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HomeMy WebLinkAboutContract 47694 ' CITY SECRETAW CONTRACT W. y ECONOMIC DEVELOPMENT PROGRAM AGREEMENT aQ� . qj � P_ 8 L rj'Q This ECONOMIC DEVELOPMENT PROGRAM AGREEMENT "Agreement") is entered into by and between the CITY OF FORT WORTH, TEXAS (the "City"), a home rule municipality organized under the laws of the State of Texas, and AMERICAN AIRLINES,INC. ("Company"), a Delaware corporation. RECITALS A. Company leases approximately 97.701 acres of property in the City within the boundaries of Dallas/Fort Worth International Airport ("DFW") and more specifically described in Exhibit "A" (the "Land") under a lease approved by the Dallas/Fort Worth International Airport Board as well as the governing bodies of both the City of Fort Worth and the City of Dallas, which is attached as Exhibit "C" to the Tax Abatement Agreement (the "Lease"). Company wishes to construct a new corporate headquarters facility on the Land consisting of not less than 900,000 square feet of floor area in the office and complimentary and associated uses (the "Required Improvements") along with ancillary improvements and facilities, which may include such improvements as dining facilities, conferencing facilities, recreational amenities or similar types of improvements supporting the corporate headquarters facility (the "Ancillary Improvements"). The lease between Company and DFW will require Company to pay all taxes assessed on the Land, any improvements on the Land and any Taxable Tangible Personal Property (as defined herein). Exhibit "A" is attached hereto and hereby made a part of this Agreement for all purposes. B. In order to encourage Company to undertake the Required Improvements, the City has offered a fifteen (15)-year economic development incentive consisting of(i) a one (1)-year real and personal property tax abatement, as governed by Chapter 312 of the Texas Tax Code and that certain Tax Abatement Agreement to be by and between the City and Company, a public document on file in the City Secretary's Office as City Secretary Contract No. 47341 (the "Tax Abatement Agreement"), and (ii) an Economic Development Program Grant Agreement that provides for the City to pay fourteen (14) annual economic development grants to Company, as governed by this Agreement. C. Under the Tax Abatement Agreement, Company is entitled to receive a tax abatement for the Commencement Tax Year (as defined therein) of up to a maximum of 75% to 90% of the City's ad valorem taxes on the value of the Leasehold Interest, the Land, and any improvements on the Land (if taxed) and on the value of any Taxable Tangible Personal Property located on the Land (the actual percentage being dependent on their combined taxable appraised value for the Commencement Tax Year) over their values for the 2015 tax year if (i) Company expends or causes to be expended at least Two Hundred Million Dollars ($200,000,000.00) in Construction Costs for the Required Improvements and the Ancillary Improvements from the Effective Date of the Tax Page t OFFICIAL RECORD Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. CITY SECRETARY FT.WORTH,TX Abatement Agreement until the Completion Date; (ii) the Completion Date occurs on or before December 31, 2019; and (iii) additional funds of at least One Hundred Fifty Million Dollars ($150,000,000.00) have been expended on either Construction Costs for Required Improvements and Ancillary Improvements or New Taxable Tangible Personal Property in place on the Land by December 31, 2019, or a combination thereof, all as more specifically outlined in the Tax Abatement Agreement. D. The purpose of this Agreement is to provide the remaining fourteen (14)- year incentive to Company for completion of the Required Improvements on the Land. As recommended by the 2015 Comprehensive Pian, adopted by the City Council pursuant to Ordinance No. 21693-03-2015, and in accordance with Resolution No. 3716- 03-2009, the City has established an economic development program pursuant to which the City will, on a case-by-case basis, offer economic incentives authorized by Chapter 380 of the Texas Local Government Code that include monetary loans and grants of public money, as well as the provision of personnel and services of the City, to businesses and entities that the City Council determines will promote state or local economic development and stimulate business and commercial activity in the City in return for verifiable commitments from such businesses or entities to cause specific employment and other public benefits to be made or invested in the City (the "380 Program"). E. The City Council has determined that by entering into this Agreement, the potential economic benefits that will accrue to the City under the terms and conditions of this Agreement are consistent with the City's economic development objectives. In addition, the City Council has determined that the 380 Program is an appropriate means to achieve the Development, which the City Council has determined is necessary and desirable, and that the potential economic benefits that will accrue to the City pursuant to the terms and conditions of this Agreement are consistent with the City's economic development objectives as outlined in the 2015 Comprehensive Plan. This Agreement is authorized by Chapter 380 of the Texas Local Government Code. F. The City has determined that Company's ability and willingness to construct the Required Improvements and to operate its corporate headquarters on the Land is contingent upon Company's receipt of the Program Grants, as provided in this Agreement. The City's analysis is specifically based on financial information provided by Company. NOW, THEREFORE, in consideration of the mutual benefits and promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: Page 2 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. AGREEMENT 1. INCORPORATION OF RECITALS. The City Council has found, and the City and Company hereby agree, that the recitals set forth above are true and correct and form the basis upon which the parties have entered into this Agreement. 2. DEFINITIONS. In addition to terms defined in the body of this Agreement, the following terms shall have the definitions ascribed to them as follows: 380 Prol4ram has the meaning ascribed to it in Recital D. Affiliate means all entities, incorporated or otherwise, under common control with, controlled by or controlling Company. For purposes of this definition, "control" means fifty percent (50%) or more of the ownership determined by either value or vote. Ancillary Improvements has the meaning ascribed to it in Recital A. Base Grant Amount has the meaning ascribed to it in Section 5.2. Certificate of Completion has the meaning ascribed to it in the Tax Abatement Agreement. Commitment-Sourced Grant Amount has the meaning ascribed to it in Section 5.3. Completion Date has the meaning ascribed to it in the Tax Abatement Agreement. Combined Appraised Value means the combined taxable appraised value of the Land, improvements on the Land, the Leasehold Interest, and Taxable Tangible Personal Property in a given tax year. Commencement Tax Year has the meaning ascribed to it in the Tax Abatement Agreement. Completion Deadline has the meaning ascribed to it in the Tax Abatement Agreement. Page 3 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. Corporate Headquarters means the largest administrative office of American Airlines, Inc. (or its successor) housing the senior executives and office personnel and identified in materials as its main domestic corporate headquarters. Director means the director of the City's Economic Development Department. Effective Date has the meaning ascribed to it in Section 3. Fort Worth Certified M/WBE Company means a minority or woman-owned business that has received certification as either a minority business enterprise (MBE), a woman business enterprise (WBE) or a disadvantaged business enterprise (DBE) by the North Central Texas Regional Certification Agency (NCTRCA) and that has a principal business office located within the corporate limits of the City that performs a commercially useful function and that provides the services for which Company is seeking credit under this Agreement. Fort Worth Company means a business that has a principal office located within the corporate limits of the City that performs a commercially useful function and that provides the services for which Company is