HomeMy WebLinkAbout09822 RESOLUTION NO. 9822
A RESOLUTION APPROVING AN AGREEMENT BETVVEEN PUEBLO, A MUNICIPAL
CORPORATION, AND ESTRADA FOODS, INC. RELATING TO A JOB CREATING CAPITAL
IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO
EXECUTE SAME, AND TRANSFERRING $240,000 FROM THE 1992-2006 SALES AND USE TAX
CAPITAL IMPROVEMENT PROJECTS FUND FOR SUCH PURPOSE
BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that:
SECTION 1.
The City Council finds and determines that the expenditure of $240,000 for the job creating
capital improvement project with Estrada Foods, Inc. described in the attached Agreement, meets
and complies with the criteria and standards established by Ordinance No. 6381 and will create
employment opportunities justifying the expenditure of public funds.
SECTION 2.
The Agreement dated as of March 24, 2003 between the City of Pueblo and Estrada Foods,
Inc., a copy of which is attached hereto, having been approved as to form by the City Attorney, is
hereby approved, and the President of the City Council is authorized to execute and deliver the
Agreement in the name of the City:
SECTION 3.
Funds in an amount of $240,000 are hereby authorized to be transferred, expended and
made available to Estrada Foods, Inc. out of the 1992-2006 Sales and Use Tax Capital
Improvement Projects Fund for the sole purpose of the job creating capital improvement project
and in the manner described in the attached Agreement. The funds hereby authorized to be
transferred and expended shall be released and paid by the Director of Finance to or for the benefit
of Estrada Foods, Inc. after receipt (i) by the City Clerk of the documents required to be filed
pursuant to paragraph 2(d) of the Estrada Foods, Inc. Agreement and (ii) by the Director of
Finance of written requests for payment required by paragraph 2(e).
SECTION 4.
The officers of the City are directed and authorized to perform any and all acts consistent
with the intent of this Resolution and attached Agreement to effectuate the transactions described
therein.
SECTION 5.
This Resolution shall become effective upon final approval and passage.
INTRODUCED March 24, 2003
BY Al Gurule
Councilperson
APPROVED: ~ ' '"
President of City Council
ATTEST:
City~rk
Background Paper for Proposed
RESOLUTION
AGENDA ITEM
DATE: March 24, 2003
DEPARTMENT: Law Department
TITLE
A RESOLUTION APPROVING AN AGREEMENT BETWEEN PUEBLO, A MUNICIPAL
CORPORATION, AND ESTRADA FOODS, INC. RELATING TO A JOB CREATING
CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY
COUNCIL TO EXECUTE SAME, AND TRANSFERRING $240,000 FROM THE 1992-2006
SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND FOR SUCH
PURPOSE
ISSUE
Should City Council approve the job creating capital improvement project with Estrada
Foods, Inc. described in the Agreement attached to the Resolution?
RECOMMENDATION
See Background.
BAC~
The Resolution approves an Agreement between the City and Estrada Foods, Inc. (the
"Company") who will expand its facility at 720 West 8~ Street, Pueblo, Colorado ("Facility")
The Company has committed to employ 44 additional full-time employees for a period of
7 years starting April 1, 2004. If Company defaults in its employment commitment during
the 7-year repayment period, Company will repay City a pro-rata share of the $240,000
City funds advanced to or for the benefit of Company based upon the number of
employees actually employed by Company.
City funds will be advanced for the following purposes: $140,000 for the purchase of new
packaging equipment, and $100,000 for constructing a new packing room within its Facility.
If the fund amounts are not used for the stated purpose, the funds may be used for the
other stated purpose.
PEDCO has evaluated the economic viability of the Company and the project and
recommends that the City Council approve this job creating capital improvement project
and agreement relating to same.
FINANCIAL IMPACT
City will transfer from the one-half cent sales and use tax fund $240,000 for this project.
AGREEMENT
THIS AGREEMENT entered into as of March 24, 2003 between Pueblo, a municipal
corporation (the "City") and Estrada Foods, Inc., a Colorado corporation (the "Company").
WHEREAS, Company has expressed a willingness to expand its business within the City of
Pueblo, and in furtherance thereof has through the Pueblo Economic Development Corporation made
application for funds with the City, and
WHEREAS, the City has approved such application and will make funds available to
Company subject to and upon the tem,s and conditions 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, 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 the earlier of (i) the first day of the sixth calendar
month after the month in which the new packaging room is substantially constructed in the Facility,
or (ii) April 1, 2004.
"Equipment" means packaging equipment acquired, installed, kept, maintained and used by
Company after date of this Agreement in the Facility having an exhaustible useful life of more than
seven (7) years which can be determined or estimated with reasonable accuracy.
"Facility" means Company's facility located at 720 West 8~ Street, Pueblo, Colorado wherein
Company conducts its business operations.
"Full-Time Employee" means a person who acma!ly performs work at the Facility for not less
than thirty-two (32) hours per week 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 nor employees of independent contractors except employees of
an independent contractor acting as an agency to provide Full-Time Employees for Company to
perform work 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 sum of the business days in such Quarter.
2. If Company is not in default under this Agreement, City will advance to or for the
benefit of Company funds in an amount not to exceed $240,000.00 (the "City Funds"), subject to and
contingent upon the following conditions and covenants which Company agrees to perform and
comply with:
(a) $100,000.00 of City Funds will be advanced by City to Company for
construction of a new packaging room in the Facility.
