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03.27.2012 Town Council PacketPage 1 of 3 ] 1. Call to Order / Roll Call 2. Invocation, Pledge of Allegiance, and Pledge to the Texas Flag 3. Announcements of dates and times of upcoming community events 4. Presentation of the GFOA Certificate of Achievement for Excellence in Financial Reporting to the Town of Prosper, Texas for its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2010. (MG) 5. Presentation by Julie Stallcup regarding Health Inspection Services for the Town of Prosper. (TE) 6. CONSENT AGENDA (Items placed on the Consent Agenda are considered routine in nature and are considered non- controversial. The Consent Agenda can be acted upon in one motion. A majority vote of the Council is required to remove any item for discussion and separate action. Council members may vote nay on any single item without comment and may submit written comments as part of the official record.) MINUTES, RESOLUTIONS AND OTHER ITEMS 6a. Consider and act upon minutes from the following Council meeting(s) (AP) February 28, 2012 – Regular Town Council Meeting 6b. Consider and act upon the February 2012 Monthly Financial Statements. (MG) 6c. Consider and act upon Resolution No. 12-20, reviewing, updating and adopting the Town of Prosper and Prosper EDC Investment Policy and Investment Strategy. (MG) 6d. Consider and act upon a name for the loop street in Frontier Park. (WH) 6e. Consider and act upon Resolution No. 12-23, amending the Professional Service contract with Brown Reynolds Watford Architects, Inc. (WH) 6f. Consider and act upon Ordinance No. 12-11, cancelling the May 12, 2012 General Election. (AP) 6g. Consider and act upon approving the replacement of two vehicles for the Fire Department. (RT) AGENDA Regular Meeting of the Prosper Town Council Prosper Municipal Chambers 108 W. Broadway, Prosper, Texas Tuesday, March 27, 2012 Work Session 5:00 p.m. Council Meeting at 6:00 p.m. Page 2 of 3 7. CITIZEN’S COMMENTS (The public is invited to address the Council on any topic. However, the Council is unable to discuss or take action on any topic not listed on this agenda. Please complete a “Public Comments Form” and present it to the Town Secretary prior to the meeting.) Other Comments by the Public REGULAR AGENDA (If you wish to address the Council during the regular agenda portion of the meeting, please fill out a “Speaker Request Form” and present it to the Town Secretary prior to the meeting. Citizens wishing to address the Council for items listed as public hearings will be recognized by the Mayor. Those wishing to speak on a non-public hearing related item will be recognized on a case-by-case basis, at the discretion of the Mayor and Town Council.) DEPARTMENT RELATED ITEMS 8. Discussion regarding Capital Improvement Projects and Financing Options. (MG) 9. Consider and act upon Resolution No. 12-22, accepting the Independent Audit Report and Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2011, as presented by Lori Herrick with Davis Kinard & Co, PC, Certified Public Accountants. (MG) 10. Consider and act upon Resolution No. 12-16, authorizing an agreement with the Town of Prosper and Denton County Freshwater District for the Strategic Partnership on Tract No. 1. (ML) 11. Consider and act upon Resolution No. 12-17, authorizing an agreement with the Town of Prosper and Denton County Freshwater District for the Strategic Partnership on Tract No. 2. (ML) 12. Consider and act upon Resolution No. 12-18, authorizing an agreement with the Town of Prosper and Denton County Freshwater District for the Strategic Partnership on Tract No. 3. (ML) 13. Consider and act upon Ordinance No. 12-08, authorizing the limited purpose annexation of Tract No.1 within Denton County Freshwater Supply District #10 by the Town of Prosper. (ML) 14. Consider and act upon Ordinance No. 12-09, authorizing the limited purpose annexation of Tract No. 2 within Denton County Freshwater Supply District #10 by the Town of Prosper. (ML) 15. Consider and act upon Ordinance No. 12-10, authorizing the limited purpose annexation of Tract No. 3 within Denton County Freshwater Supply District #10 by the Town of Prosper. (ML) 16. Possibly direct Town Staff to schedule topic(s) for discussion at a future meeting. 17. Adjourn Page 3 of 3 CERTIFICATION I, the undersigned authority, do hereby certify that this Notice of Meeting was posted on the inside window at the Town Hall of the Town of Prosper, Texas, a place convenient and readily accessible to the general public at all times, and said notice was posted at least 72 hours before said meeting was convened. _________________________________ ________________ ____________________ Amy Piukana, TRMC Town Secretary Date Notice Posted Date Noticed Removed In addition to any specifically identified Executive Sessions, Council may convene into Executive Session under Section 551 of the Texas Government Code at any point during the open meeting to discuss any item posted on this agenda. The Open Meetings Act provides specific exceptions that require that a meeting be open. Should Council elect to convene into Executive Session, those exceptions will be specifically identified and announced. Any subsequent action, as a result of this Executive Session, will be taken and recorded in open session. NOTICE OF ASSISTANCE AT PUBLIC MEETINGS: The Prosper Town Council Meetings are wheelchair accessible. Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services such as Interpreters for persons who are deaf or hearing impaired, readers, or large print, are requested to contact the Town Secretary’s Office at (972) 569-1013. BRAILLE IS NOT AVAILABLE. Certificate of Achievement for Excellence in Financial Reporting Presented to Town of Prosper Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30,2010 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs)achieve the highest standards in government accounting and financial reporting. President Executive Director TheGovernmentFinanceOfficersAssociationoftheUnitedStatesandCanadapresentsthisAWARDOFFINANCIALREPORTINGACHIEVEMENTtoFinanceDepartmentTownofProsper,TexasTheawardofFinancialReportingAchievementispresentedbytheGovernmentFinanceOfficersAssociationtotheindividual(s)designatedasinstrumentalintheirgovernmentunitachievingaCertificateofAchievementforExcellenceinFinancialReporting.ACertificateofAchievementispresentedtothosegovernmentunitswhoseannualfinancialreportsarejudgedtoadheretoprogramstandardsandrepresentsthehighestawardingovernmentfinancialreporting.UNI1OSTA1SExecutiveDirectorDateNovember16,2011 Page 1 of 1 To: Mayor and Town Council From: Trish Eller, Code Compliance Officer CC: Hulon Webb T. Webb, Jr., P.E., Director of Development Services/Town Engineer Chris Copple, AICP, Planning Director Re: Town Council Meeting – March 27, 2012 Date: March 19, 2012 Agenda Item: A presentation from Julie Stallcup, Health Inspection Officer, regarding health inspections for the Town of Prosper. Description of Agenda Item The Town of Prosper has been contracted with Julie Stallcup, Health Inspector, prior to 2007. Julie Stallcup’s presentation will include the services provided, procedures, and various types of inspections conducted. Budget Impact: The FY 2011-12 budget for Health Inspections is $10,000. Legal Obligations and Review: Julie Stallcup is contracted by the Town of Prosper for FY2011-12. Attached Documents: (will be provided prior to the Town Council Meeting) 1. Power Point presentation regarding services, budgeted payment scale, and type of inspections, including annual pool inspections. 2. Pictures of restaurants, daycare, different mobile food units, and a swimming pool. Town Staff Recommendation: Receive a presentation from Julie Stallcup. Prosper is a place where everyone matters. CODE COMPLIANCE Page 1 of 4 ] Prosper is a place where everyone matters. 1. Call to Order / Roll Call – Mayor Pro Tem Dugger called the meeting to order at 6 p.m. Council present included:, Mayor Pro Tem Kenneth Dugger, Deputy Mayor Pro tem Meigs Miller, Danny Wilson, Curry Vogelsang Jr., Dave Benefield and Jason Dixon. Council Member(s) absent: Mayor Ray Smith Staff present included: Mike Land, Town Manager; Amy Piukana, Town Secretary; Hulon Webb, Director of Development Services; Chris Copple, Planning Director; Wade Harden, Parks & Recreation Manager; Matthew Garrett, Finance Director. 2. Pastor John Fowler with First United Methodist Church gave the Invocation. The Pledge of Allegiance and Pledge to the Texas Flag was given. 3. Announcements of dates and times of upcoming community events. Town Manager Mike Land announced the Windmill Playground build begins May 14th and will continue through the grand opening which is May 20th. Mr. Land announced the CPAC Meeting is set for Monday, March 19, 2012 at 6:30 p.m. in the Municipal Chambers. 4. Mayor Pro Tem Dugger read a proclamation recognizing the week of March 18-24, 2012, as Poison Prevention Week. 5. Mayor Pro Tem Dugger read a proclamation recognizing March 11-17, 2012, as Sunshine Week. 6. CONSENT AGENDA (Items placed on the Consent Agenda are considered routine in nature and are considered non- controversial. The Consent Agenda can be acted upon in one motion. A majority vote of the Council is required to remove any item for discussion and separate action. Council members may vote nay on any single item without comment and may submit written comments as part of the official record.) Council Member Dixon pulled Items 6B and 6C off the Consent Agenda. MINUTES, RESOLUTIONS AND OTHER ITEMS 6a. Consider and act upon minutes from the following Council meeting(s) (AP) February 28, 2012 – Regular Town Council Meeting MINUTES Regular Meeting of the Prosper Town Council Town of Prosper Municipal Chambers 108 W. Broadway, Prosper, Texas Tuesday, March 13, 2012 Meeting begins at 6:00 p.m. Page 2 of 4 6d. Consider and act upon Resolution No. 12-15, entering into a mutual release agreement with Berkley Regional Insurance Company and the Town of Prosper. (ML) 6e. Consider and act upon whether to direct staff to submit a written notice of appeal on behalf of the Town Council to the Development Services Department, pursuant to Chapter 4, Section 1.5(C)(7) and 1.6(B)(7) of the Town’s Zoning Ordinance, regarding action taken by the Planning & Zoning Commission on any site plan or preliminary site plan. (CC) Deputy Mayor Pro Tem Miller made a motion to approve Consent Items 6a, 6d, 6e, as presented. Motion seconded by Council Member Vogelsang. Motion approved by vote of 6-0. 6b. Consider and act upon Resolution No. 12-19, awarding the Prosper Parks & Right-of-Way Maintenance bid. Senior Parks Planner Wade Harden briefed Council regarding this item. Mr. Harden explained that the Town advertised the Parks Right of Way Maintenance Bid to locate a company to contract mowing services of all Park properties. He noted that three companies were compared using the “Best Value” criteria as established by the Texas Local Government Code. Mr. Harden explained that V&A Lawn Care scored the highest. Deputy Mayor Pro Tem Dugger made a motion to approve Item 6b, as presented. Motion seconded by Council Member Wilson. Motion approved by vote of 6-0. 6c. Consider and act upon a proposal from Toby Flanagan to operate a North Texas Baseball tournament in Frontier Park. (WH) Senior Parks Planner Wade Harden briefed Council regarding this item. Mr. Harden explained staff met with Toby Flanagan of the North Texas Baseball League to discuss a Memorial Day weekend tournament at Frontier Park May 26th and May 27, 2012. Mr. Harden stated that the tournament would not interfere with the Prosper Youth Sports Association Baseball League and that NTXBB will provide insurance for the tournament. Council discussed the contract agreement, non refundable fees, and makeup game options. Council Member Dixon made a motion to approve the North Texas Baseball tournament Memorial Day weekend at a fee of $1,000 a day for the use of Frontier Park baseball fields, softball fields, and the use of the restroom and concession structure with the stipulation that rainout options are added to the contract along with a non refundable deposit. Motion seconded by Council Member Vogelsang. Motion approved by vote of 6-0. Page 3 of 4 7. CITIZEN’S COMMENTS (The public is invited to address the Council on any topic. However, the Council is unable to discuss or take action on any topic not listed on this agenda. Please complete a “Public Comments Form” and present it to the Town Secretary prior to the meeting.) Other Comments by the Public- There was no one present that wished to speak. REGULAR AGENDA (If you wish to address the Council during the regular agenda portion of the meeting, please fill out a “Speaker Request Form” and present it to the Town Secretary prior to the meeting. Citizens wishing to address the Council for items listed as public hearings will be recognized by the Mayor. Those wishing to speak on a non-public hearing related item will be recognized on a case-by-case basis, at the discretion of the Mayor and Town Council.) PUBLIC HEARINGS 8. Second Public Hearing to provide a forum for public testimony and evidence regarding the proposed execution of three (3) separate strategic partnership agreements (the “Agreements”) between the Town of Prosper and Denton County Freshwater Supply District #10, to authorize, among other things, the limited purpose annexation of certain property within Denton County Freshwater Supply District # 10 by the Town of Prosper pursuant to the provisions of Section 43.0751, Texas Local Government Code, as amended. Town Manager Mike Land briefed Council regarding the agreements noting that Town of Prosper entered into agreement with 166 Bryan Road Partners, LP for the Reduction of the Extraterritorial Jurisdiction. In this agreement the Town enters into Strategic Partnership Agreements with Denton County Fresh Water District No. 10. These SPA agreements address the collection of sales tax and its distribution in commercial areas located within the District. Mr. Land noted that this is the second of two required public hearings, and three resolutions and three ordinances would be brought forward at the next Council Meeting. Deputy Mayor Pro Tem Miller made a motion to open the Public Hearing. Motion seconded by Council Member Dixon. Motion approved by vote of 6-0. There were no citizens present that wished to speak regarding this item. Deputy Mayor Pro Tem Miller made a motion to close the Public Hearing. Motion seconded by Council Member Benefield. Motion approved by vote of 6-0. DEPARTMENT RELATED ITEMS Council Member Dixon recused himself from Agenda Item No. 9 due to a conflict of interest. 9. Consider and act upon Resolution No. 12-12, awarding the benefit consulting services contract to IPS Advisors, Inc. and authorizing the Town Manager to execute the same. Town Manager Mike Land briefed Council regarding this item. Mr. Land explained that the Town published a request for sealed competitive proposal for health benefit consulting services. He explained the evaluation process which was based on cost, municipal experience, client base with smaller Page 4 of 4 municipalities and level of service. Mr. Land noted that Gallagher and IPS were the two companies being considered. He explained that staff recommends IPS based on the minimal cost difference between Gallagher and IPS; our ongoing strategy implementation with IPS; their experience working with smaller cities, excellent service over the past three years, and the fact no additional administrative costs would be incurred for a vendor change. After discussion, Council Member Deputy Mayor Pro Tem Miller made a motion to approve Resolution No. 12-12, as presented. Motion seconded by Council Member Benefield. Motion approved by vote of 5-0. 10. EXECUTIVE SESSION- Deputy Mayor Pro Tem Miller made a motion to adjourn into Executive Session at 7:13 p.m. Motion seconded by Council Member Wilson. Motion approved by vote of 6-0. Recess into Closed Session in compliance with Section 551.001 et. seq. Texas Government Code, to wit; 10a. Section 551.072. To deliberate the purchase, exchange, lease or value of real property located south of Prosper Trail, east of the BNSF railroad, west of Custer, and north of Highway 380. 10b. To reconvene in Regular Session and take any action necessary as a result of the Closed Session. Deputy Mayor Pro Tem Miller made a motion to reconvene into Regular Session at 7:57 p.m. Motion seconded by Council Member Dixon. Motion approved by vote of 6-0. No action was taken as a result of Executive Session. 11. Possibly direct Town Staff to schedule topic(s) for discussion at a future meeting. Town Manager Mike Land announced that staff will be providing an update regarding Hayes Road. 12. Adjourn – Deputy Mayor Pro Tem Miller made a motion to adjourn. Motion seconded by Council Member Vogelsang. Motion approved by vote of 6-0. The meeting adjourned at 7:59 p.m. APPROVED: ___________________________________ Mayor ATTEST: _______________________________ Amy M. Piukana, TRMC Town Secretary Page 1 of 2 To: Mayor and Town Council From: Matthew B. Garrett, Finance Director CC: Mike Land, Town Manager Re: Town Council Meeting – March 27, 2012 Date: March 22, 2012 Agenda Item: Consider and act upon a Resolution No. 12-20 reviewing, updating and adopting the Town of Prosper and Prosper EDC Investment Policy and Investment Strategy. Description of Agenda Item: In March, 2006 the Town of Prosper council adopted an Investment Policy for the Town and EDC. Under the Public Funds Investments Act, Chapter 2256.05, Sec. (e), the governing body of the investing entity shall review its investment policy and investment strategies and shall adopt by rule, order, ordinance, or resolution stating that it has reviewed the investment policy and investment strategies and that the written instrument so adopted shall record any changes made to either the investment policy or investment strategies. This policy was last reviewed, revised and adopted with changes in March 2011. Exhibit “A” as attached is the Policy proposed by Town Staff incorporating change recommendations for approval. The current Town of Prosper Investment Policy was reviewed by Town Staff and the changes recorded in Exhibit “B” are the resulting suggestions for the Investment Policy and Investment Strategy. Most changes resulted from the passage of HB 2226 in the 2011 legislative session. Legislative changes incorporated include credit rating monitoring, PFIA training calendar synced with the fiscal year, expands CDARS-type deposits and removes appearances of gains and losses for interim reporting. Several other changes were made to clarify or improve compliance sections based on the Government Treasurers’ Organization of Texas Certification Checklist. Lastly, the Investment Officers were updated to reflect changes in position titles and responsibilities in the near term. Budget Impact: N/A Legal Obligations and Review: N/A Prosper is a place where everyone matters. Administration Page 2 of 2 Attached Documents: Resolution Exhibit A - Investment Policy as Recommended Exhibit B - Investment Policy with Changes Highlighted and Recorded Board/Committee Recommendation: N/A Town Staff Recommendation: Staff recommends that the Town Council, “Make a motion to approve Resolution No. 12-20 reviewing, updating and adopting the Town of Prosper and Prosper EDC Investment Policy and Investment Strategy.” TOWN OF PROSPER, TEXAS RESOLUTION NO. 12-20 A RESOLUTION OF THE PROSPER TOWN COUNCIL REVIEWING, UPDATING AND ADOPTING THE PROSPER INVESTMENT POLICY AND INVESTMENT STRATEGY. WHEREAS, Section 2256.005(e) of the Public Funds Investment Act (the “Act”) states that the governing body of an investing entity shall review its investment policy and investment strategies not less than annually; and WHEREAS, the governing body shall adopt a written instrument by rule, order, ordinance, or resolution stating that it has reviewed the investment policy and investment strategies: and WHEREAS, the Act requires the written instrument so adopted shall record any changes made to either the investment policy or investment strategies. NOW, THEREFORE, BE IT RESOLVED BY THE PROSPER TOWN COUNCIL: SECTION 1. The Prosper Town Council hereby confirms that it has reviewed the Town’s Investment Policy and Investment Strategy and adopts the Investment Policy dated March 27, 2012 attached hereto as Exhibit “A”. Changes made to the Investment Policy, which have been incorporated in Exhibit “A” are recorded for compliance in the document attached hereto as Exhibit “B.” SECTION 2. This Resolution shall be effective immediately upon its passage. RESOLVED THIS THE 27th day of March, 2012. APPROVED: By: _______________________________ Ray Smith, Mayor ATTEST: By: _______________________________ Amy Piukana TRMC, Town Secretary EXHIBIT A PROSPER IS A PLACE WHERE EVERYONE MATTERS TOWN OF PROSPER, TEXAS and PROSPER ECONOMIC DEVELOPMENT CORPORATION INVESTMENT POLICY MARCH 27, 2012 EXHIBIT A Revised 03/2012 Investment Policy Page 2 of 26 INVESTMENT POLICY Table of Contents PREFACE 3 I. PURPOSE 4 A. FORMAL ADOPTION 4 B. SCOPE 4 C. REVIEW AND AMENDMENT 5 D. INVESTMENT STRATEGY 5 II. INVESTMENT OBJECTIVES 5 A. SAFETY OF PRINCIPAL 5 B. MAINTENANCE OF ADEQUATE LIQUIDITY 5 C. YIELD 6 III. INVESTMENT POLICIES 6 A. AUTHORIZED INVESTMENTS 6 B. PROTECTION OF PRINCIPAL 10 C. INVESTMENT ADVISERS AND SECURITIES DEALERS 12 D. RESPONSIBILITY AND CONTROL 14 IV. INVESTMENT STRATEGY 18 A. OPERATING FUNDS 18 B. CONSTRUCTION AND CAPITAL IMPROVEMENT FUNDS 18 C. DEBT SERVICE FUNDS 19 D. ENTERPRISE FUNDS 20 APPENDIX “A” – GLOSSARY OF TERMS 21 EXHIBIT A Revised 03/2012 Investment Policy Page 3 of 26 PREFACE The Town of Prosper and the Prosper Economic Development Corporation are separately chartered, governed, and operated entities. Each ENTITY adheres to its own governing documents and the Public Funds Investment Act. Each ENTITY additionally seeks to safely and effectively manage the funds under its control. To achieve those requirements, the governing body of each ENTITY has legally adopted this Investment Policy. Throughout this Investment Policy, the two entities shall be singularly referred to as “ENTITY” and collectively referred to as “PROSPER.” It is the policy of PROSPER that, giving due regard to the safety and risk of investment, all available funds shall be invested in conformance with State and Federal Regulations, applicable Bond Resolution requirements, adopted Investment Policy and adopted Investment Strategy. Effective cash management is recognized as essential to good fiscal management. Aggressive cash management and effective investment strategy development will be pursued to take advantage of interest earnings as viable and material revenue to all PROSPER funds. PROSPER’s portfolio shall be designed and managed in a manner responsive to the public trust and consistent with this policy. Investments shall be made with the primary objectives of:  Preservation of capital,  Safety of PROSPER funds,  Maintenance of sufficient liquidity,  Maximization of return within acceptable risk constraints, and  Diversification of investments. EXHIBIT A Revised 03/2012 Investment Policy Page 4 of 26 I. PURPOSE A. Formal Adoption This Investment Policy is authorized by PROSPER in accordance with Chapter 2256, Texas Government Code, the Public Funds Investment Act, herein referred to as “PFIA”. B. Scope This Investment Policy applies to all of the investment activities of PROSPER. These funds are accounted for in the Town’s Comprehensive Annual Financial Report (CAFR) and include:  General Funds  Debt Service Funds  Special Revenue Funds  Capital Project Funds  Enterprise Funds  Internal Service Funds  Economic Development Corporation Funds  Any new fund created by the Town The Town of Prosper may consolidate cash balances from multiple funds to maximize investment earnings. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles. This Policy establishes guidelines for: 1. Who can invest PROSPER funds, 2. How PROSPER funds will be invested, and 3. When and how a periodic review of investments will be made. In addition to this Policy, bond funds (as defined by the Internal Revenue Service) shall be managed in accordance with their issuing documentation and all applicable State and Federal Law. All investments made with PROSPER funds prior to the adoption of this Investment Policy shall be held or liquidated as determined to be in the best interest of the financial well being of PROSPER. PROSPER will also monitor changes in the credit ratings of its investments quarterly using a number of resources including rating agencies, broker/dealers or financial publications. PROSPER shall take all prudent measures that are consistent with its investment policy to liquidate an investment that does not have the minimum rating. EXHIBIT A Revised 03/2012 Investment Policy Page 5 of 26 C. Review and Amendment This Policy shall be reviewed annually by the ENTITY’s governing body. The ENTITY’s governing body shall adopt a written document stating that it has reviewed the Investment Policy. D. Investment Strategy In conjunction with the annual Policy review, the ENTITY’s governing body shall review the separate written Investment Strategy for each of PROSPER’s funds. The Investment Strategy must describe the investment objectives for each particular fund according to the following priorities: 1. Investment suitability, 2. Preservation and safety of principal, 3. Liquidity, 4. Marketability prior to maturity of each investment, 5. Diversification, and 6. Yield. II. INVESTMENT OBJECTIVES A. Safety of Principal The primary objective of all investment activity is the preservation of capital and the safety of principal in the overall portfolio. Each investment transaction shall seek to ensure first that capital losses are avoided, whether they are from securities defaults or erosion of the market value. B. Maintenance of Adequate Liquidity The investment portfolio will remain sufficiently liquid to meet the cash flow requirements that might be reasonably anticipated. Liquidity shall be achieved by matching investment maturities with forecasted cash flow requirements; investing in securities with active secondary markets; and maintaining appropriate portfolio diversification. EXHIBIT A Revised 03/2012 Investment Policy Page 6 of 26 C. Yield The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. Core investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. III. INVESTMENT POLICIES A. Authorized Investments Investments described below are authorized by PFIA as eligible securities for PROSPER. In the event an authorized investment loses its required minimum credit rating, all prudent measures will be taken to liquidate said investment. Additionally, PROSPER is not required to liquidate investments that were authorized at the time of purchase in the event that subsequent legislation renders certain securities as no longer authorized for purchase by the Town. PROSPER’s funds governed by this Policy may be invested in: 1. Obligations of Governmental Entities. Except for the items listed in 1.e. below, the following are authorized investments for obligations of governmental agencies: a. Obligations of the United States or its agencies and instrumentalities; b. Direct obligations of the State of Texas or its agencies and instrumentalities; c. Other obligations, the principal and interest on which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States; d. Obligations of states, agencies, counties, cities, and other political subdivisions of any State having been rated as to investment quality by a nationally recognized investment rating firm and having received a rating of not less than “A” or its equivalent; EXHIBIT A Revised 03/2012 Investment Policy Page 7 of 26 e. The following are not authorized investments for PROSPER: 1. Obligations whose payments represent the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal (Interest Only); 2. Obligations whose payments represent the principal stream of cash flow from the underlying mortgage-backed security collateral and bear no interest (Principal Only); 3. Collateralized mortgage obligations that have a stated final maturity date of greater than 10 years; and 4. Collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in the market index (Inverse Floater). PROSPER expressly prohibits the acceptance for collateralized deposits interest-only and principal-only mortgage backed securities and collateralized mortgage obligations with stated final maturities in excess of ten years or with coupon rates that float inversely to market index movements. 2. Financial Institution Deposits. Certificates of deposit or share certificates provided the certificate is a. Issued by a depository institution that has its main office or a branch office in Texas that is: 1. Guaranteed or insured by the Federal Deposit Insurance Corporation or its successor or the National Credit Union Share Insurance Fund or its successor; or 2. Secured by obligations that are described by 1. (Obligations of Governmental Entities) above, which are intended to include all direct Federal agency or instrumentality issued mortgage backed securities, but excluding those mortgage-backed securities of the nature described in 1.e. above, that have a market value of not less than the uninsured amount of the deposit; or 3. Secured in any other manner and amount provided by the law for deposits of PROSPER. EXHIBIT A Revised 03/2012 Investment Policy Page 8 of 26 b. In addition to the authority to invest funds in certificates of deposit under Subsection “a”, an investment in certificates of deposit made in accordance with the following conditions is an authorized investment: 1. The funds are invested through: (a) a broker that has its main office or a branch office in this state and is selected from a list adopted by the investing entity as required by Section 2256.025; or (b) a depository institution that has its main office or a branch office in this state and that is selected by the investing entity; 2. The broker or the depository institution selected by the investing entity under Subdivision (1) arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions, wherever located, for the account of the investing entity; 3. The full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States; and 4. The investing entity appoints the depository institution selected by the investing entity under Subdivision (1), an entity described by Section 2257.041(d), or a clearing broker-dealer registered with the Securities and Exchange Commission and operating pursuant to Securities and Exchange Commission Rule 15c3-3 (17 C.F.R. Section 240.15c3-3) as custodian for the investing entity with respect to the certificates of deposit issued for the account of the investing entity. 3. Mutual Funds. Money market mutual funds regulated by the Securities & Exchange Commission, with a dollar weighted average portfolio maturity of 60 days or less that fully invest dollar-for-dollar all PROSPER funds without sales commission or loads and, whose investment objectives include seeking to maintain a stable net asset value of $1 per share. PROSPER may not invest funds under its control in an amount that exceeds 10% of the total assets of any individual money market mutual fund, excluding bond proceeds and reserves and other funds held for debt service in money market mutual funds; 4. Local Government Investment Pools. Eligible investment pools organized and operating in compliance with PFIA that have been authorized by the ENTITY’s governing body; and whose investment philosophy and strategy include seeking to maintain a stable net asset value of $1 per share, and are consistent with this Policy and PROSPER’s ongoing investment strategy. EXHIBIT A Revised 03/2012 Investment Policy Page 9 of 26 PROSPER expressly allows money market mutual funds and eligible investment pools, authorized by the ENTITY’s governing body, to invest to the full extent permissible within the Public Funds Investment Act. 5. Commercial Paper. Commercial paper is an authorized investment under this policy if the commercial paper: a. Has a stated maturity of 270 days or fewer from the date of its issuance; and b. Is rated not less than A-1 or P-1 or an equivalent rating by at least: 1. two nationally recognized credit rating agencies; or 2. one nationally recognized credit rating agency and is fully secured by an irrevocable letter of credit issued by a bank organized and existing under the laws of the United States or any state. 6. Repurchase Agreements. a. A fully collateralized repurchase agreement is an authorized investment under PFIA, Subchapter A, if the repurchase agreement: 1. has a defined termination date; 2. is secured by a combination of cash and obligations described by PFIA, section 2256.009(a)(1); and 3. requires the securities being purchased by the Town or cash held by the Town to be pledged to the Town, held in the Town’s name, and deposited at the time the investment is made with the Town or with the third-party selected and approved by the Town; and 4. is placed through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing business in this state. b. In this section, “repurchase agreement” means a simultaneous agreement to buy, hold for a specific time, and sell back at a future date obligations described by Section 2256.009(a)(1), at market value at the time the funds are disbursed of not less than the principal amount of the funds disbursed. The term includes a direct security repurchase agreement and a reverse Security repurchase agreement. c. Notwithstanding any other law, the term of any reverse security repurchase a agreement may not exceed 90 days after the date the reverse security repurchase agreement is delivered. EXHIBIT A Revised 03/2012 Investment Policy Page 10 of 26 d. Money received by an entity under the terms of a reverse security repurchase agreement shall be used to acquire additional authorized investments, but the term of the authorized investments acquired must mature not later than the expiration date stated in the reverse security repurchase agreement. B. Protection of Principal PROSPER shall seek to control the risk of loss due to failure of a security issuer or grantor. Such risk shall be controlled by investing only in the safest types of securities as defined in the Policy; by collateralization as required by law; and through portfolio diversification by maturity and type. The purchase of individual securities shall be executed “Delivery versus Payment” (DVP) through PROSPER’s Safekeeping Agent. By so doing, PROSPER’s funds are not released until PROSPER has received, through the Safekeeping Agent, the securities purchased. 1. Diversification by Investment Type Diversification by investment type shall be maintained by ensuring an active and efficient secondary market in portfolio investments and by controlling the market and opportunity risks associated with specific investment types. Bond proceeds may be invested in a single security or investment if PROSPER determines that such an investment is necessary to comply with Federal arbitrage restrictions or to facilitate arbitrage record keeping and calculation. 2. Diversification by Investment Maturity In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not exceed the anticipated cash flow requirements of the funds. Generally, PROSPER will not directly invest in securities maturing more than five years from the date of purchase. Maturity guidelines by fund type are discussed in Section IV, Investment Strategy. 3. Ensuring Liquidity Liquidity shall be achieved by anticipating cash flow requirements, by investing in securities with active secondary markets and by investing in eligible money market mutual funds and local government investment pools. EXHIBIT A Revised 03/2012 Investment Policy Page 11 of 26 A security may be liquidated to meet unanticipated cash requirements, to redeploy cash into other investments expected to outperform current holdings, or otherwise to adjust the portfolio. 4. Depository Agreements Consistent with the requirements of State Law, PROSPER requires all bank deposits to be federally insured or collateralized with eligible securities. Financial institutions serving as PROSPER’s Depositories will be required to sign a Depository Agreement with PROSPER and PROSPER’s safekeeping agent. The safekeeping portion of the Agreement shall define PROSPER’s rights to the collateral in case of default, bankruptcy, or closing and shall establish a perfected security interest in compliance with Federal and State regulations, including:  The Agreement must be in writing;  The Agreement has to be executed by the Depository and PROSPER contemporaneously with the acquisition of the asset;  The Agreement must be approved by the Board of Directors or the designated committee of the Depository and a copy of the meeting minutes must be delivered to PROSPER;  The Agreement must be part of the Depository’s “official record” continuously since its execution. a. Allowable Collateral Eligible securities for collateralization of PROSPER deposits are defined by Chapter 2257, Texas Government Code, the Public Funds Collateral Act, as amended and meet the constraints of this Section III. A. 2. b. Collateral Levels The market value of pledged collateral must at all times be equal to or greater than 102% of the principal and accrued interest for PROSPER balances, less the applicable level of FDIC insurance. c. Monitoring Collateral Adequacy PROSPER shall require monthly reports of pledged securities marked to market using quotes by a recognized market pricing service quoted on the valuation date from all financial institutions with which PROSPER has collateralized deposits. The Investment Officers will monitor adequacy of collateralization levels to verify market values and total collateral positions. EXHIBIT A Revised 03/2012 Investment Policy Page 12 of 26 d. Additional Collateral If the collateral pledged for a deposit falls below adequate levels, as defined above in Section 4.b. , the institution holding the deposit will be notified by the Investment Officers and will be required to pledge additional securities no later than the end of the next succeeding business day. e. Security Substitution Collateralized deposits often require substitution of securities. Any financial institution requesting substitution must contact an Investment Officer for approval and settlement. The substituted security’s value will be calculated and substitution approved if the substitution maintains a pledged value equal to or greater than the required security level. An Investment Officer must provide written notification of the decision to the bank or the safekeeping agent holding the security prior to any security release. Substitution is allowable for all transactions, but should be limited, if possible, to minimize potential administrative problems and transfer expense. The Investment Officers may limit substitution and assess appropriate fees if substitution becomes excessive or abusive. 5. Safekeeping a. Safekeeping Agreement PROSPER shall contract with a bank or banks for the safekeeping of securities either owned by PROSPER as a part of its investment portfolio or as a part of its depository agreements. b. Safekeeping of Deposit Collateral All collateral securing bank deposits must be held by a third-party custodian bank eligible under the Public Funds Collateral Act, and acceptable to and under contract with PROSPER, or by a Federal Reserve Bank. C. Investment Advisers and Securities Dealers Investment Advisers shall adhere to the spirit, philosophy and specific terms of this Policy and shall invest within the same “Standard of Care” as defined in Section E. 3. below. Securities Dealers shall avoid recommending or suggesting transactions outside that “Standard of Care.” EXHIBIT A Revised 03/2012 Investment Policy Page 13 of 26 1. Selection of Investment Advisers The selection of Investment Advisers will be performed by the Investment Officers. The Investment Officers will establish criteria to evaluate Investment Advisers including: a. Adherence to PROSPER’s policies and strategies, b. Investment performance and transaction pricing within accepted risk constraints, c. Responsiveness to PROSPER’s request for services, information and open communication, d. Understanding of the inherent fiduciary responsibility of investing public funds, and e. Similarity in philosophy and strategy with PROSPER’s objectives. Selected Investment Advisers must be registered under the Investment Advisers Act of 1940 or with the State Securities Board. A contract with an Investment Adviser may not be for a term longer than two years and any contract, renewal or extension must be approved by Town Council. 2. Selection of Authorized Securities Dealers The ENTITY’s governing body or its Investment Officers acting as the ENTITY’s Investment Committee shall, at least annually, review, revise, and adopt a list of qualified broker/dealers and financial institutions that are authorized to engage in investment transactions with the ENTITY. a. Eligibility Authorized firms may include primary dealers or regional dealers that qualify under Securities & Exchange Commission Rule 15C3-1 (Uniform Net Capital Rule), and qualified depositories. b. Documentation Requirements Brokers/dealers and financial institutions requesting to become qualified to transact investment business with PROSPER shall be required to provide: 1. a completed Broker/Dealer Questionnaire that provides information regarding creditworthiness, experience and reputation; and EXHIBIT A Revised 03/2012 Investment Policy Page 14 of 26 2. a Certification stating the firm has received, reviewed, understood and agrees to comply with PROSPER’s investment policy. This Certification also acknowledges that the business organization has implemented reasonable procedures and controls in an effort to preclude investment transactions conducted between PROSPER and the organization that are not authorized by PROSPER’s investment policy, except to the extent that this authorization is dependent on an analysis of the makeup of PROSPER’s entire portfolio or requires an interpretation of subjective investment standards. PROSPER shall not enter into an investment transaction with a business organization prior to receiving the written instruments described above. c. Competitive Bids It is the policy of PROSPER to require competitive bidding for all individual security purchases and sales except for: 1. transactions with money market mutual funds and local government investment pools; and 2. treasury and agency securities purchased at issue through an approved broker/dealer or financial institution. D. Responsibility and Control 1. Authority to Invest The Town Manager, Finance Director and the Accounting Manager are the “Investment Officers” of the Town of Prosper. The PEDC Treasurer, PEDC Executive Director and the Accounting Manager are the “Investment Officers” of the PEDC. The Investment Officers are authorized to deposit, withdraw, invest, transfer, execute documentation, and otherwise manage PROSPER’s funds according to this Policy. The Investment Officers may authorize one or more Investment Officers to deposit, withdraw or transfer funds out of or into an investment pool or money market mutual fund in order to meet daily operating needs of PROSPER. 2. Prudent Investment Management The designated Investment Officers shall perform their duties in accordance with the adopted Investment Policy and internal procedures. In determining whether an Investment Officer has exercised prudence with respect to an investment decision, the investment of all funds over which the Investment Officer had responsibility, rather than the prudence of a single investment shall be considered. EXHIBIT A Revised 03/2012 Investment Policy Page 15 of 26 Investment Officers acting in good faith and in accordance with these policies and procedures shall be relieved of personal liability. 3. Standard of Care The standard of care used by PROSPER shall be that as defined in PFIA, Section 2256.006. It states: “Investments shall be made with judgment and care, under circumstances then prevailing, that a person of prudence, discretion and intelligence would exercise in the management of the person’s own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived.” 4. Standards of Ethics The designated Investment Officers shall act as custodians of the public trust avoiding any transactions which might involve a conflict of interest, the appearance of a conflict of interest, or any activity which might otherwise discourage public confidence. Investment Officers shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Additionally, all Investment Officers shall file with the Texas Ethics Commission and the ENTITY’s governing body a statement disclosing any personal business relationship with a business organization seeking to sell investments to PROSPER or any relationship within the second degree by affinity or consanguinity to an individual seeking to sell investments to PROSPER. For purposes of this subsection, an Investment Officer has a personal business relationship with business organization if: a. The Investment Officer owns 10 percent or more of the voting stock or shares of the business organization or owns $5,000 or more of the fair market value of the business organization; b. Funds received by the Investment Officer from the business organization exceed 10 percent of the Investment Officer’s gross income for the previous year; or c. The Investment Officer has acquired from the business organization during the previous year investments with a book value of $2,500 or more for the personal account of the Investment Officer. EXHIBIT A Revised 03/2012 Investment Policy Page 16 of 26 5. Establishment of Internal Controls PROSPER’s Investment Officers will maintain a system of internal controls over the investment activities of PROSPER. 6. Reporting Investment performance will be monitored and evaluated by the Investment Officers. The Investment Officers will provide a quarterly comprehensive report signed by all Investment Officers to the ENTITY’s governing body. This investment report shall: a. Describe in detail the investment position of PROSPER, b. Contain a summary statement, prepared in compliance with generally accepted accounting principles, of each pooled fund group that states the: 1. beginning market value of the reporting period; 2. ending market value for the period; 3. fully accrued interest for the reporting period c. State the book value and market value of each separately invested asset at the end of the reporting period by the type of asset and fund type invested; d. State the maturity date of each separately invested asset that has a maturity date; e. State the account or fund or pooled group fund in the state agency or local government for which each individual investment was acquired; and f. State the compliance of the investment portfolio with PROSPER’s Investment Policy, strategy, and PFIA. In defining market value, sources independent of the investment provider will determine valuations and consideration will be given to GASB Statement No. 31. PROSPER, in conjunction with its annual financial audit, shall perform a compliance audit of the management controls on investments and adherence to PROSPER’s Investment Policy. If PROSPER invests in other than money market mutual funds, investment pools or accounts offered by its depository bank in the form of certificates of deposits, or money market accounts or similar accounts, the reports prepared by the Investment Officers shall be formally reviewed at least EXHIBIT A Revised 03/2012 Investment Policy Page 17 of 26 annually by an independent auditor, and the result of the review shall be reported to the ENTITY’s governing body by that auditor. 7. Training In order to insure the quality and capability of PROSPER’s investment personnel making investment decisions, PROSPER shall provide periodic training in investments for the investment personnel through courses and seminars offered by GFOA, GFOAT, GTOT, TML, NCTCOG, ICMA, TSCPA, AICPA, or any independent source or institute of higher learning approved by the Finance Director. a. The Investment Officers shall: 1. attend at least 10 hours of training relating to the Investment Officers’ responsibilities within 12 months after taking office or assuming duties; and 2. attend an investment training session not less than once in a two-year period that begins on the first day of the Town’s fiscal year and consists of the two consecutive fiscal years after that date and receive not less than 10 hours of instruction relating to investment responsibilities under this subchapter from an independent source approved by the governing body of the local government or a designated investment committee advising the investment officer as provided for in the investment policy of the local government. b. Training under this section must include education in investment controls, security risks, strategy risks, market risks, diversification of investment portfolio and compliance with PFIA. EXHIBIT A Revised 03/2012 Investment Policy Page 18 of 26 IV. INVESTMENT STRATEGY In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not exceed the anticipated cash flow requirements of the fund. Investment guidelines by fund-type are as follows: A. Operating Funds 1. Suitability – Any investment eligible in the Investment Policy is suitable for the Operating Funds. 2. Safety of Principal – All investments shall be of high quality securities with no perceived default risk. 3. Liquidity – The Operating Fund requires the greatest short-term liquidity of any of the fund types. Short term investment pools and money market mutual funds provide daily liquidity and may be utilized as a competitive yield alternative to fixed maturity investments. The weighted average days to maturity for the operating fund portfolio shall be less than 365 days, and the maximum allowable maturity shall be five years. 4. Marketability – Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market “spreads” between the bid and offer prices of a particular security-type of less than a quarter of a percentage point shall define an efficient secondary market. 5. Diversification – Investment maturities shall be staggered throughout the budget cycle to provide cash flow based on the anticipated operating needs of PROSPER. Market cycle risks will be reduced by diversifying the appropriate maturity structure out no longer than five years. 6. Yield – Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The yield of an equally weighted, rolling portfolio of Treasury securities with an average maturity roughly equivalent to that of the portfolio shall be the minimum yield objective. B. Construction and Capital Improvement Funds 1. Suitability – Any investment eligible in the Investment Policy is suitable for the Construction and Capital Improvement Funds. 2. Safety of Principal – All investments shall be of high quality securities with no perceived default risk. By managing Construction and Capital Improvement Fund’s portfolio to exceed the anticipated expenditure schedule, the market risk of the overall portfolio will be minimized. EXHIBIT A Revised 03/2012 Investment Policy Page 19 of 26 3. Liquidity – PROSPER funds used for construction and capital improvement programs have reasonably predictable draw down schedules. The investment maturity of construction and capital improvement funds shall generally be limited to the anticipated cash flow requirement or the “temporary period,” as defined by Federal Tax Law. During the temporary period, which is generally three years for capital projects, bond proceeds may be invested at an unrestricted yield. After the expiration of the temporary period, bond proceeds subject to yield restriction shall be invested considering the anticipated cash flow requirements of the funds and market conditions to achieve compliance with the applicable regulations. The stated final maturity dates of investments held should not exceed the estimated project completion date; the maximum maturity for all construction or capital improvement funds shall be five years. 4. Marketability – Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market “spreads” between the bid and offer prices of a particular security-type of less than a quarter of a percentage point shall define an efficient secondary market. 5. Diversification – Investment maturities shall be staggered throughout the budget cycle to provide cash flow based on the anticipated operating needs of the construction and capital improvement funds of PROSPER. 6. Yield – Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The yield of an equally weighted, rolling three-month Treasury bill portfolio shall be the minimum yield objective. C. Debt Service Funds 1. Suitability – Any investment eligible in the Investment Policy is suitable for the Debt Service Funds. 2. Safety of Principal – All investments shall be of high quality securities with no perceived default risk. By managing Debt Service Fund’s portfolio to not exceed the debt service payment schedule the market risk of the overall portfolio will be minimized. 3. Liquidity – Debt Service have predictable payment schedules. Debt Service Funds shall be invested to ensure adequate funding for each consecutive debt service payment. The Investment Officers shall invest in such a manner as not to exceed an “unfunded” debt service date with the maturity of any investment. An unfunded debt service date is defined as a coupon or principal payment date that does not have cash or investment securities available to satisfy said payment. The weighted average days to maturity for the debt service fund portfolio shall be less than 365 days and the maximum allowable maturity shall be two years. EXHIBIT A Revised 03/2012 Investment Policy Page 20 of 26 4. Marketability – Securities with active and efficient secondary markets are not necessary as the event of an unanticipated cash requirement is not probable. 5. Diversification – Investment maturities shall be staggered throughout the budget cycle to provide cash flow based on the anticipated needs of the debt service funds of PROSPER. At no time shall the debt service schedule be exceeded in an attempt to bolster yield. 6. Yield – Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The yield of an equally weighted, rolling portfolio Treasury securities with an average maturity roughly equivalent to that of the portfolio shall be the minimum yield objective. D. Enterprise Funds 1. Suitability – Any investment eligible in the Investment Policy is suitable for the Enterprise Funds. 2. Safety of Principal – All investments shall be of high quality securities with no perceived default risk. 3. Liquidity – The Enterprise Fund requires short-term liquidity for some operations. Short-term investment pools and money market mutual funds provide daily liquidity where needed. The weighted average days to maturity for the enterprise fund portfolio shall be less than 365 days and the maximum allowable maturity shall be five years. 4. Marketability – Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market “spreads” between the bid and offer prices of a particular security-type of less than a quarter of a percentage point shall define an efficient secondary market. 5. Diversification – Investment maturities shall be staggered throughout the budget cycle to provide cash flow based on the anticipated operating needs of PROSPER. Market cycle risk will be reduced by diversifying the appropriate maturity structure out no longer than five years 6. Yield – Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. Portions of Enterprise Fund reserves are available to earn higher yield on longer maturities. The yield of an equally weighted, rolling portfolio Treasury securities with an average maturity roughly equivalent to that of the portfolio shall be the minimum yield objective. EXHIBIT A Revised 03/2012 Investment Policy Page 21 of 26 Appendix “A” Glossary of Cash Management Terms Accretion – Common investment accounting entry in which the book value of securities purchased at a discount are gradually written up to the par value. The process has the effect of recording the discount as income over time. Accrued Interest – Interest earned, but not yet paid, on a bond. Agency – See Federal Agency. Amortization – Common investment accounting entry in which the book value of securities purchased at a premium are gradually written down to the par value. The process has the effect of recording the premium as a reduction to income over time. Arbitrage – Dealing simultaneously in the same product in two markets to take advantage of temporary price distortions at minimal risk Basis Point – A unit of measurement used in the valuation of fixed-income securities equal to 1/100 of 1 percent of yield; e.g., “1/4” of 1 percent is equal to 25 basis points. Benchmark – Index used to compare risk and performance to a managed portfolio. Bid – The indicated price at which a buyer is willing to purchase a security or commodity. Book Value – The original acquisition cost of an investment plus or minus the accrued amortization or accretion. Broker – A financial firm that brings securities buyers and sellers together in return for a fee. The term “broker” is often used interchangeably with “dealer” to refer to a seller of investment securities. Callable Bond – A bond issue in which all or part of its outstanding principal amount may be redeemed before maturity by the issuer under specified conditions. Cash Settlement – A transaction which calls for delivery and payment of securities on the same day that the transaction is initiated. Collateralization – Process by which a borrower pledges securities, property, or other deposits for the purpose of securing the repayment of a loan and/or security. Collateralized Mortgage Obligation (CMO) – A derivative mortgage-backed security (MBS) created from pools of home mortgage loans. A single MBS is divided into multiple classes, each EXHIBIT A Revised 03/2012 Investment Policy Page 22 of 26 class containing unique risk profile and security characteristics. A number of CMO classes are expressly prohibited by Texas State law. Commercial Paper – An unsecured short-term promissory note issued by corporations, with maturities ranging from 1 to 270 days. Commercial paper must carry a minimum rating of A1/P1 in order to be eligible under the Texas Public Funds Investment Act. Constant Maturity Treasury (CMT) – A calculated average released by the Federal Reserve of all Treasury yields along a specific maturity point. This calculation is frequently used as a benchmark for conservative government portfolios. Coupon Rate – The annual rate of interest received by an investor from the issuer of certain types of fixed-income securities. Also known as the “interest rate.” Credit Risk – The risk to an investor that an issuer will default in the payment of interest and/or principal on a security. Derivative – Financial instruments whose value is derived from the movement of an underlying index or security. Dealer – A dealer, as opposed to a broker, sets as a principal in all securities transactions, buying and selling for their own account. Often times, the terms “broker” and “dealer” are used interchangeably to refer to a seller of investments securities. Delivery Versus Payment (DVP) – A type of securities transaction in which the purchaser pays for securities at the time of delivery either to the purchaser or his/her custodian. Derivative Security – Financial instrument created from, or whose value depends upon, one or more underlying assets or indices of asset values. Discount – The amount by which the par value of a security exceeds the price paid for the security. Diversification – A process of investing assets among a range of security types by sector, maturity, and quality rating. Dollar Weighted Average Maturity (WAM) – The average maturity of all the securities that comprise a portfolio weighted by the dollar value of each security. Fair Market Rate – A documented and verifiable rate of interest which approximates the average rate which could have been earned on similar investments at the time of the transaction. Federal Agency – A debt instrument that carries a rating of AAA because it is government sponsored. EXHIBIT A Revised 03/2012 Investment Policy Page 23 of 26 Federal Deposit Insurance Corporation (FDIC) – A federal agency that insures bank deposits, currently up to $250,000 per account. Public deposits that exceed this amount must be properly collateralized with investment securities or insured through a surety bond. Financial Industry Regulatory Authority (FINRA) - the successor to the National Association of Securities Dealers, Inc. (NASD). FINRA is a private corporation that focuses on regulatory oversight of all securities firms that do business with the public; professional training, testing and licensing of registered persons; arbitration and mediation; market regulation by contract for the New York Stock Exchange, the NASDAQ Stock Market, Inc., the American Stock Exchange LLC, and the International Securities Exchange. Interest Rate – See “Coupon Rate.” Internal Controls – An internal control structure designed to ensure that the assets of the entity are protected from loss, theft, or misuse. The internal control structure is designed to provide reasonable assurance that these objectives are met. Interlocal Cooperation Act – Law permitting joint participation by local governments providing one or more government functions within the State. This law [Section 891.001 et seq. of the Texas Government Code (the “Act”)] has allowed for the creation of investment pools in Texas. Investment Advisers Act of 1940 – Law which requires all Investment Advisers to be registered with the SEC in order to protect the public from fraud. Investment Policy – A concise and clear statement of the objectives and parameters formulated by an investor or investment manager for a portfolio of investment securities. The Texas Public Funds Investment Act requires that public entities have a written and approved investment policy. Investment Pool – An entity created under the Interlocal Cooperation Act to invest public funds jointly on behalf of the entities that participate in the pool. Liquidity – A liquid investment is one that can be easily and quickly converted to cash without substantial loss of value. Investment pools and money market funds, which allow for same day withdrawal of cash, are considered extremely liquid. Local Government Investment Pool (LGIP) – An investment by local governments in which their money is pooled as a method for managing local funds. Market Risk - The risk that the value of a security will rise or decline as a result of changes in market conditions. Market Value – A security’s par amount multiplied by its market price. EXHIBIT A Revised 03/2012 Investment Policy Page 24 of 26 Master Repurchase Agreement – A written contract covering all future transactions between the two parties to a repurchase agreement. Maturity – The date on which payment of a financial obligation is due. The final stated maturity is the date on which the issuer must retire a bond and pay the face value to the bondholder. See “Weighted Average Maturity.” Money Market Mutual Fund – Mutual funds that invest solely in money market instruments (short term debt instruments, such as Treasury bills, commercial paper, bankers’ acceptance, repos and federal funds). Mortgage-Backed Security (MBS) – Security backed by pools of home loan mortgages. Net Asset Value (NAV) – The value of a mutual fund or investment pool at the end of the business day. NAV is calculated by adding the market value of all securities in a fund or pool, deducting expenses, and dividing by the number of shares in the fund or pool. Offer – An indicated price at which market participants are willing to sell a security. Also referred to as the “Ask Price.” Par – Face value or principal value of a bond, typically $1,000 per bond. A security’s par value is multiplied by its coupon rate to determine coupon payment amount. Premium – The amount by which the price paid for a security exceeds the security’s par value. Primary Government Securities Dealer (Primary Dealer) – One of 20 (as of 02/2011 ) large government securities dealers who are required to submit daily reports of market activity and monthly financial statements to the New York Federal Reserve Bank. Primary Dealers are required to continually “make a market” in Treasury securities, buying or selling when asked, thereby creating a liquid secondary market for US debt obligations. Principal – The face value or par value of a debt instrument. Also may refer to the amount of capital invested in a given security. Prudent Investor Rule – Refers to an investment principle in the Public Funds Investment Act outlining the fiduciary responsibilities of Investment Officers. Regular Way Delivery – Securities settlement that calls for delivery and payment on the third business day following the trade date (T + 3); payment on a T + 1 basis is currently under consideration. Mutual funds are settled on a same day basis; government securities are settled on the next business day. EXHIBIT A Revised 03/2012 Investment Policy Page 25 of 26 Repurchase Agreement (repo or RP) – An agreement of one party to sell securities at a specified price to a second party and a simultaneous agreement of the first party to repurchase the securities at a specified price or at a specified later date. Reverse Repurchase Agreement (Reverse Repo) – An agreement of one party to purchase securities at a specified price from a second party and a simultaneous agreement by the first party to resell the securities at a specified price to the second party on demand or at a specified date. Safekeeping – Holding of assets (e.g., securities) by a financial institution. Total Return – The sum of all investment income plus changes in the capital value of the portfolio. For mutual funds, return on an investment is composed of share price appreciation plus any realized dividends or capital gains. This is calculated by taking the following components during a certain time period: (Price Appreciation) + (Dividends Paid) + (Capital Gains) = (Total Return). Treasury Bills – Short term U.S. government non-interest bearing debt securities with maturities of no longer than one year and issued with a minimum purchase of $100. Bills pay interest only at maturity. The interest is equal to the face value minus the purchase price. Auctions of four week, 13 week and 26 week bills are every week, while auctions of 52 week bills are done every four weeks. The yields on these bills are monitored closely in the money markets for signs of interest rate trends. Treasury Notes – Intermediate U.S. government debt securities with maturities of one to 10 years and issued with a minimum purchase of $100. Treasury notes, or T-notes, are issued in terms of 2, 3, 5, 7, and 10 years, and pay interest every six months until they mature. Uniform Net Capital Rule – SEC Rule 15C3-1 outlining capital requirements for brokers/dealers. Volatility – A degree of fluctuation in the price and valuation of securities. Yield – The current rate of return on an investment security generally expressed as a percentage of the security’s face value. Yield-to-Call (YTC) – The rate of return an investor earns from a bond assuming the bond is redeemed (called) prior to its nominal maturity date. Yield Curve – A graphic representation that depicts the relationship at a given point in time between yields and maturity for bonds that are identical in every way except maturity. A normal yield curve may be alternatively referred to as a positive yield curve. Yield-to-Maturity – The rate of return yielded by a debt security held to maturity when both EXHIBIT A Revised 03/2012 Investment Policy Page 26 of 26 interest payments and the investor’s potential capital gain or loss are included in the calculation of return. Zero-coupon Securities – Security that is issued at a discount and makes no periodic interest payments. The rate of return consist of a gradual accretion of the principal of the security and is payable at par upon maturity. EXHIBIT B PROSPER IS A PLACE WHERE EVERYONE MATTERS TOWN OF PROSPER, TEXAS and PROSPER ECONOMIC DEVELOPMENT CORPORATION INVESTMENT POLICY MARCH 2722, 201211 EXHIBIT B Revised 03/20112012 Investment Policy Page 2 of 30 INVESTMENT POLICY Table of Contents PREFACE 3 I. PURPOSE 4 A. FORMAL ADOPTION 4 B. SCOPE 4 C. REVIEW AND AMENDMENT 54 D. INVESTMENT STRATEGY 54 II. INVESTMENT OBJECTIVES 5 A. SAFETY OF PRINCIPAL 5 B. MAINTENANCE OF ADEQUATE LIQUIDITY 5 C. YIELD 6 III. INVESTMENT POLICIES 75 A. AUTHORIZED INVESTMENTS 75 B. PROTECTION OF PRINCIPAL 119 C. INVESTMENT ADVISERS AND SECURITIES DEALERS 1411 D. RESPONSIBILITY AND CONTROL 1613 IV. INVESTMENT STRATEGY 2216 A. OPERATING FUNDS 2216 B. CONSTRUCTION AND CAPITAL IMPROVEMENT FUNDS 2217 C. DEBT SERVICE FUNDS 2418 D. ENTERPRISE FUNDS 2418 APPENDIX “A” – GLOSSARY OF TERMS 2520 EXHIBIT B Revised 03/20112012 Investment Policy Page 3 of 30 PREFACE The Town of Prosper and the Prosper Economic Development Corporation are separately chartered, governed, and operated entities. Each ENTITY adheres to its own governing documents and the Public Funds Investment Act. Each ENTITY additionally seeks to safely and effectively manage the funds under its control. To achieve those requirements, the governing body of each ENTITY has legally adopted this Investment Policy. Throughout this Investment Policy, the two entities shall be singularly referred to as “ENTITY” and collectively referred to as “PROSPER.” It is the policy of PROSPER that, giving due regard to the safety and risk of investment, all available funds shall be invested in conformance with State and Federal Regulations, applicable Bond Resolution requirements, adopted Investment Policy and adopted Investment Strategy. Effective cash management is recognized as essential to good fiscal management. Aggressive cash management and effective investment strategy development will be pursued to take advantage of interest earnings as viable and material revenue to all PROSPER funds. PROSPER’s portfolio shall be designed and managed in a manner responsive to the public trust and consistent with this policy. Investments shall be made with the primary objectives of:  Preservation of capital,  Safety of PROSPER funds,  Maintenance of sufficient liquidity,  Maximization of return within acceptable risk constraints, and  Diversification of investments. EXHIBIT B Revised 03/20112012 Investment Policy Page 4 of 30 I. PURPOSE A. Formal Adoption This Investment Policy is authorized by PROSPER in accordance with Chapter 2256, Texas Government Code, the Public Funds Investment Act, herein referred to as “PFIA”. B. Scope This Investment Policy applies to all of the investment activities of PROSPER. These funds are accounted for in the Town’s Comprehensive Annual Financial Report (CAFR) and include:  General Funds  Debt Service Funds  Special Revenue Funds  Capital Project Funds  Enterprise Funds  Internal Service Funds  Economic Development Corporation Funds  Any new fund created by the Town The Town of Prosper may consolidate cash balances from multiple funds to maximize investment earnings. