R-1150-12-92RESOLUTION NO. 1150-12-92(R)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, AUTHORIZING THE MAYOR OF THE CITY OF ALLEN
TO EXECUTE A CONTRACT WITH TRW, INC.
WHEREAS, in order to maintain and/or enhance the industrial economic and employment
base of the Allen community; and,
WHEREAS, the City of Allen has adopted Resolution No. 1013-12-90 (R) and 1139-10-92
(R) stating that it elects to be eligible to participate in tax abatement; and,
WHEREAS, on the 5th day of November, 1992, the City Council of the City of Allen,
Texas, adopted Ordinance No. 1143-11-92 establishing reinvestment Zone No. Two, City
of Allen, Texas for industrial tax abatement, as authorized by Chapter 312 of the Texas
Tax Code;
NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ALLEN,
COLLIN COUNTY, TEXAS THAT: The Mayor of the City of Allen is hereby authorized
to execute a contract between the City and TRW Inc. to abate ad valorem taxes effective
December 17, 1992.
DULY PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF
ALLEN, TEXAS, ON THE 17TH DAY OF DECEMBER, 1992.
APPROVED:
r
. GAP
Farmer, MAYOR
ATTEST:
JuAy Moblrison, CITY SECRETARY
AD VALOREM TAX ABATEMENT
AND SALES TAX REBATE AGREEMENT
This Agreement is entered into by and between the City of Allen, Texas ("Allen"),
a Texas home rule municipal corporation of Collin County, Texas; the Allen Independent
School District ("the DISTRICT'); and the Allen Economic Development Corporation
("AEDC"), sometime hereinafter collectively referred to as TAXING UNITS; and TRW Inc.
("TRW")
WHEREAS, ALLEN represents that on the 5th day of November, 1992, the Allen
City Council adopted Ordinance No. 1143-11-92 which established Reinvestment Zone
No. 2 in the City of Allen, ,Texas for commercial/industrial tax abatement, hereinafter
referred to as the ORDINANCE, as authorized by the Property Redevelopment and Tax
Abatement Act (§312.001 et seq of the Texas Tax Code), as amended, hereinafter
referred to as the ACT;
WHEREAS, ALLEN represents that ALLEN has adopted a Tax Abatement Policy
(the "POLICY STATEMENT");
WHEREAS, ALLEN represents that the POLICY STATEMENT constitutes
appropriate guidelines and criteria governing tax abatement agreements to be entered
into by ALLEN as contemplated by the ACT;
WHEREAS, the TAXING UNITS represent that this Agreement is made in order
to maintain and enhance the economic and employment base of Allen for the long term
interest and benefit of the TAXING UNITS;
TAX ABATEMENT AGREEMENT - TRW - Page 1
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WHEREAS, TRW represents that as consideration for this Agreement, TRW will
tease or purchase the PREMISES and cause certain improvements to be constructed
thereon;
WHEREAS, TRW represents that as consideration for this Agreement, TRW will
move, deliver or transfer to the PREMISES substantial tangible personal property as
defined herein;
WHEREAS, TRW represents that it presently intends to use the PREMISES forthe
operation of its Information Systems & Services division's principal data center in
connection with its consumer credit operations for a minimum of fifteen (15) years. The
parties acknowledge that other business operations may be relocated to this location at
some future date, and that TRW shall not be limited to the use or type of operations to
be added, so long as such use is consistent with local codes, ordinances and zoning.
WHEREAS, TRW represents that as consideration for this Agreement, TRW
presently intends to ultimately employ eight hundred (800) to nine hundred (900)
employees on the PREMISES; and
WHEREAS, the TAXING UNITS represent that the contemplated use as stated
herein of the PREMISES, together with the contemplated improvements to the
PREMISES are consistent with the purpose of the Reinvestment Zone, the intent of the
POLICY STATEMENT and all applicable law;
NOW THEREFORE, the parties hereto mutually agree as follows:
TAX ABATEMENT AGREEMENT - TRW - Page 2
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PREMISES TO BE IMPROVED
1. The real property and improvements thereon to be the subject of this
Agreement shall be that property as described EXHIBIT "A" and made a part hereof and
shall be hereinafter referred to as the PREMISES.
