2014/05/19 RESOLUTION TO ENTER INTO ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT W/DUNN HOSPITALITY VENTURES, LLCNORTH CAROLINA RESOLUTION TO ENTER INTO ECONOMIC
DEVELOPMENT INCENTIVE AGREEMENT
HARNETT COUNTY WITH DUNN HOSPITALITY VENTURES, LLC
THAT WHEREAS, the County of Harnett ( "County") has made economic development in
Harnett County a major priority in an effort to recruit new industry and businesses to the County, to
replace displaced industry previously located in the County, to retain and/or expand current industry
located in the County, to provide local job opportunities for citizens of the County, and to increase
the County tax base; and
WHEREAS, Dunn Hospitality Ventures, LLC ( "Dunn Hospitality") is a limited liability
company with its principal headquarters located in Dunn, North Carolina; that Dunn Hospitality has
decided to locate a hotel facility (the "Facility") to be operated as a Fairfield Inn & Suites, a member
of the Marriott Hotel group, which will be located off Interstate 95, Exit 72 in the City of Dunn with
the intent to apply for the County's economic development incentives. Dunn Hospitality has
obtained an option to purchase an approximate 3.63 acre real property tract upon which will be
located its Facility which is projected to become operational no later than September, 2015. In
developing this Facility in Harnett County, Dunn Hospitality plans to invest $9.0 million and create
approximately eight (8) full -time jobs and seventeen (17) part-time jobs, and enhance travel and
tourism economic activity in the Dunn area of the County; and
WHEREAS, based upon Dunn Hospitality's location of a new hotel facility in Harnett
County, the establishment of an S8.2 million tax base, and the creation of approximately eight (8)
full -time jobs and seventeen (17) part -time jobs, the County is willing to appropriate certain
economic incentives in the form of monetary grants to Dunn Hospitality pursuant to the provisions of
N.C. General Statutes § 158 -7.1 which allows counties to make appropriations for the purpose of
aiding and encouraging the location and/or expansion of manufacturing enterprises and industrial and
commercial facilities in the County; and
WHEREAS, the County and Dunn Hospitality have negotiated an economic development
incentive package which includes an incentive to be paid to Dunn Hospitality in the form of a grant
of a maximum fifty percent (50 %) of County ad valorem taxes paid by Dunn Hospitality over a five
(5) year period dependent on Dunn Hospitality's performance of various incentive conditions
including:
(a) the purchase of the Facility 3.63 acre site (b) the development of the site with an approximate
56,000 square foot, 88 room hotel facility, with an ad valorem tax listing of at least $8.2 million (c)
the ownership and operation of this Facility during the 5 year term of the EDI grant payments and (d)
the creation and maintenance of at least five (5) full -time jobs that meet certain wage levels. That an
instrument entitled Economic Development Incentive Agreement between the County and Dunn
Hospitality which is attached to this Resolution as Exhibit "A" has been prepared for agreement
between the parties to comply with the provisions of N.C. General Statutes § 158 -7.1; that pursuant to
N.C. General Statutes § 158- 7.1(c) and a published notice of hearing, a public hearing was held on
May 19, 2014 concerning the terms of the proposed Economic Development Incentive Agreement;
that subsequent to the close of said public hearing and after deliberations, it is the desire of the
Harnett County Board of Commissioners to approve the appropriation of this Economic
Development Incentive Agreement with Dunn Hospitality subject to those terms contained within
said Agreement.
NOW, THEREFORE, BE IT RESOLVED by the Harnett County Board of
Commissioners that the Economic Development Incentive Agreement attached hereto as Exhibit
"A" between the County and Dunn Hospitality is hereby approved, and that the proper officials of
the County are hereby authorized to enter into the Economic Development Incentive Agreement with
Dunn Hospitality.
This the 14 7W day of May, 2014.
ATTEST:
Ir
COUNTY OF HARNETT
By.
