HomeMy WebLinkAbout13283RESOLUTION NO. 13283
A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT
BETWEEN PUEBLO, A MUNICIPAL CORPORATION, AND
UNITED LAUNCH ALLIANCE, A DELAWARE LIMITED LIABILITY
COMPANY, RELATING TO A JOB CREATING CAPITAL
IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT
OF THE CITY COUNCIL TO EXECUTE SAID AGREEMENT AND
TRANSFERRING TWO MILLION DOLLARS ($2,000,000.00)
FROM THE 1992-2016 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 $2,000,000.00 for the job
creating capital improvement project with United Launch Alliance, a Delaware limited liability
company, (“Company”) described in the attached Employment Agreement, meets and complies
with the criteria and standards established by Section 14-4-85 of the Pueblo Municipal Code
and will create employment opportunities justifying the expenditure of public funds.
SECTION 2.
The Employment Agreement dated July 27, 2015 between Pueblo, a Municipal
Corporation and the Company 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 the 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 $2,000,000.00 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 in the manner described in the attached Employment Agreement. The
funds hereby authorized to be transferred and expended shall be released, disbursed and paid
by the Director of Finance as specified in 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 attached Employment Agreement which are
necessary or desirable to effectuate the transactions described therein.
SECTION 5.
This Resolution shall become effective immediately upon final passage.
INTRODUCED: July 27, 2015
BY: Robert Schilling
City Clerk’s Office Item # Q-2
Background Paper for Proposed
Resolution
COUNCIL MEETING DATE: July 27, 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 UNITED LAUNCH ALLIANCE,
L.L.C., A DELAWARE LIMITED LIABILITY COMPANY, RELATING TO A JOB
CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE
PRESIDENT OF CITY COUNCIL TO EXECUTE SAID AGREEMENT AND
TRANSFERRING TWO MILLION DOLLARS ($2,000,000.00) FROM THE 1992-
2016 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND
THEREFOR
SUMMARY:
Attached is a Resolution approving and authorizing the President of City Council to sign an
employment agreement with United Launch Alliance, L.L.C., a Delaware limited liability
company (the “Company”).
PREVIOUS COUNCIL ACTION:
None.
BACKGROUND:
The Company’s business plan as it pertains to Pueblo County, is centered on the manufacture
of space launch vehicles for distribution outside of Pueblo County. The Company has agreed to
manufacture the space launch vehicles at 310 Keeler Parkway, Pueblo, Colorado 81001, in the
Pueblo Memorial Airport Industrial Park. The Company plans to rent the building from the
Pueblo Development Foundation. The building was previously occupied by Adam Aircraft.
FINANCIAL IMPLICATIONS:
In the attached Employment Agreement, the City has agreed to transfer $2 million from the
1992-2016 Sales and Use Tax Capital Improvement Projects Fund, as follows:
Up to $1,100,000.00 for the purchase of equipment or for construction costs for
the expansion of or improvements to the manufacturing facility;
A rent subsidy in the amount of $900,000.00.
For its part, the Company has agreed, after a one-year “ramp up” interval, to employ not less
than thirty-four (34) full time employees whose annual compensation shall average at least
$64,000, not including benefits. Should the Company default in meeting its employment
commitment, it has agreed to repay the economic incentives received from the City, as follows:
Interval Repayment
Years 1-5 Full amount of rent subsidy and City payments for
manufacturing equipment or construction costs
As security, in the event of a default, the City will obtain a first lien on the manufacturing
equipment purchased with City funds.
BOARD/COMMISSION RECOMMENDATION:
Not applicable to this Resolution.
STAKEHOLDER PROCESS:
Not applicable to this Resolution.
ALTERNATIVES:
If this Resolution is not approved, the Company will not be able to begin operations in Pueblo
County.
RECOMMENDATION:
The Pueblo Economic Development Corporation recommends approval of this Resolution.
Attachments:
Proposed Resolution and Employment Agreement
"Equipment" means the manufacturing machinery and trade fixtures and other related
personal property to be acquired with City funds and then installed, maintained, and used by
Company in the Facility.
