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HomeMy WebLinkAboutResolution 4305-03-2014 A Resolution NO. 4305-03-2014 APPROVING EXECUTION OF SECOND AMENDMENT TO ECONOMIC INCENTIVE AGREEMENT BETWEEN THE CITY OF IRVING, TEXAS AND AVIALL SERVICES, INC. RELATED TO AN ECONOMIC DEVELOPMENT PROJECT AT DALLAS[FORT WORTH INTERNATIONAL AIRPORT WHEREAS, as of December 21, 1998 the City of Fort Worth ("Fort Worth"), the City of Dallas ("Dallas"), the City of Irving, Texas ("Irving"), and the Dallas/Fort Worth International Airport Board ("DFW") each entered into that certain Interlocal Agreement on file as City Secretary Contract No. 24539, as amended by that certain First Amendment to Interlocal Agreement on file as City Secretary Contract No. 24539-Al executed by and between Fort Worth, Dallas, Irving and DFW as of April 2, 2009 (collectively, the "Interlocal Agreement") pursuant to which Irving agreed to share with Fort Worth and Dallas certain tax revenues received by Irving from economic development projects at any portion of Dallas/Foil Worth International Airport located within the corporate limits of Irving (the "Affected Airport Property"); and WHEREAS, Section III of the Interlocal Agreement provides that Irving will not grant any tax abatement agreements or create any tax increment reinvestment zones or public improvement districts, or grant or create any similar types of incentive plans, without the written consent of Fort Worth, Dallas, and DFW, including economic development program grants authorized by Chapter 380 of the Texas Local Government Code ("380 Grants") that are calculated on the basis of tax revenues which fall within the definition of"Increased Revenues" tinder Section 11 of the Interlocal Agreement; and WHEREAS, as of February 22, 2001 Irving and Aviall Services, Inc. ("Aviall") entered into a 10-year Economic Incentive Agreement pursuant to which Aviall agreed to construct an office/warehouse at least 280,000 square feet in size and to provide at least 340 new jobs at a location on the Affected Airport Property in return for Irving's payment of certain economic development program grants equal to Aviall's ad valorem personal property taxes paid to Irving on items that would qualify as "Freeport Goods" under Artcile VIII, Section 1 of the Texas Constitution (the "Irving Incentive Agreement"); and WHEREAS, the term of the Irving Incentive Agreement was extended for an additional 10-year term in return for Aviall's expansion of its facility by approximately 250,000 square feet and construction of a new, approximately-75,000 square foot facility (collectively, the "Aviall Facilities") pursuant to that certain Economic Incentive Agreement Renewal dated as of September 7, 2006 (the "First Amendment"); and RT WO Resolution No. 4305-03-2014 WHEREAS, the Irving Incentive Agreement was approved by the City Council pursuant to Resolution No. 2710; and WHEREAS, at the time the Irving Incentive Agreement was executed, the Texas Constitution limited "Freeport Goods" that are exempt from ad valorem taxation as commercial inventory destined for out-of-state shipment and held at a particular location in Texas for less than 175 days; and WHEREAS, effective January 1, 2014 Article VIII, Section 1-j of the Texas Constitution was amended to allow municipalities to extend the exemption on such goods that constitute aircraft parts from 175 days to a maximum of 730 days; and WHEREAS, Irving and Aviall wish to enter into the attached Second Amendment to Economic Incentive Agreement (the "Second Amendment") in order to amend the definition of"Freeport Goods" under the Irving Incentive Agreement to reflect the amended Constitutional provision, and Irving has requested that Foil Worth, Dallas and DFW each approve the Second Amendment in accordance with the Interlocal Agreement; and WHEREAS, the Fort Worth City Council is willing to approve the Second Amendment solely in accordance with the terms and conditions of this Resolution; NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS THAT: 1. The Second Amendment attached hereto as Exhibit "A" are hereby approved, subject to the following: 1.1. That the only revenues defined in the Interlocal Agreement as "Increased Revenues"that Fort Worth agrees to exempt from the tax sharing obligations of the Interlocal Agreement are those ad valorem tax revenues generated from tangible personal property located in the Aviall Facilities which are used to calculate the amount of a 380 Grant paid by Irving to Aviall pursuant to and in accordance with the Irving Incentive Agreement, as amended by the First Amendment and the Second Amendment (the "Exempted Revenues"). 