TRANSIENT GUEST TAX REBATE AGREEMENT

Transcription

1 TRANSIENT GUEST TAX REBATE AGREEMENT THIS TRANSIENT GUEST TAX REBATE AGREEMENT (this Agreement ), is made and entered into as of July, 2017 (the Effective Date ), by and between FRANKLIN COUNTY, KANSAS, a municipal corporation duly organized under the laws of the State of Kansas ( County ), and OTTAWA LODGING, LLC, a Nebraska limited liability company (the Developer ), pursuant to Resolution No. adopted by the Board of County Commissioners (the Board ) of the County on [July 12], RECITALS WHEREAS, pursuant to K.S.A a et seq., all as amended or supplemented, Charter Resolution No of the County adopted the 25 th day of June, 2003, and other provisions of the laws of the State of Kansas (the State ) applicable thereto, by proceedings had, the County levies a transient guest tax in the amount of 6.0% (the TGT ) upon the gross receipts derived from transient guests for sleeping accommodations in any hotel, motel, or tourist court; WHEREAS, the Developer has proposed to build a Holiday Inn Express & Suites limited service hotel containing approximately 81 rooms and all related appurtenances (the Project ) located within the City of Ottawa, Kansas (the City ), within the County; WHEREAS, the Developer has requested certain incentives for the Project from the City, including tax increment financing ( TIF ), a community improvement district ( CID ), and industrial revenue bonds ( IRBs ), and from the County in the form of a rebate of a portion of the TGT generated by the Project (the Rebate, as more fully described herein); WHEREAS, the Board has found and determined that providing the Rebate would promote tourism and conventions; WHEREAS, after consultation with representatives of the City regarding the TIF, CID, and IRB incentives provided by the City for the Project, the County has determined that it is necessary and desirable to provide the Rebate subject to the terms and conditions set forth in this Agreement; and WHEREAS, concurrently with the execution of this Agreement, the Developer is entering into that certain Development Agreement dated as of July, 2017 (the Development Agreement ), with the City pursuant to which the Developer has made certain covenants relating to construction and operation of the Project and the provision of the TIF, CID, and IRB incentives by the City. NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

2 1. Legal Representation. This Agreement was negotiated by the parties hereto with the benefit of legal representation, and any rules of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any party shall not apply to the construction or interpretation of this Agreement. 2. Representations and Agreements of the Developer. a. The Developer is a Nebraska limited liability company, duly authorized and existing under the laws of the State of Nebraska, and is authorized and qualified, as of the date hereof, to do business in the State of Kansas, with lawful power and authority to enter into this Agreement, acting by and through its duly authorized officer who executed this Agreement. b. To the Developer s knowledge, neither the execution and/or delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement contravenes in any material respect any provision of its articles of organization or operating agreement or conflicts in any material respect with or results in a material breach of the terms, conditions or provisions of any mortgage, debt, agreement, indenture or instrument to which the Developer is a party or by which it is bound, or to which it or any of its properties is subject, or would constitute a material default (without regard to any required notice or the passage of any period of time) under any of the foregoing, or violates in any material respect any existing law, administrative regulation or court order or consent decree to which the Developer is subject. c. As of the Effective Date, the Developer intends to own and operate the Project for at least three (3) years and acknowledges and agrees that such representation is a material inducement to the County entering into this Agreement. 3. Representations and Agreements of the County. a. The County is a municipal corporation duly organized under the constitution and laws of the State. b. Pursuant to the laws of the State and the proceedings of the Board, the County has the power to enter into and perform the transactions contemplated by this Agreement and to carry out its obligations hereunder. c. The County has duly authorized the execution and delivery of this Agreement, and the Chairman has the authority to execute this Agreement by and on behalf of the County. 4. Rebate of TGT. Subject to the terms of this Agreement, the County agrees to rebate to Developer a portion of the TGT generated by the Project equal to three percent (3%) of the gross receipts collected by Developer for the Project to which the TGT applies (the Rebate ). 2

