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HomeMy WebLinkAbout13680 RESOLUTION NO. 13680 A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT AND A CONTRACT TO BUY AND SELL REAL ESTATE BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND CR MINERALS COMPANY, LLC, A DELAWARE LIMITED LIABILITY COMPANY, RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAID AGREEMENTS AND TRANSFERRING TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) FROM THE 1992-2021 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 $250,000 for a job creating capital improvement project with CR Holdings Company, LLC, a Delaware limited liability company, (“Company”) described in the attached agreements is for a public purpose and in furtherance of a municipal function and will create employment opportunities justifying the expenditure of public funds. The City Council further finds the incentives granted to the Company hereby meet the standards established by Section 14-4-85 of the Pueblo Municipal Code. SECTION 2. The following agreements, all dated May 8, 2017 between the City and the Company, copies of which are attached hereto and incorporated herein by this reference, having been approved as to form by the City Attorney, are hereby approved: a. employment Agreement; b. Contract to Buy and Sell Real Estate The President of the City Council is authorized to execute and deliver said agreements in the name of the City and the City Clerk is directed to affix the seal of the City thereto and attest same. The President of the City Council is further authorized to execute and deliver a special warranty deed and related documents at closing, transferring the unimproved property owned by the City to the Company. SECTION 3. Funds in the aggregate amount of $250,000 are hereby authorized to be transferred, expended and made available out of the 1992-2021 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 agreements. The funds hereby authorized to be transferred and expended shall be released, disbursed and paid by the City’s Director of Finance as specified in the attached agreements. 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 agreements which are necessary or desirable to implement the transactions described therein. SECTION 5. This Resolution shall become effective immediately upon final passage. INTRODUCED May 8, 2017 BY: Ed Brown City Clerk’s Office Item # Q-1 Background Paper for Proposed Resolution COUNCIL MEETING DATE: May 8, 2017 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 AND A CONTRACT TO BUY AND SELL REAL ESTATE BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND CR MINERALS COMPANY, LLC, A DELAWARE LIMITED LIABILITY COMPANY, RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAID AGREEMENTS AND TRANSFERRING TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) FROM THE 1992- 2021 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND SUMMARY: Attached is a Resolution approving and authorizing the President of City Council to sign the following two (2) agreements:  Employment Agreement between the City of Pueblo and CR Holdings Company, a Delaware limited liability company (the “Company”);  Contract for the City to sell unimproved property to the Company for $200,000.00 PREVIOUS COUNCIL ACTION: Not applicable to this Resolution. BACKGROUND: The Company wishes to locate a pozzolan (volcanic ash) manufacturing facility within the City of Pueblo and in connection therewith has committed to invest approximately $8,500,000 in fixed assets and other resources in the project. FINANCIAL IMPLICATIONS: Under the proposed Resolution the City will transfer unimproved property with a value of $200,000 to the Company in order for the Company to construct its pozolan manufacturing facility in the City. In addition, the Resolution approves the payment to the Company of $50,000.00 for rail improvements on the property. The proposed employment Agreement provides that after a three- year “ramp up” the Company will hire seventeen (17) new full-time employees whose annual compensation shall average at least $36,850, not including benefits. 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 construct its manufacturing facility in the City and the City will lose the opportunity to create seventeen (17) new jobs. RECOMMENDATION: The Pueblo Economic Development Corporation recommends approval of this Resolution. Attachments: Proposed Resolution; proposed employment Agreement; proposed Contract to Buy and Sell Real Estate; proposed Track Access Agreement to be signed by the Pueblo Municipal Rail Corporation AGREEMENT THIS AGREEMENT ("Agreement") entered into as of May 8, 2017 between Pueblo, a municipal corporation(the"City") and CR Minerals Company, LLC, a Delaware limited liability company(the"Company"). The City and Company may be individually referred to herein as "Party" or collectively referred to as "Parties." WHEREAS, Company has expressed a willingness to locate a pozzolan products manufacturing facility within the City of Pueblo and in furtherance thereof has through the Pueblo Economic Development Corporation made application for economic development funds from the City, and WHEREAS,in connection with its application,the Company has committed that(i)it shall invest approximately Eight Million Five Hundred Thousand Dollars ($8,500,000) in fixed assets and other investment in a manufacturing facility