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RESOLUTION NO. 12018
A RESOLUTION APPROVING THE AGREEMENT
BETWEEN PUEBLO, A MUNICIPAL CORPORATION, AND
SOLAR ROAST COFFEE, LLC RELATING TO A JOB
CREATING CAPITAL IMPROVEMENT PROJECT,
AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL
TO EXECUTE SAME, AND TRANSFERRING $100,000
FROM THE 1992-2011 SALES AND USE TAX CAPITAL
IMPROVEMENT PROJECTS FUND THEREFOR
BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that:
SECTION 1.
The City Council finds and determines that the expenditure of $100,000 for the
job creating capital improvement project with Solar Roast Coffee, LLC described in the
attached Agreement, meets and complies with the criteria and standards established by
Ordinance No. 6381 and will create employment opportunities justifying the expenditure
of public funds.
SECTION 2.
The Agreement dated as of November 8, 2010 between the City of Pueblo and
Solar Roast Coffee, LLC relating to a job creating capital improvement project, 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.
Funds in an amount of $100,000 are hereby authorized to be transferred,
expended and made available to Solar Roast Coffee, LLC out of the 1992-2011 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 Agreement. The funds
hereby authorized to be transferred and expended shall be held by the City and
released, disbursed and paid by the Director of Finance to or for the benefit of Solar
Roast Coffee, LLC upon compliance with section 2(b) of the Agreement and after
receipt by the Director of written requests for payment in compliance with 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.
INTRODUCED: November 8, 2010
BY: Chris Kaufman
COUNCILPERSON
Background Paper for Proposed
RESOLUTION
DATE:AGENDA ITEM # Q-3
November 8, 2010
DEPARTMENT:
Law Department
Thomas J. Florczak, City Attorney
TITLE
A RESOLUTION APPROVING THE AGREEMENT BETWEEN PUEBLO, A
MUNICIPAL CORPORATION, AND SOLAR ROAST COFFEE, LLC RELATING TO A
JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE
PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME, AND TRANSFERRING
$100,000 FROM THE 1992-2011 SALES AND USE TAX CAPITAL IMPROVEMENT
PROJECTS FUND THEREFOR
ISSUE
Should City Council approve the Agreement between the City and Solar Roast Coffee,
LLC?
RECOMMENDATION
PEDCO recommends that City Council approve the Agreement.
BACKGROUND
Solar Roast Coffee, LLC, an Oregon limited liability company (“Company”), intends to
locate a wholesale coffee roasting and shipping facility within the City of Pueblo. The
Agreement authorizes the expenditure of $100,000 from the 1992-2011 Sales and Use
Tax Capital Improvement Projects Fund (“Funds”) as an employment incentive for 10
full-time employees whose annual compensation shall average at least $33,200. Funds
will be used for the purchase of equipment. If Company defaults in its employment
commitment, Company will repay the Funds on a pro-rata basis. The employment
commitment date is November 1, 2013 and the repayment period is 7-years after the
employment commitment date. Company’s repayment obligation will be secured by a
first security interest in equipment. The Company’s performance will also be personally
guaranteed by the principal owners of the Company.
FINANCIAL IMPACT
See Background.
■
Final 10/28/2010
AGREEMENT
THIS AGREEMENT ( "Agreement ") is entered into as of November 8, 2010 between
Pueblo, a municipal corporation (the "City ") and Solar Roast Coffee LLC, an Oregon limited
liability company (the "Company ")
WHEREAS, Company has expressed a willingness to expand its coffee roasting and
manufacturing facility currently located within downtown Pueblo, Colorado, and in furtherance
thereof has, through the Pueblo Economic Development Corporation, made application for funds
and other economic incentives with the City, and
WHEREAS, the City has approved such application and will make funds and other
economic incentives available to Company subject to and upon the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the 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
"Effective Date" means the date of approval of this Agreement by City Council of City
"Employment Commitment Date" means November 1, 2013
"Equipment" means, generally, coffee roasting and processing equipment, including a
new solar powered coffee roasting system, new tower and heliostat mirrors, and solar powered
electric generation equipment to be maintained and used by Company in the Facility, which
Equipment shall have a useful economic life of not less than 120 months. Company shall supply
City with a detailed list of such Equipment within 15 days of the date of this Agreement.
