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RE 2014-1209.6 Tax Abatement - Liberty PropertyRESOLUTION NO. 2014.1209.6 A RESOLUTION OF THE CITY OF COPPELL, TEXAS, APPROVING THE TERMS AND CONDITIONS OF A TAX ABATEMENT AGREEMENT BY AND BETWEEN THE CITY OF COPPELL, TEXAS, AND LIBERTY PROPERTY LIMITED PARTNERSHIP, A PENNSYLVANIA LIMITED PARTNERSHIP; 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 between the City of Coppell, Texas, and Liberty Property Limited Partnership, a Pennsylvania limited partnership, 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 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. 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 day of I r- , 2014. 1 APPROVE TO FORM: CITY ATTORNEY (PGS:1-14-14:TM 64354) CITY FC PELL, TE KAREN SELBO HUNT. YOR ATTES CHRISTEL PETTINOS, CITY SECRMARY 2 EXHIBIT "A" (copy of Tax Abatement Agreement to be attached) STATE OF TEXAS § § TAX ABATEMENT AGREEMENT COUNTY OF DALLAS § This Tax Abatement Agreement (the "Agreement") is entered into by and between the City of Coppell, Texas ("City"), and Liberty Property Limited Partnership, a Pennsylvania limited partnership ("Owner") (each a "Party" and collectively the "Parties"), acting by and through their authorized representatives. WITNESSETH: WHEREAS, the City Council of the City of Coppell, Texas (the "City Council"), passed an Ordinance (the "Ordinance") establishing Tax Abatement Reinvestment Zone No. 89 (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, 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 City as contemplated by the Tax Code; and WHEREAS, 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 City to enter into this Agreement in accordance with said Ordinance, the Tax Abatement Guidelines and the Tax Code; and WHEREAS, Owner currently owns or is under contract to purchase the land located at 330 S. Royal Lane, Coppell, Texas (herein the "Land"), and intends to construct, or cause to be constructed thereon, a building containing approximately 198,819 square feet of space for use as warehouse/distribution space (hereinafter defined as the "Improvements"): and WHEREAS, Owner's development efforts described herein will create permanent new jobs in City; and WHEREAS, City Council finds that the contemplated use of the Premises (hereinafter defined), and the contemplated Improvements 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 City, the Tax Code and all other applicable laws; and Page lI Tax Abatement Agreement City of Coppell and Liberty Property Limited Partnership (TM 64350) WHEREAS, 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 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; NOW, THEREFORE, in consideration of the mutual benefits and promises contained herein and for other good and 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 City, the Parties agree as follows: Article I Definitions Wherever used in this Agreement, the following terms shall have the meanings ascribed to them: "Affiliate" shall mean an entity affiliated with Owner by reason of controlling, being controlled by, or being under common control with Owner. "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. "Base Year Taxable Value" shall mean the Taxable Value for the Land for the year in which the Tax Abatement Agreement is executed. "City" shall mean the City of Coppell, Texas. "Commencement of Construction" shall mean that: (i) the plans have been prepared and all approvals thereof and permits with respect thereto required by applicable governmental authorities have been obtained for construction of the Improvements; (ii) all necessary permits for the construction of the Improvements on the Land pursuant to the respective plans therefore have been issued by all applicable governmental authorities; and (iii) grading of the Land or the construction of the vertical elements of the Improvements has commenced. "Completion of Construction" shall mean: (i) substantial completion of the Improvements; and (ii) City has conducted a final inspection of the Improvements. Page 2 Tax Abatement Agreement City of Coppell and Liberty Property Limited Partnership (TM 64350) "Effective Date" shall mean the last date of execution of this Agreement. "Expiration Date" shall mean March 1 of the calendar year following the fifth (5th) anniversary date of the First Year of Abatement. "First Year of Abatement" shall mean January 1 of the calendar year immediately following the later to occur of: (i) the date of Completion of Construction, or (ii) the date the first certificate of occupancy is issued for occupancy of the Improvements, but no later than the second (2°d) anniversary date of the date of Completion of