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HomeMy WebLinkAboutContract 49605-A1 CITY SECRETARY CONTRACT NO. AMENDED AND RESTATED ECONOMIC DEVELOPMENT PROGRAM AGREEMENT This AMENDED AND RESTATED 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 SMITH & NEPHEW, INC., a Delaware corporation ("Company"). RECITALS The City and Company hereby agree that the following statements are true and correct and constitute the basis upon which the City and Company have entered into this Agreement: A. Company is a global leader in the medical technology industry, with a presence in more than 90 countries around the world. The City and Company previously entered into that certain Economic Development Program Agreement dated as of September 7, 2017, a public document on file in the City Secretary's Office as City Secretary Contract No. 49605 (the "Original EDPA"), under which the City agreed to pay Company certain economic development grants in return for (i) Company's consolidation of its operations in the City at 3909 Hulen St. and its advance wound management headquarters relocated from St. Petersburg, Florida, into at least 55,000 square feet of leased space (the "Required Improvements") in a new building located at the intersection of Clearfork Main Street and Chisholm Trail Parkway, as more specifically described in Exhibit "A" (the "Development Site"), and (ii) Company's maintenance of its operations at 4900 West Vickery Blvd. '(the "Existing Site"). The Development Site is owned by Clearfork Office 1, LP and any successor or assign thereof ("Owner"). The lease between Owner and Company (the "Lease") includes terms and conditions consistent with those outlined in Exhibit "B". Exhibits "A" and "B" are attached hereto and hereby made a part of this Agreement for all purposes. B. Under the Original EDPA, Company was required to cause the installation of New Taxable Tangible Personal Property having a value of at least Two Million Eight Hundred Thousand Dollars ($2,800,000.00) on the Development Site by January 1, 2017, as determined solely by the appraisal district having jurisdiction over the Development Site (referred to herein as the "Personal Property Commitment"). Pursuant to Section 7.2 of the Original EDPA, failure to meet the Personal Property Commitment constituted an event of default and gave the City the right to terminate the Original EDPA without further obligation to Company. The Original EDPA also required Company to meet certain annual employment commitments. Pursuant to Section 7.3 of the Original EDPA, failure to meet any one of those employment commitments in any given year also �g'Le�eage I OFFICIAL RECORD PQR ��0� Amended and Restated Economic Development Program Agreement �FFOGQgt0 between City of Fort Worth and Smith&Nephew, Inc. CITY SECRETARY �����5� FT. WORTH,TX j constituted an event of default by Company and gave the City the right to terminate the Original EDPA. C. Company completed its relocation and consolidation of operations as required by the Original EDPA. However, Company faced several challenges with the particular provisions of the Original EDPA outlined in Recital B above. Specifically, Company installed New Taxable Tangible Personal Property on the Development Site in excess of the minimum amount required by the Agreement, which New Taxable Tangible Personal Property was in service by December 16, 2016. Due to a coding issue within Company regarding the in service date, however, in the Company's Business Personal Property Taxable Value Rendition filing with Tarrant Appraisal District, the value was not reflected in the Appraisal District's tax records until January 1, 2018 instead of by January 1, 2017. In addition, due to the specialized nature of the new employment positions created at the Development Site, Company faced unexpected difficulties in filling all of those positions. As a result, Company technically was in default under Sections 7.2 and 7.3 of the Original EDPA. D. After meeting with Company's representatives to discuss the situation, the City has agreed that the City has received the economic benefits that the Original EDPA anticipated as a result of Company's relocation and consolidation of its operations in the City. Therefore, rather than terminating the Original EDPA, the City and Company wish to amend and restate it, as more specifically set forth in this Agreement, so that (i) Company will receive credit from 2018 forward for its installation of New Taxable Tangible Personal Property having a value sufficient for it to meet the Personal Property Commitment and (ii) any failure by Company to meet the annual employment commitments will result only in a reduction of the Program Grants rather than a default and loss of all Program Grants. Notwithstanding the foregoing, the parties agree that Company will forfeit payment of any Program Grant for the 2018 calendar year, meaning that under the terms of this Agreement, Company will receive a maximum of only four (4) annual Program Grants rather than five (5), as provided in the Original EDPA. E. The Required Improvements and Company's operations therein continue to benefit the City by increasing the scope of an important commercial operation in the City with significant opportunities for employment and tax base growth. As recommended by the City's 2018 Comprehensive Plan, adopted by the City Council pursuant to Ordinance No. 23133-03-2018 (the "Comprehensive Plan"), 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"). Page 2 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. F. The City has determined that the feasibility of the proposed business expansion project described in the Original EDPA and herein was and continues to be contingent on Company's receipt of the Program Grants. The City Council has determined that the development and use of the Required Improvements have benefitted and stimulated the local economy and that the 380 Program is an appropriate means for this momentum to continue. In addition, the City Council has determined that by entering into this Agreement amending and restating the provisions of the Original EDPA, the potential economic benefits that will continue to accrue to the City remain consistent with the City's economic development objectives, as outlined in the Comprehensive Plan. This Agreement, like the Original EDPA, is authorized by Chapter 380 of the Texas Local Government Code. 