CAUSE NO.

_________________

HAMILTON ATMOS LP and § IN THE COUNTY COURT OF

CITYSQUARE HOUSING, §
§
Plaintiffs, §
§
v. § DALLAS COUNTY, TEXAS
§
CITY OF DALLAS, §
§
Defendant. §
§ COURT NUMBER______

PLAINTIFFS’ ORIGINAL PETITION

Plaintiffs Hamilton Atmos LP and CitySquare Housing files this Original Petition against

Defendant City of Dallas and would respectfully show the Court as follows:

I.
DISCOVERY CONTROL PLAN

1. Plaintiffs intend to conduct discovery in this case under Level 3 of Texas Rules of

Civil Procedure because the issues in dispute are complex and the claims will be better resolved

in accordance with a discovery plan specifically tailored by the Court for the disposition of this

case.

II.
PARTIES

2. Plaintiff Hamilton Atmos LP (“Hamilton”) is a Texas limited partnership with its

principal place of business at 311 S. Harwood St., Dallas, Dallas County, Texas 75201.

3. Plaintiff CitySquare Housing is a Texas nonprofit corporation with its principal

place of business at 511 N. Akard Street, Suite 301, Dallas, Dallas County, Texas 75201.

PLAINTIFFS’ ORIGINAL PETITION PAGE 1 OF 20

 4. Defendant City of Dallas is a Texas municipal corporation whose office for service

and principal place of business is located at 1500 Marilla St, Dallas, Dallas County, Texas 75201.

It may be served with process by serving its registered agent City Secretary Bilierae Johnson at

the City Secretary’s Office, 1500 Marilla St., Room 5 D South, Dallas, Texas 75201.

III.
JURISDICTION AND VENUE

5. This Court has jurisdiction over this case because the damages sought are within

the jurisdictional limits of the Court and the City of Dallas has unambiguously waived immunity

to suit for breach of contract claims. TEX. LOC. GOV'T CODE ANN. § 271.152; Dallas County Hosp.

Dist. v. Hospira Worldwide, Inc., 400 S.W.3d 182, 185 (Tex. App.—Dallas 2013, no pet.). Plaintiff

Hamilton seeks monetary relief over $1,000,000.

6. Venue is proper in this Court because Dallas County is the county in which all or a

substantial part of the events or omissions giving rise to Plaintiffs’ claims occurred, because Dallas

County is the county of City of Dallas’s principal office in Texas, and because Defendant City of

Dallas resides in Dallas County, Texas. See CIV. PRAC. & REM. CODE §§ 15.002(a)(1-3).

IV.
FACTS

THE PROBLEM OF AFFORDABLE HOUSING IN DALLAS

7. The City of Dallas is in an existential crisis. Despite robust economic growth, the

city’s prosperity is unavailable to the majority of its residents. Its median wages are the lowest of

any city of more than a million residents in the United States. Large swaths of the city are losing

population. The city’s Racially and Ethnically Concentrated Areas of Poverty (“RECAP”) have

more than doubled since 1990. See Matt Goodman, Dallas Isn’t Helping its Poorest Residents

Escape Poverty, and Neither Are Its Neighbors, D MAGAZINE (Nov. 6, 2018),

PLAINTIFFS’ ORIGINAL PETITION PAGE 2 OF 20

https://www.dmagazine.com/frontburner/2018/11/dallas-isnt-helping-its-poorest-residents-

escape-poverty-and-neither-are-its-neighbors/. One recent study by the Urban Institute found

Dallas to be literally the least inclusive city in the nation at 274th out of 274.

8. One of the central causes for this crisis is the lack of affordable housing in areas of

high opportunity. Dallas spent lots of money over the years on affordable housing, but its attitude

toward keeping those in need of opportunity in certain areas of town resulted in the radical re-

segregation of the city over the last twenty years concentrating poverty in areas of town where we

would apparently prefer to send police rather than education or infrastructure.

9. Recent examinations by Opportunity Dallas and Inclusive Communities Project

(“ICP”) of the city’s inability to lift its poorest residents out of poverty have pointed to

desegregation and building affordable housing in high opportunity areas as key interventions to

prevent the growth of poverty in Dallas. See Housing Policy Recommendations, OPPORTUNITY

DALLAS, https://www.opportunitydallas.org/policy-recommendations (last visited Sept. 9, 2019);

Building Inclusive Communities, INCLUSIVE COMMUNITIES PROJECT,

https://www.inclusivecommunities.net/building-inclusive-communities/ (last visited Sept. 9,

2019).

