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HomeMy WebLinkAbout2007-10-10 TIF AgreementExecution Version TAX INCREMENT FINANCING AGREEMENT BY AND AMONG THE TOWN OF LEXINGTON, SHIRE HUMAN GENETIC THERAPIES, INC., AND PATRIOT PARTNERS LEXINGTON, LLC This AGREEMENT is made this day of October, 2007 by and among the Town of Lexington, a municipal corporation duly organized under the laws of the Commonwealth of Massachusetts, having a principal place of business at Town Hall, 1625 Massachusetts Avenue, Lexington, Massachusetts 02420, acting through its Board of Selectmen (hereinafter referred to as the "TOWN "), Shire Human Genetic Therapies, Inc., a Delaware corporation with a principal place of business at 700 Main Street, Cambridge, MA 02139 (hereinafter, together with its successors and assigns, referred to as "SHIRE "), and Patriot Partners Lexington, LLC, a Delaware limited liability company, with a principal place of business at 205 Newbury Street, Framingham, MA 01701 (hereinafter referred to as "PATRIOT ") (collectively the "PARTIES "). WITNESSETH WHEREAS, SHIRE intends to expand its administrative operations and construct new laboratory, office and manufacturing facilities at the Lexington Technology Park on Spring Street, Lexington, Massachusetts resulting in an estimated capital investment of more than $300 million by December 31, 2013 as further described in the Patriot Way Tax Increment Financing Plan (the "Expansion Project'); and WHEREAS, the Expansion Project will be located on several parcels or portions of parcels owned by PATRIOT. A portion of the Expansion Project is to be built under a long -term lease between SHIRE and PATRIOT on the following parcels, or portions thereof, owned by PATRIOT and identified as Board of Assessors Map 18, Parcels 14B, 3C and 413, a 1.88 acre portion of Parcel 14A and a 17.789 acre portion of Parcel 15 (the "200 Parcel" and the "300 Parcel ", respectively, as shown on Exhibit A). The balance of the Expansion Project will be located on portions of parcels owned by PATRIOT and identified as a 4.931 acre portion of Board of Assessors Map 18, Parcel 15 and a 12.003 acre portion of Map 26, Parcel 44D (the "400/500 Parcel"), shown on Exhibit A as the 400 Parcel ( "the 400 Parcel ", which, together with the 200 Parcel and the 300 Parcel is referred to herein as the "Site ") under a long term lease between SHIRE and PATRIOT and /or the subsequent acquisition of the 400 Parcel by SHIRE. PATRIOT is in the process of subdividing the Assessors Parcels to reconfigure lots lines to correspond to the 200 Parcel, the 300 Parcel and the 400 Parcel, as described more fully below; and WHEREAS, the Site is located within the boundaries of the Lexington Technology Economic Target Area ( "ETA" as that term is used in Massachusetts General Laws, Chapter 23A, Section 3D); and Execution Version WHEREAS, the Site is located within the Patriot Way Economic Opportunity Area ( "EOA" as that term is used in Massachusetts General Laws, Chapter 23A, Section 3E); and WHEREAS, SHIRE expects to create over 600 permanent full -time jobs open to qualified residents of Lexington and retain over 500 full -time jobs within Massachusetts, all as set forth in the Certified Project Application (defined below); and WHEREAS, SHIRE is seeking a Tax Increment Financing Agreement from the TOWN, in accordance with the Massachusetts Economic Development Incentive Program and Massachusetts General Laws Chapter 23A, Chapter 40, § 59; and Chapter 59, § 5, clause 51 and regulations issued pursuant thereto ( "EDIP "); and WHEREAS, the TOWN is willing to enter into a Tax Increment Financing Agreement to provide additional jobs for residents of the Lexington Technology Economic Target Area and the Town and to improve the area's economy and strengthen the local tax base. NOW, THEREFORE, in consideration of mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties do mutually agree as follows: 1. The TOWN, contingent upon approval by Town Meeting, enters into this Tax Increment Financing Agreement (the "Agreement ") for the Expansion Project on the Site. A map of the entire TIE Zone, showing the Site is hereby attached as Exhibit A. A legal description of the Site is hereby attached as Exhibit B. 2. SHIRE acknowledges that, subject to the terms and conditions of a lease and other agreements between SHIRE and PATRIOT, SHIRE is responsible for all real estate taxes on the Site during the Exemption Period. Consequently, SHIRE will benefit from the Tax Increment Financing Exemption defined in this Agreement. 