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HomeMy WebLinkAbout13748RESOLUTION NO. 13748 A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT AND A CONTRACT TO BUY AND SELL REAL ESTATE BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND PUEBLO HOTEL SUPPLY COMPANY D/B/A GRADY’S RESTAURANT AND BAR SUPPLY, A COLORADO CORPORATION, RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAID AGREEMENTS AND TRANSFERRING SIX HUNDRED THIRTY-EIGHT THOUSAND DOLLARS ($638,000.00) 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 $638,000.00 for a job creating capital improvement project with Pueblo Hotel Supply Company d/b/a Grady’s Restaurant and Bar Supply, a Colorado corporation (the “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 August 14, 2017, between the City and the Company, copies of which are attached hereto and are 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 fix 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 170 Greenhorn Drive, Pueblo, CO 81004 to the Company. SECTION 3. Funds in the aggregate amount of $638,000.00 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 appropriate to implement the transactions described therein. SECTION 5. This Resolution shall become effective immediately upon final passage. INTRODUCED August 14, 2017 BY: Robert Schilling City Clerk’s Office Item # Q-1 Background Paper for Proposed Resolution COUNCIL MEETING DATE: August 14, 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 PUEBLO HOTEL SUPPLY COMPANY D/B/A GRADY’S RESTAURANT AND BAR SUPPLY, A COLORADO CORPORATION, RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAID AGREEMENTS AND TRANSFERRING SIX HUNDRED THIRTY-EIGHT THOUSAND DOLLARS ($638,000.00) 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 agreements:  employment Agreement between the City of Pueblo and Pueblo Hotel Supply Company d/b/a Grady’s Restaurant and Bar Supply, a Colorado corporation (the “Company”).  Contract for the City to sell 170 Greenhorn Drive, Pueblo, Colorado 81004 (the “Property”) to the Company for $3,100,000.00. PREVIOUS COUNCIL ACTION: Not applicable to this Resolution. BACKGROUND: The Company wishes to establish a new distribution center with business administration offices for the Company’s commercial restaurant supply business at the Minnequa Industrial Park. The Company’s business plan, as it pertains to Pueblo County, is centered on the commercial sale of bar and restaurant equipment for distribution outside of Pueblo County. The Company has committed to investing approximately $5,620,000.00 in fixed assets at its new distribution center/office complex located within the City at the Minnequa Industrial Park. FINANCIAL IMPLICATIONS: Under the proposed Resolution, the City will transfer $638,000.00 to be applied toward the purchase price of the distribution facility located at 170 Greenhorn Drive, Pueblo, Colorado 81004. The proposed employment Agreement provides that after a three-year ramp up period, the Company will hire and employ not less than forty-five (45) new full-time employees at its distribution facility. The City’s investment is secured by a first lien (Deed of Trust) on 170 Greenhorn Drive. 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 purchase its new distribution facility at the Minnequa Industrial Park and the City will lose the opportunity to create forty-five (45) 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 Special Warranty Deed from the City; Proposed Deed of Trust AGREEMENT THIS AGREEMENT is entered into this 14th day of August, 2017 by and between Pueblo, a municipal corporation (the "City") and Pueblo Hotel Supply Company dba Grady's Restaurant and Bar Supply, a Colorado corporation (the "Company"). The Company and the City are referred to collectively in this Agreement as the "Parties" and individually, without differentiation, each as a "Party." WHEREAS, the Company has expressed a willingness to establish a distribution center and business administration offices for the Company's commercial restaurant supply business at the Minnequa Industrial Park, and in furtherance thereof has, through the Pueblo Economic Development Corporation ("PEDCO"), made application for funds from the City; and WHEREAS, PEDCO has recommended to the City Council that City approve such application, and WHEREAS, the City Council, based on PEDCO's recommendation, has approved such application and will make funds available to Company subject to and upon the terms and conditions of this Agreement; and WHEREAS, Company's business plan, as it pertains to Pueblo County, is centered on the commercial sale of bar and restaurant equipment 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, the Company has committed to: (i) invest