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HomeMy WebLinkAbout10357RESOLUTION NO. 10357 A RESOLUTION APPROVING AN AGREEMENT BETWEEN THE CITY OF PUEBLO AND THE RECEIVABLE MANAGEMENT SERVICES CORPORATION RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE THE AGREEMENT, APPROVING A SUBLEASE BETWEEN BENESIGHT, INC. AND THE RECEIVABLE MANAGEMENT SERVICES CORPORATION, AND AUTHORIZING EXPENDITURES TO BE MADE FROM THE LEASE PROCEEDS FUND HELD UNDER ESCROW AGREEMENT DATED JULY 30, 1999 WITH RESPECT TO THE SUBLEASE WHEREAS, Pueblo Economic Development Corporation ( "PEDCO ") has presented to City Council a proposed job creating capital improvement project ( "Project') whereby The Receivable Management Services Corporation will locate its business in the building located at 317 N. Main Street, Pueblo, Colorado under sublease with Benesight, Inc. who leases the building from PEDCO Foundation, Inc. ( "Sublease "); and WHEREAS, The Receivable Management Services Corporation has committed to employ 325 full -time employee equivalents on a staggered basis during the 90 -month initial term of the Sublease: and WHEREAS, the Project and financial details thereof, including the Sublease and Agreement terms, provisions and rent, were negotiated and approved by PEDCO, and WHEREAS, PEDCO has recommended to the City Council that the City Council approve the Project, Sublease, Agreement and financial details relating thereto. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1 The City Council finds and determines that the job creating capital improvement project with The Receivable Management Services Corporation described herein and in the Agreement between the City and The Receivable Management Services Corporation and Sublease meets and complies with the criteria and standards established by Ordinance No. 6381 ( "Ordinance') and will create employment opportunities justifying the expenditure of public funds. The City Council further finds and determines that the repayment obligation of The Receivable Management Services Corporation to the extent it is based upon the number of full -time employee equivalents instead of the number of full -time employees, under all attendant circumstances, including maintaining occupancy levels in the building subject to the Sublease, constitutes a justifiable variance to the Ordinance standards and criteria and does not create or establish any precedent with respect to full -time employee commitments and repayment obligations for other job creating capital improvement projects based thereon. SECTION 2 The Agreement dated as of March 28, 2005 between the City of Pueblo and The Receivable Management Services Corporation, a copy of which is attached hereto, having been approved as to form by the City Attorney, is hereby approved. The President of the City Council is authorized to execute and deliver the Agreement in the name of the City and the City Clerk is directed to affix the seal of the City thereto and attest same. SECTION 3 The Sublease between Benesight, Inc. and The Receivable Management Services Corporation is hereby approved substantially in the form and content presented to the City Council at this meeting, with such changes thereto as the President of the City Council and City Attorney shall deem to be in the best interest of the City. A copy of the executed Sublease and attachments shall be kept in the office of the City Clerk with this Resolution. SECTION 4 Lease Proceeds Funds held under Escrow Agreement dated July 30, 1999 in the amount of $54,500 for remodeling costs and $137,525 for commissions payable with respect to the Sublease, together with other reasonable and necessary costs, expenses and fees incurred by PEDCO Foundation with respect to this Project and Sublease are hereby approved and authorized to be disbursed and expended by the Director of Finance. SECTION 5 This Resolution shall become effective upon final approval and passage. INTRODUCED March 28, 2005 BY Dr. Bill Sova Councilperson APPROVED: PRES1DENT 9F CITY CPWCIL ATTESTED BY: CITY CLERK ED 0 0 Background Paper for Proposed RESOLUTION AGENDA ITEM # a DATE: March 28, 2005 DEPARTMENT: Law Department TITLE A RESOLUTION APPROVING AN AGREEMENT BETWEEN THE CITY OF PUEBLO AND THE RECEIVABLE MANAGEMENT SERVICES CORPORATION RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE THE AGREEMENT, APPROVING A SUBLEASE BETWEEN BENESIGHT, INC. AND THE RECEIVABLE MANAGEMENT SERVICES CORPORATION, ANDAUTHOR- IZING EXPENDITURES TO BE MADE FROM THE LEASE PROCEEDS FUND HELD UNDER ESCROW AGREEMENT DATED JULY 30, 1999 WITH RESPECT TO THE SUBLEASE ISSUE Should the City Council approve the job creating capital improvement project with respect to The Receivable Management Services Corporation and related Agree- ment and sublease? RECOMMENDATION None. BACKGROUND The Receivable Management Services Corporation ( "Company ") intends to locate its call center business and related activities in the building located at 317 N. Main Street, Pueblo, Colorado, under sublease with Benesight, Inc. who leases the building from PEDCO Foundation, Inc. Company has committed to employ 325 full - time employee equivalents (FTE) on a staggered basis during the 90 -month initial term of the sublease. Of the FTEs, 70% or more must be full -time employees who actually perform work in the building for not less than 32 hours per week. If Company does not meet its employment commitment, Company will pay to the City as