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HomeMy WebLinkAbout10757RESOLUTION NO. 10757 A RESOLUTION APPROVING AN AGREEMENT BETWEEN THE CITY OF PUEBLO AND STEEL, INC. DOING BUSI -NESS AS TIMBERLINE STEEL, INC. RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME AND AUTHORIZING THE TRANSFER OF $350,000.00 FROM THE 1992 -2006 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECT FUND THEREFOR WHEREAS, Pueblo Economic Development Corporation ( "PEDCO ") has presented to City Council a proposed job creating capital improvement project whereby Steel, Inc. doing business as Timberline Steel, Inc. will expand its facilities at the Pueblo Memorial Airport Industrial Park and employ an additional 35 full -time employees during a seven year period starting January 1, 2009 ( "Project "); and WHEREAS, the Project and financial details thereof, were negotiated and approved by PEDCO, and WHEREAS, PEDCO has recommended to the City Council that the City Council approve the Project, Agreement and financial details relating thereto, and WHEREAS, based upon PEDCO's recommendation and representations made to the City by representatives of PEDCO with respect to the Project, City Council is willing to approve the Project, 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 Steel, Inc. doing business as Timberline Steel, Inc. described herein and in the attached Agreement 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. SECTION 2 The Agreement dated as of June 12, 2006 between the City of Pueblo and Steel, Inc. doing business as Timberline Steel, Inc., 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 and all related required documents in the name of the City and the City Clerk is directed to affix the seal of the City to the Agreement and attest same. SECTION 3 Funds in an amount of $350,000.00 are hereby authorized to be transferred, expended and made available to Steel, Inc. doing business as Timberline Steel, Inc. out of the 1992 -2006 Sales and Use Tax Capital Improvement Projects Fund for the sole purpose of the job creating capital improvement project and in the manner described in the attached Agreement. The funds hereby authorized to be transferred and expended shall be released and paid by the Director of Finance to or for the benefit of Steel, Inc. doing business as Timberline Steel, Inc. after receipt (i) by the City Clerk of the documents required to be filed pursuant to paragraph 2(b) of the Agreement and (ii) by the Director of Finance of written requests for payment required by paragraph 2(c) of the Agreement. SECTION 4 The officers of the City are directed and authorized to perform any and all acts consistent with the intent of this Resolution and attached Agreement to effectuate the transactions described therein. SECTION 5 This Resolution shall become effective upon final approval and passage. BY Ray Aquilera Councilperson APPROVED: President of City Council ATTESTED BY: CITY CLERK INTRODUCED June 12, 2006 FID �o D 0 IRIEW Background Paper For Proposed h ze. -A iols7 RESOLUTION DATE: June 12, 2006 AGENDA ITEM # 25 DEPARTMENT: Law Department TITLE A RESOLUTION APPROVING AN AGREEMENT BETWEEN THE CITY OF PUEBLO AND STEEL, INC. DOING BUSINESS AS TIMBERLINE STEEL, INC. RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME AND AUTHORIZING THE TRANSFER OF $350,000.00 FROM THE 1992 -2006 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECT FUND THEREFOR ISSUE Should City Council approve the job creating capital improvement project with Steel, Inc. dba Timberline Steel, Inc.? PEDCO recommends that the City Council approve the project. BACKGROUND Steel, Inc. dba Timberline Steel, Inc. ( "Company") currently conducts its steel fabrication business at the Pueblo Memorial Airport Industrial park. Company is expanding its facilities and has committed to employ an additional 35 full -time employees having an average salary of $28,500 plus benefits during a seven year period starting January 1, 2009. City will make available to Company $350,000 out of the one -half cent sales tax revenue to purchase equipment for the expansion. Company has an executed employment commitment agreement with the City requiring it to employ 50 full -time employees during the period starting January 1, 2002 and ending January 1, 2009. City advanced $155,000 for the employment commitment. Company currently employs 25 employees and has met its repayment obligation under the existing agreement. Company will continue to employ 25 employees under its existing agreement and will buy -out its obligation for the other 25 employees for $27,680.00. Company will thereafter employ 60 full -time employees at its airport facility. If Company defaults in its commitment to employ an additional 35 employees, Company will repay City funds based upon the number of employees actually employed less than the 35 additional employees. FINANCIAL IMPACT: See Background AGREEMENT THIS AGREEMENT entered into as of June 12, 2006 between Pueblo, a municipal corporation (the "City ") and Steel, Inc., a Colorado corporation doing business as Timberline Steel, Inc., a Colorado corporation (the "Company "). WHEREAS, Company is the successor in interest to McCalllin Diversified Industries, Inc., doing business as Timberline Industries, Inc., and WHEREAS, Company has expressed a willingness to expand its business within the Pueblo Memorial Airport Industrial Park, and in furtherance thereof has through the Pueblo Economic Development Corporation ( "PEDCO ") made application for funds with the City, and WHEREAS, PEDCO has recommended to the City Council that the City Council approve the application, and WHEREAS, the City, based upon PEDCO's recommendation, has approved such application and will make funds available to Company 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: "Employment Commitment Date" means January 1, 2009. "Equipment" means new business personal property described in the attached Exhibit "A" to be, kept, maintained and used by Company after date of this Agreement in the Facility. "Facility" means the buildings located on the Property 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 employees of an independent contractor acting as an agency to provide Full -Time Employees for Company to perform work at the Facility. "Property" means Lots 54 and 55, Pueblo Memorial Airport Industrial Park Subdivision, Pueblo County, Colorado, including the Facility and other improvements located thereon, street address: 319 Lockheed, Pueblo, Colorado, 81001. "Quarter" means three consecutive calendar months commencing January 1, April 1, July I and October I of each calendar year. "Quarterly Employees" means the sum of the aggregate number of Full -Time Employees on each business day of a Quarter, divided by the sum of the business days in such Quarter. 