3. To facilitate the proper determination of the Base Valuation of each of the 200 Parcel, the 300 Parcel and the 400 Parcel, the parties agree to proceed as follows. PATRIOT will, prior to December 31, 2007, request the Planning Board to endorse as "Approval Not Required" under the subdivision control law ( "ANR ") a plan substantially in the form attached as Exhibit C, which shall consolidate into a single lot (the "Combined Lot ") all of the portions of the existing parcels shown on the Assessors Maps that are within the Site. Nothing in this Section is intended to obligate the Planning Board to endorse any such plan. 4. The EDIP provides that the Base Valuation of the Combined Lot is the assessed value as of FY 2008. The Base Valuation for the Combined Lot will be derived by allocating to the Combined Lot the FY2008 assessed values of the existing Assessor's Parcels, or portions of Assessor's Parcels, that make up the Combined Lot. 5. Pursuant to zoning applicable to the Expansion Project, PATRIOT shall seek approval of a Definitive Site Development and Use Plan. Subsequent to that approval, PATRIOT shall 2 Execution Version request the Planning Board to endorse an ANR plan substantially in the form attached as Exhibit D, which shall divide the Combined Lot into the 200 Parcel, the 300 Parcel and the 400 Parcel. (In the event that the Planning Board determines that such parcels cannot be created by means of an ANR Plan, PATRIOT shall take such steps as are necessary to obtain approval to divide the Combined Parcel in the 200 Parcel, the 300 Parcel and the 400 Parcel). Legal descriptions of the 200 Parcel, the 300 Parcel and the 400 Parcel are attached as Exhibit E. Nothing in this Section is intended to obligate the Planning Board to endorse or approve any plan. The Base Valuation of each of the 200 Parcel, the 300 Parcel and the 400 Parcel will be derived by allocating to each Parcel the pro rata portion attributable to each Parcel of the Base Valuation of the Combined Parcel. 6. The TOWN hereby grants the Tax Increment Financing Exemption (the "Exemption ") to SHIRE and PATRIOT in accordance with G.L. c. 23A, § 3E; G.L. c. 40, § 59; and G.L. c. 59, § 5, clause 51. The Exemption shall be for a period of twenty (20) years (the "Exemption Period ") commencing with the fiscal year 2009 (which begins July 1, 2008) and ending with the fiscal year 2028 (which ends June 30, 2028). The Exemption shall provide, in the manner and to the extent described in Section 7 below, for a percentage exemption from the increased value of the 200 Parcel, the 300 Parcel and the 400 Parcel resulting from the Expansion Project. The Exemption Schedule applicable to the Expansion Project is as follows: Fiscal Year TIE Year Exemption'' % FY09 1 95% FY10 2 94% FY11 3 32% FY12 4 52% FY13 5 45% FY14 6 40% FY15 7 35% FY16 8 30% FY17 9 30% FY18 10 25% FY19 11 22% FY20 12 20% FY21 13 15% FY22 14 15% FY23 15 10% FY24 16 10% FY25 17 6% FY26 18 6% FY27 19 5% FY28 20 5% The Exemption applicable to each parcel shall be calculated for each fiscal year as follows: Execution Version (i) The Base Valuation shall be adjusted annually by an adjustment factor (the "Adjustment Factor ") to reflect increases in commercial and industrial property values within the community as provided in G.L. c. 40, § 59. The incremental value (the "Incremental Value ") is equal to the amount by which a parcel's assessed value for each fiscal year during the term of this TIE Agreement exceeds the adjusted Base Valuation. (ii) With respect to the 200, 300 and 400 Parcels, the Parties have agreed that the Exemption Schedule shall apply only to a portion of the Incremental Value in the assessed valuation of each such parcel, In order to increase the portion of the value of the Parcels on which SHIRE shall pay full taxes, SHIRE agrees that, solely for purposes of calculating the Exemption as provided herein, amounts shall be added to the Base Valuations of the Parcels, resulting in totals of a $7,805,000 increased base valuation of Parcel 200, a $14,900,000 increased base valuation of Parcel 300 and a $11,707,000 increased base valuation of Parcel 400 (such totals referred to below as the "Increased Base Valuation" of each Parcel); (iii) With respect to each Parcel, the Exemption Schedule will be applied to the incremental difference in the assessed valuation of the Parcel, calculated as the difference between (a) the assessed valuation of the Parcel in a given year and (b) the Increased Base Valuation, as defined in (ii) above (which shall be adjusted annually by the Adjustment Factor). SHIRE acknowledges that estimates of future assessed values used during negotiations between the Town and SHIRE are only estimates of value and in no way constitute representation by the Town of what actual assessed values will be. Assessed values will be established annually by the Board of Assessors and will be based on generally accepted assessing practices, Massachusetts General Laws and regulations promulgated by the Commonwealth of Massachusetts. 