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15-R-81 - Amazon Amendment No. 2VIBEREAS, by City Ordinance No. 12-T-15, the City of Schertz, Texas (the "City") established a program under Chapter 3 80, Texas Local Government Code, as amended, to promote economic development and to stimulate business and commercial activity in the City (the "380 Program"); and 'WHEREAS, on November 6. 2012 the City, the City of Schertz Economic Development Corporation (the "SEDC"), and Guadalupe County entered into an Economic Development Incentive Agreement with Amazon.com.kyde (the "Developer"), pursuant to the City's 380 Program; and W]HEREAS, the SEDC held a meeting on September 29, 2015, and the Board of the SEDC voted to recommend approval of Amendment No. 2 to the Economic Development Incentives Agreement (Amazon.com.kydc LLQ ("Second Amendment") to the City Council; and WHEREAS, on September 29, 2015 the Guadalupe County Commissioners approved the Second Amendment; and WHEREAS, the City Council has determined that it is in the best interest of the City to approve the Second Amendment. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS: Section 1. The City Council hereby approves the Second Amendment and authorizes the City Manager to execute and deliver the Second Amendment with the SEDC, the County, and the Developer in substantially the form set forth on Exhibit A. Section 2. The recitals contained in the -preamble hereof are hereby found to be true., and such recitals are hereby made a part of this Resolution for all purposes and are adopted as a part of the judgment and findings of the City Council. Section 3. All resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Resolution are hereby repealed to the extent of such conflict, and the provisions of this Resolution shall be and remain controlling as to the matters resolved herein. Section 4. This Resolution shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. Section 5. If any provision of this Resolution or the application thereof to any person or circumstance shall be held to be invalid, the remainder of this Resolution and the application of such provision to other persons and circumstances shall nevertheless be valid, and the City Council hereby declares that this Resolution would have been enacted without such invalid provision. Section b. It is officially found, determined, and declared that the meeting at which this Resolution is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Resolution, was given, all as required by Chapter 551, Texas Government Code, as amended. Section 7. This Resolution shall be in force and effect from and after its final passage, and it is so resolved. PASSED AND ADOPTED, this 29 day of September, 2015 ATTEST: tz Brenda Dennis, City Secretary (CITY SEAL) CITY OF SCHERTZ, TEXAS r .f Z i fl'�layor Pro -Tem, Jim Fowler M EXHIBIT A AMENDMENT NO.2 TO THE ECONOMIC DEVELOPMENT INCENTIVES AGREEMENT (AMAZON.COM.KYDC LLC) A -1 AMENDMENT NO. 2 TO THE ECONOMIC DEVELOPMENT INCENTIVES AGREEMENT (AMAZON.COMXYDC LLC) This Amendment No. 2 to the Economic Development Incentives Agreement (this "Amendment ") is entered into among the City of Schertz, Texas, a Texas home -rule municipality ( "Clty" or "Schertz "), the City of Schertz Economic Development Corporation, a Texas non - profit industrial development corporation ("SEDC"), Guadalupe County, Texas, a political subdivision of the State of Texas ("County"), and Amazon.com.kydc LLC, a Delaware limited liability company ( "Developer", and collectively with Schertz, the SEDC, and the County, the "Parties ", and each a "Party") and is dated as of the date signed by the last Party hereto to be effective as of September 29, 2015 (the "Effective Date "). RECITALS WHEREAS, this Amendment amends that certain Economic Development Incentives Agreement (Amazon.com.kydc LLC) between the Parties dated November 6, 2012, as amended by that certain Amendment No. 1 to the Economic Development Incentives Agreement (Amazon.com.kydc LLC) (collectively, the "Agreement "). WHEREAS, pursuant to the Agreement Section 5.3(f)(ii), Developer elected to pursue "Option 1 — Job Option." WHEREAS, the Developer has created New Investment, as reported on the amended 2014 Annual Report (the "2014 Annual Report") as identified in Exhibit A. attached hereto, at the Property in connection with the