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Alan S. Polackwich, Sr., County Attorney <br />William K. DeBraal, Deputy County Attorney <br />F0 <br />B.C.C. 07.16.13 <br />Office of <br />INDIAN RIVER COUNTY <br />MEMORANDUM <br />TO: Board of County Commissioners <br />FROM: Alan S. Polackwich, Sr., County Attorne�j'�- <br />DATE: July 9, 2013 <br />ATTORNEY <br />SU13JECT: Proposed Third Amendment to Facility Lease Agreement for Vero Sports Village <br />BACKGROUND. <br />On June 4, 2013, the Board of County Commissioners approved a Third Amendment to Facility Lease <br />,, Agreement for the Vero Sports Village ("Third Amendment"). The form of the Third Amendment had <br />been circulated to and approved by the tenant, Verotown, LLC ("Verotown"), before presentation to the <br />Board. After Board approval, the Third Amendment was signed by the Chairman, and sent to Verotown <br />for signature. <br />During the Verotown signature process, however, Verotown discovered that it had failed to request <br />inclusion of an important income tax related provision. Specifically, section 11 of the Third Amendment <br />states that all net income from Verotown's operations under the lease will either be invested in <br />enhancements to the Sports Village, or paid over to the county at the end of the lease. As currently <br />written, "net income" is calculated before taxes. However, under applicable tax laws, if Verotown has <br />net income, it is required to allocate the net income to its partners/members, in accordance with their <br />ownership shares. The partners/members are then required to pay personal income taxes on their allocated <br />share of the Verotown income — even though, under the Third Amendment, they never actually receive <br />any portion of the income. <br />APPROVED FOR JULY 16, 2013 <br />OUNTYA EY <br />F.—yvnda*&VEULIB C CWgendaMemoslDodgen—(t Ml0.d" <br />Indian River Co. • ved Date <br />Admin. <br />Co. Atty. e • 1; <br />Budget <br />Department -- <br />Risk Management --- -- <br />133 <br />