To: Mayor and City Council
From: Aaron Rector, Interim City Manager
Subject:
Title
Consider a resolution amending the Due Diligence period of the Ground Lease Agreement with ME Development, approved by Resolution No. 4716, dated October 17, 2023, through a Chapter 380 Economic Development Program Agreement, pursuant to Chapter 380 of the Texas Local Government Code, and further authorizes the City Manager to execute said documents on behalf of the City of Keller, Texas.
Action Requested:
Consider a resolution amending the due diligence period of the Chapter 380 Economic Development Agreement with ME Development LLC.
Background:
ME Development LLC., is proposing to build an approximately 60,000 to 75,000 square foot indoor sports facility for basketball, volleyball, cheer and futsal on undeveloped land at the Keller Sports Park. The expected cost of the facility is approximately $18,000,000.00.
This ground lease is summarized as follows:
* Lease of the 7.813 acres, more or less;
* Provides a lease term of 50 years;
* Rent payment of $15,000 per year;
* Establishes an escalating rent payment in 10-year increments;
* Controls use of facilities as recreational or approved by City.
Council approved the proposed ground lease 380 agreement on October 17, 2023 and it included a due diligence period of six (6) months (Section 3). During due diligence period, ME Development will determine the final size of the facility and all its amenities. ME Development has requested a thirty (30) day extension of the due diligence period to finalize its design. Staff has recommended a sixty (60) day extension to allow for design finalization and for ME Development to continue working with the City’s Director of Economic Development on any additional incentives.
Financial Impact:
Escalating annual rent payments are as follows:
* Lease Year 1 through Lease Year 9: $15,000.00
* Lease Year 10 through Lease Year 19: $19,000.00
* Lease Year 20 through Lease Year 29: $23,000.00
* Lease Year 30 through Lease Year 39: $27,000.00
* Lease Year 40 through Lease Year 50: $31,000.00
Total lease payments for 50 years: $1,166,000.00
Citizen Input/Board Review:
The Keller Sports Park Task Force determined through the Keller Sports Park Renovation Design Project, that these approximately seven (7) undeveloped acres at the Keller Sports Park would be better utilized in the form of a ground lease with an entity that could provide sports related recreational activity that the city could not provide in other areas of the park. Members of the Task Force have had lengthy discussions with ME Development LLC., and believe their project will be a great addition to the Keller Sports Park, and also be a great compliment to the Sports Park Renovation Project. The Keller Youth Association (KYA) has also had lengthy discussion with ME Development LLC., and the proposed facility will be utilized by KYA for their basketball program.
Legal Review:
The City Attorney’s Office has reviewed the proposed Chapter 380 Agreement and ground lease.
Alternatives:
City Council has the following alternatives:
- Approve as submitted
- Approve with changes
- Denial
Council Action:
Approve as submitted