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HomeMy WebLinkAboutReso 58-13 Sales Tax Reeimb Agmt RESOLUTION NO. 58 - 13 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN AMENDING AND RESTATING THE SALES TAX REIMBURSEMENT AGREEMENT WITH BICENTENNIAL SQUARE PARTNERS 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 City Council adopted Resolution No. 149-09 on October 6, 2009, revising and restating the Program to permit the option of a ten (10) year reimbursement period for participants that generate $500,000 in sales tax revenue for the City each year; and WHEREAS, the City Council adopted Resolution No. 135-12 on July 17, 2012, revising and restating the Program to include improvement costs made by businesses that are constructing new structures on undeveloped property sites or that may be tenants in such new structures, and which Resolution provided that the Program shall terminate on January 5, 2015; 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 (5) or ten (10) 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 four quarter 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, in May 2009, by Resolution 56-09, the City entered into a Sales Tax Reimbursement Agreement with Ring Properties, owner of 11501 Dublin Blvd. ("the Property"), to recoup improvements costs associated with the tenanting of Graybar Electric Company ("Tenant"), which at the time, did not rent office space elsewhere in the City; and WHEREAS, since that time ownership of the Property has been transferred to Bicentennial Square Partners; and WHEREAS, in order to reflect this change in ownership, and in order to ensure the continuing presence of Tenant in the City and the concomitant benefits derived by the City from said presence, Owner and City wish to amend the Agreement to modify the nature of site improvements to be constructed and to increase the total amount eligible for reimbursement. Reso No.58-13,Adopted 5-7-13, Item 7.3 Page 1 of 2 WHEREAS, the amended and restated Agreement will result in public benefits to the City, including a more aesthetically pleasing portion of the Dublin Blvd. corridor; the likelihood of job growth at Graybar and additional job creation with the building's executive suites, 580 Executive Center; the likelihood for increased property values associated with site expansion and development; the provision of a long-term real estate solution for Graybar that will generate ongoing sales tax revenue to the City; and additional local spending by these new employees in Dublin. NOW, THEREFORE BE IT RESOLVED that the City Council approves the Amended and Restated Agreement with Bicentennial Square Partners attached hereto as Exhibit A. BE IT FURTHER RESOLVED that the City Manager is authorized to execute the Amended and Restated Agreement substantially in the form attached hereto. PASSED, APPROVED AND ADOPTED this 7th day of May, 2013, by the following vote: AYES: Councilmembers Biddle, Gupta, Hart, Haubert, and Mayor Sbranti NOES: None ABSENT: None ABSTAIN: None Mayor ATTEST: City Clerk Reso No. 58-13,Adopted 5-7-13, Item 7.3 Page 2 of 2 AMENDED AND RESTATED AGREEMENT FOR REIMBURSEMENT OF SALES AND USE TAX REVENUE BETWEEN THE CITY OF DUBLIN AND BICENTENNIAL SQUARE PARTNERS THIS AMENDED AND RESTATED AGREEMENT Is made and entered into this_th day of May, 2013,by and between the City of Dublin("City'),a municipal corporation,and Bicentennial Square Partners,a California general partnership('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 City Council adopted Resolution No. 149.09 on October 6,2009,revising and restating the Program to permit the option of a ten(10)year reimbursement period for participants that generate $500,000 In sates tax revenue for the City each year;and WHEREAS,the City Council adopted Resolution No. 135-12 on July 17,2012,revising and restating the Program to include Improvement costs made by businesses that are constructing new structures on undeveloped property sites or that may be tenants in such new structures,and which Resolution provided that the Program shall terminate on January 5,2015;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 furnished the City with documentation establishing that 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,on May 5,2009 City entered into that certain Agreement for Reimbursement of Sales and use Tax Revenue between the City of Dublin and Ring Properties,which was entered into with the Ring Family Revocable Trust and the Davies Family Revocable Trust,which trusts were,at that time,the owners of the Property;and WHEREAS,since that time ownership of the Property has been transferred to Owner;and WHEREAS,in order to reflect this change in ownership,and in order to ensure the continuing presence of Tenant in the City and the concomitant benefits derived by the City from said presence,Owner and City wish to amend the Agreement to modify the nature of site improvements to be constructed and to increase the total amount eligible for reimbursement. AGREEMENT NOW,THEREFORE,for and in consideration of the mutual advantages to be derived therefrom,and in consideration