CITY COUNCIL AGENDA MEMORANDUM

3.5% City and County of Broomfield, Colorado To: Mayor and City Council From: Charles Qzaki, City and County Manager Prepared by: Bo Martinez, Director of Economic Development Pat Soderberg, Finance Director Tami Yellico, Deputy City and County Attorney Meeting Date Agenda Category Agenda Item # December 10, 2013 Council Business 9 (f) Proposed Resolution No. 201 3-1 90, Authorizing and Approving an Investment Agreement Agenda Title: Between the City and County of Broomfield and Aircell Business Aviation Services LLC to Locate in Broomfield. Summary Aircell Business Aviation Services LLC is a business operating as an indirect subsidiary of Gogo, Inc., a Delaware corporation. Aircell Business Aviation Services LLC operates in targeted industries, including aviation, aerospace, technology and media and is a leading provider of in-flight connectivity. The business is relocating and expanding to a larger building in Interlocken Advanced Technology Park, known as EQS at Interlocken Phase 1, which is located at 105 Edgeview Drive, Broomfield, Colorado. The business will occupy approximately 112,300 square feet of the 186,000 square feet EQS class A office building at Interlocken. The business expects that it will employ 150 employees at the Broomfield location. Under the proposed agreement: o CITY COUNCIL AGENDA MEMORANDUM Broomfield agrees to rebate to Aircell Business Aviation Services LLC an amount equal to 50% of 3.5% of the City s use tax, for use tax associated with improvements Aircell Business Aviation Services LLC makes at the Interlocken location. o Broomfield agrees to rebate 50% of City and County personal property taxes annually each year for 10 years, provided Aircell Business Aviation Services LLC meets the employment goals for each year; The numbers involved are summarized in the Financial Considerations section below. Proposed Resolution No. 2013-190 (attached) would approve the investment agreement. Prior Council Action The City Council has approved investment agreements with other businesses in the past. Financial Considerations The estimated dollar value of the proposed incentives are summarized below: Investment Agreement with Aircell Business Aviation Services LLC Item Amount Personal Property Taxes Personal PropertyTaxes for 10 years $ 304,124 Percentage for reimbursement investment 50% Amount of estimated reimbursement $ 152,062 Estimated net personal property tax revenue to Broomfield $ 152,062 Use Tax Use tax collected at Broomfields total tax rate of 4.15% $ 166,000 Use tax to be shared $ 140,000 Percentage for reimbursement investment 50% Amount of estimated reimbursement $ 70,000 Estimated net use tax revenue to Broomfield $ 96,000 Total estimated reimbursement investment $ 222,062 Total estimated revenue to Broomfield $ 248,062 - Alternatives City Council could decide not to orovide the orooosed incentives. Proposed Based on the above, it is recommended... That Resolution No. 201 3-1 90 be adopted. 9 f - Page 1

AGREEMENT BE1WEEN THE CITY AND COUNTY OF BROOM FIELD AND A RESOLUTION AUTHORIZING AND APPROVING AN INVESTMENT 9 f - Page 2 and County Attorney APPROVED AS TO FORM: City and County Clerk ATTEST: Mayor COLORADO THE CITY AND COUNTY OF BROOM FIELD, APPROVED on December 10, 2013. Section 3. This resolution is effective upon its approval by the City Council. county clerk is authorized to attest the agreement, in form approved by the city Section 2. The mayor or mayor pro tern is authorized to sign and the city and and county attorney. City and County of Broomfield and Aircell Business Aviation Services LLC, a Section 1. The Investment Agreement attached hereto by and between the Delaware limited liability company, to locate in Broomfield is hereby approved. BROOMFIELD, COLORADO: BE IT RESOLVED BY THE CITY COUNCIL OF ThE CITY AND COUNTY OF AIRCELL BUSINESS AVIATION SERVICES LLC TO LOCATE IN BROOMFIELD RESOLUTION NO. 2013-1 90

