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HomeMy WebLinkAboutContract 37067-A1 (2)STATE OF TEXAS § COUNTY OF TARRANT § CITY SECRETARY CONTRACT NO... 10LO- At AMENDMENT NO. i TO C ITY SECRETARY CONTRACT N0.37067 TAX ABATEMENT AGREEMENT BETWEEN CITY OF FORT WORTH AND HEALTH CARE SERVICE CORPORATION d/b/a BLUE CROSS BLUE SHIELD OF TEXAS This AMENDMENT NO. 1 TO CITY SECRETARY CONTRACT NO. 37067 ("Amendment") is entered into by and between the CITY OF FORT WORTH the "City"), a home rule municipality organized under the laws of the State of Texas and acting by and through Tom Higgins, its duly authorized Assistant City Manager, and HEALTH CARE SERVICE CORPORATION, A MUTUAL LEGAL RESERVE COMPANY, a corporation organized under the laws of the State of Illinois that is authorized to do business in the State of Texas as BLUE CROSS BLUE SHIELD OF TEXAS ("Company"). 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 Amendment: A. The City and Company previously entered into that certain Tax Abatement Agreement on file in the City Secretary's Office as City Secretary Contract No. 37067 (the "Agreement"). The Agreement requires Company to expend at least $155 million in Construction Costs to construct an approximately 220,000 square foot data center (the "Required Improvements") on the Land subject to Abatement and to install at least $20 million in New Taxable Tangible Personal Property on the Land, as more specifically set forth in the Agreement. In return, Company will be eligible to receive a ten (10)-year Abatement on the Land and any improvements located thereon, including the Required Improvements, and on any New Taxable Tangible Personal Property. The Agreement requires that the Completion Date (as defined in the Agreement) for the Required Improvements must occur by April 1, 2010 (the "Completion Deadline"). B. Due to unforeseen delays in completing installation of all intended New Taxable Tangible Personal Property on the Land, Company has requested that the Completion Deadline be extended from April 1, 2010 to December 31, 2010. In addition, because of unexpected cost savings in constructing the Required Improvements, Company has requested that the minimum Construction Costs that must be expended for the Required Improvements be reduced from $155 million to $153 million. Due to the economic and other public benefits that will accrue from completion of the Required Improvements, the City is willing to amend the Agreement to accommodate Company's requests. Page 1 of Po4:0F 'i`ICIAL HE�®�� AmendmentNo. 1 to CSC No.37067 �j� ¢Y �F�RF`�'�RY Tax Abatement Agreement between City of Fort Worth and Blue Cross Blue Shield of Texas FORT WORTH, TX C. This Amendment is authorized under § 312.208 of the Texas Tax Code because (i) the provisions of this Amendment could have been included in the original Agreement and (ii) this Amendment has been entered into following the same procedure in which the Agreement was approved and executed. NOW, THEREFORE, the City and Company, for and in consideration of the terms and conditions set forth herein, do hereby contract, covenant and agree as follows: 1. The first sentence of Section 1.1 of the Agreement (Real Property Improvements) is hereby amended to read as follows: Company shall expend a minimum of One Hundred Fifty-three Million Dollars ($153,000,000.00) in Construction Costs to construct the Required Improvements. 2. The second sentence of Section 1.2 of the Agreement (Completion of Required Improvements) is hereby amended to read as follows: Company covenants and agrees that the Completion Date shall occur by December 31, 2010, unless delayed because of Force Majeure, in which case this deadline shall be extended by the number of days comprising the specific Force Majeure (the "Completion Deadline"). 3. Capitalized terms used but not identified in this Amendment shall have the same meanings assigned to them in the Agreement. 4. Except as otherwise specifically amended in this Amendment, the Agreement shall remain in full force and effect. 5. This Amendment contains the final written expression of the City and Company with respect to the subject matter hereof. This Amendment may be executed in multiple counterparts, each of which shall be considered an original, but all of which shall constitute one instrument. EXECUTED as of the last date indicated below: [SIGNATURES IMMEDIATELY FOLLOW ON NEXT TWO (2) PAGES] Page 2 of 4 Amendment No. 1 to CSC No. 37067 Tax Abatement Agreement between City of Fort Worth and Blue Cross Blue Shield of Texas CITY OF FORT WORTH: LEGALITY: By: Tom Higgins Assistant City Manager Date: ATTEST: By: STD 9/zz//40 COUNTY OF TARRANT § APPROVED AS TO FORM AND By: / Peter Vaky Assistant City Attorney BEFORE ME, the undersigned authority, on this day personally appeared Tom Higgins, Assistant City Manager of the CITY OF FORT WORTH, a municipal corporation organized under the laws of the State of Texas, known to me to be the person and officer whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act of the CITY OF FORT WORTH, that he was duly authorized to perform the same by appropriate resolution of the City Council of the City of Fort Worth and that he executed the same as the act of the CITY OF FORT WORTH for the purposes and consideration therein expressed and in the capacity therein stated. UNDER MY HAND AND SEAL OF OFFICE this �ay of c..QiU , 2010. No�ary Publics in and for the State of Texas Notary's Printed Name =z°� �: MARIA S. SANCHEZ "� "' MY COMMISSION EXPIRES December 14, 2013 Page 3 of 4 .Amendment No. 1 to CSC No. 37067 Tax Abatement Agreement between City of Fort Worth and Blue Cross Blue Shield of Texas HEALTH CARE SERVICES CORPORATION, A MUTUAL LEGAL RESERVE COMPANY d/b/a Blue Cross Blue Shield of Texas By: - Nam '. Titl : 0 ATTEST: By: Title: - it Cd Mkt STATE OF ILLINOIS § COUNTY OF COOK § e � BEFORE ME, the undersi ned authority, on this day personally appeared �J e Lwk VWVA" a .