HomeMy WebLinkAboutLetter from Petty and AssociatesTom Brymer, Town Manager
#3 Village Circle, Suite 202
Westlake, Texas 76262
September 22, 2010
Dear Tom,
It has been my pleasure to assist with the preparation and negotiation of an economic
development incentive plan to relocate the corporate headquarters of Solera Holdings from San
Diego, California to the Town of Westlake. Solera Holdings, Inc. (NYSE: SLH) is the leading
global provider of software and services to the automobile insurance claims processing
industry. Like all corporate relocations, Westlake had to compete against other cities that were
equally thrilled at the prospect of attracting this incredible company to Texas. i am happy to
report that once again, Westlake has prevailed.
During these negotiations, we had the pleasure to meet and visit with Solera's founder, Tony
Aquilla, a refreshing and dynamic entrepreneur and true American success story. Tony began
his career sweeping floors in his uncle's auto body shop and is now the CEO of a global
corporation located in over SO countries with annual revenues over $631 million. Listening to
Tony and getting to know a few of his key staff over the last few weeks, I can say without a
doubt that Solera promises to be an incredible corporate partner that the Town is fortunate to
be able to welcome.
The economic development incentive plan, summarized in the MOU before the Board of
Aldermen, represents a conservative and reasonable agreement to relocate the Solera
headquarters to the Westlake Solana campus. The mechanism for the agreement is a Chapter
380 Sales and Use Tax sharing agreement of which the Town is abundantly familiar. The 3 year
term is intentionally short in order to give Solera the opportunity to establish their base and
begin moving corporate staff to Westlake. The agreement is designed to have significant
mutual upside based on the growth of sales situs in Westlake. It will take time for Solera to
identify and analyze those opportunities on a location by location basis in a manner that
reflects the company's values while still improving earnings.
It is important to note that even though the term is short, Solera is willing to commit to
increasing the minimum threshold for reimbursement in each of the three years of the initial
agreement. It is the intent of Solera and the Town to renegotiate the agreement before the
end of the three year term in a manner that reflects three basic principles embedded in this
first agreement.
Sales Tax Growth - Solera commits to an annual increase of the minimum threshold that
qualifies for reimbursement. The first year establishes a $5 million minimum taxable sales
volume below which the Town will reimburse nothing. The second year that figure grows to
$6.5 million and the third year it grows to $8 million.
Performance Driven - The greater the sales taxable volume, the higher percentage that qualifies
for reimbursement. The lesser the volume, the lesser the reimbursement, designed in a
manner that stair steps each year to the benefit of the Town.
Capped Sharing —The most Westlake will share under the current agreement is 50% of total
sales taxes collected. These are new revenues to the town that are not accompanied by
additional demands for service since Solera will be occupying vacant space in Solana.
Solera Holdings, Inc. will be a wonderful new corporate partner in Westlake. The company is
founded and operated on conservative business principles aligned with traditional core values
and executed by a creative and talented staff that is committed to becoming a part of the
community. I whole heartedly recommend approval of the Memorandum of Understanding
with Solera Holdings by the Board of Aldermen to be followed by a contract executed by the
Town Manager. I appreciate the opportunity to assist the Town with this important new
partner and look forward to observing their continued growth and success.
Sincerely,
11_�
Trent Petty
Petty & Associates, Inc.