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HomeMy WebLinkAbout2019-754 Economic Dev - Medline industries performance agreement I STATE OF NORTH CAROLINA ORANGE COUNTY PERFORMANCE AGREEMENT BETWEEN ORANGE COUNTY,NC AND MEDLINE INDUSTRIES,INC. This Agreement made and entered into this the__q_day of C#c�c)6CC , 2019 by and between Orange County, a body politic existing under the laws of the State of North Carolina("County") and Medline Industries,Inc., an Illinois corporation authorized to do business in North Carolina, with facilities to be located in Mebane,North Carolina ("Company"), for the purpose of incentivizing Company's investment in Orange County and Mebane. Company is an Illinois Corporation situated and doing business in Northfield, Illinois. Company is the largest privately held manufacturer and distributor of medical supply products in the United States. Company's Mebane Facility small distribute medical supplies throughout the eastern United States and central North Carolina. Company represents it is duly authorized to conduct business in North Carolina. It is understood that the levels of performance required by this Agreement are to be met by this group (Company and Medline Industries, Inc.)as a whole at its facility in Orange County(Mebane). Accordingly,the term "Company"as used in this Agreement refers to the entire group at such facility. WITNESSETH THAT WHEREAS,the County has offered to the Company an inducement package as hereinafter set forth; and WHEREAS, the State of North Carolina and the Town of Mebane,North Carolina have offered separate inducement packages to the Company; and WHEREAS, but for the offer of an inducement package the Company would not be locating its manufacturing facility within Orange County; and WHEREAS, the Company has agreed to meet and continue meeting the minimum investment and employment requirements as hereinafter set forth; NOW,THEREFORE,the parties hereto in consideration of these mutual covenants and agreements passing from each to the other do hereby agree as follows: i 1. DEFINITIONS. As used in this Agreement the terms below will have the following meanings: A. "Affiliate." A company that the Company controls,controls the Company,or is under common control with the Company. Page I of 12 B. "Commencement Date. The date in which the Company begins actual operations at the Subject Property, after having obtained applicable governmental approvals, certificates of zoning compliance, and certificates of occupancy. The Commencement Date is anticipated to be no later than July,2020. C. "Company." Medline Industries, Inc. includes its affiliates, successors,and assigns. D. "Eligible Property." Includes(a) the Subject Property(as defined in Exhibit B, Legal Description of Real Property), other real property in the County, and all improvements the Company or an Affiliate of the Company constructs or installs, or causes to be constructed or installed, at the Subject Property or such other real property, including all buildings, building systems, and building improvements, and(b) all personal property (as defined in Section I.I. below, Personal Property) the Company or an Affiliate of the Company purchases or leases and installs, at or relocates to, the Facility or such other real property. E. "Grant."An economic incentive grant to the County pursuant to Section 3 of this Agreement. F. "Minimum Taxable Investment." The aggregate investment amount in property and infrastructure the Company intends to make and that Company and County anticipate will result in a tax valuation of at least$65,300,000.00. G. "Orange County Facility""Mebane Facility," or"Facility." The Company constructed and/or owned primary and secondary structures, utilities, and operations and service areas situated on the Subject Property in Mebane, Orange County,North Carolina in and on which Company conducts its business,manufacturing, and/or operations. H. "Person." Any individual,partnership, trust, estate,association, limited liability company, corporation, custodian, nominee,governmental instrumentality or agency, body politic or any other entity in its own or any representative capacity. I. "Personal Property." All personal property the Company or an Affiliate owns or leases located at the Facility, including all (a)machinery and equipment, (b) furniture, furnishings, and fixtures, (c)property that is capitalized for