SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 2002
Commission File Number: 0-19989
Stratus Properties Inc.
Incorporated in Delaware 72-1211572
(IRS Employer Identification No.)
98 San Jacinto Blvd., Suite 220, Austin, Texas 78701
Registrant's telephone number, including area code: (512) 478-5788
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _
On September 30, 2002, there were issued and outstanding
7,115,995 shares of the registrant's Common Stock, par value
$0.01 per share.
STRATUS PROPERTIES INC.
TABLE OF CONTENTS
Page
Part I. Financial Information
Financial Statements:
Condensed Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Notes to Financial Statements 6
Report of Independent Public Accountants 11
Management's Discussion and Analysis
of Financial Condition and Results of
Operations 12
Part II. Other Information 17
Signature 18
Certifications 19
Exhibit Index E-1
2
STRATUS PROPERTIES INC.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
STRATUS PROPERTIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30, December 31,
2002 2001
--------- ---------
(In Thousands)
ASSETS
Current assets:
Cash and cash equivalents (including
restricted cash of $0.2 million) $ 1,093 $ 3,705
Accounts receivable 673 670
Current portion of notes receivable from
property sales 56 70
Prepaid expenses 236 73
--------- ---------
Total current assets 2,058 4,518
Real estate and facilities, net 110,448 110,042
Rental properties, net 22,418 -
Investments in and advances to
unconsolidated affiliates 191 8,005
Notes receivable from property sales,
net of current position 2,361 4,083
Other assets 2,608 2,830
--------- ---------
Total assets $ 140,084 $ 129,478
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 1,915 $ 2,482
Accrued interest, property taxes and other 2,237 1,895
Current portion of borrowings outstanding 18,235 -
--------- ---------
Total current liabilities 22,387 4,377
Long-term debt 26,680 25,576
Other liabilities 3,259 4,866
Mandatorily redeemable preferred stock - 10,000
Stockholders' equity 87,758 84,659
--------- ---------
Total liabilities and stockholders' equity $ 140,084 $ 129,478
========= =========
The accompanying notes are an integral part of these financial
statements.
3
STRATUS PROPERTIES INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2002 2001 2002 2001
-------- ------- -------- --------
(In Thousands, Except Per Share Amounts)
Revenues:
Real estate $ 3,626 $ 4,090 $ 7,266 $ 13,102
Rental income 817 - 1,731 -
Other 136 369 903 996
-------- ------- -------- --------
Total revenues 4,579 4,459 9,900 14,098
Cost of sales:
Real estate, net 2,759 559 4,932 6,520
Rental 606 - 1,159 -
Depreciation 244 34 571 99
-------- ------- -------- --------
Total cost of sales 3,609 593 6,662 6,619
General and administrative expenses 1,058 920 3,414 3,395
-------- ------- -------- --------
Total costs and expenses 4,667 1,513 10,076 10,014
-------- ------- -------- --------
Operating income (loss) (88) 2,946 (176) 4,084
Interest expense, net (167) - (379) (456)
Interest income 166 246 550 604
Equity in unconsolidated affiliaties'
income (loss) - (140) 372 (305)
Other income - 4 286 239
-------- ------- -------- --------
Net income (loss) $ (89) $ 3,056 $ 653 $ 4,166
======== ======= ======== ========
Reconciliation of net income to net
income attributable to common shareholders:
Net income (loss) $ (89) $ 3,056 $ 653 $ 4,166
Discount on purchase of mandatorily
redeemable preferred stock - - 2,367 -
-------- ------- -------- --------
Net income (loss)attributable to
common shareholders $ (89) $ 3,056 $ 3,020 $ 4,166
======== ======= ======== ========
Net income (loss) per share of common stock:
Basic $(0.01) $0.43 $0.42 $0.58
====== ===== ===== =====
Diluted $(0.01) $0.37 $0.41 $0.51
====== ===== ===== =====
Average shares outstanding:
Basic 7,116 7,112 7,116 7,152
===== ===== ===== =====
Diluted 7,116 8,152 7,442 8,115
===== ===== ===== =====
The accompanying notes are an integral part of these financial
statements.
4
STRATUS PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
Nine Months Ended
September 30,
----------------------
2002 2001
--------- ---------
(In Thousands)
Cash flow from operating activities:
Net income $ 653 $ 4,166
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 571 100
Cost of real estate sold 2,950 5,830
Equity in unconsolidated affiliates'
(income) loss (372) 305
Gain on sale of Stratus' 50 percent interest
in Walden Partnership (286) -
Amortization of deferred compensation (Note 3) 32 -
(Increase) decrease in working capital:
Accounts receivable and other 2 (588)
Accounts payable and accrued liabilities (400) 1,408
Long-term receivable and other 3,362 (8,356)
Distribution of unconsolidated affiliates' income 278 -
--------- ---------
Net cash provided by operating activities 6,790 2,865
--------- ---------
Cash flow from investing activities:
Real estate and facilities, net of cost of real
estate sold (9,845) (19,540)
Net cash acquired from Barton Creek and 7000 West
Joint Ventures 1,067 -
Proceeds from the sale of Stratus' 50 percent
interest in the Walden Partnership 3,141 -
Acquisition of Olympus' interest in the Barton Creek
and 7000 West Joint Ventures (3,858) -
Investment in Lakeway Project 1,239 (2,000)
-------- ---------
Net cash used in investing activities (8,256) (21,540)
-------- ---------
Cash flow from financing activities:
Borrowings under revolving credit facility, net 1,453 9,740
Borrowings under 7500 Rialto project loan 1,966 -
Borrowings under term loan component of
credit facility 4,645 -
Payments on term loan portion of credit facility (1,497) -
Payments on 7000 West project loan (127) -
Repurchase of mandatorily redeemable preferred stock (7,633) -
Proceeds from unsecured term loan - 5,000
Repayment of convertible debt - (3,240)
Repurchases of shares of Stratus' common stock - (242)
Exercise of stock options and other 47 -
--------- ---------
Net cash provided by financing activities (1,146) 11,258
--------- ---------
Net decrease in cash and cash equivalents (2,612) (7,417)
Cash and cash equivalents at beginning of year 3,705 7,996
--------- ---------
Cash and cash equivalents at end of period 1,093 579
Less cash restricted as to use (234) (241)
--------- ---------
Unrestricted cash and cash equivalents at
end of period $ 859 $ 338
========= =========
The accompanying notes are an integral part of these financial
statements.
5
STRATUS PROPERTIES INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements
should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended December 31,
2001, included in the Company's annual report on Form 10-K, filed
with the Securities and Exchange Commission. In the opinion of
management, the accompanying consolidated financial statements
reflect all adjustments (consisting only of normal recurring
items) considered necessary to present fairly the financial
position of Stratus Properties Inc. at September 30, 2002 and
December 31, 2001, and the results of operations for the three-
month and nine-month periods ended September 30, 2002 and 2001,
and the cash flows for the nine-month periods ended September 30,
2002 and 2001. Operating results for the three-month and nine-
month periods ended September 30, 2002 are not necessarily
indicative of the results that may be expected for the year
ending December 31, 2002.
2. OLYMPUS TRANSACTIONS
From May 1998 through February 2002, Stratus, through its
subsidiaries, was involved with Olympus Real Estate Corporation
(Olympus) in three joint ventures: the Oly Stratus Barton Creek I
Joint Venture (Barton Creek Joint Venture), the Oly Walden
General Partnership (Walden Partnership) and the Stratus 7000
West Joint Venture (7000 West). Each joint venture was governed
by a partnership agreement containing similar provisions,
including a "buy/sell option" that could be exercised by either
Stratus or Olympus.
On February 27, 2002, Stratus and Olympus concluded their
business relationship in the following transactions:
* Stratus purchased its $10.0 million of mandatorily
redeemable preferred stock held by Olympus for $7.6 million.
Stratus recorded the $2.4 million discount as additional paid in
capital (Note 5).
* Stratus sold its 49.9 percent ownership interest in the
Walden Partnership to Olympus for $3.1 million. Stratus
recognized a $0.3 million gain on this transaction.
* Stratus acquired Olympus' 50.01 percent ownership interest
in the Barton Creek Joint Venture for $2.4 million. At the time
of its acquisition, the Barton Creek Joint Venture's cash totaled
$0.3 million and the joint venture received a $1.1 million
municipal utility district reimbursement in May 2002.
* Stratus acquired Olympus' 50.1 percent ownership interest in
7000 West for $1.5 million. Stratus received $0.8 million of cash
from 7000 West upon its acquisition and also assumed 7000 West's
$12.9 million of previously unconsolidated debt (Note 6).
The net cash cost of the transactions for Stratus totaled
approximately $7.3 million, after considering the approximate
$1.1 million in cash it received from its acquisition of the
Barton Creek and 7000 West Joint Ventures. Stratus completed
these transactions using funds available to it under its credit
facility (see Note 5 of "Notes to Financial Statements" included
in Stratus' 2001 Annual Report on Form 10-K).
For a detailed discussion of the Olympus relationship and
the initial formation and subsequent transactions of the joint
ventures and partnership, see Notes 2, 3, 4 and 11 of the "Notes
To Financial Statements" included in Stratus' 2001 Annual Report
on Form 10-K. Also refer to "Transactions with Olympus Real
Estate Corporation" within Item 1 "Business"; and "Joint Ventures
With Olympus Real Estate Corporation" and "Capital Resources and
Liquidity-Olympus Relationship" included in Items 7. and 7A.
"Management's Discussion and Analysis of Financial Condition and
Results of Operations and Disclosures of Market Risks" of
Stratus' 2001 Annual Report on Form 10-K.
The summarized unaudited financial information of Stratus'
unconsolidated affiliates is shown below (in thousands):
6
Barton Creek Walden 7000
Joint Venture Partnership West Total
------------- ------------ ------ -------
Earnings data for the
two months ended
February 27, 2002:
Revenues $ - $ 652 $ 562 $ 1,214
Operating income (loss) (22) (64) 178 92
Net income (loss) (22) (34) 218 162
Stratus' equity in net
income (loss) (11) (4)a 109 94a
Earnings data for the
three months ended
September 30, 2001:
Revenues $ 750 $ 617 $ 873 $ 2,240
Operating income (loss) (77) (203) (77) (357)
Net income (loss) (76) (170) (55) (301)
Stratus' equity in net
income (loss) (38) (74)a (28) (140)a
Earnings data for the
nine months ended
September 30, 2001:
Revenues $ 5,160 $ 657 $ 347 $ 6,164
Operating loss 1,761 (278) (10) 1,473
Net income (loss) 1,761 (377) (8) 1,376
Stratus' equity in net
income (loss) 879 (174)a (4) 701a
a. Includes recognition of deferred income totaling $12,000
during the two months ended February 27, 2002, $11,000 in the
third quarter of 2001 and $34,000 for the nine months ended
September 30, 2001, representing the difference in Stratus'
investment in the Walden Partnership and its underlying equity
at the date of acquisition. Through February 27, 2002, Stratus
had recognized $164,000 of a total of $337,000 of deferred
income associated with the Walden Partnership. The remaining
$0.2 million deferred amount was eliminated in determining the
$0.3 million gain on the sale of Stratus' interest in the
Walden Partnership.
The following unaudited selected pro forma information
presents the results of operations of Stratus as if the Olympus
transactions had occurred on January 1 of each of the nine-month
periods presented. These unaudited pro forma results of
operations have been prepared for informational purposes only and
do not necessarily reflect the results of operations that would
have occurred had the transactions taken place on January 1 of
each of the periods presented, or that may result in the future
(amounts in thousands, except for per share data).
Nine Months Ended
September 30,
--------------------
2002 2001
-------- --------
Revenue $ 10,421 $ 17,073
Operating income (loss) (46) 3,470
Net income 647 3,517
Diluted net income per share a $ 0.42 $ 0.81
Diluted shares outstanding 7,253 7,264
a. Earnings per share data includes the discount on the
purchase of Stratus' mandatorily redeemable preferred stock (see
above and Note 5).
3. LAKEWAY PROJECT
As previously disclosed, in January 2001 Stratus invested $2.0
million in the Lakeway project near Austin, Texas. Since that
time, Stratus has been the manager and developer of the 552-acre
Schramm Ranch tract, receiving both management fees and sales
commissions for its services. In the second quarter of 2001,
Stratus negotiated the sale of substantially all of the Schramm
Ranch property to a single purchaser. In return for Stratus
securing the required entitlements, the sale was to be completed
in four planned phases. Stratus secured all the remaining
necessary entitlements for the Schramm Ranch property in the
fourth quarter of 2001. In the first quarter of 2002, the
purchaser closed the third of the four planned sale installments.
In the second quarter of 2002, the purchaser closed on the fourth
and final planned sale installment. In connection with the
7
closings, Stratus received a cash distribution of $0.8 million in
May 2002 and a cash distribution of $0.7 million in July 2002.
Stratus has received a total of $2.7 million of cash
distributions from its involvement in the Lakeway Project, which
represents a $1.8 million return of its $2.0 million investment
and $0.9 million of income. Stratus is entitled to 40 percent of
the future proceeds associated with the future sale of a 5-acre
commercial tract still remaining at the Schramm Ranch property,
which is actively being marketed.
For more information regarding the Lakeway Project see Note
4 of "Notes To Financial Statements" included in Stratus' 2001
Annual Report on Form 10-K.
4. RESTRICTED STOCK
On January 17, 2002, the Board of Directors authorized the
issuance of 22,726 restricted stock units (RSUs) that will be
converted into 22,726 shares of Stratus common stock ratably on
the anniversary date over the next four years. Under Stratus'
restricted stock program, shares of its common stock may be
granted to certain officers of Stratus at no cost. Upon issuance
of the RSUs, unearned compensation equivalent to the market value
at the date of grant of approximately $0.2 million was recorded
as deferred compensation in stockholders' equity and will be
amortized to expense over the four-year period. Stratus has
amortized approximately $32,000 of this deferred compensation to
expense during the nine months ended September 30, 2002.
5. EARNINGS PER SHARE
Following is a reconciliation of net income and weighted average
common shares outstanding for purposes of calculating basic and
diluted net income per share (in thousands, except per share
amounts):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2002 2001 2002 2001
-------- -------- ------- --------
Basic net income (loss)per share
of common stock:
Net income (loss) $ (89) $ 3,056 $ 653 $ 4,166
Add: Discount on purchase of
mandatorily redeemable preferred
stock (Note 2) - - 2,367 -
-------- -------- ------- --------
Net income(loss)applicable to
common shareholders $ (89) $ 3,056 $ 3,020 $ 4,166
======== ======== ======= ========
Weighted average common shares
outstanding 7,116 7,112 7,116 7,152
Basic net income (loss) per share
of common stock $(0.01) $0.43 $0.42 $0.58
====== ====== ===== =====
Diluted net income per share of
common stock:
Net income (loss) $ (89) $ 3,056 $ 653 $ 4,166
Add: Discount on purchase of
mandatorily redeemable preferred
stock (Note 2) - - 2,367 -
-------- -------- ------- --------
Net income (loss) applicable to
common shareholders $ (89) $ 3,056 $ 3,020 $ 4,166
======== ======== ======= ========
Weighted average common shares
outstanding 7,116 7,112 7,116 7,152
Dilutive stock options - 189 137 112
Assumed redemption of preferred
stock - 851 189 851
-------- ------- -------- --------
Weighted average common shares
outstanding for purposes of
calculating diluted net income
(loss) per share 7,116 8,152 7,442 8,115
-------- ------- -------- --------
Diluted net income (loss) per share
of common stock $(0.01) $0.37 $0.41 $0.51
====== ===== ===== =====
Stratus repaid all of its outstanding convertible debt in the
second quarter of 2001. Interest accrued on the convertible debt
outstanding totaled approximately $174,000 for the nine months
ended September 30, 2001. There were no dividends accrued or
paid on Stratus' mandatorily redeemable preferred stock through
February 27, 2002, the date Stratus purchased all the related
outstanding shares held by Olympus (Note 2).
Outstanding stock options excluded from the computation of
diluted net income per share of common stock because their
exercise prices were greater than the average market price of the
common stock during the period are as follows:
8
Third Quarter Nine Months
----------------- -----------------
2002 2001 2002 2001
------- ------- ------- -------
Outstanding options 275,000 142,000 275,000 399,000
Average exercise price $10.96 $12.38 $10.96 $10.26
6. DEBT OUTSTANDING
At September 30, 2002, Stratus had debt of $44.9 million compared
to debt of $25.6 million at December 31, 2001. The increase in
debt during the nine months ended September 30, 2002 included the
debt Stratus assumed in connection with its acquisition of
Olympus' 50.1 percent ownership interest in 7000 West and the
additional borrowings under its credit facility used to fund the
Olympus transactions (Note 2). Stratus' debt outstanding at
September 30, 2002 consisted of the following:
* $10.0 million of borrowings outstanding under its two
unsecured $5.0 million term loans, one of which will mature in
December 2005 and the other in July 2006.
* $13.5 million of borrowings under its $25.0 million ($23.8
million currently available, see below) revolver component of the
Comerica Bank- Texas (Comerica) credit facility, which matures in
April 2004.
* $3.1 million of net borrowings under the $5.0 million term
loan component of the Comerica facility. Stratus borrowed $4.6
million under the term loan during the second quarter of 2002 and
subsequently repaid $1.5 million of the balance, including $1.1
million during the third quarter of 2002. Some of the Mirador
subdivision lots within the Barton Creek community are currently
serving as collateral for the term loan component of the credit
facility.
* $12.8 million of borrowings under the 7000 West project loan
that were previously unconsolidated until the purchase of
Olympus' 50.1 percent ownership interest in 7000 West. This
project loan was scheduled to mature on August 24, 2002; however,
Stratus exercised its option to extend the maturity of the loan
by one year to August 24, 2003. The borrowings under this
project loan are reflected as a current liability in the
accompanying balance sheet.
* $5.5 million of borrowings under its 7500 Rialto Drive
project loan, which matures in June 2003, with an option to
extend the loan for one year, if Stratus meets certain leasing
and other criteria. Stratus does not currently meet the required
conditions to exercise the option to extend the maturity of the
project loan. Accordingly, the balance of the loan is reflected
as a current liability in the accompanying balance sheet.
The availability under the $30 million Comerica credit
facility was reduced to $28.8 million to satisfy the $1.2 million
interest reserve account requirement at September 30, 2002. For
a discussion of Stratus' bank credit facilities see Note 5
included in the "Notes To Financial Statements" included in its
2001 Annual Report on Form 10-K.
7. CIRCLE C DEVELOPMENT PLAN AGREEMENT
On August 1, 2002, the City of Austin (the City) granted final
approval of a development agreement and permanent zoning for
Stratus' 1,273 acres located within the Circle C community in
southwest Austin. These approvals permit development of one
million square feet of commercial space and 1,730 residential
units. The City also provided Stratus $15 million of incentives
in connection with its future development of its Circle C and
other Austin-area properties, including waivers of fees and
reimbursement for certain infrastructure costs. In addition,
Stratus can elect to sell up to $1.5 million of the incentives
per year to other developers for their use in paying City fees
related to their projects. As of September 30, 2002, Stratus has
used less than $0.1 million of its City-based incentives. This
development agreement firmly establishes all essential municipal
development regulations applicable to Stratus' Circle C
properties for thirty years. The Circle C development agreement
and related documents were signed and became effective on August
15, 2002.
8. RECLASSIFICATIONS, RESTRICTED CASH AND INTEREST COST
Reclassifications. Certain prior year amounts have been
reclassified to conform to the year 2002 presentation.
9
Restricted Cash. At September 30, 2002, Stratus had restricted
cash deposits totaling $0.2 million, which reflects the deposited
funds used to purchase the fractional shares of Stratus' common
stock resulting from its stock split transactions (see Note 8 of
"Notes To Financial Statements" included in Stratus' 2001 Annual
Report on Form 10-K).
Interest Costs. Interest expense excludes capitalized interest
of $0.5 million in the third quarter of 2002, $0.4 million in the
third quarter of 2001, $1.4 million for the nine months of 2002
and $0.9 million for the nine months of 2001.
9. BUSINESS SEGMENTS
As a result of completing transactions between Stratus and
Olympus in February 2002 (Note 2), Stratus now has two operating
segments, "Real Estate Operations" and "Commercial Leasing."
Stratus' commercial leasing segment was established when Stratus
acquired Olympus' 50.1 percent interest in 7000 West in February
2002. The commercial leasing segment currently consists of the
140,000-square foot Lantana Corporate Center office complex,
which includes two fully-leased 70,000-square foot office
buildings. During the third quarter of 2002, Stratus completed
its 75,000 square-foot office building at Rialto Drive and began
including the associated results within the commercial leasing
segment. Stratus' real estate operations segment is comprised of
all of its developed and undeveloped properties in Austin, Texas,
which consist of its properties in the Barton Creek community,
including those acquired from the Barton Creek Joint Venture, its
Circle C community properties and the properties in Lantana other
than its office buildings.
The segment data presented below was prepared on the same
basis as the Stratus consolidated condensed financial statements.
Real estate was Stratus' only operating segment until February
27, 2002 as discussed above.
Real Estate Commercial
Operations a Leasing Total
--------- -------- ---------
Third Quarter 2002:
Revenues $ 3,762 $ 817 $ 4,579
Cost of sales (2,759) (606) (3,365)
Depreciation (28) (216) (244)
General and administrative
expense (947) (111) (1,058)
--------- -------- ---------
Operating income (loss) $ 28 $ (116) $ (88)
========= ======== =========
Total assets $ 116,294 $ 23,790 $ 140,084
========= ======== =========
Capital expenditures $ 2,826 $ 574 $ 3,400
========= ======== =========
Nine Months Ended September
30, 2002:
Revenues $ 8,169 $ 1,731 $ 9,900
Cost of sales (4,932) (1,159) (6,091)
Depreciation (87) (484) (571)
General and administrative
expense (3,056) (358) (3,414)
--------- -------- ---------
Operating income (loss) $ 94 $ (270) $ (176)
========= ======== =========
Capital expenditures $ 8,136 $ 1,709 $ 9,845
========= ======== =========
a. Includes sales commissions, management fees and other
revenues together with related expenses.
10
Report of Independent Accountants
To the Board of Directors and Shareholders of
Stratus Properties Inc.:
We have reviewed the accompanying condensed consolidated balance
sheet of Stratus Properties Inc. (the "Company") as of September
30, 2002, and the related consolidated statements of income for
each of the three-month and nine-month periods ended September
30, 2002 and the consolidated statement of cash flows for the
nine-month period ended September 30, 2002. These financial
statements are the responsibility of the Company's management.
The financial statements of Stratus Properties Inc. as of
December 31, 2001, and for the year then ended were audited by
other independent accountants who have ceased operations. Those
independent accountants expressed an unqualified opinion on those
financial statements in their report dated February 4, 2002.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying
consolidated financial statements for them to be in conformity
with accounting principles generally accepted in the United
States of America.
/s/ PricewaterhouseCoopers LLP
Austin, Texas
November 4, 2002
11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
OVERVIEW
Management's discussion and analysis presented below should be
read in conjunction with our discussion and analysis of financial
results contained in our 2001 Annual Report on Form 10-K. The
operating results summarized in this report are not necessarily
indicative of our future operating results.
We acquire, develop, manage and sell commercial and
residential real estate almost exclusively in the Austin, Texas
area. In February 2002, as a result of completing certain
transactions (see "Transactions with Olympus Real Estate
Corporation" below), we acquired the remaining 50 percent of a
140,000-square-foot office complex that consists of two office
buildings located in Austin, Texas. During the third quarter of
2002, we completed a 75,000-square-foot office building in
Austin, Texas, which is now ready for occupancy.
DEVELOPMENT ACTIVITIES
On August 1, 2002, the City of Austin (the City) granted
final approval of a development agreement and permanent zoning
for our 1,273 acres located within the Circle C community in
southwest Austin. These approvals permit development of one
million square feet of commercial space and 1,730 residential
units. The City also provided us $15 million of incentives in
connection with our future development of our Circle C and other
Austin-area properties, including waivers of fees and
reimbursement for certain infrastructure costs. In addition, we
can elect to sell up to $1.5 million of the incentives per year
to other developers for their use in paying City fees related to
their projects. As of September 30, 2002, we have used less than
$0.1 million of our City-based incentives. This development
agreement firmly establishes all essential municipal development
regulations applicable to our Circle C properties for thirty
years. The Circle C development agreement and related documents
were signed and became effective on August 15, 2002.
Since January 2002, we have secured subdivision plat
approval for three new residential subdivisions within the Barton
Creek Community, including: Versant Place - 54 lots; Wimberly
Lane II - 47 lots; and "Calera Drive" - 155 lots. We commented
development of the initial phase of Calera Drive, which includes
17 condominium units on 19 acres. Development of the second
phase, which will include 53 single-family lots, some of which
adjoin the Fazio Canyons golf course, is currently planned for
2003. Development of the third and last phase, which will
include approximately 70 single-family lots, is not anticipated
until after 2003.
TRANSACTIONS WITH OLYMPUS REAL ESTATE CORPORATION
In May 1998, we formed a strategic alliance with Olympus
Real Estate Corporation (Olympus) to develop certain of our
existing properties and to pursue new real estate acquisition and
development opportunities. Under the terms of the agreement,
Olympus purchased $10 million of our mandatorily redeemable
preferred stock, provided us a $10 million convertible debt
facility and agreed to make available up to $50 million of
additional capital representing its share of direct investments
in joint Stratus/Olympus projects.
We subsequently entered into three joint ventures with
Olympus, the Oly Stratus Barton Creek I Joint Venture (Barton
Creek Joint Venture), the Stratus 7000 West Joint Venture (7000
West) and the Oly Walden General Partnership (Walden
Partnership). We owned approximately 49.9 percent of each joint
venture and Olympus owned the remaining 50.1 percent. We also
served as the developer and manager for each of the joint venture
projects. Accordingly, in addition to partnership distributions,
we received various development fees, sales commissions and other
management fees for our services.
In February 2002 we concluded our business relationship
with Olympus, completing the following transactions:
* We purchased our $10.0 million of mandatorily redeemable
preferred stock held by Olympus for $7.6 million.
* We acquired Olympus' ownership interest in the Barton Creek
Joint Venture for $2.4 million.
* We acquired Olympus' ownership interest in 7000 West for
$1.5 million. In connection with this acquisition, we assumed
$12.9 million of debt and included it in our balance sheet at
12
March 31, 2002. We subsequently repaid approximately $0.1 million
of these borrowings and our balance for this loan totaled $12.8
million at September 30, 2002.
* We sold our ownership interest in the Walden Partnership to
Olympus for $3.1 million.
At the time of the transactions, the Barton Creek Joint
Venture assets included an inventory of 21 estate-sized single-
family lots within the Escala Drive subdivision and one single-
family lot within the Wimberly Lane subdivision. The 7000 West
assets included a 140,000 square-foot office complex consisting of
two 70,000 square-foot office buildings that are currently fully
leased. The Walden Partnership's assets at the time of the sale
included 378 single-family lots and 80 acres of undeveloped real
estate.
