HomeMy WebLinkAbout10025ORDINANCE NO. 10025
AN ORDINANCE APPROVING AN EMPLOYMENT
AGREEMENT BETWEEN THE CITY OF PUEBLO, A
COLORADO MUNICIPAL CORPORATION AND
ARMSTRONG STEEL CORPORATION, A DELAWARE
CORPORATION, RELATING TO A JOB CREATING
CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE
MAYOR TO EXECUTE SAID EMPLOYMENT AGREEMENT
AND TRANSFERRING $1,224,000 FROM THE 1992-2026
SALES AND USE TAX CAPITAL IMPROVEMENT
PROJECTS FUND
BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that:
SECTION 1.
The City Council finds and determines that the expenditure of $1,224,000 for a
new job creating capital improvement project with Armstrong Steel Corporation, a
Delaware corporation (the “Company”) described in the attached Employment
Agreement, is for a public purpose and in furtherance of a municipal function and will
create employment opportunities justifying the expenditure of public funds.
SECTION 2.
The Employment Agreement dated September 16, 2021, 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 Mayor is authorized to execute and deliver said Employment Agreement in the
name of the City and the City Clerk is authorized to affix the seal of the City thereto and
attest same.
SECTION 3.
Funds in the aggregate amount of $1,224,000 are hereby authorized to be
transferred, expended and made available out of the 1992-2026 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
Employment Agreement. The funds are hereby authorized to be transferred and
expended and shall be released, disbursed and paid by the City’s Director of Finance
as specified in the attached Employment Agreement.
SECTION 4.
The officers and staff of the City are authorized to perform any and all acts
consistent with this Ordinance and the attached Employment Agreement which are
necessary or appropriate to implement transactions described therein.
SECTION 5.
This Ordinance shall become effective on the date of final action by the Mayor and
City Council.
Action by City Council:
Introduced and initial adoption of Ordinance by City Council on October 12, 2021.
Final adoption of Ordinance by City Council on October 25, 2021.
President of City Council
Action by the Mayor:
☒ Approved on October 26, 2021 .
□ Disapproved on based on the following objections:
_
Mayor
Action by City Council After Disapproval by the Mayor:
□ Council did not act to override the Mayor's veto.
□ Ordinance re-adopted on a vote of , on
□ Council action on _______ failed to override the Mayor’s veto.
President of City Council
ATTEST
City Clerk
City Clerk’s Office Item # R-1
Background Paper for Proposed
Ordinance
COUNCIL MEETING DATE: October 12, 2021
TO: President Lawrence W. Atencio and Members of City Council
CC: Mayor Nicholas A. Gradisar
VIA: Marisa Stoller, City Clerk
FROM: Daniel C. Kogovsek, City Attorney
SUBJECT: AN ORDINANCE APPROVING AN EMPLOYMENT AGREEMENT BETWEEN
THE CITY OF PUEBLO, A COLORADO MUNICIPAL CORPORATION AND
ARMSTRONG STEEL CORPORATION, A DELAWARE CORPORATION,
RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT,
AUTHORIZING THE MAYOR TO EXECUTE SAID EMPLOYMENT AGREEMENT
AND TRANSFERRING $1,224,000 FROM THE 1992-2026 SALES AND USE TAX
CAPITAL IMPROVEMENT PROJECTS FUND
SUMMARY:
Attached is an Ordinance approving and authorizing the Mayor to sign an employment agreement
with Armstrong Steel Corporation, a Delaware corporation (the “Company”).
PREVIOUS COUNCIL ACTION:
Not applicable to this Ordinance.
BACKGROUND:
Company’s business plan is centered on the manufacture of steel buildings, for distribution
outside of Pueblo County. The Company has committed to invest more than $5.7 million in a
manufacturing facility located within the Minnequa Industrial Park. The Company has also
committed, for a period of seven (7) years, to employ a minimum of 51 full-time employees at its
facility whose annual pre-benefit salaries shall average at least $52,400, for a total of more than
$2.67 million in annual salaries.
FINANCIAL IMPLICATIONS:
In exchange for the Company’s employment commitment, the City will advance funds in the
amount of $1,224,000 for the purchase of equipment to be used and installed at the Company’s
facility or for construction costs for improvements at the facility.
The advancement of funds by the City shall be secured by a perfected first security interest in the
Company’s equipment purchased with City funds.
