ARLINGTON COUNTY, VIRGINIA. County Board Agenda Item Meeting of December 16, 2017

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1 ARLINGTON COUNTY, VIRGINIA County Board Agenda Item Meeting of December 16, 2017 DATE: December 5, 2017 SUBJECT: First Amendment to the Governor's Development Opportunity Fund Performance Agreement between Arlington County, the Arlington County Industrial Development Authority (IDA), and the Corporate Executive Board Company (CEB). C. M. RECOMMENDATIONS: 1. Approve the attached Governor s Development Opportunity Fund Performance Amendment (GOF Amendment) between Arlington County, the IDA, and CEB. 2. Authorize the County Manager to sign, on behalf of the County Board, the GOF Amendment, subject to approval as to form by the County Attorney. ISSUES: There are no outstanding issues related to the approval of the GOF Amendment as of the date of this report. SUMMARY: The proposed GOF Amendment updates CEB s 2014 Performance Agreement to reflect CEB s new corporate structure, specifically Gartner s purchase of CEB and of another company, Capterra. The GOF Amendment does not change the total number of new jobs in Arlington or the amount of capital investment that the entity will make in Arlington. The amendment also does not change the repayment provisions associated with failure to meet performance targets. BACKGROUND: In 2008, CEB relocated from Washington, D.C. to 1919 N. Lynn Street in Rosslyn. In 2014, following a competitive site selection process, CEB chose to stay in Arlington and expand its headquarters to a total of 345,000 square feet at Central Place, 1201 Wilson Boulevard. To assist CEB with the costs of leasehold improvements and employee recruitment associated with the expansion, the Commonwealth of Virginia awarded to Arlington a GOF award of $4.5 million, which Arlington passed through to CEB. Arlington County matched the GOF incentive with in-kind infrastructure investments in Rosslyn. County Manager: ##### County Attorney: ***** Staff: Sindy Yeh, AED Alexander Iams, AED 26.

2 In September 2014, the County Board authorized the County Manager to sign the GOF Performance Agreement among Arlington County, the IDA and CEB, which lays out the terms of the distribution of the GOF incentive funds, performance targets, reporting and repayment. To keep the GOF incentive funds, CEB must make (or have made on its behalf) $149.7 million in capital investment and add 800 new full-time jobs. In January 2017, CEB was acquired by Gartner, Inc. Gartner has a small office in Ballston with around 150 employees. Earlier, in September 2015, Gartner also acquired a small Arlingtonbased technology company, Capterra, which has about 60 employees. Following Gartner s acquisition of CEB, CEB reached out to VEDP to amend its performance agreement to incorporate this new corporate structure. DISCUSSION: The proposed GOF Amendment would make the following changes to the GOF Performance Agreement: 1. Change the definition of CEB to include Gartner, Inc. and Capterra, Inc. in addition to the Corporate Executive Board Company. 2. Update the number of existing jobs in Arlington to include the Gartner s 157 full-time jobs and Capterra s 66 full-time jobs. When combined with CEB s existing full-time jobs from the GOF Performance Agreement, the number of full-time employees already located in the County would increase from 1,279 to 1,502 full-time employees. 3. Allow new full-time employees added by Gartner and Capterra after December 31, 2016 at the CEB facility to count towards the 800 new jobs target. The 800 new jobs must be in addition to the 1,502 existing full-time jobs. 4. Allow capital investment made by Gartner and Capterra (or made on their behalf) at the CEB facility to count towards the $149.7 million capital investment target. The GOF amendment does not change the new jobs or capital investment targets or any of the repayment terms of the GOF Performance Agreement. PUBLIC ENGAGEMENT: The GOF Amendment does not require public engagement or a public process. FISCAL IMPACT: The GOF Amendment does not have a material fiscal impact to Arlington