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles. This Policy establishes guidelines for: 1. Who can invest PROSPER funds, 2. How PROSPER funds will be invested, and 3. When and how a periodic review of investments will be made. In addition to this Policy, bond funds (as defined by the Internal Revenue Service) shall be managed in accordance with their issuing documentation and all applicable State and Federal Law. All investments made with PROSPER funds prior to the adoption of this Investment Policy shall be held or liquidated as determined to be in the best interest of the financial well being of PROSPER. PROSPER will also monitor changes in the credit ratings of its investments quarterly using a number of resources including rating agencies, broker/dealers or financial publications. PROSPER shall take all prudent EXHIBIT B Revised 03/20112012 Investment Policy Page 5 of 30 measures that are consistent with its investment policy to liquidate an investment that does not have the minimum rating. C. Review and Amendment This Policy shall be reviewed annually by the ENTITY’s governing body. The ENTITY’s governing body shall adopt a written document stating that it has reviewed the Investment Policy. D. Investment Strategy In conjunction with the annual Policy review, the ENTITY’s governing body shall review the separate written Investment Strategy for each of PROSPER’s funds. The Investment Strategy must describe the investment objectives for each particular fund according to the following priorities: 1. Investment suitability, 2. Preservation and safety of principal, 3. Liquidity, 4. Marketability prior to maturity of each investment, 5. Diversification, and 6. Yield. II. INVESTMENT OBJECTIVES A. Safety of Principal The primary objective of all investment activity is the preservation of capital and the safety of principal in the overall portfolio. Each investment transaction shall seek to ensure first that capital losses are avoided, whether they are from securities defaults or erosion of the market value. B. Maintenance of Adequate Liquidity The investment portfolio will remain sufficiently liquid to meet the cash flow requirements that might be reasonably anticipated. Liquidity shall be achieved by matching investment maturities with forecasted cash flow requirements; investing in EXHIBIT B Revised 03/20112012 Investment Policy Page 6 of 30 securities with active secondary markets; and maintaining appropriate portfolio diversification. EXHIBIT B Revised 03/20112012 Investment Policy Page 7 of 30 C. Yield The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. Core investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. III. INVESTMENT POLICIES A. Authorized Investments Investments described below are authorized by PFIA as eligible securities for PROSPER. In the event an authorized investment loses its required minimum credit rating, all prudent measures will be taken to liquidate said investment. Additionally, PROSPER is not required to liquidate investments that were authorized at the time of purchase in the event that subsequent legislation renders certain securities as no longer authorized for purchase by the Town. PROSPER’s funds governed by this Policy may be invested in: 1. Obligations of Governmental Entities. Except for the items listed in 1.e. below, the following are authorized investments for obligations of governmental agencies: a. Obligations of the United States or its agencies and instrumentalities; b. Direct obligations of the State of Texas or its agencies and instrumentalities; c. Other obligations, the principal and interest on which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States; d. Obligations of states, agencies, counties, cities, and other political subdivisions of any State having been rated as to investment quality by a nationally recognized investment rating firm and having received a rating of not less than “A” or its equivalent; EXHIBIT B Revised 03/20112012 Investment Policy Page 8 of 30 e. The following are not authorized investments for PROSPER: 1. Obligations whose payments represent the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal (Interest Only); 2. Obligations whose payments represent the principal stream of cash flow from the underlying mortgage-backed security collateral and bear no interest (Principal Only); 3. Collateralized mortgage obligations that have a stated final maturity date of greater than 10 years; and 4. Collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in the market index (Inverse Floater). PROSPER expressly prohibits the acceptance for collateralized deposits interest-only and principal-only mortgage backed securities and collateralized mortgage obligations with stated final maturities in excess of ten years or with coupon rates that float inversely to market index movements. 2. Financial Institution Deposits. Certificates of deposit or share certificates provided the certificate is a. Issued by a depository institution that has its main office or a branch office in State and National Banks doing business in Texas that are:that is: 1. a. Guaranteed or insured by the Federal Deposit Insurance Corporation or its successors; or the National Credit Union Share Insurance Fund or its successor; or b. 2. Secured by obligations that are described by 1. (Obligations of Governmental Entities) above, which are intended to include all direct Federal agency or instrumentality issued mortgage backed securities, but excluding those mortgage-backed securities of the nature described in 1.e. above, that have a market value of not less than the uninsured amount of the deposit; or c. 3. Secured in any other manner and amount provided by the law for deposits of PROSPER.; or EXHIBIT B Revised 03/20112012 Investment Policy Page 9 of 30 b. In addition to the authority to invest funds in certificates of deposit under Subsection “a”, an investment in certificates of deposit made in accordance with the following conditions is an authorized investment: 1. The funds are invested through: (a) a broker that has its main office or a branch office in this state and is selected from a list adopted by the investing entity as required by Section 2256.025; or (b) a depository institution that has its main office or a branch office in this state and that is selected by the investing entity; 2. The broker or the depository institution selected by the investing entity under Subdivision (1) arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions, wherever located, for the account of the investing entity; 3. The full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States; and d. 4. The investing entity appoints the depository institution selected by the investing entity under Subdivision (1), an entity described by Section 2257.041(d), or a clearing broker-dealer registered with the Securities and Exchange Commission and operating pursuant to Securities and Exchange Commission Rule 15c3-3 (17 C.F.R. Section 240.15c3-3) as custodian for the investing entity with respect to the certificates of deposit issued for the account of the investing entity. Governed by a Depository Agreement, as described in this Policy, that complies with Federal and State regulations to properly secure a pledged security interest. e. In addition to the authority to invest funds in certificates of deposit under Subsection (1), an investment in certificates of deposit made in accordance with the following conditions is an authorized investment under PFIA, Subchapter A: 1. The funds are invested by an investing entity through a depository institution that has its main office or a branch office in this state and that is selected by the Town of Prosper; EXHIBIT B Revised 03/20112012 Investment Policy Page 10 of 30 2. The depository institution selected by the Town under Subdivision (a) arranges for the deposit of the funds certificates of deposit in one or more federally insured depository institutions, wherever located, for the account of the Town; 3. The full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States; 4. The depository institution selected by the Town under Subsection (a) acts as custodian for the Town with respect to the certificates of deposit issued for the account of the Town; and 5. At the same time that the funds are deposited and the certificates of deposit are issued for the account of the Town, the depository institution selected by the Town under Subdivision (a) receives an amount of deposits from customers of other federally insured depository institutions, wherever located, that is equal to or greater than the amounts of the funds invested by the investing entity through the depository institution selected under Subdivision (a). 3. Mutual Funds. Money market mutual funds regulated by the Securities & Exchange Commission, with a dollar weighted average portfolio maturity of 60 days or less that fully invest dollar-for-dollar all PROSPER funds without sales commission or loads and, whose investment objectives include seeking to maintain a stable net asset value of $1 per share. PROSPER may not invest funds under its control in an amount that exceeds 10% of the total assets of any individual money market mutual fund, excluding bond proceeds and reserves and other funds held for debt service in money market mutual funds; 4. Local Government Investment Pools. Eligible investment pools organized and operating in compliance with PFIA that have been authorized by the ENTITY’s governing body; and whose investment philosophy and strategy include seeking to maintain a stable net asset value of $1 per share, and are consistent with this Policy and PROSPER’s ongoing investment strategy. PROSPER expressly allows money market mutual funds and eligible investment pools, authorized by the ENTITY’s governing body, to invest to the full extent permissible within the Public Funds Investment Act. 5. Commercial Paper. Commercial paper is an authorized investment under this policy if the commercial paper: a. Has a stated maturity of 270 days or fewer from the date of its issuance; and EXHIBIT B Revised 03/20112012 Investment Policy Page 11 of 30 b. Is rated not less than A-1 or P-1 or an equivalent rating by at least: 1. two nationally recognized credit rating agencies; or 2. one nationally recognized credit rating agency and is fully secured by an irrevocable letter of credit issued by a bank organized and existing under the laws of the United States or any state. 6. Repurchase Agreements. a. A fully collateralized repurchase agreement is an authorized investment under PFIA, Subchapter A, if the repurchase agreement: 1. has a defined termination date; 2. is secured by a combination of cash and obligations described by PFIA, section 2256.009(a)(1); and 3. requires the securities being purchased by the Town or cash held by the Town to be pledged to the Town, held in the Town’s name, and deposited at the time the investment is made with the Town or with the third-party selected and approved by the Town; and 4. is placed through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing business in this state. b. In this section, “repurchase agreement” means a simultaneous agreement to buy, hold for a specific time, and sell back at a future date obligations described by Section 2256.009(a)(1), at market value at the time the funds are disbursed of not less than the principal amount of the funds disbursed. The term includes a direct security repurchase agreement and a reverse Security repurchase agreement. c. Notwithstanding any other law, the term of any reverse security repurchase a agreement may not exceed 90 days after the date the reverse security repurchase agreement is delivered. d. Money received by an entity under the terms of a reverse security repurchase agreement shall be used to acquire additional authorized investments, but the term of the authorized investments acquired must mature not later than the expiration date stated in the reverse security repurchase agreement. B. Protection of Principal EXHIBIT B Revised 03/20112012 Investment Policy Page 12 of 30 PROSPER shall seek to control the risk of loss due to failure of a security issuer or grantor. Such risk shall be controlled by investing only in the safest types of securities as defined in the Policy; by collateralization as required by law; and through portfolio diversification by maturity and type. The purchase of individual securities shall be executed “Delivery versus Payment” (DVP) through PROSPER’s Safekeeping Agent. By so doing, PROSPER’s funds are not released until PROSPER has received, through the Safekeeping Agent, the securities purchased. 1. Diversification by Investment Type Diversification by investment type shall be maintained by ensuring an active and efficient secondary market in portfolio investments and by controlling the market and opportunity risks associated with specific investment types. Bond proceeds may be invested in a single security or investment if PROSPER determines that such an investment is necessary to comply with Federal arbitrage restrictions or to facilitate arbitrage record keeping and calculation. 2. Diversification by Investment Maturity In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not exceed the anticipated cash flow requirements of the funds. Generally, PROSPER will not directly invest in securities maturing more than five years from the date of purchase. Maturity guidelines by fund type are discussed in Section IV, Investment Strategy. 3. Ensuring Liquidity Liquidity shall be achieved by anticipating cash flow requirements, by investing in securities with active secondary markets and by investing in eligible money market mutual funds and local government investment pools. A security may be liquidated to meet unanticipated cash requirements, to redeploy cash into other investments expected to outperform current holdings, or otherwise to adjust the portfolio. 4. Depository Agreements EXHIBIT B Revised 03/20112012 Investment Policy Page 13 of 30 Consistent with the requirements of State Law, PROSPER requires all bank deposits to be federally insured or collateralized with eligible securities. Financial institutions serving as PROSPER’s Depositories will be required to sign a Depository Agreement with PROSPER and PROSPER’s safekeeping agent. The safekeeping portion of the Agreement shall define PROSPER’s rights to the collateral in case of default, bankruptcy, or closing and shall establish a perfected security interest in compliance with Federal and State regulations, including:  The Agreement must be in writing;  The Agreement has to be executed by the Depository and PROSPER contemporaneously with the acquisition of the asset;  The Agreement must be approved by the Board of Directors or the designated committee of the Depository and a copy of the meeting minutes must be delivered to PROSPER;  The Agreement must be part of the Depository’s “official record” continuously since its execution. a. Allowable Collateral Eligible securities for collateralization of PROSPER deposits are defined by Chapter 2257, Texas Government Code, the Public Funds Collateral Act, as amended and meet the constraints of this Section III. A. 2. b. Collateral Levels The market value of pledged collateral must at all times be equal to or greater than 102% of the principal and accrued interest for PROSPER balances, less the applicable level of FDIC insurance. c. Monitoring Collateral Adequacy PROSPER shall require monthly reports of pledged securities marked to market using quotes by a recognized market pricing service quoted on the valuation date from all financial institutions with which PROSPER has collateralized deposits. The Investment Officers will monitor adequacy of collateralization levels to verify market values and total collateral positions. d. Additional Collateral EXHIBIT B Revised 03/20112012 Investment Policy Page 14 of 30 If the collateral pledged for a deposit falls below adequate levels, as defined above in Section 4.b. , the institution holding the deposit will be notified by the Investment Officers and will be required to pledge additional securities no later than the end of the next succeeding business day. e. Security Substitution Collateralized deposits often require substitution of securities. Any financial institution requesting substitution must contact an Investment Officer for approval and settlement. The substituted security’s value will be calculated and substitution approved if the substitution maintains a pledged value equal to or greater than the required security level. An Investment Officer must provide written notification of the decision to the bank or the safekeeping agent holding the security prior to any security release. Substitution is allowable for all transactions, but should be limited, if possible, to minimize potential administrative problems and transfer expense. The Investment Officers may limit substitution and assess appropriate fees if substitution becomes excessive or abusive. 5. Safekeeping a. Safekeeping Agreement PROSPER shall contract with a bank or banks for the safekeeping of securities either owned by PROSPER as a part of its investment portfolio or as a part of its depository agreements. b. Safekeeping of Deposit Collateral All collateral securing bank deposits must be held by a third-party custodian bank eligible under the Public Funds Collateral Act, and acceptable to and under contract with PROSPER, or by a Federal Reserve Bank. C. Investment Advisers and Securities Dealers Investment Advisers shall adhere to the spirit, philosophy and specific terms of this Policy and shall invest within the same “Standard of Care” as defined in Section E. 3. below. Securities Dealers shall avoid recommending or suggesting transactions outside that “Standard of Care.” EXHIBIT B Revised 03/20112012 Investment Policy Page 15 of 30 1. Selection of Investment Advisers The selection of Investment Advisers will be performed by the Investment Officers. The Investment Officers will establish criteria to evaluate Investment Advisers including: a. Adherence to PROSPER’s policies and strategies, b. Investment performance and transaction pricing within accepted risk constraints, c. Responsiveness to PROSPER’s request for services, information and open communication, d. Understanding of the inherent fiduciary responsibility of investing public funds, and e. Similarity in philosophy and strategy with PROSPER’s objectives. Selected Investment Advisers must be registered under the Investment Advisers Act of 1940 or with the State Securities Board. A contract with an Investment Adviser may not be for a term longer than two years and any contract, renewal or extension must be approved by Town Council. 2. Selection of Authorized Securities Dealers The ENTITY’s governing body or its Investment Officers acting as the ENTITY’s Investment Committee shall, at least annually, review, revise, and adopt a list of qualified broker/dealers and financial institutions that are authorized to engage in investment transactions with the ENTITY. a. Eligibility Authorized firms may include primary dealers or regional dealers that qualify under Securities & Exchange Commission Rule 15C3-1 (Uniform Net Capital Rule), and qualified depositories. b. Documentation Requirements Brokers/dealers and financial institutions requesting to become qualified to transact investment business with PROSPER shall be required to provide: 1. a completed Broker/Dealer Questionnaire that provides information regarding creditworthiness, experience and reputation; and EXHIBIT B Revised 03/20112012 Investment Policy Page 16 of 30 2. a Certification stating the firm has received, reviewed, understood and agrees to comply with PROSPER’s investment policy. This Certification also acknowledges that the business organization has implemented reasonable procedures and controls in an effort to preclude investment transactions conducted between PROSPER and the organization that are not authorized by PROSPER’s investment policy, except to the extent that this authorization is dependent on an analysis of the makeup of PROSPER’s entire portfolio or requires an interpretation of subjective investment standards. PROSPER shall not enter into an investment transaction with a business organization prior to receiving the written instruments described above. c. Competitive Bids It is the policy of PROSPER to require competitive bidding for all individual security purchases and sales except for: 1. transactions with money market mutual funds and local government investment pools; and 2. treasury and agency securities purchased at issue through an approved broker/dealer or financial institution. D. Responsibility and Control 1. Authority to Invest The Town Manager, Finance Director and the Comptroller Accounting Manager are the “Investment Officers” of the Town of Prosper. The PEDC Treasurer, PEDC Executive Director and the Comptroller Accounting Manager are the “Investment Officers” of the PEDC. The Investment Officers are authorized to deposit, withdraw, invest, transfer, execute documentation, and otherwise manage PROSPER’s funds according to this Policy. The Investment Officers may authorize one or more Investment Officers to deposit, withdraw or transfer funds out of or into an investment pool or money market mutual fund in order to meet daily operating needs of PROSPER. 2. Prudent Investment Management The designated Investment Officers shall perform their duties in accordance with the adopted Investment Policy and internal procedures. In determining whether an Investment Officer has exercised prudence with respect to an investment decision, the investment of all funds over which the Investment Officer had responsibility, rather than the prudence of a single investment shall be considered. EXHIBIT B Revised 03/20112012 Investment Policy Page 17 of 30 Investment Officers acting in good faith and in accordance with these policies and procedures shall be relieved of personal liability. 3. Standard of Care The standard of care used by PROSPER shall be that as defined in PFIA, Section 2256.006. It states: “Investments shall be made with judgment and care, under circumstances then prevailing, that a person of prudence, discretion and intelligence would exercise in the management of the person’s own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived.” 4. Standards of Ethics The designated Investment Officers shall act as custodians of the public trust avoiding any transactions which might involve a conflict of interest, the appearance of a conflict of interest, or any activity which might otherwise discourage public confidence. Investment Officers shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Additionally, all Investment Officers shall file with the Texas Ethics Commission and the ENTITY’s governing body a statement disclosing any personal business relationship with a business organization seeking to sell investments to PROSPER or any relationship within the second degree by affinity or consanguinity to an individual seeking to sell investments to PROSPER. For purposes of this subsection, an Investment Officer has a personal business relationship with business organization if: a. The Investment Officer owns 10 percent or more of the voting stock or shares of the business organization or owns $5,000 or more of the fair market value of the business organization; b. Funds received by the Investment Officer from the business organization exceed 10 percent of the Investment Officer’s gross income for the previous year; or c. The Investment Officer has acquired from the business organization during the previous year investments with a book value of $2,500 or more for the personal account of the Investment Officer. EXHIBIT B Revised 03/20112012 Investment Policy Page 18 of 30 5. Establishment of Internal Controls PROSPER’s Investment Officers will maintain a system of internal controls over the investment activities of PROSPER. EXHIBIT B Revised 03/20112012 Investment Policy Page 19 of 30 6. Reporting Investment performance will be monitored and evaluated by the Investment Officers. The Investment Officers will provide a quarterly comprehensive report signed by all Investment Officers to the ENTITY’s governing body. This investment report shall: a. Describe in detail the investment position of PROSPER, b. Contain a summary statement, prepared in compliance with generally accepted accounting principles, of each pooled fund group that states the: 1. beginning market value of the reporting period; 2. additions and changes to the market value during the period; 3.2.ending market value for the period; 4.3.fully accrued interest for the reporting period c. State the book value and market value of each separately invested asset at the beginning and end of the reporting period by the type of asset and fund type invested; d. State the maturity date of each separately invested asset that has a maturity date; e. State the account or fund or pooled group fund in the state agency or local government for which each individual investment was acquired; and f. State the compliance of the investment portfolio with PROSPER’s Investment Policy, strategy, and PFIA. In defining market value, sources independent of the investment provider will determine valuations and consideration will be given to GASB Statement No. 31. PROSPER, in conjunction with its annual financial audit, shall perform a compliance audit of the management controls on investments and adherence to PROSPER’s Investment Policy. If PROSPER invests in other than money market mutual funds, investment pools or accounts offered by its depository bank in the form of certificates of deposits, or money market accounts or similar accounts, the reports prepared by the Investment Officers shall be formally reviewed at least EXHIBIT B Revised 03/20112012 Investment Policy Page 20 of 30 annually by an independent auditor, and the result of the review shall be reported to the ENTITY’s governing body by that auditor. EXHIBIT B Revised 03/20112012 Investment Policy Page 21 of 30 7. Training In order to insure the quality and capability of PROSPER’s investment personnel making investment decisions, PROSPER shall provide periodic training in investments for the investment personnel through courses and seminars offered by GFOA, GFOAT, GTOT, TML, NCTCOG, ICMA, TSCPA, AICPA, or any independent source or institute of higher learning approved by the Finance Director. a. The Investment Officers shall: 1. attend at least 10 hours ofone training session relating to the Investment Officers’ responsibilities within 12 months after taking office or assuming duties; and 2. attend an investment training session not less than once in a two-year period that begins on the first day of the Town’s fiscal year and consists of the two consecutive fiscal years after that date and receive not less than 10 hours of instruction relating to investment responsibilities under this subchapter from an independent source approved by the governing body of the local government or a designated investment committee advising the investment officer as provided for in the investment policy of the local government. b. Training under this section must include education in investment controls, security risks, strategy risks, market risks, diversification of investment portfolio and compliance with this PFIAchapter. EXHIBIT B Revised 03/20112012 Investment Policy Page 22 of 30 IV. INVESTMENT STRATEGY In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not exceed the anticipated cash flow requirements of the fund. Investment guidelines by fund-type are as follows: A. Operating Funds 1. Suitability – Any investment eligible in the Investment Policy is suitable for the Operating Funds. 2. Safety of Principal – All investments shall be of high quality securities with no perceived default risk. 3. 3Marketability – Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market “spreads” between the bid and offer prices of a particular security- type of less than a quarter of a percentage point shall define an efficient secondary market. 4. Liquidity – The Operating Fund requires the greatest short-term liquidity of any of the fund types. Short term investment pools and money market mutual funds provide daily liquidity and may be utilized as a competitive yield alternative to fixed maturity investments. The weighted average days to maturity for the operating fund portfolio shall be less than 365 days, and the maximum allowable maturity shall be five years. 4. 4. Marketability – Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market “spreads” between the bid and offer prices of a particular security-type of less than a quarter of a percentage point shall define an efficient secondary market. 5. Diversification – Investment maturities shall be staggered throughout the budget cycle to provide cash flow based on the anticipated operating needs of PROSPER. Market cycle risks will be reduced by diversifying the appropriate maturity structure out no longer than five years. 6. Yield – Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The yield of an equally weighted, rolling portfolio of Treasury securities with an average maturity roughly equivalent to that of the portfolio shall be the minimum yield objective. B. Construction and Capital Improvement Funds EXHIBIT B Revised 03/20112012 Investment Policy Page 23 of 30 1. Suitability – Any investment eligible in the Investment Policy is suitable for the Construction and Capital Improvement Funds. 2. Safety of Principal – All investments shall be of high quality securities with no perceived default risk. By managing Construction and Capital Improvement Fund’s portfolio to exceed the anticipated expenditure schedule, the market risk of the overall portfolio will be minimized. 43. Liquidity – PROSPER funds used for construction and capital improvement programs have reasonably predictable draw down schedules. The investment maturity of construction and capital improvement funds shall generally be limited to the anticipated cash flow requirement or the “temporary period,” as defined by Federal Tax Law. During the temporary period, which is generally three years for capital projects, bond proceeds may be invested at an unrestricted yield. After the expiration of the temporary period, bond proceeds subject to yield restriction shall be invested considering the anticipated cash flow requirements of the funds and market conditions to achieve compliance with the applicable regulations. The stated final maturity dates of investments held should not exceed the estimated project completion date; the maximum maturity for all construction or capital improvement funds shall be five years. 43. Marketability – Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market “spreads” between the bid and offer prices of a particular security-type of less than a quarter of a percentage point shall define an efficient secondary market. 4. Liquidity – PROSPER funds used for construction and capital improvement programs have reasonably predictable draw down schedules. The investment maturity of construction and capital improvement funds shall generally be limited to the anticipated cash flow requirement or the “temporary period,” as defined by Federal Tax Law. During the temporary period, which is generally three years for capital projects, bond proceeds may be invested at an unrestricted yield. After the expiration of the temporary period, bond proceeds subject to yield restriction shall be invested considering the anticipated cash flow requirements of the funds and market conditions to achieve compliance with the applicable regulations. The stated final maturity dates of investments held should not exceed the estimated project completion date; the maximum maturity for all construction or capital improvement funds shall be five years. 5. Diversification – Investment maturities shall be staggered throughout the budget cycle to provide cash flow based on the anticipated operating needs of the construction and capital improvement funds of PROSPER. 6. Yield – Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The yield of an equally weighted, rolling three-month Treasury bill portfolio shall be the minimum yield objective. EXHIBIT B Revised 03/20112012 Investment Policy Page 24 of 30 C. Debt Service Funds 1. Suitability – Any investment eligible in the Investment Policy is suitable for the Construction and Capital ImprovementDebt Service Funds. 2. Safety of Principal – All investments shall be of high quality securities with no perceived default risk. By managing Debt Service Fund’s portfolio to not exceed the debt service payment schedule the market risk of the overall portfolio will be minimized. 3. Liquidity – Debt Service have predictable payment schedules. Debt Service Funds shall be invested to ensure adequate funding for each consecutive debt service payment. The Investment Officers shall invest in such a manner as not to exceed an “unfunded” debt service date with the maturity of any investment. An unfunded debt service date is defined as a coupon or principal payment date that does not have cash or investment securities available to satisfy said payment. The weighted average days to maturity for the debt service fund portfolio shall be less than 365 days and the maximum allowable maturity shall be two years. 34. Marketability – Securities with active and efficient secondary markets are not necessary as the event of an unanticipated cash requirement is not probable. 4. Liquidity – Debt Service have predictable payment schedules. Debt Service Funds shall be invested to ensure adequate funding for each consecutive debt service payment. The Investment Officers shall invest in such a manner as not to exceed an “unfunded” debt service date with the maturity of any investment. An unfunded debt service date is defined as a coupon or principal payment date that does not have cash or investment securities available to satisfy said payment. The weighted average days to maturity for the debt service fund portfolio shall be less than 365 days and the maximum allowable maturity shall be two years. 5. Diversification – Investment maturities shall be staggered throughout the budget cycle to provide cash flow based on the anticipated needs of the debt service funds of PROSPER. At no time shall the debt service schedule be exceeded in an attempt to bolster yield. 6. Yield – Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The yield of an equally weighted, rolling portfolio Treasury securities with an average maturity roughly equivalent to that of the portfolio shall be the minimum yield objective. D. Enterprise Funds EXHIBIT B Revised 03/20112012 Investment Policy Page 25 of 30 1. Suitability – Any investment eligible in the Investment Policy is suitable for the Construction and Capital ImprovementEnterprise Funds. 2. Safety of Principal – All investments shall be of high quality securities with no perceived default risk. 3. Liquidity – The Enterprise Fund requires short-term liquidity for some operations. Short-term investment pools and money market mutual funds provide daily liquidity where needed. The weighted average days to maturity for the enterprise fund portfolio shall be less than 365 days and the maximum allowable maturity shall be five years. 43. Marketability – Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market “spreads” between the bid and offer prices of a particular security-type of less than a quarter of a percentage point shall define an efficient secondary market. 4. 5. Liquidity – The Enterprise Fund requires short-term liquidity for some operations. Short-term investment pools and money market mutual funds provide daily liquidity where needed. The weighted average days to maturity for the enterprise fund portfolio shall be less than 365 days and the maximum allowable maturity shall be five years. 5. Diversification – Investment maturities shall be staggered throughout the budget cycle to provide cash flow based on the anticipated operating needs of PROSPER. Market cycle risk will be reduced by diversifying the appropriate maturity structure out no longer than five years 6. Yield – Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. Portions of Enterprise Fund reserves are available to earn higher yield on longer maturities. The yield of an equally weighted, rolling portfolio Treasury securities with an average maturity roughly equivalent to that of the portfolio shall be the minimum yield objective. Appendix “A” Glossary of Cash Management Terms Accretion – Common investment accounting entry in which the book value of securities purchased at a discount are gradually written up to the par value. The process has the effect of recording the discount as income over time. Accrued Interest – Interest earned, but not yet paid, on a bond. EXHIBIT B Revised 03/20112012 Investment Policy Page 26 of 30 Agency – See Federal Agency. Amortization – Common investment accounting entry in which the book value of securities purchased at a premium are gradually written down to the par value. The process has the effect of recording the premium as a reduction to income over time. Arbitrage – Dealing simultaneously in the same product in two markets to take advantage of temporary price distortions at minimal risk Basis Point – A unit of measurement used in the valuation of fixed-income securities equal to 1/100 of 1 percent of yield; e.g., “1/4” of 1 percent is equal to 25 basis points. Benchmark – Index used to compare risk and performance to a managed portfolio. Bid – The indicated price at which a buyer is willing to purchase a security or commodity. Book Value – The original acquisition cost of an investment plus or minus the accrued amortization or accretion. Broker – A financial firm that brings securities buyers and sellers together in return for a fee. The term “broker” is often used interchangeably with “dealer” to refer to a seller of investment securities. Callable Bond – A bond issue in which all or part of its outstanding principal amount may be redeemed before maturity by the issuer under specified conditions. Cash Settlement – A transaction which calls for delivery and payment of securities on the same day that the transaction is initiated. Collateralization – Process by which a borrower pledges securities, property, or other deposits for the purpose of securing the repayment of a loan and/or security. Collateralized Mortgage Obligation (CMO) – A derivative mortgage-backed security (MBS) created from pools of home mortgage loans. A single MBS is divided into multiple classes, each class containing unique risk profile and security characteristics. A number of CMO classes are expressly prohibited by Texas State law. Commercial Paper – An unsecured short-term promissory note issued by corporations, with maturities ranging from 1 to 270 days. Commercial paper must carry a minimum rating of A1/P1 in order to be eligible under the Texas Public Funds Investment Act. Constant Maturity Treasury (CMT) – A calculated average released by the Federal Reserve of all Treasury yields along a specific maturity point. This calculation is frequently used as a benchmark for conservative government portfolios. EXHIBIT B Revised 03/20112012 Investment Policy Page 27 of 30 Coupon Rate – The annual rate of interest received by an investor from the issuer of certain types of fixed-income securities. Also known as the “interest rate.” Credit Risk – The risk to an investor that an issuer will default in the payment of interest and/or principal on a security. Derivative – Financial instruments whose value is derived from the movement of an underlying index or security. Dealer – A dealer, as opposed to a broker, sets as a principal in all securities transactions, buying and selling for their own account. Often times, the terms “broker” and “dealer” are used interchangeably to refer to a seller of investments securities. Delivery Versus Payment (DVP) – A type of securities transaction in which the purchaser pays for securities at the time of delivery either to the purchaser or his/her custodian. Derivative Security – Financial instrument created from, or whose value depends upon, one or more underlying assets or indices of asset values. Discount – The amount by which the par value of a security exceeds the price paid for the security. Diversification – A process of investing assets among a range of security types by sector, maturity, and quality rating. Dollar Weighted Average Maturity (WAM) – The average maturity of all the securities that comprise a portfolio weighted by the dollar value of each security. Fair Market Rate – A documented and verifiable rate of interest which approximates the average rate which could have been earned on similar investments at the time of the transaction. Federal Agency – A debt instrument that carries a rating of AAA because it is government sponsored. Federal Deposit Insurance Corporation (FDIC) – A federal agency that insures bank deposits, currently up to $250,000 per account. Public deposits that exceed this amount must be properly collateralized with investment securities or insured through a surety bond. Financial Industry Regulatory Authority (FINRA) - the successor to the National Association of Securities Dealers, Inc. (NASD). FINRA is a private corporation that focuses on regulatory oversight of all securities firms that do business with the public; professional training, testing and licensing of registered persons; arbitration and mediation; market regulation by contract for the New York Stock Exchange, the NASDAQ Stock Market, Inc., the American Stock Exchange LLC, and the International Securities Exchange. Interest Rate – See “Coupon Rate.” EXHIBIT B Revised 03/20112012 Investment Policy Page 28 of 30 Internal Controls – An internal control structure designed to ensure that the assets of the entity are protected from loss, theft, or misuse. The internal control structure is designed to provide reasonable assurance that these objectives are met. Interlocal Cooperation Act – Law permitting joint participation by local governments providing one or more government functions within the State. This law [Section 891.001 et seq. of the Texas Government Code (the “Act”)] has allowed for the creation of investment pools in Texas. Investment Advisers Act of 1940 – Law which requires all Investment Advisers to be registered with the SEC in order to protect the public from fraud. Investment Policy – A concise and clear statement of the objectives and parameters formulated by an investor or investment manager for a portfolio of investment securities. The Texas Public Funds Investment Act requires that public entities have a written and approved investment policy. Investment Pool – An entity created under the Interlocal Cooperation Act to invest public funds jointly on behalf of the entities that participate in the pool. Liquidity – A liquid investment is one that can be easily and quickly converted to cash without substantial loss of value. Investment pools and money market funds, which allow for same day withdrawal of cash, are considered extremely liquid. Local Government Investment Pool (LGIP) – An investment by local governments in which their money is pooled as a method for managing local funds. Market Risk - The risk that the value of a security will rise or decline as a result of changes in market conditions. Market Value – A security’s par amount multiplied by its market price. Master Repurchase Agreement – A written contract covering all future transactions between the two parties to a repurchase agreement. Maturity – The date on which payment of a financial obligation is due. The final stated maturity is the date on which the issuer must retire a bond and pay the face value to the bondholder. See “Weighted Average Maturity.” Money Market Mutual Fund – Mutual funds that invest solely in money market instruments (short term debt instruments, such as Treasury bills, commercial paper, bankers’ acceptance, repos and federal funds). EXHIBIT B Revised 03/20112012 Investment Policy Page 29 of 30 Mortgage-Backed Security (MBS) – Security backed by pools of home loan mortgages. Net Asset Value (NAV) – The value of a mutual fund or investment pool at the end of the business day. NAV is calculated by adding the market value of all securities in a fund or pool, deducting expenses, and dividing by the number of shares in the fund or pool. Offer – An indicated price at which market participants are willing to sell a security. Also referred to as the “Ask Price.” Par – Face value or principal value of a bond, typically $1,000 per bond. A security’s par value is multiplied by its coupon rate to determine coupon payment amount. Premium – The amount by which the price paid for a security exceeds the security’s par value. Primary Government Securities Dealer (Primary Dealer) – One of 20 (as of 02/2011 ) large government securities dealers who are required to submit daily reports of market activity and monthly financial statements to the New York Federal Reserve Bank. Primary Dealers are required to continually “make a market” in Treasury securities, buying or selling when asked, thereby creating a liquid secondary market for US debt obligations. Principal – The face value or par value of a debt instrument. Also may refer to the amount of capital invested in a given security. Prudent Investor Rule – Refers to an investment principle in the Public Funds Investment Act outlining the fiduciary responsibilities of Investment Officers. Regular Way Delivery – Securities settlement that calls for delivery and payment on the third business day following the trade date (T + 3); payment on a T + 1 basis is currently under consideration. Mutual funds are settled on a same day basis; government securities are settled on the next business day. Repurchase Agreement (repo or RP) – An agreement of one party to sell securities at a specified price to a second party and a simultaneous agreement of the first party to repurchase the securities at a specified price or at a specified later date. Reverse Repurchase Agreement (Reverse Repo) – An agreement of one party to purchase securities at a specified price from a second party and a simultaneous agreement by the first party to resell the securities at a specified price to the second party on demand or at a specified date. Safekeeping – Holding of assets (e.g., securities) by a financial institution. Total Return – The sum of all investment income plus changes in the capital value of the portfolio. For mutual funds, return on an investment is composed of share price appreciation EXHIBIT B Revised 03/20112012 Investment Policy Page 30 of 30 plus any realized dividends or capital gains. This is calculated by taking the following components during a certain time period: (Price Appreciation) + (Dividends Paid) + (Capital Gains) = (Total Return). Treasury Bills – Short term U.S. government non-interest bearing debt securities with maturities of no longer than one year and issued with a minimum purchase of $100. Bills pay interest only at maturity. The interest is equal to the face value minus the purchase price. Auctions of four week, 13 week and 26 week bills are every week, while auctions of 52 week bills are done every four weeks. The yields on these bills are monitored closely in the money markets for signs of interest rate trends. Treasury Notes – Intermediate U.S. government debt securities with maturities of one to 10 years and issued with a minimum purchase of $100. Treasury notes, or T-notes, are issued in terms of 2, 3, 5, 7, and 10 years, and pay interest every six months until they mature. Uniform Net Capital Rule – SEC Rule 15C3-1 outlining capital requirements for brokers/dealers. Volatility – A degree of fluctuation in the price and valuation of securities. Yield – The current rate of return on an investment security generally expressed as a percentage of the security’s face value. Yield-to-Call (YTC) – The rate of return an investor earns from a bond assuming the bond is redeemed (called) prior to its nominal maturity date. Yield Curve – A graphic representation that depicts the relationship at a given point in time between yields and maturity for bonds that are identical in every way except maturity. A normal yield curve may be alternatively referred to as a positive yield curve. Yield-to-Maturity – The rate of return yielded by a debt security held to maturity when both interest payments and the investor’s potential capital gain or loss are included in the calculation of return. Zero-coupon Securities – Security that is issued at a discount and makes no periodic interest payments. The rate of return consist of a gradual accretion of the principal of the security and is payable at par upon maturity. Page 1 of 2 To: Mayor and Town Council From: Wade Harden, Senior Parks and Recreation Planner Cc: Mike Land, Town Manager Hulon T. Webb, Jr., P.E., Director of Development Services/Town Engineer Re: Town Council Meeting – March 27, 2012 Date: March 22, 2012 Agenda Item: Consider and act upon a name for the loop street in Frontier Park. Description of Agenda Item: Charles Robinson, a resident of Prosper for over 91 years, has requested the Town name the loop road in Frontier Park after the family that originally settled the area where Frontier Park and Prosper High School are located. John Greenwood, Sr. settled the area prior to Prosper being a Town. John and his wife Lydia raised fourteen children on the land where Prosper High School and Frontier Community Park exist. Following John Greenwoods passing in 1926, three of his children decided to stay on the land. Today many of John Greenwood’s relatives reside in Prosper and the surrounding area, including Charles Robinson the only son of Allie (Robinson) Greenwood. The Town’s Comprehensive Parks Ordinance, Section 5 gives direction for the naming of Town park locations; however it does not give direction related to the naming of streets within park locations. Parks Division staff consulted with the Fire Department regarding the naming of the street. The recommendation from the Fire Department is to add another word into the name of the street, due to another street with the name of Greenwood Court. This would reduce the chance of any conflicts in the case of an emergency call. Staff contacted Mr. Robinson, who suggested adding the “Memorial” to the name. Budget Impact: There are no budget implications associated with this item. Legal Obligations and Review: No legal review of this item is required. Attached Documents: • Frontier Park Site Plan PARKS & RECREATION Prosper is a place where everyone matters. Page 2 of 2 Parks and Recreation Board Recommendation (PARBd): At the March 8, 2012 PARBd meeting, the Parks & Recreation Board motioned to approve the naming of the Frontier Park loop street to Greenwood Lane. The motion was approved by a vote of 6-0. Town Staff Recommendation: Staff recommends the Town Council name the loop street in Frontier Park Greenwood Memorial Lane, in honor of the Greenwood family that settled the location. Frontier ParkwayPISD PropertyN Page 1 of 2 Prosper is a place where everyone matters. To: Mayor and Town Council From: Wade Harden, Senior Parks and Recreation Planner Cc: Mike Land, Town Manager Hulon T. Webb, Jr., P.E., Director of Development Services/Town Engineer Re: Town Council Meeting – March 27, 2012 Date: March 22, 2012 Agenda Item: Consider and act upon revisions to the professional service contract with BRW, Inc. Description of Agenda Item: In December of 2011 the Town Council approved a contract with BRW to assist with the bid specification for the construction of the Parks Division maintenance structure. The services include the following: 1. Proposal preparation o Coordinate Prosper’s “front end” bidding document, included RFP. o Establish proposer’s evaluation criteria o Coordinate Prosper contract form and bonding / insurance requirements o Integrate Town general and special conditions of construction o Develop technical drawings and specifications  Bldg. Code analysis  Architectural Plans  Structural Details – Design-builder will provide a structural engineer as the engineer-of-record.  Mechanical / Electrical design criteria, including service entrance requirements. o Establish bid alternates o Establish voluntary alternates 2. Bidding assistance / Including proposal evaluations o Pre-bid meeting o Review proposals and make recommendation The contract included standard language that does not work well with a design-build process. The contract has been revised better meeting the needs of the process and dates have been adjusted (see attached). The cost of the professional services provided by BRW has not changed, being a maximum of $15,900. The construction design estimate has been set at $200,000 for the construction. PARKS & RECREATION Page 2 of 2 Budget Impact: 2008 Bond Funds will be utilized to for the professional design services. The revision to the contract does not impact the budget. Legal Obligations and Review: The contract is a standard contract that has been reviewed by legal, the minor modifications due not require legal review. Attached Documents: 1. Professional Services Agreement (w/ changes noted) 2. Resolution Town Staff Recommendation: Town staff recommends the Town Council 1) approve the revised professional services contract in the amount of $15,900 with Brown Reynolds Watford, Inc. and 2) adopt a resolution authorizing the Town Manager to execute the same. TOWN OF PROSPER, TEXAS RESOLUTION NO. ______ A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS, HEREBY AUTHORIZING THE TOWN MANAGER OF THE TOWN OF PROSPER, TEXAS, TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT FOR THE PARKS DIVISION MAINTENANCE STRUCTURE DESIGN AND BID DOCUMENTS, BETWEEN BROWN REYNOLDS WATFORD, INC. AND THE TOWN OF PROSPER. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS: SECTION 1: The Town Manager of the Town of Prosper, Texas, is hereby authorized to execute, on behalf of the Town Council of the Town of Prosper, Texas, a Professional Services Agreement for the Parks Division maintenance structure design and bid documents between Brown Reynolds Watford, Inc., and the Town of Prosper, as hereto attached. SECTION 2: This Resolution shall take effect immediately upon its passage. RESOLVED THIS THE 27th day of March, 2012. ______________________________ Ray Smith, Mayor ATTEST TO: _________________________ Amy Piukana Town Secretary Town of Prosper, Texas – Professional Services Agreement Page 1 of 32 AGREEMENT BETWEEN THE TOWN OF PROSPER, TEXAS (TOWN) AND BROWN REYNOLDS WATFORD ARCHITECTS, INC. (CONSULTANT) FOR ARCHITECTURAL DESIGN SERVICES Made as of the 1327th day of MarchDecember in the year Two Thousand TwelveEleven: BETWEEN the Town: The Town of Prosper, Texas P.O. Box 307 Prosper, Texas 75078 Telephone: (972) 346-2640 Facsimile: (972) 346-9335 and the Consultant: Brown Reynolds Watford Architects, Inc. 3535 Travis Street, Suite 250 Dallas, TX 75204 Telephone: (214)528-8704 Facsimile: (214)528-8707 for the following Project: Design & Bid Documents for Maintenance Structure The Town and the Consultant agree as set forth below. THIS AGREEMENT is made and entered by and between the Town of Prosper, Texas, a Home-Rule Municipal Corporation, hereinafter referred to as “Town,” and Brown Reynolds Watford Architects, Inc, hereinafter referred to as “Consultant,” to be effective from and after the date as provided herein, hereinafter referred to as “Agreement.” WHEREAS, the Town desires to engage the services of the Consultant to design and/or prepare construction documents for a design and bid documents for a maintenance structure in Frontier Park, hereinafter referred to as “Project;” and Town of Prosper, Texas – Professional Services Agreement Page 2 of 32 WHEREAS, the Consultant desires to render such professional architectural services for the Town upon the terms and conditions provided herein. NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS: That for and in consideration of the covenants contained herein, and for the mutual benefits to be obtained hereby, the parties agree as follows: ARTICLE 1 CONSULTANT’S SERVICES 1.1 Employment of the Consultant – The Town hereby agrees to retain the Consultant to perform professional engineering services in connection with the Project. Consultant agrees to perform such services in accordance with the terms and conditions of this Agreement. Consultant further agrees that if any employee of the Consultant, who is performing the day-to-day services under this Agreement for the Project, is separated, for any reason, from employment with the Consultant, the Consultant shall notify, in writing, a minimum of five (5) business days prior to said separation unless circumstances reasonably warrant a shorter notice period which shall not exceed two (2) business days following the separation. 1.2 Scope of Services – The parties agree that Consultant shall perform such services as are set forth and described in Exhibit “A,” which is attached hereto and incorporated herein by reference for all purposes. The parties understand and agree that deviations or modifications to the scope of services described in Exhibit “A,” in the form of written change orders, may be authorized from time to time by the Town. 1.2.1 Requirement of Written Change Order – “Extra” work, or “claims” invoiced as “extra” work, or “claims” which have not been issued as a duly executed, written change order by the Prosper Town Manager, will not be authorized for payment and/or shall not become part of the subcontracts. A duly executed written change order shall be preceded by the Town of Prosper Town Council’s authorization for the Prosper Town Manager to execute said change order. 