The net cash cost for these transactions was approximately
$7.3 million, after considering the approximate $1.1 million in
cash we received by acquiring the Barton Creek Joint Venture and
7000 West. We completed the transactions through borrowings
available to us under our revolving credit facility agreement (see
"Capital Resources and Liquidity" below).
For a detailed discussion of our Olympus transactions see
"Joint Ventures with Olympus Real Estate Corporation" and
"Olympus Relationship" located within Items 7. and 7A. and Notes
2, 3, 4 and 11 located in our 2001 Annual Report on Form 10-K.
RESULTS OF OPERATIONS
Summary operating results follow (in thousands):
Third Quarter Nine Months
----------------- -----------------
2002 2001 2002 2001
------- ------- ------- --------
Revenues:
Undeveloped properties:
Unrelated parties $ 2,068 $ 3,250 $ 3,983 $ 9,623
Recognition of deferred revenues - 840 - 3,479
------- ------- ------- --------
Total undeveloped properties 2,068 4,090 3,983 13,012
Developed properties 1,558 - 3,283 -
Rental income 817 - 1,731 -
Commissions, management fees and other 136 369 903 996
------- ------- ------- --------
Total revenues $ 4,579 $ 4,459 $ 9,900 $ 14,098
======= ======= ======= ========
Operating income (loss) $ (88) $ 2,946 $ (176) $ 4,084
======= ======= ======= ========
Net income $ (89) $ 3,056 $ 653 $ 4,166
======= ======= ======= ========
Operating Results
Our revenues during the third quarter of 2002 totaled $4.6
million, which included the sale of 11 acres of undeveloped
commercial real estate in Houston, Texas ($1.4 million) and a
nine-acre fire station site in the Circle C community ($0.7
million), the sale of two developed residential estate lots at
the Mirador subdivision ($1.2 million) and one at the Escala
subdivision ($0.4 million) within the Barton Creek community in
Austin, Texas and management fees and sales commissions. Our
rental income during the third quarter of 2002 included rental
income from the two fully-leased office buildings held by 7000
West, which was acquired in the Olympus transactions (see
"Transactions with Olympus Real Estate Corporation" above). Our
revenues for the third quarter of 2001 totaled $4.5 million,
which included the sale of a 41-acre tract in Austin Texas. Our
revenues during the third quarter of 2001 also included the
recognition of previously deferred revenues primarily associated
with the sale of the multi-family tract at Rialto Drive within
the Lantana Project in southwest Austin as discussed further
below, and management fees and sales commissions. See below for
a discussion regarding our commissions, management fees and other
revenues.
Our revenues for the nine months ended September 30, 2002
totaled $9.9 million compared with $14.1 million during the
comparable period in 2001. In addition to our third-quarter
sales discussed above, our revenues during the nine months ended
September 30, 2002 included the sale of 19 acres of undeveloped
multi-family estate in San Antonio, Texas in the second quarter
of 2002, two Mirador subdivision lots in the second quarter of
2002 and two Escala Drive residential estate lots during the
first quarter of 2002. We have recorded rental income subsequent
to our acquisition of 7000 West in February 2002. In addition to
the third-quarter revenues discussed above, our revenues during
the nine months ended September 30, 2001 included the second-
13
quarter 2001 sale of 112 acres of undeveloped residential
property in Houston, Texas ($2.7 million), the sale of 10 acres
of undeveloped multi-family property in Dallas, Texas ($1.7
million) and one 17-acre tract sale in Austin, Texas ($2.0
million). Our revenues during the nine-month period in 2001 also
included the recognition of $3.5 million of previously deferred
revenues, as further discussed below, and $0.6 million of
management fees and sales commissions during the first half of
2001.
The majority of the deferred revenue recognized during the
nine months ended September 30, 2001 was associated with the sale
of a 36.4-acre multi-family Lantana tract in December 2000. In
this transaction we sold the property for $5.3 million, but
deferred $3.5 million of the revenues and $1.6 million of the
related operating income. We recognized a pro rata portion of
these deferred amounts as the required infrastructure
construction was completed. During the nine-month period of
2001, our construction activities resulted in our recognizing
$3.3 million of the deferred revenues and $1.6 million of the
operating income during that period. See "Results of
Operations" included within Items 7. and 7A. of our 2001 Annual
Report on Form 10-K for a discussion regarding the completion of
construction and full recognition of this deferred revenue and
related gain during 2001. The remainder of deferred revenue
recognized during the nine-month period of 2001 reflects lot
sales by the Barton Creek Joint Venture (see below).
When we sold real estate to an entity we jointly owned with
Olympus, we deferred recognizing revenues from the sale related
to our ownership interest until sales were made to unrelated
parties. The sale of two Wimberly Lane single-family homesites
by the Barton Creek Joint Venture during the first quarter of
2001 resulted in our recognition of previously deferred revenues
of less than $0.1 million for the period. During the third
quarter of 2001 we sold one Escala Drive subdivision lot
resulting in the recognition of less than $0.1 million of
previously deferred revenues for that period. There were no sales
by the Barton Creek Joint Venture during the second quarter of
2001. In connection with our transactions with Olympus in
February 2002, we reduced the carrying amount of the related real
estate by $1.1 million of deferred gain associated with our
previous land sales to the Barton Creek Joint Venture and by $0.8
million of deferred gain associated with our previous land sales
to 7000 West.
Commissions, management fees and other revenues totaled $0.1
million during the third quarter of 2002 and $0.9 million for the
nine months ended September 30, 2002 compared with $0.4 million
and $1.0 million during the comparable periods of 2001. The
decreases during the 2002 periods from the comparable periods
last year primarily reflects the termination of our joint venture
arrangements with Olympus. Prior to February 2002, we received
sales commissions and management fees from the Barton Creek Joint
Venture, the Walden Partnership and 7000 West. Our sales
commissions from the joint ventures totaled $0.1 million for both
the third quarter and nine months ended September 30, 2001. Our
management fees also include fees associated with our management
of the 2,200-acre Lakeway Project, near Austin, Texas (see
"Capital Resources and Liquidity" below).
Cost of sales totaled $3.6 million during the third quarter
of 2002 compared with $0.6 million during the third quarter of
2001. The increase between the comparable periods reflects the
higher costs associated with the undeveloped property sales
during the third quarter of 2002, compared with the approximate
$0.1 million cost associated with the sale of the 41-acre tract
during the third quarter of 2001. The increase in cost of sales
during the third quarter of 2002 also reflects the costs of the
lot sales at the Mirador and Escala subdivisions as well as the
costs associated with the two office buildings we acquired in
February 2002. The results of both the Barton Creek Joint
Venture and 7000 West were unconsolidated before February 27,
2002. Our cost of sales for each of the nine months periods
ended September 30, 2002 and 2001 totaled $6.6 million. Our cost
of sales during the nine months ended September 30, 2002 included
$1.2 million of costs associated with 7000 West following its
acquisition in February 2002. These rental costs and the higher
costs of the properties sold during the third quarter of 2002
(see above) were offset by the substantial costs of the
undeveloped properties we sold during the second quarter of 2001
(see above).
Our general and administrative expense totaled $1.1 million
during the third quarter of 2002 and $3.4 million for the nine
months ended September 30, 2002, compared with $0.9 million
during the third quarter of 2001 and $3.4 million for the nine
months ended September 30, 2001. The increase between the
comparable third quarter periods reflects certain payments of
franchise taxes and increased insurance costs reflecting the
completion of our new 75,000 square-foot office building at 7500
Rialto Drive and increased premium costs over the prior year.
Our general and administrative expense during the nine months
ended September 30, 2002 included certain costs associated with
completing the transactions with Olympus.
14
Non-Operating Results
Interest expense, net of capitalized interest, totaled $0.2
during the third quarter of 2002 and $0.4 million for the nine
months ended September 30, 2002 compared with $0.4 million during
the nine months ended September 30, 2001. All our interest
expense during the third quarter of 2001 was capitalized.
Capitalized interest totaled $0.5 million in the third quarter of
2002 and $1.4 million for the nine months ended September 30,
2002. Capitalized interest totaled $0.4 million in the third
quarter of 2001 and $0.9 million for the nine months ended
September 30, 2001. The increase in capitalized interest
reflects the higher average balance of our borrowings outstanding
during 2002 over amounts outstanding during the comparable 2001
periods, partially offset by a decrease in our current
development activities (see "Capital Resources and Liquidity"
below).
Other income totaled $0.3 million during the nine months
ended September 30, 2002, which represented the gain from the
sale of our interest in the Walden Partnership (see "Transactions
with Olympus Real Estate Corporation" above). Other income
during the nine months ended September 30, 2001 totaled $0.2
million, which resulted from an adjustment to our workers
compensation insurance accrual.
CAPITAL RESOURCES AND LIQUIDITY
Net cash provided by operating activities totaled $6.8
million during the nine months ended September 30, 2002 and $2.9
million during the nine months ended September 30, 2001. The
increase between the comparable nine-month periods primarily
reflects a $1.7 million payment on a note receivable from an
Austin property sale, the receipt of a $1.1 million Barton Creek
municipal utility district reimbursement payment, and
distributions from the Lakeway Project (see below). Cash used in
investing activities totaled $8.3 million during the nine months
ended September 30, 2002 compared with $21.5 million during the
same period last year, reflecting a decrease in our net real
estate and facilities expenditures because of the current
reduction of our development activities. Also, during the first
quarter of 2001 we made a $2.0 million investment in the Lakeway
project, near Austin, Texas. During the nine months ended
September 30, 2002, we received cash disbursements from the
Lakeway Project totaling $1.5 million, which resulted in the
return of $1.2 million of our investment in the project (see
below). Our investing activities during 2002 also reflect the
receipt of $0.4 million of net cash proceeds in connection with
the closing of the Olympus transactions in February 2002 (see
"Transactions with Olympus Real Estate Corporation" above).
Our financing activities used cash of $1.1 million during
the nine months ended September 30, 2002 compared with providing
cash of $11.3 million during the same period last year. During
the nine months ended September 30, 2002 our financing activities
reflected $4.6 million of net borrowings under our Comerica
credit facility, which included the $7.3 million required to fund
the closing of the transactions with Olympus in February 2002
(see "Transactions with Olympus Real Estate Corporation" above).
We borrowed $2.0 million under our 7500 Rialto Drive project loan
and repaid $0.1 million on our 7000 West project loan during the
nine months ended September 30, 2002. We also purchased our
mandatorily redeemable preferred stock held by Olympus for $7.6
million. The cash provided by our financing activities during
the nine months ended September 30, 2001 represented $9.7 million
of net borrowings under our revolving line of credit, $5.0
million borrowing under an unsecured term loan offset in part by
the repayment of the entire $3.2 million balance under our
previous convertible debt facility with Olympus (see Note 2 of
"Notes To Financial Statements included in our 2001 Annual Report
on Form 10-K).
At September 30, 2002, we had debt of $44.9 million compared
to debt of $25.6 million at December 31, 2001. The increase in
debt during the first nine months of 2002 included the $12.9
million of debt we assumed in connection with our acquisition of
Olympus' 50.1 percent ownership interest in 7000 West and the
additional borrowings under our revolving line of credit used to
fund the Olympus transactions (see "Transactions with Olympus
Real Estate Corporation" above). Our debt outstanding at
September 30, 2002 consisted of the following:
* $10.0 million of borrowings outstanding on our two unsecured
$5.0 million term loans, one of which will mature in December
2005 and the other in July 2006.
* $13.5 million of borrowings under our $25.0 million ($23.8
million currently available, see below) revolver component of the
Comerica Bank-Texas (Comerica) credit facility, which matures in
April 2004.
15
* $3.1 million of net borrowings under the $5.0 million term
loan component of the Comerica facility. During the second
quarter of 2002, we borrowed $4.6 million under the term loan and
subsequently we have repaid $1.5 million of the balance,
including $1.1 million during the third quarter of 2002. Some of
the Mirador lots are currently serving as collateral for the term
loan component of the credit facility.
* $12.8 million of borrowings under the 7000 West project loan
that were previously unconsolidated until we purchased Olympus'
50.1 percent ownership interest in 7000 West. This project loan
is scheduled to mature on August 24, 2003. Accordingly, the
balance of the loan is reflected as a current liability in the
accompanying balance sheet.
* $5.5 million of borrowings under our 7500 Rialto Drive
project loan, which matures in June 2003, with an option to
extend the loan for one year, if we meet certain leasing and
other criteria. We do not currently meet the required conditions
to exercise the option to extend the maturity of the project
loan. Accordingly, the balance of the loan is reflected as a
current liability in the accompanying balance sheet.
The total availability under the $30.0 million Comerica
credit facility was reduced to $28.8 million to satisfy the $1.2
million interest reserve account requirement at September 30,
2002. With respect to the $12.8 million of borrowings under the 7000
West project loan, which matures in August 2003, and the $5.5
million of borrowings under the 7500 Rialto Drive project loan,
which matures in June 2003; we plan to enter into negotiations
with the existing lender to extend the maturities of these
obligations or to otherwise obtain new financings to fund the
obligations, at their maturities. Maintaining our financial
liquidity is dependent on our extending or refinancing these
obligations. For a discussion of our bank credit facilities, see
Note 5 included in the "Notes To Financial Statements" of our 2001
Annual Report on Form 10-K.
Since mid-1998, we have provided development, management,
operating and marketing services for the Lakeway project near
Austin, Texas, which is owned by Commercial Lakeway Limited
Partnership, an affiliate of Credit Suisse First Boston, for a
fixed monthly fee. In January 2001, we entered into an expanded
development management agreement with Commercial Lakeway Limited
Partnership covering a 552-acre portion of the Lakeway
development known as Schramm Ranch, and we contributed $2.0
million as an investment in this project. Under the agreement,
we receive enhanced management and development fees and sales
commissions, as well as a net profits interest in the project.
Lakeway project distributions are made to us as sales
installments close.
In the second quarter of 2001, we negotiated the sale of
substantially all the Schramm Ranch property to a single
purchaser. In return for our securing the required entitlements,
the sale was to be completed in four planned phases. We secured
all the remaining necessary entitlements for the Schramm Ranch
property in the fourth quarter of 2001. During the first half of
2002, the purchaser closed on the third sale installment in March
2002 and on the fourth and final sale installment in June 2002.
In connection with the third sales installment, we received a
cash distribution of $0.8 million in May 2002 and we received a
cash distribution of $0.7 million associated with the fourth
sales installment in July 2002. We have now received a total of
$2.7 million of cash distributions from the Lakeway project,
which represents a $1.8 million return of our original $2.0
million investment and $0.9 million of income. We are entitled
to 40 percent of the future proceeds associated with the future
sale of a 5-acre commercial tract still remaining at the Schramm
Ranch property, which is being actively marketed.
Our future operating cash flows and, ultimately, our ability
to develop our properties and expand our business will be largely
dependent on the level of our real estate sales. In turn, these
sales will be significantly affected by future real estate
values, regulatory issues, development costs, interest rate
levels and our ability to continue to protect our land use and
development entitlements. Significant development expenditures
remain to be incurred for our Austin-area properties prior to
their eventual sale. As a result of our settlement of certain
entitlement and reimbursement issues with the City during 2000,
we initiated a plan to develop a significant portion of our
Austin-area properties and incurred capital expenditures for 2001
totaling $23.1 million. Capital expenditures for the nine months
ended September 30, 2002 totaled $9.8 million compared to $19.5
million during the same period in 2001.
As a result of our development activities and our
acquisition of the Barton Creek Joint Venture, we now have an
adequate inventory of developed lots to satisfy the near-term
demand for estate lots in Austin, as well as an additional 75,000
square feet of office space ready for leasing as the Austin
economy starts its eventual recovery. Accordingly, although we
may continue to develop our Austin-area properties during the
next year, we expect to do so at a much more conservative pace as
we continue to monitor the economic environment in Austin.
16
We are continuing to actively pursue additional development and
management fee opportunities, both individually and through our
existing relationships with institutional capital sources. We
also believe we can obtain bank financing at a reasonable cost
for developing our properties. However, obtaining land
acquisition financing is generally expensive and uncertain.
CAUTIONARY STATEMENT
Management's discussion and analysis of financial condition
and results of operations contains forward-looking statements
regarding anticipated sales, debt repayments, future
reimbursement for infrastructure costs, future events related to
financing and regulatory matters, the expected results of our
business strategy and other plans and objectives of management
for future operations and activities. Important factors that
could cause actual results to differ materially from our
expectations include economic and business conditions, business
opportunities that may be presented to and pursued by us, changes
in laws or regulations and other factors, many of which are
beyond our control, that are described in more detail under the
heading "Risk Factors" in our Annual Report on Form 10-K for the
year ended December 31, 2001.
Item 4. Controls and Procedures.
(a) Evaluation of disclosure controls and procedures. Our
chief executive officer and chief financial officer, with the
participation of management, have evaluated the effectiveness of
our "disclosure controls and procedures" (as defined in Rules 13a-
14(c) and 15d-14(c) under the Securities Exchange Act of 1934) as
of a date within 90 days prior to the filing of this quarterly
report on Form 10-Q. Based on their evaluation, they have
concluded that our disclosure controls and procedures are
effective in timely alerting them to material information
relating to Stratus Properties Inc. (including our consolidated
subsidiaries) required to be disclosed in our periodic Securities
and Exchange Commission filings.
(b) Changes in internal controls. There were no
significant changes in our internal controls or in other factors
that could significantly affect these controls subsequent to the
date of their evaluation.
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings.
SOS LITIGATION: The Save Our Springs Alliance and Circle C
Neighborhood Association vs. The City of Austin, Circle C Land
Corp., and Stratus Properties Inc., Cause No. GN 202018 (Travis
County 261st Judicial District Court of Texas filed June 24,
2002). In an effort to prevent the City of Austin and Stratus
Properties Inc. from reaching a settlement concerning development
of the Circle C Project, the Save Our Springs Alliance, a non-
profit public-interest corporation, and the Circle C Neighborhood
Association, an unincorporated association, filed a lawsuit
against the City of Austin, Stratrus Properties Inc., and its
subsidiary, Circle C Land Corp. on June 24, 2002. In their
petition, Plaintiffs request judicial declarations that (i) the
City of Austin's Save Our Springs Ordinance is exempt from
Chapter 245 of the Texas Local Government Code ("Chapter 245");
(ii) Chapter 245 is an unconstitutional intrusion of the
municipal authority of Texas home-rule cities; (iii) under the
Texas Constitution, the City of Austin has the authority and duty
to apply the SOS Ordinance and its zoning authority to Stratus'
Circle C properties; and (iv) residents of the Circle C
community, including Plaintiffs, are entitled to full application
of the City's current watershed protection ordinances and the
City's zoning powers. Stratus believes that the Plaintiffs'
claims have either been previously adjudicated or are moot as a
result of the City and Stratus reaching a settlement and will
vigorously defend its position.
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits to this report are listed in the Exhibit
Index beginning on page E-1 hereof.
(b) During the period covered by this Quarterly Report
on Form 10-Q and through November 13, 2002, the
registrant filed two Current Reports on Form 8-K
reporting events under Item 4 dated July 15, 2002 and
August 14, 2002.
17
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
STRATUS PROPERTIES INC.
By: /s/ John E. Baker
-------------------------
John E. Baker
Senior Vice President and
Chief Financial Officer
Date: November 14, 2002
18
CERTIFICATIONS
I, William H. Armstrong III, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
Stratus Properties Inc.;
2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made,
in light of the circumstances under which such statements
were made, not misleading with respect to the period covered
by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 14, 2002
/s/ William H.Armstrong III
----------------------------
William H. Armstrong III
Chairman of the Board, President
and Chief Executive Officer
19
I, John E. Baker, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
Stratus Properties Inc.;
2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made,
in light of the circumstances under which such statements
were made, not misleading with respect to the period covered
by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 14, 2002
/s/ John E. Baker
----------------------
John E. Baker
Senior Vice President
and Chief Financial Officer
STRATUS PROPERTIES INC.
EXHIBIT INDEX
Exhibit
Number
3.1 Amended and Restated Certificate of Incorporation of Stratus.
Incorporated by reference to Exhibit 3.1 to Stratus' 1998 Form
10-K.
3.2 Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of Stratus. Incorporated by
reference to Exhibit 3.2 to Stratus' 2001 Form 10-K.
3.3 By-laws of Stratus, as amended as of February 11, 1999.
Incorporated by Reference to Exhibit 3.2 to Stratus' 1998 Form
10-K.
4.1 The loan agreement by and between Comerica Bank-Texas and
Stratus Properties Inc., Stratus Properties Operating Co.,
L.P., Circle C Land Corp. and Austin 290 Properties Inc. dated
December 21, 1999. Incorporated by reference to Exhibit 4.4 to
Stratus 1999 Form 10-K.
4.2 Rights Agreement, dated as of May 16, 2002, between Stratus and
Mellon Investor Services LLP, as Rights Agent, which includes
the Certificates of Designation of Series C Participating
Preferred Stock; the Forms of Rights Certificate Assignment,
and Election to Purchase; and the Summary of Rights to Purchase
Preferred Shares. Incorporated by reference to Exhibit 4.1 to
Stratus Registration Statement on Form 8-A dated May 22, 2002.
10.1 Development and Management Agreement dated and effective as of
June 1, 1991 by and between Longhorn Development Company and
Precept Properties, Inc. (the "Precept Properties Agreement").
Incorporated by reference to Exhibit 10.8 to Stratus' 1992 Form
10-K.
10.2 Assignment dated June 11, 1992 of the Precept Properties
Agreement by and among FTX (successor by merger to FMI Credit
Corporation, as successor by merger to Longhorn Development
Company), the Partnership and Precept Properties, Inc.
Incorporated by reference to Exhibit 10.9 to Stratus' 1992 Form
10-K.
10.3 Construction Loan Agreement dated April 9, 1999 by and between
Stratus 7000 West Joint Venture and Comerica Bank-Texas.
Incorporated by Reference to Exhibit 10.13 to Stratus' 2001
Form 10-K.
10.4 Modification Agreement dated August 16, 1999, by and between
Comerica Bank-Texas, as lender, Stratus 7000 West Joint
Venture, as borrower and Stratus Properties Inc., as guarantor.
Incorporated by Reference to Exhibit 10.14 to Stratus' 2001
Form 10-K.
10.5 Construction Loan Agreement dated February 24, 2000 by and
between Stratus 7000 West Joint Venture and Comerica Bank-
Texas. Incorporated by Reference to Exhibit 10.15 to Stratus'
2001 Form 10-K.
10.6 Second Amendment to Construction Loan Agreement dated December
31, 1999 by and between Stratus 7000 West Joint Venture, as
borrower, Stratus Properties Operating Co., L.P. and Stratus
Properties Inc., as Guarantors, and Comerica Bank-Texas.
Incorporated by Reference to Exhibit 10.16 to Stratus' 2001
Form 10-K.
10.7 Second Modification Agreement dated February 24, 2000 by and
between Comerica Bank-Texas, as lender, and Stratus 7000 West
Joint Venture, as borrower, and Stratus Properties Inc., as
guarantor. Incorporated by Reference to Exhibit 10.17 to
Stratus' 2001 Form 10-K.
10.8 Third Modification Agreement dated August 23, 2001 by and
between Comerica Bank-Texas, as lender, Stratus 7000 West Joint
Venture, as Borrower and Stratus Properties Inc., as guarantor.
Incorporated by Reference to Exhibit 10.18 to Stratus' 2001
Form 10-K.
10.9 Guaranty Agreement dated December 31, 1999 by and between
E-1
Stratus Properties Inc. and Comerica Bank-Texas. Incorporated
by reference to Stratus' Quarterly Report on Form 10-Q for the
Quarter ended March 31, 2000.
10.10 Guaranty Agreement dated February 24, 2000 by and between
Stratus Properties Inc. and Comerica Bank-Texas. Incorporated
by reference to Stratus' Quarterly Report on Form 10-Q for the
Quarter ended March 31, 2000.
10.11 Development Management Agreement by and between Commercial
Lakeway Limited Partnership, as owner, and Stratus Properties
Inc., as development manager, dated January 26, 2001.
Incorporated by reference to Exhibit 10.18 to the Stratus 2001
First Quarter 10-Q.
10.12 Amended Loan Agreement dated December 27, 2000 by and between
Stratus Properties Inc. and Comerica-Bank Texas. Incorporated
by reference to Exhibit 10.19 to the Stratus 2000 Form 10-K.
10.13 Second Amendment to Loan Agreement dated December 18, 2001 by
and among Stratus Properties Inc., Stratus Properties Operating
Co., L.P., Circle C Land Corp. and Austin 290 Properties Inc.
collectively as borrower and Comerica Bank-Texas, as lender.
Incorporated by Reference to Exhibit 10.23 to Stratus' 2001
Form 10-K.
10.14 Loan Agreement dated December 28, 2000 by and between Stratus
Properties Inc. and Holliday Fenoliglio Fowler, L.P.,
subsequently assigned to an affiliate of First American Asset
Management. Incorporated by reference to Exhibit 10.20 to the
Stratus 2000 Form 10-K.
10.15 Loan Agreement dated June 14, 2001, by and between Stratus
Properties Inc. and Holliday Fenoliglio Fowler, L.P.,
subsequently assigned to an affiliate of First American Asset
Management. Incorporated by reference to Exhibit 10.22 to
Stratus' Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001.
10.16 Construction Loan Agreement dated June 11, 2001 between 7500
Rialto Boulevard, L.P. and Comerica Bank-Texas. Incorporated
by Reference to Exhibit 10.26 to Stratus' 2001 Form 10-K.
10.17 Guaranty Agreement dated June 11, 2001 by Stratus Properties
Inc. in favor of Comerica Bank-Texas. Incorporated by
Reference to Exhibit 10.27 to Stratus' 2001 Form 10-K.
10.18 Development Agreement dated August 15, 2002 between Circle C
Land Corp. and City of Austin.
10.19 Stratus' Performance Incentive Awards Program, as amended
effective February 11, 1999. Incorporated by reference to
Exhibit 10.18 to Stratus' 1998 Form 10-K.
10.20 Stratus Stock Option Plan, as amended. Incorporated by
reference to Exhibit 10.9 to Stratus' 1997 Form 10-K.
10.21 Stratus 1996 Stock Option Plan for Non-Employee Directors, as
amended. Incorporated by reference to Exhibit 10.10 to
Stratus' 1997 Form 10-K.
10.22 Stratus Properties Inc. 1998 Stock Option Plan as amended
effective February 11, 1999. Incorporated by reference to
Exhibit 10.21 to Stratus' 1998 Form 10-K.
15.1 Letter dated November 14, 2002, from PricewaterhouseCoopers LLP
regarding the unaudited financial statements.
E-2
Exhibit 10.18
DEVELOPMENT AGREEMENT
BETWEEN
CITY OF AUSTIN
AND
CIRCLE C LAND CORP.
