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127-03 Ordinance RECORD OF ORDINANCES Dayton Legal Blank, Inc. Form No. 30043 ~ Ordinance No. 127-~3 Passed 20 ORDINANCE AUTHORIZING THE PROVISI ON OF CERT AIN INCENTIVES FOR PURP OSES OF ENC OURAGING THE EXPANSION WITHIN THE CITY BY WENDY'S INTERNATIONAL, INC., WHICH INCLUDE DECLARING IMPROVEMENTS TO A CERTAIN PARCEL OF REAL PROPERTY TO BE A PUBLIC PURPOSE, DESCRIBING THE PUBLIC INFRASTRUCTURE IMPROVEMENTS TO BE MADE TO BENEFIT THAT PARCEL, REQUIRING THE OWNER THEREOF TO MAKE SERVICE PAYMENTS IN LIEU OF TAXES, PROVIDING FOR THE FRANKLIN COUNTY TREASURER TO DISTRIBUTE SERVICE PAYMENTS TO THE DUBLIN CITY SCHOOL DISTRICT IN THE AMOUNT THAT SCHOOL DISTRICT WOULD OTHERWISE RECEIVE ABSENT THE EXEMPTION, ESTABLISHING A MUNICIPAL PUBLIC IMPROVEMENT TAX INCREMENT EQUIVALENT FUND FOR THE DEPOSIT OF SUCH SERVICE PAYMENTS, AND AUTHORIZING THE EXECUTION OF AN ECONOMIC DEVELOPMENT AND TAX INCREMENT FINANCING AGREEMENT. WHEREAS, consistent with the Economic Development Strategy (the "Strategy") approved by Dublin City Council Resolution No. 07-94 adopted on June 20, 1994, this Council desires to encourage commercial office development and provide for the creation of employment opportunities within the City; and WHEREAS, Wendy's International, Inc. ("Wendy's") has examined its workforce and development needs within the City, and induced by and in reliance on the tax and economic development incentives provided in this Ordinance and the Economic Development and Tax Increment Financing Agreement authorized hereby, is desirous o f e xpanding i is W orld Headquarters and its workforce within the City; and WHEREAS, consistent with the Strategy, this Council finds that the provision of tax and economic development incentives described in this Ordinance and the Economic Development and Tax Increment Financing Agreement authorized hereby, will result in the creation of approximately 50 new jobs and related employment opportunities in the City and otherwise improve the economic welfare of the people of the City; and WHEREAS, Wendy's now owns certain real property (as depicted on Exhibit A and referred to herein as the "Property") in the City and proposes to renovate and expand its World Headquarters on the Property (the "Project"); and WHEREAS, Ohio Revised Code Sections 5709.40, 5709.42 and 5709.43 provide that this Council may declare improvements to a parcel of real property located in the City to be a public purpose, thereby exempting those improvements from real property taxation for a period of time, specify public infrastructure improvements to be made to benefit that parcel, provide for the making of service payments in lieu of taxes by the owner thereof, provide for the distribution of the applicable portion of those service payments to the overlapping Dublin " City School District and establish a municipal public improvement tax increment equivalent fund into which such service payments shall be deposited; and WHEREAS, the City has determined that it is necessary and appropriate and in the best interests of the City to provide for service payments in lieu of taxes with respect to the Property pursuant to Section 5709.42 of the Ohio Revised Code; and WHEREAS, in reliance on the City's determination that the Project and the plan of economic development incentives between Wendy's and the City are in furtherance of the Strategy, RECORD OF ORDINANCES Dayton Legal Blank, Inc. Form No. 30043 Ordinance No. 127-03 Passed Page 2 20 ~ Wendy's contemplates making improvements to the Property, and the City expects to make the ublic infrastructure im rovem p ents described in Exhibit B hereto th p at once made will directly benefit the Property; and WHEREAS, the City has determined that a portion of the service payments shall be paid to the Dublin City School District in an amount equal to the real property taxes that the Dublin Cit School Distric t would have been y aid if im rovements to the Pro p p perty had not been exempted from taxation pursuant to this Ordinance; and WHEREAS, this Council finds and determines that notice of this proposed Ordinance has been delivered to all affected school districts in accordance with Section 5709.83 ofthe Ohio Revised Code and hereby ratifies the giving of that notice; and WHEREAS, this Council has determined to provide tax and economic development incentives, the terms of which are set forth in a substantially final form of the Economic Development and Tax Increment Financing Agreement presently on file in the office of the Clerk of Council, to induce Wendy's to further expand its operations and workforce within the City, to create additional jobs and employment opportunities and to improve the economic welfare of the people of the State of Ohio and the City, all as authorized in Article VIII, Section 13 of the Ohio Constitution; and WHEREAS, this Council finds that it is in the best interest of the City to provide tax and economic development incentives to induce Wendy's to expand its operations and workforce within the City and to provide for the execution and delivery of that Economic Development and Tax Increment Financing Agreement with Wendy's; NOW, THEREFORE, BE IT ORDAINED by the Council of the City of Dublin, Franklin, Union and Delaware Counties, Ohio, that: Section 1. Provision of Economic Development Incentives. The City hereby finds and determines that the Project and the related tax and economic development incentives described in the Economic Development and Tax Increment Financing Agreement are in furtherance of the Strategy. The City further finds and determines that it is necessary and appropriate and in the best interests of the City to provide those certain incentives to Wendy's for the purpose of creating jobs and employment opportunities and to improve the economic welfare of the people of the State of Ohio and the City as authorized in Article VIII, Section 13 of the Ohio Constitution. Section 2. Tax Exem tp ion. Pursuant to and in accordance with the provisions of Ohio Revised Code Section 5709.40, this Council hereby finds and determines that 100% of the increase in assessed value of the Property subsequent to the effective date of this Ordinance (which increase in assessed value is hereinafter referred to as the "Improvement" as defined in Section 5709.40) is hereby declared to be a public purpose, and shall be exempt from taxation for a period commencing with the first tax year that begins after the effective date of this Ordinance and in which an Improvement first appears on the tax list and duplicate of real and public utility property and ending on the earlier of (a) thirty (30) years after such exemption commenced or (b) the date on which the City can no longer require service payments in lieu of taxes, all in accordance with the requirements of Sections 5709.40 and 5709.42 of the Ohio Revised Code. Section 3. .Payment of Service Payments. As