1992-171~.60E2D
ORDINANCE NO. ~ -/~/
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON AUTHORIZING
THE MAYOR TO EXECUTE AN ECONOMIC DEVELOPMENT GRANT AGREEMENT BE-
TWEEN THE CITY OF DENTON AND PACCAR, INC.; AND AUTHORIZING THE
EXPENDITURE OF FUNDS PURSUANT THERETO; AND PROVIDING AN EFFECTIVE
DATE.
WHEREAS, it is in the best interest of the city of Denton,
Texas that the city enter into an economic development grant with
PACCAR, Inc., as provided for in TEX. LOC. GOV'T. CODE ANN. §
380.001 (Vernon Supp. 1992); and
WHEREAS, the City Council of the City of Denton, Texas having
reviewed the proposed economic development grant, determines that
it is appropriate that it be approved as a program to promote local
economic growth and development and to stimulate business in the
City and that approval be given; NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION I. The Mayor of the city of Denton, Texas is hereby
authorized to execute, on behalf of the city, an Economic Develop-
ment Grant Agreement between the city of Denton, Texas and PACCAR,
Inc., a copy of which is attached hereto and incorporated by
reference herein.
S C I~. That this agreement shall constitute a program,
pursuant to TEX. LOC. GOV'T. CODE ANN. § 380.001, to promote local
economic development and to stimulate business in the city.
~. That the City Council hereby authorizes the ex-
penditure of funds in the manner and amount as specified in the
contract.
SECTION IV. That this ordinance shall become effective imme-
diately upon its passage and approval.
PASSED AND APPROVED this the /~'~day of ~ 1992.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
DEBRA A. DRAYOVITCH, CITY ATTORNEY
Page 2
ALL00374
~RANT AGREEMENT
BETWEEN THE CITY OF DENTON, TEXAS
AND PACCAR XNC
. Th~s Gr~/Agree~t~tbis "Agreement") is made and entered
into this ~day of ~.~..3~ , 1992, by and between the City
of Denton, ~exas, a municipal corporation duly organized and exist-
ing under the laws of the State of Texas as a Home Rule City (the
"city") and PACCAR Inc, PACCAR Building, 777 106th Avenue N.E.,
Bellevue, Washington 98004, a corporation organized under the laws
of Delaware ("PACCAR").
RECITALS
A. City is authorizing entry into this Agreement for the
purpose of promoting state and local economic development and to
stimulate business and commercial activity within the City. The
City, by this Agreement, is exercising the power provided for and
in accordance with TEX. LOC. GOV'T CODE ANN. § 380.001, et seq.
(Vernon 1989).
B. PACCAR owns or will acquire a parcel of real estate con-
sisting of approximately 4.4864 acres located within the corporate
limits of City, which real estate is legally described in Exhibit
A, which is attached hereto and by this reference made a part here-
of, and which real estate shall be hereafter referred to as the
"Property."
C. For 21 years, the Property was operated by Moore Business
Forms, who employed 250 people. Since the closing of Moore in
1990, the Property has not significantly contributed to the city's
revenues. The city's ability to provide necessary public services
to protect the public health, safety and welfare is directly re-
lated to its ability to derive revenue from economic activity.
D. PACCAR desires to purchase the Property, refurbish it,
and operate its Peterbilt Motors Company ("Peterbilt") division
headquarters thereon. PACCAR and city anticipate approximately 200
permanent jobs, with an annual estimated payroll of over
$6,000;000, will be created with this Project.
E. City, which has determined that a substantial economic
benefit and the creation of new opportunities of employment will
accrue to City as a result of PACCAR's purchase, redevelopment and
operation of the Property, desires to have PACCAR acquire the Prop-
erty and construct, develop and operate a division headquarters.
City also anticipates that based on this payroll, City will receive
additional annual revenues of at least $16,000 from increased sales
tax revenues, and that PACCAR'S relocation will indirectly result
in creation of an additional 180 jobs throughout the City and the
County, and the value of the benefits of the Project will far out-
weigh the amount of expenditures required of the City under this
Agreement.
F. The City, being desirous of the remodeling, redevelopment
and operation of the Property as PACCAR'S Peterbilt division head-
quarters agrees, upon completion of the remodeling and start of
operation of the Property as a headquarters, to make the grants as
hereinafter set forth to PACCAR, to aid PACCAR and promote economic
development.
NOW, THEREFORE, in consideration of the foregoing and the cov-
enants, agreements, representations and warranties hereinafter set
forth and for other good and valuable consideration, City and
PACCAR agree as follows:
I. Reoitals
The recitals set forth above are incorporated herein by refer-
ence, as if fully set forth herein.
IX. Representations and Warranties
A. Representations of City. City is a municipal corporation
and on October ~_, 1992 adopted Ordinance No. 92-/7]. city rep-
resents and warrants that Ordinance No. 92-/7/, a copy of which is
attached hereto, was duly adopted pursuanttb the rules, regula-
tions and. ordinances of City and the applicable provisions of Texas
state law. City represents and warrants that the adoption by it,
of this Agreement, is within its scope of authority and the provi-
sions of State law and that, pursuant to those provisions, it is
duly authorized and empowered to enter into this Agreement.
B. Representations of PACCAR. PACCAR represents and war-
rants that (i) its actions in executing and entering into this
Agreement have been duly authorized in a manner that follows the
laws applicable to it; (ii) that it will not violate any Federal,
State or local laws in operating the Peterbilt division headquar-
ters onthe Property and that it will pay taxes before delinquent;
(iii) that it will purchase the Property and employ the number of
employees and maintain the payroll as required by this Agreement or
forego or refund the grant in accordance with the terms and condi-
tions hereinafter set forth; and (iv) that all proposed Property
improvements shall conform to the applicable building codes, zoning
ordinances, and all other ordinances and regulations.
III. Covsnants of PACCAR.
A. In consideration of City agreeing to pay to PACCAR monies
in accordance with the terms and conditions of the Grant Schedule,
Page 2
as set forth in this Agreement, PACCAR agrees to:
1. purchase, remodel and refurbish and commence operation of
the Property as the Peterbilt division headquarters which
shall consist of approximately 63,000 square feet of office
space and the construction of a research and development faci-
lity at PACCAR'S existing manufacturing plant, will meet the
Annual Employment Requirement as defined in Section IX(b) for
Peterbilt division headquarters staff at the Property, the
existing plant or elsewhere in Denton, Texas (the "Project");
and
2. beginning with the First Annual Period and ending with
the Tenth Annual Period, or the expiration of the Grant and
its terms, during each such Annual Period PACCAR shall operate
the Project so that the Project shall satisfy, at all times,
the stated "Annual Employment Requirement", if PACCAR is to
receive the grant payments provided for herein.
PACCAR shall certify to the City on or before March 1 of the
year after the Annual Period in question that the Annual Employment
Requirement has been met during such Annual Period. The City shall
have the right to verify that the Annual Employment Requirement has
been met. The parties hereby agree that PACCAR will have suffi-
ciently verified that the Annual Employment Requirement has been
met if it delivers to City or City otherwise receives (i) sworn
statements from the Controller of PACCAR'S Peterbilt Division head-
quarters in Denton indicating how many Full Time Job Equivalents
are maintained in the Peterbilt division headquarters function and
evidence of the payroll of such persons for the Project employed
during such Annual Period cumulatively showing that the Annual
Employment Requirement has been met and, (ii) copies of PACCAR'S
year-end Texas Employment Commission report, if applicable, for
such Annual Period.
B. PACCAR shall not be entitled to receive any Grant pay-
ments hereunder for any Annual Period during the term of this
Agreement until and unless it meets the requirements set forth in
Article III above.
XV. ~&~ P&Imsn~s, TsZlS and ~ondi~ions
A. ~. In consideration of PACCAR'S development
and operation of the Project, City agrees to pay to PACCAR for each
Annual Period, beginning with the First Annual Period and ending
with the Fifth Annual Period, unless this Agreement is sooner ter-
minated or expires, the amount of Grant Payment corresponding to
the appropriate annual Ad Valorem Taxes on the Property, provided
PACCAR meets the Annual Employment Requirement for such Annual Pe
riod and complies with all other conditions of this Grant Agree-
Page 3
ment.
The Grant Payment shall be calculated by subtracting
$1,545,650 from the appraised value of the real property as deter-
mined by the Denton Central Appraisal District, and if the amount
is greater than zero, multiplying said amount by the tax rate as
adopted by the City Council and the Board of Trustees of the Denton
Independent School District for that year.
If the assessed value of the Real Property for any Annual Pe-
riod is valued in excess of $1,545,650, the City shall make a Grant
Payment to PACCAR in the amount of the sum of the difference in (i)
the ad valorem taxes due and payable upon the real property and
building situated upon the Property and (ii) what the ad valorem
taxes would have been if the real property and building situated
upon the Property were assessed at a value of $1,545,650. For ex-
ample, if the ad valorem tax rate for an Annual Period is $1.343
per $100 of assessed valuation, based upon an assessed value of
$1,800,000, the amount of the City's Grant Payment for such Annual
Period to PACCAR would be the difference in the amount of ad valo-
rem taxes due and payable and what the taxes would be if the Prop-
erty were assessed at a value of $1,545,650, or $3,416.
B. Duration of the Term of Payment under Grant. For the
First Annual Period through the Fifth Annual Period of this Agree-
ment, City shall grant to PACCAR a sum determined by utilizing the
formula established in Article IV.A. hereof, subject to PACCAR'S
satisfying the requirements set forth in Article III.A. above.
C. Repayment by PACCAR. PACCAR agrees to maintain and oper-
ate its Peterbilt division headquarters in Denton, Texas for a pe-
riod of five years after the date of the City's last Grant Payment,
and to continue to meet the Annual Employment Requirement for the
sixth, Seventh, Eighth, Ninth and Tenth Annual Periods. Except as
otherwise provided herein, should PACCAR fail to meet these condi-
tions, PACCAR agrees, upon receiving notice from the City, to remit
to the City the following sums:
1. If PACCAR fails to continue to meet the Annual Employment
Requirement during the Sixth Annual Period, PACCAR agrees to
pay the City a s~m equal to the total payments actually made
by the City to PACCAR pursuant to this Agreement.
2. If PACCAR fails to continue to meet the Annual Employment
Requirement during the Seventh Annual Period, PACCAR agrees to
pay the City a sum equal to eighty (80%) percent of the total
payments actually made by the City to PACCAR pursuant to this
Agreement.
Page 4
3. If PACCAR fails to continue to meet the Annual Employ-
ment Requirement during the Eighth Annual Period, PACCAR
agrees to pay the City a sum equal to sixty (60%) percent of
the total payments actually made by the City to PACCAR pur-
suant to this Agreement.
4. If PACCAR fails to continue to meet the Annual Employment
Requirement during the Ninth Annual Period, PACCAR agrees to
pay the City a sum equal to forty (40%) percent of the total
payments actually made by the City to PACCAR pursuant to this
Agreement.
5. If PACCAR fails to continue to meet the Annual Employment
Requirement during the Tenth Annual Period, PACCAR agrees to
pay the City a sum equal to twenty (20%) percent of the total
payments actually made by the City to PACCAR pursuant to this
Agreement.
PACCAR agrees to make such payments within thirty days of re-
ceipt of notice from City. If PACCAR certifies, and the City veri-
fies, that it has had a payroll of $7,000,000 or more during any
Annual Period, then PACCAR'S obligation to refund, as set forth
above, shall be reduced by one year for each year that PACCAR
maintains such payroll. The reduction shall begin with the Tenth
Annual Period and proceed in inverse order of maturity.
~rticle v. Date of 9rant Pal~ents
A. Reoort. PACCAR shall provide City, on or before March
1st after each Annual Period, a certified final report stating that
the Annual Employment Requirement has been met during the applica-
ble Annual Period, as provided in Article III.A.
B. Payments under Grant. City shall pay the Grant Payment
as defined in Article IV.A. not later than April 15th of the year
after the Annual Period for which such payment is made or sixty
(60) days after the submission by PACCAR of the certified final re-
port, whichever occurs later, if PACCAR meets the Qualification for
Grant Payments, as stated herein.
1. Oualification for Annual Payments. The requirements for
the qualification for Annual Grant Payments are as follows:
(a) PACCAR shall certify to the City the amount of the
Ad Valorem Taxes paid for the applicable year by provid-
ing a copy of the receipt of such payment in accordance
with Article V.A.
(b) If PACCAR fails to show proof of payment of Ad
Valorem Taxes, or if PACCAR fails to submit proof of
Page 5
meeting the Annual Employment Requirement for the pre-
vious Annual Period, PACCAR will not be entitled to
receive the Grant Payments for the applicable Annual
Period.
2. Default in Oualification for Grant Payments. If PACCAR
fails to meet the Annual Employment Requirement during any
Annual Period, then any future Annual Grant Payment shall be
paid only if PACCAR meets the Annual Employment Requirement
for the following Annual Period.
C. City shall have the right, upon reasonable prior notice,
to inspect the books and records of PACCAR pertaining to payroll
calculations and lists of employees as such may be required to be
verified to ascertain PACCAR'S compliance with this Agreement.
Should~ PACCAR believe that any such records it furnishes City are
proprietary in nature and subject to exception from the Texas Open
Records Act, TEX. CIV. STAT. ANN. art. 6252-17 (Vernon Supp. 1992),
PACCAR shall note such exception on the data furnished to the City,
and, if City receives a request for disclosure of such data, City
agrees to submit a request to the Texas Attorney General for an
opinion as to whether such data is, pursuant to law, exempt from
disclosure. Both parties agree to abide by the decision of the
Attorney General in this regard.
VI. MutuaX Aesistenee
City and PACCAR agree to do all things necessary or appropri-
ate to carry out the terms and provisions of this Agreement and to
aid and assist each other in carrying out such terms and provi-
sions.
VII. Covenents Running with the Lend
PACCAR'S rights, covenants, restrictions, burdens, privileges,
and charges, set forth in this Agreement shall exist at all times
hereafter, so long as this Agreement is in effect, among all
parties having any right, title, or interest in any portion of all
of the Property but which covenant shall absolutely expire without
further action by any party on December 31, 2003.
VIII. Breech
Upon a breach of this Agreement, either of the parties, by any
action or proceeding at law or in equity, may be awarded damages
for the failure of performance as set forth herein below, together
with reasonable attorneys fees.
If PACCAR fails to maintain the Annual Employment Requirement dur-
ing any of the First through Fifth Annual Periods, then the City's
Page 6
sole remedy shall be not to pay the Grant for such Annual Period.
Notwithstanding the provisions of the above paragraph, in the event
that PACCAR has misrepresented or falsified facts relating to
compliance with the Annual Employment Requirement during the First
through the Fifth Annual Periods, the City may sue to recover the
grants paid during any period for which misrepresentations have
been made. Except as otherwise provided herein, if PACCAR fails to
maintain the Annual Employment Requirement for any of the Sixth
through Tenth Annual Periods, then the City's sole remedy shall be
the repayment of the Grant by PACCAR in accordance with the terms
of Article IV.C. above. If the city wrongfully fails to pay the
Grant to PACCAR, then PACCAR,s sole remedy shall be to compel the
City to pay such Grant. Under no circumstances may the City
require PACCAR to hire or retain employees to satisfy the Annual
Employment Requirement to cure any breach.
Should PACCAR fail to maintain the Annual Employment Requirement
during the Fifth through Tenth Annual Periods, City may deliver to
PACCAR notice of its intent to terminate the Agreement on account
of such failure. Unless PACCAR shall remedy the default within
thirty (30) days, city may terminate the Agreement. The termina-
tion of this Agreement, as provided herein, shall not release
PACCAR from its obligation to make payments of any amounts due in
accordance with the terms hereof.
XX. Definitions
The following terms shall have the meaning stated herein:
(a) "Full Time Job Eauivalent" shall mean employment worked
by one or more people, at or on the Property or worked as a
part of the divisional headquarters function of the Peterbilt
division of PACCAR in Denton, Texas, during a calendar year
that is equal to a total of 2,000 hours. "Full Time Job
Equivalent" shall be evidenced by the payroll of the Peterbilt
division headquarters and shall not include employees who work
in as manufacturing employees at the PACCAR'S Peterbilt Denton
Plant and shall not include any temporary construction jobs
for construction or remodeling.
(b) "Annual Employment Reauirement" shall mean (i) 200 Full
Time Job Equivalents for the First through Tenth Annual Peri-
ods, or (ii) an annual payroll of $7,000,000 for the division
headquarter employees officing in Denton, Texas.
(c) "A~" shall mean a calendar year.
(d) "First Annual Period" herein shall mean January 1, 1994
through December 31, 1994.
Page 7
(e) "Second Annual PeriQ~" and each succeeding annual period
as used herein shall be the first full calendar year immedi-
ately ensuing the expiration of the First Annual Period or any
subsequent calendar year.
(f) " o e e "shall mean the amount of real property
or ad valorem taxes due and owing the City of Denton, Texas
and the Denton Independent School District on the real Proper-
ty and the buildings situated thereon, but excluding any taxes
assessed by the Denton County Education District, as such
exists on the date of execution of this Agreement. The term
shall not include (i) any ad valorem taxes due and payable for
business personal property, (ii) any ad valorem taxes due and
payable upon any additions to or expansions of the 63,000
square feet of building existing on the Property on the date
of execution of this Agreement, or (iii) any local school dis-
trict payments as provided by TEX. EDUC. CODE ANN. S 20.941 et
seq. (Vernon 1992). If the foregoing statute is repealed or
amended such that any portion of the County Education District
taxes are reallocated to the Denton County Independent School
District, city's Annual Grant Payments pursuant to this Agree-
ment shall not exceed the proportional share of the total edu-
cation tax levied upon the Property, as such exists on the
date of execution of this Agreement.
X. Oeneral Provisions
A. t' e e . This instrument contains the entire
agreement between the parties with respect to the transaction con-
templated in this Agreement.
B. ~. Each section of this Agreement and each
sentence, clause or phrase contained in such section shall be con-
sidered severable and, if for any reason, any section or sentence,
clause or phrase contained in any section is determined to be in-
valid or. contrary to any existing or future law, such invalidity
shall not impair the operation of or affect that portion of the
Agreement which is valid.
C. Amen~ent. This Agreement may be amended, altered, or
revoked, at any time, in whole or in part, by written instrument
setting forth such changes, but only if signed by all of the par-
ties to this Agreement.
D. Bindina. This Agreement shall be binding on the parties,
and their respective successors, assigns, heirs and legal represen-
tatives.
Page 8
E. Section and Other Headings. Section or other headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.
F. ~. This Agreement shall not be enforceable until
and unless PACCAR or a successor or assignee of PACCAR acquires the
Property, completes remodeling of the Project and receives a certi-
ficate of occupancy for the Project.
G. Conflict with Ordinances and LawN. The provisions of
this Agreement shall not supersede any ordinance, code or regula-
tion of City. The Parties recognize and agree that as a political
subdivision of the State of Texas, the City is bound by and must
comply with all applicable laws and regulations.
H. Further Assura~¢,~. City and PACCAR agree at any time,
and from time to time, to execute any and all documents reasonably
requested by the other party to carry out the intent of this Agree-
ment.
I. ~_~. This Agreement may be executed in counter-
parts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
J. No ' t t e. Nothing contained in this Agreement is
intended by the parties to create a partnership or joint venture
between the parties, and any implication to the contrary is hereby
expressly disavowed.
K. ~. This Agreement shall be governed by the
laws of the State of Texas. Venue for any action under this Agree-
ment shall be in Denton County, Texas. This Agreement is perform-
able in Denton County, Texas.
L. Notices. Any notice required to be sent pursuant to this
Agreement shall be in writing and shall be deemed properly served
(a) when delivered, if delivered by hand to the party to whose at-
tention it is directed; (b) upon receipt, if mailed postage pre-
paid, by registered or certified United States mail, return receipt
requested; er (¢) upon receipt, if sent by private receipt courier
guaranteeing next day delivery, delivery charge prepaid, addressed
as follows:
(a) If intended for City, to
City of Denton
215 E. McKinney
Denton, Texas 76201
Attention: City Manager
Page 9
(b) If intended for PACCAR to
PACCAR Ino
P.O. Box 1518
Bellevue, Washington 98009
Attn: Real Property Department
or such other address or addresses or to such other party which any
party entitled to receive notice may designate for itself by notice
given from time to time to the other party in the manner provided
herein.
M. No Third Party Benefit. This Agreement is solely
intended for the benefit of the parties hereto and is not intended
to and shall not be construed to be for the benefit of any
individual or third party. Should City be sued as a result of its
performance under this Agreement, the parties agree that any Grant
Payments made the basis of the suit shall be paid into the registry
of the District Court to be deposited into an interest bearing
account and that the City shall seek a declaratory judgment
declaring the rights and obligations of the parties. Both parties
agree to abide by the judqment of the court.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
PACCAR INC
' ' · Re~l Proner~_-'~sn, rces
ATTEST:
Title.' Assista0t ~ar¥ ~,~
ATTEST: CITY: CITY OF DENTON
~ity ~ecretary
Mayor /
Page 10
STATE OF WASHINGTON
COUNTY OF KING
The foregoing instrument was acknowledged before me this 3rd
day of November , 1992, by RichardE. Ban~ert, II and
~v~n .1. F~¥ , respectively, the
Director, ~1 P~n~ty ~n,Jrce~ ~es{~1~nt and Assistant Secretary of
PACCAR Inc on behalf of said corporation.
Notary Public
My Commission Expires:
STATE O~~
COUNTY OF
day of(-~~) , 1992, by Bob Castleberry, the
Mayor of the City of Denton a municipal corporation, on behalf of
said corporation.
--'~-- ...................... My Commission Expires:
Page 11
L~GAL DESCRIPTION OF PROPERTV
Being Block 1 of SOUTHRIDGE, an Addition to the City of Denton,
Denton County, Texas, according to the plat thereof recorded in
Volume 3, Page 51, of the Map Records of Denton County, Texas.
Page 12