2010R27-Lone Star Pet Supply Development Agreement RESOLUTION NO. 10-R-27
A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF SCHERTZ,
TEXAS AUTHORIZING A DEVELOPMENT AGREEMENT BETWEEN THE
CITY OF SCHERTZ ECONOMIC DEVELOPMENT CORPORATION AND
LONE STAR PET SUPPLY, LTD., L.L.P., AND OTHER MATTERS IN
CONNECTION THEREWITH
WHEREAS, the City Council (the "City Council") of the City of Schertz (the "City") has
determined that it is in the best interest of the City to approve a Development Agreement between the
City of Schertz Economic Development Corporation and Lone Star Pet Supply, LTD., L.L.P., relating to
economic development incentives for,an expansion of its facility in the City; now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS THAT:
Section 1. The City Council hereby authorizes the City Manager to approve and deliver a
Development Agreement with the parties described therein 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provision of this Resolution are hereby repealed to the extent of such conflict, and the provisions of this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 6. 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 1 S` day of June 2010.
CITY C ERTZ, AS
M yor
ST:
Secretary
(CITY SEAL)
EXHIBIT A
DEVELOPMENT AGREEMENT
See attached
A-1
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") is made and entered into effective
as of June 1, 2010 between CITY OF SCHERTZ ECONOMIC DEVELOPMENT
CORPORATION, a Texas non-profit corporation (the "EDC"), and LONE STAR PET
SUPPLY, LTD., L.L.P. a Texas limited liability partnership ("LONE STAR"), as follows:
WHEREAS, LONE STAR leases and operates a 92,426 square foot
office/warehouse/distribution center (the "Building") with a street address of 17414 Triton Drive,
in the City Schertz, Texas (the "City") from 414 PARTNERSHIP, LTD., a Texas limited
partnership ("414 PARTNERSHIP");
WHEREAS, 414 PARTNERSHIP is constructing, and LONE STAR is leasing, an
approximately 35,000 square foot addition to the office/warehouse/distribution center (the
"Expansion," the Building and the Expansion, together, the "Facility");
WHEREAS, LONE STAR will expand into the Expansion and operate the Facility; and
WHEREAS, the location and operation of the Facility will increase the tax base of the
City and other taxing entities and enhance job opportunities for area citizens; and
WHEREAS, the EDC is atax-supported Type Bnon-profit corporation created under
Title 12, Subtitle C1, Local Government Code, as amended (the "EDC Act"), whose primary
revenue is derived from sales tax collected within the City and which is committed to assist in
the creation of new jobs, the retention of existing jobs, and increasing capital investment in the
private sector within the City; and
WHEREAS, the EDC and LONE STAR acknowledge that the expansion of the Building
by 414 PARTNERSHIP and lease and operation of the Facility by LONE STAR in the City will
require a substantial investment by 414 PARTNERSHIP and LONE STAR and will benefit the
entire City and its citizens by expanding the tax base and job opportunities in the City and other
taxing entities; and
WHEREAS, the EDC, in its negotiations with LONE STAR, has offered to pay $60,000
to be used by LONE STAR as an incentive to LONE STAR to expand its business in the City;
WHEREAS, LONE STAR and the EDC have agreed to comply with the provisions of
this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, it is agreed by the EDC and LONE STAR as follows:
1. In consideration of LONE STAR entering into this Agreement and complying
with the terms set forth herein, the EDC shall pay LONE STAR an economic incentive of
SIXTY THOUSAND DOLLARS ($60,000:00) (the "Incentive Amount"). The Incentive
Amount must be earned pursuant to paragraph 3 below by LONE STAR on or before September
30, 2010. The EDC shall have no obligation to pay any Incentive Amount under this Agreement
after such date, but may decide to do so in its sole and absolute discretion. Such amount is
subject to recapture in whole or in part as set forth herein.
2. LONE STAR agrees to lease and operate the entire Facility by September 30,
2010; begin and thereafter to maintain full-time operation until at least September 30, 2013.
LONE STAR expects to employ (and thereafter maintain) at least six (6) additional full-time
positions in the Facility due to the Expansion, bringing its total employees in the Facility on
September 30, 2010 to at least seventy-five (75) employees.
3. On or before September 30, 2010, LONE STAR shall provide the EDC an
executed Affidavit in the form attached hereto as Exhibit A. Upon the EDC's receipt of such
Affidavit, assuming no Default then exists, the EDC will promptly pay the Incentive Amount.
Thereafter, LONE STAR shall provide to the EDC on each January 31 and July 31 an updated
Affidavit. In addition, LONE STAR shall promptly notify the EDC in writing if it is not in full
time operations and if at any time less than seventy-five (75) full-time employees are working at
the Facility for a period of more than thirty (30) consecutive days.
4. LONE STAR shall permit such person or persons as the EDC may designate to
inspect, audit, and copy LONE STAR's employment records pertaining to the matters set forth
herein to the extent necessary to confirm LONE STAR'S performance of its obligations under
this Agreement. Such inspections and audits shall be undertaken no more than twice in any
calendar year and shall be performed at LONE STAR's facilities in the City during normal
business hours and upon reasonable advance written notice to LONE STAR. The EDC shall pay
the EDC's costs for any such inspection and audit which confirms LONE STAR's compliance
with the terms hereof; however, if such inspection and audit results in the material breach (as
determined by the EDC in its reasonable discretion) of any such terms resulting in a Default
under paragraph 5 below, LONE STAR shall pay the EDC's reasonable costs of such inspection
and audit within thirty (30) days after written demand by the EDC.
5. Under the following circumstances, which are each deemed a default under this
Agreement if not properly cured pursuant to paragraph 6 hereof (each, a "Default"), the EDC, at
its sole discretion, may terminate this Agreement and/or take the additional actions set forth in
paragraph 6 below:
(a) the appointment of a receiver for LONE STAR of all or any substantial
part of its property, and the failure of such receiver to be discharged within ninety (90) days
thereafter;
(b) the adjudication of LONE STAR as bankrupt;
(c) the filing by LONE STAR of a petition or an answer seeking bankruptcy,
receivership, reorganization, or admitting the material allegations of a petition filed against it in
any bankruptcy or reorganization proceeding;
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(d) LONE STAR fails to pay, or causes to be paid, all ad valorem taxes
assessed against or any property owned and/or leased by LONE STAR within the City prior to
their delinquency date (subject to LONE STAR's right to lawfully contest such taxes);
(e) LONE STAR fails to timely render all property owned by LONE STAR
and located at the premises to the Guadalupe County Appraisal District in accordance with the
requirements of the Texas Property Tax Code and this Agreement;
(f) LONE STAR fails to pay all sales taxes due as a result of its operation at
the Facility prior to their delinquency date (subject to LONE STAR'S right to lawfully contest
such taxes);
(g) LONE STAR fails to pay any federal or state employment or
unemployment taxes due as a result of its operation at the Facility prior to their delinquency date
(subject to LONE STAR's right to lawfully contest such taxes); or
(h) LONE STAR fails to pay any lawful charges due to the City prior to the
delinquency date thereof (subject to LONE STAR's right to lawfully contest such charges).
6. LONE STAR shall give the EDC prompt written notice of any such Default by
LONE STAR at the address set forth on the signature page of this Agreement. In addition, The
EDC shall give LONE STAR written notice of any Default by LONE STAR of which the EDC
is aware by certified mail return receipt requested, at the address set forth on the signature page
of this Agreement. LONE STAR shall have thirty (30) days after mailing a notice of Default to
the EDC or receiving a notice of Default from the EDC to cure the Default or, if such Default
cannot be reasonably cured within such thirty (30) day period, to initiate such cure and prosecute
it to completion in a reasonable time, as reasonably determined by the EDC, but in no event less
than sixty (60) days. If LONE STAR fails to timely cure any such Default, this Agreement shall
automatically terminate without further notice from the EDC, and all obligations of the EDC to
make any payment of unpaid portions of the Incentive Amount to LONE STAR shall cease. If
any Default occurs after LONE STAR has received the Incentive Amount from the EDC, LONE
STAR shall reimburse all such funds paid to LONE STAR by the EDC within thirty (30) days of
written demand therefore by the EDC.
7. LONE STAR shall give the EDC written notice of any Default by the EDC by
certified mail return receipt requested, to the address set forth on the signature page of this
Agreement. The EDC shall have thirty (30) days after mailing of the notice of Default to cure the
Default or if such Default cannot be reasonably cured within such thirty (30) day period to
initiate such cure and prosecute it to completion in a reasonable time. If the EDC fails to timely
and fully cure the act of default, LONE STAR shall be entitled to pursue specific performance of
any action required by this Agreement to be performed by the EDC as provided herein.
8. In addition to the provisions of paragraph 6, LONE STAR agrees to reimburse the
EDC all or a portion of the Incentive Amount as follows:
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(a) If LONE STAR fails at any time after receiving the Incentive Amount for
the period set forth in paragraph 2 to employ at least seventy-five (75) full-time employees at the
Facility for a period of more than thirty (30) consecutive days, it shall reimburse the EDC $1,000
for each such full-time employee under a total of seventy-five (75) full-time employees, but not
exceeding the Incentive Amount.
(b) If LONE STAR fails to maintain full-time operations for the period set
forth in paragraph 2, it shall promptly reimburse the EDC 100% of the Incentive Amount.
(c) The EDC's right to enforce reimbursement shall survive the termination of
this Agreement.
