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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 -2- 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 -3- 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. -4- 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. -5- 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. -6- 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 -7-