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: 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. This Agreement is a complete restatement and amendment of the Original EDPA. Any conflict between the provisions of this Agreement and the provisions of the Original EDPA shall be resolved in favor of the provisions set forth in this Agreement. 2. DEFINITIONS. In addition to other terms defined in the body of this Agreement, the following terms will have the definitions ascribed to them as follows: 380 Program has the meaning ascribed to it in Recital E. 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. Available Grant Funds has the meaning ascribed to it in Section 6.1. Central City means the area of the corporate limits of the City within Loop 820 (i) consisting of all Community Development Block Grant ("CDBG")-eligible census block groups; (ii) all enterprise zones, designated as such pursuant to the Texas Page 3 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. Enterprise Zone Act, Chapter 2303, Subchapter F of the Texas Government Code; (iii) all census block groups that are contiguous by seventy-five percent (75%) or more of their perimeters to CDBG-eligible block groups or enterprise zones, as well as any CDBG- eligible block in the corporate limits of the City outside Loop 820, as more specifically depicted in the map attached hereto as Exhibit "C", attached hereto and hereby made a part of this Agreement for all purposes. Central City Employment Commitment has the meaning ascribed to it in Section 4.4.3. Central City Employment Percentage has the meaning ascribed to it in Section 6.1.3. Central City Resident means an individual whose principal place of residence is at a location within the Central City. Completion Date means the date as of which all occupiable space within the Required Improvements has received a temporary or permanent certificate of occupancy. Completion Deadline means December 31, 2016. Development Site has the meaning ascribed to it in Recital A. Director means the director of the City's Economic Development Department or his authorized designee. Effective Date has the meaning ascribed to it in Section 3. Existing Site has the meaning ascribed to it in Recital A. Fort Worth Employment Commitment has the meaning ascribed to it in Section 4.4.2. Fort Worth Employment Percentage has the meaning ascribed to it in Section 6.1.2. Fort Worth Resident means an individual whose principal place of residence is at a location within the corporate limits of the City. Full-time Job means a job provided to one (1) individual by Company for at least forty (40) hours per week. Lease means that certain lease between Clearfork Office 1, LP and Company for 59,722 rentable square feet within the Required Improvements, as more specifically set forth in the Memorandum of Lease attached hereto as Exhibit "B", which is hereby made a part of this Agreement for all purposes. Page 4 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. New Taxable Tangible Personal Property means any personal property that (i) is subject to ad valorem taxation by the City; (ii) is located on the Development Site; (iii) is owned or leased by Company; and (iv) was not located in the City prior to the Effective Date of this Agreement. Original EDPA means City Secretary Contract No. 49605, which is the original Economic Development Program Agreement between the City and Company. Overall Employment Commitment has the meaning ascribed to it in Section 4.4.1. Overall Employment Percentage has the meaning ascribed to it in Section 6.1.1. Owner has the meaning ascribed to it in Recital A. Personal Property Commitment has the meaning ascribed to it in Section 4.3. 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 of City funds available for inclusion in a given Program Grant, which will equal 35.27% of the Project Real Property Tax Revenues (as Company is responsible under the Lease for paying a share of the real property taxes assessed on the Development Site and its improvements at a rate of 0.3527, which is the ratio of the rentable area of Company's leased premises within the Required Improvements (59,722 square feet) as of the execution date of this Agreement divided by the rentable area within the Required Improvements (169,332 square feet), plus one hundred percent (100%) of the Project Personal Property Tax Revenues received by the City during the Twelve-Month Period ending in the same year in which the Program Grant is payable; provided, however, that if the Lease is amended or interpreted by the parties thereto, so that at any time during a given Twelve-Month Period Company is not required to pay or reimburse to the landlord all of Company's proportionate share of real property taxes on the Development Site and all improvements thereon, the Program Source Funds available for the Program Grant payable in the same year as the year in which such Twelve-Month Period ends will equal only a percentage (calculated in accordance with this Agreement) of the Development Personal Property Tax Revenues received by the City during that Twelve-Month Period. If the ratio of the rentable area of Company's leased premises within the Required Improvements for changes from the above for any full calendar year during the Term of this Agreement, Company shall notify the City in writing, and, upon confirmation by the City, the percentage of Project Real Property Tax Revenues to be included as Program Source Funds will be adjusted to reflect the then-current ratio of the rentable area of Company's leased premises within the Required Improvements. Page 5 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. Proiect Personal Property Tax Revenues means City ad valorem taxes on New Taxable Tangible Personal Property located on the Development Site (but not the Existing Site). The taxable appraised value of New Taxable Tangible Personal Property located on the Development Site for any given year will be established solely