Project in the Amount of at least One Hundred Sixty -Six Million and No /100 Dollars ($166,000,000.00) which meets the terms of the Agreement. WHEREAS, according to the 2014 Annual Report, the Developer has reported Project Taxable Sales of Five Million One Hundred Forty -Eight Thousand Four Hundred Forty -Seven and No /100 Dollars ($5,148,447.00) which is below the minimum requirement for Tier One Project Taxable Sales of at least One Hundred Million and No /100 Dollars ($100,000,000.00) meaning that the Developer does not qualify for the Year One City Sales Tax Incentive or the Year One County Sales Tax Incentive. WHEREAS, the Developer has notified the City, SEDC, and County that it must enact certain changes to enable the collection of additional Project Sales Taxes needed to meet the minimum Tier One Project Taxable Sales. WHEREAS, according to the 2014 Annual report, the Developer reported a Taxable Property of Seventy -Three Million, Nine Hundred Eighty -Three Thousand One Hundred Six and No /100 Dollars ($73,983,106.00) which is below the minimum requirement of at least One Hundred Twenty -Five Million and No /100 Dollars ($125,000,000.00), which absent this Amendment, would create a default under the Agreement (the "Taxable Property Shortfall "). WHEREAS, absent of the Taxable Property Shortfall, according to the Agreement and 2014 Annual Report, the Developer would have qualified for the Year One City Property Tax Incentive equal to Two Hundred Fifty -Nine Thousand Two Hundred Ninety -Eight and 64/100 Dollars ($259,298.64) (the "City 2014 Property Tax Incentive "). WHEREAS, absent of the Taxable Property Shortfall, according to the Agreement and 2014 Annual Report, the Developer would have qualified for the Year One County Property Tax Incentive equal to One Hundred Seventy -Five Thousand Two Hundred Eleven and 65/100 Dollars ($175,211.65) (the "County 2014 Property Tax Incentive "). WHEREAS, the Parties wish to amend the Agreement to modify its terms related to the satisfaction of the Taxable Property for the Calendar Year 2014 and address the Taxable Property Shortfall. WHEREAS, Section 8.9 of the Agreement provides that the Agreement may be amended by a written agreement executed by the Parties. NOW THEREFORE, in consideration of the mutual promises set forth herein, and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by each Party, the Parties hereby agree as follows: Amendment No. 2 to the Economic Development Incentive Agreement (Amazon.com.kydc LLC.) Page 1 of 15 AMENDMENT 1. New Section 4.1 and 4.2 of the Agreement. The following Sections 4.1 and 4.2 is hereby added to the Agreement: ►'4.1 ►'4.2 (h) City 2014 Property Tax Incentive. Subject to all other obligations and requirements of the Agreement, the Developer shall be entitled to a payment up to the amount of the City 2014 Property Tax Incentive by qualifying for the City Sales Tax Incentive as defined in Section 4.1 (b) of the Agreement on or before December 31, 2019. The Developer shall receive 100% of the City 2014 Property Tax Incentive if the Developer qualifies for the City Sales Tax Incentive on or before December 31, 2017; 75% of the City 2014 Property Tax Incentive if the Developer qualifies for the City Sales Tax Incentive on or before December 31, 2018; and 50% of the City 2014 Property Tax Incentive if the Developer qualifies for the City Sales Tax Incentive on or before December 31, 2019. The City, as a grant paid out of sales tax revenue and authorized by Section 380.002(b), shall pay to the SEDC the City 2014 Property Tax Incentive for payment to the Developer in accordance with the Payment of Incentives as defined in Section 4.3 of the Agreement. The SEDC shall use the funds received from the City solely for the purpose of paying the City 2014 Property Tax Incentive to the Developer. The City shall not be obligated to pay the City 2014 Property Tax Incentive to the SEDC until the City has received the payment in full for the Project Sales Tax Incentive Payment for the applicable calendar year from the Texas Comptroller. The City shall be secondarily liable for the payment of the City 2014 Property Tax Incentive to the Developer in event that the SEDC defaults and fails to make the payment to the Developer in accordance with the terms of this Agreement. (e) County 2014 Property Tax Incentive. Subject