HomeMy WebLinkAboutReso 56-09 Ring Prop Sales & Use TaxRESOLUTION NO. 56-09
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
APPROVING AN AGREEMENT FOR REIMBURSEMENT OF SALES AND USE TAX
REVENUE WITH RING PROPERTIES RELATING TO IMPROVEMENTS TO BE
PERFORMED ON A PROPERTY LOCATED AT 11501 DUBLIN BOULEVARD
WHEREAS, the current worldwide economic slowdown has negatively impacted the City of
Dublin's revenues; and
WHEREAS, for decades, state and local governments have used economic development
incentives to attract or retain jobs and/or improve the local tax base; and
WHEREAS, on January 6, 2009, the City Council of the City of Dublin adopted Resolution
No. 9-09, establishing a Sales Tax Reimbursement Program ("the Program") intended to attract new
businesses to the City; and
WHEREAS, the Program established certain conditions under which the City may' agree to
enter into an agreement to reimburse property owners and businesses for costs. they incur- in making
certain internal and external building improvements, as well as site improvements provided that certain
conditions are met; and
WHEREAS, Ring Properties ("the Owner") owns certain real property- located at 11501
Dublin Boulevard ("the Property"), located in the City; and -
WHEREAS, the Owner has entered into an 10-year lease agreement with Graybar Electric
Company, Inc. ("the Tenant"), and the Owner has furnished the City with documentation establishing
that the Tenant will generate more than one hundred thousand dollars ($100,000) of sales tax revenue
for the City each year; and
WHEREAS, the Owner wishes to perform certain interior, exterior and site improvements, and
to avail itself of the benefits of the Program by entering into an agreement with the City to receive
reimbursement from the City to be paid out of sales tax revenue generated by the Tenant; and
WHEREAS, the City Council finds that it is in the public interest to enter into this agreement
because the City and its residents will benefit from increased revenue received from both sales tax
revenue that it may not otherwise receive, and from the increase in the property taxes owed by the
Owner due to the increased value of the property from the improvements; and
WHEREAS, the City Council finds that it is in the public interest to enter into this agreement
because the City and its residents will benefit from the aesthetic improvements to the neighborhood
that will occur due to the exterior improvements to be made to the structure; and
Page 1 of 2
WHEREAS, the City Council further finds that the City and its residents may also benefit from
the creation of new jobs in the City that will occur when the Tenant establishes its business here.
NOW, THEREFORE, BE IT RESOLVED that the City Council of Dublin approves the
Sales Tax Reimbursement Agreement (attached as Exhibit A), and titled "Agreement for
Reimbursement of Sales and Use Tax Revenue between the City of Dublin and Ring Properties."
BE IT FURTHER RESOLVED that the City Manager is authorized to execute the agreement
substantially in the form attached hereto and to undertake such further action as maybe necessary and
desirable to carry out the intent of this resolution.
PASSED, APPROVED AND ADOPTED this 5th day of May, 2009, by the following vote:
AYES: Councilmembers Biddle, Hart, Hillenbrand, Scholz, and Mayor Sbranti
NOES: None
ABSENT: None
ABSTAIN: None ^ /
~~../~-~
Mayor
ATTEST:
/`/fir ~ ~~~
City Clerk
Reso No. 56-09, Adopted 5-5-09, Item 8.2 Page 2 of 2
EXHIBIT A TO ATTACHMENT 2
AGREEMENT FOR REIMBURSEMENT OF SALES AND USE TAX REVENUE
BETWEEN THE CITY OF DUBLIN AND RING PROPERTIES
THIS AGREEMENT is made and entered into this _th day of , 2009, by and between
the City of Dublin ("City"), a municipal corporation, and the Ring Family Revocable Trust and the Davies Family
Revocable Trust, both revocable trusts doing business as Ring Properties. The Ring Family Revocable Trust
and the Davies Family Revocable Trust dba Ring Properties, are hereafter referred to as "Owner."
