Contract - Houghton Mifflin Harcourt - 6/11/2015 ECONOMIC DEVELOPMENT PROGRAM AGREEMENT
This Economic Development Program Agreement ("Agreement") is entered into this 11th day of
June, 2015, by and between the City of Round Rock, Texas, a Texas home rule municipal
corporation ("City"), and Houghton Mifflin Harcourt Publishing Company, a Massachusetts
corporation("HMH").
'fZ X115-2.�
WHEREAS, the City has adopted Resolution No. ttached as Exhibit A ("City
Resolution"), establishing an economic development program and authorizing the Mayor to enter
into this Agreement with HMH in recognition of the positive economic benefits to the City
through HMH's leasing space in a new building to be constructed by La Frontera Plaza, Ltd,
("Plaza") to be located in the City and locating one of HMH's office facilities in said lease space;
and
WHEREAS, HMH will employ at least two hundred seventy(270) employees when the Facility
(as hereinafter defined) is complete, and during the term of this Agreement; and
WHEREAS, the purpose of this Agreement is to promote economic development as
contemplated by Chapter 380 of the Texas Local Government Code whereby HMH will expend
significant sums to install improvements to and equip the Facility and lease, occupy, and operate
the Facility in conformance with the City's development approvals for the Facility; and
WHEREAS, the City agrees to provide performance based economic development grants to
HMH to defray a portion of HMH's 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, the
City and HMH agree as follows:
1. Authority. The City's execution of this Agreement is authorized by Chapter 380 of the
Texas Local Government Code, and the City Resolution, and constitutes a valid and
binding obligation of the City in the event HMH proceeds with the lease and occupation
of the Facility. The City acknowledges that HMH is acting in reliance upon the City's
performance of its obligations under this Agreement in making its decision to commit
substantial resources and money to lease, improve and occupy the Facility.
2. Definitions.
2.1 "Economic Incentive Payment(s)" ("EIPs") means the amount paid by the City
to HMH under the Program.
2.2 "Effective Date" is the date this Agreement is executed to be effective by the
City and HMH.
Economic Dev Agreement-FINAL-6-06-15(0033613 1 xA08F8)
--,;'015 �6f 79
2.3 "Facility" means the portion of the building to be constructed by Plaza located in
the La Frontera shopping and office development in Round Rock, Texas to be
leased by HMH.
2.4 "Improvements" means the finish out of and additions to the Facility, and
personal property and equipment with a minimum value of$3,000,000.00.
2.5 "Program" means the economic development program established by the City
pursuant to Chapter 380 of the Texas Local Government Code and under the City
Resolution to promote local economic development and stimulate business and
commercial activity within the City.
2.6 "Recapture Liability" means the total amount of all EIP's that are paid as result
of this Agreement that are subject to recapture by the City from HMH in the event
of a HMH default.
3. Term. This Agreement shall become enforceable upon its Effective Date and shall
terminate on December 31, 2026.
4. Rights and Obligations of HMH.
4.1 Lease of Facility. HMH agrees to provide City with documentation showing that
it has leased the Facility until at least December 31, 2026.
4.2 Improvements. HMH agrees to spend at least $3,000,000 to construct and/or
install the Improvements. HMH agrees to provide City with documentation
showing that this obligation has been satisfied. City shall have the right, following
reasonable advance notice to HMH, to audit HMH's records to verify that this
obligation has been satisfied.
4.3 Jobs.
4.3.1 Job Creation. Within thirty (30) days after the City issues a Certificate of
Occupancy for the Facility, HMH agrees to employ in the Facility at least two
hundred seventy (270) full-time employees. In addition, HMH agrees to retain at
least 270 employees for the full term of this Agreement.
4.3.2 Salaries and Benefits. HMH agrees that the full-time jobs will have an average
annual salary of at least$70,000, including industry standard benefits.
4.3.3 Job Compliance Affidavit. HMH agrees to provide to the City an annual Job
Compliance Affidavit by March 1 of each calendar year during the term of this
Agreement. A copy of the Job Compliance Affidavit form is attached hereto as
Exhibit B. City shall have the right, following reasonable advance notice to HMH,
to audit HMH's records to verify that this obligation has been satisfied.
2
4.4 Compliance with regulations. HMH agrees that it will comply with the City's
development approval processes and shall lease the Facility and construct and
install the Improvements and occupy and operate the Facility consistent with City
ordinances, development regulations and requirements.
4.6 Continuous operation. HMH agrees that it will continuously operate the Facility
and employ the number of employees set out in section 4.3.1 during the term of
this Agreement, including any extensions.
