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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.