DEPARTMENT: Center City Development
ASSISTANT CITY MANAGER: Carlos Contreras
COUNCIL DISTRICTS IMPACTED: 1
SUBJECT:
Master Lease and Master Agreement with HPARC
SUMMARY:
Approval of a Master Lease and Master Agreement with Hemisfair Park Area Redevelopment Corporation (HPARC). The Master Lease provides the authority for HPARC to solicit P3 development and act as landlord for the seven tracts of land within Hemisfair that City Council identified for development on December 5, 2013. The Master Agreement outlines the responsibilities for HPARC in managing the buildings and land within the Hemisfair district.
BACKGROUND INFORMATION:
On December 5, 2013, the City Council identified 14.366 acres consisting of seven (7) development tracts within Hemisfair for development consistent with the Hemisfair Master Plan. Also on December 5, 2013, the City Council dedicated 18.47 acres of land within Hemisfair as parkland, which increased the amount of public parkland in our downtown's largest park.
City staff and our real estate counsel have worked with HPARC to negotiate two long-term agreements that will grant HPARC broad authority to redevelop the district. City staff recommends a 99-year lease with HPARC that covers the seven developable parcels identified by City Council for development through Public-Private Partnerships (P3). The agreements will allow HPARC to solicit development opportunities and enter long-term subleases on the seven developable tracts. HPARC will solicit for these projects and negotiate ground leases with developers for vertical mixed-use developments via a P3 solicitation process, and those lease agreements will be subject to future City Council approval. HPARC has developed P3 Guidelines, similar to those of the City, to provide a transparent solicitation process for these vertical mixed-use developments; that process will include the involvement of City staff on evaluation committees, briefings to a City Council Committee and the eventual consideration by the City Council of each lease for a vertical mixed-use project.
The redevelopment of Hemisfair will also include minor subleases to commercial businesses located in the historic homes within the park as well as the potential for concessionaires. Appropriate tenants, including retail and restaurant businesses, will consistently draw residents from throughout the community to the park, and these visitors will help activate plazas and park space. These "minor subleases" will require the approval of the City Manager or her designee. In addition, three existing leases are assigned to HPARC on the development tracts (the UNAM, Magik Theater, and Pavilion Leases). HPARC will renegotiate new leases with these tenants in consultation with the City, with final leases subject to the approval of the City Manager or her designee.
A significant fundraising effort has always been a requisite component of redeveloping Hemisfair into a world-class park. To accomplish this goal, HPARC will work with the non-profit Hemisfair Conservancy to fundraise for the design, construction costs and the ongoing maintenance associated with the new parks at Hemisfair. Donated funds will be used to fund capital improvements and an endowment for park maintenance. Donor recognition in the parks is subject to naming parameters and exclusions that have been developed by HPARC in coordination with City staff. Naming rights for the Civic Park, the Tower Park, Yanaguana Garden, any portion of the Tower of the Americas and one additional park tract (see attached map) will require City Council approval. The HDRC must approve the type, size and placement of all markers associated with donor recognition.
Donor recognition for a major opportunity including park names at Civic Park, the Tower Park, Yanaguana Garden, any portion of the Tower of the Americas and one additional park tract) will require City Council approval. Funding for this level requires a donation for an amount that is equal to seventy percent (70%) of total capital costs. Other donor recognition opportunities, including amenities or features within parkland, shall comply with the Donor Recognition Policy, subject to City Manager's approval. The HDRC must approve the type, size and placement of all markers associated with donor recognition.
ISSUE:
HPARC was created to oversee the redevelopment of Hemisfair, to fundraise for the construction of new park assets, and to activate and maintain the parks. Staff and outside real estate counsel have negotiated the Master Lease and Master Agreement to provide HPARC with the requisite tools to accomplish these goals. HPARC will solicit P3 projects that will contribute revenue to pay for improvements, programming and asset management of the six parks consistent with the approved Master Plan.
Fundraising is a major component of delivering new world-class parks at Hemisfair and these agreements provide HPARC with the authority to accept donations (certain large gifts subject to Council approval) and recognize donors who contribute to the design, construction and long-term maintenance of Hemisfair.
City Council will take action on the Master Lease and Master Agreement between the City, HPARC and the Hemisfair Park Public Facilities Corporation. The City Council will then recess and convene as the Hemisfair Park Public Facilities Corporation and approve the Master Lease and Master Agreement.
ALTERNATIVES:
City Council could choose not to approve these agreements or to amend their terms. In addition, City Council could identify a different funding source or method for delivering a redeveloped Hemisfair Park.
FISCAL IMPACT:
The assignment of the UNAM, Magik Theater, and Pavilion leases will result in $64,669 in anticipated FY2015 lease revenue being transferred to HPARC rather than the General Fund.
RECOMMENDATION:
City staff recommends that the City Council and the Hemisfair Park Public Facilities Corporation approve these agreements.