by the appraisal district that has jurisdiction over the Development Site at the time. Project Real Property Tax Revenues means City ad valorem taxes on the Development Site (but not the Existing Site) and any improvements thereon, including the Required Improvements, minus the taxes attributable to the base collective taxable appraised value of the Development Site and all improvements thereon for the 2015 tax year, which base collective taxable appraised value is $466,400.00. The taxable appraised value of the Development Site and any improvements located thereon, including the Required Improvements, for any given year will be established solely by the appraisal district that has jurisdiction over the Development Site at the time. Real Property Commitment has the meaning ascribed to it in Section 4.2. Records has the meaning ascribed to it in Section 4.7. Required Improvements has the meaning ascribed to it in Recital A. Salary means a cash payment or remuneration made by Company to an individual for services rendered as an employee to Company, including any paid time off, commissions, or non-discretionary bonuses paid in accordance with Company's published bonus plan, but does not include the value of any benefits provided to an employee, any reimbursements for actual and necessary expenses incurred by the employee in the course and scope of the employee's job duties, or any discretionary bonuses. 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 will be effective as of July 28, 2015 (the "Effective Date"), which is the date on which the Original EDPA took effect, and, unless terminated earlier pursuant to and in accordance with this Agreement, will expire on the date as of which the City has paid all Program Grants required hereunder(the "Term"). Page 6 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. 4. COMPANY OBLIGATIONS AND COMMITMENTS. 4.1. Use of Development Site. From the Completion Date until expiration of the Term of this Agreement, Company must use the Development Site as an office facility for Company's business operations. 4.2. Completion of Real Property Improvements. The City and Company hereby agree that the Completion Date for the Required Improvements occurred by the Completion Deadline, as required by the Original EDPA (the "Real Property Commitment"). 4.3. Personal Property Improvements. The City and Company hereby agree that New Taxable Tangible Personal Property having a value of at least Two Million Eight Hundred Thousand Dollars ($2,800,000.00) was in place on the Development Site by January 1, 2017, as required by the Original EDPA and based on 2018 appraised values of Tarrant Appraisal District (the "Personal Property Commitment"). 4.4. Employment Commitments. Determination each year of compliance with the following employment commitments will be based on the employment data provided to the City pursuant to Section 4.5 for the year under evaluation. 4.4.1. Overall Employment. Company must meet or exceed the following levels of overall employment for the calendar years specified below (for each year below, the "Overall Employment Commitment"). 4.4.1.1. 2018-2020. In 2018 and each year thereafter through 2020, Company will meet the Overall Employment Commitment if Company provides and fills at least 190 Full-time Jobs on the Development Site and the Existing Site, collectively. 4.4.1.2. 2021. In 2021, Company will meet the Overall Employment Commitment if Company provides and fills at least Page 7 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. 230 Full-time Jobs on the Development Site and the Existing Site, collectively. 4.4.2. Employment of Fort Worth Residents. Company must meet or exceed the following levels of employment of Fort Worth Residents for the calendar years specified below (for each year below, the "Fort Worth Employment Commitment"). Full-time Jobs held by Fort Worth Residents in a given year will also count as Full- time Jobs for purposes of measuring the Overall Employment Commitment in the same year. 4.4.2.1. 2018-2020. In 2018 and each year thereafter through 2020, Company will meet the Fort Worth Employment Commitment if in the year under evaluation at least the greater of (i) 76 Full-time Jobs on the Development Site and the Existing Site, collectively, or (ii) forty percent (40%) of all Full-time Jobs on the Development Site and the Existing Site, collectively, regardless of the total number of Full-time Jobs provided and filled thereon, were held by Fort Worth Residents. 4.4.2.2. 2021. In 2021, Company will meet the Fort Worth Employment Commitment if at least the greater of(i) 92 Full-time Jobs on the Development Site and the Existing Site, collectively, or (ii) forty percent (40%) of all Full-time Jobs on the Development Site and the Existing Site, collectively, regardless of the total number of Full-time Jobs provided and filled thereon, were held by Fort Worth Residents. 4.4.3. Employment of Central City Residents. Company must meet or exceed the following levels of employment of Central City Residents for the calendar years specified below (for each year below, the "Central City Employment Commitment"). Full-time Jobs held by Central City Residents in a given year will also count as Full- time Jobs for purposes of measuring the Overall Employment Commitment and the Fort Worth Employment Commitment in the same year. Page 8 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. 4.4.3.1. 2018-2020. In 2018 and each year thereafter through 2020, Company will meet the Central City Employment Commitment if in the year under evaluation at least the greater of(i) 38 Full-time Jobs on the Development Site and the Existing Site, collectively, or (ii) twenty percent (20%) of all Full-time Jobs on the Development Site and the Existing Site, collectively, regardless of the total number of Full-time Jobs provided and filled thereon, were held by Central City Residents. 4.4.3.2. 2021. In 2021, Company will meet the Central City Employment Commitment if the greater of(i) 46 Full-time Jobs on the Development Site and the Existing Site, collectively, or (ii) twenty percent (20%) of all Full-time Jobs on the Development Site and the Existing Site, collectively, regardless of the total number of Full-time Jobs provided and filled thereon, were held by Central City Residents. 