to all other obligations and requirements of the Agreement, the Developer shall be entitled to a payment up to the amount of the County 2014 Property Tax Incentive by qualifying for the County Sales Tax Incentive as defined in Section 4.2 (b) of the Agreement on or before December 31, 2019. The Developer shall receive 100% of the County 2014 Property Tax Incentive if the Developer qualifies for the County Sales Tax Incentive on or before December 31, 2017; 75% of the County 2014 Property Tax Incentive if the Developer qualifies for the County Sales Tax Incentive is on or before December 31, 2018; and 50% of the County 2014 Property Tax Incentive if the Developer qualifies for the County Sales Tax Incentive on or before December 31, 2019. The County shall pay the County 2014 Property Tax Incentive to the Developer from sales tax proceeds in accordance with the Payment of Incentives as defined in Section 4.3 of the Agreement. The County shall not be obligated to pay the County 2014 Property Tax Incentive to the Developer until the County has received the payment in full for the Project Sales Tax Incentive Payment for the applicable calendar year from the Texas Comptroller. 2. Annual Report Forms. Exhibit H of the Agreement is hereby deleted in its entirety and replaced with Exhibit H -1, attached hereto. Exhibit I of the Agreement is hereby deleted in its entirety and replaced with Exhibit I -1, attached hereto and will be updated annually to conform to the current year. Exhibit C is deleted in its entirety. Submitting the annual reports in the forms attached hereto as Exhibits H -1 and I -1 by April 15th of each year (for the preceding Calendar Year), shall fulfill the reporting requirements of Section 5.6 of the Agreement. 3. No Defaults. Developer represents and warrants to the City, the SEDC, and the County that to the best of the Developer's actual knowledge without additional investigation or inquiry, as of the Effective Date no default, nor any event which upon notice or lapse of time or both would constitute a default, has occurred, other than the Taxable Property Shortfall. The City, the SEDC, and the County each individually on its own behalf represent and warrant to Developer that to the best of their individual respective actual knowledge without additional investigation or inquiry, as of the Effective Date no default, nor any event which upon notice or lapse of time or both would constitute a default, has occurred, other than the Taxable Property Shortfall. 4. Waiver and Ratification of the Agreement. The City, the SEDC and the County each waive their right under the Agreement to declare Developer in default for the Taxable Property Shortfall. Developer represents and warrants that the Agreement, as amended by this Amendment, is in full force and effect and ratifies the same. The City, the SEDC and the County each individually on its own behalf represents and warrants that the Agreement, as amended by this Amendment, is in full force and effect, and each individually on its own behalf ratifies the same. 5. No Claims by the Developer. Developer represents and warrants to the City, the SEDC, and the County that to the best of the Developer's actual knowledge without additional investigation or inquiry, as of the Effective Date the Developer does not have any claims against the City, the SEDC, or the County with respect to the Agreement or this Amendment. Amendment No. 2 to the Economic Development Incentive Agreement (Amazon.com.kydc LLC.) Page 2 of 15 6. Entire Agreement; Conflict. Except as amended by this Amendment, the Agreement is and shall remain in full force and effect. This Amendment, together with the Agreement as amended by this Amendment: (a) is intended by the Parties as a final, complete and exclusive expression of the terms of their agreement, and (b) supersedes all prior agreements and understandings between the Parties with respect to the subject matter hereof. If there is a conflict between the Agreement and this Amendment, the terms of the Amendment will prevail. 7. Counterparts and Facsimile Delivery. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original and all of which taken together shall be deemed to constitute one and the same document. The Parties may sign and deliver this Amendment by facsimile transmission, via electronic mail or other electronic method mutually acceptable to the Parties, including but not limited to DocuSign. 