10. The city’s recalcitrance to building mixed income neighborhoods ultimately led to

the Federal Department of Housing and Urban Development (“HUD”) threatening to force Dallas

to repay misspent federal funds and to cut off all future housing dollars. The city is still under the

terms of a 2015 Voluntary Compliance Agreement strictly controlling its federal housing spending.

See DEP’T OF HOUSING AND URBAN DEV., VOLUNTARY COMPLIANCE AGREEMENT BETWEEN THE

UNITED STATES OF AMERICA AND THE CITY OF DALLAS (2015),

http://dallascityhall.com/departments/fairhousing/DCH%20Documents/pdfs/dallas-hud-

PLAINTIFFS’ ORIGINAL PETITION PAGE 3 OF 20

executed-vca.pdf. Every few months the media bring us stories of malfeasance in the city’s

Housing Department and of millions of dollars stolen, misspent, or missing. See Jim Schutze, HUD

City Hall Probe to End with Findings of Wrongdoing and Fakery, DALLAS OBSERVER,

https://www.dallasobserver.com/news/hud-probe-of-dallas-city-hall-will-wind-up-soon-with-

corruption-findings-10521451 (Mar. 29, 2018).

11. As it turns out, putting all of the subsidized, affordable housing in the same parts

of the city is exactly the same thing as concentrating poverty, and because Dallas’s impoverished

residents are disproportionately people of color, it’s also exactly the same thing as re-segregating

the city. Dallas’s uses of federal and state housing subsidies to concentrate poverty is so notorious

that it forms the basis of both the United States Supreme Court’s most recent opinion on disparate

impact and HUD’s regulations regarding the deployment of such funds.

THE PROMISE OF DOWNTOWN

12. The news about Dallas’s treatment of affordable housing is not uniformly bad,

though. As Dallas’s downtown lost its leadership as an employment center after Texas’s oil,

banking, and real estate crashes of the 1980s, the silver lining that emerged was large buildings

deemed by office brokers to be obsolete.

13. These former office towers could no longer attract the employer tenants that had

spurred their development, but putting residents in them held the promise of renewed life for the

vacant structures, housing near employment opportunities for those in need, and most importantly

for this case, massive increases in tax base for the city.

14. Older buildings challenge developers. No two projects work the same way, which

prevents developers from exploiting common materials, design, and construction techniques.

These are advantages developers operating in the suburbs hold over urban competitors. Interior

PLAINTIFFS’ ORIGINAL PETITION PAGE 4 OF 20

office layouts cannot be easily converted to residences. Streetscape improvements and expensive

amenities such as swimming pools are critical to attract residential tenants. Dallas’s downtown

was never built for residents.

15. Dallas’s downtown additionally had suffered reputational damage as the city

neglected its development and redevelopment in the ‘80s and ‘90s. The result was that private

capital was reluctant to enter downtown preferring Uptown and the suburbs, and while those places

have many enviable aspects, affordable housing isn’t one of them. Dallas needed risk tolerant,

creative developers to invest in downtown, and those developers were going to need specialized

financing tools to do so.

TAX INCREMENT FINANCING: An Irreplaceable Tool for Redevelopment

16. Most of the redeveloped buildings that have brought so much vibrance to

downtown today utilized the National Parks Service’s historic tax credit program, and the later

ones use the state’s similar tax credits. Recently, Texas’s Property Assessed Clean Energy program

has provided affordable financing to modernize building mechanicals. But by far the most

important public component of downtown developers’ capital stacks has been the Tax Increment

Financing (“TIF”) program. See Tax Increment Financing, DALLAS ECONOMIC DEVELOPMENT,

https://www.dallasecodev.org/358/Tax-Increment-Financing-Districts (last visited Sept. 10,

2019). Though administered by the city’s Office of Economic Development, the TIF that has most

elevated development in downtown is the Downtown Connection TIF that was initiated and

formed by downtown’s landowners themselves. Downtown Connection TIF District, DALLAS

ECONOMIC DEVELOPMENT, https://www.dallasecodev.org/416/Downtown-Connection-TIF-

District (last visited Sept. 10, 2019).

PLAINTIFFS’ ORIGINAL PETITION PAGE 5 OF 20

 17. Tax Increment Financing is a state-authorized economic development tool that

evaluates the increase to the city’s tax base that is the result of new development within a defined

area and then makes those incremental gains in tax revenue available as incentives within that area.

