shall file with the Airport Manager and keep current its
mailing addresses, telephone numbers and contacts where it can be reached in
an emergency.
2. List. Lessee shall file with the Airport Manager and keep current a list of its
tenants and sublessees.
3. Conduct. Lessee shall contractually require its employees and sublessees (and
sublessee's invitees) to abide by the terms of this Lease Agreement. Lessee
shall promptly enforce its contractual rights in the event of a default of such
covenants.
4. Utilities, Taxes and Fees. Lessee shall meet all expenses and payments in
connection with the use of the Leased Premises and the rights and privileges
herein granted, including the timely payment of utilities, taxes, permit fees,
license fees and assessments lawfully levied or assessed.
5. Laws. Lessee shall comply with all current and future federal, state and local
laws, rules and regulations which may apply to the conduct of business
contemplated, including rules, regulations and ordinances promulgated by
Lessor, and Lessee shall keep in effect and post in a prominent place all
necessary and/or required licenses or permits.
6. Maintenance of Property. Lessee shall be responsible for the maintenance,
repair and upkeep of all property, buildings, structures and improvements,
including the mowing or elimination of grass and other vegetation on the
Leased Premises, and shall keep the Leased Premises neat, clean and in
respectable condition, free from any objectional matter or thing, including
trash or debris. Lessee agrees not to utilize or permit others to utilize areas on
the Leased Premises which are located on the outside of any building for the
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storage of wrecked or permanently disabled aircraft, aircraft parts, automo-
biles, vehicles of any type, or any other equipment or items which would
distract from the appearance of the leased premises. Lessee agrees that at no
time shall the Leased Premises be used for a flea market type sales operation.
7. Painting of Buildings. During the Lease Term of this Lease Agreement and
during each extension, Lessor shall have the right to require, not more than
once every five years, that the metal exterior of hangar(s) or building(s)
located on the Leased Premises be repainted. The Lessor may require Lessee
to repaint said exteriors according to Lessor's specifications (to specify color
of paint, quality of workmanship and the year and month in which the
hangar(s) or building(s) are to be painted, if needed.) Lessee shall complete
the painting in accordance with such specifications within one (1) year of
receipt of notice from Lessor. Lessee agrees to pay all costs and expense
involved in the hangar or building painting process. Failure of Lessee to
complete the painting required by Lessor, within the one (1) year period shall
constitute Lessee's default under this Lease Agreement.
8. Unauthorized use of Leased Premises. Lessee may not use any of the Leased
Premises for any use not authorized herein unless Lessor gives Lessee prior
written approval of such additional use. .
9. Dwellings. It is expressly understood and agreed that no dwelling or domicile
may be built, moved to or established on or within the Leased Premises nor
may lessee, its tenants, employees, invitees, or guests be permitted to reside or
remain as a resident on or within the Leased Premises or other Airport
premises. Lessee may have a pilot lounge, including restroom and shower
facilities for use by flight crew and passengers.
10. Quit Possession. Lessee shall quit possession of the Leased Premises at the
end of the Lease Term or any renewal or extension thereof, or upon
cancellation or termination of the Lease Agreement, and deliver up the Lease
Premises to Lessor in as good condition as existed when possession was taken
by Lessee, reasonable wear and tear excepted.
11. Fndemnity. Lessee must indemnify, hold harmless and defend the Lessor, its
officers, agents and employees, from and against liability for any and all
claims, liens, suits, demands and/or actions for damages, injuries to persons
(including death), property damage, (including loss of use), and expenses,
including court costs, attorneys' fees and other reasonable costs, occasioned
by or incidental to the Lessee's occupancy or use of the Leased Premises or
the Airport and/or activities conducted in connection with or incidental to this
Lease Agreement, including all such causes of action based on common,
constitutional or statutory law, or based in whole or in part upon the negligent
or intentional acts or omissions of Lessee, its officers, agents employees,
invitees or other persons. Lessee must at all times exercise reasonable
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precautions on behalf of, and be solely responsible for, the safety of its
officers, employees, agents, customers, visitors, invitees, licensees and other
persons, as well as their property, while in, on, or involved in any way with
the use of the Leased Premises. The Lessor is not liable or responsible for
the negligence or intentional acts or omissions of the Lessee, its officers,
agents, employees, agents, customers, visitors and other persons. The Lessor
shall assume no responsibility or liability for harm, injury, or any damaging
events which are directly or indirectly attributable to premise defects, whether
real or alleged, which may now exist or which may hereafter arise upon the
Leased Premises, responsibility for all such defects being expressly assumed
by the Lessee. The Lessee agrees that this indemnity provision applies to all
claims, suits, demands, and actions arising from all premise defects or
conditions.
THE LESSOR AND THE LESSEE EXPRESSLY INTEND THIS
INDEMNITY PROVISION TO REQUIRE LESSEE TO INDEMNIFY
AND PROTECT THE LESSOR FROM THE CONSEQUENCES OF THE
LESSOR'S OWN NEGLIGENCE WHILE LESSOR IS PARTICIPATING
IN THIS LEASE AGREEMENT WHERE THAT NEGLIGENCE IS A
CONCURRING CAUSE OF THE INJURY DEATH OR DAMAGE.
NOTWITHSTANDING THE TERMS OF THE PRECEDING
SENTENCES, THIS INDEMNITY PROVISION DOES NOT APPLY TO
ANY CLAIM, LOSS,_ DAMAGE, CAUSE OF ACTION. SUIT AND
LIABILITY WHERE THE INJURY DEATH OR DAMAGE RESULTS
FROM THE SOLE NEGLIGENCE OF THE LESSOR OR ANY OF ITS
EMPLOYEES, CONTRACTORS, OR AGENTS, UNMIXED WITH THE
FAULT OF ANY OTHER PERSON OR ENTITY.
12. Chemicals. Lessee agrees to properly store, collect and dispose of all chemicals
and chemical residues; to properly store, confine, collect and dispose of all
paint, including paint spray ' the atmosphere, and paint products; and to
comply with all Local, State and Federal regulations governing the storage,
handling or disposal of such chemicals and paints. Further, the Lessee shall be
solely responsible for all discharges, whether accidental or intentional, of any
chemical and for the costs associated with the cleanup, remediation and
disposal of said chemicals.
13. Hazardous Activities. Should Lessee violate any law, rule, restriction or
regulation of the City of Denton or the Federal Aviation Administration, or any
other regulatory authority, or should the Lessee engage in or permit other
persons or agents to engage in activities which could produce hazards or
obstruction to air navigation, obstructions to visibility or interference with any
aircraft navigational aid station or device, whether airborne or on the ground,
then Lessor shall state such violation in writing and deliver written notice to
Lessee or Lessee's agent on the Leased Premises, or to the person(s) on the
Leased Premises who are causing said violation(s), and upon delivery of such
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written notice, Lessor shall have the right to demand that the person(s)
responsible for the violation(s) cease and desist from all such activity creating
the violation(s). In such event, Lessor shall have the right to demand that
corrective action, as required, be commenced immediately to restore the Leased
Premises into conformance with the particular law, rule or aeronautical
regulation being violated. Should Lessee, Lessee's agent, or the person(s)
responsible for the violation(s) fail to cease and desist from said violation(s)
and to immediately commence correcting the violation(s), and to complete said
corrections within twenty-four (24) hours following written notification, then
Lessor shall have the right to enter onto the Leased Premises and correct the
violation(s) at the sole cost and expense of Lessee, and Lessor shall not be
responsible for any damages incurred to any improvements on the Leased
Premises as a result of the corrective action process. In addition, such violation
shall be considered a material default by Lessee authorizing Lessor, at its sole
option and discretion, to immediately terminate and cancel this Lease
Agreement.
C. SIGNS. No signs, posters, or other similar devices ("Signage') shall be placed on
the exterior of the Lease Improvements or on any portion of the Leased Premises or Airport
property without the prior written approval of Lessor. Lessee, at its sole expense, shall be
responsible for the creation, installation and maintenance of all such Signage. Lessee shall
pay to Lessor any and all damages, injuries, or repairs resulting from the installation,
maintenance or repair of any such Signage. Any Signage placed on the Leased Premises
shall be maintained at all times in a safe, neat, sightly and good physical condition. All
signage shall be removed from the Leased Premises by Lessee immediately upon receipt of
instructions for removal of same from Lessor, including without limitation, upon expiration
or termination of this Lease Agreement. If Lessee fails to remove the Signage then Lessor
may do so at the sole cost and expense of Lessee. All signage shall comply with all
applicable ordinances including the City of Denton sign ordinance."
D. ENTRY. Lessor and its designees shall have the right to enter the Leased
Premises upon reasonable advance notice (written or oral) and at any reasonable times for
the purposes of inspecting the Leased Premises, performing any work which Lessor elects
to perform under this Lease Agreement, and exhibiting the Leased Premises for sale,
lease, or mortgage. Nothing in this section shall imply any duty upon Lessor to do any
work, which under any other provision of this Lease Agreement Lessee is required to
perform, and any performance by Lessor shall not constitute a waiver of Lessee's default.
VI. COVENANTS BY LESSOR
Lessor hereby agrees as follows:
A. PEACEFUL ENJOYMENT. Upon payment of all rent, fees, and performance of
the covenants and agreements on the part of Lessee to be performed hereunder, Lessee shall
peaceably hold and enjoy the Leased Premises and all rights and privileges herein granted.
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B. COMPLIANCE. Lessor warrants and represents that in the establishment,
construction and operation of the Airport, that Lessor has heretofore and at this time is
complying with all existing rules, regulations, and criteria distributed by the Federal
Aviation Administration, or any other governmental authority relating to and including, but
not limited to, noise abatement, air rights and easements over adjoining and contiguous
areas, over-flight in landing or takeoff, to the end that Lessee will not be legally liable for
any action of trespass. or similar cause of action by virtue of any aerial operations of
adjoining property in the course of normal take-off and landing procedures from the
Airport; Lessor further warrants and represents that at all times during the Lease Term, or
any renewal or extension of same, that it will continue to comply with the foregoing.
VII. SPECIAL CONDITIONS
It is expressly understood and agreed by and between Lessor and Lessee that this
Lease Agreement is subject to the following special terms and conditions:
Even though Lessor is granting Lessee a non-exclusive privilege in this ground Lease
Agreement, Lessor agrees not to grant a competing privilege to another lessee (new
lessee), unless the value of the new lessee's investment and improvements is equal to
or greater than those of Lessee.
VIII. LEASEHOLD IMPROVEMENTS
A. REQUIREMENTS: Before commencing the construction of any improvements
on the Leased Premises including Lessee's Improvements (the "Lease Improvements'),
Lessee shall submit:
1. Documentation, specifications, or design work, to be approved by the Lessor,
which shall establish that the improvements to be built or constructed upon the
Leased Premises are in conformance with the overall size, shape, color, quality
and design, in appearance and structure of the program established by Lessor
on the Airport.
2. All plans and specifications showing the location upon the Leased Premises of
the proposed construction and improvements;
3. The estimated cost of such construction.
No construction may commence until Lessor has approved the plans and
specifications and the location of the Lease Improvements, and the estimated costs of such
construction. Approval by the Lessor shall not be unreasonably withheld. Documentary
evidence of the actual cost of construction on public areas only (such as roads and parking
areas) shall be delivered by Lessee to Lessor's Airport Manager from time to time as such
costs are paid by Lessee, and Lessor's Airport Manager or designee is hereby authorized to
endorse upon a copy of this Lease Agreement filed with the Lessor such actual amounts as
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shall have been found to have been paid by Lessee, and the findings of the Airport Manager
when endorsed by him upon said contract shall be conclusive upon all parties for all
purposes of this Lease Agreement.
No later than 30 days after completion of the Lease Improvements, Lessee shall
submit to Lessor detailed as built plans of the Lease Improvements and documentary
evidence acceptable to Lessor evidencing the total cost to construct the Lease Improvements
("Cost to Construct Lease Improvements').
B. ADDITIONAL CONSTRUCTION OR IMPROVEMENTS: Lessee is hereby
authorized to construct upon the Leased Premises, at its own cost and expense, buildings
and structures that Lessor and Lessee mutually agree are necessary for use in connection
with the operations authorized by this Lease Agreement, provided however, Lessee shall
comply with all of the requirements of Section VIII.A., above. Such additional
improvements shall be a part of the Lease Improvements.
C. OWNERSHIP OF R PROVEMENTS: Except as otherwise provided in this
Lease Agreement, the Lease Improvements constructed upon the Leased Premises by
Lessee shall remain the property of Lessee during the Lease Term subject to the following
conditions, terms and provisions:
1. Removal of Buildings. No building or permanent fixture may be removed
from the Leased Premises.
2. Assumption. The Lease Improvements shall automatically become the
property of Lessor absolutely free, without any cost to Lessor, at the end of the
Lease Term which is defined as the end date for the initial lease period plus
any extension thereof. Assumption Options as provided in Section XV, J., 1
and 2. shall be enforced.
3. Failure to Commence or Complete Lessee's Improvements. The Lease
Improvements shall immediately become the property of Lessor at no cost,
expense, or compensation to Lessee should Lessee fail to commence or
complete the Lessee's improvements within the Commencement Period or
Construction Period as provided in Section II.C. of this Lease Agreement.
4. Lease Improvements shall include all structures, fixtures attached to structures,
heating/ventilating/air conditioning (HVAC) equipment and food service
equipment permanently attached and/or built into the structure.