provided in Ohio Revised Code Section 5709.42, the owner of the Property is hereby required to, and shall make, service payments in lieu of taxes with respect to the Improvements allocable thereto to the Treasurer of Franklin County, Ohio (the "County Treasurer") on or before the final dates for payment of real property taxes. Each service payment in lieu of taxes shall be charged and collected in the same manner and in the same amount as the real property taxes that would have been charged and payable against that Property if it were not exempt from taxation pursuant to Section 2. RECORD OF ORDINANCES Dayton Legal Blank, Inc. Form No. 30043 _ - Ordinance No. 127-03 Passed Page 3 20 - - - - - - - _ - - - - - Any late payments shall be subject to penalty and bear interest at the then current rate established under Ohio Revised Code Sections 323.121(B)(1) and 5703.47, as the same may be am ended from time to time or an successor rov' ' isions thereto as th y p e same may be amended from time to time (the payment of penalties and interest are collectively referred to herein with the service a ents in lieu of taxes as the "Service Pa " ments .The rvi p ym Se ce y Payments, and any other payments in respect of the Property which are received by the County Treasurer in connection with the reduction required by Ohio Revised Section 319.302, as the same maybe amended from time to time, or any successor provisions thereto as the same maybe amended from time to time (the "Property Tax Rollback Payments"), shall be allocated and distributed in accordance with Section 4 of this Ordinance. Section 4. Distribution of Payments to School District and City. Pursuant to Ohio Revised C ode S ections 5 709.40 a nd 5 709.42, t he C ounty T reasurer s hall distribute the Service Payments and the Property Tax Rollback Payments as follows: (i) to the Dublin City School District, an amount equal to the amounts the Dublin City School District would otherwise receive as real property tax payments (including the applicable portion of any Property Tax Rollback Payments) derived from the Improvement related to the Property absent the passage of this Ordinance, (ii) to the City, all remaining amounts for further deposit into the Fund. All distributions required under this Section 4 shall be made at the same time and in the same manner as real property tax distributions. Section 5. Creation of TIF Fund. This Council hereby establishes pursuant to and in accordance with the provisions of Ohio Revised Code Section 5709.43, the Shamrock Boulevard P roj ect M unicipal P ublic I mprovement T ax I ncrement E quivalent F and (the "Fund"). The Fund shall be maintained in the custody of the City and shall receive all distributions required to be made to the City pursuant to Section 4. Those Service Payments and Property Tax Rollback Payments received by the City with respect to the Improvements on the Property and so deposited pursuant to law as provided in Ohio Revised Code Section 5709.42, shall be used solely for the purposes authorized in Ohio Revised Code Sections 5709.40, 5709.42 and 5709.43. The Fund shall remain in existence so long as such Service Payments and Property Tax Rollback Payments are collected and used for the aforesaid purposes, after which time said Fund shall be dissolved and any surplus funds remaining therein transferred to the City's General Fund, all in accordance with Ohio Revised Code Section 5709.43. Section 6. Public Infrastructure Improvements. The public infrastructure improvements set forth in Exhibit B hereto and to be made by the City are hereby designated as those public infrastructure improvements that directly benefit, or that once made will directly benefit, the TIF Area (the "Infrastructure Improvements"). Section 7. Economic Development and Tax Increment Financing_ Agreement. The Economic Development and Tax Increment Financing Agreement in the form presently on file with the Clerk of Council providing for, among other things, the provision of certain incentives to Wendy's and the payment of such Service Payments, is hereby approved and authorized with changes therein not inconsistent with this Ordinance and not substantially adverse to this City and which shall be approved by the City Manager. The City Manager, for and in the name of this City, is hereby authorized to execute that Economic Development and Tax Increment Financing Agreement, provided further that the approval of changes thereto by that official, and their character as not being substantially adverse to the City, shall be evidenced conclusively by her execution thereof. This Council further hereby authorizes and directs the City Manager, the Clerk of Council, the Director of Law, the Director of Finance, or other appropriate officers of the City, to make such arrangements as are necessary and proper for collection of said Service Payments from the owners of Property. RECORD OF ORDINANCES Dayton Legal Blank, Inc. Form No. 30043 Ordinance No. 127-03 Passed Page 4 20 Section 8. Further Authorizations. This Council further hereby authorizes and directs the Cit Mana er the Clerk of Council the Di y g rector of Law the Director of Finance or other , a ro riate officers of the it pp p C y to prepare and sign all agreements and instruments and to take any other actions as maybe appropriate to implement this Ordinance. Section 9. Notification of Passage. Pursuant to Ohio Revised Code Section 5709.40, the Clerk of this Council is hereby directed to deliver a copy of this Ordinance to the Director of the Department of Development of the State of Ohio within fifteen days after its passage. On or before March 31 of each year that the exemption set forth in Section 2 hereof remains in effect, the Clerk or other authorized officer of this City shall prepare and submit to the Director of the Department of Development of the State of Ohio the status report required under Section 5709.40(G) of the Ohio Revised Code. Section 10. Open Meetings. This Council finds and determines that all formal actions of this Council concerning and relating to the passage of this Ordinance were taken in an open meeting of this Council and that all deliberations of this Council that resulted in those formal actions were in meetings open to the public in compliance with the law. Section 11. Effective Date. This Ordinance shall be in full force and effect on the earliest date permitted bylaw. Signed: Presiding Officer Attest: Clerk of Council j~ Passed: w . r~ , 2003 i /r Effective: ~ ~ , 2004 I hereby certify that copies of this Ordinance/Resolution were posted in the City of Dublin in accordance with Section 731.25 of the Ohio Revised Code. uty Clerk of Council, Dublin, Ohio EXHIBIT A DESCRIPTION OF TIF AREA The following real estate situated in the City of Dublin, County of Franklin and State of Ohio, as depicted as follows: Tax Parcel No. 273008805 ti i - i o 4 ~ ~ i ~ J i ~ `t 6 0 d ~ _ - -ST- ~ ~ # ~ I , f ~ ~v.