Effective as of August 15, 2002
TABLE OF CONTENTS
DEVELOPMENT AGREEMENT
Page
I. DEFINITIONS 2
II. AGREEMENT CONSTITUTES RESTRICTIVE COVENANTS AND
BINDING EFFECT AND ADDITIONAL LAND 9
2.1 RESTRICTIVE COVENANTS 9
2.2 BINDING EFFECT 10
2.3. OPTION TRACTS 10
2.3A. Time 10
2.3B. Option Tract Amendment 10
2.3C. Addition to Initial Parcel 10
2.3D. Compliance With Agreements 11
2.3E. Required Execution of Amendment 11
2.3F. Authority of Director 11
III. CITY REGULATIONS 12
3.1 APPLICABLE REQUIREMENTS 12
3.2 CHAPTER 245 EXCEPTIONS 13
3.3 APPLICABILITY OF CHAPTER 245 13
IV. ZONING 14
4.1 ZONING ORDINANCES 14
4.2 ZONING CHANGES 14
4.2A Zoning Regulations Changes Inapplicable 14
4.2B Certain Definitions 14
4.2C Effect of Downzone 15
4.2D Downzone Provisions Inapplicable to
Certain Parcels 16
4.2E No Election of Remedies; Further
Assurances 17
V. OVERALL SOS IMPERVIOUS COVER LIMITATION AND
CONSERVATION EASEMENT TO RESTRICT IMPERVIOUS COVER 17
5.1 CONSERVATION EASEMENT 17
5.2 OVERALL SOS IMPERVIOUS COVER LIMITATION 17
VI. TOTAL PERMITTED DENSITY, DENSITY ALLOCATION, AND
RECORDS 18
6.1 GENERAL 18
6.1A. Development Density 18
6.1B. Initial Allocations 18
6.1C. No Development Without Allocation; Mixed Use
Projects 19
6.1D. Ancillary Uses 19
6.1E. Civic Uses 19
6.2 ALLOCATIONS FOR DIVISIONS BY CONVEYANCE OR
DESIGNATION BY LANDOWNER 20
6.3 ALLOCATIONS FOR PLATTED LOTS 21
6.4 PLATTING AND RE-PLATTING 21
6.5 ASSIGNMENT OF DEVELOPMENT ALLOCATION 22
6.6 FORM AND CITY REVIEW OF APPORTIONMENTS AND
ASSIGNMENTS OF DEVELOPMENT ALLOCATION 23
6.7 RECORDS 23
6.8 ALLOCATIONS AND ASSIGNMENTS BY LANDOWNERS
- BINDING EFFECT AND MORTGAGEE PROTECTION 24
6.9 NOTICE OF CONVEYANCE 25
6.10 JOINT OWNERSHIP 25
6.11 CUMULATIVE RESTRICTIONS 25
6.12 ALLOCATIONS AND ASSIGNMENTS TO BE
COMPLIANT 25
6.13 NOTICE TO PURCHASERS 25
VII. LAND USE RESTRICTIONS AND MISCELLANEOUS DEVELOPMENT
MATTERS 26
7.1 LAND USE RESTRICTIONS 26
7.1A.Restrictions applicable to Parcel 115 -
the Bear Lake PUD 26
7.1B.Open Space Restrictions on Parcels 104,
105 and 109 27
7.1C.Open Space Restrictions on Parcels 111,
112 and 113 27
7.1D.Service Stations and Underground Storage
Tank Systems 28
7.1E. Limitation on Retail Developments 28
7.1F. Single Large Grocery Store Exception 28
7.1G. Single Convenience Storage Project Exception 29
7.1H. Critical Environmental Features Setback 29
7.1I Small Stream Buffers 29
7.1J. Water Wells 30
7.1K. Electronic Testing Activities 30
7.1L. Prior Covenants 30
7.1M ROW Ponds 30
7.1N Wildflower Center Pond 31
7.1O New Water Quality Controls Methodology 31
7.1P Erosion Controls 32
7.1Q Maintenance of Water Quality Controls 32
a. Maintenance Responsibility 32
b. Certain Definitions 33
c. Regulatory Authority and Operating
Permits 33
d. Additional Approval Requirements 34
e. Water Quality Control Restrictive
Covenants 35
f. Cost Estimates for Initial Fiscal 35
g. Continuing Fiscal 35
h. City Approval 36
7.1R Hill Country Conservancy Trust 36
7.1S Pipelines 38
a. Special Provisions Regarding Parcels
Adjacent to the Longhorn Pipeline 38
b. Other Pipelines on the Land 39
c. Impact of Future Pipeline Ordinance 39
d. Dispute Resolution Regarding
Decisions of the Chief 39
7.2 MISCELLANEOUS DEVELOPMENT APPROVALS,
STANDARDS AND AGREEMENTS 40
7.2A. City Fees 40
7.2B. Certain Director Approved Variances and
Waivers 40
7.2C. Water Quality Control Ponds 40
7.2D. Roads Across Critical Water Quality Zones 41
7.2E. Roads 41
7.2F. Park Land Dedication 42
7.2G. Platting Waived With Respect to Certain
Transfers to the City, Circle C HOA, and
the Wildflower Center 42
7.2H. Traffic Improvements 42
7.2I. Dedicated Review Team 44
7.2J. Stormwater Detention 44
7.3 AUSTIN CITY CODE AMENDMENT 45
VIII. WILDFLOWER CENTER AND GREEN BUILDING AGREEMENT 45
8.1 DEDICATIONS 45
8.2 GREEN BUILDING AGREEMENT 45
IX. CONVEYANCES TO THE CITY AND THE CIRCLE C HOA 46
9.1 CONVEYANCES OF PARCELS 104, 105 AND 109 46
9.2 PARCEL 102 46
X. CIRCLE C HOMEOWNERS ASSOCIATION AGREEMENT 46
XI. AISD SCHOOL SITES 47
XII. CONSIDERATION FOR DENSITY REDUCTION AND CERTAIN
LAND PURCHASES BY CITY 47
12.1 CREDIT BANKS 47
12.2 USES OF THE CREDIT BANKS 47
12.2A. W/WW Utility Credit Bank 47
12.2B. Development Credit Bank 48
12.2C. Permitted Credit Bank Users 48
12.3 CREDIT BANK TRANSFERS 49
12.4 FISCAL DEPOSITS 49
12.5 CHILLER FACILITY 50
12.6 CONSTRUCTION OF EXTENSION OF SOUTH BAY
ROAD 50
12.7 FIRE STATION SITE 51
XIII. INTERCONNECTION OF WATER AND WASTEWATER SERVICE 52
13.1. Required Water Service Extensions 52
13.1A. Improvements Required for Extension of
Water Service to Parcel 110 (West Portion
Along State Highway 45) 52
13.2. Required Wastewater Service Extensions 53
13.2A. Improvements Required For Extension of
Wastewater Service to Parcel 103 53
13.2B. Improvements Required for Extension of
Wastewater Service to Parcel 106 53
13.2C. Improvements Required for Extension
of Wastewater Service to Parcel 107 54
13.2D. Improvements Required for Extension of
Wastewater Service to Parcel 114 54
13.3 Cost Reimbursement for Service Extensions 54
XIV. REPRESENTATIONS AND WARRANTIES 55
14.1 REPRESENTATIONS AND WARRANTIES OF CCLC 55
14.1A. Organization and Good Standing 56
14.1B. Authority, No Conflict 56
14.1C. Title to Properties, Encumbrances 57
14.2 REPRESENTATIONS AND WARRANTIES OF CITY 57
14.2A. Organization and Good Standing 57
14.2B. Authority, No Conflict 58
14.3 NO ADDITIONAL REPRESENTATIONS 58
XV. ESTOPPEL CERTIFICATE 58
XVI. DEFAULT AND REMEDIES 58
16.1 CITY'S RIGHTS 58
16.2 CITY'S REMEDIES 59
16.2A. Notice of Violation, Corrective Action
and Litigation Remedies 59
16.2B. City's Arbitration Remedies 60
16.2C. Failure to Act or Delay 61
16.2D. Waiver of Certain Defenses 61
16.2E. No Liability For Actions of Others 61
16.3 CCLC'S REMEDIES 62
16.3A. CCLC's Remedies/Notice to City 62
16.3B. City Breach with Regards to Project
Approvals 62
16.3C. Failure to Act or Delay 63
16.4 ATTORNEYS' FEES AND COURT COSTS 63
16.5 OVERRIDING LIMITATION ON REMEDIES 64
XVII. MISCELLANEOUS 64
17.1 ENTIRE AGREEMENT 64
17.2 VENUE 64
17.3 NO PRESUMPTIONS 65
17.4 EXHIBITS 65
17.5 SEVERABILITY 65
17.6 COUNTERPARTS 65
17.7 RECORDATION 65
17.8 SUCCESSORS BOUND 66
17.9 COMPLIANCE ESTABLISHED FOR CERTAIN PLATTED
RESIDENTIAL LOTS 66
17.10 AMENDMENT 66
17.11 NOTICE 66
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is made to be
effective as of the 15th day of August, 2002 by and between the
CITY OF AUSTIN, a home rule city and municipal corporation
located in Travis, Hays and Williamson Counties in the State of
Texas (the "City") and CIRCLE C LAND CORP., a Texas corporation
("CCLC"). CCLC and the City are collectively referred to as the
"Parties".
RECITALS:
A. CCLC is the owner of the Land, currently comprising 17
separate parcels (each an "Initial Parcel") located entirely
within the corporate city limits of the City. Each such Initial
Parcel is assigned a number from 101 to 115CZ and 115RZ as set
forth in Exhibit "B", and individual Initial Parcels will be
referred to herein by reference to such parcel numbers (e.g.,
Parcel 101, Parcel 102CZ, etc.), with Parcel 102CZ and Parcel
102RZ being sometimes collectively referred to herein as Parcel
102 and Parcel 115CZ and Parcel 115RZ being sometimes
collectively referred to herein as Parcel 115.
B. The Land is a part of a master planned, mixed-use
development locally known and referred to as the "Circle C
Ranch." Development of the Circle C Ranch began in the early
1980's by CCLC's predecessor-in-interest as a unified master plan
development project. The master plan included a land use plan, a
utility plan for the provision of water, wastewater, drainage and
other utilities, a roadway and transportation plan, and a plan
for schools, parks, and amenities for the entire Circle C Ranch
community. Since that time, development has occurred, including
the creation and operation of municipal utility districts, the
construction and operation of water and wastewater utility
systems, the construction of major roadways, the construction of
regional stormwater detention and drainage facilities, the
development of numerous subdivisions, and the dedication and
improvement of parkland and common areas. Based on various
permits and approvals applied for and approved by the City,
including, without limitation, the filing and approval of
preliminary subdivision plans covering all of the Land, CCLC has
asserted that it has entitlements attributable to the Land under
Chapter 245 of the Texas Local Government Code.
C. A controversy has arisen between the City and CCLC with
respect to the development ordinances and standards applicable to
the Land (the "Controversy"). The City and CCLC desire to
resolve and settle all controversies between them regarding City
development ordinances, regulations, and standards which apply to
the Land in order to provide certainty with regard to the
development rights applicable to the Land and to promote the
timely and expeditious review of all development permits and
applications related to the Land as set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is acknowledged, and the
Parties' respective covenants and agreements established by this
Agreement, the Parties agree as follows:
I.
DEFINITIONS
Unless specifically defined elsewhere by this Agreement, a
word or term listed in this Section has the following meaning in
this Agreement (terms defined in this Agreement apply to both
singular and plural uses of such terms):
"Affiliated Occupants" has the meaning set forth in Section
7.1E of this Agreement.
"Agreement" has the meaning set forth in the first paragraph
of this Agreement.
"AISD" has the meaning set forth in Article XI of this
Agreement.
"AISD Agreement" has the meaning set forth in Article XI of
this Agreement.
"Allowable Impervious Cover" has the meaning set forth in
the Conservation Easement.
"Alternative Traffic Signals" has the meaning set forth in
Section 7.2H of this Agreement.
"Ancillary Improvements" has the meaning set forth in
Section 6.1D of this Agreement.
"Applicable SOS Provisions" has the meaning set forth in
Section 3.1 of this Agreement.
"Apportionment of Development Allocation" has the meaning
set forth in Section 6.2 of this Agreement.
"Assigning Parcel" has the meaning set forth in Section 6.5
of this Agreement.
"Assignment of Development Allocation" has the meaning set
forth in Section 6.5 of this Agreement.
"Association" has the meaning set forth in Section 7.1Q of
this Agreement.
"Austin City Code" means the Austin City Code of 1992,
together with all its related technical criteria manuals, as
existing and in effect on the Effective Date of this Agreement,
and does not mean the Austin City Code or technical criteria
manuals as amended or replaced after the date of this Agreement,
unless expressly so stated in this Agreement.
"Bear Lake Buffer" has the meaning set forth in Section
7.1A(iii) of this Agreement.
"BSEACD" has the meaning set forth in Section 7.1Q of this
Agreement.
"CCLC" has the meaning set forth in the first paragraph of
this Agreement.
"CCLC Affiliate" has the meaning set forth in Section 12.3
of this Agreement.
"Chapter 245" has the meaning set forth in Section 4.2C of
this Agreement.
"Chapter 245 Exceptions" has the meaning set forth in
Section 3.2 of this Agreement.
"Chief" has the meaning set forth in Section 7.1S of this
Agreement.
"Circle C HOA" has the meaning set forth in Article X of
this Agreement.
"Circle C HOA Agreements" has the meaning set forth in
Article X of this Agreement.
"Circle C Zoning" has the meaning set forth in Section 4.1
of this Agreement.
"City" has the meaning set forth in the first paragraph of
this Agreement.
"City Deeds" has the meaning set forth in the first
paragraph in Section 9.1 of this Agreement.
"City Easements" has the meaning set forth in Section 9.1 of
this Agreement.
"City Fees Notice" has the meaning set forth in Section
12.2A of this Agreement.
"Civic Uses" has the meaning set forth in Section 6.1E of
this Agreement.
"Commercial Owners Association" has the meaning set forth in
Section 7.1R of this Agreement.
"Commercial Properties Declaration" has the meaning set
forth in Section 7.1R of this Agreement.
"Commercial Site Permit" has the meaning set forth in
Section 7.1Q of this Agreement.
"commercial use" has the same meaning set forth in Section
25-2-4 of the Austin City Code.
"Conservancy Trust" has the meaning set forth in Section
7.1R of this Agreement.
"Conservation Easement" means that certain Conservation
Easement to Restrict Impervious Cover referenced in Section 5.1
below.
"Constituent Documents" means any document or instrument
contemplated by the terms of this Agreement to be executed and
delivered by any Parties or otherwise in connection herewith.
"Contiguous Roadways" has the meaning set forth in Section
7.1M of the Agreement.
"Continuing Violation" has the meaning set forth in Section
16.2 of this Agreement.
"Controversy" has the meaning set forth in Recital C of this
Agreement.
"Convenience Storage Project" has the meaning set forth in
Section 7.1G of this Agreement.
"Convenience Storage Project Location Designation" has the
meaning set forth in Section 7.1G of this Agreement.
"Credit Banks" has the meaning set forth in Section 12.1 of
this Agreement.
"Credit Bank Fiscal Deposit" has the meaning set forth in
Section 12.4 of this Agreement.
"Current Requirements" has the meaning set forth in Section
3.1 of this Agreement.
"Critical Water Quality Zone" means any portion of the Land
classified as a critical water quality zone under Section 25-8-92
of the Austin City Code.
"DDZ" has the meaning set forth in Section 12.2C of this
Agreement.
"DDZ Transferee" has the meaning set forth in Section 12.3
of this Agreement.
"Debited Amount" has the meaning set forth in Section 13.3
of this Agreement.
"Dedicated Review Team" has the meaning set forth in Section
7.2I of this Agreement.
"development" has the same meaning set forth in Section 25-1-
21 (27) of the Austin City Code.
"Development Allocation" has the meaning set forth in
Section 6.1B of this Agreement.
"Development Allocation Records" has the meaning set forth
in Section 6.7 of this Agreement.
"Development Credit Bank" has the meaning set forth in
Section 12.2B of this Agreement.
"Development Credit Bank Uses" has the meaning set forth in
Section 12.2B of this Agreement.
"development density" means the density of development of a
particular type of project on the Land or on a particular Parcel.
For office and retail development, development density is by
reference to Net Floor Area (measured in square feet) of
development, and for residential and multi-family residential
development, development density is measured by reference to the
number of residential living units.
"Development Fees" has the meaning set forth in Section
12.2B of this Agreement.
"Director" has the meaning set forth in Section 7.2B of this
Agreement.
"Discrete Parcel" has the meaning set forth in Section 6.5
of this Agreement.
"Downzone" has the meaning set forth in Section 4.2B of this
Agreement.
"Downzoned Parcel" has the meaning set forth in Section 4.2B
of this Agreement.
"Electronic Testing" is the testing of an electrical or
electronic component for a computer, computer peripheral, radio,
telephone, scientific or medical instrument, or similar
equipment.
"Effective Date" means August 15, 2002.
"Erosion Controls" has the meaning set forth in Section 7.1P
of this Agreement.
"Escarpment Segment" has the meaning set forth in Section
13.1A of this Agreement.
"Estimated Costs" has the meaning set forth in Section 7.2H
of this Agreement.
"Existing Wells" has the meaning set forth in Section 7.1J
of this Agreement.
"Facility" has the meaning set forth in Section 7.1Q of this
Agreement.
"Fire Station Site" has the meaning set forth in Section
12.7 of this Agreement.
"Fiscal Notice" has the meaning set forth in Section 12.4 of
this Agreement.
"Fully Permitted Projects" has the meaning set forth in
Section 6.2 of this Agreement.
"Green Building Agreement" has the meaning set forth in
Section 8.2 of this Agreement.
"Gross Floor Area" has the meaning set forth in and will be
calculated pursuant to the methodology set forth in Section 25-1-
21 (43) of the Austin City Code with the understanding that
loading docks will only be included in the calculation to the
extent they are within the building line of the structure subject
to the calculation.
"HCCT Assessment" has the meaning set forth in Section 7.1R
of this Agreement.
"Impervious Cover" has the meaning set forth in and shall be
calculated pursuant to the Conservation Easement.
"Indicated Use" has the meaning set forth in Section 6.2 of
this Agreement.
"Initial Parcel" has the meaning set forth in Recital A of
this Agreement.
"Judgment" has the meaning set forth in Section 4.2B of this
Agreement.
"Land" means those certain parcels of land consisting of
approximately 1,260 acres that are (i) graphically depicted in
the schematic drawing shown in Exhibit "A" and (ii) more fully
described in Exhibit "B".
"Landowner" means the fee simple owner of a portion of the
Land.
"Large Grocery Store" has the meaning set forth in Section
7.1F of this Agreement.
"Large Grocery Store Location Designation" has the meaning
set forth in Section 7.1F of this Agreement.
"Longhorn Pipeline" has the meaning set forth in Section
7.1S of this Agreement.
"Maintenance Agreement" has the meaning set forth in Section
7.1Q of this Agreement.
"Map Change Downzone" has the meaning set forth in Section
4.2B of this Agreement.
"Mid-Tex Service Extensions" has the meaning set forth in
Section 13.A of this Agreement.
"Modified Current Requirements" has the meaning set forth in
Section 3.1 of this Agreement.
"Multi-Family Residential" has the meaning set forth in
Section 6.1A of this Agreement.
"Net Site Area" as to any portion of the Land, has the
meaning, and is calculated pursuant to the formula, set forth or
referred to in the Conservation Easement.
"Net Floor Area" means Gross Floor Area multiplied by 0.95.
"New Methodology" has the meaning set forth in Section 7.1O
of this Agreement.
"New Ordinance" has the meaning set forth in Section 7.1O of
this Agreement.
"North Pond" has the meaning set forth in Section 7.2J of
this Agreement.
"Notice of Lender" has the meaning set forth in Section 6.8
of this Agreement.
"Office" has the meaning set forth in Section 6.1A of this
Agreement.
"open space" means land that is free of development.
"Operating Permit" has the meaning set forth in Section 7.1Q
of this Agreement.
"Option Tract" has the meaning set forth in Section 2.3A of
this Agreement.
"Parcel" means any portion of real property which is a part
of the Land.
"Parcel 102 Dedication Tract" has the meaning set forth in
Section 9.2 of this Agreement.
"Parties" has the meaning set forth in the first paragraph
of this Agreement.
"Permitted Transferee" has the meaning set forth in Section
12.3 of this Agreement.
"Platted Parcel" has the meaning set forth in Section 6.4 of
this Agreement.
"Pipeline Ordinance" has the meaning set forth in Section
7.1S of this Agreement.
"Preliminary Plan" means a preliminary plan covering any
portion of the Land which is filed pursuant to Section 25-4-51 of
the Austin City Code.
"Receiving Parcel" has the meaning set forth in Section 6.5
of this Agreement.
"Remaining Portion Parcel" has the meaning set forth in
Section 6.4 of this Agreement.
"Report" has the meaning set forth in Section 7.1S of this
Agreement.
"Requirements" has the meaning set forth in Section 3.1 of
this Agreement.
"Residential" has the meaning set forth in Section 6.1A of
this Agreement.
"Residential Facility" has the meaning set forth in Section
7.1Q of this Agreement.
"Retail" has the meaning set forth in Section 6.1A of this
Agreement.
"SER No. 2189" has the meaning set forth in Section 13.1 of
this Agreement.
"SER No. 2190" has the meaning set forth in Section 13.2 of
this Agreement.
"South Bay Extension" has the meaning forth in Section 12.6
of this Agreement.
"South Bay Extension Dedication Deed" has the meaning set
forth in Section 12.6 of this Agreement.
"South Pond" has the meaning set forth in Section 7.2J of
this Agreement.
"SOS Ordinance" has the meaning set forth in Section 3.1 of
this Agreement.
"Spruce Canyon Segment" has the meaning set forth in Section
13.1A of this Agreement.
"Spruce Canyon Segment Allocation" has the meaning set forth
in Section 13.1A of this Agreement.
"structure" has the same meaning set forth in Section 25-1-
21 (107) of the Austin City Code.
"Text Change Downzone" has the meaning set forth in Section
4.2B of this Agreement.
"Total Permitted Density" has the meaning set forth in
Section 6.1A of this Agreement.
"Transfer Notice" has the meaning set forth in Section 12.3
of this Agreement.
"TxDot" has the meaning set forth in Section 7.1M of this
Agreement.
"Use Categories" has the meaning set forth in Section 6.1A
of this Agreement.
"USFWS" has the meaning set forth in Section 7.1M of this
Agreement.
"Visual Buffer Zone" has the meaning set forth in Section
7.1A(iv) of this Agreement.
"Water Quality Controls RC" has the meaning set forth in
Section 7.1Q of this Agreement.
"Water Quality Controls Retrofit" has the meaning set forth
in Section 7.1M of this Agreement.
"Water Director" has the meaning set forth in Article XIII
of this Agreement.
"Wastewater Service Extensions" has the meaning set forth in
Section 13.2 of this Agreement.
"Water Service Extensions" has the meaning set forth in
Section 13.1 of this Agreement.
"Wildflower Center" has the meaning set forth in Section 8.1
of this Agreement.
"Wildflower Dedication Deed" has the meaning set forth in
Section 8.1 of this Agreement.
"W/WW Utility Credit Bank" has the meaning set forth in
Section 12.2A of this Agreement.
"W/WW Utility Credit Bank Uses" has the meaning set forth in
Section 12.2A of this Agreement.
"W/WW Utility Fees" has the meaning set forth in Section
12.2A of this Agreement.
"Year" has the meaning set forth in Section 12.3 of this
Agreement.
Other terms in this Agreement denoted by initial
capitalization are expressly defined in this Agreement or by
reference.
II.
AGREEMENT CONSTITUTES RESTRICTIVE COVENANTS AND BINDING EFFECT
AND ADDITIONAL LAND
2.1 RESTRICTIVE COVENANTS
The City and CCLC acknowledge and agree that this Agreement
(i) touches and concerns the Land, will be recorded in the
Official Records of Travis and Hays Counties, Texas and
constitutes restrictive covenants required by the City; and (ii)
except as otherwise specifically provided in this Agreement to
the contrary, runs with the Land and is binding upon each and
every successor-in-interest of CCLC, including, without
limitation each successor-in-ownership of CCLC with respect to
any part of the Land. The Parties further acknowledge that
following the execution and delivery of the Constituent Documents
the City will have a property interest in the Land in accordance
with the Conservation Easement. Any Landowner that sells,
assigns or otherwise transfers any portion of the Land, or who
contracts to do so, shall disclose to prospective buyers,
assignees or other transferees of any such portion of the Land
(including prospective purchasers of residential lots) (a) the
terms of this Agreement and the Constituent Documents and, (b)
that this Agreement and the Constituent Documents affect
development and/or building plans that involve Impervious Cover
and/or development density. A written disclosure in the form set
forth in Exhibit "C" shall be sufficient for complying with this
disclosure obligation.
2.2 BINDING EFFECT
The Parties acknowledge and agree as a material term of this
Agreement that their respective obligations under this Agreement,
including, without limitation, those set forth in Article III,
will continue and will be binding even if other laws currently in
effect or enacted or modified after the Effective Date, would
otherwise limit, eliminate, modify, enhance or impair the City's
regulatory power or ability to enforce the obligations of CCLC,
or the limitation on land use, set forth in this Agreement.
2.3 OPTION TRACTS
2.3A. Time. At any time within 36 months from the
Effective Date, upon application by CCLC (but not subsequent
Landowners) and subject to compliance with the terms of this
Section 2.3, each of the tracts described in Exhibit "D" hereto
(each an "Option Tract") may be incorporated within the Land
covered by this Agreement and the Conservation Easement from time
to time by sending written notice thereof to the City. Exhibit
"E-1" hereto contains a table showing what the Allowable
Impervious Cover allocations and Maximum Impervious Cover (as
defined in the Conservation Easement) would be for all of the
Initial Parcels if all of the Option Tracts were to be included
pursuant to this Section.
2.3B. Option Tract Amendment. If CCLC desires to include
an Option Tract in the Land within such 36 month period and the
owner of the tract in question is willing to so include the
tract, then CCLC will provide the City with a written notice
thereof along with reasonable evidence of the ownership of such
tract. The City, acting through the Director, CCLC, and the
owner of the tract to be included (if different than CCLC) will
execute an amendment to this Agreement and an amendment to the
Conservation Easement, both of which must be in form reasonably
satisfactory to the Parties, incorporating such tract within the
Land covered by this Agreement and the Conservation Easement
within a reasonable period of time after the notice. The
amendments will be recorded in the Real Property Records of
Travis and Hays Counties, Texas.
2.3C. Addition to Initial Parcel. At the time an Option
Tract is included under this Agreement and the Conservation
Easement in compliance with the terms of this Section 2.3,
(i) the Option Tract will become part of the Initial Parcel
listed for the Option Tract in Exhibit "D" for the
purposes of this Agreement and the Conservation
Easement,
(ii) the Allowable Impervious Cover listed for the Option
Tract on Exhibit "E-2" hereto will be allocated to the
Parcel or Parcels as CCLC may direct by written notice
to the City so long as such allocation does not violate
any of the terms of this Agreement or the Conservation
Easement, and
(iii) the Maximum Impervious Cover, as defined in the
Conservation Easement, for the Initial Parcel listed
for the Option Tract in Exhibit "E-2" hereto under the
heading "Initial Parcel whose Maximum Impervious Cover
Is to Be Increased" will be increased by the amount of
the Allowable Impervious Cover allocated pursuant to
clause (ii) above.
