Loading...
HomeMy WebLinkAboutReso 129-13 Regency Ctr Sales Tax Reimb RESOLUTION NO. 129 -13 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN APPROVING THE SALES TAX REIMBURSEMENT AGREEMENT WITH REGENCY CENTERS 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 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 June 18, 2013 City Council meeting, the Council authorized Staff to negotiate a Sales and Use Tax Agreement with Regency Centers, a real estate development company, who is in contract to purchase a 14-acre site from the Alameda County Surplus Property Authority at the southwest corner of Hacienda Drive and Dublin Blvd. for the development of a commercial retail center; and WHEREAS, Regency wishes to perform building and exterior 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 based on based on sales tax revenue generated; and WHEREAS, under the City's Program, Regency is eligible to participate in a 10-year reimbursement period, as taxable sales generated at the site are estimated to be in excess of $50 million annually; and WHEREAS, but for the existence of this Agreement, Regency would not be able to develop the retail center; and Page 1 of 2 WHEREAS, calculation of any reimbursement payments to Regency under the Agreement would exclude sales tax revenue attributable to businesses that have simply relocated from other locations within the City; 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 property attributable to the development of the retail center; 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 Hacienda Dr. and Dublin Blvd. 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 commercial center. 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 Regency Centers, 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 Mayor ATTES City Clerk Reso No. 129-13,Adopted 7-16-13, Item 7.6 Page 2 of 2 AGREEMENT FOR REIMBURSEMENT OF SALES AND USE TAX REVENUE BETWEEN THE CITY OF DUBLIN AND REGENCY CENTERS, INC. THIS AGREEMENT is made and entered into this _ day of , by and between the City of Dublin ("City"), a municipal corporation, and Regency Centers, L.P., ("Regency")a Delaware limited partnership, 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, which Resolution also provided that the Program shall terminate on January 5, 2015; and WHEREAS,the City of Dublin Sales Tax Reimbursement Program is a City-wide program designed to encourage the development of additional desirable commercial development within the City, with improved aesthetics and physical appearances, and well developed site improvements,to benefit the citizens of Dublin. • 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 preapproved improvements to business properties. The reimbursement is made in annual payments over ten (10) 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 businesses 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, Regency has an option to buy certain real property located at the northwest corner of Dublin Boulevard and Hacienda Drive,(APN: 986-0033-007), ("the Property"), located in the City; and WHEREAS, Regent proposes to develop a shopping Center on the Property ("the Project"); and 1 WHEREAS, the Property to be occupied by Regency's development has a total area of approximately 14.32 acres and is anticipated to be approximately 150,000 square feet leasable space anchored by a grocery store, and Regency has furnished the City with documentation establishing that the Projectis expected to have at least fifty million dollars ($50,000,000) in annual retail sales transactions, which would result in at least five hundred thousand dollars($500,000)of sales tax for the City each year; and WHEREAS, Regency intends to construct improvements to attract tenants to the Property. AGREEMENT DEFINITIONS 1.1 "Eligible Compensation Amount" means three million one hundred and fifty thousand dollars($3,150,000). 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 Regency's tenants and identified in Exhibit A of this Agreement. 1.5 "Maximum Compensation Amount"means Regency's actual costs for construction of the • Improvements, as shown in the written Notice of Maximum Amount provided to Regency by the City pursuant to Section 3.2 of this Agreement. 2. REGENCY'S DUTIES UNDER THIS AGREEMENT 2.1 Regency 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, Regency 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 Regency 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 Regency desires to modify the specifications for any of the Improvements or if change orders are required, Regency 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 Regency shall provide the City with all bills and evidence of payment for the Improvements, in a form acceptable to City within sixty(60)days of Regency's final payment for the 2 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 Regency, as indicated by City in the written Notice of Maximum Amount provided to Regency by the 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 million one_hundred fifty thousand dollars ($3,150,000). 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 Regency shall provide written notices to City: a) no later than thirty(30) days after the first tenant receives approval to occupy a space at the Property from the City; and b) no later than thirty(30)days after the Project reaches ninety-five percent (95%)occupancy based on the overall leasable square footage of the Project. 2.8 Regency shall require its tenants that operate multiple locations within the City_to 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 by said tenants at other locations within the City. Said requirement that tenants of the Property file a separate sales tax return for sales activity at the Property shall terminate when City has made its final payment to Regency pursuant to this Agreement. 2.9 In the event that City determines, pursuant to Section 3.9 of this Agreement, that it overpaid Regency due to a miscalculation or misallocation of sales tax payments, and if City is not obligated to make any additional payments to Regency pursuant to this Agreement, Regency shall pay to City the amount City overpaid within thirty(30)days of notification by City of the overpayment. 