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HomeMy WebLinkAboutReso 193-12 Dicks Sporting Sales Tx Reimb RESOLUTION NO. 193 - 12 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN APPROVING AN AGREEMENT FOR REIMBURSEMENT OF SALES AND USE TAX REVENUE WITH DICK'S SPORTING GOODS, INC. RELATING TO IMPROVEMENTS TO BE PERFORMED ON A PROPERTY LOCATED AT 2820 DUBLIN BOULEVARD 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, the City Council of the City of Dublin adopted Resolution No. 9-09 on January 6, 2009, which Resolution established a Sales Tax Reimbursement Program ("Program") intended to attract new businesses to the City; 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 established a termination date for the Program of January 5, 2011; and WHEREAS, the City Council adopted Resolution No. 172-10 on December 7, 2010, which Resolution provided that the Program shall terminate on January 9, 2013; 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 also extended the termination date until January 5, 2015; and WHEREAS, the Program authorizes the City of Dublin to enter into agreements with businesses in certain circumstances, wherein the City agrees to reimburse the 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 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 Tenants 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, Tenant leases certain real property located at 2820 Dublin Boulevard (APN: 985- 00027-009-003), ("the Property"), located in the City; and WHEREAS, the space to be occupied by Tenant has a total area of fifty-five thousand (55,000) square feet or less, and Tenant 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 Page 1 of 2 WHEREAS, Tenant intends to improve one building it will be using for its operations. These improvements include exterior and façade improvements; interior construction of offices, break room, bathrooms; interior and exterior lighting; HVAC and plumbing systems; flooring; new wall finishes; and acoustic ceilings; 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 increased value of the property from the improvements; and WHEREAS, the City Council further 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 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 the City 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 Dick's Sporting Goods, Inc."). 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 may be necessary and desirable to carry out the intent of this resolution. PASSED, APPROVED AND ADOPTED this 20th day of November, 2012, by the following vote: AYES: Councilmembers Biddle, Hart, Hildenbrand, Swalwell, and Mayor Sbranti NOES: None ABSENT: None ABSTAIN: None Mayor ATTE ficr City Clerk Reso No. 193-12,Adopted 11-20-12, Item 4.5 Page 2 of 2 AGREEMENT FOR REIMBURSEMENT OF SALES AND USE TAX REVENUE BETWEEN THE CITY OF DUBLIN AND DICK'S SPORTING GOODS, INC. THIS AGREEMENT is made and entered into this_day of November, 2012, by and between the City of Dublin ("City"), a municipal corporation, and Dick's Sporting Goods, Inc., a Delaware corporation, as tenant(''Tenant"), collectively referred to as "the Parties." RECITALS WHEREAS, the City Council of the City of Dublin adopted Resolution No. 9-09 on January 6, 2009, which Resolution established 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 established a termination date for the Program of January 5, 2011; and WHEREAS, the City Council adopted Resolution No. 172-10 on December 7, 2010, which Resolution provided that the Program shall terminate on January 9, 2013; 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 WHEREAS, the Program authorizes the City of Dublin to enter into agreements with businesses in certain circumstances, wherein the City agrees to reimburse the 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 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 Tenants 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, Tenant leases certain real property located at 2820 Dublin Boulevard (APN: 985-00027- 009-003), ("the Property"), located in the City; and WHEREAS, the space to be occupied by Tenant has a total area of fifty-five thousand (55,000)square feet or less,and Tenant 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, Tenant intends to improve one building it will be using for its operations. These improvements are: interior construction of, offices, break room and bathrooms, exterior and facade improvements, HVAC and plumbing systems, flooring, new wall finishes, and acoustic ceilings. • AGREEMENT NOW, THEREFORE, for and in consideration of the mutual advantages to be derived therefrom, and in consideration of the mutual covenants herein contained, it is agreed by and between the Parties hereto as follows: 1. DEFINITIONS 1.1 ''Eligible Compensation Amount" means three hundred fifty thousand dollars ($350,000). 1.2 "Exterior Improvements" means all improvements made to the exterior of the physical structure of the building identified in Exhibit A of this Agreement. 1.3 "Improvements" means all Exterior Improvements and Interior Improvements identified in Exhibit A. 1.4 "Interior Improvements" means all improvements made to the interior space to be occupied by the Tenant and identified in Exhibit A of this Agreement. 1.5 "Maximum Compensation Amount" means Tenant's actual costs for construction of the Improvements, as shown in the written Notice of Maximum Amount provided to Tenant by City pursuant to Section 3.2 of this Agreement. 