additional rent of $377.52 per year for each annual FTE and /or full -time employee less then committed, whichever is greater. Company shall pay rent equal to $0.69 per square foot per month or $8.28 per square foot per year. Rent is inclusive of all taxes, insurance, utilities and common area expenses applicable to the 27,505 square foot being leased by Company under the sublease. Except for the interior of the subleased premises, Company will have no responsibilities with respect to the building. Benesight will be responsible for the building and will provide all services for the building and subleased space. If Benesight does not renew or extend its lease with PEDCO Foundation after its expiration on July 31, 2006, PEDCO Foundation becomes responsible for Benesight's obligation under the sublease. If the City forecloses its deed of trust securing PEDCO Foundation's obligations to the City, the City may become responsible for Benesight's obligations under the sublease. Company may terminate the sublease on numerous grounds, including failure of PEDCO Foundation to timely complete tenant improvements and maintain the emergency power generation facilities, and if the call center employee population of the Pueblo MSA exceeds 3% of the total available work force in the Pueblo MSA as a result of PEDCO's recruitment or promotion of new or expanded call centers. The sublease may be cancelled by Company at the end of the first 60 months of the initial 90-month term. Company may extend the sublease forth ree additional 3-year terms upon the same conditions except rent shall be adjusted based upon the increase in actual operating costs for the building, on a pro rata basis. If additional space becomes available in the building, Company has the right of first refusal to rent the additional space upon the same conditions. PEDCO Foundation is obligated under the sublease to pay (a) remodeling costs estimated at $54,500, and (b) commission of $137,525 to Trammell Crow Brokerage Services, Ltd. These sums are to be paid out of the Lease Proceeds Fund held under Escrow Agreement dated July 30,1999. This job creating capital improvement project and financial details as well as the Agreement and sublease terms and provisions were negotiated and approved by PEDCO. PEDCO recommends that the City Council approve this transaction, the sublease and all related documents. FINANCIAL IMPACT See Background. -2- AGREEMENT THIS AGREEMENT entered into as of / AV 1-6 ,21 , 2005 between Pueblo, a municipal corporation (the "City") and The Receivable Management Services Corporation (the "Company "). WHEREAS, Company has expressed a willingness to locate its business and sublease space within the Building owned by the PEDCO Foundation (the Foundation) at 0 and Main Streets, Pueblo, CO, and in furtherance thereof has requested of the Foundation certain considerations with regard to the terms of the Sublease which would be acceptable to the Foundation, and WHEREAS, approval of the City of the Sublease is a necessary condition of the Sublease being approved by the Foundation, and WHEREAS, the City has approved such application for Sublease subject to and upon the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the foregoing and mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, City and Company agree as follows: 1. The following terms as used in this Agreement shall have the following meaning unless the context clearly indicates otherwise: "Facility" means the approximately 26,000 square feet within the Building (the Premises) wherein Company will conduct its business operations. "Full -Time Employee" means a person who actually performs work at the Facility for not less than thirty-two (32) hours per week, whether employed by Company or by an outside entity acting as an agency to provide Full -Time Employees for Company. The term "Full -Time Employee" does not include independent contractors nor employees of independent contractors except (a) employees of an independent contractor acting as an agency to provide Full -Time Employees for Company to perform work at the Facility and (b) subcontractors working on the Company's behalf and under the Company's supervision at the Facility. "Full -Time Equivalent" or "FTE" means thirty-two (32) payroll hours of work per week at the Facility, whether by employees of the Company or an outside entity acting as an agency to provide Full -Time Equivalents for Company. The term "Full -Time Equivalent" does not include independent contractors nor employees of independent contractors except (a) employees of an independent contractor acting as an agency to provide Full -Time Equivalents for Company to perform work at the Facility and (b) subcontractors working on the Company's behalf and under the Company's supervision at the Facility. "Lease" means the lease agreement dated June 28, 1999 between the Foundation, as lessor, and The TPA (n/k/a Benesight) as lessee. "Sublease" means the Sublease entered into between Benesight as Sublessor and the Company as Sublessee. "Building" means the Benesight Building, street address: 317 N. Main Street, Pueblo, Colorado, 81003. "Quarter" means three consecutive calendar months commencing January 1, April 1, July 1 and October 1 of each calendar year. "Quarterly Employees" means the sum of the aggregate number of Full -Time Equivalents during each week of a Quarter (based on total payroll hours of the Company during such Quarter), divided by the sum of the weeks in such Quarter. 