2. City will advance to or for the benefit of Company funds in an amount not to exceed $350,000.00 (the "City Funds "), subject to and contingent upon the following conditions and covenants which Company agrees to perform and comply with: (a) City Funds will be advanced by City solely for the acquisition of Equipment by Company at fair market value from a reputable vendor in an arms - length transaction. Acquisition of equipment from any person or entity related to or a subsidiary of Company is not an arms - length transaction, except for purchase and installation of a conveyor system from McCallin Steel Storage Systems, Inc. (b) Company shall file in the office of the City Clerk copies of the following: (i) Company's certificate or other evidence of authority to transact business in the State of Colorado issued by the Colorado Secretary of State, (ii) certified copy of the resolution of the governing board of Company approving this Agreement and authorizing its officers to execute and deliver this Agreement and related documents in the name of Company, and (iii) evidence reasonably satisfactory to City that Company will commence business operations at the Facility. The date of the last to occur of the filings required under (i), (ii) and (iii) of this paragraph 2(c) shall be referred to herein as "Closing." If Closing does not occur on or before August 1, 2006, or such later date as Company and City shall mutually agree, City, at its sole option, may terminate this Agreement and City and Company shall thereafter be released and discharged from all obligations hereunder. (c) As a condition precedent to the disbursement of the $350,000.00 of City Funds for the acquisition of Equipment, Company shall file with City's Director of Finance written request for payment certified to be true and correct by an officer of Company that the amounts included in the request for payment have not been included in any prior request for payment and are for the actual cost of Equipment, identifying the Equipment for which payment is sought, including invoices therefor and certificates of delivery and installation in the Facility. All City Funds, if any, received by Company to purchase Equipment (but not in reimbursement for Equipment purchased by Company and actually installed in the Facility) shall be deposited in a separate account and held in trust by Company for the sole and only purpose of paying for the purchase of Equipment. 3. Company acknowledges and agrees that the primary purpose of City in entering into this Agreement and the sole benefit to the City for making City Funds available to Company hereunder is the creation of jobs. Therefore, Company represents, covenants, and agrees that it will after date of this Agreement continuously conduct its business operations and employ Full -Time -2- Employees at the Facility as follows: (i) during the period from date hereof to the Employment Commitment Date, Company shall employ not less than twenty -five (25) Full -Time Employees at the Facility, and (ii) on and after the Employment Commitment Date, Company shall employ not less than thirty -five (3 5) additional Full -Time Employees (a total of sixty (60) Full -Time Employees) at the Facility having an average salary of over $28,500.00 per year excluding benefits (collectively the "Employment Commitment "). For purposes hereof "annual salary" means regular salary plus overtime (excluding benefits) computed on an annualized basis. 4. Notwithstanding anything contained in this Agreement to the contrary, if Company shall for any reason default in its Employment Commitment set forth in paragraph 3, Company shall repay to City a pro -rata share of the City Funds advanced by City under paragraph 2 hereof based upon the number of Full -Time Employees employed by Company at the Facility (the "Company's Repayment Obligation "), as follows: (a) During the period from date hereof to the Employment Commitment Date ( "First Repayment Period ") Company shall pay to City an amount each Quarter equal to the Quarterly Employees less than twenty -five (25) Full -Time Employees employed at the Facility by Company multiplied by $110.72 (the "Company's Quarterly Payments "); and, (b) During the seven (7) year period starting on the Employment Commitment Date and ending eighty -four (84) months thereafter (the "Second Repayment Period ") Company shall pay to City an amount each Quarter equal to the Quarterly Employees less than sixty (60) Full -Time Employees having an average salary of over $28,500.00 per year excluding benefits employed at the Facility by Company multiplied by $357.15 ( "Company's Quarterly Payments "). Notwithstanding the foregoing, the maximum number of Full -Time employees upon which Company's Quarterly Payments during the Second Repayment Period are computed shall not exceed thirty -five (35) Full - time Employees having an average annual salary of over $28,500.00, excluding benefits. For example, if for the Second Quarter of the second year after the Employment Commitment Date such Quarterly Employees is twenty (20), the amount payable by Company to City on or before the fifteenth (15') date of the next calendar month would be (60 -20, but not to exceed 35) x $357.15 = $12,500.25. (c) Company's Quarterly Payments, if any, shall be paid to the City without notice, demand, deduction or setoff