RECITALS
WHEREAS, the City Council of the City of Dublin adopted Resolution No. 9-09 on January 6, 2009
establishing a Sales Tax Reimbursement Program ("Program") for a period of two years; and
WHEREAS, the Program authorizes the City of Dublin to enter into agreements with property owners
and businesses, in certain circumstances, wherein the City agrees to reimburse the owner or business for the
actual costs of certain pre-approved improvements to business properties. The reimbursement is made in
annual payments over five years or until the owner or business has recouped its actual expenses for the
improvements, whichever comes first. The annual payment is capped at fifty percent (50%) of the sales and
use tax revenue (hereafter "sales tax") generated by the business in the preceding year; and
WHEREAS, provided certain circumstances are met, the Program allows property owners to recover,
over time, a portion of the costs of interior, exterior and site improvements made to their property through a
partial reimbursement from the City of sales tax generated from the property; and
WHEREAS, Owner owns certain real property located at 11501 Dublin Boulevard ("the Property"),
located in the City; and
WHEREAS, Owner has entered into a ten (10) year lease agreement for office space at the Property,
with Graybar Electric Company ("Tenant"), which does not currently rent office space elsewhere in the City; and
.WHEREAS, the lease agreement is for a space that has a total area of seventy-five thousand (75,000)
square feet or less, and Owner has famished the City with documentation establishing tha# Tenant is expected
to have at least ten million dollars ($10,000,000) in annual retail sales transactions attributable to operations
conducted at the Property, which would result in at least one hundred thousand dollars ($100,000} of sales tax
for the City each year; and
WHEREAS, Owner and Tenant. have agreed that Tenant will conduct certain tenant improvements to
the property and Owner will pay Tenant up to three hundred thousand dollars ($300,000) for said tenant
improvements; and
WHEREAS, Owner will perform additional interior improvements, exterior improvements and site
improvements to the Property, and wishes to utilize the Program to receive reimbursement from the City for the
costs it incurs in improving the Property.
EXHIBIT A TO ATTACHMENT 2
1.
1.1 "Exterior Improvements" means all improvements made to the exterior of the physical
structure of the office building identified in Exhibit A of this Agreement.
1.2 "Improvements" means all Tenant Improvements, Exterior Improvements, Interior
Improvements, Site Improvements and Public Right-of-Way Improvements identified in
Exhibit A and Exhibit B of this Agreement.
1.3 "Interior Improvements" means all improvements made to the interior office space to be
occupied by the Tenant and identified in Exhibit A of this Agreement.
1.4 "Reporting Year" means any twelve month period for which Owner provides an accounting
of Tenant's sales tax payments, which payments are subject to possible reimbursement.
1.5 "Right-of-Way Improvements" means all improvements made to the City's public right-of-
way identified in Exhibit A of this Agreement.
1.6 "Site Improvements" means all improvements made to the Property that are not Exterior
Improvements, Interior Improvements or Right-of-Way Improvements identified in Exhibit A
of this Agreement.
1.7 "Tenant Improvements" means all physical improvements made to the interior office space
to be occupied by Tenant that are contracted and paid for by Tenant and identified in
Exhibit B of this Agreement.
2. OWNER'S DUTIES UNDER THIS AGREEMENT
2.1 Owner wishes to perform certain Exterior Improvements, Interior Improvements, Right-of-
Way Improvements and Site Improvements substantially as described in Exhibit A of this
Agreement . Furthermore, Tenant intends to perform certain Tenant Improvements
substantially as described in Exhibit B of this Agreement for which Owner will provide
partial reimbursement pursuant to the provisions of the lease agreement between Owner
and Tenant.
2.2 Prior to commencement of construction of the Improvements or any portion thereof, Owner
shalt provide City with a copy of its agreement with Tenant requiring Owner to pay Tenant
three hundred thousand dollars ($300,000) to cover a portion of the cost of the Tenant
Improvements.
2.3 Owner has provided City with a description of ail proposed improvements and a cost
estimate for the proposed improvements hereto as Exhibit A. The total cost estimate for
EXHIBIT A TO ATTACHMENT 2
City of Dublin, in no event shall City pay Owner more than the Maximum Compensation
Amount.
Prior to commencement of construction of the Improvements or any portion thereof, Owner
shall submit to City all plans and specifications for the Improvements for City review and
approval, including the plans, specifications and cost estimates far the Tenant
Improvements identified in Exhibit B of this Agreement. Nothing in this Agreement shall
affect the need for Owner and Tenant to obtain any approvals from the City for the
Improvements as required by any City rules, regulations, ordinances or resolutions.
2.4 Following City approval of the plans, specifications and cost estimates pursuant to Section
3.2, and in the event that Owner desires to modify the specifications for any of the
Improvements or if change orders are required, Owner shall submit said modifications and
change orders to City for approval. Failure to do so shall relieve the City of any obligation
to pay far any Improvements not constructed as approved, pursuant to Section 3.1.
