ARLINGTON COUNTY, VIRGINIA

Transcription

1 ARLINGTON COUNTY, VIRGINIA County Board Agenda Item Meeting of December 10, 2005 DATE: November 16, 2005 SUBJECT: Authorize the acceptance of and the allocation of $1 million from the Governor s Opportunity Fund (GOF) of the Commonwealth of Virginia to be transferred to the Industrial Development Authority of Arlington County, Virginia (the Authority) and then to BNA, Inc. subject to the terms and conditions of the attached GOF Performance Agreement among Arlington County, the Authority, and BNA. C. M. RECOMMENDATION: 1. Authorize the County Manager to sign the attached Agreement on behalf of the Arlington County Board among Arlington County, the Authority, and BNA, Inc. that outlines the disbursement and management terms and conditions of this Governor s Opportunity Fund (GOF) grant. 2. Authorize the acceptance of $1 million from the GOF that will eventually be transferred to the Authority and to the BNA, Inc. subject to the terms and conditions of the Agreement among Arlington County, the Authority and BNA, Inc. 3. Allocate the $1 million received from the GOF for inducing said company to locate in Arlington, at 1801 S. Bell Street and employ a significant number of persons creating new jobs and investment in Arlington, subject to the terms and conditions of the Agreement among Arlington County, the Authority, and BNA, Inc. ISSUES: None. SUMMARY: BNA, Inc. has chosen to relocate its headquarters from the District of Columbia into 277,000 square feet of space in the 1801 S. Bell Street Building in Arlington. In order to assist BNA, Inc. with the costs relocating its headquarters and the complete renovation of this building, the Commonwealth of Virginia has awarded Arlington a Governor s Opportunity Fund (GOF) grant of $1 million. Authorization is needed for the County Manager to sign the GOF Performance Agreement (attached) among Arlington County, the Authority, and BNA, Inc. and for Arlington County to accept the grant money. Once the $1 million is received it must be allocated for distribution to BNA, Inc. through the Authority according to the terms and conditions of the GOF Performance Agreement. BACKGROUND: BNA, Inc., founded in 1929, is the foremost publisher of print and electronic news, analysis and reference products, providing intensive coverage of legal and regulatory County Manager: County Attorney: Staff: Charlotte Franklin/AED, BIG Division

2 developments for business and government professionals. Decision-makers use BNA, Inc. for detailed, up-to-the-minute news and information on laws and regulations that influence business decisions. The company produces more than 200 news and information services including the Daily Report for Executives and the Daily Tax Report. BNA, Inc. is the oldest wholly employee-owned company in the U.S. In addition to its 1000 employees at its headquarters, BNA, Inc. has over 600 reporters, lawyers and editors based in the National Capital, plus correspondents across the country and the world. BNA, Inc. has three times been named to the FORTUNE List of 100 Best Companies to Work for in America. BNA, Inc. has chosen to relocate its headquarters from the District of Columbia into 277,000 square feet of space in the 1801 S. Bell Street Building in Arlington. In order to assist BNA, Inc. with the costs relocating its headquarters and the complete renovation of this building, the Commonwealth of Virginia has awarded Arlington a Governor s Opportunity Fund (GOF) award of $1 million. Once the GOF funds are available, Arlington will manage and distribute the funds according to a GOF Performance Agreement (attached) among Arlington County, the Authority, and BNC, Inc. DISCUSSION: The GOF Performance Agreement among Arlington County, The Authority and BNA, Inc. outlines the specific requirements that need to be satisfied in order for the $1 million to be transferred to BNA, Inc. The Agreement is to be signed by the County Manager on behalf of the Arlington Board, the Chairman of the Authority on behalf of IDA, and the Treasurer of BNA, Inc. on behalf of BNA, Inc. The requirements outlined in the Agreement are as follows: BNA, Inc. will relocate its headquarters from the District of Columbia into 277,000 square feet of newly rehabilitated offices space at 1801 S. Bell Street Building in the Crystal City area of Arlington. BNA, Inc. will make a capital investment of at least $110,000,000 consisting of the building and the purchase and/or lease of related furniture, fixtures, and equipment. BNA, Inc. will relocate 1,000 employees from the District of Columbia to the renovated 1801 S. Bell Street Building in 2007 consisting of executives, corporate officers, corporate managers, reporters, researchers, attorneys and corporate support staff. The Company estimates that during the next three years, some 289 BNA, Inc. employees will move to Virginia (due to relocation and/or future hiring). The GOF grant will be applied to building and site improvements associated with the redevelopment and rehabilitation of the 1801 S. Bell Street Building for BNA, Inc. s headquarters. FISCAL IMPACT: Each year BNA, Inc. sponsors and presents various conferences and meetings which will generate additional sales tax, meals tax, and transient occupancy tax revenue to Arlington County. In 2004 BNA, Inc. generated over 2,300 room nights in local hotels in the D.C. area. More than 51 percent of BNA, Inc. operations revenue is derived from out-of-state sources. Over the next three years, BNA will relocate at least 1,000 employees with an average annual salary of $74,435 and will invest at least $110,000,000 in real estate and business tangible equipment.