Construction. "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, terrorism, war, riot, civil commotion, insurrection, adverse weather, government or de facto governmental action (unless caused by acts or omissions of such Party), fires, earthquakes, explosions or floods, unavailability of workers, materials, equipment or supplies, transportation disruptions, strikes, slowdowns or work stoppages. "Improvements" shall mean a building containing approximately 198,819 square feet of warehouse/distribution space upon Completion of Construction thereof, and other ancillary facilities such as reasonably required parking and landscaping more fully described in the submittals filed by Owner with City, from time to time, in order to obtain a building permit(s), provided, however, that "Improvements" shall not include the Land. "Land" shall mean the real property described in Exhibit "A". "Owner" shall mean Liberty Property Limited Partnership, a Pennsylvania limited partnership. "Premises" shall mean, collectively, the Land and Improvements following construction thereof. "Taxable Value" means the appraised value as certified by the applicable Appraisal District (or its successor) as of January 1 of a given year. Article II General Provisions 2.1 Owner is the owner of the Land, or is under contract to purchase the Land, which Land is located within City limits of City and within the Zone. Owner intends to construct, or cause to be constructed, the Improvements on the Land. 2.2 The Premises are not in an improvement project financed by tax increment bonds. 2.3 This Agreement is entered into subject to the rights of the holders of outstanding bonds of City. Page 3 Tax Abatement Agreement City of Coppell and Liberty Property Limited Partnership (TM 64350) 2.4 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. 2.5 Owner shall, before May 1, of each calendar year that the Agreement is in effect, certify in writing to City that it is in compliance with each term of the Agreement. 2.6 The Land and the Improvements constructed thereon at all times shall be used in the manner (i) that is consistent with City's Comprehensive Zoning Ordinance, as amended, applicable to the Land, and (ii) that, during the period taxes are abated hereunder, is consistent with the general purposes of encouraging development or redevelopment within the Zone. Article III Tax Abatement Authorized 3.1 This Agreement is authorized by the Tax Code and in accordance with City Tax Abatement Guidelines, and approved by resolution of the City Council. 3.2 Subject to the terms and conditions of this Agreement, and provided the Taxable Value for the Improvements, excluding the Land, is at least Five Million Dollars ($5,000,000.00) as of January 1 of the First Year of Abatement and as of January I of each calendar year thereafter during the term of this Agreement, City hereby grants Owner an abatement of fifty percent (50%) of the Taxable Value of the Improvements for a period of five (5) consecutive years, beginning with the First Year of Abatement. The foregoing percentage of Taxable Value of the Improvements subject to abatement for each year this 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 failure of the Improvements to have a Taxable Value of at least Five Million Dollars ($5,000,000.00) as of January 1 of any calendar year during the term of this Agreement shall not be considered an event of default or breach of this Agreement subject to repayment of the abated taxes as provided in Article V, but rather such event shall result in the forfeiture of the abatement of taxes for the Improvements for such tax year. In the event the Taxable Value of the Improvements, excluding the Land, is less than Five Million Dollars ($5,000,000.00) as of January 1 of a given tax year during the term of this Agreement, the Owner shall forfeit the tax abatement for the Improvements for such tax year. Such failure shall not be considered an event of default or breach subject to termination and recapture as provided in Article V hereof. 3.3 The period of tax abatement herein authorized shall be for a period of five (5) consecutive years beginning with the First Year of Abatement. 3.4 During the period of tax abatement herein authorized, Owner shall be subject to all taxation not abated, including but not limited to, sales tax and ad valorem taxation on the Land. 3.5 The term of this Agreement shall begin on the Effective Date and shall continue until the Expiration Date, unless sooner terminated as provided herein. Page 4 Tax Abatement Agreement City of Coppell and Liberty Property Limited Partnership (TM 64350) Article IV Improvements 4.1 Owner owns or is under contract to purchase the Land and intends to construct or cause to be constructed thereon the Improvements. Nothing in this Agreement shall obligate Owner to construct the Improvements on the Land, but said actions are conditions precedent to tax abatement for such Parties pursuant to this Agreement. 