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RE 2003-04-22.2 RESOLUTION NO. 2003-0422.2 A RESOLUTION OF THE CITY OF COPPELL, TEXAS, APPROVING THE TERMS AND CONDITIONS OF A TAX ABATEMENT AGREEMENT BY AND AMONG THE CITY OF COPPELL, TEXAS, DACM PROPERTIES LP AND PRODUCT SUPPORT SERVICES, INC.; AUTHORIZING ITS EXECUTION BY THE MAYOR; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council has been presented a proposed Tax Abatement Agreement by and among the City of Coppell, Texas, DACM Properties LP and Product Support Services, Inc., a copy of which is attached hereto and incorporated herein by reference; and WHEREAS, upon full review and consideration of the Agreement, and all matters related thereto, the City Council is of the opinion and finds that the terms and conditions thereof should be approved, and that the Mayor should be authorized to execute the Agreement on behalf of the City of Coppell, Texas; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF COPPELL, TEXAS, THAT: SECTION 1. The Agreement attached hereto having been reviewed by the City Council of the City of Coppell, Texas, and found to be acceptable and in the best interest of the City and its citizens, be, and the same is hereby, in all things approved, and the Mayor is hereby authorized to execute the Agreement on behalf of the City of Coppell, Texas. SECTION 2. The City Council finds that the improvements proposed to be built upon the Premises described in the Agreement will enhance the economic vitality of the community through a combination of new capital investment, increased sales tax revenues, and the creation of additional job opportunities. SECTION 3. The tax abatement to be granted by the Agreement will not include inventory, and supplies. SECTION 4. The improvements proposed for the Premises will accomplish the tax abatement guidelines of the City of Coppell, Texas. 53476 SECTION 5. The City Manager delivered to the presiding officer of the governing body of each taxing unit in which the property subject to the Agreement is located, a written notice that the City of Coppell, Texas, intends to enter into the Agreement. The notice given by the City Manager included a copy of the Agreement approved by this Resolution. SECTION 6. This Resolution and the Tax Abatement Agreement are hereby approved by the affirmative vote of the majority of the members of the City Council of the City of Coppell, Texas, at a regularly scheduled meeting of the City Council. SECTION 7. This Resolution shall become effective immediately from and after its passage. DULY RESOLVED AND ADOPTED by the City Council of the City of Coppell, Texas, on this the_~____-'~,(tay of ~D~9_~j ,2003. CANDY SHEEHA2, ATTEST: --LIBBY BAJS~I/~. aliTY S~QRI~TARY 2 53476 STATE OF TEXAS § COUNTY OF DALLAS § TAX ABATEMENT AGREEMENT This Tax Abatement Agreement (the "Agreement") is entered into by and among the City of Coppell, Texas (the "City"), DACM Properties LP ("Owner") and Product Support Services, Inc. ("Lessee"), acting by and through their authorized representatives. WITNESSETH: WHEREAS, the City Council of the City of Coppell, Texas, (the "City"), passed an Ordinance (the "Ordinance") establishing Tax Abatement Reinvestment Zone No. 42 (the "Zone"), for commercial/industrial tax abatement, as authorized by the Property Redevelopment and Tax Abatement Act, Chapter 312 of the Texas Tax Code, as amended (the "Tax Code"); and WHEREAS, the City has adopted guidelines for tax abatement (the "Tax Abatement Guidelines"); and WHEREAS, the Tax Abatement Guidelines contain appropriate guidelines and criteria governing tax abatement agreements to be entered into by the City as contemplated by the Tax Code; and WHEREAS, the City has adopted a resolution stating that it elects to be eligible to participate in tax abatement; and WHEREAS, in order to maintain and enhance the commercial and industrial economic and employment base of the Coppell area, it is in the best interests of the taxpayers for the City to enter into this Agreement in accordance with said Ordinance, the Tax Abatement Guidelines and the Tax Code; and WHEREAS, Owner owns or is under contract to purchase the real property described in Exhibit "A" attached hereto ("Land") and intends to construct certain Improvements (hereinafter defined) on the Land; and WHEREAS, Lessee is an affiliate of the Owner and intends to lease the Improvements and relocate its existing operations located in Grapevine, Texas to the Improvements; and WHEREAS, Owner's and Lessee's development efforts described herein will create permanent new jobs in the City; and WHEREAS, the City Council finds that the contemplated use of the Premises (hereinafter defined), the