within the City of Pueblo and (ii) the Company shall provide the employment described in Section 4 of this Agreement. WHEREAS,the City has approved such application and will make economic development 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: "Effective Date"means the date of approval of this Agreement by City Council of City. "Employment Commitment Date" means July 1, 2020. "Facility" means the manufacturing facility located on the Facility Land. "Facility Land" means the parcel of land on which the Facility will be constructed. The legal description of the Facility Land is Lot 1, St. Charles Industrial Park, Filing No. 2, County of Pueblo, State of Colorado. "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. "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 number of business days in such Quarter. 1 "Salary" means direct compensation payable to an employee including vacation pay, bonuses,overtime compensation and the amount of any pretax benefits paid by the employee under flexible spending or other qualified plans. The term does not include employer paid payroll taxes nor benefits such as employer paid health insurance. 2. If Company is not in default under this Agreement, City will advance to or for the benefit of Company funds in the amount of Two Hundred and Fifty Thousand Dollars ($250,000.00) (the "City Funds"), subject to and contingent upon the following conditions and covenants which Company agrees to perform and comply with: (a) Sale of Unimproved Land. City agrees to sell the Facility Land for $200,000.00 in accordance with the terms and conditions of the Contract to Buy and Sell Real Estate pertaining to the Facility Land of even date herewith. (b) Rail Improvements. Fifty Thousand Dollars($50,000.00) in City Funds will be disbursed by City to Company solely for reimbursement for rail improvements on the Facility Land by Company at fair market value in an arms-length transaction. As conditions precedent to the disbursement of City Funds for rail improvements, 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 rail improvements on the Facility Land, including paid invoices therefor. 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. (c) Letter of Credit. At the closing of the sale of the Facility Land by City to the Company, Company shall deliver to City a Letter of Credit in the principal amount of Two Hundred Fifty Thousand Dollars ($250,000.00). Said Letter of Credit shall have a ten (10) year term. During the seven (7) year period starting on the Employment Commitment Date and ending eighty-four (84) months thereafter (the "Repayment Period"), the principal balance of the Letter of Credit will be decreased on a quarterly basis consistent with the Company's compliance with its Employment Commitment as set forth in Section 3 of this Agreement. At the conclusion of the Repayment Period, subject to Section 3 of this Agreement,the entire principal balance of the Letter of Credit shall be due and payable by the Company to the City. The Parties anticipate that the Company will fully comply with its Employment Commitment as specified in Section 3 of this Agreement and that at the end of the Repayment Period, the principal balance of the Letter of Credit shall be zero. The issuer and format of the Irrevocable Letter of Credit shall require the consent of the City, which consent shall not be arbitrarily withheld, conditioned or delayed. (d) Company shall file in the office of the City Clerk copies of the following: (i) a certificate or other evidence of authority to transact business in the State of Colorado issued by the Colorado Secretary of State, together with a certificate of good standing issued by the governmental jurisdiction of Company's formation; (ii) certified copies of the resolutions of the governing board of Company approving (A)this Agreement and (B)the Contract to Buy and Sell Real Estate for the Facility Land and authorizing its officers or managers to execute and deliver said documents in the name of Company and(iii) (A)this Agreement and(B)the Contract to Buy 2 and Sell Real Estate for the Facility Land 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(d)shall be referred to herein as "Closing". If the Closing does not occur on or before July 1, 2017, or such later date as Company and City shall mutually agree,the Company and the City, each,at its sole option,may terminate this Agreement and the Contract to Buy and Sell Real Estate and City and Company shall thereafter be released and discharged from all obligations hereunder. For clarity, any termination of the Contract to Buy and Sell Real Estate will automatically terminate this Agreement. 