~ ~ ~ ~ _ j d ~ l Q 1a d ~ o ~ ~ ; ~ ,i ~ ,tt # _ ~ ` I ~ ~ 5 ~ ~ I ~ I ~ ~ ~ ~ ~ _ ~ 7 -UBLIN-GR• NVILL•E: D~---' ~ I' ~-----_DUBGIN=CRgNVIBL•~RD•- _ Ji,~:~_ ~B I ~ ~ ~ r1"" ~ ~ I ~ j fo , m._ o . J~ _ DU Lf 'GRANVLL WF ~ f ~ ~ o~ ~ •I ~ ~ O 4_...# _SFONERID.~fal ~ I A-1 EXHIBIT B DESCRIPTION OF INFRASTRUCTURE IMPROVEMENTS The Infrastructure Improvements will include, but not be limited to: • extension of Shamrock Boulevard from a point 650 feet north of its present northern terminus, as reflected in the City's Thoroughfare Plan. • any necessary adjustments and alterations to the infrastructure of existing sections of Shamrock Boulevard or Village Parkway as needed to accommodate the Roadway Extension and the further extension of Shamrock Boulevard. • any necessary excavating, grading, paving, constructing and installing curbs and gutters, public utilities which include water mains, sanitary sewers, and storm sewers, street lighting, sidewalks, bikeways, landscaping, traffic signalization, and also including design and other related costs, any interests in real property, erosion and sediment control measures, grading and other related work, survey work, soil engineering and construction staking, and in each case, all other costs and improvements necessary and appurtenant thereto, all of which will directly benefit, or that once made will directly benefit, the Property. B-1 Office of the City Mana er 5200 Emerald Parkway • Dubin, OH 43017 Phone: 614-410-4400 • Fax: 614-410-4490 CITY OF DLBLIN Memo To: Members of the Dublin City Council From: Jane S. Brautigam, City ManagerL,!~~-~- 5. ~,~.~..w~.~~~,,,,.,.; Date: November 10, 2003 Initiated By: Michael Stevens, Director of Economic Development Re: Ordinance No. 127-03, ' Wendy's International, Inc. -Economic Development and Tax Increment Financing Agreement Summary: Ordinance No. 127-03 authorizes the execution of an Economic Development/Tax Increment Financing (TIF) Agreement with Wendy's International, Inc. for the purpose of encouraging the company to expand operations and workforce within the City of Dublin. The attached Economic Development/TIF Agreement (the Agreement) provides for annual incentive payments for a period of 5 years based on Wendy's future growth in Dublin. The Agreement will provide Wendy's with an economic incentive to renovate and expand its corporate headquarters. The renovation and expansion will result in Wendy's increasing the number of employees at its headquarters by creating approximately 50 new jobs during the term of the incentive. It is estimated that the average annual wage of the new employees will be $75,000. The annual incentive payments will be based upon a percentage (the incentive factor) of the actual payroll withholdings in excess of the target payroll withholdings. The incentive factor will be 34% for the term of the agreement. The target payroll withholdings will be determined by using 2003's actual payroll withholdings and increasing it annually by 2.5%. The aggregate amount of payments made by the City of Dublin to Wendy's during the term of the agreement will not exceed $400,000. Due to its expansion, Wendy's is required by a previous zoning commitment to extend Shamrock Boulevard 650 feet to its present northern property line and fund 50% of the costs, estimated to be $220,000. Through joint efforts, Wendy's and the City were able to obtain a Roadwork Development (629) Account Grant in the amount of $500,000 from the State of Ohio to be applied towards the cost of the extension of Shamrock Boulevard to Village Parkway. As a result of the 629 grant, the attached agreement provides for the reduction of Wendy's financial obligation (to an amount not less than zero dollars) toward the extension of Shamrock Boulevard. The 629 grant money will not fund the entire cost of the Shamrock Boulevard extension to Village Parkway; therefore, the attached agreement also provides for the creation of a "non-school" TIF district for Wendy's headquarters site. The expansion and renovation of Wendy's existing facility will result in an increase in the property value and the creation of the TIF will generate service payments based on the increased value. We are estimating that approximately $85,000 in service payments will be generated per year. In obtaining the 629 grant and utilizing a TIF, the City has found alternative funding sources to continue to implement its thoroughfare plan as approved in the 1997 Community Plan. Recommendation: Staff continues to use innovative approaches to encourage job growth and to fund infrastructure projects. Staff recommends that City Council approve Ordinance No. 127-03 at its December 15, 2003 meeting. 2 Office of the City Mana er 5200 Emerald Parkway • Dubin, OH 43017 Phone: 614-410-4400 • Fax: 614-410-4490 " Y CITY OF DUBLIN Memo To: Members of the Dublin City Council From: Jane S. Brautigam, City Manager Date: November 5, 2003 Initiated By: Michael H. Stevens, Director of Economic Development Re: Economic Development Update Summary: The Division of Economic Development continues to work with local companies to encourage job retention and growth. In addition, staff is working with business prospects that are considering the relocation of operations to Dublin. In our ongoing efforts to communicate economic development activities to City Council, I wanted to provide an update on the following companies that will have economic development agreements before City Council in the immediate future. Wendy's International, Inc. As City Council may recall from previous correspondence (see attached October 8, 2003 Wendy's International Memo) staff has been discussing an economic development incentive with Wendy's International to encourage the expansion of its existing headquarters by 16,000 square feet. The expansion would result in the creation of 50 new full-time jobs in Dublin at an average wage of $75,000. Staff has placed on the November 17, 2003 City Council agenda an ordinance that would approve the Economic Development/Tax Increment Finance Agreement with Wendy's International. The ordinance will be held over for a second reading on December 15, 2003. The November 17, 2003 City Council agenda also includes a resolution to accept a Roadwork Development (629) Account Grant from the State of Ohio for $500,000. The 629 funding would go towards the extension of Shamrock Boulevard. Compensation Consultants, Inc. Compensation Consultant's Inc. (CCI) is considering the relocation of its headquarters from Columbus to Dublin. CCI is a third party administrator that manages worker's compensation claims for employers. CCI provides service to 10,000 companies in Ohio and does business in West Virginia, Kentucky and Indiana. CCI would relocate 140 jobs, with an annual payroll of $6 million, and lease approximately 25,000 square feet in the 5500 Glendon Court building, which has been vacant for the past year. CCI is one of