3 GOVERNOR S DEVELOPMENT OPPORTUNITY FUND GRANT FIRST AMENDMENT TO PERFORMANCE AGREEMENT This FIRST AMENDMENT TO PERFORMANCE AGREEMENT (this First Amendment ), is made and entered on the date of full execution (the Effective Date ) by and among the COUNTY BOARD OF ARLINGTON COUNTY, VIRGINIA (the County ), a political subdivision of the Commonwealth of Virginia (the Commonwealth ), THE CORPORATE EXECUTIVE BOARD COMPANY, a Delaware corporation authorized to transact business in the Commonwealth, GARTNER, INC., a Delaware corporation authorized to transact business in the Commonwealth, CAPTERRA INC., a Delaware corporation authorized to transact business in the Commonwealth, and the INDUSTRIAL DEVELOPMENT AUTHORITY OF ARLINGTON COUNTY (the IDA ), a political subdivision of the Commonwealth. WITNESSETH: WHEREAS, this First Amendment amends the Performance Agreement dated as of October 2, 2014 ( Performance Agreement ), among the County, the Corporate Executive Board Company, and the IDA; WHEREAS, capitalized terms defined in the Performance Agreement shall have the same meanings when used in this First Amendment, unless otherwise noted herein; WHEREAS, pursuant to the Performance Agreement, the County was awarded a $4,500,000 GOF Grant, with the expectation that the proceeds of the GOF Grant would be made available to The Corporate Executive Board Company, which would endeavor to achieve the Capital Investment Target and the New Jobs Target by the Performance Date; and WHEREAS, the County, The Corporate Executive Board Company, and the IDA desire to amend the Performance Agreement to reflect certain corporate transactions involving The Corporate Executive Board Company since the date of the Performance Agreement: NOW, THEREFORE, in consideration of the foregoing, the mutual benefits, promises and undertakings of the parties to this First Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties covenant and agree as follows. 1. The definition of CEB in the Performance Agreement will now be deemed to include, jointly and severally, The Corporate Executive Board Company; Gartner, Inc. and Capterra, Inc. 2. The definition of New Job in Section 1 of the Performance Agreement is deleted and replaced with the following definition: 1 P age

4 New Job means new permanent full-time employment of an indefinite duration at the CEB Facility for which the standard fringe benefits are provided by CEB for the employee, and for which CEB pays an Average Annual Wage of at least $122,083, including bonuses and other performance-based compensation. Each New Job must require a minimum of either (i) 35 hours of an employee s time per week for the entire normal year of CEB s operations, which normal year must consist of at least 48 weeks, or (ii) 1,680 hours per year. Seasonal or temporary positions, positions created when a job function is shifted from an existing location in the Commonwealth, and positions with construction contractors, vendors, suppliers and similar multiplier or spin-off jobs shall not qualify as New Jobs. The New Jobs must be in addition to CEB s 1,279 full-time jobs in the County as of October 22, 2013; Gartner, Inc. s 157 full-time employees in the Commonwealth as of December 31, 2016; and Capterra, Inc. s 66 full-time employees in the Commonwealth as of December 31, 2016, which together total 1, With the conditions described in Paragraphs 1 and 2 above, CEB may count toward its New Jobs Target any New Jobs created and Maintained at the CEB Facility by The Corporate Executive Board Company, Gartner, Inc. or Capterra, Inc. and may count toward its Capital Investment Target any Capital Investments made or caused to be made at the CEB Facility by The Corporate Executive Board Company, Gartner, Inc. or Capterra, Inc. 4. For the purposes of Section 7(a) of the Performance Agreement, notices, demands and communications to CEB will be sent to: Gartner, Inc. 56 Top Gallant Road Stamford, CT Attn: Craig Safian, Chief Financial Officer Fax: Craig.safian@gartner.com Garter, Inc. 56 Top Gallant Road Stamford, CT Attn: GaganDeep Singh, Group Vice President Fax: gagandeep.singh@gartner.com 5. All other provisions of the Performance Agreement remain in full force and effect. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 2 P age

5 IN WITNESS WHEREOF, the County, the IDA, and CEB have each executed, or caused to be duly executed, this First Amendment to Performance Agreement under seal in duplicate, in the name and behalf of each of them (acting individually or by their respective officers or appropriate legal representatives, as the case may be, thereunto duly authorized) as of the Effective Date, which the last date this First Amendment is signed below. Approved as to form: Stephen A. MacIsaac, County Attorney THE COUNTY BOARD OF ARLINGTON COUNTY, VIRGINIA, a body corporate and politic of the Commonwealth of Virginia By: Mark Schwartz, County Manager COMMONWEALTH OF VIRGINIA COUNTY OF ARLINGTON On this the day of, 2017, before me, personally appeared Mark Schwartz, who acknowledged himself to be the County Manager of Arlington County in the above instrument, and that he, as County Manager, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the County Board of Arlington County, Virginia, a body corporate and politic of the Commonwealth of Virginia by himself as County Manager of Arlington County, Virginia. 3 P age