contemplated Improvements thereto in the amount set forth in this Agreement, and the other terms hereof are consistent with encouraging development of the Zone in accordance with the purposes for its creation and/or in compliance with the Tax Abatement Guidelines, the Ordinance adopted by the City, the Tax Code and all other applicable laws; and PRODUCT SUPPORT SERVICES TAX ABATEMENT AGREEMENT - PAGE 1 54170 WHEREAS, the City Council finds that the Improvements sought are feasible and practicable and would be of benefit to the Premises to be included in the Zone and to the City after expiration of this Agreement; and WHEREAS, a copy of this Agreement has been furnished, in the manner prescribed by the Tax Code, to the presiding officers of the governing bodies of each of the taxing units in which the Premises is located; and WHEREAS, the City desires to enter into an agreement with Owner and the Lessee for the abatement of taxes pursuant to Chapter 312 of the Tax Code as amended; NOW, THEREFORE, in consideration of the mutual benefits and promises contained herein and for good and other valuable consideration, the adequacy and receipt of which is hereby acknowledged, including the expansion of primary employment, the attraction of major investment in the Zone, which contributes to the economic development of Coppell and the enhancement of the tax base in the City, the parties agree as follows: GENERAL PROVISIONS 1. Owner, is the owner of, or under contract, to purchase the Land, which Land is located within the city limits of the City and within the Zone. Owner intends to construct the Improvements on the Land and to lease the same to Lessee who intends to locate Tangible Personal Property (hereinafter defined) on the Premises. 2. The Premises are not in an improvement project financed by tax increment bonds. 3. This Agreement is entered into subject to the rights of the holders of outstanding bonds of the City. 4. The Premises are not owned or leased by any member of the Coppell City Council or any member of the Coppell Planning and Zoning Commission, or any member of the governing body of any taxing units joining in or adopting this Agreement. TAX ABATEMENT AUTHORIZED 5. This Agreement is authorized by the Tax Code and in accordance with the City Tax Abatement Guidelines, and approved by resolution of the City Council. 6. Subject to the terms and conditions of this Agreement, and provided the combined Taxable Value (hereinafter defined) for the Tangible Personal Property and the Improvements, excluding the Land, is at least Three Million Dollars ($3,000,000) as of January 1 of the First Year of Abatement (hereinafter defined) and as of January 1 of each year thereafter that this Agreement is in effect, the City hereby grants Owner an abatement of fifty percent (50%) of the Taxable Value of the Improvements and grants Lessee an abatement of fifty percent (50%) of the Taxable Value of the Tangible Personal Property for a period of five (5) consecutive years. The actual percentage of Taxable Value of the Improvements subject to abatement for each year this PRODUCT SUPPORT SERVICES TAX ABATEMENT AGREEMENT - PAGE 2 54170 Agreement is in effect will apply only to the portion of the Taxable Value of the Improvements that exceeds the Base Year Taxable Value. The actual percentage of Taxable Value of the Tangible Personal Property subject to abatement will only apply to the Tangible Personal Property located on the Premises after this Agreement is executed. 7. The period of tax abatement herein authorized shall be for a period of five (5) years. 8. During the period of tax abatement herein authorized, Owner and Lessee shall be subject to all taxation not abated, including but not limited to, sales tax and ad valorem taxation on land, inventory and supplies. DEFINITIONS 9. ' Wherever used in this Agreement, the following terms shall have the meanings ascribed to them: A "Base Year Taxable Value" shall mean the Taxable Value for the Land for the year in which the Tax Abatement Agreement is executed (2003). B. "Event of Bankruptcy or Insolvency" shall mean the dissolution or termination of a party's existence as a going business, insolvency, appointment of receiver for any part of a party's property and such appointment is not terminated within ninety (90) days after such appointment is initially made, any general assignment for the benefit of creditors, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against such party, and such proceeding is not dismissed within ninety (90) days after the filing thereof. C. "First Year of Abatement" shall mean January 1 of the calendar year immediately following the date of issuance of the final