1.2. That notwithstanding anything to the contrary in Section III of the Irving Incentive Agreement, if Aviall applies for additional extensions as authorized under such Section and any such additional extension is granted by Irving, such extension shall not be deemed to be approved by Fort Worth, and any Increased Revenues used by Irving to calculate the amount of any 380 Grants during such extended terms shall not be exempted from the tax sharing requirements of the Interlocal Agreement, unless the Fort Worth City Council, the Dallas City Council and DiFW each approve such extensions by resolution. 1.3. That if the Irving Incentive Agreement, as amended by the First Amendment and Second Amendment, is further amended to extend the term or number of 380 Grants payable thereunder, or is otherwise amended or restated, or if any other agreement between Irving ORTWORT Resolution No. 4305-03-2014 and Aviall is executed, so that the amount of the 380 Grants payable thereunder and calculated on the basis of tax revenues that are deemed "Increased Revenues" under the Interlocal Agreement are greater than those anticipated in the Irving Incentive Agreement, as amended by the First Amendment and Second Amendment, such additional "Increased Revenues" will not be exempted from the tax sharing obligations of the Interlocal Agreement unless the Fort Worth City Council, the Dallas City Council and DFW each approve such amendment or other agreement by resolution. 1.4. That approval of the Second Amendment is conditioned on Irving's agreement that if Aviall pays Irving, as liquidated damages on account of default under Section V the Irving Incentive Agreement, or otherwise reimburses Irving all or any portion of any 380 Grant(s) paid pursuant to the Irving Incentive Agreement, plus any interest thereon, Irving will., within thirty (30) calendar days following receipt thereof, pay Fort Worth a percentage of all such sums, calculated in accordance with Section 11 of the Interlocal Agreement. 1.5. That if Irving withholds any Exempted Revenues from its payment to Fort Worth of revenues subject to the tax sharing obligations of the Interlocal Agreement, Irving will, if requested by Fort Worth, provide reasonably adequate documentation that allows Fort Worth to verify that the amounts withheld as Exempted Revenues were actually paid by Irving to Aviall as a 380 Grant under the Irving Incentive Agreements. 1.6. That approval of the Second Amendment attached hereto is approved only for purposes of Fort Worth's consent to exempt any affected Exempted Revenues from the tax sharing obligations of the Interlocal Agreement, and that Fort Worth does not ratify or approve any particular provision of the Second Amendment for any other purpose. 1.7. That, as a condition precedent to the effectiveness of this Resolution, the Second Amendment attached hereto must also be approved by resolution of the Dallas City Council on substantially the same conditions as those set forth herein, and by DFW. 2. Subject to the conditions set forth in Section I above, this Resolution shall take effect on the date of its adoption. Adopted this 18th day of March 2014. 00 to.0 0 Oki Go 0 ► ATTEST: awo B y: Mary J Kf'y 1, City Secretary R '-L �24WFORT WORT Resolution No. 4305-03-2014 Exhibit "A" Second Amendment to Irving Incentive Agreement RT WORT EXHIBIT A STATE OF TEXAS KNOW ALL PERSONS BY THESE PRESENTS COUNTY OF DALLAS SECOND AMENDMENT TO ECONOMIC INCENTIVE AGREEMENT This Second Amendment to the Economic Incentive Agreement dated February 22, 2001 (the "Agreement"), is made as of the 6th day of February, 2014, by and between the City of Irving,Texas (the"City") and Aviall Services, Inc. ("Aviall"). WHEREAS, the City and Aviall entered into an Economic Incentive Agreement Renewal dated as of September 7, 2006, which extended the term of the 2001 Agreement and provided for a certain grant by the City related to Freeport Goods maintained by Aviall at its premises located at 2750 Regent, consisting of a minimum of 605,000 square feet warehouse facilities employing a minimum of 340 full time employees; and WHEREAS, Article VIII Section 1-j of the Texas Constitution has been amended effective January 1, 2014, to allow political subdivisions to extend the date by which aircraft parts exempted from ad valorem taxation under this section must be transported outside the State to a date not later than the 730th day after the date the person acquired or imported the aircraft parts in this State; and WHEREAS, the City and Aviall wish to amend the Agreement to revise the definition of Freeport Goods to conform to the amended Article VIII Section 1-j of the Texas Constitution and other related matters; and WHEREAS, all prerequisites for the approval of the Amendment have been met. NOW, THEREFORE, in consideration of the above premises, the Agreement is amended as follows: 1. Article I. Definitions, of the Agreement is hereby amended as follows: Wherever used in this Agreement, the term "Freeport Goods" shall mean that personal property as defined by Article VIII, Section 1 j of the Texas Constitution, and as may be amended. In accordance with Article VIII, Section I- j (d) of the Texas Constitution, Freeport Goods shall include aircraft parts which are