The Interlocal Agreement (ILA) sets forth the terms and conditions for the inclusion of 5.5+- acres of land owned by DART along with properties owned by the Town to create a large transit-oriented development surrounding the future Silver Line rail station. DART’s property holdings include the existing transit center and the adjacent office building (the “Baumann Building”). The Town owns approximately 13+- acres surrounding the transit center and issued a RFP at the end of April to solicit a Master Developer for these properties. The RFP does not include DART’s property; the selected master developer will have the option to add it to the overall development based on the terms of the ILA.
The basic provisions of the ILA are:
Term
- DART enters into a Master Lease Agreement with the Town for a ground lease for an initial term of 49 years, with two 25-year extension options.
- DART may terminate the Master Lease Agreement if no construction has commenced on the DART property within 60 months of its approval. The lease may also be terminated on the Baumann Building property if construction has not commenced within 10 years.
- The Town may terminate the Master Lease Agreement if no sublease or development agreement with a Master Developer has been approved within 48 months after the effective date of the Master Lease Agreement.
Base Rent
- The ILA provides a Pre-Development Period of up to 60 months for the Town to select a Master Developer, who in turn must acquire financing and complete the surveying/zoning/planning/platting and permitting process. DART receives no base rent during the Pre-Development Period. Rent will commence when the Pre-Development Period ends, or the Town issues a Certificate of Occupancy for the first building on the DART property, or when DART’s ability to use the transit facilities is adversely impacted, whichever occurs first. DART will continue to collect all rent and other revenue from lease of the Baumann Building until Base Rent becomes payable.
- Annual base rent is calculated as follows:
- For the first 5 years of the lease, the base rent for DART’s land is determined by an “as developed” appraisal conducted immediately after selection of the Master Developer, based on the proposed development plan, but also taking into consideration the impact of DART’s operational and infrastructure requirements. The appraised value of DART’s land will be multiplied by 4% to establish the base rent.
- Appraisals will be conducted by one appraiser selected by the Town and DART and another chosen by the Master Developer. If the two appraisals are within 5% of the same value, the average will be used to calculate the base rent. If the difference in the two appraisals differs more than 5%, the two appraisers shall jointly select a third appraiser to make that determination.
- A reappraisal shall be conducted initially after 5 years, and then every 10 years to reset the annual base rent. The annual base rent shall be adjusted by not less than 2% per year but not more than 3% per year since the previous adjustment.
- In addition, if the improvements actually constructed on the DART property deviate significantly from the original development plan, DART or Addison may require an adjustment to the annual base rent. The appraisal for this adjustment would be based on the actual improvements on DART’s property.
- Excess Rent – Although unlikely, if the Town receives annual rent from the Master Developer for DART’s property that exceeds the rent payable to DART, the excess rent is shared equally between the Town and DART. Property tax, sales tax and other tax receipts are not considered base rent, nor is any rent paid by the Master Developer which is rebated, credited or refunded by the Town for reimbursement of development costs.
Unsubordinated Ground Lease – the Master Lease Agreement will be unsubordinated, but with appropriate protections for subtenants and lenders.
Covenants, Conditions and Restrictions – The Town and DART will enter into a set of CCRs that prohibits noxious uses on DART’s property but promotes the development of a high density, mixed-use transit-oriented development. Development and uses shall comply with DART’s adopted Transit Oriented Development Guidelines. Mini-warehouses and a stand-alone parking garage that does not support a hotel, office or other use are prohibited on both DART’s and the Town’s properties.
Capital and Operational Expenditures
- Project Capital and Operational Expenditures – The Master Developer will be responsible for all capital expenditures for infrastructure and facility improvements and replacements, and for property management. DART will remain responsible for capital expenditures related to the rail line and platform, ticket kiosks, information boards and associated infrastructure as well as operating expenses related to transit operations.
- DART Operational and Infrastructure Requirements – DART’s ongoing bus and rail operations must be accommodated and continued as part of the development, in accordance with the requirements attached as Exhibit “C” to the ILA.
Master Developer Selection – The Town has exclusive authority to solicit proposals from developers, to select the Master Developer and enter into a sublease for DART’s property and associated development agreements. The Town has 24 months to complete this process, with one 12-month extension if required to complete the negotiations. DART will review correspondence and documents related to the RFP, the development proposals, development agreements and sublease documents.
FTA Compliance – The lease and use of DART’s property is subject to compliance with Federal Transit Administration requirements.
Next Steps:
The ILA is scheduled for consideration by the DART Board on June 22, 2021. With approval by both the Town and DART and after selection of the Master Developer, negotiations will commence on the Master Lease Agreement for DART’s property. Responses to the RFP are due by July 15th, and the Town's Selection Committee will begin the process of selecting the 2-3 developers to proceed to the second, more detailed phase of the RFP process.
The attached Resolution is complete with the exception of Exhibit A . Exhibit A will be discussed in the Executive Session being held earlier in the meeting. Copies of Exhibit A will be available when this item is being discussed. |