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HomeMy WebLinkAbout2006-10-23 Regular Meeting, Public Hearing and Workshop Meeting of La Porte City Counciln MINUTES OF REGULAR MEETING, PUBLIC HEARING AND WORKSHOP MEETING OF THE LA PORTE CITY COUNCIL October 23, 2006 1. CALL TO ORDER The meeting was called to order by Mayor Alton Porter at 6:05 p.m. Members of City Council Present: Mayor Alton Porter, Council members Tommy Moser, Mike Clausen, Mike Mosteit, Louis Rigby, Barry Beasley, Howard Ebow, Peter Griffiths and Chuck Engelken Members of Council Absent: none. Members of City Executive Staff and City Employees Present: Interim City Manager John Joerns, Assistant City Attorney Clark Askins, Planning Director Wayne Sabo, City Secretary Martha Gillett, Assistant City Secretary Sharon Harris, Police Chief Richard Reff, Human Resources Manager Robert Swanagan, Fire Marshal Cliff Meekins, Building Official Debbie Wilmore, Interim Finance Director Michael Dolby, Assistant to City Manager Crystal Scott, Patrol Lieutenant Carl Crisp, Patrol Sergeant Matt Daeumer, Purchasing Technician Cherell Daeumer, Parks and Recreation Director Stephen Barr, Controller Phyllis Rinehart, Emergency Management Coordinator Jeff Suggs, Purchasing Manager Susan Kelley, Assistant Public Works Director Don Pennell, EMS Chief Ray Nolen, Patrol Officer Matt Novosad, Judge Denise Mitrano, Fire Chief Mike Boaze, Assistant Fire Chief Champ Dunham, Detective David Huckabee, Parks and Recreation Operations Manager Marlene Rigby, Recreational Programs Coordinator Mike Hovendick, L.P.I.S.D. Officer Brain Larkey, Patrol Officer Lee Stewart, Crime Prevention Officer Richard Ayers, and numerous police officers and firefighters. Others Present: Sue Gale Mock Kooken, Trent Wise, Kelly Smith, Spero Pomonis, Shar Bingham, David Darby, Charmaine Henderson, Brenda Ross -Waters, Joe Brown, Cherie Steinle, Nelson Detillier, Morgan Jacob, Tinus Seaux, Brian Reyes, Andrew Thurman, Rocky Sexton, Rusty Smith, Megan Vasquez, Monique Moser, and other citizens. 2. Reverend Michael Bingham of Abundant Life Church of La Porte delivered the Invocation. 3. Mayor Porter led the Pledge of Allegiance. 4. PRESENTATIONS / PROCLAMATIONS There were no presentations or proclamation presented at the meeting. 5. Consent Agenda A. Consider approving Minutes of the Regular Meeting and Workshop Meeting of La Porte City Council held on October 9, 2006. B. Council to consider approval or other action awarding a quote for replacement of Warning Tower. C. Council to consider approval or other action accepting grant award for purchase of new dispatcher communication consoles for the new police building. City Council Regular Meeting, Workshop Meeting and Public Hearing —October 23, 2006 Page 2 D. Council to consider approval or other action regarding an ordinance amending Chapter 70 of the Code of Ordinances establishing presumption as the operator of illegally parked vehicle. E. Council to consider approval or other action awarding a bid for replacement vehicles. F. Council to consider approval or other action awarding a bid for demolition of buildings. G. Council to consider approval or other action regarding a resolution declaring intention to reimburse certain expenditures with borrowing proceeds for Waste Water Treatment Plant Aeration Improvements. H. Council to consider approval or other action regarding a resolution declaring intention to reimburse certain expenditures with borrowing proceeds for Spenwick Water System Upgrade. I. Council to consider approval or other action regarding a resolution declaring intention to reimburse certain expenditures with borrowing proceeds for Sens Road Utility Relocations. J. Council to consider approval or other action regarding a resolution declaring intention to reimburse certain expenditures with borrowing proceeds for Golf Course Cart Paths and Tunnel improvements. K. Council to consider approval or other action regarding an ordinance approving and authorizing an agreement between the City of La Porte and PBS&J, Inc. to provide professional engineering services to final design for phase II improvements at the Little Cedar Bayou Wastewater treatment plant, appropriating the sum not to exceed $358,348.00. L. Council to consider approval or other action regarding an ordinance approving and authorizing an agreement between the City of La Porte and LJA Engineering & Surveying, Inc. to provide engineering services for the installation of waterlines in the Spenwick area, appropriating the sum not to exceed $50,850.00. M. Council to consider approval or other action regarding an ordinance approving and authorizing an agreement between the City of La Porte and Claunch & Miller, Inc., to provide engineering services for the rehabilitation of Lift Station No. 8 and Lift Station No. 32 appropriating the sum not to exceed $64,010.00 N. Council to consider approval or other action regarding an ordinance approving and authorizing a service agreement between the City of La Porte and Camp Landscape Services to provide grounds maintenance at various sites throughout the City as provided by terms of agreement; appropriating the sum not to exceed $90,630.00. O. Council to consider approval or other action regarding an ordinance approving and authorizing an agreement between the City of La Porte and Mar -Con Services , LLC. To provide necessary services to construct phase 1 of the City's Pond to Park Project according to plans and specifications provided; appropriating $218, 983.20. City Council Regular Meeting, Workshop Meeting and Public Hearing —October 23, 2006 Page 3 Petitions & Remonstrances item taken out of order due to citizen wishing to address City Council on consent item O. Trent Wise — 425 Spencer Landing West - La Porte, Texas 77571 — Mr. Wise informed Council the Spencer Landing Homeowner's Association is in favor of the pond to park project and beautification in La Porte. He questioned the available funding of the project and how much funding is available from the city. Mr. Wise requested Council favor this project. Councilmember Moser pulled items B, C, D, E, N & O for discussion. Item B — Councilmember Moser noted concerns with only one bid. He questioned if other companies provided similar equipment. Emergency Management Coordinator Jeff Suggs noted other vendors make similar equipment but it is not compatible with City's existing equipment. Item C — Councilmember Moser requested clarification on this item, questioned if it had anything to do with purchasing the 800 system. Mr. Suggs clarified it was to accept the grant award to upgrade the dispatch of consoles and add items to new equipment at the Emergency Operations Center as it comes online. Item D - Councilmember Moser requested this item come back to a future meeting as a workshop item for council discussion and a complete understanding in order to vote on the ordinance. City Attorney Clark Askins provided clarification to proposed ordinance. Councilman Beasley also was not clear on this item. Motion was made by Council member Beasley to table item D as presented. Second by Council member Moser. Motion carried. Ayes: Mosteit, Moser, Beasley, Engelken, Rigby, Ebow, Clausen, Griffiths and Porter. Nays: None Abstain: None. Item E - Councilmember Moser requested clarification on item three of E. Director Steve Gillett clarified the award of bid is for the purchase of black and white police vehicles. Item N - Councilmember Moser requested clarification on where funds were coming from for this item. Director of Parks Stephen Barr explained the funds would come from attrition in the Parks Maintenance Budget. This item is for a one year contract with option to renew. John Joerns added funds from attrition would be transferred to make the contract award City Council Regular Meeting, Workshop Meeting and Public Hearing —October 23, 2006 Page 4 Item O - Councilmember Moser requested a breakdown of funds for the Pond to Park Project. Mr. Barr informed the East Fairmont Park Home Owner's Association contributed a total of $75, 000.00., for Phase 1 $35,000.00, $20,000.00 for Phase II and then another $20,000.00 for Phase III. The City was contributing $183,000.00. The developer was not contributing any funds to the project. Interim City Manager advised Council he would provide them with basic information in regards to the project and exchange of properties. Councilman Griffiths questioned if the project would help with the drainage on some of the streets. Mr. Barr advised some points in the construction agreement would deal with some of the flooding. Motion was made by Council member Moser to approve the consent agenda items A B C, E, F, G, H, I, J, K, L, M, N, and O as presented. Second by Council member Ebow. Motion carried. Ayes: Mosteit, Moser, Beasley, Engelken, Rigby, Ebow, Clausen, Griffiths and Porter. Nays: None Abstain: None. 6. PETITIONS, REMONSTRANCES, COMMUNICATIONS, AND CITIZENS AND TAX PAYERS WISHING TO ADDRESS COUNCIL ON ANY ITEM POSTED ON THE AGENDA. David Darby — 10908 Bois D'Arc - La Porte Texas 77571 — Retired Police Officer voiced concerns with Retiree Health Insurance increase and the decrease of benefits. Mr. Darby requested Council to look closely at the Employee Retiree Insurance and Benefits. Matt Daeumer — 4929 Archway La Porte, Texas 77571 — voiced concerns to Council regarding his application to serve on the Chapter 172 Employee Retiree Insurance and Benefits Committee as advertised in the Bayshore Sun. Mr. Daeumer questioned why he wasn't considered to serve on the committee when he met two of the eligibility requirements. Mr. Daeumer voiced concerns of rules being changed to prevent him from serving on the committee. Mr. Daeumer also advised Council he requested the Human Resources Manager to place minutes on the website and only three sets have been posted so far. 7. Public Hearing — Council to consider approval or other action on recommendation by Planning & Zoning Commission to approve Rezone Request #R06-001 rezoning the referenced property from General Commercial (GC) to Main Street District (MS). Open Public Hearing - Mayor Porter opened the Public Hearing at 6:46 p.m. Director of Planning Wayne Sabo presented summary and recommendation and answered Council's questions. Public Input: City Council Regular Meeting, Workshop Meeting and Public Hearing —October 23, 2006 Page 5 Sue Gale Mock Kooken - 410 S. I" La Porte, Texas 77571 did not address Council but noted she was in favor of Ordinance 1501-I5 The Public Hearing was closed at 6:50 p.m. Recommendation of Planning and Zoning Commission — Planning and Zoning Commission recommended approval of Rezone Request #R06-001 rezoning the referenced property from General Commercial (GC) to Main Street District (MS). 8. Council to consider approval or other action regarding Ordinance 1501-I5 Assistant City Attorney Clark Askins read: Ordinance 1501-I5- AN ORDINANCE AMENDING THE CODE OF ORDINANCES OF THE CITY OF LA PORTE, CHAPTER 106, MORE COMMONLY REFERRED TO AS THE ZONING ORDINANCE OF THE CITY OF LA PORTE, BY CHANGING THE ZONING CLASSIFICATION FROM GENERAL COMMERCIAL TO MAIN STREET DISTRICT AS REQUESTED FOR THE PROPERTY DESCRIBED AS LOTS 1 THRU 9, BLOCK 412 AND LOTS 1 THRU 23, BLOCK 411 HEREIN DESCRIBED; MAKING CERTAIN FINDINGS OF FACT RELATED TO THE SUBJECT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. Motion was made by Council member Moser to approve Ordinance 1501-I5 as recommended by Planning and Zoning Commission. Second by Council member Clausen. The motion carried. Ayes: Mosteit, Moser, Beasley, Engelken, Rigby, Ebow, Clausen, Griffiths and Mayor. Nays: None Abstain: None 9. Public Hearing — Council to consider approval or other action of Planning and Zoning Commission to approve Rezone Request #R06-002 rezoning the referenced property from Large Lot Residential (LL) to Light Industrial (LI). Open Public Hearing - Mayor Porter opened the Public Hearing at 6:52 p.m. Director of Planning Wayne Sabo presented summary and recommendation and answered Council's questions. Public Input: Carlos Smith 1003 East "D" Street — La Porte, Texas 77571 - spoke in favor ordinance 1501- J5. Cherie Steinle — 1203 Mission — La Porte, Texas 77571 — initially spoke against ordinance 1501- J5 until Director of Planning Wayne Sabo clarified the location of the F101 ditch and the proposed location of the rezone would not affect her neighborhood. Carey Beran — 11707 Bexar — La Porte, Texas 77571 — wished to speak against the ordinance if it would affect the neighborhood. Mr. Beran is acceptable of the ordinance after clarification of location by Mr. Sabo. City Council Regular Meeting, Workshop Meeting and Public Hearing —October 23, 2006 Page 6 Barbara Powell - 11703 Bexar — La Porte, Texas 77571 — wished not to speak but was against ordinance until also clarified of location by Mr. Sabo. Joe Brown — 10828 Sycamore South — La Porte, Texas 77571 — spoke in favor of the ordinance. Brenda Ross -Waters 1218 Travis Dr. La Porte, Texas 77571 - wished not to speak but was against ordinance until also clarified of location by Mr. Sabo. Recommendation of Planning & Zoning — approval of Rezone Request #R06-002 rezoning the referenced property from Large Lot Residential (LL) to Light Industrial (LI). The Public Hearing was closed at 7:03 p.m. 10. Council to consider approval or other action regarding Ordinance 150145 Assistant City Attorney Askins read: AN ORDINANCE AMENDING THE CODE OF ORDINANCES OF THE CITY OF LA PORTE, CHAPTER 106, MORE COMMONLY REFERRED TO AS THE ZONING ORDINANCE OF THE CITY OF LA PORTE, BY CHANGING THE ZONING CLASSIFICATION FROM LARGE LOT RESIDENTAL TO LIGHT INDUSTRIAL AS REQUESTED FOR THE PROPERTY OUT OF LA PORTE OUTLOTS 350, 351, AND 352, LOTS 8C-1 AND 8D-1, F.A. STAASHEN, IN THE ENOCH BRINSON SURVEY; MAKING CERTAIN FINDINGS OF FACT RELATED TO THE SUBJECT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF; Motion was made by Council member Griffiths to approve Ordinance 150145 with a 1.75 acre parcel of tract be excluded from the requested rezoning as recommended by Planning and Zoning Commission. Second by Council member Ebow. The motion carried. Wayne Sabo Ayes: Beasley, Engelken, Ebow, Clausen, Griffiths and Mayor. Nays: Mosteit, Moser, and Rigby Abstain: None Councilman Mosteit in opposition for two reasons, one for the precedent setting and it would be unfair to people that are in business owning the properties to be treated different than someone else in the same vicinity. 11. Council to consider approval or denial of recommendations of Chapter 172 Board discussed at September 11, 2006 City Council Meeting. Human Resources Manager Robert Swanagan presented summary and recommendation of Chapter 172 and requested Council to vote on the following seven items separately. 1. Recommends Flexible Spending Accounts with the Debit Cards be added to our plan. Motion was made by Council member Beasley to approve item 1 as recommended by Chapter 172 Board. Second by Council member Ebow. The motion carried. Ayes: Mosteit, Moser, Beasley, Engelken, Rigby, Ebow, Clausen, Griffiths and Mayor. Nays: None City Council Regular Meeting, Workshop Meeting and Public Hearing —October 23, 2006 Page 7 Abstain: None 2. Do not recommend Individual Child Premium Load. Could make a 5`h tier in a 4 tier structure with specific language that says dependent children can remain on the insurance to age 25 if they are a student and not married. Motion was made by Council member Clausen to not recommend Individual Child Premium Load as recommended by Chapter 172 Board and clarifying yes to coverage to age 25 if a full time student with a minimum of 12 hours and not married. Second by Council member Griffiths. The motion carried. Ayes: Mosteit, Moser, Beasley, Engelken, Rigby, Ebow, Clausen, Griffiths and Mayor. Nays: None Abstain: None 3. Do not recommend to 10% Cost Savings with Plan Design Changes. Motion was made by Council member Beasley to not recommend 10% Cost Savings with Plan Design Changes as recommended by Chanter 172 Board. Second by Council member Griffiths. The motion carried. Ayes: Mosteit, Moser, Beasley, Engelken, Rigby, Ebow, Clausen, Griffiths and Mayor. Nays: None Abstain: None 4. Recommend a one-time deferral at the discretion of the Retiree with a spousal provision as outlined in COBRA. Which is: If a Retiree is carrying their spouse at retirement then the spouse could re-enter when the retiree re-enters. Motion was made by Council member Beasley to recommend one-time deferral at the discretion of the Retiree with a spousal provision as outlined in COBRA Which is: If a Retiree is carrying their spouse at retirement then the spouse could re-enter when the retiree re-enters as recommended by Chapter 172 Board Second by Council member Griffiths. The motion carried. Mayor Porter voted for but has serious reservation regarding the repercussions of not having a cap at age 65. Ayes: Mosteit, Moser, Beasley, Engelken, Rigby, Ebow, Clausen, Griffiths and Mayor. Nays: None Abstain: None 5. Recommends that Retiree Over/Under 65 Calculation not be used and remain as it is. Motion was made by Council member Beasley to recommend that Retiree Over/Under 65 Calculation not be used and remain as it is as recommended by Chapter 172 Board Second by Council member Ebow. The motion carried. Ayes: Mosteit, Beasley, Engelken, Ebow, Clausen, Griffiths and Mayor. Nays: Moser and Rigby Abstain: None City Council Regular Meeting, Workshop Meeting and Public Hearing —October 23, 2006 Page S Mayor Porter questioned concerns on the nay votes. Rigby stated if retiree not costing the city more, retiree shouldn't have to pay the same as someone that is costing the city more money. Moser stated he does not understand where the 167% figure is coming from and has nothing to base the figure on. He does know for a fact when an employee reaches age 65 the insurance is supplemented. Human Resources Manager Robert Swanagan explained Neal Welch compiled a chart and looked at active versus retiree over under age 65 the cost was right at $387.00. An employee under 65 for a current active employee cost was $237.00. Someone 65 or older cost was $197.00 (he believes) a significant difference. Moser advised he was not comfortable with the many figures being discussed. Interim City Manager John Joerns advised he would resend the information provided by Neal Welch. 6. Recommends both Incentive Plans as potential Recruitment Incentives with the City Council determining which one it wants to adopt, or a combination of both. Motion was made by Council member Rigby not to offer incentives to new employees if incentives are not offered to current employees. Second by Council member Moser. The motion carried. Ayes: Mosteit, Beasley, Moser, Rigby, Engelken, Ebow, Clausen, Griffiths and Mayor. Nays: Abstain: None Council directed Staff to bring back incentives for both current active employees and new employees. 7. Recommends the current method of making the Retiree Calculations continue with clarification of language regarding City budgeted cost and that the coverage % discount amount applies only for retirees, not dependents. Also, the proposed Calculator that Neal is developing be implemented to allow any employee to be able to get an estimate of their insurance cost and their dependents cost at the current year budgeted City cost and for one additional year. Councilman Beasley and Moser requested Mr. Swanagan to explain the above recommendation. Mr. Swanagan explained an employee would have the ability to enter their information into a system and get all calculations previously discussed like combination of 20/80 years age etc. Neal Welch previously provided a format for four different plans that would determine the premium cost for employee and dependents as a retiree. One additional year would be added but the year would only be an estimate due to it being tied to the annual budget dollar allocated by the city. Councilman Rigby requested clarification on the city budget cost and the amount an employee would pay before and after retirement. City Council Regular Meeting, Workshop Meeting and Public Hearing —October 23, 2006 Page 9 Mr. Swanagan explained there is an amount subsided by the city and an employee looses that amount among retirement. Councilman Beasley requested Staff to bring back the Methodology and clear break down of facts, figures and how numbers are calculated for Council to have a clear understanding. Motion was made by Council member Beasley to table this item and bring back as a workshop item with all possibilities. Second by Council member Engelken. The motion carried. Ayes: Mosteit, Beasley, Moser, Rigby, Engelken, Ebow, Clausen, Griffiths and Mayor. Nays: Abstain: None 12. Council to consider approval or other action regarding an ordinance amending Fiscal Year 2006-07 Budget for the Grant Fund for the Homeland Security Grant award of $347,732,00. Assistant Finance Director Michael Dolby presented summary and recommendation and answered Council's questions. Assistant City Attorney Clark Askins read: ORDINANCE 2006-2918-A -AN ORDINANCE APPROVING AND ADOPTING THE BUDGET FOR THE CITY OF LA PORTE, TEXAS, FOR THE PERIOD OF OCTOBER 1, 2006 THROUGH SEPTEMBER 30, 2007; FINDING THAT ALL THINGS REQUISITE AND NECESSARY HAVE BEEN DONE IN PREPARATION AND PRESENTMENT OF SAID BUDGET; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. Motion was made by Council member Moser to_pprove Ordinance 2918-A as presented by Mr. Dolby. Second by Collllcll member Ebow. The motion carried Ayes: Mosteit, Moser, Beasley, Engelken, Rigby, Ebow, Clausen, Griffiths and Mayor. Nays: None Abstain: None 13. Council to consider approval or other action regarding an ordinance appointing members to various Boards and Commissions and determine alternate positions to Chapter 172. Mayor Porter presented summary and recommendation and answered Council's questions. Mayor Porter recommended moving George Van Dyke from the alternate position to Citizen Position 1 and Steve Valerius to Citizen Position 2. Council directed the City Attorney to revise the structure of the ordinance adding Matt Daeumer to an alternate position with flexibility in addition to adding terms to alternate positions as other positions. The ordinance will be brought back to the November Council Meeting. Assistant City Attorney Clark Askins read: ORDINANCE 2782-N -AN ORDINANCE APPOINTING MEMBERS TO VARIOUS BOARDS, COMMISSIONS, AND COMMITTEES, OF THE CITY OF LA PORTE; PROVIDING A SEVERABILITY City Council Regular Meeting, Workshop Meeting and Public Hearing —October 23, 2006 Page 10 CLAUSE; CONTAINING A REPEALING CLAUSE; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. Motion was made by Council member Griffiths to approve the Ordinance 2782-N appointing George Van Dyke to Citizen position 1 and Steve Valerius to Citizen Position 2 as presented by Mayor Porter. Second by Council member Ebow. The motion carried Ayes: Mosteit, Beasley, Engelken, Rigby, Ebow, Clausen, Griffiths and Mayor. Nays: Moser, Abstain: None 14. Council to consider approval or other action regarding submittal of names for AD Hoc Committee for proposed bond referendum. Interim City Manager John Joerns presented summary and recommendation and answered Council's questions. Council directed Mr. Joems to bring back an Ad Hoc appointment ordinance and council would have names to place in the ordinance. 15. Council to consider approval or other action setting November 6, 2006 as the Public Hearing date for establishing a Reinvestment Zone and authorize staff to publish said Public Hearing date and provide notices to other taxing entities as prescribed by Chapter 312 of the Texas Tax Code. Assistant Finance Director Michael Dolby presented summary and recommendation and answered Council's questions. Motion was made by Council member Clausen to approve Public Hearing Date as presented by Mr. Dolby. Second by Council member Ebow. The motion carried Ayes: Mosteit, Moser, Beasley, Engelken, Rigby, Ebow, Clausen, Griffiths and Mayor. Nays: None Abstain: None 16. Fiscal affairs Committee Chairman Engelken provided council a report. 17. Matt Novosad President of the La Porte Police Officer's Association presented an original petition to Mayor Porter and requested Council to recognize the La Porte Police Officer's Association as the sole and exclusive bargaining agent for all police officers of the City of La Porte, under "Meet and Confer" Law. 18. Ad Hoc Meet and Confer Law Review Committee Chairman Barry Beasley provided council with a report and recommended council recognize the La Porte Police Officer's Association as the sole and exclusive bargaining agent for all police officers of the City of La Porte, under "Meet and Confer" Law. 19. Council to consider approval or other action to 1)grant recognition of the La Porte Police Officer's Association as the sole and exclusive bargaining agent for all police officer's employed by the City of La Porte and provide that the City of La Porte may meet and confer without an election; or , 2) defer granting recognition of the association and order an City Council Regular Meeting, Workshop Meeting and Public Hearing -October 23, 2006 Page 11 election of voters in the city on whether the city may meet and confer; or order a certification election to determine whether the La Porte Police Officer's Association represents a majority of the Police Officer's of the City Councilman Beasley made a motion to recognize the La Porte Police Officer's Association as the sole and exclusive bargaining agent for all police officers of the City of LaPorte, under "Meet and Confer" Law. Second by Councilman Engelken. The motion carried Ayes: Mosteit, Moser, Beasley, Engelken, Rigby, Ebow, Clausen, Griffiths and Mayor. Nays: None Abstain: None 20. Close Regular Meeting and Open Workshop at 8:40 p.m. A. Interim City Manager John Joerns provided a draft proposed policy and discussed if and when it was necessary to pass by ordinance the approval of contracts/bids awards. Council directed Mr. Joerns to do a formal policy administratively with sections A, B, and C of the draft policy and changing the wording "may be approved" to "shall be presented to Council for consideration" in section C B. Fire Chief Champ Dunham provided council with an update of the preliminary report from ISO consultant. C. Purchasing Manager Susan Kelley discussed the negotiating of a contract with Ameresco for a Utility Assessment Report. Council directed staff to move forward with negotiating a contract for consideration with Ameresco for a Utility Assessment Report. 21. Closed Workshop meeting and reconvened Regular Meeting at 9:35 p.m. 22. Administrative Reports Assistant City Manager John Joerns reported and reminded council of the TML Conference October 25-27, 2006 in Austin Texas. 23. Council Comments Rigby, Moser, Beasley, Griffiths, Ebow, Engelken, Mosteit, Clausen and Porter had comments. 24. EXECUTIVE SESSION - PURSUANT TO PROVISION OF THE OPEN MEETINGS LAW, CHAPTER 551.071 THROUGH 551.076, 551-087, TEXAS GOVERNMENT CODE (CONSULTATION WITH ATTORNEY, DELIBERATION REGARDING REAL PROPERTY, DELIBERATION REGARDING PROSPECTIVE GIFT OR DONATION, PERSONNEL MATTERS, DELIBERATION REGARDING SECURITY DEVICES, OR EXCLUDING A WITNESS DURING EXAMINATION OF ANOTHER WITNESS IN AN INVESTIGATION, DELIBERATION REGARDING ECONOMIC DEVELOPMENT NEGOTIATIONS) A. SECTION - 551-072 - (PROPERTY SALE OR EXCHANGE) MEET WITH INTERIM CITY MANAGER CITY CONSULTANT/ADVISOR, AND City Council Regular Meeting, Workshop Meeting and Public Hearing —October 23, 2006 Page 12 CITY ATTORNEY REGARDING COUONTY/HOTEL PROJECT 25. Considerations and possible action on items considered in Executive Session. There was no executive session. 26. There being no further business to come before Council, the Regular Meeting was duly adjourned at 9:38 p.m. Respectfu"llyy submitte , Martha Gillett, TRMC, CMC City Secretary P ed and appro'vrA-9n this 6'h day of November 2006 Mayor Alton E. Porter REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: November 6, 2006 Requested By: John Joerns Department: Administration Report: Resolution: Ordinance: X Exhibits: Ordinance 2006- Exhibits: "A" Public Notice Budget Source of Funds: Account Number: Amount Budgeted: Amount Requested: Budgeted Item: YES NO Exhibits "B/C/D" Notices to LPISD, Harris County Commissioners Court and San Jacinto College District Exhibits "E" Legal Meets and Bounds Description Exhibits "F" Aerial of Proposed Reinvestment Zone "C" SUMMARY & RECOMMENDATION Prior to the creation of a reinvestment zone the City must publish a public notice regarding a public hearing and notify other taxing entities at least 7 days in advance of the hearing. The proposed Reinvestments Zone "C" is a site specific 10.115 Ac tract for Preferred Freezer Services Houston Port, LLC. At the Public Hearing interested persons are entitled to speak and present evidence for or against the designation. After the Public Hearing, Council will consider an ordinance designation a 10.115 Ac tract as La Porte Reinvestment Zone "C" — "Preferred Freezer Services Houston Port, LLC." The Ordinance finds that the designation of the Zone is likely to contribute to the retention or expansion of primary employment or to attract major investments in the zone that would be a benefit to the property and that would contribute to the economic development of the City of La Porte. Action Required by Council: Consider Ordinance designation a 10.115 Ac tract as La Porte Reinvestment Zone "C" — Preferred Freezer Services Houston Port, LLC. D �-/a 6 Dat ORDINANCE NO 2006 -RCS AN ORDINANCE AUTHORZING THE DESIGNATION OF THE CITY OF LA PORTE REINVESTMENT ZONE "C" - "PREFERRED FREEZER SERVICES HOUSTON PORT, LLC."; MAKING FINDINGS OF FACT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDANIED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council of the City of La Porte has heretofore, on the 14"' day of February, 2005, adopted Ordinance No. 2005-2809, an Ordinance establishing guidelines and criteria governing tax abatement agreements by the City of La Porte. A public hearing was held before the City Council of the City of La Porte on November 6, 2006, pursuant to notice as required by Section 312.201, Texas tax Codes, which notice was published not later than the 7th day before the date of the hearing in the Bayshore Sun, a newspaper having general circulation in the City of La Porte, a true and correct copy of said published notice being attached hereto as Exhibit "A" and incorporated by reference herein; and pursuant to notice delivered in writing not later than the 71h day before the hearing, to the presiding officer of the La Porte Independent School District; to the County Judge of Harris County, Texas presiding officer of the Harris County Commissioners Court, on behalf of Harris County, the Harris County Flood Control District, the Port of Houston Authority of Harris County, and the Harris County Department of Education; and to the presiding officer of the San Jacinto College District; being all of the taxing units included in the proposed reinvestment zone. A copy of the notices to the La Porte Independent School District and Harris County Commissioners Court, and the San Jacinto College District, are attached hereto as Exhibits `B", "C", and "D", respectively, incorporated by reference herein, and made a part hereof for all purposes. Section 2. Specifically, and without limiting the generality of the foregoing, the City Council of the City of La Porte finds, determines and declares that the subject property would be reasonably likely as a result of the designation as a reinvestment zone, to contribute to the retention or expansion of primary employment or to attract major investments in the zone that would be a benefit to the property and that would contribute to the economic development of the City of LaPorte. The City Council of the City of La Porte further finds, determines and declares that the improvements sought are feasible and practical and would be a benefit to the land to be included in the zone and to the City of La Porte after the expiration of an agreement into under Section 312.204, Texas Tax Code. Section 3. Accordingly, there is hereby established and designated a reinvestment zone in the City of La Porte to be know as the La Porte Reinvestment Zone "C" — Preferred Freezer Services Houston Port, LLC.", for commercial/industrial tax abatement, legally described by metes and bounds on Exhibit "B", and as more particularly shown on the location map attached hereto as Exhibit "F", Proposed La Porte Reinvestment Zone "C" — "Preferred Freezer Services Houston Port, LLC.", reference to which is here made for all purposes. This designation shall be effective for five (5) years from the effective date of this Ordinance. Section 4. This Ordinance shall serve as notice of the establishment of the La Porte Reinvestment Zone "C" by the City of La Porte, to every taxing unit that includes inside its boundaries property that is located within the boundaries of the Zone, and the City Secretary is hereby directed to send certified copies of this ordinance to all such affected taxing units. Section 5. 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 6. This Ordinance shall be effective from and after its passage and approval, and it is so ordered. PASSED AND APPROVED, this &,— day of Oelp& , 2006. ITY OF LA P� By: UA�L. Alton E. Porte Mayor ATTEST: APPROVED: Cal `7'pr Martha A. Gillett 4Giox W. Askins City Secretary City Attorney EXHIBIT "A" Public Notice STATE OF TEXAS ) COUNTY OF HARRIS ) ( CITY OF LA PORTE ) ( PUBLIC NOTICE Notice is hereby given that a public hearing will be held before the City Council of the City of La Porte, City Hall, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 pm on Monday, November 6, 2006, at which public hearing interested persons shall be entitled to speak and present evidence for or against the designation of La Porte Reinvestment Zone "Zone C", for Preferred Freezer Services Houston Port, LLC, pursuant to Chapter 312, Texas Tax Code, as amended. The legal description of the property to comprise the proposed reinvestment zone is as follow; to -wit: Being a tract or parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St. Joe Paper Company in Harris County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly described as follows (all bearings based on the southerly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes 00 Seconds East per said deed): BEGINNING at a broken concrete monument called and found at the southwest corner of both the herein described tract and aforesaid 207.049 acre tract, for the northwest corner of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Volume 2355, Page173 of the Deed Record of harris County, Texas, said corner being on the west line of aforesaid Enoch Brinson Survey and the east line of the Nicholas Clopper Survey; THENCE, coincident the south line of aforesaid 207.049 acre tract and the north of aforesaid 19.566 acre tract, North 89 Degrees 39 Minutes 06 Seconds East, a distance of 3,740.00 feet to a 5/8 inch rod with cap set for the southwest corner and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest corner of the herein described tract; North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a 5/8 inch iron rod with cap set for the northeast corner of the herein described tract; South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast corner of herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. A location map of said property is available for inspection in the City Secretary's Office. THIS FACILITY HAS DISABILITY ACCOMMODATIONS AVAILABLE. REQUESTS FOR ACCOMMODATIONS OR INTERPRETIVE SERVICES AT MEETING SHOULD BE MADE 48 HOURS PRIOR TO THIS MEETING. PLEASE CONTACT CITY SECRETARY'S OFFICE AT 281-471-5020 OR TDD LINE 281-471-5030 FOR FURTHER INFORMATION. A POSSIBLE QUORUM OF CITY COUNCIL MEMBERS MAY BE PRESENT AT THIS MEETING AND PARTICIPATE IN DISCUSSIONS BUT NOT TAKE ANY ACTION. Martha A. Gillett, TRMC City Secretary Date Posted Q � W Cr a oa ? Q W G _ CCr 0 AL - Lll W F- Z Cr M0 LL W � 0 Q W LL V 'Q 0 STATE OF TEXAS COUNTY OF HARRIS, CITY OF LA PORTE PUBLIC NOTICE Notice is hereby given that a public hearing will be held before the City Coun- cil of the City of La Porte, City Hall, 604 West Fair mont Parkway, La Porte, Texas beginning at 6:00 pm on Monday, November 6, 2006, at which public hearing interested persons shall be entitled to speak and present evidence for or against the designation of La Porte Reinvestment Zone "Zone C", for Prefer- red Freezer Services Houston Port, LLC, pur- suant to Chapter 312, Texas Tax Code, as amended. The legal de- scription of the property to comprise the proposed re- investment zone is as fol low; to -wit: Being a tract or; parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and - part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St. Joe Paper Company in Harris County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly descri- bed as follows (all bear- ings based on the souther- ly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes 00 Seconds East.per said deed): . BEGINNING at a broken concrete monument called and found at the south- west comer of both the herein described tract and aforesaid 207.049 acre tract, for the northwest cor- ner of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Vol- ume 2355, Pagel73 of the Deed Record of Harris County, Texas, said comer being on the west line of aforesaid Enoch Brinson Survey and the east line of the. Nicholas Clopper Sur- vey; PRETIVE SERVICES P THENCE, coincident the MEETING SHOULD E south line of aforesaid MADE 48 HOURS PRIO 207.049 acre tract and the TO THIS MEETIN( north of aforesaid 19.566 PLEASE CONTACT CIT acre tract, North 89 De- SECRETARY'S OFFIC grees 39 Minutes 06 Sec- AT 281-471-5020 OR TD onds East, a distance of LINE 281-471-5030 FO 3,740.00 feet to a 5/8 inch FURTHER INFORM) rod with cap set for the TION. southwest comer and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest comer of the herein descri- bed tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a-5/8 inch iron rod with cap set for the northeast corner of the herein descri- bed tract; 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast corner of herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. A location map of said property is available for in- spection in the City Secre- tary's Office. THIS FACILITY HAS DIS- ABILITY ACCOMMODA- TIONS AVAILABLE. RE- QUESTS FOR ACCOM- MODATIONS OR INTER - A POSSIBLE QUORUI OF CITY COUNCIL MEN BERS MAY BE PRESEN AT THIS MEETING AN PARTICIPATE IN DI: CUSSIONS BUT NO TAKE ANY ACTION. Martha A. Gillett, TRMC City Secretary City of La Porte EXHIBIT "B" Notice to LPISD O� AO 16 y,�� City of La Porte Established 1892 TEXA9 October 24, 2006 CM/RRR# 7005 0390 0004 8165 3522 Dr. Michael Say, Superintendent La Porte Independent School District Attn: Gene Horn, President LPISD School Board 1002 San Jacinto Street LaPorte, TX 77571 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Dr. Say: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/krp Enclosure 604 W. Fairmont Pkwy. • La Porte, Texas 77571 • (281) 471-5020 EXHIBIT "C" Notice to Harris County Commissioners Court O� AO an A��► City of La Porte Established 1892 October 24, 2006 CM/RRR# 7005 0390 0004 8165 3515 The Honorable Robert Eckels Harris County Judge Attn: David Turkel Director of Community & Economic Development 8410 Lantern Point Drive Houston, TX 77054 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Judge Eckels: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC. on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/krp Enclosure 604 W. Fairmont Pkwy. • La Porte, Texas 77571 • (281) 471-5020 EXHIBIT "D" Notice to San Jacinto College District City of La Porte " y Established 1892 ` 0" .mks «' .,r?�,:• � TEXp,B October 24, 2006 CM/RRR# 7005 0390 0004 8165 3508 Dr. Bill Lindemann, Chancellor San Jacinto College Attn: Dr, Ruede Wheeler Board of Regents 4624 Fairmont Parkway, Suite 200 Pasadena, TX 77504 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Dr. Lindemann: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC. on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, LaPorte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/krp Enclosure 604 W. Fairmont Pkwy. 9 La Porte, Texas 77571 • (281) 471-5020 EXHIBIT "E" Legal Metes & Bounds METES AND BOUNDS DESCRIPTION 10.115 ACRE TRACT LOCATED IN THE ENOCH BRINSON SURVEY, A-5 HARRIS COUNTY, TEXAS Being a tract or parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and a part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St. Joe Paper Company in Harris County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly described as follows (all bearings based on the southerly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes 00 Seconds East per said deed): BEGINNING at a broken concrete monument called and found at the southwest corner of both the herein described tract and aforesaid 207.049 acre tract, for the northwest corner of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F. Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Volume 2355, Page 173 of the Deed Records of Harris County, Texas, said corner being on the west line of aforesaid Enoch Brinson Survey and the east line of the Nicholas Clopper Survey; THENCE, coincident the south line of aforesaid 207.049 acre tract and the north line of aforesaid 19.566 acre tract, North 89 Degrees 39 Minutes 06 Seconds East, a distance of 3,740.00 feet to a 5/8 inch iron rod with cap set for the southwest corner and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest corner of the herein described tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a 5/8 inch iron rod with cap set for the northeast corner of the herein described tract; 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast corner of the herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. Reno & Associates July 13, 2006 Job No. 36-0404_10.1 acre ��i tip EXHIBIT "F" Aerial of Proposed Reinvestment Zone "C" Y OF y'�� BEVERLY KAUFMANCOUNTY OFTCLU March 28, 2007 Chief Admin Officers of LaPorte 604 W. Fairmont Parkway LaPorte, Texas 77571 Dear Sir: RECEIVED MAR 2 9 2007 ASSISTANT CITY MANAGER'S OFFICE Enclosed is the tax abatement agreement between Harris County, Preferred Freezer Services Houston Port, LLC (Lessee) a Delaware limited liability corporation, and Under Bear, LLC (Owner/Lessor) a Delaware limited liability corporation, for a cold storage warehouse and distribution facility within Harris County on a 10.115 acre tract located at 1000 Porter Road, La Porte, Texas 77571 in Precinct Two. Sincerely, Beverly B. Kaufman, County Clerk and Ex-Officio Clerk of Commissioners Court of Harris County, Texas Maricela V. Martinez, Deputy Count6lerk Commissioners Court Records enclosures 1001 PRESTON, 4TH FLOOR • P. O. BOX 1525 • HOUSTON, TX 77251-1525 • 713 / 755-6411 www.cclerk.hctx.net �S COLS T�4 HARRIS COUNTY, TEXAS COMMUNITY & ECONOMIC DEVELOPMENT DEPARTMENT 8410 Lantern Point Drive David B. Turkel Houston, Texas 77054 Director Tel (713) 578-2000 Fax (713) 578-2190 -e )> c Vote of the Court: Yes No Abstain' �-' March 13, 2007 ❑ ❑ 71-' �;o Judge Emmett Comm. Lee c r, County Judge Emmett and Comm. Garcia Commissioners Lee, Garcia, Comm. Radack Comm. Eversole :-3 -< Radack and Eversole AGENDA LETTER Please consider the following item on the Commissioners Court Agenda for March 20, 2007. Approval of the tax abatement agreement between Harris County, Preferred Freezer Services Houston Port, LLC (Lessee) a Delaware limited liability corporation, and Under Bear, LLC (Owner/Lessor) a Delaware limited liability corporation, for a cold storage warehouse and distribution facility within Harris County on a 10.115 acre tract located at 10000 Porter Road, La Porte, Texas 77571 in Precinct 2. Preferred Freezer Services Houston Port, LLC will invest a minimum of $10.4 million of which $9.9 million will be subject to abatement in the proposed facility and will create 35 full time jobs in Harris County. The City of La Porte held the required public hearing, created the Reinvestment Zone, and approved its own tax abatement on November 6, 2006. Commissioners Court approved an Early Start Variance on November 21, 2006. i cerely, David B. Turkel M ra b t'e ( C1 Director Community & Economic Development Department Presented to Commissioner's Court �� �' MAR 2 0 2007 HARRIS COUNTY, TEXAS IL15 COMMUNITY & ECONOMIC DEVELOPMENT DEPARTMENT rFxns 8410 Lantern Point Drive David B. Turkel Houston, Texas 77054 Director Tel (713) 578-2000 Fax (713) 578-2190 November 13, 2006 County Judge Eckels and Commissioners Lee, Garcia, Radack and Eversole Vote of the Court: Yes No Abstain JutW -EcKels Comm. Lee Gomm. Garcia Uomm- Gomm, AGENDA LETTER Please consider the following items on the Commissioners Court Agenda for November 21, 2006: Approval of a variance to allow for construction of improvements to commence prior to the execution and delivery of a tax abatement agreement for Preferred Freezer Services Houston Port, LLC for a proposed refrigerated warehouse facility to be located in the Underwood Business Park at 10000 Porter Road, LaPorte, TX 77571 in Precinct 2 as provided by.the Harris County Guidelines and Criteria_ DavidTurkel Director Community & Economic Development n%-' Vs-' Court Wn _j Type of Project: Company Name: Project Location: Key Map: Harris County Tax Abatement Program Project Summary and Economic Analysis Revised — March 13, 2007 New Construction — Cold Storage Warehousing and Distribution Preferred Freezer Services (Lessee) Under Bear, LLC (Owner/Lessor) 10000 Porter Road LaPorte, Texas 77571 Precinct 2, Commissioner Sylvia Garcia 539J PROJECT SUMMARY Municipal Action: On November 6, 2006, the City of La Porte held a public hearing to consider the creation of a reinvestment zone for entering into a tax abatement agreement with Preferred Freezer Services Houston Port, LLC (Preferred Freezer) where no public opposition was expressed, created the La Porte Reinvestment Zone "Zone C" by City Ordinance No. 2006-2955, and approved a tax abatement agreement by City Ordinance No. 2006-2956. Prior Actions by Commissioners Court: An early start variance was approved for the proposed project November 21, 2006, to enable construction to commence prior to the execution of a tax abatement agreement. Business Profile: Preferred Freezer Services (Preferred Freezer) started operations in Perth Amboy, New Jersey in 1989. Currently, Preferred Freezer operates 14 cold storage warehouses with a total 74 million cubic feet of space. Locations for the facilities are in New York, New Jersey, Boston, Los Angeles, Miami, and Chicago. Preferred Freezer Services will be new to Harris County having no other business facilities in operation in the state of Texas. Sales for the 14 facilities generated $79 million in 2005. Development Plan: Preferred Freezer Services' business is steadily growing. The proposed project consist of a new 167,381 square foot state of the art, standardized refrigerated warehouse and distribution facility in the Underwood Business Park in La Porte, TX. The new site will be located on an estimated 10.115-acre tract at 10000 Porter Road in Precinct 2. Preferred Freezer estimates an investment of $10.4 million in the new facility of which $9.9 million will be subject to abatement. Competitive Siting: Preferred Freezer Services considered two other cities as potential site locations for this project. Chicago, IL was considered because it would be the second facility in that area market and they have the resources for employees, vendors and customers. Chicago has offered a Tax Increment Financing (TIF) which allows lower multiples on the assessed value thereby lowering property taxes. Jacksonville, Fl has been considered because the site is located in an Enterprise/Empowerment Zone offering hiring incentives, infrastructure grants, and tax refunds. Environmental Issues: According to the Pollution Control Division of Harris County Public Health & Environmental Services, the compliance history database of the Texas Commission on Environmental Quality (TCEQ) and the EPA Integrated Compliance Information System were reviewed with no enforcement actions, violation notices, or complaints found regarding Preferred Freezer Services. This project will be subject to state and local storm water permitting requirements and any air emissions must be permitted or otherwise authorized by the TCEQ. Occupational and Safety Issues: The Federal Occupational Health and Safety Administration compliance records were searched and no violations or complaints have been recorded concerning Preferred Freezer Services. Current Property Tax History: According to the Office of the Tax Assessor -Collector there are no records for Preferred Freezer Services in Harris County. Proposed Abatement Schedule: • Duration -Ten years, beginning January 1, 2007 and ending December 31, 2016. • Amount Abated — 50 percent in, each of the ten years to be covered by the abatement agreement, in accordance with the terms of The Harris County Tax Abatement Guidelines in effect at the time the application was received in August of 2006. Jobs: Preferred Freezer Services will commit to creating 35 new full time positions for the Harris County facility. ECONOMIC BENEFIT ANALYSIS Fiscal Impact: • Average Annual Taxes Abated: $22,175 • Current Annual Revenue: $1,053 • Average annual revenue during abatement period: $33,055 • The County's average annual revenue during the abatement period increases by $32,002' • After the Abatement Period, the annual revenue increases by $35,169 over current revenues. Regional Multiplier AnalysisZ: • By creating 35 new full time jobs as described. above, 38 indirect jobs would also be created. • The total annual economic impact of this project is estimated to be $9.8 million. ' Total for all County entities (.63998 per $100 valuation). County base -portion is (.40239 per $100 valuation) = $20,121. 2Impacts calculated by GHP using the Regional Input -Output Modeling System developed by the U.S. Department of Commerce, Bureau of Economic Analysis. TAX ABATEMENT QUALIFICATIONS DETERMINATION SUMMARY March 13, 2007 Applicant: Preferred Freezer Services Houston Port, LLC (Lessee) and Under Bear, LLC (Owner/Lessor) Following are determinations that Commissioners Court will have to make in order to offer a tax abatement to Preferred Freezer Services Houston Port, LLC and Under Bear, LLC. • That the facility is an "Authorized Facility" as defined in the guidelines. This project meets the definition of "Regional Service Facility" as Under Bear, LLC will construct a new cold storage facility, including buildings and structures, including fixed machinery and equipment, used or to be used to service goods where a majority of the goods being serviced originate at least 100 miles from any part of Harris County. • That the improvements proposed to be subject to the abatement are "Eligible Property" as defined in the guidelines. The proposed real property improvements meet the definition. • That the project will increase the value of the property by at least $1 million upon completion. Preferred Freezer contemplates investing approximately $10.4 million of which $9.9 million would be subject to abatement, for the new real property improvements, which should increase taxable value by at least $1 million. • That the project will create or prevent the loss of full-time employment for at least 25 people in Harris County. Preferred Freezer will commit to creating 35 new full time jobs at competitive wage rates with full benefits. • That Harris County was in competition with other locations for the project. The Company has considered locating the project in Chicago, IL, and Jacksonville, FL. • That construction had not commenced on the proposed project before the filing of an application. Construction had not commenced as of August 28, 2006, when the fully completed application was received by Harris County. • That there will be no substantial adverse effect on the County's tax base. The proposed addition to the County's tax base will result in an average annual increase in revenue of $33,055 during the abatement period. Since the project is proposed for a partially developed location in Harris County, it is unlikely that the County will need to provide additional services for the area. • That the planned use of the property will not constitute a hazard to public safety, health, or morals. There is currently no indication that the facility would present any safety, health or moral problems. • That the Applicant has a history of compliance with all applicable state and federal "environmental laws" and Federal Occupational Health and Safety Administration regulations. According to the Pollution Control Division of Harris County Public Health & Environmental Services, the compliance history database of the Texas Commission on Environmental Quality (TCEQ) and the EPA Integrated Compliance Information System were reviewed with no enforcement actions, violation notices, or complaints found regarding Preferred Freezer Services, LLC or Under Bear, LLC. This project will be subject to state and local storm water permitting requirements and any air emissions must be permitted or otherwise authorized by the TCEQ. The Federal Occupational Health and Safety Administration compliance records were searched and no violations or complaints have been recorded concerning Preferred Freezer Services, LLC or Under Bear, LLC. Community and Economic Development Economic Development Division SEE 499 MAP MILLER Q KEY MAPS INC. 2-6A 03000 HL&JPSAM 13ERTROM STATION A 7R Al SOL TER AP INC. 1.4 (D KEY MAPS INC. 2004 us] (D KEY A TEXAS ALKYLS HARRIS OLD CLARK RD ALKYLS COUNTY DOW CHEMICAL �?§ i cc .-I I DUP04T 1. SYNGkS JAPHET pt 4 0 KEY MAPS INC. 2004 If i SIMMONS uss CHEMICALS tv Ik STRANG RD T AIR 10200 'o 119 0 jRODUcrs LA PORTE a SPAIR W U ggmgp-,�� NkPl,� S --w IN" WO, m ��5ev F ff N TG 714, -"T A "Uv" M=-CR s2oa� 000 MA AW OLMORCH 1020W;� U, im, sov SEE 579 MAP -,Aile (C) `, (F_ ( ,A A F S ! N C. 22 0 0 4 TALKING POINTS TAX ABATEMENT WITH PREFERRED FREEZER HOUSTON PORT, LLC (Lessee) and UNDER BEAR, LLC (Lessor) AGENDA ITEM COURT SESSION March 20, 2007 Representatives from Preferred attending court session: Bill Forrester, Development Manager Municipal Action: On November 6, 2006, the City of La Porte held a Public Hearing (no opposition expressed), created the La Porte Reinvestment Zone "Zone C" , and approved a tax abatement agreement. Prior Actions by Commissioners Court: An early start variance was approved for the proposed project November 21, 2006, to enable construction to commence prior to the execution of a tax abatement agreement. ■ Preferred Freezer Services began operations in Perth Amboy, NJ in 1989 as a cold storage warehousing business primarily for food and related products. ■ Current locations are in New York, New Jersey, Boston, Los Angeles, Miami, and Chicago. ■ The company will be new to Texas and Harris County. ■ Preferred will invest approximately $10.4 million in the new facility of which $9.9 million would be subject to abatement. ■ They will create 35 new full time jobs. ■ As an alternative to the site in La Porte, Preferred considered two other cities as potential site locations. One in Chicago where they would expand an already existing market and the second in Jacksonville, Florida both of which are offering tax incentive packages. FISCAL IMPACT: • Average Annual Taxes Abated: $22,175 • Current Annual Revenue: $1,053 • Average annual revenue during abatement period: $33,055 • The County's average annual revenue during the abatement period increases by $32,002 • After the abatement period, annual revenue increases by $35,169 over current revenues. • By creating 35 jobs, 38 indirect jobs would also be created because of this project. • Total annual economic impact of this project is estimated to be 9.8 million TAX ABATEMENT AGREEMENT FOR REAL PROPERTY LOCATED IN THE LA PORTE REINVESTMENT ZONE " ZONE C" THE STATE OF TEXAS § COUNTY OF TEXAS § This Tax Abatement Agreement (the "Agreement") is made and entered into by and among Harris County on behalf of itself, the Harris County Flood Control District, the Harris County Hospital District, and the Port of Houston Authority of Harris County, Texas, (collectively referred to as the "County"), and Preferred Freezer Services Houston Port, LLC ("Lessee"), a Delaware limited liability corporation, qualified to do business in the State of Texas, and Under Bear, LLC ("Lessor"), a Delaware limited liability corporation and an owner of interests in real property located within the Reinvestment Zone (defined in Section III). I. AUTHORIZATION This Agreement is authorized by the following: (a) the Texas Property Redevelopment and Tax Abatement Act, chapter 312 of the Texas Tax Code, as it exists on the effective date of the City of La Porte Tax Abatement Agreement (the "City Agreement") which is attached hereto as Exhibit A; (b) the City of La Porte Ordinance No. 2005-2809, establishing the property tax abatement program for properties in designated reinvestment zones, a true and correct copy of which is attached hereto as Exhibit A-1; (c) the City of La Porte Ordinance No. 2006-2955 which created the Zone, a true and correct copy of which is attached hereto as Exhibit A-2 and incorporated herein by reference for all purposes; (d) the City of La Porte Ordinance No. 2006-2956 which approved and authorized the City Agreement, a true and correct copy of which is attached hereto as Exhibit A-3 and incorporated herein by reference for all purposes; (e) the Order of Harris County Commissioners Court authorizing this Agreement on behalf of the County; and (f) Guidelines and Criteria for Granting Tax Abatement in a Reinvestment Zone Created in Harris County, re -adopted by the Harris County Commissioners Court on November 22, 2005 (the "Guidelines") and effective January 1, 2006, attached hereto as Exhibit B and made a part hereof. All definitions set forth therein are applicable to this Agreement, except as otherwise expressly provided in this Agreement. II. DEFINITIONS As used in this Agreement, the following terms shall have the meanings as set forth below: a) "Abatement" means the partial exemption of ad valorem taxes of certain real property (including fixed -in -place machinery and equipment) located within the Reinvestment Zone designated for economic development purposes. b) "Effective Date of Abatement" means January 1, 2007. c) "Base Year Value" means the 2006 certified appraised value, as determined by the Harris County Appraisal District ("HCAD"), for the property located in the Reinvestment Zone. d) "Improvements" means the buildings or portions thereof and other improvements, including fixed -in -place machinery and equipment, that are erected by the Lessor and Lessee in the Reinvestment Zone on or after November 21, 2006 and more fully described in the "Application for Tax Abatement in Harris County" (the "Application"), attached hereto as Exhibit C and made part hereof for all purposes. e) "Construction" means a material and substantial improvement of the property, which represents a separate and distinct Construction operation undertaken for the purpose of erecting the Improvements. The period of Construction ends when the facility is available for occupancy, or on December 31, 2008, whichever occurs first. f) "Eligible Property" means the Construction commencing on or after November 21, 2006 of buildings, structures, fixed -in -place machinery, equipment and process units, site improvements, and that office space and related fixed improvements necessary to the operation and administration of the facility, as set forth in the Investment Budget in the Application. The value of all property shall be the certified appraised value as ultimately determined by HCAD each year. g) "Ineligible Property" means any Construction commencing before November 21, 2006 and after December 31, 2008, land, inventories, supplies, tools, furnishings and other forms of movable personal property, vehicles, vessels, aircraft, housing, hotel accommodations, deferred maintenance investments, improvements for generation or transmission of electrical energy not wholly consumed by a new facility or expansion, any improvements which are not integral to the operation of the facility, property that has an economic life of less than fifteen (15) years, any Improvements that have an economic life of less than fifteen (15) years, or any Improvements exempted by local, state or federal law. h) "Lessee" means Preferred Freezer Services Houston Port, LLC a Delaware limited liability corporation. i) "Lessor" means Under Bear, LLC, a Delaware limited liability corporation. 2 j) "Permanent Employee" means a person who works a minimum of 1,750 hours per year exclusively within the Reinvestment Zone (excluding any contract employee, seasonal employee, full-time equivalent, or part-time employee), whose employment is both permanent and full-time, who receives industry -standard benefits, and whose employment is stated in the quarterly report filed with the Texas Workforce Commission ("TWC") by the Lessee. III. SUBJECT PROPERTY The Reinvestment Zone is an area within Harris County, Texas, generally described as a tract or parcel of land containing 10.115 acres of land, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and a part of that certain 207.049 acre tract of record in the name of St. Joe Paper Company, filed in the Official Public Records of Real Property of Harris County, Texas, under Harris County Clerk's File Number M032856, attached hereto as Exhibit D, and made a part hereof for all purposes. The Zone is located within the boundaries of a number of taxing units whose ad valorem taxes are by law approved or levied by the Commissioners Court of Harris County, to wit: Harris County, the Harris County Flood Control District, the Port of Houston Authority of Harris County, Texas, and the Harris County Hospital District. Upon completion of the Improvements to be constructed and further described in Exhibit C, the facility will consist of a cold storage, warehouse and distribution facility. In accordance with TEX. TAX CODE ANN. §312.204(a), HCAD shall determine the Base Year. Value of the real property subject to the Abatement Agreement. The Chief Appraiser of HCAD shall annually certify the appraised value of the Improvements located within the Reinvestment Zone and any improvements to the Reinvestment Zone subject to abatement under this Agreement and more fully described in the Application, attached hereto as Exhibit C and made part hereof for all purposes. IV. REPRESENTATIONS AND CONTEMPLATED IMPROVEMENTS A. The Lessor and Lessee each represent that the Improvements will be constructed within the boundaries of the Reinvestment Zone. B. The Lessor and Lessee each represent and warrant that (1) the Lessor is the owner of fee simple title to real property located at 10000 Porter Road, LaPorte, Texas; (2) the Lessee is the owner and operator of certain materials and equipment; and (3) the property is located within the boundaries of the Reinvestment Zone. C. The Lessor and Lessee each represent and warrant that construction of the Improvements described in the Investment Budget in Exhibit C shall begin on or after November 21, 2006. D. The Lessor and Lessee each represent and warrant that the proposed use of the facility is a cold storage, warehouse and distribution center. Additionally, the Lessor 3 and Lessee each agree to maintain the facility in good repair and condition during the Abatement period, and that construction of the Improvements shall be done in conformity with the Investment Budget included in Exhibit C. E. The Lessor and Lessee each represent and warrant they will invest at least $10,400,000 in Improvements, of which $9,900,000 is subject to the fifty percent (50%) abatement calculation as defined in Section V (B), by December 31, 2008. Furthermore, the Lessor and Lessee each represent and warrant that the certified appraised value of the Improvements, as determined by HCAD, shall be at least $9,900,000 by January 1, 2009. F. The Lessee represents and warrants that it will create thirty-five (35) new employment positions in the Reinvestment Zone on a permanent, full-time basis no later than December 31, 2009 and continuing through the remaining term of this Agreement. If at any time the Lessee fails to meet the total employment requirement, all taxes previously abated by virtue of this Agreement may be recaptured by the County and in such event such taxes shall be paid to the County, and the other political subdivisions that are parties to this Agreement, within sixty (60) days from demand. G. The Lessor and Lessee each represent and warrant that they are not indebted to the County for any past due ad valorem taxes or other obligations. H. The Lessor and Lessee each represent and warrant that they are in compliance with all state and federal laws designed to protect human health and welfare. The construction of the Improvements and operation of the facility shall be in compliance with all applicable federal, state and local laws, rules and regulations, including those designated to protect the environment from environmental hazards and degradation. V. VALUE AND TERM OF AGREEMENT A. The Lessor and Lessee shall make the Improvements in conformity with this Agreement as set out in the Investment Budget in Exhibit C, attached hereto and made a part of hereof for all purposes. Upon completion of the Improvements, the Lessor and Lessee shall use the Improvements as set forth in Section III of this Agreement. The Lessor and Lessee shall further maintain the Improvements in good repair and condition during the Abatement Period. B. The term of this tax abatement shall be for a period of ten (10) years beginning on January 1, 2007 ("Effective Date of Abatement"). In no case shall the terms of this abatement exceed ten (10) years from the Effective Date of Abatement. In no case shall the value of the Eligible Property subject to abatement exceed $4,950,000 (50% of the abatable value). The value of the Eligible Property shall be abated as follows: Improvements are eligible for abatement of new value, subject to an abatement cap, to be calculated as: $1,000,000 per job created/retained times the number of such jobs as required in the Abatement Agreement. 9 Such cap shall not exceed the increased value requirement as set out in the Abatement Agreement and will be adjusted annually. To determine the amount of each year's exemption, the adjusted cap shall be multiplied by fifty percent (50%) each year, up to a total of ten (10) years. Under no circumstance will any facility be granted the benefit of tax abatement for longer than ten (10) years. C. If the period of Construction extends beyond December 31, 2008, two (2) years from the Effective Date of Abatement, the Improvements shall be considered completed for compliance purposes of abatement. In no case shall the abatement period, inclusive of the Construction period, exceed ten (10) years from the Effective Date of Abatement. VI. TAXABILITY During the period that this Abatement Agreement is in effect, taxes shall be payable as follows: (1) The certified appraised value of the Ineligible Property as determined each year by the Harris County Appraisal District will be fully taxable. (2) The tax abatement shall apply only to Eligible Property which value shall be abated in accordance with the percentage set forth in Section V (B), above. The abatement applied to Eligible Property subject to abatement calculation in any year cannot be greater than the amount by which the value of all property located in the Reinvestment Zone, including Eligible Property subject to abatement calculation, and existing property for the year in which the Agreement is executed, as listed on the appraisal roll for that year, exceeds the Base Year Value. VII. EVENT OF DEFAULT A. During the period covered by this Agreement, the County may declare a default hereunder upon the occurrence of any one or more of the following circumstances or events: 1. Failure by the Lessor and/or Lessee to commence construction of the Improvements specified in the Investment Budget of Exhibit C and Section IV of this Agreement by December 31, 2008; or 2. If the Lessor and/or Lessee fail, refuse, or neglect to comply with any of the terms of this Agreement; or 3. Failure by the Lessor and/or Lessee to comply with TEX. TAX CODE ANN. §22.01, as amended, requiring an annual rendition of all personal property with HCAD; or 4. If any representation made by the Lessor and/or Lessee in the Application or in this Agreement is false or misleading in any material respect. 