3 As required by the Governor s Opportunity Fund requirements, Arlington County will match the $1 million grant in kind through its Capital Improvement Program. Arlington s $90 million investment in the development of the North Tract site into a 28.5 acre park with an aquatic fitness center will satisfy the State s requirement for the in kind Governor Opportunity Fund match requirement.

4 GOVERNOR S OPPORTUNITY FUND PERFORMANCE AGREEMENT This Performance Agreement made and entered this day of, 2005, by and between the Arlington County, Virginia, a political subdivision of the Commonwealth of Virginia (the County ), the Industrial Development Authority of Arlington County (the Authority ), the Bureau of National Affairs, Inc. ( BNA ), a corporation presently headquartered in the District of Columbia, a Delaware corporation, and BNA Washington Inc. ( BNAW ), a Delaware corporation and a wholly-owned subsidiary of BNA. BNA and BNAW collectively are referred to as the Company. WHEREAS, the Company plans to relocate its headquarters from the District of Columbia to the County, into a newly rehabilitated facility at 1801 S. Bell Street consisting of 277,000 square feet, hereinafter referred to as the Facility; WHEREAS, the Company will purchase the renovated Facility for use as its corporate headquarters; and WHEREAS, the County has been awarded a grant and expects to receive the sum of one million dollars ($1,000,000.00) (the Funds ) from the Governor's Opportunity Fund ( GOF ) through the Virginia Economic Development Partnership for the purpose of inducing the Company to relocate in Arlington, bringing to Arlington approximately 1,000 jobs; and WHEREAS, the County is authorized under Section of the Virginia State Code to receive such Funds; and WHEREAS, the Authority is willing to provide the GOF funds to the Company in its entirety once the Company meets certain criteria relating to employment projections and capital investment thresholds; and WHEREAS, pursuant to Section 4, the Company shall be required to return a pro rata portion of the funds so received to the Authority and, in turn, the County and/or the Authority shall be required to return a pro rata portion of the funds so received to the Commonwealth of Virginia if the performance criteria are not met by the Company; and WHEREAS, the County and the Authority find that the provisions of this agreement and the commitments of the County and the Authority herein promote the County as a business location by inducing development and business location within the County, increasing the tax base, and providing employment for its citizens, and that such development and business location will promote the prosperity of the citizens of the County. NOW, THEREFORE, the County, the Authority and the Company agree as follows:

