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HomeMy WebLinkAboutO-2007-3047 13 . REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: 10/31/2007 Bud2et ::::.::' :::::k '1 Source of Funds: N/A Account Number: N/A Report: Resolution: Ordinance: X Amount Budgeted: N/A Exhibits: Proposed Agreement SUMMARY & RECOMMENDATION Attached you will find a copy of the proposed ED Incentives Grant Agreement between the City of La Porte and WesMor Cryogenic Manufacturing L TO for your review and consideration. As you may recall, the initial discussions with representatives of WesMor occurred in mid- February of this year. They were introduced to us through the Economic Alliance who had heard of their plans to possibly relocate. At the time, the company was looking to relocate to the City of Pearland for expansion of their operations as they had found a less expensive location which seemed to suit their needs. The City Manager, Ms. Feazelle, worked with the Alliance and Intern Mike Stokes to facilitate meetings between the City and WesMor in the hopes that we could encourage them to remain in our City. Representatives were given an application for tax abatement and also informed that there might be the possibility of receiving support from the LPEDC. After the initial discussions, for whatever reason, there was miscommunication between city staff and WesMor representatives. The result of that miscommunication was that the representatives from WesMor thought that they would qualify for tax abatement when in fact they did not. When the Interim City Manager John Joerns brought this matter to the attention of the City Council the resulting determination was to have staff develop other avenues of support for the Council to consider for the project. The result of the collaboration between the Interim City Manager, staff and the Assistant City Attorney has resulted in the attached 380 agreement. Please be aware, that while this agreement does not include recapture provisions if they do not achieve their first year sales tax bench mark the agreement may be considered void thereby, making recapture much less of an issue than with other incentive agreements. Action Required by Council: Approve the attached Ordinance authorizing the Mayor to execute the Economic Development Grant Agreement between the City of La Porte and WesMor Cryogenic Manufacturing LTD. 1 Council A enda II Is 0 Date 2 ORDINANCE NO. 2007 - 3041 AN ORDINANCE APPROVING AND AUTHORIZING AN ECONOMIC DEVELOPMENT INCENTIVES GRANT AGREEMENT BETWEEN THE CITY OF LA PORTE, TEXAS AND WESMOR CRYOGENIC MANUFACTURING LTD.; MAKING VARIOUS FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; PROVIDING AND EFFECTIVE DATE HEREOF. BE IT ORDAINDED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council of the City of La Porte hereby approves and authorizes the contract, agreement, or other undertaking described in the title of this ordinance, in substantially the form as shown in the document which is attached hereto and incorporated herein by this reference. The Mayor is hereby authorized to execute such document and all related documents on behalf of the City of La Porte. The City Secretary is hereby authorized to attest to all such signatures and to affix the seal of the City to all such documents. Section 2. The City Council officially finds, determines, recites, and declares that a sufficient written notice of the date, hour, place, and subject of this meeting of the City Council was posted at a place convenient to the public at the City Hall of the City for the time required by law preceding this meeting, as required by the Open Meetings Law, Chapter 551, Texas Government Code; and that this meeting has been open to the public as required by law at all times during which this ordinance and the subject matter thereof has been discussed, considered and formally acted upon. The City Council further ratifies, approves and confirms such written notice and the contents and posting thereof. Section 3. This Ordinance shall be effective from and after its passage, and it is so ordered. PASSED AND APPROVED THIS THE ;J1l- DAY OF I.)DU. ,2007. CITY OF LA PORTE By: ~&.,<y~ Alton Porter, Mayor ATTEST: By: c;J7tirdtLr4A/1 Martha Gillett City Secretary APPROVED: By: ~d T -;(~ Clark Askins Assistant City Attorney ECONOMIC DEVELOPMENT INCENTIVES GRANT AGREEMENT STATE OF TEXAS 9 9 9 COUNTY OF HARRIS THIS ECONOMIC DEVELOPMENT INCENTIVE,) ~RANT AGREEMENT; hereinafter "Agreement" is made by and entered into this .fI- day of JuO-trn8t'1 , 2007 between the City of La Porte, Texas, a Texas home-rule municipal corporation hereinafter referred to as "City", and WesMor Cryogenic Manufacturing, LTD., hereinafter referred to as "Owner". RECITALS: Whereas, the City is authorized, pursuant to Chapter 380 of the Texas Local Government Code, to establish and provide for the administration of one or more programs, including programs for making loans and grants of public money, to promote state or local economic development and to stimulate business and commercial activity in the City; and Whereas, Owner proposes to establish a cryogenic tank and vessel manufacturing facility at 1802 West D Street, La Porte, Texas 77571 which is located within the city limits of the City of La Porte, Texas; and Whereas, it is anticipated that Owner's business will employ additional personnel thereby creating new employment opportunities in the City as well as generating a new source of sales tax revenues; and Whereas, to encourage Owner to establish such offices for its cryogenic tank and vessel manufacturing business within the City of La Porte, Texas the City desires to grant Owner, under the terms and conditions set forth in this Agreement, a certain grant of public money consisting of a payment to Owner of funds from the collection of sales tax revenues that are generated by said business within the City of La Porte, Texas. NOW, THEREFORE, in consideration of the mutual benefits and premises contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: ARTICLE I 1. Authorization. This City is authorized to enter into this Agreement pursuant to Section 380.001, et seq. of the Texas Local Government Code. 2. Definitions. "Sales Tax" means the tax that is charged by the Owner on the sale of taxable goods and services in the scope of their business transactions which is transmitted to the State Comptroller for sales tax purposes on a monthly basis. 3. Development Incentives. Grant of Public Money. 