Certificate of Occupancy for theLessee's occupancy of the Improvements, unless otherwise agreed by the parties. D. "Force Majeure" shall mean any contingency or cause beyond the reasonable control of a party including, without limitation, acts of God or the public enemy, war, riot, civil commotion, insurrection, adverse weather, government or de facto governmental action (unless caused by acts or omissions of such party), fires, explosions or floods, strikes, slowdowns or work stoppages. E. "Improvements" shall mean the contemplated improvements to be constructed on the Land and as further described herein, and any additions, expansions or additional improvements constructed on the Land during the term of this Agreement. F. "Premises" shall collectively mean the Land and Improvements but excluding Tangible Personal Property. G. "Taxable Value" means the appraised value as certified by the Appraisal District as of January 1 of a given year. PRODUCT SUPPORT SERVICES TAX ABATEMENT AGRF. F. MENT - PAGE 3 54170 H. "Land" means the real property described in Exhibit A attached hereto and incorporated herein for all purposes. I. "Tangible Personal Property" shall mean tangible personal property, equipment and fixtures owned by or leased by Lessee, other than inventory or supplies, located on the Premises subsequent to the execution of this Agreement. IMPROVEMENTS 10. Owner owns, or is under contract to purchase, the Land and intends to construct or caused to be constructed thereon a office/warehouse building containing initially 70,000 square feet of space (and other ancillary facilities such as reasonably required parking and landscaping more fully described in the submittals filed by Owner with the City from time to time in order to obtain a building permit) ("Improvements"). Lessee intends to locate Tangible Personal Property on the Premises. Nothing in this Agreement shall obligate Owner to construct the Improvements on the Land or for Lessee to locate Tangible Personal Property on the Premises but said actions are a condition precedent to tax abatement pursuant to this Agreement. CONSTRUCTION OF IMPROVEMENTS 11. As a condition precedent to the initiation of Owner's tax abatement pursuant to this Agreement, Owner will diligently and faithfully, in good and workmanlike manner, pursue the completion of the contemplated Improvements on or before December 31, 2004, as good and valuable consideration for this Agreement, and all construction of the Improvements will be in accordance with all applicable state and local laws, codes, and regulations, (or valid waiver thereof); provided, that Owner shall have such additional time to complete and maintain the Improvements as may be required in the event of "Force Majeure," if Owner is diligently and faithfully pursuing completion of the Improvements. 12. Owner agrees to ma/ntain the Improvements during the term of this Agreement in accordance with all applicable state and local laws, codes, and regulations. Owner agrees that the Improvements shall be used only as a office/warehouse building for a period of five (5) years commencing on the date the final certificate of occupancy is issued for the Lessee's occupancy of the Improvements. 13. The City, its agents and employees shall have the right of access to the Premises during construction to inspect the Improvements at reasonable times and with reasonable notice to Owner, and in accordance with Owner's visitor access and security policies, in order to insure that the construction of the Improvements are in accordance with this Agreement and all applicable state and local laws and regulations (or valid waiver thereof). PRODUCT SUPPORT SERVICES TAX ABATEMENT AGREEMENT - PAGE 4 54170 GENERAL REQUIREMENTS 14. Construction plans for the Improvements constructed on the Land will be filed with the City, which shall be deemed to be incorporated by reference herein and made a part hereof for all purposes. 15. After completion of the Improvements, Owner shall certify in writing to the City the construction cost of the Improvements. Owner and Lessee shall before May 1 of each calendar year that the Agreement is in effect, certify in writing to the City that such party is in compliance with each term of the Agreement. 