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City Clerk’s Office Item # M-14
Background Paper for Proposed
Resolution
COUNCIL MEETING DATE: December 26, 2018
TO: President Christopher A. Nicoll and Members of City Council
VIA: Brenda Armijo, Acting City Clerk
CC: Sam Azad, City Manager
FROM: Daniel C. Kogovsek, City Attorney
SUBJECT: A RESOLUTION APPROVING AND AUTHORIZING THE SALE OF 60
GREENHORN DRIVE, PUEBLO, CO 81004 TO FRE COMPOSITES USA INC., A
DELAWARE CORPORATION AND FURTHER AUTHORIZING THE PRESIDENT
OF CITY COUNCIL TO EXECUTE A SPECIAL WARRANTY DEED AND
RELATED DOCUMENTS AT THE CLOSING OF THE SALE TRANSACTION
SUMMARY:
Attached is a Resolution which authorizes the sale of 60 Greenhorn Drive, Pueblo, CO 81004 to
FRE Composites, Inc., a Delaware Corporation (“Company”) and further authorizes the President
of City Council to execute a Special Warranty Deed and related documents at closing.
PREVIOUS COUNCIL ACTION:
The Company is a Delaware corporation associated with a Canadian pipe manufacturer. Since
2011, the Company has operated a fiberglass composite pipe manufacturing facility located at 60
Greenhorn Drive, Pueblo, CO, 81004. On January 25, 2011, economic incentives in the amount
of $1,266,800 were provided to the Company as follows:
$750,000 used for the purchase of the industrial building located at 60 Greenhorn
Drive, Pueblo, CO 81004;
$5,300 for an appraisal, environmental inspection and closing costs;
$1,500 to Pueblo Development Foundation for managing the renovation of 60
Greenhorn Drive;
$510,000 distributed as follows:
- $240,000 for the acquisition of equipment;
- a lease subsidy of $240,000 applied toward the Company’s “Triple Net” Lease;
- $30,000 to remodel and renovate the building located at 60 Greenhorn Drive,
In exchange for the economic incentives from the City, the Company agreed to hire 30 full-time
employees whose annual compensation would average at least $43,000 per employee. The
Employment Commitment agreed to by the Company is from February 1, 2014 through January
31, 2021.
Amendment No. 1 to the Employment Agreement was agreed to by the parties on July 24, 2012.
That Amendment approved an exchange of collateral whereby the City’s first security interest in
the Company’s equipment located in Pueblo County was replaced by cash collateral in the
amount of $240,000. Amendment No. 1 required a gradual release of cash collateral to the
Company as the Company fulfilled its employment commitment over time.
On August 8, 2016, by Resolution No. 13496, the City Council approved the following changes to
the contractual obligations of the Company to the City:
(1) The lease subsidization terminated, effective July 1, 2016. In exchange for the
eventual transfer of 60 Greenhorn Drive from the City to the Company at the end
of the lease term, the Company agreed to pay $337,500.00 in future lease
payments to the City. However, the City also agreed to reimburse the Company
$69,428.64 for the previously accrued but unused rent subsidy.
(2) The Company agreed to satisfy and discharge the $510,000 in economic
incentives by continuing to employ 30 full-time employees (whose annual
compensation shall average at least $43,000) through January 31, 2021. In the
event Company defaults in its Employment Commitment, the Company agreed to
repay the remaining balance of the $510,000 in economic incentives on a pro-rata
basis.
(3) To secure the repayment of the $510,000 in economic incentives, the Company
granted the City a first security interest in the Company’s manufacturing equipment
situated at the Company’s manufacturing facility located at 60 Greenhorn Drive,
Pueblo, CO 81004.
(4) As a result of the Company giving the City a new first secured position in the
Company’s equipment located in Pueblo, the City released the remaining cash
collateral by making a payment of $202,582.68 to the Company. Said sum was
computed by subtracting from the current cash collateral balance of $211,439.69
the sum of $5,528.49 owed by the Company for failing to meet its employment
commitment in 2014 and the sum of $3,428.52 owed by the Company for failing to
meet its employment commitment in 2015.
