Monday , 28 May 2018

City Council Gives Stamp of Approval to Proceed with Gateway Agreement

By Angie Bado, TSB Publisher

Council chambers were full Tuesday night as the McKinney City Council overwhelmingly approved two requests for changes in the Adriatica development by IBG Adriatica Holdings Inc,. and also approved a development  agreement for a hotel and event center at Gateway. 

The first request was for approval of a general development plan (GDP) for a portion of the Adriatica Town Center District. Adriatica is located in Stonebridge Ranch, at the southeast corner of Virginia Parkway and Stonebridge Dr. The change in the GDP is not a request for rezoning of the property in Adriatica, but is a plan which depicts the orientation of buildings to streets, landscaping and parking areas. A new GDP must be submitted and approved because the new site plan does not conform to the existing site plan. Changes to the GDP would not tie down a particular use for any of the buildings involved in the project. 

Despite some objections by Stonebridge residents who cited their concerns about the changes paving the way for construction of apartments in the vicinity, George Fuller of Fuller Construction, a partner in IBG, assured citizens and council members that the density in the area would not be increased. 

Fuller told council members that there are no specific uses for any of the proposed buildings on the property yet, but as specific uses come in, he will amend and update the site plan. He also said that he doesn’t believe there is any deviation from the original planned development with regard to the multi-family concept, adding, “We are building them (the units) individually metered, as condominiums that are for sale.”

Fuller also pointed out that, “We cannot skirt the issue of today’s economy. This is a very different time (than when the project was started in 2004). We don’t believe we can go to market with 211 condos. We will always have the right to sell the condos and they are being built as such.”

During the public hearing item Stonebridge resident Nancy Poppema said, addressing council, “Both items on the agenda are not in compliance with the existing ordinance (that governs the property in Adriatica). You know that very well. And yet, I also know you are going to vote for it anyway. That’s a travesty.” 

Several Adriatica residents spoke in support of the proposed changes stating that they didn’t understand why the community was upset by the change. 

Adriatica resident Bill McMannis, who has lived in the development for three years, said, “Some of the people oppose  it because it’s something different. We would like to see it start up again and get finished.” 

Councilman Don Day (Dist. 1) moved to approve the proposed changes as submitted by the applicant, but the motion failed due to no second. Councilman Ricchi (Dist. 4) moved to amend the proposal by overlaying only the proposed building (St. Paul’s Square Lofts) onto the original conceptual plan for Adriatica. The motion was approved unanimously.

Council also approved IBG’s request for  a site plan for St. Paul’s Lofts, to be located on approximately 13.32 acres at the northwest corner of Adriatic Parkway and Mediterranean Dr. in Adriatica. Again, city staff said that the request by the applicant did not deviate from the intentions of the original PD. The lofts will consist of 211 multi family units with approximately 18000 feet of retail on ground floor. Approval of the elevations of these buildings is at the discretion of council.

Councilman Brooks (At-Large), who is a partner in IBG, stepped down from the discussion and did not vote. 

Council took a major step and voted by a margin of 5 -2 to give the greenlight to City Manager Jason Gray to enter into a development agreement for the Gateway Project hotel and conference center (see attachment) with Beck Dev., Champ Hospitality, McKinney Economic Development Corp. and McKinney Community Development Corp. 

Gray explained that the Sheraton or Sheraton-type hotel conference center project will include 186 guest rooms and be a 3.5 star full service hotel with 20,000 square feet of high quality event space. 

The project will use the existing structure on the track of property located at the northeast corner of the intersection of the the Sam Rayburn Tollway and U.S. 75. City entities will retain approximately 8 acres of property from the original project and the city will have full ability to approve the design and building material of exterior of entire project and will have design authority over interior and exterior of event center portion of the project. An event lawn, which is part of the project, will be leased and maintained by city for future additional development. 

The city will have an independent owner’s representative to protect the city’s interest with regard to the design, managing the construction and the budget of the project. 

With Council’s go-ahead Tuesday night, the expected timeline of the hotel and conference center will be the following:

–March 2013:  Private partners get financing, finalize design, branding and platting of the property to a four acre site.
–June 2013:  Construction begins
–December 2014:  Project is completed

The development agreement projects the costs for the hotel conference center to be between $35 to $38 million, which incudes public funding of somewhere between $18-$22.5 million, depending on the total cost of the project. The City of McKinney, MEDC and MCDC own the land the hotel complex will be built on. The City will own the event center and will lease both the event center and the land to the hotel owner. 

Gray said the public investment would be 100 percent property tax abatment to the hotel owner for 10 years. This is city property tax only, although he said that other taxing entities will asked to participate, Gray said that is not a requirment of the agreement. City retains full sales tax and full hotel occupancy tax (HOT), which is slated to fund the event center. 

But local hotelier Charles Helms, majority owner of the Holiday Inn & Suites in McKinney, told council, “The construction manager (in this hotel project) has little risk. When this project fails, what position will the city be in and how will we pay for it? My dad always told me, ‘son, you don’t know that the biggest thing you don’t know is the thing you don’t know.’  Let the citizens and the taxpayers have full transparency”.

Helms also said, ‘The city isn’t going into the hotel business? When the city promotes over 50% of the project, gains only 50% of the sale of the hotel, and profits when the hotel brings in conferences, that pretty much spells that the city is going into the hotel business.”

If the property is sold, the partner and the city split the net proceeds 50/50. Gray suggests a sale will be likely within the first 10 years. The City stands to gain $9.5 million in sales tax over 10 years. 

Gray also said that the public incentive number is capped at $18 million and there will be no public participation in project costs over $38 million. To protect the City’s interest, measures have been taken to establish liquidated damages on the developer for not delivering on timeline and methods for dealing with stoppage of work and foreclosure have been put into place. Any change orders that are requested by the owner after guaranted maximun price for the project, will be the responsibility of the owner. Change ordered requested by the City will become the financial responsibility of the City. If both parties request changes, the cost is shared equally by both.

“Council has worked many hours to put together a project that I believe will be for the good of the community as a whole,” Gray said. 

Mayor Pro Tem Travis Ussery (Dist. 3) and Councilman Ray Ricchi (Dist 4) were the only no votes on approving the agreement.


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