07-14-14 Meeting of the La Porte Development Corporation Board of Directors

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REQUEST FOR LA PORTE DEVELOPMENT CORPORATION AGENDA ITEM Agenda Date Requested: July 14, 2014 Requested By: Scott D. Livingston Department: Administration Report: ' Resolution:'(' Ordinance: Exhibits: 1. INEOS Request to Reivse the Development Agreement 2. INEOS Developmetn Agreement, Executed September 23, 2013 Appropriation Source of Funds: Account Number: Amount Budgeted: Amount Requested: Budgeted Item: C YES C NO SUMMARY & RECOMMENDATIONS According to Article LA.1 of the INEOS Development Agreement, approved 23 September 2013, the principals of INEOS must make a commitment to invest at least $500 million in an Ethylene Oxide Project, also known as "Unit #2", by 1 August 2014 in order to receive a payment of $700,000 from the 4B Board. In order to enable further development of commercial aspects of the Ethylene Oxide Project, which are taking longer than originally planned, the principals of INEOS respectfully request a two-year extension of certain deadlines relating to the Ethylene Oxide Project under the existing development/incentive agreement. Staff Recommendation INEOS's incentives consultant, Eric D. Geisler, reports that the anticipated amount of investment for the Polyethylene Project (i.e. Unit #1) is now expected to be $400 - $500 million, which is 60-100% greater than the initially expected amount of $250 million. By the time INEOS decides to commit to the Ethylene Oxide Project (ie. Unit #2), assuming that the size of the project remains the same, staff anticipates that the level of investment for Unit #2 will also be greater than $500 million. Considering the impact that Unit #2 will have on the City of La Porte, even at the minimum stated value of $500 million, staff recommends extending the terms of the development agreement, plus the ancillary terms pertaining to employment and growth for Unit #2, by two (2) years to 1 August 2016. Action Required by the La Porte Development Corporation: Consider voting to approve and authorize staff to revise the existing development agreement with INEOS to extend the term by two (2) years, from 1 August 2014 to 1 August 2016, by which the principals of INEOS must commit to investing at least $500 million for the Ethylene Exide Project, including revisions to the ancillary deadlines regarding employment growth and reporting for the same project. Approved for the La Porte Development Corporation Agenda Corby D. Alexander, City Manager Date