5. Rights and Obligations of the City.
In consideration of HMH's compliance with this Agreement, the City agrees as follows:
5.1 Economic Incentive Payment (`BIP").
5.1.1 EIP. City shall, subject to HMH's satisfaction of its obligation to execute
a lease for the building, and to employ 270 employees set forth in Section 4
above,make EIPs to HMH as follows:
Date Amount
April 1, 2017 $100,000.00
April 1, 2018 $100,000.00
April 1, 2019 $100,000.00
April 1, 2020 $ 50,000.00
5.1.2 EIP Reduction. Regardless of anything contained herein to the
contrary, the failure of HMH to provide 270 jobs shall not be considered an event
of default as defined in Section 7.3 below unless the number of jobs actually
provided is less than 75% of 270, or 203. If the actual number of jobs provided at
the end of any year is less than 270 but 203 or more, then the EIP for the
following year shall be reduced as follows: The amount of the EIP shall be
reduced by the same percentage that the actual number of jobs bears to the
required number of jobs. By way of illustration, if on December 31, 2018, HMH
has provided 243 jobs, then the requirement to provide 270 jobs will be short by
27 jobs, or 10%. Therefore HMH's EIP for 2019 shall be reduced by 10 percent,
(i.e. from $100,000 to $90,000.) Failure of HMH to provide at least 203 jobs shall
be considered a default on the part of HMH, and the City may exercise its rights
under Sections 6 and 7.3.
5.1.2 EIP 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 HMH. The EIP by the City under this Agreement is
subject to the City's appropriation of funds for such payments in the budget year
3
for which they are made. The EIP to be made to HMH, if paid, shall be made
solely from annual appropriations from the general funds of the City or from such
other funds of the City as may be legally set aside for the implementation of
Article III, Section 52a of the Texas Constitution or Chapter 380 of the Local
Government Code or any other economic development or financing program
authorized by statute or home rule powers of the City under applicable Texas law,
subject to any applicable limitations or procedural requirements. In the event that
the City does not appropriate funds in any fiscal year for the EIP due under this
Agreement, such failure shall not be considered a default under Section 7.3, and
the City shall not be liable to HMH for such EIP, however, the City shall extend
this Agreement for another year(s), until HMH has received all of the EIPs
provided for herein. In addition, HMH shall have the right but not the obligation
to rescind this Agreement. 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 the City terminates this Agreement as a result of HMH's
default, the City may recapture and collect from HMH the Recapture Liability. HMH shall pay
to the City the Recapture Liability within thirty(30) days after the City makes demand for same,
subject to any and all lawful offsets, settlements, deduction, or credits to which HMH may be
entitled. Notwithstanding anything herein to the contrary, such Recapture Liability shall not
exceed, in the aggregate, an amount equal to all EIPs that were paid pursuant to this Agreement
from the Effective Date to the date of termination (together with interest thereon to be charged at
the statutory rate for delinquent taxes as determined by Section 33.01 of the Property Tax Code
of the State of Texas, but without the addition of a penalty). The City shall have all remedies for
the collection of the Recapture Liability as provided generally in the Tax Code for the collection
of delinquent property taxes.
7. Miscellaneous.
7.1 Mutual Assistance. The City and HMH will do all things reasonably necessary or
appropriate to carry out the terms and provisions of this Agreement.
7.2 Representations and Warranties. The City represents and warrants to HMH that
the Program and this Agreement are within its authority, and that it is duly
authorized and empowered to establish the Program and enter into this
Agreement, unless otherwise ordered by a court of competent jurisdiction. HMH
represents and warrants to the City that it has the requisite authority to enter into
this Agreement.
7.3 Default. If either the City or HMH should default in the performance of any
obligations of this Agreement, the other party shall provide such defaulting party
written notice of the default, and a minimum period of thirty (30) days to cure
such default, prior to instituting an action for breach or pursuing any other remedy
for default. If the City remains in default after notice and opportunity to cure,
HMH shall have the right to terminate this Agreement by giving written notice
4
thereof to City and to pursue any remedy at law or in equity for the City's breach.
If HMH remains in default after notice and opportunity to cure, City shall have
the right to terminate this Agreement by giving written notice thereof to HMH
and to pursue any remedy at law or in equity for HMH's breach, in addition to the
right of EIP recapture set forth above.
7.4 Attorney's Fees. In the event any legal action or proceeding is commenced in a
court of competent jurisdiction between the City and HMH to enforce provisions
of this Agreement and recover damages for breach, the prevailing party in such
legal action shall be entitled to recover its reasonable attorney's fees and expenses
incurred by reason of such action, to the extent allowed by law.