transported outside of the State of Texas not later than the 730'" day after the date Aviall Services, Inc, acquired or imported the aircraft part into the State of Texas. The term "Premises" shall mean 2750 and 2755 Regent Blvd, Irving,Texas, 2. Article II. Consideration of the Agreement is hereby amended as follows: In consideration of Aviall Services Inc.'s office and warehouse at the Premises continuing through 2021 and consisting of at least six hundred five thousand (605,000) square feet and the continued employment of at least three hundred forty (340) employees and maintaining an inventory at the Premises of which a portion of said inventory includes Freeport Goods, the City will make a grant of lawfully available funds to Aviall, no later than March 31" of each applicable year, an amount equal to the ad valorem personal property tax Aviall paid to the City for the previous year on total taxable value as determined by DCAD, less the taxable value amount shown below: 2014 85,233,537 2015 88,216,711 2016 91,304,296 2017 94,499,946 2018 97,807,444 2019 101,230,705 2020 104,773,779 2021 108,440,862 Solely by way of example: Assume total taxable value of personal property at the premises for 2014 is $968,998,720. Reduce that by 85,233,537 = 883,755,183. The grant will be calculated as the amount of City tax paid on $883,755,183 value. In no event for tax years 2014 through 2021 will the net ad valorem personal property tax paid by Aviall be less than the net ad valorem personal property tax paid by Aviall in 2013, and the net taxes paid by Aviall shall increase 3.5%per year through 2021. However, should Aviall fail to pay City business personal property taxes for any year, City shall not make any payment to Aviall that year. Further, should Aviall, or its affiliate or successor permitted under Article VI fail, in any year, to retain its principal office/warehouse and inventory in the City for a full twelve months or meet each of the other elements of consideration set forth herein, no grant shall be due to Aviall for that year. 3. Article IV. Records and Audits is hereby amended to add: C. Aviall covenants and certifies that it does not and will not knowingly employ an undocumented worker as that term is defined by Section 2264.01(4) of the TEXAS GOVERNMENT CODE. In accordance with Section 2264.052 of the TEXAS GOVERNMENT CODE, if Aviall is convicted of a violation under 8 U.S.D. Section 1324a(f), Aviall shall repay to the City the full amount of payments made under this Agreement, plus ten percent (10%) per annum from the date the payment was made. Repayment shall be paid within one hundred twenty (120) days after the date Aviall receives notice of violation from the City. 4. This Amendment shall be effective as of the date of its approval by the cities of Fort Worth and Dallas and the execution by both parties. 5. All other terms and conditions of the Agreement, as amended, not hereby amended shall remain the same and in full force and effect. Executed this day of ' 2014. CITY OF IRVING,TEXAS By: Mayor Beth Van Duyne ATTEST: By; Sfianae Jennings, i�ty Secret ry roved _ ( _2.©1� APPROVED AS TO FORM Resolution #ZQ! _3 By: Charles R. An r;y(ity Attorney AVIALL SERVICES, INC.: By: i CITY OF IRVING COUNCIL RESOLUTION NO. RES-2014-32 WHEREAS, the City and Aviall Services, Inc. (Aviall), entered into an Economic Incentive Agreement dated as of February 22, 2001, and amended as of September 7, 2006, which provided for a certain grant by the City related to Freeport Goods maintained by Aviall at its premises located at 2750 Regent Boulevard, consisting of a minimum of 605,000 square feet warehouse facilities employing a minimum of 340 full-time employees; and WHEREAS, Article VIII, Section !j of the Texas Constitution has been amended effective January 1, 2014, to allow political subdivisions to extend the date by which aircraft parts exempted from ad valorem taxation under this section must be transported outside the state to a date not later than the 730th day after the date the person acquired or imported the aircraft parts in this state; and WHEREAS, the City and Aviall wish to amend the Agreement to revise the definition of Freeport Goods to conform to the amended Article VIII, Section t j of the Texas Constitution and other related matters; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF IRVING,TEXAS: SECTION 1. THAT the City Council hereby approves the attached Second Amended Economic Development Agreement between the City of Irving and Aviall Services, Inc., and the Mayor is authorized to execute said agreement. SECTION II. THAT this resolution shall take effect from and after its final date of passage, and it is accordingly so ordered. PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF IRVING, TEXAS, on February 6, 2014. BETH VAN DUYNE MAYOR ATTES Shanae Jennings City Secretary APP ED AS T91FOP40.e �ys'EAt Z OF Charles R. A ers City Attorney City of Fort Worth, Texas Mayor and Council Communication hll(flWini✓IeIINM R'iUMY4.9 J N"r(1 /dl la.i\ \ \,n 4Af9➢J" VNWiIVNfflAlITdmn Yl RklY,l4rtt1(ffQI11L f(.tl. MAipfIM'U�Y llNW FlIIIYtfIIOJk{YY MMfIINllll1.1149M6�i//CI//.. 