HomeMy WebLinkAbout13799RESOLUTION NO. 13799
A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT
BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND DOSS
AVIATION, INC., A TEXAS CORPORATION, RELATING TO A
JOB CREATING CAPITAL IMPROVEMENT PROJECT,
AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO
EXECUTE SAID AGREEMENT AND TRANSFERRING TWO
MILLION NINE HUNDRED THOUSAND DOLLARS
($2,900,000.00) 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 $2,900,000.00 for a job
creating capital improvement project with Doss Aviation, Inc., a Texas corporation (the
“Company”) described in the attached agreement 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 employment Agreement, dated October 13, 2017, between the City and the
Company, a copy of which is attached hereto and incorporated herein by this reference, 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 said agreement in the name of the City and the City
Clerk is directed to fix the seal of the City thereto and attest same.
SECTION 3.
Funds in the aggregate amount of $2,900,000.00 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 agreement. 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 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 agreements which are necessary or
appropriate to implement the transactions described therein.
SECTION 5.
This Resolution shall become effective immediately upon final passage.
INTRODUCED October 10, 2017
BY: Robert Schilling
City Clerk’s Office Item # Q-1
Background Paper for Proposed
Resolution
COUNCIL MEETING DATE: October 10, 2017
TO: President Stephen G. Nawrocki and Members of City Council
VIA: Gina Dutcher, City Clerk
FROM: Sam Azad, City Manager
SUBJECT: A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT BETWEEN
PUEBLO, A MUNICIPAL CORPORATION AND DOSS AVIATION, INC., A TEXAS
CORPORATION, RELATING TO A JOB CREATING CAPITAL IMPROVEMENT
PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO
EXECUTE SAID AGREEMENT AND TRANSFERRING TWO MILLION NINE
HUNDRED THOUSAND DOLLARS ($2,900,000.00) 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 an
employment Agreement between the City of Pueblo and Doss Aviation, Inc., a Texas corporation
(the “Company”).
PREVIOUS COUNCIL ACTION:
On May 22, 2006, the City Council approved a similar employment agreement with the Company.
The Company has fully complied with the 2006 employment agreement which has been
concluded.
BACKGROUND:
In 2006, the Company located its Initial Flight Screening/Training (“IFS/IFT”) business within the
Pueblo Memorial Airport Industrial Park. In 2016, the Company was awarded a 10-year contract
extension which will enable the Company to continue to provide IFS/IFT services at the Pueblo
Memorial Airport.
FINANCIAL IMPLICATIONS:
Under the proposed Resolution, the City will transfer $2,900,000.00 to be applied toward capital
improvement projects at its training facility located at 1 William White Blvd., Pueblo, CFO 81001
and the acquisition of other assets to be used in providing IFS/IFT services. The proposed
employment Agreement provides that after a two and a half year ramp up period, the Company
will hire and employ not less than one hundred ninety-two (192) new full-time employees at its
training facility. The City’s investment is secured by a first lien (Deed of Trust) on 1 William White
Boulevard.
BOARD/COMMISSION RECOMMENDATION:
Not applicable to this Resolution.
STAKEHOLDER PROCESS:
Not applicable to this Resolution.
ALTERNATIVES:
If this Resolution is not approved, the City will lose the opportunity to create 192 new jobs.
RECOMMENDATION:
The Pueblo Economic Development Corporation recommends approval of this Resolution.
Attachments:
Proposed Resolution; Proposed Employment Agreement; Proposed Deed of Trust
AGREEMENT
THIS AGREEMENT amends the Agreement entered into as of May 22, 2006 between
Pueblo, a municipal corporation (the "City") and Doss Aviation, Inc., a Texas corporation (the
"Company").
WHEREAS, in 2006, Company located its Initial Flight Screening/Training ("IFS/IFT")
business within the Pueblo Memorial Airport Industrial Park, pursuant to a contract with the U.S.
Air Force; and
WHEREAS, Company has recently been awarded a 10-year contract extension which
will enable Company to continue to provide IFS/IFT services at the Pueblo Memorial Airport
(Airport); and
WHEREAS, in anticipation of the IFS/IFT contract extension, on April 11, 2016, City
authorized the expenditure of $502,000 to develop a detailed Airport Layout Plan of Airport
expansion; and
WHEREAS, a key component Airport Expansion Plan is additional airport capacity;
WHEREAS, one of the alternatives for increased capacity is the upgrade and re-opening
of a decommissioned runway which would create three parallel runways at the Airport; and
WHEREAS, Company and City agree that they will not implement any component of
the Airport Expansion Plan without the prior concurrence of the Federal Aviation Administration
("FAA") and
WHEREAS, in furtherance of the 10-year contract extension, Company has through the
Pueblo Economic Development Corporation ("PEDCO") made application for economic
development 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 recommendations has approved such
application and will make funds available to Company subject to and upon the terms and
conditions of this Agreement; and
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:
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1. The following terms as used in this Agreement shall have the following meaning
unless the context clearly indicates otherwise:
"Employment Commitment Date" means April 1, 2020.
"Facility" means the improvements constructed on the Property where in Company
conducts its business operations, including classrooms and dormitory.