7.5 Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the EIP. This Agreement may only be amended, altered or
revoked by written instrument signed by the City and HMH.
7.6 BindingEffect.ffect. This Agreement shall be binding on and inure to the benefit of
the parties, their respective successors and assigns.
7.7 Assignment. HMH may not assign all or part of its rights and obligations to a
third party without the express written consent of the City, which consent shall
not be unreasonably withheld, conditioned or delayed, provided, however, that
HMH may assign this Agreement without the consent of the to an entity which
controls, is controlled by or is under common control with HMH, any successor
entity to HMH by way of merger, consolidation or other non-bankruptcy
corporate reorganization, or an entity which acquires all or substantially all of
HMH's assets,partnership or membership interests, or capital stock.
7.8 Amendment. This Agreement may be amended by the mutual written agreement
of the parties.
7.9 Termination. In the event HMH elects not to lease the building as contemplated
by this Agreement, HMH shall notify the City in writing, and this Agreement and
the obligations on the part of both parties shall be deemed terminated and of no
further force or effect.
7.10 Notice. Any notice and or statement required and permitted to be delivered shall
be deemed delivered by actual delivery, facsimile with receipt of confirmation, or
by depositing the same in the United States mail, certified with return receipt
requested, postage prepaid, addressed to the appropriate party at the following
addresses:
5
If to City: City of Round Rock
221 E. Main Street
Round Rock, TX78664
Attn: City Manager
Phone: (512) 218-5400
Email: lhadley@roundrocktexas.gov
With a required copy to:
Sheets & Crossfield
309 E. Main Street
Round Rock, TX78664
Attn: Stephan L. Sheets
Phone: (512) 255-8877
Email: steve@scrrlaw.com
If to HMH: Houghton Mifflin Harcourt Publishing Company
222 Berkeley Street
Boston, MA 02116
Attn: General Counsel
With a required copy to:
Houghton Mifflin Harcourt Publishing Company
9400 South Park Center Loop
Orlando,FL 32819
Attn: Manager of Lease Administration
Either party may 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, however its meaning or application, 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, and in that event, 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
6
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
'force majeure event"). A force majeure event for the purposes of this Agreement
shall include, but not be limited 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; 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.
7.17 No Joint Venture. It is acknowledged and agreed by the parties that the terms
hereof are not intended to and shall not be deemed to create any partnership or
joint venture among the parties. The City, its past, present and future officers,
elected officials, employees and agents of the City, do not assume any
responsibilities or liabilities to any third party in connection with the development
of the Facility or the design, construction or operation of any portion of the
Facility.
7.18 Estoppel Certificate. HMH may request an estoppel certificate from City so long
as the certificate is requested in connection with a bona fide business purpose and
requests commercially reasonable certifications. City agrees to promptly execute
and deliver any estoppel certificate reasonably requested pursuant to this Section
7.18. The certificate, which will upon request be addressed to HMH, or a lessee,
purchaser or assignee of HMH, shall include, but not necessarily be limited to,
statements (qualified to the best knowledge of the City) that this Agreement is in
full force and effect without default (or if a default exists, the nature of such
default and any curative action which should be undertaken to cure same), the
remaining term of this Agreement, and such other matters reasonably requested
by the party(ies) to receive the certificate.
EXECUTED to be effective as of the 11th day of June, 2015 (the"Effective Date").
7
CITY OF ROUND ROCK, TEXAS,
By:
A n McGraw, Mayor
Date: June 11, 2015
APP O ED as to form:
Stephan . Sheets, City Attorney
8
Houghton Mifflin Harcourt Publishing
Company, a Massachusetts corp tion
By:
Name:
Its: Q e , t l E-S-rpf ie
Date: June 10, 2015
9
E"
IBIT
«A»
ro A�rve�lncrr�
RESOLUTION NO. R-2015-2608
WHEREAS, Houghton Mifflin Harcourt Publishing Company, ("HMH") has expressed to the
City of Round Rock ("City") its desire to locate an office facility to the City which will provide jobs
and additional tax base to the City, and
WHEREAS, §380.001 Local Government Code provides that a municipality may establish an
economic development program ("Program") to promote local economic development and to stimulate
business and commercial activity in the municipality, and
WHEREAS, the City Council has determined that the Program described in Exhibit"A" will
meet the goals set forth in said §380.001 and will be of mutual benefit to both parties,Now Therefore
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK,TEXAS,
That the City offers to HMH a §380.001 Program in exchange for HMH locating an office
facility to the City, and
BE IT FURTHER RESOLVED
That the offer of the Program shall be as generally outlined in Exhibit "A" 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.
0112.1504;00335974
RESOLVED this 11th day of June, 2015.