The initial Development Allocation for the Option Tract will be
zero in each Use Category. No allocations or assignments of
Development Allocation or Allowable Impervious Cover may be made
to or from an Option Tract until the Option Tract is incorporated
into the Land and made a part of this Agreement and the
Conservation Easement.
2.3D. Compliance With Agreements. At the time an Option
Tract is subjected to the terms of this Agreement and the
Conservation Easement, the tract must have allocated to it
adequate Allowable Impervious Cover and Development Allocation
sufficient to cause existing and/or then fully approved and
finally permitted improvements and/or Impervious Cover on the
tract to then be in compliance with this Agreement and the
Conservation Easement.
2.3E. Required Execution of Amendment. The amendment
subjecting an Option Tract to the terms of this Agreement and the
terms of the Conservation Easement must be joined in by such
persons and/or entities as the City deems necessary or
appropriate to indefeasibly subject such tract, and all then and
future holder(s) of any then existing right, title, and/or
interest in and to such tract, to the terms of this Agreement and
the Conservation Easement. Should any person or entity that is
required to join in an amendment executed pursuant to the terms
of this Section 2.3 fail to execute and deliver the necessary
amendment, said tract will not be included in the Land or
subjected to the terms of this Agreement and will not be entitled
to any of the benefits conferred by this Agreement or in the
Conservation Easement.
2.3F. Authority of Director. The Director has the
authority to take whatever action is necessary to implement the
inclusion of any Option Tract pursuant to the terms of this
Section without any review or approval by any City board,
commission or council.
III.
CITY REGULATIONS
3.1 APPLICABLE REQUIREMENTS
The City and CCLC acknowledge and agree that the Modified
Current Requirements shall apply and shall continue to apply to
and govern any and all development activity that has commenced on
the Land, or any portion of the Land, or that is commenced on the
Land, or any portion of the Land, within 30 years from and after
the Effective Date. Other than the Chapter 245 Exceptions, no
Requirement enacted, adopted or implemented after the Effective
Date shall apply to development of the Land that is commenced on
the Land, or any portion of the Land, within 30 years from and
after the Effective Date. Any development activity on the Land
or any portion thereof that is commenced after such 30 year
period shall be governed by the Requirements in effect at the
time such development activity commences. For purposes of this
paragraph only, a development activity will be deemed to have
"commenced" when the first of an application for (A) a
Preliminary Plan, or (B) a site development permit, or (C) a
subdivision plat, has been filed with the City for that
development activity. As a material part of the settlement of
the Controversy and even though CCLC asserts that the SOS
Ordinance does not apply to the Land, CCLC hereby subjects the
Land to the Applicable SOS Provisions pursuant to the terms and
provisions of this Agreement and the Conservation Easement.
Accordingly, if a Parcel is eliminated from this Agreement
pursuant to the terms of this Agreement, CCLC's agreement to
subject the Land to the Applicable SOS Provisions will no longer
apply to that Parcel.
The following apply in this Agreement:
"SOS Ordinance" means Sections 25-8-511 through 25-8-523 of
the Austin City Code.
"Applicable SOS Provisions" means the requirements and
limitations contained in the SOS Ordinance in effect on the
Effective Date except to the extent such requirements and/or
limitations are in conflict with the terms and provisions of
this Agreement, the Conservation Easement, and/or any
ordinances enacted to carry out the terms of this Agreement
and/or the Conservation Easement (see e.g. Section 5.2).
"Requirements" means all of the City's laws, ordinances,
codes, regulations, rules, policies, requirements, technical
construction standards, traffic criteria and manuals, and
development related procedures and processes.
"Current Requirements" means the Requirements, other than
the SOS Ordinance, in effect on the Effective Date and
applicable to the Land or that would otherwise be applicable
to any development activity on the Land disregarding any
effect of Chapter 245 of the Texas Local Government Code or
any other similar rights.
"Modified Current Requirements" means (i) the Current
Requirements as expressly waived, modified or abated by this
Agreement, the Conservation Easement, and/or any ordinances
enacted to carry out the terms of this Agreement and/or the
Conservation Easement, (ii) the Applicable SOS Provisions,
and (iii) any Requirements that are Chapter 245 Exceptions
enacted, adopted or implemented after the Effective Date.
3.2 CHAPTER 245 EXCEPTIONS
The City and CCLC agree that notwithstanding the foregoing
terms of this Article III, the Requirements with respect to the
following shall apply to development activity on the Land or any
portion of the Land as they are enacted and/or amended by the
City from time to time ("Chapter 245 Exceptions"):
(i) municipal zoning regulations that do not affect lot
size, lot dimensions, lot coverage, or building size or
that do not change development permitted by a
restrictive covenant required by a municipality;
(ii) regulations for sexually oriented businesses;
(iii) fees imposed in conjunction with development
permits;
(iv) regulations for annexation;
(v) regulations for utility connections not in conflict
with the express terms of this Agreement with regard to
utilities;
(vi) regulations to prevent imminent destruction of property
or injury to persons, including regulations effective
only within a flood plain established by federal flood
control programs and enacted to prevent the flooding of
buildings intended for public occupancy;
(vii) construction standards for public works located on
public lands or easements; and
(viii) ordinances incorporating uniform building, fire,
electrical, plumbing, and/or mechanical codes, adopted
by a national code organization, and/or local
amendments to such codes enacted solely to address
imminent threats of destruction of property or injury
to persons.
3.3 APPLICABILITY OF CHAPTER 245
The Parties acknowledge that this Agreement, when executed
and delivered by the City, shall constitute an approval of a
permit in a series of permits required from the City for the use
and development of the Land in accordance with the terms of this
Agreement and, as such, the development rights and entitlements
provided to CCLC, its successors and assigns, pursuant to this
Agreement, shall be protected under Chapter 245 of the Texas
Local Government Code.
IV.
ZONING
4.1 ZONING ORDINANCES.
On or before the Effective Date, the City approved and
adopted zoning ordinances with conditional overlay restrictions
for each of the 17 Initial Parcels comprising all of the Land.
Each of such ordinances are referenced in Exhibit "F" ("Circle C
Zoning").
4.2 ZONING CHANGES.
4.2A Zoning Regulations Changes Inapplicable. As of the
Effective Date, all zoning regulations of the City are codified
in Chapter 25-2 of the Austin City Code. A change in the, or the
addition of, zoning regulations currently in Chapter 25-2 of the
Austin City Code in effect from time to time applicable to a
particular zoning classification, regardless of where codified,
will not apply to a Parcel with that zoning classification unless
(a) the Landowner of that Parcel at the time of the change or
addition has stated in a written notice to the City that it does
not object to the change or addition, or (b) the applicable
Landowner fails to timely object to the change or addition in
accordance with the provisions of clause (iii) in the definition
of Text Change Downzone below, or (c) the change or addition
becomes effective on or after the date which is 30 years after
the Effective Date.
4.2B Certain Definitions. The following definitions apply
in this Agreement:
"Downzone" means either a Map Change Downzone or a Text
Change Downzone which becomes effective on or before the
date which is 30 years after the Effective Date.
"Downzoned Parcel" means the portion of the Land for which a
Downzone is effected.
"Map Change Downzone" means a change of a zoning
classification of a Parcel, by the City, over the written
objection of the Landowner of the Parcel at the time of that
change, that results in a more restrictive zoning
classification than that which applied to the Parcel under
the Circle C Zoning. A Map Change Downzone will be
effective on the day that the zoning ordinance effecting
that change becomes effective.
A "Text Change Downzone" will have occurred with respect to
a Parcel if all of the following have occurred:
(i) There is a change in the, or the addition of,
zoning regulations currently in Chapter 25-2 of the
Austin City Code in effect from time to time applicable
to the zoning classification of that Parcel, regardless
of where codified, which, if applicable to the Parcel,
would cause the Circle C Zoning of the Parcel to be
more restrictive, and the Landowner of the Parcel at
the time of the change did not state in a written
notice to the City that it does not object to the
change.
(ii) Either (A) a court of competent jurisdiction
renders a final judgment ("Judgment") to the effect
that the change referred to in clause (i) immediately
above is applicable to the Parcel notwithstanding
Section 4.2A, and the Landowner of the Parcel at the
time that judgment became final did not thereafter
state in a written notice to the City that it does not
object to the change, or (B) the City takes the
position that, or denies or fails to timely process a
permit application based on an assertion that, the
change referred to in clause (i) immediately above is
applicable to the Parcel notwithstanding Section 4.2A.
(iii) Either (A) the Landowner of the Parcel at the
time that Judgment became final notifies the City in
writing within 60 days after the Judgment became final
that the Landowner objects to that change, or (B) the
Landowner of the Parcel notifies the City in writing
within 60 days after the Landowner becomes aware that
the City takes the position that the change referred to
in clause (i) above is applicable to the Parcel, or the
City denies or fails to timely process a permit
application based on an assertion that the change
referred to in clause (i) above is applicable to the
Parcel, and the City does not cause the change to cease
to apply to that Parcel within 120 days after the
giving of that written notice. With respect to the
situation where the City takes the position that the
change referred to in clause (i) immediately above is
applicable to the Parcel notwithstanding Section 4.2A,
the change shall, for the purpose of that situation, be
considered to have ceased to apply to the Parcel if the
City provides the relevant Landowner with a writing
stating that the City no longer takes the position that
the change referred to in clause (i) immediately above
is applicable to the Parcel.
A Text Change Downzone will be effective upon the expiration
of the City's 120 day cure period set forth in clause (iii)
above.
4.2C Effect of Downzone. If the City takes any action the
effect of which is to Downzone all or any portion of the Land,
then the following will apply:
(i) Downzoned Parcel. At the option of the Landowner of
the Downzoned Parcel at the time the Downzone became
effective, exercised by written notice to the City
within 60 days after the Downzone becomes effective,
the Downzoned Parcel will be eliminated from this
Agreement and the Conservation Easement, and will be
treated as if it was never part of this Agreement, the
Conservation Easement or any of the other Constituent
Documents. Accordingly, if such option is exercised,
all rights with respect to the Downzoned Parcel will be
the same as they were on the day before the Effective
Date, including entitlements, if any, attributable to
the Downzoned Parcel under Chapter 245 of the Texas
Local Government Code ("Chapter 245"), and the
Downzoned Parcel will no longer be subject to the Green
Building Agreement or the Circle C HOA Agreements
pursuant to the terms of those agreements. Without
limiting the generality of the foregoing, if the
Landowner of the Downzoned Parcel exercises that
option, the Landowner of the Downzoned Parcel will be
entitled to avail itself of the benefits of all legal
rights available on the date before the Effective Date
and of the benefits of all legal rights available
pursuant to any laws enacted or modified on or after
the Effective Date with regard to the Downzoned Parcel,
including entitlements, if any, attributable to the
Downzoned Parcel under Chapter 245. It is acknowledged
and agreed that, with regard to a Downzoned Parcel, if
such option is exercised, it is deemed that the
"project" for the Downzoned Parcel, as it relates to a
determination of entitlements, if any, under Chapter
245, will not have changed due to the Downzoned Parcel
being subjected to this Agreement, the Conservation
Easement, or any of the Constituent Documents or due to
any applications for permits or permits issued in
accordance with the terms and provisions of this
Agreement or the Conservation Easement.
(ii) Parcels 104, 105 and the Parcel 102 Dedication Tract.
At the option of CCLC exercised by written notice to
the City within 60 days after the Downzone becomes
effective, title to Parcels 104, 105 and the Parcel 102
Dedication Tract will revert back or be reconveyed to
CCLC with no additional encumbrances than existed on
the Effective Date (other than public utility easements
(e.g. water, wastewater and electrical utilities)
provided for in this Agreement or the Constituents
Documents), and the City's easements on those Parcels
provided for in this Agreement, other than public
utilities easements, will be terminated and released.
In such an event, Parcels 104 and 105 will not be
subject to the restrictions in Section 7.1B. The City
hereby warrants that title to such Parcels upon any
such reverter or reversion will be subject to no
additional encumbrances than existed on the Effective
Date (other than public utility easements provided for
in this Agreement or the Constituents Documents). If
CCLC exercises that option, those Parcels will be
eliminated from this Agreement and the Conservation
Easement, and will be treated as if they were never
part of this Agreement or the Conservation Easement
such that rights with respect to those Parcels will be
the same as on the day before the Effective Date,
including entitlements, if any, attributable to those
Parcels under Chapter 245. It is acknowledged and
agreed that, if such option is exercised, with regard
to those Parcels, it is deemed that the "project" for
each Parcel, as it relates to a determination of
entitlements, if any, under Chapter 245, will not have
changed due to the Parcel being subjected to this
Agreement, the Conservation Easement, or any of the
Constituent Documents or due to any applications for
permits or permits issued in accordance with the terms
and provisions of this Agreement or the Conservation
Easement.
4.2D Downzone Provisions Inapplicable to Certain Parcels.
This Section 4.2 does not apply to (i) Parcel 109, Parcel 111,
Parcel 112 or Parcel 113, (ii) a platted single-family (including
duplex) residential lot upon which a residential dwelling has
been constructed which is or has been occupied, or (iii) any
Parcel for which the zoning classification changed after the
Effective Date if the Landowner of that Parcel at the time of the
zoning classification change consented in writing to the change
prior to the change.
4.2E No Election of Remedies; Further Assurances. The
exercise of an election referred to in Section 4.2C by the
Landowner of a Downzoned Parcel or by CCLC will not be construed
as an election of remedies. All other remedies for the Downzone
of the Downzoned Parcel, whether available at common law or
enacted on, before or after the Effective Date, are preserved if
such election is exercised. In the event of such an exercise of
that election, the City, CCLC and the Landowner must take any
additional actions and execute and acknowledge any documents
necessary to effectuate the terms of this Section 4.2.
V.
OVERALL SOS IMPERVIOUS COVER LIMITATION AND CONSERVATION EASEMENT
TO RESTRICT IMPERVIOUS COVER
5.1 CONSERVATION EASEMENT.
CCLC has, contemporaneously with the execution and delivery
of this Agreement, granted to the City of Austin a Conservation
Easement to Restrict Impervious Cover ("Conservation Easement")
of even date herewith, in conformity with Texas Natural Resource
Code, Chapter 183 and other applicable law, covering the entirety
of the Land. The Conservation Easement has been or will be
recorded in the Real Property Records of Travis and Hays
Counties, Texas.
5.2 OVERALL SOS IMPERVIOUS COVER LIMITATION.
Pursuant to the Conservation Easement, CCLC agrees to
restrict the aggregate allowable Impervious Cover available for
development of the Land as a whole. The aggregate allowable
Impervious Cover on the Land is the same amount of Impervious
Cover for the development of the Land that is permitted under and
calculated in accordance with the SOS Ordinance in the aggregate
for all of the Land taken together. The Conservation Easement
provides that each Initial Parcel has a specific maximum amount
of allowable Impervious Cover, and, with the exception of Parcels
103, 106, 107 and 110, no Initial Parcel taken as a whole may
exceed the Impervious Cover limitations otherwise set forth in
the SOS Ordinance.
VI.
TOTAL PERMITTED DENSITY, DENSITY ALLOCATION, AND RECORDS
6.1 GENERAL.
6.1A. Development Density. The maximum aggregate amount
of development density permitted on the Land with respect to
certain project types is as follows ("Total Permitted Density"):
Office 750,000 square feet of Net
Floor Area
Retail 250,000 square feet of Net
Floor Area
Residential 1,730 living units
Multi-Family Residential 900 living units
The development of Multi-Family Residential units consumes
Development Allocations in both the Residential and the Multi-
Family Residential Use Categories, i.e., for each Multi-Family
Residential unit developed on the Land, there must be a
Development Allocation of one Residential unit and one Multi-
Family Residential unit for the Multi-Family Residential unit
being developed. For the purpose of Development Allocations,
each residential duplex structure shall be treated as two single-
family residential living units.
As reflected above, the Total Permitted Density is divided
into four different use categories consisting of office, retail,
residential and multi-family residential ("Use Categories").
The projects permitted within the four Use Categories are more
particularly delineated on Exhibits "G-1", "G-2", "G-3" and "G-4"
respectively and are sometimes referred to herein as "Office,"
"Retail," "Residential," and "Multi-Family Residential"
respectively.
If a particular use or proposed use on a Parcel is a use
listed in more than one of the Use Categories, the Landowner of
that Parcel must notify the City in writing of the Use Category
for the proposed use so that the City can determine whether there
is sufficient and appropriate Development Allocation to the
Parcel for the proposed use. The Landowner may, from time to
time, by written notice to the City, re-designate the Use
Category for that use to the other Use Category into which it
fits provided that there is sufficient and appropriate
Development Allocation for all uses in that Use Category on the
Parcel.
6.1B. Initial Allocations. The Total Permitted Density
has been allocated with respect to each Use Category among the 17
Initial Parcels comprising the Land pursuant to the table set
forth in Exhibit "H". An apportionment of allowable development
density with respect to a Use Category is a "Development
Allocation". The Development Allocations for the Initial Parcels
are the amounts set forth in the columns entitled Initial
Development Allocation on Exhibit "H". Future allocations and
assignments of Development Allocation will be governed by the
rules and procedures set forth below.
6.1C. No Development Without Allocation; Mixed Use
Projects. No development of a project within a Use Category may
be constructed on any Parcel, nor may any existing improvement be
utilized for any particular purpose under a Use Category unless
adequate Development Allocation for the proposed project, and/or
use, has been allocated to the Parcel under the terms and
procedures set forth in this Article.
No proposed project within a Use Category may be constructed
on a Parcel, and no Parcel may be used for a particular purpose
under a Use Category, if the sum of
(i) the Development Allocation required for such project or
use, plus
(ii) the Development Allocation attributable to and used by
all existing or fully approved and finally permitted
development and uses on the Parcel of the same Use
Category as the proposed project or use, which are to
continue and co-exist with the proposed project,
exceeds the aggregate Development Allocation for such type of Use
Category allocated to the Parcel.
No mixed use project may be constructed or operated on any
Parcel unless the Parcel has sufficient Development Allocation
allocated to it for each of the Use Categories which form a part
of the project.
6.1D. Ancillary Uses. In addition to the Total
Permitted Density, all ancillary improvements which are
customarily developed in connection with developing a particular
residential project are permitted to be constructed and operated
on the Land provided that they are merely in support of the
primary use of the project and otherwise are in compliance with
the Modified Current Requirements and with the other terms and
provisions of this Agreement and the Conservation Easement
(referred to herein as "Ancillary Improvements"). For example, a
Multi-Family Use Category project, such as an apartment complex,
may include a leasing office, a club house, laundry facilities,
exercise facilities, and pool facilities that are ancillary to
such project, and no Development Allocation is necessary for
these Ancillary Improvements. Ancillary Improvements are
permitted without a specific apportionment of Development
Allocation for Ancillary Improvements. No Development Allocation
will be used for Ancillary Improvements. Nothing in this Section
waives the requirements of the Conservation Easement of
sufficient Allowable Impervious Cover for the Ancillary
Improvements.
6.1E. Civic Uses. In addition to the Total Permitted
Density, the following non-profit, community owners association,
governmental, and quasi-governmental uses are permitted to be
constructed and operated on the Land without an apportionment of
Development Allocation therefor ("Civic Uses"):
(i) fire station, emergency medical service facility,
police sub-station, library, or other governmental
uses that provide direct service in respect to the
Land;
(ii) Austin Independent School District secondary
school;
(iii) Austin Independent School District elementary
school;
(iv) post office and mail kiosks; and
(v) community facilities and community recreational
facilities ancillary to, and primarily serving,
residential development of the Land.
No Development Allocation will be used for Civic Uses. Nothing
in this paragraph waives the requirements of the Conservation
Easement of sufficient Allowable Impervious Cover for the Civic
Uses.
6.2 ALLOCATIONS FOR DIVISIONS BY CONVEYANCE OR DESIGNATION BY
LANDOWNER.
Whenever a Parcel is divided by conveyance, each grantor and
grantee to the conveyance must give written notice to the City
for its review and approval in accordance with Section 6.6 below
specifying, with respect to each applicable Use Category, the
apportionment of the Development Allocation between the resulting
Parcels ("Apportionment of Development Allocation").
In addition, a Landowner may elect to designate a division
of a Parcel owned by the Landowner for the purpose of creating
separate Parcels from the individual Parcel. Each separate
Parcel resulting from the division must receive a discrete
apportionment of Development Allocation with respect to each
applicable Use Category by the Landowner giving the City an
Apportionment of Development Allocation. The division by
Landowner designation shall not be a division of Land for
platting purposes.
With respect to each Use Category, no Apportionment of
Development Allocation may result in the Development Allocation
apportioned to any Parcel resulting from any such division being:
(i) inconsistent with the applicable Circle C Zoning
affecting the Parcel, or
(ii) less than the Development Allocation required for all
existing improvements, and/or fully approved and
finally permitted improvements contemplated for
construction ("Fully Permitted Projects"), of such Use
Category on the Parcel as of the date of the conveyance
or Landowner designation.
Effect must be given to the actual use of the Parcel, or in the
case of an improvement not then being used, the intended use as
indicated on the finally approved site development permit or
other full and final City authorization or approval for the
development of the Parcel for commercial Parcels and the final
subdivision plat with respect to residential Parcels. For
purposes of this Agreement, the actual or intended use is the
"Indicated Use".
No improvements may be constructed on any of the Parcels
resulting from any such division until an apportionment of
Development Allocation is made in accordance with the foregoing
procedure.
6.3 ALLOCATIONS FOR PLATTED LOTS.
For purposes of this Agreement, whenever a Parcel is divided
by being platted into a subdivision that includes non-duplex
single family residential lots, the amount of Development
Allocation conclusively assumed for each non-duplex single family
residential lot in any such subdivision shall be one Residential
unit per platted non-duplex single family residential lot. The
apportionment to such lot of one Residential unit of Development
Allocation must be made accordingly. For purposes of this
Agreement, whenever a Parcel is divided by being platted into a
subdivision that includes duplex residential lots, the amount of
Development Allocation conclusively assumed for each duplex
residential lot in any such subdivision shall be two Residential
units per platted duplex residential lot for all purposes under
this Agreement. Accordingly, an apportionment to such lot of two
Residential units of Development Allocation must be made.
Whenever a Parcel is divided by platting into a subdivision that
includes lots other than single family or duplex residential
lots, there must be an apportionment of Development Allocation
for each Use Category to each lot that is not a single-family or
duplex residential lot through the use of an Apportionment of
Development Allocation. The apportionment may be zero so long as
such apportionment is expressly made.
6.4 PLATTING AND RE-PLATTING.
In connection with any division of any Parcel by way of
platting or re-platting a subdivision:
A. With respect to each Use Category, the Parcel being
platted or re-platted must have apportioned to it
Development Allocation that is equal to or more than
the aggregate amount of Development Allocation required
to be apportioned to the lots in such subdivision
pursuant to the terms of this Agreement.
B. If the division involves the platting or re-platting of
a portion, but not all, of a Parcel, resulting in the
division of such Parcel into two Parcels (i.e., a
Parcel consisting of the portion being platted (the
"Platted Parcel"), and a Parcel consisting of the
portion not being platted, (the "Remaining Portion
Parcel")), then, with respect to each Use Category,
there must be an apportionment of the Development
Allocation for such divided Parcel between the Platted
Parcel and the Remaining Portion Parcel by an
Apportionment of Development Allocation being submitted
to the City for its review and approval. One
Apportionment of Development Allocation will address
all Use Categories.
C. With respect to each Use Category and giving effect to
the Indicated Use, no division may result in the
apportioned Development Allocation on either the
Remaining Portion Parcel or the Platted Parcel being
(i) inconsistent with the applicable Circle C Zoning,
or (ii) less than the Development Allocation required
for then existing development and/or Fully Permitted
Projects.
D. Any proposed division by platting or re-platting that
does not comply with this Agreement shall be denied by
City in writing setting forth the specific reasons for
such denial. However, the City shall approve any
proposed division by platting or re-platting which is
in compliance with (i) this Agreement and the
Conservation Easement and (ii) all other laws,
ordinances and regulations pertaining thereto, except
as expressly modified, waived, or abated by this
Agreement or the Conservation Easement.
6.5 ASSIGNMENT OF DEVELOPMENT ALLOCATION.
With respect to each Use Category, Development Allocation
may be assigned from any Parcel ("Assigning Parcel") by the
Landowner of the Assigning Parcel to another Parcel ("Receiving
Parcel"). However, after giving effect to such assignment, the
assignment may not result in the Development Allocation allocated
to the Assigning Parcel being (i) inconsistent with the
applicable Circle C Zoning, or (ii) less than the Development
Allocation required for then existing improvements on the
Assigning Parcel at the time of the proposed assignment and/or
all Fully Permitted Projects (giving effect to the Indicated Use
thereof).
The foregoing notwithstanding, there shall be no assignment
of Development Allocation from or to any platted single family or
duplex residential lot without re-platting the applicable lots or
subdivision.
Only assignments of Development Allocation to and from
Discrete Parcels shall be allowed. A "Discrete Parcel" for the
purpose of the provisions of this Agreement regarding Development
Allocations is a Parcel consisting of a portion of the Land out
of one, and only one, Initial Parcel with a discrete identity,
and a discrete allocation of Development Allocation according to
the Development Allocation Records. This discrete allocation may
be zero except for single-family or duplex residential lots. If
either the Assigning Parcel or the Receiving Parcel, or both,
are, according to the Development Allocation Records, comprised
of two or more Discrete Parcels, then the assignment must
allocate the reductions and/or increases of Development
Allocation between such constituent Parcels. The City must be
given for its review and approval a written notice of any
assignment of Development Allocation by the Landowner of the
Assigning Parcel complying with the requirements therefor set
forth in Section 6.6 below (an "Assignment of Development
Allocation").
Upon any such assignment, the City shall revise the
Development Allocation Records to reflect the change in the
Development Allocation between the Parcels. Development
Allocation must not be assigned from a Parcel to any property
that is not a part of the Land.
6.6 FORM AND CITY REVIEW OF APPORTIONMENTS AND ASSIGNMENTS OF
DEVELOPMENT ALLOCATION.
An Apportionment of Development Allocation must be executed
by the grantor and grantee in the case of an apportionment of
Development Allocation in connection with a division by
conveyance. An Apportionment of Development Allocation must be
executed by the Landowner in the case of an apportionment of
Development Allocation in connection with a division by Landowner
designation or by platting.
An Apportionment of Development Allocation must be
substantially in the form attached hereto as Exhibit "I-1". Each
Assignment of Development Allocation must be executed by the
Landowner of the Assigning Parcel and by the Landowner of the
Receiving Parcel, and must be substantially in the form attached
hereto as Exhibit "I-2".