5. Cancellation or Termination. Should this Lease Agreement be canceled or
terminated before the end of the Lease Term, or extension thereof, the title in
all property improvements and remaining leasehold improvements
automatically revert to Lessor., except as provided in Section XV -
Miscellaneous Provisions, Item J.
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IX. SUBROGATION OF MORTGAGEE
Any person, corporation or institution that lends money to Lessee for construction
of any hangar, structure, building or improvement and retains a security interest in said
hangar, structure, building or improvement shall, upon default of Lessee's obligations to
said mortgagee, have the right to enter upon the Leased Premises and operate or manage
said hangar, structure, building or improvement according to the terms of this Lease
Agreement, for a period not to exceed the term of the mortgage with Lessee, or until the
loan is paid in full, whichever comes first, but in no event longer than the Lease Term. It
is expressly understood and agreed that the right of the mortgagee referred to herein is
limited and restricted to those improvements constructed with funds borrowed from
mortgagee, those improvements purchased with the borrowed funds, and those
improvements pledged to secure the refinancing of the improvements.
X_ RIGHT OF EASEMENT
Lessor shall have the right to establish easements, at no cost to Lessee, upon the
Leased Premises for the purpose of providing underground utility services to, from or
across the Airport property or for the construction of public facilities on the Airport.
However, any such easements shall not interfere with Lessee's use of the Leased Premises
and Lessor shall restore the property to the original condition as is reasonable practicable
upon the installation of any utility services on, in, over or under any such easement at the
conclusion of such construction. Construction in or at the easement shall be completed
within a reasonable time.
XI. ASSIGNMENT OF LEASE
Lessor expressly covenants that after the improvements to the Lease Premises as
described in Section H, B. and C. are completed and have met all applicable City Code
requirements, the City Manager or his designee is authorized to execute an Assignment of a
leasehold interest in this Airport Lease Agreement Commercial Operator at the Denton
Airport from Leasee to a third party to be approved by the City Manager or his designee and
said Assignment shall be in substantially the form of the Assignment attached to and made a
part of this Airport Lease Agreement Commercial Operator at the Denton Airport. Lessor
agrees that it will not unreasonably withhold its approval of assignment of the facilities for
Airport related purposes; provided however, that no such assignment shall be approved if
the rental, fees or payments, received or charged are in excess of the rental or fees paid by
Lessee to Lessor under the terms of this lease, for such portion of the Leased Premises
proposed to be assigned, subleased, transferred, licensed, or otherwise. The provisions of
this Lease Agreement shall remain binding upon the assignees, if any, of Lessee.
XII. INSURANCE
A. REQUIRED „INSURANCE: Regardless of the activities contemplated under this
Lease Agreement, Lessee shall maintain continuously in effect at all times during the term
NE Interests Ltd - Page 15
of this agreement, at Lessee's sole expense, the following minimum insurance coverages:
Commercial (Public) General Liability covering the Lessee or its company, its
employees, agents, tenants and independent contractors, and its operations on the
airport. Coverage shall be in an amount not less than $1,000,000 per occurrence
and provide coverage for premises/operations and contractual liability AND where
exposure exists, coverage for: products/completed operations; explosion, collapse
and underground property damage.
2. All risk property insurance on a replacement cost basis covering loss or damage to
all facilities used by the Lessee, either as a part of this agreement or erected by the
Lessee subsequent to this agreement. Under no circumstances shall the Lessor be
liable for any damages to fixtures, merchandise or other personal property of the
Lessee or its tenants.
3. Business Automobile Liability to include coverage for Owned/Leased Autos, Non-
Owned Autos and Hired Cars:
For operation in aircraft movement areas the limit of liability shall be $100,000
per occurrence.
For other operations the limit of liability shall be consistent with the amount set
by State Law.
B. ADDITIONAL COVERAGES: In addition to the above referenced coverages, the
following insurance is required if the activity or exposure exists or is contemplated:
If Lessee secures a liquor license from the state, Lessee shall be required to maintain at
all times, without interruption, such required insurance policies and coverages required
under state law.
C. COVERAGE REQUIREMENTS: All insurance coverages shall comply with the
following requirements:
All liability policies shall name the City of Denton, and its officers and employees
as an additional named insured and provide for a minimum of 30 days written
notice to the City of any cancellation, or material change to the policy.
2. All insurance required by this Lease Agreement must be issued by a company or
companies of sound and adequate financial responsibility and authorized to do
business in the State of Texas. All policies are subject to the examination and
approval of the City's office of Risk Management for their adequacy as to content,
form of protection and providing company.
3. Required insurance naming the City as an additional insured must be primary
insurance and not contributing with any other insurance available to the City
NE Interests Ltd - Page 16
whether from a third party liability policy or other. Said limits of insurance shall in
no way limit the liability of the Lessee hereunder.
4. The Lessor shall be provided with a copy of all such policies and renewal
certificates. Failure of Lessee to comply with the minimum specified amounts or
types of insurance as required by Lessor shall constitute Lessee's default of this
Lease Agreement.
5. During the Lease Term, or any extension thereof, Lessor herein reserves the right
to, with 60 days notice, adjust or increase the liability insurance amounts required
of the Lessee, and to require any additional rider, provisions, or certificates of
insurance, and Lessee hereby agrees to provide any such insurance requirements as
may be required by Lessor; provided however, that any requirements shall be
commensurate with insurance requirements at other public use airports similar to
the Denton Municipal Airport in size and in scope of aviation activities, located in
the southwestern region of the United States.
XIII. CANCELLATION BY LESSOR
In the event that Lessee shall file a voluntary petition in bankruptcy or proceedings
in bankruptcy shall be instituted against it and Lessee thereafter is adjudicated bankrupt
pursuant to such proceedings, or any court shall take jurisdiction of Lessee and its assets
pursuant to proceedings brought under the provisions of any Federal reorganization act,
or Lessee shall be divested of its estate herein by other operation of law; or Lessee shall
fail to perform, keep and observe any of the terms, covenants, or conditions herein
contained, or on its part to be performed, the Lessor may give Lessee written notice to
correct such condition or cure such default and, if any condition or default shall continue
for thirty (30) days after the receipt of such notice by Lessee, then Lessor may terminate
this Lease Agreement by written notice to Lessee. However, if Lessee provides written
notice to Lessor within said 30 day cure period that it is impossible to cure such default
within said time period, then the Lessor may consent to an extension of such time to cure,
which consent will not be unreasonably withheld. In the event of default, ownership of all
rights and interests in the real property shall automatically revert to Lessor under the
provisions of Section VIII.C. 5 hereof. Other provisions of this agreement not
withstanding; in the event that Lessee causes or permits the leased premises to remain
unused as set forth in Section V. hereof for a period of six months, such shall constitute a
default under this subsection.
XIV. CANCELLATION BY LESSEE
Lessee may cancel this Lease Agreement, in whole or part, and terminate all or any of
its obligations hereunder at any time, by thirty (30) days written notice, upon or after the
happening of any one of the following events: (1) issuance by any court of competent juris-
diction of a permanent injunction in any way preventing or restraining the use of the Airport
NE Interests Ltd - page 17
or any part thereof for airport purposes; (2) the breach by Lessor of any of the covenants or
agreements contained herein and the failure of Lessor to remedy such breach for a period of
ninety (90) days after receipt of a written notice of the existence of such breach; (3) the
inability of Lessee to use the Lease Premises and facilities continuing for a longer period
than ninety (90) days due to any law or any order, rule or regulation of any appropriate
governmental authority having jurisdiction over the operations of Lessor or due to war,
earthquake or other casualty; or (4) the assumption or recapture by the United States
Government, or any authorized agency thereof, of the maintenance and operation of said
airport and facilities or any substantial part or parts thereof.
Upon the happening of any of the four events listed in the preceding paragraph, such
that the Leased Premises cannot be used for purposes as provided in Section V, A of this
Agreement, then the Lessee may cancel this Lease Agreement as aforesaid, or may elect to
continue this Lease Agreement under its terms, except, however, that the use of the Leased
Premises shall be limited by such laws and ordinances as may be applicable at that time.
Should Lessor close the Airport and relocate the Airport to another location during the
primary term of this Lease Agreement, Lessee shall have the right to relocate its facilities to
the new airport at a suitable location under the same or similar terms of this Lease
Agreement. The cost of relocation of Lessee's facilities will be shared by Lessor and Lessee
in proportion to the number of years remaining on the primary term of this Lease
Agreement. In this regard Lessor will be responsible for 1130 of the such costs for every
year remaining on the primary term.
XV. MISCELLANEOUS PROVISIONS
A. ENTIRE AGREEMENT. This Lease Agreement constitutes the entire
understanding between the parties and as of its Effective Date supersedes all prior or
independent Agreements between the parties covering the subject matter hereof. Any
change or modification hereof shall be in writing signed by both parties.
B. BINDING EFFECT. All covenants, stipulations and agreements herein shall
extend to, bind and inure to the benefit of the legal representatives, successors and assigns
of the respective parties hereto.
C. SEVERABILITY. If a provision hereof shall be finally declared void or illegal by
any court or administrative agency having jurisdiction, the entire Lease Agreement shall not
be void; but the remaining provisions shall continue in effect as nearly as possible in
accordance with the original intent of the parties.
D. NOTICE. Any notice given by one party to the other in connection with this
Lease Agreement shall be in writing and shall be sent by certified mail, return receipt
requested, with postage fees prepaid or via facsimile as follows:
I . If to Lessor, addressed to:
NE Interests Ltd - Page 18
City Manager
City of Denton.
215 E. McKinney Street
Denton, Texas 76201
Fax No.940.349.8596
2. If to Lessee, addressed to:
Charlie M. Nicholas
NE Interests, Ltd.
420 Southfork Drive
Lewisville, Texas 75057
Fax No.: 972.221.2700
E. HEADINGS. The headings used in this Lease Agreement are intended for
convenience of reference only and do not define or limit the scope or meaning of any
provision of this Agreement-
F. GOVERNING LAW AND VENUE. This Lease Agreement is to be construed in
accordance with the laws of the State of Texas and is fully performable in Denton County,
Texas. Exclusive venue for any lawsuit to enforce the terms or conditions of this Lease
Agreement shall be a court of competent jurisdiction in Denton County, Texas.
G. NO WAIVER. No waiver by Lessor or Lessee of any default or breach of
covenant or term of this Lease Agreement may be treated as a waiver of any subsequent
default or breach of the same or any other covenant or term of this Lease Agreement.
H. NO AGENCY. During all times that this Lease Agreement is in effect, the parties
agree that Lessee is and shall not be deemed an agent or employee of the Lessor.
1. FORCE MAJEURE. None of the Parties shall be in default or otherwise liable
for any delay in or failure of performance under this Lease Agreement if such delay or
failure arises by any reason beyond their reasonable control, including any act of God,
any acts of the common enemy or terrorism, the elements, earthquakes, floods, fires,
epidemics, riots, failures or delay in transportation or communications. However, lack of
funds shall not be deemed to be a reason beyond a Parry's reasonable control. The Parties
will promptly inform and consult with each other as to any of the above causes, which in
their judgment may or could be the cause of a delay in the performance of this Lease
Agreement.
7. ASSUMPTION OPTIONS.
1. Upon expiration of the Lease Term which is defined as the end date for the
initial lease period plus any extension thereof, the Lessor in its sole
NE Interests Ltd - Page 19
2-At any time prior to expiration of the lease, Lessor may enter into a new
ground lease with Lessor and provide for reversion of the property
improvement at a new assumption date.
IN WITNESS WHEREOF, the parties have executed this Lease Agreement as of the
Effective Date first above written.
CITY OF DENTON, TEXAS, LESSOR
BY:
GEORGE C. CAMPBELL, CITY MANAGER
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPROVED AS TO LEGAL FORM:
ANITA BURGESS, CITY ATTORNEY
BY:
N.E. INTERESTS, LTD
By: N.E. Interests GP, LLC,
Its General Partner
BY:
C:A'i
CHARLIE M. NICHOLAS,
Manager
N.E. Interests, Ltd - Page 20
ACKNOWLEDGMENTS
THE STATE OF TEXAS §
COUNTY OF DENTON §
This instrument was acknowledged before me on the day of , 2011, by
George C. Campbell, City Manager of the City of Denton, Texas, on behalf of said
municipality.
NOTARY PUBLIC, STATE OF TEXAS
THE STATE OF TEXAS §
COUNTY OF DENTON §
This instrument was acknowledged before me on the 16 day of 2010 by
Charlie M. Nicholas, manager of N.E. Interests GP, LLC, the general partner of N.E.
Interests, Ltd, on behalf of said company.
NOTARY PUBLIC, STATE OF XAS
`Jgy pUW~ VINCENT P "00GNE
s`~ Notary Public, State of Texas
My CornrnISS@~ Xpires
March 20, 2013
N.E. Interests, Ltd - Page 21
Attachment A
EXISTING
0 2f3• ao' so'
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n+
HELSC N 0GR \
A RCMITECTS . INC.
PROPOSED
AVIATION
CENTENNIAL
HALL
•
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Proposed Concrete
Parking
016
5NO.; 10
2. 1
NE Interests, Ltd. Assignment
LEASE ASSIGNMENT OF
COMMERCIAL OPERATORS LEASE AT
DENTON MUNICIPAL AIRPORT
DATE:
ASSIGNOR: NE Interests, Ltd.
ASSIGNEE:
2011
LEASE: Date: , 2011
Landlord: City of Denton, Texas
Tenant: NE Interests, Ltd
Premises: Approximately one (1) acre of land located at Airport
Road, Denton, Texas 75207 and more fully described. in the
Attachment A and B which is made a part of this Assignment for
all purposes.
