From
Megan Mahan
Title
Resolution granting 380 Incentive Agreement with Checo Purchase Company, LLC, or affiliated entity, for a partial rebate on sales tax revenue for construction, a credit for related permit and impact fees, a state sales and use and state hotel occupancy tax rebate for 10 years during operation, and a grant of funds pursuant to the Development Agreement and Lease Terms
Presenter
Tom Hart, City Manager
Recommended Action
Approve
Analysis
The City created an Office of Economic Development to oversee economic development programs authorized by Texas law and approved by the City Council. Included among those programs are ones authorized by Chapter 380 of the Texas Local Government Code (the “Program”), to promote state and local economic development and to stimulate business and commercial activity in the City. Grand Prairie has determined that this Program will directly establish a public purpose - and that all transactions involving the use of public funds and resources in the establishment and administration of the Program as authorized will promote state and local economic development and will stimulate and promote business and commercial activity in the City.
The City has negotiated with Checo Purchase Company (“Developer”) to develop a hotel project, in conjunction with a City-owed convention center, which will be located on EpicCentral. As part of the Development Agreement negotiations, the City has offered certain incentives to the developer.
As an incentive to foster such a project in Grand Prairie, staff recommends a construction sales tax rebate to induce the Developer to situs or source construction sales tax to Grand Prairie. The City will rebate 50% of the 1% sales tax to the Developer. The project will also receive a credit for any permit or impact fees normally charged by the City under the terms in the Development Agreement.
This project recieved a Private Letter Ruling from the Comptroller stating that this project constitutes a hotel project under Texas Tax Code Section 351.102(b) and Texas Administrative Code Rule 3.12, which, once the project is completed and the formal application for benefits has been submitted and verified by the Comptroller, will entitle the City to receive certain state funds from the hotel project for a period of ten years after the date of initial occupancy. This 380 Agreement pledges a specified amount of this state rebated revenue to the paid to the Developer during the term of the lease. The City shall make a total economic development grant in the amount of $2,750,000, payable to Developer as follows: $500,000 for the first year of hotel operation, and $250,000 for each of the subsequent nine years of operation.
Lastly, the Development Agreement and Leases includes the requirement that additional funds may to be paid to the developer during construction and during the term of the Lease. This 380 Agreement authorizes these payments, pursuant to the terms of the Development Agreement and/or Lease.
Financial Consideration
Funding will be available in The EPIC Central Capital Projects Fund (360093) WO #01909801 (EPIC Central Conference Center/Restaurants) as needed.
Body
A RESOLUTION OF THE CITY OF GRAND PRAIRIE, TEXAS, TO ENTER into a Chapter 380 Program Agreement for Economic Development Incentives with CHECO PURCHASE company, LLC, OR AFFILIATE granting a partial rebate on sales tax revenue for construction, a credit for related permit and impact fees, a state sales and use and STATE hotel occupancy tax rebate for 10 years during operation, and a grant of funds under the Development Agreement AND LEASE terms
Whereas, Checo Purchase Company, LLC (“Developer”) desires to develop two hotels within EpicCentral; and
WHEREAS, on April 11, 2019 the City received Private Letter Ruling No. 20180402084739 stating that this Project constitutes a hotel project under Texas Tax Code Section 351.102(b) and Texas Administrative Code Rule 3.12, and once the project is completed and the formal application for benefits has been submitted and verified by the Comptroller, will entitle the City to receive state sales and use tax and state hotel occupancy tax from the hotel project for a period of ten years after the date of initial occupancy (the “Hotel Project”); and
Whereas, a partial construction sales tax rebate for 50% of 1% will induce Development to situs construction sales tax to Grand Prairie, and a rebate of $2,750,000 of Hotel Project state sales and use and state hotel occupancy tax funds, and a payment of any funds required under the Development Agreement and Lease will provide help provide incentive for a high quality project within Grand Prairie; and
Whereas, Developer also desires that the project receive a credit for associated project plans review, building permit and water tap and meter fees; and
WHEREAS, the City Council has determined that it is in the public interest to enter into a Chapter 380 Program Agreement for Economic Development Incentives and rebate certain tax revenue and provide a grant of funds.
NOW THEREFORE, BE IT RESOLVED, by the City Council of the City of GRAND PRAIRIE, Texas that:
Section 1. THAT the granting of an incentive through a Chapter 380 incentive agreement is approved and the City Manager is hereby authorized to execute contracts to effectuate this approval.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF GRAND PRAIRIE, TEXAS, ON THIS THE 6TH DAY OF AUGUST, 2019.