the companies in the Prospect Portfolio that has been included in the past two monthly Economic Development Updates. Staff is finalizing negotiations with CCI regarding afive-year, $180,000 maximum economic development incentive that would be based upon a percentage of actual income tax withholdings revenue. The Economic Development Agreement will be on the November 17, 2003 City Council Agenda for a first reading. Core Source Staff has met with a representative of Core Source to discuss the company's possible relocation from Westerville. Core Source is a leading provider of full service; national health benefits programs and is a subsidiary of Trustmark Insurance Company. Core Source is considering the relocation of 145 full time equivalent employees to Dublin with an average annual income of $33,800. The company is looking to enter into aseven-year lease and would relocate in May of 2004. In order to encourage Core Source's relocation, staff has offered afive-year economic development incentive that would be based upon a percentage of actual income tax withholdings revenue. It is estimated that the incentive payments would be approximately $25,000 per year with a maximum payment of $200,000 over the five-year period. Staff will continue to keep City Council updated on our discussions with Core Source. It is anticipated that an Economic Development Agreement will be placed before City Council during the first quarter of 2004 if Core Source executives decide to relocate operations to Dublin. Conclusion: The Division of Economic Development will continue to pursue job growth, retention and expansion in order to help increase income tax revenues for the City. The City's innovative approach to crafting specific incentive packages to particular companies will continue to attract interest from companies considering relocating as well as encourage the expansion of existing businesses. 2 Office of the City Mana~er 5200 Emerald Parkway • Dub in, OH 43017 Phone: 614-410-4400 • Fax: 614-410-4490 CITI OF DUBLIN Memo To: Members of the Dublin City Council From: Jane S. Brautigam, City Manager Date: September 17, 2003 Initiated By: Michael Stevens, Director of Economic Development Re: Economic Development Update-Wendy's International, Inc. Summary: In recent years Wendy's International, Inc. has expanded its business. Wendy's has built a portfolio of quality restaurants, with Wendy's Old Fashioned Hamburgers and Tim Hortons as the foundation of the company. Last year Wendy's completed its acquisition of Baja Fresh Mexican Grill and invested in two leading fast-casual restaurant chains, Cafe Express and Pasta Pomodoro. As a result of this significant growth, Wendy's is considering renovating, upgrading and expanding its corporate headquarters. Staff has been contacted by Wendy's to discuss the following issues: 1). The company's application for financial assistance from the State. 2). Expansion incentives available from the City of Dublin. 3). Recent changes to the State's tax law. Wendy's has applied for a Job Creation Tax Credit (JCTC) from the State. The Ohio Tax Credit Authority will hear Wendy's application on September 29, 2003. In addition, Wendy's is pursuing Roadwork Development Account (629) funds from the State. The 629 money will be received by the City to use for public infrastructure improvements that benefit Wendy's expansion. The City also will need to submit a request for the 629 money and if a preliminary commitment is approved by the State, legislation accepting the grant money will need to be passed by the City. Specifically, the City will use the money to extend Shamrock Boulevard from its existing terminus to Village Parkway as reflected in the City's Thoroughfare Plan (attached). The City has received money from the 629 account in the past as part of the State's effort to retain Pacer Global Logistics (fka Rail Van) in Ohio. As a part of the JCTC application, Wendy's has committed to create 50 new full-time jobs over the next three years. The estimated average wage for the new full-time jobs is $75,000. Staff has been discussing potential incentives with the company to encourage the headquarters renovation and future job growth in Dublin. The State's modified tax language has changed the way certain businesses define income. The change was made extremely late in the budget process, without committee discussion, in an effort to balance the State's budget and only impacts businesses that operate franchises. As a result, Wendy's has estimated its annual effective tax rate will increase to 37.25%, increasing its annual tax liabilities by approximately $3.2 million. Wendy's Update Memo page 2 The impact of the modified tax language on businesses operating franchises could mean less job growth throughout the State and specifically loss of existing jobs in Dublin. Staff has contacted individuals at the State Department of Taxation in an effort to better understand the issues and express the City's concerns. In our most recent conversation, it is our understanding there may be a solution in progress. City Council members maybe asked to contact our State legislators in the future to support legislation clarifying the tax language and mitigating the impact to companies such as Wendy's. Conclusion: Wendy's International, Inc. is a community leader that has called Dublin home for many years. Staff is working to encourage Wendy's to continue its job growth in Dublin and will continue to discuss incentive options with the company. Staff will continue to keep City Council updated on our discussions with Wendy's. attachment: City's Thoroughfare Plan Office of the City Mana er 5200 Emerald Parkway • Dubin, OH 43017 Phone: 614-410-4400 • Fax: 614-410-4490 f,ITl' OF DIIBLIN Memo To: Members of the Dublin City Council From: Jane S. Brautigam, City Manager Date: October 8, 2003 Initiated By: Michael H. Stevens, Director of Economic Development Re: Wendy's International, Inc. Summary: On September 29, 2003 Wendy's International received a Job Creation Tax Credit (JCTC) from the State of Ohio. Wendy's has committed to creating 50 new full-time jobs in Dublin over the next three years at an average annual wage of $75,000. Wendy's plans to make significant technological upgrades to its existing headquarters building and add 15,000 square feet of space. In addition to the JCTC the State verbally has committed to provide a minimum of $400,000 from its Roadwork Development Account (629) Fund to go towards the extension of Shamrock Boulevard. As mentioned in the September 17, 2003 Economic Development Update (attached) staff has been discussing local incentive options with a Wendy's representative to encourage future job growth in our community. At this time the incentive under discussion is a five-year, $400,000 maximum incentive that will be based upon a percentage of actual income tax withholding revenues over a set "target" for income tax withholdings. Also, due