1.2.2 DO NOT PERFORM ANY EXTRA WORK AND/OR ADDITIONAL SERVICES WITHOUT A DULY EXECUTED WRITTEN CHANGE ORDER ISSUED BY THE PROSPER TOWN MANAGER. Project Managers, Superintendents, and/or Inspectors of the Town are not authorized to issue verbal or written change orders. 1.3 Schedule of Work – The Consultant agrees to commence work immediately upon the execution of this Agreement, and to proceed diligently with said work to completion as described in the Compensation Schedule / Project Billing / Project Budget attached hereto as Exhibit “B” and incorporated herein by reference for Town of Prosper, Texas – Professional Services Agreement Page 3 of 32 all purposes, but in no event shall the Project be completed any later than MarchJanuary, 30th 31st, 2012. ARTICLE 2 THE TOWN’S RESPONSIBILITIES Town shall do the following in a timely manner so as not to delay the services of Consultant: 2.1 Project Data – The Town shall furnish required information, that it currently has in its possession, as expeditiously as necessary for the orderly progress of the work, and the Consultant shall be entitled to rely upon the accuracy and completeness thereof. 2.2 Town Project Manager – The Town shall designate, when necessary, a representative authorized to act on the Town’s behalf with respect to the Project (the “Project Manager”). The Town or such authorized representative shall examine the documents submitted by the Consultant and shall render any required decisions pertaining thereto as soon as practicable so as to avoid unreasonable delay in the progress of the Consultant’s services. The Project Manager is not authorized to issue verbal or written change orders for “extra” work or “claims” invoiced as “extra” work. ARTICLE 3 CONSULTANT’S COMPENSATION 3.1 Compensation for Consultant’s Services – As described in “Article 1, Consultant’s Services,” compensation for this Project shall be on a Lump Basis, for an amount not to exceed Fifteen-Thousand Nine Hundred Dollars and No Cents ($15,900.00), (“Consultant’s Fee”) and shall be paid in accordance with Article 3 and the Compensation Schedule / Project Billing / Project Budget as set forth in Exhibit “B.” 3.1.1 Completion of Record Documents – Town and Consultant agree that the completion of the Record Documents and/or “As-Built” Documents, including hard copy formatting and electronic formatting, shall be completed, submitted to, and accepted by the Town prior to payment of the final five percent (5%) of the Consultant’s Fee, or Seven Hundred Ninety Five Dollars and No Cents ($ 795.00). The electronic formatting shall be consistent with the standards established in Exhibit “C,” Town of Prosper Guidelines for Computer Aided Design and Drafting (“CADD”). Completion of the Record Documents and/or “As-Built” documents shall be included in the Consultant’s Fee and considered to be within the Scope of Services defined under this Agreement. Town of Prosper, Texas – Professional Services Agreement Page 4 of 32 3.1.2 Disputes between Town and Construction Contractor – If the Project involves the Consultant performing Construction Administration Services relating to an agreement between a Construction Contractor (the “Contractor”) and the Town, and upon receipt of a written request by Town, Consultant shall research previous and existing conditions of the Project, and make a determination whether or not to certify that sufficient cause exists for the Town to declare the Contractor in default of the terms and conditions of the agreement. Consultant shall submit his findings in writing to the Town, or submit a written request for a specific extension of time (including the basis for such extension), within fifteen (15) calendar days of receipt of the written request from the Town. Town and Consultant agree that if requested by the Town, completion of this task shall be included in the Consultant’s Fee and considered to be within the Scope of Services as defined under this Agreement. 3.1.3 Consultation and Approval by Governmental Authorities and Franchised Utilities – Consultant shall be responsible for identifying and analyzing the requirements of governmental agencies and all franchise utilities involved with the Project, and to participate in consultation with said agencies in order to obtain all necessary approvals and/or permissions. The Consultant shall be responsible for preparation and timely submittal of documents required for review, approval, and/or recording by such agencies. The Consultant shall be responsible for making such changes in the Construction Documents as may be required by existing written standards promulgated by such agencies at no additional charge to Town. 3.1.4 Substantial Compliance with Architectural Barriers Act – Texas Architectural Barrier Act, Chapter 68 Texas Administrative Code, as it exists or may be amended (the “Barriers Act”) shall be complied with and will be the responsibility of the Architect of Record. Should the Project fall within the regulatory requirements of the Texas Architectural Barriers Act, Chapter 68 Texas Administrative Code , as it exists or may be amended (the “Barriers Act”), as solely determined by the Town, Consultant shall comply with the Barriers Act. As part of the Scope of Services defined in this Agreement, it is the sole responsibility of the Consultant to identify and analyze the requirements of the Barriers Act and to become familiar with the governmental authorities having jurisdiction to approve the design of the Project. Consultant shall participate in consultations with said authorities in order to obtain approval for the Project. As part of the services provided under the Consultant’s Fee, the Consultant shall obtain the Notice of Substantial Compliance for the Project from the Texas Department of Licensing and Regulation (the “TDLR”). The Consultant shall, without additional compensation, immediately correct any errors, omissions, or deficiencies in the design services and/or construction Town of Prosper, Texas – Professional Services Agreement Page 5 of 32 documents identified by TDLR and/or a Registered Accessibility Specialist (“RAS”) at any phase of the Project, either by review of the construction documents, or inspection of the Project at the commencement of construction, during the construction of the Project, or at the completion of construction. 3.1.4.1 Submission of Construction Documents to TDLR – The Consultant shall mail, ship, or hand-deliver the construction documents to TDLR not later than five (5) calendar days after the Consultant issues the construction documents for the Project. 3.1.4.2 Completion of Registration Form to TDLR – Consultant shall complete an Elimination of Barriers Project Registration Form (The “Form”) for each subject building or facility within the Scope of the Project, and submit the registration form(s) along with the applicable fees not later than fourteen (14) calendar days after the Consultant completes the submittal of the construction documents to TDLR. 3.1.4.3 TDLR Approval of Construction Documents – After review of the construction documents by TDLR, the Consultant shall be notified in writing of the results; however, it is the Consultant’s responsibility to obtain TDLR’s written comments. The Consultant shall address all comments that prevent TDLR approval of the construction documents, including comments relating to Conditional Approval that must be addressed in the design and construction of the Project. Consultant shall resubmit construction documents to TDLR for review prior to the completion of construction of the Project. 3.1.4.4 TDLR Project Inspection – Consultant shall request an inspection from TDLR or a TDLR locally approved RAS no later than thirty (30) calendar days after the completion of construction of the Project. The Consultant shall advise the Town in writing of the results of each Project inspection. Town reserves the right to verify the written results with TDLR at any time during design, construction, or at the completion of the Project. 3.1.4.5 Corrective Modifications following TDLR Project Inspection When corrective modifications to achieve substantial compliance are required, the TDLR inspector or the RAS shall provide the Consultant a list of deficiencies and a deadline for completing the modifications. Consultant shall provide the Town with this list within five (5) calendar days of receipt. It is the sole responsibility of the Consultant to completely address the deficiencies by the stated deadline or to obtain a written notice of extension from the TDLR. When the corrective measures have been completed, Consultant shall provide the TDLR (and/or the RAS who completed the inspection) and the Town with written verification of the corrective measures completed. Town of Prosper, Texas – Professional Services Agreement Page 6 of 32 3.1.4.6 TDLR Notice of Substantial Compliance – TDLR shall provide a Notice of Substantial Compliance to the Town after the newly constructed Project has had a satisfactory inspection, or Consultant has submitted verification of corrective modifications. Town and Consultant agree that the final five percent (5%) of Consultant’s Fee, or Seven Hundred Ninety Five Dollars and No Cents ($ 795.00) shall not be paid until the Town is in receipt of the TDLR’s Notice of Substantial Compliance for all Project components and/or phases of the Project. 3.2 Direct Expenses – Direct Expenses are included in the Consultant’s Fee as described in Article 3.1 and include actual reasonable and necessary expenditures made by the Consultant and the Consultant’s employees and subcontractors in the interest of the Project. All submitted Direct Expenses are to be within the amounts as stated in the Compensation Schedule / Project Billing / Project Budget set forth in Exhibit “B,” and consistent with Exhibit “D,” Town of Prosper Guidelines for Direct Expenses; General and Administrative Markup; Travel and Subsistence Expenses. The Consultant shall be solely responsible for the auditing and accuracy of all Direct Expenses, including those of its subcontractors, prior to submitting to the Town for reimbursement, and shall be responsible for the accuracy thereof. Any over-payment by the Town for errors in submittals for reimbursement may be deducted from the Consultant’s subsequent payment for services; provided, however this shall not be the Town’s sole and exclusive remedy for said over-payment. 3.3 Additional Services – The Consultant shall provide the services as described in the Scope of Services as set forth in Exhibit “A” of this Agreement. If authorized in writing by the Town, the Consultant shall provide additional services, to be compensated on an hourly basis in accordance with this paragraph (“Additional Services”). These services may include, but are not limited to: 3.3.1 Additional meetings, hearings, work-sessions, or other similar presentations which are not provided for or contemplated in the Scope of Services described in Exhibit “A.” 3.3.2 Additional drafts and revisions to the Project which are not provided for or contemplated in the Scope of Services as described in Exhibit “A.” 3.3.3 Additional copies of final reports and construction plans which are not provided for or contemplated in the Scope of Services as described in Exhibit “A.” 3.3.4 Photography, professional massing models which are not provided for or contemplated in the Scope of Services as described in Exhibit “A.” Town of Prosper, Texas – Professional Services Agreement Page 7 of 32 3.3.5 Compensation for Additional Services authorized by the Town shall be in addition to the Consultant’s Fee and shall be based on direct billable labor rates and expenses. 3.3.6 Compensation for Additional Services authorized by the Town shall be in addition to the Consultant’s Fee and shall be based on an hourly basis according to the following personnel rates. The rates set forth in this chart are subject to reasonable change provided prior written notice of said change is given to Town. Hourly Billable Rates by Position Position Hourly Rate TMB Click Engineers Reed Well Benson Engineers Town of Prosper, Texas – Professional Services Agreement Page 8 of 32 3.4 Invoices – No payment to Consultant shall be made until the Consultant tenders an invoice to the Town. The Consultant shall submit monthly invoices for services rendered, based upon the actual percentage of work complete at the time the invoice is prepared, or are to be mailed to Town immediately upon completion of each individual task listed in Exhibit “B.” On all submitted invoices for services rendered and work completed on a monthly basis, Consultant shall include appropriate background materials to support the submitted charges on said invoice. Such background material shall include, but is not limited to, employee timesheets, invoices for work obtained from other parties, and receipts and/or log information relating to Direct Expenses. All invoices for payment shall provide a summary methodology for administrative markup and/or overhead charges. 3.5 Timing of Payment – Town shall make payment to Consultant for said invoices within thirty (30) days following receipt and acceptance thereof. The parties agree that payment by Town to Consultant is considered to be complete upon mailing of payment by Town. Furthermore, the parties agree that the payment is considered to be mailed on the date that the payment is postmarked. 3.6 Disputed Payment Procedures – In the event of a disputed or contested billing by Town, only that portion so contested may be withheld from payment, and the undisputed portion will be paid. Town shall notify Consultant of a disputed invoice, or portion of an invoice, in writing by the twenty-first (21st) calendar day after the date the Town receives the invoice. Town shall provide Consultant an opportunity to cure the basis of the dispute. If a dispute is resolved in favor of the Consultant, Town shall proceed to process said invoice, or the disputed portion of the invoice, within the provisions of Article 3.5. If a dispute is resolved in favor of the Town, Consultant shall submit to Town a corrected invoice, reflecting any and all payment(s) of the undisputed amounts, documenting the credited amounts, and identifying outstanding amounts on said invoice to aid Town in processing payment for the remaining balance. Such revised invoice shall have a new invoice number, clearly referencing the previous submitted invoice. Town Town of Prosper, Texas – Professional Services Agreement Page 9 of 32 agrees to exercise reasonableness in contesting any billing or portion thereof that has background materials supporting the submitted charges. 3.7 Failure to Pay – Failure of the Town to pay an invoice, for a reason other than upon written notification as stated in the provisions of Article 3.6 to the Consultant within sixty (60) days from the date of the invoice shall grant the Consultant the right, in addition to any and all other rights provided, to, upon written notice to the Town, suspend performance under this Agreement, and such act or acts shall not be deemed a breach of this Agreement. However, Consultant shall not suspend performance under this Agreement prior to the tenth (10th) calendar day after written notice of suspension was provided to Town, in accordance with Chapter 2251, Subchapter “D” (“Remedy for Nonpayment”) of the Texas Government Code. The Town shall not be required to pay any invoice submitted by the Consultant if the Consultant breached any provision(s) herein. 3.8 Adjusted Compensation – If the Scope of the Project or if the Consultant’s services are materially changed due to no error on behalf of Consultant in the performance of services under this Agreement, the amounts of the Consultant’s compensation shall be equitably adjusted as approved by Town. Any additional amounts paid to the Consultant as a result of any material change to the Scope of the Project shall be authorized by written change order duly executed by both parties before the services are performed. 3.9 Project Suspension – If the Project is suspended or abandoned in whole or in part for more than three (3) months, Consultant shall be entitled to compensation for any and all work completed to the satisfaction of Town in accordance with the provisions of this Agreement prior to suspension or abandonment. In the event of such suspension or abandonment, Consultant shall deliver to Town all finished or unfinished documents, data, studies, drawings, maps, models, reports, photographs, and/or any other items prepared by Consultant in connection with this Agreement prior to Consultant receiving final payment. If the Project is resumed after being suspended for more than three (3) months, the Consultant’s compensation shall be equitably adjusted as approved by the Town. Any additional amounts paid to the Consultant after the Project is resumed shall be agreed upon in writing by both parties before the services are performed. ARTICLE 4 OWNERSHIP OF DOCUMENTS 4.1 Documents Property of the Town – The Project is the property of the Town, and Consultant may not use the documents, plans, data, studies, surveys, drawings, maps, models, reports, photographs, and/or any materials for any other purpose not relating to the Project without Town’s prior written consent. Town shall be furnished with such reproductions of the Project, plans, data, documents, maps, and any other information as defined in Exhibit “A.” Upon Town of Prosper, Texas – Professional Services Agreement Page 10 of 32 completion of the work, or any earlier termination of this Agreement under Article 3 and/or Article 8, Consultant will revise plans, data, documents, maps, and any other information as defined in Exhibit “A” to reflect changes while working on the Project through the date of completion of the work, as solely determined by Town, or the effective date of any earlier termination of this Agreement under Article 3 and/or Article 8, and promptly furnish the same to the Town in an acceptable electronic format. All such reproductions shall be the property of the Town who may use them without the Consultant’s permission for any purpose relating to the Project, including, but not limited to, completion of the Project, and/or additions, alterations, modifications, and/or revisions to the Project. Any reuse of the documents not relating to the Project shall be at the Town’s own risk. 4.2 Documents Subject to Laws Regarding Public Disclosure – Consultant acknowledges that Town is a governmental entity and that all documents, plans, data, studies, surveys, drawings, maps, models, reports, photographs, and/or any items prepared or furnished by Consultant (and Consultant’s professional associates and/or Sub-consultants) under this Agreement are instruments of service in respect of the Project and property of the Town and upon completion of the Project shall thereafter be subject to the Texas Public Information Act (Texas Government Code, Chapter 552) and any other applicable laws requiring public disclosure of the information contained in said documents. ARTICLE 5 CONSULTANT’S INSURANCE REQUIREMENTS 5.1 Required General Liability Insurance – Consistent with the terms and provisions of Exhibit “E,” Town of Prosper Contractor Insurance Guidelines, Consultant shall maintain, at no expense to Town, a general liability insurance policy with a company that maintains a minimum rating of “A” by A.M. Best’s Key Rating Guide, or other equivalent rating service(s), authorized to transact business in the State of Texas, in an amount not less than One Million and 00/100 Dollars ($1,000,000.00) for each occurrence, and Two Million and 00/100 Dollars ($2,000,000.00) in the aggregate. Such policy shall name the Town, its officers, agents, representatives, and employees as additional insured as to all applicable coverage. Such policy shall provide for a waiver of subrogation against the Town for injuries, including death, property damage, or any other loss to the extent that same is covered by the proceeds of the insurance. Such policy shall require the provision of written notice to Town at least thirty (30) days prior to cancellation, non-renewal, or material modification of any policies, evidenced by return receipt or United States Certified Mail. Consultant shall furnish Town with certificates evidencing such coverage prior to commencing work on the Project. 5.2 Required Professional Liability Insurance – Consistent with the terms and provisions of Exhibit “E,” Town of Prosper Contractor Insurance Guidelines, Town of Prosper, Texas – Professional Services Agreement Page 11 of 32 Consultant shall maintain, at no expense to Town, a professional liability (errors and omissions) insurance policy with a company that maintains a minimum rating of “A” by A.M. Best’s Key Rating Guide, or other equivalent rating service(s), authorized to transact business in the State of Texas, in an amount not less than One Million and 00/100 Dollars ($1,000,000.00) for each claim, and Two Million and 00/100 Dollars ($2,000,000.00) in the aggregate. Such policy shall require the provision of written notice to Town at least thirty (30) days prior to cancellation, non-renewal, or material modification of any policies, evidenced by return receipt or United States Certified Mail. Consultant shall furnish Town with certificates evidencing such coverage prior to commencing work on the Project. 5.3 Required Workers Compensation Insurance – Consistent with the terms and provisions of Exhibit “E,” Town of Prosper Contractor Insurance Guidelines, Consultant shall maintain, at no expense to Town, all Statutory Workers Compensation Insurance as required by the laws of the State of Texas. Such insurance policy shall be with a company that maintains a minimum rating of “A” by A.M. Best’s Key Rating Guide, or other equivalent service(s), and authorized to transact business in the State of Texas. Such policy shall require the provision of written notice to Town at least thirty (30) days prior to cancellation, non- renewal, or material modification of any policies, evidenced by return receipt or United States Certified Mail. Consultant shall furnish Town with certificates evidencing such coverage prior to commencing work on the Project. 5.4 Circumstances Requiring Umbrella Coverage or Excess Liability Coverage – If Project size and scope warrant, and if identified on the checklist located in Exhibit “E,” Town of Prosper Contractor Insurance Guidelines, Consultant shall maintain, at no expense to the Town, an umbrella coverage or excess liability coverage insurance policy with a company that maintains a minimum rating of “A” by A.M. Best’s Key Rating Guide, or other equivalent rating service(s), authorized to transact business in the State of Texas, in an amount of Two Million and 00/100 Dollars ($2,000,000.00). Such policy shall require the provision of written notice to the Town at least thirty (30) days prior to cancellation, non-renewal, or material modification of any policies, evidenced by return receipt or United States Certified Mail. Consultant shall furnish Town with certificates evidencing such coverage prior to commencing work on the Project. ARTICLE 6 CONSULTANT’S ACCOUNTING RECORDS Records of Direct Expenses and expenses pertaining to services performed in conjunction with the Project shall be kept on the basis of generally accepted accounting principles. Invoices will be sent to the Town as indicated in Article 3.4. Copies of employee time sheets, receipts for direct expense items and other records of Project expenses will be included in the monthly invoices. ARTICLE 7 Town of Prosper, Texas – Professional Services Agreement Page 12 of 32 AUDITS AND RECORDS / PROHIBITED INTEREST / VENDOR DISCLOSURE The Consultant agrees that at any time during normal business hours and as often as the Town may deem necessary, Consultant shall make available to representatives of the Town for examination all of its records with respect to all matters covered by this Agreement, and will permit such representatives of the Town to audit, examine, copy and make excerpts or transcripts from such records, and to make audits of all contracts, invoices, materials, payrolls, records of personnel, conditions of employment and other data relating to all matters covered by this Agreement, and for a period of four (4) years from the date of final settlement of this Agreement or for such other or longer period, if any, as may be required by applicable statute or other lawful requirement. The Consultant agrees that it is aware of the prohibited interest requirement of the Town Charter, which is repeated on the Affidavit, attached hereto as Exhibit “F” and incorporated herein for all purposes, and will abide by the same. Further, a lawful representative of Consultant shall execute the Affidavit attached hereto as Exhibit “F.” Consultant understands and agrees that the existence of a prohibited interest during the term of this Agreement will render the Agreement voidable. Consultant agrees that it is further aware of the vendor disclosure requirements set forth in Chapter 176, Local Government Code, as amended, and will abide by the same. In this connection, a lawful representative of Consultant shall execute the Conflict of Interest Questionnaire, Form CIQ, attached hereto as Exhibit “G” and incorporated herein for all purposes. ARTICLE 8 TERMINATION OF AGREEMENT / REMEDIES Town may, upon thirty (30) days written notice to Consultant, terminate this Agreement, for any reason or no reason at all, before the termination date hereof, and without prejudice to any other remedy it may have. If Town terminates this Agreement due to a default of and/or breach by Consultant and the expense of finishing the Project exceeds the Consultant’s Fee at the time of termination, Consultant waives its right to any portion of Consultant’s Fee as set forth in Article 3 herein and agrees to pay any costs over and above the fee which the Town is required to pay in order to finish the Project. On any default and/or breach by Consultant, Town may elect not to terminate the Agreement, and in such event it may make good the deficiency in which the default consists, and deduct the costs from the Consultant’s Fee due Consultant as set forth in Article 3 herein. If Town terminates this Agreement and Consultant is not in default of the Agreement, Consultant shall be entitled to compensation for any and all work completed to the satisfaction of the Town in accordance with the provisions of this Agreement prior to termination. In the event of any termination, Consultant shall deliver to Town all finished and/or unfinished documents, data, studies, surveys, drawings, maps, models, reports, Town of Prosper, Texas – Professional Services Agreement Page 13 of 32 photographs and/or any items prepared by Consultant in connection with this Agreement prior to Consultant receiving final payment. The rights and remedies provided by this Agreement are cumulative, and the use of any one right or remedy by either party shall not preclude or waive its rights to use any or all other remedies. These rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance, or otherwise. ARTICLE 9 DISPUTE RESOLUTION / MEDIATION In addition to all remedies at law, the parties may resolve/mediate any controversy, claim or dispute arising out of or relating to the interpretation or performance of this Agreement, or breach thereof, by voluntary mediation to be conducted by a mutually acceptable mediator. ARTICLE 10 INDEMNITY CONSULTANT SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLES S TOWN AND ITS TOWN COUNCIL MEMBERS, OFFICERS, AGENTS , REPRESENTATIVES AND EMPLOYEES FROM AND AGAINST ALL DAMAGES, INJURIES (INCLUDING DEATH), CLAIMS, PROPERTY DAMAGES (INCLUDING LOSS OF USE), LOSSES, DEMANDS, SUITS, JUDGMENTS AND COSTS, INCLUDING REASONABLE ATTORNEY’S FEES AND EXPENSES (INCLUDING ATTORNEY’S FEES AND EXPENSES INCURRED IN ENFORCING THIS INDEMNITY), TO THE EXTENT CAUSED, IN WHOLE OR IN PART, BY THE NEGLIGENT, GROSSLY NEGLIGENT, AND/OR INTENTIONAL WRONGFUL ACT AND/OR OMISSION OF CONSULTANT, ITS OFFICERS, AGENTS, REPRESENTATIVES, EMPLOYEES, SUBCONTRACTORS, LICENSEES, INVITEES OR ANY OTHER THIRD PARTIES FROM WHOM CONSULTANT IS LEGALLY RESPONSBILE, IN ITS/THEIR PERFORMANCE OF THIS AGREEMENT AND/OR ARISING OUT OF GOODS AND/OR SERVICES PROVIDED BY CONSULTANT PURSUANT TO THIS AGREEMENT, REGARDLESS OF THE JOINT OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF THE TOWN (HEREINAFTER “CLAIMS”). THIS INDEMNIFICATION PROVISION AND THE USE OF THE TERM “CLAIMS” IS ALSO SPECIFICALLY INTENDED TO APPLY TO, BUT NOT LIMITED TO, ANY AND ALL CLAIMS, WHETHER CIVIL OR CRIMINAL, BROUGHT AGAINST TOWN BY ANY GOVERNMENT AUTHORITY OR AGENCY RELATED TO ANY PERSON PROVIDING SERVICES UNDER THIS AGREEMENT THAT ARE BASED ON ANY FEDERAL IMMIGRATION LAW AND ANY AND ALL CLAIMS, DEMANDS, Town of Prosper, Texas – Professional Services Agreement Page 14 of 32 DAMAGES, ACTIONS AND CAUSES OF ACTION OF EVERY KIND AND NATURE, KNOWN AND UNKNOWN, EXISTING OR CLAIMED TO EXIST, RELATING TO OR ARISING OUT OF ANY EMPLOYMENT RELATIONSHIP BETWEEN CONSULTANT AND ITS EMPLOYEES OR SUBCONTRACTORS AS A RESULT OF THAT SUBCONTRACTOR’S OR EMPLOYEE’S EMPLOYMENT AND/OR SEPARATION FROM EMPLOYMENT WITH THE CONSULTANT, INCLUDING BUT NOT LIMITED TO ANY DISCRIMINATION CLAIM BASED ON SEX, SEXUAL ORIENTATION OR PREFERENCE, RACE, RELIGION, COLOR, NATIONAL ORIGIN, AGE OR DISABILITY UNDER FEDERAL, STATE OR LOCAL LAW, RULE OR REGULATION, AND/OR ANY CLAIM FOR WRONGFUL TERMINATION, BACK PAY, FUTURE WAGE LOSS, OVERTIME PAY, EMPLOYEE BENEFITS, INJURY SUBJECT TO RELIEF UNDER THE WORKERS’ COMPENSATION ACT OR WOULD BE SUBJECT TO RELIEF UNDER ANY POLICY FOR WORKERS COMPENSATION INSURANCE, AND ANY OTHER CLAIM, WHETHER IN TORT, CONTRACT OR OTHERWISE. CONSULTANT IS EXPRESSLY REQUIRED TO DEFEND TOWN AGAINST ALL SUCH CLAIMS; PROVIDED, HOWEVER, IF A COURT OF COMPETENT JURISDICTION SIGNS A JUDGMENT THAT BECOMES FINAL AND NON-APPEALABLE, DETERMINING THAT THE TOWN (WITHOUT WAIVING ANY GOVERNMENTAL IMMUNITY) HAS JOINT, CONCURRENT OR SOLE NEGLIGENCE FOR THE CLAIMS, IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (THE “JUDGMENT”), THEN CONSULTANT IS NOT REQUIRED TO INDEMNIFY OR DEFEND THE TOWN TO THE EXTENT OF THE NEGLIGENCE APPORTIONED TO THE TOWN FOR EACH CAUSE(S) OF ACTION IDENTIFIED IN THE JUDGMENT. IN THE EVENT THE JUDGMENT PROVIDES THAT TOWN IS JOINTLY, CONCURRENTLY, OR SOLELY NEGLIGENT FOR THE CLAIM S REFERRED TO THEREIN, TOWN AGREES TO REIMBURSE CONSULTANT FOR ALL REASONABLE AND NECESSARY COSTS INCURRED AND PAID BY CONSULTANT THAT ARE ATTRIBUTABLE TO TOWN’S PERCENTAGE OF JOINT, CONCURRENT, OR SOLE NEGLIGENCE, AS SET FORTH IN THE JUDGMENT, INCLUDING REASONABLE AND NECESSARY ATTORNEY’S FEES AND EXPENSES, TO CONSULTANT WITHIN SIXTY (60) DAYS OF THE DATE OF THE JUDGMENT (THE “REIMBURSEMENT ALLOCATION”). IN ITS SOLE DISCRETION, TOWN SHALL HAVE THE RIGHT TO APPROVE OR SELECT DEFENSE COUNSEL TO BE RETAINED BY CONSULTANT IN FULFILLING ITS OBLIGATION HEREUNDER TO DEFEND AND INDEMNIFY TOWN, UNLESS SUCH RIGHT IS EXPRESSLY WAIVED BY TOWN IN WRITING. TOWN RESERVES THE RIGHT TO PROVIDE A PORTION OR ALL OF ITS OWN DEFENSE; HOWEVER, TOWN IS UNDER NO OBLIGATION TO DO SO. ANY SUCH ACTION BY TOWN IS NOT TO BE CONSTRUED AS Town of Prosper, Texas – Professional Services Agreement Page 15 of 32 A WAIVER OF CONSULTANT’S OBLIGATION TO DEFEND TOWN OR AS A WAIVER OF CONSULTANT’S OBLIGATION TO INDEMNIFY TOWN PURSUANT TO THIS AGREEMENT. CONSULTANT SHALL RETAIN TOWN-APPROVED DEFENSE COUNSEL WITHIN SEVEN (7) BUSINESS DAYS OF TOWN’S WRITTEN NOTICE THAT TOWN IS INVOKING ITS RIGHT TO INDEMNIFICATION UNDER THIS AGREEMENT. IF CONSULTANT FAILS TO RETAIN COUNSEL WITHIN SUCH TIME PERIOD, TOWN SHALL HAVE THE RIGHT TO RETAIN DEFENSE COUNSEL ON ITS OWN BEHALF, AND CONSULTANT SHALL BE LIABLE FOR ALL COSTS INCURRED BY TOWN. THE RIGHTS AND OBLIGATIONS CREATED BY THIS PARAGRAPH SHALL SURVIVE TERMINATION OF THIS AGREEMENT. ARTICLE 11 NOTICES Consultant agrees that all notices or communications to Town permitted or required under this Agreement shall be delivered to Town at the following addresses: Mike Land Town Manager Town of Prosper P.O. Box 307 Prosper, Texas 75078 Town agrees that all notices or communication to Consultant permitted or required under this Agreement shall be delivered to Consultant at the following addresses: Brown Reynolds Watford Architects, Inc. 3535 Travis Street, Suite 250 Dallas, TX 75204 Any notice provided in writing under the terms of this Agreement by either party to the other shall be in writing and may be effected by registered or certified mail, return receipt requested. All notices or communication required to be given in writing by one party or the other shall be considered as having been given to the addressee on the date such notice or communication is postmarked by the sending party. Each party may change the address to which notice may be sent to that party by giving notice of such change to the other party in accordance with the provisions of this Agreement. ARTICLE 12 Town of Prosper, Texas – Professional Services Agreement Page 16 of 32 MISCELLANEOUS 12.1 Complete Agreement – This Agreement, including the exhibits hereto labeled “A” through “G,” all of which are incorporated herein for all purposes, constitute the entire Agreement by and between the parties regarding the subject matter hereof and supersedes all prior and/or contemporaneous written and/or oral understandings. This Agreement may not be amended, supplemented, and/or modified except by written agreement duly executed by both parties. The following exhibits are attached below and made a part of this Agreement: 12.1.1 Exhibit “A,” Scope of Services. 12.1.2 Exhibit “B,” Compensation Schedule / Project Billing / Project Budget. 12.1.3 Exhibit “C,” Town of Prosper Guidelines for Computer Aided Design and Drafting (CADD). 12.1.4 Exhibit “D,” Town of Prosper Guidelines for Direct Expenses; General and Administrative Markup; Travel and Subsistence Expenses. 12.1.5 Exhibit “E,” Town of Prosper Contractor Insurance Guidelines. 12.1.7 Exhibit “F,” Affidavit. 12.1.8 Exhibit “G,” Conflict of Interest Questionnaire, Form CIQ. 12.2 Assignment and Subletting – The Consultant agrees that neither this Agreement nor the work to be performed hereunder will be assigned or sublet without the prior written consent of the Town. The Consultant further agrees that the assignment or subletting of any portion or feature of the work or materials required in the performance of this Agreement shall not relieve the Consultant of its full obligations to the Town as provided by this Agreement. All such approved work performed by assignment or subletting shall be billed through Consultant, and there shall be no third party billing. 12.3 Successors and Assigns – Town and Consultant, and their partners, assigns, successors, subcontractors, executors, officers, agents, employees, representatives, and administrators are hereby bound to the terms and conditions of this Agreement. 12.4 Severability – In the event of a term, condition, or provision of this Agreement is determined to be invalid, illegal, void, unenforceable, or unlawful by a court of competent jurisdiction, then that term, condition, or provision, shall be deleted and the remainder of the Agreement shall remain in full force and effect as if such invalid, illegal, void, unenforceable or unlawful provision had never been contained herein. Town of Prosper, Texas – Professional Services Agreement Page 17 of 32 12.5 Venue – This entire Agreement is performable in Collin County, Texas and the venue for any action related directly or indirectly, to this Agreement or in any manner connected therewith shall be in Collin County, Texas, and this Agreement shall be construed under the laws of the State of Texas. 12.6 Execution / Consideration – This Agreement is executed by the parties hereto without coercion or duress for any substantial consideration, the sufficiency of which is forever confessed. 12.7 Authority – The individuals executing this Agreement on behalf of the respective parties below represent to each other that all appropriate and necessary action has been taken to authorize the individual who is executing this Agreement to do so for and on behalf of the party for which his or her signature appears, that there are no other parties or entities required to execute this Agreement in order for the same to be an authorized and binding agreement on the other party for whom the individual is signing this Agreement and that each individual affixing his or her signature hereto is authorized to do so, and such authorization is valid and effective on the date hereof. 12.8 Waiver – Waiver by either party of any breach of this Agreement, or the failure of either party to enforce any of the provisions of this Agreement, at any time, shall not in any way affect, limit, or waive such party’s right thereafter to enforce and compel strict compliance. 12.9 Headings – The headings of the various sections of this Agreement are included solely for convenience of reference and are not to be full or accurate descriptions of the content thereof. 12.10 Multiple Counterparts – This Agreement may be executed in a number of identical counterparts, each of which shall be deemed an original for all purposes. 12.11 Sovereign Immunity – The parties agree that the Town has not waived its sovereign immunity by entering into and performing its obligations under this Agreement. 12.12 Additional Representations – Each signatory represents this Agreement has been read by the party for which this Agreement is executed and that such party has had the opportunity to confer with its counsel. 12.13 Miscellaneous Drafting Provisions – This Agreement shall be deemed drafted equally by all parties hereto. The language of all parts of this Agreement shall be construed as a whole according to its fair meaning, and any presumption or principle that the language herein is to be construed against any party shall not apply. Town of Prosper, Texas – Professional Services Agreement Page 18 of 32 12.14 No Third Party Beneficiaries - Nothing in this Agreement shall be construed to create any right in any third party not a signatory to this Agreement, and the parties do not intend to create any third party beneficiaries by entering into this Agreement. 12.15 Indemnity – The parties agree that the Indemnity provision set forth in Article 10 herein is conspicuous and the parties have read and understood the same. IN WITNESS WHEREOF, the parties have executed this Agreement and caused this Agreement to be effective on the latest day as reflected by the signatures below. Effective Date: ________________________________ TOWN CONSULTANT Town of Prosper, Texas Brown Reynolds Watford Architects, Inc. By: _____________________________ By: ____________________________ Mike Land Gary DeVries, AIA Title: _Town Manager________________ Title: __Principal _________________ APPROVED AS TO FORM: ________________________________ Abernathy, Roeder, Boyd, & Joplin, P.C. Town of Prosper, Texas – Professional Services Agreement Page 19 of 32 STATE OF TEXAS: COUNTY OF COLLIN: BEFORE ME, THE UNDERSIGNED AUTHORITY, A NOTARY PUBLIC IN AND FOR THE STATE OF TEXAS, ON THIS DAY PERSONALLY APPEARED MIKE LAND, KNOWN TO ME TO BE THE PERSON WHOSE NAME IS SUBSCRIBED TO THE FOREGOING INSTRUMENT AND ACKNOWLEDGED TO ME THAT HE EXECUTED THE SAME FOR THE PURPOSE AND CONSIDERATION EXPRESSED, AND IN THE CAPACITY THEREIN STATED. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS _____ DAY OF _____________________, 20112012. ________________________________________________ NOTARY PUBLIC IN AND FOR THE STATE OF TEXAS My commission expires: ____________________________ STATE OF TEXAS: COUNTY OF _______________: BEFORE ME, THE UNDERSIGNED AUTHORITY, A NOTARY PUBLIC IN AND FOR THE STATE OF TEXAS, ON THIS DAY PERSONALLY APPEARED _____________________________________, KNOWN TO ME TO BE THE PERSON WHOSE NAME IS SUBSCRIBED TO THE FOREGOING INSTRUMENT AND ACKNOWLEDGED TO ME THAT HE EXECUTED THE SAME FOR THE PURPOSE AND CONSIDERATION EXPRESSED, AND IN THE CAPACITY THEREIN STATED. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS _____ DAY OF ______________________, 20112012. ________________________________________________ NOTARY PUBLIC IN AND FOR THE STATE OF TEXAS My commission expires: ____________________________ EXHIBIT “A” SCOPE OF SERVICES Town of Prosper, Texas – Professional Services Agreement Page 20 of 32 Agreement by and between the Town of Prosper, Texas (Town) and Brown Reynolds Watford Architects, Inc. (Consultant) to perform Architectural Services for Maintenance Structure, Design and Bid Documents for the bidding of Frontier Park Maintenance Structure I. PROJECT DESCRIPTION. II. TASK SUMMARY, BASIC SERVICES. A. Task One, Proposal Preparation – o Coordinate Prosper’s “front end” bidding document, included RFP. o Establish proposer’s evaluation criteria o Coordinate Prosper contract form and bonding / insurance requirements o Integrate Town general and special conditions of construction o Develop technical drawings and specifications  Bldg. Code analysis  Architectural Plans  Structural Details – Design-builder will provide a structural engineer as the engineer-of-record.  Mechanical / Electrical design criteria, including service entrance requirements. o Establish bid alternates o Establish voluntary alternates B. Task Two, Bidding Assistance – o Pre-bid meeting o Review proposals and make recommendation C. Task Four, Completion of Record Documents – To be complete and submitted to Town prior to April 30th February 1st, 2012 D. Task Five, TDLR Notice of Substantial Compliance – Consultant is not responsible for TDLR Notice or Submittals. III. ITEMS NOT INCLUDED IN THE EXISTING SCOPE OF SERVICES. A. Additional Services not included in the existing Scope of Services – Town and Consultant agree that the following services are beyond the Scope of Services described in the tasks above. However, Consultant can provide these services, if needed, upon the Town’s written request. Any additional amounts paid to the Consultant as a result of any material change to the Scope of the Project shall be agreed upon in writing by both parties before the services are performed. These Additional Services include the following: EXHIBIT “A” SCOPE OF SERVICES Town of Prosper, Texas – Professional Services Agreement Page 21 of 32 o Provide Brown Reynolds Watford Architects, Inc. with Jacobs Engineering CAD site survey / plan for maintenance building area. o Construction administration services IV. DELIVERABLES. A. Required Deliverables – At the completion of Tasks 1 through 2, Consultant shall ensure the delivery of the following products to the Town: 1. Deliverable #1 – Bid Documents 2. Deliverable #2 – Bid Evaluation and Recommendation V. PROJECT LABOR ALLOCATION. Task Subtask Labor Hours TASK 1 Bid Documents $11,350 TASK 2 Bid Evaluation & Recommendation $ 3,550 GRAND TOTAL $14,900 VI. ATTACHMENTS (IF APPLICABLE). Not Applicable. EXHIBIT “B” COMPENSATION SCHEDULE / PROJECT BILLING / PROJECT BUDGET Town of Prosper, Texas – Professional Services Agreement Page 22 of 32 Agreement by and between the Town of Prosper (Town) and Brown Reynolds Watford Architects, Inc. (Consultant) to perform Architectural Services for Maintenance Structure, Frontier Park in the Town of Prosper, Collin County, Texas I. COMPENSATION SCHEDULE / PROJECT BILLING SUMMARY. MONTH, DATE, YEAR DOLLAR AMOUNT TASK COMPLETED December 13th, 2011March 27th, 2012 $ 000,000.00 Town executes Agreement and Issues Notice to Proceed to Consultant. December 30th, 2011March 30th, 2012 $ 000,000.00 Consultant’s receipt of fully executed Agreement. January, 31st, 2012 April 30th, 2012 $ 11,350.00 Task One, Proposal Preparation (Task Completed and all task-related deliverables completed as stated in Exhibit “A” and accepted by the Town). February, 29th, 2012 May 25 th 2012 $ 3,550.00 Task Two, Bidding Assistance (Task Completed and all task- related deliverables completed as stated in Exhibit “A” and accepted by the Town). Not Applicable Architect of Record Responsible for Filing $ 00,000.00 (5% of Consultant’s Fee) Task Four, Record Documents. Not Applicable Architect of Record Responsible for Filing $ 00,000.00 (5% of Consultant’s Fee) Task Five, TDLR Notice of Substantial Compliance. TOTAL CONSULTANT’S FEE (NOT-TO-EXCEED) $ 14,900.00 II. PROJECT BUDGET SUMMARY. A. Basic Services. 1. Description of Basic Services. a. Preliminary Design. $ 000,000.00 b. Final Design. $ 000,000.00 EXHIBIT “B” COMPENSATION SCHEDULE / PROJECT BILLING / PROJECT BUDGET Town of Prosper, Texas – Professional Services Agreement Page 23 of 32 c. Bid Specifications & Construction Documents. $ 000,000.00 d. Compliance with Barriers Act and TDLR $ 000,000.00 Notice of Substantial Compliance. h. Architectural Services. $ 14,900.00 2. Total Basic Services (Not-To-Exceed) $ 14,900.00 C. Direct Expenses. a. Description of Direct Expenses. (Add items applicable to this Contract). a. Mileage Reimbursement, In-House Reproduction, Commercial Reproduction, Communications, Postage, Courier, Plotting. $ 1,000.00 b. Total Direct Expenses (Not-To-Exceed) $ 1,000.00 E. General and/or Administrative Markup. (If this Section is Applicable to Contract) a. Description of Markup. $ 0,000.00 b. Total Approved Markup (Not-To-Exceed) $ 0,000.00 F. Travel and/or Subsistence Expenses. (If this Section is Applicable to Contract) 1. Description of Travel Expenses. $ 00,000.00 2. Description of Subsistence Expenses. $ 0,000.00 3. Total Approved Travel and Subsistence Expenses $ 00,000.00 (Not-To-Exceed) F. Project Budget, Grand Total (Not-To-Exceed) $ 15,900.00 EXHIBIT “C” TOWN OF PROSPER GUIDELINES FOR COMPUTER AIDED DESIGN AND DRAFTING (CADD) Town of Prosper, Texas – Professional Services Agreement Page 24 of 32 1. Files shall be submitted in DWG/DXF format. 2. Files shall be georeferenced in the State Plane, Texas North Central FIPS 4202 (feet) coordinate system, using a datum of NAD 83. 3. If a surface adjustment factor is applied to the data, any surface adjustment factors used should be clearly documented on the drawing. 4.2. If submissions for the Project relate to a plat, the file submitted must match exactly the plat that is submitted for recording. 5.3. The file shall contain required features for the project type as detailed below: a. Pre-Construction/ As-Built Plans and/or Record Documents: i. Layers from Final Plat Requirements as Applicable to Project Type. ii. Water Utility Features. iii. Sanitary Sewer Features. iv. Storm Sewer Features. 6. Each required feature group should be provided as a separate layer within the file. 7. Layer names should be representative of the information contained in the layer. 8.4. Line work should be continuous (e.g. no dashed lines in required layers) and complete (connecting lines should meet at corners) within the subdivision/project. Layers outside of project/subdivision boundary may be dashed in CAD data as required for Final Plats by Prosper’s Subdivision Ordinance. EXHIBIT “D” TOWN OF PROSPER GUIDELINES FOR DIRECT EXPENSES; GENERAL AND ADMINISTRATIVE MARKUP; TRAVEL AND SUBSISTENCE EXPENSES Town of Prosper, Texas – Professional Services Agreement Page 25 of 32 I. CONSULTANT’S RESPONSIBILITY. The Consultant shall be solely responsible for the auditing of all direct expenses, approved markup (general and/or administrative), and approved travel and/or subsistence charges, including those of its subcontractors, prior to submitting to the Town for reimbursement, and Consultant shall be responsible for the accuracy thereof. Any over-payment by the Town for errors in submittals for reimbursement may be deducted from the Consultant’s subsequent payment(s) for services; however, this shall not be the Town’s sole and exclusive remedy for said over-payment. II. GUIDELINES FOR DIRECT EXPENSES. A. Local Transportation – Transportation in connection with the Project, when such transportation is not a function of routine performance of the duties of the Consultant in connection with the Project, and when such transportation exceeds beyond fifty (50) miles from the Project site, shall be reimbursed at a standard mileage rate consistent with that as issued, and periodically revised, by the United States Internal Revenue Service (IRS). Under no circumstances shall Town reimburse Consultant at a higher standard mileage rate or pay additional markup on charges for local transportation. Completion of Town’s Standard Mileage Log is required for submittal of these charges for reimbursement, including justification for each submitted expense. Under no circumstances are charges associated with rental cars for local transportation eligible for reimbursement by Town. Toll road subscriptions or toll plaza receipts are not reimbursable. Consultant agrees to place these standards in all subcontracts for work on the Project. B. Supplies, Material, Equipment – Town shall reimburse the actual cost of other similar direct Project-related expenses, which are duly presented in advance and approved by Town’s Project Manager in writing. C. Commercial Reproduction – Town shall reimburse the actual cost of reproductions, specifically limited to progress prints prepared for presentation to Town at each phase of progress, and final Construction Documents prepared for distribution at bidding phase, provided that the Consultant has duly obtained at least three (3) quotations from commercial firms and has chosen the best value for the Town. Consultant shall provide such documentation to Town for review prior to submitting these expenses for reimbursement. Consultant agrees to place these standards in all subcontracts for work on the Project. D. In-House Reproduction - Consultant shall make arrangements with the Town for prior approval of in-house reproduction rates prior to submitting these expenses for reimbursement. Town shall provide Consultant with a standard format for documenting these charges. Completion of the Town’s reproduction log is required as a prerequisite for payment, including the number or EXHIBIT “D” TOWN OF PROSPER GUIDELINES FOR DIRECT EXPENSES; GENERAL AND ADMINISTRATIVE MARKUP; TRAVEL AND SUBSISTENCE EXPENSES Town of Prosper, Texas – Professional Services Agreement Page 26 of 32 reproductions, the date, time, description, the approved standard rate, and a justification for each submitted expense for reimbursement. Consultant agrees to place these standards in all subcontracts for work on the Project. E. Commercial Plotting – Town shall reimburse the actual cost of plots, specifically limited to final documents, provided the Consultant has duly obtained at least three (3) quotations from commercial firms and has chosen the best value for the Town. Consultant shall provide such documentation to Town for review prior to submitting these expenses for reimbursement. Consultant agrees to place these standards in all subcontracts for work on the Project. F. In-House Plotting – Consultant shall make arrangements with Town for prior written approval of in-house plotting rates prior to submitting these charges for reimbursement. Town shall provide Consultant with a standard format for documenting these charges. Completion of the Town’s reproduction log is required as a prerequisite for payment, including the number of plots, the date, time, description, the approved standard rate, and a justification for each submitted charge for reimbursement. G. Communications – Reimbursement for expenses relating to electronic communications shall be limited to long-distance telephone or fax toll charges specifically required in the discharge of professional responsibilities related to the Project. Telephone service charges including office or cellular phones, WATTS, or Metro line services or similar charges are not reimbursable. H. Postage, Mail, and Delivery Service – Town shall reimburse the actual cost of postage and delivery of Instruments of Service, provided the Consultant duly considers all circumstances (including available time for assured delivery) of the required delivery and selects the best value for the Town, which may require comparison of delivery costs offered by three (3) or more sources or methods of delivery, which at a minimum shall include U.S. Mail. Courier service is acceptable only in circumstances requiring deadline-sensitive deliveries and not for the convenience of the Consultant and/or the Consultant’s employees. Consultant agrees to place these standards in all subcontracts for work on the Project. I. Meals and Other Related Charges – Meals or any other related expenses are not reimbursable unless incurred outside a fifty (50) mile radius of the Project, and then only reimbursable for the actual cost subject to compliance with the Town’s currently adopted policy. Non-allowable costs include, but are not limited to, charges for entertainment, alcoholic beverages, and gratuities. EXHIBIT “D” TOWN OF PROSPER GUIDELINES FOR DIRECT EXPENSES; GENERAL AND ADMINISTRATIVE MARKUP; TRAVEL AND SUBSISTENCE EXPENSES Town of Prosper, Texas – Professional Services Agreement Page 27 of 32 III. GUIDELINES FOR GENERAL AND ADMINISTRATIVE MARKUP. A. Requirement of Prior Approval – Consultant may be allowed to charge a General and/or Administrative Markup on work completed if Consultant can clearly define to Town specifically what costs are included in the markup calculation. To apply General and/or Administrative Markup, Consultant must also document to Town what costs would be considered direct costs. Town shall issue approval in writing to allow Consultant to charge General and/or Administrative Markup. Town reserves the right to reject any and all requests for General and/or Administrative Markup. IV. GUIDELINES FOR TRAVEL AND SUBSISTENCE EXPENSES. A. Requirement of Prior Approval – Town shall reimburse the actual cost of travel and/or subsistence expenses upon prior written approval by the Town’s Project Manager. B. Adherence to Currently Adopted Town Travel Policy – Reimbursements shall be governed by the same travel policies provided for Town employees according to current adopted policy. Prior to the event, Consultant shall request, and the Town’s Project Manager shall provide the provisions and the restrictions that apply to out-of-town reimbursements. EXHIBIT “E” TOWN OF PROSPER CONTRACTOR INSURANCE GUIDELINES Town of Prosper, Texas – Professional Services Agreement Page 28 of 32 I. REQUIREMENT OF GENERAL LIABILITY INSURANCE – A. Such policy shall name the Town, its officers, agents, representatives, and employees as additional insured as to all applicable coverage with the exception of workers compensation insurance. B. Such policy shall require the provision of written notice to Town at least thirty (30) days prior to cancellation, non-renewal, or material modification of any policies, evidenced by return receipt or United States Certified Mail. C. Such policy shall provide for a waiver of subrogation against the Town for injuries, including death, property damage, or any other loss to the extent the same is covered by the proceeds of the insurance. II. INSURANCE COMPANY QUALIFICATION – All insurance companies providing the required insurance shall be authorized to transact business in the State of Texas, and shall have a minimum rating of “A” by A.M. Best’s Key Rating Guide, or other equivalent rating service(s). III. CERTIFICATE OF INSURANCE – A Certificate of Insurance evidencing the required insurance shall be submitted with the contractor’s bid or response to proposal. If the contract is renewed or extended by the Town a Certificate of Insurance shall also be provided to the Town prior to the date the contract is renewed or extended. EXHIBIT “E” TOWN OF PROSPER CONTRACTOR INSURANCE GUIDELINES Town of Prosper, Texas – Professional Services Agreement Page 29 of 32 IV. INSURANCE CHECKLIST – “X” means that the following coverage is required for this Agreement. Coverage Required Limits _X_ 1. Worker’s Compensation & Employer’s Liability  Statutory Limits of the State of Texas _X_ 2. General Liability  Minimum $1,000,000.00 each occurrence;  Minimum $2,000,000.00 in the aggregate. ___ 3. XCU Coverage  Minimum $1,000,000.00 each occurrence;  Minimum $2,000,000.00 in the aggregate. _X_ 4. Professional Liability  Minimum $ 1,000,000.00 each claim;  Minimum $ 2,000,000.00 in the aggregate. ___ 5. Umbrella Coverage or Excess Liability Coverage  An amount of $ 2,000,000.00. _X_ 6. Town named as additional insured on General Liability Policy. This coverage is primary to all other coverage the Town may possess. _X_ 7. General Liability Insurance provides for a Waiver of Subrogation against the Town for injuries, including death, property damage, or any other loss to the extent that same is covered by the proceeds of the insurance. _X_ 8. Thirty (30) days notice of cancellation, non-renewal, or material change required. The words “endeavor to” and “but failure” (to end of sentence) are to be eliminated from the Notice of Cancellation provision on standard ACORD certificates. _X_ 9. Insurance company has a minimum rating of “A” by A.M. Best’s Key Rating Guide, or other equivalent rating service(s). _X_ 10. The Certificate of Insurance must state the project title and bid number. ___ 11. Other Insurance Requirements (State Below): EXHIBIT “F” AFFIDAVIT Town of Prosper, Texas – Professional Services Agreement Page 30 of 32 THE STATE OF TEXAS § § THE COUNTY OF ______________ § I, ___________________________, a member of the Consultant team, make this affidavit and hereby on oath state the following: I, and/or a person or persons related to me, have the following interest in a business entity that would be affected by the work or decision on the Project (Check all that apply): _____ Ownership of 10% or more of the voting shares of the business entity. _____ Ownership of Twenty Five Thousand and 00/100 Dollars ($25,000.00) or more of the fair market value of the business entity. _____ Funds received from the business entity exceed ten percent (10%) of my income for the previous year. _____ Real property is involved, and I have an equitable or legal ownership with a fair market value of at least Twenty Five Thousand and 00/100 Dollars ($25,000.00). _____ A relative of mine has substantial interest in the business entity or property that would be affected by my business decision of the public body of which I am a member. _____ Other: _________________________________________________. _____ None of the Above. Upon filing this affidavit with the Town of Prosper, Texas, I further affirm that no relative of mine, in the first degree by consanguinity or affinity, as defined in Chapter 573 of the Texas Government Code, is a member of a public body which took action on the agreement. Signed this _____________________ day of _____________________, 20___. _____________________________________ Signature of Official / Title BEFORE ME, the undersigned authority, this day personally appeared ____________________________ and on oath stated that the facts hereinabove stated are true to the best of his / her knowledge or belief. Sworn to and subscribed before me on this _____ day of ________________________, 20___. _____________________________________ Notary Public in and for the State of Texas My commission expires: __________________ EXHIBIT “G” CONFLICT OF INTEREST QUESTIONNAIRE, FORM CIQ Town of Prosper, Texas – Professional Services Agreement Page 31 of 32 EXHIBIT “G” CONFLICT OF INTEREST QUESTIONNAIRE, FORM CIQ Town of Prosper, Texas – Professional Services Agreement Page 32 of 32 Page 1 of 1 To: Mayor and Town Council From: Amy Piukana, Town Secretary CC: Mike Land, Town Manager Re: Town Council Meeting – March 27, 2012 Date: March 20, 2012 Agenda Item: Consider and act upon Ordinance No. 12-11, authorizing the Town Council to cancel the May 12, 2012, General Election. Description of Agenda Item: The Town has posted notice to file for application for place on the ballot for the General Election. There were no declaration of write in candidates and each candidate on the ballot is unopposed. Therefore, under these circumstances under Subchapter C, Chapter 2 of the Election Code authorizes the Town Council to cancel the election. Attached Documents: Ordinance No. 12-11 Certificate of Unopposed Candidates Town Staff Recommendation: Town staff recommends that the Town Council approve Ordinance No. 12-11, declaring unopposed candidates and cancelling the May 12, 2012, General Election. Prosper is a place where everyone matters. ADMINISTRATION Ordinance Cancelling the May 12, 2012 General Election Page 1 606755.2 TOWN OF PROSPER ORDINANCE NO. 12-11 AN ORDINANCE OF THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS, DECLARING UNOPPOSED CANDIDATES IN THE MAY 12, 2012, GENERAL CITY ELECTION ELECTED TO OFFICE; CANCELLING THE ELECTION; PROVIDING A SEVERABILITY CLAUSE; AND PROVIDING AN EFFECTIVE. WHEREAS, the General Election was called for May 12, 2012, for the purpose of electing members to the Town Council; and WHEREAS, the Town Secretary has certified in writing that there is no proposition on the ballot, that no person has made a declaration of write-in candidacy, and that each candidate on the ballot is unopposed for election to office; and WHEREAS, UNDER THESE CIRCUMSTANCES, Subchapter C, Chapter 2, Election Code, authorizes the Town Council to declare the candidates elected to office and cancel the election. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE TOWN OF PROSPER, TEXAS: Section 1. The following candidates, who are unopposed in the May 12, 2012, General Election, are declared elected to office, and shall be issued a certificate of election following the time the election would have been canvassed: Kenneth Dugger, Town Council Place #2 Jason Dixon, Town Council Place #6 Section 2. The May 12, 2012, General Election is cancelled, and the Town Secretary is directed to cause a copy of this Ordinance to be posted on Election Day at each polling place that would have been used in the election. Section 3. It is declared to be the intent of the Town Council that the phrases, clauses, sentences, paragraphs, and sections of this Ordinance are severable, and if any phrase, clause, sentence, paragraph, or section of this competent jurisdiction, the invalidity shall not affect any of the remaining phrases, clauses, sentences, paragraphs, or sections of this Ordinance since the Town Council would have enacted them without the invalid portion. Section 4. This Ordinance shall take effect upon its final passage, and it is so resolved. Ordinance Cancelling the May 12, 2012 General Election Page 2 606755.2 DULY PASSED AND APPROVED BY TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS on this 27th day of March, 2012. Approved: ___________________________ Ray Smith, Mayor Attest: _____________________________ Amy Piukana, TRMC Town Secretary Town of Prosper Certification of Unopposed Candidates For Other Political Subdivisions (Not County) CERTIFICACION DE CANDIDATOS UNICOS PARA OTRAS SUBDIVISIONES POLITICAS (NO EL CONDADO) To: Presiding Officer of Governing Body AL: Presidente de la entidad gobernante As the authority responsible for having the official ballot prepared, I hereby certify that the following candidates are unopposed for election to office for the election scheduled to be held on May 12, 2012. Como autoridad a cargo de la preparacion de la boleta de votacion official, por la presente certifico que los siguientes candidates son candidates unicos para eleccion para un cargo en la eleccion que se llevara a cabo el May 12, 2012. List offices and names of candidates: Lista de cargos y nombres de los candidates: Office(s)/Cargo(s) Candidate(s)/ Candidato(s) Councilman, Place 2 Kenneth Dugger Councilman, Place 6 Jason Dixon 0 F P ifs Signature Firma) s i Prin Name (Nombre en letra de molde) eE,l YET // Title (Puesto) U i/ A1 `% Q- / Date (Fecha De firma) To: Mayor and Town Council From: Ronnie Tucker, Fire Chief Cc: Mike Land, Town Manager Re: Town Council Meeting – March 27, 2012 Date: March 20, 2012 Agenda Item: Replacement of aging response vehicles for Battalion Chief and Fire Marshal. Description of Agenda Item: Staff recommends the purchase of (1) 2012 Ford F150 Pickup Truck and (1) 2012 Chevy Tahoe to replace two aging Ford Expeditions that are used daily in operations and administration and provide reliable response vehicles to the Town. Both existing Expeditions were decommissioned police vehicles that were removed from their fleet for high mileage. Both vehicles are experiencing multiple mechanical issues, lack emergency striping, and need multiple repairs that could exceed the amount of current value. Budget Impact: Value of vehicles $75,109.06, reflective safety striping $2500.00, and locking bed cover $1005.00 totaling $78,614.06. We are requesting to use funds from our reimbursement received from the State of Texas from mutual-aid Wild Land Deployments in West Texas and South Texas from 2011. To date we have received $97,798.96. Due to the unknown from the State this was not included in this year’s budget revenue. All reimbursements have been received during this current budget year. $75,109.06 Vehicle Purchase Using State of Texas Contract 071-A1-2011/2012 465CLE $2500.00 Emergency Safety Reflective Striping $1005.00 Pace Edwards Locking Tonneau Cover for Pickup TOTAL $78,614.06 -$8500.00 Trade in Credit for the two Expeditions $70,114.06 Total $97,798.96 Total Reimbursement from State $27,684.90 Reimbursement Funds Remaining After Purchase Legal Obligations and Review: N/A Attached Documents: Vehicle Quotes reflecting the State of Texas Purchasing Contract Town Staff Recommendation: Town staff recommends Town Council approve the purchase of (1) 2012 Ford F150 Pickup Truck and (1) 2012 Chevy Tahoe vehicles for the Fire Department. Date 1/30/2012 Estimate #3152 Bill To Prosper Fire Department 1500 E. First Street Prosper, TX 75078 Quantity Ordered 1 Total Vehicle Order Cost $31,188.18 2012 Ford F150 Crew Cab 2WD Vehicle Base Color - Red SIGNATURE _____________________________________ Vehicle and Emergency Equipment Total Customer Contact Stuart Blasingame Customer Phone 972-347-2424 Customer E-mail stuart.blasingame@pr... (903) 564-5641 bryan@defendersupply.comEstimate By Bryan Brooks Final sale amount may be subject to state and local sales tax. Description Location 2012 Ford F150 Crew Cab 2WD XL with Locking Rear Differential, Heavy Duty Trailering Package, 5.0L V8, Deep Tinted Glass, Rear Window Defroster, XL Decor Group and Cruise Control - Purchased Using State of Texas Contract 071-A1-2011/2012 2 year State inspection certificate Whelen InnerEdge 09-10 Ford F-150 w/ Takedowns Whelen Series 295 Siren/Light Controller with PA Whelen 100 Watt Speaker with Behind the Grill Bracket - F150 Havis Shield Center Console - 24" HAVIS Arm Rest - Side Mount Havis Shield Base Plate For 24" Console Havis Shield 9" Accessory Pocket with Locking Lid Havis Shield Cup Holder Havis Shield 24" Police Console with Cup Holders, Locking 9" Box & Armrests Whelen Dominator Plus 8 LED Light - Red/Blue - 6 LED's per Module - RRRRBBBB Rear Window Whelen LINZ6 LED Split Head Light - Red/Blue - 2 Total Rear Side Glass Whelen M4 LED Light - Red/Blue - 2 Total Rear Tail Gate Federal Signal Stand Alone Opticom Infrared System Model 792 Emitter Encoded Signal Preemption Device Brush Guard Go Industries - Law Enforcement Brush Guard 2011 F-150 Whelen Dominator Plus 6 LED Light - Red/Blue - 6 LED's/Module - RRRBBB Brush Guard Whelen Vertex LED Light - Red - 2 Total Rear Tail Lights Whelen Vertex LED Light - Blue - 2 Total Rear Backup Lights Two-Way Radio Antenna Window Tint - Front Side Windows Defender Supply Wiring Harness - Ford F150 - Unmarked Shipping of Parts Misc. Shop Supplies Installation Including Department Supplied Radio Texas Government or Municipality - No Sales Tax $31,188.18 Date 1/26/2012 Estimate #3140 Bill To Prosper Fire Department 1500 E. First Street Prosper, TX 75078 Quantity Ordered 1 Total Vehicle Order Cost $43,920.88 2012 Tahoe SSV 4WD Vehicle Base Color - Red SIGNATURE _____________________________________ Vehicle and Emergency Equipment Total Customer Contact Stuart Blasingame Customer Phone 972-347-2424 Customer E-mail stuart.blasingame@pr... (903) 564-5641 bryan@defendersupply.comEstimate By Bryan Brooks Final sale amount may be subject to state and local sales tax. Description Location 2012 Chevy Tahoe SSV 4WD with Locking Rear Differential, Dual Batteries, Driver Side Spot Light, Special Paint Color and Skid Plates - Purchased Using State of Texas Contract 071-A1-2011/2012 465CLE 2 year State inspection certificate Whelen Tahoe InnerEdge with Eight 6-LED Lamps, Upper Front Unit for a 2007-2010 Chevy Tahoe, Two Piece, Individual Driver and Passenger Side Units, with Two LED Flashing/Take-Downs (One in Each Housing) Whelen Series 295 Siren/Light Controller with PA Whelen 100 Watt Speaker with Push Bumper Mounting Bracket Havis Shield Center Console - 24" HAVIS Arm Rest - Side Mount Havis Shield Base Plate For 24" Console Havis Shield 9" Accessory Pocket with Locking Lid Havis Shield Cup Holder Havis Shield 24" Police Console with Cup Holders, Locking 9" Box & Armrests Whelen Dominator Plus 8 LED Light - Red/Blue - 6 LED's per Module - RRRRBBBB Rear Window Whelen Dual Avenger LED Red/Blue - 2 Total Rear Side Glass Whelen M4 LED Light - Red/Blue - 2 Total Rear Hatch Federal Signal Stand Alone Opticom Infrared System Model 792 Emitter Encoded Signal Preemption Device Go Industries Law Enforcement Brush Guard - Tahoe Whelen Dominator Plus 6 LED Light - Red/Blue - 6 LED's/Module - RRRBBB Brush Guard Whelen Vertex LED Light - Red - 2 Total Rear Bumper Whelen Vertex LED Light - Blue - 2 Total Rear Bumper Watch Guard DV-1 Overhead w/GPS - Tahoe Whelen LED Strip Illumination Light, Clear Frosted Lens - 2 Total Inside Rear Hatch Two-Way Radio Antenna Window Tint - Front Side Windows Defender Supply Wiring Harness - Chevrolet Tahoe - Unmarked Shipping of Parts Misc. Shop Supplies Installation Including Department Supplied Radio Texas Government or Municipality - No Sales Tax $43,920.88 Page 1 of 8 To: Mayor and Town Council From: Hulon T. Webb, Jr., P.E., Director of Development Services/Town Engineer CC: Mike Land, Town Manager Matthew B. Garrett, MBA, GFCO, Finance Director Frank E. Jaromin, P.E., Director of Public Works Michael Bulla, CIP Project Manager Re: Town Council Meeting – March 27, 2012 Date: March 23, 2012 Agenda Item: Discussion regarding Capital Improvement Project and related Debt Financing Options. Description of Agenda Item: On May 14, 2011, the residents of Prosper voted in favor of five (5) bond propositions totaling $25,040,000 to fund capital improvements projects through the use of General Obligation Bonds. One of the bond propositions allocated $13,290,000 for street and road improvements that included the following Bond Committee recommended Road Projects: • Coleman (Prosper Trail to High School) • Prosper Trail (Preston to Custer) • Frontier Parkway (DNT to Preston) • Coit Road (First Street to Frontier) • Coleman (Broadway to Prosper Trail) • Rhea Mills Subdivision • Hays, Main Street • Broadway, McKinley, First, Fifth, Seventh • Church Street, Field, Pasewark, Eighth • First Street (Greenspoint to Custer) • First Street (DNT to Coleman) • Fishtrap (FM 1385 to DNT) • Gee Road (US 380 to Fishtrap) • Teel Parkway (US 380 to Fishtrap) • Parvin (Good Hope to FM 1385) Another bond proposition allocated $6,200,000 for parks, trails, recreational facilities and a park administration facility that included the following Bond Committee recommended Park Projects: • Creek Crossing Community Park • Hike and Bike Trails • Recreation Facilities • Park Administration Building ENGINEERING Prosper is a place where everyone matters. Page 2 of 8 Town staff has put together the following priority list of Road Projects and Park Projects for the Town Council to consider for potential funding through the sale of General Obligations Bonds. ROAD PROJECTS: The Road Projects listed in the table below are ranked by priority and include projects recommended by the Bond Committee. Also included in the list is an alternate cost estimate to improve Prosper Trail from Wilson Creek to Custer Road with concrete versus the recommended asphalt. Priority Roadway From To Length Material Est. Cost 1 Prosper Trail Coit Road Custer Road 10,700 Asphalt $675,000 2 Prosper Trail Preston Road Coit Road 5,480 Asphalt $325,000 3 Hays Road Ridgewood Preston Road 3,000 Concrete $500,000 4 Coleman Prosper Trail High School 2,800 Concrete $1,500,000 5 Rhea Mills Finish Project 7,100 Concrete $1,200,000 6 Coit Road First Street Frontier Pkwy 10,600 Asphalt $675,000 7 Coleman Broadway Prosper Trail 4,400 Asphalt $375,000 8 Fishtrap FM 1385 DNT 20,000 Asphalt $1,250,000 TOTAL FUNDING OF ROADS $6,500,000 ALTERNATE CONSTRUCTION OF PROSPER TRAIL 1 Prosper Trail Coit Road Custer Road 10,700 Asphalt ($675,000) 1(A) Prosper Trail Coit Road Wilson Creek 6,600 Asphalt $400,000 1(B) Prosper Trail Wilson Creek Custer Road 4,100 Concrete $2,000,000 ADDITIONAL FOR ALTERNATE $1,725,000 TOTAL FUNDING OF ROADS IF APPROVING ALTERNATE $8,225,000 Town staff recommends that Prosper Trail be improved with asphalt from Wilson Creek to Custer Road at this time as recommended by the Bond Committee. In addition, there is not adequate time for this section of Prosper Trail to be designed and the construction completed before the opening of Cynthia Cockrell Elementary this fall. PARK PROJECTS: Of the $6,200,000 allocated for parks, trails, recreational facilities and a park administration facility, the Bond Committee recommended $5,000,000 for park land acquisition. The Park Project listed below is for park land acquisition of a single community park. Project Name Description Est. Cost Park Land Land Acquisition $2,000,000 TOTAL FUNDING OF PARKS $2,000,000 The following funds are currently available for park land acquisition: • Park Land Dedication Fee Fund $1,125,000 • Collin County Parks and Open Space Grant $400,000 Page 3 of 8 DRAINAGE PROJECTS: On December 14, 2010, the Town council adopted a Municipal Drainage Utility System Fee Schedule to fund the operations and maintenance of existing Town drainage facilities. With the continued growth of the Town, the additional drainage utility system fee funds being collected are able to reimburse annual debt payments that could fund the following capital improvements listed in the Drainage Utility System Fee Report. Project Name Description Est. Cost Lakes of La Cima Detention Pond Outfall Reconstruction $250,000 Teel Road Culvert Upgrade $30,000 Parvin Street Downtown Drainage Study $75,000 Amberwood Farms Channel Improvements north of Norniella property $100,000 Gentle Creek Channel Improvements north of Crooked Stick $25,000 Frontier Parkway Culvert Upgrade $25,000 Talon Drive Culvert Upgrade $25,000 TOTAL FUNDING OF DRAINAGE $530,000 WATER PROJECTS: On November 8, 2011, the Town Council adopted an ordinance updating the Town’s land use assumptions, capital improvements plan, and roadway, water, and wastewater impact fees. The capital improvements plan was developed to provide planning to the Town for adequate water and wastewater service to support the existing and proposed residential and commercial development. The impact fees adopted as part of the capital improvement plan were based on the water and sewer projects required to meet growth demands from 2011-2021. These projects are shown on the attached water and wastewater capital improvement projects exhibits. As part of the capital improvements plan, the Town’s water demands was calculated for the Year 2011 and projected for the Year 2021 and at Buildout based on the anticipated growth. The table below provides the results of these calculations as provided in the capital improvements plan study. Projected Water Demands Year Average Day (mgd) Calculated Maximum Day (mgd) Calculated Peak Hour (mgd) 2011 2.50 (actual) 8.38 16.50 2021 6.79 19.63 38.53 Buildout 21.53 52.40 101.96 Also as part of the capital improvements plan, the Town’s ground storage and pumping capacity was evaluated in coordination with the water demands and the following associated improvements recommended based on design criteria set forth in the study: • Design and construction of ground storage tanks to serve the Upper Pressure Plane (UPP) east of the BNSF RR and the Lower Pressure Plan (LPP) west of the BNSF RR. • Expansion of the existing Custer Road Pump Station to serve the UPP. • Design and construction of a second water distribution line to facility the increased pumping capacity at the Custer Road Pump Station. • Design and construction of an additional elevated storage tank to serve the UPP. • Design and construction of an additional Pump Station to serve the LPP. • Design and construction of an elevated storage tank to serve the LPP. Page 4 of 8 Project 1A – The following figure was provided in the capital improvements plan study and summarizes the recommended ground storage capacity and associated improvements based on the design criteria. Recommended Ground Storage Capacity The following figure was provided in the capital improvements plan study and shows the timing for expansion of the existing Custer Road Pump Station to serve the UPP. Recommended UPP Firm Pumping Capacity Page 5 of 8 Freese and Nichols, Inc. developed criteria for sizing of storage and pumping capacity for the Town. These criteria take into consideration many factors including operational flexibility, fire protection, and energy efficiency. The design criteria recommended to size ground storage tank capacity is to provide adequate storage volume to meet 8 hours of maximum day demand. The design criteria recommended for pump station capacity is providing a firm pumping capacity to meet 65% of the peak hour demand. The firm pumping capacity is defined as the total available pumping capacity with the largest pump out of service to each pressure plane. • Ground Storage: The Town currently has a 3 MG tank at the Custer Road Pump Station. Based on the capital improvements plan study, the recommended capacity of ground storage for the Year 2011 was 3 MG and increases to 6.5 MG by the year 2021. Based on the growth since this study was adopted, the Town is below the recommended amount of ground storage capacity. In order to maintain adequate ground storage capacity an additional 5 MG tank is recommended. Since there exists a deficiency with the recommended ground storage tank capacity and the Town is currently undertaking an ISO Rating analysis, Town staff recommends that this additional tank be constructed as soon as the design plans are complete. This additional tank will provide enough ground storage capacity until the Year 2024 when another 5 MG tank will need to be constructed. The final 5 MG tank is anticipated to be required in the Year 2034. • Pumping Capacity: As depicted on the Recommended UPP Firm Pumping Capacity figure, the Town is currently below the recommendation in the study. With the expansion of the existing Custer Road Pump Station to 20 MGD, the pumping capacity is projected to be adequate until the Year 2024. At that time the Custer Road Pump Station would need to be expanded from 20 MGD pumping capacity to 30 MGD pumping capacity. On December 13, 2011, the Town Council approved a design contract with Freese and Nichols for the design of an additional 5 MG ground storage tank at the Custer Road Pump Station site and increasing the pumping capacity at the site from 7.35 MGD to 20 MGD. Design is underway and the anticipated project schedule is: • Complete Design April 2012 • Bid Project May 2012 • Bid Award to Town Council June 2012 • Begin Construction July 2012 • Complete Construction July 2013 Project 1B – In order to facilitate the required pumping capacity at the Custer Road Pump Station, an additional water line is needed to distribute the water from the pump station to the Town’s water system. Currently there is only one water line from the pump station and it can handle approximately 6 MGD of pumping capacity. The addition of another large distribution water line from the pump station is recommended in the capital improvements plan study to allow adequate distribution of the water from the pump station to the Town’s water system. The second water line distribution line from the Custer Road Pump Station will also serve as a secondary service line to the Town’s water system. If the existing water line from the pump station to Coit Road were to break or need maintenance, the Town would be without water service. Page 6 of 8 On December 13, 2011, the Town Council approved a design contract with Freese and Nichols for the design of an additional water line from the pump station to the Town’s water system. The specifics for this water line is: • Design of approximately 11,150 feet of 30-inch treated water pipeline extending from the Town’s pump station northwest to the intersection of Prosper Trail and Coit Road. • Design of approximately 4,300 feet of 24-inch treated water pipeline extending from the intersection of Prosper Trail and Coit Road north to the existing 20-inch waterline termination just south of Prosper Trail. Since the majority of the proposed water line extending from the pump station will cross property currently held by Landplan, Freese and Nichols will coordinate with Town staff and Landplan on an alignment study. Design is underway and the anticipated project schedule is: • Complete Alignment Study April 2012 • Complete Design September 2012 • Bid Project October 2012 • Bid Award to Town Council November 2012 • Begin Construction January 2013 • Complete Construction June 2013 Project 9 – The following figure was provided in the capital improvements plan study and shows the timing for the additional elevated storage tank to serve the UPP. The design criteria recommended for elevated storage capacity is twice the required volume needed to meet 35% of the peak hour demand for a duration of 3 hours. The Prosper Trail Elevated Storage Tank is anticipated to be required to be complete by the end of 2015. Funding is already allocated out of the 2004 CO Bonds for the acquisition of the property necessary for the tank. Recommended UPP Elevated Storage Capacity Page 7 of 8 Project 10 – The following figure was provided in the capital improvements plan study and shows the timing for construction of a pump station to serve the LPP. Recommended LPP Firm Pumping Capacity Project 19 – The following figure was provided in the capital improvements plan study and shows the timing for the elevated storage tanks to serve the LPP. Recommended LPP Elevated Storage Capacity *Assume excess capacity in the Upper Pressure Plane can be used in the Lower Pressure Plane Page 8 of 8 At this time the Town is in discussion with the Upper Trinity Regional Water District (UTRWD) on a contract to provide water service to the west side of Town or Lower Pressure Plane (LPP) west of the BNSF RR. The timing of the construction of a pump station, ground storage tanks and elevated storage tanks to serve the LPP in the capital improvements plan study was based on North Texas Municipal Water District (NTMWD) serving the LPP from the Custer Road Pump Station site. The timing of the construction of a pump station, ground storage tanks and elevated storage tanks to serve the LPP based on UTRWD serving the LPP is unknown. The lists of Water Projects in the following table are the recommended projects in the capital improvement plan study that are of immediate need as well as projects that are currently under design. The additional water projects recommended will be closely monitored and brought back to the Town Council in the future for funding at the appropriate time. WATER PROJECTS Project Name Description Est. Cost Project 1A Pump Station Expansion 20 MGD $2,600,000 “ 5 MG Ground Storage Tank $3,000,000 Project 1B Second Water Line Feed $3,500,000 TOTAL FUNDING OF WATER $9,100,000 SEWER PROJECTS: In January 2007, the Town decommissioned the Town’s sewer treatment plant at the Public Works Department facility and the actual deconstruction of the plant is still needed to remove the infrastructure that is no longer required. SEWER PROJECTS Project Name Description Est. Cost Sewer Treatment Plant Deconstruction of Plant at Public Works $800,000 TOTAL FUNDING OF OTHER $800,000 Funding Options: Jason Hughes with First Southwest will be present to discuss debt financing options. Attached Documents: 1. Water Capital Improvements Plan (2011-2021) 2. Wastewater Capital Improvements Plan (2011-2021) Town Staff Recommendation: Town staff recommends that the Town Council discuss the list of projects and debt financing options and provide feedback to Town staff for future action. VVVVVVVVVVääääääääääUUPTWW)"C`10''10''10''(212''WastewaterTreatment Plant(Abandoned)La CimaLift StationCapacity: 3.0 MGDLa Cima # 2Decommission LS and FMSteeple ChaseLift Station(Abandoned)GreenspointDecommission LS and FMWhispering FarmsDecommission LS and FMGentle CreekLift Station(Abandoned)(3(3(4(4(5(5(1(1(1(13(1(1(12(1(1(9(9(11(8(8(6(10(14(7(7(7(8(6(15(8(15(9(9(10(14(8(A(A(A(B(B(B1 2''30''15''10''18''24''27''21''18''10''10''18''10''10''24''15''21''10''10''10''12''10''24''10''10''10''24''10''18''21''10''12''1 5 ''24''10''10''10''21''10''27''10''10''21''15''21''1 0 ''15''10''21''18''10''10''18''10''10''24''10''10''21''10''24''1 0''12''10''10''27''10''24''10''21''18''1 2'' 12 ''10''24''15''24''21''21''24''21''10''24''21''15''10 ''15''27''15''10''10''24''24''12''24''10''24''24''10'' F.M27''30''24''21''12''24''21''12''21''12'' F.M.10'' F.M.6'' F .M.12'' F.M.8'' F.M .10'' F.M.4'' F.M.12'' F.M.10'' F.M.12''15 ''10''21''10''12 ''10''15''1 5 ''12''10''12''10''12''15''12''10''12''10''15''10''6''8''4''8''8''8''8''8''4''6''8''8 ''8''8''8''8''6''8''8''4''8''8 ''6''6''8''8''8''6''6''8''8''8''8''8''8''8''8''8''6''8''8''8''6''8''8''6''8''8''8''8''8''8''8''8''8''8''8''6''8''8''8''8''8''8''8''8''8''8 ''8''6''8''8''8''8 ''8''8''8'' 8'' 8 ''8''8''8''8''6''8''8''8''8''8''8''8''8''8''8''6''8''8''8''8 ''8''8''8''8''6''8''8''6''6''8''8''8 ''8''8''8''8''8''8''8 ''8''8''8''8''8''8''8''8''8''6''8''8''8''8''8''8''8''8''8''8''6''8''8''8''8''8''8''6''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''4''8 ''4''8''8''8''8''8''8''8''8''8''8''6''8''8''8''8''8''8''8''8''8''8''6''8''8''8''8''8''8''6''8''8''8''8''8''8''8 ''8''8''8''8''8''8''8''8''8''8''8''8 ''8''8''8''8''6''8''8''8''8''8''8''8''8''8''8''8''8''8''8''6''8''8''8''8''8''8''8''8''8''8''8''6''8''8 ''6''8''8''8''6''8''8 ''8''8''6''6''8''8''8''8''8''8''8''6''6''8''8''SUBBASIN 3SUBBASIN 3SUBBASIN 6SUBBASIN 6SUBBASIN 2SUBBASIN 2SUBBASIN 4SUBBASIN 4SUBBASIN 1SUBBASIN 1SUBBASIN 5SUBBASIN 58''6''6''6''8''8''6''8''8''6''8''6''6''15''12''15''15''15''15''Doe BranchPanthe r C re e k W ils o n C r e e kGentle C reekParvin BranchRutherford BranchStreamR o w le t t Cre e kPond Parvin BranchStreamParvin BranchParvin BranchDoe BranchStreamLEGENDUUPTWW)Wastewater Treatment PlantVäExisting Lift Station"C`NTMWD MeterExisting 10" and LargerWastewater LineExisting 8" and SmallerWastewater LineExisting Force MainExisting Impact Fee EligibleWastewater Line2011- 2021 Wastewater LineUTRWD Wastewater LineNTMWD Wastewater LineRoadRailroadStreamLakeParcelTown LimitETJ BoundaryCounty BoundaryFIGURE 3-9TOWN OF PROSPERWASTEWATER SYSTEM IMPACT FEECAPITAL IMPROVEMENTS01,750 3,500SCALE IN FEETIMAJOR BASINSSubbasin 1Subbasin 2Subbasin 3Subbasin 4Subbasin 5Subbasin 6Created By Freese and Nichols, Inc.Job No.: PRP11118Location: H:\W_WW_PLANNING\FINAL_REPORT\(Figure_3-9)_Wastewater_CIP_(Impact_Fee_Eligible_and_2021).mxdUpdated: Friday, November 11, 2011 11:03:50 AM Collin CountyCollin County((##UUTT(#UT[ÚUT!A!A!AProposed 2.5 MGCounty Line EST (2021)Overflow Elev.: 785 ftNTMWDDelivery Point2.0 MGPreston Rd. ESTOverflow Elev.: 926 ftProposed 2.0 MGProsper Trail EST (2015)Overflow Elev.: 926 ft(3(4(4(3(3(5(5(19(12(11(7(7(2(2(9(9(1B(1B(1B(LPP)(LPP)(LPP)(LPP)(LPP)(10(10(10(10(6(6(17(18(16(8(18(18(14(13(13(15(15(16(16(17(B(C(C(D(D(E(F(E(G(H(H(H12"20"30''20''16''12''12''12''12''20''30''12''20''20''16''16''30''20''12''16''30''12''30''12''20''30''16''20''30''30''20''20''16''16''30''16''30''30''20''16''20''20''20''20''20''20''42''16''30 ''20''24''12''24''20''20''20''16''24''42''24''30''30''16''12''16''42''20''20''16''16''20''16''24''20''12''20''20''42''20''12''20''20''20''20''16''24''12''42''16''16''42''16''30''20''24''16''24''16''20''20''16''20''30''24''42''30''12''20''16''16''16''24''20''42''16''16''16''12''12''12''12''12''12''12''12''12''12''12''1 2''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''12''8''6''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8'' 8''8''8''8''8''8''8''8''8''8''8''8''6''8''8''8''8''6''8''8''8''8''8 ''8''8''8''8''8''8''8''8''8''8''8''8''8 ''8''8''8''8''8''8''8''8''8''8''6''8 ''8''8''8''8''8''6''8''8''6''8''8''8 ''8''8''8''8''6''8''8''8''6 ''8''8''8''8''6''6''8''8''8''8''8''6''8''8''6''8 ''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''6''8''8''8 ''8''8''8 ''8''8''8''8''8''8''8''8''8''8''6''8''8''8''8''8''6''8''8''6''8''8''8''8''8''6 ''8''8''6''8''6''6''8''8''8''8''8''8''8''6''8''8''8''8''8''8''8''8''6''8''8''6 ''8''8''8 ''8''8''8''8''8''6''8''8''8''8''8''6 ''8''6''8''8''8''8''8''6 ''8''8''8''8''8''6'' 8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''8''6''8''8''8''8'' 8''8''8''8''8''8''8''8''6''8''8''8''6''6''8''8''8''6''8''8''8''8''6''6''8''6 ''8''6 ''8''8''6''8 ''8''8''6''8''8''8''8''8''8''8''8''6''8 ''8''6''8''8''8''8''8''8''8''8''8''8''6''8''8''2''6''4 ''1.5''6''2''6''1.5''6''6''6''2''6''4''6''CR 25FM 1385CR 6W UNIVERSITY DRFISHTRAP RDPARVIN RDCR 51CR 83N CUSTER RDCR 84W FIRST STSMILEY RDFM 2478CR 26W FRONTIER PKWYE FRONTIER PKWYFM 423SH 289CAREY RDPROSPER RDN LEGACY DRCOIT RDN PRESTON RDN DAL LAS PKWY CR 933DOE CREEK RDDALLAS PKWYGOOD HOPE RDFM 428 WCR 50CR 124FM 1461S TEEL PKWYS PRESTON RDCUSTER RDCR 123HAWKINS LNBONAR RDBYRAN RDCR 86E US 380EUREKA LNS COLEMAN STCR 970BRISTOL DRCR 857CR 858ARTESIA BLVDCR 7C R 856 N TEEL PKWYPRESTON HILLS CIRPR 5155GIBBS RDCR 854FALCON RDVIRGINIA PKWYCR 855M A GNOLIA BLVDPR 7 8 0 1 E BROADWAY STCR 852FIELDS RDCRUTCHFIELD DRCR 853BRINKMANN RANCH RDTWIN LAKES DRRED BUD DRHARPER RDPR 5156HERITAGE TRLBENBROOK BLVDPANTHER CREEK RDBEDFORD LNPR 5405DALLAS NORTH TOLLWAYHIGHPOINT DRVERONA DRVIRGINIA HILLS DRCROSSLAKE CTE SEVENTH STSEA PINES DROAK BEND TRLWHITE ROCK BLVDSHASTA DRJULIETTE DRPRESTONVIEW DRQUAIL HOLLOWWARREN DRNOLES RDTWIN MALLETS LNWENK CTPR 5436WATCH HILL LNBRADFORD DREQUESTRIAN WAYCOUNTRY VIEW DRPASEWARK CIRNEWPORT LNCOASTAL DRBROWNWOOD B L V D CR 860OLD DAIRY FARM RDCEDAR TRLPHANTOM LNLONG LEAF DRCARRIAGE LNSHARED DRIVEWAYDOVE CREEK C I R S REDWOOD CIRSTOCKPORT DRPIEDMONT PLYAK DRASCOT PLGARDENIA BLVDEVENING SUN DRLIVE OAK LNW RED OAK CIRFALCON CTDOOLITTLE DRDERICK LNCR 26W UNIVERSITY DRGOOD HOPE RDDALLAS PKWYCR 506''8''2''8''6''6''6''6''6''6''6''6''8''8''6''6''6''6''6''8''2''6 ''6''6''6''6''8''6'' 6'' 8 ''6''6''6''6''6''6''8''6''8''6''6''8''6''6''6''6''6''2''12''12''12''12''12''12'' 12''12''12''12''12''12''12''12''12''12''Doe BranchW il s on Cr e e k Panthe r C re e k G entle CreekParvin BranchRutherford BranchLittle Elm CreekStreamR o w le tt Cre e k Mustang CreekRutherford BranchGentle CreekParvin BranchStreamParvin BranchLEGEND!APressure Reducing Valve(#UT2011 - 2021 Elevated Storage Tank(#UTExisting Impact Fee EligibleElevated Storage TankUTExisting Impact Fee EligibleGround Storage Tank[ÚExisting Impact Fee EligiblePump StationExisting Impact Fee Eligible2011 - 2021 Water Line Improvement8" and Smaller Water Lines10" and Larger Water LinesRoadRailroadStreamLakeParcelTown LimitETJ BoundaryCounty BoundaryLower Pressure PlaneUpper Pressure PlaneFIGURE 3-8TOWN OF PROSPERWATER SYSTEM IMPACT FEECAPITAL IMPROVEMENTS01,750 3,500SCALE IN FEETI7.35 MGD UPP PS and 3.0 MG GSTExpand UPP PS to 20 MGD and Add 5.0 MG GST(2013)Construct 10 MGD LPP Pump Station(2018)NTMWD Delivery Point Improvements(A(10(1ACreated By Freese and Nichols, Inc.Job No.: PRP11118Location: H:\W_WW_PLANNING\FINAL_REPORT\(Figure_3-8)_Water_CIP_(Impact_Fee_Eligible_and_2021).mxdUpdated: Friday, November 11, 2011 11:02:03 AM Page 1 of 1 To: Mayor and Town Council From: Matthew B. Garrett, Finance Director CC: Mike Land, Town Manager Re: Town Council Meeting – March 27, 2012 Date: March 22, 2012 Agenda Item: Consider and act upon Resolution No. 12-22, accepting the Independent Audit Report and Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2011, as presented by Lori Herrick of Davis Kinard & Co, PC, Certified Public Accountants. Description of Agenda Item: The Town’s Charter, in compliance with Chapter 103 of the Local Government Code, requires an independent audit be conducted annually. This will be the Town’s first audit conducted by Davis Kinard & Co, PC. Staff has reviewed the audit and is pleased to report no significant or material findings from the audit. Staff did receive several operational improvement suggestions as a result of the audit and is planning to implement several recommendations. At the March 13, 2012 Town Council meeting, staff distributed a draft of the audit. Since that time, only page 54 has been changed correcting the three year trend information for TMRS contributions. The complete and bound Comprehensive Annual Financial Report (“CAFR”), which includes more information in the introductory and statistical sections, will be delivered to each Council member along with the Auditor’s presentation Tuesday night at the meeting. Budget Impact: The audit for the Town was conducted within budget. Legal Obligations and Review: N/A Attached Documents: Resolution FY 2010-2011 Independent Auditor’s Report and Completed Financial Sections Board/Committee Recommendation: N/A Town Staff Recommendation: Town staff recommends that the Council approve the attached resolution accepting the Independent Audit Report and Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2011. Prosper is a place where everyone matters. Administration TOWN OF PROSPER, TEXAS RESOLUTION NO. 12-22 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS, HEREBY ACCEPTING THE TOWN’S 2010-2011 FISCAL YEAR INDEPENDENT AUDIT REPORT AND COMPREHENSIVE ANNUAL FINANCIAL REOPRT AS PRESENTED BY DAVIS KINARD & CO, P.C., CERTIFIED PUBLIC ACCOUNTANTS ON MARCH 27, 2012; AUTHORIZING PUBLICATION OF THE AUDIT. WHEREAS, the Town Council is required by Section 7.18 of the Town Charter to call for an Independent Audit to be made of all accounts of the Town at the close of each fiscal year, a report of which is to be presented to the Town Council. WHEREAS, Town Staff engaged Davis Kinard & Co. P.C. to complete the Town’s Fiscal Year 2010-2011 Independent Audit. WHEREAS, a copy of the Independent Audit and accompanying Financial Statements for the 2010-2011 Fiscal Year were received and reviewed by Town Staff. WHEREAS, the Town Charter requires that upon completion of the audit, a copy of the audit shall be posted to the Town’s website and copies placed on file in the office of the person performing the duties of Town Secretary, as a public record. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS: SECTION 1: The Town Council of the Town of Prosper, Texas, hereby accepts the Town’s 2010-2011 fiscal year financial audit as presented by Davis Kinard & Co., P.C., Certified Public Accountants on March 27, 2012. SECTION 2: A copy of the completed audit shall be published immediately on the Town website and copies of the audit placed on file in the office of the person performing the duties of Town Secretary, as a public record. SECTION 3: This Resolution shall take effect immediately upon its passage. RESOLVED THIS THE 27th day of March, 2012. APPROVED: ______________________________ Ray Smith, Mayor ATTEST TO: _________________________ Amy Piukana, TRMC DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT DRAFT Page 1 of 2 To: Mayor and Town Council From: Mike Land, Town Manager Re: Town Council Meeting – Tuesday March 27, 2012 Date: March 22, 2012 Agenda Item: Consider and act on a Resolution authorizing the Town Manager to sign a Strategic Partnership Agreement for Tract 1 between the Town of Prosper and Denton County Freshwater District No. 10. Description of Agenda Item: On Tuesday December 13, 2011 the Town of Prosper entered into an Agreement with 166 Bryan Road Partners, LP for the Reduction of the Town’s Extraterritorial Jurisdiction west of FM 1385. Included in that agreement there is a reference to the Town entering into three separate Strategic Partnership Agreements with the Denton County Fresh Water District No. 10. Holding the two public hearings, one on February 28th and the other on March 13th are a part of the adoption process. The three agreements for Tracts 1, 2 and 3, all read the same, and address the collection of sales tax and its distribution generated by commercial uses located within the District. The Town will be or will eventually be collecting the full 2% sales tax on the parcels as they are or will be developed. The Town will equally share the 1% sales tax collection with the District (one half to the District, one half to the Town) with the balance of the sales tax collected (the remaining 1%) being retained by the Town. The term of the agreements are all fifteen (15) years with the potential of two (2) fifteen (15) year extensions. Recall that the three parcels being considered are located: 1) the southwest quadrant of the intersection of FM 1385 and Bryan Rd., and 2) the northeast quadrant of the intersection of Fishtrap Rd. and Teel Pkwy 3) in the northwest quadrant of the intersection of Hwy 380 and FM 1385 (Valero). With each agreement, there is a separate ordinance agenda item that also must be approved. The District has approved and signed the Settlement and Mutual Release Agreement. Budget Impact: The Valero store location at the corner of Fm 1385 and Hwy 380 (Tract 3) is the only commercial use that is built and active among the three tracts being considered. We do not have any taxable sales data at this time to utilize in projecting total taxable sales for future revenue projection. Based on our understanding of the notification process we believe that the store will begin collecting the sales and use tax within the next 90 days, probably sooner. Prosper is a place where everyone matters. ADMINISTRATION Page 2 of 2 Legal Obligations and Review: The language in the Strategic Partnership Agreements was developed by Courtney Kuykendall, the Town’s Attorney. Attached Documents: 1. Resolution authorizing the Town Manager to sign a Strategic Partnership Agreement for Tract 1 between the Town of Prosper and Denton County Freshwater District No. 10. 2. Strategic Partnership Agreement for Tract 1 between the Town of Prosper and the Denton County Fresh Water District No. 10. Town Staff Recommendation: Town staff recommends that the Town Council approve the Resolution authorizing the Town Manager to sign a Strategic Partnership Agreement for Tract 1 between the Town of Prosper and Denton County Freshwater District No. 10. Resolution – SPA NO. 1 606670.v1 TOWN OF PROSPER, TEXAS RESOLUTION NO. 12-16 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS, ADOPTING THE STRATEGIC PARTNERSHIP AGREEMENT BETWEEN THE TOWN OF PROSPER AND DENTON COUNTY FRESHWATER SUPPLY DISTRICT #10 FOR TRACT NO. 1 AND AUTHORIZING THE TOWN MANAGER OF THE TOWN OF PROSPER, TEXAS TO EXECUTE THE SAME; AND PROVIDING AN EFFECTIVE DATE. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS: SECTION 1. The Strategic Partnership Agreement between the Town of Prosper, Texas and Denton County Freshwater Supply District #10 for Tract No. 1 is hereby adopted, and the Town Manager of the Town of Prosper, Texas is hereby authorized to execute said Agreement, which is attached hereto as Exhibit “A” and incorporated herein for all purposes. SECTION 2. This Resolution is effective immediately upon its passage. DULY PASSED AND APPROVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS on this ____ day of , 2012. ____________________________ Ray Smith, Mayor ATTEST TO: _________________________ Amy Piukana, Town Secretary Legal Description of Tract Field notes to all that certain tract of land situated in the William Lumpkin League and Labor Survey, Abstract Number 730, Denton County, Texas, and being a part of the tract of land described as Tract Three in the deed to Comanche Ridge Properties Associates, L.P.,as recorded in Volume 5311, Page 4327, Real Property Records of Denton County, Texas, and being more particularly described as follows; Commencing at a 5/8" iron rod found at the Northeast corner of said Tract Three at the intersection of the approximate centerline of Bryan Road and the west right-of-way line of F.M. Road No. 1385, and at the Southeast corner of a tract of land described in the deed to C.M. Jackson and wife, Oro Jackson, as recorded in Volume 546, Page 12, said Real Property Records; Thence North 88 degrees 28 minutes 18 seconds West a distance of 20.00 feet to a point for corner; Thence South 01 degrees 31 minutes 34 seconds West a distance of 40.00 feet to a `/2" capped iron rod set for the Point of Beginning; Thence South 01 degrees 31 minutes 36 seconds West a distance of 909.48 feet to a %2" capped iron rod set for corner; Thence North 88 degrees 28 minutes 18 seconds West a distance of 719.01 feet to a '/2" capped iron rod set for corner; Thence North 01 degrees 31 minutes 36 seconds East a distance of 909.48 feet to a %s" capped iron rod set for corner in the south line of a 40' strip of land dedicated as right-of-way per Cabinet X, Page 264, Plat Records of Denton County,Texas; Thence South 88 degrees 28 minutes 18 seconds East a distance of 719.01 feet to the Point of Beginning and enclosing 15.012 acres of land more or less. AGREEMENT FOR THE REDUCT/ON OF THE EXTRATERRITORIAL JURISDICTION OP THE TOWN Or PROSPER,TEXAS Page l6of/6EXHIBITE—Forn,ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFrr SDtt/O—Commercial Tract Form of STRATEGIC PARTNERSHIP AGREEMENT BETWEEN THE TOWN OF PROSPER, TEXAS,AND DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. 10 THE STATE OF TEXAS § COUNTY OF DENTON § This STRATEGIC PARTNERSHIP AGREEMENT(this"Agreement") is entered into as of the Effective Date between the TOWN OF PROSPER, TEXAS, a home-rule municipality situated in Collin County and Denton County, Texas, acting though its governing body, the Town Council of the Town of Prosper, Texas (the "Town"), and DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. 10 (the "District"), a conservation and reclamation district . and political subdivision of the State of Texas created pursuant to Article XVI, Section 59 of the Texas Constitution, and operating under Chapters 49, 51, and, for certain purposes, 53 of the Texas Water Code, as amended. RECITALS 1. Texas Local Government Code, §43.0751 (the"Act") authorizes the Town and certain conservation and reclamation districts to negotiate and enter into a strategic partnership agreement by mutual consent; 2. This Agreement provides for the limited purpose annexation of a tract of land in the District, situated wholly within Denton County, Texas, as more specifically described in Exhibit A" ("Tract"), attached hereto and incorporated herein for all purposes, by the Town for certain purposes including, but not limited to,the imposition of a sales and use tax within the Tract; 3. As required by the Act, the Town held public hearings on 2011 and 2011 at__p.m. at Town Hall, and the District held public hearings on 2011, and 2011 at __ p.m. at Texas, at which members of the public were given the opportunity to present testimony or evidence regarding the proposed Agreement, and the Town and the District made copies of the proposed Agreement available, and gave notice of the hearings prior to the public hearings in accordance with the terms of the Act; 4. The District has, by formal action, after public hearing approved this strategic partnership agreement on in open session at a meeting held in accordance with the Open Meetings Act; AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 1 oJ16EXHIBITE—Form of Strategic Partnership Agreement Between the Town of Prosper,Texas and DCPWSD#/0—Commercial Tract 5. The Town has, by formal action, after public hearings approved this strategic partnership agreement on in open session at a meeting held in accordance with the Open Meetings Act; 6. The Town and the District wish to enter into a strategic partnership agreement to provide the terms under which services will be provided by the District to the Tract and under which the District will continue to exist for an extended period of time with respect to the Tract after the Tract of land within the District is annexed for limited purposes; and 7. Pursuant to Section 43.0751(c) of the Local Government Code, this Agreement shall become effective on the date of adoption of this Agreement by the Town and the District(the Effective Date"). Upon adoption, this Agreement shall be filed by the District in the real property records of Denton County,Texas. NOW, THEREFORE, for and in consideration of the mutual agreements, covenants, and conditions contained herein, and other good and valuable consideration, the Town and District agree as follows: THE PARTIES AGREE AS FOLLOWS: ARTICLE ONE FINDINGS The Town and the District find and declare: 1.1 The Act authorizes the Town and the District to enter into this Agreement to define the terms under which services, if any, will be provided to the Town and the District and under which the District will continue to exist after the Tract is annexed for limited purposes pursuant to this Agreement;and 1.2 This Agreement does not require the District to provide revenue to the Town solely for the purpose of an agreement with the Town to forgo annexation of the District; and 1.3 This Agreement provides benefits to the Town and the District, including revenue, services, or regulations which are reasonable and equitable with regard to the benefits provided to the other Party; and 1.4 All the terms contained in this Agreement are lawful and appropriate to provide for the provision of municipal services; and 1.5 The Town and the District negotiated this Agreement by mutual consent; the terms of the Agreement are not a result of the Town's Annexation Plan or any arbitration between the Town and the District. AGREEMENT FOR THE REDUCTION OF TILE EXTRATERRITORIAL JURISDICTION OF TIIB TOWN OF PROSPER,TEXAS Page 2 of 16EXHIBITE—Porn:ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFri'SD#1O—Commercial Tract ARTICLE TWO DEFINITIONS Unless the context requires otherwise, and in addition to the terms defined above, the following terms used in this Agreement will have the meanings set out below: 2.1 "Act" means Texas Local Government Code, §43.0751 and any amendments thereto. 2.2 "Additional Tracts" means any property within the District's boundaries that is not located within the extraterritorial jurisdiction of a municipality other than the Town designated for commercial use, other than the Tract. 2.3 "Agreement" means this strategic partnership agreement between the Town and the District. 2.4 "Board"means the Board of Directors of the District. 2.5 "Commercial Taxpayer" means a person, entity, business, or corporation who provides receipts from the sale and use at retail of taxable items to the Comptroller. 2.6 "Comptroller"means the Comptroller of Public Accounts of the State of Texas. 2.7 "District" means Denton County Fresh Water Supply District No. 10, a conservation and reclamation district created and operating under Chapters 49, 51, and, for certain purposes, 53 of the Texas Water Code, located wholly within Denton County, Texas. 2.8 "ETJ"means the extraterritorial jurisdiction of the Town. 2.9 "Government Code"means the Texas Government Code and any amendments thereto. 2.10 "Implementation Date" means the date the limited-purpose annexation ordinance is passed by Town Council pursuant to Section 3.1. 2.11 "Local Government Code" means the Texas Local Government Code and any amendments thereto. 2.12 "Party" or "Parties" means a party or the parties to this Agreement, being the Town and the District. 2.13 "Sales and Use Tax"means the sales and use tax authorized to be imposed in the Tract by the Act and Tax Code Chapter 321. 2.14 "Tax Code"means the Texas Tax Code and any amendments thereto. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL,JURISDICTION OF ME TOWN OF PROSPER,TEXAS Page 3 of 16EXHIBITE—Form ofStrategic Partnership Agreement Between the 7mrn ofProsper, Texas and DCFfr'SD!{10—Commercial7Y'act 2.15 "Town" means the Town of Prosper, Texas, a general law municipality situated in Collin County and Denton County,Texas. 2.16 "Town Charter"means the Charter of the Town and any amendments thereto. 2.17 "Town Code" means the Code of Ordinances of the Town and any amendments thereto. 2.18 "Town Council" means the Town Council of the Town or any successor governing body. 2.19 "Town Manager"means the Town Manager of the Town or his or her designee. 2.20 "Tract" means the tract of land situated wholly in Denton County, Texas, described in Exhibit"A"attached hereto and incorporated herein for all purposes. ARTICLE THREE LIMITED-PURPOSE ANNEXATION 3.1 Generally. In accordance with the terms of that Agreement for the Reduction of the Extraterritorial Jurisdiction of the Town of Prosper, dated December 13, 2011, the Town shall annex the Tract for limited purposes. 3.2 Limited Purpose Annexation of Additional Tracts. In the event the location of proposed commercial development within the District is changed or additional property designated for commercial development is added, the Town Council may annex the Additional Tracts for the limited purpose of collecting Sales and Use Tax revenues within the Additional Tracts pursuant to the Act subject to the execution of an agreement between the Town and the District substantially similar in form to this Agreement. 3. 3 Property Taxes and District Liability for Debts of the Town. During the Term (as defined in Section 9.2) of this Agreement: (i) neither the District nor any owners of taxable property within the District is liable for any present or future debts of the Town, and (ii) current and future ad valorem taxes levied by the Town will not be levied on taxable property within the District,except as provided for in Article VII. 3.4 Powers and Functions Retained by the District. This Agreement does not limit in any manner the rights,powers, functions, and authority of the District. 3.5 Extraterritorial Jurisdiction. This Agreement shall not affect or otherwise change any Town limits or extraterritorial jurisdiction of the Town except as specifically set forth herein. This Agreement shall not inure to the benefit of any party not a signatory to this Agreement, save and except assignees or successors in interests as provided herein. The Town may regulate those AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF Ti I ToswEXTRATERRITORIALJURISDICTIONOFTitETOWN OF PROSPER,TEXAS Page 4 of 16EXHIBITE—Form 0-Strategic Partnership Agreement Between the Town of Prosper,Texas and DCFWSD110—Commercial 7S•act portions of the District land located within the Town's ETJ in the same manner in which it may regulate other areas within the extraterritorial jurisdiction of the Town, subject to any other agreements between the Town and the District. ARTICLE FOUR VOTING RIGHTS IN THE DISTRICTS 4.1 Generally. Upon annexation of the Tract for limited purposes by the Town, any qualified voters within the Tract may vote in Town elections, pursuant to Local Government Code§43. 130. Voting rights are subject to all state and federal laws and regulations. 4.2 Notice. The Town will comply with all the notice requirements as set forth in §43.130 of the Local Government Code, as it now exists or hereafter amended. ARTICLE FIVE SALES AND USE TAX 5.1 Imposition of the Town's Sales and Use Tax. Pursuant to Subsection(k)of the Act, the Town shall impose a Sales and Use Tax within the Tract upon the limited-purpose annexation of the Tract. The Sales and Use Tax shall be imposed on the receipts from the sale and use at retail of taxable items at the rate of two percent (2%) or the rate specified under future amendments to Chapter 321 of the Tax Code. The Sales and Use Tax shall take effect on the date described in Tax Code§321. 102. 5.2 Payment of Sales and Use Tax. Within thirty (30) days from the establishment of a District utility service account for a Commercial Taxpayer in the Tract, the District shall inspect the building for which service is requested and provide written notice of the name of(a) the Commercial Taxpayer requesting utility service, and (b) each Commercial Taxpayer operating a commercial business at such building. Each month thereafter, the District shall inspect the Tract and provide a written report to the Town updating such information in order to maintain a current listing of all Commercial Taxpayers operating within the Tract. Based upon the names reported by the Town, the Comptroller shall create a sales tax area report for the Town. The area sales tax report shall identify the aggregate total amount of local sales tax revenue the group of or individual Commercial Taxpayers in the Tract contributed to the Town's total allocation for each month. Subject to the terms and conditions of this Agreement, the Town and District agree to share equally the 1% Sales and Use Tax revenues remaining subsequent to payment of the other 1% Sales and Use Tax revenues to the Prosper Economic Development Corporation and Town property tax relief as required by state law (the "District's Portion") that are reported on the monthly area sales tax report provided by the Comptroller and received by the Town from the Comptroller after the date of the limited-purpose annexation of the Tract. The Town shall deliver the District's Portion of the Sales and Use Tax revenues to the District within thirty(30) days of the Town's receipt of the sales report from the Comptroller. Government Code Chapter ACREE\IENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JUR ISDICTION OF THE TOWN OF PROSPER,TEXAS Page S of 16EXHIBITE—Form ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFWSD#10—Commercial Tract 2251 shall govern and provide the penalty if the Town fails to deliver the District's portion in a timely manner. For the purposes of determining the applicable overdue date under Chapter 2251, the Town is deemed to have received an invoice from the District on the date the Town receives the sales tax report from the Comptroller without further action from the District. In the event the Comptroller ceases to provide a monthly area sales report, then the Parties agree to jointly develop another method of reporting Sales and Use Tax revenues to the Town. The Town shall deliver to the District a condensed version of each monthly area sales tax report provided by the Comptroller, containing only the contents of the sales tax report relating to retail sales and retailers in the Tract within 30 days of the Town's receipt of the sales tax report. 5.3 Notification of Comptroller. The Town shall send notice of this Agreement and the limited-purpose annexation of the Tract to the Comptroller within three (3) days of the Implementation Date in the manner provided by Tax Code §321.102. The Town shall send to the District a copy of any notice from the Comptroller delaying the effectiveness of the Sales and Use Tax in the Tract. 5.4 District Use of Sales and Use Tax Revenue. The District shall use the Sales and Use Tax revenue provided in Section 5.2 only for purposes for which the District is lawfully authorized to use its ad valorem tax revenues or other revenues. 5.5 District Audit Rights. The District may audit the Sales and Use Tax collections by the Town solely to determine whether the Sales and Use Tax revenue payments provided by Section 5.2 have been made to the District in accordance with this Agreement. Any audit shall be made at the District's sole cost and expense and may be performed at any time during the Town's regular business hours by an auditor hired by the District on thirty(30) days written notice to the Town. For the purpose of any audits, the Town shall maintain and make available to the District or its representatives all books, records, documents and other evidence of accounting procedures or practices in whatever form sufficiently maintained to reflect the collection of all Sales and Use Tax revenues that are subject to this Agreement. 5.6 Town Audit Rights. The District is required by law to prepare an annual audit within one hundred twenty (120) days after the close of the District's fiscal year. The District shall provide a copy of its annual audit to the Town within thirty (30) days after the audit is completed. The Town may audit the District's expenditures made with the Sales and Use Tax revenue paid under Section 5.2, solely to determine whether the expenditures have been made by the District in accordance with Section 5.4. Any audit shall be made at the Town's sole cost and expense and may be performed at any time during regular business hours by the Town's internal auditors or an independent auditing firm on thirty(30) days written notice to the District. For the purpose of any audits, the District shall maintain and make available to the Town or its representatives all books, records, documents and other evidence of accounting procedures or ACREENIENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 6 of 16EXHIBITE-Form ofStrategic Partnership Agreement Between the Town orProsper,Texas and DCFIVSb##10-Commercial Tract practices in whatever form maintained sufficient to reflect the expenditure of all Sales and Use Tax revenues that are subject to this Agreement. ARTICLE SIX SERVICES PROVIDED BY THE DISTRICT AND THE TOWN 6.1 Water, Sewer, and Drainage Services. Subject to the applicable terms and provisions of that certain Merged, Amended and Restated Agreement Related to Water and Sanitary Sewer Service dated October 1, 2007 between Mustang Special Utility District ("Mustang SUD") and the District (the "Water and Sewer Agreement"), that certain Upper Trinity Regional Water District Regional Treated Water System Participating Customer Contract dated August 29, 2001, as amended and that certain Upper Trinity Regional Water District Northeast Regional Water Reclamation System Participating Customer Contract dated August 29, 2001, as amended, each between the Upper Trinity Regional Water District ("Upper Trinity") and the District collectively, "Upper Trinity Contracts"), reimbursement agreements between the developers or owners of the Tract and the District, and Sections 49.215(d) and 13.248, Texas Water Code, the District shall acquire, construct, own, operate and maintain a water,wastewater, and drainage system in the District and the Tract. The Town is under no obligation to provide water, sewer or drainage services to the Tract. 6.2 Operation and Maintenance. Subject to Section 6.1 above, the District agrees to operate and maintain water, wastewater,and drainage service in the Tract at the same level as the District has operated and maintained them before the Implementation Date. The Town may periodically inspect the District's water,wastewater, and drainage facilities. ARTICLE SEVEN FULL-PURPOSE ANNEXATION 7.1 No Full-Purpose Annexation. Town agrees that it will not annex all or part of the District or commence any action to annex all or part of the District for full purposes during the Tenn(as defined in Section 9.2). 7.2 Full Purpose Annexation of the Tract. The Town and District acknowledge and agree that a full purpose annexation contemplates, among other things, the annexing authority solely collecting ad valorem taxes in exchange for the landowner receiving municipal services Municipal Services") as required under §43.056, Texas Local Government, as amended. However, §43.0751 (0(5), Texas Local Government Code, authorizes the Town and District to agree to a full purpose annexation on terms and conditions acceptable to the Town and the District. Upon expiration of the Term of this Agreement, to the extent permitted by Section 43.0751(0(5) or any other applicable provision of the Local Government Code, the Town and District may enter into a full purpose annexation agreement with regards to the Tract ("Full Purpose Annexation Agreement"). As such, and at a minimum, the parties acknowledge and AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF T1w TOWN OF PROSPER,TEXAS Page 7 of 16EXHIBITE—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFlESD111 0—Commercial Tract agree that should a Full Purpose Annexation Agreement be desired by the parties, the District and Town anticipate that the Town may not be providing some, or possibly all, of the Municipal Services to the Tract. Should the Town desire not to provide all or a portion of the Municipal Services to the Tract, the Parties acknowledge and agree that one of the required provisions of the Full Purpose Annexation Agreement will provide that the Town shall assess only such ad valorem taxes on the Tract which are commensurate with the costs associated with the Municipal Services provided by the Town to the Tract. Municipal Services shall include, but not be limited to, administration, police, fire, dispatch, fire marshal, streets, library, parks, municipal court, inspections, code enforcement, planning, engineering, and an interest and sinking fund. The parties further acknowledge and agree that any Full Purpose Annexation Agreement shall include a provision to the effect that the District shall continue to have and exercise all functions, powers, and authority otherwise vested in the District, including without limitation the right to issue bonds, notes or other obligations, to provide services and facilities to and to impose ad valorem taxes on or other fees and charges to the property located within the Tract, The Town expressly acknowledges and agrees that neither the terms of this Agreement nor the Full Purpose Annexation Agreement shall subject the District to any consents, approvals, conditions or requirements of the Town with respect to the design and construction of facilities, the annexation of land by the District; the issuance and sale of bonds, notes or other obligations by the District, or the assessment of ad valorem taxes or fees or charges for services by the District. If a Full Purpose Annexation Agreement is executed between the Parties, the Town shall have no further obligation to pay to the District the District portion of the Sales and Use Tax revenues collected from the Tract. 7.3 Exercise of Full Purpose Annexation Option at Termination of Agreement. On or before the expiration of Term of this Agreement, the Town Manager shall evaluate whether the Town should negotiate a new strategic partnership agreement with the District, negotiate and execute a Full Purpose Annexation Agreement as provided in Section 7.2 above or allow this Agreement to expire. The Town Manager shall make a recommendation to the Town Council regarding the negotiation of a new strategic partnership agreement, the negotiation and execution of a Full Purpose Annexation Agreement, or the expiration of this Agreement. If the Town Manager recommends that the Town negotiate a new strategic partnership agreement, or negotiate and execute a Full Purpose Annexation Agreement , and the Town Council approves the recommendation, the Town shall begin proceedings to enter into a new strategic partnership agreement, or negotiate and execute a Full Purpose Annexation Agreement at the end of the Term of this Agreement as applicable. If the Town Manager recommends that the Town allow this Agreement to terminate upon the expiration of the initial fifteen (15) years, and the Town Council agrees,or if the Town Council rejects the Town Manager's recommendation to negotiate a new strategic partnership agreement, or to negotiate and execute a Full Purpose Annexation Agreement, the Town may begin proceedings to annex the District for full purposes or disannex the Tract for limited purposes if authorized under the applicable provision of the Local Government Code. If the Town decides to annex the District for full purposes or disannex the AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OFTHE TOWN OF PROSPER,TEXAS Page 8 of 16EXHIBITE-Form ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFrr'SD#16-Commercial Tract Tract and has the authority to do so, the Town may institute proceedings to accomplish such full purpose annexation or disannexation to be effective upon the termination of this Agreement and according to the applicable provisions of the Local Government Code and state law. ARTICLE EIGHT MATERIAL BREACH,NOTICE AND REMEDIES 8.1 Material Breach of Agreement. It is the intention of the Parties to this Agreement that the District and the Town be regulated in accordance with the terms of this Agreement. A material breach of this Agreement by the District includes, without limitation, any one or more of the following: A) Failure of the District to act in good faith in the annexation of the Tract by the Town for limited purposes as authorized by this Agreement;or A material breach of this Agreement by the Town includes, without limitation, any one or more of the following; A) Any attempt by the Town to annex the District for full purposes during the Term of this Agreement; or B) Failure of the Town to pay to the District the District's share of the Sales and Use Tax,as provided in Article V. If a Party to this Agreement believes that another Party has, by act or omission, committed a material breach of this Agreement, the provisions of this Article shall govern the remedies for breach of this Agreement. 8.2 Notice of District's Default. The Town shall notify the District in writing of an alleged failure by the District to comply with a provision of this Agreement, describing the alleged failure with reasonable particularity.The District shall,within thirty(30) days after receipt of the notice or a longer period of time as the Town may specify in the notice, either cure the alleged failure or, in a written response to the Town, either present facts and arguments in refutation or excuse of the alleged failure or state that the alleged failure will be cured and set forth the method and time schedule for accomplishing the cure. The Town shall determine (i)whether a failure to comply with a provision has occurred; ii) whether the failure is excusable; and (iii) whether the failure has been cured or will be cured by the District. The District shall make available to the Town, if requested, any records, documents or other information necessary to make the determination. If the Town determines that a failure to comply with a provision has occurred and that the failure is not excusable and has not been or will not be cured by the District in a manner and in AGREE,TENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 9 of 16 EMimET E—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFWSDi110—Commercial Tract accordance with a schedule reasonably satisfactory to the Town,then the Town may exercise the applicable remedy under Section 8.4(A). 8.3 Notice of Town's Default. The District shall notify the Town Manager in writing specifying any alleged failure by the Town to comply with a provision of this Agreement, describing the alleged failure with reasonable particularity. The Town shall, within thirty (30) days after receipt of the notice or the longer period of time as the District may specify in the notice, either cure the alleged failure or, in a written response to the District, either present facts and arguments in refutation or excuse of the alleged failure or state that the alleged failure will be cured and set forth the method and time schedule for accomplishing the cure. The District shall determine (i) whether a failure to comply with a provision has occurred; (ii)whether the failure is excusable; and (iii)whether the failure has been cured or will be cured by the Town. The Town shall make available to the District, if requested, any records, documents or other information necessary to make the determination. If the District determines that a failure to comply with a provision has occurred and that the failure is not excusable and has not been or will not be cured by the Town in a manner and in accordance with a schedule reasonably satisfactory to the District, then the District may exercise the applicable remedy under Section 8.4(B). 