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<br />I <br /> <br />I <br /> <br />I <br /> <br />t1q. <br /> <br />Draft 9-24-04 <br /> <br />ECONOMIC DEVELOPMENT AGREEMENT BETWEEN <br />THE CITY OF SAN MARCOS AND SAN MARCOS <br />FACTORY STORES, LTD. AND PRIME OUTLETS AT SAN MARCOS II, L.P. FOR <br />EXPANSION AND RENOVATION OF RETAIL COMMERCIAL FACILITY <br /> <br />This economic development agreement (the "Agreement") is entered into on September 27, <br />2004 (the "Effective Date") between the City of San Marcos, Texas (the "City"), a Texas municipal <br />corporation, San Marcos Factory Stores, Ltd. ("SMFS"), a Texas limited partnership, and Prime <br />Outlets at San Marcos II, L.P. ("POSM"), a Delaware limited partnership. San Marcos Factory <br />Stores, Ltd. and Prime Outlets at San Marcos II, L.P. are sometimes referred to collectively in this <br />Agreement as "Prime". <br /> <br />RECITALS: <br /> <br />1. The City, SMFS and POSM enter into this Economic Development Agreement pursuant <br />to a program of the City under Chapter 380 of the Texas Local Government Code, for the purpose <br />of facilitating the renovation and expansion of Prime Outlets at San Marcos, the existing retail <br />facility owned by SMFS and POSM in the City. <br /> <br />2. Prime Outlets at San Marcos, together with Tanger Factory Outlets, has for several years <br />been the third most popular tourist destination in the State of Texas, and generates significant sales <br />and use tax revenues for the City. <br /> <br />3. SMFS and POSM have proposed a project to renovate and expand Prime Outlets at San <br />Marcos, and have estimated that this proj ect will result in significant increases in retail sales at Prime <br />Outlets at San Marcos, and in sales and use tax payments to the City. <br /> <br />4. The City has agreed to an economic development grant to SMFS and POSM equal to a <br />portion of the added sales tax revenue generated in the area of Prime Outlets at San Marcos to be <br />expanded as a result of the project. <br /> <br />5. The City is authorized by Chapter 380 of the Texas Local Government Code to make <br />loans or grants of public funds for the purpose of promoting local economic development and <br />stimulating business and commercial activity within the City. <br /> <br />6. The City Council finds and determines that a grant to SMFS and POSM of receipted sales <br />tax, upon performance by SMFS and POSM of their obligations under this Agreement related to the <br />project, will serve the public purpose of promoting local economic development and enhancing <br />business and commercial activity in the City. <br /> <br />7. The City Council finds and determines that this Agreement clearly promotes economic <br />development in the City, meets the requirements of Chapter 380 of the Texas Local Government <br />Code, and is in the best interests of the City. <br /> <br />City of San Marcos/Prime Economic Development Agreement <br />Page 1 of9 <br />