HomeMy WebLinkAboutPR 12034:TARGET AGREEMENTINTER
OFFICE
MEMO
To: Mayor, City Council & City Manager
From: Mark T. Sokolow, City Attorney ~
Subject: P.R. No. 12034 Council Meeting December 17, 2002
Date: December 12, 2002
Attached is P.R. No. 12034 authorizing the City
Manager to execute a Grant and Sales Tax Refund Agreement
with Target. The proposed resolution, P. R. No. 12031,
approving the neighborhood empowerment zone will need to
be adopted first.
MTS/ts
Attachment
z. pr12 0 3 4. memo
P. R. No. 12034
12/12/02 ts
RESOLUTION NO.
A RESOLUTION AUTHORIZINO THE
TO APPROVE THE TARGET GI~%NT AND SALES
REFUND AGREEMENT
CITY MANAGER
TAX
WHEREAS, there is presently an 8.5% sales tax
composed of the following:
To the State of Texas
To the City
To Jefferson County
To the EDC
WHEREAS,
V.T.C.A., the
6.25%
1.00%
.50%
.50%
per Chapter 378 Local Government Code,
created a neighborhood
will allow it to refund
the City Council
public money and
to promote local
WHEREAS, pursuant
Government Code V.T.C.A.,
loans and grants of
personnel and services
City has
empowerment zone, which
sales taxes for this commercial development since it
will increase economic development in the zone; and
to Chapter 380 Local
can make
provide
economic
development and to stimulate business and coK~ercial
activity in the City; and
WHEREAS, the Section 4A Economic Development
Corporation can fund projects that will promote
economic development, increase employment and
commercial business development and expansion; and
WHEREAS, Target has offered to construct a store
in Port Arthur in the location, timetables and with
the expected increase in employment, as delineated
in Exhibit UA"; and
WHEREAS, the City Council deems it in the best interests
of the citizens of Port Arthur to approve a Grant and Sales
Tax Refund Agreement with Target.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF PORT ARTHUR, TEXAS:
Section 1. That
are true and correct.
Section 2. That
the facts and opinions in the preamble
the City Manager is authorized to
execute
substantially the same
Exhibit ~B", with such
the City Attorney as to
of this resolution.
a Grant and Sales Tax Refund Agreement with Target in
form as delineated in the attached
changes as to form to be approved by
incorporate Exhibit UA" and the terms
Section 3. That a copy of
Resolution be spread upon the Minutes
READ,
the caption of this
of the City Council.
ADOPTED AND APPROVED on this day of
, A.D., 2002, at a Regular Meeting of
the City
Council of the City of Port Arthur, Texas, by the following
vote: AYES: Mayor ,
Councilmembers ,
NOES:
ATTEST=
MAYOR
CITY SECRETARY
APPROVED AS TO FORM:
CITY ATTORNEY
APPROVED FOR ADMINISTRATION=
CITY MANAGER
z.prl203¢
EXHIBIT "A"
Direct Dial: 612.761.1559
Fax: 612.761.3728
June 6, 2002
TARGET CORPORATION
R_EC E I.V. E O
JUN 1 0 2002
C;l'[r'~ MANAGER OFFICF.,
VIA FAX 40%982-6743 &
E-MAIL - benji~portarthur.net
Mr. Stephen Fitzg/bbons
City Manager
City of Port Arthur
City Hall
444 4t~ Street
Port Arthur, TX 77641-1089
PROPOSED TARGET - CENTRAL MALL
PORT ARTItUR, TEXAS
Dear Mr. Fitzgibbons:
It was certainly a pleasure meetingwith you and Mayor Ortiz last week. As we discussed, Target
Corporation is currently in negotiations with the Mall ownersttip to attach a new Target store to the
Central Mall. The new store would be approximately 125,000 square feet, and would be the largest
anchor tenant for the Mall. Our intent would be to start construction early next spring and open the
stbre in March of 2004. The new store would employ approximately 150-200 full and part-time
employees. Additionally, I believe the Warmack's will re-confirm that Target is the best possible
anchor tenant to support the Mall's on-going redevelopment plans and for the long-term viability
for the Mall.