"Facility" means the manufacturing center and business administration offices located at
the Pueblo Memorial Airport Industrial Park, having a street address of 310 Keeler Parkway,
Pueblo, Colorado, 81001-4801, 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 the Company or by an outside
entity acting as an agency to provide Full-Time Employees for the 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 aggregate number of Full-Time Employees on the
last day of each month of a Quarter, divided by three.
"Security Agreement"has the meaning set forth in Section 5 of this Agreement.
2. If the Company is not in default under this Agreement, City will advance to or for
the benefit of Company funds in the amount of Two Million Dollars ($2,000,000.00) (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 to Company for the following
purposes: (i) One Million One Hundred Thousand Dollars ($1,100,000.00) for the purchase of
equipment to be used and installed at the Facility or for construction costs for the expansion of or
improvements to the Facility; and (ii) a rent subsidy in the amount of Nine Hundred Thousand
Dollars ($900,000.00).
(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, (iii) evidence
reasonably satisfactory to City that Company will establish 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(b)
shall be referred to herein as "Closing." If Closing does not occur on or before December 31,
2015, or such later date as the Parties shall mutually agree, City, at its sole option, may terminate
this Agreement and the Parties shall thereafter be released and discharged from all obligations
hereunder.
(c) As a condition precedent to the disbursement of City Funds for the
purchase of manufacturing equipment or payment of construction costs, Company shall file (i)
with the City Clerk the documents described in Paragraph (b) above, and (ii) and shall file with
the City's Director of Finance written request for payment certified to be true and correct by an
2
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 manufacturing equipment or
construction costs, identifying the specific equipment for which payment is sought or
construction costs for which payment is requested, including contracts for the purchase thereof
and certificates of delivery and installation at the Facility, to the extent applicable. Company
shall not submit requests for payment which exceed, in the aggregate, One Million One Hundred
Thousand Dollars ($1,100,000). The City agrees to disburse funds within thirty (30) days of
submission of the Company's written request for payment, if such request is accompanied by
supporting documentation as set forth herein. Following disbursement of the City funds, the
Company shall acquire and install the Equipment; and, shall provide a report to the City within
ninety (90) days thereafter documenting the purchase and the amounts paid therefor.
(d) As an additional condition precedent to the disbursement of City Funds for
the purchase of manufacturing equipment or payment of construction costs, Company shall
execute a Lease Agreement for the Facility with the Pueblo Development Foundation, a
Colorado nonprofit corporation. Said Lease Agreement shall be approved in advance by the
City, such approval not to be unreasonably conditioned, delayed, or withheld, and which Lease
Agreement shall include a termination right in favor of the Company following the fifth (5th)
year of the lease term.
(e) The City agrees to disburse funds for the rent subsidy within thirty (30)
days of submission of the Company's written request for payment. Requests for payment shall
be submitted by the Company in arrears, on a quarterly basis, for reimbursement of rent paid by
the Company to the Pueblo Development Foundation under the Lease in the prior quarter. With
any request for reimbursement, the Company shall include a statement that, to the best of its
knowledge, it is not in default of the Lease beyond any applicable notice and cure period, and
that all rent for the prior quarter owed by the Company under the Lease has been paid in full to
the Pueblo Development Foundation.
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
Company will on and after the Employment Commitment Date continuously conduct its business
operations at the Facility and employ not less than thirty-four (34) Full-Time Employees at the
Facility whose annual compensation shall average at least Sixty-Four Thousand Dollars
($64,000.00), not including benefits, for a period of five (5) years following the Employment
Commitment Date. Company will use good faith efforts, in accordance with its sound business
practices, to employ residents of the City of Pueblo as Full-Time Employees including, without
limitation, engaging in reasonable programs and posting of employment openings in the City of
Pueblo (collectively the "Employment Commitment").