seeking credit under this Agreement. Fort Worth Construction Commitment has the meaning ascribed to it in the Tax Abatement Agreement. Fort Worth Construction Percentage has the meaning ascribed to it in the Tax Abatement Agreement. Fort Worth Employment Commitment has the meaning ascribed to it in Section 4.2.2, Fort Worth Employment Percentage has the meaning ascribed to it in Section 5.3.4. Fort Worth Resident means an individual whose primary residence is at a location within the corporate limits of the City. Fort Worth Supply and Service Percentage has the meaning ascribed to it in Section 5.3.5. Fort Worth Supply and Service Spending Commitment has the meaning ascribed to it in Section 4.3.1. Full-time Equivalent Job means a job provided on the Land by Company or an Affiliate to one (1) or more individuals, whether new or retained, for at least forty (40) hours per week. Page 4 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. Grant Initiation Year means the calendar year following the Commencement Tax Year. Land has the meaning ascribed to it in Recital A. Lease has the meaning ascribed to it in Recital A. Leasehold Interest means the leasehold interest in the Land and improvements thereon provided by the Lease. MIWBE Construction Commitment has the meaning ascribed to it in the Tax Abatement Agreement, M/WBE Construction Percentage has the meaning ascribed to it in the Tax Abatement Agreement. M/WBE Supply and Service Percentag has the meaning ascribed to it in Section 5.3.6. MIWBE Supply and Service Spending Commitment has the meaning ascribed to it in Section 4.3.2. New Taxable Tangible Personal Property means any personal property, other than inventory and supplies, that (i) is subject to ad valorem taxation by the City; (ii) is located on the Land; (iii) is owned or leased by Company or an Affiliate; and (iv) was not located in the City prior to the Effective Date of the Tax Abatement Agreement. Overall Employment Commitment has the meaning ascribed to it in Section 4.2.1. Overall Employment Percentage has the meaning ascribed to it in Section 5.3.3. Program Grants means the annual economic development grants paid by the City to Company in accordance with this Agreement and as part of the 380 Program. Program Source Funds means an amount equal to the City's ad valorem taxes received by the City during the Twelve-Month Period ending in each Program Year on the value of the Land, plus the value of all improvements on the Land, plus the value of Taxable Tangible Personal Property located on the Land, less Five Million Three Hundred Seventy-one Thousand One Hundred Eighty-eight Dollars ($5,371,188.00), which is the combined amount of such ad valorem taxes received by the City for the 2015 tax year. Program Year means a calendar year in which the City is obligated pursuant to this Agreement to pay Company a Program Grant, beginning with the calendar year following the Grant Initiation Year (Program Year 1). Page 5 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. Records has the meaning ascribed to it in Section 4.6. Required Improvements has the meaning ascribed to it in Recital A. Supply and Service Expenditures means those local discretionary expenditures made by Company directly for the operation and maintenance of the Land and any improvements thereon, excluding utility service costs. Tax Abatement Agreement has the meaning ascribed to it in Recital B. Taxable Tangible Personal Property means any personal property other than inventory or supplies that (i) is subject to ad valorem taxation by the City; (ii) is located on the Land; and (iii) is owned or leased by Company. Term has the meaning ascribed to it in Section 3. Twelve-Month Period means the period between February 1 of a given year and January 31 of the following year. 3. TERM. This Agreement shall take effect on the date as of which both the City and Company have executed this Agreement (the "Effective Date") and, unless terminated earlier in accordance with its terms and conditions, shall expire on the date as of which the City has paid the fourteenth (14th) annual Program Grant pursuant to and in accordance with this Agreement (the "Term"). 4. COMPANY'S OBLIGATIONS AND COMMITMENTS. 4.1. Use of Land; Lease; Maintenance of Company's Corporate Headquarters on Land. From the Completion Date until expiration of the Term of this Agreement, Company must maintain its Corporate Headquarters on the Land. In addition, throughout the Term of this Agreement, Company or an entity to whom this Agreement has been lawfully assigned in accordance with Section 10 must own the leasehold interest in the Land. Page 6 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. a 4.2. Employment Commitments. 4.2.1. Overall Employment. Throughout the Grant Initiation Year and each calendar year thereafter for the remainder of the Term of this Agreement, at least 4,279 Full-time Equivalent Jobs must be provided and filled on the Land (the "Overall Employment Commitment"). Determination of compliance with the Overall Employment Commitment will be based on the employment data provided to the City in accordance with Section 4.4.1. 4.2.2. Employment Commitment for Fort Worth Residents. Throughout the Grant Initiation Year and each calendar year thereafter for the remainder of the Term of this Agreement, at least 400 Full-time Equivalent Jobs provided on the Land must be filled with Fort Worth Residents (the "Fort Worth Employment Commitment"). Determination of compliance with the Fort Worth Employment Commitment will be based on the employment data provided to the City in accordance with Section 4.4.1. Full-time Equivalent Jobs held by Fort Worth Residents will also count as Full-time Equivalent Jobs for purposes of measuring the Overall Employment Commitment outlined in Section 4.2.1. 4.3. Supply and Service SpendinI4 Commitments. 4.3.1. For Fort Worth Companies. In the Grant Initiation Year and each calendar thereafter for the remainder of the Term of this Agreement, Company, its Affiliates, and/or a third party manager hired by Company and/or its Affiliates must expend or cause to be expended at least Seven Hundred Fifty Thousand Dollars ($750,000.00) in Supply and Service Expenditures with Fort Worth Companies (the "Fort Worth Supply and Service Spending Commitment"). 4.3.2. For Fort Worth Certified M/WBE Companies. In the Grant Initiation Year and each calendar thereafter for the remainder of the Term of this Agreement, Company, its Affiliates, and/or a third party manager hired by Company and/or its Affiliates must expend or cause to be expended at least Three Hundred Fifty Thousand Dollars ($350,000.00) in Supply and Service Expenditures with Fort Worth Certified M/WBE Companies (the "M/WBE Supply and Service Spending Commitment"). Dollars expended with Fort Worth Certified M/WBE Companies will also count as dollars expended with Fort Worth Page 7 Economic Development Program Agreement between City of Fort Worth and American Airlines, Inc. Companies for purposes of measuring the Fort Worth Supply and Service Spending Commitment outlined in Section 4.3.1. 4.4. Reports and Filings. 4.4.1. Employment Reports. On or before February 1 of Program Year 1 and each year thereafter for the remainder of the Term of this Agreement, in order for the City to assess the degree to which the Overall Employment Commitment and the Fort Worth Employment Commitment were met in the previous calendar year, Company must provide the Director with a report in a form reasonably acceptable to the City that sets forth the total number of individuals and the total number of Fort Worth Residents who held Full- time Equivalent Jobs on the Land as of December 31 of the previous calendar year (or such other date in that calendar year that may be requested by Company and reasonably acceptable to the City). 4.4.2. Supply and Service SpendinIZ Reports. On or before February 1 of Program Year 1 and each year thereafter for the remainder of the Term of this Agreement, in order for the City to assess the degree to which Company met the Fort Worth Supply and Service Spending Commitment and the M/WBE Supply and Service Spending Commitment in the previous calendar year, Company must provide the City with a report in a form reasonably acceptable to the City that sets forth the aggregate Supply and Service Expenditures made during such previous calendar year with Fort Worth Companies and with Fort Worth Certified M/WBE Companies, together with reasonable supporting documentation. 