CM-2005-033c
Doug Greenholz
Real Estate Manager
7243 S. Sundown Cir, Suite B-2
Littleton, CO 80120
tel: 303-794-1138; f: 303-703-8519
doug.greenholz@memo.ikea.com
March 11, 2005
James R. Nuse, P.E.
City Manager
City of Round Rock
221 E. Main Street
Round Rock, TX 78664
Dear Mr. Nuse:
We have been discussing the feasibility of IKEA building a store in Round Rock for
several months. A key component to IKEA's decision to pursue such a project is a
development agreement between IKEA and the City of Round Rock, including
incentives, without which, such a project would not be possible.
IKEA desires, and the City of Round Rock has agreed to the extent permitted by state
law, to keep the substance of our discussions confidential until such time IKEA is
prepared to announce such project. We understand that, accordingly, the City cannot
enter into a binding agreement with IKEA until a public hearing at City Council takes
place. However, in the meantime, I believe it would be useful for IKEA and the City to
have a common non-binding understanding of the business terms which we have the
intent of pursuing, subject to City Council and IKEA Board approval.
To that end, below is my understanding of the key business terms that we have the
intent to reflect in a formal agreement:
Document
Development Agreement —
a. Economic Development Program Agreement
b. Property Tax Abatement Agreement
Each agreement to be in accordance with all applicable legal
and regulatory requirements.
Parties IKEA Property, Inc.
City of Round Rock
Project Subject to IKEA store, approximately 265,000 sf within Round Rock city
Agreement limits
® Printed on Recycled Papei
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March 11, 2005
Page 2 of 3
Term Start
Term End
Economic
Development Program
(City)
Payment of Economic
Development Program
Payment
IKEA Way
Expediting Approvals
Opening of IKEA store
Earlier of:
a) 7 years
-or-
b) IKEA receives a cumulative benefit of $5,000,000 from
City of Round Rock in the form of Economic Development
Program Payments [based upon 1°/.0 Sales Tax
component collections for the Project] and Property tax
abatement and
IKEA receives a cumulative benefit of $1,000,000 from
Williamson County in the form of Property tax abatement.
City to grant to IKEA an Economic Development Program
payment (based on IKEA's sales tax collections from the 1%
sales tax component (i.e. one-half of City's 2% rate) as
reported to the Comptroller's Office of the State of Texas.
City will provide a Property tax abatement based on 100% of
the IKEA property value eligible for abatement for a period of
5 years.
The value of the City Economic Development Program and
property tax abatement will be subject to a $5,000,000
limitation or 7 year duration, whichever is achieved first.
Quarterly
Conditioned upon consent from the developer, City will allow
the naming of the main entry to IKEA "IKEA Way" and IKEA
to use "IKEA Way" as its official address, whether IKEA Way
is a public or private road.
• City to assist IKEA and developer in expediting zoning,
site plan, plat approvals.
• City to provide comments to permit submittal or
resubmittal within 15 working days of submittal to City.
• City to split permits (i.e. site, utility, foundation, structural,
building, signage) in the interest of expediting permit
issuance.
• City to schedule inspections on priority basis in order to
fast track construction.
March 11, 2005
Page 3 of 3
Fee Waiver
County Contingency
Destination Retailer
City to waive all City -controlled fees (except water and
wastewater impact fees and structural inspection fees), plan
review and permit fees.
This agreement would be contingent on IKEA entering into a
property tax abatement agreement with Williamson County.
The Economic Development program is structured on the
basis that IKEA is a destination -based retailer. Annually,
upon request from City, IKEA will provide actual sales data
indicating the percentages of customers with Round Rock zip
codes versus those from outside Round Rock.
If the above accurately reflects your understanding of the key business terms, please
indicate so by signing below and returning to me.
On behalf of IKEA, I look forward to continuing to work with the City of Round Rock.
Doug Greenholz
Real Estate Manager
cc: Joan Hooke
Dave Larsson
Jerry Webberman
Jennifer Frank
City of Round Rock
1
es R. Nuse, P.E.
Manager
Mdti
Date