5 B. In the event the County declares the Lessor and/or Lessee to be in default of this Agreement, this Agreement shall terminate unless such default is cured in accordance with Subsection C below. If this Agreement is terminated, the County, and the other political subdivisions that are parties to this Agreement, shall be entitled to recapture all property taxes which have been abated as a result of this Agreement. Additionally, the Lessor and/or Lessee each agree to pay the County, and the other political subdivisions who are parties to this Agreement, interest at the rate of six percent (6%) per annum on any amount of previously abated taxes that are due to be recaptured under Section VII of this Agreement from the effective date of this Agreement. Interest for each year's abated taxes to be recaptured pursuant to Section VII of this Agreement shall be calculated beginning from the effective date of this Agreement. Interest shall be calculated on the basis of a year of 360 days and the actual days elapsed (including the first day but excluding the last day) occurring in the period for which such interest is payable, unless such calculation would result in an usurious rate, in which case interest shall be calculated on the per annum basis of a year of 365 or 366 days, as applicable, and the actual days elapsed (including the first day but excluding the last day). C. The Lessor and/or Lessee are each responsible for notifying the County of any default of this Agreement within ten (10) days of the default and must cure such default within sixty (60) days of the default ("Cure Period"). If the County determines that the Lessor or Lessee have failed to notify the County of any default of this Agreement as provided in this paragraph, the Agreement may be terminated immediately by the County and all taxes previously abated by virtue of this Agreement may be recaptured from the Lessor and/or Lessee. In such event, such taxes must be paid to the County, and other political subdivisions that are parties to this Agreement, within sixty (60) days from the date of termination. If the County does not receive full payment within said sixty (60) days of termination of this Agreement, a penalty may be added, pursuant to section 312.205 (b)(6) of the Texas Tax Code, equal to fifteen percent (15%) of the total amount of taxes abated under this Agreement. D. In the event the Lessor and/or Lessee allow the ad valorem taxes owed the County to become delinquent or fails to timely and properly follow the legal procedures for its protest and/or contest, then this Agreement may be terminated and all taxes previously abated by virtue of this Agreement will be recaptured from the Lessor and/or Lessee. In such event, such taxes must be paid to the County, and other political subdivisions that are parties to this Agreement, within sixty (60) days from the date of termination. E. In the event the facility herein is completed and the Lessee begins operation, but subsequently discontinues operation for any reason, for a period of 180 days during the abatement period, or one year in the event of a natural disaster, then this Agreement will terminate. In the event of termination pursuant to the provisions of this paragraph, the abatement of taxes under this Agreement for the calendar year during which the facility no longer is in operation will terminate and there shall be full recapture with penalties and interest as set out herein. Further, the Lessor and/or Lessee shall notify the County within ten (10) days of any discontinuation, stating the reason for the discontinuation and the projected length of discontinuation. Any taxes otherwise abated for the calendar year during which the Lessee no longer operates its cold storage, warehouse and distribution facility, must be paid directly to the Tax Assessor -Collector for Harris County for the benefit of the political subdivisions who are parties to this Agreement, within sixty (60) days from the date of discontinuation. VIII. ADMINISTRATION The Harris County Community & Economic Development Department ("HCCEDD") will administer this Agreement on behalf of the County and all political subdivisions on whose behalf it is entered. The Lessor and/or Lessee shall allow employees and/or representatives of the County who have been designated by HCCEDD to have access to the Reinvestment Zone during the term of this Agreement to inspect the facility to determine compliance with the terms and conditions of this Agreement. All inspections will be made only after giving twenty-four (24) hours prior notice and will only be conducted in such manner as to not unreasonably interfere with the Construction and/or operation of the facility. All inspections will be made with one or more representatives of the Lessor and Lessee and in accordance with safety standards of the Lessor and Lessee. Upon completion of the Improvements, HCCEDD shall annually evaluate the facility to ensure compliance with the terms and provisions of this Agreement and shall report possible defaults to the Commissioners Court, the County Attorney, and HCCEDD. The Lessee shall annually submit to HCAD and to HCCEDD, beginning on March 1, 2007, and continuing through the term of this Agreement,. a January 1 st employee -count for the Reinvestment Zone which shall correspond to employment counts reported in the Employer's Quarterly Report to the Texas Workforce Commission filed by the Lessee for the quarter ending on the previous December 31, and a separate notarized letter certifying: (1) the number of jobs created as a direct result of the Improvements, and (2) the Lessor and/or Lessee is in compliance with the environmental and worker safety requirements for the preceding year. This information will be used to determine eligibility and value of abatement for that year and shall be subject to audit if requested by HCCEDD. The Lessee's failure to submit this information will render the Lessor and Lessee ineligible to receive abatement. The Lessor and/or Lessee shall (a) obtain and maintain all required permits and other authorizations from the United States Environmental Protection Agency and the Texas Commission on Environmental Quality ("TCEQ") for the construction and operation of the facility and for the storage, transport, and disposal of solid waste; and (b) seek a permit from TCEQ for all grand -fathered units in the Reinvestment Zone, if any, by filing with TCEQ, within three (3) years of receiving the abatement, a technically complete application for such a permit. The HCAD Chief Appraiser shall annually determine (i) the taxable value pursuant to the terms of this abatement for all property located in the Reinvestment Zone and (ii) the full taxable value without abatement of the real and personal property 7 comprising the Reinvestment Zone. The Chief Appraiser shall record both the abated value and the full taxable value in the appraisal records. The full exemption value listed in the HCAD records shall be used to compute the amount of abated taxes that are required to be recaptured and paid in the event this Agreement is terminated in a manner that results in recapture. Each year, the Lessor and/or Lessee shall furnish the HCAD Chief Appraiser with such information outlined in Chapter 22, TEXAS TAX CODE, as may be necessary for the administration of the tax abatement specified herein. If the County terminates this Agreement, it shall provide the Lessor and/or Lessee with written notice of such termination. If the Lessor and/or Lessee believe that such termination was improper, the Lessor and Lessee may file suit in the Harris County District Courts appealing such termination within sixty (60) days after receipt from the County of written notice of termination. If a suit is filed, the Lessor and Lessee shall remit to the County, and other political subdivisions who are parties to this Agreement, within sixty (60) days after receipt of the notice of termination, any additional and/or recaptured taxes as may be payable during the pendency of the litigation pursuant to the payment provisions of TEX. TAX CODE ANN. § 42.08. If the final determination of the appeal increases the Lessor's and Lessee's tax liability above the amount of tax paid, the Lessor and Lessee shall remit the additional tax to the County and other political subdivisions that are parties to this Agreement, pursuant to TEX. TAX CODE ANN. § 42.42. If the final determination of the appeal decreases tax liability of the Lessor and Lessee, the County and other political subdivisions that are parties to this Agreement shall refund the difference between the amount of tax paid and the amount of tax for which the Lessor and Lessee is liable pursuant to TEX. TAX CODE ANN. § 42.43. IX. ASSIGNMENT The Lessor and Lessee may assign this Agreement to a new owner of the facility with the written consent of the Commissioners Court, which consent shall not be unreasonably withheld. Any assignment shall provide that the assignee shall irrevocably and unconditionally assume all the duties and obligations of the assignor upon the same terms and conditions as set out in this Agreement. Any assignment of this Agreement shall be to an entity that contemplates the same improvements to the property, except to the extent such improvements have been completed. No assignment shall be approved if the Lessor, Lessee or assignee is indebted to the County, or the other political subdivision that are parties to this Agreement, for ad valorem taxes or other obligations. X. RENDITION This Agreement is specifically conditioned upon the Lessor and Lessee complying with TEX. TAX CODE ANN. § 22.01, as amended, requiring an annual rendition of all personal property with HCAD. XI. NOTICE Any notice required to be given under the provisions of this Agreement shall be in writing and shall be duly served when it shall have been deposited, enclosed in a wrapper with the proper postage prepaid thereon, and duly registered or certified, return receipt requested, in a United States Post Office, addressed to the County and the Lessor and Lessee at the following addresses. If mailed, any notice or communication shall be deemed to be received three (3) days after the date of deposit in the United States Mail. Unless otherwise provided in this Agreement, all notices shall be delivered to the following addresses: To Lessor: Under Bear, LLC 360 Avenue P Newark, NJ 07105 Attention: Dan Coon, CEO To Lessee: Preferred Freezer Services Houston Port, LLC 360 Avenue P Newark, NJ 07105 Attention: John Galiher, President To County: Harris County Office of Community and Economic Development 8410 Lantern Point Drive Houston, Texas 77054 Attention: Economic Development Division with a copy to: Office of the Chief Appraiser/Abatements Harris County Appraisal District P.O. Box 920975 Houston, Texas 77292-0975 Any party may designate a different address by giving the other party ten (10) days' written notice. XII. MERGER The parties agree that this Agreement contains all of the terms and conditions of the understanding of the parties relating to the subject matter hereof. All prior negotiations, discussions, correspondence and preliminary understandings between the parties and others relating hereto are superseded by this Agreement 6 XIII. APPLICABLE LAWS Each party to this Agreement understands and agrees that this Agreement shall be governed and construed according to the laws of the State of Texas. XIV. SEVERABILITY The parties agree that if any provision, section, subsection, sentence, clause or phrase contained in this Agreement is for any reason held to be unconstitutional, void or invalid, the remaining portions of this Agreement shall not be affected thereby and all provisions contained herein are deemed severable for that purpose. XV. DATE The County executes this Agreement by and through the Director of Harris County Community and Economic Development Department acting pursuant to Order of the Commissioners Court of Harris County, Texas, so authorizing. This Agreement shall not become enforceable until executed by all parties hereto. The Effective Date of Abatement shall be January 1, 2007. The parties in multiple originals, each, have executed this Agreement having full force and effect. 10 APPROVED AS TO FORM: MICHAEL A. STAFFORD County Attorney ByY—a"&& RACHEL BOATES Assistant County Attorney ATTEST: By Name Title 0 By Nam Title �!'t�aTY IL��fNSp-r.J cFJ COUNTY DAVID B. TURKEL Director, Community & Economic Development Date signed: .3-- / Z , 0 7 LESSOR UNDER BEAR, LLC a Delaware limited liability corporation By DAN COON, COO Date signed: ,?/7A5x LESSEE PREFERRE EEZER SERVICES HOUSTON ORT, LC a Delaware li ited lia ility corporation By JOHN GALIHER, Pres3 Date signed: THE STATE OF TEXAS § COUNTY OF HARRIS § The Commissioners Court of Harris County, Texas, convened at a meeting of said Court at the Harris County Administration Building in the City of Houston, Texas, on the day of MAR 2 02 2007, with the following members present, to -wit: Edward Emmett County Judge El Franco Lee Commissioner, Precinct No. 1 Sylvia R. Garcia Commissioner, Precinct No. 2 Steve Radack Commissioner, Precinct No. 3 Jerry Eversole Commissioner, Precinct No. 4 and the following members absent, to -wit: , constituting a quorum, when among other business, the following was transacted: ORDER AUTHORIZING EXECUTION OF TAX ABATMENT AGREEMENT BETWEEN HARRIS COUNTY, PREFERRED FREEZER SERVICES HOUSTON PORT, LLC AND UNDER BEAR, LLC FOR PROPERTY LOCATED IN THE LA PORTE REINVESTMENT ZONE " ZONE C" Commissioner ntroduced an order and made a motion that the same be adopted. Commissioner econded the motion for adoption of the order. The motion, carrying with it the adoption of the order, prevailed by the following vote: Judge Emmett Comm. Lee Comm. Garcia Comm. Radack Comm. Eversole Yes No Abstain ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ The County Judge thereupon announced that the motion had duly and lawfully carried and that the order had been duly and lawfully adopted. The order thus adopted follows: RECITALS: The Texas Property Redevelopment and Tax Abatement Act, Texas Tax Code, Chapter 312, as amended, authorizes the commissioners court of a county to designate as a reinvestment zone, an area of the county that does not include area in the taxing jurisdiction of a municipality; Presented to Commissioner's Court MAR 2 0 2007 APPROVE Rnrnrrivri Vni Pane It is the policy of Harris County to encourage the redevelopment of areas wherein the creation and retention of new jobs and investment will benefit the area economy, provide needed opportunities, strengthen the real estate market and generate tax revenue to support local services; The Reinvestment Zone is an area within Harris County, Texas, generally described as a tract or parcel of land containing 10.115 acres of land, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and a part of that certain 207.049 acre tract of record in the name of St. Joe Paper Company, filed in the Official Public Records of Real Property of Harris County, Texas, under Harris County Clerk's File Number M032856. The Zone is located within the boundaries of a number of taxing units whose ad valorem taxes are by law approved or levied by the Commissioners Court of Harris County, to wit: Harris County, the Harris County Flood Control District, the Port of Houston Authority of Harris County, Texas, and the Harris County Hospital District; Preferred Freezer Services Houston Port, LLC (the "Lessee") represents and warrants that it will create thirty-five (35) permanent full-time employment positions in the Reinvestment Zone no later than December 31, 2009, and continuing through the term of this Agreement; Under Bear, LLC (the "Lessor") and the Lessee each represent and warrant that they will invest at least $10,400,000 in Improvements, of which $9,900,000 is subject to abatement calculation, in the facility by December 31, 2008, which will result in an estimated increase in certified appraised value of at least $9,900,000 by January 1, 2009; The Commissioners Court further finds that the terms of the tax abatement agreement with Under Bear, LLC and Preferred Freezer Services Houston Port, LLC and the property subject to the said agreement satisfies the Guidelines and Criteria for Granting Tax Abatement in a Reinvestment Zone Created in Harris County, as re -adopted by Commissioners Court on November 22, 2005, and effective January 1, 2006, and that: (1) there will be no substantial adverse effect on the provision of the County's tax base or services, and (2) the planned use of the property will not constitute a hazard to public safety, health or morals; and The Commissioners Court of Harris County desires to approve the County's entering into a tax abatement agreement with Under Bear, LLC and Preferred Freezer Services Houston Port, LLC, based on the aforesaid representations. NOW, THEREFORE, BE IT ORDERED BY THE COMMISSIONERS COURT OF HARRIS COUNTY, TEXAS THAT: Section 1. The recitals set forth in this order are true and correct. Section 2. This tax abatement is approved under the Guidelines and Criteria for Granting Tax Abatement in a Reinvestment Zone Created in Harris County. Section 3. The Director of Harris County Community and Economic Development Department is hereby authorized to execute an agreement on behalf of Harris County, the Harris County Hospital District, the Harris County Flood Control District, and the Port of Houston Authority of Harris County, Texas, to abate a portion of any increase in the certified appraised value of the property described in the Agreement, per the Harris County Appraisal District, for the period of ten (10) years beginning on January 1, 2007. Section 4. The Clerk of Commissioners Court must transmit a copy of this Order and, upon execution by Harris County, any agreement entered into pursuant to the authorization provided herein, to the Harris County Appraisal District, to the Assessor and Collector of Taxes for Harris County, to the City Manager of the City of La Porte, and to the Chief Administrative Officers of the La Porte School District and the San Jacinto College District with a request that such taxing units notify the Assessor and Collector of Taxes for Harris County and the Harris County Appraisal District of any agreements by those entities to abate taxes on property located within the Reinvestment Zone, and transmit "Information Only" copies to the Harris County Hospital District, the Port of Houston Authority of Harris County, Texas, and the Texas Comptroller of Public Accounts. TAX ABATEMENT AGREEMENT FOR REAL PROPERTY LOCATED IN THE LA PORTE REINVESTMENT ZONE "ZONE C'- THE STATE OF TEXAS § COUNTY OF HARRIS § This Tax Abatement Agreement (the "Agreement") is made and entered into by and between the City of LaPorte, Texas, a municipal corporation (the "City), and Preferred Freezer Services Houston Port, LLC, ("Lessee"), a Delaware Corporation qualified to do business in the State of Texas and Under Bear, LLC. ("Lessor"), a Delaware Corporation and an owner of interests in real property located within the Zone (defined below). I. AUTHORIZATION This Agreement is authorized by the following: (a) the Texas Property Redevelopment and Tax Abatement Act, chapter 312 of the Texas Tax Code, as amended, (b) the City of La Porte Ordinance 2006- authorizing this agreement; and (c) Guidelines and Criteria for Granting Tax Abatement in a Reinvestment Zone Created in La Porte, Texas, adopted by the La Porte City Council on February 14, 2005; Ordinance 2005-2809 (the "Guidelines"), attached hereto as Exhibit A and made a part hereof. All definitions set forth therein are applicable to this Agreement, except as otherwise expressly provided in this Agreement. H. DEFINITIONS As used in this Agreement, the following terms shall have the meanings set forth below: a) "Abatement" means the full or partial exemption from ad valorem taxes of certain real property (including fixed -in -place machinery & equipment) located on the Project Site within the Zone designated for economic development purposes. b) "Effective Date of Abatement" means January 1, 2007. c) "Base Year Value" means the 2006 certified appraised value, as determined by the Harris County Appraisal District ("HCAD"), for the real property located in the Reinvestment Zone "Zone C". d) "Improvements" means the buildings or portions thereof and other improvements, including fixed -in -place machinery and equipment, that are erected by the Lessor or Lessee in the Reinvestment Zone "Zone C" on or after August 16, 2006 and no later than December 31, 2008, and more fully described in the "Application for Tax Abatement in La Porte, Texas" (the "Application"), attached hereto as Exhibit B and made part hereof for all purposes. e) "Construction" means a material and substantial improvement of the property, which represents a separate and distinct construction operation undertaken for the purpose of erecting the Improvements. The period of Construction ends when the facility is available for occupancy, or on December 31, 2008, whichever occurs first. f) "Eligible Property" means the construction commencing on or after August 16, 2006, of buildings, structures, fixed machinery, equipment and process units, site improvements, and that office space and related fixed improvements necessary to the operation and administration of the facility, as set forth in the Investment Budget in the Application. The value of all property shall be the certified appraised value as finally determined by HCAD each year. g) "Ineligible Property" means any construction commencing before August 16, 2006 and after December 31, 2008, land, inventories, supplies, tools, furnishings and other forms of movable personal property, vehicles, vessels, aircraft, housing, hotel accommodations, deferred maintenance investments, improvements for generation or transmission of electrical energy not wholly consumed by a new facility or expansion, any improvements which are not integral to the operation of the facility, property that has an economic life of less than fifteen (15) years, any Improvements that have an economic life of less than fifteen (15) years, or any Improvements exempted by local, state or federal law. h) "Lessee" means Preferred Freezer Services Houston Port, LLC. a Delaware Corporation. i) "Lessor" means Under Bear, LLC, a Delaware Corporation j) "Permanent Employee" means a person who works a minimum of 1,750 hours per year exclusively in the Project within the Zone (excluding any contract employee, seasonal employee, full-time equivalent, or part-time employee), whose employment is both permanent and full-time, who receives industry -standard benefits, and whose employment is reflected in the quarterly report filed with the Texas Workforce Commission ("TWC") by the Lessor and/or Lessee (or Contractor, if applicable). k) "Project" means the 167,381 Square feet Building and Improvements to be built on a 10.15 acre tract of real property located at 10000 Porter Road, La Porte, Texas, known herein as the Project Site, and as more fully described in the Investment Budget included in Exhibit B, attached hereto and made a part hereof for all purposes. 1) "Project Site" means the 10.15 acre tract of real property to be improved, as more fully described in Exhibit C attached hereto and made a part hereof for all purposes. m) "Reinvestment Zone "Zone C"" means the 10.15 acre tract of real property located at 10000 Porter Road in La Porte, Texas, and as more fully described in Exhibit C attached hereto and made a part hereof for all purposes. III. SUBJECT PROPERTY The Project Site is in La Porte, Texas, generally described as 10.15 acres of land situated in the Enoch Brinson Survey, Abstract 5, Harris County, Texas and as more fully described in Exhibit C, attached hereto and made a part hereof for all purposes. Upon completion of the Improvements to be constructed and further described in Exhibit B, the Project will consist of a Public Cold Storage Distribution Center. In accordance with TEXAS TAX CODE Arne. §312.204(a), HCAD shall determine the Base Year Value of real property subject to the Abatement Agreement. The Chief Appraiser of HCAD shall annually certify the appraised value of the Project Site and any improvements to the Project Site subject to abatement under this Agreement. IV. REPRESENTATIONS AND CONTEMPLATED IMPROVEMENTS A. The Lessor and Lessee represents that Under Bear, LLC, presently owns fee simple title to the project site more fully described in Exhibit C, attached hereto and made a part hereof, and that the Improvements will be constructed on the project site within the boundaries of the Reinvestment Zone. . B. The Lessor and Lessee each represent that: (1) Preferred Freezer Services Houston Port, LLC. is the lessee of the real property located at 10000 Porter Road in LaPorte, Texas; and (2) the property is located within the boundaries of the zone. C. The Lessor and Lessee each represent and warrant that they have executed a valid Lease Agreement in Exhibit D for the construction of the Improvements described in the Investment Budget in Exhibit B, which will begin on or after August 16, 2006. D. The Lessor and Lessee represents and warrants that the proposed use of the Project is a Public Cold Storage Distribution Center. Additionally, the Lessor and Lessee agrees to maintain the Improvements in good repair and condition during the Abatement Period, and that construction of the Improvements shall be done substantially in conformity with the Investment Budget included in Exhibit B. E. The Lessor and Lessee represents and warrants they will invest at least $10.4 million in the Improvements by December 31, 2008, and that the certified appraised value of the Improvements, as determined by HCAD, shall be at least $9.9 million by January 1, 2009. F. The Lessee represents and warrants that they will create at least 35 new full-time, permanent employment positions on the Project Site no later than December 31, 2008. If at any time the Lessee fails to meet the total employment requirement, all taxes previously abated by virtue of this Agreement may be recaptured by the City and in such event such taxes shall be paid to the City, and the other political subdivisions that are parties to this Agreement, within sixty (60) days from demand. G. The Lessor and Lessee represents and warrants that they are not indebted to the City for any past due ad valorem taxes or other obligations. H. The Lessor and Lessee represents and warrants that they are in compliance with all state and federal laws designed to protect human health and welfare. The construction of the Improvements and operation of the facility shall be in compliance with all applicable federal, state and local laws, rules and regulations, including those designed to protect the environment from environmental hazards and degradation. V. VALUE AND TERM OF AGREEMENT A. The Lessor and Lessee shall make the Improvements in conformity with this Agreement as set out in the Investment Budget in Exhibit B attached hereto and made a part hereof for all purposes. Upon completion of the Improvements, the Lessor and Lessee shall use the Improvements as set forth in Section III of this Agreement. The Lessor and Lessee shall further maintain the Improvements in good repair and condition during the Abatement Period. B. The term of this tax abatement shall be for a period of ten (10) years beginning on January 1, 2007 ("Effective Date of Abatement"). In no case shall the term of this abatement exceed ten (10) years from the Effective Date of Abatement. The value of the Eligible Property shall be abated as follows: Year Abated 1-3 Including Construction 4 5 6 7-10 Percentage of Value 100% 80% 60% 40% 20% C. If the period of construction extends beyond December 31, 2008, two (2) years from the Effective Date of Abatement, the Improvements shall be considered completed for purposes of abatement. In no case shall the abatement period, inclusive of the construction period, exceed ten (10) years from the Effective Date of Abatement. VI. TAXABILITY During the period that this Abatement Agreement is in effect, taxes shall be payable as follows: (1) The certified appraised value of the Ineligible Property as determined each year by the Harris County Appraisal District will be fully taxable. (2) The tax abatement shall apply only to Eligible Property which value shall be abated in accordance with the percentage set forth in Section V (B), above. The abatement applied to Eligible Property in any year may not be greater than the amount by which the value of all property located in the Project Site, including Eligible Property, existing property and Ineligible Property, as listed on the appraisal roll for that year, exceeds the Base Year Value. VII. EVENT OF DEFAULT A. During the period covered by this Agreement, the City may declare a default hereunder upon the occurrence of any one or more of the following circumstances or events: 1. Failure by the Lessor and Lessee to commence construction of the Project Improvements specified in the Investment Budget of Exhibit B and Section IV of this Agreement by January 1, 2007, or 2. If the Lessor and Lessee fails, refuses, or neglects to comply with any of the terns of this Agreement; or 3. Failure by the Lessor and Lessee to comply with TEx. TAX CODE ANN. §22.01, as amended, requiring an annual rendition of all personal property with HCAD; or 4. If any representation made by the Lessor and Lessee in the Application or in this Agreement is false or misleading in any material respect. B. In the event the City declares the Lessor and Lessee to be in default of this Agreement, this Agreement shall terminate unless such default is cured in accordance with Subsection C below. If this Agreement is terminated, the City, and the other political subdivisions that are parties to this Agreement, shall be entitled to recapture all property taxes which have been abated as a result of this Agreement. Additionally, the Lessor and Lessee agrees to pay the City, and the other political subdivisions who are parties to this Agreement, interest at the rate of six percent (6%) per annum on any amount of previously abated taxes that are due to be recaptured under Section VII of this Agreement from the effective date of this Agreement. Interest for each year's abated taxes to be recaptured pursuant to Section VII of this Agreement shall be calculated beginning from the effective date of this agreement. Interest shall be calculated on the basis of a year of 360 days and the actual days elapsed (including the first day but excluding the last day) occurring in the period for which such interest is payable, unless such calculation would result in a usurious rate, in which case interest shall be calculated on the per annum basis of a year of 365 or 366 days, as applicable, and the actual days elapsed (including the first day but excluding the last day). C. The Lessor and Lessee is responsible for notifying the City of any default of this Agreement within ten (10) days of the default and must cure such default within sixty (60) days of the default ("Cure Period"). If the City determines that the Lessor and Lessee has failed to notify the City of any default of this Agreement as provided in this paragraph, the Agreement may be terminated immediately by the City and all taxes previously abated by virtue of this Agreement may be recaptured from Lessor and Lessee. In such event, such taxes must be paid to the City, and other political subdivisions that are parties to this Agreement, within sixty (60) days from the date of termination. If the City does not receive full payment within said sixty (60) days of termination of this Agreement, a penalty may be added, pursuant to section 312.205 (b)(6) of the Texas Tax Code, equal to fifteen percent (15%) of the total amount of taxes abated under this Agreement. D. In the event the Lessor and Lessee allows the ad valorem taxes owed the City to become delinquent or fails to timely and properly follow the legal procedures for its protest and/or contest, then this Agreement may be terminated and all taxes previously abated by virtue of this Agreement will be recaptured from the Lessor and Lessee. In such event, such taxes must be paid to the City, and other political subdivisions that are parties to this Agreement, within sixty (60) days from the date of termination. E. In the event the facility herein is completed and the Lessee begins operation, but subsequently discontinues operation after January 1, 2007, for any reason, for a period of 180 days during the abatement period, or one year in the event of a natural disaster, then this Agreement shall terminate. In the event of termination pursuant to the provisions of this paragraph, the abatement of taxes under this Agreement for the calendar year during which the facility no longer is in operation shall terminate and there shall be full recapture with penalties and interest as set out herein. Further, the Lessor and Lessee shall notify the City within ten (10) days of any discontinuation, stating the reason for the discontinuation and the projected length of discontinuation. Any taxes otherwise abated for the calendar year during which the Lessee no longer operates its Public Cold Storage Distribution Center, must be paid directly to the Tax Assessor -Collector for City for the benefit of the political subdivisions who are parties to this Agreement, within sixty (60) days from the date of discontinuation. VIII. ADMINISTRATION The City of La Porte Finance Department shall administer this Agreement on behalf of the City. The Lessor and Lessee shall allow employees and/or representatives of the City who have been designated by the City Manager's Office to have access to the Project Site during the term of this Agreement to inspect the facility to determine compliance with the terms and conditions of this Agreement. All inspections will be made only after giving twenty-four (24) hours prior notice and will only be conducted in such manner as to not unreasonably interfere with the construction and/or operation of the Project. All inspections will be made with one or more representatives of the Lessor and Lessee and in accordance with safety standards of the Lessor and Lessee. Upon completion of the Improvements, the City shall annually evaluate the Project to ensure compliance with the terms and provisions of this Agreement and shall report possible defaults to the City Council and City Attorney. The Lessee shall annually submit to HCAD and to the City, beginning on January 1, 2007, and continuing through the term of this Agreement, a January 1st employee -count for the Project Site which shall correspond to employment counts reported in the Employer's Quarterly Report to the Texas Workforce Commission filed by the Lessor, Lessee or Contractor, for the quarter ending on the previous December 31, and a separate notarized letter certifying: (1) the number of jobs created as a direct result of the Improvements, and (2) the Lessee is in compliance with the environmental and worker safety requirements for the preceding year. This information will be used to determine eligibility and value of abatement for that year and shall be subject to audit if requested by the City. The Lessee's failure to submit this information will render the Lessor and Lessee ineligible to receive abatement for that year. The Lessor and Lessee shall (a) obtain and maintain all required permits and other authorizations from the United States Environmental Protection Agency and the Texas Commission on Environmental Quality ("TCEQ") for the construction and operation of the Project facility and for the storage, transport, and disposal of solid waste; and (b) seek a permit from the TCEQ for all grandfathered units on the Project Site, if any, by filing with the TCEQ, within three years of receiving the abatement, a technically complete application for such a permit. The HCAD Chief Appraiser shall annually determine (i) the taxable value pursuant to the terms of this abatement for all property located in the Project Site and (ii) the full taxable value without abatement of the real and personal property comprising the Project Site. The Chief Appraiser shall record both the abated value and the full taxable value in the appraisal records. The full exemption value listed in the HCAD records shall be used to compute the amount of abated taxes that are required to be recaptured and paid in the event this Agreement is terminated in a manner that results in recapture. Each year, the Lessee shall furnish the HCAD Chief Appraiser with such information outlined in Chapter 22, TEXAS TAX CODE, as may be necessary for the administration of the tax abatement specified herein. If the City terminates this Agreement, it shall provide the Lessor and Lessee with written notice of such termination. If the Lessor and Lessee believes that such termination was improper, the Lessor and Lessee may file suit in the Harris County District Courts appealing such termination within sixty (60) days after receipt from the City of written notice of termination. If a suit is filed, the Lessor and Lessee shall remit to the City, and other political subdivisions who are parties to this Agreement, within sixty (60) days after receipt of the notice of termination, any additional and/or recaptured taxes as may be payable during the pendency of the litigation pursuant to the payment provisions of TEXAS TAX CODE ANN. § 42.08. If the final determination of the appeal increases the Lessor's and Lessee's tax liability above the amount of tax paid, the Lessor and Lessee r shall remit the additional tax to the City and other political subdivisions that are parties to this Agreement, pursuant to TEXAS TAX CODE ANN. § 42.42. If the final determination of the appeal decreases tax liability of the Lessor and Lessee, the City and other political subdivisions that are parties to this Agreement shall refund the difference between the amount of tax paid and the amount of tax for which the Lessor and Lessee is liable pursuant to TEX. TAX CODE ANN. § 42.43. IX. ASSIGNMENT The Lessor and Lessee may assign this Agreement to a new owner of the facility with the written consent of the City Council, which consent shall not be unreasonably withheld. Any assignment shall provide that the assignee shall irrevocably and unconditionally assume all the duties and obligations of the assignor upon the same terms and conditions as set out in this Agreement. Any assignment of this Agreement shall be to an entity that contemplates the same improvements to the property, except to the extent such improvements have been completed. No assignment shall be approved if the Lessor and Lessee or assignee is indebted to the City or the other political subdivision that are parties to this Agreement, for ad valorem taxes or other obligations. X. RENDITION This Agreement is specifically conditioned upon the Lessor and Lessee complying with TEX. TAX CODE ANN. § 22.01, as amended, requiring an annual rendition of all personal property with HCAD. XI. NOTICE Any notice required to be given under the provisions of this Agreement shall be in writing and shall be duly served when it shall have been deposited, enclosed in a wrapper with the proper postage prepaid thereon, and duly registered or certified, return receipt requested, in a United States Post Office, addressed to the City and the Lessor and Lessee at the following addresses. If mailed, any notice or communication shall be deemed to be received three (3) days after the date of deposit in the United States Mail. Unless otherwise provided in this Agreement, all notices shall be delivered to the following addresses: To Lessee: Preferred Freezer Services Houston Port, LLC. A Delaware Corporation John Galiher, President/ Chief Executive Officer 360 Avenue P Newark, NJ 07105 To Lessor: Under Bear, LLC a Delaware Corporation Dan Coon, Chief Operating Officer 360 Avenue P Newark, NJ 07105 To the City: Director, Department of Finance City of La Porte 604 West Fairmont Parkway LaPorte, Texas 77571 with a copy to: Office of the Chief Appraiser/Abatements Harris County Appraisal District 13013 Northwest Freeway Houston, Texas 77040-6305 Any party may designate a different address by giving the other party ten (10) days' written notice. XII. MERGER The parties agree that this Agreement contains all of the terms and conditions of the understanding of the parties relating to the subject matter hereof. All prior negotiations, discussions, correspondence and preliminary understandings between the parties and others relating hereto are superseded by this Agreement. XIII. APPLICABLE LAWS Each party to this Agreement understands and agrees that this Agreement shall be governed and construed according to the laws of the State of Texas. XIV. SEVERABILITY The parties agree that if any provision, section, subsection, sentence, clause or phrase contained in this Agreement is for any reason held to be unconstitutional, void or invalid, the remaining portions of this Agreement shall not be affected thereby and all provisions contained herein are deemed severable for that purpose. XV. DATE The City executes this Agreement by and through the City Manager acting pursuant to City of La Porte Ordinance 20064?,�& , so authorizing. This Agreement shall not become enforceable until executed by all parties hereto. The Effective Date of Abatement shall be January 1, 2007. The parties in multiple originals, each, have executed this Agreement having full force and effect. APPROVED AS TO FORM: By: Kno4x. 6Aslk City Attorney ATTEST: By: (i( . Martha A. Gillett City Secretary CITY OF LA PORTE �y _ ..,�­0 Date sited: Prefer ed Freezer er LLC e essee") A D law By: John Galiher es Houston Port, Corporation President/Chief Executive Officer Date Signed: 16 — 3 O c�c, Under Bear, LLC ("Lessor") A Delaware Corporation By: Dan Coon Chief Operating Officer Date Signed: % — �U - 0 6 XIII. APPLICABLE LAWS Each party to this Agreement understands and agrees that this Agreement shall be governed and construed according to the laws of the State of Texas. XIV. SEVERABILITY The parties agree that if any provision, section, subsection, sentence, clause or phrase contained in this Agreement is for any reason held to be unconstitutional, void or invalid, the remaining portions of this Agreement shall not be affected thereby and all provisions contained herein are deemed severable for that purpose. XV. DATE The City executes this Agreement by and through the City Manager acting pursuant to City of La Porte Ordinance 2006- , so authorizing. This Agreement shall not fiecome enforceable until executed by all parties hereto. The Effective Date of Abatement shall be January 1, 2007. The parties in multiple originals, each, have executed this Agreement having full force and effect. APPROVED AS TO FORM: By: Knox W. Askins City Attorney ATTEST: By: Martha A. Gillett City Secretary ATTEST: By: Martha A. Gillett City Secretary CITY OF LA PORTE By: John Joerns, Interim City Manager Date LLC U Lessee") A By: John ervices Houston Port, President/Chief Executive Officer Date Signed: /0 - 36 dG Under Bear, LLC ("Lessor") A Delaware Corporation By: �l Dan Coon Chief Operating Officer Date Signed: 1`0 - j 0 -C'G ORDINANCE NO 2006 -JR� AN ORDINANCE AUTHORZING THE DESIGNATION OF THE CITY OF LA PORTE REINVESTMENT ZONE "C" - "PREFERRED FREEZER SERVICES HOUSTON PORT, LLC."; MAKING FINDINGS OF FACT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDANIED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council of the City of La Porte has heretofore, on the 140' day of February, 2005, adopted Ordinance No. 2005-2809, an Ordinance establishing guidelines and criteria governing tax abatement agreements by the City of La Porte. A public hearing was held before the City Council of the City of La Porte on November 6, 2006, pursuant to notice as required by Section 312.201, Texas tax Codes, which notice was published not later than the 7`h day before the date of the hearing in the Bayshore Sun, a newspaper having general circulation in the City of La Porte, a true and correct copy of said published notice being attached hereto as Exhibit "A" and incorporated by reference herein; and pursuant to notice delivered in writing not later than the 7'h day before the hearing, to the presiding officer of the La Porte Independent School District; to the County Judge of Harris County, Texas presiding officer of the Harris County Commissioners Court, on behalf of Harris County, the Harris County Flood Control District, the Port of Houston Authority of Harris County, and the Harris County Department of Education; and to the presiding officer of the San Jacinto College District; being all of the taxing units included in the proposed reinvestment zone. A copy of the notices to the La Porte Independent School District and Harris' County Commissioners Court, and the San Jacinto College District, are attached hereto as Exhibits `B", "C", and "D", respectively, incorporated by reference herein, and made a part hereof for all purposes. Section 2. Specifically, and without limiting the generality of the foregoing, the City Council of the City of La Porte finds, determines and declares that the subject property would be reasonably likely as a result of the designation as a reinvestment zone, to contribute to the retention or expansion of primary employment or to attract major investments in the zone that would be a benefit to the property and that would contribute to the economic development of the City of La Porte. The City Council of the City of La Porte further finds, determines and declares that the improvements sought are feasible and practical and would be a benefit to the land to be included in the zone and to the City of La Porte after the expiration of an agreement into under Section 312.204, Texas Tax Code. Section 3. Accordingly, there is hereby established and designated a reinvestment zone in the City of La Porte to be know as the La Porte Reinvestment Zone "C" — Preferred Freezer Services Houston Port, LLC.", for commercial/industrial tax abatement, legally described by metes and bounds on Exhibit "E", and as more particularly shown on the location map attached hereto as Exhibit "F", Proposed La Porte Reinvestment Zone "C" — "Preferred Freezer Services Houston Port, LLC.", reference to which is here made for all purposes. This designation shall be effective for five (5) years from the effective date of this Ordinance. Section 4. This Ordinance shall serve as notice of the establishment of the La Porte Reinvestment Zone "C" by the City of La Porte, to every taxing unit that includes inside its boundaries property that is located within the boundaries of the Zone, and the City Secretary is hereby directed to send certified copies of this ordinance to all such affected taxing units. Section 5. 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 6. This Ordinance shall be effective from and after its passage and approval, and it is so ordered. PASSED AND APPROVED, this day of ko , 2006. ATTEST: Mardia A. Gillett City Secretary ITY OF LA PC�R-TE Alton E. Porte Mayor APPROVED: 6�/ /�r— / -7� ox W. Askins City Attorney EXHIBIT "A" Public Notice REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: November 6, 2006 Requested By: John Joerns Department: Administration Report: Resolution: Ordinance: X Exhibits: Ordinance 2006- Exhibits: "A" Public Notice Budget Source of Funds: Account Number: Amount Budgeted: Amount Requested: Budgeted Item: YES NO Exhibits "B/C/D" Notices to LPISD, Harris County Commissioners Court and San Jacinto College District Exhibits "E" Legal Meets and Bounds Description Exhibits "F" Aerial of Proposed Reinvestment Zone "C" SUMMARY & RECOMMENDATION Prior to the creation of a reinvestment zone the City must publish a public notice regarding a public hearing and notify other taxing entities at least 7 days in advance of the hearing. The proposed Reinvestments Zone "C" is a site specific 10.115 Ac tract for Preferred Freezer Services Houston Port, LLC. At the Public Hearing interested persons are entitled to speak and present evidence for or against the designation. After the Public Hearing, Council will consider an ordinance designation a 10.115 Ac tract as La Porte Reinvestment Zone "C" —'Preferred Freezer Services Houston Port, LLC." The Ordinance finds that the designation of the Zone is likely to contribute to the retention or expansion of primary employment or to attract major investments in the zone that would be a benefit to the property and that would contribute to the economic development of the City of La Porte. Action Required by Council: Consider Ordinance designation a 10.115 Ac tract as La Porte Reinvestment Zone "C" — Preferred Freezer Services Houston Port, LLC. 40O Dat STATE OF TEXAS } COUNTY OF HARRIS ) ( CITY OF LA PORTE ) ( PUBLIC NOTICE Notice is hereby given that a public hearing will be held before the City Council of the City of La Porte, City Hall, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 pm on Monday, November 6, 2006, at which public hearing interested persons shall be entitled to speak and present evidence for or against the designation of La Porte Reinvestment Zone "Zone C", for Preferred Freezer Services Houston Port, LLC, pursuant to Chapter 312, Texas Tax Code, as amended. The legal description of the property to comprise the proposed reinvestment zone is as follow; to -wit: Being a tract or parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St. Joe Paper Company in Harris County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly described as follows (all bearings based on the southerly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes 00 Seconds East per said deed): BEGINNING at a broken concrete monument called and found at the southwest corner of both the herein described tract and aforesaid 207.049 acre tract, for the northwest corner of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Volume 2355, Pagel73 of the Deed Record of hams County, Texas, said corner being on the west line of aforesaid Enoch Brinson Survey and the east line of the Nicholas Clopper Survey; THENCE, coincident the south line of aforesaid 207.049 acre tract and the north of aforesaid 19.566 acre tract, North 89 Degrees 39 Minutes 06 Seconds East, a distance of 3,740.00 feet to a 5/8 inch rod with cap set for the southwest corner and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest corner of the herein described tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a 5/8 inch iron rod with cap set for the northeast corner of the herein described tract; 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast corner of herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. A location map of said property is available for inspection in the City Secretary's Office. THIS FACILITY HAS DISABILITY ACCOMMODATIONS AVAILABLE. REQUESTS FOR ACCOMMODATIONS OR INTERPRETIVE SERVICES AT MEETING SHOULD BE MADE 48 HOURS PRIOR TO THIS MEETING. PLEASE CONTACT CITY SECRETARY'S OFFICE AT 281-471-5020 OR TDD LINE 281-471-5030 FOR FURTHER INFORMATION. A POSSIBLE QUORUM OF CITY COUNCIL MEMBERS MAY BE PRESENT AT THIS MEETING AND PARTICIPATE IN DISCUSSIONS BUT NOT TAKE ANY ACTION. Martha A. Gillett, TRMC City Secretary Date Posted 'STAm F TEXAS COUNTY OF HARRIS ..CITY OF LA.PORTE - PUBM NOTICE '_ Notice. is hereby given that a public hearing will: be held before the City Coon -of this City of La Porte, City Hall, 604 West Eak- moat . Parkway, La Porte, Texas beginning at 6`00 pm on Monday, November 6, 2006, , at which public hearing interested persons shall be "entitled to speak and present evidence for or against the designation of LaPorte Reinvestment' a 10 LL suant, 'tn Chapter 3t2, Texas Tax. ;`Code, as amended Th6.'legal de- scrio, of the property to comprise, the proposed re-_ investment zone `is as .fol- low•, to-wit Being a tract or parcel of i land containing 10.115 acres of land or 440,618 square feet, located: in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and ` part of that certain 207.049 acre tract (called 206.990 acre tract) of record in. the name of St. Joe . Paper Company in Harris County Clerk's File . (H.C.C.F.) Number . M032856; Said 10.115 acre tract being more particularly descri- bed as follows (all bear- ings based on the souther- ly Right -of -Way line of the Souther Pacific -Railroad "bearing South 70 Degrees 15 Minutes - 00 Seconds East .per said deed): . BEGINNING at a broken concrete monument called and found at the south- west comer of both :the herein described tract and aforesaid 207.049 acre tract, for the northwest cor- ner of a called 19.566 acre tract of record in the name of Houston ;Lighting and Power Company in H.C.C.F Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston lighting and Power Company in Vol- ume 2355, Pagel73 of the Deed Record of Harris County, Texas, said comer being on the west line of . aforesaid Enoch Brinson Survey and the east line of the- Nicholas Clopper Sur- vey; PRETIVE SERVICES P THENCE, coincident the MEETING SHOULD E south line of aforesaid MADE 48 HOURS FRIO 207.049 acre tract and the TO THIS MEETIN( north of aforesaid 19.566 PLEASE CONTACT Cli acre tract, North 89 De- . SECRETARY'S OFFIC grees 39 Minutes 06 Sec- AT 281-471-5020 OR TD onds East, a distance of TINE 281-471-5030 FO 3,740.00 feet to a 5/8 inch FURTHER INFORM) rod with cap set for the TION. southwest comer and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest comer of the herein descd- bed tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a -5/8 inch iron rod with cap set for the northeast comer of.the herein descd- bed tract; . 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast comer of herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. A location map of said property is available for in- spection in the City Secre- tary's Office. THIS FACILITY HAS DIS ABILITY ACCOMMODA- ' TIONS AVAILABLE. RE- QUESTS FOR ACCOM- MODATIONS OR INTER- A POSSIBLE QUORUI OF CITY COUNCIL MEh BERS MAY BE PRESEN AT THIS MEETING AN PARTICIPATE IN Dl; CUSSIONS BUT NO TAKE ANY ACTION. Martha A. Gillett, TRMC City Secretary . City of La Porte EXHIBIT "B" Notice to LPISD o� A y;. City of La Porte Established 1892 L.. 7'eXAS October 24, 2006 CM/RRR# 7005 0390 0004 8165 3522 Dr. Michael Say, Superintendent La Porte Independent School District Attn: Gene Horn, President LPISD School Board 1002 San Jacinto Street LaPorte, TX 77571 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Dr. Say: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, LaPorte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/krp Enclosure 604 W. Fairmont Pkwy. • La Porte, Texas 77571 9 (281) 471-5020 EXHIBIT "C" Notice to Harris County Commissioners Court J *ty of La Porte .. ....... .. Ci -Established 1892 6 b s October 24, 2006 CM/RRR# 7005 0390 0004 8165 3515 The Honorable Robert Eckels Harris County Judge Attn: David Turkel Director of Community & Economic Development 8410 Lantern Point Drive Houston, TX 77054 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Judge Eckels: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC. on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/krp Enclosure 604 W. Fairmont Pkwy. • La Porte, Texas 77571 9 (281) 471-5020 EXHIBIT "D" Notice to San Jacinto College District °� Ao �--0: City of La Porte Established 1892 �-' Texas October 24, 2006 CM/RRR# 7005 0390 0004 8165 3508 Dr. Bill Lindemann, Chancellor San Jacinto College Attn: Dr, Ruede Wheeler Board of Regents 4624 Fairmont Parkway, Suite 200 Pasadena, TX 77504 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Dr. Lindemann: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC. on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/krp Enclosure 604 W. Fairmont Pkwy. • La Porte, Texas 77571 9 (281) 471-5020 EXHIBIT "E" Legal Metes & Bounds METES AND BOUNDS DESCRIPTION 10.115 ACRE TRACT LOCATED IN THE ENOCH BRINSON SURVEY, A-5 HARRIS COUNTY, TEXAS Being a tract or parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and a part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St Joe Paper Company in Hams County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly described as follows (all beatings based on the southerly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes .00 Seconds East per said deed): BEGINNING at a broken concrete monument called and found at the southwest corner of both the herein described tract and aforesaid 207.049 acre tract, for the northwest cornet of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F. Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Volume 2355, Page 173 of the Deed Records of Harris County, Texas, said comer being on the west line of aforesaid Enoch Brinson Survey and the east line of the Nicholas Clopper Survey; THENCE, coincident the south line of aforesaid 207.049 acre tract and the north line of aforesaid 19.566 acre tract, North 89 Degrees 39 Minutes 06 Seconds East, a distance of 3,740.00 feet to a 5/8 inch iron rod with cap set for the southwest comer and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest corner of the herein described tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a 5/8 inch iron rod with cap set for the northeast corner of the herein described tract; 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast corner of the herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. ©,. a KENNUH A. GRULL�R p: 1 b/Ns.e►.lee..s.......... j.... f' Ve 5478 )� G�$SS���'�• / — Reno & Associates July 13, 2006 Job No. 36-0404_10.1 acre EXHIBIT "F" Aerial of Proposed Reinvestment Zone "C" ORDINANCE NO. 2006- �qJ AN ORDINANCE APPROVING AND AUTHORIZING A TAX ABATEMENT AGREEMENT BETWEEN THE CITY OF LA PORTE AND PREFERRED FREEZER SERVICES HOUSTON PORT, LLC., A DELAWARE CORPORATION, FOR REAL PROPERTY LOCATED IN THE LA PORTE REINVESTMENT ZONE C; MAKING VARIOUS FINDINGS AND PROVISIONS RELATING TO THE SUBJECT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council hereby approves and authorizes the contract, agreement, or other undertaking described in the title of this ordinance, a copy of which is on file in the office of the City Secretary. The City Manager 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 approval, and it is so ordered. PASSED AND APPROVED, this 6ch day of November, 2006. ity of La Porte By: Alton E. Porter, Mayor ATTEST: APPROVED: Martha A. Gillett Knox W. Askins City Secretary City Attorney EXHIBIT «A99 EXHIBIT "A" ORDINANCE NO. 2005- a�_ AN ORDINANCE AMENDING THE CODE OF ORDINANCES OF THE CITY OF LA PORTE BY REPEALING ARTICLE V GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE, SECTIONS 66-140 THROUGH 66-152 AND ADDING -ARTICLE V GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE, SECTIONS 66-140 THROUGH 66-151 INCLUSIVE; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council of the City of La Porte hereby amends the Code of Ordinances of the City of La Porte by repealing Article V. "Guidelines and Criteria Governing Tax Abatement Agreements by the City of La Porte", Sections 66-140 through 66-152 and adding Article V. "Guidelines and Criteria Governing Tax Abatement Agreements by the City of La Porte", Sections 66-140 through 66-151 inclusive, as follows, to -wit: ARTICLE V. GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS Section 66-140. REDEVELOPMENT TAX ABATEMENT AUTHORIZED. (1) Creation of Reinvestment Zones. (a) A property tax abatement program is hereby created to be administered in accordance with V.T.C.A., Tax Code Ch. 312, as amended from time to time. Tax abatement shall only be allowed m a reinvestment zone. (b) . Reinvestment zones in the city for this purpose will be considered for designation by city council upon the recommendation of the City Manager's Office. The city council may approve the creation of these reinvestment zones on a zone -by -zone basis after a public hearing before the city council. Following the public hearing the city council may consider the ordinance creating a new reinvestment zone in the proposed area- (c) The city council, may not adopt an ordinance designating a reinvestment zone until it has held a public hearing at which interested persons are entitled to speak and present evidence for or against the designation. Notice of the hearing shall be given at least seven days prior to the hearing. The presiding officers of eligible jurisdictions shall be notified in writing at least seven days prior to the hearing. A notice of the public hearing shall be given to other affected taxing jurisdictions, published in the legal classified section of the local daily newspaper having general circulation, and posted in other places as deemed appropriate, including notice to civic associations in the area surrounding - 1 - the proposed zone, at least seven days prior to the hearing. The notice shall contain the location, time, and place of the public hearing and a description of the proposed boundaries of the reinvestment zone. (d) The designation of such a zone by ordinance shall constitute an affirmative finding by the city council that the improvements sought to be constructed or repairs to be made within the zone are feasible and practical and would be of benefit to the land to be included within a zone and to the city- (e) In determining whether an area qualifies as a reinvestment zone for the property tax abatement program, the city council shall use any one or more of the following criteria as guidelines: (1) The area substantially impairs or arrests the sound growth of the city; retards the provision of housing accommodations, or constitutes an economic or social liability and is a menace to the public health, safety, morals, or welfare in its present condition and use by reasons of the presence of substantial number of substandard, slum, deteriorated, or deteriorating structures, predominance of defective or inadequate sidewalks or street layout; faulty lot layout in relation to size, accessibility, or usefulness, unsanitary or unsafe conditions; deterioration of site or other improvements; tax or special assessment delinquency exceeds the fair value of the land; defective or unusual conditions of title; the existence of conditions that endanger life or property by fire or other cause; or any combination of these factors or conditions. (2) The area is predominantly open and, because of obsolete platting or deterioration of structures or site improvements or other factors, substantially impairs or arrests the sound growth of the city. (3) The area has been designated a local or state -federal enterprise zone under the Texas Enterprise Zone Act. (4) The area is located wholly within an eligible blighted area, as identified from time to time by city council. (5) There has been a demonstration of community interest and there is evidence that substantial number of owners of taxable real property in the reinvestment zone will participate in such a program- (6) Be reasonably likely as a result of the designation to contribute to the retention or expansion of primary employment or to attract major investment in the zone that would be a benefit to the property and that would contribute to the economic development of the city. (f) The goals and objectives expressed above and the standards and restrictions expressed in V.T.C.A., Tax Code Ch. 312, as amended, are not exhaustive and shall be supplemented by such further and additional goals, objectives, rules, standards and restrictions as the city council may from time to time impose. -2- (g) The designation of a reinvestment zone hereunder shall expire five years after the date of its designation and may be renewed for periods not to exceed five years. The expiration of a designation, however, shall not affect existing agreements entered into pursuant to section 66-140 or section 66-145 of this chapter. (2) Agreement for property tax abatement. (a) Upon designation of a reinvestment zone, the city may enter into property tax abatement agreements with interested owners of taxable real property located within the reinvestment zone. The agreement shall be conditioned on the owner of the property making certain improvement or repairs to the property as outlined in Section 66-143, Application. (b) In addition to the.guidelines and criteria contained herein, to be eligible for tax abatement the planned improvement: (1) Should provide an economic benefit to the city, taking all relevant factors into consideration, including (i) size of the abatement, (ii) income from sales tax and franchise fees generated by the planned improvement, and (iii) any additional expense to the city services as a result of the improvement; and (2) Must be necessary because capacity cannot be provided efficiently utilizing existing improved property when reasonable allowance is made for necessary improvements; and (c) Property in a reinvestment zone that is owned or leased by a member of the city council or by a member of the city planning commission is excluded from property tax abatement. (d) The city may enter into a property tax abatement agreement with the interested owners of taxable real property for improvements or repairs completed before the city's approval of the tax abatement agreement if (1) The applicant has complied with the requirements of section 66-143; and (2) The applicant provides evidence of good cause as to why the city should grant tax abatements for improvements or repairs completed before the city's approval of the tax abatement agreement; and (3) The agreement is consistent with the requirements of subsections (a) through (c) above, except as provided in paragraph (2) of this subsection. Notwithstanding any other provision of this section, for tax abatement agreements approved under this subsection (d), city council shall determine the year that property tax abatement shall begin. Section 66-141. DEFINITIONS (a) "Abatement" means the full or partial exemption from ad valorem taxes of certain -3- real property (including fixed -in -place machinery & equipment) in a reinvestment zone designated for economic development purposes. (b) "Eligible Jurisdiction" means the city and any school district, college district or other taxing district eligible to abate its taxes according to Texas law that levies ad valorem taxes upon and provides services to property located within the proposed or existing reinvestment zone. (c) "Agreement" means a contractual agreement between a property owner and/or lessee and an eligible jurisdiction for the purposes of tax abatement. (d) 'Base Year Value" means the assessed value of eligible property on January 1 preceding the execution. of the agreement plus the agreed upon value of eligible property improvements made after January 1, but before the execution of the agreement, or the sales price, if the property was conveyed subsequent to January 1, whichever is greater. (e) "Competitively -Sited Project" means a project where the applicant has completed a written evaluation of competing locations for expansion, relocation, or new operations, including identification of specific sites in those locations. (f) "Department" shall mean the department of finance of the city. (g) "Economic Life" means the number of years a property improvement is expected to be in service in a facility. (h) "Employee" means a person whose employment is both permanent and fulltime; who works for and is an employee of the Owner or an employee of a Contractor, who works a minimum of 1,750 hours per year exclusively within the Zone, who receives industry standard benefits, and whose employment is reflected in the Owner's (and Contractor's, if applicable) quarterly report filed with the Texas Workforce Commission; but excluding any direct contract (seasonal, part-time, and full-time equivalent). (i) "Expansion" means the addition of buildings, structures, fixed machinery or equipment for purposes of increasing production capacity. (j) "Facility" means property improvements completed or in the process of construction which together comprise an integral whole. (k) "Manufacturing Facility" means buildings and structures, including fixed -in -place machinery and equipment, the primary purpose of which is or will be the manufacture of tangible goods or materials or the processing of such goods or materials by physical or chemical change. (I) "New Facility." means a property, previously undeveloped, which is placed into service by means other than or in conjunction with expansion or modernization. (m) "Other Basic Industry Facility" means buildings and structures including fixed machinery and equipment not elsewhere described, used or to be used for the production of products or services which primarily serve a market in the creation of new permanent employment and bring in new wealth. (n) "Owner of taxable real property" shall mean the person, corporation, company or other entity responsible for paying property taxes on certain property or an interest therein including a leasehold interest or interests. (o) "Regional Distribution Center Facility" means buildings and structures, including fixed machinery and equipment, used or to be used primarily to receive, store, service or distribute goods or materials owned by the facility operator where a majority of the goods or services are distributed to points outside the city. (p) "Regional Entertainment Facility" means buildings and structures, including fixed machinery and equipment, used or to be used to provide entertainment through the admission of the general public where the majority of users reside outside the city. (q) "Regional Service Facility" means buildings and structures, including fixed machinery and equipment, used or to be used to service goods where a majority of the goods being serviced originate outside the city. (r) "Research Facility" means building and structures, including fixed machinery and equipment, used or to be used primarily for research or experimentation to improve or develop new tangible goods or materials or to improve or develop the production processes thereto. (s) "Research and Development Facility" means buildings and structures, including. fixed -in -place machinery and equipment, used or to be used primarily for research or experimentation to improve or develop current technology in biomedicine, electronics or pre -commercial emerging industries. Section 66-142. ABATEAMN'T AUTHORIZED (a) Authorized Facility. A facility may be eligible for abatement if it is a: Manufacturing Facility, Research Facility, Regional Distribution Center Facility, Regional Service Facility, Regional Entertainment Facility, Research and Development Facility or Other Basic Industry. (b) Creation of New Value. Abatement may only be granted for the additional value of eligible real property (including fixed -in -place machinery and equipment) listed in an abatement agreement between the City and the property owner and lessee (if required), subject to such limitations as City Council and the property tax code may require- (c) New and Existing Facilities. Abatement may be granted for new facilities, the expansion of existing facilities, or the improvement to existing facilities having the -5- effect of improving current environmental conditions. (d) Eligible Property. Abatement may be extended to the value of buildings, structures, fixed machinery and equipment, site improvements plus that office space and related fixed improvements necessary to the operation and administration of the facility. The value of all property shall be the Certified Appraised Value for each year, as finally determined by the County Appraisal District ("HCAD"). (e) Ineligible Property. The following types of property shall be fully taxable and ineligible for abatement: land; inventories; supplies; tools; furnishings, and other forms of movable personal- property; vehicles; vessels; aircraft; housing; hotel accommodations; deferred maintenance investments; property to be rented or leased (except as provided in the Section 66-142(f), "Owned/Leased Facilities"); - property which has an economic life of less than 15 years; property owned or used by the State of Texas or its political subdivisions or by any organization owned, operated or directed by a political subdivision of the State of Texas, or any property exempted by local, state or federal law. When such exempted property includes manufacturing machinery and equipment listed in the Investment Budget (as required in Section 3, "Application7% then the value of such property may not be included toward the achievement of the investment or valuation thresholds set out in the Tax Abatement Agreement. (f) Owned/Leased Facilities. If a leased facility is granted abatement the agreement shall be executed with the lessor and the lessee. (g) Value and Term of Abatement. A tax abatement shall be granted in accordance with the terms of a Tax Abatement Agreement, as follows: 1. Either with the January 1st valuation date immediately following the date of execution of the agreement or a subsequent January 1 st valuation date not more than three years after execution of a tax abatement agreement, but not beyond the completion of construction. Projects are eligible for abatement of new value, subject to an abatement cap: to be calculated as $1,000,000 per job created/retained times the number of such jobs as required in the abatement agreement. Such cap shall not exceed the increased value requirement as set out in the abatement agreement, and will be adjusted annually (as set out in Section 66-142 (j), "Taxability"). Under no circumstances will any facility be granted the benefit of a tax abatement for longer than ten (10) years. Value subject to abatement must remain greater than or equal to the contractually -defined "Minimum Value Requirement." To determine the amount of each year's exemption, the adjusted cap shall be multiplied by a sliding scale as follows: M Year Abated Percentage of Value for Proiects Percentage of Value for.Proiects 1-3 Including Construction 4 5 6 7-10 Creating or Maintaining a Minimum of 25 Full-time Employees_ 100% 80% 60% 40% 20% Creating or Maintaining a Minimum of 10 Full-time Employees. 