Item 4HCity of Southlake, Texas
M E M O R A N D U M
January 30, 2007
TO:Shana Yelverton, City Manager
FROM: Greg Last,Director of Economic Development
Approve agreement clarifying tax abatements for Sabre Holdings
SUBJECT:
______________________________________________________________________________
Action Requested:
Approve the agreement noted above.
Background
Information:
Sabre desired to reduce their current real estate assets in both Southlake
and Westlake by consolidating their staff into the two Headquarter
Buildings (HQ) in Southlake. On or around December 8, 2006, Sabre
consummated a transaction with Maguire Partners summarized as follows:
Sabre will move employees out of their lease space in the Westlake
portion of Solana and into the HQ.
Sabre sold their 375,000 sf building to Maguire (Exhibit Two, tract 3).
They will lease back the building from Maguire.
Sabre sold the “Transferred Properties” (including ROW for T.W.
King and Kirkwood) shown in Exhibit Two to Maguire and retained
the “Retained Properties”
The result of this transaction as it impacts the tax abatements previously
approved for Sabre are the following:
The Transferred Properties no longer qualify for tax abatements in
accordance with clauses of the tax abatement agreements
The Retained Properties (Premises A and B) still qualify for tax
abatements per the agreements
Given the confusion of the various “Premises” and a desire by Sabre (and
the City) to clarify the current and ongoing status of the tax abatements,
this document has been prepared to summarize the issue.
Note that CSL Leasing Inc. is referenced as “Owner” in the agreement.
They own the retained properties and are leasing them to Sabre, which is a
qualifying arrangement in accordance with the tax abatement agreements.
Basically there are no impacts on the tax abatement status of the
Headquarters Buildings currently occupied by Sabre.
Financial
Considerations:
The only financial consideration would be the elimination of properties
potentially subject to future tax abatements (the “Transferred Properties”)
Citizen Input/
Board Review:
None required related to the agreement.
Legal Review:
The City Attorney’s office has been involved in the development of this
agreement.
Alternatives:
1. Approve the agreement as submitted
2. Approve a revised agreement
3. Take no action on the agreement and clarify with any future actions
Supporting
Documents:Exhibit One
: Tax Abatement agreement “Premises” as approved
Exhibit Two
: Transferred and retained properties
Exhibit Three
: Agreement
Staff
Recommendation:
Approve the agreement as submitted.
Exhibit One
Tax Abatement Agreement “Premises” as Approved
Exhibit Two
Transferred and Retained Properties
Transferred Properties: 3-7
Retained Properties: 1-2
Exhibit Three
Clarification Agreement
DRAFT1-29-2007
CCTAA
LARIFICATIONONCERNINGAXBATEMENTGREEMENTS
This Clarification Concerning Tax Abatement Agreements (this “Clarification”) is made
and entered into as of February [__], 2007, by and between CSL Leasing Inc., a Delaware
corporation (“Owner”), and the City of Southlake, Texas (“the “City”).
WHEREAS,
in 1999, the City (pursuant to City Resolution No. 99-58), Sabre Inc. and
certain other parties entered into eight separatetax abatement agreements (labeled as agreements
A through H) with respect to property located in the City’s Reinvestment Zone Number Two
(each such agreement, a “Tax Abatement Agreement”);
WHEREAS,
in 2000each of the Tax Abatement Agreements was amended by that
certain Amendment to Tax Abatement Agreements, by and among the City, First Security Bank,
National Association as owner trustee of the TSG Trust 1999-1 (“FSB”) and Sabre Inc. (the
“Amendment”), to change exhibit B to each of the Tax Abatement Agreements, and to recognize
that FSB was, as of the date of the Amendment, the “Owner” under each of the Tax Abatement
Agreements (FSB became “Owner” pursuant to transfers that were approved pursuant to section
VI.A.(iii) of each of the Tax Abatement Agreements) (each Tax Abatement Agreement, as
amended by the Amendment, is hereinafter referred to as “Amended Tax Abatement Agreement”
and such agreements are collectively referred to as the “Amended Tax Abatement Agreements”);
WHEREAS,
pursuant to City Resolution No. 03-030, in 2003 theCity consented in
advance to certain transfers of Amended Tax Abatement Agreements and property subject to
Amended Tax Abatement Agreements to affiliate(s) of Sabre Holdings Corporation (“Sabre”) or
to an entity leasing such property back to Sabre or its affiliate (the “Affiliated Transaction
Consent”), and shortly thereafter FSB transferred all eight Amended Tax Abatement Agreements