As I mentioned, we toured this market and reviewed this project with our Executive Group during
the week of April 8, 2002. At such time we received prelim/nary approval to proceed with the
project subject to the negotiation of a financial incentive package with the City of Port Arthur. As
such, in order to proceed with this project, Target respectfully requests the consideration of a sales
tax rebate/grant agreement of a total of $2,000,000 with a net present value of approximately
$1,500,000. This agreement would be entered into directly with the City of Port Arthur and Target
Corporation. The general terms and conditions of such agreement would be as follows:
A. $300,000.00 grant paid to Target within thirty (30) days of our opening for business.
B. Commencing three (3) months following Target's opening for business, quarterly
reimbursement to Target of the following amounts:
1. Years 01-05; 75% of the 1.0% of sales tax collected by the City of Port Arthur;
2. Years 06-10; 50% of the 1.0% of sales tax collected by the City of Port Arthur;
C. The Agreement shall terminate the earlier of 1) ten (10) years from the date of the opening
of the Target or 2) the date that the total payments (including the grant) reaches
$2,000,000.
Mr. Stephen Fitzgibbons
June 6, 2002
Page 2
Central Mall - Port Arthur, TX
As we discussed in our meeting, we are estimating that sales in the first full year of gperation
(2005) would be approximately $23,000,000.00. Sales are then estimated to increase to almost
$40,000,000.00 after ten (10) years (2015). As the Target store as proposed sells a limited offering
of grocery items, over 95% of the sales generated are fully taxable. Another interesting side note of
our research was that 17% of the sales generated by our existing Beaumont store a/e coming from
the proposed Port Arthur trade area. This estimate was prepared by Target's Area Research and
Planning Department, wkich has prepared similar sales projections for our over 1,000 Target stores
over the last 30 years. Please keep in mind that these sales projections are estimates only, but they
are the same projections that we rely on for our own internal financial analysis and project approval
process.
Thank you again for your consideration of the above proposal and I believe we have structured the
rebate to allow for an earlier termination (i.e. 7 or 8 years) if the sales dramatically exceed our
internal projections as you suggested. I look forward to hearing from you as to the next step with
respect to this proposal and to ensure the March 2004 opening date.
Very truly yours,
~~anager
JCG/jr
Cc:
Mayor Oscar G. Ortiz (Via fax 409-982-6743)
George Warmack, Warmack and Company (Via fax 903-223-6229)
W 5jcg\b(~rlarthur-centralmall-fitzgibbons-6.-~02
EXHIBIT "B"
mRECT mA~214) 969-1671
E-Mail: iohn.rousseau~tkIaw.com
THOMPSON & KNIGHT
ATTORNEYS AND COUNSELORS
1700 PACIFIC AVENUE · SUITE 3300
DALLAS, TEXAS 75201-4693
(214) 969-1700
FAX (214) g69-1751
www.tklaw.cam
OEO I 0 2002,
MANAGER OFF. ICE
AUSTIN
DALLAS
FORT WORTH
HOUSTON
MONTERREY. MEXICO
December 9, 2002
VIA FEDERAL EXPRESS AND FAX
Mr. Stephen Fitzgibbons
City Manager, City of Po~t Arthur
City Hall
444 4th Street
Port Arthur, Texas 77641-1089
Re: Proposed Target to be located at the Central Mall, Port Arthur, Texas
Dear Mr. Fitzgibbons:
This firm represents Target Corporation ("Target") in connection with the above-described
development in Port A~thur. In that regard, and at the request of Mr. John C. Grimes, Jr., at Target,
we have drafted and enclose, for your review, a form of Grant and Sales Tax Refund Agreement
which is based upon the business points set forth in Mr. Grimes' letter to you dated June 6, 2002.
Once you have had an opportunity to review the enclosed form of Grant and Sales Tax Refund
Agreement, please contact us regarding any questions, comments or concerns you may have. We
look forward to working with you and your attorney on the finalization and approval of this
agreement.
John B. Rousseau
Legal Assistant
JBRml
ends
Mr. John C. Grimes, Jr. (with attachment)
Gary F. Liles, Esq. (with attachment)
M. Lawrence Hicks, Jr., Esq. (with attachment)
080366 000039DALLAS 1522966.1
GRANT AND SALES TAX REFUND AGREEMENT
FOR RETAIL FACILITY REDEVELOPMENT AND EXPANSION
BETWEEN
THE CITY OF PORT ARTHUR AND TARGET CORPORATION
This Grant and Sales Tax Refund Agreement (this "Agreement") is entered into as of
,200 (the "Effective Date") by and between the City of Port Arthur
(the "City"), a Texas municipal corporation of the County of Jefferson and State of Texas, and
Target Corporation ("Target"), a Minnesota corporation.
