SUGAR LAND DEVELOPMENT CORPORATION AGENDA REQUEST AGENDA AGENDA OF: 06-06-17 III-A REQUEST NO: DONNA SVATEK, RESPONSIBLE INITIATED BY: COMPLIANCE MANAGER ECONOMIC DEVELOPMENT DEPARTMENT: PHIL WAGNER, DONNA SVATEK, PRESENTED BY: DIRECTOR: DIRECTOR OF ECONOMIC COMPLIANCE MANAGER DEVELOPMENT ADDITIONAL N/A APPROVAL: SUBJECT / PERFORMANCE AGREEMENT BETWEEN THE SUGAR LAND DEVELOPMENT CORPORATION AND PROCEEDING: THE COCA-COLA COMPANY/CONSIDERATION AND ACTION ON AMENDMENT NO. 1 EXHIBITS: AVAILABLE IN THE OFFICE OF THE CITY SECRETARY CLEARANCES APPROVAL EUGENIA CANO, ASSISTANT CITY LEGAL: JENNIFER MAY FIRST ASSISTANCE CITY ATTORNEY MANAGER: ASSISTANT CITY PURCHASING: N/A N/A MANAGER: BUDGET: N/A BUDGET EXPENDITURE REQUIRED: $ N/A CURRENT BUDGET: $ N/A ADDITIONAL FUNDING: $ N/A RECOMMENDED ACTION Approval of Amendment No. 1 to the Performance Agreement between the Sugar Land Development Corporation and The Coca-Cola Company. EXECUTIVE SUMMARY Coca-Cola markets four of the world’s top five nonalcoholic sparkling beverage brands. In 1960, The Minute Maid Corporation was acquired by The Coca-Cola Company, marking its first venture outside of soft drinks. In April 2009, the Company relocated its Minute Maid Business Unit headquarters to Sugar Land from Houston. Minute Maid occupied a minimum of 100,000 square feet of office space in the 185,000 SF office building located at 2150 Town Square Place in Sugar Land Town Square. The headquarters relocation project included Minute Maid bringing at least 275 jobs and $10.8 million in capital investment to the City. As part of this relocation, the Sugar Land Development Corporation (SLDC) and The Coca-Cola Company entered into a Performance Agreement in January 2008 for an incentive to be paid over ten years beginning in 2009. In September 2016, the Office of Economic Development was made aware that the Company was reducing their overall square footage to less than 100,000 SF, rendering their square footage obligation unobtainable. Per the requirements of the Performance Agreement, a reduction of leased square footage to under 100,000 square feet results in default. In addition, failure to maintain the minimum number of employees for each year, taxable purchases and hotel stays resulted in a reduction for the applicable incentive payment. Due to the reduction in employment and square footage, Minute Maid has expressed the desire to amend the current Agreement. The Office of Economic Development has been in negotiation with Minute Maid to come up with an applicable solution that is beneficial for both parties. In consideration of the mutual benefits that will continue to accrue to the SLDC and Minute Maid, as well as to simplify the existing agreement and align the obligations with historical performance, the proposed amendment reduces the minimum square footage requirement to 70,000 SF, reduces the employee requirement to 200 employees, and eliminates the requirement for taxable purchases and hotel stays. Accordingly, the three remaining incentive payments will be reduced by 30%. It is important to note that this is a beneficial solution for the SLDC, as it ensures the continued retention of Minute Maid while also recognizing the economic benefits of allowing their previously leased office space to be more fully utilized. The proposed Performance Agreement Amendment No. 1 terms have been reviewed with the Economic Development Committee. The Amendment was signed by The Coca-Cola Company on May 22, 2017. Staff recommends approval of Amendment No. 1 to the Performance Agreement between the Sugar Land Development Corporation and The Coca-Cola Company. EXHIBITS First Amendment to Economic Performance Agreement between the Sugar Land Development Corporation and The Coca-Cola Company available in the City Secretary’s Office. .