The theory is that the increased tax revenue results from the private development and so can be

used to stimulate private development. Without these important gap-closing dollars, it is safe to

say that Dallas’s downtown would have continued vacancies, a fraction of its residents, and

perhaps none of its recently recruited, high-paying employers.

18. Because TIF diverts tax dollars from the city’s general fund, powerful, transparent,

and exacting controls must be put in place to ensure that the funding is used to accomplish the

city’s goals as first priority. City Council has strictly complied with state law in approving TIF

districts and has laid down strong policy guidelines requiring, among other things, affordable,

mixed-income housing in exchange for TIF dollars. City staff has erected a labyrinthine

superstructure of regulations governing applications for TIF dollars, awarding of the funds, and

the timing and priority of distribution. And for added oversight, Council empowers an appointed

board for each TIF to evaluate and manage the districts on a granular level. The members of the

Downtown Connection TIF board who made the grant at issue here are some of the most

sophisticated housing advocates, architects, developers, and investors ever gathered to administer

a TIF.

19. In other words, a developer qualifying for TIF funding in the Downtown

Connection TIF will have endured an extraordinarily exacting process and will have committed to

a development specifically designed to meet the city’s needs. The financing structures that are

necessary to be successful on a historic redevelopment project in downtown Dallas can, and

usually do, comprise complex stacking of funding sources. These can include private capital, debt,

PLAINTIFFS’ ORIGINAL PETITION PAGE 6 OF 20

commercial and private loans, tax credits, limited partner contributions, and public investment.

The failure of any one of these sources to come through on an individual project, or even a delay

in capital availability, can spell ruin for the developer and extended vacancy for the city.

HAMILTON RESCUES THE ATMOS COMPLEX

20. While the city fought HUD and squandered federal funds, some Dallas developers

have for years sought to do the right thing, follow the rules, and provide desperately needed

affordable housing in areas where its residents will have easy access to jobs, education, and

transportation.

21. Hamilton Properties is Plaintiffs’ developer, a veteran of downtown

redevelopment, and one of the city’s foremost providers of affordable, mixed-income

developments. By the late ‘00s, Hamilton Properties had delivered the Davis Building, Dallas

Power & Light, Mosaic, and Lone Star Gas Lofts, all successful uses of TIF awards, and was

looking for another acquisition opportunity in downtown.

22. Atmos Energy vacated its complex between St. Paul and Harwood sometime

around 2005. The buildings in this complex were built over the course of several decades as Atmos

and its predecessor entities changed and grew. The vacant grouping of buildings—known

collectively as the Atmos Complex—presented a unique redevelopment challenge because the

physical development problems presented by one historic building are only multiplied when a

developer seeks to repurpose multiple structures from different historical periods. Plaintiffs and

Hamilton Properties tackled the challenge.

23. Hamilton signed the first of the development agreements for the project on March

31, 2009. Underlining the challenge of the project, Hamilton acquired the property from a rival

PLAINTIFFS’ ORIGINAL PETITION PAGE 7 OF 20

developer that had been unable to develop it in accord with a time-limited agreement with

Defendant.

24. The affordable housing standard typically required by the city in the Downtown

Connection TIF district prior to this project was that 10% of the units in a multifamily building

would be set aside for moderate-income affordable housing. Moderate-income, as that term has

been used by the city’s Housing and Economic Development Departments, means the least

affordable threshold at which HUD will still recognize the units as affordable for purposes of

meeting the city’s duty to affirmatively further fair housing. The tenants are not desperately poor;

in fact they make 80% of the Area Median Income or about $43,000.00 last year.

25. The city’s duty to affirmatively further fair housing is complex and involves many

other aspects that the city has historically failed to fulfill, but for purposes of this issue, it is the

number of affordable units and the income level of the residents that matters. By allowing the

previous owner to proceed with the project using TIF funds and only provide 10% of the building

for affordable housing is exactly the kind of lenience on the part of the city that ultimately resulted

in the protracted conflict with HUD and the city’s forced agreement to a Voluntary Compliance

Agreement with HUD’s Office of Inspector General.

26. As the development proceeded in the teeth of the Great Recession, Hamilton

conceived of an idea to ensure the success of the Atmos project while providing even greater

affordable housing benefits to the city. Hamilton proposed to increase its own investment in the

project if the city would approve a small increase in the TIF award and a HUD-funded grant. In

exchange, Hamilton would substantially increase the number of affordable units.

