An ordinance authorizing The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County to negotiate and accept payments in lieu of ad valorem taxes with respect to Keystone Automotive Industries, Inc.
WHEREAS, The Metropolitan Government of Nashville and Davidson County (hereafter referred to as "Metropolitan Government") is vitally interested in the economic welfare of its citizens and wishes to provide the necessary leadership to enhance this area's capabilities for growth and development; and,
WHEREAS, the provision of jobs to area citizens by local business is both necessary and vital to the economic well-being of the Metropolitan Government; and,
WHEREAS, pursuant to the Industrial Development Corporations Act, currently codified at Tenn. Code Ann. §§ 7-53-101 through 314 (such act, as heretofore or hereafter amended, the "Act"), the General Assembly of the State of Tennessee (the "General Assembly") has authorized the incorporation of public corporations known as "industrial development boards" in municipalities in the State of Tennessee (the "State"); and,
WHEREAS, The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County (the "Board") has been duly organized and incorporated in compliance with the Act; and,
WHEREAS, the General Assembly has found and declared that the Board is performing a public function on behalf of the Metropolitan Government and that the Board is a public instrumentality of the Metropolitan Government; and,
WHEREAS, the Supreme Court of Tennessee (the "Supreme Court") has found that the Board is an agency or instrumentality of the Metropolitan Government; and,
WHEREAS, the Act expressly incorporates by reference the statement of public policy set forth in Section 3 of Chapter 209 of the Public Acts of 1955; and,
WHEREAS, Chapter 209 of the Public Acts of 1955 states that the declared purpose of the Act is to do that which the State welfare demands and that which the State public policy requires to alleviate the problems of unemployment, to raise family income, to provide a means by which the citizens of the community may promote and develop industry in their area so as to obtain a balanced economic development highly essential to the welfare of the State, and to promote the development of commercial, industrial, agricultural and manufacturing enterprises by the several municipalities so as to be given local benefits peculiar to each and general benefits to the entire State; and,
WHEREAS, the General Assembly also has declared that the purposes of the Act include maintaining and increasing employment opportunities by promoting industry, trade, and commerce by inducing manufacturing, industrial, financial, service, and commercial enterprises to locate or remain in the State; and,
WHEREAS, the Supreme Court has held that the purposes of the Act includes the promotion of industry and the development of trade to provide against low wages and unemployment and that such purposes are public in nature; and,
WHEREAS, the Board is empowered pursuant to the Act to acquire, whether by purchase, exchange, gift, lease or otherwise, and to improve, maintain, equip and furnish, "projects" (as defined in the Act), and to lease such projects to others; and,
WHEREAS, Keystone Automotive Industries, Inc. (“Keystone”), is planning to cause KP Nashville, LLC (“Developer”) to construct an office building (the “Office Building”) 5846 Crossings Boulevard, in Antioch, Tennessee, for its North American support headquarters; and,
WHEREAS, the Office Building is anticipated to consist of approximately 103,955 square feet, to be completed in 2018 (the “Project”); and,
WHEREAS, the Project represents an anticipated capital investment of approximately $27,250,000 in real property and in the Office Building; and,
WHEREAS, Keystone expects the capital expenditures on the Project within the boundaries of the Metropolitan Government to provide significant employment and other commercial opportunities for area citizens; and,
WHEREAS, pursuant to Tenn. Code Ann. § 7-53-305, all properties owned by the Board are exempt from ad valorem taxation in the State of Tennessee; and,
WHEREAS, pursuant to Tenn. Code Ann. § 7-53-305(b), the Metropolitan County Council (the "Council") has the power to delegate to the Board the authority to negotiate and accept from its lessees payments in lieu of ad valorem taxes, provided that such payments are in furtherance of the Board's public purposes; and,
WHEREAS, the benefits to the Metropolitan Government of the location of the Project within the boundaries of the Metropolitan Government (“Metro”), and in exercise of its powers above, will provide an opportunity for the Board to acquire, by purchase, exchange, gift or lease, property that will be used with respect to the Project, to lease that property to Developer, which shall sublease the Project to Keystone, and to enter into one or more agreements with Keystone to accept payments in lieu of ad valorem taxes with respect to the property; and,
WHEREAS, the Board may only negotiate and accept payments in lieu of ad valorem taxes with authorization from the Council; and
WHEREAS, it is in the interest and welfare of the citizens of the Metropolitan Government to delegate authority to the Board to negotiate and execute a payment-in-lieu-of-tax agreement with Keystone.