50% 40% 30% 20% 10% 2. No tax abatement shall be given in any year in which the facility fails to meet The contractually defined "Minimum Value Requirement." 3. All Tax Abatement Agreements shall set out in detail the exact method to be used in computing each year's exemption. 4. No tax abatement. shall be given in any year in which the facility fails to meet the employment minimum set forth in Section 66-142(h), "Basic Qualifications for Tax Abatement." (h) Basic Qualifications for Tax Abatement. To be eligible for designation as a reinvestment zone and receive tax abatement the planned improvement: 1. must be shown to increase the assessed value of the property at least $1.0 million upon completion of the contractually -defined "Construction Period;" 2. must be shown to directly create or prevent the loss of permanent full-time employment for at least 10 people within the reinvestment zone upon completion of the contractually -defined "Employment Period;" 3. must be shown not to solely or primarily have the effect of transferring employment from one part of City to another. 4. the City may, at its discretion, take into account alternative or competing site information provided with the application for tax abatement. (i) Research and Development Projects. If the planned project improvement is for a research and development facility, in order to be eligible for tax abatement the planned improvement: 1. must be reasonably expected to increase the value of the property by a minimum amount of $500,000 upon the completion of construction, and 2. must be expected to create permanent employment for at least five people on a permanent basis in the designated zone, provided that this employment qualification shall take effect no more than two years after the effective date of the agreement and continue through the term of the agreement. The abatement period shall not exceed five years from the effective date of abatement and the percentage of value to be abated shall be up to 100 percent of new value throughout the abatement period, subject to a maximum abatable new value of -7- $1,000,000 per job created/retained. G) Taxability. From the execution of the abatement to the end of the agreement period, taxes shall be payable as follows: value of ineligible property (as provided in Section 66-142 (e), "Ineligible Property,") shall be fully taxable; 2. the non abatable real property within the reinvestment zone shall be fully taxable each year, 3. additional value of new eligible property shall be taxable in the manner described in Section 66-142 (g), "Value and Term of Abatement;" 4. when due to the employment formula (as described in Section 66-142 (g), "Value and Term of Abatement,"), the maximum amount eligible for abatement ("the cap") is less than the total value of the new facility, the amount of the cap will be reduced each year at the same rate as the taxable improvements are reduced in value from the previous year's value; and 5. each year's exemption will be computed by HCAD in the following manner: (a) The Base Property Value will be the current value of all real property plus fixed -in -place machinery and equipment within the zone that is not subject to abatement. (b) The Base Year Value will be subtracted from the value of the Abated Property plus the Base Property Value, the result to be called Current Amount Eligible for Abatement. In no case can this amount exceed the cap set'out in the abatement contract. (c) The Current Amount Eligible for Abatement is then multiplied by the abatement schedule set out in section 66-142 (g) to determine the amount of each year's exemption. (k) Environmental and Worker Safety Qualification_ In determining whether to grant a tax abatement, consideration will be given to compliance with all state and federal laws designed to protect human health, welfare and the environment ("environmental laws") that are applicable to all facilities in the State of Texas owned or operated by the owner of the facility or lessee, its parent, subsidiaries and, if a joint venture or partnership, every member of the joint venture or partnership ("applicants"). Consideration may also be given to compliance with environmental and worker safety laws by applicants at other facilities within the United States. Section 66-143. APPLICATION (a) Timely application: Any current or potential owner or lessee of taxable property in City must request a tax abatement by filing a completed application with the City prior to any public expression of a siting decision or any commitment (legal or financial) to the proposed project. (b) A complete application package for consideration of a tax abatement shall consist of: - a completed City Application form; • a completed narrative prepared in accordance with the template provided with the City Application and its instructions; • an "Investment Budget" detailing components and costs of the real property improvements .and fixed -in -place improvements -for which tax abatement is requested, including type, number, economic life, and eligibility for a tax exemption granted by the Texas .Commission on Environmental Quality ("TCEQ") (if known); • a map and legal description of the property; • a time schedule for undertaking and completing the proposed improvements; • a ten-year environmental and worker safety compliance history for all facilities located within the State of Texas and owned in whole or in part by applicants (as defined in Section 66-142(k), "Environmental and Worker Safety Qualification"); • a copy of the evaluation of competing locations, as described in Section 66-141, 'Definitions, - information pertaining to the reasons that the requested tax abatement is necessary to ensure that the proposed project is built in City (Le., documentation supporting assertion that "but for" a tax abatement, the stated project could not be constructed in City); • copies of the immediately preceding quarterly report(s) filed with the Texas Workforce Commission, documenting the current number of permanent full- time employees, and full-time Contractor employees, if any, at the time the application is submitted; • financial and other information, as the City deems appropriate for evaluating the financial capacity and other factors of the applicant; • certification prepared by City Tax Assessor -Collector stating that all tax accounts within City are -paid on a current basis; • for- a leased facility, the applicant shall provide with the application the name and address of the lessor and a draft copy of the proposed lease, or option contract. In the event a lease or option contract has already been executed with owner of site, the document must include a provision whereby abatement applicant may terminate such contract without penalty or loss of earnest money, in the event that City does not grant a tax abatement. (c) Upon receipt of a completed application, the City shall notify in writing and provide a copy of the application to the presiding officer of the governing body of each eligible taxing jurisdiction. (d) After receipt of an application for creation of a reinvestment zone and application for abatement, the City shall.determine whether the application qualifies for a tax abatement under the terms of these guidelines and criteria. Such determination may be delegated to an employee or City department. If it is determined that an application qualifies for abatement, it shall be recommended to the City Council that the applicant be notified in writing that subject to a public hearing, if applicable, and approval of a contract by City Council, the project qualifies for abatement- (e) The City shall not establish a reinvestment zone or enter into an abatement agreement if it finds that the request for the abatement was filed after the commencement of construction, alteration, or installation of improvements related to a proposed modernization, expansion or new facility. Property eligible for abatement includes only the new improvements that occur after the completion of an abatement agreement with City. Section 66-144. PUBLIC HEARING .AND APPROVAL (a) The City Council may not adopt an ordinance designating a reinvestment zone for the purposes of considering approval of a tax abatement until it has held a public hearing at which interested persons are entitled to speak and present evidence for or against the designation. Notice of the hearing shall be clearly identified on the City Council agenda at least 10 days prior to the hearing. The presiding officers of eligible Jurisdictions shall be notified in writing at least 7 days prior to the hearing. (b) At the public hearing, interested persons shall be entitled to speak and present written materials for or against the approval of the proposed project or tax abatement agreement. (c) In order to enter into a tax abatement agreement, the City Council must find that the terms of the proposed agreement meet these Guidelines and Criteria and that: 1. there will be no substantial adverse effect on the provision of the jurisdictions' service or tax base; and 2. the planned use of the property will not constitute a hazard to public safety, health or morals. Any variance to these guidelines must be approved by a vote of at least three -fourths (3/4) of the City Council. -10- Section 66-145. AGREEMENT After approval the City shall formally pass an ordinance and execute an agreement with the owner of the facility and lessee as required which shall include: (a) estimated value to be abated and the base year value; (b) percent of value to be abated each year as provided in Section 66-142 ("Abatement Authorized); (c) the commencement date and the termination date of abatement; (d) the proposed use of the facility; nature of construction, time schedule, survey, property description and improvement list; (e) contractual obligations in the event of default, violation of terms or conditions, delinquent taxes, recapture, administration and assignment as provided in Section 66-142 ("Abatement Authorized"), Section 66-146 ("Recapture"), Section 66-147 ("Administration"), and Section 66-148 ("Assignment"), or other provisions that may be required for uniformity or by state law; (f) amount of investment, increase in assessed value and number of jobs involved,. as provided in Section 66-142 ("Abatement Authorized"); (g) a requirement that the applicant annually submit to HCAD and City, a January ~ employee count for the abated facility which corresponds to employment counts reported in the facility's Employer's Quarterly Report to the Texas Workforce Commission for the quarter most recently ended at calendar year-end, and a separate notarized letter certifying the number of jobs created or retained as a- direct result of the abated improvements_and the number of employees in other as located within the City and the compliance with the environmental and. worker safety requirements in the agreement -for the preceding calendar year, for as of January 1. Submission shall be used to determine abatement eligibility for that year and shall be subject to audit if requested by the governing body. Failure to submit will result in the ineligibility to receive an abatement for that year, and (h) A requirement that the owner or lessee will (a) obtain and maintain all required permits and other authorizations from the United States Environmental Protection Agency and the TCEQ for the construction and operation of its facility and for the storage, transport and disposal of solid waste; and (b) seek a permit from the TCEQ for all grandfathered units on the site of the abated facility by.filing with the TCEQ, within three years of receiving the abatement, a technically complete application for such a permit. (i) Amount of investment and total permanent employees to be retained or created and total full-time equivalent jobs to be retained or created. -11- (j) A requirement that the company, on or before February 1 of each year the tax abatement agreement is in effect, provide the director a sworn statement that includes a delineation of the number of permanent employees; contract employees and part-time employees of the applicant company as of the immediately preceding January 1, who report to work in the reinvestment zone at each site covered by the agreement. (k) A requirement that the company annually file the Form 111.28 with the appropriate County appraisal district to qualify for the abatement. (1) Limit the uses of the property consistent with the general purpose of encouraging development or redevelopment of the zone during the period that property tax exemptions are in. effect. (m) Contain each term agreed to by the owner of the property. (n) Require the owner of the property to certify annually to the governing body of each taxing -unit that the owner is in compliance with each applicable term of the agreement. (o) Provide that the governing body of the municipality may cancel or modify the agreement if the property owner fails to comply with the agreement. Such agreement normally shall be executed within 60 days after the applicant has forwarded all necessary information and documentation to the City Section 66-146: RECAPTURE (a) If the facility is completed and begins producing product or service, but subsequently discontinues producing product or service for any reason for a period of 180 days during the abatement period, or one year in the event of natural disaster, then the agreement shall terminate and so shall the abatement of the taxes for the calendar year during which the facility no longer produces. The taxes otherwise abated for that calendar year shall be paid to the City within sixty (60) days from the date of termination.. The company or individual shall notify the City in writing at the address stated in the agreement within ten (10) days from any discontinuation, stating the reason for the discontinuation and the projected length of the discontinuation. If the City determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured and paid within sixty (60) days of the termination. (b) If the company or individual is in default according to the terms and conditions of its agreement; the company or individual shall notify the City in writing at the address stated in the agreement within ten (10) days from the default, and cure such default within sixty (60) days from the date of the default ("Cure Period"). If the City determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured, together with interest at 6% per annum calculated from the effective date of the agreement and paid within sixty (60) days of the termination. If -12- the City -does not receive full payment within said sixty (60) days, a penalty may be added, equal to 15% of the total amount abated. (c) If the company or individual allows its ad valorem taxes owed the City to become delinquent and fails to timely and properly follow the legal procedures for its protest and/or contest, the agreement then may be terminated, and all taxes previously abated by the agreement may be recaptured and paid within sixty (60) days of the termination, and penalties and interest may be assessed as set out in Section 66-146 ("Recapture"). Section 66-147. ADMINISTRATION (a) The Chief Appraiser of the County annually shall determine an assessment of the real and personal property comprising the reinvestment zone. Each year, the company or individual receiving abatement shall furnish the assessor with such information as may be necessary for the abatement. Once value has been established, the Chief Appraiser shall notify the affected jurisdictions, which levies taxes of the amount of the assessment. (b) The agreement shall stipulate that employees and/or designated representatives of the City will have access to the reinvestment zone during the term of the abatement to inspect the facility to determine if the terms and conditions of the agreement are being met. All inspections will be made only after giving twenty-four (24) hours prior notice and will only be conducted in such manner as to not unreasonably interfere with the construction and/or operation of the facility. All inspections will be made with one or more representatives of the company or individual and in accordance with the facility's safety standards. (c) Upon completion of construction, the City or the jurisdiction creating the reinvestment zone annually shall evaluate each facility receiving abatement to ensure compliance with the agreement and report possible violations to the contract and agreement to the City Council and the City Attorney and the affected jurisdictions which levy taxes. Section 66-148. ASSIGN ANT A tax abatement agreement may be assigned to a new owner or lessee of a facility with the written consent of the City Council, which consent shall not be unreasonably withheld. Any assignment shall provide that the assignee shall irrevocably and unconditionally assume all the duties and obligations of the assignor upon the same terms and conditions as set out in the agreement. Any assignment of a tax abatement agreement shall be to an entity that continues the same improvements or repairs to the property (except to the extent such improvements or repairs have been completed), and continues the same use of the facility as stated in the original Tax Abatement Agreement with the initial applicant. No assignment shall be approved -if the assignor or the assignee is indebted to the City for past due ad valorem taxes or other obligations. -13- Section 66-149. SUNSET PROVISION (a) These Guidelines and Criteria are effective February 14, 2005, and will remain in force until January 31, 2007, at which time all tax abatement contracts created pursuant -to these provisions will be reviewed by the City to determine whether the goals have been achieved.. Based on that review, the Guidelines and Criteria will be modified, renewed, or eliminated. . (b) This policy is mutually exclusive of existing industrial District Contracts and owners of real property in areas deserving of special attention as agreed by the affected jurisdictions. Section 66-150. LIIVIITATIONS The adoption of the guidelines and criteria by the city council of the City of LaPorte does not: (1) Limit the discretion of the city, council of the City of La Porte to decide whether to enter into a specific tax abatement agreement; (2) Limit the discretion of the city council of the City of La Porte to delegate to its employees the authority to determine whether or not the governing body should consider a particular application or request for tax abatement; or (3) Create any property, contract, or other legal right in any person to have the city council of the City of La Porte consider or grant a specific application or request for tax abatement. Section 66-151. NONAPPLICABLE AREAS; EXCEPTION The city council of the City of La Porte hereby establishes the policy of the City of La Porte, that tax abatement agreement applications will not be accepted for areas within the any existing Industrial District or Tax Increment Reinvestment Zone of the City of La Porte or any Industrial District or Tax Increment Reinvestment Zone, which may be created. However, as to any portion of such areas which are not within the corporate limits of the City of La Porte, Harris County Commissioners Court may establish tax abatement agreements for the benefit of itself, and taxing units other than the City of La Porte having jurisdiction over said area. 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 -14- times -during which this ordinance and the subject matter thereof has been discussed, considered and formally acted upon. The City Council fiirther 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 approval. PASSED AND APPORVED this le day of February, 2005. ATTEST: Martha A. Gillett City Secretary APPROVED: Knox W. ;skins City Attorney CITY OF LA PORTE B Y Alton E. Porter Mayor -15- EXHIBIT «B99 Application for Tax Abatement -La Porte, Texas - Prior to any public expression of a decision or any commitment (legal or financial) to the proposed project by applicant, a completed original of this application, including supporting documentation of competitive siting and narrative impact statement, must be submitted to the City of La Porte, 604 West Fairmont Parkway, La Porte, TX 77571. This application will become part of the Tax Abatement Agreement and any knowingly false representations will be grounds for terminating the application and/or voiding the agreement. The City will forward copies to other taxing jurisdictions, as may be required by Texas statute. PART I - APPLICANT INFORMATION Company Name: Preferred Freezer Services Application Date ____S / 16 / 06_ Headquarters Address: 360 Avenue P Newark NJ 07105 Local Address: 10000 Porter Rd. La Porte, TX Annual Sales: $79 million Local Phone: (305) 885-7077 ext. 3453 Total All Employees Worldwide: 500 Years in City of LaPorte: 0 Employees in La Porte at Present: 0 Attach description of Applicant Company, including brief history, corporate structure, financial statement, & annual report: PART II - PROJECT INFORMATION Location Address: 10000 Porter Rd. City: La Porte School District: La Porte ISD Legal Description*: Metes and Bounds Attached College District: San Jacinto Community College County: Harris Tax Acct. Numbers: 040-174-000-0006 *Attach plat survey, with a metes & bounds description, for project site. Project Description: FX-1 New Construction ❑ Expansion Attach statement fully explaining project, describe existing site and all proposed improvements, and provide "Investment Schedule" detailing improvements for which abatement is requested. Section A - Economic Development Type of Facility: ❑ Manufacturing ❑ Regional Entertainment 0 Regional Distribution ❑ Regional Service Center ❑ Research & Development ❑ Other Basic Industries Describe product or service to be provided: Public Cold Storage Distribution Center For regional facilities, provide market studies business plans or other materials demonstrating that the facility will serve a primary market which lies outside of La Porte. Section B - Variance Is the applicant seeking a variance to Guidelines? 0 Yes ❑ No If "yes" attach letter requesting and justifying the variance, with supplemental information. Application — Page 1 of 4 PART III - ECONOMIC INFORMATION Construction Estimate: Start Date _11_1_O1_1_06_ Contract Amount $10,483,492 Completion Date _05 / O1 / 07_. Peak Construction Jobs _150_ Construction Man -Years 1 If Modernization: Estimated current economic life of structure N/A years Added economic life from modernization N/A years Permanent Job Creation/Retention in LaPorte: • Current employment in LaPorte: ^0 • Jobs to be Retained in LaPorte: 0 • Jobs to be created within 3 years from contract inception (by Jan. 1, 2009) _35 Value on January 1 preceding abatement $1,300,000 $0 $1,300,000 Estimated value of new abatable investment N/A $10,483,492 $10,483,492 Estimated value not subject to abatement (e.g., Inventory)__ $400,000 $400,000 Estimated value of property subject to ad valorem tax at end of abatement Company Representative to be Contacted: Name: Bill Forrester Title: Development Director, Telephone: (305) 885-7077 ext. 3453 Authorized Company Official: Authorized Signature: Name (please print): Dan Coon Title: Chief Operating Officer Application — Page 2 of 4 Preferred Freezer Services Narrative for Tax Abatement I. Introduction of the Company A. Describe the Company's business activities, locations, primary markets, history (when and where incorporated), headquarters location, parent or subsidiary companies, etc. Preferred Freezer Services started in 1989 in Perth Amboy, NJ. Preferred Freezer Services was formed with intentions of becoming a leader in the cold storage warehousing industry. Owner and President/CEO John Galiher acquired a 3 million cubic foot freezer in Perth Amboy that had 26 full time employees and. generated $3.6 million dollars in sales. As of August 2006 Preferred Freezer Services operates fourteen (14) cold storage warehouses with a total 74 million cubic feet of space. Sales for the 14 facilities generated $79 million in 2005. The fourteen (14) current Preferred Freezer Services cold storage warehouses are in the New York/New Jersey metropolitan surrounding area, Boston -Massachusetts surrounding area, Los Angeles -California surrounding area, Miami -Florida and Chicago -Illinois. Headquarters: Preferred Freezer Services 360 Avenue P Newark, NJ 07105 (973) 820-4040 (973) 820-4004-fax B. Names of Chief Officers: John Galiher-President/Chief Executive Officer Dan Coon -Chief Operating Officer Greg Robinson -Chief Financial Officer C. Provide copy of annual report or financial statements, as detailed in "Instructions". 2005 Audited Financial Report is attached. II. Reasons For Seeking Abatement Preferred Freezer Services is proud of the business model it has formulated over the past 17 years. Integral to that business model is the development of state of the art, standardized refrigerated warehouses that can be built quickly and efficiently. The financial burden of constructing and operating these state of the art facilities is substantial. The reason Preferred Freezer Services is seeking the tax abatement with La Porte and Harris County is the abatement will lessen the financial burden, which will allow us to stay competitive in the market place. III. Describe The Project A. Facts about the proposed site (acreage, cost, location, ownership). The proposed site is 10.1 acres in the Underwood Business Park in La Porte, TX. Cost of•the land will be $1,300,000. The current owner of the property is Clay Development and Construction, Inc. B. Type and value of proposed improvements (budget, list of fixed in place equipment to be included in the project). Preliminary construction costs of proposed 167,381 square foot facility: Hard Costs Foundations $ 250,500 Concrete Slabs 888,488 Structural Steel & Misc Iron 1,183,500 Racking 1,456,800 Tilt Up Concrete Walls 575,500 Siding & Insulation 580,510 Roofing 802,247 HVAC 81,200 Plumbing 145,800 Building Sprinkler 535,847 Electric 672,500 Refrigeration (see below) 954,800 FKI Condors (see below) 1,600,000 Glass and Glazing 52,100 Carpentry 96,900 Doors & Hardware 37,100 Drywall & Metal Stubs 138,400 Painting 68,400 Floor Covering 49,300 Ceilings 31,400 Overhead doors/Dock Equipment 157,200 Standby Generator 225,000 Total Hard Costs $ 10,483,492 Fixed Equipment List Refrigeration Equipment Equipment Condensing Unit Evaporators Compressors Starters for Compressors Condensers Refrigerant Vessels Heat Exchanger Motor Control Center Qty. 1 20-freezer area 4-dock area 1-USDA inspection room 4 4 2 4 1 1 FKI Logistex Condor Cranes The Condor Cranes (8 for this facility) are fixed in place full mast material handling hybrid cranes. They are fixed in place within the freezer area. C. Project timeline -construction start date and end date. Preferred Freezer Services intends to start this project upon receipt of the tax abatement. Preferred Freezer Services is hopeful to have a start date of November 1, 2006 with a scheduled completion date of May 1, 2007. D. Environmental impact information must be provided, noting any anticipated impacts of the project on the environment, including, but not limited to, water quality, storm water and runoff, floodplain and wetlands, solid waste disposal, noise levels and air quality. Further, include history of environmental compliance by company as required in Guidelines and Criteria. Preferred Freezer Services is committed to maintaining an excellent environmental record and complying with all local, state and federal mandates. A Phase I environmental site assessment, which is attached, was performed on the 207 acres of property of which is the 9.2 acres Preferred Freezer Services plans on acquiring. There were no issues or findings noted. The proposed facility will not have an adverse affect on this site. Preferred Freezer Services believes in the environment and its surroundings, including neighbors. All equipment is indoors and therefore minimal noise levels go outside the facility. Even the back up generator is in an enclosure to eliminate engine noise. There will be an enclosed trash compactor on site to prevent rodents, odor and other issues relating to waste disposal. E. All other governmental assistance/incentives being requested or already approved for the project, (e.g. Industrial Development Bonds, Smart Job Funds). There are none at the time of application. IV. Jobs A. Provide information on current level of employment, including: (1) current payroll and (2) breakdown of current employment by zip code. Attach a copy of the company's most recent filing with the Texas Workforce Commission or other supporting documentation that can be used to determine actual employment level at time of application. There is no current level of employment with respect to this application because this will be the first facility in the state of Texas. B. Provide information on the projected job creation associated with the project, including: (1) new employee needs; e.g. skilled vs. non -skilled, level of education, experience, etc; (2) proposed pay scale; (3) any training which the company will provide to its new employees; (4) upward mobility opportunities, career tracks, etc. available to less educated and experienced workers; and (5) if this is a consolidation, information on number of "new hires" vs. "transfers". Also, provide information on construction jobs to be created by the project. 1) New employment needs for this facility will be 35 employees with 8 skilled workers (management, clerical and mechanical) and 27 non - skilled workers. 2) Proposed pay scale is as follows: Skilled salary workers $40,000-$90,000/year Skilled hourly workers $15.00-$22.00/hour Non -skilled hourly workers $10.00-$15.00/hour 3) Preferred Freezer Services provides all training for its employees, especially on the specialized equipment used in the freezer. Employees are often cross -trained for multiple jobs to maximize their productivity and provide opportunities for them. 4) Preferred Freezer Services strongly believes in promoting from within the company. Many employees with long tenures with the company are running current facilities. The expansion and growth of the company is directly due to the workers that make it successful and they have been rewarded. 5) This is not a consolidation project so all jobs are "new hires" Construction There will be an estimated 150 jobs created for this project. The trades involved will be masonry, electrical, ironworkers, pipe fitters, crane operators, skilled and unskilled laborers, construction supervisors, etc. V. Competition With Local Business A. List any competition or similar businesses in the area. There are 6 facilities in the Houston marketplace Preferred Freezer Services considers direct competition. Houston Central Industries 800 Middle Street Houston, TX 77003 P&O Cold Logistics 16110 E. Hardy Road Houston, TX 77032 International Trading Co., Inc. 300 Portwall St. Houston, TX 77029 Houston Central Industries 7080 Express Lane Houston, TX 770078 P&O Cold Logistics 502 North Broadway LaPorte, TX 77571 NOCS West Gulf, Inc. 9223 Highway 225 LaPorte, TX 77571 B. Describe how an abatement will impact competition with other similar businesses in the area. The abatement will impact our competitors in the sense that a competing company has built a facility in their area. The abatement will allow Preferred Freezer Services to compete with the facilities that are established in the area. It will help Preferred Freezer Services compete in pricing, which is directly related to the cost of building and operating a state of the art facility. The tax abatement will ease some of the cost and allow Preferred Freezer Services to establish themselves in the market. This facility will be servicing many of our nationwide customers who are interested in the Houston market as discussed below. VI. How will this project attract new business? Preferred Freezer Services has a tremendous following and loyal customer base that. has been the backbone of the growth of the company over the years. Through this loyal base of customers Preferred Freezer Services has expanded a local New Jersey warehouse into a nationwide corporation in currently in 5 states. This relationship has benefited Preferred Freezer's customers as well. In many scenarios customers have either expanded their businesses in the markets we have opened facilities in or started selling product in markets they had never prior to Preferred Freezer Services opening within said market. Preferred Freezer Services will also become a good customer for local vendors. All warehouse supplies are purchased on a local level within each market. V1I. Provide information on alternative site considerations/and incentives being offered the company. Preferred Freezer Services is considering 2 other cities besides Houston to allocate funds to building in 2006/2007, Chicago, IL and Jacksonville, FL. Chicago, IL is attractive to Preferred Freezer Services because it would be the second facility in that market so we know what to expect out of it. We have the resources for employees, vendors and customers. Chicago also offers a Tax Increment Financing (TIF) in areas to attract businesses such as Preferred Freezer Services. T1F allows lower multiples on the assessed value and therefore lowers the taxes on the property, up to 66% reduction. Jacksonville, FL is also attractive to Preferred Freezer Services because of its location in the Southeast. Jacksonville's strategic location and expanding port is very similar to why Houston is attractive to Preferred.Freezer Services. The site in Jacksonville is in an Enterprise/Empowerment Zone offering hiring incentives, infrastructure grants and tax refunds. The estimated 3-year savings will be close to $2,000,000. VIII. If leasing property, please attach copy of lease. If company owns or is purchasing land, please attach copy of deed or executed contract -option to purchase. There are none at time of application. EXHIBIT «C» METES AND BOUNDS DESCRIPTION 10.115 ACRE TRACT LOCATED IN THE ENOCH BRINSON SURVEY, A-5 HARRIS COUNTY, TEXAS Being a tract or parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and a part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St. Joe Paper Company in Harris County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly described as follows (all bearings based on the southerly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes 00 Seconds East per said deed): BEGINNING at a broken concrete monument called and found at the southwest corner of both the herein described tract and aforesaid 207.049 acre tract, for the northwest corner of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F. Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Volume 2355, Page 173 of the Deed Records of Harris County, Texas, said corner being on the west line of aforesaid Enoch Brinson Survey and the east line of the Nicholas Clopper Survey; THENCE, coincident the south line of aforesaid 207.049 acre tract and the north line of aforesaid 19.566 acre tract, North 89 Degrees 39 Minutes 06 Seconds East, a distance of 3,740.00 feet to a 5/8 inch iron rod with cap set for the southwest comer and POINT OF BEGINNING of the herein described tract THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest corner of the herein described tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a 5/8 inch iron rod with cap set for the northeast corner of the herein described tract; 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast corner of the herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. ' Oq. F• Fir; .•••MM••• •..•. h•..I •.•I...... •.... KENNETH A. GRULLEP R4 _ 5478 Reno & Associates July 13, 2006 Job No. 36-0404_10.1 acre ORDINANCE NO. 2005- G M AN ORDINANCE AMENDING THE CODE OF ORDINANCES OF THE CITY OF LA PORTE BY REPEALING ARTICLE V GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE, SECTIONS 66-140 THROUGH 66-152 AND ADDING -ARTICLE V GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE, SECTIONS 66-140 THROUGH 66-151 INCLUSIVE; FINDING COMPLIANCE WITH TE[E OPYN Al F,TR TGS LAW; ArHr PROWIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council of the City of La Porte hereby amends the Code of Ordinances of the City of La Porte by repealing Article V. "Guidelines and Criteria Governing Tax Abatement Agreements by the City of La Porte", Sections 66-140 through 66-152 and adding Article V. "Guidelines and Criteria Governing Tax Abatement Agreements by the City of La Porte", Sections 66-140 through 66-151 inclusive, as follows, to -wit: ARTICLE V. GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS Section 66-140. REDEVELOPMENT TAX ABATEMENT AUTHORIZED. (1) Creation of Reinvestment Zones. (a) A property tax abatement program is hereby created to be administered in accordance with V.T.C.A., Tax Code Ch. 312, as amended from time to time. Tax abatement shall only be allowed in a reinvestment zone. (b) Reinvestment zones in the city for this purpose will be considered for designation by city council upon the recommendation of the City Manager's Office. The city council may approve the creation of these reinvestment zones on a zone -by -zone basis after a public hearing before the city council. Following the public hearing the city council may consider the ordinance creating a new reinvestment -zone in the proposed area- (c) The city council: may not adopt an ordinance designating a reinvestment zone until it has held a public hearing at which interested persons are entitled to speak and present evidence for or against the designation. Notice of the hearing shall be given at least seven days prior to the hearing. The presiding officers of eligible jurisdictions shall be notified in writing at least seven days prior to the hearing. A notice of the public hearing shall be given to other affected taxing jurisdictions, published in the legal classified section of the local daily newspaper having general circulation, and posted in other places as deemed appropriate, including notice to civic associations in the area surrounding -1- the proposed zone, at least seven days prior to the hearing. The notice shall contain the location, Time, and place of the public hearing and a description of the proposed boundaries of the reinvestment zone- (d) The designation of such a zone by ordinance shall constitute an affirmative finding by the city council that the improvements sought to be constructed or repairs to be made within the zone are feasible and practical and would be of benefit to the land to be included within a zone and to the City- (e) In determining whether an area qualifies as a reinvestment zone for the property tax abatement program, the city council shall use any one or more of the following criteria as guidelines: (1) The area_ substantially impairs or arrests the sound growth of the city; retards the provision of housing accommodations, or constitutes an economic or social liability and is a menace to the public health, safety, morals, or welfare in its present condition and use by reasons of the presence of substantial number of substandard, slum, deteriorated, or deteriorating structures, predominance of defective or inadequate sidewalks or street layout; faulty lot layout in relation to size, accessibility, or usefulness, unsanitary or unsafe conditions; deterioration of site or other improvements; tax or special assessment delinquency exceeds the fair value of the land; defective or unusual conditions of title; the existence of conditions that endanger life or property by fire or other cause; or any combination of these factors or conditions. (2) The area is predominantly open and, because of obsolete platting or deterioration of structures or site improvements or other factors, substantially impairs or arrests the sound growth of the city. (3) The area has been designated a local or state -federal enterprise zone under the Texas Enterprise Zone Act. (4) The area is located wholly within an eligible blighted area, as identified from time to time by city council. (5) There has been a demonstration of community interest and there is evidence that substantial number of owners of taxable real property in the reinvestment zone will participate in such a program- (6) Be reasonably likely as a result of the designation to contribute to the retention or expansion of primary employment or to attract major investment in the zone that would be a benefit to the property and that would contribute to the economic development of the city. (f) The goals and objectives expressed above and the standards and restrictions expressed in V.T.C_A., Tax Code Ch. 312, as amended, are not exhaustive and shall be supplemented by such further and additional goals, objectives, rules, standards and restrictions as the city council may from time to time impose. -2- (g) The designation of a reinvestment' zone hereunder shall expire live years after the date of its designation and may be renewed for periods not to exceed five years. The expiration of a designation, however, shall not affect existing agreements entered into pursuant to section 66-140 or section 66-145 of this chapter. (2) Agreement for property tax abatement. (a) Upon designation of a reinvestment zone, the city may enter into property tax abatement agreements with interested owners of taxable real property located vrtthm the reinvestment zone. The agreement shall be conditioned on the owner of the property making certain improvement or repairs to the property as outlined in Section 66-143, Application- (b) In addition to the.widelines and criteria contained herein, to be eligible for tax abatement the planned improvement: (1) Should provide an economic benefit to the city, taking all relevant factors into consideration, including (i) size of the abatement, (ii) income from sales tax and franchise fees generated by the planned improvement, and (iii) any additional expense to the city services as a result of the improvement; and (2) Must be necessary because capacity cannot be provided efficiently utilizing existing improved property when reasonable allowance is made for necessary improvements; and (c) Property in a reinvestment zone that is owned or leased by a member of the city council or by a member of the city planning commission is excluded from property tax abatement. (d) The city may enter into a property tax abatement agreement with the interested owners of taxable real property for improvements or repairs completed before the city's approval of the tax abatement agreement if- (1) The applicant has complied with the requirements of section 66-143; and (2) The applicant provides evidence of good. cause as to why the city should grant. tax abatements for improvements or repairs completed before the city's approval of the tax abatement agreement; and (3) The agreement is consistent with the requirements of subsections (a) through (c) above, except as provided in paragraph (2) of this subsection. Notwithstanding any other provision of this section, for tax abatement agreements approved under this subsection (d), city council shall determine the year that property tax abatement Shan begin. Section 66-141. DEFI1VMONS (a) "Abatement" means the full or partial exemption from ad valorem taxes of certain real property (including fixed -in -place machinery & equipment) in a reinvestment zone designated for economic development purposes. (b) "Eligible Jurisdiction" means the city and any school district, college district or other taxing district eligible to abate its taxes according to Texas law that levies ad valorem taxes upon and provides services to property located within the proposed or existing reinvestment zone. (c) ",Agreement" means a contactual agreement between a property owner and/or I=see and an eligible jurisdiction for the purposes of tax abatement. (d) "Base Year Value" means the assessed value of eligible property on January I preceding the execution of the agreement plus the agreed upon value of eligible property improvements made after January 1, but before the execution of the agreement, or the sales price, if the property was conveyed subsequent to January 1, whichever is greater. (e) "Competitively -Sited Project" means a project where the applicant has completed a written evaluation of competing locations for expansion, relocation, or new operations, including identification of specific sites in those locations. (f) "Department" shall mean the department of finance of the city. (g) "Economic Life" means the number of years a property improvement is expected to be in service in a facility. (h) "Employee" means a person whose employment is both permanent and fulltime, who works for and is an employee of the Owner or an employee of a Contractor, who works a minimum of 1,750 hours per year exclusively within the Zone, who receives industry standard benefits, and whose employment is reflected in the Owner's (and Contractor's, if applicable) quarterly report filed with the Texas Workforce Commission; but excluding any direct contract (seasonal, part-time, and icu11-time equivalent). (i) "Expansion" means the addition of buildings, structures, fixed machinery or equipment for purposes of increasing production capacity. (j) "Facility" means property improvements completed or in the process of construction which together comprise an integral whole. (k) "Manufacturing Facility" means buildings and structures, including fixed -in -place machinery and equipment, the primary purpose of which is or will be the manufacture of tangible goods or materials or the processing of such goods or materials by physical or chemical change. (1) "New Facility." means a property, previously undeveloped, which is placed into service by means other than or in conjunction with expansion or modernization. M (m) "Other Basic Industry Facility" means buildings and structures including fixed machinery and equipment not elsewhere described, used or to be used for the production of products or services which primarily serve a market in the creation of new permanent employment and bring in new wealth. (n) "Owner of taxable real property" shall mean the person, corporation, company or other entity responsible for paying property taxes on certain property or an interest therein including a leasehold interest or interests. (o) "Regional Distribution Center Facility" means buildings and structures, including fixed machinery and equipment, used or to be used primarily to receive, store, service or distribute goods or materials owned by the facility operator where a majority of the goods or services are distributed to points outside the city. (p) "Regional Entertainment Facility" means buildings and structures, including fixed machinery and equipment, used or to be used to provide entertainment through the admission of the general public where the majority of users reside outside the city. (q) "Regional Service Facility" means buildings and structures, including fixed machinery and equipment, used or to be used to service goods where a majority of the goods being serviced originate outside the city. (r) "Research Facility" means building and structures, including fixed machinery and equipment, used or to be used primarily for research or experimentation to improve or develop new tangible goods or materials or to improve or develop the production processes thereto. (s) "Research and Development Facility" means buildings and structures, including. fixed -in -place machinery and equipment, used or to be used primarily for research or experimentation to improve or develop current technology in biomedicine, electronics or pre -commercial emerging industries. Section 66-142. ABATEMENT AUTHORIZED (a) Authorized Facility. A facility may be eligible for abatement if it is a: Manufacturing Facility, Research Facility, Regional Distribution Center Facility, Regional Senrice Facility, Regional Entertainment Facility, Research and Development Facility or Other Basic Industry. (b) Creation of New Value. Abatement may only be granted for the additional value of eligible real property (including fixed -in -place machinery and equipment) listed in an abatement agreement between the City and the property owner and Iessee (if required), subject to such limitations as City Council and the property tax code may require. (c) New and Existing Facilities. Abatement may be granted for new facilities, the expansion of existing facilities, or the improvement to existing facilities having the -5- effect of improving current environmental conditions. (d) Eligible Property. Abatement may be extended to the value of buildings, structures, fixed machinery and equipment, site improvements plus that office space and related fixed improvements necessary to the operation and administration of the facility. The value of all property shall be the Certified Appraised Value for each year, as finally determined by the County Appraisal District ("HCAD"). (e) Ineligible Property. The following types of property shall be fully taxable and ineligible for abatement: land; inventories; supplies; tools; furnishings, and other forms of movable personal property, vehicles; vessels; aircraft; housing; hotel accommodations; deferred maintenance investments; property to be rented or leased (except as provided in the Section 66-142(f), "Owned/Leased Facilities"), property which has an economic life of less than 15 years; property owned or used by the State of Texas or its political subdivisions or by any organization owned, operated or directed by a political subdivision of the State of Texas, or any property exempted by local, state or federal law. When such exempted property includes manufacturing machinery and equipment listed in the Investment Budget (as required in Section 3, "Application' ); then the value of such property may not be included toward the achievement of the investment or valuation thresholds set out in the Tax Abatement Agreement. (f) Owned/Leased Facilities. If a leased facility is granted abatement the agreement shall be executed with the lessor and the lessee. (g) Value and Term of Abatement. A tax abatement shall be granted in accordance with the terms of a Tax Abatement Agreement, as follows: 1. Either with the January 1st valuation date immediately following the date of execution of the agreement or a subsequent January lst valuation date not more than three years after execution of a tax abatement agreement, but not beyond the completion of construction. Projects are eligible for abatement of new value, subject to an abatement cap: to be calculated as $1,000,000 per job created/retained times the number of such jobs as required in the abatement agreement. Such cap shallnot exceed the increased value requirement as set out in the abatement agreement, and will be adjusted annually (as set out in Section. 66-142 0), "Taxability"). Under no circumstances will any facility be granted the benefit of a tax abatement for longer than ten (10) years. Value subject to abatement must remain greater than or equal to the contractually -defined "Minimum Value Requirement." To determine the amount of each year's exemption, the adjusted cap shall be multiplied by a sliding scale as follows: Year Abated 1-3 Including Construction 4 5 6 7-10 Percentage of V_ alue for Proi ects Creating or Maintaining a Minimum of 25 Full-time Employees 100% 80% 60% 40% 20% Percentage of Value for.Proiects Creating or Maintaining a Minimum of 10 Full-time Employees 50% 40% 30% 20% 10% 2. No tax abatement s',1ald be given in any year in .which the facili -, fans to meet The contractually defined " finimum Value Requirement." 3. All Tax Abatement Agreements shall set out in detail the exact method to be used in computing each year's exemption. 4. No tax abatement shall be given in any year in which the facility fails to meet the employment minimum set forth in Section 66-142(h), "Basic Qualifications for Tax Abatement." (h) Basic Qualifications for Tax Abatement. To be eligible for designation as a reinvestment zone and receive tax abatement the planned improvement: 1. must be shown to increase the assessed value of the property at least $1.0 million upon completion of the contractually -defined "Construction Period;" 2. must be shown to directly create or prevent the loss of permanent full-time employment for at least 10 people within the reinvestment zone upon completion of the contractually -defined "Employment Period;" 3. must be shown not to solely or primarily have the effect of transferring employment from one part of City to another. 4. the City may, at its discretion, take into account alternative or competing site information provided with the application for tax abatement. (i) Research and Development Projects. If the planned project improvement is for a research and development facility, in order to be eligible for tax abatement the planned improvement: 1. must be reasonably expected to increase the value of the property by a minimum amount of $500,000 upon the completion of construction, and 2. must be expected to create permanent employment for at least five people on a permanent basis in the designated zone, provided that this employment qualification shall take effect no more than two years after the effective date of the agreement and continue through the term of the agreement. The abatement period shallnot exceed five years from the effective date of abatement and the percentage of value to be abated shall be up to 100 percent of new value throughout the abatement period, subject to a maximum abatable new value of -7 $1,000,000 per job created/retained. (j) Taxability. From the execution of the abatement to the end of the agreement period, taxes shall be payable as follows: value of ineligible property (as provided in Section 66-142 (e), "Ineligible Property,") shall be fully taxable; 2. the non abatable real property within the reinvestment zone shall be fully taxable each year, 3. additional value of new eligible property shall be taxable in the manner described in Section 66-142 (g), "Value and Term of Abatement;" 4. when due to the employment formula (as described in Section 66-142 (g), "Value and Term of Abatement,"), the maximum amount eligible for abatement ("the cap") is less than the total value of the new facility, the amount of the cap will be reduced each year at the same rate as the taxable improvements are reduced in value from the previous year's value; and 5. each year's exemption will be computed by HCAD in the following manner: (a) The Base Property Value will be the current value of all real property plus fixed -in -place machinery and equipment within the zone that is not subject to abatement. (b) The Base Year Value will be subtracted from the value of the Abated Property plus the Base Property Value, the result to be called Cuirent Amount Eligible for Abatement. In no case can this amount exceed the cap set,out in the abatement contract. (c) The Current Amount Eligible for Abatement is then multiplied by the abatement schedule set out in section 66-142 (g) to determine the amount of each year's exemption. (k) Environmental and Worker Safety Qualification. In determining whether to grant a tax abatement, consideration will be given to compliance with all state and federal laws designed to protect human health, welfare and the environment ("environmental laws") that are applicable to all facilities in the State of Texas owned or operated by the owner of the facility or lessee, its parent, subsidiaries and, if a joint venture or partnership, every member of the joint venture or partnership ("applicants"). Consideration may also be given to compliance with environmental and worker safety laws by applicants at other facilities within the United States. Section 66-143. APPLICATION (a) Timely application: Any current or potential owner or lessee of taxable property in City must request a tax abatement by filing a completed application with the City prior to any public expression of a siting decision or any commitment (legal or financial) to the proposed project. (b) A complete application package for consideration of a tax abatement shall consist of: • a completed City Application form; • a completed narrative prepared in accordance withm.e template provided with the City Application and its instructions; • an "Investment Budget" detailing components and costs of the real property improvements .and fixed -in -place improvements -for which tax abatement is requested; including type, number, economic life, and eligibility for a tax exemption granted by the Texas .Commission on Environmental Quality ("TCEQ") (if known); a map and legal description of the property; • a time schedule for undertaking and completing the proposed improvements; - a ten-year environmental and worker safety compliance history for all facilities located within the State of Texas and owned in whole or in part by applicants (as defined in Section 66-142(k), "Environmental and Worker Safety Qualification'; • a copy of the evaluation of competing locations, as described in Section 66-141, "Definitions, - information pertaining to the reasons that the requested tax abatement is necessary to ensure that the proposed project is built in City (i.e., documentation supporting assertion that "but for" a tax abatement, the stated project could not be constructed in City); copies of the immediately preceding quarterly report(s) filed with the Texas Workforce Commission, documenting the current number of permanent full- time employees, and full-time Contractor employees, if any, at the time the application is submitted; • financial and other information, as the City deems appropriate for evaluating the financial capacity and other factors of the applicant; • certification prepared by City Tax Assessor -Collector stating that all tax accounts within City are -paid on a current basis; • for a leased facility, the applicant shall provide with the application the name and address of the lessor and a draft copy of the proposed lease, or option contract. In the event a lease or option contract has already been executed with owner of site, the document must include a provision whereby abatement applicant may terminate such contract without penalty or loss of earnest money, in the event that City does not grant a tax abatement. (c) Upon receipt of a completed application, the City shall notify in writing and provide a copy of the application to the presiding officer of the governing body of each eligible taxing jurisdiction. (d) After receipt of an application for .creation of a reinvestment zone and application for abatement, the City shall.determine whether the application qualifies for a tax abatement under the terms of these guidelines and criteria. Such determination may be delegated to an employee or City department. If it is determined that an application qualifies for abatement, it shall be recommended to the City Council that the applicant be notified in writing that subject to a public hearing, if applicable, and approval of a contract by City Council, the project qualifies for abatement. (e) The City shall not establish a reinvestment zone or enter into an abatement agreement if it finds that the request for the abatement was filed after the commencement of construction, alteration, or installation of improvements related to a proposed modernization, expansion or new facility. Property eligible for abatement includes only the new improvements that occur after the completion of an abatement agreement with City. Section 66-I44. PUBLIC HEARING AND APPROVAL (a) The City Council may not adopt an ordinance designating a reinvestment zone for the purposes of considering approval of a tax abatement until it has held a public hearing at which interested persons are entitled to speak and present evidence for or against the designation. Notice of the hearing shall be clearly identified on the City Council agenda at least 10 days prior to the hearing. The presiding officers of eligible Jurisdictions shall be notified in writing at least 7 days prior to the hearing. (b) At the public hearing, interested persons shall be entitled to speak and present written materials for or against the approval of the proposed project or tax abatement agreement. (c) Ia order to enter into a tax abatement agreement; the City Council must find that the terms of the proposed agreement meet these Guidelines and Criteria and that: there will be no substantial adverse effect on the provision of the jurisdictions' service or tax base; and 2. the planned use of the property will not constitute a hazard to public safety, health or morals. Any variance to these guidelines must be approved by a vote of at least three -fourths (3/4) of the City Council. -10- Section 66-145. AGREEMENT After approval the City shall formally pass an ordinance and execute an agreement with the owner of the facility and lessee as required which shall include: (a) estimated value to be abated and the base year value; (b) percent of value to be abated each year as provided in Section 66-142 ("Abatement Authorized); (c) the commencement date and the termination date of abatement; (d) the proposed use of the facility, nature of construction, time schedule, survey, property description and improvement list; (e) contractual obligations in the event of default, violation of terms or conditions, delinquent taxes, recapture, administration and assignment as provided in Section 66-142 ("Abatement Authorized % Section 66-146 ('Recapture"), Section 66-147 ("Administration"), and Section 66-148 ("Assignment"), or other provisions that may be required for uniformity or by state law; (f) amount of investment, increase in assessed value and number of jobs involved,. as provided in Section 66-142 ("Abatement Authorized"); (g) a requirement that the applicant annually submit to HCAD and City, a January employee count for the abated facility which corresponds to employment counts reported in the facility's Employer's Quarterly Report to the Texas Workforce Commission for the quarter most recently ended at calendar year-end, and a separate notarized letter certifying the number of jobs created or retained as a- direct result of the abated improvements. and the number of employees in other facilities located within the City and the compliance with the environmental and. worker safety requirements in the agreement -for the preceding calendar year, for as of January 1. Submission shall be used to determine abatement eligibility for that year and shall be subject to audit if requested by the governing body. Failure to submit will result in the ineligibility to receive an abatement for that year; and (h) A requirement that the owner or lessee will (a) obtain and maintain all required . permits and other authorizations from the United States Environmental Protection Agency and the TCEQ for the construction and operation of its facility and for the storage, transport and disposal of solid waste; and (b) seek a permit from the TCEQ for all grandfathered units on the site of the abated facility by filing with the TCEQ, within three years of receiving the abatement, a technically complete application for such a permit. (i) Amount of investment and total permanent employees to be retained or created and total full-time equivalent jobs to be retained or created. -II- (j) A requirement that the company, on or before February 1 of each year the tax abatement agreement is in effect, provide the director a sworn statement that includes a delineation of the number of permanent employees; contract employees and part-time employees of the applicant company as of the immediately preceding January 1, who report to work in the reinvestment zone at each site covered by the agreement. (k) A requirement that the company annually file the Form i 11.28 with the appropriate County appraisal district to qualify for the abatement- (1) limit the uses of the property consistent with the general purpose of encouraging development or redevelopment of the zone during the period that property tax exemptions are in. effect. (m) Contain each term agreed to by the owner of the property. (n) Require the owner of the property to certify annually to the governing body of each taxing -unit that the owner is in compliance with each applicable term of the agreement. (o) Provide that the governing body of the municipality may cancel or modify the agreement if the property owner fails to comply with the agreement. Such agreement normally shall be executed within 60 days after the applicant has forwarded all necessary information and documentation to the City Section 66-146: RECAPTURE (a) If the facility is completed and begins producing product or service, but subsequently discontinues producing product or service for any reason for a period of 180 days during the abatement period, or one year in the event of natural disaster, then the agreement shall terminate and so shall the abatement of the taxes for the calendar year during which the facility no longer produces. The taxes otherwise abated for that calendar year shall be paid to the City within sixty (60) days from the date of termination. The company or individual shall notify the City in writing at the address stated in the agreement within ten (10) days from any discontinuation, stating the reason for the discontinuation and the projected length of the discontinuation. If the City determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured and paid within sixty (60) days of the termination. (b) If the company or individual is in default according to the terms and conditions of its agreement, the company or individual shall notify the City in writing at the address stated in the agreement within ten (10) days from the default, and cure such default within sixty (60) days from the date of the default ("Cure Period"). if the City determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured, together with interest at 6% per annum calculated from the effective date of the agreement and paid within sixty (60) days of the termination. If -12- the City -does not receive full payment within said sixty (60) days, a penalty may be added, equal to 1 S% of the total amount abated. (c) If the company or individual allows its ad valorem taxes owed the City to become delinquent and fails to timely and properly follow the legal procedures for its protest and/or contest, the agreement then maybe terminated, and all taxes previously abated by the agreement may be recaptured and paid within sixty (60) days of the termination, and penalties and interest may be assessed as set out in Section 66-146 ("Recapture"). Section. 