8. Capitalized Terms. All capitalized terms used in this Amendment and not defined in this Amendment have the meanings given to such terms in the Agreement. 9. Binding Agreement. The terms and conditions of this Amendment are binding upon the successors and permitted assigns ofthe Parties hereto. 10. Legal Construction. In the event any one or more of the provisions contained in this Amendment shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect other provisions, and it is the intention of the Parties to this Amendment that in lieu of each provision that is found to be illegal, invalid, or unenforceable, a provision shall be added to this Amendment which is legal, valid, and enforceable and is as similar in terms as possible to the provision found to be illegal, invalid or unenforceable to the extent that it does not deprive the Parties of the benefit of the bargain and only to the extent permissible by law. 11. Governing. This Amendment shall be governed by the laws of the State of Texas, and venue for any action concerning this Amendment shall be exclusively in the State District Court of Guadalupe County, Texas. The Parties agree to submit to the jurisdiction of said court. [Signature Pages Follow] Amendment No. 2 to the Economic Development Incentive Agreement (Amazon.com.kydc LLC.) Page 3 of 15 SIGNATURE PAGE TO AMENDMENT NO. 2 TO THE ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT (AMAZON.COM.KYDC LLC) APPROVED AS TO FORM: APPROVED AS TO CONTENT: -erch, P.C. q12q1-Z01 Dace Kyle kiAfeder Date SEDC Executive Director Amendment No. 2 to the Economic Development Incentive Agreement (Amazon.com.kydc LLC.) Page 4 of 15 SIGNATURE PAGE TO AMENDMENT NO. 2 TO THE ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT (AMAZON.COM.KYDC LLC) IN WINTESS WHEREOF, the Parties have executed this Amendment as to the date(s) set forth below to be effective as of the Effective Date. The City: City of Schertz, Texas a Texas home rule municipality By: C. Kessel, City Manager q1 36/1 Date Signed THE STATE OF TEXAS COUNTY OF GUADALUPE This instrument was acknowledge before me on the day of (1��y 2015, by John C. Kessel, the City - - , M Manager of the City of Schertz, Texas, on behalf of said City. [Seal] SARAH E. GONZALEZ Notary Public State of Texas My Comm. Exp.10 -31 -2016 Wee to Public in hand for the State of Texas Amendment No. 2 to the Economic Development Incentive Agreement (Amazon.com.kydc LLC.) Page 5 of 15 SIGNATURE PAGE TO AMENDMENT NO. 2 TO THE ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT (AMAZON.COM.KYDC LLC) IN WINTESS WHEREOF, the Parties have executed this Amendment as to the date(s) set forth below to be effective as of the Effective Date. The SEDC: City of Schertz Economic Development Corporation A Texas non - profit industrial development corporation By:-411. ...�- m Brown, President , Date Signed THE STATE OF TEXAS COUNTY OF GUADALUPE �A This instrument was acknowledge before me on the day of .� �, 2015, by Tim Brown, the President of the City of Schertz Economic Development Corporation, a Texas n n- profit industrial development corporation, on behalf of said non - profit industrial development corporation. W"JI111 H111 ILI III 11177 177 it I [Seal] PATRICIA HORAN NOTARY PUBLIC STATE OF TEXAS My Commission Expires 1- 142018 ota Public in and fo the State of Texas Amendment No. 2 to the Economic Development Incentive Agreement (Amazon.com.kydc LLC.) page 6 of 15 SIGNATURE PAGE TO AMENDMENT NO. 2 TO THE ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT (AMAZON.COM.KYDC LLC) IN WINTESS WHEREOF, the Parties have executed this Amendment as to the date(s) set forth below to be effective as of the Effective Date. The County: Guadalupe County, Texas a political subdivision of the State of Texas By: _ a��— KyleY,Wtschher, County Judge Q-aq ao1h Date Signed THE STATE OF TEXAS COUNTY OF GUADALUPE This instrument was acknowledge before me on the �d�y of N 06VXIC, 2015, by Kyle Kutscher, the County Judge of Guadalupe County, Texas, a political subdivision of the State of Texas, on behalf of said County. [Seal] \`��11111111111►/ ►11 �\ O LU FH��001,�fif�f Notary Public in and for the ate Texas F OF TE�P� �8 -2019 Amendment No. 2 to the Economic Development Incentive Agreement (Amazon.com.kydc LLC.) Page 7 of 15 SIGNATURE PAGE TO AMENDMENT NO.2 TO THE ECONOMIC DEVELOPMENT INCENTIVES AGREEMENT (AMAZON.COM.KYDC LLC) IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date(s) set forth below to be effective as of the Effective Date. The Developer: Amazon.com.kydc LLC, a Delaware limited liability company By :..