8. The TOWN grants the Exemption in consideration of the commitment to and performance of the following by SHIRE and/or PATRIOT: (a) SHIRE shall create a minimum of 600 permanent full -time jobs and use its best efforts to hire residents from the Lexington Technology ETA, Middlesex County and Eastern Massachusetts. (b) SHIRE shall invest no less than $300,000,000 (including any amounts invested by PATRIOT on SHIRE's behalf) in qualified capital improvements at the Site on or before December 31, 2013, including all costs, expensed or capitalized, incurred by SHIRE related to the Site including but not limited to: demolition, installation, validation, land and building (including, without limitation, all electrical, mechanical, plumbing, HVAC, control and other building systems) and leasehold improvements ( "New Investment "). 4 Execution Version (c) SHIRE shall contribute $400,000 as follows: (a) $250,000 shall be contributed to Cary Memorial Library Foundation, Inc. by making payments of $50,000 on July 1, 2008, July 1, 2010, July 1, 2012, July 1, 2014 and July 1, 2016; and (b) $150,000 shall be contributed to the Town for a use as recommended by the Board of Selectmen by making payments of $30,000 on July 1, 2008, July 10, 2010, July 1, 2012, July 1, 2014 and July 1, 2016. The requirement that contributions be made by SHIRE under this sub - Section shall survive any decertification of the Expansion Project or termination of this TIE Agreement. (d) SHIRE agrees to pay a total of up to $2,600,000, to the Town on or before June 15, 2012, to compensate the Town for improvements to the following infrastructure affected by the Expansion Project: (i) Spring Street/Marrett Road /Bridge Street intersection; (ii) Marrett Road/Waltham Street /Hayden Avenue corridor infrastructure projects; and (iii) new sidewalks on Spring Street and Hayden Avenue (collectively "Infrastructure Projects'). SHIRE'S obligation under this paragraph is subject to the Town submitting complete and timely grant applications to the Commonwealth for state funding of the Infrastructure Projects and exercising diligent efforts to construct the Infrastructure Projects. SHIRE's payment obligation under this paragraph shall be reduced by the amount of funds the Town receives from the Commonwealth of Massachusetts including funds from State Infrastructure Grant programs (MORE, PWED, CDAG), on or before June 1, 2012, for the Infrastructure Projects. (e) SHIRE commits to work with the Town Manager's office, Lexington High School employment /placement offices and Minuteman Regional High School's employment/placement offices in developing an employment /placement program to provide job opportunities within the Expansion Project and for ongoing SHIRE operations employment opportunities. (f) SHIRE shall use diligent efforts to utilize qualified Lexington, Middlesex County and Massachusetts region based businesses wherever commercially reasonable to construct, operate and maintain the Expansion Project. (g) PATRIOT shall contribute $100,000 to the Town for a use as recommended by the Board of Selectmen by making ten annual payments of $10,000 commencing on July 1, 2008 and on each July l thereafter through July 1, 2017. (h) The TOWN shall adjust the Exemption schedule in Section 7 downward to the extent that SHIRE and /or PATRIOT does not satisfy any of the payment obligations under sub - Sections 8 (c), (d) and (g) above, provided that the annual exemption continues to satisfy the minimum requirements under G. L. c. 40, § 59. If SHIRE or PATRIOT fails to pay any of its financial obligations under sub - Sections (c) or (g), the Exemption Schedule for each subsequent fiscal year shall be adjusted downward by the Town until the total amount due from SHIRE or PATRIOT is recouped, provided that the annual exemption continues to satisfy the minimum requirements under G.L. c. 40, § 59. The schedule reduction, if any, in the event of non- compliance with sub - Section 8(d) shall be as follows. As of June 1, 2012 the Town shall identify the amount of State Infrastructure Grants identified in sub - Section 8(d) that have been received. The difference between $2.6 million as referenced in sub - Section 8(d) and the grant amounts received shall constitute the amount due to the Town no later than June 15, 2012. If SHIRE fails to pay any of its June 15, 2012 obligation, the Exemption schedule for each 5 Execution Version subsequent fiscal year shall be adjusted downward by the Town until the total amount due from SHIRE is recouped, provided that the annual exemption continues to satisfy the minimum requirements under G. L. c. 40, § 59. After the total amount due is recouped, the exemption percentage in all subsequent fiscal years shall be as shown in the schedule in Section 7. 9. SHIRE agrees to submit annual reports on job creation, retention, and New Investment to the TOWN by July 31 of each year. Reports shall be submitted for the year starting July 1, 2008, and ending June 30, 2009, and each subsequent year for the duration of the Exemption Period. The annual report shall include: (a) The number of full -time jobs created, jobs retained and the number of people hired from within the TOWN for the annual period and on a cumulative basis; and (b) The value of New Investment incurred by SHIRE in the Expansion Project annually and on a cumulative basis. 