66-147. ADAT NISTRATION (a) The Chief Appraiser of the County annually shall determine an assessment of the real and personal property comprising the reinvestment zone. Each year, the company or individual receiving abatement shall famish the assessor with such information as may be necessary for the abatement. Once value has been established, the Chief Appraiser shall notify the affected jurisdictions, which levies taxes of the amount of the assessment. (b) The agreement shall stipulate that employees and/or designated representatives of the City will have access to the reinvestment zone during the term of the abatement to inspect the facility to determine if the terms and conditions of the agreement are being met. All inspections will be made only after giving twenty-four (24) hours prior notice and will only be conducted in such manner as to not unreasonably interfere with the construction and/or operation of the facility. All inspections will be made with one or more representatives of the company or individual and in accordance with the facility's safety standards. (c) Upon completion of construction, the City or the jurisdiction creating the reinvestment zone annually shall evaluate each facility receiving abatement to ensure compliance with the agreement and report possible violations to the contract and agreement to the City Council and the City Attorney and the affected jurisdictions which levy taxes. Section 66-148. ASSIGNMENT A tax abatement agreement may be assigned to a new owner or lessee of a facility with the written consent of the City Council, which consent shall not be unreasonably withheld_ Any assignment shall provide that the assignee shall irrevocably and unconditionally assume all the duties and obligations of the assignor upon the same terms and conditions as set out in the agreement. Any assignment of a tax abatement agreement shall be to an entity that continues the same improvements or repairs to the property (except to the extent such improvements or repairs have been completed), and continues the same use of the facility as stated in the original Tax Abatement Agreement with the initial applicant. No assignment shall be approved if the assignor or the assignee is indebted to the City for past due ad valorem taxes or other obligations. -1�- Section 66-149. SUNSET PROVISION (a) These Guidelines and Criteria are effective February 14, 2005, and will remain in force until January 31, 2007, at which time all tax abatement contracts created pursuantto these provisions will be reviewed by the City to determine whether the goals have been achieved -Based on that review, the Guidelines and Criteria will be modified, renewed, or eliminated. . (b) This policy, is mutually exclusive of existing Industriaf District Contracts and owners of real property in areas deserving of special attention as agreed by the affected jurisdictions. Section 66-150. LIlbII.'TATIONS The adoption of the guidelines and criteria by the city council of the City of La Porte does not: (1) Limit the discretion of the city council of the City of La Porte to decide whether to enter into a specific tax abatement agreement; (2) Limit the discretion of the city council of the City of La Porte to delegate to its employees the authority to determine whether or not the governing body should consider a particular application or request for tax abatement; or (3) Create any property, contract, or other legal right in any person to have the city council of the City of La Porte consider or grant a specific application or request for tax abatement. Section 66-151. NONAPPLICABLL' SAS; EXCEPTION The city council of the City of La Porte hereby establishes the policy of the City of La Porte, ax that tabatement agreement applications will not be accepted for areas within the any existing Industrial District or Tax Increment Reinvestment Zone of the City of La Porte or any Industrial District or Tax Increment Reinvestment Zone, which may be created. However, as to any portion of such areas which are not within the corporate limits of the City of La Porte, Harris County Commissioners Court may establish tax abatement agreements for the benefit of itself, and taxing units other than the City of La Porte having jurisdiction over said area. 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 -14- J 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 approval. PASSED AND APPORVED this 14'h day of Febraary, 2005. ATTEST: dV Martha A. Gillett City Secretary APPROVED: GA 1 Knox W. Askins City Attorney CITY OF LA PORTE B Alton E. Porter Mayor -15- ORDINANCE NO 2006 - AN ORDINANCE AUTHORZING THE DESIGNATION OF THE LA PORTE REINVESTMENT ZONE "C" — "PREFERRED FREEZER SERVICES HOUSTON PORT, LLC."; MAKING FINDINGS OF FACT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDANIED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council of the City of La Porte has heretofore, on the 14" day of February, 2005, adopted Ordinance No. 2005-2809, an Ordinance establishing guidelines and criteria governing tax abatement agreements by the City of La Porte. A public hearing was held before the City Council of the City of La Porte on November 6, 2006, pursuant to notice as required by Section 312.201, Texas tax Codes, which notice was published not later than the 7`h day before the date of the hearing in the Bayshore Sun, a newspaper having general circulation in the City of LaPorte, a true and correct copy of said published notice being attached hereto as Exhibit "A" and incorporated by reference herein; and pursuant to notice delivered in writing not later than the 7th day before the hearing, to the presiding officer of the La Porte Independent School District; to the County Judge of Harris County, Texas presiding officer of the Harris County Commissioners Court, on behalf of Harris County, the Harris County Flood Control District, the Port of Houston Authority of Harris County, and the Harris County Department of Education; and to the presiding officer of the San Jacinto College District; being all of the taxing units included in the proposed reinvestment zone. A copy of the notices to the La Porte Independent School District and Harris - County Commissioners Court, and the San Jacinto College District, are attached hereto as Exhibits "B", "C", and "D", respectively, incorporated by reference herein, and made a part hereof for all purposes. Section 2. Specifically, and without limiting the generality of the foregoing, the City Council of the City of La Porte finds, determines and declares that the subject property would be reasonably likely as a result of the designation as a reinvestment zone, to contribute to the retention or expansion of primary employment or to attract major investments in the zone that would be a benefit to the property and that would contribute to the economic development of the City of La Porte. The City Council of the City of La Porte further finds, determines and declares that the improvements sought are feasible and practical and would be a benefit to the land to be included in the zone and to the City of La Porte after the expiration of an agreement into under Section 312.204, Texas Tax Code. Section 3. Accordingly, there is hereby established and designated a reinvestment zone in the City of La Porte to be know as the La Porte Reinvestment Zone "C" — Preferred Freezer Services Houston. Port, LLC.", for commercial/industrial tax abatement, legally described by metes and bounds on Exhibit "E", and as more particularly shown on the location map attached hereto as Exhibit "F", Proposed La Porte Reinvestment Zone "C" —'Preferred Freezer Services Houston Port, LLC.", reference to which is here made for all purposes. This designation shall be effective for five (5) years from the effective date of this Ordinance. Section 4. This Ordinance shall serve as notice of the establishment of the La Porte Reinvestment Zone "C" by the City of La Porte, to every taxing unit that includes inside its boundaries property that is located within the boundaries of the Zone, and the City Secretary is hereby directed to send certified copies of this ordinance to all such affected taxing units. Section 5. 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 6. This Ordinance shall be effective from and after its passage and approval, and it is so ordered. PASSED AND APPROVED, this V/--I day of oUt , 2006. M= OITY OF LA P By: Alton E. Porte Mayor ATTEST: APPROVED- c ,!mil / ` -7� Mart a A. Gillett ox W. Askins City Secretary City Attorney ORDINANCE NO.2006— AISP AN ORDINANCE APPROVING AND AUTHORIZING A TAX ABATEMENT AGREEMENT BETWEEN THE CITY OF LA PORTE AND PREFERRED FREEZER SERVICES HOUSTON PORT, LLC., A DELAWARE CORPORATION, FOR REAL PROPERTY LOCATED IN THE LA PORTE REINVESTMENT ZONE C; MAHING VARIOUS FINDINGS AND PROVISIONS RELATING TO THE SUBJECT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council hereby approves and authorizes the contract, agreement, or other undertaking described in the title of this ordinance, a copy of which is on file in the office of the City Secretary. The City Manager is hereby authorized to execute such document and all related documents on behalf of the City of LaPorte. 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 fizrther 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 approval, and it is so ordered. PASSED AND APPROVED, this 6ch day of November, 2006. —City of La Porte By: f y Alton E. Porter, Mayor ATTEST: APPROVED: Martha A. Gillett Knox W. Askins 1 City Secretary City Attorney HARR[S COUNTY, TEXAS COMMISSIONERS COURT: ROBERT ECKELS COUNTYJUDGE EL FRANCO LEE COMMISSIONER, PRECINCT 1 SYLVIA R. GARCIA COMMISSIONER, PRECINCT 2 STEVE RADACK COMMISSIONER, PRECINCT 3 JERRY EVERSOLE COMMISSIONER, PRECINCT 4 c/o Community and Economic Development Department 8410 Lantern Point Drive Houston, Texas 77054 (713)578-2000 Approved by Commissioners Court on November 22, 2005 GUIDELINES AND CRITERIA FOR GRANTING TAX ABATEMENT IN A REINVESTMENT ZONE CREATED IN HARRIS COUNTY Whereas, the creation and retention of job opportunities that bring new wealth is the highest civic priority; and Whereas, new jobs and investment will benefit the area economy, provide needed opportunities, strengthen the real estate market and generate tax revenue to support local services; and Whereas, the communities within Harris County must compete with other localities across the nation currently offering tax inducements to attract jobs and investments; and Whereas, any tax incentives offered in Harris County would reduce needed tax revenue unless strictly limited in application to those new and existing industries that bring new wealth to the community; and Whereas, any tax incentives should not have a substantial adverse effect on the competitive position of existing companies operating in Harris County; and Whereas, tax incentives should not be used to attract those industries that have demonstrated a lack of commitment to protecting our environment, but should be used to encourage projects designed to protect our environment; and Whereas, the abatement of property taxes, when offered to attract primary jobs in industries which bring in money from outside a community instead of merely re -circulating dollars within a community, has been shown to be an effective method of enhancing and diversifying an area's economy; and Whereas, Texas law requires any eligible taxing jurisdiction to establish Guidelines and Criteria as to eligibility for tax abatement agreements prior to granting any tax abatement, said Guidelines and Criteria to be unchanged for a two year period unless amended by a three-quarters vote; and Whereas, to assure a common, coordinated effort to promote our communities' economic development, any such Guidelines and Criteria should be adopted only through the cooperation of affected school districts, cities and Harris County; and HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS PAGE 1 OF 1 I Effective Jan. 1, 2006, through Dec. 31, 2007 Whereas, Harris County Commissioners Court has approved the circulation of the attached Guidelines and Criteria to affected taxing jurisdictions for consideration as a common policy for all jurisdiction which choose to participate in tax abatement agreements; Now, therefore, be it resolved that Harris County does hereby adopt these Guidelines and Criteria for granting tax abatement in reinvestment zones in Harris County. SECTION I DEFINITIONS (a) "Abatement" means partial exemption from ad valorem taxes of certain real property (including fixed -in -place machinery & equipment) in a reinvestment zone designated for economic development purposes. (b) "Eligible Jurisdiction" means Harris County and any municipality, school district, college district or other taxing district eligible to abate its taxes according to Texas law that levies ad valorem taxes upon and provides services to property located within the proposed or existing reinvestment zone. (c) "Agreement" means a contractual agreement between a property owner and/or lessee and an eligible jurisdiction for the purposes of tax abatement. (d) "Base Year Value" means the assessed value of eligible property on January 1 preceding the effective date of the agreement, plus the agreed upon value of eligible property improvements made after January 1 but before the effective date of the agreement, or the sales price, if the property was conveyed subsequent to January 1, whichever is greater. (e) "Competitively -Sited Project" means a project where the applicant has completed a written evaluation of competing locations for expansion, relocation, or new operations, including identification of specific sites in those locations. (f) "Economic Life" means the number of years a property improvement is expected to be in service in a facility. (g) "Employee" means a person whose employment is both permanent and fulltime, who works for and is an employee of the Owner or an employee of a Contractor, who works a minimum of 1,750 hours per year exclusively within the Zone, who receives industry - standard benefits, and whose employment is reflected in the Owner's (and Contractor's, if applicable) quarterly report filed with the Texas Workforce Commission; but excluding any direct contract (seasonal, part-time, and full-time equivalent).- (h) "Expansion" means the addition of buildings, structures, fixed machinery or equipment for purposes of increasing production capacity. (i) "Facility" means property improvements completed or in the process of construction which together comprise an integral whole. HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 2 OF 11 (j) "Manufacturing Facility" means buildings and structures, including fixed -in -place machinery and equipment, the primary purpose of which is or will be the manufacture of tangible goods or materials or the processing of such goods or materials by physical or chemical change. (k) New Facility" means a property, previously undeveloped, which is placed into service by means other than or in conjunction with expansion or modernization. (1) "Other Basic Industry Facility" means buildings and structures including fixed machinery and equipment not elsewhere described, used or to be used for the production of products or services which primarily serve a market in the creation of new permanent employment and bring in new wealth. (m)"Regional Distribution Center Facility" means buildings and structures, including fixed machinery and equipment, used or to be used primarily to receive, store, service or distribute goods or materials owned by the facility operator where a majority of the goods or services are distributed to points at least 100 miles from any part of Harris County. (n) "Regional Entertainment Facility" means buildings and structures, including fixed machinery and equipment, used or to be used to provide entertainment through the admission of the general public where the majority of users reside at least 100 miles from any part of Harris County. (o) "Regional Service Facility" means buildings and structures, including fixed machinery and equipment, used or to be used to service goods where a majority of the goods being serviced originate at least 100 miles from any part of Harris County. (p) "Research Facility" means building and structures, including fixed machinery and equipment, used or to be used primarily for research or experimentation to improve or develop new tangible goods or materials or to improve or develop the production processes thereto. (q) "Research and Development Facility" means buildings and structures, including fixed -in -place machinery and equipment, used or to be used primarily for research or experimentation to improve or develop current technology in biomedicine, electronics or pre -commercial emerging industries. SECTION 2 ABATEMENT AUTHORIZED (a) Authorized Facility. A facility may be eligible for abatement if it is a: Manufacturing Facility, Research Facility, Regional Distribution Center Facility, Regional Service Facility, Regional Entertainment Facility, Research and Development Facility or Other Basic Industry. HARRIS CouNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 3 OF 11 (b) Creation of New Value. Abatement may only be granted for the additional value of eligible real property (including fixed -in -place machinery and equipment) listed in an abatement agreement between the County and the property owner and lessee (if required), subject to such limitations as Commissioners Court and the property tax code may require. (c) New and Existing Facilities. Abatement may be granted for new facilities, the expansion of existing facilities, or the improvement to existing facilities having the effect of improving current environmental conditions. (d) Eligible Property. Abatement may be extended to the value of buildings, structures, fixed machinery and equipment, site improvements plus that office space and related fixed improvements necessary to the operation and administration of the facility. The value of all property shall be the Certified Appraised Value for each year, as finally determined by the Harris County Appraisal District ("HCAD"). (e) Ineligible Property. The following types of property shall be fully taxable and ineligible for abatement: land; inventories; supplies; tools; furnishings, and other forms of movable personal property; vehicles; vessels; aircraft; housing; hotel accommodations; deferred maintenance investments; property to be rented or leased (except as provided in the Section 2(f), "Owned/Leased Facilities"); property with an economic life of less than 15 years; property owned or used by the State of Texas or its political subdivisions or by any organization owned, operated or directed by a political subdivision of the State of Texas, or any property exempted by local, state or federal law. When such exempted property includes manufacturing machinery and equipment listed in the Investment Budget (as required in Section 3, "Application"), then the value of such property may not be included toward the achievement of the investment or valuation thresholds set out in the Tax Abatement Agreement. (f) Owned/Leased Facilities. If a leased facility is granted abatement the agreement shall be executed with the lessor and the lessee. (g) Value and Term of Abatement. A tax abatement shall be granted in accordance with the terms of a Tax Abatement Agreement, as follows: Either with the January 1st valuation date immediately following the date of execution of the agreement or a subsequent January 1 st valuation date not more than three years after execution of a tax abatement agreement, but not beyond the completion of construction. Projects are eligible for abatement of new value, subject to an abatement cap: to be calculated as $1,000,000 per job created/retained times the number of such jobs as required in the abatement agreement. Such cap shall not exceed the increased value requirement as set out in the abatement agreement, and will be adjusted annually (as set out in Section 20), "Taxability"). To determine the amount of each year's exemption, the adjusted cap shall be multiplied by up to 50 percent in each year, up to a total of ten (10) years. Under no circumstances will any HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 4 OF 11 facility be granted the benefit of a tax abatement for longer than ten (10) years. Value of eligible property must remain greater than or equal to the contractually - defined "Minimum Value Requirement." 2. No tax abatement shall be given in any year in which the facility fails to meet the contractually defined "Minimum Value Requirement." 3. All Tax Abatement Agreements shall set out in detail the exact method to be used in computing each year's exemption. 4. No tax abatement shall be given in any year in which the facility fails to meet the employment minimum set forth in Section 2(h), "Basic Qualifications for Tax Abatement." (h) Basic Qualifications for Tax Abatement. To be eligible for designation as a reinvestment zone and receive tax abatement the planned improvement: 1. must be shown to increase the assessed value of the property at least $1,000,000 upon completion of the contractually -defined "Construction Period;" 2. must be shown to directly create or prevent the loss of permanent full-time employment for at least 25 people within the reinvestment zone upon completion of the contractually -defined "Employment Period;" 3. must be competitively -sited; and 4. must be shown not to solely or primarily have the effect of transferring employment from one part of Harris County to another. (i) Research and Development Projects. If the planned project improvement is for a biomedical research and development facility, in order to be eligible for tax abatement the planned improvement: 1. must be reasonably expected to increase the value of the property by a minimum amount of $500,000 upon the completion of construction, and 2. must be expected to create permanent employment for at least five people on a permanent basis in the designated zone, provided that this employment qualification shall take effect no more than two years after the effective date of the agreement and continue through the term of the agreement. The abatement period shall not exceed five years from the effective date of abatement and the percentage of value to be abated shall be up to 100 percent of new value throughout the abatement period, subject to a maximum abatable new value of $1,000,000 per job created/retained. (j) Taxability. From the execution of the abatement to the end of the agreement period, taxes shall be payable as follows: 1. value of ineligible property (as provided in Section 2(e), "Ineligible Property,") shall be fully taxable; HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 5 OF 11 2. the non abatable real property within the reinvestment zone shall be fully taxable each year; 3. additional value of new eligible property shall be taxable in the manner described in Section 2 (g),"Value and Term of Abatement;" 4. if the Base Year Value decreases during the term of the tax abatement or if an additional exemption is granted by the state or federal government, then the maximum amount of abatable value to be used in abatement calculation ("the cap") will be reduced each year at the same rate; and 5. each year's exemption will be computed by HCAD in the following manner: (a) The Base Property Value will be the current value of all real property plus fixed - in -place machinery and equipment within the zone that is not subject to abatement. (b) The Base Year Value will be subtracted from the value of the Abated Property plus the Base Property Value, the result to be called Current Amount Eligible for Abatement. In no case can this amount exceed the lower of the cap (as set out in the abatement contract) or the adjusted cap (as described in Section 2(i)4., "Taxability"). (c) The Current Amount Eligible for Abatement is multiplied by up to 50 percent to determine the amount of each year's exemption. Environmental and Worker Safety Qualification. In determining whether to grant a tax abatement, consideration will be given to compliance with all state and federal laws designed to protect human health, welfare and the environment ("environmental laws") that are applicable to all facilities in the State of Texas owned or operated by the owner of the facility or lessee, its parent, subsidiaries and, if a joint venture or partnership, every member of the joint venture or partnership ("applicants"). Consideration may also be given to compliance with environmental and worker safety laws by applicants at other facilities within the United States. SECTION 3 APPLICATION (a) Timely application: Any current or potential owner or lessee of taxable property in Harris County must request a tax abatement by filing a completed application with the Community and Economic Development Department ("CEDD") prior to any public expression of a siting decision or any commitment (legal or financial) to the proposed project. HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAx ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 6 OF 11 (b) A complete application package for consideration of a tax abatement shall consist of: • a completed Harris County Application form; • a completed narrative prepared in accordance with the template provided with the Harris County Application and its instructions; • an "Investment Budget" detailing components and costs of the real property improvements and fixed -in -place improvements for which tax abatement is requested, including type, number, economic life, and eligibility for a tax exemption granted by the Texas Commission on Environmental Quality ("TCEQ") (if known); • a map and legal description of the property; • a time schedule for undertaking and completing the proposed improvements; • a ten-year environmental and worker safety compliance history for all facilities located within the State of Texas and owned in whole or in part by applicants (as defined in Section 2(k), "Environmental and Worker Safety Qualification"); • a copy of the evaluation of competing locations, as described in Section 1, "Definitions; • information pertaining to the reasons that the requested tax abatement is necessary to ensure that the proposed project is built in Harris County (i.e., documentation supporting assertion that "but for" a tax abatement, the stated project could not be constructed in Harris County); • copies of the immediately preceding quarterly report(s) filed with the Texas Workforce Commission, documenting the current number of permanent full-time employees, and full-time Contractor employees, if any, at the time the application is submitted; • financial and other information, as the County deems appropriate for evaluating the financial capacity and other factors of the applicant; • certification prepared by Harris County Tax Assessor -Collector stating that all tax accounts within Harris County are paid on a current basis; • for a leased facility, the applicant shall provide with the application the name and address of the lessor and a draft copy of the proposed lease, or option contract. In the event a lease or option contract has already been executed with owner of site, the document must include a provision whereby abatement applicant may terminate such contract without penalty or loss of earnest money, in the event that Harris County does not grant a tax abatement. HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 7 OF ll (c) Upon receipt of a completed application, the CEDD shall notify in writing and provide a copy of the application to the presiding officer of the governing body of each eligible taxing jurisdiction. (d) After receipt of an application for creation of a reinvestment zone and application for abatement, the County shall determine whether the application qualifies for a tax abatement under the terms of these guidelines and criteria. Such determination may be delegated to an employee or County department. If it is determined that an application qualifies for abatement, it shall be recommended to the Commissioners Court that the applicant be notified in writing that subject to a public hearing, if applicable, and approval of a contract by Commissioners Court, the project qualifies for abatement. (e) The County shall not establish a reinvestment zone or enter into an abatement agreement if it finds that the request for the abatement was filed after the commencement of construction, alteration, or installation of improvements related to a proposed modernization, expansion or new facility. Property eligible for abatement includes only the new improvements that occur after the completion of an abatement agreement with Harris County or participating municipality. SECTION 4 PUBLIC HEARING AND APPROVAL (a) The Commissioners Court may not adopt a resolution designating a reinvestment zone for the purposes of considering approval of a tax abatement until it has held a public hearing at which interested persons are entitled to speak and present evidence for or against the designation. Notice of the hearing shall be clearly identified on the Commissioners Court agenda at least 13 days prior to the hearing. The presiding officers of eligible jurisdictions shall be notified in writing at least 7 days prior to the hearing. (b) At the public hearing, interested persons shall be entitled to speak and present written materials for or against the approval of the proposed project or tax abatement agreement. (c) In order to enter into a tax abatement agreement, the Commissioners Court must find that the terms of the proposed agreement meet these Guidelines and Criteria and that: 1. there will be no substantial adverse effect on the provision of the jurisdictions' service or tax base; and 2. the planned use of the property will not constitute a hazard to public safety, health or morals. Any variance to these guidelines must be approved by a vote of at least three -fourths (3/4) of the Commissioners Court. HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAx ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 8 OF 1 1 SECTION 5 AGREEMENT After approval the County shall formally pass a resolution and execute an agreement with the owner of the facility and lessee as required which shall include: (a) estimated value to be abated and the base year value; (b) percent of value to be abated each year as provided in Section 2 ("Abatement Authorized); (c) the commencement date and the termination date of abatement; (d) the proposed use of the facility; nature of construction, time schedule, survey, property description and improvement list; (e) contractual obligations in the event of default, violation of terms or conditions, delinquent taxes, recapture, administration and assignment as provided in Section 2 ("Abatement Authorized"), Section 6 ("Recapture"), Section 7 ("Administration"), and Section 8 ("Assignment"), or other provisions that may be required for uniformity or by state law; (f) amount of investment, increase in assessed value and number of jobs involved, as provided in Section 2 ("Abatement Authorized"); (g) a requirement that the applicant annually submit to HCAD and CEDD, a January employee count for the abated facility which corresponds to employment counts reported in the facility's Employer's Quarterly Report to the Texas Workforce Commission for the quarter most recently ended at calendar year-end, and a separate notarized letter certifying the number of jobs created or retained as a direct result of the abated improvements and the number of employees in other facilities located within Harris County and the compliance with the environmental and worker safety requirements in the agreement for the preceding calendar year, for as of January 1. Submission shall be used to determine abatement eligibility for that year and shall be subject to audit if requested by the governing body. Failure to submit will result in the ineligibility to receive an abatement for that year; and (h) A requirement that the owner or lessee will (a) obtain and maintain all required permits and other authorizations from the United States Environmental Protection Agency and the TCEQ for the construction and operation of its facility and for the storage, transport and disposal of solid waste; and (b) seek a permit from the TCEQ for all grandfathered units on the site of the abated facility by filing with the TCEQ, within three years of receiving the abatement, a technically complete application for such a permit. Such agreement normally shall be executed within 60 days after the applicant has forwarded all necessary information and documentation to the County. HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS PAGE 9 OF 1 I Effective Jan. 1, 2006, through Dec. 31, 2007 SECTION 6 RECAPTURE (a) If the facility is completed and begins producing product or service, but subsequently discontinues producing product or service for any reason for a period of 180 days during the abatement period, or one year in the event of natural disaster, then the agreement shall terminate and so shall the abatement of the taxes for the calendar year during which the facility no longer produces. The taxes otherwise abated for that calendar year shall be paid to the County within sixty (60) days from the date of termination. The company or individual shall notify the County in writing at the address stated in the agreement within ten (10) days from any discontinuation, stating the reason for the discontinuation and the projected length of the discontinuation. If the County determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured and paid within sixty (60) days of the termination. (b) If the company or individual is in default according to the terms and conditions of its agreement, the company or individual shall notify the County in writing at the address stated in the agreement within ten (10) days from the default, and cure such default within sixty (60) days from the date of the default ("Cure Period"). If the County determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured, together with interest at 6% per annum calculated from the effective date of the agreement and paid within sixty (60) days of the termination. If the County does not receive full payment within said sixty (60) days, a penalty may be added, equal to 15% of the total amount abated. (c) If the company or individual allows its ad valorem taxes owed the County to become delinquent and fails to timely and properly follow the legal procedures for its protest and/or contest, the agreement then may be terminated, and all taxes previously abated by the agreement may be recaptured and paid within sixty (60) days of the termination, and penalties and interest may be assessed as set out in Section 6 ("Recapture"). SECTION 7 ADMINISTRATION (a) The Chief Appraiser of the County annually shall determine an assessment of the real and personal property comprising the reinvestment zone. Each year, the company or individual receiving abatement shall furnish the Chief Appraiser with such information as may be necessary for the abatement. Once value has been established, the Chief Appraiser shall notify the affected jurisdictions, which levies taxes of the amount of the assessment. (b) The agreement shall stipulate that employees and/or designated representatives of the County will have access to the reinvestment zone during the term of the abatement to inspect the facility to determine if the terms and conditions of the agreement are being met. All HARRIs COUNTY GUIDELINES & CRITERIA FOR GRANTING TAx ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE 10 OF 11 inspections will be made only after giving twenty-four (24) hours prior notice and will only be conducted in such manner as to not unreasonably interfere with the construction and/or operation of the facility. All inspections will be made with one or more representatives of the company or individual and in accordance with the facility's safety standards. (c) Upon completion of construction, the County or the jurisdiction creating the reinvestment zone annually shall evaluate each facility receiving abatement to ensure compliance with the agreement and report possible violations to the contract and agreement to the Commissioners Court and the County Attorney and the affected jurisdictions which levy taxes. SECTION 8 ASSIGNMENT A tax abatement agreement may be assigned to a new owner or lessee of a facility with the written consent of the Commissioners Court, which consent shall not be unreasonably withheld. Any assignment shall provide that the assignee shall irrevocably and unconditionally assume all the duties and obligations of the assignor upon the same terms and conditions as set out in the agreement. Any assignment of a tax abatement agreement shall be to an entity that continues the same improvements or repairs to the property (except to the extent such improvements or repairs have been completed), and continues the same use of the facility as stated in the original Tax Abatement Agreement with the initial applicant. No assignment shall be approved if the assignor or the assignee is indebted to the County for past due ad valorem taxes or other obligations. SECTION 9 NON -COMPETE AGREEMENTS Tax abatement shall not be granted for projects whose competitive siting consists only of counties that have agreed with Harris County to forego the use of tax incentives to compete for such projects. SECTION 10 SUNSET PROVISION These Guidelines and Criteria are effective January 1, 2006, and will remain in force until December 31, 2007, at which time all tax abatement contracts created pursuant to these provisions will be reviewed by the County to determine whether the goals have been achieved. Based on that review, the Guidelines and Criteria will be modified, renewed, or eliminated. This policy is mutually exclusive of existing Industrial District Contracts and owners of real property in areas deserving of special attention as agreed by the affected jurisdictions. Re -adopted November 22, 2005, by Harris County Commissioners Court HARRIS COUNTY GUIDELINES & CRITERIA FOR GRANTING TAX ABATEMENTS Effective Jan. 1, 2006, through Dec. 31, 2007 PAGE I 1 OF 11 PART I - APPLICANT INFORMATION Application Date 08 / 16 / 2006_ Company Name: Preferred Freezer Services Headquarters Address: 360 Avenue P City: Newark State: NJ Zip: 07105 Local Address: 10000 Porter Rd La Porte TX Zip: 77571 Annual Sales: $79 million Local Phone Number• (3051885-7077 ext. 3453 State Incorporation: DE Years in Harris County: 0 Total All Emplofees Worldwide: 500 Employees in Texas: 0 Employees in Harris County at Present: 0 Attach description of Applicant Company, including brief history, corporate structure, financial statement, & annual report, if incorporated in what state corporation designated: PART II - PROJECT INFORMATION Location Address: 10000 Porter Rd City La Porte Zip: 77571 Key Map # 539J School District: La Porte Legal Description* • Metes and Bounds Attached College District: San Jacinto Community College County: Harris Tax Acct. Numbers: 040-174-000-0006 NAICS #: 49312 * Attach plat survey, with a metes & bounds description, for project site. Project Description: 0 New Construction ❑ Expansion Attach statement fully explaining project, describe existing site and all proposed improvements, provide "Investment Schedule " detailing improvements for which abatement is requested Section A - Economic Development Type of Facility: ❑ Manufacturing ❑ Regional Entertainment 0 Regional Distribution ❑ Regional Service Center ❑ Research & Development ❑ Other Basic Industries Describe product or service to be provided: Public Cold Storage Distribution Center For re%donal facilities provide market studies business plans or other materials demonstrating that the facility is intended to serve a primary market which lies at least 100 miles outside of Harris County. Section B - Variance Is the applicant seeking a variance to Guidelines? 0 Yes ❑ No If "yes" attach letter requesting and justifying the variance, with supplemental information. PART III - ECONOMIC INFORMATION Construction Estimate: Start Date _11 / 01 /_06_ Contract Amount $ 10,483,492 Completion Date _05 /_01_/_07_ Peak Construction Jobs _150_ Construction Man -Years 1 If Modernization: Estimated current economic life of structure N/A years Added economic life from modernization N/A years Permanent Job Creation/Retention in Harris County: • Current employment: 0 • Jobs to be Retained: 0 • Jobs to be created after 3 years from contract inception _35 at Jan 1, 2009_ 10 Value on January 1 preceding abatement $1,300,000 $0 $1,300,000 Estimated value of new abatable investment $10,483,492 $10,483,492 Estimated value not subject to abatement (e.g., Inventor) $400,000 $400,000 Estimated value of property subject to ad valorem tax at end of abatement Company Representative to be Contacted: Name: Bill Forrester Title: Development Director Telephone: (305) 885-7077 ext 3453 Authorized Company Official: Authorized Signature: Name and Title: Dan Coon/COO To: Jean Anne Spivey, Harris County Project Manager From: Bill Forrester, Preferred Freezer Services CC: John Galiher, President/CEO; Dan Coon, COO Date: August 16, 2006 Re: Early Start Variance Dear Jean, This letter is intended to inform you that Preferred Freezer Services is requesting an "early start" variance with respect to the application this is accompanying. This request is being made at the recommendation of the Greater Houston Partnership because Preferred Freezer Services would like to begin construction as close to November 1, 2006 as possible. GHP recommended requesting the variance to ensure Preferred Freezer Services would be able to begin construction once approved for the tax abatement and not have to wait for an executed contract. Preferred Freezer Services understands the company would take sole responsibility of moving forward without an executed contract in regards to construction. Preferred Freezer Services is confident if approved for the abatement an executed contract will soon follow. Preferred Freezer Services also understands it does take time with any legal document and would not want the project to delay start while all the details are ironed out in the contract. Please contact me if you have any questions or comments. Best regards, Bill Forrester Preferred Freezer Services 13700 NW 115th Ave. Medley, FL 33304 (305) 885-7077 ext. 3453 bforrester@preferredfreezer.com 13700 N.W. 115th Ave. - Medley, FL 33178 Phone: (305) 885-7077 - Fax: (305) 885-7377 Preferred Freezer Services Narrative for Tax Abatement I. Introduction of the Company A. Describe the Company's business activities, locations, primary markets, history (when and where incorporated), headquarters location, parent or subsidiary companies, etc. Preferred Freezer Services started in 1989 in Perth Amboy, NJ. Preferred Freezer Services was formed with intentions of becoming a leader in the cold storage warehousing industry. Owner and President/CEO John Galiher acquired a 3 million cubic foot freezer in Perth Amboy that had 26 full time employees and generated $3.6 million dollars in sales. As of August 2006 Preferred Freezer Services operates fourteen (14) cold storage warehouses with a total 74 million cubic feet of space. Sales for the 14 facilities generated $79 million in 2005. The fourteen (14) current Preferred Freezer Services cold storage warehouses are in the New York/New Jersey metropolitan surrounding area, Boston -Massachusetts surrounding area, Los Angeles -California surrounding area, Miami - Florida and Chicago -Illinois. Headquarters: Preferred Freezer Services 360 Avenue P Newark, NJ 07105 (973) 820-4040 (973) 820-4004-fax B. Names of Chief Officers: John Galiher-President/Chief Executive Officer Dan Coon -Chief Operating Officer Greg Robinson -Chief Financial Officer C. Provide copy of annual report or financial statements, as detailed in "Instructions". 2005 Audited Financial Report is attached. III Reasons For Seeking Abatement Preferred Freezer Services is proud of the business model it has formulated over the past 17 years. Integral to that business model is the development of state of the art, standardized refrigerated warehouses that can be built quickly and efficiently. The financial burden of constructing and operating these state of the art facilities is substantial. The reason Preferred Freezer Services is seeking the tax abatement with La Porte and Harris County is the abatement will lessen the financial burden, which will allow us to stay competitive in the market place. Describe The Project A. Facts about the proposed site (acreage, cost, location, ownership). The proposed site is 10.1 acres in the Underwood Business Park in La Porte, TX. Cost of the land will be $1,300,000. The current owner of the property is Clay Development and Construction, Inc. B. Type and value of proposed improvements (budget, list of fixed in place equipment to be included in the project). Preliminary construction costs of proposed 167,381 square foot facility: Hard Costs Foundations $ 250,500 Concrete Slabs 888,488 Structural Steel & Misc Iron 1,183,500 Racking 1,456,800 Tilt Up Concrete Walls 575,500 Siding & Insulation 580,510 Roofing 802,247 HVAC 81,200 Plumbing 145,800 Building Sprinkler 535,847 Electric 672,500 Refrigeration (list below) 854,800 FKI Condors (see below) 1,600,000 Glass and Glazing 52,100 Carpentry 96,900 Doors & Hardware 37,100 Drywall & Metal Stubs 138,400 Painting 68,400 Floor Covering 49,300 Ceilings 31,400 Overhead doors/Dock Equipment 157,200 Standby Generator 225,000 Total Hard Costs $ 10,483,492 Fixed Equipment List Refrigeration Equipment Equipment Qty. Condensing Unit 1 Evaporators 20-freezer area 4-dock area 1-USDA inspection room Compressors 4 Starters 4 Condensers 2 Refrigerant Vessels 4 Heat Exchanger 1 Motor Control Center 1 FKI Logistex Condor Cranes The Condor Cranes (8 for this facility) are fixed in place full mast material handling hybrid cranes. They are fixed in place within the freezer area. C. Project timeline -construction start date and end date. Preferred Freezer Services intends to start this project upon receipt of the tax abatement. Preferred Freezer Services is hopeful to have a start date of November 1, 2006 with a scheduled completion date of May 1, 2007. D. Environmental impact information must be provided, noting any . anticipated impacts of the project on the environment, including, but not limited to, water quality, storm water and runoff, floodplain and wetlands, solid waste disposal, noise levels and air quality. Further, include history of environmental compliance by company as required in Guidelines and Criteria. Preferred Freezer Services is committed to maintaining an excellent environmental record and complying. with all local, state and federal mandates. A Phase I environmental site assessment, which is attached, was performed on the 207 acres of property of which is the 9.2 acres Preferred Freezer Services plans on acquiring. There were no issues or findings noted. The proposed facility will not have an adverse affect on this site. Preferred Freezer Services believes in the environment and its surroundings, including neighbors. All equipment is indoors and therefore minimal noise levels go outside the facility. Even the back up generator is in an enclosure to eliminate engine noise. There will be an enclosed trash compactor on site to prevent rodents, odor and other issues relating to waste disposal. E. All other governmental assistance/incentives being requested or already approved for the project, (e.g. Industrial Development Bonds, Smart Job Funds). There are none at the time of application. IV. Jobs A. Provide information on current level of employment, including: (1) current payroll and (2) breakdown of current employment by zip code. Attach a copy of the company's most recent filing with the Texas Workforce Commission or other supporting documentation that can be used to determine actual employment level at time of application. There is no current level of employment with respect to this application because this will be the first facility in the state of Texas. B. Provide information on the projected job creation associated with the project, including: (1) new employee needs; e.g. skilled vs. non -skilled, level of education, experience, etc; (2) proposed pay scale; (3) any training which the company will provide to its new employees; (4) upward mobility opportunities, career tracks, etc. available to less educated and experienced workers; and (5) if this is a consolidation, information on number of "new hires" vs. "transfers". Also, provide information on construction jobs to be created by the project. 1) New employment needs for this facility will be 35 employees with 8 skilled workers (management, clerical and mechanical) and 27 non -skilled workers. 2) Proposed pay scale is as follows: Skilled salary workers $40,000-$90,000/year Skilled hourly workers $15.00-$22.00/hour Non -skilled hourly workers $10.00-$15.00/hour 3) Preferred Freezer Services provides all training for its employees, especially on the specialized equipment used in the freezer. Employees are often cross -trained for multiple jobs to maximize their productivity and provide opportunities for them. 4) Preferred Freezer Services strongly believes in promoting from within the company. Many employees with long tenures with the company are running current facilities. The expansion and growth of the company is directly due to the workers that make it successful and they have been rewarded. 5) This is not a consolidation project so all jobs are "new hires". Construction There will be an estimated 150 jobs created for this project. The trades involved will be masonry, electrical, ironworkers, pipe fitters, crane operators, skilled and unskilled laborers, construction supervisors, etc. V. Competition With Local Business A. List any competition or similar businesses in the area. There are 6 facilities in the Houston marketplace Preferred Freezer Services considers direct competition. Houston Central Industries 800 Middle Street Houston, TX 77003 P&O Cold Logistics 16110 E. Hardy Road Houston, TX 77032 International Trading Co., Inc 300 Portwall St. Houston, TX 77029 Houston Central Industries 7080 Express Lane Houston, TX 770078 P&O Cold Logistics 502 North Broadway LaPorte, TX 77571 NOCS West Gulf, Inc. 9223 Highway 225 LaPorte, TX 77571 B. Describe how an abatement will impact competition with other similar businesses in the area. The abatement will impact our competitors in the sense that a competing company has built a facility in their area. The abatement will allow Preferred Freezer Services to compete with the facilities that are established in the area. It will help Preferred Freezer Services compete in pricing, which is directly related to the cost of building and operating a state of the art facility. The tax abatement will ease some of the cost and allow Preferred Freezer Services to establish themselves in the market. This facility will be servicing many of our nationwide customers who are interested in the Houston market as discussed below. VI. How will this project attract new business? Preferred Freezer Services has a tremendous following and loyal customer base that has been the backbone of the growth of the company over the years. Through this loyal base of customers Preferred Freezer Services has expanded a local New Jersey warehouse into a nationwide corporation in currently in 5 states. This relationship has benefited Preferred Freezer's customers as well. In many scenarios customers have either expanded their businesses in the markets we have opened facilities in or started selling product in markets they had never prior to Preferred Freezer Services opening within said market. Preferred Freezer Services will also become a good customer for local vendors. All warehouse supplies are purchased on a local level within each market. VII. Provide information on alternative site considerations/and incentives being offered the company. Preferred Freezer Services is considering 2 other cities besides Houston to allocate funds to building in 2006/2007, Chicago, II. and Jacksonville, FL. Chicago, IL is attractive to Preferred Freezer Services because it would be the second facility in that market so we know what to expect out of it. We have the resources for employees, vendors and customers. Chicago also offers a Tax Increment Financing (TIF) in areas to attract businesses such as Preferred Freezer Services. TIF allows lower multiples on the assessed value and therefore lowers the taxes on the property, up to 66% reduction. Jacksonville, FL is also attractive to Preferred Freezer Services because of its location in the Southeast. Jacksonville's strategic location and expanding port is very similar to why Houston is attractive to Preferred Freezer Services. The site in Jacksonville is in an Enterprise/Empowerment Zone offering hiring incentives, infrastructure grants and tax refunds. The estimated 3-year savings will be close to $2,000,000. VIII. If leasing property, please attach copy of lease. If company owns or is purchasing land, please attach copy of deed or executed contract -option to purchase. There are none at time of application. METES AND BOUNDS DESCRIPTION 10.115 ACRE TRACT LOCATED IN THE ENOCH BRINSON SURVEY, A-5 HARRIS COUNTY, TEXAS Being a tract or parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and a part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St. Joe Paper Company in Harris County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly described as follows (all bearings based on the southerly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes 00 Seconds East per said deed): BEGINNING at a broken concrete monument called and found at the southwest corner of both the herein described tract and aforesaid 207.049 acre tract, for the northwest corner of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F. Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Volume 2355, Page 173 of the Deed Records of Harris County, Texas, said corner being on the west line of aforesaid Enoch Brinson Survey and the east line of the Nicholas Clopper Survey; THENCE, coincident the south line of aforesaid 207.049 acre tract and the north line of aforesaid 19.566 acre tract, North 89 Degrees 39 Minutes 06 Seconds East, a distance of 3,740.00 feet to a 5/8 inch iron rod with cap set for the southwest corner and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest corner of the herein described tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a 5/8 inch iron rod with cap set for the northeast corner of the herein described tract; 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast corner of the herein described tract; THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. jt�.®.assse.srw.�ese>e.eseceosese0000,. `+�, eeNr MeeefiifelseL.+ee+cee5476 j9e.. Reno & Associates July 13, 2006 Job No. 36-0404_10.1 acre VACANTLANO XATOEN NATIE SUNOCO ' -�••~ PRIME TIXAS ENERGY ELECTRIC = BAKER TAN1C8 PUMP i+ — 0 1`ACUREN CLAY DEVELOPMENT COMMERCIAL.�_�'� i era, BUSINESS PARI( ; ! ROSEMONT PUMPS �• FURMANTE 1 fi 1 IAL� BUILDING UNDER r STARCON j UNDERWOOD CONSTRUCTION i BUSINESS I I MRPAW PARK 1 I MUNICIPAL TRASH SUBSTATION + COLUMHIA + t _ ��� w w o! w w w+. w + +------ INDUSTRIAL SERVICES OVERHEAD FIGTENSION ELECTRIC LINE H -------------- --------------------------------------------- NEW OFFM i WATER DISTRIBUTION FACILITY j I DOW PIPELINE VACANT LAND SUBSTATION VACANT LAND OVERHEAD HIGH GHTETENSION CENTER ELECTRIC LIME 6 POINT ENERGY TEPPCO PETROLEUM & ELECTRIC NATURAL GAS PIPELINE SUBSTATION LEGEND (D - POLE -MOUNTED TRANSFORMER FIGURE 2 Rone Engineerin SITE MAP -� UNDERWOOD DISTRIBUTION CENTER n1 In i IhInr-Rwrf)n ROAD AIR PRODUCTS FACILITY KATOEN NATIE o�NTION POND �► �, ----- -------------- Tt� SCRAP METAL BIN, FARM IMPLEMENTS, PILE DEBRIS WOOD 8 METALAL Dr $Ri EMPTY FUEL AM j260•GAL,). PILE OF TIRES, CONCRETE, 8 METAL RESIDENTIAL p loop "m a"CAZF I' ■ low PROJECT NM: 03-11132.00 F&M ME 0311132. M _ r0 1 REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: November 6, 2006 Requested By: John Joerns Department: Administration Report: Resolution: Ordinance: X Exhibits: Ordinance 2006- Exhibits: Tax Abatement Agreement Exhibits: "A" La Porte Guidelines and Criteria Governing Tax Abatement Agreement Exhibits `B" Preferred Freezer Application for Tax Abatement Exhibits "C" Legal Meets and Bounds Description Budget Source of Funds: Account Number: Amount Budgeted: Amount Requested: Budgeted Item: YES NO Exhibits Letters of Notice to San Jacinto College District, Harris County Commissioners Court and LPISD SUMMARY & RECOMMENDATION On October 23, 2006 City Council approved a Public Hearing date for establishing a Reinvestment Zone and authorized staff to publish said Public Hearing date and provides notice to other taxing entities as prescribed by Chapter 312 of the Texas Tax Code for Preferred Freezer. At the November 6, 2006 City Council meeting the Public Hearing was held and Ordinance 2006-_ was approved by Council designating a 10.115 Ac tract as La Porte Reinvestment Zone "C" — "Preferred Freezer Services Houston Port, LLC." This Public Cold Storage Distribution Center is contracted to add $10,483,492 in value and create 35 new jobs within the City of LaPorte. With assistance from Harris County Office of Economic Development, the staff has reviewed the application for conformance with the City's guidelines and prepared a Tax Abatement Agreement for Council's consideration. The application and proposed abatement agreement meet the city's established guidelines. Action Required by Council: Approve ordinance 2006- authorizing a Tax Abatement Agreement between the City of La Porte and Preferred Freezer Services Houston Ports, LLC. for real Property located in the La Porte Reinvestment Zone "C". dl OG Date ORDINANCE NO.2006- oZ15-10 AN ORDINANCE APPROVING AND AUTHORIZING A TAX ABATEMENT AGREEMENT BETWEEN THE CITY OF LA PORTE AND PREFERRED FREEZER SERVICES HOUSTON PORT, LLC., A DELAWARE CORPORATION, FOR REAL PROPERTY LOCATED IN THE LA PORTE REINVESTMENT ZONE C; MAKING VARIOUS FINDINGS AND PROVISIONS RELATING TO THE SUBJECT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council hereby approves and authorizes the contract, agreement, or other undertaking described in the title of this ordinance, a copy of which is on file in the office of the City Secretary. The City Manager 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 approval, and it is so ordered. PASSED AND APPROVED, this 6th day of November, 2006. ity of La Porte l� By: Alton E. Porter, Mayor ATTEST: APPROVED: Martha A. Gillett Knox W. Askins— City Secretary City Attorney EXHIBIT «A» �: ORDINANCE NO.2005-,dM_ AN ORDINANCE AMENDING THE CODE OF ORDINANCES OF THE CITY OF LA PORTE BY REPEALING ARTICLE V GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE, SECTIONS 66-140 THROUGH 66-152 AND ADDING - ARTICLE V GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS BY THE CITY OF LA PORTE, SECTIONS 66-140 THROUGH 66-151 INCLUSIVE; FINDING COMPLIANCE wVITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council of the City of La Porte hereby amends the Code of Ordinances of the City of La Porte by repealing Article V. "Guidelines and Criteria Governing Tax Abatement Agreements by the City of La Porte", Sections 66-140 through 66-152 and adding Article V. "Guidelines and Criteria Governing Tax Abatement Agreements by the City of LaPorte!', Sections 66-140 through 66-151 inclusive, as follows, to -wit: ARTICLE V. GUIDELINES AND CRITERIA GOVERNING TAX ABATEMENT AGREEMENTS Section 66-140. REDEVELOPMENT TAX ABATEMENT AUTHORIZED. (1) Creation of Reinvestment Zones. (a) A property tax abatement program is hereby created to be administered in accordance with V.T.C.A., Tax Code Ch. 312, as amended from time to time. Tax abatement shall only be allowed m a reinvestment zone. (b) . Reinvestment zones in the city for this purpose will be considered for designation by city council upon the recommendation of the City Manager's Office. The city council may approve the creation of these reinvestment zones on a zone -by -zone basis after a public hearing before the city council. Following the public hearing the city council may consider the ordinance creating a new reinvestment zone in the proposed area- (c) The city council, may not adopt an ordinance designating a reinvestment zone until it has held a public hearing at which interested persons are entitled to speak and present evidence for or against the designation. Notice of the hearing shall be given at least seven days prior to the hearing. The presiding officers of eligible jurisdictions shall be notified in writing at least seven days prior to the hearing. A notice of the public hearing shall be given to other affected taxing jurisdictions, published in the legal classified section of the local daily newspaper having general circulation, and posted in other places as deemed appropriate, including notice to civic associations in the area surrounding - 1 - the proposed zone, at least seven days prior to the hearing. The notice shall contain the location, time, and place of the public hearing and a description of the proposed boundaries of the reinvestment zone. A The designation of such a zone by ordinance shall constitute an affirmative finding by the city council that the improvements sought to be constructed or repairs to be made within the zone are feasible and practical and would be of benefit to the land to be included within a zone and to the city. (e) In determining whether an area qualifies as a reinvestment zone for the property tax abatement program., the city council shall use any one or more of the following criteria as guidelines: (1) The area substantially impairs or arrests the sound growth of the city; retards the provision of housing accommodations, or constitutes an economic or social liability and is a menace to the public health, safety, morals, or welfare in its present condition and use by reasons of the presence of substantial number of substandard, slum, deteriorated, or deteriorating structures, predominance of defective or inadequate sidewalks or street layout; faulty lot layout in relation to size, accessibility, or usefulness, unsanitary or unsafe conditions; deterioration of site or other improvements; tax or special assessment delinquency exceeds the fair value of the land; defective or unusual conditions of title; the existence of conditions that endanger life or property by fire or other cause; or any combination of these factors or conditions. (2) The area is predominantly open and, because of obsolete platting or deterioration of structures or site improvements or other factors, substantially impairs or arrests the sound growth of the city. (3) The area has been designated a local or state -federal enterprise zone under the Texas Enterprise Zone Act. (4) The area is located wholly within an eligible blighted area, as identified from time to time by city council. (5) There has been a demonstration of community interest and there is evidence that substantial number of owners of taxable real property in the reinvestment zone will participate in such a program. (6) Be reasonably likely as a result of the designation to contribute to the retention or expansion of primary employment or to attract major investment in the zone that would be a benefit to the property and that would contribute to the economic development of the city. (f) The goals and objectives expressed above and the standards and restrictions expressed in V.T.C.A., Tax Code Ch. 312, as amended, are not exhaustive and shall be supplemented by such father and additional goals, objectives, rules, standards and restrictions as the city council may from time to time impose. -2- (g) The designation of a reinvestment zone hereunder shall expire five years after the date of its designation and may be renewed for periods not to exceed five years. The expiration of a designation, however, shall not affect existing agreements entered into pursuant to section 66-140 or section 66-145 of this chapter. (2) Agreement for property tax abatement. (a) Upon designation of a reinvestment zone, the city may 'enter into property tax abatement agreements with interested owners of taxable real property located within the reinvestment zone. The agreement shall be conditioned on the owner of the property making certain improvement or repairs to the property as outlined in Section 66-143, Application. (b) In addition to the guidelines and criteria contained herein, to be eligible for tax abatement the planned improvement: (1) Should provide an economic benefit to the city, taking all relevant factors into consideration, including (i) size of the abatement, (ii) income from sales tax and franchise fees generated by the planned improvement, and (in) any additional expense to the city services as a result of the improvement; and (2) Must be necessary because capacity cannot be provided efficiently utilizing existing improved property when reasonable allowance is made for necessary improvements; and (c) Property in a reinvestment zone that is owned or leased by a member of the city council or by a member of the city planning commission is excluded from property tax abatement. (d) The city may enter into a property tax abatement agreement with the interested owners of taxable real property for improvements or repairs completed before the city's approval of the tax abatement agreement if (1) The applicant has complied with the requirements of section 66443; and (2) The applicant provides evidence of good cause as to why the city should grant tax abatements for improvements or repairs completed before the city's approval of the tax abatement agreement; and (3) The agreement is consistent with the requirements of subsections (a) through (c) above, except as provided in paragraph (2) of this subsection. Notwithstanding any other provision of this section, for tax abatement agreements approved under this subsection (d), city council shall determine the year that property tax abatement shall begin. Section 66-141. DEFINITIONS (a) "Abatement" means the full or partial exemption from ad valorem taxes of certain -3- real property (including fixed -in -place machinery & equipment) in a reinvestment zone designated for economic development purposes. (b) "Eligible Jurisdiction" means the city and any school district, college district or other taxing district eligible to abate its taxes according to Texas law that levies ad valorem taxes upon and provides services to property located within the proposed or existing reinvestment zone. (c) "Agreement" means a contractual agreement between a property owner and/or lessee and an eligible jurisdiction for the purposes of tax abatement. (d) "Base Year Value" means the assessed value of eligible property on January 1 preceding the execution, of the agreement plus the agreed upon value of eligible property improvements made after January 1, but before the execution of the agreement, or the sales price, if the property was conveyed subsequent to January 1, whichever is greater. (e) "Competitively -Sited Project" means a project where the applicant has completed a written evaluation of competing locations for expansion, relocation, or new operations, including identification of specific sites in those locations. (f) "Department" shall mean the department of finance of the city. (g) "Economic Life" means the number of years a property improvement is expected to be in service in a facility. (h) "Employee" means a person whose employment is both permanent and falltime, who works for and is an employee of the Owner or an employee of a Contractor, who works a minimum of 1,750 hours per year exclusively within the Zone, who receives industry standard benefits, and whose employment is reflected in the Owner's (and Contractor's, if applicable) quarterly report filed with the Texas Workforce Commission; but excluding any direct contract (seasonal, part-time, and full-time equivalent). (i) "Expansion" means the addition of buildings, structures, fixed machinery or equipment for purposes of increasing production capacity. (j) "Facility" means property improvements completed or in the process of construction which together comprise an integral whole. (k) "Manufacturing Facility" means buildings and structures, including fixed -in -place machinery and equipment, the primary purpose of which is or will be the manufacture of tangible goods or materials or the processing of such goods or materials by physical or chemical change. (1) "New Facility." means a property, previously undeveloped, which is placed into service by means other than or in conjunction with expansion or modernization. (m) "Other Basic Industry Facility" means buildings and structures including fixed machinery and equipment not elsewhere described, used or to be used for the production of products or services which primarily serve a market in the creation of new permanent employment and bring in new wealth. (n) "Owner of taxable real property" shall mean the person, corporation, company or other entity responsible for paying property taxes on certain property or an interest therein including a leasehold interest or interests. (o) "Regional Distribution Center Facility" means buildings and structures, including fixed machinery and equipment, used or to be used primarily to receive, store, service or distribute goods or materials owned by the facility operator where a majority of the goods or services are distributed to points outside the city. (p) "Regional Entertainment Facility" means buildings and structures, including fixed machinery and equipment, used or to be used to provide entertainment through the admission of the general public where the majority of users reside outside the city. (q) "Regional Service Facility" means buildings and structures, including fixed machinery and equipment, used or to be used to service goods where a majority of the goods being serviced originate outside the city. (r) "Research Facility" means building and structures, including fixed machinery and equipment, used or to be used primarily for research or experimentation to improve or develop new tangible goods or materials or to improve or develop the production processes thereto. (s) "Research and Development Facility" means buildings and structures, including. fixed -in -place machinery and equipment, used or to be used primarily for research or experimentation to improve or develop current technology in biomedicine, electronics or pre -commercial emerging industries. Section 66-142. ABATEMENT AUTHORIZED (a) Authorized Facility. A facility may be eligible for abatement if it is a: Manufacturing Facility, Research Facility, Regional Distribution Center Facility, Regional Service Facility, Regional Entertainment Facility, Research and Development Facility or Other Basic Industry. (b) Creation of New Value. Abatement may only be granted for the additional value of eligible real property (including fixed -in -place machinery and equipment) listed in an abatement agreement between the City and the property owner and lessee (if required), subject to such limitations as City Council and the property tax code may require. (c) New and Existing Facilities. Abatement may be granted for new facilities, the expansion of existing facilities, or the improvement to existing facilities having the -5- effect of improving current environmental conditions. (d) Eligible Property. Abatement may be extended to the value of buildings, structures, fixed machinery and equipment, site improvements plus that office space and related fixed improvements necessary to the operation and administration of the facility. The value of all property shall be the Certified Appraised Value for each year, as finally determined by the County Appraisal District ("HCAD"). (e) Ineligible Property. The following types of property shall be fully taxable and ineligible for abatement: land; inventories; supplies; tools; furnishings, and other forms of movable personal property, vehicles; vessels; aircraft; housing; hotel accommodations; deferred maintenance investments; property to be rented or leased (except as provided in the Section 66-142(f), "'Owned/Leased Facilities"), property which has an economic life of less than 15 years; property owned or used by the State of Texas or its political subdivisions or by any organization owned, operated or directed by a political subdivision of the State of Texas, or any property exempted by local, state or federal law. When such exempted property includes manufacturing machinery and equipment listed in the Investment Budget (as required in Section 3, "Application"); then the value of such property may not be included toward the achievement of the investment or valuation thresholds set out in the Tax Abatement Agreement. (f) Owned/Leased Facilities. If a leased facility is granted abatement the agreement shall be executed with the lessor and the lessee. (g) Value and Term of Abatement A tax abatement shall be granted in accordance with the terms of a Tax Abatement Agreement, as follows: 1. Either with the January 1st valuation date immediately following the date of execution of the agreement or a subsequent January 1st valuation date not more than three years after execution of a tax abatement agreement, but not beyond the completion of construction. Projects are eligible for abatement of new value, subject to an abatement cap: to be calculated as $1,000,000 per job created/retained times the number of such jobs as required in the abatement agreement. Such cap shall not exceed the increased value requirement as set out in the abatement agreement, and will be adjusted annually (as set out in Section 66-142 6), "Taxability"). Under no circumstances will any facility be granted the benefit of a tax abatement for longer than ten (10) years. Value subject to abatement must remain greater than or equal to the contractually -defined `gvlinimum Value Requirement" To determine the amount of each year's exemption, the adjusted cap shall be multiplied by a sliding scale as follows: M Year Abated 1-3 Including Construction 4 5 6 7-10 Percentage of Value for Proiects Creating or Maintaining a Minimum of 25 Full-time Em2loyees 100% 80% 60% 40% 20% Percentage of Value for Proiects Creating or Maintaining a Minimum of 10 Full -tame Employees 50% 40% 30% 20% 10% 2. No tax abatement shall be given in any year in r�rliich the facility, fails to meet The contractually defined "Minimum Value Requirement." 