4. Notwithstanding anything contained in this Agreement to the contrary, if
Company shall for any reason default in its Employment Commitment set forth in Section 3,
Company shall repay to City a pro-rata share of the City Funds advanced by City under Section 2
based upon the number of Full-Time Employees employed by Company at the Facility (the
"Repayment Obligation"), as follows:
(a) During the five (5) year period starting on the Employment Commitment
3
Date and ending sixty (60) months thereafter (the " Repayment Period") Company shall pay to
City an amount annually equal to the number of annual Employees less than thirty-four (34)
Full-Time Employees employed at the Facility by Company multiplied by $11,765.00 (the
"Company's Annual Payments"). For example, if for the second year after the Employment
Commitment Date the number of such annual Employees is thirty (30), then the amount payable
by Company to City on or before the fifteenth (15th) day of the next January would be (34 - 30)
x $11,765.00 = $47,060.00.
(b) Company's Annual 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 year during the 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 annual Payments shall bear interest at the rate of eight
percent (8%)per annum ("Default Interest") until paid.
(c) Within thirty (30) days after the end of each calendar year after the
Employment Commitment Date and for one calendar month after the expiration of the aggregate
Repayment Period, Company will submit to City's Director of Finance Company's statements
showing the annual Employees for the preceding year and their annual salary (together with the
basis upon which annual Employees and Company's annual 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 salaries, City shall have access to Company's records relating to
Company's employees employed at the Facility.
(d) Notwithstanding anything contained in this Paragraph 4 to the contrary, if
Company defaults in its Employment Commitment and Company's 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, 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, but in no event more than the amount of City
Funds advanced by City under Section 2 hereof plus Default Interest as herein provided.
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. 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 purchased with City funds. Prior to any disbursement of funds by City
for Equipment, Company shall execute and deliver to City, Company's Security Agreement,
Financing Statement, and such other documents as may be reasonably 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 conditioned, delayed, or 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
4
items of Equipment and deleting the item of Equipment being replaced. Notwithstanding the
foregoing, however, the City agrees that it shall not be permitted to enforce the Security
Agreement (or realize on the Equipment provided as collateral pursuant thereto) unless (and to
the extent that) the Company is in default under this Agreement beyond all applicable periods for
cure.
6. (a) Prior to instituting any proceeding to enforce Company's Repayment
Obligation under Section 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 Section 6 shall grant or be construed to grant to Company
any right or claim to relief from its Repayment Obligation or a 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.
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. Exclusive 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 both Parties. 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
5
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, Third Floor, Pueblo, Colorado 81003, or
(b) if to the Company, Bob Lange, Treasurer, P.O. Box 3788, M/S C2000,
Centennial, CO 80155.
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 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, except as provided below, 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. However, if Company proposes to assign this Agreement to a purchaser
of its business, the transaction is an arms-length transaction, the purchaser assumes and agrees to
perform Company's obligations under this Agreement, then, in such event, the assignment may
be made with the express written consent of the City, which consent may not be unreasonably
conditioned, delayed, or withheld. The City shall have the right to determine that said proposed
purchaser is credit worthy, has sufficient business experience in the manufacturing sector, and is
capable of performing Company's obligations under this Agreement.
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.
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. (a) In no event shall either Party, its officers, agents or employees be liable to the
other Party 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 such Party or the failure or delay of such Party 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 Section 4 hereof with respect to
the amount of City Funds actually advanced or paid by City to or for the benefit of Company
6
pursuant to Section 2 hereof.
(b) Notwithstanding the above, in the event of breach of this Agreement by
the City, Company shall have the right to request specific performance of this Agreement by the
City, but not damages.
(c) Notwithstanding the above, in the event of breach of this Agreement by
the Company, City shall have the right to enforce the Company's Repayment Obligation under
Section 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 Section 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 venturers
or partners 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.
Executed effective the day and year first above written.
[ SEAL ] CITY OF PUEBLO, a Colorado municipal
corporat'•
Attest: B
ilW411,
City rk Prem.entt the City Council
[ SEAL ] UNITED :UNC LL • NCE, L.L.C.
a P- awarile1 to• iab. • y company
Attest: :y Mi,A is ma�
n e. aun A lance
Name: Name: Bob Las ge
Treasurer
Title: Title:
7