5 1. Operations The Company will relocate its corporate headquarters to Arlington County, Virginia and will maintain its operation at the Facility. The Company will occupy a minimum of 50% of the square footage of the Facility on or before December 31, 2008 (the Initial Occupancy ). 2. Capital Investment Requirement a. The Company will purchase the substantially rehabilitated and renovated Facility. The Company agrees to make a Capital Investment of approximately $110,000, (consisting of the purchase of an existing building that has been renovated to the Company s specifications, and the purchase and/or lease of related property, furniture, fixtures, and equipment) (the Capital Investment Requirement ). To qualify for the release of funds under Section 6, within six (6) months of the Initial Occupancy (provided that at least 90% of the Capital Investment Requirement has been met), the Company, through a Company officer or authorized representative of the Company, agrees to certify and to report the same to the Authority. b. Once such certification has been made by the Company to the Authority regarding the Capital Investment Requirement, then and thereafter $500, of the Funds (the Capital Investment Portion ) shall be fully and irrevocably vested in the Company and the Company shall not be obligated in any way to repay any part of the Capital Investment Portion provided to it hereunder, unless it is found that its certifications were materially false, in which case the Company will be required to return the Capital Investment Portion to the Authority in full within 30 days of demand by the Authority. Any Funds recaptured by the Authority shall be refunded to the Governor s Opportunity Fund. 3. Employment Requirement a. In order for the Company to be in compliance with this Performance Agreement, the Company will (i) relocate by December 31, 2008, approximately 1,000 employees from the District of Columbia location to the Facility; and (ii) maintain during the 30-month time period following the Initial Occupancy (the Measurement Period ): (A) an average number of 1,000 employees, consisting of executives, corporate officers, corporate managers, reporters, researchers, attorneys and corporate support

6 staff (the Employment Requirement ), and (B) a sustained average annual total employee gross compensation of at least $74,435 (the Compensation Requirement ). b. For purposes of this Agreement, the term employees shall include regular full-time employees (i.e., those employees on a regularly scheduled work week of 37.5 hours), and fulltime equivalent employees (i.e., the total number of hours worked in a week by regular parttime employees divided by 37.5, hours), and third party contractors. c. Provided that at least 90% of the Employment Requirement was met and the full Compensation Requirement was met, the Company, through a Company officer or authorized representative of the Company, agrees to certify and to report the same to the Authority at each of the following intervals: (1) Within 60 days after the Initial Occupancy (certifying that the Company has met at least 90% of the Employment Requirement within 60 days after the Initial Occupancy); (2) Not later than January 31 st of each calendar year that falls within the Measurement Period (certifying that the Company has met at least 90% of the Employment Requirement during the previous 12 month period, i.e., January 1 through December 31, and has met the full Compensation Requirement); and (3) Within 30 days after the end of the Measurement Period (certifying that the Company has met at least 90% of the Employment Requirement and the full Compensation Requirement during the previous six (6) month period). Notwithstanding the foregoing to the contrary, if the Initial Occupancy date is less than six (6) months prior to January 31 st, the Company will not have to submit the certification required under Section 3(c)(2) until the next occurring January 31 st in the Measurement Period. d. Once the initial certification has been made by the Company to the Authority regarding the Employment Requirement and the Compensation Requirement, then $500, (the Workforce Portion ) shall be paid to Company pursuant to Section 6 and the Company shall not be obligated in any way to repay any part of the Workforce Portion provided to it hereunder, unless it is found that its certifications were materially false, in which case the Company will be required to return the Workforce Portion to the Authority in full within 30 days of demand by the Authority, or if it is subject to recapture by the Authority under Section Recapture of Workforce Portion of Funds. a. Any Funds recaptured by the Authority shall be refunded to the GOF.

