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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