4.4.4. Average Annual Salary. Beginning in 2018 and in each subsequent year of the Term of this Agreement, the average annual Salary, measured on a calendar year basis, of all Full-time Jobs on the Development Site and the Existing Site, collectively, must be at least Eighty-five Thousand Dollars ($85,000.00). 4.5. Annual Employment Report. On or before February 1, 2019 and February 1 of each year thereafter, in order for the City to assess the degree to which the Overall Employment Commitment for the previous calendar year, the Fort Worth Employment Commitment for the previous calendar year, and the Central City Employment Commitment for the previous calendar year were met, as well as to verify the average annual Salary of all Full-time Jobs on the Development Site and the Existing Site, Company must provide the Director with a report in a form reasonably acceptable to the Director that sets forth the total number of individuals, Fort Worth Residents, and Central City Residents who held Full-time Jobs on the Development Site and the Existing Site, collectively, as well as the Salary of each, all as of December 31 (or such other date requested by Company and reasonably acceptable to the City) of the previous year, together with reasonable supporting documentation. Page 9 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. 4.6. Inspections of Development Site and Lease. At any time during Company's normal business hours throughout the Term and following reasonable notice to Company, the City will have the right to inspect and evaluate the Development Site and any improvements thereon, including the Required Improvements, 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 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 representative or security personnel of Company during any such inspection and evaluation. In addition, upon request of the City at any time during the Term and following reasonable advance notice, Company will make available a copy of the Lease in effect at the time (as certified in writing by a duly authorized officer of Company) for review by the City to ensure compliance under this Agreement. 4.7. Audits. The City will have the right throughout the Term to audit the financial and business records of Company or any Affiliate that relate to the New Taxable Tangible Personal Property as well as any other documents necessary to evaluate Company's compliance with this Agreement or with the commitments set forth in this Agreement (collectively "Records"). Company must make all Records available to the City on the Development Site 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. [INTENTIONALLY LEFT BLANK] 6. PROGRAM GRANTS. As more specifically set forth herein, if the Completion Date occurred on or before the Completion Deadline and the Personal Property Commitment set forth in Section 4.3 was met, Company will be entitled to receive four(4) annual Program Grants, payment of which will begin in 2019 and end in 2022. 6.1. Amount. The maximum amount of each annual Program Grant will equal the lesser of(i) one hundred percent (100%) of the Program Source Funds received in the Twelve-Month Period ending in the same year in which the Program Grant is due, or (ii) Fifty Thousand Dollars ($50,000.00) (for each particular Program Grant, the "Available Grant Funds"). In return for having met both the Real Property Commitment and the Personal Property Commitment, each annual Program Grant Page 10 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. automatically will include fifty percent (50%) of the Available Grant Funds applicable to that Program Grant. The remaining percentage of Available Grant Funds that will be included in the applicable Program Grant will be based on the extent to which Company met the Overall Employment Commitment, the Fort Worth Employment Commitment, and the Central City Employment Commitment in the previous calendar year, and will equal the sum of the Overall Employment Percentage, the Fort Worth Employment Percentage, and the Central City Employment Percentage,as follows: 6.1.1. Overall Employment Commitment (Up to 20%). Each annual Program Grant will include a percentage of the Available Grant Funds applicable to that Program Grant that is based on Company's compliance with the Overall Employment Commitment, as set forth in Section 4.4.1 (the "Overall Employment Percentage"). If Company meets or exceeds the applicable Overall Employment Commitment in any given year, the Overall Employment Percentage applicable to the Available Grant Funds for the Program Grant payable in the following calendar year will equal twenty percent (20%). If Company fails to meet the applicable Overall Employment Commitment in any given year, the Overall Employment Percentage applicable to the Available Grant Funds for the Program Grant payable in the following year will be reduced to an amount equal to the product of twenty percent (20%) multiplied by the percentage by which Company met the Overall Employment Commitment, which will be calculated by dividing the number of Full-time Jobs provided and filled on the Development Site and the Existing Site in the previous year, collectively, by the Overall Employment Commitment applicable to the year in question. For example, the Overall Employment Commitment for 2019 is 190 Full-time Jobs. If, instead, in 2019 Company only provided and filled 152 Full-time Jobs on the Development Site and the Existing Site, collectively, the Overall Employment Percentage applicable to the Available Grant Funds for the Program Grant payable in 2020 would be 16% instead of 20% (or .20 x [152/190], or .20 x .80, or .16). 