to the 629 funding from the State, the City would release Wendy's from its commitment to pay for its portion of the Shamrock Boulevard extension, estimated at approximately $220,000. The final component of the proposed economic development agreement would be a TIF on Wendy's expansion that would generate additional funding for the Shamrock Boulevard extension, which has an estimated total cost of $2,040,000. Conclusion: Job growth and alternative funding sources for infrastructure improvements continue to be priorities for staff. The Wendy's expansion provides opportunities to accomplish both. Squires, Sanders and Dempsey, the City's bond counsel, is drafting an Economic Development Agreement that will be made available to City Council in its final draft form. Staff hopes to finalize the agreement with Wendy's in the near future and have legislation before City Council in November. ECONOMIC DEVELOPMENT AND TAX INCREMENT FINANCING AGREEMENT THIS ECONOMIC DEVELOPMENT AND TAX INCREMENT FINANCING AGREEMENT (the "Agreement") is made and entered into this 16th day of January, 2004, by and between the CITY of DUBLIN, OH[o (the "City"), a municipal corporation duly organized and validly existing under the Constitution and the laws of the State of (~hi~ tthe ~`.crnro"1 ~n~ ~.ts Charter, and WENDY'S INTERNATIONAL, INC., an Ohio corporatic ors located in Dublin, Ohio ("Wendy's"), under the circumstances sm ~ \'I' itals. WHEREAS, consistent with its Ecc ~ (the "Strategy") approved by Dublin City Council Resolution No. 1994, the City desires to encourage commercial office developl~.~~~~ a~~u ~iuviue for the creation of employment opportunities within the City; and WHEREAS, Wendy's is the owner of certain real property located in the City (which property is depicted in Exhibit A attached hereto and referred to herein as the "Property"), on which, Wendy's world headquarters is currently located (the "World Headquarters"); and WHEREAS, based on the results of Wendy's examination of workforce and development needs, and induced by and in reliance on the tax and economic development incentives provided in this Agreement, Wendy's is desirous of expanding its World Headquarters and its workforce within the City; and WHEREAS, the City has agreed to provide tax and economic development incentives to induce Wendy's to renovate and expand its World Headquarters by upgrading their existing facility and equipment and constructing a 16,000 square foot expansion thereto (which expansion is described in Exhibit B attached hereto and referred to herein as the "Project,"), which Project is expected to result in the creation of approximately 50 new jobs; and WHEREAS, in connection with the Project, the City and Wendy's have heretofore determined, as required by a previous zoning commitment, that (i) Shamrock Boulevard will need to be extended 650 feet from its present northern terminus (the "Roadway Extension"), (ii) fifty percent (50%) of the cost of that Roadway Extension shall be paid by Wendy's, to the extent provided herein; and (iii) the Roadway Extension will benefit the Property; and WHEREAS, Wendy's and the City have made application for a grant (the "629 Grant") from the State to be applied towards the cost of the Roadway Extension and to the extent that the City receives the 629 Grant, the portion of the cost of the Roadway Extension to be paid by Wendy's shall be reduced; and WHEREAS, the City and Wendy's have further determined, that certain additional public infrastructure improvements (all as more fully described in Exhibit C and referred to herein as ~~~~~f the "Public Improvements"), may be constructed by the City and which will benefit the Property; and WHEREAS, the City has determined that it is necessary and appropriate and in the best interests of the City to (i) provide certain economic incentives to Wendy's for its expansion project for the purpose of creating and preserving jobs and employment opportunities and to improve the economic welfare of the people of the State of Ohio and the City as authorized in Article VIII, Section 13 of the Ohio Constitution and (ii) provide for Wendy's, and its successors and assigns, to make service payments in lieu of taxes with respect to the Property to pay costs of the construction of the Roadway Extension and the Public Improvements or for distribution to the Dublin City School District, all pursuant to and in accordance with Ohio Revised Code Sections 5709.40, 5709.42 and 5709.43 (collectively, the "Act"), and the City, by its Ordinance No. 127- 03 passed December I5, 2003 (the "TIF Ordinance"), has declared that 100% of the increase in assessed value of the Property subsequent to the effective date of the TIF Ordinance (including but not limited to any portion of that increase in assessed value resulting from Wendy's construction of the Project and other improvements) is a public purpose and declared to be exempt from taxation for a period commencing with the first tax year that begins after the effective date of the TIF Ordinance and in which an Improvement first appears on the tax list and duplicate of real and public utility property and ending on the earlier of (a) thirty (30) years after such exemption commenced or (b) the date on which the City can no longer require service payments in lieu of taxes, all in accordance with the requirements of the Act; and WHEREAS, prior to the passage of the TIF Ordinance, the City provided notice of the proposed passage of the TIF Ordinance to any affected school districts as required by Ohio Revised Code Sections 5709.40 and 5709.83; and WHEREAS, the City and Wendy's have determined to enter into this Agreement to provide these incentives to induce that expansion by Wendy's of its operations within the City and to provide for the collection of such payments in lieu of taxes; Now, THEREFORE, in consideration of the premises and covenants contained herein, and to induce Wendy's to proceed with the Project, the parties hereto agree and obligate themselves as follows: Section 1. Wendy's Agreement to Renovate and Expand its World Headquarters and Create Employment Opportunities. In consideration of the economic development incentives to be provided by the City herein, Wendy's agrees that it will renovate and expand its World Headquarters beginning in the year 2004, and also estimates the approximate number of Wendy's employees at the World Headquarters will increase by 50 by calendar year 2008. Section 2. City's Agreement to Provide Incentives. (a) General. In consideration for Wendy's agreement to renovate and expand its World Headquarters and workforce and to increase the level of Wendy's employment and associated payroll at the World Headquarters, the City agrees to provide economic development incentives to Wendy's in accordance with this Section. -2- (b) Calculation of Actual Withholdings. On or before March 15 of each of the years 2005 through and