3 The Rebate, for any calendar year that Rebate is payable, will be paid by the County to the Developer in a single payment no later than 30 days following the County s receipt of the final disbursement of TGT revenues for such calendar year. The Rebate payable for any calendar year will be calculated as one-half (1/2) of the lesser of: a) the amount of TGT generated by overnight stays at the Project during such calendar year (the Project TGT ); and b) the amount by which TGT collected by the County for such calendar year exceeds the amount of TGT collected by the County for the calendar year immediately preceding the date of final completion of the Project (the TGT Increment ). The following chart illustrates, by way of example only, the Rebate that would be payable for the 2019 calendar year based on hypothetical TGT collections as shown, assuming that the Project is completed in year 2018 (and, thus, the TGT Increment is calculated based upon 2017 TGT collections): County s TGT Collections for Calendar Year prior to Project Completion County s 2019 TGT Collections TGT Increment Project TGT Rebate Payable $1,000,000 $1,200,000 $200,000 $100,000 $50,000 $1,000,000 $1,050,000 $50,000 $100,000 $25,000 $1,000,000 $900,000 ($100,000) $100,000 $0 5. Term. The Rebate will commence on January 1 following final completion of the Project, as evidenced by a certificate of occupancy or equivalent permit thereon, and the Rebate shall continue for a period of ten (10) years thereafter unless sooner terminated in accordance with the terms of this Agreement. 6. Meeting Space. Developer shall construct the Project to include a meeting room or area containing at least 1,200 square feet (the Meeting Space ). Upon completion of the Project, Developer agrees to make the Meeting Space available to the staff and governing bodies of the City, the County, Unified School District No. 290, Franklin County, Kansas (Ottawa), Unified School District No. 289, Franklin County, Kansas (Wellsville), Unified School District No. 288, Franklin County, Kansas (Central Heights), and Unified School District No. 287, Franklin County, Kansas (West Franklin) (collectively, the Governing Bodies ), at no charge, subject to the following conditions and limitations: a. The Governing Bodies may not reserve the Meeting Space more than thirty (30) days in advance; b. Use of the Meeting Space shall be subject to the Project s normal days and hours of operation; c. The Meeting Space will not be available to the Governing Bodies to the extent it has been reserved by hotel guests or other Project patrons; d. A reservation for use of the Meeting Space by a Governing Body may be cancelled due to a conflicting reservation for use of the space by hotel guests or other Project patrons but only with at least seven (7) days notice prior to the date of such reservation; 3

4 e. Use of the Meeting Space shall be subject to use agreements and reasonable rules and regulations from time to time, to the extent they are not inconsistent with the terms of this Agreement; and f. Developer shall not be required to gratuitously provide any food or beverage to the Governing Bodies. 7. Conditions Precedent. The following conditions precedent must be satisfied in order for the Project to be eligible for the Rebate: a. The Project must be located on the West side of Princeton Avenue; b. Developer must construct the Meeting Space; c. Developer, and any affiliate entities controlled by Developer, shall pay a minimum hourly wage greater than $10.00/hour and shall own and operate the Project, as set forth in annual certifications in a form and substance reasonably acceptable to the County; d. There shall be no Rebate paid to Developer for any calendar year that the County s total TGT collections in Franklin County are less than the total TGT collections in Franklin County for the calendar year immediately preceding final completion of the Project; e. The Project must have the Holiday Inn Express flag, unless otherwise approved in writing by the County; and f. The Developer must be current on all taxes, fees, and assessments payable to the State, the County, and the City, as well as County Expenses (as hereinafter defined). 8. County Expenses. Developer shall pay all reasonable outside expenses actually incurred by the County (with commercially reasonable supporting documentation) in connection with administering this Agreement, including, but not limited to, fees for financial, legal, or accounting consultants (the County Expenses ), provided that such expenses shall not include the salaries of County personnel and any general overhead expenses of the County). Developer shall pay County Expenses within thirty (30) days of receipt of an invoice therefor. 9. Cap of Rebate. In no event shall the total Rebate paid to Developer during the term of this Agreement exceed $600,000 (the TGT Cap ). At the time the Rebate paid to Developer equals the TGT Cap, this Agreement shall automatically terminate. The TGT Cap shall not be increased by the amount of any County Expenses paid by the Developer. 10. No Obligation to Build. Developer s execution of this Agreement shall not constitute an obligation on its part to construct the Project. If Developer has not commenced construction on the Project within two (2) years of the Effective Date of this Agreement, the 4

5 County may by written notice elect to terminate this Agreement; provided, however, that upon Developer s receipt of such notice, Developer shall have a period of thirty (30) days to commence construction. If Developer commences construction within such thirty (30) day period, the County s notice of termination shall cease to have any force or effect. 11. Insurance and Indemnification. a. Indemnification. The Developer agrees to defend, indemnify and hold the County, its officers, agents and employees, harmless from and against all liability for damages, costs and expenses, arising out of any claim, suit, judgment or demand made against the County, to the extent resulting from the negligent and/or intentional acts or omissions of the Developer, its contractors, subcontractors, agents or employees in the performance of this Agreement. The Developer shall give the County written notice of any claim, suit or demand which may be subject to this provision at the earliest feasible date. b. Insurance. Not in derogation of the indemnification provisions set forth herein, the Developer shall, at its sole cost and expense, throughout the term of this Agreement (to the extent the Developer has not sold the Project, or any portion thereof, to third parties), insure and keep insured any vertical structures built as part of the Project against direct loss or damage occasioned by fire, flood and extended coverage perils through insurers with a Best s rating of no less than A- and/or that is reasonably acceptable to the County and without co-insurance. The insurance shall be for an amount that is not less than the full replacement cost of such structures. 12. Damage, Destruction or Condemnation. a. If, at any time during the term of this Agreement, the Project or any part thereof (other than the public roads, public right-of-way and public lands within the Project) shall be damaged or destroyed by a casualty (the Damaged Facilities ), Developer, at its sole cost and expense, shall commence and thereafter proceed as promptly as reasonably possible to repair, restore and replace the Damaged Facilities as nearly as possible to their condition immediately prior to the casualty. b. If at any time during the term of this Agreement, title to the whole or substantially all of the Project shall be taken in condemnation proceedings or by right of eminent domain, Developer, at its sole discretion, may terminate this Agreement as of the date of such taking. For purposes of this Section 12(b), substantially all of the Project shall be deemed to have been taken if the County and Developer, each acting reasonably and in good faith, determine that the untaken portion of the Project cannot be practically and economically used by Developer for the purposes and at the times contemplated by this Agreement. 5

6 c. In the event of condemnation of less than the whole or substantially all of the Project which has previously been conveyed to Developer during the term of this Agreement, Developer, at its sole cost and expense, shall commence and thereafter proceed as promptly as possible to repair, restore and replace the remaining part of the Project, as nearly as possible, to its former condition. 13. Local, State and Federal Laws. The Developer agrees to abide by, and the Project shall be completed in conformity with, all applicable federal, state and local laws and regulations. 14. Nondiscrimination. Developer agrees that throughout the term of this Agreement: a. Developer shall observe the provisions of the Kansas Act Against Discrimination (K.S.A et seq.) and shall not discriminate against any person in the performance of work under the Agreement because of race, religion, color, sex, national origin, ancestry or age; b. In all solicitations or advertisements for employees, Developer shall include the phrase, equal opportunity employer, or a similar phrase to be approved by the Kansas Human Rights Commission (the Commission ); c. If Developer fails to comply with the manner in which Developer reports to the Commission in accordance with the provisions of K.S.A and amendments thereto, Developer shall be deemed to have breached the Agreement and it may be canceled, terminated or suspended, in whole or in part, by the County; d. If Developer is found guilty of a violation of the Kansas Act Against Discrimination under a decision or order of the Commission which has become final, Developer shall be deemed to have breached the Agreement and it may be canceled, terminated or suspended, in whole or in part, by the County; and e. Developer shall include the provisions of Sections 14(a) through (d) above in every contract, subcontract or purchase order so that such provisions will be binding upon such contractor, subcontractor or vendor. Developer further agrees that throughout the term of this Agreement, Developer shall abide by the Kansas Age Discrimination in Employment Act (K.S.A et seq.) and the applicable provisions of the Americans with Disabilities Act (42 U.S.C et seq.) as well as all other federal, state and local laws, ordinances and regulations applicable to the Project and to furnish any certification required by any federal, state or local laws, ordinances and regulations applicable to the Project. 15. Default. An event of default under this Agreement shall occur if: (i) either party defaults in the performance of any obligation or breach of any covenant or agreement in this Agreement; (ii) the Developer files a voluntary petition under any bankruptcy law, an involuntary petition under any bankruptcy law is filed against Developer in a court having jurisdiction and said 6

7 petition is not dismissed within thirty (30) days, assignment by Developer for the benefit of its creditors, appointment or retention of a custodian, trustee or receiver to take charge of and manage any substantial part of the assets of Developer and such appointment is not dismissed within sixty (60) days, or issuance of any execution or attachment against Developer whereupon the Project, or any part thereof, or any interest therein of Developer under this Agreement shall be taken and the same is not released prior to judicial sale thereunder (each of the events described in this romanette being deemed a default under the provisions of this Agreement); or (iii) the Developer defaults under the Development Agreement relating to other incentives for the Project, and continuance of such default or breach specified in items (i), (ii), or (iii) for a period of 30 days after the non-defaulting party has delivered to the defaulting party a written notice specifying such default or breach and requiring it to be remedied; provided, that if such default or breach cannot be fully remedied within such 30-day period, but can reasonably be expected to be fully remedied and the defaulting party is diligently attempting to remedy such default or breach, such default or breach shall not constitute an event of default if the defaulting party shall upon receipt of such notice diligently attempt to remedy such default or breach and shall thereafter prosecute and complete the same with due diligence and dispatch. In the event the County provides notice to the Developer claiming a breach of this Agreement, the County shall also provide notice of such breach to the City. In no event shall the County have the right to compel (by specific performance or otherwise) the Developer to construct, reconstruct, or build the Project. 16. No Transfer of Rebate. The Developer shall not transfer the right to receive the Rebate to any person or entity without the prior written consent of the County, which consent shall not be unreasonably withheld, conditioned or delayed. The County agrees to consent to any transfer if such transferee has also been approved by the City in connection with an assignment of the Development Agreement, unless the County finds substantial and compelling reasons to withhold such consent. 17. Time of Essence. Time is of the essence of this Agreement. Each party to this Agreement will make every reasonable effort to expedite the subject matters hereof and acknowledges that the successful performance of this Agreement requires its continued cooperation. 18. Amendment. This Agreement, and any exhibits attached hereto, may be amended only by the mutual consent of the parties, upon official action of the County s Board approving said amendment, and by the execution of said amendment by the parties to this Agreement or their successors in interest. 19. Immunity of Officers, Employees and Members. No personal recourse shall be had for any claim based upon any representation, obligation, covenant or agreement in this Agreement against any past, present or future owner, officer, manager, member, employee or agent of a party to the Agreement, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and any liability of any such officers, members, directors, employees or agents is hereby expressly waived and released as a condition of and consideration for the execution of this Agreement. Furthermore, no past, present or future owner, officer, manager, member, employee or agent of a party to this Agreement shall be 7

8 personally liable to the County, the Developer or any successor in interest, for any default or breach by the County, Developer or any successor in interest. 20. No Other Agreement. Except as otherwise expressly provided herein, this Agreement and all documents incorporated herein by reference supersedes all prior agreements, negotiations and discussions, both written and oral, relative to the subject matter of this Agreement and is a full integration of the agreement of the parties. 21. Severability. If any provision, covenant, agreement or portion of this Agreement, or its application to any person, entity or property, is held invalid or unenforceable in whole or in part, this Agreement shall be deemed amended to delete or modify, in whole or in part, if necessary, the invalid or unenforceable provision or provisions, or portions thereof, and to alter the balance of this Agreement in order to render the same valid and enforceable. In no such event shall the validity or enforceability of the remaining valid portions hereof be affected. 22. Governing Law, Venue, Fees and Expenses. For any claims arising out of this Agreement, performance or non-performance under this Agreement, and for any request or demand for damages resulting from the breach or default under this agreement, the sole and exclusive venue for litigation shall be the District Court in Franklin County, Kansas or the U.S. District Court in Kansas City, Kansas. This Agreement shall be governed by and construed in accordance with the laws of the State without regard to conflict of laws principles. 23. Notice. All notices and requests required pursuant to this Agreement shall be in writing and shall be sent as follows: To the County: Mr. Derek Brown, County Administrator Franklin County 1428 S. Main, Suite 2 Ottawa, KS With copy to: Mr. Joe Serrano Kutak Rock LLP 2300 Main Street, Suite 800 Kansas City, MO To the Developer: Mr. Mike Works Ottawa Lodging, LLC 6007 Norman Road Lincoln, NE

9 With copy to: Mr. Matthew S. Gough Barber Emerson, L.C Massachusetts P.O. Box 667 Lawrence, Kansas or at such other addresses as the parties may indicate in writing to the other either by personal delivery, national recognized overnight courier (e.g., FedEx), or by registered mail, return receipt requested, with proof of delivery thereof. Mailed notices shall be deemed effective on the third day after mailing; all other notices shall be effective when delivered. Any notices required to be provided to the City pursuant to this Agreement shall be sent as follows: To the City: Ms. Amy Finch, City Clerk City of Ottawa Ottawa City Hall 101 S. Hickory Street Ottawa, KS With copy to: Mr. Joe Serrano Kutak Rock LLP 2300 Main Street, Suite 800 Kansas City, MO Not a Partnership. The provisions of this Agreement are not intended to create, nor shall they in any way be interpreted or construed to create, a joint venture, partnership, or any other similar relationship between the parties. 25. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement. 26. Recordation of Agreement. At the request of either party, the parties shall execute and deliver a memorandum of this Agreement in mutually acceptable form for recording in the real property records of the County. 27. Required Disclosures. Developer shall immediately notify the County of the occurrence of any event which would cause any of the information furnished to the County by Developer in connection with the matters covered in this Agreement to contain any untrue statement of any material fact or to omit to state any material fact required to be stated therein or necessary to make any statement made therein, in the light of the circumstances under which it was made, not misleading. 9

10 28. Cash Basis and Budget Laws. The right of the County to enter into this Agreement is subject to the provisions of the Cash Basis Law (K.S.A et seq.), the Budget Law (K.S.A et seq.), and other laws of the State. This Agreement shall be construed and interpreted in such a manner as to ensure the County shall at all times remain in conformity with such laws. [Remainder of Page Intentionally Left Blank] 10

11 IN WITNESS WHEREOF, the County and the Developer have duly executed this Transient Guest Tax Rebate Agreement pursuant to all requisite authorizations as of the date first above written. FRANKLIN COUNTY, KANSAS a Kansas municipal corporation ATTEST: By: Chairman County Clerk ACKNOWLEDGMENT STATE OF KANSAS ) ) SS. COUNTY OF FRANKLIN ) On this July, 2017, before me, a Notary Public in and for said County and State, came Colton Waymire, Chairman of the Board of County Commissioners of Franklin County, Kansas, a municipal corporation duly authorized, incorporated and existing under and by virtue of the Constitution and laws of the State of Kansas, and Janet Paddock, County Clerk of said County, who are personally known to me to be the same persons who executed, as such officers, the within instrument on behalf of said County, and such persons duly acknowledged the execution of the same to be the act and deed of said County. In witness whereof, I have hereunto subscribed my name and affixed my official seal, the day and year last above written. [SEAL] Notary Public in and for said County and State My Commission Expires: Transient Guest Tax Rebate Agreement

12 OTTAWA LODGING, LLC a Nebraska limited liability company By: Name: Title: ACKNOWLEDGMENT STATE OF ) ) SS. COUNTY OF ) On this July, 2017, before me appeared, to me personally known, who, being by me duly sworn did say that he/she is the of Ottawa Lodging, LLC, a Nebraska limited liability company, and that said instrument was signed on behalf of said company and acknowledged said instrument to be the free act and deed of said company. In witness whereof, I have hereunto subscribed my name and affixed my official seal, the day and year last above written. [SEAL] Notary Public in and for said County and State My Commission Expires: Transient Guest Tax Rebate Agreement