R-2022-074 - 2/24/2022 RESOLUTION NO. R-2022-074
WHEREAS, on February 24, 2022, the Round Rock Transportation and Economic
Development Corporation ("'J'EDCO") entered into an Economic Dcvcloprnent Incentive Agreement
("Agreement") with SDC Austin 1J,C, and
WHEREAS, the City of Round Rock desires to approve the action of'FEDC0 in entering into
said Agreement with SDC Austin 1.1,C, Now Therefore
BE IIT' RESOLVED BV 'I'HE COUNCIL, OFTHE CITY OF ROUND ROCK, TEXAS,
That the City Council hereby approves (lie action of the Round Rock Transportation and
Economic Development Corporation in entering into ern F'conomic Development Incentive Agreement
with SDC Austin LLC, a copy of said agreement being attached hereto as Exhibit "A" 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 UP011, all as required by the Open Meetings Act,
Chapter 551, 1"'exas Government Code, as amended.
RESOLVED this 24th day offebrUary, 2022,
z
CRAIG MORdAN, M r
City of Hound Dock,
Texas
ATTEST:
AILMEAGAN S r1NK,—',,"C1y Clerk
0117.7(Q22,•1875-5.'..3'7,-8,1.87
EXHIBIT
""A„
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ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT
This Economic Development Incentive Agreement ("Agreement") is entered into this day of
February 2022, by and between the Round Rock Transportation and Economic Development
Corporation, a Type B Corporation created pursuant to Chapter 505 of the Texas Local Government
Code ("TEDCO"), and SDC Austin LLC, a Delaware limited liability company ("SDC'J. The
foregoing are referred to collectively as the"Parties."
WHEREAS, SDC is a company in the business of data center, and it intends to locate its business in
two newly constructed buildings(the"Facility")to be located at 1300 Louis Henna Blvd., in the City of
Round Rock,Texas("City"); and
WHEREAS,SDC intends to demolish an existing building located on the site(the"Existing Building")
and replace it with a new building that is more suitable for its purposes(the"New Building"); and
WHEREAS,SDC intends to invest at least$185,000,000 in Real Property Improvements(as defined in
Section 2.6), and$5,000,000 in new equipment and Business Personal Property (as defined in Section
2.1)for the Facility; and
WHEREAS, TEDCO has determined that the above-described expenditures are for a "project" as
defined by §501.101 of the Local Government Code and that it will result in the creation or retention of
"primary jobs"as defined by Section 501.002 Texas Local Government Code; and
WHEREAS, TEDCO agrees to provide performance based Economic Incentive Payments (as defined
in Section 2.2)to SDC in order to defray a portion of SDC's development expenses;
NOW, THEREFORE, in consideration of the mutual benefits and promises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, TEDCO, and
SDC agree as follows:
1. Authority. TEDCO's execution of this Agreement is authorized by§501.158 of the Texas Local
Government Code.
2. Definitions.
2.1 "Business Personal Property" means equipment which costs at least $5,000,000 and
has a model number and/or serial number and is purchased and used for the purpose of
supporting SDC's data center operations at the Facility.
2.2 "Economic Incentive Payment(s)" ("EIPs") means the amounts paid by TEDCO to
SDC under this Agreement.
2.3 "Effective Date"is the date this Agreement is executed to be effective by the Parties.
2.4 "Employee"means an employee who is hired by SDC to perform a Primary Job,as that
term is defined by § 501.002 of the Texas Local Government Code.
Economic Development Agreement with SDC;draft 01.20.22 4854-8542-8490 v.1020922
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2.5 "Facility"means the two buildings to be constructed on land located in the Round Rock
city limits with an address of 1300 Louis Henna Blvd.
2.6 "Real Property Improvements" means the real property improvements to the Facility
directly related to the design, construction, and finish out of the Facility for the purpose
of supporting SDC's data center operations, including data center specific electrical and
HVAC equipment. It does not include any other costs, including, but not limited to,
financing cost,attorney fees,architect fees, insurance,and other similar costs.
2.7 "Recapture Liability"means the total amount of all EIP's that are paid as result of this
Agreement that are subject to recapture by TEDCO from SDC in the event of a default
by SDC pursuant to this Agreement.
3. Term. This Agreement shall become enforceable upon its Effective Date and shall terminate on
May 1,2028.
4. Rights and Obligations of SDC.
4.1 Demolish Existing Buildin . SDC agrees to demolish the Existing Building on or before
e 31 st day of December,2022.