6.1.2. Fort Worth Employment Commitment (Up to 15%). Each annual Program Grant will include a percentage of the Available Grant Funds applicable to that Program Grant that is based on Company's compliance with the Fort Worth Employment Commitment, as set forth in Section 4.4.2 (the "Fort Worth Employment Percentage"). If Company meets or exceeds the applicable Fort Worth Employment Commitment in any given year, the Fort Worth Employment Percentage applicable to the Available Grant Funds for the Program Grant payable in the following calendar year will equal fifteen percent (15%). If Company fails to meet the applicable Fort Worth Employment Commitment in any Page 11 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. given year, the Fort Worth Employment Percentage applicable to the Available Grant Funds for the Program Grant payable in the following year will be reduced to an amount equal to the product of fifteen percent (15%) multiplied by the percentage by which Company met the Fort Worth Employment Commitment, which will be calculated by dividing the number of Full-time Jobs provided and filled on the Development Site and the Existing Site in the previous year, collectively, with Fort Worth Residents by the Fort Worth Employment Commitment applicable to the year in question. For example, if in 2019 Company provided and filled a total of 200 Full-time Jobs on the Development Site and the Existing Site, collectively, the Fort Worth Employment Commitment for 2019 would be 80 Full-time Jobs. If, instead, in 2019 Company only provided and filled 56 Full-time Jobs on the Development Site and the Existing Site, collectively, with Fort Worth Residents, the Fort Worth Employment Percentage applicable to the Available Grant Funds for the Program Grant payable in 2020 would be 10.5% instead of 15% (or .15 x [56/80], or .15 x .70, or .105). 6.1.3. Central City Employment Commitment (Up to 15%). Each annual Program Grant will include a percentage of the Available Grant Funds applicable to that Program Grant that is based on Company's compliance with the Central City Employment Commitment, as set forth in Section 4.4.3 (the "Central City Employment Percentage"). If Company meets or exceeds the applicable Central City Employment Commitment in any given year, the Central City Employment Percentage applicable to the Available Grant Funds for the Program Grant payable in the following calendar year will equal fifteen percent (15%). If Company fails to meet the applicable Central City Employment Commitment in any given year, the Central City Employment Percentage applicable to the Available Grant Funds for the Program Grant payable in the following year will be reduced to an amount equal to the product of fifteen percent (15%) multiplied by the percentage by which Company met the Central City Employment Commitment, which will be calculated by dividing the number of Full-time Jobs provided and filled on the Development Site and the Existing Site in the previous year, collectively, with Central City Residents by the Central City Employment Commitment applicable to the year in question. 6.2. Deadline for Payments and Source of Funds. The first Program Grant payable hereunder will be paid by the City on or before June 1, 2019. Each subsequent annual Program Grant payment will be made by the City to Company on or before June 1 of the 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 Page 12 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. and not directly from ad valorem taxes on the Development Site or improvements thereon or on New Taxable Tangible Personal Property that are received by the City. Company understands and agrees that any revenues of the City other than those dedicated for payment of a given annual Program Grant pursuant to and in accordance with 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 not serve as the basis for calculating the amount of any future Program Grant or other obligation to Company. 6.3. Forfeiture if Average Annual Salary Requirement is Not Met. Notwithstanding anything to the contrary herein, if in 2018 or any subsequent year of the Term of this Agreement the average annual Salary, measured on a calendar year basis, for all Full-time Jobs on the Development Site and the Existing Site, collectively, is not at least Eighty-five Thousand Dollars ($85,000.00), Company will forfeit payment of the Program Grant it otherwise would have been owed in the following year. In this event, the City will nevertheless be credited as having paid Company a Program Grant in that year for purposes of calculating the Term of this Agreement and the number of remaining Program Grants that the City is obligated to pay hereunder. 6.4. Forfeiture if Taxable Appraised Value of Development Site is Less than $25 Million. Notwithstanding anything to the contrary herein, if the combined taxable appraised value of (i) the Development Site and any improvements located thereon, including the Required Improvements, plus (ii) New Taxable Tangible Personal Property is less than Twenty-five Million Dollars ($25,000,000.00) in any tax year between and including 2018 through 2021, as reflected in the certified appraisal roll for such tax year that is submitted to the City by the appraisal district having jurisdiction over the Development Site at that time, Company will forfeit payment of the Program Grant it otherwise would have been owed in the following year.In this event, the City will nevertheless be credited as having paid Company a Program Grant in that year for purposes of calculating the Term of this Agreement and the number of remaining Program Grants that the City is obligated to pay hereunder. The taxable appraised value of the Development Site and any improvements located thereon as well as of New Taxable Tangible Personal Property will be determined solely by the appraisal district having jurisdiction over the Development Site at the time. 7. DEFAULT, TERMINATION AND FAILURE BY COMPANY TO MEET VARIOUS DEADLINES AND COMMITMENTS. 7.1. Failure to Meet Employment Commitments. Page 13 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. If in any year Company fails to meet the Overall Employment Commitment, the Fort Worth Employment Commitment or the Central City Employment Commitment, as outlined in Sections 4.4.1, 4.4.2 and 4.4.3, respectively, such failure shall not constitute a default hereunder or provide the City with the right to terminate this Agreement, but, rather, shall only cause the percentage of Available Grant Funds applicable to the Program Grant payable in the following calendar year to be reduced in accordance with Section 6.1 of this Agreement. 