R-01-05-24-12A3 - 5/24/2001RESOLUTION NO. R -01-05-24-12A3
WHEREAS, the City of Round Rock has established an Economic
Development Program, and
WHEREAS, Sears, Roebuck and Co. desires to participate in the
Economic Development Program by entering into an Economic Development
Program Agreement ("Agreement"), and
WHEREAS, the City Council desires to enter into said agreement
with Sears, Roebuck and Co., Now Therefore
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS,
That the Mayor is hereby authorized and directed to execute on
behalf of the City, an Economic Development Program Agreement with
Sears, Roebuck and Co., a copy of said agreement being attached hereto
and incorporated herein for all purposes.
The City Council hereby finds and declares that written notice of
the date, hour, place and subject of the meeting at which this
Resolution was adopted was posted and that such meeting was open to the
public as required by law at all times during which this Resolution and
the subject matter hereof were discussed, considered and formally acted
upon, all as required by the Open Meetings Act, Chapter 551, Texas
Government Code, as amended, and the Act.
RESOLVED this 24th day of May,
LAND, City Secretary
0:\WPDOCS\RESOLUTI\R10524A3.WPD/sc
ROS' 1 A. STLUKA, . , Mayor
City of Round Rock, Texas
ECONOMIC DEVELOPMENT PROGRAM AGREEMENT
This Economic Development Program Agreement ("Agreement") is made and entered into
by and between SEARS, ROEBUCK AND CO. ("Sears"), a Corporation, and the CITY OF ROUND
ROCK (the "City"), a home -rule city and municipal corporation, for the purposes and considerations
stated below:
RECITALS:
WHEREAS, the City has adopted Resolution No. /10/- 05 -a'/- iestablishing an Economic
Development Program and authorizing this Agreement as part of the Economic Development
Program; and
WHEREAS, Sears desires to participate in the Economic Development Program by entering
into this Agreement;
NOW, THEREFORE, in consideration of the mutual benefits and promises contained
herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Authorization.
This Agreement is authorized by §380.001 of the Texas Local Government Code and by
Resolution No. f?. o i- 05-x- /aAa.of the City.
2. Definitions.
Additional %2 Cent Tax Revenues means the amount collected by the City from the %2 cent
sales tax imposed by the City pursuant to Texas Tax Code §321.101(b).
Sears means Sears, Roebuck and Co. and all companies under common control with,
controlled by, or controlling Sears, Roebuck and Co. For purposes of this definition, "control"
means 50% or more of the ownership determined by either value or vote.
One Cent Sales Tax Revenues means that portion of Sales Tax Revenues resulting from the
imposition of a one percent municipal sales tax, such as that presently in effect pursuant to Texas
Tax Code §§321.101(a) and 321.103.
Program means the economic development program established by the City pursuant to Local
Government Code §380.001 and under the Resolution referenced in Section 1 above.
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Program Payment means the amount paid by the City to Sears each month under the
Program.
Sales Tax Revenues means the net amount of sales tax received from the state of Texas by
the City derived from sales tax collected by Sears on taxable Texas sales as a direct result of Sears's
location in the City. The term Sales Tax Revenues is limited to sales tax collected by Sears from
sales occurring over the telephone or Internet. Sales Tax Revenues does not include any sales tax
collected from sales made by Sears from a retail outlet or business located in the City, either now
or in the future. Sales Tax Revenues also does not include any administrative fee deducted by the
state of Texas from sales tax collected.
3. Term.
This Agreement shall be effective as of the date of execution by both parties. This
Agreement shall remain in full force and effect until December 31, 2031; provided, however, that
the City may terminate this Agreement between January 1 and June 1 of any year beginning with
2009 if the One Cent Sales Tax Revenues, for the immediately prior calendar year was less than
$500,000.00.
