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HomeMy WebLinkAboutSolera Memorandum of Understanding Town of Westlake September 16, 2010 Mitchell Greenhill,Vice President-Tax Solera Holdings,Inc. 15030 Avenue of Science, Suite 100 San Diego, CA 92128 Dear Mr. Greenhill: The Town of Westlake ("Westlake") is pleased to be able to work with you and Janice Peters to bring Solera to Westlake. Please accept this letter as our proposal, and Memorandum of Understanding ("MOU"), to make Solera a part of our very special community and illustrate what sets Westlake apart from the competition. We hope that you will agree with world class partners like Fidelity Investments, First American Corporation, CoreLogic, Chrysler Financial, Deloitte University and many others that have chosen Westlake as their corporate home and community partner. Westlake has taken bold and dramatic steps over the last decade to become the most attractive corporate campus location in Texas. The reason our efforts have been so successful is simple: we offer competitive economic incentives; then we devote our efforts to delivering a unique environment and location. So whether it is to conduct business, live, or raise a family, Westlake is first among any community in America. Community Benefits Located less than 15 minutes from both the DFW Airport and Alliance Airport, Westlake offers the unique combination of rural feel and friendly, small town Texas, with the dynamic appeal of the DFW metroplex. Westlake takes full advantage of both by offering a rich, family-style quality of life that is characterized by world class education opportunities; carefully master planned developments; and beautiful, protected open space that is enjoyed daily by residents and corporate employees. Whether it is to live, attend school, go to work, or just relax with friends, Westlake is an inviting master planned community protected from the noise and traffic which typically punctuates corporate life. Westlake affords the corporate employee or executive the luxury of two worlds: the convenience of a 5 minute drive to work and the ability to live and enjoy the wonderful quality of life of a small community. Additionally, adjacent communities such as Keller, Southlake, Trophy Club, Fort Worth, and Roanoke offer a wide variety of housing choices and price points for Solera's employees, all within a short commute. 3 Village Circle,Suite 202♦Westlake,Texas 76262 Metro:817-430-0941•Fax:817-430-1812•www.westlake-ex.org Community Partnership Westlake greatly values the public-private partnerships that have been forged with our corporate stakeholders. One facet of that partnership is our willingness to enhance the reasons to move to Westlake with local financial incentives for select businesses. By executing this non-binding MOU, Westlake is prepared to enter into negotiations for an economic development agreement with Solera to offer the following: Sales and Use Tax Chapter 380 of the Texas Local Government Code ("Chapter 380") authorizes municipalities to administer programs, including programs for making loans and grants of public money and providing personnel and services of the municipality, to promote economic development. Westlake has significant experience using Chapter 380 in a manner that is both mutually rewarding and relatively simple to administer. As you are aware, Westlake has adopted the 4B sales tax (now called Type B) provision of the Economic Development Corporation Act of 1979, now codified in Chapters 501-505 of the Texas Local Government Code. This additional sales tax is specifically authorized to provide economic incentives to businesses such as Solera. In addition, Westlake voters have approved an additional %z cent sales tax to reduce property taxes (formerly the 4A economic development sales tax, and referred to herein as the"PRT"). These two taxes, combined with the standard 1% sales tax collected by all Texas municipalities creates a 2% sales and use tax for Westlake. We propose that Westlake and Solera enter into negotiations for a Chapter 380 economic development agreement that provides meaningful incentives to Solera to grow its business and, if possible,relocate as much of your existing sales as possible to a Westlake point of sale. As such, Westlake will offer Solera a sales tax reimbursement agreement to extend for a period of three (3) years. Although the term of this agreement is to be three (3) years, it is intended that the agreement shall be extended on the mutual agreement of the parties and that Solera shall continue to reevaluate any opportunities to grow and relocate as much of its existing sales as possible to a Westlake point of sale as such growth and relocations shall be beneficial to both parties. You have concluded that the amount of Solera's taxable sales volume subject to Westlake sales and use taxes that Solera can commit to at this time would be $5,000,000 in the first full year of operations. Westlake will agree to negotiate an economic development agreement, subject to Town Council approval, according to the following terms regarding the sharing of