NOW, THEREFORE, BE IT ENACTED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY:
Section 1: That the Council of the Metropolitan Government finds that the Board's acceptance of payments in lieu of ad valorem taxes with respect to the Project is in furtherance of the Board's public purpose of maintaining and increasing employment opportunities, as set forth in Tenn. Code Ann. § 7-53-102, and the other public purposes described above.
Section 2: That the Metropolitan Government hereby delegates to the Board the authority to negotiate and accept payments in lieu of all real property taxes with respect to the Project for a period beginning on the date that the Board enters into a lease with Keystone with respect to the Project and ending on December 31, 2023. The amount of the payment in lieu of property tax (the “In Lieu of Tax Payment”) that shall be required with respect to each year under such arrangement shall be as follows: (a) 100% of the Applicable Ad Valorem Taxes from the date of the lease through the day before the completion of the construction of the Project (“Company Occupancy Date”);(b) an amount equal to (i) the 2015 calendar year taxes assessed on the real property of the Project (the “Base Tax Amount”), plus (ii) forty percent (40%) of the amount that the Applicable Ad Valorem Tax exceeds the 2015 calendar year taxes assessed on the real property of the Project, for the period from the Company Occupancy Date though December 31, 2023; and (c) 100% of the Applicable Ad Valorem Taxes thereafter. If any portion of the Office Building is leased or subleased to a Non-Company Entity, then with respect to the period beginning on the effective date of the lease or sublease to a Non-Company Entity and ending on the earlier of the termination of said lease or sublease or December 31, 2023, the amount of the In Lieu of Tax Payments with respect to the Non-Company Office Building Space shall be one hundred percent (100%) of the Applicable Ad Valorem Taxes for the portion of the Project building that is Non-Company Office Building Space applicable to such period.
On or before January 31 of each calendar year, starting with January 31, 2020, and ending with January 31, 2023, the Company shall provide written notice to the Issuer stating the number of full-time equivalent salaried or hourly employees on a Company Entity’s payroll at the Project (“Reported Jobs”) as of December 31 of the preceding calendar year (the “Report Date”), and the increase in the number of Reported Jobs (the “New Jobs”) over 411, being the number of full-time equivalent salaried or hourly employees of the Company located in Metro on December 6, 2016, the last employee headcount by the Company prior to December 13, 2016, the date of the Metro letter offering the incentive described herein. A “full-time” position means a position that is filled by an employee who regularly (i.e., 26 weeks or more per 12-month period) works on average 32 or more hours per week for the Company Entity, and employees who reside in Metro and perform some or all of their services for Company Entities from their homes or other off-site locations within Metro will be included in the determination of employment positions if such persons report to Project-based employees or if their work is coordinated, directed or supervised by Project-based employees of a Company Entity. If the number of New Jobs in any given year is lower than the “Jobs Target” for that year in the following table (such number being eighty percent (80%) of the number of the new jobs anticipated to be at the Project at such time), then the Company shall make an additional In Lieu of Tax Payment (the “Additional Payment”) for that year in an amount equal to the 60% of the Increment that was abated (the “Abatement Amount”) multiplied by two time (2X) the proportion by which the Jobs Target was missed.
Specifically, the Additional Payment shall be the amount determined by (i) subtracting (A) the quotient obtained by dividing the number of New Jobs by the Jobs Target from (B) 1, rounded to the nearest percentage point, (ii) multiplied by two (2), and (iii) multiplied by the Abatement Amount. By way of example, if the number of New Jobs for the December 31, 2020 Report Date is 60, the Additional Payment would be 50% of the Abatement Amount [1-(60/80) = 0.25 X 2 = .50 or 50%], and the total payment shall be the In Lieu of Tax Payment of the Base Tax Amount, plus 40% of the Increment, plus the Additional Payment, which equals 30% of the Increment for that year, with the result that the abatement is reduced to 30% of the Increment. In no event shall the Additional Payment plus the In Lieu of Tax Payment exceed 100% of the Applicable Ad Valorem Taxes.
Section 3. That the term "Applicable Ad Valorem Taxes" shall mean the amount of ad valorem real property tax that, but for ownership of the Project by the Board, would have been due and payable to the Metropolitan Government with respect to the Project. Keystone shall be permitted to challenge the assessment of any real property that is then subject to the payment in lieu of tax arrangement authorized hereby in the same manner as if Keystone owned such property.