BACKGROUND:
Pursuant to Article 22 of the 08-08-16 Lease, Company has the option of purchasing 60
Greenhorn Drive by paying the remaining balance owed to the City under the Lease. Company
has paid rent through December, 2018 in the amount of $181,250 (29 months @ $6,250 per
month) and still owes the City $156,250 (25 months @ $6,250 per month).
FINANCIAL IMPLICATIONS:
The Lease balance of $156,250 will be paid to the City at closing. However, the City, pursuant to
Article 23 of the Lease, will pay the Company $69,428.64 for the previously accrued but unused
rent subsidy.
BOARD/COMMISSION RECOMMENDATION:
Not applicable.
STAKEHOLDER PROCESS:
Not applicable.
ALTERNATIVES:
If this Resolution is not approved, the City will be in breach of its previous agreements with the
Company.
RECOMMENDATION:
Approve the Resolution.
Attachments:
Resolution; Special Warranty Deed
RESOLUTION NO. 14135
A RESOLUTION APPROVING AND AUTHORIZING THE
SALE OF 60 GREENHORN DRIVE, PUEBLO, CO 81004 TO
FRE COMPOSITES USA INC., A DELAWARE
CORPORATION AND FURTHER AUTHORIZING THE
PRESIDENT OF CITY COUNCIL TO EXECUTE A SPECIAL
WARRANTY DEED AND RELATED DOCUMENTS AT THE
CLOSING OF THE SALE TRANSACTION
BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that:
SECTION 1.
The sale of 60 Greenhorn Drive, Pueblo, CO 81004 to FRE Composites USA Inc.,
a Delaware corporation, shall be and hereby is approved and authorized.
SECTION 2
The President of City Council is authorized to execute and deliver a Special
Warranty Deed, in substantially the form attached hereto. The President of City Council
is also authorized to execute and deliver such other documents as are customarily
required at real estate closings, at the closing of this sale transaction.
SECTION 3.
The officers and staff of the City are authorized and directed to perform any and
all acts consistent with this Resolution which are necessary or appropriate to effectuate
the transaction described herein.
SECTION 4.
This Resolution shall become effective immediately upon final passage.
INTRODUCED: December 26, 2018
BY: Ed Brown
MEMBER OF CITY COUNCIL
APPROVED:
PRESIDENT OF CITY COUNCIL
ATTESTED BY:
ACTING CITY CLERK
Reception 2126868
01/02/2019 08:46:52 AM
AFTER RECORDING RETURN TO:
Thomas P.Kearns,Esq.
Fairfield and Woods,P.C.
1801 California Street,Suite 2600
Denver,CO 80202
SPECIAL WARRANTY DEED
THIS DEED is dated December 26,2018,and is made between PUEBLO,a Municipal Corporation,whose address
is c/o The City Attorney,Pueblo Law Department, One City Hall Place,3`d Floor,Pueblo,CO 81003,the"Grantor,"and
FRE COMPOSITES USA, INC., a Delaware corporation, whose legal address is 60 Greenhorn Drive, Pueblo, CO
81004,the"Grantee."
WITNESS, that the Grantor, for and in consideration of the sum of TEN DOLLARS ($10.00), the receipt and
sufficiency of which is hereby acknowledged,hereby grants, bargains, sells,conveys and confirms unto the Grantee and
the Grantee's successors and assigns forever,all the real property,together with any improvements thereon,located in the
County of Pueblo and State of Colorado,described as follows:
Lots 9 and 10,
Minnequa Industrial Park,First Filing,
County of Pueblo,State of Colorado.
Also known as 60 Greenhorn Drive,Pueblo,CO 81004
Assessor parcel numbers: 1524001008 and 1524001002
TOGETHER with all and singular the hereditaments and appurtenances thereunto belonging, or in anywise
appertaining,the reversions,remainders,rents, issues and profits thereof,and all the estate,right,title,interest,claim and
demand whatsoever of the Grantor, either in law or equity, of, in and to the above bargained premises, with the
hereditaments and appurtenances.
