Ordinance 21-10RECORD OF ORDINANCES
Ordinance No.
21 -10
Passed . 20_
AN ORDINANCE AUTHORIZING THE PROVISION OF
CERTAIN INCENTIVES TO QUALITY SUPPLY CHAIN CO-
OP, INC. TO INDUCE IT TO LOCATE ITS MAIN OFFICE
AND ASSOCIATED OPERATIONS AND WORKFORCE
WITHIN THE CITY, AND AUTHORIZING THE EXECUTION
OF AN ECONOMIC DEVELOPMENT AGREEMENT.
WHEREAS, consistent with its Economic Development Strategy (the "Strategy") approved
by Dublin City Council Resolution No. 07 -94 adopted on June 20, 1994, and the updated
strategy approved by Dublin City Council Resolution No. 30 -04 adopted on July 6, 2004,
the City desires to encourage commercial office development and provide for the creation of
employment opportunities within the City; and
WHEREAS, Quality Supply Chain Co -op, hie. (the "Company ") recently performed a
comprehensive examination of its workforce needs, and based on the results of this
examination, and induced by and in reliance on the economic development incentives
provided in the proposed Economic Development Agreement (as described below), the
Company is desirous of leasing a facility within the City for the location of its main office
and associated operations and workforce within the City in order to achieve the payroll
withholding targets set forth in the Economic Development Agreement; and
WHEREAS, this Council has determined that it is necessary and appropriate and in the
best interests of the City to provide for an economic development incentives to the
Company, as described in the proposed Economic Development Agreement; and
WHEREAS, this Council has determined to offer the economic development incentives,
the terms of which are set forth in a substantially final form of Economic Development
Agreement presently on file in the office of the Clerk of Council, to induce the Company to
lease a facility within the City and locate its main office and associated operations and
workforce within the City, thereby improving 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.
NOW, TTREFORE, BE IT ORDAINED by the Council of the City of Dublin, State of
Ohio, 6Z of the elected members concurring, that:
Section 1 . The Economic Development Agreement by and between the City and the
Company, in the form presently on file with the Clerk of Council, providing for, among
other things, the provision of certain economic development incentives in consideration for
the Company's agreement to lease a facility within the City and locate its main office and
associated operations and workforce within the City, 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 oftbis City, is hereby authorized to execute that Economic Development 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 conclusivelyby the execution
thereof. This Council further authorizes the City Manager, for and in the name of the City,
to execute any amendments to the Economic Development Agreement, which amendments
are not inconsistent with this Ordinance and not substantially adverse to this City.
Section 2 . This Council further hereby authorizes and directs the City Manager, the
Director of Law, the Director ofFinance, the Clerk of Council, or other appropriate officers
of the City to prepare and sign all agreements and instruments and to take any other actions
as may be appropriate to implement this Ordinance.
Section 3 . This Council finds and determines that all formal actions of this Council and
RECORD OF ORDINANCES
21 -10
Ordinance No.
Page 2 of 2
Passed Page
any of its committees concerning and relating to the passage of this Ordinance were taken in
open meetings of this Council or committees, and that all deliberations of this Council and
any of its committees that resulted in those formal actions were in meetings open to the
public, all in compliance with the law including Section 121.22 of the Revised Code.
Section 4. This Ordinance shall be in full force and effect on the earliest date permitted
by law.
Signed:
/�"ayor - Pres d ; Officer
Attest:
Clerk of Council
Passed: 2010
Effective: 9 i� 2010
Office of the City Manager
5200 Emerald Parkway • Dublin, OH 43017 -1090
Phone: 614- 410 -4400 • Fax: 614 -410 -4490
To: Dublin City Council
From: Terry Foegler, City Manager ('G
Date: May 20, 2010 v
Initiated By: Colleen Gilger, Economic Development Administrator
Re: Ordinance 21 -10 - Economic Development Agreement with Quality Supply Chain
Co -op (QSCC)
Summary
Staff has been in discussions with Quality Supply Chain Co -op (QSCC) regarding the possible
location of the company's headquarters and workforce. The company currently is reviewing lease
options for this operation both in Dublin and in Atlanta, GA.