�c� Dean Fullerton, Vice President Date Signed THE STATE OF WASHINGTON COUNTY OF KING !�� *1 Deanp T 's strument was acknowledged before me on the 0 `'6 date ofe F--I 1 ►1�1 , 2015, by can l� . 03n theM C (i azon.com.kydc LLC, a Delaware limited liability company, on behalf of said limited liability company. [ Seal fit STNI • ;J � Q /1111111 4fk� Notary Public in and for the ate of Washington Amendment No. 2 to the Economic Development Incentive Agreement ( Amazon.com.kydc LLC.) Page 8 of 15 Exhibit A 2014 Annual Report Amendment No. 2 to the Economic Development Incentive Agreement (Amazon.com.kydc LLC.) Page 9 of 15 Project Information: Annual Development Incentive Compliance and Certification Report Reporting Period: January 1 to December 31, 2014 Project Name: SAT1 Address of Project subject to Incentive: 6000 Schertz Parkway, Schertz, TX 78154 Property Owner: USAA - US Real Estate Limited Partnership Company Name: Amazon.com.kvdc LLC Project Contact: Eric Murray Title: Senior Manager Economic Development Telephone: 202 - 763 -5024 Email: murrayem ()amazon.com Operational Target: Date on which the Certificate of Occupancy was received: 4/3/2014 Employment: Employed undocumented workers at the project? Yes No X Number of Full -Time Jobs located at Project on January 1, 2014: 138 Number of Full -Time Jobs located at Project on December 31, 2014: 454 AML Total Annualized Payroll with respect to Full -Time Jobs located at the Project for the Reporting Period: $12,164,115 Investment in machinery, equipment, and other personal property to be located on the Property, exclusive of machinery, equipment, and other personal property that is not subject to ad valorem taxation: $62,096,332 Investment in the Building: $72,345,897 Investment in inventory, where the Investment in inventory shall be determined based on the total inventory of the type that would be subject to ad valorem taxation and that is located at the Project as of any date of the Developer's choosing: $40.361,712 Amendment No. 2 to the Economic Development Incentive Agreement (Amazon.com.kydc LLC.) Page 10 of 15 Real Property: 2014 appraised ad valorem tax value — land (Property ID 64735): $4,948,084 2014 appraised ad valorem tax value — improvements (Property ID 149870): $57,233,766 Personal Property: 2014 appraised ad valorem tax value — machinery, equipment, and other business personal property (Property ID 153094): $8,222,407 2014 appraised ad valorem tax value — inventory (Property ID 153095): $8,526,933 Total Project Taxable Sales for Calendar Year 2013: $2.962.818.00 Total Project Taxable Sales for Calendar Year 2014: $2.185.629.00 ❑ Brief narrative Highlighting the progress and status of the Project I certify that, to the best of my knowledge and belief, the information and attachments provided herein are true and accurate and in compliance with the terms of ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT (AMAZON. COM. KYDC LLC). I further certify that the representations and warranties of Developer contained within the Agreement remain true and correct as of the date of this Certification, and Amazon.com.kydc LLC remakes those representations and warranties as of the date hereof. I understand that this Certificate is being relied upon by the City and SEDC in connection with the expenditure of public funds. I have the authority to sign this Certificate on behalf of Amazon.com.kydc LLC. Dean Fullerton Name of Certifying Officer 206 - 266 -5397 Phone Number `d'U��l�r► Signature of Certifying Officer Vice President Certifying Officer's Title Fax Number September212105 Date The following Annual Development Incentive Compliance and Certification Report has been amended from its original form to better reflect the requirements of the Agreement. Section III includes Investment numbers received up to 9/30/2015 for the purpose of establishing Investment levels for the 2014 City /County Property Tax Incentive. Amendment No. 2 to the Economic Development Incentive Agreement ( Amazon.com.kydc LLC.) Page 11 of 