TO HAVE AND TO HOLD the said premises above bargained and described, with the appurtenances, unto the
Grantee and the Grantee's successors and assigns forever. The Grantor, for itself and its successors and assigns, does
covenant and agree that the Grantor shall and will WARRANT TILE TITLE AND DEFEND the above described
premises, but not any adjoining vacated street or alley, or other right-of-way that adjoins the real property, in the quiet
and peaceable possession of the Grantee and the successors and assigns of the Grantee, against all and every person or
persons claiming the whole or any part thereof, by,through or under the Grantor except and subject to general property
taxes and those created by acts or any default of Grantee and subject to the easements, rights-of-way, conditions,
covenants, restrictions, reservations, and limitations of record and those created by acts or any default of Grantee and
subject to,those matters disclosed on Exhibit A attached hereto and made a part hereof by this reference.
IN WITNESS WHEREOF,the Grantor has caused this Special Warranty Deed to be executed,on the date set forth
above.
044 4 ' o GRANTOR:
ATTEST: ry , + G •UEBLO,a Mu,'•',. Corporation
impft Ounsi ,. 1101°F
p eul►tCity Clerk `a,°C1
iilllllrMllBtill 46' Na •- %•.' opher A.Nicoll
III"III"0 Title: President of the City Council
44,
Recording Requested by:
No.16B.Rev.10-09. SPECIAL WARRANTY DEED (From a Corporation) (Page 1 of 3) FNTG-NCS Colorado
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STATE OF COLORADO )
)ss.
County of Pueblo )
The foregoing instrument was acknowledged before me this 26th day of December,2018,by Christopher A.Nicoll,
as President of the City Council of Pueblo,a Municipal Corporation.
Witness my hand and official seal.
My commission expires: 6 Y 0
4/0:4,d-<, K o
DANIEL C.KOGOVSEK Notary Public
NOTARY PUBLIC
STATE OF COLORADO
yp ID 00640.4831,
• .- rgibikevtly Created Legal Description(08-35-106.5,C.R.S.)
No.16B.Rev.10-09. SPECIAL WARRANTY DEED (From a Corporation) (Page 2 of 3)
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EXHIBIT A
1. Water rights,claims of title to water,whether or not these matters are shown by the Public Records.
2. Taxes and assessments for the year 2018 and subsequent years,a lien not yet due or payable.
3. Terms,conditions,provisions,agreements and obligations contained in the Agreement as set forth below:
Recording Date:January 9, 1974
Recording No.:Book 1770 Page 247
4. Terms,conditions,restrictions,provisions,notes and easements but omitting any covenants or restrictions,if
any,including but not limited to those based upon race,color,religion,sex,sexual orientation,familial status,
marital status,disability,handicap,national origin,ancestry,source of income,gender,gender identity,gender
expression,medical condition or genetic information,as set forth in applicable state or federal laws,except to the
extent that said covenant or restriction is permitted by applicable law,as set forth on the Plat Minnequa
Industrial Park,First Filing set forth below:
Recording Date:January 9, 1974
Recording No:Book 1770 Page 252 and 253
5. All interest in all oil,gas and other mineral rights as reserved in the instrument set forth below,and any and all
assignments thereof or interests therein:
Recording Date: September 12, 1974
Recording No.:Book 1793 Page 437
(Affects Lot 10)
6. Terms,conditions,provisions,agreements and obligations contained in the Easement Agreement as set forth
below:
Recording Date:March 28,2008
Recording No.:Reception No. 1763524
Assignment of Easement Agreement as set forth below:
Recording Date:March 28,2008
Recording No.:Reception No. 1763524
(Affects Lot 10)
No.16B.Rev.10-09. SPECIAL WARRANTY DEED (From a Corporation) (Page 3 of 3)