QSCC is a stand -alone business that began operations in January 2010 when it hired Wendy's 20-
person North American purchasing team (which was housed in Dublin), an outside President and a
CFO. QSCC operates in a cooperative basis where it is owned by its members, Wendy's
franchisees. QSCC is the exclusive purchasing agent for over 6,000 Wendy's franchisees in the
USA and Canada. QSCC is responsible for managing the purchasing of food and packaging items,
logistics and distribution for Wendy's franchisees in the USA and Canada. Once QSCC is fully
staffed, the organization will represent the culmination of efforts to organize a more effective and
independent supply chain management organization on behalf of Wendy's. Recently, the company
has been collaborating with Arby's franchisees as well. The company must make a location decision
of whether to stay near the Wendy's operation in Dublin or locate to the Wendy's /Arby's Group
shared - services operations in Atlanta.
The State of Ohio Department of Development recently approved a seven -year, 50 percent Job
Creation Tax Credit and Rapid Outreach Grant valued at $647,415 for QSCC.
The Economic Development Agreement proposed to QSCC in consideration for: (1) executing a
five -year lease in Dublin; (2) retaining its existing 20 employees; and (3) creating 24 new jobs
includes a $5,000 Location Grant and a four -year, 20% Performance Incentive on withholdings
collected, which is capped at $137,500 for the term of the agreement. The company would have to
reach predetermined annual withholdings targets to qualify for performance incentives.
The City estimates it will pay QSCC approximately $142,500 and net approximately $457,000 in
withholdings over the agreement term, should QSCC grow according to expectations.
Recommendation
Staff recommends Council passage of Ordinance 21 -10 at the second reading/public hearing on
June 14, 2010. Please contact Colleen Gilger with any questions.
ECONOMIC DEVELOPMENT AGREEMENT
THIS ECONOMIC DEVELOPMENT AGREEMENT (this `Agreement") is made and entered into
this day of , 2010, by and between the CITY OF DUBLIN, OHIO (the "City"), a
municipal corporation duly organized and validly existing under the Constitution and the laws of
the State of Ohio (the "State ") and its Charter, and QUALITY SUPPLY CHAIN CO -OP, INC. (the
"Company" and collectively with the City, the `Parries "), a Delaware corporation, under the
circumstances summarized in the following recitals.
RECITALS:
WHEREAS, consistent with its Economic Development Strategy (the "Strategy") approved
by Dublin City Council Resolution No. 07 -94 adopted on June 20, 1994, and the updated Strategy
approved by Dublin City Council Resolution No. 30 -04 adopted on July 6, 2004, the City desires
to encourage commercial office development and provide for the retention and creation of
employment opportunities within the City; and
WHEREAS, based on the results of the Company's recent comprehensive examination of
workforce needs, and induced by and in reliance on the economic development incentives provided
in this Agreement, the Company desires to locate its main office and associated operations and
workforce within the City; and
WHEREAS, pursuant to Ordinance No. 21 -10 passed on , 2010
(the "Ordinance "), the City has determined to offer the economic development incentives
described herein to induce the Company to lease a facility within the City for the location of its
main office and associated operations and workforce within the City, which will result in the
creation of new jobs 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, the City and the Company have determined to enter into this Agreement to
provide these incentives in order to induce the Company to lease a facility within the City and
locate its operations and workforce within the City;
Now THEREFORE, the City and the Company covenant, agree and obligate themselves as
follows:
Section 1. Company's Agreement to Lease a Facility and Locate Its Operations and
Workforce Within the City In consideration for the economic development incentives to be
provided by the City herein, the Company agrees that it will lease a facility within the City for the
location of its main office and associated operations and workforce within the City pursuant to this
Agreement. The Company expects to retain twenty (20) employees and create an additional
twenty -four (24) employee positions within the City by December 31, 2014. The average annual
wage of these employees for this period is estimated to be One Hundred Twenty -Three Thousand
and 00 /100 Dollars ($123,000.00), with total estimated payroll withholdings of approximately Four
Hundred Fifty -Three Thousand, Forty -Six and 00 /100 Dollars ($453,046.00) over the term of this
Agreement. The Company agrees that the City's obligations to remit any payments pursuant to
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Section 2 of this Agreement shall be contingent upon (a) the Company delivering to the City a fully
executed copy of an agreement evidencing the Company's lease of a facility within the City and (b)
the Company's satisfaction of the Actual Withholdings requirements in Section 2.