IMPROVEMENTS TO BE MADE
2. TRW will, construct (or cause to be constructed) improvements to the
PREMISES of a value of Ten Million Dollars ($10,000,000). The improvements are
generally described as follows: those finishes and construction items including raised
computer flooring, mechanical and electrical systems, as well as backup generators as
may be required to complete a data center. Also sheetrock walls and wall finishes, doors,
ceiling grid and tile, carpet and other floor coverings, plus additional mechanical electrical
and lighting systems to meet TRW's office requirement and more fully described in the
submittals filed by TRW with ALLEN from time to time in order to obtain a building
permit(s) ("the IMPROVEMENTS")
TIME FOR CONSTRUCTION OF IMPROVEMENTS
AND USE THEREOF
3. TRW shall commence construction of the IMPROVEMENTS on the
PREMISES, which IMPROVEMENTS shall be substantially completed on or before June
1, 1994 . An extension of time to complete the IMPROVEMENTS may be granted by
ALLEN upon the request of TRW, which approval will not be unreasonably withheld. In
addition, TRW shall have such additional time to complete the IMPROVEMENTS as may
be required if TRW is diligently pursuing completion of the IMPROVEMENTS and is
TAX ABATEMENT AGREEMENT - TRW - Page 3
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prevented from timely completion by an event of "force majeure." For the purpose of this
Agreement, "force majeure" shall mean a contingency or cause beyond the reasonable
control of TRW including, without limitation, acts of God, war, riot, civil commotion,
insurrection, governmental or de facto governmental action (unless caused by acts or
omissions of (TRW), fire, explosion, flood, or strikes. The date of substantial completion
of the IMPROVEMENTS shall be defined as the date a Certificate of Occupancy is issued
for the IMPROVEMENTS by ALLEN.
4. TRW represents that it is or will be contractually liable to directly pay the ad
valorem tax on the PREMISES and the tangible personal property located thereon
("T.P.P.") whether the PREMISES and the T.P.P. are owned in fee or leased. On or
before the 1 st day of September, 1993 and each September first (1 st) for each year of
this Agreement, TRW shall upon written request, provide the Collin County Appraisal
District with satisfactory evidence of TRW's legal obligation to pay the ad valorem taxes
abated herein. TRW shall thereafter, from the date of Certificate of Occupancy is issued
until December 31, 2003 operate and maintain the PREMISES as its Information Systems
& Services division's principal data center in connection with its consumer credit
operations.
TANGIBLE PERSONAL PROPERTY
5. TRW agrees that on or before June 1, 1994 (such date being subject to
extension on the same basis as provided in Section 3 above) it will move, transfer or
otherwise deliver T.P.P. (i.e., computers, telecommunications and associated equipment,
furniture, fixtures, and other personal property) to the Premises which shall have a taxable
TAX ABATEMENT AGREEMENT - TRW - Page 4
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value, as shown on the books and records of the applicable taxing authority which when
aggregated with the taxable value of the PREMISES as shown on the books and records
of the applicable taxing authority, shall total at least Twenty Five Million Dollars
($25,000,000). TRW further agrees that the combined taxable value of the T.P.P. and
the Premises shall equal at least Twenty Five Million dollars ($25,000,000) as of the first
day of each calendar year, thereafter through calendar year December 31, 2003. TRW
further agrees that as consideration for the tax abatement granted herein, that for each
of five (5) calendar years 2004 through 2008, it shall be obligated to pay ad valorem
taxes on PREMISES and T.P.P. based upon combined taxable value of no less than
$25,000,000 - i.e. if combined taxable value of the PREMISES and T.P.P. for any such
year shall be less than $25,000,000, TRW's tax obligations shall be nonetheless
calculated on a base of $25,000,000 in valuation for such year. TRW represents that the
Real Property and T.P.P. is essential and necessary for the performance of the services
that it provides to its customers and its clients.
GRANT OF TAX ABATEMENT
6. Subject to the terms and conditions of this Agreement, and subject to the
rights of holders of any outstanding bonds of the TAXING UNITS, a portion of ad valorem
taxes on the Premises and on the T.P.P. located on the Premises otherwise due the
TAXING UNITS above the $25,000,000 base relative to the ten tax years commencing
with the tax year 1994 shall be abated in accordance with the schedule and values listed
on Exhibit B attached hereto and made a part hereof. The tax rates will change from
year to year, and the amount of tax paid and abated shall be in accordance to that given
TAX ABATEMENT AGREEMENT - TRW - Page 5
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year's prevailing tax rate and assessed value. TRW shall have the right to protest or
contest any assessment on the Premises or the T.P.P. and any abatement shall be
applied to the amount of taxes finally determined to be due as a result of any such or
protest or contest. The TAXING UNITS each represent that, both as of the execution of
this Agreement and during the term hereof neither the abatement provided in this Section
6 nor the rebate provided in Section 7 will cause the TAXING UNITS to violate any
covenants to their bond holders or cause the TAXING UNITS to be in default on any of
their bonded indebtedness.