7.2. Failure to Use Development Site for Business Purposes; Failure to Maintain U.S. Headquarters Operations. If Company fails to use the Development Site as an office facility for Company's business operations for more than thirty (30) consecutive calendar days at any time during the Term of this Agreement for any reason (other than on account of Company's temporary displacement caused by a casualty to the Development Site and resulting ongoing repairs or restoration to the Development Site necessitated by such casualty), Company will be in default under this Agreement and the City will have the right to terminate this Agreement following provision of notice and opportunity to cure in accordance with Section 7.5. 7.3. No Default for Amendment of Lease; Adjustment of Program Source Funds. If the Lease is amended or interpreted by the parties thereto in any way, or any other arrangement is instituted between the parties, so that at any time during a given Twelve-Month Period Company is not required to pay or reimburse to the landlord all of Company's proportionate share of real property taxes on the Development Site and all improvements thereon, an event of default shall not occur under this Agreement, but, in accordance with the definition of"Program Source Funds" set forth in Section 2, the Program Source Funds available for the Program Grant payable in the same year as the year in which such Twelve-Month Period ends will equal only the Development Personal Property Tax Revenues received by the City during that Twelve-Month Period, and all Development Real Property Tax Revenues received by the City during that Twelve-Month Period will be excluded from the calculation of that Program Grant and may be used by the City for any other lawful purpose. 7.4. Failure to Submit Reports. If Company fails to submit the annual employment report required by and in accordance with Section 4.5, the City's obligation to pay any Program Grants at the time, if any, will be suspended until Company has provided all required reports; provided, however, that if any report required hereunder is delinquent by more than one (1) year, the City will have the right to terminate this Agreement Page 14 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. following provision of notice and opportunity to cure in accordance with Section 7.5. 7.5. 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 faith), the City will have the right to terminate this Agreement immediately by providing written notice to Company. 7.6. 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 2264.00](4) of the Texas Government Code. In the event that Company, or any branch, division, or 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): • if such conviction occurs during the Term of this Agreement, this Agreement will terminate contemporaneously upon such conviction (subject to any appellate rights that may lawfully be available to and exercised by Company), and Company must repay, within one hundred twenty (120) calendar days following receipt of written demand from the City, the aggregate amount of the Program Grants received by Company hereunder, if any,plus Simple Interest at a rate of four percent (4%)per annum; or • if such conviction occurs after expiration or termination of this Agreement, 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 the Program Grants received by Company hereunder, if any,plus Simple Interest at a rate of four percent (4%)per annum. Page 15 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. For the purposes of this Section 7.6, "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 hereunder. This rate of interest can be applied each year, but will only apply to the aggregate amount of Program Grants paid hereunder and is not applied to interest calculated. For example, if the aggregate amount of the Program Grants paid hereunder is $10,000 and such amount 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 7.6 does not apply to convictions of any subsidiary or affiliate entity of Company, by any franchisees of Company, or by a person or entity with whom Company contracts. Notwithstanding anything to the contrary herein, this Section 7.6 will survive the expiration or termination of this Agreement. 8. 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 Required Improvements and the Development Site 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. 9. INDEMNIFICATION. COMPANY, AT NO COST TO THE CITY, AGREES TO DEFEND, INDEMNIFY AND HOLD THE CITY, 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 CITY) OR SUBCONTRACTORS, RELATED TO THE DEVELOPMENT SITE OR THE EXISTING SITE, OR ANY IMPROVEMENTS THEREON, INCLUDING THE Page 16 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. REQUIRED IMPROVEMENTS, OR OTHERWISE TO THE PERFORMANCE OF THISAGREEMENTT, 10. 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 Smith&Nephew, Inc. Attn: City Manager Attn: Michael R. Gilson 1000 Throckmorton 1450 Brooks Road Fort Worth, TX 76102 Memphis, TN 38116 with copies to: the City Attorney and Smith&Nephew, Inc. Economic/Community Development 7135 Goodlett Farms Parkway Director at the same address Cordova, TN 38016 Attn: Company Secretary 11. ASSIGNMENT AND SUCCESSORS. Company may at any time assign, transfer or otherwise convey any of its rights or obligations under this Agreement to an Affiliate without the approval of the City so long as Company, the Affiliate and the City first execute an agreement under which the Affiliate agrees to assume and be bound by all covenants and obligations of Company under this Agreement. Otherwise, Company may not assign, transfer or otherwise convey any of its rights or obligations under this Agreement to any other person or entity without the prior consent of the City Council, which consent will not be unreasonably withheld, conditioned on (i) 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 (ii) 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 attempted assignment without the City Council's prior consent will constitute grounds for termination of this Agreement following ten (10) calendar days of receipt of written notice from the City to Company. 