on or before the fifteenth (15th) day of the month after the end of each Quarter after date hereof and for one month after the Second Repayment Period 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 Quarterly Payments shall bear interest at the rate of ten (10) percent per annum until paid. (d) Within fifteen (15) days after the end of each Quarter after date hereof and for one calendar month after the Second Repayment Period, Company will submit to City's Director of Finance Company's statements showing the Quarterly Employees and their average salary for the preceding Quarter and the basis upon which Quarterly Employees and Company's Quarterly Payment, if any, were computed certified by an officer of the Company to be true and correct. For purposes of verifying Company's employment, City shall have access to Company's records relating -3- to Company's employees employed at the Facility. Except in the event of any action filed by City to enforce this Agreement, City shall treat Company's records 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. (e) Notwithstanding anything contained in this Paragraph 4 to the contrary, if Company defaults in its Repayment Obligation, and such default is not cured within sixty (60) days after written notice specifying the default is given by City to Company, then in such event, City may declare the entire balance of Company's Repayment Obligation due and owing together with interest thereon from the date of default at the rate of ten (10) percent per annum. Company's Repayment Obligation is absolute and unconditional and shall not be abated, reduced, diminished, modified, withheld or otherwise offset for any cause or reason whatsoever. 5. All City Funds advanced to Company by City under this Agreement shall be deemed to be a debt of Company payable to City until Company performs and discharges its obligations hereunder including its Employment Commitment contained in Paragraph 3 and its Repayment Obligation contained in Paragraph 4. Company's obligations under this Agreement including its Employment Commitment and Repayment Obligation shall be secured by a perfected first security interest in the Equipment. Contemporaneously with the execution of this Agreement, Company shall execute and deliver to City Company's Security Agreement, Financing Statement and other documents required to perfect a first security interest in the Equipment all in form and content approved by City's Attorney (the "Security Agreement "). 6. (a) Prior to instituting any proceeding to enforce Company's Repayment Obligation under Paragraph 4, City shall notify Company in writing of its intention to institute such proceedings. Company may request relief from its Repayment 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 Repayment Obligation. (b) City Council may or may not, in its sole and absolute discretion, relieve Company, in whole or in part, from Company's Repayment 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 6 shall grant or be construed to grant to Company any right or claim to relief from its Repayment 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 Repayment Obligation, and no partial or 13 single exercise of that right, shall constitute a waiver of that right. 7. In the event of any litigation arising under this Agreement, the court shall award to the prevailing party its costs and 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. 8. 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. 9. 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. 10. 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, 503 N. Main Street, Suite 127, Pueblo, Colorado, 81003, or (b) if to the Company, President, Timberline Steel, Inc., 6300 Clermont Street, Commerce City, Colorado 80022, 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 10. 11. 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. 12. 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 legally binding obligation of Company enforceable against Company in accordance with its terms. -5- 13. 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 or City's advancement of City Funds to Company hereunder. 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, and/or to seek such other remedies legally available to City, which remedies shall be cumulative. 14. In 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 Repayment Obligation under paragraph 4 hereof with respect to the amount of City Funds actually advanced or paid by City to or for the benefit of Company pursuant to paragraph 2 hereof. 15. 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. 16. Neither party shall be, or hold itself out as, agent of the other or as joint ventures under this Agreement. 17. 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. 18. 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. 19. 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. 20. Company's Employment Commitment and Repayment Obligation based on fifty (50) Full -Time Employees under the Agreement between City and Company's successor in interest, McCallin Diversified Industries, Inc. doing business as Timberline Industries, Inc., dated as of September 25, 2000 ( "Prior Agreement ") shall be amended and reduced to twenty -five (25) Full- r8l Time Employees effective July 1, 2006 upon Company paying to the City (a) the sum of $27,680.00, and (b) Company's Quarterly Payment due under the Prior Agreement for the Quarter ending June 30, 2006,. The Prior Agreement as amended by this paragraph 20 shall remain in full force and effect. Executed at Pueblo, Colorado, the day and year first above written. [SEAL] Attest: City Cl Pueblos Municipal Corporation / By President of the City Council [SEAL] Name: Title: [SEAL] STEEL, INC., a Colorado Corporation B � � 1� 1466 �-L tL,f Name: A� tN6aP (',." Title: �3" r— f�&,A,U _ -7- Exhibit A Equipment ProservAnchor Crane Group ID or Serial Number Estimated Value $ 211,346.00 OS Walker -- magnet bar Wheelabrator 3113 46,841.00 328,276.00 ESAB Welding Burning Machine 0560939326 $ 159,056.00 Total $ 745,519.00