(,IYV of HEALTH CARE SERVICES CORPOWATION, A MUTUAL LEGAL RESERVE COMPANY d/b/a BLUE CROSS BLUE SHIELD OF TEXAS, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, in the capacity therein stated and as the act and deed of HEALTH CARE SERVICES CORPORATION, A MUTUAL LEGAL RESERVE COMPANY d/b/a BLUE CROSS BLUE SHIELD OF TEXAS. GIVEN UNDER MY HAND AND SEAL OF OFFICE this Notary Public in and for the State of Illinois �. Notary's Printed Name Page 4 of 4 Amendment No. 1 to CSC No. 37067 Tax Abatement Agreement between City of Fort Worth and Blue Cross Blue Shield of Texas City of Fort Worth, Texas Mayor and councii C :• Mil COUNCIL ACTION: Approved on 8/17/2010 unication DATE: Tuesday, August 17, 2010 REFERENCE NO.: C-24402 LOG NAME. 17TAAMENDBCBS SUB.TECT0 Authorize the Amendment to Tax Abatement Agreement with Health Care Service Corporation d/b/a Blue Cross Blue Shield of Texas to Reduce Requirements for Scope of Real Property Improvements and Extend Deadline for Completion of Required Improvements (COUNCIL DISTRICT 2) RECOMMENDATION: It is recommended that the City Council authorize an amendment to the Tax Abatement Agreement with Health Care Service Corporation d/b/a Blue Cross Blue Shield of Texas (City Secretary Contract No. 37067) to (i) reduce the minimum construction costs for real property improvements from $155 million to $153 million and (ii) extend the completion deadline for construction and installation of minimum real and personal property improvements from April 1, 2010 to December 31, 2010. DISCUSSION: On February 26, 2008, the City Council approved Tax Abatement Agreement (City Secretary Contract No. 37067) with Health Care Service Corporation (HCSC) d/b/a Blue Cross Blue Shield of Texas for the construction of a data center facility located at Alliance Gateway Business Park. The Agreement required HSCS to expend a minimum of $155 million in construction costs for real property improvements and to install at least $20 million in personal property on the site by April 1, 2010. In return the City agreed to abate up to 50 percent of incremental real and personal taxes on the HCSC site for a period of 10 years, structured as follows: 40 percent for expenditure of $155 million in construction costs for real property improvements and installation of $20 million in personal property at the site by the April 1, 2010 completion deadline; five percent for compliance with the commitment to expend at least 25 percent of non —specialized construction costs for the real property improvements with Fort Worth M/WBE companies; five percent for exceeding the minimum Fort Worth M/WBE commitment (one percent for every additional $1 million expended). As a result of the downturn in the economy, HCSC was able to generate savings on the real property investment, but market conditions have delayed the timing on the personal property investment. As of June 30, 2010, HCSC had completed construction of a 260,000 square foot data center facility, spent $153.7 million in real property improvements (or 99.2 percent of the commitment) and hired 24 full—time employees. HCSC has not yet invested any money to date on personal property. Based on current projections, it is estimated that HCSC will reach and possibly exceed the $20 million in personal property investment by December 31, 2010. The company also anticipates an additional investment in real and personal property of over $150 million at the facility in the 2011/2012 timeframe. As a result, HCSC has requested that the City consider a reduction in the minimum investment due to the cost savings realized and an extension of the completion deadline for construction and installation of the real and personal property improvements. In order to facilitate the request, City staff recommends that the City Council authorize an amendment to the existing Tax Abatement Agreement to reduce the minimum construction cost expenditures for the required real property improvements from $155 million to $153 million and to extend the completion deadline for construction and installation of the required real and personal property improvements from April 1, 2010 to December 31, 2010. Because the initial tax abatement under the Agreement will be based on property valuations to be made on January 1, 2011, the extension of the completion deadline from April 1, 2010 to December 31, 2010 will not have any effect on the tax rolls. All other terms and conditions of the agreement would remain in effect. This project is located in COUNCIL DISTRICT 2. FISCAL INFORMATION: The Financial Management Services Director certifies that this action will have no material effect on City funds. FUND CENTERS: TO Fund/Account/Centers FROM Fund/Account/Centers CERTIFICATIONS: Submitted for City Manager's Office by: Thomas Higgins (6192) Originating Department Head: Jay Chapa (5804) Additional Information Contact: Robert Sturns (8003) ATTACHMENTS No attachments found.