Assignor assigns to Assignee Tenant's interest in the lease.
A. Assignee Agrees To:
1. Assume Tenant's Obligations under the Lease.
2. Accept the premises in their present "as is" condition.
3. Complete all obligations of purchase from Assignor prior to this.
Assignment becoming effective.
Landlord consents to this assignment. Landlord agrees to notify Assignor within
30 days of any Assignee default.
B. Assignor agrees as a condition of Landlord's consent to this Assignment that:
1. Assignor will remain liable on the Lease should Assignee default on the
Lease.
2. Assignor will pay or will have the Assignee pay the Landlord a $500
transfer fee.
3. Assignor will pay or will have the Assignee pay all the Landlord's
administrative costs of handling and processing this assignment, including
without limitation, all Landlord's reasonable attorneys fees and Landlord's
staff time associated with this assignment.
PREVIOUS ASSIGNMENTS: None
For NE Interests, Ltd., Charlie M. Nicholas, Manager, Assignor
NE Interests, Ltd. Assignment
For Assignee
City of Denton, Landlord
George C. Campbell, City Manager
Attest:
Jennifer Walters, City Secretary
By:
Approved as to Legal Form:
Anita Burgess, City Attorney
By:
STATE OF TEXAS
COUNTY OF DENTON
This instrument was acknowledged before me on the day of
20 , by Charlie M. Nicholas, Manager of NE Interests, Ltd., a State of Texas corporation, on
behalf of said corporation.
[SEAL]
Notary Public, State of Texas
My Commission Expires
(or Notary Stamp)
Page 2 of 3
NE Interests, Ltd. Assignment
STATE OF TEXAS
COUNTY OF DENTON
This instrument was acknowledged before me on the day of
20 , by
[SEAL]
STATE OF TEXAS
COUNTY OF DENTON
of
Notary Public, State of Texas
My Commission Expires
(or Notary Stamp)
This instrument was acknowledged before me on the day of ,
20 , by George C. Campbell, City Manager on behalf the City of Denton, Texas, a municipal
corporation.
[SEAL]
Notary Public, State of Texas
My Commission Expires
(or Notary Stamp)
Page 3 of 3
Exhibit 2
Denton Airport Restaurant
Investment Risk Mitigation
Any investment of public funds in a revenue generating facility will include some risk of the
capital expenditure. The Denton Airport investment process includes an evaluation of the risk
associated with the project and the potential return which generates revenue for a sinking fund
plus annual operating and maintenance expense. The Airport Restaurant is projected to
produce over $50,000 in annual revenue with minimal risk of loss due to failure of the tenant's
primary business activity. Following is a summary of considerations to minimize risk for loss of
public funds invested in the project:
1. The terms and conditions of the proposed ground lease for the Airport restaurant have
been reviewed by an independent commercial real estate development consultant and
the staff proposed terms and conditions have been confirmed as favorable to the City.
Certain additional lease terms and operating procedures have been identified which
help establish this lease as a precedent for future successful public/private Airport
development ventures.
2. Prior to any expenditure of Airport Gas Well revenue for development or construction
of the Airport Restaurant, a long term lease will be consummated with the tenant, NE
Interests, Ltd. The financial pro forma for this investment shows a four point three (4.3)
year payback of the initial $225,000 investment. The developer will invest a minimum
of $500,000 in the restaurant building.
3. This investment is proposed for public infrastructure only. The parking and service road
construction will remain in use to compliment other Airport development without the
necessity of a restaurant operating at this location. The Airport entry improvements
scheduled for construction at Denton Airport are supported by this expenditure
regardless of the construction and viability of the privately funded restaurant. The risk
to be considered is more directly the alternate use of the restaurant building and
property should the restaurant fail to become and remain a successful private business
venture.
4. The architectural design for the Airport restaurant will be compatible with the existing
Airport Terminal and Tower. The same architect that presented a conceptual plan for a
more extensive dormitory structure at the Airport entrance will engaged by the Airport
to review architectural design and construction specifications for the restaurant.
Exhibit 2
5. The Airport restaurant design will include a banquet/meeting room to accommodate
seventy-five (75) people. Even if the restaurant fails to be successful, this public
meeting room with visual aids will continue to be of value to the Airport and the
community. Whether an alternate food service facility continues to operate, or, outside
catering is accessed for public meetings, the room would remain useful.
6. If the original, custom restaurant operation fails for any reason, the City could produce a
Request for Proposals for a public competition to adjust the format and continue an
alternate food service operation using the Airport facility.
7. The proposed ground lease provides architectural design approval by the City. The
architect will be asked to provide a plan for conversion of the restaurant space for office
and/or alternate uses should a restaurant business operation be abandoned in the
future.
8. The minimum private investment of $500,000 in the restaurant building is being
undertaken based upon independent market research which projects a successful
business venture. In other words, the risk of experiencing a public investment "loss" is
minimized by virtue of the greater risk being evaluated for the private investment.
9. Any unanticipated loss of capital due to default of the long-term lease of NE Interests,
Ltd. would result in loss of Airport funds and not current or future taxpayer revenue.
DRAFT MINUTES (EXCERPT)
AIRPORT ADVISORY BOARD
JANUARY 5, 2011
After determining that a quorum was present, the Airport Advisory Board of the City of Denton,
Texas convened in a Special Called Meeting on Wednesday January 5, 2011 at 5:30 p.m. in the
Airport Terminal Building, Meeting Room at 5000 Airport Road, Denton, Texas, at which the
following items were considered:
BOARD MEMBERS PRESENT: Chairman Dr. Don Smith, Mr. Bob Pugh, Mr. Bill Schofield,
Mr. Jim Clark and Mr. Jeremy Fykes.
BOARD MEMBERS ABSENT: NONE
STAFF MEMBERS PRESENT: Quentin Hix, Airport Manager, Julie Mullins, Administrative
Assistant, Andrea Sumner, Operations Coordinator, Mark Nelson, Transportation Director,
Bryan Langley, Chief Financial Officer.
PUBLIC PRESENT: Jeff Soules, US Aviation Group; Mark Taylor, US Aviation Group; Rick
Woolfolk; Damon Ward, Business Air Center; Robert Pastor, CHA; Paul Cristina, Kimerly-Horn
and Associates, Inc.
ITEMS FOR INDIVIDUAL CONSIDERATION
IV. Receive a report, hold a discussion and make a recommendation regarding an
ordinance to approve a lease of property between the City of Denton, Texas and
NE Interests, Ltd for the constriction and operation of a restaurant at the Denton
Municipal Airport;
Mr. Hix commented that on page 10 there is a lease that has been in negotiation
since September 2010 and he has had some opportunity to discuss this with the
Board. The lease has gone through a review process with City staff, the Airport
Advisory Board, the City Council and an airport land development consultant as
this is something new for the Airport. Charles Nicholas with NE Development has
been involved with negotiating an initial ground lease that included certain site
improvements to be constricted by the Airport to support the restaurant. The
ground lease rate is higher than the normal ground lease rate at the Airport. The
City will reimburse the developer in the amount of $225,000.00 for constriction
of on-site infrastructure after the development has its Certificate of Occupancy.
The estimated development cost is approximately $750,000. The ground lease is
for 30 years with two options to renew for five years each, for a total of forty
years. The tenant will pay a base annual ground lease of $21,780, plus additional
rent in the amount of three percent of the gross revenue over $1 million each year.
The business pro forma projects the total annual lease revenue to the Airport of
$51,780. The reimbursement of the developer's constriction cost for public
infrastructure will be made under a Chapter 380 Economic Development
Page 1 of 3
Agreement between the City of Denton and NE Development. There are some
changes to the existing lease and it has been signed by the tenant. There is a
change to item VIII; regarding the default and there are some alternate uses. What
is presented to you tonight is the ground lease, with the Lessor improvements, to
build a restaurant at the Airport.
Mr. Clark asked if this full service restaurant will serve alcoholic beverages. Mr.
Hix said yes the operator intends to serve alcoholic beverages with the evening
meal service.
Mr. Pugh asked if additional parking would be provided. Mr. Hix said there will
be more parking; the intent is to add additional parking east of the existing Airport
terminal parking lot. The drawing that is attached to the packet does not show the
parking.
Dr. Smith asked if parking spaces for the restaurant will conform to the city codes
for the designed capacity. Mr. Hix said yes.
Mr. Pugh asked if the tenant would be in favor of aircraft catering in the future.
Mr. Hix said he has not asked him about that. Mr. Smith asked Mr. Ward about
what their intent is. Mr. Ward said he talked with Mr. Nicholas today and yes he
would be interested in catering.
Mr. Fykes asked if the Airport has seen a business plan that supports this lease.
Mr. Hix said he has not asked for a business plan. Mr. Hix clarified what was
said earlier and that NE Development will not be presenting a business plan to the
Council. NE Development will be there to answer any questions the Council may
have. Mr. Fykes had some other questions and Mr. Hix answered them.
Mr. Fykes is going to write a letter to bring up some points that they need to be
addressed to advise the City Council. Mr. Fykes brought up some points that they
need to consider and address before making a final decision on the lease. Mr. Hix
said that the City is not spending any money on infrastructure other than public
improvements. With this lease we will recover the expense. Mr. Hix said he is
not trying to debate the restaurant market environment at the Airport. Mr. Langley
said that the city hired a consultant and gave Airport staff a real estate analysis on
this lease. Mr. Fykes said that Airport staff is spending a lot of money. Mr.
Langley said the money being spent is for infrastructure not for the restaurant. Mr.
Langley said we have spent a lot of money for infrastructure. Mr. Hix asked Mr.
Nelson if the City has ever spent $225,000 and Mr. Nelson said the City spent a
million dollars putting in the apron/ramp for Jet Works coming in. Mr. Fykes said
that if the lease defaults then we still recover our expense.
Mr. Schofield made a motion to make a recommendation to the City Council
for lease of property between the City of Denton and NE Interests, Ltd. Mr.
Page 2 of 3
Fykes seconded the motion with his addition of a written letter to City
Council.
Motion carried 5-0
Page 3 of 3
AGENDA INFORMATION SHEET
AGENDA DATE: January 11, 2011
DEPARTMENT: Airport
ACM: Jon Fortune
SUBJECT
Consider adoption of an ordinance establishing an economic development program under
Chapter 380 of the Local Government Code for making grants of public money to promote
economic development and to stimulate business activity in the City of Denton; approving an
economic development program grant agreement with NE Interests, Ltd. regarding the
constriction of a restaurant at the Denton Municipal Airport in the City of Denton, Texas;
authorizing the expenditure of funds therefor; and providing an effective date. (Airport Advisory
Board recommended approval 5-0)
BACKGROUND
A proposed Airport Lease Agreement Commercial Operator has been presented as a separate
action item by Airport staff. The background information submitted with the lease agreement
referenced an economic development incentive valued at $225,000 as a developer reimbursement
for constriction of public infrastructure on the site leased for development of an Airport
restaurant. The facilities to be constricted which will be eligible for reimbursement of cost
include perimeter service roads, public parking and other site improvements as shown on the
preliminary site plan (Exhibit 1).
The contractual document to accommodate reimbursement of specific constriction cost is a
Chapter 380 Economic Development Agreement (380 Agreement) which is attached to and made
a part of the ordinance. The source of funds for the reimbursement will be the Airport Fund with
revenue accumulated primarily from gas well royalty receipts.
Typically, Chapter 380 agreements are discussed, reviewed, and recommended for approval by
the Economic Development Partnership Board (EDPB) prior to any City Council consideration.
However, since this particular Chapter 380 agreement does not involve property and sales tax
revenue, this Agreement was reviewed and recommended for approval by the Airport Advisory
Board.
OPTIONS
1. Approve the Chapter 380 Economic Development Agreement for NE Interests, Ltd to
constrict an Airport restaurant;
2. Deny the Chapter 380 Economic Development Agreement for NE Interests, Ltd to constrict
an Airport restaurant;
Agenda Information Sheet
January 11, 2011
Page 2
3. Modify the Chapter 380 Economic Development Agreement for NE Interests, Ltd to
constrict an Airport restaurant.
PRIOR ACTION/ REVIEW
The Airport Advisory Board recommended approval of this item on January 5, 2011.
FISCAL INFORMATION
The Chapter 380 reimbursement funding for this project will be provided primarily by Airport
Gas Well funds. The proposed Airport restaurant Agreement will produce a minimum of
$21,780 annually, adjusted by a Consumer Price Index factor throughout the lease term, plus an
additional annual rent estimated to be $30,000 annually once the restaurant reaches full
operation. Additional rent is a payment of three percent (3%) of annual gross revenue above $1
million each year. The base lease amount would recover the reimbursement for public
infrastructure constriction in ten (10) years.
The estimated total lease revenue will recover the reimbursement economic development
incentive in four (4) years. The current ground lease rate for Airport tenants would produce
approximately $5,880 annually as an alternative if a developer requested this type of agreement
in order to build a restaurant independently.
EXHIBITS
1. Preliminary site plan for an Airport restaurant
2. Ordinance
3. Airport Advisory Board Minutes (Excerpt)
Respectfully submitted:
Quentin Hix
Airport Manager
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sAlegaAour documentslordinances1111ne interests 380 ord.doc
ORDINANCE NO.