(b) $140,000.00 of City Funds will be advanced by City to Company for the
acquisition of the Equipment by Company at fair market value from a reputable vendor in an arms-
length transaction. Acquisition of equipment from any person or entity related to or a subsidiary of
Company is not an arms-length transaction.
(c) Company shall cause the new packaging room to be constructed in the Facility
and the Equipment installed in an expeditious manner.
(d) 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 goveming
board of Company approving this Agreement and authorizing its officers to execute and deliver this
Agreement and related documents in the name of Company. The date of the last to occur of the
filings required under (i) and (ii) of this paragraph 2(d) shall be referred to herein as "Closing." If
Closing does not occur on or before September I, 2003, 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.
(e) As a condition precedent to the disbursement of City Funds for the acquisition
of Equipment and/or constructing the new packaging room in the Facility, Company shall file with
City's Director of Finance Written request for payment certified to be tree and correct by an officer
of Company that the amounts included in the request for payment have not been included in any
prior request for payment and (a) if for Equipment, are for the actual cost of Equipment, identifying
the Equipment for which payment is sought, including invoices therefor and certificates of delivery
and installation in the Facility, together with documentation, satisfactory to City, establishing such
Equipment has an exhaustible useful life of seven (7) or more years, and (b) if for constructing the
new packaging room in the Facility, identifying the construction for which payment is sought,
including certificates of the architect and/or contractor that the construction for which payment is
sought has been completed. All City Funds, if any, 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 the
purchase of Equipment and/or constructing the new packaging room in the Facility.
(f) The mounts set forth in subparagarphs (a) and (b) above are estimates made
upon information available to Company. Therefore, these amounts may be adjusted and modified
to the actual cost of the expenditures made for the purposes set forth in subparagraphs (a) and (b)
as identified in the request, for payment made by Company pursuant to subparagraph (e). For
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example, if the cost of Equipment is more than $140,000, Company may expend a portion of the
amount allocated for construction of a new packaging room in the Facility for the Equipment.
However, in no event, shall the total of City Funds made available to or for the benefit of the
Company under this Agreement exceed $240,000.
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 date hereof continuously conduct its business operations and employ Full-Time Employees at
the Facility as follows: (i) during the period from date hereof to the Employment Commitment Date,
Company shall use its best 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 forty-four (44) Full-Time Employees at the Facility in
addition to the one hundred ten (110) Full-Time Employees currently employed by Company at the
Facility, or a total of one hundred fifty-four (154) Full-Time Employees (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 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 fifty-four
(154) Full-Time Employees employed at the Facility by Company multiplied by $194.80 (the
"Company's Quarterly Payments"). For example, if for the second Quarter of the third year after the
Employment Commitment Date such Quarterly Employees is 140, the amount payable by Company
to City on or before the fifteenth (15th) day of the next calendar month would be (154 - 140) x
$194.80=$2,727.20. Notwithstanding the foregoing, Company's Quarterly Payment for any Quarter
shall not exceed $8,571.20 computed as follows: 44 employees X $194.80.
(b) Company's Quarterly Payments, if any, shall be paid to the City without
notice, demand, deduction or setoffon 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 often (10) percent per annum 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 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
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purposes of verifying Company's 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) Notwithstanding anything contained in this Paragraph 4 to the contrary, if
Company defaults in its Employment Commitment and/or Repayment Obligation, and such default
is not cured within thirty (30) 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 rate of ten
(10) percent per annum, and for such purpose, the entire balance of Company's Repayment
Obligation shall be an mount equal to 44 times $194.80 multiplied by the remaining Quarters of
the Repayment Period plus the amount of Company's unpaid Quarterly Payments, if any, but in no
event more than the amount of City Funds advanced by City under paragraph 2 hereof and 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. 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 Employment Commitment and its Repayment Obligation. Company's
obligations under this Agreement including its Employment Commitment and Repayment Obligation
shall be secured by a perfected first security interest in the Equipment. Contemporaneously with the
execution of this Agreement, Company shall execute and deliver to City Company's Security
Agreement, Financing Statement and other documents required to perfect a first security interest in
the Equipment all in form and content approved by City's Attorney (the "Security Agreement").
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 twenty (20) 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. 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 fmal and binding on Company, and not subject to
judicial review. Any such action by City Council is, and shall constitute, a legislative measure.
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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 consfi~te 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. 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 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 govemed 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, Pueblo, Colorado,
81003, with copy to Thomas E. Jagger, City Attorney, 127 Thatcher Building, Pueblo, Colorado,
81003, or
(b) if to the Company, Estrada Foods, Inc., 720 West 8~ Street, Pueblo, Colorado,
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.
I 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
consent may be arbitrarily withheld, conditioned or delayed. Any assigranent or attempted
assignment of this Agreement by Company without such consent shall be null and void.
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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 in the name of Company, 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
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.
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Executed at Pueblo, Colorado, the day and year first above written.
[ S E A L ] Puebl 'o~
Attest:__~~ By
City President of thd City Cotmcil
[ S E A L ] ESTRADA FOODS, INC. ~ ~ .//} a ~C o]~r, ado Corpor]afion,
Title: 55-f Q Title:
[SEALI
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