HomeMy WebLinkAbout13160RESOLUTION NO. 13160
A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT
BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND
GOODRICH CORPORATION, A UTC AEROSPACE SYSTEMS
COMPANY AND SUBSIDIARY OF UNITED TECHNOLOGIES
CORPORATION, A DELAWARE CORPORATION, RELATING
TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT
AND AUTHORIZING THE PRESIDENT OF CITY COUNCIL TO
EXECUTE SAID AGREEMENT AND TRANSFERRING
$1,416,800 FROM THE 1992-2016 SALES AND USE TAX
CAPITAL IMPROVEMENT PROJECTS FUND
BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that:
SECTION 1.
The City Council finds and determines that the expenditure of $1,416,800 for the job
creating capital improvement project with the Goodrich Corporation, a UTC Aerospace Systems
Company and subsidiary of United Technologies Corporation, a Delaware Corporation,
described in the attached employment agreement meets and complies with the criteria and
standards established by Ordinance No. 7836 and will create employment opportunities
justifying the expenditure of public funds.
SECTION 2.
The employment agreement dated as of February 2, 2015 between Pueblo, a Municipal
Corporation and Goodrich Corporation, a UTC Aerospace Systems Company and subsidiary of
United Technologies Corporation, a Delaware Corporation, relating to a job creating capital
improvement project, a copy of which is attached hereto (“Employment Agreement”), having
been approved as to form by the City Attorney, is hereby approved. The President of City
Council is authorized to execute and deliver the Employment 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 the aggregate amount of $1,416,800 are hereby authorized to be transferred,
expended and made available out of the 1992-2016 Sales and Use Tax Capital Improvement
Projects Fund for the sole purpose of the job creating capital improvement project authorized
herein and for training purposes as described in the Employment Agreement. The funds
authorized to be transferred and expended shall be held by the City and released, disbursed
and paid by the Director of Finance in accordance with the terms of the Employment
Agreement.
SECTION 4.
The officers and staff of the City are directed and authorized to perform any and all acts
consistent with the intent of this Resolution and the attached Employment Agreement which are
necessary or appropriate to effectuate the transactions described therein.
SECTION 5.
This Resolution shall become effective immediately upon final passage.
INTRODUCED: _ February 2, 2015
BY: Dennis Flores
City Clerk’s Office Item # C-1
Background Paper for Proposed
Resolution
COUNCIL MEETING DATE: February 2, 2015
TO: President Stephen G. Nawrocki and Members of City Council
CC: Sam Azad, City Manager
VIA: Gina Dutcher, City Clerk
FROM: Daniel C. Kogovsek, City Attorney
SUBJECT: A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT BETWEEN
PUEBLO, A MUNICIPAL CORPORATION AND GOODRICH CORPORATION, A
UTC AEROSPACE SYSTEMS COMPANY AND SUBSIDIARY OF UNITED
TECHNOLOGIES CORPORATION, DELAWARE CORPORATION, RELATING
TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT AND
AUTHORIZING THE PRESIDENT OF CITY COUNCIL TO EXECUTE SAID
AGREEMENT AND TRANSFERRING $1,416,800 FROM THE 1992-2016
SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND
SUMMARY:
Attached is a Resolution which approves an employment agreement with Goodrich Corporation,
a UTC Aerospace Systems Company and subsidiary of United Technologies Corporation, a
Delaware corporation (“Goodrich”) and which also authorizes the expenditure of $1,416,800
from the Half-Cent Sales Tax Fund.
PREVIOUS COUNCIL ACTION:
None.
BACKGROUND:
Goodrich currently employs 198 employees at its manufacturing plant located at the Airport
Industrial Park. The company commits to increasing the number of employees by forty-six (46)
according to the following schedule:
Employment Commitment Dates Minimum Number of Employees
Year 1: 10-1-15 through 9-30-16 213
Year 2: 10-1-16 through 9-30-17 217
Year 3: 10-1-17 through 9-30-18 225
Year 4: 10-1-18 through 9-30-19 234
Year 5: 10-1-19 through 9-30-20 244
Years 6-10: 10-1-20 through 9-30-25 244
The total economic incentive of $1,416,800 will be expended as follows. $1,380,000 will be used
by the company to acquire manufacturing equipment. The City will retain a security interest in
the production equipment purchased with the incentive proceeds. The employment agreement
also provides that the City will transfer $36,800 to the company for training purposes.
FINANCIAL IMPLICATIONS:
The expenditure of $1,416,800 from the City’s Half-Cent Sales Tax Fund.
BOARD/COMMISSION RECOMMENDATION:
Not applicable.
