23-518ORDINANCE NO. 23-518
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON AUTHORIZING THECITY MANAGER TO EXECUTE AN AGREEMENT WITH THE NATIONAL COUNCIL FORCOMMUNITY DEVELOPMENT, INC. AND FINE ARTS THEATER OF DENTON, LLCREGARD[NG DEVELOPMENT UNDERWRITING SERVICES AND AUTHORIZING PAYMENT
OF THE FEE IN THE AMOUNT NOT TO EXCEED $25,000; AND PROVIDING AN EFFECTIVEDATE
WHEREAS, the FINE ARTS THEATER OF DENTON, LLC (“DEVELOPER”) has made a
funding request to the CITY OF DENTON (“CITY") for development assistance to redevelop the Fine
Arts Theatre, which is located at 1 15 North Elm Street, Denton, Tx 76201 (the “PROJECT”); and
WHEREAS, the proposed Project furthers the CITY’S economic development goals; and
WHEREAS, the CITY desires to receive development advisory services from NATIONALDEVELOPMENT COUNCIL (“NDC”) to underwrite the aforementioned development project on
behalf of the City and if assistance is warranted, to recommend appropriate amounts and terms for such
assistance for this project; and
WHEREAS, NDC is willing to provide, on such terms and conditions as are hereinafter provided,
development underwriting services to the CITY utilizing its expertise in development underwriting; and
WHEREAS, NDC regularly performs services for various governmental agencies and public
benefit corporations located across the United States.
WHEREAS, the attached Agreement by and between the CITY, NDC, and DEVELOPER
regarding development underwriting services (the " Agreement") sets out Scope of Services, Term andCompensation; NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The findings and recitations contained in the preamble of this ordinance are
incorporated herein by reference.
SECTION 2. The Agreement between the CITY, NDC, and DEVELOPER attached hereto
serves a valid municipal and public purpose and is in the public interest.
SECTION 3. The City Manager or their designee is hereby authorized to execute the Agreement,
to take any actions that may be required or permitted to be performed by the City of Denton under the
Agreement, and to expend funds pursuant to the Agreement.
SECTION 4. This ordinance shall become effective immediately upon its passage and
approval.
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Aye
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Nay Abstain Absent
Gerard Hudspeth, Mayor:
Vicki Byrd, District 1 :
Brian Beck. District 2:
Jesse Davis. District 3:
VACANT. District 4:
Brandon Chase McGee, At Large Place 5:
Chris Watts, At Large Place 6:V/
PASSED AND APPROVED this the '1\R d,y ,f Marcy\2023
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GERARD HUDSPETH, MAYOR
ATTEST:
ROSA RIOS, CITY SECRETARY ,\\\t 11111Fe•
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APPROVED AS TO LEGAL FORM:MACK REINWAND, CITY ATTORNEY
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DocuSign Envelope ID: 889860CC-C6A9-4CDA-9F22-B830CF8722B5
AGREEMENT BY AND BETWEEN
CITY OF DENTON
AND
NATIONAL DEVELOPMENT COUNCIL
REGARDING
DEVELOPMENT UNDERWRITING SERVICES
This Agreement is made and entered into this 7+Lday of March, 2023, by and between the CITY OF
DENTON (“CITY"), a Texas municipal corporation, whose address is 401 N. Elm Street, Denton, Texas
76201; FINE ARTS THEATER OF DENTON, LLC (“DEVELOPER”), a Texas limited liability
company, whose address is 212 South Elm Street, Denton Texas 76201; and NATIONAL COUNCIL
FOR COMMUNITY DEVELOPMENT, INC., a New York non-profit corporation doing business as
the NATIONAL DEVELOPMENT COUNCIL (“NDC”), which is a tax-exempt organization under
Section 501(c)(3) of the Internal Revenue Code, whose address is 1111 Superior Ave. East, Suite 1114,
Cleveland, OH 44114. Collectively, the CITY, DEVELOPER and NDC may be referred to as the“PARTIES”
WITNESSETH THAT :
WHEREAS, the DEVELOPER has made a funding request to the CITY for development assistance to
redevelop the Fine Arts Theatre, which is located at 115 North Elm Street, Denton, Tx 76201 (the
“PROJECT”) ; and
WHEREAS, the proposed Project furthers the CITY’S economic development goals; and
WHEREAS, the CITY desires to receive development advisory services from NDC to underwrite the
aforementioned development project on behalf of the City and if assistance is warranted, to recommend
appropriate amounts and terms for such assistance for this project; and
WHEREAS, NDC is willing to provide, on such terms and conditions as are hereinafter provided,
development underwriting services to the CITY utilizing its expertise in development underwriting; and
WHEREAS, NDC regularly performs services for various governmental agencies and public benefit
corporations located across the United States.