federal or state income tax purposes, (d) all additions to any of the foregoing, and all replacements of any of the foregoing in excess of$100,000. J. "Qualifying Expenditure." All expenditures the Company, an Affiliate, or lessor to the Company or an Affiliate makes for Eligible Property which is subject to Tax in the County and is not subject to an exemption from.Tax that the Company uses. K. "State." The State of North Carolina. L. "Subject Property." The property on which Company constructs and/or operates the Orange County Facility. Page 2 of 12 M. "Tax"or"Taxes." .Ad valorem property tax levied on real and personal property located in the County pursuant to Article 25, Chapter 105 of the North Carolina General Statutes or any successor statute relating to ad valorem property tax the County levies on property. N, "Term"or"Full Term." The duration of this Agreement meaning 0(;,Fo��r Li+2019 through and including January 31,2026. 2. INDUSTRIAL INVESTMENT AND EMPLOYMENT AGREEMENT A. INVESTMENT 1. The Company anticipates it shall directly invest a Minimum Taxable Investment of sixty five million three hundred thousand dollars ($65,300,000.00), in accordance with the investment plan attached as Exhibit A,on or before January 31,2024. If the Company does not make 80%of the Minimum Taxable Investment on or before January 31, 2021 (and as may be extended below),the amount of the Grants will be adjusted as provided in Subsection 2.A.3. 2. The Company shall maintain the Minimum Taxable Investment for a period of at least five years through and including January 31,2026. i 3. If total increase of taxable investment falls below the Minimum Taxable Investment levels,due to failure to meet the investment goals set forth in Exhibit A or removal of equipment,as assessed by the Orange County Tax Assessor, the amount of the following annual installment will be reduced by a pro-rata percentage of the shortfall. The baseline for measuring whether the investment goals have been met will begin with the date of performance agreement execution shall be adjusted (1)upward, if there is an increase in the assessment of the Company's real property and (2)downward,to reflect the natural decline in the value of the Company's personal property(existing in 2020 j and acquired thereafter in the course of the new investment)as measured by the 1 depreciation of such property in accordance with generally accepted accounting principles. 4. Should Company dispute the valuation of its property by the Orange County Tax Assessor, Company may register an informal complaint with the Tax Assessor j requesting a re-evaluation of Company's property and resulting tax and the Tax Assessor shall work with Company to conduct such re-evaluation. Should Company dispute the results of any such re-evaluation the Company may appeal the resulting valuation under the same process and subject to the same requirements as any other tax appeal in Orange County. & EMPLOYMENT 1. On or before January 31, 2026, at least 250 persons will be employed in full-time positions at the Mebane facility("Jobs Minimum"). The number of full-time positions shall be evidenced by one or more Quarterly Tax and Wage Reports(Form NCUI 101) filed with the North Carolina Department of Commerce's"NC Works"employment career center. If 80%of the Jobs Minimum is not achieved on or before January 31, 2026 (oar as extended as provided below),the amount of the Grants will be adjusted as provided in Section 6. Page 3 of 12 2. During the first year of operation after commencement of this Agreement, Company and County agree Company shall hire 30 full time employees at its Mebane Facility. During the second year of operation the Company shall hire an additional 75 full time employees at its Mebane Facility for a total of 105 full time employees at its Mebane Facility. During the third year of operation the Company shall hire at a minimum an additional 75 full time employees for a total of 180 full time employees at its Mebane Facility. During the fourth year of operation the Company shall hire an additional 50 full time employees for a total of 230 full time employees at its Mebane Facility. During the fifth year an additional 20 full time employees shall be hired for a final and ongoing 250 full time employees at its Mebane Facility. At the expiration of this Agreement,the Company shall employ, at its Mebane facility in Orange County,at