4.4.3. General. Company agrees to supply any additional information reasonably requested by the City that is pertinent to the City's evaluation of compliance with each of the terms and conditions of this Agreement. 4.5. Inspections. At any time during Company's normal business hours (but once the Certificate of Completion has been issued in accordance with Section 5.1 of the Tax Abatement Agreement, not more frequently than quarterly throughout the Term and following reasonable notice to Company, the City will have the right to inspect and evaluate the Land and any improvements thereon, and Company will provide full access to the same, in order for the City to monitor compliance with the terms and conditions of this Agreement. Company will cooperate fully with Page 8 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. the City during any such inspection and evaluation. Notwithstanding the foregoing, Company will have the right to require that any representative of the City be escorted by a Company representative or security personnel during any such inspection and evaluation. 4.6. Audits. The City will have the right throughout the Term to audit the financial and business records of Company and any Affiliates that relate to the Required Improvements and the Ancillary Improvements and any other documents necessary to evaluate compliance with this Agreement or with the commitments set forth in this Agreement, as well as employment records of an Affiliate solely to the extent that Full-time Jobs provided by an Affiliate are included in the employment report submitted pursuant to Section 4.4.1 (collectively "Records"). Company will make or cause to be made all Records available to the City on the Land or at another location in the City acceptable to both parties following reasonable advance notice by the City and will otherwise cooperate fully with the City during any audit. 5. PROGRAM GRANTS. 5.1. Overall Concept. Subject to the terms and conditions of this Agreement, Company will be entitled to receive from the City fourteen (14) annual Program Grants. The amount of each Program Grant will equal the sum of the Base Grant Amount, which will be calculated each year in accordance with Section 5.2, and the Commitment-Sourced Grant Amount, which will be calculated in accordance with Section 5.3. 5.2. Base Grant Amount. As referenced in Section 5.1, one portion of each annual Program Grant will equal the Base Grant Amount, which will be based on specified percentages of Program Source Funds attributable to various increments of Combined Appraised Value for the tax year preceding the year in which the Program Grant is payable (the "Base Grant Amount"). The Base Grant Amount is designed to reward Company for not only completing the Required Improvements in accordance with the Tax Abatement Agreement incentive, but also for Company's continuation of its Corporate Headquarters operations on the Land. Thus, the higher the Combined Appraised Value for a particular tax year, the higher the Base Grant Amount for the Program Grant payable in the following Program Year will be. Specifically, the Base Grant Amount for a particular Program Year will equal the sum of the following: Page 9 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. (a) Twenty-five percent (25%) of the Program Source Funds that are attributable to the first $100,000,000.00 of Combined Appraised Value in the previous tax year; plus (b) Thirty percent (30%) of the Program Source Funds that are attributable to a Combined Appraised Value of between $100,000,000.01 and $200,000,000.00 in the previous tax year; plus (c) Thirty-five percent (35%) of the Program Source Funds that are attributable to a Combined Appraised Value of between $200,000,000.01 and $300,000,000.00 in the previous tax year; and (d) Forty percent (40%) of the Program Source Funds that are attributable to a Combined Appraised Value in excess of $300,000,000.00 in the previous tax year. For example, if in a given tax year the Combined Appraised Value is $240,000,000.00, then the Base Grant Amount to be included in the Program Grant payable in following Program Year would equal the sum of(i) 25% of the Program Source Funds attributable to the first $100 million; plus (ii) 30% of the Program Source Funds attributable to the second $100 million; plus (iv) 35% of the Program Source Funds attributable to the remaining $40 million. 5.3. Commitment-Sourced Grant Amount. As referenced in Section 5.1, the other portion of each annual Program Grant will equal the Commitment-Sourced Grant Amount, which will be based on the aggregate extent to which various spending and employment commitments have been met and, specifically, will equal the product of the Program Source Funds multiplied by the sum of the Fort Worth Construction Percentage, the M/WBE Construction Percentage, the applicable Overall Employment Percentage, the applicable Fort Worth Employment Percentage, the applicable Fort Worth Supply and Service Percentage, and the applicable M/WBE Supply and Service Percentage, as outlined in Sections 5.3.1, 5.3.2, 5.3.3, 5.3.4, 5.3.5, and 5.3.6 (the "Commitment-Sourced Grant Amount). The maximum Commitment-Sourced Grant Amount available for any Program Grant will be fifty percent (50%) of the Program Source Funds available for that Program Grant. 5.3.1. Fort Worth Construction Percentage (Up to 7.5%). The Fort Worth Construction Percentage will equal a percentage of the Program Source Funds that is based on the extent to which the Fort Worth Construction Commitment under the Tax Abatement Agreement was met. The Fort Worth Construction Percentage will be calculated in accordance with the Tax Abatement Agreement, as reflected in the Page 10 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. Certificate of Completion issued by the City to Company under the Tax Abatement Agreement. The Fort Worth Construction Percentage is a fixed amount that will be included as part of the Commitment-Sourced Grant Amount for each annual Program Grant, and, in accordance with the calculations under the Tax Abatement Agreement, cannot exceed seven and one-half percent (7.5%). 5.3.2. M/WBE Construction Percentage (Up to 7.5%). The M/WBE Construction Percentage will equal a percentage of the Program Source Funds that is based on the extent to which the M/WBE Construction Commitment under the Tax Abatement Agreement was met. The M/WBE Construction Percentage will be calculated in accordance with the Tax Abatement Agreement, as reflected in the Certificate of Completion issued by the City to Company under the Tax Abatement Agreement. The M/WBE Construction Percentage is a fixed amount that will be included as part of the Commitment-Sourced Grant Amount for each annual Program Grant, and, in accordance with the calculations under the Tax Abatement Agreement, cannot exceed seven and one-half percent (7.5%). 5.3.3. Overall Employment Percentalle (Up to 15%). The Overall Employment Percentage will equal a percentage of the Program Source Funds that is based on the extent to which the Overall Employment Commitment, as outlined in Section 4.2.1, was met in the previous calendar year (the "Overall Employment Percentage"). The Overall Employment Percentage will equal the product of fifteen percent (15%) multiplied by the percentage by which the Overall Employment Commitment was met in the previous calendar year, which will be calculated by dividing the actual number of Full-time Equivalent Jobs provided and filled on the Land in the previous calendar year by 4,279, which is the number of Full-time Equivalent Jobs constituting the Overall Employment Commitment. For example, if in a given year only 3,637 Full-time Equivalent Jobs were provided and filled on the Land, the Overall Employment Percentage applicable to the Program Grant payable in the following year would be 12.75% instead of 15% (or .15 x [3,637/4,279]), or .15 x .84996, or .12749 (rounded to .1275). If the Overall Employment Commitment is met or exceeded in any given year, the Overall Employment Percentage applicable to the Program Grant payable in the following year will be fifteen percent (15%). 