Section 2. Citv Agreement to Provide Incentives
(a) General In consideration for the Company's agreement to lease afacility within the
City for the location of its main office and associated operations and workforce within the City, the
City agrees to provide economic development incentives to the Company in accordance with this
Section.
(b) Location Grant The Company agrees to execute a lease for a minimum of five
(5) years (the "Lease ") within the City for the location of its main office and associated operations
and workforce within the City. In consideration of the Company's agreement to execute the
Lease and to establish that office and create additional employment opportunities within the City,
the City agrees to provide to the Company a Location Grant (the "Location Grant ") in the
amount of Five Thousand and 00 /100 Dollars ($5,000.00), payable to the Company within thirty
(30) days following the occurrence (to the City's reasonable satisfaction) of the Company's
execution of the Lease and provision to the City of documentation in support thereof, which will
be subject to the reasonable approval of the City.
(c) Forfeiture of Right to Receive Location Grant The Company agrees and
acknowledges that the Location Grant provided for in subsection 2(b) is being made by the City
to the Company in consideration for the Company's agreement to execute the Lease and to
establish its office and associated operations and workforce within the City. The Company further
agrees that if the requirements of subsection 2(b) are not satisfied, the City shall not be obligated
to make the Location Grant required by that subsection.
(d) Workforce Creation Grant
(i) Calculation of Actual Withholdings On or before March 15 of each of the
years 2012 through 2015, the City shall calculate the actual payroll withholding taxes
collected and received during the preceding calendar year by the City from all Employees
(as defined below). For purposes of that calculation, the Company acknowledges and
agrees that the total amount of actual payroll withholding taxes for any calendar year shall
be determined based solely upon the amount of tax payments actually received by the City
during that calendar year. The Company agrees that the determination of whether to include
in such calculation any amount received by the City in respect of any calendar year but
following the conclusion of that calendar year, shall be solely within the discretion of the
City. For purposes of this Section 2, `Employees" shall include only those individuals
employed by the Company and working within the City.
(ii) Information Relating to Employees The Company agrees that, in
accordance with the Dublin City Code, the annual payroll reconciliation and related W -2
forms relating to its Employees will be provided to the City prior to February 28 of each
calendar year.
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(iii) Incentive Payments to the Company If the actual payroll withholding taxes
collected and received by the City during the then preceding calendar year from all
Employees, net of refunds ("Actual Withholdings "), meet or exceed the Target Withholdings
or Bonus Target Withholdings as the case may be (each as defined in subsection 2(d)(iv))
for that preceding calendar year, the City shall, on or before April 15 of the then current
calendar year, pay to the Company, solely from nontax revenues (as defined in subsection
2(f)), an amount equal to the product of (A) an amount equal to the Actual Withholdings,
multiplied by (B) twenty percent (20 %) (with such product being referred to as the Annual
Incentive Payment'); provided, however, that (1) the City shall not be required pursuant to
this subsection 2(d) to remit an Annual Incentive Payment to the Company in excess of the
Annual Cap or Bonus Annual Cap as the case may be (each as defined in subsection
2(d)(iv)) in any calendar year, and (2) the aggregate of all Annual Incentive Payments
remitted pursuant to this subsection 2(d) by the City to the Company shall not exceed One
Hundred Thirty -Seven Thousand Five Hundred and 00 /100 Dollars ($137,500.00).