including 2009, the City shall determine whether the payroll withholding taxes collected during the preceding calendar year by the City from all Employees (the "Actual Withholdings") exceed the Target Withholdings for that preceding calendar year, all in accordance with the schedules set forth below. For purposes of this Section 2, "Employees" shall include all individuals employed by Wendy's and working at the World Headquarters. Wendy's agrees that, in accordance with the Dublin City Code, the annual payroll reconciliation relating to Wendy's Employees will be provided to the City on or before February 28 of each calendar year. (c) Payments to Wend. If the Actual Withholdings exceed the Target Withholdings for the preceding calendar year, the City shall, on or before April 15 of the then current calendar year, pay to Wendy's, solely from nontax revenues, an amount equal to the product of (i) an amount equal to the Actual Withholdings (net of refunds) minus the Target Withholdings, multiplied by (ii) the Incentive Factor (as defined below for each applicable year). The payments provided for in this Section shall be made by the City to Wendy's by such manner as is mutually agreed to by the City and Wendy's. With respect to the Actual Withholdings collected during each of the calendar years 2004 through 2008, the Incentive Factor shall be thirty-four percent (34%). The Target Withholdings for each of those calendar years shall be calculated as follows: Calendar Year Target Withholdings 2004 Calendar Year 2004 Actual Withholdings multiplied by 1.025 2005 Calendar Year 2004 Target Withholdings multiplied by 1.025 2006 Calendar Year 2005 Target Withholdings multiplied by 1.025 2007 Calendar Year 2006 Target Withholdings multiplied by 1.025 2008 Calendar Year 2007 Target Withholdings multiplied by 1.025 (d) Ci 's Obligation to Make Payments Not Debt; Payments Limited to Nontax Revenues. Notwithstanding anything to the contrary herein, the obligations of the City pursuant to this Section 2 shall not be a general obligation debt or bonded indebtedness, or a pledge of the general credit or taxes levied by the City, and Wendy's shall have no right to have excises or taxes levied by the City, the State or any other political subdivision of the State for the performance of any obligations of the City herein. Consistent with Section 13 of Article VIII, Ohio Constitution, any payments or advances required to be made by the City pursuant to this Section 2 shall be payable solely from the City's nontax revenues. Further, since Ohio law limits the City to appropriating monies for such expenditures only on an annual basis, the obligation of the City to make payments pursuant to this Section 2 shall be subject to annual appropriations by the City Council and certification by the Director of Finance of the City as to the availability of such nontax revenues. (e) Deficiency Carryforward Amounts. If and to the extent the amount of nontax revenues are insufficient in a particular calendar year for appropriation and payment to Wendy's, the City will make payment to Wendy's in the amount of nontax revenues available for appropriation and payment to Wendy's. The difference between the amount required to be paid by the City to Wendy's pursuant to this Section 2 and the amount actually paid (referred to herein as a -3- ~l i. "Deficiency Carryforward Amount") shall be carried forward to the next succeeding calendar year and paid to Wendy's in addition to any other payment for that succeeding year required by this Section 2. This Agreement shall not terminate until the City has paid to Wendy's all Deficiency Carryforward Amounts required to be paid to Wendy's in accordance with this Section 2; provided, however, the aggregate of all payments to Wendy's pursuant to this Agreement shall not exceed the Maximum Payment Amount (as defined below). (f) Maximum Economic Development Incentive Payments. In no event shall the aggregate amount of payments made by the City to Wendy's pursuant to this Section 2 during the term of this Agreement exceed Four Hundred Thousand Dollars ($400,000) (the "Maximum Payment Amount"). (g) Applicable Ciy Payroll Tax Rate. For purposes of calculating the Actual Withholdings in each calendar year under this Section 2, the City's payroll tax rate shall be assumed to be two percent (2%). Section 3. Roadway Extension. (a) General. In connection with the expansion of Wendy's World Headquarters, Shamrock Boulevard is required to be extended 650 feet from its present northern terminus. The City and Wendy's agree that the present estimated cost of the Roadway Extension is $440,000. (b) Wender Payment of a Portion of the Cost. The City and Wendy's agree that the City will proceed in a timely manner with the construction of the Roadway Extension and upon completion of the Roadway Extension, provide a certificate of cost Wendy's setting for the final, actual costs of such Roadway Extension, together with any supporting documentation as may be reasonably requested by Wendy's. Within thirty (30) days of receipt of such certification Wendy's shall make payment to the City in an amount equal to fifty percent (50%) of the actual costs; provided, however, such amount maybe reduced in accordance with Section 3(c). (c) 629 Funds and Reduction of Wendy's Portion. Wendy's and the City agrees to make application to the State for a grant from the State's Roadwork Development (629) Account, which grant monies would be applied towards the costs of the extension of Shamrock Boulevard to Village Parkway. The City agrees that the portion of the costs of the Roadway Extension to be paid by Wendy's shall be reduced (to an amount not less that zero dollars) by the amount of the 629 Grant received by the City. Section 4. Covenant to Make Pay_ ments in Lieu of Taxes. Wendy's, for itself and any successors in interest to the Property, or any part thereof or interest therein, hereby agrees that the then current owner shall make for the Property semiannual service payments in lieu of taxes with respect to the "Improvement" (including the Project), as that term is used and defined in the Act, pursuant to and in accordance with the requirements of the Act, and pursuant to the TIF Ordinance and any subsequent amendments or supplements thereto. Any late payments shall be subject to penalty and bear interest at the then current rate established under Ohio Revised Code Sections 323.121(B)(1) and 5703.47, as the same may be amended from time to time, or any successor provisions thereto as the same may be amended from time to time (the payment of penalties and -4- cu~'~'`/ interest are collectively referred to herein with the payments in lieu of taxes as the "Service Payments"). Such Service Payments shall be made semiannually to the County Treasurer of Franklin County, Ohio (or to the Treasurer's designated agent for collection of the Service Payments) on or before the date on which real