CC MEETING: August 6, 2024
DATE: July 30, 2024
TO: Erin Rinehart, City Manager
FROM: Ravi Shah, Executive Director of Development
Title
Consider A Resolution Amending Resolution No. 4445 Relating To A Development Agreement By And Between The City Of Carrollton, Texas And Trinity Mills Office I Owner, LLC. For The Development Of A Class 'A' Office Building In The Trinity Mills Station Project.
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BACKGROUND:
Trinity Mills Station continues to be well positioned despite the current depressed office market nationwide. However, the D/FW market has notable new office developments under construction. According to Jones Lang LaSalle (JLL), there have been multiple leasing inquiries on the Class A office building at Trinity Mills Station, but credit worthy tenants remain reluctant to engage on leasing discussions prior to commencement of vertical construction. While this has historically been simply a preference, construction commencement is now more or less a requirement in today's development environment.
The developer's lender has notified the City that a Master Lease Agreement between the City and developer is necessary to secure a $54 million loan from the lender to construct the building with a total construction cost of approximately $72 million. A Master Lease Agreement would provide for a Lease Guaranty by the City to the developer for the purpose of providing monthly lease assistance for up to 63,000 square feet of the rentable area at $35 per square foot plus NNN (taxes, insurance and utilities) for a period not to exceed five (5) years for a total amount not to exceed $14,525,000. This includes $11,100,000 in rent plus an estimated $3,425,000 for NNN.
Trinity Mills Office I Owner LLC. has committed to repay the City one hundred percent (100%) of the Lease Guaranty plus ten percent (10%) of the total expended by the City from the proceeds of the sale when the asset is sold. The City will be paid ahead of any other equity but after repayment to the ...
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