7. ALLEN levies a general one percent (1%) sales and use tax pursuant to
Chapter 321 of the Texas Tax Code and a one-half percent (.5%) sales tax for economic
development pursuant to the Development Corporation Act of 1979 (Tex. Rev. Civ. Stat.
art. 5190.6) ALLEN has incorporated the Allen Economic Development Corporation.
Based on the representations and covenants of TRW contained herein TRW is eligible
and AEDC agrees to rebate annually fifty percent (50%) of 1.5% (or 0.75 percent) of the
local sales and use tax revenue or any other tax generally considered sales and use tax
resulting from sales or taxes on purchases generated by TRW's operations on the
PREMISES including any remodeling tax paid by TRW relative to the ten calendar year
period commencing with calendar year, January 1, 1993. In no event, however, shall the
rebate be less than Seventy Five Thousand Dollars ($75,000) per year or exceed One
Hundred Fifty Thousand Dollars ($150,000) per year. TAXING UNITS shall have no
obligation to rebate local sales and use tax revenue prior to the receipt of the taxes to be
rebated from the Texas Comptroller and receipt of sales tax reports that TRW has filed
with the State of Texas identifying sales generated by TRW's operations on the
TAX ABATEMENT AGREEMENT - TRW - Page 6
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PREMISES and proof of purchase or remodel by TRW subject to ALLEN'S jurisdiction,
but in any event the AEDC shall make such rebate within 120 days thereafter. In the
event TRW has not received a rebate of sales and use taxes and or remodeling taxes in
the aggregate amount of $1,500,000 by the end of the tenth year, then the rebate of
sales and use taxes and/or remodeling taxes shall continue on the same terms and
conditions as provided in this section until TRW has received a total rebate of sales and
use and or remodeling taxes in the amount of $1,500,000 with the exception that after
such ten calendar year period the $75,000 guarantee shall be deleted and TRW shall
receive rebate based on receiving an annual fifty percent (50%) rebate of the local sales
and use tax revenue including any sale or purchase generated by TRW as well as any
remodel tax for construction in that given year. In the event, TRW assigns or transfers
all of its interest as outlined in Section 10 Item D of this Agreement, the $75,000
guarantee shall be deleted and such assignee shall receive such rebate as outlined
above.
In any event, AEDC's obligation to rebate sales taxes herein shall not extend
beyond taxes paid relative to the year ending December 31, 2007.
EVENTS OF DEFAULT
8. In the event that TRW breaches any of the obligations of this Agreement
or allows the Ad Valorem taxes due the TAXING UNITS to become delinquent, then TRW
shall be deemed to be in default. In the event of default, ALLEN shall give TRW written
notice of such default. TRW shall have ninety (90) days of said written notice to cure the
default. If TRW fails to cure the default within the ninety (90) day cure period, then this
TAX ABATEMENT AGREEMENT - TRW - Page 7
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Agreement may be terminated by the TAXING UNITS. Notice shall be in writing and shall
be delivered in accordance with the Notice Provisions of this Agreement.
PAYMENT OF ABATED TAXES
9. The parties acknowledge that actual losses to be incurred by the TAXING
UNITS in the event of a default by TRW of its obligations hereunder (and its failure to
cure such default as provided above) and termination of this Agreement by the TAXING
UNITS will be substantial. Therefore, in the event of any such default, failure to cure, and
termination, TAXING UNITS shall be entitled to receive payment from TRW of all ad
valorem real and personal property taxes which otherwise would have been paid to the
TAXING UNITS without the benefit of the abatement provided in Section 6 above.
Payment of those taxes payable to the TAXING UNITS shall, if TRW or its successors
or assigns are the owner of the Premises or Tangible Personal Property, be secured by
a tax lien on the Premises and/or Tangible Personal Property. Such taxes shall be paid
to the TAXING UNITS within ninety (90) days after the expiration of the cure period
provided in Section 8 above. The TAXING UNITS may use any legal and lawful process
or procedure to collect such taxes. Payment of these taxes shall be in lieu of any other
damages payable by TRW as a result of any default under this Agreement.
Notwithstanding the foregoing, however, in the event such default and failure to cure shall
occur on or after, January 1, 2003, TAXING UNITS shall not be entitled to receive the
foregoing payment or any damages from TRW, and TAXING UNIT'S sole remedy shall
be to terminate this AGREEMENT and the future right to TRW to receive any further
benefits; it being understood that in the event TRW should fail to comply with TRW's
TAX ABATEMENT AGREEMENT - TRW - Page 8
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obligation to pay taxes based upon a $25,000,000 value of the PREMISES and the T.P.P.
as contained in the second to the last sentence of Section 5, the TAXING UNITS shall
be entitles to damages in an amount the parties agree or as determined by a Court of
competent jurisdiction.