4.2 Construction of New Building. SDC agrees to construct the New Building on or before
e 30th day of June 2024.
4.3 Employees. Prior to and over the term of this Agreement, SDC, or Sabey Data Center
Properties LLC and its affiliates, agrees to relocate to the City or otherwise create a
minimum of 20 new primary jobs with an average salary of $90,000, plus industry
standard benefits in accordance with the following schedule;
On or Before New Jobs Created Total
December 31,2023 5 5
December 31,2024 5 10
December 31,2025 5 15
December 31,2026 3 18
December 31,2027 2 20
4.4 ob Compliance Affidavit. On or before April 15 of 2024, and of each calendar year
creafler through April 15, 2028, SDC agrees to provide to TEDCO a completed Job
ompliance Affidavit,the form of such Job Compliance Affidavit being attached hereto
s Exhibit A. TEDCO shall have the right, at its expense and following reasonable
dvance notice to SDC, to audit SDC's records to verify that this obligation has been
atisfied.
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4.5 Compliance with regulations. SDC agrees that it will comply with the City's
development approval processes and shall operate the Facility consistent with City
ordinances, development regulations, and requirements.
4.6 Continuous operation. SDC,or its successors and assigns,agrees that it will continuously
operate the Facility during the Term of this Agreement,including any extensions,subject
to normal down-time and any force majeure events.
5. Rights and Obligations of TEDCO.
In consideration of SDC's compliance with this Agreement,TEDCO agrees as follows:
5.1 Economic Incentive Payments ("EIPs").
5.1.1 ETPs. TEDCO shall, subject to SDC's satisfaction of its obligations set forth in
section 4 above,make EIPs to SDC as set forth below. The EIPs shall be made as follows:
(i) a payment to SDC of$500,000 upon the completion of the demolition of the
Existing Building; and
(ii) a payment to SDC of $500,000 upon the issuance of a Certificate of
Occupancy for the New Building or any portion thereof
5.1.2 EIPs Subject to Future Appropriations. This Agreement shall not be construed as
a commitment, issue, or obligation of any specific taxes or tax revenues for payment to
SDC. The EIPs by TEDCO under this Agreement are subject to TEDCO's appropriation
of funds for such payments in the budget year for which they are made. The EIPs to be
made to SDC, if paid, shall be made solely from annual appropriations from the general
funds of TEDCO or from such other funds of TEDCO as may be legally set aside for the
implementation of Chapters 501 and/or 505 of the Local Government Code or any other
economic development or financing program authorized by statute or other applicable
Texas law,subject to any applicable limitations or procedural requirements. In the event
that TEDCO does not appropriate funds in any fiscal year for the EIPs due under this
Agreement, such failure shall not be considered a default under Sec. 7.3, and TEDCO
shall not be liable to SDC for such EIP's; however,TEDCO shall extend this Agreement
for another year(s),until SDC has received all of the EIPs provided herein. In addition,
SDC shall have the right but not the obligation to terminate this Agreement, which shall
not be deemed to constitute a default by SDC,and,in such event,SDC shall be permitted
to retain any EIP monies received on or before the date of termination. To the extent
there is a conflict between this paragraph and any other language or covenant in this
Agreement,this paragraph shall control.
6. EIP Recapture.In the event that TEDCO terminates this Agreement as a result of SDC's default,
which has not been cured after any applicable cure period, TEDCO may recapture and collect
from SDC the Recapture Liability. SDC shall pay to TEDCO the Recapture Liability within
forty-five(45)days after TEDCO makes written demand for same, subject to any and all lawful
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offsets settlements, deduction, or credits to which SDC may be entitled. Notwithstanding
anythit g herein to the contrary such Recapture Liability shall not exceed, in the aggregate, an
amour equal to all EIPs that were paid pursuant to this Agreement from the Effective Date to
the daw of termination (together with interest thereon to be charged at the rate for delinquent
taxes a i determined by Sec. 33.01 of the Property Tax Code of the State of Texas, but without
the a&ition of a penalty). TEDCO shall have all remedies for the collection of the Recapture
Liabilil y as provided generally in the Tax Code for the collection of delinquent property taxes.
7. Miscell aneous.
7.1 Mutual Assistance. The Parties will do all things reasonably necessary or appropriate to
carry out the terms and provisions of this Agreement.