8.4 Remedies. A) If the Town determines that the District has committed a material breach of this Agreement, the Town may file suit in a court of competent jurisdiction in Collin County,Texas, and seek any relief available at law or in equity, including, but not limited to, an action under the Uniform Declaratory Judgment Act and termination of this Agreement in addition to the monetary awards as may be appropriate. B) If the District determines that the Town has committed a material breach of this Agreement, the District may file suit in a court of competent jurisdiction in Collin County, Texas, and seek any relief available at law or in equity, including,but not limited to, an action under the Uniform Declaratory Judgment Act and termination of this Agreement in addition to the monetary awards as may be appropriate. ARTICLE NINE BINDING AGREEMENT,TERM,AND AMENDMENT 9.1 Beneficiaries. This Agreement binds and inures to the benefit of the Parties, their successors and assigns. AGREEMENT FOR TIIE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 10 of 16 EXHIBIT E-Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFTl SD1110-Commercial Tract The District shall record this Agreement with the County Clerk in Official Records of Denton County, Texas. This Agreement binds each owner and each future owner of land included within the District's boundaries in accordance with Subsection(c)of the Act. 9.2 Term. This Agreement commences and binds the Parties on the Effective Date and continues for fifteen years afterward ("Term"), and may be extended thereafter at the sole discretion of the Town for up to two (2) consecutive terns of fifteen (15) years upon written notice from the Town to the District at least one hundred eighty (180) days before the expiration of the Term or any extended term of this Agreement. Any rights or privileges of the Parties and their successors or assigns under this Agreement will terminate upon the expiration or termination of this Agreement. 9.3 Amendment. The Parties by mutual written consent may amend the terms of this Agreement at any time. Any amendment to this Agreement shall be recorded within seven (7) days of the execution of the amendment with Denton County. ARTICLE TEN MISCELLANEOUS PROVISIONS 10.1 Notice. Any formal notices or other communications ("Notice") required to be given by one Party to another by this Agreement shall be given in writing addressed to the Party to be notified at the address set forth below for the Party, (i) by delivering the Notice in person(ii) by depositing the Notice in the United States Mail, certified or registered, return receipt requested, postage prepaid, addressed to the Party to be notified, (iii) by depositing the Notice with Federal Express or another nationally recognized courier service guaranteeing next day delivery, addressed to the Party to be notified, or (iv) by sending the Notice by telefax with confirming copy sent by mail. Notice deposited in the United States mail in the manner herein above described shall be deemed effective from and after the date of such deposit. Notice given in any other manner shall be effective only if and when received by the Party to be notified. For the purposes of Notice, the addresses of the Parties, until changed as provided below, shall be as follows: Town: Town of Prosper P. O. Box 307 Prosper, Texas 75078 Attention: Town Administrator Telephone: (972) 347-2304 Facsimile: (972) 247-2111 AGREE\FENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 11 of 16EXHIBITE—Form ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFfr SD#10—Commercial Tract District:Denton County Fresh Water Supply District No. 10 do Crawford and Jordan, LLP 3100 McKinnon Street, Suite 950 Dallas,Texas 75201 Telephone: (214)981-9090 Facsimile: The Parties may from time to time change their respective addresses, and each may specify as its address any other address within the United States of America by giving at least five days written notice to the other Party. If any date or any period provided in this Agreement ends on a Saturday, Sunday, or legal holiday, the applicable period for calculating the notice shall be extended to the first business day following the Saturday, Sunday or legal holiday. 10.2 Time. Time is of the essence in all things pertaining to the performance of this Agreement. 10.3 Waiver. Any failure by a Party to insist upon strict performance by the other Party of any material provision of this Agreement shall not be deemed a waiver thereof or of any other provision hereof, and the Party shall have the right at any time thereafter to insist upon strict performance of any and all of the provisions of this Agreement. 10.4 Reservation of Rights. To the extent not inconsistent with this Agreement, each Party reserves all rights,privileges, and immunities under applicable laws. 10.5 Further Documents. The Parties agree that at any time after execution of this Agreement, they will, upon request of the other Party, execute and deliver the further documents and do the further acts and things as the other Party may reasonably request in order to effectuate the terms of this Agreement. 10.6 Incorporation of Exhibits and Other Documents by Reference. All Exhibits and other documents attached to or referred to in this Agreement are incorporated into this Agreement by reference for the purposes set forth in this Agreement. 10.7 Effect of State and Federal Laws. Notwithstanding any other provision of this Agreement, the District shall comply with all applicable statutes or regulations of the United States, the State of Texas, and Town Ordinances and Town Charter provisions implementing such statutes or regulations. 10.8 Authority for Execution. The Town certifies and represents that the execution of this Agreement is duly authorized and adopted in conformity with the Town Charter and Town Ordinances. The District certifies and represents that the execution of this Agreement is duly authorized and adopted by the Board. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL.JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 12 of 16EXHIBITE—Fong ofStrategic Partnership Agreement lletween the TOIt'n of Prosper,Texas and DCFWSDNIO—Commercial Tract 10.9 Semi-Annual Review. At least semi-annually, the District shall review and confirm, and will notify the Town Planning and Development Department in a form prescribed by the Department, of the accuracy of the list of resale permit holders as provided by the State Comptroller's Office. 10.10 Representations. Each signatory represents this Agreement has been read by the party for which this Agreement is executed and that such party has had an opportunity to confer with its counsel. 10.11 No Third Party Beneficiaries. Nothing in this Agreement shall be construed to create any right in any third party not a signatory to this Agreement, and the parties do not intend to create any third party beneficiaries by entering into this Agreement. 10.12 Assignment/Binding Effect. This Agreement is assignable, in whole or in part, upon the following conditions, all of which must be satisfied before any such assignment shall be valid and enforceable: A) the assignment of the Agreement must be evidenced by a recordable document the "Assignment"), the form of which must be approved in writing by the Parties, such approval not to be unreasonably withheld; B) the Assignment must expressly contain, among other reasonable requirements and/or conditions of the Parties, an acknowledgment and agreement that all obligations, covenants and/or conditions contained in the Agreement will be assumed solely and completely by the assignee, and the contact name, address, phone number, fax number and electronic mail address of the assignee; C) Assignor will file any approved, executed Assignment in the Land Records of Denton County,Texas; and D) Assignor shall provide the other Party with a file-marked copy of the Assignment within ten(10)days of filing the same. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective officers, directors, partners, employees, representatives, agents, vendors, grantees, and/or trustees, heirs, executors, administrators, legal representatives, successors and assigns,as authorized herein. 10.13 State or Federal Laws, Rules, Orders or Regulations. This Agreement is subject to all applicable Federal and State laws and any applicable permits, ordinances, rules, orders and regulations of any local, state or federal governmental authority having or asserting jurisdiction, but nothing contained herein shall be construed as a waiver of any right to question or contest any such law, ordinance,order,rule or regulation in any forum having jurisdiction. AGREEMENT FOR THE REDUCTION OF Tiw EXTRATERRI TORIAL JUR1SDmCTION OF THE TOWN OF PROSPER,TEXAS Page 13of16EXHIBITE—Fare ofStrategic Partnership Agreement Between the Tow,ofProsper;Texas and DCF{rSDN10—Commercial Tract 10. 14 Savings/Severability. The parties hereto specifically agree that in case any one or more of the sections, subsections,provisions, clauses or words of this Agreement or the application of such sections, subsections, provisions, clauses or words to any situation or circumstance should be, or should be held to be, for any reason, invalid or unconstitutional, under the laws or constitutions of the State or the United States of America, or in contravention of any such laws or constitutions, such invalidity, unconstitutionality or contravention shall not affect any other sections, subsections, provisions, clauses or words of this Agreement or the application of such sections, subsections, provisions, clauses or words to any other situation or circumstance, and it is intended that this Agreement shall be severable and shall be construed and applied as if any such invalid or unconstitutional section, subsection, provision, clause or word had not been included herein, and the rights and obligations of the parties hereto shall be construed and remain in force accordingly. 10.15 Venue. All amounts due for the breach of this Agreement, shall be paid and be due in Collin County, Texas, which is the County in which the principal administrative offices of the Town are located. It is specifically agreed among the parties to this Agreement that Collin County, Texas is the place of performance of this Agreement; and in the event that any legal proceeding is brought to enforce this Agreement or any provision hereof, the same shall be brought and venue shall lie in Collin County,Texas. 10.16 Sovereign Immunity. By entering into and executing this Agreement, the Town and the District in no way waive or surrender their sovereign ilrununity. 10.17 Miscellaneous Drafting Provisions. This Agreement shall be deemed drafted equally by all parties hereto. The language of all parts of this Agreement shall be construed as a whole according to its fair meaning, and any presumption or principle that the language herein is to be construed against any party shall not apply. Headings in this Agreement are for the convenience of the parties and are not intended to be used in construing this document. SIGNATURE PAGE TO FOLLOW] REMAINDER OF THIS PAGE BLANK] AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 14 of 16EXIIIRITE—Fong ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFWSD#10—Commercial Traci IN WITNESS WHEREOF, the parties have executed this Agreement in multiple copies, each of which shall be an original, as of the date countersigned by the Town Controller of the Town of Prosper. The Town of Prosper,Texas By: Name: Mike Land Title: Town Manager Address: 113 W. Broadway P. O. Box 307 Prosper,Texas 75078 Fax: (972)347-2111 Date: Denton County Fresh Water Supply District No. 10 By: Name: Robert Tague Title: President Address:do Crawford and Jordan,LLP 19 Briar Hollow Lane, Suite 245 Houston, Texas 77027 Fax: (713)621-3909 Date: AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOW\OF PROSPER,TEXAS Page 15 of 16EXHIBITE-Form ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DC?WSD1110-Commercial Tract Agenda Item No. __ - Page 1 of 2 To: Mayor and Town Council From: Mike Land, Town Manager Re: Town Council Meeting – Tuesday March 27, 2012 Date: March 22, 2012 Agenda Item: Consider and act on a Resolution authorizing the Town Manager to sign a Strategic Partnership Agreement for Tract 2 between the Town of Prosper and Denton County Freshwater District No. 10. Description of Agenda Item: On Tuesday December 13, 2011 the Town of Prosper entered into an Agreement with 166 Bryan Road Partners, LP for the Reduction of the Town’s Extraterritorial Jurisdiction west of FM 1385. Included in that agreement there is a reference to the Town entering into three separate Strategic Partnership Agreements with the Denton County Fresh Water District No. 10. Holding the two public hearings, one on February 28th and the other on March 13th are a part of the adoption process. The three agreements for Tracts 1, 2 and 3, all read the same, and address the collection of sales tax and its distribution generated by commercial uses located within the District. The Town will be or will eventually be collecting the full 2% sales tax on the parcels as they are or will be developed. The Town will equally share the 1% sales tax collection with the District (one half to the District, one half to the Town) with the balance of the sales tax collected (the remaining 1%) being retained by the Town. The term of the agreements are all fifteen (15) years with the potential of two (2) fifteen (15) year extensions. Recall that the three parcels being considered are located: 1) the southwest quadrant of the intersection of FM 1385 and Bryan Rd., and 2) the northeast quadrant of the intersection of Fishtrap Rd. and Teel Pkwy 3) and the northwest quadrant of the intersection of Hwy 380 and FM 1385 (Valero). With each agreement, there is a separate ordinance agenda item that also must be approved and follows on the March 27th agenda. Budget Impact: Tract 1 and Tract 2 are not currently developed therefore until they are developed the Town and the District will not be receiving any sales tax. Prosper is a place where everyone matters. ADMINISTRATION Agenda Item No. Agenda Item No. __ - Page 2 of 2 Legal Obligations and Review: The language in the Strategic Partnership Agreements was developed by Courtney Kuykendall, the Town’s Attorney. Attached Documents: 1. Resolution authorizing the Town Manager to sign a Strategic Partnership Agreement for Tract 2 between the Town of Prosper and Denton County Freshwater District No. 10. 2. Strategic Partnership Agreement for Tract 2 between the Town of Prosper and the Denton County Fresh Water District No. 10. Town Staff Recommendation: Town staff recommends that the Town Council approve the Resolution authorizing the Town Manager to sign a Strategic Partnership Agreement for Tract 2 between the Town of Prosper and Denton County Freshwater District No. 10. Resolution – SPA NO. 2 606673.v1 TOWN OF PROSPER, TEXAS RESOLUTION NO. 12-17 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS, ADOPTING THE STRATEGIC PARTNERSHIP AGREEMENT BETWEEN THE TOWN OF PROSPER AND DENTON COUNTY FRESHWATER SUPPLY DISTRICT #10 FOR TRACT NO. 2 AND AUTHORIZING THE TOWN MANAGER OF THE TOWN OF PROSPER, TEXAS TO EXECUTE THE SAME; AND PROVIDING FOR AN EFFECTIVE DATE. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS: SECTION 1. The Strategic Partnership Agreement between the Town of Prosper, Texas and Denton County Freshwater Supply District #10 for Tract No. 2 is hereby adopted, and the Town Manager of the Town of Prosper, Texas is hereby authorized to execute said Agreement, which is attached hereto as Exhibit “A” and incorporated herein for all purposes. SECTION 2. This Resolution is effective immediately upon its passage. DULY PASSED AND APPROVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS on this ____ day of , 2012. ____________________________ Ray Smith, Mayor ATTEST TO: _________________________ Amy Piukana, Town Secretary Resolution – SPA NO. 2 606673.v1 Exhibit “A” (Agreement) EXHIBIT"F" Form of STRATEGIC PARTNERSHIP AGREEMENT BETWEEN THE TOWN OF PROSPER, TEXAS, AND DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. 10 THE STATE OF TEXAS § COUNTY OF DENTON § This STRATEGIC PARTNERSHIP AGREEMENT(this"Agreement") is entered into as of the Effective Date between the TOWN OF PROSPER, TEXAS, a home-rule municipality situated in Collin County and Denton County, Texas, acting through its governing body, the Town Council of the Town of Prosper, Texas (the "Town"), and DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. 10 (the "District"), a conservation and reclamation district and political subdivision of the State of Texas created pursuant to Article XVI, Section 59 of the Texas Constitution, and operating under Chapters 49, 51, and, for certain puposes, 53 of the Texas Water Code,as amended. RECITALS 1. Texas Local Government Code, §43.0751 (the"Act") authorizes the Town and certain conservation and reclamation districts to negotiate and enter into a strategic partnership agreement by mutual consent; 2. This Agreement provides for the limited purpose annexation of a tract of land in the District, situated wholly within Denton County, Texas, as more specifically described in Exhibit A" ("Tract"), attached hereto and incorporated herein for all purposes, by the Town for certain purposes including,but not limited to, the imposition of a sales and use tax within the Tract; 3. As required by the Act, the Town held public hearings on 2011 and 2011 at p.m. at Town Hall, and the District held public hearings on 2011, and 2011 at __ p.m. at Texas, at which members of the public were given the opportunity to present testimony or evidence regarding the proposed Agreement, and the Town and the District made copies of the proposed Agreement available, and gave notice of the hearings prior to the public hearings in accordance with the terms of the Act; 4. The District has, by formal action, after public hearing approved this strategic partnership agreement on in open session at a meeting held in accordance with the Open Meetings Act; AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 1 of 17EXHIBITF-Form of Strategic Partnership Agreement Between the Town of Prosper,Texas and DCFIVSDNIO—Artesia Tract 5. The Town has, by formal action, after public hearings approved this strategic partnership agreement on in open session at a meeting held in accordance with the Open Meetings Act; 6. The Town and the District wish to enter into a strategic partnership agreement to provide the terms under which services will be provided by the District to the Tract and under which the District will continue to exist for an extended period of time with respect to the Tract after the Tract of land within the District is annexed for limited purposes; and 7. Pursuant to Section 43.0751(c) of the Local Government Code, this Agreement shall become effective on the date of adoption of this Agreement by the Town and the District(the Effective Date"). Upon adoption, this Agreement shall be filed by the District in the real property records of Denton County,Texas. NOW, THEREFORE, for and in consideration of.the mutual agreements, covenants, and conditions contained herein, and other good and valuable consideration, the Town and District agree as follows: THE PARTIES AGREE AS FOLLOWS: ARTICLE ONE FINDINGS The Town and the District find and declare: 1. 1 The Act authorizes the Town and the District to enter into this Agreement to define the terms tinder which services, if any, will be provided to the Town and the District and under which the District will continue to exist after the Tract is annexed for limited purposes pursuant to this Agreement; and 1.2 This Agreement does not require the District to provide revenue to the Town solely for the purpose of an agreement with the Town to forgo annexation of the District; and 1.3 This Agreement provides benefits to the Town and the District, including revenue, services, or regulations which are reasonable and equitable with regard to the benefits provided to the other Party; and 1.4 All the terms contained in this Agreement are lawful and appropriate to provide for the provision of municipal services; and 1.5 The Town and the District negotiated this Agreement by mutual consent; the terms of the Agreement are not a result of the Town's Annexation Plan or any arbitration between the Town and the District. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL.JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 2 of 17EXHIBITF-Form of Strategic Partnership Agreement Between the Town of Prosper.Texas and DC IPSDN10-Artesia Tract ARTICLE TWO DEFINITIONS Unless the context requires otherwise, and in addition to the terms defined above, the following terms used in this Agreement will have the meanings set out below: 2.1 "Act"means Texas Local Govermnent Code, §43.0751 and any amendments thereto. 2.2 "Additional Tracts" means any property within the District's boundaries that is not located within the extraterritorial jurisdiction of a municipality other than the Town designated for commercial use,other than the Tract. 2.3 "Agreement" means this strategic partnership agreement between the Town and the District. 2.4 "Board"means the Board of Directors of the District. 2.5 "Commercial Taxpayer" means a person, entity, business, or corporation who provides receipts from the sale and use at retail of taxable items to the Comptroller. 2.6 "Comptroller"means the Comptroller of Public Accounts of the State of Texas. 2.7 "District" means Denton County Fresh Water Supply District No. 10, a conservation and reclamation district created and operating under Chapters 49, 51, and, for certain purposes, 53 of the Texas Water Code, located wholly within Denton County,Texas. 2. 8 "ETJ"means the extraterritorial jurisdiction of the Town. 2.9 "Government Code"means the Texas Govermnent Code and any amendments thereto. 2.10 "Implementation Date" means the date the limited-purpose annexation ordinance is passed by Town Council pursuant to Section 3.1. 2.11 "Local Government Code" means the Texas Local Government Code and any amendments thereto. 2.12 "Party" or "Parties" means a party or the parties to this Agreement, being the Town and the District. 2.13 "Sales and Use Tax"means the sales and use tax authorized to be imposed in the Tract by the Act and Tax Code Chapter 321. 2.14 "Tax Code"means the Texas Tax Code and any amendments thereto. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 3 of 17EXHIBITF—Form ofStrategic Partnership Agreement Between the Town of-Prosper,Texas and DC? SD110—Artesia Tract 2.15 "Town" means the Town of Prosper, Texas, a general law municipality situated in Collin County and Denton County,Texas. 2.16 "Town Charter"means the Charter of the Town and any amendments thereto. 2.17 "Town Code" means the Code of Ordinances of the Town and any amendments thereto. 2.18 "Town Council" means the Town Council of the Town or any successor governing body. 2.19 "Town Manager"means the Town Manager of the Town or his or her designee. 2.20 "Tract"means the tract of land situated wholly in Denton County, Texas, described in Exhibit"A"attached hereto and incorporated herein for all purposes. ARTICLE THREE LIMITED-PURPOSE ANNEXATION 3.1 Generally. In accordance with the terms of that Agreement for the Reduction of the Extraterritorial Jurisdiction of the Town of Prosper, dated December 13, 2011, the Town shall annex the Tract for limited purposes. 3. 2 Limited Purpose Annexation of Additional Tracts. In the event the location of proposed commercial development within the District is changed or additional property designated for commercial development is added, the Town Council may annex the Additional Tracts for the limited purpose of collecting Sales and Use Tax revenues within the Additional Tracts pursuant to the Act subject to the execution of an agreement between the Town and the District substantially similar in form to this Agreement. 3. 3 Property Taxes and District Liability for Debts of the Town. During the Term (as defined in Section 9.2) of this Agreement: (i) neither the District nor any owners of taxable property within the District is liable for any present or future debts of the Town, and (ii) current and future ad valorem taxes levied by the Town will not be levied on taxable property within the District, except as provided for in Article VII. 3.4 Powers and Functions Retained by the District. This Agreement does not limit in any manner the rights,powers, functions,and authority of the District. 3.5 Extraterritorial Jurisdiction. This Agreement shall not affect or othenvise change any Town limits or extraterritorial jurisdiction of the Town except as specifically set forth herein. This Agreement shall not inure to the benefit of any party not a signatory to this Agreement,save and except assignees or successors in interests as provided herein. The Town may regulate those AGREEMENT r'OR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 4 o1'17EXHIHITF—Form of Strategic Partnership Agreement Between the Town ofProsper Texas and DCFIVSD1110—Artesia 7Yact portions of the District land located within the Town's ETJ in the same manner in which it may regulate other areas within the extraterritorial jurisdiction of the Town, subject to any other agreements between the Town and the District. ARTICLE FOUR VOTING RIGHTS IN THE DISTRICTS 4.1 Generally. Upon annexation of the Tract for limited purposes by the Town, any qualified voters within the Tract may vote in Town elections, pursuant to Local Government Code§43. 130. Voting rights are subject to all state and federal laws and regulations. 4.2 Notice. The Town will comply with all the notice requirements as set forth in §43. 130 of the Local Government Code, as it now exists or hereafter amended. ARTICLE FIVE SALES AND USE TAX 5.1 Imposition of the Town's Sales and Use Tax. Pursuant to Subsection(k)of the Act, the Town shall impose a Sales and Use Tax within the Tract upon the limited-purpose annexation of the Tract, The Sales and Use Tax shall be imposed on the receipts from the sale and use at retail of taxable items at the rate of two percent(2%) or the rate specified under future amendments to Chapter 321 of the Tax Code. The Sales and Use Tax shall take effect on the date described in Tax Code§321. 102. 5.2 Payment of Sales and Use Tax. Within thirty (30) days from the establishment of a District utility service account for a Commercial Taxpayer in the Tract, the District shall inspect the building for which service is requested and provide written notice of the name of(a) the Commercial Taxpayer requesting utility service, and(b) each Commercial Taxpayer operating a commercial business at such building. Each month thereafter, the District shall inspect the Tract and provide a written report to the Town updating such information in order to maintain a current listing of all Commercial Taxpayers operating within the Tract. Based upon the names reported by the Town, the Comptroller shall create a sales tax area report for the Town. The area sales tax report shall identify the aggregate total amount of local sales tax revenue the group of or individual Commercial Taxpayers in the Tract contributed to the Town's total allocation for each month. Subject to the terms and conditions of this Agreement, the Town and District agree to share equally the 1% Sales and Use Tax revenues remaining subsequent to payment of the other 1% Sales and Use Tax revenues to the Prosper Economic Development Corporation and Town property tax relief as required by state law (the "District's Portion") that are reported on the monthly area sales tax report provided by the Comptroller and received by the Town from the Comptroller after the date of the limited-purpose annexation of the Tract. The Town shall deliver the District's Portion of the Sales and Use Tax revenues to the District within thirty (30) days of the Town's receipt of the sales report from the Comptroller. Government Code Chapter AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 5.01 17 EXHIBIT F—Form ofStrategic Partnership Agreement Between the Tone of Prosper,Texas and DCFIYSD#10—Artesia Tract 2251 shall govern and provide the penalty if the Town fails to deliver the District's portion in a timely manner. For the purposes of determining the applicable overdue date under Chapter 2251, the Town is deemed to have received an invoice from the District on the date the Town receives the sales tax report from the Comptroller without further action from the District. In the event the Comptroller ceases to provide a monthly area sales report, then the Parties agree to jointly develop another method of reporting Sales and Use Tax revenues to the Town. The Town shall deliver to the District a condensed version of each monthly area sales tax report provided by the Comptroller, containing only the contents of the sales tax report relating to retail sales and retailers in the Tract within 30 days of the Town's receipt of the sales tax report. 5.3 Notification of Comptroller. The Town shall send notice of this Agreement and the limited-purpose annexation of the Tract to the Comptroller within three (3) days of the hnplementation Date in the manner provided by Tax Code§321.102. The Town shall send to the District a copy of.any notice from the Comptroller delaying the effectiveness of the Sales and Use Tax in the Tract. 5.4 District Use of Sales and Use Tax Revenue. The District shall use the Sales and Use Tax revenue provided in Section 5.2 only for purposes for which the District is lawfully authorized to use its ad valorem tax revenues or other revenues. 5.5 District Audit Rights. The District may audit the Sales and Use Tax collections by the Town solely to determine whether the Sales and Use Tax revenue payments provided by Section 5.2 have been made to the District in accordance with this Agreement. Any audit shall be made at the District's sole cost and expense and may be performed at any time during the Town's regular business hours by an auditor hired by the District on thirty(30)days written notice to the Town. For the purpose of any audits, the Town shall maintain and make available to the District or its representatives all books, records, documents and other evidence of accounting procedures or practices in whatever form sufficiently maintained to reflect the collection of all Sales and Use Tax revenues that are subject to this Agreement. 5.6 Town Audit Rights. The District is required by law to prepare an annual audit within one hundred twenty (120) days after the close of the District's fiscal year. The District shall provide a copy of its annual audit to the Town within thirty (30) days after the audit is completed. The Town may audit the District's expenditures made with the Sales and Use Tax revenue paid under Section 5.2, solely to determine whether the expenditures have been made by the District in accordance with Section 5.4. Any audit shall be made at the Town's sole cost and expense and may be performed at any time during regular business hours by the Town's internal auditors or an independent auditing firm on thirty(30) days written notice to the District. For the purpose of any audits, the District shall maintain and make available to the Town or its representatives all books, records, documents and other evidence of accounting procedures or AGREEMENT FOR THE REDUCTION OFTIIE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 6 of 17EXHIBITF-Fonrt ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFIESD1110-Artesia 7fact practices in whatever form maintained sufficient to reflect the expenditure of all Sales and Use Tax revenues that are subject to this Agreement. ARTICLE SIX SERVICES PROVIDED BY THE DISTRICT AND THE TOWN 6.1 Water, Sewer, and Drainage Services. Subject to the applicable terms and provisions of that certain Merged, Amended and Restated Agreement Related to Water and Sanitary Sewer Service dated October 1, 2007 between Mustang Special Utility District ("Mustang SUD") and the District (the "Water and Sewer Agreement"), that certain Upper Trinity Regional Water District Regional Treated Water System Participating Customer Contract dated August 29, 2001, as amended and that certain Upper Trinity Regional Water District Northeast Regional Water Reclamation System Participating Customer Contract dated August 29, 2001, as amended, each between the Upper Trinity Regional Water District ("Upper Trinity") and the District collectively, "Upper Trinity Contracts"), reimbursement agreements between the developers or owners of the Tract and the District, and Sections 49.215(d) and 13.248, Texas Water Code, the District shall acquire,construct, own,operate and maintain a water,wastewater, and drainage system in the District and the Tract. The Town is under no obligation to provide water, sewer or drainage services to the Tract. 6.2 Operation and Maintenance, Subject to Section 6.1 above, the District agrees to operate and maintain water, wastewater, and drainage service in the Tract at the same level as the District has operated and maintained them before the Implementation Date. The Town may periodically inspect the District's water,wastewater, and drainage facilities. ARTICLE SEVEN FULL-PURPOSE ANNEXATION 7.1 No Full-Purpose Annexation. Town agrees that it will not annex all or part of the District or commence any action to annex all or part of the District for full purposes during the Term(as defined in Section 9.2). 7.2 Full Purpose Annexation of the Tract. The Town and District acknowledge and agree that a full purpose annexation contemplates, among other things, the annexing authority solely collecting ad valorem taxes in exchange for the landowner receiving municipal services Municipal Services") as required under §43.056, Texas Local Government, as amended. However, §43.0751 (f)(5), Texas Local Government Code, authorizes the Town and District to agree to a full purpose annexation on terms and conditions acceptable to the Town and the District. Upon expiration of the Term of this Agreement, to the extent permitted by Section 43.075l0)(5) or any other applicable provision of the Local Government Code, the Town and District may enter into a full purpose annexation agreement with regards to the Tract ("Full Purpose Annexation Agreement"). As such, and at a minimum, the parties acknowledge and AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 7 of 17 EXHIBIT F—Form ofStrategic Partnership Agreement Between the RAM of Prosper,Texas and DCFIi SD#IO—Artesia Traci agree that should a Full Purpose Annexation Agreement be desired by the parties, the District and Town anticipate that the Town may not be providing some, or possibly all, of the Municipal Services to the Tract. Should the Town desire not to provide all or a portion of the Municipal Services to the Tract, the Parties acknowledge and agree that one of the required provisions of the Full Purpose Annexation Agreement will provide that the Town shall assess only such ad valorem taxes on the Tract which are commensurate with the costs associated with the Municipal Services provided by the Town to the Tract. Municipal Services shall include, but not be limited to, administration, police, fire, dispatch, fire marshal, streets, library, parks, municipal court, inspections, code enforcement, planning, engineering, and an interest and sinking fund. The parties further acknowledge and agree that any Full Purpose Annexation Agreement shall include a provision to the effect that the District shall continue to have and exercise all functions, powers, and authority otherwise vested in the District, including without limitation the right to issue bonds, notes or other obligations, to provide services and facilities to and to impose ad valorem taxes on or other fees and charges to the property located within the Tract. The Town expressly acknowledges and agrees that neither the terms of this Agreement nor the Full Purpose Annexation Agreement shall subject the District to any consents, approvals, conditions or requirements of the Town with respect to the design and construction of facilities, the annexation of land by the District; the issuance and sale of bonds, notes or other obligations by the District, or the assessment of ad valorem taxes or fees or charges for services by the District. If a Full Purpose Annexation Agreement is executed between the Parties, the Town shall have no further obligation to pay to the District the District portion of the Sales and Use Tax revenues collected from the Tract. 7.3 Exercise of Full Purpose Annexation Option at Termination of Agreement. On or before the expiration of Term of this Agreement, the Town Manager shall evaluate whether the Town should negotiate a new strategic partnership agreement with the District, negotiate and execute a Full Purpose Annexation Agreement as provided in Section 7.2 above or allow this Agreement to expire. The Town Manager shall make a recommendation to the Town Council regarding the negotiation of a new strategic partnership agreement,the negotiation and execution of a Full Purpose Annexation Agreement, or the expiration of this Agreement. If the Town Manager recommends that the Town negotiate a new strategic partnership agreement, or negotiate and execute a Full Purpose Annexation Agreement , and the Town Council approves the recommendation, the Town shall begin proceedings to enter into a new strategic partnership agreement, or negotiate and execute a Full Purpose Annexation Agreement at the end of the Term of this Agreement as applicable. If the Town Manager recommends that the Town allow this Agreement to terminate upon the expiration of the initial fifteen (15) years, and the Town Council agrees, or if the Town Council rejects the Town Manager's recommendation to negotiate a new strategic partnership agreement, or to negotiate and execute a Full Purpose Annexation Agreement, the Town may begin proceedings to annex the District for full purposes or disannex the Tract for limited purposes if authorized under the applicable provision of the Local Government Code. If the Town decides to annex the District for full purposes or disannex the AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 3 of 17EXHIBITF—Form of Strategic Partnership Agreement Between the Town of Prosper Texas and DCF{ISD#10—Artesia Tract Tract and has the authority to do so, the Town may institute proceedings to accomplish such full purpose annexation or disanmexation to be effective upon the termination of this Agreement and according to the applicable provisions of the Local Government Code and state law. ARTICLE EIGHT MATERIAL BREACH,NOTICE AND REMEDIES 8.1 Material Breach of Agreement. It is the intention of the Parties to this Agreement that the District and the Town be regulated in accordance with the terms of this Agreement. A material breach of this Agreement by the District includes, without limitation, any one or more of the following: A) Failure of the District to act in good faith in the annexation of the Tract by the Town for limited purposes as authorized by this Agreement;or A material breach of this Agreement by the Town includes,without limitation, any one or more of the following: A) Any attempt by the Town to annex the District for full purposes during the Term of this Agreement; or B) Failure of the Town to pay to the District the District's share of the Sales and Use Tax, as provided in Article V. If a Party to this Agreement believes that another Party has, by act or omission, committed a material breach of this Agreement, the provisions of this Article shall govern the remedies for breach of this Agreement. 8.2 Notice of District's Default. The Town shall notify the District in writing of an alleged failure by the District to comply with a provision of this Agreement, describing the alleged failure with reasonable particularity. The District shall, within thirty(30) days after receipt of the notice or a longer period of time as the Town may specify in the notice, either cure the alleged failure or, in a written response to the Town, either present facts and arguments in refutation or excuse of the alleged failure or state that the alleged failure will be cured and set forth the method and time schedule for accomplishing the cure. The Town shall determine(i)whether a failure to comply with a provision has occurred; ii) whether the failure is excusable; and (iii) whether the failure has been cured or will be cured by the District. The District shall make available to the Town, if requested, any records, documents or other inforination necessary to make the determination. If the Town determines that a failure to comply with a provision has occurred and that the failure is not excusable and has not been or will not be cured by the District in a manner and in AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL.JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 9of17 EXHIBIT F—Fonn ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCF1VSD#IO—Artesia Tract accordance with a schedule reasonably satisfactory to the Town, then the Town may exercise the applicable remedy under Section 8.4(A). 8.3 Notice of Town's Default. The District shall notify the Town Manager in writing specifying any alleged failure by the Town to comply with a provision of this Agreement, describing the alleged failure with reasonable particularity. The Town shall, within thirty (30) days after receipt of the notice or the longer period of time as the District may specify in the notice, either cure the alleged failure or, in a written response to the District, either present facts and arguments in refutation or excuse of the alleged failure or state that the alleged failure will be cured and set forth the method and time schedule for accomplishing the cure. The District shall determine (i) whether a failure to comply with a provision has occurred; (ii) whether the failure is excusable; and(iii)whether the failure has been cured or will be cured by the Town. The Town shall make available to the District, if requested, any records, documents or other information necessary to make the determination. If the District determines that a failure to comply with a provision has occurred and that the failure is not excusable and has not been or will not be cured by the Town in a manner and in accordance with a schedule reasonably satisfactory to the District, then the District may exercise the applicable remedy under Section 8.4(B). 8.4 Remedies. A) If the Town determines that the District has committed a material breach of this Agreement, the Town may file suit in a court of competent jurisdiction in Collor County,Texas, and seek any relief available at law or in equity, including, but not limited to, an action under the Uniform Declaratory Judgment Act and termination of this Agreement in addition to the monetary awards as may be appropriate. B) If the District determines that the Town has committed a material breach of this Agreement, the District may file suit in a court of competent jurisdiction in Collin County,Texas, and seek any relief available at law or in equity, including, but not limited to, an action under the Uniform Declaratory Judgment Act and termination of this Agreement in addition to the monetary awards as may be appropriate. ARTICLE NINE BINDING AGREEMENT,TERM,AND AMENDMENT 9.1 Beneficiaries. This Agreement binds and inures to the benefit of the Parties, their successors and assigns. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 10 of 17EX9RDITF-Form ofStrategic Partnership Agreement Between the'Town ofProsper,Texas and DCFWSD#10-Artesia Tract The District shall record this Agreement with the County Clerk in Official Records of Denton County, Texas. This Agreement binds each owner and each future owner of land included within the District's boundaries in accordance with Subsection(c)of the Act. 9.2 Term. This Agreement commences and binds the Parties on the Effective Date and continues for fifteen years afterward ("Tenn"), and may be extended thereafter at the sole discretion of the Town for up to two (2) consecutive terms of fifteen (15) years upon written notice from the Town to the District at least one hundred eighty(180) days before the expiration of the Term or any extended term of this Agreement. Any rights or privileges of the Parties and their successors or assigns under this Agreement will terminate upon the expiration or termination of this Agreement. 9.3 Amendment. The Parties by mutual written consent may amend the terms of this Agreement at any time. Any amendment to this Agreement shall be recorded within seven (7) days of the execution of the amendment with Denton County. ARTICLE TEN MISCELLANEOUS PROVISIONS 10.1 Notice. Any formal notices or other communications ("Notice") required to be given by one Party to another by this Agreement shall be given in writing addressed to the Party to be notified at the address set forth below for the Party, (i) by delivering the Notice in person (ii) by depositing the Notice in the United States Mail, certified or registered, return receipt requested, postage prepaid, addressed to the Party to be notified, (iii) by depositing the Notice with Federal Express or another nationally recognized courier service guaranteeing next day delivery, addressed to the Party to be notified, or (iv) by sending the Notice by telefax with confirming copy sent by mail. Notice deposited in the United States mail in the manner -herein above described shall be deemed effective from and after the date of such deposit. Notice given in any other manner shall be effective only if and when received by the Party to be notified. For the purposes of Notice, the addresses of the Parties, until changed as provided below, shall be as follows: Town: Town of Prosper P. O. Box 307 Prosper,Texas 75078 Attention: Town Administrator Telephone: (972)347-2304 Facsimile: (972) 247-2111 AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEAS Page II of/7EXHIBITF—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFH'SDNIO—Artesia Tract District:Denton County Fresh Water Supply District No. 10 c/o Crawford and Jordan, LLP 3100 McKinnon Street, Suite 950 Dallas,Texas 75201 Telephone: (214)981-9090 Facsimile: The Parties may from time to time change their respective addresses, and each may specify as its address any other address within the United States of America by giving at least five days written notice to the other Party. If any date or any period provided in this Agreement ends on a Saturday, Sunday, or legal holiday, the applicable period for calculating the notice shall be extended to the first business day following the Saturday, Sunday or legal holiday. 10.2 Time. Time is of the essence in all things pertaining to the performance of this Agreement. 10.3 Waiver. Any failure by a Party to insist upon strict performance by the other Party of any material provision of this Agreement shall not be deemed a waiver thereof or of any other provision hereof, and the Party shall have the right at any time thereafter to insist upon strict perfol7nance of any and all of the provisions of this Agreement. 10.4 Reservation of Rights. To the extent not inconsistent with this Agreement, each Party reserves all rights,privileges, and immunities under applicable laws. 10.5 Further Documents. The Parties agree that at any time after execution of this Agreement, they will, upon request of the other Party, execute and deliver the further documents and do the further acts and things as the other Party may reasonably request in order to effectuate the terms of this Agreement. 10.6 Incorporation of Exhibits and Other Documents by Reference. All Exhibits and other documents attached to or referred to in this Agreement are incorporated into this Agreement by reference for the purposes set forth in this Agreement. 10.7 Effect of State and Federal Laws. Notwithstanding any other provision of this Agreement, the District shall comply with all applicable statutes or regulations of the United States, the State of Texas, and Town Ordinances and Town Charter provisions implementing such statutes or regulations. 10.8 Authority for Execution. The Town certifies and represents that the execution of this Agreement is duly authorized and adopted in conformity with the Town Charter and Town Ordinances. The District certifies and represents that the execution of this Agreement is duly authorized and adopted by the Board. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OP THE TOWN OF PROSPER,TEXAS Page 12 of 17EXHIBITF—Fonn ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFWSD#10—Artesia Tf act 10.9 Semi-Annual Review. At least semi-annually, the District shall review and confirm, and will notify the Town Planning and Development Department in a form prescribed by the Department, of the accuracy of the list of resale permit holders as provided by the State Comptroller's Office. 10.10 Representations. Each signatory represents this Agreement has been read by the party for which this Agreement is executed and that such party has had an opportunity to confer with its counsel. 10.11 No Third Party Beneficiaries. Nothing in this Agreement shall be construed to create any right in any third party not a signatory to this Agreement, and the parties do not intend to create any third party beneficiaries by entering into this Agreement. 10.12 Assignment/Binding Effect. This Agreement is assignable, in whole or in part, upon the following conditions, all of which must be satisfied before any such assignment shall be valid and enforceable: A) the assignment of the Agreement must be evidenced by a recordable document the "Assignment"), the form of which must be approved in writing by the Parties, such approval not to be unreasonably withheld; B) the Assignment must expressly contain, among other reasonable requirements and/or conditions of the Parties, an acknowledgment and agreement that all obligations, covenants and/or conditions contained in the Agreement will be assumed solely and completely by the assignee, and the contact name, address, phone number, fax number and electronic mail address of the assignee; C) Assignor will file any approved, executed Assignment in the Land Records of Denton County, Texas; and D) Assignor shall provide the other Party with a file-marked copy of the Assignment within ten(10)days of filing the same. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective officers, directors, partners, employees, representatives, agents, vendors, grantees, and/or trustees, heirs, executors, administrators, legal representatives, successors and assigns, as authorized herein. 10.13 State or Federal Laws,Rules, Orders or Regulations. This Agreement is subject to all applicable Federal and State laws and any applicable permits, ordinances, rules, orders and regulations of any local, state or federal governmental authority having or asserting jurisdiction, but nothing contained herein shall be construed as a waiver of any right to question or contest any such law,ordinance, order, rule or regulation in any forum having jurisdiction. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 13 of 17 Exxlwlr r•—Fenn of Strategic Partnership Agreement Between the Toscn of Prosper,Texas and DCPfr'SD##10—Artesia 7)-act 10. 14 Savings/Severability. The parties hereto specifically agree that in case any one or more of the sections, subsections,provisions, clauses or words of this Agreement or the application of such sections, subsections, provisions, clauses or words to any situation or circumstance should be, or should be held to be, for any reason, invalid or unconstitutional, under the laws or constitutions of the State or the United States of America,or in contravention of any such laws or constitutions, such invalidity, unconstitutionality or contravention shall not affect any other sections, subsections, provisions, clauses or words of this Agreement or the application of such sections, subsections, provisions, clauses or words to any other situation or circumstance, and it is intended that this Agreement shall be severable and shall be construed and applied as if any such invalid or unconstitutional section, subsection, provision, clause or word had not been included herein, and the rights and obligations of the parties hereto shall be construed and remain in force accordingly. 10. 15 Venue. All amounts due for the breach of this Agreement, shall be paid and be due in Collin County, Texas, which is the County in which the principal administrative offices of the Town are located. It is specifically agreed among the parties to this Agreement that Collin County, Texas is the place of performance of this Agreement; and in the event that any legal proceeding is brought to enforce this Agreement or any provision hereof, the same shall be brought and venue shall lie in Collin County,Texas. 10. 16 Sovereign Immunity. By entering into and executing this Agreement, the Town and the District in no way waive or surrender their sovereign immunity. 10.17 Miscellaneous Drafting Provisions. This Agreement shall be deemed drafted equally by all parties hereto. The language of all parts of this Agreement shall be construed as a whole according to its fair meaning, and any presumption or principle that the language herein is to be construed against any party shall not apply. Headings in this Agreement are for the convenience of the parties and are not intended to be used in construing this document. IN WITNESS WHEREOF, the parties have executed this Agreement in multiple copies, each of which shall be an original, as of the date countersigned by the Town Controller of the Town of Prosper. SIGNATURE PAGE TO FOLLOW] REMAINDER OF THIS PAGE BLANK] AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TORN OF PROSPER,TEXAS Page 14 of 17 EXHIBIT F-Form ofStrategic Partner ship Agreement Between the Town ofProsper,Texas and DCF{i'SLI#10-Artesia fl act IN WITNESS WHEREOF, the parties have executed this Agreement in multiple copies, each of which shall be an original, as of the date countersigned by the Town Controller of the Town of Prosper. The Town of Prosper,Texas By: Name: Mike Land Title: Town Manager Address: 113 W. Broadway P. O. Box 307 Prosper,Texas 75078 Fax: (972) 347-2111 Date: Denton County Fresh Water Supply District No. 10 By: Name: Robert Tague Title: President Address:do Crawford and Jordan,LLP 19 Briar Hollow Lane, Suite 245 Houston,Texas 77027 Fax: (713)621-3909 Date: AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 15 of 17 EXHIBIT F—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFI TD#10—Artesia 7Yact EXHIBIT"A" Legal Description of Tract BEING a tract of land situated in the LOUISA NETHERLY SURVEY, ABSTRACT NO. 962,in Denton County, Texas, and being a portion of a called 227.80 acre tract described in a deed to Sealed Bid DFW, L.P., recorded in Volume 5246, Page 1851, Real Property Records, Denton County,Texas,and being more particularly described as follows: COMMENCING at a Rail Road Spike found at the intersection of the approximate center of Fishtrap Road (an undedicated public road) with the approximate center of Fields Road (an undedicated public road) for the most southerly southwest corner of a called 60.049 acre tract of land described as Tract V in a deed to Corona Artesia LLC, recorded as Document Number 2008-34098 of said Real Property Records and the northwest corner of a called 162.722 acre tract of land described in a deed to Tommie D. Glen, Trustee, Jackson-Gray Real Estate Exchange Trust, recorded in Volume 1001,Page 933 of said Real Property Records; THENCE North 89 degrees 52 minutes 26 seconds East, along the common boundary between said 60.049 acre tract and said 162.722 acre tract, a distance of 60.01 feet to a PK Nail found in the approximate center of Fishtrap Road for the most southerly southeast corner of said 60.049 acre tract and the southwest corner of a 60-foot right-of-way dedication to the State of Texas by plat recorded as Artesia Phase 1A, an addition to Denton County, according to the plat thereof recorded in Cabinet X,Page 13 of said Real Property Records; THENCE North 01 degree 12 minutes 31 seconds west, along the common boundary between said 60.049 acre tract and said 60-foot right-of-way dedication, a distance of 60.01 to a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" found for the northwest corner of said 60-foot right-of-way dedication and the POINT OF BEGINNING; THENCE North 01 degree 12 minutes 31 seconds West, continuing along the east boundary of said 60.049 acre tract, a distance of 570.39 feet to a 5/ 8-inch iron rod with cap marked "PETITT-RPLS 4087"set for corner; THENCE over and across said 227.80 acre tract,the following courses and distances: North 89 degrees 52 minutes 26 seconds East, a distance of 225.04 feet to a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" set for corner; South 01 degree 12 minutes 31 seconds East, a distance of 270.05 feet to a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" set for corner; North 89 degrees 52 minutes 26 seconds East, a distance of 340.45 feet to a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" set for corner; AGREEMENT FOR THE REDUCTION OF THE EXTRATE RRITORIA I,JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 16 of 17 EXHIBIT F—Fonn of-Strategic Partnership Agreement Between the Toss»ofProsper,Texas and DCFB'SD#1 D—Artesia 7Yact South 01 degree 12 minutes 31 seconds East, a distance of 300.34 feet to a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" set on the north right-of-way of Fishtrap Road, said point bears South 89 degrees 52 minutes 26 seconds West, a distance of 449.99 feet from a 5/8- inch iron rod with cap marked "PETITT-RPLS 4087" found on the west right-of-way of Artesia Boulevard; THENCE South 89 degrees 52 minutes 26 seconds West, along the north right-of-way of Fishtrap Road, a distance of 565.49 feet to the POINT OF BEGINNING and containing 230,570 square feet, or 5.293 acres of land,more or less AGREESIENT FOR THE REDUCTION OF TILE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 17 of 17 EXHIBIT F—Form of Strategic Partnership Agreement Between the Town of Prosper. Texas and DCFli'SD1110—Artesia Tract Page 1 of 2 To: Mayor and Town Council From: Mike Land, Town Manager Re: Town Council Meeting – Tuesday March 27, 2012 Date: March 22, 2012 Agenda Item: Consider and act on a Resolution authorizing the Town Manager to sign a Strategic Partnership Agreement for Tract 3 between the Town of Prosper and Denton County Freshwater District No. 10. Description of Agenda Item: On Tuesday December 13, 2011 the Town of Prosper entered into an Agreement with 166 Bryan Road Partners, LP for the Reduction of the Town’s Extraterritorial Jurisdiction west of FM 1385. Included in that agreement there is a reference to the Town entering into three separate Strategic Partnership Agreements with the Denton County Fresh Water District No. 10. Holding the two public hearings, one on February 28th and the other on March 13th are a part of the adoption process. The three agreements for Tracts 1, 2 and 3, all read the same, and address the collection of sales tax and its distribution generated by commercial uses located within the District. The Town will be or will eventually be collecting the full 2% sales tax on the parcels as they are or will be developed. The Town will equally share the 1% sales tax collection with the District (one half to the District, one half to the Town) with the balance of the sales tax collected (the remaining 1%) being retained by the Town. The term of the agreements are all fifteen (15) years with the potential of two (2) fifteen (15) year extensions. Recall that the three parcels being considered are located: 1) the southwest quadrant of the intersection of FM 1385 and Bryan Rd., and 2) the northeast quadrant of the intersection of Fishtrap Rd. and Teel Pkwy 3) in the northwest quadrant of the intersection of Hwy 380 and FM 1385 (Valero). With each agreement, there is a separate ordinance agenda item that also must be approved and follows on the March 27th agenda. Budget Impact: Only Tract 3 is currently developed and therefore will be the only tract in the foreseeable future that sales and use tax will be collected on. It is our understanding that the process to begin collecting sales and use tax should take no more than 90 days. Prosper is a place where everyone matters. ADMINISTRATION Page 2 of 2 Legal Obligations and Review: The language in the Strategic Partnership Agreements was developed by Courtney Kuykendall, the Town’s Attorney. Attached Documents: 1. Resolution authorizing the Town Manager to sign a Strategic Partnership Agreement for Tract 3 between the Town of Prosper and Denton County Freshwater District No. 10. 2. Strategic Partnership Agreement for Tract 3 between the Town of Prosper and the Denton County Fresh Water District No. 10. Town Staff Recommendation: Town staff recommends that the Town Council approve the Resolution authorizing the Town Manager to sign a Strategic Partnership Agreement for Tract 3 between the Town of Prosper and Denton County Freshwater District No. 10. Resolution – SPA NO. 3 606675.v1 TOWN OF PROSPER, TEXAS RESOLUTION NO. 12-18 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS, ADOPTING THE STRATEGIC PARTNERSHIP AGREEMENT BETWEEN THE TOWN OF PROSPER AND DENTON COUNTY FRESHWATER SUPPLY DISTRICT #10 FOR TRACT NO. 3 AND AUTHORIZING THE TOWN MANAGER OF THE TOWN OF PROSPER, TEXAS TO EXECUTE THE SAME; AND PROVIDING FOR AN EFFECTIVE DATE. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS: SECTION 1. The Strategic Partnership Agreement between the Town of Prosper, Texas and Denton County Freshwater Supply District #10 for Tract No. 3 is hereby adopted, and the Town Manager of the Town of Prosper, Texas is hereby authorized to execute said Agreement, which is attached hereto as Exhibit “A” and incorporated herein for all purposes. SECTION 2. This Resolution is effective immediately upon its passage. DULY PASSED AND APPROVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS on this ____ day of , 2012. ____________________________ Ray Smith, Mayor ATTEST TO: _________________________ Amy Piukana, Town Secretary Resolution – SPA NO. 3 606675.v1 Exhibit “A” (Agreement) Form of STRATEGIC PARTNERSHIP AGREEMENT BETWEEN THE TOWN OF PROSPER, TEXAS, AND DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. 10 THE STATE OF TEXAS § COUNTY OF DENTON § This STRATEGIC PARTNERSHIP AGREEMENT(this"Agreement") is entered into as of the Effective Date between the TOWN OF PROSPER, TEXAS, a home-rule municipality situated in Collin County and Denton County, Texas, acting through its governing body, the Town Council of the Town of Prosper, Texas (the "Town"), and DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. 10 (the "District"), a conservation and reclamation district and political subdivision of the State of Texas created pursuant to Article XVI, Section 59 of the Texas Constitution, and operating under Chapters 49, 51, and, for certain purposes, 53 of the Texas Water Code,as amended. RECITALS 1. Texas Local Government Code, §43.0751 (the"Act") authorizes the Town and certain conservation and reclamation districts to negotiate and enter into a strategic partnership agreement by mutual consent; 2. This Agreement provides for the limited purpose annexation of a tract of land in the District, situated wholly within Denton County, Texas, as more specifically described in Exhibit A" ("Tract"), attached hereto and incorporated herein for all purposes, by the Town for certain purposes including, but not limited to, the imposition of a sales and use tax within the Tract; 3. As required by the Act, the Town held public hearings on 2011 and 2011 at_ p.m. at Town Hall, and the District held public hearings on 2011, and 2011 at p.m. at Texas, at which members of the public were given the opportunity to present testimony or evidence regarding the proposed Agreement, and the Town and the District made copies of the proposed Agreement available, and gave notice of the hearings prior to the public hearings in accordance with the terms of the Act; 4. The District has, by formal action, after public hearing approved this strategic partnership agreement on in open session at a meeting held in accordance with the Open Meetings Act; AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEAS Page 1 of 16 EXHIBIT G—Pan:ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFWSD#IO--Valero 7kact 5. The Town has, by formal action, after public hearings approved this strategic partnership agreement on in open session at a meeting held in accordance with the Open Meetings Act; 6. The Town and the District wish to enter into a strategic partnership agreement to provide the terms under which services will be provided by the District to the Tract and under which the District will continue to exist for an extended period of time with respect to the Tract after the Tract of land within the District is annexed for limited purposes; and 7. Pursuant to Section 43.0751(c) of the Local Government Code, this Agreement shall become effective on the date of adoption of this Agreement by the Town and the District(the Effective Date"). Upon adoption, this Agreement shall be filed by the District in the real property records of Denton County,Texas. NOW, THEREFORE, for and in consideration of the mutual agreements, covenants, and conditions contained herein, and other good and valuable consideration, the Town and District agree as follows: THE PARTIES AGREE AS FOLLOWS: ARTICLE ONE FINDINGS The Town and the District find and declare: 1. 