Westlake's municipal sales and use taxes collected and paid by Solera to the State of Texas ComptroIler's Office as follows: • Year One- Westlake would agree to reimburse 25% of all sales tax collected in the first year provided the taxable sales revenues (calculated following the first full year of operation based on the Town's fiscal year, October 1 through September 30) are equal to or exceeds $5,000,000. Westlake would agree to reimburse 25% of all sales taxes collected on the taxable sales revenues in excess of$5,000,000 but less than$8,000,000. Page 2 of 4 The sales tax collected on the taxable sales revenues of $8,000,000, plus anything received over the$8,000,000, would be reimbursed at a rate of 50%. If the taxable sales revenues do not equal $5,000,000 in this first full year of operation, then no reimbursement would occur. • Year Two- Westlake would agree to reimburse 25% of all sales tax collected in the second year provided the taxable sales revenues are equal to or exceeds $6,500,000. Westlake would agree to reimburse 25% of all sales taxes collected on the taxable sales revenues equal to or in excess of$6,500,000 but less than $8,000,000. Following the second year, Solera would need to generate $8,000,000 annually in revenues subject to Westlake sales and use taxes in order to receive a 50% reimbursement, The sales taxes on the entire $8,000,000, plus anything received over the $8,000,000, would be reimbursed at the 50% rate. Taxable sales revenues under $6,500,000 would not be subject to reimbursement. • Year Three- Westlake would agree to reimburse 50% of all sales tax collected in the third year provided the taxable sales revenues are equal to or exceeds $8,000,000. Following the third year, Solera would need to generate $8,000,000 annually in revenues subject to Westlake sales and use taxes in order to receive a 50% reimbursement. The sales taxes on the entire $8,000,000, plus anything received over the $8,000,000, would be reimbursed at the 50% rate. Taxable sales revenues under $8,000,000 would not be subject to reimbursement. Westlake proposes the term of the agreement to be three (3) years with provisions for extension based on the mutual agreement of the parties. The term will begin on the date of execution of the contract. Sales tax collected from Solera will be collected and accounted for in a manner that allows the Town and Solera to mutually verify receipts. In order to determine the eligible reimbursement on sales taxes received during the first partial fiscal year,the Town will account for all the sales tax received for each month beginning on the first date of receipt and ending with the last receipt from the Comptroller occurring before the end of the Town's fiscal year, September 31,2011. Solera will be eligible for a reimbursement in the first partial year provided the Town's sales tax collections are equal to or exceed 1/12 of the volume required under the terms for year one, multiplied by the number of months of receipt. It is the intent of the Town to work closely with Solera over the three years of this agreement to explore future opportunities to increase Solera's presence in Westlake and encourage Solera's growth and prosperity. Real Estate Westlake has an excellent working relationship with all commercial property owners in the town and will work closely with each in order to encourage a competitive real estate deal whether it is lease space or new construction. Additionally, Westlake utilizes a streamlined development process in which entitlements can be quickly reviewed and approved within the zoning already established in the various Planned Developments supporting commercial uses. In other words, Page 3 of 4 Westlake actually has what many other cities can only claim - a true "one stop shop" for expeditious development review and permitting. Westlake stands ready to immediately begin drafting documents in order to bring the Solera relocation to fruition. Westlake is very proud to be considered for the corporate relocation of Solera. The terms and conditions of this proposed agreement would be subject to Town Council approval. We are confident that the financial incentives and assistance offered herein, combined with the quality of life that has attracted so many Fortune 500 companies to Westlake, represent an outstanding invitation to Solera. We are more than happy to visit personally with the site selection team and interface with potential property owners to help facilitate this transaction. I will gladly provide further information as necessary and look forward to hearing from you soon. If you agree to commence negotiation of a comprehensive economic development agreement containing the deal points contained in this MOU, please indicate by executing in the space below. Sincerely, 7-------- ,e// ;NW (rtei ay Thomas E. Br r Town Manager AGREED: By: A4--e-- 2,41,11- Mitchell Greenhill Vice President,Tax Solera Holdings, Inc Cc: Laura Wheat,Mayor Town of Westlake Janice Peters,Principal Hudson Peters Commercial Trent Petty,President Petty&Associates,Inc. L. Stanton Lowry Town Attorney Page 4 of 4