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Attorney letter re proposed ZCBarbara A. Wolenty ROBINSON &WOr. I~.NTY 8888 Keystone Crossing Suite 710 Indianapolis, Indiana 46240 317/587-7820 August 17, 2000 Facsimile: 317/587-7829 Robert E. Hager, Esquire Nichols, Jackson, Dillard, Hager & Smith, LLP 1800 Lincoln Plaza 500 N. Akard Dallas, Texas 75201 Re: Denton Tap Parcel -Proposed zoning change Dear Bob: Thank you for your fax of last evening with the excerpts o/~ the various sections of the local ordinances, as I had requested from you when we spoke earlier yesterday. As you and I have discussed previously and discussed in more detail yesterday, we have significant issues, on behalf of our client, with the change of zoning proposed by the City of Coppell in connection with the property of my client (kaown as the Denton Tap Project). As you know, my client purchased the property after conducting appropriate due diligence and determining that the property was zor~ed "Light Industrial." After entering into two (2) contracts, one (1) with a restaurant user and one (1) for a self-storage mini warehouse user, my client learned through verbal conversations in the brokerage community, the City of Coppell was intending to change the zoning to 'q-Iighway Commercial." In fact, we discovered, much to our surprise, that the initial hearing for changing such zoning had alrea,ty been scheduled, not~sithstanding the fact neither our client nor the immediate predecessor in title (Centex) had received any noti£cation, from the city of the pr(,posed change. Subsequently, the City rescheduled the proposed change of zoning and successfully notified Centex (I believe that we have not received forn~al notification, though having attended the plan commission hearing in July, we are clearly aware of it). The City of Coppell is aware of the restaurant user (I understand that plans and permits are nearly, if not entirely, completely approved), and w,; forwarded to you in July port-ions of the applicable mini self-storage contract. As you and I discussed again yesterday, the contract has set time periods in it, which expir,: in September o£ AU;~I?~O00 1~:$~ FRO~ROBIN$ON & ~LENTY 3175877920 T-IZB P.003/004 F-948 Robert E. Ha§er August 17, 2000 Page 2 2000. These dates have been deliberately constructed in both contracts to be consistent with the dates under which various paymenrm are scheduled in connection with our financing. Clearly, any interference by the City of Coppell with our ability to perform our obligations under the contract will result in immediate aad significant damages. Since I spoke with you ori~nally, I have consulted various attcwneys, particularly concerning the Texas interpretation of the investment backed expectation doctrine. We believe our client has exceeding clear and strong case ~;ainst the City of Coppell for significant damages in the event the City of Coppell proceeds with the current proposed zoning change. It is my personal opinion ~at the most expeditious way for my client to proceed is for my client to file suit against the City of Coppell immediately. As I have told you, unless this matter is resolved very promptly, damages will be incurred regardless of whether the ultima~e zoning change is adopted. The self-storage purchaser is not prepared ~o proceed with ~ignificant engineering and other due diligence expenses without knowing that its use will be permitted by the city (assuming its proposed facilities comply with other building code and other applicable requirements). If the due d/ligence items to which I refer are not commenced promptly nex~ week upon the return from vacation of the business person at the buyer, it will not be possible to have such matters completed pcior to the expiration of the contract in mid-September. The clear and direct re.qult of a failure to resolve this roamer immediately will be significant damages to my client, giving rise to a basis for the flung of an immediate suit. I understand tha~ the City of Coppell has been discussing with our proposed buyer in some initial conversations the type of lmprovements, which our self-storage buyer proposes. Based on your description of those conversations, I ~m hopeful and would anticipate the City of Coppell and the buyer will be able to re-ah agreement; on the design, layout, etc. of the proposed buildings. However, the city must understand that our purchase agreement with such buyer simply warrants and represents that the zoning is, in fact, ~'LI.' We cannot agree to a change of zoning with a modification permitting only a specific type of narrowly defined building, as such an agreement on our part would constitute a breach of our representations and warranties in the contract which we sign prior to the city proposing the change of zoning. Such a breach would allow the buyer to terminate its obligations to purchase the Woperty and/or to try to renegotiate various other ~erms of the contrac~ with us. Any such renegotiation would be the direct result or,he actions of the City of Coppell and w, mld be included in our claim for damages. AU~--IY-2000 IZ:5~ FROM-ROBINSON & WOLEHTY 3175~??BZO T-lZ8 P.004/004 F-948 Robert E. Ha§er August 17, 2000 Page 3 Nevertheless, as we have indicated to you before, we are willing to find a resolution to this matter that works for everyone, provided such resolution can be completed in the timely matter required by our various contractual obligations. In addition to the issues concerning the public storage parcel, a change of zoning on the parcel will also affect our proposed outlots fronting on Denton Tap. We have previously offered to and, in fact, have already restricted our conversations with potential buyers to uses which are allowed under the new proposed zoning of "I-Iighway Commercial." However, certain buyers whose uses are so permitted have expressing concerns regarding the changes to the setback and landscape requirements. Until we know where we stand with the City of Coppell, we are unable to move forward which those transactions. Again, time becomes an i:~sue. I£we are unable to promptly response to these potential buyers, we will certainly lose the sales. Considering all of the facts and circumstances which you and ] discussed yesterday, I believe That the best solution to this matter is a Planned Development for the parcel. I believe we also need to include the Centex corner in such Planned Development. After a brief review of your Plan Development ordina~ce, I believe that without changing the zoning, we can restrict users such as an adult use business, night club, carnival, cemetery, and other "dirty dozen" uses which would otherwise be allowed under your '~LI" ordinance. We can also address the issues concerning the setbacks and landscaping in a manner consistent with the various plans for the property which are already in process. We understand that you will be meeting with the City of Coppell this week. We look forward to hearing from you after your meeting with regard to tls proposal. In any event, we would appreciate a response regardless of whether th~ city wishes to pursue a Planned Development, as we will need to take action, irrespective, on Monday of next weel~ CC: Thank you for your assistance. David A. Bunnell Stephen R. Thompson John B. Urbahns Ve~ truly, yours, ~ Barbara A~ Wolen y ~,]