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 hereunder is the creation of jobs. Therefore, Company represents, covenants, and agrees that Company will on and after the Employment Commitment Date and continuously for the duration of the Repayment Period conduct its business operations at the Facility and employ not less than seventeen(17)new Full-Time Employees at the Facility whose annual compensation shall average at least $36,850 in Salary. Company will use good faith efforts in accordance with 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 Paragraph 3 for any Quarter, 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 "Repayment Obligation") during such Quarter, as follows: (a) During the Repayment Period, Company shall pay to City an amount for any such Quarter equal to the number of Quarterly Employees less than seventeen Full-Time Employees employed at the Facility by Company multiplied by $525.21 (the "Company's Quarterly Payments"). For example, if for the second Quarter of the third year after the Employment Commitment Date such new Quarterly Employees is 13, the amount payable by Company to City on or before the fifteenth (15th) day of the next calendar month would be (17 - 13) x $525.21 = $2,100.84. (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 after the end of each Quarter during the Repayment Period and for one month thereafter 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 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 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 3 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, and for such purpose, the entire balance of Company's Repayment Obligation shall be an amount equal to 17 times $525.21 multiplied by the remaining Quarters of the Repayment Period from and after the default date plus the amount of Company's unpaid Quarterly Payments, if any, but in no event more than $250,000 plus Default Interest as herein provided. Except as may be agreed by the City Council in its/their sole discretion (as contemplated under paragraph 6(b) hereof), 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 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 the Irrevocable Letter of Credit in the amount of Two Hundred Fifty Thousand Dollars ($250,000.00) with a ten (10) year term, referenced in paragraph 2(c), above. The issuer and format of the Irrevocable Letter of Credit shall require the consent of the City, which consent shall not be arbitrarily withheld, conditioned or delayed. 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 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. 4 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 hereby waives its right to a jury trial. 8. This Agreement and the Contract to Buy and Sell Real Estate express 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 the Contract to Buy and Sell Real Estate and may not be amended or modified except in writing signed by City and Company. Any waiver of any provision of this Agreement or the Contract to Buy and Sell Real Estate must be in writing and signed by the party whose rights are being waived. No waiver of any breach of any provision of said agreements shall be or be deemed to be a waiver of any preceding or subsequent breach of the same or any other provision of said agreements. The failure of either party to enforce or seek enforcement of the terms of this Agreement or the Contract to Buy and Sell Real Estate 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, 2"d Floor, Pueblo, CO 81003 with a copy to City Attorney, 1 City Hall Place, 3rd Floor, Pueblo, Colorado 81003, or (b) if to the Company, 14014 Quail Ridge Drive, Broomfield, CO 80020 attention Ed Dvorak. 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. Company may not assign this Agreement or any interest herein (except for assignments to entities controlling, controlled by or under common control of the Company, which the Company can do solely upon providing written notice to the City)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 proposed to assign this Agreement(a)to a purchaser of its business; (b)the transaction is an arms-length transaction; and(c)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 consent of the City, which consent may not be unreasonably withheld. The City shall have the right to determine that said proposed purchaser is creditworthy,has sufficient business experience in the manufacturing sector, and is capable of performing Company's obligations under this Agreement. 5 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 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 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 Contract to Buy and Sell Real Estate or the performance or breach thereof by City or the failure or delay of City in the performance of any covenant or provision under said agreements on the City's part to be performed. In consideration of City entering into this Agreement and the Contract to Buy and Sell Real Estate, 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 or the Contract to Buy and Sell Real Estate shall be or be construed to be a waiver, discharge or release of Company's Repayment Obligation under paragraph 4 of this Agreement 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 of this Agreement. Notwithstanding the above, in the event of breach of this Agreement or the Contract to Buy and Sell Real Estate by the City, Company shall have the right to request specific performance of this said agreements by the City, but not damages. 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 6 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. [ SEAL ] Pueblo, a Muni ',. Corpor. 'e 1114 Attest: By City tierk Press:en i e ity Council [ SEAL ] CR Minerals Company, LLC a Delaware limited liability company Attest: By Name: Name: Title: Title: 7 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. [ SEAL] Pueblo, a Municipal Corporation Attest: By City Clerk President of the City Council [ SEAL] CR Minerals Company, LLC a Delaware limited li 'lity company Attest: By 1 W ` Name: Name: 4 'e' f " IJ Title: Title: ?MK-4r 7