STAKEHOLDER PROCESS:
Not applicable.
ALTERNATIVES:
Failure to approve this Resolution will result in the company expanding its manufacturing
operations in another location.
RECOMMENDATION:
The Pueblo Economic Development Corporation recommends approval of this Resolution.
Attachments:
February 2, 2015 Employment Agreement
AGREEMENT
THIS AGREEMENT entered into as of this 2nd day of February, 2015 between Pueblo, a
municipal corporation (the "City") and Goodrich Corporation, a UTC Aerospace Systems
Company, acting by and through its Landing Systems business unit (Wheels & Brakes) (the
"Company").
WHEREAS, Company has expressed a willingness to expand its manufacturing facilities
located at 110 William White Blvd., Pueblo, CO 81001 at the Pueblo Memorial Airport
Industrial Park, and in furtherance thereof has through the Pueblo Economic Development
Corporation made application for funds with the City, and
WHEREAS, the City has approved such application and will make funds available to
Company subject to and upon the terms and conditions of this Agreement, and
WHEREAS, Company's business plan, as it pertains to Pueblo County, is centered on the
manufacture of carbon fiber brake products for distribution outside of Pueblo County
("Company's Business"), and
WHEREAS, the City has determined that Company's Business will create primary jobs
and will not materially and substantially compete with any existing activity or business within
the City, and
WHEREAS, in connection with its application, Company has committed to invest not
less than $82 million in fixed assets in a manufacturing facility it will locate within the City of
Pueblo or the Pueblo Memorial Airport Industrial Park, and to provide the employment described
in section 4 of this Agreement; and
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 Years" means October 1, 2015 through September 30, 2025.
"Equipment" means the manufacturing machinery and trade fixtures and other related
personal property to be acquired, installed and maintained and used by Company in the Facility
and listed on Exhibit A attached hereto and incorporated by reference.
"Facility" means the manufacturing center and business administration offices located at
the Pueblo Memorial Airport Industrial Park, having a street address of 110 William White
Blvd., Pueblo, Colorado, 81001, or such other facility located within the City of Pueblo or the
Pueblo Memorial Airport Industrial Park, 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-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 or 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.
"Security Agreement" has the meaning set forth in Section 6 of this Agreement.
2. If Company is not in default hereunder, City will, after the Effective Date,
disburse, for the benefit of Company, funds in an amount not to exceed One Million Four
Hundred Sixteen Thousand Eight Hundred Dollars ($1,416,800) ("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. 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 governmental jurisdiction of Company's formation, (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) this Agreement executed by authorized officers of Company. The date of the last to
occur of the filings required under (i), (ii), and (iii) of this section 2(b) shall be referred to herein
as "Closing". If either the Effective Date or Closing does not occur on or before December 31,
2014, 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
purchase of manufacturing equipment, (i) Company shall file with the City Clerk the documents
described in subsection(a) above, and (ii) Company shall file with the City's Director of Finance
periodic written requests 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 manufacturing equipment, identifying the
specific equipment for which payment is sought, including paid invoices therefor and certificates
of delivery and installation in the Facility. Company shall not submit requests for payment which
exceed in the aggregate (a) U.S. $1,380,000 for manufacturing equipment and (b) U.S. $36,800
for training. The City agrees to disburse funds within thirty (30) days of submission of the
Company's written request for payment, accompanied by supporting documentation as set forth
herein.
3. City and Company stipulate and agree that the total economic incentives provided
by City to Company under this Agreement shall not exceed $1,380,000 for manufacturing
equipment and $36,800 for training for a total of$1,416,800 (the "Total Economic Incentives").
4. (a) 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 46 additional jobs at the Facility.
The average salary of all Full-Time Employees at the Facility over the course of Employment
Commitment Years 1 through 5, shall be $46,950 annually, not including benefits. The average
salary shall include base salary, overtime and bonus and does not assume attrition of the new
jobs during Years 1 through 5. Therefore, Company represents, covenants, and agrees it will
continuously conduct its business operations at the Facility and employ the number of Full-Time
Employees set forth below(collectively, the "Employment Commitment"):
Employment Commitment Dates Minimum Number of Employees
Year 1: 10-1-15 through 9-30-16 213
Year 2: 10-1-16 through 9-30-17 217
Year 3: 10-1-17 through 9-30-18 225
Year 4: 10-1-18 through 9-30-19 234
Year 5: 10-1-19 through 9-30-20 244
Years 6-10: 10-1-20 through 9-30-25 244
(b) Company will use good faith efforts in accordance with its sound business
practices to (i) employ residents of the City of Pueblo or(ii) 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.