Each Apportionment of Development Allocation and each
Assignment of Development Allocation must include a schematic
drawing showing each Parcel involved and the location of each
Parcel within the Land, together with an adequate legal
description for each Parcel, reasonably satisfactory to the City.
Approval by the City of an Apportionment of Development
Allocation or an Assignment of Development Allocation submitted
to it for review and approval will be granted if the
apportionment or assignment of Development Allocation is in
compliance with the terms and provisions of this Agreement. The
approval shall be deemed to have been given if approval of such
Apportionment of Development Allocation or Assignment of
Development Allocation is not expressly denied by City in writing
within 30 days after receipt by the City. The written denial
shall specifically set forth the reasons for the denial.
6.7 RECORDS.
The City will maintain records ("Development Allocation
Records") containing the Development Allocation for each Parcel
and the name and address of the Landowner of each Parcel.
Initially, the Development Allocation Records shall consist of
the list of Landowners of each Initial Parcel and the Development
Allocation allocated to each Initial Parcel as set forth on
Exhibit "H". The Development Allocation Records will reflect all
future allocations and assignments of Development Allocation
permitted under this Article VI. In ascertaining who is the then
current Landowner of any Parcel for any purposes under this
Section, the City shall be entitled to rely on the Development
Allocation Records it has established to track the Development
Allocation for the Land and ownership of Parcels. A Landowner
may correct the Development Allocation Records regarding any
conveyance of a Parcel not reflected on the Development
Allocation Records by providing to the City a certified copy of
the recorded deed or other instrument of conveyance.
6.8 ALLOCATIONS AND ASSIGNMENTS BY LANDOWNERS - BINDING EFFECT
AND MORTGAGEE PROTECTION.
A Landowner may, from time to time, deliver a Notice of
Lender ("Notice of Lender") executed by the Landowner and
notifying the City of a deed of trust lien against Landowner's
Parcel. The Notice of Lender must include:
(i) a schematic drawing of the affected Parcel showing its
location within the Land,
(ii) an adequate legal description for such Parcel,
(iii) the address and name of the Landowner which must
be consistent with the ownership of the Parcel
according to the Development Allocation Records,
(iv) the name and address of the lender, and
(v) a description of the relevant lien instrument including
recording information.
Any allocation or assignment of Development Allocation for a
Parcel subject to a Notice of Lender delivered to the City will
not be effective unless accompanied by (i) the written consent of
the lender specified in such Notice of Lender, or the lender's
successor or assigns as demonstrated to the City's reasonable
satisfaction, or (ii) a release of such Notice of Lender or a
release of the deed of trust lien against such Landowner's Parcel
as described in the Notice of Lender. The release must be
executed by such lender or such lender's successor or assigns to
be effective for purposes of this Agreement. Unless and to the
extent a release of lien expressly specifies to the contrary,
any effective recorded release of a deed of trust lien specified
in a Notice of Lender will automatically release such Notice of
Lender, but will not be effective with respect to the City until
a copy of such executed release is delivered to the City. In
addition, any written release specific to a Notice of Lender
executed by the lender named therein or such lender's successor
or assigns and delivered to the City will be effective to release
such Notice of Lender. Any Notice of Lender will be
substantially in the form attached hereto as Exhibit "J". The
foregoing notwithstanding, a Notice of Lender will not be
required or effective for a platted single-family or duplex
residential lot because Development Allocation may not be
assigned to or from such a lot.
Subject to the foregoing, any allocation or assignment of
Development Allocation made by a Landowner or Landowners in
accordance with the terms of this Article shall bind any then
current or future holder or holders of any interest in the
Parcels affected thereby, including, without limitation, the
holder of any mortgage or other encumbrances on said Parcels,
without the necessity of such holder joining in the allocation or
assignment which affects such holder's interest.
6.9 NOTICE OF CONVEYANCE.
If any Parcel or any part of any Parcel is conveyed by the
Landowner thereof, the conveyance will not be binding upon City
for purposes of this Agreement until such time as a written
notice of the conveyance together with a true and correct copy of
the fully executed and acknowledged conveyance instrument is
delivered to City; provided, however, that such notices are not
to be given to the City with respect to conveyance of platted
single family or duplex residential lots.
6.10 JOINT OWNERSHIP.
If ownership of a Parcel is by multiple persons and/or
entities owning such Parcel (i.e, through joint tenancy or
tenancy in common), all of such persons and/or entities or their
authorized representative must join in any action or notice
provided for under this Article VI in order for same to be
effective.
6.11 CUMULATIVE RESTRICTIONS.
The restrictions contained in this Article VI are in
addition to those contained in the Conservation Easement. For a
specific project to be constructed on any Parcel or used for any
particular purpose, the project must (i) comply with the terms of
the Conservation Easement, (ii) comply with the zoning applicable
to the Parcel, and (iii) be allocated sufficient and appropriate
Development Allocation in accordance with the terms of this
Article VI. Development Allocation may not be transferred to any
other property that is not part of the Land.
6.12 ALLOCATIONS AND ASSIGNMENTS TO BE COMPLIANT.
Absent compliance with this Article VI, any allocation or
assignment of Development Allocation shall not be valid, and the
City shall have no obligation to honor same.
6.13 NOTICE TO PURCHASERS.
OTHER THAN PURCHASERS OF DULY PLATTED SINGLE FAMILY OR
DUPLEX RESIDENTIAL LOTS, ANY PROSPECTIVE PURCHASER OR OTHER
ASSIGNEE OF ANY PORTION OF THE LAND IS HEREBY ADVISED THAT THE
FOREGOING ASSIGNMENT AND/OR ALLOCATION PROCEDURE AND LIMITATIONS
COULD RESULT IN NO CONSTRUCTION OF IMPROVEMENTS BEING PERMITTED
ON PORTIONS OF THE PROPERTY. ANY SUCH PROSPECTIVE PURCHASER, LIEN
HOLDER OR ASSIGNEE SHOULD REVIEW THE DEVELOPMENT ALLOCATION
RECORDS OF CITY PRIOR TO ACQUIRING ITS INTEREST IN ANY PORTION OF
THE PROPERTY TO DETERMINE WHETHER SUCH INTEREST INCLUDES THE
RIGHT TO CONSTRUCT IMPROVEMENTS ON THE PORTION OF THE PROPERTY
INVOLVED.
VII.
LAND USE RESTRICTIONS AND
MISCELLANEOUS DEVELOPMENT MATTERS
7.1 LAND USE RESTRICTIONS.
The following site specific restrictions apply to portions
of the Land as set forth below:
7.1A. Restrictions applicable to Parcel 115 - the Bear
Lake PUD.
(i) The Crescent. That portion of Parcel 115,
generally referred to and labeled on Exhibit "L"
as the "Crescent" and described by metes and
bounds field notes in Exhibit "K" hereto is hereby
restricted to single-family residential use,
including duplex residential use, and no more than
95 single-family residential units may be
constructed on such Parcel. For the purpose of
this restriction, a duplex residential unit will
treated as two (2) single-family residential
units.
(ii) FM 1826 Access. Access from Parcel 115 to FM 1826
is hereby restricted to no more than one access
road which must be located within 1,000 feet of
the intersection of State Highway 45 and FM 1826.
(iii) FM 1826 Buffer. Within Parcel 115, a buffer
is hereby established adjacent to the entire
length of FM 1826, as specifically described on
Exhibit "L" (the "Bear Lake Buffer"). No
development shall be permitted within the Bear
Lake Buffer other than utility facilities,
fencing, landscaping, water quality controls and
related facilities, hiking and biking trails,
sidewalks, lighting improvements, internal roads,
alleys and driveways and a single access road to
FM 1826, provided (i) that, to the extent the
permitted improvements involve the development of
Impervious Cover, sufficient Allowable Impervious
Cover is allocated to the appropriate Parcel
pursuant to the terms of the Conservation
Easement, and (ii) any structural water quality
controls visible from FM 1826 must be screened
using berms or existing or newly-planted
vegetation. Fencing permitted by this paragraph
must otherwise comply with the applicable
requirements of the Austin City Code.
(iv) Visual Buffer Zone Along FM 1826 and SH 45.
Within Parcel 115, a visual buffer is hereby
established adjacent to the entire length of FM
1826 and SH 45, as hereinafter specifically
described: 67 feet adjacent to the easternmost
right-of-way line of FM 1826, as it presently
exists, and 50 feet adjacent to the southernmost
right-of-way line of SH 45, as it presently exists
(the "Visual Buffer Zone"). No above ground
improvements shall be permitted within the Visual
Buffer Zone other than hiking and biking trials,
project perimeter fencing, water quality controls
and related facilities, lighting improvements and
internal roadway connections to either FM 1826 or
SH 45 and highway access roads together with
related entrance facilities including signage and
sidewalks; provided (i) any structural water
quality controls visible from either FM 1826 or SH
45 must be screened using berms or existing or
newly-planted vegetation, (ii) any highway access
roads or internal roadway connections to FM 1826
or SH 45 shall have no more than 300 linear feet
of highway frontage utilized for roadway and
entrance improvements, (iii) project perimeter
fencing in the Visual Buffer along FM 1826 is
limited to no more than 50% of the length of the
Visual Buffer along FM 1826, and (iv) except at
roadway connection points, cleared vegetation must
be replaced with vegetation in compliance with
restrictive covenants affecting that portion of
the Land, to the extent feasible, to visually
screen the development from FM 1826 or SH 45, as
appropriate, within two years from planting.
Fencing permitted by this paragraph must otherwise
comply with the applicable requirements of the
Austin City Code.
7.1B. Open Space Restrictions on Parcels 104, 105 and
109. Parcels 104, 105 and 109 are hereby restricted to open
space; provided, however, that pedestrian walkways, landscaping,
utility facilities, sidewalks, and hike and bike trails are
permitted on Parcels 104 and 105, and drainage and related
facilities installed by the City pursuant to the City Easements
are permitted on Parcel 109. In addition, water quality controls
and related facilities are permitted on Parcels 104 and 105 only
if the City and CCLC agree in writing as to the design and
location of the proposed water quality controls and related
facilities in their sole discretion. Notice of any such
agreement will be recorded in the Real Property Records of Travis
County, Texas. Nothing herein is intended to imply that CCLC
will participate in the construction or maintenance of any such
facilities.
7.1C. Open Space Restrictions on Parcels 111, 112 and
113. Parcels 111, 112 and 113 are hereby restricted to open
space, except that pedestrian walkways, underground utility
facilities, native landscaping, water quality controls and
related facilities, sidewalks, and hike and bike trails are
permitted on Parcels 111, 112 and 113. In addition, one (1)
vehicular access drive and Wildflower Center signage is permitted
on Parcel 113. Other than facilities for hike and bike trails,
the permitted facilities must only serve and may only be used in
connection with, Parcels 111, 112 and 113 and/or the land
adjacent to Parcels 111, 112 and 113 known as the Wildflower
Center and the Yates Tract, as defined in the Conservation
Easement. The permitted improvements must be developed in
compliance with the terms of the Conservation Easement.
7.1D. Service Stations and Underground Storage Tank
Systems. No facility involved in the sale of gasoline or other
motor vehicle fuel may be constructed and/or operated on the
Land.
7.1E. Limitation on Retail Developments. No Retail
project (i.e., a project for a use in the Retail Use Category
delineated in Exhibit "G-2") may be constructed on the Land other
than Parcel 107 that includes an occupant or a group of two or
more Affiliated Occupants occupying more than 35,000 square feet
of Net Floor Area used or to be used for Retail purposes, and no
Retail project may be constructed on Parcel 107 that includes an
occupant or a group of two or more Affiliated Occupants occupying
more than 50,000 square feet of Net Floor Area used or to be used
for retail purposes. This limitation does not apply to any
Public Primary Educational Facilities (as defined in Section 25-2-
6(37) of the Austin City Code) and Public Secondary Educational
Facilities (as defined in Section 25-2-6(38) of the Austin City
Code) or Safety Services Uses (as defined in Section 25-2-6(43)
of the Austin City Code) on the Land.
"Affiliated Occupants" means two or more retail occupants
with common ownership or control involved in a coordinated Retail
business and which is marketed as such. Retail occupants that
are under common ownership or control, such as common ownership
by Federated Department Stores, would not be considered to be
Affiliated Occupants solely by reason of such common ownership or
control.
Although Retail structures located on separate Parcels will
as a general rule be treated as separate Retail projects, Retail
structures on two or more contiguous Parcels shall be treated as
one individual project for the purpose of this restriction if and
only if (i) there are through drive lanes on such Parcels that
allow traffic flow between the Parcels, (ii) there is common
parking serving such structures, or (iii) the structures are
situated, or generally operated, in a manner which creates the
appearance that same are operated as a single, integrated
project.
For the purposes of this Section, two platted lots will not
be considered to be contiguous with each other if they are
separated by a street or road, whether public or private, that is
not on either of such lots. Adherence to common architectural
standards by two or more structures will not, in and of itself,
create the appearance that such structures are operated as a
single, integrated project, and structures separated by 50 or
more feet without a structure located thereon will be deemed to
not have the appearance that they are operated as a single,
integrated project.
7.1F. Single Large Grocery Store Exception. The
limitation on Retail development set forth in the immediately
preceding paragraph does not prohibit the development and
operation on the Land of one Retail store devoted primarily to
"food sales" as defined in the Austin City Code (i.e., a retail
store that would commonly be referred to as a "grocery store")
occupying up to 100,000 square feet of Net Floor Area ("Large
Grocery Store"). Examples of Retail stores devoted primarily to
food sales are typical H.E.B. grocery stores, Randalls grocery
stores, and Central Market grocery stores as currently found in
the Austin, Texas metropolitan area. Subject to compliance with
the Circle C Zoning, CCLC has the sole right to designate the
location of the Large Grocery Store by written designation to the
City (the "Large Grocery Store Location Designation"). After
CCLC makes the Large Grocery Store Location Designation, the
Large Grocery Store may be constructed and operated only on the
Parcel identified in the Large Grocery Store Location Designation
in accordance with the Modified Current Requirements, this
Agreement and the Conservation Easement. The right to make the
Large Grocery Store Designation is personal to CCLC and does not
run with the Land. CCLC may assign the right to make the Large
Grocery Store Location Designation and must provide the City
written notice of such assignment.
7.1G. Single Convenience Storage Project Exception. The
limitation on Retail development set forth in Section 7.1E above
does not prohibit the development and operation on the Land of
one project devoted primarily to "convenience storage" as defined
in the Austin City Code ("Convenience Storage Project"). Subject
to compliance with the Circle C Zoning, CCLC has the sole right
to designate the location of the Convenience Storage Project by
written designation to the City ("Convenience Storage Project
Location Designation"). After CCLC makes the Convenience Storage
Project Location Designation, the Convenience Storage Project may
be constructed and operated only on the Parcel identified in the
Convenience Storage Project Location Designation in accordance
with the Modified Current Requirements, this Agreement and the
Conservation Easement. The right to make the Convenience Storage
Project Designation is personal to CCLC and does not run with the
Land. CCLC may assign the right to make the Convenience Storage
Project Location Designation and must provide the City written
notice of such assignment.
7.1H. Critical Environmental Features Setback.
Development on Parcels 107, 108, and 115 must comply with the
requirements set forth in Exhibit "M" addressing critical
environmental features.
7.1I Small Stream Buffers. Buffers are hereby established
for small streams within the Land. Small streams are defined as
natural streams, swales or drainage ways with drainage areas of
at least 5 acres but less than 128 acres. Small stream buffers
will be the following widths:
(i) For streams draining less than 40 acres but more than 5
acres, the minimum buffer is 25 feet on either side of
the centerline of the stream.
(ii) For streams draining less than 128 acres but 40 or more
acres, the minimum buffer is 50 feet on either side of
the centerline of the stream.
Small stream buffers must remain free of construction,
development or other alterations, except as provided below.
Roadway facilities, utility facilities and other development
infrastructure crossings through small stream buffers must be
minimized and constructed only when reasonably necessary to
safely access or serve property. The Parties anticipate that
roadway facilities, utility facilities and other development
infrastructure crossings over small stream buffers will be
reasonably necessary on Parcels 101, 102, 103, 108, 110 and 115
in certain instances.
If there is a disagreement between the City and a Landowner
as to whether a particular roadway facility, utility facility or
other development infrastructure crossing is reasonably
necessary, the Landowner may request a determination from the
Director. After consultation with the Landowner, the Director
will, in the Director's reasonable discretion, determine whether
the crossing is reasonably necessary.
Other alterations within small stream buffers may include
low impact parks and open space. Low impact park development
within small stream buffers is limited to hike and bike trails,
picnic facilities, and similar construction that does not
significantly alter the existing vegetation. Parking lots and
roads are not considered low impact park improvements.
Wastewater effluent irrigation must not occur within a small
stream buffer.
7.1J. Water Wells. CCLC currently operates 2 water
wells on the Land (the "Existing Wells"). CCLC agrees that the
Existing Wells will only be used to refill the wet pond features
on Parcel 115 in accordance with best management practices and
that no additional water wells may be drilled or developed on the
Land. These restrictions shall not, however, prohibit the
drilling and development of a water well on any Parcel to provide
water for use on such Parcel if the City fails to provide water
service for the Parcel. The restrictions set forth in this
paragraph will continue to apply, however, if such failure by the
City to provide water service is the result of (i) a failure by
the relevant water user to comply with the City's rules and
regulations for water users, or (ii) a failure by CCLC to
complete the construction of the Water Service Extensions.
7.1K. Electronic Testing Activities. Electronic Testing
is permitted in the Office Use Category only and no more than
375,000 square feet of the Net Floor Area of office improvements
on the Land may be used for Electronic Testing.
7.1L. Prior Covenants. To the extent that any of the
foregoing restrictive covenants expressly conflict with the terms
of any other restrictive covenant previously required by the City
burdening any part of the Land, it is expressly agreed that the
more restrictive of the covenants will supersede and control over
the lesser restrictive covenant to the extent of the conflict,
notwithstanding any law which might allow the earlier restrictive
covenant to control even if it was less restrictive than the
subsequent covenant.
7.1M ROW Ponds. Certain roadways and highways contiguous to
the Land and existing on the Effective Date were constructed
without adequate water quality controls ("Contiguous Roadways").
The Contiguous Roadways were not constructed by CCLC. It is
anticipated that the City, the Texas Department of Transportation
("TxDOT") and/or the United States Fish and Wildlife Service
("USFWS") may initiate discussions to provide for the retrofit
and/or construction of water quality controls to treat storm
water runoff from the Contiguous Roadways ("Water Quality
Controls Retrofit"). CCLC agrees that it will participate in
these discussions upon the written request of the City, TxDOT or
USFWS. Other entities, as appropriate, may participate in these
discussions such as the Wildflower Center and the Barton
Springs/Edwards Aquifer Conservation District. These discussions
will include methods for funding and/or in-kind participation in
the Water Quality Controls Retrofit by various entities. The
discussions may include the following topics:
1. Water quality control facilities at the
southwest corner of Brodie Lane and Slaughter
Lane to treat storm water runoff from that
intersection as well as Parcel 108.
2. Water quality control facilities in City
Metropolitan Park west of MoPac Expressway
between Slaughter Lane and La Crosse Avenue
to treat storm water runoff from Parcel 107
as well as the intersection of Slaughter Lane
and MoPac Expressway.
3. Water quality control facilities at the
southeast corner of the intersection of FM
1826 and State Highway 45 to treat storm
water runoff from that intersection as well
as a portion of Parcel 115, if feasible.
4. Retrofit of existing water quality
control facilities built and owned by TxDOT
along MoPac Expressway south of Slaughter
Lane to State Highway 45, and along State
Highway 45 from the intersection of MoPac
Expressway and State Highway 45 to FM 1826.
CCLC will not unreasonably withhold the granting of easements on
the Land to the extent reasonably necessary to accommodate the
Water Quality Controls Retrofit provided that (i) CCLC does not
incur any direct or indirect costs in providing such easements,
(ii) such easements do not, in the reasonable opinion of CCLC,
adversely impact existing development on the Land or development
permitted by the Development Agreement and the Conservation
Easement, and (iii) at the time an easement is requested, CCLC
owns that portion of the Land which will be encumbered by the
easement and CCLC has the authority to grant the easement. All
liens (other than the lien for ad valorem taxes not yet due and
payable) on such portion will be subordinate to the easement.
7.1N Wildflower Center Pond. CCLC agrees that it will
discuss with the Wildflower Center the design and construction of
a water quality wet pond on Parcel 113 to treat storm water
runoff from the existing parking lot serving the Wildflower
Center and/or that portion of MoPac highway contiguous to Parcel
113 to the extent a single water quality pond can collect storm
water runoff from that portion of MoPac highway. If CCLC and the
Wildflower Center can agree on the matters reflected above, they
will enter into an agreement regarding the sharing of costs and
responsibilities for the design, construction and maintenance of
such a pond.
7.1O New Water Quality Controls Methodology
If at any time after the Effective Date, and from time
to time, the City enacts any new ordinance ("New Ordinance")
whereby the City, on a uniform basis throughout the Barton
Springs Zone (as defined by the Austin City Code), requires a new
methodology for the design and construction of water quality
controls to meet the water quality standards set forth in the
Modified Current Requirements ("New Methodology"), Residential
Plat applications and Commercial Site Permit applications in
connection with the development of any portion of the Land first
filed after the effective date of the New Ordinance will comply
with the New Methodology if and only if all of the following
conditions are satisfied:
1. The design and construction of water quality
controls in accordance with the New Methodology must
not diminish or otherwise adversely affect the
development density or Impervious Cover which could
otherwise be constructed on an applicable Parcel;
2. The New Methodology must be shown through sound
engineering practices to provide an improved
effectiveness of 10% or greater over the then customary
practice for the design and construction of water
quality controls for complying with the Austin City
Code prior to the New Ordinance; and
3. The costs for designing and constructing water
quality controls in accordance with the New Methodology
must not exceed the cost of the design and construction
of water quality controls in accordance with the then
customary practice for complying with the Austin City
Code prior to the New Ordinance by more than 10%.
If any of the foregoing conditions are not met with regard to a
Residential Plat application or a Commercial Site Permit
application in connection with the development of any portion of
the Land, then the New Ordinance will not apply to such
Residential Plat or Commercial Site Permit, as applicable.
7.1P Erosion Controls. Temporary erosion and sedimentation
controls complying with Section 1.4.0 of the City of Austin
Environmental Criteria Manual ("Erosion Controls") will be
erected on the Land in connection with development and
construction on the Land. However, if at any time after the
Effective Date, the City promulgates new criteria for Erosion
Controls on a uniform basis throughout its planning jurisdiction
(as defined in the Austin City Code), then erosion and
sedimentation controls will be erected on the Land in accordance
with such new criteria for site development permits, building
permits, and other development and construction permits issued
after the effective date of the revised criteria for temporary
erosion and sedimentation controls.
7.1Q Maintenance of Water Quality Controls
a. Maintenance Responsibility. The City intends to enter into
an agreement ("Maintenance Agreement") with Barton Springs
Edwards Aquifer Conservation District ("BSEACD"), Bear Lake PUD
Community, Inc., Circle C Commercial Community, Inc., and any
other applicable Association substantially in the form and
content attached to this Agreement as Exhibit "Y". To the extent
that modifications are necessary to the form of the Maintenance
Agreement to effectuate the intent contemplated by this
Agreement, the City Manager is authorized to negotiate those
modifications with the parties thereto. Once a Facility has been
approved by the City and the fiscal deposit required under
Section 25-8-234 of the Austin City Code for such Facility is
released, BSEACD will be responsible for performance monitoring,
maintenance and repair and remediation of each and every water
quality control facility (each being herein called a "Facility")
constructed on the Land by any person or entity, other than City,
in connection with the development of the Land. As to any
specific Facility, the Landowners of the Parcel(s) served by that
Facility must pay for all costs incurred in connection with the
performance monitoring, maintenance, repair and remediation of
the Facility through assessments on those Parcel(s) which are
secured by a lien on those Parcels.
For any Facility constructed under a Commercial Site
Permit a mandatory owners association (any such association being
herein called an "Association"), and the Landowner(s) of the
Parcel(s) served by the Facility will be jointly and severally
responsible for such performance monitoring, maintenance, and
repair and remediation should BSEACD not enter into the
Maintenance Agreement, or the Maintenance Agreement is ever
terminated for any reason including, without limitation, BSEACD's
default under the Maintenance Agreement.
For any Facility constructed under a Residential Plan
(herein "Residential Facility"), an Association will be liable in
the event the Maintenance Agreement is not entered into or the
Maintenance Agreement is terminated for any reason. Should the
responsible Association fail to maintain any Residential
Facility, City may, at its option, and in addition to any and all
other rights and remedies City may have in such event, require
that the Residential Facility be dedicated to the City and, once
accepted by the City, City shall be responsible for performance
monitoring, maintenance, and repair and remediation of the
Facility.
The City will be responsible for performance
monitoring, maintenance, and repair and remediation of any
Facility constructed on any Parcel by the City.
b. Certain Definitions. For purposes of this
Section 7.1Q, (i) "performance monitoring" of any Facility means
the monitoring of the Facility to ascertain whether the Facility
is functioning in accordance with its approved design; (ii)
"maintenance" of a Facility means taking the actions necessary to
ensure that the Facility is in proper operating condition in
accordance with its approved design; and (iii) "repair and
remediation" of any Facility means the replacement or
reconstruction of all or any portion of the Facility which is not
in proper operating condition in accordance with its approved
design. For purposes of this Agreement, the "owner of a
Facility" will be deemed to be the Landowner(s) of the Parcel(s)
served by such Facility, unless the Facility has been conveyed
to, and accepted by, an Association in which event the
Association will be the owner of the Facility. Should a Facility
be conveyed to an Association that thereafter ceases to exist,
ownership of the Facility will be deemed to have reverted back to
the Landowner(s) of the Parcel(s) served by the Facility.
c. Regulatory Authority and Operating Permits. The
City retains its regulatory authority over each and every
Facility constructed on the Land. The owner of each Facility
constructed on the Land by a person or entity other than the City
must have an annual Operating Permit (an "Operating Permit")
issued for such Facility by the City pursuant to the procedures
and requirements of Section 25-8-233 of the Austin City Code even
if Section 25-8-233 does not require an annual Operating Permit
for such Facility. An Operating Permit will not conflict with
the terms and provisions of this Section 7.1Q.
d. Additional Approval Requirements. As a condition
to the City's final approval of any subdivision construction
plans for single family or duplex residential lots (a
"Residential Plan") or a site development permit for any other
development (a "Commercial Site Permit"), the Landowner must:
(i) provide City with evidence reasonably
acceptable to the City that all of the Land
comprising such Residential Plan or
Commercial Site Permit has been irrevocably
and perpetually subjected to and made part of
an Association so that (a) an Association has
the responsibility for performance
monitoring, maintenance, and repair and
remediation of each Facility to be
constructed on such portion of the Land, and
(b) all of the Landowners of the portions of
the Land served by a particular Facility are
burdened with the responsibility for paying
all costs incurred in connection with the
performance monitoring, maintenance, and
repair and remediation of the Facility
through assessments by the Association which
are secured by a lien to cover such costs,
(ii) subject the Parcel(s) covered thereby to a
restrictive covenant and easement in the form
attached hereto as Exhibit "Z" ("Water
Quality Controls RC"), or such other form as
may be approved by the Director, executed by
the applicable Landowner and Association.