2.5 Owner may, in its discretion, arrange to have all of the Improvements constructed atone
time, or to have the Improvements constructed in the following two phases:1) aII Tenant
Improvements, Interior Improvements and Exterior Improvements ("Phase One°), 2) all Site
Improvements and Right-of-Way Improvements ("Phase 2").
2.6 In the event that Owner does not elect to construct the Improvements in phases pursuant
to Section 2.5, Owner shall provide the City with all invoices, receipts and evidence of
payment for the Exterior Improvements, Interior Improvements, Right-of-Way
Improvements and Site Improvements by the end of the first Reporting Year in which
Tenant pays sales taxes based on its operations in Dublin. Said bills and evidence of
payment shall also include a cover sheet summarizing the information contained therein,
including the original. approved estimate amount and the amount paid to each vendor.
In the event that Owner elects to construct the Improvements in phases pursuant to
Section 2.5 of this Agreement the cover sheet shall clearly identify whether any submitted
invoice, receipt and payment corresponds to Phase One or to Phase Two. Owner must
submit said bills, receipts and evidence of payment for Phase One by the end of the first
Reporting Year in which Tenant pays sales taxes based on its operations in Dublin.
Once Owner submits the first Phase Two invoices, receipts and evidence of payment, this
will trigger the five year repayment window for Phase Two.
2.7 Owner shall provide the City with evidence of all payments made by Owner to Tenant
pursuant to the lease agreement between those parties described in Section 2.2 of this
Agreement, within thirty (60) days of making said payments.
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EXHIBIT A TO ATTACHMENT 2
The first Reporting Year shall begin with the first full calendar quarter in which Tenant pays
sales taxes on its operations in City. For example, if Tenant begins operations in February
of any given year, Owner shall send to City an accounting of the amount of sales tax
Tenant paid from April of that year through the following March, broken down by calendar
quarter. Owner shall provide City with this report within ninety (9Q) days of the conclusion
of the fourth calendar quarter of each reporting year.
a. In the event that Owner does not elect to construct the Improvements in phases
pursuant to Section 2.5, Owner shall provide City with a total of five (5} annual reports, beginning with the
first full calendar quarter in which Tenant pays sales taxes on its operations in City, of the sales taxes paid
by Tenant, covering a total of five consecutive (5) Reporting Years.
b. In the event Owner elects to construct the Improvements in phases pursuant to
Section 2.5 of this Agreement, Owner shall follow the procedure described above, providing City with a total
of five (5) annual reports for each individual phase. The first Reporting Year for Phase One shall begin with
the first full calendar quarter in which Tenant pays sales taxes on its operations in City. The first Reporting
Year for Phase Two shall begin with the first full calendar quarter after Owner submits any bills or evidence
of payment for any Phase Two Improvements, pursuant to Section 2.6 of this Agreement. Once Owner
submits any such bills or evidence of payment for Phase Two, Owner shall provide City with a total of five
(5) annual reports of the sales taxes paid by Tenant covering a total of five (5) consecutive Reporting Years
for Phase Two.
2.9 The actual cost of the Improvements for which evidence of payment has been submitted to
City pursuant to Section 2.6 of this Agreement, plus the total amount of payments made by
Owner to Tenant and reported to City pursuant to Section 2.7 of this Agreement shall
constitute the Eligible Compensation Amount. Each time Owner submits evidence of
payment pursuant to Section 2.6, or reports a payment to Tenant pursuant to Section 2.7
of this Agreement, the Eligible Compensation Amount shall be adjusted to reflect the
amounts paid by Owner.
In the event Owner elects to construct the improvements in phases pursuant to Section 2.5
of this Agreement, there shall be two separate Eligible Compensation Amounts, one for the
first phase, and one for the second phase. All payments to Tenant reported pursuant to
Section 2.7 shall be added to the Eligible Compensation Amount for the first phase.
2.10 In the event that Owner performs improvements to interior spaces of the Property in
addition to the Interior Improvements, as defined in Section 1.3 of this Agreement,. Owner
shall cause all such improvements to be billed and paid for separately from the
Improvements described in Exhibit A.