INVESTMENT AGREEMENT BETWEEN THE CITY AND COUNTY OF BROOMFIELD AND AIRCELL BUSINESS AVIATION SERVICES LLC 1.0 PARTIES. The parties to this Agreement (hereinafter referred to as the Agreement ) are the City and County of Broomfield, a Colorado municipal corporation and county, (hereinafter referred to as the City ) and Aircell Business Aviation Services LLC, a Delaware limited liability company (hereinafter referred to as the Business ) and provided that City and Business may be individually referred to herein as a Party and together may be referred to as the Parties. 2.0 RECITALS. 2.1 Business is an indirect operating subsidiary of Gogo Inc., a Delaware corporation. Business is a successful, growing global company that operates in targeted industries, including aviation, aerospace, technology and media and is a leading provider of inflight connectivity. Business has the largest number of online aircraft in service and is a pioneer in wireless digital entertainment and other service in the business aviation markets. 2.2 Business is relocating from its existing offices in Broomfield, Colorado and expanding to a larger building in the Interlocken Advanced Technology Park, known as Eos at Interlocken Phase 1, which is located at 105 Edgeview Drive, Broomfield, Colorado (hereinafter referred to as the New Broomfield Location ). 2.3 Business will lease approximately 112,363 square feet at the New Broomfield Location, for an initial lease term of 12 years with two 5 year renewal periods. 2.4 Business anticipates employing 150 employees at the New Broomfield Location (hereinafter referred to as the Minimum Number of Employees ). 2.5 The City finds and determines that the relocation of Business to the New Broomfield Location is in the best interest of the City, serves the public interest, and benefits the public. 3.0 THE AGREEMENT. In consideration of the mutual covenants and promises of the Parties contained herein, and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows: 3.1 Use Tax Rebate. Business shall relocate its offices to the New Broomfield Location by December 31, 2015 and shall complete the tenant improvements at the New Broomfield Location, as evidenced 1 9 f - Page 3

by the issuance of a Certificate of Occupancy. If the Business certifies in writing to the City by December 31, 2015 or earlier that as of that date a Certificate of Occupancy was issued for the New Broomfield Location, the City agrees to rebate and pay to Business, within forty-five (45) days of the City s receipt of such certification, an amount equal to fifty (50) percent of the City s 4.15% use tax, less 0.25% presently allocated for open space and 0.40% presently allocated for the county functions, levied and collected from Business or a third party performing the improvements for or on behalf of Business at the New Broomfield Location, using building and construction materials subject to the City s use tax and as used for construction at the New Broomfield Location (hereinafter referred to as the Use Tax Rebate ). The City estimates the total amount of the Use Tax Rebate to be $70,000 (which is 50% of 3.5% of $4,000,000 in estimated building and construction materials). 3.2 Personal Property Tax Rebate for 10 Years. 3.2.1 If Business completes the tenant improvements at the New Broomfield Location by December 31, 2015, or earlier, as evidenced by the issuance of a Certificate of Occupancy, then Business shall annually, thereafter, certify in writing to the City not later than December 31st the number of employees the Business employs at the New Broomfield Location. The Business agrees that the Minimum Number of Employees at the New Broomfield Location that shall allow the Business to collect all or a percentage of the personal property rebate as provided in this section is the Minimum Number of Employees (hereinafter referred to as the Personal Property Tax Rebate ). The Business projects that it will employ 150 employees by the end of the year 2014 through 2023. Annually, after Business has paid all of its personal property taxes for personal property at the New Broomfield Location for the preceding year, the City agrees to rebate and pay to Business an amount equal to fifty (50) percent of Broomfield s city and county personal property taxes, with such rebate being made each year for a period of ten (10) years. Currently, the combined City and County mill levy for such taxes is 28.968 mills. In no event shall the total period of personal property tax rebate under this Agreement exceed ten (10) years. The City estimates the total amount of personal property tax to be rebated under this Agreement if Business employs the Minimum Number of Employees in each tax year, based upon Business s projections of added personal property, to be a total of $1 52,062 over a ten (10) year period. 2 9 f - Page 4