Joe i ler, Chai an
H ett County Board of Commissioners
EXHIBIT "A"
NORTH CAROLINA ECONOMIC DEVELOPMENT
INCENTIVE AGREEMENT
HARNETT COUNTY
THIS ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT (hereinafter referred to
as the "Agreement "), is made and entered into this the _ day of May, 2014, by and between the
County of Harnett, a body politic of PO Box 759, 102 E. Front Street, Lillington, North Carolina
27546 (the "County") and Dunn Hospitality Ventures, LLC of PO Box 578, 100 East Cumberland
Street, Dunn, NC 28335 ( "Dunn Hospitality");
WITNESSETH:
THAT WHEREAS, the County is empowered pursuant to the provisions of North Carolina
General Statutes § 158 -7.1 (commonly known as the "Local Development Act') as amended, to make
appropriations for the purposes of aiding and encouraging the location and/or expansion of certain
business operations, including the Facility (as defined below), in the County; and
WHEREAS, Dunn Hospitality is a North Carolina limited liability company with its
principal place of business in Dunn, North Carolina; and
WHEREAS, after working with the County and the City of Dunn, Dunn Hospitality has
decided to locate, construct and operate an approximate 56,000 square foot 88 room hotel facility
which will operate as a Fairfield Inn & Suites, a member of the Marriott Hotel group (the "Facility"),
to be located in the City of Dunn, Harnett County: and
WHEREAS, Dunn Hospitality has an option to purchase an approximate 3.63 acre real
property tract (the "Land ") located off Interstate 95, Exit 72 in the City of Dunn ( "City"), upon which
will be constructed the Facility, which is currently projected to become operational by September,
2015; and
WHEREAS, Dunn Hospitality expects to invest approximately $9.0 million in connection
with the opening of the Facility (the "Total Estimated Project Cost ") inclusive of the cost to acquire
the Land and related attorneys', engineers' and other professional and consultants' fees, hard and
soft development and construction costs, costs of fumiture, fixtures and equipment, franchise fees
and all other costs and expenses incurred by Dunn Hospitality (or its affiliates) in connection with
the acquisition of the Land, obtaining all related permits, approvals and agreements, and the
construction and opening of the Facility (collectively, the "Project Costs "); and
WHEREAS, as a result of the Facility operations, Dunn Hospitality expects to create
approximately eight (8) full -time jobs and seventeen (17) part-tine jobs; and
WHEREAS, as an inducement for Dunn Hospitality to proceed with its decision to locate the
Facility in the City of Dunn, Harnett County which will create new jobs, establish a new tax base
through the location and establishment of the Facility building and improvements, and the purchase
of business personal property which will be used as part of the Facility, the County is willing to
provide certain incentives to Dunn Hospitality in the form of monetary grants for the Facility
(collectively, the "Incentives ") , all upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of these premises and the mutual covenants and
promises set forth below, the County and Dunn Hospitality hereby agree as follows:
1. DUNN HOSPITALITY INCENTIVE CONDITIONS:
In order to fully receive the County's Economic Development Incentive Grant (the "EDI
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Grant'), which is described more fully below, Dunn Hospitality is required to complete the following
(the "Incentive Conditions "):
a. Purchase the Land, which will be the site for the Facility;
b. Develop the Facility upon the Land, which shall include a listing for County ad
valorem taxes in an amount of at least $8.2 million for the first year that Dunn
Hospitality shall apply for and receive the EDI Grant annual payment; pay in a timely
manner the Harnett County and City of Dunn ad valorem tax;
c. Continue to own and operate the Facility on the Land during each subsequent year, as
a condition of the County making the applicable EDI Grant payment (as defined
below) to Dunn Hospitality for that year;
d. Once the Facility is in operation, Dunn Hospitality shall create at least five or more
full -time jobs with each job having an average weekly salary equal to one - hundred
ten percent (1 10 %) of the average weekly wage level for Harnett County ($589 is the
2012 average weekly wage; therefore 110% is $648). For each full - timejob created
by Dunn Hospitality that does not reach the 110% County average weekly wage
level, then any EDI Grant payment shall be reduced in the same percentage amount
less than the 1 10% County average weekly wage level. Any job created for the ED[
Grant must be maintained for a term of at least six (6) consecutive months during the
calendar year of the EDI Grant payment.
2. PAYMENT OF ECONOMIC DEVELOPMENT INCENTIVE GRANT:
(a) At such time as Dunn Hospitality has (i) acquired the Land, (ii) constructed the Facility, (iii)
begun business operations at the Facility, and (iv) created five or more full -time jobs at the
pay level condition as previously described, Dunn Hospitality will become eligible to receive
the first of five (5) consecutive annual EDI Grant payments (each, an "EDI Payment "). The
EDI Payments described hereunder will be paid by the County, as described below.
(b) Prior to receiving the first annual EDI Payment, Dunn Hospitality shall: (i) certify that it has
an asset property listing at the Facility for ad valorem taxes with the County in an amount of
at least $8.2 million (the "Property Listing "); and (ii) timely pay the billed ad valorem taxes
for the listing to the County and the City of Dunn, through the Harnett County Tax
Department. The parties agree that Dunn Hospitality will only be required to provide a
minimum $8.2 million ad valorem tax listing for the first year in which the EDI Payment is
payable; this minimum amount shall not be required when Dunn Hospitality lists its Facility
asset property for ad valorem taxes for years 2 through 5 of the EDI Payment term.