Article 1. General Provisions
1.01. This Agreement is authorized and govemed by (i) Chapter 378 (Neighborhood
Empowerment Zone) of the Texas Local Government Code, Sections 378.001 through 378.004,
(ii) Chapter 380 (Miscellaneous Provisions Relating to Municipal Planning and Development) of
the Texas Local Government Code, Sections 380.001 through 380.003, and (iii) the City's
Resolution enacted on
1.02. Target has a contract to purchase certain land (the "Property") in the City of Port
Arthur, Jefferson County, Texas described on Exhibit A attached hereto and made a part hereof.
The Property is situated within the City of Port Arthur in an area (the "Zone") which has been
designated by the City as a Neighborhood Empowerment Zone pursuant to Resolution enacted on
· Target proposes to construct a Target or Target Greatland store of
approximately 125,000 square feet on the Property (the "Store"), which Store the City has found
will contribute to an increase in economic development in the Zone.
1.03. The Property is not part of an improvement project financed with tax increment
bonds.
1.04. The Property is not owned or leased by any member of the Port Arthur City
Council or any member of the City Planning and Zoning Commission.
Article 2. Grant and Refund Schedule and Term
2.01. As partial consideration for the construction of the Store in the Zone, the City
agrees (i) to pay to Target a grant in the sum of $300,000 (the "Grant") within thirty (30) days of
the opening of the Store to the general public and (ii) thereafter, to refund to Target a portion
(which portion is set forth below) of the sales tax proceeds from retail sales at the Store (the
"Sales Tax Refund")· The parties acknowledge the provisions of existing state law (i.e.,
Chapter , Texas Tax Code) whereby retail sales at the Store are subject to a total tax of
8.25% (the "Total Tax"). The Total Tax will be collected by Target on each applicable retail
sale, reported and paid to the Texas Comptroller of Public Accounts, and thereafter disbursed as
follows:
080366 000039 DALLAS 1521547.1
To the State of Texas:
To the City:
To Jefferson County:
To the Jefferson County
Econ. Dev. Council:
6.25%;
1.00% (the "City Portion");
0.50%; and
0.50%.
Only the City Portion of the Total Tax shall be subject to this Agreement. The Sales Tax Refund
in each calendar year (i.e., Janua~ 1 through December 31) will equal:
(i)
75% of the City Portion collected with respect to retail sales at the Store during
each such calendar year (or portion thereof) during the First Refund Period (as
such term is hereinafter defined); and
(ii)
50% of the City Portion collected with respect to retail sales at the Store during
each such calendar year (or portion thereof) during the Second Refund Period (as
such term is hereinafter defined).
2.02. The first (pt) period of the Sales Tax Refund (the "First Refund Period") will
commence on the first (1st) day of the month following the Store's opening to the general public
(the "Commencement Date") and will expire at the end of the sixtieth (60th) calendar month
thereafter (with the calendar month in which the Commencement Date occurs being counted as
the first such calendar month) unless sooner terminated in accordance with the terms and
conditions herein set forth. The second (2"a) period of the Sales Tax Refund (the "Second
Refund Period") will commence on the first (1't) day of the sixty-first (61s) calendar month after
the Commencement Date and will expire at the end of the one hundred twentieth (120th) month
after the Commencement Date unless sooner terminated in accordance with the terms and
conditions herein set forth (with, in each instance, the calendar month in which the
Commencement Date occurs being counted as the first such calendar month). For example, if the
Store opens on March 15, 2004, then (i) the Commencement Date will be April 1, 2004, (ii) the
First Refund Period shall mn from April 1, 2004, through March 31, 2009, and (iii) the Second
Refund Period shall mn from April 1, 2009, through March 31, 2014; subject, however, to an
earlier termination in accordance with the terms and conditions herein set forth.
2.03. This Agreement shall terminate on the earlier to occur of (i) the expiration of the
Second Refund Period and (ii) the date that the sum of the Grant and the Sales Tax Refund paid
to Target equals $2,000,000.00.
2.04. The City will pay to Target the Sales Tax Refund for each calendar year or part
thereof during the First Refund Period and the Second Refund Period (each being a "Refund
Period") either (a) within thirty (30) days after receipt of the City Portion from the Texas
Comptroller of Public Accounts or (b) at the City's option (but only after written notice to
Target), in monthly installments based upon the reasonably estimated Sales Tax Refund for the
applicable calendar year.
2.05. Notwithstanding anything to the contrary contained herein, the completion of the
initial construction of the Store (which completion shall be evidenced by the Store having opened
080366 000039 DALLAS 1521547.1 -2-
for business to the general public) shall be a condition precedent to the obligations of the City
under this Agreement.