property taxes would otherwise be due and payable for the Improvement. Each semiannual payment shall be in the same amount as the real property taxes that would have been charged and payable against the Improvement (after credit for any other available payments received by the City under Ohio Revised Code Section 319.302 as the same may be amended from time to time, or any successor provisions thereto as the same may be amended from time to time, herein the "Property Tax Rollback Payments") had an exemption from taxation not been granted, and otherwise shall be in accordance with the requirements of the Act. The Service Payments and Property Tax Rollback Payments shall be distributed in accordance with the TIF Ordinance. Wendy's, and its successors and assigns in interest to the Property, shall not, under any circumstances, be required for any tax year to pay both real property taxes with respect to the Improvement and payments in lieu of taxes with respect to the Improvement, whether pursuant to Ohio Revised Code Section 5709.42, the TIF Ordinance, this Agreement or any other applicable law. It is intended and agreed, and it shall be so provided by Wendy's in a declaration filed and of record in the office of the County Recorder of Franklin County, Ohio (the "Declaration"), and in any future deed from Wendy's conveying the Property or any part thereof, that the covenants provided in this Section shall be covenants running with the land and that they shall, in any event and without regard to technical classification or designation, legal or otherwise, be binding to the fullest extent permitted by law and equity for the benefit and in favor of and enforceable by the City whether or not this Agreement remains in effect or whether or not such provision is included by Wendy's in any succeeding deed to Wendy's successors and assigns in interest to the Property. It is further intended and agreed that these agreements and covenants shall remain in effect for the full period of exemption permitted in accordance with the requirements of the Act and the City's TIF Ordinance enacted pursuant thereto. Wendy's and its successors and assigns in interest to the Property shall only be responsible for making Service Payments which become due and payable during their respective periods of ownership. Such covenants running with the land in the Declaration shall have priority over any mortgage or other lien on the Property, and Wendy's shall cause any and all holders of mortgages or other liens existing on the Property (if any) as of the time of recording of the Declaration, to subordinate such lien to the covenants running with the land provided in the Declaration. Section 5. Exemption Application. Wendy's further agrees for itself and its successors and assigns in interest to the Property to assist and cooperate with the City in the preparation and filing by the City of all necessary applications and supporting documents to obtain the exemption from real property taxation for the Improvement authorized by the Act and the City, and to enable the City to collect Service Payments thereunder, and Wendy's shall cooperate with the City in connection with the preparation and filing of the initial and any further applications required to accomplish that purpose. The City shall make the initial application no later than December 31, 2005, unless the City determines a later date is permissible. -5- ~ Section 6. Tax Increment Equivalent Fund. The City and Wendy's acknowledge the creation, pursuant to the TIF Ordinance, of the Shamrock Boulevard Tax Increment Equivalent Fund (the "Fund") to be maintained in the custody of the City. The City and Wendy's agree that the Fund shall receive all Service Payments and Property Tax Rollback Payments payable to the City in respect of the Property as described in Section 1, with all such Service Payments and Property Tax Rollback Payments being used to finance or pay the costs of (a) the Roadway Extension not otherwise paid by Wendy's or the 629 Grant and (b) the Public Improvements not otherwise paid by the 629 Grant. Any incidental surplus remaining in the Fund shall be disposed of as provided in Section 5709.43(D) of the Revised Code. Section 7. Construction of ProLct Public Improvements; Issuance of Securities. In consideration for the City's agreement to construct the Public Improvements, Wendy's agrees to construct, or cause the construction of, the Project. In consideration for Wendy's agreement to construct the Project, the City agrees to construct, or cause to be constructed, the Public Improvements. Section 8. Release. Upon satisfaction of Wendy's obligations under this Agreement and termination of Wendy's obligations to make the Service Payments, the City shall, upon the request of Wendy's, or its successors and assigns in interest to the Property, execute an instrument in recordable form evidencing such termination and releasing the covenants running with the land set forth in the Declaration. Section 9. Estoppel Certificate. Upon request of Wendy's or any successors or assigns in interest to the Property, the City shall execute and deliver to Wendy's, any such successor and assign or any proposed purchaser, mortgagee or lessee of the Property, a certificate stating: (a) that the Agreement is in full force and effect, if the same is true; (b) that Wendy's or that successor or assign is not in default under any of the terms, covenants or conditions of the Agreement, or, if Wendy's or the successor or assign is in default, specifying same; and (c) such other matters as Wendy's or the successor or assign reasonably requests. Section 10. Representations of Parties. Wendy's hereby represents that it is the owner in fee simple of the Property and has full power and authority to enter into this Agreement and carry out its terms. The City hereby represents that the TIF Ordinance was passed by the City Council on December I5, 2003. Section 11. Information Reporting. Wendy's shall cooperate in all reasonable ways with and provide necessary and reasonable information to the designated Tax Incentive Review Council (the "TIRG") to enable the TIRC to review and determine annually during the term of this Agreement, the compliance of Wendy's with the terms of this Agreement. Any information supplied by Wendy's shall be provided solely for the purpose of monitoring its compliance with this Agreement. Section 12. Miscellaneous. (a) Notices. Except as otherwise specifically set forth in this Agreement, all notices, demands, requests, consents or approvals given, required or permitted to be given hereunder shall be -6- in writing and shall be deemed sufficiently given if actually received or ifhand-delivered or sent by recognized, overnight delivery service or by certified mail, postage prepaid and return receipt requested, addressed to the other party at the address set forth in this Agreement or any addendum to or counterpart of