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HomeMy WebLinkAboutReso 128-13 CJC Fallon Gateway Sales Tax Reimb RESOLUTION NO. 128 -13 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN APPROVING THE SALES TAX REIMBURSEMENT AGREEMENT WITH CJC FALLON GATEWAY LLC 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 for a five (5) year reimbursement period for participants, which would be made available to businesses that would generate ten million dollars ($10,000,000) in taxable sales annually, which is equivalent to one hundred thousand dollars ($100,000) of new sales tax revenue to the City each year; 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 five million dollars ($5,000,000) in taxable sales annually, which is equivalent to five hundred thousand dollars ($500,000) of new sales tax revenue to 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 extending the term of the Program until 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 utilizing sales tax revenue attributable to the businesses operating on the property; and WHEREAS, the Program provides for reimbursements to be made in annual payments over five (5) or ten (10) years or until the owner or business has recouped the maximum payment amount to which it is entitled, whichever comes first; and WHEREAS, the annual reimbursement 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, at the March 5, 2013 City Council meeting, the Council authorized Staff to negotiate a Sales and Use Tax Agreement with CJC Fallon Gateway LLC, a gas station development company, who is constructing a gas station/car wash facility at the southwest corner of Dublin Blvd. and Fallon Gateway; and WHEREAS, CJC Fallon Gateway LLC seeks reimbursement for the eligible improvement costs associated with construction of masonry columns and parapets for a convenience store and car wash structure, a tower element associated with the convenience store, brick planter boxes and a trash enclosure and wishes 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 based on sales tax revenue generated; and Page 1 of 2 WHEREAS, under the City's Program, CJC Fallon Gateway LLC is eligible to participate in a 5-year reimbursement period, as taxable sales generated at the site are estimated to be in excess of $10 million annually; and WHEREAS, but for the existence of this Agreement, CJC Fallon Gateway LLC would not be able to develop the gas station / car wash; 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 property taxes resulting from an increase in the value of the assessable value of the property attributable its development; 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 of the Dublin Blvd. and Fallon Road area; 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 also benefit from the creation of new jobs in the City resulting from the development of this gas station/car wash. NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Dublin approves the Sales Tax Reimbursement Agreement, attached hereto as Exhibit A, and titled "Agreement for Reimbursement of Sales and Use Tax Revenue between the City of Dublin and CJC Fallon Gateway LLC." 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 16th day of July, 2013, by the following vote: AYES: Councilmembers Biddle, Gupta, Hart, Haubert, and Mayor Sbranti NOES: None ABSENT: None ABSTAIN: None Si Mayor ATTE City Clerk Reso No. 128-13,Adopted 7-16-13, Item 7.5 Page 2 of 2 AGREEMENT FOR REIMBURSEMENT OF SALES AND USE TAX REVENUE BETWEEN THE CITY OF DUBLIN AND CJC FALLON GATEWAY, LLC THIS AGREEMENT is made and entered into this_day of July, 2013, by and between the City of Dublin ("City"), a municipal corporation, and CJC Fallon Gateway, LLC, a California Limited Liability Corporation ("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")whereby eligible businesses that would generate ten million dollars ($10,000,000) in taxable sales annually, which is equivalent to one hundred thousand dollars ($100,000) of new sales tax revenue to the City, could enter into an agreement with the City for reimbursement of a portion of their sales tax revenue over a five (5)year period for participants in order to cover costs of improvements made to the property at which those businesses are located; 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 fifty million dollars ($50,000,000) in taxable sales annually, which is equivalent to five hundred thousand dollars ($500,000)of new sales tax revenue to 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 extending the term of the Program through 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 tenant or business has recouped its actual expenses for the improvements, whichever comes first; and 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 a portion of certain real property located at southwest corner of Dublin Boulevard and Fallon Road (APNs: 985-0079-003-00; 985-0079-001-03; 985-0079-002-01; and 985-0079- 005-00) , ("the Property"), located in the City; and WHEREAS, the space to be occupied by Tenant is currently unimproved and has a total area of thirty-three thousand seven hundred thirty five (33,735) 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 taxable sales annually attributable to operations conducted at the Property, which would result in at least one hundred thousand dollars ($100,000)of new sales tax revenue to the City each year; and WHEREAS,Tenant intends to utilize any reimbursements paid pursuant to this agreement to cover the costs of constructing the following exterior improvements to the Property: masonry columns and parapets associated with a convenience store and car wash structure, construction of a tower element associated with the convenience store, brick planter boxes and a trash enclosure for the business; and WHEREAS, The cost estimate for these improvements is$399,750, and the tenant will be eligible for$382,000 of reimbursement pursuant to this Agreement; and WHEREAS, the Tenant has provided documentation establishing that, but for the existence of the Program, Tenant would be unable to locate its business within the City of Dublin, 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 eighty two thousand dollars ($382,000). 1.2 "Improvements" means all improvements to be made to Property identified in Exhibit A of this Agreement. 1.3 "Reporting Year" means any twelve month period for which Tenant provides an accounting of Tenant's sales tax payments, which payments are subject to possible reimbursement. 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 estimated to City for approval. Failure to do so shall relieve the City of any obligation to pay for any Improvements not constructed as 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 eighty two thousand dollars ($382,000). 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. 210 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 shalt reflect Tenant's actual costs for the Improvements, and which shall not exceed the Eligible Compensation Amount of three hundred eighty two thousand dollars($382,000). 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 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 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. 5. AMENDMENTS TO AGREEMENT No part 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 CJC Fallon Gateway, LLC, a California Limited Liability Corporation By: Date: 7- - i3 Carl A. Cox, Managing Member EXHIBIT A • Description of Improvements The Eligible Compensation Amount under this Agreement is $382,000. This amount is less than the planned improvement costs described in a letter submitted by the tenant, CJC Fallon Gateway, LLC, dated March 27, 2013, which letter has been reviewed and validated by City Staff. Based on this letter, the estimated costs of the eligible Improvements are as follows: Convenience Store: Masonry columns and parapets—approximately$120,000 Construction of a tower element using scored stucco treatment—approximately$135,000 Brick planter boxes—approximately $4,750 • Car Wash Building: Masonry columns and parapets—approximately$95,000 Trash enclosure—approximately$45,000 2074738.5 • •