27. Of greater benefit for low-income Dallas residents, Hamilton proposed to offer 107

of these units at low-income rents. Low-income, as that term has been used by the city’s Housing

PLAINTIFFS’ ORIGINAL PETITION PAGE 8 OF 20

and Economic Development Departments, means residents making 60% or less than the area’s

median income. These are people and families who would be mathematically unable to pay for

necessities such as health care or even adequate family nutrition without affordable housing with

rents at a deep discount to the market. Far from shying away from Dallasites in these

circumstances, Hamilton sought a way forward to provide a beneficial development for downtown

in the most challenging economy to house our vulnerable neighbors.

28. In May of 2011, the city agreed to Hamilton’s enhanced affordable housing

proposal, and Hamilton proceeded to develop and deliver the most radically mixed-income

residential project in Dallas to that date. Hamilton then brought in CitySquare Housing’s

(“CitySquare”) predecessor entity as a development partner because of CitySquare’s deep

experience with Low Income Housing Tax Credits on which the newly conceived project would

partially rely.

29. Phase 1 of the project was substantially complete in August of 2012, and Phase 2

was delivered in September, 2014. Since that time, Hamilton has provided the desperately needed

affordable housing it promised in coordination with the city’s departments of Fair Housing,

Housing, and Economic Development and in compliance with all the terms of the development

agreement with the city. The Economic Development Department conducted an audit of the project

90 days after completion and certified, as required by the development agreement, that all

conditions precedent to Hamilton’s right to collect its TIF award had been met. All of the data

confirming the continual provision of affordable housing since the complex was first leased up

have been periodically provided to the city.

PLAINTIFFS’ ORIGINAL PETITION PAGE 9 OF 20

 30. With the introduction of over 100 new units into the Downtown Connection TIF,

Plaintiffs are providing more affordable housing than the other TIF recipients combined while

using just over 5% of the total TIF funds.

TAX INCREMENT FINANCING: The Long Wait for Payment

31. Providing affordable housing is not inexpensive for apartment operators and

developers. Each dollar discount in market rent is an impact to the bottom line every single month

over the entirety of the affordability period, the shortest of which is 15 years. In the current market

downtown, offering one affordable unit at the least affordable 80% AMI threshold could easily

result in $180,000 of lost revenue over the life of the property.

32. Even if we could conjure the most magnanimous developer, charity alone will not

produce affordable units. Investors set their return expectations on market rents, and lenders

actually require borrowers to promise to charge what the market will bear. In short, there is no

affordable housing without public participation.

33. TIF spurs affordable housing while causing the city the least amount of pain. The

taxes incentivizing the development come from the investments in the TIF district themselves; so

there is a diminished vulnerability to charges of giveaways or waste. In order to further guard

against misspending the public’s resources, the city makes TIF applicants run a gantlet of onerous

financing documentation and underwriting requirements, and as is clear from the development

agreements at issue here, the city demanded serious, material benefit to the public before any TIF

award was paid.

34. The priority and timing of the payment of TIF awards demonstrates the difficulty

of becoming a successful TIF awardee. Because the city is prohibited from leveraging TIF dollars

by paying awards before the tax base has verifiably increased, TIF awards are often not due for

PLAINTIFFS’ ORIGINAL PETITION PAGE 10 OF 20

payment for ten years or more after an awardee’s project is complete. The board for the TIF at

issue in this case set forth a complex system for determining when TIF funds would be paid. The

complexity was necessary to accomplish two goals: 1) ensure the increase in tax base could pay

the awards and 2) pay successful applicants in an equitable order.

35. TIF districts are not risk-free propositions for the applicants and awardees. If a

district’s tax base doesn’t rise or if it doesn’t rise as much as projected, the last TIF awards in the

queue will not be paid. If a board sets an inequitable payment priority or if city staff pays the

awards out of order, a deserving awardee may be stiffed or short paid. Tax increment, the increase

in taxable value, is never calculated based on how much developers spend but only on the fair

market value of the district as a whole. If developers fail to convince the market that values have

risen or if one land owner devalues the district through inappropriate use of a property, the new

investment might not produce as much tax base growth as anticipated. These risks are spelled out

in the development agreements Dallas requires of TIF applicants and are just more risks Plaintiffs

braved.