10. SHIRE and PATRIOT agree to timely pay all real estate taxes they owe on the site over the Term of this Agreement. 11. SHIRE and PATRIOT agree to allow the TOWN to monitor and enforce the Agreement. 12. If SHIRE and/or PATRIOT fail to comply with the terms of this Agreement, the TOWN, acting through its Town Manager, may, at its sole discretion, take action to request decertification of the project by the Economic Assistance Coordinating Council ( "EACC "), or by any other agency which succeeds to the powers and authority of the EACC to decertify the project, after written notice to SHIRE and PATRIOT, and a reasonable opportunity to cure any such non - compliance. If SHIRE or PATRIOT fails promptly to cure such non - compliance and the Expansion Project is thereafter decertified, the TOWN shall discontinue the Exemption benefits provided to SHIRE as set forth herein, commencing with the fiscal year in which such failure occurs. The PARTIES acknowledge that the obligations, covenants, or agreements on the part of SHIRE and /or PATRIOT are material and important to the realization of economic benefits from the Expansion Project, but are solely conditions to the receipt of the tax exemptions provided herein. The TOWN's sole and exclusive remedies at law or in equity for a failure by SHIRE and /or PATRIOT to satisfy any such conditions, aside from the TOWN's rights to adjust the Exemption under sub - Section 8(h) above, is to request revocation of this Agreement by the Economic Assistance Coordinating Council (EACC) or its successor agency and to recover unpaid contributions from SHIRE pursuant to sub - Section 8(c). 13. If SHIRE materially reduces its business operations at the Site so that it fails to satisfy the obligations set forth in the Certified Project application, then the Town may seek decertification as provided in Section 12 of this Agreement. Notwithstanding anything to the contrary herein contained, SHIRE shall have the right to assign or transfer its interest in this Agreement to (a) an Affiliated Entity (as defined below), and (b) a Successor (as defined below), provided that (i) prior to or simultaneously with the effective date of any assignment (taking into account any requirement of SHIRE for confidentiality at the time of such transfer), such Affiliated Entity or Successor, as the case may be, and SHIRE execute and deliver to Town an assignment and Execution Version assumption agreement in form and substance reasonably satisfactory to Town whereby such Affiliated Entity or Successor, as the case may be, shall agree to be independently bound by all applicable provisions of this Agreement (an "Assumption Agreement "). For the purposes hereof, an "Affiliated Entity" shall be defined as any United States legal entity which is controlled by, is under common control with, or which controls SHIRE. For the purposes hereof, a "Successor" shall be defined as any entity into or with which SHIRE is merged, or with which SHIRE is consolidated, or which acquires all or substantially all of SHIRE's stock or assets. Notwithstanding anything to the contrary herein, nothing in this Agreement is intended to limit SHIRE's offering and public trading of SHIRE's stock. 14. Notices Notices to be delivered under this Agreement shall be delivered to the addresses set forth below (which addresses may be changed by a notice to the other party given pursuant to the terms hereof) by courier, recognized overnight delivery service, certified mail or by facsimile (so long as a copy of any facsimile is also delivered pursuant to one of the previously described methods): If to the TOWN: Town Manager of the Town of Lexington, Town Hall, 1625 Massachusetts Avenue, Lexington, Massachusetts 02420, If to SHIRE: Shire Human Genetic Therapies, Inc. C/O Shire — Tax Department 725 Chesterbrook Blvd Wayne PA, 19087 -5637 With a copy to: Peter Corbett, Counsel to Shire Goulston & Storrs 400 Atlantic Avenue Boston, Massachusetts 02110 -3333 If to PATRIOT: Stephen Rice Patriot Partners Lexington, LLC c/o Mohawk Partners, LLC 205 Newbury Street, Framingham, MAO 1701 [Continued on next page] Execution Version 15. This Agreement shall be binding upon all PARTIES, shall run with the 200, 300 and 400 Parcels and bind successors in interest in the Parcels, and be binding upon SHIRE and its successors and assigns as provided in Section 13 above, so long as the Expansion Project has not been decertified. IN WITNESS WHEREOF, each of the PARTIES, intending to be legally bound, has executed this TIE Agreement as a sealed instrument by their duly authorized representatives on the day and year first written above. Town of Lexington Shire Human Genetic Therapies, Inc. By its Board of Selectmen By: Title: Patriot Partners Lexington, LLC C Title: Execution Version List of Exhibits Exhibit Description A TIE Zone B Legal description of the TIE Zone C ANR forming the Combined Parcel D Proposed ANR creating 200, 300 and 400 Parcels as separate lots E Legal descriptions of the 200, 300 and 400 Parcels 9