9. LONE STAR specifically agrees that the EDC shall only be obligated to pay
LONE STAR the Incentive Amount set forth in paragraph 1 under the circumstances described
in paragraph 3 and shall not be liable to LONE STAR for any other or consequential damages,
direct or indirect, attorney's fees, court costs, or any other amount for any act of default by the
EDC under the terms of this Agreement; provided, however, Lone Star shall be entitled to
recover its reasonable attorney fees and cost if it is forced to seek specific performance. It is
further specifically agreed by LONE STAR that the EDC shall only be required to make the
payment set forth in paragraph 1 solely out of its sales tax revenue currently collected, allocated
and budgeted and to be allocated, budgeted and collected for the EDC during the term of this
Agreement. Payment by the EDC is strictly limited to those funds so allocated, budgeted and
collected solely during the term of this Agreement. The EDC shall use its best efforts to
anticipate economic conditions and to budget accordingly. However, it is further understood and
agreed that, should the actual total sales tax revenue collected for any year be less than the total
amount of economic development incentives to be paid to all contracting parties (including but
not limited to LONE STAR) with the EDC for that year, then, in that event, all contracting
parties shall receive only their pro rata share of the available sales tax revenue for that year, less
the EDC's customary and usual costs and expenses as compared to each contracting parties'
economic development incentives for that year, and the EDC shall not be liable to LONE STAR
for any such deficiency at that time or at any time in the future.
10. LONE STAR represents and warrants as follows:
(a) All documentation (invoices, certifications, wage information, etc.) either
previously provided to the EDC or subsequently provided to the EDC pursuant to the terms of
this Agreement are or will be true in all material respects and correct representations of the
matters set forth therein.
(b) No officer, director or employee of the EDC or the City has been or will be
compensated in any manner with respect to directly or indirectly in respect to the negotiation and
execution of this Agreement and the payment to LONE STAR of the economic development
incentives as provided herein.
11. LONE STAR further represents and warrants as follows:
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(a) LONE STAR certifies that its operation of the Facility within the City does not
knowingly and will not knowingly employ an undocumented worker, as defined in Chapter
2264, Subchapter A, Texas Government Code, as amended (the "Act").
(b) Pursuant to the Act, if LONE STAR is convicted of a violation under 8 U.S.C.
Section 1324a(f), after receiving all or any portion of the Incentive Amount payment described
in paragraph 1, LONE STAR shall promptly give the EDC written notice of such violation, and
LONE STAR shall repay the amount of the payment with interest, at a rate of 7 % per annum not
later than the 120th day after the date LONE STAR notifies the EDC of the violation.
12. This Agreement shall have a term ending on that date to which LONE STAR
must maintain operations and continue to employ at least seventy-five (75) employees and
maintain full-time operations, i.e. September 30, 2013. This Agreement may be terminated
earlier by the EDC as set forth in paragraph 6 and by LONE STAR as set forth in paragraph 18.
13. No term or provision of this Agreement or act of the EDC in the performance of
this Agreement shall be construed as making the EDC or its officers, directors, agents or
employees, the agent, servant, employee or contractor of LONE STAR or shall create a
partnership between the EDC and LONE STAR.
14. LONE STAR shall not make any use of the EDC's name for publicity in
connection with LONE STAR's business or activities without the prior written consent of the
EDC. The EDC may make known its payments to LONE STAR under this Agreement in
whatever manner it deems commercially appropriate in its reasonable discretion.
15. The EDC agrees to maintain all records and information provided by LONE
STAR confidential unless disclosure of such records and information shall be required by a court
order, a lawfully issued subpoena, or to the provisions of the Texas Public Information Act,
Chapter 552 of the Texas Government Code, as amended.
16. All representations, warranties, or covenants of the parties contained herein, as
well as any rights and benefits of the parties relating to the subject matter of this Agreement,
shall survive the execution hereof for the term hereof.
17. In case any one or more of the provisions, clauses, phrases or words contained in
this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect the other provisions hereof,
and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. Each party acknowledges that it has had the opportunity to be
represented by counsel, that the terms of this Agreement were negotiated between the parties and
that this Agreement will be construed as having been drafted equally by both parties.
18. This Agreement may not be assigned by LONE STAR without the prior written
consent of the EDC, which consent shall not be unreasonably withheld, conditioned or delayed.
LONE STAR may not sell or otherwise transfer any interest in the Facility without the prior
written consent of the EDC, which consent shall not be unreasonably withheld, conditioned or
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delayed; however, LONE STAR may make any such transfer without such consent if it
reimburses the EDC the entire Incentive Amount and notifies the EDC that it is terminating this
Agreement.
19. This Agreement shall be construed under and in accordance with the laws of the
State of Texas, and all obligations of the parties created hereunder are performable in Guadalupe
County, Texas.