ASSIGNMENT
10. The terms and conditions of this Agreement are binding upon the
successors and assigns of all parties hereto. This Agreement cannot be assigned by
TRW unless written permission is first granted by ALLEN, which permission shall be as
the sole discretion of ALLEN; provided however, that no such permission shall be
required in any of the following cases:
A. Assignment or transfer to a wholly owned direct or indirect subsidiary
of TRW;
B. Assignment by the owner of the PREMISES to TRW;
C. If TRW initially owns the Premises, a sale of the Premises by TRW
to a third party, provided, however, that TRW shall lease back the PREMISES
and shall continue to conduct business on the subject PREMISES as agreed
herein, or;
D. Assignment by TRW in connection with the assignment or transfer
of all of TRW's interest in the Premises to any purchaser of all or substantially all
of the assets of TRW utilized in connection with the activities or to be conducted
on the Premises i.e. data center and consumer credit operations.
TAX ABATEMENT AGREEMENT - TRW - Page 9
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INDEPENDENT RELATIONSHIP
11. It is understood and agreed between the parties that TRW, in performing
its obligations hereunder, is acting independently, and the TAXING UNITS assume no
responsibilities or liabilities in connection therewith to third parties. In the event a breach
of this Agreement by TRW or lack of authority on the part of TRW causes a claim against
the TAXING UNITS by a third party, TRW agrees to indemnify and hold the TAXING
UNITS harmless from any and all damages resulting therefore including reasonable
defense costs and reasonable attorney's fees. It is further understood and agreed among
the parties that the TAXING UNITS, in performing their obligations hereunder, are each
acting independently, and that the TRW assumes no responsibilities or liabilities in
connection therewith to third parties. In the event a breach of this Agreement by any of
the TAXING UNITS or lack of authority on the part of any of the TAXING UNITS causes
a claim against the TRW by a third party, TAXING UNITS agree to indemnify and hold
TRW harmless from any and all damages resulting therefore including reasonable
defense costs and reasonable attorney's fees.
12. TRW further agrees that ALLEN, their agents and employees, shall have
reasonable right of access to the PREMISES during regular business hours to inspect the
IMPROVEMENTS and T.P.P. in order to insure compliance with this Agreement and all
applicable state and local laws and regulations or valid waiver thereof. After completion
of the IMPROVEMENTS and delivery of the T.P.P.,. the TAXING UNITS shall have the
continuing right, subject to TRW's reasonable security requirements, to inspect the
PREMISES to insure that the PREMISES during regular business hours are thereafter
TAX ABATEMENT AGREEMENT - TRW - Page 10
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maintained and operated in accordance with this Agreement.
AUTHORIZATIONS
13. This Agreement was authorized by Resolution of the Allen City Council at
its council meeting on the nth day of December, 1992, authorizing the City Manager to
execute the Agreement on behalf of ALLEN.
14. This Agreement was authorized by the Board Minutes of the Allen
independent School District at its Board of Trustees meeting on the 14th day of
December, 1992, whereupon it was duly determined that the Board President would
execute the Agreement on behalf of the Allen Independent School District.
14A. This Agreement was authorized by the Board Minutes of the AEDC at its
Board on the 9th day of December, 1992, where upon it was duly determined that the
Board President would execute the Agreement on behalf of the AEDC.
15. This Agreement was entered into by Information Systems & Services
pursuant to authority granted to its Executive Vice President and General Manager, D.
Van Skilling authorized to execute this Agreement on behalf of TRW.
MISCELLANEOUS
16. ALLEN and the TAXING UNITS each represent and warrant that the
PREMISES do not include any property that is owned by an individual member of their
respective councils or boards, agencies, commissions, or other governmental bodies
approving, or having responsibility of the approval of this Agreement.
17. TRW agrees that it will endeavor (but shall not be obligated) to make the
Premises the point of sale for any materials and equipment purchased by TRW for use
TAX ABATEMENT AGREEMENT - TRW - Page 11
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on the Premises.