NOW THEREFORE, in consideration of the above-mentioned premises and of the mutual covenants
contained herein, the parties hereto agree as follows:
I. SCOPE OF SERVICES
NDC agrees to perform the services detailed in Exhibit A, attached hereto and incorporated herein by this
reference, as requested by the CITY and to provide such services as CITY deems necessary to accomplish
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the goals requested in a timely manner. Exhibit A attached hereto fully describes the services to be offered
to the CITY by NDC. In performing the requested services, NDC shall consult with officers and
employees of the CITY and shall meet, as appropriate, with such representatives or other entities when
necessary, including, without limitation, State and Federal officials and other local organizations. As part
of the underwriting services, NDC shall prioritize benefits to the City and shall seek for the Developer toachieve no more than a market return.”.
DEVELOPER agrees to provide the CITY and NDC the due diligence items required to complete an
underwriting review as set forth in Exhibit A.
II. TERM
NDC agrees to commence work for the CITY on the date when the City submits all items on the Checklist
for Financial Underwriting in Exhibit A (the “Effective Date”) and shall complete its obligations under
this agreement no more than 60 days later (the “Term”). The Term may be extended by mutual agreement
for an additional 30 days but shall in no event end later than ninety (90) days after the Effective Date.
Any party may, at any time, terminate this Agreement with or without cause by sending written notice to
the other parties, in which event this Agreement shall be terminated effective 30 days after receipt of such
notice
III. COMPENSATION
The CITY shall compensate NDC a fee equal to a quarter (1/4) of 1% (.0025) of the project’s estimated
total development costs. This fee shall not exceed $25,000. Total development costs are generally
comprised of hard costs such as renovation costs or construction costs and soft costs such as architectural
and engineering fees. The fee is earned by NDC upon completion of the Final Underwriting Report, if
DEVELOPER submitted the due diligence items that were noted as deficient in the preliminary
underwriting report within 60 days of receiving the Preliminary Underwriting Report, or such longer time
as may be necessary for DEVELOPER to submit such items as determined by the CITY’s director of
economic development, if applicable, and if the Final Underwriting Report determines that the
development project requires CITY funding.
The fee is not contingent upon the CITY’s ultimate decision to recommend funding. Alternatively, the
DEVELOPER shall compensate NDC a fee equal to a quarter (1/4) of 1% (.0025) of the project’s
estimated total development costs upon either: (1) the Preliminary Underwriting Report, if DEVELOPER
does not submit the due diligence items that were noted as deficient in the preliminary underwriting report
within 60 days of receiving the Preliminary Underwriting Report, or such longer time as may be necessary
for DEVELOPER to submit such items as determined by the CITY’s director of economic development,
if applicable, or (2) completion of the Final Underwriting Report, should NDC determine that the
development project does not require any CITY funding. This fee shall not exceed $25,000. 1n no event
shall NDC receive a fee from both the CITY and the DEVELOPER in relation to this agreement. On the
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Effective Date of this Agreement the Developer agrees to deposit $25,000 into a reserve account to be
used to pay the NDC fee.
In the event that this agreement is terminated by the CITY prior to completion of the Preliminary
Underwriting Report, the CITY will be responsible for NDC’s staff time and effort and will be charged at
a rate of $250 per hour. In the event the DEVELOPER withdraws their request for development assistance ;
thereby terminating this agreement prior to completion of the Preliminary Underwriting Report, the
DEVELOPER will be responsible for NDC’s staff time and effort and will be charged at a rate of $250
per hour. In either event, NDC will submit a log of hours and tasks completed with final invoice to the
responsible party. This fee shall not exceed $25,000.
As an independent contractor, NDC is responsible for all taxes and other benefits of the employees of
NDC and nothing contained herein shall be interpreted as creating a relationship of servant, employee,
partnership, or agency between the CITY and the NDC. Payment by the CITY for services rendered under
this Agreement evidences the CITY’s acceptance of such services in accordance with the terms of this
Agreement. In the event of a Freedom of Information request for information, all costs incurred by NDC
to respond to the FOIA shall be invoiced and reimbursed by the DEVELOPER at a rate of $250 per hour
(which amount is in addition to the $25,000 paid for such underwriting services).
