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HomeMy WebLinkAboutItem 03 - Eatzi's Incentive AgreementMEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: BRUNO RUMBELOW, CITY MANAGER ); MEETING DATE: SEPTEMBER 10, 2013 SUBJECT: FIRST ADDENDUM TO EATZI'S INCENTIVE AGREEMENT RECOMMENDATION: City Council to consider approving the attached First Addendum to Economic Development and Incentive Agreement for the development of a central Eatzi's location (in the former Luby's location) and a depot store in Grapevine. Phil Romano and his partners have reviewed /agreed to the new language. According to the original agreement, the first $300,000 was delivered upon the issuance of the Certificate of Occupancy of the central store (in the former Luby's location). Another $100,000 was agreed to be paid at the end of each of the first three years, should the Eatzi's central store meet sales targets of $10 million, $10.5 million and $11 million respectively. The depot store will receive $75,000 on issuance of the Certificate of Occupancy and $25,000 per year at the end of each of the first three years should it meet its sales target of $4 million annually. Due to more business interruption than was anticipated because of the DFW Connector, Eatzi's has asked that we consider lowering the annual sales targets to reach the incentive payment to $5, $6 and $7 million respectively for each of the first three years of operation. In addition, the incentive eligibility for the depot store would be extended to four years from the date of this agreement. Staff recommends approval. JCH September 5, 2013 (9:04AM) This First Addendum to Economic Development and Incentive Agreement (the "Addendum ") is entered into by and between the City of Grapevine, Texas (the "City "), and EBG, LLC dba Eatzi's Market and Bakery, a Texas limited corporation ( "Developer "), on this day of , 2013. RECITALS: A. The City and Developer have entered into that certain Economic Development and Incentive Agreement, dated May 26, 2011 (the "Agreement "), pursuant to Chapter 380 of the Texas Local Government Code; and B. Developer timely opened its flagship Eatzi's in the midst of one of the largest highway construction projects in Metroplex history (the "Connector Project "); and C. The flagship Eatzi's has been an important addition to the retail landscape at an important, high profile corner in the City; and D. The negative impact of the Connector Project has been more significant than originally anticipated; and E. The parties desire to amend the Agreement to comport with performance to date, future performance, and the Connector Project impact, along with improving the likelihood of the opening of the depot store in the City; and C. This Addendum and the incentives provided for herein are authorized by, and in accordance with, the City's Policy on Economic Development and Chapter 380 of the Texas Local Government Code; and D. All legal prerequisites for the approval and execution of this Addendum have been met, including but not limited to the requirements of the Texas Open Meetings Act and the City Charter; NOW, THEREFORE, in consideration of the premises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the parties do hereby agree as follows: 1. Section III A.i of the Agreement is hereby deleted and is replaced as follows: "ii. Obtain the necessary building permit(s) and commence construction on the flagship store no later than 12 months from the date of this Agreement. Obtain the necessary building permits and commence construction on the depot store not later than 48 months from the date of this Addendum; and" 2. Section III B. of the Agreement is hereby deleted and is replaced as follows: "B. In consideration of the Developer's completion of the Project, the City agrees to provide the following incentives. i. "The City will provide a grant of $300,000 within thirty (30) days of the issuance of a Certificate of Occupancy for the Project's central store. ii. Thereafter, the City shall provide a grant of $100,000 within thirty (30) days of the fourteen (14) month anniversary of the opening of the central store (June 6, 2012) providing store sales for that period total at least $5 million minimum. If the minimum total store sales for the first year are not met, the grant will be forfeited by the developer; another grant of $100,000 within thirty (3 0) days of the (2) year anniversary of the opening of the central store providing store sales for the second year total at least $6 million minimum. If the minimum total store sales for the second year are not met, the grant will be forfeited by the developer; another grant of $100,000 within thirty (3 0) days of the (3) year anniversary of the opening of the central store providing store sales of the third year total at least $7 million minimum. If the minimum total store sales for the third year are not met, the grant will be forfeited by the developer. iii. The City will provide a grant of $75,000 within thirty (30) days of the issuance of a Certificate of Occupancy for the Project's depot store. iv. Thereafter, the City shall provide a grant of $25,000 within thirty (30) days of the (1) year anniversary of the opening of the depot store providing total store sales for the first year total at least $4 million minimum. If the minimum store sales are not met for the first year, the grant will be forfeited by the developer; another grant of $25,000 within thirty (30) days of the (2) year anniversary of the opening of the depot store providing store sales for the second year total at least $4 million minimum. If the minimum total store sales for the second year are not met, the grant will be forfeited by the developer; another grant of $25,000 within thirty (30) days of the (3) year anniversary of the opening of the depot store providing total store sales of the third year total at least $4 million minimum. If the minimum total store sales for the third year are not met, the grant will be forfeited by the developer. V. The total potential grant amount under this Agreement shall be $750,000." 3. All other provisions of the Agreement not specifically amended herein shall remain in full force and effect and are hereby confirmed, ratified and approved. Capitalized terms which are not defined herein shall have the same meaning as set forth in the Subject Agreement. ATTEST: City Secretary APPROVED AS TO FORM: City Attorney THE CITY OF GRAPEVINE, TEXAS Bruno Rumbelow, City Manager EBG, LLC dba Eatzi's Market and Bakery Adam Romo The State of Texas County of Tarrant Before me, the undersigned, on this day personally appeared Adam Romo, Chief Executive Officer of EBG, LLC dba Eatzi's Market and Bakery, proved to me through the presentation of a valid Texas Drivers License to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. Mr. Romo furthermore attested that he /she is signing this agreement in his capacity as Chief Executive Officer of EBG, LLC dba Eatzi's Market and Bakery, and that such capacity makes his signature valid to bind the company. Seal: GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of , 2013. My Commission Expires: Notary Public in and for the State of Texas