Title
Conduct a public hearing and consider a resolution approving the Amended and Restated Chapter 380 Economic Development Program Agreement (“Agreement Three”) by and between the City of Mesquite, Texas (“City”), and MMAH Rodeo Land Holdings, LLC (“Company”), authorized by Article III, Section 52-a of the Texas Constitution and Section 380.001 of Chapter 380 of the Texas Local Government Code regarding a new electronic Freeway-Oriented Marquee Sign and authorizing the City Manager to execute said “Agreement Three” for such purposes identified herein.
Body
This agreement would allow the Rodeo to replace the existing electronic marquee gateway sign that fronts LBJ Freeway with a new Freeway-Oriented Marquee Sign utilizing electronic video screens (“EVS”) and allow MMAH Rodeo Land Holdings to transfer ownership of the sign to OUTFRONT Media, Inc., while still preserving and greatly enhancing the City’s potential share of sign advertising and lease revenues.
Background:
On October 3, 2011, the City Council approved a revised Chapter 380 Economic Development Program Agreement with the owner of the Rodeo at that time, Camelot Sports & Entertainment, LLC, to erect an electronic marquee gateway sign to advertise and promote the businesses and products sold within the Rodeo City Tax Increment Reinvestment Zone (TIRZ). The Rodeo bought and installed the sign and the City reimbursed the Rodeo $883,920.67 for the cost of the sign from TIRZ increment revenues generated from the Rodeo and other businesses within the TIRZ on an annual basis as revenues became available.
In exchange for the implementing the sign project, the Rodeo had the responsibility to maintain and operate the sign, and the City would receive a share of the gross revenues from advertising on the sign at a rate of 10 percent for the first $100,000 in gross revenues and then 25 percent of gross revenues above $100,000.
As it turned out, advertising opportunities from businesses other than the Rodeo are limited, and to date, the City has received only $10,639 of its share of revenue under the existing Chapter 380 Agreement. Advertising for the City and Convention Center events by its designee, Hampton Inn & Suites, is free, as is advertising of companies that sponsor Rodeo events or the Arena. The Rodeo offers advertising of its sponsors as part of their Arena sponsorship package, not direct advertising contracts for the sign and “sponsorships” is not included in the definition of gross revenues; therefore, the City has not shared in any of the Rodeo’s advertising.
On October 20, 2017, the Rodeo was acquired by the current owner and developer of Iron Horse and the Chapter 380 Agreement was assigned to their affiliate MMAH Rodeo Land Holdings, LLC. The City’s obligation under the existing Chapter 380 Agreement has been met and the Agreement does not terminate until the earlier of the City receiving $883,920.67 in shared revenues or the life cycle of the marquee gateway sign has ended (typically 11-15 years for LED signs).
New Proposal:
Recognizing that the existing marquee gateway sign is nine years old and is becoming more costly to maintain and repair, the Rodeo is looking to replace the existing marquee sign with new electronic video screens having an industry standard sizing of 14-foot by 48-foot dimensions. The new sign will also now be classified in the Mesquite Sign Code as a Freeway-Oriented Marquee Sign which will allow for better programming of content and greater opportunities of advertising for both on-premise and off-premise events, items, products, services, uses, etc. through a professional sign company. The proposed Freeway-Oriented Marquee Sign would have a unique Mesquite design and would be aesthetically more attractive than typical freeway signage.
Under a proposed new and restated Chapter 380 Agreement, sponsorships would be included in the definition of gross revenues and the City would continue to share in OUTFRONT’s revenues at a rate of 17.5 percent of gross advertising revenues, including any lease revenue that the Rodeo may receive from OUTFRONT. The expanded advertising opportunities would allow the city to recover its remaining balance of $873,281.25 much quicker, and the City would also receive 75 percent of any other OUTFRONT revenues associated with the sign or the land where the sign is located.
The proposed Agreement will not terminate until the City receives the remaining balance of $873,281.25, and should there be any remaining balance due on March 1, 2041, that balance would be immediately paid in lump sum to the City. The City and Convention Center would continue to receive free advertising of events on the ninth advertising spot in a 9-slot advertising cycle (a typical ad lasts about 8 seconds before the next ad rotates).
The Agreement also provides protections for the City should OUTFRONT sell the sign or the Rodeo fail to transfer ownership to OUTFRONT or any other company, or the land where the sign is located is sold.
Recommended/Desired Action
Following the public hearing, City staff recommends approval of the resolution.
Attachment(s)
Resolution
Drafter
Ted Chinn
Head of Department
Ted Chinn