4.2 As a condition precedent to the initiation of Owner's tax abatement pursuant to this Agreement, Owner agrees, subject to events of Force Majeure, to cause Commencement of Construction of the Improvements to occur on or before the date that is ninety (90) days following the Effective Date, and subject to events of Force Majeure to cause Completion of Construction of the Improvements to occur on or before July 31, 2015, as good and valuable consideration for this Agreement, and that all construction of the Improvements will be in accordance with all applicable state and local laws, codes, and regulations (or valid waiver thereof). 4.3 Construction plans for the Improvements constructed on the Land will be filed with City, which shall be deemed to be incorporated by reference herein and made a part hereof for all purposes. 4.4 Owner agrees to maintain the Improvements during the term of this Agreement in accordance with all applicable state and local laws, codes, and regulations. 4.5 City, its agents and employees shall have the right of access to the Premises during and following construction to inspect the Improvements at reasonable times and with reasonable prior written notice to Owner, and in accordance with visitor access and security policies of Owner, 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). Owner shall have the right to be present during such inspections. Article V Default: Recapture of Tax Revenue 5.1 During the term of this Agreement in the event Owner: (i) fails to cause Commencement and/or Completion of Construction of the Improvements in accordance with this Agreement or in accordance with applicable State or local laws, codes or regulations; (ii) has delinquent ad valorem or sales taxes owed to City (provided Owner retains its right to timely and properly protest such taxes or assessment); (iii) has an event of Bankruptcy or Insolvency; or (iv) breaches any of the terms and conditions of this Agreement, then Owner, 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 Owner shall, within thirty (30) days after demand, pay to City all taxes which otherwise would have been paid by the Owner to City without benefit of a tax abatement, for the property the subject of this Agreement 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 Page 5 Tax Abatement Agreement City of Coppell and Liberty Property Limited Partnership (TM 64350) difficult to determine. The Parties further agree that any abated tax, including interest, as a result of this Agreement, shall be recoverable against the Owner, its successors and assigns and shall constitute a tax lien against the Premises, and shall become due, owing and shall be paid to City within thirty (30) days after notice of termination. 5.2 Upon breach by Owner of any of the obligations under this Agreement during the term of this Agreement, City shall notify Owner in writing, which shall have sixty (60) days from receipt of the notice in which to cure any such default. If the default cannot reasonably be cured within such 60 -day period, and Owner has diligently pursued such remedies as shall be reasonably necessary to cure such default, then City may extend the period in which the default must be cured. 5.3 If during the term of this Agreement Owner fails to cure the default within the time provided as specified above, City, at its sole option, shall have the right to terminate this Agreement by providing written notice to Owner. 5.4 Upon termination of this Agreement by City during the term of this Agreement, due to a default by Owner beyond applicable notice and cure periods, all tax abated as a result of this Agreement, shall become a debt to City as liquidated damages, and shall become due and payable not later than thirty (30) days after a notice of termination is provided. 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. 