this Agreement, or to such other address as the recipient shall have previously notified the sender of in writing, and shall be deemed received upon actual receipt, unless sent by certified mail, in which event such notice shall be deemed to have been received when the return receipt is signed or refused. For purposes of this agreement, notices shall be addressed to: (i) The City at: City of Dublin, Ohio 5800 Shier Rings Road Dublin, Ohio 43016-7295 Attention: Economic Development Director (ii) Wendy's at: Wendy's International, Inc. 4288 W. Dublin-Granville Rd. Dublin, Ohio 43017 Attention: Everett Gallagher, Senior Vice President-Enterprise Tax The parties, by notice given hereunder, may designate any further or different addresses to which subsequent notices; certificates, requests or other communications shall be sent. (b) Extent of Provisions; No Personal Liability. All rights, remedies, representations, warranties, covenants, agreements and obligations of the City under this Agreement shall be effective to the extent authorized and permitted by applicable law. No representation, warranty, covenant, agreement, obligation or stipulation contained in this Agreement shall be deemed to constitute a representation, warranty, covenant, agreement, obligation or stipulation of any present or future trustee, member, officer, agent or employee of the City or Wendy's in other than his or her official capacity. No official executing or approving the City's or Wendy's participation in this Agreement shall be liable personally under this Agreement or be subject to any personal liability or accountability by reason of the issuance thereof. (c) Successors. This Agreement shall be binding upon and inure to the benefit of Wendy's and its successors and assigns. (d) Recitals. The City and Wendy's acknowledge and agree that the facts and circumstances as described in the Recitals hereto are an integral part of this Agreement and as such are incorporated herein by reference. (e) Amendments. This Agreement may only be amended by written instrument executed by the City and Wendy's. -7- (f) Executed Counterparts. This Agreement may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute but one and the same agreement. It shall not be necessary in proving this Agreement to produce or account for more than one of those counterparts. (g) Severability. In case any section or provision of this Agreement, or any covenant, agreement, obligation or action, or part thereof, made, assumed, entered into or taken, or any application thereof, is held to be illegal or invalid for any reason, (i) that illegality or invalidity shall not affect the remainder hereof or thereof, any other section or provision hereof, or any other covenant, agreement, obligation or action, or part thereof, made, assumed, entered into or taken, all of which shall be construed and enforced as if the illegal or invalid portion were not contained herein or therein, (ii) the illegality or invalidity of any application hereof or thereof shall not affect any legal and valid application hereof or thereof, and (iii) each section, provision, covenant, agreement, obligation or action, or part thereof, shall be deemed to be effective, operative, made, assumed, entered into or taken in the manner and to the full extent permitted by law. (h) Captions. The captions and headings in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement. (i) Governing Law and Choice of Forum. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio or applicable federal law. All claims, counterclaims, disputes and other matters in question between the City, its agents and employees, and Wendy's, its employees and agents, arising out of or relating to this Agreement or its breach will be decided in a court of competent jurisdiction within Franklin County, Ohio. (j) Survival of Representations and Warranties. All representations and warranties of Wendy's and the City in this Agreement shall survive the execution and delivery of this Agreement. -8- ~i Itv WITNESS WHEREOF, the City and Wendy's have caused this Agreement to be executed in their respective names by their duly authorized representatives, all as of the date first written above. CITY OF DUBLIN OHIO S ~ _ - _ - Printed: Jane Brautigam Title: Cit Mana er Printed: Marsha I. Grigsby Title: Director of Finance Approved as to Form: Printed: Stephen J. Smith Title: Director of Law WENDY'S INTERNATIONAL, INC. By: ~~.4.~,`~ ; ~a lam" 1 Printed: ~ J `=''z-}~ ~ ~ „r` Title: ~ e~: t`. ~ . L~ ~i `5 ~ aQ a ~ n -4-~ r ~ 5c -9- FISCAL OFFICER' S CERTIFICATE The undersigned, Director of Finance of the City under the foregoing Agreement, certifies hereby that the moneys required to meet the obligations of the City during the year 2004 under the foregoing Agreement have been appropriated lawfully for that purpose, and are in the Treasury of the City or in the process of collection to the credit of an appropriate fund, free from any previous encumbrances. This Certificate is given in compliance with Sections 5705.41 and 5705.44, Ohio Revised Code. Dated:: ~a.,~.. , 2004 Director of Finance City of Dublin, Ohio -10- EXHIBIT A DESCRIPTION OF TIF AREA The following real estate situated in the City of Dublin, County of Franklin and State of Ohio, as bounded and described as follows: Tax Parcel No. 273008805 (._f ~ ~ ` ~r~ t Q~ - ~ 7 ~ a r 1 Ve lh ~ ~ ~ o~ o p c t ti ~ ~ ~ o 0 ~_..U;BL•IN~ •9N.V.IL-L•E;.D~ - - DU! ; - ; ~1- BLIN^CRyAN:VIL'~~RD I iD ,BL+I -C,R•; N.~ILLE~t 1` ~ ~ ; ~ a 7 0 ~ STON6F~IDGP~L °0 [~{u' A-1 EXHIBIT B PROJECT The Project is expected to include a 16,000 square foot expansion and renovation of the Wendy's International corporate headquarters, which is to include space for offices and other uses, as well as associated parking and landscaping improvements, and other related improvements. -12- i - EXHIBIT C PUBLIC IMPROVEMENTS The Public Improvements will include, but not be limited to: • extension of Shamrock Boulevard from a point 650 feet north of its present northern terminus, as reflected in the City's Thoroughfare Plan. • any necessary adjustments and alterations to the infrastructure of existing sections of Shamrock Boulevard or Village Parkway as needed to accommodate the Roadway Extension and the further extension of Shamrock Boulevard. • any necessary excavating, grading, paving, constructing and installing curbs and gutters, public utilities which include water mains, sanitary sewers, and storm sewers, street lighting, sidewalks, bikeways, landscaping, traffic signalization, and also including design and other related costs, any interests in real property, erosion and sediment control measures, grading and other related work, survey work, soil engineering and construction staking, and in each case, all other costs and improvements necessary and appurtenant thereto, all of which will directly benefit, or that once made will directly benefit, the Property. -13- c