(iv) Target Withholdings and Annual Can: Bonus Target Withholdings and
Bonus Annual Cap The Target Withholdings and Annual Cap for each of the calendar
years 2011 through 2014 shall be:
Calendar Year
Target Withholdings
Annual Cap
2011
$109,102 - $125,735.99
$25,000
2012
$111,829 - $142,193.99
25,000
2013
$114,625 - $163,695.99
25,000
2014
$117,490 - $167,777.99
25,000
provided, however, that if the Company's Actual Withholdings meet or exceed the Bonus
Target Withholdings thresholds listed below, the Bonus Annual Cap for each of the
calendar years 2011 through 2014 shall be:
Bonus Bonus
Calendar Year Target Withholdings Annual Cap
2011 $125,736+ $30,000
2012 $142,194+ 32,500
2013 $163,696+ 35,000
2014 $167,778+ 40,000
(v) Forfeiture of Right to Receive Incentive Payment The Company agrees and
acknowledges that Annual Incentive Payments provided for in subsection 2(d) are being
made by the City to the Company in consideration for the Company's agreement to lease a
facility within the City and locate its operations and workforce within the City. The
Company further agrees that if the Actual Withholdings do not equal at least the minimum
Target Withholdings requirement for any given calendar year as set forth in subsection
2(d)(iv), the City shall not be obligated to make any Annual Incentive Payment to the
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Company for the calendar year in respect of the year in which the Actual Withholdings do
not equal at least the minimum Target Withholdings requirement for that calendar year.
Failure to meet the minimum Target Withholdings requirement in respect of any one
calendar year does not prohibit the Company from receiving an Annual Incentive Payment
for any subsequent calendar year in respect of which the minimum Target Withholdings
requirement is satisfied.
(e) Method of Payment The payments to be paid to the Company as provided in this
Section 2 shall be made by the City to the Company by electronic funds transfer or by such other
manner as is mutually agreed to by the City and the Company.
(f) City's Obligation to Make Payments Not Debt; Payments Limited to Non -Tax
Revenues Notwithstanding anything to the contrary herein, the obligations of the City pursuant
to this Agreement shall not be a general obligation debt or bonded indebtedness, or a pledge of
the general credit or taxes levied by the City, and the Company 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 non -tax 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 non -tax revenues. For purpose of this Agreement, "nontax revenues"
shall mean, all moneys of the City which are not moneys raised by taxation, to the extent
available for such purposes, including, but not limited to the following: (i) grants from the
United States of America and the State; (ii) payments in lieu of taxes now or hereafter authorized
to be used for the purposes by State statute; (iii) fines and forfeitures which are deposited in the
City's General Fund; (iv) fees deposited in the City's General Fund from properly imposed
licenses and permits; (v) investment earnings on the City's General Fund and which are credited
to the City's General Fund; (vi) investment earnings of other funds of the City that are credited
to the City's General Fund; (vii) proceeds from the sale of assets which are deposited in the
City's General Fund; and (viii) rental income which is deposited in the City's General Fund; and
(ix) gifts and donations.
(e) Applicable City 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. Miscellaneous.
(a) Assignment This Agreement may not be assigned without the prior written consent
of all non - assigning Parties, which consent shall not be unreasonably withheld.
(b) Binding Effect The provisions of this Agreement shall be binding upon the
successors or assigns of the Parties.
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(c) 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.
(d) Day for Performance Wherever herein there is a day or time period established for
performance and such day or the expiration of such time period is a Saturday, Sunday or legal
holiday, then such time for performance shall be automatically extended to the next business day.
(e) Entire Agreement This Agreement embodies the entire agreement and
understanding of the Parties relating to the subject matter herein and therein and may not be
amended, waived or discharged except in an instrument in writing executed by the Parties.