AN ORDINANCE ESTABLISHING AN ECONOMIC DEVELOPMENT PROGRAM UNDER
CHAPTER 380 OF THE LOCAL GOVERNMENT CODE FOR MAKING GRANTS OF
PUBLIC MONEY TO PROMOTE ECONOMIC DEVELOPMENT AND TO STIMULATE
BUSINESS ACTIVITY IN THE CITY OF DENTON; APPROVING AN ECONOMIC
DEVELOPMENT PROGRAM GRANT AGREEMENT WITH NE INTERESTS LTD.
REGARDING THE CONSTRUCTION OF A RESTAURANT AT THE DENTON
MUNICIPAL AIRPORT IN THE CITY OF DENTON, TEXAS; AUTHORIZING THE
EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, NE Interests, Ltd. ("NE Interests") has made a request of the City of Denton
to establish an economic development program under Chapter 380 of the Texas Local
Government ("Chapter 380") to stimulate the development of commercial property within the
City of Denton; and
WHEREAS, the City Council by this ordinance is establishing an economic development
program under Chapter 380 which will stimulate business activity in the City and promote the
public interest (the "Program");
WHEREAS, to effectuate the Program, the City and NE Interests have negotiated an
Economic Development Grant Agreement (the "Agreement"), a copy of which is attached hereto
and made a part hereof by reference; and
WHEREAS, the City Council finds that the Program and Agreement promote economic
development and will stimulate commercial activity within the City of Denton for the benefit of
the public; NOW, THEREFORE;
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The recitals and findings contained in the preamble. of this ordinance are
incorporated into the body of this ordinance.
SECTION 2. The City Manager, or his designee, is hereby authorized to execute the
Agreement on behalf of the City of Denton and to carry out the City's responsibilities and rights
under the Agreement, including without limitation the authorization to make the expenditures set
forth in the Agreement.
SECTION 3. This ordinance shall become effective immediately upon its passage and
approval.
PASSED AND APPROVED this the day of y 2011.
MARK BURROUGHS, MAYOR
s:llegallour documentslordinancesll line interests 380 ord.doc
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPROVED AS TO LEGAL FORM:
ANITA BURGESS, CITY ATTORNEY
BY:
Page 2
c:ldocume-llvdhooghe\locals- lltemplne interests 380 agr.doc
ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH
NE INTERESTS, LTD.
This Economic Development Program Grant Agreement ("Agreement") is made
and entered into as of the effective date provided for below, by and NE INTERESTS,
LTD, a Texas limited partnership, and the CITY OF DENTON (the "City"), a Texas
municipal corporation, for the purposes and considerations stated below:
WHEREAS, this Agreement is authorized by and made pursuant to the economic
development program provisions of Chapter 380 of the Texas Local Government Code
(the "Act") to promote local economic development and to stimulate business and
commercial activity in the City of Denton; and
WHEREAS, NE Interests, Ltd. is contemplating the development of that certain
real property located within the city limits of the City as more particularly described in
Exhibit "A" attached hereto and made a part hereof by reference (the "Property"); and
WHEREAS, on the 11th day of January, 2011, NE Interests, Ltd. entered into a
property lease with the City which included specific economic development incentives
concerning the contemplated use and development of the Property, which is on file in the
City's Office of Economic Development, a copy of which is attached hereto and made a
part hereof by reference as Exhibit "B" (the "Lease"); and
WHEREAS, the City Council finds that the contemplated use and development of
the Property, the proposed improvements provided for herein and the other terms and
conditions of this Agreement will promote economic development and will stimulate
development activity within the City of Denton for the benefit of the public;
NOW, THEREFORE, the City and NE Interests, Ltd. for and in consideration of
the premises and the promises contained herein do hereby contract, covenant and agree as
follows:
1.
CONDITIONS OF THE GRANT
The City's obligations under this Agreement are subject to the fulfillment of the
following conditions (the "Grant Conditions"):
A. No later than December 31, 2011 (subject to force majeure delays not to
exceed 180 days), NE Interests, Ltd. shall make a capital investment of at least $500,000
for the construction, equipping and furnishing of a building or buildings and other
improvements to be constructed or placed on the Property as more particularly described
in the "Lease" attached hereto as Exhibit "B". The Improvements include the obligation
of NE Interests, Ltd. to: (i) construct a facility of not less than 5,000 square feet to be
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used as a restaurant under terms and conditions as described in the "Lease" attached
hereto as Exhibit "B"; (ii) in addition to the facility referenced herein to be used as a
restaurant, NE Interests, Ltd. shall construct perimeter access roads, vehicle parking, site
improvements including utility connections, landscaping and such other site development
improvements as may be required to meet or exceed City building codes, all as described
in the "Lease" attached hereto as Exhibit "B".
B. NE Interests, Ltd. shall satisfy all of the provisions and requirements for
the project as set forth in the "Lease" including the requirement that the Improvements
shall be used in accordance with the description of the project set forth in the "Lease";
and
II.
GENERAL PROVISION
A. In the event of any conflict between the City zoning ordinances, or other
City ordinances or regulations, and this Agreement, such ordinances or regulations shall
control, provided however the City shall not diminish the benefits to NE Interests, Ltd.
under this Agreement through ordinances or regulations (whether now or hereafter in
effect).
III.
TERMS AND CONDITIONS OF GRANT
A. Subject to the terms and conditions of this Agreement, the City hereby
agrees to reimburse to NE Interests, Ltd. A lump sum payments for specified public
infrastructure improvements as described in the "Lease" following receipt by NE
Interests, Ltd. of the certificate of occupancy for the facility, such lump sum payment to
be subject to the following terms and conditions provided, however, that such amount
shall not exceed $225,000.
B. All calculations in this Agreement shall be based upon actual cost to
construct the public infrastructure improvements as described in the "Lease" evidenced
by expenditure receipts to be provided by NE Interests, Ltd. To the City.
IV.
RECORDS, AUDITS, AND EVALUATION OF PROJECT
A. NE Interests, Ltd. shall provide access and authorize inspection of the
property by City employees and allow sufficient inspection of financial information to
insure that the improvements are made and the terms of the "Lease" have been met
according to the specifications and conditions of this Agreement. Such inspections shall
be done in a way that will not interfere with NE Interests, Ltd. business operations. City
shall evaluate the Project at such times deemed appropriate by the City to ensure
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compliance with this Agreement and relevant statutes, codes, ordinances and regulations.
NE Interests, Ltd. shall provide information to the City on a form satisfactory to the City
for the evaluation. The information shall include, without limitation, an inventory listing
the kind, number, and location of and the total investment value of all improvements to
the property, including the value of all buildings and other structures and permanent
improvements installed, renovated, repaired or located on the Premises.
V.
FAILURE TO MEET CONDITIONS
In the event (i) NE Interests, Ltd. fails to use the Property or Building for the
purpose as stated in the "Lease"; or, (ii) any other material conditions of this Agreement
are not substantially met, including the Grant Conditions, then a "Condition Failure" shall
be deemed to have occurred. It is understood that a Condition. Failure shall not be deemed
to occur merely because at a particular time it cannot be determined whether such
condition will be met, but shall occur only if at a particular time it can be determined that
such condition will not be met after notice and reasonable opportunity by NE Interests,
Ltd. to cure such failure. In the event that a Condition Failure occurs, the City shall give
NE Interests, Ltd. written notice of such Condition Failure and if the Condition Failure
has not been cured or satisfied within ninety (90) days of said written notice, this
Agreement may be terminated by the City, provided, however, that if such Condition
Failure is not reasonably susceptible of cure or satisfaction within such ninety (90) day
period and NE Interests, Ltd. has commenced and is pursuing the cure or satisfaction of
same, then after first advising the City of efforts to cure or satisfy same, NE Interests,
Ltd. may utilize such additional time as may be reasonably required to cure such
Condition Failure, but not less than ninety (90) days nor more than one hundred eighty
(180) days. Time in addition to the foregoing may be authorized by the City Council. If
a Condition Failure is not cured or satisfied after the expiration of the applicable notice
and cure or satisfaction periods ("Condition. Failure Default"), as City's sole and
exclusive remedy, the lump sum payment shall be repaid to the City in accordance with
the following criteria: In the event of a Condition Failure Default within the first year
after receipt of the lump sum payment, NE Interests, Ltd. shall repay to the City 80% of
the lump sum payment received; for a Condition Failure Default after receipt of the
second year, NE Interests, Ltd. shall repay to the City 70% of the lump sum payment
previously received; after the third year, 60%; after the fourth year, 50%; after fifth year,
40%; after the sixth year, 30%; after the seventh year, 20%; and thereafter no repayment
is required.
VI.
ASSIGNMENT
This Agreement and NE Interests, Ltd.'s rights and obligations hereunder may not
be assigned without prior notice to the City, unless such notice is prohibited by contract
or applicable law in which case notice shall be provided as soon as allowable. In the
event that the facility is closed, is utilized for a primary purpose other than a restaurant
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facility, this Agreement shall terminate and all obligations of the City, as set forth herein,
shall terminate and be of no further force and effect.
VII.
NOTICE
All notices called for or required by this Agreement shall be addressed to the
following, or such other party or address as either party designated in writing, by certified
mail postage prepaid or by hand delivery:
NE INTERESTS, LTD.:
Manager
420 Southfork Drive
Lewisville, Texas 75057
Fax No.: 972.221.2700
CITY:
City Manager
City of Denton
215 E. McKinney
Denton, Texas 76201
Fax No.: 940.349.8596
VIII.
CITY COUNCIL AUTHORIZATION
This Agreement is authorized by the City Council at its meeting on the
day of , 2011, authorizing the City Manager to execute this Agreement on
behalf of the City.
IX.
BOARD OF DIRECTORS AUTHORIZATION
NE Interests, Ltd. represents that this Agreement is entered into by NE Interests,
Ltd. pursuant to authority of its Manager. A certificate of the attorney for NE Interests,
Ltd. supporting this representation is attached hereto and made a part hereof as Exhibit C.
X.
SEVERABIILTY
In the event any section, subsection, paragraph, sentence, or phrase is held
invalid, illegal or unconstitutional, the balance of this Agreement shall stand, shall be
4
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In the event any section, subsection, paragraph, sentence, or phrase is held
invalid, illegal or unconstitutional, the balance of this Agreement shall stand, shall be
enforceable and shall be read as if the parties intended at all times to delete said invalid,
illegal or unconstitutional provision.
XI.
ESTOPPEL CERTIFICATE
Any party hereto may request an estoppel certificate from another party hereto so
long as the certificate is requested in connection with a bona fide business purpose. The
certificate, which if requested will be addressed to NE Interests, Ltd., shall include, but
not necessarily be limited to, statements that this Agreement is in full force and effect
without default (or if default exists the nature of default and curative action, which should
be undertaken to cure same), the remaining Term of this Agreement, the levels and
remaining Term of the lump sum payment in effect, and such other matters reasonably
requested by the party(ies) to receive the certificates.
XII.
NE INTERESTS, LTD. STANDING
NE Interests, Ltd., as a party to this Agreement, shall be deemed a proper and
necessary party in any litigation questioning or challenging the validity of this Agreement
or any of the underlying ordinances, resolutions, or City Council actions authorizing
same and NE Interests, Ltd. shall be entitled to intervene in said litigation.
XIII.
APPLICABLE LAW
This Agreement shall be construed under the laws of the State of Texas. Venue
for any action under this Agreement shall be the appropriate court serving Denton
County, Texas. This Agreement is fully performable in Denton County, Texas.
XIV.
RECORDATION OF AGREEMENT
A fully executed original counterpart of this Agreement or a Memorandum of
Agreement, in recordable form, shall be recorded in the Deed Records of Denton County,
Texas.
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XV.
AMENDMENT
This Agreement is the entire agreement of the parties and may only be modified
by a written instrument executed by both parties.
XVI.
EFFECTIVE DATE
This Agreement is effective as of the _ day of , 2011.
CITY OF DENTON, TEXAS
BY:
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPROVED AS TO FORM:
ANITA BURGESS, CITY ATTORNEY
BY:
GEORGE C. CAMPBELL.
CITY MANAGER
NE INT ,
BY:
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ACKNOWLEDGMENTS
STATE OF TEXAS
COUNTY OF DENTON
The foregoing Economic Development Program Agreement was executed before
me on the day of , 2011 by George C. Campbell, City
Manager of the City of Denton, Texas, a Texas municipal corporation, on behalf of said
municipal corporation.
STATE OF TEXAS
COUNTY OF DENTON
Name:
Notary Public in and for the
State of Texas
The foregoing Economic Development Program Agreement was executed before
me on the day of , 2011 by Charlie Nicholas, Manager of
NE Interests GP, LLC, Texas lim ed liability company the general partner of N.E.
Interests, Ltd., a Texas limited partnership, on behalf of said limited liability company
and limited partnership.
CENT P D~1006HE
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Public, State of Texas
Notary ion Expires
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2013
Ma[Ch 20,
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Notary Public in and for the
State of Texas
7
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Exhibit "A"
PROPERTY DESCRIPTION
(More Specifically Described In A Commercial Operator Lease Dated January 11, 2011
Between The City of Denton, Texas and NE Interests, Ltd.)
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Lease Agreement rev 4.doc
Exhibit B
AIRPORT LEASE AGREEMENT
COMMERCIAL OPERATOR
This Lease Agreement is made and executed to be effective as of the _10th_ day
following approval of the site plan by the City of Denton (the "Effective Date') at Denton,
Texas, by and between the City of Denton, Texas, a municipal corporation, hereinafter
referred to as "Lessor", and NE Development And Construction, hereinafter referred to as
"Lessee".
WITNESSETH:
WHEREAS, Lessor now owns, controls and operates the Denton Municipal Airport
(the "Airport') in the City of Denton, County of Denton, State of Texas; and
WHEREAS, Lessee desires to lease certain premises at the Airport and construct and
maintain a restaurant thereon;
NOW, THEREFORE, for and in consideration of the promises and the mutual
covenants contained in this Agreement, the parties agree as follows:
I. CONDITIONS OF LEASE AGREEMENT
NOTWITHSTANDING ANY LANGUAGE TO THE CONTRARY HEREINAFTER
CONTAINED, THE LANGUAGE IN PARAGRAPHS A THROUGH D OF THIS
SECTION SHALL BE BINDING.
A. PRINCIPLES OF OPERATIONS. The right at Denton Airport to conduct a food
service business and restaurant related services to the public is granted to Lessee subject to
Lessee agreeing:
1. To furnish said services on a fair, equal and not unjustly discriminatory basis
to all users thereof; and
2. To charge fair, reasonable and not unjustly discriminatory prices for each unit
or service; provided, that Lessee may be allowed to make reasonable and
nondiscriminatory discounts, rebates, or other similar types of price reductions
to volume purchasers.
B. NON-DISCRZMII ATION: Lessee, for itself, its personal representatives,
successors, and assigns, as a part of the consideration hereof, does hereby covenant and
agree as a covenant running with the land that:
1. No person on the grounds of race, religion, color, sex, or national origin shall
be excluded from participation in, denied the benefits of, or be otherwise
subjected to discrimination in the use of said facilities; a
2. In the construction of any improvements on, over, or under such land and the
furnishing of services thereon, no person on the grounds of race, religion,
color, sex, or national origin shall be excluded from participation in, denied
the benefits of, or otherwise be subjected to discrimination;
3. Lessee shall use the premises in compliance with all other requirements
imposed by or pursuant to Title 49, Code of Federal Regulations, Department
of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimi-
nation in Federally assisted programs of the Department of Transportation -
Effectual of Title VI of the Civil Rights Act of 1964, as said Regulations may
be amended.
C. RIGHT OF INDIVIDUALS TO MAINTAIN AIRCRAFT. It is clearly
understood by Lessee that no right or privilege has been granted which would operate to
prevent any person, firm or corporation operating an aviation related business on the Airport
from performing any services on its own leased premises to serve its own regular employees
(including, but not limited to, cafeteria or food vending service) that it may choose to
perform.
D. NON-EXCLUSIVE RIGHT. It is understood and agreed that nothing herein
contained shall be construed to grant or authorize the granting of an exclusive right within
the meaning of Title 49 U.S.C. Appendix § 1349.
E. PUBLIC AREAS.
Lessor reserves the right to firrther develop or improve the land area of the
Airport as it sees fit, regardless of the desires or views of Lessee, and without
interference or hindrance.
2. Lessor shall be obligated to maintain, and keep in good repair the public land
area of the Airport and all publicly owned facilities of the Airport, together
with the right to direct and control all activities of Lessee in this regard.
3. During time of war or national emergency, Lessor shall have the right to lease
the land area of the Airport or any part thereof to the United States
Government for military or naval use, and, if such lease is executed, the
provisions of this instrument insofar as they are inconsistent with the
provisions of the lease to the Government, shall be suspended.
4. Lessor reserves the right to take any action it considers necessary to protect the
aerial approaches of the Airport against obstruction, together with the right to
prevent Lessee from erecting, or permitting to be erected, any building or other
structure on or adjacent to the Airport which, in the opinion of Lessor, would
limit the usefulness or safety of the Airport or constitute a hazard to aircraft or
to aircraft navigation. The restaurant facility as currently proposed as
provided in Section 11. C. does not violate this provision.
NE Interests Ltd - Page 2
5. This Lease Agreement shall be subject to all federal, state and local laws,
statutes, constitutional provisions, charters, ordinances, rules regulations,
directives, policies, permits, standards and orders (including without
limitation, the City of Denton, Texas, the State of Texas, the Federal Aviation
Administration, and, the Texas Department of Transportation) whether in
existence now or enacted in the future, including any grant agreements or
grant assurances now existing or agreed to in the future.
M LEASED PREMISES
Lessor, for and in consideration of the covenants and agreements herein contained, to
be kept by Lessee, does hereby demise and lease unto Lessee, and Lessee does hereby lease
from Lessor, for the lease term described in Article 111, the following described land situated
in Denton County, Texas:
A. LAND. A tract of land, being approximately one (1) acre; or, 43,560_guare_feet ,
drawn and outlined on Attachment "A", legally described in Attachment B" and with the
improvements shown on a Site Plan in Attachment "C" delineating all proposed
improvements to be constructed by Lessee and Lessor , such attachments being incorporated
herein by reference (the "Leased Premises").
Together with the right of ingress and egress to the Leased Premises; and the right in
common with others so authorized of passage upon the Airport property generally, subject
to reasonable regulations by the City of Denton and such rights shall extend to Lessee's-
employees, passengers, patrons and invitees. For purposes of this agreement, the term
"Leased Premises" shall mean all property located within the metes and bounds described
and identified within Attachment "B", including leasehold improvements constructed by the
Lessee and Lessor as shown on Attachment "C", and including certain easements or
property owned and/or controlled by the Lessor.
A legal description of the leased premises is not currently attached as Attachment "B".
Lessee shall deliver to Lessor no later then 30 days after the date of this Agreement a legal
description of the leased premises accurately describing the leased premises that is
acceptable to Lessor. If Lessee fails to do so, Lessor at its option may terminate this
Agreement, in which case it will have no further force and effect. The approved legal
description will be attached to this Agreement as Attachment "B".
A Site Plan delineating all improvements to be constructed by Lessee and Lessor is
not currently attached as Attachment "C". Lessee shall deliver to Lessee prior to
construction of said improvements a Site Plan that accurately depicts all improvements to
be constructed by Lessee and Lessor that is acceptable to Lessor. If Lessee fails to do so,
Lessor at its option may terminate this Agreement, in which case it will have no further
force and effect. The approved Site Plan will be attached to this Agreement as
Attachment "C".
NE Interests Ltd - Page 3
B. M'ROVEMENTS PROVIDED BY LESSOR: In addition to the general
easements as set forth in Article UR "Access to Utilities" below, Lessor shall reimburse
Lessee according to terms of an Economic Development Grant Agreement approved
between Lessor and Lessee dated January 11, 2011 for the construction cost of the
following improvements to Lessee's leased premises:
1. Perimeter access roads on the north, west and south sides of the property within
the lease boundaries as shown on Attachment "A" to this lease agreement, said
improvements to be constructed to specifications agreed upon by Lessor and
Lessee;
2. Vehicle parking on the east side of the property within the lease boundaries as
shown on Attachment "C" to this lease agreement, said improvements to be
constructed to specifications agreed upon by Lessor and Lessee;
3. All site improvements including utilities;
4. Landscaping at various locations within the lease boundaries as shown on
Attachment "C" to this lease agreement, said improvements to be constructed
to specifications agreed upon by Lessor and Lessee;
5. The total expenditure to be reimbursed by Lessor to Lessee for road, parking,
site iznprovements, utilities and landscaping improvements within the lease
boundaries as shown on Attachment "C" to this lease agreement shall not
exceed an amount of two hundred twenty five thousand dollars ($225,000.00).
b. Qualified expenditures for Lessor reimbursed improvements may include all
design, engineering, surveying, testing, and other such costs deemed
appropriate by Lessor in Lessor's sole discretion in addition to all hard
construction costs.
The term "Lessor improvements" shall mean those things on or adjacent to the
Leased Premises belonging to, constructed by, or to be constructed by the Lessor. Unless
otherwise noted herein, all Lessor improvements are and will remain the property of Lessor.
All Lessor improvements must be described in detail above, or above referenced and
attached to this Agreement in an exhibit approved by Lessor.
C. IlVIPROVEMENTS PROVIDED BY LESSEE. On the Leased Premises; Lessee
shall construct a facility to be used as a restaurant of not less than J5,000 square feet.
Lessee shall also construct appropriate culverts or drainage as required by City
ordinances within the lease boundaries as well as other improvements as determined
necessary by City ordinances (All above described improvements to be constructed by
Lessee are called the "Lessee's hnprovements"). Construction of Lessee's Improvements
shall be commenced no later than 270 days (the "Commencement Period") and completed
no later than 720 days after the Effective Date (the "Construction Period"). Construction of
NE Interests Ltd = Page 4
Lessee's Improvements is cansidered comrnenced upon issuance of a building permit and
canstruction o:f any portion of fhe facihty. Construction of Lessee's Iznprovements is
coiisidered complete upon the issuance of a Certificate of Occupan cy for the entire facility,
and clrainage and utzlity improvements are completed. In addztion, a.s a condition precedent
to the effectiveness of tl-►is Lease Agreement, watllin 60 days after tkae Effective Date of tlus
Lease Agreernent, Lessee shali pravide to Lessor (i) a written estimate of the cost to
coilstruct Lessee's hnprovements prepared by a contractor who has demozzstrated
experiencE in the snccessful constructian of improvements similar to Lessee's
Tmprovements {the "Construetion Cost Estimate"}, (zi) a written schedule of constructian to
camplete Lessee's Improvements, and (ui) a written loan commitment from a lending
institution provid.ing for sufficient funding to cover the Consfizction Cast Estimate (called
"Conditions Precedent"). 5hould the Cand.itions Precedent no# be met either party may
tenninate this Lease Agreexnent by giving the other parly written notice, zn which case tiiis
Lease Agreement shall be nuIl and void and of no further fozce and effect. Such ternliiaatian
shall 11ot prevent the Lessee from submitting a new proposed lease request at alater date.
The parties may extend the 60 day time period if in writing signed by both parties. Lessee is
nat entitled to take possession of the Leasect Premises under this Lease Agreement until the
Conditions Precedent have been fulfilled.
Notwithstanding anything contained in this Lease Agreement to the contrary, a
failure to cammence the Lessee's ImprovenEaenfs within the Commencement Period or
to complete the Lessee's Tmprovements within the Consiruction Period may, at the
sole option and discretion of the Lessor, result in the immediate terminatipn and
cancella#xon af this Lease Agreement upon 30 days wriften notice of can.cellatiom to
Lessee. Upoau receipt of sucb notice of cancellation, Lessee's rights and/or Lessee's
right to cnre or remedy the faiInre ta perform under the Lease Agreement will
immediateIy cease and be forfeited, and all of Lessee's Improvements shall
immediateiy become the properiy of Lessar at no cost, expense or other compensation
paid by Lessor to Lesses; and Lessee shall immediately vacate the Leased Premises.
D. EASEMENTS. Lessor and Lessee by mutual agreement may establish, an the
Leased Premises, easements for public access on roa.d.s and taxiways. All such easements
shali be by written agreeznent and publicly recorded in official county public records.
E. ACCESS TO UTILITIES. Lessor zepresents that there are water, sewer and 3-
phase electricity Iines within close proximity to the Leased Preinises available to "tap-'vz" by
Lessee, and that the same are sut'fieient for usual and customary service on the Leased
Premises. Lessee's connections to saad utiliries are to be made at Lessee's sole cast, expense
and risk, iricluding a1.1 customary utility fees assessed by the respective service provider.
Lessee agrees to execute or otYierwise grant appz-opriate customary utiliiy easements
required by a utility servi.ce provider an the Leased Premises or to the Leased premises.
F. REOUlELED FILING. Prior to commencing construcfion, Lessee must submit,
or cause to have submztted, a Federal Aviation Administrafion (FAA) Form 7460-I as
required, arid submit fo Lessor copies of all FAA findings and related correspondence upoii
receipt of saazie.
NE Interests Ltd - Page 5
Ia. TERM
The term of this Lease Agreement shall be for a period af thirty (30) years, com-
znencixzg on the 1 Oth day follawing the approval of the site plan by the City of Dentozz.
Lessee has the option to renew for two (2) adtlitional five (5) year terms. In order to
exercise the first option Lessee must provide written notice to Lessor of its intent to exercise
the first 5 year option no later than 180 day before the expiration of the 30 year primary
tezm. To exezcise the second aption such written notice must be provided no later than 180
days before the expiration of the first S year option term. The rental and tenms to be
ilegotiated for the optian periocl.s sha11 be reasonable and consistent with the then value,
rentals and terrns of similar property on the Airport. Lessee may only exercise its option
rights if not in default of this Agreeznent at the turie of exercising the optiozx or at the time
the option is due to commence. '
N. PAYIVTENTS, RENTALS AND FEES
Lessee covenants and agrees to pay Lessor, as consideration for this Lease Agreement,
tlZe folIowing payments, reritals and fees:
A. LAND AND RENTAL_ Rental shall be due arzd payable to Lessor in the form
of a base ground Iease amount plus an additianal rent on gross sales as follows:
1. Lessae shall pay a base lease amount in the sum of $0.50 per square foot or
$21,780 per year {the `Base Rent"}, payable in twelve (12) equal monthly
msta3lments in the sum of one thousand eight hundred fifteen dollars
($1,$15.00) in advance, on or before the lst day of each and every rnonth
during the tezm of this Lease Agreement. Lessee has the option to pay annual
base rental in whole oii ar before the Ist day of October, at the beginning of the
City's fiscal year, each and every year of this Lease Agreement; and,
2. Lessee shall pay additional rent ta Lessor on grass sa,ies calculated for each
tvelve (12) month period arid payable in iump sum ixi the first month following
each twelve (12) month period during the term af this iease in the amaunt of
three percent (3%) of the grass sales in excess of ane million dollars
($1,440,000A0) calculated for each twelve (12) month period of this
Agreement during the term of this lease begi.nning February 1, 2010.
NE Tnterests Ltd - Paqe 6
3. Additional reiit shall be ca.lculated for each twelve {12} month pExiod of this
Agreernent based upon the total gross incame fram all types of sales received
by ar due and payable to Lessee (or ariy of its affliates or related entities
conducting businESS operations at any tiine from the Leased Premises), without
any offset or deductians including, without Iimrtatian, al1 faad and non-
alcoholic beverages, aleahalic beverages, catering serviees, vending machines
or ariy other pay-for-service type deviees, meeting andlor banquet services and
other uses or activities either pre-approved or not approved by Lessar.
4. Lessee shall be required to keep its financial books and records, including state
and federai tax records, for each of the previous five (5) fuJ.i ca.lexidar years for
the durati.on of this Agreement, to be made available for the Lessor's inspection
and audit at Lessor's request. Lessor shall have the right, at any reasonable
time, to examine and perform audits of Lessee's recozds pertaining ta rts
operations on the Leased Premises. Tbe cast of any such audits will be born.e
by the Lessor and Lessee shall pay upon demand any proven deficiencies in
additional rent. If the Lessor's audit finds tbat the gross sales were under
reported by five percent (5°/4) or more, the Lessee shall pay the proven
deficiency plus reimburse Lessar far the cost of the audit, upon Lessor's written
demand.
B. LESSOR IlWROVEMENTS RENTALS. NONE: Lessar improvements as
described in Article II, B. l., 2., and 3. on the Leased Preiriises are included as a part of the
ground lease rental as described in Article N, A., 1., and 2..
C. PAYNENT. PENALTY. ADJIJSTMENTS. All payments due Lessor froxn
I,essee shall be made ta Lessor at the offices of the Finance Department of the City of
Dentoaa, Custom-er Service Division, 601 West Hickory, Denton, Texas, unless otherwise
designa#ed in writing by the Lessor. If payments are not received on or before the 15t' da.y
of the rnonth, a five percent (5%) penalty will be due as of the 16th. Tf payments are not
received by the first of the subsequent xnonth, au additional penalty of one percent (1%) of
the unpaid rentaUfee aunotant will be due. A one percent {i%} charge will be added on the
first of each subsequent mont.h watil the uripaid renta3/fee payment is xnade. The Original
Rent for the Leased Prezn.ises shaJl he readjusted at the end af each five (5) year period
during the Lease Term on the basis of the proportion that the then current United States
Consumer Price index for all urban cansumers (CPI-LT) for the Dallas-Fart Worth Bureau af
Labor Statistics bears to the Iast month of the previous calendar quarter in.dex
(_Sentember which was 218.439 at the begnning of this lease (1982-84 =100)o Each
rental adjustrment, if any, shall occur on the lst day of each fifth (S"') vear of this
Lease Agtsement.
The adjushnents in the yeariy rent slzall be deternnned by multiplying the Original
Reizt by a fraction, the numerator of which is the index number for the last month of f1-ie
NE Interests I,td - Page 7
previou.s calendar quarter uzdex (_Senternber ) pn'or to the acljustrnent, and the
denominator of which is the index nuxaaber applicable at the execution of tlus Lease
Agreement. If the product of this Fnultiplication is greater than the Original Rent, Lessee
shall pay this greater amount as the yearIy rent until the time of the next rental adjustment
as called for in this sectian. If the praduct of this multiplication is less tlaan the Base Rent
there shall be no adjustrment in the annual reiit at that time, aud Lessee shall pay tl-ie
previous year's annual rent untii t11e time of the next rental adjustment as called for 'm this
section. In no event shall any reiztal adjustrnent called for in this section result ii1 an
annual rent Iess than the previous yeat's almual rent. The adjustnient shall be limited so
that the anriual rental paymeiit determined for any given five-year period shall not exceed
the annual rental payment calcuIated for the previous CPI adjustment by more than twenty
percent {20%} percent.
If the coasurn.er price index for all urban cozasumers (CPI-U) far the Da.llas-Fort
Wax-tl7 geogzaphical region, as coinpiled by the U.S. Deparkment of Labor, Bureau of Labor
Statistacs, is discontinued during the Lease Term, the remaining rental adjus#rnents called
for in this section sha11 be made using the farmula set forth above, but by substituting the
mdex numbers for the Consumer Price Tndex-Seasonally Adjusted U.S. Crty Average For
A1.1 Items Far All Urbazx Consumers (CPT U} for the index numbers far the CPT-U
applicablE to the Dallas-Fort Worth geographical regian. Tf both the CPI-U far the Dallas-
Fort Worth geographical zegi.on and the U.S. City Average are discontinued duri.ng the
Lease Term, the remainin.g renta.l adjustments called for in this section shall be made using
the statistics of the Bureau of Labor Staristics of the United States Department af Labor that
are anost nearIy com.parable ta the CPI-U applicable to the Dallas-Fort Worth geographical
regian. If the Bureau of Labor Statistics of the United States Department of Labor ceases to
exist or ceases to publish statistics cancerning the puzchasing power of the cansumer dollar
duriilg the Lease Term, the remaining rental adjustments called for iri tnis section shall be
made using the most nearly cornparable statistzcs published by a recoga;zed financial
authority selected by Lessor.
V. RIGHTS AND OBLIGATIONS OF LESSEE
A. U5E OF LEASED PREMLSES. Lessee as granted the non-exclusive przvilege to
engage in owner/operator activities providing the follawixzg restaurant services:
1. Restaurant Food Service. Lessee is gz-azited the non-exclusive xight to sell
pzepared food to public patrons at the leased prernises location on the Deilton
Airport during the term of tlazs lease agreement;
2. Meetin2 andJor Banauet Food Service. Lessee is granted the nan-exclusive
nght to rent banquet and/or meeting room space to the public at Deiiton
Auport and the rig13t to sell prepared food to public patrons in the zestaurant
facility, including a banquet andlor meeting raazn, Iocated on the leased
premises;
3. Food Caterin2 Service. Lessee is granted the non-exclusive right to provide
NE interests Ltd - Page 8
food service to thi.rd parti.es on Denton Airport property in facilities and at
locations owned and operated by tlurd parties at Denton Airport;
Lessee, zts tenants, employees, invitees and guests shall not.be authorized to conduct
auy services not specifically listed i_n thi.s Lease Agz-eement. The use af the Leased Premises
by Lessee, its tenants, employees, invitees or guests sha11 be limited to only #hose pri.vate,
comsnercial, retail or industrial activities having to do with or related to restaurant food
service. Except as specifically authorized in this Lease Agreement, no person, business az
corporatian may operate a commercial, reta.il ar industriai business upon t.ie Leased
Premises or upon the Airport withaut a lease or Iicense from Lessor autllarizing such
coinmerczal, retaal or industrial activity_ The Lessor shall nat uu.reasonably withhold
authorization to condnct food related services.
B. STANDARDS. Lessee shall meet or exceed the #'ollowing standards:
1. Address. Lessee shali file with tl-ie Ai.zport Manager and keep current its
xnai.ling addresses, telephane numbers and contacts where it cati be reached an
an emergency.
2. List. Lessee shali fiIe with the Auport Manager and keep current a list of its
tenants and sublessees.
3. Conduct. Lessee shall contractually require its employees and sublessees (and
sublessee's invitees) ta abide by the terms of this Lease Agreement. Lessee
shall promptiy enforce its contractuaT rights in the event of a default of such
covenants.
4. Utilities, Taxes and Fees. Lessee shall meet al1 expenses axad payments in
connection witla the use of the Leased Pxemises and the rights arid privileges
herei.n granted, including the timely payment of utilities, taxes, permit fees,
license fees and assessments lawfully levied or assessed.
5. Laws_ Lessee shall comgly with atl cuzrent and future federal, state and local
laws, nzies and regulations which may apply to the conduct of buszness
contemplated, including ruies, regulations and ordinances promuIgated by
Lessor, and Lessee shall keep in effect and post in a prorninent pla.ce a11
necessary and/or required licenses arpermits.
6. Maintenance of ProDertv. Lessee shall be respoxzsible for the maintenance,
repair and upkeep af all property, buildings, structures and improvements,
inclucling the mowing ar elimination of grass and other vegetation on the
Leased Premises, and shall keep tlie Leased Preznises neat, clean and in
respectable candition, free from ai-iy objection.al matter or thing, including
trash or debris_ Lessee agxees not to utilize or permit others to utilize areas an
t.he Leased Premises which are located on the outside of any building for the
NE Interests Ltd - Page 9
starage o£ wFecked or permanently d"zsahled aixcraft, aircraft parts, automa-
biles, vehucles af any type, ax any other equipment or items which would
distract from the appearance of the leased premises. Lessee agrees tha.t at no
time shall the Leased Premises be used for a flea market type sales operation.
7. Paintim, of Bzaildinzs. During the Lease Term af this Lease Agreement and
during each extension, Lessor shall have the right ta require, not more tllan
once every five years, that the anetal exterior of hangar(s) or building(s)
located on the Leased Premises be repainted. The Lessar may require Lessee
to repaint said exterzozs according to Lessor's specifications (to specify color
of paint, quality of worknanship and the year and rn.onth in which tJie
hangar(s) or building(s) are to be painted, if need.ed..} Lessee shall complete
the painting in accordance with such specifications widiin one (1) year of
receipt of notice fram Lessor. Lessee agrees to pay all casts and expense
irivolved in the hangar or building painfing process. Failure of Lessee to
complete t.he painting requxred by Lessor, wifliin the one (1) year period shall
constitute Lessee's default wnder this Lease Agreement.
8. Unauthorized use of Leased Premises. Lessee may not use any of the Leased
Premises for any use nat authorized herein unless Lessar gives Lessee prior
written approval of such additional use. .
9. Dwellin2s. It is expressIy understood and agreed thaf no dwelling or dornicile
may be built, rnoved to or established on or within the Leased Premises nor
may Iessee, its tenants, employees, invitees, or guests be permitted to reside or
zexnai_n a.s a resident on or witliin the Leased Premises ar other Airport
premises. Lessee may have a pilot lounge, includ.ing restroom and shower
facilities far use by fligkt crew azid passengers.
10. Ouit Possession. Lessee shall quit possessian of the Leased Premises at fiie
end of the Lease Term or any renewal oz extension thereof, or upon
caracellation or texmination of t.he Lease Agreeanent, and deliver up the Lease
Premises to Lessor in as goad condition as ex%sted when possession was taken
by LessEe, reasanable wear and tear excepted.
11. Indemnitv. Lessee must indemnify, hold hazrnless and defend the Lessor, its
officers, agents and employees, from and against Iiability for any and all
claims, liens, suits, demands and/or actions for dainages, injuries to pezsons
(inclncling death), property damage, (includ.zng Ioss of use), and expenses,
including court costs, attarneys' fees and other reasonable costs, oecasioned
by or incidental to the Lessee's occupancy or use of the Leased Premises or
the Airport andlor activities conducted in connection wrth ar incidental to tIus
Lease AgreemeFlt, including alI such causes of aetion based on cornrrion,
constitu.tianal or statutory Iaw, or based in whole or in part upon the negligent
or intenfional acts or omissions of Lessee, i`ts officers, agents employees,
invitees or other persans. Lessee n7ust at a1I times exercise reasonable
NE Tnterests Ltd - Page 10
precaution.s on belialf of, and be solely rESponsiUle for, the safety of its
officers, empIoyees, agents, customers, visitors, znvitees, licensees and other
persons, as we11 as their property, wiule in, on, or involved in any way with
the use of the Leased Premfses. The Lessor is not liable or responsible for
the negligence oz' infentiflna.l acts or omissions of the Lessee, its officers,
agents, employees, agents, customezs, visitors and other persons. The Lessor
shall assurne no responsibility or liability for hanm, injuzy, or axty damaging
events wliich are directly ar 'Mdi.rectly attributable to preznise defects, whether
real.ar alleged, which may now exist or which znay hereafter arise upon the
Leased Premises, responsibility far all such defects being expressly assumed
by the Lessee. The Lessee agrees that this indemnity pravision appiies to a11
claims, suits, demands, and actions arisirzg fram all premise defects or
condinans.
THE LESSOR AND THE LESSEE EXPRESSLY INTEND THIS
INDEMNI!'Y PROVISION TO REOUIRE LESSEE TO INDEMIVTFY
AND PROTECT THE LESSOR FROM TEE CONSE4UENCES OF THE
LESSOR'S OWN NEGLIGENCE WHILE LES,SOR IS PARTICIl'ATING
IN THIS LEASE AGREEMENT WHERE THAT NEGLIGENCE IS A
CONCURR]NG CAUSE OF TBE INNRY, DEATH. OR DAMAGE.
NDTWTTHSTANDIlVG THE TERMS OF THE PRECEDIlNG
SENTENCES, THIS TNDEMNTTY PROVTSION DOES NOT APPLY TO
ANY CLAIM, LOSS, DAMAGE. CAUSE QF ACTION. SUIT ANU
LIABILITY WHERE THE JNJURY, DEATH, OR DAMAGE RESULTS
FROM THE SOLE NEGLIGENCE OF THE LESSOR OR ANY OF ITS
EMPLOYEES, CONTRACTORS, OR AGENTS, UNNiIXED WITH THE
FAULT OF ANY OTHER PERSON OR ENTITY.
12. Chemicals. Lessee agees to properly store, collect and dispose af aIl chemicals
and chemical residues; to properly store, confine, callect and dispose of all
paint, inciuding paint spray ixz tlie atmosphere, and paint products, and ta
comply with ali Local, State and Federal regulations governing the starage,
handling or disposal of such chemicals and paints. Further, the Lessee sha11 be
solely responsible for a.ll discharges, vvhethez- accidental or intentional, of a31y
chemical and for the costs associated with the cleanup, remediation and
dzsposal of said claemicais.
13e Hazardous Act'rvities. Should Lessee violate any law, ru1e, restriction or
regulation of the City of Denton or the Federal Avzatzon Administration, or any
other regulatory autriority, oz should the Lessee engage in or permit other
persons or agents to engage in activities which could produce hazards ar
obstruction to air navfgation, obstructzons ta visibility or interference with any
aircraft navigationai aid station or device, whethez airborne or on the graund,
then Lessor shaIl state such violation rn wziting and deliver written notice to
'Lessee or Lessee's agent on the Leased Premises, or to the person(s) o~i tl-ie
Leased Prenzises w11o are caus'mg said violation(s), and upon delivery of such
NE Interests Ltd - Page 11
written notice, Lessor shall have the n'ght to demand that the person(s)
responsible for the violation{s} cease and desist fram all such activity creating
the violation(s). Tn such event, I.essor shall have the right to demand that
corrective action, as required, be cominenced unmediately to restore the LEased
Premises into canformance with the particular law, rule or aeronautical
regulation being violated. Should Lessee, Lessee's agent, or the person(s)
responsibIe for tlle violation{s} fail to cease and desist from sai.d violation(s)
and to i.mmediately commence cozrecting the violation(s), and to complete said
corrections within twenty-fowr (24) hours following written notificatian, then
Lessor shall have the right to entez oiito the Leased Pramises and correct t11e
violation(s) afi the sole cost and expense of Lessee, and Lessor shall not be
responsible for an.y damages incurred to any irriprovements on the Leased
Premises as a result of the corrective action process. In addition, such violation
shall be considered a material default by Lessee authorizin.g Lessor, at its sole
optian and discretion, to unmediately terminate and cancel tlus Lease
Agreement_
C. SIGNS. No signs, posters, ax other similar devices ("Signage") shall be placed on
the exterior of the Lease Improveinents or on any portion of the Leased Premises or Auport
praperiy without the priar wri.tten appraval of Lessor. Lessee, at its sole expense, shall be
responsible for the creation, iristallation and mauitenance of al1 sueh Signage. Lessee shall
pay to Lessor any and all damages, inju.ri.es, or repaus zesulting from the installation,
maintenance or repair of any such Signage. Any Signage placed on the Leased Premises
shall be maintained at alR tines 'm a safe, neat, sigl-itly and good physical condationo AI1
signage shall be removed from the Leased Prernises by Lessee i.mmediately upan receipt of
ilistructions foz removal of same from Lessaz, including without lirnitation, upon expiratian
or termination of this Lease Agreement. If Lessee fails to remove tbe Signage tIien Lessor
may do so at the sole cost and expense of Lessee. AlI signage shall camply with all
applicabie ordinances incluciing the City of Denton sign ordinance."
D. ENTRY. Lessor and its designees shall have the right to enter the Leased
Preinises upon reasonable advance notice (written or oral) and at any reasonable times for
tlle purposes of inspecting the Leased Premises, performing any work which Lessor elects
to perfonn under this Lease Agz-eement, and exhibiting the Leased Premises for sale,
Iease, or mortgage. Notlung in this section shall zmply any duty upon Lessor to do aazy
work, which un.der any other provisiazl of this Lease Agreement Lessee is reqnzred to
perform, and any perfoxmance by Lessor shall not constitate a waiver of Lessee's default.
VI. COVENANTS BY LESSOR
Lessor hereby agees as follows:
A. PEACEFUL ENJOYMENT. Upon payment of all rent, fees, and per.formance ofr
the eovenants and agreeinents on the part of Lessee to be performed herc.under, Lessee shall
peaceably hold and enjoy the Leased Premises and all rights and privileges herdin granted.
NE Interests Ltd - Page 12
B. COMPLJ.ANCE. Lessor warrants ai1d represents that in the establishment,
construction and operation of the Airport, tl-iat Lessor kias heretofare and at this ti.me is
complyizag with ail EXi5t171g ru.Ies, regulations, arid criteria distributed by the Federal
Aviation Administration, or any other governmental autlaority relating to and includ.ing, vut
nat litni.ted ta, noise abatement, air rights and easements over adjoining and eontiguous
areas, over-fligkrt in Ianding or takeoff, to the end that Lessee will not be legally liable for
any action af trespass ar similar cause of action by virtue of any aerial operations of
adjoi.ning praperty in the course of nozxual take-off and landing procecl.ures frorn t11e
Aizport; Lessor fiu-ther warrants and represents tliat at all times during the Lease Term, or
any renewal or extension of same, that it will contixiue ta comply with the foregoing.
VII. SPECIAL CONDTTIONS
It is expressly understood and agreed by azld between Lessor and Lessee tiat tlus
Lease Agreement is subject to the following special terms and conditions:
Even though Lessor is granting Lessee a non-exclusive p3rivilege in this groursd Lease
Agreement, Lessor agrees not to grant a cornpeting pzivzlege to another iessee (new
lessee), imless the va.lue of the new lessee's invesfment and improvements is equal to
or greater thasi those of Lessee.
VIIU. LEASEHOLD IIV4PROVEMENTS
A. REOUTREMENTS: Before commenc'rrig the constructian af any improvements
an the Leased Prernises including Lessee's improvements (the "Lease Jm.provements"),
Lessee shall submit:
l. Documenfia.tion, specificatians, or deszgn work, to be approved by the Lessor,
vvhich shaIi establish #hat the improvements to be built or constructed upon the
Leased Premises are in conformance vvith the overall size, shape, color, quality
and design, in appearance and structure of the program established by Lessor
on the Airport.
2. AI1 plans and specifications showing the location upon the Leased Prexnises of
the proposed construction and improvements;
3. The estimated cost of such consttuction.
No constructzail may commence uritil Lessor has approved the plans aild
specifications and the location of the Lease Irnprovements, and the estunated costs of sucli
construction. Approval by the Lessor shall n.ot be iuireasonabiy withheld. Docwnentary
evideiiee of the actuat cost of coiistnzction on public areas only (such as roads and parking
areas) sliall be delivered by Lessee to Lessor's Aizport Manager from time to tune as sucli
casts are paid by Lessee, and r.essor°s Airport Maxzager ar desigiiee zs hereby autriorizecl to
endorse upan a copy of this Lease Agxeement filed witli the Lessor such actual amounts as
NE Inte=ests Ltd - Page 13
shall have been found to have been paid by Lessee, and the findings of the Auport Mailager
wheii ealdorsed by hiam upon said contract shall be concluszve upon all parties for alI
purposes of this Lease Agreement.
No Iater than 30 days after completion of the Lease Inprovements, Lessee shall
submit to Lessor detailed as built plans of the Lease Iffiprovements and docw.nentary
evidence acceptable to Lessoz evid.eizcing the total cost to construct the Lease Improvements
("Cost ta Construct Lea.se Impzavements").
B. ADDITIONAL CONSTRUCTZON OR IlVIPRQVEMENTS: Lessee is hereby
authorized to consiruct upon the Leased Premises, at its own cost and expense, buildings
and structures that Lessor and Lessee muhtally agree are necessary far use in connection
uith the operations authorizEd by this Lease Agreement, provi.ded however, Lessee shall
comply with alI of the requirements of Section VIII.A., above. Such additional
improvements sball be a part of the Lease IzxaprovemEnts.
C. OWNER,SHIP OF IlVTPRQVEMENTS: Except as otherwise provided in t11is
Lease Agreement, the Lease Irnpzovements constructed upon the Leased Premises by
Lessee shall remaiu the property of Lessee during the Lease Term subject ta the followriig
conditions, terms and provisions:
1. Removai of Buildizaas. No building or permanent fixture may be removed
from the Leased Premises.
2. Assurnptiozx. The Lease Imp:rovements shall automatically become the
properly of Lessar absoIutely free, withouti any cost to Lessor, at the end of the
Lease Term which is defined as the end date for the initia.l Iease periad plus
arxy extension thereof Assumpiion Options as pravided in Section XV, J., I
and 2. shall be enforced.
3. FaiIure to Cammence ar ComDlete Lessee's ImDrovements. The Lease
Improvements shalI irnmediately beeome the property of Lessor at no cost,
expense, or coznpensation to Lessee should Lessee fail to coznmence or
complete the Lessee's Improver.nents witlvn the Commencement Periiod or
Construction Period as provided in Section H.C. of this Lease Ageement.
4. Lease Improveinents shall include all stru.ctures, fixtures attached to slructures,
heating/ventilating/air canditioning (HVAC) eqi.ipment and food seivice
equipment permanently aitached and/or buzlt into the structure.
5. Cancellation or Ternvnataon. Should this Lease Agzeerrient be canceled or
terniinated before tlxe end of t1-ie Lease Term, or extension thereo:f, the title in
alI property improvements and remainung leasehold improvements
autornatically revert to Lessor., except as provided in Section XV -
Miscellaneaus Pz-ovisions, Item J.
NE Interests Ltd - Page 14
IX. SUBROGATION OF MORTGAGEE
Ai-iy person, corporation ar uistitution that lends money to Lessee for construction
of any 1langar, stnzcture, building or improvernent and retains a security interest in said
hazagar, sh-ucture, buildin.g or unpravertlent shall, upon default of Lessee`s obligations to
said mortgagee, have the right ta enter upon the Leased Pzemises and operate or manage
said hangar, siructure, buiIding or improvement according to the terzns of this Lease
Agreement, for a period not to exceed the term of the mortgage with Lessee, or until the
laan is paid in full, whichever comes first, but in no event longer than the Lease Term. It
is expressly understood and agreed that the right of the mortgagee referred ta hereiil is
limited axxd restricted to tl-iose improvemeiits cans#nzcted with fiunds borrowed from
mortgagee, those im.provements purehased with the bozrowed fEUids, and those
improvements pledged to secure the refinancing of the zFnpravements.
X. RIGHT OF EASEMENT
Lessor shall have the right to establish easernents, at no cost to Lessee, upon the
Leased Premzses for the purpose of providing undergraund utility services to, frozzi or
across the Airpart properiy or for the constz-uction of public facalities on the Auport.
Hawever, any such easements shall not interfere with Lessee's use of the Leased Premises
and Lessar shall restore the pzoperiy to the original conclition as is reasonablepracticable
upon the installation of any utility services ozi, in, over or tznder any such easement at the
canclusion of such construction. Canstruction in or at the easement shall be campleted
witUi a reasonable time.
M. A.SSIGNIvENT OF LEASE
Lessor expressly cavezzants that after the unprovements to the Lease Prerruses as
described in Section II, B. and C. are completed and have met all applicable City Code
requiremezits, the City Manager or his designee zs authorized to execute an Assignanent of a
leasehold interest in this Airport Lease Agreement Cornrmercial Operator at the Denton
Auport from Leasee to a third party to be approved by the Czty Manager or his designee ai-id
said Assignment shall be in substantially the fonZx of the Assignment attached to aaa.d made a
part of tlu.s Aizport Lease Agreement CommerciaT Operator at the Denton Auport. Lessor
agrees that it will not unreasonably withbaid its approval of assignrflent of the facilities for
.Aizport related puFposes; provided however, that na such assignment shali be approved if
the rental, fees or payments, received or chazged are in excess of the rentai or fees paid by
Lessee fio Lessor under the tertns of tlus Iease, for such portion of the Leased Premises
proposed to be assigned, subleased, transferred, licensed, or othercvise. The provisions of
this Lease Agreement shall remain binding upan the assignees, if any, af Lessee.
XII. INSURANCE
A. REOUIRED TNSURANCE: Regardless"of the activities contemplated under tl-lis
Lease Agreement, Lessee slzall main#ain continuously in effect at all times during the tenn
NE Interes'ts Ltd - Page 15
a£tlais agreernent, at Lessee's sole expense, the following minimurri insurance coverages:
Commercial (Public) Geiieral Liability coveriiig the Lessee or its company, rts
employees, agents, tenants and independent contractors, and i.ts operations on ti1e
aiiport. Coverage shall be zn an amount not Iess tlian $1,000,040 per Qccutx-enee
and provide coverage for premises/aperations and eontractual liability AND where
exposure exists, coverage for: productslcaznpleted aperations; explosian, eollapse
and underground property damage.
2. All risk property insurance an a replacement cost baszs eovering loss or damage fio
all facifities used by the Lessee, either as a part of this agreement or erected by the
Lessee subsaquent to this agreement. Under no circumsfa.nces shali the Lessor be
liable for any damages to fixtures, merchand.ise or other personal property of the
Lessee ar its tenants.
Business Autornobile Liability to include coverage :for OwnecULeased Autos, Non-
4wned Autos and Hirect Cars:
For opezation in aircraft movement areas the limit af liability shall be $100,000
per occurrence.
For other operations the limi.t of liability shall be consistent wrth the amount set
by State Law.
B. ADDTTIQNAL COVERAGES: In addztion to the abave referenced coverages, tlie
following insurance is required if the activity or exposuxe exists or is cantemplated:
Tf Lessee secures a liquor license from the state, Lessee shall be requirea to maintain at
all times, without interruption, such required insuraaice policies and coverages required
under state law.