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. Page 17 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. 12. 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. 13. GOVERNMENTAL POWERS. It is understood that by execution of this Agreement, the City does not waive or surrender any of it governmental powers or immunities. 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. 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. INTERPRETATION. In the event of any dispute over the meaning or application of any provision of this Agreement, this Agreement must be interpreted fairly and reasonably, and neither more strongly for or against any party, regardless of the actual drafter of this Agreement. 18. CAPTIONS. Page 18 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. Captions and headings used in this Agreement are for reference purposes only and will not be deemed a part of this Agreement. 19. 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. 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 Page 19 Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. considered an original, but all of which will constitute one instrument. EXECUTED as of the last date indicated below: CITY OF FORT WORTH: SMITH & NEPHEW, INC., a Delaware corporation: By: By: Kew., C Na asa.� J,.;le.I ,444,,j Assistant City Manager Title: VP_ F� �a�ce Date: Date: 4-atll- zoi CONTRACT COMPLIANCE MANAGER: By signing below, I hereby acknowledge that I am the person responsible for the monitoring and administration of this contract, including ensuring all performance and reporting requirement By: Name of City Employee: V 6 L. 3$ (I Title: APPROVED AS TO FORM AND LEGALITY: .. OF 992, By. Atte by: Peter Vaky # ' :` • Deputy City Attorney garb J. eidqlecre �Fas M&C: C-28937 12-04-18 Form 1295: 2018-424537 Page 20 OFFICIAL RECORD Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. CITY SECRETARY FT. WORTH,TX EXHIBITS "A"—Description and Map Depicting the Development Site "B"—Memorandum of Lease "C"—Map of Central City Amended and Restated Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. Exhibit"All-Description and Map Depicting the Development Site Lot 2,Block 3,Edwards Ranch Clearfork Addition f.. i n33P .t •iN,an`a \ mw V pj.�►• �YrT pi— .� L.J.EwIRrN pert -^37s0 re 14 ew i y•OYN•CY� \ "".'^n .t't° aoa a ! Oirl.'hrlW�ter 2 a "' •-or3re ,U, WL. Drams �i ``� �n.wa �•._ J//Jff _' +� s•ar e- q w's ea." ir R.NOLM --- - f p.NAMMiwe L•saw � lOIIiTOF WMINNUM -' TRINITY RIVER Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. EXHIBIT B TO ECONOMIC DEVELOPMENT PROGRAM AGREEMENT MEMORANDUM OF LEASE This Memorandum of Lease is executed by Clearfork Office 1, LP, a Texas limited partnership (°Landlord") and Smith & Nephew, Inc., a Delaware corporation ("Tenant") for the purpose of providing a summary of certain terms and conditions set forth in that certain Office Lease Agreement executed by Landlord and Tenant, having an effective date of May 27, 2015 ("Lease"). The terms and conditions of the Lease include the following: 1. Building and Leased Premises. Landlord has completed construction of a six-story office building located at 5600 Clearfork Main Street, Fort Worth, Texas. The Building contains a total floor area of approximately 169,332 square feet. The Premises leased to Tenant include all of the fifth and sixth floors of the Building, containing a total of 59,722 rentable square feet. 2. Lease Term: Renewal Options. The term of the Lease is 123 full calendar months following its Commencement Date of August 8, 2016. Tenant has the option to extend the Lease Term for two renewal periods of five years each, subject to the renewal terms and conditions set forth in the Lease. 3. Permitted Uses. The Lease provides that the Premises may be used only for Tenant's general office purposes. 4. Rent. The Lease provides that Tenant will pay to Landlord monthly as Base Rent an amount based upon the Rentable Area of the Premises, as well as Tenant's Pro Rata Share of Excess Operating Expenses, Electricity Costs and Parking Fees, all as further described in the Lease. 5. Personal Property Taxes. The Lease provides that Tenant is responsible for the payment of all taxes assessed on Tenant's furniture, equipment and fixtures placed in the Premises by Tenant. 6. Real Property Taxes. The Lease provides that real property taxes assessed against the Land and Building are part of the Project's Operating Expenses and Tenant is obligated to pay its pro rata share of Operating Expenses in excess of the 2017 Operating Expenses. Tenant's Pro Rata Share equals 0.3527, being the ratio of the rentable area of the Premises (59,722 square feet) divided by the rentable area of the Building (169,332 square feet). This Memorandum is executed to be attached as and an Exhibit to that certain Economic Development Program Agreement executed or to be executed by Tenant and the City of Fort Worth: This Memorandum does not modify, increase, decrease or in any way affect the rights, duties and obligations of Landlord and Tenant under the Lease, as the same may be amended from time to time. Landlord and Tenant each has rights, duties and obligations (and conditions to rights) which are not stated in this Memorandum. If the Lease and this Memorandum conflict, the Lease governs. Capitalized terms used but not defined herein, but defined in the Lease, shall have the same meaning given to them in the Lease. Economic Development Program Agreement Exhibit B I Page 1 of 2 1A020911002M I t.4300.00cx This Memorandum may be executed in multiple counterparts, each of which will be considered as an original, and all of which will constitute one instrument. I . i I i i Economic Development Program Agreement Exhibit B(Page 2 of 2 1A0209110021111 L4300.DOCX 1 Executed to be effective the day of December, 2016 LANDLORD: Clearfork Office 9, LP, a Texas limited partnership By: Clearfork Development Company, LLC, a Texas limited liability company, it's General P3ktn6r By: Name; Title: TENANT: Smith &Nephew, Inc., a Delaware corporation By: Name: / .G tez' 14JAW Title: J G1.�%/s.•-r1U Economic Development Program Agreement Exhibit B}Page 3 of 2 LX0209110021111 L4300.DOCx "C"—Map of Central City M 4 R 76092 f e . �� 7 ` ._ _ - m• - -- ' jai = .' ' 76131, 7 76182 76148 - i 79021 . 