2 (a). Company acknowledges and agrees that the primary purpose of City approving the Sublease and entering into this Agreement and the sole benefit to the City for approving the Sublease for the Company hereunder is the creation of jobs. Therefore, Company represents, covenants, and agrees that it will after Commencement Date of the Sublease conduct its business operations and employ Full -Time Equivalents at the Facility as follows: (i) during the period from Commencement Date of the Sublease to the last day of the 12` complete calendar month following the Commencement Date of the Sublease, Company shall use its best efforts in good faith to employ as many Full -Time Equivalents as reasonably justified by its business operations; and (ii) from the first day of the 13 complete calendar month following the Commencement Date of the Sublease through the last day of the 24 complete calendar month following the Commencement Date of the Sublease, Company shall employ not less than 100 Full -Time Equivalents; and (iii) from the first day of the 25 complete calendar month following the Commencement Date of the Sublease through the last day of the 36 complete calendar month following the Commencement Date of the Sublease, Company shall employ not less than 200 Full -Time Equivalents; and (iv) from the first day of the 37 complete calendar month following the Commencement Date of the Sublease through the balance of the initial term of the Sublease, Company shall employ not less than 325 Full -Time Equivalents (collectively, the "Employment Commitment "). (b) Of the Full -Time Equivalents Required by Section 2 (a), above, seventy percent (70 %) or more shall be from Full -Time Employees. 3. Notwithstanding anything contained in this Agreement to the contrary, if Company shall for any reason default in its Employment Commitment set forth in Paragraph 2, Company shall pay to City additional rent based upon the number of Full -Time Equivalents (FTEs) employed by Company at the Facility (the "Additional Rent Obligation "), as follows: (a) Annual Reports and Additional Rent Beginning on the 15` day of the 25 complete calendar month following the Commencement Date of the Sublease, and continuing on the fifteenth (15` day of every twelfth month thereafter during the initial term of the Sublease, the Company will submit to the City statements showing Actual FTEs and Full -Time Employees for the preceding twelve (12) month period. If Actual FTEs and Full -Time Employees for the applicable twelve month period equals or exceeds the Full Time Equivalents and Full -Time Employees required for the applicable period, no Additional Rent shall be due or payable by the Company for such period. If Actual FTEs or the Full -Time Employees for the applicable period do not equal or exceed the Full Time Equivalents or the Full -Time Employees required for the applicable period, then the Company shall owe Additional Rent for such twelve month period, which shall be remitted to the City, together with the Company's statement for the applicable period in an amount equal to the product of (x) $31.46 multiplied by (y) twelve (i.e. the number of months in the applicable period) multiplied by (z) the difference between the Full Time Equivalents and /or Full -Time Employees required for the applicable period and the Actual FTEs and Full -Time Employees for such period. As an illustration of the application of this provision, with respect to FTEs, during the period referenced in Section 2(a)(ii), above, the Company agrees to employ not less than 100 FTEs. 100 FTEs at 32 hours per week for 52 weeks totals 166,400 hours. A single FTE at 32 hours per week for 52 weeks would equal 1664 hours. If during the period referenced in Section 2(a)(ii) , above, the total hours as measured pursuant to this Section 3(a) equaled 140,000 hours there would be a deficiency of 26,400 hours which would equal 15.86 FTEs ( 166,400- 140,000 = 26,400; 26,400= 1664 = 15.86). 15.86 FTEs x $31.46x12= $5989.50. The amount of $5989.50 would be due from the Company to the City. By way of illustration, with respect to the Full -Time Employees, during the period referenced in Section 2(a)(ii), above, Seventy percent of 100 FTEs equals 70 Full -Time Employees, required by the provisions of Section 2(b). If during the referenced period the Company, pursuant to this Section 3(a), reported 65 Full -Time Employees there would be due to the City 70- 65= 5431.46x12=$1887.60. Full - Time Employees, for the purpose of this Section 3(a) will be determined as an average for the four Quarters of the Full -Time Employees reported to the City, as provided in Section 3(c), below. In the event Company should fail to attain both the FTEs and the Full -Time Employee commitments for the same applicable period the amount to be paid shall be the greater of the amount determined due for the FTEs or Full -Time Employees. (b) Company's Additional Rent Payments, if any, shall be paid to the City without notice, demand, deduction or setoff at the office of the Director of Finance of City, 1 City Hall Place, Pueblo, Colorado, 81003, or such other person or location as the City may designate. All past due Company's Additional Rent Payments shall bear interest at the rate of ten (10) percent per annum until paid. (c) Within fifteen (15) days after the end of each Quarter after the first anniversary of the Commencement Date of the Sublease , Company will submit to City's Director of Finance Company's statements showing the Quarterly Employees and Full -Time Employees for that Quarter and their salaries for the preceding Quarter and the basis upon which Quarterly Employees and Full -Time Employees for the Quarter were computed certified by an officer of the Company to be true and correct. For purposes of verifying such employment, City shall have access to Company's records relating to Company's employees employed at the Facility. City shall treat such information as confidential and shall not disclose (except pursuant to a subpoena or court order) such information to any party other than those City employees who have a need to know such information. The City will respect and comply with applicable laws and the right of employees and the Company as to confidentiality and handling of such personnel records. 4. If not paid if, as and when due hereunder, the potential Additional Rent Obligation contained in Paragraph 3 shall be deemed to be a debt of Company payable to City until Company performs and discharges its obligations hereunder. 5. (a) The parties understand that the Company's ability to employ Full Time Equivalents at the Facility may be subject to factors and conditions outside of the control of Company. Prior to instituting any proceeding to enforce Company's potential Additional Rent Obligation under Paragraph 3, City shall notify Company in writing of its intention to institute such proceedings. Company may request relief from its potential Additional Rent Obligation by delivering to City within twenty (20) days after date of City's notice, Company's written request for relief specifying the grounds upon which such relief is sought together with documents supporting said grounds. Within ninety (90) days after receipt of Company's request, City will schedule a meeting with the City Council at which Company may appear. City will notify Company of the time and place of the meeting. Failure of Company to timely deliver its complete written request for relief or to appear at the scheduled meeting with the City Council shall entitle City to immediately institute proceedings to enforce Company's Additional Rent Obligation, if any. Without limiting the foregoing, in the event that, notwithstanding the Company's diligent efforts to meet its commitment of Full Time Equivalents at the Facility, the Company is at any time unable to meet the foregoing commitment due to factors outside of its control (including but not limited to the Company's loss of business relationships serviced from the Facility or the Company's inability to hire and retain quality associates at a wage rate comparable to that paid by the Company at its Tucson, Arizona and Lehigh Valley, Pennsylvania facilities), City and City Counsel, upon written request of the Company, will meet to discuss in good faith whether the requirements with regard to the number of Full Time Equivalents and/or percentage of Full Time Employees required should be modified or extended. (b) City Council may or may not, in its reasonable discretion, relieve Company, in whole or in part, from Company's potential Additional Rent Obligation. Any action taken by the City Council relating to a request for relief shall be final and binding on Company, and not subject to judicial review. Any such action by City Council is, and shall constitute, a legislative measure. Nothing contained in this Paragraph 5 shall grant or be construed to grant to Company any right or claim to relief from its potential Additional Rent Obligation or hearing with respect thereto. (c) No delay by the City in scheduling a meeting, or failure by City to exercise its right to enforce this Agreement, including Company's potential Additional Rent Obligation, and no partial or single exercise of that right, shall constitute a waiver of that right. 6. In the event of any litigation arising under this Agreement, the court shall award to, and the prevailing party shall recover its costs together with all internal and out -of- pocket expenses of any kind relating to the litigation including, but not limited to, reasonable attorney fees. Venue for any such litigation shall be Pueblo County, Colorado. All such litigation shall be filed in the District Court, County of Pueblo, State of Colorado and each party submits to the jurisdiction of such District Court. To the extent allowed by law, each party waives its right to a jury trial. 7. This Agreement expresses the entire understanding of the parties and supersedes and abrogates any and all prior dealings and commitments, whether oral or written, with respect to the subject matter of this Agreement and may not be amended or modified except in writing signed by City and Company. Any waiver of any provision of this Agreement must be in writing and signed by the party whose rights are being waived. No waiver of any breach of any provision hereof shall be or be deemed to be a waiver of any preceding or subsequent breach of the same or any other provision of this Agreement. The failure of either party to enforce or seek enforcement of the terms of this Agreement following any breach shall not be construed as a waiver of such breach. 8. This Agreement shall be construed in accordance with and be governed by the laws of the State of Colorado without regard to conflict of law principles. 