2. TENANT'S DUTIES UNDER THIS AGREEMENT • 2.1 Tenant wishes to perform certain Improvements substantially as described in Exhibit A of this Agreement . 2.2 Prior to commencement of construction of the Improvements or any portion thereof, Tenant shall submit to City all plans, specifications and cost estimates for the Improvements for City review and approval. Nothing in this Agreement shall affect the need for Tenant to obtain any approvals from the City for the Improvements as required by any City rules, regulations, ordinances or resolutions. 2.3 Following City approval of the plans, specifications and cost estimates pursuant to Section 3.1, and in the event that Tenant desires to modify the specifications for any of the Improvements or if change orders are required, Tenant shall submit the modifications, change orders and any revisions to the originally approved cost estimates to City for approval. Failure to do so shall relieve the City of any obligation to pay for any Improvements not constructed as originally approved. 2.4 Tenant shall provide the City with all bills and evidence of payment for the Improvements, in a form acceptable to City within thirty(30) days of Tenant's final payment for the Improvements. A form acceptable to the City could include a summary of the original estimate and final amount paid to each vendor. This summary would also require copies of receipts and paid invoices as an attachment to the summary. 2.5 The actual cost of the Improvements paid by Tenant, as indicated by City in the written Notice of Maximum Amount provided to Tenant by City pursuant to Section 3.2 of this Agreement shall constitute the Maximum Compensation Amount. In no event shall said Maximum Compensation Amount exceed the Eligible Compensation Amount of three hundred fifty thousand dollars ($350,000). 2.6 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. 2.7 Tenant shall file with the State Board of Equalization a separate sales tax return encompassing sales tax data relating to sales made at the Property only, regardless of any other sales activity conducted at other locations within the City. Beginning with the first full quarter in which Tenant pays sales taxes on its operations at the Property, and for every subsequent quarter, Tenant shall provide City with copies of all sales tax returns filed with the State Board of Equalization for a period of five (5) years. For example, if Tenant begins operations in February of a given year, the first sales tax return submitted to the City shall be for the period from April through June of that year. Tenant shall provide City with quarterly returns within thirty(30)days of submitting each return to the Board of Equalization. Said submission of quarterly sales tax returns shall end when City has made its final payment to Tenant pursuant to this Agreement. 2.8 Tenant shall provide City with a total of twenty(20) consecutive quarterly returns, covering sales taxes paid over a total of five (5) consecutive twelve month periods. Each such twelve month period constitute a Reporting Year. Thus, if the first sales tax return submitted pursuant to Section 2.7 encompasses the period from April through June of a given year,the first Reporting Year shall run from April of that year through March of the following year, after which the second Reporting Year shall commence. . In the event that Tenant has been fully reimbursed the Maximum Compensation Amount, Tenant shall not be obligated to provide additional quarterly returns pursuant to this Section. 2.9 In the event that Tenant learns or is notified that the sales taxes it has paid were incorrectly allocated between City and any other taxing entity for any quarter for which Tenant has provided City with sales information pursuant to Section 2.7 of this Agreement, Tenant shall promptly notify City of the error within thirty(30) days of such notification. 2.10 In the event that City determines, pursuant to Section 3.9 of this Agreement, that it overpaid Tenant due to a miscalculation or misallocation of sales tax payments, and if City is not obligated to make any additional payments to Tenant pursuant to this Agreement, Tenant shall pay to City the amount City overpaid within thirty(30)days of notification by City of the overpayment. 2.11 Tenant hereby acknowledges and agrees that the City may, as required by law, disclose to third parties confidential information contained in or derived from the sales tax returns submitted to City pursuant to Section 2.7 of this Agreement. Such information includes, but is not limited to, the amount of any payments made to Tenant pursuant to Section 3.3 of this Agreement. 3. CITY'S DUTIES UNDER THIS AGREEMENT 3.1 Upon receipt of the plans, specifications and cost estimates, for the Improvements pursuant to Section 2.2 of this Agreement, or upon submission of revised specifications for any of the Improvements, change orders or any revisions to the originally approved cost estimates pursuant to Section 2.3, 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 Tenant in writing either that the proposed Improvements have been approved,or that they have been approved with exceptions, which exceptions shall also be in writing. 