ORDINANCE NO. BL2015-1128

An ordinance authorizing The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County to negotiate and accept payments in lieu of ad valorem taxes with respect to Asurion, LLC.

WHEREAS, The Metropolitan Government of Nashville and Davidson County (hereafter referred to as "Metropolitan Government") is vitally interested in the economic welfare of its citizens and wishes to provide the necessary leadership to enhance this area's capabilities for growth and development; and,

WHEREAS, the provision of jobs to area citizens by local business is both necessary and vital to the economic well-being of the Metropolitan Government; and,

WHEREAS, pursuant to the Industrial Development Corporations Act, currently codified at Tenn. Code Ann. §§ 7-53-101 through 314 (such act, as heretofore or hereafter amended, the "Act"), the General Assembly of the State of Tennessee (the "General Assembly") has authorized the incorporation of public corporations known as "industrial development boards" in municipalities in the State of Tennessee (the "State"); and,

WHEREAS, The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County (the "Board") has been duly organized and incorporated in compliance with the Act; and,

WHEREAS, the General Assembly has found and declared that the Board is performing a public function on behalf of the Metropolitan Government and that the Board is a public instrumentality of the Metropolitan Government; and,

WHEREAS, the Supreme Court of Tennessee (the "Supreme Court") has found that the Board is an agency or instrumentality of the Metropolitan Government; and,

WHEREAS, the Act expressly incorporates by reference the statement of public policy set forth in Section 3 of Chapter 209 of the Public Acts of 1955; and,

WHEREAS, Chapter 209 of the Public Acts of 1955 states that the declared purpose of the Act is to do that which the State welfare demands and that which the State public policy requires to alleviate the problems of unemployment, to raise family income, to provide a means by which the citizens of the community may promote and develop industry in their area so as to obtain a balanced economic development highly essential to the welfare of the State, and to promote the development of commercial, industrial, agricultural and manufacturing enterprises by the several municipalities so as to be given local benefits peculiar to each and general benefits to the entire State; and,

WHEREAS, the General Assembly also has declared that the purposes of the Act include maintaining and increasing employment opportunities by promoting industry, trade, and commerce by inducing manufacturing, industrial, financial, service, and commercial enterprises to locate or remain in the State; and,

WHEREAS, the Supreme Court has held that the purposes of the Act includes the promotion of industry and the development of trade to provide against low wages and unemployment and that such purposes are public in nature; and,

WHEREAS, the Board is empowered pursuant to the Act to acquire, whether by purchase, exchange, gift, lease or otherwise, and to improve, maintain, equip and furnish, "projects" (as defined in the Act), and to lease such projects to others; and,

WHEREAS, Asurion, LLC. (“Asurion”), has worked in conjunction with American Health Properties, Inc. (“AHP”) to lease and rehabilitate an office building (the “Office Building”) at 5720 Crossings Boulevard in Antioch, and has worked with Freeland to lease and construct a parking lot for use by Asurion in conjunction with, and located across the street from, the Office Building (the “Parking Lot”) on Crossings Boulevard in Antioch; and,

WHEREAS, AHP has since conveyed its fee simple interest in the Office Building to FDS Crossings, LLC (“FDS”); and,

WHEREAS, the Office Building consists of 121,596 rentable square feet rehabilitated for use by Asurion, and the Parking Lot parcel consists of 164,571 square feet including a newly constructed asphalt parking lot to support Asurion’s use of the Office Building, all completed in 2014 (the “Project”); and,

WHEREAS, the Project represents a capital investment of $8,836,443 in real property in the Office Building and $750,000 in real property in the Parking Lot, together with $8,551,980 in personal property, machinery and equipment over the course of two years; and,

WHEREAS, Asurion expects its capital expenditures within the boundaries of the Metropolitan Government to provide significant employment and other commercial opportunities for area citizens; and,

WHEREAS, pursuant to Tenn. Code Ann. § 7-53-305, all properties owned by the Board are exempt from ad valorem taxation in the State of Tennessee; and,

WHEREAS, pursuant to Tenn. Code Ann. § 7-53-305(b), the Metropolitan County Council (the "Council") has the power to delegate to the Board the authority to negotiate and accept from its lessees payments in lieu of ad valorem taxes, provided that such payments are in furtherance of the Board's public purposes; and,

WHEREAS, the benefits to the Metropolitan Government of the location of the Project within the boundaries of the Metropolitan Government, and in exercise of its powers above, will provide an opportunity for the Board to acquire, by purchase, exchange, gift or lease, property that will be used with respect to the Project, to lease that property to Asurion and/or FDS and/or Freeland, and to enter into one or more agreements with Asurion and/or FDS and/or Freeland to accept payments in lieu of ad valorem taxes with respect to the property; and,

WHEREAS, the Board may only negotiate and accept payments in lieu of ad valorem taxes with authorization from the Council; and

WHEREAS, it is in the interest and welfare of the citizens of the Metropolitan Government to delegate authority to the Board to negotiate and execute a payment-in-lieu-of-tax agreement with Asurion and/or FDS and/or Freeland.