1 The Act authorizes the Town and the District to enter into this Agreement to define the terms under which services, if any, will be provided to the Town and the District and under which the District will continue to exist after the Tract is amiexed for limited purposes pursuant to this Agreement; and 1.2 This Agreement does not require the District to provide revenue to the Town solely for the purpose of an agreement with the Town to forgo annexation of the District; and 1.3 This Agreement provides benefits to the Town and the District, including revenue, services, or regulations which are reasonable and equitable with regard to the benefits provided to the other Party; and 1.4 All the terms contained in this Agreement are lawful and appropriate to provide for the provision of municipal services;and 1.5 The Town and the District negotiated this Agreement by mutual consent; the terms of the Agreement are not a result of the Town's Annexation Plan or any arbitration between the Town and the District. AGREEMENT FORTIIE REDUCTION OF THE EXTRATERRIIORIAI,JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 2 of16 EXHIBIT G—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFJVSD#10—Valero Tract ARTICLE TWO DEFINITIONS Unless the context requires otherwise, and in addition to the terms defined above, the following terms used in this Agreement will have the meanings set out below: 2.1 "Act"means Texas Local Government Code, §43.0751 and any amendments thereto. 2.2 "Additional Tracts" means any property within the District's boundaries that is not located within the extraterritorial jurisdiction of a municipality other than the Town designated for commercial use,other than the Tract. 2.3 "Agreement" means this strategic partnership agreement between the Town and the District. 2.4 "Board"means the Board of Directors of the District. 2.5 "Commercial Taxpayer" means a person, entity, business, or corporation who provides receipts from the sale and use at retail of taxable items to the Comptroller. 2.6 "Comptroller"means the Comptroller of Public Accounts of the State of Texas. 2.7 "District" means Denton County Fresh Water Supply District No. 10, a conservation and reclamation district created and operating under Chapters 49, 51, and, for certain purposes, 53 of the Texas Water Code,located wholly within Denton County,Texas. 2.8 "ETJ"means the extraterritorial jurisdiction of the Town. 2.9 "Government Code"means the Texas Government Code and any amendments thereto. 2.10 "Implementation Date" means the date the limited-purpose annexation ordinance is passed by Town Council pursuant to Section 3.1. 2.11 "Local Government Code" means the Texas Local Government Code and any amendments thereto. 2.12 "Party" or "Parties" means a party or the parties to this Agreement, being the Town and the District. 2.13 "Sales and Use Tax"means the sales and use tax authorized to be imposed in the Tract by the Act and Tax Code Chapter 321. 2.14 "Tax Code"means the Texas Tax Code and any amendments thereto. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 3 of-16ERHIBITG—Form ofShategic Partnership Agreement Between the Towwn,of Prosper Texas and DCFIVSD#10—Valero Tract 2.15 "Town" means the Town of Prosper, Texas, a general law municipality situated in Collin County and Denton County,Texas. 2.16 "Town Charter"means the Charter of the Town and any amendments thereto. 2.17 "Town Code" means the Code of Ordinances of the Town and any amendments thereto. 2.18 "Town Council" means the Town Council of the Town or any successor governing body. 2.19 "Town Manager" means the Town Manager of the Town or his or her designee. 2.20 "Tract" means the tract of land situated wholly in Denton County, Texas, described in Exhibit"A"attached hereto and incorporated herein for all purposes. ARTICLE THREE LIMITED-PURPOSE ANNEXATION 3.1 Generally. In accordance with the terms of that Agreement for the Reduction of the Extraterritorial Jurisdiction of the Town of Prosper, dated December 13, 2011, the Town shall annex the Tract for limited purposes. 3.2 Limited Purpose Annexation of Additional Tracts. In the event the location of proposed commercial development within the District is changed or additional property designated for commercial development is added, the Town Council may annex the Additional Tracts for the limited purpose of collecting Sales and Use Tax revenues within the Additional Tracts pursuant to the Act subject to the execution of an agreement between the Town and the District substantially similar in form to this Agreement. 3. 3 Property Taxes and District Liability for Debts of the Towmi. During the Term (as defined in Section 9.2) of this Agreement: (i) neither the District nor any owners of taxable property within the District is liable for any present or future debts of the Town, and (ii) current and future ad valorem taxes levied by the Town will not be levied on taxable property within the District, except as provided for in Article VII, 3.4 Powers and Functions Retained by the District. This Agreement does not limit in any manner the rights,powers, functions, and authority of the District. 3.5 Extraterritorial Jurisdiction. This Agreement shall not affect or otherwise change any Town limits or extraterritorial jurisdiction of the Town except as specifically set forth herein. This Agreement shall not inure to the benefit of any party not a signatory to this Agreement,save and except assignees or successors in interests as provided herein. The Town may regulate those AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIALJURISDICTION OF THE TOWN OF PROSPER,TEXAs Page 4 of l6EXHIBITG—Form of Strategic Partnership Agreement Between the Town ofProsper,Texas and DCPWSD1110—Valero Tract portions of the District Iand located within the Town's ETJ in the same manner in which it may regulate other areas within the extraterritorial jurisdiction of the Town, subject to any other agreements between the Town and the District. ARTICLE FOUR VOTING RIGHTS IN THE DISTRICTS 4.1 Generally. Upon annexation of the Tract for limited purposes by the Town, any qualified voters within the Tract may vote in Town elections, pursuant to Local Government Code§43.130. Voting rights are subject to all state and federal laws and regulations. 4.2 Notice. The Town will comply with all the notice requirements as set forth in §43.130 of the Local Govermnent Code, as it now exists or hereafter amended. ARTICLE FIVE SALES AND USE TAX 5.1 Imposition of the Town's Sales and Use Tax. Pursuant to Subsection(k)of the Act, the Town shall impose a Sales and Use Tax within the Tract upon the limited-purpose annexation of the Tract. The Sales and Use Tax shall be imposed on the receipts from the sale and use at retail of taxable items at the rate of two percent(2%) or the rate specified under future amendments to Chapter 321 of the Tax Code. The Sales and Use Tax shall take effect on the date described in Tax Code §321.102. 5.2 Payment of Sales and Use Tax. Within thirty (30) days from the establishment of a District utility service account for a Commercial Taxpayer hi the Tract, the District shall inspect the building for which service is requested and provide written notice of the name of(a) the Commercial Taxpayer requesting utility service, and (b) each Commercial Taxpayer operating a commercial business at such building. Each month thereafter, the District shall inspect the Tract and provide a written report to the Town updating such information in order to maintain a current listing of all Commercial Taxpayers operating within the Tract. Based upon the names reported by the Town, the Comptroller shall create a sales tax area report for the Town. The area sales tax report shall identify the aggregate total amount of local sales tax revenue the group of or individual Commercial Taxpayers in the Tract contributed to the Town's total allocation for each month. Subject to the terms and conditions of this Agreement, the Town and District agree to share equally the 1% Sales and Use Tax revenues remaining subsequent to payment of the other I% Sales and Use Tax revenues to the Prosper Economic Development Corporation and Town property tax relief as required by state law (the "District's Portion") that are reported on the monthly area sales tax report provided by the Comptroller and received by the Town from the Comptroller after the date of the limited-purpose annexation of the Tract. The Town shall deliver the District's Portion of the Sales and Use Tax revenues to the District within thirty (30) days of the Town's receipt of the sales report from the Comptroller. Government Code Chapter ACREEAIENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page S of 16EXHIBITG-Form ofstrategic Partnership Agreement Between the Tong ofProsper,Texas and DCFIrSD#10—Valero Tract 2251 shall govern and provide the penalty if the Town fails to deliver the District's portion in a timely manner. For the purposes of determining the applicable overdue date under Chapter 2251, the Town is deemed to have received an invoice from the District on the date the Town receives the sales tax report from the Comptroller without further action from the District. In the event the Comptroller ceases to provide a monthly area sales report, then the Parties agree to jointly develop another method of reporting Sales and Use Tax revenues to the Town. The Town shall deliver to the District a condensed version of each monthly area sales tax report provided by the Comptroller,containing only the contents of the sales tax report relating to retail sales and retailers in the Tract within 30 days of the Town's receipt of the sales tax report. 5.3 Notification of Comptroller. The Town shall send notice of this Agreement and the limited-purpose annexation of the Tract to the Comptroller within three (3) days of the Implementation Date in the manner provided by Tax Code §321.102. The Town shall send to the District a copy of any notice from the Comptroller delaying the effectiveness of the Sales and Use Tax in the Tract. 5.4 District Use of Sales and Use Tax Revenue. The District shall use the Sales and Use Tax revenue provided in Section 5. 2 only for purposes for which the District is lawfully authorized to use its ad valorem tax revenues or other revenues. 5.5 District Audit Rights. The District may audit the Sales and Use Tax collections by the Town solely to determine whether the Sales and Use Tax revenue payments provided by Section 5. 2 have been made to the District in accordance with this Agreement. Any audit shall be made at the District's sole cost and expense and may be performed at any time during the Town's regular business hours by an auditor hired by the District on thirty (30) days written notice to the Town. For the purpose of any audits, the Town shall maintain and make available to the District or its representatives all books, records, documents and other evidence of accounting procedures or practices in whatever form sufficiently maintained to reflect the collection of all Sales and Use Tax revenues that are subject to this Agreement. 5. 6 Town Audit Rights. The District is required by law to prepare an annual audit within one hundred twenty (120) days after the close of the District's fiscal year. The District shall provide a copy of its annual audit to the Town within thirty (30) days after the audit is completed. The Town may audit the District's expenditures made with the Sales and Use Tax revenue paid under Section 5.2, solely to determine whether the expenditures have been made by the District in accordance with Section 5.4. Any audit shall be made at the Town's sole cost and expense and may be performed at any time during regular business hours by the Town's internal auditors or an independent auditing firm on thirty(30) days written notice to the District. For the purpose of any audits, the District shall maintain and make available to the Town or its representatives all books, records, documents and other evidence of accounting procedures or AGREEMENT FOR THE REDUCTION OF TILE EXTRATERRITORIAI.JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 6 of 16EXHIBITG-Form of Strategic Partnership Agreement Between the Town of Prosper,Texas and DCFTVSDI110-Valero Tract practices in whatever form maintained sufficient to reflect the expenditure of all Sales and Use Tax revenues that are subject to this Agreement. ARTICLE SIX SERVICES PROVIDED BY THE DISTRICT AND THE TOWN 6.1 Water, Sewer, and Drainage Services. Subject to the applicable terms and provisions of that certain Merged, Amended and Restated Agreement Related to Water and Sanitary Sewer Service dated October 1, 2007 between Mustang Special Utility District ("Mustang SUD") and the District (the "Water and Sewer Agreement"), that certain Upper Trinity Regional Water District Regional Treated Water System Participating Customer Contract dated August 29, 2001, as amended and that certain Upper Trinity Regional Water District Northeast Regional Water Reclamation System Participating Customer Contract dated August 29, 2001, as amended, each between the Upper Trinity Regional Water District ("Upper Trinity") and the District collectively, "Upper Trinity Contracts"), reimbursement agreements between the developers or owners of the Tract and the District, and Sections 49.215(d) and 13.248, Texas Water Code, the District shall acquire, construct, own, operate and maintain a water, wastewater, and drainage system in the District and the Tract. The Town is under no obligation to provide water, sewer or drainage services to the Tract. 6.2 Operation and Maintenance. Subject to Section 6.1 above,the District agrees to operate and maintain water, wastewater,and drainage service in the Tract at the same level as the District has operated and maintained them before the Implementation Date. The Town may periodically inspect the District's water,wastewater,and drainage facilities. ARTICLE SEVEN FULL-PURPOSE ANNEXATION 7.1 No Full-Purpose Annexation. Town agrees that it will not annex all or part of the District or commence any action to annex all or part of the District for full purposes during the Term (as defined in Section 9.2). 7.2 Full Purpose Annexation of the Tract. The Town and District acknowledge and agree that a full purpose annexation contemplates, among other things, the annexing authority solely collecting ad valorem taxes in exchange for the landowner receiving municipal services Municipal Services") as required under §43.056, Texas Local Government, as amended. However, §43.0751 (0(5), Texas Local Government Code, authorizes the Town and District to agree to a full purpose annexation on terms and conditions acceptable to the Town and the District. Upon expiration of the Tenn of this Agreement, to the extent permitted by Section 43. 0751(0(5) or any other applicable provision of the Local Government Code, the Town and District may enter into a full purpose annexation agreement with regards to the Tract ("Full Purpose Annexation Agreement"). As such, and at a minimum, the parties acknowledge and AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 7 of 16EXHIBITG—Fora ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFII'SD#10—Valero Tract agree that should a Full Purpose Annexation Agreement be desired by the parties, the District and Town anticipate that the Town may not be providing some, or possibly all, of the Municipal Services to the Tract. Should the Town desire not to provide all or a portion of the Municipal Services to the Tract, the Parties acknowledge and agree that one of the required provisions of the Full Purpose Annexation Agreement will provide that the Town shall assess only such ad valorem taxes on the Tract which are commensurate with the costs associated with the Municipal Services provided by the Town to the Tract. Municipal Services shall include, but not be limited to, administration, police, fire, dispatch, fire marshal, streets, library, parks, municipal court, inspections, code enforcement, planning, engineering, and an interest and sinking fund. The parties further acknowledge and agree that any Full Purpose Annexation Agreement shall include a provision to the effect that the District shall continue to have and exercise all functions, powers, and authority otherwise vested in the District, including without limitation the right to issue bonds, notes or other obligations, to provide services and facilities to and to impose ad valorem taxes on or other fees and charges to the property located within the Tract. The Town expressly acknowledges and agrees that neither the ternis of this Agreement nor the Full Purpose Annexation Agreement shall subject the District to any consents, approvals, conditions or requirements of the Town with respect to the design and construction of facilities, the annexation of land by the District; the issuance and sale of bonds, notes or other obligations by the District, or the assessment of ad valorem taxes or fees or charges for services by the District. If a Full Purpose Annexation Agreement is executed between the Parties, the Town shall have no further obligation to pay to the District the District portion of the Sales and Use Tax revenues collected from the Tract. 7.3 Exercise of Full Purpose Annexation Option at Termination of Agreement. On or before the expiration of Tenn of this Agreement, the Town Manager shall evaluate whether the Town should negotiate a new strategic partnership agreement with the District, negotiate and execute a Full Purpose Annexation Agreement as provided in Section 7.2 above or allow this Agreement to expire. The Town Manager shall make a recommendation to the Town Council regarding the negotiation of a new strategic partnership agreement, the negotiation and execution of a Full Purpose Annexation Agreement, or the expiration of this Agreement. If the Town Manager recommends that the Town negotiate a new strategic partnership agreement, or negotiate and execute a Full Purpose Annexation Agreement , and the Town Council approves the recommendation, the Town shall begin proceedings to enter into a new strategic partnership agreement, or negotiate and execute a Full Purpose Annexation Agreement at the end of the Term of this Agreement as applicable. If the Town Manager recommends that the Town allow this Agreement to terminate upon the expiration of the initial fifteen (15) years, and the Town Council agrees,or if the Town Council rejects the Town Manager's recommendation to negotiate a new strategic partnership agreement, or to negotiate and execute a Full Purpose Annexation Agreement, the Town may begin proceedings to annex the District for full purposes or disannex the Tract for limited purposes if authorized under the applicable provision of the Local Government Code. If the Town decides to annex the District for full purposes or disannex the AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 8 of 16EXDDITG—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCF1JSDJi10—Valero Tract Tract and has the authority to do so, the Town may institute proceedings to accomplish such full purpose annexation or disannexation to be effective upon the termination of this Agreement and according to the applicable provisions of the Local Government Code and state law. ARTICLE EIGHT MATERIAL BREACH,NOTICE AND REMEDIES 8.1 Material Breach of Agreement. It is the intention of the Parties to this Agreement that the District and the Town be regulated in accordance with the terms of this Agreement. A material breach of this Agreement by the District includes, without limitation, any one or more of the following: A) Failure of the District to act in good faith in the annexation of the Tract by the Town for limited purposes as authorized by this Agreement; or A material breach of this Agreement by the Town includes,without limitation, any one or more of the following: A) Any attempt by the Town to annex the District for full purposes during the Term of this Agreement; or B) Failure of the Town to pay to the District the District's share of the Sales and Use Tax, as provided in Article V. If a Party to this Agreement believes that another Party has, by act or omission, committed a material breach of this Agreement, the provisions of this Article shall govern the remedies for breach of this Agreement. 8.2 Notice of District's Default. The Town shall notify the District in writing of an alleged failure by the District to comply with a provision of this Agreement, describing the alleged failure with reasonable particularity. The District shall, within thirty(30)days after receipt of the notice or a longer period of time as the Town may specify in the notice, either cure the alleged failure or, in a written response to the Town, either present facts and arguments in refutation or excuse of the alleged failure or state that the alleged failure will be cured and set forth the method and time schedule for accomplishing the cure. The Town shall determine (i) whether a failure to comply with a provision has occurred; ii) whether the failure is excusable; and (iii) whether the failure has been cured or will be cured by the District. The District shall make available to the Town, if requested, any records, documents or other information necessary to make the determination. If the Town determines that a failure to comply with a provision has occurred and that the failure is not excusable and has not been or will not be cured by the District in a manner and in AGREEMENT FOR THE REDUCTION OFTRE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TESAs Page 9 of 16E\HJBrr G—Form ofStrategic Parhterslip Agreement Between the Town ofProsper,Texas and DCFWSD1110—Valero Tract accordance with a schedule reasonably satisfactory to the Town, then the Town may exercise the applicable remedy under Section 8.4(A). 8.3 Notice of Town's Default. The District shall notify the Town Manager in writing specifying any alleged failure by the Town to comply with a provision of this Agreement, describing the alleged failure with reasonable particularity. The Town shall, within thirty (30) days after receipt of the notice or the longer period of time as the District may specify in the notice, either cure the alleged failure or, in a written response to the District, either present facts and arguments in refutation or excuse of the alleged failure or state that the alleged failure will be cured and set forth the method and time schedule for accomplishing the cure, The District shall determine (i) whether a failure to comply with a provision has occurred; (ii)whether the failure is excusable; and (iii)whether the failure has been cured or will be cured by the Town. The Town shall make available to the District, if requested, any records, documents or other information necessary to make the determination. If the District determines that a failure to comply with a provision has occurred and that the failure is not excusable and has not been or will not be cured by the Town in a manner and in accordance with a schedule reasonably satisfactory to the District, then the District may exercise the applicable remedy under Section 8.4(B). 8.4 Remedies. A) If the Town determines that the District has committed a material breach of this Agreement, the Town may file suit in a court of competent jurisdiction in Collin County, Texas, and seek any relief available at law or in equity, including, but not limited to, an action under the Uniform Declaratory Judgment Act and termination of this Agreement in addition to the monetary awards as may be appropriate. B) If the District determines that the Town has committed a material breach of this Agreement,the District may file suit in a court of competent jurisdiction in Collin County,Texas, and seek any relief available at law or in equity, including, but not limited to, an action under the Uniform Declaratory Judgment Act and termination of this Agreement in addition to the monetary awards as may be appropriate. ARTICLE NINE BINDING AGREEMENT,TERM,AND AMENDMENT 9.1 Beneficiaries. This Agreement binds and inures to the benefit of the Parties, their successors and assigns. AGREEMENT FOR THE REDUCTION OF THE EXTR\TERRITORLALJURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 10 of 16 EXHIBIT G—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFlf SD1110—Valero Tract The District shall record this Agreement with the County Clerk in Official Records of Denton County, Texas. This Agreement binds each owner and each future owner of land included within the District's boundaries in accordance with Subsection(c)of the Act. 9.2 Term. This Agreement commences and binds the Parties on the Effective Date and continues for fifteen years afterward ("Term"), and may be extended thereafter at the sole discretion of the Town for up to two (2) consecutive terms of fifteen (15) years upon written notice from the Town to the District at least one hundred eighty(180) clays before the expiration of the Term or any extended term of this Agreement. Any rights or privileges of the Parties and their successors or assigns under this Agreement will terminate upon the expiration or termination of this Agreement. 9.3 Amendment. The Parties by mutual written consent may amend the terms of this Agreement at any time. Any amendment to this Agreement shall be recorded within seven (7) days of the execution of the amendment with Denton County. ARTICLE TEN MISCELLANEOUS PROVISIONS 10.1 Notice. Any formal notices or other communications ("Notice") required to be given by one Party to another by this Agreement shall be given in writing addressed to the Party to be notified at the address set forth below for the Party, (i) by delivering the Notice in person(ii) by depositing the Notice in the United States Mail, certified or registered, return receipt requested, postage prepaid, addressed to the Party to be notified, (iii) by depositing the Notice with Federal Express or another nationally recognized courier service guaranteeing next day delivery, addressed to the Party to be notified, or (iv) by sending the Notice by telefax with confirming copy sent by mail. Notice deposited in the United States mail in the manner herein above described shall be deemed effective from and after the date of such deposit. Notice given in any other manner shall be effective only if and when received by the Party to be notified. For the purposes of Notice, the addresses of the Parties, until changed as provided below, shall be as follows: Town: Town of Prosper P. O. Box 307 Prosper, Texas 75078 Attention: Town Administrator Telephone: (972) 347-2304 Facsimile: (972)247-2111 AGREEMENT TOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 11 of 16EXHIBITG—Fornl ofStrategic Partnership Agreement Between the Town of Prosper Texas and DCF13'SD#1 D—Valero 7)act District:Denton County Fresh Water Supply District No. 10 c/o Crawford and Jordan,LLP 3100 McKinnon Street, Suite 950 Dallas,Texas 75201 Telephone: (214)981-9090 Facsimile: The Parties may from time to time change their respective addresses, and each may specify as its address any other address within the United States of America by giving at least five days written notice to the other Party. If any date or any period provided in this Agreement ends on a Saturday, Sunday, or legal holiday, the applicable period for calculating the notice shall be extended to the first business day following the Saturday, Sunday or legal holiday. 10.2 Time. Time is of the essence in all things pertaining to the performance of this Agreement. 10.3 Waiver. Any failure by a Party to insist upon strict performance by the other Party of any material provision of this Agreement shall not be deemed a waiver thereof or of any other provision hereof, and the Party shall have the right at any time thereafter to insist upon strict performance of any and all of the provisions of this Agreement. 10.4 Reservation of Rights. To the extent not inconsistent with this Agreement, each Party reserves all rights,privileges, and immunities under applicable laws. 10.5 Further Documents. The Parties agree that at any time after execution of this Agreement, they will, upon request of the other Party, execute and deliver the further documents and do the further acts and things as the other Party may reasonably request in order to effectuate the terms of this Agreement. 10.6 Incorporation of Exhibits and Other Documents by Reference. All Exhibits and other documents attached to or referred to in this Agreement are incorporated into this Agreement by reference for the proposes set forth in this Agreement. 10.7 Effect of State and Federal Laws. Notwithstanding any other provision of this Agreement, the District shall comply with all applicable statutes or regulations of the United States, the State of Texas, and Town Ordinances and Town Charter provisions implementing such statutes or regulations. 10.8 Authority for Execution. The Town certifies and represents that the execution of this Agreement is duly authorized and adopted in conformity with the Town Charter and Town Ordinances. The District certifies and represents that the execution of this Agreement is duly authorized and adopted by the Board. AGREE\I£AT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF TIIE TOWN OF PROSPER,TEXAS Page 12 of 16 EXHIBIT G—Form ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCPWSD#10—Valero nfact 10.9 Semi-Annual Review. At least semi-annually, the District shall review and confirm,and will notify the Town Planning and Development Department in a form prescribed by the Department, of the accuracy of the list of resale permit holders as provided by the State Comptroller's Office. 10.10 Representations. Each signatory represents this Agreement has been read by the party for which this Agreement is executed and that such party has had an opportunity to confer with its counsel. 10.11 No Third Party Beneficiaries. Nothing in this Agreement shall be construed to create any right in any third party not a signatory to this Agreement, and the parties do not intend to create any third party beneficiaries by entering into this Agreement. 10.12 Assignment/Binding Effect. This Agreement is assignable, in whole or in part, upon the following conditions, all of which must be satisfied before any such assignment shall be valid and enforceable: A) the assignment of the Agreement must be evidenced by a recordable document the "Assignment"), the form of which must be approved in writing by the Parties, such approval not to be unreasonably withheld; B) the Assignment must expressly contain, among other reasonable requirements and/or conditions of the Parties, an acknowledgment and agreement that all obligations, covenants and/or conditions contained in the Agreement will be assumed solely and completely by the assignee, and the contact name, address, phone number, fax number and electronic mail address of the assignee; C) Assignor will file any approved, executed Assignment in the Land Records of Denton County,Texas; and D) Assignor shall provide the other Party with a file-marked copy of the Assignment within ten(10)days of filing the same. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective officers, directors, partners, employees, representatives, agents, vendors, grantees, and/or trustees, heirs, executors, administrators, legal representatives, successors and assigns, as authorized herein. 10.13 State or Federal Laws,Rules, Orders or Regulations. This Agreement is subject to all applicable Federal and State laws and any applicable permits, ordinances, rules, orders and regulations of any local, state or federal governmental authority having or asserting jurisdiction, but nothing contained herein shall be construed as a waiver of any right to question or contest any such law,ordinance, order,rule or regulation in any forum having jurisdiction. AGREEMENT FOR THE REDUCTION OF THE EXT RATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 13 of 16EXHIBIT0—Form ofStrategic Partnership Agreement Between the 7oun of Prosper,Texas and DCFWSD#10—Valero Tract 10. 14 Savings/Severability. The parties hereto specifically agree that in case any one or more of the sections, subsections, provisions, clauses or words of this Agreement or the application of such sections, subsections, provisions, clauses or words to any situation or circumstance should be, or should be held to be, for any reason, invalid or unconstitutional, under the laws or constitutions of the State or the United States of America,or in contravention of any such laws or constitutions, such invalidity, unconstitutionality or contravention shall not affect any other sections, subsections, provisions, clauses or words of this Agreement or the application of such sections, subsections, provisions, clauses or words to any other situation or circumstance, and it is intended that this Agreement shall be severable and shall he construed and applied as if any such invalid or unconstitutional section, subsection, provision, clause or word had not been included herein, and the rights and obligations of the parties hereto shall be construed and remain in force accordingly. 10.15 Venue. All amounts due for the breach of this Agreement, shall be paid and be due in Collin County, Texas, which is the County in which the principal administrative offices of the Town are located. It is specifically agreed among the parties to this Agreement that Collin County, Texas is the place of performance of this Agreement; and in the event that any legal proceeding is brought to enforce this Agreement or any provision hereof, the same shall be brought and venue shall lie in Collin County,Texas. 10.16 Sovereign Immunity. By entering into and executing this Agreement, the Town and the District in no way waive or surrender their sovereign immunity. 10. 17 Miscellaneous Drafting Provisions. This Agreement shall be deemed drafted equally by all parties hereto. The language of all parts of this Agreement shall be construed as a whole according to its fair meaning, and any presumption or principle that the language herein is to be construed against any party shall not apply. Headings in this Agreement are for the convenience of the parties and are not intended to be used in construing this document. IN WITNESS WHEREOF, the parties have executed this Agreement in multiple copies, each of which shall be an original, as of the date countersigned by the Town Controller of the Town of Prosper. SIGNATUREPAGE TO FOLLOW] REMAINDER OF THIS PAGE BLANK] AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 14 of 16 EXHIBIT G-Form ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFWSD#10-Valero Tract IN WITNESS WHEREOF, the parties have executed this Agreement in multiple copies, each of which shall be an original, as of the date countersigned by the Town Controller of the Town of Prosper. The Town of Prosper,Texas By: Name: Mike Land Title: Town Manager Address: 113 W. Broadway P. O. Box 307 Prosper, Texas 75078 Fax: (972) 347-2111 Date: Denton County Fresh Water Supply District No. 10 By: Name: Robert Tague Title: President Address:c/ o Crawford and Jordan, LLP 19 Briar Hollow Lane, Suite 245 Houston, Texas 77027 Fax: (713)621-3909 Date: AGREEMENT FOR THE REDUCTION'OFTRE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page IS of 16EXHIBITG—Form of Strategic Partnership Agreement Between the Town ofProsper, Texas and DC?WSD#1 D—Valero Tract EXHIBIT"A" Legal Description of Tract BEING a tract of land situated in the Jose Gonzales Survey, Abstract No. 447, in Denton County, Texas, and being all of Tract 2B of the Replat of Tracts 2A & 2B of SAVANNAH PHASE 3, an addition to Denton County, Texas, according to the replat thereof recorded in Cabinet Y, Page 336, of the Real Property Records of Denton County, Texas, and being more particularly described as follows: BEGINNING at a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" found in the north right-of-way line of U.S. Highway No. 380 (a variable width right-of-way) and the west line of Farm-to-Market Road No.1385 (a 110 foot right-of-way at this point), said point being the southeast corner of said Tract 2B; THENCE North 88 degrees 31 minutes 26 seconds West, along the north right-of-way line of U.S. Highway No, 380 and the south boundary of said Tract 2B, a distance of248.50 feet to a 5/8-inch iron rod with cap marked "PETITT- 4087 found for the southwest corner of said Tract 2B and the most southerly southeast coiner of Tract 2A of said addition; THENCE North 01 degrees 28 minutes 34 seconds East, departing said north line of U.S. Highway No. 380 and along the common boundary between said Tracts 2A and 2B, a distance of 280.00 feet to a 5/8-inch iron rod with cap marked "PETITT - RPLS 4087" found for the northwest coiner of said Tract 2B and an interior ell corner of said Tract 2A; THENCE South 88 degrees 31 minutes 26 seconds East, continuing along the common boundary between said Tracts 2A and 2B, a distance of270.87 feet to a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" found for the northeast corner of Tract 2B and the most easterly southeast corner of Tract 2A, same being on the west right-of-way line of Farm—to- Market Road No. 1385; THENCE South 06 degrees 02 minutes 38 seconds West, along the east line of said Tract 2B and the west right-of-way line of Farm-to-Market Road No. 1385, a distance of280.89 feet to the POINT OF BEGINNING and containing 1.669 acres of land,more or less. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL.JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 16 of 16 EXHIBIT G—Font,ofStrategic Partners/tip Agreement Between the Town of Prosper.Texas and DCF{YSDi11 D—Valero Tract Page 1 of 2 To: Mayor and Town Council From: Mike Land, Town Manager Re: Town Council Meeting – Tuesday March 27, 2012 Date: March 22, 2012 Agenda Item: Consider and act on a Ordinance authorizing the limited purpose annexation for the purpose of imposing sales and use tx on property known as Tract No. 1. Description of Agenda Item: On Tuesday December 13, 2011 the Town of Prosper entered into an Agreement with 166 Bryan Road Partners, LP for the Reduction of the Town’s Extraterritorial Jurisdiction west of FM 1385. Included in that agreement there is a reference to the Town entering into three separate Strategic Partnership Agreements with the Denton County Fresh Water District No. 10. Holding the two public hearings, one on February 28th and the other on March 13th are a part of the adoption process. The three agreements for Tracts 1, 2 and 3, all read the same, and address the collection of sales tax and its distribution generated by commercial uses located within the District. The Town will be or will eventually be collecting the full 2% sales tax on the parcels as they are or will be developed. The Town will equally share the 1% sales tax collection with the District (one half to the District, one half to the Town) with the balance of the sales tax collected (the remaining 1%) being retained by the Town. The term of the agreements are all fifteen (15) years with the potential of two (2) fifteen (15) year extensions. Recall that the three parcels being considered are located: 1) the southwest quadrant of the intersection of FM 1385 and Bryan Rd., and 2) the northeast quadrant of the intersection of Fishtrap Rd. and Teel Pkwy 3) in the northwest quadrant of the intersection of Hwy 380 and FM 1385 (Valero). With each agreement, there is a separate ordinance agenda item that also must be approved. The District has approved and signed the Settlement and Mutual Release Agreement. Budget Impact: The Valero store location at the corner of Fm 1385 and Hwy 380 (Tract 3) is the only commercial use that is built and active among the three tracts being considered. We do not have any taxable sales data at this time to utilize in projecting total taxable sales for future revenue projection. Based on our understanding of the notification process we believe that the store will begin collecting the sales and use tax within the next 30 to 60 days, probably sooner. Prosper is a place where everyone matters. ADMINISTRATION Page 2 of 2 Legal Obligations and Review: The language in the Strategic Partnership Agreements was developed by Courtney Kuykendall, the Town’s Attorney. Attached Documents: 1. Ordinance No. 12-08, authorizing the limited purpose annexation for the purpose of imposing sales and use tax on property known as Tract No. 1. 2. Strategic Partnership Agreement for Tract 1 between the Town of Prosper and the Denton County Fresh Water District No. 10. Town Staff Recommendation: Town staff recommends that the Town Council approve Ordinance No. 12-08, annexing territory within the boundaries of the Denton County Freshwater Supply District #10 for the Limited Purpose of imposing sales and use tax for Tract No. 1. Limited Purpose Annexation for Tract No. 1 Page 1 606653.1 TOWN OF PROSPER, TEXAS ORDINANCE NO. 12-08 AN ORDINANCE OF THE TOWN OF PROSPER, TEXAS, ANNEXING TERRITORY WITHIN THE BOUNDARIES OF THE DENTON COUNTY FRESHWATER SUPPLY DISTRICT #10 FOR THE LIMITED PURPOSE OF IMPOSING SALES AND USE TAX ON TERRITORY; PROVIDING FOR REPEALING, SAVINGS AND SEVERABILITY CLAUSES; PROVIDING FOR AN EFFECTIVE DATE OF THIS ORDINANCE; AND PROVIDING FOR THE PUBLICATION OF THE CAPTION HEREOF. WHEREAS, the Town of Prosper, Texas (“Prosper”), Denton County Fresh Water Supply District #10 (“District”), 166 Bryan Road Partners, L.P. (“Developer”), and Bryan Road Retail Partners (“Landowner”) previously entered into that certain agreement for the release of a portion of property in Prosper’s extraterritorial jurisdiction, effective December 14, 2011 (“Release Agreement”); and WHEREAS, as a condition of the Release Agreement, the District agreed to enter into three (3) separate strategic partnership agreements with Prosper pursuant to Section 43.0751, Texas Local Government Code, as amended, authorizing limited purpose annexation for the limited purpose of imposing sales and use tax on territory within the boundaries of the District; and WHEREAS, the Town Council of Prosper (“Town Council”) previously investigated and determined that it was in the best interest of Prosper to adopt and execute the strategic partnership agreement attached hereto as Exhibit “A,” and incorporated herein for all purposes (“Strategic Partnership Agreement for Tract No. 1”); and WHEREAS, the governing body of the District, prior to the Town’s adoption and execution, adopted the Strategic Partnership Agreement for Tract No. 1 at a duly called meeting on February 16, 2012 and executed the same on March 15, 2012; and Limited Purpose Annexation for Tract No. 1 Page 2 606653.1 WHEREAS, the Town Council finds that all requisites relative to consideration and adoption of this Ordinance have been complied with pursuant to Chapter 43.0751, Texas Local Government Code, as amended; and WHEREAS, notice of two (2) public hearings concerning the limited purpose annexation of the territory described in Exhibit “A,” was published in a newspaper of general circulation in the Town and in the area to be annexed; and WHEREAS, a copy of the Strategic Partnership Agreement for Tract No. 1 has been on file in the office of the Town Secretary and made available to the public; and WHEREAS, the two (2) public hearings were held during Town Council meetings on February 28, 2012 and March 13, 2012, and concluded after providing an opportunity for all persons present to be heard with respect to the limited purpose annexation associated with the Strategic Partnership Agreement for Tract No. 1; and WHEREAS, the Town Council finds that all legal notices, hearings, procedures and publishing requirements for annexation have been performed and completed in the manner and form set forth by law. NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS: SECTION 1: Findings Incorporated. The findings set forth above are incorporated into the body of this Ordinance as if fully set forth herein. SECTION 2: Property Annexed for Limited Purposes. The Property described as follows is hereby annexed to Prosper, to-wit: BEING a tract of land out of the William Lumpkin League and Labor Survey, Abstract No. 730, Denton County, Texas containing 15.012 acres of land, more or less; said tract is more particularly described in Exhibit "A" attached hereto and incorporated herein for all purposes. Limited Purpose Annexation for Tract No. 1 Page 3 606653.1 The present boundary limits of Prosper are amended to include the Property described in Exhibit “A” for limited purposes. The Property is within the extraterritorial jurisdiction and adjacent to the town limits of the Town of Prosper, Texas in Denton County, Texas. The Property is annexed into the Town for the limited purpose of imposing sales and use tax. SECTION 3: Rights and Privileges. From and after the passage of this Ordinance, the Property shall be a part of Prosper for the sole, limited purpose set forth herein. SECTION 4: Official Map and Boundaries Amended. The official map and boundaries of Prosper are hereby amended to include the Property as part of Prosper for the limited purposes described herein. A certified copy of this Ordinance shall be filed in the County Clerk's Office of Denton County. SECTION 5: Penalty Provision. Any person, firm, corporation or business entity violating this Ordinance, as it exists or may be amended, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be fined a sum not exceeding Five Hundred Dollars ($500.00). Each continuing day's violation under this Ordinance shall constitute a separate offense. The penal provisions imposed under this Ordinance shall not preclude Prosper from filing suit to enjoin the violation. Prosper retains all legal rights and remedies available to it pursuant to local, state and federal law. SECTION 6: Savings/Repealing Clause. All provisions of any ordinance in conflict with this Ordinance are hereby repealed to the extent they are in conflict; but such repeal shall not abate any pending prosecution for violation of the repealed ordinance, nor shall the repeal prevent a prosecution from being commenced for any violation if occurring prior to the repeal of the ordinance. Any remaining portions of said ordinances shall remain in full force and effect. Limited Purpose Annexation for Tract No. 1 Page 4 606653.1 SECTION 7: Severability. Should any section, subsection, sentence, clause or phrase of this Ordinance, be declared unconstitutional or invalid by a court of competent jurisdiction, it is expressly provided that any and all remaining portions of this Ordinance shall remain in full force and effect. Prosper hereby declares that it would have passed this Ordinance, and each section, subsection, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, and phrases be declared unconstitutional or invalid. SECTION 8: Effective Date. This Ordinance shall become effective from and after its adoption and publication as required by the Town Charter and by law. PASSED AND APPROVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS on this 27th day of March, 2012. ______________________________ Ray Smith, Mayor ATTESTED TO AND CORRECTLY RECORDED BY: APPROVED AS TO FORM: _________________________ _________________________________ Amy Piukana, Town Secretary Abernathy, Roeder, Boyd & Joplin, P.C. Courtney A. Kuykendall, Town Attorney DATE(S) OF PUBLICATION: _________________________________________________, Prosper Press Limited Purpose Annexation for Tract No. 1 Page 5 606653.1 EXHIBIT “A” (Strategic Partnership Agreement for Tract No. 1) Legal Description of Tract Field notes to all that certain tract of land situated in the William Lumpkin League and Labor Survey, Abstract Number 730, Denton County, Texas, and being a part of the tract of land described as Tract Three in the deed to Comanche Ridge Properties Associates, L.P.,as recorded in Volume 5311, Page 4327, Real Property Records of Denton County, Texas, and being more particularly described as follows; Commencing at a 5/8" iron rod found at the Northeast corner of said Tract Three at the intersection of the approximate centerline of Bryan Road and the west right-of-way line of F.M. Road No. 1385, and at the Southeast corner of a tract of land described in the deed to C.M. Jackson and wife, Oro Jackson, as recorded in Volume 546, Page 12, said Real Property Records; Thence North 88 degrees 28 minutes 18 seconds West a distance of 20.00 feet to a point for corner; Thence South 01 degrees 31 minutes 34 seconds West a distance of 40.00 feet to a `/2" capped iron rod set for the Point of Beginning; Thence South 01 degrees 31 minutes 36 seconds West a distance of 909.48 feet to a %2" capped iron rod set for corner; Thence North 88 degrees 28 minutes 18 seconds West a distance of 719.01 feet to a '/2" capped iron rod set for corner; Thence North 01 degrees 31 minutes 36 seconds East a distance of 909.48 feet to a %s" capped iron rod set for corner in the south line of a 40' strip of land dedicated as right-of-way per Cabinet X, Page 264, Plat Records of Denton County,Texas; Thence South 88 degrees 28 minutes 18 seconds East a distance of 719.01 feet to the Point of Beginning and enclosing 15.012 acres of land more or less. AGREEMENT FOR THE REDUCT/ON OF THE EXTRATERRITORIAL JURISDICTION OP THE TOWN Or PROSPER,TEXAS Page l6of/6EXHIBITE—Forn,ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFrr SDtt/O—Commercial Tract Form of STRATEGIC PARTNERSHIP AGREEMENT BETWEEN THE TOWN OF PROSPER, TEXAS,AND DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. 10 THE STATE OF TEXAS § COUNTY OF DENTON § This STRATEGIC PARTNERSHIP AGREEMENT(this"Agreement") is entered into as of the Effective Date between the TOWN OF PROSPER, TEXAS, a home-rule municipality situated in Collin County and Denton County, Texas, acting though its governing body, the Town Council of the Town of Prosper, Texas (the "Town"), and DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. 10 (the "District"), a conservation and reclamation district . and political subdivision of the State of Texas created pursuant to Article XVI, Section 59 of the Texas Constitution, and operating under Chapters 49, 51, and, for certain purposes, 53 of the Texas Water Code, as amended. RECITALS 1. Texas Local Government Code, §43.0751 (the"Act") authorizes the Town and certain conservation and reclamation districts to negotiate and enter into a strategic partnership agreement by mutual consent; 2. This Agreement provides for the limited purpose annexation of a tract of land in the District, situated wholly within Denton County, Texas, as more specifically described in Exhibit A" ("Tract"), attached hereto and incorporated herein for all purposes, by the Town for certain purposes including, but not limited to,the imposition of a sales and use tax within the Tract; 3. As required by the Act, the Town held public hearings on 2011 and 2011 at__p.m. at Town Hall, and the District held public hearings on 2011, and 2011 at __ p.m. at Texas, at which members of the public were given the opportunity to present testimony or evidence regarding the proposed Agreement, and the Town and the District made copies of the proposed Agreement available, and gave notice of the hearings prior to the public hearings in accordance with the terms of the Act; 4. The District has, by formal action, after public hearing approved this strategic partnership agreement on in open session at a meeting held in accordance with the Open Meetings Act; AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 1 oJ16EXHIBITE—Form of Strategic Partnership Agreement Between the Town of Prosper,Texas and DCPWSD#/0—Commercial Tract 5. The Town has, by formal action, after public hearings approved this strategic partnership agreement on in open session at a meeting held in accordance with the Open Meetings Act; 6. The Town and the District wish to enter into a strategic partnership agreement to provide the terms under which services will be provided by the District to the Tract and under which the District will continue to exist for an extended period of time with respect to the Tract after the Tract of land within the District is annexed for limited purposes; and 7. Pursuant to Section 43.0751(c) of the Local Government Code, this Agreement shall become effective on the date of adoption of this Agreement by the Town and the District(the Effective Date"). Upon adoption, this Agreement shall be filed by the District in the real property records of Denton County,Texas. NOW, THEREFORE, for and in consideration of the mutual agreements, covenants, and conditions contained herein, and other good and valuable consideration, the Town and District agree as follows: THE PARTIES AGREE AS FOLLOWS: ARTICLE ONE FINDINGS The Town and the District find and declare: 1.1 The Act authorizes the Town and the District to enter into this Agreement to define the terms under which services, if any, will be provided to the Town and the District and under which the District will continue to exist after the Tract is annexed for limited purposes pursuant to this Agreement;and 1.2 This Agreement does not require the District to provide revenue to the Town solely for the purpose of an agreement with the Town to forgo annexation of the District; and 1.3 This Agreement provides benefits to the Town and the District, including revenue, services, or regulations which are reasonable and equitable with regard to the benefits provided to the other Party; and 1.4 All the terms contained in this Agreement are lawful and appropriate to provide for the provision of municipal services; and 1.5 The Town and the District negotiated this Agreement by mutual consent; the terms of the Agreement are not a result of the Town's Annexation Plan or any arbitration between the Town and the District. AGREEMENT FOR THE REDUCTION OF TILE EXTRATERRITORIAL JURISDICTION OF TIIB TOWN OF PROSPER,TEXAS Page 2 of 16EXHIBITE—Porn:ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFri'SD#1O—Commercial Tract ARTICLE TWO DEFINITIONS Unless the context requires otherwise, and in addition to the terms defined above, the following terms used in this Agreement will have the meanings set out below: 2.1 "Act" means Texas Local Government Code, §43.0751 and any amendments thereto. 2.2 "Additional Tracts" means any property within the District's boundaries that is not located within the extraterritorial jurisdiction of a municipality other than the Town designated for commercial use, other than the Tract. 2.3 "Agreement" means this strategic partnership agreement between the Town and the District. 2.4 "Board"means the Board of Directors of the District. 2.5 "Commercial Taxpayer" means a person, entity, business, or corporation who provides receipts from the sale and use at retail of taxable items to the Comptroller. 2.6 "Comptroller"means the Comptroller of Public Accounts of the State of Texas. 2.7 "District" means Denton County Fresh Water Supply District No. 10, a conservation and reclamation district created and operating under Chapters 49, 51, and, for certain purposes, 53 of the Texas Water Code, located wholly within Denton County, Texas. 2.8 "ETJ"means the extraterritorial jurisdiction of the Town. 2.9 "Government Code"means the Texas Government Code and any amendments thereto. 2.10 "Implementation Date" means the date the limited-purpose annexation ordinance is passed by Town Council pursuant to Section 3.1. 2.11 "Local Government Code" means the Texas Local Government Code and any amendments thereto. 2.12 "Party" or "Parties" means a party or the parties to this Agreement, being the Town and the District. 2.13 "Sales and Use Tax"means the sales and use tax authorized to be imposed in the Tract by the Act and Tax Code Chapter 321. 2.14 "Tax Code"means the Texas Tax Code and any amendments thereto. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL,JURISDICTION OF ME TOWN OF PROSPER,TEXAS Page 3 of 16EXHIBITE—Form ofStrategic Partnership Agreement Between the 7mrn ofProsper, Texas and DCFfr'SD!{10—Commercial7Y'act 2.15 "Town" means the Town of Prosper, Texas, a general law municipality situated in Collin County and Denton County,Texas. 2.16 "Town Charter"means the Charter of the Town and any amendments thereto. 2.17 "Town Code" means the Code of Ordinances of the Town and any amendments thereto. 2.18 "Town Council" means the Town Council of the Town or any successor governing body. 2.19 "Town Manager"means the Town Manager of the Town or his or her designee. 2.20 "Tract" means the tract of land situated wholly in Denton County, Texas, described in Exhibit"A"attached hereto and incorporated herein for all purposes. ARTICLE THREE LIMITED-PURPOSE ANNEXATION 3.1 Generally. In accordance with the terms of that Agreement for the Reduction of the Extraterritorial Jurisdiction of the Town of Prosper, dated December 13, 2011, the Town shall annex the Tract for limited purposes. 3.2 Limited Purpose Annexation of Additional Tracts. In the event the location of proposed commercial development within the District is changed or additional property designated for commercial development is added, the Town Council may annex the Additional Tracts for the limited purpose of collecting Sales and Use Tax revenues within the Additional Tracts pursuant to the Act subject to the execution of an agreement between the Town and the District substantially similar in form to this Agreement. 3. 3 Property Taxes and District Liability for Debts of the Town. During the Term (as defined in Section 9.2) of this Agreement: (i) neither the District nor any owners of taxable property within the District is liable for any present or future debts of the Town, and (ii) current and future ad valorem taxes levied by the Town will not be levied on taxable property within the District,except as provided for in Article VII. 3.4 Powers and Functions Retained by the District. This Agreement does not limit in any manner the rights,powers, functions, and authority of the District. 3.5 Extraterritorial Jurisdiction. This Agreement shall not affect or otherwise change any Town limits or extraterritorial jurisdiction of the Town except as specifically set forth herein. This Agreement shall not inure to the benefit of any party not a signatory to this Agreement, save and except assignees or successors in interests as provided herein. The Town may regulate those AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF Ti I ToswEXTRATERRITORIALJURISDICTIONOFTitETOWN OF PROSPER,TEXAS Page 4 of 16EXHIBITE—Form 0-Strategic Partnership Agreement Between the Town of Prosper,Texas and DCFWSD110—Commercial 7S•act portions of the District land located within the Town's ETJ in the same manner in which it may regulate other areas within the extraterritorial jurisdiction of the Town, subject to any other agreements between the Town and the District. ARTICLE FOUR VOTING RIGHTS IN THE DISTRICTS 4.1 Generally. Upon annexation of the Tract for limited purposes by the Town, any qualified voters within the Tract may vote in Town elections, pursuant to Local Government Code§43. 130. Voting rights are subject to all state and federal laws and regulations. 4.2 Notice. The Town will comply with all the notice requirements as set forth in §43.130 of the Local Government Code, as it now exists or hereafter amended. ARTICLE FIVE SALES AND USE TAX 5.1 Imposition of the Town's Sales and Use Tax. Pursuant to Subsection(k)of the Act, the Town shall impose a Sales and Use Tax within the Tract upon the limited-purpose annexation of the Tract. The Sales and Use Tax shall be imposed on the receipts from the sale and use at retail of taxable items at the rate of two percent (2%) or the rate specified under future amendments to Chapter 321 of the Tax Code. The Sales and Use Tax shall take effect on the date described in Tax Code§321. 102. 5.2 Payment of Sales and Use Tax. Within thirty (30) days from the establishment of a District utility service account for a Commercial Taxpayer in the Tract, the District shall inspect the building for which service is requested and provide written notice of the name of(a) the Commercial Taxpayer requesting utility service, and (b) each Commercial Taxpayer operating a commercial business at such building. Each month thereafter, the District shall inspect the Tract and provide a written report to the Town updating such information in order to maintain a current listing of all Commercial Taxpayers operating within the Tract. Based upon the names reported by the Town, the Comptroller shall create a sales tax area report for the Town. The area sales tax report shall identify the aggregate total amount of local sales tax revenue the group of or individual Commercial Taxpayers in the Tract contributed to the Town's total allocation for each month. Subject to the terms and conditions of this Agreement, the Town and District agree to share equally the 1% Sales and Use Tax revenues remaining subsequent to payment of the other 1% Sales and Use Tax revenues to the Prosper Economic Development Corporation and Town property tax relief as required by state law (the "District's Portion") that are reported on the monthly area sales tax report provided by the Comptroller and received by the Town from the Comptroller after the date of the limited-purpose annexation of the Tract. The Town shall deliver the District's Portion of the Sales and Use Tax revenues to the District within thirty(30) days of the Town's receipt of the sales report from the Comptroller. Government Code Chapter ACREE\IENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JUR ISDICTION OF THE TOWN OF PROSPER,TEXAS Page S of 16EXHIBITE—Form ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFWSD#10—Commercial Tract 2251 shall govern and provide the penalty if the Town fails to deliver the District's portion in a timely manner. For the purposes of determining the applicable overdue date under Chapter 2251, the Town is deemed to have received an invoice from the District on the date the Town receives the sales tax report from the Comptroller without further action from the District. In the event the Comptroller ceases to provide a monthly area sales report, then the Parties agree to jointly develop another method of reporting Sales and Use Tax revenues to the Town. The Town shall deliver to the District a condensed version of each monthly area sales tax report provided by the Comptroller, containing only the contents of the sales tax report relating to retail sales and retailers in the Tract within 30 days of the Town's receipt of the sales tax report. 5.3 Notification of Comptroller. The Town shall send notice of this Agreement and the limited-purpose annexation of the Tract to the Comptroller within three (3) days of the Implementation Date in the manner provided by Tax Code §321.102. The Town shall send to the District a copy of any notice from the Comptroller delaying the effectiveness of the Sales and Use Tax in the Tract. 5.4 District Use of Sales and Use Tax Revenue. The District shall use the Sales and Use Tax revenue provided in Section 5.2 only for purposes for which the District is lawfully authorized to use its ad valorem tax revenues or other revenues. 