80 76135 L 716022 { 761a6' i• 1 , _i ,. 751 t , . _ 112 781p5—k 760`i$ 7 i J.— .T p 7811�- i •76109 + 9 76016 M15 i M17 7801 76143 (- ! 78001 11 , 1 7 36 Legend FORT WORTH Updated OWM014 Q caenvd ary Bowda+y Q ao coda COCA BIyDIeNae Economic Development pal„LI„I CDBG Eligible Areas & Central City Economic Development Program Agreement between City of Fort Worth and Smith&Nephew,Inc. City of Fort Worth, Texas Mayor and Council Communication COUNCIL ACTION: Approved on 12/4/2018 DATE: Tuesday,December 4, 2018 REFERENCE NO.: **C-28937 LOG NAME: 17ED AMENDISMITH&NEPHEW SUBJECT: Authorize Amendment to Economic Development Program Agreement with Smith& Nephew,Inc., (City Secretary Contract No. 49605) for Development of a Medical Technology Facility at 5600 Clearfork Main Street to Revise Economic Development Grant Calculations and Termination Rights (COUNCIL DISTRICT 9) RECOMMENDATION: It is recommended that the City Council authorize the City Manager to execute an amendment to the City's Economic Development Program Agreement with Smith & Nephew, Inc., (City Secretary Contract No. 49605) for development of a medical technology facility at 5600 Clearfork Main Street to revise the method in which Economic Development Program Grants are calculated and adjust termination rights under the Agreement. DISCUSSION: On July 28, 2015, (M&C C-27397) the City Council authorized the execution of an Economic Development Program Agreement (City Secretary Contract No. 49605) with Smith and Nephew, Inc., (Company) to lease 55,000 square feet in a new build−to−suit facility located at 5600 Clearfork Main Street that had an estimated capital investment of $35 million. The Company, a global leader in the medical technology industry, with a presence in more than 90 countries around the world, leased a portion of the building and moved its Advanced Wound Care Division to Fort Worth to consolidate with existing operations. Per the Agreement, the Company was required to have $2.8 million in business personal property located at the site as of January 1, 2017, retain 170 full−time employees (FTEs), and create 20 new full−time positions (FTEs)by December 31, 2016, increasing to 60 new FTEs by December 31, 2021. The Company is required to fill a minimum of 40 percent of all FTEs with Fort Worth residents and a minimum of 20 percent of all FTEs with Fort Worth Central City residents. The average salary of all FTEs must be a minimum of$85,000.00 annually. In return, the City agreed to pay the Company five annual Economic Development Program grants, as authorized by Chapter 380, Texas Local Government Code, equal to a proportional share of Company's ad valorem real property taxes from the site plus its business personal property taxes, capped at an amount not to exceed$50,000.00 in any year. Current terms of the Agreement state that failure to meet minimum investment or any annual job number commitments will result in a default under the Agreement, giving the City the right to terminate without further obligation. In addition, the Company will forfeit the annual grant in any year that the average salary of employees is below $85,000.00 or the total real and personal property appraisal for all property located on the platted property is below$25,000,000.00. The Company has met the overall investment and employee salary requirements. However, due to an error by Company in filing the Business Personal Property Taxable Value Rendition with Tarrant Appraisal District, Company's personal property valuation did not appear in tax records until 2018. In addition, due to the specialized nature of the positions at the Company, meeting the local employment requirements has proved more difficult than anticipated Because overall the intent of the Agreement has been met, Company has asked the City to consider amending the Agreement to remove the termination rights associated with the business personal property valuation and employment commitments, and instead agree to reductions in the Program Grant amounts based on the extent to which Company might fail to meet those commitments. This structure is commonly utilized in most of the City's economic development incentive agreements. As a result, City staff concurs with Company's request, and would propose that the Agreement be amended to weight each of Company's commitments, and to provide for proportional reductions to the Program Grant amounts to the extent any of those commitments are not met, as provided in the following chart: Requirement Max Grant Completion of Project by 5% 12/31/16 $2.8 Million BPP by 01/01/17 5% Overall Employment= 190 FTE 0% Fort Worth Employment=40% 15% of Total W Central City Empl. =20% 15% of Total Avg Annual FTE Salary Payment Forfeited in Any $85,000 Year Not Met Taxable Value of Site+BPP Payment Forfeited in Any Improvements=$25 million Year Not Met Irn in. TOTAL 100% The maximum annual Program Grant payments will continue to be capped at $50,000.00, and the forfeitures for failure to meet the minimum annual average salary amount and minimum taxable value amount will remain in place. The first Program Grant payment under the Agreement (2018) will be forfeited since the Company did not meet the terms of the Agreement as stated at that time. This project is located in COUNCIL DISTRICT 9. FISCAL INFORMATION/CERTIFICATION: The Director of Finance certifies that approval of this agreement will have no material effect on the Fiscal Year 2019 Budget. While no current year impact is anticipated from this action, any effect on expenditures and revenues will be budgeted in future Fiscal Years and will be included in the long-term financial forecast. FUND IDENTIFIERS (FIDs): TO Department Account Project Program Activity Budget Reference# Amount Fund ID ID Year (Chartfield 2) FROM Department Account Project Program Activity Budget Reference# Amount Fund ID ID Year (Chartfield 2) CERTIFICATIONS: Submitted for City Manager's Office by: Susan Alanis (5804) Originating Department Head: Robert Stums (2663) Additional Information Contact: Carol Griffith (6027) ATTACHMENTS 1. 181213_form1295.121f (Public)