approximately Five Million Six Hundred Twenty Thousand Dollars ($5,620,000) in fixed assets in a distribution facility located within the City at the Minnequa Industrial Park: and (ii)provide the employment described in Section 4 of this Agreement. NOW, THEREFORE, in consideration of the foregoing recitals 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: "Employment Commitment Date" means October 1, 2020. "Facility" means the 45,000 square foot building constructed on the Property wherein 1 Company conducts its business operations. "New Full-Time Employee" means a person who actually performs work at the Facility for not less than thirty-two (32) hours per week at an average annual salary of not less than $35,600.00 per year plus benefits, employed by the Company. The term "New Full-Time Employee" does not include employees currently employed by Company as of the date of this Agreement or independent contractors or subcontractors or their employees, who work at the Facility. "Per Employee Payment" means an amount equal to (a) the Total Funds Advanced divided by 45 (i.e. the New Full Time Employees subject to the Employment Commitment), divided by(b) 28 (i.e. the number of Quarters in the Repayment Period). "Property" means Lot 2, Minnequa Industrial Park, Third Filing, Pueblo County, State of Colorado, according to the recorded plat thereof filed in the records of the Pueblo County Clerk and Recorder, also known by street and number as: 170 Greenhorn Drive, Pueblo, CO 81004. "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 New Full-Time Employees on each business day of a Quarter, divided by the number of business days in such Quarter. "Repayment Reduction" means for each Quarter an amount equal to the Total Funds Advanced divided by 28 (i.e. the number of Quarters in the Repayment Period). For example, if the Total Funds Advanced equals $638,000.00, the Repayment Reduction would be $638,000 28 = $22,785.72. 2. If Company is not in default under this Agreement, City will advance to or for the benefit of Company (each such advance, a "Funds Advance" and all such cumulative advances the "Total Funds Advanced") funds in the amount of six Hundred Thirty-Eight Thousand Dollars ($638,000.00) (the "City Funds"), subject to and contingent upon the following conditions and covenants which Company agrees to perform and comply with: (a) City agrees to sell the Facility to Company in accordance with the terms and conditions of the Contract to Buy and Sell Real Estate pertaining to the Facility of even date herewith. The "closing" of the sale of the Facility by City to Company shall take place within thirty(30) days of the issuance of a Certificate of Occupancy for the Facility following the remodeling and renovation of the Facility by the Company. (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 2 Colorado issued by the Colorado Secretary of State, and (ii) certified copies of the resolutions of the governing board of Company approving (A) this Agreement; (B) the Contract to Buy and Sell Real Estate for the Facility and authorizing its officers to execute and deliver said documents in the name of Company, and (iii) (A) this Agreement; and (B) the Contract to Buy and Sell Real Estate for the Facility, 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 Closing does not occur on or before October 1, 2017, 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. 3. Company acknowledges and agrees that the primary purpose of City in entering into this Agreement and the sole benefit to the City for making City Funds available to Company hereunder is the creation of jobs. Therefore, Company represents, covenants, and agrees that it will after the date of this Agreement continuously conduct its business operations and employ New Full-Time Employees at the Facility as follows: (i) during the period from the date of this Agreement to the Employment Commitment Date, Company shall use its commercially reasonable efforts in good faith to employ as many New Full-Time Employees as reasonably justified by its business operations, and (ii) on and after the Employment Commitment Date, Company shall employ not less than forty five (45) New Full-Time Employees at the Facility (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, 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 New 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 each Quarter equal to the Quarterly Employees less than forty-five (45) New Full-Time Employees employed at the Facility by Company multiplied by the Per Employee Payment (the "Company's Quarterly Payments"). For example, if for the second Quarter of the third year after the Employment Commitment Date the Total Funds Advanced equals $638,000.00 and such Quarterly Employees is 29, the amount payable by Company to City on or before the fifteenth (15th) day of the next calendar month would be (45 - 29) x $506.35 = $8,101.60. (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 3 interest at the rate of eight(8)percent per annum ("Default Rate") 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 and their aggregate salaries for the preceding Quarter and the basis upon which Quarterly Employees and Company's Quarterly Payment, if any, were computed, certified by an officer of the Company to be true and correct. For purposes of verifying such employment, City shall have access to Company's records relating to Company's employees employed at the Facility. Except in the event of any action filed by City to enforce this Agreement, City shall treat such information as confidential and shall not disclose (except pursuant to a subpoena or court order) such information to any party other than those City employees who have a need to know such information. (d) Subject to the provisions of Paragraph 6, if Company defaults in the performance of its Repayment Obligation and such default is not cured within sixty (60) days after written notice specifying the default is given by City to Company, then in such event, City may declare the entire balance of Company's Repayment Obligation due and owing together with interest thereon from the date of default at the Default Rate, and for such purpose, the entire balance of Company's Repayment Obligation shall be the amount calculated pursuant to Paragraph 4(e). 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. (e) Except as otherwise provided in Paragraphs 7 and 13 hereof, City's damages for breach of Company's Employment Commitment or Repayment Obligation shall not exceed Total Funds Advanced plus interest, provided, however, that the Total Funds Advanced shall be reduced by the Repayment Reduction for each Quarter Company meets its Repayment Obligation during the Repayment Period by either (i) employing forty-five (45) Quarterly Employees at the Facility, or (ii) paying Company's Quarterly Payments as provided in Paragraph 4(a) above for such Quarter. 5. All City Funds advanced to Company by City under this Agreement shall be deemed to be a debt of Company payable to City until Company performs and discharges its obligations hereunder including its Repayment Obligation contained in Paragraph 4. The Company's performance under this Agreement including its Repayment Obligation contained in Paragraph 4 shall be secured by a Deed of Trust encumbering the Facility and Property. Company covenants with and warrants to the City that the Deed of Trust shall constitute a first priority lien or encumbrance and that there are and will be no senior liens or encumbrances against the Facility and Property. The form and content of the Deed of Trust shall be subject to the prior reasonable approval of counsel for the City and the Company. 6. (a) Prior to instituting any proceeding to enforce Company's Repayment 4 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 thirty (30) 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 must appear. City will notify Company of the time and place of the meeting at least ten (10) days before 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. 7. In the event of any litigation arising under this Agreement, the court shall award to, and the prevailing party shall recover its costs together with all internal and out-of-pocket expenses of any kind relating to the litigation including, but not limited to, reasonable attorney fees. Venue for any such litigation shall be Pueblo County, Colorado. All such litigation shall be filed in the District Court, County of Pueblo, State of Colorado and each party submits to the jurisdiction of such District Court. To the full extent allowed by law, each party waives its right to a jury trial. 8. This Agreement expresses the entire understanding of the parties and supersedes and abrogates any and all prior dealings and commitments, whether oral or written, with respect to the subject matter of this Agreement and may not be amended or modified except in writing signed by City and Company. Any waiver of any provision of this Agreement must be in writing and signed by the party whose rights are being waived. No waiver of any breach of any provision hereof shall be or be deemed to be a waiver of any preceding or subsequent breach of the same or any other provision of this Agreement. The failure of either party to enforce or seek enforcement of the terms of this Agreement following any breach shall not be construed as a waiver of such breach. 