16. The Land and the Improvements constructed thereon at all times shall be used in the manner (i) that is consistent with the City's Comprehensive Zoning Ordinance, as amended, and (ii) that, during the period taxes are abated hereunder, is consistent with the general purposes of encouraging development or redevelopment within the Zone. 17. Lessee agrees, subject to events of Force Majeure or ("Casualty"), to continuously occupy at least 70,000 square feet of space in the Improvements for a period of at least five (5) consecutive years beginning the First Year of Abatement. DEFAULT: RECAPTURE OF TAX REVENUE 18. In the event: (i) Owner fails to complete the Improvements in accordance with this Agreement or in accordance with applicable State or local laws, codes or regulations; (ii) Owner and/or Lessee has delinquent ad valorem or sales taxes owed to the City (provided such party retains its right to timely and properly protest such taxes or assessment); (iii) Owner and/or Lessee has an "Event of Bankruptcy or Insolvency"; or (iv) Owner and/or Lessee breaches any of the terms and conditions of this Agreement, then such party ("Defaulting Party") after the expiration of the notice and cure periods described below, shall be in default of this Agreement. As liquidated damages in the event of such default, the Defaulting Party shall,' within thirty (30) days after demand, pay to the City all taxes which otherwise would have been paid by the such party to the City without benefit of a tax abatement for the such party's property the subject of this Agreement, with interest at the statutory rate for delinquent taxes as determined by Section 33.01 of the Tax Code as amended but without penalty. The parties acknowledge that actual damages in the event of default termination would be speculative and difficult to determine. The parties further agree that any abated tax, including interest as a result of this Agreement, shall be recoverable against the Defaulting Party, its successors and assigns and shall constitute a tax lien against the Defaulting Party's property, the subject of this Agreement, and shall become due, owing and shall be paid to the City within thirty (30) days after termination. 19. Upon breach by Owner and/or Lessee of any obligations under this Agreement, the City shall notify the Defaulting Party in writing, who shall have thirty (30) days from receipt of the notice in which to cure any such default. The non-defaulting party shall have the right but not the obligation to cure such default. If the default cannot reasonably be cured within a thirty (30) day period, and the Defaulting Party has diligently pursued such remedies as shall be reasonably PRODUCT SUPPORT SERVICES TAX ABATEMENT AGREEMENT - PAGE 5 54170 necessary to cure such default, then the City may extend the period in which the default must be cured. 20. If-the Owner and/or Lessee fails to cure the default within the time provided as specified above or, as such time period may be extended, then the City at its sole option shall have the right to terminate this Agreement, by written notice to the such party. 21. Upon termination of this Agreement by City, all tax abated as a result of this Agreement, shall become a debt to the City as liquidated damages, and shall become due and payable not later than thirty (30) days after a notice of termination is made. The City shall have all remedies for the collection of the abated tax provided generally in the Tax Code for the collection of delinquent property tax. The City at its sole discretion has the option to provide a repayment schedule. The computation of the abated tax for the purposes of the Agreement shall be based upon the full Taxable Value of the Improvements and/or the Tangible Personal Property, as the case may be, without tax abatement for the years in which tax abatement hereunder was received by the Defaulting Party, as determined by the Appraisal District, multiplied by the tax rate of the years in question, as calculated by the City Tax Assessor-Collector. The liquidated damages shall incur penalties as provided for delinquent taxes and shall commence to accrue after expiration of the thirty (30) day payment period. ANNUAL APPLICATION FOR TAX EXEMPTION 22. It shall be the responsibility of the Owner pursuant to the Tax Code, to file an annual exemption application form with the Chief Appraiser for each Appraisal District in which the eligible taxable property has situs. A copy of the exemption application shall be submitted to the City upon request. NOTICE 23. All notices required by this Agreement shall be addressed to the following, or other such other party or address as either party designates in writing, by certified mail, postage prepaid, or by hand or overnight delivery: If intended for Owner, to: DACM Properties LP 5410 Kingston Drive Richardson, Texas 75082 With copy to: CAI Holdings, Inc. 5410 Kingston Drive Richardson, Texas 75082 If intended for Lessee, to: PRODUCT SUPPORT SERVICES TAX ABATEMENT AGRF. FMENT - PAGE 6 54170 Robert M. Cook President/CEO Product Support Services, Inc. 4051 State Highway 121, Suite 200 Grapevine, Texas 76051 