NOW, THEREFORE, BE IT ENACTED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY:

Section 1: That the Council of the Metropolitan Government finds that the Board's acceptance of payments in lieu of ad valorem taxes with respect to the Project is in furtherance of the Board's public purpose of maintaining and increasing employment opportunities, as set forth in Tenn. Code Ann. § 7-53-102, and the other public purposes described above.

Section 2: That the Metropolitan Government hereby delegates to the Board the authority to negotiate and accept payments in lieu of all personal property taxes with respect to the Project for a period of four years, beginning on the date that the Board enters into a lease with Asurion and/or FDS and/or Freeland with respect to the Project (the “Term”). The amount of the payment in lieu of personal property tax that shall be required with respect to each year under such arrangement shall be one hundred percent (100%) of the Base Tax and zero percent (0%) of the Increased Tax.

Section 3. That the Metropolitan Government further delegates to the Board the authority to negotiate and accept payments in lieu of all real property taxes with respect to the Project, for a period of four years beginning on the date that the Board enters into a lease with Asurion and/or FDS and/or Freeland. The amount of the payment in lieu of real property tax that shall be required with respect to each year under such arrangement shall be one hundred percent (100%) of the Base Tax and zero percent (0%) of the Increased Tax. Notwithstanding the foregoing, if there are fewer than 640 Company Positions (as defined below) as of December 31 preceding a year during the period contemplated by this clause, the PILOT Payment for such year will be one hundred percent (100%) of the Base Tax and one hundred percent (100%) of the Increased Tax.

Section 4. That the term "Base Tax" shall mean the amount of ad valorem real and personal property tax that the prior owner of the Project was required to pay in 2013 with respect to the real and personal property comprising the Project, and the term “Increased Tax” shall mean any additional amounts of ad valorem real and personal property taxes that Asurion and/or FDS and/or Freeland would be required to pay in any subsequent tax year with respect to the real and personal property comprising the Project, if Asurion and/or FDS and/or Freeland owned such property, whether due to an increased assessed value of such property, an increase in millage rates or other cause. Asurion and/or FDS and/or Freeland shall be permitted to challenge the assessment of any real or personal property that is then subject to the payment in lieu of tax arrangement authorized hereby in the same manner as if Asurion and/or FDS and/or Freeland owned such property.

Section 5. That the term “Company Position” shall mean each full-time Project-based employee position. A Project-based employee will be considered a “full-time” position if the position is filled by an individual who regularly works on average 40 hours or more hours per week for Asurion.

Section 6. (a) That the payment in lieu of tax arrangement authorized by this Ordinance shall apply to all real property and personal property comprising a portion of, or used at or in connection with the Office Building and Parking Lot.
(b) That the payment in lieu of tax arrangement authorized by this Ordinance shall apply to all land, buildings, improvements, fixtures, construction in progress, equipment, furniture, and other properties of any nature comprising a portion of, or used in connection with, facilities located on the property described above. Such arrangement shall apply to such facilities and such properties in their current scope and configuration and to all replacements, enhancements, additions, expansions, and improvements to such properties and facilities.

Section 7: Asurion and/or FDS and/or Freeland will produce and manage a diversified business enterprise program to assist small, minority owned, and women owned business enterprises (“DBEs”) with respect to their participation in any construction at the Project site during the Term. Such program will be designed with a DBE participation target of not less than 20% of the Project’s hard construction costs and shall be subject to the reasonable approval of, the Metropolitan Government, and will provide for quarterly reporting to the Metropolitan Council and the Minority Caucus of the status of DBE participation in the construction of the Project. The program will include a process to document all (i) good faith efforts with prospective bidders to reach out to DBE companies, (ii) joint venture or partnership participation by DBE companies, (iii) DBE participation by subcontractors, suppliers or joint ventures proposed by each bidder, (iv) any increases or decreases from an anticipated DBE participation by successful bidders, and (v) the level of payments to DBE’s of hard construction costs.

Section 8. That the final version of the payment in lieu of tax agreement authorized by this Ordinance must be approved as to legality by the Department of Law of the Metropolitan Government prior to being executed by the Board.

Section 9. That all ordinances or resolutions, or parts thereof, in conflict with the provisions of this Ordinance are, to the extent of such conflict, hereby repealed.

Section 10. That this Ordinance shall take effect from and after its final passage, the welfare of The Metropolitan Government of Nashville and Davidson County requiring it.

Sponsored by: Bill Pridemore, Jacobia Dowell

LEGISLATIVE HISTORY
Introduced:	May 19, 2015
Passed First Reading:	May 19, 2015
Referred to:	Budget & Finance Committee
Passed Second Reading:	June 2, 2015
Passed Third Reading:	June 16, 2015 - Roll Call Vote
Approved:	June 17, 2015
By:

Requests for ADA accommodation should be directed tothe Metropolitan Clerk at 615/862-6770.