2004-063 - Approving And Authorizing Town Manager To Execute A Sales Tax Agreement With Netflix Inc.RESOLUTION .2004 - 63
RESOLUTION OF THE TOWN COiJNCIL OF THE TOWN OF LOS GATOS
APPROVING AND AUTHORIZING THE TOWN MANAGER TO
EXECUTE A .SALES TAX AGREEMENT WITH NETFLIX, INC.
WHEREAS:
A. Netflix, Inc., desires to relocate its corporate headquarters to the Los Gatos Gateway
Project being developed by Sobrato Development Companies at 14300-14350 Winchester
Boulevard.
B. SobratoDevelopmentCompanies, onbehalf ofNetflix,Inc.., requested approval to modify
the approved Planned Development (PD) (Ordinance No. 2126) and obtain other necessary land use
entitlements in order to increase the size of the office/R&D component of the project by 40,000 and
other related changes.
C. Netflix, Inc. generates significant sales tax revenues resulting from transaction that occur
in the Town of Los Gatos.
D. Netflix, Inc., is willing to agree to terms intended to help maintain the Town as the point
of sale for purposes of California sales tax revenues.
RESOLVED:
1. That an agreement with Netflix., Inc., attached hereto as Exhibit "A" .and incorporated
herein by this reference., is hereby approved.
2. That the Town Manager is authorized to execute the agreement attached as Exhibit "A."
1
:PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los
Gatos, California held on the 4t'' day of May, 2004, by the :following vote:
COUNCIL MEMBERS:
AYES: Sandy Decker, Diane McNutt,. Joe Pirzynski, Mike Wasserman,
Mayor .Steve Glickman.
NAYS : None
ABSENT: None
ABSTAIN: None
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST: ~''
/~'~
CLERK OF TNT TOWN OF LOS GA - S
LOS GATOS, CALIFORNIA
2
April 28, 2004 TM
The honorable Steve Glickman, Mayor
Town of Los Gatos
110 East Main Street
Los Gatos, CA 95032
Dear Mayor Glickman and Town Council Members:
f.W,•V:i,CE OF THE :1 O1'V Ay CLERK
OfffD—m - --
On behalf of Netflix, I want, once again, to express our appreciation for your consideration and
cooperation in helping to secure an additional 40,000 square feet of office entitlement at the Los Gatos
Gateway Project ( "Project "). Netflix understands that local retention of sales tax revenue is a major
factor in the Town's determination whether to grant the entitlement that would ultimately satisfy. Netflix's
desire to relocate its corporate headquarters to the Project.
In consideration of decisions by the Town to grant the land use entitlements necessary to secure an
additional 40,000 square feet, Netflix agrees as follows:
1. That it will not enter into any other agreement with any other government entity for land use
entitlements or other consideration directly relating to the point of sale determination regarding sales tax
revenues generated by Netflix and currently payable to Los Gatos; and
2. Should Netflix determine, as it may in its sole and absolute discretion, to move the per
comprising what Netflix refers to as its E- commerce group (which currently operates in the Town
and, according to the Town, .gives rise to the point of sales transactions for California sales tax purposes)
out of Los Gatos, Netflix shall, no later than sixty (60) days prior to the effective date of such move notify
the Town Manager of the Town of the intended move, and shall thereafter consider in good faith any
reasonable proposal to retain the point of sale in the Town, but in no event will Netflix be under any
obligation to accept or otherwise act upon such proposals.
Netflix agrees that this Agreement shall become effective as of the date of this letter and shall continue in
full force and effect until June 1, 2010, unless (i) the Town fails to grant the land use entitlements
requested by Netflix and Sobrato Development Companies in connection with the additional 40,000
square feet of office space to relocate its corporate headquarters to the Project, in which event this
Agreement shall terminate effective on the date that the decision by the Town to deny a necessary
application becomes final, or (ii) Netflix fails to enter into a final lease between Netflix and Sobrato
Development Companies regarding the Project, in which event this Agreement shall terminate six (6)
months from the date of this Agreement.
Except as otherwise agreed herein, nothing in this Agreement shall be deemed to impose any restriction
on Netflix in moving its personnel or otherwise adjusting its operations and that Netflix, in its sole and
absolute discretion, may undertake such actions as it deems appropriate for its business purpose.
Furthermore, the parties expressly agree that there shall be no equitable enforcement of this Agreement
and that any liability arising out of or in connection with this Agreement shall be limited to $250,000.
970 University Avenue Los Gatos, CA 95032 Phone 408.399.3700 Fax 408.399.3737 WWW.netflix.00in
Thank you again for your consideration and support. We look forward to working with you and to a long
mutually beneficial relationship.
Sincerely,
David' yman
General Counsel
cc: Debra Figone, Town Manager
Bud Lortz, Community Development Director
ACCEPTED BY TIIE TOWN OF LOS GATOS:
Die *J.F21toiz�-r , Manager
ATTEST:
Cleric of the Town of Los Gatos,
Los Gatos, California
Mariaf IV6j gy c,.Town Cleric r
Approved as to Form:
P
Orry Town Attorney