Article 3. Additional Incentives Provided by the City of Port Arthur
As partial consideration for the construction of the Store in the Zone and the creation of
jobs and other economic benefits to the Zone anticipated in connection with the operation of the
Store, the City agrees to expedite the process for all hearings, reviews, inspections, and contacts
with City staff in order to ensure the timely completion of the construction process, and to
consider any other reasonable requests made by Target in order to assist it in constructing the
Store.
Article 4. Effect of Sale and Assignment
4.01. Target shall have the fight, without the City's consent, to transfer or assign this
Agreement to an Affiliate (as such term is hereinafter defined) of Target or any other business
entity that will occupy the Store for the purpose of operating a retail business enterprise, provided
that Target shall notify the City in writing of such transfer or assignment within ten (10) days
after the effective date thereof. For purposes of this Agreement, the term "Afl.fflate" shall mean:
(1)
(2)
(3)
(4)
A parent corporation of Target;
Any wholly owned subsidiary of Target or Target's parent corporation;
Any business entity succeeding to substantially all of Target's assets as a result of
a consolidation or merger; or
Any business entity to which all or substantially all of Target's assets in the
Beaumont-Port Arthur-Orange area have been sold.
4.02 The transfer or assignment of this Agreement to an entity which does not satisfy
the requirements of Section 4.01 above shall require the City's consent as evidenced by an
ordinance duly enacted by the City Council after receipt by the City of Target's written
notification of such proposed transfer at least sixty days before the effective date thereof,
provided that the City's consent shall not unreasonably be withheld, conditioned, or delayed, but
shall be conditioned upon the express assumption, pursuant to an Assignment of and Assumption
of Obligations Under Grant and Sales Tax Refund Agreement in substantially the form attached
hereto as Exhibit B, by such transferee/assigneo of all of Target's obligations set forth in this
Agreement.
4.03 Any attempted transfer or assignment of this Agreement in violation of the terms
set forth in this Article 4 shall be void ab initio, and shall entitle the City to terminate this
Agreement by written notice to Target, whereupon the parties hereto shall be relieved of all
duties hereunder except that Target shall be entitled to its share of the Sales Tax Refund accrued
prior to the date of such termination; provided, however, that such termination shall not be
effective if, within ten days after its receipt of the City's termination notice, Target shall notify
the City that Target has rescinded such attempted transfer or assignment.
080366 000039 DALLAS 1521547.1 -3-
4.04. Effective as of the effective date of a transfer or assignment pursuant to Section
4.01 or 4.02 above, Target will be released of any further duties or obligations under this
Agreement.
Article 5. Independent Contractor/Indemnity
5.01. In executing this Agreement and in performing their respective obligations
hereunder, the City and Target are acting independently and not in any form of partnership or
joint venture. The City assumes no responsibilities or liabilities to any third parties in connection
with this Agreement.
Article 6. Documentation
&01. The parties agree that the dollar amount of retail sales tax eligible for the Sales
Tax Refund will be calculated based upon sales and sales tax information furnished by the Office
of the Comptroller of the State of Texas or any successor agency charged with collecting such
information and preparing such reports (the "Comptroller's Office"). Each calendar year (or
month, if the City elects to pay the Sales Tax Refund in monthly installments) during the
applicable Refund Period, Target will authorize the Comptroller's Office to famish to the City a
report of Target's collections and payments of sales tax for the Store during such calendar year
(or month, as applicable).
Article 7. Notice
7.01. All notices required or permitted by this Agreement will be delivered either (a) by
certified mail, postage prepaid, effective five days after mailing, or (b) by hand delivery or a
nationally recognized overnight courier, in either case effective upon delivery, in all cases
addressed as follows (or to such other address as a party may specify to the other party by notice
delivered in accordance with the terms hereof):
To Target:
Target Corporation
Attn: Property Development
1000 Nicollet Mall
Minneapolis, Minnesota 55403
To the City:
City of Port Arthur
Attn: City Manager
City Hall
444 4th Street
Port Arthur, Texas 7;/641
Article 8. Miscellaneous
8.01. This Agreement was approved by the City Council of the City at its meeting on · 200
8.02. If any section, subsection, paragraph, sentence, phrase, or word of this Agreement
is held invalid for any reason, the balance of th/s Agreement will remain in effect and will be
read as if the parties intended at all times not to include the invalid section, subsection,
paragraph, sentence, phrase, or word.