of the mutual covenants herein contained,Parties hereto enter Into this Amended and Restated Agreement for Reimbursement of Sales and Use Tax Revenue Between the City of Dublin and Bicentennial Square Partners to read as follows: 1. DEFINITIONS 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 shall 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 all proposed improvements and a cost estimate for the proposed improvements hereto as Exhibit A. The total cost estimate for these improvements is Six Hundred and Ninety Seven Thousand Five Hundred Dollars ($697,500). This amount,plus three hundred thousand dollars($300,000)which Owner Is required to pay Tenant as described in Section 2.2 of this Agreement constitute the Maximum Compensation Amount of Nine Hundred and Ninety Seven Thousand Five Hundred Dollars($997,500). Absent an amendment to this Agreement and subject to approval by the City Council of the 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 for 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 for 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 at one time,or to have the Improvements constructed in the following two phases: 1)all Tenant Improvements,Interior improvements and Exterior Improvements("Phase Ones),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 sixty(60)days of making said payments. 2.8 Once Tenant begins paying sales taxes on its operations within the City,Owner shall provide City with an annual report,signed by a duly authorized representative of Tenant, showing the amount of sales tax Tenant paid for transactions occurring in the City in the preceding Reporting Year. The report shall Include a breakdown of the amount of sales tax payments made in each quarter of the Reporting Year. 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(90)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. 2.11 A representative of the City shall have the right,at the City's sole discretion,to inspect all Improvement work performed to ensure that said work was performed substantially as approved by the City pursuant to Section 3.1 of this Agreement. This right of inspection shall be in addition to any inspection performed by City staff as required or permitted by any other City rules,regulations,ordinances or resolutions. 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 Tenants 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 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 thirty(30)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 California 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 at seq.of the California Labor Code. 2.15 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 2.6 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. In the event that the City is unable to verify the accuracy of Owner's report of sales tax delivered to City pursuant to Section 2.6 of this Agreement,City shall so inform Owner. Owner shall have sixty(60)days from such notification by City to deliver a revised report of sales tax in the form described in Section 2.6. If City is able to verify the accuracy of any such new report,City shall,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. 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 fall 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 If 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 2.6 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 2.6 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 learns 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 underpayment it may have made for the period In question. If City determines that it underpaid Owner,but is not obligated to make any additional payments to Owner pursuant to this Agreement,City shall pay owner the amount It underpaid, provided that the total payments to Owner do not then exceed the Maximum Compensation Amount.This payment shall be made within thirty(30)of City's discovery of 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. MKS:KS: 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: . By: John D.Bakker,City Attorney,City of Dublin • ADOPTED BY: CITY OF DUBLIN,a Municipal Corporation Date:, Sy: Joni Pattillo,City Manager BICENTENNIAL SQUARE PARTNERS Date: 4 • 2.(o• 2M 13 By: • Kevin Ring,its Authorize Partner 7074587.1 Exhibit A MAXIMUM COMPENSATION AMOUNT: $997,500 Tenant Improvements: $300,000 o Tenant Improvement Allowance for work conducted by Graybar(see Exhibit B for description) Interior and Exterior Improvements: $150,475 o Remodel 1st floor(Graybars)resirooms. Includes new counter tops,sinks,faucets,low flow toilets,partitions, tile,and paint o Paint on north and east sides(visible from Dublin Blvd) o Accessibility upgrades required for conformance to California Title 24 and Federal Americans with Disability Act Site and Right-of-Way Improvements:$547,025 o Improvements as necessary to connect the existing parking area to the new access that will be constructed off Dublin Blvd. o Construct additional parking for Graybar 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. 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)