EXHIBIT A TO ATTACHMENT 2
2.12 In the event that Tenant, during the term of this Agreement, opens an additional business
operation in the City that will pay sales.taxes, Owner shall ensure that the report of
Tenant's annual sales tax it submits to City, pursuant to Section 2.6 of this Agreement
includes only that portion of the sales tax attributable to business. conducted by Tenant at
the Property.
2.13 In the event that City determines, pursuant to Section 3.10 of this Agreement, that it
overpaid Owner due to a miscalculation or misallocation of sales tax payments, and if City
is not obligated to make any additional payments to Owner pursuant to this Agreement, or
the amount of any additional payments owed by City is insufficient to compensate City for
its prior overpayment, Owner shall pay to City the amount City overpaid within sixty (60)
days of notification by City of the overpayment.
2.14 Owner agrees that the Right-of-Way Improvements constitute "public works° as that term is
defined in Section 1720 of the Califomia Labor Code. Owner shall ensure that all-work on
the Right-of--Way Improvements is performed in compliance with all prevailing wage
requirements contained in Section 1720 et seq. of the Califomia Labor Code.
2.1.5 Owner acknowledges that it has had the opportunity to consult with an attorney regarding
the terms of this Agreement.
3. CITY'S DUTIES UNDER THIS AGREEMENT
3.1 Upon receipt of the plans and specifications for the Improvements pursuant to Section 2.3
of this Agreement, City shall review said materials to determine the extent to which they
represent work that is consistent with the intent of the Program. City shall inform Owner in
writing either that the Improvements have been approved, or that they have been
approved with exceptions, which exceptions shall also be in writing.
3.2 Within thirty (30) days of receipt of receipt of evidence of payment for the Improvements,
any individual phase of the Improvements pursuant to Section 2.6 of this Agreement, or of
payments made to Tenant pursuant to Section 2.7 of this Agreement, City shall provide
Owner with an updated statement of the Eligible Compensation Amount. Where Owner
elects to construct the Improvements in phases pursuant to Section 2.5 of this Agreement,
City shall provide Owner with an updated statement of the Eligible Compensation Amount
for the relevant phase.
3.3 City shall verify the accuracy of Owner's report of sales tax delivered to City pursuant to
Section 2.8 of this Agreement. City shall, within one hundred twenty (120) days after the
end of the last calendar quarter covered by the report, and subject to the provisions of
Sections 3.4, 3.5, 3.6, 3.7, 3.8 and 3.9 of this Agreement, pay to Owner an amount equal
to fifty percent (50%) of the sales tax paid by Tenant.
EXHIBIT A TO ATTACHMENT 2
3.9 of this Agreement, pay to Owner an amount equal to fifty percent (50%) of the sales
tax paid by Tenant. If Owner does not submit a revised report within sixty (60) days of
notification, or if City is unable to verify the accuracy of the revised report, City. shall make
no payment to Owner for that Reporting Year until the matter is resolved to the satisfaction
of the City.
3.4 Should Owner fail to timely submit to City the information as required in Section 2.6 of this
Agreement, City shall be under no obligation to make any payment to Owner for that year.
3.5 In no event shall City make any payment to Owner for any year in which the total sales tax
paid by Tenant is less than one hundred thousand dollars ($100,000).
3.6 At no time shall the cumulative amount of City's payments be more than the Eligible
Compensation Amount then in effect.
3.7 1f Owner does not elect to construct the Improvements in phases pursuant to Section 2.5,
in no event shall City be obligated to pay Owner based on sales tax generated more than
five (5) years after the first quarter covered by the report of sales tax submitted to City
pursuant to Section 2.8 of this Agreement.
In the event that Owner has elected to construct the Improvements in phases pursuant to
Section 2.5 of this Agreement, in no event shall City be obligated to pay Owner for any
individual phase based on sales tax generated more than five (5) years after the first
quarter covered by the report of sales tax for that same phase submitted to City pursuant
to Section 2.8 of this Agreement.
3.8 In the event that the actual cost of the Improvements, or any phase thereof, is less than
the estimates approved by City pursuant to Section 3.1 of this Agreement, City shall be
responsible only for cumulative payments equal to the actual amount of the Improvements.
3.9 In the event that Tenant terminates its lease agreement or otherwise vacates the Property
before submitting five (5) annual reports of sales tax payments, City's obligation to pay
Owner shall be based only on the amount of sales. tax generated by Tenant while
occupying the Property.