The Landowner must also cause any holder of a
monetary lien on the Parcel subject to the
Water Quality Controls RC (other than the
lien for ad valorem taxes not yet due and
payable) to subordinate, in writing, the lien
to the Water Quality Controls RC, and
(iii) post a fiscal deposit with the City in
the amount of the initial estimated annual
maintenance costs for the Facility, as
determined by the procedure set forth in this
Section, by a cash deposit, performance bond
or letter of credit. A fiscal deposit by
performance bond or letter of credit will be
in form customarily accepted by the City for
satisfying fiscal security requirements set
forth in Section 25-1-112 of the Austin City
Code. CCLC may post fiscal deposits for
maintenance costs from the Development Credit
Bank in accordance with Section 12.4 of this
Agreement. The fiscal deposit required in
this Section 7.1Q for a Facility is in
addition to the fiscal security required
under Section 25-8-234 of the Austin City
Code.
e. Water Quality Control Restrictive Covenants. The
Water Quality Controls RC, among other provisions,:
(i) requires that each Facility be maintained in
accordance with the terms of its Operating
Permit and the Modified Current Requirements,
(ii) grants an easement to BSEACD and the
Association, as applicable, for the
performance monitoring, maintenance, repair
and remediation of each Facility covered
thereby,
(iii) grants an easement to the City, as a co-
beneficiary of the Water Quality Controls RC,
to inspect the performance monitoring,
maintenance, repair and remediation of each
such Facility and to exercise certain self-
help remedies under the Water Quality
Controls RC,
(iv) allows the City to provide performance
monitoring, maintenance, and repair and
remediation of a Facility if it is not being
maintained in accordance with the
requirements of this Section, and
(v) requires that the owner of the Facility
maintain a fiscal deposit in the amount of
the estimated annual maintenance costs with
the City at all times.
f. Cost Estimates for Initial Fiscal. The owner of
each Facility will provide the Dedicated Review Team the initial
estimated annual costs for the maintenance plan submitted in the
initial application for an Operating Permit for that Facility.
If Dedicated Review Team disagrees with the estimate it will
inform the owner of such fact. In that event, Dedicated Review
Team and the owner will attempt to resolve the discrepancy. If
they cannot do so within fifteen (15) days, then the Dedicated
Review Team and the owner will jointly select an independent
third party civil engineer to review the proposed maintenance
plan and develop an estimate of the initial annual maintenance
costs for the Facility. If the Dedicated Review Team and the
Landowner cannot agree on the engineer, then each will select an
independent third party engineer and those engineers will select
an independent third party engineer to perform the required
review. The third party engineer's estimate of the annual
maintenance costs will be binding on City and the owner of the
Facility for determining the initial amount of the required
fiscal deposit. Each of the engineers selected must be
experienced in the design and operation of water control
facilities. Each party will be responsible for its respective
engineering costs and will split the costs for the engineer
making the ultimate determination of the estimated annual
maintenance costs.
g. Continuing Fiscal. Each time an application for an
Operating Permit for a Facility is filed with the City, the owner
of the Facility will submit its estimate of the costs necessary
to implement the maintenance plan contained in the permit
application. If the Dedicated Review Team disagrees with the
cost estimate for such maintenance, it will inform the owner of
the Facility of such fact. If the Dedicated Review Team and the
owner do not agree on the estimated costs within fifteen days,
the dispute will be resolved in accordance with the procedure
established for estimating the initial maintenance costs. The
estimate of the annual maintenance costs will be binding on the
City and the owner of the Facility for purposes of determining
the amount of the fiscal deposit required for the annual period
covered by the Operating Permit.
h. City Approval. All provisions of any and all
documents, including, without limitation, any declaration of
restrictive covenants or other documents creating an Association
or establishing the assessments contemplated by this Section,
regarding the performance monitoring, maintenance, and repair and
remediation of any Facility, and/or the assessments to pay costs
incurred in connection therewith and/or liens to secure payment
of such assessments must be approved by the City, which approval
will not be unreasonably withheld or delayed, and the documents
in which such provisions are contained must provide that any such
provisions may not be modified, amended or terminated without the
City's consent. The City hereby agrees that if a portion of the
Land is subjected to, and made a part of, either (i) that certain
Circle C Commercial Master Declaration of Covenants, Conditions,
Restrictions and Easements recorded under Document No. 2002151143
of the Real Property Records of Travis County, Texas, or (ii)
that certain Bear Lake PUD Master Declaration of Covenants,
Conditions, Restrictions and Easements recorded under Document
No. 2002151142 of the Real Property Records of Travis County,
Texas and under Document No. 02022306 of the Real Property
Records of Hays County, Texas, then such action will satisfy the
requirement of Subsection 7.1Q(d)(i).
7.1R Hill Country Conservancy Trust
Within 180 days of the full execution of this Agreement, the
City and CCLC will cause a trust to be formed under the name
"Hill Country Conservancy Trust" to receive proceeds from
assessments on certain commercial Landowners (as described below)
to be used for (i) the acquisition and preservation of additional
open space within or adjacent to the Edwards Aquifer Recharge
Zone, as defined by the Austin City Code, (ii) regional watershed
and habitat protection planning, (iii) environmental education
programs and (iv) other purposes ancillary thereto (the
"Conservancy Trust"). The Conservancy Trust will be governed by
five trustees appointed as follows:
1.One trustee will be appointed by the City.
2.One trustee will be appointed by CCLC.
3. One trustee will be appointed by the Hill Country
Conservancy, a Texas not for profit corporation.
4. One trustee will be appointed by the Barton
Springs Edwards Aquifer Conservation District.
5.One trustee will be appointed by the Wildflower
Center.
All areas of the Land that are developed for Office Use
Category will be subject to a mandatory assessment (the "HCCT
Assessment") administered by a commercial owners association (the
"Commercial Owners Association") created pursuant to that certain
Circle C Commercial Master Declaration of Covenants, Conditions,
Restrictions and Easements recorded in Document No. 2002151143 of
the Real Property Records of Travis County, Texas, (the
"Commercial Properties Declaration"). No Parcel may be developed
or used for Office use unless the City has been provided evidence
reasonably satisfactory to the City that (i) such Parcel has been
made irrevocably and perpetually subject to the Commercial
Properties Declaration through the filing of a Notice of
Applicability (as defined in the Commercial Properties
Declaration), (ii) such Parcel is included within a "Development
Area" and within an "Assessment Unit" (as such terms are defined
in the Commercial Properties Declaration), and (iii) the
Commercial Owners Association is in existence.
The portions of the Land that are allocated Office Use
Category Development Allocation from time to time will be subject
to the HCCT Assessment pursuant to the terms of the Commercial
Properties Declaration. The Commercial Properties Declaration
includes the following terms with respect to the HCCT
Assessments:
i. The annual HCCT Assessment for all the Land will be (i)
25 cents per year per $100.00 of building value used for
Office, minus (ii) the Commercial Owners Association's
costs for the relevant year incurred under the cost
sharing agreement dated August 15, 2002 between the
Commercial Owners Association and the Circle C.
Homeowners Association for street landscape
maintenance, with the deduction for such costs not to
exceed $70,000.00 per year (with the $70,000.00 maximum
deduction being escalated by 3% per year).
ii. The HCCT Assessment for a particular Parcel will be
levied no earlier than six months after an Office use
occupant has commenced occupation of the building on
that Parcel.
iii. There will be prorations for (i) buildings with mixed
use (i.e., Office and Retail) based on the Development
Allocations for the Parcel upon which such building is
located, and (ii) assessments for partial years.
iv. There is a lien to secure the payment of the HCCT
Assessment obligation.
v. The HCCT Assessments designated for funding the
Conservancy Trust will be paid by the Commercial Owners
Association to the Conservancy Trust within 10 days of
collection.
vi. The City and the Conservancy Trust will have the right
to inspect and audit the Commercial Owners
Association's books and records with respect to the
HCCT Assessments.
vii. The provisions of the Commercial Properties Declaration
affecting the HCCT Assessments cannot be amended
without the prior written consent of the City and the
Conservancy Trust.
Any Landowner providing an Apportionment of Development
Allocation or an Assignment of Development Allocation to the City
under the terms of this Agreement in connection with the
allocation or assignment of Office Use Category must at the same
time provide a copy of that apportionment or assignment to the
Commercial Owners Association and the Conservancy Trust. It will
be the responsibility of that Landowner to determine the then
current address of the Commercial Owners Association and the
Conservancy Trust when providing that copy. The Conservancy
Trust will file its current address for notices in the Real
Property Records of Travis County, Texas.
The document creating the Conservancy Trust will provide
that in all literature, brochures and other advertising, the
Conservancy Trust will credit Commercial Owners Association with
funding the acquisition and preservation of property for open
space preservation and the funding of education programs.
7.1S Pipelines
a. Special Provisions Regarding Parcels Adjacent to the
Longhorn Pipeline. Initial Parcels 102, 103 and 106 are
encumbered by that certain pipeline currently located in
easements granted to Humble Pipeline Co. and Exxon Pipeline Co.
as described in instruments recorded in Volume 993, Page 355,
Volume 994, Page 397, Volume 9263, Page 995, and Volume 9684,
Page 844 of the Real Property Records of Travis County, Texas and
commonly referred to as the "Longhorn Pipeline." It is
anticipated that the Longhorn Pipeline will soon be transporting
refined gasoline. Accordingly, in addition to all the other
requirements in this Agreement for the construction of any
structure on Parcels 102, 103, and 106, CCLC will file,
concurrently with the submission of a site plan relating to such
structure, a technical opinion from a qualified engineer (the
"Report") that verifies that the proposed structure is designed
to: (1) have at least a one hour fire rating for exposure from
the Longhorn Pipeline and (2) allow persons one hour to evacuate
the structure at its maximum occupancy loading. The Report will
be submitted directly to the City of Austin Fire Department Chief
(the "Chief"). The Chief may require the Report to be sealed by
a professional engineer. The Report must take into consideration
the structure's proximity to the Longhorn Pipeline in determining
whether the proposed structure meets the one-hour fire rating and
one-hour evacuation criteria set forth above. The Chief may in
his discretion require, to the extent such setbacks are not
already reflected on the site plan the structure, the following
building setbacks for the structure:
(i) a set back of up to 200 feet from the center
of the Longhorn Pipeline on Parcel 103,
(ii) a setback of up to 150 feet from the center
of the Longhorn Pipeline on Parcel 106, and
(iii) up to 50 feet on either side of the center
of the Longhorn Pipeline on Parcel 102.
These setbacks that may be required by the Chief are building
setbacks only and, for example, do not apply to parking lots,
drives, sidewalks, landscaping improvements, entrance
improvements, fencing or lighting facilities. If the Chief
requires a setback of 175 feet or more on Parcel 103, CCLC shall
be allowed to develop three story structures beginning at the
setback line.
b. Other Pipelines on the Land. In connection with the
submission of a site plan for any structure proposed to be
constructed within 400 feet of any other pipeline located on the
Land, the applicable Landowner must deliver to the Chief a Report
that verifies the structure's ability to meet the one hour fire
rating with respect to exposure from the pipeline and the one
hour evacuation criteria set forth above, both taking into
account the presence of the existing pipeline as then currently
used on the date of the submission.
c. Impact of Future Pipeline Ordinance. If within 30 years
from and after the Effective Date the City passes an ordinance
regulating development near pipelines, then the Land will be
treated as if it was already in a developed condition as of the
effective date of any such ordinance (a "Pipeline Ordinance").
Any Pipeline Ordinance passed by the City must apply uniformly
throughout the planning jurisdiction of the City. If a Pipeline
Ordinance is passed and (i) a court of competent jurisdiction
renders a Judgment to the effect that treating the Land as if it
were already developed is invalid, or (ii) if the City takes the
position in writing that treating a Parcel as if it were already
developed is invalid or otherwise denies a permit application on
that basis, or (iii) the Pipeline Ordinance, by its terms,
adversely impacts property covered by the ordinance that is
already in a developed condition, then an affected Landowner may
request a variance for a Parcel from the Pipeline Ordinance from
the Chief. For these purposes, the Chief is authorized to grant
variances and waivers from any Pipeline Ordinance covering the
Land as the Chief may elect to grant without review by any City
board, commission, or council. In determining whether to grant
waivers or variances from any Pipeline Ordinance, the Chief will
base his decision only on whether the proposed structure for the
affected Parcel is designed to: (1) have at least a one hour
fire rating for exposure from any existing pipeline affecting the
Parcel as such pipeline is then currently being used, and (2)
allow persons one hour to evacuate the structure at its maximum
occupancy loading taking into account the existing pipeline
affecting the Parcel as such pipeline is then currently being
used.
d. Dispute Resolution Regarding Decisions of the Chief. If
the Chief (i) refuses to accept a Report or (ii) the affected
Landowner believes that the proposed construction design,
materials, or requirements being imposed to gain the Chief's
acceptance of a Report are disproportionately and unreasonably
burdensome given the benefits received from the proposed
construction, or (iii) the Chief denies a requested waiver or
variance pursuant to Section 7.1S(c) above, then the affected
Landowner may by written notice to the City Manager, appeal the
decision or position of the Chief to the City Manager (the
"Appeal"). In the event of an Appeal, the City Manager will
facilitate a conference between the Chief and affected Landowner
in an attempt to resolve the dispute.
7.2 MISCELLANEOUS DEVELOPMENT APPROVALS, STANDARDS AND
AGREEMENTS.
For the purposes of the development of the Land, the
following standards and agreements are approved as part of this
Agreement:
7.2A. City Fees. The fees charged by the City for
development applications, reviews and approvals required from
time to time in connection with the development of any portion of
the Land in compliance with applicable law and this Agreement,
the Constituent Documents or the Austin City Code shall not
exceed the fees then set forth on the City's standard fee
schedules applicable to other persons who are not parties to this
Agreement and, except as expressly set forth herein, no special
fees will be imposed by the City for administering the terms of
this Agreement or the Constituent Documents.
7.2B. Certain Director Approved Variances and Waivers.
The Director ("Director") of the Watershed Protection and
Development Review Department, or its successor department, is
authorized to grant variances or waivers as the Director may
elect to grant, without review by any City board, commission or
council, from any Austin City Code requirements otherwise
regulating or affecting the following:
(i) cut and fill for screening berms six feet (6') or less
in height on Parcel 110; provided there is no
classified waterway (as defined in Section 25-8-91 of
the Austin City Code) within one hundred feet (100') of
the boundaries of the area for which the variance is
sought; and
(ii) construction of driveways, buildings and residences on
slopes of up to twenty-five percent (25%) on Parcels
101, 102 and 115; provided structural stabilizations
acceptable to the Director are contained within the lot
on which such improvements are constructed.
Any facility for which a variance or waiver is granted hereunder
must otherwise be constructed in accordance with the Modified
Current Requirements.
7.2C. Water Quality Control Ponds.
Water quality control ponds to be constructed on the Land
are hereby granted a variance from Sections 25-8-341 and 25-8-342
of the Austin City Code and any other applicable section of the
Austin City Code to permit cut and fill that does not exceed
eight feet (8'); provided there is no classified waterway (as
defined in Section 25-8-91 of the Austin City Code) within one
hundred feet (100') of the boundaries of the area for which the
variance is sought. Any such water quality pond must otherwise
be constructed in accordance with the Modified Current
Requirements. Any requested cut and fill variance for a water
quality pond in excess of eight feet (8') will only be granted in
compliance with the applicable variance procedures of the Austin
City Code.
7.2D. Roads Across Critical Water Quality Zones.
A variance from the Austin City Code is hereby granted for:
(i) a single crossing by a roadway or driveway on Parcel 110 over
the tributary extending eastward from Parcel 109 classified as a
Critical Water Quality Zone under Section 25-8-92 of the Austin
City Code, and (ii) a single crossing by a roadway or driveway on
Parcel 115 over any portion of Parcel 115 classified as a
Critical Water Quality Zone. The requirements of Section 7.1I do
not apply to the crossings permitted by this Section 7.2D. Any
such roadway or driveway subject to the variance must otherwise
be constructed in accordance with the Modified Current
Requirements.
7.2E. Roads.
The following will apply with regard to roadways platted
and/or constructed by any of the Landowners on the Land:
a. Upon approval from the provider of fire protection and
emergency medical services stating no objection to the
contrary for proposed roadway facilities, the Watershed
Protection and Development Review Department of the
City, or its successor department, will grant
administrative waivers without review by any City
board, commission or council to the Austin City Code
that otherwise prohibit block lengths exceeding the
limitations in Sections 25-4-152 and 25-4-153 of the
Austin City Code with respect to Parcels 101, 102, 103,
108, 110 and 115 only;
b. Any private street developed on the Land will be
treated as a "roadway" for purposes of Sections 25-8-
341 and 25-8-342 of the Austin City Code and any lot
fronting a private street will be deemed to be in
compliance with Section 25-4-171(A) of the Austin City
Code so long as the private street upon which the lot
fronts complies with all Modified Current Requirements
which would apply to such street had it been a public
road; and
c. Alternate urban street standards under Section 25-6-171
of the Austin City Code (as such standards may have
been modified by the terms of this Agreement) will be
permitted on the Land; and
d. With regard to Parcel 103, CCLC will request, and the
City will consider, allowing that portion of Escarpment
Boulevard that bisects Parcel 103 to be constructed as
a four lane roadway with an asymmetric median and
bicycle lane(s).
e. The restriction in the definition of "Site" in Section
25-1-21(98) of the Austin City Code prohibiting a Site
from crossing a public street or right-of-way does not
apply to Parcels 101, 103, and 110 for all purposes
under the Austin City Code.
7.2F. Park Land Dedication.
Should any subdivider of all or any portion of the Land be
obligated to dedicate park land pursuant to Section 25-4-211 of
the Austin City Code in connection with such subdivision, such
subdivider will have the option of either dedicating such park
land in accordance with Section 25-4-211 of the Austin City Code
or paying the park land dedication fee in lieu of making such
dedication in an amount as provided in Section 25-4-211 of the
Austin City Code. If such subdivider elects to pay such fee
rather than dedicate such park land, Development Credit Bank
funds may be used to pay such fees.
7.2G. Platting Waived With Respect to Certain Transfers
to the City, Circle C HOA, and the Wildflower Center.
The City hereby waives, and grants to CCLC an exemption
from, platting requirements with regard to the initial conveyance
of Parcels 104 and 105, the Parcel 102 Dedication Tract and the
right-of-way described in the South Bay Extension Dedication Deed
to the City, the initial conveyance of Parcel 109 to Circle C
Homeowners Association, and the initial conveyance of Parcels
111, 112 and 113 to the Wildflower Center.
7.2H. Traffic Improvements.
CCLC agrees to construct the traffic improvements reflected
on Exhibit "N" in accordance with the time schedule set forth on
Exhibit "N" and agrees to post and maintain fiscal deposits in
the amount of the Estimated Costs for each traffic improvement in
accordance with the schedule set forth on Exhibit "N". Fiscal
deposits for traffic improvements may be posted from the
Development Credit Bank in accordance with Section 12.4 of this
Agreement. A fiscal deposit posted with the City for a traffic
improvement will be released by the City when the traffic
improvement has been completed by CCLC and accepted by the City.
If a traffic improvement has not been completed in accordance
with the time schedule set forth on Exhibit "N", the City will
give CCLC a written notice specifying the failure and giving CCLC
a 30 day opportunity to cure such failure. If such failure
cannot reasonably be cured within 30 days, such 30 day period
will be extended so long as CCLC commences to cure the failure
within the initial 30 day period and thereafter diligently
pursues such cure to completion. If CCLC fails to cure a failure
to construct a traffic improvement after the notice and
opportunity to cure in this paragraph, then the City may cure
such failure and draw the fiscal deposit posted by CCLC for such
traffic improvements to reimburse the City its actual costs for
curing the failure. Any remaining amount in such fiscal deposit
after the completion of a traffic improvement by the City will be
released.
Accordingly, no traffic impact analysis will be required to
be performed and no further off-site traffic improvements or
facilities will be required by the City to be constructed in
connection with the development of the Land in accordance with
this Agreement and the Conservation Easement; provided, however
that the waivers of traffic impact analysis requirements and any
further requirements to construct off-site traffic improvements
or facilities will not apply during the continuance of any
default by CCLC of its obligations to construct such traffic
improvements, and/or post and maintain the requisite fiscal
deposits, in accordance with the time schedule set forth on
Exhibit "N". Any such default with respect to a particular
traffic improvement will be treated as having been cured when
such traffic improvement is completed by CCLC. CCLC's obligation
to construct the traffic improvements as described on Exhibit "N"
is a personal obligation of CCLC and will not run with the Land.
Exhibit "N" includes cost estimates for the warrant study,
if applicable, and the design and construction of the various
traffic improvements set forth thereon (each referred to as the
"Estimated Costs"). If the actual costs of such items at the
time of design and construction thereof exceed the Estimated
Costs, CCLC will pay all associated cost increases it incurs in
the design and construction of such improvements at the time of
construction.
At any time on or after January 1, 2010 and before all of
the traffic signals identified as items 1, 2 and 3 on Exhibit "N"
are warranted, the City may notify CCLC by one or more written
notices that the City has determined that a traffic signal is
warranted, and has decided to design and construct a traffic
signal (an "Alternate Traffic Signal"), at one or more of the
following alternative locations:
* Escarpment Boulevard and Davis;
* Escarpment Boulevard and South Bay Road;
* Dahlgren and LaCrosse;
* Norman/Bremner and Slaughter Lane; and/or
* Sendera Mesa and Slaughter Lane.
After the City gives CCLC such a written notice, the City
may design and construct an Alternate Traffic Signal at the
location named in the notice. In such event, CCLC will make
available the remaining Estimated Costs for one of the traffic
signals identified as items 1, 2 or 3 on Exhibit "N" which is not
then warranted, as selected by CCLC, to reimburse the City for
its design and construction costs for the Alternative Traffic
Signal identified in such written notice from the City to CCLC.
The Estimated Costs available for reimbursement to the City from
the relevant item (i.e., item 1, 2 or 3 on Exhibit "N" as
selected by CCLC as provided above) will be reduced by any
amounts expended specifically for that item by CCLC for a warrant
study and the design of the relevant traffic improvements. CCLC
will reimburse the City for each Alternative Traffic Signal
within 30 days after the date the City notifies CCLC in writing
that such facilities have been completed, provided that such
reimbursement will be limited to the amount of the available
Estimated Costs as provided above. The associated fiscal deposit
for such traffic improvement will be released by the City
contemporaneously with such payment. The City will pay for any
additional costs related to the applicable Alternative Traffic
Signal.
A traffic signal will be considered to be "warranted" if a
warrant study conducted in accordance with the warranty study
guidelines of the applicable governmental authority with
jurisdiction has been provided to the City, and such study
indicates that such traffic signal is warranted.
7.2I. Dedicated Review Team.
The City will establish and maintain throughout the term of
this Agreement a dedicated permit review team in the Watershed
Protection and Development Review Department, or its successor
department, who will be responsible for the review, processing
and approval of all subdivision plats, site development permits,
and all other permits for development within the Land which are
normally processed by the Watershed Protection and Development
Review Department (or its successor department(s)) (the
"Dedicated Review Team"). The foregoing notwithstanding, the
Dedicated Review Team will not be responsible for the review,
processing and approval of single family residential building
permits.
The Dedicated Review Team will be familiar with the terms
and provisions of this Agreement and the Conservation Easement
and other issues particular to CCLC and, accordingly, will be in
a position to more efficiently process and expedite applications
for permits, subdivision plat approvals and site development
permit approvals for projects within the Land. The initial
Dedicated Review Team will be designated to CCLC by the City
Manager in writing within 30 days after the date of this
Agreement. The City will notify CCLC in writing of any changes
in the Dedicated Review Team as changes occur from time to time.
7.2J. Stormwater Detention.
Upon completion of the Circle C South Detention Structure
constructed under Site Development Permit No. SP-92-0179D and
acceptance of those facilities by the City ("South Pond"), no
additional on-site storm water detention or payment of regional
detention fees will be required for development on those portions
of the Land located within the drainage basins served by South
Pond. The City acknowledges that South Pond is properly sized to
provide adequate storm water detention for the development of
those portions of the Land within the drainage basins served by
South Pond in accordance with this Agreement and the Conservation
Easement.
The City acknowledges that the Circle C Phase B Section 1
North Dam Rough Cut and Circle C Ranch Phb (Phase One) North Dam
constructed under permit numbers 86-11-4875 and 86-08-4826
("North Pond") are complete and have been accepted by the City.
Accordingly, no additional on-site storm water detention or
payment of regional detention fees will be required for
development on those portions of the Land located within the
drainage basins served by North Pond. The City acknowledges that
North Pond is properly sized to provide adequate storm water
development for the development of those portions of the Land
within the drainage basins served by North Pond in accordance
with this Agreement and the Conservation Easement.
7.3 AUSTIN CITY CODE AMENDMENT.
This Agreement is approved by ordinance of the Austin City
Council and the ordinance adopting this Agreement is an amendment
to the Austin City Code to the extent necessary to give effect to
this Agreement. It is specifically acknowledged that all
processes required for the enactment of such ordinances have been
duly observed. To the extent any of the Land is made subject to
the requirements and limitations contained in the SOS Ordinance
by this Development Agreement and/or the Conservation Easement,
it is acknowledged and agreed that CCLC has agreed to subject
such portion of the Land to such requirements and limitations
contained in the SOS Ordinance as a settlement of the
Controversy.
VIII.
WILDFLOWER CENTER AND GREEN BUILDING AGREEMENT
8.1 DEDICATIONS.
Contemporaneously with the approval by the City Council of
the City and the full execution of this Agreement, CCLC is
dedicating Parcels 111, 112, and 113 to the Lady Bird Johnson
Wildflower Center ("Wildflower Center") in accordance with that
certain Dedication Deed from CCLC to the Wildflower Center
("Wildflower Dedication Deed"). All allowable Impervious Cover
derived from Parcels 111, 112 and 113 is retained by CCLC and is
allocable for development permitted by this Agreement and the
Conservation Easement (i.e., such dedication does not include any
allocation of Allowable Impervious Cover). Such dedication will
be specifically subject to easements for hike and bike trails and
water quality controls and related facilities for the benefit of
the City. Such dedication will be free and clear of liens other
than liens for ad valorem taxes not yet due and payable and the
land conveyed must not have been made subject to the Commercial
Properties Declaration. Any Option Tracts which are made part of
Parcel 113 pursuant to Section 2.3C of this Agreement will be
conveyed to the Wildflower Center at the time they are included
in the Land by a deed in the same form as the Wildflower
Dedication Deed and subject to such easements.