3. All Tax Abatement Agreements shall set out in detail the exact method to be used in computing each year's exemption. 4. No tax abatement shall be given in any year in which the facility fails to meet the employment minimum set forth in Section 66-142(h), `Basic Qualifications for Tax Abatement." (h) Basic Qualifications for Tax Abatement. To be eligible for designation as a reinvestment zone and receive tax abatement the planned improvement: 1. must be shown to increase the assessed value of the property at least $1.0 million upon completion of the contractually -defined "Construction Period;" 2. must be shown to directly create or prevent the loss of permanent full-time employment for at least 10 people within the reinvestment zone upon completion of the contractually -defined "Employment Period;" 3. must be shown not to solely or primarily have the effect of transferring employment from one part of City to another. 4. the City may, at its discretion, take into account alternative or competing site information provided with the application for tax abatement. (i) Research and Development Projects. If the planned project improvement is for a research and development facility, in order to be eligible for tax abatement the planned improvement: 1. must be reasonably expected to increase the value of the property by a minimum amount of $500,000 upon the completion of construction, and 2. must be expected to create permanent employment for at least five people on a permanent basis in the designated zone, provided that this employment qualification shall take effect no more than two years after the effective date of the agreement and continue through the term of the agreement. The abatement period shall not exceed five years from the effective date of abatement and the percentage of value to be abated shall be up to 100 percent of new value throughout the abatement period, subject to a maximum abatable new value of -7- $1,000,000 per job created/retained. (j) Taxability. From the execution of the abatement to the end of the agreement period, taxes shall be payable as follows: 1. value of ineligible property (as provided in Section 66-142 (e), "Ineligible Property,") shall be fully taxable; 2. the non abatable real property within the reinvestment zone shall be fully taxable each year, 3. additional value of new eligible property shall be taxable in the manner described in Section 66-142 (g), "Value and Term of Abatement;" 4. when due to the employment formula (as described in Section 66-142 (g), "Value and Term of Abatement,' ), the maximum amount eligible for abatement ("the cap") is less than the total value of the new facility, the amount of the cap will be reduced each year at the same rate as the taxable improvements are reduced in value from the previous year's value; and 5. each year's exemption will be computed by HCAD in the following manner: (a) The Base Property Value will be the current value of all real property plus fixed -in -place machinery and equipment within the zone that is not subject to abatement (b) The Base Year Value will be subtracted from the value of the Abated Property plus the Base Property Value, the result to be called Current Amount Eligible for Abatement. In no case can this amount exceed the cap set,out in the abatement contract (c) The Current Amount Eligible for Abatement is then multiplied by the abatement schedule set out in section 66-142 (g) to determine the amount of each year's exemption. (k) Environmental and Worker Safety Qualification. In determining whether to grant a tax abatement, consideration will be given to compliance with all state and federal laws designed to protect human health, welfare and the environment ("environmental laws") that are applicable to all facilities in the State of Texas owned or operated by the owner of the facility or lessee, its parent, subsidiaries and, if a joint venture or partnership, every member of the joint venture or partnership ("applicants''). Consideration may also be given to compliance with environmental and worker safety laws by applicants at other facilities within the United States. Section 66-143. APPLICATION (a) Timely application: Any current or potential owner or lessee of taxable property in 9 City must request a tax abatement by filing a completed application with the City prior to any public expression of a siting decision or any commitment (legal or financial) to the proposed project. (b) A complete application package for consideration of a tax abatement shall consist of- . a completed City Application form; • a completed narrative prepared in accordance with the template provided with the City Application and its instructions; • an "Investment Budget' detailing components and costs of the real property improvements .and fixed -in -place improvements for which tax abatement is requested, including type, number, economic life, and eligibility for a tax exemption granted by the Texas .Commission on Environmental Quality ("TCEQ") (if known); • a map and legal description of the property; • a time schedule for undertaking and completing the proposed improvements; • a ten-year environmental and worker safety compliance history for all facilities located within the State of Texas and owned in whole or in part by applicants (as defined in Section 66-142(k), "Environmental and Worker Safety Qualification"); • a copy of the evaluation of competing locations, as described in Section 66-141, 'Definitions, - information pertaining to the reasons that the requested tax abatement is necessary to ensure that the proposed project is built in City (i.e., documentation supporting assertion that "but for" a tax abatement, the stated project could not be constructed in City); • copies of the immediately preceding quarterly report(s) filed with the Texas Workforce Commission, documenting the current number of permanent full- time employees, and full-time Contractor employees, if any, at the time the application is submitted; • financial and other information, as the City deems appropriate for evaluating the financial capacity and other factors of the applicant; • certification prepared by City Tax Assessor -Collector stating that all tax accounts within City are -paid on a current basis; • for a leased facility, the applicant shall provide with the application the name and address of the lessor and a draft copy of the proposed lease, or option contract. In the event a lease or option contract has already been executed with owner of site, the document must include a provision whereby abatement M applicant may terminate such contract without penalty or loss of earnest money, in the event that City does not grant a tax abatement. (c) Upon receipt of a completed application, the City shall notify in writing and provide a copy of the application to the presiding officer of the governing body of each eligible taxing jurisdiction. (d) After receipt of an application for creation of a reinvestment zone and application for abatement, the City shalldeterminewhether the application qualifies for a tax abatement under the terms of these guidelines and criteria_ Such determination may be delegated to an employee or City department. If it is determined that an application qualifies for abatement, it shall be recommended to the City Council that the applicant be notified in writing that subject to a public hearing, if applicable, and approval of a contract by City Council, the project qualifies for abatement. (e) The City shall not establish a reinvestment zone or enter into an abatement agreement if it finds that the request for the abatement was filed after the commencement of construction, alteration, or installation of improvements related to a proposed modernization, expansion or new facility. Property eligible for abatement includes only the new improvements that occur after the completion of an abatement agreement with City. Section 66-144. PUBLIC HEARING AND APPROVAL (a) The City Council may not adopt an ordinance designating a reinvestment zone for the purposes of considering approval of a tax abatement until it has held a public hearing at which interested persons are entitled to speak and present evidence for or against the designation. Notice of the hearing shall be clearly identified on the City Council agenda at least f 0 days prior to the hearing. The presiding officers of eligible Jurisdictions shall be notified in writing at least 7 days prior to the hearing. (b) At the public hearing, interested persons shall be entitled to speak and present written materials for or against the approval of the proposed project or tax abatement agreement. (c) In order to enter into a tax abatement agreement, the City Council must find that the terms of the proposed agreement meet these Guidelines and Criteria and that: 1. there will be no substantial adverse effect on the provision of the jurisdictions' service or tax base; and 2. the planned use of the property will not constitute a hazard to public safety, health or morals. Any variance to these guidelines must be approved by a vote of at least three -fourths (3/4) of the City Council. -10- Section 66-145. AGREEMENT After approval the City shall formally pass an ordinance and execute an agreement with the owner of the facility and lessee as required which shall include: (a) estimated value to be abated and the base year value; (b) percent of value to be abated each year as provided in Section 66-142 ("Abatement Authorized); - (c) the commencement date and the termination date of abatement; (d) the proposed use of the facility; nature of construction, time schedule, survey, property description and improvement list; (e) contractual obligations in the event of default, violation of terms or conditions, delinquent taxes, recapture, administration and assignment as provided in Section 66-142 ("Abatement Authorized), Section. 66-146 ("Recapture"), Section 66-147 ("Administration7% and Section 66-148 ("Assignment"), or other provisions that may be required for uniformity or by state law; (f) amount of investment, increase in assessed value and number of jobs involved,. as provided in Section 66-142 ("Abatement Authorized"); (g) a requirement that the applicant annually submit to HCAD and City, a January employee count for the abated facility which corresponds to employment counts reported in the facility's Employer`s Quarterly Report to the Texas Workforce Commission for the quarter most recently ended at calendar year-end, and a separate notarized letter certifying the number of jobs created or retained as a- direct result of the abated improvements and the number of employees in other as located within the City and the compliance with the environmental and worker safety requirements in the agreement -for the preceding calendar year, for as of January 1. Submission shall be used to determine abatement eligibility for that year and shall be subject to audit if requested by the governing body. Failure to submit will result in the ineligibility to receive an abatement for that year, and (h) A requirement that the owner or lessee will (a) obtain and maintain all required permits and other authorizations from the United States Environmental Protection Agency and the TCEQ for the construction and operation of its facility and for the storage, transport and disposal of solid waste, and (b) seek a permit from the TCEQ for all grandfathered units on the site of the abated facility by. filing with the TCEQ, within three years of receiving the abatement, a technically complete application for such a permit. (i) Amount of investment and total permanent employees to be retained or created and total fall -time equivalent jobs to be retained or created. -11- (j) A requirement that the company, on or before February 1 of each year the tax abatement agreement is in effect, provide the director a sworn statement that includes a delineation of the number of permanent employees; contract employees and part-time employees of the applicant company as of the immediately preceding January 1, who report to work in the reinvestment zone at each site covered by the agreement. (k) A requirement that the company annually file the Form i 11.29 with the appropriate County appraisal district to qualify for the abatement. (1) Limit the uses of the property consistent with the general purpose of encouraging development or redevelopment of the zone during the period that property tax exemptions are in. effect. (m) Contain each term agreed to by the owner of the property. (n) Require the owner of the property to certify annually to the governing body of each taxing -unit that the owner is in compliance with each applicable term of the agreement. (o) Provide that the governing body of the municipality may cancel or modify the agreement if the property owner fails to comply with the agreement. Such agreement normally shall be executed within 60 days after the applicant has forwarded all necessary information and documentation to the City Section 66-146: RECAPTURE (a) If the facility is completed and begins producing product or service, but subsequently discontinues producing product or service for any reason for a period of 180 days during the abatement period, or one year in the event of natural disaster, then the agreement shall terminate and so shall the abatement of the taxes for the calendar year during which the facility no longer produces. The taxes otherwise abated for that calendar year shall be paid to the City within sixty (60) days from the date of termination.. The company or individual shall notify the City in writing at the address stated in the agreement within. ten (10) days from any discontinuation, stating the reason for the discontinuation and the projected length of the discontinuation_ If the City determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured and paid within sixty (60) days of the termination. (b) If the company or individual is in default according to the terms and conditions of its agreement, the company or individual shall notify the City in writing at the address stated in the agreement within ten (10) days from the default, and cure such default within sixty (60) days from the date of the default ("Cure Period"). If the City determines that such requirement has not been complied with, the agreement may be terminated immediately and all taxes previously abated by virtue of the agreement may be recaptured, together with interest at 6% per annum calculated from the effective date of the agreement and paid within sixty (60) days of the termination. If -12- the City -does not receive full payment within said sixty (60) days, a penalty may be added, equal to 15% of the total amount abated. (c) If the company or individual allows its ad valorem taxes owed the City to become delinquent and fails to timely and properly follow the legal procedures for its protest and/or contest, the agreement then may be terminated, and all taxes previously abated by the agreement may be recaptured and paid within sixty (60) days of the termination, and penalties and interest may be assessed as set out in Section 66-146 ("Recapture"). Section 66-147. ADMINISTRATION (a) The Chief Appraiser of the County annually shall determine an assessment of the real and personal property comprising the reinvestment zone. Each year, the company or individual receiving abatement shall furnish the assessor with such information as may be necessary for the abatement. Once value has been established, the Chief Appraiser shall notify the affected jurisdictions, which levies taxes of the amount of the assessment. (b) The agreement shall stipulate that employees and/or designated representatives of the City will have access to the reinvestment zone during the term of the abatement to inspect the facility to determine if the terms and conditions of the agreement are being met. All inspections will be made only after giving twenty-four (24) hours prior notice and will only be conducted in such manner as to not unreasonably interfere with the construction and/or operation of the facility. All inspections will be made with one or more representatives of the company or individual and in accordance with the facility's safety standards. (c) Upon completion of construction, the City or the jurisdiction creating the reinvestment zone annually shall evaluate each facility receiving abatement to ensure compliance with the agreement and report possible violations to the contract and agreement to the City Council and the City Attorney and the affected jurisdictions which levy taxes. Section 66-148. ASSIGNMENT A tax abatement agreement may be assigned to a new owner or lessee of a facility with the written consent of the City Council, which consent shall not be unreasonably withheld. Any assignment shall provide that the assignee shall irrevocably and unconditionally assume all the duties and obligations of the assignor upon the same terms and conditions as set out in the agreement. Any assignment .of a tax abatement agreement shall be to an entity that continues the same improvements or repairs to the property (except to the extent such improvements or repairs have been completed), and continues the same use of the facility as stated in the original Tax Abatement Agreement with the initial applicant. No assignment shall be approved -if the assignor or the assignee is indebted to the City for past due ad valorem taxes or other obligations. -13- Section 66-149. SUNSET PROVISION (a) These Guidelines and Criteria are effective February 14, 2005, and will remain in force until January 31, 2007, at which time all tax abatement contracts created pursuant -to these provisions will be reviewed by the City to determine whether the goals have been achieved -Based on that review, the Guidelines and Criteria will be modified, renewed, or eliminated. (b) This policy is mutually exclusive of existing Industrial District Contracts and owners of real property in areas deserving of special attention as agreed by the affected jurisdictions. Section 66-150. MUTATIONS The adoption of the guidelines and criteria by the city council of the City of La Porte does not: (1) Limit the discretion of the city. council of the City of La Porte to decide whether to enter into a specific tax abatement agreement; (2) Limit the discretion of the city council of the City of La Porte to delegate to its employees the authority to determine whether or not the governing body should consider a particular application or request for tax abatement; or (3) Create any property, contract, or other legal right in any person to have the city council of the City of La Porte consider or grant a specific application or request for tax abatement. Section 66-151. NONAPPLICABLE AREAS; EXCEPTION The city council of the City of La Porte hereby establishes the policy of the City of La Porte, that tax abatement agreement applications will not be accepted for areas within the any existing Industrial District or Tax Increment Reinvestment Zone of the City of La Porte or any Industrial District or Tax Increment Reinvestment Zone, which may be created. However, as to any portion of such areas which are not within the corporate limits of the City of La Porte, Harris County Commissioners Court may establish tax abatement agreements for the benefit of itself, and taxing units other than the City of La Porte having jurisdiction over said area. 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 -14- 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 approval. PASSED AND APPORVED this 14'h day of February, 2005. ATTEST: 4//G% Martha A_ Gillett City Secretary APPROVER: GA Knox W. Askins City Attorney CITY OF LA PORTE B Alton E. Porter Mayor -15- EXHIBIT 66W Application for Tax Abatement -La Porte, Texas - Prior to any public expression of a decision or any commitment (legal or financial) to the proposed project by applicant, a completed original of this application, including supporting documentation of competitive siting and narrative impact statement, must be submitted to the City of La Porte, 604 West Fairmont Parkway, La Porte, TX 77571. This application will become part of the Tax Abatement Agreement and any knowingly false representations will be grounds for terminating the application and/or voiding the agreement. The City will forward copies to other taxing jurisdictions, as may be required by Texas statute. PART I - APPLICANT INFORMATION Application Date _8_/ 16,/ 06_ Company Name: Preferred Freezer Services Headquarters Address: 360 Avenue P Newark NJ 07105 Local Address: 10000 Porter Rd. La Porte, TX Annual Sales: $79 million Local Phone: (305) 885-7077 ext. 3453 Total All Employees Worldwide: 500 Years in City of LaPorte: 0 Employees in La Porte at Present: 0 Attach description of Applicant Company, including brief history, corporate structure, financial statement, & annual report: PART II - PROJECT INFORMATION Location Address: 10000 Porter Rd. City: La Porte School District: La Porte ISD Legal Description*: Metes and Bounds Attached College District: San Jacinto Communi!y College_ County: Harris Tax Acct. Numbers: 040-174-000-0006 * Attach plat survey, with a metes & bounds description, for project site. Project Description: 0 New Construction ❑ Expansion Attach statement fully explaining project, describe existing site and all proposed improvements, and provide "Investment Schedule" detailing improvements for which abatement is requested. Section A - Economic Development Type of Facility: ❑ Manufacturing ❑ Regional Entertainment 0 Regional Distribution ❑ Regional Service Center ❑ Research & Development ❑ Other Basic Industries Describe product or service to be provided: Public Cold Storage Distribution Center For re.eional facilities provide market studies business plans or other materials demonstrating that the facility will serve a primary market which lies outside of La Porte. Section B - Variance Is the applicant seeking a variance to Guidelines? 0 Yes ❑ No If "yes" attach letter requesting and justifying the variance, with supplemental information. Application — Page 1 of 4 PART III - ECONOMIC INFORMATION Construction Estimate: Start Date _11_/_01_/ 06_ Contract Amount $10,483,492 Completion Date _05_/_01_L 07_ Peak Construction Jobs _150_ Construction Man -Years 1 If Modernization: Estimated current economic life of structure N/A years Added economic life from modernization N/A years Permanent Job Creation/Retention in LaPorte: • Current employment in LaPorte:`0. • Jobs to be Retained in LaPorte: 0. • Jobs to be created within 3 years from contract inception (by Jan. 1, 2009) _35 . N-MIN-110 ­0 e Value on January 1 preceding abatement $1,300,000 $0 $1,300,000 Estimated value of new abatable investment N/A $10,483,492 $10,483,492 Estimated value not subject to abatement (e.., Inventory) $400,000 $400,000 Estimated value of property subject to ad valorem tax at end of abatement Company Representative to be Contacted: Name: Bill Forrester Title: Development Director Telephone: (305) 885-7077 ext. 3453 Authorized Company Official: Authorized Signature: Name (please print): Dan Coon Title: Chief Operating; Officer Application — Page 2 of 4 Preferred Freezer Services Narrative for Tax Abatement I. Introduction of the Company A. Describe the Company's business activities, locations, primary markets, history (when and where incorporated), headquarters location, parent or subsidiary companies, etc. Preferred Freezer Services started in 1989 in Perth Amboy, NJ. Preferred Freezer Services was formed with intentions of becoming a leader in the cold storage warehousing industry. Owner and President/CEO John Galiher acquired a 3 million cubic foot freezer in Perth Amboy that had 26 full time employees and generated $3.6 million dollars in sales. As of August 2006 Preferred Freezer Services operates fourteen (14) cold storage warehouses with a total 74 million cubic feet of space. Sales for the 14 facilities generated $79 million in 2005. The fourteen (14) current Preferred Freezer Services cold storage warehouses are in the New York/New Jersey metropolitan surrounding area, Boston -Massachusetts surrounding area, Los Angeles -California surrounding area, Miami -Florida and Chicago -Illinois. Headquarters: Preferred Freezer Services 360 Avenue P Newark, NJ 07105 (973) 820-4040 (973) 820-4004-fax B. Names of Chief Officers: John Galiher-President/Chief Executive Officer Dan Coon -Chief Operating Officer Greg Robinson -Chief Financial Officer C. Provide copy of annual report or financial statements, as detailed in "Instructions". 2005 Audited Financial Report is attached. Reasons For Seeking Abatement Preferred Freezer Services is proud of the business model it has formulated over the past 17 years. Integral to that business model is the development of state of the art, standardized refrigerated warehouses that can be built quickly and efficiently. The financial burden of constructing and operating these state of the art facilities is substantial. The reason Preferred Freezer Services is seeking the tax abatement with La Porte and Harris County is the abatement will lessen the financial burden, which will allow us to stay competitive in the market place. III. Describe The Project A. Facts about the proposed site (acreage, cost, location, ownership). The proposed site is 10.1 acres in the Underwood Business Park in La Porte, TX. Cost of the land will be $1,300,000. The current owner of the property is Clay Development and Construction, Inc. B. Type and value of proposed improvements (budget, list of fixed in place equipment to be included in the project). Preliminary construction costs of proposed 167,381 square foot facility: Hard Costs Foundations $ 250,500 Concrete Slabs 888,488 Structural Steel & Misc Iron 1,183,500 Racking 1,456, 800 Tilt Up Concrete Walls 575,500 Siding & Insulation 580,510 Roofing 802,247 HVAC 81,200 Plumbing 145,800 Building Sprinkler 535,847 Electric 672,500 Refrigeration (see below) 854,800 FKI Condors (see below) 1,600,000 Glass and Glazing 52,100 Carpentry 96,900 Doors & Hardware 37,100 Drywall & Metal Stubs 138,400 Painting 68,400 Floor Covering 49,300 Ceilings 31,400 Overhead doors/Dock Equipment 157,200 Standby Generator 225,000 Total Hard Costs $ 10,483,492 Fixed Equipment List Refrigeration Equipment Equipment Qty. Condensing Unit 1 Evaporators 20-freezer area 4-dock area 1-USDA inspection room Compressors 4 Starters for Compressors 4 Condensers 2 Refrigerant Vessels 4 Heat Exchanger 1 Motor Control Center 1 FKI Logistex Condor Cranes The Condor Cranes (8 for this facility) are fixed in place full mast material handling hybrid cranes. They are fixed in place within the freezer area. C. Project timeline -construction start date and end date. Preferred Freezer Services intends to start this project upon receipt of the tax abatement. Preferred Freezer Services is hopeful to.have a start date of November 1, 2006 with a scheduled completion date of May 1, 2007, D. Environmental impact information must be provided, noting any anticipated impacts of the project on the environment, including, but not limited to, water quality, storm water and runoff, floodplain and wetlands, solid waste disposal, noise levels and air quality. Further, include history of environmental compliance by company as required in Guidelines and Criteria. Preferred Freezer Services is committed to maintaining an excellent environmental record and complying with all local, state and federal mandates. A Phase I environmental site assessment, which is attached, was performed on the 207 acres of property of which is the 9.2 acres Preferred Freezer Services plans on acquiring. There were no issues or findings noted. The proposed facility will not have an adverse affect on this site. Preferred Freezer Services believes in the environment and its surroundings, including neighbors. All equipment is indoors and therefore minimal noise levels go outside the facility. Even the back up generator is in an enclosure to eliminate engine noise. There will be an enclosed trash compactor on site to prevent rodents, odor and other issues relating to waste disposal. E. All other governmental assistance/incentives being requested or already approved for the project, (e.g. Industrial Development Bonds, Smart Job Funds). There are none at the time of application. IV. Jobs A. Provide information on current level of employment, including: (1) current payroll and (2) breakdown of current employment by zip code. Attach a copy of the company's most recent filing with the Texas Workforce Commission or other supporting documentation that can be used to determine actual employment level at time of application. There is no current level of employment with respect to this application because this will be the first facility in the state of Texas. B. Provide information on the projected job creation associated with the project, including: (1) new employee needs; e.g. skilled vs. non -skilled, level of education, experience, etc; (2) proposed pay scale; (3) any training which the company will provide to its new employees; (4) upward mobility opportunities, career tracks, etc. available to less educated and experienced workers; and (5) if this is a consolidation, information on number of "new hires" vs. "transfers". Also, provide information on construction jobs to be created by the project. 1) New employment needs for this facility will be 35 employees with 8 skilled workers (management, clerical and mechanical) and 27 non - skilled workers. 2) Proposed pay scale is as follows: Skilled salary workers $40,000-$90,000/year Skilled hourly workers $15.00-$22.00/hour Non -skilled hourly workers $10.00-$15.00/hour 3) Preferred Freezer Services provides all training for its employees, especially on the specialized equipment used in the freezer. Employees are often cross -trained for multiple jobs to maximize their productivity and provide opportunities for them. 4) Preferred Freezer Services strongly believes in promoting from within the company. Many employees with long tenures with the company are running current facilities. The expansion and growth of the company is directly due to the workers that make it successful and they have been rewarded. 5) This is not a consolidation project so all jobs are "new hires". Construction There will be an estimated 150 jobs created for this project. The trades involved will be masonry, electrical, ironworkers, pipe fitters, crane operators, skilled and unskilled laborers, construction supervisors, etc. u Competition With Local Business A. List any competition or similar businesses in the area. There are 6 facilities in the Houston marketplace Preferred Freezer Services considers direct competition. Houston Central Industries 800 Middle Street Houston, TX 77003 P&O Cold Logistics 16110 E. Hardy Road Houston, TX 77032 International Trading Co., Inc. 300 Portwall St. Houston, TX 77029 Houston Central Industries 7080 Express Lane Houston, TX 770078 P&O Cold Logistics 502 North Broadway LaPorte, TX 77571 NOCS West Gulf, Inc. 9223 Highway 225 La Porte, TX 77571 B. Describe how an abatement will impact competition with other similar businesses in the area. The abatement will impact our competitors in the sense that a competing company has built a facility in their area. The abatement will allow Preferred Freezer Services to compete with the facilities that are established in the area. It will help Preferred Freezer Services compete in pricing, which is directly related to the cost of building and operating a state of the art facility. The tax abatement will ease some of the cost and allow Preferred Freezer Services to establish themselves in the market. This facility will be servicing many of our nationwide customers who are interested in the Houston market as discussed below. VI. How will this project attract new business? Preferred Freezer Services has a tremendous following and loyal customer base that has been the backbone of the growth of the company over the years. Through this loyal base of customers Preferred Freezer Services has expanded a local New Jersey warehouse into a nationwide corporation in currently in 5 states. This relationship has benefited Preferred Freezer's customers as well. In many scenarios customers have either expanded their businesses in the markets we have opened facilities in or started selling product in markets they had never prior to Preferred Freezer Services opening within said market. Preferred Freezer Services will also become a good customer for local vendors. All warehouse supplies are purchased on a local level within each market. VII. Provide information on alternative site considerations/and incentives being offered the company. Preferred Freezer Services is considering 2 other cities besides Houston to allocate funds to building in 2006/2007, Chicago, IL and Jacksonville, FL. Chicago, IL is attractive to Preferred Freezer Services because it would be the second facility in that market so we know what to expect out of it. We have the resources for employees, vendors and customers. Chicago also offers a Tax Increment Financing (TIF) in areas to attract businesses such as Preferred Freezer Services. TIF allows lower multiples on the assessed value and therefore lowers the taxes on the property, up to 66% reduction. Jacksonville, FL is also attractive to Preferred Freezer Services because of its location in the Southeast. Jacksonville's strategic location and expanding port is very similar to why Houston is attractive to Preferred.Freezer Services. The site in Jacksonville is in an Enterprise/Empowerment Zone offering hiring incentives, infrastructure grants and tax refunds. The estimated 3-year savings will be close to $2,000,000. VIII. If leasing property, please attach copy of lease. If company owns or is purchasing land, please attach copy of deed or executed contract -option to purchase. There are none at time of application. EXHIBIT «C99 METES AND BOUNDS DESCRIPTION 10.115 ACRE TRACT LOCATED IN THE ENOCH BRINSON SURVEY, A-5 HARRIS COUNTY, TEXAS Being a tract or parcel of land containing 10.115 acres of land or 440,618 square feet, located in the Enoch Brinson Survey, Abstract 5, Harris County, Texas, being out of and a part of that certain 207.049 acre tract (called 206.990 acre tract) of record in the name of St. Joe Paper Company in Harris County Clerk's File (H.C.C.F.) Number M032856; Said 10.115 acre tract being more particularly described as follows (all bearings based on the southerly Right -of -Way line of the Southern Pacific Railroad bearing South 70 Degrees 15 Minutes 00 Seconds East per said deed): BEGINNING at a broken concrete monument called and found at the southwest corner of both the herein described tract and aforesaid 207.049 acre tract, for the northwest comer of a called 19.566 acre tract of record in the name of Houston Lighting and Power Company in H.C.C.F. Number D417662, and on the east line of a called 2.833 acre tract of record in the name of Houston Lighting and Power Company in Volume 2355, Page 173 of the Deed Records of Harris County, Texas, said corner being on the west line of aforesaid Enoch Brinson Survey and the east line of the Nicholas Clopper Survey; THENCE, coincident the south line of aforesaid 207.049 acre tract and the north line of aforesaid 19.566 acre tract, North 89 Degrees 39 Minutes 06 Seconds East, a distance of 3,740.00 feet to a 5/8 inch iron rod with cap set for the southwest comer and POINT OF BEGINNING of the herein described tract; THENCE, through and across aforesaid 207.049 acre tract the following three (3) courses: 1. North 00 Degrees 20 Minutes 54 Seconds West, a distance of 884.19 feet to a 5/8 inch iron rod with cap set for the northwest comer of the herein described tract; 2. North 89 Degrees 39 Minutes 06 Seconds East, a distance of 496.66 feet to a 5/8 inch iron rod with cap set for the northeast comer of the herein described tract; 3. South 00 Degrees 33 Minutes 54 Seconds East, a distance of 884.20 feet to a 5/8 inch iron rod with cap set for the southeast comer of the herein described tract THENCE, coincident the north line of aforesaid 19.566 acre tract South 89 Degrees 39 Minutes 06 Seconds West, a distance of 500.00 feet to the POINT OF BEGINNING and containing 10.115 acres of land. OF KEP*TH A. GRULLEP 1 �J 5478 Q ,.•' v `0... `7 SUE?�►E,_ Reno & Associates July 13, 2006 Job No. 36-0404_10.1 acre z v �. City of La forte Established 1892 October 24, 2006 CM/RRR# 7005 0390 0004 8165 3515 The Honorable Robert Eckels Harris County Judge Attn: David Turkel Director of Community & Economic Development 8410 Lantern Point Drive Houston, TX 77054 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Judge Eckels: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC. on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, LaPorte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/lap Enclosure 604 W. Fairmont Pkwy. • La Porte, Texas 77571 • (281) 471-5020 City of La Porte Established 1892 Ms. Kathy Powell, Tax Assessor City of La Porte 604 W Fairmont Parkway LaPorte, TX 77571 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Ms. Powell: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC. on November 6, 2006 Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/krp Enclosure 604 W. Fairmont Pkwy. • La Porte, Texas 77571 • (281) 471-5020 City of La Porte Established 1892 October 24, 2006 CM/RRR# 7005 0390 0004 8165 3522 Dr. Michael Say, Superintendent La Porte Independent School District Attn: Gene Horn, President LPISD School Board 1002 San Jacinto Street LaPorte, TX 77571 RE: Notice of Public Hearing Notice of Intent to Enter Into Tag Abatement Agreement Dear Dr. Say: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, LaPorte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/lrp Enclosure 604 W. Fairmont Pkwy. 9 La Porte, Texas 77571 9 (281) 471-5020 N 'ACity of La Porte October 24, 2006 CM/RRR## 7005 0390 0004 8165 3508 Dr. Bill Lindemann, Chancellor San Jacinto College Attn: Dr, Ruede Wheeler Board of Regents 4624 Fairmont Parkway, Suite 200 Pasadena, TX 77504 RE: Notice of Public Hearing Notice of Intent to Enter Into Tax Abatement Agreement Dear Dr. Lindemann: Pursuant to Chapter 312, Texas Tax Code, enclosed is a copy of the Notice of Public Hearing on the designation of La Porte Reinvestment Zone "Zone C" for Preferred Freezer Services, LLC. on November 6, 2006. Per Section 312.2041 of the Texas Property Tax Code, the City of La Porte is providing notice of intent to enter into a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. A copy of the proposed Tax Abatement is provided. At this time we anticipate City Council's consideration at their regular scheduled meeting of November 6, 2006. The meetings are held at City Hall Council Chambers, 604 West Fairmont Parkway, La Porte, Texas beginning at 6:00 PM. Yours Truly, John Joerns, Interim City Manager JJ/krp Enclosure 604 W. Fairmont Pkwy. • La Porte, Texas 77571 • (281) 471-5020 TAX ABATEMENT AGREEMENT FOR REAL PROPERTY LOCATED IN THE LA PORTE REINVESTMENT ZONE "ZONE C" THE STATE OF TEXAS § COUNTY OF HARRIS § This Tax Abatement Agreement (the "Agreement") is made and entered into by and between the City of La Porte, Texas, a municipal corporation (the "City), and Preferred Freezer Services Houston Port, LLC, ("Lessee"), a Delaware Corporation qualified to do business in the State of Texas and Under Bear, LLC. ("Lessor"), a Delaware Corporation and an owner of interests in real property located within the Zone (defined below). I. AUTHORIZATION This Agreement is authorized by the following: (a) the Texas Property Redevelopment and Tax Abatement Act, chapter 312 of the Texas Tax Code, as amended, (b) the City of La Porte Ordinance 2006- authorizing this agreement; and (c) Guidelines and Criteria for Granting Tax Abatement in a Reinvestment Zone Created in La Porte, Texas, adopted by the La Porte City Council on February 14, 2005; Ordinance 2005-2809 (the "Guidelines"), attached hereto as Exhibit A and made a part hereof. All definitions set forth therein are applicable to this Agreement, except as otherwise expressly provided in this Agreement. ]I. DEFINITIONS As used in this Agreement, the following terms shall have the meanings set forth below: a) "Abatement" means the full or partial exemption from ad valorem taxes of certain real property (including fixed -in -place machinery & equipment) located on the Project Site within the Zone designated for economic development purposes. b) "Effective Date of Abatement" means January 1, 2007. c) "Base Year Value" means the 2006 certified appraised value, as determined by the Harris County Appraisal District ("HCAD"), for the real property located in the Reinvestment Zone "Zone C". d) "Improvements" means the buildings or portions thereof and other improvements, including fixed -in -place machinery and equipment, that are erected by the Lessor or Lessee in the Reinvestment Zone "Zone C" on or after August 16, 2006 and no later than December 31, 2008, and more fully described in the "Application for Tax Abatement in La Porte, Texas" (the "Application"), attached hereto as Exhibit B and made part hereof for all purposes. e) "Construction" means a material and substantial improvement of the property, which represents a separate and distinct construction operation undertaken for the purpose of erecting the Improvements. The period of Construction ends when the facility is available for occupancy, or on December 31, 2008, whichever occurs first. f) `Eligible Property" means the construction commencing on or after August 16, 2006, of buildings, structures, fixed machinery, equipment and process units, site improvements, and that office space and related fixed improvements necessary to the operation and administration of the facility, as set forth in the Investment Budget in the Application. The value of all property shall be the certified appraised value as finally determined by HCAD each year. g) "Ineligible Property" means any construction commencing before August 16, 2006 and after December 31, 2008, land, inventories, supplies, tools, furnishings and other forms of movable personal property, vehicles, vessels, aircraft, housing, hotel accommodations, deferred maintenance investments, improvements for generation or transmission of electrical energy not wholly consumed by a new facility or expansion, any improvements which are not integral to the operation of the facility, property that has an economic life of less than fifteen (15) years, any Improvements that have an economic life of less than fifteen (15) years, or any Improvements exempted by local, state or federal law. h) "Lessee" means Preferred Freezer Services Houston Port, LLC. a Delaware Corporation. i) "Lessor" means Under Bear, LLC, a Delaware Corporation j) "Permanent Employee" means a person who works a minimum of 1,750 hours per year exclusively in the Project within the Zone (excluding any contract employee, seasonal employee, full-time equivalent, or part-time employee), whose employment is both permanent and full-time, who receives industry -standard benefits, and whose employment is reflected in the quarterly report filed with the Texas Workforce Commission ("TWC") by the Lessor and/or Lessee (or Contractor, if applicable). k) "Project" means the 167,381 Square feet Building and Improvements to be built on a 10.15 acre tract of real property located at 10000 Porter Road, La Porte, Texas, known herein as the Project Site, and as more fully described in the Investment Budget included in Exhibit B, attached hereto and made a part hereof for all purposes. 1) "Project Site" means the 10.15 acre tract of real property to be improved, as more fully described in Exhibit C attached hereto and made a part hereof for all purposes. m) "Reinvestment Zone "Zone C"" means the 10.15 acre tract of real property located at 10000 Porter Road in La Porte, Texas, and as more fully described in Exhibit C attached hereto and made a part hereof for all purposes. III. SUBJECT PROPERTY The Project Site is in La Porte, Texas, generally described as 10.15 acres of land situated in the Enoch Brinson Survey, Abstract 5, Harris County, Texas and as more fully described in Exhibit C, attached hereto and made a part hereof for all purposes. Upon completion of the Improvements to be constructed and further described in Exhibit B, the Project will consist of a Public Cold Storage Distribution Center. In accordance with TEXAS TAX CODE ANN. §312.204(a), HCAD shall determine the Base Year Value of real property subject to the Abatement Agreement. The Chief Appraiser of HCAD shall annually certify the appraised value of the Project Site and any improvements to the Project Site subject to abatement under this Agreement. IV. REPRESENTATIONS AND CONTEMPLATED IMPROVEMENTS A. The Lessor and Lessee represents that Under Bear, LLC, presently owns fee simple title to the project site more fully described in Exhibit C, attached hereto and made a part hereof; and that the Improvements will be constructed on the project site within the boundaries of the Reinvestment Zone. . B. The Lessor and Lessee each represent that: (1) Preferred Freezer Services Houston Port, LLC. is the lessee of the real property located at 10000 Porter Road in La Porte, Texas; and (2) the property is located within the boundaries of the zone. C. The Lessor and Lessee each represent and warrant that they have executed a valid Lease Agreement in Exhibit D for the construction of the Improvements described in the Investment Budget in Exhibit B, which will begin on or after August 16, 2006. D. The Lessor and Lessee represents and warrants that the proposed use of the Project is a Public Cold Storage Distribution Center. Additionally, the Lessor and Lessee agrees to maintain the Improvements in good repair and condition during the Abatement Period, and that construction of the Improvements shall be done substantially in conformity with the Investment Budget included in Exhibit B. E. The Lessor and Lessee represents and warrants they will invest at least $10.4 million in the Improvements by December 31, 2008, and that the certified appraised value of the Improvements, as determined by HCAD, shall be at least $9.9 million by January 1, 2009. F. The Lessee represents and warrants that they will create at least 35 new full-time, permanent employment positions on the Project Site no later than December 31, 2008. If at any time the Lessee fails to meet the total employment requirement, all taxes previously abated by virtue of this Agreement may be recaptured by the City and in such event such taxes shall be paid to the City, and the other political subdivisions that are parties to this Agreement, within sixty (60) days from demand. G. The Lessor and Lessee represents and warrants that they are not indebted to the City for any past due ad valorem taxes or other obligations. H. The Lessor and Lessee represents and warrants that they are in compliance with all state and federal laws designed to protect human health and welfare. The construction of the Improvements and operation of the facility shall be in compliance with all applicable federal, state and local laws, rules and regulations, including those designed to protect the environment from environmental hazards and degradation. V. VALUE AND TERM OF AGREEMENT A. The Lessor and Lessee shall make the Improvements in conformity with this Agreement as set out in the Investment Budget in Exhibit B attached hereto and made a part hereof for all purposes. Upon completion of the Improvements, the Lessor and Lessee shall use the Improvements as set forth in Section III of this Agreement. The Lessor and Lessee shall further maintain the Improvements in good repair and condition during the Abatement Period. B. The term of this tax abatement shall be for a period of ten (10) years beginning on January 1, 2007 ("Effective Date of Abatement"). In no case shall the term of this abatement exceed ten (10) years from the Effective Date of Abatement. The value of the Eligible Property shall be abated as follows: Year Abated 1-3 Including Construction 4 5 6 7-10 Percentage of Value 100% 80% 60% 40% 20% C. If the period of construction extends beyond December 31, 2008, two (2) years from the Effective Date of Abatement, the Improvements shall be considered completed for purposes of abatement. In no case shall the abatement period, inclusive of the construction period, exceed ten (10) years from the Effective Date of Abatement. VI. TAXABILITY During the period that this Abatement Agreement is in effect, taxes shall be payable as follows: (1) The certified appraised value of the Ineligible Property as determined each year by the Harris County Appraisal District will be fully taxable. (2) The tax abatement shall apply only to Eligible Property which value shall be abated in accordance with the percentage set forth in Section V (B), above. The abatement applied to Eligible Property in any year may not be greater than the amount by which the value of all property located in the Project Site, including Eligible Property, existing property and Ineligible Property, as listed on the appraisal roll for that year, exceeds the Base Year Value. VII. EVENT OF DEFAULT A. During the period covered by this Agreement, the City may declare a default hereunder upon the occurrence of any one or more of the following circumstances or events: 1. Failure by the Lessor and Lessee to commence construction of the Project Improvements specified in the Investment Budget of Exhibit B and Section IV of this Agreement by January 1, 2007, or 2. If the Lessor and Lessee fails, refuses, or neglects to comply with any of the terms of this Agreement; or 3. Failure by the Lessor and Lessee to comply with TEx. TAX CODE Alum. §22.01, as amended, requiring an annual rendition of all personal property with HCAD; or 4. If any representation made by the Lessor and Lessee in the Application or in this Agreement is false or misleading in any material respect. B. In the event the City declares the Lessor and Lessee to be in default of this Agreement, this Agreement shall terminate unless such default is cured in accordance with Subsection C below. If this Agreement is terminated, the City, and the other political subdivisions that are parties to this Agreement, shall be entitled to recapture all property taxes which have been abated as a result of this Agreement. Additionally, the Lessor and Lessee agrees to pay the City, and the other political subdivisions who are parties to this Agreement, interest at the rate of six percent (6%) per annum on any amount of previously abated taxes that are due to be recaptured under Section VII of this Agreement from the effective date of this Agreement. Interest for each year's abated taxes to be recaptured pursuant to Section VII of this Agreement shall be calculated beginning from the effective date of this agreement. Interest shall be calculated on the basis of a year of 360 days and the actual days elapsed (including the first day but excluding the last day) occurring in the period for which such interest is payable, unless such calculation would result in a usurious rate, in which case interest shall be calculated on the per annum basis of a year of 365 or 366 days, as applicable, and the actual days elapsed (including the first day but excluding the last day). C. The Lessor and Lessee is responsible for notifying the City of any default of this Agreement within ten (10) days of the default and must cure such default within sixty (60) days of the default ("Cure Period"). If the City determines that the Lessor and Lessee has failed to notify the City of any default of this Agreement as provided in this paragraph, the Agreement may be terminated immediately by the City and all taxes previously abated by virtue of this Agreement may be recaptured from Lessor and Lessee. In such event, such taxes must be paid to the City, and other political subdivisions that are parties to this Agreement, within sixty (60) days from the date of termination. If the City does not receive full payment within said sixty (60) days of termination of this Agreement, a penalty may be added, pursuant to section 312.205 (b)(6) of the Texas Tax Code, equal to fifteen percent (15%) of the total amount of taxes abated under this Agreement. D. In the event the Lessor and Lessee allows the ad valorem taxes owed the City to become delinquent or fails to timely and properly follow the legal procedures for its protest and/or contest, then this Agreement may be terminated and all taxes previously abated by virtue of this Agreement will be recaptured from the Lessor and Lessee. In such event, such taxes must be paid to the City, and other political subdivisions that are parties to this Agreement, within sixty (60) days from the date of termination. E. In the event the facility herein is completed and the Lessee begins operation, but subsequently discontinues operation after January 1, 2007, for any reason, for a period of 180 days during the abatement period, or one year in the event of a natural disaster, then this Agreement shall terminate. In the event of termination pursuant to the provisions of this paragraph, the abatement of taxes under this Agreement for the calendar year during which the facility no longer is in operation shall terminate and there shall be full recapture with penalties and interest as set out herein. Further, the Lessor and Lessee shall notify the City within ten (10) days of any discontinuation, stating the reason for the discontinuation and the projected length of discontinuation. Any taxes otherwise abated for the calendar year during which the Lessee no longer operates its Public Cold Storage Distribution Center, must be paid directly to the Tax Assessor -Collector for City for the benefit of the political subdivisions who are parties to this Agreement, within sixty (60) days from the date of discontinuation. VIH. ADMMSTRATION The City of La Porte Finance Department shall administer this Agreement on behalf of the City. The Lessor and Lessee shall allow employees and/or representatives of the City who have been designated by the City Manager's Office to have access to the Project Site during the term of this Agreement to inspect the facility to determine compliance with the terms and conditions of this Agreement. All inspections will be made only after giving twenty-four (24) hours prior notice and will only be conducted in such manner as to not unreasonably interfere with the construction and/or operation of the Project. All inspections will be made with one or more representatives of the Lessor and Lessee and in accordance with safety standards of the Lessor and Lessee. Upon completion of the Improvements, the City shall annually evaluate the Project to ensure compliance with the terms and provisions of this Agreement and shall report possible defaults to the City Council and City Attorney. The Lessee shall annually submit to HCAD and to the City, beginning on January 1, 2007, and continuing through the term of this Agreement, a January lst employee -count for the Project Site which shall correspond to employment counts reported in the Employer's Quarterly Report to the Texas Workforce Commission filed by the Lessor, Lessee or Contractor, for the quarter ending on the previous December 31, and a separate notarized letter certifying: (1) the number of jobs created as a direct result of the Improvements, and (2) the Lessee is in compliance with the environmental and worker safety requirements for the preceding year. This information will be used to determine eligibility and value of abatement for that year and shall be subject to audit if requested by the City. The Lessee's failure to submit this information will render the Lessor and Lessee ineligible to receive abatement for that year. The Lessor and Lessee shall (a) obtain and maintain all required permits and other authorizations from the United States Environmental Protection Agency and the Texas Commission on Environmental Quality ("TCEQ") for the construction and operation of the Project facility and for the storage, transport, and disposal of solid waste; and (b) seek a permit from the TCEQ for all grandfathered units on the Project Site, if any, by filing with the TCEQ, within three years of receiving the abatement, a technically complete application for such a permit. The HCAD Chief Appraiser shall annually determine (i) the taxable value pursuant to the terms of this abatement for all property located in the Project Site and (ii) the full taxable value without abatement of the real and personal property comprising the Project Site. The Chief Appraiser shall record both the abated value and the full taxable value in the appraisal records. The full exemption value listed in the HCAD records shall be used to compute the amount of abated taxes that are required to be recaptured and paid in the event this Agreement is terminated in a manner that results in recapture. Each year, the Lessee shall furnish the HCAD Chief Appraiser with such information outlined in Chapter 22, TEXAS TAX CODE, as may be necessary for the administration of the tax abatement specified herein. If the City terminates this Agreement, it shall provide the Lessor and Lessee with written notice of such termination. If the Lessor and Lessee believes that such termination was improper, the Lessor and Lessee may file suit in the Harris County District Courts appealing such termination within sixty (60) days after receipt from the City of written notice of termination. If a suit is filed, the Lessor and Lessee shall remit to the City, and other political subdivisions who are parties to this Agreement, within sixty (60) days after receipt of the notice of termination, any additional and/or recaptured taxes as may be payable during the pendency of the litigation pursuant to the payment provisions of TEXAS TAX CODE ANN. § 42.08. If the final determination of the appeal increases the Lessor's and Lessee's tax liability above the amount of tax paid, the Lessor and Lessee r shall remit the additional tax to the City and other political subdivisions that are parties to this Agreement, pursuant to TEXAS TAX CODE ANN. § 42.42. If the final determination of the appeal decreases tax liability of the Lessor and Lessee, the City and other political subdivisions that are parties to this Agreement shall refund the difference between the amount of tax paid and the amount of tax for which the Lessor and Lessee is liable pursuant to TEX. TAX CODE ANN. § 42.43. IX. ASSIGNMENT The Lessor and Lessee may assign this Agreement to a new owner of the facility with the written consent of the City Council, which consent shall not be unreasonably withheld. Any assignment shall provide that the assignee shall irrevocably and unconditionally assume all the duties and obligations of the assignor upon the same terms and conditions as set out in this Agreement. Any assignment of this Agreement shall be to an entity that contemplates the same improvements to the property, except to the extent such improvements have been completed. No assignment shall be approved if the Lessor and Lessee or assignee is indebted to the City or the other political subdivision that are parties to this Agreement, for ad valorem taxes or other obligations. X. RENDITION This Agreement is specifically conditioned upon the Lessor and Lessee complying with TEX. TAX CODE ANN. § 22.01, as amended, requiring an annual rendition of all personal property with HCAD. XI. NOTICE Any notice required to be given under the provisions of this Agreement shall be in writing and shall be duly served when it shall have been deposited, enclosed in a wrapper with the proper postage prepaid thereon, and duly registered or certified, return receipt requested, in a United States Post Office, addressed to the City and the Lessor and Lessee at the following addresses. If mailed, any notice or communication shall be deemed to be received three (3) days after the date of deposit in the United States Mail. Unless otherwise provided in this Agreement, all notices shall be delivered to the following addresses: To Lessee: Preferred Freezer Services Houston Port, LLC. A Delaware Corporation John Galiher, President/ Chief Executive Officer 360 Avenue P Newark, NJ 07105 To Lessor: Under Bear, LLC a Delaware Corporation Dan Coon, Chief Operating Officer 360 Avenue P Newark, NJ 07105 To the City: Director, Department of Finance City of La Porte 604 West Fairmont Parkway LaPorte, Texas 77571 with a copy to: Office of the Chief Appraiser/Abatements Harris County Appraisal District 13013 Northwest Freeway Houston, Texas 77040-6305 Any party may designate a different address by giving the other party ten (10) days' written notice. XII. MERGER The parties agree that this Agreement contains all of the terms and conditions of the understanding of the parties relating to the subject matter hereof. All prior negotiations, discussions, correspondence and preliminary understandings between the parties and others relating hereto are superseded by this Agreement. XIII. APPLICABLE LAWS Each party to this Agreement understands and agrees that this Agreement shall be governed and construed according to the laws of the State of Texas. XIV. SEVERABILITY The parties agree that if any provision, section, subsection, sentence, clause or phrase contained in this Agreement is for any reason held to be unconstitutional, void or invalid, the remaining portions of this Agreement shall not be affected thereby and all provisions contained herein are deemed severable for that purpose. XV. DATE The City executes this Agreement by and through the City Manager acting pursuant to City of La Porte Ordinance 2006-0!Jb , so authorizing. This Agreement shall not become enforceable until executed by all parties hereto. The Effective Date of Abatement shall be January 1, 2007. The parties in multiple originals, each, have executed this Agreement having full force and effect. APPROVED AS TO FORM: Knox . 4Asins City Attorney ATTEST: By:fl] 0, Martha A. Gillett City Secretary Prefer ed Freezer LLC By: John Galiher es Houston Port, Corporation President/Chief Executive Officer Date Signed: 16 ` 3 c -- c�r— Under Bear, LLC ("Lessor") A Delaware Corporation By: -- Dan Coon Chief Operating Officer Date Signed: /0 — -U - CC REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: November 6, 2006 Requested By: John Joerns Department: Administration Report: Resolution: Ordinance: Exhibits: Request Letter from Preferred Freezer Service Exhibits: Exhibits: Bud et Source of Funds: Account Number: Amount Budgeted: Amount Requested: Budgeted Item: YES NO SUMMARY & RECOMMENDATION The application for tax abatement from Preferred Freezer Services Houston Port, LLC included a request for a variance from the City's Guidelines. The request is for an early construction start prior to approval/completion of a tax abatement agreement. Per Section 66-144 of the City's Guidelines and Criteria for Tax Abatement, the approval of a variance requires a 3/a vote of the City Council. This "Early Start Variance" will not be required if the proposed abatement agreement is approved prior to this item. Action Required by Council: Consider approval of a variance to allow construction of improvements for a proposed Public Cold Storage Distribution Center to be located at 10000 Porter Road, La Porte, Texas, to commence prior to the execution and delivery of a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. The variance is "at risk" and does not commit or bind the City to approval of a Tax Abatement Agreement with Preferred Freezer Services Houston Port, LLC. AvvrovesWoBcil A enda Jo oer imi Manager ate PREFERRED FREEZE��RQ�SER11, 's OF V , F. To: From: CC: Date: _AMR AUG 2 8 2005 6 E I ASST. CITY MANAGER John Joerns, Assistant City Manager, La Porte, TX Bill Forrester, Preferred Freezer Services John Galiher, President/CEO; Dan Coon, COO August 16, 2006 Re: Early Start Variance Dear John, This letter is intended to inform you that Preferred Freezer Services is requesting an "early start" variance with respect to the application this is accompanying. This request is being made at the recommendation of the Greater Houston Partnership because Preferred Freezer Services would like to begin construction as close to November 1, 2006 as possible. GHP recommended requesting the variance to ensure Preferred Freezer Services would be able to begin construction once approved for the tax abatement and not have to wait for an executed contract. Preferred Freezer Services understands the company would take sole responsibility of moving forward without an executed contract in regards to construction. Preferred Freezer Services is confident if approved for the abatement an executed contract will soon follow. Preferred Freezer Services also understands it does take time with any legal document and would not want the project to delay start while all the details are ironed out in the contract. Please contact me if you have any questions or comments. Best regards, Bill Forrester Preferred Freezer Services 13700 NW 115t' Ave. Medley, FL 33304 -(305) 885-7077 ext. 3453 bforrester@preferredfreezer.com 13700 N.W. 115th Ave. • Medley, FL 33178 Phone: (305) 885-7077 • Fax: (305) 885-7377 REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: Novaumir 6 2006 Requested By: Department: Report: Resolution: Ordinance: Exhibits: Ordinance Exhibits: Exhibits: Appropriation Source of Funds: Account Number: Amount Budgeted: Amount Requested: Budgeted Item: YES NO SUMMARY & RECOMMENDATION At the October 23, 2006 meeting, City Council was given information regarding appointments of members to a committee for proposed bond referendum. Council directed staff to prepare an Ad HOC Appointment Ordinance. Action Required by Council: Consider approval or other action regarding an ordinance appointing an Ad HOC Committee for Proposed Bond Referendum. Date ORDINANCE NO. 2006-J_rf„57 AN ORDINANCE APPOINTING MEMBERS TO THE 2007 BOND REFERENDUM AD HOC REVIEW COMMITTEE OF THE CITY OF LA PORTEI FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW1 PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council of the City of La Porte hereby appoints the following members to the City of La Porte 2007 Bond Referendum Ad Hoc Review Committee, for the term commencing on the effective date hereof, and expiring on the completion of the duties of said ad -hoc committee: 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 approval, and it is so ordered. PASSED AND APPROVED, this 6th day of November, 2006. By: ATTEST: Martha A. Gillett City Secretary APPROVED: Clark T. Askins City Attorney CITY OF LA PORTE Alton E. Porter Mayor REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: Requested By: Stephen L. Department: Parks & Recreation Appropriation Source of Funds: Park Zone Funds & Council Discretionary Funds Acc't Number: Report: _Resolution: Ordinance: X I Amount Budgeted: Exhibits: Agreement Exhibits: Attestation by SLHOA Amount Requested: $32,854 SUMMARY & RECOMMENDATION As the City Council may recall, staff has been working with the Spencer Landing Homeowner's Association to utilize funds from the Park Zone 5 to provide a play area for the subdivision. Earlier in the year, playground and park service equipment was purchased for this site in the amount of $18,996. The agreement before you provides for the City of La Porte to purchase and install the equipment on the detention area owned by the Spencer Landing Homeowner's Association. Councilmember Moser and Mayor Porter have been working with the Spencer Landing Homeowner's Association to develop an agreement that is workable and protects both parties' interests. In addition to the available Park Zone funds of $19,854, the Mayor is recommending that and additional $13,000 be earmarked from Council Discretionary Funds, to fund the purchase of additional equipment. The Spencer Landing Homeowner's Association will contribute an additional $7,500 for equipment for a total expenditure of earthmoving and equipment of $59,350 for the site, including the equipment already purchased The agreement calls for the City to maintain the equipment only, for a period of twenty years, at which time the equipment would revert to the Spencer Landing Homeowner's Association. The Association will maintain the grounds of the detention basin. Since the last time Council reviewed the agreement, the following items have been changed or added: • The detention site will be available for use by the public, including citizens of La Porte that do not live in the Spencer Landing subdivision. • The boardwalk has been lengthened to 80' and will be engineered and installed by others, but maintained by the Spencer Landing Homeowner's Association. • Lighting and irrigation systems will be installed by others, but maintained by the Spencer Landing Homeowner's Association. • Additional play equipment has been identified that may be added in the future as matching funding by both parties becomes available. City Council is asked to consider approval of the agreement and funding as described here and in the agreement. Action Required by Council: Consider an Ordinance authorizing and approving an Agreement between the City of La Porte and the Spencer Landing Homeowner's Association, Inc. regarding installation and maintenance of playground and park service equipment for use by the public in a detention basin facility owned by the Association, and approving additional funding as described. Approved for City Council Agenda /! v/Ao d Jo . Joefn terim City Manager Diate ORDINANCE NO. 2006-..�,`/_J b AN ORDINANCE APPROVING AND AUTHORIZING AND APPROVING AN AGREEMENT BETWEEN THE CITY OF LA PORTE AND THE SPENCER LANDING HOMEOWNER'S ASSOCIATION, INC. REGARDING INSTALLATION AND MAINTENANCE OF PLAYGROUND AND PARK SERVICE EQUIPMENT FOR USE BY THE PUBLIC IN A DETENTION BASIN FACILITY OWNED BY THE ASSOCIATION; MAKING VARIOUS FINDINGS AND PROVISIONS RELATING TO THE SUBJECT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council hereby approves and authorizes the contract, agreement, or other undertaking described in the title of this ordinance, a copy of which is on file in the City Secretary's office. The City Manager 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 approval, and it is so ordered. PASSED AND APPROVED, this 6t' day of NOVEMBER 2006. ME ATTEST: 'uQhtuLAA"2 W Martha Gillett, City Secretary CITY OF LA PORTE 0IIkI;L0 rpo"V� Alton E. Porter, Mayor of La Porte Attestation I hereby attest that the Board of Directors of the Spencer Landing Homeowner's Association, Inc. approved the proposed Agreement with the City of La Porte regarding improvements to the Spencer Landing detention area at their 2006 board meeting. Dated: Gx, 2006 SPENCER LANDING HOMEOWNER'S ASSOCIATION, INC. i fonrfa Green, SLHOA Secretary Date AGREEMENT THE STATE OF TEXAS § COUNTY OF HARRIS § CITY OF LA PORTE § This Agreement is made and entered into by and between City of La Porte, a body corporate and politic under the laws of the State of Texas, hereinafter called "City," and the Spencer Landing Homeowner's Association, Incorporated, a non-profit corporation chartered under the laws of the State of Texas, hereinafter called "SLHOA"; RECITALS: 1. It is to the mutual benefit of City and SLHOA to use park development contributions accumulated from Park Zone 5, to purchase and install play equipment, park service equipment, and to include improvements involving earthmoving, relocation of existing inlet, and other basic improvements designed to provide a play area for the residents of Spencer Landing subdivision but open for use by any citizen of the City of appropriate age, hereinafter called the "Project", on the existing detention basin facility owned and operated by SLHOA, as a joint venture designated herein, and 2. The SLHOA has agreed to continue maintenance and upkeep of its detention basin property, except for maintenance of the installed play equipment and park service equipment which will be maintained by the City for a period of twenty years, and 3. NOW, THEREFORE, for and in consideration of the mutual covenants, agreements and benefits to the parties herein named, it is agreed as follows: TERMS: 1. The City shall administer the earthmoving and inlet relocation bid process by advertising and receiving bids on a "lowest bid meeting specifications" basis, for construction of earthmoving improvements for the Project in the manner similar to that of other City projects, and according to State law. 2. Upon receipt and tabulation of the bids for the Project, City will determine the responsible low bidder meeting specifications for the construction of earthmoving improvements and storm sewer inlet relocation for the Project. 3. In the event the Project as defined in Exhibit "A" are greater than the amount budgeted by City, City shall have the following options: Agreement — City of La Porte and SLHOA, Page 1 of 8 a. City may elect to pay the additional costs of the earthmoving improvement Costs of the Project or, the SLHOA may elect to pay the additional costs, or a combination of City/SLHOA funding for additional costs for the Project. b. City may reject all bids and elect not to proceed with the letting of the contract and terminate this agreement as provided below as an option of last resort. C. City may reject all bids and re -advertise for bids for construction of the Project in accordance with the approved drawings and specifications in the same manner as before and under the same conditions. d. City may negotiate a reduced Scope of Work to be agreed upon by both parties prior to re -bid or acceptance of alternate bids for this phase of the Project. 4. City shall award applicable contracts for the Project to the responsible bidder who submits the lowest bid meeting specifications, in accordance with the usual and customary procedures of the City and according to State law. It is expressly agreed and understood that City reserves the right to reject all bids. In such event, the City, in its discretion, may either re -advertise for bids pursuant to the same understanding with regard to rejection of bids or terminate this agreement as hereinafter provided. The City's determination of the responsible bidder who submits the lowest bid meeting specifications for the Project shall be final and conclusive. 5. City shall be responsible for administering applicable contracts for all phases of the Project. SLHOA shall not interfere with the work in progress; any issue that is of concern to the SLHOA will be addressed to City. City and SLHOA shall approve plans for the Project, prior to letting bids for the Project. SLHOA agrees to right of entry to perform services to both the City and contractor under applicable contracts for the Project according to the terms included herein. 6. City shall purchase and install play equipment and park service equipment on the site that is new and unused, utilizing force account labor and other contracted services as may be deemed necessary to accomplish the general scope of the Project as delineated in Exhibit "A". 7. Each cost or expense included within the Project shall be paid entirely from funds controlled by the City. 8. City acknowledges and agrees that the SLHOA's sole obligation under this Agreement during the construction of the Project is to continue to maintain the detention basin and for the costs of the Project to the extent stated in this Agreement, Agreement — City of La Porte and SLHOA, Page 2 of 8 and the SLHOA has not assumed any responsibility for the actual construction of the Project or the performance of the work other than the contribution of funds as provided herein, if necessary. The SLHOA shall not be responsible for the maintenance and condition of the affected areas during construction of the Project but shall be responsible for maintenance of all areas except the play equipment and park service equipment thereafter. 9. SLHOA acknowledges and agrees that the City's sole obligation under this Agreement is to complete the earthmoving according to specifications, and to install the play equipment and park service equipment as indicated in Exhibit "A". Upon completion of the Project, City agrees to maintain the play equipment and park service equipment stipulated for a period of the useful life expectancy of the play equipment and park service equipment, or twenty years, whichever may occur first. City agrees to provide copies of its monthly Playground Inspection Report to SLHOA upon request during the period set out in this agreement. 10. City will work with SLHOA on any changes and amendments to the project. City may make such changes and amendments to the drawings and specifications within the general scope of the approved Project, as City deems necessary or desirable during construction of the Project. 11. Either the SLHOA or City may terminate this Agreement, without cause, at any time prior to the letting of the Contract for construction of the Project, by written notice to the other party. After termination, neither party shall have any further obligations hereunder, except as follows: City shall return to the SLHOA any unspent funds which the SLHOA has paid to City hereunder prior to such termination. 12. The SLHOA and its authorized representatives shall have the right to review and audit all books, records, vouchers and documents of whatever nature related to City's performance under this Agreement during the period of performance of this agreement and for three (3) years thereafter or for so long as there exists any dispute or litigation arising from this agreement. At the conclusion of the project the City will submit a Closure Report to the SLHOA detailing and accounting for expenditures for the Project. 13. No party hereto shall make, in whole or in part, any assignment of this agreement or any obligation hereunder without the prior written consent of the other parties hereto. 14. All notices required or permitted hereunder shall be in writing and shall be deemed delivered when actually received or, if earlier, on the third day following deposit in a United States Postal Service post office or receptacle with proper postage affixed (certified mail, return receipt requested) addressed to the respective other party at the address prescribed hereinbelow or at such other address as the other party may have theretofore prescribed by notice to the sending party. Agreement — City of La Porte and SLHOA, Page 3 of 8 15. Address for notice shall be as follows: CITY SLHOA: City of La Porte 604 W. Fairmont Parkway La Porte, Texas 77571-6215 Attn: Stephen L. Barr, Director of Parks & Recreation Department Spencer Landing Homeowners Association, Inc. c/o Houston Community Management Services 18333 Egret Bay Blvd, Suite 445 Houston, TX 77058-3860 Attn: Ms. Belinda Tyler 16. The SLHOA shall indemnify and hold harmless the City, its officers, directors, agents, and employees from and against any and all claims, damages, losses, expenses, and liabilities, including attorney's fees which may be asserted against or incurred by the City arising, directly or indirectly, from any activities conducted or services performed by the SLHOA under this agreement, or from any event occurring on the premises owned by the SLHOA during any period in which activities are being performed, conducted, or sponsored on the premises by the City. 17. The City shall indemnify and hold harmless the SLHOA, its officers, directors, agents, and employees from and against any and all claims, damages, losses, expenses, and liabilities, including attorney's fees which may be asserted against or incurred by the SLHOA arising, directly or indirectly from any activities conducted or services performed by the City pursuant to this agreement, or from any event occurring on the premises owned by the SLHOA during any period in which activities are being performed, conducted, or sponsored on the premises by the SLHOA. 18. The Association shall keep and maintain during the term of this agreement, a comprehensive general liability policy, with the City named as Additional Named Insured, with limits of liability of not less than One Million Dollars ($1,000,000.00) combined single limit bodily injury and property damage per occurrence, with a maximum deductible of One Thousand ($1,000.00) per occurrence. Thirty (30) days prior notice of policy cancellation shall be provided to the City. Effective policy must not exclude participants in SLHOA's or City's scheduled or unscheduled activities at the facilities. The SLHOA shall furnish the City with a Certificate of Insurance evidencing such coverage. Such insurance shall include contractual liability insuring the indemnity agreements contained in this Agreement — City of La Porte and SLHOA, Page 4 of 8 Agreement. 19. During the term of this Agreement, the SLHOA and the City may enter into separate agreements or amend the current Agreement regarding future capital improvement projects through the City's Joint Ventures program based on available funding on the part of the City and the SLHOA, for other play or park service amenities that may be contemplated at the site. 20. This instrument contains the entire agreement between the parties relating to the rights herein granted and the obligations herein assumed. Any modifications concerning this instrument shall be of no force and effect excepting a subsequent modification in writing, approved by the governing bodies and signed by all parties hereto. Agreement — City of La Porte and SLHOA, Page 5 of 8 IN TESTIMONY OF WHICH, this agreement, in duplicate counterparts, each having equal force and effect of an original, has been executed on behalf of the parties hereto as follows, to -wit: a. It has on the day of , 2006, been executed on behalf of the Spencer Landing Homeowners Association, Inc. by its President, pursuant to a certified approval by the Board of said Association authorizing such execution. b. It has on the - day of UaY1ge?"'_, 2006, been executed on behalf of City by the City Manager and attested by its City Secretary, pursuant to Ordinance of City Council of the City of La Porte authorizing such execution. APPROVED AS TO FORM: Attorney of Record, SLHOA ATTEST: Belinda Tyler, Houston mmunity Management Services ATTEST: �/ lak0fliLett, City Secretary APPROVED AS TO FORM: Clark T. As ins, Assistant City Attorney SPENCER LANDING HOMEOWNERS ASSOCIATION, INC. Agreement — City of La Porte and SLHOA, Page 6 of 8 Trent Wise, President SLHOA er EXHIBIT A The Project contemplated for the detention basin owned and operated by SLHOA is as follows: 1. Extend and relocate the existing stormwater inlet on the northeast corner of the subject property to allow for deposit of additional topsoil. 2. Redistribute and add topsoil to the site in such a manner as to not exceed the Engineer's recommendations for stormwater detention for the site. 3. Purchase and install a composite modular playground set, as manufactured by Miracle Recreation Equipment Company Reference #559148, or approved equal; purchase and install a two bay swingset, Miracle # 2864S or approved equal, according to manufacturer's specifications. 4. Install borders, Miracle #44012R, or approved equal and landing surface Fall Material as manufactured by Total Recreation, or approved equal, around and under play equipment according to manufacturer's specifications. 5. Install park service equipment including park bench (Miracle #12677), picnic table (Miracle #1118) or approved equals. 6. Provide cleanup and restoration of site; provide berm udag rass/ryeg rass overseed to reduce the possibility of erosion, after earthwork is completed. 7. Contingent upon available funding, install approximately 800 feet, by 4 feet wide crushed granite pathway around three sides of the perimeter of the east leg of the detention area, connecting at each end with the existing sidewalk that traverses the north side of the detention area. Install approximately 80 feet of boardwalk to span the detention area (to be installed by others, and maintained by SLHOA). 8. Install lighting around the perimeter of the trail (to be installed by others, and maintained by SLHOA). 9. Additional equipment to be purchased, utilizing joint funding from SLHOA and City as identified and as funds become available, up to and including the following: a. One (1) Single Post Swing w/ Tot Seats, Miracle #714-735-2t, or approved equal. b. Two (2) 6' Park Bench, Miracle #1267, or approved equal. c. Four (4) 6' Slat Bench, Miracle # 1281R, or approved equal. d. One (1) PRC coated steel picnic Table, Miracle #1118, or approved equal. Agreement — City of La Porte and SLHOA, Page 7 of 8 e. Three (3) Trash Receptacle, as determined by joint review by SLHOA and City f. One (1) Standard Bike Rack, Miracle 710U, or approved equal. g. Two (2) Awning/Shade Cover installed over Picnic Tables, as determined by joint review by SLHOA and City. h. One (1) Concrete Basketball Pad, 20' X 25', and One (1) Steel Fan Backboard, Support, & Goal, as determined by joint review by SLHOA and City. i. One (1) Jet Interceptor Spring Rider, Miracle #940, or approved equal. j. One (1) Three Zone sprinkler system (to be installed by others, and maintained by SLHOA). Purchase of the equipment listed in 8. a - j, contingent upon available funds. If funds are not available to complete the purchases, SLHOA and City will work toward joint purchases in subsequent years as funds become available, as delineated in Section 19 of the Agreement. SLHOA and City to jointly agree on future play equipment type as well as funding levels. Agreement — City of La Porte and SLHOA, Page 8 of 8 REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: November 6, 2006 Requested By: S. Gillett Department: Public Works Report: Resolution: Ordinance: X Exhibits: Ordinance Exhibits: Report on Agreement Exhibits Appropriation Source of Funds: Fund 016 Account Number: 016-705-553-8085 Amount Budgeted: S600,000 Amount Requested: $542,880 Budgeted Item: YES SUMMARY & RECOMMENDATION The City of Houston Southeast Water Purification Plant (SEWPP) is schedule for an expansion from 120 Million Gallons per Day (MGD) to 200 MGD. Additionally, repairs and upgrades of the existing facility are also planned to improve operational efficiencies and comply with Surface Water Treatment regulations. The La Porte Area Water Authority (Authority) is not participating in the expansion, but its share of the repairs and upgrades total $542,880, based on ownership capacity (7.8 MGD). The Authority' existing capacity is estimated to serve the cities of La Porte, Morgan's Point and Shoreacres through 2030. The attached excerpt from the Report Regarding Proposed Expansion of the SEWPP, approved by the Authority Board on January 12, 2000 meeting, outlines the projected demands for its service area through 2040. The Authority Board, at its October 18, 2006 meeting, approved the attached Amendment to Cost Sharing Agreement Southeast Water Purification Plant (Restated and Amended). The Agreement changes ownership allocations with the Co -Participants and details costs associated with the expansion and repair/upgrades. Additionally, it formalized the recent change from contract operation to operation by the City of Houston, and imposes the same performance standards as the previous contract operator. The enabling legislation of the Authority requires the La Porte City Council to approve all contracts entered into by the Authority. Funds for this Project are available in the fund balance of the Authority. Action Required by Council: Approve ordinance authorizing the Mayor to execute the Amendment to Cost Sharing Agreement Southeast Water Purification Plant (Restated and Amended). Approved for Citv Council Agenda p OG Jo oern , I 'm City Manager 91te ORDINANCE NO. 2006 51 AN ORDINANCE APPROVING AND AUTHORIZING AN AMENDMENT TO COST SHARING AGREEMENT SOUTHEAST WATER PURIFICATION PLANT BETWEEN THE LA PORTE AREA WATER AUTHORITY AND THE CITY OF HOUSTONI APPROPRIATING THE SUM NOT TO EXCEED $542,880.00, TO FUND SAID CONTRACTf MAKING VARIOUS FINDINGS AND PROVISIONS RELATING TO THE SUBJECT] FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW1 AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City Council hereby approves and authorizes the contract, agreement, or other undertaking described in the title of this ordinance, a copy of which is on file in the office of the City Secretary. 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. City Council appropriates the sum not to exceed $542,880.00 from the City of La Porte Fund 016, to fund said contract. 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 approval, and it is so ordered. PASSED AND APPROVED, this 6th day of November, 2006. CITY OF LA PORTE By. Alton E. Porter Mayor ATTEST: LALdtda 0. " Martha A. Gillet City Secretary APPROVED: Knox W. Askins City Attorney Memo To: La Porte Area Water Authority Board From: Steve Gillett, Director of Public Works 44� CC: John Joerns, Interim City Manager Michael Dolby, Finance Director Date: 10/12/2006 Re: LPAWA —Additional Capital Cost Update I have previously provided reports on the Progress of the expansion and upgrade of the Southeast Water Purification Plant, as well as the cost estimates for the Authority's share of the upgrade (the Authority is not participating in the expansion). I will summarize the history of the cost estimate to the Authority, and then report on the recent progress made by the Co -Participants in reducing the scope and cost of the Project. The City of Houston originally informed the Authority of its estimated cost totaling $669,059 in December 2002. This cost was upgraded to $742,003 in March 2003, $784,756 in October 2003 and $833,181 in January 2004. In March 2004 the Authority's cost estimated was $904,800, and was expected to increase to over $1,000,000 by the time design was complete and bids issued. Co -Participants began questioning Houston on individual cost elements of the Project, and after several months, Houston supplied information on major elements of the Project. It quickly became apparent that several components that were previously presented as regulatory requirements were in fact Houston's estimate of future regulatory requirements, some as far as 10 years in the future. Additionally, it appeared that some security improvements were excessive for threat levels, and the Co - Participants began to demand input into the process. At the February 10, 2005 Co -Participant's monthly meeting, two committees were formed. The Technical Review Committee would review the need for various design elements, and recommend changes and/or reductions in scope. The Financial 0 Page 1 Committee would review the proposed cost allocation for each Co -Participant, as well as examine recoupment costs due to Houston from past projects. Because La Porte was not involved in the expansion, I volunteered for the Financial Committee, and was appointed chairman. Both committees met numerous times over the next few months, and eventually reduced the scope and cost of the Project, as well as identifying costs not eligible for reimbursement to Houston. The estimated cost to the Authority is now $542,880. The City of Houston has prepared a new Amendment to Cost Sharing Agreement (Restated and Amended) to reflect the proposed expansion, upgrade and changes in ownership allocation with the Co -Participants. The Agreement also incorporates the change in operator from contract to the City of Houston. The City of Houston has agreed to be bound by similar contractual language as previous contract operators, and has reduced contract operational costs significantly. The new contract also allows the Co -Participants to convert back to contract operations should the need arise. The City of Houston requests that the new Amendment to Cost Sharing Agreement (Restated and Amended) be approved by the governing bodies of the Co - Participants before January 1, 2007 to allow the Houston to bid the Project and award bids in the coming year. The Authority's share of the Project ($542,880) would be payable after bids were tabulated and apparent low bidder identified, but before award by the Houston City Council. Estimated time schedule is as follows: • Executed agreement with Co -Participants • Advertise Project • Open Bids • Funds Due from Co -Participants • Award Contract If you have any questions, please advise 0 Page 2 January 2007 February 2007 April/May 2007 May/June 2007 June/July 2007 PROJECTED CAPACITY DEMANDS The Consultant has indicated that the total demand for the new capacity is 43 MGD, but only 40 MGD will be available. To date, three (3) Participants have expressed a desire to obtain an option on excess Authority capacity. Should the Authority have excess capacity to sell, the price, as indicated by the new proposed Contract, is subject to negotiation. The La Porte Area Water Authority currently owns 4.2 MGD, with an additional 3 MGD available by August 2001. With a total capacity of 7.2 MGD, the Authority can meet its average daily demand, with a 2% growth rate, through 2040, and peak daily demand through 2025. Current demand (including groundwater usage) averages 3.6 MGD, with peak day at 4.5 MGD (See Table 3). TABLE 3 — LPAWA WATER DEMAND PROJECTIONS FLOW TYPE 2000 2002 2010 2020 2025 2030 2040 Daily Average 3.302 3.447 4.025 4.907 5.417 5.981 7.291 Daily Peak 4.513 4.710 5.501 6.706 7.403 8.173 9.964 Purchase of the Authority's percentage share of the expansion would cost $2,711,630, and would supply the Authority's average daily demand beyond 2050. However, the additional capacity would also result in 50% increase in O&M, emergency repair, and overhead costs that are allocated according to the percentage of ownership. These additional costs would be paid for over 25 years before the additional capacity is needed. With the transfer of the 3-MGD from Galveston to the Authority scheduled in August 2001, the need for additional capacity is approximately .6 MGD. This additional capacity will ensure that the Authority can meet its peak daily demand without exceeding its capacity. Additionally, the increased maintenance costs would only increase approximately 7%, and the Authority would have capacity beyond 2030. Original pumping capacity at the Plant totaled 225 MGD. The Expansion Study performed by the Consultant indicated that the firm pumping capacity, defined as the capacity after failure of the largest single pump, is 200 MGD, a reduction of 25 MGD. There are no plans to upgrade the pumping facilities to increase this capacity. 7 Due to the volume of this contract, a copy is available for your review in the City Secretary's Office. Signature page attached from La Porte Area Water Authority showing approval AMENDMENT TO COST SHARING AGREEMENT SOUTHEAST WATER PURIFICATION PLANT (RESTATED AND AMENDED) HAEWMSOUTHE.DOC Q/19i 006 TABLE OF CONTENTS Page No. RECITALS.....................................................................................................................................I ARTICLE I DEFINITIONS....................................................................................................................2 ARTICLE II PAYMENT.........................................................................................................................5 ARTICLE III CONSTRUCTION.............................................................................................................6 ARTICLE IV MANAGEMENT AND ACCOUNTING FOR 200 MGD PROJECT COST.............................................................................................7 ARTICLE V SUBSTANTIALCOMPLETION.....................................................................................8 ARTICLE VI ACCESS TO PLANT AND RECORDS..........................................................................9 ARTICLE VII UNTREATED WATER COSTS; CERTAIN AMENDMENTS REGARDING ANNUAL O&M BUDGET.......................................9 ARTICLE VIII COSTS FOR WATER LINE UPGRADE OR REPLACEMENT..............................14 ARTICLE IX INSURANCE....................................................................................................................Is ARTICLE X ENTIREAGREEMENT.................................................................................................15 EXHIBITS Addendum to Operations and Maintenance for Southeast Water Purification Plant Cl Schedule of Actual and Estimated Costs for Plant ffTWB\SOUTHE.DOC 1 9/ 19/2006 C2 Calculation of Unrecovered Original Capital Costs C3 CWA Bond Debt Service DI Schedule of Actual Costs of Pumping / Distribution D2 Calculation of Unrecovered Capital Costs for Pumping / Distribution F Calculation of Total Investment by Participant Calculation of Total Gallons per Participant G Beamer Road and Related Transmission Allocation H (No Exhibit) I Untreated Water Facilities Outstanding Debt J Transmission Line Capacity Map PARTICIPANT EXHIBITS I Maps of Point of Delivery II Demand, Pumping and Distribution Allocations and Costs HAEW B\SOUTHE. DOC I I 9/ 19/2006 AMENDMENT TO COST SHARING AGREEMENT SOUTHEAST WATER PURIFICATION PLANT (RESTATED AND AMENDED) THIS AMENDMENT TO THE COST SHARING AGREEMENT SOUTHEAST WATER PURIFICATION PLANT (RESTATED AND AMENDED) is made on the date of countersignature shown below by and between the CITY OF HOUSTON (herein "Managing Participant") and THE GULF COAST WATER AUTHORITY, THE CLEAR LAKE CITY WATER AUTHORITY, THE CITY OF NASSAU BAY, THE CLEAR BROOK CITY MUNICIPAL UTILITY DISTRICT, THE LAPORTE AREA WATER AUTHORITY, HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 55, THE CITY OF PASADENA, THE CITY OF SOUTH HOUSTON, THE CITY OF WEBSTER, THE CITY OF FRIENDSWOOD and BAYBROOK MUNICIPAL UTILITY DISTRICT NO. 1 (herein 'Participants"). RECITALS WHEREAS, the Participants and the Managing Participant entered into various Contracts for cost sharing in the construction and operation of the Southeast Water Purification Plant ("Plant"), which had the initial production capacity of 80 million gallons of water per day (MGD) during 1986-87; and HAEW B\SOUTHE.DOC 1 9/ 19/2006 WHEREAS, the Participants and the Managing Participant entered into the Cost Sharing Agreement, Southeast Water Purification Plant (Restated and Amended) (herein "Restated Agreement") on or about June 22, 2001 to increase the production capacity of the Plant to 120 MGD; and WHEREAS, the Participants and the Managing Participant have agreed to share in the cost of a new modification of the Plant to increase its production capacity to 200 MGD and add certain enhancements to the Plant; and WHEREAS, the Participants have reviewed and approved the scope of the Project described herein; NOW, THEREFORE, the parties agree as follows: ARTICLE I. DEFINITIONS All definitions included in the Restated Agreement shall apply unless the context requires otherwise or in case the term is otherwise defined in this Amendment. 11200 MGD Project" includes certain improvements to the Plant that will increase its Production Capacity to 200 MGD and the Plant's Pumping Capacity to 255 MGD. The "200 MGD Project" also includes certain upgrades for the Plant's existing facilities that will benefit the Participants. A summary of these improvements and estimated costs is attached as Exhibits "Cl" and "131" hereto. The 200 MGD Project is an "Other Project" as defined in Section 3.7 of the Restated Agreement. "200 MGD Project Cost" includes: a. Costs for facilities to increase the reliable capacity of the Plant from 120 MGD to 200 MGD to benefit only the Participants sharing in the increased 80 MGD HAEWB\SOUTHE.DOC 2 9/ 19/2006 capacity of the Plant, including engineering, testing, construction, equipment, legal services, contractor claims expenses, construction management, cost of services performed by the Managing Participant's employees, and auditing expenses. (Reference Exhibit Cl "Firm 200 MGD" Columns, herein these expenses are "Firm 200 MGD Expenses"). b. Costs for the upgrades to the facilities built to enhance the operation of the Plant for the benefit of all Participants, including engineering, testing, construction, equipment, legal services, contractor claims expenses, construction management, cost of services performed by Managing Participant's employees and auditing expenses. (Reference Exhibit Cl columns labeled "Enhancements (existing 120 MGD capacity only)", herein those expenses are "Enhancement Expenses"). C. Cost for the additional 55 MGD high service pump station to benefit only the Participants sharing in the increased 80 MGD capacity of the Plant, including engineering, testing, construction, equipment, legal services, contractor claims expenses, construction management, cost of services performed by Managing Participant's employees and auditing expenses. Reference Exhibit D1, column "High Service Treated Water Pumping" with rows labeled "Cost per Gallon New Pump less Old Pump", "Incremental Cost -Original Capacity" and "Purchase of Original Capacity" with details shown in Exhibit D2, columns labeled "200 MGD Costs Purchased Capacity" and "Increased $", herein these expenses are "Pump Station Expenses") H \EWB\SOUTHE.DOC 3 9/19/2006 Costs that are borne in common by paragraphs a, b and c, such as engineering and auditing expenses, will be apportioned among paragraphs a, b and c based on actual construction costs for work describe in paragraphs a, b and c. "Plant Recoupment Cost" means certain unrecovered and redistributed capital costs for the Managing Participant's initial construction of the Plant as shown on Exhibit Cl, row labeled "Additional Capital Allocations Recoupment" and columns labeled "Existing Facilities," and Exhibit C2, Treatment Plant (SEWPP), column labeled "Recoupment Increased $" hereto. The Managing Participant affirms that Plant Recoupment Costs required under this Amendment are based on the accounting for the prior capital costs for the Plant and are final for the Demand Allocation of each Participant as shown on the Participant Exhibits II. "Pumping and Distribution Recoupment Cost" includes: a. Unrecovered capital costs for additional capacity in the Treated Water Pumping Facilities and the Treated Water Transmission Facilities are as shown on Exhibits "131" and "D2." The Treated Water Transmission Facility additional capacity capital costs are shown on Exhibit D1 in rows labeled as follows, with the capacity purchased specific to the area of service: "Cost per Gallon - Existing Pipeline (96" C to D and Beamer)" and C to D portion shown separately on Exhibit D2 in columns labeled "Balance of Distribution $ (C to D) and New Allocation %". "Purchase of Original Capacity (Dist. `B to C")" and detail shown on Exhibit D2 in column labeled "Jun-00 Allocation $ (B to C)". HAEWWSOUTHE.DOC 4 9/19/2006 The Treated Water Pumping Facility additional capacity capital costs are shown on Exhibit D1 in row labeled as "Purchase of Original Capacity (Dist. `B to C")" and further detailed on Exhibit D2 in column labeled "200 mgd costs Purchased Capacity". b. Unrecovered capital costs for the Managing Participant's initial construction of the Treated Water Pumping Facilities as shown in Exhibit Dlcolumn labeled "High Service Treated Water Pumping" and row labeled "Incremental Cost - Original Capacity" with details shown in Exhibit D2 High Service Treated Water Pumping, column labeled "Increased V. C. Unrecovered capital costs for construction of the Beamer Road transmission line as shown on Exhibit "D1". The Managing Participant affirms that Plant Recoupment Costs and the Pumping and Distribution Recoupment Costs required under this Amendment are based on the accounting for the prior capital costs for the Plant and constitute all of the remaining unrecovered costs for the Plant and that there are no further unrecovered costs to be recovered from any of the Participants in the future other than those costs in Exhibit C2 in the column labeled `Balance of SEWPP" for treatment plant costs, those costs in Exhibit D2 in the column labeled "Balance of HS PS" for pumping costs, and any additional capacity purchased for distribution for the amount shown on Exhibit D2 (B to C allocation is $.04660/gallon and C to D allocation is $0.0570/gallon). ARTICLE II. PAYMENT Participants agree to make payment to the Managing Participant in the amounts shown on Exhibit 11, except payment for the 200 MGD Project Cost shall be based on the bid cost of the H \EWB\SOUTHE.DOC 5 9/ 19/2006 200 MGD Project plus a five percent construction contingency of the bid cost plus other non - construction cost items included in the definition of "200 MGD Project Cost." After bids for the 200 MGD Project are opened and read, the Managing Participant shall provide each Participant an accounting and invoice for the payment, which shall be due within 90 days of the Participant's receipt of such accounting. A summary of the investment dollars and Demand Allocation purchased per Participant is shown on Exhibit "F". Payments for Plant Recoupment Costs and Pumping and Distribution Recoupment Costs are firm as shown in Exhibit 11. The Managing Participant shall use diligent efforts to obtain bids for construction of the 200 MGD Project after execution of this Amendment by all Participants. At such time as the Managing Participant has secured sufficient financing for the 200 MGD Project from the Participants, it will award the construction contract and complete the 200 MGD Project. If the Managing Participant does not timely receive the funds necessary to construct the 200 MGD Project and the Project is canceled, then the Managing Participant shall promptly refund all funds paid by the Participants to the Managing Participant for the 200 MGD Project Costs, plus interest thereon compounded quarterly at the Interest Rate. ARTICLE III. CONSTRUCTION During all working hours of the construction period, a Participant Director and anyone authorized by such Director shall have access to the Plant premises and may inspect or review the Plant and all engineering specifications and documents related to the Plant. The Managing Participant shall present any change order(s) in the design, specifications or construction of the 200 MGD Project that exceed(s), cumulatively, the five percent construction contingency to the Operating Advisory Committee for prior written approval. Failure to do so will result in the H:\EWB\S0UTHE.D0C 6 9/ 19/2006 change order not being included in the 200 MGD Project unless and until written approval is received from the Participants. Change orders caused under Force Majeure or acts of terror shall be excluded from this provision. ARTICLE IV. MANAGEMENT AND ACCOUNTING FOR 200 MGD PROJECT COST Each Participant's contribution for the 200 MGD Project Cost shall be kept by the Managing Participant in an account with interest accruing to the benefit of each Participant at the Interest Rate until it is spent for the 200 MGD Project Costs. Funds from the account may be spent by the Managing Participant only for 200 MGD Project Costs. Within 90 days of the formal acceptance of the completed construction of the 200 MGD Project by the Managing Participant City Council, the Managing Participant Director shall cause an accounting to be made of the 200 MGD Project Cost. A copy of the accounting shall be delivered to each Participant within ten days after its completion. Additionally, within 30 days after completion of the accounting, the Managing Participant shall engage an independent certified public accounting firm from a selection of no more than three prequalified firms selected by the Operating Advisory Committee to audit the Managing Participant's accounting. As soon as the firm has completed the audit, the Managing Participant shall submit the audit to all Participants. The audit scope must be approved by the Operating Advisory Committee and, at a minimum, shall state the difference between the estimated 200 MGD Project Cost paid by each Participant, and each Participant's actual share of the 200 MGD Project Cost and must be in accordance with good accounting practices and principles. If a Participant's share of the 200 MGD Project Cost, as determined by the audit, is less than the share paid by the Participant of H \EWB\SOUTHE DOC 7 9/19/2006 the 200 MGD Project Cost, resulting in an overpayment by the Participant of its share, the Managing Participant shall refund such difference with interest accrued, at the Interest Rate compounded quarterly from the date deposited to the date of payment, to such Participant within 90 days of the date of the receipt of the audit. If a Participant's share of the 200 MGD Project Cost, as determined by the audit, is more than the share of the 200 MGD Project Cost paid by the Participant, resulting in an underpayment by such Participant of its share, the Participant shall pay such difference, with interest determined at the Interest Rate compounded quarterly from the date payment is required to the date of payment, to the Managing Participant within 90 days of the date of the receipt of the audit by the Participant. Any of the Participants who disagree with the audit shall have the right to pay any amounts under protest and seek refunds, plus reasonable attorneys fees and court costs, in a court of appropriate jurisdiction or pursue any other available remedy at law or in equity. If the Participant does not pay its underpayment within such 90 day period, the Managing Participant shall pay same and the Participant's Demand Allocation Factor shall be reduced, and the Managing Participant's Demand Allocation Factor shall be increased, to reflect the percentage deficit of the payment. The reduction in the Demand Allocation Factor shall be determined by dividing the amount owed by the amount previously paid, with the resulting percentage used to reduce the existing Demand Allocation Factor. ARTICLE V. SUBSTANTIAL COMPLETION When the Managing Participant Director gives the construction contractor notice of Substantial Completion for the 200 MGD Project, the Managing Participant shall notify each HAEW B\SOUTHE. DOC 8 9/ 19/2006 Participant Director within ten business days thereafter and designate a day for the initial operation of Plant at 200 MGD firm capacity. ARTICLE VI. ACCESS TO PLANT AND RECORDS The Managing Participant shall provide the Participants full access to the Plant and to the books and records of the Plant, including the 200 MGD Project, during all regular working hours, including all engineering reports, design specifications, change orders, correspondence, plant accounts, construction plan accounts or any other written document or instruction associated with or pertaining to the construction of the Plant and the 200 MGD Project. ARTICLE VII. UNTREATED WATER COSTS; CERTAIN AMENDMENTS REGARDING ANNUAL O&M BUDGET A. Participants that have increased their Demand Allocation (City of Friendswood, Clear Brook City Municipal Utility District, City of Pasadena, and Gulf Coast Water Authority) may pay the Managing Participant's standard contract rates for untreated water currently described in the City of Houston Code of Ordinances Section 47-85 as amended from time to time for "Other Project Water" produced by the 200 MGD Project (an "Other Project" is defined in Section 3.7 of the Restated Agreement). "Other Project Water" shall include all gallons in excess of 6022.5 million gallons per year taken by the Gulf Coast Water Authority, and all gallons in excess of 547.5 million gallons per year taken by the Clear Brook City Municipal Utility District, all gallons in excess of 8,577.5 million gallons per year taken by the City of Pasadena and all gallons in excess of 2,190 million gallons per year taken by the City of Friendswood. Payment H vEWB�SOUTHE.DOC 9 9/19/2006 of the Managing Participant's standard contract rates for untreated water shall be referenced herein as the "Other Projects Untreated Water Payment". Alternatively, each Participant that has increased its Demand Allocation may elect to pay an Existing Capital Charge, New Debt Service Expenses, and Untreated O&M Expenses (as explained below), in lieu of making Other Projects Untreated Water Payments. Such payments shall be referenced herein as "Other Projects Alternative Untreated Water Payments". Each Participant that will be increasing its Demand Allocation must give the Managing Participant notice of its payment election in writing by the Participant within 2 months of the effective date of this Amendment. In the event no election is made by the Participant, the provisions for the Other Projects Alternative Untreated Water Payments shall apply. Payments for the Participants that have increased their Demand Allocations and certain changes to their O&M Expense (Section 4.3 and Exhibits E" and " E" Pasadena) are as follows: OTHER PROJECTS ALTERNATIVE UNTREATED WATER PAYMENTS One Time Raw Water Capital Cost Payment Existing Capital: (A2/D2 x C) Contribution (To be paid 60 days after notice from the Managing Participant for the first delivery of water from the Plant expansion.) Changes made to O&M Expenses under Restated Agreement New Debt Service Expenses: (A2/DI x E) (for fiscal year) (To be paid monthly for debt issued for new untreated water facilities.) Untreated Water Same as provided in the Restated Agreement except O & M Expense: delete the `(A/E x D) x (I + H)' term and the `(I X ff term but add the term `(A1/D1 x B)' WEWB\SOUTHE.DOC 10 9/ 19/2006 (To be paid monthly beginning 30 days after delivery of water beginning on the date the Plant expansion begins delivery of water.) These New Debt Service Expenses and Untreated Water O & M Expense shall be paid and administered in accordance with procedures applicable to O & M Expense as provided in the Restated Agreement. OTHER PROJECTS UNTREATED WATER PAYMENTS For Participants who have selected the Other Projects Untreated Water Payments, O&M Expenses under the Restated Agreement shall be charged for the Other Projects Water they take by deleting the `(A/E x D) x (I + H)' term and the `(1 x F)' term, but add the term `(A, x R)' where R is the Managing Participants contract rate for untreated water. As used herein: "A," is the amount of treated water taken by a Participant during a fiscal year in excess of its Demand Allocation under the Restated Agreement. "A2" is 3,650 million gallons for the Gulf Coast Water Authority, 365 million gallons per year for the Clear Brook City Municipal Utility District, 6,022.5 million gallons per year for the City of Pasadena and 2,190 million gallons per year for the City of Friendswood. "B" means all costs and expenses incurred by the Managing Participant (whether incurred by the Managing Participant through its own staff or by independent contractors) for the maintenance and operation of the untreated water facilities during the fiscal year, including, (i) chemicals, labor, power, testing, permits, insurance, and other related costs, necessary for the efficient maintenance and operation of the untreated water facilities as required under the Restated Agreement and all applicable regulatory requirements and the preparation of costs of the annual audit; (ii) necessary repairs and replacements to the untreated water facilities; and (iii) H-\EWB\SOUTHE DOC 11 9/19/2006 improvements and betterments to maintain the untreated water facilities in proper operation and to comply with Restated Agreement and all applicable regulatory requirements. No cost to the Managing Participant's government not directly related to the maintenance and operation of the Untreated Water Facilities shall be included in factor `B". "C" is the outstanding debt for all existing untreated water facilities listed in Exhibit letter "I" adjusted for the calendar year preceding substantial completion, but excluding any debt payments for existing untreated water facilities for which Participant has paid a capital contribution. "DI" is the total amount of surface water sold to the Managing Participant's water customers during the fiscal year. As defined herein, D1 includes such raw water received at the Managing Participant water treatment plants as well as the billable quantity (including take -or - pay amounts as applicable) taken by the Managing Participant's untreated water customers, but excludes line loss by evaporation, leakage, etc. "D2" is the total amount of surface water sold to the Managing Participant's water customers during the Managing Participant's calendar year preceding substantial completion of the 200 MGD Project. As defined herein, D2 includes the untreated water received at the Managing Participant's water treatment plants as well as the billable quantity (including take -or - pay amounts as applicable) taken by the Managing Participant's raw water customers, but excludes line loss by evaporation, leakage, etc.. "E" is the annual debt service paid by the Managing Participant for all new untreated water facilities for each fiscal year. As used herein "new untreated water facilities "means untreated water facilities such as reservoirs, canals, pipelines and water rights that convey or H �EWB\SOUTHE.DOC 12 9/19/2006 store untreated water but are not listed in Exhibit "I" as well as improvements, repairs, or expenses for items listed on Exhibit "I", for which the Managing Participant issues new debt. B. Section 3.4 of the Restated Agreement is amended to read as follows: 3.4.1 The Managing Participant shall submit for review to all Participants, not later than 60 days prior to the beginning of the Managing Participant's fiscal year, an estimated Annual Budget consisting of various departmental components that constitute the O&M expenditures. The components are described in greater detail in Exhibits "E", "E Pasadena" and "E LaPorte Area Water Authority" (see Restated Agreement). The estimated Plant production will also be provided, along with the breakdown of the production per Participant. The estimated Annual Budget and the estimated Plant production will be used to calculate the annual estimated cost per thousand gallons for the ensuing fiscal year. The final Annual Budget will be submitted to the Participants when the Managing Participant's City Council approves its yearly budget. 3.4.2 A majority of Participants by weighted vote may object to any specific item of the Annual O&M Budget. However, if such item is necessary for regulatory compliance, health, safety or security, it shall be excluded from this provision and the Participants shall continue to make payments for such item as provided by the Annual O&M Budget presented by the Managing Participant (or such amended Budget acceptable to the Managing Participant and the majority of the Participants by weighted vote). If such item is not necessary for regulatory compliance, health, safety or security, the payment made for such item shall be the amount the Participants by majority weighted vote decide and shall continue while the Participants pursue dispute resolution procedures as described herein. HAEW MSOUTHE.DOC 13 9/ 19/2006 3.4.3 During the first month after the objection to items of the Annual O&M Budget, the Participants shall pursue the dispute resolution procedures found in Section 5.15 of the Restated Contract. 3.4.4 If the Participants are still at an impasse one month after the vote objecting to item of the Annual O&M Budget, the Managing Participant shall procure a mediator acceptable to a majority of the Participants by weighted vote. If the Participants reach no agreement after mediation, then the amounts established above shall continue for the remainder of the Budget year unless amended by the majority of Participants by weighted vote, including the Managing Participant. All Participants shall make payment to the mediator as an O&M Expense. 3.4.5 As used herein "weighted vote" means a system of voting under which each Participant's vote is weighted in proportion to the amount of water it has taken in the prior 12 months under the Restated Agreement. Thus, for example, if A has taken 10% of all the water taken under the Restated Agreement, A is entitled to 10% of the voting strength. For voting purposes, no Participant's shall count for more than 49% regardless of the amount of water taken. ARTICLE VIII. COSTS FOR WATER LINE UPGRADE OR REPLACEMENT It is anticipated that it will be necessary to replace one or more water lines joining the Treated Water Transmission Facilities to the points of delivery of many of the Participants due to an order of the Texas Department of Transportation that some of such facilities be removed from State right-of-way or easement or other upgrade/replacement of the lines. Costs for any such replacements, including the cost of real estate and right-of-way are the responsibility of the Participants using the affected water line, and the Managing Participant shall charge the H.\EWB\SOUTHE.DOC 14 9/ 19/2006 Participants for their share of costs of such facility based on each Participant's Distribution Allocation in such facility. Distribution Allocations under this Amendment for two of the lines are shown on Exhibit "G". Distribution Allocations for the Beamer Rd., the existing 42," the existing 24," and the 48" transmission lines are shown on Exhibit "J". The Managing Participant shall be responsible for constructing the replacement facility when it has secured adequate funding from the Participants. ARTICLE IX. INSURANCE Section 5.1.4 of the Restated Agreement is deleted. ARTICLE X. ENTIRE AGREEMENT The Restated Agreement and the Amendment are the entire agreement of the parties. In the event of any irreconcilable conflict between a provision of the Restated Agreement and this Amendment, the provision of this Amendment shall prevail to the extent of conflict only. The parties have executed this Amendment in multiple copies, each of which is an original. H \EWB\SOLITHE.DOC 15 9/19/2006 ATTEST/SEAL: THE CITY OF PASADENA B By: y 60 A, t'h-- N 1-6 UZ- Name: Nam . Title: C, 2 C-- TA 1Z I/ Title: M', Y c r)— H:\EWB\SOUTHE.DOC 22 9/19f2006 ATTEST/SEAL: By2e:NAcea �era Title: City Secretary Date: 08/10/2007 THE CITY OF SOUTH HOUSTON By: Name: oe Soto Title- Mayor Da Authorized: Date Executed: 08/08/2007 08/10/2007 NOTE: This Agreement is executed on the condition that the City of South Houston shall have 5.5 years (66 months), interest free, to pay the $261,000.00 detailed in Exhibits No. I & II. H:\E WB\SOUTHE.DOC 23 9/ 19/2006 ATTEST/SEAL: B. Name: �— Title: CITY OF NASSAU BAY By: s Name: Title: fOHN D. KcNNED CITY MAiyAGFR � CITY OF NASSAU 0 H `,EWB'SOUTHE UUC 16 9/19/2006 ATTEST/SEAL: GULF COAST WATER AUTHORITY By: N e: John W. Knust Name: W. W. Latimer Title: Board Secretary -Treasurer Title: Board 1President HAEWB\SOUTHE.DOC 17 9/19/2006 ATTEST/SEAL: By: Nan Tit]( CLEAR LAKE CITY WATER AUTHORITY By: Name: Title: H:Ew8\s0vTHE.fl0C 1-8 9/ 19/2006 ATTEST/SEAL: By. J,94 Name: w� 1 �'F� L Title: Se-c ,,G� r CLEAR BROOK CITY MUNICIPAL UTILITY DISTRICT --- By: -- Name: Title: HAE W B\SOUTHE. DOC 19 9/ 19/2006 AT' By: Name: Title: Steve Valerius President By: Name: Alton • Title: Mayor APPROVED AS TO FORM: Z: ;, �,7 By: Name: Knox W. Askins Title: City Attorney THE LAPORTE AREA WATER AUTHORITY By: Name: Chester Pool Title: Secretary CITY OF LAPORTE By: 4=06 -� r Name: Martha A. Gillett Title: City Secretary HAMMSOUTHE DOC 20 9/ 19/2006 ATTEST/SEAL: By: Name: Title: HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO.55 c By:r c u� Name: Title: HAEWMSOUTHE.DOC 21 9/19i2OO6 ATTEST/SEAL: By:.(2, Name: ;' Q j<L /,41.4�- Sal 3.c t-. Title: Ct �Zr ti� THE CITY OF WEBSTER By: Name: Title: J ati),-{ e. H:\EWB\SOUTHE DOC 24 9/ 19/2006 ATTEST/SEAL: THE CITY OF RIENDSWOOD B J-1 k tw Bar_ Deloris McKenzie, CMC bavid J.H. Smith City Secretary Mayor Date: 11/21/06 Date: 11/21/06 H:\EWB\SOUTHE.DOC 25 9/19/2006 ATTEST/SEAL: By: =--,�,,,.;1e Name: p,q v tr) .Z 1 u 6W-A Title: 5&6287/40-Y BAYBROOK MUNICIPAL UTILITY DISTRICT NO. I r" / By: �,��.,�cl / ( ( _ Name: P A V, i; A. C�v' iII A) Title: HA MSOUTHE.DOC 26 9/19/2006 z T/SEAL: City Secretary APPROVED: �c Director, Public Works and Engineering Department APPROVED AS TO FORM: Assistant City Att ey L.D. File No.(`) Z[OG��411� CITY OF HOUSTON, TEXAS Mayor IN COUNTERSIGNED BY: QAA City Controller DATE COUNTERSIGNED: H:'EWB'SOUTHE DOC 27 M9/2006 FORM 132.M (Approving/Authorizing) City of Houston, Texas Ordinance No. o?eW" /V7 AN ORDINANCE APPROVING AND AUTHORIZING AN AMENDMENT TO THE COST SHARING AGREEMENT FOR THE SOUTHEAST WATER PURIFICATION PLANT BETWEEN THE CITY OF HOUSTON AND THE GULF COAST WATER AUTHORITY, THE CLEAR LAKE CITY WATER AUTHORITY, THE CITY OF NASSAU BAY, THE CLEAR BROOK CITY MUNICIPAL UTILITY DISTRICT, THE LAPORT AREA WATER AUTHORITY, HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 55, THE CITY OF PASADENA, THE CITY OF SOUTH HOUSTON, THE CITY OF WEBSTER, THE CITY OF FRIENDSWOOD AND BAYBROOK MUNICIPAL UTILITY DISTRICT NO. 1; CONTAINING PROVISIONS RELATING TO THE SUBJECT; AND DECLARING AN EMERGENCY. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF HOUSTON, TEXAS: Section 1. The City Council 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 Houston. 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 Mayor is hereby authorized to take all actions necessary to effectuate the City's intent and objectives in approving such agreement, agreements or other undertaking described in the title of this ordinance, in the event of changed circumstances. Section 3. The City Attorney is hereby authorized to take all action necessary to enforce all legal obligations under said contract without further authorization from Council. Section 4. There exists a public emergency requiring that this Ordinance be passed finally on the date of its introduction as requested in writing by the Mayor; therefore, this Ordinance shall be passed finally on such date and shall take effect immediately upon its passage and approval by the Mayor; however, in the event that the Mayor fails to sign this Ordinance within five days after its passage and adoption, it shall take effect in accordance with Article VI, Section 6, Houston City Charter. PASSED AND ADOPTED this 16-1day of , 20�. APPROVED this day of 920 FORM 132.M (Approving/Authorizing) Mayor of the City of Houston, Texas Pursuant to Article VI, Section 6, Houston City er, the effective d to of the foregoing Ordinance is AUG 2 1 2907 City Secretary (Prepared by Legal Dept. (EWB ajj 07/31/2007) Assistant City torney (Requested by Michael S. Marcotte, Director, Public Works and Engineering Department) (L.D. File Nos.0800500059001-11) CAPTION PUBUSHED IN DAILY COURT REVIEW DATE. „_..;NG4-1-2007 -2- AYE NO MAYOR WHITE • • • • • • • • COUNCIL MEMBERS LAWRENCE AWNf JOHNSON CLUTiERBUCK EDWARDS ACIM WISEMAN d KHAN HOLM GARCIA ALVARADO BROWN LOVELL NORIEGA GREEN BERRY CAPTION ADOPTED MAY 017 cw_1AM ADDENDUM TO OPERATIONS AND MAINTENANCE FOR THE SOUTHEAST WATER PURIFICATION PLANT A. Operation and Maintenance Services by Managins Participant. During the Service Term, the Managing Participant shall provide full time management, operation and maintenance for the Plant by means of the Managing Participant's employees. The Managing Participant shall operate and maintain the Plant in accordance with Attachment A —O&M Scope of Services and all applicable federal and state laws, regulations and permits. B. Costs. Cost of Services shall be calculated as provided in 3.4 and Exhibits "E", "B Pasadena" and "E La Porte Area Water Authority", except: 1. Treated water will be produced at an electrical efficiency of no more than 1100 kilowatt hours per million gallons treated, determined on an annual basis. Participants will not be required to make payment for electrical costs, on a per million gallon basis, in excess of this maximum usage. Should the annual average usage exceed the specified efficiency, reimbursement will be made by the Managing Participant in the annual operations and maintenance cost true up. 2. Treated water will be produced at an efficiency determined by the maximum treatment chemical usages per million gallons treated specified below (list), as determined on an annual average basis: Ferric Sulfate — 300.0 lbs/MG Lime — 150 lbs/MG Caustic — 15 lbs/MG Polymer — 30 lbs/MG SApweshare\PLANSECi\Water Supply and Cost Sharing Contracts\Treated Water Supply Contracts\Southeast Plant\southeast expansion contract\operations addendum\ADMSEWP091206accepted.DOC 1 September 12. 2006 OA Fluoride — 30 lbs/MG (wet weight) Aqueous Ammonia — 5.0 lbs/MG (dry weight) Chlorine Ton Cylinder 30.0 lbs/MG (dry weight) Participants will not be required to make payment for treatment chemicals in excess of the specified maximum usages. Should an annual average usage exceed the specified maximum usage, reimbursement for that cost will be made by the Managing Participant in the annual operations and maintenance cost true up 3. The Managing Participant shall provide the draft Annual O&M Budget at least 30 days prior to the beginning of the Managing Participant's fiscal year. Exhibits "E", "E LaPorte" and "E Pasadena" are amended such that during the Service Term "Overhead Costs" shall include $600,000 for the Managing Participant management, support and other indirect costs, but there shall be no percentage payment for "Total Contracted Water Services." Each fiscal year the Managing Participant may adjust the Overhead Costs by increasing this amount by no more than the increase in the CPI Index for the previous fiscal year. "CPI Index" means the U.S. Consumer Price Index for all Urban Consumers for the Houston -Galveston Brazoria Texas Metropolitan Area. C. Fines and Liquidated Damages. Any fines imposed by the Texas Department of Health, TCEQ, EPA or any other state or federal agency for non -attainment of drinking water quality, effluent discharge violations, or improper handling and disposal of the sludge or waste materials shall be entirely paid by Managing Participant. SApweshare\PLANSECT\Water Supply and Cost Sharing Contracts\Treated Water Supply Contracts\Southeast Plant\southeast expansion contract\operations addendum\ADMSEWP091506accepted.DOC 2 September 15, 2006 3 In the event the Managing Participant believes the regulatory fine is unjustified because the excursion was caused by a Force Majeure or other reason, it is the Managing Participant's responsibility to contest the regulatory fine at its own expense. The Operating Advisory Committee may withhold from payment as liquidated damages amounts as shown in Attachment A, Table [1) — Treated Water Quality Standards for exceedances of the specified water quality performance standards. Provided, however, the Operating Advisory Committee shall not impose liquidated damages (i) if the raw water exceeds the limits shown in Attachment A, Table [2] — Raw Water Parameters, and the Managing Participant demonstrates "best efforts" for water treatment; or (ii) the Managing Participant demonstrates that the exceedance was due to a Force Majeure. (Each Participant shall be given credits for liquidated damages on the basis of its percentage share of total Demand Allocation in the Plant). D. Term. The Service Term shall begin June 1, 2006 and last for five years. The Service Term is automatically renewable for successive five-year terms unless either the Managing Participant Director or a majority of the Participant Directors gives six months' notice of non -renewal. In addition, Participants may terminate the Service Term, if they can secure another service provider that can provide the same operation and maintenance services as described herein for a lower cost than the Managing Participant and obtain a two-thirds majority of Participants in favor of hiring the new service provider. No costs for the procurement of such replacement service provider shall be assessed against the Managing Participant. Voting under this Section D shall be one vote for each Participant. Each Participant must show that the proper authority has approved its vote. The Managing Participant shall continue to S:\pweshare\PLANSECi Water Supply and Cost Sharing Contracts\Treated Water Supply Contracts\Southeast Plant\southeast expansion contract\operations addendum\ADM SEWP091206accepted.DOC 3 September 12. 2006 4 provide service under the service terms of this agreement until the contract for the new service provider is approved. E. Close -Out At the end of the Service Term, the Managing Participant shall return the Plant to its condition when Managing Participant commenced maintenance, less normal wear and tear during the Service Term. The Managing Participant shall ensure all equipment is fully operational in accordance with the manufacturer's equipment specifications. Managing Participant shall replenish inventory levels to the levels that existed at the time Managing Participant commenced its maintenance of the Plant. S:\pweshare\PLANSECT\Water Supply and Cost Sharing Contracts\Treated Water Supply Contracts\Southeast Plant\southeast expansion contract\operations addendum\ADMSEWP091206accepted.DOC 4 September 12. 2006 ATTACHMENT A O&M SCOPE OF SERVICES 1. General Requirements The Managing Participant shall operate and maintain (O&M) the Treatment Facility and Water Facilities to ensure the ability to treat water up to the design capacity of the plant in compliance with all applicable laws and regulation. As described below, the Managing Participant shall be responsible for all aspects of operation and maintenance, including providing all labor, materials, and utilities necessary to treat up to the maximum design capacity of water daily. The amount of water treated by the Managing Participant shall be determined by the custody transfer flow meters located at the High Service Pump Station, as adjusted for in -plant uses (plant potable water - PPW) through flow meters FMT5101 and FMT 5102. The Managing Participant will assume the status of "generator," and will be responsible for the ultimate disposal of all sludge and waste residuals resulting from the contract activities. In addition, any lubricants or bulk chemicals proposed to be utilized at the Treatment Facility must comply with ANSI/NSF Standards 61 and 60, respectively. 2. Performance Standards The Managing Participant shall be responsible for meeting the following performance standards: • Meeting the Water Quality Performance Standards set forth in Schedule 1 of this Scope of Services. • Performing all of the Managing Participant's obligations as set forth in this Scope of Services. • Performing all related preventive maintenance in accordance with prudent industry standards. 3. Description of Managing Participant Responsibilities The Managing Participant shall operate and maintain the Treatment Facility in accordance with all Applicable Law, the Scope of Services and Schedules 1 through 8 of this Attachment, and the Cost Sharing Agreement. The Managing Participant is required to provide all necessary corrective, preventative and predictive maintenance at the Treatment Facility and Water Facilities. The Managing Participant shall, at a minimum, perform the following preventative maintenance: (i) as required by the manufacturer of the equipment; and (ii) generally accepted engineering, operational and maintenance practices for a facility of this size, type and age. The Managing Participant accepts without limitation the Treatment Facility in "as is" condition. During the Service Term of the Cost Sharing Agreement, the Managing Participant shall be responsible for the operation and maintenance of the Treatment Facility. This will include providing the staff and materials necessary to ensure that the Treatment Facility is capable of and can produce up to the design capacity of water, 365 days per year. SApweshare\PLANSECT\Water Supply and Cost Sharing Contracts\Treated Water Supply Contracts\Southeast Plant\southeast expansion contract\operations addendum\ADMSEWP091506accepted.DOC 5 September 15, 2006 ATTACHMENT A O&M SCOPE OF SERVICES 3.1 Transition Services Upon receiving a notice to proceed, the Managing Participant shall implement a transition plan to begin to assume responsibility for the Treatment Facility. These transition services are intended to ensure that the Managing Participant is fully able to commence operations of the Treatment Facility on June 1, 2006. This shall include: • Recruiting staff necessary to fill all positions required by the City of Houston Public Utility's staffing plan, • Monitoring plant operations for at least 21 days on multiple shifts prior to assuming operational responsibility; • Utilize the existing computerized maintenance management system that incorporates the specifications and requirements described in Section 3.3 below. • Updating within sixty (60) days of the effective start date the Emergency Response Plan and a Risk Management Plan. • Conducting an inventory and the quantities of materials, supplies, fuel and other consumables on site at the time service commences. 3.2 Operation The Managing Participant will operate the Treatment Facility to ensure that it treats up to the plant design capacity of water each day as needed to supply sufficient flow and pressure to the OAC members. The Treatment Facility shall be operated in accordance with the Cost Sharing Agreement and attached Schedule 1. Operational decision making will reflect the following minimum objectives: • Protecting public health and welfare; • Protecting the health and safety of the plant operating staff; • Complying with all applicable laws, rules, regulations and ordinances, including without limitation, City, State, and Federal water quality and supply requirements and safety requirements; • Protecting the environment; • Protecting and preserving the plant equipment and facilities; and • Maximizing plant operational efficiency and minimization of operating costs. The Managing Participant shall develop and implement procedures to ensure attainment of these goals. The Managing Participant shall comply with the Water Quality Performance Standards set forth in Schedule 1. 6 9/ 15/2006 ATTACHMENT A O&M SCOPE OF SERVICES The City of Houston Public Utility's responsibilities include, but are not necessarily limited to: • Treating raw water and distributing potable water to the Co -Participants and the City of Houston distribution system in response to their demand requirements, in conformance to all applicable laws and the Cost Sharing Agreement; • Providing a Texas Class "A" licensed Water Operator who will be in charge of the operation of the Treatment Facility. This operator will be a full-time employee dedicated solely to the Treatment Facility and will also be responsible during evening call -outs. • Staffing the Treatment Facility in accordance with the City of Houston Public Utility's proposed staffing plan and at a minimum consistent with the requirements of the State of Texas. This shall include at least one Texas Class "B" licensed Surface Water Operator or higher onsite during each shift. • Providing all materials, both durable and consumable, and supplies necessary to operate and maintain the Water Facilities, including but not limited to chemicals, utilities, residuals management, rolling stock, and consumables. The payment for all such items is described in the Cost Sharing Agreement; • Maintaining: 1) a minimum water level in the ground storage tanks to satisfy all regulatory requirements; 2) discharge pressures from the Treatment Facility to meet all regulatory requirements; and 3) a goal of a minimum delivery point pressure of 35 psig at each Co - participant's delivery point. • Add additional chemicals as needed to address periodic water quality problems; • Obtain laboratory services to ensure compliance with all applicable law and to monitor and manage the treatment process. The Managing Participant will develop and implement an appropriate QA/QC plan for all such work • The Managing Participant will be responsible for maintaining the lagoon in a condition such that it can be used for its intended purpose. Maintenance of the lagoon facility includes maintenance of all side slopes and removal of all rooted vegetation. The Managing Participant will be responsible for the proper handling and disposal of all materials removed from the lagoon. • The Managing Participant is responsible for operating and maintaining the on -site monofill in compliance with the operating plan contained in the Permit Application and Site Development Plan for the Southeast Water Purification Plant Onsite Sludge Disposal Area, dated February 1992 and submitted to the Texas Department of Health as well as the current operating permit Number 03523. Furthermore, the Managing Participant will be responsible for maintaining the side slopes, vehicle road ramp as well as the paved road and sludge processing area. The Managing Participant will be responsible for pest and fire ant control at the sludge lagoon and monofill. 9/ 12/2006 ATTACHMENT A O&M SCOPE OF SERVICES • Responding immediately to emergency or disaster situations in a manner equal to or better than existing plans, and in accordance with the current "Emergency Operations Plan of the Department of Public Works and Engineering" and the approved Emergency Response and Risk Management plans. • Providing emergency repair services to the Water Facilities and related infrastructure. This may include repairing main breaks and valves between the Treatment Facility and the points of delivery to each co -participant. The Managing Participant may subcontract that work to qualified firms, if deemed necessary. The Managing Participant may use its own labor to make the repairs. • Conducting preventive maintenance on the Co -Participant delivery point locations including: maintaining fencing and security; grounds maintenance; and maintaining the valve vault, the flow control valves and the flow and pressure transmitters to the Treatment Facility when construction has been completed. The Managing Participant shall be responsible for the operation, maintenance and calibration of the flow control devices and the flow and pressure transmitters that transmit signals to the Treatment Facility. The Managing Participant shall be responsible for the operation, maintenance and calibration of the Co -Participant flow meters and flow transmitters that transmit signals to the City of Houston water billing department; • Maintaining professional responsible working relationships with the Co -participants, regulatory authorities, material and service vendors, the media and the public. • Providing and maintaining adequate security at all Treatment Facility facilities, systems, buildings, plants and equipment which is inside the fence line. • Providing unrestricted access by the Co -participants to the Water Facilities to observe operations and evaluate the condition of said facility. This will include allowing the Co - participants to test and audit the performance of the equipment at Water Facilities. 3.3 Maintenance The Managing Participant shall be responsible for all aspects of maintenance at the Water Facilities, including corrective, preventative, and predictive maintenance. This may include emergency repairs at the Water Facilities sites or to the mains and point of service connections, replacement of certain equipment and capital improvements. The Managing Participant shall use its professional judgement in determining what additional maintenance is appropriate and necessary. The Managing Participant will be required to implement maintenance procedures to ensure attainment of the objectives set forth in this Scope of Services. This includes, at a minimum, responding to corrective maintenance needs in a timely and appropriate manner. The Managing Participant shall provide necessary corrective, preventative and predictive maintenance for all systems, structures and equipment at the plant. In addition, the Managing Participant shall: 8 9/ 12/2006 ATTACHMENT A O&M SCOPE OF SERVICES • Perform all necessary preventive maintenance on installed cathodic protection at the Treatment Facility. All needed repairs must be made to ensure the integrity and operability of the system. • Inspect annually all tanks and piping systems, including the ground storage tanks and clear well. Piping that is equipped with heat tracing shall be inspected prior to winter conditions, and repaired as necessary. • Inspect annually, at a minimum, tank level indicators, including the two ground storage tanks, and calibrate and adjust the level indicator as necessary. • Perform preventative maintenance on the 138 KV Substation, High and Medium Voltage Equipment as required by standard industry practice. • Perform maintenance on all chlorine feed systems, including relief -valves, evaporators, and vacuum regulators on a bi-annual basis, per manufacturer's specifications. This shall include complete disassembly of the units and repair or replacement as necessary. • Perform maintenance on flexible metal tubing used to connect chlorine supply cylinders to piping systems, according to manufacturer's and the Chlorine Institute's specifications, and replace on an annual basis or sooner if needed. • Perform annual vibration analysis testing of critical mechanical equipment. The Managing Participant shall perform interpretation and analysis of test results and submit an evaluative written report in an approved format to the OAC, including necessary ,action plans. The Managing Participant shall promptly address any deficiencies identified in the testing report. • Perform annual oil sampling of critical mechanical equipment. The Managing Participant shall perform interpretation and analysis of test results. The Managing Participant shall promptly address any deficiencies identified in the testing report. • Inspect, maintain and test all backflow preventers within the Water facilities operated or maintained by the Managing Participant in accordance with Texas Commission on Environmental Quality (TCEQ) requirements, and at least annually perform calibration and testing. • Perform maintenance on the on -site City of Pasadena Metering Station, which shall include all valves and flow meters. • Touch up paint on any equipment or facilities as needed to minimize corrosion and maximize service life. • Maintain the Sludge Lagoon and monofill free from excessive vegetation and overgrowth. The side slopes of the monofill will be maintained for stability and to prevent erosion. 9 9/ 12/2006 ATTACHMENT A O&M SCOPE OF SERVICES • Conduct annual infrared inspections of all motor control centers, transformers and motor connections greater than 60 hp. • Perform periodic calibration of instruments in accordance with manufacturer's recommended procedures. • Repair expansion joints to maintain integrity of concrete structures and prevent leaks. • Operate, maintain and calibrate, or arrange for the operation, maintenance and calibration of the High Service Pump Station discharge custody transfer flow meters and the two in- plant potable water (PPW) flow meters FMT5101 and FMT 5102; and • Operate, maintain and calibrate, or arrange for the operation, maintenance and calibration of the off -site Co -Participant's flow meters and the flow transmitters that transmit signals to the City of Houston's water billing department. The Managing Participant shall be responsible for the operation, maintenance and calibration of the flow control devices and the flow and pressure transmitters that transmit signals to the Treatment Facility. • The Managing Participant will be responsible for maintaining the physical facilities of the Treatment Facility. This will include at a minimum: • All spare parts, materials and supplies shall be stored in an orderly manner; • Regular pest control including fire ant control; • As needed pest control for capture and removal of wild hogs and any other pest animals which may cause destruction of property or endanger treatment processes; • Repair of all plumbing and piping leaks and failures; • External cleaning, such as pressure washing of the ground storage tanks and similar facilities as needed; • Walls will be cleaned and touch up paint applied as necessary • Tile walls will be washed as needed; • Repair of cracks or spauled concrete and expansion joints; • Railroad track beds and fence lines will be treated with herbicides as necessary to prevent weed growth; • Weed control will be performed in paved areas to keep cracks and joints clear of vegetation; 10 9/ 12/2006 ATTACHMENT A O&M SCOPE OF SERVICES • Grass and landscaped areas will be maintained in an attractive, neat manner, which may be used for open houses and plant tours. For purposes of this section, maintenance of the ditch along the southerly side of the property, outside the fence is included; • Grass will be mowed as needed during the growing season from April through November 15thof each year; and • Grass will be mowed and weed control will be performed on a regular basis at the Co - Participant delivery point locations. 3.4 Reporting Requirements All reports and data shall also be saved in electronic format. The reports at a minimum shall include: • A monthly operations report summarizing daily raw water quality, finished water quality, staffing changes, chemical and utility usage, maintenance activities, (summary of preventative maintenance projects started, completed, backlogged, corrective maintenance activities undertaken), sludge production, sludge disposal locations and such other information appropriate for the OAC to understand performance, operations and maintenance at the Treatment Facility. Sludge that is taken off -site must be disposed of at facilities that are properly operated and licensed by the State to accept such sludge. Sludge disposal manifests must be maintained on -site during the entire period of this Agreement. • Monthly list of the warranty status of any warranties for components purchased and installed by the Managing Participant or a third party. • A monthly report of the actual chemical purchases and invoiced amounts for any chemicals utilized at the Water Facilities. • Quarterly report summarizing maintenance activities completed in the last quarter and scheduled to be undertaken for the upcoming quarter. This should also include proposed repair and replacement projects. • Annual report summarizing the operations over the previous year, major issues moving into the upcoming year, including but not limited to recommended modifications or improvements to the facility, anticipated modifications enhancements to maintenance procedures. • Any reports required of water producers under applicable law. • Any reports requested by the OAC to verify operation and maintenance issues, or document special circumstances. 11 9/12/2006 ATTACHMENT A O&M SCOPE OF SERVICES SCHEDULEI Treated Water Quality Performance Standards PURPOSE The purpose of this schedule is to identify the Treated Water Quality Performance Standards that the Managing Participant is required to meet. WATER TREATMENT REQUIREMENTS All analytical methods used to demonstrate compliance shall be according to approved methods by EPA. In the event that a particular parameter does not have a method approved by EPA, methods currently accepted by the industry shall be used. The Managing Participant shall operate the SEW PP in such a manner that the SEW PP will produce Treated Water that is in compliance with all applicable laws, rules and regulations. The requirements were developed to maintain consistency with current internal requirements, minimize public health risks, allow for flexibility to meet future regulations and eliminate or reduce the need for major modifications to the SEWPP in the near future. SAMPLING AND ANALYSIS The Managing Participant will ensure performance of all sampling, analysis and record keeping required by USEPA and the TCEQ. Managing Participant will be responsible for all monitoring, up to and including the point of entry into the distribution system. USEPA and TCEQ approved laboratory procedures will be followed. 2. For any analytical laboratory work performed at an outside or offsite laboratory, the Managing Participant shall use an approved testing laboratory. 3. The Managing Participant will be responsible for compliance with all currently effective monitoring requirements as well as those becoming effective during the Service Term of the Cost Sharing Agreement. The Managing Participant will perform other tests for process control as necessary. 12 9/ 12/2006 ATTACHMENT A O&M SCOPE OF SERVICES SCHEDULEI Treated Water Quality Performance Standards 4. Compliance monitoring parameters which are currently effective and required at the SEWPP (Entry Point 002 in PWS ID No. 1010013) include the list of samples and analyses outlined in a document titled, "Drinking Water Samples to be collected by the TCEQ in 2000," These samples are collected and analyzed by TCEQ personnel. The Managing Participant will be responsible for all labor costs associated with annual compliance monitoring. 5. Also included in the current required monitoring are all parameters associated with the Surface Water Treatment Rule (SWTR). 6. Current TCEQ approved T,o values, shall be used when calculating the CT value. 7. Managing Participant is responsible for all costs associated with the sampling, analysis, report completion and submission. 8. Lead and Copper Rule compliance monitoring at the SEWPP includes bi-weekly monitoring and reporting of the following Water Quality Parameters at the point of entry into the distribution system. The lead and copper rule related water quality parameter report is to be completed by the 10th day of the month following the quarterly reporting period. a. Alkalinity as CaCO3 b. pH c. Calcium as Ca d. Conductivity e. Temperature 9. Radionuclides are sampled by TCEQ every four (4) years at each point of entry on a quarterly schedule. The SEWPP will be sampled during a total of eight (8) quarters in two (2) different years during the Service Term of the Cost Sharing Agreement. These analyses include: a. Gross Alpha b. Total Radium c. Radium 226 d. Radium 228 e. Total Uranium f. Gross Beta 13 9/ 3 2/2006 ATTACHMENT A O&M SCOPE OF SERVICES SCHEDULE 1 Treated Water Quality Performance Standards 10. In addition to all other compliance related monitoring, the Managing Participant will be responsible for the following analyses of record. Analysis/Report Frequency 1. Complete chemical analysis report Biweekly 2. Heterotrophic plate counts at each process through distribution: A. Settled B. Filtered C. Distribution (see Table 1 — Item 15 for limits) D. Raw 3. Total Coliform Counts A. Raw B. Settled C. Filtered D. Distribution (see Table 1 — Item 14 for limits) 4. Giardia and Cryptospordium A. Raw B. Distribution (see Table 1 — Items 27 and 28 for limits) 5. Algae Counts and Enumeration A. Raw B. Distribution (see Table 1 — Item 24 for limits) 6. Trihalomethanes A. Distribution 7. Trihaloacetic Acids (HAA6) (see Table 1 — Item 26 for limits) A. Distribution Weekly Weekly Daily Daily Daily Weekly Weekly Daily Monthly Biweekly Biweekly Biweekly 14 9/ 1212006 ATTACHMENT A O&M SCOPE OF SERVICES SCHEDULE 1 Treated Water Qualitv Performance Standards 11. Process control monitoring will be performed by Managing Participantat a minimum of the following grab sample tests and frequencies. Parameter/Location Frequency 1. pH Every 4 hours A. Raw (Once/day) B. Settled C. Filtered D. Distribution (see Table 1 — Item 18 for limits) 2. Turbidity: Every 4 hours A. Raw (Once/day) B. Settled (see Table 1 — Item 3 for limits) C. Clearwell (see Table 1 — item 1 for limits) D. Individual Filters (see Table 1 — Item 2 for limits) 3. Alkalinity Daily A. Raw B. Settled C. Filtered D. Distribution 4. Jar Tests Weekly Using D/DBP protocol to establish diminishing returns for TOC. 5. T.O.N. Daily, Mon -Fri A. Raw B. Distribution (see Table 1 — Item 30 for limits) 6. Hardness Daily A. Raw B. Settled C. Filtered D. Distribution 7. True Color (City of Houston Method) Daily A. Raw B. Settled C. Filtered D. Distribution (see Table 1 — Item 31 for limits) 15 9/ 12/2006 ATTACHMENT A O&M SCOPE OF SERVICES Parameter/Location Frequency 8. Fluoride Daily A. Distribution (see Table 1 — Item 21 for limits) 9. Filter Profile (Each filter element) Weekly 10. Chloride Daily A. Raw B. Distribution 11. Calcium Daily A. Raw B. Distribution 12. Ammonia Daily A. Raw -Total B. Distribution — Free (see Table 1 — Item 28 for limits) 13. Chlorine Residual — Free and Total Every 4 hours A. Raw B. Settled C. Filtered D. Distribution (see Table 1 — Item 13 for limits) 16 9/ 12/2006 ATTACHMENT A O&M SCOPE OF SERVICES TABLE 1 - TREATED WATER QUALITY STANDARDS Water Treatment Water treatment Performance Monitoring and Standard Subject Reporting to Liquidated Requirement Subject Reporting Damages up to a to Liquidated Frequency or Maximum of Damages up to a Point of Monitoring Reason Data Monitoring $10,000Iday Total Maximum of Parameter Compliance Value 1 Frequency Needed Responsibility $1,000/day Total 1. Turbidity Clearwell Less than 0.100 NTU, more Continuously 15 minute Certified than 95% of the 15 minute interval Operator X intervals. Less than 0.300 NTU readings, report 100% of the time. daily 2. Turbidity Individual filter Less than 0.100 NTU more Continuously 15 minute Certified X effluent lines than 95% of the 15 minute intervals Operator intervals, less than 0.300 NTU 100% of the time. 3. Turbidity Individual filter A maximum of 0.300 NTU spike Within 15 Intervals not Certified X effluent lines following a filter backwash and minutes exceeding one Operator recovery to less than 0.100 following a minute, report NTU within 15 minutes from filter daily initiating filter operations backwash and recovery 4. Turbidity Sedimentation Daily average of less than 2.00 4 hour Daily Average Certified X Basin effluents NTU at all times for the intervals Report Operator combined basin effluent 5. Giardia and High Service Surface Water Treatment Rule Daily Daily for Certified X virus Pump Station requires a total of 3 log Giardia demonstration Operator inactivation discharge and virus (4 log) of CT removaltinactivation compliance for each parameter Provide a minimum of .5 log Daily Giardia and a 2-log virus inactivation using disinfectant residual 6. Temperature Raw Water Degrees C Daily Lowest value Certified X each day for Operator CT calculation 17 9/ 12/2006 ATTACHMENT A O&M SCOPE OF SERVICES Water Treatment Water treatment Performance Monitoring and Standard Subject Reporting to Liquidated Requirement Subject Reporting Damages up to a to Liquidated Frequency or Maximum of Damages up to a Point of Monitoring Reason Data Monitoring $10,000/day Total Maximum of Parameter Compliance Value 1 Frequencv Needed Responsibility $1,000/day Total 7. Peak Hour Flow High Service Pump MGD Daily Highest value Certified x Station each day for Operator discharge CT calculation 8. Disinfectant Each Disinfection Report Continuous Lowest value Certified x residual each day for Operator Zone CT calculation 9. TOC- Raw Water Prior to Report Monthly Enhanced TCEQ x chemical coagulation Approved addition compliance Laboratory 10, TOC- Raw Water Influent to Treatment Report Weekly Enhanced TCEQ x coagulation Approved Module compliance Laboratory 11. TOC- Treated Water High Service Report Monthly Enhanced TCEQ x Pump Station coagulation Approved Discharge compliance Laboratory 12. TOC- Treated High Service Report Weekly, Enhanced TCEQ Water Pump Station Actual Plant coagulation Approved X Discharge compliance Laborato 13. Chlorine Residual High Service 2.50 mg/I (minimum) to 3.90 Continuous Grab samples Certified X Pump Station mg/I (maximum), +/-0.10 mgll as specified Daily Operator Combined discharge and sufficient concentration to by Owner meet CT requirements of the Surface Water Treatment Rule (SWTR). Owner will have the option to specify a free residual of up to 3.50 mg/L on an intermittent basis under emergency conditions to address microbiological problems in the transmission and distribution system or in response to treatment process needs 18 9/12/2006 ATTACHMENT A O&M SCOPE OF SERVICES 14. Total Col form High Service Not detected 100% of time. In Daily Daily based on TCEQ x Pump Station compliance when sample result grab samples approved discharge is negative. If initial test is laboratory positive, in compliance when confirmation test is negative. 15. Hetrotrophic High Service Less than 25 colony forming Daily TCEQ x Plate Count Pump Station units; R2A; 5 days, 26 degree approved (HPC) discharge C; or other method approved by laboratory Owner 16.Fecal Coliform High Service Not detected 100% of time. In Daily Daily based on TCEQ x Pump Station compliance when sample result grab samples approved discharge is negative. If initial test is laboratory positive, in compliance when confirmation test is negative. 17. pH High Service Maintain pH greater than 0.00 Continuously Daily Certified x Pump Station to 0.20 + Stability pH (pHs) not Operator discharge exceeding a pH of 8.60. 18.pH High Service Report Daily Daily grab Certified x Pump Station samples Operator dischar e 19.Alkalinity High Service See Langelier Index Daily Daily Certified x Pump Station requirements Operator discharge 20. Manganese High Service Less than 0.050 mg/L Once Per Once Per TCEQ x Pump Station Month Month approved discharge laboratory 21. Iron High Service Less than 0.200 mg/L Once Per Once Per TCEQ x Pump Station Month Month approved discharge laboratory 22. Fluoride Clearwell 0.850 +l-0.100 mg/L Continuous Once per day Certified x Operator 23. Arsenic Raw Water Report Monthly Monthly TCEQ X approved High Service Report Monthly Monthly laboratory x Pump Station discharge 24. TTHMs High Service Less than 64.0 ug/L daily max. Twice per Twice per TCEQ x Pump Station month month approved discharge I laborato 19 10/ 11 /2006 ATTACHMENT A O&M SCOPE OF SERVICES 25. HAAs High Service Less than 48.0 ug/L daily max. Twice per Twice per TCEQ x Pump Station month month approved discharge laboratory 26. Giardia (2) High Service Report Monthly Monthly grab EPA Method x Pump Station samples 1623 or most discharge current method 27.Crytospoddium High Service Report Monthly Monthly grab EPA Method x (2) Pump Station samples 1623 or most discharge current method 28. Free Ammonia Plant Influent Report Daily Reported daily Certified X Operator High Service No more than a 0.500 mg/L as Daily Reported daily x Pump Station N increase over plant influent discharge value 29. Nitrite Plant Influent Report Twice a Twice a month Certified x month Operator High Service No more than a 0.500 mg/L Twice a Twice a month x Pump Station increase over plant influent month dischar a value 30. Threshold High Service Less than 2.0 T.O.N.100% of Daily during Daily during Certified X Odor Number Pump Station time odor event odor event, Operator discharge otherwise otherwise Weekly Weekly 31. True Color High Service Less than 5.0 Pt Co Units Daily Daily Certified X Pump Station 100% of the time Operator discharge (1) Absence of data to demonstrate compliance with these requirements shall be assumed to be non-compliance unless Managing Participant can demonstrate that the performance was met and that every reasonable effort has been made to maintain and/or restore the collection of data. (2) Sufficient sample must be analyzed to ensure laboratory achieves detection limit below any current or future regulatory trigger. Analysis procedures shall meet the following criteria: 1. Analysis for Cryptosporidium to be completed by a method and laboratory approved by the U.S. EPA and City of Houston. Note: TOC analysis method with a detection limit of 0.5 mg/I. 20 10/11/2006 ATTACHMENT A O&M SCOPE OF SERVICES SCHEDULE 1 Treated Water Quality Performance Standards TABLE 2 RAW WATER QUALITY TREATMENT PARAMETERS' Parameter Minimum Value Maximum Value Turbidity - NTU 1 120 Alkalinity - m as CaCO3 60 150 Hardness - mgA as CaCO3 60 150 H - pH scale 7.0 8.5 Chloride - m 60.0 10.0 Temperature - oC 5 35 Fluoride - m 0.1 1.2 Calcium - mStL as Ca 10.0 55.0 Magnesium - m 1.0 6.0 UV,% nm - cm-1 <0.01 0.60 Color - co- t unit 1 40 Conductivity - umhos/cm 100 500 Total Iron m <0.03 3.0 Sodium - m 5.0 50.0 Potassium - m 1.0 6.0 Total Manganese - m <0.01 0.30 Total Iron - m <0.03 2.50 Bromide - m <0.01 0.30 Total Organic Carbon - m 1.0 15 Total Dissolved Solids (Calc.) - m 100 350 Sulfate - m 2 50 Nitrate (N) - m 0 2 Total Phosphate (P) - m <0.01 1.5 Notes: 1. Any raw water quality parameter not listed in this table must be demonstrated at the City of Houston Public Utility's expense to result in a condition such that the Treatment Facility is not capable, despite "best efforts", including but not limited to addition of chemicals, of meeting one or more of the water quality standards specified in Table 1. 2. These values are provided only for the purposes of determining whether credits shall apply for exceedance of any water quality performance standard described in Table 1. 21 10/ 11 /2006 EXHIBIT C1 (200 mgd ) SCHEDULE OF ACTUAL AND ESTIMATED COSTS FOR PLANT Enhancements (existing 120 Total New Firm 200 MGD I mgd capacity only) ( Construction SEWPP Expansion Costs New Construction Existing Facilities New Construction Existing Facilities Enhancements 200 mgd 80 mgd Expansion Enhancements 120 mgd Total Forebay $ 623,086 $ (623,086) Existing Raw Water Modifications $ 533,997 $ 800,996 $ 1,334,993 $1,334,993 $1,334,993 New Raw Water Pipeline 1,269,163 $ - 1,269,163 1,269,163 1,269,163 TM No 1 & Lift Stations 1 & 2 $1,189,491 1,189,491 1,189,491 1,189,491 Treatment Module #2 17,269,339 17,269,339 17,269,339 17,269,339 Chemical Feed Facility (Disinfection) 12,996,804 258,661 - (258,661) 12,996,804 12,996,804 12,996,804 New Ground Storage Tank 8,773,994 8,773,994 8,773,994 0 8,773,994 Existing Ground Storage Tank Modifications 2,946,173 2,946,173 - 2,946,173 2,946,173 Filtration/Clearwell & Filter Complex 10,533,623 - 10,533,623 10,533,623 10,533,623 New Transfer Pump Station No. 2 10,578,790 - 10,578,790 10,578,790 - 10,578,790 Transfer Pump Station No. 1 Modifications 124,458 124,458 124,458 124,458 High Service Pump Station (Exh Di) - - - - Clarifier 192.729 (192,729) Backwash Waste Pump System 2,874,527 0 2,874,527 2,874,527 2,874,527 Sludge Processing Facility 2,011,677 249,437 (249,437) 2,011,677 2,011,677 2,011,677 Overflow Basin & Sludge Lagoon - 824,135 - (824,135) Generator Installation 203,986 305,978 509,964 509,964 509,964 Plant Security 3,346,004 5,019,006 8,365,009 8,365,009 8,365,009 Fire Alarm System - 752,197 752,197 752,197 752,197 Operations Building & Electrical Subs - 2,544,906 - (2,544,906) Control/Electrical Comples (Architectt 4,343,486 4,343,486 4,343,486 - 4,343,486 Instrumentation and Controls 2,559,669 2:559,669 2,559,669 2,559,669 Subtotal $78,484,5501 $4,692,9541 $9,948,808 �$4,692,954 $88,433,358 $10,209,966 $74,400,564 $3,822,828 $88,433,358 Diane%27s%20Summary_90%25%20Modified_No%20UV_Rev3%20082906(1).xls EXHIBIT C1 (200 mgd ) SCHEDULE OF ACTUAL AND ESTIMATED COSTS FOR PL ANT Enhancements (existing 120 Total New Firm 200 MGD mgd capacity only) Construction SEW PP Expansion Costs New Construction Existing Facilities New Construction Existing Facilities Enhancements 200 mgd 80 mgd Expansion Enhancements 120 mgd Total Engineering _ Cost Allocation Analysis Storm Sewer System Hydraulic AnE Facility Expansion Evaluation Programming O&M Training $292,674 49,815 390,500 900,000 $37,100 6,315 - 300,000 $329,774 56130 390:500 1,200,000 $38,074 6,480 - 1 $277,445 47,223 390,500 900,000 _ $14,256 2,426 - 300,000 $329,774 56,130 390,500 1,200,000 _ Regulatory Issues _ UVT Testing _ _ CT Analysis CFD Modeling (GST's & UV Inlet) Geotechnical Surveying Stormwater Pollution Prevention Technical Review Committee UV Pilot Testing Filter Pilot Testing Air Stripping for pH Wetlands Delineation Electrical Services Pump Station Surge Model 27,186 45,696 131,339 80,157 20,471 21,300 7,455 223,500 155,312 21,032 370,500 - 5,792 - - 2,700 945 - 19,688 - 27,186 51,488 131,339 80,157 20,471 24,000 8,400 223,500 175,000 21,032 370,500 5,944 - 2,771 970 20,204 - 27,186 43,318 131,339 80,157 20,471 20,192 7,067 223,500 147,231 21,032 370,500 - - 2,226 - 1,037 363 7,565 - 27,186 51,488 131,339 80,157 20,471 24,000 8,400 223,500 175,000 21,032 370,500 Co -Participant Flow Control Valve Sludge Disposal Site Bid -Document Reproduction Tracer CT Study Record Drawings - - Balance of Amendment #2 - Basic Balance of Amendment #2 - Additio Phase I Preliminary Design Phase I Final Design Balance of Amendment #1 - Basic Lab Tests, Legal, City Const Mgt. Construction Management (Estimate) 355,000 1,030,637 1,886,362 3,699,767 2,123,045 7,063,610 5,324,996 45,000 130,645 239,118 468,988 269,120 895,393 675,004 400,000 1,161,282 2125480 4:168:755 2392,165 7:959,002 6,000,000 46,182 134,074 245,395 481,299 276,185 918,897 692,723 336,527 977,007 1,788,204 3,507,248 2,012,571 6,696,051 5,047,907 17,291 50,200 91,881 180,208 103,409 344,055 259,370 400,000 1,161.282 2,125,480 4,168,755 2,392,165 7,959,002 6,000,000 $24,220,355 $3,695,806 $27,316,161 $2,869,197 $23,072,676 $1,374,288 $27,316,161 Subtotal Construction + Engineering Additional Capital Allocations Recoupmeni Retroactive CWA Debt Service (Exhibit C $ 102,704,905 3,009,957 - $ 4,692,954 $ 13,044,614 $ (4,692,954) $ 115,749,519 3,009,957 _ Total rapacity per Component most per Gallon - Construction and Engine most per Gallon - Recoupment $ 105,714,862 80,000,000 $ 4,692,954 80,000,000 $ 13,044,614 120,000,000 $ (4,692,954) 120,000,000 $ 118,759,476 $ 13,079,163 $ 97,473,240 $ 5,197,116 $ 115,749,519 $ 1.2838 $ 0.0376 $ 0.0587 0.1087 (0.0391) most per Gallon - CWA Debt Service $ - �ost per Gallon - Total $ 1.3214 $ 0.0587 $ 0,1087 $ 0.0391 Diane°/,27s%20Summary_90'/025%20Modified_No%20UV_Rev3%20082906(1).xls CALCULATION OF UNRECOVERED ORIGINAL CAPITAL COSTS Raw Water Supply: Pipeline CWA - 96" Pipeline Pump Station, CWA Treatment Plant (SEWPP): Land Acquisition Site Cleanup Engineering: Preliminary Siting Study Final Design - 160 mgd Final Design - 80 mgd Construction Construction 138 KV Electric Construction Mgt. Audit Fees EXHIBIT C2 (200 mgd) Raw Project Original Original Jun-00 Jun-00 Jun-00 New New Original Costa Costa Allocation % a Allocation $ a Allocation % Allocation $ Increased $ Allocation % Allocation $ Increased $ $ 14,367,830 $ 14,367,830 80/250 $ 4,597.706 126/250 $ 7,241.386 $ 2,643,681 210/250 $ 11,494,264 $ 4,252,878 21,261,056 7,492,883 225/225 7,492,883 2251225 7,492,883 225/225 7,492,883 - $ 35,628,886 $ 21,860,713 $ 12,090,589 $ 14.734,269 $ 2.643,681 $ 18,987.147 $ 4,252,878 cn M) Original Cost SEWPP Cost 73 % Original Allocation % Original Allocation $ Jun-00 Allocation % Jun-00 Allocation $ Jun-00 Increased $ New Allocation % New Allocation $ Recoupment Increased $ Balance of SEWPP $ 6,675,192 $ 4,872,890 801750 $ 519,775 120/750 $ 779,662 $ 259,887 2001750 $ 1.299,437 $ 519.775 $3,573,453 1.149.372 - 0 - 0 0 606,238 442,554 80/750 47,206 1201750 70,809 23,603 200r750 118,014 47,206 324,539 145,660 106,332 801750 11,342 120/750 17,013 5,671 200/750 28,355 11,342 77,977 6,285,146 4.588,157 80/160 2,294,078 80/160 2,294,078 - 160/160 4,588,157 2,294,078 - 2,692,423 1,965,469 80180 1,965,469 80/80 1,965.469 80/80 1,965.469 - 728,232 531,609 80/80 531,609 80180 531,609 80/80 531,609 80,393,507 58,687,260 80/80 58,687,260 80180 58,687,260 80/80 58,687,260 - 1,695,900 1,238,007 80/750 132,054 120t720 206.335 74,280 200r720 343,891 137,556 894,116 6.102,064 4,454,507 80/80 4,454,507 80/80 4,454,507 - 80/80 4,454,507 - 25,150 25,150 80/BO 25,150 80/80 25,150 80/80 25,150 $ 106,498,884 $ 76,911,934 $ 68,668,450 $ 69.031,892 $ 363,442 $72,041,849 $ 3,009,957 $4,870,085 Total Raw Water Supply and SEWPP 1 $ 142,127,770 1 $ 98,772,647 $ 80,759,039 1 1 $ 83.766,161 1 $ 3,007,123 $91,028,996 1 $ 7,262,835 (a) Source: KPMG Audit of SEWPP Construction Costs as of November 30, 1995. (b) The unrecovered costs after this expansion will be $4,870,085. Diane %27s%20Summary_90%25%20Modified__No%20uV_Rev31,20082906(1).xls 9/12/2006 EXHIBIT C3 (200 mgd) CWA BOND DEBT SERVICE - SERIES 1995 BONDS CONSTRUCTION OF 96" RAW WATER LINE RECOVERY OF PRIOR YEAR DEBT SERVICE Fiscal CWA Bond Series SEWPP Allocation Allocation to 80 Allocation to 126 Additional 46 MGD Allocation to 210 Additional 64 MGD Year 1995 Debt Service of Debt Service (1) MGD SEWPP (2) MGD SEWPP (3) Debt Service MGD SEWPP (3) Debt Service 1996 $ 2,608,990 $ 2,429,231 $ 809,744 $ 1,275,346 $ 465,602 $ 2,125,577 $ 850,231 1997 2,809,890 2,616,289 872,096 1,373,551 501,455 2,289,252 915,701 1998 2,806,223 2,612,874 870,958 1,371,758 500,800 2,286,264 914,506 1999 2,806,705 2,613,323 871,108 1,371,994 500,886 2,286,657 914,663 2000 2,806,465 2,613,100 871,033 1,371,876 500,843 2,286,461 914,585 2001 2,720,039 2,532,628 844,209 1,329,629 485,420 2,216,049 886,420 2002 2,723,914 2,536,236 845,412 1,331,523 486,111 2,219,206 887,683 2003 2,722,133 2,534,578 844,859 1,330,652 485,793 2,217,755 887,103 2004 2,724,695 2,536,964 845,654 1,331,905 486,251 2,219,842 887,937 2005 2,720,989 2,533,513 844,504 1,330,093 485,589 2,216,823 886,730 $ 25,558,736 $ 8,519,578 $ 4,898,749 $ 22,363,886 $ 8,945,559 with new raw water contract $0.00 1) Allocation of $45 million bond debt service to 96" raw water pipeline for SEWPP based on the following: Allocation of Costs After Cost (millions) Issuance Costs Allocation 96" line construction cost (est.) $ 40.3 $ 1.6 $ 41.9 Line "C" project cost (est.) 3.0 0.1 3.1 Issuance cost, discount, accrued interest 1.7 (1.7) - $ 45.0 $ - $ 45.0 2) Allocation to 80 MGD SEWPP based on the following: 96" Line Capacity 240 MGD Module Capacity 80 MGD Module % of Allocation 33.33% 3) Allocation to 126 MGD and 240 MGD SEWPP based on the following: 96" Line Capacity 240 MGD 240 Module Capacity 126 MGD 210 Module % of Allocation 52.50% 87.50% 4) The balance of the unrecovered costs will be $3,194,849 through 2000 and varies annually thereafter. EXHIBIT D1 (200 mgd) (With Distribution Purchased Capacity for Transmission Allocation) SCHEDULE OF ACTUAL COSTS OF PUMPING/DISTRIBUTION DISTRIBUTION COSTS BASED ON NO RESIDUAL VALUES Land Acquisition Site Cleanup Engineering: Preliminary Siting Study Final Design - 160 MGD Final Design Construction Construction - 12" Hail Rd. Construction - 10" Plumley Construction - 36" Beamer - 10,000 If (Original Beamer Rd.) Construction - 36" Beamer - 26,000 If (bid + City costs 8/12/02) Construction - New Pumping Less: Original Pumps* Construction - 96" Point C to Point D Audit Fees Total Capacity Purchased Existing Pipelines Capacity Purchased New Beamer Rd. Pipeline Cost per Gallon - Existing Pipeline (96" C to D and Beamer) Cost per Gallon - New Beamer Rd. pipeline Cost per Gallon - New Pump less Old Pump Incremental Cost - Original Capacity Purchase of Original Capacity (Dist. "B to C") Purchase of Original Capacity (See Exhibit D2 for Details) * The original pump costs were estimated to have been $1,560,230 per the Kalluri Group report dated March 5, 2002. 55 mgd/200 mgd was allocated. Estimated Project Costs Distribution (Treated High Service Treated Water Line)* Water Pumping Total 2,752,075 9,796,047 1,823,009 - 2,712,212 (429,063) 2,752,075 9,796,047 2,712,212 (429,063) 1,823,009 $ 14,371,131 32,000,000 $ 2,283,148 55,000,000 $ 16,654,279 32,000,000 $ 0.1430 $ 0.3061 $ 0.0415 $ - $ 0.0187 $ 0.0466 $ 0.1256 $ 0.4957 1 $ 0.1858 A Diane%27s%20Summary_90%25%20Modified_No%20UV_Rev3%20082906(1).xls 9/12/2006 CALCULATION OF UNRECOVERED ORIGIF Distribution (Treated Water Pipeline): Preliminary Engineering Final Design Construction Capacity Included in Costs Distribution Cost per Gallon High Service Treated Water Pumping Land Acquisition Site Cleanup Engineering: Preliminary Siting Study Final Design - 160 mgd Final Design - 80 mild Construction Constriction 138 KV Else= Constriction Mgt. Audit Fees Capacity Included in Costs Pumping Cost per Galion EXHIBIT D2 (200 m9d) AL %.Arc 1 AL b VA 10 Raw Project Original Original Jun-00 Jun-00 Jun-00 New New Balance of New Distribution (C to Original Costa Cost 45% a Allocation % a Allocation $ a Allocation % Allocation $ 8 to C Increased $ Allocation % Allocation $ Increased $ D Allocation % 321250 $ 1,132.802 $ 509.761 225225 S 56,640 250/750 $ 169,920 $ 113,280 2SW50 S 169,920 $ - $ 26,583 250//50 1,879,080 845,586 225d675 281,862 250250 1345,586 563,724 2501250 845,586 132,287 250/250 23 6,32 1095248 2675 45749 2500 10 635724 01 49 220 5010 $ 11695 $3 8251 S 164 $7 7685 $07. 11 63572 S S1 8S 23, 9 Is �w 0.04680 I $ - I . . I $ 0.0570 Original Costa HS Pumping Cost 27% Original Allocation % Original Allocation $ Jun-00 Allocation % Jun-00 Allocation $ Jun-00 Increased S New Allocation % New Allocation $ 200 mild Costs lurchased Capacit, Increased S Balance of HS PS b $ 6,675,192 $ 1,802,302 W750 $ 192,246 200/750 $ 480,614 S 288,368 2551750 $ 612.783 $ 132,169 $ 1,189,519 1,149,372 0 0 0 0 0 0 606,238 163.684 BW50 17.460 200(750 43,649 26,189 255f750 55,653 12,004 108,032 145,660 39,328 80r750 4,195 20Qf750 10,488 6.293 255/750 13,372 2,884 25,957 6,285146 1,696,989 BU160 848.495 W160 848,495 160/160 1,696,989 848.495 848,496 2,692,423 726,954 80/80 726,954 20012W 726,954 2001200 726,954 725.954 - 728,232 196,623 80/80 196.623 2001200 196,623 200200 196,623 196,623 80,393,507 21.706,247 80180 21,706,247 200= 21,706,247 2001200 21,706.247 21,706,247 - - 1,695,900 457.893 81N750 48,842 200/720 127,193 78,351 255/750 162.170 34,978 295,723 6.102,064 1.647,557 80/80 1,647.557 200200 1,647,557 - 2001200 1,647.557 1.647,557 - - 25 150 - 80/80 2001200 2001200 $ 106 498 884 S 28 437 578 S 25 388 618 S 25 787 819 '-- '-- S 399 201 $ 25,518,348 s 25.125 576 $ 1 030 529 S 1 619,230 (a) Souros: KPMG Audit of SEWPP Construction Costs as of November 30, 1995. (b) The unrecovered high service pumping costs after "a expansion will be $t 619,230. (c) The unrecovered W distribution costs after this expansion will be $12.604,758. s o.izas s -- -oases I S .-o.6157 I Cost per gallon of Incremental w/o Final Design Costs S 0.0033 0.1289 Original Cost HS Pumping Fully Alloc. $ 25,125,876 Lou: Cost of Original Pumps (1,560,230) $ 23,565,646 Original Firm HS Pumping Capacity 200,000,000 Original Firm HS Purring Fully Alloc. Costs/gal $0.1178 Original Firm Fully Alloc Costs + Incremental + New Pr $0.1858 A 10/112006 Diane's Summary90% Modified -No UV Rev3 091506.xis Gulf Coast Water Authority Less: Capacity Sold League City Webster South Houston Pasadena Plus: Capacity Bought Pasadena Harris Co. MUD #55 Plus: Capacity Bought Less: Ownership Sold Harris Co. MUD #55 LaPorte Area WA Plus: Capacity Bought Less: Capacity Sold LaPorte Area WA Friendswood Plus: Capacity Bought Fries Clear Lake City WA Plus: Capacity Bought Clear Lake City WA Saybrook MUD #1 Clear Brook City MUD Co -Participant Totals City of Houston Less: Recoupment Costs Less: Capacity Sold City of Houston TOTAL NET TOTAL COSTS EXHIBIT F CALCULATION OF TOTAL INVESTMENT BY PARTICIPANT Original Investment Investment Total Investment FY 2000 FY 2006 Investment $24,373,666 $3,346,676 $28,161,400 $55,871,742 (11 640,553) (11,540,553) $12,833,113 $3,346,676 $28,151,400 $44,331,189 3,369,608 860,012 1,117,206 5,346,826 2,848,968 863,607 261,000 3,963,475 17,093,807 6,358,196 28,451,366 51,903,367 0 850,000 _ _850,000 17,093,807 7,208,196 28,451,365 52,753,367 1,153,386 875,180 851.766 2,880,332 2,318,696 2,318,695 0 (1,168,800) (1,168,800) 3,472,081 (293,620) 851,766 4,030,227 4,831,404 1,141,744 542,880 6,516,028 3,425,120 3,425,120 0 (2,550,000) (2,550,000) r 8,256,524 (1,408,256) 542,880 7,391,148 3,418,761 2,021,459 10,150,076 16,590,296 0 1,434,400 1,434,400 3,418,761 3,455,859 10,150,076 17,024,696 12,046,367 6,916,939 1,670,400 20,633,706 5,796,738 1,434,400 7,231,138 17,843,106 8,351,339 1,670,400 27,864,844 1,650,470 324,272 125,280 2,100,022 1,375,392 452,073 2,034,407 3,861,872 $72,161,829 $23,150,057 $73,356,779 $168,667,665 67,040,991 3,973,245 62,461,043 133,475,279 0 (4,214,809) (1,447,600) (5,662,409) 0 (7,965,697) (9,294,422) (17,260,119) 67,040,991 (8,207,261) 61,719,021 110,552,751 $139,202,820 14,942,796 $125,074,800 $279,220,416 $139,202,820 27,123,302 135,816,822 Percent 15.88% 1.91 % 1.42% 18.89% 1.44% 2.66% 6.10% 9.98% 0.75% 1.38% 39.59% 100.00% A Exhibits - 200 mgd_020907 x1s 6/20/2007 Page 1 of 3 EXHIBIT F (continued) CALCULATION OF TOTAL GALLONS BY PARTICIPANT Distribution Allocation Demand Pumping Existing New Allocation Allocation 96" B to C 96' C to D Beamer Beamer Gulf Coast Water Authority Original 16.5000 16.5000 18.1675 Capacity Sold Incremental Purchase 15.0000 15.0000 15.0000 15.0000 5.0000 5.0000 Subtotal 31.5000 31.5000 33.1675 15.0000 5.0000 5.0000 Webster Original 4.0500 5.8310 5.8310 Incremental Purchase I 1.8600 1.8600 1.8600 Subtotal 4.0500 5.8310 5.8310 1.8600 1.8600 1.8600 South Houston Original 3.7500 3.7500 3.7500 Incremental Purchase Subtotal 3.7600 3.7500 3.7500 0.0000 0.0000 0.0000 Pasadena Original 23.5000 31.0000 16.6675 Incremental Purchase 16.5000 21.7660 Subtotal 40.0000 52.7660 16.6675 0.0000 0.0000 0.0000 Harris Co. MUD #55 Original 3.4625 4.2520 4.2520 Incremental Purchase 1.3600 1.3600 1.3600 Subtotal 3.4625 4.2520 4.2520 1.3600 1.3600 1.3600 LaPorte Area Water Authority Original 7.8000 9.7500 0.0000 Incremental Purchase Subtotal 7.8000 9.7500 0.0000 0.0000 0.0000 0.0000 Friendswood Original 6.0000 8.5200 8.5200 Incremental Purchase 6.0000 6.0000 6.0000 9.6800 9.6800 9.6800 Subtotal 12.0000 14.5200 14.5200 9.6800 9.6800 9.6800 A Exhibits • 200 mgd_020907-z1s 6l20/2007 Page 2 of 3 Clear Lake City Water Authority Original Incremental Purchase Subtotal Baybrook MUD #1 Original Incremental Purchase Subtotal Clear Brook City MUD Original Incremental Purchase Subtotal TOTAL (prior to City) City of Houston Original Capacity Sold Incremental Purchase Subtotal TOTAL EXHIBIT F (continued) CALCULATION OF TOTAL GALLONS BY PARTICIPANT Distribution Allocation Demand Pumping Existing New Allocation Allocation 96" B to C 96' C to D Beamer Beamer 0000 36.5100 36.5100 1.8000 3.3750 3.3750 0.0000 0.0000 0.0000 1.8000 3.3750 3.3750 0.0000 0.0000 0.0000 1.5000 3.8455 3.8455 1.0000 0.0000 3.8455 3.8455 0.0000 2.5000 3.8455 3.8455 3.8455 3.8455 0.0000 130.8625 166.0995 121.9185 31.7455 21.7455 17.9000 27.6375 76.6665 149.0815 250.0000 32.0000 32.0000 0.0000 (21.0000) (31.7455) (21.7455) (17.9000) 41.5000 12.2340 69.1375 88.9005 128.0815 218.2545 10,2545 14.1000 �I Us A Exhibits - 200 mgd_020907 AS 6/20/2007 Page 3 of 3 Beamer Rd. and Related Transmission Allocation to Benefiting Participants Participant p Existing Distribution (Contract Purchase) MGD Incremental Purchased Distribution Capacity (MGD) Total Purchased Distribution Capacity(MGD) Total Distribution Capacity w/ Only 36" (MGD) (Reamer Rd.) Total Distribution Capacity w/ Only 42" (MGD) (42") Friendswood 8.5200 6.0000 14.5200 9.6800 4.8400 GCWA 18.1675 5.0000 23.1675 5.0000 18.1675 Webster 5.8310 0.0000 5.8310 1.8600 3.9710 Harris Co MUD 4.2520 0.0000 4.2520 1.3600 2.8920 Clear Lake City (25% of Total 9.1200 0.0000 9.1200 0.0000 9.1200 Ba brook MUD 3.3750 0.0000 3.3750 0.0000 3.3750 Clear Brook MUD 3.8455 0.0000 3.8455 0.0000 0.0000 City of Houston 10.0000 0.0000 10.0000 14.1000 1.1583 Totals 63.1110 11.0000 74.1110 32.0000 43.5238 Totals without Clear Brook or City of Houston Clear Brook MUD for Existing 96" and 36" City of Houston for Existing 96" and 36" Total with City of Houston and Clear Brook for Existing 96" and 36" CAPACITY 42" LINE MGD)l 43.5238::::] CAPACITY 36" LINE MGD 32.0000 17.9000 3.8455 10.2545 32.0000 EXHIBIT I CITY OF HOUSTON UNTREATED WATER FACILITIES' OUTSTANDING DEBT FACILITY COMPONENT Pnncipai @ 7/112005 1 Coastal Water Authority (General) $198,625,000 2 Trinity River Authority (General) 6,000,000 $204,625,000 Less: '87P91 Issue 96" Initial Capital Payment $14,734,269 of $120,000,000 Principal Total (12.28%) times Outstanding Principal @ 7/1/2005 of $86,700,000 (10,646,760) $193,978,240 3 Coastal Water Authority (TRA/Lynchburg PS Upgrade) (General) 40,385,000 4 TRA - Current Lake Livingston Improvements 17,996,000 5 Aliens Creek Land Purchase 14,000,000 6 Lake Houston Dam/Reservoir Improvements 17,016,400 7 Wallisville Lake Project 10,077,550 8 Dayton Canal 5,150,000 Total Outstanding Debt: $298,603,190 ESTIMATED COST OF RAW WATER FOR EXPANSION TO 200 MGD Clear Brook Raw Water Costs (Formula for Exhibit C) (A2/D2 x C) (A2) Additional Demand Capacity (mgd) (D2) Defined Year Average Day Production (mgd) (Fiscal Year 2004 data) (C) Houston's Untreated Water Outstanding Debt (for period ending 7/1/05) Additional Raw Water Capacity Cost Formula equals (A/B) x C = Total Estimated Raw Water Demand Capacity Cost 1.00 GCWA/ League Friendswood Pasadena GCWA/Pearland City (A2/D2 x C) (A2/D2 x C) (A2/02 x C) (A2/D2 x C) 6 16.5 10 5 518.65 518.65 518.65 518.65 518.65 $298,603,190 $298,603,190 $298,603,190 $298,603,190 $298,603,190 $576,304 $3,454,839 $9,498,567 $5,757,070 $2,878,535 $22,165,315 S 1pweshafe\PLANSECMater Supply and Cost Sharing ContractslTreated Water Supply Contracts%Southeast PlantUatesAQQQWanson contract 091506tFor printinglExhibits - 200 mpd_02M7 062007 As Page 1 Exhibit J - Transmission Line Capacity Distribution Map 200-mgd Capacity Distribution with Beamer Road Line Houston • Total Capacity of 42" & 36" Lines = 75.52 mgd • Exist & Expansion Purchased Capacity = 75.52 mgd (as of October 7, 2005) AL Gulf Coast Point D Water Authority ` (10.00 mgd) Clearbrook (Hall & Sage Canyon) (1.92/0 mgd) South Houston Point B Point C 48" s61 11 LaPorte Area Pasadena Water Authority (6-10"& 1-30') (2-16 & 1-24') •,. Sly , ItD, Clearbrook (Scarsdale & Beamer) (1.92/0 mgd) 60 d' ,Q Friendswood q�r (9.68/0 mgd) 'S7 • Take Point (1.5 mgd) Purchased Capacity Balance of Purchase " Line Capacity (mgd) (P HC MUD 55 (1.36/2.892 mgd)4k Fnendswood ! (0/4.84mgd) � Lodge Apartments 'l 5.00 Gulf Coast Water Authority (5.00/0 mgd) Clear Lake City Water Authority (If, & 24') 2-10" ? , PRVs Baybrook Qn> `gsg Mall ��, �� (12" Teas Nursery D-142 (10.25/2.83 mgd) Baybrook Water Plant ;& & 12') (013.38 mgd) Clear Lake City Water Authority (0/9.12 mgd) 10� ;�<Q Webster Sr8 (Plumley) (0.93/1.99mgd) Webster (Magnolia) (0.93/1.98 mgd) /,�yy 10Tb,So Gulf Coast Water Authority (0/16.50 mgd) ;:\8138\43343-ADDEND\CO-PART DELIVERY POINTS\FINAL 2006\MAPF.dwg, 9/11/2006 5:38:51 PM, hollandjr MAPF.DWG C? L I c > �`) C� Gulf Poll wPa 1- � a GENOA Lt- ry KINGSp OINT t-ti It G --NN ARDOR 1 Lo LEN�j,Cp�F�r� ON Vj�� � �� s / _`• ill ��� �p�Y� FUi1 ECMU110N KARLM s o Mi v 1 �Z- KIRKSHIR Q Q KIRKD AL f SPA; �� �v . RK M, E- DO J KI• i �' ,� / KIRK , I- OLLti\At KIRKI VPLLEY \ -Q Dili S Sc D .�y `p GULF COAST WATER AUZHORLTY (GCWA) o FUQUA RD 0 BEAMERRD ui C4 CONNECl10N pOINT a m 0 �vo C, INN, IN scojet r-) to - pcNiB uTM�� tc�cr+A CDOiiWal GULF Mvp a il�., -0*4 p1m, EXHIBIT II ESTIMATED COSTS PER CO -PARTICIPANT GCWA - PEARLAND UGD Cost MGM. SEWPP Existing Capacity 0.0000 $0.0696 $0 Added Capacity Needed 10-0000 $1.3801 13,801,000 Total SEWPP 2005 Capacity 10.0000 $13,801.000 Pumping Existing Capacity 0.0000 $0 Incremental Capacity 10.0000 $0.1858 1,858,000 Total Pumping 10.0000 $1.858,000 Distribution Existing Capacity 0.0000 96" Line - Pant C to Pant D 0.0000 and Existing 36" Beamer 0.0000 $0.1430 ' New 36" Beamer Line 0.0000 $0,3061 - Incremental Capacity 96" Line - Pant C to Point D 10.0000 $0,0570 570,000 New 364 Beamer Line 0.0000 $0.3061 96' Line Pant 8 to Point C 10.0000 $0.0466 466,000 Total Distribution 10.0000 $1,036,000 Total Costs s f 66""- k4G0 is nwne rt by GCWA A Dianes Summary_90 Modified -No UV_Rev_030807_do1061207cor.x1s 6/12/2007 Page 1 of 1 s: VSt38\43343-ADDEND\C0-PART DELIVERY P"NTSVINAL 2006\MAPC3 dwg, 9/11/2006 5:28:47 PM, holfandjr MAPaDvic MZ I I�ATHOY I z o NATIONS NA Tn�V lE3ybANON NYA M-< vIAICA a z z -0 K mTAL m AM JANA ROY �►� PINE i PI BAYWOOD z IT ?+ g i BAYF. .a C= EXHIBIT 11 ESTIMATED COSTS PER CO -PARTICIPANT GCWA - LEAGUE CITY MGD Cast per Gai. SEWPP Existing Capacity 16.5000 $0.0696 $1,148,400 Added Capacity Needed 5.0000 $1.3801 6,900,500 Tulal SEWPP 2005 Capacity 21.5000 $8,048.900 Pumping Existing Capacity 16.5000 Incremental Capacity 5.0000 $0.1858 -- 929.000 Total Pumping 21.5000 $929,000 Distribution Existing Capacity 16.5000 96" Line - Point C to Pant D and Existing 36' Beamer 0.0000 $0.1430 New 36' Beamer Line 0.0000 $0.3061 Incremental Capacity 96" Line - Pant C to Point D and Existing 36' Beamer 5.0000 $0.1430 715,000 New 36" Beamer Line 5.0000 $0.3061 1,530,500 96" Line Point 8 to Point C 5.0000 $0.0466 233,000 Total Distribution 21.500 $2,478,500 out Casts $11,456,400 A Dianes Summary_90 Modified_No UV_Rev_030007_dolW1207cor.xls 6r'12l2007 Page 1 of 1 r►"'� HoUSTUAt 6 C� 6 4 0. u c9 a a ,2 rri m � n G $col e 0 15 F-4 EXN OT EXHIBIT 11 ESTIMATED COSTS PER CO -PARTICIPANT CLEAR BROOK CITY MUD MGD Cost per Gal. SEWPP Existing Capacity Added Capacity Needed Total SEWPP Costs Pumping Existing Capacity Incremental Capacity Total Pumping Distribution Existing Capacity 96" Line - Point C to Point D and Existing 36" Beamer New 36" Beamer Line Incremental Capacity 96" Line - Point C to Point D New 36" Beamer Line 96" Line Point B to Point C Total Distribution Total Costs 1.5000 $0.0696 $104,400 1.0000 $1.3801 1,380,100 2.5000 $1,484,500 3.8455 $0 0.0000 $0.1858 - 3.8455 $0 3.8455 3.8455 $0.1430 549,907 0.0000 $0.3061 - 0.0000 $0.1430 - 0.0000 $0.3061 - 0.0000 $0.0466 - 3.8455 $549,907 $2 A Diane%27s%20Summarv_ 90%25%20Modified No0/620UV Rev3%20082906(11.As o/t 7i�nnc `% f KtRK 5.0 S! gcole: ,s ID 10 SCMag F L p • AT ►�CpNN' EAIRMONT Z / /i 1 /7 DA AR T 0 o Co m (-ioUSTdA1 t GENOA — RED Jt F� -• COASTAL TES EASEMENT 80' H.C.F.C•D. .W.A. . ASEMENT 15' H.C.F.C:D. ASEMENT Scale: 6 10 15 EXHIBIT I cny OF LAPORTE CONNECTION POINT EXHIBIT II ESTIMATED COSTS PER CO -PARTICIPANT LAPORTE MGD Cost Der Gal. C SEWPP Existing Capacity 7.8000 $0.0696 Added Capacity Needed 0.0000 $1.3801 Total SEWPP 2005 Capacity 7.8000 Pumping Existing Capacity 9.750 Incremental Capacity 0.000 $0.1858 Total Pumping/Distribution 9.750 Total! Costs $542,880 $542,880 $0 $542,880 A Diane%27s%20Summary_90%25%20Modified_No%20UV_Rev3%20082906(1).xls 9/12/2006 EXHIBIT II ESTIMATED COSTS PER CO -PARTICIPANT BAYBROOK MUD #1 SEWPP Existing Capacity Added Capacity Needed Total SEWPP 2005 Capacity Pumping Existing Capacity Incremental Capacity Total Pumping Distribution Existing Capacity 96" Line - Point C to Point D and Existing 36" Beamer New 36" Beamer Line Incremental Capacity 96" Line - Point C to Point D New 36" Beamer Line 96" Line Point B to Point C Total Distribution otal Costs MGD Cost per Gal. Charge/Rebate 1.8000 $0.0696 $125,280 0.0000 $1.3801 - 1.8000 $125,280 3.375 $0 0.000 $0.1858 3.375 3.375 0.000 $0.1430 - 0.000 $0.3061 - 0.000 $0.1430 - 0.000 $0.3061 - 0.000 $0.0466 - 3.375 $ - 125.280 A Diane%27s%20Summary_90%25%20Modified_No%20UV_Rev3%20082906(1).xis 9/12/2006 c 1-41 L7 - -� - - - CONNEC11ON 'A' EWNGTON FIELD Scale: ("U"O'W Feet) L*GjT I EAST CONNEC11ON POINT gcale� e S Fes) EX�� M f W PLOHT C�C11tA�NN EXHIBIT II ESTIMATED COSTS PER CO -PARTICIPANT CLEAR LAKE CITY WATER AUTHORITY MGD Cost per Gal. SEWPP Existing Capacity Added Capacity Needed Total SEWPP 2005 Capacity Pumping Existing Capacity Incremental Capacity Total Pumping Distribution Existing Capacity 96" Line - Point C to Point D and Existing 36" Beamer New 36" Beamer Line Incremental Capacity 96" Line - Point C to Point D and Existing 36" Beamer New 36" Beamer Line 96" Line Point B to Point C Total Distribution Total Costs 20.4500 $0.0696 $1,423,320 0.0000 $1.3801 20.4500 $ 1,423,320 32.00000 - $ - 0.00000 $0.1858 - 32.00000 $0 32.00000 0.00000 $0.1430 - 0.00000 $0.3061 - 0.00000 $0.1430 - 0.00000 $0.3061 - 0.00000 $0.0466 0.00000 $0 $1,423,320 A Diane%27s%20Summary_90%25%20Modified_No%20UV_Rev3%20082906(1).xis 9/12/2006 EXHIBIT II ESTIMATED COSTS PER CO -PARTICIPANT CLEAR LAKE CITY WATER AUTHORITY JOHNSON SPACE CENTER MGD Cost per Gal. Charge/Rebate SEWPP Existing Capacity 1.6000 $0.0696 $111,360 Added Capacity Needed 0.0000 $1.3801 Total SEWPP 2005 Capacity Pumping Existing Capacity Incremental Capacity Total Pumping Distribution Existing Capacity 96" Line - Point C to Point D and Existing 36" Beamer New 36" Beamer Line Incremental Capacity 96" Line - Point C to Point D and Existing 36" Beamer New 36" Beamer Line 96" Line Point B to Point C Total Distribution otal Costs 1.6000 $111,360 2.560 $0 0.000 $0.1858 - 2.560 $0 2.560 0.000 $0.1430 - 0.000 $0.3061 - 0.000 $0.14300 - 0.000 $0.30610 - 0.000 $0.04660 - 0.000 $0 $111,360 A Diane's Summary_90% Modified —No UV Rev3 082906.xls 9/15/2006 EXHIBIT II ESTIMATED COSTS PER CO -PARTICIPANT NASSAU BAY MGD Cost per Gal. Ch SEWPP Existing Capacity 1.9500 $0.0696 Added Capacity Needed 0.0000 $1.3801 Total SEWPP 2005 Capacity 1.9500 Pumping Existing Capacity Incremental Capacity Total Pumping Distribution Existing Capacity 96" Line - Point C to Point D and Existing 36" Beamer New 36" Beamer Line Incremental Capacity 96" Line - Point C to Point D and Existing 36" Beamer New 36" Beamer Line 96" Line Point B to Point C Total Distribution Total Costs 1.95000 0.00000 $0.1858 1.95000 1.950000 am 1 01111-1 $0.1430 $0.3061 $0.1430 $0.3061 $0.0466 $135,720 $135,720 $0 $0 135,720 A Diane's Summary_90% Modified —No UV Rev3 082906.xis 9/15/2006 /y -5,� eF� scale-- 15 b 10 '—��EHOsr� CI���.�� PaNT S:\8138\43343-ADDEND\CA-PART DELNERY POINTSVINAL 2006\MAPE-GEX.dwg, 9/11/2006 5:34:08 PM, hollargr NAPE-GEX.DWG EXHIBIT 11 ESTIMATED COSTS PER CO -PARTICIPANT WEBSTER MGD Cost per Gal. Charge/Rebate SEWPP Existing Capacity 4.0500 $0.0696 $281,880 Added Capacity Needed 0.0000 $1.3801 $0 Total SEWPP 2005 Capacity 4.0500 $281,880 Pumping Existing Capacity 5.831 $0 Incremental Capacity 0.000 $0.1858 Total Pumping 5.831 $0 Distribution - Alternative #2 Existing Capacity 5.831 96" Line - Point C to Point D and Existing 36" Beamer 1.860 $0,1430 $265,980 New 36" Beamer Line 1.860 $0.3061 569,346 Incremental Capacity 96" Line - Point C to Point D 0.000 $0.1430 New 36" Beamer Line 0.000 $0.3061 - 96" Line Point B to Point C 0.000 $0.0466 - Total Distribution 5.831 $835,326 Total Costs $1,117,206 A Diane%27s%20Summary_90%25%2OModified_No°/a20UV_Rev3%20082906(1).xis dl H'aLsrOt n / Gy- V �C3 O op op 4� 2 41 Al 161 IN sec \ \ \Ofhis i�Lffil ll%� olm pG"OUN a 0 v EXHIBIT If ESTIMATED COSTS PER CO -PARTICIPANT SOUTH HOUSTON MGD Cost per Gal. Charge/Rebate SEWPP Existing Capacity 3.7500 $0.0696 $261,000 Added Capacity Needed 0.0000 $1.3801 - Total SEWPP 2005 Capacity 3.7500 $261,000 Pumping Existing Capacity 3.75000 $0 Incremental Capacity 0.00000 $0.1858 - Total Pumping 3.75000 $0 Distribution Existing Capacity 96" Line - Point C to Point D and Existing 36" Beamer 0.0000 $0.1430 - New 36" Beamer Line 0.0000 $0.3061 - Incremental Capacity 96" Line - Point C to Point D and Existing 36" Beamer 0.0000 $0.1430 - New 36" Beamer Line 0.0000 $0.3061 - 96" Line Point B to Point C 0.0000 $0.0466 - Total Distribution 0.000 $0 Total Costs $261 Alternatively, the City of South Houston can make payment by paying $0.1all 000 gallons until a total of 3.05 billion gallons have been purchased. (At 1.5 MGD, the COH will be repaid in approximately 5.5 vears.) A Dianes Summary_90 Modified -No UV_Rev_030807_do1061207cor062107.xis 7/11/2007 D wa 1u uo tin cn . NE TION �� NEC �. sty Atilt � 1 pig - I? 1 r pork sui Ln s; , a co ^' A��AN u Scaleo is NA 8 tl ' -' 37- .-j -` AN '.' 1 HOUST i . aly OF SOUTH 7th STW CONNECTION POINHS W (.7 rn 3Q M W EXHIBIT II ESTIMATED COSTS PER CO -PARTICIPANT PASADENA MGD Cost per Gallon Ch SEWPP Existing Capacity 23.5000 $0.0696 Added Capacity Needed 16.5000 $1.3801 Total SEWPP Costs Pumping Existing Capacity Incremental Capacity Total Pumping Distribution Existing Capacity 96" Line - Point C to Point D and Existing 36" Beamer New 36" Beamer Line Incremental Capacity 96" Line - Point C to Point D New 36" Beamer Line 96" Line Point B to Point C Total Distribution Total Costs 40.0000 $1,635,600 22,771,650 $24,407,250 31.00000 $0 21.76596 $0.1858 4,044,115 52.76596 $4,044,115 16.66750 - 0.0000 $0.1430 - 0.0000 $0.3061 - 0.0000 $0.1430 - 0.0000 $0.3061 - 0.0000 $0.0466 - 16.6675 $0 1 A lane°io 7s°r;20Summary__90°1025%20Modified_No%20UV Rev3%20082906(1).xls ,,,, Pork X PIS CONNECTION -L 1, S' ti�r CaJree S'EMIPP-� Et.w�NCsTON � AtRPdr�7' Scale: o & so _ ao (Hundred Fes) EXHIBIT I I)TY OF PASAMNA 6MNEC11ON POINT' EXHIBIT 11 ESTIMATED COSTS PER CO -PARTICIPANT HARRIS COUNTY MUD #55 MGD Cost per Gal. Charge/Rebate SEWPP Existing Capacity 3.4625 $0.0696 $240,990 Added Capacity Needed 0.0000 $1.3801 - Total SEWPP 2005 Capacity 3.4625 $240,990 Pumping Existing Capacity 4.25200 $0 Incremental Capacity 0.00000 $0.1858 $0 Total Pumping 4.25200 $0 Distribution - Alternative #2 Existing Capacity 4.25200 96" Line - Point C to Point D and Existing 36" Beamer 1.36000 $0.1430 194,480 New 36" Beamer Line 1.36000 $0.3061 416,296 Incremental Capacity 96" Line - Point C to Point D 0.00000 $0.1430 New 36" Beamer Line 0.00000 $0.3061 96" Line Point B to Point C 0.00000 $0.0466 - Total Distribution 4.25200 $ 610,776 Total Costs $ 851,766 A Diane%27s%20Summary_90%25°/,20Modified_No%20UV__Rev3%20082906(1).xls 9/12/2006 4rk O \ � � 1 akill \Zo62 tir r \\ AGE �_�� I=- WOOD PARK AO�— _ r- 71. � I ) Whitcomb / Cemetery — Scale: 01 o / s 10 15 (FMndrrd Feet) / EXHIBIT I o HARRIS COUNTY Y.U.D. No. 55 CONNECTION POINT EXHIBIT II ESTIMATED COSTS PER CO -PARTICIPANT FRIENDSWOOD SEWPP Existing Capacity Added Capacity Needed Existing Capacity - Costs Total SEWPP Exp Capacity Total SEWPP Costs Pumping Existing Capacity Incremental Capacity Total Pumping Distribution - Alternative #2 Existing Capacity 96" Line - Point C to Point D Existing 36" Beamer New 36" Beamer Line Incremental Capacity 96" Line - Point C to Point D New 36" Beamer Line 96" Line Point B to Point C Total Distribution Total Costs MGD Cost per Gal. Cha 6.0000 $0.0696 $417,600 6.0000 $1.3801 8,280,600 12.0000 $8,698,200 8.52000 $0 6.00000 $0.1858 1,114, 800 14.52000 $1,114,800 8.52000 0.68000 $0.0570 38,760 0.68000 $0.0860 58,480 0.68000 $0.3061 208,148 0.00000 $0.0860 - 0.00000 $0.3061 - 0.68000 $0.0466 31,688 14.52000 $337,076 $10,1 A Diane%27s%20Summary_90%25%20Modified_No%20UV_Rev3%2008 "9WfPQ1s Pane 1 of 1 REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested November 6, 2006 Requested By: Mayor Alton E. Porter Department: —A4s, er's Office Report: Resolution: Ordinance: X Exhibits: Exhibits: Appropriation Source of Funds: n/a Account Number: n/a Amount Budgeted: n/a Amount Requested: Budgeted Item: YES NO SUMMARY & RECOMMENDATION City Council to approve appointing positions on Boards and Commissions for vacant slots. Chapter 172 Employee, Retiree Insurance and Benefits Board: Alternate Position 2 — position has never been filled. Terms left blank for Council to determine expiration dates. Note: Revised language in Section 3 regarding Alternate Position 1&2. La Porte Development Corporation Board — 4b Corporation Deborah Johnson — Term Expiration 2007 — resigned from board position vacant Youth Advisory Council Crystal Scott advised there will be no changes to the Youth Advisory Council until after school begins in the fall. Advise staff if any other changes regarding positions Council desires. Action Required by Council: Consider approving Ordinance appointing members to various Boards and Commissions and determine alternate positions to Chapter 172. / of 06 Date ORDINANCE NO. 2004-2782-0 AN ORDINANCE APPOINTING MEMBERS TO VARIOUS BOARDS, COMMISSIONS, AND COMMITTEES, OF THE CITY OF LA PORTE; PROVIDING A SEVERABILITY CLAUSE; CONTAINING A REPEALING CLAUSE; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: • Indicates reappointment Section 1. The City Council of the City of La Porte hereby makes the following appointments to the Airport Advisory Board for the City of La Porte Municipal Airport, for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: Position 1. - Debra Rihn 2007 Position 2. - Nick Hooke 2007 Position 3. - *Hector Villarreal 2009 Position 4. - *Tucker Grant 2009 Position 5. - Steve Gillett 2007 Position 6. - Eliminated by City Council on 7/13/98 by Ord. 98-2265 FAA Representative - William Gray No Term Airline Representative - Dan Myhaver No Term Section 2. The City Council of the City of La Porte hereby makes the following appointments to the Board of Directors of the City of La Porte Reinvestment Zone Number One, for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: Position 1 - Peggy Antone 2007 Position 2 - *Dave Turnquist 2008 Position 3 - Alton Porter 2007 Position 4 - *Horace Leopard 2008 Position 5 - Doug Martin 2007 Position 6 - *J. J. Meza 2008 Position 8 - *Chester Pool 2008 The City Council of the City of La Porte hereby ratifies the following appointments by La Porte Independent School District and Harris County: Position 7 - Dr. Say (LPISD) 2007 Position 9 - Lindsay Pfeiffer (Harris Co.) 2007 Section 3. The City Council of the City of La Porte hereby makes the following appointments to the Chapter 172 Employee Retiree Insurance and Benefits Committee, for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: Citizen Position 1 - George Van Dyke No Term Citizen Position 2 - Steve Valerius No Term Retiree Participant - Buddy Jacobs No Term Employee Participant - Karen Beerman No Term Finance Staff - Michael Dolby No Term H.R. Staff - Robert Swanagan No Term Legal Staff - Clark T. Askins No Term Alternate Pos. 1 - Matt Daeumer No Term Alternate Pos. 2 - Juliane Graham No Term Alternate position 1 may participate in all meetings of the committee but is entitled to vote only in the absence of a regular member; Alternate position 2 may participate in all meetings of E the committee but is entitled to vote only in the absence of a regular member, and where Alternate Pos. 1 member is not present, or where two or more regular members are absent. Section 4. The City Council of the City of La Porte hereby makes the following appointments to the Fiscal Affairs Committee, without term, or until their successors shall have been duly appointed and qualified: Date Appointed Chairman - Chuck Engelken 1998 Committee Member - Barry Beasley 2004 Committee Member - Howard Ebow 1998 Alternate Member - Louis Rigby 2004 Alternate Member - Tommy Moser 2004 Section 5. The City Council of the City of La Porte hereby makes the following appointments to the Fire Code Review Board of the City of La Porte, for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: District 1 - Tim Bird 2008 District 2 - *Jeff Brown 2009 District 3 - *Woodrow Sebesta 2009 District 4 - *Floyd Craft 2009 District 5 - Jim Bridge 2006 District 6 - Lester Clark 2008 At Large -A - *Bryan Moore 2009 At Large-B - Paul Vige 2008 Mayor - *Lynn Green 2009 3 Section 6. The City Council of the City of La Porte hereby makes the following appointments to the La Porte Area Water Authority, for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: Position 1 - Robert Roy 2007 Position 2 - Dennis H. Steger 2007 Position 3 - Steve Valarius 2007 Position 4 - *Chester Pool 2008 Position 5 - *Paul Berner 2008 Section 7. The City Council of the City of La Porte hereby appoints the following named persons, all of whom are residents of the City of La Porte, and no more than four of whom are elected city officials or city employees, to serve as directors of the City of La Porte Development Corporation without compensation, but with reimbursement for actual expenses, for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: Chuck Engelken 2007 *Mike Clausen 2008 Tommy Moser 2007 *Bill Love 2008 Ed Matuszak 2007 *Pat Muston 2006 Vacant 2007 Section 8. The City Council of the City of La Porte hereby makes the following appointments to the La Porte Health Authority, W for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: Health Authority - Abdul R. Moosa, M.D. 2008 Alternate - Robert D. Johnston, M.D. 2008 Medical Advisor/EMS - Oscar Boultinghouse Contract Section 9. The City Council of the City of La Porte hereby makes the following appointments to the La Porte Redevelopment Authority, for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: Position 1 - Peggy Antone 2007 Position 2 - *Dave Turnquist 2008 Position 3 - Alton Porter 2007 Position 4 - *Horace Leopard 2008 Position 5 - Douglas Martin 2007 Position 6 - *J. J. Meza 2008 Position 7 - Dr. Say 2007 Position 8 - *Chester Pool 2008 Position 9 - Lindsay R. Pfeiffer, Chairman 2007 Section 10. The City Council of the City of La Porte hereby makes the following appointments to the Main Street District Committee, an '"ad hoc" committee, without term, or until their successors shall have been duly appointed and qualified: Position 1 - Bill Manning, Chairman No Term Position 2 - Robert Schlenk, Vice Chairman No Term Position 3 - Deborah Johnson No Term Position 4 - Douglas Martin No Term 5 Position 5 - Vicki Campise No Term Position 6 - Paul Berner No Term Position 7 - Pat Muston No Term Position 8 - Gloria Lair No Term Position 9 - Brenda Brown No Term Section 11. The City Council of the City of La Porte hereby makes the following appointments to the Main Street Advisory Board, a new Board required by the Texas Historical Commission, for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: Position 1- Vacant 2008 Position 2- Vicki Campise 2008 Position 3- Vacant 2008 Position 4- Vacant 2009 Position 5- *Jerry Carpenter 2009 Position 6- Vacant 2009 Position 7- Michaelyn Dunaway 2007 Position 8- Claire Zaborowski 2007 Position 9- Lawrence McNeal 2007 Position 10 Position 10 Eliminated by Ordinance 2004- 2782-L on August 28th, 2006 by City Council action. Position 11 Position 11 Eliminated by Ordinance 2004- 2782-L on August 28th, 2006 by City Council action. There are also three (3) Ex Officio members of this Board: 1 - the City of La Porte's Main Street Coordinator 2 - the City Manager of the City of La Porte, or her designee 0 3 - the Manager of the La Porte-Bayshore Chamber of Commerce Section 12. The City Council of the City of La Porte hereby makes the following appointments to the City of La Porte Planning and Zoning Commission, for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: Chairman - *Pat Muston 2009 District 1 - Doretta Finch 2008 District 2 - *Nick Barrera 2009 District 3 - *Kirby Linscombe Jr. 2009 District 4 - Dottie Kaminiski 2007 District 5 - Paul Berner 2007 District 6 - Claude Meharg 2008 Alternate 1 - Hal Lawler 2007 Alternate 2 - Les Bird 2008 Section 13. The City Council of the City of La Porte hereby makes the following appointments to the Southeast Texas Housing Finance Corporation Board of Directors, for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: Director - *Patricia Muston 2009 Section 14. The City Council of the City of La Porte hereby makes the following appointments to the Youth Advisory Council, for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: Position 1 - Shelby Barnett 2005 7 Position 2 - Hiba Haroon 2005 Position 3 - Chaise J. Merritt 2005 Position 4 - Laura J. Low 2005 Position 5 - Amanda Gass 2005 Position 6 - Brandy C. Hickey 2005 Position 7 - Clemea J. Donaldson 2005 Position 8 - Brandon C. Lunsford 2005 Position 9 - Pierre N. Castillo 2005 Position 10 - LaSadra M. Hillman 2005 Position 11 - Margo R. Curette 2005 Position 12 - Marc R. Vanderbrink 2005 Position 13 - Carol Parmer 2005 Position 14 - Mia Parisi 2005 Position 15 - Taylor Ryan Rowan 2005 Position 16 - Ashley N. Weddle 2005 Section 15. The City Council of the City of La Porte hereby makes the following appointments to the Zoning Board of Adjustment, for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: Position 1 - Sidney Grant 2007 Position 2 - Bob Capen 2007 Position 3 - Rod Rothermel 2007 Position 4 - Charles Schoppe 2007 Position 5 - George (Bill) W. Maltsberger 2007 Alternate 1 - *Lawrence McNeal 2008 Alternate 2 - *Gilbert Montemayor 2008 The City Council of the City of La Porte hereby designates of Position , to serve as Chairman of the Zoning Board of Adjustment until the expiration of the member's term of appointment as designated in this section, or until their successor shall have been duly appointed and qualified. Section 16. The City Council of the City of La Porte hereby appoints the following named persons, all of whom are resident electors of the City of La Porte or non-resident individuals owning or operating a business within the City of La Porte, duly verified by proof of an applicable tax statement or utility account for such business, and each of whom the City Council deems competent to serve on such Board by virtue of their experience and training in matters pertaining to building construction, and none of whom are employed by the City of La Porte, to serve as members of the Building Codes Appeals Board for terms expiring on August 31st of the year indicated, or until their successors shall have been duly appointed and qualified: Position 1 - Tom Campbell 2007 Position 2 - Terry Bunch 2007 Position 3 - Paul Larson 2007 Position 4 - Ron Holt 2007 Position 5 - Ken Schlather 2007 Position 6 - John Elfstrom 2007 Position 7 - Bruce Compton 2007 Section 17. The City Council of the City of La Porte hereby makes the following appointment to the Fire Fighters Pension Board 0 of Trustees, to serve without term or until his successor shall have been duly appointed and qualified: City Council Representative - *John Joerns 2007 Section 18. If any section, sentence, phrase, clause or any part of any section, sentence, phrase, or clause, of this ordinance shall, for any reasons, be held invalid, such invalidity shall not affect the remaining portions of this ordinance, and it is hereby declared to be the intention of this City Council to have passed each section, sentence, phrase or clause, or part thereof, irrespective of the fact that any other section, sentence, phrase or clause, or part thereof, may be declared invalid. Section 19. All ordinances or parts of ordinances in conflict herewith are repealed to the extent of such conflict only. Section 20. 