5.3.4. Fort Worth Employment Percentage (Up to 5%). The Fort Worth Employment Percentage will equal a percentage of the Program Source Funds that is based on the extent to which the Fort Page I I Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. Worth Employment Commitment, as outlined in Section 4.2.2, was met in the previous calendar year (the "Fort Worth Employment Percentage"). The Fort Worth Employment Percentage will equal the product of five percent (5%) multiplied by the percentage by which the Fort Worth Employment Commitment was met in the previous calendar year, which will be calculated by dividing the actual number of Full-time Equivalent Jobs provided and filled on the Land and filled with Fort Worth Residents in the previous calendar year by 400, which is the number of Full-time Equivalent Jobs comprising the Fort Worth Employment Commitment. If the Fort Worth Employment Commitment is met or exceeded in any given year, the Fort Worth Employment Percentage applicable to the Program Grant payable in the following year will be five percent (5%). 5.3.5. Fort Worth Supply and Service Percentaize (Up to 7.5%). The Fort Worth Supply and Service Percentage will equal a percentage of the Program Source Funds that is based on the extent to which the Fort Worth Supply and Service Spending Commitment, as outlined in Section 4.3.1, was met in the previous calendar year (the "Fort Worth Supply and Service Percentage"). The Fort Worth Supply and Service Percentage will equal the product of seven and one-half percent (7.5%) multiplied by the percentage by which the Fort Worth Supply and Service Spending Commitment was met in the previous calendar year, which will be calculated by dividing the amount of Supply and Service Expenditures made with Fort Worth Companies in the previous calendar year by Seven Hundred Fifty Thousand Dollars ($750,000.00), which is the number of dollars comprising the Fort Worth Supply and Service Spending Commitment. For example, if in a given year Company made only Six Hundred Seventy-five Thousand Dollars ($675,000.00) in Supply and Service Expenditures with Fort Worth Companies, the Fort Worth Supply and Service Percentage for the Program Grant payable in the following year would be 6.75% instead of 7.5% (or .075 x [$675,000/$750,000], or .075 x .90, or .0675). If the Fort Worth Supply and Service Spending Commitment is met or exceeded in any given year, the Fort Worth Supply and Service Percentage applicable to the Program Grant payable in the following year will be seven and one-half percent (7.5%). 5.3.6. M/WBE Supply and Service Percentalze (Up to 7.5%). The M/WBE Supply and Service Percentage will equal a percentage of the Program Source Funds that is based on the extent to which the M/WBE Supply and Service Spending Commitment, as outlined in Section 4.3.2, was met in the previous calendar year (the "M/WBE Supply and Service Percentage"). The M/WBE Supply and Service Percentage will equal the product of seven and one-half percent (7.5%) Page 12 Economic Development Program Agreement between City of Fort Worth and American Airlines, Inc. multiplied by the percentage by which the M/WBE Supply and Service Spending Commitment was met in the previous calendar year, which will be calculated by dividing the amount of Supply and Service Expenditures made with Fort Worth Certified M/WBE Companies in the previous calendar year by Three Hundred Fifty Thousand Dollars ($350,000.00), which is the number of dollars comprising the M/WBE Supply and Service Spending Commitment. If the M/WBE Supply and Service Spending Commitment is met or exceeded, the M/WBE Supply and Service Percentage applicable to the Program Grant payable in the following year will be seven and one-half percent (7.5%). 5.3.7. No Offsets. A deficiency in attainment of one commitment may not be offset by exceeding attainment in another commitment. For example, if in a given year Company failed to meet the M/WBE Supply and Service Spending Commitment by $5,000.00, but exceeded the Fort Worth Supply and Service Spending Commitment by $5,000.00, the M/WBE Construction Percentage applicable to the Program Grant payable in the following year would still be reduced in accordance with Section 5.3.6 on account of Company's failure to meet the M/WBE Supply and Service Spending Commitment. 5.4. Deadline for Payments and Source of Funds. Company will receive its one tax abatement under the Tax Abatement Agreement for the Commencement Tax Year, which will be based partially on Company's compliance with various employment and spending commitments for the preceding year. Company's first Program Grant under this Agreement will be paid in the year following the Grant Initiation Year (which will be Program Year 1) and will be based partially on Company's compliance with various employment and spending commitments in the Grant Initiation Year. For example, if Company elects for its tax abatement to be applied to tax year 2020 (malting 2020 the Commencement Tax Year), then (i) the Grant Initiation Year will be 2021; (ii) Company will not receive any incentive in 2021 on account of application of the tax abatement under the Tax Abatement Agreement for the 2020 tax year; and (iii) Company will not be subject to any employment or supply and service spending commitments in 2020 pursuant to this Agreement. Each Program Grant will be paid on or before June 1 of the Program Year in which such payment is due. It is understood and agreed that all Program Grants paid pursuant to this Agreement will come from currently available general revenues of the City and not directly from the Program Source Funds themselves. Company understands and agrees that any revenues of the City other than those dedicated for payment of a given annual Program Grant pursuant to this Agreement may be used by the City for any lawful purpose that the City deems necessary in the carrying out of its business as a home rule municipality and will Page 13 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. not serve as the basis for calculating any future Program Grant payment or other obligation to Company. 6. DEFAULT, TERMINATION AND FAILURE BY COMPANY TO MEET VARIOUS DEADLINES AND COMMITMENTS. 6.1. Termination of Tax Abatement Agreement. If the Tax Abatement Agreement is lawfully terminated in accordance with terms and conditions of the Tax Abatement Agreement, this Agreement automatically will terminate contemporaneously upon the effectiveness of termination of the Tax Abatement Agreement. 6.2. Failure to Submit Reports. If Company fails to submit any report or information to the City pursuant to and in accordance with the provisions of Section 4.4, the City will notify Company in writing. Company will have thirty (30) calendar days from the date of such notice to provide the City with any such report or information in full. If the City has not received the report or information in full within such thirty (30) calendar days, the City will have the right to terminate this Agreement immediately upon provision of written notice to Company, in which case the City will have no further obligation to Company hereunder. The right of the City to terminate as expressed herein is not intended to preclude the Company from requesting, or the City from negotiating, a modification of this Agreement as an alternative to termination. However, any such modification must be approved as an amendment as set forth in Section 20. 6.3. Failure to Pay City Taxes. An event of default will occur under this Agreement if any City taxes owed by Company or an Affiliate or arising on account of Company's or an Affiliate's operations on the Land become delinquent and Company or the Affiliate does not either pay such taxes or properly follow the legal procedures for protest and/or contest of any such taxes. In this event, the City will notify Company in writing and Company will have thirty (30) calendar days to cure such default. If the default has not been fully cured by such time, the City will have the right to terminate this Agreement immediately upon provision of written notice to Company, in which case the City will have no further obligation to Company hereunder, but the City will retain all other rights and remedies that may be available to it under the law or in equity. The right of the City to terminate as expressed herein is not intended to preclude the Company from requesting, or the City from negotiating, a modification of this Agreement as an alternative to termination. However, any such modification must be approved as an amendment as set forth in Section 20. Page 14 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. 