BOARD/COMMISSION RECOMMENDATION:
Not applicable to this Ordinance.
STAKEHOLDER PROCESS:
Not applicable to this Ordinance.
ALTERNATIVES:
If this Ordinance is not approved, the Company will not open its manufacturing facility in the City
of Pueblo.
RECOMMENDATION:
The Pueblo Economic Development Corporation recommends approval of this Ordinance.
Attachments:
Proposed Ordinance
Proposed Employment Agreement
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of this 16th
day of September, 2021, between the City of Pueblo, a Colorado municipal corporation (the
"City"), and Armstrong Steel Corporation, a Delaware 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 manufacturing center
and business administration offices in 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,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; and
WHEREAS, Company's business plan, as it pertains to Pueblo County, is centered on the
manufacture of steel buildings 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
not less than $5.7 million in a manufacturing facility located within the Minnequa Industrial Park;
and(ii)provide the employment described in Section 4 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, the Parties 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 October 1, 2025.
"Equipment" means the manufacturing machinery and trade fixtures and other related
personal property to be acquired with City funds and then installed, maintained, and used by
Company in the Facility.
"Facility" means the manufacturing center and business administration offices located in
the Minnequa Industrial Park at TBD Greenhorn Drive wherein Company will conduct its business
operations.
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"Full-Time Employee" means a person who actually performs work at the Facility for not
less than thirty-five (35) hours per week at an average annual salary of not less than $52,400 per
year not including benefits,
"Operations Date" means the date when the Company begins the manufacture of steel
buildings at the Facility.
"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.
"Quarterly Payment Per Employee" means $1,224,000 (the Total Funds Advanced)
divided by 28 (the number of quarters in the Repayment Period) divided by 51 (Employment
Commitment): $1,224,000_28 = $43,714.29_ 51 = $857.14.
"Repayment Reduction" means for each Quarter an amount equal to $1,224,000 (the
Total Funds Advanced) divided by 28 (i.e. the number of Quarters in the Repayment Period):
$1,224,000- 28 = $43,714.29.
"Security Agreement" has the meaning set forth in Section 5 of this Agreement.
2. If the Company is not in default under this Agreement, City will advance to or for
the benefit of Company funds in the amount of One Million Two Hundred Twenty-Four Thousand
Dollars ($1,224,000) (the "City Funds"), subject to and contingent upon the following conditions
and covenants which Company agrees to perform and comply with:
(a) City Funds will be advanced by City to Company for the purchase of
Equipment to be used and installed at the Facility or for construction costs for improvements to
the Facility.
(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, (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 and related documents in the name of Company, (iii)duly executed copies of this
Agreement. The date of the last to occur of the filings required under (i), (ii) and (iii) of this
paragraph 2(b) shall be referred to herein as "Closing." If Closing does not occur on or before
December 31, 2021, or such later date as the Parties shall mutually agree, City, at its sole option,
may terminate this Agreement and the Parties shall thereafter be released and discharged from all
obligations hereunder.
(c) As a condition precedent to the disbursement of City Funds for the purchase
of manufacturing equipment or payment of construction costs, Company shall file(i)with the City
Clerk the documents described in Paragraph (b) above, and (ii) and shall file with the City's
Director of Finance written requests for payment certified to be true and correct by an officer of
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Company 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 manufacturing equipment or construction costs,
identifying the specific equipment for which payment is sought or construction costs for which
payment is requested, including contracts for the purchase thereof and certificates of delivery and
installation at the Facility, to the extent applicable. Company shall not submit requests for
payment which exceed, in the aggregate, One Million Two Hundred Twenty-Four Thousand
Dollars ($1,224,000). The City agrees to disburse funds within thirty (30) days of submission of
the Company's written request for payment, if such request is accompanied by supporting
documentation as set forth herein. Following disbursement of the City funds, the Company shall
acquire and install the Equipment and shall provide a report to the City within ninety (90) days
thereafter documenting the purchase and the amounts paid therefor and installation of the
Equipment in the Facility.