With copy to: Brad D' Amico Kessler & Collins 5950 Sherry Lane Suite 222 Dallas, Texas 75225 If intended for City, to: Attn: City Manager City of Coppell, Texas P. O. Box 478 Coppell, Texas 75019 With copy to: Peter G. Smith Nichols, Jackson, Dillard, Hager & Smith, L.L.P. 1800 Lincoln Plaza 500 N. Akard Dallas, Texas 75201 CITY COUNCIL AUTHORIZATION 24. This Agreement was authorized by resolution of the City Council approved by its Council meeting authorizing the Mayor to execute this Agreement on behalf of the City. SEVERABILITY 25. In the event any section, subsection, paragraph, sentence, phrase or word herein is held invalid, illegal or unconstitutional, the balance of this Agreement shall stand, shall be enforceable and shall be read as if the parties intended at all times to delete said invalid section, subsection, paragraph, sentence, phrase or word. PRODUCT SUPPORT SERVICES TAX ABATEMENT AGREEMENT - PAGE 7 54170 APPLICABLE LAW 26. This Agreement shall be construed under the laws of the State of Texas. Venue for any action under this Agreement shall be the State District Court of Dallas County, Texas. This Agreement is performable in Dallas County, Texas. COUNTERPARTS 27. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and constitute one and the same instrument. ENTIRE AGREEMENT 28. This Agreement embodies the complete agreement of the parties hereto, superseding all oral or written previous and contemporary agreements between the parties and relating to the matters in this Agreement, and except as otherwise provided herein cannot be modified without written agreement of the parties to be attached to and made a part of this Agreement. CONVENANTS RUNNING WITH THE PREMISES 29. The provisions of this Agreement are hereby declared covenants running with the Premises and are fully binding on all successors, heirs, and assigns of Owner who acquire any right, title, or interest in or to the Premises, or any part thereof. Any person who acquires any right, title, or interest in or to the Premises, or any part hereof, thereby agrees and covenants to abide by and fully perform the provisions of this Agreement with respect to the right, title or interest in such Premises. RECORDATION OF AGREEMENT 30. A certified copy of this Agreement shall be recorded in the Deed Records of Dallas County, Texas. INCORPORATION OF RECITALS 31. The determinations recited and declared in the preambles to this Agreement are hereby incorporated herein as part of this Agreement. EXHIBITS 32. All exhibits to this Agreement are incorporated herein by reference for all purposes wherever reference is made to the same. CHAMBER OF COMMERCE 33. During the term of this Agreement Lessee shall continuously maintain membership in the Coppell Chamber of Commerce. PRODUCT SUPPORT SERVICES TAX ABATEMENT AGRF. F. MENT- PAGE 8 54170 EXECUTED in duplicate originals this the~ay o~~z, 2003. CITY OF COPPELL, TEXAS CAI~TD'~'~i:~: ~;~d',~, ~vlt'~YO~ ATTEST: LIBBY//~, CITY SECRETARY AGREED~ CITY ATTORNEY EXECUTED in duplicate originals this theT-6'J~-'[ day of t,l~t C~c ,2003. PRODUC~~DRT SERVICES, INC. ROBERT M. COOK PRESIDENT/CEO, TEXAS I. EXECUTED in duplicate originals this the 7~Sday of vt~;{i, 2003. DACM PROPERTIES LP By: DACM Properties GP LLC, its Gener~ef j.,/ By:( I/,~//L/'~//--~.c.._ ~ ROBL~RT M. COOK SOLE MANAGER AND MEMBER PRODUCT SUPPORT SERVICES TAX ABATEMENT AGREEMENT - PAGE 9 54170 CITY'S ACKNOWLEDGMENT STATE OF TEXAS § COUNTY OF DALLAS § ,~,,,~hia,/~,,.ttjument_.., -- -,~. was acknowledged before me on the ~'~--~-day of 20 ~,~~ ~ehan, Mayor of the City of Coppell, Texas, a Texas mun~ity, & beh~f ~ : :.~ · . ~ . ~b-OF~ ~ ~ t . - .... · - '.. --,.t~ .- * - Not~ Pubh~ate of Texas LESSEES'S AC~OWLEDGMENT STATE OF T'c_.ga.d § COUNTY OF ]~.)d~,c~ § This instrument was acknowledged before me on the ..q 5'~r'~ day of ~, 2003, by Robert M. Cook being President/CEO of Product Sup~rt Services, Inc., on behalf of said Corporation. N~otary-Public, OWNER'S ACKNOWLEDGMENT STATE OF I-o~,c.q § COUNTY OF ~-)',~-.co § This instrument was acknowledged before me on the oQ 3'~L~'~ day of c'Jqlo~cZ.. , 2003, by DACM Properties LP by DACM Properties GP LLC, its General Partner by Robert M. Cook, the Sole Manager and Member. .l ~¢~. BARBARA H. JAHODA~ t ~?:.-~L~'~ NOTARY PUBLIC 4 ~,~/~,~ STATE OF TEXAS My Commission Expires:~a.cc,/t I ~'. l' ota -Pt blic, S tat&.cJf PRODUCT SUPPORT SERVICES TAX ABATEMENT AGREEMENT - PAGE 10 54170 EXHIBIT "A" LEGAL DESCRIPTION OF LAND This property is legally described as Lot 2, Block 3 (5.66 acres) of the Freeport North Addition, a replat of Freeport North Addition out of the William K. Payne Survey, Abstract 1140, City of Coppell, Dallas County, Texas.