5.5 District Audit Rights. The District may audit the Sales and Use Tax collections by the Town solely to determine whether the Sales and Use Tax revenue payments provided by Section 5.2 have been made to the District in accordance with this Agreement. Any audit shall be made at the District's sole cost and expense and may be performed at any time during the Town's regular business hours by an auditor hired by the District on thirty(30) days written notice to the Town. For the purpose of any audits, the Town shall maintain and make available to the District or its representatives all books, records, documents and other evidence of accounting procedures or practices in whatever form sufficiently maintained to reflect the collection of all Sales and Use Tax revenues that are subject to this Agreement. 5.6 Town Audit Rights. The District is required by law to prepare an annual audit within one hundred twenty (120) days after the close of the District's fiscal year. The District shall provide a copy of its annual audit to the Town within thirty (30) days after the audit is completed. The Town may audit the District's expenditures made with the Sales and Use Tax revenue paid under Section 5.2, solely to determine whether the expenditures have been made by the District in accordance with Section 5.4. Any audit shall be made at the Town's sole cost and expense and may be performed at any time during regular business hours by the Town's internal auditors or an independent auditing firm on thirty(30) days written notice to the District. For the purpose of any audits, the District shall maintain and make available to the Town or its representatives all books, records, documents and other evidence of accounting procedures or ACREENIENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 6 of 16EXHIBITE-Form ofStrategic Partnership Agreement Between the Town orProsper,Texas and DCFIVSb##10-Commercial Tract practices in whatever form maintained sufficient to reflect the expenditure of all Sales and Use Tax revenues that are subject to this Agreement. ARTICLE SIX SERVICES PROVIDED BY THE DISTRICT AND THE TOWN 6.1 Water, Sewer, and Drainage Services. Subject to the applicable terms and provisions of that certain Merged, Amended and Restated Agreement Related to Water and Sanitary Sewer Service dated October 1, 2007 between Mustang Special Utility District ("Mustang SUD") and the District (the "Water and Sewer Agreement"), that certain Upper Trinity Regional Water District Regional Treated Water System Participating Customer Contract dated August 29, 2001, as amended and that certain Upper Trinity Regional Water District Northeast Regional Water Reclamation System Participating Customer Contract dated August 29, 2001, as amended, each between the Upper Trinity Regional Water District ("Upper Trinity") and the District collectively, "Upper Trinity Contracts"), reimbursement agreements between the developers or owners of the Tract and the District, and Sections 49.215(d) and 13.248, Texas Water Code, the District shall acquire, construct, own, operate and maintain a water,wastewater, and drainage system in the District and the Tract. The Town is under no obligation to provide water, sewer or drainage services to the Tract. 6.2 Operation and Maintenance. Subject to Section 6.1 above, the District agrees to operate and maintain water, wastewater,and drainage service in the Tract at the same level as the District has operated and maintained them before the Implementation Date. The Town may periodically inspect the District's water,wastewater, and drainage facilities. ARTICLE SEVEN FULL-PURPOSE ANNEXATION 7.1 No Full-Purpose Annexation. Town agrees that it will not annex all or part of the District or commence any action to annex all or part of the District for full purposes during the Tenn(as defined in Section 9.2). 7.2 Full Purpose Annexation of the Tract. The Town and District acknowledge and agree that a full purpose annexation contemplates, among other things, the annexing authority solely collecting ad valorem taxes in exchange for the landowner receiving municipal services Municipal Services") as required under §43.056, Texas Local Government, as amended. However, §43.0751 (0(5), Texas Local Government Code, authorizes the Town and District to agree to a full purpose annexation on terms and conditions acceptable to the Town and the District. Upon expiration of the Term of this Agreement, to the extent permitted by Section 43.0751(0(5) or any other applicable provision of the Local Government Code, the Town and District may enter into a full purpose annexation agreement with regards to the Tract ("Full Purpose Annexation Agreement"). As such, and at a minimum, the parties acknowledge and AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF T1w TOWN OF PROSPER,TEXAS Page 7 of 16EXHIBITE—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFlESD111 0—Commercial Tract agree that should a Full Purpose Annexation Agreement be desired by the parties, the District and Town anticipate that the Town may not be providing some, or possibly all, of the Municipal Services to the Tract. Should the Town desire not to provide all or a portion of the Municipal Services to the Tract, the Parties acknowledge and agree that one of the required provisions of the Full Purpose Annexation Agreement will provide that the Town shall assess only such ad valorem taxes on the Tract which are commensurate with the costs associated with the Municipal Services provided by the Town to the Tract. Municipal Services shall include, but not be limited to, administration, police, fire, dispatch, fire marshal, streets, library, parks, municipal court, inspections, code enforcement, planning, engineering, and an interest and sinking fund. The parties further acknowledge and agree that any Full Purpose Annexation Agreement shall include a provision to the effect that the District shall continue to have and exercise all functions, powers, and authority otherwise vested in the District, including without limitation the right to issue bonds, notes or other obligations, to provide services and facilities to and to impose ad valorem taxes on or other fees and charges to the property located within the Tract, The Town expressly acknowledges and agrees that neither the terms of this Agreement nor the Full Purpose Annexation Agreement shall subject the District to any consents, approvals, conditions or requirements of the Town with respect to the design and construction of facilities, the annexation of land by the District; the issuance and sale of bonds, notes or other obligations by the District, or the assessment of ad valorem taxes or fees or charges for services by the District. If a Full Purpose Annexation Agreement is executed between the Parties, the Town shall have no further obligation to pay to the District the District portion of the Sales and Use Tax revenues collected from the Tract. 7.3 Exercise of Full Purpose Annexation Option at Termination of Agreement. On or before the expiration of Term of this Agreement, the Town Manager shall evaluate whether the Town should negotiate a new strategic partnership agreement with the District, negotiate and execute a Full Purpose Annexation Agreement as provided in Section 7.2 above or allow this Agreement to expire. The Town Manager shall make a recommendation to the Town Council regarding the negotiation of a new strategic partnership agreement, the negotiation and execution of a Full Purpose Annexation Agreement, or the expiration of this Agreement. If the Town Manager recommends that the Town negotiate a new strategic partnership agreement, or negotiate and execute a Full Purpose Annexation Agreement , and the Town Council approves the recommendation, the Town shall begin proceedings to enter into a new strategic partnership agreement, or negotiate and execute a Full Purpose Annexation Agreement at the end of the Term of this Agreement as applicable. If the Town Manager recommends that the Town allow this Agreement to terminate upon the expiration of the initial fifteen (15) years, and the Town Council agrees,or if the Town Council rejects the Town Manager's recommendation to negotiate a new strategic partnership agreement, or to negotiate and execute a Full Purpose Annexation Agreement, the Town may begin proceedings to annex the District for full purposes or disannex the Tract for limited purposes if authorized under the applicable provision of the Local Government Code. If the Town decides to annex the District for full purposes or disannex the AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OFTHE TOWN OF PROSPER,TEXAS Page 8 of 16EXHIBITE-Form ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFrr'SD#16-Commercial Tract Tract and has the authority to do so, the Town may institute proceedings to accomplish such full purpose annexation or disannexation to be effective upon the termination of this Agreement and according to the applicable provisions of the Local Government Code and state law. ARTICLE EIGHT MATERIAL BREACH,NOTICE AND REMEDIES 8.1 Material Breach of Agreement. It is the intention of the Parties to this Agreement that the District and the Town be regulated in accordance with the terms of this Agreement. A material breach of this Agreement by the District includes, without limitation, any one or more of the following: A) Failure of the District to act in good faith in the annexation of the Tract by the Town for limited purposes as authorized by this Agreement;or A material breach of this Agreement by the Town includes, without limitation, any one or more of the following; A) Any attempt by the Town to annex the District for full purposes during the Term of this Agreement; or B) Failure of the Town to pay to the District the District's share of the Sales and Use Tax,as provided in Article V. If a Party to this Agreement believes that another Party has, by act or omission, committed a material breach of this Agreement, the provisions of this Article shall govern the remedies for breach of this Agreement. 8.2 Notice of District's Default. The Town shall notify the District in writing of an alleged failure by the District to comply with a provision of this Agreement, describing the alleged failure with reasonable particularity.The District shall,within thirty(30) days after receipt of the notice or a longer period of time as the Town may specify in the notice, either cure the alleged failure or, in a written response to the Town, either present facts and arguments in refutation or excuse of the alleged failure or state that the alleged failure will be cured and set forth the method and time schedule for accomplishing the cure. The Town shall determine (i)whether a failure to comply with a provision has occurred; ii) whether the failure is excusable; and (iii) whether the failure has been cured or will be cured by the District. The District shall make available to the Town, if requested, any records, documents or other information necessary to make the determination. If the Town determines that a failure to comply with a provision has occurred and that the failure is not excusable and has not been or will not be cured by the District in a manner and in AGREE,TENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 9 of 16 EMimET E—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFWSDi110—Commercial Tract accordance with a schedule reasonably satisfactory to the Town,then the Town may exercise the applicable remedy under Section 8.4(A). 8.3 Notice of Town's Default. The District shall notify the Town Manager in writing specifying any alleged failure by the Town to comply with a provision of this Agreement, describing the alleged failure with reasonable particularity. The Town shall, within thirty (30) days after receipt of the notice or the longer period of time as the District may specify in the notice, either cure the alleged failure or, in a written response to the District, either present facts and arguments in refutation or excuse of the alleged failure or state that the alleged failure will be cured and set forth the method and time schedule for accomplishing the cure. The District shall determine (i) whether a failure to comply with a provision has occurred; (ii)whether the failure is excusable; and (iii)whether the failure has been cured or will be cured by the Town. The Town shall make available to the District, if requested, any records, documents or other information necessary to make the determination. If the District determines that a failure to comply with a provision has occurred and that the failure is not excusable and has not been or will not be cured by the Town in a manner and in accordance with a schedule reasonably satisfactory to the District, then the District may exercise the applicable remedy under Section 8.4(B). 8.4 Remedies. A) If the Town determines that the District has committed a material breach of this Agreement, the Town may file suit in a court of competent jurisdiction in Collin County,Texas, and seek any relief available at law or in equity, including, but not limited to, an action under the Uniform Declaratory Judgment Act and termination of this Agreement in addition to the monetary awards as may be appropriate. B) If the District determines that the Town has committed a material breach of this Agreement, the District may file suit in a court of competent jurisdiction in Collin County, Texas, and seek any relief available at law or in equity, including,but not limited to, an action under the Uniform Declaratory Judgment Act and termination of this Agreement in addition to the monetary awards as may be appropriate. ARTICLE NINE BINDING AGREEMENT,TERM,AND AMENDMENT 9.1 Beneficiaries. This Agreement binds and inures to the benefit of the Parties, their successors and assigns. AGREEMENT FOR TIIE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 10 of 16 EXHIBIT E-Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFTl SD1110-Commercial Tract The District shall record this Agreement with the County Clerk in Official Records of Denton County, Texas. This Agreement binds each owner and each future owner of land included within the District's boundaries in accordance with Subsection(c)of the Act. 9.2 Term. This Agreement commences and binds the Parties on the Effective Date and continues for fifteen years afterward ("Term"), and may be extended thereafter at the sole discretion of the Town for up to two (2) consecutive terns of fifteen (15) years upon written notice from the Town to the District at least one hundred eighty (180) days before the expiration of the Term or any extended term of this Agreement. Any rights or privileges of the Parties and their successors or assigns under this Agreement will terminate upon the expiration or termination of this Agreement. 9.3 Amendment. The Parties by mutual written consent may amend the terms of this Agreement at any time. Any amendment to this Agreement shall be recorded within seven (7) days of the execution of the amendment with Denton County. ARTICLE TEN MISCELLANEOUS PROVISIONS 10.1 Notice. Any formal notices or other communications ("Notice") required to be given by one Party to another by this Agreement shall be given in writing addressed to the Party to be notified at the address set forth below for the Party, (i) by delivering the Notice in person(ii) by depositing the Notice in the United States Mail, certified or registered, return receipt requested, postage prepaid, addressed to the Party to be notified, (iii) by depositing the Notice with Federal Express or another nationally recognized courier service guaranteeing next day delivery, addressed to the Party to be notified, or (iv) by sending the Notice by telefax with confirming copy sent by mail. Notice deposited in the United States mail in the manner herein above described shall be deemed effective from and after the date of such deposit. Notice given in any other manner shall be effective only if and when received by the Party to be notified. For the purposes of Notice, the addresses of the Parties, until changed as provided below, shall be as follows: Town: Town of Prosper P. O. Box 307 Prosper, Texas 75078 Attention: Town Administrator Telephone: (972) 347-2304 Facsimile: (972) 247-2111 AGREE\FENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 11 of 16EXHIBITE—Form ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFfr SD#10—Commercial Tract District:Denton County Fresh Water Supply District No. 10 do Crawford and Jordan, LLP 3100 McKinnon Street, Suite 950 Dallas,Texas 75201 Telephone: (214)981-9090 Facsimile: The Parties may from time to time change their respective addresses, and each may specify as its address any other address within the United States of America by giving at least five days written notice to the other Party. If any date or any period provided in this Agreement ends on a Saturday, Sunday, or legal holiday, the applicable period for calculating the notice shall be extended to the first business day following the Saturday, Sunday or legal holiday. 10.2 Time. Time is of the essence in all things pertaining to the performance of this Agreement. 10.3 Waiver. Any failure by a Party to insist upon strict performance by the other Party of any material provision of this Agreement shall not be deemed a waiver thereof or of any other provision hereof, and the Party shall have the right at any time thereafter to insist upon strict performance of any and all of the provisions of this Agreement. 10.4 Reservation of Rights. To the extent not inconsistent with this Agreement, each Party reserves all rights,privileges, and immunities under applicable laws. 10.5 Further Documents. The Parties agree that at any time after execution of this Agreement, they will, upon request of the other Party, execute and deliver the further documents and do the further acts and things as the other Party may reasonably request in order to effectuate the terms of this Agreement. 10.6 Incorporation of Exhibits and Other Documents by Reference. All Exhibits and other documents attached to or referred to in this Agreement are incorporated into this Agreement by reference for the purposes set forth in this Agreement. 10.7 Effect of State and Federal Laws. Notwithstanding any other provision of this Agreement, the District shall comply with all applicable statutes or regulations of the United States, the State of Texas, and Town Ordinances and Town Charter provisions implementing such statutes or regulations. 10.8 Authority for Execution. The Town certifies and represents that the execution of this Agreement is duly authorized and adopted in conformity with the Town Charter and Town Ordinances. The District certifies and represents that the execution of this Agreement is duly authorized and adopted by the Board. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL.JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 12 of 16EXHIBITE—Fong ofStrategic Partnership Agreement lletween the TOIt'n of Prosper,Texas and DCFWSDNIO—Commercial Tract 10.9 Semi-Annual Review. At least semi-annually, the District shall review and confirm, and will notify the Town Planning and Development Department in a form prescribed by the Department, of the accuracy of the list of resale permit holders as provided by the State Comptroller's Office. 10.10 Representations. Each signatory represents this Agreement has been read by the party for which this Agreement is executed and that such party has had an opportunity to confer with its counsel. 10.11 No Third Party Beneficiaries. Nothing in this Agreement shall be construed to create any right in any third party not a signatory to this Agreement, and the parties do not intend to create any third party beneficiaries by entering into this Agreement. 10.12 Assignment/Binding Effect. This Agreement is assignable, in whole or in part, upon the following conditions, all of which must be satisfied before any such assignment shall be valid and enforceable: A) the assignment of the Agreement must be evidenced by a recordable document the "Assignment"), the form of which must be approved in writing by the Parties, such approval not to be unreasonably withheld; B) the Assignment must expressly contain, among other reasonable requirements and/or conditions of the Parties, an acknowledgment and agreement that all obligations, covenants and/or conditions contained in the Agreement will be assumed solely and completely by the assignee, and the contact name, address, phone number, fax number and electronic mail address of the assignee; C) Assignor will file any approved, executed Assignment in the Land Records of Denton County,Texas; and D) Assignor shall provide the other Party with a file-marked copy of the Assignment within ten(10)days of filing the same. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective officers, directors, partners, employees, representatives, agents, vendors, grantees, and/or trustees, heirs, executors, administrators, legal representatives, successors and assigns,as authorized herein. 10.13 State or Federal Laws, Rules, Orders or Regulations. This Agreement is subject to all applicable Federal and State laws and any applicable permits, ordinances, rules, orders and regulations of any local, state or federal governmental authority having or asserting jurisdiction, but nothing contained herein shall be construed as a waiver of any right to question or contest any such law, ordinance,order,rule or regulation in any forum having jurisdiction. AGREEMENT FOR THE REDUCTION OF Tiw EXTRATERRI TORIAL JUR1SDmCTION OF THE TOWN OF PROSPER,TEXAS Page 13of16EXHIBITE—Fare ofStrategic Partnership Agreement Between the Tow,ofProsper;Texas and DCF{rSDN10—Commercial Tract 10. 14 Savings/Severability. The parties hereto specifically agree that in case any one or more of the sections, subsections,provisions, clauses or words of this Agreement or the application of such sections, subsections, provisions, clauses or words to any situation or circumstance should be, or should be held to be, for any reason, invalid or unconstitutional, under the laws or constitutions of the State or the United States of America, or in contravention of any such laws or constitutions, such invalidity, unconstitutionality or contravention shall not affect any other sections, subsections, provisions, clauses or words of this Agreement or the application of such sections, subsections, provisions, clauses or words to any other situation or circumstance, and it is intended that this Agreement shall be severable and shall be construed and applied as if any such invalid or unconstitutional section, subsection, provision, clause or word had not been included herein, and the rights and obligations of the parties hereto shall be construed and remain in force accordingly. 10.15 Venue. All amounts due for the breach of this Agreement, shall be paid and be due in Collin County, Texas, which is the County in which the principal administrative offices of the Town are located. It is specifically agreed among the parties to this Agreement that Collin County, Texas is the place of performance of this Agreement; and in the event that any legal proceeding is brought to enforce this Agreement or any provision hereof, the same shall be brought and venue shall lie in Collin County,Texas. 10.16 Sovereign Immunity. By entering into and executing this Agreement, the Town and the District in no way waive or surrender their sovereign ilrununity. 10.17 Miscellaneous Drafting Provisions. This Agreement shall be deemed drafted equally by all parties hereto. The language of all parts of this Agreement shall be construed as a whole according to its fair meaning, and any presumption or principle that the language herein is to be construed against any party shall not apply. Headings in this Agreement are for the convenience of the parties and are not intended to be used in construing this document. SIGNATURE PAGE TO FOLLOW] REMAINDER OF THIS PAGE BLANK] AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 14 of 16EXIIIRITE—Fong ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFWSD#10—Commercial Traci IN WITNESS WHEREOF, the parties have executed this Agreement in multiple copies, each of which shall be an original, as of the date countersigned by the Town Controller of the Town of Prosper. The Town of Prosper,Texas By: Name: Mike Land Title: Town Manager Address: 113 W. Broadway P. O. Box 307 Prosper,Texas 75078 Fax: (972)347-2111 Date: Denton County Fresh Water Supply District No. 10 By: Name: Robert Tague Title: President Address:do Crawford and Jordan,LLP 19 Briar Hollow Lane, Suite 245 Houston, Texas 77027 Fax: (713)621-3909 Date: AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOW\OF PROSPER,TEXAS Page 15 of 16EXHIBITE-Form ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DC?WSD1110-Commercial Tract Page 1 of 2 To: Mayor and Town Council From: Mike Land, Town Manager Re: Town Council Meeting – Tuesday March 27, 2012 Date: March 22, 2012 Agenda Item: Consider and act on a Ordinance authorizing the limited purpose annexation for the purpose of imposing sales and use tax on property known as Tract No. 2. Description of Agenda Item: On Tuesday December 13, 2011 the Town of Prosper entered into an Agreement with 166 Bryan Road Partners, LP for the Reduction of the Town’s Extraterritorial Jurisdiction west of FM 1385. Included in that agreement there is a reference to the Town entering into three separate Strategic Partnership Agreements with the Denton County Fresh Water District No. 10. Holding the two public hearings, one on February 28th and the other on March 13th are a part of the adoption process. The three agreements for Tracts 1, 2 and 3, all read the same, and address the collection of sales tax and its distribution generated by commercial uses located within the District. The Town will be or will eventually be collecting the full 2% sales tax on the parcels as they are or will be developed. The Town will equally share the 1% sales tax collection with the District (one half to the District, one half to the Town) with the balance of the sales tax collected (the remaining 1%) being retained by the Town. The term of the agreements are all fifteen (15) years with the potential of two (2) fifteen (15) year extensions. Recall that the three parcels being considered are located: 1) the southwest quadrant of the intersection of FM 1385 and Bryan Rd., and 2) the northeast quadrant of the intersection of Fishtrap Rd. and Teel Pkwy 3) and the northwest quadrant of the intersection of Hwy 380 and FM 1385 (Valero). With each agreement, there is a separate ordinance agenda item that also must be approved and follows on the March 27th agenda. Budget Impact: Tract 1 and Tract 2 are not currently developed therefore until they are developed the Town and the District will not be receiving any sales tax. Prosper is a place where everyone matters. ADMINISTRATION Page 2 of 2 Legal Obligations and Review: The language in the Strategic Partnership Agreements was developed by Courtney Kuykendall, the Town’s Attorney. Attached Documents: 1. Ordinance authorizing the Town to annex territory for the limited purpose of imposing sales and use tax on Tract No. 2. 2. Strategic Partnership Agreement for Tract No. 2 between the Town of Prosper and the Denton County Fresh Water District No. 10. Town Staff Recommendation: Town staff recommends that the Town Council approve Ordinance No. 12-09, annexing territory within the boundaries of the Denton County Freshwater Supply District #10 for the Limited Purpose of imposing sales and use tax for Tract No. 2. Limited Purpose Annexation for Tract No. 2 Page 1 607174.1 TOWN OF PROSPER, TEXAS ORDINANCE NO. 12-09 AN ORDINANCE OF THE TOWN OF PROSPER, TEXAS, ANNEXING TERRITORY WITHIN THE BOUNDARIES OF THE DENTON COUNTY FRESHWATER SUPPLY DISTRICT #10 FOR THE LIMITED PURPOSE OF IMPOSING SALES AND USE TAX ON TERRITORY; PROVIDING FOR REPEALING, SAVINGS AND SEVERABILITY CLAUSES; PROVIDING FOR AN EFFECTIVE DATE OF THIS ORDINANCE; AND PROVIDING FOR THE PUBLICATION OF THE CAPTION HEREOF. WHEREAS, the Town of Prosper, Texas (“Prosper”), Denton County Fresh Water Supply District #10 (“District”), 166 Bryan Road Partners, L.P. (“Developer”), and Bryan Road Retail Partners (“Landowner”) previously entered into that certain agreement for the release of a portion of property in Prosper’s extraterritorial jurisdiction, effective December 14, 2011 (“Release Agreement”); and WHEREAS, as a condition of the Release Agreement, the District agreed to enter into three (3) separate strategic partnership agreements with Prosper pursuant to Section 43.0751, Texas Local Government Code, as amended, authorizing limited purpose annexation for the limited purpose of imposing sales and use tax on territory within the boundaries of the District; and WHEREAS, the Town Council of Prosper (“Town Council”) previously investigated and determined that it was in the best interest of Prosper to adopt and execute the strategic partnership agreement attached hereto as Exhibit “A,” and incorporated herein for all purposes (“Strategic Partnership Agreement for Tract No. 2”); and WHEREAS, the governing body of the District, prior to the Town’s adoption and execution, adopted the Strategic Partnership Agreement for Tract No. 2 at a duly called meeting on February 16, 2012 and executed the same on March 15, 2012; and Limited Purpose Annexation for Tract No. 2 Page 2 607174.1 WHEREAS, the Town Council finds that all requisites relative to consideration and adoption of this Ordinance have been complied with pursuant to Chapter 43.0751, Texas Local Government Code, as amended; and WHEREAS, notice of two (2) public hearings concerning the limited purpose annexation of the territory described in Exhibit “A,” was published in a newspaper of general circulation in the Town and in the area to be annexed; and WHEREAS, a copy of the Strategic Partnership Agreement for Tract No. 2 has been on file in the office of the Town Secretary and made available to the public; and WHEREAS, the two (2) public hearings were held during Town Council meetings on February 28, 2012 and March 13, 2012, and concluded after providing an opportunity for all persons present to be heard with respect to the limited purpose annexation associated with the Strategic Partnership Agreement for Tract No. 2; and WHEREAS, the Town Council finds that all legal notices, hearings, procedures and publishing requirements for annexation have been performed and completed in the manner and form set forth by law. NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS: SECTION 1: Findings Incorporated. The findings set forth above are incorporated into the body of this Ordinance as if fully set forth herein. SECTION 2: Property Annexed for Limited Purposes. The Property described as follows is hereby annexed to Prosper, to-wit: BEING a tract of land out of the Louisa Netherly Survey, Abstract No. 962, Denton County, Texas containing 5.293 acres of land, more or less; said tract is more particularly described in Exhibit "A" attached hereto and incorporated herein for all purposes. Limited Purpose Annexation for Tract No. 2 Page 3 607174.1 The present boundary limits of Prosper are amended to include the Property described in Exhibit “A” for limited purposes. The Property is within the extraterritorial jurisdiction and adjacent to the town limits of the Town of Prosper, Texas in Denton County, Texas. The Property is annexed into the Town for the limited purpose of imposing sales and use tax. SECTION 3: Rights and Privileges. From and after the passage of this Ordinance, the Property shall be a part of Prosper for the sole, limited purpose set forth herein. SECTION 4: Official Map and Boundaries Amended. The official map and boundaries of Prosper are hereby amended to include the Property as part of Prosper for the limited purposes described herein. A certified copy of this Ordinance shall be filed in the County Clerk's Office of Denton County. SECTION 5: Penalty Provision. Any person, firm, corporation or business entity violating this Ordinance, as it exists or may be amended, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be fined a sum not exceeding Five Hundred Dollars ($500.00). Each continuing day's violation under this Ordinance shall constitute a separate offense. The penal provisions imposed under this Ordinance shall not preclude Prosper from filing suit to enjoin the violation. Prosper retains all legal rights and remedies available to it pursuant to local, state and federal law. SECTION 6: Savings/Repealing Clause. All provisions of any ordinance in conflict with this Ordinance are hereby repealed to the extent they are in conflict; but such repeal shall not abate any pending prosecution for violation of the repealed ordinance, nor shall the repeal prevent a prosecution from being commenced for any violation if occurring prior to the repeal of the ordinance. Any remaining portions of said ordinances shall remain in full force and effect. Limited Purpose Annexation for Tract No. 2 Page 4 607174.1 SECTION 7: Severability. Should any section, subsection, sentence, clause or phrase of this Ordinance, be declared unconstitutional or invalid by a court of competent jurisdiction, it is expressly provided that any and all remaining portions of this Ordinance shall remain in full force and effect. Prosper hereby declares that it would have passed this Ordinance, and each section, subsection, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, and phrases be declared unconstitutional or invalid. SECTION 8: Effective Date. This Ordinance shall become effective from and after its adoption and publication as required by the Town Charter and by law. PASSED AND APPROVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS on this 27th day of March, 2012. ______________________________ Ray Smith, Mayor ATTESTED TO AND CORRECTLY RECORDED BY: APPROVED AS TO FORM: _________________________ _________________________________ Amy Piukana, Town Secretary Abernathy, Roeder, Boyd & Joplin, P.C. Courtney A. Kuykendall, Town Attorney DATE(S) OF PUBLICATION: _________________________________________________, Prosper Press Limited Purpose Annexation for Tract No. 2 Page 5 607174.1 EXHIBIT “A” (Strategic Partnership Agreement for Tract No. 2) Legal Description of Tract Field notes to all that certain tract of land situated in the William Lumpkin League and Labor Survey, Abstract Number 730, Denton County, Texas, and being a part of the tract of land described as Tract Three in the deed to Comanche Ridge Properties Associates, L.P., as recorded in Volume 5311, Page 4327, Real Property Records of Denton County, Texas, and being more particularly described as follows; Commencing at a 5/8" iron rod found at the Northeast corner of said Tract Three at the intersection of the approximate centerline of Bryan Road and the west right-of-way line of F.M. Road No. 1385, and at the Southeast corner of a tract of land described in the deed to C.M. Jackson and wife, Oro Jackson, as recorded in Volume 546, Page 12, said Real Property Records; Thence North 88 degrees 28 minutes 18 seconds West a distance of 20.00 feet to a point for corner; Thence South 01 degrees 31 minutes 34 seconds West a distance of 40.00 feet to a %2" capped iron rod set for the Point of Beginning; Thence South 01 degrees 31 minutes 36 seconds West a distance of 909.48 feet to a %2" capped iron rod set for corner; Thence North 88 degrees 28 minutes 18 seconds West a distance of 719.01 feet to a %2" capped iron rod set for corner; Thence North 01 degrees 31 minutes 36 seconds East a distance of 909.48 feet to a %2" capped iron rod set for corner in the south line of a 40' strip of land dedicated as right-of-way per Cabinet X, Page 264, Plat Records of Denton County,Texas; Thence South 88 degrees 28 minutes I8 seconds East a distance of 719.01 feet to the Point of Beginning and enclosing 15.012 acres of land more or less. AGREE\IE\T FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 16 of 16EXHIBITE—Form ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFIYSD#10—Commercial Tract EXHIBIT"F" Form of STRATEGIC PARTNERSHIP AGREEMENT BETWEEN THE TOWN OF PROSPER, TEXAS, AND DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. 10 THE STATE OF TEXAS § COUNTY OF DENTON § This STRATEGIC PARTNERSHIP AGREEMENT(this"Agreement") is entered into as of the Effective Date between the TOWN OF PROSPER, TEXAS, a home-rule municipality situated in Collin County and Denton County, Texas, acting through its governing body, the Town Council of the Town of Prosper, Texas (the "Town"), and DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. 10 (the "District"), a conservation and reclamation district and political subdivision of the State of Texas created pursuant to Article XVI, Section 59 of the Texas Constitution, and operating under Chapters 49, 51, and, for certain puposes, 53 of the Texas Water Code,as amended. RECITALS 1. Texas Local Government Code, §43.0751 (the"Act") authorizes the Town and certain conservation and reclamation districts to negotiate and enter into a strategic partnership agreement by mutual consent; 2. This Agreement provides for the limited purpose annexation of a tract of land in the District, situated wholly within Denton County, Texas, as more specifically described in Exhibit A" ("Tract"), attached hereto and incorporated herein for all purposes, by the Town for certain purposes including,but not limited to, the imposition of a sales and use tax within the Tract; 3. As required by the Act, the Town held public hearings on 2011 and 2011 at p.m. at Town Hall, and the District held public hearings on 2011, and 2011 at __ p.m. at Texas, at which members of the public were given the opportunity to present testimony or evidence regarding the proposed Agreement, and the Town and the District made copies of the proposed Agreement available, and gave notice of the hearings prior to the public hearings in accordance with the terms of the Act; 4. The District has, by formal action, after public hearing approved this strategic partnership agreement on in open session at a meeting held in accordance with the Open Meetings Act; AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 1 of 17EXHIBITF-Form of Strategic Partnership Agreement Between the Town of Prosper,Texas and DCFIVSDNIO—Artesia Tract 5. The Town has, by formal action, after public hearings approved this strategic partnership agreement on in open session at a meeting held in accordance with the Open Meetings Act; 6. The Town and the District wish to enter into a strategic partnership agreement to provide the terms under which services will be provided by the District to the Tract and under which the District will continue to exist for an extended period of time with respect to the Tract after the Tract of land within the District is annexed for limited purposes; and 7. Pursuant to Section 43.0751(c) of the Local Government Code, this Agreement shall become effective on the date of adoption of this Agreement by the Town and the District(the Effective Date"). Upon adoption, this Agreement shall be filed by the District in the real property records of Denton County,Texas. NOW, THEREFORE, for and in consideration of.the mutual agreements, covenants, and conditions contained herein, and other good and valuable consideration, the Town and District agree as follows: THE PARTIES AGREE AS FOLLOWS: ARTICLE ONE FINDINGS The Town and the District find and declare: 1. 1 The Act authorizes the Town and the District to enter into this Agreement to define the terms tinder which services, if any, will be provided to the Town and the District and under which the District will continue to exist after the Tract is annexed for limited purposes pursuant to this Agreement; and 1.2 This Agreement does not require the District to provide revenue to the Town solely for the purpose of an agreement with the Town to forgo annexation of the District; and 1.3 This Agreement provides benefits to the Town and the District, including revenue, services, or regulations which are reasonable and equitable with regard to the benefits provided to the other Party; and 1.4 All the terms contained in this Agreement are lawful and appropriate to provide for the provision of municipal services; and 1.5 The Town and the District negotiated this Agreement by mutual consent; the terms of the Agreement are not a result of the Town's Annexation Plan or any arbitration between the Town and the District. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL.JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 2 of 17EXHIBITF-Form of Strategic Partnership Agreement Between the Town of Prosper.Texas and DC IPSDN10-Artesia Tract ARTICLE TWO DEFINITIONS Unless the context requires otherwise, and in addition to the terms defined above, the following terms used in this Agreement will have the meanings set out below: 2.1 "Act"means Texas Local Govermnent Code, §43.0751 and any amendments thereto. 2.2 "Additional Tracts" means any property within the District's boundaries that is not located within the extraterritorial jurisdiction of a municipality other than the Town designated for commercial use,other than the Tract. 2.3 "Agreement" means this strategic partnership agreement between the Town and the District. 2.4 "Board"means the Board of Directors of the District. 2.5 "Commercial Taxpayer" means a person, entity, business, or corporation who provides receipts from the sale and use at retail of taxable items to the Comptroller. 2.6 "Comptroller"means the Comptroller of Public Accounts of the State of Texas. 2.7 "District" means Denton County Fresh Water Supply District No. 10, a conservation and reclamation district created and operating under Chapters 49, 51, and, for certain purposes, 53 of the Texas Water Code, located wholly within Denton County,Texas. 2. 8 "ETJ"means the extraterritorial jurisdiction of the Town. 2.9 "Government Code"means the Texas Govermnent Code and any amendments thereto. 2.10 "Implementation Date" means the date the limited-purpose annexation ordinance is passed by Town Council pursuant to Section 3.1. 2.11 "Local Government Code" means the Texas Local Government Code and any amendments thereto. 2.12 "Party" or "Parties" means a party or the parties to this Agreement, being the Town and the District. 2.13 "Sales and Use Tax"means the sales and use tax authorized to be imposed in the Tract by the Act and Tax Code Chapter 321. 2.14 "Tax Code"means the Texas Tax Code and any amendments thereto. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 3 of 17EXHIBITF—Form ofStrategic Partnership Agreement Between the Town of-Prosper,Texas and DC? SD110—Artesia Tract 2.15 "Town" means the Town of Prosper, Texas, a general law municipality situated in Collin County and Denton County,Texas. 2.16 "Town Charter"means the Charter of the Town and any amendments thereto. 2.17 "Town Code" means the Code of Ordinances of the Town and any amendments thereto. 2.18 "Town Council" means the Town Council of the Town or any successor governing body. 2.19 "Town Manager"means the Town Manager of the Town or his or her designee. 2.20 "Tract"means the tract of land situated wholly in Denton County, Texas, described in Exhibit"A"attached hereto and incorporated herein for all purposes. ARTICLE THREE LIMITED-PURPOSE ANNEXATION 3.1 Generally. In accordance with the terms of that Agreement for the Reduction of the Extraterritorial Jurisdiction of the Town of Prosper, dated December 13, 2011, the Town shall annex the Tract for limited purposes. 3. 2 Limited Purpose Annexation of Additional Tracts. In the event the location of proposed commercial development within the District is changed or additional property designated for commercial development is added, the Town Council may annex the Additional Tracts for the limited purpose of collecting Sales and Use Tax revenues within the Additional Tracts pursuant to the Act subject to the execution of an agreement between the Town and the District substantially similar in form to this Agreement. 3. 3 Property Taxes and District Liability for Debts of the Town. During the Term (as defined in Section 9.2) of this Agreement: (i) neither the District nor any owners of taxable property within the District is liable for any present or future debts of the Town, and (ii) current and future ad valorem taxes levied by the Town will not be levied on taxable property within the District, except as provided for in Article VII. 3.4 Powers and Functions Retained by the District. This Agreement does not limit in any manner the rights,powers, functions,and authority of the District. 3.5 Extraterritorial Jurisdiction. This Agreement shall not affect or othenvise change any Town limits or extraterritorial jurisdiction of the Town except as specifically set forth herein. This Agreement shall not inure to the benefit of any party not a signatory to this Agreement,save and except assignees or successors in interests as provided herein. The Town may regulate those AGREEMENT r'OR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 4 o1'17EXHIHITF—Form of Strategic Partnership Agreement Between the Town ofProsper Texas and DCFIVSD1110—Artesia 7Yact portions of the District land located within the Town's ETJ in the same manner in which it may regulate other areas within the extraterritorial jurisdiction of the Town, subject to any other agreements between the Town and the District. ARTICLE FOUR VOTING RIGHTS IN THE DISTRICTS 4.1 Generally. Upon annexation of the Tract for limited purposes by the Town, any qualified voters within the Tract may vote in Town elections, pursuant to Local Government Code§43. 130. Voting rights are subject to all state and federal laws and regulations. 4.2 Notice. The Town will comply with all the notice requirements as set forth in §43. 130 of the Local Government Code, as it now exists or hereafter amended. ARTICLE FIVE SALES AND USE TAX 5.1 Imposition of the Town's Sales and Use Tax. Pursuant to Subsection(k)of the Act, the Town shall impose a Sales and Use Tax within the Tract upon the limited-purpose annexation of the Tract, The Sales and Use Tax shall be imposed on the receipts from the sale and use at retail of taxable items at the rate of two percent(2%) or the rate specified under future amendments to Chapter 321 of the Tax Code. The Sales and Use Tax shall take effect on the date described in Tax Code§321. 102. 5.2 Payment of Sales and Use Tax. Within thirty (30) days from the establishment of a District utility service account for a Commercial Taxpayer in the Tract, the District shall inspect the building for which service is requested and provide written notice of the name of(a) the Commercial Taxpayer requesting utility service, and(b) each Commercial Taxpayer operating a commercial business at such building. Each month thereafter, the District shall inspect the Tract and provide a written report to the Town updating such information in order to maintain a current listing of all Commercial Taxpayers operating within the Tract. Based upon the names reported by the Town, the Comptroller shall create a sales tax area report for the Town. The area sales tax report shall identify the aggregate total amount of local sales tax revenue the group of or individual Commercial Taxpayers in the Tract contributed to the Town's total allocation for each month. Subject to the terms and conditions of this Agreement, the Town and District agree to share equally the 1% Sales and Use Tax revenues remaining subsequent to payment of the other 1% Sales and Use Tax revenues to the Prosper Economic Development Corporation and Town property tax relief as required by state law (the "District's Portion") that are reported on the monthly area sales tax report provided by the Comptroller and received by the Town from the Comptroller after the date of the limited-purpose annexation of the Tract. The Town shall deliver the District's Portion of the Sales and Use Tax revenues to the District within thirty (30) days of the Town's receipt of the sales report from the Comptroller. Government Code Chapter AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 5.01 17 EXHIBIT F—Form ofStrategic Partnership Agreement Between the Tone of Prosper,Texas and DCFIYSD#10—Artesia Tract 2251 shall govern and provide the penalty if the Town fails to deliver the District's portion in a timely manner. For the purposes of determining the applicable overdue date under Chapter 2251, the Town is deemed to have received an invoice from the District on the date the Town receives the sales tax report from the Comptroller without further action from the District. In the event the Comptroller ceases to provide a monthly area sales report, then the Parties agree to jointly develop another method of reporting Sales and Use Tax revenues to the Town. The Town shall deliver to the District a condensed version of each monthly area sales tax report provided by the Comptroller, containing only the contents of the sales tax report relating to retail sales and retailers in the Tract within 30 days of the Town's receipt of the sales tax report. 5.3 Notification of Comptroller. The Town shall send notice of this Agreement and the limited-purpose annexation of the Tract to the Comptroller within three (3) days of the hnplementation Date in the manner provided by Tax Code§321.102. The Town shall send to the District a copy of.any notice from the Comptroller delaying the effectiveness of the Sales and Use Tax in the Tract. 5.4 District Use of Sales and Use Tax Revenue. The District shall use the Sales and Use Tax revenue provided in Section 5.2 only for purposes for which the District is lawfully authorized to use its ad valorem tax revenues or other revenues. 5.5 District Audit Rights. The District may audit the Sales and Use Tax collections by the Town solely to determine whether the Sales and Use Tax revenue payments provided by Section 5.2 have been made to the District in accordance with this Agreement. Any audit shall be made at the District's sole cost and expense and may be performed at any time during the Town's regular business hours by an auditor hired by the District on thirty(30)days written notice to the Town. For the purpose of any audits, the Town shall maintain and make available to the District or its representatives all books, records, documents and other evidence of accounting procedures or practices in whatever form sufficiently maintained to reflect the collection of all Sales and Use Tax revenues that are subject to this Agreement. 5.6 Town Audit Rights. The District is required by law to prepare an annual audit within one hundred twenty (120) days after the close of the District's fiscal year. The District shall provide a copy of its annual audit to the Town within thirty (30) days after the audit is completed. The Town may audit the District's expenditures made with the Sales and Use Tax revenue paid under Section 5.2, solely to determine whether the expenditures have been made by the District in accordance with Section 5.4. Any audit shall be made at the Town's sole cost and expense and may be performed at any time during regular business hours by the Town's internal auditors or an independent auditing firm on thirty(30) days written notice to the District. For the purpose of any audits, the District shall maintain and make available to the Town or its representatives all books, records, documents and other evidence of accounting procedures or AGREEMENT FOR THE REDUCTION OFTIIE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 6 of 17EXHIBITF-Fonrt ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFIESD1110-Artesia 7fact practices in whatever form maintained sufficient to reflect the expenditure of all Sales and Use Tax revenues that are subject to this Agreement. ARTICLE SIX SERVICES PROVIDED BY THE DISTRICT AND THE TOWN 6.1 Water, Sewer, and Drainage Services. Subject to the applicable terms and provisions of that certain Merged, Amended and Restated Agreement Related to Water and Sanitary Sewer Service dated October 1, 2007 between Mustang Special Utility District ("Mustang SUD") and the District (the "Water and Sewer Agreement"), that certain Upper Trinity Regional Water District Regional Treated Water System Participating Customer Contract dated August 29, 2001, as amended and that certain Upper Trinity Regional Water District Northeast Regional Water Reclamation System Participating Customer Contract dated August 29, 2001, as amended, each between the Upper Trinity Regional Water District ("Upper Trinity") and the District collectively, "Upper Trinity Contracts"), reimbursement agreements between the developers or owners of the Tract and the District, and Sections 49.215(d) and 13.248, Texas Water Code, the District shall acquire,construct, own,operate and maintain a water,wastewater, and drainage system in the District and the Tract. The Town is under no obligation to provide water, sewer or drainage services to the Tract. 6.2 Operation and Maintenance, Subject to Section 6.1 above, the District agrees to operate and maintain water, wastewater, and drainage service in the Tract at the same level as the District has operated and maintained them before the Implementation Date. The Town may periodically inspect the District's water,wastewater, and drainage facilities. ARTICLE SEVEN FULL-PURPOSE ANNEXATION 7.1 No Full-Purpose Annexation. Town agrees that it will not annex all or part of the District or commence any action to annex all or part of the District for full purposes during the Term(as defined in Section 9.2). 7.2 Full Purpose Annexation of the Tract. The Town and District acknowledge and agree that a full purpose annexation contemplates, among other things, the annexing authority solely collecting ad valorem taxes in exchange for the landowner receiving municipal services Municipal Services") as required under §43.056, Texas Local Government, as amended. However, §43.0751 (f)(5), Texas Local Government Code, authorizes the Town and District to agree to a full purpose annexation on terms and conditions acceptable to the Town and the District. Upon expiration of the Term of this Agreement, to the extent permitted by Section 43.075l0)(5) or any other applicable provision of the Local Government Code, the Town and District may enter into a full purpose annexation agreement with regards to the Tract ("Full Purpose Annexation Agreement"). As such, and at a minimum, the parties acknowledge and AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 7 of 17 EXHIBIT F—Form ofStrategic Partnership Agreement Between the RAM of Prosper,Texas and DCFIi SD#IO—Artesia Traci agree that should a Full Purpose Annexation Agreement be desired by the parties, the District and Town anticipate that the Town may not be providing some, or possibly all, of the Municipal Services to the Tract. Should the Town desire not to provide all or a portion of the Municipal Services to the Tract, the Parties acknowledge and agree that one of the required provisions of the Full Purpose Annexation Agreement will provide that the Town shall assess only such ad valorem taxes on the Tract which are commensurate with the costs associated with the Municipal Services provided by the Town to the Tract. Municipal Services shall include, but not be limited to, administration, police, fire, dispatch, fire marshal, streets, library, parks, municipal court, inspections, code enforcement, planning, engineering, and an interest and sinking fund. The parties further acknowledge and agree that any Full Purpose Annexation Agreement shall include a provision to the effect that the District shall continue to have and exercise all functions, powers, and authority otherwise vested in the District, including without limitation the right to issue bonds, notes or other obligations, to provide services and facilities to and to impose ad valorem taxes on or other fees and charges to the property located within the Tract. The Town expressly acknowledges and agrees that neither the terms of this Agreement nor the Full Purpose Annexation Agreement shall subject the District to any consents, approvals, conditions or requirements of the Town with respect to the design and construction of facilities, the annexation of land by the District; the issuance and sale of bonds, notes or other obligations by the District, or the assessment of ad valorem taxes or fees or charges for services by the District. If a Full Purpose Annexation Agreement is executed between the Parties, the Town shall have no further obligation to pay to the District the District portion of the Sales and Use Tax revenues collected from the Tract. 7.3 Exercise of Full Purpose Annexation Option at Termination of Agreement. On or before the expiration of Term of this Agreement, the Town Manager shall evaluate whether the Town should negotiate a new strategic partnership agreement with the District, negotiate and execute a Full Purpose Annexation Agreement as provided in Section 7.2 above or allow this Agreement to expire. The Town Manager shall make a recommendation to the Town Council regarding the negotiation of a new strategic partnership agreement,the negotiation and execution of a Full Purpose Annexation Agreement, or the expiration of this Agreement. If the Town Manager recommends that the Town negotiate a new strategic partnership agreement, or negotiate and execute a Full Purpose Annexation Agreement , and the Town Council approves the recommendation, the Town shall begin proceedings to enter into a new strategic partnership agreement, or negotiate and execute a Full Purpose Annexation Agreement at the end of the Term of this Agreement as applicable. If the Town Manager recommends that the Town allow this Agreement to terminate upon the expiration of the initial fifteen (15) years, and the Town Council agrees, or if the Town Council rejects the Town Manager's recommendation to negotiate a new strategic partnership agreement, or to negotiate and execute a Full Purpose Annexation Agreement, the Town may begin proceedings to annex the District for full purposes or disannex the Tract for limited purposes if authorized under the applicable provision of the Local Government Code. If the Town decides to annex the District for full purposes or disannex the AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 3 of 17EXHIBITF—Form of Strategic Partnership Agreement Between the Town of Prosper Texas and DCF{ISD#10—Artesia Tract Tract and has the authority to do so, the Town may institute proceedings to accomplish such full purpose annexation or disanmexation to be effective upon the termination of this Agreement and according to the applicable provisions of the Local Government Code and state law. ARTICLE EIGHT MATERIAL BREACH,NOTICE AND REMEDIES 8.1 Material Breach of Agreement. It is the intention of the Parties to this Agreement that the District and the Town be regulated in accordance with the terms of this Agreement. A material breach of this Agreement by the District includes, without limitation, any one or more of the following: A) Failure of the District to act in good faith in the annexation of the Tract by the Town for limited purposes as authorized by this Agreement;or A material breach of this Agreement by the Town includes,without limitation, any one or more of the following: A) Any attempt by the Town to annex the District for full purposes during the Term of this Agreement; or B) Failure of the Town to pay to the District the District's share of the Sales and Use Tax, as provided in Article V. If a Party to this Agreement believes that another Party has, by act or omission, committed a material breach of this Agreement, the provisions of this Article shall govern the remedies for breach of this Agreement. 8.2 Notice of District's Default. The Town shall notify the District in writing of an alleged failure by the District to comply with a provision of this Agreement, describing the alleged failure with reasonable particularity. The District shall, within thirty(30) days after receipt of the notice or a longer period of time as the Town may specify in the notice, either cure the alleged failure or, in a written response to the Town, either present facts and arguments in refutation or excuse of the alleged failure or state that the alleged failure will be cured and set forth the method and time schedule for accomplishing the cure. The Town shall determine(i)whether a failure to comply with a provision has occurred; ii) whether the failure is excusable; and (iii) whether the failure has been cured or will be cured by the District. The District shall make available to the Town, if requested, any records, documents or other inforination necessary to make the determination. If the Town determines that a failure to comply with a provision has occurred and that the failure is not excusable and has not been or will not be cured by the District in a manner and in AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL.JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 9of17 EXHIBIT F—Fonn ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCF1VSD#IO—Artesia Tract accordance with a schedule reasonably satisfactory to the Town, then the Town may exercise the applicable remedy under Section 8.4(A). 8.3 Notice of Town's Default. The District shall notify the Town Manager in writing specifying any alleged failure by the Town to comply with a provision of this Agreement, describing the alleged failure with reasonable particularity. The Town shall, within thirty (30) days after receipt of the notice or the longer period of time as the District may specify in the notice, either cure the alleged failure or, in a written response to the District, either present facts and arguments in refutation or excuse of the alleged failure or state that the alleged failure will be cured and set forth the method and time schedule for accomplishing the cure. The District shall determine (i) whether a failure to comply with a provision has occurred; (ii) whether the failure is excusable; and(iii)whether the failure has been cured or will be cured by the Town. The Town shall make available to the District, if requested, any records, documents or other information necessary to make the determination. If the District determines that a failure to comply with a provision has occurred and that the failure is not excusable and has not been or will not be cured by the Town in a manner and in accordance with a schedule reasonably satisfactory to the District, then the District may exercise the applicable remedy under Section 8.4(B). 8.4 Remedies. A) If the Town determines that the District has committed a material breach of this Agreement, the Town may file suit in a court of competent jurisdiction in Collor County,Texas, and seek any relief available at law or in equity, including, but not limited to, an action under the Uniform Declaratory Judgment Act and termination of this Agreement in addition to the monetary awards as may be appropriate. B) If the District determines that the Town has committed a material breach of this Agreement, the District may file suit in a court of competent jurisdiction in Collin County,Texas, and seek any relief available at law or in equity, including, but not limited to, an action under the Uniform Declaratory Judgment Act and termination of this Agreement in addition to the monetary awards as may be appropriate. ARTICLE NINE BINDING AGREEMENT,TERM,AND AMENDMENT 9.1 Beneficiaries. This Agreement binds and inures to the benefit of the Parties, their successors and assigns. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 10 of 17EX9RDITF-Form ofStrategic Partnership Agreement Between the'Town ofProsper,Texas and DCFWSD#10-Artesia Tract The District shall record this Agreement with the County Clerk in Official Records of Denton County, Texas. This Agreement binds each owner and each future owner of land included within the District's boundaries in accordance with Subsection(c)of the Act. 9.2 Term. This Agreement commences and binds the Parties on the Effective Date and continues for fifteen years afterward ("Tenn"), and may be extended thereafter at the sole discretion of the Town for up to two (2) consecutive terms of fifteen (15) years upon written notice from the Town to the District at least one hundred eighty(180) days before the expiration of the Term or any extended term of this Agreement. Any rights or privileges of the Parties and their successors or assigns under this Agreement will terminate upon the expiration or termination of this Agreement. 