least the equivalent of 250 full time employees in accordance with Exhibit A. 3. Employees counted toward this total shall include only new employees of the Company employed and located at Company's Mebane Facility in Orange County,provided such employees are employed in Orange County on a full time basis. Employees of the Company will be eligible to participate in Company sponsored health insurance and retirement programs. For purposes of this section "250 full time equivalent employees" shall be defined as 250 actively employed individuals and shal[ not include vacant positions for which the Company is actively or otherwise recruiting. It is understood that vacancies occur and that when such occur the Company will immediately, or as soon as is reasonably possible thereafter, fill said vacancies. The average wage of the 250 new full time equivalent employees shal l be, as of the last day of this Agreement, at the annual rate of$353468. C. DEVELOPMENT GRANT PARTICIPATION: Where applicable,the Company agrees to partner,through the commitment to create new jobs,with Orange County and other applicable agencies to apply for development grants that will improve and/or add water, sewer, road or other necessary infrastructure in order to facilitate the successful completion of this project. The Company agrees to meet with program representatives, and to participate in the giant request process as necessary to secure the required funding. D. GUARANTEED MINIMUM LEVEL OF PERFORMANCE: The Company guarantees that its minimum level of performance pursuant to this Agreement shall be as set out in this Section 2. Company agrees that failure to meet the minimum level of new employment as reflected in Section 2.13. shall entitle the County to reductions in inducement installments paid to the Company in an amount of four hundred fifty dollars ($450.00)per employee not hired as reflected in Section 2.13. and Exhibit A. Company further agrees that failure to meet the minimum level of direct investment as reflected in Section 2.A. and Exhibit A shall entitle County to pro rats reductions in inducement installments paid to the Company as set out in Section 3. E, STATUTORY COMPLIANCE: The Company understands that the County's participation is contingent upon authority found in North Carolina General Statute 158-7.1 and other relevant North Carolina General Statutes and that should such statutory authority be withdrawn by the North Carolina General Assembly County may terminate this Agreement without penalty to County and without further compliance with this Agreement. Page 4 of 12 3. INDUCEMENT PACKAGE A. COUNTY INDUCEMENT GRANT: The County, upon execution of this Agreement, shall provide to the Company an inducement to offset facility development, expansion, and acquisition costs in an amount not to exceed One Million Eight Hundred Forty Thousand Nine Hundred Sixty Seven Dollars ($1,840,967.00). This inducement shall be payable in five installments over a five year period, calculated as a performance grant equal to seventy-five percent(75.0%) of the actual property tax valuation for real and personal property taxes due in each year of the 5-year grant period. The first installment shall occur during of the 2021 calendar year upon receipt of proof, as described in Section 5 of this Agreeme t, that the minimum employment and investment numbers referenced in Section 2 of this Agreement have been met and that all local property taxes on the real and business personal property owned by the Company and located within Orange County have been paid. Subsequent annual installments will occur during the month of January for the term of this Agreement with the final installment occurring in January 2026. No installment shall be required to be paid until such time as County receives proof of the payment of all property taxes and verification of employment and investment Ievels has been submitted to the County. B.TOTAL COUNTY COMMITMENT: The total County commitment for the Inducement Grant outlined in Section 3.A. above shall not exceed One Million Eight Hundred Forty Thousand Nine Hundred Sixty Seven Dollars ($1,840,957.00). 