7.2 Representations and Warranties. TEDCO represents and warrants to SDC that this
Agreement is within its authority, and that it is duly authorized and empowered to enter
into this Agreement,unless otherwise ordered by a court of competent jurisdiction. SDC
represents and warrants to TEDCO that it has the requisite authority to enter into this
Agreement.
7.3 Default. If either TEDCO or SDC should default in the performance of any obligations
Df this Agreement,then the other Party shall provide such defaulting Party written notice
f the default, and a minimum period of thirty (30) days to cure such default, prior to
nstituting an action for breach or pursuing any other remedy for default. If TEDCO
emains in default after notice and opportunity to cure, SDC shall have the right to
erminate this Agreement by giving written notice thereof to TEDCO and to pursue any
emedy at law or in equity for TEDCO's breach. If SDC remains in default after notice
d opportunity to cure,TEDCO as its exclusive remedy shall have the right to terminate
is Agreement by giving written notice thereof to SDC and, upon such termination,
ecapture EIP and interest thereon as provided in Sec. 6 and, in the event of litigation or
court proceeding to enforce such recapture,recovery of reasonable attorney's fees and
xpenses pursuant to the Terms of Sec. 7.4.
7.4 ttorne 's Fees. In the event any legal action or proceeding is commenced in a court of
ompetent jurisdiction between TEDCO and SDC to enforce provisions of this
greement and/or recover damages for breach, the prevailing Party in such legal action
hall be entitled to recover its reasonable attorneys' fees and expenses incurred by reason
f such action, to the extent allowed by law.
7.5 Entire Agreement. This Agreement contains the entire agreement between the Parties
ith respect to the subject matter hereof. This Agreement may only be amended, altered
r revoked by written instrument signed by the Parties.
7.6 Binding Effect. This Agreement shall be binding on and inure to the benefit of the Parties,
their respective successors and assigns.
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7.7 &Agnrnent. SM", may not assign all or [,)art of its rights and obligations to as third party
without the express written consent ofTED('1.'(), which consent shall not be unreasonably
withheld, conditioned or delayed, provided, however, that SDC rnay assign this
.Agreement without the consent o1'TEDC0 to tare entity which controls, is controlled by
or is under comnion control with SDC, any SUCCCSSor entity to SDC by wary of nierger,
consolidation or other non-bankiaiptcy corporate reorganization, or an entity which
acquires all or substantially all of SDC's assets, partnership or membership interests, Or
capital stock, or any pUrChaSer Of the Facility, including the IMICI Upon which it is located.
7.8 Atriendi-nent. This Agreement inay be amended by the Mutual Written agreement of the
Parties.
7.9 "T"ermination. In the event SDC elects not to proceed with the investments as
contemplated by this Agreernent, SDC shall notify the City in writing,and this Agrecinent
and the obligations on the part of all Parties shall be deemed terminated and of no further
force or eM�ct,
7.10 Notice. Any notice and or staterrient required aincl permitted to be delivered shall be
deemed delivered by actual delivery, facsimile with receipt of confirmation, electronic
mail transi-nission, or by depositing the same in the United States mail, certified with
return receipt requested, postage prepaid, addressed to the approp�riatc party at the
following addresses,:
If toTEDCO:
Round Rocl< Transportation an(] Economic Development.Corporation
221 E. Main Street
Round Rock, TX 78664
Attn: City Manager
Phone: (5 12) 218-5400
Email: ihad] rond
urocktex s.gpy
� -
With as required copy to:
Sheets & (.7rossfield
309 E. Main Street
Round Rock, TX 78664
Attru Stephan L. Sheets
Phone: (;51.2) 255-8877
Ernail: steve(�i.,,,scj-rlaw,coni
If to SDC:
SDC Austin LLC
c/o Sabey Corporation
12201 'I'Likwila Intl Blvd, 4"' Floor.
Seattle, WA 98 168
Attw Mikel Hansen
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Email: mikelh@sabey.com
With a required copy to:
Sabey Corporation
12201 Tukwila Int'l Blvd,4`h Floor
Seattle,WA 98168
Attn: General Counsel
Email: genemlcounsel@sabey.com
Either Party m ay designate a different address at any time upon written notice to the other Party.
7.11 Interpretation. Each of the Parties has been represented by counsel of their choosing in
the negotiation and preparation of this Agreement. Regardless of which Party prepared
the initial draft of this Agreement, this Agreement shall, in the event of any dispute, be
interpreted fairly and reasonably and neither more strongly for or against any Party.