36. In the case of the Downtown Connection TIF, and to all our good fortune, the

redevelopment of downtown has been successful, especially when measured by increase in tax

base. The TIF board’s payment priority policy was made an effective amendment to Hamilton’s

development agreement with the city and lists all the projects ahead of Atmos in the queue and the

conditions under which city staff can be assured that the TIF district has produced enough

increment for Hamilton’s TIF award to be paid. Again happily, all those other awardees have been

paid, and the TIF is currently more than adequately funded to pay Hamilton’s award some seven

years after Hamilton started providing one of the largest sources of affordable housing in the city.

PLAINTIFFS’ ORIGINAL PETITION PAGE 11 OF 20

And for those seven years, Hamilton has absorbed the monthly foregone revenue described above

while patiently waiting on its award.

THE CITY WELSHES ON THE DEAL

37. Because the queue for payment and the balance of available funds are public record,

Plaintiffs began inquiring with the city about payment when it became obvious that the award was

owed in the summer of 2018. After multiple inquiries from Plaintiffs, the city finally responded

with three separate letters on the same day alleging a variety of bogus defaults it claimed prevented

the payment of the TIF award. All of the ostensible defaults alleged by the city were drawn from

data continuously provided to the city by Hamilton for years, and none of the ostensible defaults

are actual, contractual conditions precedent to the city’s duty to pay the TIF award.

38. More troubling is that the city’s alleged defaults would result in awful outcomes

for the affordable housing tenants if Plaintiffs were to comply with the city’s requests. For instance,

one of Plaintiffs’ affordable housing tenants qualified for an affordable unit but later got a raise.

The city claims, in contradiction of federal housing regulations, that this poor tenant’s hard work

to improve his income required Plaintiffs to immediately evict him. This is not how federal housing

regulations work.

39. Plaintiffs had many informal communications with city staff attempting to work

through what Plaintiffs assumed must be a kind of misunderstanding. Ultimately, calm discussion

failed, and Hamilton was forced to send the city a notice of default in compliance with the default

provisions of the development agreement on June 7, 2019, and making written demand for its TIF

award.

THE DANGER TO THE CITY

PLAINTIFFS’ ORIGINAL PETITION PAGE 12 OF 20

 40. The city’s reckless action in refusing to pay Plaintiffs a presently due and owing

TIF award endangers the city and its residents in a number of ways.

41. First, the city is in violation of its duty to affirmatively further fair housing under

federal housing law and regulations as well as the 2014 Voluntary Compliance Agreement with

HUD. The duty to affirmatively further fair housing, again, is a complex duty encompassing many

obligations, but for cities like Dallas with an acute shortage of affordable housing, diligent pursuit

of more affordable housing may be the most important.

42. The VCA was a compromise reached between the city and HUD after HUD’s OIG

had concluded after an extensive investigation that the city had systematically discriminated

against minority residents by concentrating them in poverty-stricken areas and explicitly refusing

to build affordable housing in areas of high opportunity.

43. The regulatory danger the city has placed itself in is that a motivated HUD could

easily pursue the city for breaches of its duties and breaches of the VCA. The federal government’s

remedies in cases like these include repayment of federal housing funds and reducing or ceasing

future funding.

44. The bigger danger, though, is the message the city is sending to developers and

builders who might otherwise be tempted to propose housing projects that can begin to heal the

historical divisions in our city. Even apart from TIF funding, if Plaintiffs can be treated this way

after providing so much affordable housing, who will ever rely on the city’s promises to help

develop affordable housing again?

THE DANGER OF IRREPARABLE HARM TO HAMILTON

45. More pressing is the issue of what will happen to Hamilton’s TIF award if it is not

paid in order and in compliance with the board’s explicit prioritization policy. As discussed above,

PLAINTIFFS’ ORIGINAL PETITION PAGE 13 OF 20

TIFs are never guaranteed to provide the incentives we hope they do. If a deserving project is

inappropriately sidelined and scheduled for a payment in the future, the wasting fund of the

increment becomes subject to the claims of lower priority awardees in the queue. By the time the

city can be convinced to pay Plaintiffs what it owes, there is a real risk that the Downtown

Connection TIF could be underfunded to fulfill the award or may even have been shuttered.

46. To guard against this risk of irreparable harm, Plaintiffs require the Court’s help in

the form of a Temporary and Permanent Injunction prohibiting the city from making any further

transfers out of the TIF until Plaintiffs’ award is paid and from further violating the board’s

prioritization policy. Further details are pleaded below in Plaintiffs’ Petition for a Temporary and

Permanent Injunction.