"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 $55,000.00
per year plus benefits, 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 or subcontractors or their employees, such as food, cleaning or
janitorial services employees, nor officers or shareholders of Company., unless said independent
contractors or subcontractors are the result of mandatory DBE set aside language contained in
Doss's agreement with the United States Department of Defense. Since the hours of
employment for flight pilot instructors may vary depending on flight training activities, Full-
Time Employees can include full-time equivalent employees computed on thirty-two (32) hours
per week for flight pilot instructors up to twenty percent (20%) of the total number of Full-Time
Employees actually employed by Company.
"Per Employee Payment" means an amount equal to (a) the Total Funds Advanced
divided by 192 (i.e. the Full Time Employees subject to the Employment Commitment), divided
by(b) 28 (i.e. the number of Quarters in the Repayment Period).
"Property" means Parcel B, Lot Line Rearrangement 2005-005, a vacation and replat of
Lots 23 and 24, Pueblo Memorial Airport Industrial Park Subdivision, 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: 1 William White Boulevard, Pueblo, CO
81001.
"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.
"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 $2,900,000, the Repayment Reduction would be $2,900,000
28 = $103,571.42.
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2. Pursuant to the process described in Section 2(c) and prior to the Employment
Commitment Date, the 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 an
amount not to exceed $2,900,000.00 (the "City Funds"), subject to and contingent upon the
following conditions and covenants which Company agrees to perform and comply with:
(a) Company shall use City Funds for capital improvement projects for the
Facility located on the Property and acquisitions of other assets employed in the provision of
IFS/IFT at Pueblo.
(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, and (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 in the name of Company. The date of the last to occur of the
filings required under (i) and (ii) of this Paragraph 2(b) shall be referred to herein as "Closing."
If Closing does not occur on or before July 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.
(c) As conditions precedent to disbursement or payment of City Funds,
Company shall file (i) with the City Clerk the documents required by (b) above, and (ii) with
City's Director of Finance written request for payment certified to be true and correct by an
officer of Company or its representative 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 capital
construction or asset acquisition, identifying the construction work and/or assets for which
payment is sought, including in the case of construction work, certificates of the architect and
contractor that the construction work for which payment is sought has been completed. All City
Funds received by Company shall be deposited in a separate account and held in trust by
Company for the sole and only purpose of paying for capital construction and asset acquisition.
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
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 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 one hundred ninety-two (192) Full-Time Employees at the Facility
(the "Employment Commitment").
4. Notwithstanding anything contained in this Agreement to the contrary, if
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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 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 one hundred
ninety-two (192) 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 $2,900,000 and such Quarterly Employees is 155, the amount payable by Company to
City on or before the fifteenth (15th) day of the next calendar month would be (192 - 155) x
$539.43 = $19,958.91.
(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 (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.
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(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 one hundred ninety-two (192)
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 the renewal of the existing Deed of Trust, as amended,
encumbering the Facility and Property. Company covenants with and warrants to the City that
the Amended Deed of Trust shall constitute a first priority lien or encumbrance and that there are
no senior liens or encumbrances against the Facility and Property. The form and content of the
Deed of Trust, as amended, 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
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 may 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 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.
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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.
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, Doss Aviation, Inc., 3670 Rebecca Lane, Colorado
Springs, Colorado, 80917,
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.
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
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.
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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
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
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counterpart shall be deemed for all purposes to be an original, and all such counterparts shall
together constitute but one and the same original.
20. In the event the FAA provides the City with a written statement of no objection for
the upgrade or construction of a fourth runway at the Airport, the City commits to the
expenditure of an additional One Million Four Hundred Thousand Dollars ($1,400,000.00)
toward that construction project. In connection with the upgrade or construction of a fourth
runway, the parties agree to fully comply with all conditions and requirements imposed by the
FAA. The City and Company further agree that the expenditure of an additional $1,400,000.00 in
City funds will be the subject of an amendment to this Agreement which the parties agree to
negotiate in good faith.
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Executed at Pueblo, Colorado, this I3 day of D c.--10 beI , 2017.
Pueblo, a Municipal Corporation
[ SEAL ]
Attest: By 1
City Jerk President of the City Council
[ SEAL ]
DOSS AVIATION, INC.
a Texas corporation
Attest: ``.-iBy
Name: LuAnn Hanson Na : Mark Lester
Title: Chief Financial Officer Title: Vice President
STATE OF COLORADO )
) ss.
COUNTY OF PUEBLO )
The foregoing instrument was acknowledged before me this h day of
Ct 101;v2 t, , 2017 by Stephen G. Nawrocki as President of the City Council and Gina
Dutcher as City Clerk of Pueblo, a municipal corporation.
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Witness my hand and official seal.
BRENDA AM1LOmmissi n expires: O 'i y f,-2.(2
NOTARY PUBLIC .
00Th H[agr8D7O2 l CQ C.
MY COMMISSION EXPIRES 0211412020 Notary Public tit
STATE OF 0010(a 0(o )
D ) ss.
COUNTY OF c t1 P� S D )
The foregoing instrument was acknowledged before me this 2 s day of hp-tersbCf
2017 by Mark Lester as Vice President and LuAnn Hanson as Chief Financial Officer of Doss
Aviation, Inc., a Texas corporation.
Witness my hand and official seal.
My commission expires: Q/J y/2020 .
[ SEAL ] a ��Nlµ
rk, ?s9411/1-k
JENNIFER M PATNEAL
NOTARY PUBLIC•STATE OF COLORADO
Notary Identification 019994005039
My Commission Expires 9114/2020 NotPubli
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