(c) The "EDI Payment" shall be defined as an amount equal to $7,000.00 per full -time job
created and/or maintained by Dunn Hospitality in the operation of the Facility. The full -time
job must meet the 110% Harnett County average weekly wage criteria. If any created and/or
maintained full -time job does not meet the 110% weekly wage level then the full incentive
of $7,000 shall be reduced by the equivalent percentage below the 110% average weekly
wage level.
Based upon the fact that Dunn Hospitality's Facility investment is less than $10
million, the total EDI Payment shall have a capped maximum of 50% of the ad valorem tax
paid by Dunn Hospitality to the County for that year. Furthermore, the EDI annual grant
payments shall only extend over a five (5) consecutive year maximum period.
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The EDI annual grant payment shall begin with the first tax year in which both the
Facility is operational and the Facility's improvements are assessed as fully completed
improvements (i.e., the first of the five (5) years of EDI Payments shall be the year in which
the Facility improvements are fully assessed as completed and occupied for purposes of ad
valorem base tax listing purpose in the amount of at least $8.2 million).
(d) After the first year's EDI Payment, the EDI Payments shall continue on an annual basis for a
term of four (4) consecutive years (i.e., a total of 5 years of EDI Payments), provided that
Dunn Hospitality continues to own and operate the Facility and meet the minimum five (5)
full -time jobs requirement during such five (5) year period. For the avoidance of doubt, Dunn
Hospitality will not be required to return EDI Payments made to Dunn Hospitality in respect
of years in which Dunn Hospitality was operating the Facility if Dunn Hospitality
subsequently ceases ownership and operation of the Facility at some point during the five (5)
year term of the EDI Payments. For example, if Dunn Hospitality receives the EDI Payment
in year 3 because it is owning and operating the Facility and meeting the full -time jobs
requirement in year 3, and Dunn Hospitality ceases owning and/or operating the Facility
and/or does not meet the full -time jobs requirement in year 4 and as a result, Dunn
Hospitality is not eligible to receive the EDI Payment for year 4, Dunn Hospitality
nonetheless will be entitled to retain the EDI Payment in respect of year 3 (and prior years).
(e) The `ad valorem base tax" shall be defined as the tax amount (for both real and business
personal property taxes) based upon the County base tax rates. Any supplemental taxes, paid
for fire district services, the Averasboro school tar or other special taxes or fees, are not
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included in the EDI Payment calculation. As of the date hereof, the "ad valorem base tax" on
which the EDI Payment would be calculated is equal to 0.00725 Harnett County tax, which
means, for example, that on an appraised value of $8.2 million, the ad valorem tax paid by
Dunn Hospitality on which the EDI Payment would be calculated would be $59,450; any
EDI Payment associated with such an ad valorem tax payment would be capped at $29,725
(ie 50% of $59,450).
(t) The annual EDI Payment shall be paid by the County to Dunn Hospitality each year for five
(5) years, and shall be payable to Dunn Hospitality within thirty (30) days of the following:
(a) the Harnett County Tax Department's receipt on behalf of the City and the County of
Dunn Hospitality's payment of its ad valorem tax obligation on the Facility for the applicable
tax year and evidence of said payment being sent to and received by the County Manager (or
other designated official); and (b) confirmation with the County that Dunn Hospitality has
created new or maintained at least five (5) full -time jobs that existed for at least six (6)
months during the applicable tax year at the 110% weekly pay levels (this condition is
subject to a per job incentive reduction if below the 110% weekly pay level as previously
described). For the avoidance of doubt, using the example set forth in Section 2(e) above, on
an appraised value of $8.2 million, Dunn Hospitality would pay 559,450 in respect of
County ad valorem base taxes, and the County would calculate five (5) full - timejobs with a
110° 0 average weekly wage X 57,000 perjob = 535,000 to be capped at 50 1,10 of the tax paid
with an EDI payment of 529,725 to Dunn Hospitalitv.
3. ACQUISITION CONTINGENCY:
The County acknowledges that the Land is currently owned by a third party and Dunn
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Hospitality only has an option to purchase the Land; therefore this Agreement is contingent upon
Dunn Hospitality's acquisition of the Land under the option to purchase (the "Acquisition
Contingency"). In the event that Dunn Hospitality does not purchase the Land for any reason, Dunn
Hospitality shall provide notice to the County and this Agreement shall automatically terminate. The
Acquisition Contingency under this Section shall automatically expire and be of no further force or
effect upon the completion of the acquisition of the Land by Dunn Hospitality.