47. Plaintiffs are now faced with the sad prospect of being forced to petition this Court

for assistance in collecting a presently due and owing debt by compulsion from a city that by

federal mandate, by state policy, and by city council policy should be an eager partner in providing

shelter to our neighbors who need it the most.

V.
COUNT 1 – BREACH OF CONTRACT

48. In May of 2011, Hamilton and Dallas executed a valid and enforceable written

contract in the form of the First Amendment to the Development Agreement. Hamilton attaches a

copy of the contract as Exhibit A and incorporates it by reference.

49. On February 15, 2013, the city and the Plaintiffs executed a valid and enforceable

contract in the form of a Partial Assignment to Development Agreement and the city’s Consent

thereto. These agreements are attached as Exhibit B and incorporated by reference.

50. These contracts provided that Plaintiffs would provide the improvements described

therein along with the affordable housing discussed above in exchange for certain incentives

PLAINTIFFS’ ORIGINAL PETITION PAGE 14 OF 20

totaling up to $23,000,000.00. Plaintiffs fully performed by delivering both phases of the project,

and indeed, people are residing in the affordable units today.

51. Defendant materially breached the contract when it withheld Hamilton’s TIF

payments as they came due starting in summer of 2018.

52. Plaintiffs have been damaged in a liquidated, principal amount of $7,992,134.81

after all lawful offsets and allowances.

53. Plaintiffs additionally made a valid demand for payment and declaration of default

in accordance with the default terms of the contracts. Those provisions specify a default rate of

interest on the amount of Plaintiffs’ principal damages at a rate of Prime plus four percent. This

default interest accrues to Plaintiffs damages for breach of contract and is also due and owing.

54. Plaintiffs are entitled to recover reasonable and necessary attorney fees under Texas

Local Government Code section 271.153(a)(3) because this suit is for breach of contract against a

local-government entity.

VI.
TEMPORARY AND PERMANENT INJUNCTIVE RELIEF

55. Plaintiffs require injunctive relief to prevent the City from transferring any more

money out of the TIF fund until Plaintiffs’ TIF award is paid and to prevent the City from further

violating the TIF board’s prioritization policy.

56. As detailed above, Plaintiffs have a right to money from the Dallas Downtown

Connection TIF. A TIF creates a particularized pool of funding that pursuant to state law can only

be drawn from, and spent within, a designated geographic zone.

57. The board of this TIF has created strong and clear guidelines setting forth the

priority of payments from the revenues of the TIF. Such clear rules were and are necessary to give

PLAINTIFFS’ ORIGINAL PETITION PAGE 15 OF 20

developers sufficient confidence in the TIF payment stream to induce them to invest in the TIF

district.

58. If the Defendant is allowed to deny Plaintiffs payment of the due and owning TIF

award or of the Defendant is permitted to vary the board’s priority of payment, Plaintiffs may not

have an adequate remedy at law because the TIF could run out of revenue due to drawing down of

the funds through payments to other, due to loss of value in an economic downturn, or due to loss

of confidence of existing or future investors limiting the new increment to be created in the future.

59. Any of these factors would tend to limit the effectiveness of a judgment in

Plaintiffs’ favor if Defendant is allowed to continue dispersing TIF funds while this case is still

pending.

60. Plaintiffs can easily demonstrate a probable right to recovery on their breach of

contract claim at a hearing on Temporary Injunction.

61. For these reasons, Plaintiffs request a Temporary Injunction until trial and a

Permanent Injunction on final trial. Plaintiffs seek the Court’s order only to preserve the status quo

during the pendency of this action. Plaintiffs seek an order immediately restraining Defendant from

making any further payments out of the Downtown Connection Tax Increment Finance District

funds or from making further awards or from taking any other action that could reduce the

probability of Plaintiffs’ due and presently owing award being paid.

VII.
CONDITIONS PRECEDENT

62. All conditions precedent to Plaintiffs’ right to recover their TIF award are listed in

Section 4.05 of the First Amendment to the Development Agreement as follows:

PLAINTIFFS’ ORIGINAL PETITION PAGE 16 OF 20

 “4.05 Specific Conditions to TIF Subsidy. That in addition to the conditions set out above,

the Agreement is hereby expressly made subject to all of the following contingencies which must

be performed or occur for each phase of development:

(a) Hamilton Atmos shall complete the Phase I Improvements and the Phase II

Improvements as described in Sections 1.01A and B and shall meet all deadlines for

obtaining building permits and for completing of the Atmos Complex Improvements by

the Phase I- CO and Phase II-CO dates; and

(b) Hamilton Atmos shall provide Affordable Housing in the Phase I Improvements

throughout the Phase I Affordability Period and shall provide Affordable Housing the

Phase II Improvements throughout the Phase II Affordability Period in accordance with

Section 1.11 and all applicable state and local laws, codes and regulations; and

(c) Hamilton Atmos shall market such residential units as Affordable Housing pursuant

to an affirmative fair housing marketing plan approved by the City; and

(d) Hamilton Atmos shall privately bid the construction and abide by the City's

Business Inclusion and Development Fair Share policies and Downtown Connection TIF

District Fair Share Agreement adopted by the Downtown Connection TIF District Board

of Directors on August 10, 2006, with a goal of twenty-five percent (25%) participation in

the construction of TIP-eligible expenditures and twenty-five percent (25%) participation

in the construction of non-TIP-eligible expenditures and otherwise in accordance with the

Downtown Connection TIF Project Plan; and

(e) Hamilton Atmos shall obtain Downtown Connection TIF District Design Review

Committee review and approval of Phase II design and site plan;

PLAINTIFFS’ ORIGINAL PETITION PAGE 17 OF 20

 (f) Hamilton Atmos, LP shall construct the Atmos Complex Improvements in

conformance to the design and the materials shown in elevations and site plans approved

by the Downtown Connection TIF District Board and the Design Review Committee

including any streetscape improvements; and

(g) Hamilton Atmos shall submit quarterly status reports in form and substance

satisfactory to the City on the progress of the construction of the Atmos Complex

Improvements from inception to the issuance of a final ce1iificate of occupancy and a final

certificate of acceptance by the Department of Public Works and Transportation; and

(h) Hamilton Atmos shall execute and deliver an operating and maintenance agreement

for the public infrastructure improvements associated with the Atmos Complex

Improvements in fom1 and substance satisfactory to the City by the Phase I-CO and Phase

II-CO dates; and

(i) Hamilton Atmos shall complete construction in substantial accordance with the

Plans and the Construction Budget and receive a final ce1iificate of occupancy and a final

certificate of acceptance issued by the Department of Public Works and Transportation for

the Phase I Improvements by the Phase I-CO date and for the Phase II Improvements by

the Phase II-CO date; and

(j) the Office of Economic Development shall conduct and complete a post construction

audit within 90 days after the final certificate of completion is issued for the Atmos

Complex to verify the Hamilton Atmos' compliance with the conditions to TIF Subsidy.

Failure of the City to complete such audit within 90 days shall not delay any payments of

the TIF Subsidy.”

PLAINTIFFS’ ORIGINAL PETITION PAGE 18 OF 20

 63. The certificate of completion was issued in 2014, and Defendant has either certified

that all conditions precedent have been met or has waived its right to do so pursuant to subsection

(j).

VIII.
JURY DEMAND

64. Plaintiff Hamilton Properties demands a trial by Jury and tenders the appropriate

fee with this Original Petition.

IV.
REQUEST FOR DISCLOSURE

65. Pursuant to Rule 194, Defendants are requested to disclose, within 50 days of

service, all information or material described in Texas Rule of Civil Procedure 194.2.

X.
PRAYER

66. For these reasons, Plaintiff respectfully asks that the Court issue citation for

Defendants City of Dallas to appear and answer. Plaintiff prays that it be awarded a judgment

against Defendants City of Dallas for the principal damages and interest listed above, and any such

other and further relief, both at law and in equity, general and specific, to which Plaintiff proves it

is justly entitled.

PLAINTIFFS’ ORIGINAL PETITION PAGE 19 OF 20

 Respectfully submitted,

James M. Stanton
State Bar No. 24037542
jms@stantonllp.com
Jennifer Salim Richards
State Bar No. 24079262
jrichards@stantonllp.com
Philip T. Kingston
State Bar No. 24010159
pkingston@stantonllp.com

STANTON LLP
1717 Main Street
Suite 3800
Dallas, Texas 75201
Telephone: (972) 233-2300
Facsimile: (972) 692-6812

ATTORNEYS FOR
PLAINTIFFS

PLAINTIFFS’ ORIGINAL PETITION PAGE 20 OF 20

EXHIBIT “A”
EXHIBIT “B”