6.4. Violations of City Code, State or Federal Law. An event of default will occur under this Agreement if any written citation is issued to Company or an Affiliate due to the occurrence of a violation of a material provision of the City Code on the Land or on or within any improvements thereon (including, without limitation, any violation of the City's Building or Fire Codes and any other City Code violations related to the environmental condition of the Land; the environmental condition of other land or waters which is attributable to operations on the Land; or to matters concerning the public health, safety or welfare) and such citation is not paid or the recipient of such citation does not properly follow the legal procedures for protest and/or contest of any such citation. An event of default will occur under this Agreement if the City is notified by a governmental agency or unit with appropriate jurisdiction that Company or an Affiliate, or any successor in interest thereto; any third party with access to the Land pursuant to the express or implied permission of Company or an Affiliate, or any successor in interest thereto; or the City (on account of the Required Improvements or the act or omission of any party other than the City on or after the effective date of this Agreement) is declared to be in violation of any material state or federal law, rule or regulation on account of the Land, improvements on the Land or any operations thereon (including, without limitation, any violations related to the environmental condition of the Land; the environmental condition of other land or waters which is attributable to operations on the Land; or to matters concerning the public health, safety or welfare). Upon the occurrence of such default, the City will notify Company in writing, and Company will have (i) thirty (30) calendar days to cure such default or (ii) if Company has diligently pursued cure of the default but such default is not reasonably curable within thirty (30) calendar days, then such amount of time that the City reasonably agrees is necessary to cure such default. If the default has not been fully cured by such time, the City will have the right to terminate this Agreement immediately by providing written notice to Company and will have all other rights and remedies that may be available it to under the law or in equity. The right of the City to terminate as expressed herein is not intended to preclude the Company from requesting, or the City from negotiating, a modification of this Agreement as an alternative to termination. However, any such modification must be approved as an amendment as set forth in Section 20. 6.5. Knowing Employment of Undocumented Workers. Company acknowledges that the City is required to comply with Chapter 2264 of the Texas Government Code, enacted by House Bill 1196 (80th Texas Legislature), which relates to restrictions on the use of certain public subsidies. Company hereby certifies that Company, and any branches, divisions, or departments of Company, does not and will not knowingly employ an undocumented worker, as that term is defined by Section 2264.001(4) of the Teas Government Code. In the event that Company, or any branch, division, or Page 15 Economic Development Program Agreement between City of Fort Worth and American Airlines, Inc. department of Company, is convicted of a violation under 8 U.S.C. Section 1324a(l) (relating to federal criminal penalties and injunctions for a pattern or practice of employing unauthorized aliens), subject to any appellate rights that may lawfully be available to and exercised by Company, Company must repay, within one hundred twenty (120) calendar days following receipt of written demand from the City, the aggregate amount of Program Grants received by Company hereunder, if any,plus Simple Interest at a rate of four percent (4%) per annum. For the purposes of this Section 6.5, "Simple Interest" is defined as a rate of interest applied only to an original value, in this case the aggregate amount of Program Grants paid pursuant to this Agreement. This rate of interest can be applied each year, but will only apply to the amount of Program Grants received hereunder and is not applied to interest calculated. For example, if the aggregate amount of Program Grants received by Company hereunder is $10,000 and it is required to be paid back with four percent (4%) interest five years later, the total amount would be $10,000 + [5 x ($10,000 x 0.04)], which is $12,000. This Section 6.5 does not apply to convictions of any Affiliate of Company, any franchisees of Company, or any person or entity with whom Company contracts. Notwithstanding anything to the contrary herein, this Section 6.5 will survive the expiration or termination of this Agreement as to convictions for actions for offenses occurring prior to the termination of this Agreement. 6.6. Failure to Meet Construction Cost Spendin1j,Employment, or Supply and Service Spending Commitments. A failure to meet the Fort Worth Construction Commitment or the M/WBE Construction Commitment under the Tax Abatement Agreement, or to meet the Overall Employment Commitment, the Fort Worth Employment Commitment, the Fort Worth Supply and Service Spending Commitment, or the M/WBE Supply and Service Spending Commitment in any year under this Agreement, will not constitute a default hereunder or provide the City with the right to terminate this Agreement, but, rather, will only cause the amount of a given Program Grant payable to Company under to this Agreement to be reduced in accordance with this Agreement. 6.7. General Breach. Unless stated elsewhere in this Agreement, Company will be in default under this Agreement if Company breaches any term or condition of this Agreement. In the event that such breach remains uncured after thirty (30) calendar days following receipt of written notice from the City referencing this Agreement (or, if Company has diligently and continuously attempted to cure following receipt of such written notice but reasonably requires more than thirty (30) calendar days to cure, then such additional amount of time as is reasonably necessary to effect cure, as determined by both parties mutually and in good Page 16 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. faith), the City will have the right to terminate this Agreement immediately by providing written notice to Company. The right of the City to terminate as expressed herein is not intended to preclude the Company from requesting, or the City from negotiating, a modification of this Agreement as an alternative to termination. However, any such modification must be approved as an amendment as set forth in Section 20. 7. INDEPENDENT CONTRACTOR. It is expressly understood and agreed that Company will operate as an independent contractor in each and every respect hereunder and not as an agent, representative or employee of the City. Company will have the exclusive right to control all details and day-to-day operations relative to the Land and any improvements thereon and will be solely responsible for the acts and omissions of its officers, agents, servants, employees, contractors, subcontractors, licensees and invitees. Company acknowledges that the doctrine of respondeat superior will not apply as between the City and Company, its officers, agents, servants, employees, contractors, subcontractors, licensees, and invitees. Company further agrees that nothing in this Agreement will be construed as the creation of a partnership or joint enterprise between the City and Company. 8. INDEMNIFICATION. COMPANY, AT NO COST TO THE CITY, AGREES TO DEFEND, INDEMNIFY AND HOLD THE CITY AND ITS OFFICERS, AGENTS SERVANTS AND EMPLOYEES, HARMLESS AGAINST ANY AND ALL CLAIMS, LAWSUITS, ACTIONS, COSTS AND EXPENSES OF ANY KIND, INCLUDING, BUT NOT LIMITED TO, THOSE FOR PROPERTY DAMAGE OR LOSS (INCLUDING ALLEGED DAMAGE OR LOSS TO COMPANY'S BUSINESS AND ANY RESULTING LOST PROFITS) AND/OR PERSONAL INJURY, INCLUDING DEATH, THAT MAY RELATE TO, ARISE OUT OF OR BE OCCASIONED BY (i) COMPANY'S BREACH OF ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT OR (ii) ANY NEGLIGENT ACT OR OMISSION OR INTENTIONAL MISCONDUCT OF COMPANY, ITS OFFICERS, AGENTS, ASSOCIATES, EMPLOYEES, CONTRACTORS (OTHER THAN THE CITI) OR SUBCONTRACTORS, RELATED TO THE REQUIRED IMPROVEMENTS, THE LAND AND ANY OPERATIONS AND ACTIVITIES THEREON, OR THE PERFORMANCE OF THIS AGREEMENT OTHERWISE. THE CITY AND COMPANY SHALL COOPERATE IN THE DEFENSE OF ANY CLAIM CONTESTING THE VALIDITY OF THIS AGREEMENT. Page 17 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. 