ALAN MCGRAW, Mayor
City of Round Rock, Texas
ATTEST:
giv
[I�
A
SARA L. WHITE, City Clerk
2
EXHIBIT A
ECONOMIC DEVELOPMENT PROGRAM
The terms of the §380.001 Economic Development Program to be offered to Houghton Mifflin
Harcourt Publishing Company, ("HMH") in exchange for HMH's locating an office facility in the City
of Round Rock are as generally outlined below:
1. HMH's obligations:
1.1. HMH agrees to lease and occupy a majority of a building to be constructed in the La
Frontera shopping and office development, in Round Rock, Texas (the"Facility").
1.2 HMH agrees to invest at least$3,000,000 in Facility improvements and personal
property.
1.3 HMH agrees to employ at least 270 full-time equivalent employees in the Facility.
2. City's obligations:
2.1 City shall, subject to HMH's satisfaction of its obligation to execute a lease for the
office facility and to employ 270 employees, make the following EIP's to HMH:
Date Amount
April 1, 2017 $100,000.00
April 1, 2018 $100,000.00
April 1, 2019 $100,000.00
April 1, 2020 $ 50,000.00
3. The terms and provisions of this Program will be set out in more detail in the Economic
Development Program Agreement of even date herewith.
3
EXHIBIT "B"
TO THE ECONOMIC DEVELOPMENT AGREEMENT
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 OAT STATED AS FOLLOWS:
1. "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.
2. "I AM THE (TITLE) OF HOUGHTON MIFFLIN
HARCOURT PURBLISHING COMPANY AND I AM DULY AUTHORIZED TO
MAKE THIS AFFIDAVIT.
3. "AS OF DECEMBER 31, 201 HOUGHTON MIFFLIN HARCOURT PUBLISHING
COMPANY HAD THE FOLLOWING JOB POSITIONS AND SALARIES:
EMPLOYEE ID NO. JOB POSITION OR TITLE ANNUAL
SALARY
$
$
$
$
$
$
TOTAL JOBS AVG. SALARY $
4. "IN ADDITION TO THE SALARY, ALL FULL TIME JOBS INCLUDED INDUSTRY
STANDARD EMPLOYEE BENEFITS.
DATED THIS DAY OF , 201_.
(PRINTED NAME)
(TITLE)
SUBSCRIBED AND SWORN TO BEFORE ME ON THIS THE DAY OF
, 201-.
NOTARY PUBLIC, STATE OF TEXAS
Mayor Councilmembers City Manager
Craig Morgan Michelle Ly Laurie Hadley
Matthew Baker
Frank Ortega
ROUND ROCK TEXAS Mayor Pro-Tern Kristin Stevens City Attorney
FINANCE Rene Flores Hilda Montgomery Stephan L. Sheets
June 9, 2021
Houghton Mifflin Harcourt Publishing Company
Attn: General Counsel
222 Berkeley Street
Boston, MA 02116
RE: Economic Development Program Agreement ("Agreement") with City of Round Rock, Texas ("City")
Dear General Counsel:
This letter is to inform you that as of December 31, 2020, Houghton Mifflin Harcourt Publishing Company
("HMH") is in default with its Agreement with the City. Per Section 4.3.1, HMH agreed to employ at least
270 full-time employees for the full term of this Agreement. The term of this Agreement goes through
December 31, 2026. The Job Compliance Affidavit submitted in February 2021 certified 140 employees.
This is well below the required 270 employees.
Per Section 7.3,this is written notice of default due to HMH employing fewer than 270 full-time employees
for the term of this Agreement. HMH's employee counts have been below the required 270 from 2017
through 2020.
Calendar Employee
Year Count
2016 276
2017 241
2018 234
2019 204
2020 140
This is the required 30-day notice to cure said default. If not cured, the City may pursue remedies for
default, up to and including termination of this Agreement, in addition to the right of recapture of
Economic Incentive Payments per Section 6.
CITY OF ROUND ROCK 221 East Main Street, Round Rock, Texas 78664
[P] 512.218.5400 • [F] 512.671.2808 • roundrocktexas.gov
/oft1 tow'
If you have any questions or need additional information, please call our legal counsel, Steve Sheets of
Sheets&Crossfield PLCC at 512-255-8877.
Sincerely,
XIAAke:At 11°a
Laurie Hadley
City Manager
City of Round Rock,TX
cc:
Houghton Mifflin Harcourt Publishing Company
Attn: Manager of Lease Administration
9400 South Park Center Loop
Orlando, FL 32819
Sheets&Crossfield
Attn: Stephan L.Sheets
309 E. Main Street
Round Rock,TX 78664