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 Effective 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 Effective
Date of this Agreement to the Employment Commitment Date,Company shall use commercially
reasonable efforts in good faith to employ as many Full-Time Employees as reasonably justified
by its business Operations; (ii) on and after the Employment Commitment Date continuously
conduct its business Operations at the Facility and employ not less than Fifty-One(51)Full-Time
Employees at the Facility whose annual compensation shall average at least Fifty-Two Thousand
Four Hundred Dollars ($52,400), not including benefits, for a period of seven (7) years following
the Employment Commitment Date. Company will use good faith efforts, in accordance with
its sound business practices, to employ residents of the County of Pueblo as Full-Time Employees
including, without limitation, engaging in reasonable programs and posting of employment
openings in the County 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 Section 3, Company shall
repay to City a pro-rata share of the City Funds advanced by City under Section 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
Fifty-One (51) Full-Time Employees employed at the Facility by Company multiplied by the
Quarterly Payment Per Employee (the "Company's Quarterly Payments"). For example, if for
the second Quarter of the third year after the Employment Commitment Date the number of
Quarterly Employees is 44, the amount payable by Company to City on or before the fifteenth
(15th) day of the next calendar month would be(51-44) x $857.14= $5,999.98.
(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 at the office of the Director of Finance of City, 1 City
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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 thirty (30) days after the end of each quarter after the Employment
Commitment Date and for one calendar month after the expiration of 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 quarterly salaries (together with the basis upon
which Quarterly Employees 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 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, but in no event more than the amount of City Funds
advanced by City under Section 2 hereof plus Default Interest as herein provided. 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, without limitation, its Repayment Obligation. Company's obligations under this
Agreement including its Repayment Obligation shall be secured by:
(a) a perfected first security interest in the Equipment purchased with City funds. Prior
to any disbursement of funds by City for Equipment, Company shall execute and deliver to City,
Company's Security Agreement, Financing Statement, and such other documents as may be
reasonably required to perfect a first security interest in the Equipment all in form and content
approved by City's Attorney (the "Security Agreement"), such approval not to be unreasonably
conditioned, delayed, or withheld. Company may be permitted from time to time to substitute
items of replacement equipment for items of Equipment removed from the Facility,provided that
the Company provides the City with prior written notice of such substitution, replacement or
removal and an amended Security Agreement meeting the requirements of this section is executed
and delivered identifying the substitute items of equipment and deleting the item of Equipment
being replaced.
Notwithstanding the foregoing, however, the City agrees that it shall not be permitted to
enforce the Security Agreement (or take possession of the Equipment provided as collateral
pursuant thereto) unless (and to the extent that) the Company is in default under this Agreement
beyond all applicable periods for cure.
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6. (a) Prior to instituting any proceeding to enforce Company's Repayment Obligation
under Section 4,City shall notify Company in writing of it's intention to institute such proceedings.
Company may request relief from its Repayment Obligation by delivering to City within (20)days
after the date if City's notice, Company 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 Mayor and 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 Mayor and 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 Section 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
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
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 personal and subject matter jurisdiction
of such District Court. To the 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 this Agreement may not be amended or modified
except in writing signed by both Parties. 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, Mayor, City of Pueblo, 1 City Hall Place, Second Floor, Pueblo,
CO 81003 with a copy to City Attorney, 1 City Hall Place, Third Floor, Pueblo, Colorado 81003,
or
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(b) if to the Company, Armstrong Steel Corporation, Attn: President/CEO, 2
Inverness Dr East, Suite 200, Centennial, CO 80112.
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 Section 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, provided Company may not,
except as provided below, assign this Agreement or any interest herein 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.
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 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 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, 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 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 Section 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 Section 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 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
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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 effective the day and year first above written.
[ SEAL ] CITY OF PUEBLO, a Colorado municipal
corporation
Attest: eiriv By �telttA/
re444404,
City C Mayor
[ SEAL ]
Armstrong Steel Corporation
a Delaware corpor ion
By
Name: era C"'"1" 1
Title:
STATE OF COLORADO )
) ss.
COUNTY OF Areptiolvt )
The foregoing instrument was acknowledged before me this K.day of SES
2021 by E"MA,V 0/(0A(41•1 as PS Atiitm- of Armstrong Steel Corporation,
a Delaware corporation.
Witness my hand and official seal.
My commission expires: ' 3- of- 2013
STEVEN ZAUGG '
[ S A L] NOTARY PUBLIC
STATE OF COLORADO
c>
NOTARY ID 20034009024
MY COMMISSION EXPINIS 0311412023