9. NOTICES. All written notices called for or required by this Agreement must be addressed to the following, or such other party or address as either party designates in writing, by certified mail, postage prepaid, or by hand delivery: City: Company: City of Fort Worth American Airlines, Inc. Attn: City Manager Attn: Chuck Allen 1000 Throckmorton 4333 Amon Carter Blvd., MD 5673 Fort Worth, TX 76102 Fort Worth, TX 76155 with copies to: the City Attorney and Economic Development Dept. Director at the same address 10. ASSIGNMENT AND SUCCESSORS. Company may not assign, transfer or otherwise convey any of its rights or obligations under this Agreement to any other person or entity other than an Affiliate of Company without the prior consent of the City Council, which consent will not be unreasonably withheld, conditioned on (i) the assignee or successor will own the leasehold interest in the Land and the improvements located on the Land and all New Taxable Tangible Personal Property; (ii) the prior approval of the assignee or successor and a . finding by the City Council that the proposed assignee or successor is financially capable of meeting the terms and conditions of this Agreement; and (iii) prior execution by the proposed assignee or successor of a written agreement with the City under which the proposed assignee or successor agrees to assume and be bound by all covenants and obligations of Company under this Agreement. Any lawful assignee or successor in interest of Company of all rights under this Agreement will be deemed "Company" for all purposes under this Agreement. Notwithstanding the above, the City hereby agrees and consents to any merger, stock transfer, asset transfer, or other internal corporate restructuring of Company (including, without limitation, that involving American Airlines, Inc. and American Airlines Group, Inc. ("AAL") and/or any other wholly-owned subsidiary or subsidiaries of AAL or similar internal restructuring within Company's organization) (an "Internal Restructuring") and any related assignment or transfer of the Leasehold Interest, all New Taxable Tangible Personal Property, and this Agreement that may occur or may be deemed to occur as a result of any such Internal Restructuring, and the City waives any right it may have to terminate, amend or modify this Agreement and any claim of breach or default hereunder in each case arising directly in connection with or as a result of any such Internal Restructurings. Page 18 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. 11. COMPLIANCE WITH LAWS, ORDINANCES, RULES AND REGULATIONS. This Agreement will be subject to all applicable federal, state and local laws, ordinances, rules and regulations, including, but not limited to, all provisions of the City's Charter and ordinances, as amended. 12. GOVERNMENTAL POWERS. It is understood that by execution of this Agreement, the City does not waive or surrender any of its governmental powers or immunities. 13. SEVERABILITY. If any provision of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired. If any provision of this Agreement is held to be invalid, illegal or unenforceable, and the effect of such holding is that the City cannot grant Company the amount of Program Grant funds intended hereunder, the City staff will review other potential incentives that might be recommended to the City Council as an-alternative to providing the Program Grant funds hereunder. 14. NO WAIVER. The failure of either party to insist upon the performance of any term or provision of this Agreement or to exercise any right granted hereunder will not constitute a waiver of that party's right to insist upon appropriate performance or to assert any such right on any future occasion. 15. VENUE AND JURISDICTION. If any action, whether real or asserted, at law or in equity, arises on the basis of any provision of this Agreement, venue for such action will lie in state courts located in Tarrant County, Texas or the United States District Court for the Northern District of Texas — Fort Worth Division. This Agreement will be construed in accordance with the laws of the State of Texas. Page 19 Economic Development Program Agreement between City of Fort Worth and American Airlines, Inc. 16. NO THIRD PARTY RIGHTS. The provisions and conditions of this Agreement are solely for the benefit of the City and Company, and any lawful assign or successor of Company, and are not intended to create any rights, contractual or otherwise, to any other person or entity. 17. FORCE MAJEURE. It is expressly understood and agreed by the parties to this Agreement that if the performance of any obligations hereunder is delayed by reason of war, civil commotion, acts of God, strike, inclement weather, shortages or unavailability of labor or materials, unreasonable delays by the City (based on the then-current workload of the City department(s) responsible for undertaking the activity in question) in issuing any permits, consents, or certificates of occupancy or conducting any inspections of or with respect to the Land or any improvements located thereon, or other circumstances which are reasonably beyond the control of the party obligated or permitted under the terms of this Agreement to do or perform the same, regardless of whether any such circumstance is similar to any of those enumerated or not, the party so obligated or permitted shall be excused from doing or performing the same during such period of delay, so that the time period applicable to such design or construction requirement shall be extended for a period of time equal to the period such party was delayed. Notwithstanding anything to the contrary herein, it is specifically understood and agreed that any failure to obtain adequate financing to complete any Required Improvements by the Completion Deadline will not be deemed to be an event of force majeure and that this Section 17 will not operate to extend the Completion Deadline in such an event. 18. INTERPRETATION. In the event of any dispute over the meaning or application of any provision of this Agreement, this Agreement will be interpreted fairly and reasonably, and neither more strongly for or against any party, regardless of the actual drafter of this Agreement. In the event of any direct conflict between the body of this Agreement and the Application, the body of this Agreement will control. 19. CAPTIONS. Captions and headings used in this Agreement are for reference purposes only and will not be deemed a part of this Agreement. Page 20 Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. 20. ENTIRETY OF AGREEMENT. This Agreement, including any exhibits attached hereto and any documents incorporated herein by reference, contains the entire understanding and agreement between the City and Company, and any lawful assign and successor of Company, as to the matters contained herein. Any prior or contemporaneous oral or written agreement is hereby declared null and void to the extent in conflict with any provision of this Agreement. Notwithstanding anything to the contrary herein, this Agreement may not be amended unless executed in writing by both parties and approved by the City Council of the City in an open meeting held in accordance with Chapter 551 of the Texas Government Code. 21. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which will be considered an original, but all of which will constitute one instrument. EXECUTED as of the last date indicated below: [SIGNATURES IMMEDIATELY FOLLOW ON NEXT PAGE] Page 21 Economic Development Program Agreement between City of Fort Worth and American Airlines, Inc. CITY OF FORT WORTH: ATTEST: By: �—� �' By: Jesus J. Chapa Name: J I t y)i t- Assistant City Manager Title: b 1-4 -<reew ka vV Date: J Date: / �l FO APPROVED AS TO FORM AND LEGALITY: °°°°°°° C��� 0 g M By: $ ° ®0 Peter Vaky Deputy City Attorney �° ° M&C: C-27526 11-10-15 Form 1295 Certificate No. 2 D/ AMERICAN AIRLINES, INC., a Delaware corporation: V: Namf: Title: Date: OFFICIAL RECORD Page 22 Economic Development Program Agreement CITY SECRETARY between City of Fort Worth and American Airlines,Inc. FT.WORTH,TX EXHIBITS "A" —Description and Map Depicting the Land Economic Development Program Agreement between City of Fort Worth and American Airlines,Inc. EXHIBIT"A" BEING a 97.701 acre tract of land situated in the William G. Matthews Survey,Abstract Number 1052 and the V.1. Hutton Survey,Abstract Number 681,Tarrant County,Texas,in the City of Fort Worth,being a portion of the tract of land described in the deed to Dallas- Fort Worth Regional Airport Board recorded in Volume 6710, Page 520, Deed Records of Tarrant County,Texas and being all of the tract of land described as the North Tract in the deed to Dallas-Fort Worth Regional Airport Board recorded in Volume 6653,Page 856, Deed Records of Tarrant County,Texas,also being a portion of Lot 1, Block 3 and all of Lot 1,Block 2,American Airlines Addition according to the plat recorded in Volume 388-133, Page 60, Plat Records of Tarrant County,Texas,and being a portion of the tract of land described as Plot B in the deed to the City of Fort Worth recorded in Volume 5072, Page 417, Deed Records of Tarrant County,Texas,said 97.701 acre tract of land being more particularly described as follows: BEGINNING at a 5/8 inch iron rod found in the westerly right-of-way line of State Highway 360 (a variable width right-of-way) for the northeasterly corner of said North Tract and of said Lot 1,Block 2,American Airlines Addition; THENCE with the westerly right-of-way line of State Highway 360 the following: South 009 55' 57" East(Volume 6653, Page 856 &Volume 388-133, Page 60 =South 004 23' 38" East) a distance of 87.75 feet to a 5/8 inch iron rod found for corner; South 344 12' 56"West(Volume 6653,Page 856&Volume 388-133, Page 60 = South 349 45' 15"West) a distance of 60.96 feet to a point; South 009 47' 18" East (Volume 6653, Page 856&Volume 388-133,Page 60 =South 00414' 57" East) a distance of 149.86 feet to a 5/8 inch iron rod found for corner; South 142 45' 52" East (Volume 6653, Page 856 &Volume 388-133, Page 60 =South 149 13' 33" East) a distance of 103.15 feet to a 5/8 inch iron rod found for corner; South 004 44' 21" East (Volume 6653, Page 856 &Volume 388-133, Page 60 =South 00412' 02" East) a distance of 99.93 feet to a 5/8 inch iron rod found for corner; South 154 53' 36"West(Volume 6653, Page 856&Volume 388-133, Page 60 = South 16Q 25' 55"West)a distance of 104.32 feet to a 5/8 inch iron rod found for corner; South 029 32' 25"West(Volume 6653, Page 856&Volume 388-133, Page 60 South 039 04' 44"West) a distance of 601.18 feet to a 3/4 inch iron rod found for corner; South 012 06' 26"West (Volume 6653, Page 856&Volume 388-133,Page 60 South 014 38' 45"West) a distance of 300.25 feet to a 3.5 inch aluminum monument found for corner; South 024 58' 25"West(Volume 6653, Page 856 &Volume 388-133, Page 60 = South 032 30' 44"West) a distance of 182.88 feet to a 3.5 inch aluminum monument found for corner; South 434 26' 04"West(Volume 6653, Page 856 &Volume 388-133,Page 60 = South 434 58' 23"West) a distance of 73.34 feet to a point in the northerly right-of- way line of Trinity Boulevard (a variable width right-of-way); THENCE departing the westerly right-of-way line of State Highway 360 with the northerly right-of-way line of Trinity Boulevard the following; South 864 16' 17"West(Volume 6653, Page 856&Volume 388-133, Page 60 = South 869 48' 36"West) a distance of 119.82 feet to an aluminum disk stamped "DFW Int Airport"found for corner; North 82° 00' 32"West(Volume 6653, Page 856&Volume 388-133, Page 60 = North 814 28' 13"West) a distance of 372.43 feet to a point; South 872 44' 01"West(Volume 6653, Page 856 &Volume 388-133, Page 60 = South 884 16' 20"West) a distance of 102.31 feet to a 5/8 inch iron rod found for corner; North 849 05'43"West(Volume 6654, Page 856 &Volume 388-133, Page 60= North 834 3557"West) a distance of 243.89 feet to an aluminum disk stamped "DFW Int Airport" found for the beginning of a non-tangent curve to the right having a radius of 1,372.00 feet; Northwesterly along said curve through a central angle of 49 21' 00"an arc distance of 104.17 feet with a chord bearing of North 70° 35'54"West and a chord distance of 104.14 feet to the end of said curve; North 684 29' 39"West a distance of 146.40 feet to an aluminum disk stamped "DFW Int Airport" found for the point of curvature of a curve to the left having a radius of 1,428.00 feet; Southwesterly along said curve through a central angle of 544 27' 23" an arc distance of 1,357.23 feet with a chord bearing of South 844 16'40"West and a chord distance of 1,306.72 feet to a 5/8 inch iron rod with a cap stamped"KHA" found at the end of said curve; South 579 32' 19"West a distance of 61.02 feet to a 5/8 inch iron rod with a cap stamped "KHA" found for corner; South 882 44' 41"West a distance of 153.69 feet to a 5/8 inch iron rod with an orange cap found in the easterly right-of-way line of American Boulevard (a variable width right-of-way) for the beginning of a non-tangent curve to the right having a radius of 700.00 feet; THENCE departing the northerly right-of-way line of Trinity Boulevard with the easterly right-of-way line of American Boulevard the following: Northwesterly along said curve through a central angle of 229 24' 10"an arc distance of 273.70 feet with a chord bearing of North 110 26' 01"West and a chord distance of 271.96 feet to an aluminum disk stamped"DFW Int Airport" found at the end of said curve; North 002 13' 26"West a distance of 559.39 feet to an aluminum disk stamped "DFW Int Airport" found for the beginning of a non-tangent curve to the right having a radius of 1,270.00 feet; Northeasterly along said curve through a central angle of 244 59' 55"an arc distance of 554.11 feet with a chord bearing of North 12416' 12" East and a chord distance of 549.73 feet to an aluminum disk stamped "DFW Int Airport" found at the end of said curve; North 239 59' 25" East a distance of 367.44 feet to a point; THENCE departing the easterly right-of-way line of American Boulevard North 894 06' 09" East at a distance of 1,388.49 feet passing the northwesterly corner of said Lot 1, Block 2, American Airlines Addition, continuing with the northerly line of said Lot 1, Block 2 in all a total distance of 1,788.49 feet to a point; THENCE departing the northerly line of said Lot 1, Block 2 North 00° 53' 51"West a distance of 100.00 feet to a point; THENCE North 892 06' 09" East a distance of 300.00 feet to a point; THENCE South 004 53' 31" East a distance of 100.00 feet to a point in the northerly line of said Lot 1,Block 2; THENCE with the northerly line of said Lot 1,Block 2 North 894 06' 09" East a distance of 398.82 feet to the POINT OF BEGINNING; CONTAINING a computed area of 97.701 acres (4,255,856 square feet) of land. 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Authorize the City Manager to execute an Economic Development Program Agreement with American Airlines, Inc., and a Tax Abatement Agreement with American Airlines, Inc., and the Dallas/Fort Worth International Airport Board for development of a corporate headquarters facility on property at Dallas-Fort Worth International Airport located within the City of Fort Worth; and 2. Find that the terms and conditions of the Economic Development Program Agreement, as outlined below, constitute a custom-designed Economic Development Program, as recommended by the 2015 Comprehensive Plan and authorized by Chapter 380 of the Texas Local Government Code. DISCUSSION: American Airlines, Inc. (American), intends to invest $350 million in real property improvements and business personal property by December 31, 2019 for the development of a new corporate headquarters on property at Dallas-Fort Worth International Airport located entirely within the City of Fort Worth. A minimum of$200 million of the total investment will be expended on real property improvements. Failure to meet the real property investment is a condition of default and will result in immediate termination of both Agreements. Under the terms of the Agreements, American must spend a minimum of$50 million of its hard construction costs with Fort Worth contractors and a minimum of$25 million of its hard construction costs with contractors that are Fort Worth certified Minority/Women-Owned Business Enterprises (M/WBE). American must also maintain a minimum of 4,279 full-time equivalent jobs at the site as of December 31, 2019 and at least 400 of those jobs must be held by Fort Worth residents. In addition, American must spend at least $750,000.00 in annual discretionary service and supply expenditures with Fort Worth contractors and a minimum of$350,000.00 of annual discretionary service and supply expenditures with contractors that are Fort Worth certified M/WBE. In return, the City will abate a maximum of between 75 percent and 90 percent of the incremental real