8.2 GREEN BUILDING AGREEMENT.
Contemporaneously with the full execution of this Agreement,
CCLC, at the request of the Wildflower Center, is subjecting the
Land to certain building standards agreed upon between CCLC and
the Wildflower Center ("Green Building Agreement"). The Green
Building Agreement provides that a structure constructed on any
portion of the Land must meet certain green building standards.
Accordingly, the City will not issue a building permit until it
receives a certification as, and to the extent, required by the
Green Building Agreement. If there is any conflict, as
determined by the City, between the Austin City Code and the
green building standards set forth in the Green Building
Agreement, then standards and terms of the Austin City Code will
govern and supercede the conflicting provisions of the green
building standards.
IX.
CONVEYANCES TO THE CITY AND THE CIRCLE C HOA
9.1 CONVEYANCES OF PARCELS 104, 105 AND 109.
Contemporaneously with the approval by the City Council of
the City and the full execution of this Agreement, CCLC is
conveying Parcels 104 and 105 to the City and Parcel 109 to the
Circle C HOA, in accordance with those certain deeds of even date
herewith ("City Deeds") for use as open space. Such conveyances
will be free and clear of liens other than liens for ad valorem
taxes not yet due and payable, and the land conveyed must not
have been made subject to the Commercial Properties Declaration.
In connection with such conveyances and the conveyance
contemplated in Section 9.2 below, a utility easement adjoining
and parallel to Slaughter Lane, and a hike and bike trail
easement over Parcels 104 and 105 is being conveyed to the City,
a hike and bike trail and vehicular ingress and egress easement
is being conveyed over the Parcel 102 Dedication Tract, and a
water quality controls and related facilities easement over
Parcel 109 is being conveyed to the City ("City Easements"). All
allowable Impervious Cover derived from Parcels 104, 105 and 109
is retained by CCLC and is allocable for development permitted by
this Agreement and the Conservation Easement (i.e., such
conveyances do not include any allocation of Allowable Impervious
Cover).
9.2 PARCEL 102.
Contemporaneously with the approval by the City Council of
the City and the full execution of this Agreement, CCLC is
conveying that portion of Parcel 102 described on Exhibit "X"
attached hereto ("Parcel 102 Dedication Tract") to the City free
and clear of liens other than liens for ad valorem taxes not yet
due and payable, and the land conveyed must not have been made
subject to the Commercial Properties Declaration. Allowable
Impervious Cover derived from the Parcel 102 Dedication Tract is
retained by CCLC and is allocable for development permitted by
this Agreement and the Conservation Easement (i.e., such
conveyance does not include any allocation of Allowable
Impervious Cover).
X.
CIRCLE C HOMEOWNERS ASSOCIATION AGREEMENT
CCLC and the Circle C Homeowners Association, Inc. ("Circle
C HOA") are entering into certain agreements (the "Circle C HOA
Agreements") which address certain deed restrictions, owners
associations and related matters affecting the development of the
Land, and which include, among other restrictions, landscaping
restrictions, including a list of permissible and impermissible
vegetation for landscaping on the Land.
XI.
AISD SCHOOL SITES
CCLC and the Austin Independent School District ("AISD") are
contemplating entering into that certain Sale and Dedication
Agreement ("AISD Agreement") pursuant to which CCLC agrees to (i)
donate a site for the construction of a planned elementary school
within Parcel 115, and (ii) grant AISD an option to purchase a
site within Parcel 101 at its fair market value for the
construction of a secondary school.
XII.
CONSIDERATION FOR DENSITY REDUCTION AND
CERTAIN LAND PURCHASES BY CITY
12.1 CREDIT BANKS.
In consideration of the execution of this Agreement and the
Conservation Easement and CCLC's agreements set forth herein and
therein, the City hereby grants to CCLC two accounts of credits
(collectively, "Credit Banks") from the City for certain uses as
set forth herein in the total amount of Fifteen Million and
00/100 Dollars ($15,000,000.00). Any interest accrual on the
Credit Banks will accrue to the benefit of the City. In
addition, any remaining balance in the Credit Banks on the date
which is 30 years after the Effective Date will be released to
the City and will not be available hereunder. The City will
maintain records reflecting the availability of, and balance, of
the Credit Banks.
12.2 USES OF THE CREDIT BANKS.
12.2A. W/WW Utility Credit Bank. The City hereby grants to
CCLC an account of credits ("W/WW Utility Credit Bank") in the
amount of Eight Million One Hundred Thousand and 00/100 Dollars
($8,100,000.00). Subject to certain limitations on the use of
the Credit Banks set forth below, CCLC or any Permitted
Transferee may, by written notice to the City in the form
attached hereto as Exhibit "O" ("City Fees Notice") use the W/WW
Utility Credit Bank to pay the City (including the City of Austin
Water and Wastewater Utility Department) for any of the following
(collectively, "W/WW Utility Fees"):
1. Capital Recovery Fees for Water and Wastewater
Service.
2. Tap Fees for Water and Wastewater Service.
3. Cost Reimbursement for the Water Service
Extensions described in Article XIII of this
Agreement in an amount not to exceed
$3,600,000.00.
4. Any other City of Austin Water and Wastewater
Utility Department, or its successor department's,
fees or charges related to water and/or wastewater
service within the corporate or extraterritorial
limits of the City.
The W/WW Utility Fees and other permitted uses for the W/WW
Utility Credit Bank referenced in Sections 12.2A, 12.3 and 12.4
and Article XIII below are sometimes collectively referred to
herein as the "W/WW Utility Credit Bank Uses".
12.2B. Development Credit Bank. The City hereby grants to
CCLC an account of credits ("Development Credit Bank") in the
amount of Six Million Nine Hundred Thousand and 00/100 Dollars
($6,900,000.00). Subject to certain limitations on the use of
the Credit Banks as set forth below, CCLC or any Permitted
Transferee may, by a City Fees Notice, use the Development
Credit Bank to pay the City (including Austin Energy) for any of
the following (collectively, "Development Fees"):
1. Stormwater Detention Fees.
2. Parkland Dedication Fees (except as limited in
Section 12.3).
3. Subdivision Application Fees.
4. Re-Zoning Application Fees (except for the Circle
C Zoning referenced in Section 4.1 above).
5. Site Plan Fees.
6. Electric Meter and Other Electric Fees including
Capital Recovery Fees.
7. Development Inspection Fees.
8. Any other City fees or charges (other than fees or
charges of the City of Austin Water and Wastewater
Utility Department, or its successor department)
related to the development activities within the
corporate or extraterritorial limits of the City.
The Development Fees and other permitted uses for the
Development Credit Bank referenced in Sections 12.2B, 12.3,
12.4, and 12.5 below are sometimes collectively referred to
herein as the "Development Credit Bank Uses".
12.2C. Permitted Credit Bank Users. The Credit Banks may
only be used for W/WW Utility Credit Bank Uses and Development
Credit Bank Uses by (i) CCLC or any Permitted Transferee in
connection with developing any portion of the Land, (ii) CCLC or
any Permitted Transferee in connection with developing any land
in the Desired Development Zone as defined in the Austin City
Code (the "DDZ"), and/or (iii) CCLC or any CCLC Affiliate in
connection with developing any portion of the property described
in the following instruments:
(a) that certain Deed of Trust (Lantana) recorded
under Document No. 1999158707 of the Real Property
Records of Travis County, Texas,
(b) that certain Deed of Trust (Barton Creek) recorded
under Document No. 199915870 of the Real Property
Records of Travis County, Texas,
(c) that certain Deed of Trust (Austin 290) recorded
under Document No. 1999158711 of the Real Property
Records of Travis County, Texas, and
(d) that certain Deed of Trust (Escala) recorded under
Document No.2002038536 of the Real Property Records of
Travis County, Texas.
12.3 CREDIT BANK TRANSFERS.
It is understood and agreed that the Credit Banks are
personal to CCLC and do not run with the Land absent a specific
written transfer of all or part of the W/WW Utility Credit Bank
or Development Credit Bank executed and delivered in accordance
with this paragraph. By written notice from CCLC to the City in
the form attached hereto as Exhibit "P" ("Transfer Notice"), CCLC
may, from time to time, transfer all or part of the Credit Banks
to any of the following transferees ("Permitted Transferee"):
(i) any successor Landowner of all or part of the Land, (ii) any
person who controls, is controlled by or is under common control
with CCLC ("CCLC Affiliate"), and/or (iii) any land developer or
user with a proposed development located in the DDZ ("DDZ
Transferee"). The City agrees to honor a Transfer Notice
complying with the forgoing upon receipt of same.
No more than $1,500,000.00 in the aggregate per Year from
the Credit Banks may be used for development in the DDZ and no
amounts from the Credit Banks may be used to pay park land
dedication fees incurred in connection with development of any
land in the DDZ. "Year" means the City's fiscal year of October
1 to September 30 annually for purposes of this Article XII. The
first partial Year will be pro-rated from the Effective Date of
this Agreement through September 30, 2002. There is no annual
limit to the amount that CCLC, its Permitted Transferees, or CCLC
Affiliates may use from the Credit Banks on the Land. There is
no annual limit to the amount that CCLC or CCLC Affiliates may
spend on the properties referenced in Section 12.2C(iii)(a), (b),
(c), and (d) above.
12.4 FISCAL DEPOSITS.
CCLC may, from time to time, upon specific written notice to
the City in the form attached hereto as Exhibit "Q" ("Fiscal
Notice"), designate a portion of the then remaining Credit Banks
as a fiscal deposit required by the Modified Current Requirements
related to the development of any portion of the Land ("Credit
Bank Fiscal Deposit"). Such Credit Bank Fiscal Deposit will
serve as the fiscal deposit which would otherwise be required by
the Modified Current Requirements.
Fiscal deposits required by the City of Austin Water and
Wastewater Utility Department must be allocated from the
available balance of the W/WW Utility Credit Bank and all other
fiscal deposit requirements of the City (including those of
Austin Energy, if any) must be allocated from the available
balance of the Development Credit Bank. A Credit Bank Fiscal
Deposit is limited to the amount then remaining in either the
W/WW Utility Credit Bank or Development Credit Bank, as
applicable, for use by CCLC.
During the time a Credit Bank Fiscal Deposit is designated
by a Fiscal Notice to satisfy a fiscal posting requirement under
the Modified Current Requirements, the amount of such Credit Bank
Fiscal Deposit will be unavailable under the W/WW Utility Credit
Bank or Development Credit Bank, as applicable, for other W/WW
Utility Credit Bank Uses or Development Credit Bank Uses, as
applicable, until such time as the City releases the Credit Bank
Fiscal Deposit in accordance with the Modified Current
Requirements that would otherwise be applicable to a posting of
fiscal security. When a Credit Bank Fiscal Deposit, or portion
thereof, is so released by the City, the associated portion of
the W/WW Utility Credit Bank or Development Credit Bank, as
applicable, will again be available for all W/WW Utility Credit
Bank Uses or Development Credit Bank Uses, as applicable,
including a subsequent Credit Bank Fiscal Deposit.
12.5 CHILLER FACILITY
The City and CCLC or any CCLC Affiliate may, at their
discretion, enter into an agreement to design and construct a
"chiller" facility to serve office development on the Land. In
the event such an agreement is reached for the City to design
and/or construct such a chiller facility, CCLC may draw upon the
Development Credit Bank in an amount not to exceed $1,500,000.00
to reimburse the City for the City's costs for such design and/or
construction in accordance with the terms of such agreement.
12.6 CONSTRUCTION OF EXTENSION OF SOUTH BAY ROAD.
On or before 120 days after the Effective Date, the City
agrees to purchase from CCLC for the purchase price of
$371,000.00 right-of-way, in fee simple, an easement for drainage
and water quality controls and related facilities and Allowable
Impervious Cover for an extension of South Bay Road ("South Bay
Extension"). Such right-of-way, easement and Allowable
Impervious Cover are described in the form of deed therefor
attached as Exhibit "R" ("South Bay Extension Dedication Deed").
Title to be conveyed to the City must be free and clear of liens,
and free and clear of any easements, restrictions or other
encumbrances that would unreasonably limit the construction of
the South Bay Extension, and the land conveyed must not have been
made subject to the Commercial Properties Declaration.
Accordingly, the status of title must be confirmed prior to
closing by a title commitment or title report from a title
company reasonably acceptable to the City.
CCLC, conditioned on such purchase and sale occurring,
agrees to design and construct the portion of the South Bay
Extension described on Exhibit "S" attached hereto in accordance
with the specifications described on Exhibit "S". Upon the
completion by CCLC and approval by the City of such portion of
the South Bay Extension, which approval is not to be unreasonably
withheld or delayed by the City, such portion of the South Bay
Extension will be considered sufficient to fulfill public road
access requirements for the full development of Parcel 110 in
accordance with this Agreement and the Conservation Easement
without the requirement of any additional traffic improvements or
facilities to be constructed by CCLC other than internal roadway
improvements on Parcel 110.
If the final plans and specifications for such portion of
the South Bay Extension, as approved by the City, do not require
all of the area covered by the easement for drainage and water
quality controls and related facilities, any excess easement area
not required for those facilities will be promptly released by
the City upon the written request of CCLC.
12.7 FIRE STATION SITE.
Within 15 days of the date of this Agreement, the City will
purchase that certain fire station site ("Fire Station Site"),
described in the Fire Station Deed attached hereto as Exhibit
"T", together with any utility and/or drainage and water quality
controls and related facilities easements described in Exhibit
"T" necessary to develop the Fire Station Site as a fire station,
from CCLC for, and in consideration of, the payment by the City
to CCLC the lump sum of $679,000.00 payable in cash or other
immediately available funds contemporaneously with the delivery
of the Fire Station Deed. Title to the Fire Station Site to be
conveyed to the City must be free and clear of liens, and free
and clear of any easements, restrictions or other encumbrances
that would unreasonably limit the City's ability to construct a
fire station on the Fire Station Site as confirmed prior to
closing by a title commitment or title report from a title
company reasonably acceptable to the City, and the land conveyed
must not have been made subject to the Commercial Properties
Declaration. In addition, the City may designate reasonably
necessary lateral support easements for a sidewalk along
Escarpment Boulevard from the Fire Station Site to State Highway
45 within one (1) year after the Effective Date and CCLC will
grant such lateral support easements by separate instrument in
form reasonably satisfactory to the Parties. Any owner's policy
of title insurance to insure title to the Fire Station Site will
be at the City's sole cost and expense. In addition, the City
will pay the recording fee for the Fire Station Deed and all
other customary closing costs.
The Parties agree that contemporaneously with the execution
and delivery of the Fire Station Deed, CCLC will allocate to the
Fire Station Site Allowable Impervious Cover (as defined in, and
pursuant to the procedure set forth in, the Conservation
Easement) equal to 15% of the Net Site Area of the Fire Station
Site. Any excess in such Allowable Impervious Cover over the
Allowable Impervious Cover shown on the approved Site Development
Permit for the Fire Station Site will be assigned by the City to
a Parcel designated by CCLC provided that such assignment is
otherwise in compliance with the terms of the Conservation
Easement. It is agreed that the Fire Station Site does not
require any Development Allocation in order to develop and
construct a fire station thereon.
In the event CCLC causes Parcel 110 to participate in the
Balcones Canyonland Plan established pursuant to the regional
habitat conservation plan known as the Balcones Canyonland
Conservation Plan - Shared Vision, U.S. Fish & Wildlife Service
Permit No. PRT-788841, the Fire Station Site will be included
under the applicable participation certificate for Parcel 110 at
no cost to the City if the City joins in the related
participation agreement.
XIII.
INTERCONNECTION OF WATER AND WASTEWATER SERVICE
The Parties acknowledge that the Land is located wholly
within the Utility Service Area and Impact Fee Service Area of
the City's Water and Wastewater Utility. In order to obtain City
water and wastewater services for the Land, CCLC filed its
written application with the Director of the City's Water and
Wastewater Utility ("Water Director") for approval of those water
and wastewater utility service extensions necessary to connect
the Land to existing City water and wastewater facilities to
service development proposed to be constructed within the Land
under this Agreement.
13.1. Required Water Service Extensions. In order to
extend City water service to the Land, the Water Director
determined in Water Service Extension Request No. 2189 ("SER No.
2189") that the extension of City water service to the Land will
require the water improvements in the Southwest A and Southwest B
Pressure Zones described in SER No. 2189 (collectively,"Water
Service Extensions") and such water service is conditioned upon
such improvements being made. A true copy of SER No. 2189 is
attached hereto as Exhibit "U-1" and incorporated by reference
for all purposes. Contemporaneously with the execution of this
Agreement, CCLC and the City are entering into a cost
reimbursement agreement concerning the construction of the Water
Service Extensions by CCLC ("Cost Reimbursement Agreement").
13.1A. Improvements Required for Extension of Water
Service to Parcel 110 (West Portion Along State Highway 45): The
Water Service Extensions include the construction of
approximately 3,200 linear feet of 16-inch SWB water main from a
point of connection to the existing 16-inch SWB water main at the
southern end of Escarpment Boulevard south along the proposed
extension of Escarpment Boulevard to State Highway 45 (the
"Escarpment Segment"), then west along State Highway 45 to the
existing to the existing 16-inch SWB water main in Spruce Canyon
Drive and State Highway 45 (the "Spruce Canyon Segment").
However, the design and construction of the Spruce Canyon Segment
may be delayed by CCLC for a period of up to seven (7) years from
the date of completion and final acceptance of the Escarpment
Segment provided that CCLC agrees to unconditionally limit
development on that portion of Parcel 110 described on Exhibit
"U" attached hereto to 10 living unit equivalents of water
service, until such time as the Mid-Tex Service Extensions or the
Spruce Canyon Segment is completed and accepted by the City,
except that the fire station contemplated to be constructed by
the City on the Fire Station Site will not be included in the 10
living unit equivalents limitation.
As of the Effective Date, the amount of $350,000 out of the
Debited Amount set aside out of CCLC's available balance in the
W/WW Utility Credit Bank to offset the reimbursement of the cost
of the Water Service Extensions (which is the estimated cost of
the Spruce Canyon Segment) shall be deemed allocated and
encumbered for the Spruce Canyon Segment (the "Spruce Canyon
Segment Allocation") and may not be used by CCLC for any other
purpose or to offset any other expense unless and until released
by the City.
If CCLC so delays construction of the Spruce Canyon Segment
and if the water service extensions required to provide wholesale
water service to the Mid-Tex Utilities, Inc. service area, as
identified in the Wholesale Water Service Agreement entered into
between the City and Mid-Tex Utilities, Inc. ("Mid-Tex Service
Extensions") are constructed before the expiration of the seven
(7) year period described above, then CCLC shall not be required
to construct the Spruce Canyon Segment and the Spruce Canyon
Segment Allocation will be released by the City to the W/WW
Credit Bank. If CCLC delays construction of the Spruce Canyon
Segment and if the Mid-Tex Service Extensions are not constructed
on before the expiration of the seven (7) year period referenced
above and if the Spruce Canyon Segment is not otherwise
constructed in the seven (7) year period, then CCLC will commence
the design of the Spruce Canyon Segment within 120 days from the
expiration of the seven (7) year period described above and will
commence construction of the Spruce Canyon Segment within 90 days
from the date of City approval of the construction plans and the
issuance of any necessary City permits for the work and will
complete the same within one year thereafter.
In the event that CCLC is required to construct the Spruce
Canyon Segment, CCLC will receive cost reimbursement from the
City for the Spruce Canyon Segment in accordance with the Cost
Reimbursement Agreement.
13.2. Required Wastewater Service Extensions. In order
to extend City wastewater service to the Land, the Water Director
determined in Wastewater Service Extension Request No. 2190 ("SER
No. 2190") that the extension of City wastewater service to the
Land will require the following wastewater improvements in the
Slaughter Creek and Bear Creek drainage basins which shall be
designed and constructed by CCLC at its sole cost without
reimbursement from the City (collectively the "Wastewater Service
Extensions") and such wastewater service is conditioned on such
improvements being made:
13.2A. Improvements Required For Extension of Wastewater
Service to Parcel 103: Construction of approximately 650 linear
feet of 8-inch gravity wastewater line extending from the
existing 36-inch gravity wastewater line south of West Slaughter
Lane north to the subject Parcel;
13.2B. Improvements Required for Extension of Wastewater
Service to Parcel 106: Construction of approximately 1,200
linear feet of 8-inch gravity wastewater line extending from the
existing 36-inch gravity wastewater line south of West Slaughter
Lane north to the subject Parcel;
13.2C. Improvements Required for Extension of Wastewater
Service to Parcel 107: Construction of approximately 250 linear
feet of 8-inch gravity wastewater line from the existing 36-inch
gravity wastewater line south of West Slaughter Lane north to the
subject Parcel;
13.2D. Improvements Required for Extension of Wastewater
Service to Parcel 114: Construction of approximately 1,800
linear feet of appropriately sized gravity wastewater line
extending from the existing 10-inch gravity wastewater line east
of the subject Parcel at State Highway 45 west to the subject
Parcel.
A true copy of SER No. 2190 is attached hereto as Exhibit "U-2"
and is made a part of this Agreement for all purposes.
13.3. Cost Reimbursement for Service Extensions. CCLC
shall design and construct the Water Service Extensions and the
Wastewater Service Extensions, in accordance with the City's
design criteria and specifications, at its sole cost and expense
subject to reimbursement for the Water Service Extensions as set
forth in the Cost Reimbursement Agreement. The City Council has
adopted (i) a resolution authorizing negotiation and execution of
the Cost Reimbursement Agreement setting forth terms and
conditions for construction of the above-described Water Service
Extensions, and for the City's reimbursement to CCLC for the cost
of the Water Service Extensions in an amount not to exceed the
Debited Amount, and (ii) an ordinance waiving certain provisions
of Chapter 25-9 that are necessary to authorize cost
reimbursement for the Water Service Extensions.
The Cost Reimbursement Agreement provides that the City's
reimbursement obligation thereunder is limited to an amount
("Debited Amount") equal to $3,600,000.00. The W/WW Utility
Credit Bank is hereby reduced by the Debited Amount to offset the
City's reimbursement obligation under the Cost Reimbursement
Agreement and such amount will no longer be available for use or
transfer by CCLC. In the event that the facilities contemplated
by the Cost Reimbursement Agreement are completed in accordance
therewith and the amount reimbursed to CCLC under the Cost
Reimbursement Agreement is less than the Debited Amount, then the
difference between the amount reimbursed thereunder and the
Debited Amount will be released to the W/WW Utility Credit Bank
balance for use by CCLC in accordance with Article XII above.
13.3A. CCLC shall design and construct the Wastewater
Service Extensions described in Wastewater SER No. 2190.
13.3B. CCLC shall bear all costs associated with the
design and construction of the Wastewater Service Extensions
without reimbursement from the City.
13.3C. In accordance with Article XII, any City
construction inspection fees, plan review fees, rights of way
permits, and other City fees and charges associated with the
construction of the Water Service Extensions and the Wastewater
Service Extensions may be paid with credits from the W/WW Utility
Credit Bank, should CCLC so elect, subject to CCLC having a
sufficient balance available in the W/WW Utility Credit Bank at
the time the fees or charges in question are to be paid.
13.3D. The Debited Amount subtracted from CCLC's
available balance in the W/WW Utility Credit Bank will be applied
towards the fiscal surety required for the completion of the
Water Service Extensions notwithstanding its concurrent
application to offset reimbursement costs under the Cost
Reimbursement Agreement. In the event of default by CCLC in the
construction of any of the Water Service Extensions, and subject
to the further terms and conditions of the Cost Reimbursement
Agreement regarding default, the Parcel for which such Water
Service Extensions are required shall not receive City water or
wastewater service until the described Water Service Extension,
or the equivalent thereof as determined by the Water Director, is
completed and receives final acceptance from the City.
13.3E. CCLC shall be responsible for the design and
construction of all internal subdivision water distribution
facilities, internal subdivision wastewater collection and
transportation facilities, and all other water and wastewater
facilities required to serve the Land, without reimbursement from
the City.
13.3F. CCLC shall provide or acquire easements conforming
to City specifications for the Water Service Extensions and the
Wastewater Service Extensions. Those easements must be
reasonably acceptable in form and content to the Water Director
and the City Attorney. CCLC agrees to dedicate easements for
those portions of the Water Service Extensions and the Wastewater
Service Extensions traversing the Land. To the extent reasonable
and necessary, the City agrees to assist in obtaining easements
for the Water Service Extensions and Wastewater Service
Extensions that will traverse property owned by third persons not
affiliated with CCLC in the event that such easements cannot
reasonably be secured by CCLC for their fair market value by good
faith negotiations.
13.3G. Upon the completion of the Water Service
Extensions and the Wastewater Service Extensions by CCLC, the
City shall exercise reasonable efforts to ensure that sufficient
capacity exists in the service extensions to provide City water
and wastewater services to the portions of the Land they were
constructed to serve.
XIV.
REPRESENTATIONS AND WARRANTIES
14.1 REPRESENTATIONS AND WARRANTIES OF CCLC.
CCLC does hereby represent and warrant to City as follows:
14.1A. Organization and Good Standing.
CCLC is duly organized, validly existing, and in good
standing under the laws of its jurisdiction of its formation,
with full power and authority to conduct its business as it is
now being conducted, to own or use the properties and assets that
it purports to own or use, and to perform all its obligations
hereunder. CCLC has delivered to the City true and complete
copies of the portions of its respective organizational documents
as currently in effect which govern the authority of such party
to enter into this Agreement and the Constituent Documents and
the authority of the person or entity acting on behalf of CCLC to
do so.
14.1B. Authority, No Conflict.
i. This Agreement and each of the Constituent Documents
constitutes the legal, valid and binding obligations of
CCLC, enforceable against CCLC in accordance with their
terms. CCLC has the absolute and unrestricted right,
power, authority, and capacity to execute and deliver
this Agreement and the Constituent Documents, and to
perform its obligations under this Agreement and the
Constituent Documents.
ii. Neither the execution and delivery of this Agreement or
the Constituent Documents nor the consummation or
performance of any of the transactions contemplated
hereby will, directly or indirectly (with or without
notice or lapse of time):
(a) Contravene, conflict with, or result in a
violation of (a) any provision of any of the
organizational documents of CCLC as amended, or
(b) any resolution adopted by the board of
directors for CCLC;
(b) Contravene, conflict with, or result in a
violation of, or give any governmental body or
other person the right to challenge any of the
transactions contemplated hereby or to exercise
any remedy or obtain any relief under any legal
requirement or any order to which CCLC, or any of
the assets owned or used by CCLC may be subject;
(c) Contravene, conflict with, or result in a
violation or breach of any provision of, or give
any person the right to declare a default or
exercise any remedy under, or to accelerate the
maturity or performance of, any contract,
agreement, instrument or understanding by which
CCLC is bound; or
(d) Result in the imposition or creation of any lien,
security interest, or encumbrance upon or with
respect to any of the assets owned or used by CCLC
other than as provided in this Agreement and the
Constituent Documents.
iii. CCLC is not and will not be required to give any notice
to or obtain any consent from any person or entity in connection
with the execution and delivery of this Agreement or the
Constituent Documents or the consummation or performance of any
of the transactions contemplated hereby other than the lienholder
consents set forth below.