3.2.2 Nothing in this Section 3.2 shall be construed as authorizing a rebate of personal property taxes for personal property located in Broomfield as of December 31, 2013 or for personal property brought on to any facility that already exists within Broomfield as of December31, 2013. 3.3 Repayment Conditions. 3.3.1 From 2014 through 2023, if in any year Business fails to maintain the Minimum Number of Employees, no rebate for that year shall be made to the Business and a proportionate amount of the total Personal Property Tax and Use Tax Rebate to Business to that date by the City for all years shall be immediately refunded to the City as follows: Year in which Total Number of Proportion of Total Personal Business Employees at Broomfield Property Tax Rebate and Use Tax Location is below 150 employees for Rebate to be Refunded by Business any of the years 2014 through 2023 to City 2014 100% 2015 through 2018 80% 2019 through 2021 60% 2022 through 2023 40% The Parties agree that any refund by Business to City of personal property taxes shall be made with respect to all personal property taxes rebated by City to Business to date through the end of any tax year that Business is not in compliance with the certifications and tax payment as required in Section 3.3 of this Agreement. 3.3.2 In the event that it is later discovered that the amounts levied and collected by the City are less than the amount estimated in this Section 3.0, nothing herein shall be construed by Business as creating an obligation on the part of the City to pay Business the difference between the amounts levied and collected and the amounts estimated. In the event the amounts of personal property and use taxes levied and collected by the City are greater or less than the amount estimated in this Section 3.0, the City shall calculate and pay Business the rebate based upon the actual amounts of taxes levied and collected and not the amounts of tax estimated and consistent with all other terms and conditions of this Agreement. 3 9 f - Page 5

3.4 Miscellaneous. 3.4.1 Nothing in this Agreement shall be construed or deemed as creating a multiple year fiscal obligation by the City. All obligations of the City pursuant to this Agreement are subject to prior annual appropriation by the city council. 3.4.2 Business typically employs and recruits highly specialized and technically trained individuals for the majority of its open positions. Subject to the provisions of: 1) applicable law, 2) applicable labor agreements, 3) the job requirements and specifications for positions of employment at Business, 4) the most qualified candidates for positions as determined by Business in Business s sole discretion and 5) Business employment procedures and policies, Business agrees to make a commercially reasonable effort to employ qualified residents of Broomfield at the New Broomfield Location. 3.4.3 In the event the Business fails to maintain the Minimum Number of Employees under the terms and conditions of the Agreement, the City may pursue all repayment options available to the City under the law. 4.0 ASSIGNMENT. This Agreement shall not be assigned by the other Party without the prior written consent of the City, which shall not be unreasonably withheld, provided, however, that Business shall have the right to assign this Agreement to any affiliate of Business without prior written consent of the City, but with prior written notice to the City. 5.0 NOTICES. Any notice required or permitted by this Agreement shall be in writing and shall be deemed to have been sufficiently given for all purposes if personally served or if sent by certified mail or registered mail, postage and fees prepaid, addressed to the Party to whom such notice is to be given in the case of the City to the attention of the City and County Manager, George DiCiero Municipal Building, One DesCombes Drive, Broomfield, Colorado, 80020 and in the case of Business, such notice shall be to the Attention of (1) Norman Smagley, EVP & CPO, Gogo Inc., 1250 N. Arlington Heights Road, Suite 500, Itasca, Illinois 60143; (2) Ken Low, Director of Accounting, Aircell Business 120 Aviation Services LLC, 11001 West th Avenue, Suite 310,Broomfield, CO 80021; and (3) Michael McElroy, VP-Tax, Gogo Inc., 1250 N. Arlington Heights Road, Suite 500, Itasca, Illinois 60143, or at such other address as has been previously furnished in writing, to the other Party or Parties. Such notice shall be deemed to have been given when deposited in the mail of the United States Postal Service. 4 9 f - Page 6

6.0 EXHIBITS. All exhibits referred to in this Agreement, if any, are by reference incorporated herein for all purposes. 7.0 DELAYS. Any delays in or failure of performance by any Party of its obligations under this Agreement shall be excused if such delays or failure are a result of acts of God, fires, floods, strikes, labor disputes, accidents, acts of terrorism, regulations or order by civil or military authorities, shortages of labor or materials, or other causes, similar or dissimilar, which are beyond the control of such Party. 8.0 DEFAULT. Time is of the essence. If any undisputed payment or any other material condition, obligation, or duty is not timely made, tendered, or performed by either party, then this Agreement, at the option of the party who is not in default, may be terminated by the non-defaulting party, in which case, the non-defaulting party may recover such damages as may be proper. If the non defauting party elects to treat this Agreement as being in full force and effect, the non-defaulting party shall have the right to an action for damages that is limited to the amount of use and personal property taxes rebated under this Agreement. 9.0 PARAGRAPH CAPTIONS. The captions of the paragraphs are set forth only for the convenience and reference of the Parties and are not intended in any way to define, limit, or describe the scope or intent of this Agreement. 10.0 ADDITIONAL DOCUMENTS OR ACTION. The Parties agree to execute any additional documents or take any additional action that is necessary to carry out this Agreement. 11.0 INTEGRATION AND AMENDMENT. This Agreement represents the entire agreement between the Parties and there are no oral or collateral agreements or understandings. This Agreement may be amended only by an instrument in writing signed by the Parties. If any other provision of this Agreement is held invalid or unenforceable, no other provision shall be affected by such holding, and all of the remaining provisions of this Agreement shall continue in full force and effect. 12.0 WAIVER OF BREACH. A waiver by any Party to this Agreement of the breach of any term or provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by either Party. 13.0 GOVERNING LAW. This Agreement shall be governed by the laws of the State of Colorado. 14.0 BINDING EFFECT. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective legal representatives, successors, heirs, and assigns, provided that nothing in this paragraph shall be construed to 5 9 f - Page 7

permit the assignment of this Agreement except as otherwise expressly authorized herein. 15.0 EXECUTION IN COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same instrument. 16.0 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended to describe the rights and responsibilities only as to the Parties hereto. This Agreement is not intended and shall not be deemed to confer any rights on any person or entity not named as a Party hereto. 17.0 FINANCIAL OBLIGATIONS OF THE CITY. All financial obligations of the City under this Agreement are subject to appropriation, budgeting, and availability of funds to discharge such obligations. Subject to Section 3.4.1 above, in the event the City fails to appropriate funds for this Agreement beyond the current fiscal year, the City shall have no obligations for rebates for future fiscal years. Nothing in this Agreement shall be deemed to pledge the City s credit or faith, directly or indirectly, to the other Party. 18.0 NO PRESUMPTION. The Parties to this Agreement and their attorneys have had a full opportunity to review and participate in the drafting of the final form of this Agreement. Accordingly, this Agreement shall be construed without regard to any presumption or other rule of construction against the Party causing the Agreement to be drafted. 19.0 SEVERABILITY. If any provision of this Agreement as applied to either Party or to any circumstance shall be adjudged by a court to be void or unenforceable, the same shall in no way affect any other provision of this Agreement, the application of any such provision in any other circumstances or the validity, or enforceability of the Agreement as a whole. 20.0 EXECUTION REQUIRED. This Agreement shall not be binding upon any Party hereto unless and until the Parties have executed this Agreement. 21.0 MINOR CHANGES. The Parties executing this Agreement are authorized to make non-substantive corrections to this Agreement and attached exhibits, if any, as the Parties mutually consider necessary; provided, however, that a copy of any correction made to this Agreement and attached exhibits, if any, by a Party shall immediately be provided to the other Party and, further, no such correction shall be effective unless the other Party has indicated its agreement with such correction. 22.0 DAYS. If the day for any performance or event provided for herein is a Saturday, Sunday, or a day on which national banks are not open for the regular transactions of business, or a legal holiday pursuant to section 24-11- 6 9 f - Page 8

101(1), C.RS., such day shall be extended until the next day on which such banks and state offices are open for the transaction of business. 23.0 GOOD FAITH OF PARTIES. In the performance of this Agreement or in considering any requested approval, acceptance, extension of time, or appropriation, budgeting, or payment action, the Parties agree that each will act in good faith and will not act unreasonably, arbitrarily, capriciously, or unreasonably withhold, condition, or delay any approval, acceptance, or extension of time required or requested pursuant to this Agreement. 24.0 PARTIES NOT PARTNERS. Notwithstanding any language in this Agreement or any other agreement, representation, or warranty to the contrary, the Parties shall not be deemed to be partners or joint venturers, and neither Party shall be deemed to be partners or joint venturers, and neither Party shall be responsible for any debt or liability of the other Party. IN WITNESS WHEREOF, this Agreement is executed by the Parties hereto in their respective names as of 2013. THE CITY AND COUNTY OF BROOMFIELD, a Colorado municipal corporation and county ATTEST: Mayor One DesCombes Drive Broomfield, CO 80020 City and County Clerk APPROVED AS TO FORM: City & County Attorney 7 9 f - Page 9

AIRCELL BUSINESS AVIATION SERVICES LLC, a Delaware limited liability company By: Address: ATTEST: State of ) ) ss. County of The foregoing instrument was acknowledged before me this day of 2013 by as of Aircell Business Aviation Services LLC Notary Public My Commission expires: 8 9 f - Page 10