4. EXPANSION OPPORTCJNIT Y Participation in this Agreement shall not exclude the Company from consideration for additional inducements from the County either during or upon completion of this Agreement. Future projects shall be considered on a case-by-case basis and induced at the discretion of the County based on new taxable investment and job creation in excess of the minimum levels outlined in Section 2 above. Any such agreement shall require a separate"Performance Agreement"which shall conform to all relevant North Carolina Statutes and/or Orange County Ordinances, Policies or Resolutions, shall be in writing, and shall be mutually agreed upon by the Parties. 5. PROOF AND CERTIFICATION The officials of Parties to this Agreement shall furnish the necessary reports and certificates to verify that each Party's respective goals are met. Once the Company maintains its investment and employment goals for the term of this Agreement it will no longer need to fiirnish these reports. Acceptable forms of proof for taxable investment shall be the records of the County Tax Administrator. Acceptable forms of proof of payment of taxes shall be in the form of cancelled checks and receipts of payment from the County Tax Administrator. Acceptable forms of proof for employment numbers shall be in the form of a notarized statement from a North Carolina licensed Certified Public Accountant and shall be verified by the North Carolina Employment Security Commission. i Page 5 of 12 6. REMEDY A. INDUCEMENT PACKAGE: 1f the County does not meet and maintain the terms set forth in the inducement package, the Company has the option to the rights set forth in Section I I.A. of this Agreement upon thirty(30)days written notice to the County. B. DELAY OF INDUCEMENT PACKAGE INITIATION: If the Company does not meet employment and investment goals that are to be met pursuant to this Agreement by December 31, 2020,the onset of this Agreement may be delayed one (1)year, at the option of the Company. Written notification of a request to delay onset must be received by the County no later than December 31, 2020. In that event this Agreement shall initiate no later than December 31,2021 and shall expire no later than January 31, 2026. C. INVESTMENT AND EMPLOYMENT PACKAGE: If the Company does not meet and maintain either the investment or employment goals within the annual timetable set forth in this Agreement,and does not opt to delay the onset of this Agreement as described above,then the county will reduce the annual installment payment as set forth in Section 2.D. of this Agreement until such time as the Company once again meets both the investment and employment goals. Reduction shall be computed, exclusively by the County,based on the percentage of the goal not met. In order to qualify for the full reimbursement, including recovery of any prior reductions, both investment and employment must meet or exceed the minimum standards outlined above prior to the natural termination of this Agreement. 7. SEVERABILITY If any term or provision of this Agreement is held to be illegal, invalid,or unenforceable,the legality,validity,or enforceability of the remaining terms, or provisions of this Agreement shall not be affected thereby; and in lieu of such illegal, invalid or unenforceable term or provision, there shall be added by mutually agreed upon written amendment to this Agreement, a legal, valid,or enforceable term or provision, as similar as possible to the term or provision declared illegal, invalid, or unenforceable. 8. COMPLIANCE WITH THE LOCAL GOVERNMENT BUDGET AND FISCAL CONTROL ACT OF NORTH CAROLINA GENERAL STATUTES All appropriations and expenditures pursuant to this Agreement shall be subject to the provisions of the Local Government Budget and Fiscal Control Act of the North Carolina General Statutes for cities and counties and shall be listed in the annual report submitted to the Local Government Commission by the County. 9. GOVERNING LAWS &FORUM This Agreement shall be governed and construed by the Laws of the State of North Carolina. Any action brought to enforce or contest any term or provision of this Agreement shall be brought in the North Carolina General Court of Justice sitting in Orange County,North Carolina. The Parties hereto stipulate to the jurisdiction of said court. Page 6 of 12 10. INDEMNIFICATION The Company hereby agrees to indemnify, protect and save the County and its officers, directors, and employees harmless from all liability, obligations, losses, claims, damages, actions, suits,proceedings, costs and expenses, up to the amount of the Inducement Grant including reasonable attorneys' fees, arising