(f) Events of Default and Remedies Except as otherwise provided in this Agreement,
in the event of any default in or breach of this Agreement, or any of its terms or conditions, by any
Party hereto, such defaulting Party shall, upon written notice from any non - defaulting Party,
proceed immediately to cure or remedy such default or breach, and, in any event, within thirty (30)
days after receipt of such notice. In the event such default or breach is of such nature that it cannot
be cured or remedied within said thirty (30) day period, then in such event the defaulting Party shall
upon written notice from any non - defaulting Party commence its actions to cure or remedy said
breach within said thirty (30) day period, and proceed diligently thereafter to cure or remedy said
breach. In case such action is not taken or not diligently pursued, or the default or breach shall not
be cured or remedied within a reasonable time, the aggrieved non - defaulting Party may institute
such proceedings as may be necessary or desirable in its opinion to cure and remedy such default or
breach. Notwithstanding any provision in this Agreement to the contrary, in no event shall specific
performance by the defaulting party be compelled or required.
(g) Executed Counterparts This Agreement may be executed in several counterparts,
each of which shall be deemed to constitute an original, but all of which together shall constitute but
one and the same instrument It shall not be necessary in proving this Agreement to produce or
account for more than one of those counterparts.
(h) Extent of Covenants: No Personal Liability All covenants, obligations and
agreements of the Parties contained in this Agreement shall be effective to the extent authorized and
permitted by applicable law. No such covenant, obligation or agreement shall be deemed to be a
covenant, obligation or agreement of any present or future member, officer, agent or employee of
the City or the Company other than in his or her official capacity, and neither the members of the
legislative body of the City nor any official executing this Agreement shall be liable personally
under this Agreement or be subject to any personal liability or accountability by reason of the
execution thereof or by reason of the covenants, obligations or agreements of the City and the
Company contained in this Agreement.
(i) Governing Law 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 the Company, 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.
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(j) Legal Authority The Parties respectively represent an d covenant that each is legally
empowered to execute, deliver and perform this Agreement and to enter into and carry out the
transactions contemplated by this Agreement. The Parties further respectively represent and
covenant that this Agreement has, by proper action, been duly authorized, executed and delivered by
the Parties and all steps necessary to be taken by the Parties have been taken to constitute this
Agreement, and the covenants and agreements of the Parties contemplated herein, as a valid and
binding obligation of the Parties, enforceable in accordance with its terms.
(k) Limit on Liability Notwithstanding any clause or provision of this Agreement to
the contrary, in no event shall City or the Company be liable to each other for punitive, special,
consequential, or indirect damages of any type and regardless of whether such damages are claimed
under contract, tort (including negligence and strict liability) or any other theory of law.
(1) 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
in writing and shall be deemed sufficiently given if actually received or if hand - 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) the Company at: Quality Supply Chain Co -op, Inc.
One Dave Thomas Boulevard
Dublin, OH 43017
Attention: Christian Cooney
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.
(m) Recitals The Parties 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.
(n) Severability If any provision of this Agreement, or any covenant, obligation or
agreement contained herein is determined by a court to be invalid or unenforceable, that
determination shall not affect any other provision, covenant, obligation or agreement, each of which
shall be construed and enforced as if the invalid or unenforceable portion were not contained herein.
That invalidity or unenforceability shall not affect any valid and enforceable application thereof, and
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each such provision, covenant, obligation or agreement shall be deemed to be effective, operative,
made, entered into or taken in the manner and to the full extent permitted by law.
(o) Survival of Representations and Warranties All representations and warranties of
the Parties in this Agreement shall survive the execution and delivery of this Agreement.
(remainder o(page intentionally left blank — signature page follows)
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IN WITNESS WHEREOF, the City and the Company 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
Printed: Terry Foegler
Title: Citv Manager
Approved as to Form:
C
Printed: Stephen J. Smith
Title: Director of Law
QUALITY SUPPLY CHAIN CO -OP, INC.
Printed: Christian Coonev
Title: Chief Financial Officer
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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 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: .2010
Marsha I. Grigsby
Deputy City Manager /Director of Finance
City of Dublin, Ohio
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