Tractor Supply Company. Project Outline Transaction Structure for Distribution Facility Located in Casa Grande, Arizona 1

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1 Tractor Supply Company Project Outline Transaction Structure for Distribution Facility Located in Casa Grande, Arizona 1 Overview. Tractor Supply Company ( TSC ) operates over 1,300 retail stores in 48 states and employs more than 18,000 people, making it the largest operator of rural lifestyle retail stores in the United States. Operating retail stores under the trade names Tractor Supply Company and Del s Feed & Farm Supply, TSC s business model focuses on supplying the lifestyle needs of recreational farmers and ranchers, as well as tradesmen and other small businesses. TSC has identified the City of Casa Grande (the City ) as a possible location for its newest distribution facility that will serve retail stores in California, Arizona, Nevada and Utah (the Distribution Center ). Specifically, TSC has identified an approximately 100 acre site located in the City (the Property ), which TSC plans to acquire from a third-party seller (the Seller ). The proposed project is more particularly described and depicted on Exhibit A attached hereto. The project will require a total capital investment of up to $90 million. Upon completion, the Distribution Center will provide approximately 267 full-time jobs and nearly $8.5 million in annual wages. Additional information regarding the proposed Distribution Center, including average hourly wages, can be found on Exhibit B attached hereto. The construction and future operation of the Distribution Center will benefit the City and its residents by creating a significant number of high paying jobs. Pursuant to City Code , the City can encourage economic development by authorizing the rebate of certain fees and taxes, including fees paid in connection with a new commercial project and taxes levied as a result of constructing the same. To that end, the purpose of this Project Outline is to provide a summary of the proposed transaction structure between TSC and the City regarding construction of the Distribution Center, specifically this includes certain economic incentives to be provided by the City, which are necessary in order to make the Distribution Center an economically viable project for TSC. The following terms and conditions may be further refined and negotiated among the parties in a formal Letter of Intent, which shall thereafter be used as the basis for a Development Agreement by and between the City, TSC, and the Seller. Transaction Structure. 1. Foreign Trade Zone. TSC s obligation to construct the Distribution Facility under the Development Agreement shall be conditioned upon TSC obtaining all state and local level approvals and all required resolutions and letters of support for the designation of the Distribution Center as a Sub-Zone of the Phoenix Free Trade Zone No. 75, as well as approval by the City of Phoenix to submit the formal application for the FTZ Sub-Zone designation. Relative to the PHX FTZ Sub-Zone designation, the City Council has previously adopted a resolution supporting the PHX FTZ Sub-Zone. The City will generally cooperate and reasonably 1 This outline represents a summary of discussion points, is not binding on either Tractor Supply Company or the City of Casa Grande and imposes no enforceable obligations on the parties

2 assist TSC in seeking Foreign Trade Zone status with respect to the Distribution Center, provided, however, such cooperation and assistance shall be at no cost to the City. 2. Economic Incentive Credit. In connection with the construction of the Distribution Center, the City will charge permit fees, plan check fees, application fees, inspection fees, impact fees, sewer connection fees, and fees and charges pursuant to the City Code (collectively, the City Fees ). Pursuant to City Code , the City shall provide TSC with an economic incentive credit in the amount of $250,000 (the Economic Incentive Credit ), which shall be applied in its entirety against the City Fees payable with respect to the construction of the Distribution Center as and when provided in Section 4 below. 3. Construction Sales Tax. In connection with construction of the Distribution Facility, TSC shall pay the City s statutory transaction privilege tax rate of 4% pursuant to City Code 3.08, along with any other fees associated with this project that may be required pursuant to City Code Pursuant to City Code (A)(13)(e) and , the City shall thereafter apply 2.2% of such taxes (i.e. 55% of the total dollar amount paid by TSC) (the Sales Tax Credit ) toward any City Fees that remain outstanding following application of the Economic Incentive Credit. In no event shall Economic Incentive Credit and the Sales Tax Credit exceed $919, Timing of Payment of City Fees. At such time as a building permit is issued by the City for the Distribution Center, the City shall apply the entirety of the Economic Incentive Credit against the City Fees payable with respect to the construction of the Distribution Center plus any amounts prepaid in respect to the City Fees at TSC s acquisition of the Property. The balance of the City Fees payable with respect to the construction of the Distribution Center shall be paid as and when the Sale Tax Credit is applied pursuant to Section 3 above, and the remaining City Fees payable with respect to the construction of the Distribution Center, if any, shall be due and payable by TSC on or before the thirtieth (30 th ) day following the date the final construction sales tax payment is due to the City. 5. Economic Incentive Criteria. TSC will acknowledge that to be eligible for the economic incentives described in paragraphs 2 and 3 above, they must meet the following criteria as required by Section of the City of Casa Grande City Code: A. The rebating of the fees, expenditure of the funds or rebate of City sales tax revenues will assist in the creation or retention of a significant number of jobs in the City with the average hourly wage for non-exempt positions (pursuant to the FSLA) of at least 75% higher than the federal minimum hourly wage and wherein the recipient pays at least 25% of the average hourly wage for non-exempt positions in benefits; and B. New eligible industrial and commercial projects must expend a minimum of One Million, Five Hundred Thousand dollars ($1,500,000.00) in equipment, machinery, land, and building improvements as its initial investment at a single location; or expansions of existing eligible industrial and commercial projects must expend a minimum of Seven Hundred, Fifty Thousand dollars ($750,000.00) in equipment, machinery, land, and building improvements as its expansion investment at a single location

3 6. Developer Obligations. TSC will acknowledge that pursuant to Section of the City of Casa Grande City Code, in order to receive, or continue receiving, incentives, developer is required to meet certain obligations and TSC acknowledges and agrees that it will meet those obligations

4 EXHIBIT A PRELIMINARY SITE PLAN

5 EXHIBIT B DISTRIBUTION CENTER INFORMATION In addition to providing 267 full-time jobs, with almost $8.5 million in annual wages, and making a capital investment of approximately $70 million, additional benefits associated with the Distribution Center include: Increased reputation as one of the key locations for distribution centers that service the southwest region of the United States. Adding a Fortune 500 company to the Casa Grande community, which will increase the chances of attracting other major companies. Increased land value in the industrial corridor, which will translate into higher property tax revenue for the City. Increase in sales tax generated from the fueling of delivery trucks. Increase in sales taxes generated by new employees. TSC s use will not be a nuisance to the surrounding area, nor will it create any significant environmental threats. OVERVIEW OF WAGES Total annualized payroll for year 1: $5,265,878 Total annualized payroll at build-out: $8,460,430 Total FTE year 1: 161 Total FTE at build-out: 267 Number of Exempt positions year 1: 21 Number of Exempt positions at build-out: 29 Number of non-exempt positions year 1: 140 Number of non-exempt positions at build-out: 238 Average annualized wages year 1 - Sr. Management: $93,600 - Other salaried positions: $60,412 - Hourly positions: $27, ($13.16) Average annualized wages at build-out - Sr. Management: $93,600 - Other salaried positions: $60,658 - Hourly positions: $27,465 ($13.20)

CITY OF GOODYEAR CITY COUNCIL ACTION FORM

CITY OF GOODYEAR CITY COUNCIL ACTION FORM AGENDA ITEM # DATE: 11/28/11 COAC NUMBER: 11-4729 SUBJECT: Approve and Adopt Resolution No. 11-1460 Approving and Authorizing the City Manager to Execute Job Creation