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 Regency 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 3 • Agreement, City shall provide Regency with a written Notice of Maximum Amount that may be paid to Regency under this Agreement,which amount shall reflect Regency's actual costs for the Improvements, and which shall not exceed the Eligible Compensation Amount of three million one hundred fifty thousand dollars ($3,150,000). 3.3 City shall make payments to Regency based on annual taxable sales collected over ten (10)consecutive twelve-month periods (individually referred to as"Reporting Years.") The first Reporting Year shall commence the first full calendar quarter after the sooner of: a) the date that the Project reached ninety-five percent(95%) occupied and open to the public for business based on the leasable square footage of the Project or b)twelve(12) months after the first day of operations to the public for a Tenant at the shopping center. For example, if the first approval of occupancy occurs on February 1, 2016, then the First Reporting Year would commence on April 1, 2016, unless the Project achieves 95% occupancy before January 1, 2016. In no event shall City be obligated to make any payment to Regency for sales tax generated after the completion of the ten (10) Reporting Years. • 3.4 City shall verify the accuracy of all sales tax information submitted to City. Within two hundred and forty(240)days.after receipt of the final sales tax information for each Reporting Year, as that term is defined in Section 3.3, above, the City shall pay Regency a fixed amount based on the taxable sales attributable to the Property's tenants as follows: Annual Taxable Sales Maximum Annual Payment $50,000,000-$55,000,000 '.250,000 $55,000,001 -$60,000,000 $275,000 $60,000,001 -$65,000,000 $300,000 $65,000,001 -$70,000,000 $325,000 • $70,000,001 -$75,000,000 $350,000 $75,000,001 —$80,000,000 $375,000 $80,000,001 -$85,000,000 $400,000 $85,000,001 —$90,000,000 $425,000 $90,000,001 -$95,000,000 $450,000 $95,000,001 -$100,000,000 $475,000 $100,000,001 -above $500,000 4 • In no event shall City be obligated to include, in its calculation of annual taxable sales for the Property, taxable sales attributable to: a) A tenant that operates multiple locations in the City that has not submitted a sales tax return that relates to sales taking place at the Property only. b) A tenant that has relocated to the Property from a location within the Cities of Dublin, Pleasanton, or Livermore unless the tenant did not conduct sales from said other location for six months or more before relocating to the Property. 3.5 In no event shall City make any payment to Regency for any Reporting Year if any of the following situations occurs: a) The total sales tax attributable to sales at the Property is less than fifty million dollars ($50,000,000); b) The Property has fewer than four tenants that pay sales tax: c) The annual taxable sales of any one tenant in the center comprise eighty percent (80%) or more of the total annual taxable sales attributable to the Property. 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 Regency determined pursuant to Section 3.2 of this Agreement. 3.7 In no event shall City be obligated to pay Regency based on sales tax generated more than ten (10)years after the first Reporting Year. 3.8 In the event that Regency sells the Property, the City's obligation to pay Regency shall be transferred to the Buyer of the Property, subject to the rules set forth in Section 6 of this Agreement. The subsequent payment made by City pursuant to section 3.4 shall be prorated, to the nearest calendar quarter, between Regency and the Buyer of the Property. 3.9 If the City determines that the data used to calculate payments to Regency were in error, and if the result of the error is that City paid Regency more or less than it would have been required to pay pursuant to Section 3.4 of this Agreement, City shall determine the amount of overpayment or underpayment. If the City is obligated to make any subsequent annual payment to Regency 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 Regency pursuant to this Agreement, but has determined that it underpaid Regency, City shall pay Regency the amount it underpaid, provided that the sum total of payments to Regency 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. 5 • If City is not obligated to make any additional payments to Regency pursuant to this Agreement, but has determined that it overpaid Regency, Regency shall pay City the amount City overpaid in compliance with Section 2.9 of this Agreement. 4. INDEMNIFICATION Regency shall defend City, its officers, employees and officials, against any claims or actions (including declaratory or injunctive relief)concerning Regency'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 Regency in connection with, or on account of, the construction of the Improvements, and/or City's failure to enforce or comply with any laws applicable to this Agreement, 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 may only be assigned with the prior written consent of the City,which consent will not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, Regency may freely assign this Agreement to any • entity which is affiliated or otherwise controlled by Regency upon written notice to the City. 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 andd the year first written above. APPROVED AS TO FORM AND CONTENT: By: • ADOPTED BY: ' CITY OF DUBLIN, a Municipal Corporation By: Date: Joni Pattillo, City Manager 6 REGENCY,,Ct4tTERS, L.P., a Delaware Limited Partnership By: / S — - Date: e1?�?V Its: s'-'1'— PP---14'< ?9a1'--r--7 • 7 • EXHIBIT A Description of Improvements The Eligible Contribution Amount under this Agreement is three million one hundred and fifty thousand dollars ($3,150,000), Staff has reviewed and validated a letter submitted, via e-mail, by Regency Centers L.P., dated June 26, 2013 separating the valuations for the shell and Regency improvements for the proposed center. Based on this letter, which was reviewed and considered to be valid by the City's Building Official, the Regency improvement cost is $3,150,000. The eligible Regency improvements are: Hardscape •Building enhancement landscape Split face masonry/veneer Parapet overhang Vertical & horizontal building variation Metal canopies/awnings Green screens Composite siding Sheet metal Storefronts - dear glazing Storefronts -frosted glazing Plastered surfaces Painting General Conditions, Insurance, and Construction Fee FF&E 8