R-05-09-08-11H1 - 9/8/2005RESOLUTION NO. R -05-09-08-11H1
WHEREAS, IKEA Property, Inc. ("IKEA") is one of the largest and
most successful furniture retailers in the world, and
WHEREAS, IKEA has expressed to the City of Round Rock ("City")
its desire to locate an IKEA retail furniture store in the City which
will attract shoppers from outside of the area and provide hundreds of
new jobs, and
WHEREAS, §380.001 Local Government Code provides that a
municipality may establish a 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 Mayor is hereby authorized and directed to offer to IKEA
a .§380.001 Program in exchange for IKEA locating an IKEA retail
furniture store in the City of Round Rock, 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
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upon, all as required by the Open Meetings Act, Chapter 551, Texas
Government Code, as amended.
RESOLVED this 8th day of Septemb- , 005
MAXWEL , Mayor
City of Round Rock, Texas
CHRISTINE R. MARTINEZ, City Secy-tary
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EXHIBIT A
The terms of the §380.001 Program to be offer to IKEA in exchange for IKEA's locating an IKEA
retail furniture store in the City of Round Rock are as generally outlined below:
1. The City agrees to make program payments to IKEA calculated on the basis of sales tax
revenues actually received by the CITY from taxable sales generated by the IKEA retail
furniture store as follows:
a. The City will retain all of the sales tax revenues derived from the one-half cent of
the tax devoted to the reduction of ad valorem property tax;
b. The City will make program payments to IKEA equal to 100% of the 1% general
sales tax revenues derived from annual gross taxable sales;
c. The total amount of program payments to IKEA will not exceed the sum of
$5,000,000.
2. The term of the Program shall not exceed seven years.
3. The terms and provisions of the Program will be set out in more detail in an Economic
Development Program Agreement.
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DATE: September 1, 2005
SUBJECT: City Council Meeting - September 8, 2005
ITEM: 11.H.1. Consider a resolution establishing an Economic Development Program to
be offered to IKEA Property, Inc. pursuant to Section 380 of the Local
Government Code.
Department: Administration Department
Staff Person: Jim Nuse, City Manager
David Kautz, Assistant City Manager/Chief Financial Officer
Steve Sheets, City Attorney
Justification:
The Economic Development Program Agreement enables the company to establish a store in our local
market. The company provides quality jobs in that pay is competitive and full benefits including
medical coverage are provided to employees working more than 20 hours per week. Additionally, the
company is a destination retailer, bringing in customers from greater distances and providing needed
diversity to our local sales tax base without over -burdening local government services.
Funding:
Cost: N/A
Source of funds: N/A
Outside Resources: N/A
Background Information:
In connection with IKEA's recent announcement to open a retail store in Round Rock at the southeast
corner of IH 35 and Chandler Road the City has negotiated terms for an Economic Development
Program Agreement with the company. IKEA is the world's leading furniture and home furnishings
retailer and will open a 252,000 square foot retail store that provides 300 jobs in as well as a 250
seat restaurant.
The Economic Development Program Agreement provides financial incentive to the company to
establish a store in our local market. The company provides quality jobs in that pay is competitive
and full benefits including medical coverage are provided to employees working more than 20 hours
per week. Additionally, the company is a destination retailer, bringing in customers from greater
distances and providing needed diversity to our local sales tax base without over -burdening local
government services.
State law requires that for an Economic Development Program agreement to be approved an
Economic Development Program must be established and the general terms outlined. That is the
purpose of this agenda item.
Public Comment: N/A