6 INDUSTRIAL DEVELOPMENT AUTHORITY OF ARLINGTON COUNTY, a political subdivision of the Commonwealth of Virginia By: Elizabeth Wildhack, Chair COMMONWEALTH OF VIRGINIA COUNTY OF ARLINGTON On this the day of, 2017, before me, personally appeared Elizabeth Wildhack, who acknowledged herself to be the Chair of the Industrial Development Authority of Arlington County in the above instrument, and that she, as Chair, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the Industrial Development Authority of Arlington County, a political subdivision of the Commonwealth of Virginia by himself as Chairman of the Industrial Development Authority of Arlington County. 4 P age

7 THE CORPORATE EXECUTIVE BOARD COMPANY By:, COMMONWEALTH OF VIRGINIA OF On this the day of, 2017, before me, personally appeared, who acknowledged himself / herself to be the of The Corporate Executive Board Company, and that he / she, as, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of The Corporate Executive Board Company by himself / herself as of The Corporate Executive Board Company. 5 P age

8 GARTNER, INC. By:, COMMONWEALTH / STATE OF OF On this the day of, 2017, before me, personally appeared, who acknowledged himself / herself to be the of Gartner, Inc., and that he / she, as, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of Gartner, Inc. by himself / herself as of Gartner, Inc. 6 P age

9 CAPTERRA INC. By:, COMMONWEALTH / STATE OF OF On this the day of, 2017, before me, personally appeared, who acknowledged himself / herself to be the of Capterra Inc., and that he / she, as, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of Capterra Inc. by himself / herself as of Capterra Inc. 7 P age

10 GOVERNOR S DEVELOPMENT OPPORTUNITY FUND GRANT FIRST AMENDMENT TO PERFORMANCE AGREEMENT This FIRST AMENDMENT TO PERFORMANCE AGREEMENT (this First Amendment ), is made and entered on the date of full execution (the Effective Date ) by and among the COUNTY BOARD OF ARLINGTON COUNTY, VIRGINIA (the County ), a political subdivision of the Commonwealth of Virginia (the Commonwealth ), THE CORPORATE EXECUTIVE BOARD COMPANY, a Delaware corporation authorized to transact business in the Commonwealth, GARTNER, INC., a Delaware corporation authorized to transact business in the Commonwealth, CAPTERRA INC., a Delaware corporation authorized to transact business in the Commonwealth, and the INDUSTRIAL DEVELOPMENT AUTHORITY OF ARLINGTON COUNTY (the IDA ), a political subdivision of the Commonwealth. WITNESSETH: WHEREAS, this First Amendment amends the Performance Agreement dated as of October 2, 2014 ( Performance Agreement ), among the County, the Corporate Executive Board Company, and the IDA; WHEREAS, capitalized terms defined in the Performance Agreement shall have the same meanings when used in this First Amendment, unless otherwise noted herein; WHEREAS, pursuant to the Performance Agreement, the County was awarded a $4,500,000 GOF Grant, with the expectation that the proceeds of the GOF Grant would be made available to The Corporate Executive Board Company, which would endeavor to achieve the Capital Investment Target and the New Jobs Target by the Performance Date; and WHEREAS, the County, The Corporate Executive Board Company, and the IDA desire to amend the Performance Agreement to reflect certain corporate transactions involving The Corporate Executive Board Company since the date of the Performance Agreement: NOW, THEREFORE, in consideration of the foregoing, the mutual benefits, promises and undertakings of the parties to this First Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties covenant and agree as follows. 1. The definition of CEB in the Performance Agreement will now be deemed to include, jointly and severally, The Corporate Executive Board Company; Gartner, Inc. and Capterra, Inc. 2. The definition of New Job in Section 1 of the Performance Agreement is deleted and replaced with the following definition: 1 P age