4. Submission of Data.
Within thirty (30) days of the end of each calendar month, Sears shall submit to the City a
schedule detailing the amount of Sales Tax Revenues for that month. As backup for the schedule,
Sears shall submit the following:
(a) A copy of all state of Texas sales tax reports, including amended reports, filed by
Sears for that month showing the amount of sales tax collected;
(b) Such other data as the parties determine appropriate to support One Cent Sales Tax
Revenues.
In addition to the foregoing, Sears shall provide the City with copies of any and all sales tax
audits, amended sales tax returns and/or any error corrections.
Sears hereby gives its consent to the State of Texas Comptroller's Office to provide the City
with a Limited Sales, Excise, and Use Tax Taxpayer history and Payment Information relating to
Sales Tax Revenues. Sears agrees to execute any and all documents that may be required by the state
of Texas in the future to reflect Sears's permission and/or consent to granting the City access to the
foregoing or similar reports related to Sales Tax Revenues.
5. Program Payment.
Within thirty (30) days of receipt of Sales Tax Revenues from the State of Texas for the
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month covered by a schedule submitted by Sears pursuant to Section 4, the City shall pay the
Program Payment to Sears or as directed in writing by Sears.
6. Computation of Program Payment.
The Program Payment for a month shall include 60% of One Cent Sales Tax Revenues for
the first ten years and 50% of One Cent Sales Tax Revenues for the remaining twenty years of this
Agreement.
7. Default.
If either party should default (the "Defaulting Party") with respect to any of its obligations
hereunder and should fail, within thirty (30) days after delivery of written notice of such default from
the other party (the "Complaining Party") to cure such default, the Complaining Party, by action or
proceeding at law or in equity, may be awarded its damages and/or specific performance for such
default.
8. Mutual Assistance.
The City and Sears shall do all things necessary or appropriate to carry out the terms and
provisions of this Agreement and to aid and assist each other in carrying out such terms and
provisions. Sears hereby consents to and agrees to cooperate in any request by the City to obtain
copies of Sales/Use tax returns from the State which contains information pertinent to the calculation
of a Program Payment.
9. Relocation or Expansion by Sears.
The City's agreement herein to establish the Program is conditioned upon Sears locating its
telephone and Internet sales site to the City so that such sales made to customers residing in Texas
will be subject to the City's sales tax. In the event that Sears shall relocate or expand its business so
that any telephone and/or Internet sales made to customers residing in Texas are no longer subject
to the City's sales tax, then Sears agrees to pay the City a sum equal to all Program Payments
previously received by Sears. Such payment shall be made by Sears to City within sixty (60) days
following such relocation or expansion.
10. Representations and Warranties.
The City represents and warrants to Sears that the Program and this Agreement are within
the scope of its authority and the provisions of its charter and that it is duly authorized and
empowered to establish the Program and enter into this Agreement. Sears represent and warrants
to the City that it has the requisite authority to enter into this Agreement.
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11. Section or Other Headings.
Section or other headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
12. Attorneys Fees.
In the event any legal action or proceeding is commenced to enforce or interpret provisions
of this Agreement, the prevailing party in any such legal action shall be entitled to recover its
reasonable attorneys' fees and expenses incurred by reason of such action.
13. Amendment.
This Agreement may only be amended, altered, or revoked by written instrument signed by
Sears and the City.
14. Successors and Assigns.
This Agreement shall be binding on and inure to the benefit of the parties, their respective
successors and assigns. Sears may assign all or part of its rights and obligations hereunder only upon
prior written approval of the City, which approval shall not be unreasonably withheld or delayed.
The determination of such approval shall be based upon the credit worthiness and financial ability
of any proposed assignee to assume such rights and obligations of Sears. Notwithstanding the
foregoing provisions of this Section, in the event Sears desires to transfer or assign its rights or
obligations hereunder any entity which falls within the definition of "Sears" contained in this
Agreement, it shall have the right to do so without the consent or approval by the City, so long as
Sears shall remain responsible and obligated to the City for the performance of its obligations under
this Agreement.