9.3 Amendment. The Parties by mutual written consent may amend the terms of this Agreement at any time. Any amendment to this Agreement shall be recorded within seven (7) days of the execution of the amendment with Denton County. ARTICLE TEN MISCELLANEOUS PROVISIONS 10.1 Notice. Any formal notices or other communications ("Notice") required to be given by one Party to another by this Agreement shall be given in writing addressed to the Party to be notified at the address set forth below for the Party, (i) by delivering the Notice in person (ii) by depositing the Notice in the United States Mail, certified or registered, return receipt requested, postage prepaid, addressed to the Party to be notified, (iii) by depositing the Notice with Federal Express or another nationally recognized courier service guaranteeing next day delivery, addressed to the Party to be notified, or (iv) by sending the Notice by telefax with confirming copy sent by mail. Notice deposited in the United States mail in the manner -herein above described shall be deemed effective from and after the date of such deposit. Notice given in any other manner shall be effective only if and when received by the Party to be notified. For the purposes of Notice, the addresses of the Parties, until changed as provided below, shall be as follows: Town: Town of Prosper P. O. Box 307 Prosper,Texas 75078 Attention: Town Administrator Telephone: (972)347-2304 Facsimile: (972) 247-2111 AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEAS Page II of/7EXHIBITF—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFH'SDNIO—Artesia Tract District:Denton County Fresh Water Supply District No. 10 c/o Crawford and Jordan, LLP 3100 McKinnon Street, Suite 950 Dallas,Texas 75201 Telephone: (214)981-9090 Facsimile: The Parties may from time to time change their respective addresses, and each may specify as its address any other address within the United States of America by giving at least five days written notice to the other Party. If any date or any period provided in this Agreement ends on a Saturday, Sunday, or legal holiday, the applicable period for calculating the notice shall be extended to the first business day following the Saturday, Sunday or legal holiday. 10.2 Time. Time is of the essence in all things pertaining to the performance of this Agreement. 10.3 Waiver. Any failure by a Party to insist upon strict performance by the other Party of any material provision of this Agreement shall not be deemed a waiver thereof or of any other provision hereof, and the Party shall have the right at any time thereafter to insist upon strict perfol7nance of any and all of the provisions of this Agreement. 10.4 Reservation of Rights. To the extent not inconsistent with this Agreement, each Party reserves all rights,privileges, and immunities under applicable laws. 10.5 Further Documents. The Parties agree that at any time after execution of this Agreement, they will, upon request of the other Party, execute and deliver the further documents and do the further acts and things as the other Party may reasonably request in order to effectuate the terms of this Agreement. 10.6 Incorporation of Exhibits and Other Documents by Reference. All Exhibits and other documents attached to or referred to in this Agreement are incorporated into this Agreement by reference for the purposes set forth in this Agreement. 10.7 Effect of State and Federal Laws. Notwithstanding any other provision of this Agreement, the District shall comply with all applicable statutes or regulations of the United States, the State of Texas, and Town Ordinances and Town Charter provisions implementing such statutes or regulations. 10.8 Authority for Execution. The Town certifies and represents that the execution of this Agreement is duly authorized and adopted in conformity with the Town Charter and Town Ordinances. The District certifies and represents that the execution of this Agreement is duly authorized and adopted by the Board. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OP THE TOWN OF PROSPER,TEXAS Page 12 of 17EXHIBITF—Fonn ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFWSD#10—Artesia Tf act 10.9 Semi-Annual Review. At least semi-annually, the District shall review and confirm, and will notify the Town Planning and Development Department in a form prescribed by the Department, of the accuracy of the list of resale permit holders as provided by the State Comptroller's Office. 10.10 Representations. Each signatory represents this Agreement has been read by the party for which this Agreement is executed and that such party has had an opportunity to confer with its counsel. 10.11 No Third Party Beneficiaries. Nothing in this Agreement shall be construed to create any right in any third party not a signatory to this Agreement, and the parties do not intend to create any third party beneficiaries by entering into this Agreement. 10.12 Assignment/Binding Effect. This Agreement is assignable, in whole or in part, upon the following conditions, all of which must be satisfied before any such assignment shall be valid and enforceable: A) the assignment of the Agreement must be evidenced by a recordable document the "Assignment"), the form of which must be approved in writing by the Parties, such approval not to be unreasonably withheld; B) the Assignment must expressly contain, among other reasonable requirements and/or conditions of the Parties, an acknowledgment and agreement that all obligations, covenants and/or conditions contained in the Agreement will be assumed solely and completely by the assignee, and the contact name, address, phone number, fax number and electronic mail address of the assignee; C) Assignor will file any approved, executed Assignment in the Land Records of Denton County, Texas; and D) Assignor shall provide the other Party with a file-marked copy of the Assignment within ten(10)days of filing the same. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective officers, directors, partners, employees, representatives, agents, vendors, grantees, and/or trustees, heirs, executors, administrators, legal representatives, successors and assigns, as authorized herein. 10.13 State or Federal Laws,Rules, Orders or Regulations. This Agreement is subject to all applicable Federal and State laws and any applicable permits, ordinances, rules, orders and regulations of any local, state or federal governmental authority having or asserting jurisdiction, but nothing contained herein shall be construed as a waiver of any right to question or contest any such law,ordinance, order, rule or regulation in any forum having jurisdiction. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 13 of 17 Exxlwlr r•—Fenn of Strategic Partnership Agreement Between the Toscn of Prosper,Texas and DCPfr'SD##10—Artesia 7)-act 10. 14 Savings/Severability. The parties hereto specifically agree that in case any one or more of the sections, subsections,provisions, clauses or words of this Agreement or the application of such sections, subsections, provisions, clauses or words to any situation or circumstance should be, or should be held to be, for any reason, invalid or unconstitutional, under the laws or constitutions of the State or the United States of America,or in contravention of any such laws or constitutions, such invalidity, unconstitutionality or contravention shall not affect any other sections, subsections, provisions, clauses or words of this Agreement or the application of such sections, subsections, provisions, clauses or words to any other situation or circumstance, and it is intended that this Agreement shall be severable and shall be construed and applied as if any such invalid or unconstitutional section, subsection, provision, clause or word had not been included herein, and the rights and obligations of the parties hereto shall be construed and remain in force accordingly. 10. 15 Venue. All amounts due for the breach of this Agreement, shall be paid and be due in Collin County, Texas, which is the County in which the principal administrative offices of the Town are located. It is specifically agreed among the parties to this Agreement that Collin County, Texas is the place of performance of this Agreement; and in the event that any legal proceeding is brought to enforce this Agreement or any provision hereof, the same shall be brought and venue shall lie in Collin County,Texas. 10. 16 Sovereign Immunity. By entering into and executing this Agreement, the Town and the District in no way waive or surrender their sovereign immunity. 10.17 Miscellaneous Drafting Provisions. This Agreement shall be deemed drafted equally by all parties hereto. The language of all parts of this Agreement shall be construed as a whole according to its fair meaning, and any presumption or principle that the language herein is to be construed against any party shall not apply. Headings in this Agreement are for the convenience of the parties and are not intended to be used in construing this document. IN WITNESS WHEREOF, the parties have executed this Agreement in multiple copies, each of which shall be an original, as of the date countersigned by the Town Controller of the Town of Prosper. SIGNATURE PAGE TO FOLLOW] REMAINDER OF THIS PAGE BLANK] AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TORN OF PROSPER,TEXAS Page 14 of 17 EXHIBIT F-Form ofStrategic Partner ship Agreement Between the Town ofProsper,Texas and DCF{i'SLI#10-Artesia fl act IN WITNESS WHEREOF, the parties have executed this Agreement in multiple copies, each of which shall be an original, as of the date countersigned by the Town Controller of the Town of Prosper. The Town of Prosper,Texas By: Name: Mike Land Title: Town Manager Address: 113 W. Broadway P. O. Box 307 Prosper,Texas 75078 Fax: (972) 347-2111 Date: Denton County Fresh Water Supply District No. 10 By: Name: Robert Tague Title: President Address:do Crawford and Jordan,LLP 19 Briar Hollow Lane, Suite 245 Houston,Texas 77027 Fax: (713)621-3909 Date: AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 15 of 17 EXHIBIT F—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFI TD#10—Artesia 7Yact EXHIBIT"A" Legal Description of Tract BEING a tract of land situated in the LOUISA NETHERLY SURVEY, ABSTRACT NO. 962,in Denton County, Texas, and being a portion of a called 227.80 acre tract described in a deed to Sealed Bid DFW, L.P., recorded in Volume 5246, Page 1851, Real Property Records, Denton County,Texas,and being more particularly described as follows: COMMENCING at a Rail Road Spike found at the intersection of the approximate center of Fishtrap Road (an undedicated public road) with the approximate center of Fields Road (an undedicated public road) for the most southerly southwest corner of a called 60.049 acre tract of land described as Tract V in a deed to Corona Artesia LLC, recorded as Document Number 2008-34098 of said Real Property Records and the northwest corner of a called 162.722 acre tract of land described in a deed to Tommie D. Glen, Trustee, Jackson-Gray Real Estate Exchange Trust, recorded in Volume 1001,Page 933 of said Real Property Records; THENCE North 89 degrees 52 minutes 26 seconds East, along the common boundary between said 60.049 acre tract and said 162.722 acre tract, a distance of 60.01 feet to a PK Nail found in the approximate center of Fishtrap Road for the most southerly southeast corner of said 60.049 acre tract and the southwest corner of a 60-foot right-of-way dedication to the State of Texas by plat recorded as Artesia Phase 1A, an addition to Denton County, according to the plat thereof recorded in Cabinet X,Page 13 of said Real Property Records; THENCE North 01 degree 12 minutes 31 seconds west, along the common boundary between said 60.049 acre tract and said 60-foot right-of-way dedication, a distance of 60.01 to a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" found for the northwest corner of said 60-foot right-of-way dedication and the POINT OF BEGINNING; THENCE North 01 degree 12 minutes 31 seconds West, continuing along the east boundary of said 60.049 acre tract, a distance of 570.39 feet to a 5/ 8-inch iron rod with cap marked "PETITT-RPLS 4087"set for corner; THENCE over and across said 227.80 acre tract,the following courses and distances: North 89 degrees 52 minutes 26 seconds East, a distance of 225.04 feet to a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" set for corner; South 01 degree 12 minutes 31 seconds East, a distance of 270.05 feet to a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" set for corner; North 89 degrees 52 minutes 26 seconds East, a distance of 340.45 feet to a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" set for corner; AGREEMENT FOR THE REDUCTION OF THE EXTRATE RRITORIA I,JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 16 of 17 EXHIBIT F—Fonn of-Strategic Partnership Agreement Between the Toss»ofProsper,Texas and DCFB'SD#1 D—Artesia 7Yact South 01 degree 12 minutes 31 seconds East, a distance of 300.34 feet to a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" set on the north right-of-way of Fishtrap Road, said point bears South 89 degrees 52 minutes 26 seconds West, a distance of 449.99 feet from a 5/8- inch iron rod with cap marked "PETITT-RPLS 4087" found on the west right-of-way of Artesia Boulevard; THENCE South 89 degrees 52 minutes 26 seconds West, along the north right-of-way of Fishtrap Road, a distance of 565.49 feet to the POINT OF BEGINNING and containing 230,570 square feet, or 5.293 acres of land,more or less AGREESIENT FOR THE REDUCTION OF TILE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 17 of 17 EXHIBIT F—Form of Strategic Partnership Agreement Between the Town of Prosper. Texas and DCFli'SD1110—Artesia Tract Page 1 of 2 To: Mayor and Town Council From: Mike Land, Town Manager Re: Town Council Meeting – Tuesday March 27, 2012 Date: March 22, 2012 Agenda Item: Consider and act on a Ordinance authorizing the limited purpose annexation for the purpose of imposing sales and use tax on property known as Tract No. 3. Description of Agenda Item: On Tuesday December 13, 2011 the Town of Prosper entered into an Agreement with 166 Bryan Road Partners, LP for the Reduction of the Town’s Extraterritorial Jurisdiction west of FM 1385. Included in that agreement there is a reference to the Town entering into three separate Strategic Partnership Agreements with the Denton County Fresh Water District No. 10. Holding the two public hearings, one on February 28th and the other on March 13th are a part of the adoption process. The three agreements for Tracts 1, 2 and 3, all read the same, and address the collection of sales tax and its distribution generated by commercial uses located within the District. The Town will be or will eventually be collecting the full 2% sales tax on the parcels as they are or will be developed. The Town will equally share the 1% sales tax collection with the District (one half to the District, one half to the Town) with the balance of the sales tax collected (the remaining 1%) being retained by the Town. The term of the agreements are all fifteen (15) years with the potential of two (2) fifteen (15) year extensions. The District has approved and signed the Settlement and Mutual Release Agreement. Budget Impact: The Valero store location at the corner of Fm 1385 and Hwy 380 (Tract 3) is the only commercial use that is built and active among the three tracts being considered. We do not have any taxable sales data at this time to utilize in projecting total taxable sales for future revenue projection. Based on our understanding of the notification process we believe that the store will begin collecting the sales and use tax within the next 90 days, probably sooner. Legal Obligations and Review: The language in the Strategic Partnership Agreements was developed by Courtney Kuykendall, the Town’s Attorney. Prosper is a place where everyone matters. ADMINISTRATION Page 2 of 2 Attached Documents: 1. Ordinance authorizing the Town to annex territory for the limited purpose of imposing sales and use tax on Tract No. 3. 2. Strategic Partnership Agreement for Tract 3 between the Town of Prosper and the Denton County Fresh Water District No. 10. Town Staff Recommendation: Town staff recommends that the Town Council approve Ordinance No. 12-09, annexing territory within the boundaries of the Denton County Freshwater Supply District #10 for the Limited Purpose of imposing sales and use tax for Tract No. 3. Limited Purpose Annexation for Tract No. 3 Page 1 607175.1 TOWN OF PROSPER, TEXAS ORDINANCE NO. 12-10 AN ORDINANCE OF THE TOWN OF PROSPER, TEXAS, ANNEXING TERRITORY WITHIN THE BOUNDARIES OF THE DENTON COUNTY FRESHWATER SUPPLY DISTRICT #10 FOR THE LIMITED PURPOSE OF IMPOSING SALES AND USE TAX ON TERRITORY; PROVIDING FOR REPEALING, SAVINGS AND SEVERABILITY CLAUSES; PROVIDING FOR AN EFFECTIVE DATE OF THIS ORDINANCE; AND PROVIDING FOR THE PUBLICATION OF THE CAPTION HEREOF. WHEREAS, the Town of Prosper, Texas (“Prosper”), Denton County Fresh Water Supply District #10 (“District”), 166 Bryan Road Partners, L.P. (“Developer”), and Bryan Road Retail Partners (“Landowner”) previously entered into that certain agreement for the release of a portion of property in Prosper’s extraterritorial jurisdiction, effective December 14, 2011 (“Release Agreement”); and WHEREAS, as a condition of the Release Agreement, the District agreed to enter into three (3) separate strategic partnership agreements with Prosper pursuant to Section 43.0751, Texas Local Government Code, as amended, authorizing limited purpose annexation for the limited purpose of imposing sales and use tax on territory within the boundaries of the District; and WHEREAS, the Town Council of Prosper (“Town Council”) previously investigated and determined that it was in the best interest of Prosper to adopt and execute the strategic partnership agreement attached hereto as Exhibit “A,” and incorporated herein for all purposes (“Strategic Partnership Agreement for Tract No. 3”); and WHEREAS, the governing body of the District, prior to the Town’s adoption and execution, adopted the Strategic Partnership Agreement for Tract No. 3 at a duly called meeting on February 16, 2012 and executed the same on March 15, 2012; and Limited Purpose Annexation for Tract No. 3 Page 2 607175.1 WHEREAS, the Town Council finds that all requisites relative to consideration and adoption of this Ordinance have been complied with pursuant to Chapter 43.0751, Texas Local Government Code, as amended; and WHEREAS, notice of two (2) public hearings concerning the limited purpose annexation of the territory described in Exhibit “A,” was published in a newspaper of general circulation in the Town and in the area to be annexed; and WHEREAS, a copy of the Strategic Partnership Agreement for Tract No. 3 has been on file in the office of the Town Secretary and made available to the public; and WHEREAS, the two (2) public hearings were held during Town Council meetings on February 28, 2012 and March 13, 2012, and concluded after providing an opportunity for all persons present to be heard with respect to the limited purpose annexation associated with the Strategic Partnership Agreement for Tract No. 3; and WHEREAS, the Town Council finds that all legal notices, hearings, procedures and publishing requirements for annexation have been performed and completed in the manner and form set forth by law. NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS: SECTION 1: Findings Incorporated. The findings set forth above are incorporated into the body of this Ordinance as if fully set forth herein. SECTION 2: Property Annexed for Limited Purposes. The Property described as follows is hereby annexed to Prosper, to-wit: BEING a tract of land out of the Jose Gonzales Survey, Abstract No. 447, Denton County, Texas containing 1.669 acres of land, more or less; said tract is more particularly described in Exhibit "A" attached hereto and incorporated herein for all purposes. Limited Purpose Annexation for Tract No. 3 Page 3 607175.1 The present boundary limits of Prosper are amended to include the Property described in Exhibit “A” for limited purposes. The Property is within the extraterritorial jurisdiction and adjacent to the town limits of the Town of Prosper, Texas in Denton County, Texas. The Property is annexed into the Town for the limited purpose of imposing sales and use tax. SECTION 3: Rights and Privileges. From and after the passage of this Ordinance, the Property shall be a part of Prosper for the sole, limited purpose set forth herein. SECTION 4: Official Map and Boundaries Amended. The official map and boundaries of Prosper are hereby amended to include the Property as part of Prosper for the limited purposes described herein. A certified copy of this Ordinance shall be filed in the County Clerk's Office of Denton County. SECTION 5: Penalty Provision. Any person, firm, corporation or business entity violating this Ordinance, as it exists or may be amended, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be fined a sum not exceeding Five Hundred Dollars ($500.00). Each continuing day's violation under this Ordinance shall constitute a separate offense. The penal provisions imposed under this Ordinance shall not preclude Prosper from filing suit to enjoin the violation. Prosper retains all legal rights and remedies available to it pursuant to local, state and federal law. SECTION 6: Savings/Repealing Clause. All provisions of any ordinance in conflict with this Ordinance are hereby repealed to the extent they are in conflict; but such repeal shall not abate any pending prosecution for violation of the repealed ordinance, nor shall the repeal prevent a prosecution from being commenced for any violation if occurring prior to the repeal of the ordinance. Any remaining portions of said ordinances shall remain in full force and effect. Limited Purpose Annexation for Tract No. 3 Page 4 607175.1 SECTION 7: Severability. Should any section, subsection, sentence, clause or phrase of this Ordinance, be declared unconstitutional or invalid by a court of competent jurisdiction, it is expressly provided that any and all remaining portions of this Ordinance shall remain in full force and effect. Prosper hereby declares that it would have passed this Ordinance, and each section, subsection, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, and phrases be declared unconstitutional or invalid. SECTION 8: Effective Date. This Ordinance shall become effective from and after its adoption and publication as required by the Town Charter and by law. PASSED AND APPROVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS on this 27th day of March, 2012. ______________________________ Ray Smith, Mayor ATTESTED TO AND CORRECTLY RECORDED BY: APPROVED AS TO FORM: _________________________ _________________________________ Amy Piukana, Town Secretary Abernathy, Roeder, Boyd & Joplin, P.C. Courtney A. Kuykendall, Town Attorney DATE(S) OF PUBLICATION: _________________________________________________, Prosper Press Limited Purpose Annexation for Tract No. 3 Page 5 607175.1 EXHIBIT “A” (Strategic Partnership Agreement for Tract No. 3) Form of STRATEGIC PARTNERSHIP AGREEMENT BETWEEN THE TOWN OF PROSPER, TEXAS, AND DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. 10 THE STATE OF TEXAS § COUNTY OF DENTON § This STRATEGIC PARTNERSHIP AGREEMENT(this"Agreement") is entered into as of the Effective Date between the TOWN OF PROSPER, TEXAS, a home-rule municipality situated in Collin County and Denton County, Texas, acting through its governing body, the Town Council of the Town of Prosper, Texas (the "Town"), and DENTON COUNTY FRESH WATER SUPPLY DISTRICT NO. 10 (the "District"), a conservation and reclamation district and political subdivision of the State of Texas created pursuant to Article XVI, Section 59 of the Texas Constitution, and operating under Chapters 49, 51, and, for certain purposes, 53 of the Texas Water Code,as amended. RECITALS 1. Texas Local Government Code, §43.0751 (the"Act") authorizes the Town and certain conservation and reclamation districts to negotiate and enter into a strategic partnership agreement by mutual consent; 2. This Agreement provides for the limited purpose annexation of a tract of land in the District, situated wholly within Denton County, Texas, as more specifically described in Exhibit A" ("Tract"), attached hereto and incorporated herein for all purposes, by the Town for certain purposes including, but not limited to, the imposition of a sales and use tax within the Tract; 3. As required by the Act, the Town held public hearings on 2011 and 2011 at_ p.m. at Town Hall, and the District held public hearings on 2011, and 2011 at p.m. at Texas, at which members of the public were given the opportunity to present testimony or evidence regarding the proposed Agreement, and the Town and the District made copies of the proposed Agreement available, and gave notice of the hearings prior to the public hearings in accordance with the terms of the Act; 4. The District has, by formal action, after public hearing approved this strategic partnership agreement on in open session at a meeting held in accordance with the Open Meetings Act; AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEAS Page 1 of 16 EXHIBIT G—Pan:ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFWSD#IO--Valero 7kact 5. The Town has, by formal action, after public hearings approved this strategic partnership agreement on in open session at a meeting held in accordance with the Open Meetings Act; 6. The Town and the District wish to enter into a strategic partnership agreement to provide the terms under which services will be provided by the District to the Tract and under which the District will continue to exist for an extended period of time with respect to the Tract after the Tract of land within the District is annexed for limited purposes; and 7. Pursuant to Section 43.0751(c) of the Local Government Code, this Agreement shall become effective on the date of adoption of this Agreement by the Town and the District(the Effective Date"). Upon adoption, this Agreement shall be filed by the District in the real property records of Denton County,Texas. NOW, THEREFORE, for and in consideration of the mutual agreements, covenants, and conditions contained herein, and other good and valuable consideration, the Town and District agree as follows: THE PARTIES AGREE AS FOLLOWS: ARTICLE ONE FINDINGS The Town and the District find and declare: 1. 1 The Act authorizes the Town and the District to enter into this Agreement to define the terms under which services, if any, will be provided to the Town and the District and under which the District will continue to exist after the Tract is amiexed for limited purposes pursuant to this Agreement; and 1.2 This Agreement does not require the District to provide revenue to the Town solely for the purpose of an agreement with the Town to forgo annexation of the District; and 1.3 This Agreement provides benefits to the Town and the District, including revenue, services, or regulations which are reasonable and equitable with regard to the benefits provided to the other Party; and 1.4 All the terms contained in this Agreement are lawful and appropriate to provide for the provision of municipal services;and 1.5 The Town and the District negotiated this Agreement by mutual consent; the terms of the Agreement are not a result of the Town's Annexation Plan or any arbitration between the Town and the District. AGREEMENT FORTIIE REDUCTION OF THE EXTRATERRIIORIAI,JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 2 of16 EXHIBIT G—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFJVSD#10—Valero Tract ARTICLE TWO DEFINITIONS Unless the context requires otherwise, and in addition to the terms defined above, the following terms used in this Agreement will have the meanings set out below: 2.1 "Act"means Texas Local Government Code, §43.0751 and any amendments thereto. 2.2 "Additional Tracts" means any property within the District's boundaries that is not located within the extraterritorial jurisdiction of a municipality other than the Town designated for commercial use,other than the Tract. 2.3 "Agreement" means this strategic partnership agreement between the Town and the District. 2.4 "Board"means the Board of Directors of the District. 2.5 "Commercial Taxpayer" means a person, entity, business, or corporation who provides receipts from the sale and use at retail of taxable items to the Comptroller. 2.6 "Comptroller"means the Comptroller of Public Accounts of the State of Texas. 2.7 "District" means Denton County Fresh Water Supply District No. 10, a conservation and reclamation district created and operating under Chapters 49, 51, and, for certain purposes, 53 of the Texas Water Code,located wholly within Denton County,Texas. 2.8 "ETJ"means the extraterritorial jurisdiction of the Town. 2.9 "Government Code"means the Texas Government Code and any amendments thereto. 2.10 "Implementation Date" means the date the limited-purpose annexation ordinance is passed by Town Council pursuant to Section 3.1. 2.11 "Local Government Code" means the Texas Local Government Code and any amendments thereto. 2.12 "Party" or "Parties" means a party or the parties to this Agreement, being the Town and the District. 2.13 "Sales and Use Tax"means the sales and use tax authorized to be imposed in the Tract by the Act and Tax Code Chapter 321. 2.14 "Tax Code"means the Texas Tax Code and any amendments thereto. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 3 of-16ERHIBITG—Form ofShategic Partnership Agreement Between the Towwn,of Prosper Texas and DCFIVSD#10—Valero Tract 2.15 "Town" means the Town of Prosper, Texas, a general law municipality situated in Collin County and Denton County,Texas. 2.16 "Town Charter"means the Charter of the Town and any amendments thereto. 2.17 "Town Code" means the Code of Ordinances of the Town and any amendments thereto. 2.18 "Town Council" means the Town Council of the Town or any successor governing body. 2.19 "Town Manager" means the Town Manager of the Town or his or her designee. 2.20 "Tract" means the tract of land situated wholly in Denton County, Texas, described in Exhibit"A"attached hereto and incorporated herein for all purposes. ARTICLE THREE LIMITED-PURPOSE ANNEXATION 3.1 Generally. In accordance with the terms of that Agreement for the Reduction of the Extraterritorial Jurisdiction of the Town of Prosper, dated December 13, 2011, the Town shall annex the Tract for limited purposes. 3.2 Limited Purpose Annexation of Additional Tracts. In the event the location of proposed commercial development within the District is changed or additional property designated for commercial development is added, the Town Council may annex the Additional Tracts for the limited purpose of collecting Sales and Use Tax revenues within the Additional Tracts pursuant to the Act subject to the execution of an agreement between the Town and the District substantially similar in form to this Agreement. 3. 3 Property Taxes and District Liability for Debts of the Towmi. During the Term (as defined in Section 9.2) of this Agreement: (i) neither the District nor any owners of taxable property within the District is liable for any present or future debts of the Town, and (ii) current and future ad valorem taxes levied by the Town will not be levied on taxable property within the District, except as provided for in Article VII, 3.4 Powers and Functions Retained by the District. This Agreement does not limit in any manner the rights,powers, functions, and authority of the District. 3.5 Extraterritorial Jurisdiction. This Agreement shall not affect or otherwise change any Town limits or extraterritorial jurisdiction of the Town except as specifically set forth herein. This Agreement shall not inure to the benefit of any party not a signatory to this Agreement,save and except assignees or successors in interests as provided herein. The Town may regulate those AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIALJURISDICTION OF THE TOWN OF PROSPER,TEXAs Page 4 of l6EXHIBITG—Form of Strategic Partnership Agreement Between the Town ofProsper,Texas and DCPWSD1110—Valero Tract portions of the District Iand located within the Town's ETJ in the same manner in which it may regulate other areas within the extraterritorial jurisdiction of the Town, subject to any other agreements between the Town and the District. ARTICLE FOUR VOTING RIGHTS IN THE DISTRICTS 4.1 Generally. Upon annexation of the Tract for limited purposes by the Town, any qualified voters within the Tract may vote in Town elections, pursuant to Local Government Code§43.130. Voting rights are subject to all state and federal laws and regulations. 4.2 Notice. The Town will comply with all the notice requirements as set forth in §43.130 of the Local Govermnent Code, as it now exists or hereafter amended. ARTICLE FIVE SALES AND USE TAX 5.1 Imposition of the Town's Sales and Use Tax. Pursuant to Subsection(k)of the Act, the Town shall impose a Sales and Use Tax within the Tract upon the limited-purpose annexation of the Tract. The Sales and Use Tax shall be imposed on the receipts from the sale and use at retail of taxable items at the rate of two percent(2%) or the rate specified under future amendments to Chapter 321 of the Tax Code. The Sales and Use Tax shall take effect on the date described in Tax Code §321.102. 5.2 Payment of Sales and Use Tax. Within thirty (30) days from the establishment of a District utility service account for a Commercial Taxpayer hi the Tract, the District shall inspect the building for which service is requested and provide written notice of the name of(a) the Commercial Taxpayer requesting utility service, and (b) each Commercial Taxpayer operating a commercial business at such building. Each month thereafter, the District shall inspect the Tract and provide a written report to the Town updating such information in order to maintain a current listing of all Commercial Taxpayers operating within the Tract. Based upon the names reported by the Town, the Comptroller shall create a sales tax area report for the Town. The area sales tax report shall identify the aggregate total amount of local sales tax revenue the group of or individual Commercial Taxpayers in the Tract contributed to the Town's total allocation for each month. Subject to the terms and conditions of this Agreement, the Town and District agree to share equally the 1% Sales and Use Tax revenues remaining subsequent to payment of the other I% Sales and Use Tax revenues to the Prosper Economic Development Corporation and Town property tax relief as required by state law (the "District's Portion") that are reported on the monthly area sales tax report provided by the Comptroller and received by the Town from the Comptroller after the date of the limited-purpose annexation of the Tract. The Town shall deliver the District's Portion of the Sales and Use Tax revenues to the District within thirty (30) days of the Town's receipt of the sales report from the Comptroller. Government Code Chapter ACREEAIENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page S of 16EXHIBITG-Form ofstrategic Partnership Agreement Between the Tong ofProsper,Texas and DCFIrSD#10—Valero Tract 2251 shall govern and provide the penalty if the Town fails to deliver the District's portion in a timely manner. For the purposes of determining the applicable overdue date under Chapter 2251, the Town is deemed to have received an invoice from the District on the date the Town receives the sales tax report from the Comptroller without further action from the District. In the event the Comptroller ceases to provide a monthly area sales report, then the Parties agree to jointly develop another method of reporting Sales and Use Tax revenues to the Town. The Town shall deliver to the District a condensed version of each monthly area sales tax report provided by the Comptroller,containing only the contents of the sales tax report relating to retail sales and retailers in the Tract within 30 days of the Town's receipt of the sales tax report. 5.3 Notification of Comptroller. The Town shall send notice of this Agreement and the limited-purpose annexation of the Tract to the Comptroller within three (3) days of the Implementation Date in the manner provided by Tax Code §321.102. The Town shall send to the District a copy of any notice from the Comptroller delaying the effectiveness of the Sales and Use Tax in the Tract. 5.4 District Use of Sales and Use Tax Revenue. The District shall use the Sales and Use Tax revenue provided in Section 5. 2 only for purposes for which the District is lawfully authorized to use its ad valorem tax revenues or other revenues. 5.5 District Audit Rights. The District may audit the Sales and Use Tax collections by the Town solely to determine whether the Sales and Use Tax revenue payments provided by Section 5. 2 have been made to the District in accordance with this Agreement. Any audit shall be made at the District's sole cost and expense and may be performed at any time during the Town's regular business hours by an auditor hired by the District on thirty (30) days written notice to the Town. For the purpose of any audits, the Town shall maintain and make available to the District or its representatives all books, records, documents and other evidence of accounting procedures or practices in whatever form sufficiently maintained to reflect the collection of all Sales and Use Tax revenues that are subject to this Agreement. 5. 6 Town Audit Rights. The District is required by law to prepare an annual audit within one hundred twenty (120) days after the close of the District's fiscal year. The District shall provide a copy of its annual audit to the Town within thirty (30) days after the audit is completed. The Town may audit the District's expenditures made with the Sales and Use Tax revenue paid under Section 5.2, solely to determine whether the expenditures have been made by the District in accordance with Section 5.4. Any audit shall be made at the Town's sole cost and expense and may be performed at any time during regular business hours by the Town's internal auditors or an independent auditing firm on thirty(30) days written notice to the District. For the purpose of any audits, the District shall maintain and make available to the Town or its representatives all books, records, documents and other evidence of accounting procedures or AGREEMENT FOR THE REDUCTION OF TILE EXTRATERRITORIAI.JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 6 of 16EXHIBITG-Form of Strategic Partnership Agreement Between the Town of Prosper,Texas and DCFTVSDI110-Valero Tract practices in whatever form maintained sufficient to reflect the expenditure of all Sales and Use Tax revenues that are subject to this Agreement. ARTICLE SIX SERVICES PROVIDED BY THE DISTRICT AND THE TOWN 6.1 Water, Sewer, and Drainage Services. Subject to the applicable terms and provisions of that certain Merged, Amended and Restated Agreement Related to Water and Sanitary Sewer Service dated October 1, 2007 between Mustang Special Utility District ("Mustang SUD") and the District (the "Water and Sewer Agreement"), that certain Upper Trinity Regional Water District Regional Treated Water System Participating Customer Contract dated August 29, 2001, as amended and that certain Upper Trinity Regional Water District Northeast Regional Water Reclamation System Participating Customer Contract dated August 29, 2001, as amended, each between the Upper Trinity Regional Water District ("Upper Trinity") and the District collectively, "Upper Trinity Contracts"), reimbursement agreements between the developers or owners of the Tract and the District, and Sections 49.215(d) and 13.248, Texas Water Code, the District shall acquire, construct, own, operate and maintain a water, wastewater, and drainage system in the District and the Tract. The Town is under no obligation to provide water, sewer or drainage services to the Tract. 6.2 Operation and Maintenance. Subject to Section 6.1 above,the District agrees to operate and maintain water, wastewater,and drainage service in the Tract at the same level as the District has operated and maintained them before the Implementation Date. The Town may periodically inspect the District's water,wastewater,and drainage facilities. ARTICLE SEVEN FULL-PURPOSE ANNEXATION 7.1 No Full-Purpose Annexation. Town agrees that it will not annex all or part of the District or commence any action to annex all or part of the District for full purposes during the Term (as defined in Section 9.2). 7.2 Full Purpose Annexation of the Tract. The Town and District acknowledge and agree that a full purpose annexation contemplates, among other things, the annexing authority solely collecting ad valorem taxes in exchange for the landowner receiving municipal services Municipal Services") as required under §43.056, Texas Local Government, as amended. However, §43.0751 (0(5), Texas Local Government Code, authorizes the Town and District to agree to a full purpose annexation on terms and conditions acceptable to the Town and the District. Upon expiration of the Tenn of this Agreement, to the extent permitted by Section 43. 0751(0(5) or any other applicable provision of the Local Government Code, the Town and District may enter into a full purpose annexation agreement with regards to the Tract ("Full Purpose Annexation Agreement"). As such, and at a minimum, the parties acknowledge and AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 7 of 16EXHIBITG—Fora ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFII'SD#10—Valero Tract agree that should a Full Purpose Annexation Agreement be desired by the parties, the District and Town anticipate that the Town may not be providing some, or possibly all, of the Municipal Services to the Tract. Should the Town desire not to provide all or a portion of the Municipal Services to the Tract, the Parties acknowledge and agree that one of the required provisions of the Full Purpose Annexation Agreement will provide that the Town shall assess only such ad valorem taxes on the Tract which are commensurate with the costs associated with the Municipal Services provided by the Town to the Tract. Municipal Services shall include, but not be limited to, administration, police, fire, dispatch, fire marshal, streets, library, parks, municipal court, inspections, code enforcement, planning, engineering, and an interest and sinking fund. The parties further acknowledge and agree that any Full Purpose Annexation Agreement shall include a provision to the effect that the District shall continue to have and exercise all functions, powers, and authority otherwise vested in the District, including without limitation the right to issue bonds, notes or other obligations, to provide services and facilities to and to impose ad valorem taxes on or other fees and charges to the property located within the Tract. The Town expressly acknowledges and agrees that neither the ternis of this Agreement nor the Full Purpose Annexation Agreement shall subject the District to any consents, approvals, conditions or requirements of the Town with respect to the design and construction of facilities, the annexation of land by the District; the issuance and sale of bonds, notes or other obligations by the District, or the assessment of ad valorem taxes or fees or charges for services by the District. If a Full Purpose Annexation Agreement is executed between the Parties, the Town shall have no further obligation to pay to the District the District portion of the Sales and Use Tax revenues collected from the Tract. 7.3 Exercise of Full Purpose Annexation Option at Termination of Agreement. On or before the expiration of Tenn of this Agreement, the Town Manager shall evaluate whether the Town should negotiate a new strategic partnership agreement with the District, negotiate and execute a Full Purpose Annexation Agreement as provided in Section 7.2 above or allow this Agreement to expire. The Town Manager shall make a recommendation to the Town Council regarding the negotiation of a new strategic partnership agreement, the negotiation and execution of a Full Purpose Annexation Agreement, or the expiration of this Agreement. If the Town Manager recommends that the Town negotiate a new strategic partnership agreement, or negotiate and execute a Full Purpose Annexation Agreement , and the Town Council approves the recommendation, the Town shall begin proceedings to enter into a new strategic partnership agreement, or negotiate and execute a Full Purpose Annexation Agreement at the end of the Term of this Agreement as applicable. If the Town Manager recommends that the Town allow this Agreement to terminate upon the expiration of the initial fifteen (15) years, and the Town Council agrees,or if the Town Council rejects the Town Manager's recommendation to negotiate a new strategic partnership agreement, or to negotiate and execute a Full Purpose Annexation Agreement, the Town may begin proceedings to annex the District for full purposes or disannex the Tract for limited purposes if authorized under the applicable provision of the Local Government Code. If the Town decides to annex the District for full purposes or disannex the AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 8 of 16EXDDITG—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCF1JSDJi10—Valero Tract Tract and has the authority to do so, the Town may institute proceedings to accomplish such full purpose annexation or disannexation to be effective upon the termination of this Agreement and according to the applicable provisions of the Local Government Code and state law. ARTICLE EIGHT MATERIAL BREACH,NOTICE AND REMEDIES 8.1 Material Breach of Agreement. It is the intention of the Parties to this Agreement that the District and the Town be regulated in accordance with the terms of this Agreement. A material breach of this Agreement by the District includes, without limitation, any one or more of the following: A) Failure of the District to act in good faith in the annexation of the Tract by the Town for limited purposes as authorized by this Agreement; or A material breach of this Agreement by the Town includes,without limitation, any one or more of the following: A) Any attempt by the Town to annex the District for full purposes during the Term of this Agreement; or B) Failure of the Town to pay to the District the District's share of the Sales and Use Tax, as provided in Article V. If a Party to this Agreement believes that another Party has, by act or omission, committed a material breach of this Agreement, the provisions of this Article shall govern the remedies for breach of this Agreement. 8.2 Notice of District's Default. The Town shall notify the District in writing of an alleged failure by the District to comply with a provision of this Agreement, describing the alleged failure with reasonable particularity. The District shall, within thirty(30)days after receipt of the notice or a longer period of time as the Town may specify in the notice, either cure the alleged failure or, in a written response to the Town, either present facts and arguments in refutation or excuse of the alleged failure or state that the alleged failure will be cured and set forth the method and time schedule for accomplishing the cure. The Town shall determine (i) whether a failure to comply with a provision has occurred; ii) whether the failure is excusable; and (iii) whether the failure has been cured or will be cured by the District. The District shall make available to the Town, if requested, any records, documents or other information necessary to make the determination. If the Town determines that a failure to comply with a provision has occurred and that the failure is not excusable and has not been or will not be cured by the District in a manner and in AGREEMENT FOR THE REDUCTION OFTRE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TESAs Page 9 of 16E\HJBrr G—Form ofStrategic Parhterslip Agreement Between the Town ofProsper,Texas and DCFWSD1110—Valero Tract accordance with a schedule reasonably satisfactory to the Town, then the Town may exercise the applicable remedy under Section 8.4(A). 8.3 Notice of Town's Default. The District shall notify the Town Manager in writing specifying any alleged failure by the Town to comply with a provision of this Agreement, describing the alleged failure with reasonable particularity. The Town shall, within thirty (30) days after receipt of the notice or the longer period of time as the District may specify in the notice, either cure the alleged failure or, in a written response to the District, either present facts and arguments in refutation or excuse of the alleged failure or state that the alleged failure will be cured and set forth the method and time schedule for accomplishing the cure, The District shall determine (i) whether a failure to comply with a provision has occurred; (ii)whether the failure is excusable; and (iii)whether the failure has been cured or will be cured by the Town. The Town shall make available to the District, if requested, any records, documents or other information necessary to make the determination. If the District determines that a failure to comply with a provision has occurred and that the failure is not excusable and has not been or will not be cured by the Town in a manner and in accordance with a schedule reasonably satisfactory to the District, then the District may exercise the applicable remedy under Section 8.4(B). 8.4 Remedies. A) If the Town determines that the District has committed a material breach of this Agreement, the Town may file suit in a court of competent jurisdiction in Collin County, Texas, and seek any relief available at law or in equity, including, but not limited to, an action under the Uniform Declaratory Judgment Act and termination of this Agreement in addition to the monetary awards as may be appropriate. B) If the District determines that the Town has committed a material breach of this Agreement,the District may file suit in a court of competent jurisdiction in Collin County,Texas, and seek any relief available at law or in equity, including, but not limited to, an action under the Uniform Declaratory Judgment Act and termination of this Agreement in addition to the monetary awards as may be appropriate. ARTICLE NINE BINDING AGREEMENT,TERM,AND AMENDMENT 9.1 Beneficiaries. This Agreement binds and inures to the benefit of the Parties, their successors and assigns. AGREEMENT FOR THE REDUCTION OF THE EXTR\TERRITORLALJURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 10 of 16 EXHIBIT G—Form ofStrategic Partnership Agreement Between the Town of Prosper,Texas and DCFlf SD1110—Valero Tract The District shall record this Agreement with the County Clerk in Official Records of Denton County, Texas. This Agreement binds each owner and each future owner of land included within the District's boundaries in accordance with Subsection(c)of the Act. 9.2 Term. This Agreement commences and binds the Parties on the Effective Date and continues for fifteen years afterward ("Term"), and may be extended thereafter at the sole discretion of the Town for up to two (2) consecutive terms of fifteen (15) years upon written notice from the Town to the District at least one hundred eighty(180) clays before the expiration of the Term or any extended term of this Agreement. Any rights or privileges of the Parties and their successors or assigns under this Agreement will terminate upon the expiration or termination of this Agreement. 9.3 Amendment. The Parties by mutual written consent may amend the terms of this Agreement at any time. Any amendment to this Agreement shall be recorded within seven (7) days of the execution of the amendment with Denton County. ARTICLE TEN MISCELLANEOUS PROVISIONS 10.1 Notice. Any formal notices or other communications ("Notice") required to be given by one Party to another by this Agreement shall be given in writing addressed to the Party to be notified at the address set forth below for the Party, (i) by delivering the Notice in person(ii) by depositing the Notice in the United States Mail, certified or registered, return receipt requested, postage prepaid, addressed to the Party to be notified, (iii) by depositing the Notice with Federal Express or another nationally recognized courier service guaranteeing next day delivery, addressed to the Party to be notified, or (iv) by sending the Notice by telefax with confirming copy sent by mail. Notice deposited in the United States mail in the manner herein above described shall be deemed effective from and after the date of such deposit. Notice given in any other manner shall be effective only if and when received by the Party to be notified. For the purposes of Notice, the addresses of the Parties, until changed as provided below, shall be as follows: Town: Town of Prosper P. O. Box 307 Prosper, Texas 75078 Attention: Town Administrator Telephone: (972) 347-2304 Facsimile: (972)247-2111 AGREEMENT TOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 11 of 16EXHIBITG—Fornl ofStrategic Partnership Agreement Between the Town of Prosper Texas and DCF13'SD#1 D—Valero 7)act District:Denton County Fresh Water Supply District No. 10 c/o Crawford and Jordan,LLP 3100 McKinnon Street, Suite 950 Dallas,Texas 75201 Telephone: (214)981-9090 Facsimile: The Parties may from time to time change their respective addresses, and each may specify as its address any other address within the United States of America by giving at least five days written notice to the other Party. If any date or any period provided in this Agreement ends on a Saturday, Sunday, or legal holiday, the applicable period for calculating the notice shall be extended to the first business day following the Saturday, Sunday or legal holiday. 10.2 Time. Time is of the essence in all things pertaining to the performance of this Agreement. 10.3 Waiver. Any failure by a Party to insist upon strict performance by the other Party of any material provision of this Agreement shall not be deemed a waiver thereof or of any other provision hereof, and the Party shall have the right at any time thereafter to insist upon strict performance of any and all of the provisions of this Agreement. 10.4 Reservation of Rights. To the extent not inconsistent with this Agreement, each Party reserves all rights,privileges, and immunities under applicable laws. 10.5 Further Documents. The Parties agree that at any time after execution of this Agreement, they will, upon request of the other Party, execute and deliver the further documents and do the further acts and things as the other Party may reasonably request in order to effectuate the terms of this Agreement. 10.6 Incorporation of Exhibits and Other Documents by Reference. All Exhibits and other documents attached to or referred to in this Agreement are incorporated into this Agreement by reference for the proposes set forth in this Agreement. 10.7 Effect of State and Federal Laws. Notwithstanding any other provision of this Agreement, the District shall comply with all applicable statutes or regulations of the United States, the State of Texas, and Town Ordinances and Town Charter provisions implementing such statutes or regulations. 10.8 Authority for Execution. The Town certifies and represents that the execution of this Agreement is duly authorized and adopted in conformity with the Town Charter and Town Ordinances. The District certifies and represents that the execution of this Agreement is duly authorized and adopted by the Board. AGREE\I£AT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF TIIE TOWN OF PROSPER,TEXAS Page 12 of 16 EXHIBIT G—Form ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCPWSD#10—Valero nfact 10.9 Semi-Annual Review. At least semi-annually, the District shall review and confirm,and will notify the Town Planning and Development Department in a form prescribed by the Department, of the accuracy of the list of resale permit holders as provided by the State Comptroller's Office. 10.10 Representations. Each signatory represents this Agreement has been read by the party for which this Agreement is executed and that such party has had an opportunity to confer with its counsel. 10.11 No Third Party Beneficiaries. Nothing in this Agreement shall be construed to create any right in any third party not a signatory to this Agreement, and the parties do not intend to create any third party beneficiaries by entering into this Agreement. 10.12 Assignment/Binding Effect. This Agreement is assignable, in whole or in part, upon the following conditions, all of which must be satisfied before any such assignment shall be valid and enforceable: A) the assignment of the Agreement must be evidenced by a recordable document the "Assignment"), the form of which must be approved in writing by the Parties, such approval not to be unreasonably withheld; B) the Assignment must expressly contain, among other reasonable requirements and/or conditions of the Parties, an acknowledgment and agreement that all obligations, covenants and/or conditions contained in the Agreement will be assumed solely and completely by the assignee, and the contact name, address, phone number, fax number and electronic mail address of the assignee; C) Assignor will file any approved, executed Assignment in the Land Records of Denton County,Texas; and D) Assignor shall provide the other Party with a file-marked copy of the Assignment within ten(10)days of filing the same. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective officers, directors, partners, employees, representatives, agents, vendors, grantees, and/or trustees, heirs, executors, administrators, legal representatives, successors and assigns, as authorized herein. 10.13 State or Federal Laws,Rules, Orders or Regulations. This Agreement is subject to all applicable Federal and State laws and any applicable permits, ordinances, rules, orders and regulations of any local, state or federal governmental authority having or asserting jurisdiction, but nothing contained herein shall be construed as a waiver of any right to question or contest any such law,ordinance, order,rule or regulation in any forum having jurisdiction. AGREEMENT FOR THE REDUCTION OF THE EXT RATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 13 of 16EXHIBIT0—Form ofStrategic Partnership Agreement Between the 7oun of Prosper,Texas and DCFWSD#10—Valero Tract 10. 14 Savings/Severability. The parties hereto specifically agree that in case any one or more of the sections, subsections, provisions, clauses or words of this Agreement or the application of such sections, subsections, provisions, clauses or words to any situation or circumstance should be, or should be held to be, for any reason, invalid or unconstitutional, under the laws or constitutions of the State or the United States of America,or in contravention of any such laws or constitutions, such invalidity, unconstitutionality or contravention shall not affect any other sections, subsections, provisions, clauses or words of this Agreement or the application of such sections, subsections, provisions, clauses or words to any other situation or circumstance, and it is intended that this Agreement shall be severable and shall he construed and applied as if any such invalid or unconstitutional section, subsection, provision, clause or word had not been included herein, and the rights and obligations of the parties hereto shall be construed and remain in force accordingly. 10.15 Venue. All amounts due for the breach of this Agreement, shall be paid and be due in Collin County, Texas, which is the County in which the principal administrative offices of the Town are located. It is specifically agreed among the parties to this Agreement that Collin County, Texas is the place of performance of this Agreement; and in the event that any legal proceeding is brought to enforce this Agreement or any provision hereof, the same shall be brought and venue shall lie in Collin County,Texas. 10.16 Sovereign Immunity. By entering into and executing this Agreement, the Town and the District in no way waive or surrender their sovereign immunity. 10. 17 Miscellaneous Drafting Provisions. This Agreement shall be deemed drafted equally by all parties hereto. The language of all parts of this Agreement shall be construed as a whole according to its fair meaning, and any presumption or principle that the language herein is to be construed against any party shall not apply. Headings in this Agreement are for the convenience of the parties and are not intended to be used in construing this document. IN WITNESS WHEREOF, the parties have executed this Agreement in multiple copies, each of which shall be an original, as of the date countersigned by the Town Controller of the Town of Prosper. SIGNATUREPAGE TO FOLLOW] REMAINDER OF THIS PAGE BLANK] AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 14 of 16 EXHIBIT G-Form ofStrategic Partnership Agreement Between the Town ofProsper,Texas and DCFWSD#10-Valero Tract IN WITNESS WHEREOF, the parties have executed this Agreement in multiple copies, each of which shall be an original, as of the date countersigned by the Town Controller of the Town of Prosper. The Town of Prosper,Texas By: Name: Mike Land Title: Town Manager Address: 113 W. Broadway P. O. Box 307 Prosper, Texas 75078 Fax: (972) 347-2111 Date: Denton County Fresh Water Supply District No. 10 By: Name: Robert Tague Title: President Address:c/ o Crawford and Jordan, LLP 19 Briar Hollow Lane, Suite 245 Houston, Texas 77027 Fax: (713)621-3909 Date: AGREEMENT FOR THE REDUCTION'OFTRE EXTRATERRITORIAL JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page IS of 16EXHIBITG—Form of Strategic Partnership Agreement Between the Town ofProsper, Texas and DC?WSD#1 D—Valero Tract EXHIBIT"A" Legal Description of Tract BEING a tract of land situated in the Jose Gonzales Survey, Abstract No. 447, in Denton County, Texas, and being all of Tract 2B of the Replat of Tracts 2A & 2B of SAVANNAH PHASE 3, an addition to Denton County, Texas, according to the replat thereof recorded in Cabinet Y, Page 336, of the Real Property Records of Denton County, Texas, and being more particularly described as follows: BEGINNING at a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" found in the north right-of-way line of U.S. Highway No. 380 (a variable width right-of-way) and the west line of Farm-to-Market Road No.1385 (a 110 foot right-of-way at this point), said point being the southeast corner of said Tract 2B; THENCE North 88 degrees 31 minutes 26 seconds West, along the north right-of-way line of U.S. Highway No, 380 and the south boundary of said Tract 2B, a distance of248.50 feet to a 5/8-inch iron rod with cap marked "PETITT- 4087 found for the southwest corner of said Tract 2B and the most southerly southeast coiner of Tract 2A of said addition; THENCE North 01 degrees 28 minutes 34 seconds East, departing said north line of U.S. Highway No. 380 and along the common boundary between said Tracts 2A and 2B, a distance of 280.00 feet to a 5/8-inch iron rod with cap marked "PETITT - RPLS 4087" found for the northwest coiner of said Tract 2B and an interior ell corner of said Tract 2A; THENCE South 88 degrees 31 minutes 26 seconds East, continuing along the common boundary between said Tracts 2A and 2B, a distance of270.87 feet to a 5/8-inch iron rod with cap marked "PETITT-RPLS 4087" found for the northeast corner of Tract 2B and the most easterly southeast corner of Tract 2A, same being on the west right-of-way line of Farm—to- Market Road No. 1385; THENCE South 06 degrees 02 minutes 38 seconds West, along the east line of said Tract 2B and the west right-of-way line of Farm-to-Market Road No. 1385, a distance of280.89 feet to the POINT OF BEGINNING and containing 1.669 acres of land,more or less. AGREEMENT FOR THE REDUCTION OF THE EXTRATERRITORIAL.JURISDICTION OF THE TOWN OF PROSPER,TEXAS Page 16 of 16 EXHIBIT G—Font,ofStrategic Partners/tip Agreement Between the Town of Prosper.Texas and DCF{YSDi11 D—Valero Tract