out of, connected with, or resulting directly or indirectly from the business, construction, maintenance, or operations of the Company or the Company's Mebane Facility or the transactions contemplated by or relating to this Agreement, including without limitation, the possession, condition, construction or use thereof, insofar as such matters relate to events subject to the control of the Company and not the County. To the extent authorized by North Carolina law the County hereby agrees to indemnify,protect and save the Company and its officers, directors, and employees harmless from all liability, obligations, losses, claims, damages, actions, suits,proceedings, costs and expenses, including reasonable attorneys' fees, arising out of, connected with, or resulting directly or indirectly from the performance of this Agreement attributable to the negligence or misconduct of the County, its officers or employees. The indemnification arising under this Article shall survive the Agreement's termination. 11. TERMINATION A. COMPANY: Upon Company's meeting its Employment and Investment obligations as set out in Section 2 above and upon Company's certification to such and certification of the payment of all real and personal property taxes, as set out in Section 5 above, then upon the occurrence of any of the following events, the Company shall have the option of terminating this Agreement: Failure of the County, to provide the initial inducement installment as provided in Section 3 of this Agreement; or, under the same circumstances, failure of the County to make future inducement installments, as provided for in Section 3 of this Agreement. Should the Company exercise its option to terminate this Agreement,pursuant to this Section for failure by the County, the Company shall be entitled to retain all funds paid to or for the benefit of the Company pursuant to this Agreement. Should the Company terminate this Agreement of its unilateral choice,regardless of any of the above incidences of default, the Company shall repay to the County all funds paid to or for the benefit of the Company pursuant to this Agreement. Thereafter,the County shall have no further obligation to make inducement installments annually or otherwise. Any such termination of this Agreement by the Company shall be in writing and shall meet notice requirements as set out herein. B. COUNTY: The County shall have the option of terminating this Agreement upon any Abandonment of Operations by the Company,without penalty to the County, which option shall be executed by giving written notice to the Company.Abandonment of Operations shall be defined as a period in excess of four(4) weeks during which the Company's level of hull Time Equivalent Employees or Direct Investment goes below twenty percent(20°/a) of the guaranteed minimum levels of performance commitments for either Full Time Equivalent Employees or Direct Investment as reflected in Section 2 above. Notwithstanding the foregoing, if the aforesaid decline in the number of full time equivalent employees or the Company's failure to make the required direct investments is attributable to a substantial overall national economic decline(as such may be recognized by the United States Bureau of Labor Statistics), this shall not be deemed an abandonment of operations entitling the County to terminate this Agreement,and the Company shall not be deemed in default. In such event,the Company's and s the County's obligations shall be suspended for one year and resume thereafter. If after one Page 7 of 12 year the aforesaid substantial decline continues the County may declare an Abandonment of Operations and proceed as set forth herein. C. NATURAL: In any event, the above terms notwithstanding,this Agreement shall terminate upon the 3 1"day of January of the year in which the final financial inducement installment is made. 12. LIMITATION OF COUNTY'S OBLIGATION NO PROVISION OF THIS AGREEMENT SHALL BE CONSTRUED OR INTERPRETED AS CREATING A PLEDGE OF THE FAITH AND CREDIT OF THE COUNTY WITHIN THE MEANING OF ANY CONSTITUTIONAL DEBT LIMITATION. NO PROVISION OF THIS AGREEMENT SHALL BE CONSTRUED OR INTERPRETED AS DELEGATING GOVERNMENTAL POWERS NOR AS A DONATION OR A LENDING OF THE CREDIT OF THE COUNTY WITHIN THE MEANING OF THE STATE CONSTITUTION. THIS AGREEMENT SHALL NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE COUNTY TO MAKE ANY PAYMENTS BEYOND THOSE APPROPRIATED IN THE COUNTY'S SOLE DISCRETION FOR ANY FISCAL YEAR IN WHICH THIS AGREEMENT SHALL BE IN EFFECT. NO PROVISION OF THIS AGREEMENT SHALL BE CONSTRUED TO PLEDGE OR TO CREATE A LIEN ON ANY CLASS OR SOURCE OF THE COUNTY'S MONEYS,NOR SHALL ANY PROVISION OF THE AGREEMENT RESTRICT TO ANY EXTENT PROHIBITED BY LAW,ANY ACTION OR RIGHT OF ACTION ON THE PART OF ANY FUTURE COUNTY GOVERNING BODY. TO THE EXTENT OF ANY CONFLICT BETWEEN THIS ARTICLE AND ANY OTHER PROVISION OF THIS AGREEMENT,THIS ARTICLE SHALL CONTROL. 