IV. MISCELLANEOUS PROVISIONS
4.1 Confidentiality of Reports. NDC shall keep confidential all reports, information and data given
to, prepared or assembled by NDC pursuant to NDC’s performance hereunder and CITY or
DEVELOPER designates in writing as confidential. Such information shall not be made available
to any person, firm, corporation or entity without first obtaining the prior written consent of the
party submitting such confidential information, unless otherwise mandated by applicable law. All
information submitted to NDC pursuant to this Agreement shall be deemed to be submitted to the
City
4.2 Equal Opportunity and Anti-Discrimination. NDC shall comply with all provisions of Title VI
of the Civil Rights Act of 1964 and of the rules, regulations and relevant order of the Secretary of
Labor and City Ordinances regarding discrimination. In the event a party is determined by the final
order of an appropriate agency or court to be in violation of any non-discrimination provision of
federal, state, or local law, this Agreement may be cancelled, terminated or suspended in whole or
in part by the CITY, and that party may be declared ineligible for further CITY contracts. NDC
shall not discriminate against any person in employment or public accommodation because of race,
religion, color, creed, gender identity, sex, national origin, sexual orientation, mental or physical
disability, marital status or age. "Employment" shall include but not be limited to hiring, accepting,
registering, classifying, promoting, or referring to employment. "Public accommodation" shall
include but not be limited to providing goods, services, facilities, privileges and advantages to the
public
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4.3 Connicts of Interest. No board member, officer or employee of CITY or its designees or agents,
and no other public official who exercises any functions or responsibilities with respect to any
requested technical assistance, shall be permitted to financially benefit from this Agreement or have
any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof, for work to be
performed in connection with this Agreement.
4.4 Notices. All notices shall be sent by certified mail, hand-delivery or overnight mail and in all
events with a written acknowledgment of receipt to the address set forth at the beginning of this
Agreement.
If to NDC:
National Development CouncilAnn: Daniel Marsh Ill, President & CEOP.O. Box 845300
Boston, MA 02284- 5300
With email communication to:
Sheldon Bartel, Field Director
sbartel(g}ndconline.org
If to CITY:
Wayne Emerson, Director of Economic Development
City of Denton
401 N. Elm Street
Denton, Texas 76201
With email communication to:
Wayne Emerson, Director of Economic Development
wayne.emerson@,cityofdenton.com
If to DEVELOPER:
Fine Arts Theater of Denton, LLC
Ann: Brad D. Andrus
212 S. Elm Street
Denton, Texas 76201
With email communication to:
Brad Andrus
DocuSign Envelope ID: 889860CC-C6A94CDA-9F22-B830CF8722B5
brad@nbrealtyholdings.com
4.5 Responsibility for Claims Indemnification. NDC agrees to indemnify and save harmless CITY,
their agents, officials, and employees from any liability, damage, expense, cause of action, suit,
claim, judgment or expenses (including attorneys’ fees) arising from injury to person, including
death or personal property or otherwise, caused by or resulting from the activities in furtherance
of the work described herein. CITY agrees that such indemnity shall not apply to any actions,
claims or damages arising as a result of CITY’s bad faith, willful misconduct or gross negligence.
4.6 Release of News Information. No news release, including photographs, public announcements,
or social media posts relating to any part of the subject matter of this Agreement or any phase of
any program hereunder or confirmation of same shall be made without prior written approval of
the CITY.
4.7 Compliance with Laws. NDC agrees to comply with all applicable federal, state and local laws
in the conduct of the work hereunder. This Agreement shall be construed, interpreted and the rights
of the parties determined, in accordance with the laws of the State of Texas. The exclusive venue
for any conflict arising in relation to this Agreement shall be in Denton County, Texas.
4.8
4.9
Assignment. Neither this Agreement nor any rights, duties or obligations described herein may
be assigned by any party hereto without the prior expressed written consent of the other parties.
Severability. A determination that any part of this Agreement is invalid shall not invalidate or
impair the force of the remainder of this Agreement.
4.10 Acknowledgement. The CITY expressly acknowledges that all opinions and advice (written or
oral) given by NDC to the CITY in connection with NDC’s engagement are intended solely for
the benefit and use of the CITY considering the financing and the CITY agrees that no such opinion
or advice shall be used for any other purpose without the prior consent of NDC.
4.11 Disclaimer. The CITY is a sophisticated business enterprise and has retained NDC for the
purposes set forth in this Agreement and the parties acknowledge and agree that their respective
rights and obligations are contractual in nature. Each party disclaims an intention to impose
fiduciary agency rights or obligations on the other by virtue of the engagement hereunder.