9. This Agreement shall be construed in accordance with and be governed by the laws of the State of Colorado without regard to conflict of law principles. 5 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, 2nd Floor, Pueblo, Colorado, 81003, with copy to City Attorney, 1 City Hall Place, 3`d Floor, Pueblo, Colorado, 81003, or (b) if to the Company,430 W. 4`h Street, Pueblo, CO 81003 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. Notice shall be effective (i) upon receipt if delivered personally, or(ii)three (3)business days after deposit in the mails, if mailed. 1 1. Time is of the essence hereof. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, provided Company may not assign this Agreement or any interest herein without the express written consent of the City which will not be unreasonably withheld or delayed. Any assignment or attempted assignment of this Agreement by Company without such consent shall be null and void. No assignment of this Agreement or any interest herein by Company shall release or discharge Company from any of its obligations under this Agreement unless otherwise agreed by City at the time consent to assignment is given. 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 and 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 by City 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, or to seek such other remedies legally available to City, which remedies shall be cumulative. 14. In no event shall City, its officers, agents or employees be liable to Company for damages, including without limitation, compensatory, punitive, indirect, special or consequential damages, resulting from or arising out of or related to this Agreement or the performance or breach thereof by City or the failure or delay of City in the performance of any covenant or provision under this Agreement on its part to be performed. In consideration of City entering into this Agreement, Company hereby waives and discharges City, its officers, agents and employees from all claims for any and all such damages. No breach, default, delay or failure of 6 City under this Agreement shall be or be construed to be a waiver, discharge or release of Company's Repayment Obligation under Paragraph 4 hereof with respect to the amount of City Funds actually advanced or paid by City to or for the benefit of Company pursuant to Paragraph 2 hereof. 15. If any provision of this Agreement is declared by a court of competent jurisdiction to be invalid or unenforceable, such determination shall not affect the other provisions of this Agreement which shall remain in full force and effect. 16. Neither party shall be, or hold itself out as, agent of the other or as joint ventures under this Agreement. 17. Each party acknowledges that this Agreement was fully negotiated by the parties and, therefore, no provision of this Agreement shall be interpreted against any party because such party or its legal representative drafted such provision. 18. The provisions of this Agreement are for the exclusive benefit of the parties hereto and their successors and permitted assigns, and no third party shall be a beneficiary, or have any rights by virtue of, this Agreement. 19. This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed for all purposes to be an original, and all such counterparts shall together constitute but one and the same original. Executed at Pueblo, Colorado, this 14th day of August, 2017. Pueblo, a Munici•al Co .oration [ SEAL] 40411° Attest: - By City rk Pr 's ent of the City Counci 7 S PUEBLO HOTEL SUPPLY COMPANY a Colorado corporation Attest: By Of t ,-'•0' ,:'r0--k—_____ Name: Name. Gy,u c( L./,ir'1rpL'Shvt✓' Title: Title: ou, STATE OF p\-urc..c\-O ) ss. COUNTY OFi1 ebAu ) The (oregoirw instrument was acknowledged before me this a5 day of 3,11 , 2017 by a,uQ r«S 3 4u r as COU and L. tZ _./1/-0,1 7 -0 oils A �- as Qct,O of Pueblo Hotel Supply Company, a Colorado corporation. Witness my hand and official seal. My commission expires: \, 6 t`i ./' I. [ SEAL ] —7 6...1.,T,- .) CLot. V1/4.4., PATSY RODRIGUES Notary Public NOTARY PUBLIC STATE OF COLORADO NOTARY ID 199440%7336 My Commission Expires 11-06-2019 8 PUEBLO HOTEL SUPPLY COMPANY a Colorado corporation I C\ Attest, , I I 11 r . x r. By r�.-u— , Name: L' P-t 4o Graot.i s i a r Naini: t Jr. -i ,-f., j u e-I/0 Titic: nor Title: /hi fi s. STATE OF ) ) ss. COUNTY OF '.a.• ' ) foregoin. instrument was acknowledged before me this day of , 2017 b 1 , as . ,. r. , and , ii.rt Wilagl.ke as 6 w.4 er of Pueblo Hotel Supply Company,a Co credo corporation. Witness my hand and official seal. My commission expires: « ?if ()t 9 44. [SEAL] ( s -7 Air-``\w ... Notary Public O PATSY RODRIGUESr NOTARY PUBLIC STATE Of COLORADO NOTARY Ib 19944017336 My Conorrdsslon El las 11.46.2ri19 8