1 a. The City agrees to grant a sum of public money to Owner from the annual sales tax revenues that are generated from Owner's business operations at its proposed cryogenic tank and vessel manufacturing facility at 1802 West 0 Street, La Porte, Texas 77571 within the City of La Porte, Texas. b. The Owner will be required to provide to the City proof that the sales tax benchmarks established in Table A, below, have been met when requesting a payment from the City by providing a copy of their monthly Sales Tax Report which is required by law to be filed with the State Comptroller's Office. Further, Owner understands that a yearly audit will be conducted by the City of La Porte and Owner agrees to cooperate fully with such audit. c. Three (3) equal payments of $20,000.00 will be paid at the end of each 12 month period during the term of this Agreement, upon submittal of written proof that Owner has satisfied the sales tax benchmarks in Table A, provided that such written proof is submitted at least one month in advance of the end of the 12 month period. Should the Owner exceed the yearly benchmarks established in Table A, Owner may make written request of City to accelerate payments based upon the established benchmarks in Table A. However, it is understood by Owner that the City is under no obligation to accelerate the payments if it determines that the request is not financially feasible for the City. Further, in no event shall the total payments made to the Owner by the City exceed $60,000.00 Table A Pa ment 1 Pa ment 2 Pa ment 3 Payment b Cit Minimum Taxable Sales by Owner $20,000.00 $20,000.00 $20,000.00 $3,000,000.00 $5,000,000.00 $5,500,000.00 d. All payments during the term of this Agreement are contingent upon the Owner attaining the benchmarks in Table A as they relate to the annual sales tax revenues generated by the Owner and payable to the City through the collection of sales tax revenue collected by the State Comptroller's Office. e. The initial payment request by Owner may be made anytime after the attainment of the first established sales tax benchmark listed in Table A above, but in no event shall Owner have more than 12 months from the effective date of this agreement to satisfy the first established sales tax benchmark and make a request for payment. Should Owner fail to satisfy the first established sales tax benchmark within the time specified in this paragraph then this Agreement shall automatically terminate and all obligations and/or liabilities of City under the Agreement shall become void and of no effect. Furthermore, Owner shall have no more than 12 months from the date of any previous payment by City to satisfy the next sales tax benchmark under Table A and make a request for payment. 2 Should Owner fail to satisfy the subsequent sales tax benchmarks within the time specified in this paragraph then this Agreement shall automatically terminate and all obligations and/or liabilities of City under the Agreement shall become void and of no effect. In the case where Owner does so qualify, subsequent payments may be requested in accordance with the terms in Article 1, Section 3 c., above. In all cases where request for payment is made, City shall have a reasonable period of time to independently verify that Owner has satisfied established sales tax benchmarks, before payment is made. 4. Representations and Warranties. The City represents and warrants to Owner that this Agreement is within the scope of its authority and the provisions of its charter and that it is duly authorized and empowered to enter into this Agreement. Owner represents and warrants to the City that it has the requisite authority to enter into this Agreement. 5. The term of this Agreement is for a period beginning on the date of final approval by the last party to execute same, and ending three years from the date of the last payment made by the City to the Owner, pursuant to this Agreement. 6. Attorney Fees. In the event any legal action or proceeding is commenced to enforce or interpret provisions of this Agreement, the prevailing party in any such legal action shall be entitled to its reasonable attorney fees and expenses incurred by reason of such action. 7. Statutes and Ordinances. Nothing in this Agreement shall alter Owner's obligation to comply with all state statues, local ordinances, rules and regulations related to this Agreement. 8. Section Names, other Headings, and Construction. Section names or other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All references to the singular shall include the plural, and to the plural the singular. 9. Severability. If for any reason any provision of this Agreement is held to be invalid by a court of competent jurisdiction, such holding shall not affect, impair or invalidate the remainder of the Agreement but shall be confined in its operation to the specific provision of this Agreement held invalid, and the invalidity of any provision of this Agreement in anyone or more instances shall not affect or prejudice in any way the validity of this Agreement in any other instance. 10. Amendment. This Agreement may only be amended, altered, or revoked by written instrument signed by Owner and the City. 11. Successors and Assigns. This Agreement shall be binding on and inure to the benefit of the parties, their respective successors and assigns. Owner may assign all or part of its rights and obligations under this Agreement to any successive Owner of the development, except that during the term of this Agreement, Owner shall provide the City with ten days' written notice prior to any such proposed ownership transfer, including the name, address, business telephone number and contact person for such proposed new Owner. 3 12. Notice. Any notice and/or statement required and permitted to be delivered shall be deemed delivered by depositing same in the United States mail, certified with return receipt requested, postage prepaid, addressed to the appropriate party at the following addresses, or at such other addresses provided by the parties in writing: Owner: WesMor Cryogenic Manufacturing, LTD. 1820 West 0 Street La Porte, Texas 77571 The City: Mayor City of La Porte 604 W. Fairmont Parkway La Porte, Texas 77571 13. Interpretation. Regardless of the actual drafter of the Agreement, this Agreement shall, in the event of any dispute over its meaning or application, be interpreted fairly and reasonably, and neither more strongly for or against any party. 14.Applicable Law. This Agreement is made and shall be construed and interpreted in accordance with the laws of the State of Texas and venue of any cause of action to enforce this Agreement must be brought in Harris County, Texas. 15. Counterparts. This Agreement shall be executed in duplicate, each of which shall be considered an original, but all of which shall constitute one instrument. By: M~~ Owner Attes~~ It:> \ '" \ 0' ~~?~ Alton Porter, Mayor Attest: /!7t(j;t/Aodd Martha Gillett, City Secretary Date: By: Date: II /'1 :P fJ 1 AP~ ~RT~ Clark skins, Assistant City Attorney 4