1,!111A1U 1l PR!!!!!!ll�fmlMg6:YY. //. YI///!// lY//// ....IYINN! IJIJIJ.11�22L ANI PO%MH.,A U11tlYRidbDOURfivI(RiM4'ARJGTIN:PInAIiNStlIJ\M6b9 X11Y 14WdYdU1\➢YNN1A6WlfN4/IM10p XAt tlIV14 MIN4AYYPAYI M!MN/uFAtl YJIi I(M'M1 COUNCIL.ACTION: Approved on 3/18/2014 - Resolution No. 4306-03,2014 IBIItWWIM' tYl A 1Y\Y0Y 1-M ,WYMUdfi dl XINM IoTIJluW iVtlVI!YrSAtlIliblranYAYlllllilllYllil YIfl IV(i 11M VU 1'Ir evYtl I WWYIUxI MlVIJM MJllMUJ➢Ibl!N1AAM,YAAllll!�AInIMii NNnrc,Ywlr riIIII111�dING/p/. l ULW01l0A-111MIIIIIILMRRrcrc i\MinW NR/lJll11!llm0.. m 12m1}ILDINIIIA�f n,ttoNWIpJJ,+f01pIIMNIbtlA`UhI1 iNk(YENIflfr NYAINFfiOMWIMIWWCI&IlpJmllipllli6 4N01AIMM�flAFl vFM4"I91NI4WYINIINDiYGMVWkAIi@ Illflsn rn'\WYHIS01tin;,N11N1911i1if:Y!MIR DATE: Tuesday, March 18, 2014 REFERENCE NO.: **G-18144 LOG NAME: 17AVIALLAMEND1 SUBJECT: Adopt Resolution Approving Execution of Second Amendment to Economic Incentive Agreement Between City of Irving and Aviall Services, Inc., for Purposes of Tax Revenue Sharing Obligations at Dallas/Fort Worth Airport (NO COUNCIL DISTRICT) RECOMMENDATION: It is recommended that the City Council adopt the attached Resolution approving the Second Amendment to Economic Development Incentive Agreement between the City of Irving and Aviall Services, Inc., for purposes of the City of Irving's tax revenue sharing obligations at Dallas/Fort Worth Airport. DISCUSSION: On December 21, 1998, the City of Fort Worth executed an Interlocal Agreement with the Dallas/Fort Worth (D/FW) Airport Board (the Board), the City of Dallas and the City of Irving (City Secretary Contract No. 24539, as amended by City Secretary Contract No, 24539-A1). This Interlocal Agreement provides that specified tax revenues attributable to property located in the City of Irving's corporate limits within the fence at D/FW Airport (the Irving Airport Property) will be shared between the City of Irving (1/3) and the Cities of Fort Worth and Dallas (2/3 collectively, with that amount divided between the City of Fort Worth [4/11] and the City of Dallas [7/11]). The Interlocal Agreement prohibits the City of Irving from granting tax abatements and other incentives, including economic development grants calculated on the basis of tax receipts that would impact the amount of taxes payable to the Cities of Fort Worth and Dallas under the Interlocal Agreement, without approval by the Cities of Fort Worth, Dallas and the D/FW Board. Effective February 22, 2001, the City of Irving and Aviall Services, Inc. (Aviall), entered into a 10 year Economic Incentive Agreement pursuant to which Aviall agreed to construct an office/warehouse at least 280,000 square feet in size and to provide at least 340 new jobs on Irving Airport Property. In return, as authorized by Chapter 380 of the Texas Local Government Code, the City of Irving agreed to pay Aviall economic development program grants in an amount equal to Aviall's ad valorem personal property taxes that would qualify as Freeport goods under Article VIII, Section 1-j of the Texas Constitution. The City of Irving does not have a Freeport tax exemption. The Fort Worth City Council approved this Agreement pursuant to Resolution No. 2710, as the project's location at D/FW Airport also benefitted the owner cities. Effective September 7, 2006, the term of this Agreement was subsequently extended for an additional 10 year term in return for Aviall's expansion of its facility by approximately 250,000 square feet and construction of a new, approximately 75,000 square foot facility. At the time the Agreement between the City of Irving and Aviall was executed, the Texas Constitution limited goods eligible for a Freeport exemption to commercial inventory destined for out-of-state shipment and held at a location in Texas for less than 175 days. However, a Constitutional Amendment that took effect on January 1, 2014, now allow cities to extend the date by which aircraft parts must be transported outside the State from 175 days to 730 days after the date the aircraft parts were acquired or imported into the State. Logname: 17AVIALLAMEND1 Page 1 oft Aviall and the City of Irving now wish to amend the Economic Incentive Agreement a second time in order to change the definition of"Freeport Goods" in the Agreement to mirror the new definition permitted by the Texas Constitution. Aviall has been an important presence at D/FW Airport, and the Cities of Dallas and the D/FW Airport Board have already approved this Second Amendment. Staff has no objection to the City of Irving's request. FISCAL INFORMATION / CERTIFICATION: 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: Fernando Costa (6122) Originating Department Head: Jay Chapa (5804) Additional Information Contact: Robert Sturns (212-2663) Logname: 17AVIALLAMENDI Page 2 of 2