and personal property taxes from the site for a period of one year. After the one-year tax abatement, the City will then pay American 14 additional annual Economic Development Program Grants, as authorized by Chapter 380, Texas Local Government Code. The maximum amount of each annual Program Grant will equal between 75 percent to 90 percent of the incremental real and personal property taxes from the Logname: 17ED PROJECTSERVERFARM Page 1 of 4 site. The exact maximum percentage will be determined in accordance with the amount of(i) incremental real property tax revenues from the land that were received by the City for the previous tax year; and (ii) personal property tax revenues from New Taxable Tangible Personal Property that were received by the City for the previous tax year, as more specifically outlined in the charts below. American must meet specific construction spending, annual employment and annual supply and service spending commitments in order to achieve the maximum amount of potential incentive for each Program Grant. The maximum potential incentive for any given year applied to the first $100 million of appraised value of real and personal property at the site is 75 percent of the City ad valorem real and personal property taxes and will be based on the corresponding commitments in Table 1: Property Owner or Company Commitment Potential Incentive Real and Personal Property Investment (Base Commitment) 25 Percent Fort Worth Contractors 7.5 Percent Fort Worth M/WBE Contractors 17.5 Percent Overall Employment Up to15 Percent Employment of Fort Worth Residents Up to 5 Percent Utilization of Fort Worth Companies for Services and Supplies Up to 7.5 Percent Utilization of Fort Worth M/WBE Companies for Services and Up to 7.5 Supplies Percent TOTAL 75 Percent The maximum potential incentive for any given year applied to the appraised value of between $100 million and $200 million is 80 percent of the City ad valorem real and personal property taxes and will be based on the corresponding commitments in Table 2: Property Owner or Company Commitment Potential Incentive Real and Personal Property Investment (Base Commitment) 130 Percent FortWorth Contractors 7.5 Percent Fort Worth M/WBE Contractors 7.5 Percent Overall Employment 15 Percent Employment of Fort Worth Residents $ Percent Utilization of Fort Worth Companies for Services and Supplies 7.5 Percent IUtilization of Fort Worth M/WBE Companies for Services and 5 Percent upplies TOTAL 80 Percent The maximum potential incentive for any given year applied to the appraised value of between $200 million and $300 million is 85 percent of the City ad valorem real and personal property taxes and will be based on the corresponding commitments in Table 3: Property Owner or Company Commitment Potential Incentive Real and Personal Property Investment (Base Commitment) 1 35 Percent Fort Worth Contractors 7.5 Percent Fort Worth M/WBE Contractors 7.5 Percent _ Logname: 17ED PROJECTSERVERFARM Page 2 of 4 Overall Employment ! 15 Percent Employment of Fort Worth Residents F-5Percent Utilization of Fort Worth Companies for Services and Supplies 7.5 Percent Utilization of Fort Worth M/WBE Companies for Services and 7.5 Percent Supplies OTAL F85 Percent The maximum potential incentive for any given year applied to the appraised value of more than $300 million is 90 percent of the City ad valorem real and personal property taxes and will be based on the corresponding commitments in Table 4: Property Owner or Company Commitment Potential Incentive Real and Personal Property Investment (Base Commitment) 40 Percent Fort Worth Contractors 7.5 Percent Fort Worth M/WBE Contractors F 7.5 Percent Overall Employment 15 Percent Employment of Fort Worth Residents 5 Percent Utilization of Fort Worth Companies for Services and Supplies 7.5 Percent Utilization of Fort Worth M/WBE Companies for Services and 7.5 Percent Supplies OTAL 90 Percent The Dallas/Fort Worth International Airport Board will be a party to the Tax Abatement Agreement. Staff recommends that the City Council authorize the City Manager to execute the Tax Abatement Agreement and Economic Development Program Agreement in accordance with the terms and specifications set forth above. This project is located in COUNCIL DISTRICT 5. FISCAL INFORMATION /CERTIFICATION: The Financial Management Services Director certifies that approval of the above recommendation will have no material effect on the Fiscal Year 2016 budget. Upon approval, the impacts of this Incentive Agreement will be included in the long-term financial forecast. FUND IDENTIFIERS (FIDs): TO Fund Department ccoun Project JProgram ctivity Budget Reference # moun ID ID Year Chartfield 2 FROM Fund Department ccoun Project Program ctivity Budget Reference # moun ID ID Year Chartfield 2 CERTIFICATIONS: Submitted for City Manager's Office by: Jay Chapa (6116) Originating Department Head: Robert Sturns (2663) Additional Information Contact: Robert Sturns (2663) Logname: 17ED PROJECTSERVERFARM Page 3 of 4 ATTACHMENTS 1. American Airlines Headquarters Map.pdf (Public) Logname: 17ED PROJECTSERVERFARM Page 4 of 4 CERTIFICATE OF INTERESTED PARTIES FORM 1295 1 of 2 Complete Nos. 1-4 and 6 if there are interested parties. OFFICE USE ONLY Complete Nos. 1,2,3,5,and 6 if there are no interested parties. CERTIFICATION OF FILING 1 Name of business entity filing form,and the city,state and country of the business entity's place Certificate Number: of business. 2016-39259 American Airlines, Inc. Fort Worth,TX United States Date Filed: 2 Name of governmental entity or state agency that is a party to the contract for which the form is 04/13/2016 being filed. City of Fort Worth Date Acknowledged: L-//('-7 // 3 Provide the identification number used by the governmental entity or state agency to track or identify the contract,and provide a description of the goods or services to be provided under the contract. C-27526 Economic Development Program Agreement 4 Nature of interest(check applicable) Name of Interested Party City,State,Country(place of business) Controlling Intermediary Mead, Susan Dallas,TX United States X Dornic, Myron Dallas,TX United States X Jackson Walker L.L.P. Dallas, TX United States X Dyer,Jeff Fort Worth, TX United States X Pitchford,Joseph Dallas,TX United States X Crescent Real Estate Equities LLC Dallas,TX United States X Barron,Troy Fort Worth,TX United States X Weston Commercial Realty Fort Worth,TX United States X Kerr, Derek Fort Worth,TX United States X Isom, Robert Fort Worth,TX United States X Johnson, Steve Fort Worth,TX United States X Kirby, Scott Fort Worth,TX United States X Parker, Doug Fort Worth,TX United States X American Airlines Group Inc Fort Worth,TX United States X Forms provided by Texas Ethics Commission www.ethics.state.tx.us Version V1.0.645 CERTIFICATE OF INTERESTED PARTIES FORM 1295 2of2 Complete Nos. 1-4 and 6 if there are interested parties. OFFICE USE ONLY Complete Nos. 1,2,3,5,and 6 if there are no interested parties. CERTIFICATION OF FILING 1 Name of business entity filing form,and the city,state and country of the business entity's place Certificate Number: of business. 2016-39259 American Airlines, Inc. Fort Worth,TX United States Date Filed: 2 Name of governmental entity or state agency that is a party to the contract for which the form is 04/13/2016 being filed. City of Fort Worth Date Acknowledged: 3 Provide the identification number used by the governmental entity or state agency to track or identify the contract,and provide a description of the goods or services to be provided under the contract. C-27526 Economic Development Program Agreement 4 Nature of interest(check applicable) Name of Interested Party City,State,Country(place of business) Controlling Intermediary 5 Check only if there is NO Interested Party. ❑ 6 FFID V I swear,or affirm,under penalty of perjury,that the above dis true a correct. `"""",��00, CAROL IAEGER Notary Public,State of Texas Comm,Expires 11-17-2019 OFA „ Notary ID 130443251 n,na "OoSignatureorf auArnzed 6f contracting business entity AFFIX NOTARY STAMP/SEAL ABOVE Sworn to and subscribed before me,by the said Ke nine--kh t�J.w�PR L�eT��( this the 113 day of 20 1(a to certify which,witness my hand and seal of office. Cie o �c� e 2-- E cam- fl 5s�5+an� Signature of officer administering oath Printed name of officer administerlrifg oath Title of officer administering oath Forms provided by Texas Ethics Commission www.ethics.state.tx.us Version V1.0.645