"Facility" means the manufacturing facility located at 226 Main Street, Pueblo, Colorado,
wherein Company will conduct its roasting and manufacturing operations for wholesale
production of coffee for distribution and sale outside of Pueblo County
"Full -Time Employee" means a person who actually performs work at the Facility for not
less than thirty -five (35) 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 performing work at the Facility who are employees of an independent
contractor acting as an agency to provide Full -Time Employees for Company
"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 Employees
on each business day of a Quarter, divided by the sum of the aggregate business days in such
Quarter
2. If Company is not in default hereunder, City will, after the Effective Date,
disburse to or for the benefit of Company funds in an amount not to exceed $100,000 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 disbursed by City to Company solely for
reimbursement 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. Company shall
grant to City a perfected first security interest in all Equipment for which Company receives
reimbursement from City by execution of a Security Agreement which identifies the Equipment
in accordance with section 6 of this Agreement.
(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, together with Company's certificate of good
standing issued by the state of Oregon as the state of Company's formation, (ii) certified copy of
the resolution of the governing board of Company approving this Agreement and the Security
Agreement, and authorizing its officers to execute and deliver this Agreement, the Security
Agreement, and related documents in the name of Company, (iii) this Agreement, and Security
Agreement executed by authorized officers of Company and the Continuing Guaranty required
by Section 6 of this Agreement, and (iv) evidence reasonably satisfactory to City that Company
will expand manufacturing operations at the Facility The date of the last to occur of the filings
required under (i), (ii), (iii), and (iv) of this section 2(b) shall be referred to herein as "Closing"
If Closing does not occur on or before December 1, 2010, 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 conditions precedent to the disbursement of City Funds for the
acquisition of Equipment, Company shall file (i) with the City Clerk, the documents described in
subsection (b) above, and (ii) with the City's Director of Finance, written request for payment,
certified to be true and correct by an officer of Company, representing 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 paid by Company, identifying the Equipment for which payment is
sought, including paid invoices therefor and certificates of delivery and installation in the
Facility
3 City and Company stipulate and agree that the total economic incentives provided
by City to Company under this Agreement is $100,000 00 (the "Total Economic Incentives ")
4 Company acknowledges and agrees that the primary purpose of City in entering
into this Agreement and the sole benefit to the City for making the Total Economic Incentives
available to Company hereunder is the creation of additional fobs. Therefore, Company
represents, covenants, and agrees that, because it currently employs 7 full time equivalent
employees in its retail operation, Company will, on and after the Employment Commitment
Date, continuously conduct its business operations at the Facility and employ not less than ten
(10) additional Full -Time Employees in its wholesale operation at the Facility whose annual
salary shall average at least $33,200 00 (the "Employment Commitment "). Company will use
good faith efforts in accordance with its sound business practices to (i) employ residents of the
County of Pueblo as Full -Time Employees including, without limitation, engaging in reasonable
programs and posting of employment openings in the City of Pueblo, and (ii) engage engineers,
architects, contractors and suppliers whose principle places of business are located in Pueblo
County, Colorado, in all construction work for or related to the Facility
5 Notwithstanding anything contained in this Agreement to the contrary, if
Company shall for any reason default in its Employment Commitment, Company shall repay to
City a pro -rata share of the Total Economic Incentives based upon the number of Full -Time
Employees employed by Company at the Facility (the "Repayment Obligation "), as follows.
(a) During the seven (7) year period starting on the Employment Commitment
Date and ending eighty -four (84) months thereafter (the "Repayment Period "), Company shall
pay to City an amount for each Quarter equal to the Quarterly Employees less than seventeen
(17) but more than or equal to seven (7) Full -Time Employees employed at the Facility by
Company multiplied by the Adjusted Quarterly Repayment Capitation (the "Company's Quarterly
Payments ") The Adjusted Quarterly Repayment Capitation as of the date of this Agreement shall
be $357 15 The Adjusted Quarterly Repayment Capitation shall be adjusted on February 15 each
year beginning February 15, 2011 (and shall apply retroactively as of the preceding January 1) by
the 12 month percentage increase over the previous year of the Consumer Price Index for "All
Urban Consumers (CPI -U) All Items ( 1982 -1984 = 100)" for Denver - Boulder - Greeley published
by the Bureau of Labor Statistics of the United States Department of Labor ( the "Bureau "),
provided that if the Bureau ceases to publish the CPI -U or materially changes its composition, the
City and Company shall agree to and use a comparable published statistic or index to adjust the
Adjusted Quarterly Repayment Capitation to adjust for inflation. For example, if for the second
Quarter of the third year after the Employment Commitment Date the Adjusted Quarterly
Repayment Capitation is $480 00, and such Quarterly Employees is 12, the amount payable by
Company to City on or before the fifteenth (15th) day of the next calendar month would be (17 -
12) x $480 00 = $2400 00 If the number of Quarterly Employees for any Quarter is 7 or less, the
Company's Quarterly Payment will be fixed at ten (10) times the then applicable Adjusted
Quarterly Repayment Capitation.