11 New Job means new permanent full-time employment of an indefinite duration at the CEB Facility for which the standard fringe benefits are provided by CEB for the employee, and for which CEB pays an Average Annual Wage of at least $122,083, including bonuses and other performance-based compensation. Each New Job must require a minimum of either (i) 35 hours of an employee s time per week for the entire normal year of CEB s operations, which normal year must consist of at least 48 weeks, or (ii) 1,680 hours per year. Seasonal or temporary positions, positions created when a job function is shifted from an existing location in the Commonwealth, and positions with construction contractors, vendors, suppliers and similar multiplier or spin-off jobs shall not qualify as New Jobs. The New Jobs must be in addition to CEB s 1,279 full-time jobs in the County as of October 22, 2013; Gartner, Inc. s 157 full-time employees in the Commonwealth as of December 31, 2016; and Capterra, Inc. s 66 full-time employees in the Commonwealth as of December 31, 2016, which together total 1, With the conditions described in Paragraphs 1 and 2 above, CEB may count toward its New Jobs Target any New Jobs created and Maintained at the CEB Facility by The Corporate Executive Board Company, Gartner, Inc. or Capterra, Inc. and may count toward its Capital Investment Target any Capital Investments made or caused to be made at the CEB Facility by The Corporate Executive Board Company, Gartner, Inc. or Capterra, Inc. 4. For the purposes of Section 7(a) of the Performance Agreement, notices, demands and communications to CEB will be sent to: Gartner, Inc. 56 Top Gallant Road Stamford, CT Attn: Craig Safian, Chief Financial Officer Fax: Craig.safian@gartner.com Garter, Inc. 56 Top Gallant Road Stamford, CT Attn: GaganDeep Singh, Group Vice President Fax: gagandeep.singh@gartner.com 5. All other provisions of the Performance Agreement remain in full force and effect. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 2 P age

12 IN WITNESS WHEREOF, the County, the IDA, and CEB have each executed, or caused to be duly executed, this First Amendment to Performance Agreement under seal in duplicate, in the name and behalf of each of them (acting individually or by their respective officers or appropriate legal representatives, as the case may be, thereunto duly authorized) as of the Effective Date, which the last date this First Amendment is signed below. Approved as to form: Stephen A. MacIsaac, County Attorney THE COUNTY BOARD OF ARLINGTON COUNTY, VIRGINIA, a body corporate and politic of the Commonwealth of Virginia By: Mark Schwartz, County Manager COMMONWEALTH OF VIRGINIA COUNTY OF ARLINGTON On this the day of, 2017, before me, personally appeared Mark Schwartz, who acknowledged himself to be the County Manager of Arlington County in the above instrument, and that he, as County Manager, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the County Board of Arlington County, Virginia, a body corporate and politic of the Commonwealth of Virginia by himself as County Manager of Arlington County, Virginia. 3 P age

13 INDUSTRIAL DEVELOPMENT AUTHORITY OF ARLINGTON COUNTY, a political subdivision of the Commonwealth of Virginia By: Elizabeth Wildhack, Chair COMMONWEALTH OF VIRGINIA COUNTY OF ARLINGTON On this the day of, 2017, before me, personally appeared Elizabeth Wildhack, who acknowledged herself to be the Chair of the Industrial Development Authority of Arlington County in the above instrument, and that she, as Chair, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the Industrial Development Authority of Arlington County, a political subdivision of the Commonwealth of Virginia by himself as Chairman of the Industrial Development Authority of Arlington County. 4 P age

14 THE CORPORATE EXECUTIVE BOARD COMPANY By:, COMMONWEALTH OF VIRGINIA OF On this the day of, 2017, before me, personally appeared, who acknowledged himself / herself to be the of The Corporate Executive Board Company, and that he / she, as, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of The Corporate Executive Board Company by himself / herself as of The Corporate Executive Board Company. 5 P age

15 GARTNER, INC. By:, COMMONWEALTH / STATE OF OF On this the day of, 2017, before me, personally appeared, who acknowledged himself / herself to be the of Gartner, Inc., and that he / she, as, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of Gartner, Inc. by himself / herself as of Gartner, Inc. 6 P age

16 CAPTERRA INC. By:, COMMONWEALTH / STATE OF OF On this the day of, 2017, before me, personally appeared, who acknowledged himself / herself to be the of Capterra Inc., and that he / she, as, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of Capterra Inc. by himself / herself as of Capterra Inc. 7 P age