Title
Resolution - A Resolution of the City Council of the City of Mansfield, Texas, Approving an Economic Development and Performance Agreement By and Between the City of Mansfield and Pavilion Properties and Authorizing its Execution by the Mayor and Providing an Effective Date
Requested Action
Approval of resolution.
Recommendation
Staff recommends that the council approve the agreement as presented.
Description/History
Representatives of the Board of Directors of Methodist Mansfield Hospital have approached the City with a proposal to initiate a significant expansion to the existing Methodist Mansfield Hospital campus. The expansion will occur in several phases and will extend over several years. The first phase calls for the construction of a new patient bed tower providing in excess of one hundred additional patient beds and supporting services. The new patient tower will be located immediately west of the existing facility and will be constructed in a manner to present a comparable appearance to the existing hospital structure. During the same initial expansion phase, Pavilion Properties will construct a physician's office building immediately south of the proposed new patient tower wing. The professional office building will provide approximately seventy-five thousand square feet of leasable space for use by physicians and associated professionals in the health care industry. It is expected that the construction of the new patient tower and the physician office building will generate a significant number of new jobs in the city and will serve as a catalyst to additional medical facility and service development in the immediate vicinity of the hospital.
1. 380 with Pavilion Properties.
As a portion of the City's agreement to incentivize the expansion of Methodist Mansfield, the City has been requested to provide an economic development incentive to the hospital group through the form of a Chapter 380 Economic Development Agreement.
Under the terms of the proposed Chapter 380 Economic Development Project Agreement, the City would agree to make a grant to Pavilion Properties (a property ownership affiliate of the Hospital) that would cumulatively amount to a two hundred thousand dollar payment to assist the Hospital and/or its affiliate in meeting various permit and construction costs generated by the development of the physician's office building. The City will make the payment in an amount equivalent to the ad valorem taxes paid by the hospital/affiliate on the physician's office building annually until a total of two hundred thousand dollars has been paid pursuant to the terms of the 380 Agreement. The city will be obligated to make annual payments in an amount equal to 100% of the taxes paid on the professional building after the tax payments are received by the city on the completed physician's office building. The city will make annual payments after the date that the ad valorem taxes are paid until such time as the total grant amount of two hundred thousand dollars has been paid pursuant to the terms of this Agreement.
2. Ordinance Closing a portion of Hospital Drive.
In addition to the 380 Agreement, representatives of Methodist Mansfield Hospital has requested that the city close a portion of the current Hospital Drive which runs essentially east/west and lies south of the existing hospital facility. Hospital Drive in its current location would impede the ability of the hospital to construct certain facility improvements that are planned in the first phase expansion. It is proposed that the City would agree to close a portion of Hospital Drive, in its current location, and release the roadway easement to the hospital at the time that the new patient tower construction was complete. Under the terms the of the Ordinance the City would retain the right to leave any existing public or private utilities in place after the roadway easement is abandoned. The City would have the right to maintain and repair existing utilities but would not be permitted to install new utilities in the abandoned right of way. If the City needs to relocate utilities, out of the current right of way because of Mansfield Methodist future development plans, the Hospital would pay for the relocation of the utilities including the cost of right of way acquisition. The existing road surface would remain in place and open for public use until the City issued a Certificate of Occupancy for the completion of new Patient Tower II. The Agreement provides that if the Hospital does not complete the construction of new Patient Tower II by April 30, 2016, the right of way will revert back to the City of Mansfield. The Ordinance and Deed Without Warranty being used to convey the street right of way to Mansfield Methodist Hospital also provides that if the Hospital or its successors attempts to use the property in any manner inconsistent with the tax exempt character of the debt that funded the construction of Hospital Drive while that debt is outstanding the property will revert to the City of Mansfield. This provision has been strongly recommended by the tax group within the Bracewell & Guliani firm that provides bond counsel to both the City of Mansfield and the Methodist Hospital system. It is the provision that will protect the City's bond debt from an adverse IRS ruling if a future complaint about use is made by any group or individual.
Justification
The City of Mansfield and the Methodist Mansfield Hospital believe this Agreement is in the best interest of both entities.
Funding Source
General Fund
Prepared By
Allen Taylor, TOASE