(b) 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 following
the end of each Quarter during the Repayment Period at the office of the Director of Finance of
City, 150 Central Main Street, 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
eight percent (8 %) per annum ( "Default Interest ") until paid.
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(c) Within fifteen (15) days after the end of each Quarter after the
Employment Commitment Date and for one calendar month after the Repayment Period,
Company will submit to City's Director of Finance Company's statements showing the Quarterly
Employees for the preceding Quarter and their annual salary, together with 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
and salary, City shall have access to and the right to audit Company's records relating to
Company's employees employed at the Facility
(d) If Company defaults in any of its obligations under this Agreement
including, without limitation, its Repayment Obligation, and such default is not cured within
thirty (30) days after written notice specifying the default is given by City to Company, then in
such event, the entire balance of Company's Repayment Obligation shall become due and
payable, without notice, notice being hereby expressly waived, together with Default Interest
from the date of default, and for such purpose, the entire balance of Company's Repayment
Obligation shall be an amount equal to 10 times $357 15 or the then applicable Adjusted
Quarterly Repayment Capitation, whichever is greater, multiplied by the remaining Quarters of
the Repayment Period plus the amount of Company's unpaid Quarterly Payments, if any, but in
no event more than the amount of the Total Economic Incentives actually provided by City to
Company plus Default Interest. 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
6 Company's Repayment Obligation under this Agreement shall be deemed to be a
debt of Company payable to City until Company performs and discharges its obligations
hereunder including, without limitation, its Repayment Obligation. Company's obligations under
this Agreement including its Repayment Obligation shall be secured by a perfected first security
interest in the Equipment, and by Continuing Guaranty executed by Mr David Hartkop and Mr
Michael Hartkop. Contemporaneously with the execution of this Agreement, Company shall
execute and deliver to City Company's Security Agreement, Financing Statement, the Continuing
Guaranty and all 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 ")
7 (a) Prior to instituting any proceeding to enforce Company's Repayment
Obligation, 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 of City ( "City Council ") at which meeting 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.
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(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 section 7 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 single exercise of that right, shall constitute a waiver of that right.
8 In the event of any litigation arising under this Agreement, the court shall award
to the prevailing party its costs and reasonable attorney fees. Exclusive venue for any such
litigation shall be Pueblo County, Colorado All such litigation shall be filed in the District
Court in and for the 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.
9 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.
10 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.
11 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, or
(b) j 4o fly Company oar Roast Coffee, LLC, 226 Main Street, Pueblo, CO
81003, Attention. Z ieh i/ / „')
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 section 11
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12. 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 City, which
consent shall not be unreasonably withheld. Any assignment or attempted assignment of this
Agreement by Company without such consent shall be null and void. No such assignment nor
City's consent thereto shall release or discharge Company from any obligation or liability under
this Agreement.
15 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.
16 (a) 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 providing the Total Economic Incentives hereunder, or
any part thereof. 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.
(b) Company agrees to indemnify, defend and hold City, its officers, agents
and employees harmless from and against all claims and actions arising from any claim or
allegation of patent infringement by Company or any Equipment purchased, manufactured or
used by Company In the event any such Equipment is determined to infringe any patent or
Company is required by law or contract to cease use of such Equipment, then Company shall take
all actions necessary to secure substitute equipment and provide to City a first security interest in
such substitute equipment.
17 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. Notwithstanding the foregoing, if City defaults in any
material covenant of this Agreement, Company shall have the right, without the showing or any
special damages or an inadequate remedy at law, to seek specific enforcement thereof, but not for
damages of any type or nature.
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•
18 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.
19 Neither party shall be, or hold itself out as, agent of the other or as point venturers
under this Agreement.
20 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.
21 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.
22. 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.
Executed at Pueblo, Colorado, the day and year first above written.
[SEA L ] Pueblo, a Municipal Corporation
Attest: ,,,.,, v By / LnitA j , a
City Clerk `President of the City Council
[SEAL]
Solar Roast Coffee, LLC, an Oregon limited
1 1
liability company
V `
Attest: y � .1. ; . , '
B ''�
Name. Name David HartVop
Title. Title Manager
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