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 without tax abatement for the years in which tax abatement hereunder was received by the Owner, as determined by the Appraisal District, multiplied by the tax rate of the years in question, as calculated by 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. Owner shall not be liable to the City for any alleged consequential or other damages. The remedy of the City described herein shall be the exclusive remedy of the City for Owner's default hereunder. Article V1 Annual Application for Tax Exemption It shall be the responsibility of Owner, pursuant to the Tax Code, to file an annual exemption application form for the Improvements with the Chief Appraiser for the Appraisal District (or its successor) in which the eligible taxable property has situs. A copy of the respective exemption application shall be submitted to City upon request. Article V1I Annual Rendition Owner shall annually render the value of the Improvements to the Appraisal District, and shall provide a copy of the same to City upon written request. Page 6 Tax Abatement Agreement City of Coppell and Liberty Property Limited Partnership (TM 64350) Article VIII Miscellaneous 8.1 Notice. Any notice required or permitted to be delivered hereunder shall be deemed received (a) three (3) days thereafter sent by United States Mail, postage prepaid, certified mail, return receipt requested, addressed to the Party at the address set forth below, or (b) on the day actually received if sent by courier or otherwise hand delivered: If intended for City, to: Attn: City Manager City of Coppell, Texas P. O. Box 478 Coppell, Texas 75019 If intended for Owner, to: Attn: H. Michael Heise Vice President Liberty Property Trust 1717 McKinney Avenue, #700 Dallas, Texas 75202 With a copy to: Peter G. Smith Nichols, Jackson, Dillard, Hager & Smith, L.L.P. 1800 Ross Tower 500 N. Akard Dallas, Texas 75201 With a copy to: Raymond J. Kane Kane Russell Coleman & Logan PC 3700 Thanksgiving Tower 1601 Elm Street Dallas, Texas 75201 8.2 Authorization. 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 City. 8.3 Severability. 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. 8.4 Governing Law. This Agreement shall be governed by the laws of the State of Texas without regard to any conflict of law rules. Exclusive venue for any action under this Agreement shall be the State District Court of Dallas County, Texas. The Parties agree to submit to the personal and subject matter jurisdiction of said court. 8.5 Counterparts. 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. 8.6 Entire Agreement. 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 Page 7 Tax Abatement Agreement City of Coppell and Liberty Property Limited Partnership (TM 64350) modified without written agreement of the Parties to be attached to and made a part of this Agreement. 8.7 Recitals. The determinations recited and declared in the preambles to this Agreement are hereby incorporated herein as part of this Agreement. 8.8 Exhibits. All exhibits to this Agreement are incorporated herein by reference for all purposes wherever reference is made to the same. 8.9 Assignment. This Agreement shall be binding on and inure to the benefit of the Parties to it and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns. This Agreement may not be assigned by the Owner without the prior written consent of the City Manager, which shall not be unreasonably withheld, denied or delayed. Notwithstanding the foregoing, the owner may assign this Agreement to an Affiliate, or in connection with the sale of the entire Premises, upon thirty (30) days prior written notice to City provided such assignee assumes in writing the liabilities and obligations of the Owner under this Agreement in a form reasonably approved by the City Manager. 8.10 Employment of Undocumented Workers. During the term of this Agreement, Owner agrees not to knowingly employ any undocumented workers and, if convicted of a violation under 8 U.S.C. Section 1324a (f), Owner shall repay the taxes abated herein, and any other funds received by Owner from City as of the date of such violation within one hundred twenty (120) days after the date Owner is notified by City of such violation, plus interest at the rate of four percent (4%) compounded annually from the date of violation until paid. 8.11 Right of Offset. City may at its option, offset any amounts due and payable under this Agreement against any debt (including taxes) lawfully due to City from the Owner, regardless of whether the amount due arises pursuant to the terms of this Agreement or otherwise and regardless of whether or not the debt due City has been reduced to judgment by a court. [Signature page to follow] Page 8I Tax Abatement Agreement City of Coppell and Liberty Property Limited Partnership (TM 64350) EXECUTED in duplicate originals the I Q day CIT1 Attest: By: Christel Pettinos, City Secretary v/ ii' /// EXECUTED in duplicate originals the -37 day of , 2014. LIBERTY PROPERTY LIMITED PARTNERSHIP BY: LIBERTY PROPERTY TRUST, General Partner By: H. Michael Heise, Vice President Page 9 I Tax Abatement Agreement City orCoppell and Liberty Property Limited Partnership (TM 64350) EXHIBIT "A" Block A, Lot 1 C-R of Amberpoint Business Park of Coppell (12.691 acres) Page 10 Tax Abatement Agreement City of Coppell and Liberty Property Limited Partnership (I'M 64350)