5. Notwithstanding anything contained in this Agreement to the contrary, if
Company shall for any reason fail to meet 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 ten (10) year period starting on the beginning of the first
Employment Commitment Date and ending one hundred twenty (120) months thereafter (the
"Repayment Period"), Company shall pay to City a compensating amount for each Quarter in the
Repayment Period calculated by subtracting the number of Quarterly Employees actually
employed at the Facility from the employment commitment stated in Section 4 supra. and then
multiplying the result by $770.00 For example, if for the second quarter of Year 3 the number of
Quarterly Employees is 210, the amount payable by Company to City on or before the fifteenth
(15th) day of the next calendar month would be (225 - 210) x $770.00 = $11,550.00. In no event
will Company's repayment obligation exceed the amount of the economic incentive paid to
Company.
(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, 200 S. Main Street, Pueblo, Colorado, 81003, or such other person or location as the City
may designate by written notice to Company. All past due Company's Quarterly Payments shall
bear interest at the rate of eight percent (8%)per annum ("Default Interest") until paid.
(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 the
Company to be true and correct. For purposes of verifying Company's employment and salary,
for a period of three (3) years after receipt of a Quarterly Statement from the Company, 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 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, subject to sections 7(a) below, the entire balance of Company's
Repayment Obligation shall become due and payable, upon written notice, together with Default
Interest from the date of default. City may accelerate payment of Company's repayment
payments and Company shall pay to City in a lump sum the amount of all repayment payments
which have become due and would have become due during the remainder of the Repayment
Period, calculated based upon there being no Quarterly Employees for the duration of the
Repayment Period. 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, which Equipment shall have a fair market value of not less than the
amount of the City Funds requested for reimbursement for Equipment at the time placed in the
Facility. Prior to any disbursement of funds by City for Equipment, 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"), such approval not to be unreasonably withheld.
Company may be permitted from time to time to substitute items of replacement Equipment for
items of Equipment removed from the Facility, provided that an amended Security Agreement
meeting the requirements of this section is executed and delivered identifying the substitute
items of Equipment and deleting the item of Equipment being replaced.
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 the 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 decision by the City
Council of whether or not to grant request for relief from Company's Repayment Obligation
shall be final and binding on Company, and not subject to judicial review. Any such decision 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.
(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. 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 any 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, 200 S. Main Street, Pueblo, CO,
81003 with a copy to City Attorney, 1 City Hall Place, 3`d Floor, Pueblo, CO 81003;
(b) if to Company, Attention: Plant Manager, 110 William White Blvd.,
Pueblo CO 81001; with copy to Crystal B. Gray, Associate General Counsel —Landing Systems,
2730 West Tyvola Rd, Charlotte,NC 28217
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.
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. Notwithstanding the foregoing, Company may assign any and all of its rights
and obligations hereunder upon notification to City to (i) any Company-affiliated entity; (ii) a
third party pursuant to any sale or transfer of all or part of the assets or business of Company; or
(iii) a third party pursuant to or in connection with any financing, merger, consolidation, change
in control, reorganization or other business combination involving Company.
13. The persons signing this Agreement in the name of and on behalf of Company
and City each represent and warrant that they have the requisite power and authority on behalf of
their respective entity to enter into, execute, and deliver this Agreement, and that this Agreement
is a valid legally binding obligation of Company and City enforceable in accordance with its
terms.
14. (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, the 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 the purchase,
installation or use of the Equipment at the Facility.
15. Except to the extent of the City's obligation to disburse City Funds for the benefit
of Company in accordance with this Agreement, City, its officers, agents or employees shall not
be liable to Company for other damages, and in no event shall City be liable for 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 the 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. Except for
the City's failure to disburse City Funds for the benefit of Company as provided in Section 2
above, 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.
In no event shall Company be liable for 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 Company or the failure or delay of Company in the
performance of any covenant or provision under this Agreement on its part to be performed. In
consideration of the Company entering into this Agreement, City hereby waives and discharges
City, its officers, agents and employees from all claims for any and all such damages.
16. 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.
17. None of the parties shall be, or hold itself out as, agent of any other party or as a
partner or joint venturer under this Agreement.
18. 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.
19. 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.
20. 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.
[S E A L]
Attest: ' Puebl• -: 'mcipal Co
4p;•4-- 3
City rk
President of the City Council
[S E A L]
Goodrich Corporation, a UTC Aerospace
Systems Company, acting by and through its
Landing Systems business unit (Wheels &
Brakes) 1
Attest: 117.4 By
9J-J
Name: Name: ,1
Title: 4042.A.-t,,,., Title: V E d Ce co I dr,S