Disclaimer regarding NDC’s compliance with Section 975 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (“Dodd-Frank”) and amended Section 15B of the
Securities and Exchange Act of 1934 (“Exchange Act”).
The National Development Council is not a Registered Municipal Advisor as defined in Dodd-
Frank and the Exchange Act and therefore cannot provide advice to a municipal entity or obligated
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person with respect to municipal financial products or the issuance of municipal securities,
including structure, timing, terms or other similar matters concerning such financial products orISsues
4.12 Entire Agreement. This Agreement contains the final agreement between the parties regarding
the matters covered and supersedes any and all other agreements, either oral or in writing,
regarding the matters contained herein.
DocuSign Envelope ID: 889860CC-C6A94CDA-9F22-B830CF8722B5
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year
first written above.
NATIONAL DEVELOPMENT
COUNCIL,
a New York nonprofit corporation
CITY OF DENTON,
a Texas municipal corporation
/'-DocuSlgned by:
By: 1 DMitl h4Vql 1[1\88D7FDCEOF18498
Daniel Marsh III,
President & CEO
Sara Hensley,
City Manager
Date: 2/10/2023 Date:
Approved as to legal form:
Mack Reinwand, City Attorney
Digitally signed by Scottgd%-- Fi,.„„„,,.pBy : (# 1 o:14:26 -06'oo'
FINE ARTS THEATER OF DENTON,LLC
a Texas limited liability company
By: Northbridge Realty Holdings, LLC
a Texas liability company
its Manager
Brad D. Andrus, Manager
CW OF DENTON, TEXASDate. 2/13/2023
DocuSign Envelope ID: 889860CC-C6A94CDA-9F22-B830CF8722B5
EXHIBIT A
Scope of Services
Development Underwriting Services
The Scope of Services describes the assistance available under this Development Underwriting Services
Agreement during the specified contract period. The Scope of Services includes:
1
2
3
4.
5
6.
7.
Evaluating developer experience and capacity.
Financial review of the sources and uses, operating proformas, and financial statements.
Structuring of deals with available public sector economic development programs.
Review of appraisals, cost assumptions, capital budgets, operating statements, marketing data and
other funding commitments.
Advising on tax credit equity sources, requirements, and structuring.
Identifying other funding sources for the range of commercial, industrial, and residential real estateand business credit deals.
Determining the need for CITY funding of the Project, utilizing the underwriting documentation
set forth in the Checklist for Financial Underwriting attached hereto.
NDC shall provide off-site technical assistance to the CITY to analyze and evaluate the reasonableness ofthe DEVELOPER’s request for assistance from the CITY. NDC will measure the impacts and
reasonableness of the requested City assistance through off-site technical assistance via document
collection and review, emails, phone calls, virtual meetings or other means as necessary to complete its
analysis
NDC will be available to attend hearings and legislative sessions where the CITY’s request for City
assistance will be considered through videotelephony or by phone, as necessary. Travel reimbursements
for on-site attendance at meetings will be reimbursed by the CITY.
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DocuSign Envelope ID: 889860CC-C6A94CDA-9F22-B830CF8722B5
Checklist for Financial Underwriting
n Request letter detailing how the project is compatible with the:
City’s Strategic PlanTIF Policies
Requirements of the TIF district in which it is located
Project Description
Why city subsidy is required
O Documentation of Site Control – Resubmit if:
Changed or modified since Application Part 1
Ownership or ownership structure has changed
LJ Applicant Contact Information
n Economic Development Support Requested and rationale for the request
U Project Information including:
Development Team and Development Team Narrative
Projected Operations Start Date
Company Plans Narrative
Detailed Development Budget in unlocked Excel format
a Capital Investment Information – Update all information including but not limited to:Revised Cost Narrative
Sources and Uses in unlocked Excel format - update with numbers generated in the more
expansive pro-forma required as part of this Gap Analysis Application
Updated independent third-party appraisal supporting acquisition costs
Updated Debt, Equity and Other Sources (grants, tax credits etc.) commitment letters
Changes to Developer Fee payments
U Operating Expenditures and Operating Revenues for 20 years in unlocked Excel format– update withnumbers generated in the more expansive pro forma required as part of this Financial Underwriting
Application
Regulatory Review Status
U Environmental Information, including Phase 1 and updated narrative descriptions of environmentally
friendly features and both positive and negative environmental impacts
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D Additional Community Benefits
U Employment Information and Employee Benefits
Disclosure Form – Update the disclosure and note any changes in the Request Letter
U Independent third-party market study
n Last three years financial statements for the applicant and anyone with 20% or more ownership interest
in the project