C. COVERAGE REOUIREMENTS: All insurance coverages shall eomply with the
following requiremeilts:
l. All Iiability policies shall name the City of Denton, and its officers and employees
as an additional named insuzed and provide for a ininim.um of 30 days written
notice to tIle City of any cancellation or material change to the policy.
2. All insurance required by this Lease Agreement must be issued by a com.pauy or
companies o:f sound and adequate finallcia.l responsibility a1id authorized to do
business in the State of Texas. All policies are subject to the examiziation and
approval of the City's office of Risk Management far their adequacy as to conteiit,
form o#'protectian and providing campany.
^ 3. Reqnired insurance naining the City as aai additiolial i.xisured must be primary
insurance and nat contnbuting witli any other insuraiice available to the City
NE Interests i,td - Fage 16
whether frarn a thixd party liability policy or otlier. Said limits of insurance shall in
no way Iimit the Iiabilrty ofthe Lessee hereunder.
4. The Lessor shall be pravided wzth a copy of all such policies and renewal
certificates. Failure of Lessee to camply with the m;r,;mum specified amounts or
types of insurance as required by Lessor shall constitute Lessee's default of tliis
Lease Agreement.
5. During the Lease Term, or any extension thereof, Lessor herein reserves the n'gl-it
to, with 60 days notice, aajust or increase the liability iasurance amounts required
of the Lessee, and to requiare any additiaiial rider, provisions, or certificates of
insuran.ce, and Lessee hereby agrees to provide any such 'msurance requirements as
anay be required by Lessor; provided however, that axry requirements shall be
commensurate with insurance requirements at other public use airports similar to
the Denton Municipal Airport in size and in scope of aviation activities, iocated in
the southwestem region of the United States.
XIII. CANCELLATTON BY LESSOR
In the event that Lessee shall fiIe a voluntary petition in bankruptcy ar proceedings
in baaikxuptcy shall be instituted agaiust it and Lessee thereafter is adjudicated baulc-upt
pursuant ta such proceedings, or any court shall take jurisdietion of Lessee and its assets
pursuant to proceedings brought under the provisions of auy Federal reorganization act,
ar Lessee shaIi be divested of zts estate herein by other operation of Iaw; or Lessee shall
fail to perform, keep and observe any of the terms, covenants, or canditians herein
contained, or on zts part to bE perfanmed, the Lessor may give Lessee written notice to
correct snch condition or cure such default and, if any conclition or default shall continue
far thirty (30) days after the receipt of such notice by Lessee, then Lessor may teryiinate
this Lease Agreement by vvritten notice to Lessee. Howevez, if Lessee provides written
notice to Lessar within said 30 day cure period that it is impossible to cure such default
within said time period, tiien tlae Lessor may consent to an extension of such time to cure,
wluch consent will not be unreasonably witilheld_ In the eveiit of defauIt, ownership of all
z-i.ghts and interests in the real properiy shail autornatically revert to Lessor under the
pravisions of Section VIII.C. 5 hereof. 4ther provisians of this agreement not
withstandixig; in the event -that Lessee causes or pernzzts the leased preznises to remain
unused as set forth in Section V. hereof for a period of six months, such sha11 constitute a
default under t31is subsection.
XN. C.ANCELLATION BY LESSEE
Lessee m.ay cancel tl-izs Lease Agreement, in wl-tnle or part, and tezminate all or any of
its obligatioiis hereunder at any time, by thirty (30) days written notice, upon or after tiie
I1appeiiing of any one of tlae following events: (1) issuance by any caurt of competEnt jiuzs-
dzction of a permanent injinction in any way preventing or restrai.xi.ing the use of the Auport
NE Inte=ests Ltd - Page 17
or any part thereof for airport purposes; (2) the breach by Lessor of any of the covenants or
agreements contained herein and the failure of Lessor to remedy such breach for a peziod of
ninety (90) days after receipt af a written notice of the existenee of such breach; (3) t11e
inability af Lessee to use tl-le L,ease Premises and facili#ies conianuing for a longer period
thazi ninety (90) days due to any law or any order, rule or regulatian of axiy appropriate
govexnznental authority having jurisdiction over the operafions af Lessor or due to war,
eart.hquake or other casualty; or (4) the assuznption or recapture by the United States
Govemznent, or any authorized agency thereof~ of the maintenance and aperation of said
auport aiid facilities or any substantial part or parts thereof.
Upon the happening of any of the four eveaits listed in the prececling paragraph, such
that the Leased Premises cannot be used for puYposes as pravided in Sectian V, A of tlus
Agreement, then the Lessee may cancel this Lease Agreement as afozesaid, or may elect to
continue fliis Lease Agreernent under its terms, except, however, that the use of the Lea.sed
Preinises shall be ]imited by such Iaws and ordinances as may be appiicable at that time.
Should Lessor close the Airport and relacate the Aixport to anather iocation during ti-le
primary term of t.his Lease Agreement, Lessee shall have the right to relocate its facilities ta
the new airport at a stutable locatian under the same or sixnilar terms af #his Lease
Agreement. The cost of relocation of Lessee's facilities will be shared by Lessor and Lessee
in proporti.on to the number of years remaining on the priznary term of this Lease
Ageernent. In this regard Lessor wi11 be responsible -for 1/30 of 4he such costs for every
year reznaining on the prirnary tezm.
XV. MISCELLANE4US PROVISIONS
A. ENTIRE AGREEMENT. Tlus Lease Agreement constitutes tlie ealtire
understanding between tlle parties and as of its Effectzve Date supersedes all prior ar
and.ependent Agreements between the parties covering tIae subject matter hereof. AYry
change or moclificatian hereof shail be in writing signed by both pariies.
B. BIlVDING EFFECT. All covenants, stipulations azxd agreements hexein shall
extezid to, bina and inure to the benefit of the legal represenfa.tzves, successors and assigns
of tiie respective parties hereto.
C. SEVERABILTTY. Tf a provision hereof shall be fina.l.ly declared void ar illegaI by
any court or adnunistraiave agency having jurisdiction, the entire Lease Agreement shall not
be void; but the rezn.ainung pravisions shall continue 'm effect as nearly as possible in .
accordance witIi the original inteilt af the parties.
D. NOTICE. ,Aary notice given by aile party ta the other iri eonnecti.on with tl-izs
Lease Agreement shall be in writing and shall be sent by certified zxzail, returri receipt
requested, vcrith postage fees prepaid or via facsimile as follows:
4 .
1. If to Lessor, addressed to:
NE Interests Ltd - Page 18
City Manager
City af Denton
215 E_ McKinney Street
Denton, Texas 75201
Fax No.940.349.8596
2. Tf to Lessee, addressed to:
ChaF-lie M. Nicholas
NE Interests, Ltd.
420 Southforlc Drive
Lewisville, Texas 75057
Fax No.: 972.221.2700
E. HEADINGS. The kzeadings used in tlus Lease Agreement are intended for
convenience of reference only and do not define ar Iimi.t the scope ar meaning of aiiy
provisian of this Agreement.
F. GOVERNING LAW AND VENEIE. This Lease Agreement is to be construed in
accordance with the laws of the State of Texas and is fully perfozmable zzi Denton County,
Texas. Exclusive venue for any lawsuit to enforce the terms or conditions of this Lease
Agreement shall be a court of competent jurisdiction in Denton County, Texas.
G. NO WANER No wa.iver by Lessor or Lessee of any defaul.t or breach af
covenant or term of this Lease Ageement may be treated as a waiver af any subsequent
default or breach of tile same or any other covenant oz tezxn of this Lease Agreement.
H. NO AGENCY. During all tiffies that tbis Lease Agreement is in effect, the parties
agree tha.t Lessee is and shall not be deemed an agent or einployee of t.he Lessor.
1. FORCE MAJELTRE. Nane of the Parties shall be in default ar atherwise 1iable
for any delay in or failure of performance undez this Lease Agreement if sueh detay or
failure arises by any reason beyond their reasonable controi, including any act of God,
any acts af the co=on enemy or terrorism, the elernents, earthquakes, floods, fires,
epidemics, r'rots, failures or delay in transportation or communications. However, lack of
funds shall not be deemed ta be a reason beyond a Party's reasonable control. The Parties
will promptly inform and consult with each ather as ta any of the above causes, whXCh in
their judgment rnay or could be the cause af a delay in the perforinance of this Lease
Agreement.
J. ASSUMPTION OPTIONS.
l..Upon expiration of the Lease Texm whi.ch is defined as #he end date for tl-ie
initial Iease period plus any extension tl-iereof, the Lessor in its soIe
NE Interests Ltd - Page 19
2.At any time prior to expiration of the lease, Lessor may enter into a new
ground lease with Lessoz and provide for reversion of the property
unprovement at anew assumption date.
IN WITNESS WHEREOF, the parties have executed this Lease Agreement as of the
Effective DatE first above wxitten.
CITY OF DENTON, TEXAS, LESSOR
BY:
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPROVED AS TQ LEGAL FORM:
1LNITA BURCESS, CITY ATT4RNEY
BY:
7 ~
GEORGE C. CAMI'BELL, CITY MANAGER
N.E. INTERESTS, LTD
By: N.E. Interests GP, LLC,
Its General Partnzr
~
BY:
CHA.RLIE M. NICHOLAS,
Maz►ager
N.E. Interests, Ltd - Page 20
ACKNOWLEDGMENTS
THE STATE OF TEXAS §
COUNTY OF DENTON §
This instnunent was acknowledged before me on tlle day af , 2011, by
George C. CaTnpbell, City Manager of the City of Denton, Texas, on behalf of said
municipality.
NOTARY PUBLIC, STATE OF TEXAS
THE STATE OF TEXAS §
COUNTY OF DENTON §
This in.strument was acknowledged before rne an the day of .2010 by
Charlie M. Nicholas, manager af N.E. Interests GP, LLC, the general partner of N.E.
hiterests, Ltd, on behalf of said campany. -
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NOTARY PUBLIC, STATE OF '~EXAS``-
N.E. Interests, Ltd Page 21
Attachment A
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c:ldocume-'llvdhooghellocals-lltemplne interes#s 380 agr.doc
Exhibit "C"
Attorney's Cerkificate
The undersigned, Vincent P. Dhooghe, attorney for NE Interests, Ltd., a Texas lirnited
partnership, hereby certifies the folIowing:
I certify that Charlie Nicholas, Manager of N.E. Interests GP, LLC, a Texas 1imited
liability company, the general partner of N.E. Interests, Ltd, is authorized to execute,
deliver and perform that certain Econornic Development Pragram Grant Agreement with
N.E. Interests, Ltd. and the City of Denton, and is authorized to take all action necessary,
advisable or desirable to execute the agreement and perform the terms and conditions by
N.E. Interests, Ltd. required thereunder.
BY: v?
Vincent P. Dhaoghe
Attorney At Law
420 Southfork Drive
Lewisville, Texas 75057
Phone 972-221-2105
Fax 972-221-2700
SBN 05798950
State of Texas
County of Denton
This instrument was acknowledged before me, the undersigned notary public, on
this 5d" day of January, 2011, by Vincent P. Dhooghe, attozney for N.E. Interests, Ltd.
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My commission expires: 1-7
9
DRAFT MINUTES (EYCERPT)
AIRPORT ADVISORY BOARD
JANUARY 5, 2011
After determiiung that a quoniin was present, the Airport Advisory Board of the City of Denton,
Texas convened in a Special Called Meeting on Wednesday January 5, 2011 at 5:30 p.in. in the
Airport Terininal Building, Meeting Rooin at 5000 Airport Road, Denton, Texas, at which the
following items were considered:
BOARD MEMBERS PRESENT: Chairinan Dr. Don Sinith, Mr. Bob Pugh, Mr. Bill Schofield,
Mr. Jim Clarlc and Mr. Jereiny Fylces.
BOARD MEMBERS ABSENT: NONE
STAFF MEMBERS PRESENT: Quentin Hix, Airport Manager, Julie Mullins, Administrative
Assistant, Andrea Sumner, Operations Coordinator, Marlc Nelson, Transportation Director,
Bryan Langley, Cluef Financial Officer.
PUBLIC PRESENT: Jeff Soules, US Aviation Group; Marlc Taylor, US Aviation Group; Riclc
Woolfollc; Damon Ward, Business Air Center; Robert Pastor, CHA; Paul Cristina, ILimerly-Horn
and Associates, liic.
ITEMS FOR INDIVIDUAL CONSIDERATION
V. Receive a report, hold a discussion and make a recommendation regarding an
ordinance establishing an econoinic developinent prograin under Chapter 380
of the Local Governinent Code for NE Interests, Ltd. to constnjct and operate
a restaurant at the Denton Muiucipal Airport;
Mr. Hix said that this is the procedure to reimburse the infrastnicture
constniction that has been used as an economic development incentive. The
City will not reiinburse NE liiterests until after the tenant receives the
certificate of occupancy. The Chapter 380 a~reement with this lease states
that if they default on the lease they have to pay baclc the City for the
iiifrastnicture.
Mr. Schofield asked Mr. Langley if the City can file a UCC if they do file for
banknjptcy. Mr. Langley said he does not know how to proceed with that, but
will follow up with legal on tlus issue.
Mr. I+ykes made a motion to recommend to the City Council to approve
the economic development program under Chapter 380 of the local
government code for NE Interests, Ltd. Mr. Clark seconded the motion.
Motion carried 5-0