3.10 In the event that City teams that Tenant's sales tax payments were incorrectly calculated
or allocated to the City, and if the result of the incorrect calculation or allocation is that City
paid Owner more or less than it would have been required to pay pursuant to Section 3.3
of this Agreement, City shall determine the amount of overpayment or underpayment.
If the City is obligated to make any subsequent annual payment to Owner pursuant to this
Agreement, City shall adjust the subsequent payment to reflect any overpayment or
EXHIBIT A TO ATTACHMENT 2
Compensation Amount. This payment shall be made within sixty (60) of City's discovery or
the amount of the underpayment.
If City determines that it overpaid Owner, but is either not obligated to make any additional
payments to Owner pursuant to this Agreement, or the amount of any additional payments
is insufficient to compensate City for its prior overpayment, Owner shall pay City the
amount City overpaid in compliance with Section 2.13 of this Agreement.
4. Indemnification
Owner shall defend City, its officers, employees and officials, against any claims or actions
(including declaratory or injunctive relief) concerning Owner's construction of the Improvements,
including the Right-of-Way Improvements, and shall indemnify and hold City harmless from any
damages, charges, fees or penalties that may be awarded or imposed against City and/or Owner in
connection with, or on account of, Owner's construction of the Improvements, including the Right-
of-Way Improvements, and/or City's failure to enforce or comply with any applicable laws.
5. Amendments to Agreement
No part of this Agreement shall be altered or amended without written agreement of the signatory
Parties. Any amendment to the Maximum Reimbursement Amount shall require prior approval by
the City Council of the City of Dublin.
6. Assignment
The rights and obligations of the Parties under this agreement are not assignable and shall not be
delegated without the prior written approval of the other Party.
7. Exhibits.
The following Exhibit is attached hereto and incorporated as if fully set forth herein:
Exhibit A: Description of Improvements.
Exhibit B: Description of Tenant Improvements
IN WITNESS WHEREOF, the Parties execute this agreement hereto on the day and the year first written
above.
APPROVED AS TO FORM AND CONTENT:
EXHIBIT A TO ATTACHMENT 2
CITY OF Dublin, a Municipal Corporation
Date:
By:
Joni Pattillo, City Manager
The Ring Family Revocable Trust as to an undivided twa-thirds (2/3) interest in the Property and the Davies
Family Revocable Trust as to an undivided one-third (1/3) interest in the Property
Date: The Ring Family Revocable Trust
By:
Kevin Ring, trustee under trust agreement dated
March 23,1993
Date: The Davies Family Revocable Trust
By:
Caroline Davies, trustee under trust agreement dated
February 24,1992
1192643.13
Exhibit A
MAXIMUM COMPENSATION AMOUNT:
$632,500
Tenant Improvements
o Tenant Improvement Allowance for work conducted by Graybaz (see Exhibit B for
description)
o Cost: $300,000
Interior Improvements:
o Remodel 1st floor (Graybaz's) restrooms. Includes new counter tops, sinks, faucets, low
flow toilets, partitions, tile, and paint
o Estimated Cost: $25,500
Exterior Improvements:
o Paint on north and east sides (visible from Dublin Blvd}
o Estimated Cost: $12,000
Site and Right-of--Way Improvements:
o Improvements as necessary to connect the existing pazking azea to the new access that
will be constructed off Dublin Bivd.
o Construct additional pazking for Graybaz on the excess right-of--way area.
o Improvements will include grading, paving (new and repair), concrete curbing and stairs
and/or sidewalks, parking lot sealing and striping, signage numbering, and landscaping.
o Costs will include fees for civil engineers, a landscape architect, city plan check and
permits, and as well as factoring in labor costs under prevailing wage for the right-of--way
improvements.
o Estimated costs: $295,000 (plans cannot be prepared until the Dublin Blvd. expansion
plans are completed)
Exhibit B
TENANT IMPROVEMENTS - GRAYBAR ELECTRIC, INC.
DESCRIPTION
Tenant Improvement Summary
o Demolition of existing executive suite space
o Installation of new carpets
o Upgrades to disability access
o Addition of a conference room
o Remodel of remaining offices
o New lighting/rewiring of electrical system
o New mechanical duct work
o New heat pumps
o Painting of walls
Tenant Improvement Allowance for work conducted by Graybar -Cost: $300,000 (valuation
of the improvements -approx. $700,000)