14.1C. Title to Properties, Encumbrances.
CCLC owns good and indefeasible fee simple title to all of
the Land subject only to the security interests, mortgages,
liens, leases and other encumbrances listed on Exhibit "V"
attached hereto. CCLC has not entered into any contract or other
agreement to convey or otherwise transfer all or any portion of
the Land, or any interest therein to any third party. CCLC does
not have knowledge of any pending or threatened litigation in any
way affecting, involving, or relating to the Land or any interest
therein other than the lawsuit currently pending under Cause No.
GN202018 in the 261st District Court of Travis County, Texas to
the extent it may affect the Land.
In addition to the foregoing, CCLC acknowledges that this
Agreement is intended to pertain to, and the "Land" is intended
to cover, the real property depicted on the Map attached hereto
as Exhibit "A". CCLC has provided the legal descriptions for the
Land contained in Exhibit "B" and CCLC represents and warrants to
the City that, to its best knowledge, each of the legal
descriptions for the Parcels set forth on Exhibit "B" is a true,
correct and complete legal description for the corresponding real
property designated as such Parcel on Exhibit "A", attached
hereto. In the event the City learns that any of the legal
descriptions contained in Exhibit "B" is not a true, correct and
complete legal description for the corresponding Parcel shown on
Exhibit "A", CCLC shall take all actions as are reasonably
necessary and appropriate to correct such legal description and
otherwise include the intended real property within the terms of
this Agreement and the other Constituent Documents.
14.2 REPRESENTATIONS AND WARRANTIES OF CITY
The City represents and warrants to CCLC as follows:
14.2A. Organization and Good Standing
The City is a duly organized and validly existing municipal
corporation in good standing under the laws of the State of
Texas, with full power and authority to conduct its business
as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform
all its obligations hereunder.
14.2B. Authority, No Conflict.
This Agreement constitutes the legal, valid and binding
obligation of the City, enforceable against the City in
accordance with its terms. The City has the absolute and
unrestricted right, power, authority, and capacity to
execute and deliver this Agreement and to perform its
obligations under this Agreement.
14.3 NO ADDITIONAL REPRESENTATIONS
The Parties represent to each other that before executing
this Agreement, each Party became fully informed of the terms,
contents, conditions and effects of this Agreement; that in
making this Agreement, each Party has had the benefit of the
advice of attorneys and advisors of that Party's own choosing;
and that no promises or representations of any kind have been
made by any of the Parties or by anyone acting or purporting to
act for any Party except as expressly stated in this Agreement.
By signing this Agreement, each Party expressly disclaims any
reliance on any representations, promises, or other statements by
any of the other Parties hereto (except to the extent such
representations, promises or other statements are expressly set
forth herein), or by such other Parties' representatives, agents
or attorneys.
XV.
ESTOPPEL CERTIFICATE
Upon a written request in a form reasonably acceptable to
City by any Landowner, the City shall within ten (10) business
days after the City's Department of Watershed Protection and
Development Review (or its successor) receives same, execute and
deliver to such Landowner, or to any party designated by
Landowner, an estoppel certificate in form and content
promulgated by the City which certifies, with respect to the
portion of the Land owned by such Landowner and which is the
subject of the request, the then current allocation of
Development Allocation to the portion of the Land which is the
subject of such request. Such certification shall be limited to
information contained in the Development Allocation Records with
respect to this Agreement with the understanding that said
records are controlling with regard to such allocation. The City
acknowledges that the form estoppel certificate attached hereto
as Exhibit "W", and, if applicable and correct, the
certifications set forth therein, are acceptable to the City.
XVI.
DEFAULT AND REMEDIES
16.1 CITY'S RIGHTS
In order to ensure the on-going compliance with the terms of
this Agreement by CCLC and any other Landowners (as applicable),
the City is given the right:
16.1A. To enter upon the Land, or any portion thereof, by
and through its authorized employees or enforcement
agents, at reasonable times in order to monitor
compliance with and otherwise enforce the terms of this
Agreement; provided that, except in cases where the
City reasonably determines that immediate entry is
required to prevent, terminate, or mitigate a violation
of this Agreement causing immediate and irreparable
harm, such entry shall be upon prior reasonable notice
to the owner of the portion of the Land upon which the
City is to enter, and the City will not in any case
unreasonably interfere with such owner's use and quiet
enjoyment of such portion of the Land. No entry onto
an occupied platted single family residential or duplex
residential lot will be authorized by this Subsection
which is not otherwise authorized by law; and
16.1B. To prevent any activity on, or use of, any portion
of the Land that is inconsistent with the terms of this
Agreement and to require the restoration of such areas
or features of such portions of the surface of the
Land that may be damaged by any activity or use which
is inconsistent with the terms of this Agreement,
pursuant to the remedies set forth in Section 16.2 of
this Agreement.
16.2 CITY'S REMEDIES
16.2A. Notice of Violation, Corrective Action and
Litigation Remedies.
If the City becomes aware of a violation of the terms of
this Agreement, the City shall, except as expressly set
forth herein, notify the defaulting party and the
Landowner(s) of the portion(s) of the Land involved in such
violation and request corrective action sufficient to abate
such violation and, if applicable, restore the surface of
the affected portions of the Land to its previous condition
prior to the violation. Failure to abate the violation and
take such other corrective action as may be required to cure
the violation within thirty (30) days after the giving of
such notice, or such longer period of time as may be
reasonably necessary to cure the violation in question so
long as the cure is commenced within said thirty (30) day
period and prosecuted until completion with all reasonable
diligence no later than ninety (90) days from the date of
such notice, will entitle the City to exercise any and all
rights and remedies available to it at law or in equity as a
result of such failure. The City's remedies shall include,
without limitation, any one or more of the following
remedies:
i. bring a zoning enforcement action in a court of
competent jurisdiction;
ii. bring an action at law or in equity to enforce the
zoning applicable to the Land and/or the terms of
this Agreement, as applicable, including seeking a
temporary restraining order, temporary injunction
and/or permanent injunction to enjoin the non-
compliance;
iii. bring an action to require the restoration of the
surface of the affected land to its previous
condition;
iv. bring an action for specific enforcement of this
Agreement; and/or
v. subject to the limitation on damages set forth in
Section 16.5 of this Agreement, recover any
damages arising from the non-compliance.
With respect to all the remedies described in this Section,
the City's rights under this Agreement apply equally in the
event of either actual or threatened violations of the terms
of this Agreement.
CCLC, and any and all successor Landowners, agree that the
City's remedies at law with respect to an alleged or
threatened violation of the terms of this Agreement are
inadequate and that the City shall be entitled to injunctive
relief, both prohibitive and mandatory, in addition to such
other relief to which the City may be entitled, including
specific performance of the terms of this Agreement, without
the necessity of proving other actual damages or the
inadequacy of otherwise available legal remedies. The
City's right to injunctive relief with respect to any
alleged or threatened violation of the terms of this
Agreement shall apply without the requirement of any notice
or opportunity to cure being given the Landowner(s). The
City's remedies described in this Section shall be
cumulative and shall be in addition to all remedies now or
hereafter existing at law or in equity, including the
remedies provided for in the Conservation Easement.
16.2B. City's Arbitration Remedies.
With respect to an alleged violation of the Agreement by any
Landowner(s), the City may, at the City's option, rather
than instituting a lawsuit to seek its litigation remedies,
first initiate non-binding arbitration. Arbitration will be
conducted under the rules of the American Arbitration
Association. The City will appoint an arbitrator, the
Landowner(s) will appoint an arbitrator, and then the
arbitrators selected by the City and the Landowner(s) will
select the third arbitrator. The prevailing party in the
arbitration can, in addition to its arbitration award, upon
request and approval by the arbitrators, recover its
attorneys' fees. Either the City or the Landowner(s) may
appeal the result of the arbitration to the District Courts
of Travis County. Because the arbitration is non-binding,
the proceedings in Travis County District Court will be a
trial de novo and the decision of the arbitrators will not
be entitled to any effect or deference whatsoever, though
discovery taken in the arbitration may be used in the
District Court proceeding.
The prevailing party in the District Court de novo
proceeding shall recover, in addition to its damages other
relief awarded, its attorneys' fees and court costs, which
shall include its attorneys' fees from the arbitration.
Moreover, if, in the judgment of the District Court
presiding over the de novo proceeding, the party that
initiated the de novo proceeding did not obtain a result
equal to or better than the final judgment rendered by the
arbitration panel, then the appealing party will pay
liquidated damages in an amount to be decided by the trial
court, up to and including, but not exceeding, two times the
amount of attorneys' fees incurred in the de novo proceeding
by the party that did not appeal the judgment of the
arbitrators. The foregoing liquidated damages clause will
not apply if both the City and the Landowner(s) appeal the
final judgment of the arbitration panel. Nothing herein
shall be construed as depriving any party of its rights of
appeal from the judgment of the District Court.
16.2C. Failure to Act or Delay.
Forbearance by the City from exercising any of its rights
under this Agreement in the event of any breach of any term
of this Agreement by CCLC or any subsequent Landowner shall
not be deemed or construed to be a waiver by the City of
such term or of any subsequent breach of the same or any
other term of this Agreement or of any of the City's rights
under this Agreement. No delay or omission by the City in
the exercise of any right or remedy upon any breach by CCLC
or any subsequent Landowner shall impair such right or
remedy or be construed as a waiver. No covenant, term,
condition or restriction of this Agreement or the breach
thereof by CCLC will be deemed waived, except by written
consent of the City, and any waiver of the breach of any
such covenant, term, condition or restriction will not be
deemed or construed to be a waiver of any preceding or
succeeding breach of the same or any other covenant, term,
condition or restriction. The City shall retain the right
to take any action as may be necessary to ensure compliance
with this Agreement notwithstanding any prior failure to
act.
16.2D. Waiver of Certain Defenses.
CCLC hereby waives any defense of laches, estoppel, or
prescription.
16.2E. No Liability For Actions of Others.
Notwithstanding any provision of this Agreement to the
contrary, it is agreed and understood that, except as
expressly set forth herein: (a) the liabilities, obligations
and responsibilities of each Landowner under this Agreement
are several, and not joint; and (b) no Landowner will be in
default under this Agreement or otherwise liable or
responsible for any default which is not caused by such
Landowner or by any person acting by, through or under such
Landowner except for a Continuing Violation (as defined
herein). For purposes of this Agreement, a "Continuing
Violation" shall mean any violation of this Agreement with
regard to any Parcel arising prior to the transfer of title
to such Parcel to the Landowner in question which continues
uncured after such transfer of title.
16.3 CCLC'S REMEDIES
16.3A. CCLC's Remedies/Notice to City.
The remedies of an aggrieved Landowner (including CCLC) for
a breach of this Agreement by City include the following:
(i) specific performance and/or writ of mandamus for
the enforcement of the City's obligations and
agreements in this Agreement; and
(ii) subject to the limitation on damages set forth in
Section 16.5 of this Agreement, recovery of damages
arising out of non-compliance of this Agreement.
With regard to the remedy of specific performance and writ
of mandamus, the Parties acknowledge and agree that remedies
at law (including monetary damages) arising out of a default
by the City under this Agreement are inadequate to
compensate the aggrieved Landowner for such default by the
City and that such aggrieved Landowner is entitled to
injunctive relief, both prohibitive and mandatory, in
addition to such other relief to which such party may be
entitled, including specific performance of this Agreement
and writ of mandamus. To the extent allowed by law, the
City waives any right to governmental immunity with regard
to the enforcement of this Agreement by Landowners.
Before initiating any action for breach of this Agreement,
CCLC (or other Landowner) shall notify the City Manager in
writing of such alleged breach, and the alleged breach must
remain uncured following the expiration of thirty (30) days
after the day on which the City Manager receives such notice
or such longer period of time as may be reasonably necessary
to cure the alleged breach so long as the cure is commenced
within such thirty (30) day period and prosecuted to
completion with all reasonable diligence. If, after the
City receives the notice and opportunity to cure described
in this paragraph the alleged breach is still, in the sole
judgment of CCLC (or other Landowner), not cured, then CCLC
(or other Landowner) may either (i) initiate litigation
against the City in the District Courts of Travis County or
(ii) initiate non-binding arbitration, which shall be
conducted under the same rules as set forth in Section 16.2
B above.
16.3B. City Breach with Regards to Project Approvals.
It shall be a breach hereunder for the City to wrongfully
withhold the approval of any development permit, proposed
development and/or development application with respect to
development of any portion of the Land which complies with
the terms of this Agreement (including, without limitation,
the Modified Current Requirements, to the extent same are
applicable, and the applicable Constituent Documents)
provided, that if any Landowner claims that the City has
wrongfully withheld the approval of any development permit,
proposed development, and/or development application, in
violation of the terms of this Agreement, the party seeking
such approval shall notify the City Manager of the City of
such claim in writing. Within seven (7) business days after
receipt of the written notice from the party seeking
approval, the City Manager shall make a determination as to
the validity of such claim and send notice to the party
seeking the approval of its determination as to the validity
of the claim. If and only if the City Manager determines
that the City has wrongfully withheld the approval in
question in violation of the terms of this Agreement,
(i) the City Manager shall instruct the City staff to
process such approval with reasonable diligence until
completed in accordance with all usual and customary City
procedures and processes and (ii) the withholding of the
approval in question shall not constitute a breach of this
Agreement, provided City Staff fulfills item (i) above. If
(i) the City Manager determines that the approval in
question was not wrongfully withheld in violation of the
terms of this Agreement, (ii) the City Manager fails to make
a determination within such seven (7) business day period,
or (iii) the City staff fails to process such approval with
reasonable diligence until completed in accordance with all
usual and customary City procedures and processes after
instruction to do so by the City Manager, then the Landowner
seeking the approval shall then be entitled to initiate
either non-binding arbitration or litigation to enforce its
rights hereunder without further notice to the City
(notwithstanding any other notice provisions contained in
this Agreement). Any such arbitration shall be conducted
according to Section 16.2 B above.
16.3C. Failure to Act or Delay.
Forbearance by any Landowner to exercise any of its rights
under this Agreement in the event of any breach of any term
of this Agreement by City shall not be deemed or construed
to be a waiver by the Landowner of such term or of any
subsequent breach of the same or any other term of this
Agreement or of any of such Landowner's rights under this
Agreement. No delay or omission by a Landowner in the
exercise of any right or remedy upon any breach by the City
of any obligation it may have under this Agreement shall
impair such right or remedy or be construed as a waiver.
16.4 ATTORNEYS' FEES AND COURT COSTS
In the event that any matter relating to this Agreement
results in the institution of legal proceedings by any party to
this Agreement, the prevailing party in such proceeding shall be
entitled to recover all costs and expenses incurred by it in
connection with such proceedings, including, without limitation,
reasonable court costs and reasonable attorneys' fees.
16.5 OVERRIDING LIMITATION ON REMEDIES
Notwithstanding anything contained herein to the contrary,
in no event shall either City or CCLC ever have any right to
terminate this Agreement as a result of the default hereunder by
any other party hereto and to the extent any such right would
exist at law, in equity or otherwise, same is hereby RELEASED,
WAIVED and FOREVER RELINQUISHED by each of the City and CCLC on
behalf of themselves and their respective successors and assigns,
if any, including, without limitation, any successor Landowner.
FURTHERMORE, IT IS EXPRESSLY AGREED THAT IN THE EVENT ANY
MATTER RELATING TO THIS AGREEMENT RESULTS IN THE INSTITUTION OF
LEGAL PROCEEDINGS, THE PREVAILING PARTY IN SUCH LEGAL PROCEEDING
MAY ONLY RECOVER THE ACTUAL DAMAGES, AND NOT ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES, SUCH PREVAILING PARTY MAY SUFFER OR INCUR
AS A RESULT OF THE NON-PREVAILING PARTY'S DEFAULT HEREUNDER. TO
THE EXTENT THE RIGHT TO ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
WOULD EXIST AT LAW OR IN EQUITY, SAME IS HEREBY RELEASED, WAIVED
AND FOREVER RELINQUISHED. BY ACQUIRING TITLE TO ANY PORTION OF
THE LAND, EACH LANDOWNER AGREES TO BE BOUND BY THE TERMS AND
CONDITIONS OF THE FOREGOING.
XVII.
MISCELLANEOUS
17.1 ENTIRE AGREEMENT
This Agreement, and the exhibits and attachments hereto,
some of which are to be separately executed and recorded in the
public records, collectively constitute the entire Agreement
between and among the parties; provided, however, that the
Conservation Easement is separate and independent and no terms
included herein are incorporated therein except to the extent
done so by an express reference hereto in any of such documents.
There are no other Agreements, written or oral, between the
parties addressing these matters. No waiver, amendment,
modification or alteration of this Agreement is effective unless
such change is in writing and signed by an authorized
representative of each party.
17.2 VENUE
The parties agree that the exclusive, mandatory venue for
any litigation rising under or related to this Agreement and the
Constituent Documents is the State District Courts of Travis
County, Texas. CCLC specifically waives any rights it may have
to challenge the personal jurisdiction of the Travis County
District Courts, and also specifically waives any rights it may
have to challenge venue in Travis County, including any rights
CCLC may have to challenge venue in Travis County on the basis
that Travis County is not a convenient forum for CCLC. CCLC also
specifically waives any right it may have to bring any suit
relating to this Agreement in Hays County, Texas and agrees that
the mandatory, exclusive venue for any litigation arising under
or related to this Agreement is Travis County, Texas, even if the
litigation concerns, in whole or in part, any property in Hays
County, Texas.
17.3 NO PRESUMPTIONS
This Agreement is a result of negotiations between the
parties. The final language of this Agreement was the subject of
extensive negotiations, and the parties agree that none of the
language herein should be construed against one party or the
other.
17.4 EXHIBITS
Except as otherwise expressly stated herein, all of the
exhibits referenced herein are incorporated herein for all
purposes.
17.5 SEVERABILITY
If any provision of this Agreement or any of the Constituent
Documents, or the application thereof to any person, entity,
circumstance or portion of the Land is found to be invalid, the
remainder of the provisions of this Agreement and the Constituent
Documents, or the application of such provision to persons,
entities, circumstances or portions of the Land other than those
as to which it is found to be invalid, as the case may be, shall
not be affected thereby.
17.6 COUNTERPARTS
This Agreement may be executed in multiple counterparts
which shall be construed together as a single original instrument
as though all parties had signed one instrument, and, when
executed, each counterpart shall be binding upon and inure to the
benefit of each of the parties executing the instrument whether
or not all other parties have executed same.
17.7 RECORDATION
City shall record this Agreement and any amendments hereto
in the Real Property Records of Hays and Travis Counties, Texas,
and may re-record it at any time from time to time.
17.8 SUCCESSORS BOUND
This Agreement shall be binding upon and inure to the
benefit of each of the parties hereto, their respective
successors and assigns; including, without limitation, any
successor Landowners.
17.9 COMPLIANCE ESTABLISHED FOR CERTAIN PLATTED RESIDENTIAL LOTS
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE
CONTRARY, THE CITY'S APPROVAL OF A SUBDIVISION PLAT FOR SINGLE
FAMILY OR DUPLEX RESIDENTIAL LOTS ON THE LAND SHALL CONCLUSIVELY
ESTABLISH THAT EACH OF THOSE LOTS HAVE BEEN PROPERLY ALLOCATED
DEVELOPMENT ALLOCATION FOR CONSTRUCTION OF A SINGLE FAMILY OR
DUPLEX RESIDENTIAL STRUCTURE THEREON, AS MAY BE APPLICABLE.
17.10 AMENDMENT.
Any Landowner and City may amend this Agreement as it
relates solely to such Landowner's Parcel or Parcels without the
joinder of any other Landowner. In addition, CCLC (and its
successors and assigns) and the City may amend this Agreement as
it relates to the Credit Banks and the provisions related thereto
as set forth in Article XII above without the joinder of any
other Landowner. Any such amendment must be in writing, signed
by such Landowner and City and recorded in the Real Property
Records of Travis County, Texas. Otherwise any amendment of this
Agreement requires an amendment in writing signed by City and all
Landowners of the Land (other than Landowners of occupied single
family or duplex residential lots).
17.11 NOTICE
Any notice, communication, request, reply or advice
(severally and collectively referred to as "Notice") in this
Agreement provided or permitted to be given, made or accepted by
any party to the other(s) must be in writing. Notice shall,
unless otherwise provided herein, be given or served (1) by
depositing the same in the United States mail, postage paid,
certified mail, and addressed to the party to be notified at the
last address for which the sender has at the time of mailing,
with return receipt requested, or (2) by hand delivering the same
to such party. Notice to a Landowner or City deposited in the
mail in the manner herein above described shall be effective two
days after such deposit. Notice given to a Landowner or City in
any other manner shall be effective only if and when received by
the party to be notified. For the purposes of notice, the
addresses of the parties shall, until changed as provided below,
be as follows:
Landowner(s): Initially, the address of Landowner shall be:
Circle C Land Corp.
98 San Jacinto, Suite 220
Austin, Texas 78701
Telephone: (512) 478-5788
Fax: (512) 478-6340
Once any portion of the Land has been
conveyed then any notice relating to such
portion of the Land shall be sent to the
address of the Landowner thereof as set forth
in the Development Allocation Records. A
Landowner may change its address for notice
hereunder by providing the City ten (10) days
prior written notice of such change of
address sent in accordance with the terms and
provisions of this Section.
Any notice to CCLC must include a copy to:
Armbrust & Brown, L.L.P.
Attn: Kenneth N. Jones
100 Congress Ave., Suite 1300
Austin, Texas 78701
Telephone: (512) 435-2312
Fax: (512) 435-2360
City: City of Austin
Attn: City Manager
P.O. Box 1088
Austin, Texas 78767-8839
Telephone: (512) 499-2200
Fax: (512) 499-2832
With Copy To:
City of Austin
Attn: Director of the Watershed Protection and
Development Review Department
P.O. Box 1088
Austin, Texas 78767-8839
Telephone: (512) 974-3433
Fax: (512) 974-2859
With Copy To:
City of Austin
City Attorney
P. O. Box 1088
Austin, Texas 78767-8839
Telephone: (512) 974-2268
Fax: (512) 974-2912
provided that City may change its address from time to
time by filing such designation in the Real Property
Records of Travis County, Texas, and sending notice
thereof to CCLC.
EXECUTED to be effective the 15th day of August, 2002.
CITY: CITY OF AUSTIN, a home rule
city and
Texas municipal corporation
By: /s/ Lisa Y. Gordon
-------------------------
Lisa Y. Gordon,
Assistant City Manager
Date: August 14, 2002
CCLC: CIRCLE C
LAND CORP., a Texas
corporation
By: /s/ John E. Baker
--------------------------
Printed Name: John E. Baker
Title: Sr. Vice President
Date: August 15, 2002
STATE OF TEXAS [Seal]
COUNTY OF TRAVIS [Seal]
This instrument was acknowledged before me on the 14th day
of August, 2002, by Lisa Y. Gordon, Assistant City Manager of The
City of Austin, a Texas municipal corporation, on behalf of said
municipal corporation.
/s/ Junie Marie Plummer
---------------------------------
Notary Public, State of Texas
My commission expires: 05-16-2003
THE STATE OF TEXAS [Seal]
COUNTY OF TRAVIS [Seal]
Before me, Kathy S. Nunn, Notary Public, State of Texas, on
this day personally appeared John E. Baker, Sr. Vice President of
Circle C Land Corp., a Texas corporation, known to me to be the
person whose name is subscribed to the foregoing instrument and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed.
Given under my hand and seal of office this 15th day of
August, A. D. 2002.
/s/ Kathy S. Nunn
-----------------------------
Notary Public, State of Texas
My commission expires: 4-11-2004
(Seal)
The undersigned, being a holder of a lien or liens on or other
interest(s) in a portion of the Land, including, but not limited
to, the rights and interests set forth in that certain Deed of
Trust, recorded under Document No. 1999158708 of the Official
Public Records of Travis County, Texas, that certain Cross-
Default and Cross-Collateralization Agreement recorded under
Document No. 1999161071 of the Official Public Records of Travis
County, Texas and under Document No. 9929850 of the Official
Public Records of Hays County, Texas, that certain instrument
recorded under Document No. 2000204551 of the Official Public
Records of Travis County, Texas and in Volume 1754, Page 392 of
the Official Public Records of Hays County, Texas, that certain
Cross-Default and Cross-Collateralization Agreement recorded
under Document No. 2001099340 of the Official Public Records of
Travis County, Texas and in Volume 1832, Page 71 of the Official
Public Records of Hays County, Texas, that certain Second
Modification Agreement recorded under Document No. 2001215158 of
the Official Public Records of Travis County, Texas and in Volume
1924, Page 563 of the Official Public Records of Hays County,
Texas, that certain Modified Cross-Default and Cross-
Collateralization Agreement recorded under Document No.
2002038535 of the Official Public Records of Travis County, Texas
and in Volume 1959, Page 548 of the Official Public Records of
Hays County, Texas, that certain Financing Statement recorded
under Document No. 1999158952 of the Official Public Records of
Travis County, Texas and under Document No. 9929851 of the
Official Public Records of Hays County, Texas, that certain Deed
of Trust recorded under Document No. 1999158709 of the Official
Public Records of Travis County, Texas and under Document No.
9929849 of the Official Public Records of Hays County, Texas,
hereby consents to the foregoing Development Agreement and agrees
that its lien(s) and/or other interest(s) is/are hereby subject
and subordinate to the Development Agreement.
COMERICA BANK - TEXAS,
a state banking association
By: /s/ Shery R. Layne
----------------------------
Name: Shery R. Layne
Title: Sr. Vice President
THE STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on the 15th day
of August, 2002, by Shery R. Layne, Sr. Vice President of
COMERICA BANK - TEXAS, a state banking association, on behalf of
said state banking association.
/s/ Kristine K. Finn
---------------------------------
Notary Public, State of Texas
Print Name: Kristine K. Finn
My Commission Expires:
Exhibit 15.1
November 14, 2002
Stratus Properties Inc.
98 San Jacinto Blvd.
Austin, TX 78701
Gentlemen:
With respect to the unaudited financial information of
Stratus Properties Inc. (the "Company") for the nine month
period ended September 30, 2002, incorporated by reference in
the Company's Registration Statements (File Nos. 33-78798,
333-31059 and 333-52995) and its Form 10-Q/A (Amendment No.
1) for the quarter ended September 30, 2002,
PricewaterhouseCoopers LLP reported that they have applied
limited procedures in accordance with professional standards
for a review of such information. However, their separate
report dated November 4, 2002, incorporated by reference
herein, states that they did not audit and they do not
express an opinion on that unaudited financial information.
Accordingly, the degree of reliance on their report on such
information should be restricted in light of the limited
nature of the review procedures applied.
PricewaterhouseCoopers LLP is not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for
their report on the unaudited financial information because
that report is not a "report" or a "part" of the registration
statement prepared or certified by PricewaterhouseCoopers LLP
within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
PricewaterhouseCoopers LLP