and all property subject to the Amended Tax Abatement Agreements to CSL Leasing Inc., a
Delaware corporation (“CSL”), which leased such property back to Sabre Inc., a Sabre affiliate;
Sabre (through its attorney) notified the City of such transfers in a letter to the City dated July
23, 2003;
WHEREAS,
CSL has been receiving tax abatements under Amended Tax Abatement
Agreement A, but has not yet received any tax abatements under any other Amended Tax
Abatement Agreement (CSL has not met the condition in Section II.A.(1) in any other Amended
Tax Abatement Agreement);
WHEREAS,
in December, 2006 (the “Sale Date”), CSL transferred to Maguire Partners
– Solana Limited Partnership and Maguire Partners Southlake Land LP (collectively, “Buyer”):
(a) certain property (including certain roads but not including any vertical improvements) within
the boundaries of the “Premises” (as defined in Amended Tax Abatement Agreement A) of
Amended Tax Abatement Agreement A (the portion of property within the boundaries of the
“Premises” of Amended Tax Abatement Agreement A that was transferred to Buyer is
hereinafter referred to as “Transferred Abatement Agreement A Property;” and the portion of
property within the boundaries of the “Premises” of Amended Tax Abatement Agreement A that
is not Transferred Abatement Agreement A Property is hereinafter referred to as “Retained
Abatement Agreement A Property”); (b) certain property (including certain roads but not
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including any vertical improvements, as there are not yet any vertical improvements on the
“Premises” of Amended Tax Abatement Agreement B) within the boundaries of the “Premises”
(as defined in Amended Tax Abatement Agreement B) of Tax Abatement Agreement B (the
portion of property within the boundaries of the “Premises” of Amended Tax Abatement
Agreement B that was transferred to Buyer is hereinafter referred to as “Transferred Abatement
Agreement B Property;” and the portion of property within the boundaries of the “Premises” of
Amended Tax Abatement Agreement B that is not Transferred Abatement Agreement B Property
is hereinafter referred to as “Retained Abatement Agreement B Property”); and (c) all or almost
all of the property subject to Tax Abatement Agreements C, D, E, F, G and H;
WHEREAS,
section VI.B. of each of the Amended Tax Abatement Agreements
provides that a transfer of fee simple title to any portion of the “Premises” (as defined in such
agreement) to a buyer that is not a permitted transferee shall result in the termination for
subsequent years of the tax abatement under such agreement, but only with respect to the
property transferred, indicating that such transfer would not affect the transferor’s right to
receive tax abatements with respect to the portion of the “Premises” not transferred (the “Section
VI.B. Transfer Provision”) (the non-transferred properties under Amended Tax Abatement
Agreements A and B are referred to above as Retained Abatement Agreement A Property and
Retained Abatement Agreement B Property);
WHEREAS,
Buyer is not an affiliate of Sabre, nor is Buyer leasing any of the acquired
property to Sabre or its affiliate; thus, such transfers are not subject to the Affiliated Transaction
Consent;
WHEREAS,
the City and Owner desire to clarify the current and ongoing status of the
Amended Tax Abatement Agreements subsequent to the transfers described above.
NOW, THEREFORE,
it is hereby agreed as follows:
1. Owner hereby waives its rights to receive tax abatements under any retained
property subject to Amended Tax Abatement Agreements C, D, E, F, G and H.
2. The City agrees that, pursuant to the Section VI.B. Transfer Provision, Amended
Tax Abatement Agreement A continues to apply to the Retained Abatement Agreement A
Property.
3. The City agrees that, pursuant to the Section VI.B. Transfer Provision, Amended
Tax Abatement Agreement B continues to apply to the Retained Abatement Agreement B
Property.
4. This Clarification may be executed in several counterparts, each of which shall be
deemed an original and said counterparts shall constitute but one and the same instrument which
may be sufficiently evidenced by one counterpart.
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IN WITNESS WHEREOF
, the foregoing instrument has been duly executed by the
undersigned as of the date and year first above written.
CITY OF SOUTHLAKE, TEXAS
________________________________
Andrew Wambsganss, Mayor
CSL LEASING INC.,
a Delaware corporation
By:
Name:
Title:
ATTEST:
__________________________
City Secretary
APPROVED AS TO FORM:
__________________________
City Attorney
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