15 Attachment #1 AMAZON.COM.KYDC, LLC Brief Narrative Highlighting The Progress and Status of the Project City of Schertz and Guadalupe County Annual Development Incentive Compliance and Certification Reports After originally opening in September 2013, Amazon.com.kydc, LLC's SAT1 facility began a comprehensive retrofit in February 2014 in order to incorporate robotic technology. The planned improvements were completed in October 2014, with a certificate of occupancy issued in September 2014. As of December 1, 2014, the facility represented a cumulative investment of $174,803,941. As of December 31, 2014, the facility represented employed 454 Full Time employees with an annualized payroll of $12,164,115. Amendment No. 2 to the Economic Development Incentive Agreement ( Amazon.com.kydc LLC.) Page 12 of 15 Exhibit H -1 and Exhibit I -1 City Annual Development Incentive Compliance and Certification Report and County Annual Development Incentive Compliance and Certification Report Amendment No. 2 to the Economic Development Incentive Agreement (Amazon.com.kydc LLC.) Page 13 of 15 PE coG2� Annual Development Incentive Q Compliance and Certification � } p 180' Report Project Information: Project Name: Address of Project subject to Incentive: Property Owner: Company Name: Project Contact: Title: Telephone: Email: Employment: Employed undocumented workers at the project? Yes No Average Number of Full -Time Jobs located at the Project during the 2014* Calendar Year: Number of Full -Time Jobs located at Project on January 1, 2014 *: Number of Full -Time Jobs located at Project on December 31, 2014 *: Wages: Total Annual Payroll with respect to Full -Time Jobs located at the Project for the 2014* Calendar Year: Real Property: 2014* appraised ad valorem tax value — land (Property ID 64735): $ 2014* appraised ad valorem tax value — improvements (Property ID 149870): $ Personal Property: 2014* appraised ad valorem tax value — machinery, equipment, and other business personal property (Property ID 153094): $ 2014* appraised ad valorem tax value — inventory (Property ID 153095): $ Amendment No. 2 to the Economic Development Incentive Agreement (Amazon.com.kydc LLQ Page 14 of 15 Total Project Taxable Sales for Calendar Year 2014 *: ❑ Copies of the sales tax reports filed with the corresponding receipts received from the Texas Comptroller for each of the reporting periods within the Calendar Year showing that the Project Sales Taxes for each reporting period have been paid in full and received by the Texas Comptroller, which reports and receipts may be redacted to remove information not related to the project or the Property (each a "Comptroller Receipt ") ❑ Brief narrative Highlighting the progress and status of the Project ❑ If applicable, a statement addressing any failure to meet requirements of the Incentive Agreement and a plan for rectification. I certify that, to the best of my knowledge and belief, the information and attachments provided herein are true and accurate and in compliance with the terms of ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT (AMAZON.COMXYDC LLC). I further certify that the representations and warranties of Developer contained within the Agreement remain true and correct as of the date of this Certification, and Amazon.com.kydc LLC remakes those representations and warranties as of the date hereof. I understand that this Certificate is being relied upon by the City and SEDC in connection with the expenditure of public funds, I have the authority to sign this Certificate on behalf of Amazon.com.kydc LLC. Name of Certifying Officer Phone Number Signature of Certifying Officer Certifying Officer's Title Fax Number Date The following Annual Development Incentive and Compliance Report has been amended form its original form and approved as part of Amendment No. 2 to the Economic Development Agreement. Please sign and return an original to the following: City of Schertz Economic Development Corporation 1400 Schertz Parkway, Bldg. No. 2 Schertz, TX 78154 Guadalupe County Commissioner's Court Guadalupe County Justice Center 211 West Court Street Seguin, TX 78155 *Annual Development Incentive and Compliance Report will be updated annually by the SEDC to reflect the current year, Amendment No. 2 to the Economic Development Incentive Agreement ( Amazon.com.kydc LLC.) Page 15 of 15