13. LIABILITY OF PUBLIC OFFICERS No officer, agent or employee of the County or the Company shall be subject to any personal Liability or accountability by reason of the execution of this Agreement or any other documents related to the transactions contemplated hereby. Such officers, agents, or employees shall be deemed to execute such documents in their official capacities only, and not in their individual capacities, This Section shall not relieve any such officer, agent or employee from the performance of any official duty provided by law. 14. MISCELLANEOUS A. ENTIRE AGREEMENT: This Agreement, including all exhibits attached, constitutes the entire contract between the parties, and this Agreement shall not be amended except in writing signed by the Parties. B. BINDING EFFECT: Subject to the specific provisions of this Agreement,this Agreement shall be binding upon and inure to the benefit of and be enforceable by the Parties and their respective successors and assigns. C. TIME: Time is of the essence in this Agreement and each and all of its provisions. Page 8 of 12 D. CONSTRUCTION: Nothing in this Agreement shall be construed to the effect that the County has any right to influence the Company's business decisions or to receive business information from the Company(except as expressly provided in Section 2R and Section 5 hereof). 15. NOTICES Any notices pursuant to and/or required by this Agreement shall be in writing and shall be delivered via United,States Mail,certified,return receipt requested: If to Orange County; If to Medline Industries, Inc.: County Manager Director Tax Tax Department Three Lakes Drive 200 S. Cameron Street Northfield, IL 60093 Hillsborough,NC 27278 Any addressee may designate additional or different addresses for communications by notice given under this Section to the other Party. [SIGNATURE PAGE TO FOLLOW] i i Page 9 of 12 AGREEMENT REVIEWED AND ACCEPTED BY: By Medline Industries, I Ak A Date Attest: Date Dmitiy Dukhan Vice President of Real Estate Title: D�«: ,r, �' {� .1i A,AA- Medline Industries,Inc. By Orange County. Penny Rich Date Attest:r Donna B er` Date Clair Clerk to the Board Orange County Commissioners Orange County Commissioners 1 This i strum of as been pre-audited in the manner required by the Local Government Budget and Fisc , ont if t. Chief t ancial`Officer Approved as to fo and legal sufficiency. C ice of the County Attorney Page 10 of 12 EXHIBIT A— Proposed Orange County Incentive Project Summary Form for State of North Carolina Incentive Review PROJECT SUMMARY FORM Medlin a Ind u stries,In c. Key Dates: Enterthe date that the Company anticipates: a.Making the decision vhet her to locate the Project in NC 5 2019 b.Malong the initial capital investment related to the Project 7 2019 c.Starting construction,expansion, or renovation/upSt of the Project facifity 9 2019 d.Airing the trst job related to the Project 7 2020 e.Commencing operations at the Project faciCty 10 2020 AverageWages AvgNewJobs BYl'ear 3-Yaw 5-yew lia;eo A- , +3meofALL 1..r.:rcum 25D N&-& Av3.Arrusa e02a 2021 ZOO 2024 TOTAL TOTAL Jots Wage ofJobs 30 75 75 50 20 180 250 S35.468 S35,468 N1w lnvesMl*nt By Year 3Ye-V 5.Ye`c 2019 2020 21 23= 2= TOTAL TOTAL Peal PrcpeTj S 15,000.000 S30.000.000 S0 SO so S55,000,000 S55,000,000 Tangible Pemcr al Property S3.000.000 S7.000.000 $100.000 St00.000 S100.000 S110,100,0001 $10,300,000 T"Investrrtent S28,000,000 $37,000,000 SIDO.0001 S700.000 5100,000 S65,100.000 1 $65,300,000 Page 11 of 12 EXHIBIT B—Proposed Orange County Incentive Legal Description of Real Property Owner Property Identification Number(PIN) Acreage Collins, Donna G 9834657934 34.37 Collins Donna G Trustee Rohl Irell Trustee Eta] 9834756858 62.51 Rohl, Robert D Whitfield,James H 9834853573 14.09 Allison, Gary L 9834856553 14.08 SL Efland Heirs LLC 9834868296 28 Brown, Martha S 9834955748 19.74 Page 12of12