4. ASSIGNhIENT:
The assignment of the incentive benefits of this Agreement by Dunn Hospitality is prohibited
except with the written consent of the County, which may be withheld in the sole and absolute
discretion of the County; provided that Dunn Hospitality may assign this Agreement and the benefits
hereunder, following notice to the County, to an affiliated entity for purposes of acquiring,
constructing and/or operating the Facility.
5. NOTICES:
All notices and other communications hereunder shall be in writing and shall be deemed to
have been given on the date of actual delivery by: (i) registered or certified mail, return receipt
requested, postage prepaid, (ii) hand delivery, or (iii) nationally recognized overnight carver, to the
following respective addresses:
To the County: Harnett County
Attn: County Manager
Post Office Box 759
102 E. Front Street
Lillington, NC 27546
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To Dunn Hospitality: Dunn Hospitality Ventures, LLC
Attn: Oscar N. Hams and
John M. Sandlin, Managers
107 Stokeley Road, Suite 100
Wilmington, NC 28403
Either the County or Dunn Hospitality may change the address to which all notices shall be
sent by addressing a notice of such change in the manner provided in this Section.
6. AMENDMENTS. CHANGES AND MODIFICATIONS:
Except as otherwise provided in this Agreement, this Agreement may not be amended,
changed, modified or altered, except by written agreement of the parties hereto.
7. SITUS AND SEVERABILITY:
This Agreement shall be construed and governed according to the laws of the State of North
Carolina. If any provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision
hereof.
8. APPROVALS AND AUTHORITY:
Dunn Hospitality represents and warrants to the County that it has obtained any required
approval of its members, managers, officers, or board and any other approval that may be required
under the documents and laws governing its existence and operation for the execution and
performance of this Agreement. The County represents and warrants to Dunn Hospitality that it has
obtained any required approval of the County Board of Commissioners and any other approval that
may be required under applicable documents and laws governing the County's existence and
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operation and of any other governmental authority whose approval is required for the execution and
performance of this Agreement.
]Signature pages follow.]
IN WITNESS WHEREOF, the County has caused this Agreement to be executed in
duplicate originals, by its duly authorized representative, and has sealed the same on the day and year
first above written.
ATTEST:
Margaret Regina Wheeler, Clerk
NORTH CAROLINA
HARNETT COUNTY
COUNTY OF HARNETT
In
Joe Miller, Chairman
Harnett County Board of Commissioners
I, a notary public, certify that Joe Miller, who being by me duly swom, says that he is
Chairman of the Hamett County Board of Commissioners, and that Margaret Regina Daniel is
Clerk to the Harnett County Board of Commissioners, that the seal affixed to the foregoing
attested instrument is the seal of Harnett County, North Carolina, and that said instrument was
signed by him as Chairman of the Harnett County Board of Commissioners and by the Clerk of
said Board, who affixed the official seal of Hamett County to said instrument; and that the said
Joe Miller, Chairman, acknowledged said instrument to be the act and deed of Harnett County,
North Carolina.
Witness my hand and official stamp or seal, this day of May, 2014.
Notary Public
My Commission Expires:
This instrument has been preaudited in the manner required by the Local Government Budget and
Fiscal Control Act.
Kimberly Honeycutt, County of Hamett Finance Director
(U1
IN WITNESS WHEREOF, Dunn Hospitality has caused this Agreement to be executed in
duplicate originals, by its duly authorized representative.
DUNN HOSPITALITY VENTURES, LLC
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STATE OF NORTH CAROLINA
COUNTY OF
Oscar N. Hams, Manager
John M. Sandlin, Manager
1, a Notary Public, do hereby certify that Oscar N. Hams personally came before me this day
and acknowledged that he is Manager of Dunn Hospitality Ventures, LLC, a North Carolina limited
liability company, and that he in said capacity being authorized to do so, executed the foregoing
instrument on behalf of the limited liability company.
Witness my hand and official stamp or seal, this day of May, 2014.
Notary Public
My Commission Expires:
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STATE OF NORTH CAROLINA
COUNTY OF
1, a Notary Public, do hereby certify that John M. Sandlin personally came before me this day
and acknowledged that he is Manager of Dunn Hospitality Ventures, LLC, a North Carolina limited
liability company, and that he in said capacity being authorized to do so, executed the foregoing
instrument on behalf of the limited liability company.
Witness my hand and official stamp or seal, this day of May, 2014.
Notary Public
My Commission Expires: