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Home My WebLink About14070 RESOLUTION NO. 14070 A RESOLUTION APPROVING A FIFTH AMENDMENT TO AN EMPLOYMENT AGREEMENT BETWEEEN PUEBLO, A MUNICIPAL CORPORATION AND ROCLA CONCRETE TIE, INC. A TEXAS CORPORATION, RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT AND AUTHORIZING THE PRESIDENT OF CITY COUNCIL TO EXECUTE SAID AMENDMENT BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The Fifth Amendment to Employment Agreement dated as of October 22, 2018, between Pueblo, a municipal corporation and Rocla Concrete Tie, Inc., a Texas corporation, relating to a job creating capital improvement project, a copy of which attached hereto, (“Fifth Amended 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 Fifth Amended 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 2. The officers and staff of the City are authorized and directed to perform any and all acts consistent with this Resolution and the attached Fifth Amended Agreement which are necessary or appropriate to effectuate the transactions described therein. SECTION 3. This Resolution shall become effective immediately upon final passage. INTRODUCED October 22, 2018__ ___ __ BY: Ed Brown MEMBER OF CITY COUNCIL APPROVED: PRESIDENT OF CITY COUNCIL ATTESTED BY: ACTING CITY CLERK City Clerk’s Office Item # M-8 Background Paper for Proposed Resolution COUNCIL MEETING DATE: October 22, 2018 TO: President Christopher A. Nicoll and Members of City Council CC: Sam Azad, City Manager VIA: Brenda Armijo, Acting City Clerk FROM: Daniel C. Kogovsek, City Attorney SUBJECT: A RESOLUTION APPROVING A FIFTH AMENDMENT TO AN EMPLOYMENT AGREEMENT BETWEEEN PUEBLO, A MUNICIPAL CORPORATION AND ROCLA CONCRETE TIE, INC. A TEXAS CORPORATION, RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT AND AUTHORIZING THE PRESIDENT OF CITY COUNCIL TO EXECUTE SAID AMENDMENT SUMMARY: Attached is a Resolution which authorizes the President of City Council to sign a Fifth Amendment to an Employment Agreement with Rocla Concrete Tie, a Texas Corporation (“Rocla”). PREVIOUS COUNCIL ACTION: Date Action 04/09/2012 $1.4 million for construction and installation of a railroad lead track adjacent to Rocla’s manufacturing plant 02/25/2013 Increased the economic incentives by $362,216 and extended the term of Rocla’s employment commitment 09/23/2013 Rocla agrees to hire fifty (50) additional employees in exchange for an increase in economic incentives of $700,000 12/08/2014 City advanced $600,000 for the construction and installation of a second railroad lead track adjacent to Rocla’s manufacturing plant BACKGROUND: Rocla is a Texas corporation which relocated its concrete railroad tie manufacturing facility from the Denver metropolitan area to the City in 2012. Beginning in 2012, the City has advanced approximately $3.1 million in economic incentives in exchange for an employment commitment of 150 full-time employees through March 31, 2023. The City’s prior investments were not for the exclusive benefit of Rocla. The two new rail spurs are owned by the City’s Pueblo Municipal Rail Corporation and are available for use to companies other than Rocla on a non-exclusive basis. As a result of current economic conditions, Rocla has requested that the City suspend Rocla’s employment commitment for a period of three (3) years. FINANCIAL IMPLICATIONS: Under this Resolution, Rocla’s employment commitment would be suspended and held in abeyance for a period of three (3) years, from October 1, 2016 to September 30, 2019. BOARD/COMMISSION RECOMMENDATION: Not applicable. STAKEHOLDER PROCESS: Not applicable. ALTERNATIVES: Failure to approve this Resolution would result in Rocla’s default under the current employment agreement. Rocla is currently employing approximately 100 full-time employees which is less than Rocla’s employment commitment of 150 full-time employees. Attachments: Proposed Resolution and Fifth Amended Employment Agreement FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT THIS FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT("Fifth Amendment") entered into this 22nd day of October, 2018 between Pueblo, a municipal corporation (the"City") and Rocla Concrete Tie, Inc., a Texas corporation (the "Company"). WHEREAS, Company and City entered into an original Employment Agreement ("Employment Agreement") dated April 9, 2012 which provided, inter alia, for the construction and installation of a Railroad Lead Track and associated facilities adjacent to the manufacturing plant owned by Company; and WHEREAS,Company and City entered into an amendment to the Employment Agreement on February 25, 2013. ("First Amendment") which, inter alia, increased the economic incentives from the City to the Company and extended the term of the Company's employment commitment; and WHEREAS, Company and City entered into a second amendment to the Employment Agreement on September 23, 2013 ("Second Amendment") which, inter alia, increased the economic incentives from the City to the Company and increased the Company's employment commitment by an additional fifty (50) employees; and WHEREAS, Company and City entered into a third amendment to the Employment Agreement on December 8, 2014 ("Third Amendment")which, inter alia, advanced funds for the construction and installation of an additional railroad lead track ("Second Railroad Lead Track") and associated facilities which are adjacent to the existing Railroad Lead Track; and WHEREAS, Company and City entered into a fourth amendment to the Employment Agreement on November 28, 2015 ("Fourth Amendment") which, inter alia, extended the Company's Employment Commitment date for a period of one (1) year; and WHEREAS, Company intends to continue to operate its manufacturing facility within the City through, at least, September 30, 2026; and WHEREAS, as a result of a significant decrease in the world-wide price of oil, the Company has requested that the City suspend the Company's Employment Commitment for a period of three (3) years. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, City and Company agree as follows: 1. The Company's Employment Commitment is hereby suspended retroactively and until October 1, 2019. The Parties agree that there are no outstanding amounts currently owed by Company due to its Employment Commitment. 2. The Termination Date of the Company's Employment Commitment is hereby extended to September 30, 2026. 3. From October 1, 2019 to September 30, 2026, Company will continuously conduct its business operations at the Facility and employ, on a quarterly average, not less than one hundred fifty (150) Full-Time Employees at the Facility ("Employment Commitment"). Such quarterly average shall be calculated using the sum of the aggregate number of Full-Time Employees on each business day of a Quarter, divided by the sum of the aggregate business days in such Quarter. 4. Notwithstanding anything contained in this Agreement to the contrary, if Company shall fail to meet the Employment Commitment, Company shall pay to City compensating amounts calculated as follows. From October 1, 2019 to September 30, 2026 (the "Commitment Period")Company shall pay to City a compensating amount for each Quarter in the Commitment Period calculated by subtracting the number of Quarterly Employees from the commitment of one hundred fifty (150) Full-Time Employees and then multiplying the result by $729.10. For example, if for the second Quarter of 2020, the number of Quarterly Employees is 141 the amount payable by Company to City on or before the fifteenth(15th) day of the next calendar month would be(150 - 141) x $729.10 = $6,561.90. 5. The Fourth Amendment Agreement between the Parties, which is incorporated herein by this reference, shall remain in full force and effect, except as amended by this Fifth Amendment Agreement. Executed at Pueblo, Colorado, the day and year first above written. [ SEAL ] Pueblo, a Municipal C• •-oration Attest:.ZWid ( By City Clerke oft e City Council [ SEAL ] ROCLA CONC TE T1E,INC., a Texas corpo Attest: (� ' C By Name: iv(2 K) f`'� Tilo Brandis Title: CFO President