080366 000039 DALLAS 1521547.1 -4-
8.03. This Agreement will be construed under the laws of the State of Texas.
8.04. This Agreement may be executed by the parties in multiple counterparts, all of
which counterparts when taken together constituting one agreement.
[Remainder of page intentionally left blank; signatures follow]
080366000039DALLAS1521547.1 -5-
SIGNATURE PAGE TO GRANT AND SALES TAX REFUND AGREEMENT
FOR RETAIL FACILITY REDEVELOPMENT AND EXPANSION
BETWEEN
THE CITY OF PORT ARTHUR AND TARGET CORPORATION
EXECUTED by the parties hereto to be effective as of the date first set forth above.
CITY OF PORT ARTHUR, a Texas municipal
corporation (the "City")
By:
Name:
Title:
TARGET CORPORATION, a Minnesota
corporation ("Target")
By:.
Name:
Title:
080366 000039 DALLAS 1521547.1 -6-
EXHIBIT A
Legal Description of the Property
080366 000039 DALLAS 1521547,1 -]-
EXHIBIT B
ASSIGNMENT OF AND ASSUMPTION OF OBLIGATIONS UNDER
GRANT AND SALES TAX REFUND AGREEMENT
THIS ASSIGNMENT OF AND ASSUMPTION OF OBLIGATIONS UNDER GRANT
AND SALES TAX REFUND AGREEMENT (hereinafter called this "Assignment") made the
day of ,200 , between
, a corporation duly organized and existing
under the laws of the State of , with its principal place of business at
(hereinafter called "Assignor") and
0 a corporation duly organized and existing under
the laws of the State of , with its principal place of business at
(hereinafter called "Assignee"), and the City of Port Arthur, a
municipal corporation of the County of Jefferson and State of Texas, with its principal place of
business at 444 4th Street, Port Arthur, Texas 77641 (hereinafter called the "City").
WITNESSETH:
WHEREAS, City and Assignor entered into a Grant and Sales Tax Refund Agreement
(hereinafter called the "Agreement") dated , 200 , a copy of which is
attached hereto as Exhibit "1 ", whereby Assignor became entitled to ce~ain rights and privileges and
subject to certain duties and obligations, all as more particularly described in the Agreement;
WHEREAS, Assignee is neither an "Affiliate" (as such term is defined in the Agreement)
of Assignor nor another business entity that will occupy the "Store" (as such term is defined in the
Agreement) for the purpose of operating a retail business enterprise, but Assignor is desiring of
transferring to Assignee all of its right, title and interest in and to the Agreement, and Assignee is
desirous of accepting such transfer;
WHEREAS, under the terms of the Agreement, because Assignee is neither an Affiliate of
Assignor nor another business entity that will occupy the Store for the purpose of operating a retail
business enterprise, such transfer shall be ineffective and of no force or effect without the consent
thereto by City; and
WHEREAS, the City is willing to consent to such assignment on the terms set forth herein.
NOW, THEREFORE, in consideration of the sum ofTen Dollars ($10.00) and other good
and valuable consideration exchanged among the parties hereto, the receipt and sufficiency of all of
which is hereby acknowledged and confessed, it is agreed:
1. Assignor by these presents does sell, grant, assign and convey unto Assignee all of
Assignor's right, title and interest in and to the Agreement and Assignor fully authorizes and
empowers Assignee to exercise all rights as Assignor under the terms of said Agreement, and in the
same manner as Assignor might or could do thereunder.
080366 000039 DALLAS 1521547,1
2. Assignee hereby expressly assumes all of the terms, covenants, and conditions of the
Agreement, and expressly agrees to be bound thereby and assumes full performance thereunder.
3. Nothing herein contained shall in any way operate to modify or abrogate any
requirements in the Agreement respecting any further or future assignment of the Agreement, or the
rights or obligations thereunder, in whole or in part.
4. The parties hereto do hereby expressly ratify and reaffirm the Agreement, and the
terms, covenants and conditions therein contained.
5. Expressly subject to the terms herein contained, the City does hereby consent to the
within assignment of the Agreement. It is further agreed and understood between all parties to this
Assignment that upon the assumption of the obligations contained in the Agreement by Assignee,
Assignor shall be relieved of all rights, privileges, duties and obligations thereunder.
IN WITNESS THEREOF, the parties hereto have executed this Assignment as of the day and
year first above written, and the City further manifests its approval of this Assignment by ordinance
of even date therewith.
[,~ dd appropriate signature blocks]
080366 000039 DALLAS 1521547.1 -2-