15. Notice.
Any notice and/or statement required and permitted to be delivered shall be deemed
delivered by depositing same in the United States mail, certified with return receipt requested,
postage prepaid, addressed to the appropriate party at the following addresses, or at such other
addresses provided by the parties in writing:
Sears: Ron Douglas
Vice President of Real Estate
3333 Beverly Road, Mail Stop B2 -154b
Hoffman Estates, IL 60179
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With a Copy to: Susan Russell
Assistant General Counsel
3333 Beverly Road, Mail Stop B2 -094a
Hoffman Estates, IL 60179
City: Robert L. Bennett, City Manager
City of Round Rock
221 E. Main Street
Round Rock, Texas 78664
With a Copy to: Stephan L. Sheets, City Attorney
309 E. Main Street
Round Rock, Texas 78664
16. Interpretation.
Regardless of the actual drafter of this Agreement, this Agreement shall, in the event of any
dispute over its meaning or application, be interpreted fairly and reasonably, and neither more
strongly for or against any party.
17. Applicable Law.
This Agreement is made, and shall be construed and interpreted under the laws of the State
of Texas and venue shall lie in Williamson County, Texas.
18. Severability.
In the event any provision of this Agreement is illegal, invalid, or unenforceable under
present or future laws, then, and in that event, it is the intention of the parties hereto that the
remainder of this Agreement shall not be affected thereby, and it is also the intention of the parties
to this Agreement that in lieu of each clause or provision that is found to be illegal, invalid, or
unenforceable a provision be added to this Agreement which is legal, valid and enforceable and is
as similar in terms as possible to the provision found to be illegal, invalid or unenforceable.
19. Counterparts.
This Agreement may be executed in multiple counterparts, each of which shall be considered
an original, but all of which shall constitute one instrument.
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ATTEST:
e Land, City Secretary
THE _1iit1 F RO D ROCK
B
Ro.'— A. Stluka, Jr., Mior
Date: May �L, 2001
SEARS, ROEBUCK AND CO.
Susan Russell, Assistant General Counsel
Date: May 9 , 2001
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DATE: ' - May18, 2001
SUBJECT: City Council Meeting — May 24, 2001
ITEM:
Resource:
History:
12.A.3. Consider a resolution authorizing the Mayor to enter into an
Economic Development Program Agreement with Sears,
Roebuck and Co. The proposed agreement provides for the City
sharing with Sears a portion of the sales tax collected or a result of
Sears' locating its telephone and Internet sales in the City.
Funding:
Cost:
Source of funds:
Outside Resources:
Impact/ Benefit:
Public Comment:
Sponsor:
Bob Bennett, City Manager
David Kautz, Finance Director
Nancy Yawn, Public Affairs Director
Staff has been in discussions with Sears, Roebuck and Co. regarding the
locating of its telephone and Internet sales to Round Rock. Round Rock
will be the on-line sales site for the entire Sears product line and the Great
Indoors. Round Rock has been in competition for this retailer with other
cities in Texas and California. Based on the terms in the attached
agreement, the location of Sears to Round Rock fits well with the City's
business recruitment and sales tax model.
Authority for entering into an agreement of this type with Sears is
provided by Section 380 of the Local Government Code. A requirement
of Section 380 is the establishment of a program to promote local
economic development and to stimulate business and commercial
activity in the municipality.
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On-line retailing of the Sears product line in Texas requires the
collection of state and local sales taxes on those sales. Consolidating the
point -of -ordering for sales in Texas to a Round Rock location enables
the local sales tax to be collected by the City of Round Rock. Since this
type of retailing enables the consolidation of sales from across the state
and is a single retailing site for this type of transaction, Round Rock
proposes to share a portion of the local sales tax with Sears as outlined in
the agreement. The sales tax sharing arrangement is based upon sales
transactions not yet located in Texas and, as such, represent no current or
future cost for the City.
This type of activity is beneficial to the City in that it produces sales tax
revenue from consolidated statewide sales and it enables diversification
of our sales tax base.
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