Title
Resolution - A Resolution of the City Council of the City of Mansfield, Texas, Authorizing the City Manager to Negotiate, Finalize and Execute a Master Development Agreement (The "MDA") and Related Ground Leases, and any necessary conveyance documents (Collectively, The "Agreements") for the Qualified Convention Center and Hotel Project between the City of Mansfield, a Texas home-rule municipal corporation, the Board of Directors of Reinvestment Zone Number Four in the City of Mansfield, Texas, and TerraViva Global, LLC, a Texas limited liability company and/or assigns; Upon its Finalization, Authorizing the City Manager or His Designee, and Chairman of the Board of Directors of Reinvestment Zone Number Four (The "Board") to Execute the Agreement; Finding that the Meeting at which this Resolution is Passed is Open to the Public as Required by Law; And Declaring an Effective Date
Requested Action
To Consider the Resolution
Recommendation
To Approve the Resolution
Description/History
As part of the state's amendment to Chapter 351 of the Texas Tax Code in 2023, the City of Mansfield was added to the language as defined in the Qualified Hotel section. This will allow the return of state revenues from sales tax and hotel occupancy tax based on parameters established in the project. City Council further defined this Qualified Hotel per Resolution 4155-24 adopted on January 22, 2024. The new resolution includes the possibility of more than one qualified hotel in the Qualified Project, if authorized by the Texas Comptroller of Public Accounts.
Staff began working to recruit a hotel developer and in the summer of 2024, met and began negotiating with TerraViva Global on a headquarter hotel and 22,000 sft convention center. The master development agreement contemplates multiple developments within the Staybolt Street campus. This development is located within Reinvestment Zone Number Four (TIRZ #4), and is intended to promote tourism and stimulate economic development through increased hotel occupancy and associated tax revenue. The hotels will serve as headquarters for the adjacent convention center, which will provide at least 22,000 square feet of continuous meeting space.
The agreement provides for a ground lease where the hotel and convention center are developed, and a sale for the mixed-use retail/residential development on the northeast corner of Lone Star Road and Staybolt Drive (forthcoming north-south road that will connect the stadium to Lone Star Road). The total private development is expected to yield a taxable value of over $300,000,000. Since the developments will be located on city-owned land, any city tax dollars that are otherwise exempt, will be paid to the city in the form of a Payment in Lieu of Taxes (PILOT), annually.
Key Terms of the Agreement:
• Scope of Work: TerraViva Global will plan, design, and construct two upper-upscale hotels and a convention center facility, as well as related infrastructure such as parking garages. The convention center will be publicly owned and operated by the developer.
• Funding Mechanism: The project will benefit from the Tax Increment Reinvestment Zone (TIRZ #4), with a portion of hotel occupancy tax and sales tax revenues used to repay obligations tied to public improvements.
• City Contributions: The City will provide necessary public utilities and access roads to the site and lease the land to the developer. The City will also tie development fees to the amounts owed at the time the Plat is filed.
• Developer Responsibilities: The developer is responsible for privately funding the construction of the hotels and convention center and will make payments in lieu of property taxes for any tax-exempt portions of the project.
• Duration: The master development agreement has a term of 30 years, or until all terms have been satisfied, whichever comes first. However, the ground lease will establish a term of up to 75 years, with the option for conveyance of the property at the expiration of 10 years from initial hotel occupancy.
Financial Implications:
The City will use hotel occupancy and sales taxes generated by the project to cover public infrastructure costs. The developer will make capital investments and is responsible for maintaining the properties throughout the term of the agreement.
Benefits to the City:
This project will boost Mansfield's tourism and hotel industry, generating significant hotel occupancy tax revenue and creating jobs. The public will gain access to a high-quality convention center, enhancing the city’s ability to host major events. This project will also benefit the region and the economy of the State.
Justification
The incentives being contemplated are specific to the state sales tax and state hotel occupancy taxes provided for by the development within the defined Hotel Qualified program, per Chapter 351 of the Texas Tax Code. The sale of the property will match what the city paid for the property and the ground lease for the hotel portions of the property will require a payment in lieu of any taxes that are exempt from the normal collection of the TIRZ. The resolution allows final negotiations on legal outline and legal terms associated with non-deal point items. Therefore, it should be noted that the final agreement may differ, slightly, on legal language approved by the city's attorney, than what is attached on the council agenda item.
Funding Source
Qualified Hotel Program
Prepared By
Jason Moore, Executive Director, MEDC