3.2 Upon receipt of evidence of payment for the Improvements pursuant to Section 2.4 of this • Agreement, City shall provide Tenant with a written Notice of Maximum Amount that may be paid to Tenant under this Agreement, which amount shall reflect Tenant's actual costs for the Improvements, and which shall not exceed the Eligible Compensation Amount of three hundred fifty thousand dollars ($350,000). 3.3 City shall verify the accuracy of all sales tax returns submitted to City pursuant to Section 2.7 of this Agreement. Within one hundred twenty (120) days after receipt of the final sales tax return of each Reporting Year, as that term is defined in Section 2.8 of this Agreement, the City shall pay Tenant an amount equal to fifty percent(50%) of the sales tax paid by Tenant in the preceding Reporting Year, subject to the provisions of Sections 3.4, 3.5, 3.6, 3.7 and 3.8 of this Agreement. In no event shall the City's payment to Tenant for any one Reporting Year exceed one hundred seventy-five thousand dollars ($175,000). 3.4 Should Tenant fail to timely submit its sales tax returns to City, City shall be under no obligation to make any payment to Tenant for that year. • 3.5 In no event shall City make any payment to Tenant for any Reporting Year in which the total sales tax paid by Tenant relating to sales on the Property 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 Maximum Compensation Amount that may be paid to Tenant determined pursuant to Section 3.2 of this Agreement. 3.7 In no event shall City be obligated to pay Tenant based on sales tax generated more than five (5) years after,the first quarter Tenant submits its sales tax return pursuant to Section 2.7 of this Agreement. 3.8 In the event that Tenant vacates the Property or ceases to conduct business at the Property before submitting sales tax returns encompassing five (5) consecutive years, City's obligation to pay Tenant shall be based only on the amount of sales tax generated by Tenant while occupying the Property. 3.9 If, pursuant to Section 2.9 of this Agreement, Tenant informs City that its sales tax payments were incorrectly allocated to the City, or if the City otherwise learns that Tenant's sales tax payments were incorrectly allocated to the City, and if the result of the incorrect allocation is • that City paid Tenant 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 Tenant 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 is not obligated to make any additional payments to Tenant pursuant to this Agreement, but has determined that it underpaid Tenant, City shall pay Tenant the amount it underpaid, provided that the sum total of payments to Tenant 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 is not obligated to make any additional payments to Tenant pursuant to this Agreement, but has determined that it overpaid Tenant,Tenant shall pay City the amount City overpaid in compliance with Section 2.10 of this Agreement. 4. INDEMNIFICATION Tenant shall defend City, its officers,employees and officials, against any claims or actions(including declaratory or injunctive relief) concerning Tenant's construction of the Improvements, including any 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 Tenant in connection with,or on account of, Tenant's construction of the Improvements, including any Right-of-Way Improvements, and/or City's failure to enforce or comply with any applicable laws, including but not limited to the requirements of the California Labor Code, Section 1771, et seq. Tenant shall be in compliance with this Section 5 if it causes a third party to defend, indemnify and hold City harmless in the manner required of Tenant, provided, however,that in the event any said third party fails to satisfy these obligations, Tenant shall remain liable for their performance. 5. AMENDMENTS TO AGREEMENT No pad of this Agreement shall be altered or amended without written agreement of the signatory Parties. • 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. 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 By: Date: Joni Pattillo, City Manager Dick's Sporting Goods, Inc., a etaware Corporation By: l Its: vi)- 'TAx Date: I t l 6 l 1 x- 1991090.2 1320607.1 EXHIBIT A Description of Improvements The Eligible Contribution Amount under this Agreement is $350,000. This amount is less than planned improvement costs, which Staff has reviewed and validated a letter submitted by the property owner, Charter Properties, dated October 8, 2012. The documentation separates the valuations for the shell and tenant improvements for the proposed Dick's Sporting Goods retail store. Based on this letter, which was reviewed and considered to be valid by the City's Senior Chief Building Official, the tenant improvement valuation/cost is $1,755,143 ($31.91 per square foot). If the tenant improvement/validation cost is factored over the 10-year lease agreement, leasehold improvement costs are estimated at $175,000 annually. Because these improvements are being paid by the tenant through their lease with the property owner. The annual amount eligible for reimbursement will be spread over the term of this Agreement (5 years). The annual amount eligible for reimbursement may not exceed $175,000 and is . subject to cumulative payments under this agreement of no more than $350,000. The eligible tenant improvements are: • Exterior and facade improvements • Interior construction of offices, break room, bathrooms • HVAC and Plumbing systems • Flooring • New wall finishes • Acoustic ceilings • • • •