The parties further agree as follows:
A. This Agreement, including the recitals herein and its Exhibits, constitute the
entire Agreement and understanding between the parties hereto, and supersede
to any prior or contemporaneous oral or written agreement and understanding
relating to the subject matter of this Agreement. This Agreement and its Exhibits
may be modified or amended only by a duly authorized written instrument
executed by the parties hereto;
B. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and all of which together
shall constitute but one and the same instrument. It shall not be necessary that
any single counterpart hereof be executed by all parties hereto so long as at least
one counterpart is executed by each party;
C. This Agreement and the rights and obligation of parties hereunder, is
contingent upon TRW's lease or purchase of the Premises. In the event that TRW
does not become the owner of the PREMISES, then this AGREEMENT shall not
become effective until the owner of the PREMISES has executed an appropriate
joinder to this AGREEMENT.
D. Any notice or communication required or permitted hereunder shall be
sufficiently given if personally delivered or if sent by registered or certified mail,
return receipt requested, postage and fees prepaid to:
TAX ABATEMENT AGREEMENT - TRW - Page 12
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(1) City of Allen City Manager
City of Allen
One Butler Circle
Allen, Texas 75002
(2) Allen Independent
Superintendent of Schools
School District
Allen Independent School Dist.
P.O. Box 13
Allen, Texas 75002
(3) Allen Economics
AEDC Director
Development Corp.
Allen Economic
Development Corp.
One Butler Circle
Allen, Texas 75002
Copy to:
Attorney of Record
Allen Economic Development
Corporation
One Butler Circle
Allen, Texas 75002
(4) TRW Inc.
TRW Inc.
Director of Real Estate
and Administration
500 City Parkway West
Orange, CA 92668
Copy to: TRW, Inc.
Vice President - Law
1900 Richmond Road
4 West
Cleveland, Ohio 44236
D. All warranties, covenants, and representations shall survive the execution
of this Agreement. The parties hereto in executing, and in carrying out the
provisions of this Agreement, are relying solely on the representations, warranties,
TAX ABATEMENT AGREEMENT - TRW - Page 13
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and agreements contained in this Agreement or in any writing delivered pursuant
to provisions of this Agreement herein provided for and not upon any
representation, warranty, agreement, promise or information, written or oral, made
any person than as specifically setforth herein or therein; and
E. This Agreement shall be construed in accordance with the laws of the State
of Texas and is performable in Collin County, Texas.
EXECUTED on the /d day of 4 , 1992.
ATTEST:
JLAy Mor & on, City Secretary
CITY OF ALLEN, TEXAS
e Farmer, Mayor
EXECUTED on the /F'`¢ day of �� , 1992.
ATTEST:
Mary Evan Board Secretary
ALLEN INDEPENDENT SCHOOL
DISTRICT
/" dM It"If"
lenn Andrew, Board President
TAX ABATEMENT AGREEMENT - TRW - Page 14
Revised 12/17/92
EXECUTED on the day of 31992.
ATTEST:
Jagaves L. Brazeal, CorporateSdbretary
ALLEN ECONOMIC DEVELOPMENT
CORT N
—�Z�4 L" '.'4
F. Vern Lahart, President
EXECUTED on the 21 S�day of 1992.
ATTEST:
TRW INC.
Van Skilling,
xecutive Vice President &
General Manager
Information Systems & Services
TAX ABATEMENT AGREEMENT - TRW - Page 15
Revised 12/17/92
LEGAL DESCRIPTION
BEING all that tract of land in the City of Allen, Collin County, Texas, a part of the
MICHAEL SEE SURVEY, ABSTRACT NO. 543, a part of the W.M. PERRIN SURVEY,
ABSTRACT NO. 708, a part of the RUFUS SEWELL SURVEY, ABSTRACT NO. 875, and
being all of Lot 1 and Lot 2, Block 1 of the Replat of Enterprises Addition No. 1 as recorded
in Cabinet C, Page 567, and being all of Lot 1, Block 1 of Enterprises Addition No. 2 as
recorded in Cabinet G, Page 457, Collin County Plat Records.
-1-
CAKOLUOENERAURMCOMAV7
EXHIBIT "B"
SCHEDULE OF TAX ABATEMENT ON THE
IMPROVEMENTS AND TANGIBLE PERSONAL PROPERTY
AS IDENTIFIED IN THE AGREEMENT
Ad valorem taxes on real and tangible personal property in excess of Twenty five million
dollars ($25,000,000) of real and personal property based on the certified tax role of the
TAXING UNITS 1991-1992 fiscal year shall be abated in accordance to the following
schedule:
Year
Ad Valorem tax
Ad Valorem tax
Abated to TRW
Paid to Allen (City & School)
1994
100%
0%
1995
100%
0%
1996
80%
20%
1997
80%
20%
1998
60%
40%
1999
60%
40%
2000
40%
60%
2001
40%
60%
2002
20%
80%
2003
20%
80%