Section 4. That the term “Non-Company Entity” shall mean an entity that it is not a Company Entity, and the term “Company Entity” shall mean (a) Keystone, (b) any successor to Keystone, including, without limitation, any corporation, partnership, limited liability company or other entity that (1) acquires, directly or indirectly, a controlling interest in Keystone (whether through merger, purchase of stock, partnership interests or other ownership interests, swap of stock, partnership interests or other ownership interests, or otherwise), (2) merges or consolidates with Keystone or (3) acquires substantially all of the assets of Keystone, (c) any corporation, partnership, limited liability company or other entity that directly or indirectly controls, is controlled by, or is under common control with, any of the foregoing, and/or (d) an entity that is occupying the space primarily to provide outsourced services to another Company Entity.
Section 5. (a) That the payment in lieu of tax arrangement authorized by this Ordinance shall apply to all real property comprising a portion of, or used at or in connection with the Project.
(b) That the payment in lieu of tax arrangement authorized by this Ordinance shall apply to all land, buildings, improvements, fixtures, construction in progress, and other properties of any nature comprising a portion of, or used in connection with, facilities located on the property described above that are treated as real property for ad valorem tax purposes. Such arrangement shall apply to such facilities and such properties in their current scope and configuration and to all replacements, enhancements, additions, expansions, and improvements to such properties and facilities.
Section 6: Developer will produce and manage a diversified business enterprise program to assist small, minority owned, and women owned business enterprises (“DBEs”) with respect to their participation in construction at the Project site. Such program will be designed with a DBE participation target of not less than 20% of the Project’s hard construction costs and shall be subject to the reasonable approval of, the Metropolitan Government, and will provide for quarterly reporting to the Metropolitan Council and the Minority Caucus of the status of DBE participation in the construction of the Project. The program will include a process to document all (i) good faith efforts with prospective bidders to reach out to DBE companies, (ii) joint venture or partnership participation by DBE companies, (iii) DBE participation by subcontractors, suppliers or joint ventures proposed by each bidder, (iv) any increases or decreases from an anticipated DBE participation by successful bidders, and (v) the level of payments to DBE’s of hard construction costs. Additionally, Keystone will utilize the Metropolitan Government’s workforce development program with the goal of ensuring that reasonable efforts are made to hire or utilize residents of Davidson County for the construction of the Project.
Section 7. That the final version of the payment in lieu of tax agreement authorized by this Ordinance must be approved as to legality by the Department of Law of the Metropolitan Government prior to being executed by the Board.
Section 8. That all ordinances or resolutions, or parts thereof, in conflict with the provisions of this Ordinance are, to the extent of such conflict, hereby repealed.
Section 9. That this Ordinance shall take effect from and after its final passage, the welfare of The Metropolitan Government of Nashville and Davidson County requiring it.
Sponsored by: Jacobia Dowell, John Cooper
AMENDMENT NO. 1
ORDINANCE NO. BL2017-836
Mr. President –
I move to amend Ordinance No. BL2017-836 as follows:
I. By deleting Section 7 in its entirety and substituting therefore the following:
Section 7. That the final version of the payment in lieu of tax agreement authorized by this Ordinance shall be in the form attached hereto as Exhibit A together with such changes that do not alter the material terms hereof as may be approved by the Board, and must be approved as to legality by the Department of Law of the Metropolitan Government prior to being executed by the Board.
II. By amending Section 2 by deleting the word “Issuer” and replacing it with the word “Board” in the first sentence of the second paragraph as follows:
On or before January 31 of each calendar year, starting with January 31, 2020, and ending with January 31, 2023, the Company shall provide written notice to the
IssuerBoard stating the number of full-time equivalent salaried or hourly employees on a Company Entity’s payroll at the Project (“Reported Jobs”) as of December 31 of the preceding calendar year (the “Report Date”), and the increase in the number of Reported Jobs (the “New Jobs”) over 411, being the number of full-time equivalent salaried or hourly employees of the Company located in Metro on December 6, 2016, the last employee headcount by the Company prior to December 13, 2016, the date of the Metro letter offering the incentive described herein.
III. By attaching the form of the payment in lieu of tax agreement attached hereto as Exhibit A to the ordinance.
Sponsored by: Bob Mendes
|Introduced:||August 1, 2017|
|Passed First Reading:||August 1, 2017|
|Referred to:||Budget & Finance Committee|
|Passed Second Reading:||August 15, 2017|
|Amended:||September 5, 2017|
|Passed Third Reading:||September 5, 2017|
|Approved:||September 6, 2017|
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