7.12 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.
7.13 Severability. In the event any provisions of this Agreement are illegal, invalid or
unenforceable under present or future laws, it is the intention of the Parties that the
remainder of this Agreement shall not be affected. It is also the intention of the Parties
of this Agreement that in lieu of each clause and provision that is found to be illegal,
invalid or unenforceable, a provision be added to this Agreement which is legal,valid or
enforceable and is as similar in terms as possible to the provision found to be illegal,
invalid or unenforceable.
7.14 Paragraph Headings. The paragraph headings contained in this Agreement are for
convenience only and will in no way enlarge or limit the scope or meaning of the various
and several paragraphs.
7.15 No Third-Party Beneficiaries. This Agreement is not intended to confer any rights,
privileges or causes of action upon any third party.
7.16 Force Majeure. Except as otherwise provided herein, an equitable adjustment shall be
made for delay or failure in performing if such delay or failure is caused, prevented, or
restricted by conditions beyond that Party's reasonable control(a`farce majeure event").
j A force majeure event for the purposes of this Agreement shall include,but not be limited
I to,acts of God,fire;explosion,vandalism;storm or similar occurrences;orders or acts of
military or civil authority; litigation; changes in law, rules, or regulations outside the
control of the affected Party;national emergencies or insurrections;epidemic;pandemic;
riots; acts of terrorism; or supplier failures, shortages or breach or delay. Except as
otherwise expressly provided, herein,there shall be an equitable adjustment allowed for
performance under this Agreement as the result of any event of force majeure.
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7.17 No Joint Venture. It is acknowledged and agreed by the Parties that tile terms hereof are
not intended to and shall not be deemed to create any partnership orJoint venture aniong
the Parties. T EDCO, its Past, present atid fUtUl-C officers, elected officials,eniployees,and
agents ofEDCO, (to not assurne any responsibi I i ties or liabilities to any third party in
connection with the development ofthe Facility or the design, construction, or operation
of any portion ofthe Facility.
7,18 Estoppel Certifigate. SDC may I-eClUeSt ,it) estoppel certificate from TEDCO so long as
the certificate is requested in connection with as bona fide business purpose and requests
connnercially reasonable certifications. TEM.',Ci agrees to promptly execute and deliver
any estoppel certificate reasonably requested pursuant to this Sec. 7.18. The certificate,
which will upon request be addressed to SDC, or a lessor, lessee, purcliaser or assignee
of SDC or the Facility, or any lender associated with any of the foregoing, and sluill
include, but not necessarily be limited to, statements (qualified to the best knowledge of
T']--'[)C'O) that this Agreement is in full force and effect without default (or if a default
exists, the natUl-C Of ,SUCli defilUtt and any curative action which should be Undertaken to
cure same), the retnaining tern) of this Agreement, and such other matters reasonably
reclucsted by the party(ics) to receive the certificate.
E`XECUTED to be effective as of the day of February, 2022 (the "Effective Date").
ROUND ROCKTRANSPORTATION AND
ECONOMIC DEVELOPMENTCORPORATION
By: _.................................. .............
Craig Morgan, President
SDC AUSTIN LLC
By Sabey Data Center Properties LLC
By Sabey Properties LLC
ra
By Sabey Co tion
By:
Patricia A. Se"", It, Chie a a icial (Officer.
1, Sec
_y
Corporate Trea jjer�; r
irer Secr air
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EXHIBIT A
Job Compliance Affidavit
Before me, the undersigned authority, on this day personally appeared
(name),known to me to be the person whose
name is subscribed below and after having been duly sworn, on his/her oath stated as
follows:
"My name is . I am over the age of 21 years and
am capable of making this affidavit. The facts stated in this affidavit are within my
personal knowledge and are true and correct. I am the
(title) of SDC Austin LLC,, and I am duly
authorized I o make this affidavit on its behalf."
As of December 31, 202_, in compliance with Section 4.3 of the Economic
Developme t Agreement, SDC Austin LLC had created the following Employee
positions:
EMP OYEE ID NO. JOB POSITION OR TITLE
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TOTAL JOBS
DATED THIS DAY OF ,202—.
By: (Signature)
(Printed Name)
(Title)
SUBSCRIBED AND SWORN TO BEFORE ME ON THIS THE DAY OF
20—.
NOTARY PUBLIC, STATE OF TEXAS
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