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 21. This Ordinance shall be effective from and after its passage and approval, and it is so ordered. PASSED AND APPROVED, this Ot day of &M_, 2006. ATTEST: Nk d-*� ar ha A. Gillett City Secretary APPROVED: ar -skins Assistant City Attorney C ,TY OF LA PQO By: C� u--- Alton E. Porter Mayor 11 REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested October 23, 2006 Requested By: City Attorney Department: Q4, Attomay's-Office Report: Resolution: Ordinance: X Exhibits: Proposed Ordinance Exhibits: Copy of Statute Appropriation Source of Funds: Account Number: Amount Budgeted: Amount Requested: Budgeted Item: YES NO SUMMARY AND RECOMMENDATION In the process of issuing citations to motor vehicle operators for parking violations, it is frequently the case that the vehicle itself is unattended and it is thereby impossible for the officer to locate the offender and personally issue the vehicle operator a citation to appear in court. In these situations the current practice of the City is to issue citations to "owner/operator" and to leave a copy of the citation attached to the vehicle. While this policy is legal it can complicate efforts at prosecuting parking violators, particularly when a case is contested in court and the State must proffer evidence that a particular person, whether it be the registered owner or not, was actually culpable. Section 545.308 of the Texas Transportation Code addresses this potential problem by providing that the governing body of a local authority can by ordinance or other order establish that in prosecutions of parking offenses there is a legal presumption that the registered owner of the illegally parked vehicle was the operator of the vehicle when the offense was committed. This is a relative new statute, added by the Legislature in September of 2001, and as worded should help make prosecution of parking violations more effective — and efficient — by shifting to ticketed parking offenders the burden of overcoming the presumption that the registered owner was the actual violator. 11 Proposed for your consideration is an ordinance amending Chapter 70, "Traffic and Vehicles",of the Code of Ordinances to add a section creating the presumption that the registered owner of a vehicle was the operator at the time of the offense, in the case of parking violations under the Subchapter G of the Transportation Code, as prescribed by Section 545.308 of the Transportation Code. Action Required by Council: Recommendation is to approve ordinance amending Chapter 70 of the Code of Ordinances establishing presumption as to operator of illegally parked vehicles. Approve or City —Council Agenda Jo oe rim City Manager ate ORDINANCE 140 . 2 0 0 6 - �,qL[ q Ffi 7 h1 , , AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LA PORTE AMENDING CHAPTER 70, "TRAFFIC AND VEHICLES", ARTICLE V, "STOPPING, STANDING AND PARKING", OF THE CODE OF ORDINANCES OF THE CITY OF LA PORTE, BY ADDING NEW SECTION 70-182, ESTABLISHING LEGAL PRESUMPTION AS TO OPERATOR OF PARKED VEHICLES IN PROSECUTION OF PARKING OFFENSES, AND AMENDING SECTIONS 70-182--70-210, "RESERVED"f PROVIDING FOR PUBLICATION OF THE CAPTION HEREOF1 FINDING COMPLIANCE WITH THE OPEN MEETINGS LAWj AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. Chapter 70, "Traffic and Vehicles", Article V, "Stopping, Standing and Parking", is hereby amended by adding new Section 70-182, which shall hereafter read as follows, to -wit: "Sec. 70-182. Presumed operator of parked vehicles. In a prosecution for an offense prohibited under Texas Transportation Code Chapter 545, Subchapter G, and relating to the stopping, standing and parking of unattended motor vehicles, it is presumed that the registered owner of the vehicle is the person who stopped, stood, or parked the vehicle at the time and place the offense occurred. State law reference - authority of city to create presumption as to operator of parked car established by State law, V.T.C.A., Transportation Code §545.308." Section 2. Chapter 70, "Traffic and Vehicles", Article V, "Stopping, Standing and Parking", "Sec. 70-182--70-210. Reserved.", is hereby amended and shall hereafter read as follows, to -wit: "Sec. 70-183--70-210. Reserved." Section 3. 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 4. This Ordinance shall be effective fourteen (14) days after its passage and approval. The City Secretary shall give notice to the passage of the ordinance by causing the caption to be published in the official newspaper of the City of La Porte at least twice within ten (10) days after the passage of the ordinance. PASSED AND APPROVED, this ATTEST: Martha A. Gillett City Secretary APPROVED: Clark T. Askins Assistant City Attorney day of CITY OF LA PORTE By: Alton E. Porter Mayor 2 2006. 1 0 Sec. 545.307 TEXAS CRIMINAL AND TRAFFIC LAW Stats. 2003 78th Leg. Sess. Ch. 1034, effective September 1, 2003. Sec. 545.307. Overnight Parking of Commercial Motor Vehicle In Residen- tial Subdivision. (a) In this section: (1) "Commercial motor vehicle" means: (A) a commercial motor vehicle, as defined by Section 522.003, and includes a vehicle meeting that definition regardless of whether the vehicle is used for a commercial purpose; or (B) a road tractor, truck tractor, pole trailer, or semitrailer, as those terms are defined by Section 541.201. (2) "Residential subdivision" means a subdi- vision in a county with a population greater than 220,000: (A) for which a plat is recorded in the county real property records; and (B) in which the majority of lots are sub- ject to deed restrictions limiting the lots to residential use. (b) After 10 p.m. and before 6 a.m., a person may not park a commercial motor vehicle or leave the vehicle parked on a street of a residential subdivision for which signs are posted as pro- vided by Subsection (c) unless the commercial; motor vehicle: (1) is transporting persons or property to or from the residential subdivision or performing work in the subdivision; and (2) remains parked in the subdivision only for the period necessary to complete the trans- portation or work. (c) The residents of a residential subdivision may petition a county or municipality in which the subdivision is located for the posting of signs prohibiting the overnight parking of a commer- cial motor vehicle in the subdivision. The petition must be signed by at least 25 percent of the owners or tenants of residences in the subdivi- sion. Not more than one person for each residence may sign the petition, and each person signing must be at least 18 years of age. Promptly after the filing of a petition meeting the requirements of this subsection and subject to Subsection (d), the county or municipality receiving the petition shall post the signs. The signs must: (1) be posted at each entrance of the subdi- vision through which a commercial motor vehi- cle may enter the subdivision or within the 858 subdivision if there is not defined entrance to the subdivision; and (2) state, in letters at least two inches in height, that overnight parking of a commercial motor vehicle is prohibited in the subdivision (d) A county or municipality receiving a peti- tion under Subsection (c) may condition the post- ing of the signs on payment by the residents of the residential subdivision of the cost of providing the signs. (e) A person commits an offense if the person parks a commercial motor vehicle in violation of Subsection (b). (f) This section does not limit the power of a municipality to regulate the parking of commer- cial motor vehicles. (g) For the purposes of this section, contiguous subdivisions that are developed by the same entity or a successor to that entity and that are given the same public name or a variation of the same public name are considered one subdivision. Separation of one of the subdivisions from an- other by a road, stream, greenbelt, or similar barrier does not make the subdivisions noncon- tiguous. Leg.H. Stats. 1997 75th Leg. Sess. Ch. 173, effective September 1, 1997; Stats. 1999 76th Leg. Sess. Ch. 731, effective September 1, 1999, Ch. 1419, effective June 18, 1999. Sec. 545.308. Presumption. The governing body of a local authority, by ordinance, order, or other official action, may provide that in a prosecution for an offense under this subchapter involving the stopping, standing, or parking of an unattended motor vehicle it is presumed that the registered owner of the vehicl is the person who stopped, stood, or parked th vehicle at the time and place the offense occurred Leg.H. Stats. 2001 77th Leg. Sess. Ch. 1080 effective September 1, 2001. SUBCHAPTER H SPEED RESTRICTIONS Sec. 545.351. Maximum Speed Re- quirement. (a) An operator may not drive at a speed greater than is reasonable and prudent under the circumstances then existing. (b) An operator: (1) may not drive a vehicle at a speed greater than is reasonable and prudent under the con- Page 1 of 2 Gillett, Martha To: Mayor and City Council Subject: FW: 6 November meeting of city council. Martha A. Gillett, TRW CMC City Secretazy/Public Information Officer City ofLa Porte 604 West Fairmont Parkway LaPorte, Texas 77571 281-471-5020 ext. 5019 From: Rice, Gary Sent: Sunday, November 05, 2006 5:24 AM To: Gillett, Martha Cc: riceg@laportebc.gov Subject: 6 November meeting of city council. Ms. Gillett, If possible, would you see that all council members and the mayor receive a copy of this prior to the meeting? Judge Mitrano asked if I could be in attendance to answer possible questions from council in reference to the parking ordinance that was tabled from the last meeting. I cannot attend the meeting of the 6th and would like to address some issues that may clear up any questions that council members may have. I originally requested permission from Judge Mitrano to issue parking citations to a vehicle using "Owner or Operator" in lieu of a name on the citation. After meeting with the Judge, a decision was made to use the registered owners name in the "name" portion of the citation, however, the city prosecutor also wanted to address the issue via ordinance. The problem that we have in the police department and the fire marshals have in the fire department, is that we simply don't have time to wait on a violator to return to their vehicle and issue the citation directly to a person instead of the vehicle. I have checked with several agencies and have been advised that they issue all of their parking citations to the registered owner as well. On any given day this city has hundreds of illegally parked vehicles and trailers on our streets. Officers bypass enforcement on these issues due to the current unwritten policy of writing the citation to a person instead of a vehicle. The primary offenders that I choose to write are the ones violating the "Handicap Parking" zones, and the ones that park too close to, or completely block fire hydrants. Since I work midnight shift, I see repeat violators all over our city, that park in front of fire hydrants at night. It would be a sad situation if their house or a neighbor's house burnt down due to their negligence in something as simple as a parking violation that went unenforced. The bulk of our violations come from an offense known as "Park with wheels (Right) over 18" from curb or edge of roadway". This violation can be observed by the dozens as you drive down any street in town. The problem with this violation is that the offender has to do three things (all of which are violations) to get into or out of that position. 11 /6/2006 Page 2 of 2 1. The violator has to drive on the wrong side of the street, not passing. 2. The violator then parks his or her car illegally. 3. The violator has to again drive on the wrong side of the street, not passing to get out of the position. People mainly use this form of parking simply because they are too lazy to park on the right side of the street with their "right' wheels against the curb and walk a few extra steps to their destination. The intent that we have on the parking issue is not necessarily to address all of these violations, but to enforce the major ones, especially the repeat offenders. Any and all consideration in this matter would be beneficial. Sincerely, Lt. Gary Rice Police Department 11 /6/2006 VE REQUE Agenda Date Requested: N Requested By: Department: FOR CITY COUNCIL AGENDA ITEM Report: Resolution: Ordinance: Exhibits: Draft Ordinance Exhibits: Exhibits: Appropriation Source of Funds: Account Number: Amount Budgeted: Amount Requested: Budgeted Item: XIES NO SUMMARY & RECOMMENDATION At the October 9, 2006 meeting, a citizen addressed City Council regarding a Pooper Scooper Law. Council directed staff to prepare to workshop this item at a future Council meeting. Staff has prepared an ordinance amending Chapter 14, "Animals", Article 1, "In General", of the Code of Ordinances of the City requiring the owner or custodian of an animal to dispose of animal excreta deposited on public property or private property not under control. Action Required by Council: Workshop discussion on an ordinance amending Chapter 14, "Animals", Article 1, "In General', of the Code of Ordinances of the City requiring the owner or custodian of an animal to dispose of animal excreta deposited on public property or private property not under control. Date ORDINANCE NO. 2006- AN ORDINANCE AMENDING CHAPTER 14, "ANIMALS", ARTICLE I, "IN GENERAL", OF THE CODE OF ORDINANCES OF THE CITY OF LA PORTE BY REQUIRING THE OWNER OR CUSTODIAN OF AN ANIMAL TO DISPOSE OF ANIMAL EXCRETA DEPOSITED ON PUBLIC PROPERTY OR PRIVATE PROPERTY NOT UNDER THE CONTROL, POSSESSION OR SUPERVISION OF THE ANIMAL OWNER OR CUSTODIAN; PROVIDING THAT ANY PERSON VIOLATING THE TERMS OF THIS ORDINANCE SHALL BE DEEMED GUILTY OF A MISDEMEANOR AND UPON CONVICTION SHALL BE FINED IN A SUM NOT TO EXCEED FIVE HUNDRED DOLLARS; CONTAINING A REPEALING CLAUSE; CONTAINING A SEVERABILITY CLAUSE; PROVIDING FOR PUBLICATION OF THE CAPTION HEREOF; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. Chapter 14, "Animals", Article I, "In General", Section 14-1, "Definitions", is hereby amended by adding in correct alphabetical sequence the following definition: "Excreta means waste material eliminated or separated off from an organism, including excretions or feces of an animal." Section 2. Chapter 14, "Animals", Article I, "In General", is hereby amended by adding Section 14-9, "Animal waste disposal", which shall hereafter read as follows, to -wit: "Sec. 14-9. Animal waste disposal. The owner and/or custodian of every animal shall be responsible for the sanitary disposal of, and shall dispose of, any excreta deposited by an animal under his or her control on all public property, including, but not limited to, public walks, streets, recreation area and parks, and also upon all private property not within the control, possession or supervision of said owner or custodian." Section 3. Chapter 14, "Animals", Article I, "In General", is hereby amended by amending "Secs. 14-9 -- 14-40 Reserved.", which shall hereafter read as follows, to -wit: "Secs. 14-10 -- 14-40 Reserved." Section 4. Any person, as defined in Section 1.07(27), Texas Penal Code, who shall violate any provision of the ordinance, shall be deemed guilty of a misdemeanor and upon conviction shall be punished by a fine not to exceed Five Hundred Dollars ($500.00). Section 5. All ordinances or parts of ordinances in conflict herewith are hereby repealed to the extent of such conflict only. Section 6. If any section, sentence, phrase, clause, or any part of any section, sentence, phrase, or clause, of this Ordinance shall, for any reason, be held invalid, such invalidity shall not affect the remaining portions of this Ordinance, and it is hereby declared to be the intention of this City Council to have passed each section, sentence, phrase, or clause, or part thereof, irrespective of the fact that any other section, sentence, phrase, or clause, or part thereof, may be declared invalid. Section 7. 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 8. This Ordinance shall be effective fourteen (14) days after its passage and approval The City Secretary shall give K, notice to the passage of the ordinance by causing the caption to be published in the official newspaper of the City of La Porte at least twice within ten (10) days after the passage of the ordinance. PASSED AND APPROVED, this day of ATTEST: Martha A. Gillett City Secretary APPROVED: Clark T. Askins Assistant City Attorney By. CITY OF LA PORTE Alton E. Porter Mayor 2006. 3 C REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: November 6, 2I)06 Requested By: John Joerns/Wa ueJ.S o Department: CMO/Planning Report: X Resolution: Ordinance: Exhibits: Draft Interlocal Agreement Typical Road Cross Section Area Map Appropriation Source of Funds: NA Account Number: NA Amount Budgeted: NA SUMMARY Council is aware that several initiatives are underway to mitigate the truck traffic challenges along Barbours Cut Blvd. and the associated issues with trucks queuing for entry to the various container yards along Broadway and L Streets. One course of action is being taken by the Port of Houston (POH) which will open a portion of the J Street ROW as a 2-lane public road beginning at the intersection of J Street and S.H. 146's feeder road, crossing over 8`h Street, proceeding east to the former 6`h Street ROW and then north as a 3-lane private road to L Street. Another action, in association with Frontier Logistics, is being considered to open and construct a temporary, emergency traffic relief road beginning at the intersection of Barbours Cut and the 4`h street ROW, going north to the H Street ROW and then east along H Street to Broadway (see area map). During initial coordination, Frontier Logistics has agreed to pay for the construction. While clearing of the ROWs has begun, actual construction of the roadbeds requires coordination with and approval by the City. As a start point, attached is the draft interlocal agreement with POH prepared by the City Attorney. This interlocal agreement with POH lays out terms for: • Constructing and maintaining a public street including drainage (Standards to be approved by the City). The proposed cross section is 8" lime -stabilized subgrade and 10" cement -stabilized base. (See Exhibit —Typical Road Cross Section) • POH agrees to pay all associated expenses and emplace protective measures required for city utilities. • POH maintains the roadway, installs and maintains street lighting to City standards. • Duration of the agreement is 5 years with a year -by -year renewal or cancellation by either party with 1-year's notice. The intent of the road is to be a temporary ingress/egress for trucks to the Ceres Container Yard and other locations thereby relieving truck queuing on Barbours Cut and Broadway. There are several points of discussion. The proposed cross section for trucks is 10" Cement Stabilized Base with an 8" Lime Stabilized Subgrade. POH has not included a surface course to make the surface dust free as per City ordinance. Staff has notified POH engineering staff that at least a single course penetration will be required in order for the surface to be considered. At any rate, the road, as planned, does not meet PICM standards and if allowed, requires some form of variance. (See Proposed Cross Section attached). Owing to the highly plastic nature of the soils in the area as well as the anticipated traffic load, Staff is concerned about measures to prevent long term maintenance problems. Given that the road is an expedient measure and temporary in nature, and given that the POH is responsible for the maintenance of the road for at least five years (or for the duration of the agreement), the questions must be asked what happens to the road once the interlocal agreement expires or is terminated and in what condition will it be? At some point a decision must be made to close the road or to make it permanent to City Standards. The draft interlocal agreement mandates lighting to City Standards. So as not to slow the project's progress, POH's initial intent is not to light the street and to only allow usage under daylight conditions. Should conditions warrant such, POH is willing to re -look the issue. Regarding usage of the 41h Street and H Street ROWS, the issues are similar. The intent is for this road to be blocked from daily use and opened when necessary to relieve traffic congestion. Trucks would queue along 4th and H Street while waiting for entry into container yards. Given that this temporary road is an expedient measure and that the City is working with a private corporation to assist and pay for construction, Staff is recommending that Council direct a resolution be generated to cite the need for the road to relieve traffic congestion, establish the need for the public safety and the necessity to deviate from normal City street standards as set in PICM. It is anticipated that the construction for this project will be the same or similar to the standards for the POH initiative along the JStreet ROW. Action Required by Council: 1. Direct issues and concerns to Staff for formal input to the Port of Houston. 2. Direct Staff to prepare a Resolution for the construction of a temporary road along the 4`h and H Street ROWS as identified in this report. 3. Provide guidance on any other issues identified. Approved for City Council Agenda / QI oc ate ACRF.F.MF'NT STATE OF TEXAS KNOW ALL MEN BY THESE PRESENTS: COUNTY OF HARRIS THIS AGREEMENT made and entered into by and between the CITY OF LA PORTE, a municipal corporation of Harris County, Texas, hereinafter referred to as "CITY" and the PORT OF HOUSTON AUTHORITY, a body politic of Harris County, Texas, hereinafter referred to as "PORT", WITNESSETH: WHEREAS, PORT is in need of certain governmental services for the benefit of the people and property at its Barbour's Cut Terminal; and WHEREAS, CITY is able and willing to provide said governmental services to PORT, upon the terms, conditions, and covenants herein contained: NOW, THEREFORE, pursuant to the authority granted by the Interlocal Cooperation Act (Article 4413(32c), V.A.T.S.), and in consideration of the mutual covenants, agreements, and benefits to both parties, it is hereby agreed as follows: I. CITY grants to PORT, CITY's consent for PORT to improve CITY's street Right -of -Way, described as follows: North Avenue J, from State Highway 146 to North 6th Street. for the purpose of constructing and maintaining a public street, including associated surface drainage. The engineering design, including drainage, materials, plans and specifications, shall be subject to the prior approval of CITY. Minimum standards for said project are set forth on Exhibit "A" attached hereto. PORT shall also secure approval of Harris County as to the drainage design, to insure that runoff from the former Harris County landfill is accounted for in the drainage design. II. PORT agrees to pay for all expenses associated with the design, construction, and maintenance of the roadway, including any necessary adjustment to or protective measures required for CITY utilities, or utilities operated by duly franchised CITY utility providers. PORT shall maintain the roadway in a safe and passable condition at all times. PORT shall install and maintain street lighting to CITY standards. This Agreement shall be effective October 1, 2006, for a five (5) year initial term, and shall continue thereafter on a year-to- year basis, unless cancelled by either party hereto upon one (1) year's written notice to the other party hereto. The parties recognize that the roadway to be constructed and maintained by PORT shall be primarily utilized by truck traffic to PORT's Barbour's Cut Terminal, and CITY shall have no maintenance responsibility for said roadway upon termination of this Agreement. EXECUTED IN DUPLICATE ORIGINALS, effective as of this the 1st day of October, 2006. WA ATTEST: Martha A. Gillett City Secretary APPROVED: Knox W. Askins City Attorney CITY OF LA PORTE Debra Brooks Feazelle City Manager PORT OF HOUSTON AUTHORITY BY: _ Name: Title. ATTEST: EXHIBIT "A" To Agreement between City of La Porte and the Port of Houston Authority. Minimum standards for engineering design for the improvement of North Avenue J, and associated drainage: 8' UME STAMUZED sue Vp" ROLL Saul. . 9' /4M 13' ,to i �� TYPIC6L 2 LANE PAVEMENT CROSS SECTION TYPICAL. 3-LANE PAVEMENT CROSS SECTION REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: November 6 2006 Requested By: Wayne Sab Department: Planning Report: X Resolution: Ordinance: Exhibits: Letter to Mr. Joe Fogarty (October 31, 2006) Letter from Arete Development Exhibit, Fairmont Greens Bayou Crossing Exhibit, Fairmont Greens Recreational Trail Exhibit, La Porte Pedestrian Trail Plan Appropriation Source of Funds: NA Account Number: NA Amount Budgeted: NA SUMMARY Staff received a request from Mr. Joe Fogarty to present a concept concerning planned amenities for the Lakes at Fairmont Greens residential development. At issue is the Harris County Flood Control District's (HCFCD) portion of Taylor Bayou. The developer is proposing consideration for the City of La Porte to accept a segment of Taylor Bayou bounded by SH. 146 and McCabe Road from HCFCD into public domain (See Exhibit, Fairmont Greens Recreational Trail). As with the Port Crossing and Bayforest Retreat developments, HCFCD, during the review process of the drainage outfall structures for the developments, requested additional easements for maintenance purposes. Additional allocation, however, has a detrimental effect upon the lots planned for the subdivision. The concept being presented would have the City accept responsibility for the stated portion of Taylor Bayou and, in turn, turn the maintenance responsibilities over to the Public Improvement District (PID) for that housing development. HCFCD will only consider abandoning easements to governmental agencies. It must be understood that the City views the portion of the HCFCD channel that Arete wants the City to accept into public domain as being strategically placed so that any action or modification made on this segment of channel affects all developments upstream and downstream; specifically Fort Crossing and The Preserve at Taylor Bayou. Modifications considered for this portion of the Bayou will require technical review by the Engineering Staff. Council could accept responsibility for maintenance as is. Staff, however, recommends that should the Council consider accepting responsibility for the subject portion of Taylor Bayou, these steps be accomplished: 1. Arete must appear before the TIRZ Board to brief the concept and receive approval for funding the project. Plats and Construction Drawings must be reviewed and approved by Harris County, HCFCD and the City. The City must receive a copy of the Express Approval Sheet from Harris County. 2. The subject channel be incorporated into a public amenity that benefits the entire project in order for Public Improvement District funding to be allocated to the maintenance of the project. Submitted Plats must reflect this amenity as a detention reserve, dedicated to the public with the City's right of entry. All pedestrian, water or park features must be incorporated into the channel improvements and not overlapping any public ROW (e.g. alley). 3. Construction drawings for the fence bordering Section 1 and Taylor Bayou must be reviewed and approved by the City. HCFCD and the City of La Porte share the same concern over maintenance issues resulting from the proximity of the privacy fence to the berm of Taylor Bayou. This fence must be properly engineered and be commercial grade. It should be noted that the land plan for the neighboring Section 9 has not, as yet, been approved. Mr. Fogarty will present the concept during the workshop in an expanded format. Action Required by Council: 1. Direct issues and concerns to Staff for formal input to Arete Development. 2. Direct Staff to coordinate and prepare appropriate documentation with HCFCD should consideration be favorable. 3. Provide guidance on any other issues identified. Approved for City Council Agenda J Joe r nterim City Manager Date • RroEstablished 1892 /s City of La Porte I N � p Fri October 31, 2006 Mr. Joe Fogarty Arete Real Estate Development 340 N. Sam Houston Pkwy. East, Suite 100 Houston, TX 77060 RE: Letter Dated October 25, 2006 Dear Mr. Fogarty: Your letter does not accurately reflect previous conversations regarding City maintenance of Taylor Bayou. In past discussion with Mr. Reed he noted that 65 La Porte LTD is unwilling to adjust the plat to secure HCFCD approval. The City staff stated they would entertain a positive recommendation to City Council to. take over maintenance of this stretch of Taylor Bayou (and incorporate it into the PID) if it were redesigned and developed into an amenity feature. Of course, the final decision rests with City Council and the TIRZ/Redevelopment Authority. Mr. Reed indicated that was a feasible approach and noted willingness to dedicate land to the south of Taylor Bayou. Please coordinate with Wayne Sabo regarding the conceptual approach and presentations to City Council and the TIRZ/Redevelopment Authority. Sincerely, John Jo s Inte ' City Manager JJ/ml David Hawes, TIRZ/Authority Consultant OC �6 LA [V 9 604 W. Fairmont Pkwy. • La Porte, Texas 77571 • (281) 471-5020 Real ]Estate & 340 N. Sam Houston Pkwy. E., # 100 • Houston, Texas 77060 Deve opmentGo (281) 272-6134 • (281) 260-9798 (FAX) October 25, 2006 Mr. John Joerns Interim City Manager City of La Porte 604 West Fairmont Parkway LaPorte, Texas 77572-1115 Dear Sir: RECEIVED OCT 2 7 2006 ASSISTANT CITY MANAGER'S OFFICE Please provide a letter to Harris County Flood Control concerning the maintenance of Taylor Bayou between Highway 146 and McCabe Road in La Porte. This letter is necessary in order for me to get Harris County Flood Control approval of my construction plans. I would like the letter to be similar to the attached. Sincerely, oe F rty President JF/dlc Real state 6340 N. Sam Houston Pkwy. E , # 100 • Houston, Texas 77060 DeyeopI�2entCo. (281) 272-6134 • (281) 260.9798 (FAXI October 31, 2006 Mr Wayne Sabo City of'La Porte 604 West Fairmont Parkway La Porte, IX 77571 Re: Lakes at Fairmont Greens Dear Mr,. Sabo: In order to move our development forward, we need the City of La Porte to accept for maintenance that portion of Taylor Bayou from 146 to McCabe Road, This maintenance would be done through the development authority which will administer the PID created in support of our Lakes at Fairmont Greens development.. The property which we own is bisected by Taylor Bayyou,. Harris County Flood Control will only approve out plans under one oftwo scenarios. One of those requires us to giant to Harris County Food Control an additional 30' of width in exchange for their continued maintenance of 'this stretch of'the Bayou. The other, scenario requires the City agree to accept future maintenance of the stretch of the Bayou The first scenario would require that we redo our land plan, redo our- construction plans and engineering, request a variance of'street setbacks for some of'the lots and change some of'the lots sizes. The additional easement would not be affective unless also granted across the golf' course., Even if'that solution were acceptable, the level of'maintenance then provided by Flood Control only allow for mowing twice a year- It is my view that this is an unacceptable level of maintenance•. A number, of'homes which back up to this Flood Control easement are within the boundaries of the PH) and would be paying a maintenance assessment equal to all others in the development and have a right to expect that the drainage facility behind their homes would be maintained to the same standard as that easement between the development and the golf' course.. The drawings attacied illustrate the route of'the walkway which goes between the chain of lakes and the golf' course crosses Taylor Bayou and continues down to McCabe Road with a bridge crossing Taylor Bayou. That portion of'the walkway will be landscaped and lighted similar- to all the walkways in the development This is not a change, This is the same plan previously approved.. This scenario enhances the quality of'our proposed development.. Thank you for your- assistance in this matter. Sin e o at� .President EXHIBIT FOR W W W W W L J: FAIRMONT GREENS W W SECTION 1 W W BAYOU CROSSING W W W W W W W W W W W W W W W W W W W W W w\t i W W W r W W 6' PEDESTRIAN W W W \ FOOT BRIDGE W W \\\ W W \ W J\ y W " W W W W W W i W W SECTION 9 W W W CIJbm pVNRo � \W W W W \ W W W W W W W W \ W W y W W W W \ W W W W W W W W W W W W W W W W W W W \W W J\ W W W W W W W W W W TYPICAL SECTION (N.T.S.) l 1-GEN1) Water 8' Wulkiny had 12' Alley (One Way) 20' Alley (Two Way) Open Space Ion Design Group a � . SECTION 9 t4,0'r % P P&O V F, b) in IN WHARTON WEEMS BOULEVARD ----------- -------------- omol --= 01101110110-110- - --- --- - - ------- ------ - ----- --- ----- -- ----- -- - ----- ---------- - - - - -- --------- - - tam." ----------------- EXHIBIT FOR FAIRMONT GREENS RECREATIONAL TRAIL PEDESTRIAN FOOT BRIDGE I F GFNI) 8' Walking Trail V)' Alley (Ofl(-- W(-I.Y) Ion 2800 N. Henderson Avenue Studio 100 .. Design Dallas,Texas 75206 214.310.1470 lh .Group214.370.3083 Fx MCCABE ROAD 0 Me REQUEST FOR CITY COUNCIL AGENDA ITF,M Agenda Date Requested: 10-27-06 Requested By: Robert S wanagan R t" Department: Human Resources Report: X Resolution: Ordinance: Exhibits: Exhibits: See attached exhibits Appropriation Source of Funds: Account Number: Amount Budgeted: Amount Requested: Budgeted Item: YES NO Exhibits: SUMMARY & RECOMMENDATION Presentation to City Council by Neal Welch, HRH Consultant regarding Cost calculations for Active and Retiree Insurance and resulting impact on budget. Action Required by Council: Approved for CIty Council A enda John erns, t City Manager ate HIBITS: 1. E-Mails October 18'h & 19'h 2. E-Mail s October 31s1 (See *) Memo from HRH October 31, with illustrations and spreadsheet Page 1 of 2 Jcerns, John From: Dolby, Michael Sent: Thursday, October 19, 2006 5:06 PM To: Joerns, John; Gillett, Martha; Swanagan, Robert Subject: FW: Retirement Insurance From: Clark, Kathy [mailto:Kathy.Clark@HRH.com] Sent: Thursday, October 19, 2006 10:00 AM To: Dolby, Michael Cc: Welch, Neal Subject: Retirement Insurance Michael, Good morning! Neal asked me to respond to your email In order to maintain the plan reserves for the future, there is a trend factor added to each year's plan cost. For La Porte, the factor was 15% for 2007. The 15% equates to $254,000. The actives would pick up approximately $173,000 of this cost and the retirees $81,000. The Council decided to freeze the active employee contributions at 2006 rates and shift the trend increase to the City of $173,000 ($575 pepm to $620.73 pepm). Retirees would continue to contribute a percentage of the total plan cost based on the approved vesting schedule. Keep in mind that the retirees pay a portion of the total plan cost using an approved vesting schedule; whereas active employees pay a declared split with the City's contribution. I think much of the controversy is based in the fact that the active employee contributions were frozen for 2007, and all trend increases were absorbed for that group by the City. Please let us know if you need anything else. Thanks! Kathy Clark From: Welch, Neal Sent: Thursday, October 19, 2006 9:44 AM To: Kathy Clark (Kathy.Clark@HRH.com) Subject: FW: Retirement Insurance Neal W. Welch Hilb Rogal & Hobbs PHONE: 281-584-1616 From: Dolby, Michael [mailto:DolbyM@ci.la-porte.tx.us] Sent: Wednesday, October 18, 2006 3:09 PM 10/31 /2006 Page 2 of 2 To: Welch, Neal Cc: Joerns, John; Gillett, Martha; Swanagan, Robert Subject: Retirement Insurance Hello Neal, Mr.. Moser (District 4 Councilman) asked: What is the split (amount city pays and retiree pays) calculation for retirees health insurance? How did your firm arrive at the $170,000 cost for retirees? How did your firm arrive at the $253,000 dollar subsidy number? thanks Michael G. Dolby, CPA Assistant Director of Finance City of La Porte (281)470-5036 10/31 /2006 Page 1 of 2 Joerns, John From: Clark, Kathy [Kathy.Clark@HRH.com] Sent: Tuesday, October 31, 2006 4:25 PM To: Welch, Neal; Joerns, John Cc: Swanagan, Robert; Dolby, Michael; Welch, Neal Subject: Retiree Premium Freeze Comparison 09-28-06.xls Attachments: Memo, John Joerns, 10-31-06, Contribution Worksheet.doc; 2007 Proposed Contribution Worksheet 10-31-06.xls John, Attached are the documents we discussed. Please let us know if you have any questions. Thanks! Kathy Clark From: Welch, Neal Sent: Tuesday, October 31, 2006 4:12 PM To: Joerns, John Cc: Kathy Clark (Kathy. Clark@HRH.com) Subject: RE: Retiree Premium Freeze Comparison 09-28-06.xls Good explanation. Kathy is forwarding responses to questions and illustrations this afternoon. For expediency sake I will have Kathy send to Michael and Robert as well. Neal W. Welch Hilb Rogal & Hobbs PHONE: 281-584-1616 From: Joerns, John [mailto:Joerns)@ci.la-porte.tx.us] Sent: Tuesday, October 31, 2006 4:08 PM To: Dolby, Michael; Swanagan, Robert Cc: Wolny, Shelley; Feazelle, Debra; Welch, Neal; :katy.clark@hrh.com Subject: FW: Retiree Premium Freeze Comparison 09-28-06.xis Some not so good news 4I spoke with Neal regarding Council confusion on the cost of freezing the retiree schedule. In some of his earlier work he had not taken into account that the 56 current retirees are already frozen by our ordinance----- and we think there is confusion by Council when they ask about retirees and staff gives answers that reflect the retirees after Jan 1, 2006—that are according to the vesting schedule. Bottom line —they are sending new schedules and a simple explanation —the last e-mail questioned by Council did not reverse the numbers ($170,000 and $81,000)—so we will need to look at a budget amendment I think of $170,000 minus the $81,000 already added. When new sheets arrive —I will circulate to all for a look see 10/31 /2006 `]HRH. hilb rogal & hobbs" TO: John Joerns FROM: Neal Welch Kathy Clark cc: Robert Swanagan Michael Dolby DATE: October 31, 2006 RE: 2007 Proposed Contribution Worksheet Hilb Rogal & Hobbs 1 155 Dairy Ashford, Suite 350 P.O. Box 941709 (77094-8709) Houston, Texas 77079-3012 281-531-4455 800-964-6564 Attached you will find the worksheets we discussed during our conference call today. Question #1 - What is the budget impact to the City of absorbing the employee increase of 15% for 2007? Answer - $173,132 for 2007 (See Illustration #1 and #2) Question #2 - What is the budget impact to the City of absorbing the retiree increase of 15% for 2007? Answer - $30,488 for 2007 (See Illustration # 1 and #2) Illustration #3 is provided to review the impact on individual rates. cAdocuments and settings\joemsj\local settings\temporary internet files\olkIWrnemo john joems 10-31-06 contribution worksheet.doc City of La Porte 2007 Proposed Contribution Illustrations Illustration #1 2006 Plan Cost (Estimate) $2,900,000 2007 Plan Cost (Estimate) 4 249 + 15% (Includes medical trend, Rx trend, admin. and stop loss fees) Increase Needed $440,249 Illustration #2 Current City Contribution $500 PEPM Budget City Contribution (2007) $575 PEPM + 15% City contribution if it absorbs active and retiree $620.37 PEPM contribution increase ($45.37 increase) Active Subsidy = $45.37 x 318 x 12 $173,132 Retiree Subsidy = $45.37 x 56 x 12 $30,488 Active and Retiree Subsidy $203,620 City Contribution @ $575 $2,580,600 Current Active and Retiree Contribution $556,007 $3,340,227 cAdocuments and settings\joemsj\local settings\temporary internet files\olkI Wmemo john joems 10-31-06 contribution worksheet.doc City of La Porte 2007 Proposed Contribution Worksheet Original 2007 Employee & Employee & Employer Retiree Retiree Total 2007 Subs Contribution Subsidy Contribution Plan Cost Coverage Vt - $1,500 Deductible Employee Only 24 $575.00 $45.37 $14.65 $635.02 Employee & Spouse 13 $575.00 $45.37 $105.00 $725.37 Employee and Children 17 $575.00 $45.37 $95.24 $715.61 Employee and Family 24 $575.00 $45.37 $120.69 $741.06 Coverage Vt - $1,000 Deductible Employee Only 50 $575.00 $45.37 $22.70 $643.07 Employee & Spouse 23 $575.00 $45.37 $130.34 $750.71 Employee and Children 20 $575.00 $45.37 $120.07 $740.44 Employee and Family 35 $575.00 $45.37 $155.60 $775.97 PPO - $500 Deductible Employee Only 26 $575.00 $45.37 $50.23 $670.60 Employee & Spouse 19 $575.00 $45.37 $165.74 $786.11 Employee and Children 10 $575.00 $45.37 $155.15 $775.52 Employee and Family 21 $575.00 $45.37 $185.32 $805.69 PPO - $300 Deductible Employee Only 22 $575.00 $45.37 $79.14 $699.51 Employee & Spouse 14 $575.00 $45.37 $225.79 $846.16 Employee and Children 4 $575.00 $45.37 $215.99 $836.36 Employee and Family 52 $575.00 $45.37 $239.56 $859.93 374 Total Monthly Funding $215,050 $16,968 $46,334 $278,352 Total Annual Funding $2,580,600 $203,621 $556,007 $3,340,228 Employer/Employee % 77% 6% 17% 3,340,228 Illustration 3 Coverage 1st - $1,500 Deductible Employee Only Employee & Spouse Employee and Children Employee and Family Coverage 1st - $1,000 Deductible Employee Only Employee & Spouse Employee and Children Employee and Family PPO - $600 Deductible Employee Only Employee & Spouse Employee and Children Employee and Family PPO - $300 Deductible Employee Only Employee & Spouse Employee and Children Employee and Family Total Monthly Funding Total Annual Funding Employer/Employee % City of La Porte 2007 Proposed Contribution Worksheet 80/20 Split Subs Original 2007 Employer Contribution Employee & Retiree Subsidy Employee & Retiree Contribution Total 2007 Plan Cost 24 $575.00 $22.62 $37.27 $634.89 13 $575.00 $22.62 $127.62 $725.24 17 $575.00 $22.62 $117.86 $715.48 24 $575.00 $22.62 $143.31 $740.93 50 $575.00 $22.62 $45.32 $642.94 23 $575.00 $22.62 $152.96 $750.58 20 $575.00 $22.62 $142.69 $740.31 35 $575.00 $22.62 $178.22 $775.84 26 $575.00 $22.62 $72.85 $670.47 19 $575.00 $22.62 $188.36 $785.98 10 1 $575.00 1 $22.62 1 $177.77 1 $775.39 1 21 $575.00 $22.62 $207.94 $805.56 22 $575.00 $22.62 $101.76 $699.38 14 $575.00 $22.62 $248.41 $846.03 4 $575.00 $22.62 $238.61 $836.23 52 $575.00 $22.62 $262.18 $859.80 374 $215,050 $8,460 $54,794 $278,304 $2,580,600 $101,519 $657,526 $3,339,644 77% 3% 20% $3,339,644 REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: November 6, 2006 Requested By: .Inhn .1nerns Department: AdmWistr2fian Report: Resolution: Ordinance: Exhibits: Ordinance 2004-2781-C with Exhibit A Exhibits: Exhibit B-Chapter 172 Board Recommendations And Recommendations with Original Direction Exhibits: Appropriation Source of Funds: Account Number: Amount Budgeted: Amount Requested: Budgeted Item: YTS No SUMMARY & RECOMMENDATION At the September 25 City Council meeting Council formally approved items 1-6 (attached) of the recommendations of the Chapter 172 Board. Item 7 was tabled and Council requested additional information. This item is presented again for Council's formal confirmation of the Chapter 172 Board recommendation. (7) Recommends the current method of making the Retiree calculations continue with clarification of language regarding City budgeted cost and that the coverage % discount amount applies only for retirees, not dependents. Also, the proposed calculator that Neal is developing be implemented to allow any employee to be able to get an estimate of their insurance cost and their dependents cost at the current year budgeted City cost and for one additional year. o Ordinance 2004-2781-C, Exhibit A approved October 23, 2006 (attached) Section 1.D.5 clarified the language regarding City budgeted cost and Section 1.D.5 clarified that the coverage % discount amount applies only for retirees, not dependents. NOTE: Staff will return with clarification language for Exhibit A (1.D.5) that notes dependent must (also) be full time student with a minimum of 12 hours course load. Action Required by Council: Consider recommendation #7 of Chapter 172 Board. �/ od Date ORDINANCE NO.2004-2781-C AN ORDINANCE ADOPTING AN AMENDMENT TO THE CITY OF LA PORTE EMPLOYEE POLICIES HANDBOOK BY AMENDING SECTION 9A, "RETIREE MEDICAL COVERAGE"; PROVIDING FOR THE TERMS AND CONDITIONS OF RETIREE MEDICAL COVERAGE; PROVIDING AN EFFECTIVE DATE OF SAID AMENDMENT; CONTAINING A SEVERABILITY CLAUSE; FINDING COMPLIANCE WITH THE OPEN MEETINGS ACT; AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. The City of La Porte Employee Policies Handbook is hereby amended, by amending Section 9A, "Retiree Medical Coverage", as shown on Exhibit A attached hereto, incorporated by reference herein, and made a part hereof for all purposes. Section 2. If any provisions, section, subsection, sentence, clause, or phrase of this ordinance or amendment of the City of La Porte Employee Policies Handbook hereby adopted, or the application of same to any person or set of circumstances is for any reason held to be unconstitutional, void or invalid, the validity of the remaining portions of this Ordinance or their application to other persons or sets of circumstances shall not be affected thereby, it being the intent of the City Council in adopting this new Ordinance that no portion hereof or provision or regulation contained herein shall become inoperative or fail by reason of any constitutionality, voidness or invalidity of any other portion hereof, and all provisions of this Ordinance are declared to be severable for that purpose. Section 3. 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 is 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 Chapter 551, Tx. Gov't 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 4. Except as amended by this ordinance, Section 9A, "Retiree Medical Coverage", of the City of La Porte Employee Policies Handbook, shall remain in full force and effect. Section S. This Ordinance shall be effective from and after its passage and approval, and it is so ordered. Passed and Approved this C2` day of"91,-Or , 2006. CITY OF LA PORTE By: D-,6,L Alton E. Porter, Mayor ATTEST: rr� -� Martha Gillet, City Secretary _JOJ= G Clark T. Askins, Assistant City Attorney ( Exhibit A Zw Oki(- 9 A Retiree Medical Coverage 1. The following persons are eligible for retiree medical coverage: A. Present retirees of the City of La Porte receiving retirement annuities as a qualified annuitant under the Texas Municipal Retirement System, who have retired in accordance with the City of La Porte Employee Policies Handbook; and were employed by the City of La Porte at the time of their retirement. Retirees re-employed after retirement from the City of La Porte that have employer sponsored health care coverage available through the new employer may not continue health coverage with the City of La Porte, except for those with 30 years or more tenure with the City of LaPorte. If an employee works 30 years or more with the City of La Porte they may maintain the City of La Porte sponsored health plan as secondary, which working for a new employer offering a health plan option. All POW Retirees who are self- employed are eligible for medical coverage, but occupational illnesses or injuries shall not be covered. Annual contributions by retirees to the health plan will be based on current active employee/dependent rates. B. City employees who retire from the City of La Porte employment on or before December 31, 2005, as a qualified annuitant under the Texas Municipal Retirement System; who retire in accordance with the City of La Porte Employee Policies Handbook; who complete at least 10 years of service with the City of La Porte, and are currently employed by the City of La Porte at the time of their retirement. Retirees re- employed after retirement from the City of La Porte that have employer sponsored health care coverage available through the new employer may not continue health coverage with the City of La Porte, except for those with 30 years or more tenure with the City of La Porte. If an employee works 30 years or more with the City of La Porte they may maintain the City of La Porte sponsored health plan as secondary, which working for a new employer offering a health plan option. All applicable costs of the plan will still annly. " R Retirees who are self-employed are eligible for medical coverage, but occupational illnesses or injuries shall not be covered. Annual contributions by retirees to the health plan will be based on current fictive employee/dependent rates. C. City employees who retire from City of La Porte employment on or after January 01, 2006 and (1) who have a combination of years of service with the City of LaPorte, plus age, totaling 80; and (2) who retire as a qualified annuitant under the Texas Municipal Retirement System; who retire in accordance with the City of La Porte Employee Policies Handbook; who complete at least 20 years of service with the City of La Porte, and are currently employed by the City of La Porte at the time of their retirement. Retirees re-employed after retirement from the City of La Porte that have employer sponsored health care coverage available through the new employer may not continue health coverage with the City of La Porte, except for those with 30 years or more tenure with the City of La Porte, or for retirees re-employed with the City of La Porte. If an employee works 30 years or more with the City of La Porte they may maintain the City of La Porte sponsored health plan as secondary, while working for a new employer offering a health plan o tion. p p INS N q ,., _ All applicable costs of the Plan will still apply. For those retirees who are self-employed, occupational illnesses or injuries shall not be covered. Annual contributions by retirees to the health plan will be based on a cost schedule determined by years of service, as established under Section 5, "Premiums", of this chapter. D. City employees meeting the eligibility requirements for (1) disability retirement under the Texas Municipal Retirement System Act and (2) have been declared permanently disabled under the Social Security Act, and have elected to receive Medicare, Parts A and B, shall be eligible for medical benefits, which shall be secondary to Medicare benefits, provided they have worked for the City of La Porte for ten (10) continuous years at the time of disability determination. Costs associated with retirement under this tier shall be 75% of the city cost. 2. The retiree and dependent coverage will be primary for those participants not yet qualified for Medicare. The coverage will be secondary for those retirees and retirees' dependents who are Medicare eligible. The Retiree and dependant coverage will be secondary for Retirees with 30 or more years tenure with the City of La Porte, who have employer sponsored health coverage available through their new employer, or for retirees reemployed with the City of La Porte, as hereinabove provided. If a covered retiree dies, dependents may continue coverage until the earlier of the date the surviving spouse remarries, obtains group insurance, or becomes entitled to Medicare, or until any unmarried children financially dependent upon the covered retiree is 25 years of age. Surviving dependents shall pay the appropriate contribution toward dependent coverage as established in this chapter_ Retirees who work for another employer offering health coverage shall not be eligible for retiree health coverage from the City after their subsequent employment ends, regardless of the length of service with the subsequent employer. 4. Retirees who delay their retirement annuity shall not be eligible for retiree health coverage from the City. j 5. Premiums: The City of La Porte utilizes a self -funded medical plan so there are no formal premiums paid for health coverage. Each year, during the budget process, an amount is determined for each employee to cover claims and administration of the medical fund. MA The Total Premium Cost is the Total annual dollar allocated each year by budget as approved by City Council for the City of La Porte for Health Insurance for each employee, including employee and employer contributions. At least 20 years of service At least 21 years of service At least 22 years of service Retiree pays 60% of city cost + Dependent premiums Retiree pays 55% of city cost + Dependent premiums Retiree pays 50% of city cost a At least 23 years of service At least 24 years of service At least 25 years of service At least 26 years of service At least 27 years of service At least 28 years of service At least 29 years of service At least 30 years of service + Dependent premiums Retiree pays 45% of city cost + Dependent premiums Retiree pays 40% of city cost + Dependent premiums Retiree pays 35% of city cost + Dependent premiums Retiree pays 30% of city cost + Dependent premiums Retiree pays 25% of city cost + Dependent premiums Retiree pays 20% of city cost + Dependent premiums Retiree pays 15% of city cost + Dependent premiums Retiree pays 10% of city cost + Dependent premiums Eligible dependents include: Your lawful spouse who is legally married to and living with you; natural children; stepchildren; children who, before reaching the age of 18, are either adopted by you; or other children for whom you have care, custody and control under court decree. A dependent child must be unmarried and rely on you for primary support and maintenance. Dependent children remain eligible until age 25. 6. Retirees may not add dependents once retired. There are no qualifying events to add dependents. Dependents may be dropped by written request at any time. 7. Retirees shall pay all required contributions to the City by the 15th of the month of coverage. One annual statement will be mailed to retirees for selection of payment plan: annual, bi-annual, quarterly or monthly. Failure to pay the required contribution will result in termination of the member's participation in the City of La Porte sponsored health plan. Payment delayed beyond 60 days will initiate COBRA notification for continuation of health coverage once the member is terminated from the Plan. Vault. W L-�- CHAPTER 172 EMPLOYEE RETIREE INSURANCE AND BENEFITS BOARD RECOMMENDATIONS TO CITY COUNCIL FROM THURSDAY, AUGUST 10, 2006 MEETING: 1. Recommends that Flexible Spending Accounts with the Debit Cards be added to our plan. 2. We do not recommend the Individual Child Premium Load. We could make a 5`h tier in a 4 tier structure with specific language that says dependent children can remain on the insurance to age 25 if they are a student and not married. 3. We do not recommend the 10% Cost Savings with Plan Design Changes 4. Recommends a one-time deferral at the discretion of the Retiree with a spousal provision as outlined in COBRA. Which is: If a Retiree is carrying their spouse at retirement then the spouse could re-enter when the retiree re-enters. 5. Recommends that Retiree Over/Under 65 Calculation not be used and remain as it is. 6. Recommends both Incentive Plans as potential Recruitment Incentives with the City Council determining which one it wants to adopt, or a combination of both. 7. Recommends the current method of making the Retiree Calculations continue with clarification of language regarding City budgeted cost and that the coverage % discount amount applies only for retirees, not dependents. Also, the proposed Calculator that Neal is developing be implemented to allow any employee to be able to get an estimate of their insurance cost and their dependents cost at the current year budgeted City cost and for one additional year. CHAPTER 172 EMPLOYEE RETIREE INSURANCE AND BENEFITS BOARD RECOMMENDATIONS TO CITY COUNCIL FROM THURSDAY, AUGUST 10, 2006 MEETING: 1. Recommends that Flexible Spending Accounts with the Debit Cards be added to our plan. YES Approved 2. We do not recommend the Individual Child Premium Load. NO We could make a 5tn t"' in a 4 tier structure with specific language that says dependent children can remain on the insurance to age 25 if they are a student and not married. YES APPROVED 3. We do not recommend the 10% Cost Savings with Plan Design Changes NO 4. Recommends a one-time deferral at the discretion of the Retiree with a spousal provision as outlined in COBRA. Which is: If a Retiree is carrying their spouse at retirement then the spouse could re-enter when the retiree re-enters. YES Approved 5. Recommends that Retiree Over/Under 65 Calculation not be used and remain as it is. YES Approved 6. Recommends both Incentive Plans as potential Recruitment Incentives with the City Council determining which one it wants to adopt, or a combination of both. YES Approved did not determine which method will be used 7. Recommends the current method of making the Retiree Calculations continue with clarification of language regarding City budgeted cost and that the coverage % discount amount applies only for retirees, not dependents. Also, the proposed Calculator that Neal is developing be implemented to allow any employee to be able to get an estimate of their insurance cost and their dependents cost at the current year budgeted City Cost and for one additional year. YES Approved POLICY MANUAL Date: October 23, 2006 Revised Approved: John Joerns Subject Authority to Contract Certain Expenditures Responsible Agency: City Manager Policy Objective: Establish a policy regarding City Manager's authorization to contract for expenditures. Authority or Authorizing Legislation: Reviewed by City Council on October 23, 2006. Policy: Authority of city manager to contract for expenditures; limits. a) pursuant to the provisions of Charter Section 5.02 (attached) and Section 2-81 of the Code of Ordinances (attached) regarding purchase procedure, the city council hereby confers upon the city manager general authority to contract for expenditures, without further approval of the city council, for budgeted items not exceeding $25,000.00. All contracts for expenditures involving more than $25,000.00 must be expressly approved in advance by city council. b) in the case of contracts for expenditures involving more than $25,000.00 and which expenditures city council has previously approved by budget ordinance or amendments thereto, such expenditures shall be presented to Council for action by city council on its agenda, and the passage of ordinance shall not be necessary to meet the requirements that all such expenditures be expressly approved by council. c) an ordinance is required for the contracting of indebtedness or the issuance of bonds; pursuant to the provisions of Charter Section 2.09.b and Section 2.1 Lb (attached). Exhibits: La Porte Code of Ordinances Section 2-81 La Porte Charter Sections 2.09 b. and 2.11 City Council Minutes of October 23, 2006 1 :5101 or CITY OF LA PORTE f2�� Jb MEETING HANDOUTS 7l'e, ire 6 Ine � Sp.eficer anding park roposal Funds available for park - $ 38,850.00 Additional Funds from Spencer Landing HOA - $ 7,500.00 Funds matched by the City of La Porte - $ 7,500.00 Total - $ 53,850.00 Possible additional funds from the City of La Porte -$ 5,600.00 Total - $ 59,450.00 Items already purchased for the park by the citv. 1) One (1) Modular Playset - $ 14,336.00 2) Fifty (50) Boarder timbers with stakes - $ 3,140.00 3) One (1) 4-seat swing set - $ 920.00 4) One (1) 8' PVC coated picnic table - #1118 -$ 600.00 Total spent so far - $19,996.00 Additional work to be done on park 1) Dirt work for playground - $ 4,560.00 2) Re -align trickle channel & dirt work (+/- $500 each/ max $3500) - $ 2,500.00 3) Lighting around entire 800ft of trail/boardwalk - $ 6,900.00 4) Fi-Bar fail material - $ 2,524.00 5) Crushed granite for walking trail (16yds total material) - $ 1,500.00 6) Mackadoo base for walking trail (16yds total material) - $ 1,100.00 7) Boardwalk over retention pond (approx. 80'L x 4'or 5'W) **-$16,000.00 8) Engingering Design & Approval A£ Boardwalk * *- $ 2,000.00 Total - $ 37,084.00 (Max total - $ 38,084.00) ** W 7 & # 8 Price could chanke depending on final design.) Additional items we would like to purchase for the park 1) One (1) Single Post Swing w/tot seats (#714-735-2t) - $ 1,011.00 2) Two (2) 6' Park benches (#1267) ($340 ea.) -$ 680.00 3) One (1) 8' PVC coated steel picnic table (as previously purchased) - $ 600.00 4) Three (3) trash cans ($30 ea.) -1- 90.00 Total of additional items - $ 2,381.00 Spencer Landing Park Proposal Total of all actual and proposed items is: Funds available Funds short for completion of park - $ 58,461.00 - $ 53,850.00 -$ 4,611.00 Total funds contributed by Spencer Landing - $ 46,350.00 Total- of all possible funds contributed by the City of La Porte - $13;100.00 Total fund available for park Total - $ 59,450.00 Total of all actual and proposed items is: Total with possible additional funds Total funds remaining for park (approx.) - $ 58,461.00 - $ 59,450.00 - $ 989.00 The continued up keen and beautification of the park area. 1) Mowing and weed eating of park area weekly ($200 ea) - $ 10,400.00 2) Mowing of retention pond/park base area ($300 ea) (every 2 wks for 8 months total) - $ 4,800.00 3) Additional flowers, trees, shrubs etc. (as needed) (each yr) -$ 1,000.00 4) Watering of all grass, trees, flowers etc. (per year approx.) - $ 300.00 5) Electricity for all lights (per year approx.) - $ 750.00 6) Insurance increase for park area (per year) - $ 2,500.00 Approximate total spent Per year - $19,750.00 ** All information and figures are estimated and subject to change according to proper funding and availability. ** Spencer Landing Park Proposal DUE to the shortfall in funds due to the City of La Porte requiring the boardwalk to be engineered we are willing to postpone the following items. We hope to have all of the following items added to the park next year through the matching funds program. 1) The sprinkler system (3-zone) - $ 2,436.00 2) Four (4) 6' Slat benches w/o back (#1281R) ($368 ea.) - $ 1,472.00 3) One (1) Standard bike rack (#710LJ) -$ 450.00 4) Two (2) Awning/shade covers installed over picnic tables (10'x10'x 4' w/ 3or 4 powder coated legs) ($ 2,030.00 ea.) - $ 4,060.00 5) One (1) Concrete Basketball Pad-20'x 25'= 500sq.ft -$ 750.00 6) One (1) Basketball goal steel fan double rim w/chain (#360-756LJ)- $ 824.00 7) One (1) Jet Interceptor spring rider (#940) -$ 457.00 Total - $10,449.00 If funds are remaining after the above work has been completed, then it will be at the SLHOA discretion as to what other items are added to the park. Those item(s) would be paid for utilizing the remaining funds.