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
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Background Paper For Proposed
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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
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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
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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
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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.
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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 _
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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