City Council Minutes 1999 03 16 - Laserfiche WebLink

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DISCUSSION/DIRECTION - SALES TAX AGREEMENT, WAL-MART BUSINESS TRUST, d/b/a/SAM'S CLUB Davidson called for staff presentation. Bill Simmons, City Administrator, explained that at a previous Council meeting, a motion was passed to authorize the Mayor and City Administrator to negotiate a sales tax rebate agreement for Wal-Mart, d/b/a Sam's Club to be submitted to Council for consideration. Negotiations have been ongoing with Koelbel & Company, and several drafts have been exchanged. In correspondence with Koelbel, it was noted that the draft was a staff-level preliminary draft only and that it had not been reviewed or approved by Council. A draft agreement was reviewed by the Finance committee at its January meeting and the consensus of the Committee was to include a cap in the agreement setting the maximum amount of the rebate payment at $450,000. A draft containing this provision was forwarded to Koelbel on February 1, 1999. At a March 9, 1999 work session, Koelbel stated that a cap was not part of the rebate agreement discussions and requested the Council to set the rebate at 50% of the sales tax revenues collected from the application of a 3% sales tax upon sales at Sam's Club for a twelve-month period of its operation. To proceed and conclude with these negotiations, Council is requested to provide direction to the provisions of the rebate agreement. Specifically, should the rebate agreement contain a cap, and, if yes, how much should the cap be? Davidson called for Wal-Mart's statement. Walter A. Koelbel, Jr., President of Koelbel & Company, asked to provide a brief recap of the events to date. He explained that they came to the first preliminary meeting, after many letters and much discussion, with the understanding that there was an acceptance of a sales tax rebate, which had obviously not been approved by Council. As part of the presentation, Koelbel was asked to provide some cost estimates of the upgrades associated with this particular project prior to the City Council meeting. It was felt that there should be some tie to the upgrades related to the sales tax rebate. The information was prepared and presented to Council. He stated that nothing in the discussions ever indicated that there was a cap, as such, other than what they felt was already an inherent cap in the structure. There was a fifty-percent cap and a one-year time frame, both of which were lower than originally requested on behalf of Wal-Mart. There was discussion about a $900,000 figure, which evolved into discussion about half of that amount, or $450,000. He stated that there may have been some confusion at that meeting, and they have gone back and reviewed the videotape from the meeting. The first draft agreement did not contain a cap, which was clearly consistent with what they felt was discussed at the City Council. The agreement was then sent off to Wal-Mart for their review. Later draft agreements did contain a cap. He stated that they made an assumption at the conclusion of the City Council meeting that there was a spirit of understanding in the agreement. There was some confusion to what the figures were, but when the first draft agreement was received, it was consistent with the events of the meeting. Mr. Koelbel stated that they are in somewhat of a dilemma. They are obligated to complete this transaction pursuant to their contract with Wal-Mart. He stated that at the work session, it 13