7 b. If, by the end of the Measurement Period, the Company has not made all of the certifications described in Section 3.c.(2) and (3), the Company shall repay to the County, within sixty (60) days after the last certification described in Section 3.c.(3) is due, that portion of the Workforce Portion that is proportional to the shortfall, as provided by the following example: If the average number of Company employees during the Measurement Period is at least 900, and the average annual total employee gross compensation is equal to or greater than $74,435.00, then no refund of the Workforce Portion shall be required. If the average number of Company employees during the Measurement Period has been 670 (67% of 1,000), then the Company shall refund to the County 33 % of the Workforce Portion -- i.e., the sum of $165, If, at the end of the Measurement Period, the average total employee gross compensation is $73, (98% of $74,495.00), then the Company shall refund to the County 2% of the Workforce Portion -- i.e., the sum of $10,000.00). 5. Use of Governor s Opportunity Fund The GOF grant will be applied to building and site improvements associated with the redevelopment and rehabilitation of the 1801 S. Bell Street for the Company s corporate headquarters as stated in Provision 2 above. An inspection will be conducted by the County to verify the expenditure totals before funds will be disbursed. The Company is to immediately make available to the Authority all pertinent documentation and payment receipts, as requested. 6. Basis of Release of Funds -- The County will transfer the Funds received from the GOF to the Authority, and the Authority shall release said Funds in lump sums in the form of a check made payable to The Bureau of National Affairs, Inc., conditioned upon presentation and certification, and acceptance by the County and/or the Authority of such certifications (such acceptance to be given to BNA within 14 days after receipt) that the Capital Investment (or at least 90% thereof), the Employment Requirement with respect to the first sixty (60) days after the Initial Occupancy (or at least 90% thereof), and the Compensation Requirement thresholds established above have been met. The full amount of the Funds will be released within 60 days after receipt by the County of such certification. The Funds are considered to consist of $500, for the Capital Investment Requirement (the Capital Investment Portion ) and $500, for the Employment and Compensation Requirements (the Workforce Portion ).

8 7. County and Authority Obligations The County s and the Authority s obligations herein are contingent upon receipt of the $1,000, grant from the GOF. Neither the Authority nor the County shall have an obligation to pay any funds except as may be received from the Commonwealth of Virginia s Governor s Opportunity Fund. 8. Governing Law This agreement shall be construed in accordance with the laws of the Commonwealth of Virginia. 9. Execution Each copy of this agreement shall constitute an original. 10. Limitation of Liability Notwithstanding any provisions of this agreement, in no event shall any party, its employees, directors, officers, agents, subsidiaries, or affiliates, be liable to any other party for any special, incidental, consequential, indirect or punitive damages, whether foreseeable or not, arising from this agreement. In no event shall the Company s total liability for any act, error, or omission arising from this agreement, whether foreseeable or not, exceed $1 million or the actual amount received by BNA pursuant to this agreement. 11. Applicability This agreement is binding on the heirs, successors, and assigns of BNA. [SIGNATURE PAGES TO FOLLOW]

9 WITNESS the following signatures and seals: ARLINGTON COUNTY: COMMONWEALTH OF VIRGINIA, AT LARGE BY: Ron Carlee County Manager The foregoing instrument was acknowledged before me in Arlington County, Virginia on the day of, 2005 by:. My commission expires. Given under my hand this day of, (Seal) Notary Public THE BUREAU OF NATIONAL AFFAIRS, INC.: DISTRICT OF COLUMBIA BY: Paul N. Wojcik President & CEO The foregoing instrument was acknowledged before me in Washington, D.C. on the day of, 2005 by:. My commission expires. Given under my hand this day of, (Seal) Notary Public

10 BNA WASHINGTON INC.: BY: DISTRICT OF COLUMBIA Elizabeth L. Brown President The foregoing instrument was acknowledged before me in Washington, D.C. on the day of, 2005 by:. My commission expires. Given under my hand this day of, (Seal) Notary Public INDUSTRIAL DEVELOPMENT AUTHORITY OF ARLINGTON COUNTY, VIRGINIA: BY: James Mayer Chairman COMMONWEALTH OF VIRGINIA, AT LARGE The foregoing instrument was acknowledged before me in Arlington County, Virginia on the day of, 2005 by:. My commission expires. Given under my hand this day of, (Seal) Notary Public