9. Any notices hereunder shall be sufficiently given if given in writing personally or mailed by first class, registered, or certified mail, postage prepaid, addressed: (a) if to City, City Manager, City of Pueblo, 1 City Hall Place, Pueblo, Colorado, 81003, with copy to Thomas E. Jagger, City Attorney, 127 Thatcher Building, 503 N. Main Street, Pueblo, Colorado, 81003, or (b) if to the Company, 899 Eaton Ave., Bethlehem, Pennsylvania, 18025, Attention: Real Estate Department or to such other person or address as either party shall specify in written notice given to the other party pursuant to the provisions of this Paragraph 9. 10. Time is of the essence hereof. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, provided Company may not assign this Agreement or any interest herein without the express written consent of the City, which consent may be arbitrarily withheld, conditioned or delayed. Any assignment or attempted assignment of this Agreement by Company without such consent shall be null and void. II. The persons signing this Agreement in the name of and on behalf of Company represent and warrant that they and Company have the requisite power and authority to enter into, execute, and deliver this Agreement, and that this Agreement is a valid and legally binding obligation of Company enforceable against Company in accordance with its terms. 12. Company represents and warrants that no person, entity, or organization has been employed or retained or will receive or be paid, directly or indirectly, any commission, percentage, contingent fee or any other remuneration payment or receipt of which is contingent upon approval of this Agreement. For breach or violation of this warranty, City shall have the right to terminate this Agreement, or recover the full amount of such commission, percentage, contingent fee or other remuneration, or to seek such other remedies legally available to City, which remedies shall be cumulative. 13. hi no event shall City, its officers, agents or employees be liable to Company for damages, including without limitation, compensatory, punitive, indirect, special or consequential damages, resulting from or arising out of or related to this Agreement or the performance or breach thereof by City or the failure or delay of City in the performance of any covenant or provision under this Agreement on its part to be performed. In consideration of City entering into this Agreement, Company hereby waives and discharges City, its officers, agents and employees from all claims for any and all such damages. No breach, default, delay or failure of City under this Agreement shall be or be construed to be a waiver, discharge or release of Company's potential Additional Rent Obligation under Paragraph 3 hereof. 14. If any provision of this Agreement is declared by a court of competent jurisdiction to be invalid or unenforceable, such determination shall not affect the other provisions of this Agreement which shall remain in full force and effect. 15. Neither party shall be, or hold itself out as, agent of the other or as joint ventures under this Agreement. 16. Each party acknowledges that this Agreement was fully negotiated by the parties and, therefore, no provision of this Agreement shall be interpreted against any party because such party or its legal representative drafted such provision. 17. The provisions of this Agreement are for the exclusive benefit of the parties hereto and their successors and permitted assigns, and no third party shall be a beneficiary, or have any rights by virtue of, this Agreement. 18. This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed for all purposes to be an original, and all such counterparts shall together constitute but one and the same original. 19. If for any reason the City acquires the interest of the Foundation or Benesight in and to the Building or the Premises, then the City agrees to recognize the validity and continuance of the Sublease, and so long as the Company is not in default (beyond any period given the Company thereunder to cure such default) in the payment of rent or in the performance of any of the material terms, covenants or conditions of the Sublease or this Agreement, on the Company's part to be performed, the Company's possession of the Premises and rights and privileges under the Sublease shall not be disturbed or diminished or interfered with by the City or anyone claiming by, through or under the City. The Company shall not be named in any foreclosure or similar. proceedings unless required by applicable law in order to prosecute such foreclosure. Executed at Pueblo, Colorado, the day and year first above written. [SEAL] Pue lo, a Munici C Attest: By ' City erk President of the 16ity Coun [SEA4] Attest: , Name: Title: Secretary STATE OF COLORADO ) COUNTY OF PUEBLO ) SS. The Receiva le M agem ervices Corp. B lZ� Name: Title: President The foregoing instrument was acknowledged before me this 3 c f k da of (Yl cirr {, , 2005 by PAerr- 5, A , Ho'ni as President of the City Council and Gina Dutcher as City Clerk of Pueblo, a municipal corporation. Witness my hand and official seal. My commission expires: 3 - 7 - aee' [SEAL] t�y Pub Tic STATE OF ss. COUNTY OF 6 The foregoing instrument was acknowledged before me this Sf day of r 2005 by t)pyi �,mlJu a b� President and C-in mns R lob as secretary of The Receivable Management Services Corp. Witness my hand and official seal. My commission expires: 10 OR . [SEAL] �1u 1} -t�lll rn� Notary Public Npfary A� ?4 Commtsslon EVI 10 / 3 /