20. This Agreement shall be binding upon and inure to the benefit of the parties
hereto, and their respective successors and permitted assigns.
21. In the event of a dispute between the EDC and LONE STAR over issues related
to this Agreement, the parties agree to submit such disputes to mediation by a mutually agreeable
mediator prior to the institution of any suit to attempt to resolve the dispute or to enforce the
terms of this Agreement.
22. Either party to this Agreement who is the prevailing party in any legal proceeding
against any other signatory brought under or with relation to this Agreement, shall be
additionally entitled to recover court costs and reasonable attorney's fees from the nonprevailing
party, except as specifically otherwise provided herein.
23. This Agreement constitutes the sole and only agreement of the parties hereto
relating to the subject matter of this Agreement and supersedes any prior understandings or
written or oral agreements between the parties respecting such subject matter.
24. The obligations of the EDC under this Agreement are subject to the approval
thereof by the City Council of the City in accordance with the requirements of the EDC act, and
the Articles of Incorporation and Bylaws of the EDC. If the EDC is unable to obtain such
approval, this Agreement shall not become effective.
25. This Agreement may be amended with the written consent of the EDC, LONE
STAR and the City Council of the City.
CITY OF SCHERTZ ECONOMIC
DEVELOPMENT CORPORATION
Steven White
-
President
1400 Schertz Parkway
Schertz, TX 78154
Telephone: (210) 619-1070
Facsimile: (210) 619-1769
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LONE STAR PET SUPPLY, LTD., L.L.P.
By: LONE STAR PET SUPPLY GP, L.L.C.,
Its Sole eral Partner
t
By:
Name: Dennis W. Stahl
Title: President/CEO
17414 Triton Dr.
Schertz, TX 78154
Telephone: (210) 651-4414
Facsimile: (210) 651-5910
APPROVAL BY CITY OF SCHERTZ
The obligations of the EDC as set forth above were approved by the City Council of the
City of Schertz in accordance with the requirements of law.
EXECUTED June 1, 2010:
CITY OF SCHERTZ
By: f
Don Taylor
City Manager
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EXHIBIT A
AFFIDAVIT OF COMPLIANCE
TO: City of Schertz Economic Development Corporation
1400 Schertz Parkway
Schertz, Texas 78154
Attention: Director of Economic Development
Date
Re: Development Agreement dated June 1, 2010 (the "Development
Agreement") between the City of Schertz Economic Development
Corporation (the "EDC") and LONE STAR PET SUPPLY, LTD., L.L.P.
("LONE STAR")
LONE STAR hereby represents and warrants to the EDC as follows:
1. The undersigned has. read and is thoroughly familiar with the provisions of the
Development Agreement. Hereinafter, unless otherwise expressly provided herein
or unless the context requires otherwise, the capitalized terms used but not
defined herein shall have the meanings assigned to such terms in the Development
Agreement.
2. LONE STAR is in complete compliance with the requirements of paragraph 2 of
the Development Agreement. LONE STAR has achieved and maintained the
following level of operations and employment:
3: Check the correct box. ? At no time from the date of the Development
Agreement to the date hereof (the "Review Period") has LONE STAR been in
Default under the Development Agreement. ? During the Review Period, LONE
STAR was in Default under the Development Agreement as follows and has taken
the following corrective actions:
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4. Throughout the Review Period, to the knowledge of the undersigned, following
reasonable inquiry, LONE STAR [check the correct box] ? has ? has not
knowingly employed an undocumented worker, as defined in Chapter 2264,
Subchapter A; Texas Government Code, as amended. During the Review Period,
LONE STAR [check the correct box] ? has ? has not been convicted of a
violation under 8 U.S.C. Section 1324a(f).
5. LONE STAR has not sold or transferred any interest in the Facility.
LONE STAR PET SUPPLY, LTD., L.L.P.
By: LONE ST R PET SUPPLY GP, L.L.C.,
Its Sole eral P~.rtner
By:
Name: Dennis W. Stahl
Title: President/CEO
Telephone: (210) 651-4414
Facsimile: (210) 651-5910
STATE OF TEXAS §
COUNTY OF Q ~ ( §
This instrument was acknowledged before me on the ~ day of ilL ~ ,
20~p, by DENNIS W. STAHL, President/CEO of LONE STAR PET SUPPLY GP, L.L.C., a
Texas limited liability company, which is the General Partner of LONE STAR PET SUPPLY,
LTD., L.L.P., a Texas limited liability partnership, known to me to be the person whose name is
subscribed to the foregoing instrument and acknowledged to me that he executed the same for
the purposes therein expressed, in the capacity therein stated, and as the act and deed of LONE
STAR PET SUPPLY, LTD., L.L.P.
I_
Notary Public, State of l~~ "
My commission expires: lQ°~D' I
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